Bear, LLC v. Marine Group Boat Works, LLC et al, No. 3:2014cv02960 - Document 36 (S.D. Cal. 2015)
Court Description: ORDER granting in part and denying in part 23 Motion to Dismiss for Failure to State a Claim and denying as Moot 14 Motion to Dismiss for Failure to State a Claim. Bear shall file an answer to the Amended Counterclaim within 14 days of the entry of this Order. Counsel for the parties are further Ordered to appear before this Court on July 29, 2015, at 3:00 p.m. for a status conference and to set a trial date. Signed by Judge Barry Ted Moskowitz on 7/14/2015. (sjt)
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Bear, LLC v. Marine Group Boat Works, LLC et al Doc. 36 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 BEAR, LLC, a Minnesota limited 12 liability company, Plaintiff, 13 14 v. 15 MARINE GROUP BOAT WORKS, LLC, a California limited liability 16 company; UNIVERSAL STEEL FABRICATION, INC., a California 17 corporation, 18 19 20 Case No. 3:14-CV-02960-BTM-BLM ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AMENDED COUNTERCLAIM FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED AND TO STRIKE Defendant. On February 25, 2015, Plaintiff/Counter-Defendant Bear, LLC, (“Bear”) 21 filed a Motion to Dismiss, Doc. 14, Defendant/Counter-Plaintiff, Marine 22 Group Boat Works, LLC’s (“MGBW”) Counterclaim, Doc. 8. MGBW then filed 23 24 an Amended Counterclaim, Doc. 18, to which Bear filed an Amended Motion 25 to Dismiss and to Strike, Doc. 23, rendering the prior motion moot. For the 26 reasons discussed below, Bear’s Amended Motion to Dismiss and to Strike 27 28 is DENIED IN PART and GRANTED IN PART. -1- Case No. 3:14-cv-02960-BTM-BLM Dockets.Justia.com 1 2 3 4 I. BACKGROUND In May of 2014, Bear’s 102 foot, 260-gross ton motor vessel (“the Polar Bear” or “the yacht”), ran aground in San Diego Harbor. Doc. 1, 5 Complaint (“Compl.”), ¶¶ 2, 9, 10. The incident dented the bottom of the hull, 6 damaged the port and starboard sides of the keel, and damaged the aft port 7 8 stabilizer shaft. Id. at ¶ 9. Though no longer seaworthy, the damaged Polar 9 Bear managed to sail to MGBW’s boatyard for repairs. Id. at ¶ 10. 10 11 12 Before the yacht was hauled out of the water, MGBW’s Project Manager, Eric Lundeen, asked the Polar Bear’s captain, Roger Trafton, to 13 sign a one-page, double sided, form entitled Work Order (the “Contract”), 14 which described the services to be performed as “Haul Out, Block & 15 Launch,” to be completed at a flat rate of $3,500, and a “lay day charge @ 16 17 $2.00/per ft/per day. No charge for day of haul out and day of launch.” Id. at 18 ¶12; Doc. 1-2, at 1; Doc. 18-1, at 1. Bear maintains that Trafton signed the 19 Contract on May 7, 2014, without seeing or discussing the terms on the 20 21 reverse side, Compl., ¶¶13-14; Doc. 1-2, at 2; Doc 18-1 at 2, and that some 22 of those terms are unenforceable. Compl., ¶¶17-18. 23 Bear asserts that after the yacht was lifted and the damage further 24 25 surveyed, the parties orally agreed that the repairs would total $169,233.00, 26 and that all work would be completed by MGBW. Compl., ¶24. That price 27 /// 28 -2- Case No. 3:14-cv-02960-BTM-BLM 1 was memorialized in writing as Change Order #1002. Doc. 18-1, at 4. The 2 parties then mutually agreed to amend the Contract with eight additional 3 4 Work Order/Change Orders (the “amendments”). Doc. 18-1. Plaintiff alleges 5 that sometime in May or June 2014, MGBW retained Universal Steel 6 Fabrication, Inc. (“USF”), to perform repairs on the Polar Bear. It is 7 8 undisputed that on June 19, 2014, the Polar Bear was rendered a total loss 9 by fire. Compl., ¶27; Doc. 29, at 2. The cause of the fire remains contested. 10 While MGBW alleges that the fire’s cause is unknown, Bear asserts that the 11 yacht caught fire when USF was grinding or welding steel panels on its port 12 13 side. Comp., ¶ 34; Doc. 18, at 20, ¶10. 