The opinion of the court was delivered by: D. LOWELL JENSEN
The Court heard argument on June 29, 1994 in the above-captioned matter. Daniels & Associates ("D&A") moved to dismiss the related actions brought by Templeton, Inc. and Saline Cellular, Inc. Cross-motions for summary judgment were also presented for consideration by D&A and Independent Cellular Telephone ("ICT"). Richard Patch and Susan Jamison of Coblentz, Cahen, McCabe & Breyer appeared on behalf of D&A; ICT, Templeton, Inc. and Saline Cellular, Inc. were represented by Daniel Furniss and Theodore Herhold of Townsend and Townsend Khourie and Crew. For the reasons stated below, the Court enters the following disposition: the motions to dismiss submitted by D&A are granted, and summary judgment is granted in favor of D&A and against ICT.
I. Factual Background and Procedural History
Collectively, these diversity actions seek to establish that contracts entered into with D&A were both illegal and breached, and that D&A engaged in unfair competition within the meaning of California's Business & Professions Code.
ICT, Templeton and Saline Cellular each entered into various contracts with defendant D&A, a Colorado general partnership in the business of representing clients in arranging and negotiating the purchase and sale of cellular telephone businesses. Now before the Court is the question of the viability of those contracts.
Case number C-93-0983 DLJ involves plaintiff and counterdefendant ICT, a Delaware corporation which entered into a letter agreement with D&A on October 22, 1991 at a trade show in California. Pursuant that agreement, D&A was to act as the exclusive agent and representative of ICT on a "best efforts" basis to find a purchaser for certain assets of ICT. Those assets specifically included the cellular authorization to serve the Idaho 5, Tennessee 1, and New York 4 Rural Service Areas (RSAs). As compensation, D&A was to receive a commission at the closing of the transaction.
ICT contends that while D&A initially performed "certain limited services under the Agreement, [D&A] made little effort to market the assets." ICT Mot. at 3. The agreement was terminated between the parties and, subsequent to the termination, ICT was successful in selling certain of its assets. D&A thereafter contended it was owed a commission. In a first amended complaint filed July 8, 1993--after adjudication on a motion to dismiss before Judge Vukasin--ICT sought declaratory relief that the contract was both illegal as well as breached, and also that D&A had engaged in unfair competition within the meaning of California's Business and Professions Code. D&A counter-claimed for commissions it claimed to be owed.
Saline Cellular, Inc., alleges in case number C-94-0786 DLJ, that it entered into a listing agreement with D&A on November 30, 1990 in California, whereby D&A was to act as the exclusive agent and representative in finding a purchaser for the cellular authorization to serve the Nebraska 9 RSA. On September 9, 1991, Saline sold the interest and, pursuant to the agreement, paid D&A a commission of $ 99,403. Saline thereafter filed essentially the same action as filed by Templeton, and D&A has moved to dismiss.
A. Cross-Motions for Summary Judgment
The Federal Rules of Civil Procedure provide for summary adjudication where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(e).
In a motion for summary judgment, "if the party moving for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genuine issues of material fact," the burden of production then shifts so that "the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, 'specific facts showing that there is a genuine issue for trial.'" T.W. Electric Service, Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1983); Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103-04 (9th Cir.), cert. denied, 479 U.S. 949, 107 S. Ct. 435, 93 L. Ed. 2d 384 (1986)) (emphasis in original).
On cross motions for summary judgment, the burdens faced by the opposing parties vary with the burden of proof they will face at trial. To succeed on summary judgment, a plaintiff must prove each element essential to the claims upon which he seeks judgment by undisputed facts. Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (party with burden "must establish beyond peradventure all of the essential elements . . ." (emphasis original)). In an influential article, a plaintiff's burden has been articulated as follows: "Where the moving party has the burden [of proof at trial . . .,] his showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487-488 (1984).
By contrast, a defendant's motion for summary judgment faces a lighter burden. Because the defendant does not bear the burden of proof at trial, the defendant need only point to the insufficiency of the plaintiff's evidence to shift the burden to the plaintiff to raise genuine issues of fact as to each claim by substantial evidence. T.W. Electric, 809 F.2d at 630 citing Celotex, 106 S. Ct. at 2553; Kaiser Cement, 793 F.2d at 1103-04. Should a plaintiff fails to raise a genuine issue of fact, summary adjudication in favor of the defendant is appropriate.
In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence, and is required to draw all inferences in a light most favorable to the nonmoving party. T.W. Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991). Regardless of who is the moving party, each party must "establish the existence of the elements essential to [its] case, and on which [it] will bear the burden of proof at trial." Celotex Corp., 106 S. Ct. at 2552. The standard for judging a motion for summary judgment is the same standard used to judge a motion for a directed verdict: "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202 (1986).
In meeting their burdens of proof, each party must come forward with admissible evidence. Fed. R. Civ. P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Falls Riverway Realty, Inc. v. Niagara Falls, 754 F.2d 49 (2nd Cir. 1985); Thornhill Pub. Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Hearsay statements found in affidavits are inadmissible. See, e.g., Fong v. American Airlines, Inc., 626 F.2d 759, 762-63 (9th Cir. 1980). Plaintiffs must ultimately persuade the Court in opposing summary judgment that they will have sufficient admissible evidence to justify going to trial.
Motions to dismiss for failure to state a claim pursuant to Rule 12(b)(6) are generally viewed with disfavor. The Supreme Court has held that a complaint should not be dismissed unless it appears "beyond doubt" that plaintiff can prove no set of facts in support of the claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957). Thus, the question presented by a motion to dismiss is not whether plaintiff will prevail in the action, but whether he is entitled to offer evidence in support of his claim. Scheuer v. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974). In answering this question, the Court must assume that plaintiff's allegations are true and must draw all reasonable inferences in plaintiff's favor. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even if the face of the pleadings indicates that the chance of recovery is remote, the Court must allow plaintiff to develop his case at this stage of the proceedings. United States v. Redwood City, 640 F.2d 963, 966 (9th Cir. 1981).
If the Court chooses to dismiss the complaint, it must then decide whether to grant leave to amend. In general, leave to amend is only denied if it is clear that amendment would be futile and "that the deficiencies of the complaint could not be cured by amendment." Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987) (quoting Broughton v. Cutter Laboratories, 622 F.2d 458 , 460 (9th Cir. 1980) (per curiam)); see Poling v. Morgan, 829 F.2d 882, 886 (9th Cir. 1987) (citing Foman v. ...