United States District Court,

M.D. Pennsylvania.

James BURKE and Victoria Burke, Plaintiffs,

v.

TRANSAM TRUCKING, INC. and Gregory Wirfel, Defendants,

Rinehimer Bus Lines, Inc. and Nick Paolello.

Civil Action No. 03:06-CV-2090.

 

March 31, 2009.

 

MEMORANDUM

 

RICHARD P. CONABOY, District Judge.

 

Before the Court for consideration is Defendants’ Motion for Partial Summary Judgment (Doc. 91). This case arises from a vehicle accident involving the commercial tractor-trailer driven by Gregory Wirfel (“Defendant Wirfel”) and the automobile driven by James Burke (“Plaintiff”). (Doc. 57). At all times relative to this accident, Defendant Wirfel was employed by TransAm Trucking, Inc. (“TransAm”). (Doc. 93 at 2.) Plaintiffs allege Defendants are liable for damages resulting from the accident. (Id.) Defendants bring the present motion requesting the Court grant partial summary judgment on Counts III, V, VI, VII and VIII of Plaintiffs’ Amended Complaint, arguing that Plaintiffs’ claims for punitive damages should be dismissed because Plaintiffs cannot establish that Defendants’ conduct was deliberate and outrageous, and that Plaintiffs’ claims for negligent hiring, training, instruction, monitoring, supervision and entrustment against Defendant TransAm should be dismissed as irrelevant because Defendant TransAm trucking has admitted that Defendant Wirfel acted within the course and scope of his employment. (Doc. 91.) Based on the discussion below, we will deny the motion.

 

I. BACKGROUND

 

On April 10, 2006, Plaintiff James Burke’s vehicle was struck from behind by a tractor trailer operated by Defendant Gregory Wirfel and owned by TransAm. (Doc. 100 at 1.) Plaintiff was traveling on Route 940 in White Haven, Pennsylvania, and was stopped for a school bus at the time of the accident.(Id.)

 

On August 30, 2006, Plaintiffs initiated a lawsuit against Defendants in the Court of Common Pleas of Luzerne County. (Doc. 91 at 2.) Subsequently, on October 24, 2006, Defendants removed the action to this Court. (Id.) Plaintiffs’ original Complaint contained four counts against Defendants, and no punitive damage count existed. (Id.) After initial discovery was conducted, Plaintiffs filed their Amended Complaint on January 22, 2008, which included four counts against Defendants alleging punitive damages. (Id.) Plaintiffs allege they are entitled to punitive damages against both Defendants Wirfel and TransAm because their conduct was outrageous and/or done willfully, wantonly and/or with reckless indifference.

 

On January 30, 2009, Defendants’ Motion for Partial Summary Judgment (Doc. 91) was filed with a brief in support (Doc. 93). Defendants admit Defendant Wirfel was acting within the course and scope of his employment with Defendant TransAm at the time of the accident, however, Defendants move for partial summary judgment seeking dismissal of Plaintiffs’ claims for punitive damages and any claims against Defendant TransAm apart from respondeat superior.(Doc. 93 at 15.); (Doc. 91.)

 

On February 16, 2009, Plaintiffs filed their Brief in Opposition to Defendants’ Motion for Partial Summary Judgment (Doc. 100), Plaintiffs’ Response to Defendants’ Short and Concise Statement of Material Facts (Doc. 101), and Plaintiffs’ Response to Defendants’ Motion for Partial Summary Judgment (Doc. 102). On March 2, 2009, Defendants’ Reply to Defendant’s Motion for Partial Summary Judgment was filed. (Doc. 137.) Defendants also filed a Supplemental Brief in Support of their Motion for Partial Summary Judgment (Doc. 183) on March 20, 2009. The motion is fully briefed and ripe for disposition.

 

II. STANDARD OF REVIEW

 

Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”See Knabe v. Boury, 114 F.3d 407, 410 n. 4 (3d Cir.1997)(citingFed.R.Civ.P. 56(c)).“[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

 

A fact is “material” if proof of its existence or nonexistence would affect the outcome of the lawsuit under the law applicable to the case. Anderson, 477 U.S. at 248; Levendos v. Stern Entertainment Inc., 860 F.2d 1227, 1233 (3d Cir.1988). An issue of material fact is “genuine” if the evidence is such that a reasonable jury might return a verdict for the non-moving party. Anderson, 477 U.S. at 257. In determining whether a genuine issue of fact exists, a court must resolve all factual doubts and draw all reasonable inferences in favor of the nonmoving party. Conoshenti v. Public Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir.2004) (citation omitted).

 

The initial burden is on the moving party to show an absence of a genuine issue of material fact. The moving party may meet this burden by “pointing out to the district court [ ] that there is an absence of evidence to support the nonmoving party’s case when the nonmoving party bears the ultimate burden of proof.”Celotex, 477 U.S. at 325. The non-moving party may not rest on the bare allegations contained in his or her pleadings, but is required by Federal Rule of Civil Procedure 56(e) to go beyond the pleadings by way of affidavits, depositions, answers to interrogatories or the like in order to demonstrate specific material facts which give rise to a genuine issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When Rule 56(e) shifts the burden of proof to the nonmoving party, that party must produce evidence to show the existence of every element essential to its case which it bears the burden of proving at trial. Equimark Commercial Finance Co. v. C.I.T. Financial Services Corp., 812 F.2d 141, 144 (3d Cir.1987).

 

“In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of evidence.” Anderson, 477 U.S. at 255. Therefore, when evidentiary facts are in dispute, when the credibility of witnesses may be in issue, or when conflicting evidence must be weighed, a full trial is usually necessary.

 

III. DISCUSSION

 

Based on the following discussion, we will deny Defendants’ Motion for Partial Summary Judgment (Doc. 91). In the supporting documents to Defendants’ instant motion, they assert Plaintiffs’ claims for punitive damages should be dismissed because Plaintiffs cannot establish that Defendants’ conduct was deliberate and outrageous. (Doc. 93 at 9.) Additionally, Defendants contend Plaintiffs’ claims for negligent hiring, training, instruction, monitoring, supervision and entrustment against Defendant TransAm should be dismissed as irrelevant because Defendant TransAm has admitted that Defendant Wirfel was acting within the course and scope of his employment at the time of the accident. (Id. at 11 .)We will address each of Defendants’ arguments in turn.

 

A. Punitive Damages

 

We now turn to Defendants’ assertion that Plaintiffs’ punitive damages claims should be dismissed. (Doc. 91 at 7.) Our analysis will first address Plaintiffs’ punitive damages claim against Defendant Wirfel and then Defendant TransAm.

 

1. Defendant Wirfel

 

In 2005, the Pennsylvania Supreme Court observed:

 

The standard governing the award of punitive damages in Pennsylvania is settled. Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others. As the name suggests, punitive damages are penal in nature and are proper only in cases where the defendant’s actions are so outrageous as to demonstrate willful, wanton or reckless conduct.

