Opinion
Case No. 2:20-cv-09416-MCS-AGR
2021-07-16
LOCKANDLOCATE, LLC, a California Limited Liability Company, Plaintiff, v. HISCOX INSURANCE CO., INC., an Illinois Corporation, et al., Defendants.
Nicholas Duane Myers, Clifford L. White, Myers Law Group, Newport Beach, CA, for Plaintiff. James A. Stankowski, Paul S. White, David M. Morrow, Wilson Elser Moskowitz Edelman and Dicker LLP, Los Angeles, CA, for Defendant Hiscox Insurance Company Inc.
Nicholas Duane Myers, Clifford L. White, Myers Law Group, Newport Beach, CA, for Plaintiff.
James A. Stankowski, Paul S. White, David M. Morrow, Wilson Elser Moskowitz Edelman and Dicker LLP, Los Angeles, CA, for Defendant Hiscox Insurance Company Inc.
ORDER GRANTING IN PART AND DENYING IN PART HISCOX INSURANCE COMPANY, INC.’S MOTION TO DISMISS, AND/OR STRIKE PORTIONS OF, PLAINTIFF LOCKANDLOCATE, LLC'S COMPLAINT [ECF NO. 11]
MARK C. SCARSI, UNITED STATES DISTRICT JUDGE
Before the Court is Defendant Hiscox Insurance Company, Inc.’s ("Hiscox Insurance") Motion to Dismiss and Strike Plaintiff LockandLocate, LLC's ("LockandLocate") Complaint ("Motion"). Mot., ECF No. 11. Hiscox Insurance filed an Opposition and LockandLocate filed a Reply. Opp'n, ECF No. 12; Reply, ECF No. 13. Hiscox Insurance also filed a Request for Judicial Notice. RJN ISO Mot. ("RJN"), ECF No. 11-1. The Court heard oral argument on January 4, 2021. ECF No. 15. For the following reasons, the Court GRANTS in part and DENIES in part Hiscox Insurance's Motion.
I. BACKGROUND
LockandLocate sets forth the following allegations in its Complaint. See generally , Compl., ECF No. 1. LockandLocate, a California limited liability company, uses truck drivers’ cellphone location data to allow its clients to "track the location of commercial trucks" and "see the progress of their brokered loads and deliveries in real time." Id. at ¶¶ 1, 9. Truck drivers allow LockandLocate to use their data in this manner. Id. at ¶ 9. To access this data, LockandLocate contracts with Location Smart, a vendor that obtains "tracking data ... from the major cell phone service providers." Id.
LockandLocate's business model relies on its ability to access Location Smart's location data. See Id. ¶¶ at 9, 10. LockandLocate became "concerned that if" it could not "access" Location Smart's "location data, its business would be negatively impacted" and it may even be "forced out of business." Id. at ¶ 11. LockandLocate sought insurance coverage for this possibility. Id.
LockandLocate contacted Hiscox Insurance to inquire whether Hiscox Insurance could provide insurance coverage for the loss of access to data from "one of its vendors," including Location Smart. Id. at ¶ 13. LockandLocate asked a Hiscox Insurance agent "what type of insurance it would need to cover losses in case it lost a vendor that would cause its application not to work." Id. The agent advised LockandLocate to purchase "business interruption insurance" because "such coverage was available as part of [Hiscox Insurance's] businessowner's policy." Id. While still on the phone with the agent, LockandLocate purchased the business interruption insurance. Id. at ¶ 14.
After LockandLocate bought Hiscox Insurance's policy, Location Smart notified LockandLocate that it "lost its ability to obtain the truck drivers’ location information" from Sprint and it would soon lose its access to Verizon's data. Id. at ¶¶ 15, 16. LockandLocate "submitted a claim" to Hiscox Insurance for "coverage for losses" resulting from Location Smart's inability to obtain the location information. Id. at ¶ 18. LockandLocate also called Hiscox Insurance and a Hiscox Insurance analyst advised LockandLocate that the policy only covered "loss ... from physical damage" to LockandLocate's property. Id. at ¶ 19. LockandLocate provided information to Hiscox Insurance's third party claims administrator but still did not receive coverage. Id. at ¶¶ 20, 21. Hiscox Insurance eventually notified LockandLocate that its policy "did not cover loss of business income of the type claimed by" LockandLocate. Id. at ¶ 22.
