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Global Btg LLC v. National Air Cargo

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


October 13, 2011

GLOBAL BTG LLC, PLAINTIFF,
v.
NATIONAL AIR CARGO, INC., DEFENDANT.

The opinion of the court was delivered by: Honorable Ronald S.W. Lew Senior, U.S. District Court Judge

ORDER re: Defendant's Motion to Dismiss Plaintiff's First Amended Complaint [27]

Before the Court is Defendant National Air Cargo, Inc.'s ("Defendant") Motion to Dismiss Plaintiff Global BTG LLC's ("Plaintiff") First Amended Complaint [27] and Defendant's Request for Judicial Notice in support of its Motion [28]. The Court having reviewed all papers submitted pertaining to this Motion and having considered all arguments presented to the Court, NOW FINDS AND RULES AS FOLLOWS:

The Court hereby DENIES Defendant's Request for Judicial Notice and DENIES the Motion to Dismiss Plaintiff's First Amended Complaint.

A. Judicial Notice

As a preliminary matter, Defendant filed a request for this Court to take judicial notice of three documents in support of its Motion to Dismiss: (1) the draft Letter of Intent ("LOI"), (2) Plaintiff's certified Articles of Organization, and (3) a printout of an Internet search for business entities on the California Secretary of State website. Generally, a court may not consider material beyond the complaint in ruling on a Rule 12(b)(6) motion. See Fed. R. Civ. P. 12(b)(6). However, a court may take judicial notice of facts that are "(1) generally known within the territorial jurisdiction of the trial court, or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). To the extent that the contents in the documents are in dispute, "such matters of controversy are not appropriate subjects for judicial notice." U.S. v. Southern Cal. Edison Co., 300 F. Supp. 2d 964 (E.D. Cal. 2004) (quoting Del Puerto Water Dist. v. U.S. Bureau of Reclamation, 271 F. Supp. 2d 1224 (E.D. Cal. 2003)).

Pursuant to this standard, the Court hereby DENIES,

Defendant's Request for Judicial Notice of the draft LOI referred to in Plaintiff's First Amended Complaint. The Court finds that the Parties disagree as to which document is the actual draft LOI, therefore such disputed matters are not appropriate subjects for judicial notice.

The Court also DENIES as Moot Plaintiff's Request for Judicial Notice of (1) Plaintiff's certified Articles of Organization, and (2) a printout of an Internet search for business entities on the California Secretary of State website. The Court finds that it previously ruled on this matter on June 29, 2011.

B. Motion To Dismiss

The Court DENIES Defendant's Motion to Dismiss Plaintiff's First Amended Complaint because Plaintiff has pled sufficient facts to support its breach of contract claim. Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir. 1991). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations,[it]. . . requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553-556 (2007). However, a party need not state the legal basis for his claim, but only the facts underlying it. McCalden v. California Library Ass'n, 955 F.2d 1214, 1223 (9th Cir. 1990).

Previously, on February 24, 2011, Plaintiff brought a breach of contract claim and Defendant filed a Motion to Dismiss on the ground that Plaintiff lacked standing and capacity to bring this Action. On June 29, 2011, this Court granted Defendant's Motion to Dismiss and issued an Order [19] holding that the Complaint failed to allege sufficient facts showing that Plaintiff had the capacity to sue. The Court intended to hold that Plaintiff failed to allege sufficient facts to support a showing that it had capacity to enforce the contract with Defendant. Due to this Court's unfortunate choice of language, the Parties were misled as to the Court's intended meaning of capacity to sue.

In fact, the Court finds that Plaintiff had capacity to sue at all times relevant to this Action. Pursuant to Federal Rule of Civil Procedure, Rule 17, the "capacity to sue or be sued shall be determined by the law of the state in which the district court is held." Fed. R. Civ. P. 17. In this case, the Court finds that Plaintiff had the capacity to sue at all times subsequent to July 20, 2010 when it filed its Articles of Organization with the Nevada Secretary of State. Cal. Corp. Code § 17003(b)(stating that a Limited Liability Company ("LLC") "organized under this title shall have . . . the power to" sue or be sued).

Although Plaintiff did not exist as a legal entity at the time the contract was entered into, Plaintiff has pled sufficient facts showing its authority to enforce the contract. The Court finds that Plaintiff has pled sufficient facts showing its ability to enforce the contract through the doctrine of LLC by estoppel.

California has applied the traditional corporate formation doctrines to LLCs. 02 Development, LLC v. 607 South Park, LLC, 159 Cal. 4th 609, 612 (2008).

Additionally, courts have long held that if a party contracts with a corporation, that party is estopped from denying its existence. James D. Cox and Thomas Lee Hazen, 1 Treatise on the law of Corporations § 6:12 (3rd ed. 2011); see also Home Owners' Loan Corp. v. Gordon, 36 Cal. App. 2d 189, 192 (Cal. App. 3 Dist. 1939) (stating that a long line of authorities establishes that a defendant is estopped from denying a corporation's existence in an action to enforce a contract when a defendant contracts with a plaintiff as a corporation). According to the First Amended Complaint, Defendant contracted with Plaintiff, in Plaintiff's capacity as a LLC, thus Defendant is now estopped from denying Plaintiff's existence.

In sum, this Court finds that Plaintiff has pled sufficient facts in its First Amended Complaint to support its breach of contract claim. Though Plaintiff was not a validly formed LLC at the time of contracting, the Court finds that the First Amended Complaint alleges facts necessary to support a LLC by estoppel theory. Therefore, Plaintiff pleads sufficient facts to constitute a cognizable legal theory and should not be dismissed pursuant to Federal Rule of Civil Procedure, Rule 12(b)(6).

Accordingly, the Court DENIES Defendant's Motion to Dismiss Plaintiff's First Amended Complaint.

IT IS SO ORDERED.

20111013

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