J. Vale y Asociados, S.A. de C.V. vs. Flight Test Associates, Inc., No. 1:2010cv00606 - Document 10 (E.D. Cal. 2010)
Court Description: MEMORANDUM DECISION on Defendant's Motion to Dismiss 5 , signed by Judge Oliver W. Wanger on 8/22/2010. ( 1) Plaintiffs complaint is REMANDED to the California Superior Court, County of Kern; and 2) Defendants shall submit a form of order consistent with, and within five (5) days following electronic service of, this memorandum decision.) (Gaumnitz, R)
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J. Vale y Asociados, S.A. de C.V. vs. Flight Test Associates, Inc. Doc. 10 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 J. VALE y ASOCIADOS, S.A. de C.V., 1:10-cv-00606-OWW-DLB MEMORANDUM DECISION ON DEFENDANT S MOTION TO DISMISS (Doc. 5) 9 Plaintiff, 10 11 v. 12 13 FLIGHT TEST ASSOCIATES, INC., Defendants. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 I. INTRODUCTION. Plaintiff J. Vale y Asociados, S.A. de C.V. ( Plaintiff ) is proceeding with an action for breech of contract and fraud against Flight Test Associates, Inc. ( Defendant ) pursuant to 28 U.S.C. ยง 1332. Plaintiff filed its complaint on April 7, 2010. (Doc. 1). Defendant filed a motion to dismiss on May 9, 2010 on the basis that, inter alia, a forum selection clause requires dismissal of Plaintiff s complaint. (Doc. 5). Plaintiff filed opposition to the motion to dismiss on June 1, 2010. (Doc. 7). a reply to Plaintiff s opposition on July 1, 2010. Defendant filed (Doc. 8). II. FACTUAL BACKGROUND. On or about September 21, 2006, Plaintiff and Defendant entered into a contract pursuant to which Defendant agreed to 28 1 Dockets.Justia.com 1 install certain RVSM equipment on Plaintiff s Saberliner Aircraft 2 ( aircraft ). 3 Defendant to complete installation of the equipment on Plaintiff s 4 aircraft within seventy-five working days from the date of the 5 contract and within 20 days after delivery of the aircraft to 6 Defendant. 7 Plaintiff 8 subsequently made two payments to Defendant pursuant to the terms 9 of the agreement, totaling sixty-thousand dollars. 10 (Complaint at 2). The parties contract required (Complaint at 2). delivered the On or about October 4, 2006, aircraft to Defendant, and Plaintiff (Complaint at 2). 11 After Defendant failed to perform its obligations within the 12 time requirements set forth in the parties contract, Plaintiff 13 communicated its dissatisfaction to Defendant a number of times. 14 (Complaint at 3). 15 that Defendant remedy the situation. 16 responded to Plaintiff s April 11 demand on April 12, 2007, by 17 indicating in an email that Defendant would reassemble the aircraft 18 to its original configuration and provide Plaintiff a full refund 19 of all monies paid to Defendant. 20 2007, in response to inquires from Plaintiff regarding the status 21 of its refund, Defendant stated in an email that John Ligon would 22 be providing the agreed refund and requested instructions on how to 23 return the refund to Plaintiff. 24 On April 11, 2007, Plaintiff made a final demand (Complaint at 3). Defendant (Complaint at 3). On May 31, (Complaint at 3). Plaintiff recovered the aircraft from Defendant on June 6, 25 2007. 26 Plaintiff by email that it would not provide Plaintiff a full 27 refund. 28 (Complaint at 3). On June 13, 2007, Defendant informed (Complaint at 3). Plaintiff alleges that it suffered at least $60,000.00 in lost 2 1 profits due to the time Plaintiff was deprived of use of the 2 aircraft, in addition to the $60,000.00 it paid Defendant for work 3 that was not completed. III. LEGAL STANDARD 4 5 (Complaint at 3). A. Motion to Dismiss 6 Dismissal under Rule 12(b)(6) is appropriate where the 7 complaint lacks sufficient facts to support a cognizable legal 8 theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th 9 Cir.1990). To sufficiently state a claim to relief and survive a 10 12(b) (6) motion, the pleading does not need detailed factual 11 allegations but the [f]actual allegations must be enough to raise 12 a right to relief above the speculative level. Bell Atl. Corp. v. 13 Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 14 Mere labels and conclusions or a formulaic recitation of the 15 elements of a cause of action will not do. Id. Rather, there must 16 be enough facts to state a claim to relief that is plausible on 17 its face. Id. at 570. In other words, the complaint must contain 18 sufficient factual matter, accepted as true, to state a claim to 19 relief that is plausible on its face. Ashcroft v. Iqbal, --- U.S. 20 ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal 21 quotation marks omitted). 22 The Ninth Circuit has summarized the governing standard, in 23 light of Twombly and Iqbal, as follows: In sum, for a complaint to 24 survive a motion to dismiss, the nonconclusory factual content, and 25 reasonable 26 suggestive of a claim entitling the plaintiff to relief. Moss v. 27 U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal 28 quotation marks omitted). Apart from factual insufficiency, a inferences from that 3 content, must be plausibly 1 complaint is also subject to dismissal under Rule 12(b)(6) where it 2 lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or 3 where the allegations on their face show that relief is barred 4 for some legal reason, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 5 910, 166 L.Ed.2d 798 (2007). 