CF Gainesville Inv'r, LLC v. Astronergy Solar, Inc.
| Decision Date | 22 April 2022 |
| Docket Number | 2:21-CV-02654-CAS (RAOx) |
| Parties | CF GAINESVILLE INVESTOR, LLC v. ASTRONERGY SOLAR, INC. ET AL. |
| Court | U.S. District Court — Central District of California |
Proceedings (IN CHAMBERS) - DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' SECOND AMENDED COMPLAINT (Dkt. 49, filed on February 4, 2022)
On March 26, 2021, plaintiff CF Gainesville Investor, LLC, ("CF Gainesville") filed this action against defendants Astronergy Solar, Inc. ("Astronergy"), Chint Power Systems Americas Co. ("Chint Power"), and Chint Solar (Zhejiang) Co. Ltd. ("Chint Solar"). Dkt 1 ("Compl."). Plaintiffs initial complaint asserted claims for: (1) breach of express warranty, (2) breach of implied warranty, (3) fraudulent misrepresentation, (4) violation of California's Unfair Competition Law, Cal. Bus. Prof. Code § 17200, et seq., and (5) violation of California's False Advertising Law, Cal. Bus. Prof. Code § 17500, et seq. Id
On April 27, 2021, Astronergy and Chint Power filed a motion to dismiss for lack of subject matter jurisdiction, alleging that CF Gainesville had not pled facts necessary to establish diversity jurisdiction. Dkt. 19 at 3; Fed. R. Civ. Pro. 12(b)(1). On May 24, 2021, CF Gainesville filed an opposition to the motion to dismiss for lack of subject matter jurisdiction. Dkt. 21. On May 24, 2021, in response to defendants' motion, CF Gainesville also filed the First Amended Complaint ("FAC") which removed defendants Astronergy and Chint Power as parties, rendering defendants' motion to dismiss moot. Dkt. 23 ("FAC") at 3. CF Gainesville's FAC is identical to the original initial complaint except that it deletes defendants Astronergy and Chint Power. Id.
On August 30, 2021, Chint Solar moved to dismiss CF Gainesville's FAC for insufficient process under Federal Rule of Civil Procedure ("Rule") 12(b)(4). Dkt. 25; Fed. R. Civ. Pro. 12(b)(4). On September 27, 2021, the Court denied Chint Solar's motion to dismiss for insufficient process and ordered CF Gainesville to serve the FAC by first-class mail on counsel for defendant. Dkt. 31.
On October 15, 2021, Chint Solar again moved to dismiss the FAC, this time for lack of subject matter jurisdiction. Dkt. 32. On November 12, 2021, the Court denied defendant's motion to dismiss for lack of subject matter jurisdiction, finding that plaintiff had pled facts sufficient to establish this Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. Dkt. 37.
On November 24, 2021, Chint Solar moved to dismiss the FAC once more, this time based on plaintiffs lack of standing under Rule 12(b)(1). Dkt. 38. On the same day, Chint Solar also moved the Court to reconsider its denial of Chint Solar's previous motion to dismiss for lack of subject matter jurisdiction. Dkt. 39. On January 12, 2022, the Court denied defendant's motion for reconsideration and granted defendant's motion to dismiss for lack of standing with leave to amend. Dkt. 47 at 5. Regarding defendant's motion to dismiss for lack of standing, the Court found that plaintiff had not alleged facts to show that it, rather than its subsidiaries CF Gainesville Owner One, LLC ("GV1"), CF Gainesville Owner Two, LLC ("GV2"), and CF Gainesville Owner Three, LLC ("GV3") had standing to assert claims against defendant. Id. at 7.
On January 21, 2022, plaintiff timely filed the Second Amended Complaint ("SAC"), which remains identical to the FAC, except that it added GV1 and GV2 as plaintiffs and omitted the fraudulent misrepresentation claim for relief. Dkt. 48 ("SAC").
On February 4, 2022, Chint Solar moved to dismiss plaintiffs' SAC for lack of subject matter jurisdiction under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6) based on collateral estoppel. Dkt. 49 ("MTD") at 2. On the same day, in support of its motion to dismiss, defendant filed a request for judicial notice. Dkt. 50. On February 14, 2022, plaintiffs filed their opposition to the motion. Dkt. 51 ("Opp."). On the same day, plaintiffs filed a request for judicial notice. Dkt. 52. On February 21, 2022, defendant filed its reply in support of the motions. Dkt. 53 ("Reply").
On March 7, 2022, the Court held a hearing. Having carefully considered the parties' arguments and submissions, the Court finds and concludes as follows.
