1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 12 13 GREAT AMERICAN INSURANCE Case No.: 19-CV-1173-CAB-AHG COMPANY, 14 ORDER GRANTING DEFENDANTS’ Plaintiff, 15 MOTIONS TO DISMISS v. PLAINTIFF’S FOURTH CAUSE OF 16 ACTION AND REQUEST FOR VASQUEZ MARSHALL ARCHITECTS 17 PUNITIVE DAMAGES et al.,
18 Defendants. [Doc. Nos. 24, 26] 19
21 22 Before the Court are Defendant Vasquez Marshall Architects’ and Defendant BDS 23 Engineering, Inc.’s (collectively “Defendants”) motions to dismiss Plaintiff’s fourth cause 24 of action and request for punitive damages. [Doc. Nos. 24, 26.] The Court deems them 25 suitable for determination on the papers submitted and without oral argument. See S.D. 26 Cal. CivLR 7.1(d)(1). For the reasons set forth below, the Court grants Defendants’ 27 motions to dismiss Plaintiff’s fourth cause of action and request for punitive damages. 28 1 I. BACKGROUND 2 On September 30, 2014, KOO Construction, Inc. (“KOO”) entered into a 3 design/build contract (the “Prime Contract”) with the Navy for the P-888 Close Quarters 4 Dynamic Shooting Facility at Camp Michael Mansoor in Pine Valley, California (the 5 “Project”). [Doc. No. 23 at ¶ 21.2] KOO assigned to Plaintiff Great American Insurance 6 Company (“GAIC”) all of its claims referenced in Plaintiff’s First Amended Complaint 7 (“FAC”). [Id. at ¶ 3.] 8 According to the FAC, when KOO prepared its bid for the Prime Contract it entered 9 into conversations with its architectural and engineering consultants, Defendant Vasquez 10 Marshall Architects (“VMA”). [Id. at ¶ 22.] KOO discussed with VMA that the Project 11 would be a “balanced site,” where all the excavated materials removed from the “cut” areas 12 could be accommodated after compaction in the “fill” areas. [Id.] To achieve this, 13 Defendant VMA hired Defendant BDS Engineering, Inc. (“BDS”) as the civil engineer. 14 [Id.] Plaintiff relied on Defendants’ representations that no additional borrow material 15 would be needed to complete the final grading of the Project and entered into a grading 16 subcontract with Civil Prime General Engineering (“Civil Prime”) for the final grading. 17 [Id. at ¶¶ 43–46.] In February 2018, Civil Prime reported that the fill areas at a major 18 portion of the project were over 13,000 cubic yards short of fill. [Id. at ¶ 50.] Plaintiff 19 reported this shortage to Defendants and requested an investigation with regard to the 20 shortage of fill. [Id. at ¶ 51.] More than three months after discovery of the shortage, BDS 21 revealed to Plaintiff that no shrinkage factor was used in their calculations. [Id. at ¶ 53.] 22 According to Plaintiff, Defendants deliberately remained silent during the three-to-four- 23 month investigation period about failing to apply any shrinkage factor which led to 24 extended delays in completing critical grading operations and cost Plaintiff $726,042.91 in 25 26 27 1 The facts herein are derived from Plaintiff’s First Amended Complaint. [Doc. No. 23.] The Court is not making any findings of fact, but rather summarizing the relevant allegations of Plaintiff’s complaint. 28 1 order to bring in additional suitable material for final grading of the Project. [Id. at ¶¶ 54– 2 60.] 3 II. LEGAL STANDARD 4 To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain 5 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 6 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. 7 Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court “accept[s] factual allegations in the 8 complaint as true and construe[s] the pleadings in the light most favorable to the 9 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 10 (9th Cir. 2008). On the other hand, the Court is “not bound to accept as true a legal 11 conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678; see also Lee v. City of 12 Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001) (“Conclusory allegations of law are 13 insufficient to defeat a motion to dismiss”). Nor is the Court “required to accept as true 14 allegations that contradict exhibits attached to the Complaint or . . . allegations that are 15 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels- 16 Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). 