United States District Court, D. Nevada, San Jose Division
GRANTING IN PART WITH LEAVE TO AMEND AND DENYING IN PART
PLAINTIFF AND THIRD PARTY DEFENDANT'S MOTION TO DISMISS
DEFENDANT SHAPIRO'S COUNTERCLAIMS AND THIRD PARTY
COMPLAINT; GRANTING SHAPIRO'S MOTION TO CHANGE VENUE;
TRANSFERRING CASE TO DISTRICT OF NEVADA [RE: ECF 59,
LAB SON FREEMAN, UNITED STATES DISTRICT JUDGE.
Paul Ponomarenko (“Ponomarenko”) brings this
action against Defendants Nathan Shapiro
(“Shapiro”) and Project Vegas Mansion
(“PVM”) (collectively, “Defendants”)
for alleged breach of contract and fraud arising out of a
contract for personal coaching services with PVM-services
that Ponomarenko alleges were never provided to him. See
generally First Amended Complaint (“FAC”),
ECF 43. Shapiro, proceeding pro se, filed seven
counterclaims against Ponomarenko as well as a Third Party
Complaint against Ponomarenko's company, Summit Estate,
Inc. (“Summit Estate”). See Answer,
Counterclaim and Third Party Complaint (“Answer &
Counterclaim”), ECF 56.
and Summit Estate filed a joint motion to dismiss the
Counterclaim and Third Party Complaint pursuant to Federal
Rule of Civil Procedure 12(b)(6). See Motion to
Dismiss (“MTD”), ECF 59. In addition to opposing
the motion to dismiss, Shapiro filed a motion to change venue
to the United States District Court for the District of
Nevada, unofficial southern division seated in Las Vegas,
Clark County, pursuant to 28 U.S.C. § 1404(a) and the
forum selection clause in the written agreement between the
parties. See Motion to Change Venue (“Transfer
Mot.”), ECF 74.
Court heard oral argument on both motions on December 7,
2017. At the hearing, the Court explained to the parties that
it would rule on Ponomarenko and Summit Estate's motion
to dismiss the counterclaim and third party complaint
regardless of whether it ultimately transferred the case to
Nevada pursuant to the forum selection clause. For the
reasons that follow as well as those stated on the record at
the hearing, Ponomarenko and Summit Estate's motion to
dismiss the Counterclaim and Third Party Complaint is GRANTED
IN PART WITH LEAVE TO AMEND and DENIED IN PART.
upon consideration of the briefing, oral argument, and
relevant law, Shapiro's motion to change venue is
GRANTED. This action shall be transferred to the United
States District Court for the District of Nevada, unofficial
southern division seated in Las Vegas, Clark County, Nevada.
Any amendments to Shapiro's Counterclaim and Third Party
Complaint are due on or before March 7,
Allegations in the FAC 
alleges that Shapiro is a life coach who markets his coaching
services to potential clients in California such as
Ponomarenko. See FAC ¶ 11. Shapiro regularly
collaborated with other life coaches to promote his services
in major cities in the United States including New York, Las
Vegas, Miami, San Francisco, Chicago, and others.
Id. ¶¶ 11-12. Shapiro is the sole owner
and operator of Project Vegas Mansion (“PVM”),
which offered these personal coaching sessions through PVM
agents. Id. ¶¶ 3, 8. Ponomarenko met
Shapiro at a PVM personal coaching seminar in San Francisco
in February 2013. Id. ¶¶ 14-16.
Ponomarenko paid $349 to attend the event. Id.
later attended an “in-field” coaching session,
where Defendants took him and several other individuals on
“training sessions.” Id. ¶ 16.
Following the seminar and training sessions, Defendants
invited Ponomarenko to join them at a third event for further
demonstration of their personal coaching methods.
Id. ¶ 17. After these interactions, Shapiro
allegedly induced Ponomarenko to consider a long-term
business relationship with Defendants for personal coaching
services which would include “substantial, regular, and
organized feedback.” Id. ¶¶ 18-19.
Shapiro informed Ponomarenko that the personal coaching
services would be provided in both California and Nevada, and
would require Ponomarenko to “periodically
travel” to Nevada to receive coaching. Id.
¶ 19. The coaching sessions would be provided under the
PVM “umbrella” through PVM's agents including
Shapiro and another individual who identified himself to be
working on behalf of PVM as Shapiro's business partner.
