King v. Nat'l Gen. Ins. Co.
| Decision Date | 16 May 2016 |
| Docket Number | Case No. 15-cv-00313-DMR |
| Citation | 186 F.Supp.3d 1062 |
| Parties | Edd King, et al., Plaintiffs, v. National General Insurance Company, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Michael Francis Ram, Susan S. Brown, Karl Olson, Jeffrey B. Cereghino, Ram, Olson, Cereghino & Kopczynski LLP, San Francisco, CA, William Craig Bashein, John Phillip Hurst, Bashein and Bashein, Cleveland, OH, for Plaintiffs.
Mona Z. Hanna, Todd Harrison Stitt, Michelman and Robinson, LLP, Irvine, CA, Marc Russell Jacobs, Michelman Robinson LLP, Los Angeles, CA, for Defendants.
ORDER ON MOTION TO DISMISS CORRECTED SECOND AMENDED COMPLAINT AND MOTION TO STRIKE
Qualified California drivers are entitled to purchase "Good Driver Discount" auto insurance policies. Plaintiffs Edd King, Diedre King, Elmo Sheen, and Sheila Lee allege that they are qualified "Good Drivers." Plaintiffs allege that Defendants National General Insurance Company ("NGIC"), National General Assurance Company ("NGAC"), Integon National Insurance Company ("Integon National"), Integon Preferred Insurance Company ("Integon Preferred"), MIC General Insurance Corporation ("MIC"), Personal Express Insurance Company ("Personal Express"), and Sequoia Insurance Company ("Sequoia") share common ownership, management or control, and therefore belong to the same "control group." Plaintiffs bring this putative class action alleging that Defendants failed to cross-offer to Plaintiffs and putative class members the lowest Good Driver rates available within Defendants' control group, as required by California law.
Defendants previously moved to dismiss the complaint and to strike certain allegations. The court held that Plaintiffs had sufficiently alleged injury-in-fact for Article III standing, and that Plaintiffs' claim did not involve challenges to rates approved by the Department of Insurance ("DOI") or DOI's ratemaking authority, and therefore did not fall within DOI's exclusive jurisdiction. Now before the court are Defendants' second motion to dismiss ("Mot.") pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), and second motion to strike ("MTS") pursuant to Federal Rule of Civil Procedure 12(f). [Docket Nos. 75, 76.]
The court held a hearing on the motions on February 11, 2016. At the hearing, Plaintiffs informed the court that there were factual errors in their Second Amended Complaint related to the Plaintiffs' policies, premiums, and calculations of premium overcharges. Plaintiffs subsequently filed a Corrected Second Amended Complaint. ("CSAC" [Docket No. 90] ). The parties agree that the corrections do not require re-briefing of Defendants' motion to dismiss or motion to strike. [Docket No. 89.]
For the reasons stated below, the motion to dismiss is granted, and the motion to strike is denied without prejudice.
The information in this section is derived from the allegations in the CSAC unless otherwise noted. California requires insurers that provide private passenger automobile insurance ("PPA" policies) to offer a Good Driver discount to qualified drivers. CSAC at ¶ 1. See also Cal. Ins. Code § 1861.025 (); § 1861.02(b)(1) (); § 1861.02(b)(2) (). Plaintiffs all held insurance policies issued by one or more of the Defendants. Plaintiffs allege that they, along with all members of the putative class, qualify as "Good Drivers" as defined by California statute. CSAC at ¶¶ 3, 4, 21.
