Aerojet Rocketdyne, Inc. v. Glob. Aerospace, No. 2:17-cv-01515-KJM-AC

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
• Decision Date: 09 July 2020
• Docket Number: No. 2:17-cv-01515-KJM-AC
• Parties: AEROJET ROCKETDYNE, INC., Plaintiff, v. GLOBAL AEROSPACE, INC., et al., Defendants.

AEROJET ROCKETDYNE, INC., Plaintiff,
v.
GLOBAL AEROSPACE, INC., et al., Defendants.

No. 2:17-cv-01515-KJM-AC

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

July 9, 2020

ORDER

Defendant Global Aerospace, Inc. ("Global")¹ moves, under Federal Rule of Civil Procedure 12(c), for judgment on the pleadings of plaintiff Aerojet Rocketdyne, Inc.'s third cause of action for violations of California Business and Professions Code 17200 et seq. ("UCL claim"). In short, Global contends (1) the UCL claim fails as a matter of law because Aerojet is precluded from seeking equitable relief where alternative remedies exist, and (2), as pled, the second amended complaint contains insufficient allegations to satisfy the pleading standards applicable to a claim under the UCL. For the reasons explained below, Global's motion is GRANTED in part and DENIED in part.

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I. BACKGROUND

Several of the court's prior orders have thoroughly explained the history of this dispute, see, e.g., ECF No. 231; therefore, the court only briefly summarizes details as relevant here. This suit arises from two incidents involving non-party Orbital Sciences Corporation and rocket engines Aerojet supplied to Orbital. Second Am. Compl. ("SAC"), ECF No. 149, ¶ 36. First, on May 22, 2014, Orbital conducted a hot-fire acceptance test of rocket Engine E-17, supplied by Aerojet, at the NASA Stennis Space Center. Id. During the test, the engine failed, ultimately causing "substantial damage to the engine, the test facility, and ground equipment." Id. Second, on October 28, 2014, at the NASA Wallops Flight Facility, Orbital attempted to launch its "Orbital Antares launch vehicle with cargo destined for the International Space Station." Id. The launch was powered by two engines supplied by Aerojet. Id. Fifteen seconds into the launch, the vehicle exploded and impacted near the launch pad, causing destruction to the launch vehicle, its cargo and "significant damage to the launch pad and associated facilities and buildings." Id.

Orbital threatened litigation, id. ¶¶ 42-43, but on September 21, 2015, Aerojet and Orbital ultimately settled their dispute before litigation ensued, id. ¶ 48. Prior to finalizing settlement, however, Aerojet sought insurance coverage from defendant Global for Orbital's threatened claims. Id. ¶ 44. Global was aware of the nature of Orbital's claims and that Aerojet would seek indemnification under the Global policy for the value of property damage included in the Orbital settlement. Id. ¶¶ 44-47. Once Aerojet concluded the Orbital settlement agreement, it "tendered the settlement to Global and requested Global reimburse Aerojet for amounts [] paid to Orbital under the settlement." Id. ¶ 50. Global denied Aerojet's reimbursement request, claiming the policy does not provide indemnification for "amounts [] paid to Orbital under the settlement[.]" Id. ¶ 51.

On June 26, 2017, based on Global's denial of its claim, Aerojet filed suit in Los Angeles County Superior Court, and on July 20, 2017, Global timely removed to this court. Not. of Removal, ECF No. 1. The operative second amended complaint makes three claims: (1) breach of written insurance contract, (2) breach of implied covenant of good faith and fair

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dealing, and (3) unfair competition in violation of California Business and Professions Code section 17200 et seq. ("UCL claim"). SAC ¶¶ 54-79. The second amended complaint also seeks various forms of relief, including, inter alia, compensatory and consequential damages, restoration, restitution, preliminary and injunctive relief, and disgorgement of monies paid to Global under the policy. Id. at 18, ¶¶ 1-11 (prayer for relief).

Here, Global moves for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) as to Aerojet's UCL claim only. Mot., ECF No. 235. Aerojet opposes, Opp'n, ECF No. 250, and Global has replied, Reply, ECF No. 253. On November 22, 2019, the court heard oral argument on the motion. Counsel Rosemary Loehr and Milton Smith appeared on behalf of Aerojet; counsel Mary Dow and Larry Golub appeared on behalf of Global defendants. Thereafter, the court took the matter under submission for resolution by written order. The court resolves the motion here.

