Unpublished Disposition, 914 F.2d 261 (9th Cir. 1989)

MEMORANDUM^* 

We affirm the district court's order dismissing six of appellants' ten causes of action and granting final judgment on those claims in favor of appellees.

* On January 26, 1986, John Blair entered into a written agreement with V.I.P. Motor Cars, Ltd. ("V.I.P.") to buy a new Mercedes-Benz automobile. Upon delivery of the car on June 26, 1986, Blair noticed that the climate-control system in the car was defective.

After failing to receive what he considered adequate redress from either V.I.P. or Mercedes-Benz of North America, Inc. ("Mercedes-Benz"), Blair filed a complaint in Superior Court of the State of California for the County of Riverside (Indio Branch). The complaint, which named V.I.P., Mercedes-Benz, and Does 1-20 as defendants, alleged three state-law causes of action. Blair sought "damages according to proof," but no less than $60,000 on any cause of action. Mercedes-Benz answered the complaint; V.I.P. filed a demurrer.

In December 1987, Blair, now joined as plaintiff by his wife Margaret Blair, filed an amended complaint. It reasserted the three causes of action raised in the original complaint and alleged two additional state-law causes of action. Again, the lowest amount sought by the Blairs on any count was $60,000. V.I.P. answered the first amended complaint, but Mercedes-Benz filed a demurrer. Mercedes-Benz argued, in effect, that the Blairs lacked standing to sue because the purchase agreement for the car indicated that a company named "Springs Leasing" had bought the car.

A second amended complaint was filed on April 21, 1988. The plaintiffs now included Springs Leasing as well as the Blairs. The causes of action alleged also had again grown in number--this time to ten. One of the five new causes of action alleged breach of the federal Magnuson-Moss Warranty Act.

Based on the Magnuson-Moss Act claim, Mercedes-Benz and V.I.P. timely removed this action to federal court. On May 19, 1988, Mercedes-Benz filed in federal district court a motion to dismiss pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure. On June 3, 1988, Springs Leasing and the Blairs (collectively hereinafter "plaintiffs") filed a motion for remand to state court. Plaintiffs argued that the district court lacked subject-matter jurisdiction and that all claims should be remanded to the state court, and alternatively that all claims not presenting a federal question should be so remanded.

After a hearing, the district court filed, on August 9, 1988, an order granting a motion by Mercedes-Benz for judicial notice of certain documents, denying plaintiffs' motion to remand, and dismissing with prejudice pursuant to Rule 12(b) (6) six of plaintiffs' ten causes of action. The court dismissed without prejudice the three remaining state-law claims and retained jurisdiction over the Magnuson-Moss Act claim.

On September 22, 1988, Springs Leasing refiled all nine state claims in state court, including the six claims which the district court had dismissed with prejudice. After Mercedes-Benz informed plaintiffs of the impropriety of refiling claims which had been dismissed with prejudice, plaintiffs filed in the district court a motion for clarification or for certification of issues for appeal. On March 31, 1989, the district court, pursuant to Federal Rule of Civil Procedure 54(b), filed an order granting partial final judgment as to the six claims which it had dismissed with prejudice and certified them for appeal.

Plaintiffs timely appeal from the March 31, 1988 order. We have jurisdiction over the district court's partial final judgment under 28 U.S.C. § 1291.¹ 

II

We must inquire whether the district court erred in dismissing with prejudice six of plaintiffs' state-law claims. This issue is properly before us because the district court entered final judgment with respect to these claims. See Fed R.Civ.P. 54(b); 28 U.S.C. § 1291 (1988).²  Our review is de novo and is limited to the contents of the complaint. See Jackson v. Southern Cal. Gas Co., 881 F.2d 638, 642-43 (9th Cir. 1989). All allegations of material fact are taken as true and construed in the light most favorable to the plaintiffs. See id.

* Plaintiffs' second cause of action sought relief under the Song-Beverly Consumer Warranty Act ("Song-Beverly Act"). See Cal.Civ.Code Secs. 1790-1795 (West 1985 & Supp.1990). Their ninth cause of action sought relief under the Consumer Legal Remedies Act ("CLRA"). See id. Secs. 1750-84. The district court did not err in dismissing these causes of action.

Neither act in question applies to the automobile sale at issue, for the parties agree that the purchase agreement lists only a corporation (Springs Leasing) and not individuals (e.g., the Blairs). As a corporation, Springs Leasing lacks standing to sue under these acts. By its own terms, the CLRA "protect [s] consumers against unfair and deceptive business practices," id. Sec. 1760, and defines "consumer" as "an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes." Id. Sec. 1761(d); see also id. Sec. 1780 (granting standing to sue to "any consumer who suffers any damage").³  The CLRA distinguishes between an "individual" and a "corporation" in defining "person" as "an individual, partnership, corporation, association, or other group, however organized." Id. Sec. 1761(c). As for the Song-Beverly Act, it grants standing to sue to "any buyer of consumer goods" who is damaged in a certain way, id. Sec. 1794(a), and defines "buyer" as any "individual who buys consumer goods from a person engaged in the business of manufacturing, distributing, or selling such goods at retail." Id. Sec. 1791(b); cf. id. (defining "person " as "any individual, partnership, corporation, association, or other legal entity which engages in any such business").

