Matthew Johnson et al v. David Mazza et al, No. 2:2015cv09183 - Document 107 (C.D. Cal. 2017)
Court Description: ORDER GRANTING PLAINTIFFS MOTION TO DISMISS 90 , DENYING PLAINTIFFS MOTIONTO STRIKE, AND GRANTING DEFENDANTS MOTION FOR JUDGMENT ON THE PLEADINGS 95 by Judge Otis D. Wright, II: The Court GRANTS Plaintiffs Motion toDismiss Mazzas counterclaims and DENIES LEAVE TO AMEND for all of Mazzas causes of action except Paul Wests separate claim for intentionalinterference with a contract. (ECF No. 90.) Any amended Countercomplaint must befiled within 30 days of the date of this Order. The Court furthe r DENIES Plaintiffs special Motion to Strike and GRANTS Allegretti and HBKs Motion for Judgment on the Pleadings WITHOUT LEAVE TO AMEND (ECF No. 95). As an administrative matter, Defendants Allegretti and HBKs Motion forJudgment on the Pleadings noticed at ECF No. 93 is STRICKEN AS MOOT in lightof the corrected motion filed at ECF NO. 95. (lc)
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Matthew Johnson et al v. David Mazza et al Doc. 107 O 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 Case No. 2:15-cv-09183-ODW(AS) 11 MATTHEW JOHNSON; NATHAN 12 JOHNSON; GEMINI PARTNERS, INC.; 13 and ALACRITY CAPITAL OFFSHORE ORDER GRANTING PLAINTIFFS’ 14 FUND, LTD., MOTION TO DISMISS [90], 16 DENYING PLAINTIFFS’ MOTION Plaintiffs, 15 TO STRIKE, AND GRANTING v. DEFENDANTS’ MOTION FOR 17 DAIVD MAZZA; PAUL M. WEST; 18 ANTHONY ALLEN WOOD; JOSEPH D. JUDGMENT ON THE PLEADINGS 19 SIMMS; CHRISTOHPER ALLEGRETTI; [95] 20 HILL BARTH & KING LLC; HA&W 21 WEALTH MANAGEMENT LLC; 22 HABIF, AROGETI & WYNNE, LLP; and 23 DOES 1 through 50, inclusive, 24 Defendants. 25 26 I. INTRODUCTION 27 This case involves claims and counterclaims directed toward various plaintiffs 28 and defendants individually and as groups. For purposes of the motions discussed Dockets.Justia.com 1 herein, all Plaintiffs/Counterdefendants (Matthew Johnson, Nathan Johnson, Gemini 2 Partners, Inc. (“Gemini”), and Alacrity Capital Offshore Fund, Ltd. (“Alacrity”) 3 (collectively, “Plaintiffs”)) bring motions and defenses as a group. However, two 4 distinct groups of defendants have emerged for purposes of the motions discussed in 5 this Order: Defendants Christopher Allegretti and Hill, Barth & King LLC (“HBK”), 6 and Defendants David Mazza, Paul M. West, and Anthony Allen Wood (collectively, 7 “Mazza”). 8 On September 20, 2016, the Court granted Allegretti and HBK’s first Motion 9 for Judgment on the Pleadings, giving Plaintiffs leave to amend their claims directed 10 at Allegretti and HBK involving fraud. (ECF No. 80.) On October 4, 2016, the Court 11 granted Plaintiffs’ first Motion to Dismiss Mazza’s counterclaims. (ECF No. 81.) 12 That Order dismissed Mazza’s counterclaims for intentional interference with a 13 contract, negligent interference with a contract, equitable estoppel, fraud, and 14 conspiracy. 15 estoppel. It granted leave to amend for all causes of action except equitable 16 Following those two orders, Plaintiffs filed a second amended Complaint (ECF 17 No. 83), Allegretti and HBK filed a new Answer (ECF No. 87), and Mazza filed a 18 new Answer with associated counterclaims (ECF No. 89.) Defendant HA&W Wealth 19 Management LLC also filed a separate answer. (ECF No. 88.) Plaintiffs then filed a 20 Motion to Dismiss and/or Strike Mazza’s counterclaims (ECF No. 90), and Allegretti 21 and HBK filed a Motion for Judgment on the Pleadings (ECF No. 95.) Those motions 22 are fully briefed and ready for decision.1 For the reasons discussed below, the Court 23 GRANTS Plaintiffs’ Motion to Dismiss, DENIES Plaintiffs’ Motion to Strike, and 24 GRANTS Allegretti and HBK’s Motion for Judgment on the Pleadings. II. 25 FACTUAL BACKGROUND 26 27 28 1 After carefully considering the papers filed with respect to the Motions, the Court deems the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. 2 1 Matthew and Nathan Johnson are brothers who together formed Gemini in 2001 2 and Alacrity in 2009. (Second Am. Compl. (“SAC”) ¶ 25, ECF No. 83.) Gemini is an 3 investment bank that provides capital market services to medium-sized businesses, 4 and Alacrity is a fund that provides secured loans to companies unable to obtain 5 traditional financing. (Id.) 6 The Johnson brothers met David Mazza in 2010 in the context of a new 7 business model Mazza was promoting under the name Alethean. (Id. ¶ 27.) Mazza 8 solicited business from the Johnsons, offering Gemini an exclusive on investment 9 banking deals through CPA360, a web-based portal. (Id. ¶¶ 31–32, 37.) CPA360 was 10 allegedly designed to match CPA clients in need of financial services with financial 11 services providers, such as Gemini. (Id.) In turn, Alacrity would provide Alethean 12 with a $1 million loan. (Id. ¶ 37.) Mazza assured Johnson that revenues generated as 13 a result of the deal would exceed $5 million and that two of the top-100 accounting 14 firms in the country—Defendants HBK and HA&W Wealth Management LLC—were 15 fully committed to Alethean. 