 

Hutchison v. Luddy, 582 Pa. 114, 870 A.2d 766, 770 (Pa.2005) (quotations and citations omitted). A plaintiff seeking to demonstrate that a defendant’s conduct was outrageous must establish the defendant possessed the requisite state of mind. Hutchison, 870 A.2d at 770-71. The defendant’s action or inaction must be intentional, reckless or malicious. Id. at 771.The court explained:

Thus, in Pennsylvania, a punitive damages claim must be supported by evidence sufficient to establish that (1) a defendant had a subjective appreciation of the risk of harm to which the plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk.

 

Hutchison, 870 A.2d at 772.

 

In this case, Plaintiffs allege Defendant Wirfel acted with reckless indifference by operating a tractor trailer at an excessive rate of speed and without paying attention to the roadway before him and for operating his vehicle in violation of the rules and regulations of the Federal Motor Carrier Safety Regulations (“FMCSR”). (Doc. 57 at 12-13.) Plaintiffs allege Defendant Wirfel had a history of speeding violations, failed to document his travel log as required by law, failed to maintain a proper driver’s log, and failed to observe driver rest requirements. (Id. at 13, 870 A.2d 766 .)

 

According to Defendants, no genuine issue of material fact exists as to whether punitive damages are appropriate because this case is a simple negligence case involving a driver who failed to stop his vehicle prior to impact. (Doc. 93 at 13.) Defendants contend the accident occurred immediately following a blind corner where, without notice or warning, a bus was stopped discharging students. (Id.) Defendants argue that an investigation of the accident scene was conducted by Defendants’ reconstruction expert and based upon the skid marks from Defendant Wirfel’s vehicle, the reconstruction expert opined that Defendant Wirfel was likely traveling between thirty-five and forty miles per hour prior to the accident. (Id.) Defendants assert the speed limit where the accident occurred was thirty-five miles per hour, and Defendant Wirfel was traveling, at most, only five miles per hour over the speed limit prior to the accident. (Id.)

 

Defendants also argue that despite the Pennsylvania School Bus Driver’s Manual that states the placement of school bus stops should be in locations where there is at least 500 feet of sight distance in both directions, from the direction Defendant Wirfel was traveling, the sight distance for the bus stop where the accident occurred was only 175 to 200 feet. (Id. at 10, 870 A.2d 766.) Finally, Defendants assert at the time of the accident, Defendant Wirfel was not under the influence of drugs or alcohol, and the police officer responding to the accident did not charge Defendant Wirfel for any FMCSR violations, including improper or illegal logs, or any other mechanical violations with respect to the tractor-trailer he was operating. (Id. at 11, 870 A.2d 766.) Defendants ultimately contend that Plaintiffs have failed to produce any evidence which would tend to show Defendants acted in an outrageous or reckless manner. (Id.)

 

In opposition, Plaintiffs contend that genuine issues of material fact exist regarding Defendants’ reckless and outrageous conduct. Plaintiffs argue that its reconstruction expert, Joseph Tarris, examined the scene of the accident and determined that Defendant Wirfel was exceeding the posted speed limit and was operating his vehicle in an inattentive manner. (Doc. 100 at 15.) With regards to Defendants’ claim that the accident occurred on a “blind corner,” Tarris found the measurements show that the sight lines for the location of the accident are nearly twice those required for this type of curve and that Defendants’ reliance on its reconstruction expert’s report is misplaced.(Id.) Regarding Defendant Wirfel’s speed, Plaintiffs assert that Richard Henry, a witness who was following Defendant Wirfel at the time of the accident, stated that Defendant Wirfel was traveling 55 miles per hour as he approached the curve. (Id. at 17, 870 A.2d 766.) Further, Nick Paolello, the driver of the stopped school bus who witnessed the accident, also stated he believed Defendant Wirfel was traveling about 55 miles per hour. (Id.) Finally, Plaintiffs’ reconstruction expert, Tarris, determined that Defendant Wirfel was traveling at a minimum speed of 43 mile per hour. (Id.) In addition to speeding, Plaintiffs argue Defendant Wirfel was not maintaining a sufficient distance to avoid collision or keeping a proper lookout. (Doc. 100 at 16.) Plaintiffs contend Defendants’ motion for summary judgment on punitive damages should be denied because, under these facts, there exists genuine issues of material fact as to whether or not a tractor trailer driver was acting with reckless disregard by speeding under these conditions. (Doc. 100 at 21 (citing Gregory v. Sewell, 2006 WL 2707405 (M.D.Pa.2006) (The defendant’s motion for summary judgment as to the plaintiffs’ punitive damages claims denied where genuine issue of material fact as to whether or not the driver was speeding and driving too fast for the icy conditions)).)

 

In addition to speeding and failing to pay proper attention to the roadway, Plaintiffs argue genuine issues of material fact exist regarding whether or not Defendant Wirfel’s reported history of log falsification demonstrates reckless indifference to the safety of the traveling public. (Doc. 100 at 17.) Plaintiffs assert that David Cole, TransAm’s Safety and Compliance manager, whose main job it was to keep compliance with the FMSCR, testified that a manual audit was performed on Defendant Wirfel’s logs after his accident. (Doc. 100 at 8-10.) Plaintiffs assert that several issues of falsification were identified in this audit. This audit showed an occasion in which Defendant Wirfel would have had to travel 120 miles per hour to make the trip in the time on the logs. (Id.) Mr. Cole admitted that this was not physically possible, however this was not considered a log violation. (Id.) Mr. Cole also testified there were times when Defendant Wirfel was moving when the log showed him in the sleeper birth. (Id.) In fact, the audit found violations on 20 of the 29 days in which Defendant Wirfel was driving in the month before this accident. (Doc. 100 at 10.) Between November 2005 and April 2006, Defendant TransAm issued a total of seven warning letters and log audits to Defendant Wirfel. (Id.) These audits found numerous violations, including violations of duty of status totals, speeding, violations of the hours of service violations, dropping miles, adding miles, duplicate logging, falsification of logs, illegible records and missing mileage. (Id.)

 

Kerry Nelson, Plaintiffs’ expert in commercial motor carrier operations, reviewed the Defendant Wirfel’s logs and found several other specific instances of falsification. (Doc. 100 at 12.) Mr. Nelson found that on April 9, 2006, the day before the accident, although Defendant Wirfel’s logs indicated that he was off duty from 6 p.m. until 8 p.m., the GPS records showed that Defendant Wirfel had actually traveled 216 miles, not stopping until 10 p.m. (Id.)Plaintiffs argue on the day of the accident, Mr. Nelson found Defendant Wirfel had been driving for almost 14 hours, covering a distance of 665 miles. (Doc. 100 at 12.) Plaintiffs contend this was in violation of the hours of service regulation, which limits the time allowed for driving at any one consecutive time to a maximum of 11 hours, at which time the driver must take a ten hour break. (Id.) Mr. Nelson determined that Defendant Wirfel would not have been at the scene of this accident until considerably later if he complied with the hours of service regulation. (Id.)