Eventually, Location Smart lost access to Verizon's data and could not provide it to LockandLocate. Id. at ¶ 23. LockandLocate had to "shut down its business as its application ceased to function properly." Id. LockandLocate submitted another claim to Hiscox Insurance and Hiscox Insurance again denied the claim. Id. at ¶¶ 24, 26. LockandLocate also repeatedly asked for Hiscox Insurance to provide a copy of a recording of the phone call between LockandLocate and the Hiscox Insurance agent that sold the Policy. Id. at ¶¶ 24, 27. Hiscox Insurance declined to provide the recording. Id. at ¶¶ 25, 26.
LockandLocate asserts that Hiscox Insurance and its agent damaged LockandLocate by misrepresenting what the policy covered and failing to cover certain business interruptions. Id. at ¶ 28. LockandLocate alleges the following claims: (1) breach of oral contract; (2) breach of the duty of good faith and fair dealing (bad faith); (3) intentional misrepresentation; (4) negligent misrepresentation; (5) negligence; (6) reformation; and (7) violation of Cal. Bus. & Prof. Code § 17200, et seq. Id. at ¶¶ 29–75. LockandLocate attached the following documents to its Complaint: (1) the policy between LockandLocate and Hiscox Insurance (Ex. 1); (2) Location Smart's letter to LockandLocate advising LockandLocate of changes in its ability to access Sprint's and Verizon's data (Ex. 2); (3) a letter from Engle Martin, Hiscox Insurance's third party claims administrator, to LockandLocate regarding LockandLocate's claim (Ex. 3); (4) Hiscox Insurance's letter to LockandLocate that explains its decision to decline coverage (Ex. 4); (5) a letter from Hiscox Insurance's counsel to LockandLocate addressing coverage (Ex. 5); and (6) a letter from Hiscox Insurance explaining its decision to deny coverage (Ex. 6). ECF Nos. 1-1–1-6.
Hiscox Insurance moves to dismiss all claims and strike punitive damages from the negligence claim. See generally , Mot.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for "failure to state a claim upon which relief can be granted." "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "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." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.
The determination of whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. Generally, a court must accept the factual allegations in the pleadings as true and view them in the light most favorable to the plaintiff. Park v. Thompson , 851 F.3d 910, 918 (9th Cir. 2017) ; Lee v. City of Los Angeles , 250 F.3d 668, 679 (9th Cir. 2001). But a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
Averments of fraud are subject to the heightened pleading standard of Rule 9(b). See Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1105 (9th Cir. 2003). To meet Rule 9(b), a plaintiff must "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). The complaint must identify the "who, what, when, where, and how" of the fraudulent misconduct, "as well as what is false or misleading about" it, and "why it is false." Cafasso v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks omitted).
As a general rule, leave to amend a complaint that has been dismissed should be freely granted unless it is clear the complaint could not be saved by any amendment. Fed. R. Civ. P. 15(a) ; Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008).
Federal Rule of Civil Procedure 12(f) provides that a court may "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The function of a motion to strike is "to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Whittlestone, Inc. v. Handi-Craft Co. , 618 F.3d 970, 973 (9th Cir. 2010) (internal quotation marks omitted). Motions to strike "are generally regarded with disfavor because of the limited importance of pleading in federal practice," and they "are generally not granted unless it is clear that the matter sought to be stricken could have no possible bearing on the subject matter of the litigation." Gaines v. AT&T Mobility Servs., LLC , 424 F. Supp. 3d 1004, 1014 (S.D. Cal. 2019) (internal quotation marks omitted).
