Sheikh v. Spinnaker Ins. Co.

[6] 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA [10] 11 FIRDOS SHEIKH, an individual, No. 2:23-cv-01582-TLN-SCR [12] Plaintiff, 13 ORDER v. [14] SPINNAKER INSURANCE COMPANY, [15] et al., [16] Defendants. [19] 20 This matter is before the Court on Defendants Spinnaker Insurance Company and Hippo 21 Analytics Inc.’s (“Defendants”) Motion to Dismiss. (ECF No. 9.) Plaintiff Firdos Sheikh 22 (“Plaintiff”) filed an opposition. (ECF No. 13.) Defendants filed a reply. (ECF No. 15.) For the 23 reasons set forth below, the Court DENIES Defendants’ motion. 24 /// 25 /// 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 This case arises from an insurance coverage dispute. Plaintiff owns a property at 9005 3 Calvine Road, Sacramento, California (the “Property”). (ECF No. 1 at 2.) Defendants are home 4 insurance providers. (Id. at 3.) On June 23, 2020, Defendants issued Plaintiff a landlord home 5 insurance policy for the Property, covering the period of June 23, 2020, to June 23, 2021 (the 6 “Policy”). (Id. at 3.) The Policy states that it “renews automatically on each anniversary.” (Id. at 7 4.) In relevant part, the Policy covers: (1) loss by fire that is not arson by the insured; (2) theft; 8 and (3) vandalism. (Id.) 9 There are three distinct insurance claims at issue in this case. First, on or about January 10 25, 2021, a fire broke out at the Property (the “First Fire”). (Id. at 5.) The First Fire was 11 allegedly not a result of arson by the insured and was not a total loss. (Id.) Plaintiff filed a timely 12 claim with Defendants. (Id.) Second, on or about July 4, 2021, the Property was vandalized. (Id. 13 at 6.) The vandalism included removal of boards that had been installed around the property and 14 damage to the garage door. (Id.) Plaintiff again filed a timely claim with Defendants. (Id.) 15 Third, on or about August 2, 2021,1 another fire occurred at the Property (the “Second Fire”). 16 (Id.) The Second Fire was allegedly not a result of arson by the insured and this time resulted in a 17 total loss. (Id.) Plaintiff again filed a timely claim with Defendants. (Id.) 18 On March 15, 2021, after the First Fire claim but before the vandalism claim, Defendants 19 allegedly created a computer-generated renewal application on behalf of Plaintiff for the Policy, 20 which stated the Property had no damage and was occupied. (Id. at 7.) On or about July 29, 21 2021, Defendants informed Plaintiff the First Fire claim had been processed and sent her a check 22 for $184,002.19. (Id.) Between October 2021 and February 2022, Defendants requested various 23 documents from Plaintiff: tax returns; property tax records; cell phone records; financial account 24 statements; loan or credit records; and all records from the past three years relating to real estate, 25 litigation, bankruptcy, income, and employment. (Id. at 8–9.) At Defendants’ request, Plaintiff [26] 27 1 The Complaint alleges the Second Fire occurred in 2023. (ECF No. 1 at ¶¶ 27.) However, based on the timeline presented, that date appears to be an error. The Court assumes 28 Plaintiff intended to allege the Second Fire occurred in 2021. 1 also participated in an examination under oath, outside the presence of counsel. (Id. at 9.) On 2 February 18, 2022, Defendants notified Plaintiff they would not pay her Second Fire claim or 3 vandalism claim. (Id.) Defendants’ alleged basis for denying the claims was that the renewal 4 application from March 15, 2021, falsely stated the Property had no damage and was occupied. 5 (Id. at 7.) 6 Plaintiff filed the operative Complaint on August 1, 2023, alleging claims for: (1) breach 7 of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) intrusion into 8 private affairs; and (4) declaratory relief. (ECF No. 1.) Defendants filed the instant motion to 9 dismiss on September 9, 2023. (ECF No. 9.) 10 II. STANDARD OF LAW 11 A motion to dismiss for failure to state a claim upon which relief can be granted under 12 Federal Rule of Civil Procedure (“Rule”) 12(b)(6) tests the legal sufficiency of a complaint. 13 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a) requires that a pleading contain 14 “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. 15 Civ. P. 8(a); see also Ashcroft v. Iqbal, 556 U.S. 662 , 677–78 (2009). Under notice pleading in 16 federal court, the complaint must “give the defendant fair notice of what the . . . claim is and the 17 grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal 18 citation and quotations omitted). “This simplified notice pleading standard relies on liberal 19 discovery rules and summary judgment motions to define disputed facts and issues and to dispose 20 of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). 