Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-00895/USCOURTS-cand-5_05-cv-00895-3/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

Case No. C 05-00895 JF

ORDER DENYING MOTION TO DISMISS

(JFEX1)

** E-filed on 7/19/05 **

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

DR. WERNER SCHREIBER, in his capacity as

Insolvency Administrator for M+S ELEKTRONIC

AG AND M+S ELECTRONIC AG,

 Plaintiff,

 v.

KINTANA, INC., n/d/b as MERCURY

INTERACTIVE CORPORATION,

 Defendants.

Case Number C 05-00895 JF

ORDER DENYING MOTION TO

DISMISS

[Docket No. 3]

Defendant Kintana, Inc. (“Kintana”) moves pursuant to Federal Rule of Civil Procedure

12(b)(6) to dismiss the claims brought by Plaintiff Dr. Werner Schreiber (“Schreiber”) for failure

to state a claim upon which relief can be granted. The Court has read the moving and responding

papers and has considered the oral arguments of counsel presented on July 15, 2005. For the

reasons set forth below, the motion will be denied.

I. BACKGROUND

On or about March 28, 2001, Kintana, a business software developer, and M+S

Elektronic (“M+S”), a German company that markets and distributes software products and

services, entered into a “Distributor Agreement” that granted M+S a “non-exclusive, nonCase 5:05-cv-00895-JF Document 30 Filed 07/19/05 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

1

 The agreement states that it is dated March 28, 2001. See Compl., Ex. A at 1. 

However, some of the signatures are dated April 2, 2001. See, e.g., id. at 11.

2

 The Court assumes that Schreiber meant to allege that M+S received the letter in 2001

rather than in 2002. See Compl. ¶ 13.

2

Case No. C 05-00895 JF

ORDER DENYING MOTION TO DISMISS

(JFEX1)

transferable, limited license to distribute and market the KINTANA Products in connection with

[M+S’] own computer software products and services” to customers located in Germany.1

Compl., Ex. A at 1, 2. On the same day it executed the Distributor Agreement, M+S paid

Kintana i1,878,544. Compl. ¶ 10. On March 30, 2001, M+S received a letter on Kintana

letterhead from Klaus Horn (“Horn”), Kintana’s general manager for central and eastern Europe,

acknowledging an order dated March 28, 2001, and stating as follows:

As agreed you have the right to return the licences from the above mentioned

order to Kintana, if against our expectation a resale will not happen or will only

happen partialy [sic] within the framework of the current project situation i.e.

Mannesmann until July 30, 2001 . . . .

In this case the untransacted invoice amount will be reimbursed. 

Compl., Ex. C; see also Compl. ¶ 13.2 Schreiber alleges that, because M+S could not sell the

Kintana products before July 30, 2001, it requested reimbursement from Kintana, but Kintana

refused to reimburse M+S by letter dated October 26, 2001. See Compl., Ex. D. On March 2,

2005, Schreiber, in his capacity as insolvency administrator for M+S, filed the instant action

against Kintana for rescission and breach of contract, seeking a return of i1,878,544 to M+S. 

Kintana now moves to dismiss the complaint.

II. LEGAL STANDARD

A complaint may be dismissed for failure to state a claim upon which relief can be

granted for one of two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts

under a cognizable legal theory. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Robertson v.

Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984). For purposes of a motion to

dismiss, all allegations of material fact in the complaint are taken as true and construed in the

light most favorable to the nonmoving party. Clegg v. Cult Awareness Network, 18 F.3d 752,

754 (9th Cir. 1994). Although the Court generally may not consider any material beyond the

Case 5:05-cv-00895-JF Document 30 Filed 07/19/05 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

3

Case No. C 05-00895 JF

ORDER DENYING MOTION TO DISMISS

(JFEX1)

pleadings when ruling on a motion to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(6), Cooper v. Pickett, 137 F.3d 616, 622 (9th Cir. 1997), it may consider documents that

are attached to and part of the complaint, Durning v. First Boston Corp., 815 F.2d 1265, 1267

(9th Cir. 1987). A complaint should not be dismissed “unless it appears beyond doubt the

plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Clegg,

18 F.3d at 754. However, the Court “is not required to accept legal conclusions cast in the form

of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged.” Id.

at 754-55. Motions to dismiss generally are viewed with disfavor under this liberal standard and

are granted rarely. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997).

III. DISCUSSION

Kintana moves to dismiss Schreiber’s claims on the ground that they are barred by the

applicable limitations periods. The undisputed date of accrual of Schreiber’s claims is October

26, 2001, the date that Kintana refused M+S’ request for reimbursement. Schreiber did not file

the instant lawsuit until nearly three-and-a-half years later. Kintana contends that one of two

two-year limitations periods applies.

