Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00291/USCOURTS-caed-1_05-cv-00291-16/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 18:1962 Racketeering (RICO) Act

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

JOE FLORES, an individual, and )

CONNIE FLORES, an individual, ) 

)

Plaintiffs, )

v. )

)

EMERICH & FIKE, a professional )

 corporation, et al., )

Defendants. )

____________________________________)

1: 05 - CV - 0291 AWI DLB

ORDER GRANTING MOTIONS’ TO

DISMISS AND DISMISSING

COMPLAINT WITH LEAVE TO

AMEND

(Documents #225, #233, #235)

BACKGROUND

On March 1, 2005, Plaintiff Joe Flores and Plaintiff Connie Flores (“Plaintiffs”) filed a

complaint. The complaint contains eleven causes of action: (1) alter ego Liability; (2) malicious

prosecution; (3) malicious use of process, spoilation of evidence, and fraudulent concealment of

evidence; (4) violations of the Uniform Fraudulent Transfer Act; (5) violations of PACA; (6)

fraud, deceit, intentional and negligent fraud, constructive fraud, and breach of fiduciary duty; (7)

conversion; (8) RICO violations; (9) interference with or procure a breach of contract; (10)

conspiracy to defraud, interfere in a business relationship, unlawfully injure a business, destroy a

business, and slander or title; (11) invasion of privacy and defamation. 

On May 4, 2007, Defendants Dennis Hagobian, Victoria Hagobian, the Dennis Hagobian

Residential Trust, the Victoria Hagobian Residential Trust, Yosemite Technologies, Inc., and

Rod Christensen (“Hagobian Defendants”) filed a motion to dismiss the complaint. On May 7,

2007, Defendants Sandy L. Vartan, Judith Yeramian, the Judith Mary Yeramian Family Trust,

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 The court recognizes that default has been entered as to some Defendants. However, 1

because the motions are brought on behalf of other Defendants, the court finds that it is

appropriate to resolve the pending motions despite the entry of default as to some Defendants.

2

and the Lee Yeramian Exempt QTIP Trust (“Yeramian Defendants”) filed a motion to dismiss

the complaint. On May 7, 2007, Defendants Russell Davidson and W.D. Farming LLC joined 1

the motion to dismiss filed by the Hagobian Defendants. On June 7, 2007, Plaintiff Joe Flores 

filed a late opposition, which Plaintiff Connie Flores joined. On June 11, 2007, Hagobian

Defendants filed a reply. On June 18, 2007, Plaintiff Joe Flores filed a supplemental

opposition, which Plaintiff Connie Flores joined. 

LEGAL STANDARD

A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil

Procedure if it appears beyond doubt that the plaintiff can prove no set of facts in support of the

claim that would entitle him to relief. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (citing

Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Balistreri v. Pacifica Police Department, 901 F.2d

696, 699 (9 Cir. 1990). A Rule 12(b)(6) dismissal can be based on the failure to allege a th

cognizable legal theory or the failure to allege sufficient facts under a cognizable legal theory. 

Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9 Cir. 1984). In considering a th

motion to dismiss, the court must accept as true the allegations of the complaint in question,

Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), construe the pleading in

the light most favorable to the party opposing the motion, and resolve all doubts in the pleader's

favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969). 

Essentially, a motion to dismiss for failure to state a claim tests the plaintiff's compliance

with the liberal requirements of Rule 8(a)(2) of the Federal Rules of Civil Procedure. See 5A

Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356, at 294-96. 

Rule 8(a)(2) requires a complaint include “a short and plain statement of the claim showing that

the pleader is entitled to relief.” Fed. R. Civ. Pro. 8(a)(2). Rule 8(a)(2) requires sufficient

allegations to put defendants fairly on notice of the claims against them. McKeever v. Block,

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932 F.2d 795, 798 (9 Cir.1991); Lynn v. Sheet Metal Workers’ Intern. Ass’n, 804 F.2d 1472, th

1482 (9 Cir. 1986). “The liberal notice pleading of Rule 8(a) is the starting point of a simplified th

pleading system, which was adopted to focus litigation on the merits of a claim.” Swierkiewicz

v. Sorema N. A., 534 U.S. 506, 514 (2002); see also Bell Atlantic Corp. v. Twombly, 127 S.Ct.