As is evident from these statutory definitions, both of the California acts in question grant standing to individuals, not to corporations. The statutes reflect a careful distinction between, on the one hand, "consumer [s]" and "buyer [s]," to whom standing is granted because they are "individual [s]," and, on the other hand, other types of "person [s]," such as "corporation [s]," which would include Springs Leasing and which are not included in the statutory provisions granting standing to sue. See, e.g., id. Secs. 1780, 1794.

As a corporation, therefore, Springs Leasing lacked standing under either act.⁴ 

B

Plaintiffs' fifth cause of action sought relief on the ground that defendants tortiously breached an implied convenant of good faith and fair dealing. The district court did not err in dismissing it.

An implied covenant of good faith and fair dealing exists in every contract in California, but the availability of a tort remedy for the covenant's breach is limited. California courts have limited the remedy to " 'special relationship [s]' ... characterized by elements of public interest, adhesion, and fiduciary responsibility," such as the relationship between insurer and insured. Seaman's Direct Buying Serv. v. Standard Oil Co., 36 Cal. 3d 752, 768-69 & n. 6, 686 P.2d 1158, 1166 & n. 6, 206 Cal. Rptr. 354, 362 & n. 6 (1984). Such a "special relationship" has been found not to exist between parties to a distributorship agreement, see Consolidated Data Terminals v. Applied Digital Data Systems, Inc., 708 F.2d 385, 399-400 (9th Cir. 1983), and parties to an ordinary commercial contract, see Premier Wine & Spirits v. E. & J. Gallo Winery, 846 F.2d 537, 540 (9th Cir. 1988). Indeed, the California Supreme Court recently found that such a special relationship does not exist between an employer and his employee. See Foley v. Interactive Data Corp., 47 Cal. 3d 654, 692-93, 765 P.2d 373, 395-96, 254 Cal. Rptr. 211, 234-35 (1988). Given this backdrop, it is beyond gainsaying that the relationship between an automobile vendor and a purchaser is not "special" such that a tort remedy will lie for breach of a contract's implied covenant of good faith and fair dealing.

C

Plaintiffs' sixth cause of action alleged bad-faith denial of an existing contract. It was properly dismissed.

California law renders actionable the denial, in bad faith and without probable cause, that a contract exists. See Seaman's Direct Buying Serv., 36 Cal. 3d at 769, 686 P.2d at 1167, 206 Cal. Rptr. at 363. Plaintiffs have not alleged, however, that Mercedes-Benz or V.I.P. ever denied the existence of a service contract, warranty, or any other agreement. At most, defendants allegedly denied the applicability of a supposed contractual term (viz., the provision stating the relevance of the Song-Beverly Act).

D

Appellants' seventh cause of action alleged intentional infliction of emotional distress. A prima facie case requires (1) outrageous conduct by the defendant, (2) intention to cause or reckless disregard of the probability of causing emotional distress, (3) severe emotional suffering, and (4) actual and proximate causation of the emotional distress. Agarwal v. Johnson, 25 Cal. 3d 932, 946, 603 P.2d 58, 66, 160 Cal. Rptr. 141, 149 (1979). We agree with the district court that plaintiffs failed to make out such a case.

To be considered "outrageous," the defendants' conduct must exceed "all bounds usually tolerated by a decent society, [and be] of a nature which is especially calculated to cause, and does cause, mental distress." Agarwal, 25 Cal. 3d at 946, 603 P.2d at 66-67, 160 Cal. Rptr. at 149-50 (quotation omitted). The determination that the conduct alleged by the plaintiffs did not rise to this level was properly made by the district court. See Godfrey v. Steinpress, 128 Cal. App. 3d 154, 173, 180 Cal. Rptr. 95, 104 (1982) ("Regarding emotional distress, the trial court initially determines whether a defendant's conduct may reasonably be regarded as so extreme and outrageous as to permit recovery.... Otherwise stated, the court determines whether severe emotional distress can be found....").

We conclude that reasonable people could not differ as to whether the alleged conduct surrounding this admittedly unhappy climate-control system was so extreme as to exceed all bounds usually tolerated by a decent society. We therefore must affirm the district court's dismissal of this cause of action. See id. (where reasonable people cannot differ on whether conduct alleged was so extreme and outrageous, nonsuit is proper).

E

Finally, we come to plaintiffs' tenth cause of action, which alleged that appellees violated the California Unfair Practices Act. See Cal.Bus. & Prof.Code Secs. 17000-17101 (West 1987 & Supp.1990). Appellants' claim for relief under this cause of action was predicated on appellees' alleged violation of the Song-Beverly Act. Because we concluded above that appellants' Song-Beverly claim was properly dismissed, we must conclude that dismissal of this cause of action was also appropriate.

AFFIRMED.