Sprint Spectrum Realty Company, LLC v. Hartkopf, Jr.

• Court: District Court, N.D. California
• Decided: November 22, 2019
• Docket: 3:19-cv-03099
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SPRINT SPECTRUM REALTY Case No. 19-cv-03099-JSC COMPANY, LLC, 8 ORDER RE: PLAINTIFF’S MOTION Plaintiff TO DISMISS DEFENDANT’S 9 COUNTERCLAIM FOR v. CONCEALMENT 10 WILLIAM F. HARTKOPF, JR., Re: Dkt. No. 28 11 Defendant.

13 Sprint Spectrum Realty Company, LLC (“Sprint”) sues William F. Hartkopf, Jr. seeking 14 declaratory judgment and other relief for breach of contract and breach of good faith and fair 15 dealing arising out of a lease of real property owned by Mr. Hartkopf. (Dkt. No. 1.)1 Mr. 16 Hartkopf brings counterclaims against Sprint seeking declaratory judgment and other relief for 17 breach of contract, breach of good faith and fair dealing, unjust enrichment, and concealment. 18 (Dkt. No. 27.) Now before the Court is Sprint’s motion to dismiss Mr. Hartkopf’s amended 19 counterclaim for concealment pursuant to Federal Rule of Civil Procedure 12(b)(6).2 (Dkt. No. 20 28.) After careful consideration of the parties’ briefing and having had the benefit of oral 21 argument on November 21, 2019, the Court GRANTS Sprint’s motion. Mr. Hartkopf fails to 22 plead facts that plausibly suggest that Sprint concealed the material fact at issue. 23 // 24 // 25 // 26 1 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 27 ECF-generated page numbers at the top of the documents. 1 BACKGROUND 2 I. Counterclaim Allegations 3 The gravamen of Mr. Hartkopf’s concealment counterclaim is that Sprint did not disclose 4 that its communications equipment, which Sprint installed on the roof of a building owned by Mr. 5 Hartkopf pursuant to a lease agreement between the parties, occupied more than 300 square feet of 6 the subject property. 7 A. The Agreement 8 Mr. Hartkopf owns a building located in Fremont, California (the “Property”). (Dkt. No. 9 27 at ¶ 8.) In August 1997, Mr. Hartkopf and Sprint entered into a “PCS Site Agreement” (the 10 “Agreement”), as landlord and tenant, respectively. (Id. at ¶ 9.) Pursuant to the Agreement, Mr. 11 Hartkopf leased to Sprint certain space on the Property’s roof (the “Site”) for $1,300.00 per month 12 “for the purpose of installing, removing, replacing, maintaining[,] and operating a personal 13 communications service systems family” (the “Facility”). (Id. at ¶ 10; see also Dkt. No. 27, Ex. A 14 at 13 ¶ 3.) The Site consists of: (1) “[b]uilding exterior space for attachment of antennas”; (2) 15 “[b]uilding exterior space for placement of base station equipment”; and (3) “[s]pace required for 16 cable runs.” (Dkt. No. 27, Ex. A at 13 ¶ 1.) 17 The Agreement’s description of the Site states that it consists of: 18 Space on the exterior of the [Property] . . . for at least three [ ] sectors of antennas as depicted in Exhibit A-2; approximately 300 square 19 feet, measuring approximately on the rooftop of the [Property] for Sprint Spectrum’s equipment as depicted in Exhibit A-2; space for 20 utility runs connecting Sprint Spectrum’s equipment with the nearest available utility services; space for coaxial cables connecting Sprint 21 Spectrum’s equipment and the antennas; and, access to the antennas, Sprint Spectrum’s equipment, utility runs and coaxial cables. 22 23 (Id. at 14.) Mr. Hartkopf agreed to the terms of the Agreement “with the express understanding 24 that the space being leased to Sprint consisted of 300 square feet for all of Sprint’s equipment.” 25 (Dkt. No. 27 at ¶ 14.) Sprint has at all times relevant to the instant action, however, known “that 26 the equipment it planned to install required more than the 300 square feet identified in the 27 [Agreement],” and has failed to disclose that fact to Mr. Hartkopf. (Id. at ¶ 15.) 1 B. The 2011 Amendment and Subsequent Modifications 2 In December 2011, the parties entered into “Amendment No. One” to the Agreement 3 (“2011 Amendment” or “Amendment”). (Id. at ¶ 18; see also Dkt. No. 1-2, Ex. B at 2-8.)3 The 4 Amendment modified the Agreement only to the extent it “permitted Sprint to conduct necessary 5 work to prepare, maintain[,] and alter the Site to install or otherwise modify [certain] 6 [i]mprovements.” (Dkt. No. 27 at ¶¶ 19-20.) As consideration for the modifications, “the 7 Amendment increased the monthly rent by $200.00.” (Id. at ¶ 21.) However, the Amendment did 8 not increase the size of the Site set forth in the Agreement and Mr. Hartkopf agreed to the 9 Amendment with that understanding. (Id. at ¶¶ 22-23.) Nor have the parties executed any 10 subsequent amendments that provide Sprint with more space than originally agreed upon. (Id. at ¶ 11 24.) 