Brown v. Liberty County Mutual Insurance Company ( 2020 )

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 RONNIE L. BROWN, ) 4 ) Plaintiff, ) Case No.: 2:20-cv-00163-GMN-DJA 5 vs. ) ) ORDER 6 LIBERTY COUNTY MUTUAL ) 7 INSURANCE COMPANY, ) ) 8 Defendant. ) ) 9 10 Pending before the Court is Defendant Liberty County Mutual Insurance Company’s 11 (“Defendant’s”) Motion to Dismiss, (ECF No. 6). Plaintiff Ronnie Brown (“Plaintiff”) filed a 12 Response, (ECF No. 9), and Defendant filed a Reply, (ECF No. 10). 13 Also pending before the Court is Defendant’s Motion to Strike, (ECF No. 15), the 14 Amended Complaint, (ECF No. 14). Plaintiff filed a Response, (ECF No. 17), and Defendant 15 filed a Reply, (ECF No. 18). 16 Also pending before the Court is Plaintiff’s Motion for Leave to File an Amended 17 Complaint, (ECF No. 16). Defendant filed a Response, (ECF No. 20), and Plaintiff filed a 18 Reply, (ECF No. 21). 19 For the reasons discussed below the Court GRANTS Defendant’s Motion to Strike and 20 Plaintiff’s Motion for Leave to File an Amended Complaint. The Court DENIES as moot 21 Defendant’s Motion to Dismiss. 22 I. BACKGROUND 23 This case arises from Plaintiff’s claim to underinsured motorist insurance coverage 24 benefits after sustaining injuries in a motor vehicle accident that occurred in Grapevine, Texas. 25 (Compl. ¶¶ 6, 8–10, ECF No. 1). Plaintiff, whose damages from the accident allegedly total 1 $195,000.00, sought insurance coverage benefits from Defendant up to the policy limit of 2 $100,000.00. (Id. ¶¶ 12–13). Plaintiff alleges that Defendant offered only $500.00 in coverage 3 benefits to Plaintiff. (Id. ¶ 14). 4 Plaintiff commenced this action by filing the Complaint on January 23, 2020. (See 5 generally id., ECF No. 1). The Complaint seeks to recover damages for Defendant’s alleged 6 breach of the implied covenant of good faith and fair dealing, breach of contract, and breach of 7 statutory duties under Texas law. (Id. ¶¶ 25–46). Plaintiff’s original Complaint also asserts 8 claims for declaratory and injunctive relief, supplemental relief, and punitive damages. (Id. ¶¶ 9 47–62). 10 On February 18, 2020, Defendant moved to dismiss the Complaint, arguing: (1) the 11 Court does not have personal jurisdiction over Defendant; (2) Plaintiff failed to properly serve 12 process; and (3) the Complaint fails to state plausible claims for declaratory and injunctive 13 relief. (See Mot. Dismiss (“MTD”) 3:1–11:2, ECF No. 6). The Motion to Dismiss is fully 14 briefed. (See MTD Resp., ECF No. 9); (MTD Reply, ECF No. 10). 15 On May 5, 2020, Plaintiff attempted to file an Amended Complaint without seeking 16 leave of Court or consent of Defendant. (See Am. Compl., ECF No. 14). Defendant moved to 17 strike the Complaint because it was improperly filed. (See Mot. Strike, ECF No. 15). Plaintiff 18 concedes that the Amended Complaint was improperly filed, and he asks that the Amended 19 Complaint be stricken. (Resp. Mot. Strike 4:4–5, ECF No. 17) (“Plaintiff apologize [sic] to the 20 Court and opposing Counsel for this oversight, and respectfully request [sic] that the Court 21 strike said pleading without prejudice.”).1 22 Plaintiff now seeks leave of Court to file the Amended Complaint, (See Mot. Leave File 23 Am. Compl. (“Mot. Am.”), ECF No. 16). Defendant opposes the Motion, arguing that the 24 25 1 Given Plaintiff’s request that the Amended Complaint be stricken, the Court GRANTS Defendant’s Motion to Strike, (ECF No. 15). 1 proposed amendment would be futile and prejudice Defendant. (See Resp. Mot. Am. 1:2–11, 2 ECF No. 20). 3 II. LEGAL STANDARD 4 Federal Rule of Civil Procedure 15(a) provides that the court “should freely give leave 5 [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “Four factors are commonly 6 used to determine the propriety of a motion for leave to amend. These are: bad faith, undue 7 delay, prejudice to the opposing party, and futility of amendment. These factors, however, are 8 not of equal weight in that delay, by itself, is insufficient to justify denial of leave to amend.” 