Body Jewelz, Inc. v. Valley Forge Ins. Co.

241 F.Supp.3d 1084

BODY JEWELZ, INC., Plaintiff,

v.VALLEY FORGE INSURANCE COMPANY; CNA Financial Corporation; CNA Equipment Breakdown Risk Control; GoDaddy, Inc.; and Does 1 through 100, Defendants.

Case No 2:17–cv–00140–ODW (PLA)

United States District Court, C.D. California.

Signed March 14, 2017

Evan M. Selik, Selik and Associates LLC, Sherman Oaks, CA, for Plaintiff.

Anthony Cox, Cna Coverage Litigation Group, Dallas, TX, Julie Payne Humphreys, CNA Coverage Litigation Group, Brea, CA, Sherman C. Lee, CNA Coverage Litigation Group, San Francisco, CA, Aaron M. McKown, Cozen O'Connor PC, Los Angeles, CA, Paula L. Zecchini, Cozen O'Connor, Seattle, WA, Jeffrey M. Monhait, Cozen O'Connor, Philadelphia, PA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS [9]

OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This lawsuit stems from the "crash" of Plaintiff Body Jewelz Inc.'s website. Before the Court is Defendant GoDaddy Inc.'s ("GoDaddy") Federal Rule of Civil Procedure 12(b)(6) motion to dismiss. (ECF No. 9.) The Court GRANTS IN PART and DENIES IN PART GoDaddy's motion to dismiss.

II. FACTUAL BACKGROUND

Plaintiff owns a business in Los Angeles. (Compl. ¶ 1, ECF No. 1–1.) GoDaddy is an Arizona-based provider of "online services and website monitoring for individuals and businesses." (Id. ¶ 3; Not. of Removal ¶ 9, ECF No. 1.) Plaintiff entered into a "written and implied contract" with GoDaddy to "manage, administer, and monitor Plaintiff's website." (Compl. ¶ 40.) On August 4, 2015, Plaintiff's website "crashed." (Id. ¶ 6.) Plaintiff "lost thousands of dollars in online orders and had to rebuild its website" as a result of the "crash." (Id. ) On October 7, 2016, Plaintiff filed this lawsuit alleging four claims against GoDaddy: (1) breach of contract; (2) fraud in the performance; (3) negligent misrepresentation; and (4) negligence.¹ (Id. ¶¶ 39–55.) On January 6, 2017, GoDaddy removed the case to federal court. (ECF No. 1.) GoDaddy filed this Rule 12(b)(6) motion to dismiss on January 13, 2017.² (ECF No. 9.) The motion is now fully briefed and ready for decision.³ (ECF Nos. 20–21.)

III. LEGAL STANDARD

A court may dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). To survive a motion to dismiss, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)—a short and plain statement of the claim.

Porter v. Jones , 319 F.3d 483, 494 (9th Cir. 2003). The factual "allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). That is, the 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted).

The determination of whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. A court is generally limited to the pleadings and must construe all "factual allegations set forth in the complaint ... as true and ... in the light most favorable" to the plaintiff. Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001) (internal quotation marks omitted). But a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001).

Fraud-based claims are subject to the heightened Rule 9(b) pleading standard. Rule 9(b) requires a party alleging fraud to "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). The allegations "must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false." Vess v. Ciba–Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotation marks omitted). In essence, the defendant must be able to prepare an adequate answer to the allegations of fraud. Odom v. Microsoft Corp. , 486 F.3d 541, 553 (9th Cir. 2007). Although conclusory allegations of the circumstances constituting the alleged fraud are insufficient, see Moore v. Kayport Package Express, Inc. , 885 F.2d 531, 540 (9th Cir. 1989), a party is not required to plead with specificity the alleged wrongdoer's state of mind, see Concha v. London , 62 F.3d 1493, 1503 (9th Cir. 1995).

