Candid Ventures, LLC v. Dew Ventures, Inc.

— 1 — — 2 — — 3 — 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA — 6 — 7 CANDID VENTURES, LLC, Case No. 24-cv-07800-HSG 8 Plaintiff, ORDER GRANTING MOTION TO DISMISS 9 v. Re: Dkt. No. 76 10 DEW VENTURES, INC., et al., 11 Defendants. — 12 — 13 Before the Court is Plaintiff Candid Ventures, LLC’s (“Plaintiff”) motion to dismiss. Dkt. 14 No. 76. The Court finds this matter appropriate for disposition without oral argument and the 15 matter is deemed submitted. See Civil L.R. 7-1(b). The Court GRANTS the motion. 16 I. BACKGROUND 17 Plaintiff alleges that Defendants Suresh Deopura (“Deopura”), FeathersUp India Pvt. Ltd., 18 and Dew Ventures, Inc. (“Dew”) (collectively, “Defendants”) engaged in the fraudulent transfer of 19 assets held by non-party Nestlings, Inc. (“Nestlings”) in order to deprive Plaintiff of its equity 20 interest in Nestlings. See Dkt. No. 1 (“Compl.”) at ¶¶ 1, 62. Specifically, Plaintiff alleges that it 21 loaned Nestlings a total of $51,000 in August 2024, while Nestlings also incurred an unauthorized 22 and unsecured debt from Dew. Id. ¶¶ 22, 34. Then, in September 2024, after Plaintiff demanded 23 repayment of its loans, Plaintiff alleges Defendants improperly transferred all of Nestlings’ assets 24 to Dew without obtaining Plaintiff’s authorization as priority creditor and preferred shareholder of 25 Nestlings. Id. ¶¶ 53, 63. Defendants filed counterclaims against Plaintiff and Cross-Defendant 26 Anushree Vora (“Vora”). See Dkt. No. 62. Plaintiff moved to dismiss those claims, and 27 Defendants filed an amended counterclaim, which Plaintiff now seeks to dismiss. See Dkt. 72 1 Defendants assert one counterclaim for promissory estoppel. Countercl. ¶¶ 33–37. 2 Defendants allege that Vora first invested in Nestlings in 2020 through Plaintiff in exchange for 3 preferred shares. Id. ¶ 9. In 2022, Defendants allege that Nestlings contracted to provide software 4 services for a university in India and asked Vora for help raising further funding. Id. ¶¶ 11, 15. 5 Vora allegedly asked Nestlings, “[C]an we get a loan? I understand these will not be the most 6 favorable terms but I think this business can make the case for a line of credit.” Id. ¶ 15. In the 7 face of a “cash crunch that put the [contract] at risk,” Defendants allege that Nestlings reached out 8 to Deopura, who provided $205,000 “between November 2022 and February 2023” and “agreed to 9 postpone the discussion of terms till a later date.” Id. ¶ 17. In March 2023, Defendants allege that 10 Vora suggested formalizing Deopura’s funding by creating a line of credit and treating his 11 contributions as debt and stated, “I think with [Deopura] we should take it as debt. Have we 12 considered a line of credit?” Id. ¶ 18. Defendants also claim that Vora “stated in multiple 13 meetings with [Deopura] that Dew’s monetary contributions would be protected and that Dew 14 would have priority in the event of liquidation or wind-down.” Id. ¶ 19. 15 By mid-2024, Nestlings was allegedly “in dire financial straits. Id. ¶ 20. Dew allegedly 16 made several offers to acquire an interest in Nestlings, but Vora refused to “agree to investment 17 terms satisfactory to [Deopura] where his contribution would be treated as equity” and “refused to 18 treat the contribution as debt.” Id. ¶¶ 25, 27. Defendants allege that Nestlings then dissolved and 19 transferred all its assets to Dew in mid-September 2024. Id. ¶¶ 28, 31. 20 II. LEGAL STANDARD 21 A. Rule 12(b)(6) 22 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 23 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 24 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 25 granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 26 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 27 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 1 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 2 when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 3 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 4 In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as 5 true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. 6 St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nevertheless, courts do not 7 “accept as true allegations that are merely conclusory, unwarranted deductions of fact, or 8 unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) 9 (quotation omitted). 10 III. DISCUSSION 11 To sufficiently plead a claim for promissory estoppel under California law, a plaintiff must 12 allege: (1) that there was “a clear and unambiguous” promise; (2) “reliance by the party to whom 13 the promise is made;” (3) “reasonable and foreseeable” reliance; and (4) injury as a result of that 14 reliance. See U.S. Ecology, Inc. v. State of California, 129 Cal. App. 4th 887, 901 (2005) 15 (quotation omitted). Plaintiff argues that Defendants’ claim should be dismissed because (1) they 16 did not allege that Plaintiff or Vora made a clear and unambiguous promise; (2) they “cannot have 17 reasonably relied on purported promises that were made after the relevant events”; and (3) they 18 were not harmed by reliance on any alleged promises. Mot. at 4. The Court finds that Defendants 19 fail to adequately allege that they relied upon any promise alleged in the counterclaim. 20 A. Clear and Unambiguous Promise 21 Plaintiff argues that only three of Defendants’ allegations could plausibly constitute a clear 22 and unambiguous promise: (1) Vora’s October 2022 comment to Nestlings, asking, “[C]an we get 23 a loan? I understand these will not be the most favorable terms but I think this business can make 24 the case for a line of credit,” Mot. at 4 (citing Countercl. ¶ 15); (2) Vora’s March 2023 text 25 message to Nestlings, stating, “I think with [Deopura] we should take it as debt. Have we 26 considered a line of credit?” Mot. at 4 (citing Countercl. ¶ 18); and (3) Vora’s statements “in 27 multiple meetings with [Deopura] that Dew’s monetary contributions would be protected and that 1 ¶ 19). Defendants argue that “they have specified that [Plaintiff and Vora] promised to treat the 2 Dew Parties’ contributions as debt with priority in both . . . text messages and meetings.” Opp. at 3 5 (citing Countercl. ¶¶ 18, 19, 34). 