United States of America, for the Use and Benefit of Graybar Electric Company, Inc. v. Miller/Watts Constructors, Inc. Et Al.

Filing 64

ORDER Granting Liberty Mutual Insurance Company's 60 Motion to Dismiss the Cross Claims Brought by G.E. Electrical; ORDER Dismissing G.E. Electrical's Cross Claims signed by Chief Judge Anthony W. Ishii on 04/13/2011. (Flores, E)

1
2
3
4
5
6
7
IN THE UNITED STATES DISTRICT COURT FOR THE
8
EASTERN DISTRICT OF CALIFORNIA
9
10
11
12
13
14
15
16
17
18

UNITED STATES OF AMERICA
FOR THE USE AND BENEFIT
OF GRAYBAR ELECTRIC
COMPANY, INC.,

)
)
)
)
)
Plaintiff,
)
v.
)
)
MILLER/WATTS CONSTRUCTION, )
INC., et al,
)
)
Defendants.
)
____________________________________)
)
And related cross claims.
)
____________________________________)

1:06-CV-1521 AWI DLB
ORDER GRANTING LIBERTY
MUTUAL INSURANCE COMPANY’S
MOTION TO DISMISS THE CROSS
CLAIMS BROUGHT BY G.E.
ELECTRICAL
(Document #60)
ORDER DISMISSING G.E.
ELECTRICAL’S CROSS CLAIMS
(Document #15)

19
20

BACKGROUND

21

On October 27, 2006, the United States, for the use and benefit of Graybar Electric

22

Company, Inc., filed a complaint for recovery under the Miller Act (40 U.S.C. § 270(b)), along

23

with claims for breach of an oral contract, the agreed upon/reasonable value of goods sold and

24

delivered, an account stated, an open book account, intentional misrepresentation, negligent

25

misrepresentation, and recovery on a payment bond. The named defendants include Defendant

26

Liberty Mutual Insurance Company, Defendant G.E. Electrical, Inc., improperly sued as “Gilbert

27

Electric, Inc.”, and UPA Group, Inc. On December 29, 2006, Defendant UPA Group, Inc. filed

28

an answer, along with a cross claim against Defendant G.E. Electrical, Inc. On January 31,

1

2007, Defendant G.E. Electrical, Inc. filed an answer to UPA Group, Inc.’s cross claim and a

2

cross claims against all Defendants, including Liberty Mutual Insurance Company. (Document

3

#15).

4

On February 4, 2011, Defendant Liberty Mutual Insurance Company filed a motion to

5

dismiss the cross claims brought by Defendant G.E. Electrical, Inc. Liberty Mutual Insurance

6

Company contends that G.E. Electrical, Inc. lacks the capacity to prosecute its cross claims

7

because its corporate status has been suspended. On February 28, 2011, Liberty Mutual

8

Insurance Company filed a reply brief.

9
10

G.E. Electrical, Inc. did not file an opposition to Liberty Mutual Insurance Company’s
motion or otherwise contact the court.

11

LEGAL STANDARDS

12

Parties invoking federal jurisdiction must have standing. Davis v. Federal Election

13

Com'n, 128 S.Ct. 2759, 2768 (2008). In the Ninth Circuit, attacks upon standing at the pleading

14

stage are generally brought in a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules

15

of Civil Procedure. See, e.g., Sacks v. Office of Foreign Assets Control, 466 F.3d 764, 771 (9th

16

Cir. 2006); Jensen v. County of Sonoma, 2010 WL 2330384, at *4 (N.D.Cal. 2010); Yeager v.

17

Bowlin, 2008 WL 3289481, at *6 n.4 (E.D.Cal. 2008).

18

Under Rule 12(b)(6), a claim may be dismissed because of the plaintiff’s “failure to state

19

a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Although a complaint’s

20

factual allegations may provide the framework of a complaint, legal conclusions are not accepted

21

as true and “[t]hreadbare recitals of elements of a cause of action, supported by mere conclusory

22

statements, do not suffice.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009); see also Warren

23

v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). As the Supreme Court has

24

explained:

25
26

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitlement to relief’ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do. Factual allegations must

27
28

2

1

be enough to raise a right to relief above the speculative level, on the assumption
that all the allegations in the complaint are true (even if doubtful in fact).

2
3

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, “a complaint must contain

4

sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”

5

Iqbal, 129 S.Ct. at 1949. “A claim has facial plausibility when the plaintiff pleads factual

6

content that allows the court draw the reasonable inference that the defendant is liable for the

7

misconduct alleged.” Iqbal, 129 S.Ct. at 1949. “In sum, for a complaint to survive a motion to

8

dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must

9

be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. United States Secret

10

Service, 572 F.3d 962, 969 (9th Cir. 2009).

