Judge Robert B. Broadbelt, Case Number: 23STCV20565, Date: 2024-08-09 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 23STCV20565, Date: 2024-08-09 Tentative Ruling

The court considered the moving, opposition, and reply papers filed in connection with the motion to dismiss or stay, demurrer, and motion to strike.

Plaintiff Shervin Lalezary (“Plaintiff”) filed the operative Second Amended Complaint in this action against defendant GoDaddy.com, LLC (“Defendant”) on January 24, 2024, alleging five causes of action for (1) fraud, (2) violation of Business and Professions Code section 17200 et seq., (3) false promise, (4) breach of contract, and (5) breach of the covenant of good faith and fair dealing.

Now pending before the court are the following three matters: (1) Defendant’s motion to dismiss or stay Plaintiff’s Second Amended Complaint; (2) Defendant’s demurrer to the Second Amended Complaint; and (3) Defendant’s motion to strike portions of the Second Amended Complaint.

Defendant moves the court for an order dismissing or, alternatively, staying Plaintiff’s action pursuant to Code of Civil Procedure section 410.30, on the ground that there is a forum selection clause that requires Plaintiff’s action to be filed in Arizona.

“When a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.” (Code Civ. Proc., §¿410.30, subd. (a).) “‘Section 410.30 is a codification of the doctrine of forum non conveniens [citation], but the principles governing enforcement of a forum selection clause are not the same as those applicable to motions based on forum non conveniens. [¶] In California, “forum selection clauses are valid and may be given effect, in the court’s discretion and in the absence of showing that enforcement of such a clause would be unreasonable.” [Citation.] [¶] The burden of proof is on the plaintiff, and the factors involved in traditional forum non conveniens analysis do not control. [Citation.] “Instead, the forum selection clause is presumed valid and will be enforced unless the plaintiff shows that enforcement of the clause would be unreasonable under the circumstance of the case.” [Citations.]’” (Korman v. Princess Cruise Lines, Ltd. (2019) 32 Cal.App.5th 206, 213.)

The court finds that Defendant has not met its burden to show that the subject forum selection clause applies to this action.

Defendant has submitted a copy of the “Universal Terms of Service Agreement” (the “Agreement”). (Hanyen Decl., Ex. A, Agreement.) While the Agreement is unsigned, Defendant has submitted the declaration of a Senior Manager – Sales Operations for Defendant, Jessica Hanyen, in which Hanyen states that (1) all of Defendant’s customers are required to agree to the Agreement before Defendant will provide the purchased products or services; (2) “[n]o customer can use [Defendant’s] products or services unless and until they have affirmatively consented to the [Agreement] and any other applicable agreements[;]” (3) to agree to the Agreement, a customer (i) is taken to a review page to review the order, (ii) is then taken to a checkout page, on which the customer is presented with a “Complete Purchase” button, which states, immediately below that button, “‘By clicking “Complete Purchase”, you agree to our Terms & Conditions and Privacy Policy . . . .[,]’” the former of which includes a hyperlink to the applicable contractual agreements, and (iii) must then click on the “Complete Purchase” button; and (4) Defendant’s records demonstrate that Plaintiff (i) has been a customer of Defendant’s since approximately October 2004, (ii) made more than 50 purchases with Defendant between January 1, 2022 and May 26, 2022, at which time Plaintiff “agreed to the [Agreement] with each of these purchases[,]” and (iii) made more than 25 purchases with Defendant between June 1, 2022 and December 31, 2022, and has, with each purchase, agreed to the Agreement. (Hanyen Decl., ¶¶ 7, 9-10, 12.)

The Agreement includes an arbitration agreement, which covers all disputes between Defendant and its customer—including any dispute, claim, or action between the customer and Defendant involving either party, “whether in contract, warranty, misrepresentation, fraud, tort, intentional tort, statute, regulation, ordinance, or any other legal or equitable basis”—except for those governed by the Uniform Domain Name Dispute Resolution Policy as referenced in the Agreement and claims or causes of action for trade secret misappropriation, patent infringement, copyright infringement or misuse, and trademark infringement or dilution. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subds. (A) [defining “Dispute”], (B) [stating that “You and GoDaddy further agree: (i) to arbitrate all Disputes between the parties pursuant to the provisions in these Terms”] [emphasis added].) Moreover, the Agreement provides that, notwithstanding the arbitration provision, a customer “may bring an individual action in the small claims court of [the customer’s] state or municipality if the action is within that court’s jurisdiction and is pending only in that court.” (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (C).)

