Best Fresh, LLC v. Vantaggio Farming Corporation et al, No. 3:2021cv00131 - Document 27 (S.D. Cal. 2022)
Court Description: ORDER Denying Produce Pay, Inc.'s Motion To Dismiss For Failure To State A Claim [ECF No. 23 ]. Signed by Judge Roger T. Benitez on 9/7/2022. (ddf)
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Best Fresh, LLC v. Vantaggio Farming Corporation et al Doc. 27 Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.285 Page 1 of 24 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 BEST FRESH LLC, an Arizona LLC, Plaintiff, 11 12 v. 13 VANTAGGIO FARMING CORPORATION, a California corporation; PRODUCE PAY, INC., a Delaware corporation, 14 15 Defendants. 16 17 18 I. ) ) ) ) ) ) ) ) ) ) ) Case No.: 3:21-cv-00131-BEN-WVG ORDER DENYING PRODUCE PAY, INC.’S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM [ECF No. 23] INTRODUCTION 19 Plaintiff Best Fresh, LLC (“Plaintiff”) brings this suit alleging several causes of 20 action against Defendants Vantaggio Farming Corporation (“Vantaggio”) and Produce 21 Pay, Inc., (“Produce Pay”) (collectively, “Defendants”) relating to the sale of produce. 22 Before the Court is Produce Pay’s Motion to Dismiss, see ECF No. 23, which was 23 submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and 24 Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 10. After considering the 25 papers submitted, supporting documentation, and applicable law, the Court DENIES 26 Produce Pay’s Motion to Dismiss as outlined below. See infra Part V. 27 II. 28 BACKGROUND Plaintiff brings twelve causes of action relating to unpaid proceeds resulting from -13:21-cv-00131-BEN-WVG Dockets.Justia.com Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.286 Page 2 of 24 1 the sale of bell peppers to Vantaggio, and the alleged wrongful taking of said proceeds by 2 Produce Pay. 3 A. 4 Plaintiff is an Arizona based “distributor of agricultural products, including but not 5 limited to bell peppers.” ECF No. 19 (“FAC”) at 2, 2 ¶ 3. Defendants are “distributors, 6 buyers and sellers of fresh fruits and vegetables” and are licensed “Dealers,” “Commission 7 Merchants,” and “Brokers” as those terms are defined by the Perishable Agricultural 8 Commodities Act, 7 U.S.C. § 499a, et seq. (“PACA”). Id. at 2, ¶ 6. “Vantaggio is generally 9 known . . . to be substantially engaged in selling the produce of others,” including Plaintiff, 10 Statement of Facts 1 and Produce Pay was aware of this. Id. at 3, ¶ 8. 11 Around December 2019, Plaintiff and Vantaggio entered into a verbal consignment 12 sales agreement for Vantaggio to market Plaintiff’s bell peppers in exchange for a 13 commission and warehousing fee. Id. at 3, ¶ 9; 6, ¶ 20. The verbal agreement was 14 subsequently confirmed in writing via invoices—pursuant to the terms, “Vantaggio agreed 15 to sell the bell peppers to third party buyers at the price agreed, collect the proceeds of sale, 16 deduct its commission [10%] and warehousing fee [$350.00 per shipment], [and] remit[] 17 the net proceeds of sale to Plaintiff.” Id. at 3–4, ¶ 10. Thus, Plaintiff’s obligation under 18 the agreement was to deliver the bell peppers to Vantaggio, which, in turn, would sell the 19 goods for Plaintiff to third-party purchasers and “inform Plaintiff of the market price it was 20 able to obtain.” Id. at 3, ¶ 9. “As part of the parties’ agreements, as stated on Plaintiff’s 21 invoices . . . [,] Vantaggio agreed to pay Plaintiff’s attorney’s fees and costs incurred in 22 collection efforts or litigation to obtain the sums owed . . . .” Id. at 4, ¶ 14. 23 Between December 2019 and March 2020, Vantaggio received several shipments of 24 25 26 27 28 1 The majority of the facts set forth are taken from the operative complaint, and for purposes of ruling on the instant Motion to Dismiss, the Court assumes the truth of the allegations pled and liberally construes them in favor of the non-moving party. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 2 Unless otherwise indicated, all page number references are to the ECF-generated page number contained in the header of each ECF-filed document. -23:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.287 Page 3 of 24 1 bell peppers from Plaintiff, took delivery of the produce ordered from Plaintiff, and “paid 2 [Plaintiff] the agreed upon amounts for a number of the initial shipments . . . .” Id. at 4, ¶ 3 11. With respect to later shipments, however, Vantaggio sold Plaintiff’s bell peppers on 4 Plaintiff’s behalf and “failed to remit the net proceeds to Plaintiff,” which amounted to no 5 less than $295,864.67. Id. at 4, ¶¶ 12, 13. Plaintiff further alleges that the bell peppers it 6 delivered to Vantaggio were red, yellow, and orange, and that this specific type of produce 7 was “supplied by (and only by) Plaintiff during the time in question.” Id. at 5, ¶ 18. 8 Plaintiff attaches invoices—and email correspondence identifying two of the alleged 9 invoices—that involve payment for red, yellow, and/or orange bell peppers. Ex. 1 to FAC 10 at 1, 3, 10, 12. 11 Payment for the peppers was made by third-party buyers in “checks payable to 12 Vantaggio,” but the checks were ultimately delivered to Produce Pay at its Los Angeles 13 office. FAC at 4, ¶¶ 13, 16. The money was subsequently “deposited into a bank account 14 controlled by and in . . . Produce Pay’s name.” Id. at 4, ¶ 16. Plaintiff further alleges that 15 “Vantaggio personnel have . . . confirmed that these funds were delivered to Produce Pay 16 upon its demand, and were retained by Produce Pay, despite request to release the funds 17 for payment to Plaintiff (because Produce Pay had no right to retain Plaintiff’s funds.)” Id. 18 at 5, ¶ 18. Produce Pay was aware that the bell peppers and payment were Plaintiff’s 19 property—and not that of other third-party suppliers—and “exercised dominion and 20 control over, directed, managed and ratified Vantaggio’s actions at issue . . . .” Id. at 4, ¶ 21 15; 5, ¶ 17. Produce pay did all of this without Plaintiff’s knowledge or consent and 22 continues to wrongfully retain the sums rather than remit the payment to Plaintiff. Id. at 23 4–5, ¶ 16. 24 B. 25 On November 6, 2020, Produce Pay filed suit against Vantaggio, in the Chancery 26 Court of Delaware alleging nine causes of action for: (1) breach of contract; (2) breach of 27 fiduciary duty and principals; (3) conversion; (4) unjust enrichment; (5) intentional 28 interference with contractual relations; (6) alter ego or single enterprise liability; (7) Procedural History -33:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.288 Page 4 of 24 1 conspiracy to defraud; (8) aiding and abetting; and (9) breach of malfeasance agreement. 