AmeriPOD, LLC v. davisREED Construction, Inc. et al
Filing
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ORDER Denying Plaintiff's 12 Motion to Dismiss. Signed by Judge Marilyn L. Huff on 7/11/2017. (ag)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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Case No.: 3:17-cv-00747-H-WVG
AMERIPOD, LLC, a New Jersey limited
liability company,
ORDER DENYING PLAINTIFF’S
MOTION TO DISMISS
Plaintiff,
v.
[Doc. No. 12]
DAVISREED CONSTRUCTION INC., a
California corporation, and DOES 1
through 10,
Defendant.
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On April 13, 2017, Plaintiff AmeriPOD, LLC (“Plaintiff”) filed a complaint
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against Defendant davisREED Construction, Inc. (“Defendant”), alleging breach of
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contract and various related causes of action. (Doc. No. 1.) On May 22, 2017, Defendant
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filed an answer, asserting twelve counterclaims. (Doc. No. 10.) On June 12, 2017,
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Plaintiff filed a motion to dismiss ten of Defendant’s counterclaims pursuant to Fed. R.
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Civ. P. 12(b)(6). (Doc. No. 12.) On June 26, 2017, Defendant filed an opposition to
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Plaintiff’s motion. (Doc. No. 14.) On July 30, 2017, Plaintiff filed a reply. (Doc. No.
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16.) The Court submitted the motion to dismiss, pursuant to Local Rule 7.1(d)(1), on
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June 29, 2017. (Doc. No. 15.)
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3:17-cv-00747-H-WVG
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BACKGROUND
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The following facts are taken from Defendant’s answer and counterclaims. (Doc.
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No. 10.) At the motion to dismiss stage, the Court accepts as true all facts alleged, and
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draws all reasonable inferences in favor of the claimant. See Retail Prop. Trust v. United
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Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014).
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Defendant is a construction contractor who was engaged to build the Argyle Hotel
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in Los Angeles, California (“the Project”). (Doc. No. 10 at ln. 16:15-18.) Defendant
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subsequently engaged Plaintiff as a subcontractor to provide prefabricated modular
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bathroom units (“pods”) for the Project. (Id. at ln. 16:19-17:3.) During the installation of
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the pods, Defendant discovered that some of the shower floors were faulty and leaked.
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(Id. at ln. 17:13-18.) Defendant’s investigation revealed the pods were damaged during
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transport by Plaintiff. (Id. at ln. 18:4-5.) Defendant notified Plaintiff of the defects but
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Plaintiff failed to resolve the issues or remediate the harm caused by the leaky pods. (Id.
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at ln. 17:13-24.) Defendant alleges that Plaintiff subsequently abandoned the Project and,
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on February 22, 2017, Defendant issued a 48-Hour Notice, informing Plaintiff that it was
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taking steps to supplement the workforce to address Plaintiff’s abandonment. (Id. at ln.
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18:6-15.) Plaintiff failed to timely respond to the 48-Hour Notice and, as a result,
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Defendant terminated Plaintiff from the Project for cause. (Id. at ln. 18:16-19.)
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Defendant alleges that Plaintiff’s actions resulted in damage to various aspects of the
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Project beyond the pods, including structural elements. (Id. at ln. 18: 23-27.)
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3:17-cv-00747-H-WVG
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DISCUSSION
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In its answer, Defendant asserts twelve counterclaims. (Doc. No. 10 at 19-27.)
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Plaintiff moves to dismiss ten of these counterclaims pursuant to Federal Rule of Civil
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Procedure 12(b)(6). (Doc. No. 12.) Plaintiff argues these claims inappropriately attempt
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to reframe Defendant’s breach of contract claim and fail to allege sufficient facts. The
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Court disagrees. Defendant is entitled to plead alternative theories of liability and has
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alleged sufficient facts to state its various causes of action. As such, the Court denies the
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motion to dismiss.
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I.
MOTION TO DISMISS STANDARD
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A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal
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sufficiency of the pleadings and allows a court to dismiss a complaint if the claimant has
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failed to state a claim upon which relief can be granted. See Conservation Force v.
