Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-00662/USCOURTS-caed-2_07-cv-00662-1/pdf.json

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

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* This matter was determined to be suitable for decision without

oral argument. L.R. 78-230(h).

1 Defendant FedEx was formally known as Roadway Package System,

Inc. and RPS, Inc.

2 All references to “Rules” are to the Federal Rules of Civil

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

SOWOCO, a California general )

partnership, )

) 2:07-cv-662-GEB-GGH

Plaintiff, )

)

v. ) ORDER*

)

ROADWAY PACKAGE SYSTEM, INC., a )

business organization form unknown;)

RPS, INC., a business organization )

form unknown; FEDEX GROUND PACKAGE )

SYSTEM, INC., a business entity )

form unknown, )

)

Defendants. )

)

Defendant FedEx1 (“FedEx”) moves under Federal Rule of Civil

Procedure 12(b)(6) for dismissal of Plaintiff’s claims of waste,

violation of the California Unruh Civil Rights Act, and negligence,

arguing that they are not claims upon which relief can be granted.2

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(...continued)

Procedure.

2

FACTUAL ALLEGATIONS

 Plaintiff alleges it entered into a lease agreement with

Defendant Roadway Package System, Inc. (“Roadway”) whereby Roadway

would occupy certain property belonging to Plaintiff. (Pl.’s Compl. ¶

7.) Plaintiff further alleges that all Defendants are responsible for

the obligations imposed by the lease. (Id. ¶ 8.) This lease

obligated Defendants “to deliver up and return [the leased property]

in as good a condition as upon entry.” (Id.) Plaintiff further

alleges Defendants “caused damage to [that] property.” (Id. ¶ 10.) 

Plaintiff provided notice to Defendants of the damage and requested

Defendants repair the property. (Id. ¶ 11.) Defendants refused and

therefore, Plaintiff “engaged the services of individuals and

companies to restore [the property] to good order and condition” for

an expense in excess of $400,000. (Id. ¶ 12.) 

DISCUSSION

I. Legal Standard

A claim may be dismissed under Rule 12(b)(6) “for one of two

reasons: (1) lack of a cognizable legal theory or (2) insufficient

facts under a cognizable legal claim.” Robertson v. Dean Witter

Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). When deciding

dismissal under Rule 12(b)(6), all material allegations in the

Complaint must be accepted as true and construed in the light most

favorable to Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974);

Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

In addition, Plaintiff is given the benefit of every reasonable

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inference that can be drawn from the plead allegations. Retail Clerks

Int’l Ass’n v. Shermahorn, 373 U.S. 746, 753 n.6 (1963).

II. Waste

FedEx argues Plaintiff’s waste claim must be dismissed

because Plaintiff “does not allege [permanent] depreciation [in market

value of the property and instead] avers that the property was

restored to ‘good order.’” (Def.’s Mot. to Dismiss (“Def.’s Mot.”) at

3:7-9.) Plaintiff rejoins the damage to the property “is widespread

and severe” and that “[t]he use of the word ‘waste’ in describing the

damage in conjunction with the factual allegations should be

sufficient under federal law to withstand [FedEx’s] challenge.” 

(Pl.’s Opp’n at 6:8-12.) 

To state a claim for waste Plaintiff must allege “that th[e]

damage [to its property] caused a substantial or permanent diminution

in the market value of the premises.” Freeze v. Brinson, 3 Cal. App.

4th Supp. 1, 4 (1991). This has not been alleged. Plaintiff asserts

a depreciation in market value is implicit in its use of the word

waste, but this bare assertion is unpersuasive. (Pl.’s Opp’n at

7:11.) Since Plaintiff has failed to allege that the market value of

the property has decreased, it has not provided FedEx “fair notice of

what the [waste] claim is and the grounds upon which it rests.” 

Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007). Therefore,

Plaintiff’s waste claim against FedEx is dismissed without prejudice.

III. Unruh Act

FedEx argues Plaintiff’s claim under the Unruh Act, in which

Plaintiff alleges that FedEx intentionally breached its contractual

obligations to Plaintiff because one of Plaintiff’s partners is of

Arabic descent, must be dismissed because a landlord is not protected

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3 In its Reply, FedEx also asserts “the economic loss rule . . .

is . . . applicable in this case” and that since “[Plaintiff] has failed

to allege harm above and beyond a broken contractual promise[,] the

negligence claim should be dismissed.” (Def.’s Reply at 6:1-2, 10-11.)

