Clark v. Allstate Ins. Co.
Decision Date | 27 July 2000 |
Docket Number | No. 00-CV-1102 W JFS.,00-CV-1102 W JFS. |
Citation | 106 F.Supp.2d 1016 |
Court | U.S. District Court — Southern District of California |
Parties | John T. CLARK, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant. |
John T. Richard, San Diego, CA, for Plaintiff.
Peter H. Klee & William P. Cole, Luce, Forward, Hamilton & Scripps, San Diego, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO STRIKE
This matter comes before the Court on a motion to strike filed by Defendant Allstate Insurance Company ("Allstate"). Plaintiff John T. Clark ("Plaintiff") opposes. Both parties are represented by counsel.
On April 7, 2000 Plaintiff commenced this action in San Diego Superior Court against Allstate alleging claims for breach of contract and breach of the implied covenant of good faith and fair dealing. On May 31, 2000 Allstate timely removed this case to district court. (See Not. of Removal ¶ 1).
On June 8, 2000 Allstate filed a motion to strike pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. Plaintiff filed its opposition on July 17, 2000 and Allstate replied on July 24, 2000. The Court thereafter took the motion under submission and issues this Order on the papers submitted pursuant to Civil Local Rule 7.1.d.1.1
Allstate's motion seeks to strike (1) Plaintiff's prayer for punitive damages and (2) Plaintiff's attorney's fees request arising under his breach of contract claim. The Court will address each argument in turn.
Allstate's motion first seeks an order striking any references in Plaintiff's Complaint to punitive damages. Allstate contends the conclusory allegations and facts pled in Plaintiffs' Complaint are inadequate to establish entitlement to punitive damages under California law.
Under California law, when a defendant "has been [found] guilty of oppression, fraud, or malice," the court may award punitive damages. See Cal. Civ. Code § 3294. "Malice" is defined as "conduct which is intended to cause injury to the plaintiff" or "despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others." Id. § 3294(c)(1). "Oppression" is defined as "despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights." Id. § 3294(c)(2). A plaintiff may collect punitive damages for an insurer's breach of the implied covenant of good faith and fair dealing where the plaintiff also establishes the requirements of Section 3294. See, e.g., PPG Indus., Inc. v. Transamerica Ins. Co., 20 Cal.4th 310, 319, 975 P.2d 652, 658, 84 Cal.Rptr.2d 455, 461 (1999); Egan v. Mutual of Omaha, Ins. Co., 24 Cal.3d 809, 820-822, 620 P.2d 141, 147-48, 169 Cal.Rptr. 691, 696-698 (1979).
Allstate points to several California decisions that subject punitive damage prayers to a heightened pleading standard. These decisions generally require a plaintiff to allege specific evidentiary facts to support allegations of malice, oppression or fraudulent intent. See, e.g., Smith v. Superior Court, 10 Cal.App.4th 1033, 1041-42, 13 Cal.Rptr.2d 133, 136 (1992); Brousseau v. Jarrett, 73 Cal.App.3d 864, 872, 141 Cal. Rptr. 200, 205 (1977); Lehto v. Underground Constr. Co., 69 Cal.App.3d 933, 944, 138 Cal.Rptr. 419, 426 (1977); G.D. Searle & Co. v. Superior Court, 49 Cal. App.3d 22, 122 Cal.Rptr. 218 (1975). Citing these cases, Allstate argues that Plaintiff "must allege specific facts that actually show oppression, fraud or malice to support the punitive damages claim." (Def.'s Mot. at 5 (emphasis in original)). Allstate claims Plaintiff's Complaint does not provide the factual specificity required by California law, requiring the Court to strike the prayer for punitive damages.
Allstate is wrong.