12 Subsequent to the 2011 Amendment, Mr. Hartkopf agreed to allow “Sprint to make 13 physical modifications to the Site,” upon Sprint’s request and pursuant to the terms of the 14 Agreement. (Id. at ¶¶ 25-26.) “Sprint affirmed and represented in numerous correspondences 15 with [Mr.] Hartkopf that any modifications or improvements at the Site would not increase 16 Sprint’s lease space” set forth in the Agreement. (Id. at ¶ 27.) Sprint knew, however, that its 17 requested modifications and improvements “required more than . . . 300 square feet” and did not 18 disclose that fact to Mr. Hartkopf. (Id. at ¶¶ 28-29.) 19 C. Notice of Default 20 In early April 2019, Mr. Hartkopf discovered “an article detailing the deceptive practices 21

22 3 Under the incorporation-by-reference doctrine, courts may consider on a Rule 12(b)(6) motion to dismiss “evidence on which the complaint necessarily relies if: (1) the complaint refers to the 23 document; (2) the document is central to the plaintiff's claim; and (3) no party questions the [document’s] authenticity.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (internal 24 quotation marks and citation omitted). Here, Mr. Hartkopf’s amended counterclaim references the 2011 Amendment, (see Dkt. No. 27 at ¶¶ 18-24), but does not attach it to the counterclaim. The 25 Amendment is attached, however, to Sprint’s underlying complaint and Mr. Hartkopf’s opposition to the instant motion references that attachment and does not dispute its authenticity. (See Dkt. 26 Nos. 1-2, Ex. B & 29 at 10-11.) The Court will therefore consider the Amendment because it is incorporated by reference in Mr. Hartkopf’s amended counterclaim. Likewise, Mr. Hartkopf’s 27 amended counterclaim references the “Note of Default” attached to the underlying complaint, (see 1 employed by lessees of cell tower leases.” (Id. at ¶ 32.) “On or about April 15, 2019, [Mr.] 2 Hartkopf went on the roof of the Property to measure the space occupied by Sprint’s equipment 3 and discovered that Sprint was using in excess of 300 square feet.” (Id. at ¶ 33.) Mr. Hartkopf 4 notified Sprint by mail three weeks later that it was not in compliance with the Agreement and 5 owed back rent for the additional space. (Id. at ¶ 34-35; see also Dkt. No. 1-3, Ex. 3 at 2-7.) 6 Sprint responded to Mr. Hartkopf’s letter and denied his allegations. (Dkt. No. 27 at ¶ 36.) In 7 June 2019, Mr. Hartkopf retained Total Telco Specialists (“Telco”) “to perform a roof survey and 8 to measure the roof space being used by Sprint.” (Id. at ¶ 38.) Telco’s measurements confirmed 9 Mr. Hartkopf’s April 2019 finding that Sprint was occupying more than 300 square feet of the 10 Site; further, the overage was greater than Mr. Hartkopf initially thought. (Id.) Mr. Hartkopf 11 revised his calculation of back rent accordingly. (Id.) 12 II. Procedural History 13 Sprint filed the underlying complaint in this action on June 4, 2019, asserting claims for 14 “declaratory judgment,” “breach of contract,” “breach of good faith and fair dealing,” and 15 “specific performance.” (Dkt. No. 1 at 10-13.) In August 2019, Mr. Hartkopf filed counterclaims 16 for “declaratory judgment,” “breach of contract,” “breach of implied covenant of good faith and 17 fair dealing,” and “unjust enrichment.” (Dkt. No. 20 at 4-7.) The following month Mr. Hartkopf 18 filed amended counterclaims that added a claim for “concealment.” (See Dkt. No. 27 at 8-9.) 19 Sprint filed the instant motion to dismiss the concealment counterclaim thereafter. (Dkt. No. 28.) 20 The motion is fully briefed, (see Dkt. Nos. 29 & 30), and the Court heard oral argument on 21 November 21, 2019. 22 DISCUSSION 23 The elements of a claim for fraudulent concealment are: “(1) concealment or suppression 24 of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the 25 defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) 26 the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had 27 known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the 1 606 (2014); see also Johnson v. Mitsubishi Dig. Elecs. Am., Inc., 578 F. Supp. 2d 1229, 1239 2 (C.D. Cal. 2008) (same). 3 Fraud claims are subject to the heightened pleading standard of Rule 9(b), which requires a 4 plaintiff to “state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. 