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Harris v. Meiling

United States District Court, D. Nevada

October 31, 2019

MARC HARRIS, an individual, on behalf of himself and all others similarly situated, Plaintiff,
v.
DEAN MEILING, et al., Defendants. AND ALL RELATED CASES

          ORDER

          MIRANDA M. DU CHIEF UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         Plaintiff Marc Harris seeks to represent a class of investors who lost money after investing in Metalast International, LLC (“Metalast”) against the Chemeon Defendants, [1]and Defendants Janet Chubb, Tiffany Schwartz, Armstrong Teasdale, LLP, and Kaempfer Crowell, Ltd. (collectively, the “Attorney Defendants”), where Plaintiff basically alleges that Defendants conspired to improperly take Metalast through a state receivership proceeding resulting in the Meiling family taking control of Metalast at a discount. (ECF No. 10 (“FAC”).) Before the Court are a number of motions, but this order primarily focuses on the Chemeon Defendants' motion for judgment on the pleadings, or alternatively for a stay of the proceedings (the “Motion”).[2] (ECF No. 48.) Because the Court agrees with the Chemeon Defendants this case is barred by the applicable statutes of limitations, and as further explained below, the Court will dismiss Plaintiff's case in its entirety and deny all other pending motions, [3] mostly as moot.

         II. BACKGROUND

         This is the second attempted class action filed by a group of investor plaintiffs including Marc Harris primarily against the Meiling family and the entities they control regarding the Nevada state-court receivership proceeding through which the Meilings purchased Metalast. See Jerry Alexander, et al. v. Dean Meiling, et al., No. 3:16-cv-00572-MMD-CBC (D. Nev. Filed October 3, 2016) (“Alexander”).[4] Both this case and Alexander also have a state-court companion case in which at least a majority of the Chemeon Defendants seek to enjoin Plaintiff and other members of his desired class from bringing Alexander and this case. (ECF Nos. 48 at 9-13, 74 at 7-10.) Thus, the Metalast receivership proceeding has generated several legal proceedings.

         This case was removed by the Chemeon Defendants from California state court (ECF No. 1), where it was originally filed, and then transferred by a stipulated order from the Central District of California to this Court (ECF No. 33). Generally speaking, Plaintiff alleges that Defendants are involved in a fraudulent conspiracy where the Meilings feigned interest in making additional investments in Metalast, used their feigned interest to gain access to confidential information indicating to them that Metalast was about to become profitable, but then nonetheless appointed people they were connected to in forcing Metalast through a receivership proceeding-resulting in the Meiling family gaining control of Metalast's assets at a good price, forcing out the Semas family, who had run Metalast up to that point, and giving Plaintiff and other investors, some of them elderly, no shot at recouping the approximately $90 million they had collectively invested in Metalast. (ECF No. 10 at 9-13.) Plaintiff refers to this as the “Fraudulent Scheme.” (Id. at 9.)

         Based on the Fraudulent Scheme, Plaintiff brings claims for: (1) financial elder abuse in violation of California Welfare and Institutions Code § 15610.30; (2) breach of fiduciary duty; (3) constructive fraud: (4) intentional misrepresentation; (5) professional negligence; (6) constructive trust; (7) violation of California Business and Professions Code § 17200; (8) misappropriation; and (9) conversion. (Id. at 13-26.)

         As relevant to the Chemeon Defendants' Motion, Plaintiff alleges that the Fraudulent Scheme occurred between April and December 2013. (Id. at 9-13, 15, 17, 19.) However, Plaintiff alleges that he did not discover-and could not have discovered-the Fraudulent Scheme until “a late 2016 deposition of Defendant James Proctor in a different lawsuit in Nevada, when a review of documents produced at the deposition revealed” documents establishing Plaintiff's basis for alleging the Fraudulent Scheme. (Id. at 11-12.)

         III. LEGAL STANDARD

         “Dismissal under Rule 12(c) is warranted when, taking the allegations in the complaint as true, the moving party is entitled to judgment as a matter of law.” Daewoo Elecs. Am. Inc. v. Opta Corp., 875 F.3d 1241, 1246 (9th Cir. 2017), cert. denied, 138 S.Ct. 2654 (2018) (citation omitted). “Analysis under Rule 12(c) is ‘substantially identical' to analysis under Rule 12(b)(6) because, under both rules, a court must determine whether the facts alleged in the complaint, taken as true, entitle the plaintiff to a legal remedy.” Pit River Tribe v. Bureau of Land Mgmt., 793 F.3d 1147, 1155 (9th Cir. 2015) (citation omitted).

         Under Rule 12(b)(6), a court 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).

         In 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 Id. 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). That is insufficient. A complaint 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). 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.

         IV. DISCUSSION

         The Court will grant the Chemeon Defendants' Motion and deny most of the other pending motions as moot because once the Court takes judicial notice of a document filed in the underlying state court receivership proceeding, the Court finds Plaintiff's entire case is barred by the applicable statutes of limitations. However, the Court first addresses several motions and related issues not rendered moot by the Court's statute of limitations finding.

         A. Plaintiff's Motion to Remand and the Chemeon Defendants' Related Motion for Sanctions

         Plaintiff filed a motion to remand this case (ECF No. 11) before it was transferred to this Court (ECF No. 33).[5] The Chemeon Defendants later filed a motion for sanctions based on Plaintiff's motion to remand, arguing the motion to remand was not meritorious and should have been withdrawn when Plaintiff stipulated to transfer this case to this Court. (ECF No. 50.) The Chemeon Defendants seek their attorneys' fees and costs in opposing Plaintiff's motion to remand. (Id. at 15.) Plaintiff responds that the Chemeon Defendants' motion for sanctions should be denied because his motion to remand was rendered moot by Plaintiff's stipulation to transfer to this Court, he was unable to withdraw the motion to remand because it was filed in a Central District of California case that is now closed, and, in any event, his motion to remand was meritorious. (ECF No. 72.)

         The Court will deny the motion to remand because Plaintiff has subsequently consented to this Court's jurisdiction, appears to have withdrawn the motion to remand, [6] and the motion is rendered moot by the transfer. (Id. at 7-8.) Cf. Quality Mech. Contractors, LLC v. Am. Home Assur. Co., No. 2:11-cv-00232-RLH-RJJ, 2011 WL 3678803, at *1 (D. Nev. Aug. 22, 2011) (“[S]oon after removal, [a defendant] filed two motions with this Court . . . which the Court accepts as evidence of [that defendant's] consent to removal.”). Plaintiff concedes as much, offering that he was unable to withdraw the motion after this case was transferred because the motion was filed in the Central District. (ECF No. 72 at 4, 8.)

         As to the sanctions motion, the Court declines to exercise its power under either Fed.R.Civ.P. 11(c), 28 U.S.C. § 1927, or its inherent powers to sanction Plaintiff. See Fed. R. Civ. P. 11(c)(1), (2) (providing the Court may impose sanctions); see also Lahiri v. Universal Music & Video Distribution Corp., 606 F.3d 1216, 1219 (9th Cir. 2010) (indicating the Court's imposition of sanctions under 28 U.S.C. ยง 1927 and its inherent powers is not mandatory). The Court will therefore deny the ...


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