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Salazar, 646 F.3d 1240, 1241 (9th Cir. 2011). Federal Rule of Civil Procedure 8(a)(2)
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only requires that pleadings contain “a short and plain statement of the claim showing
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that the pleader is entitled to relief.” The pleading need only “give the defendant fair
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notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v.
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Twombly, 550 U.S. 544, 555 (2007).
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A complaint will survive a motion to dismiss if it contains “enough facts to state a
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claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has
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facial plausibility when the plaintiff pleads factual content that allows the court to draw
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the reasonable inference that the defendant is liable for the misconduct alleged.”
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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A pleading that offers ‘labels and
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conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’”
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Id. (quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders
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‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. (quoting Twombly,
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550 U.S. at 557). Accordingly, dismissal for failure to state a claim is proper where the
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claim “lacks a cognizable legal theory or sufficient facts to support a cognizable legal
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theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).
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3:17-cv-00747-H-WVG
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In reviewing a Rule 12(b)(6) motion to dismiss, a district court must accept as true
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all facts alleged in the complaint, and draw all reasonable inferences in favor of the
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claimant. See Retail Prop. Trust, 768 F.3d at 945. But a court need not accept “legal
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conclusions” as true. Iqbal, 556 U.S. at 678. Further, it is improper for a court to assume
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the plaintiff “can prove facts which it has not alleged or that the defendants have violated
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the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal.,
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Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). A court may consider
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documents incorporated into the complaint by reference and items that are proper
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subjects of judicial notice. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th
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Cir. 2010).
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II.
ANALYSIS
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A. Promissory Estoppel
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Plaintiff argues that Defendant’s counterclaim for promissory estoppel should be
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dismissed because there is a valid contract defining the parties’ rights as to the subject.
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(Doc. No. 12-1 at 9.) Defendant opposes the motion, arguing that the promissory
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estoppel claim is properly plead as an alternative theory of liability given that the parties
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dispute various terms of the contract. (Doc. No. 14 at 4.)
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At the pleadings stage, a claimant is free to plead inconsistent theories of liability.
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Fed. R. Civ. P. 8(d)(3). These inconsistent theories may be premised on contradictory
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statements of fact so long as the pleader has a legitimate doubt about the underlying facts.
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Fed. R. Civ. P. 8(e)(2) (pleadings are subject to Rule 11 obligations); 5 Wright and
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Miller, Federal Practice and Procedure § 1285 (3d ed. 2017) (“A party therefore should
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not set forth inconsistent . . . statements in the pleadings unless, after a reasonable
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inquiry, the pleader legitimately is in doubt about the factual background or legal theories
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supporting the claims.”).
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Defendant’s promissory estoppel claim was properly plead. To prove its claim of
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promissory estoppel, Defendant must show (1) Plaintiff made a clear and unambiguous
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promise, (2) Defendant relied on the promise, (3) the reliance was reasonable and
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3:17-cv-00747-H-WVG
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foreseeable, and (4) Defendant was injured by its reliance. Sateriale v. R.J. Reynolds
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Tobacco Co., 697 F.3d 777, 792 (9th Cir. 2012). Defendant has alleged sufficient facts to
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establish each element at the pleadings stage. (See Doc. No. 10 at 19-20.) Defendant
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alleges that Plaintiff promised to deliver prefabricated bathroom pods meeting or
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exceeding certain requirements, (id. ¶ 31), that Defendant reasonably relied upon this
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promise, (id. ¶ 32), and was subsequently injury by Plaintiff’s failure to deliver as
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promised, (id. ¶ 34).
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The fact that Defendant separately alleges Plaintiff breached the parties’ express
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contract through its failure to deliver conforming pods does not change this analysis at
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the motion to dismiss stage. Generally, a party cannot recover for both a claim of
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promissory estoppel and a breach of contract with regard to the same subject matter.
