Case 2°22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page1of17 Page ID#:312

' ' 1 Oo

Q UNITED STATES DISTRICT COURT

9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 | MORROW-MEADOWS CV 22-05716-RSWL-SKx CORPORATION, ORDER re: 13 mlaintite DEFENDANT’S MOTION to 14 ALNCLEE, Dismiss [22] Vv. 15 16 HONEYWELL INTERNATIONAL

INC.,

17 Defendant. 18 19 Plaintiff Morrow-Meadows Corporation (“Plaintiff”) 20 | brought the instant Action against Defendant Honeywell 21 | International Inc. (“Defendant”) alleging breach of 22 | contract and violation of statutory prompt payment 23 | penalties (pursuant to Business & Professions Code 24/1 § 7108.51 and Public Contract Code §§ 7107, 10262, and 25 1 In the First Amended Complaint, Plaintiff refers to 26 Business & Professions Code section 7108.8. See FAC 29, ECF No. 20. No such statute exists. Given the circumstances, 27 | Plaintiff likely meant to refer to Business & Professions Code section 7108.5. See Pl.’s Opp’n. to Mot. (“Opp’n”) 13:24-25 28 | n.17, ECF No. 23.

Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 2 of 17 Page ID #:313

1 10262.5). Currently before the Court is Defendant’s

2 Motion to Dismiss [22] (“Motion”).

3 Having reviewed all papers submitted pertaining to 4 the Motion, the Court NOW FINDS AND RULES AS FOLLOWS: 5 the Court GRANTS in part and DENIES in part Defendant’s 6 Motion WITHOUT LEAVE TO AMEND. 7 I. BACKGROUND 8 A. Factual Background 9 The First Amended Complaint (“FAC”) alleges: 10 Plaintiff, a subcontractor, and Defendant, a 11 general contractor, entered into a master subcontract 12 agreement (the “MSA”). FAC ¶ 4. Prior to signing the 13 MSA, Defendant contracted with the City of Los Angeles 14 (the “City”) to perform work on the Wastewater 15 Information Network System Project (the “WINS Project”). 16 Id. ¶¶ 5-6. The Parties amended the MSA to incorporate 17 certain terms and conditions from Defendant’s WINS 18 Project contract. Id. ¶¶ 7-8. 19 Defendant issued to Plaintiff Purchase Order 20 No. 4402186019 on or about May 17, 2012, and Purchase 21 Order No. 4408556431 on or about July 14, 2016 22 (collectively “Purchase Orders”). Id. ¶¶ 9-10. The 23 former provided that for $6,961,710, Plaintiff would 24 supply and install the WINS Project’s Hyperion 25 Facility’s electrical and controls systems with an 26 estimated completion date of December 31, 2018. Id. 27 ¶ 9. The latter provided that for $1,686,970, Plaintiff 28 would supply and install the WINS Project’s Terminal 2 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 3 of 17 Page ID #:314

1 Island site’s electrical system with an anticipated

2 completion date of December 29, 2017. Id. ¶ 10.

3 During its performance of the Purchase Orders, 4 Plaintiff suffered substantial delays, and provided 5 Defendant with written notice regarding those delays. 6 Id. ¶¶ 12, 15. Defendant contacted the City to complain 7 about the delays and to seek compensation from the City 8 for the resulting losses that Plaintiff and Defendant 9 suffered while working on the WINS Project. Id. ¶¶ 13- 10 14. Defendant filed claims against the City in part 11 based on the delays that Plaintiff suffered. Id. ¶ 16. 12 An amendment to the MSA (the “Amendment”) provided 13 that Plaintiff would receive compensation for delays 14 suffered. Id. ¶ 19. 15 After filing claims regarding the delays on the 16 WINS Project, Defendant recovered $11,075,901 from the 17 City. Id. ¶¶ 28-29. 18 B. Procedural Background 19 Plaintiff filed a complaint in the Superior Court 20 of California, County of Los Angeles, on July 6, 2022. 21 Defendant removed [1] this Action to this Court based on 22 diversity jurisdiction on August 12, 2022. Plaintiff 23 filed its FAC on November 21, 2022. 24 Defendant filed the instant Motion [22] on December 25 5, 2022. Plaintiff opposed [23] on December 30, 2022. 26 Defendant replied [24] on January 10, 2023. 27 /// 28 /// 3 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 4 of 17 Page ID #:315

