Lynch Marks, LLC v. Vermonster, LLC

Filing 31

CLERK'S NOTICE REGARDING TENTATIVE RULING ON DEFENDANT'S MOTION TO DISMISS. (Attachments: # 1) (bzsec, COURT STAFF) (Filed on 7/17/2006)

TENTATIVE RULING

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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LYNCH MARKS, LLC,
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Plaintiff(s),
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v.
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VERMONSTER, LLC,
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Defendant(s).
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No. C05-5178 BZ
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION TO DISMISS

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Before the court is defendant Vermonster, LLC’s motion to
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dismiss certain of plaintiff Lynch Marks, LLC’s claims
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pursuant to Fed. R. Civ. P. 12(b)(6) and to dismiss
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plaintiff’s fraud claim for lacking the specificity required
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under Fed. R. Civ. P. 9(b).1
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A motion to dismiss for failure to state a claim will
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only be granted when considering all well pleaded facts in the
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The court has not considered the materials attached
to the declaration of James Lucey. In ruling on a motion to
dismiss, the court is limited to the allegations of the
complaint and exhibits attached thereto and may not consider
matters outside the pleading. Fed. R. Civ. P. 12(b).
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TENTATIVE RULING

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complaint in the light most favorable to plaintiff, the court

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concludes that plaintiff is entitled to no relief.

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v. Gibson, 355 U.S. 41, 45-46 (1957).

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See Conley

The motion to dismiss the contract claim is DENIED.

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Plaintiff has sufficiently pled the existence of a written

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agreement between the parties, and the court cannot conclude

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as a matter of law that plaintiff would not be entitled to any

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relief on the facts alleged.

Accepting plaintiff’s

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allegations that while the parties never executed a further

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written agreement, they treated the term sheet as “the written

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contractual agreement” which terms “have been agreed upon,

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confirmed and ratified thereafter by virtue of the parties

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[sic] subsequent oral and written agreements, communications

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and actions” for purposes of this motion, plaintiff has

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sufficiently alleged a claim.

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writings between the parties appear sufficient at the pleading

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stage to satisfy the statute of frauds.

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F.2d 786, 787 (9th Cir. 1986)(reversing district court’s grant

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of summary judgment because “written memorandum [detailing

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understanding of parties for proposed sale of professional

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basketball franchise] would be sufficient to comply with the

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statute of frauds if all disputed matters were resolved in

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plaintiffs’ favor”).

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complaint does not set forth all the terms of the contract is

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not grounds for dismissing the complaint.

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memorandum indicates sufficiently the few terms deemed

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essential as a matter of law by California courts to satisfy

Compl. ¶ 10.

The alleged

Levin v. Knight, 780

Defendant’s contention that the

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See id. (“written

TENTATIVE RULING

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the statute of frauds requirements”).

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to discovery.

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that it has performed as required by the contract, its

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allegations in paragraphs 14, 40 and 41, among others,

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sufficiently allege performance to withstand a motion to

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dismiss.

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Those terms are subject

While it is true that plaintiff has not alleged

Compl. ¶¶ 14, 40 and 41.

Defendant’s motion to dismiss plaintiff’s second cause of
action for specific performance is DENIED.

The court does not

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construe the allegations of the complaint as requiring the

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performance of personal services, but as requiring defendant

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to deliver software, which plaintiff claims it ordered and

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paid for.

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it was defendant who characterized the term sheet as

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describing the proposed terms for “the sale of goods for more

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than $500” (Mot. 6:13-16), and not as a contract for personal

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services.

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In fact, in moving to dismiss the contract claim,

Defendant’s motion to dismiss the claim for conversion is

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GRANTED in part and DENIED in part.

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that defendant converted its $75,000 is not cognizable.

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elements of a conversion are the plaintiff’s ownership or

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right to possession of the property at the time of the

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conversion; the defendant’s conversion by a wrongful act or

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disposition of property rights; and damages.”

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Exchange v. Zerin, 53 Cal.App.4th 445, 451 (Ct. App. 1997).

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Plaintiff “need only allege that it is ‘entitled to immediate

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possession at the time of conversion.’”

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and emphasis omitted).

First, plaintiff’s claim
“The

Farmers Ins.

Id. at 452 (citations

“However, a mere contractual right of
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TENTATIVE RULING

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payment, without more, will not suffice.”

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basis for its money conversion claim is that defendant “has

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possession of monies in excess of $75,000 which were delivered

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. . . for goods and services either never delivered or not

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delivered in full, timely and in an appropriate and viable

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manner.”

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is insufficient for conversion.

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to dismiss on plaintiff’s conversion claim of the $75,000 is

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Compl. ¶ 48.

Id.

Plaintiff’s

This is a claim under contract, which
Therefore, defendant’s motion

GRANTED with leave to amend.

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On plaintiff’s second conversion claim regarding the

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intellectual property, plaintiff has alleged defendant “has

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failed to turn over the original code” which was “specifically

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assigned” to plaintiff pursuant to an assignment agreement.

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Compl. ¶ 48.

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plaintiff has a right to possess the code pursuant to the

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assignment agreement, and defendant has wrongfully retained

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it.

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conversion in cases involving intangible property, this is not

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the current state of the law in California.

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Cohen, 337 F.3d 1024, 1036 (9th Cir. 2003)(holding that

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intangible property such as an internet domain name can be the

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subject of a viable claim for conversion).

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that defendant converted its software code is cognizable, and

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defendant’s motion to dismiss plaintiff’s intellectual

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property conversion claim is DENIED.

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Accepting plaintiff’s allegations as true,

While traditionally courts may have struggled to find

See Kremen v.

Plaintiff’s claim

The motion to dismiss the fifth and sixth claims for
lacking specificity is DENIED.

Plaintiff’s allegations of
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defendant’s misrepresentations concealing that it was “unable

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or unwilling to create a final working package of software”

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and “unable or unwilling to provide the [client] support” are

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sufficient to withstand defendant’s motion to dismiss under

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Fed. R. Civ. P. 9(b).

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v. San Francisco Investment Corp., 552 F.2d 866 (9th Cir.

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1977)(holding that a complaint alleging that defendants

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misrepresented their expertise and special knowledge was

Compl. ¶¶ 52, 53.

See, e.g., Gottreich

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sufficient under Rule 9(b) because it identified the

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circumstances constituting fraud so that defendants could

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prepare an adequate answer from the allegations).

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Gordon v. Impulse Marketing Group, Inc., 2006 WL 624838, at *

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2 (E.D. Wash. Mar. 9, 2006)(under a similar Washington law,

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“[a]lthough Impulse Marketing has not pointed to any specific

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employers or relationships that were affected, its allegations

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[of tortious interference] are sufficient under general

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pleading standards to survive a motion to dismiss”).

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deficiencies of the sort claimed by defendants can best be

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dealt with on summary judgment.

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See, e.g.,

Any

Therefore, IT IS ORDERED that defendant’s motion to

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dismiss is DENIED as stated above, except as to plaintiff’s

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conversion claim for the $75,000, which plaintiff is GRANTED

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leave to amend by August 7, 2006.

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Dated:

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Bernard Zimmerman
United States Magistrate Judge
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