III. REQUEST FOR JUDICIAL NOTICE
Hiscox Insurance requests that this Court take judicial notice of the following documents:
(1) Letter from United States Senator Hon. Ron Wyden (OR) to the Chairman of the Federal Communications Commission ("FCC"), dated May 8, 2018 (Ex. A);
(2) Letter to United States Senator Hon. Ron Wyden (OR), submitted by Verizon Wireless, dated June 15, 2018 (Ex. B);
(3) Press Release from the Office of United States Senator Hon. Ron Wyden (OR), published June 19, 2018 (Ex. C); and
(4) Press Release and announcement from the Federal Communications Commission, published February 28, 2020 (Ex. D).
RJN ISO Mot. ¶¶ 1–4, ECF No. 11-1. The Court takes judicial notice of the existence of the press releases (Ex.’s C, D) but does not take "judicial notice of the truth of the facts" in these press releases. Gerritsen v. Warner Bros. Ent. Inc. , 112 F. Supp. 3d 1011, 1029 (C.D. Cal. 2015). The Court declines to take judicial notice of the two letters (Ex.’s A, B) because it is unnecessary for the purposes of ruling on this motion.
IV. DISCUSSION
A. Breach of Contract
Hiscox Insurance first alleges that LockandLocate fails to state a claim for a breach of contract. Mot. 9–14. To make out a claim for breach of contract, a party must plead facts to establish "(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff." Coles v. Glaser , 2 Cal. App. 5th 384, 391, 205 Cal.Rptr.3d 922 (2016). "Interpretation of insurance contracts under California law requires us to employ general principles of contract interpretation." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008).
The Court applies California law to this diversity action. Torre v. Brickey , 278 F.3d 917, 919 (9th Cir. 2002) ("Absent a direct conflict between a federal rule and state law, state law applies in diversity actions.")
Hiscox Insurance argues that it performed the terms of the contract by providing "business interruption" insurance that only covers "lost business income" LockandLocate could incur from "direct physical loss or damage to property" at LockandLocate's premises. Mot. 10; Compl., Ex. 1, at 26. Hiscox Insurance argues that LockandLocate's sudden inability to obtain data from Location Smart "is not a direct physical loss" under the policy. Mot. 11 (internal quotation marks omitted).
According to LockandLocate, Hiscox Insurance misconstrues its breach of contract claim. LockandLocate argues that it entered into an oral contract with Hiscox Insurance whereby Hiscox Insurance would provide coverage if LockandLocate lost access to a vendor's data. Opp'n 9. In response, Hiscox Insurance argues that the policy is an integrated agreement that supersedes any alleged oral agreement. Mot. 11–13.
California law provides that a written contract "supersedes" previous oral agreements. Cal. Civ. Code § 1625 ; Adams v. United of Omaha Life Ins. Co. , No. SACV 12-969-JST (JPRx), 2013 WL 12113224, at *4 (C.D. Cal. Apr. 24, 2013). "The parol evidence rule ... ‘generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument.’ " Casa Herrera, Inc. v. Beydoun , 32 Cal.4th 336, 343, 9 Cal.Rptr.3d 97, 83 P.3d 497 (2004) (quoting Alling v. Universal Mfg. Corp. , 5 Cal. App. 4th 1412, 1433, 7 Cal.Rptr.2d 718 (1992) ). In Adams , the plaintiff alleged that he formed an oral agreement with an insurance company whereby the insurance company agreed to not increase his premiums. Adams , 2013 WL 12113224, at *1, *4. The plaintiff alleged the insurance company breached his policy by raising the premiums. Id. at *4. The policy had an integration clause. Id. Plaintiff's oral contract claim was "merged into the written contract" and the district court precluded it from being a "separate, oral contract claim." Id. The district court dismissed the plaintiff's claim. Id.