21 On a motion to dismiss, the factual allegations of the complaint must be accepted as true. 22 Cruz v. Beto, 405 U.S. 319, 322 (1972). A court must give the plaintiff the benefit of every 23 reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail 24 Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746 , 753 n.6 (1963). A plaintiff need not allege 25 “‘specific facts’ beyond those necessary to state his claim and the grounds showing entitlement to 26 relief.” Twombly, 550 U.S. at 570 (internal citation omitted). 27 Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of 28 factual allegations.” U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638 , 643 n.2 (9th Cir. 1986). 1 While Rule 8(a) does not require detailed factual allegations, “it demands more than an 2 unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 . A 3 pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the 4 elements of a cause of action.” Twombly, 550 U.S. at 555 ; see also Iqbal, 556 U.S. at 678 5 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 6 statements, do not suffice.”). Thus, “[c]onclusory allegations of law and unwarranted inferences 7 are insufficient to defeat a motion to dismiss” for failure to state a claim. Adams v. Johnson, 355 8 F.3d 1179, 1183 (9th Cir. 2004) (citations omitted). Moreover, it is inappropriate to assume the 9 plaintiff “can prove facts that it has not alleged or that the defendants have violated the . . . laws 10 in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State 11 Council of Carpenters, 459 U.S. 519, 526 (1983). 12 Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough 13 facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570 . “A claim 14 has facial plausibility when the plaintiff pleads factual content that allows the court to draw the 15 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 16 680. While the plausibility requirement is not akin to a probability requirement, it demands more 17 than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678 . This plausibility 18 inquiry is “a context-specific task that requires the reviewing court to draw on its judicial 19 experience and common sense.” Id. at 679 . Thus, only where a plaintiff fails to “nudge [his or 20 her] claims . . . across the line from conceivable to plausible[,]” is the complaint properly 21 dismissed. Id. at 680 (internal quotations omitted). If a complaint fails to state a plausible claim, 22 “[a] district court should grant leave to amend even if no request to amend the pleading was 23 made, unless it determines that the pleading could not possibly be cured by the allegation of other 24 facts.” Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). 25 /// 26 /// 27 /// 28 /// 1 III. ANALYSIS 2 Defendants move to dismiss: (1) the intrusion into private affairs claim (Claim Three); (2) 3 the fraud allegations throughout the Complaint; and (3) the request for punitive damages. (ECF 4 No. 9-1 at 6.) The Court will address each of these arguments in turn. 5 A. Intrusion into Private Affairs Claim 6 An intrusion into private affairs claim has two elements: “(1) intrusion into a private 7 place, conversation, or matter, (2) in a manner highly offensive to a reasonable person.” Shulman 8 v. Grp. W Prods., Inc., 18 Cal. 4th 200, 231 (1998). As to the first element, “the plaintiff must 9 show the defendant penetrated some zone of physical or sensory privacy surrounding, or obtained 10 unwanted access to data about, the plaintiff.” Id. at 232 . “The tort is proven only if the plaintiff 11 had an objectively reasonable expectation of seclusion or solitude in the place, conversation or 12 data source.” Id. As to the second element, “determining offensiveness requires consideration of 13 all the circumstances of the intrusion, including its degree and setting and the intruder’s motives 14 and objectives.” Id. at 236 (citation and internal quotation marks omitted). Whether a 15 defendant’s conduct was highly offensive to a reasonable person is a question of fact. See In re 16 Facebook, Inc. Internet Tracking Litig., 956 F.3d 589, 606 (9th Cir. 2020) (“The ultimate 17 question of whether Facebook’s tracking and collection practices could highly offend a 18 reasonable individual is an issue that cannot be resolved at the pleading stage.”). 