Margosian v. Margosian

Decision Date18 February 2011
Docket NumberCASE NO. CV F 11-0137 LJO SMS
CourtU.S. District Court — Eastern District of California
PartiesARON MARGOSIAN, et al., Plaintiffs, v. DALE MARGOSIAN, et al., Defendants.

ORDER ON SCHOENBURG DEFENDANTS' F.R.Civ.P. 12 MOTION TO DISMISS (Doc. 7.)

INTRODUCTION

Defendants Loren Schoenburg ("Mr. Schoenburg") and Marge Schoenburg ("Mrs. Schoenburg") seek to dismiss plaintiff Aron Margosian ("Mr. Margosian") and Carrie Margosian's ("Mrs. Margosian's") fraud and related tort claims as insufficiently plead. Mr. and Mrs. Margosian (collectively "plaintiffs") filed no timely opposition papers. This Court considered Mr. and Mrs. Schoenburg's F.R.Civ.P. 12(b)(6) motion to dismiss on the record and VACATES the March 2, 2011 hearing, pursuant to Local Rule 230(c), (g). For the reasons discussed below, this Court DISMISSES the claims against Mr. and Mrs. Schoenburg.

BACKGROUND1
Summary

Since 1995, Mr. Margosian and Martin Zaninovich ("Mr. Zaninovich")2 have been associated in several agricultural business entities. The 43-page complaint names as defendants nine individuals, including accountants, a lawyer and two bankers, a bank, and another business entity (collectively "defendants"). The complaint's gist is that defendants assisted Mr. Zaninovich to defraud Mr. Margosian of thousands of dollars through Mr. Zaninovich's "schemes" to render Mr. Margosian's "financial well being in tatters."

Mr. and Mrs. Schoenburg held ownership interests in Z&S with Mr. Zaninovich. The complaint identifies Z&S as Mr. Zaninovich's "company."

Early Farming Operations

After finishing high school, Mr. Margosian started to work on his Margosian Brothers family farm. In 1995, Mr. Margosian hired Mr. Zaninovich to sell Margosian Brothers produce. Beginning in 1998, Mr. Margosian and Mr. Zaninovich purchased and operated agricultural lots as Two Play Farms. In 2001, Mr. Margosian, Mr. Zaninovich and two others purchased a parcel and operated it as Three Play Farms. Mr. Margosian managed day-to-day growing and harvesting operations. Mr. Zaninovich addressed "business aspects of [the] partnership." Mr. Margosian and Mr. Zaninovich agreed that proceeds would be split equally between owner grower accounts and that the money in Mr. Margosian's account would be saved to purchase additional acreage. In 2006, at Mr. Zaninovich's suggestion, Two Play Farms was converted to a limited liability company.

Mr. Zaninovich's Schemes

Mr. Zaninovich commonly commingled various business venture funds and frequently withdrew large sums from business accounts in which Mr. Margosian held an equal ownership interest.

In 2006, Mr. Zaninovich agreed with Scott and James Critchley (the "Critchley Brothers") tobecome part of an established packing house. Mr. Margosian understood that Mr. Zaninovich used two Z&S Peterbilt trucks to make the acquisition. Mr. Margosian did not know that Mr. Zaninovich used $150,000 of Two Play's line of credit to make the acquisition.

Mr. Zaninovich arranged for loans for the various business entities in which he had an interest. Mr. Zaninovich told Mr. Margosian that new loan documents were to lower the interest rates on Mr. Zaninovich's existing loans and that Mr. Margosian's signature was needed because Two Play was the leaseholder to Z&S and that Mr. Margosian's permission was required to swap the loan interest.

Mr. Margosian and Mr. Zaninovich were partners in Two Play Arizona which purchased a cold storage in Nogales, Arizona. Mr. Zaninovich told Mr. Margosian that in 10 years, the cold storage would be paid off and that Mr. Margosian would receive $125,000 per year in rent from Z&S.

