Holt v. Noble House Hotels & Resort, LTD et al

Filing 26

ORDER Granting 20 Plaintiff's Motion to Dismiss and Strike Defendant's Counterclaim. The Court grants Plaintiff's motion and dismisses with prejudice Noble House's counterclaim for attorneys' fees. The Clerk of Court is instructed to terminate the action as to Counter Claimant Noble House Hotels & Resort, LTD and Counter Defendant Kathleen Holt. Signed by Judge Michael M. Anello on 3/28/2018. (rmc)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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KATHLEEN HOLT, individually and on
behalf of all others similarly situated,

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ORDER GRANTING PLAINTIFF'S
MOTION TO DISMISS AND STRIKE
DEFENDANT'S COUNTERCLAIM

Plaintiff,

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Case No.: 17cv2246-MMA (BLM)

v.
NOBLE HOUSE HOTELS & RESORT,
LTD; and DOES 1 TO 25,

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Defendants.

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NOBLE HOUSE HOTELS & RESORT,
LTD,

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Counter Claimant,

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v.

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KATHLEEN HOLT, individually and on
behalf of all others similarly situated,

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[Doc. No. 20]

Counter Defendant.

Plaintiff and Counter Defendant Kathleen Holt (“Plaintiff”), individually and on

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behalf of all others similarly situated, filed a putative class action Complaint against

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Defendant and Counter Claimant Noble House Hotels & Resort, LTD (“Noble House”)

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and Doe Defendants 1 to 25 alleging causes of action for violations of California’s False
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17cv2246-MMA (BLM)

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Advertising Law (“FAL”), California Business and Professions Code sections 17500, et

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seq.; California’s Unfair Competition Law (“UCL”), California Business and Professions

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Code sections 17200, et seq.; and California’s Consumers Legal Remedy Act (“CLRA”),

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California Business and Professions Code sections 1750, et seq. Doc. No. 1-3

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(“Compl.”). Noble House filed an Answer largely denying the allegations of the

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Complaint, asserting twenty-one affirmative defenses, and asserting a counterclaim for

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attorneys’ fees pursuant to California Civil Code § 1780(e). Doc. No. 15 (“Answer”).

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Plaintiff moves to dismiss and strike Noble House’s counterclaim pursuant to Federal

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Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f). Doc. No. 20-1 (“MTD”). Noble

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House opposes dismissal [Doc. No. 23 (“Oppo.”)] and Plaintiff replies [Doc. No. 24

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(“Reply”)]. The Court found the matter suitable for determination on the papers and

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without oral argument pursuant to Civil Local Rule 7.1.d.1. Doc. No. 25. For the

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reasons stated below, the Court GRANTS Plaintiff’s motion.
BACKGROUND

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The claims in Plaintiff’s Complaint arise out of a 3.5% surcharge of $1.38, which

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was added to the balance of her bill on August 6, 2017, at Acqua California Bistro in San

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Diego, California, which is owned by Noble House. Compl., ¶¶ 17-23. Plaintiff alleges

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that Noble House is misleading the public by advertising prices for food and drinks in its

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menus and then adding the surcharge to the balance of the bill total at checkout “when it

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is too late to make an informed decision about the increased total bill.” Compl., ¶¶ 17,

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26. Plaintiff alleges Noble House “purposely added this ‘surcharge’ instead of raising the

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prices on its menu in order to mislead [and deceive] consumers into thinking that their

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meal would cost less than it actually does.” Compl., ¶¶ 25, 31. Accordingly, Plaintiff

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asserts causes of action for violations of the FAL, UCL, and CLRA. See generally,

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Compl.

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On February 6, 2018, Noble House filed its Answer to Plaintiff’s Complaint. Doc.
No. 15. In its Answer, Noble House substantially denied the allegations of the

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17cv2246-MMA (BLM)

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Complaint, raised twenty-one affirmative defenses, and asserted a counterclaim for

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attorneys’ fees pursuant to California Civil Code § 1780(e). Id.

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LEGAL STANDARD
A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro

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v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain

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statement of the claim showing that the pleader is entitled to relief. . . .” Fed. R. Civ. P.

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8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is

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plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Fed. R. Civ.

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P. 12(b)(6). The plausibility standard demands more than “a formulaic recitation of the

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elements of a cause of action,” or “naked assertions devoid of further factual

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enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and

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alterations omitted). Instead, the complaint “must contain sufficient allegations of

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underlying facts to give fair notice and to enable the opposing party to defend itself

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effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

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In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth

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of all factual allegations and must construe them in the light most favorable to the

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nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

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The court need not take legal conclusions as true merely because they are cast in the form

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of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987).

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Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to

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defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

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DISCUSSION
Noble House has asserted a “counterclaim” for attorneys’ fees pursuant to

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California Civil Code § 1780(e). Answer at 13. Plaintiff moves to dismiss and strike the

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counterclaim pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f).

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MTD at 12-21. The Court addresses only Plaintiff’s motion pursuant to Federal Rule of

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Civil Procedure 12(b)(6) in finding that Noble House has not stated a “claim.”

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Federal Rule of Civil Procedure 54(d)(2)(A) requires demands for attorneys’ fees

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to be made by motion, unless the substantive law requires those fees to be proved at trial

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as an element of damages. Fed. R. Civ. P. 54(d)(2)(A). Here, California Civil Code §

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1780(e) provides that “[t]he court shall award costs and attorney’s fees to a prevailing

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plaintiff in litigation filed pursuant to this section. Reasonable attorney’s fees may be

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awarded to a prevailing defendant upon a finding by the court that the plaintiff’s

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prosecution of the action was not in good faith.” Cal. Civ. Code § 1780(e). Based upon

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this language, § 1780(e) does not require attorneys’ fees to be proved at trial as an

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element of damages. See id. As a result, a demand for attorneys’ fees pursuant to

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§ 1780(e) must be made by motion and it is improper to assert a “claim” for attorneys’

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fees. See Fed. R. Civ. P. 54(d)(2)(A). As such, the Court GRANTS Plaintiff’s motion

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and DISMISSES WITH PREJUDICE and without leave to amend Noble House’s

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counterclaim for attorneys’ fees. The Court notes that, when and if appropriate, Noble

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House may file a motion for attorneys’ fees pursuant to Rule 54(d)(2) and that the Court

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will have jurisdiction to address such a motion. See Fed. R. Civ. P. 54(d)(2)(A).
CONCLUSION

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Based on the foregoing, the Court GRANTS Plaintiff’s motion and DISMISSES

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WITH PREJUDICE Noble House’s counterclaim for attorneys’ fees. Doc. No. 20. The

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Clerk of Court is instructed to terminate the action as to Counter Claimant Noble House

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Hotels & Resort, LTD and Counter Defendant Kathleen Holt.

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IT IS SO ORDERED.
Dated: March 28, 2018

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