KJ-Park, LLC v. Match Group, LLC

Background

K-J Park, LLC sued Match Group, LLC and Match Group, Inc. in state court, alleging breach of a lease agreement and a guaranty involving a building at 2555 Park Boulevard in Palo Alto, California. K-J Park alleged that Match Group owed more than $8 million in damages. Match Group removed the action to federal court based on diversity jurisdiction.

Arguments

Match Group moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts and a legally recognized basis for relief. Match Group argued that K-J Park could not plausibly state breach-of-contract claims because a 2017 municipal Retail Preservation Ordinance affected the lease. Match Group contended that it had properly terminated the lease after K-J Park failed to timely provide the premises in a condition permitting Match Group to lawfully occupy and use the entire building as office space. Match Group also argued that the lease and guaranty could not be enforced under the doctrines of mistake and frustration of purpose.

Court’s Analysis

The principal dispute concerned whether the 2017 ordinance applied to the premises. Match Group submitted minutes from a June 3, 2019 Palo Alto City Council meeting and argued that the minutes showed the City Council believed the ordinance applied. The court explained that the minutes might be subject to judicial notice, but that did not make every factual assertion in them judicially established.

The court concluded that Match Group’s arguments required factual inferences about what occurred during the City Council’s closed session and why the City Council reached its conclusion about the premises. The court held that those matters could not appropriately be decided on a Rule 12(b)(6) motion.

Disposition

The court denied Match Group’s Rule 12(b)(6) motion to dismiss the complaint. The order did not decide whether Match Group breached the lease or guaranty, or whether Match Group’s other contract defenses ultimately apply.