9 DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (citation omitted). “[I]t is 10 the consideration of prejudice to the opposing party that carries the greatest weight.” Eminence 11 Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). “The party opposing 12 amendment bears the burden of showing prejudice.” DCD Programs, 833 F.2d at 187. 13 In addition to the Rule 15(a) requirements, the District of Nevada’s Local Rules require 14 that a plaintiff submit a proposed amended complaint along with a motion to amend. LR 15- 15 1(a). If the court grants leave to amend, “the moving party must then file and serve the 16 amended pleading.” LR 15-1(b). 17 III. DISCUSSION 18 Defendant argues in the Motion to Dismiss that the Court lacks personal jurisdiction 19 because Defendant is neither a citizen of Nevada nor has sufficient minimum contacts with the 20 forum state. (MTD 4:21–7:28). Defendant argues in its Response to Plaintiff’s Motion to 21 Amend that the Court should deny leave to amend because the proposed amendment does not 22 cure the jurisdictional pleading deficiencies, Plaintiff’s request is in bad faith, and granting 23 leave to amend would prejudice defendant. (Resp. Mot. Am. 4:6–10:23, ECF No. 20).2 The 24 25 2 Defendant does not raise improper service or failure to state a claim in support of its argument that the proposed amendment would be futile. (Compare MTD 8:1–10:25); (with Resp. Mot. Am. 6:20–8:23). 1 Court begins its discussion with the Motion to Amend because, if granted, Defendant’s Motion 2 to Dismiss will become moot. 3 Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may 4 move to dismiss a complaint for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). In 5 opposition to a defendant’s motion to dismiss for lack of personal jurisdiction, the plaintiff 6 bears the burden of establishing that jurisdiction is proper. See Sher v. Johnson, 911 F.2d 1357, 7 1361 (9th Cir. 1990). If the district court decides the motion without an evidentiary hearing, 8 which is the case here, then “the plaintiff need only make a prima facie showing of the 9 jurisdictional facts.” Id. (citation omitted). Absent an evidentiary hearing this court “only 10 inquire[s] into whether [the plaintiff’s] pleadings and affidavits make a prima facie showing of 11 personal jurisdiction.” Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126, 127–28 (9th Cir. 12 1995). Uncontroverted allegations in the plaintiff’s complaint must be taken as true. See AT&T 13 v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1995). “Conflicts between parties 14 over statements contained in affidavits must be resolved in the plaintiff’s favor.” 15 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 16 When no federal statute governs personal jurisdiction, the district court applies the law 17 of the forum state. See Panavision Int’l L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). 18 Nevada has authorized its courts to exercise jurisdiction over persons “on any basis not 19 inconsistent with . . . the Constitution of the United States.” Nev. Rev. Stat. § 14.065. Thus, the 20 Due Process Clause of the Fourteenth Amendment is the relevant constraint on Nevada’s 21 authority to bind a nonresident defendant to a judgment of its courts. Cf. World-Wide 22 Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980). The Due Process Clause requires 23 that the nonresident must have “certain minimum contacts . . . such that the maintenance of the 24 suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. 25 Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). 