14 15 16 17 II. LEGAL STANDARD A complaint must contain a “short and plain statement of the claim 18 showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). Dismissal 19 under Rule 12(b)(6) for failure to state a claim is appropriate only when the 20 21 complaint does not give the defendant fair notice of a legally cognizable 22 claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 23 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to 24 25 state a claim, the court will take all material allegations as true and construe 26 them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 27 792 F.2d 896, 898 (9th Cir. 1986). However, this principle is inapplicable to 28 -3- Case No. 3:14-cv-02960-BTM-BLM 1 legal conclusions and “[t]hreadbare recitals of the elements of a cause of 2 action, supported by mere conclusory statements,” are not taken as true. 3 4 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although the court is generally 5 confined to consideration of the allegations in the pleadings, when the 6 complaint is accompanied by attached documents, such documents are 7 8 deemed part of the complaint and may be considered in evaluating the 9 merits of a Rule 12(b)(6) motion. See Durning v. First Boston Corp., 815 10 F.2d 1265, 1267 (9th Cir. 1987). 11 12 13 14 15 16 III. DISCUSSION MGBW’s Amended Counterclaim, Doc. 18, contains a claim of breach of contract, two common counts claiming debts owed on an open book 17 account and an account stated in writing, and a quantum meruit claim for 18 work, labor and services provided. Bear argues that the common counts fail 19 because MGBW must plead on the Contract, and that the contract claim 20 21 also fails because it is internally conflicting and insufficiently specific. Doc. 22 23-1, at 2. Bear also moves the Court to strike MGBW’s allegations of the 23 reasonable value of services provided. Id. 24 25 26 27 28 A. Breach of Contract Count IV of MGBW’s Amended Counterclaim claims that Bear -4- Case No. 3:14-cv-02960-BTM-BLM 1 breached the May 7, 2014 Contract. To state a claim for breach of contract 2 under California law, a plaintiff must plead four elements: “(1) existence of 3 4 the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) 5 defendant’s breach; and (4) damages to plaintiff as a result of the breach.” 6 CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239 (2008). 7 8 Bear argues that MGBW has failed to sufficiently plead a breach of 9 contract because MGBW has not, and cannot, satisfy the second element. 10 To satisfy that element, MGBW raises the impossibility of performance 11 defense, which in maritime law includes those cases where performance 12 13 might be so difficult and expensive that it may be described as 14 “impracticable.” Hellenic Lines, Ltd. v. United States, 512 F.2d 1196 (2d Cir. 15 1975). However, only a promisor who is faultless in causing the condition of 16 17 impossibility or frustration of contractual purpose and is harmed thereby, can 18 raise that defense. See 20th Century Lites, Inc. v. Goodman, 64 Cal.App.2d 19 Supp. 938, 940-41 (Cal. App. Dep’t Super. Ct. 1944); Rains v. Arnett, 189 20 21 Cal.App.2d 337, 347-48 (Ct. App. 1961). In this case, MGBW denies that the 22 fire which made further contractual performance allegedly impossible or 23 impracticable resulted from its negligence or gross negligence. Doc 18, ¶2724 25 28; Doc. 29, at 5. 26 27 28 However, the Court need not reach the issue of impossibility of performance at the pleading stage. Even where full contractual performance -5- Case No. 3:14-cv-02960-BTM-BLM 1 remains technically possible, some California courts have applied the 2 equitable doctrine of commercial frustration of contract if the principal reason 3 4 the parties entered into the agreement has been frustrated. See Habitat 5 Trust for Wildlife, Inc. v. City of Rancho Cucamonga, 175 Cal.App.4th 1306, 6 1336 (2009). Under this doctrine, a “promisor seeking to excuse himself 7 8 from performance of his obligations [must] prove that the risk of the 9 frustrating event was not reasonably foreseeable and that the value of 10 counter performance is totally or nearly totally destroyed.” Waegemann v. 11 Montgomery Ward & Co., 713 F.2d 452, 454 (9th Cir. 1983) (citing Lloyd v. 12 13 Murphy, 25 Cal.2d 48, 53, 54 (1944)). Application of the doctrine “has been 14 limited to cases of extreme hardship . . .” Lloyd, 25 Cal.2d at 54. 