The Agreement also includes a forum selection clause that provides that, for “any controversy excluded from the dispute resolution procedure and class action waiver provisions in this Section (other than an individual action filed in small claims court)[,] [such controversy] shall be filed only in the Superior Court of Maricopa County, Arizona, or the United States District Court for the District of Arizona, and each party irrevocably and unconditionally consents and submits to the exclusive jurisdiction of such courts for any such controversy.” (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (N).)

Defendant contends that the forum selection clause “requires any controversy not brought via binding arbitration to instead” be filed in the courts specified in the Agreement (i.e., certain courts in Arizona). (Mot., p. 4:5-7.) However, the language of the forum selection clause provides that the parties agree “that any controversy excluded from the dispute resolution procedure and class action waiver provisions” in that section shall be subject to the exclusive jurisdiction of the specified Arizona courts. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (N) [emphasis added].) Thus, the forum selection clause does not require “any controversy not brought via binding arbitration” to be filed in the specified Arizona courts as Defendant contends, but requires “any controversy excluded from the dispute resolution procedure and class action waiver provisions” to be filed in those courts. (Ibid.; Mot., p. 4:5-7.)

Defendant did not show that the claims alleged in Plaintiff’s Second Amended Complaint are “excluded from the dispute resolution procedure and class action waiver provisions” set forth in the Agreement. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (N).) Instead, it appears that Defendant takes the position that those claims are covered by the arbitration provision. (Mot., p. 5:11-18; Reply, pp. 1:10-14, 6:9-16 [arguing that the forum selection clause applies to any dispute as defined in section 22, subdivision (A) of the Agreement].) As set forth above, the parties’ Agreement includes a provision requiring Defendant and its customer “to arbitrate all Disputes between the parties pursuant to the provisions in these Terms . . . .” (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (B) [emphasis added].) Thus, because Defendant contends that Plaintiff’s claims fall within the scope of the Agreement defining “Dispute,” his claims would be subject to the arbitration provision and therefore his action does not constitute a “controversy excluded from the dispute resolution procedure and class action waiver provisions” within the meaning of the forum selection clause. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (N).)

Moreover, Defendant did not present argument or evidence showing that Plaintiff’s claims are not subject to these provisions. Defendant did not, for example, present evidence showing that Plaintiff opted out of the arbitration provision by following the procedure set forth in the Agreement. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (K) [setting forth 30-day opt-out procedure].) It is also undisputed that Plaintiff has not alleged claims for trade secret misappropriation, patent infringement, copyright infringement or misuse, or trademark infringement or dilution. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (A) [excluding those claims from the definition of “Dispute”].)

The court notes that, in opposition, Plaintiff contends that the Agreement does not apply to his claims because there was no consummated “transaction” between them. (Opp., p. 1:3-7.) The court disagrees. The claims asserted by Plaintiff in the Second Amended Complaint fall within the scope of the arbitration provision because (1) the term “Dispute” is defined to mean any dispute, claim, or action between the customer and Defendant arising out of or relating to, inter alia, “any other transaction involving [the customer, i.e., Plaintiff] and [Defendant], whether in contract . . . , misrepresentation, fraud, tort, intentional tort, [or] statute . . . .[,]” and (2) Plaintiff (i) has alleged facts establishing that a transaction occurred between Plaintiff and Defendant based on the allegations that (a) Defendant partnered with Saw.com in the sale of domains, (b) Plaintiff purchased a domain name from Saw.com (with whom Defendant was partnered), (c) Defendant later sent a false email to Plaintiff informing him that he had cancelled the purchase, which harmed Plaintiff and forced him to repurchase the domain name for an amount substantially above the original contract price, and (ii) has alleged causes of action for fraud, violation of statute (the unfair competition law), breach of contract, and breach of the implied covenant of good faith and fair dealing. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (A); SAC ¶¶ 11-12, 15-16.)

