Clear Channel Outdoor, Inc. v. Bently Holdings California LP

Filing 51

ORDER by Judge Edward M. Chen Granting in Part and Denying in Part 21 Defendant's Motion to Dismiss. (emcsec, COURT STAFF) (Filed on 12/7/2011)

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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 CLEAR CHANNEL OUTDOOR, INC., 9 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS v. 11 For the Northern District of California United States District Court 10 No. C-11-2573 EMC BENTLY HOLDINGS CALIFORNIA LP, 12 Defendant. ___________________________________/ (Docket No. 21) 13 14 15 Plaintiff Clear Channel Outdoor, Inc. has filed suit against Defendant Bently Holdings 16 California LP, raising various claims related to the lease of a rooftop advertising sign in Union 17 Square. Plaintiff contends that Defendant has breached its lease both anticipatorily as well as 18 through past conduct, and asserts claims for declaratory judgment, breach of contract, and unjust 19 enrichment. Pending before the Court is Defendant’s Rule 12(b)(1) motion to dismiss for lack of 20 subject matter jurisdiction and Rule 12(b)(6) motion to dismiss for failure to state a claim. Docket 21 No. 21. After considering the parties’ submissions and oral argument, and for the reasons set forth 22 below, the Court DENIES the motion to dismiss under 12(b)(1) and GRANTS in PART and 23 DENIES in PART the motion under 12(b)(6). 24 I. FACTUAL & PROCEDURAL BACKGROUND 25 This action was initiated on May 27, 2011 when Plaintiff Clear Channel (“CCO”) filed suit 26 against Defendant Bently alleging breach of contract. Plaintiff claims that Defendant has breached 27 the lease by, inter alia, refusing Clear Channel access to the sign, applying for permits to do work on 28 1 the sign, and indicating that Defendant would not negotiate in good faith per the terms of the lease. 2 Plaintiff alleges as follows. 3 Plaintiff owns and operates a sign structure on Stockton Street, in the Union Square area of 4 San Francisco. Complaint, Docket No. 1, ¶1 (hereinafter, Compl.). Defendant Bently owns the 5 building to which the sign is attached. Id. Plaintiff (Tenant) and Defendant (Landlord) have a lease 6 effective June 2006, attached to the complaint. Compl. ¶ 10; Compl. Exhibit A (hereinafter, Ex. A). 7 The lease has a term of five years. Compl. ¶ 11, Ex. A ¶ 2. The lease provides that it shall continue 8 after the initial term “for subsequent like terms” unless it is terminated with ninety days notice in 9 writing. Compl. ¶ 11, Ex. A ¶ 3. The lease also contains an agreement to maintain a month-tomonth tenancy and engage in good-faith negotiations for a year following the “termination or natural 11 For the Northern District of California United States District Court 10 expiration of this Lease.” Compl. ¶ 11, Ex. A ¶ 5. The negotiations are to be aimed toward an 12 extension of the lease for at least 5 additional years. Id. Should these negotiations fail to produce a 13 new long-term lease within one year, Tenant CCO has the right to remove its sign structure within 14 120 days of the anniversary of the lease’s termination. Compl. ¶ 11; Ex. A ¶ 5. 15 The lease contains provisions for access and permits. It gives Tenant “all rights of ingress 16 and egress over the Property necessary to legally access the Structure from a public roadway.” 17 Compl. ¶ 15, Ex. A ¶ 1. It also provides that Tenant “has the sole right to make any necessary 18 applications with, and obtain permits from” any governmental entities. . .” Compl. ¶ 12, Ex. A ¶ 5. 19 Finally, it provides that all such permits are the property of Tenant, and that Tenant “shall have no 20 obligation to pursue any zoning matter or to continue to maintain any permit.” Ex. A ¶ 5. The lease 21 has no specific provisions regarding Plaintiff’s (Tenant’s) obligations regarding maintenance. 