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Bishay v. Icon Aircraft, Inc.

United States District Court, E.D. California

July 24, 2019

SAMER BISHAY, Plaintiff,
v.
ICON AIRCRAFT, INC., Defendant.

          ORDER

         Plaintiff alleges he entered into a contract and paid a $100, 000 down payment to purchase a limited edition aircraft from defendant, but defendant now refuses to honor the parties' agreement. Defendant moves to dismiss plaintiff's complaint. As explained below, the court GRANTS the motion.

         I. BACKGROUND

         Plaintiff Samer Bishay is a Canadian citizen. Compl., ECF No. 1, ¶ 2. Defendant ICON Aircraft, Inc. is a Delaware corporation with its headquarters and principal place of business in Vacaville, California. Id. ¶ 3. ICON manufacturers an experimental light-sport aircraft: the ICON A5. Id. ¶ 5. The A5 is a two-seat, light-sport aircraft designed to take off from and land on water. Id. ¶ 6. The A5 is the only product ICON manufactures and no other manufacturer makes a similar aircraft. Id. ¶¶ 6, 7.

         On February 14, 2011, plaintiff executed an ICON A5 Limited Edition Aircraft Deposit Agreement, under which plaintiff agreed to pay a $100, 000 deposit to ICON to purchase one of the first 100 limited edition A5s ICON would manufacture. Id. ¶ 8; Deposit Agreement, Compl. Ex. A, ECF No. 1-1. Under the deposit agreement, plaintiff would pay a total price of “$135, 000 Fixed” for his limited edition A5. Compl. ¶ 8. ICON countersigned the deposit agreement on February 23, 2011, and plaintiff wired his $100, 000 deposit to ICON's business operations account. Id. ¶ 10. Plaintiff was then assigned “purchase slot number 92.” Id. Plaintiff alleges on information and belief that “ICON solicited at least $10, 000, 000 in deposits from at least 100 potential purchasers (including Plaintiff), which money was deposited directly into its operating account and used as ‘seed money' for business development.” Id. ¶ 12.

         Under the deposit agreement, plaintiff agreed to pre-purchase a limited edition “Founder's edition A5, ” which would include “a specialized color scheme, unique badges and ‘fully-loaded' capabilities.” Id. ¶ 9. Under the parties' agreement, ICON would send plaintiff a purchase agreement when it began manufacturing his plane, which would require plaintiff to then make certain selections for his limited edition A5 and also pay the remaining purchase price. Id.

         ICON promised plaintiff and other purchasers of the first 100 Founder's Edition A5s that their aircrafts would be manufactured and delivered in 2011. Id. ¶ 11; but see Deposit Agreement § 2.2 (“ICON expects deliveries of the Aircraft to begin in 2011. Actual production and delivery dates may vary. The scheduled date of delivery for the Aircraft (“Delivery Date”) shall be determined by ICON.”). Plaintiff's A5 was not manufactured or delivered in 2011. Compl. ¶ 13.

         In 2015, though it still had not delivered plaintiff's or any other purchaser's aircraft, ICON contacted plaintiff to address “various revisions [ICON] wanted to make to [plaintiff's] deposit agreement, including (most importantly) an increase in the price of the aircraft.” Id. ¶ 14. On December 28, 2015, plaintiff and ICON executed the “ICON A5 Founder's Edition Amended and Restated Aircraft Deposit Agreement.” Id. ¶ 15; Amended Agreement, Compl., Ex. B, ECF No. 1-2, at 2 (“As a result of changes to ICON's aircraft design over time, including the expected incorporation into the base ICON A5 model of items previously understood to be options, ICON and Buyer desire to enter into this Deposit Agreement.”). Under the amended agreement, its terms would supersede and replace the original deposit agreement. Compl. ¶ 16; Amended Agreement at 2. The amended agreement did not require plaintiff to submit a further deposit, but instead applied his $100, 000 deposit under the original deposit agreement to the amended agreement. Compl. ¶ 17. The amended agreement also “purportedly” increased plaintiff's purchase price to “$220, 000 Fixed.” Id. ¶ 18. Plaintiff retained purchase position 92 of the first 100 aircraft produced. Id. He alleges on information and belief that all other deposit holders also executed new amended agreements substantively similar to the amended agreement plaintiff signed. Id. ¶ 21.

         Both the deposit agreement and amended agreement barred the parties from unilaterally cancelling the contract, instead providing the contract “remained in force until ICON sent Plaintiff a ‘Production Notice' indicating that his aircraft in purchase position 92 was about to commence manufacture.” Id. ¶ 22. Upon plaintiff's receipt of a production notice, he would have 21 days to cancel the contract and receive a full refund of his deposit or execute a purchase agreement. Id. ¶ 23. The purchase agreement would incorporate the terms of the deposit agreement and provide for payment of the remaining purchase price. Id.

         ICON never sent plaintiff a production notice. Id. ¶ 24. Relying on the deposit and amended agreement, however, plaintiff made arrangements for the eventual delivery of his aircraft, “including arranging for a United States registration number for the aircraft with the Federal Aviation Administration.” Id. ¶ 25.

         Plaintiff alleges on information and belief that ICON experienced manufacturing delays in 2016 and moved its headquarters and facility to Vacaville, California. Id. ¶ 26. On May 26, 2016, ICON's CEO, Kirk Hawkins, emailed plaintiff, “inform[ing] him that customer deliveries would be shifted again by another year.” Id. ¶ 26. On October 30, 2017, ICON emailed plaintiff, explaining ICON was increasing the purchase price again and plaintiff had “forfeited” his purchase position. Id. ¶ 27. Despite plaintiff informing ICON he was able and willing to pay the remaining purchase price of the aircraft, including the amount called for in the amended agreement, on an unspecified date, “ICON informed Plaintiff that it could no longer honor either the [deposit agreement] or the [amended agreement], and that the purchase price for the A5 aircraft was being increased to at least $352, 000 for all customers.” Id. ¶ 29. ICON informed plaintiff he could retain his purchase position only if he entered into a new deposit agreement and agreed to pay the new $352, 000 price. Id. ¶ 30. ICON stated it would refund plaintiff's deposit and cancel his contract if he did not agree to the new purchase price. Id. ¶ 30. Plaintiff rejected this offer and demanded in writing that ICON honor his contract without increasing the purchase price. Id. ¶ 31. ICON refused. Id.

         On January 28, 2019, plaintiff sued ICON, alleging breach of contract and seeking specific performance, violation of the California Consumer Legal Remedies Act (“CLRA”), California Civil Code section 1770, and unfair business practices (“UCL”) under California Business & Professions Code section 17200. Id. ¶¶ 32-53. ICON moves to dismiss the complaint, Mot., ECF No. 11, plaintiff opposes, Opp'n, ECF No. 13, and ICON filed a reply, Reply, ECF No. 15. The court submitted the motion after hearing and resolves it here.

         II. LEGAL STANDARD

         Under 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 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).

         Although 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 ...


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