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Cabo Brands, Inc v. Mas Beverages

November 14, 2012

CABO BRANDS, INC., PLAINTIFF,
v.
MAS BEVERAGES, INC., DEFENDANT. MAS BEVERAGES, INC., COUNTERCLAIMANT,
v.
CABO BRANDS, INC.; COUNTERDEFENDANTS. MAS BEVERAGES, INC., CROSSCLAIMANT,
v.
FABRICA DE TEQUILAS FINOS S.A. DE C.V.; WORLDWIDE BEVERAGE IMPORTS, LLC; WORLDWIDE SPIRITS, INC.; UNIVERSAL BRANDS AND IMPORTS, LLC; DRINKS AMERICAS, INC.; DRINKS AMERICAS HOLDINGS, LTD; FEDERICO G. CABO; RICHARD F. CABO; AND DOES 1 THROUGH 10, INCLUSIVE, CROSSDEFENDANTS.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

O

ORDER GRANTING CROSSDEFENDANTS' MOTION TO DISMISS [72]

Crossdefendants-Worldwide Spirits, Inc., Worldwide Beverage Imports, LLC, Universal Brands and Imports, LLC, Drinks Americas, Inc., and Drinks Americas Holdings, Ltd.-ask the Court to dismiss MAS's claims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).*fn1 (ECF No. 72.) For the reasons discussed below, the Court GRANTS Crossdefendants' Motion to Dismiss.

I.BACKGROUND

On November 16, 2010, MAS entered into an agreement with Cabo to promote Ed Hardy, Agave 99, and KAH brand tequilas. (Countercl. ¶¶ 20, 22.) Cabo agreed to sell the tequila products to MAS at the prices specified in the agreement, and MAS would sell the products to its clients. (Countercl. ¶ 25.) But allegedly, Cabo never intended to follow the terms of the agreement and conspired with Crossdefendants- through the control of Federico Cabo-to breach the agreement by granting Drinks the right to distribute the same tequila products throughout the United States. (Countercl. ¶¶ 27, 35, 36.) MAS claims it has the exclusive rights to distribute in numerous territories, including the United States. (Countercl. ¶ 27.) Further, Cabo and Crossdefendants failed to notify MAS of this arrangement, and purportedly allowed MAS to continue performing under the agreement. (Countercl. ¶ 28.) As a result, MAS claims that it "expended funds and effort to set up a sales force, created marketing plan," and solicited clients, following the terms of the agreement. (Countercl. ¶ 30.) MAS further alleges that it performed in good faith, but Cabo and Crossdefendants ignored MAS's efforts. (Countercl. ¶ 37.) MAS also tried to resolve the problems it had with Cabo; such as Cabo's unilateral price increase and failure to fill MAS's orders; but to no avail. (Countercl. ¶¶ 34, 39.)

On December 12, 2011, Cabo brought a complaint, seeking a declaratory judgment against MAS. (ECF No. 1.) In response, MAS filed counterclaims against Cabo for breaching the terms of the agreement and also brought claims against Crossdefendants on March 16, 2012. (ECF No. 19.) Crossdefendants now bring this motion to dismiss MAS's claims. (ECF No. 72.)

II.LEGAL STANDARD

Dismissal under Rule 12(b)(6) can be based on "the lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement-to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Iqbal's plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully," but does not go so far as to impose a "probability requirement." Id. Rule 8 demands more than a complaint that is merely consistent with a defendant's liability-labels and conclusions, or formulaic recitals of the elements of a cause of action do not suffice. Id. Instead, the complaint must allege sufficient underlying facts to provide fair notice and enable the defendant to defend itself effectively. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The determination whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 566 U.S. at 679.

When considering a Rule 12(b)(6) motion, a court is generally limited to the pleadings and must construe "[a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most favorable to [the plaintiff]." Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of fact, and unreasonable inferences need not be blindly accepted as true by the court. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a complaint should be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts" supporting plaintiff's claim for relief. Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999).

As a general rule, leave to amend a complaint that has been dismissed should be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).

III.DISCUSSION

Crossdefendants move to dismiss the following five causes of action asserted against them: (1) fraud-intentional misrepresentation; (2) fraud-negligent misrepresentation; (3) negligent interference with prospective economic advantage; (4) accounting; and (5) unfair business ...


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