Opinion
2:13-cv-00142-RCJ-CWH
04-25-2013
ROBERT D. HUGHES et al., Plaintiffs, v. ETHEL M. CHOCOLATES, INC. et al., Defendants.
ORDER
This is a wrongful death and survival action. Pending before the Court are a Motion to Dismiss (ECF No. 4) and a Motion to Remand (ECF No. 25). For the reasons given herein, the Court denies both motions.
I. FACTS AND PROCEDURAL HISTORY
On December 23, 2010, Plaintiff Robert D. Hughes was visiting M&M's World in Las Vegas, Nevada with his wife Sylvia G. Hughes, their daughters Jacqueline Markowitz and Lisa Freedman, Jacqueline's husband Warren, Jacqueline's and Warren's children Morgan, Zachary, and Abigail, Lisa's husband John, and Lisa's and John's children Rebecca and Georgina, when Sylvia tripped and fell on an escalator leading from the fourth floor to the third floor due to the wide spacing between the escalator's steps, resulting in one to two weeks of medical care and her eventual death on January 16, 2011. (First Am. Compl. ¶¶ 29-36, Jan. 9, 2013, ECF No. 1-1, at 39). Robert Hughes witnessed the fall, and Jacqueline and Lisa witnessed Sylvia immediately after the fall. (Id. ¶ 34). Plaintiff Karen Hughes is also Sylvia's daughter, but she is not alleged to have been present at the scene of the accident. (See id. ¶ 4).
Plaintiffs Robert Hughes, both individually and in his capacity as the administrator of Sylvia Hughes's estate (the "Estate"), Jacqueline Markowitz, Lisa Freedman, and Karen Hughes sued Defendants Ethel M. Chocolates, Inc., Mars Chocolate North America, LLC, Mars Retail Group, Inc., Mars, Inc. (collectively, "Mars"), Showcase Mall Joint Venture ("Showcase"), Forest City Rental Properties Corp. ("Forest City"), CCR/AG Showcase Phase I Owner, LLC ("CCR/AG"), Showcase Retail Management Services, LLC ("Showcase Retail"), Schindler Elevator Corp. ("Schindler"), and Otis Elevator Co. ("Otis") in state court. The First Amended Complaint ("FAC") lists eight nominal causes of action: (1) negligence (against Schindler and Otis); (2) negligence (against Mars, Showcase, Showcase Retail, Forest City, and CCR/AG); (3) negligence per se (against Schindler and Otis); (4) negligence per se (against Mars, Showcase, Showcase Retail, Forest City, and CCR/AG); (5) negligent infliction of emotional distress ("NIED") (by all Plaintiffs except Karen Hughes against all Defendants); (6) strict liability (against Schindler); (7) breach of warranty (against Schindler); and (8) wrongful death. Defendants removed. Mars has moved to dismiss the claim for punitive damages for failure to state a claim. Plaintiffs have stipulated to dismiss all claims against Ethel M. Chocolates, Inc. and Mars Chocolate North America, LLC without prejudice.
The third and fourth nominal causes of action are redundant with the first and second, respectively, as negligence per se is not a separate theory of liability but a legal doctrine affecting the negligence claims.
II. LEGAL STANDARDS
A. Remand
District courts have original jurisdiction in cases where all plaintiffs are diverse from all defendants and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). A defendant may remove a case filed in state court to the federal district court where the federal court would have had original jurisdiction had the case been filed there. Id. § 1441(a). Under the "forum defendant rule," however, defendants who are citizens of the forum state may not remove cases where federal jurisdiction is based purely upon § 1332(a). Id. § 1441(b)(2). In any case removed to a district court where it later appears that the court lacks subject matter jurisdiction, the court must remand the case to the state court. Id. § 1447(c).
B. Dismissal
Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation is plausible, not just possible. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 555).
"Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss" without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court may take judicial notice of "matters of public record." Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).
