United States District Court, D. Nevada
M. Navarro, Chief Judge United States District Judge.
before the Court is the Motion to Dismiss, (ECF No. 19),
filed by Defendant Lexington Insurance Company
(“Defendant”). Plaintiff Centex Homes
(“Plaintiff”) filed a Response, (ECF No. 28), and
Defendant filed a Reply, (ECF No. 34). For the following
reasons, the Motion to Dismiss is DENIED in part and
GRANTED in part.
instant dispute arises out of a state court action involving
property damage from subcontractors that worked for Plaintiff
to build a housing development (“the
development”). On February 15, 2013, homeowners in the
development filed an amended complaint in state court against
Plaintiff alleging that Plaintiff is liable for defective and
negligent engineering and construction on homes in the
development. (See Compl. ¶ 43, ECF No. 1);
See Pensi Callaway, et al. v. Centex Homes, Eighth
Judicial District Court, Clark County, Nevada, Case No.
A-13-674439-D (“Callaway action”).
Plaintiff alleges that the Callaway action seeks
damages arising out of the work or ongoing operations of
various subcontractors that were insured through Defendant.
(Id. ¶ 44). As a result of the
Callaway action, Plaintiff claims that it has
incurred significant costs. (Id. ¶ 45).
issued insurance policies to the subcontractors Desert
Plastering, LLC, and L&S Air Conditioning, Inc.
(collectively the “subcontractors”) that worked
on the development. (Id. ¶¶ 31-35).
Defendant's polices were endorsed to cover Plaintiff as
an “additional insured” with respect to liability
arising out of the subcontractor's respective work.
(Id. ¶ 36). Plaintiff alleges that the policies
required Defendant to defend Plaintiff against all claims
that create potential liability for covered property damage
or bodily injury. (Id. ¶ 37). On September, 11,
2012, Plaintiff tendered the defense and indemnity of the
Callaway action to Defendant under the policies that
were issued to the subcontractors. (Id. ¶ 56).
Plaintiff claims that on December 12, 2012, and February 8,
2013, Defendant improperly breached its duty to defend
Plaintiff in the Callaway action under the insurance
policies issued to the subcontractors. (Id.
¶¶ 57-60). Specifically, Plaintiff alleges that it
was forced to spend significant time and money defending
itself against the Callaway action because Defendant
failed to meet its duty pursuant to the policies.
(Id. ¶ 61).
on these allegations, Plaintiff asserts the following causes
of action against Defendant: (1) breach of contract; (2)
breach of the implied duty of good faith and fair dealing;
(3) violations of Nevada's Unfair Claims Settlement
Practices Action under NRS § 686A.310; and (4)
declaratory relief. (Id. ¶¶ 67-88). In the
instant motion, Defendant requests that the Court dismiss all
of Plaintiff's claims, as well as Plaintiff's prayer
for attorney's fees and punitive damages. (Mot. to
Dismiss 2:3-7, ECF No. 19).
is appropriate under Rule 12(b)(6) where a pleader fails to
state a claim upon which relief can be granted. Fed.R.Civ.P.
12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). A pleading must give fair notice of a legally
cognizable claim and the grounds on which it rests, and
although a court must take all factual allegations as true,
legal conclusions couched as factual allegations are
insufficient. Twombly, 550 U.S. at 555. Accordingly,
Rule 12(b)(6) requires “more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. “To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. This standard “asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Court grants a motion to dismiss for failure to state a
claim, leave to amend should be granted unless it is clear
that the deficiencies of the complaint cannot be cured by
amendment. DeSoto v. Yellow Freight Sys.,
Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant to
Rule 15(a), the court should “freely” give leave
to amend “when justice so requires, ” and in the
absence of a reason such as “undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure
to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, futility of the amendment, etc.” Foman
v. Davis, 371 U.S. 178, 182 (1962).
Breach of Contract
Nevada, to succeed on a claim for breach of contract a
plaintiff must show: (1) the existence of a valid contract;
(2) that the plaintiff performed or was excused from
performance; (3) that the defendant breached the terms of the
contract; and (4) that the plaintiff was damaged as a result
of the breach. See Restatement (Second) of Contracts
§ 203 (2007); see also Bernard v. Rockhill Dev.
Co., 734 P.2d 1238, 1240 (Nev. 1987); see also
Brochu v. Foote Enterprises, Inc., No. 55963,
2012 WL 5991571 at *5 (Nev. 2012) (“To prove a breach
of contract, the plaintiff must show an existing valid
agreement with the defendant, the defendant's material
breach, and damages.”).
Nevada law, “an insurer bears a duty to defend its
insured whenever it ascertains facts which give rise to the
potential of liability under the policy.”
United Nat'l Ins. Co. v. Frontier Ins. Co., 99
P.3d 1153, 1158 (Nev. 2004). “If there is any doubt
about whether the duty to defend arises, this doubt must be
resolved in favor of the insured.” Id.
Additionally, “[w]hile clauses providing coverage are
interpreted broadly so as to afford the greatest possible
coverage to the insured, clauses excluding coverage are
interpreted narrowly against the insurer.”
Nat'l Union Fire Ins. Co. of State of Pa. v.
Reno's Exec. Air, Inc., 682 P.2d 1380, 1383
first cause of action alleges that it is covered under
Defendant's insurance policies as “additional
insureds, ” and that Plaintiff “performed all
obligations owing under each of the policies in connection
with its tender of defense, and [Plaintiff] has satisfied all
relevant conditions precedent.” (Compl. ¶¶
31-37, 68, ECF No. 1).
claims that Plaintiff “alleged only conclusions in
support of its breach of contract claim.” (Mot. to
Dismiss 12:20). Moreover, Defendant avers that the insurance
policies' language demonstrates that Plaintiff's
breach of contract claim fails. (See Id. 13:6).
Specifically, the parties dispute whether or not the
Callaway action involves construction defects from
ongoing operations or completed work
because the policies only cover ongoing
construction. (See Id. 14:15-23); (see also
Resp. 6:4-9, ECF No. 28); (see also Ex. 1 to App. to
Mot. to Dismiss at 6, ECF No. 20-1) (emphasis added).
party disputes the existence of a valid contract. Because a
valid contract exists and Plaintiff alleges that the contract
was breached, Plaintiff has met the first and second
requirements for a breach of contract claim. Additionally,
Plaintiff claims that Defendant “failed to ...