2 Produce Pay, Inc. v. Vantaggio Farming Corporation, Case No. 2020-09-54, 2020 WL 3 66371554 (Del. Ch. Nov. 6, 2020) (Verified Complaint).3 4 On January 22, 2021, Plaintiff filed this action against Defendants Vantaggio and 5 Produce Pay, alleging twelve causes of action for: (1) breach of contract; (2) breach of 6 PACA; (3) breach of fiduciary duty; (4) goods had and received; (5) open book account; 7 (6) conversion; (7) civil theft, California Penal Code sections 496(a) and (c); (8) 8 accounting; (9) violation of the Uniform Fraud Transfer Act, California Civil Code sections 9 3439, et seq.; (10) violation of California’s Business & Professions Code section 17200 10 (the “UCL”); (11) violation of Chapter 7 of the California Food & Agricultural Code (the 11 “Produce Dealer Act”); and (12) unjust enrichment and constructive trust. ECF No. 1 12 (“Compl.”). On January 26, 2021, Vantaggio executed a waiver of service of the summons 13 pursuant to Rule 4(d) of the Federal Rules of Civil Procedure. ECF No. 16 at 2. 14 On February 16, 2021, Produce Pay filed a Motion to Dismiss Plaintiff’s claims for: 15 (1) breach of contract; (2) breach of fiduciary duty; (3) goods had and received; (4) open 16 book account; (5) civil theft; (6) accounting; and (7) the UCL. See ECF No. 4 at 1. Produce 17 Pay answered the remaining claims for: (1) breach of PACA; (2) conversion; (3) violation 18 of the Uniform Fraudulent Transfer Act; (4) violation of the Produce Dealer Act; and (12) 19 20 21 22 unjust enrichment and constructive trust. See generally ECF No. 5. On March 29, 2021, the deadline for Vantaggio’s to respond to the Complaint expired, with no response from Vantaggio. See ECF No. 16 at 2; see also FED. R. CIV. P. 4(d)(3). Plaintiff filed an Application for Entry of Default against Vantaggio, which was entered by the Clerk of Court on July 23, 2021. ECF Nos. 16, 17. 23 24 25 On July 22, 2021, On September 20, 2021, the Court issued an Order, see ECF No. 18 (the “Dismissal Order”), granting Produce Pay’s Motion to Dismiss. The Court dismissed with prejudice, Plaintiff’s claims against Produce Pay for: (1) breach of contract; (2) open book account; 26 27 28 3 The Court will refer to the complaint filed in this separate litigation as the “Delaware Complaint.” -43:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.289 Page 5 of 24 1 and (3) violation of California’s UCL under the fraudulent prong. Id. The Court also 2 dismissed with prejudice, Plaintiff’s allegations that Vantaggio and Produce Pay have an 3 agency/principal, master/servant, employer/employee, or joint venture relationship. Id. 4 The Court dismissed with leave to amend Plaintiff’s claims for: (1) breach of fiduciary 5 duty; (2) goods had and received; (3) civil theft; (4) accounting; and (5) violations of the 6 UCL under the unfair and unlawful prongs. See generally id. The Court also took judicial 7 notice of the Delaware Complaint, because it is a document of public record, but did not 8 take judicial notice of the factual allegations therein. Id. at 4 n.4. 9 On October 4, 2021, Plaintiff filed the First Amended Complaint (the “FAC”) 10 alleging the same twelve causes of action but amended the goods had and received claim 11 to goods and money had and received, and did not name Produce Pay in its claims for (1) 12 breach of contract; (2) breach of fiduciary duty; (3) open book account; and (4) accounting. 13 See generally FAC. Produce Pay responded by filing the instant Motion to Dismiss, 14 seeking to dismiss with prejudice Plaintiff’s remaining claims. ECF No. 23-1 (“Motion”). 15 Plaintiff filed an Opposition and Produce Pay replied. ECF Nos. 24, 25. 16 III. LEGAL STANDARD 17 Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint may be 18 dismissed when a plaintiff’s allegations fail to set forth a set of facts which, if true, would 19 entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); 20 Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible 21 to survive a motion to dismiss). The pleadings must raise the right to relief beyond the 22 speculative level; a plaintiff must provide “more than labels and conclusions, and a 23 formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. 24 at 555. On a motion to dismiss, a court accepts as true a plaintiff’s well-pleaded factual 25 allegations and construes all factual inferences in the light most favorable to the plaintiff. 26 Manzarek, 519 F.3d at 1031. However, a court is not required to accept as true legal 27 conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. 28 /// -53:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.290 Page 6 of 24 1 IV. DISCUSSION 2 Produce Pay seeks to dismiss all remaining claims lodged against it and set forth in 3 the FAC. Produce Pay also seeks to dismiss all allegations that it and Vantaggio had an 4 alter ego type relationship and argues that without these allegations, Plaintiff cannot 5 maintain any claims against it. 6 A. 7 On September 20, 2021, the Court dismissed with prejudice Plaintiff’s claims for: 8 (1) breach of contract; (2) open book account; and (3) UCL violations based on the 9 fraudulent prong. See ECF No. 18 at 8–9, 19–20, 25. The Court also dismissed with 10 prejudice Plaintiff’s allegations that Produce Pay and Vantaggio “have any sort of 11 agency/principal, employer/employee, master/servant, or joint venture relationship.” Id. at 12 29. Despite this Court’s prior order, Plaintiff’s FAC re-alleges an agency/principal, 13 master/servant, and employee/employer relationship between Produce Pay and Vantaggio. 14 FAC at 3, ¶ 7; 12, ¶ 59; 13, ¶ 66. Because these allegations were dismissed with prejudice, 15 they will be disregarded. See Virgen v. Mae, No. CIV S-06-0341-FCD-DAD-PS, 2007 16 WL 1521553, at *8 (E.D. Cal. May 23, 2007), R. & R. adopted sub nom. Virgen v. Sallie 17 Mae, No. CVS 06-0341-FCD-DAD-PS, 2007 WL 1821414 (E.D. Cal. June 25, 2007) 18 (holding that a claim dismissed with prejudice and re-alleged “was irrelevant and w[ould] 19 be disregarded.”). As to Plaintiff’s claims for breach of contract and open book account, 20 these claims are re-alleged as to Vantaggio only. FAC at 6, 9. Any arguments by Produce 21 Pay that Plaintiff improperly alleged these claims will also be disregarded, because Plaintiff 22 clearly alleges them against only Vantaggio. Plaintiff’s UCL claim is addressed below. Claims Previously Dismissed with Prejudice 23 B. 24 In the Court’s Dismissal Order, Plaintiff’s claim for violation of the UCL based on 25 the fraudulent prong was dismissed with prejudice. ECF No. 18 at 25. Violations based 26 on the unlawful and unfair prongs were also dismissed, but not with prejudice. Id. at 28. 27 However, Plaintiff seeks to dismiss its UCL claim stating “[i]n light of the Court’s ruling 28 regarding the remedies available under the UCL, restitution and injunctive relief, [Plaintiff] UCL Claim -63:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.291 Page 7 of 24 1 is willing to dismiss this claim without prejudice.” ECF No. 24 (“Oppo.”) at 24. Plaintiff 2 further “requests leave of the Court to dismiss this claim without prejudice pursuant to Rule 3 15(a)(2).” Oppo. at 24. Federal Rule of Civil Procedure 15(a)(2) states that “a party may 4 amend its pleading only with the opposing party’s written consent or the court’s leave. The 5 court should freely give leave when justice so requires.” Produce Pay makes no objections 6 to Plaintiff’s proposed and voluntary dismissal and therefore, the Court GRANTS 7 Plaintiff’s request and DISMISSES the UCL claim under the unlawful and unfair prongs 8 without prejudice as to Produce Pay. 9 C. Breach of Fiduciary Duty 10 Plaintiff’s prior claim for breach of fiduciary duty was dismissed without prejudice 11 in the Court’s prior Dismissal Order. ECF No. 18 at 10–17. Plaintiff’s FAC indicates that 12 Plaintiff brings its claim for breach of fiduciary duty against Vantaggio and not Produce 13 Pay. See FAC at 8; Cf. Compl. at 6. Although Plaintiff indicates that Produce Pay is 14 involved in the claim—based on Plaintiff’s use of the term Defendants—Plaintiff’s 15 Opposition does not address Produce Pay’s arguments regarding the breach of fiduciary 16 duty. See generally Oppo. Accordingly, although it is clear the FAC does not allege breach 17 of fiduciary duty against Produce Pay, to the extent it does, that claim is DISMISSED with 18 prejudice. 