United States District Court, D. Nevada
NOEL C. MURRAY, et al., Plaintiffs,
PROVIDENT TRUST GROUP, LLC, AND ASCENSUS, LLC, Defendants.
MIRANDA M. DU UNITED STATES DISTRICT JUDGE
Noel C. Murray and Swarna Perera seek to represent a class of
investors who lost substantial amounts of money they were
saving for retirement when they invested in the Woodbridge
real-estate Ponzi scheme through their self-directed
individual retirement accounts (“SDIRAs”),
against Defendant Provident Trust Group, who provided
custodial and administrative services for Plaintiffs'
SDIRAs. Defendant has moved to dismiss all of Plaintiffs'
claims against it under Federal Rule of Civil Procedure
12(b)(6) (the “Motion”). (ECF No. 21.) Because the
contract that Plaintiffs allege governs their relationship
with Defendant contradicts Plaintiffs' breach of contract
and fiduciary duty allegations in their Complaint, the
economic loss doctrine applies to their negligence claim, and
the applicable contract precludes their unjust enrichment
claim- and as further discussed below-the Court will grant
following facts are adapted from Plaintiffs' Complaint,
which asserts a class action under the Class Action Fairness
Act. Plaintiffs seek to represent a class of investors who
invested in the Woodbridge group of companies (through the
“Woodbridge Securities”) by moving retirement
money into SDIRAs for which Defendant was the custodian. (ECF
No. 1 at 2.) While some other financial services companies
declined to allow their customers to hold Woodbridge
Securities in their SDIRA accounts, Defendant did, and failed
to take any steps to ascertain the nature, assets underlying,
or value of the Woodbridge Securities. (Id. at 5.)
It turned out the Woodbridge Securities were part of a Ponzi
scheme orchestrated by Robert H. Shapiro. (Id. at
continued to accept Woodbridge Securities as custodian from
other customers that Woodbridge steered towards Defendant
even after federal and state regulatory agencies had
concluded Shapiro was operating Woodbridge in a way that
broke various laws. (Id. at 6-9.) Despite the fact
these investigations and related charges were public,
Defendant did not notify any of its customers who held
Woodbridge Securities in their SDIRAs about them.
(Id. at 9.) At least one company similarly situated
to Defendant did. (Id. at 42.) And while the
Woodbridge Securities were valueless, Defendant continued to
list their value at or near the price Plaintiffs paid for
them in Plaintiffs' periodic account statements.
(Id. 42-43.) Plaintiff Noel C. Murray invested $54,
148.84 in Woodbridge Securities held in a SDIRA for which
Defendant was the custodian, and Plaintiff Dr. Swarna Perera
invested $600, 000. (Id. at 11.) Plaintiffs'
relationship with Defendant is governed by a contract
Plaintiffs attached to, and explicitly referred to in, their
Complaint (ECF No. 1-2, the “2017 Contract”).
(Id. at 4-5, 14-15, 20-21, 45.)
Complaint asserts the following claims: (1) breach of
contract under state and federal law; (2) breach of fiduciary
duty under state and federal law; (3) negligence and gross
negligence; and (4) unjust enrichment. (Id. at
45-49.) Defendant's Motion seeks dismissal of all four
claims. (ECF No. 21.)
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, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555.) “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, 556
U.S. at 678 (internal citation omitted). And it must contain
either direct or inferential allegations concerning
“all the material elements necessary to sustain
recovery under some viable legal theory.”
Twombly, 550 U.S. at 562 (quoting Car Carriers,
Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir.
1989) (emphasis in original)).
Iqbal, the Supreme Court clarified the two-step
approach district courts are to apply when considering
motions to dismiss. First, a district court must accept as
true all well-pled factual allegations in the complaint;
however, legal conclusions are not entitled to the assumption
of truth. See Iqbal, 556 U.S. at 678-79. Mere
recitals of the elements of a cause of action, supported only
by conclusory statements, do not suffice. See id. at
678. Second, a district court must consider whether the
factual allegations in the complaint allege a plausible claim
for relief. See Id. at 679. A claim is facially
plausible when the plaintiff's complaint alleges facts
that allow a court to draw a reasonable inference that the
defendant is liable for the alleged misconduct. See
Id. at 678. Where the complaint does not permit the
court to infer more than the mere possibility of misconduct,
the complaint has “alleged-but it has not show[n]-that
the pleader is entitled to relief.” Id. at 679
(internal quotation marks omitted). This is insufficient.
When the claims in a complaint have not crossed the line from
conceivable to plausible, the complaint must be dismissed.
See Twombly, 550 U.S. at 570.
the Court sympathizes with Plaintiffs regarding their alleged
substantial losses of retirement funds, they have failed to
state a claim against Defendant at this time. Their breach of
contract and breach of fiduciary duty claims fail for the
most part because their allegations are directly contradicted
by the terms of 2017 Contract upon which they rely to
establish them. Plaintiffs' negligence claim is barred by
the economic loss doctrine. Plaintiffs' unjust enrichment
claim fails because Plaintiffs acknowledge the existence of
the valid 2017 Contract. The Court will further address
Defendant's Motion with respect to each of
Plaintiffs' alleged causes of action below.
before the Court addresses Defendant's Motion in the
context of Plaintiffs' asserted causes of action, the
Court briefly addresses several preliminary matters. First,
Plaintiffs cite the Employee Retirement Income Security Act
of 1974 (“ERISA”) throughout their Complaint.
(ECF No. 1 at 3, 13, 14.) However, Plaintiffs do not allege
in their Complaint that the SDIRAs at issue were established
or maintained by an employer or employee organization.
(See generally id.) Therefore, ERISA does not apply.
See, e.g., Charles Schwab & Co. v.
Debickero, 593 F.3d 916, 919 (9th Cir. 2010) (finding
that an individual retirement account created and ...