Argyros v. Island Storage & Marine LLC

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Shannon Argyros as Special Administrator of the Estate of George Argyros, Jr., Plaintiff, v. Island Storage & Marine LLC, et al., Defendants.

No. CV-20-08195-PCT-JJT

United States District Court, D. Arizona

September 27, 2021

ORDER

Honorable John J. Tuchi, United States District Judge

At issue is Defendants Island Storage & Marine, LLC Islander RV Resort, LLC; Rick Holloway; Patrice Holloway; and Ken Komick's Motion to Dismiss (Doc. 25, MTD), to which Plaintiff Shannon Argyros filed a Response, (Doc. 26, Resp.) and Defendants filed a Reply (Doc. 27, Reply).^[1] The Court finds these matters appropriate for decision without oral argument. See LRCiv 7.2(f). For the reasons set forth below the Court grants Defendants' Motion to Dismiss but will grant Plaintiff leave to amend the Complaint.

I. BACKGROUND

Island Storage & Marine, LLC and Islander RV Resort, LLC (collectively, “Islander Defendants”) are Arizona limited liability companies (Compl. ¶¶ 2-3.) The individual Defendants are members or owners of the LLC. (Compl. ¶¶ 4-6.)

Plaintiff alleges the Islander Defendants own and operate a boat storage facility, private marina, and private boat launch ramp located in Lake Havasu City, Arizona. (Compl. ¶ 13.) The Islander Defendants' facility is unique among such watercraft storage facilities because it can accommodate large watercraft, and offers paid premium services such as the pay-per-use “arrive and drive” service whereby employees will drive the tenant's vehicle and trailer to a parking lot for the day and then drive them back to the ramp when the tenant returns with the boat. (Compl. ¶¶ 13-14.)

Plaintiff became a tenant of Island Storage and unit H1003 in 2008. (Compl. ¶ 17.) Mr. Argyros chose Island Storage and the unit because of the “arrive and drive” service as well as its ability to accommodate larger watercraft. (Compl. ¶¶ 16-18.)

In 2018, Island Storage developed plans to build a new watercraft storage facility with units combining both high-capacity watercraft storage space and residential amenities. (Compl. ¶ 19.) Tenants could customize the interior of the units at their expense. (Compl. ¶ 21.) Prior to building the new facility, Mr. Holloway approached Mr. Argyros to discuss whether he would be interested in leasing the first such combination residential/storage unit. (Compl. ¶ 22.) Plaintiff alleges that the Islander Defendants and Mr. Holloway represented that the new units would be built to accommodate large watercraft and offered Mr. Argyros a prime location if he would lease and, at his sole expense, “build out” such a unit. (Compl. ¶ 24.) Additionally, Mr. Holloway assured Mr. Argyros that he would have ongoing and full use of the Islander Defendants' facility and all its amenities. (Compl. ¶ 27.) The Islander Defendants would then use his unit as a model or “showpiece” to attract other potential tenants. (Compl. ¶ 25.)

In April 2018, Mr. Argyros signed a sixty-month lease with Defendant for Storage Unit MC106 (the “MC106 Lease”).^[2] Relying on the MC106 Lease and his communications with Defendants, Mr. Argyros spent approximately $250, 000 customizing the unit. (Compl. ¶ 29.)

In the latter half of 2019, the Islander Defendants constructed a a restaurant facility adjacent to MC106 and leased it to Boat House Grill. (Compl. ¶ 31.) Over the next three months, Mr. Argyros had multiple confrontations with the restaurant's employees and customers. (Compl. ¶¶ 31-33.)

Shortly thereafter, the Islander Defendants sent Mr. Argyros a 30-day notice to vacate unit H1003 but gave no written reason for the demand. (Compl. ¶ 34, Ex. A.) Mr. Argyros then retained an attorney, and the Islander Defendants sent a second notice to vacate, citing default of rental payments. (Compl. ¶ 35, Ex. B.) After discussions between the parties, the Islander Defendants withdrew their attempt to terminate the rental agreement and paid Mr. Argyros $7, 500, at which point he believed the matter was resolved. (Compl. ¶ 36.)