It is well-established that federal courts sitting in diversity must apply state substantive law and federal procedural rules. See Computer Economics, Inc. v. Gartner Group, Inc., 50 F.Supp.2d 980, 986 (S.D.Cal.1999) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938)). Where state law directly conflicts with applicable provisions of the Federal Rules of Civil Procedure, federal courts must apply the Federal Rules — not state law. Id. (citing Hanna v. Plumer, 380 U.S. 460, 471, 85 S.Ct. 1136, 1143-44, 14 L.Ed.2d 8 (1965)).2
Although Section 3294 provides the governing substantive law for punitive damages, California's heightened pleading standard irreconcilably conflicts with Rules 8 and 9 of the Federal Rules of Civil Procedure — the provisions governing the adequacy of pleadings in federal court. See, e.g., Bureerong v. Uvawas, 922 F.Supp. 1450, 1480 (C.D.Cal.1996). Specifically, Rule 8(a) requires only that Plaintiff's Complaint include "a short and plain statement of the claim showing that [Plaintiff] is entitled to relief, and ... a demand for judgment for the relief [he] seeks." Fed.R.Civ.P. 8(a). The second sentence of Rule 9(b) further provides that "[m]alice, intent, knowledge, and other conditions of mind of a person may be averred generally." Fed.R.Civ.P. 9(b). As interpreted by the Ninth Circuit, this provision "does not require `any particularity in connection with an averment of intent, knowledge or condition of the mind.'" In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547 (9th Cir.1994) (en banc) (quoting Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir.1973)) (emphasis in GlenFed); Gottreich v. San Francisco Inv. Corp., 552 F.2d 866, 866-67 (9th Cir.1977) ( ). Rules 8(a) and 9(b) therefore preclude district courts from applying a heightened pleading for allegations of malice or fraudulent intent. Cf. Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168, 113 S.Ct. 1160, 1163, 122 L.Ed.2d 517 (1993) ( ). In federal court, a plaintiff may include a "short and plain" prayer for punitive damages that relies entirely on unsupported and conclusory averments of malice or fraudulent intent.
Indeed, several federal district courts in California (including this one) have upheld conclusory assertions that a defendant acted intentionally, with "malice," or with "conscious disregard" as adequate to plead the mental state required under Section 3294. See, e.g., Mantic Ashanti's Cause v. Godfather's Pizza, No. 98-CV-2264 W, 1999 U.S. Dist. LEXIS 16675, at *18-19 (S.D. Cal. June 1, 1999) (); Jackson v. East Bay Hosp., 980 F.Supp. 1341, 1353-54 (N.D.Cal.1997) () (quoting Fed.R.Civ.P. 9(b)); Bureerong v. Uvawas, 922 F.Supp. 1450, 1480-81 (C.D.Cal.1996) ( ); Grecco v. Sanofi Winthrop Pharmaceuticals, No. C-96-3876 FMS, 1997 WL 68551, at *4, 1997 U.S. Dist. LEXIS 23391, at *12-13 (N.D.Cal. Feb. 13, 1997) () ; Pease & Curren Refining, Inc. v. Spectrolab, Inc., 744 F.Supp. 945, 948-49 (C.D.Cal.1990) (, )abrogated on other grounds Stanton Road Assocs. v. Lohrey Enters., 984 F.2d 1015, 1018 (9th Cir.1993); see also Primerica Fin. Servs., Inc. v. Mitchell, 48 F.Supp.2d 1363, 1371 (S.D.Fla.1999) ( ); 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1301 at 676 (2d ed. 1990) (). Thus, Plaintiff need not plead evidentiary facts to support his contention that Allstate had the mental state required to impose punitive damages under Section 3294.3
Here, Plaintiff's Complaint complies with Rules 8 and 9 because it clearly requests punitive damages and makes conclusory assertions of intentional and malicious misconduct. The Complaint alleges that Allstate intentionally denied Plaintiff's insurance claim despite knowledge of its coverage obligations, and that it acted with an intent to injure Plaintiff. (Compl. ¶¶ 17(b), 21). Whether Allstate's allegedly wrongful denial of benefits rises to the sort of morally culpable conduct that justifies punitive damages is an issue that must remain unresolved at this stage of the litigation.4 Because the allegations in the Complaint plead the elements of Section 3294 and comply with federal pleading standards, the Court DENIES Allstate's motion to strike Plaintiff's prayer for punitive damages.
The second part of Allstate's motion seeks an order striking Plaintiff's Complaint to the extent it seeks an award of attorney's fees for breach of contract. Allstate contends the subject...
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