II. LEGAL STANDARD

A. Rule 12(c)

Rule 12(c) of the Federal Rules of Civil Procedure provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A Rule 12(c) motion may raise the defense of failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(h)(2)(B). The same standard of review applies to motions brought under Rule 12(c) or Rule 12(b)(6), and many of the same rules delineated in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), apply to Rule 12(c) motions. See Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011) ("Rule 12(c) is 'functionally identical' to Rule 12(b)(6) . . . .").

"Judgment on the pleadings is properly granted when there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009); Merchs. Home Delivery Serv., Inc. v. Frank B. Hall & Co., 50 F.3d 1486, 1488 (9th Cir. 1995). "A dismissal may be affirmed only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the

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allegations." Turner v. Cook, 362 F.3d 1219, 1225 (9th Cir. 2004) (Rule 12(b)(6)) (internal quotation marks and citation omitted).

In resolving a motion for judgment on the pleadings, the court "must accept all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party." Fleming, 581 F.3d at 925. However, the court is not required to accept as true "a legal conclusion couched as a factual allegation," Papasan v. Allain, 478 U.S. 265, 286 (1986), quoted in Twombly, 550 U.S. at 555, or "allegations that contradict matters properly subject to judicial notice" or material attached to or incorporated by reference into the complaint, Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). A court's consideration of documents attached to a complaint, documents incorporated by reference in the complaint, or matters of judicial notice will not convert a motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003); Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).

B. Rule 9(b)

A claim grounded in fraud must be pleaded with the particularity required by Federal Rule of Civil Procedure 9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (2003). The Ninth Circuit has specifically held that Rule 9(b)'s heightened pleading standard applies to claims of fraud under the UCL. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (citing Vess, 317 F.3d at 1102-05). Aerojet's UCL claim alleges, inter alia, that Global conducted "fraudulent business practices within the meaning of Business & Professions Code Section 17200." SAC ¶ 76; see also id. ¶ 73 ("Global's conduct . . . constitute[s] malice, oppression and/or fraud."). Accordingly, the entirety of Aerojet's UCL claim sounds in fraud and must satisfy the pleading requirements of Rule 9(b), which requires that a party "state with particularity the circumstances constituting fraud or mistake," including "the who, what, when, where, and how" of the alleged fraudulent conduct.² Vess, 317 F.3d at 1106 (quoting Cooper v.

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Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). In addition, Aerojet "'must set forth what is false or misleading about a statement, and why it is false.'" Id. (quoting Decker v. GlenFed, Inc. (In re GlenFed, Inc. Sec. Litig.), 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc)).

III. DISCUSSION

Global moves for judgment on the pleadings as to Aerojet's UCL claim based on two theories: (1) the UCL permits only equitable relief, and where alternative avenues of relief exist, as here, a UCL claim fails as a matter of law; and (2) Aerojet fails to plead its UCL claim, under any prong, with the particularity required by Rule 9(b) and Aerojet cannot amend its complaint to cure these deficiencies. See generally Reply. In opposition, Aerojet contends the UCL permits the alternative relief it seeks and the allegations in the complaint are pled with the specificity necessary to state a claim under each of the UCL's three prongs. See generally Opp'n. Aerojet also asks the court to rely on evidence beyond the complaint and convert Global's motion to one for summary judgment. Id. at 2-3, 9 n.1.

Given its threshold nature, the court first addresses Aerojet's request to convert Global's motion to one for summary judgment before reaching the merits of the parties' contentions.

A. Conversion of 12(c) Motion to Summary Judgment Motion

"[I]t is within the district court's discretion whether to accept extra-pleading matter on a motion for judgment on the pleadings and treat it as one for summary judgment or to reject it and maintain the character of the motion as one under Rule 12(c)." 5C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1371 (3d ed. 2019); Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989) (in resolving motion under Rule

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12(c), if "the district court goes beyond the pleadings to resolve an issue[,] such a proceeding must properly be treated as a motion for summary judgment"). But, if such a conversion occurs, the court "must give the parties notice and an opportunity to be heard on the summary judgment question." Wright & Miller, supra, § 1371.

Here, the court exercises its discretion and declines to convert Global's motion to one for summary judgment. As explained below, Global's motion presents primarily legal questions as to the...