Arimilli v. Rezendes

• Docket Number: CV-21-00345-PHX-GMS
• Decision Date: 24 May 2022
• Parties: Nirmala Arimilli, Plaintiff, v. Keith Rezendes, Defendant.
• Court: U.S. District Court — District of Arizona

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Nirmala Arimilli, Plaintiff, v. Keith Rezendes, Defendant.

No. CV-21-00345-PHX-GMS

United States District Court, D. Arizona

May 24, 2022

ORDER

G Murray Snow, Chief United States District Judge

Before the Court is Keith Rezendes's (“Defendant”) Motion to Dismiss (Doc. 16). For the following reasons Defendant's motion is granted in part and denied in part.

BACKGROUND

The following facts from the Third Amended Complaint (“TAC”) (Doc. 15) are construed in a light most favorable to Plaintiff. Plaintiff Nirmala Arimilli (“Plaintiff”) formed a relationship with Defendant between 1999 and 2000. (Doc. 15 at 2.) In March 2017, Plaintiff visited Defendant, and was introduced to his purported wife, Ms. Rosen. Id. at 3. During this visit, Defendant asked Plaintiff to invest in his company Avidbrain Inc., claiming that she was eligible to invest in his company due to a change in the investment laws. Id. Defendant also extended a job offer to Plaintiff, which she accepted. Id. By April 2017, Plaintiff had invested $125, 000 in Defendant's company.

While employed by Defendant, Plaintiff noticed “discrepancies in relation to [the] overall success of the company.” Id. Defendant denied any wrongdoing. Id. Plaintiff alleges that, due to her “years long trust in Defendant, ” she believed Defendant and maintained communication with Defendant. Id. at 4. After receiving further information that “affirmed [her] doubts and concerns about the company, ” Plaintiff confronted Defendant and was subjected to a “torrent of vitriol and verbal abuse.” Id. at 4. Plaintiff's last communication with Defendant was in November 2017. Id. at 5.

Plaintiff filed suit in Maricopa County Superior Court on October 26, 2020. Plaintiff amended her complaint twice in state court. The Second Amended Complaint asserts the following claims against Defendant: fraudulent misrepresentation; negligent misrepresentation; professional negligence; gross negligence; fraudulent inducement; fraudulent concealment; breach of fiduciary duty; conversion, misappropriation; constructive fraud; security and stock fraud; breach of oral agreement; breach of written contract; identity theft; wage theft; unjust enrichment; intentional infliction of emotional distress (“IIED”); defamation; breach of the implied covenant of good faith and fair dealing; civil racketeering; and emergency protective order. (Doc. 1-1 at 130-133.)

Defendant removed the case to this Court on February 26, 2021. Defendant subsequently moved to dismiss the complaint pursuant to Federal Rule of Procedure Rule 12(b)(6). (Doc. 5 at 1.) The Court granted in part and denied in part Defendant's motion. (Doc. 14 at 10.) First, Plaintiff's claims for negligent misrepresentation, breach of fiduciary duty, professional negligence, gross negligence, conversion, misappropriation, constructive fraud, security and stock fraud, identity theft, wage theft, IIED, implied covenant of good faith and fair dealing, and an emergency protective order were dismissed with leave to amend. (Doc. 14 at 10.) Second, Defendant's motion was denied as to Plaintiff's claims for defamation, unjust enrichment, and civil racketeering. (Doc. 14 at 10.) Finally, the Court denied Defendant's motion as to Plaintiff's claims for fraudulent misrepresentation, fraudulent inducement, and fraudulent concealment “to the extent they are based on Defendant's representation about company filings, ” but otherwise dismissed those claims. (Doc. 14 at 10.) Plaintiff subsequently filed a TAC. (Doc. 15 at 1.) Defendant now moves to dismiss the TAC for failure to state a claim. (Doc. 16 at 2.)

DISCUSSION

I. Legal Standard

A. Notice Pleading Requirements

Federal Rule of Civil Procedure 8(a) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a), so that the defendant receives “fair notice of what the . . . claim is and the grounds upon which it rests.” BellAtl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) after the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Twombly, a plaintiff's factual allegations in the complaint “must . . . suggest that the claim has at least a plausible chance of success.” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (quoting In re Century Aluminum Co. Sec. Litig., 729 F.3d 1104, 1107 (9th Cir. 2013)). Factual allegations in the complaint are accepted as true, and the pleading is construed “in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a complaint ... may not simply recite the elements of a cause of action [and] must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Levitt, 765 F.3d at 1135 (quoting Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 2014)). Further, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998).

