Sarkhan Nabiyev v. Closet World, Inc.

• Court: District Court, C.D. California
• Decided: November 16, 2023
• Docket: 2:23-cv-02218
• Status: Unknown

Opinion

O 1

2 3 4

5 6 7 8 United States District Court 9 Central District of California

11 SARKHAN NABIYEV et al., Case № 2:23-cv-02218-ODW (PDx)

12 Plaintiffs, ORDER DENYING 13 v. 14 C LOSET WORLD, INC. et al., MOTION TO DISMISS [25]

15 Defendants.

16 I. INTRODUCTION 17 Plaintiffs Sarkhan Nabiyev and Sevinj Mirzatagi bring this putative class action 18 against Defendants Closet World, Inc. and Home Organizers Inc. for allegedly 19 violating California false advertising laws by misleading consumers with deceptive 20 advertisements featuring falsely discounted home organization products. (First Am. 21 Compl. (“FAC”), ECF No. 19.) Defendants now move to dismiss Plaintiffs’ FAC for 22 failure to state a claim under Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Mot. 23 Dismiss FAC (“Motion” or “Mot.”), ECF No. 25.) For the following reasons, the 24 Court DENIES Defendants’ Motion in its entirety.1 25 26 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 The following facts are taken from Plaintiffs’ FAC. See Ashcroft v. Iqbal, 3 556 U.S. 662, 678 (2009) (holding that well-pleaded factual allegations are accepted 4 as true for purposes of a motion to dismiss). 5 A. Defendants’ Business Model and Operations 6 Closet World, Inc. and Home Organizers, Inc. own and operate a nationwide 7 home organization business where they “make, sell, and market home organizing 8 products including, but not limited to, custom closets, garages, storage solutions, and 9 home offices” (the “Products”). (FAC ¶ 8.) To market their Products, Defendants 10 engage in various advertising techniques such as online advertisements and mailing 11 physical paper advertisements directly to consumers. (Id. ¶¶ 10–12.) The 12 advertisements promote Defendants’ product line and simultaneously offer apparent 13 “limited-time” discount sales to consumers who elect to contract with and purchase 14 Defendants’ Products. (Id.) These online and paper advertisements typically offer 15 “40%” or “50%” discounts on the quoted price, as well as other incentives such as free 16 installation and financing plans. (Id. ¶¶ 26, 32.) 17 B. Plaintiffs Contract with Defendants 18 In or around July 2022, Nabiyev and his mother, Mirzatagi, received a mailed 19 advertisement promoting discounts for 50% off Defendants’ Products. (Id. ¶ 51.) At 20 the time of receipt, Nabiyev and Mirzatagi lived in the same Los Angeles residence. 21 (Id.) Upon receiving the mailed advertisement, Nabiyev scheduled an in-home 22 consultation with Defendant Closet World, resulting in an initial quote promising 50% 23 off all quoted products. (Id. ¶¶ 53–55.) 24 On July 17, 2022, Nabiyev and Mirzatagi contracted with Defendants to 25 purchase two closets, a custom office, and various other home organizer products for 26 their Los Angeles residence. (Id. ¶ 56.) Nabiyev paid the initial deposit with his 27 credit card and the remaining balance was financed using Mirzatagi’s approved credit. 28 1 (Id. ¶ 57.) Payments toward the balance were drawn from a joint bank account shared 2 by Nabiyev and Mirzatagi, with Nabiyev as the first listed account holder. (Id.) 3 C. Plaintiffs’ Allegations 4 On May 1, 2023, Plaintiffs filed the FAC. (Id.) Plaintiffs allege the advertised 5 “limited-time” sales and discounts are, in reality, fake promotions offered 6 continuously throughout the year. (Id. ¶¶ 12, 25–30, 40.) Additionally, Plaintiffs 7 contend the regular list prices of Defendants’ products are fabricated, because the 8 purported list prices are always discounted. (Id. ¶¶ 31–35.) Furthermore, Plaintiffs 9 assert the fake discounts and falsely inflated list prices are designed to induce 10 consumers to purchase products that consumers would not normally be inclined to 11 purchase. (Id. ¶¶ 12–14, 59.) Plaintiffs allege that they relied on the false 12 representations described above and would not have contracted with Defendants had 13 Plaintiffs known the representations were untrue. (Id. ¶¶ 58–59.) 