 

Plaintiffs contend that violation of the applicable FMCSR and Defendant Wirfel’s history of speeding has been held sufficient to support an award of punitive damages. (Doc. 100 at 20 (citing Esteras v. TRW, Inc., 2006 WL 2474049 (M.D.Pa. Aug.25, 2006)(Caputo, J.); Came v. Micou, 2005 WL 1500978 (M.D.Pa. June 23, 2005) (Jones, J.); Schafer v. Wickham, 1999 WL 961273 at *2, 3 (E.D.Pa. Oct.15, 1999)(Green, J.); Wang v. Marzani, 885 F.Supp. 74, 79(S.D.N.Y.1995)).)

 

In Defendants’ Reply Brief (Doc. 137), Defendants argue that any factual differences regarding Defendant Wirfel’s speed and Defendant Wirfel’s description of the location of the accident should be facts considered regarding Plaintiffs’ negligence claims and not a punitive damage claim. Defendants argue that in Burke v. Maasen, 904 F.2d 478 (3d Cir.19990), the Third Circuit noted that the Defendant driver admitted to speeding, driving over 14 hours on the day of the accident, falsifying drivers’ logs and there was even circumstantial evidence that the Defendant driver had fallen asleep at the wheel, but held that even with these admissions and evidence discovered, an award of punitive damages was not warranted. (Doc. 137 at 3.) Defendants argue that Plaintiffs’ have produced no evidence through the course of discovery that Defendant Wirfel was acting with malice, intent, or even a reckless indifference to the rights of others regarding speed at the time of the accident, maintaining proper lookout or maintaining sufficient distance.(Id .)

 

Defendants contend the only Pennsylvania case cited by Plaintiffs which discusses speed being the primary reason not to grant Defendant’s summary judgment motion with respect to punitive damages is Gregory v. Sewell, 2006 WL 2707405 (M.D.Pa.2006).(Id. at 4.) In Gregory, the Court made specific mention of the fact that the accident occurred at night, on icy and hazardous weather conditions, which defendant knew about, and he disregarded them by traveling at a high rate of speed, even after recently passing a prior accident scene. (Id.) Defendants assert that there are no such facts of bad or hazardous road conditions in the instant matter, or of a prior accident in the location of the accident here. (Id.)

 

Defendants further argue that Plaintiffs’ claims of violations of the FMCSR are not sufficient to support a claim of punitive damages because such violations are not alleged to have caused the accident in question. (Doc. 137 at 5.) Defendants attempt to distinguish the cases offered by Plaintiffs for the notion that violations of the FMSCR are sufficient to support an award of punitive damages. (Id .)

 

Defendants argue that although Defendant Wirfel and designees of Defendant TransAm have admitted to having an understanding and knowledge of the purpose behind the FMCSR regarding hours of service, there has been no evidence proffered by Plaintiffs that Defendant Wirfel was in fact fatigued at the time of the accident or whether fatigue played a role in this accident. (Id. at 11-12.)Defendants contend, even assuming that there were violations of the hours of service regulations, Plaintiffs have not offered any evidence to establish a genuine issue of material fact sufficient to show that this accident was caused by a violation of hours of service or that Defendant Wirfel acted in conscious disregard of those risks. (Id. at 12.)Finally, in Defendants’ Supplemental Brief, Defendants point out that in Plaintiffs’ Response in Opposition to Defendants’ Motion in Limine to Preclude Evidence of Hours of Service Violations (Doc. 153), Plaintiffs admit that they did not produce an expert report regarding fatigue because Plaintiffs are not alleging that this accident occurred due to fatigue. (Doc. 183 at 2.) Because of Plaintiffs’ concession that this accident did not occur due to fatigue, Defendants argue that there is no genuine issue of material fact which would justify punitive damages. (Id. at 3.)

 

Considering all of the facts in the light most favorable to Plaintiffs, the Court finds that there is a genuine issue of material fact regarding Defendant Wirfel’s culpability for punitive damages and Defendants’ motion for summary judgment with respect to Plaintiffs’ claims for punitive damages against Defendant Wirfel should accordingly be denied. Having reviewed the record submitted by the parties and drawing any inferences and resolving any controverted evidence in favor of the Plaintiffs, the nonmovants here, the Court finds a reasonable fact finder could determine that Defendant Wirfel’s conduct was in conscious disregard to known risks.

 

Here the parties dispute whether Defendant Wirfel was speeding prior to the accident, and whether the accident occurred near a blind corner. It is not the Court’s task here to weigh the conflicting evidence, but it is the Court’s task to evaluate whether the conflict presented by evidence is genuine and material. The Court finds that it is. It would not be unreasonable for a jury to find that Defendant Wirfel, with his experience and training, consciously appreciated the risk of harm from driving fifty-five miles per hour in a thirty-five mile per hour zone around a curve and consciously disregarded or was indifferent to that risk. Although there are no facts of bad or hazardous road conditions as in Gregory, the Court finds that based on Defendant Wirfel’s experience and training, a jury could find that he consciously appreciated the risk of harm that could result by traveling twenty miles an hour over the speed limit in a tractor trailer while approaching a “blind” curve.

 

The Court recognizes that Plaintiffs’ burden in proving punitive damages is higher than their burden in proving ordinary negligence. But if a jury were to credit Plaintiffs’ arguments and evidence over Defendants’ arguments and evidence, it could support a finding of fact that Defendant Wirfel’s conduct was outrageous, satisfying the higher burden necessary to allow Plaintiffs to receive punitive damages. This analysis infers that in order for the jury to receive a charge on punitive damages the Court must first be satisfied that Plaintiffs presented sufficient evidence at trial for a reasonable fact finder to find Plaintiffs are entitled to punitive damages.

 

Thus, consistent with our standard of review and the elements necessary to support a punitive damages claim under Pennsylvania law, we find the record in this case demonstrates genuine issues of material fact exist as to Defendant Wirfel’s subjective appreciation of the risk to which Plaintiff was exposed.

 

2. Defendant TransAm

 

Turning to Plaintiffs’ claim for punitive damages against Defendant TransAm, we again find summary judgment is not warranted at this stage in the proceedings.

 

As previously discussed, a plaintiff seeking punitive damages must demonstrate that the defendant possessed (1) a subjective appreciation of the risk of harm to which the plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk. Hutchison, 870 A.2d at 772.

 

In their Amended Complaint, Plaintiffs allege Defendant TransAm is liable for punitive damages because it knew or should have known a serious injury to other drivers could result by permitting Defendant Wirfel to operate its tractor trailer when he was unable to do so properly and after he exhibited a pattern and course of conduct of violating the FMCSR Hours of Service limitations and speeding. (Doc. 57 at 16-17.)

