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Sonoran Resources LLC v. Oroco Resource Corp.

United States District Court, D. Arizona

June 11, 2014

Sonoran Resources LLC, et al., Plaintiffs,
v.
Oroco Resource Corporation, et al., Defendants.

ORDER

DAVID G. CAMPBELL, District Judge.

Defendant Goldgroup Mining, Inc. ("Goldgroup") has filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Doc. 36. The motion is fully briefed. For the reasons that follow, the Court will grant the motion in part and deny it in part.[1]

I. Background.

This case arises out of contracts entered in 2010 and 2011 between Plaintiffs Sonoran Resources, LLC ("Sonoran") and SR Servicios Mineros, S.A. de C.V. ("SRSM"), and Defendants Oroco Resource Corporation ("Oroco") and Minas de Oroco Resources, S.A. ("MOR"). Doc. 36. at 2. The contracts relate to land "located in Cerro Prieto near Magdalena, Sonora, Mexico, " on which the Oroco Defendants owned surface and mining rights. Id. The first contract was a Professional and Consulting Services Agreement (the "PCS Agreement") between Sonoran, Oroco, and MOR. Id. The second was a Service Agreement between MOR and SRSM. Id. The third was an Engineering Procurement and Construction Management Agreement (the "EPCM Agreement") between ORC, MOR, Sonoran, and SRSM. Id. The EPCM Agreement incorporated the Service Agreement. Id. Defendant Goldgroup is not a party to any of the Agreements. Id. at 2.

Plaintiffs contend that, in accordance with the Service and EPCM Agreements, they obtained a mining license, known as a "Manifesto de Impacto Ambiental" or "MIA, " from Mexico's environmental regulatory agency. Doc. 32, ¶ 25, Doc. 37 at 3. Plaintiffs later pursued a suspension of the MIA at Oroco's request. Doc. 32, ¶ 37. The terms of the suspension allegedly required that "all flora and fauna" on the Cerro Prieto land were to "remain undisturbed, preserved, and protected." Id., ¶ 37. Plaintiffs allege that Oroco and MOR subsequently breached the MIA and the Agreements, and Plaintiffs filed this action against Oroco and MOR on June 25, 2013. See Doc. 1. In September 2013, Goldgroup acquired MOR from Oroco along with Oroco's surface and mining rights in the Cerro Prieto land. Id., ¶ 62. It is unclear from the pleadings whether MOR remains a separate legal entity, but Plaintiffs allege that Goldgroup "assumed all liabilities of MOR, including all obligations under the Agreements." Id.

Plaintiffs allege that Goldgroup violated the terms of the MIA suspension by "making unauthorized modifications to the Cerro Prieto property[.]" Id., ¶ 54. Plaintiffs further allege that they are owed 250, 000 shares of Oroco common stock and $177, 066.43 under the Agreements, and that Goldgroup has "improperly induced" Oroco and MOR to cease performance of the Agreements. Plaintiffs filed an amended complaint in January 2014 asserting claims against Goldgroup for breach of contract, breach of the duty of good faith and fair dealing, and intentional interference with business expectancy. Doc. 32. Goldgroup seeks dismissal of these claims.

II. Legal Standard.

When analyzing a complaint for failure to state a claim to relief under Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the complaint must plead 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). This plausibility standard "is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged B but it has not show[n]' B that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

III. Analysis.

A. Breach of Contract.

Goldgroup seeks dismissal of Plaintiffs' breach of contract claim on the ground that it is not a party to any contract with Plaintiffs. Doc. 36 at 4. Under Arizona law, a breach of contract claim requires a plaintiff to show (1) a contract, (2) a breach, and (3) damages. Thunderbird Metallurgical, Inc. v. Ariz. Testing Lab., 423 P.2d 124, 126 (Ariz. 1967). Goldgroup argues that it did "not become a party to the [Agreements] by acquiring MOR, nor did it acquire or become liable for any obligations of MOR as a result, " and further argues that "the corporate form must not be disregarded." Doc. 36 at 4. Goldgroup does not respond, however, to Plaintiffs' allegations that Goldgroup "subsumed the obligations for the Agreements" when it acquired MOR (Doc. 32, ¶ 8) and "accepted all assets and assumed all liabilities of MOR, including all obligations under the Agreements" ( id., ¶ 62).

It is unclear from the pleadings whether MOR still exists as a separate legal entity. Goldgroup does not dispute that MOR is a party to the Agreements, nor does it argue that Plaintiffs' have failed to state a breach of contract claim against MOR. Although it is true that Plaintiffs' do not allege that Goldgroup is a party to the Agreements, they do allege that Goldgroup assumed MOR's obligations and liabilities under the Agreements. Accepting this allegation as true, as the Court must at this stage, Plaintiffs have stated a claim for breach of contract. The Court will deny the motion to dismiss this claim.

B. Breach of the Duty of Good Faith and Fair Dealing.

The covenant of good faith and fair dealing is implied in every contract. Rawlings v. Apodaca, 726 P.2d 565, 569 (Ariz. 1986). "The duty arises by virtue of a contractual relationship." Id. As discussed above, Plaintiffs have alleged that MOR violated the covenant of good faith and fair dealing with respect to the Agreements and that Goldgroup assumed MOR's liabilities and obligations under the Agreements. See ...


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