United States District Court, D. Oregon
OPINION AND ORDER
F. BECKERMAN, UNITED STATES MAGISTRATE JUDGE
Bethany Village Centre, LLC (“Bethany Village”)
filed this action against defendant Petco Animal Supplies
Stores, Inc. (“Petco”), alleging breach of
contract and seeking a declaratory judgment on the
parties' rights and obligations under a ten-year
commercial lease. (ECF No. 1.) Bethany Village now moves for
leave to amend its original complaint to add a claim for
breach of the implied covenant of good faith and fair
dealing. (ECF No. 20.) For the following reasons, the Court
denies Bethany Village's motion for leave to amend.
Village and Petco entered into a ten-year commercial lease in
January 2013. (Compl. ¶ 3.) Section 11 of the lease
provided that “the Shopping Center is and will remain
substantially retail in character and, further, no part of
same shall be used as an auditorium, meeting hall, school or
other place of public assembly[.]” (Compl. ¶ 5.)
On or about February 16, 2018, Petco gave notice to Bethany
Village that it was in default under the terms of the lease
because it allowed a “preschool/childcare center”
to operate at the shopping center. (Compl. ¶ 5.) In
March 2018, Petco terminated the lease, effective June 24,
2018, due to Bethany Village's alleged breach of Section
11. (Compl. ¶ 7.)
proposed amended complaint, Bethany Village alleges that the
addition of the preschool to the shopping center was not a
“legitimate” or Petco's “true”
reason for terminating the lease. (First Am. Compl. ¶
24.) Rather, on information and belief, Bethany Village
alleges that Petco's true reason for terminating the
lease was the financial performance of the store. (First Am.
Compl. ¶ 27.)
STANDARD OF REVIEW
to grant leave to amend is committed to the sound discretion
of the district court.” United Bhd. of Carpenters
& Joiners of Am. v. Bldg. & Constr. Trades Dep't,
AFL-CIO, 770 F.3d 834, 845 (9th Cir. 2014). The Ninth
Circuit has emphasized that “[t]he standard for
granting leave to amend is generous, ” United
States v. Corinthian Colls., 655 F.3d 984, 995 (9th Cir.
2011) (citation omitted), because the purpose of Rule 15(a)
is “to facilitate decision on the merits, rather than
on the pleadings or technicalities.” Novak v.
United States, 795 F.3d 1012, 1020 (9th Cir. 2015)
(citation omitted). Courts generally consider five factors:
“bad faith, undue delay, prejudice to the opposing
party, futility of the amendment, and whether the plaintiff
has previously amended the complaint.” Corinthian
Colls., 655 F.3d at 995. However, “[f]utility of
amendment can, by itself, justify the denial of a motion for
leave to amend.” Gonzalez v. Planned Parenthood of
L.A., 759 F.3d 1112, 1114, 1116 (9th Cir. 2014) (citing
Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir.
1995)). Petco does not oppose Bethany Village's proposed
amendment on the grounds of delay, prejudice, bad faith, or
prior amendment. Thus, leave to amend turns on whether the
proposed amendment would be futile. See
Corinthian Colls., 655 F.3d at 995 (making the same
“proper test to be applied when determining the legal
sufficiency of a proposed amendment is identical to the one
used when considering the sufficiency of a pleading
challenged under Rule 12(b)(6).” Miller v.
Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988)
(citation omitted); Gandhi v. Sitara Capital Mgmt.,
LLC, 721 F.3d 865, 869 (7th Cir. 2013) (“District
courts may refuse to entertain a proposed amendment on
futility grounds when the new pleading would not survive a
motion to dismiss.”). To survive a Rule 12(b)(6)
“motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
opposes on futility grounds adding Bethany Village's
proposed claim for breach of the implied covenant of good
faith and fair dealing, arguing that the implied duty of good
faith in the performance of a contract cannot
“‘contradict an express contractual term or
otherwise provide a remedy for an unpleasantly motivated act
that is expressly permitted by the contract.'”