IV. DISCUSSION

A. Judicial Notice

Courts considering a Rule 12(b)(6) motion to dismiss are generally limited to information contained in the complaint. Lee , 250 F.3d at 688. When courts take into account additional information, they run the risk of converting the motion into one for summary judgment. Fed. R. Civ. P. 12(d). However, there are two instances in which courts are allowed to take into account information outside of the complaint without converting the motion into one for summary judgment: judicial notice and incorporation by reference. See Hsu v. Puma Biotech., Inc. , No. SACV150865AGJCGX, 213 F.Supp.3d 1275, 2016 WL 5859000, at *3 (C.D. Cal. Sept. 30, 2016) (citing United States v. Ritchie , 342 F.3d 903, 908 (9th Cir. 2003) ). Judicial notice allows courts to consider a fact that is not subject to reasonable dispute because it is generally known within the territory or can be determined from sources of unquestionable accuracy. Fed. R. Evid. 201. Incorporation by reference allows a court to consider documents that are physically attached to the complaint or those which are (1) referenced in the complaint, (2) central to the plaintiff's claim, and (3) of unquestioned authenticity by either party. See Hsu , 213 F.Supp.3d at 1281, 2016 WL 5859000, at *4 (citing Marder v. Lopez , 450 F.3d 445, 448 (9th Cir. 2006) ).

GoDaddy asks the Court to consider two documents extrinsic to the complaint in adjudicating its motion to dismiss: a Hosting Agreement and a Universal Terms of Service Agreement.⁴ (RJN, Exs. 1–2, ECF No. 10.) GoDaddy alleges that "all customers who purchase [its] hosting services," must agree to the Hosting Agreement's terms before receiving such services. (Mot. 8, ECF No. 9.) Thus, it argues that the Hosting Agreement is the "written" contract referenced in Plaintiff's complaint (or at least part of the "written" contract) and that Plaintiff should be bound by its terms. (Reply 4.)

The Court will not consider the agreements in connection with this motion to dismiss. First, the Court cannot take judicial notice of facts contained in the agreements because those facts are not generally known within the territory or derived from sources of unquestionable accuracy. Cf. Shahar v. Bowers , 120 F.3d 211, 214 (11th Cir. 1997) ("[T]he kinds of things about which courts ordinarily take judicial notice are (1) scientific facts: for instance, when does the sun rise or set; (2) matters of geography: for instance, what are the boundaries of a state; or (3) matters of political history: for instance, who was president in 1958.")

Second, the Court cannot invoke the incorporation by reference doctrine because Plaintiff explicitly "questions the authenticity of these documents." (Opp'n 6.) While Plaintiff does not offer clear reasons for questioning "the authenticity of the documents," the Court is wary of considering these generic⁵ agreements, which obviously do not constitute the entire final contract⁶ between the parties. (RJN Ex. 1–2); see also Precision Orthopedic Implants Inc. v. Limacorporate S.P.A. , No. 216CV02945ODWPLA, 2016 WL 7378878, at *3–4 (C.D. Cal. Dec. 20, 2016) (denying request for incorporation by reference where it was clear that the contract submitted was not the entire final contract between the parties).⁷ In sum, neither judicial notice nor incorporation by reference is appropriate in this case and the Court will not consider the agreements in connection with this motion.

B. Claims

1. Breach of Contract

A cause of action for breach of contract requires proof of four elements: (1) existence of a contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach. See Zamora v. Solar , No. 2:16-CV-01260-ODW-KS, 2016 WL 3512439, at *3 (C.D. Cal. June 27, 2016) (citing CDF Firefighters v. Maldonado , 158 Cal.App.4th 1226, 1239, 70 Cal.Rptr.3d 667 (2008) ).

Plaintiff alleges the existence of a contract. (Compl. ¶ 40.) In this contract, Plaintiff paid "money to GoDaddy" and GoDaddy "manage[ed], administer [ed,] and monitor[ed] Plaintiff's website and online services." (Id. ) Plaintiff alleges that GoDaddy breached this contract when it failed to "manage and monitor" Plaintiff's website and failed to perform "preventative management" that presumably would have kept Plaintiff's website from crashing. (Id. ¶ 41.) Plaintiff also alleges that it performed under the contract and that "GoDaddy's conduct" was the proximate cause of "thousands of dollars" in damages it suffered from the "crash." (Id. ¶¶ 42–43.) Though Plaintiff could have been more specific about exactly how GoDaddy's conduct caused the breach, the Court finds that these allegations are sufficient under Rule 8(a)'s "short and plain statement" standard. Accordingly, the Court DENIES Defendant's motion to dismiss as to Plaintiff's breach of contract claim.

2. Fraud and Negligent Misrepresentation

A cause of action for fraud requires proof of five elements: (1) misrepresentation; (2) knowledge of the statement's falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. Hunter v. Up–Right, Inc. , 6 Cal.4th 1174,...