Parducci v. AMCO Insurance Company

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RICHARD P. PARDUCCI, Case No. 18-cv-07162-WHO

8 Plaintiff, ORDER DENYING MOTIONS TO 9 v. DISMISS

10 OVERLAND SOLUTIONS, INC., et al., Re: Dkt. Nos. 62, 64 Defendants. 11

12 13 INTRODUCTION 14 Plaintiff Richard P. Parducci (“Parducci”) sues defendants AMCO Insurance Company 15 (“AMCO”) and Overland Solutions, Inc. (“Overland”) for allegedly engaging in a scheme to 16 overcharge customers of homeowners’ insurance by intentionally overestimating the replacement 17 costs of homes. I previously dismissed his original complaint because he did not sufficiently 18 plead fraud with requisite particularity. Order Granting Motions to Dismiss and Denying Motion 19 to Strike (“Order”) [Dkt. No. 56]. He fixed the deficiencies and now sufficiently pleads fraud in 20 his Amended Complaint, which forms the basis for his intentional misrepresentation, negligent 21 misrepresentation, elder abuse, and fraudulent business practices claims. Amended Complaint 22 (“Am. Compl.”) [Dkt. No. 59]. Parducci also sufficiently alleges a breach of implied covenant of 23 good faith and fair dealing against AMCO because he is not required to bring a breach of contract 24 claim or allege withholding of benefits in order to move forward with this claim. AMCO’s and 25 Overland’s motions to dismiss are DENIED. 26 BACKGROUND 27 I. PROCEDURAL BACKGROUND 1 for and on behalf of Margarett L. Parducci, and as Trustee of the John A. Parducci and Margarett 2 L. Parducci Survivor’s Trust. Complaint [Dkt. No. 1]. On July 17, 2019, I dismissed his 3 complaint because he failed to allege valid claims against AMCO and Overland for (i) intentional 4 misrepresentation, (ii) negligent misrepresentation, (iii) unlawful, unfair, and fraudulent business 5 practices under Cal. Bus. & Prof. § 17200, et seq. (“UCL”), and (iv) financial elder abuse. Order 6 at 10. He also failed to allege claims against AMCO for (v) breach of the implied covenant of 7 good faith and fair dealing and (vi) breach of contract. Id. 8 On August 16, 2019, Parducci filed an Amended Complaint bringing the same claims, 9 except for breach of contract. See Am. Compl. Both AMCO and Overland move to dismiss the 10 Amended Complaint. AMCO Motion to Dismiss (“AMCO MTD”) [Dkt. No. 62]; Overland 11 Motion to Dismiss (“Overland MTD”) [Dkt. No. 64]. I heard oral argument on November 20, 12 2019. 13 II. FACTUAL BACKGROUND 14 Parducci is the grandson of Margarett Parducci and the late John. A Parducci (the “Senior 15 Parduccis”). Am. Compl. at ¶ 1. During the relevant time period, the Senior Parduccis were both 16 over the age of 65 and resided in a home located in Ukiah, California. Id. at ¶¶ 7–8. AMCO 17 insured the Parducci residence under a homeowners’ policy since at least 2008. Id. ¶¶ 8–9. 18 Parducci contends that for at least seven of those years, the home was over-insured as a result of 19 inflated replacement values allegedly determined by defendants. Id. ¶ 12. As a result, the Senior 20 Parduccis were required to pay excessive premiums on coverage limits that the family “would 21 never be able to collect if there had been a loss.” Id. 22 On January 4, 2016, pursuant to his duties and responsibilities as trustee, Parducci 23 requested from the Senior Parduccis’ broker and AMCO’s agent, Mark Davis Insurance Agency 24 (“MDI”), “a seven-year history of the amount of insurance that was being carried on the 25 Parduccis’ residence, an accounting of the premiums for the coverage of the structure, and an 26 explanation of how the replacement cost had been determined for each year that the property has 27 been insured.” Am. Compl. ¶ 10. He initially received a copy of the 2013 appraisal report 1 the insurance file in May 2017, MDI responded, in part: professional inspections and analyses of the Parducci property were 2 performed in 2010 (survey only) and 2013 (Castle Inspection Service), at the insurer’s expense. The 2013 report by Castle (an 3 industry leader) concluded that the replacement cost of the Parducci property was [$]1,528,000. Nationwide requested coverage of 4 [$]1,589,000, and that was the amount of coverage provided. I attach a copy of the 2010 and 2013 reports. 