5 P. 9(b). In general, a plaintiff alleging fraudulent conduct must include the “who, what, when, 6 where, and how” of the fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 7 2003). However, “a fraud by omission or fraud by concealment claim can succeed without the 8 same level of specificity required by a normal fraud claim” because a plaintiff in such cases “is 9 alleging a failure to act instead of an affirmative act,” and thus “cannot point out the specific 10 moment when the defendant failed to act.” Baggett v. Hewlett-Packard Co., 582 F. Supp. 2d 11 1261, 1267 (C.D. Cal. 2007) (citing Falk v. Gen. Motors Corp., 496 F. Supp. 2d 1088, 1098-99 12 (N.D. Cal. 2007) (noting that a “fraud by omission claim will not be dismissed purely for failure to 13 precisely state the time and place of the fraudulent conduct”); see also Erickson v. Boston 14 Scientific Corp., 846 F. Supp. 2d 1085, 1093 (C.D. Cal. 2011) (“To plead the existence of an 15 omission sufficient to support a fraudulent concealment claim, a plaintiff must describe the content 16 of the omission and where the omitted information should or could have been revealed.”) (internal 17 quotation marks and citation omitted). Ultimately, “[a] pleading is sufficient under Rule 9(b) if it 18 identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer 19 from the allegations.” Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 20 1989). 21 Sprint moves to dismiss Mr. Hartkopf’s counterclaim for concealment on four independent 22 grounds: (1) the allegations fail to satisfy the heightened pleading standards for fraud claims under 23 Federal Rule of Civil Procedure 9(b); (2) the alleged material fact was not concealed; (3) Sprint 24 had no duty to disclose; and (4) the claim is time-barred by the applicable statute of limitations. 25 The Court addresses Sprint’s first two arguments and concludes that dismissal is warranted 26 because Mr. Hartkopf fails to plead facts that plausibly support an inference that Sprint concealed 27 the total square footage it occupied at the Site. 1 I. The Allegations Satisfy Rule 9(b) 2 Sprint first argues that Mr. Hartkopf’s allegations of concealment are “vague and 3 insufficient under 9(b)’s heightened pleading standard” because he “fails to identify who on behalf 4 of Sprint made representations regarding the Facility’s aggregate square footage, what the 5 substance of these representations were, and when or where such representations were made.” 6 (Dkt. No. 28 at 7.) The Court disagrees. 7 Mr. Hartkopf alleges that the terms of the Agreement limit the Site “to approximately 300 8 square feet for Sprint equipment” but that Sprint knew at the outset that the Facility required more 9 than 300 square feet of space. (See Dkt. No. 27 at ¶¶ 13, 15, 62.) Mr. Hartkopf also alleges that 10 Sprint was “in exclusive possession of said facts” at all times relevant to the counterclaim. (Id. at 11 ¶ 63.) Further, “Sprint continued its failure to disclose said facts to [Mr.] Hartkopf with the 12 intention of inducing [him] to agree to the requested modifications or improvements [in the 2011 13 Amendment].” (Id. at ¶ 65.) 14 Thus, Mr. Hartkopf has sufficiently “describe[d] the content of the omission and where the 15 omitted information should or could have been revealed,” see Erickson, 846 F. Supp. 2d at 1093; 16 specifically, Sprint allegedly failed to disclose in the Agreement that the Facility would require 17 more than 300 square feet and did not disclose that fact in communications with Mr. Hartkopf 18 concerning subsequent modifications or improvements at the Site. Those allegations satisfy the 19 Rule 9(b) standard by describing the circumstances of the alleged concealment, such that Sprint 20 “can prepare an adequate answer from the allegations.” See Moore, 885 F.2d at 540. 21 Accordingly, the Court denies Sprint’s motion to the extent it asserts that the concealment 22 counterclaim fails to satisfy Rule 9(b). 