United States District Court, D. Nevada
TODD A. PRINS, Plaintiff,
LIGHTYEAR NETWORK SOLUTIONS, INC.; CHRIS T. SULLIVAN; and RICK HUGHES, Defendants.
M. Navarro, Chief Judge United States District Judge.
before the Court is the Motion to Dismiss, (ECF No. 101),
filed by Defendants Rick Hughes (“Hughes”),
Lightyear Network Solutions, Inc. (“Lightyear”),
and Chris Sullivan (“Sullivan”) (collectively
“Defendants”). Plaintiff Todd A. Prins
(“Plaintiff) filed a Response, (ECF No. 109),
Defendants filed a Reply, (ECF No. 110). For the reasons
discussed below, the Court GRANTS in part and DENIES in part
Defendants' Motion to Dismiss.
case arises from Plaintiff's investment in
Defendants' company Lightyear Network Solutions, Inc.
(“Lightyear”). Specifically, Lightyear LLC,
Lightyear's predecessor, was a provider of
telecommunications services throughout the United States,
including telephone long distance, internet and intranet,
calling cards, and voice over internet protocol. (SAC ¶
8). In 2010, Lightyear LLC, entered into a reverse merger
transaction with Libra Alliance Corporation
(“Libra”). (Id. ¶ 9). Libra fully
acquired Lightyear LLC, and once the merger was completed,
Libra operated Lightyear LLC's business and changed its
name to “Lightyear Network Solutions, Inc.”
(Id.). Defendant Chris Sullivan
(“Sullivan”) was the director of Lightyear and
eventually owned approximately forty percent of its stock.
(Id. ¶ 10).
attempt to acquire additional investors, Defendant Rick
Hughes (“Hughes”) approached Plaintiff about an
investment opportunity in Lightyear. (Id. ¶
11). As a result, Plaintiff became a shareholder of
Lightyear's common stock by investing $500, 000.
(Id. ¶ 14). In 2013, however, Lightyear was
purchased by Birch Communications (“Birch”);
Lightyear's sale proceeds were paid predominantly to
Sullivan and Plaintiff did not receive any reimbursement.
(Id. ¶¶ 16-18). Plaintiff brought suit to
recover the amount of his investment. (Id. ¶
instant Motion, Defendants seek dismissal of Plaintiff's
Second Amended Complaint due to Plaintiff alleging various
causes of action pursuant to Texas law. (Mot. to Dismiss at
8, ECF No. 101). Defendants allege that the choice of law
clause in the Agreement requires Plaintiff to assert claims
pursuant to Nevada law, and therefore Plaintiff's
“Texas common law and statutory claims should be
dismissed.” (Id. at 8).
12(b)(6) of the Federal Rules of Civil Procedure mandates
that a court dismiss a cause of action that fails to state a
claim upon which relief can be granted. See North Star
Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581
(9th Cir. 1983). When considering a motion to dismiss under
Rule 12(b)(6) for failure to state a claim, dismissal is
appropriate only when the complaint does not give the
defendant fair notice of a legally cognizable claim and the
grounds on which it rests. See Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). In considering
whether the complaint is sufficient to state a claim, the
Court will take all material allegations as true and construe
them in the light most favorable to the plaintiff See NL
Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.
Court, however, is not required to accept as true allegations
that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences. See Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic
recitation of a cause of action with conclusory allegations
is not sufficient; a plaintiff must plead facts showing that
a violation is plausible, not just possible.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555) (emphasis added). In order
to survive a motion to dismiss, a complaint must allege
“sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.”
Id. “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.” Id.
may also dismiss a complaint pursuant to Federal Rule of
Civil Procedure 41(b) for failure to comply with Federal Rule
of Civil Procedure 8(a). Hearns v. San Bernardino Police
Dept., 530 F.3d 1124, 1129 (9th Cir. 2008). Rule 8(a)(2)
requires that a plaintiff's complaint contain “a
short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).
“Prolix, confusing complaints” should be
dismissed because “they impose unfair burdens on
litigants and judges.” McHenry v. Renne, 84
F.3d 1172, 1179 (9th Cir. 1996). Mindful of the fact that the
Supreme Court has “instructed the federal courts to
liberally construe the ‘inartful pleading' of pro
se litigants, ” Eldridge v. Block, 832 F.2d
1132, 1137 (9th Cir. 1987), the Court will view Plaintiffs
pleadings with the appropriate degree of leniency.
a district court may not consider any material beyond the
pleadings in ruling on a Rule 12(b)(6) motion . . . .
However, material which is properly submitted as part of the
complaint may be considered on a motion to dismiss.”
Hal Roach Studios, Inc. v. Richard Feiner & Co.,
896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted).
Similarly, “documents whose contents are alleged in a
complaint and whose authenticity no party questions, but
which are not physically attached to the pleading, may be
considered in ruling on a Rule 12(b)(6) motion to
dismiss” without converting the motion to dismiss into
a motion for summary judgment. Branch v. Tunnell, 14
F.3d 449, 454 (9th Cir. 1994). Under Federal Rule of Evidence
201, a court may take judicial notice of “matters of
public record.” Mack v. S. Bay Beer Distrib.,
798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the
district court considers materials outside of the pleadings,
the motion to dismiss is converted into a motion for summary
judgment. See Fed. R. Civ. P. 12(d); Arpin v.
Santa Clara Valley Transp. Agency, 261 F.3d 912, 925
(9th Cir. 2001).
Court grants a motion to dismiss, it must then decide whether
to grant leave to amend. Pursuant to Rule 15(a), the court
should “freely” give leave to amend “when
justice so requires, ” and in the absence of a reason
such as “undue delay, bad faith or dilatory motive on
the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment,
futility of the amendment, etc.” Foman v.
Davis, 371 U.S. 178, 182 (1962). Generally, leave to
amend is only denied when it is clear that the deficiencies
of the complaint cannot be cured by amendment. See DeSoto
v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th
instant Motion, Defendants seek dismissal of Plaintiff s
Second Amended Complaint (“SAC”) because it
contains “only claims that are based upon Texas
law” in contradiction to “the Nevada choice of
law clause in the [ ] Agreement.” (Mot. to Dismiss at
2, ECF No. 101). Plaintiff responds that its first, third,
fourth, fifth, sixth, ninth, tenth, and eleventh causes of
action are common law causes of ...