Case Number: KC058765    Hearing Date: August 22, 2014    Dept: J

Re: Landstar Ligon, Inc. v. Progressive Casualty Insurance Company, et al. (KC058765)

MOTION TO STRIKE PORTIONS OF THE SECOND AMENDED COMPLAINT

Moving Party: Defendant United Financial Casualty Company

Respondent: Plaintiff Landstar Ligon, Inc.

POS: Moving OK; Opposing OK

This action involves bad faith and breach of contract causes of action relating to commercial auto insurance policies issued to Defendant James Moore and his company and to former Defendant Danny Moore and his company. Plaintiff alleges that the policy of insurance issued by Defendants covered Plaintiff’s liability for the accident of September 7, 2006, in which Defendant James Moore caused injury to a third party, and thus, Plaintiff is entitled to reimbursement and indemnification from Defendants for the $728,615.54 that it paid to resolve the third party claim. Plaintiff commenced the action on 5/20/10. The operative Second Amended Complaint, filed on 5/19/14, asserts causes of action for:

1. Breach of the Covenant of Good Faith and Fair Dealing
2. Breach of the Covenant of Good Faith and Fair Dealing
3. Breach of Contract
4. Declaratory Relief
5. Express Indemnity
6. Implied Indemnity
7. Contribution

The Trial is set for February 24, 2015.

JUDICIAL NOTICE:

The court takes judicial notice of the records in this case, attached to Plaintiff’s request as Exhibits A, B, C, E and F. (Ev C § 452(d).) The court also takes judicial notice of Progressive’s webpage, attached to Plaintiff’s request as Exhibit D. (Ev C §452(h).)

MOTION TO STRIKE:

Defendant United Financial Casualty Company (“Defendant” or “United Financial”) moves to strike portions of the Second Amended Complaint (“SAC”) referencing United Financial on the grounds that United Financial was improperly named as DOE 1, because based on the allegations of the original Complaint, the First Amended Complaint, and the SAC, Plaintiff was actually aware of the identity of United Financial at the time it filed the original Complaint.

United Financial also moves to strike portions of the SAC that refers to CCR, Title 10, Chapter 5, subchapter 7.5, section 2695.4(a), on the ground that the regulation applies only to first party, and not third party, claims and is thus inapplicable to the facts at bar.

The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) strike out any irrelevant, false, or improper matter inserted in any pleading; or (b) strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (CCP § 436.) The grounds for a motion to strike must appear on the face of the pleading under attack, or from matters which the court may judicially notice. (CCP § 437.)

DOE AMENDMENTS:

CCP § 474 provides in pertinent part: “When the plaintiff is ignorant of the name of a defendant, he must state that fact in the complaint… and such defendant may be designated in any pleading or proceeding by any name, and when his true name is discovered, the pleading or proceeding must be amended accordingly.”

Leave to amend may be denied for unreasonable delay after plaintiff ascertains a “Doe” defendant’s identity resulting in prejudice to the defendant. (A.N. v. County of Los Angeles (2009) 171 Cal.App.4th 1058, 1068 — “Doe” amendments filed on eve of trial quashed because plaintiff knew defendants’ identities more than 2 years earlier and it would be difficult for defendants to prepare for trial in such short order.)

However, as long as the statute of limitations has not yet run, the amendment cannot be challenged on the ground plaintiff was not “truly ignorant” of defendant’s identity when the complaint was filed. Plaintiff could have sought leave to amend the complaint to add that person as a defendant rather than serving him or her as a “Doe.” To treat the “Doe” amendment differently “would elevate form over substance and would ignore common sense.” (Davis v. Marin (2000) 80 Cal.App.4th 380, 387.)

Where a complaint is amended after the statute of limitations has run to identify a fictitiously-named defendant, and to assert a cause of action against that defendant not included in the original complaint, the amended complaint will be given relation back effect, so as to avoid the statute of limitations, provided: (1) the original complaint stated a valid cause of action against the now-identified “Doe” defendant; (2) plaintiff was “genuinely ignorant” of the defendant’s identity or the facts rendering defendant liable when the original complaint was filed; and (3) the amended complaint, identifying the defendant, is based on the “same general set of facts” as the original and refers to the “same accident and same injuries.” (Austin v. Massachusetts Bonding & Ins. Co. (1961) 56 Cal.2d 596, 600–601.)

Serving someone as a “Doe” defendant after the statute of limitations has run may seriously impair his or her ability to defend. Hence, relation back effect will be given only when the plaintiff was proceeding in good faith; i.e., only where plaintiff was genuinely ignorant of that person’s identity or liability when the action was commenced. (Miller v. Thomas (1981) 121 Cal.App.3d 440, 445–446.)

