Opinion
CV 20-11592-RSWL-JPRx
10-26-2021
VICTORIA ANNUNZIATO P/K/A KING VICTOBER, Plaintiff, v. MEGAN GUTHRIE P/K/A MEGNUTT02, ET AL., Defendants. MEGAN GUTHRIE P/K/A MEGNUTT02, ET AL., Counterclaimant, v. VICTORIA ANNUNZIATO P/K/A KING VICTOBER, Counter-defendants.
ORDER RE: PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIMS [14-1] AND STRIKE AFFIRMATIVE DEFENSES AND DAMAGES REQUEST [14-2]
HONORABLE RONALD S.W. LEW Senior U.S. District Judge
Currently before the Court is a Motion to Dismiss Defendant's Counterclaim [14-1] and Motion to Strike Affirmative Defenses and Damages Request [14-2] filed by Plaintiff/Counter-Defendant Victoria Annunziato (“Plaintiff”). Having reviewed all papers submitted pertaining to the Motions, the Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS Plaintiff's Motion to Dismiss and GRANTS in part and DENIES in part Plaintiff's Motion to Strike.
I. BACKGROUND
A. Factual Background
Defendant/Counterclaimant Megan Guthrie (“Defendant”) alleges the following in her Counterclaim:
This action arises from an alleged oral agreement between Plaintiff and Defendant in which Defendant allegedly agreed to pay Plaintiff twenty percent of the income received from her OnlyFans.com account (“Account”) as compensation for Plaintiff's managerial services. Notice of Removal Ex. B (“Compl.”) ¶ 6, ECF No. 1-2.
Defendant was the sole and exclusive owner of the OnlyFans.com account (“Account”). Countercl. ¶ 9, ECF No. 13. Plaintiff represented to Defendant, among other things, that she possessed the requisite experience and knowledge to manage the Account. Id. at ¶¶ 10-11. Because of Plaintiff's representations, Defendant hired Plaintiff to manage the Account. Id. at ¶¶ 12-13.
OnlyFans.com is an internet content subscription service where content creators can earn money from users who subscribe to their content.
Plaintiff knowingly misrepresented: (1) her prior management experience; (2) the time she would devote to the Account; (3) that she would stop her own pursuits on social media; (4) her familiarity with the rules and regulations of OnlyFans.com; and (5) that she had the requisite skills to manage and increase the Account revenue. Id. at ¶ 24(a)-(e).
Plaintiff also failed to perform her duties, which included: facilitating the posting of all content on the Account and other social media accounts, responding to Defendant's messages, instructing Defendant on content production, employing personnel if necessary, observing applicable laws related to the Account, and communicating with Defendant about Plaintiff's management progress. Id. ¶ 32(a)-(h).
As a result of Plaintiff's misrepresentations and failure to perform her managerial services, Defendant was harmed. Id. ¶ 34.
Defendant argues that Plaintiff failed to: (1) inform Defendant that a third party would provide content and manage the Account for substantially less pay; (2) report the existence of unanswered messages; (3) prevent copyright violations; (4) employ additional staff as needed; (5) answer messages; (6) work adequate hours and hire staff to manage the Account; and (7) notify Defendant of client dissatisfaction. Id. ¶ 33(a)-(e).
B. Procedural Background
On November 16, 2020, Plaintiff filed her Complaint [1-2] against Defendant, alleging seven causes of action: (1) breach of oral contract; (2) breach of implied contract; (3) quasi-contract/unjust enrichment; (4) fraud: false promise; (5) fraud: intentional misrepresentation; (6) fraud: negligent misrepresentation; and (7) conversion. Defendant removed [1] the Action to this Court on December 23, 2020.
Defendant filed a Motion to Dismiss Plaintiff's Complaint and Strike Damages Request [6] on December 29, 2020. On May 20, 2021, the Court granted in part the Motion [11] and dismissed Plaintiff's fourth, fifth, sixth, and seventh claims from the Complaint.
On June 3, 2021, Defendant filed her Answer and Counterclaim against Plaintiff [12-13], alleging: (1) breach of fiduciary duty; (2) fraudulent misrepresentation; and (3) breach of contract. Plaintiff filed the instant Motion to Dismiss [14-1] and Motion to Strike [14-2] on June 24, 2021. Defendant filed her Opposition to the Motion to Dismiss [17] and Opposition to the Motion to Strike [18] on July 6, 2021, and Plaintiff replied [19, 20] to both Motions on July 13, 2021.
II. DISCUSSION
A. Legal Standard
1. Motion to Dismiss
Rule 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted). Dismissal is warranted for a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988) (citation omitted).
