Benn v. Allstate Insurance Company

569 F.Supp.3d 1029

Lillian BENN, an individual, Plaintiff,

v.ALLSTATE INSURANCE COMPANY, a California corporation; Melody Sloan Mosley, P.C., an organization form unknown, Defendants.

Case No. 5:21-cv-01584-JFW-SPx

United States District Court, C.D. California, Eastern Division.

Signed October 29, 2021

Regina Ashkinadze Spurley, Law Offices of Regina Spurley, Pasadena, CA, for Plaintiff.

John D. Edson, Peter H. Klee, Sheppard Mullin Richter and Hampton LLP, San Diego, CA, for Defendants.

AMENDED STATEMENT OF DECISION GRANTING ALLSTATE INSURANCE COMPANY'S MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS

John F. Walter, United States District Judge

ORDER OF THE COURT

The Court has considered Allstate's motion for partial judgment on the pleadings, Lillian Benn's opposition, and Allstate's reply. For the reasons stated in Allstate's motion and good cause appearing, the Court grants the motion and enters judgment in Allstate's favor on the fourth claim for relief.

I. ALLEGATIONS IN THE COMPLAINT

On February 7, 2019, Benn discovered an alleged vandalism and theft to a storage unit where she kept personal property items. (Complaint, ECF No. 1-2 at ¶¶ 14-15.) At the time of the incident, Benn insured her personal property through Allstate. (Id. ¶¶ 11-13).

Benn reported the claim. (Id. at ¶ 16.) Allstate then raised questions about items claimed as stolen or vandalized that she failed to schedule in her bankruptcy filings. (Id. at ¶ 18.) Allstate also raised questions regarding Benn's financial condition. (Id. at ¶ 20.)

Benn further alleges that Allstate informed her that a witness saw her on a security camera damaging one of her items on the date of the loss. Benn alleges that the actual footage of this incident did not exist at the time of her claim. (Id. at ¶ 21.) Allstate then denied her claim. (Id. at ¶22.)

II. STANDARDS FOR JUDGMENT ON THE PLEADINGS

Allstate may seek judgment on the pleadings once they have closed. Fed. R. Civ. P. 12(c). Allstate's motion is "properly granted when, taking all allegations in the pleading as true, [Allstate] is entitled to judgment as a matter of law." Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co. , 132 F.3d 526, 528 (9th Cir. 1997).

"In a motion for judgment on the pleadings, the Court may consider information ‘contained in materials of which the court may take judicial notice’ and documents attached to the complaint." See Mays v. Wal-Mart Stores, Inc. , 354 F. Supp. 3d 1136, 1141 (C.D. Cal. 2019) (quoting Heliotrope Gen., Inc. v. Ford Motor Co. , 189 F.3d 971, 981 n.18 (9th Cir. 1999) and citing United States v. Ritchie , 342 F.3d 903, 908 (9th Cir. 2003) ).

In this respect, a Rule 12(c) motion is "functionally equivalent" to a motion to dismiss under Rule 12(b)(6) ; the same legal standard applies. Harris v. County of Orange , 682 F.3d 1126, 1131 (9th Cir. 2012) ; Morsa v. Facebook, Inc. , 77 F. Supp. 3d 1007, 1010 (C.D. Cal. 2014), aff'd , 622 F. App'x 915 (Fed. Cir. 2015). Although the Court must accept material factual allegations as true in a Rule 12(b)(6) or Rule 12(c) motion, it is not required to accept as true legal conclusions that are couched as factual allegations. See Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Under a Rule 12(c) motion, a claim for relief may be dispensed with based on: (1) no cognizable legal theory; or (2) insufficient facts to support a cognizable legal claim. Mays v. Wal-Mart Stores, Inc. , 354 F. Supp. 3d 1136, 1141 (C.D. Cal. 2019) ; Id. ("[I]t is common to apply Rule 12(c) to individual causes of action." (internal quotation marks omitted)). Both apply here.

III. BENN'S FOURTH CAUSE UNDER BUSINESS AND PROFESSIONS CODE § 17200 FAILS AS A MATTER OF LAW

Benn's fourth cause of action for violation of the Business and Professions Code section 17200 fails to state a claim for several independent reasons.

A. Benn Has an Adequate Legal Remedy

Benn has an adequate remedy at law, and therefore, cannot pursue her claim for equitable relief. Section 17200 is not "an all-purpose substitute for a tort or contract action."

Cortez v. Purolator Air Filtration Prods. Co. , 23 Cal. 4th 163, 173, 96 Cal.Rptr.2d 518, 999 P.2d 706 (2000) ; accord Korea Supply Co. v. Lockheed Martin Corp. , 29 Cal. 4th 1134, 1150-51, 131 Cal.Rptr.2d 29, 63 P.3d 937 (2003). Rather, it provides for equitable relief only. See Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co. , 20 Cal. 4th 163, 179, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999).