5 Id. ¶ 11. MDI also provided eleven declaration pages for various years and some limited 6 correspondence between MDI and AMCO; it failed to provide the original policy application. Id. 7 Parducci alleges that misrepresentations regarding the home’s replacement value were 8 made “on at least two appraisal reports issued in 2010 and 2013 by Overland and prepared at the 9 request of AMCO.” Am. Compl. ¶ 21. He contends that “AMCO used the Overland appraisal 10 report dated November 22, 2010 to justify the replacement value of $1,525,000,” which it had 11 previously set in or about October 18, 2010. Id. ¶ 15. Exhibit 1 to the Amended Complaint is the 12 November 22, 2010 report. See Amended Compl., Ex. 1 (“2010 Report”). He asserts that the 13 2010 Report was “performed by Overland’s agent or employee, Bruce Hotaling” and the “insurer 14 identified on Overland’s inspection report is Allied Insurance Company (AMCO’s parent).” Am. 15 Compl. ¶ 14; 2010 Report at 2.1 16 In or around October 18, 2012, Parducci contends that AMCO increased the dwelling 17 coverage limit to $1,589,600. Am. Compl. ¶ 16. Subsequently on July 19, 20193, AMCO, 18 through its agent or employee Laura O. Volpe, issued a request to Overland to perform an 19 appraisal of the Parduccis’ home. Id. Ms. Volpe allegedly informed Overland that the 20 replacement coverage amount for the Parduccis’ home should be $1,589,600, which is 21 documented in the 2013 report attached to the Amended Complaint. Id.; see Am. Compl., Ex. 2 22 (“2013 Report”). The coverage limits listed in the October 18, 2012 declaration ($1,589,600) 23 matched the 2013 report. Am. Compl. ¶ 16. Parducci alleges that AMCO justified the inflated 24 dwelling coverage limits that it had already placed on the Parduccis’ residence with the 2013 25 Report performed by Overland, through its agent or employee David McMills. Id. 26

27 1 The replacement coverage amount continued to increase with each renewal notice and 2 declaration pages as follows: 3 • October 18, 2013: $1,634,600. 4 • October 18, 2014: $1,693,000. 5 • October 18, 2015: $1,734,000. 6 • October 18, 2016: $1,766,900. 7 • October 18, 2017: $1,809,700. 8 Id. ¶ 17. 9 In August 2016, Parducci moved the homeowners’ policy to a new AMCO agent, 10 identified as the Lincoln-Leavitt Agency, “in the hopes of obtaining an accurate replacement 11 valuation.” Am. Compl. ¶ 19. Using its in-house computer estimator, Lincoln-Leavitt Agency 12 estimated that the replacement value of the residence should be between $855,000 to $925,000, 13 depending on the value of certain fixtures. Id. In February 2017, in response to Lincoln-Leavitt 14 Agency’s estimate, Parducci solicited the opinion of various contractors and architects in the area, 15 who estimated that the residence could be replaced at that time for between $140 and $170 per 16 square foot, bringing the total replacement cost for the approximately 6,000 square foot home to 17 between $840,000 and $1,020,000. Id. 18 In April 2017, Parducci used these estimates to request that AMCO reduce the amount of 19 coverage to reflect the lowered home replacement cost. Am. Compl. ¶ 20. The Lincoln-Leavitt 20 Agency forwarded his request for reduction to AMCO. Id. AMCO refused to lower the 21 replacement cost, claiming that the higher replacement cost reflected in the policy was correct. Id. 22 His first request to lower the coverage was refused between August 2016 and February 2017 and 23 his second request was refused in or about April 2017. Am. Compl. ¶ 21. He does not know the 24 manner in which the Lincoln-Leavitt Agency forwarded his requests to reduce coverage to 25 AMCO, but alleges that this information and the specific dates should be obtainable in discovery. 26 Id. He also does not know the name of the individual or individuals at AMCO who refused his 27 requests, and seeks discovery on that as well. Id. 1 LEGAL STANDARD 2 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss if a claim 3 fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to 4 dismiss, the claimant must allege “enough facts to state a claim to relief that is plausible on its 5 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when 6 the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant 7 is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation 8 omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. 