Getzels et al v. Kirby Ai et al

Filing 25

ORDER GRANTING 15 DEFENDANTS' MOTION TO DISMISS AND GRANTING LEAVE TO AMEND. Plaintiffs' First Amended Complaint, ECF No. 13 , is DISMISSED without prejudice. Plaintiffs may file a Second Amended Complaint by December 9, 2024. Signed by Judge Mary K. Dimke. (LTR, Case Administrator)

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FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON

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Nov 22, 2024

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SEAN F. MCAVOY, CLERK

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF WASHINGTON

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ZOE GETZELS and QUENTIN
BODIGUEL,
Plaintiffs,
v.
KIRBY AI, an individual; EVIE
VAUGHAN, and individual; VAN
VENTURE AI, LLC, a dissolved
Washington Limited Liability Company;
and KIRBY AI and EVIE VAUGHAN
as members of VAN VENTURE AI,
LLC,

No. 2:24-CV-161-MKD
ORDER GRANTING
DEFENDANTS’ MOTION TO
DISMISS AND GRANTING LEAVE
TO AMEND
ECF No. 15

Defendants.

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Before the Court is Defendants’ Motion to Dismiss. ECF No. 15. On

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November 18, 2024, the Court held a hearing. ECF No. 24. Henry Rymer

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appeared for Plaintiffs. Caleb Hatch appeared for Defendants. This Order

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memorializes and supplements the Court’s oral ruling granting Defendants’ motion

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and grants Plaintiffs leave to file a Second Amended Complaint.

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ORDER - 1

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BACKGROUND

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Plaintiffs’ First Amended Complaint asserts five claims: (1) breach of

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contract; (2) breach of implied contract; (3) fraudulent Inducement; (4) negligent

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misrepresentation; and (5) violation of the Washington Consumer Protection Act

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(CPA). ECF No. 13 at 16-20. First, Plaintiffs allege Defendants have “failed to

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comply with their contractual obligations . . . caus[ing] Plaintiffs damages in an

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amount to be proven at trial, but in any event in excess of $75,000.” Id. at 16.

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Second, Plaintiff alternatively pleads “[i]f there was no express contract between

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Plaintiffs and Defendants, then one should be implied from their conduct or as a

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matter of law.” Id. Third, Plaintiffs allege “[t]he facts regarding Van Venture’s

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abilities/expertise and the time necessary to perform the work were uniquely within

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the knowledge of Van Venture and Kirby [Ai] and could not have been readily

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learned by Plaintiffs.” Id. at 17 ¶ 62. Plaintiffs assert they “justifiably and

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reasonably relied upon the[se] representations” and “[h]ad they known the truth,

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they would not have contracted with Van Venture.” Id. at 17-18 ¶¶ 63-64. Fourth,

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Plaintiffs allege “Kirby [Ai] and Van Venture supplied information for the

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guidance of Plaintiffs in their transaction with Van Venture, which was false, or

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failed to correct information regarding Van Venture’s abilities/expertise and the

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duration of the build which they knew Plaintiffs did not possess.” Id. at 18 ¶ 67.

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Plaintiffs also allege that “Kirby and Van Venture were negligent in

ORDER - 2

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communicating the false information . . . or failing to correct it” and “Plaintiffs

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justifiably and reasonably relied on the false information.” Id. ¶¶ 69-70. Finally,

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Plaintiffs allege all Defendants violated the CPA by engaging in “deceptive and/or

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unfair business practices,” “holding themselves out [publicly] as van conversion

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experts that could adequately and timely complete work,” and “clearly

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[Defendants] did not have such expertise[.]” Id. at 19 ¶ 74.
LEGAL STANDARD

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“To survive a [Fed. R. Civ. P. 12(b)(6)] motion to dismiss, a complaint must

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contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

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plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell

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Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the

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elements of a cause of action, supported by mere conclusory statements, do not

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suffice.” Id. In considering a motion to dismiss for failure to state a claim, the

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Court must accept as true the well-pleaded factual allegations and any reasonable

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inference to be drawn from them, but legal conclusions are not entitled to the same

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assumption of truth. Id. A complaint must contain either direct or inferential

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allegations respecting all the material elements necessary to sustain recovery under

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some viable legal theory. Twombly, 550 U.S. at 562. “Factual allegations must be

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enough to raise a right to relief above the speculative level.” Id. at 555.