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Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1167 (9th Cir. 1996)
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(quoting Chrysler Capital Corp. v. Century Power Corp., 778 F.Supp. 1260, 1272
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(S.D.N.Y. 1991)) (“the existence of a valid and enforceable written contract governing a
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particular subject matter ordinarily precludes recovery in quasi-contract.”); accord
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Douglas E. Barnhart, Inc., 221 Cal.App.4th at 242. However, when the parties dispute
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the terms of a contract at the motion to dismiss stage—before any factual development—
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it will be difficult to determine whether the claims for promissory estoppel and breach of
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contract concern the same particular subject matter. Rowland v. JPMorgan Chase Bank,
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N.A., 2014 WL 992005, at *6 (N.D. Cal. 2014) (“Because the validity of the terms of the
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contract may be disputed, Plaintiffs may plead their claims in the alternative and the court
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denies the motion to dismiss [the promissory estoppel claim]”); Trunov v. Rusanoff, 2012
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WL 6115608, at *3 (N.D. Cal. 2012) (denying plaintiff’s motion to dismiss counterclaim
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of promissory estoppel because the terms of the contract were in dispute). In such
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situations, it is appropriate for a claimant to plead both promissory estoppel and breach of
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contract. Id. That is the case here: both parties dispute the terms of the contract, arguing
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they performed their obligations under the contract while the other party failed to do so.
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(Compare Doc. No. 1 ¶¶ 10-12 with Doc. No. 10 at 17, ¶ 16.) As such, this dispute is
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better resolved at summary judgment, when the facts have been more fully established.
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Plaintiff’s reliance on Total Coverage, Inc. v. Cendant Settlement Servs. Grp., Inc.,
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252 Fed.Appx. 123 (9th Cir. 2007), does not help it. As a threshold matter, the Court
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notes that the opinion in Total Coverage was unpublished and, thus, is not binding on this
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Court. 9th Cir. R. 36-3(a). Furthermore, the reasoning in Total Coverage does not
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change the outcome here. There, the Ninth Circuit found that the parties agreed “that the
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express contract govern[ed] the relationship between the parties.” Total Coverage, 252
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Fed.Appx. at 126. Here, in contrast, there is a dispute regarding the parties’ obligations
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under the contract. Plaintiff alleges that its steps to remediate the defective pods satisfied
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its obligations, (Doc. No. 1 ¶¶ 10-12), while Defendant contends they did not, (Doc. No.
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10 at 17, ¶ 16). In light of these disputes, Defendant may plead alternative theories of
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liability and any dispositive decision on the matter is better left for summary judgment.
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Rowland, 2014 WL 992005, at *6; Trunov, 2012 WL 6115608, at *3.
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B. Quantum Meruit
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“Quantum meruit refers to the well-established principle that the law implies a
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promise to pay for services performed under circumstances disclosing that they were not
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gratuitously rendered.” Huskinson & Brown, LLP v. Wolf, 32 Cal.4th 453, 458 (2004).
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The party seeking recovery must “show the circumstances were such that the services
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were rendered under some understanding or expectation of both parties that
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compensation therefor was to be made.” Id.; accord E.J. Franks Constr., Inc. v. Sahota,
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226 Cal.App.4th 1123, 1128 (2014) (“In other words, quantum meruit is equitable
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payment for services already rendered.”); Reinicke v. Creative Empire LLC, 38
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F.Supp.3d 1192, 1205 (S.D. Cal. 2014) (“Quantum meruit is based not on the intention of
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the parties, but rather on the provision and receipt of benefits and the injustice that would
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result to the party providing those benefits absent compensation.”). The understanding or
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expectation of payment can be based on either an express or implied request for services.
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Advanced Choices, Inc. v. Dept. of Health Servs., 182 Cal.App.4th 1661, 1673 (2010).
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Defendant has alleged sufficient facts to state a claim for quantum meruit.
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Defendant alleges that Plaintiff was obligated to remedy the defective pods, as well as
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any other damage resulting from their defect. (Doc. No. 10 at 17, ¶ 12.) When Plaintiff
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failed to do so, Defendant sent Plaintiff a 48-Hour Notice, indicating that it intended to
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procure additional services, equipment, and material to address the defect. (Id. at 18, ¶
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19.) Plaintiff failed to timely respond and Defendant proceeded with its plan to remedy
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the defect. (Id. ¶ 20-22.) Taking these facts as true, and drawing all inferences in
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Defendant’s favor, one could conclude that the circumstances are such that Defendant
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rendered services for Plaintiff with the expectation it would be compensated. Huskinson
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& Brown, 32 Cal.4th at 458; see also Advanced Choices, 182 Cal.App.4th at 1673
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(stating that a request for services can be implied). As such, Defendant has stated a
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claim.
