Fin. Indem. Co. v. Messick
| Decision Date | 08 June 2022 |
| Docket Number | 2:21-cv-01585-KJM-AC |
| Citation | 606 F.Supp.3d 996 |
| Parties | FINANCIAL INDEMNITY COMPANY, Plaintiff, v. Charles S. MESSICK, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
Howard N. Wollitz, Charlston, Revich & Wollitz LLP, Los Angeles, CA, for Plaintiff.
Steven M. Crane, Berkes Crane Santana & Spangler LLP, Los Angeles, CA, for Defendant Jon Messick.
This matter is before the court on defendant's motion to dismiss. The court submitted the matter without oral argument. For the reasons below, the court grants defendant's motion.
On November 18, 2018, Charles C. Messick ("Driver") lost control of the car he was driving, rolled down an embankment, and collided with a fence in Moffat County, Colorado. See First Am. Compl. ¶ 14, ECF No. 6. Charles S. Messick ("Passenger") was riding in the car and sustained "catastrophic injuries." Id. Driver passed away as a result of injuries sustained in the accident.1 Id.
At the time of the accident, Driver was a "listed driver" on a one-year California commercial vehicle insurance policy issued on March 15, 2018 by plaintiff Financial Indemnity Company ("FIC"). Id. ¶ 7. The policy also included Charles S. "Merrick" -- not "Messick" -- as a "listed driver." Id. This was a spelling error: Both parties intended to include Passenger, Charles S. Messick. Id. Importantly, the insurance policy contains an exclusion ("Exclusion 19") providing that "coverage does not apply" to "[b]odily injury to any insured person." Id. ¶ 11. The policy does include coverage, however, when an uninsured or underinsured motorist harms an insured. Id. ¶ 16.
After the accident, Passenger asserted a claim against Driver seeking damages for bodily injuries arising out of the accident. Id. ¶ 15. The claim was tendered to FIC in FIC's capacity as Driver's insurer. Id. FIC denied coverage, citing Passenger's status as an insured and asserting that coverage was therefore barred under Exclusion 19. Id. Passenger then asserted a different claim as an insured of FIC's: because FIC's previous denial of coverage rendered the vehicle involved in the accident an "uninsured vehicle" with respect to Passenger, Passenger claimed coverage under the uninsured/underinsured policy. Id. ¶ 16. This time, FIC paid Passenger $1,000,000, the maximum for the uninsured/underinsured policy. Id. Approximately seven months later, Passenger sued Driver's estate in Colorado state court, seeking damages for bodily injury based on Driver's alleged negligent and reckless operation of the vehicle. Id. ¶ 17. This action also was tendered to FIC, which is defending Driver's estate.
FIC filed suit against Driver and Passenger in this court on September 3, 2021, seeking declaratory relief regarding its contractual obligations and seeking to reform the insurance policy to correct Passenger's misspelled name. See generally First Am. Compl. The clerk entered default against Driver's estate on November 3, 2021. See ECF No. 12.2 Passenger filed his motion to dismiss on November 5, 2021. See ECF No. 13. FIC opposes, ECF No. 14, and Passenger has replied, ECF No. 15. The court submitted the motion without a hearing and resolves it here.
Passenger seeks to dismiss both of FIC's claims: (1) that it does not have a duty to defend or indemnify; and (2) for reformation of its insurance contract. See generally Mot. Dismiss. A threshold question is which state's law applies, and so the court starts there.
In diversity actions, a federal district court applies the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). California courts use both common law and statutory choice of law rules. Compare, e.g. , Kearney v. Salomon Smith Barney, Inc. , 39 Cal. 4th 95, 107–08, 45 Cal.Rptr.3d 730, 137 P.3d 914 (2006) () with , e.g. , Frontier Oil Corp. v. RLI Ins. Co. , 153 Cal. App. 4th 1436, 1459–61, 63 Cal.Rptr.3d 816 (2007) (applying Cal. Civ. Code § 1646 ). In Frontier Oil , the California court of appeal thoroughly reviewed the history of both the governmental interests test and section 1646 before concluding that section 1646 governs disputes involving the interpretation of contracts. See 153 Cal. App. 4th at 1454–61, 63 Cal.Rptr.3d 816 (). Accordingly, California Civil Code section 1646 governs the contract claims at issue in this case.