1955, 1976 (2007) (quoting Swierkiewicz). However, “the liberal pleading standard . . . applies

only to a plaintiff’s factual allegations.” Neitze v. Williams, 490 U.S. 319, 330 n.9 (1989). “[A]

liberal interpretation of a civil rights complaint may not supply essential elements of the claim

that were not initially pled.” Bruns v. Nat’l Credit Union Admin., 122 F.3d 1251, 1257 (9 Cir. th

1997) (quoting Ivey v. Bd. of Regents, 673 F.2d 266, 268 (9 Cir. 1982)). th

FACTS

A. Facts Alleged in the Complaint

The complaint alleges that the claims against Defendants arose from a written packing

and marketing agreements entered into between Plaintiffs and DDJ, Inc. On September 26, 1995,

April 4, 1996, February 18, 1997, and March 23, 1998. 

In an underlying action entitled Flores, et al v. DDJ, Inc., et al, 1:99-cv-5878 AWI DLB

(“Flores I”), Plaintiffs sued DDJ, Inc. and DDJ, LLC for PACA violations, breach of contract,

breach of fiduciary duty, fraud, and conversion. In the underlying action, DDJ, Inc. and DDJ,

LLC filed a cross-complaint for breach of contract and failure to pay loan advances. On July

25, 2003, a jury returned a verdict in favor of Plaintiffs. Plaintiffs then filed a motion to add

judgment debtors in the underlying action based on a theory of alter ego.

The complaint alleges that during review of documents in preparation for the motion to

add alter egos as judgment debtors, Plaintiff s discovered that Defendants fraudulently

transferred all assets belong to DDJ, Inc. and DDJ, LLC to Defendants.

The complaint alleges that Plaintiffs then filed a complaint to set aside fraudulent

transfers in violation of the California Fraudulent Transfer Act, entitled Joe Flores, et al. v.

Dennis Hagobian, et al., 1:04-cv-6405 AWI DLB (“Flores II”). 

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The complaint alleges that on January 3, 2005, DDJ, Inc. and DDJ, LLC filed bankruptcy. 

The complaint alleges that the bankrupcty gave rise to further investigation and this action

(“Flores III”).

The complaint alleges Defendants are the owners, directors, officers, members, and/or

agents of DDJ, Inc. and/or DDJ, LLC. The complaint alleges Defendants are the alter egos of

DDJ, Inc. and/or DDJ, LLC.

B. Judicial Notice

Facts subject to judicial notice may be considered by a court on a motion to dismiss. In re

Russell, 76 F.3d 242, 244 (9 Cir. 1996); Mullis v. United States Bankruptcy Court, 828 F.2d th

1385, 1388 (9 Cir. 1987). The court may take judicial notice of facts that are capable of th

accurate and ready determination by resort to sources whose accuracy cannot reasonably be

questioned. Fed. R. Evid. 201(b); United States v. Bernal-Obeso, 989 F.2d 331, 333 (9 Cir. th

1993). Judicial notice may be taken of court records. See, e.g., Colonial Penn Ins. Co. v. Coil,

887 F.2d 1236, 1239 (4 Cir. 1989); Mullis v. United States Bank. Ct., 828 F.2d 1385, 1388 n.9 th

(9 Cir. 1987). 

