Van Winkle v. Allstate Ins. Co., EDCV 03-00622-VAP(SGLx).
| Decision Date | 30 October 2003 |
| Docket Number | No. EDCV 03-00622-VAP(SGLx).,EDCV 03-00622-VAP(SGLx). |
| Parties | Gaurasundari VAN WINKLE and Anne Van Winkle, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, the Hartford Financial Services Group, and Does 1 through 10, Inclusive, Defendants. |
| Court | U.S. District Court — Central District of California |
Allen R. Ball, Brian Yorke, Ball & Yorke, Ventura, CA, for Plaintiffs.
Gregory Michael MacGregor, Deborah A. Berthel, MacGregor & Berthel, Woodland Hills, CA, for Defendants.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND GRANTING PLAINTIFFS LEAVE TO AMEND
Defendant Allstate's Motion to Dismiss and Motion to Strike came before the Court for hearing on October 28, 2003. After reviewing and considering all papers filed in support of, and in opposition to, the Motions, as well as the arguments advanced by counsel at the hearing, the Court GRANTS Defendant's Motion to Dismiss and GRANTS Plaintiffs leave to amend.
On or about June 11, 2000, Mr. Johan Reyes ("Reyes"), of New York, rented a 2000 Ford Explorer from Budget Rent-A-Car ("Budget") located in Los Angeles, California pursuant to a rental agreement. Reyes purchased insurance for the vehicle from Budget but did not list Mr. Chia Chang ("Chang"), also of New York, as a driver of that vehicle. [Id.]
On or about June 11, 2000, Chang was driving the vehicle owned by Budget and rented to Reyes. [Id. ¶ 18.] Chang caused a motor vehicle collision with a vehicle owned by Plaintiff Anne Van Winkle and driven by Plaintiff Gaurasundari Van Winkle ("Plaintiffs"), citizens and residents of Nevada. [Id. ¶¶ 9, 18.] The accident occurred in the State of California. [Id. ¶ 15.]
Plaintiffs allege that at the time of the collision Reyes was covered by an automobile liability insurance policy issued by Defendant Hartford Financial Services Group ("Hartford"), a Connecticut corporation with its principal place of business in Connecticut. [Id. ¶¶ 6, 18.] Plaintiffs allege that Chang was covered by an automobile liability insurance policy issued to Chang's parents by Defendant Allstate Insurance Company ("Allstate"), an Illinois corporation with its principal place of business in Illinois. [Id. ¶¶ 5, 18.]
On or about July 27, 2000, Budget denied coverage for the collision because Reyes, who had rented the vehicle from Budget, had not listed Chang as a driver on the rental agreement. [Id. ¶ 19.]
On or about June 1, 2001, Plaintiffs filed suit against Chang and Reyes in the Superior Court of California, County of San Bernardino, case number BCV05682. [Id. ¶ 20.] The Complaint and Statement of Damages was served on Chang and Reyes at their respective residences in the State of New York. [Id.] Neither Chang nor Reyes were provided a defense by their insurers and both Chang and Reyes failed to answer Plaintiffs' Complaint or otherwise appear before the Superior Court. [Id.]
Plaintiffs allege that Defendants Hartford and Allstate were given "reasonable notice" of the lawsuit and had an opportunity to defend the suit prior to entry of judgment. [Id. ¶ 21.]
On or about October 10, 2001, a request for entry of judgment was entered by the California Court against Chang and Reyes. [Id. ¶ 22.] Thereafter, Plaintiffs allege that Allstate and Hartford denied coverage for the collision because Chang was operating the vehicle without the permission of the vehicle's owner, Budget. [Id. ¶ 23.] On or about May 7, 2002, the California Court entered judgment against Chang and Reyes in the amounts of $403,317.66 for Gaurasundari Van Winkle and $199,710.16 for Anne Van Winkle. [Id. ¶ 25.] Plaintiffs allege that the judgment is final but that no part of the judgment has been paid by Defendants Hartford and Allstate. [Id. ¶ 26.]
On June 3, 2003, Plaintiffs filed a Complaint ("Compl.") in this Court against Defendants Allstate and Hartford, as judgment creditors, under California Insurance Code § 11580. [Id. at 1, 6:9-25.] In addition, Plaintiffs seek exemplary and punitive damages under California Civil Code § 3294. [Id. ¶ 28.]