According to Plaintiffs, the Defendant insurers are commonly owned or operated under common management, and therefore belong to a control group called the "AmTrust Group." Cal. Ins. Code § 1861.16(b) ; CSAC at ¶¶ 1, 16, 75. More specifically, Plaintiffs allege that from at least January 1, 2008, "Defendants' applicable policy form filings, rate filings, rule filings and/or marketing representations with respect to the offering of the policies at issue and the Good Driver discounts were all drafted, developed, filed and/or approved for use by each Defendant insurer in the same or similar manner and by the same managers and personnel." Id. at ¶ 17. Defendants hold themselves out as a single entity when marketing their insurance products, including offering a Good Driver Discount policy for California automobile policyholders. Id. at ¶ 18. There is actual or apparent agency among the Defendants with respect to the conduct, marketing of policies, marketing of Good Driver discounts and the resulting legal and contractual responsibilities of each of the Defendant companies on behalf of the other named Defendant companies. Id. Plaintiffs assert that Defendants NGIC, NGAC, Integon National, Integon Preferred, and MIC have been members of AmTrust Group since prior to the commencement of the January 1, 2008 class period. Id. at ¶ 75. Plaintiffs further contend that Defendants Personal Express and Sequoia have been members of the AmTrust Group since April 2013. Id.
California law requires an agent or representative of any insurer within a control group to offer a qualified Good Driver the policy with the lowest rates for that coverage offered by any of the insurers within the control group. CSAC at ¶ 25. See also Cal. Ins. Code § 1861.16(b) (). The parties refer to this duty as the "cross-offer" requirement of section 1861.16(b).
The California Insurance Code provides certain exemptions from the cross-offer requirement. Cal. Ins. Code § 1861.16(c)(1). However, Plaintiffs allege that Defendants do not meet the criteria for any cross-offer exemption. CSAC at ¶ 27.
Plaintiffs allege that "[a]cting together in concert and holding themselves out to be a single entity, [Defendants] have unlawfully failed to offer and sell Good Driver discounted private passenger automobile policies to Plaintiffs and other qualified California Good Drivers in the Class offering the lowest rates for that coverage," and "failed to offer and sell the policies from their Control Group with the lowest Good Driver rates that were legally required under applicable law, and/or contained in Defendants' Control Group regulatory filings." CSAC at ¶¶ 1, 4, 28, 40.
Furthermore, Plaintiffs allege that Defendants did not inform overcharged policyholders of their right to be reimbursed for their premium overpayments, and did not make the required reimbursements when overcharges were discovered. Id. at ¶ 36. Instead, "as a Control Group, Defendants maintain and/or maintained substantially uniform and systematic policies, procedures and practices designed to conceal this wrongful conduct from Plaintiffs and the Class." Id. According to Plaintiffs, "[b]ecause of Defendants' active concealment and ongoing fraudulent actions..., the Plaintiffs and the Class were not reasonably able to discover Defendants' wrongful conduct and/or the premium overcharges ...." Id. at ¶ 42; see also ¶ 101.
Plaintiffs bring seven claims for relief: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) declaratory and injunctive relief; (4) fraud and misrepresentation; and (5)-(7) violations of California's Unfair Competition Law ("UCL"), codified at California Business and Professions Code § 17200 et seq ., for unlawful, unfair, and fraudulent business practices.
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus., Inc. v. Symington , 51 F.3d 1480, 1484 (9th Cir.1995). A court may dismiss a claim "only where there is no cognizable legal theory" or there is an absence of "sufficient factual matter to state a facially plausible claim to relief." Shroyer v. New Cingular Wireless Servs., Inc. , 622 F.3d 1035, 1041 (9th Cir.2010) (citing Ashcroft v. Iqbal , 556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Navarro v. Block , 250 F.3d 729, 732 (9th Cir.2001) ) (quotation marks omitted). A claim has facial plausibility when a 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, 129 S.Ct. 1937 (citation omitted). In other words, the facts alleged must demonstrate "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ); see Lee v. City of L.A. , 250 F.3d 668, 679 (9th Cir.2001), overruled on other grounds by Galbraith v. Cnty. of Santa Clara , 307 F.3d 1119 (9th Cir.2002) ; Moss v. U.S. Secret Serv. , 572 F.3d 962, 969 (9th Cir.2009) ().
When reviewing a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must "accept as true all of the...
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