9 While courts do not require “heightened fact pleading of specifics,” a claim must be supported by 10 facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 11 570. 12 Under Federal Rule of Civil Procedure 9(b), a party must “state with particularity the 13 circumstances constituting fraud or mistake,” including “the who, what, when, where, and how of 14 the misconduct charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) 15 (internal quotation marks omitted). However, “Rule 9(b) requires only that the circumstances of 16 fraud be stated with particularity; other facts may be pleaded generally, or in accordance with Rule 17 8.” United States ex rel. Lee v. Corinthian Colls., 655 F.3d 984, 992 (9th Cir. 2011). In deciding 18 a motion to dismiss for failure to state a claim, the court accepts all of the factual allegations as 19 true and draws all reasonable inferences in favor of the plaintiff. Usher v. City of Los Angeles, 20 828 F.2d 556, 561 (9th Cir. 1987). But the court is not required to accept as true “allegations that 21 are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead 22 Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 23 DISCUSSION 24 I. INTENTIONAL MISREPRESENTATION, NEGLIGENT MISREPRESENTATION 25 AND ELDER ABUSE CLAIMS 26 Federal Rule of Civil Procedure 9(b) requires that Parducci’s causes of action for 27 intentional misrepresentation, negligent misrepresentation, and elder abuse be pleaded with 1 Complaint satisfies Rule 9(b), I address the argument of both AMCO and Overland that Parducci 2 failed to allege misrepresentation because the exhibits attached to his Amended Complaint, the 3 2010 and 2013 Reports, directly contradict his allegation that AMCO made misrepresentations as 4 part of an alleged “scheme” to over insure the Parducci home. AMCO MTD 5–7; Overland MTD 5 5–6 6 A. Contradictions by Exhibits to Amended Complaint 7 1. 2010 Report 8 Parducci alleges that AMCO placed dwelling coverage limits of $1,525,000 on the Senior 9 Parduccis’ residence in October 2010, and subsequently in November 2010 “issued a request to 10 Overland to perform an appraisal” and informed Overland “that the replacement coverage amount 11 . . . should be $1,525,000.” Am. Compl. ¶ 14. He alleges the AMCO “set the coverage limits of 12 $1,525,000 before the 2010 report had even been prepared.” Id. He asserts that “AMCO knew 13 that Overland . . . would rely upon the replacement coverage amount suggested by [it] to set the 14 appraisal value in its report instead of performing an independent appraisal and determining the 15 true value of the Parduccis’ home.” Id. The 2010 Report was “performed by Overland’s agent or 16 employee, Bruce Hotaling” and the “insurer identified on Overland’s inspection report is Allied 17 Insurance Company (AMCO’s parent).” Id. 18 AMCO argues that the 2010 Report was “simply a survey relating to wildfire risks” that 19 “involved neither an appraisal of the property itself nor an assessment of the property’s square 20 footage.” AMCO MTD 6. Regardless of the ultimate purpose of the 2010 Report, it clearly 21 addresses the replacement cost under headings “Replacement Cost Info” and “Replacement Cost 22 Details.” 2010 Report at 3. The 2010 Report does not necessarily contradict with Parducci’s 23 claims; he alleges that the 2010 Report was used to support the misrepresented replacement value 24 that AMCO had already set, as indicated in the 2010 renewal notice sent to the Senior Parduccis 25 one month prior. 26 2. 