Instead, Plaintiff alleges that the Islander Defendants began to undertake a campaign of retaliatory and harassing tactics. (Compl. ¶ 37.) In or around May 2020, they informed Mr. Argyros that he was no longer entitled to “unfettered use” of the parking lot in front of MC106 to access his watercraft because “Rick [Holloway] doesn't like [Mr. Argyros].” (Compl. ¶ 38.) Subsequently, the Islander Defendants barred Mr. Argyros from parking his vehicles in front of MC106 and instructed employees to stop providing boat launch services to him. (Compl. ¶¶ 39, 41.) The Islander Defendants then designated the entire area around unit MC106 for parking by permit only and refused to provide Mr. Argyros with a permit. (Compl. ¶ 40.) Plaintiff alleges that Islander Defendants understood that these services were material to Plaintiff's decision to help build and lease unit MC106. (Compl. ¶ 41.)

After Mr. Argyros's attorney emailed Island Storage about the ongoing issues, the Boat House Grill, Islander Resort, and Mr. Holloway obtained injunction against harassment orders on Mr. Argyros. (Compl. ¶ 43, Ex. C; MTD, Exs. D-F.)^[3]

Finally, on July 10, 2020, and after no adverse contact with Plaintiff, the Islander Defendants sent Plaintiff another notice to vacate unit H1003. (Compl. ¶ 43.)

II. LEGAL STANDARD

When analyzing a complaint for failure to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim. In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010) (quoting Halkin v. VeriFone Inc. (In re VeriFone Sec. Litig.), 11 F.3d 865, 868 (9th Cir. 1993)).

A dismissal under Rule 12(b)(6) for failure to state a claim can be based on either (1) the lack of a cognizable legal theory or (2) insufficient facts to support a cognizable legal claim. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). “While a complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citations omitted). The complaint must thus contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that ‘recovery is very remote and unlikely.'” Twombly, 550 U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

III. Analysis

To start, the Court must address Plaintiff's failure to attach the M106 Lease and H1003 Lease as exhibits to the Complaint. Plaintiff relies on the M106 Lease for multiple claims and references it throughout the Complaint. Defendants attached it as an exhibit in support of their Motion to Dismiss. (MTD, Ex. B.) Typically courts cannot rely on extrinsic evidence without converting a motion to dismiss into a motion for summary judgment. Lee, 250 F.3d at 688; Fed R. Civ. P. 12(d). However, courts “may consider evidence on which the complaint ‘necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). The court may treat such a document as “part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6).” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003). The MC106 Lease meets the first and the third elements. Therefore, the Court will consider the MC106 Lease where it is central to Plaintiff's claim.

The H1003 Lease poses a more complicated question. The H1003 Lease and its addendum provide for Mr. Argyros's boat launch services as well as Defendants' right to revoke or modify the services “at any time for any reason.” (MTD, Ex. B at 5.) Defendants attached the H1003 Lease and the addendum as evidence that they legally terminated Mr. Argyros's boat launch services. (MTD at 7, Ex. B.)

The Complaint mentions the H1003 Lease and several of Plaintiff's claims rely in part on the revocation of the boat launch services. However, Plaintiff never discusses the addendum; nor does the Complaint expressly tie the boat launch services to the H1003 Lease. Because the extent to which Plaintiff relies upon the H1003 Lease and addendum for her claims is unclear, the documents are not properly before the Court. The Court will not rely on the H1003 Lease or Addendum when evaluating Defendants' Motion to Dismiss. Likewise, Plaintiff cannot rely on the revocation of Mr. Argyros's boat launch privileges to state a claim.

A. Count One: Breach of implied Covenant of Good Faith and Fair Dealing as against Island Storage

Plaintiff alleges that Island Storage breached the covenant of good faith and fair dealing implied in the MC106 Lease by acting to prevent Plaintiff from receiving benefits to which Plaintiff is entitled under the written lease, namely 1) “free ingress and egress” for her watercraft into and out of Unit MC106 and 2) access to Island Resort's boat launch servic...