United States District Court, E.D. California
ROBIN RUMBAUGH, TRUSTEE OF THE EDITH AND JAMES HARLEY TRUST DATED AUGUST 31, 1981, Plaintiff,
CYNTHIA HARLEY, CYNTHIA HARLEY, TRUSTEE OF THE HARLEY FAMILY TRUST U/D/T/ DATED DECEMBER 15, 1988, AND DOES I THROUGH X, Defendant.
moves to dismiss and separately moves to strike portions of
plaintiff's first amended complaint. Plaintiff opposes
both motions. As explained below, the court GRANTS the motion
to dismiss and DENIES the motion to strike as MOOT.
August 31, 1981, grantors Edith Harley and James Harley
created the Edith S. Harley and James M. Harley Trust. First.
Am. Compl. (“FAC”), ECF No. 25, ¶¶ 2,
6. When James Harley died on October 29, 1987, the Trust
agreement provided for the establishment of the Edith S.
Harley Survivor Trust, which is revocable, and the James M.
Harley Residual Trust, which is irrevocable. Id.
¶ 6. On October 22, 2008, Edith Harley resigned as
trustee of the Survivor and Residual Trusts, and her son,
Richard Harley, was appointed successor trustee of both
Trusts. Id. Richard Harley died unexpectedly on
October 4, 2014. Id. ¶ 7. Edith Harley was
unable to act as trustee of the Trusts. Id.
Accordingly, Edith's daughter, plaintiff Robin Rumbaugh,
filed a petition to confirm trustee in the First Judicial
District of the State of Nevada, requesting the court appoint
Rumbaugh as the successor trustee of the Trusts. Id.
On November 17, 2015, that court appointed Rumbaugh trustee.
unspecified date after Richard's death, Rumbaugh learned
that assets of the Trusts were in defendant Cynthia E.
Harley's possession, either in Harley's capacity as
trustee of the Harley Family Trust U/D/T dated December 15,
1988, or personally. Id. ¶ 8. That property
consists of: (1) real property located at 22532 Phoenix Lake
Road, Sonora, California, which plaintiff alleges “was
purchased by Defendant with cash belonging to Plaintiff,
” and (2) $523, 868.46 in cash. Id. ¶
an unspecified date, but after Rumbaugh was appointed trustee
on November 17, 2015, Rumbaugh requested that Harley return
the trust assets. Id. ¶ 9. Harley agreed and
retained counsel to assist her in returning the property, and
the parties arranged for the return to take place no later
than February 28, 2017. Id. ¶¶ 9, 13. Upon
Harley's request, Rumbaugh agreed that Harley's son
and his family could reside on the Sonora property until that
date. Id. ¶ 16.
September 12, 2016 email, Harley's counsel proposed that
Harley return the property to Rumbaugh and resolve any claims
Rumbaugh had against Harley. Id. ¶ 14. The
parties then prepared a proposed written agreement for the
return of the property. Id. ¶ 15. On November
4, 2016, Harley's counsel sent Rumbaugh's counsel an
email with proposed changes to the draft settlement
agreement. Id. ¶ 15. On February 14, 2017,
Harley's counsel advised Rumbaugh for the first time that
Harley would not return the property. Id. ¶ 17.
Harley never signed the agreement. Id. ¶ 15. On
September 22, 2017, Rumbaugh filed this suit. See
Compl., ECF No. 1.
initial complaint, Rumbaugh alleged conversion, unjust
enrichment, constructive trust and money had and received.
Id. ¶¶ 11-32. The court granted
Harley's motion to dismiss that complaint in its
entirety, finding Rumbaugh's claims were time-barred
under California Code of Civil Procedure section 366.2,
which required Rumbaugh to file all claims arising from
Richard's misconduct within one year of his death. Prior
Order, ECF No. 24. In that order, the court found equitable
estoppel did not render Rumbaugh's claims timely, as the
statute of limitations expired on October 4, 2015, one year
after Richard's death, and Rumbaugh alleged she relied on
Harley's promise to return the property only as early as
November 2015, after the statute of limitations had expired.
