Court Opinion

ID: 2675643
Source: CourtListenerOpinion
Date Created: 2014-05-23 21:00:29.113975+00
Date Added: 2024-06-11T13:09:50.273590
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                             MAY 23 2014

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

JOSTES CONCRETE, INC., an Arizona                No. 12-15717
corporation, on behalf of itself and all
others similarly situated,                       D.C. No. 2:11-cv-01011-SRB

              Plaintiff - Appellant,
                                                 MEMORANDUM*
  v.

MDC HOLDINGS, INC., a Delaware
corporation; RICHMOND AMERICAN
CONSTRUCTION, INC., a Delaware
corporation; RICHMOND AMERICAN
HOMES OF ARIZONA, INC., a Delaware
corporation; RICHMOND AMERICAN
HOMES OF COLORADO, INC., a
Delaware corporation; RICHMOND
AMERICAN HOMES OF DELAWARE,
INC., a Colorado corporation;
RICHMOND AMERICAN HOMES OF
ILLINOIS, a Colorado corporation;
RICHMOND AMERICAN HOMES OF
FLORIDA, LP, a Colorado limited
partnership; RICHMOND AMERICAN
HOMES OF MARYLAND, INC., a
Maryland corporation, DBA Richmond
Homes of California, Inc.; RICHMOND
AMERICAN HOMES OF NEVADA,
INC., a Colorado corporation;

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
RICHMOND AMERICAN HOMES OF
NEW JERSEY, INC., a Colorado
corporation; RICHMOND AMERICAN
HOMES OF PENNSYLVANIA, INC., a
Colorado corporation; RICHMOND
AMERICAN HOMES OF TEXAS, INC.,
a Colorado corporation; RICHMOND
AMERICAN HOMES OF UTAH, INC., a
Colorado corporation; RICHMOND
AMERICAN HOMES OF VIRGINIA,
INC., a Virginia corporation; JOHN AND
JANE DOES, 1-100; XYZ
CORPORATIONS, 1-10; ABC
PARTNERSHIPS, 1-10; BLACK AND
WHITE UNINCORPORATED
ASSOCIATIONS, 1-10,

             Defendants - Appellees.

                   Appeal from the United States District Court
                            for the District of Arizona
                    Susan R. Bolton, District Judge, Presiding

                       Argued and Submitted May 14, 2014
                            San Francisco, California

Before: GRABER, W. FLETCHER, and PAEZ, Circuit Judges.

      Plaintiff Jostes Concrete, Inc. (“Jostes”), appeals the district court’s order

dismissing with prejudice Counts One, Two, and Seven of its First Amended

Complaint (“FAC”) against defendants. We have jurisdiction under 28 U.S.C.

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§ 1291. We reverse. We remand with instructions to grant Jostes leave to file a

second amended complaint.

      The district court properly dismissed Count One (breach of contract), Count

Two (wrongful termination), and Count Seven (alter-ego liability) of the FAC as

pled. Count One fails because Jostes did not adequately allege that any of

defendants’ modifications applied retroactively to work that Jostes had already

completed. See Rubenstein v. Sela, 672 P.2d 492, 493 (Ariz. Ct. App. 1983).

Count Two fails because Jostes’s allegations do not provide fair notice of its claim

that defendants breached the covenant of good faith and fair dealing. See Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007). The district court properly dismissed

Count Seven because Jostes did not adequately plead any substantive cause of

action.

      However, the district court erred in dismissing Counts One, Two, and Seven

without giving Jostes an opportunity to amend the FAC. Jostes requested an

opportunity to amend in its response to defendants’ motion to dismiss. The FAC

was the first complaint to which defendants responded, and amendment would not

clearly be futile. See AE ex rel. Hernandez v. Cnty. of Tulare, 666 F.3d 632, 636

(9th Cir. 2012); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1034

(9th Cir. 2008).

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      The district court should have allowed Jostes to amend Count One to allege

that defendants retroactively provided reduced payments that they owed for

completed work. Such allegations could state a claim under Arizona law. State v.

Gregg, 157 P. 227, 228 (Ariz. 1916); see also Demasse v. ITT Corp., 984 P.2d
1138, 1144 n.3 (Ariz. 1999).

      The district court should have allowed Jostes to amend Count Two because

it is not clear that Jostes could not plead a claim for breach of the covenant of good

faith and fair dealing under Arizona law. See Bike Fashion Corp. v. Kramer, 46
P.3d 431, 434–35 (Ariz. Ct. App. 2002) (“[A] party can breach the implied

covenant of good faith and fair dealing both by exercising express discretion in a

way inconsistent with a party’s reasonable expectations and by acting in ways not

expressly excluded by the contract’s terms but which nevertheless bear adversely

on the party’s reasonably expected benefits of the bargain.”).

      We decline to reach the merits of Count Seven. If Jostes amends Counts

One and Two, it is free to re-plead its claim for alter-ego liability. The district

court may then consider the merits of that claim in the first instance.

      REVERSED and REMANDED.

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