Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_24-cv-01850/USCOURTS-caed-2_24-cv-01850-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

PRO 49 DEVELOPMENT, LLC, a 

California limited liability 

company,

Plaintiff,

v.

NESS EXPRESS 1, LLC, a Delaware 

limited liability company; ADAM 

DECKER, an individual; JOSEPH 

DECKER, an individual, et al.,

Defendants.

No. 2:24-cv-01850-JAM-JDP

ORDER DENYING DEFENDANTS’

MOTION TO DISMISS

Before the Court is Defendants Adam Decker and Joseph 

Decker’s (collectively, the “Deckers”) motion to dismiss. See

Mot., ECF No. 22. Pro 49 Development (“Plaintiff”) opposes. See

Opp’n, ECF No. 24. The Deckers reply. See Reply, ECF No. 26. 

For the following reasons, Defendants’ motion is DENIED.1

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Plaintiff originally filed suit in the Superior Court of 

California, County of Placer. See Notice of Removal, ECF No. 1. 

Defendants then properly removed the case to federal court under 

1This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). The hearing was 

scheduled for November 19, 2024.

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diversity jurisdiction. See id.; see also Order Denying Motion 

to Remand, ECF No. 25. 

This controversy arises out of a lease between Plaintiff and 

Defendant Ness Express 1 (“Ness”) for the establishment of a car 

wash under the franchise of Defendant Tommy’s Express. See Comp. 

¶ 1, ECF No. 1. Plaintiff alleges that Ness violated the lease 

and that named defendants (the Deckers and Ryan Essenburg)

interfered with the lease. See id. Plaintiff brings thirteen 

causes of action, including breach of contract. See id. at 1. 

The Deckers now move to dismiss nine causes of action for 

failure to state a claim upon which relief can be granted. Mot. 

at 1-2. Specifically, the Deckers argue that Plaintiff has 

failed to adequately allege that they are the alter ego of Ness. 

See id. at 4. Plaintiff responds that it has sufficiently pled 

this allegation. See Opp’n at 1. 

II. OPINION

A. Legal Standard

A Rule 12(b)(6) motion challenges the sufficiency of a 

complaint for “failure to state a claim upon which relief can be 

granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to 

dismiss [under 12(b)(6)], a complaint must contain sufficient 

factual matter, accepted as true, to state a claim to relief 

that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 

662, 678 (2009) (internal quotation marks and citation omitted). 

Plausibility requires “factual content that allows the court to 

draw the reasonable inference that the defendant is liable for 

the misconduct alleged.” Id. While “detailed factual 

allegations” are unnecessary, the complaint must allege more 

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than “[t]hreadbare recitals of the elements of a cause of 

action, supported by mere conclusory statements.” Id. 

Conclusory allegations are not to be considered in the 

plausibility analysis. Id. at 679 (“While legal conclusions can 

provide the framework of a complaint, they must be supported by 

factual allegations.”). When a plaintiff fails to “state a 

claim upon which relief can be granted,” the Court must dismiss 

the claim. Fed. R. Civ. P. 12(b)(6). 

B. Request for Judicial Notice

Under Federal Rule of Evidence 201, a district court may 

take judicial notice of a fact that is “not subject to 

reasonable dispute because it can be accurately and readily 

determined from sources whose accuracy cannot reasonably be 

questioned.” Fed. R. Evid. 201(b)(2). A court may therefore 

take judicial notice of matters of public record. Reyn’s Pasta 

Bella LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 

2006). It also is proper for a court to consider evidence 

subject to judicial notice while deciding a motion to dismiss. 

Weston Fam. P’ship LLLP v. Twitter, Inc., 29 F.4th 611, 617 (9th 

Cir. 2022). 

The Deckers request that the Court take judicial notice of 

Ness’s State of Delaware Certification of Formation of Limited 

Liability Company. See Request for Judicial Notice, ECF No. 22-

2. The Certification shows that Ness was formed on June 6, 

2023, and that Joseph Decker signed as the “Authorized Person.” 

See id. Because the Deckers seek judicial notice of a document

that is a matter of public record and the request is unopposed, 

the Court GRANTS this request.