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DISCUSSION

A. Rule 8

Preliminarily, the court notes that the complaint does not contain a short and plain

statement the Plaintiffs’ claims and does not sufficiently puts Defendants on notice of the claims

against them. Rule 8 requires a “short and plain statement of the claim showing that the pleader

is entitled to relief,” see Fed. R. Civ. P. 8(a), and mandates that “[e]ach averment of a pleading

shall be simple, concise, and direct.” Fed. R. Civ. P. 8(e)(1). 

The complaint is not short and to the point, containing only those facts necessary to state

one or more claims against each Defendant. The complaint is some 142 pages. The complaint

contains unnecessary background information. The complaint is unclear on what facts support

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the listed causes of action and which facts have merely been added as background information. 

The function of the complaint is to place each defendant on notice as to the plaintiff’s claims. It

is not the function of the complaint to list every single fact relating to Plaintiffs’ claims and it is

not the function of the complaint to include all of the evidence in Plaintiffs’ possession that they

intend to use to support the claims. In addition, it is not even clear what causes of action are

before the court. Several of the complaint’s 11 causes of action include several torts. For

example, the sixth cause of action is for fraud, deceit, “intentional and negligent fraud”, 

constructive fraud, and breach of fiduciary duty. It is unclear if this is one cause of action stated

several different ways or if this is six separate causes of action. The complaint simply fails to

comply with Rule 8. Thus, as discussed more fully below, the court will dismiss the complaint

with leave to amend. When filing any amended complaint, Plaintiffs must submit an amended

complaint to the court that meets the requirements of Rule 8. 

B. Duplicative Lawsuit

The complaint references two other lawsuits in this court, Flores I and Flores II. The

presence of these other lawsuits raises concerns that Plaintiffs are litigating their claims against

Defendants in a confusing, piecemeal fashion. It appears that Plaintiffs may be raising causes of

action that are or could have been raised in either Flores I or Flores II.

The court has broad discretion to control its docket. Thompson v. Hous. Auth. of City of

Los Angeles, 782 F.2d 829, 831 (9 Cir. 1986) (per curiam). After weighing the equities of the th

case of a duplicative case the court may exercise its discretion to dismiss a duplicative action, 

stay the action pending resolution of the first action, enjoin the parties from proceeding with it,

or consolidate both actions. Adams v. California Dept. of Health Services, 487 F.3d 684, 688

(9 Cir. 2007). “Plaintiffs generally have ‘no right to maintain two separate actions involving the th

same subject matter at the same time in the same court and against the same defendant.’” Adams, 

487 F.3d at 688 (quoting Walton v. Eaton Corp., 563 F.2d 66, 70 (3d Cir. 1977) (en banc)). 

In assessing whether a second action is duplicative of the first, the court examines

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whether the causes of action and relief sought, as well as the parties or privies to the action, are

the same. Adams, 487 F.3d at 689. First, the court must examine whether the causes of action

in the two suits are identical pursuant to the transaction test; the most important factor being

whether the two suits arise out of the same transactional nucleus of facts.” Id (citing Costantini

v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9 Cir.1982). Here, it appears that this action th

shares some common transactional nucleus of facts with Flores I. Flores I also concerned the

written packing and marketing agreements entered into between Plaintiffs and DDJ, Inc. on

September 26, 1995, April 4, 1996, February 18, 1997, and March 23, 1998. While it is almost

impossible to discern which of the complaint’s allegations are merely being provided as

background information and which are provided to support distinct causes of action, it appears as

though Plaintiffs are attempting to raise claims concerning the same packing agreements at issue

in Flores I. For example, Plaintiffs’ alter ego cause of action is similar to the motion to add

judgment debtors filed in Flores I. While Plaintiffs’ oppositions appear to focus this action on

events that occurred when DDJ, Inc. and DDJ, LLC were sold in 2002 and 2003, which would

not arise from the same facts as Flores I, the complaint is confusing because of the presence of

significant facts surrounding what occurred regarding the packing agreements in 1995 through

1998. To the extent Plaintiffs are attempting to re-litigate these issues, the evidence is the same

as that submitted in Flores I or that which could have been submitted. Further, a judgment on

causes of action in this case could impair rights and interests established by the judgment in

Flores I. For example, a ruling on alter ego claims in this action may be inconsistent with

findings concerning alter ego in Flores I. In addition, a ruling on the fraud causes of action in

this case may differ from the jury’s award in Flores I.

