Best Western International Inc. v. NM Hospitality Roswell LLC

          ORDER

         This matter is before the Court on Plaintiff's Motion for Partial Judgment on the Pleadings (“Motion”) (Doc. 55). Defendants filed a Response (Doc. 56) and Plaintiff filed a Reply (Doc. 57).

         I. BACKGROUND

         Plaintiff filed its Complaint on April 28, 2017, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, open account, stated account, post-termination use of trademarks, state and federal trademark infringement, false designation of origin and unfair competition, and common law trademark infringement against Defendants NM Hospitality Roswell, LLC; Frist Capital Real Estate Investments, LLC; and Ron Cobb, an individual (collectively “Defendants”). (Doc. 1). Shortly thereafter, the parties reached a settlement agreement and requested that the Court stay the matter to allow the parties to finalize the terms of the agreement. (Doc. 19). Accordingly, the Court stayed the case and ordered the parties to file a stipulation to dismiss or status report by September 15, 2017. (Doc. 20).

         On September 20, 2017, Plaintiff filed a Motion to Enforce Settlement Agreement (Doc. 26), in which Plaintiff argued that the parties entered into a fully enforceable Settlement Agreement on June 26, 2017, and that Defendants failed to timely remit payment under its terms. (Id.) In their Response to Plaintiff's Motion to Enforce Settlement Agreement, Defendants stated that they “still intend[ed] to perform under the settlement agreement, ” but were unable to do so by the original deadline of August 31, 2017. (Doc. 27 at 2). Defendants stated that they would be able to perform under the settlement agreement by October 31, 2017, and would work with Plaintiff to either file a stipulation to dismiss the action or a status report on that day. (Doc. 27 at 2). Without waiving their rights to enforce the settlement agreement, Plaintiff agreed to the extension and requested the Court hold its Motion to Enforce in abeyance until October 31, 2017. (Doc. 28). The Court so ordered. (Doc. 29). On October 31, 2017, Plaintiff unilaterally filed a Status Report, informing the Court that Defendants had not remitted payment by October 31, 2017. (Doc. 30). Accordingly, Plaintiff requested the Court rule on its pending Motion to Enforce the Settlement Agreement. (Id.) For the reasons articulated in Plaintiff's Motion to Enforce, which were uncontested by Defendants, the Court found that the parties entered into a binding agreement to settle this case. (Doc. 32).

         Following the Court's Order, Defendants made a partial payment to Plaintiff. (Docs. 48, 67). The partial payment was approximately forty-three percent of the total settlement amount. (Docs. 67, 68). On August 20, 2018, Plaintiff filed an Amended Complaint, which included a claim for breach of the Settlement Agreement, as well as seven causes of action that were initially plead in Plaintiff's original Complaint. (Compare Doc. 48, with Doc. 1).^[1] On November 16, 2018, Plaintiff filed the pending Motion for Partial Judgment on the Pleadings with respect to its claim for breach of the Settlement Agreement. (Doc. 55). On February 4, 2019, the parties filed a Joint Report, in which the parties represented that Defendants “expect[ed] to complete performance and make reminder of the payment due under the Settlement Agreement by February 15, 2019.” (Doc. 58). On February 22, 2019, the parties filed another Joint Status Report, in which they provided that “Defendants still intend to comply with their obligations under the Settlement Agreement, but were unable to make the remainder of the payment due by February 15, 2019. They hope to be able to do so in the near future.” (Doc. 60). On March 29, 2019, the parties filed a third Joint Status Report, in which they provide that “Defendants still intend to comply with their obligations under the Settlement Agreement. Defendants anticipate paying 15-20% of the amount outstanding under the Settlement Agreement on or before April 9, 2019, and the remainder outstanding by April 30, 2019.” (Doc. 62). On May 6, 2019, the parties filed a fourth Joint Status Report, in which they provide that “Defendants still intend to comply with their obligations under the Settlement Agreement. Defendants anticipate being able to pay the amount outstanding under the Settlement Agreement within 15 business days.” (Doc. 64). Plaintiff further provided that “[g]iven [Defendants'] history of failing to perform, however, [Plaintiff] has no confidence that the balance will be paid. [Plaintiff] therefore seeks a ruling on its fully-briefed Motion for Judgment on the Pleadings (Docs. 55, 56, 57).” (Doc. 64 at 2).

         On May 7, 2019, the Court ordered the parties to file supplemental briefing to address the effect of the Settlement Agreement on the causes of action plead in the original Complaint and the Amended Complaint.^[2] (Doc. 65 at 1). In its supplemental briefing, Plaintiff argued that the “pre-Settlement Agreement claims are still alive because Defendants have not paid [Plaintiff] the full amount owed under the Settlement Agreement, and payment in full was a condition precedent to [Plaintiff's] obligation to release and dismiss its claims.” (Doc. 69 at 2). Defendants contend that “payment was not the only consideration for the Settlement Agreement” and that Plaintiff cannot simultaneously pursue breach of the Settlement Agreement and the underlying claims that the Settlement Agreement purportedly extinguished. (Doc. 70).

         I. PARTIAL JUDGMENT ON THE PLEADINGS

         Plaintiff has moved for Partial Judgment on the Pleadings with respect to its claim for breach of the Settlement Agreement, which is Count VIII of the Amended Complaint. (Doc. 55 at 2-4).