22 In a letter sent by Defendant, dated February 4, 2011, Defendant asserted that Plaintiff had 23 failed to meet maintenance obligations and thus, according to Plaintiff, “improperly asserted that it 24 had rights of ownership in the Sign Structure by claiming to reserve for itself the right to seek 25 permits on its own.” Compl. ¶ 14. Plaintiff also alleges that Defendant denied Plaintiff rights of 26 ingress and egress over Defendant’s property to access the sign for over a month. Id. ¶ 15. Plaintiff 27 alleges that once Defendant allowed Plaintiff to access the sign and Plaintiff sent a plan of action for 28 repairs, which Plaintiff asserted were not necessary (and only done out of an abundance of caution), 2 1 Defendant did not respond to this plan of action. Rather, Defendant simply sent a letter on May 3, 2 2011, “claiming that CCO had breached its obligation to maintain the sign in a safe manner.” Id. ¶¶ 3 16-17. Plaintiff asserts that in the May 3 letter Defendant also expressed its intent to refuse to 4 comply with the requirement for good faith negotiations, and improperly asserted that Clear Channel 5 had breached the lease and had lost the right to continue to keep its structure on the property. Id. ¶ 6 17. Plaintiff describes a series of letters between Plaintiff and Defendant discussing repairs, 7 termination of the lease, removal of the sign structure, and access to the sign. Id. ¶ 18-20. 8 9 Plaintiff alleges that “Defendant has repudiated CCO’s rights”, “intends to exercise and/or has exercised control over CCO’s Sign Structure and the permitting rights attendant thereto. Defendant’s statements and actions are in derogation of CCO’s rights,” and that “Defendant’s 11 For the Northern District of California United States District Court 10 statements and actions are intended to appropriate CCO’s property.” Id. ¶ 21. 12 Plaintiff’s claims, as numbered in the complaint, are 13 1) For declaratory judgment. Plaintiff alleges that there is an actual controversy over 14 ownership of the sign and permits as well as the right to apply for an obtain permits. 15 Plaintiff alleges that Defendant has “improperly attempted to terminate the lease,” “refuses to 16 engage in contractually required good faith negotiations,” and has materially breached the 17 lease. Id. ¶ 23. 18 2) For breach of written contract. Plaintiff alleges that Defendant has materially breached 19 the lease by refusing to provide access, altering the sign structure, refusing to engage in good 20 faith negotiations, and asserting ownership rights by “assert[ing] permit rights vested solely 21 in CCO under the Lease.” Plaintiff claims it is entitled to injunctive and/or specific relief as 22 well as actual damages and attorney’s fees for breach of contract. Id. ¶¶ 28-30. 23 3) For unjust enrichment. Plaintiff’s third claim for relief alleges that Defendant has been 24 unjustly enriched “at the expense and to the detriment of CCO.” Id. ¶¶ 32-33. 25 Defendant moves to dismiss Plaintiff’s complaint “for lack of subject matter jurisdiction, 26 because th[e] matter is not yet ripe for adjudication,” and because it “fails to state facts 27 demonstrating any plausible cause of action or need for the Court’s intervention.” Docket No. 21, 28 Def.’s Motion to Dismiss, hereinafter MTD, at 1. Defendant argues that no duty to negotiate arose 3 1 until June 2011 and that since that time parties have been negotiating. Id. Defendant also counters 2 Plaintiff’s claim that Plaintiff has not been allowed access to the sign. 3 4 5 II. A. DISCUSSION 12(b)(1) Jurisdictional Challenge Defendant has moved to dismiss Plaintiff’s complaint for lack of lack of standing under 6 Federal Rule of Civil Procedure 12(b)(1), arguing that defendant’s claim is not yet ripe for 7 adjudication. 8 9 “The jurisdiction of federal courts is defined and limited by Article III of the Constitution. In terms relevant to the question for decision in this case, the judicial power of federal courts is constitutionally restricted to ‘cases’ and ‘controversies.’ . . . Justiciability is the term of art employed 11 For the Northern District of California United States District Court 10 to give expression to this dual limitation placed upon federal courts by the case-and-controversy 12 doctrine.” Flast v. Cohen, 392 U.S. 83, 94 (1968). “Because standing and ripeness pertain to 13 federal courts’ subject matter jurisdiction, they are properly raised in a Rule 12(b)(1) motion to 14 dismiss.” Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). “On a 15 motion to dismiss for lack of standing, a district court must accept as true all material allegations in 16 the complaint, and must construe the complaint in the nonmovant’s favor.” Id. at 1121 (internal 17 citations omitted). However, “[t]he party asserting federal subject matter jurisdiction bears the 18 burden of proving its existence.” Id. at 1222. 19 1. 