To defeat the amendment, the burden is on defendant to prove plaintiff’s earlier awareness of defendant’s identity and facts creating its liability. (See Fara Estates Homeowners Ass’n v. Fara Estates, Ltd. (9th Cir. 1998) 134 F3d 377, 377 (applying Calif. law); Breceda v. Gamsby (1968) 267 Cal.App.2d 167, 179.)

United Financial contends that the facts alleged in the SAC and its predecessors demonstrate that Plaintiff was not ignorant of the identity of United Financial at the time it commenced the instant lawsuit. Specifically, United Financial contends that by the time Plaintiff filed its FAC, it acknowledged that it knew of the existence of United Financial’s policy at issue and that it was an additional insured under that policy. (See FAC ¶ 19.)

However, there is nothing in the pleadings that demonstrates that Plaintiff had any particular policy documents, nor that any documents Plaintiff had in its possession identified United Financial and implicated it as a potential defendant. (See FAC ¶ 19 – “STATES and JAMES had an insurance policy with PROGRESSIVE, Policy No. 01709102, had policy limits of $1,000.00 (“JAMES’ Policy”). PILOT and DANNY had a similar policy, Policy No. 0270656, with the same policy limits (“DANNY’s Policy”). LANDSTAR was an additional insured on both of these PROGRESSIVE policies. LANDSTAR is informed and believes, and thereon alleges, that DANNY and PILOT may also have had other business policies with PROGRESSIVE or other carriers on which LANDSTAR would be an additional insured. LANDSTAR had no other insurance to protect its interest and was, except for the two Progressive policies, self-insured up to a judgment of $5 million or more.”)

Plaintiff, in opposition, also explains that this case involves bad faith and breach of contract causes of action relating to two Progressive commercial auto insurance policies separately issued to Defendant James Moore and his company and to former Defendant Danny Moore and his company. The two policies were underwritten by separate Progressive entities. James Moore’s policy was underwritten by a Progressive underwriting unit known as Progressive Casualty Insurance Company (“Progressive”) while Danny Moore’s policy was underwritten by a different Progressive underwriting unit known as United Financial. Both underwriting entities are affiliated Progressive companies. (RJN, Exh. D.) Progressive and United Financial use their trade names interchangeably and identify themselves as dba’s of each other. (RJN, Exh. E.) In an abundance of caution and to avoid issues that would require additional pretrial motions in limine, Plaintiff proposed to Defendant Progressive that United Financial be added as a named defendant. Progressive was amendable and entered into an appropriate stipulation allowing Plaintiff to file an amended complaint identifying United Financial as Doe 1. (RJN, Exh. F.) United Financial, through the same counsel it shares with Progressive, now challenges the Doe amendment.

It also appears that United Financial has not been prejudiced by the amendment since no new causes of action are pleaded, the trial in this matter is six months away, its trial counsel has been involved in the matter since September 2010 as counsel for Progressive, and the majority of the documentary evidence is in Defendants’ own insurance files.

Defendant fails to demonstrate that Plaintiff’s earlier awareness of United Financial’s identity and/or the facts creating its liability appears on the face of the SAC or other documents that the court can take judicial notice of. Thus, the motion to strike the allegations against United Financial is denied.

10 CCR § 2695.4(a):

“Every insurer shall disclose to a first party claimant or beneficiary, all benefits, coverage, time limits or other provisions of any insurance policy issued by that insurer that may apply to the claim presented by the claimant. When additional benefits might reasonably be payable under an insured’s policy upon receipt of additional proofs of claim, the insurer shall immediately communicate this fact to the insured and cooperate with and assist the insured in determining the extent of the insurer’s additional liability.” (10 CCR § 2695.4(a).)

United Financial also moves to strike those portions of the SAC referencing 10 CCR § 2695.4(a) on the ground that it is irrelevant since the regulation only relates to “first party claimant,” whereas Plaintiff’s underlying claim involved a defense to a third party lawsuit.

However, the term “first party claimant” is defined as “any person asserting a right under an insurance policy as a named insured, other insured or beneficiary under the terms of that insurance policy, and including any person seeking recovery of uninsured motorist benefits.” (10 CCR § 2695.4 (f).) Thus, it appears that the term includes not only insureds making claims under first party policies, but also insureds making claims under third party, liability policies. (Superior Dispatch, Inc. v. Insurance Corp. of New York (2010) 181 Cal.App.4th 175, 188.) Accordingly, the motion to strike the references to 10 CCR § 2695.4 is denied.

United Financial has 10 days to answer the SAC.