         Pursuant to the Federal Rules of Civil Procedure (“Rule”) 12(c), any party may move for judgment on the pleadings “after the pleadings are closed but within such time as not to delay the trial.” The pleadings are closed once a complaint and an answer have been filed. See Fed. R. Civ. P. 7(a); see also Doe v. U.S., 419 F.3d 1058, 1061 (9th Cir. 2005). A motion for judgment on the pleadings is functionally identical to a motion to dismiss brought under Rule 12(b)(6); the same legal standard applies. See Cafasso v. General Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 n.4 (9th Cir. 2011). However, unlike Rule 12(b)(6), a Rule 12(c) motion for judgment on the pleadings may be made by either party. A plaintiff may move for judgment on the pleadings if the answer fails to controvert material facts alleged in the complaint. Qwest Commc'ns Corp. v. City of Berkeley, 208 F.R.D. 288, 290 (N.D. Cal. 2002). The allegations of the non-moving party must be accepted as true, and are construed in the light most favorable to that party. See Jones v. Town of Quartzsite, 2014 WL 12617038, at *2 (D. Ariz. Feb. 24, 2014); see also Lyon v. Chase Bank USA, N.A., 656 F.3d 877, 882 (9th Cir. 2011). “Uncontested allegations to which the other party had an opportunity to respond are taken as true.” Qwest Commc'ns Corp., 208 F.R.D. at 290.

         Judgment on the pleadings is appropriate “when there are no issues of material fact, and the moving party is entitled to judgment as a matter of law.” 3550 Stevens Creek Assocs. v. Barclays Bank, 915 F.2d 1355, 1357 (9th Cir. 1990). In considering a motion for judgment on the pleadings, the court reviews the pleadings only. However, a document that is not attached to the complaint may be considered if it is referred to in the complaint and the authenticity of the document is not questioned. See The Armored Group, LLC v. Supreme Corp., 2010 WL 2595280, at *2 (D. Ariz. June 24, 2010) (citing Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994)).

         In its present Motion, Plaintiff contends that it is entitled to judgment on the pleadings with respect to its claim for breach of the Settlement Agreement because the Court has already found that the Settlement Agreement was valid and enforceable, and Defendants have admitted in their Answer to every fact necessary to establish its liability for breach of the Settlement Agreement. (Doc. 55 at 2-3); see also Honey v. Distelrath, 195 F.3d 531, 532-33 (9th Cir. 1999). Plaintiff did not attach a copy of the Settlement Agreement as an exhibit to the Amended Complaint; however, the Court will consider the Settlement Agreement (Doc. 68), because Plaintiff refers to the Settlement Agreement in the Amended Complaint, and there is no dispute over the authenticity of the document. See The Armored Group, 2010 WL 2595280, at *2. The Court agrees that judgment on Plaintiff's breach of the Settlement Agreement claim is warranted.

         In the Amended Complaint, Plaintiff alleges that on June 26, 2017, Plaintiff and Defendants entered into an enforceable Settlement Agreement; however, Defendants failed to make the full payment that was required under the Settlement Agreement. (Doc. 48 ¶¶ 68, 69). Plaintiff further claims that despite numerous demands for payment of the remaining balance under the Settlement Agreement, Defendants have failed to make payment. (Id. ¶¶ 74-76). Thus, Plaintiff alleges Defendant's failure to make full payment under the Settlement Agreement is a breach of the Settlement Agreement. (Id. ¶¶ 127-32).

         To prevail on its breach of settlement claim, Plaintiff must allege the existence of a contract between Plaintiff and Defendants, a specific breach of that contract by Defendant, and resulting damage to Plaintiff. See Coleman v. Watts, 87 F.Supp.2d 944, 955 (D. Ariz. 1998) (citing Clark v. Compania Ganadera de Cananea, S.A., 387 P.2d 235, 237 (Ariz. 1963)). Here, Defendants agree that the Settlement Agreement is a valid contract and concede that they failed to make the full required payment under the terms of the Settlement Agreement. (Doc. 51 ¶¶ 65-76, 127-33). Furthermore, in their Response, Defendants failed to address or otherwise defend against the merits of Plaintiff's Motion and therefore have implicitly conceded to granting it.^[3] (Doc. 56 at 2); see also Pepper Hamilton L.L.P. v. Intelligent Water Sols., Inc., 2008 WL 4080358, at *1 (D. Ariz. Sept. 2, 2008) (holding that defendant's failure to respond to plaintiff's motion for judgment on the pleadings may be deemed a consent to the granting of the motion and the court may dispose of the motion summarily) (citing LRCiv. 7.2(i))). In fact, Defendants provide that they “still intend to perform under the Settlement Agreement in the near future when the Defendants' financial situation permits them to render performance.” (Id. at 2). Thus, Defendants concede that the Settlement Agreement is valid and that they have not performed as required by the Settlement Agreement. Furthermore, Defendants do not dispute or otherwise contest that Plaintiffs have been damaged as a result of Defendants' breach. (Compare Doc. 55 at 3-4, with Doc. 56 at 1-2). For the reasons articulated in Plaintiff's Motion, which go uncontested by Defendants, the Court finds that Plaintiff is entitled to judgment as to liability on its breach of the Settlement Agreement claim. While Plaintiff has established that it was damaged as a result of the breach, Plaintiff however has not established the amount of damages. Thus, the Court will not rule on the amount of damages at this time and provide the parties with an opportunity to submit briefing regarding amount of damages stemming from Defendant's breach of the Settlement Agreement.

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