W. Edna Assocs. v. Twin City Fire Ins. Co.
| Decision Date | 18 March 2020 |
| Docket Number | Case No.: 2:19-cv-00607-GMN-BNW |
| Parties | WEST EDNA ASSOCIATES, LTD., Plaintiff, v. TWIN CITY FIRE INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
Pending before the Court is the Motion to Dismiss, (ECF No. 8), filed by Defendant Twin City Fire Insurance Company ("Twin City"). Plaintiff West Edna Associates, Ltd., doing business as Mojave Electric ("Plaintiff") filed a Response, (ECF No. 12), and Twin City filed a Reply, (ECF No. 14).
Also pending before the Court is the Motion to Remand, (ECF No. 9), filed by Plaintiff. Twin City filed a Response, (ECF No. 10), and Plaintiff filed a Reply, (ECF No. 13).
Also pending before the Court is Twin City's Motion for Leave to Supplement its Response to the Motion to Remand, (ECF Nos. 18, 21). Plaintiff filed a Response, (ECF No. 23), and Twin City did not file a reply.
Also pending before the Court is the Motion to Dismiss, (ECF No. 22), filed by Defendant Harris Insurance Services, Inc. ("Harris"). Plaintiff filed a Response, (ECF No. 24), and Harris did not file a reply.1
Also pending before the Court is Harris's Motion to Strike, (ECF No. 25). Plaintiff filed a Response, (ECF No. 26), and Harris did not file a reply.
This matter arises from an insurance dispute involving a commercial insurance liability policy. . Plaintiff alleges its insurance provider, Twin City, wrongfully denied insurance coverage for a lawsuit filed against it in the Eighth Judicial District Court ("state court"). . Plaintiff also sues its insurance broker, Harris, for allegedly breaching its duty to timely report a claim to Twin City, on Plaintiff's behalf. (Id. ¶ 64-68). The facts are as follows:2
A. Policies Issued by Twin City to Plaintiff
Through Harris, Plaintiff purchased insurance policy number 00 KB 0229077-11 (the "2011 Policy") from Twin City. (Compl. ¶ 7). The "Policy Period" of the 2011 Policy was from March 1, 2011 to March 1, 2012. (2011 Policy at 3, Ex. 1 to Twin City MTD, ECF No. 8-1) (providing March 1, 2011 as the "Inception Date" and March 1, 2012 as the "Expiration Date"); (Id. at 10) (defining "Policy Period" as the period from the Inception Date to the Expiration Date). The 2011 Policy included four "Coverage Parts" including a "Directors, Officers and Entity Liability Coverage Part" ("D&O Liability Part"). (Id. at 45). Relevant here, the D&O Liability Part provided that Twin City "shall pay Loss on behalf of an Insured Entity resulting from an Entity Claim first made against such Insured Entity during the Policy Period or Extended Reporting Period, if applicable, for a Wrongful Act by an Insured Entity." (Id. at 19); (Compl. ¶ 8).
The "Insured Entity" was defined as Plaintiff. (Id. at 3). The term "Entity Claim" was defined as any:
(Id. at 20). In addition, the term "Wrongful Act" was defined, in relevant part, as "any actual or alleged . . . error, misstatement, misleading statement, act, omission, neglect, or breach of duty committed by . . . an Insured Entity." (Id. at 40).
The Common Terms and Conditions contained a section entitled Notice of Claim that was applicable to "all Liability Coverage Parts," including the D&O Liability Part. (Id. at 9). The Notice of Claim section stated, in relevant part:
As a condition precedent to coverage under this Policy, the Insureds shall give the Insurer written notice of any Claim as soon as practicable after a Notice Manager becomes aware of such Claim, but in no event later than sixty (60) calendar days after the termination of the Policy Period, or any Extended Reporting Period as described in Section IX.
(Id. at 13). The term Claim as used in the Notice of Claim section included any Entity Claim. (Id. at 8, 19).