The court recognizes that this action contains claims that could not have been litigated in

Flores I, and it does appear from Plaintiffs opposition that most of the causes of action are based

on facts that did not accrue until the time DDJ, Inc. and DDJ, LLC were sold. To this extent,

this action is not duplicative of Flores I. The concern, however, is that it is duplicative of Flores

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II. Both Flores II and this action concern Defendants’ actions in selling, dissolving, and

dissipating DDJ, Inc., DDJ, LLC, and these entities’ assets. As with this action, Flores II seeks

to set aside alleged fraudulent transfers concerning DDJ, Inc. and DDJ, LLC, While the facts

underlying this action and Flores II are not identical, they appear to arise from the same operative

facts - Defendants actions in selling, dissolving, and dissipating DDJ, Inc., DDJ, LLC, and these

entities’ assets. In addition, there is grave concern that any judgment in this action could be

inconsistent with a judgment in Flores II. Finally, although distinct rights are at issue in both

this case and Flores II, this factor alone does not give reason to have duplicative lawsuits. It

appears to the court that many of the claims in the present complaint arise out of the same

transactional nucleus of facts asserted in Flores II. Because both actions concern Defendants

actions in selling, dissolving, and dissipating DDJ, Inc., DDJ, LLC, and these entities’ assets, it

would appear substantially the same evidence would be presented in both actions. 

The Defendants in Flores II and this action are similar. However, the court recognizes

that the Defendants in Flores I were DDJ, Inc. and DDJ, LLC, and not the Defendants named in

this action. However, in determining if an action is duplicative, the court looks not at whether

the defendants are identical, but rather on whether they are in privity with each other. Privity

includes an array of relationships which fit under the title of “virtual representation.” Kourtis v.

Cameron, 419 F.3d 989, 996 (9 Cir. 2005). “The necessary elements of virtual representation th

are an identity of interests and adequate representation.” Adams, 487 F.3d at 691 (citing Kourtis,

419 F.3d at 996).

 Here, the Defendants were the owners, directors, officers, members, and/or agents of

DDJ, Inc. and/or DDJ, LLC. Thus, Defendants in this action and the Defendants in Flores I had

a close relationship See, e.g., Adams, 487 F.3d at 691 (finding employees of corporation in

privity when employees submitted evidence in prior action and corporation’s liability predicated

on action’s of employees); Irwin, 370 F.3d at 930-31 (finding senior corporate officer virtually

represented by his corporation). In fact, Plaintiffs allege that not only did Defendants control

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DDJ, Inc. and/or DDJ, LLC, Defendants were the alter egos of DDJ, Inc. and/or DDJ, LLC. 

Thus, based on the complaint’s allegations, Defendants in this action were represented by DDJ,

Inc. and/or DDJ, LLC in Flores I.

When faced with duplicative actions, the court maintains discretion of dismiss the later

filed complaint with prejudice, dismiss the complaint without prejudice, consolidate the cases, or

stay or enjoin proceedings. Adams, 487 F.3d at 692. Here, it appears that the complaint is

duplicative of causes of action that were raised or could have been raised in Flores I or Flores II. 