III. ANALYSIS
A. Remand
Plaintiffs argue a lack of complete diversity. Specifically, they argue that Defendants Showcase and Showcase Retail are not diverse with Plaintiffs Robert Hughes and Markowitz, because all of these parties are Nevada citizens. Also, under the "forum defendant rule," which is an independent bar to removal regardless of complete diversity, Showcase and Showcase Retail cannot remove a case to federal court in Nevada. Plaintiffs adduce only the unverified First Amended Complaint ("FAC") in support. Plaintiffs allege that Robert Hughes and Markowitz are Nevada residents. (See First Am. Compl. ¶¶ 1, 3). They also allege that Showcase is a Nevada partnership and that Showcase Retail is a Nevada LLC. (See id. ¶¶ 16, 20).
Defendants respond that Showcase and Showcase retail are fraudulently joined, such that their presence should not defeat diversity. Defendants argue that under its lease from Showcase, Mars Retail Group had the sole responsibility to maintain any leasehold improvements in good condition and repair, including interior escalators, such as the one where Ms. Hughes allegedly fell, which were not even installed until after Mars took possession from Showcase.
The question is whether Showcase can be liable for injuries to Mars's invitees due to conditions on the land after Mars took possession from Showcase.
Except as stated in §§ 357 and 360-362, a lessor of land is not subject to liability to his lessee or others upon the land with the consent of the lessee or sublessee for physical harm caused by any dangerous condition which comes into existence after the lessee has taken possession.Restatement (Second) of Torts § 355. Nevada follows this "traditional common law rule." See Wright v. Schum, 781 P.2d 1142, 1143 (Nev. 1989) (citing Turpel v. Sayles, 692 P.2d 1290 (Nev. 1985)). A lessor is liable for conditions arising after the lessee takes possession only where, inter alia, the lessor has contracted to maintain the land. Id. § 357(a). A lessor is also potentially liable as to any part of the land that he retains under his control or for injuries arising from any negligent repairs he actually makes on the land, regardless of any contract requiring him to maintain the land. Id. §§ 360-362.
Certain facts do not appear to be in dispute: Mars was Showcase's lessee, Ms. Hughes was Mars's invitee, and the allegedly dangerous condition arose after Mars took possession from Showcase. The question is whether Showcase had any duty to maintain the premises by contract. The Lease, attached as Exhibit B to the Notice of Removal, (see Lease, ECF No. 1-2), notes that the landlord (Showcase) and the tenant (Ethel M. Chocolates) shared responsibility for repairs on the premises. (See Lease §§ 15.1-15.2, at 45-47). The landlord's responsibility is for "the roof, structural portions, the exterior of the Premises, parking facilities . . . and other Common Areas . . . ." (Id. § 15.1(a)(1), at 45). "Premises" is defined as "the specific devised store space leased to Tenant by Landlord . . . ." (id. § 1.1(b)), and "Common Areas" is defined as "the 'Atrium' and its amenities, plaza areas, driveways, aisles, sidewalks, loading docks, dock levelers, passageways, landscaping, courts, stairs, ramps, elevators, escalators, meeting rooms, public restrooms and other common service areas," (id. § 1.1(c) (emphasis added)). The tenant's responsibility is for, inter alia, "any leasehold improvements installed by Tenant (including but not limited to, any vertical transportation systems within the premises), and the interior of the Premises . . . ." (Id. § 15.2, at 46-47 (emphasis added)). The Lease therefore makes the tenant liable to maintain escalators within the leased space (the interior of the store), but makes the landlord liable to maintain escalators in common areas (outside areas not under control of the tenant). Notably, "structural portions and exteriors of the Premises" for which the landlord is liable excludes "store front and entrance doors," making the intention clear that the landlord was not to be responsible for the maintenance or repair of anything within the store itself, because even the boundary between the leased space and the common area, i.e., the store entrances and storefront, were to be maintained by the tenant. (Id. § 15.1(b), at 46). The FAC only identifies the subject escalator as a downward escalator from the fourth floor to the third floor, and it does not specify whether the escalator was within M&M's World or in a common area outside. It can be implied that the escalator was inside M&M's World, because it is described as "the downward escalator from the fourth to the third floors of M&M'S WORLD." (First Am. Compl. ¶ 31).