 

According to Plaintiffs, substantial evidence exists that Defendant TransAm actually knew that Defendant Wirfel was falsifying his logs on a daily basis, but despite this, never disciplined Defendant Wirfel or took any steps to prevents its driver from continuing to drive despite consistently operating in excess of the hours of service regulations and posted speed limits. (Doc. 100 at 13-14.) Plaintiffs contend that there is evidence that Defendant Wirfel routinely sped and that Defendant TransAm did nothing about this. (Doc. 100 at 17.)

 

Plaintiffs distinguish the present matter from Burke v. Maasen, 904 F.2d 18 (3rd Cir.1990), because here Defendants admitted that they were fully aware of the safety purpose behind the hours of service regulations. (Doc. 100 at 21-22.) Despite this, Defendant Wirfel routinely drove over hours and then attempted to falsify his log books to hide this fact. (Id. at 22.)Defendant TransAm did nothing to discipline Defendant Wirfel, even though its own computer audits listed numerous violations for him from November 2005 through April 2006. (Id.) In fact, Defendant TransAm’s own audit found violations on 20 of the 29 days in which Defendant Wirfel was driving in the month before this accident. (Doc. 100 at 6.) Plaintiffs contend that Defendant TransAm could have compared the GPS reports to Defendant Wirfel’s logs to show that he was moving when his logs showed he was stopped. (Doc. 100 at 22.)

 

Plaintiffs contend that genuine issues of material fact exist regarding whether or not Defendants’ actions were recklessly indifferent to the public’s safety. (Id. at 24-25.)Plaintiffs assert they can demonstrate that both Defendants Wirfel and TransAm simply ignored the regulations that they knew were designed to prevent accidents such as this one. (Id.)

 

We previously discussed that a plaintiff must demonstrate a genuine issue of material fact exists as to the claim or portion of the claim sought to be dismissed. See Anderson, 477 U.S. at 248; Levendos, 860 F.2d at 1233. We find a genuine issue of material fact exists as to Defendant TransAm’s subjective appreciation of the risk of permitting Defendant Wirfel to drive despite his history of speeding, driving over hours and log falsification. Defendant TransAm’s subjective appreciation of the risk of harm may be evidenced by knowledge attributable to the corporation of the risk attendant when tractor-trailer drivers operate in violation of the hours of service regulations, falsify logs, and continually drive over the speed limit. The Court finds Plaintiffs’ assertion that Defendant TransAm engaged in a pattern and course of conduct of permitting Defendant Wirfel to drive over his hours of service and continue to violate speeding regulations may demonstrate a conscious disregard of the risk of harm. The viability of these assertions remain despite Defendants’ arguments to the contrary. We find Plaintiffs are entitled to pursue these issues at trial. Thus, we find summary judgment in favor of Defendant TransAm on the issue of punitive damages is not appropriate at this stage in the proceedings.

 

Even if Defendant TransAm’s independent actions were not sufficient to survive summary judgment, punitive damages may still be awarded against it for the actions of Defendant Wirfel. The Pennsylvania Superior Court has recognized that, “Punitive damages may be awarded on the basis of vicarious liability.” Shiner v. Moriarty, 706 A.2d 1228, 1240 (Pa.Super.1998); see also Arias v. Decker Transportation, 2008 WL 450435, at(M.D.Pa. Feb.14, 2008) (Caputo, J.). The court observed that Pennsylvania law does not require “an agent to commit a tortious act at the direction of the principal, nor must the principal ratify the act, in order for punitive damages to be imposed on him.” Shiner, 706 A.2d at 1240. Thus, summary judgment on Plaintiffs’ punitive damages claim against Defendant TransAm is not warranted at this time.

 

B. Negligent Entrustment, Supervision, and Control

 

We now turn to Defendants argument that Plaintiffs’ claims for negligent entrustment, supervision, and control should be dismissed. (Doc. 93 at 15.) We find summary judgment is not warranted on Plaintiffs’ claims.

 

The Pennsylvania Superior Court has recognized that Restatement (Second) of Agency § 213 (1958) states the existing tort law in Pennsylvania. Brezenski v. World Truck Transfer, Inc., 755 A.2d 36, 42 (Pa.Super.2000). The court observed that § 213 imposes “on an employer the duty to exercise reasonable care in selecting and controlling employees.”Id. In relevant part, § 213 provides:

 

A person conducting an activity through servants or other agents is subject to liability for harm resulting from his conduct if he is negligent or reckless:

 

…

 

(b) in the employment of improper person 20 or instrumentality in work involving risk of harm to others:

 

(c) in the supervision of the activity;

 

(d) or in permitting, or failing to prevent, negligent or other tortious conduct by persons, whether or not his servants or agents, … with instrumentalities under his control.

 

Restatement (Second) of Agency § 213 (1958).

 

In this case, Defendants argue that Plaintiffs’ claims against Defendant TransAm for negligent hiring, supervision, monitoring and entrustment should not be permitted to go forward because Defendant TransAm has admitted that Defendant Wirfel acted within the course and scope of his employment at the time of the accident. (Doc. 93 at 15.) Therefore, Defendant TransAm is liable to Plaintiffs for Defendant Wirfel’s negligence, if any, pursuant to the doctrine of respondeat superior.

 

According to Defendants, claims for negligent hiring, supervision, monitoring and entrustment are duplicative and prejudicial when elements of respondeat superior are established. (Id. at 15-17.)Defendants argue that because Defendant TransAm has admitted agency, claims for negligence, hiring, training, instruction, monitoring, supervision and entrustment serve no usable purpose in this case. (Id. at 12.)Defendants claim if the trier of fact determines that Defendant Wirfel was not negligent, Defendant TransAm cannot be liable to Plaintiffs, even under a cause of action for negligent supervision and entrustment. (Id.) However, if Defendant Wirfel is found to be liable to Plaintiffs, Defendant TransAm will be liable to Plaintiffs under the doctrine of respondeat superior.(Id.) Where agency is admitted, evidence of negligent training, monitoring and supervision serves no useful purpose except to prejudice the jury. (Id.)

 

In support Defendants cite Holben v. Midwest Emery Freight System, 525 F.Supp. 1224 (W.D.Pa.1981) and Vargo v. Coslet, Civil No. 3 CV-02-676 (M.D.Pa. Dec. 20, 2002) (Kosik, J.), for the idea that “to permit a case to proceed on respondeat superior and negligent entrustment would allow the evaluation of evidence which would be highly prejudicial and inadmissible in a cause of action based on the imputed negligence of the driver alone.”

 

Defendants also cite several jurisdictions which have precluded claims for negligent hiring and retention where there was no viable claim for punitive damages and the plaintiff proceeded against the defendant on a theory of respondeat superior.(Id. at 17-19 .)

