United States District Court, E.D. California
ORDER
Plaintiff
alleges he entered into a contract to purchase a limited
edition aircraft from defendant, but defendant has refused to
honor the parties' agreement. Defendant now moves to
dismiss plaintiff's first amended complaint. As explained
below, the court GRANTS the motion.
I.
BACKGROUND
The
court set forth the relevant facts in its order on the
defendant's first motion to dismiss and incorporates them
by reference here. Order, ECF No. 18.
In that
order, the court dismissed plaintiff's breach of contract
claim for failure to allege facts showing the
unenforceability of the limitation of liability clause in
either of the parties' two agreements. Order at 8. The
court dismissed the CLRA and UCL claims for failure to plead
facts supporting fraud claims with particularity as required
by Federal Rule of Civil Procedure 9(b). Id. at 11.
At hearing on the first motion, plaintiff indicated he
intended to pursue the CLRA and UCL claims under a theory of
unfairness and deceit instead of fraud. Id. at 10.
In its order on the first motion to dismiss, the court
explained that a first amended complaint should clearly
allege as much and include supporting facts. Id. at
10.
In his
first amended complaint (“FAC”), plaintiff has
alleged the limitation of liability provision in the
agreements is unenforceable in that “it falls
dramatically outside the reasonable expectations of the
parties at the time they entered into the agreement and its
application here, ” and is therefore unconscionable.
FAC ¶ 43. He also alleges the limitation of liability
provision is contrary to public policy “as it attempts
to relieve ICON of all liability, including for intentional
conduct.” Id. Plaintiff further claims he was
not represented by counsel at the signing of either the first
or second deposit agreement, and “there was no
opportunity to negotiate the terms” of either
agreement. Id. ¶¶ 10, 20.
Plaintiff
further alleges he read articles in a magazine and on the
internet that “reflected representations made by ICON
about the A5 aircraft, including the Founder's Edition
model.” Id. ¶ 8, Ex. A. Attached as
Exhibit A to the first amended complaint are two articles
about the ICON A5 from the websites Graphic News and New
Atlas. Id. Plaintiff does not allege either website
was controlled or directed by ICON in the making or
publishing of representations about the A5 in those articles.
Rather, plaintiff alleges that ICON “informed the
public that it was developing and manufacturing the A5
aircraft, and that the plane was being offered for $135, 000.
It also spread the news about its Founders Edition program,
allowing those willing to make an early deposit of $100, 000
the opportunity to secure one of the first 100 limited
edition A5 aircraft.” Id. ¶ 47. Plaintiff
alleges that “ICON individually communicated the same
information to Plaintiff, encouraging him to become one of
the Founders Edition investors so he could receive a unique
A5 aircraft at the ‘fixed' price of $135,
000.” Id. ¶ 48. Supporting his claim for
a violation of California Business & Professions Code
section 17200, [1] plaintiff alleges, “ICON released
information to the public to induce early investors to make
down-payments toward one of the first 100 limited edition A5
aircraft when manufactured. ICON either intentionally mislead
[sic] investors or carelessly disregarded the reliance these
investors placed on its' representations about the
aircraft and the advertised price[.]” Id.
¶ 58.
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 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 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).
In
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)
motion).
III.
DISCUSSION
A.
Breach of Contract
As the
court discussed in its first order, “contractual
limitation of liability clauses are enforceable unless they
are unconscionable, that is, the improper result of unequal
bargaining power or contrary to public policy.”
Food Safety Net Servs. v. Eco Safe Sys. USA, Inc.,
209 Cal.App.4th 1118, 1126 (2012); see also 1
Witkin, Summary 11th Contracts § 697 (2019) (collecting
cases).
Unconscionability
is comprised of two elements, procedural unconscionability
and substantive unconscionability. Baltazar v. Forever
21, Inc., 62 Cal.4th 1237, 1243 (2016), citing
Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109,
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