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Hydroblend, Inc. v. Nothum Manufacturing Co.

United States District Court, D. Idaho

July 10, 2014

HYDROBLEND, INC., Plaintiff,
v.
NOTHUM MANUFACTURING COMPANY, et al., Defendants.

ORDER

EDWARD J. LODGE, District Judge.

Before the Court in the above entitled matter is the Defendant's Motion to Dismiss pursuant to Rules 9(b) and 12(b) or, in the alternative, Motion for More Definite Statement pursuant to Rule 12(b)(e). The parties have filed their responsive briefing and the matter is ripe for the Court's review. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the Motion shall be decided on the record before this Court without oral argument.

FACTUAL AND PROCEDURAL BACKGROUND

In September of 2009, Plaintiff Hydroblend, Inc., an Idaho corporation, and Defendant Nothum Manufacturing Company, a Missouri corporation, executed a Letter of Understanding which represented the terms and conditions of the parties' legal understanding and agreement moving forward in a joint venture for the purpose of developing and manufacturing a bread crumb applicator machine, for the industrial food processing marketplace, capable of achieving superior handling and application characteristics for Hydroblend's fresh Nama Panko coating. (Dkt. 1 at ¶ 7) (Dkt. 14-2, Ex. A.) The parties also executed a Term Sheet which summarized the principal terms with respect to the anticipated formation of the joint venture discussed in the Letter of Understanding. (Dkt. 14-3, Ex. B.)[1] Under the terms of the Agreements each party was obligated to make cash contributions as well as adhere to other duties as outlined in the Agreements.

On October 15, 2013, Hydroblend commenced this action by filing a Verified Complaint alleging claims against Nothum arising from the Agreements for: 1) Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing, 2) Breach of Fiduciary and Statutory Duties, 3) Fraud, and 4) Dissolution and Winding Up of the Joint Venture. (Dkt. 1.) The claims relate to Hydroblend's allegations that Nothum failed to perform as required by the Agreements. Generally, Hydroblend alleges Nothum did not meet certain milestones, failed to manufacture any functional prototype machines, and did not complete regular performance reports. In addition, the claims arise from allegations that Nothum had accepted a purchase order for one machine at a price of $140, 000 from King & Prince and had received a $70, 000 down payment. (Dkt. 1 at ¶¶ 21-28.) Nothum allegedly never informed Hydroblend about that purchase order or down payment and no machine was ever delivered to King & Prince.

Nothum has filed this Motion to Dismiss arguing the claims fail to state a cause of action as a matter of law or, alternatively, that Hydroblend should be ordered to file a more definite statement. (Dkt. 5.) In addition, Nothum has filed counterclaims against Hydroblend alleging: 1) Breach of Contract, 2) Negligent Misrepresentation, 3) Fraudulent Misrepresentation/Inducement, and 4) Breach of Fiduciary Duty. (Dkt. 20.) In this Order, the Court takes up the pending Motion to Dismiss and finds as follows.

STANDARDS OF LAW

1. Motion to Dismiss

A motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a party's claim for relief. When considering such a motion, the Court's inquiry is whether the allegations in a pleading are sufficient under applicable pleading standards. Federal Rule of Civil Procedure 8(a) sets forth minimum pleading rules, requiring only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).

A motion to dismiss will only be granted if the complaint fails to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citations omitted). Although "we must take all of the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly , 550 U.S. at 555. Therefore, "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Caviness v. Horizon Comm. Learning Cent., Inc. , 590 F.3d 806, 811-12 (9th Cir. 2010) (citation omitted).

2. Motion for More Definite Statement

Federal Rule of Civil Procedure 12(e) provides, in relevant part: "A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response." Rule 12(e) motions are "not favored by the courts since pleadings in federal courts are only required to fairly notify the opposing party of the nature of the claim." Griffin v. Cedar Fair , L.P., 817 F.Supp.2d 1152, 1154 (N.D. Cal. 2011). A motion for more definite statement is used to provide a remedy for an unintelligible pleading rather than a correction for lack of detail. See Comm. for Immigrant Rights of Sonoma Cnty. v. Cnty. of Sonoma , 644 F.Supp.2d 1177, 1191 (N.D. Cal. 2009). When a pleading lacks detail and fails to state a claim for relief, the pleading is properly analyzed pursuant to Rule 12(b)(6). See Wright & Miller, 5C Federal Practice & Procedure § 1376, at n. 8 (3d ed.). A motion filed pursuant to Rule 12(e) "must point out the defects complained of and the details desired." Fed.R.Civ.P. 12(e). "Such a motion is likely to be denied where the substance of the claim has been alleged, even though some of the details are omitted." True v. American Honda Motor Co., Inc. , 520 F.Supp.2d 1175, 1180 (C.D. Cal. 2007). By contrast, "a Rule 12(e) motion is more likely to be granted where the complaint is so general that ambiguity arises in determining the nature of the claim or the parties against whom it is being made." Sagan v. Apple Computer, Inc. , 874 F.Supp. 1072, 1077 (C.D. Cal. 1994).[2]

DISCUSSION

1. Nature of the Motion

Generally, the Court may not consider any material beyond the pleadings in ruling on a motion to dismiss under Rule 12(b)(6). See Branch v. Tunnell , 14 F.3d 449, 453 (9th Cir. 1994). If materials outside the pleadings are considered, the motion is converted to a motion for summary judgment governed by Federal Rule of Civil Procedure 56. See Jacobsen v. AEG Capital Corp. , 50 F.3d 1493, 1496 (9th Cir. 1995). There are, however, times when documents other than the pleadings can be considered without converting a motion to dismiss into a motion for summary judgment. See Branch , 14 F.3d at 453. "[D]ocuments 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." Id.

The Court has reviewed the documents provided by Hydroblend in response to the Motion. (Dkt. 14, Exs. A-C.) Neither party appears to dispute the authenticity of the documents and both parties have referred to and relied upon these documents in arguing their positions on the Motion to Dismiss. (Dkt. 5, 14, 15); see also Branch , 14 F.3d at 453. Accordingly, the Court will consider the same in deciding this Motion. The Court finds it appropriate to consider these documents on this Motion to Dismiss without requiring that the Motion be converted to one for summary judgment. Based on the foregoing, Court will consider the Motion as one for dismissal pursuant to Rule 12(b)(6) under the standard of law stated above.

2. Motion to Dismiss or Motion for More Definite Statement

Nothum generally argues because the parties entered into a "joint venture, " as opposed to a contract, that Hydroblend cannot recover any alleged damages simply because the joint venture was not successful. Specifically, Nothum maintains that the terms of the Agreement control and the facts alleged in the Complaint fail to support the claims. (Dkt. 5.) Alternatively, Nothum asks that Hydroblend be required to file a more definite statement of its claims. (Dkt. 5.) Hydroblend counters that the facts alleged in the Complaint are sufficient ...


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