Broken Drum Bar, Inc. et al v. Site Centers Corp. et al, No. 2:2019cv01445 - Document 34 (C.D. Cal. 2019)
Court Description: ORDER GRANTING, IN PART, DENYING IN PART, DEFENDANTS MOTION TO DISMISS 21 .Plaintiffs may amend their complaint to address the deficienciesas identified above within 14 days from the date of this Order 21 by Judge Otis D. Wright, II (lc)
Download PDF
<![CDATA[
Broken Drum Bar, Inc. et al v. Site Centers Corp. et al Doc. 34 O 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 11 BROKEN DRUM BAR, INC. et al., Case No. 2:19-cv-01445-ODW (SKx) Plaintiff, 12 v. 13 ORDER GRANTING, IN PART, 14 SITE CENTERS CORP. et al., 15 Defendants. DENYING IN PART, DEFENDANTS’ MOTION TO DISMISS [21] 16 17 18 I. INTRODUCTION 19 Plaintiffs Broken Drum Bar, Inc. (“Broken Drum Bar”); Stefan Guillen; and 20 Brian Maginnis bring various claims against Defendants Site Centers Corp. Inc.; DDR 21 Urban, Inc.; DDR Urban LP (“DDR”); Patrick Brady; and Morgan Erickson relating 22 to a lease dispute. Defendant DDR1 owns and operates a shopping center in Long 23 Beach, California. (First Am. Compl. (“FAC”) ¶¶ 11, 18, ECF No. 12.) 24 Defendants move to dismiss on the following grounds: (1) Plaintiffs Guillen 25 and Maginnis lack standing; (2) Defendants Site Centers Corp. Inc., DDR Urban, Inc., 26 Brady, and Erickson are improper defendants; and (3) Plaintiffs failed to sufficiently 27 28 1 The other two entities are allegedly affiliates of DDR Urban LP. (See FAC ¶¶ 9–15.) Dockets.Justia.com 1 allege each cause of action. (See generally Mot. to Dismiss FAC (“Mot.”), ECF No. 2 21.) 3 Having reviewed the papers and the oral argument of counsel, and for the 4 reasons that follow, the Court GRANTS, IN PART, DENIES IN PART, Defendants’ 5 Motion to Dismiss. 6 7 8 II. FACTUAL BACKGROUND Plaintiff Stefan Guillen is the President of Broken Drum Bar, Inc. (Mot. 3.) Plaintiff Brian Maginnis is an investor of Broken Drum Bar, Inc. (Id.) 9 Defendant DDR owns and operates the Pike Outlets in Long Beach, California. 10 (Mot. 3.) Defendant Patrick Brady is the Vice President of Leasing for Defendant Site 11 Centers Corp., Inc. (FAC ¶ 12.) Defendant Morgan Erickson is the Regional General 12 Manager for Defendant Site Centers Corp., Inc. (FAC ¶ 13.) 13 In 2017, Mr. Guillen, on behalf of Broken Drum Bar, Inc., commenced the 14 process of obtaining a lease for unit number 550 (previously occupied by Sgt. 15 Pepper’s Dueling Pianos). (See FAC ¶¶ 18, 27.) As part of the process, Plaintiff 16 Guillen submitted a detailed outline of his business plan to Defendant Brady, which 17 informed Defendant Brady that he intended to use the space as a live music and 18 entertainment venue. (FAC ¶ 19.) Defendant Brady responded that Plaintiff Guillen’s 19 proposal had been recommended for approval and that “final approval and consent 20 [for] use as a live music and bar . . . would take a few more weeks.” (FAC ¶ 20.) 21 On March 1, 2018, Plaintiffs took over the lease of unit number 550 from Sgt. 22 Pepper’s Dueling Pianos. (FAC ¶ 22.) On March 17, 2018, Plaintiffs held a soft 23 opening for the business. (FAC ¶ 23.) During the soft opening, security guards were 24 sent to Plaintiffs’ business due to noise complaints from the nearby movie theatre, 25 Cinemark Movie Theatres (“Cinemark”). (FAC ¶ 24.) Due to the noise, during 26 Plaintiffs’ operation of the business, Defendants would place security personnel at the 27 entrance of Plaintiffs’ business, and the security personnel were instructed to take 28 notes of employee names and patrons entering the business. (FAC ¶ 29.) 2 1 Prior to entering into the lease, Plaintiffs allege that Defendants informed them 2 that there had been no prior noise complaints related to unit number 550. (FAC ¶ 30.) 3 However, Plaintiffs allege that they were informed by numerous tenants at the 4 shopping center that noise complaints from unit number 550 were nothing new and 5 had been ongoing for several years. (FAC ¶¶ 27–28.) Defendants demanded that 6 Plaintiffs remedy the noise issue or change the nature of their business. (FAC ¶ 31.) 