14 Plaintiffs bring nine causes of action individually and on behalf of a proposed 15 class, for: (1) Violation of California’s False Advertising Law; (2) Violation of 16 California’s Consumer Legal Remedies Act; (3) Violation of California’s Unfair 17 Competition Law; (4) Breach of Contract; (5) Breach of Express Warranty; (6) Breach 18 of Implied Warranty; (7) Breach of Quasi-Contracts; (8) Negligent 19 Misrepresentations; and (9) Intentional Misrepresentations with regard to falsely 20 discounted home organization product prices. (Id. ¶¶ 76–165.) 21 Defendants now move this Court to dismiss certain claims in the FAC pursuant 22 to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. 23 III. LEGAL STANDARD 24 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 25 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 26 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To 27 survive a dismissal motion, a complaint need only satisfy the minimal notice pleading 28 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 1 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to 2 raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 3 550 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual 4 matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 5 556 U.S. at 678 (internal quotation marks omitted). 6 The determination of whether a complaint satisfies the plausibility standard is a 7 “context-specific task that requires the reviewing court to draw on its judicial 8 experience and common sense.” Id. at 679. A court is generally limited to the 9 pleadings and must construe all “factual allegations set forth in the complaint . . . as 10 true and . . . in the light most favorable” to the plaintiff. Lee v. City of Los Angeles, 11 250 F.3d 668, 679 (9th Cir. 2001). However, a court need not blindly accept 12 conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. 13 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 14 IV. DISCUSSION 15 Defendants seek to dismiss Plaintiffs’ causes of action one through five, eight, 16 and nine, asserting: (A) Plaintiffs have not pleaded these causes of action with the 17 required particularity; (B) Plaintiffs lack Article III and statutory standing; 18 (C) Defendants’ advertisements are not deceptive on their face; (D) Plaintiff failed to 19 meet specific procedural requirements under California false advertising laws; 20 (E) Plaintiffs either were not damaged or are not party to the contract, and Plaintiff did 21 not rely on the alleged advertisements when purchasing Defendants’ products. (See 22 generally Mot.) The Court addresses each of Defendants’ arguments in turn. 23 A. Rule 9(b) Required Particularity 24 Defendants’ assert that Plaintiffs fail to plead the first, second, third and ninth 25 causes of action with the required particularity under Rule 9(b). The Court finds 26 Plaintiffs’ fraud-based claims meet the requisite Rule 9(b) threshold for particularity. 27 Rule 9(b) provides: “In alleging fraud or mistake, a party must state with 28 particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). 1 The heightened pleading requirements of Rule 9(b) are designed “to give defendants 2 notice of the particular misconduct which is alleged to constitute the fraud charged so 3 that they can defend against the charge and not just deny that they have done anything 4 wrong.” Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir. 1993). “A pleading satisfies 5 Rule 9(b) if it identifies ‘the who, what, when, where, and how’ of the misconduct 6 charged.” MetroPCS v. SD Phone Trader, 187 F. Supp. 3d 1147, 1150 (S.D. Cal. 7 2016) (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)). 8 The plaintiff must “set forth more than the neutral facts necessary to identify the 9 transaction. The plaintiff must set forth what is false or misleading about a statement, 10 and why it is false.” Vess, 317 F.3d at 1106. 11 Here, Plaintiffs need only provide the preliminary Vess factors to meet the 12 Rule 9(b) threshold requirement for particularity. Id. (“‘[T]he who, what, when, 13 where, and how’ of the misconduct charged.”). Plaintiffs do just that in their FAC. 14 Plaintiffs identify “who” committed the alleged misconduct: Closet World and Home 15 Organizers. (FAC ¶¶ 8, 19, 20.) Plaintiffs state “what” the misconduct was: 16 advertisements representing alleged “limited-time” sales. (FAC ¶¶ 25–29, 31–32.) 