Opinion
Case No. 05-CV-1677 H (BLM).
April 3, 2006
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITHOUT PREJUDICE
On February 17, 2006, pro se Plaintiff Charles R. Jordan filed a second amended complaint ("SAC"). (Doc. No. 13.) Defendant Consumer Plumbing Recovery Center ("CPRC") moved to dismiss this action on February 27, 2006. (Doc. No. 15.) On March 13, 2006, Plaintiff filed his opposition. (Doc. No. 18.) Defendant filed its reply on March 27, 2006. (Doc. No. 20.) On April 3, 2006, the Court held a hearing on the motion. Plaintiff appeared pro se and Brandon C. Fernald appeared on behalf of Defendant. For the reasons stated below, the Court GRANTS Defendant's motion to dismiss without prejudice.
Procedural History
On August 24, 2005, Plaintiff filed a complaint relating to Defendant's administration of claims pursuant to a settlement agreement reached in the matter of Cox v. Shell Oil, Civ. A. No. 18844, 1995 WL 775363 (Tenn.Ch. Nov. 17, 1997). (Doc. No. 1.) Defendant filed a motion to dismiss on September 19, 2005. (Doc. No. 4.) The Court granted Defendant's motion without prejudice on October 20, 2005. (Doc. Nos. 7.) On November 15, 2005, Plaintiff filed an amended complaint. (Doc. No. 8.) The Court granted Defendant's motion to dismiss the first amended complaint without prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6) on January 18, 2006. (Doc. No. 12.)
Factual Background
This lawsuit arises out of the Cox class action settlement agreement regarding polybutylene pipes. The Court takes judicial notice of the Final Order in Cox v. Shell Oil, Civ. A. No. 18844, 1995 WL 775363 (Tenn.Ch. Nov. 17, 1997) that approved the settlement agreement. (Doc. No. 6, Ex. A.) The Court also takes judicial notice of the underlying settlement agreement that, among other things, established the CPRC. (Doc. No. 6, Ex. B.) The CPRC manages and disburses funds to replace polybutylene piping. (Id. at 22.)
The settlement agreement provides the sole and exclusive remedy for claims brought by settlement class members. (Id. at 24.) The settlement agreement also contains appellate and arbitration procedures for disputed claims. First, a dissatisfied claimant may appeal the CPRC's decision to an Appeals Committee appointed by the CPRC's Board of Directors. (Id., Ex. C at 15-16.) If still unsatisfied, the claimant may then pursue arbitration in the state in which the property is located. (Id.)
According to the SAC, Plaintiff owns a single family residence in the Emerald Point Development in Oceanside, California. (SAC at 3-4.) Plaintiff alleges that he contacted Defendant on June 7, 2005 concerning his claims that polybutylene pipes burst in his home, causing it damage. (Id.) Accordingly, Plaintiff was determined to be a member of the Cox settlement class. (Pl's Opp. to Mot. to Dismiss, Letter from CPRC Ombudsman, dated February 2, 2006 at 2.)
Plaintiff's second amended complaint alleges only one new cause of action for subrogation. (SAC at 4.) It also appears to re-allege causes of action previously stated by Plaintiff in his earlier complaints: (1) intentional infliction of emotional distress; (2) violations under Title VII of the Civil Rights Act of 1964; (3) a breach of a covenant of good faith and fair dealing; and (4) civil conspiracy. (Id. at 4-5.)
Discussion
1. The Settlement Agreement
Under the Full Faith and Credit Act, the "judicial proceedings" of a state "shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such state . . . from which they are taken." 28 U.S.C. § 1738; see also Matsushita Electric Indust. Co., Ltd. v. Epstein, 516 U.S. 367, 373 (1996). The Supreme Court held in Matsushita that the Full Faith and Credit Act gives preclusive effect to state court judgments even when those state court judgments incorporate class action settlement agreements that release claims solely within the jurisdiction of federal courts. Matsushita, 516 U.S. at 375.
Additionally, the Ninth Circuit has repeatedly expressed its support for arbitration clauses contained in contracts between parties such as a settlement agreement. See generally, Schoenduve Corp. v. Lucent Tech., Inc., ___ F.3d ___, 2006 WL 709194, at *2 (9th Cir. 2006) (noting that arbitration offers flexibility, efficiency and cost benefits compared to litigation); see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (holding that forum selection clause in cruise line's ticket was reasonable and enforceable). Pursuant to 9 U.S.C. § 4, a district court may compel a party to submit to arbitration where the dispute between the parties is covered by an arbitration provision. 9 U.S.C. § 4. Furthermore, a district court generally has discretion to stay proceedings in its court.Lockyear v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005).