In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir. 1991). The question is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence to support the claims. Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 184 (2005) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). While a complaint need not contain detailed factual allegations, a plaintiff must provide more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
2. Motion to Strike
Rule 12(f) provides that a court may, by motion or on its own initiative, “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “The function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. HandiCraft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994)). “Motions to strike are generally disfavored.” Leghorn v. Wells Fargo Bank, N.A., 950 F.Supp.2d 1093, 1122 (N.D. Cal. 2013) (citation omitted); see also Sapiro v. Encompass Ins., 221 F.R.D. 513, 518 (N.D. Cal. 2004) (“Courts have long disfavored Rule 12(f) motions, granting them only when necessary to discourage parties from making completely tendentious or spurious allegations.”).
“In ruling on a motion to strike under Rule 12(f), the court must view the pleading in the light most favorable to the nonmoving party.” Cholakyan v. Mercedes-Benz USA, LLC, 796 F.Supp.2d 1220, 1245 (C.D. Cal. 2011). “[B]efore granting such a motion . . . the court must be satisfied that there are no questions of fact, that the [claim or] defense is insufficient as a matter of law, and that under no circumstance could [it] succeed.” Id. (citing Tristar Pictures, Inc. v. Del Taco, Inc., No. CV 99-07655 DDP(Ex), 1999 WL 33260839, at *1 (C.D. Cal. Aug. 31, 1999)). “[C]ourts frequently require the moving party to demonstrate prejudice before granting the requested relief, and ultimately whether to grant a motion to strike falls on the sound discretion of the district court.” Cook v. County of Los Angeles, No. CV 19-2417 JVS (KLSx), 2021 WL 1502704, at *2 (C.D. Cal. Mar. 31, 2021) (internal quotation marks and citation omitted).
B. Discussion
1. Motion to Dismiss
Plaintiff moves to dismiss Defendant's counterclaims for: (1) breach of fiduciary duty; (2) fraudulent misrepresentation; and (3) breach of contract. See generally Mot. to Dismiss.
i. Breach of Fiduciary Duty
“In order to plead a claim for breach of fiduciary duty [in California], the claimant must allege (1) the existence of a fiduciary relationship giving rise to a fiduciary duty, (2) breach of that duty, and (3) damage proximately caused by the breach.” Negrete v. Fidelity & Guardian Life Ins. Co., 444 F.Supp.2d 998, 1003 (C.D. Cal. 2006).
“[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.” Alvarado Orthopedic Rsch, L.P. v. Linvatec Corp., No. 11-CV-246-IEG RBB, 2011 WL 3703192, at *3 (citations and internal quotation marks omitted). A person “knowingly undertake[s] to act on behalf and for the benefit of another” when they intend to subordinate their interests to another party. EduMoz, LLC v. Republic of Mozambique, No. CV 1302309MMMCWX, 2014 WL 12802921, at *25 (C.D. Cal. July 21, 2014); cf. City of Hope Nat'l Med. Ctr. v. Genentech, Inc., 43 Cal.4th 375, 386 (2008) (finding that a party did not knowingly undertake fiduciary obligations where there was a mutually beneficial arrangement). Further, “examples of relationships that impose fiduciary duties as a matter of law include a joint venture, a partnership, or an agency.” Alvarado Orthopedic Rsch, 2011 WL 3703192, at *4 (internal quotation marks omitted).
Here, Plaintiff argues in part that Defendant's breach of fiduciary duty counterclaim should be dismissed because it is insufficiently pled. The Court agrees. Defendant has neither alleged facts showing that Plaintiff knowingly undertook fiduciary obligations, nor that Plaintiff owed Defendant a fiduciary duty as a matter of law. As such, Defendant has not pled sufficient facts to establish a fiduciary relationship between the parties.
