Pappy's Barber Shops, Inc. v. Farmers Group, Inc.

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 PAPPY’S BARBER SHOPS, INC. et al., Case No.: 20-CV-907-CAB-BLM 11 Plaintiffs, ORDER ON MOTION FOR LEAVE 12 v. TO FILE AMENDED COMPLAINT 13 FARMERS GROUP, INC. et al., [Doc. No. 21] 14 Defendants. 15 16 On September 11, 2020, the Court dismissed Plaintiffs’ complaint seeking insurance 17 coverage for business income losses they incurred as a result of the COVID-19 Civil 18 Authority Orders issued by San Diego Mayor Kevin Falconer and Governor Gavin 19 Newsom. In the order, the Court indicated that because the facts surrounding Plaintiffs’ 20 insurance claim are largely undisputed, any amendment to the complaint was likely to be 21 futile, but it nevertheless allowed Plaintiffs to seek leave to amend. Plaintiffs’ motion for 22 leave to amend is now before the Court. 23 Federal Rule of Civil Procedure 15 states that courts “should freely give leave [to 24 amend] when justice so requires.” “But a district court need not grant leave to amend where 25 the amendment: (1) prejudices the other party; (2) is sought in bad faith; (3) produces an 26 undue delay in litigation; or (4) is futile.” AmeriSourceBergen Corp. v. Dialysist W., Inc., 27 465 F.3d 946, 951 (9th Cir. 2006). “Futility of amendment is analyzed much like a Rule 28 12(b)(6) motion to dismiss—an amended complaint is futile when it would be subject to 1 dismissal.” Woods v. First Am. Title, Inc., No. CV111284GHKVBKX, 2011 WL 2 13218022, at *2 (C.D. Cal. Sept. 20, 2011). Thus, Plaintiffs’ motion for leave to amend 3 should be denied if the proposed amended complaint does not remedy the deficiencies that 4 caused the Court to dismiss the original complaint. 5 The allegations from the original complaint are detailed in the Court’s dismissal 6 order and will not be repeated here. The primary additions to the proposed amended 7 complaint are speculative allegations that the COVID-19 virus, or individuals infected by 8 the virus, likely had entered Plaintiffs’ premises at the time of the COVID-19 Civil 9 Authority Orders. Even assuming the truth of these allegations, the presence of the virus 10 itself, or of individuals infected the virus, at Plaintiffs’ business premises or elsewhere do 11 not constitute direct physical losses of or damage to property. Moreover, even if they do 12 constitute direct physical losses of or damage to property, they were not the cause of the 13 business income losses for which Plaintiffs’ seek coverage here. 14 The cause of Plaintiffs’ business income losses was the COVID-19 Civil Authority 15 Orders themselves, which, as the proposed amended complaint alleges, were 16 “precautionary measures taken by the state to prevent the spread of COVID-19 in the 17 future” [Proposed Am. Compl. at ¶ 51], and therefore not issued as a result of loss or 18 damage to property at Plaintiffs’ premises or elsewhere. In the absence of the COVID-19 19 Civil Authority Orders, Plaintiffs would not have closed their business and thus would not 20 have suffered the business income losses for which they now seek coverage. Accordingly, 21 for these and all of the reasons stated in the Court’s order dismissing the original complaint, 22 the proposed amended complaint fails to state a claim. No amount of artful pleading by 23 Plaintiffs can state a plausible claim that they suffered any business income losses due to 24 direct physical loss of or damage to property at their premises, or due to civil authority 25 orders prohibiting access to Plaintiffs’ premises due to direct physical loss or damage to 26 property elsewhere, as required for coverage under the Policy. 27 28 1 The motion for leave to amend is therefore DENIED, and this case is DISMISSED 2 || WITH PREJUDICE. 3 It is SO ORDERED. 4 ||Dated: October 1, 2020 € Z 5 Hon. Cathy Ann Bencivengo 6 United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28