16 representatives of HBK and HA&W made assurances to Plaintiffs about their 17 respective firms being fully committed to the Alethean model. (Id. ¶ 44.) Plaintiffs 18 claim to have “relied heavily” on those assurances. (Id. ¶ 48.) (Id. ¶¶ 37, 48.) Moreover, Plaintiffs allege that 19 After the parties entered into a formal agreement, years passed without 20 significant deal flow to Gemini and without the required loan payments from Alethean 21 to Alacrity. 22 payment, at which point Defendants Wood, West, and Mazza, among others, took the 23 position that they were no longer involved with Alethean. (Id. ¶ 55.) 24 Johnson filed suit against the Alethean entities in California state court. (Id. ¶¶ 57.) 25 The state court granted default judgment in December 2013. (Id.) In early 2015, 26 while trying to collect on the default judgment, Johnson discovered a bankruptcy and 27 a number of lawsuits filed against several of the Defendants named in this action. (Id. 28 ¶¶ 58–59.) (Id. ¶¶ 51–56.) The Johnson brothers made a formal demand for In 2013, After reviewing the documents involved in those lawsuits, Johnson 3 1 discovered that Alethean was neither unique nor proprietary and had never been fully 2 implemented or deployed. (Id. ¶¶ 59–61.) Mazza also asserts counterclaims against Plaintiffs. 3 Mazza’s position, 4 alternatively, is that Johnson perpetrated a scheme to defraud Mazza through the loan 5 agreement and through the court system. (See generally Answer with Countercl.) III. 6 DISCUSSION The Court begins by addressing Plaintiffs’ Motion to Dismiss and/or Strike and 7 8 then addresses Allegretti and HBK’s Motion for Judgment on the Pleadings. 9 A. Plaintiffs’ Motion to Dismiss and/or Strike 10 Mazza asserts five counterclaims against Plaintiffs: intentional interference with 11 a contract; Defendant West’s separate counterclaim for intentional interference with a 12 contract; intentional interference with a prospective economic advantage; fraud; and 13 conspiracy. (Answer with Countercl.) In moving to strike and/or dismiss those 14 causes of action, Johnson argues that Mazza has failed to state a claim on which relief 15 can be granted. 16 Alternatively, as to Mazza’s counterclaims for fraud and conspiracy, Johnson makes a 17 special Motion to Strike under California’s Anti-SLAPP statute (Cal. Civ. Proc. Code 18 § 425.16). (Id.) The Court analyzes the relevant grounds for dismissal in connection 19 with each cause of action in turn. See Fed. R. of Civ. P. 12(b)(6); (Mot. to Dismiss or Strike.) 20 1. Legal Standard 21 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 22 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 23 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). To 24 survive a dismissal motion, a complaint need only satisfy the minimal notice pleading 25 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 26 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to 27 raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 28 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual matter, 4 1 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 2 Iqbal, 556 U.S. 662, 678 (2009). 3 The determination of whether a complaint satisfies the plausibility standard is a 4 “context-specific task that requires the reviewing court to draw on its judicial 5 experience and common sense.” Id. at 679. A court is generally limited to the 6 pleadings and must construe all “factual allegations set forth in the complaint . . . as 7 true and . . . in the light most favorable” to the plaintiff. Lee v. City of L.A., 250 F.3d 8 668, 688 (9th Cir. 2001). But a court need not blindly accept conclusory allegations, 9 unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden 10 State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Generally, a court should freely 11 give leave to amend a complaint that has been dismissed, even if not requested by the 12 party. See Fed. R. Civ. P. 15(a); Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) 13 (en banc). However, a court may deny leave to amend when it “determines that the 14 allegation of other facts consistent with the challenged pleading could not possibly 15 cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 16 1393, 1401 (9th Cir. 1986). 