On September 18, 2003, Defendant All-state filed a Motion to Dismiss ("Dismiss Mot.") and a Motion to Strike Portions of Plaintiffs' First Amended Complaint ("Strike Mot."). On October 3, 2003, Plaintiffs filed an Opposition to the Motion to Dismiss ("Dismiss Opp'n") and an Opposition to the Motion to Strike ("Strike Opp'n"). On October 14, 2003, Allstate filed a Reply regarding the Motion to Dismiss ("Dismiss Reply") and a Reply regarding the Motion to Strike ("Strike Reply"). On October 15, 2003, Plaintiffs filed a Surrebuttal on the Motion to Strike and Allstate filed a Reply to the Surrebuttal on October 21, 2003.1
Under Rule 12(b)(6), a party may bring a motion to dismiss for failure to state a claim upon which relief can be granted. Dismissal is appropriate when it is clear that no relief could be granted under any set of facts that could be proven consistent with the allegations set forth in the complaint. See Williamson v. General Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir.2000); Big Bear Lodging Ass'n v. Snow Summit, Inc., 182 F.3d 1096, 1101 (9th Cir.1999).
The Court must view all allegations in the complaint in the light most favorable to the non-movant and must accept all material allegations—as well as any reasonable inferences to be drawn from them—as true. See Big Bear Lodging Ass'n, 182 F.3d at 1101; American Family Ass'n. Inc. v. City and County of San Francisco, 277 F.3d 1114, 1120 (9th Cir.2002). The Court cannot grant the motion to dismiss "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
Plaintiffs' Complaint assumes that California law applies in this case. [Compl.] Defendant Allstate asserts that New York law should be applied and that a conflict exists between the applicable New York and California laws. [Dismiss Mot. at 8:1-7.]
The threshold question is which state's choice of law rules apply. Defendant asserts, and Plaintiffs agree, that California's choice of law rules should be used in determining whether California or New York substantive law applies. [Dismiss Mot. at 4:25-27; Dismiss Opp'n at 2:3-5.] This is a diversity action under 28 U.S.C. § 1332. [Compl. ¶ 12.] "When a federal court sits in diversity, it must look to the forum state's choice of law rules to determine the controlling substantive law." Patton v. Cox, 276 F.3d 493, 495 (9th Cir.2002) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed 1477 (1941)). Because the case was filed in the Central District of California, the Court looks to California's choice of law rules. See id.
"Questions of choice of law are determined in California ... by the `governmental interest analysis.'" Offshore Rental Co. v. Continental Oil Co., 22 Cal.3d 157, 161, 148 Cal.Rptr. 867, 583 P.2d 721 (1978). Under this approach, "the forum in a conflicts situation `must search to find the proper law to apply based upon the interests of the litigants and the involved states.'" Id. (quoting Reich v. Purcell, 67 Cal.2d 551, 553, 63 Cal.Rptr. 31, 432 P.2d 727 (1967)). "The first step of the analysis is to examine the laws of the states involved." Denham v. Farmers Ins. Co., 213 Cal.App.3d 1061, 1065, 262 Cal.Rptr. 146 (1989).
The matter presently before the Court involves two states: California, the forum and site of the underlying automobile collision; and New York, the state of residence of the underlying tortfeasor, the location of his insurance agent, and the state whose law is referenced in the insurance policy. [Appendix to Dismiss Mot. (Policy) passim.]2 The fact that two states are involved does not itself indicate that there is a "conflict of laws" or "choice of law" problem. Hurtado v. Super. Ct., 11 Cal.3d 574, 114 Cal.Rptr. 106, 522 P.2d 666 (1974), quoted in Offshore, 22 Cal.3d at 161-62, 148 Cal.Rptr. 867, 583 P.2d 721. "There is obviously no problem where the laws of the two states are identical." Hurtado, 11 Cal.3d at 580, 114 Cal.Rptr. 106, 522 P.2d 666.
Here, the laws of California and New York are not identical. Each state has a "direct action" statute but the contours of the laws differ. Under California law, all policies insuring against losses "resulting from liability for injury suffered by another person" or losses "to property caused by ... any vehicle" will be construed as containing the following provision:
A provision that whenever judgment is secured against the insured or the executor or administrator of a deceased insured in an action based upon bodily injury, death, or property damage, than an action may be brought against the insurer on the policy and subject to its terms and limitations, by such judgment creditor to recover on the judgment.
Cal. Ins.Code § 11580.
Under New York law, liability insurance issued in the state must contain the following provision:
A provision that in case judgment against the insured ... in an action brought to recover damages for injury sustained ... shall remain unsatisfied at the expiration of thirty days from the serving of notice of entry of judgment upon the attorney for the insured, or upon the insured, and upon the insurer, then an action may ... be maintained against the insurer under the terms of the policy or contract for the amount of such judgment not exceeding the amount of the applicable limit of coverage under such policy.
N.Y. Ins. Law § 3420(a)(2).
As Defendant points out, there are at least two important differences between the California law and the New York law. [Dismiss Mot. at 2:22-3:17.] First, under New York law, a litigant must wait thirty days until after notice of entry...
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