20 The doctrine of ripeness, a subset of justiciability, concerns “the appropriate timing of Legal Standard for Ripeness 21 judicial intervention.” Renne v. Geary, 501 U.S. 312, 320 (U.S. 1991). One timing concern is 22 “whether the harm asserted has matured sufficiently to warrant judicial intervention.” Warth v. 23 Seldin, 422 U.S. 490, 499 (1975); Pacific Legal Foundation v. State Energy Resources Conservation 24 & Dev. Com., 659 F.2d 903, 915 (9th Cir. 1981). In the context of a private contract case, the Ninth 25 Circuit has held that “the appropriate standard for determining ripeness of private party contract 26 disputes is the traditional ripeness standard, namely, whether ‘there is a substantial controversy, 27 between parties having adverse legal interests, of sufficient immediacy and reality to warrant the 28 issuance of a declaratory judgment.” Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 671 (9th 4 1 Cir. 2005). More specifically, “[t]he ‘central concern [of the ripeness inquiry] is whether the case 2 involves uncertain or contingent future events that may not occur as anticipated, or indeed may not 3 occur at all.’” Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122-1123 (9th Cir. 4 2010) (citing Richardson v. City and County of Honolulu 124 F.3d 1150, 1160 (9th Cir. 1997)). 5 In Chandler, plaintiff sued his insurer over a reimbursement dispute after his car was rear- 6 ended. The plaintiff had been partially reimbursed by the insurer of the other driver, but had not 7 sued that third party’s insurer. The court held that the plaintiff’s claim was not ripe for adjudication 8 until he had attempted and failed to sue that third party, thus showing injury. Id. (“Plaintiff’s claims 9 involve future events that are too uncertain and speculative to permit Plaintiff to proceed with his lawsuit.”). Similarly, where a claim involves outcomes dependent on an uncertain event, such as the 11 For the Northern District of California United States District Court 10 resolution of another case, courts have dismissed the claim as unripe. See Bhatia v. Office of the 12 United States Atty., No. CV-09-5581 SBA, 2011 U.S. Dist. LEXIS 36461 (N.D. Cal. Mar. 29, 2011) 13 (dismissing claims as unripe where injury was dependent on outcome of ongoing criminal case). 14 However, claims may be ripe for adjudication even where there is no immediately apparent 15 damage. In Robinson, plaintiff and defendant were parties to a long-term lease which provided for 16 rent adjustment in the thirty-first and sixty-first years of the lease. Robinson, 394 F.3d at 668. The 17 parties disagreed as to their interpretation of this provision, and when they renegotiated the lease 18 they included this disagreement in a lease amendment. When one of the parties tried to sell its 19 interest, it could not because of the disagreement. The court agreed that their case was ripe for 20 decision. Id. at 672. A claim may also be ripe for adjudication where, although there were parallel 21 or future proceedings at issue, current damage is alleged. Tethys Bioscience, Inc. v. Mintz, Levin, 22 Cohn, Ferris, Glovsky & Popeo, P.C., No. C 09-5115 CW, 2010 U.S. Dist. LEXIS 55010, at *7 23 (N.D. Cal. 2010) (“Plaintiff pleads that it has suffered various forms of damage, including a decrease 24 in the value of its technology and business, arising from Defendants’ alleged disclosure of its 25 confidential information. . . . That Plaintiff’s harm could be enhanced or mitigated by the PTO’s 26 decision does not render its claims unripe.”). 27 2. 28 In the instant case, Defendant argues that Plaintiff’s claims are not ripe because they are Application to This Case 5 1 based on Defendant’s alleged failure to negotiate, which it was required to do once the lease expired. 2 MTD at 8. Because Defendant’s obligation to negotiate did not arise until June 2011, and the parties 3 have been negotiating since then, Defendant argues that the claim is not ripe. In addition, Defendant 4 argues that, contrary to Plaintiff’s assertions, it has consistently provided for Plaintiff’s access to the 5 Sign Structure. MTD at 8. 