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Plaintiff’s argument that Defendant’s quantum meruit claim fails because of the
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parties’ contractual relationship is unavailing. (Doc. No. 12-1 at 18.) At the pleadings
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stage, litigants can plead alternative theories of liability. Fed. R. Civ. P. 8(d)(3). Thus “it
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is not improper for a plaintiff to pursue contract and quasi-contract claims
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simultaneously.” LePatner & Assocs., LLP. V. Thomas Jefferson School of Law, 2014
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WL 12666881, at *4 (S.D. Cal. 2014) (citing Munoz v. MacMillan, 195 Cal.App.4th 648,
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661 (2011) (“[W]e are unaware of any authority for the proposition that the existence of a
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remedy in restitution precludes a plaintiff from suing on an express contract.”)).
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Defendant may not be able to ultimately recover under both theories, but this argument is
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more appropriately addressed at summary judgment, after the facts have been developed.
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See DPR Constr. v. Shire Regenerative Medicine, Inc., 204 F.Supp.3d 1118, 1131 (S.D.
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Cal. 2016) (granting summary judgment for defendant on quantum meruit claim seeking
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recovery on the same subject matter as plaintiff’s contract claim).
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C. Equitable Indemnity
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To plead a claim of equitable indemnity, Defendant must allege “(1) a showing of
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fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which
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the indemnitor is contractually or equitably responsible. Expressions at Rancho Niguel
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Ass’n v. Ahmanson Devs., Inc., 86 Cal.App.4th 1135, 1139 (2001). “[T]he obligation of
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equitable indemnity arises from ‘equitable considerations, brought into play either by
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contractual language not specifically dealing with indemnification or by the equities of
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the particular case.’” American Licorice Co. v. Total Sweeteners, Inc., 2014 WL 892409,
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at *5 (N.D. Cal. March 4, 2014) (quoting Bay Dev., Ltd. V. Superior Court, 50 Cal.3d
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1012, 1029 (1990)).
Defendant has alleged sufficient facts to plead a case of equitable indemnity.
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Defendant alleges Plaintiff is at fault for delivering defective pods and subsequently
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failing to remedy the defect. (Doc. No. 10 at 17, ¶ 16.) As such, Defendant allegedly
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incurred damages for which Plaintiff is contractually or equitably responsible. (Id. at 18,
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¶¶ 19-20.)
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The Court rejects Plaintiff’s argument that Defendant’s equitable indemnity claim
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should be dismissed because it is eclipsed by the indemnity clause in the parties’ contract.
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The Court is not in a position to rule on the scope of the indemnity clause and this
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argument is better addressed at summary judgment, once the facts have been developed.
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See Unichappell Music, Inc. v. Modrock Prod., LLC, 2015 WL 546059, at *3 (C.D. Cal.
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Feb. 10, 2015) (denying motion to dismiss equitable indemnity claim because parties
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“may plead contradictory alternative theories”).
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D. Contribution and Apportionment
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Plaintiff challenges Defendant’s claim of contribution and apportionment on the
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grounds that this equitable remedy is unavailable in light of the existence of an express
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contract covering the same subject matter. (Doc. No. 12-1 at 20-21.) As with
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Defendant’s other equitable claims, the Court denies Plaintiff’s motion to dismiss as the
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issue is better resolved at summary judgment. See Restatement (Third) of Torts:
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Apportionment Liab. § 23 (2000) (“A person may seek both indemnity and contribution
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as alternative theories of recovery, but a person may not recover under both theories.”).
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E. Negligence
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To state a claim of negligence, Defendant must allege (1) Plaintiff owed Defendant
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a duty, (2) Plaintiff breached that duty, and (3) the breach was a proximate cause of
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Defendant’s damages. Lockheed Martin Corp. v. Superior Court, 29 Cal.4th 1096, 1106
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(2003). “A person may not ordinarily recover in tort for the breach of duties that merely
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restate contractual obligations.” Aas v. Superior Court, 24 Cal. 4th 627, 643 (2004),
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superseded by statute on other grounds as stated in Rosen v. State Farm Gen. Ins. Co., 30
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Cal. 4th 1070, 1079 (2003). To recover, a claimant must allege “some independent duty
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arising from tort law.” Erlich v. Menezes, 21 Cal.4th 543, 554 (1999). Where a contract
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involves the provision of services, the service provider has “an independent tort law duty
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to perform their services in a competent and reasonable manner.” Land O’Lakes, Inc. v.
