241 F. Supp. 3d 1084
C.D. Cal.2017Background
- Body Jewelz, an L.A. business, contracted with GoDaddy for website hosting, management, and monitoring; its website crashed on August 4, 2015, causing alleged lost online sales and rebuild costs.
- Plaintiff sued GoDaddy in state court asserting breach of contract, fraud in the performance, negligent misrepresentation, and negligence; GoDaddy removed and moved to dismiss under Rule 12(b)(6).
- GoDaddy sought judicial notice / incorporation of a Hosting Agreement and Universal Terms of Service; the court declined to consider those extrinsic agreements on the motion to dismiss.
- The complaint alleges a written and implied contract, performance by Plaintiff, breach by GoDaddy in failing to manage/monitor the site, and resulting economic damages exceeding $500,000.
- Plaintiff’s fraud and negligent-misrepresentation allegations rest on post-crash statements by GoDaddy technicians that they “did not know what caused” the crash; Plaintiff implies those statements were false.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — sufficiency of pleadings | Plaintiff alleges formation, payment, performance, breach (failure to manage/monitor) and economic damages | GoDaddy argues complaint lacks specifics tying its conduct to the crash | Denied dismissal — breach claim survives under Rule 8(a) (plausible pleading) |
| Fraud and negligent misrepresentation — reliance & causation | Post-crash statements were false and induced reliance, causing damages | Statements occurred after the crash so Plaintiff could not have relied; misrepresentations are not the cause of damages | Granted dismissal with leave to amend — Plaintiff failed to plead reliance and causation under Rule 9(b) and Rule 8 |
| Negligence — viability given economic-loss rule | GoDaddy owed a duty to manage/monitor; breach caused economic loss | Economic-loss rule bars tort recovery for purely economic damages arising from contractual relationship | Granted dismissal without leave to amend — negligence barred by economic-loss rule (no applicable exception) |
| Judicial notice / incorporation of GoDaddy’s agreements | N/A (Plaintiff contests authenticity) | GoDaddy: Hosting Agreement and Terms govern the relationship and should be considered | Denied — court refused judicial notice and incorporation by reference because authenticity and completeness were disputed |
Key Cases Cited
- Balistreri v. Pacifica Police Dep’t, 901 F.2d 696 (9th Cir. 1988) (12(b)(6) dismissal standard and notice-pleading requirements)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (requirement that pleadings state a plausible claim; context-specific plausibility inquiry)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (Rule 9(b) particularity for fraud allegations)
- Hunter v. Up-Right, Inc., 6 Cal.4th 1174 (1994) (elements of fraud under California law)
- Fox v. Pollack, 181 Cal.App.3d 954 (1986) (elements of negligent misrepresentation under California law)
- Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979 (2004) (economic loss rule — economic losses are recoverable in contract, not tort)
- J’Aire Corp. v. Gregory, 24 Cal.3d 799 (1979) (special-relationship exception test for permitting economic-loss recovery in tort)
- Biakanja v. Irving, 49 Cal.2d 647 (1957) (factors used to assess duty and special relationship in tort recovery for economic loss)