6 In deciding whether to grant a motion to dismiss, the court 7 must accept as true all well-pleaded factual allegations in the 8 pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, 9 however, required to accept as true allegations that are merely 10 conclusory, 11 inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 12 (9th Cir.2001). When ruling on a Rule 12(b)(6) motion to dismiss, 13 if a district court considers evidence outside the pleadings, it 14 must normally convert the 12(b)(6) motion into a Rule 56 motion for 15 summary 16 opportunity to respond. United States v. Ritchie, 342 F.3d 903, 17 907 court 18 materials-documents 19 incorporated by reference in the complaint, or matters of judicial 20 notice-without converting the motion to dismiss into a motion for 21 summary judgment. Id. at 908. 22 B. Motion for More Definite Statement (9th unwarranted judgment, and Cir.2003). A deductions it must attached of give may, to fact, the unreasonable nonmoving however, the or party consider complaint, an certain documents 23 "If a pleading fails to specify the allegations in a manner 24 that provides sufficient notice, a defendant can move for a more 25 definite 26 Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). 27 12(e), [a] party may move for a more definite statement of a 28 pleading when it is so vague or ambiguous that the party cannot statement under Rule 4 12(e) before responding." Under Rule 1 reasonably prepare a response. A Rule 12(e) motion is proper only 2 if 3 ascertain the nature of the claim being asserted, i .e., so vague 4 that the defendant cannot begin to frame a response. See Famolare, 5 Inc. v. Edison Bros. Stores, Inc., 525 F.Supp. 940, 949 (E.D. Cal. 6 1981). The motion must be denied if the complaint is specific 7 enough to notify defendant of the substance of the claim being 8 asserted. See Bureerong v. Uvawas, 922 F. Supp. 1450, 1461 (C.D. 9 Cal. 1996); see also San Bernardino Pub. Employees Ass'n v. Stout, 10 946 F. Supp. 790, 804 (C.D. Cal. 1996) ( A motion for a more 11 definite statement is used to attack unintelligibility, not mere 12 lack of detail, and a complaint is sufficient if it is specific 13 enough to apprise the defendant of the substance of the claim 14 asserted against him or her. ). 15 C. Forum Selection Clause 16 the complaint is so indefinite that the defendant cannot A motion to enforce a forum selection clause is treated as a 17 motion to dismiss pursuant to Rule 12(b)(3). 18 LLC, 552 F.3d 1077, 1081 (9th Cir. 2010). In ruling on a motion to 19 enforce court 20 Plaintiff s pleadings as true, and facts outside the pleadings may 21 be considered. 22 interpretation of a forum selection clause. a forum selection clause, a Id. (citation omitted). E.g. Doe 1 v. AOL need not accept Federal law applies to Id. 23 Forum selection clauses are prima facie valid and should not 24 be set aside unless the party challenging enforcement of such a 25 provision can show it is "'unreasonable' under the circumstances." 26 Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996). 27 A forum selection clause is unreasonable if (1) its incorporation 28 into the contract was the result of fraud, undue influence, or 5 1 overweening bargaining power; (2) the selected forum is so "gravely 2 difficult and inconvenient" that the complaining party will "for 3 all practical purposes be deprived of its day in court; or (3) 4 enforcement of the clause would contravene a strong public policy 5 of the forum in which the suit is brought. 6 omitted). IV. DISCUSSION. 7 8 9 Id. (citations A. Plaintiff s Fraud Claim The complaint contains a conclusory allegation that 10 Defendant s conduct constitutes breach of contract and fraud. 11 (Complaint at 3). 12 party alleging fraud to state with particularity the circumstances 13 constitution fraud or mistake. 14 extent Plaintiff is attempting to assert a fraud cause of action, 15 the complaint fails to meet the federal pleading standard for fraud 16 and thus any such claim must be DISMISSED. 17 B. Breach of Contract Claim Federal Rule of Civil Procedure 9(b) requires a Fed. R. Civ. P. 9(b). To the 18 1. Existence of a Forum Selection Provision 19 Defendant moves to dismiss Plaintiff s breach of contract 20 claim on the basis that, inter alia, a forum selection clause 21 contained in the parties contract requires that any disputes 22 arising out of the contract must be litigated in the California 23 Superior Court in Kern County. 24 support 25 Defendant s Chief Executive Officer, John Ligon, and a document Mr. 26 Ligon declares is the agreement underlying Plaintiff s claim for 27 breach of contract. 