17 Plaintiffs explain “where” the misconduct occurred: on Defendants’ mailed 18 advertisements and website. Id. Plaintiffs provide “when” the misconduct occurred 19 using digitally archived images of Defendants’ websites showing multiple dates and 20 demonstrating the possibility of continuous sales online. (FAC ¶ 30.) Lastly, 21 Plaintiffs describe “how” Defendants’ purported fake discounts and misconduct led 22 Plaintiffs and other consumers to purchase Defendants’ Products. (FAC ¶¶ 12, 26–28, 23 34–35.) Accordingly, the Court finds Plaintiffs meet the Rule 9(b) heightened 24 requirements for particularity. 25 For the aforementioned reasons, the Court finds Plaintiffs’ first, second, third, 26 and ninth causes of action meet the heightened threshold pleading requirement set 27 forth by Rule 9(b). Accordingly, the Court denies Defendants’ motion to dismiss 28 Plaintiffs’ first, second, third, and ninth causes of action. 1 B. Standing 2 Defendants assert the Court should dismiss the entire action because Plaintiffs 3 lack Article III and California statutory standing. (Mot. 9.) For the reasons set forth 4 below, the Court concludes Plaintiffs meet the minimum requirements for Article III 5 and California statutory standing. 6 1. Article III Standing 7 To establish Article III standing, “the plaintiff must have (1) suffered an injury 8 in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and 9 (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. 10 Robins, 578 U.S. 330, 338 (2016). In lawsuits involving California false advertising 11 laws, consumers suffer an injury-in-fact for Article III purposes “when the consumer 12 alleges that he would not have made the purchase but for the misrepresentation. . . .” 13 Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1107 (9th Cir. 2013) (“[W]hen a consumer 14 purchases merchandise on the basis of false price information, and when the consumer 15 alleges that he would not have made the purchase but for the misrepresentation, he has 16 standing to sue . . . .”). With regard to the proposed class Article III standing, “only 17 one Plaintiff needs to have standing for a class action to proceed.” Battle v. Taylor 18 James, LLC, 607 F. Supp. 3d 1025, 1042 (C.D. Cal. 2022) (quoting In re Zappos.com, 19 Inc., 888 F.3d 1020, 1028 n.11 (9th Cir. 2018)). 20 In the present case, Defendants maintain Plaintiffs do not have Article III 21 standing because Plaintiffs received the “benefit of the bargain" and therefore have 22 not suffered an injury in fact. (Mot. 10.) It is true Plaintiffs received the purchased 23 Products outlined in the July 17, 2022 contract. (See generally FAC.) Similarly, the 24 Court agrees that, by nature of receiving the home organization Products, Plaintiffs 25 enjoyed some degree of benefit from the purchase. However, Plaintiffs claim they 26 would not have purchased Defendants’ Products absent Defendants’ alleged false 27 advertisements and promotions. (FAC ¶¶ 14, 44–46.) Under Hinojos, Plaintiffs 28 sufficiently allege an injury-in-fact for the purpose of Article III standing. Thus, the 1 first element of Article III standing is satisfied. The second element and third 2 elements to establish Article III standing have not been raised as issues by the parties. 3 Nevertheless, the Court confirms that they are satisfied. The second element is clearly 4 met as the alleged injury-in-fact is directly traceable to Defendants and their 5 advertising and promotional discounts. The third element is also fulfilled because the 6 injuries-in-fact alleged by Plaintiffs could be redressed by a favorable judicial 7 decision. 8 The Court concludes Plaintiffs have Article III standing, which means the 9 proposed class in this action also has Article III standing. In light of this conclusion, 10 the Court declines to address the immaterial secondary arguments Defendants raise 11 challenging Plaintiffs’ Article III standing. 12 2. Statutory Standing 13 When a plaintiff brings claims under California Unfair Competition Law 14 (“UCL”), Consumer Legal Remedies Act (“CLRA”), and False Advertising Law 15 (“FAL”), the plaintiff must establish additional statutory standing requirements. 16 Battle, 607 F. Supp. 3d at 1042; see also Cal. Bus. & Prof. Code §§ 17200, 17500; 17 Cal. Civ. Code § 1782. The UCL and FAL require a plaintiff to “(1) establish a loss 18 or deprivation of money or property sufficient to qualify as an injury in fact, i.e., 19 economic injury, and (2) show that economic injury was the result of, i.e., caused by, 20 the unfair business practice or false advertising that is the gravamen of the claim.” 