Williams v. Cerny, et al., No. 1:2010cv01793 - Document 5 (E.D. Cal. 2010)

Court Description: FINDINGS and RECOMMENDATIONS Regarding Plaintiff's 1 Complaint signed by Magistrate Judge Gary S. Austin on 12/1/2010. The Court HEREBY RECOMMENDS that this action be DISMISSED WITHOUT LEAVE TO AMEND. Referred to Judge Anthony W. Ishii. Objections to F&R due by 1/6/2011. (Bradley, A)
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Williams v. Cerny, et al. Doc. 5 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 MICHAEL J. WILLIAMS, 11 12 13 14 15 16 ) ) Plaintiff, ) ) v. ) ) JAY EDWARD CERNY dba LOS OLIVOS ) CML, Inc., CCOW dba County Bank of ) Merced, MATT PERETZ dba Argo Equities, ) ) Defendants. ) ) _____________________________________ ) 1:10-cv-01793 AWI GSA FINDINGS AND RECOMMENDATIONS REGARDING PLAINTIFF’S COMPLAINT (Document 1) 17 18 19 Plaintiff Michael J. Williams (“Plaintiff”), appearing pro se and proceeding in forma 20 pauperis, filed the instant complaint against Defendants Jay Edward Cerny, dba Los Olivos 21 CML, Inc., CCOW, dba County Bank of Merced, and Matt Peretz, dba Argo Equities, on 22 September 30, 2010. (Doc. 1.) 23 DISCUSSION 24 A. 25 Pursuant to Title 28 of the United States Code section 1915(e)(2), the Court must conduct 26 Screening Standard an initial review of the complaint for sufficiency to state a claim. The Court must dismiss a 27 28 1 Dockets.Justia.com 1 complaint or portion thereof if the Court determines that the action is legally “frivolous or 2 malicious,” fails to state a claim upon which relief may be granted, or seeks monetary relief from 3 a defendant who is immune from such relief. 28 U.S.C. § 1915(e)(2). If the Court determines 4 that the complaint fails to state a claim, leave to amend may be granted to the extent that the 5 deficiencies of the complaint can be cured by amendment. 6 A complaint must contain “a short and plain statement of the claim showing that the 7 pleader is entitled to relief . . ..” Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not 8 required, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere 9 conclusory statements, do not suffice.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing 10 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65 (2007)). Plaintiff 11 must set forth “sufficient factual matter, accepted as true, to ‘state a claim that is plausible on its 12 face.’” Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555). While legal conclusions 13 can provide a framework of a complaint, they must be supported by factual allegations. Iqbal, 14 129 S.Ct. at 1950. While factual allegations are accepted as true, legal conclusion are not. Iqbal 15 at 1949. 16 In reviewing a complaint under this standard, the Court must accept as true the allegations 17 of the complaint in question, Hospital Bldg. Co. V. Trustees of Rex Hospital, 425 U.S. 738, 740 18 (1976), construe the pro se pleadings liberally in the light most favorable to the Plaintiff, Resnick 19 v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000), and resolve all doubts in the Plaintiff’s favor, 20 Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). 21 A pleading may not simply allege a wrong has been committed and demand relief. The 22 underlying requirement is that a pleading give “fair notice” of the claim being asserted and the 23 “grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47-48 (1957); Yamaguchi v. 24 United States Department of Air Force, 109 F.3d 1475, 1481 (9th Cir. 1997). 25 26 27 28 2 1 B. 2 Plaintiff’s complaint alleges a violation of his rights pursuant to Title 18 of the United Plaintiff’s Allegations 3 States Code section 1346, or “the ‘honest services’ fraud statute,” as well as a breach of fiduciary 4 duty pursuant to Title 29 of the United States Code section 1109. (Doc. 1 at 1.) Generally 5 speaking, Plaintiff claims that Defendants were privy to certain financial information related to 6 his business, B & T Industries, and that Defendants used the information improperly, to the 7 degree Plaintiff suffered significant losses while Defendants benefitted financially. (Doc. 1 at 2- 8 4.) Plaintiff seeks damages in the amount of $4,200,000. (Doc. 1 at 4-5.) 9 10 11 C. Analysis 1. 18 U.S.C. § 1346 Plaintiff claims that all Defendants have “violated rights protected under federal law” 12 pursuant to Title 18 of the United States Code section 1346, the “‘honest services’ fraud statute.” 13 (See Doc. 1 at 1.) 14 Title 18 of the United States Code involves crimes and criminal procedure. More 15 particularly, section 1346 of that title, specifically referenced by Plaintiff, provides as follows: 16 “For purposes of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or 17 artifice to deprive another of the intangible right of honest services.” 