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govinfo:USCOURTS-casd-3_26-cv-02506-0

U.S. District Court for the Southern District of California · 2026-06-15

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UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF CALIFORNIA 
Safchild Investment, LLC, a California 
limited liability company, 
Plaintiff, 
v. 
Academi Real Estate Holdings, LLC, a 
North Carolina limited liability company; 
Academi Training Center, Inc., a 
Delaware corporation; Constellis Holding, 
LLC, a Delaware limited liability 
company; and DOES 1 through 10, 
inclusive, 
Defendants. 

ORDER DENYING DEFENDANT 
CONSTELLIS’ MOTION TO 
DISMISS 
[Doc. No. 5.] 
On April 27, 2026,
 Defenda nt Constellis Holdings, LL C (“Constellis”) filed a 
motion to dismiss Plaintiff Safchild Investments, LLC’s complaint pursuant to Fed. R. Civ. 
P. 12(b)(6) for failure
 to state a claim for which relief can be granted. (Doc. No. 5-1.) On
June 1, 2026, Plainti
ff filed a response in opposition to Defendant’s motion to di smiss.
(Doc. No. 9.) On June 8, 2026, Constellis filed its re
ply. (Doc. No. 12.) On June 12, 2026,
the Court took the matter under submission. (Doc. No. 13.) For the reasons below, the
Court denies Defendant Constellis’ motion to dismiss.
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Background 
The following factual background is take n from the allegations in Plaintiff’s 
complaint. 
On July 2, 2007, Plaintiff, as lessor, en tered a standard commercial single-tenant 
lease (“Original Lease”) with E & J Holdings, LLC, as lessee. (Doc. No. 1-2, Compl. ¶ 9.) 
The Original Lease leased premises loca ted at 7685 Siempre Viva Road, San Diego, 
California 92154 (“Premises”) fro m August 16, 2007 to August 31, 2010. (Id. ¶¶ 9-10.) 
Blackwater Lodge and Training Center, Inc. and Subsidiaries Blackwater U.S.A. executed 
a guaranty of the Original Lease. (Id. ¶ 9.) 
On December 29, 2009, Plaintiff and E & J Holdings, LLC executed the First 
Amendment to the Original Lease, extending the lease term to August 31, 2013. (Id. ¶ 11.) 
U.S. Training Center, Inc., formerly Blac kwater Lodge and Training Center, Inc., 
acknowledged its guaranty of the Original Lease and approved the First Amendment. (Id.) 
On February 2, 2012, Plaintiff and E & J Holdings, LLC executed the Second 
Amendment to the Original Lease, changing E & J Holdings, LLC’s name to Academi Real 
Estate Holdings, LLC (“Academi RE”) and U.S. Training Center, Inc.’s name to Academi 
Training Center, LLC (“Academi TC”). (Id. ¶ 12.) 
On November 15, 2012, Plaintiff and Academi RE executed the Third Amendment 
to the Original Lease, extending the lease term to August 31, 2018. (Id. ¶ 13.) 
On November 17, 2017, Plaintiff and Academi RE executed the Fourth Amendment 
to the Original Lease, extending the lease term to December 31, 2024. (Id. ¶ 14.) Plaintiff 
asserts that Academi RE’s parent corpora tion, Constellis Holdings, LLC (“Constellis”), 
guaranteed all terms of the Original Lease a nd subsequent amendments in this Fourth 
Amendment. (Id.) 
On August 23, 2024, Plaintiff and Academi RE executed the Fifth Amendment to 
the Original Lease, extending the lease term to June 30, 2025. (Id. ¶ 15.) On or before 
June 30, 2025, Academi RE surrendered possession of the Premises. (Id. ¶ 16.) 
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Plaintiff asserts that the Original Leas e, First Amendment, Second Amendment, 
Third Amendment, Fourth Amendment, and Fifth Amendment ("Lease”) set out lessee and 
lessor maintenance obligations. (Id. ¶ 15.) Paragraph 7.1(a) of the Lease requires Academi 
RE to keep the Premises in good order, condition, and repair “including, but not limited to, 
all equipment or facilities, such as … HVAC e quipment, … roofs, roof drainage systems, 
… driveways, parking lots, … sidewalks and pa rkways located in, on, or adjacent to the 
Premises.” (Id. ¶¶ 15, 25.) Paragraph 7.2 of the Lease specifies Plaintiff has “no 
obligation, in any manner whatsoever, to re pair and maintain the Premises, or the 
equipment therein, all of which obligations are intended to be that of the Lessee.” (Id. ¶¶ 
15, 26.) Paragraph 7.4 of the Lease provides “‘[o]rdinary wear and tear’ shall not include 
any damage or deterioratio n that would have been prevented by good maintenance 
practice.” (Id.) 
