Eshagh v. Terminix International

Filing 27

MEMORANDUM, DECISION RE: Motion to Dismiss 10 , signed by Judge Oliver W. Wanger on 7/25/2011. (Kusamura, W)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 1:11-cv-00222-OWW-DLB 8 EDVARD ESHAGH, 9 MEMORANDUM DECISION RE: MOTION TO DISMISS (Doc. 10) Plaintiff, 10 v. 11 12 THE TERMINIX INTERNATIONAL CO., L.P., et al., 13 Defendants. 14 I. INTRODUCTION. 15 16 Edvard Eshagh (“Plaintiff”) proceeds with an action against 17 Terminix International Company, L.P. and Terminix International, 18 Inc., (“Defendants”) pursuant to 28 U.S.C. § 1332.1 On 19 April 7, 2010, Defendants 20 Plaintiff’s complaint. 21 June 24, 2011. 22 2011. (Doc. 18). a motion to dismiss Plaintiff filed opposition on Defendants filed a reply on July 5, (Doc. 23). II. FACTUAL BACKGROUND. 23 Defendants provide termite prevention services. 24 25 (Doc. 10). filed From 1999 to the present, Plaintiff has contracted with Defendants for termite 26 1 27 28 Plaintiff seeks to proceed as a class representative pursuant to Fed. R. Civ. P. 23. Because the complaint is subject to dismissal, the court does not reach the propriety of Plaintiff’s attempt to assert his claims in a class action suit at this time. 1 1 prevention services at his residence under a Control Service 2 Agreement (“CSA”). 3 Pursuant to Defendants’ internal policy, certain “Minimum 4 Basic Requirements” must be satisfied in order for a property to 5 qualify for 6 Plaintiff’s property has been in violation of two of the Minimum 7 Basic 8 “uncorrected stucco hazard” within the meaning of Defendants’ 9 internal policies. a “Terminix Requirements. Guarantee.” First, At all Plaintiff’s times property relevant, has an Second, Plaintiff’s property is incapable of 10 receiving an “entire structure treatment” due to various attributes 11 of the property. 12 Terminix 13 represented that they had performed “all necessary services” within 14 the meaning of the CSA. Despite these deficiencies, Defendants issued Guarantees for Plaintiff’s property and falsely 15 Defendants did not disclose to Plaintiff that they were not 16 performing all “necessary services” required by Defendants internal 17 procedures. 18 options for addressing a stucco condition such as Plaintiff’s: (1) 19 lower the exterior grade to expose the bottom edge of the stucco 20 and create three inches clearance of exposed foundation; (2) seal 21 off or recommend sealing off the stucco; or (3) cut stucco back 22 from 23 Defendants did not address the stucco condition on Plaintiff’s 24 property as required by Defendants’ policies, leaving Plaintiff’s 25 property susceptible to termite damage. 26 ground Defendants internal policies set forth the following contact for proper inspection and treatment. In February 2008, Plaintiff discovered a termite infestation 27 at his property when a section of flooring gave way. 28 another area of floor gave way in a different area of Plaintiff’s 2 In 2009, 1 property. The State of California inspected Plaintiff’s property 2 in 2010 and concluded that Terminix had not adequately treated 3 Plaintiff’s property for termite prevention. III. DISCUSSION. 4 5 A. Statute of Limitations 6 1. Breach of Contract Cause of Action 7 Plaintiff’s fourth cause of action is for breach of contract. 8 Plaintiff alleges that Defendants breached the terms of the CSA by 9 failing to perform “all necessary services” within the meaning of 10 the CSA. Plaintiff complains that Defendants did not correct the 11 stucco hazard and did not provide an “Entire Structure Treatment.” 12 (Comp. at 39). 13 Under California law, the ordinary statute of limitations for 14 breach of a written contract is four years. Cal. Civ. Pro. § 337; 15 e.g., Vu v. Prudential Property & Casualty Ins. Co., 26 Cal. 4th 16 1142, 1148 (Cal. 2001). 17 cause of action accrues. Cal. Civ. Pro. § 312; Fox v. Ethicon 18 Endo-Surgery, 19 speaking, a cause of action accrues at ‘the time when the cause of 20 action is complete with all of its elements.’” Id. Inc., 35 The limitations period commences when the Cal.4th 797, 806 (2005). “Generally 21 The discovery rule “postpones accrual of a cause of action 22 until the plaintiff discovers, or has reason to discover, the cause 23 of action.” 24 App. 4th 1308, 1318 (Cal. Ct. App. 2007) (citation omitted). 25 Delayed 26 relationship between the parties is one of special trust. 27 Where the discovery rule applies, the limitations period does not 28 accrue E-Fab, Inc. v. Accountants, Inc. Services, 153 Cal. accrual until of the a cause aggrieved of action party 3 has may result notice of where the the Id. facts 1 constituting the injury. Id. A person with actual notice of 2 circumstances sufficient to put a prudent person upon inquiry is 3 deemed to have constructive notice of all facts that a reasonable 4 inquiry would disclose. 