Chou v. Carnival Cruise Lines ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 RICHARD CHOU, M.D., No. 2:19-cv-01681-KJM-DB 12 Plaintiff, ORDER1 13 v. 14 CARNIVAL CRUISE LINES, et al., 15 Defendants. 16 17 18 In this breach of contract case, defendants Carnival Cruise Lines and its unnamed 19 employees have filed a motion to dismiss. The court heard oral argument on the motion on 20 January 17, 2020. Michael Schaps appeared for plaintiff; Yesenia Gallegos appeared for 21 defendants. For the reasons below, the court DENIES defendants’ motion. 22 I. FACTS AND PROCEDURAL HISTORY 23 This case concerns plaintiff’s allegations surrounding work he performed for 24 Carnival Cruise Lines in 2015. On May 31, 2015, defendants hired plaintiff, a board-certified 25 anesthesiologist, to manage ship-based referrals in instances in which sick passengers and 26 crewmembers may require land-based care. First Am. Compl. (“FAC”) ¶ 8, ECF No. 7. In July 27 1 The court originally signed this order on September 10, 2020 but has just determined it 28 did not make it to the docket. It apologizes for the delay. 1 2015, plaintiff alleges he was performing the work for which he was hired; he also entered into an 2 oral contract with defendants to “perform a separate and distinct function: consulting with 3 shipboard medical staff to manage the care of critically sick and injured passengers and 4 crewmembers on Defendants’ cruise ships.” Id. ¶ 9. Plaintiff claims defendants agreed to pay 5 him $250 per hour for this work, which was in addition to his $12,500 monthly payment for 6 approving and denying land-based specialized care, as appropriate, for crew and passengers. Id. 7 ¶ 10. On June 15, 2017, defendants terminated plaintiff’s services for business reasons. Id. ¶ 11. 8 Plaintiff expected defendants to pay him $114,000 for the 456 hours of work he had already 9 completed at that time, but defendants did not pay him and as of the date he filed this action have 10 not paid him. Id. ¶ 12. 11 Plaintiff brings a single claim for breach of oral contract. Id. ¶ 13. Plaintiff 12 alleges defendants breached the parties’ oral agreement when they terminated plaintiff’s services 13 and failed to pay him for his services under the agreement. Id. ¶ 16. As a result, plaintiff alleges 14 his damages for performing 456 hours of work without pay total $114,000. Id. ¶¶ 15–16. 15 Plaintiff requests: (1) compensatory damages of at least $114,000, (2) pre-judgment and post- 16 judgment interest on all sums, and (3) any further relief as the court may deem proper. Id. at 4. 17 Plaintiff initially filed this complaint against defendants in the Superior Court of 18 California, County of Solano, on June 14, 2019. Not. of Removal, ECF No. 1. Defendants 19 removed the matter to this court on August 28, 2019. Id. Plaintiff filed an amended complaint on 20 September 27, 2019. See generally FAC. In October 2019, plaintiff’s counsel and defendants’ 21 counsel met to discuss “perceived deficiencies” defendants identified in plaintiff’s first amended 22 complaint. Mot., ECF No. 10, at 1. Defendants filed a motion to dismiss following those 23 discussions, ECF No. 10, which plaintiff opposed, Opp’n, ECF No. 12; defendants replied, Reply, 24 ECF No. 14. The court resolves defendants’ motion to dismiss below. 25 II. LEGAL STANDARD 26 Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to 27 dismiss a complaint for “failure to state a claim upon which relief can be granted.” A court may 28 dismiss “based on the lack of cognizable legal theory or the absence of sufficient facts alleged 1 under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 2 1990). 3 Although a complaint need contain only “a short and plain statement of the claim 4 showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), in order to survive a motion 5 to dismiss this short and plain statement “must contain sufficient factual matter . . . to ‘state a 6 claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 7 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something 8 more than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or “‘labels and 9 conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’” Id. (quoting 10 Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss 11 for failure to state a claim is a “context-specific task that requires the reviewing court to draw on 12 its judicial experience and common sense.” Id. at 679. Ultimately, the inquiry focuses on the 13 interplay between the factual allegations of the complaint and the dispositive issues of law in the 14 action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). 