As such, this court has serious concerns about the duplicative nature of this lawsuit. However,

at this time, the court will not dismiss this action with prejudice as duplicative. The court will

give Plaintiffs the opportunity to omit duplicative causes of action in any amended complaint and

file any reasonable motions to streamline their cases to avoid duplicate work for the court and the

parties. At this time, Plaintiffs are simply forewarned that if necessary, the court will take steps

to prevent Plaintiffs from “fragmenting a single cause of action and litigating piecemeal the

issues which could have been resolved in one action.” Adams, 487 F.3d at 694 (quoting Flynn

v. State Bd. of Chiropractic Exam'rs, 418 F.2d 668, 668 (9 Cir.1969) (per curiam)). th

C. Statute of Limitations

Defendants contend that some the complaint’s causes of action are barred by the

applicable statute of limitations. In the opposition, it does not appear that Plaintiffs disagree

with most, if not all, of the statute of limitations being used by Defendants. Rather, Plaintiffs

contend that their causes of action did not accrue until approximately 2002 and 2003 when

Defendants allegedly improperly sold, destroyed, and dissipated DDJ, Inc., DDJ, LLC, and these

entities’ assets. 

The differences in what facts the parties believe support what causes of action leads them

to different conclusions on when the statute of limitations accrued. Defendants take the

position that Plaintiffs are litigating events that occurred in 1995 through 1998 concerning the

packing agreements. Plaintiffs take the position that they are litigating Defendants’ actions in

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2002 and 2003 to hide assets from Plaintiffs. The complaint’s failure to comport with Rule 8

makes it impossible to determine which events support the various causes of actions, allowing

the court to determine if any statute of limitations has been violated. In any amended

complaint, Plaintiffs must clarify the specific facts that support Plaintiffs’ causes of action. 

Causes of action arising out of events that occurred between 1995 through 1998 will be

dismissed, for among other reasons, as violating the applicable statute of limitations. 

D. Leave to Amend

When dismissing a complaint, the Ninth Circuit has stated that “leave to amend should be

granted unless the district court determines that the pleading could not possibly be cured by the

allegation of other facts.” Bly-Magee v. California, 236 F.3d 1014, 1019 (9 Cir.2001) (internal

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quotation marks omitted); Chang v. Chen, 80 F.3d 1293, 1296 (9 Cir. (9 Cir. 1996). The th th

court cannot find that at least some of the complaint’s allegations could not be cured by

amendment. As such, the court will grant Plaintiffs the opportunity to amend the pleadings in

this case.

Any amended complaint should be short and to the point, containing only those facts

necessary to state one or more causes of action against each Defendant. Plaintiffs’ amended

complaint should not contain legal arguments, citations to legal authority, or unnecessary

background information. Plaintiffs are advised that any causes of action in the amended

complaint must be based upon a well-founded belief that a cognizable or arguable legal theory

exists that would support such a theory. When filing any amended complaint, Plaintiffs must

submit an amended complaint that meets the requirements of Rule 8. In addition, Plaintiffs

should be mindful of the following legal points.

1. Alter Ego

The complaint contains alter ego allegations. Specifically, Plaintiffs contend that

Defendants are the alter egos of the Defendants in Flores I. Plaintiffs seek to hold these

Defendants liable for the verdict in Flores I by establishing that they are alter egos of DDJ Inc.

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and DDJ LLC. The alter ego allegations in this action are clearly duplicative of the motion to

amend judgment debtors filed in Flores I. Thus, Plaintiffs clearly must either withdraw the alter

ego motion filed in Flores I or withdraw the alter ego cause of action from this case. The

question is whether Plaintiffs are required to proceed with their alter ego claims in one action

over the another. 

Under California law, alter ego is usually established after a judgment has been entered

against the defendant corporation through a motion to add a judgment debtor. See Cigna

Property and Casualty Insurance Co. v. Polaris Pictures Corp., 159 F.3d 412, 421 (9 Cir. 1998); th

Dow Jones Co. v. Avenel, 151 Cal.App.3d 144, 148 (1984). Federal Rule of Civil Procedure

69(a) governs the execution of judgments awarded by federal courts. In the absence of

controlling federal authority, Rule 69(a) requires the district court to follow “practices and

procedures of the state in which the district court is held.” Fed.R.Civ.P. 69(a). The court looks

to California law to determine whether a new complaint may contain allegations that parties are

the alter ego of defendants in another action to obtain satisfaction of the judgment in the other

action. 