21 Battle, 607 F. Supp. 3d at 1042 (quoting Kwikset Corp. v. Superior Ct., 51 Cal. 4th 22 310, 322 (2011)). Similarly, the CLRA necessitates that a plaintiff “must not only be 23 exposed to an unlawful practice but also have suffered some kind of damage.” Id. 24 (quoting Bower v. AT&T Mobility, LLC, 196 Cal. App. 4th 1545, 1556 (2011)). In 25 sum, for a plaintiff to establish standing under the UCL, CLRA, and FAL, a plaintiff 26 must sufficiently allege he: (1) suffered an economic injury; and (2) relied on the 27 purported material misrepresentation. In re Ferrero Litig., 794 F. Supp. 2d 1107, 28 1111–12 (S.D. Cal. 2011) (citing Kwikset, 51 Cal. 4th at 326–27). 1 In the case at hand, Defendants recycle the same arguments used to attack 2 Plaintiffs’ Article III standing. (Mot. 11.) Defendants claim Plaintiffs do not have 3 statutory standing because Plaintiffs did not suffer any injuries or rely on any 4 advertisements when purchasing Defendants’ Products. (Id. at 12.) However, 5 Plaintiffs specifically allege that, “due to Defendants’ misrepresentations, Plaintiffs 6 and the class paid more for the Products they bought than they otherwise would have.” 7 (FAC ¶ 46.) Additionally, Plaintiffs reiterate throughout the FAC that, shortly after 8 receiving Defendants’ advertisements in the mail, Plaintiffs contacted Defendants to 9 schedule a consultation based on the mailed advertisement’s alleged promotional 10 discounts, which eventually resulted in a contract. (FAC ¶¶ 52–54.) These allegations 11 satisfy the threshold requirements of an economic injury and reliance on purported 12 material misrepresentations in Defendants’ promotional advertisements. The Court 13 therefore finds that Plaintiffs establish statutory standing under the UCL, CLRA, and 14 FAL. 15 In conclusion, Plaintiffs satisfy the requirements to establish Article III and 16 California statutory standing. Accordingly, the Court denies Defendants’ motion to 17 mismiss Plaintiffs’ FAC for lack of standing. 18 C. CLRA Notice Requirement 19 Defendants next argue the Court should dismiss Plaintiffs’ second cause of 20 action for violations of the CLRA because Plaintiffs failed to serve the required 21 thirty-day notice letter required by the statute at least thirty days prior to commencing 22 the instant action. (Mot. 12.) The Court finds that the CLRA thirty-day notice letter is 23 not required in the present case because Plaintiffs seek only injunctive relief under the 24 CLRA. 25 Under the CLRA, plaintiffs are required to provide notice to a defendant of any 26 alleged CLRA violations by certified or registered mail “thirty days or more prior to 27 the commencement of an action for damages.” Cal. Civ. Code. § 1782(a). The notice 28 must also specify the “particular alleged violations” of the CLRA and demand that the 1 defendant “correct, repair, replace, or otherwise rectify” the alleged violations. Id. If 2 the defendant corrects the alleged wrongs or indicates it will make corrections within 3 a reasonable time, the plaintiff cannot file a suit seeking damages. Id. § 1782(c). 4 However, a thirty-day notice letter is not required where a plaintiff seeks only 5 injunctive relief under “specific provisions of Section 1770” of the CLRA. Id. 6 § 1782(d). 7 In the instant action, Plaintiffs assert a cause of action for CLRA violations 8 seeking—exclusively—injunctive relief under the CLRA. (Compl. ¶¶ 87–88, ECF 9 No. 1; FAC ¶ 104.) Thus, Plaintiffs are not required under the CLRA to send 10 Defendants a thirty-day notice letter because Plaintiffs do not seek CLRA-specific 11 damages. (See Compl. ¶¶ 87–88; FAC ¶ 104.) Furthermore, Plaintiffs properly plead 12 their request for injunctive relief, citing valid and applicable provisions of 13 Section 1770 of the CLRA. (FAC ¶¶ 94–104.) 14 Accordingly, the Court denies Defendants’ motion to dismiss as to Plaintiffs’ 15 CLRA cause of action on this basis. 16 D. Deceptive Advertising 17 Defendants’ move to dismiss Plaintiffs’ FAC on the grounds that the 18 advertisements at-issue are not deceptive as a matter of law. (Mot. 13, 17.) The Court 19 finds this issue to be more appropriately resolved on a motion for summary judgment 20 once all discovery matters have been exhausted. As such, the Court denies 21 Defendants’ motion to dismiss on this basis. 