Certain Underwriters At Lloyd's of London Subscribing to Policy No. E&o 14 10873 A v. Gen. Star Indem. Co.
Certain Underwriters At Lloyd's of London Subscribing to Policy No. E&o 14 10873 A v. Gen. Star Indem. Co.
Opinion of the Court
*931This case involves two insurers disagreeing over which one was responsible for providing more than $865,000 ($1 million) in fire insurance coverage to third-party Dr. Janak Mehtani ("Mehtani") after his residential care facility burned down in 2013. After Mehtani was denied $1 million in fire insurance coverage under his insurance policy with Defendant General Star Indemnity Company ("General Star" or "Defendant"), he sued Defendant and his insurance brokers Ophelia Riego and Riego Insurance and Financial Services ("Riego"). Compl., ECF No. 1, ¶¶ 5-11. Defendant settled with Mehtani for $135,000. Id., ¶ 15. Plaintiff Certain Underwriters at Lloyd's of London Subscribing to Policy No. E & O 14 10873 A ("Underwriters" or "Plaintiff") defended Riego in that lawsuit under an errors and omissions insurance contract Riego had with Plaintiff (the "Underwriters E & O Policy") and subsequently paid Mehtani $1 million under the Underwriters E & O Policy to cover the fire damage. See id., ¶¶ 12-16.
Plaintiff claims Defendant should have paid Mehtani the full $1 million he sought under his fire insurance policy. See id., ¶¶ 20-21. As a result, Plaintiff has brought this lawsuit against Defendant alleging a claim for equitable indemnity. See Compl. Defendant has moved to dismiss with prejudice and Plaintiff opposes. Mem., ECF No. 8-1; Opp., ECF No. 10. For the reasons explained below, the Court grants Defendant's motion with prejudice.
I. FACTUAL AND PROCEDURAL BACKGROUND
On or around July 10, 2013, a fire damaged a residential care facility owned by Mehtani. Compl. ¶¶ 5, 9. After Defendant denied Mehtani coverage under his $1 million fire insurance policy, Mehtani brought a bad faith insurance lawsuit in October 2015 against Defendant, Riego, and others in Mehtani v. The AHBE Group, et al., Case No. 34-2015-00185527 in Sacramento County Superior Court (the "Underlying Action"). Id., ¶ 11; Def. Req. for Judicial Notice ("RJN"), ECF No. 8-3, Exhs. 2, 3. Mehtani brought claims against Defendant for breach of the insurance contract and breach of the covenant of good faith and fair dealing. RJN, Exhs. 2, 3.
Plaintiff provided Riego a defense in the Underlying Action under the Underwriters E & O Policy. Compl., ¶ 14. Though the fire damage exceeded $1 million, Defendant paid Mehtani only $135,000 to settle his claim against it. Id., ¶ 15. After Defendant settled with Mehtani, Plaintiff paid Mehtani $1,000,000 under Riego's Underwriters E & O Policy. Id., ¶ 16. Plaintiff alleges Defendant should have been paid this amount. Id., ¶ 16. As a result, Plaintiff has brought the immediate equitable indemnity claim against Defendant to recover the more than $865,000 that it paid to Mehtani. See Compl.
II. OPINION
A. Analysis
Defendant argues Plaintiff's claim for equitable indemnity fails as a matter of law because Plaintiff has failed to allege facts showing General Star owed Mehtani a tort duty of care. Mem. at 3-4. The Court agrees.
*932The doctrine of equitable indemnity applies only to defendants who are jointly and severally liable to the underlying plaintiff. BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc.,
Plaintiff argues that Mehtani's underlying bad faith claim against Defendant gives rise to tort liability and equitable indemnity applies as a result. Opp. at 5-6. Plaintiff reasons that Defendant violated the covenant of good faith and fair dealing implied in every contract, including insurance policies, and this gives rise to tort liability. Id. at 6. In support of this argument, Plaintiff cites Wilson v. 21st Century Ins. Co.,
Further, as Defendant points out, "Underwriters cite no authority (because there is none) which establishes that an insurer is subject to a claim for equitable indemnity based on an underlying claim of breach of the implied covenant." Reply, ECF No. 11, at 2. Even though Mehtani brought a claim for breach of the covenant of good faith and fair dealing against Defendant, Plaintiff lacks authority to support its claim that Defendant is consequently liable in tort for the purpose of an equitable indemnity claim. Because Plaintiff's claim for equitable indemnity relies on an unsupported legal theory, the Court finds that Plaintiff's claim may not proceed and that it must be dismissed. See Bell Atlantic Corp. v. Twombly,
B. Leave to Amend
Defendant argues the Court should grant its motion with prejudice because Plaintiff cannot state facts to show a tort duty owed by General Start to Mehtani in this case since the claims were based in contract. Mem. at 2-3, 6. Plaintiff counters that it should be given leave to amend, seeming to argue by implication that *933amendment would not be futile. Opp. at 8-9 (citing Federal Rule 15(a); Independent Trust Corp. v. Stewart Information Services Corp.,
III. SANCTIONS
The Court issued its Order re Filing Requirements ("Order") on March 8, 2018. ECF No. 3-2. The Order limits memoranda in support of and in opposition to motions to dismiss to fifteen pages and reply memoranda in support of motions to dismiss to five pages. The Order also states that an attorney who exceeds the page limits must pay monetary sanctions of $50.00 per page and that the Court will not consider any arguments made past the page limit. Defendant's reply memorandum exceeds the page limit by two pages. The Court has not considered any arguments made after page five of the reply brief. The Court ORDERS Defendant's counsel to pay $100.00 to the Clerk of the Court within five days of the date of this Order.
IV. ORDER
For the reasons set forth above, the Court GRANTS Defendant's motion WITH PREJUDICE.
IT IS SO ORDERED.
This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for August 7, 2018. In deciding this motion, the Court takes as true all well-pleaded facts in the operative complaint.
Reference
- Full Case Name
- CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON SUBSCRIBING TO POLICY NO. E & O 14 10873 A v. GENERAL STAR INDEMNITY COMPANY
- Cited By
- 2 cases
- Status
- Published