7 In response, Plaintiffs informed Defendants that they would withhold rent until 8 Defendants fixed the property. (FAC ¶ 32.) However, shortly thereafter, Plaintiffs 9 ceased operation of the Broken Drum Bar. (FAC ¶ 33.) III. 10 PROCEDURAL HISTORY 11 On January 7, 2019, Plaintiffs filed this lawsuit in Los Angeles County Superior 12 Court. (Notice of Removal, ECF No. 1.) Plaintiffs brought seven claims for relief: 13 (1) negligence; (2) breach of implied covenant of good faith and fair dealing; (3) 14 intentional misrepresentation; (4) negligent misrepresentation; (5) negligent 15 interference with prospective economic relations; (6) intentional interference with 16 prospective economic relations; and (7) breach of quiet enjoyment. (See generally 17 FAC.) 18 On February 27, 2019, Defendants removed this case on the basis of diversity 19 jurisdiction. (Id.) On March 11, 2019, Defendants filed a motion to dismiss. (ECF 20 No. 9.) On March 27, 2019, Plaintiffs filed a First Amended Complaint adding two 21 additional parties, Patrick Brady and Morgan Erickson, purportedly to destroy 22 diversity. (ECF No. 12.) On the same day, Plaintiffs attempted to file a motion for 23 remand, which the Court struck because it was improperly filed. (See ECF No. 19.) 24 Plaintiffs have not attempted to refile their motion for remand. On April 10, 2019, 25 Defendants again moved to dismiss the case. (Mot.) 26 27 28 3 IV. 1 LEGAL STANDARD 2 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 3 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 4 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To 5 survive a dismissal motion, a complaint need only satisfy the minimal notice pleading 6 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 7 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to 8 raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 9 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual matter, 10 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 11 Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). 12 The determination of whether a complaint satisfies the plausibility standard is a 13 “context-specific task that requires the reviewing court to draw on its judicial 14 experience and common sense.” Id. at 679. A court is generally limited to the 15 pleadings and must construe all “factual allegations set forth in the complaint . . . as 16 true and . . . in the light most favorable” to the plaintiff. Lee v. City of Los Angeles, 17 250 F.3d 668, 679 (9th Cir. 2001). But a court need not blindly accept conclusory 18 allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. 19 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 20 Where a district court grants a motion to dismiss, it should generally provide 21 leave to amend unless it is clear the complaint could not be saved by any amendment. 22 See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 23 1025, 1031 (9th Cir. 2008). V. 24 25 A. DISCUSSION Standing 26 Based on the allegations in the First Amended Complaint, Plaintiffs Guillen and 27 Maginnis do not have standing to bring a claim related to the lease dispute. The First 28 Amended Complaint generally alleges that Plaintiff Guillen, acting on behalf of 4 1 Broken Drum Bar, Inc., negotiated and entered into the lease with Defendant DDR. 2 (See FAC ¶ 42.) Plaintiff Maginnis was an investor in Broken Drum Bar. (FAC ¶ 69.) 3 Plaintiffs offer no response to this issue. 4 “The normal rule is that a corporation is run by its management, and the 5 corporation itself has the right to make claims.” Quinn v. Anvil Corp., 620 F.3d 1005, 6 1012 (9th Cir. 2010). For individual shareholders of a corporation to bring a suit on 7 behalf of the corporation, the shareholders must bring a shareholder derivative suit 8 and comply with Federal Rule of Civil Procedure 23.1. 9 requirements, Rule 23.1 requires that the plaintiff “allege with particularity the efforts, 10 if any, made by the plaintiff to obtain the action the plaintiff desires from the 11 directors.” Potter v. Hughes, 546 F.3d 1051, 1056 (9th Cir. 2008) (internal quotation 12 marks omitted). Id. Among other 13 Here, Plaintiffs Guillen and Maginnis do not come close to alleging facts 14 sufficient to support a derivative lawsuit. With Broken Drum Bar, Inc. as a party to 15 this lawsuit, Plaintiffs’ ability to maintain a derivative suit is improbable; Broken 16 Drum Bar, Inc. is already acting in the interest of its shareholders. See Paulson, Inc. v. 17 Bromar, Inc., 775 F. Supp. 1329, 1339 (D. Haw. 1991) (finding that derivative actions 18 are only permitted when “a corporation has failed to enforce a right which may be 19 properly assigned to it”) (internal quotation marks omitted). 