LockandLocate, LLC v. Hiscox Ins. Co.
| Decision Date | 16 July 2021 |
| Docket Number | Case No. 2:20-cv-09416-MCS-AGR |
| Citation | 549 F.Supp.3d 1093 |
| Parties | LOCKANDLOCATE, LLC, a California Limited Liability Company, Plaintiff, v. HISCOX INSURANCE CO., INC., an Illinois Corporation, et al., Defendants. |
| Court | U.S. District Court — Central District of California |
Nicholas Duane Myers, Clifford L. White, Myers Law Group, Newport Beach, CA, for Plaintiff.
James A. Stankowski, Paul S. White, David M. Morrow, Wilson Elser Moskowitz Edelman and Dicker LLP, Los Angeles, CA, for Defendant Hiscox Insurance Company Inc.
Before the Court is Defendant Hiscox Insurance Company, Inc.’s ("Hiscox Insurance") Motion to Dismiss and Strike Plaintiff LockandLocate, LLC's ("LockandLocate") Complaint ("Motion"). Mot., ECF No. 11. Hiscox Insurance filed an Opposition and LockandLocate filed a Reply. Opp'n, ECF No. 12; Reply, ECF No. 13. Hiscox Insurance also filed a Request for Judicial Notice. RJN ISO Mot. ("RJN"), ECF No. 11-1. The Court heard oral argument on January 4, 2021. ECF No. 15. For the following reasons, the Court GRANTS in part and DENIES in part Hiscox Insurance's Motion.
LockandLocate sets forth the following allegations in its Complaint. See generally , Compl., ECF No. 1. LockandLocate, a California limited liability company, uses truck drivers’ cellphone location data to allow its clients to "track the location of commercial trucks" and "see the progress of their brokered loads and deliveries in real time." Id. at ¶¶ 1, 9. Truck drivers allow LockandLocate to use their data in this manner. Id. at ¶ 9. To access this data, LockandLocate contracts with Location Smart, a vendor that obtains "tracking data ... from the major cell phone service providers." Id.
LockandLocate's business model relies on its ability to access Location Smart's location data. See Id. ¶¶ at 9, 10. LockandLocate became "concerned that if" it could not "access" Location Smart's "location data, its business would be negatively impacted" and it may even be "forced out of business." Id. at ¶ 11. LockandLocate sought insurance coverage for this possibility. Id.
LockandLocate contacted Hiscox Insurance to inquire whether Hiscox Insurance could provide insurance coverage for the loss of access to data from "one of its vendors," including Location Smart. Id. at ¶ 13. LockandLocate asked a Hiscox Insurance agent "what type of insurance it would need to cover losses in case it lost a vendor that would cause its application not to work." Id. The agent advised LockandLocate to purchase "business interruption insurance" because "such coverage was available as part of [Hiscox Insurance's] businessowner's policy." Id. While still on the phone with the agent, LockandLocate purchased the business interruption insurance. Id. at ¶ 14.
After LockandLocate bought Hiscox Insurance's policy, Location Smart notified LockandLocate that it "lost its ability to obtain the truck drivers’ location information" from Sprint and it would soon lose its access to Verizon's data. Id. at ¶¶ 15, 16. LockandLocate "submitted a claim" to Hiscox Insurance for "coverage for losses" resulting from Location Smart's inability to obtain the location information. Id. at ¶ 18. LockandLocate also called Hiscox Insurance and a Hiscox Insurance analyst advised LockandLocate that the policy only covered "loss ... from physical damage" to LockandLocate's property. Id. at ¶ 19. LockandLocate provided information to Hiscox Insurance's third party claims administrator but still did not receive coverage. Id. at ¶¶ 20, 21. Hiscox Insurance eventually notified LockandLocate that its policy "did not cover loss of business income of the type claimed by" LockandLocate. Id. at ¶ 22.
