Moreland Apartments Associates v. LP Equity LLC

CourtDistrict Court, N.D. California
DecidedDecember 12, 2019
Docket5:19-cv-00744
StatusUnknown

This text of Moreland Apartments Associates v. LP Equity LLC (Moreland Apartments Associates v. LP Equity LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Moreland Apartments Associates v. LP Equity LLC, (N.D. Cal. 2019).

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 MORELAND APARTMENTS 8 ASSOCIATES, et al., Case No. 5:19-cv-00744-EJD

9 Plaintiffs, ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; ORDER 10 v. DENYING IN PART AND GRANTING IN PART DEFENDANT’S 11 LP EQUITY LLC, ADMINISTRATIVE MOTION TO FILE PARTS OF ITS MOTION TO DISMISS 12 Defendant. UNDER SEAL

13 Re: Dkt. Nos. 27, 29

14 Plaintiffs Moreland Apartments Associates, Seaside Apartments Associates, and San Jose 15 Apartments Associates allege that Defendant LP Equity misappropriated trade secrets, engaged in 16 unfair competition, and intentionally interfered with contractual relations. See First Amended 17 Complaint (“FAC”), Dkt. 25. The Court finds this motion suitable for consideration without oral 18 argument. See N.D. Cal. Civ. L.R. 7-1(b). Having considered the Parties’ papers, Defendant’s 19 motion to dismiss is GRANTED. 20 I. BACKGROUND 21 A. Factual Background 22 Plaintiffs are limited partnerships formed in the 1980s to acquire real property in California 23 and to “construct, own, hold, lease, and operate” apartment projects. FAC ¶¶ 9–11. Defendant 24 purchases limited partnership interests. Id., Ex. A. 25 In 2015, Defendant began soliciting some of Plaintiffs’ limited partners, asking if they 26 would be interested in selling their limited partnership interest. Id. ¶ 12; Id., Ex. A. As Exhibit A 27 Case No.: 5:19-cv-00744-EJD ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; ORDER DENYING IN PART 1 shows, the letters requested that the limited partner, if interested in selling their interest, send a K- 2 1 form to Defendant. Id. ¶ 11; Id., Ex. A. Defendant specifically requested that interested limited 3 partners “black out or remove [their] social security number on the K-1” form before mailing it to 4 Defendant. Id., Ex. A. Allegedly, many of the limited partners are elderly, unsophisticated 5 investors who are “ignorant of the[ir] investment, its value, and the tax implications associated 6 with a sale of the security.” Id. ¶ 19. Plaintiffs contend that Defendant’s solicitation was 7 “aggressive [and] predatory.” Id. ¶¶ 12, 17.1 8 Plaintiffs further allege that Defendant solicited limited partners in a manner that violated 9 the partnership terms. Id. ¶ 22. The transfer of a limited partnership interest requires written 10 approval of the general partners. Id. Despite knowing this, Defendant only solicited the limited 11 partners to evade the terms of the limited partnership agreement and to coerce the limited partners 12 to breach their contract with Moreland. Id. 13 Plaintiffs contend that Defendant obtained the identities and personal information, i.e., 14 home addresses, home and cellular phone numbers, and social security numbers, of Plaintiffs’ 15 limited partners through improper means. Id. ¶ 23. Plaintiffs argue that this information 16 constitutes trade secrets. Id. ¶¶ 25–26. Plaintiffs further allege that Defendant engaged in 17 malicious acts to purchase the limited partners’ interests and that Defendant’s solicitations were 18 misleading. Id. ¶ 45. Lastly, Plaintiffs argue that Defendant intentionally disrupted the 19 performance of Plaintiffs’ limited partners under the partnership agreement. Id. ¶ 53. 20 B. Procedural History 21 On May 21, 2019, Plaintiffs filed their First Amended Complaint. See generally FAC. 22 Defendant filed a Motion to Dismiss Plaintiffs’ First Amended Complaint on June 4, 2019. 23

24 1 Plaintiffs contend in their Opposition that Defendant also engaged in “multiple telephone calls 25 and correspondence to these limited partners to obtain their K1 tax forms.” Moreland Apartments Associates et al.’s Opposition to Defendant’s Motion to Dismiss (“Opp.”), Dkt. 30. The First 26 Amended Complaint, however, does not allege that Defendant called limited partners. See generally FAC. 27 Case No.: 5:19-cv-00744-EJD ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; ORDER DENYING IN PART 1 Defendant’s Motion to Dismiss (“Mot.”), Dkt. 29. On June 17, 2019, Plaintiffs filed an 2 opposition. Moreland Apartments Associates et al.’s Opposition to Defendant’s Motion to 3 Dismiss (“Opp.”), Dkt. 30. Defendant filed its reply on June 24, 2019. Reply in Support of 4 Defendant’s Motion to Dismiss (“Reply”), Dkt. 31. Defendant also filed a motion to seal. See 5 Administrative Motion to File Under Seal Documents in Support of Its Motion to Dismiss(“Admin 6 Mot.”), Dkt. 27. 7 II. LEGAL STANDARD 8 To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual 9 matter, accepted as true, to “state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 10 556 U.S. 662, 678 (2009) (discussing Federal Rule of Civil Procedure 8(a)(2)). A claim has facial 11 plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable 12 inference that the defendant is liable for the misconduct alleged. Id. The requirement that the 13 court must “accept as true” all allegations in the complaint is “inapplicable to legal conclusions.” 14 Id. “[F]ormulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. 15 Twombly, 550 U.S. 544, 555 (2007). Legal conclusions, without more, give rise to “unwarranted 16 inferences . . . insufficient to avoid a Rule 12(b)(6) dismissal.” Cousins v. Lockyer, 568 F.3d 17 1063, 1067 (9th Cir. 2009) (quotation marks and citation omitted). 18 Dismissal can be based on “the lack of a cognizable legal theory or the absence of 19 sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 20 F.2d 696, 699 (9th Cir. 1990). When a claim or portion of a claim is precluded as a matter of law, 21 that claim may be dismissed pursuant to Rule 12(b). See Whittlestone, Inc. v. Handi-Craft Co., 22 618 F.3d 970, 975 (9th Cir. 2010) (discussing Rule 12(f) and noting that 12(b)(6), unlike Rule 23 12(f), provides defendants a mechanism to challenge the legal sufficiency of complaints). 24 III. DISCUSSION 25 A. Misappropriation of Trade Secrets 26 Plaintiffs allege two theories to support their misappropriation of trade secrets claim: (1) 27 Case No.: 5:19-cv-00744-EJD ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; ORDER DENYING IN PART 1 they base their first claim for relief in the Defend Trade Secrets Act (“DTSA”), see 18 U.S.C. 2 § 1836, and (2) they base second claim for relief in the California Uniform Trade Secrets Act 3 (“CUTSA”), see Cal. Civ. Code § 3426.2 FAC ¶¶ 24–43. For purposes of a motion to dismiss, 4 “the elements of CUTSA and DTSA claims are substantially the same.” Genentech, Inc. v. JHL 5 Biotech, Inc., 2019 WL 1045911, at *10 (N.D. Cal. Mar. 5, 2019). 6 To state a claim for misappropriation of trade secrets, a plaintiff must allege that: “(1) the 7 plaintiff owned a trade secret; (2) the defendant misappropriated the trade secret; and (3) the 8 defendant’s actions damaged the plaintiff.” Autodesk, Inc. v. ZWCAD Software Co., Ltd., 2015 9 WL 2265479, at *5 (N.D. Cal. May 13, 2015).

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Moreland Apartments Associates v. LP Equity LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moreland-apartments-associates-v-lp-equity-llc-cand-2019.