19 D. 20 To plead an alter ego relationship between two entities, the plaintiff must allege facts 21 sufficient to plausibly show: (1) “there is such unity of interest and ownership that the 22 separate personalities of the two entities no longer exist,” and (2) “failure to disregard their 23 separate identities would result in fraud or injustice.” Ranza v. Nike, Inc., 793 F.3d 1059, 24 1073 (9th Cir. 2015); see also Leek v. Cooper, 194 Cal. App. 4th 399, 417 (2011). “[A] 25 plaintiff must allege specific facts supporting both of the necessary elements.” Gerritsen 26 v. Warner Bros. Ent. Inc., 116 F. Supp. 3d 1104, 1136 (C.D. Cal. 2015); see also In re 27 Packaged Seafood Prod. Antitrust Litig., 242 F. Supp. 3d 1033, 1062 (S.D. Cal. 2017) 28 (Sammartino, J.); Cork v. CC-Palo Alto, Inc., 534 F. Supp. 3d 1156, 1191 (N.D. Cal. 2021) Alter Ego Allegations -73:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.292 Page 8 of 24 1 (striking “Plaintiff’s alter ego allegations[, which] consists of two sentences” without leave 2 to amend as “[t]hese are the type of conclusory allegations that will not suffice.”). Courts 3 may consider several factors in determining whether two entities have a unity of interest 4 and ownership, including: 5 6 7 8 9 10 (1) inadequate capitalization, (2) commingling of funds and other assets, (3) disregard of corporate formalities and failure to maintain an arm’s length relationship, (4) holding out by one entity that is liable to the debts of the other, (5) identical equitable ownership, (6) use of the same offices and employees, (7) lack of segregation of corporate records, (8) manipulating assets between entities so as to concentrate the assets in one and the liabilities in another, and (9) identical directors and officers. 11 12 City & Cty. of San Francisco v. Purdue Pharma L.P., 491 F. Supp. 3d 610, 635 (N.D. Cal. 13 2020) (citing Daewoo Elecs. Am. Inc. v. Opta Corp., 875 F. 3d 1241, 1250 (9th Cir. 2017)). 14 This Court’s prior Dismissal Order dismissed with prejudice any allegations of an 15 “agency/principal, employer/employee, master/servant, or joint venture relationship” 16 between Produce Pay and Vantaggio as abandoned by Plaintiff. ECF No. 18 at 29. 17 However, the Court went on to analyze Plaintiff’s allegations of an alter ego and/or a single 18 enterprise relationship between the Defendants and those allegations were dismissed, but 19 not with prejudice. Id. at 35. 20 Produce Pay argues that Plaintiff “generically pleads that Produce Pay was the alter 21 ego of [Vantaggio],” but fails “to plead any facts to support or develop this allegation.” 22 23 24 25 26 27 28 Motion at 27. Produce Pay contends that Plaintiff abandoned its alter ego allegations based on its failure to re-plead them following this Court’s Dismissal Order and therefore, these allegations should be dismissed with prejudice. Id. Plaintiff argues that the FAC’s allegations regarding Vantaggio’s insolvency and Produce Pay’s control over operations and finances are sufficient to allege an alter ego or single enterprise liability claim at the pleadings stage. Oppo. at 21–22. Specifically, Plaintiff points to Vantaggio’s alleged undercapitalization and insolvency, Produce Pay and Vantaggio’s commingling/improper -83:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.293 Page 9 of 24 1 transfer of funds, and that Produce Pay used Vantaggio as a mere shell/conduit for a single 2 vertically integrated venture. Id. Produce Pay replies that the FAC’s allegations are 3 unsubstantiated and “still conflict with other factual averments in the [FAC].” ECF No. 25 4 (“Reply”) at 6. Produce Pay also contends that Plaintiff fails to allege how Produce Pay 5 diverted the funds from Plaintiff. Id. Produce Pay points out that ownership is mentioned 6 only minimally in the FAC and not with respect to Produce Pay and Vantaggio. Id. at 6– 7 7. Finally Produce Pay reiterates its argument that all claims against Produce Pay rest on 8 the theory that it controlled Vantaggio and without this theory, the Court should dismiss 9 all claims against Produce Pay. Id. at 7. 10 The Court finds that Plaintiff sufficiently substantiated its allegations that an alter 11 ego relationship existed between Produce Pay and Vantaggio. Although the original 12 Complaint made conclusory statements regarding Produce Pay’s dominion and control 13 over Vantaggio, the FAC now supports those contentions with additional factual 14 allegations, allowing the Court to draw plausible inferences. First, the FAC alleges that: 15 (1) Vantaggio was undercapitalized and is now insolvent, lacking the funds to pay Plaintiff; 16 (2) Produce Pay used Vantaggio as an instrumentality or conduit for a single venture to 17 divert Plaintiff’s proceeds from Vantaggio to Produce Pay, and (3) Produce Pay 18 manipulated or controlled the finances of Vantaggio to obtain the assets for itself, leaving 19 Vantaggio with the debt. FAC at 5, ¶ 17. The FAC then, more specifically, alleges how 20 attached invoices, checks, and emails show that: (1) Produce Pay was intimately involved 21 in the internal operations of Vantaggio and controlled how payments were directed; (2) the 22 proceeds payments were for the type of produce supplied only by Plaintiff during the time 23 in question; and (3) checks were made out to Vantaggio but delivered to a Produce Pay 24 office address and deposited into a Produce Pay bank account. Id. at 4, ¶ 15–16; 5, ¶ 18; 25 see also Ex. 1 to FAC. Finally, the FAC alleges that: (1) Vantaggio personnel confirmed 26 the funds at issue were delivered to Produce Pay upon demand; (2) the funds were retained 27 by Produce Pay, despite a request to release them to Plaintiff; and (3) Produce Pay asserted 28 dominion and control over all of Vantaggio’s proceeds of sale from Plaintiff’s produce. -93:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.294 Page 10 of 24 1 See id. 2 The Court finds the substantiated allegations in the FAC invoke several factors set 3 forth above and used to determine the unity of interest and common ownership element of 4 an alter ego claim. See Purdue Pharma, 491 F. Supp. at 635. First, Plaintiff alleges that 5 Vantaggio’s inadequate capitalization and insolvency resulted from Produce Pay’s 6 interference with the funds Vantaggio received. FAC at 5, ¶ 17. From this, the Court can 7 plausibly infer that Produce Pay’s alleged control over and diversion of Vantaggio’s funds 8 led to the insolvency. Second, the invoices, emails, and checks (made out to Vantaggio 9 but allegedly addressed to Produce Pay) allow the Court to plausibly infer that Produce Pay 10 was intimately involved in Vantaggio’s finances, and that some unity of interest existed 11 with respect to the purported invoices and proceeds. For example, the subject line of two 12 payment related emails detailing certain purported invoices read “Vantaggio Farming 13 (Produce Pay) – Huron Produce payment details attached . . . .” See Ex. 1 to FAC at 1, 3. 