United States District Court, D. Nevada
ORDER GRANTING MOTION TO DISMISS [ECF NO.
P. GORDON UNITED STATES DISTRICT JUDGE.
Faraday & Future Inc. (incorrectly named in the
complaint) moves to dismiss the breach of the implied
covenant and promissory estoppel claims asserted by plaintiff
The Astound Group. Faraday contends these claims are
duplicative of Astound's breach of contract claim. It
also argues that the promissory estoppel claim is not pleaded
with the specificity required by Federal Rule of Civil
Procedure 9(b). I grant the motion to dismiss but allow
Astound leave to amend.
of the Implied Covenant
contends that it can simultaneously assert both breach of
contract and breach of the implied covenant. A claim of
breach of the implied covenant arises “[w]hen one party
performs a contract in a manner that is unfaithful to the
purpose of the contract and the justified expectations of the
other party are thus denied. . . .” Hilton Hotels
Corp. v. Butch Lewis Productions, Inc., 808 P.2d 919,
923 (Nev. 1991). Faraday argues the claim is inconsistent
with a breach of contract claim because the breach of the
implied covenant claim requires a showing of “literal
compliance” with the contract. But it points to no
cases holding that the breaching party must comply with the
entire contract. As Astound notes, in theory a party could be
liable for breaching one part of the contract, and also
breach the implied covenant by other actions that are
“unfaithful to the purpose of” a different part
of the contract. ECF No. 14 at 11. Thus, both claims can be
pleaded simultaneously. However, Astound's complaint does
not clearly plead separate facts giving rise to separate
claims of breach of contract and breach of the implied
also argues that its breach of the implied covenant claim is
pleaded as an alternative “failsafe in the event that
the Court finds that there was no breach of the
Contract.” ECF No. 14 at 11. While pleading in the
alternative is permitted by Federal Rule of Civil Procedure
8(d), all of Astound's allegations are incorporated into
each cause of action, without designating them as alternative
claims. See Maloney v Scottsdale Ins. Co., 256
Fed.Appx. 29, 31-32 (9th Cir. 2007) (holding that
inconsistent allegations “were not pleaded in the
alternative [because] they were expressly incorporated into
each cause of action”). Thus, as pleaded, these are not
dismiss the breach of the implied covenant claim. But Astound
may be able to cure these pleading defects, so I grant it
leave to amend. It should designate whether the claims are
separate, alternative, or both.
argues that Nevada law does not recognize a claim for
promissory estoppel. Astound points out that the Supreme
Court of Nevada has recognized promissory estoppel in at
least two cases. In Torres v. Nev. Direct Ins. Co.,
353 P.3d 1203, 1209 (Nev. 2015) the court referred to
promissory estoppel as a “theory.” In Pink v.
Busch, 691 P.2d 456, 459-60 (Nev. 1984), the court
stated that “[p]romissory estoppel . . . can be used as
a ‘consideration substitute' to support the release
of liability under a guaranty contract.” The court has
thus not been clear whether promissory estoppel is a
stand-alone claim or part of another claim.
stage, I need not decide whether promissory estoppel is a
stand-alone claim under Nevada law. Astound's complaint
puts Faraday on notice that it is pursuing promissory
estoppel as a way to recover its alleged damages. I leave for
another day whether Astound can prevail on it as an
independent claim or whether it must be proven as a
substitute element of another claim.
next contends that promissory estoppel is subject to the
heightened pleading standard of Federal Rule of Civil
Procedure 9(b). I need not decide whether Rule 9(b) applies
in all cases where promissory estoppel is
pleaded because Astound does not dispute its
applicability here. Astound's complaint includes
specifics about some representations by Faraday manager
O'Neill. ECF No. 1 at ¶¶ 9, 18. But many other
allegations are vague and do not satisfy Rule 9(b).
See, e.g., Id. at ¶ 10
(“verbal confirmation and reinforcement . . . from all
employees and directors at Faraday”), ¶ 14
(referring to “representations” but not
identifying the substance or speakers), ¶ 46 (alleging
“Faraday was misrepresenting its intentions” but
not identifying the substance or speakers). Although Astound
need not allege the details of every communication that gives
rise to its claim, here Faraday is left to guess about who
said what that caused Astound to believe it was hired and
would be paid for its work.
dismiss the promissory estoppel claim. But the defects in the
complaint can be cured so I grant Astound leave to file an
amended complaint. Again, Astound should designate whether
its promissory estoppel claim is separate, alternative, or
both with regard to the breach of contract claim.
THEREFORE ORDERED that the motion to dismiss (ECF No.
12) is granted. Astound may file an amended
complaint by April 19, 2019. If it does not, the case will
proceed on the remaining claims.