United States District Court, C.D. California
April 13, 2015
FORD MOTOR COMPANY, Plaintiff,
TITAN ENTERPRISE INC., Defendant.
AMENDED AS TO SIGNATURE DATE ORDER RE: DEFENDANT'S MOTION TO DISMISS 
RONALD S.W. LEW, Senior District Judge.
Currently before the Court is Defendant Titan Enterprise Inc.'s ("Defendant" or "Titan") Motion to Dismiss  ("Motion") pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant's Motion  arises out of Plaintiff Ford Motor Company's ("Plaintiff" or "Ford") Action [1, 23] against Titan for breach of contract.
The Court, having reviewed all papers submitted and pertaining to this Motion , NOW FINDS AND RULES AS FOLLOWS: The Court DENIES Defendant's Motion to Dismiss .
A. Factual Background
Plaintiff Ford is incorporated in Delaware with its principal place of business in Michigan. First Amend. Compl. ("FAC") ¶ 1, ECF No. 23. Defendant Titan is incorporated in California with its principal place of business in California. Id. ¶ 2. Plaintiff is seeking $823, 000 in damages. Id. ¶ 31.
Ford's Competitive Price Allowance Program ("CPA") is an incentive program that encourages high volume purchases by offering "discounts or credits to qualified high-volume purchasers of Ford vehicles through the Ford Fleet Program." Id. ¶¶ 8-9. Ford and Titan executed a CPA contract on September 18, 2013, for the 2014 Program Year. Id. ¶ 10. In exchange for discounts on Titan's purchases, the CPA contract states: "Titan Enterprise Inc. must acquire 250 units during the course of the program year [i.e., the calendar year], " and "[i]n the event this volume has not been reached, you will be required to reimburse Ford all or a portion of the CPA funds paid." Id. ¶ 14 (alteration in original). The CPA contract also contained terms requiring the purchased Ford vehicles to be registered and operated "solely in the United States." Id. ¶ 15.
In early 2014, Defendant Titan purchased over seventy Ford Explorers from a licensed Ford dealer in California named Rush Truck Centers of California, Inc. ("Rush"). Id. ¶ 18. Titan received a total of $322, 500 in discounts from Ford as a result of its purchase from Rush. Id. Titan also purchased over one hundred Ford Explorers from AutoNation Ford Littleton, a licensed Ford dealer in Colorado. Id. ¶ 19. As a result of this purchase, Titan received $500, 500 in discounts from Ford. Id.
In May of 2014, "Ford personnel verified that dozens of Ford Explorers purchased by Titan pursuant to the CPA Contract were  found at a port of entry in mainland China." Id. ¶ 20. On June 17, 2014, Jim Chen, president of Titan, allegedly "admitted to Ford that he exported to China some or all of the Ford Explorers Titan purchased pursuant to the CPA Contract." Id. ¶ 23. Titan also failed to purchase 250 Ford vehicles within the program year, as required by the CPA contract. Id. ¶ 21.
B. Procedural Background
Plaintiff filed its Complaint  on October 3, 2014, and timely filed its First Amended Complaint  on January 27, 2015. On February 17, 2015, Defendant timely filed the present Motion to Dismiss . On February 27, 2015, Plaintiff Ford timely filed its Opposition . Defendant did not file a Reply before the March 10, 2015, deadline and, to date, has not filed a Reply. The present Motion  was set for hearing on March 24, 2015, and taken under submission  on March 18, 2015.
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Dismissal can be based on a "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 must "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) (internal quotation marks omitted); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) ("While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do." (internal citations omitted)).
In a Rule 12(b)(6) motion to dismiss, a 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). The question presented by a motion to dismiss is not whether the plaintiff will ultimately prevail, but whether the plaintiff has alleged sufficient factual grounds to support a plausible claim to relief such that plaintiff is entitled to offer evidence in support of its claim. Iqbal, 556 U.S. at 678; Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002).
A. Breach of Contract Claim
The four elements of a breach of contract claim under California law are: "(1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff." Richman v. Hartley, 169 Cal.Rptr.3d 475, 478 (Ct. App. 2014) (citing Careau & Co. v. Sec. P. Bus. Credit, Inc., 272 Cal.Rptr. 387, 395 (Ct. App. 1990)).
1. The Contract
Here, Defendant does not dispute the existence of the CPA Contract, and Plaintiff alleges sufficient facts showing the existence of a contract between Ford and Titan. Opp'n 6:16-7:8; FAC ¶¶ 10-19; see Cal. Civ. Code § 1550.