5 the limitations period, inquiry notice is triggered by suspicion. 6 Id. Id. at 1319. For purposes of accrual of 7 “A plaintiff whose complaint shows on its face that his claim 8 would be barred without the benefit of the discovery rule must 9 specifically plead facts to show (1) the time and manner of 10 discovery and (2) the inability to have made earlier discovery 11 despite reasonable diligence.” 12 Inc., 74 Cal. App. 4th 151, 160 (Cal. Ct. App. 1999) partially 13 superceded on other grounds as stated in Grisham v. Philip Morris 14 U.S.A., Inc., 40 Cal. 4th 623, 637 n.8 (Cal. Ct. App. 2007). 15 Application of the discovery rule ordinarily presents questions of 16 fact. 17 810). 18 McKelvey v. Boeing North American, E-Fab, 153 Cal. App. 4th at 1320 (citing Fox, 35 Cal. 4th at Defendants contend that the statute of limitations for 19 Plaintiff’s breach of contract claims began to run when Plaintiff 20 first had reason to know that the stucco siding on his property 21 provided a possible point of entry for termites. 22 complaint is an Inspection Report Defendant provided to Plaintiff 23 on November 30, 2006. 24 25 26 Attached to the The November 2006 report provides: The stucco siding extends beneath the outside grade level creating/providing possible points of entry for wood destroying organisms behind the stucco into the structure. No evidence of active infestation/infection was noted at the time of this inspection as a result of this condition. Periodic inspection is provided. 27 28 Defendants motion does not establish, as a matter of law, that the 4 1 November 2006 report was sufficient to put Plaintiff on notice of 2 his claim for breach of contract. 3 of contract claim is that Defendants did not perform “necessary 4 services.” 5 Defendants were not performing necessary services related to the 6 stucco issue; to the contrary, the November 2006 report implicitly 7 represents that the only action necessary with respect to the 8 stucco siding was periodic inspection. The November 2006 The crux of Plaintiff’s breach report does not suggest that 9 Defendants contend, in the alternative, that the statute of 10 limitations on Plaintiff’s breach of contract claim began to run on 11 the date on which Plaintiff first learned there was termite damage 12 to his property. 13 Inspection Report which provides: 14 Attached to the complaint is a February 1, 2008 Evidence of subterranean termites at/in subarea. No active infestation was noted at this time. This company has previously treated this structure for the control and/or eradication of this wood destroying organism. No additional treatment is recommended at this time. Periodic inspection is advised. 15 16 17 18 Assuming arguendo that the statute of limitations began to run on 19 February 1, 2008, Plaintiff’s breach of contract claim is timely. 20 Plaintiff filed his complaint on February 8, 2011, less than four 21 years from the date of the February 2008 Inspection Report.2 22 Cal. Civ. Pro. § 337. 23 24 See Defendants also contend that an inspection report from March 2002 indicated termite damage at Plaintiff’s property. Defendants 25 26 27 28 2 Defendants’ motion erroneously contends that the two-year statute of limitations set forth in California Code of Civil Procedure section 339 applies to Plaintiff’s contract claims. Section 339 applies to “[a]n action upon a contract...not founded upon an instrument of writing.” Cal. Civ. Pro. § 339 (2011) (emphasis added). Plaintiff’s counsel failed to identify this error. 5 1 attach what appears 2 Plaintiffs’ property, however, the March 2002 report submitted by 3 Defendants is not properly authenticated and is not a document 4 incorporated 5 Accordingly, Defendants motion to dismiss Plaintiff’s contract 6 claims as time barred is DENIED, without prejudice. into or to be a March referenced by 2002 report Plaintiff’s concerning complaint. 7 2. 8 California’s Unfair Competition Law (“UCL”) sets forth a 9 UCL and FAL Claims four-year statute of limitations period. Cal. Bus. & Prof. Code § 10 17208; Cortez v. Purolator Air Filtration Products Co., 23 Cal. 4th 11 163, 179 (Cal. 2000). 12 claims is an open question under California law. 13 Guardian Life Ins. Co. of America, 171 Cal. App. 4th 912, 920 (Cal. 14 Ct. App. 2009); but see Karl Storz Endoscopy-Am., Inc. v. Surgical 15 Techs., Inc., 285 F.3d 848, 857 (9th Cir. 2002) (“claims under 16 California Business and Professions Code § 17200 et seq. are 17 subject to a four-year statute of limitations which began to run on 18 the 19 discovery”). date the cause Whether the discovery rule applies to UCL of action accrued, not on Broberg v. The the date of 20 Claims under California’s False Advertising Law (“FAL”) are 21 subject to either the three-year statute of limitations provided by 22 California Code of Civil Procedure 338(a) or the four-year statute 23 of limitations applicable to UCL claims. See McCready v. Am. Honda 24 Motor Co., 2006 U.S. Dist. LEXIS 44137 * 9 (N.D. Cal. 2006) (noting 25 open question); but see Streamcast Networks, Inc. v. Skype Techs., 26 S.A., 2006 U.S. Dist. LEXIS 97393 * 26 n.8 (C.D. Cal. 2006) 27 (applying section 338 without analysis). 