22 E. FTC Regulations & Statutory Safe Harbor Doctrine 23 Defendants argue Plaintiffs’ UCL, CLRA, and FAL causes of action fail and 24 should be dismissed because Defendants’ conduct and advertisements are permitted 25 by Federal Trade Commission (“FTC”) regulation guidelines and therefore 26 Defendants’ advertisements are protected from legal claims under a statutory “safe 27 harbor” doctrine. (Mot. 17, 19.) In California, UCL, CLRA, and FAL “claims are 28 subject to the safe harbor doctrine, which precludes plaintiffs from bringing claims 1 based on ‘actions the Legislature permits.’” Ebner v. Fresh, Inc., 838 F.3d 958, 963 2 (9th Cir. 2016). Upon review of the asserted FTC regulations, the Court determines 3 Defendants’ alleged conduct is not expressly permitted by regulation and is therefore 4 not protected by the safe harbor doctrine. As such, Plaintiffs’ UCL, CLRA, and FAL 5 causes of action do not fail on this basis. 6 First, to contextualize the “safe harbor” doctrine in relation to UCL, CLRA, and 7 FAL statutory claims, the Court turns to the Ninth Circuit and California Supreme 8 Court. The California Supreme Court has explained, “[s]pecific legislation may limit 9 the judiciary’s power to declare conduct unfair[,] and [i]f the Legislature has 10 permitted certain conduct or considered a situation and concluded no action should lie, 11 courts may not override that determination.” Davis v. HSBC Bank, 691 F.3d 1152, 12 1164 (9th Cir. 2012) (quoting Cel-Tech Commc’ns Inc. v. L.A. Cellular Tel. Co., 13 20 Cal. 4th 163, 182 (1999)). Thus, “[w]hen specific legislation provides a ‘safe 14 harbor,’ plaintiffs may not use the general unfair competition law to assault that 15 harbor.” Cel-Tech Commc’ns Inc., 20 Cal. 4th at 182. “To fall within the safe harbor, 16 the challenged conduct must be affirmatively permitted by statute—the doctrine does 17 not immunize from liability conduct that is merely not unlawful.” Ebner, 838 F.3d 18 at 963. 19 Defendants argue their alleged marketing conduct is permitted by 16 C.F.R 20 § 233.4 and contend their advertisements are therefore protected from UCL, CLRA, 21 and FAL claims under the safe harbor doctrine. (Mot. 15 (citing 16 C.F.R. § 233.4 22 (“Bargain offers based upon the purchase of other merchandise”)).) Section 233.4 23 addresses advertisement offers where a buyer must first purchase a regular priced item 24 to trigger a discount bargain on an additional, secondary item. 16 C.F.R. § 233.4. 25 More specifically, the types of offers discussed in § 233.4 are “‘Free,’ ‘Buy One-Get 26 One Free,’ ‘2-For-1 Sale,’ ‘Half Price Sale,’ ‘1¢ Sale,’ ‘50% Off,’ etc.,” where the 27 buyer must first purchase an article at full price to receive the advertised benefit. Id. 28 § 233.4(a). Section 233.4 does not encompass the type of discount bargain Plaintiffs 1 allege Defendants deceptively offer, nor is it the type of discount offered in 2 Defendants’ advertisements. 3 Instead, Plaintiffs allege Defendants display fictitious regular list prices and 4 continuously advertise “purported time-limited, ‘__%’ off’ sales off of those prices.” 5 (FAC ¶¶ 25, 31.) Plaintiffs further allege Defendants’ conduct leads reasonable 6 consumers to believe Defendants’ advertising means the Products are “regularly and 7 formerly retailed at the list price, and are being sold at a ‘__% off’ discount for a 8 limited time.” (Id. ¶ 42.) Plaintiffs argue that Defendants’ alleged conduct leads 9 consumers to believe they are receiving a product “worth more at a bargain price 10 because a time-limited sale is running, when in fact they are paying full price for a 11 product with a lower value than advertised.” (Opp’n Mot. (“Opp’n”) 14, ECF 12 No. 39.) 13 In light of Plaintiffs’ allegations, the relevant FTC regulation for a safe harbor 14 analysis is § 233.1, addressing former price comparisons for products and bargain 15 offers. See 16 C.F.R. § 233.1 (“Former price comparisons”). The language in this 16 section expressly outlines various scenarios where a seller’s former price will be 17 construed as “fictitious” and likely in violation of unfair competition laws: 18 If, on the other hand, the former price being advertised is not bona fide but fictitious—for example, where an artificial, inflated price was 19 established for the purpose of enabling the subsequent offer of a large 20 reduction—the “bargain” being advertised is a false one; the purchaser is 21 not receiving the unusual value he expects. In such a case, the “reduced” price is, in reality, probably just the seller’s regular price. 