Plaintiff alleges Academi RE failed to pr operly maintain the Premises and repair 
major building systems including the parking lot, roof, and HVAC systems as required by 
the Lease. (Id. ¶ 17.) Despite repeated re quests, Academi RE also allegedly failed to 
provide documentation of any service contracts or maintenance records for the parking lot, 
roof, or HVAC systems as required by the Lease. (Id. ¶ 27.) As a re sult, Plaintiff asserts 
the Premises has suffered deteri oration falling outside the scope of “ordinary wear and 
tear.” (Id. ¶ 28.) 
Plaintiff’s complaint alleges claims for: (1) breach of lease against Defendant 
Academi RE and (2) breach of guaranty agai nst Defendants Academi TC and Constellis. 
(Id. ¶¶ 31-40.) Plaintiff asserts Academi RE failed to properly main tain the property as 
required by the Lease, and Academi TC and Constellis breached their guaranties by failing 
to pay Plaintiff damages for Academi RE’s failure to properly maintain the property. (Id. 
¶¶ 33, 38.) 
By the present motion, Defendant Constellis moves to dismiss Plaintiff’s breach of 
guaranty claim against it pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure 
to state a claim. (Doc. No. 5-1 at 6, 14.) 
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Discussion 
I. Legal Standards 
A motion to dismiss under Fede ral Rule of Civil Procedure 12(b)(6) tests the legal 
sufficiency of the pleadings and allows a cour t to dismiss a complaint if the plaintiff has 
failed to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6); 
Conservation Force v. Salaza r, 646 F.3d 1240, 1241 (9th Ci r. 2011) (citing Navarro v. 
Block, 250 F.3d 729, 732 (9th Cir. 2001)). Federal Rule of Civil Procedure 8(a)(2) requires 
that a pleading that states a claim for relief contain “a short and plain statement of the claim 
showing that the pleader is entitled to relief.” The function of this pleading requirement is 
to “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it 
rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 
355 U.S. 41, 47 (1957)). 
 A complaint will survive a Rule 12(b)(6) motion to dismiss if it contains “enough 
facts to state a claim to relief that is plausible on its face.” Id. at 570. “A claim has facial 
plausibility when the plaintif f pleads factual content that allows the court to draw the 
reasonable inference that the defendant is lia ble for the misconduct alleged.” Ashcroft v. 
Iqbal, 556 U.S. 662, 678 (2009). “A pleading th at offers ‘labels and conclusions’ or ‘a 
formulaic recitation of the elements of a cause of action will not do.’” Id. (quoting 
Twombly, 550 U.S. at 555). “Thr eadbare recitals of the elem ents of a cause of action, 
supported by mere conclusory statements, do not suffice.” Id. “Wh ile legal conclusions 
can provide the framework of a complaint, they must be supported by factual allegations.” 
Id. at 679. Accordingly, dismissal for failur e to state a claim is proper where the claim 
“lacks a cognizable legal theory or sufficient f acts to support a cognizable legal theory.” 
Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); see Los 
Angeles Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795, 800 (9th Cir. 2017). 
 In reviewing a Rule 12(b)(6) motion to di smiss, a district court must “‘accept the 
factual allegations of the complaint as true a nd construe them in the light most favorable 
to the plaintiff.’” Los Angeles Lakers, 869 F.3d at 800 (quoting AE ex rel. Hernandez v. 
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Cty. of Tulare, 666 F.3d 631, 636 (9th Cir. 2012)). But a c ourt need not accept “legal 
conclusions” as true. Iqbal, 556 U.S. at 678. “Further, it is improper for a court to assume 
the claimant “can prove facts which it has not alleged or that the defendants have violated 
the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. 
v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). 
A court may consider documents incorporat ed into the complaint by reference and 
items that are proper subjects of judicial noti ce. See Coto Settleme nt v. Eisenberg, 593 
F.3d 1031, 1038 (9th Cir. 2010). If the court dismisses a complaint for failure to state a 
claim, it must then determine whether to gran t leave to amend. See Doe v. United States, 
58 F.3d 494, 497 (9th Cir. 1995); Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th 
Cir. 2010). Dismissal without leave to amend is proper if it is clear that the complaint 
could not be saved by amendment. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 
1052 (9th Cir. 2003) (per curiam). 
II. Analysis 
Constellis moves to dismiss Pl aintiff’s breach of guaranty claim, arguing Plaintiff 
failed to sufficiently plead that Constellis gua ranteed the Lease. (Doc. No. 5-1 at 10.) 