1 II. DISCUSSION

2 A. Legal Standard

3 Federal Rule of Civil Procedure (“Rule”) 12(b)(6) 4 allows a party to move for dismissal of one or more 5 claims if the pleading fails to state a claim upon which 6 relief can be granted. A complaint must “contain 7 sufficient factual matter, accepted as true, to state a 8 claim to relief that is plausible on its face.” 9 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation 10 omitted). Dismissal is warranted for a “lack of a 11 cognizable legal theory or the absence of sufficient 12 facts alleged under a cognizable legal theory.” 13 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 14 (9th Cir. 1988) (citation omitted). 15 In ruling on a 12(b)(6) motion, a court may 16 generally consider only allegations contained in the 17 pleadings, exhibits attached to the complaint, and 18 matters properly subject to judicial notice. Swartz v. 19 KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court 20 must presume all factual allegations of the complaint to 21 be true and draw all reasonable inferences in favor of 22 the non-moving party. Klarfeld v. United States, 944 23 F.2d 583, 585 (9th Cir. 1991). “[T]he issue is not 24 whether a plaintiff will ultimately prevail but whether 25 the claimant is entitled to offer evidence to support 26 the claims.” Jackson v. Birmingham Bd. of Educ., 544 27 U.S. 167, 184 (2005) (quoting Scheuer v. Rhodes, 416 28 U.S. 232, 236 (1974)). While a complaint need not 4 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 5 of 17 Page ID #:316

1 contain detailed factual allegations, a plaintiff must

2 provide more than mere “labels and conclusions” or “a

3 formulaic recitation of the elements of the cause of 4 action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 5 (2007). However, a “well-pleaded complaint may proceed 6 even if it strikes a savvy judge that actual proof of 7 those facts is improbable, and “that a recovery is very 8 remote and unlikely.” Id. at 556 (quoting Scheuer, at 9 236). 10 B. Discussion 11 1. Judicial Notice 12 Before turning to the merits of Defendant’s Motion, 13 the Court firsts address Defendant’s request for 14 judicial notice. A court may take judicial notice of an 15 adjudicative fact that is “not subject to reasonable 16 dispute because it: (1) is generally known within the 17 trial court’s territorial jurisdiction; or (2) can be 18 accurately and readily determined from sources whose 19 accuracy cannot reasonably be questioned.” Fed. R. 20 Evid. 201(b). Under the judicially created 21 incorporation-by-reference doctrine, “[a] court may 22 consider evidence on which the complaint ‘necessarily 23 relies’ if: (1) the complaint refers to the document; 24 (2) the document is central to the plaintiff's claim; 25 and (3) no party questions the authenticity of the copy 26 attached to the 12(b)(6) motion.” Marder v. Lopez, 450 27 F.3d 445, 448 (9th Cir. 2006). 28 Here, Defendant requests the Court take judicial 5 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 6 of 17 Page ID #:317

1 notice of the Purchase Orders. Def.’s Mot. to Dismiss

2 (“Mot.”) 5:23-6:4, ECF No. 22. Plaintiff alleged a

3 breach of contract claim because Defendant “breached the 4 two Purchase Orders.” FAC ¶ 21. Thus, the claim 5 necessarily relies on the Purchase Orders’ contractual 6 provisions, and the Purchase Orders are central to the 7 FAC. See Marder at 448. Moreover, Plaintiff did not 8 question the authenticity of the documents attached to 9 the Motion. See generally Opp’n. Therefore, it is 10 appropriate for the Court to consider the Purchase 11 Orders under the incorporation-by-reference doctrine, 12 rather than take judicial notice. Accordingly, the 13 Court DENIES Defendant’s request for judicial notice and 14 instead considers the Purchase Orders under the 15 incorporation-by-reference doctrine. 16 2. Plaintiff Properly Stated a Breach of Contract 17 Claim 18 a. Elements of a Breach of Contract Claim 19 A claim for breach of contract requires the 20 plaintiff to prove four elements: (1) existence of a 21 contract; (2) plaintiff’s performance; (3) defendant’s 22 breach; and (4) damage to plaintiff because of the 23 breach. Body Jewelz, Inc. v. Valley Forge Ins. Co., 241 24 F. Supp. 3d 1084, 1090 (C.D. Cal. 2017) (internal 25 citation omitted). To survive a motion to dismiss, a 26 complaint must include more than mere “labels and 27 conclusions” or a “formulaic recitation of the elements 28 of a cause of action.” Bell Atl. Corp. v. Twombly, 550 6 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 7 of 17 Page ID #:318

1 U.S. 544, 555 (2007). The complaint must offer a

2 cognizable legal theory under the facts alleged.