Here, the policy is a fully integrated agreement that supersedes any oral agreements. Compl., Ex 1, 63. The policy "contains all the agreements between" LockandLocate and Hiscox Insurance about the insurance policy. Id. The policy's integration clause prevents LockandLocate from basing its breach of an oral contract claim on its conversations with Hiscox Insurance before purchasing the policy. Adams , 2013 WL 12113224, at *4 ; Casa Herrera, Inc. , 32 Cal. 4th at 343, 9 Cal.Rptr.3d 97, 83 P.3d 497 (quoting Alling , 5 Cal. App. 4th at 1412, 7 Cal.Rptr.2d 718 ).
The Court dismisses the breach of contract claim and GRANTS this portion of Hiscox Insurance's Motion.
The Court does not reach the merits of the parties’ other claims about the breach of oral contract because the Court finds that LockandLocate has not sufficiently pleaded an oral contract exists.
B. Breach of the Duty of Good Faith and Fair Dealing
Hiscox Insurance next moves to dismiss the breach of the duty of good faith and fair dealing claim on the basis that it has not breached the insurance contract. Mot. 15, 16. LockandLocate again argues that it pleads a breach of an oral contract. Opp'n 14. LockandLocate pleads that the parties entered into an "oral insurance policy" whereby Hiscox Insurance would cover "losses caused by a loss of services provided by its vendors." Compl. ¶ 35. According to LockandLocate, the alleged oral insurance policy contained an implied covenant of good faith and fair dealing. Id. LockandLocate alleges that once it lost access to certain data, it "submitted a claim" to Hiscox Insurance, but Hiscox Insurance denied coverage and "refused to indemnify" LockandLocate. Id. at ¶¶ 38, 40.
"California law is clear, that without a breach of the insurance contract, there can be no breach of the implied covenant of good faith and fair dealing." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1034 (9th Cir. 2008). As explained above, LockandLocate fails to sufficiently plead a breach of an oral contract claim. The Court therefore finds that LockandLocate has not pleaded a breach of the implied covenant of good faith and fair dealing in the alleged oral contract. Manzarek , 519 F.3d at 1034.
The Court dismisses LockandLocate's claim for breach of the implied covenant of good faith and fair dealing and GRANTS this portion of Hiscox Insurance's Motion.
C. Intentional and Negligent Misrepresentation
Hiscox Insurance moves to dismiss LockandLocate's intentional and negligent misrepresentation claims because LockandLocate has not adequately pleaded that it justifiably relied on Hiscox Insurance's alleged misrepresentations. Mot. 18–20. The elements of intentional misrepresentation, a type of fraud claim, are "misrepresentation, knowledge of falsity, intent to induce reliance on the misrepresentation, justifiable reliance on the misrepresentation, and resulting damages." Reeder v. Specialized Loan Servicing LLC , 52 Cal. App. 5th 795, 803, 266 Cal.Rptr.3d 578 (2020) (citing Lazar v. Superior Ct. , 12 Cal.4th 631, 638, 49 Cal.Rptr.2d 377, 909 P.2d 981 (1996) ). This claim "may lie where a defendant fraudulently induces the plaintiff to enter into a contract, by making promises he does not intend to keep." Id. "The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true." Charnay v. Cobert , 145 Cal. App. 4th 170, 184, 51 Cal.Rptr.3d 471 (2006).
Hiscox Insurance also argues that LockandLocate's negligence and negligent misrepresentation claims fail because an insured cannot bring negligence claims against its insurer. Mot. 16–18. This is not an accurate representation of California caselaw. Paper Savers v. Nacsa , 51 Cal. App. 4th 1090, 1104, 59 Cal.Rptr.2d 547 (1996).
