Life Savers Concepts Ass'n of Cal. v. Wynar

• Decision Date: 16 May 2019
• Docket Number: Case No. 18-CV-02252-LHK
• Court: U.S. District Court — Northern District of California
• Parties: LIFE SAVERS CONCEPTS ASSOCIATION OF CALIFORNIA, et al., Plaintiffs, v. Roahn WYNAR, et al., Defendants.

387 F.Supp.3d 989

LIFE SAVERS CONCEPTS ASSOCIATION OF CALIFORNIA, et al., Plaintiffs,

v.Roahn WYNAR, et al., Defendants.

Case No. 18-CV-02252-LHK

United States District Court, N.D. California, San Jose Division.

Signed May 16, 2019

Michael T. Stoller, Law Offices of Michael Stoller, APC, Calabasas, CA, Charles Thomas Marshall, Advantis Law Group, Irvine, CA, for Plaintiffs.

Claire T. Cormier, United States Attorney's Office, San Jose, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 47

LUCY H. KOH, United States District Judge

Plaintiffs Life Savers Concepts Association of California ("Life Savers"), Lupita Chavez, Rito Chavez, Raquel Chavez, and Esequiel Lombera (collectively, "Individual Plaintiffs") bring suit against various Doe Defendants as well as Defendant Roahn Wynar ("Wynar"), a Federal Bureau of Investigation ("FBI") agent, in his personal and official capacities in connection with an FBI investigation into Life Savers' business operations (collectively, "Defendants"). Before the Court is Wynar's motion to dismiss the first amended complaint. ECF No. 47 ("Mot."). Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS in Part and DENIES in Part Wynar's motion to dismiss.

I. BACKGROUND

A. Factual Background

In July 2012, Life Savers was founded, incorporated as a North Carolina corporation, and then registered with the California Secretary of State to do intrastate business in California. ECF No. 44 ("first amended complaint," or "FAC") at ¶¶ 1-2. Life Savers did business by entering into membership agreements with homeowners. Id. at ¶ 3. Members transferred and assigned to Life Savers members' claims relating to their home loans so that Life Savers could bring suit against lenders seeking to foreclose on members' homes. Id. at ¶ 6. Most of the members also executed grant deeds that transferred to Life Savers a 5% ownership interest in members' real property securing their home loans. Id. at ¶ 3. Between March 29, 2013 and December 10, 2015, Life Savers assigned all of its required rights to Larry Brown. Id. at ¶¶ 4-5. "Based on these assignments, Brown claims to hold a 5 percent ownership interest in each of the properties that secured the home loans of the members." Id. at ¶ 5. The Office of the Monterey County District Attorney and the FBI have investigated Life Savers for fraud since at least 2014. Id. at ¶ 7. Individual Plaintiffs Lupita, Rito, Raquel, and Esequiel¹ are alleged to be Life Savers' employees. Id. at ¶¶ 20, 24-25.

The Court first discusses the FBI's execution of a search warrant at Life Savers' Sunnyvale office, then discusses Wynar's subsequent contact with Life Savers' Members.

1. FBI's Execution of a Search Warrant

On the morning of July 11, 2017, Wynar and several other FBI agents executed a search warrant on Life Savers' Sunnyvale, California office. Id. at ¶ 19. Wynar knocked on the door to Life Saver's office. Id. at 20. Plaintiffs Lupita, Rito, and Raquel, "who all reside in the adjoining living quarters were dressing or still in bed." Id. at ¶ 20. Eventually, Raquel answered the door. Wynar and the FBI team entered the building and proceeded to attempt to open office doors, which were locked. Id. at ¶ 21. Wynar asked Raquel why the doors were locked and who was present in the building. Id. at ¶ 21. Raquel answered that the office doors were locked because Life Savers opened at 11:00 a.m., and it was only around 9:30 a.m. when Wynar arrived with his team. Id. at ¶ 21. Raquel also informed Wynar that there were 3 more people in the back rooms. Id. Wynar asked Raquel why Raquel was sleeping in Life Savers' office, to which Raquel replied that all the Individual Plaintiffs had resided at the office for about 3 years. Id. at ¶ 22.

At that point, 30 FBI agents with guns drawn entered the office, and Wynar told Raquel that the FBI was there to execute a "search warrant for documents and computers related to Life Savers." Id. at ¶ 23. Wynar stated that he would give Raquel a copy of the search warrant later. Id. Wynar asked for keys to all the offices, and Raquel complied. Id. at ¶ 24. Afterwards, "Wynar grabbed Esequiel Lombera with great force, pushed him against the wall with force, twisted his arm, searched and handcuffed him with his hands behind his back and ordered him to face the wall." Id. Wynar also grabbed Rito, twisted Rito's hands and handcuffed Rito with Rito's hands behind his back, and ordered Rito to face the wall. Id. At that point in time, Plaintiffs allege that 20 more agents entered the Life Savers office with guns drawn and began to search the offices. Id.