 

Plaintiffs contend that although Defendant TransAm admits that Defendant Wirfel was its employee and was driving the tractor trailer in the course and scope of his employment at the time of the accident, Defendants do not accept responsibility for the accident. (Doc. 100 at 21.) Plaintiffs distinguish Holben and Vargo from the present matter. (Id. at 21-22.)Plaintiffs claim that this is not a case, such as Holben, 525 F.Supp. 1224, in which Plaintiffs are attempting to introduce evidence of prior accidents. (Id. at 22.)Further, Plaintiffs argue that Holben actually holds against TransAm as the Court found that punitive damage claims against a trucking company should not be dismissed when the company was aware of the driver’s prior driving history. (Id.) Likewise, Plaintiffs argue that Vargo, Civil No. 3 CV-02-676 (M.D.Pa. Dec. 20, 2002), is distinguishable from the present matter because it did not involve a claim for punitive damages. (Id.) There, the Court noted that a claim for negligent entrustment, by itself, was insufficient to support a claim for punitive damages. (Id.) However, Plaintiffs claim this is not the case here. (Id.) Here, Plaintiffs will introduce evidence of Defendant TransAm’s own improper actions, and Plaintiffs claims for punitive damages are not based solely on negligent entrustment, making the Vargo case inapplicable. (Id.)

 

Preliminarily, we note none of the cases cited by Defendants for the preclusion of a negligent hiring and retention claim under circumstances similar to those presented in this case are from a Pennsylvania state court. Defendants do not cite any authority binding on this Court for the above proposition.

 

[10] As we discussed above, we found Plaintiffs’ punitive damages claims against Defendants Wirfel and TransAm sufficient to survive summary judgment at this stage in the proceedings. While Defendant TransAm admits that Defendant Wirfel was its employee and was driving the tractor trailer in the course and scope of his employment at the accident, they do not accept responsibility for the accident. As outlined above, there are genuine issues of material fact regarding Defendant TransAm’s own actions in this case. Furthermore, Defendants’ argument that Plaintiffs’ negligent hiring, supervision, monitoring and entrustment claims should be dismissed seems to be contingent on a lack of a viable punitive damages claim. In regards to Plaintiffs’ punitive damages claim against Defendant TransAm, we discussed above that Plaintiffs’ claims are premised on Defendant TransAm’s independent acts, or its failure to act, as well as it’s vicarious liability for the actions of Defendant Wirfel. Given our finding that Plaintiffs’ punitive damages claims go forward, we find summary judgment on Plaintiffs’ negligent hiring, supervision, monitoring and entrustment claims inappropriate at this stage in the proceedings.

 

IV. CONCLUSION

 

Based on the discussion above, we find summary judgment is not warranted at this stage in the proceedings on Plaintiffs’ punitive damages claims and the claims for negligent hiring, supervision, monitoring and entrustment. We will deny Defendants’ Motion for Partial Summary Judgment (Doc. 91). An appropriate Order follows.

 

ORDER

 

AND NOW, this 31st day of March 2009, for the reasons discussed in the accompanying Memorandum, Defendants’ Motion for Partial Summary Judgment (Doc. 91) is DENIED.

 

The background is primarily derived from Plaintiffs’ Brief in Opposition to Defendants’ Motion for Partial Summary Judgment (Doc. 100).

 

The parties do not dispute that Pennsylvania law applies in this diversity action. Defendants cite the Third Circuit Court of Appeals decision in Burke v. Maassen, 904 F.2d 178 (3d Cir.1990), for the proper standard to analyze a punitive damages claim under Pennsylvania law. (Doc. 93 at 6.) At the time the Third Circuit decided Burke, the state of the law on punitive damages was unsettled in Pennsylvania. See Gregory v. Sewell, 2006 WL 2707405 at n. 3 (M.D. of Pa.2006) (Jones, J.). The Court of Appeals did not have the benefit of the Pennsylvania Supreme Court’s decision in Hutchison.Given the definitive word of the Pennsylvania Supreme Court on Pennsylvania law, we will utilize the standard from Hutchison to analyze Defendants’ assertion that Plaintiffs’ claims for punitive damages should be dismissed.

 

Kerry Nelson, Plaintiffs’ expert in commercial motor carrier operations, notes that, according to the Commercial Driver License Manual, the recommended following distance for a CMV is one second for every ten foot of truck when traveling below 40 miles per hour. Plaintiffs contend even assuming Defendant Wirfel was traveling below 40 miles per hour, he should have allowed 6.5 seconds of following distance as his truck was 65 feet long. Plaintiffs argue the fact that Defendant Wirfel struck Plaintiff James Burke indicates that Defendant Wirfel did not maintain sufficient following distance to avoid the collision. (Doc. 100 at 12-13.)

United States District Court,

C.D. California.

BUDWAY ENTERPRISES, INC., a California Corporation, Plaintiff,

v.

FEDERAL INSURANCE COMPANY, a New Jersey Corporation; Chubb National Insurance Company, an Indiana Corporation, doing business as Chubb Group of Insurance Companies; and Does 1 through 10, inclusive, Defendants.

No. EDCV 09-448-VAP (OPx).

 

April 14, 2009.

 

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

 

VIRGINIA A. PHILLIPS, District Judge.

 

Defendants Federal Insurance Company and Chubb National Insurance Company’s Motion to Dismiss came before the Court for hearing on April 6, 2009. After reviewing and considering all papers filed in support of, and in opposition to, the Motion, as well as the arguments advanced by counsel at the hearing, the Court GRANTS IN PART and DENIES IN PART the Motion.

 

I. BACKGROUND

 

A. Factual Allegations

 

On or about June 5, 2007, Plaintiff Budway Enterprises, Inc. (“Plaintiff”) purchased a written policy of motor truck cargo insurance, bearing number 0662-66-34 LAO (“the policy”) from Defendants Federal Insurance Company and Chubb National Insurance Company (“Defendants”). (See Compl. at ¶ 7.) The policy covered all damages Plaintiff would become legally obligated to pay to “a common carrier truckman, a contract truckman, or other truckman for hire because of the direct physical loss or damage to freight being transported by Plaintiff.”(Id.) Under the policy, Defendants agreed to pay or indemnify Plaintiff up to the sum of $100,000 per occurrence and up to $25,2000 for loss of earned freight charges. (Id.) The policy was effective from June 1, 1007 through June 1, 2008. (Id. at ¶ 8.)

 

On or about December 21, 2007, Plaintiff’s shipper and customer ALCOA tendered two shipments, with separate Bills of Lading and separate delivery numbers, of aluminum products to Plaintiff for transportation. (Id. at ¶¶ 9, 10.)Plaintiff loaded the shipments into two separate trailers, attached to and pulled by two separate tractors. (Id. at ¶¶ 11, 12.)On or about December 26, 2007, the tractors and trailers filled with ALCOA’s aluminum shipments were stolen from the freight yard by persons unknown. Police later located the tractors and trailers, but not the aluminum cargo. (Id. at ¶ 13.)

