Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-01880/USCOURTS-casd-3_18-cv-01880-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

1 

 Case No. 18-cv-1880-L-WVG 

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 

SOUTHERN DISTRICT OF CALIFORNIA 

PROTECTION CAPITAL, LLC, a 

Delaware limited liability company, 

Plaintiff, 

v. 

IP CO., LLC, a Georgia limited 

liability company , 

Defendant. 

CASE NO. 18-cv-1880-L-WVG 

ORDER DENYING DEFENDANT 

GLOCOM INC.’S MOTION TO 

DISMISS [DOC. 37] 

Pending before the Court is Defendant Glocom, Inc.’s (“Glocom”) motion 

to dismiss the fourth claim of Plaintiff Protection Capital, LLC’s (“PPC”) Second 

Amended Complaint (“SAC”), Tortious Interference with Contract, pursuant to 

Federal Rule of Civil Procedure 12(b)(6). Doc. 37. Pursuant to Civil Local Rule 

7.1.d.1, the Court has decided this motion without oral argument. For the 

following reasons, the Court DENIES Glocom’s motion to dismiss. 

Background 

This case arises from Defendant IP Co., LLC’s (“IPCO”) failure to continue 

payments to PPC pursuant to a Convertible Promissory Note and a Note Purchase 

Agreement the two parties executed on April 30, 2007. Under the Note, IPCO 

had access to unsecured loans of up to a maximum aggregate value of $500,000 

between 2007 and 2012. Under the Purchase Agreement, IPCO and its affiliates 

Case 3:18-cv-01880-L-WVG Document 54 Filed 01/14/20 PageID.<pageID> Page 1 of 5
2 

Case No. 18-cv-1880-L-WVG 

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

were required to pay PPC five percent (5%) of all “products, proceeds and 

amounts received” with respect to the intellectual property identified in the 

Purchase Agreement. Between 2008 and 2017, IPCO remitted the five percent 

(5%) owed to PPC under the Purchase Agreement without any form of protest or 

reservation of rights. 

In 2017, Glocom purchased 100% of IPCO’s membership interests with 

knowledge of IPCO’s continuing financial obligations to PPC under the Note and 

Purchase Agreement. PPC alleges that, after Glocom’s acquisition of 100% of 

IPCO’s membership interest, Glocom instructed IPCO to breach its financial 

obligations to PPC under the Purchase Agreement. Due to IPCO’s failure to pay 

PPC since the Glocom acquisition, it is alleged that between $150,000 and 

$500,000 is owed by IPCO to PPC at the time the original complaint was filed. 

PPC has since provided IPCO with written notice of default and demand for 

payment. 

 On August 8, 2018, PPC filed the original complaint against IPCO. 

Subsequently, the Court found good cause to grant PPC leave to amend its 

complaint twice. See Docs. 20, 26. PPC filed the operative Complaint on May 

31, 2019, alleging Glocom is liable for Tortious Interference with Contract and 

seeking exemplary and punitive damages for intentional conduct. On July 22, 

2019, Glocom filed the instant motion, seeking to dismiss the tortious interference 

claim and the SAC as to Glocom. This motion has been fully briefed and is ready 

for disposition. 

Legal Standard 

A motion under Rule 12(b)(6) tests the sufficiency of the complaint. 

Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted 

where the complaint lacks a cognizable legal theory. Shroyer v. New Cingular 

Wireless Serv., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). Alternatively, a 

complaint may be dismissed where it presents a cognizable legal theory, yet fails 

Case 3:18-cv-01880-L-WVG Document 54 Filed 01/14/20 PageID.<pageID> Page 2 of 5
3 

Case No. 18-cv-1880-L-WVG 

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

to plead essential facts under that theory. Robertson v. Dean Witter Reynolds, Inc., 

749 F.2d 530, 534 (9th Cir. 1984). 

In reviewing a Rule 12(b)(6) motion, the Court must assume the truth of all 

factual allegations and construe them most favorably to the nonmoving party. 

Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997, 999 n.3 (9th Cir. 2006). 

Even if doubtful in fact, factual allegations are assumed to be true. Bell Atl. Corp. 

v. Twombly, 550 U.S. 544, 555 (2007). “A well-pleaded complaint may proceed 

even if it strikes a savvy judge that actual proof of those facts is improbable, and 

that a recovery is very remote and unlikely.” Id. at 556 (internal quotation marks 

and citation omitted). On the other hand, legal conclusions need not be taken as 

true merely because they are couched as factual allegations. Id. at 555; see also

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 

Generally, the Court does not “require heightened fact pleading of 

specifics, but only enough facts to state a claim to relief that is plausible on its 

face.” Twombly, 550 U.S. at 570. “Nevertheless, a plaintiff’s obligation to provide 

the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and 

conclusions, and a formulaic recitation of the elements of a cause of action will 

not do.” Id. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). Thus, 

“[t]o survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 

Iqbal, 556 U.S. at 678 (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.” 