A. Two-Year Limitations Period for “Damage Compensation Claims”

The Distributor Agreement provides that the maximum limitations period for “[a]ny

damage compensation claims on [Kintana], with the exception of damage compensation claims

from actions in tort,” is two years “from the effecting of the performance on which the claim is

based.” Compl., Ex. A at 25. Kintana argues that Schreiber’s claims for rescission and breach of

contract are covered by this provision and therefore barred as untimely. Because the phrase

“damage compensation claims” is not defined in the agreement, Kintana urges the Court to

interpret it in the “ordinary and popular sense” to mean “any claim that seeks payment for a

party’s loss or harm.” Reply at 5; see also Cal. Civ. Code § 1644 (providing that words of a

contract are to be understood in their ordinary and popular sense rather than according to their

strict legal meaning). However, the phrase “damage compensation claims” is not a term of art,

and it is susceptible to more than one interpretation, giving rise to factual questions regarding the

parties’ intent that cannot be resolved in the context of a motion to dismiss. For example,

Case 5:05-cv-00895-JF Document 30 Filed 07/19/05 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

3

 Although the court in AIU Insurance Co. v. Superior Court found that the ordinary use

of the term “damages” could include restitution, the decision was made in the context of a

dispute over insurance coverage and was influenced by public policy arguments. See AIU Ins.

Co. v. Superior Court, 799 P.2d 1253, 1274 (Cal. 1990). Other courts have found that the use of

the term “damages” in unfair competition statutes does not include restitution, see Cortez v.

Purolator Air Filtration Prods. Co., 999 P.2d 706, 713 (Cal. 2000); Bank of the West v. Superior

Court, 833 P.2d 545, 554 (Cal. 1992), and that restitutionary payments are not “damages” under

section 14170 of the California Welfare & Institutions Code, see Jaffe v. Cranford Ins. Co., 214

Cal. Rptr. 567, 571 (Ct. App. 1985). 

4

 Schreiber contends that the “damage compensation claims” provision is irrelevant to the

instant motion because a claim for rescission destroys the entire contract. However, the Court

has not yet ruled on Schreiber’s claim for rescission, and Schreiber is not automatically relieved

from the contractual limitations period simply by virtue of having sued for rescission of the

contract.

4

Case No. C 05-00895 JF

ORDER DENYING MOTION TO DISMISS

(JFEX1)

because the parties used the phrase to limit certain legal claims, it could be understood as

imposing limitations only on claims for compensatory damages, as distinguished from claims for

rescission and restitution.3See Arthur Linton Corbin, Corbin on Contracts § 996 (1964). 

Accordingly, the Court will deny Kintana’s motion to dismiss with respect to its argument that

the complaint is barred by a contractual limitations period imposed by the “damage

compensation claims” provision.4 

B. Two-Year Statute of Limitations for Oral Agreements

Section 339 of the California Civil Code (“Section 339”) bars any “action upon a

contract, obligation or liability not founded upon a writing” two years after the cause of action

arises. Cal. Civ. Code § 339. Kintana asserts that the agreement regarding reimbursement

referenced in Horn’s letter was an oral agreement subject to the two-year statute of limitations in

Section 339 and thus that Schreiber’s claims for rescission and breach of contract, which are

founded on an alleged breach of that reimbursement agreement, are barred. However, it cannot

be determined from the face of the complaint or from any exhibit thereto when any oral

representations regarding the reimbursement agreement were made (i.e., before or after execution

of the Distributor Agreement) and whether they were intended to modify the Distributor

Agreement. Moreover, depending on the timing of the oral representations and the parties’

Case 5:05-cv-00895-JF Document 30 Filed 07/19/05 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

5

Case No. C 05-00895 JF

ORDER DENYING MOTION TO DISMISS

(JFEX1)

intent, and because Horn appears to have been acting on behalf of Kintana, a trier of fact could

find that Horn’s letter satisfied the contractual requirement that amendments to the Distributor

Agreement be in writing, making Section 339 inapplicable. Accordingly, the Court also will

deny Kintana’s motion to dismiss with respect to its argument that the complaint is barred by

Section 339’s two-year limitations period.

IV. ORDER

Good cause therefore appearing, IT IS HEREBY ORDERED that Kintana’s motion to

dismiss is DENIED. 

DATED: July 19, 2005

/s/ (electronic signature authorized)

JEREMY FOGEL

United States District Judge

Case 5:05-cv-00895-JF Document 30 Filed 07/19/05 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

6

Case No. C 05-00895 JF

ORDER DENYING MOTION TO DISMISS

(JFEX1)

This Order has been served upon the following persons:

Connie L. Chen

conniechen@mofo.com, vklasse@mofo.com 

Erin-Leigh A. Henderson

ehenderson@rutan.com, bevans@rutan.com, lhowell@rutan.com 

Stephen H. Locher

stephen.locher@goldbergkohn.com, amy.ardelean@goldbergkohn.com

Case 5:05-cv-00895-JF Document 30 Filed 07/19/05 Page 6 of 6