17 Alternatively, California’s Anti-SLAPP (Strategic Lawsuit against Public 18 Participation) statute allows defendants (or counterdefendants) to make a special 19 motion to strike a claim if that claim arises from an act by the defendants to further 20 their right of petition or free speech in connection with a public issue. Cal. Civ. Proc. 21 Code § 425.16(b)(1); see also Newsham v. Lockheed Missiles & Space Co., 190 F.3d 22 963, 973 (9th Cir. 1999) (concluding that the twin aims of the Erie doctrine “favor 23 application of California’s anti-SLAPP statute in federal cases”). An act qualifies for 24 protection under this statute if it falls within one of four categories: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law[;] (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official 25 26 27 28 5 proceeding authorized by law[;] (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest[;] or (4) any conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. 1 2 3 4 5 6 Id. § 425.16(e). 7 Analyzing an Anti-SLAPP motion involves a two-step process. First, a court 8 determines whether the defendants have made a prima facie showing that the 9 plaintiff’s claims arise from an act protected under the statute. Ingles v. Westwood 10 One Broad. Servs., Inc., 129 Cal. App. 4th 1050, 1061 (2005). To make this 11 determination, a court should look to any pleadings or affidavits that state facts 12 supporting or refuting the parties’ theories of liability or defense regarding the claim. 13 Martinez v. Metabolife Int’l Inc., 113 Cal. App. 4th 181, 186 (2003). 14 Then, the court should decide whether the parties have carried their respective 15 burdens. If the defendant (here, counterdefendant) makes the required prima facie 16 showing, the burden then shifts to the plaintiff (here, counterclaimant) to demonstrate 17 “a probability that [he] will prevail on the claim.” 18 425.16(b)(1). The plaintiff must provide admissible evidence to establish that “the 19 complaint is legally sufficient and supported by a prima facie showing of facts [that] 20 sustain a favorable judgment.” Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 840 21 (9th Cir. 2001). If the plaintiff fails to make this showing by a preponderance of the 22 evidence, a court must grant the motion to strike and award the prevailing defendant 23 attorneys’ fees and costs. Cal. Civ. Proc. Code § 425.16(c)(1); Ingles, 129 Cal. App. 24 4th at 1061–62. 25 2. 26 Under California law, the elements for the tort of intentional interference with a 27 contract are: “(1) a valid contract between plaintiff and a third party; (2) defendant’s 28 knowledge of this contract; (3) defendant’s intentional acts designed to induce a Cal. Civ. Proc. Code § First Cause of Action: Intentional Interference with a Contract 6 1 breach or disruption of the contractual relationship; (4) actual breach or disruption of 2 the contractual relationship; and (5) resulting damage.” United Nat’l Maintenance, 3 Inc. v. San Diego Convention Center, Inc., 766 F.3d 1002, 1006 (9th Cir. 2014). The 4 Court dismissed this cause of action in Mazza’s original Countercomplaint for failure 5 to allege a contractual relationship with a third party, since the parties listed as 6 counterclaim defendants (Matthew Johnson, Nathan Johnson, Alacrity, and Gemini) 7 were the very same individuals and entities who were parties to the contract at issue. 8 (Order 7.) Now, on his second attempt, Mazza asserts this cause of action solely 9 against Matthew Johnson and Nathan Johnson. (See Countercompl. ¶ 38.) This does 10 not cure the defect. The Johnson brothers control Alacrity and Gemini; as such, they 11 are not “strangers” to the contract for purposes of this tort. (See Countercompl. ¶ 20.) 12 “California law has long recognized that the core of intentional interference business 13 torts is interference with an economic relationship by a third-party stranger to that 14 relationship, so that [a party] with a direct interest or involvement in that relationship 15 is not usually liable for harm.” Marin Tug & Barge, Inc. v. Westport Petroleum, Inc., 16 271 F.3d 825, 832 (9th Cir. 2001) (emphasis in original). As such, Mazza’s claim 17 cannot survive Plaintiffs’ Motion to Dismiss. Because Mazza has already amended 18 once following dismissal on the same basis and does not allege any third party 19 stranger to the contract in his second Countercomplaint, the dismissal is without leave 20 to amend. 21 3. 