(Def.'s Opp'n at 7 (quoting Zygar v.
Johnson, 169 Or.App. 638, 645 (2000); see also
Def.'s Supp. Resp. at 3, 6.) Petco argues that it could
not have breached the implied duty by exercising its express
contractual right to terminate the lease when Bethany Village
violated Section 11. (Def.'s Opp'n at 8-9). Bethany
Village responds that the lease did not allow Petco to
terminate because Section 11 refers to a “school”
and the preschool at issue is not a “school.”
(Pl.'s Reply at 2.) Bethany Village argues that because
the terms of the lease did not allow Petco to terminate,
Petco's ulterior motive for terminating supports a claim
for breach of the implied covenant of good faith and fair
dealing. (Pl.'s Reply at 2.)
“law imposes a duty of good faith and fair dealing in
the performance and enforcement of every contract.”
Hampton Tree Farms, Inc. v. Jewett, 320 Or. 599, 615
(1995) (citations omitted). This duty “serves to
protect the objectively reasonable contractual expectations
of the parties.” Stevens v. Foren, 154 Or.App.
52, 58 (1998) (citations omitted). Petco is correct that
under Oregon law, the duty of good faith “cannot
contradict an express contractual term, ” and cannot
“provide a remedy for an unpleasantly motivated act
that is permitted expressly by contract.”
Zygar, 169 Or.App. at 645 (citing Stevens,
154 Or.App. at 58); see also Or. Univ. Sys. v.
Or. Pub. Emps. Union, Local 503, 185 Or.App. 506, 511
(2012) (noting that the duty of good faith and fair dealing
“may be implied as to a disputed issue only if the
parties have not agreed to an express term that governs that
issue”); U.S. Nat'l Bank of Or. v. Boge,
311 Or. 550, 567 (1991) (“[T]he obligation of good
faith does not vary the substantive terms of the
bargain[.]”) (en banc).
under Oregon law, if the lease allowed Petco to terminate
when Bethany Village added a preschool to the shopping center
(and if Petco did not waive its right to terminate), Petco
will prevail on the breach of contract claim even if its
termination of the lease was unpleasantly motivated (e.g.,
for financial or any other reason). If the lease so allowed,
Petco would also necessarily prevail on Bethany Village's
proposed bad faith claim. See Marshall v. Wells
Capital Mgmt., Inc., No. 07-309-HU, 2007 WL 4565164, at
*9 (D. Or. Dec. 19, 2007) (“Conduct consistent with the
terms of the contract cannot serve as the basis of a claim of
violation of the duty of good faith.”).
flip side, if Bethany Village prevails on its breach of
contract claim because the lease did not allow Petco to
terminate, Bethany Village's proposed claim that Petco
breached in bad faith is superfluous. SeeN.
Clackamas Cnty Water Com'n v. Siemens Water Tech.
Corp., No. 3:13-cv-01441-ST, 2014 WL 197811, at *9 (D.
Or. Jan. 14, 2014) (applying Oregon law and dismissing bad
faith claim as “superfluous” where “the
contract  contains express provisions governing all aspects
of the alleged breach”); see alsoDoyle v.
Mastercard Int'l Inc., 700 Fed.Appx. 22, 24 (2d Cir.
2017) (applying New York law and affirming dismissal of bad
faith claim as “duplicative of the claim for breach of
contract”); Pierry, Inc. v. Thirty-One Gifts,
LLC, No. 17-cv-03074-MEJ, 2017 WL 4236934, at *5 (N.D.
Cal. Sept. 25, 2017) (applying California law and dismissing
bad faith claim because it relied on the same facts as the
breach of contract claim and was therefore
“redundant”); Stonebrae, L.P. v. Toll Bros.,
Inc., No. C-08-0221 EMC, 2010 WL 114010, at *7 (N.D.
Cal. Jan. 7, 2010) (“Because [the plaintiff's]
claim for breach of the implied ...