Camp Richardson Resort, Inc. v. Phila. Indem. Ins. Co.

CAMP RICHARDSON RESORT, INC., Plaintiff, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant.

No. 2:15-cv-01101-TLN-AC

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

November 8, 2016

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

This matter is before the court pursuant to Defendant Philadelphia Indemnity Insurance Company's ("Defendant") Motion to Dismiss Plaintiff's First Amended Complaint. (ECF No. 23.) Plaintiff Camp Richardson Resort ("Plaintiff") filed an opposition. (ECF No. 31.) Defendant filed a reply. (ECF No. 33.) The Court, having read and carefully considered the briefing filed by both parties, hereby GRANTS Defendant's Motion to Dismiss with prejudice.¹ (ECF No. 23.)

I. FACTUAL AND PROCEDURAL BACKGROUND

On May 5, 2015, Plaintiff filed a complaint seeking declaratory relief and damages forbreach of contract and breach of the covenant of good faith against Defendant. (ECF No. 2.) The complaint arises from a third-party suit against Plaintiff by the Jameson Beach Property Owners' Association and other individuals ("third party"), currently pending in this District, Case No. 2:13-cv-01025-MCE-AC ("Jameson action").

Plaintiff is a year-round resort on the shores of Lake Tahoe, including a marina, hotel, ice cream parlor, restaurant, cabins and campground. It is owned by the United States Forest Service ("USFS") and operated by Plaintiff under Special Use Permits. A subdivision of lakeside homes, the Jameson Beach Subdivision, lies to the east of Plaintiff. A partially-paved 25-foot strip of land on Plaintiff's eastern boundary provides access from State Highway 89 to the main camp facility, the marina, and to the public beach. It is identified as "Jameson Beach Road." Plaintiff, at the direction of the USFS, provides public parking spaces along Jameson Beach Road and controls the flow of traffic from Highway 89 into the camp via a traffic kiosk. The Jameson Beach Subdivision property owners and guests use the roadway for ingress and egress.² (ECF No. 15 at 2.)

On May 22, 2013, the third party initiated a lawsuit against Plaintiff and others, alleging claims for: (1) inverse condemnation; (2) deprivation of civil rights due to local government policy or custom; (3) due process; (4) equal protection; (5) due process³; (6) private nuisance; (7) trespass; (8) public nuisance; (9) unfair competition; (1) intentional infliction of emotional distress; (11) negligent infliction of emotional distress; (12) unjust enrichment; and (13) negligence. (ECF No. 18-1 at 213.)

On July 24, 2014, the third party plaintiffs amended their complaint to allege the following claims: (1) quiet title against the Forest Service; (2) quiet title against other defendants; (3) interference with easement; (4) partition; (5) ejectment; (6) inverse condemnation; (7) trespass; (8) unfair competition; (9) public nuisance; (10) private nuisance; (11) intentional infliction of emotional distress; (12) negligent infliction of emotional distress; (13) unjustenrichment; (14) negligence; and (15) Freedom of Information Act violations. (ECF No. 18-1 at 243.) Relevant to the remaining claims in this action, the third party's amended complaint alleged that Plaintiff's patrons "are often loud, boisterous, drunk, and frequently trespass onto [Jameson Beach] property and docks causing [Jameson Beach's] special injury in the loss of comfort and enjoyment in their homes." (ECF No. 18-1 at 266.)

On May 20, 2015, Plaintiff filed suit against Defendant for declaratory relief, breach of contract, and breach of the covenant of good faith and fair dealing. Plaintiff alleged that it was entitled to a defense in the Jameson action under the Coverage A, Coverage B, and Liquor Liability Coverage insuring agreements in Defendant's policy. Plaintiff is insured by Defendant under a commercial general liability coverage policy ("CGL Policy"), which contains one relevant provision to this instant action, the Liquor Liability Coverage. Under the Liquor Liability Coverage, Plaintiff is insured against liability for damages because of 'injury' ...[if] such 'injury' is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage. (ECF No. 2-1 at 203.)

On July 17, 2015, Defendant moved to dismiss Plaintiff's complaint for failure to state a claim, arguing that the facts do not support a duty to defend or indemnify under the CGL Policy. (ECF No. 9.) The Court granted Defendant's motion to dismiss, but allowed Plaintiff leave to file an amended complaint to submit additional authorities and arguments, or plead other facts that could withstand a motion to dismiss. (ECF No. 15 at 14.)

On January 13, 2016, Plaintiff filed a First Amended Complaint alleging claims for declaratory relief and breach of contract. (ECF No. 18.) Defendant moved to dismiss Plaintiff's First Amended Complaint for failure to state a claim, asserting that the facts again do not support a duty to defend or indemnify under the CGL Policy. (ECF No. 23-1.)

II. STANDARD

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of Civil Procedure 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 556U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim . . . is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. 544, 556 (2007)).

Nevertheless, a court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged[.]" Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 697 (quoting Twombly, 550 U.S. at 570). Only where a plaintiff fails to "nudge[] [his or her] claims . . . acrossthe line from conceivable to plausible[,]" is the complaint properly dismissed. Id. at 680. While the plausibility requirement is not akin to a probability requirement, it demands more than "a sheer possibility that a defendant has acted unlawfully." Id. at 678. This plausibility inquiry is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998).

If a complaint fails to state a plausible claim, "'[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.'" Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in denying leave to amend when amendment would be futile). Although a district court should freely give leave to amend when justice so requires under Federal Rule of Civil Procedure 15(a)(2), "the court's discretion to deny such leave is 'particularly broad' where the plaintiff has previously amended its complaint[.]" Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)).

III. ANALYSIS

A. First Cause of Action: Declaratory Relief

In the instant matter, Plaintiff requests a judicial determination of the parties' rights and duties under Defendant's CGL Policy as they pertain to Plaintiff's right to a defense and indemnification from the third party action. (ECF No. 18 at 11.) Under California law, an...