1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Stephen A. Hill, ) No. CV-19-04930-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) HD Supply Management, Inc., et al., ) 12 ) 13 Defendants. ) ) 14 ) 15 Before the Court is Defendants HD Supply Management, Inc. and HD Supply 16 Facilities Maintenance, Ltd.’s (collectively “Defendants”) Motion to Dismiss Plaintiff’s 17 Second Amended Complaint (the “Motion”) (Doc. 29), which is fully briefed. For the 18 reasons that follow, the motion will be granted without prejudice.1 19 I. Background 20 Plaintiff Stephen Hill (“Hill”) initiated this action on July 29, 2019 in state court 21 (Doc. 1-3) and Defendants removed it to federal court on August 9, 2019 (Doc. 1). In his 22 second amended complaint (the “SAC), which is the operative complaint in this case and 23 was filed on October 2, 2019, Plaintiff alleges that he was employed by Defendants from 24 July 2017 through April 2019 as an area sales manager. (Doc. 28 at 2, ¶ 6) Hill alleges that 25 he was entitled to payment of a yearly salary of $91,468.50, plus a yearly bonus and 26
27 1 Because it would not assist in resolution of the instant issues, the Court finds the pending motion is suitable for decision without oral argument. See L.R. Civ. 7.2(f); Fed. 28 R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 monthly commissions based on performance. (Doc. 28 at 2, ¶ 8) Hill further alleges that, 2 at the time of termination, Defendants owed him $52,359.17 in unpaid yearly bonus (Doc. 3 28 at 2, ¶ 10) but only paid him $18,974.63 after unilaterally modifying the terms of his 4 employment contract, including the commissions structure. (Doc. 28 at 2, ¶11) Hill also 5 alleges that he was owed commissions for the month of February 2019 in the amount of 6 $3,500. (Doc. 28 at 2, ¶ 15) Accordingly, Hill alleges that Defendants owe him $33,384.54 7 in unpaid bonus and $3,500 in unpaid commissions. The SAC contains four counts: (1) 8 unpaid wages under Arizona Revised Statutes (“A.R.S.”) § 23-350; (2) breach of contract; 9 (3) breach of the covenant of good faith and fair dealing; and (4) unjust 10 enrichment/quantum meruit. (Doc. 28 at 3–4) Defendants filed the Motion on October 16, 11 2019. (Doc. 29) 12 II. Standard of Review 13 Rule 8(a)(2) requires a “short and plain statement of the claim showing that the 14 pleader is entitled to relief,” so that the defendant has “fair notice of what the … claim is 15 and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 16 (internal quotations omitted). Also, a complaint must contain sufficient factual matter, 17 which, if accepted as true, states a claim to relief that is “plausible on its face.” Ashcroft v. 18 Iqbal, 556 U.S. 662, 678 (2009). Facial plausibility exists if the pleader pleads factual 19 content that allows the court to draw the reasonable inference that the defendant is liable 20 for the misconduct alleged. Id. Plausibility does not equal “probability,” but plausibility 21 requires more than a sheer possibility that a defendant acted unlawfully. Id. “Where a 22 complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops 23 short of the line between possibility and plausibility of entitlement to relief.’” Id. (citing 24 Twombly, 550 U.S. at 557). 25 Although a complaint attacked for failure to state a claim does not need detailed 26 factual allegations, the pleader’s obligation to provide the grounds for relief requires “more 27 than labels and conclusions, and a formulaic recitation of the elements of a cause of action 28 will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Rule 8(a)(2) “requires 1 a ‘showing,’ rather than a blanket assertion, of entitlement to relief. Without some factual 2 allegation in the complaint, it is hard to see how a claimant could satisfy the requirement 3 of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which 4 the claim rests.” Id. (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 5 1202, pp. 94, 95 (3d ed. 2004)). Thus, Rule 8’s pleading standard demands more than “an 6 unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 7 (citing Twombly, 550 U.S. at 555). 8 In deciding a motion to dismiss the Court must construe the facts alleged in the 9 complaint in the light most favorable to the drafter of the complaint and must accept all 10 well-pleaded factual allegations as true. OSU Student Alliance v. Ray, 699 F.3d 1053, 1061 11 (9th Cir. 2012); Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, 12 the Court does not have to accept as true a legal conclusion couched as a factual allegation. 13 Papasan v. Allain, 478 U.S. 265, 286 (1986). 