Broken Drum Bar, Inc. v. Site Ctrs. Corp., Case No. 2:19-cv-01445-ODW (SKx)
| Decision Date | 22 May 2019 |
| Docket Number | Case No. 2:19-cv-01445-ODW (SKx) |
| Parties | BROKEN DRUM BAR, INC. et al., Plaintiff, v. SITE CENTERS CORP. et al., Defendants. |
| Court | U.S. District Court — Central District of California |
ORDER GRANTING, IN PART, DENYING IN PART, DEFENDANTS' MOTION TO DISMISS [21]
Plaintiffs Broken Drum Bar, Inc. ("Broken Drum Bar"); Stefan Guillen; and Brian Maginnis bring various claims against Defendants Site Centers Corp. Inc.; DDR Urban, Inc.; DDR Urban LP ("DDR"); Patrick Brady; and Morgan Erickson relating to a lease dispute. Defendant DDR1 owns and operates a shopping center in Long Beach, California. (First Am. Compl. ("FAC") ¶¶ 11, 18, ECF No. 12.)
Defendants move to dismiss on the following grounds: (1) Plaintiffs Guillen and Maginnis lack standing; (2) Defendants Site Centers Corp. Inc., DDR Urban, Inc., Brady, and Erickson are improper defendants; and (3) Plaintiffs failed to sufficientlyallege each cause of action. (See generally Mot. to Dismiss FAC ("Mot."), ECF No. 21.)
Having reviewed the papers and the oral argument of counsel, and for the reasons that follow, the Court GRANTS, IN PART, DENIES IN PART, Defendants' Motion to Dismiss.
Plaintiff Stefan Guillen is the President of Broken Drum Bar, Inc. (Mot. 3.) Plaintiff Brian Maginnis is an investor of Broken Drum Bar, Inc. (Id.)
Defendant DDR owns and operates the Pike Outlets in Long Beach, California. (Mot. 3.) Defendant Patrick Brady is the Vice President of Leasing for Defendant Site Centers Corp., Inc. (FAC ¶ 12.) Defendant Morgan Erickson is the Regional General Manager for Defendant Site Centers Corp., Inc. (FAC ¶ 13.)
In 2017, Mr. Guillen, on behalf of Broken Drum Bar, Inc., commenced the process of obtaining a lease for unit number 550 (previously occupied by Sgt. Pepper's Dueling Pianos). (See FAC ¶¶ 18, 27.) As part of the process, Plaintiff Guillen submitted a detailed outline of his business plan to Defendant Brady, which informed Defendant Brady that he intended to use the space as a live music and entertainment venue. (FAC ¶ 19.) Defendant Brady responded that Plaintiff Guillen's proposal had been recommended for approval and that "final approval and consent [for] use as a live music and bar . . . would take a few more weeks." (FAC ¶ 20.)
On March 1, 2018, Plaintiffs took over the lease of unit number 550 from Sgt. Pepper's Dueling Pianos. (FAC ¶ 22.) On March 17, 2018, Plaintiffs held a soft opening for the business. (FAC ¶ 23.) During the soft opening, security guards were sent to Plaintiffs' business due to noise complaints from the nearby movie theatre, Cinemark Movie Theatres ("Cinemark"). (FAC ¶ 24.) Due to the noise, during Plaintiffs' operation of the business, Defendants would place security personnel at the entrance of Plaintiffs' business, and the security personnel were instructed to take notes of employee names and patrons entering the business. (FAC ¶ 29.)
Prior to entering into the lease, Plaintiffs allege that Defendants informed them that there had been no prior noise complaints related to unit number 550. (FAC ¶ 30.) However, Plaintiffs allege that they were informed by numerous tenants at the shopping center that noise complaints from unit number 550 were nothing new and had been ongoing for several years. (FAC ¶¶ 27-28.) Defendants demanded that Plaintiffs remedy the noise issue or change the nature of their business. (FAC ¶ 31.) In response, Plaintiffs informed Defendants that they would withhold rent until Defendants fixed the property. (FAC ¶ 32.) However, shortly thereafter, Plaintiffs ceased operation of the Broken Drum Bar. (FAC ¶ 33.)
On January 7, 2019, Plaintiffs filed this lawsuit in Los Angeles County Superior Court. (Notice of Removal, ECF No. 1.) Plaintiffs brought seven claims for relief: (1) negligence; (2) breach of implied covenant of good faith and fair dealing; (3) intentional misrepresentation; (4) negligent misrepresentation; (5) negligent interference with prospective economic relations; (6) intentional interference with prospective economic relations; and (7) breach of quiet enjoyment. (See generally FAC.)