17 When resolving a motion to dismiss for failure to state a claim, courts may not 18 generally consider materials outside the pleadings. See Schneider v. Cal. Dep’t of Corrs., 19 151 F.3d 1194, 1197 n.1 (9th Cir. 1998); Jacobellis v. State Farm Fire & Cas. Co., 120 20 F.3d 171, 172 (9th Cir. 1997); Allarcom Pay Television Ltd. v. Gen. Instrument Corp., 69 21 F.3d 381, 385 (9th Cir. 1995). “The focus of any Rule12(b)(6) dismissal . . . is the 22 complaint.” Schneider, 151 F.3d at 1197 n.1. “A court may, however, consider certain 23 materials—documents attached to the complaint, documents incorporated by reference in 24 the complaint, or matters of judicial notice—without converting the motion to dismiss into 25 a motion for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 26 2003). 27 Generally, when dismissing a complaint for failure to state a claim, the court should 28 deny opportunity to amend only if amendment would be futile. See Albrecht v. Lund, 845 1 F.2d 193, 195 (9th Cir. 1988) (dismissal without leave to amend is appropriate if 2 amendment “could not possibly cure the deficiency”), amended, 856 F.2d 111 (9th Cir. 3 1988). 4 III. DISCUSSION 5 Defendants move to dismiss Plaintiff’s fourth cause of action and request for 6 punitive damages for exceeding the Court’s Order granting leave to amend and for failure 7 to sufficiently plead a punitive damages claim. In opposition, Plaintiff contends it modified 8 its fourth cause of action within the scope of the Court’s Order in order to sufficiently plead 9 fraud. 10 A. Scope of Court’s Order Granting Leave to Amend 11 Plaintiff amended its fourth cause of action to allege Misrepresentation, 12 Concealment of Superior Information, and Deceit. [Doc. No. 23 at ¶¶ 82–94.] The Court 13 does not find Plaintiff’s amendment to be outside of the scope of the Court’s Order granting 14 leave to amend as Defendants suggest. Plaintiff’s amendment relates to the same set of 15 facts and conduct set forth or attempted to be set forth in Plaintiff’s original complaint and 16 the Court’s Order granting leave to amend did not foreclose amending any cause of action 17 to “sufficiently plead malice, oppression, or fraud.” [Doc. No. 22 at 8.] Under the amended 18 cause of action, Plaintiff seeks an award of punitive damages against Defendants for 19 essentially a fraudulent concealment. 20 B. Fraudulent Concealment and Request for Punitive Damages 21 California law authorizes exemplary damages “in an action for the breach of an 22 obligation not arising from contract, where it is proven by clear and convincing evidence 23 that the defendant has been guilty of oppression, fraud, or malice,” in addition to actual 24 damages. Cal. Civ. Code § 3294.
Free access — add to your briefcase to read the full text and ask questions with AI
1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 12 13 GREAT AMERICAN INSURANCE Case No.: 19-CV-1173-CAB-AHG COMPANY, 14 ORDER GRANTING DEFENDANTS’ Plaintiff, 15 MOTIONS TO DISMISS v. PLAINTIFF’S FOURTH CAUSE OF 16 ACTION AND REQUEST FOR VASQUEZ MARSHALL ARCHITECTS 17 PUNITIVE DAMAGES et al.,
18 Defendants. [Doc. Nos. 24, 26] 19
21 22 Before the Court are Defendant Vasquez Marshall Architects’ and Defendant BDS 23 Engineering, Inc.’s (collectively “Defendants”) motions to dismiss Plaintiff’s fourth cause 24 of action and request for punitive damages. [Doc. Nos. 24, 26.] The Court deems them 25 suitable for determination on the papers submitted and without oral argument. See S.D. 26 Cal. CivLR 7.1(d)(1). For the reasons set forth below, the Court grants Defendants’ 27 motions to dismiss Plaintiff’s fourth cause of action and request for punitive damages. 28 1 I. BACKGROUND 2 On September 30, 2014, KOO Construction, Inc. (“KOO”) entered into a 3 design/build contract (the “Prime Contract”) with the Navy for the P-888 Close Quarters 4 Dynamic Shooting Facility at Camp Michael Mansoor in Pine Valley, California (the 5 “Project”). [Doc. No. 23 at ¶ 21.2] KOO assigned to Plaintiff Great American Insurance 6 Company (“GAIC”) all of its claims referenced in Plaintiff’s First Amended Complaint 7 (“FAC”). [Id. at ¶ 3.] 