Eventually, Location Smart lost access to Verizon's data and could not provide it to LockandLocate. Id. at ¶ 23. LockandLocate had to "shut down its business as its application ceased to function properly." Id. LockandLocate submitted another claim to Hiscox Insurance and Hiscox Insurance again denied the claim. Id. at ¶¶ 24, 26. LockandLocate also repeatedly asked for Hiscox Insurance to provide a copy of a recording of the phone call between LockandLocate and the Hiscox Insurance agent that sold the Policy. Id. at ¶¶ 24, 27. Hiscox Insurance declined to provide the recording. Id. at ¶¶ 25, 26.
LockandLocate asserts that Hiscox Insurance and its agent damaged LockandLocate by misrepresenting what the policy covered and failing to cover certain business interruptions. Id. at ¶ 28. LockandLocate alleges the following claims: (1) breach of oral contract; (2) breach of the duty of good faith and fair dealing (bad faith); (3) intentional misrepresentation; (4) negligent misrepresentation; (5) negligence; (6) reformation; and (7) violation of Cal. Bus. & Prof. Code § 17200, et seq. Id. at ¶¶ 29–75. LockandLocate attached the following documents to its Complaint: (1) the policy between LockandLocate and Hiscox Insurance (Ex. 1); (2) Location Smart's letter to LockandLocate advising LockandLocate of changes in its ability to access Sprint's and Verizon's data (Ex. 2); (3) a letter from Engle Martin, Hiscox Insurance's third party claims administrator, to LockandLocate regarding LockandLocate's claim (Ex. 3); (4) Hiscox Insurance's letter to LockandLocate that explains its decision to decline coverage (Ex. 4); (5) a letter from Hiscox Insurance's counsel to LockandLocate addressing coverage (Ex. 5); and (6) a letter from Hiscox Insurance explaining its decision to deny coverage (Ex. 6). ECF Nos. 1-1–1-6.
Hiscox Insurance moves to dismiss all claims and strike punitive damages from the negligence claim. See generally , Mot.
Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for "failure to state a claim upon which relief can be granted." "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ "
Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "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, 129 S.Ct. 1937.
The determination of whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. Generally, a court must accept the factual allegations in the pleadings as true and view them in the light most favorable to the plaintiff. Park v. Thompson , 851 F.3d 910, 918 (9th Cir. 2017) ; Lee v. City of Los Angeles , 250 F.3d 668, 679 (9th Cir. 2001). But a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
Averments of fraud are subject to the heightened pleading standard of Rule 9(b). See Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1105 (9th Cir. 2003). To meet Rule 9(b), a plaintiff must "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). The complaint must identify the "who, what, when, where, and how" of the fraudulent misconduct, "as well as what is false or misleading about" it, and "why it is false." Cafasso v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks omitted).
As a general rule, leave to amend a complaint that has been dismissed should be freely granted unless it is clear the complaint could not be saved by any amendment. Fed. R. Civ. P. 15(a) ; Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008).
Federal Rule of Civil Procedure 12(f) provides that a court may "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The function of a motion to strike is "to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Whittlestone, Inc. v. Handi-Craft Co. , 618 F.3d 970, 973 (9th Cir. 2010) (internal quotation marks omitted). Motions to strike "are generally regarded with disfavor because of the limited importance of pleading in federal practice," and they "are generally not granted unless it is clear that the matter sought to be stricken could have no possible bearing on the subject matter of the litigation." Gaines v. AT&T Mobility Servs., LLC , 424 F. Supp. 3d 1004, 1014 (S.D. Cal. 2019) (internal quotation marks omitted).
Hiscox Insurance requests that this Court take judicial notice of the following documents:
RJN ISO Mot. ¶¶ 1–4, ECF No. 11-1. The Court takes judicial notice of the existence of the press releases (Ex.’s C, D) but does not take "judicial notice of the truth of the facts" in these press releases. Gerritsen v. Warner Bros. Ent. Inc. , 112 F. Supp. 3d 1011, 1029 (C.D. Cal. 2015). The Court declines to take judicial notice of the two letters (Ex.’s A, B) because it is unnecessary for the purposes of ruling on this motion.
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