Beluca Ventures LLC v. Einride Aktiebolag

Background

Beluca Ventures LLC and Christian Lagerling sued Einride Aktiebolag, Einride US Inc., and Does 1–10. Beluca alleged that, during a December 2020 telephone conversation, Einride’s founder and chief executive officer agreed that Beluca would lead and assist with fundraising for Einride’s Series B financing. According to the complaint, Beluca performed that work, Einride raised $110 million, and Einride did not pay the compensation Beluca claimed under the alleged oral agreement.

The complaint asserted breach of contract, breach of the covenant of good faith and fair dealing, conversion, unjust enrichment, quantum meruit, and promissory estoppel. Einride moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The court explained that this motion uses the same standard as a motion to dismiss for failure to state a claim: accepting well-pleaded facts as true, the court asks whether those facts plausibly entitle the plaintiff to a legal remedy.

Quasi-Contract Claims

The court held that Rule 8 permits a plaintiff to plead contract and quasi-contract theories in the alternative, but only when the plaintiff alleges facts suggesting that the supposed contract may be invalid or unenforceable. Beluca had described the alleged oral agreement as an enforceable contract and had not pleaded facts supporting possible invalidity or unenforceability.

The court noted that Einride had asserted in its answer and counterclaims that the agreement was void and unenforceable because Einride’s lead investors had not approved it in writing and Einride’s chief executive officer allegedly lacked authority to enter major agreements without board approval. The court said those facts could support alternative theories, so it dismissed the quasi-contract claims against Einride Aktiebolag—unjust enrichment, quantum meruit, and promissory estoppel—with leave to amend. The court also explained that, under Ninth Circuit precedent, an unjust-enrichment claim under California law may be treated as a quasi-contract claim seeking restitution.

Conversion

Conversion is the wrongful exercise of control over another person’s property. The court found that Beluca’s conversion allegations largely repeated its breach-of-contract allegations and sought payment of a contractual obligation. Under the authorities discussed by the court, merely failing to pay money owed under a contract ordinarily does not constitute conversion.

Beluca argued that its agreement created an equitable lien, meaning a property interest charging particular property to secure payment of a debt. The court rejected that theory at the pleading stage because Beluca had not alleged an equitable lien in its complaint and had not shown that Einride held specific funds for Beluca’s benefit. The court therefore granted Einride’s motion on the conversion claim and gave Beluca leave to amend.

Einride US

The complaint alleged that Einride US was formed in February 2021, after the alleged oral agreement in December 2020. The court found that Beluca had not plausibly alleged that Einride US was liable under either an alter-ego theory or a direct-liability theory. An alter-ego theory seeks to hold one entity responsible for another entity’s conduct based on alleged unity between the entities and the need to avoid fraud or injustice; the court found that Beluca had not pleaded the required elements or supporting facts.

The court also found it implausible that an entity not yet in existence when the alleged agreement was formed could be directly liable for the contract and quasi-contract claims. It dismissed all claims against Einride US. The court stated that, if Beluca learned facts during discovery supporting liability against Einride US, Beluca could move to amend at that time.

Disposition

The court granted Einride’s motion for judgment on the pleadings. It dismissed Beluca’s conversion, unjust-enrichment, quantum-meruit, and promissory-estoppel claims with leave to amend, dismissed all claims against Einride US, and ordered Beluca to amend its complaint within 20 days of the order’s filing.