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Dairyamerica, Inc., 2017 WL 495644, at *3 (E.D. Cal. Feb. 6, 2017); see also Music
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Group Macao Commercial Offshore Limited v. Foote, 2015 WL 3882448, at *16 (N.D.
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Cal. June 23, 2015).
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Plaintiff argues Defendant’s negligence claim should fail because Plaintiff owed
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Defendant no duty apart from its contractual obligations. (Doc. No. 12-1 at 11.)
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Plaintiff, however, has plead sufficient facts to establish an independent duty at this stage.
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Defendant alleges that Plaintiff was negligent while performing the service of “delivering
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and installing [] pods.” (Doc. No. 10 at 20, ¶ 37.) Taking these facts as true, and
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drawing all inferences in favor of Defendant, Plaintiff was providing services that gave
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rise to an independent duty to perform such services in a competent and reasonable
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manner. Land O’Lakes, 2017 WL 495644, at *3. Because Defendant has also alleged
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facts tending to show a breach of this duty and resulting injuries, Defendant has properly
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plead a claim of negligence.
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Plaintiff argues that the independent duty for services is limited to “the ambit of a
professional services contract” and the disputed contract did not involve those. (Doc. No.
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16 at 4.) Even if that is so, determining whether a contract involves professional services
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is premature at the motion to dismiss stage. E.g., City and County of San Francisco v.
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Cambridge Integrated Services Group, Inc., 2007 WL 1970092, at *5 (N.D. Cal. July 2,
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2007) (“it would be premature to make such a determination at the motion to dismiss
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stage”). As such, the Court denies the motion to dismiss Defendant’s negligence claim.
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F. Breach of Warranty
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To plead a claim of breach of express warranty, Defendant must allege (1) an
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affirmation of fact or promise or a description of the goods, (2) that was part of the basis
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of the bargain, and (3) a breach of said promise or description. Weinstat v. Dentsply
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Int’l, Inc., 180 Cal.App.4th 1213, 1227 (2010). No “formal words” are required to create
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an express warranty, Cal. Comm. Code § 2313(2), but a claimant must allege the exact
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terms of the warranty. Williams v. Beechnut Nutrition Corp., 185 Cal.App.3d 135, 142
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(1986).
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Plaintiff moves to dismiss Defendant’s breach of warranty counterclaim, arguing
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that Defendant has not alleged the exact terms of the warranty or facts supporting a
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breach of the warranty. (Doc. No. 12-1 at 12.) The Court disagrees.
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Defendant has sufficiently stated the terms of a warranty. Defendant alleges that
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Plaintiff “warrantied that, to the extent the Project was impacted by its work under the
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Subcontract, it would return the Project in good condition.” (Doc. No. 10 at 21, ¶ 41.)
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Furthermore, Defendant’s counterclaims incorporate by reference the underlying contract
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between the parties, which provides:
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Subcontractor warrants to . . . the Contractor that all materials and
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equipment furnished shall be new unless otherwise specified, and that all
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Subcontract Work shall be of good quality, free from faults and defects and
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in conformance with the Contract Documents. Subcontractor shall at its sole
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cost, inspect the Subcontract Work in place upon the request by . . .
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Contractor to investigate any alleged defect in Subcontract Work and shall
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promptly replace defective materials, workmanship and equipment and re-
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execute defective work.
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(Doc. No. 1 at 24, ¶ 20; see also Doc. No. 10 at 16, ¶ 9.) Such warranties are
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sufficiently exact. See Williams, 185 Cal.App.3d at 142 (finding as sufficiently
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exact the warranty that “said product was effective, proper and safe for is intended
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use”).
