Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-02033/USCOURTS-azd-2_14-cv-02033-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Gateway Deliveries, LLC, )

)

Plaintiff, ) 2:14-cv-02033 JWS

)

vs. ) ORDER AND OPINION

)

Mattress Liquidators, Inc., et al. ) [Re: Motion at Docket 10]

)

Defendants. )

)

I. MOTION PRESENTED

At docket 10 defendants David Dolan and Sarah Thomas (collectively, “the

individual defendants”) move to dismiss plaintiff Gateway Deliveries, LLC’s

(“Gateway’s”) claim against them pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure. Gateway opposes at docket 18. The individual defendants reply at

docket 25. Oral argument was not requested and would not assist the court.

II. BACKGROUND

This case presents a dispute regarding a contract to provide mattress delivery

services. According to the complaint, Gateway entered into a contract with Bed Mart,

Inc. (“Bed Mart”) wherein Gateway was given the exclusive right to provide all of Bed

Mart’s deliveries from May 1, 2011 until April 30, 2016 (“the contract”). Bed Mart was

acquired by Mattress Liquidators, Inc. (“Mattress Liquidators”) who continued to honor

the contract. The individual defendants are officers of Mattress Liquidators.

Case 2:14-cv-02033-JWS Document 31 Filed 04/16/15 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In 2014 most of Mattress Liquidators’ business was acquired by Mattress Firm. 

As part of the acquisition Mattress Firm required Mattress Liquidators to terminate the

contract with Gateway. As a result, Gateway brought this action alleging contractual

bad faith against Mattress Liquidators (Count 1) and tortiuos interference with contract

or business expectancy against the individual defendants and Mattress Firm (Counts 2

and 3, respectively). The individual defendants now move to dismiss Count 2 of

Gateway’s complaint.

III. STANDARD OF REVIEW

Rule 12(b)(6) tests the legal sufficiency of a plaintiff’s claims. In reviewing such

a motion, “[a]ll allegations of material fact in the complaint are taken as true and

construed in the light most favorable to the nonmoving party.”1 To be assumed true, the

allegations, “may not simply recite the elements of a cause of action, but must contain

sufficient allegations of underlying facts to give fair notice and to enable the opposing

party to defend itself effectively.”2 Dismissal for failure to state a claim can be based on

either “the lack of a cognizable legal theory or the absence of sufficient facts alleged

under a cognizable legal theory.”3

 “Conclusory allegations of law . . . are insufficient to

defeat a motion to dismiss.”4 

To avoid dismissal, a plaintiff must plead facts sufficient to “state a claim to relief

that is plausible on its face.”5 “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the

1Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997).

2Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 

3Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

4Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001).

5Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 570 (2007)).

-2-

Case 2:14-cv-02033-JWS Document 31 Filed 04/16/15 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

defendant is liable for the misconduct alleged.”6

 “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.”7

 “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.’”8

 “In sum, for a complaint to survive a motion to dismiss, the

non-conclusory ‘factual content,’ and reasonable inferences from that content, must be

plausibly suggestive of a claim entitling the plaintiff to relief.”9

IV. DISCUSSION

The tort of intentional interference with contract subjects individuals to liability for

“intentionally and improperly” interfering with the performance of a contract “between

another and a third person.”10 To establish a prima facie claim a plaintiff must show

(1) “the existence of a valid contractual relationship or business expectancy;” (2) “the

interferer’s knowledge of the relationship or expectancy;” (3) “intentional interference

inducing or causing a breach or termination of the relationship or expectancy;” (4) the

interference was “improper;” and (5) “resultant damage to the party whose relationship

or expectancy has been disrupted.”11

 It is impossible for a defendant to interfere with

6

Id.

7

Id. (citing Twombly, 550 U.S. at 556).

8

Id. (quoting Twombly, 550 U.S. at 557).

9Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009); see also Starr, 652 F.3d

at 1216.

10Restatement (Second) of Torts § 766 (1979).

11Miller v. Hehlen, 104 P.3d 193, 202 (Ariz. Ct. App. 2005) (quoting Wallace v. Casa

Grande Union High Sch. Dist. No. 82 Bd. of Governors, 909 P.2d 486, 494 (Ariz. Ct. App.

1995)).

-3-

Case 2:14-cv-02033-JWS Document 31 Filed 04/16/15 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

her own contract; interference with contract requires a contract between the plaintiff and

a third party.

12

The individual defendants argue that they cannot be held liable for interference

with contract because, as Mattress Liquidators’ corporate officers, they are considered

parties to the contract.13

 Gateway responds by conceding that corporate officers are

generally incapable of interfering with their own corporation’s contracts, but it points out

that there is an exception to this rule where the officer has acted so contrary to his

corporation’s interest that his actions “could only have been motivated by personal

interests.”14 Gateway contends that terminating the contract was contrary to Mattress

Liquidators’ interests because it exposed Mattress Liquidators “to liability for breach of

contract and/or breach of the duty of good faith and fair dealing.”15 

Generally speaking, corporate officers “are not outsiders intermeddling

maliciously in the business affairs of the corporation. They are privileged to act on

behalf of their corporations, using their business judgment and discretion.”16 If this

privilege did not exist, a corporate officer’s “freedom of action aimed toward corporate

12Spratt v. N. Auto. Corp., 958 F. Supp. 456, 464 (D. Ariz. 1996). See also Barrow v.

