Rolled Alloys, Inc. v. Walls

• Decision Date: 03 September 2021
• Docket Number: 20-cv-01961-AJB-KSC
• Court: U.S. District Court — Southern District of California
• Parties: Rolled Alloys, Inc., a Delaware corporation, Plaintiff, v. John Gregory Walls and Pamela Walls, husband and wife, dba Executive Hospitality, Inc.; and Executive Hospitality, Inc, a suspended California corporation; JGW, LLC, a California Limited Liability Company, Defendants.

Rolled Alloys, Inc., a Delaware corporation, Plaintiff, v. John Gregory Walls and Pamela Walls, husband and wife, dba Executive Hospitality, Inc.; and Executive Hospitality, Inc, a suspended California corporation; JGW, LLC, a California Limited Liability Company, Defendants.

No. 20-cv-01961-AJB-KSC

United States District Court, S.D. California

September 3, 2021

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS (DOC. NO. 15)

Hon Anthony J. Battaglia United States District Judge.

Before the Court is JGW, LLC; John G. Walls (“Mr Walls”); and Pamela Coker's, sued as Pamela Walls (“Mrs. Walls”), (collectively “Defendants”) motion to dismiss. (Doc. No. 15.) Rolled Alloys, Inc. (“Plaintiff”) filed an opposition, (Doc. No. 17), and Defendants filed a reply (Doc. No. 18). For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Defendants' motion.

I. BACKGROUND^[1]

Plaintiff, a Delaware Corporation, purchased an entertainment package for the April 2020 Masters Golf Tournament (“2020 Masters”) in Augusta, Georgia. The package included tournament badges, van transportation (including a driver), lodging, maid service, meals, and various other entertainment services. Plaintiff claims that based on statements made by Mr. Walls, it believed it purchased the package from “Executive Hospitality, Inc.” The contract (“Agreement”)^[2] lists the company as “Executive Hospitality.”^[3]

In October 2019, Plaintiff signed the Agreement, which indicates the services would be provided from April 6 to 12, 2020. On March 2, 2020, Plaintiff sent Executive Hospitality its final installment payment. Later, however, due to the COVID-19 pandemic, the 2020 Masters was postponed from April to November 2020, and no spectators were allowed to attend the November event. After learning about the postponement, Plaintiff demanded that Mr. Walls and Executive Hospitality provide the remaining services under the Agreement. According to Plaintiff, the owner or operator of Magnolia Manor, the private clubhouse provided for in the Agreement, represented that Magnolia Manor was available for use during the 2020 Masters. Plaintiff claims that despite due demands for performance of remaining services or a refund, neither were provided.

Plaintiff commenced this action to obtain a refund for the services paid for under the Agreement but never received, and to hold Defendants liable for statutory violations and fraudulent conduct. Defendants move to dismiss all counts.

II. LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) tests the legal sufficiency of a complaint, i.e., whether the complaint lacks either a cognizable legal theory or facts sufficient to support such a theory. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001) (citations omitted). For a complaint to survive a Rule 12(b)(6) motion to dismiss, it 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) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In reviewing the motion, the court “must accept as true all of the allegations contained in a complaint, ” but it need not accept legal conclusions. Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

III. DISCUSSION

Defendants' motion to dismiss raises various challenges to Plaintiff's causes of action for Violation of California Business and Professions Code Section 17550.14, Fraud and/or Negligent Misrepresentation, Declaratory Relief/Unjust Enrichment, and Breach of Contract. The Court discusses them in turn.

A. Defendant Mrs. Walls' Dismissal

As an initial matter, Defendants contend that contrary to Plaintiff's allegation, Mrs. Walls is not married to Mr. Walls, and that the Court should not accept Plaintiff's assertion as true. (Doc. Nos. 15 at 9; 18 at 3.)^[4] However, absent clear and binding case law mandating that, for purposes of a motion to dismiss, an allegation concerning someone's relationship status must be construed as a legal conclusion, the Court declines to dismiss Mrs. Walls as a defendant on this basis.

Next, Defendants argue that even if the Court assumes Mrs. Walls is married to Mr. Walls, she should be dismissed because Plaintiff alleges no factual or legal basis to hold Mrs. Walls liable. (Doc. No. 15 at 9-10.) Under Rule 8(a), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft, 556 U.S. at 678 (quoting Bell Atlantic Corp., 550 U.S. at 555). The FAC does not contain any factual allegations showing why Plaintiff is entitled to relief from Mrs. Walls. Plaintiff mentions Mrs. Walls only once: “John Gregory Walls (“Walls”) and Pamela Walls are husband and wife, are permanent residents of San Diego County, California, and all of [Mr.] Walls' acts alleged herein were undertaken on behalf of the Walls' marital community.” (Doc. No. 12 at 2.) Beyond that allegation, the FAC does not allege any wrongdoing by Mrs. Walls.