Plaintiff CF Gainesville is a foreign limited liability company established under Delaware law with its principal place of business in Florida. SAC ¶ 1. None of its members are citizens of the People's Republic of China ("PRC"). Id. Plaintiffs GV1 and GV2 are both foreign limited liability companies established under Florida law and none of their members are citizens of the PRC. Id. ¶¶ 2-3. Defendant Chint Solar is a foreign limited liability company established in the PRC, which sells solar photovoltaic modules and other components used for solar energy generation and distribution in the United States and California. Id. ¶ 4.
CF Gainesville alleges it owns 100 percent membership interest in three operating companies, plaintiff GV1, plaintiff GV2, and GV3. Id. ¶ 7. These companies were formed to operate solar projects in Gainesville, Florida. Id. Plaintiffs assert that GV3 has dissolved and that prior to GV3's dissolution it assigned all of its rights, warranties, titles, claims, and interests to CF Gainesville. Id
Plaintiffs allege that Chint Solar is a foreign limited liability company that manufactures, sells, markets, and distributes solar photovoltaic modules, operating under the CHINT Group Co., Ltd. umbrella. Id. ¶ 8. Plaintiffs state that GV1 entered into multiple contracts (the "Contracts") with SPG Solar, Inc. ("SPG") to engineer, design, install, and procure Chint Solar's photovoltaic panels (the "Modules") for installation at six project locations in Gainesville, Florida (the "Gainesville sites"). Id. ¶ 9. The Contracts assigned the manufacturers' warranty for the Modules to GV1. Id. ¶ 10.[1]
Plaintiffs allege that the Modules carried Chint Solar's Limited Warranty for PV Modules (the "Module Warranty"). Id. ¶ 16. This Module Warranty provides that "[i]f a module is found defective in material or workmanship, Chint Solar will. . . repair or replace the module or replace the purchase price paid by the customer" (the "Product Warranty"). Id. ¶ 17. The Module Warranty also states that if within 10 years from the date of shipment, any modules exhibit a power output less than 90 percent of the minimal "Peak Power at STC" or if within 25 years, any modules exhibit a power output less than 80 percent of the minimal "Peak Power at STC," Chint Solar will replace such loss in power by either providing additional modules or replacing defective ones (the "Performance Warranty"). Id. ¶ 18.
Plaintiffs state that on November 4, 2013, a fire occurred on the roof of a building covered by some of the Modules. Id. ¶ 24. Plaintiffs sought recourse for this fire from defendant and defendant denied culpability. Id. Investigations revealed that the fire was likely caused by a spark from a loose wire. Id. ¶ 25. Plaintiffs conducted an inspection of the remaining Modules after the fire and did not find any evidence of defects relating to energy production. Id. ¶ 25.
Plaintiffs state that in October 2020, they realized the Modules were exhibiting catastrophic product and material defects that resulted in near-complete failure and under-performance in energy production and promptly notified defendant of its breach of the Product Warranty and Performance Warranty. Id. ¶¶ 21, 26, 43. Plaintiffs issued an amended claim notice by letter to defendant dated December 22, 2020. Id. ¶ 26. The original complaint was filed on March 26, 2021. Dkt. 1. Plaintiffs claim that to date, defendant has neither acknowledged the validity of the claim nor provided plaintiffs with remedies sought thereunder. SAC ¶ 28.
On September 29, 2021, CF Gainesville Investor, GV1, and GV2 filed their first amended complaint in Los Angeles Superior Court (the ) against Chint Power and Astronergy. Dkt. 50-1 at 1. In the complaint, plaintiffs brought claims for: (1) breach of express warranty; (2) breach of implied warranty; (3) fraudulent misrepresentation; (4) violation of California's unfair competition law; and (5) violation of California's false advertising law. Id. at 2-3. Chint Power and Astronergy demurred to all causes of action. Id. at 3. The Superior Court sustained the demurrer without leave to amend for all claims except for the express warranty claims, finding that plaintiffs lacked standing to sue Astronergy and Chint Power because SPG Solar, Inc. ("SPG") was the one who purchased the modules at issue from Chint Solar. Id. at 6. The Superior Court also found that GV1 and GV2 could potentially have standing to bring a claim for breach of express warranty because SPG assigned the Module Warranty to ProjectCos, and ProjectCos consisted of GV1, GV2, and GV3. Id. Accordingly, GV1 and GV2 were granted leave to amend this claim. Id. at 6.
On February 16, 2022, GV1 and GV2 filed a second amended complaint in the state action.[2] Dkt. 53-1. In that complaint, CF Gainesville is no longer a plaintiff, and GV1 and GV2 bring a claim for breach of express warranty against Astronergy, Chint Power, and Chint Solar, Id. at 15, and a claim for breach of implied warranty against Chint Solar, Id. at 16.
A motion to dismiss an action pursuant to Fed.R.Civ.P. 12(b)(1) raises the objection that the federal court has no subject matter jurisdiction over the action. This defect may exist despite the formal sufficiency of the allegations in the...
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