United States District Court, D. Nevada
before the court is defendants CGrowth Capital, Inc.
(“CGrowth”), Keystone Financial Management, Inc.
(“Keystone”), and William Wright's
(collectively, the “CGrowth defendants”) motion
for judgment on the pleadings (ECF No. 136), to which
defendants Fossil Energy, Inc (“Fossil”),
Montgomery George, Paul Grady, William Sturdevant, and Tari
Vickery (collectively, the “Fossil defendants”)
joined, (ECF No. 137). Plaintiffs Karen and Phillip Wingen
filed a response. (ECF No. 140). The CGrowth defendants and
the Fossil defendants filed separate replies. (ECF Nos. 141,
are a married couple residing in Minnesota. (ECF No. 1).
Plaintiffs brought this lawsuit in their individual
capacities as investors in securities issued in 2012 by Salt
Creek West Drilling Fund, LLP (“Salt Creek West”)
and Ventrum Louisiana, LLP (“Ventrum LA”).
Ventrum Energy (“VE”) was a Nevada corporation
with its principal place of business in Nevada. VE was the
managing partner of Salt Creek West and Ventrum
On December 15, 2014, VE's corporate charter was
dissolved in the state of Nevada.
Andrew Van Slee was, at all relevant times, a Nevada
resident. Id. “Van Slee directly or indirectly
controlled [VE], Salt Creek West, [and] Ventrum LA.”
invested in both Salt Creek West and Ventrum LA between
February and July of 2012. Id. During that time
period, plaintiffs purchased 2.5 partnership units in Salt
Creek West for $500, 000. Id. On April 15, 2012,
plaintiffs purchased one partnership unit of Ventrum LA for
$100, 000. Id. Plaintiffs allege that Van Slee and
his related entities made false or misleading statements to
induce plaintiffs to invest in Salt Creek West and Ventrum
is a Delaware corporation with its principal place of
business in Washington. Id. Keystone is a Washington
corporation with its principal place of business in
Washington. Id. Keystone holds 33.5% of
CGrowth's common stock and all of CGrowth's Series B
preferred stock. Id. Wright is a Washington resident
who maintains a controlling stake in CGrowth and Keystone as
a shareholder, sole director, and CEO. Id.
2013 and early 2014, CGrowth entered into two purchase and
sale agreements for oil leases and wells under development by
Salt Creek West and Ventrum LA. Id.; (ECF Nos. 54-1,
54-2). As consideration, CGrowth issued shared of CGrowth
stock to VE and Ventrum LA. (ECF No. 1).
allege that as a result of the purchase and sale agreements
the CGrowth shares were distributed to plaintiffs and the
other limited partners of Salt Creek West and Ventrum LA.
Id. Plaintiffs allege that the sale of these
partnership assets to CGrowth was done without the consent or
involvement of plaintiffs or the other limited partners.
October 22, 2015, plaintiffs filed their complaint in this
court, asserting causes of action for alleged violations of
state and federal securities laws, fraudulent or intentional
misrepresentation, negligent misrepresentation, breach of
contract, breach of fiduciary duty, racketeering, deceptive
trade practices, civil conspiracy, partnership-by-estoppel,
and aiding and abetting. (ECF No. 1).
for judgment on the pleadings pursuant to Federal Rule of
Civil Procedure 12(c) are “functionally
identical” to motions to dismiss for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6).
Dworkin v. Hustler Magazine Inc., 867 F.2d 1188,
1192 (9th Cir. 1989).
reviewing a motion for judgment on the pleadings pursuant to
Rule 12(c), the court “must accept all factual
allegations in the complaint as true and construe them in the
light most favorable to the non-moving party.”
Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir.
2009). “[J]udgment on the pleadings is proper
‘when, taking all the allegations in the non-moving
party's pleadings as true, the moving party is entitled
to judgment as a matter of law.'” Ventress v.
Japan Airlines, 486 F.3d 1111, 1114 (9th Cir. 2007)
(citation omitted). The allegations of the nonmoving party
must be accepted as true while any allegations made by the
moving party that have been denied or contradicted are
assumed to be false. MacDonald v. Grace Church
Seattle, 457 F.3d 1079, 1081 (9th Cir. 2006).