Constellis asserts Plaintiff has not adequately alleged the existence of a valid, written, and 
signed contract between Plaintiff and Constellis . (Id. at 11.) The parties do not dispute 
that the Lease is governed by California law. (See Doc. No. 1-2, Compl., Ex. A at 27; Doc. 
No. 5-1 at 10 n.1.) 
Under California law, a plaintiff asserting a breach of contract claim must establish: 
(1) the existence of a contract; (2) plaintif f’s performance or excuse for nonperformance; 
(3) defendant's breach; and (4 ) damages. McDonald v. J ohn P. Scripps Newspaper, 210 
Cal. App. 3d 100 (1989). A claim for a breach of guaranty is treated like a claim for breach 
of contract. See Gerritsen v. Warner Br os. Ent. Inc., 116 F. Supp. 3d 1104, 1123 (C.D. 
Cal. 2015); see also MRW, Inc. v. Big–O Tires, LLC, 2009 WL 3368438, *9 (E.D. Cal. 
Oct. 16, 2009) (“An action for breach of guara nty is a species of claim for breach of 
contract”). As such, a breach of guaranty claim can be raised if “(1) there is a 
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valid guaranty, (2) the borrowe r has defaulted, and (3) the guarantor failed to perform 
under the guaranty.” Egrovich v. CCFG Costebelle La Jolla, LLC, 2022 WL 485006, at*2 
(S.D. Cal. Feb. 16, 2022) (citing First Am. Com. Bancorp, Inc. v. Vantari Genetics, LLC, 
2020 WL 5027990, at *3 (C.D. Cal. Mar. 12, 2020)). 
 A. Whether Constellis is Bound by the Fourth Amendment to the Contract 
Constellis contends it is not bound by the fourth amendment to the Contract because 
it is neither a party nor a signatory to the fourth amendment. (Doc. No. 5-1 at 11.) Plaintiff 
asserts that Constellis is bound by Academi RE’s execution of the fourth amendment to the 
Contract as its parent corporation and principal, regardless of whether Constellis’ signature 
appears on the document. (Doc. No . 9 at 1, 4.) In support, Plaintiff notes that the fourth 
amendment to the Contract was physically executed by Katherine F. McKenzie, who 
signed as Assistant Secretary and Senior Counsel at Constellis. (Id. at 5; see also Doc. No. 
1-2, Compl., Ex. E at 56.) Constellis argues Plaintiff’s assertion fa ils because a parent 
company is not liable on a contract signed by its subsidiary simply because it is a wholly 
owned subsidiary, and Ms. McKenzie executed the fourth amendment to the Contract only 
on behalf of Academi RE.1 (Doc. No. 12 at 5-7.) 
Under California law, an agent is defined as “one who represents another, called the 
principal, in dealings with third persons.” Cal. Civ. Code § 2295. An agent can have either 
actual or ostensible authority. Cal. Civ. Code § 2298. An agent has actual authority when 
the agent is “really employed” by the principal. Cal. Civ. Code § 2299. An agent has 
 
1 In its reply, Constellis notes that Plaintiff does not allege any agency theory in its 
Complaint. (Doc. No. 12 at 6-7.) Constellis cites to Gerritsen which holds that it is 
“improper” for a plaintiff to assert an unpled theory of liability in an opposition to a 
motion to dismiss. 116 F. Supp. 3d at 1126. In Gerritsen, the Plaintiff alleged various 
vicarious liability theories in her complaint and expressly disclaimed other theories. Id. 
Then, in her opposition to defendant’s motion to dismiss, Gerritsen raised a new theory of 
“direct liability,” not previously pled. Id. Here, unlike in Gerritsen, Plaintiff is not 
alleging a “new” claim or theory of liability. Rather, Plaintiff is explaining how there are 
sufficient facts in the complaint to infer liability under the Lease as to Constellis. 
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ostensible authority when the principal “intentionally, or by want of ordinary care, causes 
a third person to believe another to be his agent who is not really employed by him.” Cal. 
Civ. Code § 2300. To establish ostensible au thority, “the principal’s consent need not be 
express.” C.A.R. Transp. Br okerage Co., Inc. v. Darden Rests., Inc., 213 F.3d 474, 479-
80 (9th Cir. 2000) (citing Tomerlin v. Canadi an Indem. Co., 61 Cal. 2d 638, 639 (1964)). 
Rather, “[a]n agent’s authority may be implied from the circumstances of a particular case 
and may be proved by circumstantial evidence. ” Id. at 480 (citing Kelley v. R.F. Jones 
Co., 272 Cal. App. 2d 113 (1969). 