2013 Report 27 Parducci alleges that the 2013 Report also shows that the “replacement coverage amount 1 AMCO set the coverage limit of $1,589,600 on the Parducci residence, as indicated in the October 2 18, 2012 renewal notice, and subsequently on June 19, 2013, requested Overland perform an 3 appraisal, informing it that the “replacement coverage amount . . . should be $1,589,600.” Id. The 4 2013 Report indicates that Laura O. Volpe, an agent or employee of AMCO, was the requestor, 5 and David McMills, an agent or employee of Overland, was the inspector. Id. It follows, he 6 argues, that AMCO set the appraisal value instead of performing an independent appraisal and 7 determining the true value of the Parduccis’ home. Id. Overland fulfilled this scheme because it 8 “knew or should have known that AMCO would use the appraised value in [its] inspection report 9 to set or justify the excessive or inflated dwelling coverage limits imposed on the Parduccis’ 10 residence.” Id. With the 2013 Report performed by Overland, AMCO was able to justify the 11 inflated dwelling coverage limits that it had already placed on the Parducci residence. Id. 12 Parducci also alleges that the replacement coverage amount continued to increase with each 13 renewal notice and declaration page. Id. ¶ 17. 14 AMCO argues that the 2013 Report not only contradicts Parducci’s claims of a fraudulent 15 scheme and related misrepresentation, but also confirms that there is no dispute as to the 16 replacement value of the home. AMCO MTD 6. The 2013 Report states that the gross square 17 footage of the Parduccis’ residence is 8,885 square feet and that the replacement cost per square 18 foot is $171.98. 2013 Report at 48. Parducci contends that the home is 6,000 square feet and that 19 the replacement cost per square foot should be between $140 and $170 per square foot. Am. 20 Compl. ¶ 19. Accordingly, AMCO contends that the 2013 Report shows that “the Parducci home 21 was insured at nearly the exact rate at which [Parducci] alleges it should have been ($171 per 22 square foot).” AMCO MTD 1. It suggests this case involves a dispute over square footage of the 23 Parduccis’ unique home in the undeveloped hills of Ukiah County. Id. If the square footage is 24 equalized, the respective valuation calculations of the parties would be nearly equivalent, yielding 25 an aggregate valuation differential of slightly more than 1%. Id.2 26

27 2 The calculation is as follows: “[u]sing the high-end of [Parducci’s] alleged range of replacement 1 Parducci responds that AMCO tries to minimize the inflation by comparing the figure in 2 the 2013 Report with a price range he gathered from other contractors in 2017. Oppo. AMCO 3 MTD 13. By arguing the per square foot replacement cost in the 2013 Report ($171.98) was only 4 $1.98 above the high-end of Parducci’s suggested range of ($170), AMCO and Overland ignore 5 the fact that the suggested range was based on 2017 estimates, not 2013 estimates. Id. The value 6 of the home in 2013 should have been much less compared to his 2017 estimates. Id. at 14. 7 Additionally, AMCO’s annual declarations suggest that the value of the home rose $175,100 8 between October 2013 and October 2017. Am. Compl. ¶ 17. 9 Parducci’s argument has merit. Taking inflation into account, the per square foot 10 calculation in the 2013 Report should have been materially less than the estimate range he 11 gathered in 2017. The 2010 and 2013 Reports attached to the Amended Complaint do not 12 contradict his fraud claims. 13 B. Allegations with Requisite Specificity 14 In order to adequately allege a claim sounding in fraud under Rule 9(b), a party must “state 15 with particularity the circumstances constituting fraud or mistake,” including “the who, what, 16 when, where, and how of the misconduct charged.” Vess, 317 F.3d at 1106 (internal quotation 17 marks omitted). I found that Parducci’s original complaint was deficient under Rule 9(b) because: 18 Basic information is missing, such as who at Overland and AMCO 19 made the specific misrepresentations, when and where the misrepresentations occurred, how Parducci discovered the falsity of 20 the representations, on what basis he realized that AMCO and Overland’s statements were misrepresentations, when and how his 21 unidentified new agent forwarded his request to reduce coverage based on his lower replacement value estimates, who at AMCO 22 refused his request, when that request was refused, and what the form of the refusal was. 23 Order at 10. I acknowledged that some of this information may be unknown to him but held that 24 he “should allege what he can and explain why certain gaps will require discovery” since “[t]here 25 is no justification to relax Rule 9(b)’s pleading standards when information is equally within his 26 27 1 possession as within AMCO’s possession.” Id. at 11. 