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Mark Kravis, Inc. v. Franking Fueling Systems

September 28, 2007

MARK KRAVIS, INC., PLAINTIFF,
v.
FRANKING FUELING SYSTEMS, INC., INDIVIDUALLY AND DBA; HEALY SYSTEMS, INC.; FRANKLIN ELECTRIC CO., INC.; AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matter pending before the Court is the amended motion to dismiss Plaintiff's first amended complaint ("FAC") (Doc. # 18), filed by Defendants Franklin Fueling Systems, Inc. ("Franklin Fueling") and Franklin Electric Co., Inc. ("Franklin Electric").

Procedural History

On February 17, 2007, Mark Kravis, Inc. ("Plaintiff") commenced an action against Franklin Fueling and Healy Systems, Inc. ("Healy") in the Superior Court of California. On March 16, 2007, Franklin Fueling removed the case to federal court (Doc. #1). On March 23, 2007, Franklin Fueling filed a motion to dismiss (Doc. #4). On May 16, 2007, Plaintiff filed a FAC, which added Franklin Electric as a Defendant (Doc. # 12). On June 8, 2007, Franklin Fueling and Franklin Electric filed an amended motion to dismiss (Doc. #18), and Healy filed an amended answer to the FAC (Doc. #19).

Allegations in Plaintiff's FAC

On or about October 27, 1999, Plaintiff entered into a written contractual agreement ("Agreement") with Healy in which Plaintiff agreed to serve as Healy's sales representative for the state of California. FAC, ¶ 7. On or about September 22, 2003, Plaintiff and Healy amended the Agreement to add the state of Washington and the state of Oregon to Plaintiff's sales territory. Id. at ¶ 8. In August, 2006, Healy breached the Agreement by reducing Plaintiff's compensation from the agreed-upon 8.5% of his earnings to a lower amount. Id. at ¶ 9. On September 6, 2006, Plaintiff gave Healy 30 days notice that he would be terminating their relationship. Id. at ¶ 10.

Prior to the expiration of the thirty day notice, Plaintiff discovered Franklin Fueling and/or Franklin Electric acquired Healy. Id. at ¶ 11. After the acquisition, Arthur Boroff, the sales manager for "defendants, and each of them," asked Plaintiff to withdraw his termination. Id. at ¶ 12. Boroff orally represented to Plaintiff that Don Kenney, President of Franklin Fueling and Healy, and spokesman for Franklin Electric, agreed to pay Plaintiff the difference between the agreed-upon 8.5% compensation under the Agreement and the amount Plaintiff actually received. Id. at ¶ 13. Boroff orally represented on behalf of the "new company" that Plaintiff would continue to receive compensation at the 8.5% rate if he continued his sales efforts. Id. at ¶ 14.

On September 26, 2006, in reliance on Boroff's representations, Plaintiff withdrew his notice of termination. Id. at ¶ 15. On September 27, 2006, Plaintiff received a check from Kenney paying him the difference between the agreed-upon 8.5% compensation under the Agreement and the amount Plaintiff actually received. Id. Plaintiff continued to perform services until January 31, 2007. Id. On or about December 6, 2006, Plaintiff received a letter from Franklin Fueling terminating the Agreement. Id. at ¶ 17. At this time, Franklin Fueling, Franklin Electric and/or Healy owed Plaintiff compensation in the sum of $489,459.83 for services performed pursuant to the Agreement, as adopted by Franklin Fueling and Franklin Electric. Id.

Plaintiff seeks damages for breach of contract, intentional misrepresentation and negligent misrepresentation, and a judicial declaration that Franklin Fueling and/or Franklin Electric acquired Healy, that Franklin Fueling and/or Franklin Electric subsequently formed a new agreement to pay Plaintiff for services performed, and that Franklin Fueling and/or Franklin Electric adopted the Agreement after acquiring Healy.

Franklin Fueling and Franklin Electric's Amended Motion to Dismiss

Franklin Fueling and Franklin Electric move to dismiss the FAC, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.*fn1 Franklin Fueling and Franklin Electric assert that the FAC fails to state a claim for the following reasons: (1) the FAC fails to allege any basis for claiming that Franklin Fueling or Franklin Electric owed Plaintiff contractual obligations, and (2) the FAC fails to identify any misrepresentations made by, or on behalf of Franklin Fueling and/or Franklin Electric. Franklin Fueling and Franklin Electric also move to dismiss Plaintiff's claims against "Does 1 through 50."

Standard of Review

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings. See De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). A complaint may be dismissed for failure to state a claim under Rule 12(b)(6) where the factual allegations do not raise the right to relief above the speculative level. See Bell Atlantic v. Twombly, 127 S.Ct. 1955, 1965 (2007). Conversely, a complaint may not be dismissed for failure to state a claim where the allegations plausibly show that the pleader is entitled to relief. See id. (citing Fed R. Civ. P. 8(a)(2)). In ruling on a motion pursuant to Rule 12(b)(6), a court must construe the pleadings in the light most favorable to the plaintiff, and must accept as true all material allegations ...


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