Bishay v. Icon Aircraft, Inc.

          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, ...