PAUL TUFANO, Individually and on behalf of all others similarly situated v. State Farm Mutual Automobile Insurance Company

1
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PAUL TUFANO, Individually and on behalf
of all others similarly situated,
Plaintiff-Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellee.
No. 20-15995
D.C. No.
2:18-cv-03281-MCE-DB
MEMORANDUM*
Appeal from the United States District Court
for the Eastern District of California
Morrison C. England, Jr., District Judge, Presiding
Submitted March 12, 2021**
Las Vegas, Nevada
Before: CLIFTON, NGUYEN, and BENNETT, Circuit Judges.
Paul Tufano appeals the district court’s order granting State Farm Mutual
Automobile Insurance Company’s (“State Farm”) motion to dismiss his first
amended complaint for failure to state any plausible claims. We have jurisdiction
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
FILED
MAR 18 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

-- 1 of 5 --

2
pursuant to 28 U.S.C. § 1291 and affirm.
This case concerns State Farm’s refusal to pay Tufano for the diminished
value of his car after it was fully repaired. In 2017, Tufano was involved in a
collision with another driver, Rosalio Acero. Both Tufano and Acero were insured
by State Farm. Tufano’s policy includes collision coverage that gave State Farm the
choice between repairing or replacing the car, and State Farm elected to, and did,
repair Tufano’s car. Tufano’s policy coverage excluded recovery for “any reduction
in the value of the covered vehicle after it has been repaired, as compared to its value
before it was damaged.” Nonetheless, Tufano filed an insurance claim for the
diminished value of his repaired car, which State Farm denied. Tufano then brought
this putative class action, alleging breach of contract (on both his own and Acero’s
policies) and various state and federal fraud claims. The district court dismissed
Tufano’s complaint because the claims under his own policy were precluded by
applicable case law, he had no basis to bring claims under Acero’s policy, and the
fraud claims lacked the requisite particularity.
We review de novo the district court’s order granting the motion to dismiss
for failure to state a claim. Whitaker v. Tesla Motors, Inc., 985 F.3d 1173, 1175 (9th
Cir. 2021). We may affirm the district court’s dismissal on “any ground supported
by the record.” Canyon Cnty. v. Syngenta Seeds, Inc., 519 F.3d 969, 975 (9th Cir.
2008).

-- 2 of 5 --

3
Tufano argues that his policy’s exclusion of coverage for the diminished value
of his car violates California law and public policy. But California courts have
consistently held that such insurance policies are permissible. See Baldwin v. AAA
N. Cal., Nev. & Utah Ins. Exch., 204 Cal. Rptr. 3d 433, 441–42 (Ct. App. 2016);
Carson v. Mercury Ins. Co., 148 Cal. Rptr. 3d 518, 533 (Ct. App. 2012); Ray v.
Farmers Ins. Exch., 246 Cal. Rptr. 593, 596 (Ct. App. 1988). Our nonprecedential
decision in Copelan v. Infinity Insurance Co., 728 F. App’x 724 (9th Cir. 2018), did
not suggest otherwise. See id. at 726 (holding that insurer’s “‘election to repair is
conclusive,’ regardless of any diminution in value” (quoting Ray, 246 Cal. Rptr. at
595)).
Tufano further contends that State Farm breached the implied covenant of
good faith and fair dealing. But in Baldwin, the court explained that “[a]n insurer
does not act in bad faith by repairing, as promised in the policy, the insured’s
vehicle,” and rejected the plaintiff’s argument that his insurer improperly excluded
coverage for his car’s diminished value. 204 Cal. Rptr. 3d at 444 (citing Carson,
148 Cal. Rptr. 3d at 533–34). Thus, Tufano has not plausibly alleged bad faith here.
Because Tufano’s claim under his own policy is based on the contract (and there is
no bad faith), California Civil Jury Instruction No. 3903J, which allows litigants to
recover the diminished value of a car in tort actions, is irrelevant. See id. at 445 n.6.
Tufano also attempts to recover diminished value from State Farm under

-- 3 of 5 --

4
Acero’s liability coverage. However, to directly sue State Farm based on Acero’s
policy, Tufano must first obtain a court judgment against Acero. Cal. Ins. Code §
11580(b)(2). Otherwise, he is a stranger to Acero’s insurance policy with State Farm
and lacks standing to enforce Acero’s contractual rights. See Coleman v. Republic
Indem. Ins. Co., 33 Cal. Rptr. 3d 744, 746 (Ct. App. 2005) (“[T]he coincidental fact
that plaintiffs are insured by the same insurer as the other party does not change
plaintiffs’ position as strangers to the other party’s insurance policy . . . .”). Here,
there is no evidence that Tufano has obtained a judgment against Acero. Rather,
Tufano contends that he does not need a judgment, because his position is like that
of an excess insurer in an equitable subrogation action, who can proceed without a
judgment against a primary insurer. But “actions between liability insurers are not
based on contract,” so insurers may resolve disputes between themselves “without
the limits imposed in other contexts by the direct-action proscription.” Fortman v.
Safeco Ins. Co. of Am., 271 Cal. Rptr. 117, 119 (Ct. App. 1990). Because Tufano’s
action against State Farm is based on Acero’s insurance contract, he lacks standing
to sue based on Acero’s policy.
Finally, Tufano alleges that State Farm misrepresented its products as
“insurance,” which led him to think he was purchasing coverage for the diminished
value of his car. Based on these allegations, he contends that State Farm violated
California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), and

-- 4 of 5 --

5
Consumer Legal Remedies Act (“CLRA”), as well as the federal Racketeer
Influenced and Corrupt Organizations Act (“RICO”).
The UCL and FAL claims are implausible under the “reasonable consumer”
standard. See Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016). The
reasonable consumer would not think the term “insurance” means that the policy
will always cover diminished value, because consumers know that insurance policies
are customizable and contain all types of exclusions. The CLRA claim fails because
the CLRA applies only to transactions involving tangible goods and services, and
insurance is neither a tangible good nor a service. See Fairbanks v. Superior Ct.,
205 P.3d 201, 202 (Cal. 2009). The RICO claim is predicated on Tufano’s allegation
that State Farm’s advertising of its products as “insurance” constitutes mail fraud or
wire fraud. Tufano has not plausibly alleged that State Farm’s advertising was
misleading, so he has not shown that State Farm formed a scheme to defraud him,
as required to establish mail or wire fraud. See Rothman v. Vedder Park Mgmt., 912
F.2d 315, 316–17 (9th Cir. 1990). Without plausible allegations of mail or wire
fraud, there is no predicate racketeering activity, and Tufano’s RICO claim fails.
See 18 U.S.C. §§ 1961(1), 1962.
AFFIRMED.

-- 5 of 5 --