28 /// 6 1 For reasons discussed below, Plaintiff’s UCL and FAL claims 2 are not pled with the specificity required to satisfy federal 3 pleading standards; accordingly, it is unnecessary to reach the 4 statute of limitations issue governing these claims. 5 motion to dismiss Plaintiff’s UCL and FAL claims as time barred is 6 DENIED, without prejudice. Defendants’ 7 3. 8 Plaintiff advances two tort claims: (1) breach of professional 9 Tort Claims duty; and (2) assumpsit.3 The two-year statute of limitations set 10 forth in California Code of Civil Procedure section 339 applies to 11 claims of professional negligence that are not specifically covered 12 under discrete statutes. 13 Eng'rs & Geologists, 89 Cal. App. 4th 638, 642-43 (Cal. Ct. App. 14 2001). 15 of limitations set forth in section 339. 16 Murphy’s Flat Fluming, 22 Cal. 621, 630 (Cal. 1863) (holding that 17 action in assumpsit is “an action upon a contract, obligation, or 18 liability, not founded on an instrument in writing”); Cal. Code. 19 Civ. Pro. 339. 20 The See Roger E. Smith v. Shn Consulting Assumpsit actions are also subject to the two-year statute complaint alleges Plaintiff See Unions Water Co. v. discovered a termite 21 infestation at his property in February 2008 when a portion of the 22 floor collapsed due to termite damage; the statute of limitations 23 began to run on Plaintiff’s tort claims at that time. 24 person is put on inquiry notice that termite prevention services 25 have not been adequately performed when they learn their property A reasonable 26 3 27 28 Assumpsit, a Latin word meaning “he promised,” is an ancient quasi-contractual theory of recovery developed in the King’s and Queen’s courts of England. Jogani v. Superior Court, 165 Cal. App. 4th 901, 905-906 (Cal. Ct. App. 2008). It appears Plaintiff’s assumpsit claim is in fact an unjust enrichment claim. 7 1 is collapsing due to termite damage. 2 Defendants “lulled Plaitnif to believe it was simply an example of 3 a vaccine not working 100%” is unavailing; a reasonable person with 4 knowledge of the objective facts Plaintiff alleges would have, at 5 a minimum, conducted an investigation that would have revealed the 6 basis for Plaintiff’s tort causes of action. 7 claims were not filed within two years of February 2008 as required 8 by section 339. 9 causes of action Plaintiff’s allegation that Plaintiff’s tort Defendants motion to dismiss Plaintiff’s tort is GRANTED. 10 tort claims are DISMISSED, with prejudice. 11 Plaintiff’s B. Pleading Deficiencies 12 13 1. Plaintiff’s UCL and False Advertising Claims Plaintiff’s UCL claims are predicated, at least in part, on 14 allegations sounding in fraud. 15 Defendants engaged in “ practices;” “never 16 intended to...fulfill its provide termite prevention 17 services;” and employed “false” advertisements. 18 Plaitniff’s UCL and FAL claims are subject to Federal Rule of Civil 19 Procedure 9(b). E.g., Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 20 (9th Cir. 2009) (Rule 9(b) applies to all claims that "sound in 21 fraud" or are "grounded in fraud"). 22 Inter alia, Plaintiff alleges (Comp. at 36-37). Rule 9(b) imposes an elevated pleading standard with respect 23 to fraud claims. To comply with Rule 9(b), allegations of fraud 24 must be specific enough to give defendants notice of the particular 25 misconduct which is alleged to constitute the fraud. 26 KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (internal quotation 27 marks omitted). 28 place, and specific content of the false representations as well as Swartz v. Allegations of fraud must include the "time, 8 1 the identities of the parties to the misrepresentations." Id. 2 (internal quotation marks omitted). The "[a]verments of fraud must 3 be accompanied by the who, what, when, where, and how of the 4 misconduct charged." Kearns 567 F.3d at 1124. (internal quotation 5 marks omitted). A plaintiff alleging fraud "must set forth more 6 than the neutral facts necessary to identify the transaction. The 7 plaintiff must set forth what is false or misleading about a 8 statement, and why it is false." 9 F.3d 1097, 1106 (9th Cir. 2003). 10 The complaint does not Vess v. Ciba-Geigy Corp. USA, 317 allege the relevant facts with 11 sufficient particularity to satisfy Rule 9. 