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ORDER - 3

DISCUSSION

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Defendants move to dismiss Plaintiffs’ Defendants First Amended

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Complaint in its entirety, contending Plaintiffs have failed to state a claim for all

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causes of action. ECF No. 15 at 9-18.

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1. Breach of Contract

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To establish breach of contract, Plaintiffs must demonstrate: (1) the

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existence of a valid contract; (2) breach of that contract; and (3) resulting damages.

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Nw. Indep. Forest Mfrs. v. Dep’t of Labor & Indus., 899 P.2d 6, 9 (Wash. App.

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1995). The necessary elements of contract formation are: (1) offer; (2) acceptance;

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(3) competent parties; (4) legal subject matter; and (5) consideration. Lager v.

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Berggren, 60 P.2d 99, 101 (Wash. 1936). “Under Washington law, a contract

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requires mutual assent to its essential terms in order to be binding.” Lee v. Intelius

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Inc., 737 F.3d 1254, 1259 (9th Cir. 2013). To sufficiently allege Defendants’

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breach, Plaintiffs must demonstrate the Defendants failed to perform a contractual

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duty as stipulated in the contract. Nw. Indep. Forest Mfrs., 899 P.2d at 9.

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“Damages are not recoverable for loss beyond an amount that the evidence permits

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to be established with reasonable certainty.” Columbia Park Golf Course, Inc. v.

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City of Kennewick, 248 P.3d 1067, 1076 (Wash App. 2011) (citing Kadiak

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Fisheries Co. v. Murphy Diesel Co., 422 P.2d 496, 504 (Wash. 1967)).

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ORDER - 4

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Plaintiffs have failed to state a breach of contract claim for three reasons.

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First, Plaintiffs have failed to sufficiently allege the existence of a valid contract

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between the parties. Second, even if they had, Plaintiffs still have failed to

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sufficiently allege Defendants’ breach of any contractual obligation. Finally, even

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if Plaintiffs had sufficiently alleged the prior two elements, Plaintiffs also have

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failed to identify specific damages that directly resulted from any breach.

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Plaintiffs have thus failed to state a valid breach of contract claim.

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2. Breach of Implied Contract

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The “elements of a contract implied in law”—or unjust enrichment—“are:

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(1) the defendant receives a benefit, (2) the received benefit is at the plaintiff’s

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expense, and (3) the circumstances make it unjust for the defendant to retain the

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benefit without payment.” Young v. Young, 191 P.3d 1258, 1262 (Wash. 2008) (en

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banc). The “elements of a contract implied in fact”—or quantum meruit—“are: (1)

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the defendant requests work, (2) the plaintiff expects payment for the work, and (3)

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the defendant knows or should know the plaintiff expects payment for the work.”

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Id. at 1263. “‘[U]njust enrichment’ is founded on notions of justice and equity

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whereas ‘quantum meruit’ is founded in the law of contracts, a legally significant

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distinction.” Id. If the same subject matter governs both claims, the implied

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contract claim should be dismissed. Woodard v. Boeing Emps. Credit Union, 2023

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WL 4847126, at *5-6 (W.D. Wash. July 28, 2023) (on motion to dismiss,

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dismissing implied contract and unjust enrichment claims where an express

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contract governed the same subject matter).

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Plaintiffs have failed to differentiate which facts separately form the basis of

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their implied contract claim: Plaintiffs have failed to sufficiently allege if and when

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an implied contact arose. Plaintiffs failed to specify whether the implied contract

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was one in law or in fact. Plaintiffs have also failed to sufficiently plead the

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elements of this cause of action and thus failed to state a valid breach of implied

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contract claim.

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3. Fraudulent Inducement

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“There are nine essential elements of fraud, all of which must be established

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by clear, cogent, and convincing evidence: (1) a representation of existing fact, (2)

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its materiality, (3) its falsity, (4) the speaker’s knowledge of its falsity, (5) the

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speaker's intent that it be acted upon by the person to whom it is made, (6)

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ignorance of its falsity on the part of the person to whom the representation is

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addressed, (7) the latter’s reliance on the truth of the representation, (8) the right to

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rely upon it, and (9) consequent damage.” Elcon Const., Inc. v. E. Washington

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Univ., 273 P.3d 965, 970 (Wash. 2012) (citation omitted).