22 This cause of action is also for intentional interference with a contract, but it is 23 based on a set of facts separate from those relevant to the first cause of action. Here, 24 Defendant West independently claims that Alacrity, Gemini, and/or Matthew Johnson 25 are responsible for interfering with a contractual relationship between Alethean and its 26 payroll company for payment of taxes. (Countercompl. ¶¶ 43–53.) This claim for 27 intentional interference with a contract also fails. 28 West’s Separate Claim for Intentional Interference with a Contract West does not adequately allege the breach of a contract with a third party. The 7 1 Countercomplaint states that the third-party contractual relationship was between 2 Alethean/West and Alethean’s payroll company. (See Countercompl. ¶ 44.) The 3 allegation of breach is that Matthew Johnson failed to pay a tax obligation owed to the 4 Internal Revenue Service (“IRS”) once he took control of Alethean, causing Paul 5 West to become personally liable since he had served as the guarantor. (Id. ¶¶ 44–45.) 6 The tax obligation was associated with the alleged third-party payroll contract because 7 the debt stemmed from payroll taxes that had gone unpaid. (See id. ¶ 45.) However, 8 the Countercomplaint explicitly alleges that the tax obligation/debt was already 9 overdue at the time Matthew Johnson took control of Alethean. (See id. ¶ 46.) As 10 such, West has not sufficiently alleged that Matthew Johnson interfered with the 11 contract between Alethean and the payroll company. 12 Countercomplaint, it appears that the contract had already been breached by the time 13 Matthew Johnson took over Alethean. (See id.) The fact that Johnson failed to pay 14 the already-due debt once he took over is not sufficiently characterized as a breach in 15 the Coutnercomplaint. 16 interference. Because West has not previously asserted this claim, the Court dismisses 17 the claim with leave to amend. From the language of the As such, West has not stated a claim for intentional 18 4. Intentional Interference with a Prospective Economic Advantage 19 This cause of action fails for the same reason as Mazza’s first cause of action. 20 The Ninth Circuit has ruled that a third party for purposes of intentional interference 21 business torts must be a true stranger to the relationship, and Mazza has not alleged 22 such a relationship here. See Marin Tug & Barge, Inc., 271 F.3d at 832. 23 Mazza asserts this specific cause of action for the first time in his Countercomplaint, it 24 is nearly identical to his previously-dismissed cause of action for Negligent 25 Interference with a Contract. The Court dismissed that claim because California does 26 not recognize Negligent Interference with a Contract as a cause of action. (Order 8.) 27 Mazza’s second attempt (albeit under a different name) makes it clear that there is no 28 stranger to the prospective business relationship. As this is not the type of absence 8 Though 1 that can be cured through amendment, this dismissal is without leave to amend. See 2 Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (“[A] district court should grant 3 leave to amend even if no request to amend the pleading was made, unless it 4 determines that the pleading could not possibly be cured by the allegation of other 5 [consistent] facts.”). 6 5. 7 Claims of fraud are subject to the particularized pleading standard. Courts have 8 interpreted Federal Rule of Civil Procedure (“FRCP”) 9(b) to require that the pleader 9 of a fraud claim state the “time, place, and specific content of the false representations 10 as well as the identities of the parties to the misrepresentation.” Schreiber Dist. Co. v. 11 Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir. 1986); see also Lewis v. 12 Sporck, 612 F.Supp. 1316, 1325 (N.D. Cal. 1985) (requiring that pleaders of fraud 13 “identify the time, place, and manner of each fraud plus the role of each defendant in 14 each scheme”). 15 Fraud The problem here is that Mazza lumps together allegations against multiple 16 defendants. For instance, the Countercomplaint states, “Matthew and or Nathan 17 Johnson misrepresented to counterclaim plaintiffs that they (i.e. – Alacrity and or 18 Gemini) were experienced in funding the type of deals which Alethean would be 19 referring to them . . . .” (Countercompl. ¶ 65.) Mazza has repeatedly attempted to 20 have it both ways with respect to the identities of Matthew Johnson, Nathan Johnson, 21 Alacrity, and Gemini, and it disrupts the coherency of his counterclaims. In the first 22 cause of action, Mazza claims that the Johnson brothers are separate from Alacrity and 23 Gemini such that they can act as third parties in an intentional interference with a 24 contract claim, but here, Mazza asserts that the brothers are one and the same with the 25 entities for purposes of fraud misrepresentations. This internal inconsistency within 26 the Countercomplaint demonstrates that Mazza’s pleadings are not sufficient under 27 FRCP 9(b). 