23 II. Intentional Concealment of Material Fact 24 Sprint next argues that the “counterclaim demonstrates that Sprint did not actively conceal 25 information concerning the square footage of the Facility at the Site.” (Dkt. No. 28 at 7.) Sprint 26 asserts that Mr. Hartkopf fails to plead active concealment for two reasons: (1) Mr. Hartkopf “had 27 possession of the property and was capable of inspecting the aggregate square footage used by 1 Amendment “included ‘sketches’ of the Site that included drawings regarding the different 2 components of the Facility that Sprint installed on the Site.” (Id. at 7-8.) Because the Court 3 concludes that the first argument is dispositive, it need not address the disputed “sketches.”4 4 Accepting the counterclaim’s allegations as true and drawing all inferences in Mr. 5 Hartkopf’s favor, Mr. Hartkopf fails to plead a plausible claim for fraudulent concealment because 6 there are no factual allegations that plausibly support an inference that Sprint engaged in conduct 7 intended to conceal that it was using more than 300 square feet at the Site. Mr. Hartkopf’s 8 allegations that in April 2019 he “went on the roof of the Property to measure the space occupied 9 by Sprint’s equipment and discovered that Sprint was using in excess of 300 square feet,” (see 10 Dkt. No. 27 at ¶ 33), and retained Telco in June 2019 “to perform a roof survey and to measure the 11 roof space being used by Sprint,” (id. at ¶ 38), support a plausible inference that Sprint did nothing 12 to conceal or suppress the actual square footage occupied by its equipment. In other words, Mr. 13 Hartkopf discovered the approximate true square footage as soon as he made the effort to look. 14 Such circumstances do not amount to concealment. 15 Mr. Hartkopf counters that he did not have “unfettered access to the Site” because the 16 Agreement required him “to warrant that he would not have unsupervised access to the Site or to 17 Sprint’s equipment.” (Dkt. No. 29 at 11 (citing Dkt. No. 1-1, Ex. 1 at 2 ¶ 4 (providing, in 18 pertinent part, “that Owner shall not have unsupervised access to the Site or to the PCS 19 Equipment”)).) The Agreement did not, however, bar Mr. Hartkopf from accessing the entirety of 20 the roof which he alleges he did on two occasions. Given that Mr. Hartkopf had access to the roof 21 on which the Site was located—indeed, it is Mr. Hartkopf’s roof—Mr. Hartkopf’s allegations 22 support a more plausible inference that Sprint could not conceal the amount of space the Facility 23

24 4 Mr. Hartkopf disputes the authenticity of the sketch included with the Agreement that is attached to Sprint’s underlying complaint. (Dkt. No. 29 at 9 (disputing the authenticity of Dkt. No. 1-1, Ex. 25 1 at 7-8 and asserting that the “referenced ‘sketch’ . . . was not part of the agreement”).) However, Mr. Hartkopf does not dispute the authenticity of the “Equipment Layout Plans” included with the 26 2011 Amendment that are attached to Sprint’s underlying complaint. (See Dkt. No. 1-2, Ex. 2 at 6-7.) As previously discussed, Mr. Hartkopf’s counterclaim incorporates the Amendment by 27 reference. That said, adopting Sprint’s interpretation of the Amendment’s Equipment Layout 1 used in relation to the total square footage of the roof itself. In other words, the material fact 2 allegedly concealed was also—as alleged—readily available to Mr. Hartkopf. See Clayton v. 3 Landsing Pac. Fund, Inc., No. C 01-03110 WHA, 2002 WL 1058247, at *7 (N.D. Cal. May 9, 4 2002) (dismissing fraudulent concealment claim where the allegedly concealed “information was 5 in full view; plaintiff just [overlooked] it until years later”). 6 Mr. Hartkopf’s opposition recognizes in a footnote that the Site is located on the roof of his 7 building, but he asserts that “the roof is accessible only through a wall-mounted metal ladder, 8 adjacent to which is posted a sign warning individuals to ‘stay back’ due to radio frequency energy 9 emissions that exceed exposure limits.” (Dkt. No. 29 at 11 n.4.) Further, Mr. Hartkopf contends 10 that he saw “similar signs posted on the roof itself, which caused him to exit quickly once he saw 11 them.” (Id.) Those facts are not alleged in the complaint, and even if they were, that Sprint posted 12 the signs does not give rise to a reasonable inference that the signs were intended to conceal the 13 equipment size from Mr. Hartkopf, see Graham, 226 Cal. App. 4th at 606 (to prevail on a claim of 14 fraudulent concealment, the plaintiff must prove the defendant intended to defraud the plaintiff by 15 intentionally concealing or suppressing the fact); instead, the more plausible inference is that 16 Sprint posted the signs to warn of energy emissions produced by its equipment. See Ashcroft v. 17 Iqbal, 556 U.S. 662, 678 (2009) (“Where a complaint pleads facts that are merely consistent with a 18 defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to 19 relief”) (internal quotation marks and citation omitted). 