Cook v. State Farm General Insurance Company

Background

Jason Cook and Elfe Kuesters alleged that they were forced to evacuate their homes because of a wildfire and that power remained out during the evacuation. When they returned 20 days later, food left in their refrigerators had decomposed. They alleged that chemical reactions physically altered the refrigerators’ components, causing a total loss of personal property.

The plaintiffs sought coverage under their homeowners policies based on provisions covering personal-property damage caused by fire. They alleged that State Farm denied their claims because it did not consider fire the predominant cause of the wildfire-related power outages. They brought state-law claims on their own behalf and for a proposed class.

In an earlier order, the court dismissed the claim for declaratory relief and dismissed the claim for restitution under California’s Unfair Competition Law, while allowing amendment only as to injunctive relief. In the Second Amended Complaint, the plaintiffs repeated the dismissed claims and amended their request for injunctive relief.

Court’s analysis

The plaintiffs sought an injunction that would prohibit State Farm from denying claims for personal-property losses resulting from certain fire-, lightning-, or windstorm-related power outages. The court had previously found that they had not shown they were realistically threatened by a repetition of State Farm’s alleged conduct. The plaintiffs added an allegation that California would continue to experience major wildfires and unplanned power outages in future years because of increasing temperatures. The court held that this allegation was insufficient because a lengthy chain of events would have to occur before the plaintiffs would again experience the same alleged conduct.

The plaintiffs also sought an injunction requiring State Farm to open their claims and determine the amount owed. The court explained that the Unfair Competition Law permits injunctive relief and restitution but does not permit damages. Because the plaintiffs’ theory was that their refrigerator damage was covered and that State Farm had deprived them of contractual benefits, the court concluded that the requested injunction effectively sought payment of insurance benefits. It therefore held that this request was not available under the Unfair Competition Law.

The court also addressed the plaintiffs’ decision to repeat the previously dismissed declaratory-relief claim and restitution request to preserve them for appeal. The court relied on Ninth Circuit authority stating that claims dismissed with prejudice and without leave to amend do not need to be repeated in a later amended complaint to preserve them for appeal. Although the Ninth Circuit had not prohibited repleading in every circumstance, the court found that including claims already dismissed could confuse the scope of discovery and later motions.

Disposition

The court granted State Farm’s motion to dismiss or strike portions of the Second Amended Complaint. It dismissed the plaintiffs’ injunctive-relief claim, included in the Fourth Claim for Relief, without further leave to amend. It struck the First Claim for Relief and the Fourth Claim for Relief to the extent it sought restitution. It denied the plaintiffs’ request for further leave to amend. The order did not dismiss the Second and Third Claims for Relief, which alleged breach of contract and breach of the covenant of good faith and fair dealing.

Judge Maxine M. Chesney signed the order on April 26, 2022.