The opinion of the court was delivered by: Hayes, Judge:
The matter before the Court is the Motion to Dismiss filed by Defendant Gemological Institute of America, Inc. (ECF No. 10).
On April 19, 2012, Plaintiffs Frederick Stocco and Kathleen Stocco filed a complaint in San Diego Superior Court against Defendant. (ECF No. 1). On May 29, 2012, Defendant removed the complaint to this Court. (ECF No. 1-3).
On July 10, 2012, Plaintiffs filed the First Amended Complaint ("Complaint") against Defendant, asserting the following claims for relief: (1) fraudulent misrepresentation; (2) negligence; (3) breach of written contract; (4) fraud in the inducement; (5) failure to provide franchise offering circular, in violation of California Corporation's Code section 31119; and (6) unfair business practices, in violation of California Business & Professions Code section 17203. Id.
On July 20, 2012, Defendant filed a Motion to Dismiss as to claims three, four, five, and six of the Complaint. (ECF No. 10). On August 13, 2012, Plaintiffs filed a Response. (ECF No. 12). On August 20, 2012, Defendant filed a Reply. (ECF No. 13).
ALLEGATIONS OF THE COMPLAINT
... 9. At all relevant times, GIA represented itself (and continues to represent itself) as a nonprofit institute, whose mission is to "ensure the public trust in gems and jewelry by upholding the highest standard of integrity, academics, science, and professionalism through education, research, laboratory services, and instrument development." GIA is the global leader in gem grading. A GIA gem grading certificate significantly increases the value of a gem across the world. The GIA gem grading certificates can only be issued by gem grading labs authorized by GIA to issue GIA gem grading certificates. GIA's gem grading certificates are therefore highly valuable, and the gem grading labs and/or GIA gem drop-off locations that are authorized to issue such certificates have a huge advantage over and are much more highly regarded than those that lack GIA affiliation.
10. Beginning in 1991, and during all relevant times, the Stoccos were employees of GIA. As referenced above, on or about December 1, 1991, the Stoccos entered into an employment agreement, with GIA-GEM Instruments Corporation, a wholly owned subsidiary of GIA. GIA issued pay checks and W2s to the Stoccos. The employment agreement was entered into by the Stoccos, and required the Stoccos to open GIA's first European GIA location and to relocate to Vicenza, Italy to do so. The employment agreements provided: "Point of Origin/Country of Origin: Santa Monica, CA U.S.A." A copy of the employment agreements and initial pay check is attached as Exhibit" 1" hereto.
11. GIA-GEM Instruments Corporation's principal place of business was located in Santa Monica, California and the employment agreements were entered into in California. GIA-GEM Instruments is no longer a viable entity, having merged back into Defendant GIA. GIA is the principal and successor to GIA-GEM Instruments, and GIA's principal place of business is located in Carlsbad, California.
12. In 1992, the Stoccos relocated from the United States to Italy for the sole purpose of establishing the first European GIA location for GIA. Pursuant to their employment agreement obligations, the Stoccos organized, opened and directed the first GIA European location in Vicenza, Italy, (hereinafter "GIA Italy"), to establish a gem grading school on behalf of GIA. GIA Italy was created by GIA, and GIA Italy was a foreign affiliate and subsidiary wholly owned by GIA. 13. In early 1992, GIA Italy opened under the leadership of the Stoccos. GIA Italy rapidly became the hub of GIA's activities in Europe. In 1998, the GIA school moved to an 8,000-square-foot state-of-the-art facility in Vicenza, Italy. By 2003, GIA Italy had approximately 60 graduate gemologists per year. GIA Italy had about 200 students enrolled in extension and design classes, and another approximately 400 in the distance education classes. GIA Italy enrollment included students from the United States and California. Similarly, Italian students worked in and visited California, U.S., while earning GIA gemologist degrees....
15. From 1993-2007, the Stoccos continued to work and live in Italy, drawing salaries from GIA Italy, which was wholly owned by Defendant GIA and an affiliate for purposes of the Social Security Administration. During this time period, the Stoccos asked GIA for documentation regarding their employment agreements as well as participation in pension, retirement and other employment benefit plans, but were repeatedly rebuffed in their requests for information. GIA did issue a proposed Salary Agreement between GIA and the Stoccos. The Agreement was dated February 2000, and signed by both Brook Ellis, Vice President of Education for GIA, and Seung-Hae Moon, Director of Global Education for GIA. A true and correct copy of the salary agreement is attached as Exhibit "2" hereto.
16. At all times, the Stoccos employee reviews were exemplary. In 1992, Bill Boyajean, GIA's President, wrote the Stocco's a letter indicating that the Stoccos were doing a great job for GIA. Thereafter, GIA executives continued to visit Italy and issue reports on the progress being made there. GIA had control and oversight of all operations at GIA in Italy.
17. In 2005, GIA and the Florence Chamber of Commerce negotiated an agreement whereby the Chamber of Commerce would provide financial support to GIA Italy so long as GIA Italy agreed to allow the construction of a gem grading lab or GIA gem drop-off location that would be authorized to issue GIA gem grading certificates.
18. In March 17,2005, GIA, by and through its attorney, indicated that it would establish a GIA lab but only with GIA's written consent, and would agree to conduct a feasibility study regarding establishing a GIA gem drop-off location that would be used for GIA gem grading. GIA further indicated in this letter that the decision to establish a GIA gem drop-off location in Florence would be at the sole discretion of GIA Italy.