2 Parducci argues that he answers these questions, particularly in Paragraph 21 of the 3 Amended Complaint, and indicates where and why any information is lacking. Oppo. AMCO 7; 4 Amended Compl. ¶ 21. AMCO and Overland argue that his answers to these questions are 5 insufficient. I address each in turn. 6 1. Who at Overland and AMCO made the specific misrepresentations? 7 Parducci alleges that “[a]s indicated on Overland’s [2013 Report], AMCO’s agent, Laura 8 O. Volpe, ordered the report on behalf of AMCO and thus, is alleged to be the one who advised 9 Overland that the replacement coverage amount for the Parduccis’ residence should be 10 $1,589,600. Am. Compl. ¶ 21; see 2013 Report at 2, 7, 8, 48. Overland’s agent or employee, 11 David McMills, performed the appraisal to validate that amount. Am. Compl. ¶ 21. Parducci also 12 contends that the 2010 Report “omits information as to who at AMCO ordered the report (this 13 may be obtainable in written interrogatories to AMCO and Overland)” but notes that “the 14 appraisal was conducted by Bruce Hotaling,” an alleged agent or employee of Overland. Id.; see 15 2010 Report at 1, 3. 16 AMCO contends that Parducci’s allegations are insufficient because he only states that 17 Volpe made a representation to Overland but does not explain who at AMCO made a 18 misrepresentation to him or the Senior Parduccis. AMCO MTD 8. Overland similarly points out 19 that Parducci merely alleges that McMills performed the appraisal but fails to allege who at 20 Overland made any sort of misrepresentations to the him or the Senior Parduccis. Overland MTD 21 7. 22 Parducci responds that “‘who’ misrepresented the replacement value coverage amount to 23 [the Parduccis] is ultimately that person who authorized the inflated amount at the outset.” Oppo. 24 AMCO MTD 9. He alleges that the misrepresentations were made in the 2010 and 2013 Reports, 25 and that he received copies of those reports years later after requesting them from AMCO’s agent 26 in January 2016 and May 2017. Am. Compl. ¶ 10–11, 14–16, 21. He argues that he has met the 27 Rule 9(b) pleading standard because these reports show how AMCO validated its inflated 1 appraisals according to AMCO’s pre-determined amounts. Similarly, the “‘who’ at Overland 2 [that] misrepresented the replacement value coverage amount to [the Parduccis] is ultimately that 3 person who determined the inflated amount at the outset.” Oppo. Overland MTD at 11–12. He 4 notes that I previously rejected Overland’s attempt to argue that it was saved from liability for not 5 making a direct misrepresentation to Parducci or the Senior Parduccis. Oppo. Overland MTD 12; 6 see Order at 17–18 (“If such a scheme were in effect, Overland would know that its allegedly 7 overinflated estimate would reach AMCO’s customers, and that the customers would be 8 influenced by Overland’s estimated value of their home when purchasing AMCO’s insurance 9 policy.”). 10 Parducci has sufficiently answered this question. As I explained in my previous order, 11 Parducci is not required to allege direct representations in order to sufficiently allege a claim for 12 fraud. Order at 17–18. Rather, he is required to allege who at AMCO and Overland made the 13 specific misrepresentations that he claims were made as part of the alleged fraud or scheme; he has 14 done that here. 15 2. When and where did the misrepresentations occur? 16 Parducci alleges that the misrepresentations “occurred on at least two appraisal reports 17 issued in 2010 and 2013 by Overland and prepared at the request of AMCO.” Am. Compl. ¶ 21. 18 In both instances, AMCO pre-determined an amount, requested that Overland agents perform an 19 appraisal to match that amount, and Overland agents complied. Id. ¶¶ 12, 15–16. He further 20 contends that “the renewal notices and declaration pages mailed or delivered to the Parduccis each 21 October 18 from 2010 to 2017” also show when and where the misrepresentations occurred. Id. ¶ 22 21; see AMCO Request for Judicial Notice, Exs. A–F [Dkt. No. 18-1] (copies of renewal notices). 