14 These emails show payment details including invoice numbers, and above the invoice 15 numbers, the documents read “Vantaggio (“Produce Pay Inc.).” Id. Plaintiff also alleges 16 that the invoices involve the type of bell peppers that, during the relevant time, only 17 Plaintiff delivered to Vantaggio. See id. at 1, 3, 10, 12 (showing two invoices involving 18 yellow, red, and/or orange bell peppers that match certain invoice details in the attached 19 emails). The Vantaggio name followed by the Produce Pay name (in parentheses), in 20 emails regarding invoices that detailed the type of bell peppers delivered to Vantaggio 21 (only by Plaintiff), allow for the plausible inference that the companies have a common 22 interest in Vantaggio’s proceeds resulting from Plaintiff’s delivery of bell peppers. See id. 23 Third, allegations that the checks were made out to Vantaggio but addressed to a Produce 24 Pay location in Los Angeles create a plausible inference that Defendants share at least one 25 office, where funds are delivered. See id. at 4–6. Plaintiff also alleges that Vantaggio 26 personnel confirmed Produce Pay’s receipt of Plaintiff’s funds upon demand and its refusal 27 to release the funds to Plaintiff when requested. FAC at 5, ¶ 18. These allegations, coupled 28 with the emails and alleged invoices described above, create a plausible inference that -103:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.295 Page 11 of 24 1 funds were commingled or at the very least, the companies were not maintaining an arm’s 2 length relationship. Ex. 1 to FAC at 2 (indicating that Produce Pay employees worked with 3 Vantaggio to obtain invoices and close balances respecting Plaintiff’s bell peppers). In 4 light of all the allegations described above, the Court can plausibly infer that Produce Pay’s 5 alleged manipulation of assets between it and Vantaggio, and Vantaggio’s subsequent 6 insolvency, caused the assets at issue to be concentrated in Produce Pay and the debts left 7 to Vantaggio. See Sundance Image Tech., Inc. v. Inkjetmall.com, Ltd., No. 02-cv-02258- 8 B-AJB, 2005 WL 8173279, at *3 (S.D. Cal. Oct. 4, 2005) (listing as factors “the diversion 9 of assets from a corporation by or to a stockholder or other person or entity, to the detriment 10 of creditors, or the manipulation of assets and liabilities between entities so as to 11 concentrate the assets in one and the liabilities in another;” and . . . “the formation and use 12 of a corporation to transfer to it the existing liability of another person or entity.”). 13 The FAC’s satisfaction of these factors through specific factual allegations—in 14 addition to the general allegations that Produce Pay asserted control over Vantaggio’s 15 finances and used Vantaggio as an instrumentality or conduit to intercept the funds— 16 plausibly allege the unity of interest and common ownership element required for 17 Plaintiff’s alter ego allegations. Produce Pay does not specifically challenge4 the second 18 element required for alter ego allegations and as such, it will not be addressed. 19 As noted in the prior Dismissal Order, Plaintiff failed to allege facts sufficient to 20 plausibly infer an alter ego type relationship. As explained above, however, the FAC 21 22 23 24 25 26 27 28 4 The Court further notes that Produce Pay makes limited arguments regarding the alter ego allegations in its Motion to Dismiss. Any new arguments made in Produce Pay’s Reply that are unresponsive to Plaintiff’s Opposition, are deemed waived. The Court also notes Produce Pay lodged at least one argument in a footnote. See Motion at 24–25 n.6. The Court will not consider new arguments made only in footnotes and the Reply. See also Khoja v. Orexigen Therapeutics, Inc., 498 F. Supp. 3d 1296, 1309 (S.D. Cal. Nov. 2, 2020) (quoting Cheever v. Huawei Device USA, Inc., No. 18-cv-06715-JST, 2019 WL 8883942, at *3 (N.D. Cal. Dec. 4, 2019)) (explaining that generally, parties waive “arguments raised only in footnotes, or only on reply . . . .”). Regardless, Plaintiff sufficiently pleads its alter ego allegations. -113:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.296 Page 12 of 24 1 alleges additional facts that support these allegations. Produce Pay points to the verified 2 Delaware Complaint, alleging it shows that Produce Pay purchased bell peppers that were 3 placed with Vantaggio. Motion at 13. As such, Produce Pay disputes Plaintiff’s allegation 4 that it was the only entity providing bell peppers to Vantaggio. Id. Although the Court 5 took judicial notice of the Delaware Complaint, the Court did not judicially notice “any of 6 the factual allegations contained in the complaint.” ECF No. 18 at 4 n.4. The allegations 7 and attachments set forth in the FAC therefore, create factual disputes between the parties 8 regarding Produce’s Pay’s relationship and dealings with Vantaggio. 9 disputes are inappropriate for resolution on a motion to dismiss. And while the Delaware 10 Complaint “plausibly shows that Produce Pay neither controls nor has any relationship 11 with Vantaggio,” Plaintiff’s instant FAC plausibly shows otherwise. See ECF No. 18 at 12 35; see generally FAC. The Complaints at issue set forth conflicting factual allegations, 13 but the Court cannot disregard the FAC here and accept as true all factual allegations 14 lodged by Produce Pay in the Delaware Complaint. Accordingly, the Court DENIES 15 Produce Pay’s Motion to Dismiss Plaintiff’s allegations of alter ego set forth in the FAC. These factual 16 E. 17 “The count for money had and received states in substance that the defendant is 18 indebted to the plaintiff in a certain sum for money had and received by the defendant for 19 the use of the plaintiff.” Scheibe v. Freeman, No. 10-cv-01496-H-WMC, 2010 WL 20 11684791, at *4 (S.D. Cal. Sept. 27, 2010) (internal quotation marks and citations omitted). 21 “The essential elements of an action for money and/or goods had and received are ‘(1) a 22 statement of indebtedness of a certain sum, (2) the consideration made by the plaintiff, and 23 (3) nonpayment of the debt.’” Id. (quoting First Interstate Bank v. State of Cal., 197 Cal. 24 App. 3d 627, 635 (1987)). Plaintiff’s claim for goods had and received was previously 25 dismissed without prejudice in this Court’s Dismissal Order. ECF No. 18 at 19; see also 26 Compl. at 6. In the FAC, Plaintiff re-alleges the claim against both Produce Pay and 27 Vantaggio, clarifying that the claim is for goods and money had and received against both 28 Defendants. FAC at 9. Goods and Money Had and Received -123:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.297 Page 13 of 24 1 Produce Pay argues that Plaintiff’s FAC fails to allege any additional facts to cure 2 the defects in its original Complaint. Motion at 16. Produce Pay argues Plaintiff merely 3 reasserts the previously dismissed allegations “of receipt, acceptance, resale, collection, 4 and remittance” by Vantaggio. Id. at 16. 