Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-04141/USCOURTS-cand-3_14-cv-04141-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1330 Breach of Contract

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UNITED 

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COURT

For the Northern District of California

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No. C14-04141 LB

ORDER

UNITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

Northern District of California

San Francisco Division

HEXAGON SECURITIES LLC,

Plaintiff,

v.

 GOLDEN PACIFIC BANCORP, INC.,

Defendant.

_____________________________________/

No. C 14-04141 LB

ORDER GRANTING DEFENDANT’S

MOTION TO DISMISS PLAINTIFF’S

FIRST AMENDED COMPLAINT

[Re: ECF No. 14]

INTRODUCTION

Plaintiff Hexagon Securities, LLC (“Hexagon”) entered into a contract with Defendant Golden

Pacific Bancorp, Inc. (“GPB”), which Hexagon now says GPB breached by not paying it a

transaction fee with respect to a transaction that closed after the contract terminated. Hexagon sued

GPB, and now GPB moves to dismiss Hexagon’s First Amended Complaint. Pursuant to Civil

Local Rule 7-1(b), the court found this matter suitable for determination without oral argument and

vacated the January 15, 2015 hearing. Upon consideration of Hexagon’s allegations, the briefs

submitted, and the applicable legal authority, the court grants GPB’s motion and dismisses without

prejudice Hexagon’s First Amended Complaint.

STATEMENT

Hexagon is a small investment bank that specializes in capital markets, capital raising, and

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 Record citations are to documents in the Electronic Case File (“ECF”); pinpoint citations

are to the ECF-generated page numbers at the top of the documents.

No. C14-04141 LB

ORDER 2

mergers and acquisition activities. First Amended Complaint (“FAC”), ECF No. 11 at 1.1 GPB is a

bank holding company. Id. On December 20, 2010, Hexagon and GPB entered into a written

agreement (the “Agreement”) regarding Hexagon’s provision of financial services to GPB. Id.; see

id., Ex. A, ECF No. 11-1 at 1-11. By written letter, the parties amended certain provisions of the

Agreement on March 23, 2011. Id., Ex. A, ECF No. 11-1 at 12-13. The Agreement, as amended,

provides in relevant part:

1. Services.

[GPB] hereby retains Hexagon and Hexagon shall have the right to act during the

term of this Agreement as lead manager, bookrunner, placement agent, arranger or

initial purchaser, as the case may be (“Lead Placement Agent”), in connection with

the structuring, issuance, sale, arrangement or placement, whether in a public or

private transaction, of any equity or hybrid securities, including (without limitation),

stock, warrants and convertible debt securities (the “Securities”) to investors

(“Investors”) (any of all of the foregoing, whether in one or more issuances, the

“Transaction”).

. . .

Hexagon’s services as Lead Placement Agent shall include, but not be limited to,

the following:

(a) Assisting with the preparation of any and all marketing materials for

discussions with Investors relating to the Transaction, including working with

[GPB] on the Information Memorandum;

(b) Assisting with the coordination of the marketing process and roadshow

with respect to the Transaction;

(c) Assisting with the coordination of the execution of the Transaction with

[GPB’s] and Hexagon’s legal counsel.

. . .

4. Compensation.

(a) [GPB] agrees to pay Hexagon, promptly upon closing of a Transaction, a cash fee

(the “Transaction Fee”) equal to six percent (6.0%) of the aggregate gross proceeds to

[GPB] (i.e., the par amount of such Securities). Notwithstanding the foregoing, the

Transaction Fee with respect to any Securities sold to shareholders existing as of the

date hereof or to [GPB’s] directors or officers will be one percent (1.0%) of such

aggregate gross proceeds to [GPB]. For purposes of clarity, no Transaction Fee shall

be payable with respect to capital, if any, raised by [GPB] through The Troubled

Asset Relief Program (TARP), Small Business Lending Fund (SBLF) or similar

government programs (collectively, “SBLF Capital”).

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No. C14-04141 LB

ORDER 3

. . .

