Wells Fargo Bank, N.A. v. Elefante et al

Filing 27

ORDER Denying 15 Motion to Dismiss. Signed by Chief Judge Robert C. Jones on 3/11/13. (Copies have been distributed pursuant to the NEF - EDS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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WELLS FARGO BANK, N.A.,
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Plaintiff,
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vs.
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DANIEL J. ELEFANTE et al.,
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Defendants.
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2:12-cv-01521-RCJ-CWH
ORDER

This case arises out of the default of a commercial loan and the alleged failure of two

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guarantors to honor a guaranty of the loan. Pending before the Court is a motion to dismiss. For

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the reasons given herein, the Court denies the motion.

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I.

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FACTS AND PROCEDURAL HISTORY
On or about June 1, 2004, non-party Summit Plaza Storage Partners, LLC (“Summit

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Plaza”) borrowed $4.1 million from non-party General Electric Capital Corp. (“GECC”). (See

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Compl. ¶¶ 9–10, Aug. 27, 2012, ECF No. 1). Defendants Daniel J. Elefante and Theodore H.

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Toch guarantied the loan via a “Joinder” thereto (the “Guaranty”). (See id. ¶¶ 4–5, 13). Under

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the Guaranty, Defendants guarantied any obligations for which Summit Plaza was “personally

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liable.” (See id. ¶ 15 (citing Guaranty, first unnumbered paragraph, ECF No. 15-2, at 2). Summit

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Plaza was “personally liable” under the Loan Agreement for any deficiency on the loan, inter

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alia, if it filed for bankruptcy. (See Loan Agreement § 12.1(m), at ECF No. 15-1, at 58–59).

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GECC later assigned the loan to Plaintiff Wells Fargo Bank, N.A. (“Wells Fargo”),

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endorsing the promissory note. (Compl. ¶¶ 19–20). Summit Plaza defaulted via nonpayment and

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later filed for bankruptcy protection in response to Wells Fargo’s state court lawsuit against it,

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thereby triggering “personal liability” under § 12.1(m) to any extent it did not already obtain, and

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therefore triggering Defendants’ liability under the Guaranty. (See id. ¶¶ 25, 28–30).

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Plaintiff sued Defendants in this Court on a single claim for breach of contract (the

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Guaranty). Defendants have moved to dismiss for failure to state a claim.

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II.

LEGAL STANDARDS

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

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claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of

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what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47

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(1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action

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that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule

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12(b)(6) tests the complaint’s sufficiency. See N. Star Int’l v. Ariz. Corp. Comm’n, 720

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F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for

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failure to state a claim, dismissal is appropriate only when the complaint does not give the

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defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell

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Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is

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sufficient to state a claim, the court will take all material allegations as true and construe them in

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the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th

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Cir. 1986). The court, however, is not required to accept as true allegations that are merely

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conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden

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State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action

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with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own

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case making a violation plausible, not just possible. Ashcroft v. Iqbal, 556 U.S. 662, 677–79

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(2009) (citing Twombly, 550 U.S. at 556) (“A claim has facial plausibility when the plaintiff

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pleads factual content that allows the court to draw the reasonable inference that the defendant is

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liable for the misconduct alleged.”). In other words, under the modern interpretation of Rule

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8(a), a plaintiff must do more than specify the legal theory under which he seeks to hold a

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defendant liable; he also must identify the theory of his own case so that the court can properly

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determine not only whether any such legal theory exists (Conley review), but also whether he has

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any basis for relief under such a theory even assuming the facts are as he alleges (Twombly-Iqbal

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review).

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“Generally, a district court may not consider any material beyond the pleadings in ruling

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on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the

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complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner

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& Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents

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whose contents are alleged in a complaint and whose authenticity no party questions, but which

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are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6)

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motion to dismiss” without converting the motion to dismiss into a motion for summary

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judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule

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of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay

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Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court

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considers materials outside of the pleadings, the motion to dismiss is converted into a motion for

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summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir.

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2001).

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III.

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ANALYSIS
Defendants argue that they are only liable under the Guaranty for any “personal liability”

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of Summit Plaza under § 12.1 of the loan agreement, and that Summit Plaza’s bare default did

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not trigger such liability. Plaintiff correctly responds that it has sufficiently pled the occurrence

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of a condition precedent to personal liability under the Loan Agreement, and hence guarantor

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liability under the Guaranty, i.e., that Summit Plaza filed for bankruptcy, making it “personally

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liable” under § 12.1(m) of the Loan Agreement.

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CONCLUSION

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IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 15) is DENIED.

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IT IS SO ORDERED.

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Dated this 11th day of March, 2013.
Dated this 30th day of October, 2012.

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_____________________________________
ROBERT C. JONES
United States District Judge

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