14 III. Analysis 15 A. Breach of Contract and Covenant of Good Faith and Fair Dealing 16 On the face of the SAC, Plaintiff’s claims appear to be based on a “contractual 17 relationship” and “contractual expectation” for his bonus and commissions (Doc. 28 at 2, 18 ¶¶ 7, 9) but the SAC does not set forth any contractual term which would have given rise 19 to the causes of action. Instead, Plaintiff recites allegations that he had a contractual 20 expectation for his bonus and commissions and that the Defendants unilaterally modified 21 the commissions structure to deprive him of what he had earned. (Doc. 28 at 2) This is not 22 sufficient under federal pleading standards. Although it is true that the federal rules do not 23 require attaching a contract or agreement to the complaint when alleging breach of contract 24 or other claims based on the terms of such contract, it can, and is usually helpful to do so. 25 Plaintiff clarifies in his response to the Motion that “he took the job with the understanding 26 he would be paid based on meeting sales goal,” he based his allegations on his “history of 27 receiving monthly bonuses and commissions,” and in a footnote mentions that he could 28 “plead these facts if necessary in an amended complaint.” (Doc. 34 at 2, fn.1) Furthermore, 1 Plaintiff states, for the first time, that he “has not alleged the existence of a written contract, 2 [but] has alleged that an implied-in-fact contract existed with Defendants as part of his 3 employment” which covered his claims. (Doc. 34 at 2) This is a new allegation. Nowhere 4 in the SAC can the Court find a mention of a quasi- or implied-in-fact contract. The vague 5 allegation of a “contractual expectation” and that the nature of the parties’ relationship was 6 “contractual in nature” is insufficient for the Court to decipher that the claims sounded in 7 equity. In this respect, the SAC is grossly deficient under the relevant pleading standard. 8 Plaintiff cannot save the SAC from dismissal by adding factual allegations in his response, 9 those allegations should be contained in the SAC. Indeed, the Court is bound to looking at 10 the four corners of the complaint when deciding a motion to dismiss under 12(b)(6). See 11 Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) 12 Plaintiff bears the burden to establish three elements for a breach of contract claim: 13 (1) the existence of a valid contract; (2) a breach; and (3) damages. Graham v. Ashbury, 14 112 Ariz. 184, 185 (1975).
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Stephen A. Hill, ) No. CV-19-04930-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) HD Supply Management, Inc., et al., ) 12 ) 13 Defendants. ) ) 14 ) 15 Before the Court is Defendants HD Supply Management, Inc. and HD Supply 16 Facilities Maintenance, Ltd.’s (collectively “Defendants”) Motion to Dismiss Plaintiff’s 17 Second Amended Complaint (the “Motion”) (Doc. 29), which is fully briefed. For the 18 reasons that follow, the motion will be granted without prejudice.1 19 I. Background 20 Plaintiff Stephen Hill (“Hill”) initiated this action on July 29, 2019 in state court 21 (Doc. 1-3) and Defendants removed it to federal court on August 9, 2019 (Doc. 1). In his 22 second amended complaint (the “SAC), which is the operative complaint in this case and 23 was filed on October 2, 2019, Plaintiff alleges that he was employed by Defendants from 24 July 2017 through April 2019 as an area sales manager. (Doc. 28 at 2, ¶ 6) Hill alleges that 25 he was entitled to payment of a yearly salary of $91,468.50, plus a yearly bonus and 26
27 1 Because it would not assist in resolution of the instant issues, the Court finds the pending motion is suitable for decision without oral argument. See L.R. Civ. 7.2(f); Fed. 28 R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 monthly commissions based on performance. (Doc. 28 at 2, ¶ 8) Hill further alleges that, 2 at the time of termination, Defendants owed him $52,359.17 in unpaid yearly bonus (Doc. 3 28 at 2, ¶ 10) but only paid him $18,974.63 after unilaterally modifying the terms of his 4 employment contract, including the commissions structure. (Doc. 28 at 2, ¶11) Hill also 5 alleges that he was owed commissions for the month of February 2019 in the amount of 6 $3,500. (Doc. 28 at 2, ¶ 15) Accordingly, Hill alleges that Defendants owe him $33,384.54 7 in unpaid bonus and $3,500 in unpaid commissions. The SAC contains four counts: (1) 8 unpaid wages under Arizona Revised Statutes (“A.R.S.”) § 23-350; (2) breach of contract; 9 (3) breach of the covenant of good faith and fair dealing; and (4) unjust 10 enrichment/quantum meruit. (Doc. 28 at 3–4) Defendants filed the Motion on October 16, 11 2019. (Doc. 29) 12 II. Standard of Review 13 Rule 8(a)(2) requires a “short and plain statement of the claim showing that the 14 pleader is entitled to relief,” so that the defendant has “fair notice of what the … claim is 15 and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 16 (internal quotations omitted). Also, a complaint must contain sufficient factual matter, 17 which, if accepted as true, states a claim to relief that is “plausible on its face.” Ashcroft v. 18 Iqbal, 556 U.S. 662, 678 (2009). Facial plausibility exists if the pleader pleads factual 19 content that allows the court to draw the reasonable inference that the defendant is liable 20 for the misconduct alleged. Id. Plausibility does not equal “probability,” but plausibility 21 requires more than a sheer possibility that a defendant acted unlawfully. Id. “Where a 22 complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops 23 short of the line between possibility and plausibility of entitlement to relief.’” Id. (citing 24 Twombly, 550 U.S. at 557). 