20 Accordingly, the Court grants Defendants’ Motion and dismisses Plaintiffs 21 Guillen and Maginnis with leave to amend. Plaintiffs Guillen and Maginnis are given 22 leave to amend to allege non-derivative claims. 23 B. Defendants Site Centers Corp. Inc. and DDR Urban, Inc. 24 Defendants argue that Site Centers Corp. Inc. and DDR Urban, Inc. are not 25 proper parties to the lawsuit and should be dismissed. Plaintiffs offer no opposition to 26 this issue. 27 Plaintiffs allege that Site Centers Corp., Inc. and DDR Urban, Inc. were the 28 property development and management companies. (FAC ¶¶ 9, 10.) Plaintiffs further 5 1 allege that Site Centers Corp., Inc. is the successor company to DDR Corp., Inc. 2 (FAC ¶ 9.) Plaintiffs also allege that each of the Defendants were the agents and 3 employees of every other Defendant and were acting within the scope and course of 4 such agency and employment. 5 Defendants were acting for the benefit of each co-Defendant. (FAC ¶ 17.) (FAC ¶ 16.) Moreover, Plaintiffs allege that 6 These boilerplate, conclusory allegations are insufficient to survive a motion to 7 dismiss. See Fajardo v. Ross, No. 1:12-cv-00217 AWI DLB, 2012 WL 2921179, at 8 *1 (E.D. Cal. July 17, 2012). Plaintiffs fail to explain how Site Centers Corp. Inc. and 9 DDR Urban, Inc. are related to the other defendants or their potential liability to any 10 causes of action. Neither of these Defendants are signatories to the lease agreement 11 between Broken Drum Bar, Inc. and DDR Urban LP. 12 Accordingly, the Court grants Defendants’ Motion, however, Plaintiffs are 13 given leave to amend its complaint to allege more specific facts against Site Centers 14 Corp. Inc. and DDR Urban, Inc. 15 C. 16 17 Defendants Brady and Erickson Defendants also move to dismiss Defendants Brady and Erickson on the basis that they are sham defendants. 18 “An exception to the requirement of complete diversity exists where it 19 appears that a plaintiff has fraudulently joined a ‘sham’ non-diverse defendant.” 20 Sanchez v. Lane Bryant, Inc., 123 F. Supp. 3d 1238, 1241 (C.D. Cal. 2015). “If the 21 plaintiff fails to state a cause of action against a resident defendant, and the failure 22 is obvious according to the settled rules of the state, the joinder of the resident 23 defendant is fraudulent.” Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 24 1203, 1206 (9th Cir. 2007) (quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 25 1339 (9th Cir. 1987)); see also Padilla v. AT&T Corp., 697 F. Supp. 2d 1156, 1158 26 (C.D. Cal. 2009) (“[A] non-diverse defendant is deemed a sham defendant if . . . 27 the plaintiff could not possibly recover against the party whose joinder is 28 questioned.”). 6 1 Plaintiffs offer no opposition or reason why these Defendants could be held 2 individually liable as Plaintiffs have alleged that Defendants Brady and Erickson 3 were acting within the scope of their employment. (See FAC ¶ 16.) Further, these 4 Defendants were added only after the case was removed. Plaintiffs previously 5 identified Defendants Brady and Erickson in their Complaint, and simply changed 6 them to Defendants in their First Amended Complaint, likely in an attempt to 7 destroy diversity. Plaintiffs did not make any new allegations against them. Nor 8 do the allegations raise a sufficient claim against Defendants Brady and Erickson. 9 Further, Plaintiffs were provided an opportunity at the hearing to address why the 10 Court should not consider Defendants Brady and Erickson sham defendants, and 11 Plaintiffs failed to provide any substantive response. Accordingly, the Court grants the Motion and dismisses Defendants Brady and 12 13 Erickson without leave to amend. 14 D. 15 Specific Claims 1. Negligence 16 Defendants move to dismiss Plaintiffs’ claim for negligence on the basis that 17 Defendants owed no duty to Plaintiffs. Specifically, Defendants argue that the lease 18 agreement “disclaims any such duty” because the lease agreement contemplated 19 Plaintiff taking the property on an “as-is” basis. (Mot. 13.) 