5 contradictory argument that the goods were “delivered to and accepted by Defendants,” 6 does not save the claim, as established in this Court’s prior Dismissal Order. Id. at 17. 7 Produce Pay argues that because it never received goods or money from Plaintiff and no 8 contract or agreement ever existed between Plaintiff and Produce Pay, a money had and 9 received claim cannot be sustained. Id. at 17–18. Produce Pay points to Exhibit 1 attached 10 to the FAC and notes they are unverified records involving “payments to Vantaggio in Los 11 Angeles for invoices related to bell pepper.” Id. at 18. Produce Pay argues “the Delaware 12 Complaint already established that Produce Pay also provided Vantaggio with bell 13 pepper[s],” because those peppers originated from Mexico and the FAC fails to allege the 14 peppers originated from Mexico. Id. Produce Pay further contends Plaintiff’s 15 Plaintiff counters that it sufficiently pleads a claim for money had and received, 16 because the FAC alleges that “Produce Pay received the money belonging to [Plaintiff].” 17 Oppo. at 18. Plaintiff contends that Produce Pay argues, with no factual support, that it did 18 not receive money for Plaintiff’s produce. Id. Plaintiff asserts a claim for money had and 19 received “does not require that the money be given to Produce Pay by Plaintiff, only that 20 Produce Pay be in possession of money which, by rights, belongs to Plaintiff.” Id. Plaintiff 21 says it sufficiently pleads that Produce Pay intercepted the money for a money had and 22 received claim by alleging that “[s]aid money did not belong to Produce Pay and was not 23 for [Produce Pay’s] benefit . . . . and refused to remit the proceeds of sale of Plaintiff’s 24 produce which belong to Plaintiff and in which Produce Pay has no right or interest.” Id. 25 Produce Pay replies that the money had and received claim should still be dismissed, 26 because there is “no colorable allegation that Produce Pay received anything from Plaintiff, 27 and sums owed to Produce Pay by Vantaggio are not proper grounds.” Reply at 8. 28 In its original Complaint, Plaintiff alleged that Defendants received, accepted, and -133:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.298 Page 14 of 24 1 sold Plaintiff’s goods (i.e., the bell peppers) and refused to remit the proceeds to Plaintiff. 2 Compl. at 6, ¶ 35. However, the FAC alleges that only Vantaggio accepted and resold 3 Plaintiff’s goods. FAC at 4–5, ¶¶ 11–17; 9, ¶ 41. The FAC further pleads that both 4 “Produce Pay and Vantaggio caused the proceeds from the sale of Plaintiff’s produce, 5 which were at all times property of Plaintiff, to be delivered to Produce Pay in Los Angeles, 6 rather than Vantaggio, for remittance to Plaintiff and then deposited into a bank account 7 controlled by and in Defendant Produce Pay’s name.” Id. at 4, ¶ 16; 9, ¶ 41. Finally, 8 Plaintiff alleges that “Vantaggio personnel have . . . confirmed that [said] funds were 9 delivered to Produce Pay upon its demand, and were retained by Produce Pay, despite 10 request to release the funds for payment to Plaintiff (because Produce Pay had no right to 11 retain Plaintiff’s funds.)” Id. at 5, ¶ 18. The Court finds these allegations—coupled with 12 the alter ego allegations that Produce Pay controlled and directed Plaintiff’s profits from 13 Vantaggio to itself—sufficient to state a claim for money had and received. 14 The conclusory and contradictory allegations in the original Complaint that 15 “Defendants transferred the produce or proceeds from of sale to Produce Pay,” are cured 16 in the FAC because there, the allegations assert that Produce Pay interjected itself in 17 Vantaggio’s finances to divert and retain funds belonging to Plaintiff to Produce Pay’s 18 bank account. Id. at 4, ¶ 16; 9, ¶ 41. To the extent Plaintiff alleges a goods had and received 19 claim, that claim is dismissed with prejudice as to Produce Pay, because there are no 20 allegations that Produce Pay received the bell peppers (i.e., the goods) at issue. However, 21 a money had and received claim and a goods had and received claim are different causes 22 of action. Compare CACI 371 with CACI 370. The fact that Plaintiff pleads itself out of 23 a goods had and received claim against Produce Pay, based on the implausibility that 24 Produce Pay received Plaintiff’s goods, does not make it implausible that Produce Pay 25 received Plaintiff’s money. Id. 26 “A cause of action for money had and received is stated if it is alleged [that] the 27 defendant is indebted to the plaintiff in a certain sum for money had and received by the 28 defendant for the use of the plaintiff.” Avidor v. Sutter’s Place, Inc., 212 Cal. App. 4th -143:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.299 Page 15 of 24 1 1439, 1454 (2013) (internal quotation marks and citations omitted). Plaintiff’s money had 2 and received claim does not require that the money at issue be given to Produce Pay by 3 Plaintiff directly. Mains v. City Title Ins. Co., 34 Cal.2d 580, 586 (1949) (“[A money had 4 and received claim] may be brought ‘… wherever one person has received money which 5 belongs to another, and which “in equity and good conscience,” or in other words, in justice 6 and right, should be returned.”); Gutierrez v. Girardi, 194 Cal. App. 4th 925, 937 (2011) 7 (quoting Weiss v. Marcus, 51 Cal.App.3d 590, 599 (1975)) (explaining that a money had 8 and received claim “lies wherever one person has received money which belongs to 9 another, and which in equity and good conscience should be paid over to the latter.”); 10 Utility Audit Co., Inc. v. City of Los Angeles, 112 Cal. App. 4th 950, 958 (2003) (“A claim 11 for money had and received can be based upon money paid by mistake, money paid 12 pursuant to a void contract, or a performance by one party of an express contract.”). 13 Read in the light most favorable to Plaintiff, Produce Pay allegedly retained 14 Plaintiff’s money through control of Vantaggio, by diverting checks that were seemingly 15 made out to Vantaggio but addressed to a Produce Pay location, and those checks were 16 subsequently deposited into Produce Pay’s bank account. FAC 4–5, ¶¶ 16–18. Plaintiff 17 pleads additional supporting facts that Vantaggio’s employees confirmed Produce Pay’s 18 receipt of Plaintiff’s funds and did not release the funds to Plaintiff upon request. Id. at 5, 19 ¶ 18. These facts are sufficient to state a claim for money had and received against Produce 20 Pay, because the allegations plausibly indicate that: (1) Plaintiff provided bell peppers to 21 Vantaggio; (2) Plaintiff did not receive the proceeds it was entitled to (totaling at least 22 $295,864.67); and (3) Produce Pay obtained possession of the subject proceeds, which 23 belong to Plaintiff. 