Id. at 10-18. Noting unjust enrichment is not a
standalone claim but may be construed as a quasi-contract
claim for restitution, the court granted Rumbaugh leave to
amend her claim for unjust enrichment, as she “may be
able to provide greater clarity with respect to . . . the
extent she could not have sued Richard for the same
misconduct . . . .” Id. at 15-16. Applying
similar reasoning, the court also granted Rumbaugh leave to
amend her claim of money had and received. Id. at
filed her first amended complaint on September 11, 2018,
bringing a single quasi-contract claim for restitution. FAC
¶¶ 11-22. Harley again moves to dismiss the
complaint in its entirety, arguing Rumbaugh's claim is
barred by California Code of Civil Procedure section 366.2
and that Rumbaugh cannot sufficiently allege the necessary
elements of a quasi-contract claim. Mot. to Dismiss
(“Mot.”), ECF No. 32-1. Rumbaugh opposes,
Opp'n, ECF No. 36, and Harley filed a reply, Reply, ECF
No. 41. Harley also moves to strike portions of
Rumbaugh's first amended complaint that, according to
Harley, improperly “pertain to settlement
discussions.” ECF No. 33-1 at 2. Rumbaugh opposes that
motion, ECF No. 37, and Harley has replied, ECF No. 42. After
hearing argument on both motions, the court submitted the
motions and resolves them here.
Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
party may move to dismiss a complaint for “failure to
state a claim upon which relief can be granted.” A
court may dismiss “based on the lack of 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 need contain only “a short and plain
statement of the claim showing that the pleader is entitled
to relief, ” Fed.R.Civ.P. 8(a)(2), in order to survive
a motion to dismiss this short and plain statement
“must contain sufficient factual matter . . . to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A complaint must include something
more than “an unadorned,
the-defendant-unlawfully-harmed-me accusation” or
“‘labels and conclusions' or ‘a
formulaic recitation of the elements of a cause of
action.'” Id. (quoting Twombly,
550 U.S. at 555). Determining whether a complaint will
survive a motion to dismiss for failure to state a claim is a
“context-specific task that requires the reviewing
court to draw on its judicial experience and common
sense.” Id. at 679. Ultimately, the inquiry
focuses on the interplay between the factual allegations of
the complaint and the dispositive issues of law in the
action. See Hishon v. King & Spalding, 467 U.S.
69, 73 (1984).
making this context-specific evaluation, this court must
construe the complaint in the light most favorable to the
plaintiff and accept as true the factual allegations of the
complaint. Erickson v. Pardus, 551 U.S. 89, 93-94
(2007). This rule does not apply to “‘a legal
conclusion couched as a factual allegation, '”
Papasan v. Allain, 478 U.S. 265, 286 (1986)
quoted in Twombly, 550 U.S. at 555, nor to
“allegations that contradict matters properly subject
to judicial notice” or to material attached to or
incorporated by reference into the complaint. Sprewell v.
Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir.
2001). A court's consideration of documents attached to a
complaint or incorporated by reference or matter of judicial
notice will not convert a motion to dismiss into a motion for
summary judgment. United States v. Ritchie, 342 F.3d
903, 907-08 (9th Cir. 2003); Parks Sch. of Bus. v.
Symington, 51 F.3d 1480, 1484 (9th Cir. 1995);
compare Van Buskirk v. Cable News Network, Inc., 284
F.3d 977, 980 (9th Cir. 2002) (noting that even though court
may look beyond pleadings on motion to dismiss, generally
court is limited to face of the complaint on 12(b)(6)
quasi-contract claim seeking restitution is not based on a
“true contract, ” but instead arises from
“an obligation . . . created by the law without regard
to the intention of the parties, and is designed to restore
the aggrieved party to his or her former position by return
of the thing or its equivalent in money.” 1 Witkin,
Summary 11th Contracts § 1050, Nature of Restitution
(2018). Restitution is the remedy for a defendant's
unjust enrichment, which occurs when “a defendant has
been unjustly conferred a benefit ‘through mistake,
fraud, coercion, or request.'” Astiana v. Hain
Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015)
(quoting 55 Cal. Jur. 3d Restitution § 2). A
quasi-contract claim requires: “(1) a defendant's
receipt of a benefit and ...