United States District Court, D. Arizona
G. Campbell, United States District Judge.
September 27, 2016, Defendants All American Games
(“AAG”) and Douglas Berman filed an amended
counterclaim against Plaintiff Chad Carpenter. Doc. 20.
Plaintiff filed a motion to dismiss pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. Doc. 25. Defendants
filed a response (Doc. 26), and Plaintiff did not reply.
Neither party has requested oral argument. For the reasons
set forth below, the Court will deny the motion.
Court takes the allegations of Defendants' counterclaim
as true for purposes of a motion to dismiss. Defendants,
through a wholly owned subsidiary, Football University, LLC
(“FBU”), operate a national football tournament
for youth football players (“FBU tournament”).
Doc. 20, ¶ 4. Defendants also operate football camps
throughout the United States, including in Phoenix, Seattle,
and various cities in California. Id. Plaintiff is a
former employee of Defendants. Id. He worked as a
“regional player representative in the western
region” and was “responsible for assisting in
recruiting athletes to attend [the camps] and recruiting
teams to participate in the [FBU tournament].”
Id., ¶ 5. Plaintiff began his affiliation with
Defendants as a coach at the camps in 2010. Id.,
¶ 6. Plaintiff became a full time employee in September
2012, making a base salary of $65, 000 and receiving
commissions based on camp revenues and payments from FBU
tournament participation. Id., ¶ 6. Prior to
June 2015, Defendant paid Plaintiff two commissions: $7, 500
as payment for his work on the 2014 FBU tournament, and $3,
110 as payment for his promotional activities for the 2015
FBU camps in his region. Id. There is a factual
dispute between the parties about whether additional
commissions are due. Doc. 25, at 4; Doc. 26 at 5-6.
2015, Defendants discovered a “troubling and improper
relationship between Plaintiff and another former
employee.” Doc. 20, ¶ 7. According to Defendants,
this former employee was manipulating
“[Defendants'] financial systems to inflate the
revenue numbers for the FBU regional camps being held in
Phoenix, Seattle and California.” Id., ¶
8. Following the former employee's termination on June 2,
2015, Defendants discovered “considerable evidence that
Plaintiff was fully knowledgeable of the fraudulent actions
of the dismissed former employee.” Id.,
¶¶ 9-10. Defendants' investigation revealed
that “Plaintiff extended reduced pricing to customers
that were unauthorized by AAG in order to inflate the revenue
numbers for those camps, ” and that Plaintiff had acted
with “gross insubordination with respect to his
supervisor.” Id., ¶¶ 11-12. Within
days of the first employee's termination, Defendants
terminated Plaintiff. Id., ¶ 13; Doc. 1, ¶
contends that, after his termination, Defendants sent an
e-mail regarding his termination to over 200 employees and
outside affiliates, calling into question his character,
jeopardizing his future employment, and potentially making
him “untouchable” as a coach. Doc. 1, ¶ 13.
Plaintiff sued Defendants for defamation, unpaid wages,
unjust enrichment, and breach of contract. Doc. 1.
Defendants' amended counterclaim followed, alleging
breach of contract, unjust enrichment, breach of implied
covenant, breach of fiduciary duty of good faith and loyalty
to AAG, and conversion. Doc. 20 at 10-14.
successful motion to dismiss under Rule 12(b)(6) must show
either that the complaint lacks a cognizable legal theory or
fails to allege facts sufficient to support its theory.
Balistreri v. Pacifica Police Dep't, 901 F.2d
696, 699 (9th Cir. 1990). A complaint that sets forth a
cognizable legal theory will survive a motion to dismiss as
long as it contains “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) (citing 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.” Id., 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556). “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.” Id. (citing
Twombly, 550 U.S. at 556). Arizona law governs
Defendants' state law claims. United Mine Workers of
America v. Gibbs, 383 U.S. 715, 726 (1996).
Defendants' Motion to Dismiss.
Breach of Contract.
argues that Defendants' amended counterclaim recites only
legal conclusions and fails to plead sufficient factual
allegations that, if true, would state a cause of action for
breach of contract. Doc. 25 at 2. The elements of a breach of
contract claim are the existence of a contract, breach, and
resulting damages. Thomas v. Montelucia Villas, LLC,
302 P.3d 617, 621 (Ariz. 2013). Defendants' counterclaim
alleges that Plaintiff became a full-time employee in
September 2012, and that his salary and commissions were
contingent upon his responsibilities as a player
representative and recruiter. Doc. 20, ¶¶ 5-6.
Defendants contend that Plaintiff breached his employment
contract by “[s]pecifically and without limitation
fail[ing] to follow FBU procedures with regard to billing and
pricing for camps, which were Plaintiff's job
responsibilities pursuant to his Agreement with AAG.”
Id., ¶ 20. Specifically, Defendants allege that
Plaintiff failed to follow FBU procedures regarding billing
and pricing by extending unauthorized discounts to certain
AAG customers to inflate the revenue figures for his camps,
causing Defendants both financial and reputational damage.
Id., ¶¶ 11, 20, 22. Defendants also assert
that Plaintiff's alleged insubordination was in violation
of FBU policies and procedures. Id., ¶ 20.
These allegations provide a sufficient factual basis to
support the claim for breach of contract.
also argues that Defendants' amended counterclaim only
cites “conduct by a third party employee and fails to
establish any facts related to the duties of an agreement or
the breach of those duties by Plaintiff.” Doc. 25 at 3.
To the contrary, Defendants have pled when the employment
relationship began with Plaintiff, when and how they
discovered his failure to comply with billing and pricing
policies and procedures, and the injury Plaintiff's
conduct has caused them. Although Defendants do allege that
Plaintiff was aware of the former employee's fraudulent
actions (Doc. 20, ¶¶ 7-10), the Court need not
decide if that factual allegation alone is sufficient because
it is not the sole allegation upon which Defendants'
breach of contract claim depends. Defendants have pled
sufficient facts to state a claim that is plausible on its
face. See Iqbal, 556 U.S. at 678.
is unjustly enriched when it “has and retains money or
benefits which in justice and equity belong to
another.” City of Sierra Vista v. Cochise Enters.,
Inc., 697 P.2d 1125, 1131 (Ariz.Ct.App. 1984). The five
elements of unjust enrichment are “(1) an enrichment;
(2) an impoverishment; (3) a connection between the
enrichment and the impoverishment; (4) absence of
justification for the enrichment and the impoverishment, and
(5) an absence of a remedy provided by ...