28 Further, the “time” alleged for purposes of these misrepresentations is “in or about The allegations impermissibly intermingle the identities of parties. 9 1 2010.” This is far too vague to allow Plaintiffs a meaningful opportunity to identify 2 the alleged misrepresentations and defend against Mazza’s claims. As such, this cause 3 of action fails. 4 Countercomplaint, the Court declines to grant leave to amend in this instance. And since Mazza has already had a chance to amend his 5 The Court does not, however, agree with Plaintiffs’ argument in making a 6 special Motion to Strike under California’s Anti-SLAPP statute. As stated in the 7 Court’s previous Order denying this type of motion on Mazza’s fraud counterclaim, 8 the inclusion of allegations relating to a party’s action in bringing a previous lawsuit 9 does not automatically mean that the claim is a SLAPP. See Castleman v. Sagaser, 10 216 Cal. App. 4th 481, 499 (2013) (“it does not follow that any claims associated with 11 [bringing a previous lawsuit] are subject to the [Anti-SLAPP] statute.”). Here, the 12 majority of Mazza’s counterclaim for fraud is based on allegations not related to 13 Plaintiffs’ 2013 state court suit, and the Court is not convinced that Mazza included 14 those allegations for an improper purpose or to have a chilling effect on Plaintiffs’ use 15 of the court system. As such, the Court DENIES Plaintiffs’ special Motion to Strike 16 with respect to Mazza’s fraud claim. 17 6. 18 In order for Mazza’s conspiracy claim to survive Plaintiffs’ Rule 12(b)(6) 19 motion, it would need to sufficiently plead the existence of an underlying tort 20 associated with the alleged conspiracy. Because conspiracy “imposes liability on 21 persons who, although not actually committing a tort themselves, share with the 22 immediate tortfeasors a common plan or design in its perpetration . . . [conspiracy] 23 must be activated by the commission of an actual tort.” Moran v. Endres, 135 Cal. 24 App. 4th 952, 954–55 (2006). 25 Conspiracy Here, Mazza has not alleged such a commission. The Countercomplaint 26 implies that the underlying tort is fraud (see Countercompl. ¶ 81), but as discussed 27 above, Mazza has not adequately pled fraud. Therefore, Mazza’s conspiracy claim 28 fails. As Mazza has already had a chance to amend, the Court does not grant leave to 10 1 amend here. 2 Additionally, for the reasons discussed in connection with Mazza’s fraud 3 counterclaim, the Court does not find that the Countercomplaint is a SLAPP. See 4 Castleman, 216 Cal. App. 4th at 499. 5 B. Allegretti and HBK’s Motion for Judgment on the Pleadings 6 In Plaintiffs’ SAC, the causes of action for fraud and fraudulent inducement are 7 alleged against all defendants, including Allegretti and HBK. (See generally SAC.) 8 Arguing a failure to plead these fraud-related claims with the requisite specificity, 9 Allegretti and HBK move for judgment on the pleadings as to their liability. 10 1. Legal Standard 11 After the pleadings are closed but within such time as to not delay the trial, any 12 party may move for judgment on the pleadings. Fed. R. Civ P. 12(c). The standard 13 applied on a Rule 12(c) motion is essentially the same as that applied on Rule 12(b)(6) 14 motions; a judgment on the pleadings is appropriate when, even if all the allegations 15 in the complaint are true, the moving party is entitled to judgment as a matter of law. 16 Milne ex rel. Coyne v. Stephen Slesinger, Inc., 430 F.3d 1036, 1042 (9th Cir. 2005); 17 Bell Alt. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007) (“[f]actual 18 allegations must be enough to raise a right to relief above the speculative level … on 19 the assumption that all the allegations in the complaint are true (even if doubtful in 20 fact).” (Citations omitted)). 