Defendant alleges in her Counterclaim that “[Plaintiff] was duty-bound to act with the utmost good faith for the benefit of [Defendant]” and that [Defendant] placed her confidence in . . . [Plaintiff], who voluntarily accepted the confidence, and agreed to act as [Defendant]'s manager.” Countercl. ¶ 13. Additionally, in her Opposition, Defendant claims that she and Plaintiff had a relationship analogous to that of a principal and agent, and that she placed her trust and confidence in Plaintiff. Opp'n to Mot. to Dismiss at 8:9-10; 8:12-20. These allegations, without more, are insufficient to show that Plaintiff knowingly undertook to act as Defendant's fiduciary. See World Surveillance Grp. Inc. v. La Jolla Cove Invs., Inc., 66 F.Supp.3d 1233, 1235 (N.D. Cal. 2014) (dismissing a breach of fiduciary duty claim where it only alleged “typical arms-length business dealings” and that defendant “would continue to act” in plaintiff's “best interests”). Just because Plaintiff agreed to manage Defendant does not elevate their relationship to that of principal and agent. See Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, 634 F.Supp.2d 1009, 1021 (N.D. Cal. 2007) (“[Mere] contractual relationships, without more, do not give rise to fiduciary relationships.”); cf. Wiltsee v. California Emp. Commission, 69 Cal.App.2d 120, 125, 128 (employment contract entitling an employee to 25 percent of future profits neither created a joint venture nor gave rise to a fiduciary relationship); cf. Dufour v. BE LLC, No. C 09-03770 CRB, 2010 WL 2560409, at *4 (N.D. Cal. June 22, 2010) (dismissing breach of fiduciary duty claim with prejudice where managerial services “did not constitute a true personal representation” and where defendants did not control plaintiff's property giving rise to a fiduciary duty). That Defendant placed her “trust and confidence” in Plaintiff does not establish a fiduciary relationship either. See City Solutions, Inc. v. Clear Channel Commc'ns, Inc., 201 F.Supp.2d 1048, 1050 (N.D. Cal. 2002) (“The mere fact that in the course of their business relationships the parties reposed trust and confidence in each other does not impose any corresponding fiduciary duty.”).
Defendant also has not alleged facts to show that a fiduciary duty was imposed as a matter of law. See generally Countercl. Nowhere in her Counterclaim does she mention that the parties were in a partnership, joint venture, or special relationship. Id. In fact, Defendant vehemently denies that a partnership or joint venture was formed between the parties. Opp'n to Mot. to Dismiss at 6:12-14 (“[Plaintiff's] partnership and/or joint venture commentary are as untrue as they are unpleaded . . . .”).
While Defendant alleges that the parties were in a principal-agent relationship, this allegation is conclusory at best for the reasons discussed above. Interestingly, Plaintiff argues that the parties formed a joint venture/partnership, but this is irrelevant to the inquiry here because the focus is on how well-pled Defendant's counterclaims are.
Because Defendant has neither alleged facts showing that Plaintiff knowingly undertook a fiduciary duty, nor that a fiduciary duty was imposed as a matter of law, the Court GRANTS Plaintiff's Motion to Dismiss with leave to amend as to this claim. The Court will not address Plaintiff's arguments regarding the economic loss rule at this time.
ii. Fraudulent Misrepresentation
Plaintiff argues that Defendant's fraudulent misrepresentation counterclaim should be dismissed, in part because: (1) it fails to meet the heightened pleading standard under Federal Rule of Civil Procedure “Rule” 9(b); and (2) fraudulent intent is insufficiently alleged. See Mot. to Dismiss at 13:6-14:16. The Court agrees.
1. Dismissal Under Rule 9(b)
Plaintiff asserts that “Defendant fails to plead any of th[e] [fraudulent misrepresentation] cause of action with the requisite particularity[, ] falling silent on the questions of ‘where, when, why, and how.'” Id. at 13:14-16. In opposition, Defendant states that the fraud counterclaim satisfies Rule 9(b) because it is specific enough to give Plaintiff notice of the misconduct so that she can defend against it. Opp'n to Mot. to Dismiss at 7:22-23.
“Claims for fraud . . . must meet the heightened pleading requirements of Rule 9(b).” UMG Recordings, Inc. v. Glob. Eagle Ent., Inc., 117 F.Supp.3d 1092, 1106 (C.D. Cal. 2015) (citations omitted). Under Rule 9(b), fraud allegations must include the “time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Id. at 1106 (citations omitted); see also Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 964 (9th Cir. 2018) (“To properly plead fraud with particularity under Rule 9(b), ‘a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false.'”) (quoting Cafasso, U.S. ex rel v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). Here, Defendant fails to adequately allege “when” and “where” the fraud occurred, in addition to “what” was fraudulent and “why” it was fraudulent.
Plaintiff also argues that Defendant “fall[s] silent” in pleading “how” the alleged misrepresentations were false. Mot. to Dismiss at 13:15-16. In her Counterclaim, Defendant alleges that Plaintiff “knew . . . the statements w[ere] false when . . . made . . .” and that “[i]n making the false statements, [Plaintiff] intended that [Defendant] would rely on [them].” Countercl. at 4:15-17. Contrary to Plaintiff's argument, these allegations are sufficient to show “how” the alleged misrepresentations were false. See Fitzpatrick v. Fitzpatrick, No. 2: 12-CV-2938 GEB AC, 2014 WL 2197610, at *6 (E.D. Cal. May 27, 2014); Tyco Industries, Inc. v. Superior Court, 164 Cal.App.3d 148, 156 (1985) (“[T]he falsity of that promise is sufficiently pled with a general allegation the promise was made without an intention of performance.”).