6 7 a. Breach of Contract With respect to Plaintiff’s breach of contract claim, Defendant appears to misconstrue 8 Plaintiff’s allegations. Defendant portrays Plaintiff’s allegations as solely concerning conduct that 9 may appear in the future (i.e., Defendant may refuse to negotiate in good faith or may refuse Plaintiff access to its sign). See MTD at 8. However, Plaintiff is not basing its allegations purely on 11 For the Northern District of California United States District Court 10 whether or not Defendant will actually engage in good faith negotiations. Rather, Plaintiff claims 12 that “Defendant has [already] materially breached and repudiated its obligations under the Lease, 13 including the implied covenant of good faith and fair dealing.” Compl. ¶ 28. Plaintiff argues actual 14 breach of material conditions of the lease, as well as anticipatory repudiation of the requirement to 15 engage in good-faith negotiations and, it appears, a current and ongoing failure to act in good faith 16 under the contract more generally. See Compl. ¶¶ 14-21 (describing “belated[]” and “improper[]” 17 assertions regarding Plaintiff’s maintenance obligations and the parties’ respective rights under the 18 lease); Opp. at 7 (describing Bently’s refusal to negotiate as “pretextual”). 19 Plaintiff provides specific examples of ways in which it alleges Defendant has already 20 breached the Lease, including, inter alia, Defendant’s application for a permit to perform repairs on 21 the sign in violation of Plaintiff’s exclusive permitting right, and Bently’s refusal to allow CCO 22 unconditional access to the sign. Opp. at 4-5. While Bently disputes CCO’s assertion that 23 Defendant has denied it access to the structure, that does not render Plaintiff’s claim to the contrary 24 speculative or uncertain. As noted above, this Court must take Plaintiff’s allegations as true on this 25 motion to dismiss for lack of standing. Chandler, 598 F.3d at 1121. Because Plaintiff’s contract 26 allegations concern past and current, ongoing behavior, not just future behavior, they are ripe for 27 adjudication. See Robinson, 394 F.3d at 671-72; Cf. St. Clair v. City of Chico, 880 F.2d 199, 204 28 (9th Cir. 1989) (finding lack of ripeness where “Appellants failed to satisfy their burden of showing 6 1 that their application for a connection to the City’s sewer system was rejected in a final, definitive 2 decision”); Richardson v. City and County of Honolulu, 124 F.3d 1150, 1160 (9th Cir. 1997) 3 (finding landowners’ claim “that Ordinance 91-95 does not fully compensate them for the taking of 4 their property” unripe because they filed suit the same day the ordinance was enacted and “several 5 [non-self-executing] events must occur before any taking will occur”).1 6 In addition to the current breaches alleged in the Complaint, Plaintiff also appears to make an 7 anticipatory repudiation claim. See Opp. at 8-9. Specifically, Plaintiff alleges that Defendant 8 provided unequivocal notice that it would refuse to negotiate in good faith for an extension of the 9 lease once it expired in May 2011. Compl. ¶ 17. More specifically, Plaintiff alleges that Bently stated CCO “ha[d] breached its lease and ha[d] therefore lost the right to continue to keep its 11 For the Northern District of California United States District Court 10 structure on the property on a month to month basis for a year at the expiration date of this lease on 12 May 31, 2011.” Compl. ¶ 17, Ex. B. Plaintiff claims that these statements and other conduct create 13 “uncertainty around how long Bently will continue to engage in such negotiations particularly given 14 its prior pretextual refusal to engage in such negotiations.” Opp. at 7. For the reasons stated below 15 regarding the 12(b)(6) motion to dismiss, that claim appears insufficient to state a claim for relief. 16 However, since, as discussed above, Plaintiff has also made allegations about current behavior, this 17 deficiency is not fatal to jurisdiction. 18 b. Declaratory Relief 19 Finally, Defendant argues that declaratory relief is inappropriate. MTD at 15. The 20 Declaratory Judgment Act provides that this Court “may declare the rights and other legal relations 21 of any interested party seeking such declaration, whether or not further relief is or could be sought.” 22 28 U.S.C. § 2201. Determination of jurisdiction is a two-part test: first the court must determine 23 ripeness, and then the court must determine whether to exercise its discretion. Dennis v. Wachovia 24 Bank, FSB, No. 10-01596 CW, 2011 U.S. Dist. LEXIS 6810 (N.D. Cal. Jan. 19, 2011) (citing 25 Robinson, 394 F.3d at 669). Under the first part, “[t]he requirement that a case or controversy exist 26 27 28 1 Defendant relies on St. Clair and Richardson, but the comparison is inapposite. In St. Clair, plaintiffs had not yet suffered any adverse action because their application had yet to be denied. Similarly, in Richardson, no taking had occurred and no negotiation for just compensation had occurred. By contrast, in the instant case, Plaintiff alleges that Bently has already breached its obligations under the contract. 