19 Defendants contend Plaintiff fails to allege sufficient facts to state a claim.2 (ECF No. 9-1 20 at 10–14.) Rather than provide clear, distinct arguments for each element, Defendants present 21 overlapping arguments for both elements. Specifically, Defendants argue requests for an 22 examination under oath (“EUO”) and/or relevant documents are common during investigations of 23 insurance claims. (Id. at 11.) Defendants further argue it was especially reasonable to investigate [24] 2 Without citing any authority, Defendants also argue Plaintiff’s intrusion into private [25] affairs claim is duplicative to Plaintiff’s insurance bad faith claim. (ECF No. 9-1 at 13.) Defendants’ argument is unpersuasive. Plaintiff’s Complaint alleges bad faith arising from [26] “Defendant’s failure to pay the Policy benefits.” (ECF No. 1 at 13.) In contrast, the Complaint 27 alleges intrusion into private affairs arising from Defendants “forcing [Plaintiff] to produce… documents.” (Id.) Because they are based on distinct harms, the claims are not duplicative. [28] 1 Plaintiff’s claims due to the number of losses occurred at the Property within a short time, which 2 raised suspicion about the claims being false or fraudulent. (Id. at 12.) Lastly, Defendants note 3 that Plaintiff produced the requested information by her own volition. (Id.) In opposition, 4 Plaintiff contends California protects a privacy right to records, such as the cell phone records, tax 5 records, and bank records that Defendants improperly demanded in this case. (ECF No. 13 at 12.) 6 Neither party cites authority directly on point as to whether Plaintiff can assert a viable 7 intrusion into private affairs claim based on Defendants’ request for Plaintiff’s personal 8 information. Defendants rely on Brizuela v. CalFarms Ins. Co., 116 Cal. App. 4th 578 (2004), 9 and Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1 (1995). (ECF No. 9-1 at 11–12.) Both cases 10 are distinguishable from the instant case. First, Defendants cite Brizuela for the general 11 contention that an insured must comply with policy requirements to submit an EUO before 12 receiving benefits under the policy. (Id.) However, Brizuela was decided on a motion for 13 summary judgment and involved a breach of contract claim, not an intrusion into private affairs 14 claim. 116 Cal. App. 4th at 587 . Defendants fail to present meaningful analysis to persuade the 15 Court that Brizuela has any bearing on the instant case. 16 Defendants next cite Waller to support the proposition that an insurance company’s 17 request for documents from an insured is objectively reasonable considering that insureds are 18 obligated to demonstrate policy coverage in the first instance. (ECF No. 9-1 at 12.) At issue in 19 Waller was whether an insurance company had a duty to defend the plaintiff under the language 20 of the insurance policy. 11 Cal. 4th at 20 . In the portion of the opinion Defendants cite, the 21 Waller court simply explained that a plaintiff bears the burden to show an insurance policy 22 provides coverage. Id. As with Brizuela, Defendants fail to provide meaningful analysis to 23 persuade the Court that Waller is relevant here. 24 Plaintiff’s analysis is similarly deficient. Plaintiff string cites various cases to support the 25 broad proposition that California law protects a privacy right to records. (ECF No. 13 at 12 26 (citing Williams v. Super. Ct., 3 Cal. 5th 531 (2017); Saunders v. Superior Ct., 12 Cal. App. 5th 27 Supp. 1 (2017); People v. McKunes, 51 Cal. App. 3d 487 (1975); Webb v. Standard Oil Co., 49 28 Cal. 2d 509 (1957)).) However, all the cited cases appear to be distinguishable from the instant 1 case. In short, Williams involved a discovery dispute, Saunders involved public disclosure of 2 records to media, McKunes involved investigation by a state agent, and Webb involved an issue 3 about a court mandated disclosure. Williams, 3 Cal. 5th at 538 ; Saunders, 12 Cal. App. 5th Supp. 4 at 4 ; McKunes, 51 Cal. App. 3d at 490 ; Webb, 49 Cal. 2d at 513–14. None of the cases involved 5 an insurance company requesting records from an insurer, nor did they involve a cause of action 6 for intrusion into private affairs. 7 Based on the extremely limited arguments before the Court, Defendants ultimately fail to 8 persuade the Court that Plaintiff’s intrusion into private affairs claim should be dismissed. The 9 thrust of Defendants’ arguments seems to be that their investigation was reasonable as a matter of 10 law. However, such arguments are premature at the pleading stage. In the Complaint, Plaintiff 11 alleges Defendants forced her to disclose her private affairs to have her claim processed. (ECF 12 No. 1 at 14.) More specifically, Plaintiff alleges Defendants forced her to produce tax returns, 13 cell phone records, bank records, income records, property records (unrelated to the claim at 14 issue), credit records, and other financial records, which had “little to nothing” to do with her 15 claim, in order to harass and place unreasonable hurdles on Plaintiff. (Id. at 13.) Plaintiff also 16 alleges as a result she suffered “severe emotional distress, which aggravated her existing medical 17 conditions.” (Id. at 14.) Taking Plaintiff’s allegations as true and drawing all reasonable 18 inferences in her favor, the Court finds Defendants’ allegedly improper requests for Plaintiff’s 19 personal information could be considered “unwanted access to data” about Plaintiff that would be 20 highly offensive to a reasonable person. Shulman, 18 Cal. 4th at 231 ; In re Facebook, Inc. 21 Internet Tracking Litig., 956 F.3d at 606 . 