Rule 9(b) requires that the dates of fraudulent misconduct be alleged with specificity. See Pegasus Trucking, LLC v. Asset Redeployment Grp., Inc., 2021 U.S. Dist. LEXIS 68881, at *15 (C.D. Cal. Feb. 16, 2021) (“Plaintiffs state the transaction . . . commenced in late December 2018 or early January 2019 . . . but Plaintiffs do not allege specific instances on specific dates where the purported promises were made.”). General allegations of the month and year in which the purported fraudulent misconduct occurred do not suffice. See Glen Holly Entm't, Inc. v. Tektronix, Inc., 100 F.Supp.2d 1086, 1094 (C.D. Cal. 1999) (“[A]llegations such as ‘during the course of discussions in 1986 and 1978,' and ‘in or about May through December 1987' do not make the grade under Rule 9(b).”) (quoting U.S. Concord, Inc. v. Harris Graphics Corp., 757 F.Supp. 1053, 1057 (N.D. Cal. 1991))). Here, Defendant alleges that Plaintiff's misrepresentations were made “on or about October 2020.” Countercl. ¶ 24. Because merely alleging the month and year “do[es] not make the grade under Rule 9(b), ” Defendant's fraudulent misrepresentation claim does not meet Rule 9(b)'s standard.
Rule 9(b) additionally requires that the location of alleged fraudulent misconduct be specified. See U.S. ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1051-52 (9th Cir. 2001) (finding that a plaintiff's claim had no factual support where it did not specify the places where the alleged fraudulent misconduct occurred). Here, Defendant does not mention in her Counterclaim where Plaintiff's alleged misrepresentations were made. See generally Countercl. Defendant's Opposition is similarly devoid of a discussion as to where the misrepresentations occurred. See generally Opp'n to Mot. to Dismiss. Therefore, Defendant's fraudulent misrepresentation claim fails to meet Rule 9(b) for this additional reason.
Moreover, “[a] pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer to the allegations. Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th Cir. 1989) (citation omitted). Broad allegations lacking particularized supporting detail are insufficient. Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001); see also SmithKline Beecham, 245 F.3d at 1051 (finding that a complaint was not specific enough under Rule 9(b) where it alleged that a defendant “knowingly” falsified laboratory results). Here, Defendant's allegations lack particularized supporting detail. Defendant broadly claims that Plaintiff misrepresented her management experience and the time she would devote to the Account, in addition to other allegedly false statements. Countercl. ¶ 24. Defendant does not detail what was fraudulent about Plaintiff's statements and does not attempt to explain why they were false. See generally id.; see generally also Opp'n to Mot. to Dismiss. Without more, these allegations are not “specific enough to give [Plaintiff] notice of the particular [fraudulent] misconduct . . . so that [she] can defend against [it] and not just deny that [she] ha[s] done anything wrong.” Bly-Magee, 236 F.3d at 1019 (citation omitted); see also Houston v. Medtronic, Inc., 957 F.Supp.2d 1166, 1180 (C.D. Cal. 2013) (dismissing fraudulent misrepresentation because plaintiff “fail[ed] to allege the specific contents of [defendants] representations . . . and why they were false”). As such, Defendant's fraudulent misrepresentation claim fails to satisfy Rule 9(b) on these additional grounds.
2. Dismissal for Failure to Sufficiently Allege Fraudulent Intent
Plaintiff asserts that “Defendant . . . makes the conclusory statement that ‘[Plaintiff] intended that [Defendant] would rely on the false statements,' which is insufficient [to allege intent within a fraudulent misrepresentation counterclaim].” Mot. to Dismiss at 14:10-16. Defendant is silent as to this argument in her Opposition. See generally Opp'n to Mot. to Dismiss. The Court agrees with Plaintiff here.
In California, a fraud claim requires: (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage. EduMoz, LLC, 2014 WL 12802921, at *26. While Rule 9(b) requires that circumstances constituting fraud be stated with particularity, intent may be alleged generally under Rule 8(a). Fed. R. Civ. Proc. 9(b); see also R Power Biofuels, 2017 WL 1164296, at *10 (“[A]llegations of intent must still satisfy the plausibility requirements of Rule 8(a).”).
Merely pleading that “representations and promises were false when they were made, ” and that a defendant “knew . . . representations were false when they were made, ” is insufficient to allege intent even under Rule 8(a). UMG Recordings, 117 F.Supp.3d at 1109 (“Although allegations of scienter need not meet rule 9(b)'s specificity requirement, these allegations are insufficient even to satisfy Rule 8(a).”). While intent can be averred generally, “a plaintiff must [still] point to facts which show that [a] defendant harbored an intention not to be bound by [the] terms of [a] contract at formation.” Id. at 1109-10.
