Moss v. Infinity Insurance Co.
197 F. Supp. 3d 1191
N.D. Cal.2016Background
- Plaintiff Arryanne Moss sued Infinity Insurance (Infinity), AWS, Lithia Chrysler Jeep Dodge of Santa Rosa (Lithia), and employee Charlotte Toth after a 2012 automobile collision, alleging insurance-related contract, bad-faith, negligence, and California UCL (§17200) and FAL (§17500) claims arising from denial of coverage.
- TAC asserts 12 causes of action: breach of contract (against Infinity, AWS, Lithia, Toth), breach of the implied covenant/good faith (against insurers and Lithia/Toth), negligence, and statutory unfair competition/false advertising claims against the corporate defendants collectively.
- Key factual allegations: Toth (Lithia employee) assisted Moss in obtaining Infinity insurance at purchase, made the first payment, and told Moss she did not need to list minor children on the policy; Infinity denied coverage based on a household/endorsement exclusion because the son was not listed.
- Procedural posture: Lithia and Infinity moved to dismiss portions of the Third Amended Complaint under Fed. R. Civ. P. 12(b)(6). The court considered written submissions and oral argument and ruled on statute-of-limitations, pleading specificity, duty/agency, and contractual-coverage issues.
- Disposition summary: Court denied Lithia's motion as to Moss's breach-of-oral-contract and negligence claims (third and tenth causes), granted Lithia's motion to dismiss the implied-covenant claim with prejudice, and dismissed Lithia §17200 and §17500 claims with leave to amend. Court granted Infinity's motion: dismissed Infinity breach-of-contract, bad-faith, and negligence claims with prejudice; dismissed Infinity §17200 and §17500 claims with leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (Lithia) | Lithia orally promised to help secure insurance benefits and breached when it failed to assist after the accident | Claim is time-barred (two-year statute), or governed by written retail contract (four-year statute) | Denied dismissal: TAC silent on breach date, court infers breach could be within two years; 4-year written-contract theory rejected because retail contract contained no insurance-duty term |
| Breach of implied covenant/good faith (Lithia/Toth) | Moss seeks relief for bad faith in failing to secure benefits | Court previously dismissed this claim; plaintiff concedes | Dismissed with prejudice as conceded |
| Negligence (Lithia) | Lithia owed duties in assisting with insurance application and claims process; breached duties causing damages | Lithia argues it's a dealer (not insurer) and thus owed no insurance-related duty; statute of limitations | Denied dismissal: pleadings permit inference Lithia/Toth acted beyond ordinary dealer role (assisted purchase/made payment); statute limitations not resolved on face of TAC |
| UCL (§17200) / FAL (§17500) (Lithia) | Misleading statements/materials induced purchase of insurance | Lithia: claims sound in fraud requiring Rule 9(b) particularity; plaintiff fails to identify specific statements/ads | Dismissed with leave to amend: plaintiff must plead which UCL prong(s) and, for fraudulent prong or FAL rooted in fraud, satisfy Rule 9(b) specificity (who, what, when, where, how) |
| Breach of contract (Infinity) | Toth's statements negate exclusion applicability; Infinity breached by denying benefits | Infinity: household exclusion applies; insurer complied with written policy so no breach | Dismissed with prejudice: court holds household exclusion applies so Infinity complied with contract; breach claim cannot proceed (plaintiff may pursue other theories with leave) |
| Bad faith / implied covenant (Infinity) | Toth's misrepresentations render insurer's denial wrongful | Infinity: insurer complied with written policy; no coverage so no bad-faith liability | Dismissed with prejudice: insurer's compliance with express policy terms bars bad-faith claim |
| Negligence (Infinity) | Insurer negligently handled claim | Infinity: negligence is not a recognized theory against insurers in California; only bad faith supports tort recovery | Dismissed with prejudice: negligence claim barred as matter of law where insurer-defendant (insured's remedy is bad faith) |
| UCL / FAL (Infinity) | Statutory unfair/false-advertising claims based on same conduct | Infinity: plaintiff has adequate remedy at law (breach claims) and fails Rule 9(b) pleading for fraud-based claims | §17200/§17500 dismissed as to Infinity (leave to amend for non-contract bases); UCL restitution unavailable where plaintiff primarily seeks policy benefits; fraud-based claims require heightened pleading |
Key Cases Cited
- Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) (pleading standard: construe allegations in plaintiff's favor on motion to dismiss)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (Rule 9(b) applies to fraud-based UCL/FAL claims; particularity requirement explained)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) (Rule 9(b) "who, what, when, where, and how" standard for fraud allegations)
- State Farm Mut. Auto. Ins. Co. v. Davis, 7 F.3d 180 (9th Cir. 1993) (no breach-of-contract liability where insurer properly withholds coverage under policy terms)
- Hydro-Mill Co. v. Hayward, Tilton & Rolapp Ins. Assocs., 115 Cal.App.4th 1145 (Cal. Ct. App. 2004) (statute of limitations for insurance coverage negligence claims governed by two-year rule)
- Sanchez v. Lindsey Morden Claims Servs., 72 Cal.App.4th 249 (Cal. Ct. App. 1999) (negligence is not a generally available theory of recovery against insurers; bad faith required)
- Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153 (Cal. Ct. App. 1991) (fraud pleadings must identify who made representations, authority, to whom, what was said, and when)
- O'Keefe v. Allstate Indem. Co., 953 F. Supp. 2d 1111 (S.D. Cal. 2013) (insurer cannot be liable for bad faith where benefits were properly withheld under policy terms)