28 Mr. of its Ligon motion, declares (Motion to Dismiss at 2-3). Defendant that he 6 submits engaged the in declaration the In of contract 1 negotiations between Plaintiff and Defendant, reduced the parties 2 agreement to writing, signed the agreement on behalf of Defendant, 3 and transmitted the agreement to Plaintiff for signing. 4 Dec. at 1). 5 a copy of the contract signed by Plaintiff after a diligent search 6 of Defendant s records, Mr. Ligon recollects that the contract was 7 signed on behalf of Plaintiff. 8 that he would not have proceeded as he did without a signed 9 contract. 10 (Ligon Mr. Ligon declares that although he could not locate (Id.). Mr. Ligon further states (Id.). Attached to Mr. Ligon s declaration is a copy of the purported 11 agreement, signed by Mr. Ligon on behalf of Defendant. 12 Dec., Ex. 1). 13 Ligon s declaration mirror the terms of the contract alleged in the 14 complaint: Mr. Ligon s contract is dated September 21, 2006, the 15 date specified in the complaint as the date on which the contract 16 was formed; Mr. Ligon s contract specifies time periods of 20 days 17 and 75 days for Defendant s installation of RVSM equipment on 18 Plaintiff s Saberliner aircraft, the same time frames alleged in 19 the complaint; Mr. Ligon s contract provides for sixty-thousand 20 dollars 21 Defendant s performance, the precise amount Plaintiff alleges it 22 paid Defendant; Mr. Ligon s contract includes a forum selection 23 clause identifying Kern County California Superior Court as the 24 exclusive venue, and the complaint references a forum selection 25 clause. 26 declaration. 27 The 28 in (Ligon The terms set forth in the contract attached to Mr. payments from Plaintiff to Defendant prior to Plaintiff presents no evidence contrary to Mr. Ligon s declaration of Javier Vale Castilla, submitted by Plaintiff in opposition to Defendant s motion to dismiss, does not 7 1 dispute that the document attached to Mr. Ligon s declaration is an 2 accurate 3 Castilla s declaration concedes that Plaintiff entered into a 4 contract with Defendant on September 21, 2006, and that the terms 5 of the agreement were memorialized in a written contract. Mr. Vale 6 Castilla declares in pertinent part: 7 copy of the parties agreement. Instead, Mr. Vale 1. I am Administrador of Unico of J. Vale Asociados, V.A. de C.V. 8 9 10 2. On or about September 21, 2006, Plaintiff and Defendant entered into an agreement for the installation of RSVM equipment...the terms of this agreement were memorialized in a written contract, but neither I nor any person on behalf of Plaintiff ever signed the document 11 (Vale Dec. at 1). Critically, Mr. Vale Castilla s declaration does 12 not dispute that Plaintiff agreed to the forum selection clause 13 contained in the document attached to Mr. Ligon s declaration. 14 Further, Plaintiff s complaint contains and express reference to a 15 forum selection clause: the contract that is the subject of this 16 action provides for venue in [the Eastern District of California] 17 by its terms. (Complaint at 2). Factual assertions in pleadings, 18 unless amended, are considered judicial admissions conclusively 19 binding on the party who made them. Am. Title Ins. Co. v. Lacelaw 20 Corp., 861 F.2d 224, 226 (9th Cir. 1988). 21 Based on (1) Mr. Ligon s uncontroverted declaration; (2) the 22 similarity between the allegations in Plaintiff s breach of 23 contract claim and the terms of the document attached to Mr. 24 Ligon s declaration; (3) Mr. Vale Castilla s express and tacit 25 admissions; and (4) the complaint s judicial admission that the 26 parties entered into a contract on September 21, 2006 that 27 contains a forum selection provision, it is reasonably inferred 28 8 1 that the contract attached 2 contract 3 contractual agreement between the parties. hereafter) is to an 4 Plaintiff Ligon s accurate declaration representation ( the of the 2. Plaintiff s Arguments 5 Mr. contends that Defendant s motion is untimely 6 because, although the motion was filed on May 9, 2010, a Sunday, 7 the Notice of Electronic Filing did not issue until May 10, 2009. 8 Plaintiff s argument lacks merit. 9 counsel agreed to grant Defendant a ten-day extension of time to 10 file its motion, resulting in a filing date of on or before May 9, 11 2010. 12 the Notice of Electronic filing, rather, the agreement specifically 13 references the filing date of May 9, 2010. 14 filing of the motion on May 9 was consistent with the agreement 15 assented 16 Defendant s motion was filed a day late, Plaintiff has suffered no 17 prejudice on account of the delay and did not move to enter 18 default. (Opposition, Ex. B). to by Plaintiff s On April 29, 2010, Plaintiff s Counsels agreement did not reference counsel. (Id.). Further, to Defendant s the extent 19 Plaintiff advances two substantive arguments in opposition to 20 enforcement of the forum selection clause: (1) Plaintiff never 21 signed 22 selection clause should not be enforced against Plaintiff; and (2) 23 The agreement that is the basis of Plaintiff s causes of action... 