23 AMCO argues that these allegations are directly contradicted by the exhibits attached to 24 the Amended Complaint, but as discussed above, I find the 2010 and 2013 Reports are not 25 necessarily contradicted. Regardless of the purpose of the 2010 Report, it still contains a section 26 on “Replacement Cost Info,” and comparing the figure in the 2013 Report with the estimates 27 Parducci gathered in 2017 does not show a contradiction if inflation is taken into account. 1 ‘misrepresentations’ were made to the Parduccis, and what misrepresentations the Parduccis 2 allegedly relied on.” Overland MTD 8. As discussed above in response to the first question, he is 3 not required to allege a direct misrepresentation between AMCO/Overland and the Senior 4 Parduccis. He is also not required to allege more facts as to reliance, because I previously found 5 that “reliance is sufficiently pleaded as is” in the original complaint and found that AMCO’s and 6 Overland’s arguments concerning reliance were without merit. Order at 9 n.3, 20. Parducci has 7 sufficiently alleged that the misrepresentations occurred in at least 2010 and 2013, based on the 8 two reports, and continually between 2010 and 2017 based on the renewal notices that inflated the 9 replacement cost. 10 3. How did Parducci discover the falsity of the representations? On what basis 11 did he realize that AMCO and Overland’s statements were 12 misrepresentations? 13 Parducci alleges that he discovered the falsity of the representations in August 2016, when 14 he switched to a different AMCO agent, the Lincoln-Leavitt Agency, and obtained an alternate 15 estimate from its in-house computer estimator. Am. Compl. ¶ 21. The Lincoln-Leavitt Agency 16 “estimated that the replacement value of the Parducci residence should be between $855,000 and 17 $925,000, depending on the value of certain fixtures.” Id. In response to this estimate, in 18 February 2017, he sought “the opinion of various contractors and architects in the area who 19 confirmed that the Parducci residence could be replaced at that time for between $140 and $170 20 per square foot, bringing the total replacement cost for the approximately 6,000 square foot home 21 to between $840,000 and $1,020,000.” Id. 22 AMCO argues that it cannot be true that he learned of the misrepresentation when he 23 obtained the estimate range from other contractors in February 2017 because the 2013 Report has 24 nearly identical figures as to the contractor range when square footage is equalized. AMCO MTD 25 9. Again, as discussed above, the 2013 Report does not necessarily show identical figures given 26 that 2013 and 2017 numbers can be different due to inflation. 27 Overland contends that Parducci has alleged “merely the same exact language as what was 1 8. Parducci responds that although the underlying allegation is the same—that he learned of the 2 misrepresentation when he switched insurance agencies and performed his own independent 3 investigation—the allegations are much more detailed than before. Oppo. Overland MTD 12–13. 4 For example, he alleges that he made requests through his attorney on January 4, 2016 and May 8, 5 2017 to MDI for documentation regarding the policy, which is how he obtained the 2010 and 2013 6 reports that are attached to the Amended Complaint. Am. Compl. ¶¶ 10–11. He also adds when 7 he moved the Parduccis’ policies to a different AMCO agent, identifies the name of the new 8 agency as Lincoln-Leavitt Agency, and provides a date for when he sought the advice of other 9 contractors. Id. ¶ 19. He clarifies that the Lincoln-Leavitt Agency estimated the replacement 10 value by utilizing an in-house computer estimator, which is what led him to seek the opinions of 11 contractors and architects in the area in February 2017. Id. 12 In its reply, Overland asserts that these allegations are not sufficient because Parducci 13 “fails to allege how it came about that he believed it was necessary to acquire a new agent or to 14 ask for new estimates.” Overland Reply In Support of Motion to Dismiss (“Overland Reply”) 15 [Dkt. No. 70] 6. But Parducci alleges in his Amended Complaint that “[p]ursuant to his duties and 16 responsibilities as Trustee of the Trust, [he] requested a seven-year history of the amount of 17 insurance that was being carried on the Senior Parduccis’ residence.” Am. Compl. ¶ 10. He then 18 received the 2013 Report in January 2016 and again in May 2017 along with an additional 2010 19 Report. Id. ¶¶ 10–11. Based on these documents, “it appeared that the Parduccis’ home had been 20 over-insured,” which is what prompted him to acquire a new agent and ask for new estimates. Id. 21 ¶ 12, 19. Given these additional factual allegations, I find Parducci has answered this question. 