21 pleadings, the Court should assume the allegations in the Complaint to be true and 22 construe them in the light most favorable to the plaintiff, and the movant must clearly 23 establish that no material issue of fact remains to be resolved. McGlinchey v. Shell 24 Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988). However, “conclusory allegations 25 without more are insufficient to defeat a motion [for judgment on the pleadings].” Id. When determining a motion for judgment on the 26 Failure to plead with particularity as required by Rule 9(b) can be challenged 27 by a Rule 12(c) motion. Cafasso, U.S. ex rel. v. General Dynamics C4 Systems, Inc. 28 637 F.3d 413, 418 (9th Cir. 2012). Fraud allegations under Rule 9(b) must be state 11 1 with “specificity including an account of the time, place, and specific content of the 2 false representations as well as the identities of the parties to the misrepresentations.” 3 Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007). 4 2. 5 As the factual basis for both causes of action (fraud and fraudulent inducement) 6 is the same, and because both causes of action are subject to the same heightened 7 pleading standard, the Court will analyze them together. Plaintiffs’ fraud allegations against Allegretti and HBK are too vague to survive 8 9 Analysis Rule 9(b) scrutiny. Plaintiffs impermissibly lump together allegations against 10 multiple defendants; stating, for example, “Specifically, HA&W, HBK, and the 11 Alethean parties represented that they would generate a minimum of $5 million in 12 investment banking fees for Gemini within three years.” (SAC ¶ 44.) Based on the 13 Swartz rule regarding the identification of parties to the misrepresentations, this type 14 of group allegation is insufficient. See Swartz, 476 F.3d at 764. Allegretti and HBK 15 are separate from the other defendants in this action, and as such, they cannot 16 adequately defend against allegations of fraud in which their actions are lumped in 17 with the actions of separate entities. 18 In addition, Plaintiffs’ allegations regarding Allegretti and HBK’s role in the 19 purported misrepresentations are vague as to content. For example, Plaintiffs claim 20 that HBK and Allegretti “concealed material facts . . . in order to induce Plaintiffs into 21 entering into the business relationship.” (SAC ¶ 45.) Without more, this statement is 22 conclusory; it does not provide the “how” or “why” for the inducement or HBK and 23 Allegretti’s concealment of material facts. 24 The primary change in this version of Plaintiffs’ Complaint is that it more 25 specifically alleges conversations Plaintiffs had with Allegretti on behalf of HBK 26 about HBK’s use of the CPA360 software. (Compare FAC, ECF No. 38, with SAC ¶ 27 41.) 28 Allegretti during a time period relevant to Plaintiffs’ entering into a loan agreement However, while Plaintiffs sufficiently allege conversations with HBK and 12 1 with Alethean, they do not sufficiently allege the significance of those conversations 2 to HBK and Alethean. (See SAC ¶ 41.) Moreover, Plaintiffs have not supported their 3 allegation that Allegretti and HBK knew their misrepresentations would induce action 4 on Plaintiffs’ part. Plaintiffs’ claim that all Defendants were “the agents, authorized 5 representatives, joint venturers, partners, and/or alter egos of one another, and in doing 6 the acts alleged in this complaint, did so jointly and for a common purpose” is 7 conclusory and has no support in the remainder of the Complaint. (SAC ¶ 24.) 8 Plaintiffs have failed to link Allegretti and HBK’s conduct to the other defendants’ 9 alleged scheme, and their pleadings do not satisfy the Rule 9(b) standard. 10 3. Leave to Amend 11 The Court declines to grant leave to amend. Plaintiffs have now had two 12 opportunities to properly state their claims and have not done so. See Foman v. Davis, 13 371 U.S. 178, 182 (1962) (finding it proper to deny leave to amend for repeated 14 failure to cure deficiencies with previous amendment). 15 // 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // 13 V. 1 CONCLUSION 2 For the reasons discussed above, the Court GRANTS Plaintiffs’ Motion to 3 Dismiss Mazza’s counterclaims and DENIES LEAVE TO AMEND for all of 4 Mazza’s causes of action except Paul West’s separate claim for intentional 5 interference with a contract. (ECF No. 90.) Any amended Countercomplaint must be 6 filed within 30 days of the date of this Order. The Court further DENIES Plaintiffs’ 7 special Motion to Strike and GRANTS Allegretti and HBK’s Motion for Judgment on 8 the Pleadings WITHOUT LEAVE TO AMEND (ECF No. 95). 9 As an administrative matter, Defendants Allegretti and HBK’s Motion for 10 Judgment on the Pleadings noticed at ECF No. 93 is STRICKEN AS MOOT in light 11 of the corrected motion filed at ECF NO. 95. 12 13 IT IS SO ORDERED. 14 15 February 17, 2017 16 17 18 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 14
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