An adequate legal remedy precludes a party from seeking equitable relief. Knox v. Phoenix Leasing Inc. , 29 Cal. App. 4th 1357, 1365, 35 Cal.Rptr.2d 141 (1994) ("Equity is ordinarily meant to operate in these situations [citation omitted], but its operation is subject to the principle that ‘equity follows the law.’ ") (quoting English v. Olympic Auditorium , 217 Cal. 631, 641, 20 P.2d 946 (1933)) ; E.A. Taliaferro v. Dorothy Taliaferro , 144 Cal. App. 2d 109, 113, 300 P.2d 726 (1956) ("There being an available legal remedy equitable relief is not available, and the complaint, therefore, does not state a cause of action for equitable relief"); Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 381, 112 S.Ct. 2031, 2035, 119 L.Ed.2d 157 (1992) ("It is a ‘basic doctrine of equity jurisprudence that courts of equity should not act ... when the moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable relief.’ "); Walters v. Reno , 145 F.3d 1032, 1048 (9th Cir. 1998) ("Injunctive relief is proper only if monetary damages or other legal remedies will not compensate the plaintiffs for their injuries.")

Therefore, to maintain a cause of action for equitable relief, a plaintiff must plead facts "showing that the wrongful act constitutes an actual or threatened injury to property or personal rights which cannot be compensated by an ordinary damage award." Brownfield v. Daniel Freeman Marina Hosp. , 208 Cal. App. 3d 405, 410, 256 Cal.Rptr. 240 (1989).

This rule also applies to section 17200 claims. See Prudential Home Mortgage Co. v. Superior Court , 66 Cal. App. 4th 1236, 1250, 78 Cal.Rptr.2d 566 (1998). In Prudential , the plaintiffs alleged a violation of section 17200 and sought equitable relief. The defendants argued that the availability of equitable relief under section 17200 "is subject to fundamental equitable principles, including inadequacy of the legal remedy." Id. at 1249, 78 Cal.Rptr.2d 566. The court agreed, finding that the legal remedies available to the plaintiffs were adequate, "thus precluding equitable relief under the Business and Professions Code." Id. at 1250, 78 Cal.Rptr.2d 566 ; see also William Stern, Business & Professions Code Section 17200 Practice § 5:239 (Rutter Group 2021) ("If plaintiff has an adequate remedy at law, that could provide a defense to a UCL injunction or restitution claim. That is because the remedies under the UCL involve the exercise of the court's equitable powers. Hence, as with any equitable claim, a plaintiff must show that he or she has no adequate remedy at law") (citations omitted); Redding v. St. Francis Med. Ctr. , 208 Cal. App. 3d 98, 107, 255 Cal.Rptr. 806 (1989) (holding that the normal process of determining availability of injunctive relief is employed under section 17200 ).

Benn raises a number of unpersuasive arguments to the contrary.

First, Benn alleges that obtaining damages from Allstate for breach of contract and bad faith does not prevent Allstate from interacting in a similar fashion with other insureds. (Opp. 6:21-22; 17:6-9). Yet, to the extent those other insureds are damaged, they can also be made whole through claims for breach of contract or bad faith. Or, if some insured has a harm that cannot be addressed through a normal damage award, he or she is free to seek UCL relief.

Second, Benn cites several cases for the proposition that a bad faith claim may, in some cases, support a UCL claim. E.g., Zhang v. Sup. Ct. , 57 Cal. 4th 364, 384, 159 Cal.Rptr.3d 672, 304 P.3d 163 (2013) ; Mass. Mutual Life Ins. v. Superior Ct. , 97 Cal.App.4th 1282, 1285, 119 Cal.Rptr.2d 190 (2002) ; State Farm Fire Casualty Co. v. Superior Court , 45 Cal.App.4th 1093, 1099, 53 Cal.Rptr.2d 229 (1996) ; State Farm Fire and Casualty Co. v. Sup. Ct. (Allegro) , 45 Cal. App. 4th 1093, 1098, 53 Cal.Rptr.2d 229 (1996) ; Troyk v. Farmers Group, Inc. , 171 Cal.App.4th 1305, 1314, 90 Cal.Rptr.3d 589 (2009). (Opp. 11:3-17:2).

An insurance dispute case can raise facts that cannot be addressed through a normal remedy at law. And that was the case in most of the cases that plaintiff relies upon. E.g., Zhang , 57 Cal.4th at 378, 159 Cal.Rptr.3d 672, 304 P.3d 163 ("Zhang's UCL claim is premised on allegations of false advertising."); Mass. Mutual Life Ins. , 97 Cal.App.4th at 1285, 119 Cal.Rptr.2d 190 (life insurance product failed to provide "a guaranteed return on accumulated premium"); Troyk , 171 Cal.App.4th at 1314, 90 Cal.Rptr.3d 589 (insurer's service charge was a hidden premium not stated in the policy in violation of Insurance Code section 381(f) ); Kapsimallis v. Allstate Ins. Co. , 104 Cal.App.4th 667, 669, 128 Cal.Rptr.2d 358 (2002) (homeowners had claims denied under the one-year statute of limitations following the Northridge earthquake and could not obtain relief for late discovered damage without relief from the deadline); Gallimore v. State Farm Fire Casualty Ins. Co. , 102 Cal.App.4th 1388, 1392, 126 Cal.Rptr.2d 560 (2002) (alleged violations of California Department of Insurance market conduct examinations); Wilner v. Sunset Life Insurance Company , 78 Cal.App.4th 952, 961, 93 Cal.Rptr.2d 413 (2000) (Life insurance company "failed to disclose ... that in purchasing new policies they would lose substantial cash values, accumulation account values, pay new and significant commission charges, be subject to new contestability clauses, cash surrender charges, and pay more for insurance at an older insurable age."); Notrica...