3 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 4 (9th Cir. 1988) (citation omitted). 5 Here, Plaintiff adequately alleges the elements of 6 a breach of contract claim. Plaintiff states that a 7 contract existed when Plaintiff signed the MSA with 8 Defendant on September 28, 2010. FAC ¶ 4. Next, 9 Plaintiff contends it performed all work mandated by the 10 Purchase Orders except for any work prevented or excused 11 by Defendant. Id. ¶ 18. Plaintiff also argues that it 12 was damaged by delays due to paying extended performance 13 costs. Id. ¶ 17. Section 2.2.2 of the Amendment 14 (“Section 2.2.2”) provided Plaintiff with a claim for 15 relief for delay damages. Id. ¶ 19. Finally, Plaintiff 16 asserts that Defendant breached the contract by failing 17 to compensate Plaintiff for the damages it suffered due 18 to project delays. Id. ¶ 21. In sum, Plaintiff has 19 sufficiently alleged a breach of contract claim. 20 b. The Limitation of Liability Clause 21 Defendant argues that the Purchase Orders “Section 22 28: Limitation of Liability” limits Defendant’s 23 liability from “indirect, incidental, [and] 24 consequential” damages. See Def.’s Exhibits, Ex. 1, ECF 25 No. 22. Defendant further argues that Plaintiff’s 26 breach of contract claim is a claim for delay damages, 27 and therefore a claim for consequential or incidental 28 7 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 8 of 17 Page ID #:319

1 damages.2 See Mot. at 7:16-24. Defendant asserts that

2 the Limitation of Liability Clause causes Plaintiff’s

3 claim for delay damages to “fail as a matter of law.” 4 See id. at 7:25. 5 When contracting, Plaintiff and Defendant signed 6 the Purchase Orders, the MSA, and the Amendment. 7 Section 2.2.2 enabled Plaintiff to make claims and be 8 compensated for delay damages. See FAC ¶ 19. Upon 9 inspection, it appears that Section 2.2.2 and Section 28 10 of the Purchase Orders conflict with or contradict each 11 other. Section 2.2.2 enables Plaintiff to recover delay 12 damages while Section 28 of the Purchase Orders may 13 limit Plaintiff from recovering such damages. Plaintiff 14 asserts that the terms in the Amendment control over the 15 terms in the Purchase Orders. Opp’n at 8:4-7. 16 Defendant asserts the opposite, that the terms in the 17 Purchase Orders take precedence. Def.’s Reply to Pl.’s 18 Opp’n. (“Reply”) 5:14-20, ECF No. 24. 19 Looking at the Purchase Orders, it becomes clear 20 that the Amendment controls. The Purchase Orders 21 contain terms and conditions that establish an order of 22 precedence when there is conflict between contractual 23 documents. See Def.’s Exhibits, Ex. 1. They state the 24 following: 25 In the event of any conflict among provisions 26 2 As the Court’s decision rests on other grounds, the Court 27 does not decide whether a claim seeking damages for “delays” is a 28 claim for “consequential or incidental damages.” 8 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 9 of 17 Page ID #:320

1 . . . the following order of precedence

2 applies: a) any consignment agreement; then b)

3 any supply agreement; then c) any contract for 4 labor services; then d) the face of the 5 Purchase Order and any supplemental terms 6 included or incorporated by reference; then e) 7 these general Purchase Order provisions; and 8 finally f) other contract documents agreed to 9 in writing by the parties. 10 See id. 11 Defendant asserts that the Amendment should be 12 treated as “other contract documents agreed to in 13 writing” (sixth in the order of precedence) and 14 therefore the Purchase Orders (fifth in the order of 15 precedence) should control. Reply at 5:14-20. However, 16 Defendant offers no support for the contention that the 17 Amendment would qualify as “other contract documents” 18 rather than a “supply agreement” (second in order of 19 precedence) or a “contract for labor services” (third in 20 the order of precedence). The MSA uses the title 21 “Master Service Agreement” while both the MSA and 22 Amendment refer to Plaintiff as “Supplier.” 23 Furthermore, the Amendment contains headings such as 24 “Length of Workday and Work Week,” “Covered Work,” and 25 “Non-Conforming Work.” 26 Therefore, it follows that the Amendment would 27 qualify as a “supply agreement” or “contract for labor 28 services” rather than “other documents” as Defendant 9 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 10 of 17 Page ID #:321