1 A court determines sufficient minimum contacts either through “specific jurisdiction,” where 2 the defendant’s specific interaction with the forum relating to the cause of action gives rise to 3 the contacts; or through “general jurisdiction,” where the contacts with the forum are 4 systematic and continuous, warranting the exercise of personal jurisdiction. See id. Here, only 5 specific jurisdiction is at issue. (See Proposed Am. Compl. (“Am. Compl.”) ¶¶ 3–8, Ex. 2 to 6 Mot. Am., ECF No. 16) (“In light of the above, Plaintiff believes, and thereon asserts, that 7 Defendant LIBERTY purposefully availed itself of opportunities to conduct business in the 8 State of Nevada, and is therefore subject to personal specific jurisdiction in Nevada on claims 9 arising out of that contact.”). 10 To establish specific jurisdiction, the Proposed Amended Complaint alleges that, when 11 Defendant offered Plaintiff an insurance policy and accepted Plaintiff’s premium payments, 12 “Defendant LIBERTY knew that: (a) Plaintiff was a resident of Nevada; (b) the subject 13 automobile would be operated and maintained on a regular basis by Plaintiff in Nevada, and (c) 14 Plaintiff was responsible and would be making payment of all premiums associated with the 15 2014 policy changes in question.” (Am. Compl. ¶ 14); (see also id. ¶¶ 3–8, 11–13). Defendant 16 responds that the Amended Complaint is futile because “Plaintiff appears to attempt 17 amendment solely for the purpose of supplementing his position regarding personal jurisdiction 18 by reference to an alleged phone call, the desired new allegation is immaterial, and therefore 19 futile.” (Resp. Mot. Amend. 7:6–9).3 The Court concludes that, in the absence of evidence to 20 the contrary, Plaintiff’s allegations establish the Court’s specific jurisdiction over Defendant. 21 22 23 3 Defendant appears to be referencing the following allegation in the Amended Complaint: “Sometime prior to May 30, 2014, a long-distance telephone conference was held between the Plaintiff, Defendant’s named insured 24 under it’s [sic] 2014 existing policy, and Defendant’s insurance sales agent, wherein said sales agent discussed and obtained from the Plaintiff certain insurance rating and other information regarding Plaintiff and his 2008 25 Mercedes Benz S-550 automobile . . . including whether he desired additional or increased coverages on said policy.” (Am. Compl. ¶ 12). 1 In McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957), the United States 2 Supreme Court held that a defendant-insurer has sufficient contacts with the forum state to 3 confer specific jurisdiction when the defendant issued an insurance policy with knowledge that 4 the plaintiff resided in the forum state, accepted premium payments from the forum, and knew 5 that insurance benefits would be paid in the forum. 355 U.S. 220, 223 (1957) (“It is sufficient 6 for purposes of due process that the suit was based on a contract which had substantial 7 connection with that State. . . . The contract was delivered in California, the premiums were 8 mailed from there and the insured was a resident of that State when he died.”). Here, Plaintiff 9 alleges that Defendant issued Plaintiff an insurance policy with knowledge that he resided in 10 Nevada, accepted premium payments from Nevada, and knew that the insured’s vehicle would 11 be used in Nevada. (Am. Compl. ¶ 14). Accordingly, irrespective of whether the long-distance 12 call was a sufficient minimum contact to establish specific jurisdiction, Plaintiff’s other 13 allegations confer this Court’s jurisdiction over Defendant. 14 The Court must accept Plaintiff’s allegations in the Proposed Amended Complaint as 15 true because Defendant has not produced evidence to the contrary. AT&T, 94 F.3d at 588. 16 Defendant alleges that “Plaintiff seeks benefits pursuant to a Texas policy issued to a Texas 17 resident (someone else), for a Texas accident that occurred in 2018 . . . .” (Resp. Mot. Am. 18 8:15–20). However, the disputed insurance policy itself and related documentation are not 19 among the Exhibits that Defendant produced in support of its Motion to Dismiss. (See Exs. 1–4 20 to Mot. Dismiss, ECF Nos. 6-1–6-4).4 The Court therefore is left without evidence to evaluate 21 22 4 Defendant’s proffered evidence accompanying the Motion to Dismiss does little to support its position. Exhibit 23 1, entitled “Nevada Division of