Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-00483/USCOURTS-casd-3_07-cv-00483-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MARK KRAVIS, INC.,

Plaintiff,

CASE NO. 07cv0483WQH

ORDER

vs.

FRANKING FUELING SYSTEMS,

INC., individually and dba; HEALY

SYSTEMS, INC.; FRANKLIN

ELECTRIC CO., INC.; and DOES 1

through 50, inclusive,

Defendants.

HAYES, Judge:

The matter pending before the Court is the amended motion to dismiss Plaintiff’s first

amended complaint (“FAC”) (Doc. # 18), filed by Defendants Franklin Fueling Systems, Inc.

(“Franklin Fueling”) and Franklin Electric Co., Inc. (“Franklin Electric”).

Procedural History

On February 17, 2007, Mark Kravis, Inc. (“Plaintiff”) commenced an action against 

Franklin Fueling and Healy Systems, Inc. (“Healy”) in the Superior Court of California. 

On March 16, 2007, Franklin Fueling removed the case to federal court (Doc. #1). On

March 23, 2007, Franklin Fueling filed a motion to dismiss (Doc. #4). On May 16, 2007,

Plaintiff filed a FAC, which added Franklin Electric as a Defendant (Doc. # 12). On June

8, 2007, Franklin Fueling and Franklin Electric filed an amended motion to dismiss (Doc.

#18), and Healy filed an amended answer to the FAC (Doc. #19). 

Case 3:07-cv-00483-WQH-JMA Document 29 Filed 09/28/07 Page 1 of 7
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Allegations in Plaintiff’s FAC

On or about October 27, 1999, Plaintiff entered into a written contractual agreement 

(“Agreement”) with Healy in which Plaintiff agreed to serve as Healy’s sales representative

for the state of California. FAC, ¶ 7. On or about September 22, 2003, Plaintiff and Healy

amended the Agreement to add the state of Washington and the state of Oregon to

Plaintiff’s sales territory. Id. at ¶ 8. In August, 2006, Healy breached the Agreement by

reducing Plaintiff’s compensation from the agreed-upon 8.5% of his earnings to a lower

amount. Id. at ¶ 9. On September 6, 2006, Plaintiff gave Healy 30 days notice that he

would be terminating their relationship. Id. at ¶ 10. 

Prior to the expiration of the thirty day notice, Plaintiff discovered Franklin Fueling

and/or Franklin Electric acquired Healy. Id. at ¶ 11. After the acquisition, Arthur Boroff,

the sales manager for “defendants, and each of them,” asked Plaintiff to withdraw his

termination. Id. at ¶ 12. Boroff orally represented to Plaintiff that Don Kenney, President

of Franklin Fueling and Healy, and spokesman for Franklin Electric, agreed to pay Plaintiff

the difference between the agreed-upon 8.5% compensation under the Agreement and the

amount Plaintiff actually received. Id. at ¶ 13. Boroff orally represented on behalf of the

“new company” that Plaintiff would continue to receive compensation at the 8.5% rate if he

continued his sales efforts. Id. at ¶ 14. 

On September 26, 2006, in reliance on Boroff’s representations, Plaintiff withdrew

his notice of termination. Id. at ¶ 15. On September 27, 2006, Plaintiff received a check

from Kenney paying him the difference between the agreed-upon 8.5% compensation

under the Agreement and the amount Plaintiff actually received. Id. Plaintiff continued to

perform services until January 31, 2007. Id. On or about December 6, 2006, Plaintiff

received a letter from Franklin Fueling terminating the Agreement. Id. at ¶ 17. At this

time, Franklin Fueling, Franklin Electric and/or Healy owed Plaintiff compensation in the

sum of $489,459.83 for services performed pursuant to the Agreement, as adopted by

Franklin Fueling and Franklin Electric. Id. 

Plaintiff seeks damages for breach of contract, intentional misrepresentation and

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1

 Plaintiff “admits that it had no direct communications with Franklin Electric, and will

stipulate to the dismissal of that defendant, without prejudice.” Opposition to Mot. to Dismiss, p. 3.

In the same document, Plaintiff states he “has properly alleged a claim against each of the named

defendants. Therefore, the motion of [Franklin Fueling and Franklin Electric] to be dismissed from

the case . . . should be denied.” Id. at 5. Since Plaintiff has not filed a stipulation dismissing Franklin

Fueling and this motion is on the pleadings, the Court includes Franklin Electric in this motion. 

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negligent misrepresentation, and a judicial declaration that Franklin Fueling and/or

Franklin Electric acquired Healy, that Franklin Fueling and/or Franklin Electric

subsequently formed a new agreement to pay Plaintiff for services performed, and that

Franklin Fueling and/or Franklin Electric adopted the Agreement after acquiring Healy. 