1 claims. See Foster Poultry Farms, Inc. v. Certain

2 Underwriters at Lloyd’s, No. 1:14-953 WBS SAB, 2016 U.S.

3 Dist. LEXIS 7629, at *8 (E.D. Cal. Jan. 20, 2016) (“An 4 unambiguous contract provision is enforced according to 5 the plain meaning of its terms, and courts commonly 6 refer to the dictionary to ascertain a provision’s plain 7 and ordinary meaning.”) 8 Whether the Amendment is a “supply agreement” or 9 “contract for labor services,” Section 2.2.2 takes 10 precedence over the Limitation of Liability Clause.3 11 Given that if there is a conflict, Section 2.2.2 takes 12 precedence, Plaintiff can recover delay damages as 13 prescribed by Section 2.2.2. 14 c. Contractual Condition 15 Defendant argues that to recover under Section 16 2.2.2, Plaintiff must have given Defendant a detailed 17 statement of the costs of the delays “within seven 18 calendar days after the termination thereof.” Mot. at 19 8:4-8. Defendant further argues that “the FAC does not 20

21 3 Section 2.2.2 and the Limitation of Liability Clause may not conflict with or contradict each other. See Cal. Civ. Code § 22 1641 (“The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause 23 helping to interpret the other”); Fernandez v. K-M Indus. Holding 24 Co., 646 F. Supp. 2d 1150, 1160 (N.D. Cal. 2009) (“inconsistent terms should be ‘reconciled, if possible, by such an 25 interpretation as will give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole 26 contract.’”). The Court does not need to decide whether the two terms are in conflict however, because if they are, Section 2.2.2 27 would take precedence as discussed above. See Def.’s Exhibits, 28 Ex. 1. 10 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 11 of 17 Page ID #:322

1 allege that Plaintiff satisfied this condition.” Id. at

2 8:10.

3 “In order to state a claim for breach of contract, 4 . . . the performance of conditions precedent must be 5 alleged either generally or specifically.” Challenge 6 Printing Co., Inc. v. Elecs. for Imaging Inc., 500 F. 7 Supp. 3d 952, 963 (N.D. Cal. 2020).4 Notably, on a 8 motion to dismiss, a court must “draw all reasonable 9 inferences in favor of the nonmoving party.” Retail 10 Prop. Tr. v. United Bhd. of Carpenters & Joiners of Am., 11 768 F.3d 938, 945 (9th Cir. 2014). Here, Plaintiff has 12 generally alleged compliance with Section 2.2.2’s 13 contractual condition. See generally FAC. Plaintiff 14 has alleged that it “repeatedly provided written notice 15 to [Defendant] that Plaintiff was being delayed due to 16 the actions or inaction of others.” Id. ¶ 15. 17 Furthermore, Plaintiff “has performed all things on its 18 part to be performed under” the Purchase Orders. Id. ¶

19 4 Defendant argues that New York law applies to Plaintiff’s 20 breach of contract claim. See generally Mot. Like California courts, New York courts “have repeatedly found general 21 allegations that the plaintiff satisfied the condition precedent to be sufficient.” Superior Site Work, Inc. v. NASDI, LLC, No. 22 14-cv-1061 (ADS) (SIL), 2016 U.S. Dist. LEXIS 15793, at *22 (E.D.N.Y. Feb. 9, 2016); see also Mendez v. Bank of Am. Home 23 Loans Servicing, LP, 840 F. Supp. 2d 639, 650 (E.D.N.Y. 2012) 24 (“[A]t the motion to dismiss stage, ‘[t]he issue is not whether a plaintiff will . . . prevail on [his or] her claim but whether 25 [he or] she is entitled to offer evidence in support of the allegations in the complaint.’”) Here, either under New York or 26 California law, Plaintiff has pled compliance with Section 2.2.2’s condition. The Court therefore does not need to and does 27 not decide whether New York or California law applies to 28 Plaintiff’s claims. 11 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 12 of 17 Page ID #:323