25 Although a complaint attacked for failure to state a claim does not need detailed 26 factual allegations, the pleader’s obligation to provide the grounds for relief requires “more 27 than labels and conclusions, and a formulaic recitation of the elements of a cause of action 28 will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Rule 8(a)(2) “requires 1 a ‘showing,’ rather than a blanket assertion, of entitlement to relief. Without some factual 2 allegation in the complaint, it is hard to see how a claimant could satisfy the requirement 3 of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which 4 the claim rests.” Id. (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 5 1202, pp. 94, 95 (3d ed. 2004)). Thus, Rule 8’s pleading standard demands more than “an 6 unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 7 (citing Twombly, 550 U.S. at 555). 8 In deciding a motion to dismiss the Court must construe the facts alleged in the 9 complaint in the light most favorable to the drafter of the complaint and must accept all 10 well-pleaded factual allegations as true. OSU Student Alliance v. Ray, 699 F.3d 1053, 1061 11 (9th Cir. 2012); Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, 12 the Court does not have to accept as true a legal conclusion couched as a factual allegation. 13 Papasan v. Allain, 478 U.S. 265, 286 (1986). 14 III. Analysis 15 A. Breach of Contract and Covenant of Good Faith and Fair Dealing 16 On the face of the SAC, Plaintiff’s claims appear to be based on a “contractual 17 relationship” and “contractual expectation” for his bonus and commissions (Doc. 28 at 2, 18 ¶¶ 7, 9) but the SAC does not set forth any contractual term which would have given rise 19 to the causes of action. Instead, Plaintiff recites allegations that he had a contractual 20 expectation for his bonus and commissions and that the Defendants unilaterally modified 21 the commissions structure to deprive him of what he had earned. (Doc. 28 at 2) This is not 22 sufficient under federal pleading standards. Although it is true that the federal rules do not 23 require attaching a contract or agreement to the complaint when alleging breach of contract 24 or other claims based on the terms of such contract, it can, and is usually helpful to do so. 25 Plaintiff clarifies in his response to the Motion that “he took the job with the understanding 26 he would be paid based on meeting sales goal,” he based his allegations on his “history of 27 receiving monthly bonuses and commissions,” and in a footnote mentions that he could 28 “plead these facts if necessary in an amended complaint.” (Doc. 34 at 2, fn.1) Furthermore, 1 Plaintiff states, for the first time, that he “has not alleged the existence of a written contract, 2 [but] has alleged that an implied-in-fact contract existed with Defendants as part of his 3 employment” which covered his claims. (Doc. 34 at 2) This is a new allegation. Nowhere 4 in the SAC can the Court find a mention of a quasi- or implied-in-fact contract. The vague 5 allegation of a “contractual expectation” and that the nature of the parties’ relationship was 6 “contractual in nature” is insufficient for the Court to decipher that the claims sounded in 7 equity. In this respect, the SAC is grossly deficient under the relevant pleading standard. 8 Plaintiff cannot save the SAC from dismissal by adding factual allegations in his response, 9 those allegations should be contained in the SAC. Indeed, the Court is bound to looking at 10 the four corners of the complaint when deciding a motion to dismiss under 12(b)(6). See 11 Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) 12 Plaintiff bears the burden to establish three elements for a breach of contract claim: 13 (1) the existence of a valid contract; (2) a breach; and (3) damages. Graham v. Ashbury, 14 112 Ariz. 184, 185 (1975). Additionally, Plaintiff must make a showing that there was “an 15 offer, an acceptance, consideration, and sufficient specification of terms so that the 16 obligations involved are ascertainable.” KnightBrook Ins. Co. v. Payless Car Rental Sys., 17 Inc., 43 F. Supp. 3d 965, 974 (D. Ariz. 2014) (internal quotations omitted), overruled on 18 other grounds. Plaintiff alleges that he had an expectation of a bonus and commissions but 19 does not offer any other factual support for the formation of a contract or any of its terms. 