24 Complaint—that both Produce Pay and Plaintiff sold bell peppers to Vantaggio—and that 25 the FAC’s attached Exhibits are “unverified,” would require the Court to evaluate and 26 weigh evidence to resolve a material factual dispute—that would be improper at this stage 27 in the proceedings. 28 12124390, at *28 (C.D. Cal. June 11, 2013) (denying a motion for summary judgment In addition, Produce Pay’s contentions regarding the Delaware Cf. Colby v. Newman, No. CV 11-07413-JGB-RZx, 2013 WL -153:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.300 Page 16 of 24 1 based on conflicting factual contentions and evidence regarding a money had and received 2 claim). Accordingly, the Court DENIES Produce Pay’s Motion to Dismiss Plaintiff’s 3 money had and received claim. 4 F. 5 “A claim for civil theft in California ultimately rests on whether a plaintiff 6 establishes that a defendant committed theft as defined by California Penal Code section 7 484.” GEC US 1 LLC v. Frontier Renewables, LLC, No. 3:16-cv-01276-YGR, 2016 WL 8 4677585, at *9 (N.D. Cal. Sept. 7, 2016) (citing Bell v. Feibush, 212 Cal. App. 4th 1041, 9 1049 (2013)). A person is guilty of theft where he or she, inter alia, (1) feloniously steals, 10 takes, carries, or drives “away the personal property of another;” (2) “fraudulently 11 appropriate[s] property which has been entrusted to him or her,” or (3) “knowingly and 12 designedly, by any false or fraudulent representation or pretense, defraud[s] any other 13 person of money . . . or personal property.” CAL. PENAL CODE § 484. “To establish theft 14 under Section 484, a defendant must have the specific ‘felonious’ intent to deprive the 15 owner of his or her property.” GEC, No. 3:16-cv-01276-YGR, 2016 WL 4677585, at *9 16 (dismissing the plaintiffs’ civil theft claim without prejudice because “[a]bsent adequate 17 allegations of the requisite specific intent, the FAC [did] not state a plausible claim for civil 18 theft”) (citing People v. Avery, 27 Cal.4th 49, 58 (2002)). “The requisite intent is a specific 19 intent to steal and cannot be established if a defendant has a ‘good faith claim of right’ to 20 possession.” Id. (citing People v. Davis, 19 Cal. 4th 301, 305 (1998)). Plaintiff’s claim 21 for civil theft was previously dismissed without prejudice in this Court’s Dismissal Order. 22 ECF No. 18 at 22; see also Compl. at 7. In the FAC, Plaintiff re-alleges the claim against 23 both Defendants. FAC at 10. Civil Theft 24 Produce Pay argues that Plaintiff’s claim for Civil Theft against it does not state a 25 claim because the FAC: (1) fails “to allege that Produce Pay ‘feloniously’ stole, took, 26 carried, or drove ‘away the person property’” of Plaintiff; and (2) fails to plead “that 27 Produce Pay possessed the requisite intent to steal.” Motion at 22–23. Produce Pay argues 28 the documents attached to the FAC and purported to be invoices are unverified, and that -163:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.301 Page 17 of 24 1 the allegations cannot state a claim for legal theft, because Plaintiff’s contention that only 2 it delivered bell peppers to Vantaggio is false. Id. at 22. Produce Pay further contends that 3 Plaintiff cannot establish Produce Pay’s receipt of bell peppers, because the peppers were 4 delivered to Vantaggio. Id. at 22–23. Produce Pay argues that because it “also provided 5 Vantaggio with bell pepper[s], Plaintiff’s allegations regarding Produce Pay’s dealings in 6 bell pepper[s] cannot establish a plausible claim that Produce Pay possessed the requisite 7 intent to steal.” Id. at 23. Produce Pay further explains that it “had every right to conduct 8 business with Vantaggio involving bell pepper[s] and Plaintiff is wholly unable to 9 articulate why or how those dealings involve Plaintiff or injured Plaintiff.” Id. 10 Plaintiff counters that the FAC sufficiently pleads a claim for civil theft, citing 11 various allegations in the FAC. Oppo. at 19–20. Plaintiff also argues that the Produce Pay 12 relies on improper extrinsic fact in its Motion to Dismiss, and that even if the Court were 13 to consider the evidence, Produce Pay’s argument would fail. Id. at 19. Plaintiff explains 14 that the evidence attached to Produce Pay’s Motion shows that it delivered green bell 15 peppers (not red, yellow, or orange as delivered by Plaintiff) during August 2020 and not 16 in late 2019 and the first quarter of 2020 (the relevant time period in this case). Id. The 17 Court will not resolve this factual dispute. 18 The Court previously dismissed the claim for civil theft because the original 19 Complaint failed to state sufficient facts to plausibly show that: (1) Produce Pay obtained 20 Plaintiff’s property, and (2) Produce Pay possessed the requisite specific intent required 21 for civil theft. ECF No. 18 at 22. The Court finds that Plaintiff’s FAC substantiates its 22 claim for civil theft. First, although Produce Pay argues that Plaintiff again fails “to provide 23 facts which demonstrate that [Plaintiff] was the sole provider of bell pepper[s] to 24 Vantaggio,” the FAC clearly states that during the requisite time period, Plaintiff was the 25 only provider of yellow, red, and orange bell peppers. FAC at 5, ¶ 18. In addition, the 26 invoices attached to the FAC are for bell peppers, two of which are cited in email 27 discussions involving Produce Pay and Vantaggio employees. See id.; Ex. 1 to FAC at 1, 28 3, 10, 12. It is plausible that if Plaintiff was the sole provider of bell peppers to Vantaggio -173:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.302 Page 18 of 24 1 during the time in question, Produce Pay was aware the proceeds identified in the purported 2 emails/invoices involved bell peppers and therefore, did not belong to Produce Pay. The 3 FAC also alleges that the checks for Plaintiff’s produce were made out to Vantaggio but 4 delivered to a Produce Pay office in Los Angeles and deposited into a bank account 5 controlled by and in Produce Pay’s name. FAC at 4, ¶ 16. This indicates the funds were 6 allegedly obtained in a felonious manner through representations that Vantaggio received 7 them, when in reality, Produce Pay received them. This inference is further supported by 8 Plaintiff’s allegation that “Vantaggio personnel . . . confirmed . . . the[] funds were 9 delivered to Produce Pay upon its demand, and were retained by Produce Pay, despite 10 request to release the funds for payment to Plaintiff (because Produce Pay had no right to 11 retain Plaintiff’s funds).” Id. at 5, ¶ 18. 