2. Plaintiff's Performance or Excuse
Once a valid contract exists, both parties are required to perform according to the terms of the agreement. Palmquist v. Palmquist, 27 Cal.Rptr. 744, 753 (Ct. App. 1963). Here, Defendant Titan does not dispute that Ford performed according to the terms of the CPA Contract, and Ford has sufficiently alleged its performance. See FAC ¶¶ 13-14, 18-19.
Non-performance of the contract terms constitutes a breach of contract. Zee Med. Distrib. Ass'n, Inc. v. Zee Med., Inc., 94 Cal.Rptr.2d 829, 836 (Ct. App. 2000). Here, Plaintiff alleges that Defendant Titan had a duty under the CPA Contract to purchase at least 250 Ford vehicles during the course of the program year, and to register and operate the purchased Ford vehicles solely in the United States. FAC ¶¶ 14-15. Ford alleges that Titan failed to perform both duties by Titan's failure to purchase the required 250 Ford vehicles and to register and operate the purchased Ford vehicles solely in the United States. FAC ¶¶ 20-23. As such, Plaintiff has sufficiently alleged that Titan breached the CPA Contract.
The final element of a breach of contract claim requires that Plaintiff show damages. Emerald Bay Cmty. Assn. v. Golden Eagle Ins. Corp., 31 Cal.Rptr.3d 43, 52 (Ct. App. 2005). Here, Plaintiff alleges it was damaged in the amount of $823, 000 because Titan refused to return the $823, 000 in discounts, to which Titan is allegedly no longer entitled as a result of Titan's breach of the CPA Contract. FAC ¶ 24.
In light of the above analysis, Plaintiff has sufficiently alleged a breach of contract claim upon which Plaintiff may recover.
B. Defendant's Affirmative Defenses
"[T]he assertion of an affirmative defense may be considered properly on a motion to dismiss where the allegations in the complaint suffice to establish' the defense." Sams v. Yahoo! Inc., 713 F.3d 1175, 1179 (9th Cir. 2013) (citing Jones v. Bock, 549 U.S. 199, 215 (2007)); see also Asarco, LLC v. Union P. R.R. Co., 765 F.3d 999, 1004 (9th Cir. 2014) ("Dismissal under Rule 12(b)(6) on the basis of an affirmative defense is proper only if the defendant shows some obvious bar to securing relief on the face of the complaint."). But a dismissal under Rule 12(b)(6) is improper if the asserted affirmative defense raises disputed issues of fact. Asarco, 765 F.3d at 1004 (citing Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984)).
1. Meaning of Contract Term Requiring Purchased Vehicles to be Registered and Operated Within the United States
Defendant argues that the "term that the Vehicles must be registered and operated solely in the United States, ' does not preclude TITAN for [sic] exporting the vehicles for sale." Mot. 11:6-9. Defendant is essentially disputing the meaning of a term of the CPA Contract. The Court need not consider Defendant's argument, however, because even if Defendant's interpretation of the CPA Contract is correct, Plaintiff could still recover under its breach of contract claim on the basis of Defendant's alleged failure to purchase the requisite 250 vehicles within the program year.
Because Defendant's affirmative defense fails to preclude Plaintiff's recovery for its breach of contract claim, this affirmative defense fails to justify dismissal pursuant to Fed.R.Civ.P. 12(b)(6).
2. Enforceability of Contract Due to Alleged Restraint on Trade
Defendant argues that the "export prohibition" in the CPA Contract is unenforceable because it is an "undue restraint of trade" on Titan, preventing Titan "from disposing of lawfully acquired vehicles." Mot. 9:24-10:1. If Defendant is correct in arguing that the export clause is an undue restraint of trade, the Court would sever the clause from the rest of the CPA Contract. See Adair, 77 Cal.Rptr.3d at 73-74 ("It is settled that where a contract has both void and valid provisions, a court may sever the void provision and enforce the remainder of the contract.").
Thus, even if the export clause is severed from the CPA Contract, the rest of the CPA Contract would be enforceable, and Defendant Titan could still be liable for breach of contract for failing to purchase the required 250 Ford vehicles within the program year. Because Plaintiff is not precluded from recovery by this affirmative defense, this affirmative defense also fails to justify dismissal under Fed.R.Civ.P. 12(b)(6).
Because Defendant has not shown that Plaintiff's First Amended Complaint  fails to state a claim upon which relief can be granted, see Fed.R.Civ.P. 12(b)(6), Defendant's Motion  must be DENIED.
For the foregoing reasons, Defendant Titan's Motion to Dismiss  is HEREBY DENIED.
IT IS SO ORDERED.