20 To maintain a claim for negligence, Plaintiffs must allege “(1) duty; (2) breach; 21 (3) causation; and (4) damages.” Ileto v. Glock, Inc., 349 F.3d 1191, 1203 (9th Cir. 22 2003). In California, “the general rule is that all persons have a duty to use ordinary 23 care to prevent others from being injured as the result of their conduct.” Rowland v. 24 Christian, 69 Cal. 2d 108, 112 (1968), superseded by statute of other grounds as stated 25 in Perez v. S. Pac. Transp. Co., 218 Cal. App. 3d 462, 467 (1990)); see also Cal. Civ. 26 Code § 1714. California further recognizes a duty of care to communicate accurate 27 information (1) “where providing false information poses a risk of and results in 28 physical harm to person or property;” or (2) “where information is conveyed in a 7 1 commercial setting for a business purpose.” Friedman v. Merck & Co., 107 Cal. App. 2 4th 454, 477 (2003). 3 Here, as pled, Plaintiffs have stated a sufficient claim for negligence. Plaintiffs 4 allege that Defendants fell below the requisite standard of care by failing to disclose 5 “prior and ongoing noise bleeds and property defect” resulting in harm to Plaintiffs. 6 (See FAC ¶ 40.) Plaintiffs further allege that the failure to disclose information 7 resulted in Plaintiffs being unable to book entertainment acts, eventually resulting in 8 Plaintiffs shutting down the business. (FAC ¶¶ 39–40.) Defendants’ argument that 9 Plaintiffs took the property on an “as-is” basis is misplaced. Simply because Plaintiffs 10 took the property on an “as-is” basis does not relieve Defendants of their duty to 11 convey accurate information to Plaintiffs. Nor does the provision allow Defendants to 12 make misrepresentations to Plaintiffs to induce Plaintiffs into signing a lease. 13 The Court denies Defendants’ Motion on the negligence claim. 2. 14 Breach of Covenant of Good Faith and Fair Dealing 15 Defendants move to dismiss Plaintiffs’ breach of covenant of good faith and 16 fair dealing on the basis that “allegations prior to the existence of a contract cannot 17 form the basis for a claim for breach of the covenant of good faith and fair dealing.” 18 (Mot. 14 (emphasis in original) (citing McClain v. Octagon Plaza, LLC, 159 Cal. App. 19 4th 784, 799 (2008).) Plaintiffs do not oppose, instead, they seek leave to amend. 20 Based on the facts and circumstances of this case, the Court finds that this claim could 21 be saved by an amendment. 22 Accordingly, the Court grants the Motion as to this claim with leave to amend. 3. 23 Intentional and Negligent Misrepresentation 24 Defendants move to dismiss Plaintiffs’ claims for intentional and negligent 25 misrepresentation because Plaintiffs do not specifically identify which Defendant 26 made a misrepresentation. Defendants also argue that because Plaintiffs took the 27 property on an “as-is” basis, Plaintiffs could not have justifiably relied on Defendants’ 28 statements. 8 1 2 3 Plaintiffs agree that their claim for intentional misrepresentation lacks sufficient detail and request leave to amend to include such detail. However, Plaintiffs have made a sufficient claim for negligent 4 misrepresentation. Defendants’ argument that Plaintiffs could not have justifiably 5 relied on Defendants’ statements is more suitable for summary judgment than a 6 motion to dismiss. At this stage, Plaintiffs have sufficiently alleged that Defendants 7 knowingly/negligently failed to provide Plaintiffs with material information and that 8 Plaintiffs’ reliance on Defendants’ misrepresentations is the cause of Plaintiffs’ harm. 9 (FAC ¶¶ 57, 61, 63, 67–70.) 10 Accordingly, the Court grants Defendants’ Motion to Dismiss as to the claim 11 for intentional misrepresentation with leave to amend and denies the Motion as to the 12 claim for negligent misrepresentation. 13 14 4. Negligent Interference with Prospective Relations and Intentional Inference with Prospective Economic Relations 15 Defendants move to dismiss Plaintiffs’ claims for negligent and intentional 16 interference with prospective economic relations on the basis that Plaintiffs did not 17 allege a wrongful act. (Mot. 17–18.) Defendants argue that Plaintiffs’ sole basis for 18 these claims is that Defendants refused fix the property defect, which is not wrongful 19 conduct because the lease agreement assigned repairs of property defects to Plaintiffs, 20 not Defendants. This is wrong. Plaintiffs allege that Defendants’ wrongful conduct 21 was Defendants’ representations that “there was no noise complaint from neighboring 22 tenants prior to [Plaintiffs] signing the lease” and that even after the lease was signed, 23 Defendants reassured Plaintiffs that there had been no prior noise complaints. 24 (FAC ¶¶ 82, 83.) As a result of Defendants’ alleged wrongful conduct, Plaintiffs 25 claim that the relationship between Plaintiff Guillen and Plaintiff Maginnis was 26 interfered with. (FAC ¶¶ 74, 84.) 