Section 187 of the California Code of Civil Procedure states “[a] trial court has the

authority to amend a judgment in order to add additional judgment debtors.” Dow Jones Co. v.

Avenel, 151 Cal.App.3d 144, 148 (1984). Under California law, a judgment may be amended to

impose liability upon a person who was not a party to the underlying litigation pursuant to the

alter ego doctrine. Farenbaugh & Son v. Belmont Construction, Inc., 194 Cal.App.3d 1023, 1029

(1987); Dow Jones Co. v. Avenel, 151 Cal.App.3d at 148; Alexander v. Abbey of the Chimes,

104 Cal.App.3d 39, 44 (1980); Mirabito v. San Francisco Dairy Co., 8 Cal.App.2d 54, 60 (1935);

see also Rutter, CAL. PRACTICE GUIDE: ENFORCING JUDGMENTS/DEBTS CH. 6G-15; 6:1575

(2007). 

In some circumstances, the issue of alter ego may be raised in a completely new second

action. In California, where a plaintiff brings a wholly separate action against an individual on

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an alter ego theory to enforce a prior judgment against a corporation, the action must be based

upon a different "primary right" than that which was litigated in the first case. See Brenelli

Amedeo, S.P.A. v. Bakara Furniture, Inc., 29 Cal.App.4th 1828, 1840-41 (1994); CAL. CIV.

PRAC. BUSINESS LITIGATION § 5:24, Raising alter ego issue (2007). 

 At least one federal case has also allowed alter ego allegations to proceed in a second

action. In Blackburn Truck Lines Inv. V. Francis, 723 F.2d 730 (9 Cir. 1984), the plaintiff had

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obtained a default judgment in federal district court against corporate entities. A second suit was

filed in an effort to collect on the earlier judgment from the sole owners of the corporations on a

theory that the defendants in the second suit are the alter egos of the corporate entities. Id. at

731. After the district court dismissed the second action for lack of jurisdiction, the Ninth

Circuit reversed. The Ninth Circuit found that, in one sense, the second suit was effort to

enforce the initial default judgment and, in another sense, an effort to accomplish what joining

the defendants to the first action would have provided. Id. at 732. The Ninth Circuit

concluded that the court had jurisdiction to decide the alter ego issue in order to give effect to its

judgment. Id. The Ninth Circuit reasoned that the second case could be viewed as a

proceeding merely supplementary to and in aid of the plaintiff’s judgment against the corporate

entities. Id. at 732 -33. In conclusion, the Ninth Circuit stated:

It follows that in this case jurisdiction exists without regard to whether it is

viewed as a proceeding independent of the default judgment against [the corporate

entites], or as one in aid of that judgment as envisioned by Rule 69(a). In either

event, state law will determine the liability, if any, of the appellees. Difficult

questions of federal jurisdiction are suggested by the facts of this case. Our

holding, however, is a narrow one applicable only to the facts of this case. We

intend to lay down no broad jurisdictional principles.

Id. at 733.

Here, Plaintiffs are not foreclosed from amending judgment in Flores I to include

Defendants as alter egos. In fact, such a motion is pending. Based on the above cited authority,

it appears that Plaintiffs should raise the issue of alter ego in a motion to amend judgment in

Flores I and not in this separate action. At this time the court will not prohibit Plaintiffs from

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alleging alter ego claims in any amended complaint. However, the court would expect any

amended complaint that contains alter ego allegations be filed with a motion to withdraw the

motion to add judgment debtors in Flores I.

2. Spoilation of Evidence

The complaint contains a spoilation of evidence claim that arises from Defendants’

alleged conduct in Flores I. It appears such a claim is barred. 

