S and V LLC v. Lowe's Home Centers, LLC

          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 ...