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Similarly, Defendant has alleged sufficient facts to plead a breach of Plaintiff’s
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warranty. Defendant alleges that Plaintiff delivered defective pods, which damaged the
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Project. (Doc. No. 10 at 21, ¶ 43.) Defendant further alleges that Plaintiff subsequently
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failed to remedy either the defective pods or the damage they caused before abandoning
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the project and, thus, failed to return the Project in good condition. (Id. ¶¶ 27, 43.)
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Taking these facts as true, Defendant has sufficiently alleged Plaintiff breached its
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warranties and the Court denies Plaintiff’s motion to dismiss Defendant’s breach of
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warranty counterclaim.
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G. Intentional Interference with Contract
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To plead a claim of intentional interference with contract, Defendant must plead
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“(1) a valid contract between [Defendant] and a third party; (2) [Plaintiff’s] knowledge of
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the contract; (3) [Plaintiff’s] intentional acts designed to induce a breach or disruption of
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a contractual relationship; (4) actual breach or disruption of the contractual relationship;
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and (5) resulting damage.” Guidiville Band of Pomo Indians v. NGV Gaming, Ltd., 531
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F.3d 767, 774 (9th Cir. 2008) (quoting Tuchscher Dev. Enters., Inc. v. San Diego Unified
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Port Dist., 106 Cal.App.4th 1219, 1239 (2003)) (internal quotation marks omitted).
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Plaintiff moves to dismiss the intentional interference with contract claim on the
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grounds that Defendant fails to allege that Plaintiff acted intentionally. (Doc. No. 12-1 at
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13.) Defendant can establish the requisite intent by alleging that Plaintiff knew or was
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substantially certain a breach or disruption would occur as a result of its action.
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Tuchscher Dev. Enters., 106 Cal.App.4th at 1239. Defendant has done so.
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Defendant alleges that Plaintiff “willfully refus[ed] to meet the agreed terms of the
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Subcontract, and then totally and affirmatively abandon[ed] the Project.” (Doc. No. 10 at
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22, ¶ 48.) At this time, Defendant alleges that Plaintiff knew about the contractual
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relationship between Defendant and the Argyle Hotel, LLC (“the Project Owner”). (Doc.
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No. 10 at 22, ¶ 47.) Indeed, the relationship was set forth explicitly in the Subcontract
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between Plaintiff and Defendant. (Doc. No. 1 at 16.) Taking these facts as true, and
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drawing all inferences in favor of Defendant, one could conclude that Plaintiff “knew or
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was substantially certain” that their actions would disrupt the relationship between
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Defendant and the Project Owner. Tuchscher Dev. Enters., 106 Cal.App.4th at 1239;
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accord Quelimane Co. v. Stewart Title Guaranty Co., 19 Cal.4th 26, 56 (1998) (a claim
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for intentional interference with contract lies where “an interference [] is incidental to the
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actor’s independent purpose and desire but known to him to be a necessary consequence
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of his action”).
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Defendant has also alleged sufficient facts to plead the remaining elements of an
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intentional interference with contract claim. Defendant alleges it had a valid contract
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with Argyle Hotel, LLC (“the Project Owner”) for the construction of the Project. (Doc.
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No. 10 at 16, ¶ 8.) Defendant alleges that Plaintiff knew of the contractual relationship
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between Defendant and the Project Owner as a result of being engaged as a subcontractor
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on the project. (Id. at 22, ¶ 47.) Finally, Defendant alleges that Plaintiff’s acts “severely
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impacted [its] ability to timely complete the Project”, thereby subjecting Defendant to
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“threats and/or the imposition of liquidated damages” and possibly permanently damaged
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the relationship between Defendant and the Project Owner. (Doc. No. 10 at 22, ¶ 49.)
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This is sufficient at the pleadings stage as it provides Plaintiff with “fair notice.”
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Twombly, 550 U.S. at 555. Thus, the Court denies Plaintiff’s motion to dismiss
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Defendant’s counterclaim of intentional interference with contract.
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H. Unfair Competition
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California Business and Professional Code § 17200 prohibits unfair competition,
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including “any unlawful, unfair or fraudulent business act.” Section 17200’s coverage is
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“sweeping, embracing anything that can properly be called a business practice and that at
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the same time is forbidden by law.” Cal-Tech Comms., Inc. v. Los Angeles Cellular Tel.