Id. Thereafter, Ponomarenko flew to Las Vegas,
Nevada, where he visited PVM's “coaching
center” and finalized a written agreement with PVM for
long term personal coaching. Id. ¶¶ 20-21.
in Las Vegas, Ponomarenko and Defendants executed a written
agreement whereby PVM would provide a specific number of
hours and sessions of personal coaching to Ponomarenko in
exchange for payment. Id. ¶ 21; see
also Project Vegas Mansion's Agreement, ECF 74-1
(“First Agreement”). The First Agreement was
executed in writing on March 3, 2013, and obligated
Ponomarenko to make an initial down payment of $25, 000. FAC
¶ 21; First Agreement at 16. Ponomarenko paid Shapiro
$5, 000 while he was in Las Vegas, and paid an additional
$15, 000 a few days later. FAC ¶ 21. Upon execution of
the First Agreement, Ponomarenko also paid $5, 000 to another
individual named Luke Krogh
(“Krogh”). The remainder of the payments owed under
the First Agreement were to be made in regular intervals
during the course of the training period. Id.
First Agreement expressly stated that Ponomarenko would
receive his training from Krogh. See FAC ¶ 22;
First Agreement at 16. Krogh became Ponomarenko's
“personal mentor and instructor, ” and
Ponomarenko alleges that he was told to make his remaining
payments due under the First Agreement to Krogh. FAC ¶
22. In the time period from March 2013 to January 2014,
Ponomarenko repeatedly and regularly traveled between
California and Nevada to attend the contracted coaching
sessions. FAC ¶ 23. Ponomarenko alleges that it became
evident that the personal coaching sessions lacked the
“clearly defined structure” he was promised, and
many sessions were conducted “in a party like setting,
” at Ponomarenko's expense. Id. ¶ 24.
Ponomarenko grew frustrated with the lack of organized
training, which he communicated to Krogh. Id. ¶
January 2014, Krogh proposed a second agreement to
Ponomarenko whereby Krogh would move to San Francisco to
provide the coaching sessions so that Ponomarenko did not
have to regularly fly to Las Vegas. Id. ¶ 26
(hereafter, “Second Agreement”). Ponomarenko was
given the impression that PVM authorized the Second
Agreement, although Ponomarenko did not communicate with
Shapiro during this time period. Id. Pursuant to the
Second Agreement, which was in oral form only, Ponomarenko
agreed to pay $99, 000 to enroll in an advanced personal
coaching program. Id. In addition to the fees,
Ponomarenko agreed to cover all of Krogh's travel
expenses for the duration of the Second Agreement.
February 2014, Krogh traveled to San Francisco and stayed in
a short-term rental apartment-paid for by Ponomarenko-for a
purported coaching session that lasted approximately 7 days.
Id. ¶ 27. On February 20, 2014, Krogh required
Ponomarenko to pay $40, 000, consisting of a $23, 500 payment
on the First Agreement and a $16, 500 down payment for the
Second Agreement. Id. ¶ 28. Ponomarenko made
these payments to Krogh, and alleges that he was shocked when
Shapiro contacted Ponomarenko in January 2016 to inform him
that a $23, 500 payment was still owed to PVM. Id.
Krogh never delivered on the promise to provide advanced
coaching services to Ponomarenko. Id. ¶ 29.
Much like the First Agreement, it appeared that
Ponomarenko's payments were instead used to fund “a
lavish San Francisco/Vegas lifestyle” for PVM's
agents, and to solicit other clients and business with no
benefit to Ponomarenko. Id.
terminated the Second Agreement in November 2014, yet Krogh
demanded the full amount of the coaching fee as well as
additional expenses. Id. ¶ 30. When Krogh
finally left the apartment, Ponomarenko had to pay additional
expenses to terminate the lease. Id. Ponomarenko
alleges that he paid thousands of dollars to PVM and its
agents, including Shapiro, for coaching services that were
never provided to him as promised. Id. ¶¶
filed this suit against Shapiro and PVM on May 23, 2016.
See generally Complaint, ECF 1. Shapiro moved to
quash service of process for failure to serve in accordance
with the Federal Rules of Civil Procedure, and moved to
dismiss the complaint for lack of personal jurisdiction over
him. See ECF 27. On May 3, 2017, the Court denied
Shapiro's motion to quash service of process, and granted
the motion to dismiss for lack of personal jurisdiction with
leave to amend in order to allege Shapiro's contacts with
California, an agency relationship between Shapiro and PVM or
“PVM's agent, ” (Krogh), and/or that PVM has
no corporate identity separate from Shapiro. See ECF
42 at 11.
30, 2017, Ponomarenko filed the FAC asserting six claims
against Shapiro and PVM for (1) breach of contract; (2)
intentional misrepresentation; (3) negligent
misrepresentation; (4) false promise; (5) breach of the
covenant of good faith and fair dealing; and (6) violation of
California's Unfair Competition Law, California Business
and Professions Code § 17200 (“UCL”).
