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Puna Geothermal Venture v. Allianz Global Risks U.S. Insurance Co.

United States District Court, D. Hawaii

December 5, 2019



          Susan Oki Mollway United States District Judge


         Defendants 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.

         Puna 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 claim.

         II. BACKGROUND.

         On May 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.

         Several 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[.]”[1] ECF No. 31-3, PageID #162; ECF No. 31-4, PageID # 245.

         Both 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.

         On 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.


         Under 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.

         On a 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).

         Dismissal 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)).

         “[T]o 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, the-defendant-unlawfully-harmed-me accusation”). “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.

         IV. ANALYSIS.

         The 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 ...

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