In reply, Plaintiffs argue that the lease provision requiring Mars to maintain vertical transportation systems within the premises is vague and ambiguous. Plaintiffs argue that there is no evidence when the subject elevator was installed (Plaintiffs appear to concede that the subject elevator was within the Premises). In other words, Plaintiffs argue that the contract is at least ambiguous as to whose responsibility it was to maintain an interior escalator that was installed before Mars took possession of the Premises, and it is not clear when the subject elevator was installed. But the Court finds that the installation date of the subject escalator is inapposite under the contract. Under the contract, Mars is liable for "any leasehold improvements installed by Tenant (including but not limited to, any vertical transportation systems within the premises), and the interior of the Premises . . . ." (Id. § 15.2, at 46-47). This provision is not ambiguous as to whether Mars or Showcase has to maintain the subject elevator. Mars's responsibility under this provision is twofold: (1) it is liable for improvements it makes (including interior escalators); and (2) it is liable for the interior of the Premises. Whether the subject elevator constitutes an improvement made by Mars under the first prong does not matter if the subject elevator was within the interior of the Premises under the second prong. The provision is not ambiguous in this regard, and it does not appear to be seriously disputed that the subject elevator was within the Premises.
Plaintiffs adduce a print-out showing that Showcase Retail is licensed to do business in Clark County, which fact is inapposite to the citizenship of a limited liability company. The citizenship of Showcase Retail is not clear, but it does not appear to be a Nevada citizen. The citizenship of a limited liability company is controlled by the citizenships of its members, Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006), and Showcase Retail has a single member, Center City Realty Partners, LLC, whose address is given as San Francisco, CA in the Nevada Secretary of State's website. The California Secretary of State's website, in turn, lists Center City Realty Partners, LLC as a Delaware limited liability company, but the website of the Delaware Division of Corporations does not return any results for Center City Realty Partners, LLC. Showcase, however, is a common law partnership (or joint venture, which is a type of partnership in Nevada), and its citizenship is therefore controlled by the citizenships of its partners, see id. (citing Carden v. Arkoma Assocs., 494 U.S. 185, 195-96 (1990)), but Plaintiffs do not allege the identity of Showcase's partners. Nor do Defendants allege the identity of Showcase's partners in the Notice of Removal. The parties simply refer to it as "a Nevada general partnership," presumably meaning a partnership under the common law of Nevada that operates in Nevada. But this says nothing of its citizenship. A partnership may exist entirely in one state and not be a citizen of that state for the purposes of diversity if its general partners are all citizens of other states. For the purposes of the present motion, the Court will assume that the Showcase Defendants are not diverse with certain Plaintiffs, but it is worth noting that Defendants may in fact be completely diverse with Plaintiffs. Defendants could potentially defeat the motion to remand without resorting to the fraudulent-joinder argument if they simply proved their own citizenship under the law of diversity rather than wrongly assuming, as Plaintiffs also have, that because the Showcase Defendants operate primarily or entirely in Nevada, they must necessarily be Nevada citizens under the diversity statute. That conclusion does not even necessarily follow for corporations—corporations may operate entirely in one state and still not be a citizen of that state if incorporated elsewhere and if the company's headquarters is outside of the state—much less for limited liability companies and partnerships.
Plaintiffs also argue that § 15.3 provides that Mars was not permitted to make any alterations to the Premises, including to vertical transportation, without Showcase's permission. But the same section also notes that any such alterations would not transfer liability to Showcase. And that caveat is superfluous with respect to premises liability, anyway, because § 15.3 does not vitiate the Second Restatement/Wright rule that only the tenant is liable for harm to a tenant's invitee caused by alterations a tenant makes after taking possession. It simply requires the tenant to obtain permission form the landlord before making changes to the landlord's property.