See generally FAC.
Allegations in Shapiro's Counterclaim and Third Party
answered the FAC on June 30, 2017, asserting venue in the
United States District Court of Nevada seated in Clark
County, Las Vegas, Nevada. See Answer &
Counterclaim ¶ 5 at 19, 31. Shapiro brought a
Counterclaim against Ponomarenko, asserting seven causes of
action. Id. at 24-30. In addition, Shapiro brought a
Third Party Complaint against Summit Estate, that does not
include any causes of action but asserts that Ponomarenko and
Summit Estate acted for each other in connection with the
challenged conduct “as agents of each other” and
therefore each is fully liable for the acts of the other.
Id. at 32-33. Among other relief, Shapiro seeks
general damages in the amount of $2, 423, 000 against
Ponomarenko and Summit Estate. Id. at 33.
alleges that through PVM, he invested considerable resources
to develop his personal coaching business in the Las Vegas
metropolitan area. Id. at 19-20. This included
identifying clients and techniques, maintaining relationships
with those clients, developing innovative solutions to meet
client needs, and developing highly qualified personal
coaches to benefit the clients. Id. at 20. Shapiro
alleges that this information is “valuable,
confidential, and proprietary” and has
“significant economic value.” Id.
First Agreement between Ponomarenko and PVM, executed in
March 2013, contains covenants not to compete and not to
divulge confidential information. Id. at 21. For
example, the First Agreement's non-compete clause
provides in part that “[d]uring coaching and after
leaving the PVM program PARTICIPANT will not compete with PVM
for a period of two years within Clark County, Nevada.”
First Agreement at 10. The First Agreement also contains a
nondisclosure provision, which governs the use of
confidential information. Id. at 10-11.
alleges that Ponomarenko and Summit Estate violated these
provisions in the First Agreement by forming a business
entity known as “Elevated Pickup” for the
purposes of competing with PVM. Id. at 22. Elevated
Pickup offers social relationship coaching in Las Vegas as
well as Los Angeles and San Francisco. Id. at 22-23.
In essence, Shapiro's allegation is that while
Ponomarenko was still working with PVM, he contacted
PVM's clients, disclosed PVM's proprietary and
confidential information, contacted PVM's key independent
contractor for his own benefit, and solicited business and
clients for Elevated Pickup, all in contravention of the
First Agreement. Id. at 23. For example, Shapiro
alleges that Ponomarenko communicated with at least 100 PVM
potential or current clients using electronic networking
systems such as meetup.com, Craigslist, and Twitter, in an
attempt to secure business for Elevated Pickup. Id.
Counterclaim, Shapiro asserts seven causes of action against
Ponomarenko for: (1) breach of contract; (2) breach of
non-disclosure and confidentiality provisions; (3) breach of
non-compete provision; (4) tortious interference with
prospective economic advantage; (5) breach of Nevada Uniform
Deceptive Trade Practices Act; (6) civil conspiracy; and (7)
breach of implied covenant of good faith and fair dealing.
Id. at 18-30. Although Shapiro asserts a
“Third Party Complaint” against Summit Estate, it
contains no causes of action. Id. at 30-31.
Ponomarenko and Summit Estate filed a joint motion to dismiss
the Counterclaim and Third Party Complaint. See
generally MTD. The Court first addresses the motion to
dismiss, and then turns to Shapiro's motion to change
venue pursuant to the forum selection clause in the First
MOTION TO DISMISS COUNTERCLAIM AND THIRD PARTY
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted ‘tests the legal sufficiency of a
claim.'” Conservation Force v. Salazar,
646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro
v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When
determining whether a claim has been stated, the Court
accepts as true all well-pled factual allegations and
construes them in the light most favorable to the plaintiff.
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681,
690 (9th Cir. 2011). However, the Court need not
“accept as true allegations that contradict matters
properly subject to judicial notice” or
“allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences.” In
re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th
Cir. 2008) (internal quotation marks and citations omitted).
While a complaint need not contain detailed factual
allegations, it “must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible when it “allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
motion to dismiss, the Court's review is limited to the
face of the complaint and matters judicially noticeable.
MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th
Cir. 1986). However, under the “incorporation by
reference” doctrine, the Court also may consider
documents which are referenced extensively in the complaint
and which are accepted by all parties as authentic. In re
Silicon Graphics, Inc. Sec. Litig., 183 F.3d 970, 986
(9th Cir. 1999), abrogated on other grounds by S. Ferry
LP, No. 2 v. Killinger, 542 F.3d 776, 784 (9th Cir.
