Bell-Sparrow v. Wiltz et al

Filing 61

ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANT MCGOWAN'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT; (2) DENYING WITHOUT PREJUDICE PLAINTIFF'S MOTION TO COMPEL; AND (3) CONTINUING THE HEARING ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT TO 3:00 P.M.ON FEBRUARY 7, 2014 58 60 (Illston, Susan) (Filed on 2/4/2014) Modified on 2/4/2014 (Illston, Susan).

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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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No. C 12-02782 SI
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ORDER:

ARLENE BELL-SPARROW,
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Plaintiff,

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United States District Court
For the Northern District of California

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v.
PAUL WILTZ, MONE’T INC., and WONDA
MCGOWAN

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Defendants.

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(1) GRANTING IN PART AND DENYING
IN PART DEFENDANT MCGOWAN’S
MOTION TO DISMISS OR, IN THE
ALTERNATIVE, FOR SUMMARY
JUDGMENT;
(2) DENYING WITHOUT PREJUDICE
PLAINTIFF’S MOTION TO COMPEL;
AND
(3) CONTINUING THE HEARING ON
PLAINTIFF’S MOTION FOR DEFAULT
JUDGMENT

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Now before the Court is a motion by defendant Wonda McGowan to dismiss, or in the

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alternative, for summary judgment of plaintiff’s claims and a motion by plaintiff Arlene Bell-Sparrow

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to compel compliance with her written discovery requests. The motions are scheduled to be heard on

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February 7, 2014. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for

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resolution without oral argument and hereby VACATES the hearing. For the reasons below, the Court

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hereby GRANTS IN PART and DENIES IN PART defendant Wonda McGowan’s motion to dismiss,

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or in the alternative, for summary judgment and DENIES WITHOUT PREJUDICE plaintiff’s motion

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to compel.

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BACKGROUND

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The following allegations are taken from plaintiff’s first amended complaint (“FAC”).

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Defendant Mone’t Inc. is an Illinois corporation that provides funding for commercial property. Docket

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No. 28, FAC at 6. Defendant Paul Wiltz is the owner and CEO of Mone’t, and defendant Wonda

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McGowan is the Executive Vice-President of Mone’t. Id.

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Around August 2009, plaintiff contacted Mr. Wiltz about helping her with the purchase of a

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commercial property. FAC at 6. Mr. Wiltz forwarded plaintiff a retention agreement. Id. at 6, Ex. 66.6.

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Plaintiff states that the contract contained a clause requiring a non-refundable up-front fee of $11,500.

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Id. After reading the clause, plaintiff called Mr. Wiltz and requested that the contract be changed so that

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she would receive the $11,500 fee back if the commercial project was not funded. Id. Mr. Wiltz agreed

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to change the terms of the contract and stated that he would reimburse plaintiff the $11,500 if the project

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did not go through. Id. at 6-7, ¶¶ 2-3. Plaintiff entered into the contract with Mone’t and paid the

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$11,500 fee. FAC ¶¶ 1, 49.

United States District Court
For the Northern District of California

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Plaintiff found a commercial property called Emerald Square Apartments listed for $4,700,000,

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and plaintiff’s real estate agent forwarded that information to Mr. Wiltz in December 2009. FAC ¶ 6.

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Mr. Wiltz informed plaintiff that to obtain funding for the property, plaintiff would have to pay an

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additional $60,000.1 Id. ¶¶ 8, 11. Plaintiff states that this additional cost was not required under the

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terms of the contract. Id. ¶¶ 107-08. Plaintiff did not have the additional money, so on January 20,

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2010, plaintiff sent an email to Mr. Wiltz and Ms. McGowan requesting a refund of her $11,500 fee.2

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Id. ¶¶ 8-9.

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Plaintiff alleges that through several communications, Mr. Wiltz, Ms. McGowan, and Mr.

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Wiltz’s attorney represented to plaintiff that she would be refunded the $11,500 fee.3 FAC ¶¶ 16-24,

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38-39. But, on May 3, 2010, Mr. Wiltz’s attorney emailed plaintiff and stated that the money would not

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be refunded. Id. ¶¶ 31, 42.

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Plaintiff also alleges that the additional charges and fees Mone’t added on for closing on the
property would have cost a total of $2,840,000, making the final purchase price of the property
$7,540,000. FAC ¶ 13.
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Plaintiff alleges that she had previously informed Mr. Wiltz and Ms. McGowan that the
$11,500 was all the money that she had. FAC ¶ 12.
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Plaintiff alleges that these communications included plaintiff signing a settlement agreement
on April 27, 2010 that was provided to her by Mr. Wiltz’s attorney, whereby Mr. Wiltz agreed to return
the $11,500 in exchange for plaintiff withdrawing her complaints against Mr. Wiltz. FAC ¶¶ 46, 57-58.
It is unclear from the allegations whether Mr. Wiltz also signed the agreement.