 

ALCOA submitted to Plaintiff a “written Loss and Damage Claim” for each shipment, totaling $150,679.43. (Id. at ¶¶ 14, 15.)Plaintiff provided timely notice to Defendants of its request to “pay the cargo loss and damage claims against [P]laintiff” for the loss to ALCOA, but Defendants have refused to pay Plaintiff, contending there was only one occurrence of theft, thereby triggering the $100,000 per occurrence policy limit. (Id. at ¶ 17.)

 

B. Procedural History

 

Plaintiff filed a Complaint in the California Superior Court against Defendants on January 27, 2009. The Complaint contained the following claims against both Defendants: (1) Breach of Contract; and (2) Breach of the Implied Covenant of Good Faith and Fair Dealing. In addition, Plaintiff also seeks punitive damages and attorneys’ fees. Defendants removed the action to this Court on the basis of diversity jurisdiction, 28 U.S.C. § 1332.

 

On March 9, 2009, Defendants filed a Motion to Dismiss Plaintiff’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”), a Request for Judicial Notice, the Declaration of Neil S. Lerner (“Lerner Declaration”), and the Declaration of Jolene R. Rice (“Rice Declaration”). On March 20, 2009, Plaintiff filed Opposition and the Declaration of John F. Oakes (“Oakes Declaration”). On March 30, 2009, Defendants filed a Reply and “Objections to Extrinsic Evidence Proffered by Plaintiff” (“Objections”).

 

The Court grants Defendants’ Request for Judicial Notice of the inland marine insurance policy underwritten by Defendants, attached as Exhibit C to the Lerner Declaration. SeeFed.R.Evid. 201. In any event, Plaintiff does not object to the document.

 

Defendants failed to attach the proper backing to their Moving papers, in violation of Local Rule 11-3.5. Also, Defendants failed to separate the exhibits attached to the Lerner Declaration with tabs, in violation of Local Rule 11-5.

 

Plaintiff has violated the Court’s Standing Order, requiring the parties to provide the Westlaw citation, where available, instead of the Lexis citation. (See Standing Order ¶ 4.) Plaintiff also violated Local Rule 11-3.1.1 by failing to use the proper typeface. Plaintiff also failed to provide the Court with pinpoint citations in many of its citations to cases.

 

Next, the parties attach evidence as exhibits for which they do not seek judicial notice and which were not attached to the Complaint. The scope of review on a Rule 12(b)(6) Motion is limited to the four corners of the Complaint and to documents of which the Court takes judicial notice. See Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). The Court declines to convert this Motion into one seeking summary judgment; thus it does not consider this evidence, except for that of which it takes judicial notice.

 

The Court does not rule on Defendant’s Objections because the Court has already concluded it will not consider the evidence attached by Plaintiff that did not accompany the original Complaint and for which the Court has not taken judicial notice.

 

II. LEGAL STANDARD

 

Under Rule 12(b)(6), a party may bring a motion to dismiss for failure to state a claim upon which relief can be granted. As a general matter, the Federal Rules require only that a plaintiff provide “ ‘a short and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (quoting Fed.R.Civ.P. 8(a)(2)); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007). In addition, the Court must accept all material allegations in the complaint-as well as any reasonable inferences to be drawn from them-as true. See Doe v. United States, 419 F.3d 1058, 1062 (9th Cir.2005); ARC Ecology v. U.S. Dep’t of Air Force, 411 F.3d 1092, 1096 (9th Cir.2005).

 

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic, 127 S.Ct. at 1964-65 (citations omitted). Rather, the allegations in the complaint “must be enough to raise a right to relief above the speculative level.” Id. at 1965.

 

Although the scope of review is limited to the contents of the complaint, the Court may also consider exhibits submitted with the complaint, Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990), and “take judicial notice of matters of public record outside the pleadings,” Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir.1988).

 

III. DISCUSSION

 

Defendants move the Court to dismiss both of Plaintiff’s claims and its request for punitive damages and attorneys’ fees.

 

A. Breach of Contract

 

Plaintiff alleges Defendants breached their contract by refusing to pay Plaintiff the full value of the theft of ALCOA’s cargo, totaling $150,679.43. (See Compl. at ¶¶ 6-19.) Defendants argue Plaintiff’s allegation fails to state a claim because Defendants did not breach the contract, as there was only one “occurrence” of theft. (See Mot.)

 

1. Ambiguity

 

Plaintiff alleges the term “occurrence” is not defined in the contract, is ambiguous, and must be construed in favor of Plaintiff by finding coverage for the theft of both aluminum shipments in this case. (See Opp’n at 4-6.)

 

If a term in an insurance contract is ambiguous, the Court must examine the language in the light of the insured’s objectively reasonable expectations. See Jordan v. Allstate Ins. Co., 116 Cal.App.4th 1206, 1213-14, 11 Cal.Rptr.3d 169 (2004). An insurance contract term is ambiguous if it “is capable of two or more reasonable constructions.” United Nat. Ins. Co. v. Spectrum Worldwide, Inc., 555 F.3d 772, 777 (2009) (citations and internal quotations omitted). Where a policy is unambiguous, however, the Court does not look beyond the four corners of the insurance contract. Vons Companies v. Fed’l Ins. Co., 212 F.3d 489 (9th Cir.2000).

 

Here, Plaintiff specifically argues the term is ambiguous because it is not defined in the contract and that its expectation at the time of contracting was that “occurrence” meant “shipment,” whereby each shipment would be insured up to $100,000. (Opp’n at 5.) The latter point is made only in the Opposition papers, whereas the former point is alleged in the Complaint; the Court limits its analysis to the allegations made in the Complaint. (See Compl. at ¶ 23.) Taking all the allegations in the Complaint as true, Plaintiff fails to state a claim that the term is ambiguous because the basis for the allegation rests solely on the lack of a definition of the term in the contract. See Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 5 Cal.4th 854, 866, 21 Cal.Rptr.2d 691, 855 P.2d 1263 (1993).

 

2. Scope of Coverage

 

Plaintiff alleges each theft of the two aluminum shipments are covered under its policy with Defendants. (See Opp’n at 5-6.) To the contrary, Defendants argue the policy covers the thefts as one “occurrence,” but only up to $100,000 policy limit per occurrence, not the full amount claimed by Plaintiff. (See Mot. at 5-6.)

