AIIRAM LLC v. KB Home
| Decision Date | 12 August 2019 |
| Docket Number | Case No. 19-CV-00269-LHK |
| Parties | AIIRAM LLC, et al., Plaintiffs, v. KB HOME, Defendant. |
| Court | U.S. District Court — Northern District of California |
Plaintiffs AIIRAM LLC and Mariia Kravchuk (collectively, "Plaintiffs") bring this putative class action lawsuit against Defendant KB Home ("Defendant") for breach of contract and related claims. Before the Court is Defendant's motion to stay the action or, in the alternative, to strike Plaintiffs' class allegations and dismiss seven of Plaintiffs' claims. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court DENIES Defendant's motion to stay; DENIES Defendant's motion to strike Plaintiffs' class allegations; and GRANTS Defendant's motion to dismiss with leave to amend in part and without leave to amend in part.
AIIRAM is a Nevada limited liability company. ECF No. 17 ("FAC"), ¶ 5. Kravchuk, an individual residing in Ukraine, is the sole owner of AIIRAM. Id. ¶ 4. Defendant is a Delaware corporation with its principal place of business in Los Angeles, California. Id. ¶ 6.
Plaintiffs allege that on or about July 26, 2017, Kravchuk and non-party Artem Koshkalda "electronically signed a Purchase Agreement and Escrow instructions with Defendant for Tract 10377, Lot/Unit 8, at 1035 Giacomo Lane #7, San Jose, California." Id. ¶ 15. Defendant executed the contract on or about August 3, 2017. Id. Kravchuk and Koshkalda agreed to pay $943,367 for Lot 8 and deposited $27,240 into escrow. Id.
On or about July 27, 2017, Koshkalda and non-party Vladimir Westbrook signed a purchase agreement and escrow instructions with Defendant for Lot 11 at Tract 10377. Id. ¶ 16. Defendant executed the contract on or about August 4, 2017. Id. Koshkalda and Westbrook agreed to pay $876,427 for Lot 11 and deposited $25,440 into escrow. Id.
On or about July 28, 2017, AIIRAM, through Kravchuk, signed a purchase agreement and escrow instructions with Defendant for Lot 14 at Tract 10377. Id. ¶ 17. Defendant executed the contract on August 3, 2017. Id. AIIRAM agreed to pay $932,028 for Lot 14 and deposited $27,240 into escrow. Id.
On November 9, 2017, Westbrook—who was the real estate agent for Plaintiffs and Koshkalda, as well as a purchaser of Lot 11—conducted a "pre-carpet" walkthrough of the homes at Lots 8, 11, and 14. Id. ¶ 18. On November 27, 2017, Westbrook conducted a final walkthrough of the homes at Lots 8, 11, and 14. Id. ¶ 20.
On November 27, 2017, Defendant emailed Koshkalda and stated that because November 30, 2017 was the close of Defendant's fiscal year, it was "imperative" that Plaintiffs and the other purchasers close escrow on Lots 8, 11, and 14 by that date. Id. ¶ 21. Defendant also informed Koshkalda that he would receive in the mail a "3 day default letter" stating that Koshkalda must close the purchase by November 30, 2017 or Defendant "will refund your deposit and cancel the purchase." Id.
On November 27, 2017, Defendant sent Kravchuck, via overnight delivery, a notice of default. Id. ¶ 22. The notice stated that under section 3.2 of the Lot 8 contract, Kravchuk could "continue with the purchase of your home if you are able to deposit all funds into escrow within 3 business days of delivery of this letter and you provide KB Home a copy of your final loan approval." Id. (emphasis in original).
On November 28, 2017, Kravchuk, Koshkalda, and Westbrook each assigned to AIIRAM the contractual rights to purchase Lots 8, 11, and 14. Id. ¶ 24.