19. In 2005, Baker, on behalf of GIA, entered into a written agreement with the Florence Chamber of Commerce to move GIA Italy to Florence, and open a GIA school, and a gem grading lab or GIA gem drop-off location authorized to issue GIA gem grading certificates. This agreement ("Firgem Agreement") was made and signed by Baker on behalf of GIA and GIA Italy. In exchange for GIA agreeing to open a GIA school and gem grading lab or GIA gem drop-off location authorized to issue GIA gem grading certificates, the Florence Chamber of Commerce (a quasi-governmental entity) agreed to provide GIA Italy with substantial financial support for a twenty (20) year period. [The Firgem Agreement provided support for both the local community, and GIA's operation in Italy which was headed and run by the Stoccos. (ECF No. 7 at 11:13-15)] Without agreeing to move forward with a gem grading lab and/or GIA gemdrop-off location, authorized to issue GIA gem grading certificates, the Florence Chamber of Commerce would not have entered into the Firgem Agreement. A true and correct copy of the Firgem Agreement, and a certified translation thereof, are attached as Exhibits "3" and "4" hereto.
20. A bank loan of approximately $350,000 Euros was taken out by GIA Italy with GIA's express and written permission to build out a space required for the new school and gem grading lab. This bank loan was obtained while the Stoccos, personally and as directors of GIA Italy, relied upon GIA's promise to authorize access to GIA gem grading certificates.
21. On about October 31, 2007, Tawfic Farah, GIA's Vice-President for International Operations, sent a letter to the Florence Chamber of Commerce thanking it for its support of GIA and its Italy operations.
22. In or before 2007, GIA developed a scheme whereby they would attempt to convert GIA Italy to a franchise, and convert the Stoccos from employees to franchisees, and then withdraw support of GIA Italy. Tawfic Farah informed the Stoccos on or about August 20, 2007, that he was authorized to negotiate and conclude an agreement with the Stoccos to take over GIA Italy. Tawfic Farah pitched the idea as recognition for the Stocco's 16 years of hard work and dedication for GIA. Unbeknownst to the Stoccos, this was actually part of GIA's plan to vacate its Italy operation (and concurrently vacate its support for the Firgem Agreement).
23. In late 2007, GIA approached the Stoccos and offered them ownership of GIA Italy under a franchise agreement Concurrent with discussions regarding making the Stoccos franchisee owners, GIA sent the Stoccos a letter dated November 12, 2007, entitled "Resignation from Personnel Employment Agreement" seeking to have the Stoccos state that they had been paid all salary accrued vacation and reimbursable expenses to which they were entitled under their employment agreement. GIA further sought to force the Stoccos to agree that they had no claims against GIA. A true and correct copy of the attempted waiver of liability dated November 12, 2007, is attached as Exhibit "5" hereto....
25. Ultimately, a franchise agreement was entered into by GIA and GIA Italy. Concurrently, the stock of GIA Italy was transferred to the Stoccos personally. GIA did not provide the Stoccos a copy of the franchise offer circular. A true and correct copy of the franchise agreement is attached as Exhibit "6" hereto.
26. On or about April 10, 2008, Donna Baker resigned from the Firgem Agreement council personally, and delegated all of GIA's authority within the Firgem Agreement to GIA Italy. GIA Italy's authority to open a GIA gem drop-off location was confirmed in correspondence from Baker dated April 10, 2008, which stated that GIA, as a member of the Firgem Agreement, delegates GIA Italy all powers to make any and all decisions and enter into any agreements related to the Firgem Agreement. The Stoccos relied on the grants of authority and the Firgem Agreement in continuing to work with the Florence Chamber of Commerce towards a construction of a gem lab. A true and correct copy of the letter conferring GIA authority on GIA Italy is attached as Exhibit "7" hereto. [The existence of the gem grading lab agreement formed a material basis for the Stoccos agreeing to the franchise agreement. (ECF No. 7 at 12:27-18)]
27. In or about September 2010, construction on an actual lab for the purpose of issuing GIA gem certificates began in Florence, Italy. The Florence Chamber of Commerce issued all funds for the construction of the lab to GIA specifications for it to have the ability to issue GIA gem grading certificates. A director was also pursued [and retained (ECF No. 7 at 12:1-2)] to support operation of the new lab.
28. On or about March 22, 2011, GIA sent the Florence Chamber of Commerce a letter indicating that GIA would no longer allow a GIA drop-off service at the lab location in Florence, Italy. A true and correct copy of the letter dated March 22, 2011, is attached as Exhibit "8" hereto.
29. Later in 2011, the Stoccos were informed that the Florence Chamber of Commerce would not continue its support of GIA Italy because an authorized gem grading lab had still not been opened, GIA was no longer going to authorize GIA gem grading certificates, and GIA had seemingly withdrawn its support of GIA Italy. As a result of the loss of this expected source of significant revenue, the Stoccos are losing the revenue opportunity afforded other GIA locations, and GIA Italy is now going out of business. GIA Italy has lost all of the enrollments in its school, and has lost Florence Chamber of Commerce support....
46. GIA breached, and continues to breach, this written agreement by failing to comply with the terms of the agreement and by failing to provide any support to GIA Italy for the purpose of opening a gem grading ...