27 28 9 1 However, Plaintiffs did not address these claims in their Opposition. Further, 2 although not addressed in the Motion, these claims are tenuous as Plaintiffs failed to 3 allege sufficient facts to support a claim. 4 5 6 7 8 9 10 11 12 13 To state a claim for negligent interference with prospective economic relations, a plaintiff must allege: (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part. 14 Venhaus v. Shultz, 155 Cal. App. 4th 1072, 1077–78 (2007). Here, Plaintiffs failed to 15 allege that the relationship between Plaintiff Guillen and Plaintiff Maginnis contained 16 a reasonably probable future economic benefit, that Defendants’ failure to act with 17 due care would interfere with this relationship; and how the relationship was actually 18 interfered with or disrupted. 19 To state a claim for intentional interference with prospective economic 20 advantage, a plaintiff must allege: “(1) the existence, between the plaintiff and some 21 third party, of an economic relationship that contains the probability of future 22 economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) 23 intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption 24 of the relationship; and (5) economic harm proximately caused by the defendant’s 25 action.” Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., 2 Cal. 5th 505, 26 512 (2017). 27 Here, Plaintiffs failed to allege facts that Defendants’ wrongful acts were 28 designed to disrupt the relationship between Plaintiff Guillen and Plaintiff Maginnis, 10 1 actual disruption of the relationship, and economic harm proximately caused by 2 Defendants’ action. 3 4 5 Accordingly, the Court grants Defendants’ Motion as to these claims with leave to amend. 5. Breach of Quiet Enjoyment 6 Defendants move to dismiss Plaintiffs’ claim for breach of quiet enjoyment on 7 the basis that Defendants had no obligation to repair the premises under the lease. 8 Again, this argument is misplaced. Plaintiffs allege that Defendants breached the 9 covenant of quiet enjoyment because Defendants placed their security guards on 10 Plaintiffs’ premises “to interfere, harass and intimidate Plaintiff’s Broken Drum Bar’s 11 occupation of [u]nit [number] 550.” (FAC ¶ 91.) This is sufficient to state a claim. 12 See Nativi v. Deutsche Bank National Trust Co., 223 Cal. App. 4th 261, 292 (2014) 13 (finding the covenant of quiet enjoyment “insulates the tenant against any act or 14 omission on the part of the landlord . . . which interferes with a tenant’s right to use 15 and enjoy the premises for the purposes contemplated by the tenancy”). 16 17 Accordingly, the Motion is denied as to this claim. 6. Damages 18 Defendants also move to dismiss this case as Plaintiffs have no recoverable 19 damages because the lease agreement limits Plaintiffs’ ability to recover damages. 20 Defendants do not argue that the damages that Plaintiffs seek are unavailable by law, 21 but rather, the lease agreement alters what Plaintiffs may recover. 22 As an initial matter, a demand for an improper remedy is not a proper basis for 23 a 12(b)(6) motion. Cent. Sierra Envtl. Res. Ctr. v. Stanislaus Nat’l Forest, 304 F. 24 Supp. 3d 916, 955 n.28 (E.D. Cal. 2018) (quoting Massey v. Banning Unified Sch. 25 Dist., 256 F. Supp. 2d 1090, 1092 (C.D. Cal. 2003)) (“Courts do not grant motions 26 under Rule 12(b)(6) ‘merely because a plaintiff requests a remedy to which he or she 27 is not entitled.’”). 28 11 1 Further, at this stage, it is improper to dismiss a claim on the basis that the lease 2 agreement prohibits certain damages. See Whittlestone, Inc. v. Hand-Craft Co., 618 3 F.3d 970, 975 n.2 (9th Cir. 2010) (reviewing the entire contract and finding that it 4 would be inappropriate to dismiss claims based on the language of a contract 5 prohibiting consequential damages). 6 7 Accordingly, the Court denies the Motion based on the limitation of damages provision of the lease agreement. IV. 8 CONCLUSION 9 For the foregoing reasons, the Court GRANTS IN PART, DENIES IN PART, 10 Defendants’ Motion. Plaintiffs may amend their complaint to address the deficiencies 11 as identified above within fourteen (14) days from the date of this Order. 12 13 IT IS SO ORDERED. 14 15 May 22, 2019 16 17 18 19 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 12
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
