United States District Court, D. Nevada
ORDER DENYING ALPS' MOTION FOR PARTIAL JUDGMENT
ON THE PLEADINGS AND MOTION TO STRIKE AND DENYING
PLAINTIFFS' MOTION FOR LEAVE TO FILE SUR-REPLY AND MOTION
FOR HEARING [ECF NOS. 43, 46, 50, 52]
P. GORDON UNITED STATES DISTRICT JUDGE
plaintiffs provided insurance and reinsurance coverage to a
defendant in an underlying personal injury lawsuit. The
plaintiffs sue Douglas Gardner, the defense counsel in that
suit, and his malpractice insurer, ALPS Property &
Casualty Insurance Company. The plaintiffs allege that ALPS
committed breach of contract, breach of the covenant of good
faith and fair dealing, and fraud by offering to contribute
$1.5 million towards a settlement of the underlying
litigation and then reneging on that offer. ALPS moves for
judgment on the pleadings on the fraud claim. ECF No. 43. The
plaintiffs move for leave to file a sur-reply in opposition
to the motion. ECF No. 50. ALPS moves to strike the
sur-reply. ECF No. 52.
ALPS' motion for judgment on the pleadings because the
plaintiffs have pleaded fraud with requisite particularity
and ALPS relies on evidence outside of the pleadings. Because
the surreply is focused on the evidence outside of the
pleadings, I deny the motion for leave to file the surreply
and deny the motion to strike as moot.
represented the defendant in the underlying personal injury
lawsuit filed in 2016. ECF No. 26 at ¶¶ 18, 21-22.
The plaintiffs in this suit provided insurance and
reinsurance coverage to that defendant. Id. at
¶¶ 14-15. The plaintiffs allege that Gardner
committed malpractice, which resulted in entry of a $4, 940,
629.74 judgment against the defendant in that suit.
Id. at ¶¶ 40-41. After the defendant filed
a notice of appeal, the parties agreed to a $3 million
settlement in mediation. Id. at ¶¶ 43-45.
plaintiffs in this suit negotiated with ALPS prior to the
mediation. Id. at ¶ 45. ALPS made a written
offer to “fund $1.5 million in settlement” and
later reiterated “its commitment to fund up to $1.5
million of a total $3 million settlement . . . and stated
that its contribution offer would remain open through
mediation.” Id. The plaintiffs allege that
they agreed to the $3 million settlement in reliance on this
representation. Id. However, “ALPS was
secretly communicating with [the plaintiff's]
counsel” and later refused to fund the settlement as
promised. Id. at ¶¶ 46-47. The plaintiffs
allege that ALPS “made the false promise . . . to
induce [the plaintiffs in this suit] to settle[, ]”
“thereby capping ALPS exposure due to Gardner's
malpractice.” Id. at ¶¶ 75-76.
Judgment on the Pleadings Standard
on the pleadings under Federal Rule of Civil Procedure 12(c)
is proper if, “taking all the allegations in the
pleadings as true, the moving party is entitled to judgment
as a matter of law.” Milne ex rel. Coyne v. Stephen
Slesinger, Inc., 430 F.3d 1036, 1042 (9th Cir. 2005)
(quotation omitted). “[J]udgment on the pleadings is
improper when the district court goes beyond the pleadings to
resolve an issue; such a proceeding must properly be treated
as a motion for summary judgment.” Hal Roach
Studios, Inc. v. Richard Feiner & Co., 896 F.2d
1542, 1550 (9th Cir. 1989). A Rule 12(c) motion is the
functional equivalent of a Rule 12(b)(6) motion. See
Harris v. Orange Cty., 682 F.3d 1126, 1131 (9th Cir.
2012). Consequently, I must determine whether the complaint
contains “sufficient factual matter . . . to state a
claim for relief that is plausible on its face.”
Id. (quoting Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009)).
Federal Rule of Civil Procedure 9(b)'s particularity
requirement applies to the plaintiffs' fraud claim.
“Rule 9(b) requires a party to state with particularity
the circumstances constituting fraud or mistake, including
the who, what, when, where, and how of the misconduct
charged.” Ebeid ex rel. U.S. v. Lungwitz, 616
F.3d 993, 998 (9th Cir. 2010) (quotation omitted).
Id. “The plaintiff must set forth what is
false or misleading about a statement, and why it is
false.” Id. (quotation omitted). In sum, the
plaintiff “must provide enough detail to give [the
defendant] notice of the particular misconduct which is
alleged to constitute the fraud charged so that [it] can
defend against the charge and not just deny that [it has]
done anything wrong.” Id. at 999 (quotation
argues that the plaintiffs fail to plead fraud with
particularity. ECF No. 43 at 8-9. ALPS also attaches a
“claim debilitating email” from the
plaintiffs' attorney on the day of the mediation.
Id. at 3 n.1. The plaintiffs respond that its claim
is pleaded with particularity and they attach a declaration
providing context to the email. ECF No. 44.
Nevada law, a claim for fraud requires proof of four
elements: “(1) [a] false representation made by the
defendant; (2) defendant's knowledge or belief that its
representation was false or that defendant has an
insufficient basis of information for making the
representation; (3) defendant intended to induce plaintiff to
act or refrain from acting upon the misrepresentation; and
(4) damage to the plaintiff as a result of relying on the
misrepresentation.” Barmettler v. Reno Air,
Inc., 956 P.2d 1382, 1386 (Nev. 1998). The plaintiffs
allege (1) that ALPS' two offers to fund $1.5 million of
the settlement were false, (2) that ALPS knew the offers were
false because it had no intention of funding the settlement
and made the offers to induce the plaintiffs in this suit to
settle, (3) the plaintiffs relied on the misrepresentation,
and (4) the plaintiffs incurred damage as a result. ECF No.
26 at ¶¶ 73-79. The plaintiffs allege in their
amended complaint the date these representations were made,
to whom they were made, and why they were false. Id.
at ¶¶ 45, 75. Ultimately, ALPS' ability to
respond to the plaintiffs' allegations with a purportedly
“claim debilitating” email suggests that it can
“defend against the charge and not just deny that [it
has] done anything wrong.” Lungwitz, 616 F.3d
at 999 (quotation omitted). So, the plaintiffs' fraud
claim is alleged with requisite particularity.
argues in reply that the plaintiffs' allegation that ALPS
did not intend to perform is insufficient because otherwise
“every claim for breach of contract could be converted
into a fraud case ‘so long as the plaintiff adds to his
complaint a general allegation that the defendant never
intended to keep [its] promise.'” ECF No. 45 at 6
(quoting Smith v. Allstate Ins. Co., 160 F.Supp.2d
1150, 1154 (S.D. Cal. 2001). But Smith is
distinguishable. In that case, the plaintiff alleged that his
insurer made misrepresentations in his policy, including that
he would be in “good hands.” Smith, 160
F.Supp.2 d at 1153-54. In contrast, the plaintiffs in this
case allege specific misrepresentations in the days prior ...