15 To determine whether frustration of contractual purpose applies, the 16 17 Court must first construe that purpose by ascertaining and giving effect to 18 the parties’ intentions at the time of agreement. See Cal. Civil Code § 1636; 19 Hay v. Allen, 112 Cal.App.2d 676, 681 (1972). That intent must be derived 20 21 from the contract’s plain language. See Hensler v. City of Los Angeles, 124 22 Cal. App. 2d 71, 77-78 (1954). Here, the parties’ intent is evident from the 23 Contact’s Statement of Work, according to which MGBW promised to 24 25 “furnish materials, parts, supplies and labor to perform the work described in 26 the Order.” Doc. 1-2, at 2, ¶1. The work is described as “Haul Out, Block & 27 Launch,” and the amendments added installation of parts and related 28 -6- Case No. 3:14-cv-02960-BTM-BLM 1 services that became necessary in the course of performance. The 2 Statement of Work makes clear that the contractual intent was to repair the 3 4 damage that the Polar Bear had sustained when it ran aground in San Diego 5 Harbor, and not to rebuild the yacht in case of total damage from fire. By 6 contrast, Bear’s argument that the Polar Bear’s complete destruction did not 7 8 excuse MGBW’s continuing performance implies that full performance 9 requires MGBW to rebuild the yacht. But this was not the intent of the 10 parties. See Reality & Rebuilding Co. v. Rea, 184 Cal. 565, 576 (1920) 11 (“repair means to mend an old thing, not to make a new thing; ... not to 12 13 create something which has no existence.”). Moreover, since the originally 14 agreed-on repairs can no longer make the ship seaworthy in light of its total 15 destruction, the Court finds that the parties’ contractual intent was destroyed 16 17 by the June 19, 2014 fire. 18 19 20 21 22 23 24 25 26 27 Next is the question of foreseeability, which was directly addressed in Lloyd, 25 Cal.2d at 54: The purpose of a contract is to place the risks of performance upon the promisor, and the relation of the parties, terms of the contract, and circumstances surrounding its formation must be examined to determine whether it can be fairly inferred that the risk of the event that has supervened to cause the alleged frustration was not reasonably foreseeable. If it was foreseeable there should have been provision for it in the contract, and the absence of such a provision gives rise to the inference that the risk was assumed. 28 -7- Case No. 3:14-cv-02960-BTM-BLM 1 Having examined the Contract’s provision captioned “Owner’s Assumption 2 of Risk,” the Court finds that its terms foresee and shift the risk of negligence 3 4 committed by MGBW or a third party to Bear. Doc. 18-1, at 3, ¶8(a)-(b). Bear 5 disputes the enforceability of this provision based on facts pled in the 6 Complaint. Compl., ¶15-16. However, resolving this dispute is not 7 8 9 appropriate in deciding Bear’s motion to dismiss and to strike. Finally, MGBW has sufficiently alleged that the value of the Contract 10 has been destroyed. As stated above, there is no benefit in making the 11 agreed-on repairs to a vessel destroyed by fire because the repairs would 12 13 not achieve the parties’ contractual intent of making the Polar Bear 14 seaworthy. Therefore, MGBW has sufficiently alleged that it is legally 15 excused from further performance on the Contract. 16 Bear also argues that MGBW’s Amended Counterclaim does not state 17 18 a contract claim based on substantial performance. Doc. 23-1, at 8. Bear 19 may be correct if MGBW did not substantially perform the Contract before 20 21 the Polar Bear was destroyed. See Thomas Haverty Co. v. Jones, 185 Cal. 22 285, 290-91 (1921) (substantial performance requires a contractor to 23 complete the work to a degree where it could still reasonably serve its 24 25 intended purpose). However, since MGBW’s claim is based on excuse from 26 performance, not substantial performance, MGBW’s contract claim remains 27 28 -8- Case No. 3:14-cv-02960-BTM-BLM 1 sufficiently pled. Furthermore, MGBW has, at a minimum, stated a contract 2 claim for hauling out, blocking and storing the vessel. 