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Porter v. Chetal

United States District Court, D. Nevada

June 27, 2014

MARIAN K. PORTER, Plaintiff,
v.
SHYAM K. Chetal, Individually and d/b/a ADVANTAGE REAL ESTATE PRO, UNITED CAPITAL INVESTMENTS, INC., SMARTTOUCH SYSTEMS, INC., and DOES 1-30, inclusive, Defendants.

ORDER

LARRY R. HICKS, District Judge.

Before the Court is Defendant Smarttouch Systems, Inc.'s ("SSI") Motion to Dismiss. Doc. #5.[1] Plaintiff Marian K. Porter ("Porter") filed an Opposition (Doc. #7), to which SSI did not reply.

I. Factual and Procedural History

This is a contract dispute in which Porter alleges that SSI was involved in a fraudulent financing scheme with Shyam K. Ch ("Chetal"), United Capital Investments, Inc. ("United"), and Advantage Real Estate Pro ("Advantage") (collectively "Defendants"). See Doc. #1 ¶¶ 2-4, 21, 61, 62, 63, 72, 78, 95, 104, Ex. 3. Initially, Chetal, on behalf of United, offered to purchase Porter's mining claims and pay the maintenance fees owing and due thereon. See Doc. #1, Ex. 1; Doc. #1, ¶ 27. Thereafter, Chetal, on behalf of SSI, provided documentary proof to Porter of his financial capability to pay for the valuable mining claims and maintenance fees. See Doc. #1, Ex. 3. Porter allegedly relied on these documents for assurance of payment and agreed to the offer. See Doc. #1, ¶ 90, Ex. 2. Ultimately, Defendants failed to timely pay the maintenance fees and Porter permanently and irrevocably lost all rights to the mining claims. See Doc. #1, ¶¶ 39-41. Porter alleges that none of the Defendants had the financial capability or intention to pay the maintenance fees or purchase the mining claims. See Doc. #1, ¶ 43. Porter further alleges that Defendants intentionally perpetrated the financing scheme to cause Porter to lose her mining claims, thereby enabling Chetal to purchase the claims directly from the Bureau of Land Management ("BLM") for a lower price. See Doc. #1, ¶¶ 44-46. On December 3, 2013, Porter filed a Complaint alleging claims for breach of contract, tortious breach of contract, fraud, negligence, and breach of the implied covenant of good faith and fair dealing. See id.

On February 11, 2014, SSI filed the present Motion to Dismiss on the grounds that all causes of action in the Complaint arise out of an alleged breach of contract by United. See Doc. #5, p.2. SSI contends that it had no relevant part in the alleged agreement between Porter and United and was only a party to a third-party agreement (the "Bank Guarantee") with Continent Finance Ltd. of England ("Continent").[2] See Doc. #5, p.2; Doc. #1, Ex. 3.

II. Legal Standard

SSI seeks dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the Federal Rule of Civil Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). That is, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The Rule 8(a)(2) pleading standard does not require detailed factual allegations; however, a pleading that offers "labels and conclusions' or a formulaic recitation of the elements of a cause of action'" will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

Furthermore, Rule 8(a)(2) requires a complaint to "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the Court to draw the reasonable inference, based on the Court's judicial experience and common sense, that the defendant is liable for the misconduct alleged. See id. at 678-79. "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. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. at 678 (internal quotation marks and citation omitted).

In reviewing a motion to dismiss, the Court accepts the facts alleged in the complaint as true. Id. However, "bare assertions... amount[ing] to nothing more than a formulaic recitation of the elements of a... claim... are not entitled to an assumption of truth." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 556 U.S. at 681) (brackets in original) (internal quotation marks omitted). The Court discounts these allegations because "they do nothing more than state a legal conclusion - even if that conclusion is cast in the form of a factual allegation." Id. (citing Iqbal, 556 U.S. at 681). "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." Id.

III. Discussion

SSI asserts that they played no relevant part in the matters complained of in this case and that all of Porter's claims arise out of United's alleged breach of a contract to which SSI was not a party. See Doc. #5, p. 2. SSI further asserts that Porter failed to meet the heightened pleading standard for claims of fraud. See Doc. #4, p. 4. In both regards, the Court disagrees.

Claims grounded in fraud must satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9. See Fed.R.Civ.P. 9(b); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003). Rule 9 provides: "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). An allegation of fraud must be "specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). "Averments of fraud must be accompanied by the who, what, when, where, and how' of the misconduct charged, " Vess, 317 F.3d at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). Moreover, in a fraud suit involving multiple defendants, a plaintiff must inform each defendant of their alleged role in the fraud. See Swartz v. KPMG LLP, 476 F.3d 756, 764-65 (9th Cir. 2007).

Here, the Court finds that Porter has pled facts sufficient to satisfy Rule 9's heightened pleading requirements. See Doc. #1, ¶¶ 75-92. Porter's Complaint provided SSI adequate notice of their alleged role in the fraud. See Doc. #1, ¶¶ 2-4, 61, 62, 75, 78 (alleging specifically that SSI, acting in concert with the other Defendants, engaged in a financing scheme to perpetrate fraud against Porter). Porter also sufficiently pled the who, what, when, where, and how of the fraudulent conduct. See Doc. #7, ¶¶ 1-6 (citing Doc. #1).

Contrary to SSI's averments that it played no relevant part in any of the events giving rise to Porter's claims, SSI's Motion to Dismiss confirms that SSI was involved in the transaction as a "guarantor for a bank guarantee." See Doc. #5, 2:17-18. This bank guarantee allegedly played a central role in assuring Porter that Chetal had the financial capability to render performance under the contract. See Doc. #1, ¶¶ 61, 62, Ex. 3. Moreover, the Complaint states with particularity the circumstances under which SSI falsely represented to Porter that Chetal and his business entities had sufficient financing available to timely purchase Porter's mining rights and pay the maintenance fees. See Doc. #7, ¶¶ 1-7 (citing Doc. #1). Specifically, Porter alleges that Chetal, as president of SSI, produced documents purporting to verify that Chetal had the financial capability to purchase the mining rights and pay the maintenance fees. See Doc. #1, ¶¶ 21, 22, Ex. 3. Porter alleges that she relied on these assurances when she accepted Chetal's offer. See Doc. #1, ¶¶ 19, 22. Porter further alleges that Chetal, United, Advantage, and/or SSI never had sufficient financing to pay Porter or the BLM. See Doc. #1, ...


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