On February 27, 2019, Defendants removed this case on the basis of diversity jurisdiction. (Id.) On March 11, 2019, Defendants filed a motion to dismiss. (ECF No. 9.) On March 27, 2019, Plaintiffs filed a First Amended Complaint adding two additional parties, Patrick Brady and Morgan Erickson, purportedly to destroy diversity. (ECF No. 12.) On the same day, Plaintiffs attempted to file a motion for remand, which the Court struck because it was improperly filed. (See ECF No. 19.) Plaintiffs have not attempted to refile their motion for remand. On April 10, 2019, Defendants again moved to dismiss the case. (Mot.)
A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). To survive a dismissal motion, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual "allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, the complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).
The determination of whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. A court is generally limited to the pleadings and must construe all "factual allegations set forth in the complaint . . . as true and . . . in the light most favorable" to the plaintiff. Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). But a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
Where a district court grants a motion to dismiss, it should generally provide leave to amend unless it is clear the complaint could not be saved by any amendment. See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
Based on the allegations in the First Amended Complaint, Plaintiffs Guillen and Maginnis do not have standing to bring a claim related to the lease dispute. The First Amended Complaint generally alleges that Plaintiff Guillen, acting on behalf ofBroken Drum Bar, Inc., negotiated and entered into the lease with Defendant DDR. (See FAC ¶ 42.) Plaintiff Maginnis was an investor in Broken Drum Bar. (FAC ¶ 69.) Plaintiffs offer no response to this issue.
"The normal rule is that a corporation is run by its management, and the corporation itself has the right to make claims." Quinn v. Anvil Corp., 620 F.3d 1005, 1012 (9th Cir. 2010). For individual shareholders of a corporation to bring a suit on behalf of the corporation, the shareholders must bring a shareholder derivative suit and comply with Federal Rule of Civil Procedure 23.1. Id. Among other requirements, Rule 23.1 requires that the plaintiff "allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors." Potter v. Hughes, 546 F.3d 1051, 1056 (9th Cir. 2008) (internal quotation marks omitted).
Here, Plaintiffs Guillen and Maginnis do not come close to alleging facts sufficient to support a derivative lawsuit. With Broken Drum Bar, Inc. as a party to this lawsuit, Plaintiffs' ability to maintain a derivative suit is improbable; Broken Drum Bar, Inc. is already acting in the interest of its shareholders. See Paulson, Inc. v. Bromar, Inc., 775 F. Supp. 1329, 1339 (D. Haw. 1991) () (internal quotation marks omitted).
Accordingly, the Court grants Defendants' Motion and dismisses Plaintiffs Guillen and Maginnis with leave to amend. Plaintiffs Guillen and Maginnis are given leave to amend to allege non-derivative claims.
Defendants argue that Site Centers Corp. Inc. and DDR Urban, Inc. are not proper parties to the lawsuit and should be dismissed. Plaintiffs offer no opposition to this issue.
Plaintiffs allege that Site Centers Corp., Inc. and DDR Urban, Inc. were the property development and management companies. (FAC ¶¶ 9, 10.) Plaintiffs furtherallege that Site Centers Corp., Inc. is the successor company to DDR Corp., Inc. (FAC ¶ 9.) Plaintiffs also allege that each of the Defendants were the agents and employees of every other Defendant and were acting within the scope and course of such agency and employment. (FAC ¶ 16.) Moreover, Plaintiffs allege that Defendants were acting for the benefit of each co-Defendant. (FAC ¶ 17.)
These boilerplate, conclusory allegations are insufficient to survive a motion to dismiss. See Fajardo v. Ross, No. 1:12-cv-00217 AWI DLB, 2012 WL 2921179, at *1 (E.D. Cal. July 17, 2012). Plaintiffs fail to explain how Site Centers Corp. Inc. and DDR Urban, Inc. are related to the other defendants or their potential liability to any causes of action. Neither of these Defendants are signatories to the lease agreement between Broken Drum Bar, Inc. and DDR Urban LP.
Accordingly, the Court grants Defendants' Motion, however, Plaintiffs are given leave to amend its complaint to allege more specific facts against Site Centers Corp. Inc. and DDR Urban, Inc.
Defendants also move to dismiss Defendants Brady and Erickson on...
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