Here, Plaintiff is a member of the Cox settlement class. (Pl's Opp. to Mot. to Dismiss, Letter from CPRC Ombudsman, dated February 2, 2006 at 2.) The settlement agreement that was approved by the Tennessee court is the sole means of recovery for members of the Cox settlement class. (Doc. No. 6, Ex. B at 24.) The settlement agreement also provides for an appeals process for disputed claims. (Id., Ex. C at 15.) Pursuant to the settlement agreement, a claimant who remains unsatisfied with his recovery may appeal the CPRC's decision first to a Board of Directors and then may pursue arbitration in the state in which the property is located. (Id.)
Based on the documents submitted by Plaintiff, it appears that he has yet to pursue an appeal with the CPRC's Board of Directors or arbitration. (Pl's Opp. to Mot. to Dismiss, Letter from CPRC Ombudsman, dated February 2, 2006 at 1.) Therefore, Plaintiff has failed to exhaust the administrative remedies available to him pursuant to the settlement agreement.
Accordingly, the Court GRANTS Defendant's motion to dismiss without prejudice. Plaintiff shall first exhaust his remedies under the settlement agreement before pursuing any further claims with the Court. The Court further ORDERS Defendant to file with the Court an explanation of the arbitrational processes available to Plaintiff pursuant to Part VII(B) of Exhibit A to the settlement agreement on or before May 4, 2006.
Incidentally, the Court notes that the parties may avail themselves to a settlement conference with the Magistrate Judge assigned to this case.
2. Federal Rule of Civil Procedure 12(b)(6)
A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims in the complaint. Courts are particularly liberal in construing the pleadings of pro se litigants. Hughes v. Rowe, 449 U.S. 5, 9 (1980). Claims asserted by pro se litigants will be dismissed if "`it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Haines v. Kerner, 404 U.S. 519, 520-21 (1972) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
Plaintiff alleged a subrogation cause of action in the SAC. Under California law, subrogation is defined as:
The substitution of another person in place of the creditor or claimant to whose rights he or she succeeds in relation to the debt or claim. By undertaking to indemnify or pay the principal debtor's obligation to the creditor or claimant, the "subrogee" is equitably subrogated to the claimant (or "subrogor"), and succeeds to the subrogor's rights against the obligor. . . . The doctrine of subrogation is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays the debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.Hartford Cas. Ins. Co. v. Mt. Hawley Ins. Co., 123 Cal. App. 4th 278, 287 (2004); see also Truck Ins. Exch. v. County of Los Angeles, 95 Cal. App. 4th 13, 20-21 (2002) (stating the elements of an insurance-based subrogation claim).
Plaintiff has failed to allege necessary facts to state a claim under a theory of subrogation. See Fed.R.Civ.P. 12(b)(6). It appears from his complaint that Plaintiff attempts to argue that the CPRC has in some way assumed the obligations of another party. To the contrary, the CPRC was established by the settlement agreement to manage and release funds to replace polybutylene piping. (Doc. No. 6, Ex. B at 22.) As such, the CPRC is an administrative body established by the court-approved settlement agreement to administer claims and the disbursement of funds arising from the class action settlement. (Id., Ex. C at 10.)
Finally, the Court further notes that, to the extent that Plaintiff re-alleged causes of action in the SAC that he raised in his earlier complaints, the repeated causes of action must fail because Plaintiff has not provided any additional facts related to them. Particularly, Plaintiff failed to assert any new facts that would state a claim for intentional infliction of emotional distress. See Fed.R.Civ.P. 12(b)(6). The Court cannot retain subject matter jurisdiction over Plaintiff's complaint without this cause of action, as it provides the necessary claim for damages required for a diversity action.See 18 U.S.C. § 1332.
Conclusion
For the reasons stated above, the Court GRANTS Defendant's motion to dismiss without prejudice. Plaintiff may choose to amend his complaint in an attempt to cure the deficiencies noted above, but not until he exhausts his administrative and arbitrational remedies pursuant to the settlement agreement. Additionally, the Court ORDERS Defendant to file an explanation of the procedures for arbitration available to Plaintiff pursuant to Part VII(B) of Exhibit A to the settlement agreement on or before May 4, 2006.IT IS SO ORDERED.