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Probuilders Specialty Insurance Co. v. Double M. Construction

United States District Court, D. Nevada

March 17, 2015

PROBUILDERS SPECIALTY INSURANCE COMPANY, et al., Plaintiff(s),
v.
DOUBLE M. CONSTRUCTION dba CLASSIC HOMES, Defendant(s)

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court is counterdefendant Probuilders Specialty Insurance Company's (hereinafter "Probuilders") motion to dismiss. (Doc. #28). Double M. Construction dba Classic Homes' (hereinafter "Double M") responded, (doc. #31), and Probuilders replied, (doc. #32).

I. Background

Double M was the developer and general contractor of single-family homes at Richland Estates, a housing development in Pahrump, Nevada. (Doc. #24 at 2). On August 10, 2012, fourteen Richland Estate homeowners filed suit in Nye County District Court (hereinafter " Erbe action"). ( Id. ). The homeowners have asserted numerous causes of action including constructional defects under NRS Chapter 40. One of the underlying theories is that the affected homes are being damaged due to earth movement, specifically differential settlement. ( Id. at 2-3).

Probuilders has issued Double M several insurance policies (the "policies") where Double M is a named insured. (Doc. #24 at 3-4). Probuilders asserts that the policies do not cover injury to property caused by earth movement. ( Id. at 5-6). Probuilders has undertaken the legal defense of Double M in the Erbe action while issuing a full and complete reservation of rights. ( Id. at 9).

Probuilders filed the instant case seeking three types of declaratory relief. First, Probuilders requests that this court declare that Probuilders owes no duty to defend Double M in the Erbe action, or alternatively, that this court declare the rights and obligations of Probuilders and Double M under the policies. ( Id. at 12).

Second, Probuilders requests that this court declares that Probuilders owes no duty to pay any judgments obtained against Double M in the Erbe action, or alternatively, that this court declare the rights and obligations of Probuilders and Double M under the policies. ( Id. at 13).

Third, Probuilders requests that this court declare that the deductable applies on a per home basis, that Double M is obligated to pay a deductable for each house involved in the Erbe action, and that by Double M's failure to do so, the policies are void regarding the Erbe action. ( Id. at 14).

On December 8, 2014, Double M filed an answer and a counterclaim. (Doc. #27). Double M asserts four causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing - contract damages; (3) breach of the implied covenant of good faith and fair dealing - tort damages; and (4) violation of NRS ยง 686A.310(1)(a). ( Id. at 9-11).

Double M also seeks declaratory relief, specifically asking that this court declare (1) that the policies at issue cover the construction defect claims; (2) Double M is entitled to indemnification under the policies; (3) that the policies are enforceable and do not preclude coverage of the claims; (4) that Probuilders has a duty to defend Double M; and (5) Double M is entitled to reimbursement of attorneys' fees and costs incurred regarding this action. ( Id. at 12).

Probuilders filed the instant motion to dismiss Double M's counterclaim, (doc. #28), to which Double M responded, (doc. #31), and Probuilders replied, (doc. #32).

II. Legal standard

A court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a) (2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 1949. Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 1949.

Where the complaint does not "permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief." Id. (internal quotations and alterations omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

The Ninth Circuit addressed post- Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court held, "First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Id.

III. Discussion

A. Count I: Breach of contract


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