Thus, the court finds that Defendant has not met its burden to show that the forum selection clause applies to Plaintiff’s action because (1) the plain language of the forum selection clause states that it applies to “any controversy excluded from the dispute resolution procedure and class action waiver provisions in” section 22 of the Agreement, and (2) Defendant did not show that the controversy alleged in Plaintiff’s Second Amended Complaint is a “controversy excluded from the dispute resolution procedure and class action waiver provisions” set forth in the Agreement. (Hanyen Decl., Ex. A, Agreement, ¶ 22, subd. (N).)

The court notes that Defendant has cited authority establishing that the burden is on the plaintiff to show a mandatory forum selection clause is unenforceable. “It is true that a party seeking to avoid enforcement of an otherwise applicable forum selection clause has the burden of proving that such enforcement would be unreasonable.” (Bushansky v. Soon-Shiong (2018) 23 Cal.App.5th 1000, 1006 [emphasis in original]; Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 2015 [the party opposing enforcement of a forum selection clause ordinarily bears the burden of proving why it should not be enforced].) However, “[w]here a plaintiff brings suit in California, the potential applicability of a contractual forum selection clause is raised by the defendant through a motion to dismiss on grounds of forum non conveniens. [Citation.]” (Bushansky, supra, 23 Cal.App.5th at p. 1005.) Thus, the moving party bears the initial burden. (Ibid.) The court therefore finds that, as the moving party, Defendant had the initial burden of proving that the forum selection clause is applicable to this action. (Id. at p. 1006 [finding that the “defendants’ burden-shifting argument puts the cart before the horse in assuming the forum selection clause is otherwise applicable” and noting that the question of applicability presented a preliminary question of contract interpretation].)

For the reasons set forth above, the court finds that Defendant did not meet its burden to show that the forum selection clause in the Agreement applies to this action. The court therefore denies Defendant’s motion to dismiss or stay Plaintiff’s Second Amended Complaint. (Code Civ. Proc., § 410.30, subd. (a).)

Defendant moves the court for an order sustaining its demurrer to each cause of action alleged in Plaintiff’s Second Amended Complaint.

The court sustains Defendant’s demurrer to the first cause of action for fraud because it does not state facts sufficient to constitute a cause of action since Plaintiff has not alleged facts establishing justifiable reliance on the alleged misrepresentation that resulted in damages. (Code Civ. Proc., § 430.10, subd. (e); Aton Center, Inc. v. United Healthcare Ins. Co. (2023) 93 Cal.App.5th 1214, 1245 [elements of intentional misrepresentation].)

Plaintiff has alleged the actionable misrepresentation to be Defendant’s representation “regarding the reason for the cancellation of the domain[,]” and, specifically, Defendant’s representation that “the cancellation of the domain sale was because [Plaintiff] canceled the product, when in fact, [Plaintiff] never cancelled the sale of the domain.” (SAC ¶¶ 19, 13.) However, while Plaintiff has alleged that he “reasonably relied on” that representation (SAC ¶ 21), Plaintiff did not allege facts establishing that such reliance was reasonable in light of Plaintiff’s personal knowledge of the facts underlying the representation (i.e., whether he cancelled his purchase of the subject domain). (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1239 [“‘[i]f the conduct of the plaintiff in the light of his own intelligence and information was manifestly unreasonable, however, he will be denied a recovery’”].) Moreover, Plaintiff has not alleged facts establishing that Defendant’s alleged misrepresentation of the underlying reason for the cancellation was the cause of his damages, rather than the cancellation of the purchase (and subsequent repurchase) itself.

The court sustains Defendant’s demurrer to the second cause of action for violation of the unfair competition law because it does not state facts sufficient to constitute a cause of action since Plaintiff has not alleged facts showing that he suffered an injury in fact resulting in loss of money or property as a result of Defendant’s alleged violations of the unfair competition law and therefore has not alleged standing.[1] (Code Civ. Proc., § 430.10, subd. (e); Bus. & Prof. Code, § 1204; Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 615 [finding the plaintiff “does not allege facts demonstrating he has standing to sue under the UCL because he does not allege sufficient facts showing a causal link between the alleged UCL violations and an injury in fact resulting in loss of money or property”].) Specifically, Plaintiff (1) bases this cause of action on Defendant’s alleged misrepresentation of the reason for its cancellation of Plaintiff’s purchase of the subject domain (SAC ¶¶ 25-27), but (2) does not allege facts establishing how the purported misrepresentation of the underlying reason for the cancellation caused him to “los[e] money or property as a result” thereof, rather than Plaintiff’s loss of money suffered as a result of the cancellation of his purchase itself and his subsequent repurchase (SAC ¶ 16 [Plaintiff was forced to repurchase the domain]).