8 According to the FAC, when KOO prepared its bid for the Prime Contract it entered 9 into conversations with its architectural and engineering consultants, Defendant Vasquez 10 Marshall Architects (“VMA”). [Id. at ¶ 22.] KOO discussed with VMA that the Project 11 would be a “balanced site,” where all the excavated materials removed from the “cut” areas 12 could be accommodated after compaction in the “fill” areas. [Id.] To achieve this, 13 Defendant VMA hired Defendant BDS Engineering, Inc. (“BDS”) as the civil engineer. 14 [Id.] Plaintiff relied on Defendants’ representations that no additional borrow material 15 would be needed to complete the final grading of the Project and entered into a grading 16 subcontract with Civil Prime General Engineering (“Civil Prime”) for the final grading. 17 [Id. at ¶¶ 43–46.] In February 2018, Civil Prime reported that the fill areas at a major 18 portion of the project were over 13,000 cubic yards short of fill. [Id. at ¶ 50.] Plaintiff 19 reported this shortage to Defendants and requested an investigation with regard to the 20 shortage of fill. [Id. at ¶ 51.] More than three months after discovery of the shortage, BDS 21 revealed to Plaintiff that no shrinkage factor was used in their calculations. [Id. at ¶ 53.] 22 According to Plaintiff, Defendants deliberately remained silent during the three-to-four- 23 month investigation period about failing to apply any shrinkage factor which led to 24 extended delays in completing critical grading operations and cost Plaintiff $726,042.91 in 25 26 27 1 The facts herein are derived from Plaintiff’s First Amended Complaint. [Doc. No. 23.] The Court is not making any findings of fact, but rather summarizing the relevant allegations of Plaintiff’s complaint. 28 1 order to bring in additional suitable material for final grading of the Project. [Id. at ¶¶ 54– 2 60.] 3 II. LEGAL STANDARD 4 To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain 5 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 6 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. 7 Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court “accept[s] factual allegations in the 8 complaint as true and construe[s] the pleadings in the light most favorable to the 9 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 10 (9th Cir. 2008). On the other hand, the Court is “not bound to accept as true a legal 11 conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678; see also Lee v. City of 12 Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001) (“Conclusory allegations of law are 13 insufficient to defeat a motion to dismiss”). Nor is the Court “required to accept as true 14 allegations that contradict exhibits attached to the Complaint or . . . allegations that are 15 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels- 16 Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). 17 When resolving a motion to dismiss for failure to state a claim, courts may not 18 generally consider materials outside the pleadings. See Schneider v. Cal. Dep’t of Corrs., 19 151 F.3d 1194, 1197 n.1 (9th Cir. 1998); Jacobellis v. State Farm Fire & Cas. Co., 120 20 F.3d 171, 172 (9th Cir. 1997); Allarcom Pay Television Ltd. v. Gen. Instrument Corp., 69 21 F.3d 381, 385 (9th Cir. 1995). “The focus of any Rule12(b)(6) dismissal . . . is the 22 complaint.” Schneider, 151 F.3d at 1197 n.1. “A court may, however, consider certain 23 materials—documents attached to the complaint, documents incorporated by reference in 24 the complaint, or matters of judicial notice—without converting the motion to dismiss into 25 a motion for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 26 2003). 27 Generally, when dismissing a complaint for failure to state a claim, the court should 28 deny opportunity to amend only if amendment would be futile. See Albrecht v. Lund, 845 1 F.2d 193, 195 (9th Cir. 1988) (dismissal without leave to amend is appropriate if 2 amendment “could not possibly cure the deficiency”), amended, 856 F.2d 111 (9th Cir. 3 1988). 4 III. DISCUSSION 5 Defendants move to dismiss Plaintiff’s fourth cause of action and request for 6 punitive damages for exceeding the Court’s Order granting leave to amend and for failure 7 to sufficiently plead a punitive damages claim. In opposition, Plaintiff contends it modified 8 its fourth cause of action within the scope of the Court’s Order in order to sufficiently plead 9 fraud. 