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Sweet v. Bridge Base

May 28, 2009

CYNTHIA SWEET, PLAINTIFF,
v.
BRIDGE BASE, INC. A NEVADA CORPORATION, BRIDGE BASE INC., A NEVADA CORPORATION D/B/A BRIDGE BASE ONLINE, AND BRIDGE BASE ONLINE, LTD. A NEVADA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge

MEMORANDUM OPINION AND ORDER ON DEFENDANTS' MOTION TO DISMISS THE COMPLAINT [Doc. # 54]

INTRODUCTION

This is an action in diversity for breach of express or implied contract by plaintiff Cynthia Sweet ("Plaintiff") against defendants Bridge Base, Inc. and Bridge Base Online ("Defendants"), Nevada corporations that organize online bridge tournaments. The First Amended Complaint ("FAC") alleges one count of breach of express contract and one count of breach of implied contract, both under California common law. The parties agree that diversity jurisdiction exists pursuant to 28 U.S.C. § 1332. Venue is proper in this court.

FACTUAL ALLEGATIONS AND PROCEDURAL HISTORY

Plaintiff alleges that she and a number of individuals started "one of the first 'for profit' online bridge tournament websites in the world in 2004." Plaintiff alleges she entered into the "joint enterprise and venture with the Defendants in return for at least 5% of the gross revenue generated by tournament revenue rather than a percentage of the business or an equity position as an owner of the company. Doc.# 52 at ¶ 8. It is Plaintiff's contention that her agreement with Defendants obliged Defendants to continue paying her the 5% share of gross revenue commencing in 2004 with the formation of the company and continuing "without limitation." Id. Plaintiff alleges she was paid from June 2004 through February 2007. Plaintiff alleges she has not been paid since that time.

The FAC alleges Plaintiff is an avid bridge player with experience in directing and participating in online bridge tournaments. FAC at ¶ 9. Plaintiff alleges she "not only offered extensive technical, process and procedural knowledge to the team but also acted as a sales person and advertising and marketing director." FAC at ¶ 11. The FAC alleges Plaintiff "worked with Defendants to create, launch, and maximize the income from this business," id., but the FAC does not allege whether or to what extent Plaintiff's participation was, or was expected to be, ongoing in the Defendant companies. The FAC alleges Plaintiff "continued to contribute to the development and growth of the Web Business until she was removed from the business in February 2007 by having her administrative status suspended and authority removed."

Plaintiff's first claim for relief alleges the existence of an express contract obliging Defendants to pay Plaintiff a percentage of the gross revenue from Defendants' tournaments "as compensation for [Plaintiff's] contributions to the development and administration of the Web Business' ACBL tournaments." FAC at ¶ 48. So far as the court is aware, no writing has been submitted, nor is any writing referenced by either party. In her first claim for relief, Plaintiff alleges Defendants were unjustly enriched, but the FAC does not appear to assert a claim for unjust enrichment. Plaintiff's second claim for relief alleges the existence of an implied contract under which Plaintiff performed all her duties.

The FAC was filed on March 3, 2009. Defendants' motion to dismiss was filed on March 19, 2009. Plaintiff filed an opposition on April 27, 2009, and Defendants filed their reply on May 4, 2009. Oral argument scheduled for May 6, 2009, was vacated and the matter was taken under submission by the court as of that date.

LEGAL STANDARD

A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure if it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle him to relief. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). A Rule 12(b)(6) dismissal can be based on the failure to allege a cognizable legal theory or the failure to allege sufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984). In considering a motion to dismiss, the court must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), construe the pleading in the light most favorable to the party opposing the motion, and resolve all doubts in the pleader's favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969). In deciding a Rule 12(b)(6) motion, courts do not "assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981).

DISCUSSION

There is a good deal of agreement or at least non-dispute between the parties as to the factual background of this action. While the parties dispute whether there is/was an enforceable express contract between the parties, there is no doubt that no writing has been appended to the complaint nor has any writing been referred to by Plaintiff. Thus, from the perspective of this court's analysis of the motion to dismiss, if there is or was an express agreement between the parties, it was in the nature of a oral agreement. The parties also agree that between June 2004, and February 2007, the parties carried out activities in accordance with what Plaintiff alleges were the terms of the express agreement. That is, Plaintiff lent her time, expertise and goodwill to the growth and development of the online bridge tournament business and Defendants paid Plaintiff 5% of the gross revenues realized from the online bridge tournament business. Although Defendants argue at some length that Plaintiff cannot assert any claim against Defendants based on any representation that Plaintiff and Defendants were co-venturers in the online business, Plaintiff clarifies in her opposition to the motion to dismiss that she does not claim any co-venturer or equity status. Thus, the parties agree that Defendants' obligations to Plaintiff arise, if at all, from a contractual agreement between Defendants and Plaintiff and not as a result of Plaintiff having any equity or co-ownership interest in the enterprise.

Plaintiff's action, and Defendants' motion dismiss, distills into two claims. First, Plaintiff claims she and Defendants entered into an express contract whereby Defendants agreed to pay 5% of the gross revenues realized from the online bridge tournament business on a continuing basis in exchange for Plaintiff's effort and expertise in setting up and growing the online business. Defendants assert that Plaintiff has failed to assert a claim upon which relief can be granted because the alleged "express" contract fails to satisfy California's Statute of Frauds. Second, Plaintiff claims in the alternative that an agreement granting Plaintiff 5% of the gross revenues on a continuing basis from the online bridge tournament business in return for Plaintiff's efforts in the startup and growth of the enterprise ...


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