Here, Defendant has not adequately alleged intent. In her Counterclaim, Defendant only alleges that “[i]n making the false statements, Plaintiff intended that [Defendant] would rely on the false statements.” Countercl. ¶ 26. Defendant has not pointed to any facts showing that Plaintiff had an intention not to be bound by the parties' agreement at formation. See generally id.; Opp'n to Mot. to Dismiss. Thus, it appears that Defendant alleges intent based only on Plaintiff's nonperformance of her managerial duties, which is insufficient. See R Power Biofuels, 2017 WL 1164296, at *11 (“It is insufficient to allege intent based purely on [a] [d]efendant's failure to perform its promises.”); see also Tenzer v. Superscope, Inc., 39 Cal.3d 18, 30 (1985) (“[S]omething more than nonperformance is required to prove [a] defendant's intent not to perform his promise.”). On this additional basis, the Court GRANTS Plaintiff's Motion to Dismiss Defendant's fraudulent misrepresentation claim with leave to amend. The Court will not address Plaintiff's arguments regarding the economic loss rule at this time.
iii. Breach of Contract Counterclaim
Plaintiff argues that Defendant's breach of contract counterclaim should be dismissed because it fails to allege consideration and whether Defendant performed or was otherwise excused from performance under the contract. Mot. to Dismiss at 15:5-9. Defendant asserts that, on the contrary, she has pled the requisite elements for a breach of contract claim. Opp'n to Mot. to Dismiss at 11:1-4. The Court agrees with Plaintiff.
In California, “the elements of a viable breach of contract claim are: (1) the existence of a contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) damages . . . as a result of the breach.” Alpha GRP, Inc. v. Subaru of Am., Inc., No. CV 182133MWFMRWX, 2018 WL 5986989, at *10 (C.D. Cal. June 8, 2018) (citations and internal quotation marks omitted). “Under California law, consideration is an essential element of a contract.” VasoNova, Inc. v. Grunwald, No. C 12-02422 WHA, 2012 WL 6161041, at *5 (N.D. Cal. Dec. 11, 2012) (citation omitted); see also Cal. Civ. Code § 1150 (“It is essential to the existence of a contract that there should be: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient cause or consideration.”).
Here, Defendant has not alleged consideration in her breach of contract counterclaim. See generally Countercl. Further, in her Opposition, Defendant merely restates the allegations in her Counterclaim without addressing the arguments raised by Plaintiff. See generally Opp'n to Mot. to Dismiss. Because Defendant has not alleged consideration whatsoever, the Court dismisses Defendant's breach of contract counterclaim. Cf. VasoNova, 2012 WL 6161041, at *5 (dismissing breach of contract claim for failure to “plead any consideration”).
Defendant also has not alleged that she performed under the contract or was otherwise excused from performing. See generally Countercl. In her Counterclaim, Defendant merely states that “[Defendant] and [Plaintiff] entered into a contract in which [Plaintiff] agreed to manage [Defendant]'s Only[F]ans.com account.” Id. ¶ 31. Defendant alleges Plaintiff's obligations under the contract but is silent as to her own. See generally id. Without more, the Court cannot “determine the nature of the parties' obligations . . . .” See Alpha GRP, 2018 WL 5986989, at *10. Therefore, the Court dismisses Defendant's breach of contract counterclaim on this additional ground. Id. (holding that failure to plead “what [defendant] precisely promised . . ., the effective date of the contract, [and] the duration of the contract . . .” was “fatal to the breach of contract claim”).
For the foregoing reasons, the Court GRANTS Plaintiff's Motion to Dismiss Defendant's Counterclaims in its entirety with leave to amend each claim.
2. Motion to Strike
Plaintiff moves to strike Defendant's damages requests and affirmative defenses. See generally Mot. to Strike.
i. Damages Requests
In tandem with her Counterclaim, Defendant requested: (1) punitive and exemplary damages; (2) attorney's fees and costs; and (3) consequential and incidental damages. See Mot. to Strike at 1:1-12.
In her Opposition to Plaintiff's Motion to Strike, Defendant withdrew her request for attorney's fees and costs. Opp'n to Mot. to Strike at 2:9-11. Accordingly, the Court DENIES as moot Plaintiff's Motion to Strike Defendant's request for attorney's fees and costs.