12 Produce Pay’s arguments disregard the fact that in resolving its Motion to Dismiss, 13 this Court must liberally construe and accept as true the allegations set forth in Plaintiff’s 14 FAC. See Beaver v. Omni Hotels Mgmt. Corp., No. 20-cv-00191-AJB-KSC, 2021 WL 15 5042116, at *2 (S.D. Cal. Oct. 29, 2021) (assuming the truth of the allegations and the 16 reasonable inferences drawn therefrom in denying a motion to dismiss an alter ego theory 17 of liability). Produce Pay improperly relies on the contention that it also provided 18 Vantaggio with bell peppers, which directly conflicts with allegations in the FAC. As 19 discussed supra, at this stage in the proceedings, the Court will not engage in resolving 20 factual disputes as to whether and/or when Produce Pay provided bell peppers (including 21 of what type) to Vantaggio. Accordingly, the Court rejects Produce Pay’s arguments and 22 DENIES its Motion to Dismiss Plaintiff’s claim for civil theft. 23 G. 24 Generally, a defense asserted in a Rule 12(b)(6) motion to dismiss must be made 25 before filing an answer. See Fed. R. Civ. P. 12(b)(6). Pascal v. Concentra, Inc., No. 19- 26 cv-02559-JCS, 2020 WL 4923974, at *2 (N.D. Cal. Aug. 21, 2020)). “[A]lthough an 27 amended complaint ordinarily supercedes [sic] the original pleading, it does not 28 automatically revive defenses and objections a defendant has waived in response to the Timeliness of Arguments Not Raised in Prior Motion to Dismiss -183:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.303 Page 19 of 24 1 original complaint.” Brooks v. Caswell, No. 3:14-cv-01232-AC, 2016 WL 866303, at *2 2 (D. Or. Mar. 2, 2016) (citations omitted). “[A] defendant may attack only new allegations 3 or claims not contained in the original complaint.” Id. (citations omitted). If an amended 4 complaint merely substantiates claims previously alleged, “[a]llowing a post-answer 5 motion to dismiss” the complaint “would render the Rule 12(b) restriction on post-answer 6 motions meaningless.” Id. at *3. Essentially, post-answer motions to dismiss can only be 7 heard to the extent the arguments set forth were not previously available to the moving 8 party. See Pascal v. Concentra, Inc., No. 19-cv-02559-JCS, 2020 WL 4923974, at *2 9 (N.D. Cal. Aug. 21, 2020) (explaining that the defendant’s “challenges under Rule 12(b)(6) 10 are not aimed at any new material in the SAC and therefore its objections have already 11 been waived.”). 12 The only Ninth Circuit case on the matter is an unpublished opinion, where the Court 13 affirmed a district court’s decision to consider a post-answer motion but provided no 14 discussion or analysis on the matter. Adesanya v. I.N.S., 996 F.2d 1223 (9th Cir. 1993). 15 Lower courts have found this opinion unpersuasive. See Brooks, No. 3:14-cv-01232-AC, 16 2016 WL 866303, at *3 (citing Fed. Agr. Mortg. Corp. v. It’s A Jungle Out There, Inc., 17 No. C 03-3721-VRW, 2005 WL 3325051, at *5 (N.D. Cal. Dec. 7, 2005)). Even so, certain 18 district courts have entertained post-answer motions to dismiss amended complaints for the 19 purpose of judicial economy or based on distinguishing factors. See Fed. Agr. Mortg. 20 Corp. v. It’s A Jungle Out There, Inc., No. C 03-3721 VRW, 2005 WL 3325051, at *5 21 (N.D. Cal. Dec. 7, 2005); Parra, Tr. of Laura E. Parra Revocable Tr. Dated Sept. 9, 1994 22 v. Parra, No. 20-cv-00839-DMS-JLB, 2021 WL 2038323, at *3 (S.D. Cal. May 20, 2021). 23 Here, however, entertaining Produce Pay’s motion to dismiss claims asserted in the original 24 complaint weighs against judicial economy, because Produce Pay waived those arguments 25 previously available to it. If the Court were to dismiss these claims based on previously 26 waived arguments, it would likely do so without prejudice, leaving the potential for a 27 second amended complaint and a subsequent motion to dismiss. 28 Produce Pay cites Parra to argue that its Motion, arguing to dismiss previously -193:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.304 Page 20 of 24 1 answered claims, should be considered based on Plaintiff’s new factual allegations. Reply 2 at 4 (citing Parra, No. 20-cv-00839-DMS-JLB, 2021 WL 2038323, at *2). In Parra, the 3 court heard an untimely motion to dismiss and converted it into a motion for judgment on 4 the pleadings in a land inheritance dispute, because a material fact changed while litigation 5 was pending. Parra, No. 20-cv-00839-DMS-JLB, 2021 WL 2038323, at *3. That is not 6 the case here, where Plaintiff substantiated its existing claims with certain factual 7 allegations. Although Produce Pay argues the Court may convert the instant Motion to 8 Dismiss into a motion for judgment on the pleadings, see Reply at 4, that would be 9 inappropriate given the factual disputes at issue. 10 The Court follows the general rule that only new allegations—and arguments 11 previously unavailable—can be considered in resolving the remainder of Produce Pay’s 12 Motion to Dismiss. See Rowley v. McMillan, 502 F.2d 1326, 1333 (4th Cir. 1974) (“[W]e 13 agree, that an amendment to the pleadings permits the responding pleader to assert only 14 such of those defenses which may be presented in a motion under Rule 12 as were not 15 available at the time of his response to the initial pleading. An unasserted defense available 16 at the time of response to an initial pleading may not be asserted when the initial pleading 17 is amended.”). Although the FAC largely substantiates the claims asserted in the original 18 complaint, to the extent Produce Pay bases its arguments on new factual allegations, the 19 Court will consider only those arguments. 20 previously available to Produce Pay as waived and untimely. 21 i. The Court otherwise rejects arguments PACA Violation 22 Plaintiff’s PACA claim was originally filed against both Produce Pay and 23 Vantaggio. Compl. at 5. Produce Pay did not challenge the PACA claim in its original 24 Motion to Dismiss, and the FAC re-alleges the PACA claim against both Defendants. FAC 25 at 6. Produce Pay argues that Plaintiff’s PACA claim fails, because the Court already held 26 there was no contract between Produce Pay and Plaintiff, and PACA requires some form 27 of contract or agreement. The Court will not address this argument, because Produce Pay 28 cites to a portion of the FAC that was also included in the original Complaint. Motion at -203:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.305 Page 21 of 24 1 10 (citing FAC at 7, ¶ 29); see also Compl. at 5, ¶ 26. This defense was available to 2 Produce Pay when it filed its original motion to dismiss, evidenced by Produce Pay’s 3 challenge to Plaintiff’s breach of contract claim and argument that no contract existed 4 between Produce Pay and Plaintiff. 5 Produce Pay also argues that Plaintiff included allegations of agency/principal, 6 employer/employee, master/servant, and join venture relationship, which this Court 7 already dismissed with prejudice. Motion at 11, 14. However, Produce Pay ignores the 8 fact that the Court did not dismiss with prejudice allegations of alter ego, which the Court 9 now finds are stated with sufficiency in Plaintiff’s FAC. See supra at Part IV.D. 10 Finally, Produce Pay argues that Plaintiff’s mischaracterization that Vantaggio 11 received bell peppers from only Plaintiff is false. Motion at 12–14. Produce Pay contends 12 that the Court already took judicial notice of the Delaware Complaint, which shows (among 13 other things) that Vantaggio dealt with bell peppers in relation to Produce Pay as well. Id. 14 at 13. As discussed supra, the Court finds this allegation creates a factual dispute between 15 the parties inappropriate for resolution on a motion to dismiss. Accordingly, the Court 16 DENIES Produce Pay’s Motion to Dismiss Plaintiff’s PACA claim. 