22 4. When and how did Parducci’s new agent forward his request to reduce 23 coverage based on his lower replacement value estimates? 24 Overland argues that Parducci “does not provide even approximate dates for when he 25 requested his new AMCO agent forward his request to reduce coverage, despite having the 26 knowledge of when he himself made this request.” Overland Reply 6. Even if Parducci does not 27 know who internally refused his request, I directed him to “still allege how he asked to change the 1 communicated with.” Order at 11. Although Parducci does allege when he initially made the 2 request, this is the only detail he has failed to allege. 3 5. Who at AMCO refused Parducci’s request, when was that request refused, 4 and what the form of the refusal was? 5 Parducci alleges that his “first request to lower the coverage was refused between August 6 2016 and February 2017; his second request was refused in or about April 2017.” Am. Compl. ¶ 7 21. He admits that he “does not know the exact date that his requests were refused or the manner 8 in which the Lincoln Leavitt agency forwarded his requests to reduce coverage to AMCO, but this 9 information and the specific dates should be obtainable in discovery.” Id. He points out that, as 10 acknowledged in my previous order, he “allege[s] what he can and explain[s] why certain gaps 11 will require discovery.” Oppo. Overland MTD 9 (citing to Order at 11). He also emphasizes that 12 my previous order recognized that he may not know “who in AMCO internally rejected his bid to 13 change the replacement cost estimate of his home.” Order at 10–11. 14 Overland points out that Parducci as failed to explain what exactly happened between 2016 15 and 2017 and if he renewed the policy. Overland MTD 8. However, this was previously 16 discussed in the context of whether he sufficiently alleged a breach of contract claim. Order at 17 12–13. He does not bring a breach of contract claim in his Amended Complaint, and discussion of 18 policy renewal is not necessarily relevant to when his requests for cost reduction were refused. 19 As discussed in this section, the only question Parducci does not answer that is within his 20 knowledge is when he initially requested the reduction in coverage amounts based on the lower 21 replacement value estimates. He has sufficiently alleged that: (i) the 2010 and 2013 Reports show 22 which AMCO and Overland agents or employees made the specific misrepresentations; (ii) these 23 misrepresentations occurred at least in 2010 and 2013, as indicated in the two Reports, and carried 24 on until 2017 as indicated in the renewal notices; (iii), he discovered the misrepresentation when 25 he compared alternate estimates obtained in 2016 and 2017 to those reports; (iv) and his requests 26 for lowering coverage were denied, although he admits he does not know how his agent forwarded 27 his request and who exactly denied them. The Amended Complaint plausibly alleges fraud under 1 negligent misrepresentation and elder abuse claims are DENIED. 2 II. UCL CLAIMS 3 The UCL prohibits “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. 4 & Prof. Code § 17200. “Each of these three adjectives captures a separate and distinct theory of 5 liability.” Rubio v. Capital One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010) (quotation marks 6 omitted). Relevant here, the “fraudulent” prong requires Rule 9(b) heightened pleading. I 7 previously dismissed Parducci’s UCL claims because he had not met Rule 9(b) pleading standard 8 for fraud. Order at 14–15. Because I find Parducci has now met that standard, his UCL claims are 9 sufficiently alleged in the Amended Complaint.3 AMCO’s and Overland’s motions to dismiss the 10 UCL claim are DENIED. 