It is unclear "whether Rule 9(b) ’s heightened pleading standard applies to a negligent misrepresentation claim." Kobashi v. Sentry Ins. , No. 8:20-cv-00718-DOC-JDE, 2021 WL 1231425, at *6 (C.D. Cal. Mar. 2, 2021) ; see also Cutler v. Rancher Energy Corp. , No. SACV 13-00906-DOC, 2014 WL 1153054, at *3 (C.D. Cal. Mar. 11, 2014) (whether Rule 9(b) applies to negligent misrepresentation claims "divides the California district courts"). While "recent unpublished decisions from this Circuit indicate it does," Kobashi , 2021 WL 1231425, at *6, the Court need not address this issue because LockandLocate has adequately pleaded it justifiably relied on the agent's statements and the issue of justifiable reliance is where parties focus their arguments. See Mot. 18, 19; but see Opp'n 17–20.
The Parties disagree on whether LockandLocate "justifiably relied" on the insurance agent's representations about the Policy because LockandLocate did not read the Policy. See Mot. 18, 19; but see Opp'n 17–20. California caselaw concerning these sets of facts is not clear. For instance, the court in Hadland v. NN Invs. Life Ins. Co. stated that "reliance on representations ... was unjustified as a matter of law" if a plaintiff "failed to read the policy." 24 Cal. App. 4th 1578, 1589, 30 Cal.Rptr.2d 88 (1994). However, the court in Clement v. Smith stated that "[a]bsent some notice or warning, an insured should be able to rely on an agent's representations of coverage without independently verifying the accuracy of those representations by examining the relevant policy provisions." 16 Cal. App. 4th 39, 45, 19 Cal.Rptr.2d 676 (1993). And the Court in Paper Savers, Inc. v. Nacsa reversed summary judgment for an insurance agent and insurer and stated "... the issue [of] whether an insured has a duty to read his policy and whether in not reading his policy he is, nonetheless, bound by its terms, is a complex one." 51 Cal. App. 4th at 1104, 59 Cal.Rptr.2d 547.
Here, the Court applies Clement and Paper Savers, Inc. and finds that LockandLocate has pleaded that it justifiably relied on Hiscox Insurance's representations about the policy. Fanucci v. Allstate Ins. Co. , 638 F. Supp. 2d 1125, 1142 (N.D. Cal. 2009) (stating " Hadland is not dispositive" and instead applying Clement and Paper Savers, Inc. ). LockandLocate pleads that it asked Hiscox Insurance for an insurance policy that would provide coverage if "its business was affected by the loss of one of its vendors." Compl. ¶ 13. Hiscox Insurance's agent stated LockandLocate "needed business interruption insurance and that such coverage was available as part of [Hiscox Insurance's] businessowner's policy." Id. LockandLocate relied on the agent's representation and purchased the Policy. See Id. at ¶ 14. At this stage, LockandLocate has "adequately alleged justifiable reliance on these alleged oral representations to survive a motion to dismiss." Am. Gen. Life Ins. Co. v. Zinszer , No. CV 10-5876 SVW, 2010 WL 11552972, at *7 (C.D. Cal. Dec. 6, 2010).
The Court DENIES this portion of Hiscox Insurance's Motion.
D. Negligence
Hiscox Insurance moves to dismiss LockandLocate's negligence claim. Mot. 16–18. LockandLocate argues that it pleaded a negligent procurement of insurance claim. Opp'n 15, 16. "To prove a claim for negligent failure to obtain insurance coverage a plaintiff must prove: (1) that plaintiff requested the defendant to obtain insurance coverage and defendant promised to obtain that insurance for them; (2) that the defendant was negligent in failing to obtain the promised insurance; (3) that plaintiff was harmed; and (4) that the defendant's negligence was a substantial factor in causing the harm." Morfin v. Allstate Prop. & Cas. Ins. Co. , No. SACV 19-00603 JVS (KESx), 2019 WL 7205994, at *4 (C.D. Cal. Dec. 9, 2019).