In an attempt to hold Mrs. Walls liable, Plaintiff asserts that it can name Mrs. Walls as a defendant because an innocent spouse's share of the community property assets may be reached when her spouse engages in tortious conduct.^[5] (Doc. No. 17 at 11-12.) The Court acknowledges that there appears to be “no California authority that would preclude a plaintiff from naming the non-wrongdoing spouses solely in their capacity as co-representatives of the community estate.” Reynolds & Reynolds Co. v. Universal Forms, Labels & Sys., Inc., 965 F.Supp. 1392, 1396 (C.D. Cal. 1997). However, “current statutory law makes clear that it is not necessary in California to name both spouses in the action in order to bind the community estate.” Id. (citing Cal. Fam. Code § 910 (“[T]he community estate is liable for a debt incurred by either spouse before or during marriage. . . regardless of whether one or both spouses are parties . . . to a judgment for the debt.”)). As such, when a plaintiff names a non-debtor spouse in a community representative capacity-and not in an effort to reach that spouse's separate property-“the non-debtor spouse may opt not to participate in the litigation[] and will be dismissed as essentially a nominal defendant upon the non-debtor spouse's request.” Id. at 1397.

Here, there is no indication that Plaintiff seeks to reach Mrs. Walls' separate property. Indeed, Plaintiff's opposition brief makes clear that it names Mrs. Walls as a defendant only in a community representative capacity. (Doc. No. 17 at 12 (arguing that “[b]ecause the ‘innocent spouse's share of community assets' may be reached as a result of Walls' tortious conduct, his spouse is properly named as a defendant.”) And as previously discussed, the FAC does not present factual allegations to establish that Mrs. Walls harmed Plaintiff, and instead, names her in this litigation solely because she is alleged to be Mr. Walls' wife. The Court therefore finds that Plaintiff joined Mrs. Walls in her capacity as a community estate co-representative. See Reynolds & Reynolds Co., 965 F.Supp. at 1397-98. The Court also construes Mrs. Walls' motion to dismiss as communicating her desire to not participate in this litigation. (Doc. No. 18 at 3.) Accordingly, as Mrs. Walls is a non-debtor spouse who is sued only as a community representative and declines participation in this litigation, the Court GRANTS Defendants' motion to dismiss as to Mrs. Walls and DISMISSES her as a nominal defendant in this action. See Reynolds & Reynolds Co., 965 F.Supp. at 1397.

B. Mr. Walls' Personal Liability

As another preliminary matter, Defendants argue the FAC does not allege facts showing Mr. Walls' personal liability for the Agreement. (Doc. No. 15 at 10.) The Court disagrees. An agent avoids personal liability when he discloses his agency and the principal's identity. Restatement (Second) of Agency § 4 (Am. L. Inst. 1958); see Dones v. Life Ins. Co. of North America, 55 Cal.App. 5th 665, 690 (2020) (explaining that the purpose behind this disclosure is to ensure a party knows who they are dealing with and can protect itself from entering a contract with a company that cannot meet its obligations). When the agent uses a fictitious business name and does not disclose the principal's name, the agent is not protected from personal liability. See G. W. Andersen Const. Co. v. Mars Sales, 164 Cal.App.3d 326, 332-33 (1985) (holding the agent personally liable because the “plaintiff did not know the name or corporate status of the principal” and California holds the agent liable “unless the name of the principal is disclosed”) (emphasis in original); W.W. Leasing Unlimited v. Com. Standard Title Ins. Co., 149 Cal.App.3d 792, 795-96 (1983) (finding the agent personally liable when defendant used only a fictitious business name when dealing with plaintiff and at no time disclosed the principal's name).

Here Plaintiff alleges that “[a]t no time during any oral or written communications during which Walls induced Rolled Alloys to execute the Purported Contract did Walls: 1) disclose that he was acting as an agent for an entity called JGW, LLC; 2) mention the name JGW, LLC; or 3) indicate that JGW, LLC would be liable in any way for any obligations arising out of the Purported Contract.” (Doc. No. 12 at 2.) Because the FAC contains allegations that Mr. Walls was acting as an agent for JGW,...