Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-03852/USCOURTS-cand-4_06-cv-03852-3/pdf.json

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

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

STERILE CONTAINMENT 

TECHNOLOGIES, LLC,

Plaintiff, No. C 06-3852 PJH 

v. ORDER DENYING MOTION TO DISMISS 

IN PART, GRANTING MOTION TO

NELSON LABORATORIES, INC., DISMISS IN PART AND DENYING 

MOTION TO STRIKE 

Defendant.

___________________________________/

Defendant’s motion to dismiss plaintiff’s third and fourth causes of action and

defendant’s motion to strike came on for hearing before this court on September 27, 2006. 

Plaintiff, Sterile Containment Technologies, LLC (“plaintiff”) appeared through its counsel,

Jefford C. Davis. Defendant Nelson Laboratories, Inc. (“defendant”) appeared through its

counsel, James Belshe. Having read the papers filed in conjunction with the motion and

carefully considered the arguments and the relevant legal authority, the court hereby

DENIES defendant’s motion to dismiss plaintiff’s third cause of action, GRANTS

defendant’s motion to dismiss plaintiff’s fourth cause of action with leave to amend, and

DENIES defendant’s motion to strike, for the reasons stated at the hearing, and

summarized as follows:

1. Defendant’s motion to dismiss plaintiff’s third cause of action for breach of the

implied covenant of good faith is DENIED. Although California law is clear that tort

damages for the implied covenant of good faith are only available in the insurance and

employment contexts, contractual damages are available. See Foley v. Interactive Data

Case 4:06-cv-03852-PJH Document 25 Filed 10/04/06 Page 1 of 3
United States District Court

For the Northern District of California

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Corp., 47 Cal. 3d 654, 692-693 (1988); Guz v Bechtel Nat’l. Inc., 24 Cal. 4th 317, 352

(2000) (a claim for breach of the implied covenant of good faith may be allowed to stand

where the remedy is contract or economic damages). Plaintiff has made sufficient

allegations to state a claim for contractual damages. See Carma Developers (Calif.) v.

Marathon Dev. Calif., 2 Cal. 4th 342, 371 (1992) (every contract contains an implied

covenant of good faith that each party will (1) do everything the contract contemplates to

accomplish the purpose of the contract, and (2) do nothing to deny the other party of the

benefits of the contract).

2. Defendant’s motion to dismiss plaintiff’s fourth cause of action for breach of

fiduciary duty is GRANTED. Plaintiff has failed to allege that an actionable fiduciary

relationship exists between the parties, or the underlying facts necessary to support such a

claim. See Wolf v. Sup. Ct., 107 Cal. App. 4th 25, 30 (2003) (traditional fiduciary

relationships include trustee/ beneficiary, directors and majority shareholders of a

corporation, business partners, joint adventurers and agent/principal). Although plaintiff

asserts that a fiduciary relationship exists based on plaintiff and defendant’s relationship as 

“testing partners,” it has failed to support this assertion with any legal authority. Plaintiff is,

however, granted 20 days from the date of the hearing in which to amend its complaint in

order to allege a qualifying fiduciary relationship.

3. Defendant’s motion to strike references to the letter from the FDA of

December 2004 (“FDA letter”) is DENIED. The court finds that the defendant’s argument

raises essentially a question of admissibility, and is more appropriately addressed in a

dispositive motion or at trial. See Le Duc v. Kentucky Central Life Ins. Co., 814 F.Supp.

820, 830 (ND CA 1992) (allegations supplying evidence in a case should not be stricken

unless defendant can show undue prejudice). However, plaintiff shall amend its complaint

to eliminate the allegation that the FDA letter provided defendant with “actual notice” that

the testing “that was being performed” for plaintiff was substandard, as this allegation is

factually impossible based on the other allegations in the complaint. See Complaint, p. 11,

line 8-15. Any such amendment must be made within 20 days of the date of the hearing.

Case 4:06-cv-03852-PJH Document 25 Filed 10/04/06 Page 2 of 3
United States District Court

For the Northern District of California

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In conclusion, the court hereby (1) DENIES defendant’s motion to dismiss plaintiff’s

third cause of action; (2) GRANTS defendant’s motion to dismiss plaintiff’s fourth cause of

action with leave to amend within 20 days from the date of the hearing; and (3) DENIES

defendant’s motion to strike references to the FDA letter in the complaint except as set

forth above. No other amendments are permitted. 

IT IS SO ORDERED.

Dated: October 4, 2006

______________________________ PHYLLIS J. HAMILTON

United States District Judge 

Case 4:06-cv-03852-PJH Document 25 Filed 10/04/06 Page 3 of 3