7 1 under the Declaratory Judgment Act is identical to Article III’s constitutional case or controversy 2 requirement.” Robinson, 394 F.3d at 669; see Cal. County Superintendents of Schs. Educ. Ass’n v. 3 Marzion, 2009 U.S. Dist. LEXIS 20453 (N.D. Cal. Mar. 2, 2009) (“A case is ripe where the essential 4 facts establishing the right to declaratory relief have already occurred.”) (citing Boeing Co. v. 5 Cascade Corp., 207 F.3d 1177, 1192 (9th Cir. 2000)). 6 Under the second part, the Court should address various factors as identified in Brillhart v. 7 Excess Ins. Co., 316 U.S. 491 (1942), in determining whether to exercise its discretion, including: 8 (1) “avoid[ing] needless determination of state law issues”; (2) “discourag[ing] litigants from filing 9 declaratory actions as a means of forum shopping”; and (3) “avoid[ing] duplicative litigation.” Robinson, 394 F.3d. at 672 (citing Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 11 For the Northern District of California United States District Court 10 1998)).2 In deciding the first factor, courts have looked to whether there are parallel proceedings in 12 state court. Continental Casualty Co. v. Robsac Indus., 947 F.2d 1367, 1371 (9th Cir. 1991), 13 questioned on other grounds by Ryan ex rel. Syndicates & Ins. Cos. Subscribing to Policy PHP91- 14 4699 v. Sea Air, 902 F. Supp. 1064, 1066 (D. Alaska 1995). For the second factor, courts have 15 looked to whether plaintiffs “perceive a tactical advantage from litigating in a federal forum.” Id. 16 Finally, the third factor is also concerned with parallel litigation. Id. 17 In the instant case, Defendant’s sole argument against declaratory judgment jurisdiction is its 18 contention that there is no actual case or controversy. MTD at 15. As noted above, this case is ripe 19 under the Article III analysis because there is a dispute between the parties as to their respective 20 rights and obligations under the lease; accordingly, the claim for declaratory relief should be 21 allowed to go forward. Specifically, as alleged, the parties dispute whether Plaintiff has sole rights 22 under the lease to obtain permits, whether Plaintiff must have unconditional access to its sign 23 structure, whether Plaintiff has the right to remove the sign, and whether Plaintiff’s failure to do 24 2 25 26 27 28 The Robinson court also noted other additional factors, including “whether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a ‘res judicata’ advantage; or whether the use of a declaratory action will result in entanglement between the federal and state court systems. In addition, the district court might also consider the convenience of the parties, and the availability and relative convenience of other remedies.” Robinson, 394 F.3d at 672, citing Dizol, 133 F.3d at 1225, n.5 8 1 certain repairs could result in a breach of or forfeiture of rights under the lease. See Opp. at 8. 2 Furthermore, the Brillhart factors point in favor of exercising jurisdiction. Although contract 3 interpretation does depend on an interpretation of state law, there is no indication that there is 4 parallel state litigation, that there will be state (or other duplicative) litigation in the future, or that 5 Plaintiff has in any way engaged in forum shopping. Thus, there is no particular reason why a 6 declaratory judgment would not be an appropriate remedy in this case. 7 Accordingly, the Court DENIES Defendant’s 12(b)(1) motion. 8 9 Failure to State a Claim Defendant also moves to dismiss Plaintiff’s complaint under Federal Rule of Civil Procedure 12(b)(6). MTD at 16. 11 For the Northern District of California United States District Court 10 B. 1. 12 Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the Standard 13 failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to 14 dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks 15 Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In considering such a motion, a court 16 must take all allegations of material fact as true and construe them in the light most favorable to the 17 nonmoving party, although “conclusory allegations of law and unwarranted inferences are 18 insufficient to avoid a Rule 12(b)(6) dismissal.” Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 19 2009). While “a complaint need not contain detailed factual allegations . . . it must plead ‘enough 20 facts to state a claim to relief that is plausible on its face.’” Id. “A claim has facial plausibility when 21 the plaintiff pleads factual content that allows the court to draw the reasonable inference that the 22 defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); see 23 also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). “The plausibility standard is not akin to 24 a ‘probability requirement,’ but it asks for more than sheer possibility that a defendant acted 25 unlawfully.” Id. 26 2. 27 Defendant argues that Plaintiff has not pled a cause of action. More specifically, Defendant 28 Analysis argues that Plaintiff’s allegations are conclusory and that the complaint lacks sufficient facts to 9 1 create a plausible legal theory of relief. MTD at 16. For many of the reasons stated above in the 2 analysis of ripeness, Plaintiff’s complaint alleges sufficient facts to state a claim for relief. Plaintiff 3 has made a significant number of very specific allegations. These allegations, if true, would 4 certainly rise to the level of plausibility required by Iqbal and Twombly. 5 6 7 8 9 a. Declaratory Relief (Claim One) For the reasons stated above in the analysis of the 12(b)(1) motion to dismiss, Plaintiff has adequately pled a claim for declaratory relief. b. Breach of Contract (Claim Two) In order to establish a case for breach of contract in California., a party must show “(1) the [existence of a] contract, (2) plaintiff’s performance or excuse for non-performance, (3) defendant’s 11 For the Northern District of California United States District Court 10 breach, and (4) damage to plaintiff therefrom. Cryotech Int’l, Inc. v. Technifab Prods., 2010 U.S. 12 Dist. LEXIS 40622 (N.D. Cal. Apr. 26, 2010) (citing Acoustics, Inc. v. Trepte Constr. Co., 14 Cal. 13 App. 3d 887 (1971). 14 As for the first prong, Plaintiff has clearly shown the existence of a contract, and this fact is 15 not disputed, although Plaintiff and Defendant dispute the meaning of the contract. Under the 16 second and third prongs, Defendant argues that Plaintiff “breached its obligations under the 17 Lease. . . .” MTD at 4. However, if Plaintiff’s allegations are taken as true, Plaintiff has performed 18 under the contract and Defendant has not. Specifically, as noted above, Plaintiff has alleged that 19 Defendant has blocked its access to its property and asserted permit and other rights of ownership 20 while repudiating Plaintiff’s ownership rights. Opp. at 11. 21 Finally, Defendant emphasizes that Plaintiff has not shown any damages. However, the 22 stated purpose of the lease is for “maintaining, operating, improving . . . [and] repairing, an outdoor 23 advertising structure. . . ,” and the lease “includes all rights of ingress and egress over the Property 24 necessary to legally access the Structure from a public roadway.” Ex. A at ¶ 1. Thus, if Plaintiff’s 25 allegations are true, Plaintiff has pled that Defendant interfered with the stated purpose of the lease. 26 Finally, Plaintiff has alleged the fact of damage through interference with the Plaintiff’s access to its 27 sign and enjoyment of the benefit of its bargain. See Runyan v. Pacific Air Industries, Inc., 2 Cal.3d 28 304, 316 n.15 (Cal. 1970) (“The award given in an action for damages compensates the party not in 10 1 default for the loss of his ‘expectational interest’ – the benefit of his bargain which full performance 2 would have brought.”) (citations omitted). 3 4 c. Anticipatory Repudiation (Claim Two) A subset of Plaintiff’s breach of contract claim is a claim that Defendant anticipatorily 5 repudiated the contract. Defendant argues that no duty to negotiate arose until the expiration of the 6 lease and thus there can be no breach. Plaintiff responds that Defendant has anticipatorily 7 repudiated its obligations under the lease by announcing that it did not intend to engage in good- 8 faith negotiations and by asserting that Plaintiff had forfeited its rights under the contract. Compl. 