1 18. Defendant was also “aware of the delays and

2 resulting damages being suffered by Plaintiff,” while

3 writing to Plaintiff to quantify its delay damages. Id. 4 ¶ 16. Therefore, given the motion to dismiss standard, 5 it can be reasonably inferred that Plaintiff complied 6 with Section 2.2.2’s conditional notice requirement. 7 In sum, the Court DENIES Defendant’s Motion to 8 Dismiss as to Plaintiff’s breach of contract claim. 9 3. Prompt Payment Statute Claim 10 a. Statutes Not Applicable Under the Facts 11 Offered by Plaintiff 12 Plaintiff alleged that Defendant violated four 13 California “prompt payment statutes” (collectively, the 14 “Statutes”). See FAC ¶ 17. The first statute is 15 California Business and Professions Code section 7108.5, 16 which provides that within seven days of receiving 17 progress payments, a “prime contractor” must pay its 18 subcontractors according to their interest in the 19 payment. Cal. Bus. & Prof. Code § 7108.5. The next two 20 statutes, California Public Contract Code Sections 10262 21 and 10262.5, impose the same requirement. Cal. Pub. 22 Cont. Code § 10262 (“The contractor shall pay to his or 23 her subcontractors, within seven days of receipt of each 24 progress payment, the respective amounts allowed the 25 contractor on account of the work performed by his or 26 her subcontractors, to the extent of each 27 subcontractor's interest therein”); Cal. Pub. Cont. Code 28 § 10262.5. The final statute cited is California Public 12 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 13 of 17 Page ID #:324

1 Contract Code section 7107, which holds that contractors

2 must pay their subcontractors their share of retention

3 proceeds within the same seven-day timeframe. Cal. Pub. 4 Cont. Code § 7107. 5 Here, because of delays, Defendant served the City 6 with various claims for compensation, including Claim 7 No. 004. FAC ¶¶ 17, 26. Plaintiff alleged Defendant 8 violated the Statutes by refusing to pay Plaintiff any 9 portion of its Claim 004 “recovery.” Id. ¶ 29. 10 However, Plaintiff failed to allege that it possessed 11 any contractual interest in the recovery, and the 12 Statutes all presuppose a contractual payment 13 obligation. See, e.g., Cal. Bus. & Prof. Code § 7108.5 14 (“to the extent of each subcontractor’s interest 15 therein”); see generally FAC. Instead, Plaintiff merely 16 alleged that because Claim No. 004 included compensation 17 requests based off Plaintiff’s delays, it was entitled 18 to a portion of the recovery. Id. ¶ 31. Nowhere in the 19 FAC does Plaintiff allege that the City or Defendant 20 intended for Claim No. 004 to compensate Plaintiff. See 21 generally id. Therefore, Plaintiff’s Statutes claim is 22 insufficiently pled. 23 Plaintiff’s Statutes claim is insufficiently pled 24 for other reasons as well. California prompt payment 25 statutes distinguish between payment types; thus, as a 26 threshold matter, courts must evaluate the type of 27 payment involved to determine what statutes apply. 28 HARRY D. MILLER & MARVIN B. STARR, CH. 31. CONSTRUCTION LAW AND 13 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 14 of 17 Page ID #:325

1 CONTRACTING, IN MILLER AND STARR CAL. REAL EST. (4TH ED. 2015) §

2 31:92. Both “progress payments” and “retention

3 proceeds” are defined terms in the construction trade. 4 Id. “A progress payment is a . . . periodic payment, 5 paid over the length of a project . . . typically on a 6 percentage of work during a defined time period.” Id. 7 “Retention proceeds” refer to payment withheld by an 8 owner or contractor until project completion to secure 9 full contract performance. Id.; see also Yassin v. 10 Solis, 108 Cal. Rptr. 3d 854, 861 (2010) (noting that 11 “retention occurs when the owner retains a percentage 12 from each progress payment as a form of security”) 13 (citing KENNETH C. GIBBS ET AL., CAL. CONSTRUCTION LAW (16TH ED. 14 2000) § 3.02[A][5] at 103). 15 Here, Plaintiff alleges that it requested “extended 16 performance costs incurred as a result of the repetitive 17 and pervasive delays on the projects.” FAC ¶ 24. The 18 Purchase Orders appear to contain no provisions that 19 would compensate Plaintiff’s extended performance costs. 20 See generally Def.’s Exhibits.5 The only provision that 21 would compensate Plaintiff for extended performance 22 costs, is Section 2.2.2. See generally FAC. This 23 provision does not define the extended performance costs 24 5 The Purchase Orders appear to have explicitly established 25 “Terms of payment” - “90% Net, 10% Retention.” See Def.’s Exhibits. These provisions likely entitled Plaintiff to 90% of 26 the Purchase Orders’ payment within ninety days of the invoice receipt and enabled Defendant to retain 10% of the cost until 27 project completion. The latter 10% would qualify as “retention 28 proceeds” under California Public Contract Code § 7107. 14 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 15 of 17 Page ID #:326

