Ameripod, LLC v. Davisreed Constr. Inc.
| Decision Date | 11 July 2017 |
| Docket Number | Case No.: 3:17-cv-00747-H-WVG |
| Court | U.S. District Court — Southern District of California |
| Parties | AMERIPOD, LLC, a New Jersey limited liability company, Plaintiff, v. DAVISREED CONSTRUCTION INC., a California corporation, and DOES 1 through 10, Defendant. |
ORDER DENYING PLAINTIFF'S MOTION TO DISMISS
On April 13, 2017, Plaintiff AmeriPOD, LLC ("Plaintiff") filed a complaint against Defendant davisREED Construction, Inc. ("Defendant"), alleging breach of contract and various related causes of action. (Doc. No. 1.) On May 22, 2017, Defendant filed an answer, asserting twelve counterclaims. (Doc. No. 10.) On June 12, 2017, Plaintiff filed a motion to dismiss ten of Defendant's counterclaims pursuant to Fed. R. Civ. P. 12(b)(6). (Doc. No. 12.) On June 26, 2017, Defendant filed an opposition to Plaintiff's motion. (Doc. No. 14.) On July 30, 2017, Plaintiff filed a reply. (Doc. No. 16.) The Court submitted the motion to dismiss, pursuant to Local Rule 7.1(d)(1), on June 29, 2017. (Doc. No. 15.)
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The following facts are taken from Defendant's answer and counterclaims. (Doc. No. 10.) At the motion to dismiss stage, the Court accepts as true all facts alleged, and draws all reasonable inferences in favor of the claimant. See Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014).
Defendant is a construction contractor who was engaged to build the Argyle Hotel in Los Angeles, California ("the Project"). Defendant subsequently engaged Plaintiff as a subcontractor to provide prefabricated modular bathroom units ("pods") for the Project. During the installation of the pods, Defendant discovered that some of the shower floors were faulty and leaked. Defendant's investigation revealed the pods were damaged during transport by Plaintiff. Defendant notified Plaintiff of the defects but Plaintiff failed to resolve the issues or remediate the harm caused by the leaky pods. Defendant alleges that Plaintiff subsequently abandoned the Project and, on February 22, 2017, Defendant issued a 48-Hour Notice, informing Plaintiff that it was taking steps to supplement the workforce to address Plaintiff's abandonment. Plaintiff failed to timely respond to the 48-Hour Notice and, as a result, Defendant terminated Plaintiff from the Project for cause. Defendant alleges that Plaintiff's actions resulted in damage to various aspects of the Project beyond the pods, including structural elements.
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In its answer, Defendant asserts twelve counterclaims. (Doc. No. 10 at 19-27.) Plaintiff moves to dismiss ten of these counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 12.) Plaintiff argues these claims inappropriately attempt to reframe Defendant's breach of contract claim and fail to allege sufficient facts. The Court disagrees. Defendant is entitled to plead alternative theories of liability and has alleged sufficient facts to state its various causes of action. As such, the Court denies the motion to dismiss.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a complaint if the claimant has failed to state a claim upon which relief can be granted. See Conservation Force v. Salazar, 646 F.3d 1240, 1241 (9th Cir. 2011). Federal Rule of Civil Procedure 8(a)(2) only requires that pleadings contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The pleading need only "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
A complaint will survive a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Twombly, 550 U.S. at 555). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (quoting Twombly, 550 U.S. at 557). Accordingly, dismissal for failure to state a claim is proper where the claim "lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).
In reviewing a Rule 12(b)(6) motion to dismiss, a district court must accept as true all facts alleged in the complaint, and draw all reasonable inferences in favor of the claimant. See Retail Prop. Trust, 768 F.3d at 945. But a court need not accept "legal conclusions" as true. Iqbal, 556 U.S. at 678. Further, it is improper for a court to assume the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). A court may consider documents incorporated into the complaint by reference and items that are proper subjects of judicial notice. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010).
Plaintiff argues that Defendant's counterclaim for promissory estoppel should be dismissed because there is a valid contract defining the parties' rights as to the subject. (Doc. No. 12-1 at 9.) Defendant opposes the motion, arguing that the promissory estoppel claim is properly plead as an alternative theory of liability given that the parties dispute various terms of the contract. (Doc. No. 14 at 4.)
At the pleadings stage, a claimant is free to plead inconsistent theories of liability. Fed. R. Civ. P. 8(d)(3). These inconsistent theories may be premised on contradictory statements of fact so long as the pleader has a legitimate doubt about the underlying facts. Fed. R. Civ. P. 8(e)(2) (); 5 Wright and Miller, Federal Practice and Procedure § 1285 (3d ed. 2017) ().
Defendant's promissory estoppel claim was properly plead. To prove its claim of promissory estoppel, Defendant must show (1) Plaintiff made a clear and unambiguous promise, (2) Defendant relied on the promise, (3) the reliance was reasonable andforeseeable, and (4) Defendant was injured by its reliance. Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 792 (9th Cir. 2012). Defendant has alleged sufficient facts to establish each element at the pleadings stage. (See Doc. No. 10 at 19-20.) Defendant alleges that Plaintiff promised to deliver prefabricated bathroom pods meeting or exceeding certain requirements, (id. ¶ 31), that Defendant reasonably relied upon this promise, (id. ¶ 32), and was subsequently injury by Plaintiff's failure to deliver as promised, (id. ¶ 34).
The fact that Defendant separately alleges Plaintiff breached the parties' express contract through its failure to deliver conforming pods does not change this analysis at the motion to dismiss stage. Generally, a party cannot recover for both a claim of promissory estoppel and a breach of contract with regard to the same subject matter. Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1167 (9th Cir. 1996) (quoting Chrysler Capital Corp. v. Century Power Corp., 778 F.Supp. 1260, 1272 (S.D.N.Y. 1991)) ("the existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi-contract."); accord Douglas E. Barnhart, Inc., 221 Cal.App.4th at 242. However, when the parties dispute the terms of a contract at the motion to dismiss stage—before any factual development—it will be difficult to determine whether the claims for promissory estoppel and breach of contract concern the same particular subject matter. Rowland v. JPMorgan Chase Bank, N.A., 2014 WL 992005, at *6 (N.D. Cal. 2014) (); Trunov v. Rusanoff, 2012 WL 6115608, at *3 (N.D. Cal. 2012) (). In such situations, it is appropriate for a claimant to plead both promissory estoppel and breach of contract. Id. That is the case here: both parties dispute the terms of the contract, arguing they performed their obligations under the contract while the other party failed to do so.(Compare Doc. No. 1 ¶¶ 10-12 with Doc. No. 10 at 17, ¶ 16.) As such, this dispute is better resolved at summary judgment, when the facts have been more fully established.
Plaintiff's reliance on Total Coverage, Inc. v. Cendant Settlement Servs. Grp., Inc., 252 Fed.Appx. 123 (9th Cir. 2007), does not help it. As a threshold matter, the Court notes that the opinion in Total Coverage was unpublished and, thus, is not binding on this Court. 9th Cir. R. 36-3(a). Furthermore, the reasoning in Total Coverage does not change the outcome here. There, the Ninth Circuit found that the parties agreed "that the express contract govern[ed] the relationship between the parties." Total Coverage, 252 Fed.Appx....
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