Peri Formwork Systems, Inc. v. Legendary Builders Corporation et al

NOTICE OF MOTION AND MOTION to Dismiss Counterclaim of Legendary Structures, Inc.

C.D. Cal.June 16, 2017

10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ADAM A. HUTCHINSON (SBN 190992) aah@severson.com JOHN R. MEEHAN (SBN 125414) jrm@severson.com JOSEPH W. GUZZETTA (SBN 233560) jwg@severson.com SEVERSON & WERSON A Professional Corporation 1 Embarcadero Center, Suite 2600 San Francisco, California 94111 Telephone: (415) 398-3344 Facsimile: (415) 956-0439 Attorneys for Plaintiff and Counter-Defendant PERI FORMWORK SYSTEMS, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA PERI FORMWORK SYSTEMS, INC., a Maryland corporation, Plaintiff, v. LEGENDARY BUILDERS CORPORATION, a California corporation; LEGENDARY STRUCTURES, INC., a California corporation, and Does 1-10, inclusive. Defendants. p e r CASE NO. 2:16-CV-07517 [Assigned for all purposes to: The Honorable Virginia A. Phillips] NOTICE OF MOTION AND MOTION OF PERI FORMWORK SYSTEMS, INC. TO DISMISS COUNTERCLAIMS OF LEGENDARY STRUCTURES, INC. PURSUANT TO RULE 12(b)(6) OF THE FEDERAL RULES OF CIVIL PROCEDURE Hearing Date: July 24, 2017 Hearing Time: 2:00 p.m. Courtroom: 8A Judge: Hon. Virginia A. Phillips Legendary Structures, Inc., a California corporation, Counter-Claimant, v. PERI FORMWORK SYSTEMS, INC., a Maryland corporation. Counter-Defendant. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 1 of 28 Page ID #:839 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on July 24, 2017 at 2:00 p.m. or as soon thereafter as the matter may be heard in Courtroom 8A of the above-entitled Court, the Honorable Virginia A. Phillips presiding, located at 350 West First Street, Los Angeles, CA, 90012, plaintiff and counter-defendant PERI Formwork Systems, Inc. (“PERI”) will, and hereby does, move for an order dismissing the counterclaims asserted by defendant and counterclaimant Legendary Structures, Inc. (“Legendary Structures”). This motion is made pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the ground that each of the causes of action asserted in the counterclaim fails to state a claim against PERI upon which relief may be granted under Rule 12(b)(6). PERI attempted to meet and confer with opposing counsel pursuant to Civil Local Rule 7-3 in advance of the filing of this motion. Declaration of Joseph W. Guzzetta (“Guzzetta Decl.”) ¶¶ 2-4. However, despite the fact that PERI’s counsel left numerous voice messages asking Legendary Structures’ counsel to return his telephone calls to meet and confer (or email to set up a time to meet and confer), Legendary Structures’ counsel never responded to the voice messages. Id. Accordingly, PERI’s counsel was unable to have a conference of counsel in advance of the filing of this motion in accordance with Civil Local Rule 7-3. Id. PERI’s counsel will continue to attempt to meet and confer with counsel for Legendary Structures in advance of the due date of the opposition to this motion and, if the motion, or any portion thereof, can be resolved in advance of the hearing, will notify the Court in accordance with Civil Local Rule 7-16 and Section 5 of the Court’s Standing Order. Id. ¶ 5. This motion is based on this notice of motion and motion, the memorandum of points and authorities and request for judicial notice filed herewith, the Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 2 of 28 Page ID #:840 2 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 complaint, the counterclaim and all other pleadings and records on file in this action, and upon such other argument as the Court may consider at the hearing on this motion. DATED: June 16, 2017 Respectfully submitted, SEVERSON & WERSON A Professional Corporation By: /s/ Joseph W. Guzzetta Attorneys for Plaintiff and Counter-Defendant PERI FORMWORK SYSTEMS, INC. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 3 of 28 Page ID #:841 i 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page I. INTRODUCTION................................................................................................1 II. FACTUAL AND PROCEDURAL BACKGROUND ......................................3 III. ARGUMENT .......................................................................................................5 A. THE COURT SHOULD DISMISS THE COUNTERCLAIM UNDER COLORADO RIVER BECAUSE THERE IS AN IDENTICAL STATE COURT ACTION PENDING BETWEEN THE SAME PARTIES.........................................................7 B. THE COURT SHOULD DISMISS THE COUNTERCLAIM BECAUSE LEGENDARY STRUCTURES LACKS STANDING TO BRING IT ...................................................................11 C. THE COURT SHOULD DISMISS THE COUNTERCLAIM BECAUSE LEGENDARY STRUCTURES HAS FAILED TO PLEAD FACTS SUFFICIENT TO STATE A CAUSE OF ACTION AGAINST PERI. ....................................................................13 1. THE CONTRACTUAL INDEMNITY COUNTERCLAIM IS INSUFFICIENTLY PLEADED UNDER TWOMBLY.....................................................................14 2. THE EQUITABLE INDEMNITY COUNTERCLAIM IS INSUFFICIENTLY PLEADED UNDER TWOMBLY. .............15 3. THE INTENTIONAL INTERFERENCE COUNTERCLAIM FAILS BECAUSE IT IS INSUFFICIENTLY PLEADED UNDER TWOMBLY AND IT FAILS TO ALLEGE AN INTENTIONAL INTERFERENCE WITH A THIRD-PARTY CONTRACT. ................................................................................16 IV. CONCLUSION ..................................................................................................19 Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 4 of 28 Page ID #:842 ii 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) CASES Aas v. Super. Ct., 24 Cal. 4th 627, 635 (2000) ....................................................................................16 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ......................................................................................... 13, 15 Balistreri v. Pacifica Police Dep’t., 901 F.2d 696 (9th Cir. 1990) ....................................................................................6 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ........................................................................................ passim BFGC Architects, Inc. v. Forcum/Mackey Construction, Inc., 119 Cal. App. 4th 848 (2004) .................................................................................16 Church of Scientology of Cal. v. Flynn, 744 F.2d 694 (9th Cir. 1984) ....................................................................................6 Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) ......................................................................................6 Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) ........................................................................................ passim County of Marin v. Deloitte Consulting LLP, 2011 WL 3903222 (N.D. Cal. Sept. 6, 2011) ........................................................10 County of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292 (2006) .................................................................................16 Current, Inc. v. State Bd. Of Equalization, 24 Cal. App. 4th 382 (1994) ...................................................................................13 Davis v. Nadrich, 174 Cal. App. 4th 1 (2009) .....................................................................................17 Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 5 of 28 Page ID #:843 iii 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Durning v. First Boston Corp., 815 F.2d 1265 (9th Cir. 1987) ..................................................................................6 Elk Grove Unified School Dist. v. Newdow, 542 U.S. 1 (2004) ...................................................................................................12 Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377 (2014) .............................................................................................12 Expressions at Rancho Niguel Ass’n v. Ahmanson Developments, Inc., 86 Cal. App. 4th 1135 (2001) .................................................................................14 Fifield Manor v. Finston, 54 Cal. 2d 632 (1960)..............................................................................................17 Gladstone Realtors v. Village of Bellwood, 441 U.S. 91 (1979) ..................................................................................................11 Grinell Fire Protection Systems Co., Inc. v. Regents of California, 554 F. Supp. 495 (N.D. Cal 1982)............................................................................8 Holder v. Holder, 305 F.3d 854 (9th Cir. 2002) ....................................................................................8 Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180 (1952) ..................................................................................................7 Khoury v. Maly’s of California, 14 Cal. App. 4th 612 (1993) ...................................................................................17 Kowalski v. Tesmer, 543 U.S. 125 (2004) ................................................................................................12 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ......................................................................................... 11, 12 Mack v. South Bay Beer Distributors, 798 F.2d 1279 (9th Cir. 1986) ..................................................................................6 McCollum v. California Dept. of Corrections & Rehab., 647 F.3d 870 (9th Cir. 2011) ..................................................................................12 Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 6 of 28 Page ID #:844 iv 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Minucci v. Agrama, 868 F.2d 1113 (9th Cir. 1989) ................................................................................10 Mullis v. U.S. Bankr. Ct., 828 F.2d 1385 (9th Cir. 1987) ..................................................................................6 Nakash v. Marciano, 882 F.2d 1411 (9th Cir. 1989) ................................................................................10 Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480 (9th Cir. 1995) ....................................................................................6 R.R. Street & Co., Inv. v. Transport Ins. Co., 656 F.3d 966 (2011) ..............................................................................................7, 8 Reliance Finance Corp. v. Miller, 557 F.2d 674 (9th Cir. 1982) ....................................................................................8 Rodriguez v. J.P. Morgan Chase & Co., 809 F. Supp. 2d 1291 (S.D. Cal. Aug. 25, 2011) ..................................................13 Rosen v. State Farm General Ins. Co., 24 Cal. 4th 627 (2000) ............................................................................................16 ScripsAmerica, Inc. v. Ironridge Global LLC, 56 F. Supp. 3d 1121, 1147 (C.D. Cal. Nov. 3, 2014)............................................10 Set Enterprises, Inc. v. 132297 Ontario Inc., 2014 WL 11515702 (D. Az. Apr. 24, 2014)..........................................................18 Silberkleit v. Kantrowitz, 713 F.2d 433 (9th Cir. 1983) ..................................................................................10 Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016) .............................................................................................11 Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) ....................................................................................6 Square 1 Bank v. Lo, 2014 WL 4181907 (N.D. Cal. Aug. 22, 2014) ............................................... 14, 15 Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 7 of 28 Page ID #:845 v 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Steckman v. Hart Brewing, Inc., 143 F.3d 1293 (9th Cir. 1998) ..................................................................................6 United States v. Hays, 515 U.S. 737 (1995) ................................................................................................11 Wheeler v. Travelers Ins. Co., 22 F.3d 534 (3d Cir. 1994) .....................................................................................11 Rules Federal Rules of Civil Procedure Rule 8 ........................................................................................................ 2, 5, 13, 15 Rule 12 .............................................................................................................. 1, 5, 6 Civil Local Rules Rule 15-1....................................................................................................................5 Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 8 of 28 Page ID #:846 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION Plaintiff and counter-defendant PERI FORMWORK SYSTEMS, INC. (“PERI”) respectfully submits this memorandum of points and authorities in support of its motion to dismiss the counterclaim of defendant and counterclaimant LEGENDARY STRUCTURES, INC. (“Legendary Structures”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (“Rule 12(b)(6)”). By this motion, PERI respectfully requests that the Court dismiss the counterclaim asserted by Legendary Structures on three grounds: (1) Colorado River abstention, (2) lack of standing, and (3) failure to allege facts in the counterclaim sufficient to state a claim. First, the Court should grant this motion and dismiss the counterclaim under the doctrine espoused by the United States Supreme Court in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). Before it filed the counterclaim in this action, Legendary Structures filed a cross-complaint in the Superior Court of the State of California for the County of Los Angeles (the “Los Angeles Superior Court”) against PERI. In that action, Legendary Structures asserts the very same claims against PERI that it is also attempting to assert in the counterclaim, based on a dispute arising out of the very same commercial parking lot construction project (indeed, the factual allegations against PERI in the counterclaim are, in several respects, verbatim of the allegations in the state court action). The Colorado River factors weigh strongly in favor of dismissing the counterclaim in favor of the state court action, where Legendary Structures’ rights will be well-protected, and where it can obtain any relief to which it may be entitled. There is no reason for two courts to waste resources adjudicating the same claim in parallel actions, possibly resulting in conflicting rulings. The Court should exercise its discretion and dismiss the counterclaims under Colorado River. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 9 of 28 Page ID #:847 2 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Second, the counterclaim should be dismissed because Legendary Structures lacks standing to bring these claims. All of the causes of action asserted in the counterclaim relate to PERI’s provision of construction materials for a parking lot project on Ventura Boulevard in Los Angeles, California. However, there is no contract between Legendary Structures and PERI for the provision of materials for the parking lot project. Instead, PERI’s contract relating to the counterclaim – i.e. the purchase order issued to facilitate rental of the materials PERI provided – is with a separate corporation named Legendary Builders, Inc. Legendary Structures and Legendary Builders are separate corporate entities, but Legendary Builders has asserted no claims here. Federal law is clear that a party cannot assert claims for harm to other, third parties because the party lacks standing to bring those claims. Because Legendary Structures has no contract with PERI relating to the parking lot project, it lacks standing to assert causes of action in the counterclaim, and the Court should dismiss the counterclaim as a result. Finally, the factual allegations in the counterclaim do not meet the standard laid out by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and hence should be dismissed. Here, Legendary Structures asserts three causes of action against PERI – for contractual indemnity, equitable indemnity and intentional interference with contractual relations. However, none of those claims is pleaded with any supporting facts that, if true, would entitle Legendary Structures to relief. Instead, all the counterclaim provides is a “formulaic recitation of the elements of [the] cause[s] of action.” The Supreme Court has held this is insufficient to meet the “clear and plain statement” standard in Rule 8 of the Federal Rules of Civil Procedure and, for that reason, the Court should dismiss the counterclaim. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 10 of 28 Page ID #:848 3 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 For all of these reasons, as explained more fully below, the Court should grant this motion and dismiss the counterclaim in its entirety. II. FACTUAL AND PROCEDURAL BACKGROUND On or about April 23, 2015, PERI entered into a contract with Legendary Builders, Inc. (“Legendary Builders”) to provide formwork materials (materials used to create forms into which concrete can be poured for setting) for a parking garage construction project at 18131 Ventura Boulevard, Los Angeles, California, 91356 (the “Ventana Parking Garage Project”). Counterclaim (Docket No. 29-1, Ex. B (Docket No. 29-3)) (“Counterclaim”) ¶¶ 10; 13. In exchange for this rental of materials, Legendary Builders agreed to pay PERI within 30-days of delivery to the Ventana worksite. Id. ¶ 7. Between August 2015 and January 2016, PERI provided materials for the Ventana Parking Garage Project pursuant to purchase order. Complaint (Docket No. 1) (“Compl.”) ¶ 9. However, despite the fact that it issued a purchase order for the formwork materials, and despite the fact that PERI provided the requested materials, Legendary Builders failed to pay PERI as agreed. Compl. ¶ 10. PERI alleges that Legendary Builders owes it $365,456.38 for the Ventana Parking Garage Project. Id. ¶ 11. On or about April 16, 2015, PERI also entered into a separate contract with a separate and distinct corporation, Legendary Structures, to provide formwork materials for a different construction project (the “Allen Project”). Compl. ¶ 14. In exchange, Legendary Structures agreed to pay PERI for the rental of formwork materials. Id. Between September 2015 and January 2016, PERI supplied the formwork materials to Legendary Structures pursuant to the Allen Project purchase order issued by Legendary Structures. Id. ¶ 15. However, despite the fact that it issued a purchase order for the materials, and despite the fact that PERI provided Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 11 of 28 Page ID #:849 4 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the requested materials, Legendary Structures failed to pay PERI as agreed. Id. ¶ 17. PERI alleges that Legendary Structures owes it $92,168.63 for the Allen Project. Id. (This separate contractual relationship with Legendary Structures relating to the Allen Project is not the subject of the counterclaim.) On or about July 6, 2016, C.W. Driver, Inc. (“C.W. Driver”), the general contractor on the Ventana Parking Garage Project, filed a complaint against, among others, Legendary Structures and PERI in the Los Angeles Superior Court as case number BC625934 (the “State Court Action”). Request for Judicial Notice (“RJN”), Ex. 1. In the State Court Action, C.W. Driver asserts various claims against Legendary Structures and PERI relating to the construction of the parking garage project. Id. On or about October 8, 2016, PERI filed this lawsuit against Legendary Builders and Legendary Structures. Docket No. 1. In its complaint, PERI alleges causes of action for breach of contract, goods and services rendered and account stated. Id. On or about October 31, 2016, Legendary Structures filed a cross-complaint against, amongst others, C.W. Driver and PERI in the State Court Action. RJN, Ex. 2. In the cross-complaint, Legendary Structures asserts causes of action against PERI for breach of contract, contractual indemnity and equitable indemnity relating to PERI’s provision of formwork materials for the Ventana Parking Garage Project. Id. ¶¶ 37-48. On or about March 31, 2017, six months after PERI initiated this action and five months after it filed its cross-complaint in the State Court Action, Legendary Structures filed its motion for leave to file counterclaims against PERI in the above- captioned case, as well as third party claims against three additional proposed parties. Docket No. 29 at Docket No. 29-1. The motion included a draft of the Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 12 of 28 Page ID #:850 5 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 proposed counterclaim. Id. On May 15, 2017, the Court granted Legendary Structures leave to amend its answer to assert the counterclaims against PERI, but denied the motion with respect to the other parties. Docket No. 41. Under Civil Local Rule 15-1, Legendary Structures was required to promptly file its counterclaim upon receiving leave to amend as a separate document on the docket. Despite the fact that PERI requested that Legendary Structures file the counterclaim as a separate document (and that it remove the third party defendants as to whom leave to amend was denied), Legendary Structures has failed to file the counterclaim. Accordingly, PERI must make this motion to dismiss with respect to the proposed counterclaim that Legendary Structures attached to its motion for leave to amend as Docket No. 29-1. The counterclaim conclusorily asserts three state law causes of action against PERI – for contractual indemnity (Counterclaim ¶¶ 36-41), equitable indemnity (Counterclaim ¶¶ 42-47), and intentional interference with contractual relations (Counterclaim ¶¶ 67-83). However, the factual allegations in the counterclaim do not meet the pleading standards under Rule 8 of the Federal Rules of Civil Procedure and, as a result, the Court should dismiss the counterclaim. III. ARGUMENT To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint or counterclaim must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); id. at 554–56, 562–63 (stating that the Rule 12(b)(6) standard that dismissal is warranted only if plaintiff can prove no set of facts in support of his claims that would entitle him to relief “has been questioned, criticized, and explained away long enough,” and that having “earned its retirement,” it “is best forgotten as an incomplete, negative gloss on an accepted pleading standard”). Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 13 of 28 Page ID #:851 6 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Thus, the facts pleaded in the counterclaim must amount to “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Id. at 555. Instead, the “[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. (citation omitted). Dismissal may be based either on the lack of cognizable legal theories or the lack of pleading sufficient facts to support cognizable legal theories. Balistreri v. Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir. 1990). In ruling on a Rule 12(b)(6) motion, the counterclaim’s factual allegations are accepted as true. Church of Scientology of Cal. v. Flynn, 744 F.2d 694, 696 (9th Cir. 1984). The Court construes the pleading in the light most favorable to counterclaimant and resolves all doubts in counterclaimant’s favor. Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Despite this, the Court may disregard allegations contradicted by the counterclaim’s attached exhibits. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987); Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295–96 (9th Cir. 1998). Furthermore, the Court is not required to accept as true allegations contradicted by judicially noticed facts. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (citing Mullis v. U.S. Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987)). The Court may also consider matters of public record, including pleadings, orders, and other papers filed with the Court. Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986). Finally, “the court is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness Network, 18 F.3d 752, 754–55 (9th Cir. 1994). Nor need the Court accept unreasonable inferences, or unwarranted deductions of fact. Sprewell, 266 F.3d at 988. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 14 of 28 Page ID #:852 7 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. THE COURT SHOULD DISMISS THE COUNTERCLAIM UNDER COLORADO RIVER BECAUSE THERE IS AN IDENTICAL STATE COURT ACTION PENDING BETWEEN THE SAME PARTIES As described above, this is not the only lawsuit brought by Legendary Structures against PERI regarding the Ventana Parking Garage Project. On October 31, 2016, Legendary Structures asserted the same claims that it asserted in the counterclaim against PERI by filing a cross-complaint against PERI in the State Court Action. RJN, Ex. 2. In order to avoid duplication of judicial resources and the risk of inconsistent judicial determinations regarding these claims, the Court should dismiss the federal counterclaim under Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). In Colorado River, the United States Supreme Court recognized that in certain circumstances, “the presence of a concurrent state proceeding” permits a federal trial court to dismiss or stay the concurrent federal lawsuit for reasons of “‘[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.’” Colorado River, 424 U.S. at 818 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183 (1952)). In the Ninth Circuit, courts have developed an eight factor test for determining whether dismissal under Colorado River is appropriate. R.R. Street & Co., Inv. v. Transport Ins. Co., 656 F.3d 966, 978 (2011). In deciding whether to stay or dismiss a federal lawsuit under Colorado River, a court considers: (1) which court first assumed jurisdiction over any property at stake; (2) the inconvenience of the federal forum; (3) the desire to avoid piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether federal law or state law provides the rule of decision on the merits; (6) whether the state court proceedings can adequately protect the rights of the federal litigants; (7) the desire to avoid forum Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 15 of 28 Page ID #:853 8 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 shopping; and (8) whether the state court proceedings will resolve all issues before the federal court. Id. at 978-79 (citing Holder v. Holder, 305 F.3d 854, 870 (9th Cir. 2002)). Here, the eight factor test strongly favors dismissal of the counterclaims. There is no physical property at issue in this case over which the courts have assumed jurisdiction, so the first factor does not weigh in favor of or against dismissal of the counterclaim. The federal and state courts are both in downtown Los Angeles, and hence are equally convenient for the parties. Thus, the second factor does not weigh in favor of or against dismissal of the counterclaim. The third factor also does not weigh in favor of or against dismissal because dismissing the counterclaim will not result in piecemeal litigation – all of the claims asserted by Legendary Structures in the counterclaim are also asserted in (or can be asserted in) the state litigation and will be resolved in that case. The fourth factor weighs in favor of dismissal because the Los Angeles Superior Court assumed jurisdiction over Legendary Structures’ claims against PERI on October 31, 2016 – over seven months before the counterclaims were asserted in this Court. The fifth factor weighs heavily in favor of dismissal because all of the claims asserted by Legendary Structures in both the state court litigation and in the counterclaim are state law claims. Legendary Structures’ counterclaims are based entirely in contract, and state law governs contract-based claims. See, e.g., Grinell Fire Protection Systems Co., Inc. v. Regents of California, 554 F. Supp. 495, 497 (N.D. Cal 1982) (“In diversity cases involving contract disputes, the federal courts ordinarily apply state law”) (citing Reliance Finance Corp. v. Miller, 557 F.2d 674 Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 16 of 28 Page ID #:854 9 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (9th Cir. 1982)). There are no federal issues whatsoever present in the counterclaims.1 The sixth factor also weighs in favor of dismissal. There is no reason whatsoever that the state court cannot completely protect Legendary Structures’ rights to the same extent that this Court can do so. Indeed, before PERI filed its independent collections action in federal court, Legendary Structures was more than content to litigate this matter in state court. The seventh factor also weighs in favor of dismissal. The existence of parallel lawsuits, pending in two separate courts, presents a pointed risk of forum shopping. If Legendary