United States District Court, D. Nevada
GLORIA M. NAVARRO, Chief District Judge.
Pending before the Court is the Motion to Dismiss (ECF No. 9) filed by Defendants Harris Corporation; M/A Com, Inc.; TE Connectivity Inc.; TE Connectivity Ltd.; TE Connectivity Networks, Inc.; Tyco Electronics Corporation; and Tyco Electronics, Ltd. (collectively, "Defendants"). Plaintiff Las Vegas Metropolitan Police Department ("Plaintiff" or "LVMPD") filed a Response (ECF No. 13) and Defendants filed a Reply (ECF No. 16). For the reasons discussed in this Order, the Court GRANTS Defendants' Motion to Dismiss, but will grant Plaintiff leave to file a Second Amended Complaint if Plaintiff can cure the defects identified herein.
This case arises from a contract between Plaintiff and Defendant M/A COM, under which M/A COM agreed to replace Plaintiff's radio communication system. (Compl. ¶¶ 6, 9-11, ECF No. 1-2.) In the proposal and the contract, M/A COM represented that the new radio system would be "state of the art" and "would, among other things, provide redundancies, reliability, maintainability and interoperability." ( Id. ¶ 9.) However, Plaintiff now alleges that, after several years of development and several million dollars spent, Defendants delivered inoperability, rather than the promised "interoperability"; ( Id. ¶ 20 ("Extensive problems have been encountered with respect to the radio system infrastructure, radios, consoles and/or the recording system.").) Furthermore, despite notifying Defendants and providing opportunities for Defendants to cure the problems, the radio system is still defective and "is effectively useless." ( Id. ¶¶ 21-30, 33.)
As a result of these alleged breaches of the contract, Plaintiff initiated the instant action in state court. ( See id. ) Thereafter, Defendants removed the action to this Court, (Notice of Removal, ECF No. 1), and filed the instant Motion to Dismiss, (ECF No. 9), in which Defendants request that the Court dismiss Plaintiff's Misrepresentation Claims.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
The Court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation is plausible, not just possible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).
If the court grants a motion to dismiss, it must then decide whether to grant leave to amend. The court should "freely give" leave to amend when there is no "undue delay, bad faith[, ] dilatory motive on the part of the movant... undue prejudice to the opposing party by virtue of... the amendment, [or] futility of the amendment...." Fed.R.Civ.P. 15(a); Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is only denied when it is clear that the deficiencies of the complaint cannot be cured by amendment. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).
III. MISREPRESENTATION CLAIMS
A. The Economic Loss Doctrine bars only Plaintiff's Negligent Misrepresentation Claim
Defendants first assert that the Court should dismiss Plaintiff's Misrepresentation Claims as prohibited by the Economic Loss Doctrine. "Under the economic loss doctrine there can be no recovery in tort for purely economic losses." Calloway c. City of Reno, 993 P.2d 1259, 1263 (Nev. 2000) (internal quotation marks omitted), overruled on other grounds by Olson v. Richard, 89 P.3d 31 (2004). However, Defendants have failed to provide, and the Court cannot find, a single case that holds that the Economic Loss Doctrine bars a Fraudulent Misrepresentation claim. Essentially, Defendants request that this Court expand on an opinion from the Ninth Circuit in which the circuit predicted Nevada law, see Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 2007), rather than applying express statements in a more recent opinion from the Nevada Supreme Court, see Halcrow v. Eighth Judicial Dist. Court, 302 P.3d 1148 (Nev. 2013). Specifically, in Giles, the Ninth Circuit predicted that "Nevada law may also bar recovery for other tort claims where the plaintiff's only complaint is that the defendant failed to perform what was promised in the contract." 494 F.3d at 879. In contrast, in Halcrow, the Nevada Supreme Court expressly and unambiguously stated that "[i]ntentional torts are not barred by the economic loss doctrine." 302 P.3d at 1154 n.2. The Nevada Supreme Court further stated that, because fraudulent misrepresentation is an intentional tort, the Economic Loss Doctrine does not bar such a claim. Id.
In contrast, the Nevada Supreme Court has indicated that the Economic Loss Doctrine bars most negligence-based claims. Halcrow, 302 P.3d at 1152-1154. In fact, the court noted that a case would be excepted from the Economic Loss Doctrine only when the case presents "strong countervailing considerations [that] weigh in favor of imposing liability." Id. at 1153 (quotation marks omitted). The court further explained that the Economic Loss Doctrine might not bar liability in cases that involve "economic losses sustained, for example, as a result of defamation, intentionally caused harm, negligent misstatements about financial matters, and loss of consortium." Id. However, as it relates to negligent misrepresentation claims in the context of commercial construction projects, the Nevada Supreme Court held that "contract law is better suited" to resolve such issues. Id. As such, in Halcrow, the court concluded that the trial court correctly concluded that the Economic Loss Doctrine required dismissal of the negligent misrepresentation claim without leave to amend.
Here, Plaintiff has failed to persuade the Court that there are "strong countervailing considerations [that] weigh in favor of imposing liability" in this type of case. In contrast, it appears to the Court that this case is much more similar to the commercial construction case, where the Economic Loss Doctrine does bar a negligent misrepresentation claim, than it is to a case involving allegations of defamation. Specifically, Plaintiff and Defendants entered into a contract for the construction and installation of a radio communication system. Furthermore, the Complaint lacks any allegations of defamation and lacks allegations that Defendants made any negligent misstatements about financial matters. Thus, Plaintiff has not provided any basis from which the Court can conclude that it would be proper to exclude this case from the Economic Loss Doctrine. Finally, as discussed above, to the extent Plaintiff alleges that the misrepresentations were the result of Defendants' intentional ...