15 In making this context-specific evaluation, this court must construe the complaint 16 in the light most favorable to the plaintiff and accept as true the factual allegations of the 17 complaint. Erickson v. Pardus, 551 U.S. 89, 93–94 (2007). This rule does not apply to “a legal 18 conclusion couched as a factual allegation,” Papasan v. Allain, 478 U.S. 265, 286 (1986) quoted 19 in Twombly, 550 U.S. at 555, nor to “allegations that contradict matters properly subject to 20 judicial notice” or to material attached to or incorporated by reference into the complaint. 21 Sprewell v. Golden State Warriors, 266 F.3d 979, 988–89 (9th Cir. 2001). A court’s 22 consideration of documents attached to a complaint or incorporated by reference or matter of 23 judicial notice will not convert a motion to dismiss into a motion for summary judgment. United 24 States v. Ritchie, 342 F.3d 903, 907–08 (9th Cir. 2003); Parks Sch. of Bus. v. Symington, 51 F.3d 25 1480, 1484 (9th Cir. 1995); compare Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 26 980 (9th Cir. 2002) (noting that even though court may look beyond pleadings on motion to 27 dismiss, generally court is limited to face of the complaint on 12(b)(6) motion). 28 ///// 1 III. DISCUSSION 2 A. Breach of Oral Contract 3 Defendants argue plaintiff’s claim for breach of oral contract fails to set forth 4 sufficient facts to support a timely contract claim. Mot. at 10. Specifically, defendants claim 5 plaintiff’s complaint must fail because it does not “allege sufficient facts of the contract’s 6 formation, fails to allege the material terms of the contract with respect to Carnival’s payment 7 obligations, and fails to allege sufficient [sic] how and when the contract was purportedly 8 breached.” Id. at 12. Defendants compare the pleading insufficiencies here to those in 9 Gottesman v. Santana, No. 16-CV-2902 JLS (JLB), 2017 WL 2882214 (S.D. Cal. July 6, 2017), 10 and Roberts, et al. v. UBS AG, et al., No. CVF12-0724 LJO SKO, 2013 WL 394701 (E.D. Cal. 11 Jan. 30, 2013). Id. at 11. 12 In Santana, the plaintiff alleged he entered into an oral contract that required 13 defendant to pay him “for the license to limited use of the salsa labels and associated designs, 14 time taken to create the works, time to modify same, and time to coordinate production and 15 printing of the labels at [plaintiff] GMAN’s normal and customary rates.” Santana, 2017 WL 16 2882214, at *3. Plaintiff did not provide a date when he entered into this oral contract and, 17 regarding breach, claimed: “Despite [plaintiff’s] demands for payment, these defendants breached 18 the parties’ contract by continuing to refuse to pay as agreed.” Id. The court found plaintiff’s 19 allegations could not survive a motion to dismiss because the allegations did not provide essential 20 information, including “any specifics regarding the material terms of the verbal contract between 21 Plaintiff and [defendant] Service First, much less when this contract was allegedly formed and 22 breached.” Id. Plaintiff provided additional details in his opposition to defendant’s motion to 23 dismiss, but those details were not pled in the complaint. Id. at *4. The details—“the dates of 24 certain agreements, the approximate hours worked in reliance on those agreements, and the 25 alleged money owed for breaching those agreements”—would likely have stated a plausible claim 26 for the existence of a breach of contract had they been included in the complaint; because they 27 were not, the court could not consider them in its analysis. Id. 28 ///// 1 In Roberts, plaintiffs alleged they “entered into implied, oral and written contracts 2 with Defendants to provide [them] with professionally competent investment advisory and 3 execution services, tax and legal advice and services, and accounting services.” Roberts, 2013 4 WL 394701, at *17. The plaintiffs further alleged defendants “ ‘breached their contracts by, 5 among other things, providing each Plaintiff with advice, opinions, recommendations, 6 representations, instructions, and services that Defendants either knew or reasonably should have 7 known to be wrong’ . . . and charging plaintiffs ‘fees, costs, and expenses that were not 8 chargeable or agreed to by each Plaintiff.’ ” Id. The court found plaintiffs’ complaint failed to 9 “identify sufficiently precise contract terms, their breach, who breached them, and how they were 10 breached […] plaintiffs’ consideration to support breach of contract claims.” Id. at *20. 