17 ii. Conversion 18 Plaintiff’s conversion claim was originally filed against both Produce Pay and 19 Vantaggio. Compl. at 7. Produce Pay did not challenge the conversion claim in its original 20 Motion to Dismiss and the FAC re-alleges the claim against both Defendants. FAC at 10. 21 Produce Pay now argues that the FAC fails to allege Plaintiff is an intended beneficiary for 22 purposes of PACA’s trust provisions. Motion at 20. This argument was available to 23 Produce Pay when Plaintiff filed its original Complaint, which alleged “Plaintiff is an 24 intended beneficiary under PACA.” Compl. at 6, ¶ 28. The Court, therefore, rejects this 25 argument as waived and untimely. 26 Produce Pay also reiterates its argument that it too provided Vantaggio with bell 27 peppers, making false Plaintiff’s claim that the proceeds from the bell peppers in question 28 belonged to Plaintiff. As stated supra, the Court will not resolve the factual dispute -213:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.306 Page 22 of 24 1 regarding whether and/or when Produce Pay provided bell peppers to Vantaggio. 2 Accordingly, the Court DENIES Produce Pay’s Motion to Dismiss Plaintiff’s conversion 3 claim. 4 iii. Uniform Fraudulent Transfer Act 5 Plaintiff’s claim under the Uniform Fraudulent Transfer Act was originally filed 6 against both Produce Pay and Vantaggio. Compl. at 9. Produce Pay did not challenge the 7 claim in its original Motion to Dismiss, and the FAC re-alleges the claim against both 8 Defendants. FAC at 13. Produce Pay again argues that Plaintiff was not the only one to 9 provide Vantaggio with bell peppers. Motion at 24. Produce Pay further argues that “no 10 special relationship exists between Produce Pay and Vantaggio.” Id. As stated supra, the 11 Court: (1) holds that Plaintiff sufficiently states allegations of an alter ego relationship 12 between Produce Pay and Vantaggio; and (2) will not resolve factual disputes involving 13 whether and/or when Produce Pay provided Vantaggio with bell peppers. Accordingly, 14 the Court DENIES Produce Pay’s Motion to Dismiss Plaintiff’s claim under the Uniform 15 Fraudulent Transfer Act. 16 iv. Produce Dealer Act 17 Plaintiff’s claim under the Produce Dealer Act was originally filed against both 18 Produce Pay and Vantaggio. Compl. at 11. Produce Pay did not challenge the claim in its 19 original Motion to Dismiss, and the FAC re-alleges the claim against both Defendants. 20 FAC at 15. Produce Pay argues that “allegations regarding any failure by Produce Pay to 21 account to Plaintiff cannot form the basis for Plaintiff’s” claim, because there are no “facts 22 sufficient to show that Produce Pay undertook unfair or unlawful business practices.” 23 Motion at 25–26. Produce Pay points to the Delaware Complaint and argues it “identifies 24 Produce Pay as an unpaid creditor of Vantaggio, a supplier of bell peppers and other 25 Produce to Vantaggio, and a party to a written contract with Vantaggio providing Produce 26 Pay the right to receive payment from Vantaggio in connection with the parties Produce 27 dealings.” Id. at 26. Produce Pay contends the business relationship between it and 28 Vantaggio “cannot possibly be injurious to Plaintiff.” Id. -223:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.307 Page 23 of 24 1 The Court declines Produce Pay’s argument. First, the argument respecting 2 accounting and the Delaware Complaint was available when Plaintiff filed its original 3 Complaint and is therefore waived and untimely. Second, for the reasons described supra, 4 the Court will not address any factual disputes between the instant FAC and the Delaware 5 Complaint. To resolve the issue, the Court would need to evaluate whether and when any 6 bell peppers were delivered by Produce Pay to Vantaggio because here, the FAC alleges 7 that during the time in question, Plaintiff was the only supplier of bell peppers to 8 Vantaggio. Accordingly, the Court DENIES Produce Pay’s Motion to Dismiss Plaintiff’s 9 claim under the Produce Dealer Act. 10 v. Unjust Enrichment and Constructive Trust 11 Plaintiff’s claim for Unjust Enrichment/Constructive Trust was originally filed 12 against both Produce Pay and Vantaggio. Compl. at 12. Produce Pay did not challenge 13 the claim in its original Motion to Dismiss, and the FAC re-alleges the claim against both 14 Defendants. FAC at 16. Produce Pay once again argues that it too provided Vantaggio 15 with bell peppers, making Plaintiff’s allegations “demonstrably wrong.” Motion at 27. 16 Produce Pay further argues that the FAC fails to allege “that Produce Pay took anything 17 from Plaintiff or received any property belonging to Plaintiff.” Id. As established supra, 18 the Court has determined that: (1) it will not resolve factual disputes regarding whether and 19 when Produce Pay delivered bell peppers to Vantaggio; and (2) Plaintiff plausibly alleges 20 that Produce Pay wrongfully obtained the bell pepper funds belonging to Plaintiff. 21 Accordingly, the Court DENIES Produce Pay’s Motion to Dismiss Plaintiff’s claim for 22 unjust enrichment and constructive trust. 23 V. CONCLUSION 24 For the reasons set forth above, the Court ORDERS the following: 25 1. Plaintiff’s claims for breach of contract, open book account, and breach of 26 fiduciary duty were re-alleged as to Vantaggio only and are disregarded for purposes of 27 Produce Pay’s Motion to Dismiss. 28 2. Plaintiff’s re-alleged allegations of an agency/principal, master/servant, and -233:21-cv-00131-BEN-WVG Case 3:21-cv-00131-BEN-WVG Document 27 Filed 09/08/22 PageID.308 Page 24 of 24 1 employer/employee relationship between Produce Pay and Vantaggio were previously 2 DISMISSED with prejudice and remain DISMISSED with prejudice. 3 3. Plaintiff’s UCL claim under the unlawful and unfair prongs is DISMISSED 4 without prejudice as to Produce Pay. Any claim under the fraud prong of the UCL remains 5 DISMISSED with prejudice. 6 7 8 9 10 4. The Motion to Dismiss Plaintiff’s allegations of an alter ego relationship between Produce Pay and Vantaggio is DENIED. 5. The Motion to Dismiss Plaintiff’s money had and received claim is DENIED. To the extent Plaintiff alleges a goods had and received claim against Produce Pay, that claim is DISMISSED with prejudice. 11 6. The Motion to Dismiss Plaintiff’s claim for civil theft is DENIED. 12 7. The Motion to Dismiss Plaintiff’s PACA claim is DENIED. 13 8. The Motion to Dismiss Plaintiff’s conversion claim is DENIED. 14 9. The Motion to Dismiss Plaintiff’s Produce Dealer Act claim is DENIED. 15 10. The Motion to Dismiss Plaintiff’s unjust enrichment and constructive trust 16 17 18 claim is DENIED. IT IS SO ORDERED. DATED: September 7, 2022 HON. ROGER T. BENITEZ United States District Judge 19 20 21 22 23 24 25 26 27 28 -24- 3:21-cv-00131-BEN-WVG
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