10 A. Scope of Court’s Order Granting Leave to Amend 11 Plaintiff amended its fourth cause of action to allege Misrepresentation, 12 Concealment of Superior Information, and Deceit. [Doc. No. 23 at ¶¶ 82–94.] The Court 13 does not find Plaintiff’s amendment to be outside of the scope of the Court’s Order granting 14 leave to amend as Defendants suggest. Plaintiff’s amendment relates to the same set of 15 facts and conduct set forth or attempted to be set forth in Plaintiff’s original complaint and 16 the Court’s Order granting leave to amend did not foreclose amending any cause of action 17 to “sufficiently plead malice, oppression, or fraud.” [Doc. No. 22 at 8.] Under the amended 18 cause of action, Plaintiff seeks an award of punitive damages against Defendants for 19 essentially a fraudulent concealment. 20 B. Fraudulent Concealment and Request for Punitive Damages 21 California law authorizes exemplary damages “in an action for the breach of an 22 obligation not arising from contract, where it is proven by clear and convincing evidence 23 that the defendant has been guilty of oppression, fraud, or malice,” in addition to actual 24 damages. Cal. Civ. Code § 3294. “The elements of an action for fraud and deceit based 25 on concealment are: (1) the defendant must have concealed or suppressed a material fact, 26 (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the 27 defendant must have intentionally concealed or suppressed the fact with the intent to 28 defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not 1 have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result 2 of the concealment or suppression of the fact, the plaintiff must have sustained damage.” 3 Blickman Turkus LP v. MF Downtown Sunnyvale, 162 Cal.App.4th 858, 868 (2008) 4 (internal quotations, citations, and alterations omitted). “It is not enough that the 5 misstatement (or concealment) actually harmed the plaintiff; it must have been made by 6 the defendant with the intent to induce action (or inaction) by the plaintiff.” Id. at 869. 7 Here, Plaintiff alleges that Defendants remained silent as to the fact that they did not 8 consider any shrinkage factor in determining the quantities and final grades for achieving 9 a “balanced site.” Plaintiff alleges that by their silence, Defendants acted deceitfully and 10 maliciously when they had a duty to speak, unnecessarily delaying completion of the 11 Project and resulting in significant cost to Plaintiff in order to complete the Project. 12 Plaintiff has not alleged any facts that lead to a reasonable inference that Defendants 13 intentionally concealed or suppressed the fact that no shrinkage factor was utilized with the 14 intent to defraud Plaintiff, or that Defendants intended to induce action or inaction. While 15 Plaintiff’s allegations could support a reasonable inference of negligence, Plaintiff’s 16 conclusory allegations that Defendants acted “deceitfully and maliciously” are insufficient 17 to infer a fraudulent concealment or any other basis of fraud to support its request for 18 punitive damages. 19 Accordingly, Plaintiff’s fourth cause of action and request for punitive damages are 20 DISMISSED. However, should such facts arise over the course of diligent discovery that 21 would provide Plaintiff with the ability to plead a factual basis of Defendants’ intent to 22 support a sufficient fraud claim, Plaintiff may move for leave to amend to add a fraud claim 23 and request for punitive damages at the appropriate time. 24 25 26 27 28 1 IV. CONCLUSION 2 For the foregoing reasons, the Court GRANTS Defendants’ motions to dismiss 3 || Plaintiff's fourth cause of action and request for punitive damages. Plaintiff may move to 4 ||amend to include a fraud claim and request for punitive damages should facts develop over 5 course of discovery that would allow them to plead to the extent required by relevant 6 || law. 7 Itis SO ORDERED. 8 Dated: November 5, 2019 € □ 9 Hon. Cathy Ann Bencivengo 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28