Finally, Plaintiffs, after having argued that there is "no evidence" of when the subject escalator was installed, admit that Defendants have adduced Stefan's Affidavit stating that Showcase Retail did not design, install, maintain, etc. the subject escalator. Plaintiffs argue that Stefan's attestation is not credible in light of paragraph 8 of Showcase Retail's Answer because Showcase Retail states therein that it is "without knowledge or information to know whether or not it owns, occupies, operates, lease, controls and manages M&M's World." The Court rejects this argument. Rote recitations in an Answer, like the present one, typically amount to boilerplate denials of knowledge in stock legalese. Stefan's affidavit, solicited by his attorneys after the present issues became clearer, is a better presentation of the facts. If there is any inconsistency, it is the affidavit that is more important in the present context. Plaintiffs adduce no contrary evidence.
Plaintiffs next argue that the duty to maintain an escalator is non-delegable, citing a pre-Second Restatement case from California that cites the First Restatement and which Plaintiffs have improperly cited as having been decided by the Ninth Circuit Court of Appeals. See Brown v. George Pepperdine Found., 143 P.2d 929 (Cal. 1943). Plaintiffs also cite an inapposite pre-First Restatement case from Nevada. See Smith v. Odd Fellows Bldg. Ass'n, 205 P. 796, 797-98 (Nev. 1922). Smith did not determine whether a building owner cannot transfer its duty to repair or maintain elevators to a tenant, but only that the owner/operator of an elevator has a duty of care as a common carrier. Strictly speaking, it did not even determine that question. The issue appealed and decided in Smith concerned contributory negligence. The Court noted that the defendant had not objected below to the instructions that the operator of the elevator had a duty to ensure the safety of invitees, and it noted in passing that it agreed, but the case simply did not concern any landlord versus tenant liability issues. See generally id. The other California cases Plaintiffs cite concern injuries caused to invitees by independent contractors hired by the landlord to perform improvements or repairs on the building. But Plaintiffs do not allege that the landlord here actually hired any contractors to maintain or repair the subject escalator. If they do obtain such evidence in discovery, they may rejoin Showcase Defendants and move to remand again.
Here, although the duty for invitee safety is presumably non-delegable, the party from whom the duty is non-delegable is controlled by the Second Restatement and contract under Wright. That is, the duty to maintain safe premises in the interior of the store is non-delegable from Mars. The issues of non-delegability of duty of care to invitees and landlord versus tenant liability are distinct. Plaintiffs point to no cases in which the doctrine of non-delegability has applied to make a landlord liable for the dereliction of duties imposed upon a tenant by law or contract, but only where the doctrine has been applied to make a party (whether landlord or tenant) liable for the dereliction of its own duty through the use of a negligent contractor, which is the precise case in which the doctrine does apply. Neither Showcase Retail nor Mars can escape their respective duties to invitees by pointing to the negligence of an independent contractor one of them has hired to perform work, but either Showcase Retail or Mars may indeed point to a common-law or contractual division of duties to show that the ultimate non-delegable duty to maintain the safe condition of a certain portion of the premises lies with the other. The non-delegable duty doctrine does not conflict with or vitiate Wright.
The non-delegable duty doctrine is an exception to an exception. The rule, known as respondeat superior, is that persons are liable for the acts of their employees or "servants" committed within the scope of employment. An exception to this rule, known as the independent contractor doctrine, is that persons are not liable for similar acts by their independent contractors whose actions they do not closely control. An exception to this exception, known as the non-delegable duty doctrine, is that landowners cannot escape liability for the acts of their independent contractors with respect to the duty to maintain safe premises for invitees.
Professor Dobbs, for example, explicitly and deliberately uses the term "landowner" to include "possessors" in this context in his treatise. See Dan. B. Dobbs, The Law of Torts § 231, at 587 (2000). He confirms the common law and Second Restatement rule of the shifting of the duty to maintain safe premises from landlord to tenant (subject to contractual agreement) that the Nevada Supreme Court confirmed in Wright. See id. § 240, at 625-26.
The Court will therefore deny the motion to remand, as the court is convinced that no claim lies against the Showcase Defendants. The evidence adduced makes clear that the duty to maintain and repair the subject elevator fell upon the diverse tenants, not upon the potentially non-diverse landlords. The latter are therefore fraudulently joined, and their joinder does not defeat removal.