Arizona Bd. of Regents, 761 P.2d 145, 152 (Ariz. Ct. App. 1988); Servo Kinetics, Inc. v. Tokyo

Precision Instruments Co., 475 F.3d 783, 800 (6th Cir. 2007) (“‘[T]tortious interference with

contract requires proof . . . that the defendant was a “third-party” to the contractual

relationship.’”) (quoting Willis v. New World Van Lines, Inc., 123 F. Supp. 2d 380, 396 (E.D.

Mich. 2000)).

13See Payne v. Pennzoil Corp., 672 P.2d 1322, 1327 (Ariz. Ct. App. 1983) (“The

appellees argue that since they were acting for Duval they were Duval, and that they could not

interfere with their own contract. We agree.”).

14Doc. 18 at 3 (quoting S. Union Co. v. Sw. Gas Corp., 165 F. Supp. 2d 1010, 1038 (D

Ariz. 2001)).

15Doc. 18 at 4.

16George A. Fuller Co., a Div. of Northrop Corp. v. Chicago Coll. of Osteopathic Med.,

719 F.2d 1326, 1333 (7th Cir. 1983).

-4-

Case 2:14-cv-02033-JWS Document 31 Filed 04/16/15 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

benefit” would be curtailed by fear of personal liability.

17

 Officers lose this privilege,

however, where they act to serve their own private interests “with no benefit to the

corporation.”18

 In such instances an officer may be liable for interference with contract

because the officer “is wearing the hat of an outsider to the contractual parties.”19 For

individual liability to attach, the plaintiff must show more than mixed motives; the officer

must have acted solely for his or her own benefit.20

Gateway’s complaint does not state a claim against the individual defendants. 

Unlike the plaintiffs in the cases upon which Gateway relies, Gateway does not plead

facts indicating that the individual defendants interfered with their corporation’s contract

out of personal motives and without the intent to further their corporation’s interests.21

To the contrary, Gateway alleges that terminating the contract allowed Mattress

Liquidators to obtain a higher purchase price for its assets.22 Although Gateway alleges

that the individual defendants benefitted from this higher price, that benefit is derivative

17

Id.

18Ong Hing v. Arizona Harness Raceway, Inc., 459 P.2d 107, 115 (Ariz. Ct. App. 1969).

19Servo Kinetics, Inc., 475 F.3d at 801 (6th Cir. 2007).

20S. Union Co., 165 F. Supp. 2d at 1039; Olympic Fish Products, Inc. v. Lloyd, 611 P.2d

737, 739 (Wash. 1980) (“The good faith test merely prevents corporate officers from pursuing

purely personal goals with no intent to benefit the corporation.”). Cf. Los Angeles Airways, Inc.

v. Davis, 687 F.2d 321, 328 (9th Cir. 1982) (“[W]here, as here, an advisor is motivated in part

by a desire to benefit his principal, his conduct in inducing a breach of contract should be

privileged.”).

21See AGA Shareholders, LLC v. CSK Auto, Inc., No. CV-07-0062-PHX-DGC, 2007 WL

2320532, at *1 (D. Ariz. Aug. 10, 2007) (plaintiffs alleged that individual defendants made false

statements to artificially inflate the corporate stock price, which the individual defendants then

sold for substantial profits); Olympic Fish Products, 611 P.2d at 602 (plaintiff submitted

evidence showing that the individual defendant “gained more than an incidental benefit” from

his corporation’s breach of contract).

22Doc. 1 at 8 ¶ 63.

-5-

Case 2:14-cv-02033-JWS Document 31 Filed 04/16/15 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of Mattress Liquidators’ improved financial condition.23

 Because Gateway does not

plead facts indicating that the individual defendants’ interests were not aligned with

those of Mattress Liquidators, Gateway effectively claims that Mattress Liquidators

interfered with its own contract. This claim fails as a matter of law. 

V. CONCLUSION

For the reasons stated above, the individual defendants’ motion to dismiss at

docket 10 is GRANTED. Claim 2 of Gateway’s complaint is dismissed. 

DATED this 16th day of April 2015.

/s/ JOHN W. SEDWICK

SENIOR UNITED STATES DISTRICT JUDGE

23See Doc. 1-4 at 17 ¶ 2.5 (stating that Mattress Firm would pay the purchase price of

Mattress Liquidators’ assets directly to Mattress Liquidators). See also Holloway v. Skinner,

898 S.W.2d 793, 796 (Tex. 1995) (“[T]he mere existence of a personal stake in the outcome,

especially when any personal benefit is derivative of the improved financial condition of the

corporation . . ., cannot alone constitute proof that the defendant committed an act of willful or

intentional interference.”).

-6-

Case 2:14-cv-02033-JWS Document 31 Filed 04/16/15 Page 6 of 6