24 is not the initial contract between the parties (memorialized in 25 the contract of September, 2006), but a separate written agreement 26 memorialized by e-mails exchanged in April, 2007. the first written agreement and therefore the forum 27 In light of the complaint s judicial admission that Plaintiff 28 entered into a contract with Defendant with a forum selection 9 1 clause on September 21, 2006, (Complaint at 2), and the implied 2 admission by Mr. Vale Castilla that the contract attached to Mr. 3 Ligon s declaration is an accurate memorialization of the terms of 4 the parties agreement, Plaintiff s assertion that it is not bound 5 by the forum selection clause because it did not sign the document 6 memorializing 7 Plaintiff s argument that the agreement that is the basis of 8 Plaintiff s 9 September, 2006" directly contradicts the complaint s allegations. the causes parties of agreement action... is not is not ...the well-taken. contract of 10 3. Construction of the Forum Selection Clause 11 Federal law governs construction of a forum selection clause 12 in federal court. Doe 1, 553 F.3d at 1081. 13 general principles of contract interpretation for guidance in 14 construing contractual terms. Klamath Water Users Protective Ass'n 15 v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999). 16 are to be given their ordinary meaning, and when the terms of a 17 contract are clear, the intent of the parties must be ascertained 18 from the contract itself. Id. 19 20 21 22 23 24 25 26 27 28 Federal courts turn to Contract terms Section 8.6 of the contract between Plaintiff and Defendant provides: Disputes. All disputes, claims, and controversies that arise out of or relate in any way to this Agreement or its subject matter, including without limitation those concerning the validity, interpretation, performance, or breach of this Agreement, shall be governed and decided by the laws of the State of California exclusive of any choice of law rule of California or any other jurisdiction, which would cause any matter to be referred to the law of any jurisdiction other than California. The Courts of California, located in Kern County, shall be the sole and exclusive forum for resolution of all claims, disputes, and controversies between the Parties regarding this Agreement. The successful Party in any legal action arising out of this Agreement or its subject matter shall be entitled to recover all out-of-pocket 10 1 expenses incurred in connection with the enforcement of its rights under this Agreement, including but not limited to legal expenses, collection costs, and reasonable attorney s fees. 2 3 4 (Ligon Dec., Ex. 1 at 5) (emphasis added). The unambiguous meaning 5 of the phrase The Courts of California, located in Kern County, 6 shall be the sole and exclusive forum for resolution of all claims, 7 disputes, and controversies between the Parties regarding this 8 Agreement is that the parties must litigate their dispute in a 9 California state court located in Kern County. 10 The ordinary meaning of the phrase Courts of California 11 is California state courts. 12 Ninth Circuit explained in Doe 1: 13 See Doe 1, 552 F.3d at 1082. As the The clause's use of the preposition "of"--rather than "in"--is determinative. Black's Law Dictionary defines "of" as a term "denoting that from which anything proceeds; indicating origin, source, descent, and the like . . . ." 8 Black's Law Dictionary 1080 (6th ed. 1990). Thus, courts "of" Virginia refers to courts proceeding from, with their origin in, Virginia --i.e., the state courts of Virginia. Federal district courts, in contrast, proceed from, and find their origin in, the federal government. 14 15 16 17 18 Id. The ordinary meaning of the phrase shall be the sole and 19 exclusive forum establishes that the parties must adjudicate any 20 disputes arising out of the contract exclusively in the designated 21 forum. See, e.g., Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 22 F.2d 75, 77 (9th Cir. 1987) (discussing permissive versus mandatory 23 language in forum selection clauses). 24 The forum selection clause contained in the contract between 25 Plaintiff and Defendant requires that any disputes arising out of 26 the contract be litigated in a California state court located in 27 Kern County. It is beyond dispute that Plaintiff s claims for 28 11 1 breach of contract and fraud arise out of the contract and are 2 related to the contract s subject matter. Accordingly, Plaintiff s 3 breach of contract claim must be remanded to the Superior Court of 4 California, County of Kern.1 5 ORDER 6 7 For the reasons stated IT IS ORDERED that: 8 1) Plaintiff s complaint is REMANDED to the California 9 Superior Court, County of Kern; and 10 2) Defendants shall submit a form of order consistent with, 11 and within five (5) days following electronic service of, 12 this memorandum decision. 13 14 IT IS SO ORDERED. Dated: hkh80h August 22, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Defendant s alternative motions for dismissal under Rule 12(b)(6) and for a more definite statement are moot. 12
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