Effective March 1, 2012, Twin City issued policy number 00 KB 0229077-12 to Plaintiff (the "2012 Policy"). (2012 Policy at 3, Ex. 2 to Twin City MTD, ECF No. 8-2). The Policy Period of the 2012 Policy was March 1, 2012 to March 1, 2013. (Id.). Twin Citysubmits, and Plaintiff does not dispute, that "[o]ther than the Policy Period, the terms and conditions of the 2012 Policy were the same in all relevant respects to the 2011 Policy." (Twin City MTD at 4).
B. The Underlying Action
In early 2010, Plaintiff was selected as the electrical subcontractor for the new Las Vegas City Hall construction project ("Project"). (Compl. ¶ 11). Plaintiff's work included installing the building's emergency standby power system. (Id. ¶ 12). The materials for the emergency standby power system were provided by non-party Cashman Equipment Company ("Cashman"). (Id. ¶ 13). On September 30, 2011, Cashman filed a complaint in state court against Plaintiff and several other defendants, including CAM Consulting Co. (the "Underlying Action"). (Id. ¶ 19). Cashman alleged that it entered into an agreement with CAM Consulting Co. ("CAM") whereby Cashman agreed to sell equipment to CAM for the total price of $755,893.89, to be incorporated into the Project. ( .3 Further, Plaintiff contracted with CAM to purchase the electrical equipment that CAM had agreed to buy from Cashman. (Id. ¶ 88). Additionally, Cashman alleged that despite being aware that CAM was purchasing the equipment from Cashman, Plaintiff "refused to issue a joint check payable to both CAM and [Cashman] to pay for the equipment [Cashman] supplied to the Project." (Id. ¶¶ 8990). Instead, Plaintiff issued payment for the equipment directly to CAM. (Id. ¶ 91). Moreover, after receiving the funds to payCashman from Plaintiff, CAM failed to pay for the equipment. (Id. ¶¶ 20, 31). While failing to pay Cashman, CAM allegedly wrote two checks to Plaintiff for the total amount of $275,636.70. (Id. ¶ 92).
Cashman brought four causes of action against Plaintiff: (1) foreclosure of surety interest; (2) enforcement of mechanic's lien release bond; (3) unjust enrichment; and (4) contractor's license bond claim. (Compl. ¶ 20). Following a bench trial, an appeal, and a reversal by the Nevada Supreme Court, the Underlying Action was settled. (Id. ¶ 25). In defending and settling the Underlying Action, Plaintiff alleges it incurred $1,739,565.54 in fees and expenses. (Id. ¶ 26).
C. Plaintiff's Notice of Claim to Twin City and the Instant Action
Plaintiff alleges that once it "learned the facts and allegations justifying coverage," Plaintiff, "through [Harris], submitted a timely claim to Twin City." (Id. ¶ 29). "Twin City received notice of [Plaintiff's] claim on February 25, 2013." (Id. ¶ 31). On December 12, 2013, Twin City denied Plaintiff's claim. (Id. ¶ 33). According to Twin City, the claim was untimely and "the Policy's contractual liability exclusion precluded coverage." (Id. ¶¶ 34, 36). On April 17, 2018, following the settlement of the Underlying Action, Plaintiff "renewed its claim with Twin City." (Id. ¶ 38). However, Twin City denied Plaintiff's claim reasserting the reasons given in 2013. (Id. ¶ 39). Over the course of the following months, Plaintiff provided Twin City with additional documentation supporting its position that it was entitled to coverage. (Id. ¶ 40). "[O]n December 7, 2018, Twin City again denied [Plaintiff's] claim for the same two reasons." (Id. ¶ 41). On January 10, 2019, Plaintiff sent Twin City a letter asserting that, under the facts and Nevada law, Plaintiff was entitled to coverage. (Id. ¶ 42). On March 1, 2019, Twin City sent Plaintiff a letter denying coverage "for the same two reasons." (Id. ¶ 43).
Plaintiff filed the instant action in state court on March 7, 2019, and Twin City subsequently removed to this Court on the basis of diversity jurisdiction. (See Pet. Removal,ECF No. 1). Plaintiff's Complaint states the following causes of action: (1) breach of contract against Twin City; (2) breach of the implied covenant of good faith and fair dealing against Twin City; (3) insurance bad faith against Twin City; and (4) negligence against Harris.
Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
The Court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation is plausible, not just possible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).
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