Structures is permitted to continue suing PERI on these claims in both federal and state court, it can simply wait and see which court appears more receptive to its claims, and continue in that forum. For example, Legendary Structures could wait and see how the state and federal courts rule on a motion for summary judgment. If one of these courts rules in favor of Legendary Structures, it could then dismiss the other action and pursue this case in that forum. The presence of these parallel actions allows Legendary Structures to forum shop; dismissal would eliminate this risk. Finally, the eighth Colorado River factor weighs in favor of dismissal. The two lawsuits filed by Legendary Structures assert the same claims based on the same contract. If the state court litigation is resolved first (which is likely given 1 Indeed, the purchase order between PERI and Legendary Builders provides that “[t]he contract resulting from the acceptance of this Purchase Order is to be governed by and construed in accordance with the laws of the State of California without regard to the choice of law provisions thereof.” Compl. (Docket No. 1), Ex. A § 21. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 17 of 28 Page ID #:855 10 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that the state court had a seven-month head start), all issues asserted in counterclaim will be resolved.2 An exception to the Colorado River rule has been developed in the Ninth Circuit holding that courts may not dismiss a proceeding in favor of a parallel state court proceeding where the federal proceeding involves claims of exclusive federal jurisdiction. See Minucci v. Agrama, 868 F.2d 1113, 1115 (9th Cir. 1989) (holding that “the Colorado River doctrine only applies to claims under the concurrent jurisdiction of the federal and state courts. ‘[T]he district court has no discretion to stay proceedings as to claims within the exclusive federal jurisdiction under the wise judicial administration exception.’”) (quoting Silberkleit v. Kantrowitz, 713 F.2d 433, 436 (9th Cir. 1983)) (alterations and emphasis in original). Here, however, there is no such concern – the counterclaims asserted by Legendary 2 It is true that in the State Court Action, Legendary Structures asserts a breach of contract claim it has not asserted in the counterclaim, and in the counterclaim, Legendary Structures asserts a claim for intentional interference with contract that it has not asserted in the State Court Action. These facts, however, do not change the Colorado River analysis. “In the Ninth Circuit, ‘exact parallelism [between the two suits] . . . is not required. It is enough if the two proceedings are “substantially similar”’”. ScripsAmerica, Inc. v. Ironridge Global LLC, 56 F. Supp. 3d 1121, 1147 (C.D. Cal. Nov. 3, 2014) (quoting Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989)) (alterations in original); see also County of Marin v. Deloitte Consulting LLP, 2011 WL 3903222, at *1 (N.D. Cal. Sept. 6, 2011) (“The threshold for applying the Colorado River doctrine is whether the two cases are substantially similar. Substantial similarity does not mean that the cases must be identical.”). Here, there can be no dispute that the claims asserted in the counterclaim and the claims asserted in the State Court Action are substantially similar. All of the claims asserted in the counterclaim and the State Court Action arise out of one common set of facts – Legendary Structures’ allegations that PERI failed to deliver the concrete forms it promised to deliver for the Ventana Parking Garage Project. Compare RJN, Ex. 2 ¶ 20 (“LEGENDARY and PERI entered into an agreement wherein LEGENDARY performed labor and provided materials and equipment for the construction of a six-level parking garage at the Property”) with Counterclaim ¶¶ 70-72 (“PERI failed to use reasonable care in performing the work under an agreement with LEGENDARY”). Indeed, the allegations in support of Legendary Structures’ contractual indemnity and equitable indemnity claims in the counterclaim are verbatim of the allegations in support of those same claims in the State Court Action. Compare Counterclaim ¶¶ 36-47 with RJN, Ex. 2 ¶¶ 37-48. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 18 of 28 Page ID #:856 11 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Structures are state law claims brought in this Court pursuant only to the Court’s diversity jurisdiction. As demonstrated above, all eight of the Colorado River factors are either neutral or weigh strongly in favor of the Court exercising its Colorado River discretion and dismissing the counterclaims in favor of the state court proceeding filed by Legendary Structures. B. THE COURT SHOULD DISMISS THE COUNTERCLAIM BECAUSE LEGENDARY STRUCTURES LACKS STANDING TO BRING IT The Court should also dismiss the counterclaim because Legendary Structures lacks standing to assert these claims against PERI. This is because Legendary Structures is not the party with whom PERI contracted for construction- related services and materials at the Ventana Parking Garage Project. Standing is an “essential and unchanging part of the case or controversy requirement of Article III.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Standing is a jurisdictional limitation, and must be considered by the federal courts even if the parties fail to raise it. United States v. Hays, 515 U.S. 737, 742 (1995). Standing to sue is governed by federal law, even in cases – such as this – arising under the Court’s diversity jurisdiction. Wheeler v. Travelers Ins. Co., 22 F.3d 534, 537 (3d Cir. 1994). The federal doctrine of standing is comprised of both requirements under Article III of the Constitution and of “prudential concerns”. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99 (1979). It is the plaintiff’s (or, in this case, the counterclaimant’s) burden to establish that it has standing to bring its claims in federal court. Lujan, 504 U.S. at 561. In order to establish standing, Article III requires the counterclaimant to establish, as a “irreducible minimum”, (1) an “injury in fact” that is both “concrete and particularized,” actual or imminent and not hypothetical or conjectural, (2) a Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 19 of 28 Page ID #:857 12 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 causal connection between the injury and the defendant’s (or counter-defendant’s) conduct or omissions, and (3) a likelihood that the injury will be redressed by a favorable decision. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016); see also Lujan, 504 U.S. at 560-61. Additionally, the counterclaim must establish the “prudential elements” of standing. To do so, the counterclaim must establish that the claim relates to Legendary Structures’ own legal interests, rather than the legal interests of third parties. Elk Grove Unified School Dist. v. Newdow, 542 U.S. 1, 14 (2004) (overruled on other grounds in Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1386-87 (2014)). Here, Legendary Structures cannot establish either the “injury in fact” requirement or the prudential elements of the standing requirements. The reason for this is simple – this is a breach of contract-related action, and there never was any contract between PERI and Legendary Structures relating to the Ventana Parking Garage Project. See Compl., Ex. A at Ex. 1. Instead, PERI’s contracts related to the Ventana Parking Garage Project were with a different legal entity – Legendary Builders. Id. This is not a trivial difference or a mere typographical error – Legendary Structures is a California corporation registered with the California Secretary of State. See Counterclaim, Ex B (Docket No. 29-3); RJN, Ex. 4. Legendary Builders is a different California corporation registered with the California Secretary of State. See RJN, Ex. 3. It is axiomatic that a party lacks standing to assert claims relating to injuries to others. Kowalski v. Tesmer, 543 U.S. 125, 134 (2004); McCollum v. California Dept. of Corrections & Rehab., 647 F.3d 870, 879-80 (9th Cir. 2011). As the Ninth Circuit has ruled, “[t]o demonstrate third party standing, a plaintiff must show his own injury, a close relationship between himself and the third parties whose rights he asserts, and the inability of the parties to assert their own rights.” McCollum, 647 F.3d at 879. Legendary Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 20 of 28 Page ID #:858 13 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Structures has suffered no injury itself because it had no contract with PERI that could be breached, and there is absolutely no reason why Legendary Builders cannot assert its own rights here. As separate corporations, Legendary Builders and Legendary Structures are different legal entities and, even if they are under common ownership, one lacks standing to assert the rights of the other. See, e.g., Rodriguez v. J.P. Morgan Chase & Co., 809 F. Supp. 2d 1291, 1299 (S.D. Cal. Aug. 25, 2011) (“It is the general rule that a parent corporation and its subsidiary will be treated as separate legal entities.”) (citing Current, Inc. v. State Bd. Of Equalization, 24 Cal. App. 4th 382, 391 (1994)). For all of the foregoing reasons, the Court should dismiss the counterclaim because Legendary Structures lacks standing to assert the causes of action in it. C. THE COURT SHOULD DISMISS THE COUNTERCLAIM BECAUSE LEGENDARY STRUCTURES HAS FAILED TO PLEAD FACTS SUFFICIENT TO STATE A CAUSE OF ACTION AGAINST PERI Even if the Court chooses not to exercise its discretion under Colorado River even though the Ninth Circuit’s eight factor test counsels in favor of dismissal, the Court should still dismiss the counterclaim because it fails to plead facts sufficient to state any of the causes of action asserted in it. As pointed out above, in Twombly, the United States Supreme Court rejected the prior interpretation of Rule 8 permitting a pleading to survive unless the plaintiff can prove “no set of facts” that would state a claim, holding that that standard “is best forgotten as an incomplete, negative gloss on an accepted pleading standard.” Twombly, 550 U.S. at 563. Instead, the Twombly court clarified that Rule 8 requires a plaintiff (or, in this case, a counterclaimant) to plead “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. To state a claim under Rule 8, a complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim for Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 21 of 28 Page ID #:859 14 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 relief is “plausible on its face” when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 1. THE CONTRACTUAL INDEMNITY COUNTERCLAIM IS INSUFFICIENTLY PLEADED UNDER TWOMBLY Legendary Structures’ claims must be dismissed because none of the counterclaims meet the standard laid out by the Supreme Court in Twombly. “‘The elements of a cause of action for indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is contractually . . . responsible.’” Square 1 Bank v. Lo, 2014 WL 4181907, at *4 (N.D. Cal. Aug. 22, 2014) (quoting Expressions at Rancho Niguel Ass’n v. Ahmanson Developments, Inc., 86 Cal. App. 4th 1135, 1139 (2001)). As an initial matter, and as described in more detail in Section B, supra, Legendary Structures cannot recover on its claim for contractual indemnity because the exhibits attached to the complaint and the counterclaim establish that Legendary Structures is not a party to a contract with PERI relating to the Ventana Parking Garage Project. Counterclaim (Docket No. 29-3). Additionally, the counterclaim fails to even specify what Legendary Structures is claiming indemnity for – it has specified no harm that Legendary Structures has suffered for which it is entitled to contractual indemnity. Legendary Structures’ counterclaim for contractual indemnity simply states no facts that would entitle it to relief – instead, the counterclaim does nothing but parrot the elements of a contractual indemnity claim. For example, the counterclaim states that “PERI failed to use reasonable care in performing the work under an agreement with LEGENDARY,” but fails to describe how PERI failed to use reasonable care in performing the work. Counterclaim ¶ 38. Similarly, Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 22 of 28 Page ID #:860 15 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Legendary Structures alleges that “PERI’s failure contributed as a substantial factor in causing LEGENDARY’s harm,” but alleges no facts describing how PERI’s failure contributed to its harm, or indeed how it was harmed at all. Id. ¶ 39. As the Supreme Court stated in Twombly, Rule 8 “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 550 U.S. at 555. However, a “formulaic recitation of the elements of” its contractual indemnity claim is all Legendary Structures offers in the counterclaim. Not only does the counterclaim fail to plead “factual content that allows the court to draw the reasonable inference that [PERI] is liable for the alleged misconduct,” it fails to plead any misconduct by PERI at all. Iqbal, 556 U.S. at 678. 2. THE EQUITABLE INDEMNITY COUNTERCLAIM IS INSUFFICIENTLY PLEADED UNDER TWOMBLY As with a cause of action for contractual indemnity, to state a claim for equitable indemnity, the counterclaim must include “‘(1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is . . . equitably responsible.’” Lo, 2014 WL 4181907, at *4. And as with the contractual indemnity claim, the cause of action for equitable indemnity as to PERI fails to state any facts that, if proven, would entitle Legendary Structures to relief. As with the contractual indemnity claim, the equitable indemnity claim alleges only that “PERI failed to use reasonable care in performing the work under an agreement with LEGENDARY” (Counterclaim ¶ 45), and that “PERI’s failure contributed as a substantial factor in causing LEGNNDARY’s harm” (Counterclaim ¶ 46). The counterclaim asserts no facts to support a finding of that a duty was owed by PERI to Legendary Structures. Counterclaim, passim. It also fails to demonstrate any factual basis to conclude that PERI breached any such duty, if one existed. Id. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 23 of 28 Page ID #:861 16 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The counterclaim simply alleges no facts related to the equitable indemnity cause of action that, if true, would entitle Legendary Structures to relief. In addition to there being no supporting facts, the counterclaim and related documents establish that Legendary Structures cannot maintain an action for equitable indemnity because there is no predicate underlying tort. PERI provided formwork material pursuant to its contractual obligation. Claims that it breached its contractual duties cannot form the basis for a tort claim. BFGC Architects, Inc. v. Forcum/Mackey Construction, Inc., 119 Cal. App. 4th 848, 852-853 (2004) (“Without any action sounding in tort, there is no basis for a finding of potential joint and several liability on the part of defendants, thereby precluding a claim for equitable indemnity.”) Moreover, the nature of the claims asserted against Legendary Structures in the State Court Action, and for which Legendary Structures ostensibly seeks to be indemnified, are purely economic damages. Thus, an indemnity claim based on negligence is precluded. Aas v. Super. Ct., 24 Cal. 4th 627, 635 (2000) (superseded on other grounds in Rosen v. State Farm General Ins. Co., 24 Cal. 4th 627 (2000)); County of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292, 230 (2006) (“When a product’s defect and the resulting damage are one and the same, the defect may not be considered to have caused physical injury necessary to pursue negligence . . .The expenses of repair plaintiff has incurred . . . are purely economic damages.”)) 3. THE INTENTIONAL INTERFERENCE COUNTERCLAIM FAILS BECAUSE IT IS INSUFFICIENTLY PLEADED UNDER TWOMBLY AND IT FAILS TO ALLEGE AN INTENTIONAL INTERFERENCE WITH A THIRD-PARTY CONTRACT There are three reasons why the claim asserted in the cross-complaint for intentional interference with contractual relations should be dismissed. As an initial Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 24 of 28 Page ID #:862 17 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 matter, Legendary Structures has failed to plead any facts supporting its allegation that PERI intended to disrupt Legendary Structures’ subcontract with C.W. Driver. Instead, Legendary Structures alleges that PERI failed to perform its own contract with Legendary Builders. This is insufficient to plead a cause of action for intentional interference with contract under California law. Khoury v. Maly’s of California, 14 Cal. App. 4th 612, 618 (1993) (holding that formulaic statement in complaint that defendant intended to disrupt plaintiff’s business relationships by breaching contract was insufficient because “[a]llowing such conclusory pleading would be contrary to the cautious policy of the courts about extending tort remedies to ordinary commercial contracts”). Because it lacks any evidence of intentional interference, Legendary Structures goes on to allege what looks like a claim for negligent interference with contract. However, there is no tort for negligent interference with contractual relations under California law. See Davis v. Nadrich, 174 Cal. App. 4th 1, 9 (2009) (“‘the courts have consistently refused to recognize a cause of action based on negligent, as opposed to intentional, conduct which interferes with the performance of a contract between third parties or renders its performance more expensive or burdensome.’”) (quoting Fifield Manor v. Finston, 54 Cal. 2d 632, 636 (1960)). But negligent interference with contractual relations is all that Legendary Structures has alleged here. See, e.g., Counterclaim ¶¶ 72 (“PERI failed to use reasonable care in performing the work under an agreement with LEGENDARY”); 73 (“PERI failed to use reasonable care in performing the work at the Project relating to LEGENDARY’s agreement with CW DRIVER which affected LEGENDARY…”). Nowhere in the counterclaim does Legendary Structures allege that PERI intentionally failed to “meet the required specifications and plans for the Project” or intentionally “caused the formation to be thicker than acceptable to” the contracting Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 25 of 28 Page ID #:863 18 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 parties. Instead, the entire counterclaim is pleaded in the language of negligence. However, without allegations that PERI intentionally interfered with the contract, the international interference claim fails as a matter of law and must be dismissed. Finally, the entire intentional interference claim is insufficiently pleaded under Twombly. In order to properly plead a claim for intentional interference with contractual relations under Twombly, the counterclaim must “explain how Plaintiff interfered with Defendant’s business relationships [and] how that interference was improper.” Set Enterprises, Inc. v. 132297 Ontario Inc., 2014 WL 11515702, at *2 (D. Az. Apr. 24, 2014) (emphasis added). Additionally, an intentional interference claim should be dismissed when the “[p]laintiff has not pleaded any facts, but only broad allegations, regarding [the] Defendant’s conduct, let alone whether or not such unspecified conduct was egregious.” The counterclaim, however, is devoid of factual allegations regarding how PERI’s alleged non-performance interfered with Legendary Structures’ agreement with C.W. Driver. Instead, Legendary Structures only conclusorily alleges that “PERI’s conduct prevented performance or made performance more expensive or difficult.” Counterclaim ¶ 81. Once again, Legendary Structures must do more than just parrot the elements of an intentional interference claim, but that is all that Legendary Structures did in the counterclaim. Accordingly, the intentional interference cause of action should be dismissed under Twombly. For all of these reasons, the Court should dismiss the intentional interference counterclaim. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 26 of 28 Page ID #:864 19 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. CONCLUSION For all of the foregoing reasons, PERI respectfully requests that the Court dismiss the counterclaim in its entirety. DATED: June 16, 2017 Respectfully submitted, SEVERSON & WERSON A Professional Corporation By: /s/ Joseph W. Guzzetta Attorneys for Plaintiff and Counter-Defendant PERI FORMWORK SYSTEMS, INC. Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 27 of 28 Page ID #:865 20 10900.0014/10779189.2 NOTICE OF MOTION AND MOTION OF PERI FORMWORK TO DISMISS COUNTERCLAIM OF LEGENDARY STRUCTURES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Certificate of Service Under Rule 5 of the Federal Rules of Civil Procedure, I hereby certify that a copy of the forgoing was provided on the 16th day of June, 2017 via ECF to the following persons: M. DANTON RICHARDSON danton@sonilaw.com MICHAEL A. LONG mike@sonilaw.com THE SONI LAW FIRM 116 S. Euclid Avenue Pasadena, CA 91101 Telephone: (626) 683-7600 Facsimile: (626) 683-1199 Attorneys for Defendant and Counterclaimant /s/ . Joseph W. Guzzetta Case 2:16-cv-07517-VAP-PJW Document 44 Filed 06/16/17 Page 28 of 28 Page ID #:866 10900.0014/10786516.1 GUZZETTA DECL. IN SUPPORT OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ADAM A. HUTCHINSON (SBN 190992) aah@severson.com JOHN R. MEEHAN (SBN 125414) jrm@severson.com JOSEPH W. GUZZETTA (SBN 233560) jwg@severson.com SEVERSON & WERSON A Professional Corporation 1 Embarcadero Center, Suite 2600 San Francisco, California 94111 Telephone: (415) 398-3344 Facsimile: (415) 956-0439 Attorneys for Plaintiff and Counter-Defendant PERI FORMWORK SYSTEMS, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA PERI FORMWORK SYSTEMS, INC., a Maryland