Pebble Beach Investment Group, LLC v. Square One Starts, LLC
3:21-cv-00522
N.D. Cal.Jun 21, 2021Background
- Pebble Beach and Square One entered a contract on June 29, 2020: Square One would germinate 14,400 Kush Hemp seeds for $3,312.
- Pebble Beach delivered the seeds and payment; thousands of seeds were allegedly destroyed by Square One.
- Pebble Beach sued for negligent and intentional misrepresentation, unfair competition (premised on the misrepresentations), negligence, breach of contract, and breach of fiduciary duty.
- Square One moved to dismiss all claims.
- The court dismissed all claims except breach of contract (which survives and may proceed to discovery); the court granted leave to amend negligence and fiduciary-duty claims in the alternative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Misrepresentation / UCL | Square One represented specific capacity, facilities, experience to germinate seeds | Statements were generalized, non-quantifiable puffery not actionable | Dismissed — alleged statements are generalized; complaint lacks factual context to make them specific enough to be actionable; related UCL claim fails |
| Negligence | Square One owed a duty because it was entrusted with Pebble Beach’s seeds | No special relationship; economic-loss rule bars negligence for contract performance absent independent duty | Dismissed — conclusory duty allegation insufficient; leave to amend in caution |
| Breach of Contract | Parties formed a contract; Pebble Beach performed by paying and delivering seeds; Square One failed to germinate seeds | (Defendant sought dismissal of claims generally) | Sustained — complaint adequately pleads contract terms, performance, and breach; claim may proceed to discovery |
| Breach of Fiduciary Duty | Entrusting seeds created fiduciary duties | Ordinary arms-length dealings do not create fiduciary duties; no facts showing agency, partnership, or knowingly undertaken fiduciary role | Dismissed — no factual allegations supporting a fiduciary relationship; leave to amend denied as to current pleading but permitted in abundance of caution |
Key Cases Cited
- City of Hope Nat. Med. Ctr. v. Genentech, Inc., 43 Cal.4th 375 (Cal. 2008) (fiduciary relationships do not generally arise from ordinary arms‑length dealings)
- Pellegrini v. Weiss, 165 Cal. App. 4th 515 (Cal. Ct. App. 2008) (joint venture/partnership elements for fiduciary duties)
- Langan v. United Servs. Auto. Ass'n, 69 F. Supp. 3d 965 (N.D. Cal. 2014) (elements required to plead breach of contract)
- World Surveillance Group Inc. v. La Jolla Cove Investors, Inc., 66 F. Supp. 3d 1233 (N.D. Cal. 2014) (fiduciary duty does not arise from ordinary arms‑length business dealings)