The court sustains Defendant’s demurrer to the third cause of action for false promise because it does not state facts sufficient to constitute a cause of action since Plaintiff has not alleged, with the requisite particularity, facts establishing that Defendant made a promise to Plaintiff without any intention of performing it at the time the promise was made. (Code Civ. Proc., § 430.10, subd. (e); Missakian v. Amusement Industry, Inc. (2021) 69 Cal.App.5th 630, 654 [elements of promissory fraud]; Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1498 [“As with any other form of fraud, each element of a promissory fraud claim must be alleged with particularity”].)

To the extent that Plaintiff has alleged that Defendant promised to sell to Plaintiff the domain for a specified amount (which is not alleged with particularity), that promise must have been made by no later than May 26, 2022 (i.e., the purchase date of the domain). (SAC ¶ 12 [“On May 26, 2022, [Plaintiff] purchased the domain Accident.org”].) But Plaintiff has also alleged that, “on June 2, 2022,” the Chief Executive Officer and founder of Saw.com and an employee of Defendant’s “conversed and decided that the Accident.org domain price was a ‘typo’ and should have been sold at a higher price point” (SAC ¶ 14). Thus, the facts alleged in the Second Amended Complaint show that Defendant formed an intent not to perform the promise after the promise was made, following a conversation in which Defendant “decided” with Saw.com that the domain should have been sold at a higher price. (SAC ¶¶ 12, 14.)

The court sustains Defendant’s demurrer to the fourth cause of action for breach of contract because Plaintiff has represented, in his opposition papers, that he “agrees to dismiss” this cause of action. (Opp., p. 1, n. 1.)

The court sustains Defendant’s demurrer to the fifth cause of action for breach of the covenant of good faith and fair dealing because Plaintiff has represented, in his opposition papers, that he “agrees to dismiss” this cause of action. (Opp., p. 1, n. 1.)

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.”¿ (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.)¿ To satisfy that burden, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”¿ (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) Because Plaintiff has agreed to dismiss his causes of action for breach of contract and breach of the covenant of good faith and fair dealing, the court sustains Defendant’s demurrer to those causes of action without leave to amend. The court grants Plaintiff leave to amend his first through third causes of action. However, the court denies Plaintiff’s request, made in his opposition papers, for leave to amend his complaint to add additional causes of action for negligence and intentional interference with contractual relations, without prejudice to Plaintiff’s filing a regularly noticed motion seeking this relief.

Defendant moves the court for an order striking from Plaintiff’s Second Amended Complaint (1) the request for an injunction, (2) the request for punitive damages, and (3) the request for attorney’s fees.

Because the court has sustained Defendant’s demurrer to each cause of action alleged in Plaintiff’s Second Amended Complaint, the court denies Defendant’s motion to strike as moot.

The court denies defendant GoDaddy.com, LLC’s motion to dismiss or stay the second amended complaint.

The court sustains defendant GoDaddy.com, LLC’s demurrer to plaintiff Shervin Lalezary’s first through third causes of action with leave to amend.

The court sustains defendant GoDaddy.com, LLC’s demurrer to plaintiff Shervin Lalezary’s fourth and fifth causes of action without leave to amend.

The court grants plaintiff Shervin Lalezary 20 days leave to file a Third Amended Complaint that cures the defects in the first, second, and third causes of action discussed in this ruling.

[1] The court notes that this cause of action does not appear to incorporate the allegations of the third cause of action for false promise and is therefore based solely on Defendant’s alleged misrepresentation. (SAC ¶ 23 [incorporating preceding paragraphs].)

shervin lalezary ; Plaintiff, vs. godaddy.com, inc. , et al.; Defendants.	Case No.:	23STCV20565

	Hearing Date:	August 9, 2024

	Time:	10:00 a.m.

	[tentative] Order RE: (1) defendant’s motion to dismiss or stay plaintiff’s second amended complaint (2) defendant’s demurrer to second amended complaint (3) defendant’s motion to strike portions of second amended complaint