corporation, Plaintiff, v. LEGENDARY BUILDERS CORPORATION, a California corporation; LEGENDARY STRUCTURES, INC., a California corporation, and Does 1-10, inclusive. Defendants. p e r CASE NO. 2:16-CV-07517 [Assigned for all purposes to: The Honorable Virginia Phillips] DECLARATION OF JOSEPH W. GUZZETTA IN SUPPORT OF MOTION OF PERI FORMWORK SYSTEMS, INC. TO DISMISS COUNTERCLAIMS OF LEGENDARY STRUCTURES, INC. PURSUANT TO RULE 12(b)(6) OF THE FEDERAL RULES OF CIVIL PROCEDURE Hearing Date: July 24, 2017 Hearing Time: 2:00 p.m. Courtroom: 8A Judge: Hon. Virginia Phillips Legendary Structures, Inc., a California corporation, Counter-Claimant, v. PERI FORMWORK SYSTEMS, INC., a Maryland corporation. Counter-Defendant. Case 2:16-cv-07517-VAP-PJW Document 44-1 Filed 06/16/17 Page 1 of 4 Page ID #:867 - 2 - 10900.0014/10786516.1 GUZZETTA DECL. IN SUPPORT OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I JOSEPH W. GUZZETTA, DECLARE AS FOLLOWS: 1. I am an attorney duly licensed to practice law in all courts of the State of California, and am admitted to practice before this Court. I am an attorney with the law firm of Severson and Werson, LLP, counsel of record for plaintiff and counter-defendant PERI FORMWORK SYSTEMS, INC. (“PERI”), in the above- referenced action. I make this declaration in support PERI’s motion to dismiss the counterclaim filed by defendant and counterclaimant LEGENDARY STRUCTURES, INC. (“Legendary Structures”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. 2. I have been attempting to contact counsel for Legendary Structures in order to have a conference of counsel as required by Civil Local Rule 7-3 in advance of filing PERI’s motion to dismiss. 3. On June 9, 2017, I called counsel of record for Legendary Structures, but was unable to reach him. On June 12, 2017, I called counsel of record for Legendary Structures, but was unable to reach him. I left a voice message informing counsel that I was calling to meet and confer regarding the filing of PERI’s motion to dismiss, and asking that counsel return my telephone call or email me. On June 13, 2017, I called counsel of record for Legendary Structures, but was unable to reach him. I left a voice message informing counsel that I was calling to meet and confer regarding the filing of PERI’s motion to dismiss, and asking that counsel return my telephone call or email me. On June 14, 2017, I called counsel of record for Legendary Structures, but was unable to reach him. I left a voice message informing counsel that I was calling to meet and confer regarding the filing of PERI’s motion to dismiss, and asking that counsel return my telephone call or email me. On June 15, 2017, I called counsel of record for Legendary Structures, but was unable to reach him. I left a voice message informing counsel that I was calling to meet and confer regarding the filing of PERI’s motion to dismiss, and asking that counsel return my telephone call or email me. On June 16, Case 2:16-cv-07517-VAP-PJW Document 44-1 Filed 06/16/17 Page 2 of 4 Page ID #:868 - 3 - 10900.0014/10786516.1 GUZZETTA DECL. IN SUPPORT OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2017, I called counsel of record for Legendary Structures, but was unable to reach him. I left a voice message informing counsel that I was calling to meet and confer regarding the filing of PERI’s motion to dismiss, and asking that counsel return my telephone call or email me. 4. Despite my repeated telephone calls and voice messages, counsel for Legendary Structures has never returned my call or emailed. Accordingly, I was unable to have a conference of counsel in advance of the filing of this motion. 5. I will continue to attempt to reach counsel for Legendary Structures after the filing of this motion in order to complete the conference of counsel requirement. If, after the conference of counsel, the parties are able to reach any agreement regarding the motion to dismiss, I will promptly notify the Court as required by Civil Local Rule 7-16 and Section 5 of the Court’s Standing Order. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct, and that this declaration was executed on June 16, 2017, at San Francisco, California. /s/ Joseph W. Guzzetta Case 2:16-cv-07517-VAP-PJW Document 44-1 Filed 06/16/17 Page 3 of 4 Page ID #:869 - 4 - 10900.0014/10786516.1 GUZZETTA DECL. IN SUPPORT OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Certificate of Service Under Rule 5 of the Federal Rules of Civil Procedure, I hereby certify that a copy of the forgoing was provided on the 16th day of June, 2017 via ECF to the following persons: M. DANTON RICHARDSON danton@sonilaw.com MICHAEL A. LONG mike@sonilaw.com THE SONI LAW FIRM 116 S. Euclid Avenue Pasadena, CA 91101 Telephone: (626) 683-7600 Facsimile: (626) 683-1199 Attorneys for Defendant and Counterclaimant /s/ . Joseph W. Guzzetta Case 2:16-cv-07517-VAP-PJW Document 44-1 Filed 06/16/17 Page 4 of 4 Page ID #:870 10900.0014/10786561.1 [PROPOSED] ORDER GRANTING MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA PERI FORMWORK SYSTEMS, INC., a Maryland corporation, Plaintiff, v. LEGENDARY BUILDERS CORPORATION, a California corporation; LEGENDARY STRUCTURES, INC., a California corporation, and Does 1-10, inclusive. Defendants. p e r CASE NO. 2:16-CV-07517 [Assigned for all purposes to: The Honorable Virginia Phillips] [PROPOSED] ORDER GRANTING MOTION OF PERI FORMWORK SYSTEMS, INC. TO DISMISS COUNTERCLAIMS OF LEGENDARY STRUCTURES, INC. PURSUANT TO RULE 12(b)(6) OF THE FEDERAL RULES OF CIVIL PROCEDURE Hearing Date: July 24, 2017 Hearing Time: 2:00 p.m. Courtroom: 8A Judge: Hon. Virginia Phillips Legendary Structures, Inc., a California corporation, Counter-Claimant, v. PERI FORMWORK SYSTEMS, INC., a Maryland corporation. Counter-Defendant. Case 2:16-cv-07517-VAP-PJW Document 44-2 Filed 06/16/17 Page 1 of 2 Page ID #:871 - 2 - 10900.0014/10786561.1 [PROPOSED] ORDER GRANTING MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The motion of plaintiff and counter-defendant PERI FORMWORK SYSTEMS, INC. (“PERI”) to dismiss the counterclaim of defendant and counterclaimant LEGENDARY STRUCTURES, INC. (“Legendary Structures”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure came on regularly for hearing on July 24, 2017, at 2:00 p.m. in Courtroom 8A of the above-entitled Court, the Honorable Virginia A. Phillips presiding. All appearances, if any, were as noted on the record. After considering the moving papers, opposition papers, if any, and reply papers, if any, and any oral argument requested by the Court, and good cause appearing therefor, the Court rules as follows: The Court finds that Legendary Structures’ counterclaim, and each of the causes of action asserted therein, fail to state facts sufficient to constitute a viable claim or otherwise provide grounds for entitlement to relief, against PERI. GOOD CAUSE APPEARING THEREFOR, IT IS HEREBY ORDERED that PERI’s motion to dismiss is GRANTED WITHOUT LEAVE TO AMEND, Legendary Structures’ counterclaim is dismissed with prejudice, Legendary Structures shall take nothing from PERI by the counterclaim, and judgment on the counterclaim shall be entered in favor of PERI. IT IS SO ORDERED. DATED: ____________________ HON. VIRGINIA A. PHILLIPS UNITED STATES DISTRICT JUDGE Case 2:16-cv-07517-VAP-PJW Document 44-2 Filed 06/16/17 Page 2 of 2 Page ID #:872