B. Dismissal
Plaintiffs have pled no separate claim for punitive damages, but have included a prayer for punitive damages. Mars argues that the allegation that Mars acted "with a conscious disregard, malice and oppression, of the rights, welfare or safety of Decedent and Plaintiffs" and "specifically intended to cause injury to the decedent or was despicable conduct . . . ." is conclusory. Mars notes that under Nevada law punitive damages are only available to a plaintiff who proves by clear and convincing evidence that the defendant is guilty of "oppression, fraud, or malice, express or implied." Nev. Rev. Stat. § 42.001. Mars argues that Plaintiffs have not set forth enough factual allegations to make oppression, fraud, or malice plausible in this case. The types of conduct that might apply in this case are "malice" or "oppression" which are defined as "conduct which is intended to injure a person or despicable conduct which is engaged in with a conscious disregard of the rights or safety of others" and "despicable conduct that subjects a person to cruel and unjust hardship with conscious disregard of the rights of the person," respectively. See id. Gross negligence or recklessness is not enough. Wyeth v. Rowatt, 244 P.3d 765, 783 (Nev. 2010).
Mars is correct that although Plaintiffs' allegations may be sufficient to infer negligence or even gross negligence, there is no allegation concerning behavior by Mars that would permit a finding of malice or oppression. Plaintiffs do not allege that Mars injured Hughes on purpose or knew of a particular unsafe condition and consciously disregarded it, except in conclusory fashion, or that it purposely treated her cruelly. (See First Am. Compl. ¶¶ 59-61). Plaintiffs argue that Mars consciously disregarded statutory and administrative standards concerning escalator installation and maintenance, but the argument is conclusory and does not appear in the Complaint as an allegation.
Refusal to repair a known dangerous condition has been held not to support punitive damages in Nevada, without more. See Maduike v. Agency Rent-A-Car, 953 P.2d 24, 26-27 (Nev. 1998). In Maduike, a rental car company refused to repair the brakes on a vehicle or replace the car when the plaintiffs brought the car back to the company after experiencing problems with the brakes. See id. at 25. The plaintiffs drove the car home and crashed because of the faulty brakes. Id. The Nevada Supreme Court affirmed the district court's dismissal of the punitive damages claim because the facts did not amount to conscious disregard of the plaintiffs' rights. See id. at 26-27. The Court noted that "even unconscionable irresponsibility will not support a punitive damages award." Id. at 26 (quoting First Interstate Bank v. Jafbros Auto Body, 787 P.2d 765, 767 (Nev. 1990)).
The Court later retreated from this approach, however, and ruled that the disjunctive "implied malice" prong of the punitive damages statute permits such damages for "conscious disregard" of unsafe conditions. See Countrywide Home Loans v. Thitchener, 192 P.3d 293, 253-55 & n.51 (Nev. 2008). "'Conscious disregard' means the knowledge of the probable harmful consequences of a wrongful act and a willful and deliberate failure to act to avoid those consequences." Nev. Rev. Stat. § 42.001(1). This is the standard applicable to the availability of punitive damages for "implied malice."
Defendants are correct that Plaintiffs have only pled conscious disregard in conclusory fashion, but punitive damages is not a separate cause of action that must withstand scrutiny under Rule 8(a). So long as there is some evidence supporting punitive damages, the issue can go to a jury. The Court will therefore not strike or dismiss the prayer for punitive damages. Mars' installation records, maintenance records, and the testimony of its employees may reveal evidence of a conscious disregard of a known defect supporting punitive damages under Thitchener. Plaintiffs are not expected to have such information at the this stage. So long as they have sufficiently pled a cause of action that could support punitive damages under appropriate circumstances (they have), they may proceed to discovery. The Court will not permit the jury to consider punitive damages if Plaintiffs provide no evidence of implied malice or some other basis for punitive damages, but the exclusion of punitive damages at this stage would be premature.
CONCLUSION
IT IS HEREBY ORDERED that the Motion to Remand (ECF No. 25) is DENIED.
IT IS FURTHER ORDERED that the Motion to Dismiss (ECF No. 4) is DENIED.
IT IS SO ORDERED.
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ROBERT C. JONES
United States District Judge