ORDER GRANTING DEFENDANT'S MOTION TO
DISMISS THE SECOND AND FOURTH CAUSES OF ACTION
AND DENYING DEFENDANT'S MOTION TO DISMISS THE THIRD CAUSE OF ACTION
On August 16, 2010, Plaintiffs Care Plus Insurance Marketing ("CPIM") and Mike Massad, owner and operator of CPIM, filed a complaint for breach of contract, conversion, defamation and unfair competition in violation of California Business Code § 17200, et seq. The complaint arises from a contract dispute between Defendant Connecticut General Life Insurance Company ("CGLIC") and Plaintiffs. On October 5, 2010, Defendant removed the action to this court because the parties are citizens of different states and more than $75,000 is at issue.
On October 12, 2010, Defendant filed a motion to dismiss. Defendant contends that the second cause of action for conversion fails as a matter of law because conversion cannot be predicated on only a contractual right of payment and Plaintiffs have not specifically identified the money that was allegedly converted. Defendant argues that the third cause of action for defamation should be dismissed because the complaint fails to meet the stringent pleading standard for defamation. Defendant contends that the fourth cause of action for unfair competition fails to state a claim because an allegation of only a breach of contract is not a violation of California's unfair competition law. Defendant asks the court to dismiss Plaintiffs' second, third and fourth causes of action with prejudice.
Plaintiffs filed an opposition on October 27, 2010. Plaintiffs contend that the conversion claim properly alleges that Defendant took control over property belonging to Plaintiffs. Plaintiffs contend that the defamation claim sufficiently alleges that Defendant falsely stated that Plaintiffs were not paid as a result of their incompetence, mismanagement and dishonesty. Finally, Plaintiffs contend that they have stated a claim for unfair competition because the complaint alleges that Defendant's intentional failure to perform in accordance with the contract placed Plaintiffs at a competitive disadvantage with competitors. Plaintiffs request that any dismissal be with leave to amend.
On November 11, 2010, Defendant filed a reply, repeating the same arguments as the motion to dismiss.
Under Federal Rule of Civil Procedure 12(b)(6),a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all of the complaint's material allegations of fact are taken as true, and the facts are construed in the light most favorable to the non-moving party. Marceau v. Balckfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The court must also assume that general allegations embrace the necessary, specific facts to support the claim. Smith v. Pac. Prop. and Dev. Corp., 358 F.3d 1097, 1106 (9th Cir. 2004). However, the court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Although they may provide the framework of a complaint, legal conclusions are not accepted as true and "[t]hreadbare recitals of elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009); see also Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). As the Supreme Court has explained:
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949.
The plausibility standard is not akin to a 'probability requirement,' but it asks more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of 'entitlement to relief.' . .
Determining whether a complaint states a plausible claim for relief will . . . be a context specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not shown -- that the pleader is entitled to relief.
Id. at 1949-50. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).
The complaint alleges that Plaintiffs and Defendant entered into a written agreement on April 8, 2010. Plaintiffs agreed to solicit applications for Defendant's Medicare Plans and additionally sell, market and promote the Medicare Plans. Defendant agreed to pay Plaintiffs a set amount for each application it submitted. The written agreement stated that Defendant would provide marketing materials to Plaintiffs and train Plaintiffs' agents regarding the requirements of Medicare Laws and Regulations. The written agreement also provided that if Defendant were to terminate the contract for cause, Defendant was required to provide written notice of the alleged default and provide Plaintiffs with the opportunity to cure the alleged default.
The complaint alleges that on December 17, 2009, Defendant breached the contract by immediately terminating the written agreement because of alleged defaults by Plaintiffs. The complaint alleges Defendant failed to provide Plaintiffs with the opportunity to cure the alleged defaults as required by the written agreement. The complaint alleges Defendant committed an additional breach when ...