Further, given that the Court GRANTS Plaintiff's Motion to Dismiss for the reasons outlined above, Plaintiff's Motion to Strike Defendant's requests for: (1) punitive and exemplary damages; and (2) consequential and incidental damages are additionally DENIED as moot.
ii. Affirmative Defenses
Rule 8(b)(1) requires a party to “state in short and plain terms its defenses to each claim asserted against it.” Fed.R.Civ.P. 8(b)(1). Rule 12(f) permits a court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “A defense may be stricken as insufficient if it fails to give plaintiff ‘fair notice' of the defense.” Perez v. Gordon & Wong L. Grp., P.C., No. 11-CV-03323-LHK, 2012 WL 1029425, at *5 (N.D. Cal. Mar. 26, 2012) (quoting Wyshak v. City Nat'l Bank, 607 F.2d 824, 827 (9th Cir.1979)); see also Schwarz v. Meinberg, No. CV 1300356BROPLAX, 2016 WL 4011716, at *4 (C.D. Cal. July 15, 2016) (noting that the majority of courts within the Central District of California apply the fair notice standard when addressing the sufficiency of affirmative defenses). “Fair notice” requires that affirmative defenses “be supported by at least some facts indicating the grounds on which the defense is based, but need not include facts sufficient to demonstrate plausible entitlement to relief.” Rosen v. Masterpiece Marketing Group, LLC, 222 F.Supp.3d 793, 802 (C.D. Cal. 2016).
“A court may also strike from an answer matter that is immaterial, i.e., ‘that which has no essential or important relationship to the claim for relief or the defenses being plead,' or matter that is impertinent, i.e., that which does not pertain, and is not necessary, to the issues in question.” Id. (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517(1994)).
a. Affirmative Defense #1: Failure to State a Claim
Defendant withdraws her “failure to state a claim” defense. Opp'n to Mot. to Strike at 3:11-12. Accordingly, the Court DENIES as moot Plaintiff's Motion to Strike Defendant's first affirmative defense.
b. Affirmative Defense #2: Offset
Defendant contends that she “is entitled to an offset against any award in the amount of the damages caused by [Plaintiff].” Answer ¶ 41, ECF No. 12. Plaintiff attacks the sufficiency of Defendant's offset defense and argues that it is redundant in light of Defendant's breach of contract counterclaim, which would “naturally entail an offset. . . .” Mot. to Strike at 8:2-5; Reply to Mot. to Strike Opp'n at 1:23-25. Plaintiff does not provide legal support for its argument, however. See generally id. In fact, California district courts have denied motions to strike where movants have similarly argued that an offset defense is repetitive of counterclaims. See, e.g., Snap Mobile, Inc. v. Croghan, No. 18-CV-04686-LHK, 2019 WL 884177, at *2 (N.D. Cal. Feb. 22, 2019) (denying motion to strike offset defense even though it repeated allegations in a counterclaim).
Still, Defendant's offset defense will be stricken because it is insufficient. “Under the fair notice standard, even defenses that are pled in a conclusory manner may provide fair notice so long as they are ‘potentially viable affirmative defenses, the nature of the defenses is well known, and [the] [p]laintiff can seek discovery regarding the purported factual basis for the[] defenses.'” Schwarz, 2016 WL 4011716, at *4 (citation omitted). Here, Defendant requests that Plaintiff's recovery be offset by the amount of damages caused to Defendant. Answer ¶ 41. However, Defendant does not specify a damages amount or otherwise indicate how much the offset would be. See generally Answer. As such, Defendant's offset defense is too conclusory and does not provide Plaintiff with notice of the amount of damages allegedly caused to Defendant. Cf. Jacobson v. Persolve, LLC, No. 14-CV-00735-LHK, 2014 WL 4090809, at *9 (N.D. Cal. Aug. 19, 2014) (holding that an offset defense was sufficient because plaintiff had notice of the amount potentially owed to defendant based on the context of the dispute.)
Accordingly, the Court GRANTS Plaintiff's Motion to Strike Defendant's offset defense, with leave to amend to add a more specified offset amount. See Wyshak v. City Nat. Bank, 607 F.2d 824, 826 (9th Cir. 1979) (“In the absence of prejudice to the opposing party, leave to amend [affirmative defenses] should be freely given.”).
c. Affirmative Defense #3: Vagueness as to Term
Plaintiff argues that Defendant's “vagueness as to term” defense is redundant and not an affirmative defense because it overlaps with Defendant's breach of contract counterclaim. Mot. to Strike 8:9-18. Defendant asserts that it is valid because “contract terms must be ascertainable (or not vague) for a contract to be enforceable.” Opp'n to Mot. to Strike 4:2-7. Defendant's argument is unavailing.
