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Rinehart v. Gov't Emps. Ins. Co.

United States District Court, D. Arizona

December 10, 2019

Charles and Raquel Rinehart, Plaintiffs,
Gov't Emps. Ins. Co., et al., Defendants.


          Douglas L. Rayes United States District Judge.

         At issue is the motion to dismiss filed by Defendants Geico General Insurance Company (“Geico General”), Government Employees Insurance Company (“Government Employees”), and Geico Casualty Insurance Company (“Geico Casualty”), collectively referred to as GEICO Defendants, which is fully briefed. (Docs. 25, 30, 35.) For the reasons stated below, the motion is granted in part and denied in part.

         I. Background

         In approximately 2008, Plaintiffs purchased a GEICO policy through, without knowing the differences between the various GEICO entities.[1] (Doc. 13 at 19.) On September 6, 2018, a vehicle driven by Plaintiffs' teenage daughter was damaged in a collision with another driver. (Id. at 5-6.) Plaintiffs were insured by Geico General and the at-fault driver in the collision was insured by Geico Casualty. (Id. at 6.) Soon after the accident, Plaintiffs contacted Geico[2] and notified it about the accident, seeking to recover for their daughter's medical bills and the costs to repair the vehicle. (Id.) A Government Employees adjuster, Jessie Baranek, asked Plaintiffs whether they wanted their car repaired using their own policy or the at-fault driver's policy. Ms. Baranek explained that Plaintiffs would not have to pay the deductible if they used the at-fault driver's policy, which persuaded Plaintiffs to submit a third-party claim. (Id.)

         Plaintiffs then submitted a third-party claim to Geico Casualty under the at-fault driver's policy. (Id.) Geico Casualty's guarantee gave Plaintiffs the option to get their own estimates, after which Geico Casualty would pay the reasonable costs to correct the covered repairs, or to take the car directly to a GEICO Auto Repair Xpress Service Center (“ARX”). (Id. at 7.) Plaintiffs chose to receive an estimate from a GEICO ARX, and Geico Casualty directed Plaintiffs to Service King Paint & Body, LLC (“Service King”) for repairs. (Id. at 8.) On September 10, 2018, Plaintiffs took their vehicle to Service King. Another Government Employees adjuster, Kevin Dorsch, produced an estimate for $1, 525.88. Service King made the repairs, totaling $1, 525.88, and returned the vehicle to Plaintiffs on September 11, 2018. (Id. at 9.) The same day, Ms. Baranek emailed Plaintiffs, noting the apparent discrepancy between their daughter's injuries and the low repair estimate and lack of structural damage to the vehicle. (Id. at 12.)

         Suspicious of the low estimate and limited work performed, Plaintiffs took the vehicle to Coach Works Auto Body (“Coach Works”) on September 17, 2018 to receive a second opinion. (Id.) Matt Radman of Coach Works noted evidence of deficient repairs and began dissembling the vehicle. That day, Plaintiffs contacted Geico Casualty to advise it that the vehicle had not been properly repaired by Service King. (Id.) On September 18, 2018, Mr. Radman sent an email to David Edgar, a Geico General and Geico Casualty Auto Damage Supervisor and employee of Government Employees, informing him about the deficient repairs and requesting a meeting for September 21, 2018. (Id. at 13.) Mr. Edgar met with Plaintiffs and Mr. Radman on September 21, 2018 and performed an inspection on the vehicle. (Id.) On September 25, 2018, Geico Casualty provided Plaintiffs with a new estimate, stating it would pay $4, 689.65 for repairs. (Id. at 14.)

         On October 11, 2018, Coach Works provided Geico Casualty with an updated repair estimate which totaled $8, 982.80. (Id.) Geico Casualty only paid $4, 990.85 to Coach Works. (Id.) In response, Plaintiffs asked Geico General to open a first-party claim under their policy. (Id.) Geico General explained that it could not open a claim because the repairs in question were already completed. However, on October 16, 2018, Geico General assigned Plaintiffs a first party claim number, but informed Plaintiffs that it would not pay the outstanding amount. (Id. at 14.) On October 19, 2018, Coach Works generated a final estimate for $8, 944.91. (Id. at 15.) After deducting Geico Casualty's payment of $4, 990.85, Plaintiffs still owed $3, 954.06 before Coach Works would return the vehicle. On October 19, 2018, Geico Casualty made an additional payment of $209.99 to Coach works but refused to pay the remainder of the balance. (Id.) On October 26, 2018, Plaintiffs paid Coach Works $4, 763.52[3] to get their vehicle back.

         On February 15, 2019, Plaintiffs filed suit in Maricopa County Superior Court. (Doc. 1-3.) On March 21, 2019, the GEICO Defendants removed to this Court. On April 3, 2019, Plaintiffs filed their amended complaint (Doc. 13), which is the operative complaint. Importantly, the amended complaint asserts that all GEICO Defendants are alter egos of each other or were engaged in a joint venture, and therefore any claim against one equally applies to the others. The amended complaint alleges four counts: (1) breach of the covenant of good faith and fair dealing (against GEICO Defendants), (2) violations of the Arizona Consumer Fraud Act (“ACFA”) (against GEICO Defendants and Service King), (3) breach of contract (against GEICO Defendants and Service King), and (4) aiding and abetting tortious conduct (against GEICO Defendants).

         The GEICO Defendants move to dismiss all claims against them, except for the breach of contract claim against Geico Casualty. (Doc. 25.) The motion is now ripe.

         II. Legal Standard

         To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain factual allegations sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The task when ruling on a motion to dismiss “is to evaluate whether the claims alleged [plausibly] can be asserted as a matter of law.” See Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When analyzing the sufficiency of a complaint, the well-pled factual allegations are taken as true and construed in the light most favorable to the plaintiff. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as factual allegations are not entitled to the assumption of truth, Iqbal, 556 U.S. at 680, and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2008).

         III. Discussion

         A. Joint Venture and Alter-Ego Theories

         In their complaint, Plaintiffs assert that the GEICO Defendants were engaged in a joint venture. (Doc. 13 at 23-25.) To adequately plead a joint venture, Plaintiffs' complaint must allege the existence of (1) a contract; (2) a common purpose; (3) a community of interest; (4) an equal right of control; and (5) participation in profits and losses. Tanner Companies v. Superior Court, 696 P.2d 693, 695 (Ariz. 1985) (citation omitted). Plaintiffs' complaint fails to adequately plead a joint venture theory because it does not assert that each of the GEICO Defendants exercised an equal right of control. Equal right of control means that each entity “must share, to some extent, in the control of the venture. In other words, it is sufficient that a venturer has some voice or right to be heard in the control or management of the venture.” Estate of Hernandez by Hernandez-Wheeler v. Flavio, 930 P.2d 1309, 1313 (Ariz. 1997). Here, Plaintiffs do not contend that ...

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