United States District Court, D. Hawaii
ORDER DENYING DEFENDANTS ALLIANZ GLOBAL RISKS U.S.
INSURANCE COMPANY AND ACE AMERICAN INSURANCE COMPANY'S
MOTION TO DISMISS COUNT “D” OF PLAINTIFF'S
Oki Mollway United States District Judge
Allianz Global Risks U.S. Insurance Company and Ace American
Insurance Company (collectively, “the Insurers”)
have declined to cover damage to Plaintiff Puna Geothermal
Venture's power plant on the Big Island. The damage was
sustained when the Kilauea volcano erupted in May 2018.
Geothermal asserts several claims against the Insurers based
on their allegedly wrongful denial of Puna Geothermal's
claims, including an unfair practices claim brought under
Nevada Revised Statutes § 686A.310(1).
The Insurers argue that the unfair practices claim should be
dismissed because Hawaii law, not Nevada law, applies to
claims by Puna Geothermal that are not contract claims. The
choice-of-law clauses in the insurance policies at issue,
however, call for the application of Nevada law. Because Puna
Geothermal's unfair practices claim falls within the
choice-of-law policy language, this court denies the
Insurers' motion to dismiss the Nevada unfair practices
3, 2018, the Kilauea volcano on the Big Island erupted,
causing molten lava to flow towards Puna Geothermal's
power plant in lower Puna. ECF No. 1, PageID # 5. To protect
the geothermal plant and the surrounding community, Puna
Geothermal ceased operations and took several steps to
minimize the harm caused by the lava flows. Id. at
5, 13. Those steps included removing flammable gases from the
plant and plugging various wells to keep hydrogen sulfide
from escaping. Id. at 13. Eventually, lava reached
the geothermal plant, which was damaged. Id. at 5-6.
The plant remains closed today. Id. at 6.
insurance policies purchased by one of Puna Geothermal's
corporate parents, Ormat Technologies, Inc., covered the Puna
geothermal plant. Id. at 5, 8-9. Allianz had issued
one of those policies, and Ace had issued another.
Id. at 7-8. Both policies (“the Insurance
Policies”) contain a choice-of-law clause stating that
“[t]his policy shall be governed by the laws of the
State of Nevada[.]” ECF No. 31-3, PageID #162; ECF No.
31-4, PageID # 245.
policies also inlcude “Time Element Coverage”
clauses. Each such clause insures Puna Geothermal against
losses caused by actions taken for the temporary protection
and preservation of the geothermal power plant. ECF No. 1,
PageID # 12-13. Puna Geothermal says that it is entitled to
compensation under the Time Element Clause because it
suffered considerable losses as a result of the steps it took
to protect its geothermal plant from further damage. See
Id. at 13. Puna Geothermal filed claims with both
Allianz and Ace under the Time Element Clause, but Allianz
and Ace denied the claims. Id. at 13-14.
August 21, 2019, Puna Geothermal filed this action, asserting
four claims: (1) a breach of contract claim against Allianz,
(2) a breach of contract claim against Ace, (3) a breach of
the implied covenant of good faith and fair dealing claim
against both Allianz and Ace, and (4) a claim under Nevada
Revised Statutes § 686A.310(1) against both Allianz and
Ace. ECF No. 1, PageID # 15-20.
STANDARD OF REVIEW.
Rule 12(b)(6) of the Federal Rules of Civil Procedure, the
court's review is generally limited to the contents of a
complaint. Sprewell v. Golden State Warriors, 266
F.3d 979, 988 (9th Cir. 2001); Campanelli v.
Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). If
matters outside the pleadings are considered, the Rule
12(b)(6) motion is treated as one for summary judgment.
See Keams v. Tempe Tech. Inst., Inc., 110 F.3d 44,
46 (9th Cir. 1997); Anderson v. Angelone, 86 F.3d
932, 934 (9th Cir. 1996). However, the court may take
judicial notice of and consider matters of public record
without converting a Rule 12(b)(6) motion to dismiss into a
motion for summary judgment. See Khoja, 899 F.3d at
998. The court may also consider documents that have been
incorporated by reference into the complaint. Id.
Rule 12(b)(6) motion to dismiss, all allegations of material
fact are taken as true and construed in the light most
favorable to the nonmoving party. Fed'n of African
Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207
(9th Cir. 1996). However, conclusory allegations of law,
unwarranted deductions of fact, and unreasonable inferences
are insufficient to defeat a motion to dismiss.
Sprewell, 266 F.3d at 988; Syntex Corp. Sec.
Litig., 95 F.3d 922, 926 (9th Cir. 1996).
under Rule 12(b)(6) may be based on either: (1) lack of a
cognizable legal theory, or (2) insufficient facts under a
cognizable legal theory. Balistreri v. Pacifica Police
Dept., 901 F.2d 696, 699 (9th Cir. 1988) (citing
Robertson v. Dean Witter Reynolds, Inc., 749 F.2d
530, 533-34 (9th Cir. 1984)).
survive a Rule 12(b)(6) motion to dismiss, factual
allegations must be enough to raise a right to relief above
the speculative level, on the assumption that all the
allegations in the complaint are true even if doubtful in
fact.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (internal quotation marks omitted);
accord Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“[T]he pleading standard Rule 8 announces does not
require ‘detailed factual allegations,' but it
demands more than an unadorned,
“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.”
Twombly, 550 U.S. at 555. The complaint must
“state a claim to relief that is plausible on its
face.” Id. at 570. “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.
Insurers ask this court to dismiss Puna Geothermal's
unfair practices claim, brought under Nevada Revised Statutes
§ 686A.310(1). They contend that Puna Geothermal's
noncontractual claims are governed by Hawaii law, and that
although Hawaii has its own unfair practices law in chapter
480 of Hawaii Revised Statutes, nothing in Hawaii law is
comparable to ...