United States District Court, S.D. California
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AMENDED COUNTERCLAIM FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED AND TO STRIKE
BARRY TED MOSKOWITZ, Chief District Judge.
On February 25, 2015, Plaintiff/Counter-Defendant Bear, LLC, ("Bear") filed a Motion to Dismiss, Doc. 14, Defendant/Counter-Plaintiff, Marine Group Boat Works, LLC's ("MGBW") Counterclaim, Doc. 8. MGBW then filed an Amended Counterclaim, Doc. 18, to which Bear filed an Amended Motion to Dismiss and to Strike, Doc. 23, rendering the prior motion moot. For the reasons discussed below, Bear's Amended Motion to Dismiss and to Strike is DENIED IN PART and GRANTED IN PART.
In May of 2014, Bear's 102 foot, 260-gross ton motor vessel ("the Polar Bear " or "the yacht"), ran aground in San Diego Harbor. Doc. 1, Complaint ("Compl."), ¶¶ 2, 9, 10. The incident dented the bottom of the hull, damaged the port and starboard sides of the keel, and damaged the aft port stabilizer shaft. Id. at ¶ 9. Though no longer seaworthy, the damaged Polar Bear managed to sail to MGBW's boatyard for repairs. Id. at ¶ 10.
Before the yacht was hauled out of the water, MGBW's Project Manager, Eric Lundeen, asked the Polar Bear 's captain, Roger Trafton, to sign a one-page, double sided, form entitled Work Order (the "Contract"), which described the services to be performed as "Haul Out, Block & Launch, " to be completed at a flat rate of $3, 500, and a "lay day charge @ $2.00/per ft/per day. No charge for day of haul out and day of launch." Id. at ¶ 12; Doc. 1-2, at 1; Doc. 18-1, at 1. Bear maintains that Trafton signed the Contract on May 7, 2014, without seeing or discussing the terms on the reverse side, Compl., ¶¶ 13-14; Doc. 1-2, at 2; Doc 18-1 at 2, and that some of those terms are unenforceable. Compl., ¶¶ 17-18.
Bear asserts that after the yacht was lifted and the damage further surveyed, the parties orally agreed that the repairs would total $169, 233.00, and that all work would be completed by MGBW. Compl., ¶ 24. That price was memorialized in writing as Change Order #1002. Doc. 18-1, at 4. The parties then mutually agreed to amend the Contract with eight additional Work Order/Change Orders (the "amendments"). Doc. 18-1. Plaintiff alleges that sometime in May or June 2014, MGBW retained Universal Steel Fabrication, Inc. ("USF"), to perform repairs on the Polar Bear. It is undisputed that on June 19, 2014, the Polar Bear was rendered a total loss by fire. Compl., ¶ 27; Doc. 29, at 2. The cause of the fire remains contested. While MGBW alleges that the fire's cause is unknown, Bear asserts that the yacht caught fire when USF was grinding or welding steel panels on its port side. Comp., ¶ 34; Doc. 18, at 20, ¶ 10.
II. LEGAL STANDARD
A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). Dismissal under Rule 12(b)(6) for failure to state a claim is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). However, this principle is inapplicable to legal conclusions and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, " are not taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although the court is generally confined to consideration of the allegations in the pleadings, when the complaint is accompanied by attached documents, such documents are deemed part of the complaint and may be considered in evaluating the merits of a Rule 12(b)(6) motion. See Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).
MGBW's Amended Counterclaim, Doc. 18, contains a claim of breach of contract, two common counts claiming debts owed on an open book account and an account stated in writing, and a quantum meruit claim for work, labor and services provided. Bear argues that the common counts fail because MGBW must plead on the Contract, and that the contract claim also fails because it is internally conflicting and insufficiently specific. Doc. 23-1, at 2. Bear also moves the Court to strike MGBW's allegations of the reasonable value of services provided. Id.
A. Breach of Contract
Count IV of MGBW's Amended Counterclaim claims that Bear breached the May 7, 2014 Contract. To state a claim for breach of contract under California law, a plaintiff must plead four elements: "(1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach." CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239 (2008).
Bear argues that MGBW has failed to sufficiently plead a breach of contract because MGBW has not, and cannot, satisfy the second element. To satisfy that element, MGBW raises the impossibility of performance defense, which in maritime law includes those cases where performance might be so difficult and expensive that it may be described as "impracticable." Hellenic Lines, Ltd. v. United States, 512 F.2d 1196 (2d Cir. 1975). However, only a promisor who is faultless in causing the condition of impossibility or frustration of contractual purpose and is harmed thereby, can raise that defense. See 20th Century Lites, Inc. v. Goodman, 64 Cal.App.2d Supp. 938, 940-41 (Cal.App. Dep't Super. Ct. 1944); Rains v. Arnett, 189 Cal.App.2d 337, 347-48 (Ct. App. 1961). In this case, MGBW denies that the fire which made further contractual performance allegedly impossible or impracticable resulted from its negligence or gross negligence. Doc 18, ¶ 27-28; Doc. 29, at 5.
However, the Court need not reach the issue of impossibility of performance at the pleading stage. Even where full contractual performance remains technically possible, some California courts have applied the equitable doctrine of commercial frustration of contract if the principal reason the parties entered into the agreement has been frustrated. See Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga, 175 Cal.App.4th 1306, 1336 (2009). Under this doctrine, a "promisor seeking to excuse himself from performance of his obligations [must] prove that the risk of the frustrating event was not reasonably foreseeable and that the value of counter performance is totally or nearly totally destroyed." Waegemann v. Montgomery Ward & Co., ...