United States District Court, W.D. Washington, Seattle
ORDER GRANTING MOTION TO DISMISS COUNT II OF ZHIZHENG
S. Lasnik United States District Judge.
matter comes before the Court on Intervenor Plaintiff
Decathlon Alpha III, L.P.'s (“Decathlon”)
motion to dismiss Count II of Plaintiff Zhizheng Wang's
(“Wang”) Crossclaims. Dkt. # 54. Wang and
Decathlon are each lenders to G.A.E.M.S., Inc.
(“GAEMS”). Id. Although Wang's loan
predated Decathlon's chronologically, Decathlon's
loan was contingent on the subordination of Wang's loan.
Dkt. #1-1. Wang alleges that Decathlon will violate the
implied covenant of good faith and fair dealing by postponing
the Maturity Date of its loan to GAEMS, which will have the
effect of delaying Wang's recovery from GAEMS. Dkt. #50
at 13; Dkt. #56 at ¶¶ 3-5, 7. Wang asks this Court
to enjoin Decathlon from postponing the loan's maturity
date and to award Wang damages for Decathlon's alleged
violations. Dkt. #50 at ¶¶ 4-43, p. 14. Decathlon
seeks dismissal of this claim, arguing that Wang has not
identified a contractual provision to which the duty of good
faith applies and has therefore failed to state a claim upon
which relief may be granted. Dkt. #54.
question for the Court on a motion to dismiss under Fed. R.
Civ. Proc. 12(b)(6) is whether the facts alleged in the
complaint and supporting documents sufficiently state a
“plausible” ground for relief. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is
plausible when “the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
stage, “[a]ll well-pleaded allegations of material fact
in the complaint are accepted as true and are construed in
the light most favorable to the non-moving party.”
Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017,
1019 (9th Cir. 2013) (citing Manzarek v. St. Paul Fire
& Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.
2008)). The Court, however, need not accept as true factual
allegations that contradict exhibits or constitute
unreasonable inferences. Daniels-Hall v. Nat'l Educ.
Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). Dismissal
is appropriate where the complaint fails to state a
cognizable legal theory or fails to provide facts sufficient
to support a claim. Shroyer v. New Cingular Wireless
Servs., Inc., 622 F.3d 1035, 1041 (9th Cir 2010).
reviewed the memoranda, declaration, and exhibits submitted
by the parties as well as Wang's crossclaims and the
various contracts, the Court GRANTS Decathlon's Motion to
Dismiss Count II of Wang's Crossclaims.
The Court will not consider some of the materials referenced
in Wang's response to Decathlon's motion to
opposing Decathlon's motion, Wang submitted materials
outside the pleadings, to which Decathlon objects. Dkt. #59
at 3-4. As a general rule, “a district court may not
consider any material beyond the pleadings in ruling on a
Rule (12)(b)(6) motion.” Lee v. City of Los
Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (citing
Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir.
1994)). The Court, however, may consider materials attached
to the complaint as well as “unattached evidence on
which the complaint ‘necessarily relies.'”
Id. The Court will only consider unattached evidence
that meet the following conditions: (1) the complaint refers
to the document; (2) the document is central to the
plaintiff's claim; and (3) no party disputes the
authenticity of the document. U.S. v. Corinthian
Colleges, 655 F.3d 984, 999 (9th Cir. 2011). The Court
may also consider matters of public record so long as they
are not reasonably subject to dispute. Gemtel Corp. v.
Cmty. Redevelopment Agency of City of Los Angeles, 23
F.3d 1542, 1544 n.1 (9th Cir. 1994).
cites several sources that are outside the pleadings and do
not meet any of the above exceptions, including deposition
transcripts and correspondence with GAEMS executives. Dkt.
#56 at 3, 4. None of these materials was attached to
Wang's crossclaims against Decathlon, nor do they form
the basis for the crossclaims. See Dkt. #50;
Corinthian Colleges, 655 F.3d at 999. The Court
therefore will not consider information from the Mercier
email correspondence, the Griffith declaration, or the
also disputes Wang's reliance on a publicly posted GAEMS
stock price. Dkt. # 59 at 3. This stock price is a matter of
public record and is therefore properly before the Court on a
motion to dismiss. Gemtel Corp., 655 F.3d at 1544 n.
Washington law requires only that parties perform their
contractual obligations in good faith.
succeed on a breach of contract claim, the plaintiff must
demonstrate duty, breach, causation, and damages. BP West
Coast Prods. LLC v. SKR Inc., 989 F.Supp.2d 1109, 1121
(W.D. Wash. 2013). Washington law recognizes an implied
covenant of good faith and fair dealing in every contract
which requires the parties to “perform in good faith
the obligations imposed by their agreement.”
Badgett v. Security State Bank, 116 Wn.2d 563, 570
(1991); Keystone Land & Dev. Co. v. Xerox Corp.,
152 Wn.2d 171, 178 (2004) (there must be a contractual duty
in order for the implied duty of good faith to attach).
However, “there cannot be a breach of the duty of good
faith when a party simply stands on its rights to require
performance of a contract according to its terms.”
Keystone Land & Dev. Co, 152 Wn.2d at 178. The
Court cannot read additional duties into an agreement under
the guise of enforcing a covenant of good faith. Building
11 Investors LLC v. City of Seattle, 912 F.Supp.2d 972,
978-79 (W.D. Wash. 2012). Although “good faith applies
when the contract gives one party discretionary authority to
determine a contract term, ” the duty “does not
apply to contradict contract terms.”
Goodyear Tire & Rubber Co. v. Whiteman Tire,
Inc., 86 Wn.App.732, 738 (1997) (emphasis in original).
claim that Decathlon breached the duty of good faith and fair
dealing can survive Decathlon's Motion to Dismiss if Wang
has plausibly alleged the following: that Decathlon owed him
a duty of good faith to perform an obligation articulated in
their contract; that Decathlon failed to honor it; and, ...