 

Defendants argue California law dictates that “occurrence,” when used in an insurance contract to limit liability, means “cause.” (Reply at 2 (citing Whittaker, 11 Cal.App.4th at 1242, 14 Cal.Rptr.2d 659).) In Whittaker, 11 Cal.App.4th at 1242, 14 Cal.Rptr.2d 659, the California Court of Appeal, distinguishing between the number of covered occurrences and whether an occurrence was covered based on its timing, made the following pronouncement: “[O]ccurrence has generally been held to mean the underlying cause of the injury, rather than the injury or claim itself; otherwise, the insurer’s effort to limit its liability per occurrence would be substantially weakened.”This “cause standard” applies when determining the number of occurrences covered by an applicable insurance policy. Id. at 1243, 14 Cal.Rptr.2d 659 (quoting Michigan Chemical Corp. v. American Home Assur. Co., 728 F.2d 374, 379 (6th Cir.1984)). Later cases have also applied the “cause standard” in this context. See, e.g., Eott Energy Corp. v. Storebrand Int’l Ins. (“Eott”), 45 Cal.App.4th 565, 575-77, 52 Cal.Rptr.2d 894 (1996) (applying cause standard, found 653 thefts committed as part of organized and systematic scheme to steal diesel fuel constituted one occurrence); B.H.D., Inc. v. Nippon Ins. Co. of Europe, LTD (“B.H.D.”), 46 Cal.App.4th 1137, 1141-43, 54 Cal.Rptr.2d 272 (1996) (applying cause standard, found theft of $117,280 in jewelry from store over period of three months by one person constituted multiple occurrences); Lexington Ins. Co. v. Travelers Indem. Co. of Illinois (“Lexington”), 2001 WL 1132677, at *3-4 (9th Cir.2001) (unpublished) (applying cause standard, found four separate fires in four separate buildings at four separate locations constituted four occurrences). The Court adopts the “cause standard” in evaluating Plaintiff’s claim for breach of contract.

 

Here, Plaintiff fails to allege facts that show there were at least two separate causes of the theft to support its claim that Defendants breached the insurance contract. Plaintiff alleges unknown thiefs stole the shipments on or about the same day from a locked freight yard; it is unknown whether the thefts occurred “at the same time, or at different times.”(Compl. at ¶ 13.) Plaintiff fails to allege any particular facts relating to the cause of its injury, but insists it is entitled to recover for the theft of both shipments because there were “two separate shipments, with two separate bills of lading, two separate shipment manifests, loaded in two separate trailers pulled by two separate trucks, and that ALCOA presented two separate claims [to Plaintiff] which it billed on two separate invoices.”(Compl. at ¶ 17.)

 

Defendants rely on Eott, 45 Cal.App.4th at 575-77, 52 Cal.Rptr.2d 894, for the proposition that multiple related acts, resulting from the same cause, may constitute one occurrence. (See Mot. at 5; Reply at 3.) There, the Court, reversing the trial court’s entry of summary judgment in favor of the defendant insurer, found over six hundred thefts of diesel fuel constituted one occurrence. Eott, 45 Cal.App.4th at 575-77, 52 Cal.Rptr.2d 894. The Court focused on the language of the contract, which defined “occurrence” to include “a continuous or repeated exposure to conditions;” thus, the term “reasonably contemplate[d] that multiple claims could, in at least some circumstances, be treated as a single occurrence or loss.” Id. at 575, 52 Cal.Rptr.2d 894. The Court also relied on several cases that held “a series of related acts, attributable to a single cause, may be treated as having been caused by one occurrence.”Id. Accordingly, based on the language in the contract and precedent, the Court found one occurrence because “there was a systematic and organized scheme to steal” that proximately caused the injury. Id.

 

Here, although the Court is not guided by a definition of “occurrence” within the insurance contract as in Eott, the provision in the governing contract does contemplate multiple claims submitted by multiple parties that would constitute one occurrence. (See Rice Decl., Ex. C at 5 (“The applicable Limit of Insurance for Motor Truck Cargo Legal Liability shown in the Declarations [$100,000] is the most we will pay in any one occurrence regardless of the number of: insureds; claims made or suits brought; or persons or organizations making claims or bringing suits.”).) Thus, applying Eott, this contract provision could cover multiple claims by multiple parties but only constituting one occurrence, triggering the $100,000 policy limit.

 

As to the second ground for the Eott Court’s decision, that case, unlike this one, was before the trial court on a summary judgment motion. Here, by contrast, the Court cannot determine, based on the factual allegations in Plaintiff’s Complaint, whether or not the theft of the aluminum shipments constituted “a series of related acts, attributable to a single cause.”The question, thus, is whether the Complaint sufficiently alleges more than one occurrence. Nonetheless, Eott applies here to illustrate the contract provision at issue in this case may support a determination that multiple claims by multiple parties may constitute only one occurrence for purposes of coverage under the insurance policy. Thus, under Eott, Plaintiff fails to state a claim that Defendants have breached the insurance contract.

 

Plaintiff’s attempts to distinguish Eott are not persuasive. Plaintiff relies exclusively on the fact that Eott has been distinguished by B.H.D. and Lexington.Those cases distinguished Eott because the contract provisions at issue in those cases required such distinction.

 

Next, Defendants rely on B.H.D., 46 Cal.App.4th at 1141-43, 54 Cal.Rptr.2d 272, for the proposition that theft of several items on one occasion constitutes only one occurrence. (See Mot. at 5; Reply at 4-5.) There, the Court, affirming the trial court’s entry of summary judgment in favor of the defendant insurer, found multiple thefts of jewelry committed by one person over a period of three months constituted multiple occurrences; this is contrary to Defendants’ contention. B.H.D., 46 Cal.App.4th at 1141-43, 54 Cal.Rptr.2d 272. As in Eott, the Court relied on the specific language in the contract: “each claim for loss or damages (separately occurring) … shall be adjusted separately ….” Based on the inclusion of the words “separately occurring,” the Court found the following:

 

“In context, it can only mean that the deductible applied to each “separately occurring” loss. While the noun form of “occurring,” that is “occurrence,” is not specifically defined in the policy, its plain reference is to each separate covered loss. If a thief takes several items on a single occasion, there is one occurrence. If a thief commits larceny on each of several successive days, there are many occurrences…. The result is that the deductible applies to each theft that occurs on a separate occasion.”

 

Id. at 1142, 54 Cal.Rptr.2d 272. Accordingly, the Court found each theft committed during the three month period was a separate occurrence. Id.

 

Thus, this case does not support Defendants’ argument; furthermore, there is no such “separately occurring” language in the contract between the parties in this case. In fact, as discussed above, the contract provision contemplates multiple claims brought by multiple parties may constitute one occurrence nonetheless. (See Rice Decl., Ex. C at 5.) The contract provision here is distinguishable from the provision at issue in B.H.D. and more similar to the definition of “occurrence” given in Eott.Plaintiff argues Defendants selectively quoted dicta from the B.H.D. opinion; in any event, the Court finds B.H.D. does not apply to this case, as it is distinguishable factually.