Plaintiffs allege that Plaintiffs' loans were approved before November 30, 2017. Id. ¶ 25. On November 30, 2017, Kravchuk flew to California and met with the escrow officer to sign the final paperwork and to transfer the balance of the funds into escrow. Id. ¶ 26. However, the escrow officer informed Kravchuk that Defendant had canceled the contracts for Lots 8, 11, and 14. Id. ¶ 27. Later that same day, Defendant left a voicemail for Westbrook and said that Lots 8, 11, and 14 were available for "market prices." Id. ¶ 28. Plaintiffs allege that the market prices later listed for Lots 8, 11, and 14 far exceeded the prices Plaintiffs had agreed to pay. Id. ¶ 29.
On June 11, 2018, Plaintiffs filed a lawsuit (the "Individual State Action") against Defendant in California Superior Court for the County of Santa Clara. ECF No. 23, Ex. B.1 In the Individual State Action, Plaintiffs allege five causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) intentional interference with economic advantage; (4) negligence [sic] interference with economic advantage; and (5) bad faith denial of contract. Id. at 1.
In the Individual State Action, Plaintiffs have filed at least three motions to compeldiscovery from Defendant. See Ex. A at 2-4. The state court has also held at least two case management conferences. Id. at 3, 10.
On December 17, 2018, Plaintiffs filed a putative class action complaint against Defendant in California Superior Court for the County of Santa Clara. ECF No. 2-1. Plaintiffs' class action complaint raised the same five claims as Plaintiffs' complaint in the Individual State Action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) intentional interference of economic advantage; (4) negligence [sic] interference with economic advantage; and (5) bad faith denial of contract.
On January 16, 2019, Defendant removed Plaintiffs' putative class action ("Federal Action") to this Court under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2)(A). ECF No. 1.
On February 14, 2019, in the Federal Action, the parties filed a stipulation to extend Defendant's deadline to respond to Plaintiff's complaint. ECF No. 11. The parties stated that the Federal Action is "related to a lawsuit pending in California state court, Kravchuk et al. v. KB Home, Case No. 18CV329716" (the Individual State Action) and stated that the Individual State Action "involves the same individual plaintiffs, same factual allegations, and same claims as this lawsuit, and is identical to this lawsuit except for the fact that this lawsuit is a putative class action and includes class allegations." Id. at 2.
On April 12, 2019, in the Federal Action, Plaintiffs filed the FAC. ECF No. 17. The FAC includes eight claims: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) intentional interference of economic advantage; (4) negligence [sic] interference of economic advantage; (5) bad faith denial of contract; (6) violation of the unfair prong of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200; (7) violation of the fraudulent prong of the UCL; and (8) violation of the unlawful prong of the UCL. FAC ¶¶ 30-71.
Plaintiffs propose to certify the following class and subclass:
On April 24, 2019, Defendant filed the instant motion to stay the case or, in the alternative, to strike Plaintiffs' class allegations and dismiss seven of Plaintiffs' claims. ECF No. 21 ("Mot."). On May 8, 2019, Plaintiffs filed their opposition, ECF No. 25 ("Opp."), and on May 15, 2019, Defendant filed its reply. ECF No. 26 ("Reply").
Under the Colorado River doctrine, a federal court may stay a case in favor of parallel state proceedings where doing so would serve the interests of "[w]ise judicial administration, giving regard to the conservation of judicial resources and comprehensive disposition of litigation." Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (citation omitted). A stay of proceedings pursuant to Colorado River is appropriate only in "exceptional circumstances," Holder v. Holder, 305 F.3d 854, 867 (9th Cir. 2002), and if there is "substantial doubt as to whether the state court proceedings will resolve" all issues before the federal court, a stay or dismissal on Colorado River grounds is "preclude[d]," Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 913 (9th Cir. 1993). The United States Supreme Court described the Colorado River doctrine as a narrow exception to "the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them." Colo. River, 424 U.S. at 817.
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include "a short and plain statement of the claim showing that the pleader is entitled to relief." A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The U.S. Supreme Court has held that Rule 8(a) requires a plaintiff to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff...
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