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Archette Wellness Group, Inc. v. Seychelle Environmental Technologies, Inc.

United States District Court, C.D. California

August 19, 2014

ARCHETTE WELLNESS GROUP, INC., ET AL
v.
SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC., ET AL

CIVIL MINUTES - GENERAL

DAVID O. CARTER, District Judge.

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING MOTION TO DISMISS THE FOURTH AND SIXTH CAUSES OF ACTION [8]

Before the Court is Defendants Seychelle Environmental Technologies, Inc., Cari Beck, as trustee of TAM IT, Carl Palmer, and Richard Parsons' (together, "Seychelle's") Motion to Dismiss the Fourth and Sixth Causes of Action (Dkt. 8) ("Motion" or "Mot"). The Court finds this matter appropriate for resolution without oral argument. See Fed.R.Civ.P. 78; L.R. 7-15. Having considered the Motion, Opposition (Dkt. 11) ("Opp'n"), and Reply (Dkt. 12), the Court GRANTS Seychelle's Motion.

I. Background

The Court draws the following facts from Plaintiff's Complaint ("Compl."), Notice of Removal (Dkt. 1) Ex. 1. In 2012, Plaintiff Archette Wellness Group, Inc. dba Functional Water Technologies ("Archette") entered into an agreement ("Agreement") with Seychelle whereby Archette was the exclusive distributor of certain Seychelle water filtration products. See Compl. ¶¶ 11, 13. In the Agreement, Seychelle expressly represented that in supplying its water filtration products, it would comply with all applicable federal, state, and local laws. See Compl. ¶¶ 24, 78, 94. California law requires that any filtration products that claim to improve the health or safety of drinking water be certified and registered. Seychelle was aware that its water filtration products were required to be certified and registered. See Compl. ¶¶ 77-80, 93-96. However, Seychelle failed to obtain registrations. Compl. ¶¶ 25-26. Archette relied on Seychelle's false representations that the water filtration products that they sold to Archette were in compliance with all laws, Compl. ¶¶ 81, 97, and was subsequently damaged by Seychelle's misrepresentations through Archette's investment in the Agreement. Compl. ¶¶ 82, 98.

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal , 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555 (citing Papasan v. Allain , 478 U.S. 265, 286 (1986)). On a motion to dismiss, this court accepts as true a plaintiff's well-pled factual allegations and construes all factual inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008). The court is not required to accept as true legal conclusions couched as factual allegations. Iqbal , 556 U.S. at 678.

Federal Rule of Evidence 201 allows the court to take judicial notice of certain items without converting the motion to dismiss into one for summary judgment. Barron v. Reich , 13 F.3d 1370, 1377 (9th Cir. 1994). The court may take judicial notice of facts "not subject to reasonable dispute" because they are either: "(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; see also Lee v. City of Los Angeles , 250 F.3d 668, 689 (9th Cir. 2001) (noting that the court may take judicial notice of undisputed "matters of public record"), overruled on other grounds by 307 F.3d 1119, 1125-26 (9th Cir. 2002). The court may disregard allegations in a complaint that are contradicted by matters properly subject to judicial notice. Daniels-Hall , 629 F.3d at 998.

Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey , 353 F.3d 750, 758 (9th Cir. 2003); Lopez v. Smith , 203 F.3d 1122, 1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure states that leave to amend should be freely given "when justice so requires." This policy is applied with "extreme liberality." Morongo Band of Mission Indians v. Rose , 893 F.2d 1074, 1079 (9th Cir. 1990).

III. Discussion

The key issue in this Motion is whether Seychelle and Archette each have an independent duty to certify the water treatment device as manufacturers. Seychelle seeks to dismiss two claims from Archette's complaint: fraudulent inducement and negligent misrepresentation (the fourth and sixth causes of action).

Archette argues that Seychelle knowingly misrepresented that its water filtration products were in compliance with state laws. Compl. ¶¶ 26, 76, 93. Furthermore, Archette argues that the Seychelle's misrepresentations induced Archette into entering into the Exclusive Distribution Agreement with Seychelle. Id. ¶¶ 78, 96.

a. Fraud and Negligent Misrepresentation Elements

The elements of a claim for fraudulent inducement consist of "(a) a misrepresentation []; (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage." Hinesley v. Oakshade Town Ctr. , 135 Cal.App.4th 289, 294 (2005). The elements of a claim for negligent misrepresentation "consist of (1) a misrepresentation of a past or existing material fact, (2) without reasonable grounds for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) ignorance of the truth and justifiable reliance on the ...


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