Court concludes that the complaint should be dismissed, it
must then decide whether to grant leave to amend. Under Rule
15(a) of the Federal Rules of Civil Procedure, leave to amend
“shall be freely given when justice so requires,
” bearing in mind “the underlying purpose of
Rule15... [is] to facilitate decision on the merits, rather
than on the pleadings or technicalities.” Lopez v.
Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (en banc)
(internal quotation marks and citation omitted). Nonetheless,
a district court may deny leave to amend a complaint due to
“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, [and]
futility of amendment.” See Leadsinger,
Inc. v. BMG Music Publ'g, 512 F.3d 522, 532 (9th
asserts seven causes of action in his Counterclaim against
Ponomarenko, and zero causes of action in his Third Party
Complaint against Summit Estate. See generally
Answer & Counterclaim. The Court finds that six of the
causes of action against Ponomarenko, and the entire Third
Party Complaint against Summit Estate, are insufficiently
pled. Shapiro's pleading also contains general
deficiencies, such as failure to state a demand for relief
sought in the Counterclaim as required by Rule 8(a)(3), and
failure to plead any causes of action against Summit Estate.
In his opposition, Shapiro concedes that he
“inadvertently omitted a prayer for relief at the
conclusion of the Counterclaim, ” and then provides a
prayer for relief in the text of his brief. See
Opp'n to MTD at 15-16 (“Accordingly, the following
[prayer for relief] should have been included.”) This
is improper, as the Court's review on a motion to dismiss
is limited to the four corners of the complaint. MGIC
Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir.
1986). However, Shapiro is given leave to amend to address
these deficiencies and may add his inadvertently omitted
prayer for relief.
uses his opposition to add allegations to the point where it
looks like an entirely new claim. For example, Shapiro argues
that he has a viable Third Party claim against Summit Estate
for Statutory Unfair Competition pursuant to California
Business and Professional Code § 17200. See
Opp'n to MTD at 14. Shapiro does not allege a §
17200 claim anywhere in his pleading, and he cannot amend his
Counterclaim and Third Party Complaint through his opposition
brief. Accordingly, Ponomarenko and Summit Estate's
motion to dismiss any § 17200 claim is GRANTED WITH
LEAVE TO AMEND.
extent that Shapiro wishes to rely on his “Statement of
Relevant Facts” in his opposition, which are also
absent from his Counterclaim, he must allege those facts in
an amended pleading. The Court will not evaluate their
sufficiency, but will consider them as Shapiro's offer of
amendment. Any amendment must also distinguish between the
causes of action and factual allegations brought against
Ponomarenko, and those brought against Summit Estate.
against Summit Estate
Third Party Complaint against Summit Estate also fails for
lack of factual specificity. The Supreme Court has made clear
that “[f]actual allegations must be enough to raise a
right to relief above the speculative level.”
Twombly, 550 U.S. at 555. Shapiro's allegations
regarding Summit Estate are sparse. Shapiro alleges that
Summit Estate and Ponomarenko “are alter egos of one
another, ” based on the sole contention that
Ponomarenko paid Shapiro for coaching services with a
“corporate business check” from Summit Estate.
See Answer & Counterclaim ¶¶ 21, 34.
attempts to bolster his allegations through his opposition,
and argues that the Third Party Complaint sufficiently
alleges that Ponomarenko used Summit Estate as a
“virtual ATM” for his own personal use in
accomplishing his objectives and funding “Elevated
Pickup.” See Opp'n to MTD at 14-15, ECF
62. To the extent that this is Shapiro's theory, he does
not allege it in the Third Party Complaint. The issue is
compounded by the fact that the only factual allegations are
contained in the Counterclaim, which is brought against
Ponomarenko only. See Answer & Counterclaim at
19-24. The Court cannot make out a coherent theory of alter
ego liability from Shapiro's pleading, and Summit Estate
is not on notice of the claims against it or the factual
basis for those claims. See Twombly, 550 U.S. at 556
n.3 (“Without some factual allegation in the complaint,
it is hard to see how a claimant could satisfy the
requirement of providing not only ‘fair notice' of
the nature of the claim, but also ‘grounds' on
which the claim rests.”)
pled, Shapiro has not adequately alleged any cognizable
claims against Summit Estate. Moreover, a standalone
allegation of a payment made from Summit Estate on
Ponomarenko's behalf is insufficient to support an alter
ego theory. Ponomarenko and Summit Estate's joint motion
to dismiss the Third Party Complaint against Summit Estate is
GRANTED WITH LEAVE TO AMEND.
Breach of Contract Claim ...