In early 2009, Mr. Margosian discovered that he "had entered into these ventures" with Mr. and Mrs. Schoenburg.

In July 2009, Mr. Zaninovich sold Two Play Arizona cold storage to decrease his and Z&S' debts and loans. Mr. Margosian believed the sale would benefit Two Play because $800,000 was owed and the sale was $1.5 million. Mr. Zaninovich told Mr. Margosian that the sale would reduce "our debts" which Mr. Margosian understood to be Two Play's debts, not those of Z&S in which Mr. Margosian had no interest. Mr. Margosian signed the sale documents waiving rent collection on the cold storage because Mr. Zaninovich represented that Two Play's debts would decrease.

In 2009, Mr. Margosian received conflicting information as to his grower accounts and discovered that PACA grower account monies were misappropriated though Z&S, whose officers include Mr. and Mrs. Schoenburg.

Plaintiffs' Claims

The complaint, as discussed below, alleges against Mr. and Mrs. Schoenburg and the other defendants claims of negligent misrepresentation, intentional misrepresentation, fraud-intentional concealment/suppression of fact, constructive fraud, conspiracy, RICO, 18 U.S.C. § 1962-aiding and abetting, breach of fiduciary duty, and negligent and intentional infliction of emotional distress.

DISCUSSION
F.R.Civ.P. 12(b)(6) Motion To Dismiss Standards

Mr. and Mrs. Schoenburg attack the fraud claims as lacking sufficient particularity to satisfy F.R.Civ.P. 9(b) and the remaining claims as lacking facts to support necessary elements.

A F.R.Civ.P. 12(b)(6) motion to dismiss is a challenge to the sufficiency of the pleadings set forth in the complaint. "When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheurer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683 (1974); Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th Cir. 1997). A F.R.Civ.P. 12(b)(6) dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990); Graehling v. Village of Lombard, Ill., 58 F.3d 295, 297 (7th Cir. 1995).

In resolving a F.R.Civ.P. 12(b)(6) motion, a court must: (1) construe the complaint in the light most favorable to the plaintiff; (2) accept all well-pleaded factual allegations as true; and (3) determine whether plaintiff can prove any set of facts to support a claim that would merit relief. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-338 (9th Cir. 1996). Nonetheless, a court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Sciences Securities Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). A court "need not assume the truth of legal conclusions cast in the form of factual allegations, " U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638, 643, n. 2 (9th Cir.1986), and a court must not "assume that the [plaintiff] can prove facts that it has not alleged or that the defendants have violated... laws in ways that have not been alleged." Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897 (1983). A court need not permit an attempt to amend if "it is clear that the complaint could not be saved by an amendment." Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires morethan labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 554, 127 S. Ct. 1955, 1964-65 (2007) (internal citations omitted). Moreover, a court "will dismiss any claim that, even when construed in the light most favorable to plaintiff, fails to plead sufficiently all required elements of a cause of action." Student Loan Marketing Ass'n v. Hanes, 181 F.R.D. 629, 634 (S.D. Cal. 1998). In practice, "a complaint... must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562, 127 S.Ct. at 1969 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).

In Ashcroft v. Iqbal, __ U.S. _, 129 S.Ct. 1937, 1949 (2009), the U.S. Supreme Court recently explained:

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face."... A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.... The plausibility standard is not akin to a "probability requirement, " but it asks for more than a sheer possibility that a defendant has acted unlawfully. (Citations omitted.)

After discussing Iqbal, the Ninth Circuit Court of Appeals summarized: "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Service, 572 F.3d 962, 989 (9th Cir. 2009) (quoting Iqbal, __ U.S. _, 129 S.Ct. at 1949).

The U.S. Supreme Court applies a "two-prong approach" to address a motion to dismiss:

First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.... Second, only a complaint that states a plausible claim for relief survives a motion to dismiss.... Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and...

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