4 Defendants have sufficiently alleged a clear and unambiguous promise. “To be 5 enforceable, a promise need only be definite enough that a court can determine the scope of the 6 duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for 7 the assessment of damages.” Garcia v. World Sav., FSB, 183 Cal. App. 4th 1031, 1045 (2010) 8 (quotation omitted). Defendants allege that Vora made several statements in meetings that “Dew 9 would have priority in the event of liquidation or wind-down.” Countercl. ¶ 19. While 10 Defendants’ allegations lack some specificity about how much priority Dew would be given, the 11 Court finds that, construing this allegation in the light most favorable to Defendants, this alleges a 12 promise to give Dew’s interests some degree of priority in a wind-down, which is sufficiently 13 definite for the Court to “determine the scope of the duty” at the pleading stage.1 Cf. Edwards v. 14 Fed. Home Loan Mortg. Corp., No. 12-CV-04868-JST, 2013 WL 2355445 , at *3 (N.D. Cal. May 15 29, 2013) (finding similarly sparse and general allegations sufficient to plead a clear and 16 unambiguous promise). 17 B. Actual Reliance 18 Next, Plaintiff argues that Defendants cannot have relied on a promise that was made after 19 Deopura invested in Nestlings. Plaintiff notes that Defendants allege that Dew and Deopura 20 provided funding to Nestlings between November 2022 and February 2023 and “agreed to 21 postpone the discussion of terms till a later date,” and only began to consider treating Deopura’s 22 investments as priority debt “after the fact, in March 2023.” Countercl. ¶¶ 17–19. Defendants — 23 — 1 In contrast, Defendants do not sufficiently plead a clear and unambiguous promise through the — 24 — other allegations the parties discuss. The allegation that Dew’s monetary contributions would be “protected,” see Countercl. ¶ 19, is too vague to constitute a clear and unambiguous promise. The — 25 — other paragraph that Defendants cite is purely conclusory and describes no specific allegations. See Countercl. ¶ 34; cf. Moates v. Facebook Inc., No. 22-CV-04478-RFL, 2024 WL 2853976 , at — 26 — *3 (N.D. Cal. Apr. 3, 2024) (finding failure to state a claim given general, conclusory language that there was a promise). And the Court agrees with Plaintiff that Vora’s October 2022 and — 27 — March 2023 statements were general questions and suggestions and were not promises to anyone. 1 claim that Plaintiff ignores their allegations, but they do not cite to supporting facts in their 2 counterclaim. See Opp. at 6. Instead, Defendants argue that Plaintiff’s complaint alleges that 3 Dew provided funding as late as July 2024, after Vora’s alleged promises. Opp. at 6 (citing 4 Compl. ¶ 34). 5 The Court agrees that Defendants did not adequately plead reliance on any promise as 6 alleged. “Reliance requires a change of position in any way, either by act or forbearance in 7 reliance on [the] promise . . . .” Temple v. Bank of Am., N.A., No. 15-CV-01330 NC, 2015 WL 8 3658834, at *4 (N.D. Cal. June 12, 2015) (quotation omitted). Defendants do not allege anywhere 9 in their counterclaim that Vora or Plaintiff made any promise before Defendants invested in 10 Nestlings. Nor do Defendants allege how they relied on these statements—Plaintiff assumes that 11 Defendants’ theory is that Deopura and Dew would not have invested absent this promise, but 12 Defendants do not allege this or even articulate it in their motion. Cf. Zierolf v. Wachovia Mortg., 13 No. C-12-3461 EMC, 2012 WL 6161352 , at *8 (N.D. Cal. Dec. 11, 2012) (dismissing a claim 14 where “[t]he amended complaint alleges no facts which show that Plaintiff changed his position in 15 any way because of what he was allegedly promised by Defendant”). Defendants cannot fix these 16 deficiencies by relying on allegations in the Complaint, particularly where they have disavowed 17 the truth of any such allegations. Countercl. ¶ 1.2 18 // 19 // 20 // 21 // 22 // — 23 — — 24 — 2 Because the Court finds that Defendants have not sufficiently alleged that they relied upon any — 25 — promise, the Court does not consider Plaintiff’s arguments about whether such reliance would have been reasonable or foreseeable. The Court likewise does not reach Plaintiff’s argument that — 26 — Defendants did not allege an injury as a result of any reliance, since Defendants are currently in possession of all of Nestlings’ assets and thus received the priority they claim they were promised. — 27 — Mot. at 6–7. Defendants do not appear to dispute this fact, but argue that they are being sued to IV. CONCLUSION Defendants have not adequately alleged reliance. The Court cannot say at this stage that — 2 — amendment necessarily would be futile. See Lopez v. Smith, 203 F.3d 1122 , 1127 (9th Cir. 2000) — 3 — (en banc) (“[A] district court should grant leave to amend even if no request to amend the pleading — 4 — was made, unless the pleading could not possibly be cured by the allegation of other facts.”’) — 5 — (quotation omitted). Accordingly, the Court GRANTS Plaintiff's motion to dismiss, Dkt. No. 76, — 6 — WITHOUT PREJUDICE. Any amended counterclaim must be filed within 14 days from the — 7 — date of this Order. — 8 — — 9 — IT IS SO ORDERED. — 10 — — 11 — woeo S. GILLIAM, JR. □ United States District Judge © — 15 — — 16 — = 17 Z 18 — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 —