Rio Properties, Inc. v. Xtreme Merchandising, LLC

Filing 31

ORDER Denying 20 Motion to Dismiss and Granting 23 Motion to File Amended Complaint. Amended Complaint deadline: 5/31/2012. Signed by Judge James C. Mahan on 5/24/12. (Copies have been distributed pursuant to the NEF - ASB)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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RIO PROPERTIES, INC.,

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2:11-CV-1897 JCM (GWF)

Plaintiff,
v.
XTREME MERCHANDISING, LLC,

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Defendant.

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ORDER

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Presently before the court is defendant Xtreme Merchandising, LLC’s motion to dismiss.

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(Doc. #20). Plaintiff Rio Properties, Inc. filed an opposition. (Doc. #23). Plaintiff’s opposition

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brief further requested leave to file an amended complaint. (Doc. #23). Plaintiff also filed a copy

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of its proposed amended complaint. (Doc. #23, Ex. 2). Defendant then filed a reply. (Doc. #25).

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This case involves a dispute over an agreement allegedly between defendant and plaintiff for

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rooming accommodations, banquet facilities, and catering services during a World Series of Poker

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event, which was held at plaintiff’s property between May 31, 2011, and July 19, 2011. Defendant

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now moves to dismiss the complaint, arguing that defendant is not a party to the agreement. The

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face of the agreement shows that it is between plaintiff and an entity named “Pro’s Suite.” (Doc.

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#20, Ex. 1). Therefore, defendant argues that it is not a proper party to this case, and the complaint

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should be dismissed.

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In response, plaintiff argues that defendant was doing business as Pro’s Suite. (Doc. #23).

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Plaintiff notes that it made a similar agreement with defendant in 2010, and the parties used the name

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James C. Mahan
U.S. District Judge

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Pro’s Suite rather than Xtreme Merchandising, LLC in the contract “due to various sensitivities

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involving internet poker.” (Doc. #23). Plaintiff further states that it had the same understanding for

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the 2011 contract at issue in this case. Accordingly, plaintiff asserts that defendant is the real party

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in interest, and the complaint should not be dismissed. In support of this assertion, plaintiff attached

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an affidavit of Jennifer Little, plaintiff’s Catering Sales Manager, and various email communications

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between the parties. (Doc. #23, Ex. 1). Additionally, plaintiff requests leave of the court to amend

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its complaint to include claims for misrepresentation and reformation of the contract to express that

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defendant is the contracting party. (Doc. #23).

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Legal Standard

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A complaint must include a “short and plain statement of the claim showing that the pleader

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is entitled to relief.” FED. R. CIV. P. 8(a)(2). The statement of the claim is intended to “give the

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defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic Corp.

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v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Pursuant to Federal Rule of Civil

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Procedure 9(b), a party alleging fraud or mistake “must state with particularity the circumstances

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constituting fraud or mistake. FED. R. CIV. P. 9(b). “Averments of fraud must be accompanied by

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“the who, what, when, where, and how” of the misconduct charged.” Vess v. Ciba-Geigy Corp.

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USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Courts may dismiss causes of action that “fail[] to state

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a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6).

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The court must “accept all factual allegations in the complaint as true.” Tellabs, Inc. v.

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Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Further, the court must draw all reasonable

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inferences in plaintiff’s favor. Twombly, 550 U.S. at 547. However, “[t]o survive a motion to

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dismiss, a complaint must contain sufficient factual matter . . . to state a claim to relief that is

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plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (internal citations omitted).

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Although “not akin to a ‘probability requirement,’” the plausibility standard asks for more than a

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sheer possibility that a defendant has acted unlawfully. Id. “Where a complaint pleads facts that are

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‘merely consistent’ with a defendant’s liability, it ‘stops short of the line between possibility and

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plausibility of entitlement to relief.’” Id.

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James C. Mahan
U.S. District Judge

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Pursuant to Federal Rule of Civil Procedure 15(a), leave to amend “shall be freely given

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when justice so requires.” Absent a showing of an “apparent reason” such as undue delay, bad faith,

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dilatory motive, prejudice to the defendants, futility of the amendments, or repeated failure to cure

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deficiencies in the complaint by prior amendment, it is an abuse of discretion for a district court to

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refuse to grant leave to amend a complaint. Moore v. Kayport Package Express, Inc., 885 F.2d 531,

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538 (9th Cir. 1989). The local rules of federal practice in the District of Nevada require that a

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plaintiff submit a proposed amended complaint along with the motion to amend. LR 15-1(a).

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Discussion

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Where a document is “clear and unambiguous on its face, the court must construe it from the

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language therein.” Southern Trust Mort. Co. v. K&B Door Co., Inc., 104 Nev. 564, 568 (1988).

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Extrinsic evidence “is not admissible to add to, subtract from, vary, or contradict . . . written

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instruments which . . . are contractual in nature and which are valid, complete, unambiguous, and

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unaffected by accident or mistake.” Crockett & Myers, Ltd. v. Napier, Fitzgerald & Kirby, LLP, 440

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F. Supp. 2d 1184, 1191 (D. Nev. 2006) (quoting Ringle v. Bruton, 86 P.3d 1032, 1037-38 (Nev.

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2004)). Therefore, evidence is not admissible to vary or contradict the terms of an unambiguous

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written agreement. Id. A contract is ambiguous when it is “reasonably susceptible to different

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constructions or interpretations.” Id. at 1193.

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Evidence is, however, admissible if the party attacking the instrument can establish fraud or

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mistake. Tallman v. First Nat. Bank of Nev., 66 Nev. 248, 258 (1949). “[A] party relying upon fraud

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for this purpose must both plead and prove it.” Id.; Crockett & Myers, 440 F. Supp. 2d at 1191.

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Plaintiff’s original complaint does not plead fraud or misrepresentation. (Doc. #1, Ex. A).

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However, once defendant filed its motion to dismiss challenging its liability under the contract,

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plaintiff filed an opposition and requested leave to file an amended complaint. (Doc. #23).

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Plaintiff’s proposed amended complaint adds claims for reformation and misrepresentation. (Doc.

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#23, Ex. 2).

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The court finds that granting leave to amend the complaint is appropriate here. If plaintiff

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pleads and proves misrepresentation, as alleged in the proposed amended complaint, it may be able

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James C. Mahan
U.S. District Judge

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to admit extrinsic evidence to attack the contract. See Tallman, 66 Nev. at 258. Thus, justice

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requires granting leave to amend. FED. R. CIV. P. 15(a).

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendant Xtreme

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Merchandising, LLC’s motion to dismiss (doc. #20) be, and the same hereby is, DENIED.
IT IS FURTHER ORDERED that plaintiff Rio Properties, Inc.’s request for leave to file an
amended complaint (doc. #23) be, and the same hereby is, GRANTED.

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IT IS FURTHER ORDERED that plaintiff shall file its proposed amended complaint with

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the court within 7 days of entry of this order. Failure to file the proposed amended complaint may

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result in sanctions, including dismissal of the instant case.
DATED May 24, 2012.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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