The FBI prevented any of the Individual Plaintiffs from leaving, kept Rito and Esequiel handcuffed and facing the wall, and prevented the employees from using their cellphones or the office phones. Id. at ¶ 26. None of the Individual Plaintiffs were Mirandized. Id. Raquel asked to use the bathroom, but Wynar told Raquel to wait. Raquel asked to use the bathroom twice more, and on the third request, which was "nearly one hour from the first request," Wynar allowed Raquel to use the bathroom. Id. By that point, Rito and Esequiel had been handcuffed for over 30 minutes. Id.

Soon after, Wynar uncuffed Rito and Esequiel and had all the Individual Plaintiffs go to the front desk with Wynar and "Arlette," an Internal Revenue Service ("IRS") agent. Id. at ¶ 27. Wynar instructed another FBI agent to take Rito's, Lupita's, and Esequiel's identification cards. Id. Lupita, Rito, and Esequiel were told to leave, but Raquel was not permitted to leave and was told to sit down. Id. at ¶ 28. As Rito was leaving, he realized that 5 members who were coming to the Life Savers office were being questioned by FBI agents and told that Life Savers was a scam. Id. Raquel, who was not permitted to leave, was then interrogated by Arlette, the IRS agent, and Wynar. Id. at ¶¶ 29-32. Eventually, as the government agents completed their search, Wynar handed Raquel back her keys, the search warrant, and a Receipt for Property that documented all the items the agents seized. Id. at ¶ 35.

2. Wynar's Subsequent Contact with Life Savers' Members

In November 2017, Wynar spoke to Life Savers member Margaret Marroquin. Id. at ¶¶ 36-37. Wynar presented Marroquin with a copy of a check Marroquin wrote to pay her Life Savers membership dues. Id. at ¶ 37. Among other things, Wynar asked whether Marroquin knew how the money was being used. Id. Marroquin responded that she did not know how the money was used. In addition, Wynar asked Marroquin if she knew that Larry Brown was using Life Savers' members' money to buy drugs, expensive cars, jewelry for his girlfriend, trips, and alcohol. Id. at ¶ 38. Marroquin asked if Brown had been sued, to which Wynar responded that the government was still looking for evidence against the alleged scam before suing anyone. Id.

On March 28, 2018, Wynar telephoned another Life Savers member, Rosalinda Aceves, and left a voicemail. Id. at ¶ 40. Aceves returned Wynar's call that same day. Id. On the call, Wynar told Aceves that she was a victim of fraud, and Wynar also wanted to know whether Aceves gave Brown any money. Id. Aceves initially denied that she gave Brown any money, but Aceves eventually realized that Wynar was "referring to the money she had refinanced from her home." Id. at ¶ 41.

On April 8, 2018, Wynar stood outside a Life Savers meeting in San Jose, California. Id. at ¶ 42. Wynar approached various Life Savers' members to tell them that Life Savers was a scam, that Brown had a long criminal record, and that Brown was stealing from them. Id. Wynar allegedly "continued his campaign of intimidating members for several hours as members came to attend the meeting throughout the afternoon." Id. at 45. Wynar allegedly physically intimidated members from entering the venue, and then threatened members with arrest if members participated in the Life Savers scam. Id.

B. Procedural History

On April 15, 2018, Plaintiffs filed a complaint. ECF No. 1. In addition to Roahn Wynar, Plaintiffs' complaint stated causes of action against Alicia Cox² and the FBI. Id. On August 27, 2018, the FBI filed a motion to dismiss. ECF No. 24. On October 12, 2018, Wynar filed a motion to dismiss. ECF No. 36. On October 17, 2018, the Court entered a case management order specifying that by November 13, 2018, Plaintiffs should either oppose Wynar's and the FBI's motions to dismiss, or amend Plaintiffs' complaint. ECF No. 41 at 1. The case management order also granted Plaintiffs' motion to dismiss Defendant Alicia Cox without prejudice. Id. On November 16, 2018, Wynar and the FBI filed a joint reply brief noting that Plaintiffs failed to oppose the motions to dismiss or amend Plaintiffs' complaint by the Court's November 13, 2018 deadline. ECF No. 42. Later on that same day, on November 16, 2018, the parties filed a stipulation to extend the deadline for Plaintiffs to file an amended complaint to November 16, 2018. ECF No. 43. This stipulation was granted. ECF No. 45. Thus, on November 16, 2018, Plaintiffs filed a first amended complaint. ECF No. 44. In the FAC, Plaintiffs no longer named the FBI as a Defendant. See FAC at ¶¶ 11-16. Thus, the only remaining Defendants are Roahn Wynar and unidentified Doe Defendants.

On December 6, 2018, Wynar filed the instant motion to dismiss. ECF No. 47 ("Mot."). On January 7, 2019, Plaintiffs filed an opposition. ECF No. 53 ("Opp."). On February 12, 2019, Wynar filed a reply. ECF No. 59 ("Reply").

II. LEGAL STANDARD

A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include "a short and plain statement of the claim showing that the pleader is entitled to relief." A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The U.S. Supreme Court has held that Rule 8(a) r...