Under section 1646, a "contract is to be interpreted according to the law and usage of the place where it is to be performed; or, if it does not indicate a place of performance, according to the law and usage of the place where it is made." Cal. Civ. Code § 1646 ; Frontier Oil , 153 Cal. App. 4th at 1450, 63 Cal.Rptr.3d 816. Here, the FIC Policy does not clearly indicate a place of performance. The FIC Policy contemplates coverage "within the United States, its territories or possessions, or Canada or between their ports." FIC Policy at 25,3 First Am. Compl. Ex. 1, ECF No. 6-1. As Passenger points out, the FIC Policy has numerous other provisions that refer to coverage in the United States generally, see Mot. Dismiss at 7, with no provision specifying coverage of a particular state or states. This contrasts with the contract the court analyzed in Frontier Oil , which was issued in Texas but made specific reference to, for example, "claims arising out of ... Oil and Gas Operations at 9865 Olympic Blvd., City of Beverly Hill[s], CA." 153 Cal. App. 4th at 1444, 63 Cal.Rptr.3d 816.
However, even absent an express specification, "[t]he parties’ intention as to the place of performance sometimes can be gleaned from the nature of the contract and the surrounding circumstances." Id. at 1450, 63 Cal.Rptr.3d 816. In Frontier , the insurance policy endorsements specifically named the City of Beverly Hills and the Department of Transportation of the City of Los Angeles as insureds. Id. at 1461, 63 Cal.Rptr.3d 816. The court found these Id. at 1461–62, 63 Cal.Rptr.3d 816. Here as well, unlike the insurance policy in Frontier Oil , the FIC Policy contemplates coverage in the United States generally, singling out no state and offering no clues that can help the court glean the parties’ intention as to the place of performance.
Because the FIC Policy does not clearly indicate a place of performance, the court looks to the place the contract was made, as the statute directs. See Cal. Civ. Code § 1646. Under California law, "[a] contract is ‘made’ in the place of acceptance." Costco Wholesale Corp. v. Liberty Mut. Ins. Co. , 472 F. Supp. 2d 1183, 1197 (S.D. Cal. 2007) (citing ABF Capital Corp. v. Grove Properties Co. , 126 Cal. App. 4th 204, 222, 23 Cal.Rptr.3d 803 (2005) ). Although the parties do not discuss the place of acceptance, the FIC Policy lists the insurance broker and the named insureds with addresses in Marysville, California. See FIC Policy at 2. The court therefore finds the FIC Policy was made in California, and California law applies. Cf. Lexington Ins. Co. v. Energetic Lath & Plaster, Inc. , No. 15-00861, 2015 WL 5436784, at *5 (E.D. Cal. Sept. 15, 2015) ().
A party may move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). The motion may be granted if the complaint lacks a "cognizable legal theory" or if its factual allegations do not support a cognizable legal theory. Godecke v. Kinetic Concepts, Inc. , 937 F.3d 1201, 1208 (9th Cir. 2019) (quoting Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988) ). The court assumes all factual allegations are true and construes "them in the light most favorable to the nonmoving party." Steinle v. City & Cnty. of San Francisco , 919 F.3d 1154, 1160 (9th Cir. 2019) (quoting Parks Sch. of Bus., Inc. v. Symington , 51 F.3d 1480, 1484 (9th Cir. 1995) ). If the complaint's allegations do not "plausibly give rise to an entitlement to relief," the motion must be granted. Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
A complaint need contain only a "short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), not "detailed factual allegations," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). But this rule demands more than unadorned accusations; "sufficient factual matter" must make the claim at least plausible. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. In the same vein, conclusory or formulaic recitations of elements do not alone suffice. Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). This evaluation of plausibility is a context-specific task drawing on "judicial experience and common sense." Id. at 679, 129 S.Ct. 1937.
The court first analyzes whether FIC's allegations, accepted as true and construed in FIC's favor, plausibly give rise to a claim for reformation of the insurance policy. Second, using the same analysis, the court examines FIC's declaratory judgment claim in the face of the pending motion.
Under California law, the statute of limitations for a reformation...
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