3 4 The Court only holds that MGBW has pled a breach of contract claim. 5 Whether MGBW can actually recover on that claim is not before the Court 6 on the present motion. Therefore, Bear’s motion to dismiss Count IV is 7 8 9 10 11 12 DENIED. B. Common Counts Counts I and II of the Amended Counterclaim plead indebtedness in common counts. The parties agree that since maritime law is limited on the 13 subject, California law applies to the common counts. Doc. 23-1, at 2. Under 14 California law, “[a] common count is not a specific cause of action ...; rather, 15 it is a simplified form of pleading normally used to aver the existence of 16 17 various forms of monetary indebtedness[.]” McBride v. Boughton, 123 18 Cal.App.4th 379, 394 (2004); see also Zumbrun v. University of Southern 19 California, 25 Cal.App.3d 1, 14–15 (1972). The elements of a common count 20 21 are: (1) the statement of indebtedness in a certain sum, (2) consideration, 22 and (3) nonpayment. See Farmers Ins. Exchange v. Zerin, 53 Cal.App.4th 23 445, 460 (1997). 24 25 For an express contract that is no longer executory, a common count 26 is appropriate when the only remaining obligation is the payment of money 27 by the defendant. See Ferro v. Citizens Nat. Trust & Sav. Bank, 44 Cal.2d 28 -9- Case No. 3:14-cv-02960-BTM-BLM 1 401, 409 (1955); McBride, 123 Cal.App.4th at 394-95. MGBW’s common 2 counts incorporate its breach of contract cause action in alleging that MGBW 3 4 has performed its contractual obligations and is excused from further 5 performance. Doc. 18, at 20, ¶¶10. MGBW claims that despite demands for 6 payment, Bear has failed to remit the sum due of $52,500.00 for lay day 7 8 charges and $136,300.36 for work, labor, and services provided in repairing 9 the Polar Bear prior to the fire. Id. at 20-21, ¶¶12-13. 10 11 12 Consistent with the holding as to Count IV, the Court agrees that the Contract is no longer executory because the vessel has been destroyed. 13 However, MGBW’s strategy of pleading the common counts as an additional 14 theory of recovery is not pleading in the alternative under F.R.C.P 8(d). See 15 Doc. 29, 3. MGBW’s common counts are based on the same facts as its 16 17 breach of contract claim, seek the exact same damages, and are not 18 inconsistent with the breach claim. See Doc. 18, pp. 19-20, ¶¶4-13. The 19 common counts are simply derived from the contract claim. See Sutherland 20 21 v. Francis, 2014 WL 879697, at *5 (N.D. Cal. Mar. 3, 2014). 22 23 24 Since MGBW has the ability to recover for breach of contract, there is no need for the additional common counts causes of action because if the 25 Contract is not found to be enforceable, as alleged in Bear’s Complaint, 26 there is no other basis on which Bear owes money to MGWB on a book 27 account. See Smith v. Simmons, 2008 WL 744709, at *13 (E.D. Cal. Mar. 28 -10- Case No. 3:14-cv-02960-BTM-BLM 1 18, 2008). “When a common count is used as an alternative way of seeking 2 the same recovery demanded in a specific [claim], and is based on the same 3 4 facts,” it does not survive if the underlying claim does not survive. McBride, 5 123 Cal.App.4th at 394; see also Mitchell v. Nat’l Auto. & Cas. Ins. Co., 38 6 Cal.App.3d 599, 606 (1974) (“It is settled that when a common count is 7 8 based upon the same facts specifically pleaded in another count which is 9 subject to demurrer, the common count is likewise subject to demurrer.”). 10 Therefore, Bear’s motion to dismiss Counts I and II is GRANTED. 11 12 13 C. Work, Labor and Services in Quantum Meruit 14 Count III of MGBW’s Amended Counterclaim seeks recovery in 15 16 quantum meruit for work, labor, and services rendered at Bear’s request and 17 completed prior to the fire, and incorporates the facts supporting Counts I, II 18 and IV. Doc. 18, at ¶17-22. “A quantum meruit or quasi-contractual recovery 19 rests upon the equitable theory that a contract to pay for services rendered 20 21 is implied by law for reasons of justice.... However, it is well settled that there 22 is no equitable basis for an implied-in-law promise to pay reasonable value 23 when the parties have an actual agreement covering compensation.” 