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On May 31, 2012, plaintiff filed this action against defendant Paul Wiltz, Mone’t Inc., and

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Wonda McGowan, alleging causes of action for breach of contract and fraud. Docket No. 1. On

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October 12, 2012, defendant McGowan filed an answer and a motion to dismiss the complaint. Docket

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No. 15. On February 20, 2013, plaintiff filed a first amended complaint. Docket No. 28. By the present

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motions, defendant McGowan moves to dismiss plaintiff’s first amended complaint or, in the alternative,

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for summary judgment of plaintiff’s claims, Docket No. 58; and plaintiff moves to compel compliance

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with her written discovery requests that she served on Defendant McGowan, Docket No. 60.

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United States District Court
For the Northern District of California

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DISCUSSION
I.

Defendant McGowan’s Motion to Dismiss or, in the Alternative, for Summary Judgment

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A.

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Federal Rule of Civil Procedure 12(b)(6) permits a defendant to move to dismiss on the ground

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that there is a “failure to state a claim upon which relief can be granted.” A motion to dismiss should

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be granted if plaintiff fails to proffer “enough facts to state a claim to relief that is plausible on its face.”

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Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) (abrogating Conley v. Gibson, 355 U.S. 41,

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78 S. Ct. 99 (1957)). The court “must accept as true all of the factual allegations contained in the

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complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007), and must construe pro se pleadings liberally,

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Hebbe v. Pliler, 627 F.3d 338, 341-42 (9th Cir. 2010). The court need not accept as true allegations that

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are legal conclusions, unwarranted deductions of fact or unreasonable inferences. See Ashcroft v. Iqbal,

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556 U.S. 662, 678 (2009); In re Gilead Scis. Sec.Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

Legal Standard for a Rule 12(b)(6) Motion to Dismiss

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B.

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Summary judgment is proper “if the movant shows that there is no genuine dispute as to any

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material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The

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moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact.

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Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party, however, has no burden to

Legal Standard for a Motion for Summary Judgment

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disprove matters on which the non-moving party will have the burden of proof at trial. The moving

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party need only demonstrate to the Court that there is an absence of evidence to support the non-moving

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party’s case. Id. at 325.

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Once the moving party has met its burden, the burden shifts to the nonmoving party to “set forth,

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by affidavit or as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine issue for

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trial.’” T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987)

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(citing Celotex, 477 U.S. at 324). To carry this burden, the non-moving party must “do more than

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simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.

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Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

United States District Court
For the Northern District of California

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In deciding a summary judgment motion, the Court must view the evidence in the light most

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favorable to the non-moving party and draw all justifiable inferences in its favor. Anderson v. Liberty

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Lobby, Inc., 477 U.S. 242, 255 (1986).

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C.

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In the motion, defendant McGowan argues that all of the causes of action in plaintiff’s complaint

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should be dismissed because she never entered into a written contract or any other agreement with

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plaintiff. Docket No. at 1-2. In the first amended complaint, plaintiff alleges causes of action against

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the defendants for: (1) breach of contract, (2) negligent misrepresentation, (3) promissory fraud, (4)

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fraud, (5) violation of California’s Unfair Competition Law (“UCL”), California Business and

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Professions Code § 17200 et seq., and (6) breach of the implied covenant of good faith and fair dealing.

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Docket No. 28, FAC ¶¶ 44-108.

Analysis

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The existence of a contract is a required element of a claim for breach of contract and a claim

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for breach of the implied covenant of good faith and fair dealing. See CDF Firefighters v. Maldonado,

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158 Cal. App. 4th 1226, 1239 (2008) (listing the “existence of the contract” as an element for a breach

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of contract claim); Racine & Laramie, Ltd. v. Department of Parks & Recreation, 11 Cal. App. 4th

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1026, 1031 (1992) (“The implied covenant of good faith and fair dealing rests upon the existence of

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some specific contractual obligation.”). In the first amended complaint, plaintiff does not allege that

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defendant McGowan was a party to the contract at issue. To the contrary, plaintiff alleges that she

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entered into a contract with Mone’t. FAC at 6-7 & ¶¶ 1, 49. In addition, plaintiff has attached several

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exhibits to the first amended complaint, consisting of email communications between herself and

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defendants Wiltz, McGowan and others at Mone’t. Id. Exs. 66-71. None of these exhibits show the

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existence of a contract between plaintiff and defendant McGowan. See id. The exhibits only show that

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Mone’t was a party to the contract. See id. Ex. 66.6 (email from Don Lucas of Mone’t with the subject

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line “Monet Inc. Retention Agreement for PHSS4”). Plaintiff appears to assert that defendant McGowan

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should be liable under the contract because she is the Executive Vice President of Mone’t, and she was

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United States District Court
For the Northern District of California

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involved in the communications with plaintiff about the contract and her refund request. See FAC at

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4 & ¶¶ 37, 45, 49. But, directors and officers of a company are not personally liable on contracts for

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and on behalf of a corporation unless the directors and officers purport to bind themselves individually.