20 Mr. Hartkopf further argues that he “never had any cause to go up to the Site and inspect 21 [Sprint’s] equipment” until he read the article in April 2019 because Sprint allegedly “affirmed 22 and represented in numerous correspondences with [him] that any modifications or improvements 23 would not increase Sprint’s lease space as originally agreed upon in the . . . Agreement.” (Id. at 24 11.) But as Mr. Hartkopf clarified at oral argument, he does not allege that the modifications or 25 improvements increased Sprint’s lease space; he alleges that the original installation exceeded the 26 agreed-to limitation. Further, as alleged, Mr. Hartkopf had access to the roof and could have 27 determined the square footage used by Sprint at any time over the last two decades. That he had 1 engaged in fraudulent concealment because there are no allegations that Sprint ever acted to 2 conceal the square footage. See Johnson, 578 F. Supp. 2d at 1239 (noting that a claim for 3 fraudulent concealment will not lie “when it cannot be shown that defendants acted to conceal 4 information”). 5 Mr. Hartkopf has failed to plausibly allege that Sprint intentionally concealed the amount 6 of space its equipment occupied for a another reason: Sprint’s underlying complaint alleges that 7 the Agreement does not limit the Site to 300 square feet.5 In other words, and as Sprint asserts, 8 Mr. Hartkopf “ignores Sprint’s position in this case that it did disclose to [Mr. Hartkopf]” in the 9 Agreement that the Facility required more than 300 square feet of space. (See Dkt. No. 30 at 7 10 (emphasis added).) To plausibly plead that Sprint intentionally concealed that it was using more 11 space than the parties agreed to, Mr. Hartkopf must plausibly plead facts that give rise to an 12 inference that Sprint shared Mr. Hartkopf’s interpretation of the Agreement when it allegedly 13 concealed its purported breach from him. Mr. Hartkopf does not allege a single fact to support 14 such an inference. The Agreement itself cannot support that inference because its interpretation is 15 not so clear that the Court can infer that Sprint had to have known that the Agreement means what 16 Mr. Hartkopf presently asserts. 17 Mr. Hartkopf’s reliance on Warner Constr. Corp. v. City of Los Angeles is unavailing 18 because there the California Supreme Court found—upon review of the trial court’s award of 19 damages following a jury trial—that “[t]he facts concealed were exclusively available to [the] 20 defendant and “the plaintiff presented evidence of intentional concealment by the [defendant].” 21 See 2 Cal. 3d 285, 295 (1970). Similar facts are not alleged here because the fact allegedly 22 concealed—the total square footage of space Sprint occupied on the roof—was not exclusively 23 available to Sprint. Nor do the counterclaim’s allegations give rise to a reasonable inference of 24 intentional concealment. 25

26 5 Sprint’s underlying complaint in this action alleges that pursuant to the Agreement, “Sprint has the right, among other things, to occupy four separate spaces on the Site: (1) 300 square feet on 27 the rooftop of the building for Sprint’s Base Station Equipment; (2) space for the Cable Trays; (3) 1 Accordingly, the Court grants Sprint’s motion to dismiss on the grounds that Mr. Hartkopf 2 || fails to plead facts that plausibly support an inference that Sprint intentionally concealed the total 3 square footage it occupied at the Site. The Court declines to consider Sprint’s other arguments in 4 || light of this holding. 5 CONCLUSION 6 The Court GRANTS Sprint’s motion to dismiss Mr. Hartkopf’s counterclaim for 7 || fraudulent concealment because Mr. Hartkopf fails to plead facts that plausibly support an 8 inference that Sprint concealed the total square footage it occupied at the Site. In light of the 9 || undisputed fact that Mr. Hartkopf had access to his roof, the Court doubts that the deficiencies in 10 || the fraudulent concealment claim can be cured. Nonetheless, the Court will give Mr. Hartkopf 21 11 days to file an amended fraudulent concealment claim, provided he can do so consistent with 12 || Federal Rule of Civil Procedure 11. 5 13 The Court does not grant Mr. Hartkopf leave to add any other claims. At oral argument 14 and in his opposition, Mr. Hartkopf did not identify any alleged misrepresentations that were made 15 to him. Thus, if Mr. Hartkopf wishes to bring a different tort counterclaim, he must first move for 16 || leave to amend. 3 17 This Order disposes of Docket No. 28. IT IS SO ORDERED. 19 Dated: November 22, 2019 20

JAQQUELINE SCOTT CORLE 22 United States Magistrate Judge 23 24 25 26 27 28