22 23 Id. § 233.1(a). In this case, Plaintiffs allege Defendants’ advertisements display 24 fictious list prices, promote fake discounts, and lead consumers to believe they are 25 getting a “limited-time” bargain price—when, in reality, the alleged bargain price is 26 the just the regularly sold price. (FAC ¶¶ 36–40.) The above language in § 233.1 27 directly addresses the core issues of Plaintiffs’ claims in the FAC and is the proper 28 FTC regulation section for a safe harbor analysis. The Court the does not find any 1 indication that Defendants’ discount scheme contained the type of offers in § 233.4, 2 such as “Buy One-Get One Free,” or “2-For-1 Sale.” (See generally FAC); see also 3 16 C.F.R. § 233.4. Accordingly, any reliance on § 233.4 for the purpose of a safe 4 harbor analysis is decidedly misplaced. Upon reviewing all facts in light of § 233.1, 5 the Court finds Defendants’ conduct is not permitted by the language of §233.1. 6 As such, Defendants’ alleged conduct is not protected by the FTC safe harbor 7 doctrine and the Court denies Defendants’ challenge to Plaintiffs’ UCL, CLRA, and 8 FAL causes of action. 9 F. Breach of Contract 10 Defendants seek to dismiss Plaintiffs’ fourth cause of action for breach of 11 contract2 on the grounds that: (1) Mirzatagi was not damaged as a result of 12 Defendants’ alleged breach of the July 17, 2023 contract; and (2) Nabiyev is a 13 third-party incidental beneficiary and thus has no right to enforce the contract. 14 (Mot. 20–21.) The Court finds Plaintiffs sufficiently allege their fourth cause of 15 action for breach of contract. 16 1. Mirzatagi’s Breach of Contract Claim 17 Neither party disputes that Mirzatagi entered into a contract with Closet World. 18 (Mot. 20; Opp’n 17.) Instead, Defendants argue Mirzatagi cannot bring a breach of 19 contract claim because she did not pay any personal money toward the purchase of the 20 Products or pay any money to Closet World. (Mot. 20.) The crux of this dispute is 21 whether the funds paid to Closet World from Plaintiffs’ joint account are considered 22 both Mirzatagi and Nabiyev’s money, or solely Nabiyev’s. In California, each owner 23 of a joint bank account is entitled to all funds in the joint account. Lee v. Yang, 24 111 Cal. App. 4th 481, 490 (2003). Plaintiffs have made clear that the funds Nabiyev 25 used to purchase the Products were taken from a joint bank account held by Nabiyev 26 2 Under California state law, “[a] cause of action for breach of contract requires proof of four 27 elements: (1) existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.” CDF Firefighters v. 28 Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). 1 and Mirzatagi. (FAC ¶ 57.) Therefore, Nabiyev and Mirzatagi jointly owned the 2 money used to pay Closet World and Mirzatagi’s alleged economic damages resulting 3 from Defendants’ conduct are sufficient to state a breach of contract claim. The Court 4 denies Defendants’ motion to dismiss Mirzatagi’s fourth cause of action for breach of 5 contract. 6 2. Nabiyev’s Breach of Contract Claim 7 The Ninth Circuit instructs that, “[b]efore a third party can recover under a 8 contract, it must show that . . . it is an intended beneficiary of the contract.” Klamath 9 Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999). 10 “Whether a third party is an intended beneficiary or merely an incidental beneficiary 11 to the contract involves construction of the parties’ intent, gleaned from reading the 12 contract as a whole in light of the circumstances under which it was entered.” 13 Planned Parenthood Fed’n of Am., Inc. v. Ctr. for Med. Progress, 402 F. Supp. 3d 615, 14 662 (N.D. Cal. 2019). 15 In the case at bar, Nabiyev alleges he contacted Closet World for the July 2022 16 in-home consultation after receiving Defendants’ mailed advertisement. (FAC ¶ 52.) 