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Bio-Horticultura Las Parritas, Sa De C.V. v. Aviara Parkway Farms, Inc.

United States District Court, S.D. California

September 30, 2014

BIO-HORTICULTURA LAS PARRITAS, S.A. de C. V. a Mexican Corporation, Plaintiffs,
v.
AVIARA PARKWAY FARMS, INC., A California Corporation, Defendants.

ORDER

WILLIAM Q. HAYES, District Judge.

The matter before the Court is Plaintiff's Motion to Dismiss Defendant's Third Counterclaim for Promissory Fraud. (ECF No. 14).

BACKGROUND

On April 15, 2014, Plaintiff Bio-Horticultura Las Parritas, S.A. de C.V. ("Bio-Horticultura"), initiated this action against Defendant Aviara Parkway Farms, Inc. ("Aviara") by filing the Complaint. (ECF No. 1). The Complaint states that "[o]n or about February 8, 2012, fresh-produce-grower BIO-HORTICULTURA entered into a written contract with fresh-produce-distributer [sic] AVIARA under which AVIARA agreed to market and sell BIO-HORTICULTURA's perishable produce - its fresh cucumbers and grape tomatoes - on consignment." Id. at 2. The Complaint states that "[b]etween in or about May 2012 and in or about January 2013, AVIARA received from BIO-HORTICULTURA - and AVIARA sold as a commercial merchant - numerous loads of BIO-HORTICULTURA's fresh cucumbers and grape tomatoes." Id. at 3.

The Complaint alleges that Aviara, "(1) engaged brokers to assist it in selling BIO-HORTICULTURA's produce, and deduct[ed] their fees from the sales proceeds, without first obtaining BIO-HORTICULTURA's permission; (2) sold BIO-HORTICULTURA's produce to other produce distributors at below market prices as strawman buyers' who then re-sold the produce to others at true market prices; (3) unilaterally reduced the sales prices for BIO-HORTICULTURA's produce, made other price adjustments, and/or rejected or dumped - or allowed customers to reject or dump - BIO-HORTICULTURA's produce without first obtaining neutral and impartial inspection, the approval of BIO-HORTICULTURA, or the requisite proof to support the price reductions; [and] (4) failed to utilize its best efforts with respect to its sale of BIO-HORTICULTURA's produce..." Id. at 5. The Complaint further alleges that "[a]s a direct and proximate result of AVIARA's breaches of the Contract... BIO-HORTICULTURA has suffered damages..." Id. at 6.

On May 8, 2014, Defendant Aviara filed an Answer and Counterclaim against Plaintiff Bio-Horticultura. (ECF No. 4). The Counterclaim states that "[f]rom February 8, 2012 through October 15, 2012, AVIARA PARKWAY FARMS loaned to BIO-HORTICULTURA monies to fund BIO-HORTICULTURA's growing operations." Id. at 12. "The loans were documented by written promissory notes that were signed by BIO-HORTICULTURA." Id. The Counterclaim alleges the following four causes of action: Breach of Written Promissory Notes, Breach of Written Contract, Fraud - Promise Without Intent to Perform, and Breach of Implied Covenant of Good Faith and Fair Dealing. (ECF No. 4 at 12-17).

On July 28, 2014, Plaintiff/Counterdefendant Bio-Horticultura, filed the Motion to Dismiss Aviara's counterclaim for fraud on grounds of failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 14).

On August 25, 2014, Defendant/Counterclaimant Aviara filed an Opposition to the Motion to Dismiss the Third Cause of Action in the Counterclaim, and, in the alternative, requests leave to amend its Counterclaim. (ECF No. 17).

ALLEGATIONS OF FRAUD COUNTERCLAIM

The Third Cause of Action for fraud in Aviara's Counterclaim alleges:

15. At the time that BIO-HORTICULTURA entered into the contract and promissory notes, BIO-HORTICULTURA, by and through its principal, Vincent Gomez, promised to comply with the terms of the promissory notes and contract, and further promised to utilize its best efforts to provide quality, re-saleable produce for distribution by AVIARA PARKWAY FARMS in order to ensure repayment of substantial loans pursuant to the promissory notes.
16. At the time that BIO-HORTICULTURA made the promises to AVIARA PARKWAY FARMS, BIO-HORTICULTURA had no intention of performing the promises.
17. The promises were made with the intent to induce AVIARA PARKWAY FARMS to advance substantial loans to BIO-HORTICULTURA to fund its growing operations.
18. AVIARA PARKWAY FARMS, at the time these promises were made and at the time that it advances the loans, was ignorant of BIO-HORTICULTURA's secret intention not to perform and AVIARA PARKWAY FARMS could not, in the exercise of reasonable diligence, have discovered BIO-HORTICULTURA's secret intention. In reliance on the promises of ...

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