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United States Liability Ins. Co. v. Haidinger-Hayes, Inc., 1 Cal. 3d 586, 595 (1970). Because defendant

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McGowan was not a party to the contract at issue, she cannot be liable for breach of contract or breach

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of the implied covenant of good faith and fair dealing. See CDF Firefighters, 158 Cal. App. 4th at 1239;

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Racine & Laramie, 11 Cal. App. 4th at 1031. Accordingly, the Court dismisses with prejudice

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plaintiff’s claims for breach of contract and breach of the implied covenant of good faith and fair dealing

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against defendant McGowan.

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However, the existence of a contract is not a required element for a cause of action for fraud,

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negligent misrepresentation, or violation of the UCL. See Small v. Fritz Cos., Inc., 30 Cal. 4th 167, 173-

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74 (2003) (listing the elements for fraud and negligent misrepresentation); Kwikset Corp. v. Superior

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Court, 51 Cal. 4th 310, 320-22 (2011) (listing the elements for stating a claim under California’s UCL).

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Therefore, the lack of a contractual relationship between plaintiff and defendant McGowan does not

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justify dismissal of these claims. Accordingly, the Court DENIES defendant McGowan’s motion to

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The emails state that “PHSS” is PHSS Medical Staffing. FAC Ex. 66.5. In the first amended
complaint, plaintiff alleges that she is the CEO of Professional HealthCare Staffing LLC, a medical
staffing agency. FAC at 3.

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dismiss or, in the alternative, for summary judgment with respect to plaintiff’s claims for fraud,

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negligent misrepresentation, and violation of the UCL.

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II.

Plaintiff’s Motion to Compel
Plaintiff moves for an order compelling defendant McGowan to respond to plaintiff’s written

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discovery requests. Docket No. 60. Between November 22, 2013 and December 3, 2013, plaintiff

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served on defendant McGowan three sets of interrogatories and a request for the production of

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documents. Id. In her motion, plaintiff states that defendant has failed to respond to these discovery

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requests. Id. at 1-2. In addition, plaintiff states that she attempted to meet and confer with defendant

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United States District Court
For the Northern District of California

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McGowan about these requests by sending her a letter on January 4, 2014, but defendant McGowan

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failed to respond to the letter. Id.

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Under Civil Local Rule 37-1(a), the parties must meet and confer in an attempt to resolve a

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discovery dispute prior to the filing of a motion to resolve the dispute. Civ. L.R. 37-1(a); see also

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Docket No. 9-1 at 5. The Court’s standing order requires that: “The parties shall meet and confer in

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person, or, if counsel are located outside the Bay Area, by telephone, to attempt to resolve their dispute

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informally. A mere exchange of letters [or] emails . . . does not satisfy the requirement to meet and

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confer.” Docket No. 9-1 at 4-5.

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Plaintiff does not state in her motion that she attempted to meet and confer with defendant

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McGowan regarding her discovery responses by telephone. Plaintiff only states that she attempted to

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meet and confer with defendant McGowan by letter. This is insufficient to satisfy the meet and confer

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requirements under the Court’s standing order and the Local Rules. See Civ. L.R. 37-1(a); Docket No.

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9-1 at 4-5. Accordingly, the Court DENIES WITHOUT PREJUDICE plaintiff’s motion to compel and

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ORDERS the parties to meet and confer by telephone regarding plaintiff’s discovery requests within

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fourteen (14) days from the date this order is filed.

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CONCLUSION

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For the foregoing reasons:

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1.

The Court GRANTS IN PART and DENIES IN PART defendant McGowan’s motion

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to dismiss or, in the alternative, for summary judgment. Specifically, the Court

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dismisses with prejudice plaintiff’s claims for breach of contract and breach of the

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implied covenant of good faith and fair dealing against defendant McGowan. The Court

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declines to dismiss or grant summary judgment of plaintiff’s claims for fraud, negligent

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misrepresentation, and violation of the UCL against defendant McGowan.

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2.

The Court DENIES WITHOUT PREJUDICE plaintiff’s motion to compel and ORDERS

United States District Court
For the Northern District of California

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the parties to meet and confer by telephone regarding plaintiff’s discovery requests

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within fourteen (14) days from the date this order is filed.

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3.

In addition, the Court CONTINUES the hearing on plaintiff’s motion for default

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judgment against defendant Paul Wiltz and Mone’t Inc. from February 7, 2014 at 9:00

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a.m. to February 7, 2014 at 3:00 p.m., so that it may be heard at the same time as the

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scheduled status conference.

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This Order resolves Docket Nos. 58, 60.

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IT IS SO ORDERED.

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Dated: February 4 , 2014
SUSAN ILLSTON
United States District Judge

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