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Co., 20 Cal.4th 163, 180 (1999) (quoting Rubin v. Green, 4 Cal.4th 1187, 1200 (1993))
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(internal quotation marks omitted). This includes “any practices forbidden by law, be it
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civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.”
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Saunders v. Superior Court, 27 Cal.App.4th 832, 838-39 (1994).
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The Ninth Circuit has held that an intentional interference with contract can form
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the basis of a § 17200 claim. CRST Van Expedited, Inc. v. Werner Enterps. Inc., 479
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F.3d 1099, 1107 (9th Cir. 2007). There, the Court explained that:
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CRST adequately alleged that Werner violated [§ 17200] because CRST
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adequately alleged that Werner engaged in an ‘unlawful’ business act or
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practice that allegedly harmed CRST, namely, intentional interference with
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CRST’s employment contracts . . . . [I]ntentional interference with contract
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is a tortious violation of duties imposed by law.
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Id. (citing Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1143
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(2003)).
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Here, as already explained, Defendant has properly plead a claim for intentional
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interference with contract. As such, Defendant has adequately alleged an unlawful act
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for purposes of § 17200 and the Court denies Plaintiff’s motion to dismiss Defendant’s
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counterclaim.
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I. Declaratory Judgment
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Federal courts have the power to grant declaratory relief pursuant to the
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Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202. This power is discretionary, and
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courts consider various factors in deciding whether the relief is appropriate. 28 U.S.C. §
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2201(a) (“[courts] may declare the rights and other legal relations of any interested
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party”); MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 136 (2007) (“[we] vest
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district courts with discretion in the first instance, because facts bearing on the usefulness
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of the declaratory judgment remedy, and the fitness of the case for resolution, are
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peculiarly within their grasp”); Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1107 (9th Cir.
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2011) (listing factors). A cause of action for declaratory relief does not state an
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independent action, but rather “merely seeks relief.” Audette v. Int’l Longshoremen’s
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and Warehousemen’s Union, 195 F.3d 1107, 1111 n.2 (9th Cir. 1999).
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To properly plead a claim of declaratory relief, Defendant need only allege facts
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showing “there is a substantial controversy, between parties having adverse legal interest,
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of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
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MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). This showing is
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satisfied where a party has a “real and reasonable apprehension the he will be subject to
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liability.” Spokane Indian Tribe v. U.S., 972 F.2d 1090, 1092 (9th Cir. 1992) (quoting
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Hal Roach Studios, Inc. v. Richard Feiner and Co., 892 F.2d 1542, 1555 (9th Cir. 1990)).
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As both parties assert claims against the other, it cannot be doubted there is a substantial
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controversy regarding the rights Defendant seeks declared. (See Doc. Nos. 1, 10.) For
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example, as a result of Plaintiff’s breach, Defendant is subject to “claims, demands,
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causes of action or other liabilities” and argues it should be indemnified by Plaintiff for
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such liabilities. (Doc. No. 10 at 24, ¶ 62.) Plaintiff, however, claims it performed all of
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its obligations under the contract. (Doc. No. 1 at 3, ¶ 11.) As there is real controversy
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concerning the parties’ rights, Defendant has properly plead their claim for declaratory
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relief and the Court has jurisdiction of such claim.
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Plaintiff argues that the Court should dismiss the claims for declaratory relief
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because they are duplicative of the other claims asserted by Defendant. (Doc. No. 12-1 at
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21.) In support, Plaintiff cites to cases declining to entertain declaratory judgment
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actions that are “duplicative.” E.g., Tech. & Intellectual Prop. Strategies Grp. PC v.
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Fthenakis, 2011 WL 3501690, at *10 (N.D. Cal. 2011) (“the availability of other
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adequate remedies may make declaratory relief inappropriate”). At this stage, however,
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the Court cannot say that declaratory relief will be duplicative. As such, this argument is
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more appropriately addressed at summary judgment.
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///
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CONCLUSION
For the foregoing reasons, the Court denies Plaintiff’s motion to dismiss
Defendant’s counterclaims.
IT IS SO ORDERED.
DATED: July 11, 2017
Hon. Marilyn L. Huff
United States District Judge
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