“Affirmative defenses plead matters extraneous to [a] plaintiff's prima facie case, which deny plaintiff's right to recover, even if the allegations of the complaint are true.” Schwarz, 2016 WL 4011716, at *5 (citation and internal quotation marks omitted). “In contrast, denials of the allegations in [a] [c]omplaint or allegations that [a] [p]laintiff cannot prove the elements of his claims are not affirmative defenses.” Id. “Therefore, defenses that deny or seek to disprove elements of a [p]laintiff's claim[] are not affirmative defenses and should be stricken.” Id.
Here, Defendant's vagueness as to term defense serves to attack an element of Plaintiff's breach of contract claim-that an enforceable contract existed during the period for which Plaintiff seeks recovery. As such, vagueness as to term is not an affirmative defense and will be stricken. See Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002) (“A defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense.”); see also Dairy Emps. Union Loc. No. 17 v. Dairy, No. 5:14-CV-01295-RSWL-M, 2015 WL 505934, at *4 (C.D. Cal. Feb. 16, 2015) (striking an affirmative defense challenging an element of plaintiffs' prima facie case as improper). The Court therefore GRANTS Plaintiff's Motion to Strike Defendant's third affirmative defense with prejudice. See id. (denying leave to amend because “[d]efendant may assert this allegation in any other proper manner, but not as an affirmative defense”).
d. Affirmative Defense #4: Breach of Implied Covenant of Good Faith and Fair Dealing
Defendant argues that Plaintiff “breached her contract by failing to provide the service agreed upon and by breaching the implied covenant of good faith and fair dealing.” Answer ¶ 43. Defendant counters that this defense is duplicative of Plaintiff's breach of contract counterclaim and fails to state an independent claim for breach of the implied covenant. Mot. to Strike 8:22-9:21.
The Court does not agree that Defendant's fourth affirmative defense should be stricken as duplicative of her breach of contract claim. Though similar, the two claims consist of different elements and are therefore separate legal theories. See Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F.Supp.2d 952, 968 (N.D. Cal. 2010) (listing the elements for a cause of action for breach of the implied covenant of good faith and fair dealing under California law); Body Jewelz, Inc. v. Valley Forge Ins. Co., 241 F.Supp.3d 1084, 1090 (C.D. Cal. 2017) (listing the elements for a breach of contract claim under California law).
However, the Court nevertheless finds that this defense is insufficiently pled. The elements required to prove breach of the implied covenant of good faith and fair dealing are: “(1) the parties entered into a contract; (2) [Defendant] fulfilled [her] obligations under the contract; (3) any conditions precedent to [Plaintiff's] performance occurred; (4) [Plaintiff] unfairly interfered with [Defendant's] rights to receive the benefits of the contract; and (5) [Defendant] was harmed by [Plaintiff's] conduct.” Rosenfeld, 732 F.Supp.2d at 968. In alleging this affirmative defense, however, Defendant simply states that Plaintiff “failed to provide the service agreed upon” and breached the implied covenant. Answer ¶ 43.
Though acknowledging the existence of a contract, Defendant provides no facts indicating that she fulfilled her obligations under it. Defendant similarly fails to describe which benefits under the contract Plaintiff interfered with, and how her conduct amounted to a failure to perform under the terms of the agreement. While Defendant need not meet the Iqbal/Twombly standard of plausibility in pleading affirmative defenses, Defendant must provide “some facts indicating the grounds on which the defense is based.” See Rosen, 222 F.Supp. at 802 (emphasis added). Merely adding a conclusory statement that Plaintiff breached the implied covenant is insufficient. See Microsoft Corp. v. Hon Hai Precision Indus. Co., No. 19-CV-01279-LHK, 2020 WL 836712, at *13 (N.D. Cal. Feb. 20, 2020) (striking the affirmative defense of breach of the implied covenant of good faith and fair dealing because it was insufficiently pled and recited a mere legal conclusion). Furthermore, Defendant's failure to adequately plead the existence of a contract in the first place makes this affirmative defense especially questionable.
The Court accordingly GRANTS Plaintiff's Motion to Strike the fourth affirmative defense with leave to amend. See Wyshak, 607 F.2d at 826.
e. Affirmative Defense #5: Breach of Material Term Excusing Performance
In her fifth affirmative defense, Defendant asserts that Plaintiff “breached material provisions of any oral or implied contract and thereby damaged [Defendant] and is prohibited from recovery.” Answer ¶ 44. Plaintiff argues this claim is redundant because it is the same as Defendant's counterclaim for breach of contract. Mot. to Strike 9:25-28.
