United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND
MOTION TO STRIKE RE: DKT. NOS. 7, 8
KANDIS
A. WESTMORE, UNITED STATES MAGISTRATE JUDGE
Plaintiff
S and V LLC filed the instant case against Defendant
Lowe's Home Centers, LLC, asserting claims related to the
Easements, Covenants, Conditions, and Restrictions
(“ECCRs”) that govern the use of certain real
property. (Compl., Dkt. No. 1-1.) Pending before the Court
are Defendant's motion to dismiss and Defendant's
motion to strike the attorney's fee demand. (Def.'s
Mot. to Dismiss, Dkt. No. 7; Def.'s Mot. to Strike, Dkt.
No. 8.) Having considered the parties' filings, the
relevant legal authorities, and the arguments made at the
December 19, 2019 hearing, the Court GRANTS Defendant's
motions.
I.
BACKGROUND
Plaintiff
and Defendant each own real property in the Commercial Center
in Dublin, California. (Compl. ¶¶ 1, 13.) The
Commercial Center is made up of five legal parcels, one of
which is owned by Defendant. (Compl. ¶ 15.) The
Commercial Center also includes Lot E, which is owned by
Plaintiff and currently undeveloped. (Compl. ¶¶
15-16.)
The
Commercial Center is governed by the November 17, 2006 ECCRs
between Plaintiff and Defendant. (Compl. ¶ 2.) The ECCRs
identify three sets of uses: (1) uses that are automatically
permitted, (2) uses that are permitted with Defendant's
written permission, and (3) uses that are never permitted.
(Compl. ¶ 18.) Specifically, ECCR § 3.3(a) states:
“no portion of the [Commercial] Center may be used for
any of the following purposes without the written consent
from all of the Consenting Parties, ” including
theaters, health clubs, car dealerships, and hotels. (Compl.,
Exh. 3 (“ECCR”).) ECCR § 3.3(b), in turn,
identifies uses that “no portion of the [Commercial]
Center may at any time be used for . . . whatsoever.”
Plaintiff
alleges that Defendant has violated its obligations under the
ECCRs by “either not respond[ing] or automatically
reject[ing] proposed uses that require [Defendant]'s
consent.” (Compl. ¶ 21.) For example, in June
2017, Plaintiff proposed a hotel for Lot E, which Defendant
rejected without any explanation. (Compl. ¶ 22.) In
April 2019, Plaintiff proposed a Volvo dealership for Lot E.
(Compl. ¶ 24.) Defendant did not respond to Plaintiff
until a final demand was made, at which point Defendant
stated: “under no circumstances would Lowes approve a
car dealership.” (Compl. ¶ 25.)
On July
24, 2019, Plaintiff sent Defendant a notice of breach,
complaining of Defendant's failure to study, analyze, or
investigate the proposed project. (Compl. ¶ 26.)
Specifically, Plaintiff asserted that: (1) Defendant had not
articulated any material negative impact that Defendant would
suffer, (2) Defendant had refused to respond directly to the
buyer's attorney or Plaintiff to discuss the benefits of
the project, (3) Defendant had refused to meet with the
buyer's attorney regarding the scope of the project, and
(4) Defendant had informed the City of Dublin that Defendant
would not approve a car dealership under any circumstances.
(Compl. ¶ 26.)
On
August 21, 2019, Plaintiff filed the instant suit in state
court. First, Plaintiff asserts a claim for declaratory
relief that Defendant's “habitual failure to abide
by its duties of good faith and fair dealing render the ECCRs
approval process inequitable and oppressive, ” such
that it is necessary for the Court to “consider
striking the provision at issue so as to no longer allow
[Defendant] to continue to breach its obligations under the
ECCRs.” (Compl. ¶¶ 32, 37.) Second, Plaintiff
asserts a claim for cancellation and removal of cloud on
title, based on “Section 3.3(b)[1] of the ECCRs . . . creating
a cloud on title by preventing the property from being sold
or developed.” (Compl. ¶ 41.) Third, Plaintiff
asserts a claim for breach of good faith and fair dealing
based on Defendants' “arbitrarily withhold[ing]
consent under the ECCRs” when it should otherwise
“act reasonably” and approve a use if it
“will benefit the Commercial Center.” (Compl.
¶ 44.) Finally, Plaintiff asserts a claim for injunctive
relief based on “Defendant's wrongful and
continuing interference.” (Compl. ¶ 51.)
On
October 16, 2019, Defendant removed the case to federal
court. (Dkt. No. 1.) On October 23, 2019, Defendant filed a
motion to dismiss and a motion to strike the demand for
attorney's fees. On November 6, 2019, Plaintiff filed an
opposition to the motion to dismiss. (Pl.'s Opp'n,
Dkt. No. 13.) On November 13, 2019, Defendant filed its
reply. (Def.'s Reply, Dkt. No. 15.) As of the date of
this order, Plaintiff has not filed an opposition to the
motion to strike.
II.
LEGAL STANDARD
A.
Motion to Strike
Federal
Rule of Civil Procedure 12(f) provides that, on its own or on
a motion from a party, a “court may strike from a
pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.”
“The purposes of a Rule 12(f) motion is to avoid
spending time and money litigating spurious issues.”
See Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527
(9th Cir. 1993), rev'd on other grounds, 510
U.S. 517 (1994).
B.
Motion to Dismiss
Under
Federal Rule of Civil Procedure 12(b)(6), a party may file a
motion to dismiss based on the failure to state a claim upon
which relief may be granted. A motion to dismiss under Rule
12(b)(6) tests the legal sufficiency of the claims asserted
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