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House of Lebanon Organization, Inc. v. House of Pacific Relations International Cottages. Inc.

United States District Court, S.D. California

June 1, 2017

HOUSE OF LEBANON ORGANIZATION, INC., Plaintiff,
v.
HOUSE OF PACIFIC RELATIONS INTERNATIONAL COTTAGES. INC., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION [DOC. 7] TO DISMISS

          M. James Lorenz Judge.

         Pending before the Court is Defendants'[1] motion to dismiss Plaintiff House of Lebanon's (“Plaintiff”) first amended complaint. The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). For the reasons stated below, the Court GRANTS IN PART and DENIES IN PART Defendants' motion.

         I. Background

         This case arises out of a dispute involving a project to construct new cottages in Balboa Park. The cottages at issue are run by non-profit organizations with an aim toward educating the public about the culture of various foreign countries. Each cottage, it seems, is to be operated by a member of Defendant House of Pacific Relations International Cottages (“HPR”). Plaintiff is a member of HPR. Along with eight other HPR members, all of whom are defendants[2] in this action, Plaintiff sought to occupy one of nine cottages to be constructed in a proposed HPR expansion project (the “Project”) in Balboa Park.

         In its effort to gain inclusion into the Project, Plaintiff (1) organized as a non-profit entity; (2) became a member of HPR; (3) paid HPR over $34, 000; and (4) prepared paperwork for presentation to the City of San Diego, the San Diego Planning Commission, and the Balboa Park Committee. Furthermore, some or all of the defendants in this case represented to Plaintiff that they would permit Plaintiff to participate in the Project. In reliance upon these representations made by unspecified defendants, Plaintiff communicated its support of the project to the San Diego City Council. Subsequently, City Council approved the project, but Defendants excluded Plaintiff from participating in the Project.

         Accordingly, Plaintiff filed an amended complaint in the Superior Court of California, County of San Diego, alleging (1) discrimination in violation of 42 U.S.C. § 1981; (2) a right to declaratory relief; (3) breach of contract; (4) breach of the implied covenant of good faith and fair dealing; (5) ultra vires action; (6) fraud; (7) negligent misrepresentation; (8) a right to an inspection and accounting; and (9) violation of California Business and Professions Code § 17200. (See FAC [Doc. 1-2].) Defendants removed to this Court and now move to dismiss under Fed.R.Civ.P. 12(b)(6). (See Rem. Not. [Doc. 1]; MTD [Doc. 7]; Joinder [Doc. 8].) Plaintiff opposes. (See Opp'n [Doc. 11].)

         II. Legal Standard

         The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n., 720 F.2d 578, 581 (9th Cir. 1983). The court must assume the truth of all factual allegations and “construe them in the light most favorable to [the nonmoving party].” Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002); see also Walleri v. Fed. Home Loan Bank of Seattle, 83 F.2d 1575, 1580 (9th Cir. 1996).

         As the Supreme Court explained, “[w]hile 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 ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (internal citations and quotation marks omitted). Instead, the allegation in the complaint “must be enough to raise a right to relief above the speculative level.” Id. at 1965. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

         III. Count 1

         Count 1 of Plaintiff's Amended Complaint alleges a violation of 42 U.S.C. § 1981.

§ 1981 provides that All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

42 U.S.C. § 1981(a). The Supreme Court has articulated that § 1981 forbids only racial discrimination in the making of contracts. Saint Francis College v. Al-Khazraji, 481 U.S. 604, 609 (1987). § 1981 does not prohibit discrimination on the basis of national origin in the making of contracts. Id. at 613. Here, Plaintiff explicitly bases its § 1981 claim on national origin discrimination. (FAC ¶ 29). Indeed, the Amended Complaint does not even state the racial ancestry of Plaintiff's members. Nor does it allege how any discrimination it suffered was based on the race of its members. Accordingly, the Court GRANTS WITHOUT PREJUDICE Defendants' motion as to the § 1981 claim.

         IV. Counts ...


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