1 as “progress payments” or “retention proceeds,” but

2 instead as delay damages. See id. Therefore, given

3 that Plaintiff is requesting “extended performances 4 costs,” Plaintiff is neither requesting progress 5 payments nor retention proceeds, but instead is 6 requesting delay damages. See FAC ¶¶ 21, 24. Given 7 that the Statutes only apply to progress payments and 8 retention proceeds, Plaintiff’s request for delay 9 damages should have been exclusively brought under its 10 breach of contract claim. 11 Furthermore, Plaintiff does not allege that 12 Defendant failed to pay Plaintiff the full contract 13 price of the two Purchase Orders. See generally FAC; 14 see also Murray’s Iron Works, Inc. v. Boyce, 158 Cal. 15 App. 4th 1279, 1297 (2008) (“Progress payments . . . are 16 payments of portions of the contract price based upon 17 the progress of the contract work.”); Blois Constr., 18 Inc. v. FCI/Fluor/Parsons, 245 Cal. App. 4th 1091, 1096 19 (2016) (holding that retention proceeds are payments of 20 part of a contract price that are withheld). Delay 21 damages are “damages due to construction being completed 22 later than anticipated.” Chinese Hosp. Ass’n v. Jacobs 23 Eng’g Grp., Inc., No. 18-cv-05403-JSC, 2019 U.S. Dist. 24 LEXIS 198635, at *11 (N.D. Cal. Nov. 15, 2019). 25 In its FAC, Plaintiff did not allege that Defendant 26 failed to timely proffer any of the contractually owed 27 payment. See generally FAC. Furthermore, Plaintiff did 28 not allege that Plaintiff possessed a contractual 15 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 16 of 17 Page ID #:327

1 interest in Defendant’s Claim No. 004 recovery. The

2 Court therefore GRANTS Defendant’s Motion on Plaintiff’s

3 statutory prompt payment penalties claim. 4 4. Leave to Amend 5 “Where a motion to dismiss is granted, a district 6 court must decide whether to grant leave to amend.” 7 Winebarger v. Pennsylvania Higher Educ. Assistance 8 Agency, 411 F. Supp. 3d 1070, 1082 (C.D. Cal. 2019). 9 “The court should give leave [to amend] freely when 10 justice so requires.” Fed. R. Civ. P. 15(a)(2). In the 11 Ninth Circuit, “Rule 15’s policy of favoring amendments 12 to pleadings should be applied with ‘extreme 13 liberality.’” United States v. Webb, 655 F.2d 977, 979 14 (9th Cir. 1981). Against this extremely liberal 15 standard, the Court may consider “the presence of any of 16 four factors: bad faith, undue delay, prejudice to the 17 opposing party, and/or futility.” Owens v. Kaiser 18 Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 19 2001) (citation omitted). 20 Here, allowing Plaintiff to amend the FAC would be 21 futile because there is no indication that any 22 additional facts exist that would establish a statutory 23 prompt payment penalties claim. Given that the provided 24 contracts do not give Plaintiff an interest in 25 Defendant’s settlement with the City, Plaintiff’s claim 26 cannot be cured through amendment. Because the 27 defective prompt payment penalties claim cannot be cured 28 through amendment, leave to amend would be futile. See 16 Case 2:22-cv-05716-RSWL-SK Document 26 Filed 03/13/23 Page 17 of 17 Page ID #:328

1 Nat’l Funding, Inc. v. Com. Credit Counseling Servs.,

2 Inc., 817 F. App’x 380, 385 (9th Cir. 2020) (affirming

3 district court’s denial of leave to amend because no 4 additional facts are available that would support 5 plaintiff’s claim to cure its deficiencies). Therefore, 6 the Court GRANTS Defendant’s Motion to Dismiss 7 Plaintiff’s prompt payment penalties claim WITHOUT LEAVE 8 TO AMEND. 9 III. CONCLUSION 10 Based on the foregoing, the Court DENIES in part 11 Defendant’s Motion as to Plaintiff’s breach of contract 12 claim and GRANTS in part as to Plaintiff’s statutory 13 prompt payment penalties claim WITHOUT LEAVE TO AMEND. 14 15 IT IS SO ORDERED. 16 17 DATED: March 13, 2023 /s/Ronald S.W. Lew

HONORABLE RONALD S.W. LEW

18 Senior U.S. District Judge 19 20 21 22 23 24 25 26 27 28 17