22 Accordingly, the Court concludes Plaintiff has plausibly alleged her intrusion into private 23 affairs claim. 24 B. Fraud Allegations Throughout the Complaint 25 Defendants next argue Plaintiff’s fraud allegations fail to meet the heightened pleading 26 requirements of Rule 9(b). (ECF No. 9-1 at 14.) Defendants contend Plaintiff’s allegations about 27 her automatic, computer-generated policy renewal application do not rise to the level of fraud. 28 (ECF No. 9-1 at 16.) Defendants also argue Plaintiff fails to identify the names, titles, or job 1 responsibilities of any employees or agents who had anything to do with the allegedly fraudulent 2 policy renewal application. (Id.) In opposition, Plaintiff argues Rule 9(b) does not apply because 3 she has not alleged a separate fraud claim. (ECF No. 13 at 14.) However, Plaintiff argues her 4 allegations nonetheless satisfy Rule 9(b). (Id.) 5 A claim grounded in fraud “must state with particularity the circumstances constituting 6 fraud.” Fed. R. Civ. P. 9(b). A court may dismiss a claim for failing to satisfy Rule 9(b)’s 7 heightened pleading requirements. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th 8 Cir. 2003). Under this heightened pleading standard, a party must “identify the who, what, when, 9 where, and how of the misconduct charged, as well as what is false or misleading about the 10 purportedly fraudulent statement, and why it is false.” Moore v. Mars Petcare US, Inc., 966 F.3d 11 1007, 1019 (9th Cir. 2020) (quoting Davidson v. Kimberly–Clark, 889 F.3d 956, 964 (9th Cir. 12 2018)). The complaint must contain enough detail to put a defendant on notice of the alleged 13 misconduct so they may “defend against the charge and not just deny that they have done 14 anything wrong.” Vess, 317 F.3d at 1106 . 15 Assuming without deciding that Rule 9(b) applies to Plaintiff’s allegations about fraud 16 despite the lack of a distinct fraud claim, the Court concludes Plaintiff’s allegations satisfy Rule 17 9(b). Put simply, Plaintiff alleges that from October 2021 to February 2022, Defendants devised 18 a scheme to deny Plaintiff’s second and third insurance claims by fabricating a policy renewal 19 application which falsely reflected that Plaintiff indicated the Property had no damage and was 20 occupied at the time of renewal. (ECF No. 1 at 7.) Plaintiff alleges Defendant knew the 21 application was false because: (1) the application was automatic and computer-generated and 22 therefore not based on Plaintiff’s representations; and (2) Defendants were aware the Property 23 was damaged and unoccupied due to the First Fire claim which was already in process at the time 24 of renewal. (Id.) Absent meaningful argument from Defendants to the contrary, the Court finds 25 these allegations are sufficient to put Defendants on notice of their allegedly fraudulent 26 misconduct. 27 Accordingly, the Court DENIES Defendants’ motion to dismiss under Rule 9(b). 28 /// 1 C. Punitive Damages 2 Finally, Defendants move to dismiss Plaintiff's request for punitive damages. (ECF No. 3 | 9-1 at 17-18.) However, “a motion to dismiss is not the proper vehicle to challenge a claim of 4 | damages.” Trull v. City of Lodi, No. 2:23-cv-01177-TLN-CKD, 2024 WL 1344478 , at *8 (E.D. 5 | Cal. Mar. 29, 2024); see Oppenheimer v. Sw. Airlines Co., No. 13-CV-260-IEG BGS, 2013 WL 6 | 3149483, at *3 (S.D. Cal. June 17, 2013) (“Because punitive damages are but a remedy, and thus 7 | neither constitutes a claim nor pertains to whether any claim has been stated, requests for punitive 8 | damages provide no basis for dismissal under Fed. R. Civ. P. 12(b)(6).”); Monaco v. Liberty Life 9 | Assur. Co., No. CO06-07021 MJJ, 2007 WL 420139 , at *6 (N.D. Cal. Feb. 6, 2007) (“[A] 10 | complaint is not subject to a motion to dismiss for failure to state a claim under Rule 12(b)(6) 11 || because the prayer seeks relief that is not recoverable as a matter of law.”). 12 Accordingly, the Court DENIES Defendants’ motion to dismiss Plaintiffs request for 13 || punitive damages. 14 IV. CONCLUSION 15 For the foregoing reasons, the Court DENIES Defendants’ Motion to Dismiss. (ECF No. 16 || 9.) Defendants shall file an answer not later than twenty-one (21) days from the electronic filing 17 | date of this Order. 18 IT IS SO ORDERED. 19 | Date: September 30, 2024 [20] 21 7, 22 TROY L. NUNLEY 74 CHIEF UNITED STATES DISTRICT JUDGE