Varlack v. Liberty Mutual Insurance Company

Background

Varlack brought claims against Ohio Security Insurance Company, Kaiser, and CoverWallet. The opinion addresses motions to dismiss filed by Kaiser, CoverWallet, and Ohio Security. The court states that Kaiser and CoverWallet challenged Varlack’s negligence claim under California’s two-year statute of limitations. Kaiser separately argued that service of process occurred more than 90 days after the complaint was filed. Ohio Security’s motion relied on problems identified in the court’s prior decision.

Evidentiary objection

The court struck paragraphs 2 through 17 of Tiega-Noel Varlack’s declaration supporting the opposition to Kaiser’s motion. The court found that the paragraphs repeated allegations from the complaint and that Tiega-Noel Varlack, identified as Varlack’s lawyer, had not shown personal knowledge of those facts.

Kaiser’s service argument

Under Federal Rule of Civil Procedure 4(m), the court explained that it could extend the service deadline retroactively, even without a showing of good cause. The court denied the motion to dismiss based on late service. Although Varlack had not necessarily shown good cause and had not shown that Kaiser had actual notice of the lawsuit, the court found that other factors weighed against dismissal: the negligence claim would likely be barred by the statute of limitations if the case were dismissed, the two-month service delay had not caused obvious prejudice to Kaiser, and Kaiser was eventually served.

Negligence claims against Kaiser and CoverWallet

Kaiser and CoverWallet argued that the negligence claim was barred by California’s two-year statute of limitations. Varlack argued that California Emergency Rule 9 tolled, or paused, the limitations period for 178 days during the COVID-19 emergency.

The court held that federal courts had consistently applied Emergency Rule 9 to California state-law claims. Because the parties agreed that California’s limitations period applied, the court held that California’s tolling provision applied as well. The court rejected the argument that Varlack had to prove that COVID-19 specifically prevented him from filing earlier. The court therefore held that the negligence claim was not time-barred and did not reach whether the claim related back to the original complaint under Federal Rule of Civil Procedure 15.

The court denied Kaiser and CoverWallet’s motions to dismiss. The opening order states: “Kaiser and CoverWallet’s motions to dismiss are denied.”

Ohio Security

The court granted Ohio Security’s motion to dismiss for the reasons explained in its prior decision. It found that Varlack had added no new facts and had merely repeated legal theories rejected in the earlier briefing. The court also found that Varlack’s reliance on a Ninth Circuit decision concerning whether the actual or potential presence of COVID-19 could constitute direct physical loss or damage to property did not address the problem here, because the complaint did not allege that COVID-19 was actually or potentially present on the property.

The court dismissed the claims against Ohio Security without leave to amend. It concluded that Varlack had not addressed the problems identified in the prior order and had not explained how he could amend the complaint to state a claim against Ohio Security.

Further proceedings

The court ordered that Kaiser and CoverWallet’s answers were due in seven days. It set a case-management conference for March 8, 2023, and required a case-management statement by March 1, 2023.