5. Expenses.

In lieu of reimbursing Hexagon for travel and marketing expenses incurred by

Hexagon in connection with the engagement contemplated hereunder, [GPB] shall

pay Hexagon a monthly administrative fee during the first six months of this

engagement. This monthly fee shall be based upon a mutually agreed budget

described in Appendix B; thereafter, [GPB] will not be responsible for travel and

marketing expenses incurred hereunder. In the event [GPB] elects [to] not complete

the Transaction [GPB] will reimburse Hexagon, promptly upon receipt of an invoice

therefor, for all reasonable out-of-pocket legal fees and legal expenses incurred by

Hexagon which have been agreed to in advance by [GPB] in connection with a

Transaction. [GPB] shall not be liable for any of Hexagon’s specific outside legal

fees or costs should Hexagon elect to not proceed with the Transaction or if Hexagon

fails to achieve the minimum capital raise as agreed upon by [GPB] and Hexagon

which causes the Transaction to not be closed.

. . . 

7. Termination and Break-up Fees.

The term of Hexagon’s engagement hereunder will commence upon the execution

of this Agreement by both parties, and will continue until December 31, 2013 (which

date may be extended by mutual agreement of the parties) (the “Termination Date”),

unless terminated earlier pursuant to the immediate succeeding sentence (the

“Termination Date”). Notwithstanding the foregoing, the Termination Date shall be

the latest of (a) December 31, 2011 if no Transaction has closed on or prior to such

date and [GPB] has not raised SBLF Capital between the date hereof and such date;

or (b) March 31, 2012 if no Transaction has closed on or prior to such date and [GPB]

has raised SBLF Capital between the date hereof and such date. Upon termination of

this Agreement, [GPB] shall promptly pay Hexagon any accrued but unpaid fees

payable hereunder and shall reimburse Hexagon for any unreimbursed expenses that

are reimbursable hereunder. If, during the six month period following the

Termination Date of this Agreement, [GPB] consummates a transaction similar in

nature to a Transaction with any of the Investors introduced to it by Hexagon (a “Tail

Period Transaction”), Hexagon shall be entitled to the Transaction Fee set forth in

Section 4 as if such Tail Period Transaction were a “Transaction.” Upon any

termination of this Agreement, the rights and obligations of the parties hereunder

shall terminate, except for the obligations set forth in Sections 6 [regarding

indemnification], 7 [regarding termination and break-up fees], and 9 [regarding the

governing law] and Appendix A [regarding indemnification], which shall survive

such termination. 

Subject to market conditions, the parties hereto shall use their good faith efforts to

close the Transaction in a reasonably expeditious manner. 

. . .

9. Governing Law.

THIS AGREEMENT AND ALL DISPUTES ARISING OUT OF OR

RELATING TO THIS AGREEMENT SHALL BE GOVERNED BY, AND

CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW

YORK. . . .

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No. C14-04141 LB

ORDER 4

The parties hereto hereby (a) consent to submit to the jurisdiction of the courts of

the State of California and of the United States of America located in the State of

California for any action, suit or proceeding arising out of or relating to this

Agreement (and hereby and irrevocably and unconditionally agree not to commence

any such action, suit, or proceeding except in such courts), (b) waive the defense of

an inconvenient forum or venue of any such action, suit or proceeding in any such

courts, (c) agree to accept service of process by mail and (d) agree that a decision in

such jurisdiction will be conclusive and may be enforced in other jurisdictions by suit

on the judgment or in any other manner provided by law.

. . .

13. Miscellaneous.

This Agreement constitutes the entire agreement between the parties with respect

to th subject matter hereof, and may not be amended or modified except in writing

signed by each party hereto. . . .

Id., Ex. A, ECF No. 11-1 at 1, 3-4, 12-13, ¶¶ 1, 4(a), 7, 9, 13 (underlining in original); see also id.,

ECF No. 11 at 2-3. 

In its First Amended Complaint, Hexagon alleges that, pursuant to the Agreement, and beginning

in or around June 2011, it worked as the Lead Placement Agent for a Transaction involving Gapstow

Capital Partners (“Gapstow”) (the “Gapstow Transaction”). Id., ECF No. 11 at 3. It says that it

expended significant resources in connection with the Gapstow Transaction, including assisting with

preparing presentations for Gapstow, formulating equity calculations related to value/share structure,

and other time-intensive tasks essential to the success of the Gapstow Transaction. Id. at 3-4. 

Despite its beginnings in June 2011, the Gapstow Transaction did not close for a few years. 