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“To avoid dismissal for inadequacy under Rule 9(b), [Plaintiffs’] complaint

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would need to ‘state the time, place, and specific content of false representations as

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well as the identifies of the parties to the misrepresentation.” Edwards v. Marin

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Park, Inc., 356 F.3d 10158, 1066 (9th Cir. 2004) (citing Alan Neuman Prods., Inc

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v. Albright, 862 F.2d 1388, 1392-93 (9th Cir. 1989)).

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Plaintiffs have failed to sufficiently plead the time, place, and content of the

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misrepresentation, as required under Rule 9(b). Plaintiffs have thus failed to state a

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valid fraudulent inducement claim.

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4. Negligent Misrepresentation

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Washington has adopted the Restatement (Second) of Torts, which sets forth

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the elements of a negligent misrepresentation claim: “One who, in the course of his

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business, profession or employment ... supplies false information for the guidance

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of others in their business transactions, is subject to liability for pecuniary loss

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caused to them by their justifiable reliance upon the information, if he fails to

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exercise reasonable care or competence in obtaining or communicating the

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information.” Havens v. C & D Plastics, Inc., 876 P.2d 435, 447 (Wash. 1994) (en

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banc). “The proof must be clear, cogent and convincing.” Id. (citation omitted).

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The parties dispute whether this claim falls under Rule 9(b). Compare ECF

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No. 15 at 19 (arguing 9(b) is applicable given negligent misrepresentation is

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“grounded in fraud”) (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-

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04, 1107 (9th Cir. 2003)), with ECF No. 20 at 13-14 (arguing “negligent

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misrepresentation is not fraud and Rule 9(b) is inapplicable) (emphasis in original).

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However, because Plaintiffs’ claim fails to satisfy the more liberal requirements of

ORDER - 7

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Rule 8(a)(2), the Court need not resolve whether the claim falls under Rule 9(b)’s

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stricter standard. At bottom, Plaintiffs have failed to sufficiently allege an

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actionable misrepresentation. Cf. Wessa v. Watermark Paddlesports, Inc., 2006

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WL 1418906, at *3 (W.D. Wash. May 22, 2006) (“Promises of future performance

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are not representations of presently existing fact.”) (citation omitted). Plaintiffs

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have thus failed to state a valid negligent misrepresentation claim.

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5. CPA

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The CPA provides that “[u]nfair methods of competition and unfair or

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deceptive acts or practices in the conduct of any trade or commerce” are unlawful.

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RCW 19.86.020. Washington courts use a five-part test to assess private actions

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brought under the CPA. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins.

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Co., 719 P.2d 531, 535 (Wash. 1986). Plaintiffs must demonstrate (1) an unfair or

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deceptive practice or act; (2) in commerce or trade; (3) that affects the public

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interest; (4) injury to the plaintiffs’ business or property; and (5) a causal link

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between the unfair or deceptive practice or act and the injury suffered. Id.

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Defendants contend Plaintiffs have failed to satisfy the first, third, and fourth

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elements. ECF No. 15 at 22-24. The Court agrees. Plaintiffs have failed to

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sufficiently allege an unfair or deceptive act that effects the public interest and an

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injury to Plaintiffs’ property.

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ORDER - 8

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CONCLUSION

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For the reasons discussed above, Plaintiffs’ First Amended Complaint is

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dismissed in its entirety. Plaintiffs are granted leave to file a Second Amended

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Complaint by December 9, 2024, for the reasons stated on the record at the

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November 18, 2024, hearing. See Cook, Perkiss & Liehe, Inc. v. N. California

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Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990) (noting “a district court

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should grant leave to amend even if no request to amend the pleading was made,

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unless it determines that the pleading could not possibly be cured by the allegation

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of other facts”) (citations omitted).

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Accordingly, IT IS HEREBY ORDERED:

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1. Defendants’ Motion to Dismiss, ECF No. 15, is GRANTED.

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2. Plaintiffs’ First Amended Complaint, ECF No. 13, is DISMISSED

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without prejudice.

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3. Plaintiffs may file a Second Amended Complaint by December 9, 2024.

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IT IS SO ORDERED. The Clerk’s Office is hereby directed to enter this

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Order and provide a copy to counsel.

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DATED November 22, 2024.

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s/Mary K. Dimke
MARY K. DIMKE
UNITED STATES DISTRICT JUDGE

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ORDER - 9