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Raygarr LLC v. Employers Mutual Casualty Co.

United States District Court, D. Arizona

September 4, 2018

Raygarr LLC, Plaintiff,
Employers Mutual Casualty Company, Defendant.


          Honorable Rosemary Marquez United States District Judge.

         Pending before the Court is Defendant Employers Mutual Casualty Company's (“EMC”) Motion to Dismiss (Doc. 7). Plaintiff Raygarr LLC (“Raygarr”) filed a Response (Doc. 10), and EMC filed a Reply (Doc. 13).

         I. Background

         Raygarr filed a Complaint in Pima County Superior Court case number C20181666 on April 5, 2018. (Doc. 1-4 at 8-17.) EMC removed the case to federal court on May 11, 2018. (Doc. 1.) Raygarr's Complaint alleges the following:

         On or about February 18, 2014, EMC issued Commercial General Liability Policy #5D0-74-23---15 and Umbrella Policy #5J0-74-23---15 to Raygarr as insured and Raytheon Missile Systems Company (“Raytheon”) as an additional insured. (Doc. 1-4 at 9.) The policies were effective for the period February 22, 2014 to February 22, 2015. (Id.) On or about July 28, 2014, Raygarr signed Purchase Order No. 4200942454 with Raytheon to perform as a general contractor and provide all labor, materials, and equipment to renovate and upgrade bathrooms in Raytheon's Building 842. (Id.) On or about September 9, 2014, Raytheon informed Raygarr that a flood in Building 842 had caused extensive damage to the building and to personal property inside it. (Id.) The flood was allegedly caused by the breaking of PVC caps installed by Raygarr's subcontractor, Qualified Mechanical Contractors. (Id.) Raytheon demanded Raygarrr be responsible for flood remediation and repairs. (Id.) A representative of Raygarr contacted its insurance broker, who notified EMC of the flood. (Id. at 10.) EMC established a claim file and claim number for the incident and assigned EMC Senior Claims Adjuster Fabien Mireles to the claim. (Id.)

         Flood remediation contractors Abracadabra and ATI were contacted to provide immediate flood remediation work. (Id.) Raytheon refused to sign contracts for the flood remediation work, informing Abracadabra and ATI that Raygarr should sign the contracts. (Id.) Raygarr's principle, Ray Garrison, informed Mireles that Raygarr was being asked to sign contracts for the flood remediation work. (Id. at 11.) Mireles told Garrison to sign the contracts and proceed with the flood remediation, and he ensured Garrison that the cost of the flood remediation and repairs would be covered by EMC. (Id.) Based on Mireles's representations, Raygarr signed the contracts with Abracadabra and ATI for the flood remediation of Building 842. (Id. at 12.) Raygarr used all of its cash, credit, and resources to perform the remediation and restoration work for Building 842. (Id.) Despite Mireles's representations, EMC refused and failed to pay Raygarr for the costs of the flood remediation and restoration. (Id.) As a direct consequence of EMC's conduct, Raygarr was suspended and then terminated from performing additional work as a general contractor for Raytheon. (Id.)

         Based upon the above allegations, Raygarr asserts claims for negligent misrepresentation, negligence, equitable estoppel, insurance bad faith, and breach of contract. (Id. at 12-17.) Raygarr seeks compensatory and punitive damages as well as costs, attorneys' fees, and interest. (Id. at 17.)

         II. Legal Standard

         EMC moves for dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988), as amended. To survive a Rule 12(b)(6) 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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In other words, the complaint's “non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (internal quotation omitted). “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. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

         A court evaluating a motion to dismiss must view the allegations of a complaint “in the light most favorable to the plaintiff.” Abramson v. Brownstein, 897 F.2d 389, 391 (9th Cir. 1990). All well-pleaded factual allegations of the complaint must be accepted as true, although the same does not apply to legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678-79.

         The court ordinarily may not consider evidence outside the pleadings in ruling on a Rule 12(b)(6) motion to dismiss. See United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). “A court may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment.” Id. at 908. A document is considered incorporated by reference into a complaint “if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claims.” Id.

         III. Discussion

         EMC seeks dismissal of Raygarr's claims for breach of contract, negligent misrepresentation, negligent claim handling, and equitable estoppel. (Doc. 7 at 1.) EMC argues that the claims for negligent claim handling and equitable estoppel are not cognizable under Arizona law, and that the claims for breach of contract and negligent misrepresentation are not supported by the factual allegations of Raygarr's Complaint. (Id.)

         A. ...

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