Under California law, the elements of a cause of action for breach of contract are: “(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.” Body Jewelz, Inc., 241 F.Supp.3d at 1090. Thus, Defendant's assertion that Plaintiff breached material terms of the agreement serves to negate a prima facie element of Plaintiff's breach of contract claim-that Plaintiff fully performed her obligations under the contract. This claim is therefore not an affirmative defense and is stricken. See Zivkovic, 302 F.3d at 1088; Cathay Logistics, LLC v. Gerber Plumbing Fixtures, LLC, No. 2: 15-cv-02926-ODW(RAO), 2016 WL 3912011, at *5 (C.D. Cal. July 19, 2016) (“[D]emonstrating performance and/or an excuse for non-performance under the contract is part of [Plaintiff]'s prima facie case; it is not an affirmative defense.”).
The Court therefore GRANTS Plaintiff's Motion to Strike the fifth affirmative defense with prejudice. See Zody v. Microsoft Corp., No. C- 12-00942-YGR, 2013 WL 2468250, at *8 (N.D. Cal. 2013) (striking defendant's breach-of-contract affirmative defense without leave to amend because it addressed plaintiff's affirmative case).
f. Affirmative Defense #6: Fraud
Defendant asserts that any agreement between herself and Plaintiff is invalid because it was based on fraudulent misrepresentations by Plaintiff. Answer ¶ 45. Plaintiff asserts that this defense should be stricken because it fails to meet the heightened pleading standard under Rule 9(b), is redundant, and is nevertheless barred by the economic loss rule. Mot. to Strike 10:5-11:5.
In all averments of fraud, including affirmative defenses, the circumstances constituting the fraud must be stated with particularity. ADP Comm. Leasing, Inc. v. M.G. Santos, Inc., No. CV F 13-0587 LJO SKO, 2013 WL 3863897, at *9 (E.D. Cal. July 24, 2013) (citing Multimedia Patent Trust v. Microsoft Corp., 525 F.Supp.2d 1200, 1210-1211 (S.D. Cal. 2007)). Despite Defendant's inclusion of Plaintiff's alleged misrepresentations, the pleading of this affirmative defense is insufficient for the same reasons that Defendant's fraud counterclaim fails to survive a motion to dismiss. Defendant again fails to allege when and where the fraudulent statements took place and does not include particularized supporting detail.
Accordingly, the Court GRANTS Plaintiff's Motion to Strike Defendant's sixth affirmative defense with leave to amend to plead the circumstances of fraud with greater specificity. See Wyshak, 607 F.2d at 826.
g. Affirmative Defense #7: Unclean Hands
Defendant asserts that Plaintiff's claims are barred “by virtue of Plaintiff's unclean hands in the matters giving rise to the agreement and Plaintiff's intentional withholding of material information from Defendant.” Answer ¶ 50. Defendant argues that this defense should be stricken because it relies on Defendant's allegations of fraud, and Defendant has therefore “failed to provide Plaintiff fair notice of the grounds upon which the defense rests.” Mot. to Strike 11:9-15.
Here, because Defendant's unclean hands defense depends upon the allegations of fraud, this affirmative defense must be held to the same heightened pleading standard. See Intel Corp. v. Hyundai Electronics Am., Inc., 692 F.Supp. 1113, 1117 (N.D. Cal. 1987). Thus, the Court GRANTS the Motion to Strike as to the seventh affirmative defense because Defendant fails to state the circumstances of the fraudulent activity with sufficient particularity. See id. (striking defendant's unclean hands affirmative defense because it referred to allegations of fraud but failed to allege specific facts to support those allegations). However, the Court grants Defendant leave to amend to plead the circumstances of fraud with greater specificity. See Wyshak, 607 F.2d at 826.
Defendant relies on Gen-Probe Inc. v. Becton Dickinson & Co., No. 09-cv-2319 BEN (NLS), 2010 WL 4442731, at *1 (S.D. Cal. Nov. 1, 2010), for the proposition that “a mere statement that a defendant intends to assert the [unclean hands] defense is sufficient under the Rules.” Opp'n to Mot. to Strike 5:10-11. However, the assertion of unclean hands there did not involve allegations of fraudulent conduct and therefore did not invoke the heightened pleading standard under Rule 9(b). See Gen-Probe Inc., 2010 WL 4442731, at *1. Thus, its reasoning is inapplicable here.
III. CONCLUSION
Based on the foregoing, the Court GRANTS Plaintiff's Motion to Dismiss. With respect to Plaintiff's Motion to Strike, the Court DENIES as moot the motion to strike damages requests and Defendant's first affirmative defense; GRANTS with leave to amend the motion to strike Defendant's second, fourth, sixth, and seventh affirmative defenses; and GRANTS with prejudice the motion to strike Defendant's third, fifth affirmative defenses.
IT IS SO ORDERED.