In general, a parent compa ny is not liable on a contract signed by its subsidiary 
“simply because it is a wholly owned subsidiary.” Northern Natural Gas Co. v. Superior 
Court, 64 Cal. App. 3d 983, 991 (1976). Parent corporations can, however, be held liable 
for the acts of subsidiary companies that ac t as their agents. See United States v. 
Bestfoods, 524 U.S. 51, 64–65 (1998); Gerritsen, 116 F. Supp. 3d at 1127. “When an 
alleged wrong can seemingly be traced to the parent through the conduit of its own 
personnel and management and the parent is directly a participant in the wrong complained 
of,” the parent is liable for its own actions. Bestfoods, 524 U.S. at 64-65. 
Viewing the allegations in the complaint in the light most favorable to Plaintiff, 
Plaintiff has alleged sufficient facts to pl ausibly allege that Academi RE acted as 
Constellis’ ostensible agent. Indeed, Plaintiff contends that the agency relationship 
between Academi RE and Constellis is evidenced by the terms of the fourth amendment to 
the Contract. (Doc. No. 9 at 5.) Specifically, Plaintiff highlights Paragraph H of the fourth 
amendment to the Contract which states, “Lessee’s parent corporation, Constellis Holding, 
LLC shall guarantee all terms of the Lease, including on time payments of rent and 
operating expenses. If the parent corporation changes its name or structure, the guarantee 
will survive. . . . Performance Guarantee will be provided by the parent company that 
stipulates compliance with all terms of the Lease, including timely payment of the base 
rent and operating expense.” (Doc. No. 1-2, Compl. at 56.) Plaintiff claims Constellis 
failed to pay damages on the Pre mises and is, thus, a direct participant in the wrong 
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complained of. (Id. ¶ 38, 39.) Further, Plaintiff points to Katherine F. McKenzie alleged 
personnel of Constellis’ physical execution of the fourth amendment to the Contract. (Doc. 
No. 9 at 5.) Ms. McKenzie identified herself as Assistant Secretary and Senior Counsel in 
the signature block and listed her email address as “kmckenz ie@constellis.com.” (Id. at 
5.) While Constellis is correct that there is no signature block for Constellis in the fourth 
amendment to the Contract, under the allegations in the complaint, Ms. McKenzie 
represented herself as a Constellis employee in Academi RE’s signature block and signed 
an agreement explicitly referenc ing Constellis’ role as “Less ee’s parent corporation” and 
guarantee. (Doc. No. 12 at 7-8; see also Doc. No. 1-2, Ex. E at 56.) These circumstantial 
allegations, taken as true, r easonably support an inference that Constellis authorized 
Academi RE to enter it into legally binding c ontracts, including the fourth amendment to 
the Contract and the Lease. Whether an agency relationship truly existed between 
Academi RE and Constellis is a fact-int ensive inquiry that is not proper at 
the motion to dismiss stage. Brown v. Nano Hearing Tech Opco, LLC, 2024 WL 3367536 
at *4 (S.D. Cal. 2024). As such, the complaint contains sufficient f actual allegations to 
plausibly allege that Constellis is a party to the fourth ame ndment to the Contract via the 
actions of its agent. 
B. Whether Guaranty Obligations Ex ist Under the Fourth Amendment to 
the Contract 
Even if Constellis is a party to the four th amendment to the Contract, Constellis 
argues that the fourth amendment is still insu fficient by itself to constitute a valid and 
binding guaranty. (Doc. No. 5-1 at 12.) Constellis asserts the plain language of the fourth 
amendment to the Contract contemplates the execution of a separate guaranty which never 
occurred. (Id. at 12, 13.) In response, Plain tiff contends that the language of the fourth 
amendment to the Contract itself provides a pr esent, enforceable guaranty obligation; and 
to the extent a separate gua ranty is required, Constellis should not benefit from its own 
failure to execute. (Doc. No. 9 at 6, 7.) 
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Under California law, a contract must be in terpreted to “give effect to the mutual 
intention of the parties as it existed at the tim e of contracting.” Ca l. Civ. Code § 1636. 
“[S]uch intent is to be inferred, if possi ble, solely from the written provisions of the 
contract,” read in their ordinary and popular sense, unless it appears the parties used the 
terms in some special se nse. AIU Ins. Co. v. FMC Corp., 51 Cal. 3d 807, 822 
(1990) (citing Cal. Civ. Code § 1639). If the language used is “clear and explicit,” then it 
controls as a matter of law. Segal v. Silberst ein, 156 Cal. App. 4th 627, 633 (2007). But 
where a contract is “capable of two or more constructions, both of which are reasonable,” 
it is considered ambiguous. TRB Invs., Inc. v. Fireman's Fund Ins. Co., 40 Cal. 4th 19, 27 
(2006). Where the language “leaves doubt as to the parties’ intent,” a motion to dismiss 
must be denied. Consul Ltd. v. Solide Enters., Inc., 802 F.2d 1143, 1149 (9th Cir. 1986). 
