Broadstone Land, LLC v. Charming Charlie Markets, Inc. ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 BROADSTONE LAND, LLC, a No. 2:22-cv-01091-JAM-AC California limited liability 12 company, 13 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS 14 v. 15 CHARMING CHARLIE MARKETS, INC., a Delaware corporation, 16 and DOES 1-10, inclusive, 17 Defendants. 18 19 Charming Charlie Markets Inc. (“Defendant”) seeks to dismiss 20 Broadstone Land, LLC’s (“Plaintiff”) fraudulent promise claim for 21 failure to state a claim for which relief may be granted under 22 Federal Rule of Civil Procedure 12(b)(6). See Mot. to Dismiss 23 (“Mot.”), ECF No. 16. Plaintiff opposes the motion.1 See Opp’n, 24 ECF No. 19. Defendant replied. See Reply, ECF No. 20. For the 25 1 The Court declines Defendant’s request to strike Plaintiff’s untimely opposition briefing. Reply at 2. Though an untimely 26 opposition may “be construed by the Court as a non-opposition to 27 the motion” under Local Rule 230, the Court in its discretion shall consider the opposition on its merits. E.D. Cal. 28 L.R. 230(c). 1 reasons set forth below, the Court GRANTS Defendant’s motion to 2 dismiss.2 3 I. BACKGROUND 4 Plaintiff owns and leases commercial property (“Premises”) 5 located in Folsom, California. First Amend. Compl. (“FAC”) ¶ 4, 6 ECF No. 13. The Premises is part of a larger shopping center. 7 Id. Plaintiff leased the Premises to Defendant to open a retail 8 store selling women’s fashion accessories, apparel, beauty 9 supplies, and gifts. Id. ¶¶ 6-7. As part of the leasing 10 agreement, Plaintiff agreed to pay Defendant a tenant improvement 11 allowance (“TIA”) of $300,000.00. Id. ¶ 16. Defendant agreed to 12 take possession of the property and to pay rent from June 1, 2021 13 to May 31, 2026. Id. ¶¶ 6, 10. 14 Plaintiff alleges that Defendant breached the leasing 15 agreement by abandoning the Premises and refusing to pay rent 16 due. Id. ¶¶ 8-10. Defendant allegedly abandoned the Premises on 17 April 15, 2022 and has not paid rent since. Id. ¶¶ 7, 10. 18 Plaintiff further alleges that Defendant fraudulently 19 induced Plaintiff to provide a 300k TIA, because Defendant asked 20 for a “larger-than-normal” TIA even though it “knew it lacked the 21 financial backing, skill, and commitment to perform under the 22 Lease.” Id. ¶¶ 16, 21. This suit followed. See Compl. 23 /// 24 /// 25 /// 26 27 2 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for November 15, 2022. 1 II. OPINION 2 A. Legal Standard 3 Federal Rule of Civil Procedure 8(a)(2) requires “a short 4 and plain statement of the claim showing that the pleader is 5 entitled to relief.” When a plaintiff fails to “state a claim 6 upon which relief can be granted,” the Court must dismiss the 7 suit. Fed. R. Civ. P. 12(b)(6). To defeat a motion to dismiss, 8 a plaintiff must “plead enough facts to state a claim to relief 9 that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 10 550 U.S. 544, 570 (2007). Plausibility under Twombly requires 11 “factual content that allows the Court to draw a reasonable 12 inference that the defendant is liable for the misconduct 13 alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “At 14 this stage, the Court ‘must accept as true all of the 15 allegations contained in a complaint.’” Id. But it need not 16 “accept as true a legal conclusion couched as a factual 17 allegation.” Id. 18 Here, where Plaintiff alleges a claim based in fraud, 19 Plaintiff’s allegations must satisfy the heightened pleading 20 standard of Rule 9(b). Fed. R. Civ. P. 9(b). “To comply with 21 Rule 9(b), allegations of fraud must be specific enough to give 22 defendants notice of the particular misconduct which is alleged 23 to constitute the fraud.” Swartz v. KPMG LLP, 476 F.3d 756, 764 24 (9th Cir. 2007) (internal quotation marks omitted). The 25 “[a]verments of fraud must be accompanied by the who, what, 26 when, where, and how of the misconduct charged.” Kearns v. Ford 27 Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (internal 28 quotation marks omitted). It is not enough to set forth “the 1 neutral facts necessary to identify the transaction. The 2 plaintiff must set forth what is false or misleading about a 3 statement, and why it is false.” Vess v. Ciba-Geigy Corp. USA, 4 317 F.3d 1097, 1106 (9th Cir. 2003). This heightened pleading 5 standard applies to state-law claims sounding in fraud. Vess, 6 317 F.3d at 1103-04. 7 B. Discussion 8 Defendant seeks to dismiss Plaintiff’s state fraud claim for 9 failure to meet the heightened pleading standard of Rule 9(b). 10 Mot. at 6. The elements for a claim for fraudulent promise are 11 (1) misrepresentation; (2) knowledge of falsity; (3) intent to 12 defraud; (4) justifiable reliance; and (5) resulting damage. 13 Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). 14 The Court finds that Plaintiff has failed to allege these 15 elements with the specificity required by Rule 9(b). For one, 16 Plaintiff has not identified the specific misrepresentations 17 giving rise to fraud. Although Plaintiff alleges that Defendant 18 “knew it lacked the financial backing, skill, and commitment” to 19 perform its lease obligations, knowledge is not the same as 20 misrepresentation. Rule 9(b) requires Plaintiff to allege the 21 “who, what, when, where, and how of the misconduct charged.” 22 Kearns, 567 F.3d at 1124. This means Plaintiff must allege more 23 than what is simply “necessary to identify the transaction,” 24 which is all Plaintiff has done. Vess, 317 F.3d at 1106. 25 In the absence of specific facts, Plaintiff’s allegation 26 that Defendant never intended to perform its duties under the 27 lease is but “a legal conclusion couched as a factual 28 allegation,” and the Court need not accept it as true. Ashcroft nnn enn nen eee nn nnn nn nn nn nn nn nn ne nO ED 1 v. Igbal, 556 U.S. 662, 678 (2009). As such, Plaintiff has not 2 pled facts sufficient to state a claim for relief that is 3 plausible on its face, nor has Plaintiff pled facts with the 4 specificity required by Rule 9(b). Accordingly, the Court 5 dismisses Plaintiff’s claim for fraudulent promise with leave to 6 amend. Cooks, Perkiss & Leiche, Inc. v. N. Cal. Collection 7 Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990) (holding that 8 leave to amend should be granted unless the “pleading could not 9 | possibly be cured by the allegation of other facts”). 10 Til. ORDER 11 For the reasons set forth above, the Court GRANTS 12 Defendant’s Motion to Dismiss Plaintiff’s second claim for 13 fraudulent promise without prejudice. If Plaintiff intends to 14 file an amended complaint, it must do so within twenty (20) days 15 of this Order. Defendant’s response pleading is due twenty (20) 16 | days thereafter. If Plaintiff does not file an amended 17 complaint, the case will proceed on the remaining claim in its 18 complaint. 19 IT IS SO ORDERED. 20 Dated: December 13, 2022 21 cp, JOHN A. MENDEZ 23 SENIOR UNITED*STATES DISTRICT JUDGE 24 25 26 27 28