12 complaint 13 advertising materials Plaintiff relied on, does not identify any 14 individuals alleged to have made fraudulent statements, and does 15 not clearly establish when the misleading statements Plaintiff 16 allegedly relied on were made. does not allege what specific Inter alia, the representations or 17 In his opposition, Plaintiff argues that the information 18 needed to satisfy Rule 9 – such as the identify of person making 19 representations and the dates on which such representations were 20 made– can be gleaned from the twenty exhibits Plaintiff attached to 21 his complaint. 22 into the factual allegations underlying Plaintiff’s UCL and FAL 23 claims. 24 voluminous exhibits to a complaint and expecting Defendants, and 25 the court, to comb through approximately one-hundred pages of The complaint does not incorporate these documents Plaintiff cannot satisfy Rule 9 by simply attaching 26 27 28 9 1 documents in order to piece together a cognizable claim.4 2 Plaintiff’s UCL and FAL claims are DISMISSED, without prejudice. 3 2. Tort Claims 4 Defendants argument that the economic loss rule bars 5 Plaintiff’s tort causes of action is moot in light of the statute 6 of limitations holding. 7 3. Contract Claims 8 Defendants contend that the contract underlying Plaintiff’s 9 claim for breach of contract cannot be ascertained from the face of 10 the complaint. Although the complaint is fairly ambiguous, it is 11 sufficient to provide fair notice that Plaintiff’s claim is for 12 breach of the document attached to the complaint as Exhibit I and 13 the annual extensions thereto. 14 Subterranean Termite Plan Agreement” and is signed by Defendants’ 15 employee and Plaintiff. 16 into the complaint and is described as the operative agreement 17 throughout the complaint. 18 allegations of the complaint, the terms reflected in Exhibit I, and 19 the references 20 complaint is sufficient to provide the notice required by Rule 8. 21 However, to the extent Plaintiff’s seeks to assert claims for 22 breach arising out of contracts other than Exhibit I, such claims 23 are not properly pled, and any such claims are DISMISSED, without 24 prejudice. 25 /// to Exhibit I is entitled “California Exhibit I is incorporated by reference Exhibit (Comp. at 16, 29). I contained in the In light of the complaint, the 26 27 28 4 This is especially so where, as here, a significant amount of superfluous evidentiary matter is attached, and where there are twenty exhibits appended to the complaint that are docketed on the CM/ECF system without titles. 10 1 Defendants also contend that Plaintiff’s “property damage 2 claim should be dismissed” pursuant to the terms of the parties’ 3 agreement. 4 Defendants from liability for property damage. Plaintiff rejoins 5 that the by 6 unconscionable. 7 recover for damage to his property under his breach of contract 8 claim, the property damage exclusion Defendants invoke does not 9 provide a basis to dismiss the breach of contract cause of action 10 asserted in the complaint, which seeks to recover “damages in an a 11 amount to be determined at trial.” 12 attempt to limit the amount of contract damages Plaintiff may 13 recover can be addressed in the context of a motion for summary 14 judgment or in a motion in limine. 15 C. Motion to Strike Plaintiff’s Request for Injunctive Relief Defendants note that the contract purports to exempt provision of the contract invoked Defendants is Even assuming arguendo that Plaintiff cannot (Comp. At 40). Defendants’ 16 Defendants’ seek to strike Plaintiff’s prayer for injunctive 17 relief because Plaintiff has not alleged he has an inadequate 18 remedy at law.5 As the complaint is subject to dismissal for the 19 reasons stated above, Defendants’ motion to strike is moot. ORDER 20 21 For the reasons stated, IT IS ORDERED: 22 1) Plaintiff’s UCL and FAL claims are DISMISSED, without 23 prejudice; 24 2) Plaintiff’s breach of professional duty and assumpsit 25 claims are DISMISSED as time barred, with prejudice; 26 27 28 5 Defendants’ argument is misplaced, as injunctive relief is available under the UCL. E.g., Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144 (Cal. 2003). 11 1 3) Plaintiff shall file an amended complaint within 20 days 2 following electronic service of this memorandum decision; 3 Defendants shall filed responsive pleading within 15 days 4 following service of an amended complaint; and 5 4) Defendants shall file a form of order consistent with this 6 memorandum decision within five (5) days of electronic service 7 of this decision. 8 IT IS SO ORDERED. 9 Dated: hkh80h July 25, 2011 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12

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