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C. Alter Ego Liability

The Court must first determine the law that will apply to 

its alter ego analysis. “Where a statute dictates the choice-oflaw, the court need not apply a common law choice-of-law 

analysis.” Wehlage v. EmpRes Healthcare Inc., 821 F. Supp. 2d 

1122, 1128 (N.D. Cal. 2011) (citing Barclays Discount Bank Ltd. 

v. Levy, 743 F.2d 722, 725 (9th Cir. 1984)). California 

Corporations Code Section 17708.01 states that “[t]he law of the 

state or other jurisdiction under which a foreign limited 

liability company is formed governs . . . the liability of a 

member as member and a manager as manager for the debts, 

obligations, or other liabilities of the limited liability 

company.” Cal. Corp. Code § 17708.01. This statutory language 

“encompasses the determination of an LLC’s alter ego liability.” 

MacRae v. HCR Manor Care Servs., LLC, No. SACV140715DOCRNB, 2017 

WL 11480091, at *3 (C.D. Cal. Sept. 14, 2017). Accordingly, 

federal courts in California apply the law of the state of 

incorporation in assessing the alter ego of an LLC. See e.g., 

Greenlight Sys., LLC v. Breckenfelder, No. 19-CV-06658-EMC, 2021 

WL 2651377, at *17 (N.D. Cal. June 28, 2021), aff’d, No. 21-

16245, 2022 WL 17222415 (9th Cir. Nov. 25, 2022) (applying Ohio 

law because it was the state of incorporation); Wehlage, 821 F. 

Supp. 2d at 1128-29 (applying Washington law because it was the 

state of incorporation); MacRae, 2017 WL 11480091 at *3 (applying 

Delaware law for the alter ego analysis of a Delaware LLC, and 

applying Ohio law for the alter ego analysis of an Ohio LLC). 

Because Ness is an LLC incorporated in Delaware, the Court 

applies Delaware law in its alter ego analysis. See Request for 

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Judicial Notice. The Deckers agree with this conclusion, and

Plaintiff does not address this question. See Mot. at 7; see

generally Opp’n. 

In NetJets, the Second Circuit applied Delaware law in 

determining whether a corporation was the alter ego of an 

individual. It held that the relevant standard is “whether the 

two entities operated as a single economic entity such that it 

would be inequitable for the Court to uphold a legal distinction 

between them.” NetJets Aviation, Inc. v. LHC Commc’ns, LLC, 537 

F.3d 168, 177 (2d Cir. 2008) (cleaned up). The court thus 

articulated a “two-pronged test . . . (1) whether the entities in 

question operated as a single economic entity, and (2) whether 

there was an overall element of injustice or unfairness.” Id.; 

see also Fletcher v. Atex, Inc., 68 F.3d 1451, 1457 (2d Cir.

1995). 

1. Single Economic Entity

The NetJets court held that the “alter ego analysis must 

start with an examination of factors which reveal how the 

corporation operates and the particular defendant’s relationship 

to that operation. These factors include whether the corporation 

was adequately capitalized for the corporate undertaking; whether 

the corporation was solvent; whether dividends were paid, 

corporate records kept, officers and directors functioned 

properly, and other corporate formalities were observed; whether 

the dominant shareholder siphoned corporate funds; and whether, 

in general, the corporation simply functioned as a facade for the 

dominant shareholder.” NetJets, 537 F.3d at 176-177 (citation 

omitted). The court recognized that “somewhat less emphasis is 

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placed on whether the LLC observed internal formalities because 

fewer such formalities are legally required” in Delaware. Id. at 

178. The court continued that “no single factor can justify a 

decision to disregard the corporate entity” and, instead, “some 

combination of them is required.” Id. at 177 (internal quotation 

marks and citation omitted). 

Here, Plaintiff argues that Ness was undercapitalized and 

insolvent, and that it simply functioned as a façade for the 

Deckers. 

a. Undercapitalized and Insolvent

Plaintiff makes the following relevant allegations: Ness 

“was created without assets for the express and specific purpose 

of entering into the Lease,” Compl. ¶ 13(f); Ness could not 

demonstrate its solvency, so the Deckers “each submitted their 

own individual finances” to enter the Lease, id. ¶ 13(k); Ness

”on or about December 4, 2023, . . . admitted in writing that it 

cannot afford to perform the construction it needs to on the” 

leased property, id. ¶ 13(d); and Ness “on or about December 15, 

2023, . . . admitted in writing that one of the reasons it was 

abandoning its obligations under the Lease was that” regulations 

were “prohibitively expensive,” id. ¶ 13(e).