 

Plaintiff relies on Lexington, 2001 WL 1132677, at *3-4, for the proposition that a systematic and organized scheme should be construed as multiple occurrences. There, the Court, affirming the district court’s order granting summary judgment to the indemnity defendants, found four separate fires in four different locations constituted four occurrences. Lexington, 2001 WL 1132677, at *3-4. The Court discussed both Eott and B.H.D. Id. at *3, 52 Cal.Rptr.2d 894. The Court noted the deductible provision was identical to that in Eott, but contained additional language that allowed the aggregation of losses as one occurrence in two situations, neither of which were present in the case before the Lexington Court. Id. at *4. Accordingly, the Court found, as arson was not described as one of the situations where multiple acts could be aggregated as one occurrence, that each act of arson constituted its own occurrence.

 

Lexington is distinguishable. Here, there is no language in the insurance contract that describes specific circumstances whereby the insurer may aggregate losses as one occurrence in certain circumstances. Thus, the rationale behind the Lexington Court’s decision does not apply here. Moreover, no facts appear in the Complaint that a “systematic and organized scheme” lay behind the two thefts.

 

Finally, Plaintiff relies on Basler Turbo Conversions, LLC, v. HCC Insurance Company (“Basler Turbo”), 2009 WL 585658 (E.D.Wis.) to support its multiple occurrences argument. There, the Court, denying the insured plaintiff’s motion for a declaratory judgment, found a series of thefts of airplane parts constituted multiple occurrences. Basler Turbo, 2009 WL 585658 at(“The actions by which he caused each theft were separated by time, some by weeks and even months, and interrupted by periods of sleep, meals and countless other activities of daily living. To consider them all as one occurrence would stretch the meaning of the term far beyond the ordinary use.”). This opinion, authored by the District Court of the Eastern District of Wisconsin, is not binding on this Court and is based almost entirely on Wisconsin law, although it does also discuss Eott and B.H.D. in part. The Court declines to follow its reasoning.

 

Applying the applicable and binding precedent discussed above, the Court finds Plaintiff’s allegations of Defendants’ breach of contract fail to state a claim upon which relief can be granted. SeeFed.R.Civ.P. 12(b)(6). The Complaint lacks factual allegations to show multiple occurrences caused Plaintiff’s injury; Plaintiff’s failure to plead those facts renders it unable to state a claim that Defendants breached their insurance contract. Accordingly, the Court GRANTS Defendants’ Motion as to Plaintiff’s first claim, with leave to amend.

 

B. Breach of Implied Covenant of Good Faith and Fair Dealing

 

Plaintiff alleges Defendants breached the implied covenant of good faith and fair dealing by their bad faith refusal to pay Plaintiff’s claims in full without a reasonable investigation into the claims. (See Compl. at ¶¶ 20-25.) Defendants argue there was, and continues to be, a genuine dispute between the parties as to coverage under the policy; thus, Defendants argue, they have not denied payment in bad faith. (See Mot. at 6-7.)

 

The implied covenant of good faith and fair dealing arises between the parties to a contract. See Price v. Wells Fargo Bank, 213 Cal.App.3d 465, 478, 261 Cal.Rptr. 735 (1989); Rest.2d Contracts § 205 (“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”). An insurer must investigate thoroughly a claim by an insured before denying the claim in good faith; if an insurer denies a claim it has not investigated reasonably, then the insurer is subject to tort liability. See Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809, 818-19, 169 Cal.Rptr. 691, 620 P.2d 141 (1979); Jordan v. Allstate Ins. Co., 148 Cal.App.4th 1062, 1071-72, 56 Cal.Rptr.3d 312 (2007); McCoy v. Progressive West Ins. Co., 171 Cal.App.4th 785, 792-93, 90 Cal.Rptr.3d 74 (2009); Caso v. Hartford Casualty Ins. Co., 2008 WL 1970024, at *5-6 (E.D.Cal.2008).“Where there is a genuine issue as to the insurer’s liability under the policy for the claim asserted by the insured, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute.” Jordan v. Allstate Ins. Co., 148 Cal.App.4th at 1072, 56 Cal.Rptr.3d 312.

 

Here, Plaintiff alleges Defendants did not conduct an investigation into its claim and, in bad faith, refused to pay Plaintiff’s claim under Defendants’ theory that the limit of $100,000 applied as there was only one occurrence. Taking the allegations in the Complaint as true for the purposes of this Motion, Plaintiff clearly states a claim for the breach of the implied covenant of good faith and fair dealing. Id. at 1072, 56 Cal.Rptr.3d 312. Defendants may raise their genuine issue defense before the Court at a later stage of this litigation; at this juncture, the genuine issue doctrine does not bar Plaintiff’s allegation.

 

Plaintiff’s claim includes a prayer for punitive damages. (See Compl. at ¶ 25 (“The acts of defendants … were done intentionally, in bad faith, maliciously, and with the intent to defraud plaintiff, in conscious disregard of plaintiff’s rights.”).) In California, punitive damages are only available against defendants “guilty of oppression, fraud, or malice.”Cal. Civ.Code § 3294(a). “Malice” means conduct intended to injure or “which is carried on by the defendant with a conscious disregard of the rights or safety of others.”Cal. Civ.Code § 3294(c).“ ‘Oppression means subjecting a person to cruel or unjust hardship in conscious disregard of that person’s rights.”Id.“There must be an intent to vex, annoy, or injure. Mere spite or ill will is not sufficient; and mere negligence, even gross negligence is not sufficient to justify an award of punitive damages.” Ebaugh v. Rabkin, 22 Cal.App.3d 891, 894, 99 Cal.Rptr. 706 (1972). Plaintiff’s claim for violation of the implied covenant of good faith and fair dealing supports its prayer for punitive damages by alleging Defendants denied its claim in bad faith and with oppression, fraud, or malice. See San Jose Prod. Credit Ass’n v. Old Republic Life Ins. Co., 723 F.2d 700, 705 (1984). Accordingly, the Court DENIES Defendants’ Motion as to Plaintiff’s second claim and prayer for punitive damages.

 

C. Attorneys’ Fees

 

Plaintiff seeks attorneys’ fees on both of its claims “pursuant to Civil Code § 1717.5 and/or Code of Civil Procedure Section 1033.5, subdivision (a), subsection (10)(A).” (See Compl. at 6.) Defendants argue Plaintiffs are not entitled to recover reasonable attorneys’ fees under the statutes Plaintiff cites in its Complaint. While Defendants are correct and Plaintiffs concede this, Plaintiff is entitled to seek “attorneys’ fees reasonably incurred to compel payment of insurance policy benefits … if [Plaintiff] proves breach of the covenant of good faith and fair dealing.” McGregor v. Paul Revere Life Ins. Co., 369 F.3d 1099, 1100-01 (9th Cir.2004) (citing Brandt v. Superior Court, 37 Cal.3d 813, 210 Cal.Rptr. 211, 693 P.2d 796 (1985). Accordingly, the Court grants Plaintiff leave to amend its prayer for damages to remove the inapplicable statutory citations.

 

IV. CONCLUSION

 

For the foregoing reasons, the Court GRANTS the Motion in part and DENIES it in part. Plaintiff must file an amended Complaint no later than May 18, 2009.