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Moreland Apartments Associates v. LP Equity LLC

United States District Court, N.D. California, San Jose Division

December 12, 2019

MORELAND APARTMENTS ASSOCIATES, et al., Plaintiffs,
v.
LP EQUITY LLC, Defendant.

          ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT'S ADMINISTRATIVE MOTION TO FILE PARTS OF ITS MOTION TO DISMISS UNDER SEAL RE: DKT. NOS. 27, 29

          EDWARD J. DAVILA, UNITED STATES DISTRICT JUDGE

         Plaintiffs Moreland Apartments Associates, Seaside Apartments Associates, and San Jose Apartments Associates allege that Defendant LP Equity misappropriated trade secrets, engaged in unfair competition, and intentionally interfered with contractual relations. See First Amended Complaint (“FAC”), Dkt. 25. The Court finds this motion suitable for consideration without oral argument. See N.D. Cal. Civ. L.R. 7-1(b). Having considered the Parties' papers, Defendant's motion to dismiss is GRANTED.

         I. BACKGROUND

         A. Factual Background

         Plaintiffs are limited partnerships formed in the 1980s to acquire real property in California and to “construct, own, hold, lease, and operate” apartment projects. FAC ¶¶ 9-11. Defendant purchases limited partnership interests. Id., Ex. A.

         In 2015, Defendant began soliciting some of Plaintiffs' limited partners, asking if they would be interested in selling their limited partnership interest. Id. ¶ 12; Id., Ex. A. As Exhibit A shows, the letters requested that the limited partner, if interested in selling their interest, send a K-1 form to Defendant. Id. ¶ 11; Id., Ex. A. Defendant specifically requested that interested limited partners “black out or remove [their] social security number on the K-1” form before mailing it to Defendant. Id., Ex. A. Allegedly, many of the limited partners are elderly, unsophisticated investors who are “ignorant of the[ir] investment, its value, and the tax implications associated with a sale of the security.” Id. ¶ 19. Plaintiffs contend that Defendant's solicitation was “aggressive [and] predatory.” Id. ¶¶ 12, 17.[1]

         Plaintiffs further allege that Defendant solicited limited partners in a manner that violated the partnership terms. Id. ¶ 22. The transfer of a limited partnership interest requires written approval of the general partners. Id. Despite knowing this, Defendant only solicited the limited partners to evade the terms of the limited partnership agreement and to coerce the limited partners to breach their contract with Moreland. Id.

         Plaintiffs contend that Defendant obtained the identities and personal information, i.e., home addresses, home and cellular phone numbers, and social security numbers, of Plaintiffs' limited partners through improper means. Id. ¶ 23. Plaintiffs argue that this information constitutes trade secrets. Id. ¶¶ 25-26. Plaintiffs further allege that Defendant engaged in malicious acts to purchase the limited partners' interests and that Defendant's solicitations were misleading. Id. ¶ 45. Lastly, Plaintiffs argue that Defendant intentionally disrupted the performance of Plaintiffs' limited partners under the partnership agreement. Id. ¶ 53.

         B. Procedural History

         On May 21, 2019, Plaintiffs filed their First Amended Complaint. See generally FAC. Defendant filed a Motion to Dismiss Plaintiffs' First Amended Complaint on June 4, 2019. Defendant's Motion to Dismiss (“Mot.”), Dkt. 29. On June 17, 2019, Plaintiffs filed an opposition. Moreland Apartments Associates et al.'s Opposition to Defendant's Motion to Dismiss (“Opp.”), Dkt. 30. Defendant filed its reply on June 24, 2019. Reply in Support of Defendant's Motion to Dismiss (“Reply”), Dkt. 31. Defendant also filed a motion to seal. See Administrative Motion to File Under Seal Documents in Support of Its Motion to Dismiss(“Admin Mot.”), Dkt. 27.

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (discussing Federal Rule of Civil Procedure 8(a)(2)). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. The requirement that the court must “accept as true” all allegations in the complaint is “inapplicable to legal conclusions.” Id. “[F]ormulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Legal conclusions, without more, give rise to “unwarranted inferences . . . insufficient to avoid a Rule 12(b)(6) dismissal.” Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009) (quotation marks and citation omitted).

         Dismissal can be 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). When a claim or portion of a claim is precluded as a matter of law, that claim may be dismissed pursuant to Rule 12(b). See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 975 (9th Cir. 2010) (discussing Rule 12(f) and noting that 12(b)(6), unlike Rule 12(f), provides defendants a mechanism to challenge the legal sufficiency of complaints).

         III. ...


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