Taken together, these allegations plausibly state that Ness 

was undercapitalized and insolvent.

b. Functioned as a Facade

To demonstrate that Ness functioned as a façade for the 

Deckers, Plaintiff alleges: Ness was “a mere shell, 

instrumentality, and conduit[] through which” the Deckers 

exercised “complete control and dominance,” id. ¶ 13(a); the 

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Deckers formed Ness for the “express and specific purpose of 

entering into the Lease,” id. ¶ 13(f); Ness was “controlled, 

dominated, and operated by” the Deckers, id. ¶ 13(i); the 

business affairs of the Deckers and Ness are “so mixed and 

intermingled that the same cannot be reasonably segregated,” id.

¶ 13(j); the Deckers and Ness were “commingling its assets with 

one another,” id. ¶ 14; neither Ness nor the Deckers made any 

payment under the lease, id. ¶ 69; and the Deckers formed “a 

financially insolvent entity” “to avoid any liability related to 

the injury Plaintiff suffered,” id. ¶¶ 13(b), 14. These 

allegations plausibly state that Ness functioned as a façade for 

the Deckers, who exercised complete control over the entity.

Other evidence supports these allegations. The Deckers’

Request for Judicial Notice indicates that they formed Ness for 

the sole purpose of entering into the agreement with Plaintiff. 

The public record shows that Ness was formed on June 6, 2023. 

See Request for Judicial Notice. Just a week later, on June 13, 

2023, Adam Decker made an offer to Plaintiff for the leased 

property, and on September 19, 2023, Plaintiff entered into the

contract with Ness. See Compl. ¶¶ 17, 23. To be sure, the 

Deckers admit in their brief that Ness “was formed for the sole 

purpose of building and operating a Tommy’s Express Car Wash 

Franchise” on the leased property. See Reply at 2. 

Also, the Deckers previously stated that Ness is “wholly 

owned by parent company” Ness Express Holdings. See Rule 7.1 

Corporate Disclosure Statement, ECF No. 2. The Deckers also 

admit that they are the “sole members of Ness Holdings,” which 

means they exclusively and completely control Ness. See id.; see

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also Mot. at 5 (Deckers stating that they own Ness Holdings, and 

that Ness Holdings is the sole member of Ness).

Accordingly, Plaintiff has sufficiently alleged that Ness 

functioned as a façade for the Deckers, and the Deckers 

maintained complete and exclusive control over Ness. Taken 

together with Plaintiff’s allegations regarding 

undercapitalization and insolvency, the Court finds that a 

combination of factors supports disregarding the corporate 

entity. See NetJets, 537 F.3d at 177.

2. Element of Injustice or Unfairness

“[T]he plaintiff need not prove that the corporation was 

created with fraud or unfairness in mind. It is sufficient to 

prove that it was so used.” NetJets, 537 F.3d at 177. The

NetJets court held that “the claimed injustice must consist of 

more than merely the tort or breach of contract that is the basis 

of the plaintiff’s lawsuit . . . [b]ut nothing prevents a court, 

in determining whether there is sufficient evidence of fraud or 

unfairness, from taking into account relevant evidence that is 

also pertinent to the question of whether the two entities in 

question functioned as one.” NetJets, 537 F.3d at 183. Indeed, 

courts applying Delaware law have found that, for a motion to 

dismiss, “[a]llegations of undercapitalization and siphoning of 

funds are sufficient to satisfy the ‘injustice or unfairness’

element.” See Essar Steel Algoma Inc. v. Nevada Holdings, Inc., 

No. 17MISC360ATRWL, 2020 WL 2539031, at *4 (S.D.N.Y. May 18,

2020) (collecting cases).

As explained above, Plaintiff has sufficiently alleged that 

Ness was undercapitalized, insolvent, and a façade for the 

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Deckers. Taken as true for the purposes of this motion, these 

allegations demonstrate that the Deckers abused the corporate 

form to promote injustice. In line with other courts applying 

Delaware law, the Court therefore finds that these allegations 

satisfy the injustice or unfairness element to survive a motion 

to dismiss. See e.g., McBeth v. Porges, 171 F. Supp. 3d 216, 234 

(S.D.N.Y. 2016) (“[T]he allegations regarding the commingling of 

personal and corporate assets and the insufficient capital to 

cover expenses plausibly plead an ‘inequitable use of the 

corporate form.’”); TradeWinds Airlines, Inc. v. Soros, No. 08 

Civ. 5901, 2012 WL 983575 (S.D.N.Y. Mar. 22, 2012) (finding that 

the allegation that defendants improperly left a corporation

undercapitalized was sufficient to show fundamental injustice); 

Blair v. Infineon Techs. AG, 720 F. Supp. 2d 462, 473 (D. Del. 

