City Of San Jose v. JUM Global, LLC

Filing 24

ORDER by Magistrate Judge Howard R. Lloyd denying 8 defendant's motion to dismiss the complaint. 6/28/2016 hearing vacated. (hrllc2, COURT STAFF) (Filed on 6/23/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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CITY OF SAN JOSE,

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Case No. 5:16-cv-01462-HRL

Plaintiff,

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v.

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JUM GLOBAL, LLC,

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Defendant.

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ORDER DENYING DEFENDANT'S
MOTION TO DISMISS THE
COMPLAINT
Re: Dkt. No. 8

The City of San Jose (City) sues J.U.M Global, LLC (JUM) for breach of contract and

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fraud, arising from a failed project to develop technology for converting waste materials to energy.

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Jurisdiction is based on diversity, 28 U.S.C. § 1332. Pursuant to Fed. R. Civ. P. 12(b)(6), JUM

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now moves to dismiss on the ground that the exhibits appended to the complaint contradict the

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complaint’s allegations. The matter is deemed suitable for determination without oral argument,

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and the June 28, 2016 hearing is vacated. Civ. L.R. 7-1(b). Upon consideration of the moving

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and responding papers, the court denies defendant’s motion.1

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LEGAL STANDARD
A motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) tests

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the legal sufficiency of the claims in the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.

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All parties have expressly consented that all proceedings in this matter may be heard and finally
adjudicated by the undersigned. 28 U.S.C. § 636(c); Fed. R. Civ. P. 73.

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2001). Dismissal is appropriate where there is no cognizable legal theory or an absence of

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sufficient facts alleged to support a cognizable legal theory. Id. (citing Balistreri v. Pacifica Police

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Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)). In such a motion, all material allegations in the

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complaint must be taken as true and construed in the light most favorable to the claimant. Id.

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However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory

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statements, do not suffice.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Moreover, “the court

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is not required to accept legal conclusions cast in the form of factual allegations if those

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conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness

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Network, 18 F.3d 752, 754-55 (9th Cir. 1994).

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Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the

United States District Court
Northern District of California

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claim showing that the pleader is entitled to relief.” This means that the “[f]actual allegations

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must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v.

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Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted)

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However, only plausible claims for relief will survive a motion to dismiss. Iqbal, 129 S.Ct. at

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1950. A claim is plausible if its factual content permits the court to draw a reasonable inference

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that the defendant is liable for the alleged misconduct. Id. A plaintiff does not have to provide

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detailed facts, but the pleading must include “more than an unadorned, the-defendant-unlawfully-

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harmed-me accusation.” Id. at 1949.

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Documents appended to the complaint or which properly are the subject of judicial notice

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may be considered along with the complaint when deciding a Fed. R. Civ. P. 12(b)(6) motion. See

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Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990);

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MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986).

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While leave to amend generally is granted liberally, the court has discretion to dismiss a

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claim without leave to amend if amendment would be futile. Rivera v. BAC Home Loans

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Servicing, L.P., 756 F. Supp.2d 1193, 1997 (N.D. Cal. 2010) (citing Dumas v. Kipp, 90 F.3d 386,

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393 (9th Cir. 1996)).

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DISCUSSION
According to the complaint: In 2011, the City received a grant from the California Energy

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Commission to conduct a study and to develop technology to produce energy from waste

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materials. (Complaint ¶ 6). The grant subsequently was amended twice. Among other things, the

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first amendment (Amendment 1) substituted JUM in place of a prior subcontractor. And, by virtue

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of an agreement with JUM (discussed below), the City alleges that JUM had certain obligations

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under the grant and Amendment 1. (Id. ¶ 7). As for the second amendment (Amendment 2), the

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complaint alleges that JUM’s duties under Amendment 1 were not materially changed. (Id. ¶ 8).

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As previewed above, the City, JUM, and one Zero Waste Energy (another company
involved in the project) then entered into an agreement (Agreement). (Complaint ¶ 10). Among

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United States District Court
Northern District of California

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other things, the Agreement gave JUM (and Zero Waste Energy) a non-exclusive license to enter

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the San Jose-Santa Clara Regional Wastewater Facility to construct and operate a gasification unit.

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(Id.). According to the City, not only did the Agreement directly impose certain obligations on

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JUM, defendant also was obliged under the Agreement to comply with certain requirements of the

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grant and Amendment 1. (Id. ¶¶ 7, 10-13). The complaint alleges that JUM breached the

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Agreement by failing to perform all of its obligations. JUM allegedly also submitted a false

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invoice to the City for reimbursement of funds that JUM did not actually spend.

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Among the exhibits appended to the complaint are the grant, Amendment 1, Amendment

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2, and the Agreement. JUM moves to dismiss, arguing that these exhibits contradict the

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complaint’s allegations. Although defendant’s motion is styled as one seeking dismissal for

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failure to state a claim, JUM’s arguments are directed to the ultimate merits of plaintiff’s claims,

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rather than to the sufficiency of the pleading. In sum, defendant contends that the grant, in its

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entirety, was not part of JUM’s contractual obligations. However, the proper interpretation of the

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relevant documents is a question for another day. And, while it remains to be seen whether

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plaintiff will prevail on its claims, purely for pleading purposes, the court does not find that the

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exhibits negate the complaint’s allegations.

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ORDER

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Based on the foregoing, defendant’s motion to dismiss is denied.

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SO ORDERED.

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Dated: June 23, 2016

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HOWARD R. LLOYD
United States Magistrate Judge

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United States District Court
Northern District of California

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5:16-cv-01462-HRL Notice has been electronically mailed to:

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Alan Robert Lipton

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Bethany Jayne Silva

[e-mail], [e-mail]
[e-mail]

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United States District Court
Northern District of California

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