24 25 Hedging Concepts, Inc. v. First Alliance Mortgage Co., 41 Cal.App.4th 1410, 26 1419 (1996). “The elements of an unjust enrichment claim are the ‘receipt of 27 a benefit and [the] unjust retention of the benefit at the expense of another.’” 28 -11- Case No. 3:14-cv-02960-BTM-BLM 1 Peterson v. Cellco P’ship, 164 Cal.App.4th 1583, 1594 (2008); Kirkeby v. JP 2 Morgan Chase Bank, N.A., 2014 WL 4364836, at *7 (S.D. Cal. Sept. 3, 3 4 5 2014). Bear argues that recovery for contractual breach and unjust 6 enrichment are mutually exclusive. See Klein v. Chevron U.S.A., Inc., 202 7 8 Cal.App.4th 1342, 1389 (2012) (affirming dismissal of a plaintiff’s unjust 9 enrichment cause of action because it stated a valid breach of contract claim 10 on the same subject matter). The decision in Klein dismissing alternative 11 theories of recovery turned on the plaintiff’s failure to plead that the contract 12 13 underlying its breach of contract claim might be invalid, thus requiring 14 quantum meruit as an alternative means of recovery. Id. By contrast, MGBW 15 states that Bear’s Complaint contests the validity of at least some of the 16 17 Contract’s terms, including the amendments pursuant to which MGBW 18 performed its work, labor and services prior to the fire. Doc. 29, at 3. 19 Whether MGBW can succeed on its claim for unjust enrichment 20 21 depends in part on whether Bear accepted or received the benefit of any 22 work, labor or services that MGBW may have performed on the Polar Bear. 23 See Spurgeon v. Buchter, 192 Cal.App.2d 198, 206-07 (1961); Petters Co. 24 25 v. BLS Sales Inc., 2005 WL 2072109 (N.D. Cal. Aug. 26, 2005). Here, there 26 may have been a benefit if the yacht’s value was arguably increased by any 27 repairs that can be proven to have been performed prior to the fire. This is 28 -12- Case No. 3:14-cv-02960-BTM-BLM 1 enough at this stage. Therefore, MGBW has sufficiently pled an alternative 2 quantum meruit claim. Bear may readdress the issue after sufficient 3 4 discovery on a motion for summary judgment. The motion to dismiss Count 5 III is DENIED. 6 7 8 D. Motion to Strike Bear asks the Court to strike from paragraphs 13, 16, 19, 22, and 27 of 9 the Amended Counterclaim, allegations regarding the reasonable value of 10 services MGBW provided Bear prior to the fire. Doc. 23-1, at 8-9. Under 11 Fed. R. Civ. P. 12(f), a court may strike “any redundant, immaterial, 12 13 impertinent, or scandalous matter.” Since Counts III and IV survive at this 14 time, the allegations of reasonable value of services provided may be 15 relevant to proving restitution damages. See Pay Less Drug Stores v. 16 17 Bechdolt, 92 Cal.App.3d 496, 501 (Ct. App. 1979) (awarding purchase price 18 as restitution remedy for breach and quoting Restatement (First) of 19 Contracts § 347 cmt b (1932)); Restatement (Second) of Contracts § 377 20 21 (discussing restitution in cases of impracticability and frustration). Therefore, 22 these allegations are not redundant or immaterial, nor are they impertinent. 23 For these reasons, Bear’s motion to strike is DENIED. 24 25 /// 26 /// 27 28 /// -13- Case No. 3:14-cv-02960-BTM-BLM IV. 1 2 3 4 CONCLUSION For the reasons discussed above, Bear’s Motion to Dismiss Amended Counterclaim and to Strike, Doc. 23, is GRANTED IN PART and DENIED IN 5 PART. The Motion is GRANTED as to Counts I and II. The Motion is 6 DENIED as to Counts III and IV. The Motion to Strike is DENIED. Counts I 7 8 and II are DISMISSED from MGBW’s Amended Counterclaim. Additionally, 9 Bear’s Motion to Dismiss, Doc. 14, is DENIED as moot. Bear shall file an 10 answer to the Amended Counterclaim within 14 days of the entry of this 11 Order. Counsel for the parties are further ORDERED to appear before this 12 13 Court on July 29, 2015, at 3:00 p.m. for a status conference and to set a trial 14 date. If counsel wish to appear telephonically, they must coordinate a 15 conference call. 16 17 IT IS SO ORDERED. 18 Dated: July 14, 2015 19 20 21 22 23 24 25 26 27 28 -14- Case No. 3:14-cv-02960-BTM-BLM
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