2010) (holding that misdirection of funds, dominating control, 

and siphoning of funds supported existence of injustice or 

unfairness). Accordingly, drawing all inferences in Plaintiff’s 

favor, Plaintiff has satisfied both prongs of this analysis and 

plausibly stated that the Deckers are the alter ego of Ness.

The Deckers’ final argument here is that Plaintiff’s

allegations of injustice or unfairness fail to satisfy Federal 

Rule of Civil Procedure 9(b). A plaintiff “must satisfy Rule 

9(b)’s particularity standard as to the fraud element of 

plaintiff’s alter ego theory.” Wimbledon Fund, SPC v. Graybox, 

LLC, No. CV15-6633-CAS(AJWX), 2016 WL 7444709, at *5 (C.D. Cal. 

Aug. 31, 2016) (collecting cases). This rule requires a 

plaintiff to plead allegations of fraud with particularity, 

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including the “circumstances constituting fraud or mistake.” 

Fed. R. Civ. P. 9(b).

The Deckers argue that Plaintiff failed to satisfy Rule 9(b) 

because it did not provide “further elaboration of what the 

injustice would be” if the Court found that the Deckers are not 

the alter ego of Ness. See Mot. at 12 (internal quotation marks 

and citation omitted). But Plaintiff has sufficiently pled that 

the injustice would be that the Deckers “would avoid any 

liability” in this action. See Compl. ¶ 14. Moreover, none of 

the cases the Deckers cite for this proposition applied Delaware 

law. See Mot. at 11-12. In the most relevant case cited, the 

court held that “the mere allegation that [the corporation] is 

undercapitalized is not enough to imply an unjust result.” Orosa 

v. Therakos, Inc., No. C-11-2143 EMC, 2011 WL 3667485, at *7 

(N.D. Cal. Aug. 22, 2011). But Orosa is inapposite because the 

court there found that the plaintiff failed to satisfy the first 

prong of the alter ego analysis, and thus the court did not 

consider whether a sufficient undercapitalization allegation 

satisfied the injustice element. See id. at *6 (“Plaintiff’s 

allegations are insufficient to satisfy either prong of the alter 

ego theory”). Regardless, courts applying Delaware law are clear 

that Plaintiff’s allegations are sufficient to satisfy the 

injustice or unfairness prong on a motion to dismiss.

As such, Plaintiff has adequately alleged here that the 

Deckers created a shell corporation they completely controlled 

for the sole purpose of entering the lease, violated the terms of 

that lease, and now are hiding behind an undercapitalized and 

insolvent corporation to avoid liability for injuries suffered by 

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Plaintiff. These allegations satisfy the heightened pleading 

standard and show bad faith conduct on the part of the Deckers. 

Accordingly, Plaintiff has sufficiently pled that the Deckers are 

the alter ego of Ness.

3. Federal Rule of Civil Procedure 8(a)

The Deckers’ only remaining argument in support of their 

motion to dismiss is that Plaintiff failed to satisfy Federal 

Rule of Civil Procedure 8(a)(2), which requires “a short and 

plain statement of the claim” to put defendants on sufficient 

notice of the allegations against them. Fed. R. Civ. P. 8(a)(2). 

The Deckers contend that Plaintiff fails to differentiate between 

them throughout its complaint. See Mot. at 10. But the 

complaint is clear that the Deckers are alleged to have engaged 

in the same conduct: forming Ness to enter the lease and then 

violating the agreement. Accordingly, Plaintiff has presented a 

plain statement of the claim such that each of the Deckers are on 

sufficient notice of the allegations against them.

III. ORDER

For the reasons set forth above, Defendants’ motion to 

dismiss is DENIED. Adam Decker and Joseph Decker are hereby

ordered to answer the complaint within fourteen (14) days of this 

Order.

IT IS SO ORDERED.

Dated: November 6, 2024

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