Total Coverage, Inc. v. Cendant Settlement Services Group, Inc.

252 F. App'x 123
Court of Appeals for the Ninth Circuit·Decided July 3, 2007·No. No. 05-55521·Published·Cited by 9 cases

Opinions

MEMORANDUM **

Appellant Total Coverage, Inc. Appeals dismissal of its complaint for failure to state a claim. We affirm for the reasons discussed below.

Fii'st, the Agreement to Negotiate did not categorically prohibit Cendant from negotiating with T-Mobile. The unambiguous language of the Agreement explicitly gave Total Coverage a “non-exclusive right to negotiate on [Cendant’s] behalf.” Nothing in the Agreement supports Total Coverage’s theory that this language means Cendant cannot negotiate on its own behalf, or that the agreement is “non-exclusive” only as to “other third-party vendors.” An agreement which simply gives one party the right to negotiate for the other does not prohibit the latter from negotiating on its own. See Nelson v. Mayer, 122 Cal.App.2d 438, 440, 445, 265 P.2d 52 (1954); Harcourt v. Stockton Food Products, 113 Cal.App.2d 901, 905, 249 P.2d 30 (1952). Total Coverage’s remaining arguments based on the language of the Agreement also fail.1

Total Coverage argues it nonetheless stated a claim for breach of contract because it was the “procuring cause” of the agreement Cendant ultimately entered into with T-Mobile.2 Under a procuring cause theory,

if the broker’s efforts result in a “meeting of the minds” between the buyer and the seller but the final negotiations and the conclusion of the- sale are conducted by them without the aid of the broker, he will still earn his commission.

Buckaloo v. Johnson, 14 Cal.3d 815, 820 n. 2, 122 Cal.Rptr. 745, 537 P.2d 865 (1975), disapproved on other grounds by Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal.4th 376, 45 Cal.Rptr.2d 436, 902 [125] P.2d 740 (1995) (citations omitted); see also Twogood v. Monnette, 191 Cal. 103, 107, 215 P. 542 (1923)(broker has earned the commission where he has produced party willing to purchase on terms satisfactory to seller, brought buyer and seller together, or produced buyer who has accepted seller’s terms).

Total Coverage did not plead that as a result of its efforts, T-Mobile was “able, ready, and willing to enter into [a] transaction on terms acceptable to [Cendant],” Justice v. G.W. Ackerman, 183 Cal.App.2d 649, 652, 6 Cal.Rptr. 921 (1960)(emphasis added), or that Cendant ultimately closed the deal on terms comparable to those Total Coverage had negotiated on its behalf. The Second Amended Complaint alleges only that Total Coverage “negotiated rates on behalf of Defendant CENDANT and presented the rates to CENDANT’s decision-making executives,” Second Amended Complaint ¶ 9, and that it “fully performed all of its obligations under the Agreement.” Id. ¶ 10. These bare allegations are insufficient to state a claim under a procuring cause theory.

Although leave to amend is freely given “when justice so requires,” Fed. R. Civ. Pro. 15(a), Total Coverage is not entitled in this simple contract case to a fourth attempt to state a claim. The district court granted the Motion to Dismiss the First Amended Complaint “for the reasons stated in defendants’ papers and in light of plaintiffs request for leave to file an amended complaint.” Cendant’s briefs, in turn, argued the “procuring cause” theory did not apply because Total Coverage failed to allege it had produced a buyer “ready [and] able to buy upon the terms and at the prices specified by the owner,” citing Duffy v. Campbell, 250 Cal.App.2d 662, 668, 58 Cal.Rptr. 653 (1967). ER 165. Total Coverage was on notice of the deficiency in its pleadings when it filed the Second Amended Complaint.

Second, Cendant did not breach the Covenant Not To Compete and Non-Disclosure Agreement because the Covenant was superseded by the Agreement to Negotiate. The two agreements related to the same subject matter: the Covenant provided that Cendant would not be connected with a business that competes with Total Coverage, while under the Agreement to Negotiate, Cendant could permissibly be connected with (or function as) a business that competes with Total Coverage. Had the parties intended to keep those portions of the Covenant relating to confidential information in force, they could have agreed that the confidential information provisions of the Covenant remained in effect. See, e.g., Romo v. Y-3 Holdings, Inc., 87 Cal.App.4th 1153, 1159, 105 Cal.Rptr.2d 208 (2001)(deseribing merger clause which states contract is “complete agreement of the parties on the subject of arbitration of disputes, except for any arbitration provision contained in any pension or benefit plan”).3

Third, the alleged oral contract is indistinguishable from the written Agreement to Negotiate, and fails for the same reasons: neither purports to give Total Coverage an exclusive right to negotiate on Cendant’s behalf. Moreover, the merger clause in the Agreement to Negotiate, dated July 10, 2003, provided that the Agreement superseded any contemporaneous agreement on the same subject matter.

Fourth, Total Coverage cannot state claims for quantum meruit, unjust enrichment, or promissory estoppel because the parties’ respective rights were [126] set out in the written Agreement to Negotiate. Under California law, an action in quasi-contract does not lie “when an enforceable, binding agreement exists defining the rights of the parties.” Paracor Fin. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1167 (9th Cir.1996); Sutter Home Winery v. Vintage Selections, 971 F.2d 401, 408-409 (9th Cir.1992)(denying on the pleadings defendant’s quasi-contract claims because relationship between parties governed by a valid express contract); see also Hedging Concepts, Inc. v. First Alliance Mortgage Co., 41 Cal.App.4th 1410, 1419-1420, 49 Cal.Rptr.2d 191 (1996). The Agreement to Negotiate gave Total Coverage a non-exclusive right to negotiate, clearly contemplating that some other entity might also negotiate and close a deal. It made no provision for paying Total Coverage for its fruitless efforts under those circumstances. Allowing Total Coverage to recover in quasi-contract would improperly redefine the party’s rights. See California Medical Ass’n, Inc. v. Aetna U.S. Healthcare of California, Inc., 94 Cal.App.4th 151, 172-173, 114 Cal.Rptr.2d 109 (2001).

Total Coverage argues it is entitled to plead both the express contracts and its ' quasi-contract claims in the alternative under Fed. R. Civ. Pro. 8(e)(2). We have held that, in light of Rule 8(e)(2)’s liberal pleading policy, a pleading “should not be construed as an admission against another alternative or inconsistent pleading in the same case.” McCalden v. California Library Ass’n, 955 F.2d 1214, 1219 (9th Cir.1990), quoting Molsbergen v. United States, 757 F.2d 1016, 1019 (9th Cir.1985).

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Total Coverage, Inc. v. Cendant Settlement Services Group, Inc., 252 F. App'x 123 (9th Cir. 2007).

252 F. App'x 123 (Total Coverage, Inc. v. Cendant Settlement Services Group, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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