Hexagon alleges that GPB acknowledged Hexagon’s work and role in several communications

throughout 2013 and 2014, and that GPB requested Hexagon’s assistance with respect to the

Gapstow Transaction on numerous occasions in 2014. Id. at 4. Hexagon responded to each request

diligently. Id. Nevertheless, GPB’s Chief Executive Officer, Virginia Varela, sent Hexagon a letter

dated July 2, 2014 which stated that she “believ[ed] that all of [GPB’s] obligations pursuant to [its

agreements with Hexagon] have been satisfied in full and that no fees will be due under either of

these agreements in the future.” Id. Gapstow (as distinguished from GPB), however, continued to

request assistance from Hexagon with respect to the Gapstow Transaction as late as August 14,

2014. Id. And “senior representatives of GPB acknowledged Hexagon’s ole and entitlement to

compensation” as late as August 16, 2014. Id. 

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No. C14-04141 LB

ORDER 5

On some unspecified date thereafter, the Gapstow Transaction closed. Id. GPB raised

$3,000,000 of capital through it. Id. Hexagon believes that it is entitled, under the Agreement, to a

6% Transaction Fee based on its work on the Gapstow Transaction, so on September 12, 2014 it

sued GPB in this court to recover it. See Original Complaint, ECF No. 1. After GPB answered it,

Hexagon filed its First Amended Complaint as a matter of right. See FAC, ECF No. 11; see also

Fed. R. Civ. P. 15(a)(1)(B). In it, Hexagon brings two claims for breach of contract and one claim

for unjust enrichment. See FAC, ECF No. 11 at 5-6. GPB then filed a motion to dismiss the First

Amended Complaint. See Motion, ECF No. 14. Hexagon filed an opposition, and GPB filed a

reply. See Opposition, ECF No. 17; Reply, ECF No. 19. Both parties consented to the

undersigned’s jurisdiction over this action. See Consent (Hexagon), ECF No. 9; Consent (GPB),

ECF No. 10. 

ANALYSIS

I. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a) requires that a complaint contain a “short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A

complaint must therefore provide a defendant with “fair notice” of the claims against it and the

grounds for relief. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation and

citation omitted). 

A court may dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) when it does

not contain enough facts to state a claim to relief that is plausible on its face. See 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, 129 S. Ct. 1937, 1949 (2009). “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 557.). “While a complaint attacked by a Rule

12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to

provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do. Factual allegations must be

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No. C14-04141 LB

ORDER 6

enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (internal

citations and parentheticals omitted). 

In considering a motion to dismiss, a court must accept all of the plaintiff's allegations as true

and construe them in the light most favorable to the plaintiff. See id. at 550; Erickson v. Pardus, 551

U.S. 89, 93-94 (2007); Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007). 

If the court dismisses the complaint, it should grant leave to amend even if no request to amend

is made “unless it determines that the pleading could not possibly be cured by the allegation of other

facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Cook, Perkiss and Liehe, Inc.

v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990)). But when a party

repeatedly fails to cure deficiencies, the court may order dismissal without leave to amend. See

Ferdik v. Bonzelet, 963 F.2d 1258, 1261 (9th Cir. 1992) (affirming dismissal with prejudice where

district court had instructed pro se plaintiff regarding deficiencies in prior order dismissing claim

with leave to amend).

II. APPLICATION

GPB moves to dismiss each of Hexagon’s three claims. The court addresses each claim in turn

below.

A. Hexagon’s First Breach of Contract Claim Must Be Dismissed

In its first breach of contract claim, Hexagon alleges that the Agreement is a valid and

enforceable agreement, that it performed all of its duties (including those with respect to the

Gapstow Transaction) under the Agreement, that it therefore is entitled to a 6% Transaction Fee with

respect to the Gapstow Transaction, that GPB breached the Agreement by not paying the

Transaction Fee to it, and that it has been damaged for this reason. See FAC, ECF No. 11 at 5. 

GPB argues that Hexagon’s claim fails because the Gapstow Transaction did not occur before

the Agreement terminated or within the six-month Tail Period, so the Agreement has not been

breached. Based on Hexagon’s allegations, the Agreement terminated on December 31, 2013, and

the six-month Tail Period ended on June 30, 2014. Section 7 of the Agreement provides that this is

to be the Termination Date unless it is extended by mutual agreement of the parties, and Section 13

provides that the Agreement may not be amended or modified except in writing signed by each

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ORDER 7

party. Here, while Hexagon argues in its opposition that Hexagon and GPB extended the Agreement

to cover the closing date of the Gapstow Transaction, such an allegation does not appear in the First

Amended Complaint, nor has Hexagon pointed to any agreement that extends the Termination Date

of Agreement. Thus, the Agreement terminated on December 31, 2013, and the six-month Tail

Period ended on June 30, 2014.