Id. at 678. “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. (quoting Twombly, 550 U.S. at 556). “Determining whether a complaint states 

a plausible claim for relief will . . . be a context-specific task that requires the 

reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 

Case 3:18-cv-01880-L-WVG Document 54 Filed 01/14/20 PageID.<pageID> Page 3 of 5
4 

Case No. 18-cv-1880-L-WVG 

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

U.S. at 679. 

To state a claim for intentional interference with contract, a plaintiff must 

plead (1) the existence of a valid contract between the plaintiff and a third party; 

(2) the defendant’s knowledge of that contract; (3) the defendant’s intentional acts 

designed to induce a breach or disruption of the contractual relationship; (4) actual 

breach or disruption of the contractual relationship; and (5) resulting damage. See 

Reeves v. Hanlon, 33 Cal.4th 1140, 1148 (2004). 

Discussion 

Under California law, tortious interference with contract may only be 

maintained against “stranger[s] to a contract” or “noncontracting parties.” See 

Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 514 (1994). This 

“protect[s] the expectations of contracting parties against frustration by outsiders

who have legitimate social or economic interest in the contractual relationship.” 

Id. “[U]nder California law, the pertinent economic relationship is the one that 

exists between the two contracting parties.” United Nat’l Maint., Inc. v. San 

Diego Convention Ctr., Inc., 766 F.3d 1002, 1007 (9th Cir. 2014). The 

contracting parties have the “direct interest or involvement in that relationship.” 

Marin Tug & Westport Petroleum, Inc., 271 F.3d 825, 832 (2001). California 

thus recognizes a cause of action sounding in tort against noncontracting parties 

who interfere with the performance of a contract. Woods v. Fox Broad. Sub., Inc., 

28 Cal.Rptr.3d 463, 469 (Cal. Ct. App. 2005). 

Glocom contends that it cannot be considered a stranger to the Note or Note 

Purchase Agreement after it acquired 100% membership interest in IPCO in 

November 2017. Doc. 37 at 5. Specifically, Glocom asserts that it obtained 

“Affiliate” status pursuant to the Purchase Agreement because it “owns or 

controls directly or indirectly such Person [IPCO][.]” Id. Notwithstanding its 

economic interest in the contract after acquiring its membership interest, Glocom 

was not a contracting party here. As such, Glocom is not immune to PPC’s 

Case 3:18-cv-01880-L-WVG Document 54 Filed 01/14/20 PageID.<pageID> Page 4 of 5
5 

Case No. 18-cv-1880-L-WVG 

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

tortious interference with contract claim. 

Glocom also contends that PPC inappropriately relies on Asahi Kasei 

Pharma Corp. v. Actelion Ltd., 222 Cal.App.4th 945 (Cal. Ct. App. 2013) to 

allege that Glocom can be held liable for tortious interference with contract. Doc. 

37 at 5-6. In Asahi, defendant Actelion similarly asserted that it could not be held 

liable for tortious interference with contract because it acquired CoTherix, a party 

with whom Asahi agreed to develop their drug—Fasudil, before Actelion and 

CoTherix shelved the drug’s development. See Asahi, 222 Cal.App.4th at 952. 

However, the California Court of Appeal found that Actelion’s broad reading of 

Applied Equipment unpersuasive because it admitted that no contract existed 

between it and Asahi and that Actelion did not assume the contract between Asahi 

and CoTherix. Id. at 967-68. Here, while Glocom makes no admission like 

Actelion, the facts readily indicate a similar contractual posture. There is no 

contract between Glocom and PPC. Granted Glocom acquired 100% membership 

interest in the IPCO’s contract rights, it failed to represent that it assumed the 

contract with PPC in toto. Moreover, a plain reading of the Purchase Agreement 

reveals that Glocom’s acquisition of IPCO’s interest does not create a contractual 

relationship with PPC on its own. As such, the Court finds that Glocom is a 

stranger to the contract between PPC and IPCO. Therefore, Glocom can be held 

liable for tortious interference with contract. 

Conclusion 

For the foregoing reasons, Glocom’s motion to dismiss [doc. 37] is 

DENIED. 

Date: January 14, 2020 

Case 3:18-cv-01880-L-WVG Document 54 Filed 01/14/20 PageID.<pageID> Page 5 of 5