Rivercard, LLC v. Post Oak Prods., Inc.
| Decision Date | 06 May 2013 |
| Docket Number | 2:12-CV-1150 JCM (CWH) |
| Parties | RIVERCARD, LLC, Plaintiff(s), v. POST OAK PRODUCTIONS, INC., et al., Defendant(s). |
| Court | U.S. District Court — District of Nevada |
Presently before the court is defendant Scot Patriquin's motion to dismiss. (Doc. # 20). Plaintiff Rivercard, LLC responded (doc. # 22), and defendant Patriquin replied (doc. # 27).
Also before the court is plaintiff's application for default judgment against defendant Patriquin. (Doc. # 21). Defendant Patriquin responded. (Doc. # 26).
The facts alleged in the complaint establish that the instant dispute centers around plaintiff's purchase of stock in defendant Patriquin's Canadian client, Post Oak Productions. (Doc. # 1). On or about April 7, 2010, plaintiff invested approximately $1,000,000 in Post Oak Productions under two separate agreements. (Doc. # 1, 4:19-25). Plaintiff contends that the investments were contingent on several conditions being satisfied, including Post Oak Productions being awarded an exclusive contract from Harrah's Interactive Entertainment to operate the World Series of Poker online training website. (Doc. # 1, 6:4-7). Approximately $800,000 was paid for a 25% interest in the companythrough a subscription agreement, while $200,000 was transferred in the form of a loan through a loan agreement, payable after a year upon presentation of a demand note. (Id.)
Plaintiff alleges that the necessary documents related to closing were not perfected and completed, due to the fault of all named defendants. (Doc. # 1, 7:23-25). Plaintiff also alleges that defendants failed to issue the 25% interest in Post Oak Productions (doc. # 1, 8:1-3), and instead issued plaintiff shares in an unrelated shell company, believed to be named 2084701 Ontario, Inc. (doc. # 1, 8:4-6).
Defendant Patriquin is a Canadian-based attorney who advised defendant Post Oak Productions and its officers, Jeff Goldenberg and Brandon Rosen.1 (Doc. # 1).
Plaintiff filed suit against Patriquin, Goldenberg, Rosen, and Post Oak Productions. Plaintiff alleges nine causes of action against defendant Patriquin: (1) fraudulent/intentional misrepresentation; (2) failure to disclose material facts; (3) RICO violations/wire fraud (18 U.S.C. § 1961-1968); (4) RICO violations/mail fraud (18 U.S.C. § 1961-1968); (5) RICO violations pursuant to NRS § 207.470; (6) violation of United States securities laws; (7) violation of Nevada securities laws and Blue Sky laws; (8) civil conspiracy/concert of action; and (9) punitive damages.
Defendant Patriquin brings the instant motion on the basis that plaintiff's complaint fails to state a claim under Rule 12(b)(6) and Rule 9(b).
A court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted).
"Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (citation omitted).
In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 1949.
Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the plaintiff's complaint alleges facts that allows the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 1949.
Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged - but not shown - that the pleader is entitled to relief." Id. (internal quotations omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.
The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court stated, Id.
ii. Rule 9
Rule 9 provides that for a party to allege fraud, he FED. R. CIV. P. 9(b). Assertions of fraud must include "the who,what, when, where, and how" of the misconduct alleged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Rule 9 serves several purposes, including: (1) providing defendants with adequate notice so they are able to defend the charge and deter plaintiffs from filing complaints "'as a pretext for the discovery of unknown wrongs'; (2) to protect those whose reputation would be harmed as a result of being subject to fraud charges; and (3) to 'prohibit [ ] plaintiff[s] from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis.'" Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (quoting In re Stac Elecs. Sec Litig., 89 F.3d 1399, 1405 (9th Cir. 1996) (citation omitted)).
In the context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, identify the role of each defendant in the alleged fraudulent scheme to satisfy the fraud pleadings rule. Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).
The court addresses all those claims alleged against defendant Patriquin.
Fraud/intentional misrepresentation require that the plaintiff state "(1) the defendant made a false representation; (2) with the knowledge or belief that the representation was false (knowledge that it had an insufficient basis for making the representation); (3) and was made with the intentionof inducing the party to act or refrain from acting upon the misrepresentation; (4) plaintiff justifiably relied upon the misrepresentation; and (5) plaintiff suffered damage as a result of the reliance." Scaffidi v. United Nissan, 425 F.Supp.2d 1159, 1168-69 (D.Nev. 2005).
Plaintiff's complaint fails to state with sufficient particularity what representations were false. Paragraph 69 is likely the most specifically pleaded paragraph in this cause of action as it states that defendant Patriquin created an email on or about April 9, 2010, that contained "[n]umerous material misrepresentation" (doc. # 1, 14:1); however, the paragraph fails to state what representations were false or how the representations were false. Further, all other paragraphs in this cause of action fail to allege "the who, what, when, where, and how," Vess, 317 F.3d at 1106, to provide defendant Patriquin adequate notice of the alleged wrongdoing. Even when the "who," "when," and "where" are alleged, plaintiff fails to include the "what" and "how."
The alleged misrepresentations are not only in possession of defendants. Plaintiff alleges that it relied on emails and other forms of correspondence that caused it damage. On that basis, plaintiff is in possession of this correspondence and should be able, with specificity, to describe the representations that Patriquin allegedly made to it.
Defendant Patriquin's motion as to plaintiff's claim for fraudulent/intentional misrepresentation is GRANTED.
ii. Failure to disclose material facts (claim 6)
Defendant Patriquin argues that plaintiff's claim for failure to disclose material facts is merely an element of plaintiff's fraud/intentional misrepresentation claim. Defendant Patriquin argues that the first factor, false representation, includes the omission of a material fact which a party in good faith is bound to disclose. Plaintiff appears to concede defendant Patriquin's understanding of its claim. As such, the court's analysis supra II.B.ii. sufficiently addresses this cause of action.
Accordingly, defendant Patriquin's motion as to plaintiff's claim for failure to disclose material facts is GRANTED.
. . .
. . . iii. RICO claims (claims 7-9)
"To state a civil RICO claim, plaintiffs must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (5) causing injury to plaintiffs' 'business or property.'" Ove v. Gwinn, 264 F.3d 817, 825 (9th Cir. 2001) (citing 18 U.S.C. § 1964(c)).
Under Nevada law, RICO claims must also be pleaded with specificity. Hale v. Burkhardt, 104 Nev. 632, 638 (1988). "A civil RICO pleading must, in that portion of the pleading which describes the criminal acts that the defendant is charged to have committed, contain a sufficiently 'plain, concise and definite' statement of the essential...
To continue reading
Request your trial