17 The in-home consultation was for and occurred in the shared residence of Nabiyev 18 and Mirzatagi. Id. The initial quote listed two separate closet orders labeled “Yours” 19 in reference to the closet for Nabiyev’s room and “Mom’s” in reference to the closet 20 for Mirzatagi’s room. (Id. ¶ 54.) Nabiyev’s email and phone number are listed as the 21 primary contact information on the invoice Plaintiffs used to contract with Defendants 22 for their Products. (Id. ¶ 57.) Thus, it is clear Plaintiffs purchased Closet World’s 23 Products for a home in which Nabiyev resided. At the very least, Plaintiffs purchased 24 a closet specifically for Nabiyev’s room, i.e. “Yours,” which indicates they intended 25 Nabiyev to benefit from the July 17, 2022 contract. The Court finds Plaintiffs 26 sufficiently allege facts establishing Nabiyev is an intended third-party beneficiary 27 with a right to enforce the contract. 28 As such, Nabiyev has a right to bring this initial breach of contract claim 1 against the Defendants and the Court denies Defendants’ motion to dismiss Nabiyev’s 2 fourth cause of action for breach of contract 3 G. Express Warranty 4 Defendants next move to dismiss Plaintiffs’ fifth cause of action, for breach of 5 express warranty, arguing that Plaintiffs did not rely on the representations in Closet 6 World’s advertisements to make the July 17, 2022 purchase. (Mot. 22.) Upon review 7 of the pleadings, the Court determines Plaintiffs sufficiently state a cause of action for 8 breach of express warranty. 9 To successfully plead a cause of action for breach of express warranty, “a 10 plaintiff must prove that the seller (1) made an affirmation of fact or promise or 11 provided a description of its goods; (2) the promise or description formed part of the 12 basis of the bargain; (3) the express warranty was breached; and (4) the breach caused 13 injury to the plaintiff.” Cho v. Hyundai Motor Co., Ltd., 636 F. Supp. 3d 1149, 1173 14 (C.D. Cal. 2022) (citing Asghari v. Volkswagen Grp. of Am., Inc., 42 F. Supp. 3d 1306, 15 1333 (C.D. Cal. 2013)). “Product advertisements, brochures, or packaging can serve 16 to create part of an express warranty.” Rosales v. FitFlop USA, LLC, 882 F. Supp. 2d 17 1168, 1178 (S.D. Cal. 2012) (citing Cal. Comm. Code § 2313(1)(b)). When 18 advertisements create an express warranty, courts do not require that a plaintiff rely on 19 an individual advertisement to form the basis of the bargain. Id. (citing In re Toyota 20 Motor Corp. Unintended Acceleration Mktg., Sales Pracs., & Prods. Liab. Litig., 21 754 F. Supp. 2d 1145, 1183 (C.D. Cal. 2010)). Instead, plaintiffs need allege only that 22 they were “actually exposed to the advertising.” Id. 23 In the present case, Defendants argue that Plaintiffs’ breach of express warranty 24 claim fails because, first, Nabiyev did not rely on Closet World’s advertisement to 25 make the July 17, 2022 purchase; and, second, Plaintiffs “failed to allege that Closet 26 World did not fulfill any obligations set forth in the offer.” (Mot. 21–22.) 27 As to Defendants’ first argument, Plaintiffs have clearly articulated in the FAC 28 that they received Defendants’ advertisements in the mail and shortly thereafter 1 | contacted Defendant to schedule a consultation, ultimately leading to a contract. (FAC 9952-54.) Thus, Plaintiffs allege they were exposed to Defendants’ 3 || advertisements as well as the representations and express warranties therein. This is 4|| sufficient at this stage to establish Defendants’ advertisements formed part of the 5 | “basis of the bargain.” Cho, 636 F. Supp. 3d at 1173. 6 Regarding Defendants’ second argument, Plaintiffs distinctly allege that Closet 7|| World did not fulfill obligations set forth in the offer. (FAC {[§ 65, 136.) More 8 | specifically, Plaintiffs claim Defendants did not fulfill their promise to “provide 9 || Plaintiffs with a discounted price, as advertised.” (d.) Thus, Plaintiffs identify the 10 || specific obligations they allege Defendants failed to fulfill. 11 Therefore, the Court finds Plaintiffs sufficiently state a cause of action for 12 || breach of express warranty. Accordingly, the Court denies Defendants’ motion to 13 || dismiss Plaintiffs’ fifth cause of action. 14 Vv. CONCLUSION 15 For the reasons discussed above, the Court DENIES Defendants’ Motion to 16 || Dismiss Plaintiffs’ FAC. (ECF No. 25.) 17 18 19 IT IS SO ORDERED. 20 “See Oa 21 November 15, 2023 bedi 22 oe 23 4 OTIS D. WRIGHT, I 05 UNITED STATES DISTRICT JUDGE

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