United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO
DISMISS (DKT. 7)
Honorable Candy W. Dale United States Magistrate Judge
before the Court is Defendant Rhythm Engineering's
partial motion to dismiss, seeking to dismiss Plaintiff Ada
County Highway District's claims of unjust enrichment and
breach of implied warranty of merchantability. (Dkt. 7.) The
motion is fully briefed and the Court heard oral argument
from the parties on August 22, 2016. After review of the
record and consideration of the parties' arguments and
relevant legal authorities, the Court will grant Rhythm's
motion to dismiss the unjust enrichment claim, with leave to
amend, and will deny the motion to dismiss the breach of
implied warranty of merchantability claim.
January 8, 2014, ACHD and Rhythm entered into an Adaptive
Control Technology Purchase Agreement (Purchase
Agreement) for the installation of a signal control
system on roads throughout Ada County, Idaho. Adaptive signal
control technology systems are composed of computer hardware
and software, which together, are designed to help control
the flow of traffic over busy roads.
Purchase Agreement contained a two year warranty. Compl.,
¶ 9 (Dkt. 1 at 4). Pursuant to the Purchase Agreement,
Rhythm agreed to provide a full refund if, after three months
of operation, ACHD believed the adaptive signal control
technology system did not reduce travel time and emission and
fuel consumption, while also improving safety. Id.
To receive a full refund, ACHD had to: (1) collect before and
after data using the same collection method; (2) allow Rhythm
time to “fine tune” the adaptive signal control
technology system; and (3) provide a written list of concerns
to Rhythm. Id.
December of 2014 and October of 2015, ACHD and Rhythm
corresponded in writing and discussed, in-person, problems
ACHD was experiencing with the adaptive signal control
technology system. Id. at ¶ 11 (Dkt. 1 at 4).
Rhythm attempted to correct the system's problems;
however, Rhythm's attempts were not
November 9, 2015, ACHD notified Rhythm of its rejection of
the adaptive signal control technology system and termination
of the Purchase Agreement. Id. at ¶ 19 (Dkt. 1 at
5). ACHD identified Section C.12 of the Purchase Agreement as
the basis for termination,  and asserted that the system
failed field operational testing three times by failing to
automatically adjust based on the traffic conditions, which
in turn, lead to the failure to reduce side street delays.
Id. In its termination notice, ACHD demanded a full
days later, Rhythm responded to the termination notice,
informing ACHD that ACHD did not have the right to terminate
the Purchase Agreement under Section C.12, ACHD's
rejection of the system was untimely under the Idaho Uniform
Commercial Code, and ACHD failed to comply with conditions of
the warranty. Id. at ¶ 20 (Dkt. 1 at 6). Rhythm
demanded ACHD return the adaptive signal control technology
system equipment within 30 days for a refund under the
warranty. On December 8, 2015, ACHD attempted to return the
system's equipment to Rhythm via Federal Express
overnight delivery; Rhythm refused to accept delivery of the
equipment. Id. at ¶ ¶ 24-25 (Dkt. 1 at 6).
December 16, 2015, ACHD filed a Complaint against Rhythm
asserting the following claims: (1) breach of contract; (2)
breach of express warranty; (3) breach of implied warranty of
merchantability; (4) breach of implied warranty of fitness
for a particular purpose; and (5) unjust enrichment. ACHD
seeks a full refund of the purchase costs of the adaptive
signal control technology system and attorney fees.
February 16, 2016, Rhythm filed an answer and counterclaim
against ACHD (Dkt. 6) and a partial motion to dismiss
ACHD's unjust enrichment and breach of implied warranty
of merchantability claims (Dkt. 7). The motion is ripe for
the Court's consideration.
Motion to Dismiss
complaint fails to state a claim for relief under Rule 8 of
the Federal Rules of Civil Procedure if the factual
assertions in the complaint, taken as true, are insufficient
for the reviewing court plausibly “to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 622, 678 (2009). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. In other
words, although Rule 8 “does not require detailed
factual allegations, … it demands more than an
accusation.” Id. (internal quotations
omitted). If the facts pleaded are “merely consistent
with a defendant's liability, ” the complaint has
not stated a claim for relief that is plausible on its face.
Id. (internal quotations marks omitted).
Leave to Amend
dismissal without leave to amend is improper unless it is
beyond doubt that the complaint “could not be saved by
any amendment.” Livid Holdings Ltd. v. Salomon
Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005).
The United States Court of Appeals for the Ninth Circuit has
held that, “in dismissals for failure to state a claim,
a district court should grant leave to amend even if no
request to amend the pleading was made, unless it determines
that the pleading could not possibly be cured by the
allegation of other facts.” Cook, Perkiss and
Liehe, Inc. v. N. California Collection Serv., Inc., 911
F.2d 242, 247 (9th Cir. 1990). The issue is not whether
plaintiff will prevail but whether she “is entitled to
offer evidence to support the claims.” See Hydrick
v. Hunter, 466 F.3d 676, 685 (9th Cir. 2006).
claims that Count V-unjust enrichment-must be dismissed
pursuant to Fed.R.Civ.P. 12(b)(6), because ACHD admits the
existence of an enforceable express written contract that
governs the parties' relationship. Rhythm alleges also
that the unjust enrichment claim should be dismissed because
the unjust enrichment claim itself refers to the existence of
a contract, which otherwise defeats the unjust enrichment
claim. To the contrary, ACHD contends that, because it is yet
to be determined whether the Purchase Agreement is
enforceable, and ACHD may plead inconsistent claims pursuant
to Fed.R.Civ.P. 8, it is premature to dismiss its unjust
enrichment claim. As explained below, the Court agrees with
Rhythm's second argument and will dismiss the unjust
enrichment claim, although will grant leave to ACHD to amend.
enrichment, or restitution, is the measure of recovery under
a contract implied in law.” Barry v. Pac. W.
Const., Inc., 103 P.3d 440, 447 (Idaho 2004). “A
contract implied in law, or quasi-contract, ‘is not a
contract at all, but an obligation imposed by law for the
purpose of bringing about justice and equity without
reference to the intent of the agreement of the parties, and,
in some cases, in spite of an agreement between the
parties.'” Id. (citing Continental
Forest Prod., Inc. v. Chandler Supply Co., 518 P.2d 1201
to Idaho law, to prevail on an unjust enrichment claim, the
plaintiff bears the burden of proving: “(1) a benefit
conferred upon defendant by plaintiff; (2) appreciation by
the defendant of the benefit; (3) acceptance of the benefit
under circumstances that would be inequitable for the
defendant to retain the benefit without payment of the value
thereof.” Aberdeen-Springfield Canal Co. v.
Peiper, 982 P.2d 917, 923 (Idaho 1999).
doctrine of unjust enrichment, however, does not apply in
circumstances where there is an enforceable express contract
between the parties covering the same subject matter.
Wilhelm v. Johnston,30 P.3d 300, 307 (Idaho.Ct.App.
2001) (finding that the existence of an enforceable
promissory note and deed of trust precluded the application
of unjust enrichment). “The reason for this rule
presently is that the remedies for breach of an express
contract, whether by law or by express agreement, afford