So, did the Gapstow Transaction close before June 30, 2014? Not according to Hexagon’s

allegations. Although it does not provide a specific closing date, it is clear from the chronology of

Hexagon’s allegations that the Gapstow Transaction was still being worked on as late as August

2014, and it was only sometime around then, or shortly thereafter, that the Gapstow Transaction

closed. Section 7 of the Agreement makes clear that, with certain exceptions not applicable here,

Hexagon’s and GPB’s rights and obligations under the Agreement terminate at the Agreement’s

Termination Date and that the Tail Period lasts only for six months. Because the Gapstow

Transaction closed after this period, and in the absence of any allegations that the parties extended

the Termination Date or that GPB did not use good faith efforts to close the Gapstow Transaction in

a reasonably expeditious manner, GPB’s obligation to pay Hexagon a Transaction Fee extinguished

on June 30, 2014. Accordingly, Hexagon’s first breach of contract claim fails and must be

dismissed without prejudice. The court dismisses the claim without prejudice because the court

cannot say at this time that Hexagon cannot allege that the parties agreed in writing to extend the

Termination Date or that GPB intentionally or wrongfully delayed the Gapstow Transaction to

frustrate Hexagon’s rights under the Agreement. 

B. Hexagon’s Second Breach of Contract Claim Must Be Dismissed As Well

In its second breach of contract claim, Hexagon alleges that the Agreement is a valid and

enforceable agreement, that it performed all of its duties under the Agreement, that the parties

consented to the jurisdiction of California’s state and federal courts and agreed to waive the defenses

of improper venue or inconvenient forum in the Agreement, that GPB breached the Agreement by

asserting improper venue and inconvenient forum as affirmative defenses in GPB’s answer to

Hexagon’s now-superseded Original Complaint, and that it has been damaged because it has

incurred unnecessary costs and attorney’s fees to defend against these affirmative defenses. See

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ORDER 8

FAC, ECF No. 11 at 5. 

The court finds that this claim fails because it is moot and Hexagon suffered no damages because

it never had to defend against its affirmative defenses. As explained above, GPB asserted its

defenses in response to Hexagon’s Original Complaint, which was superseded when it chose to file a

First Amended Complaint as a matter of right. GPB never had to defend against GPB’s affirmative

defenses because it immediately filed a First Amended Complaint. The court notes that Hexagon

does not address these points in its opposition. In these circumstances, the court finds that

Hexagon’s second breach of contract claim fails and must be dismissed without prejudice.

C. Hexagon’s Unjust Enrichment Claim Also Must Be Dismissed

In its unjust enrichment claim, which is pled in the alternative, Hexagon alleges that it provided

valuable placement and advisory services to GPB worth at least $126,000, that GPB was enriched in

that amount, and that it would be inequitable to permit GPB to retain the benefit of Hexagon’s

services without compensating Hexagon for them. See FAC, ECF No. 11 at 6. 

This claim also must be dismissed. As GPB points out, under New York law, a claim for unjust

enrichment fails where there exists an express contract that covers the subject matter forming the

basis for the unjust enrichment claim. See IDT Corp. v. Morgan Stanley Dean Witter & Co., 907

N.E.2d 268 (N.Y. 2009) (“The theory of unjust enrichment lies as a quasi-contract claim. It is an

obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the

parties concerned. Where the parties executed a valid and enforceable written contract governing a

particular subject matter, recovery on a theory of unjust enrichment for events arising out of that

subject matter is ordinarily precluded.”) (citing Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 516

N.E.2d 190, 193 (N.Y. 1987)) (internal citation and quotation marks omitted); see also Georgia

Malone & Co., Inc. v. Rieder, 973 N.E.2d 743, 746 (N.Y. 2012). Here, the Agreement clearly

delineates Hexagon’s right to receive, and GPB’s obligation to pay, a Transaction Fee. Hexagon

does not dispute this point, see Opposition, ECF No. 17 at 7, and it also does not allege that the

Agreement was procured by fraud or is invalid. Accordingly, Hexagon’s unjust enrichment claim

fails and must be dismissed without prejudice.

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ORDER 9

CONCLUSION

Based on the foregoing, the court grants GPB’s motion and dismisses without prejudice

Hexagon’s First Amended Complaint. Hexagon may file a Second Amended Complaint by January

27, 2015.

IT IS SO ORDERED.

Dated: January 13, 2015 _______________________________

LAUREL BEELER

United States Magistrate Judge

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