Here, the relevant language in the fourth ame ndment to the Contract is capable of 
multiple, reasonable constructions. Under Plai ntiff’s construction, the first sentence of 
paragraph H creates a mandatory obligation: Constellis “sha ll guarantee all terms of the 
Lease, including on time payments of rent and operating expenses ,” while the second 
sentence describes how that obligation was to be formalized: a “Performance Guarantee 
will be provided by the parent company that stipulates compliance with all terms of the 
Lease.” (Doc. No. 1-2, Compl., Ex. E at 56.) Under Constellis’ construction, the two 
sentences read together contemplate a future event and action rather than a present, binding 
command. (Doc. No. 12 at 11, 12.) 
The use of the word “shall” is ordinarily used in laws, regulations, or directives to 
impose mandatory obligations. See Maine Co mmunity Health Options v. United States, 
590 U.S. 296, 310 (2020). “Unlike the word ‘m ay,’ which implies discretion, the word 
‘shall’ usually connotes a requirement.” Kingdomware Technologi es, Inc. v. United 
States, 579 U.S. 162, 163 (2016); see also Lexecon v. Milberg Weiss Bersahd Hynes & 
Lerach, 523 U.S. 26, 35 (1998) (observing that “‘shall’” typically “creates an obligation 
impervious to ... discretion”). Constellis does not provide case law suggesting a meaning 
of “shall” to the contrary. Constellis only cites to Chenoweth v. Chambers, which asserts 
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that the term “shall” “must be read in connection with its context.” 33 Cal. App. 104, 110 
(1917). Interestingly, in Chenoweth, the court found the use of the word “shall” “[i]n the 
first person [] simply denotes future fact. In the second and third person the idea of 
obligation remains, and is felt to be imposed by the person speaking . . . Consequently you 
(he or they) shall, expresses command or necessity, never simple future action.” Id. at 109. 
Here, “shall” is used in the third person to impose the obligation to guarantee the Lease 
upon Constellis, not a simple future action. (Doc. No. 1-2, Compl., Ex. E at 56.) (“Lessee’s 
parent corporation, Constellis Holding, LLC shall guarantee …) No particular form of 
agreement is required to establish a guaranty contract if the agreement establishes the 
intention to create such a contract. See Superior Wholesale Elec. Co. v. Cameron, 264 Cal. 
App. 2d 488, 493 (1968). Based on the plain la nguage of the first sentence, Plaintiff 
plausibly alleges the fourth amendment to the Contract imposes a guaranty obligation on 
Constellis. 
Nevertheless, Constellis maintains that th e fourth amendment to the Contract only 
contemplates a future event rather than a pr esent command or necessity. (Doc. No. 12 at 
12.) Constellis notes that the second se ntence would be “unnecessary” and rendered 
“superfluous” if the first sentence itself establishes a binding, present guaranty obligation. 
(Id. at 11.) An interpretation which gives effect to all provisions of the contract is preferred 
to one that would render other portions of the contract superfluous, useless, or inexplicable. 
See Turlock Irrigation District v. FERC , 903 F.3d 862, 872 (9th Cir. 2018) (citing 
Brinderson-Newberg Joint Venture v. Pac. Er ectors, Inc., 971 F.2d 272, 278-79 (9th Cir. 
1992)). Plaintiff rebuts that the second sent ence only obligates Constellis to memorialize 
the commitment made in the first sentence. (Doc. No. 9 at 7,8.) This is a reasonable 
interpretation of the second sentence presented by Plaintiff. In light of this, the language 
of the second sentence leaves doubt as to the parties’ intent. Where the language “leaves 
doubt as to the parties’ intent,” the motion to dismiss must be denied. Consul Ltd. v. Solide 
Enters., Inc., 802 F.2d 1143, 1149 (9th Cir. 1986). 
/ / / 
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Conclusion 
For the reasons above, the Court denies C onstellis’ motion to dismiss. Defendant 
Constellis must file its answer to Plaintiff’s complaint within fourteen (14) days from the 
date this order is filed. See Fed. R. Civ. P. 12(a)(4)(A). 
 IT IS SO ORDERED. 
DATED: June 15, 2026 
 
 MARILYN L. HUFF, District Judge 
 U N I T E D S T A T E S D I S T R I C T C O U R T 
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