The opinion of the court was delivered by: MARTIN JENKINS, District Judge
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO
DISMISS DEFENDANTS' COUNTERCLAIM
Before the Court is Plaintiff Allied North America Insurance
Brokerage Corporation's ("Plaintiff") Motion to Dismiss the
Third, Fourth, Fifth, and Seventh Causes of Action in Defendants
Woodruff-Sawyer and Dermond Houweling's ("Defendants")
First Amended Counterclaim.
Plaintiff employed Defendant Houweling, a successful and highly
regarded executive in the insurance and surety brokerage
industry, from June 15, 1998 through June 15, 2004. Houweling and
Plaintiff executed a "Producer Agreement" ("the Agreement") which
governed the terms and conditions of his employment with
Plaintiff. The Agreement allegedly prevented Houweling from
engaging in conduct that posed a conflict of interest with his
employment with Plaintiff and attempted to restrict him from
engaging in similar activities after his employment with
Plaintiff ended. On June 15, 2004, Houweling resigned from
Plaintiff and accepted employment with Defendant Woodruff-Sawyer.
Plaintiff filed this suit against Defendants on June 24, 2004.
On July 1, 2004, the Court issued a temporary restraining order
against Defendants. The Court later modified the order following
Defendants' motion for reconsideration on July 24, 2004.
Houweling filed a counterclaim and subsequently passed away on
November 20, 2004. On January 3, 2004, Houweling's counsel
notified Plaintiff of Houweling's death and the appointment of
Mary Houweling as the Special Administrator to Houweling's
estate. On March 30, 2005, the Estate was substituted in as
counterclaimant. The First Amended Counterclaim was filed on June
15, 2005. On June 21, 2005 Plaintiff filed a First Amended
Complaint. The Estate moved to strike the complaint, prompting
Plaintiff to seek leave of the Court to file its First Amended
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency
of the claims asserted in the complaint. See Cahill v. Liberty
Mut. Ins. Co., 80 F.3d 336, 337 (9th Cir. 1996). Dismissal of an
action pursuant to Rule 12(b)(6) is appropriate only where it
"appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief."
Levine v. Diamanthuset, Inc., 950 F.2d 1478, 1482 (9th Cir.
1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). In
reviewing such a motion, the Court must assume all factual
allegations to be true and must construe them in the light most
favorable to the nonmoving party. See N. Star v. Ariz. Corp.
Comm., 720 F.2d 578, 580 (9th Cir. 1983). In the context of a
motion to dismiss, review is limited to the contents of the
complaint. Allarcom Pay Television, Ltd. v. Gen. Instrument
Corp., 69 F.3d 381, 385 (9th Cir. 1995). However, matters
properly presented to a court, such as those attached to the
complaint and incorporated within its allegations, may be
considered as part of the motion to dismiss. See Hal Roach
Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19
(9th Cir. 1989).
Motions to dismiss for failure to state a claim "are generally
viewed with disfavor." Ramos v. Cal. Comm. of Bar Exam'rs of the
State Bar of Cal., 857 F. Supp. 702, 704 (N.D. Cal. 1994). "Each
averment of a pleading shall be simple, concise, and direct."
FED. R. CIV. P. 8(e)(1). Courts must assume that all general
allegations "embrace whatever specific facts might be necessary
to support them." Peloza v. Capistrano Unified Sch. Dist.,
37 F.3d 517, 521 (9th Cir. 1994). If the complaint does not meet the
liberal pleading standard, a court must grant leave to amend
unless "it is absolutely clear that the deficiencies of the
complaint [cannot] be cured by amendment." Noll v. Carlson,
809 F.2d 1446, 1448 (9th Cir. 1987).
Plaintiff moves to dismiss Defendants' Third, Fourth, Fifth and
Seventh Causes of Action for failure to state a claim under Rule
12(b) of the Federal Rules of Civil Procedure. Since Plaintiff
has voluntarily dismissed the Third and Fourth Causes of Action,
the Court does not address the merits of these actions.
A. The Fifth Cause of Action Declaratory Relief
Defendants' Fifth Cause of Action seeks declaratory relief
based on Plaintiff's actions in restricting Houweling from
conducting business with his long-standing clients. This cause of
action also seeks attorney's fees and costs based on section
18.10 of the Agreement. Plaintiff argues that Defendants' request
for declaratory relief is mooted by Houweling's death. Defendants
counter that even though Houweling has died, an actual
controversy still exists surrounding the validity and
enforceablity of the Agreement's non-interference provision.
Declaratory relief is appropriate only when there exists an
"actual controversy." 28 U.S.C. § 2201. An actual controversy
exists when there is a "substantial controversy, between parties,
having adverse legal interests, of sufficient immediacy and
reality to warrant the issuance of declaratory judgment."
Maryland Gas Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273
(1941). Additionally, if the claim for declaratory relief becomes
moot, no actual controversy will exist. U.S. Const., Art. III;
see also McQuillon v. Schwarzennegger, 369 F.3d 1091, 1095 (9th
Here, the Court finds that Defendants' declaratory relief claim
is appropriate because of the necessity to determine the rights
of the Estate under the provisions of the Agreement and to
address questions regarding the validity and enforceability of
the non-interference provisions. Additionally, the Court is not
persuaded that the Estate's right to recover attorney fees is
adversely affected by Houweling's death. Therefore, the Court
DENIES Plaintiff's motion to dismiss Defendants' Fifth Cause of
Action. B. The Seventh Cause of Action Waiting Time Penalties
Defendants' Seventh Cause of Action alleges a violation of
California Labor Code Section 203 which provides for penalties
beyond those provided by contract law. California Labor Code
Section 203 states that, "[i]f an employer willfully fails to
pay, without abatement or reduction, in accordance with Sections
201, 201.5, 202, and 205.5, any wages of an employee who is
discharged or who quits" then the employee shall receive ...