18 “The fact that a federal statute has been violated and some person harmed does not 19 automatically give rise to a private right of action.” Touche Ross & Co. v. Redington, 442 U.S. 20 560, 568, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). “Instead, the statute must either explicitly create 21 a right of action or implicitly contain one.” Diaz v. Davis (In re Digimarc Corp. Derivative 22 Litig.), 549 F.3d 1223, 1230 (9th Cir. 2008). Here, a violation of section 1346 of Title 18 of the 23 United States Code is a criminal provision that provides no basis for civil liability. See e.g., 24 Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (holding that criminal statutes “provide 25 no basis for civil liability”); see also Ellis v. City of San Diego, 176 F.3d 1183, 1189 (9th Cir. 26 1999) (criminal statutes do not generally provide a private cause of action nor basis for civil 27 28 3 1 liability); Moore v. Kamikawa, 940 F.Supp. 260, 265 (D.Hawai'i 1995) (criminal conspiracy 2 statutes, making it a crime for two or more persons to conspire to deprive another of rights 3 secured by the Constitution or laws of the United States or to deprive another of such rights, 4 under color of law, on account of alienage, color, or race, provided no basis for civil liability); 5 John's Insulation, Inc. v. Siska Const. Co., Inc., 774 F.Supp. 156 (S.D.N.Y. 1991) (federal 6 criminal statute which permits federal prosecutions for interference with federally protected 7 rights confers neither substantive rights nor private right of action for damages). 8 9 Thus, Plaintiff may not assert a cause of action pursuant to Title 18 of the United States Code because it involves criminal statutes only; it does not provide for a civil cause of action 10 brought by a private citizen. In other words, only the United States government may bring 11 criminal charges against a defendant or defendants for a violation of a criminal statute. 12 Therefore, because Plaintiff has failed to state a claim upon which relief may be granted, and 13 granting Plaintiff leave to amend would prove futile, this Court will recommend dismissal of this 14 claim. 15 16 2. 29 U.S.C. § 1109 Next, Plaintiff claims that all Defendants breached their fiduciary duties pursuant to Title 17 29 of the United States Code section 1109. (See Doc. 1 at 1.) That section provides as follows: 18 23 (a) Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. A fiduciary may also be removed for a violation of section 1111 of this title. (b) No fiduciary shall be liable with respect to a breach of fiduciary duty under this subchapter if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary. 24 Title 29 of the United States Code involves the Labor code, and more specifically, the 19 20 21 22 25 protection of employee benefits pursuant to the Employee Retirement Income Security Act 26 (“ERISA”). Plaintiff was not an employee and/or beneficiary of a retirement plan administered 27 28 4 1 by Defendants and thus he cannot state a cause of action pursuant to Title 29 of the United States 2 Code. See 28 U.S.C. § 1132(a)(3) (providing a civil action may be brought “by a participant, 3 beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this 4 subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to 5 redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the 6 plan”). 7 Here, the transaction between Plaintiff and Defendants appears to have involved financial 8 negotiations regarding a loan for Plaintiff’s business, B & T Industries. (Doc. 1 at 3, § 6.) There 9 is no indication that the loan involved retirement benefits or funds; accordingly, it appears the 10 transaction was not one arising under the Labor code or ERISA, and thus, Plaintiff cannot state a 11 claim pursuant to Title 29 of the United States Code section 1109. Therefore, because Plaintiff 12 has failed to state a claim upon which relief may be granted, and granting Plaintiff leave to 13 amend would prove futile, this Court will recommend dismissal of this claim. 14 FINDINGS AND RECOMMENDATIONS 15 For the foregoing reasons, the Court HEREBY RECOMMENDS that this action be 16 17 DISMISSED WITHOUT LEAVE TO AMEND. These findings and recommendations will be submitted to the Honorable Anthony W. 18 Ishii pursuant to the provisions of section 636(b)(l). Within thirty (30) days after being served 19 with these findings and recommendations, the parties may file written objections with the Court. 20 The document should be captioned "Objections to Magistrate Judge's Findings and 21 Recommendations." The parties are advised that failure to file objections within the specified 22 time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 23 (9th Cir. 1991). 24 25 26 IT IS SO ORDERED. Dated: 6i0kij December 1, 2010 /s/ Gary S. Austin UNITED STATES MAGISTRATE JUDGE 27 28 5