Insurance Analysis,” merely provides screenshots showing that Defendant’s business does not appear from a search of the Nevada Division of Insurance website. (See Nev. Div. Ins. 24 Analysis, Ex. 1 to MTD, ECF No. 6-1). Defendant does not explain the meaning of the Exhibit, and it may only show that Defendant is not “at home” and subject to general jurisdiction in Nevada. The same is true of Exhibits 25 2 and 3—Defendant’s Annual Statement and the Texas Division of Insurance Report—which show that Defendant is, in fact, a Texas company. (Annual Statement and Texas Div. Ins. Report, Exs. 2–3 to MTD, ECF No. 6-2, 6-3). 1 the veracity of Defendant’s allegations and must accept Plaintiff’s allegations as true. See 2 Schwarzenegger, 374 F.3d at 800. Thus, the Court may presently exercise personal jurisdiction 3 over Defendant. 4 Given that the Court finds that the Proposed Amended Complaint establishes personal 5 jurisdiction, and Defendant’s argument that amendment would be futile depends exclusively on 6 the Court’s alleged absence of personal jurisdiction over Defendant, Defendant has not shown 7 futility of amendment. Nor can Defendant establish prejudice. Defendant argues that granting 8 leave to amend will cause prejudice because amendment will moot the fully briefed motion to 9 dismiss and delay dismissal of the Complaint. (See Mot. Am. 5:25–6:19). The argument 10 incorrectly assumes that Plaintiff’s proposed amendment is futile for failure to adequately 11 allege personal jurisdiction. (See id. 6:5–16) (“Delay in this regard is also not justifiable 12 because the proposed amendment cannot resolve the dispute regarding the ability for any 13 personal jurisdiction for Defendant . . . .”). Given that the Court has concluded above that the 14 proposed amendment alleges sufficient facts for the Court to exercise personal jurisdiction over 15 Defendant, it would be error for the Court to dismiss without leave to amend. Swartz v. KPMG 16 LLP, 476 F.3d 756, 760 (9th Cir. 2007) (quoting McKesson HBOC, Inc. v. N.Y. State Common 17 Ret. Fund, Inc., 339 F.3d 1087, 1090 (9th Cir. 2003)) (“Assuming a substantive or 18 jurisdictional defect in the pleadings, “[d]ismissal without leave to amend is proper only if it is 19 clear, upon de novo review, that the complaint could not be saved by any amendment.”). 20 Here, because the Amended Complaint shows that Plaintiff can amend the Complaint in 21 a manner that confers personal jurisdiction over Defendant, the Court must provide leave to 22 amend. Although Plaintiff is correct that the Motion to Amend provides Plaintiff a means to 23 24 Defendant does produce a payment notice that Kenneth W. Chism (“Chism”) is the insured and made a payment under the policy. (See Ex. 1 to MTD Reply, ECF No. 10-1). However the evidence is not sufficient to rebut the 25 allegations in the Proposed Amended Complaint because it does not show: (1) where Chism lived; (2) that Defendant did not know the vehicle would be serviced and operated in Nevada; or (3) that Plaintiff did not make other premium payments on the policy from Nevada with Defendant’s knowledge. 1 overcome a deficient Response to the Motion to Dismiss, that alone does not establish 2 prejudice. Thus, Defendant has not established any factor that cautions against providing leave 3 to amend. The Court therefore grants Plaintiff’s request for leave to amend and denies the 4 pending Motion to Dismiss as moot. 5 IV. CONCLUSION 6 IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss, (ECF No. 6), is 7 DENIED as moot. 8 IT IS FURTHER ORDERED that Defendant’s Motion to Strike, (ECF No. 15), is 9 GRANTED. 10 IT IS FURTHER ORDERED that Defendant’s Motion for Leave to File an Amended 11 Complaint, (ECF No. 16), is GRANTED. Plaintiff shall file the Amended Complaint within 12 twenty-one (21) days from entry of this Order. 13 DATED this __2_0__ day of September, 2020. 14 15 ___________________________________ Gloria M. Navarro, District Judge 16 UNITED STATES DISTRICT COURT 17 18 19 20 21 22 23 24 25