11

As a general matter, a district court may not consider any material outside of the

12

pleadings when ruling on a Rule 12(b)(6) motion. Dunn v. Castro, 621 F.3d 1196, 1205 n.6 (9th

13

Cir. 2010); Intri-Plex Technologies, Inc. v. Crest Group, Inc., 499 F.3d 1048, 1052 (9th Cir.

14

2007); Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001). However, the court may

15

consider documents of which the court may take judicial notice. Coto Settlement v. Eisenberg,

16

593 F.3d 1031, 1038 (9th Cir. 2010); Catholic League for Religious and Civil Rights v. City and

17

County of San Francisco, 567 F.3d 595, 607 n.13 (9th Cir. 2009); U.S. v. 14.02 Acres of Land

18

More or Less in Fresno County, 547 F.3d 943, 955 (9th Cir. 2008).

19

DISCUSSION

20

Liberty Mutual Insurance Company contends that G.E. Electrical, Inc.’s cross claims

21

should be dismissed because G.E. Electrical, Inc. is a California corporation that is currently

22

suspended by the California Secretary of State. Liberty Mutual Insurance Company argues that

23

California law prohibits a suspended corporation from prosecuting claims.

24

Preliminarily, the court notes that Liberty Mutual Insurance Company has filed a request

25

for judicial notice in support of its motion to dismiss G.E. Electrical, Inc.’s cross claims. Liberty

26

Mutual Insurance Company provides a State Certificate of Status provided by the California

27
28

3

1
2

Secretary of State. The Certificate of Status states that the office’s records:

3

indicate the Secretary of State suspended the entity’s powers, rights and privileges
on March 12, 2009, pursuant to the provisions of the California Corporations
Code, and the entity’s powers, rights and privileges remain suspended.

4

See Liberty Mutual Insurance Company’s Exhibit A. The court may take judicial notice of facts

5

that are capable of accurate and ready determination by resort to sources whose accuracy cannot

6

reasonably be questioned. Fed. R. Evid. 201(b); United States v. Bernal-Obeso, 989 F.2d 331,

7

333 (9th Cir. 1993). Facts subject to judicial notice may be considered by a court on a motion to

8

dismiss. Coto, 593 F.3d at 1038. The court finds that a Certificate of Status provided by the

9

California Secretary of States is a source whose accuracy cannot reasonably be questioned.

10

The capacity of a corporate litigant to sue or be sued in a federal case is controlled by

11

Rule 17(b) of the Federal Rules of Civil Procedure. Rule 17(b) provides that the capacity of a

12

corporation to sue is determined “by the law under which it was organized.” Fed.R.Civ.Pro.

13

17(b)(2); Chicago Title & Trust Co. v. Forty-One Thirty-Six Wilcox Bldg. Corp., 302 U.S. 120,

14

124-25 (1937); AmeriPride Services, Inc. v. Valley Indus. Service, Inc., 2008 WL 5068672, at *3

15

(E.D.Cal. 2008). The Ninth Circuit has held that pursuant to Rule 17(b), the court must

16

determine a corporations’s standing pursuant to state law. Hillis Motors, Inc. v. Hawaii Auto.

17

Dealers' Ass'n, 997 F.2d 581, 584 (9th Cir. 1993); Community Elec. Serv. v. Nat'l Elec.

18

Contractors Ass'n, 869 F.2d 1235, 1239 (9th Cir. 1987). Thus, this court must follow California

19

law to determine whether G.E. Electrical, Inc. has the capacity to sue. See Louisiana-Pacific

20

Corp. v. ASARCO, Inc., 5 F.3d 431, 434 (9th Cir. 1993); Levin Metals Corp. v. Parr-Richmond

21

Terminal Co., 817 F.2d 1448, 1451 (9th Cir.1987).

22

Liberty Mutual Insurance Company provides undisputed evidence that G.E. Electrical,

23

Inc.’s corporate status has been suspended. Under California law, a suspended corporation

24

cannot prosecute an action in either a California court or a federal court. See e.g., Matter of

25

Christian & Porter Aluminum Co., 584 F.2d 326, 331 (9th Cir. 1978). Because G.E. Electrical,

26

Inc., as a suspended corporation, lacks standing to sue, G.E. Electrical, Inc.’s cross claims must

27
28

4

1

be dismissed

2

ORDER

3

Accordingly, the court ORDERS that:

4

1.

5
6
7

Liberty Mutual Insurance Company’s motion to dismiss G.E. Electrical, Inc.’s
cross claims is GRANTED; and

2.

G.E. Electrical, Inc.’s cross claims (Document #15) is DISMISSED.

IT IS SO ORDERED.

8
9

Dated:
0m8i78

April 13, 2011
CHIEF UNITED STATES DISTRICT JUDGE

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

5