United States District Court, D. Arizona
MURRAY ENOW CHIEF UNITED STATES DISTRICT JUDGE
before the Court is Defendant CNA National Warranty
Corporation's Motion to Dismiss. (Doc. 8.) For the
following reasons, the Court grants the motion in part and
denies the motion in part.
case is brought by Plaintiff RHN, Inc. (“RHN”),
which owns and operates automobile dealerships. In 2017,
Defendant CNA National Warranty Corporation
(“CNA”) contacted RHN regarding a proposed
business arrangement. The proposal called for RHN to sell
automobile warranties, frequently referred to as
“vehicle service contracts” (“VSCs”),
to the consumers at its auto dealerships. RHN would collect a
commission on each VSC sold, and remit the premiums collected
on each sale to CNA. CNA would allegedly deposit the premiums
into an investment account of RHN's choosing, and the
parties would share the profits earned from the invested
funds. As part of the arrangement, CNA agreed to give RHN an
advance payment of $5 million. To repay CNA for the advance,
RHN agreed to remit the amounts due to RHN as commissions for
selling VSCs- $267.00 for each VSC sold-back to CNA for four
years. RHN allegedly agreed to sell a minimum of 390 VSCs per
quarter. On December 29, 2017, the parties executed a written
agreement (“Override Agreement”) setting forth
the terms of the advance payment, its repayment, and the
allegedly agreed upon VSC quota. The alleged agreement to
share the profits from the invested proceeds
(“Profit-Sharing Agreement”) was never
memorialized into a written contract.
made the advance payment to RHN on January 2, 2018, and RHN
allegedly began performing under the Override Agreement. CNA,
however, did not place the proceeds from the VSC sales into
the account designated by RHN for the purpose of the alleged
Profit-Sharing Agreement. Instead, CNA deposited the proceeds
into a different account and kept all profits earned on the
invested funds for itself. CNA refused to provide RHN with
any information regarding the alleged profit-sharing account.
RHN also made repeated requests for reports regarding the
amounts collected by CNA as repayment on the advance;
however, CNA did not respond to RHN's demands. Despite
its ignored demands, RHN continued to sell VSCs pursuant to
the Override Agreement.
allegedly reached out to CNA in mid-2018 to modify the VSC
quota. RHN claims “market forces in the automobile
industry changed so as to make the parties' initial
quarterly sales target of at least 390 VSCs
impracticable.” (Doc. 1-3 at 10.) CNA allegedly agreed
to reduce the quota to 220 VSCs per quarter. This
modification was not reduced to writing. CNA continued to
ignore RHN's repeated requests for information regarding
the profit-sharing account and the status of RHN's
repayment on the advance.
filed this action in April 2019 asserting seven claims: (1)
breach of contract; (2) breach of fiduciary duty; (3) breach
of the implied covenant of good faith and fair dealing; (4)
unjust enrichment; (5) a request for declaratory relief
regarding the enforceability of the VSC quota modification;
(6) a request for an equitable accounting; and (7) a request
for injunctive relief directing CNA to place all proceeds
from VSC sales into the agreed upon account. CNA moves to
dismiss all seven claims pursuant to Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim.
Rule of Civil Procedure 8(a)(2) requires a plaintiff to set
forth a “short and plain statement of the claim showing
that the [plaintiff] is entitled to relief.” Fed. R.
Civ. Pro. 8(a)(2). The scope of review on a motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6) is
generally limited to the contents of the complaint. However,
“[a] court may consider evidence on which the complaint
‘necessarily relies' if: (1) the complaint refers
to the document; (2) the document is central to the
plaintiff's claim; and (3) no party questions the
authenticity of the copy attached to the 12(b)(6)
motion.” Marder v. Lopez, 450 F.3d 445, 448
(9th Cir. 2006). “The Court may treat such a
document as ‘part of the complaint.'”
Id. (quoting United States v. Ritchie, 342
F.3d 903, 908 (9th Cir. 2003).
survive dismissal for failure to state a claim, a complaint
must contain more than a “formulaic recitation of the
elements of a cause of action”; it must contain factual
allegations sufficient to “raise the right of relief
above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957)). While “a
complaint need not contain detailed factual allegations . . .
it must plead ‘enough facts to state a claim to relief
that is plausible on its face.'” Clemens v.
DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th
Cir.2008) (quoting Twombly, 550 U.S. at 570).
“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.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
556). The plausibility standard “asks for more than a
sheer possibility that a defendant has acted unlawfully.
Where a complaint pleads facts that are ‘merely
consistent with' a defendant's liability, it
‘stops short of the line between possibility and
plausibility of entitlement to relief.'”
Id. (quoting Twombly, 550 U.S. at 555)
(internal citations omitted).
analyzing a complaint for failure to state a claim,
“[a]ll allegations of material fact are taken as true
and construed in the light most favorable to the non-moving
party.” Smith v. Jackson, 84 F.3d 1213, 1217
(9th Cir. 1996). In addition, the Court must assume that all
general allegations “embrace whatever specific facts
might be necessary to support them.” Peloza v.
Capistrano Unified Sch. Dist., 37 F.3d 517, 521 (9th
Cir. 1994). However, legal conclusions couched as factual
allegations are not given a presumption of truthfulness, and
“conclusory allegations of law and unwarranted
inferences are not sufficient to defeat a motion to
dismiss.” Pareto v. F.D.I.C., 139 F.3d 696,
699 (9th Cir. 1998).
Claims One, ...