United States District Court, D. Nevada
M. Navarro, Chief Judge.
before the Court is the Plaintiff/Counterdefendant Invacare
Corporation's (“Plaintiff's”) Motion to
Dismiss (ECF No. 12) the Counterclaims (ECF No. 9) filed by
Defendants/Counterclaimants Desert Medical Equipment
(“Desert Medical”) and Bryan Schultz
“Defendants”). Defendants filed a Response (ECF
No. 13), and Plaintiff filed a Reply (ECF No. 14).
case arises out of an alleged breach of a commercial lease
agreement regarding medical equipment. (See Am.
Compl., ECF No. 4). On November 25, 2013, Schultz, President
of Desert Medical, “entered into a Lease on behalf of
Desert Medical with Invacare, agreeing to lease 120 units of
Invacare's Leo Model scooters (the
“Scooters”) for a term of 36 months” at $3,
609.85 per month (the “Lease”). (Defs.' Ans.
& Countercls. 8:2-6, ECF No. 9). Schultz personally
guaranteed the Lease. (Id. 8:4 n.1). About a year
prior to the execution of the Lease, the United States Food
and Drug Administration (“FDA”) issued a recall
on the Scooters, about which allegedly Plaintiff knew and
Defendants did not. (Id. 8:13-20). Defendants allege
that “[s]ometime after the commencement of the Lease .
. . it became evident [to them] that the seats on the
Scooters were defective.” (Id. 8:7-8).
Thereafter, Defendants stopped paying on the Lease.
filed its Complaint in this Court on February 1, 2016.
(Compl., ECF No. 1). On the same day, Plaintiff filed its
Amended Complaint as a matter of right, alleging the
following claims: (1) breach of contract against Desert
Medical, (2) breach of guaranty against Schultz, (3) breach
of the implied covenant of good faith and fair dealing
against both Defendants, and (4) unjust enrichment against
Desert Medical. (Am. Compl. 3:16-5:19). On February 29, 2016,
Defendants filed their Answer, which also asserted the
following Counterclaims: (1) “Fraudulent in the
Inducement” and (2) “Unfair Trade Practices
pursuant to 73 Pa. Stat. Ann. § 201-3.”
(Defs.' Ans. & Countercls. 9:14-10:18). On March 24,
2016, Plaintiff filed the instant Motion to Dismiss
Defendants' Counterclaims. (ECF No. 12).
is appropriate under Rule 12(b)(6) where a pleader fails to
state a claim upon which relief can be granted. Fed.R.Civ.P.
12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). A pleading must give fair notice of a legally
cognizable claim and the grounds on which it rests, and
although a court must take all factual allegations as true,
legal conclusions couched as a factual allegations are
insufficient. Twombly, 550 U.S. at 555. Accordingly,
Rule 12(b)(6) requires “more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. “To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. This standard “asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. Rule 12(b)(6) applies equally to a counterclaim.
See King County v. Rasmussen, 299 F.3d 1077, 1090
(9th Cir. 2002) (affirming 12(b)(6) dismissal of
a district court may not consider any material beyond the
pleadings in ruling on a Rule 12(b)(6) motion . . . .
However, material which is properly submitted as part of the
complaint may be considered on a motion to dismiss.”
Hal Roach Studios, Inc. v. Richard Feiner & Co.,
896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted).
Similarly, “documents whose contents are alleged in a
complaint and whose authenticity no party questions, but
which are not physically attached to the pleading, may be
considered in ruling on a Rule 12(b)(6) motion to
dismiss” without converting the motion to dismiss into
a motion for summary judgment. Branch v. Tunnell, 14
F.3d 449, 454 (9th Cir. 1994). Under Federal Rule of Evidence
201, a court may take judicial notice of “matters of
public record.” Mack v. S. Bay Beer Distrib.,
798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the
district court considers materials outside of the pleadings,
the motion to dismiss is converted into a motion for summary
judgment. See Arpin v. Santa Clara Valley Transp.
Agency, 261 F.3d 912, 925 (9th Cir. 2001).
court grants a motion to dismiss for failure to state a
claim, leave to amend should be granted unless it is clear
that the deficiencies of the complaint cannot be cured by
amendment. DeSoto v. Yellow Freight Sys., Inc., 957
F.2d 655, 658 (9th Cir. 1992). Pursuant to Rule 15(a), the
court should “freely” give leave to amend
“when justice so requires, ” and in the absence
of a reason such as “undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, futility of the amendment, etc.” Foman
v. Davis, 371 U.S. 178, 182 (1962).
seeks to dismiss Defendants' first counterclaim,
fraudulent inducement, because it is “both time barred
and insufficiently pled.” (Pl.'s Mot. to Dismiss
Countercls. (“Pl.'s MTD Countercls.”)
4:11-12, ECF No. 12).
Statute of Limitations
the parties do not dispute that the Pennsylvania two-year
statute of limitations for fraud applies here. See
42 Pa. Cons. Stat. § 5524(7). “[I]n cases of
fraud[, ] the statute [of limitations] runs only from
discovery, or from when, with reasonable diligence, there
ought to have been discovery.” Deemer v.
Weaver, 187 A. 215, 216 (Pa. 1936). “Reasonable
diligence is not an absolute standard, but is what is
expected from a party who has been given reason to inform
himself of the facts upon which his right to recovery is
premised.” Fine v. Checcio, 870 A.2d 850, 858
(Pa. 2005). Specifically, “[w]e evaluate the
[party's] conduct in terms of what he should have known
at a particular time by following a course of reasonable
diligence. If a party has the means of discovery within his
power but neglects to use them, his claim will still be
barred.” Burnside v. Abbott Labs., 505 A.2d
973, 988 (Pa. Super. Ct. 1985). “[T]his question
involves a factual determination as to whether a party was
able, in the exercise of reasonable diligence, to know of his
injury and its cause, ” unless “reasonable minds
would not differ in [this] finding.” Fine, 870
A.2d at 858-59. In other words, “[o]nly where the facts
are undisputed and lead unerringly to the conclusion that the
length of time it took the [party] to discover the injury or
its cause was unreasonable may the question be decided as a
matter of law on summary judgment.” Burnside,
505 A.2d at 988.
Defendants' Counterclaim asserts that “[t]o induce
Desert Medical to enter into the Lease, Plaintiff
purposefully failed to inform Desert Medical of the FDA's
recall on the Scooters.” (Defs.' Ans. &
Countercls. 9:18-19). Defendants contend that they discovered
the Scooters' defects ...