In Cedars-Sinai Medical Center v. Superior Court, 18 Cal.4th 1(1998), the California

Supreme Court held that there is no tort remedy for intentional spoliation of evidence by a party

to an action. Id. at 17-18. The California Supreme Court’s holding concerned intentional

spoliation of evidence if the spoliation victim knew or should have known of the spoliation

before the trial or other decision on the merits in the underlying action. Id. at 17-18. In Temple

Community Hospital v. Superior Court, 20 Cal.4th 464 (1999), the California Supreme Court

extended the holding of Cedars Sinai to intentional third party spoliation of evidence. Id. at 466,

478. The California Supreme Court noted in Cedars-Sinai that discovery sanctions are available

as a remedy for intentional spoliation of evidence by a party. Cedars-Sinai, 18 Cal.4th at 12. In

Temple Community Hospital, the Supreme Court “recognize[d] that the salient distinction

between first party and third party spoliation of evidence is the disparity in sanctions available

within the confines of the underlying litigation.” Temple Community Hospital, 20 Cal.4th at

476. However, the California Supreme Court reasoned that 

the victim of third party spoliation may deflect the impact of the spoliation on his

or her case by demonstrating why the spoliated evidence is missing. (See

Evid.Code § 412.) It also may be possible to establish a connection between the

spoliator and a party to the litigation sufficient to invoke the sanctions applicable

to spoliation by a party. (Code Civ. Proc. § 2025, subds. (j)(3), (o).)

Temple Community Hospital, 20 Cal.4th at 477. 

Here, the spoilation of evidence cause of action appears to concern discovery disputes

that occurred during discovery in Flores I. While unclear, it appears this cause of action alleges

that Defendants allegedly destroyed evidence rather than give it to Plaintiffs during discovery in

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Flores I. When filing any amended complaint containing a spoilation of evidence cause of

action, Plaintiffs should be mindful of when they knew or should have known that Defendants

allegedly destroyed evidence. Given the extensive discovery disputes in Flores I, where

Plaintiffs repeatedly accused DDJ Inc., DDJ LLC, and Defendants of hiding and destroying

evidence, the court questions whether Plaintiffs were unaware of the facts underlying their

spoilation of evidence cause of action prior to trial in Flores I. However, because the exact basis

of the spoilation of evidence claim is unclear, the court will allow Plaintiffs to amend this claim. 

Plaintiffs are advised that any amended complaint that includes such a cause of action must be

based upon a well-founded belief that a cognizable or arguable legal theory exists that would

support such a theory. 

E. Defendants’ Remaining Arguments 

Because Plaintiffs are being given leave to amend to clarify the exact facts supporting

each cause of action, delete duplicative causes of action that were raised or could have been

raised in earlier cases, and establish that the causes of action are not barred by the statute of

limitations because they are based on facts they occurred within the statute of limitations, the

court declines to address the other arguments made in Defendants’ briefs at this time. 

Determining whether a complaint that violates Rule 8 states a claim on causes of action that

might not be contained in an amended pleading or will be clarified in an amended pleading is not

an efficient use of judicial researches. In declining to address these issues, the court is not

finding that the complaint adequately states a claim for the other causes of action. In filing any

amended complaint, Plaintiffs should review the elements for each cause of action and ensure

that the amended complaint’s alleged facts meet these elements. 

ORDER

Accordingly, based on the above memorandum opinion and order, the court ORDERS

that:

1. Hagobian Defendants’ motion to dismiss is GRANTED;

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2. Yeramian Defendants’ motion to dismiss is GRANTED;

3. The complaint is DISMISSED with leave to amend;

4. Plaintiffs shall file any amended complaint within thirty days of this order’s date

of service; and

5. Plaintiffs are FOREWARNED that failure to file an amended complaint within

thirty days will result in this action’s dismissal.

IT IS SO ORDERED.

Dated: July 27, 2007 /s/ Anthony W. Ishii 

0m8i78 UNITED STATES DISTRICT JUDGE

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