Franklin Fueling and Franklin Electric’s Amended Motion to Dismiss

Franklin Fueling and Franklin Electric move to dismiss the FAC, pursuant to Rule 

12(b)(6) of the Federal Rules of Civil Procedure.1

 Franklin Fueling and Franklin Electric

assert that the FAC fails to state a claim for the following reasons: (1) the FAC fails to

allege any basis for claiming that Franklin Fueling or Franklin Electric owed Plaintiff

contractual obligations, and (2) the FAC fails to identify any misrepresentations made by,

or on behalf of Franklin Fueling and/or Franklin Electric. Franklin Fueling and Franklin

Electric also move to dismiss Plaintiff’s claims against “Does 1 through 50.” 

Standard of Review

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings.

See De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). A complaint may be

dismissed for failure to state a claim under Rule 12(b)(6) where the factual allegations do

not raise the right to relief above the speculative level. See Bell Atlantic v. Twombly, 127

S. Ct. 1955, 1965 (2007). Conversely, a complaint may not be dismissed for failure to state

a claim where the allegations plausibly show that the pleader is entitled to relief. See id.

(citing Fed R. Civ. P. 8(a)(2)). In ruling on a motion pursuant to Rule 12(b)(6), a court

must construe the pleadings in the light most favorable to the plaintiff, and must accept as

true all material allegations in the complaint, as well as any reasonable inferences to be

drawn therefrom. See Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003); see also

Chang v. Chen, 80 F.3d 1293 (9th Cir. 1996). 

Case 3:07-cv-00483-WQH-JMA Document 29 Filed 09/28/07 Page 3 of 7
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Discussion

I. Breach of Contract 

 Franklin Fueling and Franklin Electric move to dismiss Plaintiff’s breach of contract 

claim on grounds that the FAC fails to allege they are parties to any contract with Plaintiff. 

Franklin Fueling and Franklin Electric contend that the FAC contains only conclusory

allegations that Franklin Fueling and/or Franklin Electric acquired Healy, formed a new

agreement to pay Plaintiff for services performed after acquiring Healy, and adopted the

Agreement with Healy. Mot. to Dismiss, p. 4-5. Franklin Fueling and Franklin Electric

contend that the allegations in the FAC contradict Plaintiff’s claim that he had a contract

with Franklin Fueling and/or Franklin Electric. Franklin Fueling and Franklin Electric

contend that Boroff, who allegedly represented to Plaintiff that Franklin Fueling and/or

Franklin Electric would pay Plaintiff for future services and adopt the terms of the

Agreement, worked for Healy, and therefore could not contract on behalf of Franklin

Fueling and/or Franklin Electric. Reply to Opposition to Mot. to Dismiss, p. 4. 

In order to state a claim for breach of contract, a plaintiff must allege: (1) the

existence of a contract, (2) performance by the plaintiff or excuse for nonperformance, (3)

breach by the defendant, and (4) damages. First Commercial Mortgage Co. v. Reece, 89

Cal. App. 4th 731, 745 (Cal. Ct. Appeal 2001); 4 Witkin, Cal. Procedure (4th ed. 1997)

Pleading, § 476, p. 570. Plaintiff alleges that Franklin Fueling and Franklin Electric

adopted the Agreement, and that Mr. Boroff, the sales manager for “defendants, each of

them,” represented that Franklin Fueling and/or Franklin Electric would pay him pursuant

to the terms of the Agreement if Plaintiff continued to work for the new company.” FAC,

¶¶ 12-14, 18. A reasonable inference to be drawn from these allegations is that Plaintiff

believes Boroff had authority to contract on behalf Franklin Fueling and Franklin Electric. 

Plaintiff alleges “performance by the plaintiff” through his allegation that he withdrew his

notice of termination and continued to perform services for the Defendants. Id. at ¶¶ 15-16. 

Plaintiff further alleges “breach by the defendant” through his allegation that “Defendants,

each of them, breached the said contract when they failed to pay plaintiff the . . .

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commissions it was due for services performed . . . between August, 2006, and January 31,

2007.” Id. at ¶¶ 28-29. Finally, Plaintiff alleges damages through his allegation that he is

entitled to compensation in the sum of $489,459.83 as a result of Defendants’ breach. Id. at

¶¶ 18, 30. Viewing the allegations in the light most favorable to Plaintiff, the Court finds

that the FAC alleges facts that could support a claim for breach of contract. Defendant

Franklin Fueling and Defendant Franklin Electric’s amended motion to dismiss Plaintiff’s

cause of action for breach of contract is DENIED. 

II. Intentional and Negligent Misrepresentation

Franklin Fueling and Franklin Electric move for dismissal of Plaintiff’s intentional

misrepresentation and negligent misrepresentation claims on grounds that the FAC fails to

allege any representations made by, or on behalf of Franklin Fueling or Franklin Electric. 

Franklin Fueling and Franklin Electric contend that Plaintiff “alleges only that the Vice

President of Sales for Healy made certain representations to him and that he received a

check from Don Kenney, the president of Healy,” and that therefore the FAC contains no

allegation of any representation made to Plaintiff by Franklin Fueling or Franklin Electric. 

Mot. to Dismiss, p. 5. 