9 ¶¶ 14, 17. In California, “[w]hen a promisor repudiates a contract, the injured party faces an election of 11 For the Northern District of California United States District Court 10 remedies: he can treat the repudiation as an anticipatory breach and immediately seek damages for 12 breach of contract, thereby terminating the contractual relation between the parties, or he can treat 13 the repudiation as an empty threat, wait until the time for performance arrives and exercise his 14 remedies for actual breach if a breach does in fact occur at such time.” Taylor v. Johnston, 15 15 Cal.3d 130, 137 (1975 ). “A party asserting express anticipatory repudiation must demonstrate that 16 (1) the other party absolutely and unequivocally refused to perform and (2) it (the party asserting 17 anticipatory repudiation) effectuated the other party’s breach by materially changing its position and 18 treating the repudiation as final.” Shahani v. United Commer. Bank, C 11-00416 CRB, 2011 U.S. 19 Dist. LEXIS 106433, at *13 (N.D. Cal. Sept. 20, 2011) (citing Guerrieri v. Severini, 51 Cal. 2d 12, 20 19 (1958); Wilton v. Clarke, 27 Cal. App. 2d 1, 4 (1938)). 21 Plaintiff argues that in its May 3, 2011 letter, when Defendant wrote “Clear Channel has 22 breached its lease and has therefore lost the right to continue to keep its structure on the property on 23 a month to month basis for a year at the expiration date of this lease on May 31, 2011,” Defendant 24 had “expressed its intent to refuse to comply with or honor Paragraph 5 of the lease, which calls for 25 month-to-month tenancy in combination with good faith negotiations for a lease extension . . . .” 26 Compl., ¶ 17. Defendant characterizes this statement as merely a “suggest[ion] that this breach 27 could excuse any obligation to continue the tenancy on a month-to-month basis,” MTD at 4. 28 Defendant points out that Plaintiff has not chosen to treat the breach as final, by continuing to 11 1 negotiate under the terms of the lease. Defendant thus argues that Plaintiff cannot state a claim both 2 because there was no clear repudiation and because the Plaintiff did not treat Defendant’s actions as 3 repudiation. Reply at 5-6. 4 In the instant case, Plaintiff has not sufficiently pled anticipatory repudiation. Specifically, 5 even assuming that the May 3 letter constituted a clear repudiation of the contract, Plaintiff has not 6 materially changed its position and treated the repudiation as final. See Shahani v. United Commer. 7 Bank, 2011 U.S. Dist. LEXIS 106433 at *14-15 (finding no anticipatory repudiation where the 8 plaintiff “continued to act as though the contract were still in force”); Taylor v. Johnston, 15 Cal.3d 9 130, 136-37 (1975 ) (“[I]f the injured party disregards the repudiation and treats the contract as still in force, and the repudiation is retracted prior to the time of performance, then the repudiation is 11 For the Northern District of California United States District Court 10 nullified and the injured party is left with his remedies, if any, invocable at the time of 12 performance.”); Cf. Guerrieri, 51 Cal. 2d at 19 (finding a plaintiff had materially changed its 13 position when it purchased a higher price winery to obtain the wine it needed). Plaintiff has alleged 14 no material change in position so as to indicate that it has treated the repudiation as final. Rather, it 15 continues to assert the validity of the lease and Defendant’s ongoing duty to act pursuant to that 16 lease. Indeed, CCO’s May 19 letter, attached to its complaint as Exhibit C, confirms that it 17 responded to Bently’s “attempted termination of the lease” with efforts to negotiate and maintain the 18 parties’ compliance with the lease. See Compl., Ex. C at 2. CCO also seeks specific performance of 19 the Lease. Compl. at 10 ¶ 2. Such a position is not consistent with a claim for anticipatory 20 repudiation, which terminates the contractual relationship between the parties. That Bently has 21 negotiated and apparently continues to negotiate with CCO to renew the lease (see Opp. at 6), 22 further indicates that the terms of the contract are still in force. See Taylor, 15 Cal.3d at 137-38 23 (“[I]f the injured party disregards the repudiation and treats the contract as still in force, and the 24 repudiation is retracted prior to the time of performance, then the repudiation is nullified and the 25 injured party is left with his remedies, if any, invocable at the time of performance.”). Accordingly, 26 while Plaintiff has adequately stated claims for breach of various terms of the contract and 27 declaratory relief, as discussed above, it has not so stated a claim for anticipatory repudiation. The 28 12 1 Court therefore GRANTS Defendant’s motion to dismiss Plaintiff’s anticipatory repudiation claim. 2 This dismissal is without prejudice. 