The economic loss rule provides “[w]here a purchaser’s expectations in

a sale are frustrated because the product he bought is not working

properly, his remedy is said to be in contract alone, for he has

(continued...)

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under the Unruh Act for discrimination by a tenant. (Def.’s Mot. at

3:14, 18-19; 4:13-14; 5:2-3; see also Pl.’s Compl. ¶¶ 23-24.) 

Plaintiff counters that the Unruh Act should be interpreted broadly to

provide protection against all discrimination. (Pl.’s Opp’n at 7:18-

19; 9:15-19.)

The Unruh Act provides that “[a]ll persons within the

jurisdiction of [California] are free and equal, and . . . are

entitled to . . . full and equal accommodations, advantages,

facilities, privileges, or services in all business establishments.” 

Cal. Civ. Code § 51. The Unruh Act protects “clients, patrons or

customers,” or a “[P]laintiff . . . in a relationship with the

offending organization similar to that of the customer in the

customer-proprietor.” Strother v. S. Cal. Permanente Med. Group, 79

F.3d 859, 873-74 (9th Cir. 1996). A landlord constitutes a business

establishment within the meaning of the Unruh Act and therefore, is

not the equivalent of a client, patron, or customer under the Act. 

See O’Connor v. Vill. Green Owners Ass’n, 33 Cal. 3d 790, 796 (1983). 

Accordingly, Plaintiff’s Unruh Act claim against FedEx is dismissed

with prejudice.

IV. Negligence

FedEx also seeks dismissal of Plaintiff’s negligence claim

arguing “Plaintiff does not allege that [FedEx] owed a duty to

[Plaintiff] independent of the contractual obligations.”3 (Def.’s

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(...continued)

suffered only ‘economic’ losses.” Robinson Helicopter Co., Inc. v. Dana

Corp., 34 Cal. 4th 979, 988 (2004) (internal quotation marks omitted).

In addition, when a tort claim is based on a duty independent of the

contract, the economic loss rule does not apply. Frye v. Wine Library,

Inc., 2006 WL 3500605, at *2 (N.D. Cal. Dec. 4, 2006). Since Plaintiff

is not a purchaser seeking recovery for “economic” losses, but is

seeking recovery for damage to its property based on an independent tort

duty, the economic loss rule does not apply.

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Mot. at 7:17-18.) Plaintiff rejoins the negligence claim stands

“because an independent legal duty exists protecting [Plaintiff’s]

property rights.” (Pl.’s Opp’n at 10:26-27.)

Plaintiff argues its negligence claim is based on the

independent statutory duty that “[e]very person is bound, without

contract, to abstain from injuring the . . . property of another, or

infringing upon any of his or her rights.” Cal. Civ. Code § 1708. 

Plaintiff alleges FedEx caused damage to “the pavement, modular deck

areas, asphalt, storm drains, walks, loading docks, plumbing,

downspouts, and CMU walls” on Plaintiff’s property. (Pl.’s Compl. ¶¶

15, 29.) “Conduct amounting to a breach of contract becomes tortious

. . . when it also violates a duty independent of the contract arising

from principles of tort law.” Erlich v. Menezes, 21 Cal. 4th 543, 551

(1999); Vandenberg v. Super. Ct., 21 Cal. 4th 815, 840 (1999) (“[T]he

same act may constitute both a breach of contract and a tort”); Eads

v. Marks, 39 Cal. 2d 807, 811 (1952) (“A tort may grow out of or be

coincident with a contract.”). Since FedEx has not shown Plaintiff’s

negligence claim does not arise from a duty independent of the

contract, this portion of the motion is denied.

CONCLUSION

For the stated reasons, FedEx’s motion is granted and denied

in part. Plaintiff is granted leave to amend its waste claim,

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provided that it files an amended complaint within ten days from the

date on which this order is filed. 

IT IS SO ORDERED.

Dated: August 7, 2007

 

GARLAND E. BURRELL, JR.

United States District Judge

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