Hiscox Insurance asserts that LockandLocate's negligent procurement of insurance claim must be dismissed because an insured cannot bring this type of claim against an insurer. Mot. 16–18. Hiscox Insurance is incorrect, as insureds can bring negligent procurement claims against insurers. See Butcher v. Truck Ins. Exch. , 77 Cal. App. 4th 1442, 1465, 92 Cal.Rptr.2d 521 (2000) (allowing a claim of "negligent failure to procure adequate liability insurance coverage" to be brought against the insurer and insurance agent).
The Court DENIES this portion of Hiscox Insurance's motion.
E. Reformation
Hiscox Insurance moves to dismiss LockandLocate's reformation claim on the basis that LockandLocate has not adequately pleaded fraud or mutual mistake. Mot. 20, 21. LockandLocate clarified in its Opposition that it only bases its reformation claim on alleged fraud. Opp'n 20, 21.
Courts can reform a contract "when, through fraud[,] ... a written contract does not truly express the intention of the parties." Cal. Civ. Code § 3399 ; Am. Home Ins. Co. v. Travelers Indem. Co. , 122 Cal. App. 3d 951, 961, 175 Cal.Rptr. 826 (1981) (" Civil Code section 3399 sets forth the statutory guidelines for reformation of a written contract.") Hiscox Insurance argues that because LockandLocate's Complaint does not adequately plead it justifiably relied on Hiscox Insurance's alleged misrepresentations–an essential element of a fraudulent misrepresentation claim–the Court must dismiss LockandLocate's reformation claim. Mot. 20. However, the Court explained above that LockandLocate has adequately pleaded justifiable reliance.
Hiscox Insurance next argues that the Policy cannot be "reformed to cover the loss of illegally-obtained ‘location data’ " because this "loss is uninsurable." Mot. 20. Hiscox Insurance makes this argument because the February 28, 2020 Federal Communications Commission ("FCC") Press Release ("FCC Press Release") stated that the FCC proposed fines on Verizon and Sprint for "disclosing their customers’ location information, without their authorization, to a third party" and that these entities "apparently violated the law." RJN ISO Mot., Ex. D, 1, 2. As stated above, the Court cannot take judicial notice of the truth of the statements in the FCC Press Release. Gerritsen , 112 F. Supp. 3d at 1029. The Court therefore cannot consider Hiscox Insurance's argument and finds that this argument is better addressed at a later stage in the litigation.
Hiscox Insurance also asserts several arguments in its Reply. Reply 15, 16. The Court will not consider these arguments for two reasons. First, these arguments appear on pages fifteen and sixteen of the Reply brief even though the Reply is to be no more than ten pages. Initial Standing Order § 9(d). Second, Hiscox Insurances asserts many arguments for the first time in its Reply. The Court will not consider these arguments. See Zamani v. Carnes , 491 F.3d 990, 997 (9th Cir. 2007) ("The district court need not consider arguments raised for the first time in a reply brief.")
The Court DENIES Hiscox Insurance's Motion to Dismiss LockandLocate's reformation claim. F. Cal. Bus. & Prof. Code § 17200, et seq.
Hiscox Insurance moves to dismiss LockandLocate's claim for violations of Cal. Bus. & Prof. Code § 17200 (" Section 17200"). Mot. 21, 22. Section 17200 of the Unfair Competition Law ("UCL") prohibits "unlawful, unfair or fraudulent business act[s] or practice[s]." Cal. Bus. & Prof. Code § 17200. "Because [S]ection 17200 is written in the disjunctive, a business act or practice need only meet one of the three criteria—unlawful, unfair, or fraudulent—to be considered unfair competition under the UCL." Daro v. Superior Ct. , 151 Cal. App. 4th 1079, 1093, 61 Cal.Rptr.3d 716 (2007), as modified on denial of reh'g (July 3, 2007) (emphasis in original). "An act can be alleged to violate any or all of the three prongs of the UCL—unlawful, unfair, or fraudulent." Berryman v. Merit Prop. Mgmt., Inc. , 152 Cal. App. 4th 1544, 1554, 62 Cal.Rptr.3d 177 (2007).