20 To be clear, Plaintiff’s SAC does not need “detailed factual allegations” but the SAC in 21 this case does nothing more than list allegations of the “the-defendant-harmed-me” type 22 regarding the breach of contract claim. It might be that once Plaintiff amends his complaint 23 to clearly set forth the factual support for his claim that he is seeking recovery in quasi- 24 contract and equity then he will have actually stated a claim upon which relief can be 25 granted under an implied-in-fact contract. The SAC fails to do so because it offers no 26 allegations of what representations and course of conduct specifically gave rise to his 27 “contractual expectation” to receive more money and how a quasi-contract could exist in 28 this case. 1 Similarly, without a valid contract, written or implied-in-fact, there can be no claim 2 for a breach of the covenant of good faith and fair dealing. Indeed, such claim is derivative 3 of the existence and breach of a contract and cannot stand on its own. See, e.g., Schwartz 4 v. Chase Home Fin., LLC, 2010 WL 5151326, at *1 (D. Ariz. Dec 13, 2010). As discussed 5 above, the SAC is deficient on the breach of contract claim and derivatively fails on the 6 breach of the covenant of good faith and fair dealing. Plaintiff argues in his response to the 7 Motion that such covenant can exist on its own if the conduct giving rise to the claim is 8 one other than the termination of the contract. (Doc. 34 at 4) Plaintiff further argues that 9 he properly alleged such claim here because it is not the termination of his employment but 10 instead the unilateral modifications of the bonus structure that gives rise to the breach of 11 the covenant. (Doc. 34 at 4) This again might be true but there still must be some allegations 12 in the complaint regarding the alleged bonus expectation from plaintiff and also how the 13 alleged compensation structure was changed. As discussed above, the SAC falls short on 14 this issue. The SAC does not offer more than a conclusory statement that Plaintiff expected 15 a bonus and commissions and that Defendants changed the structure without explaining at 16 all the basis for such allegations. Accordingly, the Court will grant Defendants’ Motion to 17 Dismiss on Count 2 and 3 of the SAC. 18 B. Unpaid Wages 19 Plaintiff alleges that “the wages owed to [him] are wages under A.R.S. § 23-350” 20 and that there is no “good faith reason for Defendants to withhold such wages.” (Doc. 28 21 at 3, ¶¶ 17, 18) The SAC contains not other allegations or statement supporting such claim. 22 In Arizona, wages are defined are “nondiscretionary compensation due an employee in 23 return for labor or services rendered by an employee for which the employee has a 24 reasonable expectation to be paid whether determined by a time, task, piece, commission 25 or other method of calculation.” A.R.S. § 23-350(7). The only allegation supporting 26 Plaintiff’s reasonable expectation for the bonus and the commissions is that he had a 27 contractual expectation. He also responds that whether his expectation was reasonable is a 28 question of fact the Court cannot resolve at this stage of the case. (Doc. 34 at 6) Indeed, 1 the reasonableness of such expectation is a question for the trier of fact. This does not 2 change the fact that the first hurdle for this count, like counts 2 and 3 of the SAC, still is 3 that the “contractual expectation” Plaintiff allegedly had is plead so poorly that his claim 4 for unpaid wages must be dismissed. Without any factual basis offered in the SAC for his 5 “contractual expectation,” this claim fails as a matter of law. Accordingly, the Court will 6 grant Defendants’ Motion to Dismiss on Count I of the SAC. 7 C. Unjust Enrichment/Quantum Meruit 8 The only allegations related to this Count are that “Defendants, by their conduct, as 9 alleged herein, have been unjustly enriched at the expense of [Plaintiff].” (Doc. 28 at 4, ¶ 10 32) In Arizona, a claim for unjust enrichment requires proving that there was “(1) an 11 enrichment, (2) an impoverishment, (3) a connection between the [two], (4) the absence of 12 a justification for the [two], and (5) the absence of a remedy provided at law.” Wang Elec., 13 Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 318 (Ct. App. 2012). Although Plaintiff 14 does not have to prove the elements with his complaint, he must still present factual 15 allegations which, if taken as true, could support such a claim. Plaintiff’s barebones 16 allegations fail to meet such standard. Indeed, all Plaintiff alleges in the SAC is his 17 “contractual expectation” of a specific amount of bonus and commissions and the 18 conclusory statement that Defendants were unjustly enriched. This is nothing more than a 19 legal conclusion disguised as a factual allegation and it not enough under Iqbal and 20 Twombly. Accordingly, the Court will grant Defendants’ Motion to Dismiss on Count 4 of 21 the SAC. 22 Although the Court will grant Defendants’ Motion to Dismiss entirely, it will do so 23 without prejudice to the filing of a third amended complaint. It is possible that Plaintiff can 24 plead enough facts to advance to the next stage of the case although the SAC fails to do so 25 now. The Court, however, will not grant any further leave to amend the complaint. 26 Accordingly, 27 IT IS ORDERED that Defendants’ Motion to Dismiss (Doc. 29) is granted in full. 28 The Second Amended Complaint is dismissed without prejudice in its entirety. 1 IT IS FURTHER ORDERED that the Court grants Plaintiff leave to amend the 2.| complaint and no further leave will be granted. 3 IT IS FURTHER ORDERED that Plaintiff shall have until April 21, 2020 to file an amended complaint in compliance with this order. 5 Dated this 7th day of April, 2020. 6 7 AR 8 United States District Ladue 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28