Allegations in a pro se complaint are held to “less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). Pro se complaints must be liberally construed and afforded the benefit of any doubt. Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010).

B. Fraud Pleading Requirements

Federal Rule of Civil Procedure 9(b) requires that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “To satisfy the particularity of circumstances, statements of the time, place, and nature of the alleged fraudulent activities are sufficient, while mere conclusory allegations of fraud are not.” Arnold & Assocs., Inc. v. Misys Healthcare Sys., 275 F.Supp.2d 1013, 1028 (D. Ariz. 2003). In addition to setting out the “who, what, when, where, and how” of the misconduct, Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997), a plaintiff must “set forth what is false or misleading” about a particular statement, “and why it is false.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Decker v. GlenFed, Inc. (In re GlenFed, Inc. Sec Litig.), 42 F.3d 1541, 1548 (9th Cir. 1994), superseded by statute on other grounds as recognized in Avakian v. Wells Fargo Bank, N.A., 827 Fed.Appx. 765, 766 (9th Cir. 2020)).

II. Analysis

A. Previously Dismissed Claims

Plaintiff's TAC reasserts several claims previously dismissed by the Court. Defendant moves to dismiss these claims, arguing that Plaintiff has failed to cure the deficiencies that led to the Court's dismissal of these claims in its earlier order. (Doc. 16 at 3.)

1. Gross Negligence

The Court previously dismissed Plaintiff's claim for gross negligence because Plaintiff did “not allege that Defendant knew or had reason to know that his conduct would create an unreasonable risk of bodily harm.” (Doc. 14 at 8); see Walls v. Ariz. Dep't of Pub. Safety, 170 Ariz. 591, 595, 826 P.2d 1217, 1221 (Ct. App. 1991). Count 2 of the TAC, alleging gross negligence, is identical to the dismissed claim for gross negligence in the SAC. (Doc. 15 at 8.) Plaintiff argues the allegations are sufficient because “gross negligence is not limited to unreasonable risk of bodily harm but also includes unreasonable risk of financial harm, ” but cites no authority in support. (Doc. 17 at 2-3.)

Plaintiff also argues that the Court should consider the emotional harm she suffered in determining whether Defendant knew or had reason to know his conduct would create an unreasonable risk of bodily harm. Id.

Neither argument has merit. First, the Court is unaware of any cases supporting Plaintiff's proposition that gross negligence under Arizona law encompasses financial harm as well as bodily harm. See, e.g., Noriega v. Town of Miami, 243 Ariz. 320, 328, 407 P.3d 92, 100 (Ct. App. 2017) (reaffirming the definition of gross negligence set forth in Walls). Second, to the extent Plaintiff argues her emotional distress should be considered bodily harm for the purposes of a gross negligence claim, her argument is not well taken. Even though emotional distress may cause bodily harm, emotional distress itself is not a form of bodily harm under Arizona law. See Keck v. Jackson, 122 Ariz. 114, 115-16, 593 P.2d 668, 669-70 (1979) (requiring, in the NIED context, that “the shock or mental anguish . . . must be manifested as a physical injury” for there to be recovery, because “[d]amages for emotional disturbance alone are too speculative”). Plaintiff's claim for gross negligence is dismissed.

2. Security and Stock Fraud, Misappropriation, Identity Theft, and Wage Theft

Plaintiff's claims for security and stock fraud, misappropriation, identity theft, and wage theft were previously dismissed because Plaintiff did not indicate the legal basis for bringing the claims. (Doc. 14 at 5.) In the TAC, Plaintiff does not identify a statutory or common law basis for any of these claims, nor does she cite any cases in her response that would aid the Court and the parties in identifying the legal basis for her claims. Consequently, Plaintiff has not put Defendant on “fair notice of the claim asserted and the ground upon which it rests” for any of these claims. Rosal v. First Fed. Bank of Cal., 671 F.Supp.2d 1111, 1125 (N.D. Cal. 2009). These claims are therefore dismissed.

3. Breach of Fiduciary Duty

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