LockandLocate argues in its Opposition that its Complaint adequately pleads Section 17200 violations based on unlawful, unfair, and fraudulent business practices. Opp'n 21–23. LockandLocate has adequately pleaded a fraudulent and negligent misrepresentation claim and thus has adequately pleaded a Section 17200 claim based on fraud. Creative Healthcare Sol.’s., Inc. v. Broadreach Med. Res., Inc. , No. CV 08-1789-GW(CAX), 2008 WL 11343017, at *3 (C.D. Cal. Oct. 9, 2008) (finding that the plaintiff adequately pleaded a Section 17200 fraud claim because the plaintiff adequately pleaded the underlying fraud claim). LockandLocate has also adequately alleged a Section 17200 claim based on the unlawful practices prong. "Violation of almost any federal, state, or local law may serve as the basis for a UCL claim." Plascencia v. Lending 1st Mortg. , 583 F. Supp. 2d 1090, 1098 (N.D. Cal. 2008). LockandLocate has adequately alleged that Hiscox Insurance violated the "unlawful" prong of Section 17200 by adequately alleging fraudulent and negligent misrepresentation as well as negligent procurement of insurance coverage. See CRST Van Expedited, Inc. v. Werner Enterprises, Inc. , 479 F.3d 1099, 1107 (9th Cir. 2007) (intentional interference with contracts was "unlawful" under the UCL). Finally, Hiscox Insurance argues that the Complaint does not contain any allegations to support a claim under the "unfair" prong of Section 17200 "because the gravamen of the Complaint is that Hiscox failed to pay all policy benefits due for lost ‘business income’ resulting from ‘loss of location data’ and ‘loss of services.’ " Mot. 22. Hiscox Insurance misstates LockandLocate's actual pleadings. LockandLocate pleads that its Section 17200 claims are based on Hiscox Insurance's misrepresentation of "the contents of its insurance policies to potential consumers including Plaintiff." Compl. ¶ 71. Hiscox Insurance fails to address this pleading.
The Court does not address LockandLocate's argument that it has adequately alleged a Section 17200 "unlawful" claim based on Cal. Civ. Code § 1709 because LockandLocate does not allege violations of this statute in its Complaint. See generally , Compl.; see also Opp'n 22.
The Court will not consider Hiscox Insurance's arguments in its Reply for the same reasons as articulated in footnote six of this Order.
The Court DENIES Hiscox Insurance's Motion to Dismiss LockandLocate's Section 17200 claim.
G. Punitive Damages
Finally, Hiscox Insurance seeks to strike, under Fed. R. Civ. P. 12(f), paragraph 64 of the Complaint which seeks punitive damages for LockandLocate's negligence claim. Mot. 22, 23; Compl. ¶ 64. However, " Rule 12(f) does not authorize district courts to strike claims for damages on the ground that such claims are precluded as a matter of law." Whittlestone, Inc. v. Handi-Craft Co. , 618 F.3d 970, 974–75 (9th Cir. 2010).
The Court DENIES Hiscox Insurance's Motion to the extent it asks the Court to strike claims for punitive damages.
V. LEAVE TO AMEND
The Court finds that leave to amend is warranted in this instance. Fed. R. Civ. P. 15(a) ; Manzarek , 519 F.3d at 1031. LockandLocate may amend its breach of contract and breach of implied covenant of good faith and fair dealing claims.
VI. CONCLUSION
For the foregoing reasons, the Court GRANTS in part and DENIES in part Hiscox Insurance's Motion to Dismiss and Strike Plaintiff LockandLocate, LLC's Complaint. Plaintiff may file a further amended complaint within 14 days of the date of this Order, if they can do so consistent with Federal Rule of Civil Procedure 11(b) and this Order. Failure to file a timely amended complaint will waive the right to do so. Leave to add new defendants or claims must be sought by a separate, properly noticed motion.