To state a claim for intentional misrepresentation, a plaintiff must allege: (1) a

misrepresentation, (2) knowledge that the representation was false, (3) intent to induce

reliance on the misrepresentation, (4) justifiable reliance on the misrepresentation, and (5)

resulting damage. Agosta v. Astor, 120 Cal. App. 4th 596, 599, 603 (Cal. Ct. Appeal

2004); 5 Witkin Summary of Cal. Law (10th ed. 2005) Torts, § 772, p. 1121. To state a

claim for negligent misrepresentation, a plaintiff must allege: (1) a misrepresentation, (2)

made without any reasonable ground for believing the representation was true, (3) intent to

induce reliance on the misrepresentation, (4) justifiable reliance on the misrepresentation,

and (5) resulting damage. Glenn K. Jackson Inc. v. Roe, 273 F.3d 1192, 1201 (9th Cir.

2001); 5 Witkin Summary of Cal. Law (10th ed. 2005) Torts, § 818, p. 1181. 

First, Plaintiff alleges a misrepresentation through his allegation that Boroff

misrepresented to Plaintiff that if he withdrew his notice of termination and continued his

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sales efforts on behalf of the “new company” he would continue to receive compensation at

the rate provided in the Agreement. FAC, ¶¶ 13-14, 30. Second, Plaintiff alleges the

requisite knowledge for both his intentional and negligent misrepresentation claims through

his allegation that the misrepresentation was “then and there known to be false by

defendants.” Id. at ¶ 32. Third, Plaintiff alleges intent to induce reliance on the

misrepresentation through his allegation that the purpose of Boroff’s misrepresentation was

to induce Plaintiff to continue to perform services. Id. at ¶ 33. Fourth, Plaintiff alleges his

reliance on the misrepresentation was justified through his allegation that his “reliance . . .

was justified because the defendants’ promises were made contemporaneously with the

payment of the amount plaintiff had been been shorted by Healy in his most recent

commission payment.” Id. at ¶¶ 33-34. Finally, Plaintiff alleges damages through his

allegation that he has not been compensated for the services he performed in reliance on

Defendants’ misrepresentation. Id. at ¶ 35. Viewing the allegations in the light most

favorable to Plaintiff, the Court finds that the FAC alleges facts that support a claim for

intentional misrepresentation and negligent misrepresentation. Defendant Franklin Fueling

and Defendant Franklin Electric’s amended motion to dismiss Plaintiff’s causes of action

for intentional misrepresentation and negligent misrepresentation is DENIED. 

III. Declaratory Relief 

Franklin Fueling and Franklin Electric move for dismissal of Plaintiff’s declaratory

judgment claims on grounds that Plaintiff cannot state a claim for declaratory relief based

on conclusory allegations, and that the FAC contains no factual allegations that Franklin

Fueling and/or Franklin Electric have any contractual obligation to Plaintiff. 

The Declaratory Judgment Act confers jurisdiction to declare the rights of interested

parties in a case of actual controversy. 28 U.S.C. § 2201. Plaintiff alleges facts that

support his claim that Franklin Fueling and Franklin Electric owe him contractual

obligations pursuant to the Agreement with Healy and a new agreement to compensate

Plaintiff for services he performed after Franklin Fueling and/or Franklin Electric acquired

Healy. Viewing the allegations in the light most favorable to Plaintiff, the Court finds that

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the FAC alleges facts that support the existence of a dispute between Plaintiff and Franklin

Fueling and Franklin Electric regarding their contractual obligations to one another. 

Defendant Franklin Fueling and Defendant Franklin Electric’s amended motion to dismiss

Plaintiff’s causes of action for declaratory relief is DENIED. 

IV. Does 1 through 50 

Franklin Fueling and Franklin Electric contend that Plaintiff’s claim against “Does 1 

through 50” should be dismissed because claims against “Doe” defendants are not

recognized by the Federal Rules of Civil Procedure. Mot. to Dismiss, p. 6. 

The Ninth Circuit disfavors the use of the John Doe device. Gillespie v. Ciciletti,

629 F.2d 637, 642 (9th Cir. 1980). However, where the identity of alleged defendants will

not be known prior to the filing of a complaint, a plaintiff should be given an opportunity

through discovery to identify the unknown defendants. Id. 

Plaintiff does not assert a need for discovery to identify unknown defendants. 

Plaintiff also does not oppose the motion to dismiss his claims against fictitious Defendants

“Does 1 through 50.” Franklin Fueling and Franklin Electric’s amended motion to dismiss

“Does 1 through 50” is GRANTED. 

Conclusion

IT IS HEREBY ORDERED that the amended motion to dismiss Plaintiff’s FAC 

(Doc. #18) filed by Defendants Franklin Fueling and Franklin Electric is GRANTED as to

“Does 1 through 50” and otherwise DENIED. 

DATED: September 28, 2007

WILLIAM Q. HAYES

United States District Judge

Case 3:07-cv-00483-WQH-JMA Document 29 Filed 09/28/07 Page 7 of 7