11 Plaintiff is correct that Santana and Roberts are “inapposite” to this case, Opp’n at 12 4, and defendants do not rebut plaintiff’s analysis of these cases in their reply, Reply at 6–8. As 13 relevant here, plaintiff alleges he entered into the oral contract in July 2015 to provide on-board 14 care for critically sick passengers at $250 per hour and that he was owed $114,000 for 456 hours 15 of work when defendants terminated him for business reasons on July 15, 2017. FAC ¶¶ 9–12. 16 With these factual allegations, plaintiff provides more detail than either of the plaintiffs in 17 Santana and Roberts. In particular, he provides the information in his complaint that would likely 18 have led the court in Santana to deny the motion to dismiss in that case, if the details were 19 properly pled — namely, “the dates of certain agreements, the approximate hours worked in 20 reliance on those agreements, and the alleged money owed for breaching those agreements.” 21 Plaintiff has stated a plausible claim for breach of oral contract. 22 B. Statute of Limitations 23 Defendants also argue the applicable two-year statute of limitations bars plaintiff’s 24 breach of contract claim insofar as plaintiff contends defendants breached the oral contract before 25 June 14, 2017. Mot. at 12; see also Cal. Code Civ. Proc. § 339 (1)2. Under this reasoning, 26 2 “Within two years: An action upon a contract, obligation or liability not founded upon an 27 instrument of writing, except as provided in Section 2725 of the Commercial Code or subdivision 2 of Section 337 of this code; or an action founded upon a contract, obligation or liability, 28 evidenced by a certificate, or abstract or guaranty of title of real property, or by policy of title 1 defendants claim, “there are (at best) two days at issue that may not be barred by the two-year 2 statute of limitations (June 14 and June 15, 2017).” Mot. at 13. Defendants also request the court 3 strike paragraphs 12 and 16 from plaintiff’s first amended complaint, because these paragraphs 4 refer to Carnival’s alleged breach of the purported oral contract before June 14, 2017. Id. 5 In opposition to defendants’ arguments in this respect, plaintiff argues even if he 6 were required to plead around a possible statute of limitations affirmative defense, defendants’ 7 motion still fails because any limitations arguments “would not dispose of Plaintiff’s claim” 8 entirely. Opp’n at 5. Plaintiff labels defendants’ motion to strike as “simply confusing,” and 9 argues it appears defendants would like “an order that Plaintiff alleges breaches that occurred 10 before his termination,” a result wholly unsupported by the pleadings, which are subject to 11 Federal Rule of Civil Procedure 11. Id. at 6. 12 A fair reading of plaintiff’s allegations is that defendants breached the contract on 13 June 15, 2017, when defendants terminated him, and “he expected to be paid what he was owed, 14 and he asked to be paid.” FAC ¶ 12. Plaintiff’s allegations that he expected and asked to be paid 15 at that time support his position that his alleged damages from the breach of oral contract began 16 on June 15, 2017 as well. Plaintiff’s counsel clarified this point at hearing, definitively stating the 17 alleged breach occurred when defendants terminated their employment relationship with plaintiff. 18 These allegations place plaintiff’s claim within the two-year statute of limitations, given that 19 plaintiff filed his complaint on June 14, 2019. Defendants characterize plaintiff’s failure to allege 20 precisely when they were required to pay him as a “tactic.” Reply at 7. But if the court were to 21 accept this argument, it would be disregarding the totality of plaintiff’s pleadings and imputing a 22 bad faith motive to plaintiff with no basis for doing so. Plaintiff’s claim as pled falls within the 23 statute of limitations. 24 ///// 25 ///// 26 insurance; provided, that the cause of action upon a contract, obligation or liability evidenced by a 27 certificate, or abstract or guaranty of title of real property or policy of title insurance shall not be deemed to have accrued until the discovery of the loss or damage suffered by the aggrieved party 28 thereunder.” Cal. Code Civ. Proc. § 339 (1). 1 IV. CONCLUSION 2 For the reasons above, the court DENIES defendants’ motion to dismiss (ECF No. 3 10). The court also DENIES defendants’ motion to strike paragraphs 12 and 16 from plaintiff’s 4 first amended complaint. 5 IT IS SO ORDERED. 6 DATED: December 2, 2020. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28