11 III. BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR 12 DEALING 13 Parducci brings an additional claim against AMCO for breach of the implied covenant of 14 good faith and fair dealing. AMCO argues that it is “well settled law that without a breach of the 15 contract, there can be no breach of the covenant of good faith and fair dealing.” AMCO MTD 11 16 (citing to Waller v. Truck Ins. Exch., 11 Cal. 4th 1, 36 (1995)). Because he does not bring a claim 17 for breach of contract, AMCO contends that his bad faith claim necessarily fails. Id. 18 However, “breach of a specific provision of the contract is not a necessary prerequisite to a 19 claim for breach of the implied covenant of good faith and fair dealing.” King v. Nat’l Gen. Ins. 20 Co., 129 F. Supp. 3d 925 (N.D. Cal. 2015) (citation and quotation marks omitted). The defendants 21 in King raised the same argument as AMCO. The Hon. Donna S. Ryu found that Waller “do[es] 22 not support their argument, because [that case] stand[s] for the proposition that a first party bad 23 faith claim requires an insured to show that he was owed benefits under the contract.” King, 129 24 F. Supp. 3d at 941.4 The King plaintiff contended that defendants breached the implied covenant 25 3 Parties disagree on whether the UCL claims can continue under the “unlawful” or “unfair” 26 prongs if Rule 9(b) is not met, but because I find Rule 9(b) has been met, those arguments need not be addressed. 27 1 of good faith and fair dealing by “failing to offer rates and calculate premiums in compliance with 2 their contractual obligations and/or rate filings.” Id. at 940. Similarly, Parducci claims that 3 AMCO undertook a contractual obligation to provide estimates, and the breach of implied 4 covenant occurred when AMCO did not obtain those estimates in good faith. Am. Compl. ¶ 53 5 (“Plaintiff’s insurance policy provides: ‘You are encouraged to obtain a current estimate of the 6 cost to rebuild your home from your insurance agent, broker or insurance company or an 7 independent appraisal from a local contractor, architect or real estate appraiser.’”) (emphasis 8 added). By undertaking that AMCO will provide estimates, the implied covenant was breached 9 when AMCO failed to give Parduccis’ interest at least as much consideration as its own. Id. ¶ 59. 10 Parducci is not required to bring a breach of contract claim along with his breach of implied 11 covenant claim given the type of bad faith claim he has brought here. 12 AMCO also argues that under California law, claims for “‘bad faith,’ or breach of implied 13 covenant of good faith and fair dealing, require an improper withholding of benefits under an 14 insurance policy.” AMCO MTD 12. The King defendants made a similar argument that a “bad 15 faith” claim is limited to situations where an insurer has withheld payment of an insured’s claim. 16 King, 129 F. Supp. 3d at 941. Judge Ryu clarified, “[t]hat is one type of bad faith claim, but not 17 the only type, and it is not the bad faith claim asserted by Plaintiffs.” Id. Similarly, Parducci is 18 not claiming that AMCO breached the implied covenant by withholding benefits, but instead 19 because it was not calculating premiums in good faith. It allegedly breached the implied covenant 20 of good faith by “refusing to acknowledge that it had a duty to the Parduccis to perform an 21 accurate calculation,” and instead “utilizing a replacement cost analysis that it knew or should 22 have known was inaccurate, inflated or incorrect.” Am. Compl. ¶ 59. AMCO’s motion to dismiss 23 his claim for breach of implied covenant of good faith and fair dealing is DENIED. 24 25 26 insured’s direct benefit under a first party policy. The gravamen of a first party lawsuit is a breach 27 of the implied covenant of good faith and fair dealing by refusing, without proper cause, to 1 CONCLUSION 2 AMCO’s and Overland’s motions to dismiss are DENIED. 3 IT IS SO ORDERED. 4 Dated: November 25, 2019 \ 6 Wriliam H. Orrick 7 United States District Judge 8 9 10 11 a 12

13 14

15 16

= 17

Z 18 19 20 21 22 23 24 25 26 27 28