3 d. 4 Unjust Enrichment (Claim Three) Finally, Defendant argues that Plaintiff fails to state a claim for unjust enrichment. However, 5 Defendant offers no argument or analysis as to the standard for asserting unjust enrichment or how 6 Plaintiff has failed to meet it. Rather, it simply asserts that “[n]one of [Plaintiff’s] facts, if true 7 establish . . . any unjust enrichment by Bently.” MTD at 16. Plaintiff argues that the same 8 allegations supporting its breach of contract claim also support its unjust enrichment claim. Opp. at 9 11. The elements of unjust enrichment are “receipt of a benefit and unjust retention of the benefit 11 For the Northern District of California United States District Court 10 at the expense of another.” Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000). Under 12 California law, “unjust enrichment is an action in quasi-contract, which does not lie when an 13 enforceable, binding agreement exists defining the rights of the parties.” Paracor Fin., Inc. v. GE 14 Capital Corp., 96 F.3d 1151, 1167 (9th Cir. 1996). “California courts appear to be split on whether 15 a stand alone cause of action for unjust enrichment is anything more than “a general principle, 16 underlying various legal doctrines and remedies.” Mattel, Inc. v. MGA Entm’t, Inc. & Consol. 17 Actions, 782 F. Supp. 2d 911, 1014 (C.D. Cal. 2010) (noting that “stand alone claims for unjust 18 enrichment are simply redundant of relief already available under other existing law.”). Courts in 19 this District have held that California law permits unjust enrichment claims, in which “restitution 20 may be awarded either (1) in lieu of breach of contract damages, where an asserted contract is found 21 to be unenforceable or ineffective, or (2) where the defendant obtained a benefit from the plaintiff by 22 fraud, duress, conversion, or similar conduct, but the plaintiff has chosen not to sue in tort.” Oracle 23 Corp. v. SAP AG, 2008 WL 5234260, at *8 (N.D. Cal. Dec. 15, 2008) (citing McBride v. Boughton, 24 123 Cal. App. 4th 379, 388 (2004)). Accordingly, even though a plaintiff may not ultimately prevail 25 under both unjust enrichment and breach of contract, it may plead both in the alternative. Id. (“A 26 defendant is not entitled to have a cause of action dismissed for failure to state a claim simply 27 because it conflicts with another cause of action.”); see also Wolf v. Wells Fargo Bank, N.A., No. 28 C11–01337 WHA, 2011 WL 4831208, at *8 (N.D. Cal. Oct. 12, 2011) (“Restitution [under an unjust 13 1 enrichment theory] may be awarded in lieu of breach of contract damages when the parties had an 2 express contract, but it was procured by fraud or is unenforceable or ineffective for some reason.”) 3 (citing McBride v. Boughton, 123 Cal. App. 4th 379, 388 (2004)). 4 In the instant case, however, Plaintiff has not adequately alleged a restitution/unjust 5 enrichment claim because it has alleged no facts as to how the contract would be unenforceable, 6 since both parties appear to claim the contract is valid and enforceable. See Solano v. America’s 7 Servicing Co., No. 2:10-cv-02426-GEB-GGH, 2011 WL 4500874, at *9 (E.D. Cal. Sept. 27, 2011) 8 (dismissing unjust enrichment claim where “[n]one of Plaintiffs’ allegations plausibly suggest that 9 valid contracts did not exist between the parties.”); Cf. Parino v. BidRack, Inc., No. CV 11–3149 WHA, 2011 WL 4479462, at *6 (N.D. Cal. Sept. 26, 2011) (“[P]laintiff has properly alleged a claim 11 For the Northern District of California United States District Court 10 for fraud in the procuring of the alleged contract with BidRack. As such, plaintiff has sufficiently 12 stated a claim for unjust enrichment in the alternative to her breach-of-contract claim.”). 13 Defendant’s motion to dismiss is therefore GRANTED as to the unjust enrichment claim, and 14 Plaintiff is granted leave to amend. 15 16 III. CONCLUSION For the foregoing reasons, the Court DENIES Defendant’s motion to dismiss for lack of 17 jurisdiction, GRANTS Defendant’s motion to dismiss under 12(b)(6) as to the unjust enrichment 18 and anticipatory repudiation claims with leave to amend, and DENIES Defendant’s motion to 19 dismiss under 12(b)(6) as to the breach of contract and declaratory relief claims. Any amended 20 complaint shall be filed within 21 days of this Order. 21 This order disposes of Docket No. 21. 22 23 IT IS SO ORDERED. 24 25 Dated: December 7, 2011 26 _________________________ EDWARD M. CHEN United States District Judge 27 28 14

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