Lennar Mare Island, LLC v. Steadfast Ins. Co.
Decision Date | 02 March 2016 |
Docket Number | No. 2:12-cv-02182-KJM-KJN,2:12-cv-02182-KJM-KJN |
Parties | LENNAR MARE ISLAND, LLC, Plaintiff, v. STEADFAST INSURANCE COMPANY, Defendant. AND RELATED COUNTERCLAIMS |
Court | U.S. District Court — Eastern District of California |
The matter is before the court on the motions by Lennar Mare Island, LLC (LMI), and CH2M Hill Constructors, Inc. (CCI) to dismiss Steadfast Insurance Company's Second Amended Counterclaim (SACC). The court granted the parties' stipulated request for an expedited briefing schedule and the matter was submitted for decision without a hearing. As explained below, the motions are granted in part without leave to amend.
The court has summarized the factual and procedural background of this case in previous orders. See, e.g., Order Oct. 16, 2015, at 1-7, ECF No. 306.1 Because much of the SACC parallels its previous iteration, no detailed review is necessary. In summary, Steadfast alleges it issued two insurance policies covering LMI's and CCI's environmental cleanup efforts at the former Mare Island Naval Shipyard in Vallejo California: (1) the Remedial Stop Loss (RSL) Policy, now expired, which was meant to insure against cleanup costs incurred in the cleanup of certain known pollution conditions; and (2) the Environmental Liability Insurance (ELI) policy, which remains in effect and is meant to insure against cleanup costs incurred in the cleanup of previously unknown pollution conditions. See SACC ¶¶ 9-12.
In 2012, LMI filed a complaint in state court alleging Steadfast had not paid certain claims under the ELI Policy. See Not. Rem. Ex. A, ECF No. 1. Steadfast removed the case to this court and filed a counterclaim against both LMI and CCI. See id.; Countercl., ECF No. 5. At that time, Steadfast requested only a declaration of its rights under the RSL policy. See Countercl. at 5. In late 2014, Steadfast received discovery responses from CCI, which Steadfast believed proved CCI and LMI had committed fraud. See generally Mot. Am. Countercl., ECF No. 162. Steadfast requested leave to file an amended counterclaim, and the court granted the request several months later. See Order, ECF No. 290. LMI and CCI then moved to dismiss the amended counterclaim. See ECF Nos. 294, 297-1.
The court granted the motions to dismiss but allowed Steadfast leave to file the SACC so as to bring its pleading into compliance with the heightened requirements of Federal Rule of Civil Procedure 9(b). See Order Oct. 16, at 37. The court also allowed Steadfast to advance a claim for breach of the implied covenant of good faith and fair dealing. See id. The SACC alleges seven claims: (1) equitable accounting; (2) breach of the implied covenant of good faith and fair dealing; (3) restitution; (4) unjust enrichment; (5) negligent misrepresentation; (6) intentional misrepresentation; and (7) declaratory relief. Steadfast requests relief in the form of an accounting, restitution, cancellation of the ELI Policy, compensatory damages, punitive damages, a declaration of its rights under the RSL and ELI policies, and other appropriate relief. SACC at 38. Steadfast attaches copies of the RSL and ELI policies to its pleading. See id. App. A (RSL Policy); id. App. B (ELI Policy).
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The court summarized the applicable legal standard in its previous order:
The court first addresses LMI's and CCI's general argument that the SACC must be dismissed because Steadfast requested leave to amend in bad faith. Then the court turns to each of Steadfast's claims.
In the court's order granting Steadfast leave to amend its counterclaim, the court "question[ed] Steadfast's early-case practice" and found "Steadfast should have been more diligent" in discovering the facts that supported its First Amended Counterclaim. Order Aug. 17, 2015, at 12, ECF No. 290. These facts, Steadfast argued, it had discovered first in late 2014 upon CCI's production of several million new pages of documents; before then Steadfast claimed to have harbored only suspicions and hunches. Despite Steadfast's questionable diligence, the court found "denial of Steadfast's motion would not satisfy the court's duty to ensure fundamental fairness in the litigation before it." Id. Steadfast was allowed leave to file an amended counterclaim. LMI's and CCI's current motions request the court revisit its decision. They argue Steadfast's bad faith is laid bare in the SACC, whose allegations in their view could not stem from any late-2014 production.
Federal district courts enjoy discretion in managing their dockets. See Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991); Hamilton Copper & Steel Corp. v. Primary Steel, Inc., 898 F.2d 1428, 1429 (9th Cir. 1990). Within this discretion is the inherent power to dismiss claims, but dismissal is a harsh remedy reserved for only "extreme circumstances." Hamilton, 898 F.2d at 1429 (citation and quotation marks omitted). The circumstances of this case are not
///// so extreme as to warrant dismissal of the SACC on grounds of bad faith, and dismissal would not serve fundamental fairness.
An accounting claim is equitable in nature, designed to prevent unjust enrichment. Civic W. Corp. v. Zila Indus., Inc., 66 Cal. App. 3d 1, 14 (1977). It is a proceeding in equity meant to obtain a judicial settlement of accounts; the court adjudicates the amount due, administers full relief and renders complete justice. Flores v. EMC Mortgage Co., 997 F. Supp. 2d 1088, 1119-20 (E.D. Cal. 2014). To state a claim, Steadfast must allege (1) a relationship exists between itself, LMI, and CCI that requires an accounting; (2) LMI and CCI engaged in some misconduct; and (3) some balance of money is due to Steadfast that can only be ascertained by an accounting. See Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179 (2009).
In addition, "[a] suit for an accounting will not lie where it appears from the complaint that none is necessary or that there is an adequate remedy at law." Civic W. Corp., 66 Cal. App. 3d at 14 (internal quotation marks omitted); see also Union Bank v. Super Ct., 31 Cal. App. 4th 573, 594 (1995) (). If an accounting claim may be "folded into the fraud and breach of contract causes of action," then an accounting is unnecessary. Se...
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