Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-00873/USCOURTS-casd-3_18-cv-00873-8/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332fd Diversity-Breach of Fiduciary Duty

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

HOWARD APPEL, et al.,

Plaintiffs,

Case No. 18-cv-873-BAS-MDD

ORDER GRANTING IN PART

DEFENDANT’S MOTION TO 

DISMISS THIRD AMENDED 

COMPLAINT

[ECF No. 101]

v.

BOSTON NATIONAL TITLE 

AGENCY, LLC,

Defendant.

Presently before the Court is Defendant Boston National Title Agency, LLC’s 

Motion to Dismiss Third Amended Complaint. (“Mot.,” ECF No. 101.) Plaintiffs 

Howard Appel, David Cohen, and Ke’e Partners LLC filed an opposition to the

Motion, (“Opp’n,” ECF No. 102), to which Defendant replied, (“Reply,” ECF No. 

103). The Court finds resolution of this matter is suitable without the need for oral 

argument. See Civ. L.R. 7.1(d)(1). For the reasons discussed below, the Court

GRANTS IN PART and DENIES IN PART Boston National’s Motion.

I. BACKGROUND

In June 2017, Plaintiffs signed a Bidder Registration Agreement with 

Concierge Auctions, LLC, to participate in Concierge’s “Summer Portfolio Sale” 

auction of real estate properties. The Bidder Agreement provided that escrow 

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services would be provided by Boston National Title. (Third Amended Complaint, 

“TAC,” ECF No. 73, ¶ 9.) Plaintiffs wired $100,000 to Boston National to be held 

in Boston National’s escrow account. Plaintiffs entered the auction and bid on a 

property in Fiji (“Fiji Property”). (Id.) On July 1, 2017, Plaintiffs were declared the 

winning bidder for the Fiji Property. (Id. ¶ 12.) Concierge emailed Plaintiffs 

informing them they had won and requested they wire an additional $185,000 to the 

escrow account. Concierge also emailed the Fiji Property owners congratulating 

them on the sale and sent a purchase contract. (Id. ¶ 13.) The Fiji Property owners 

responded to Concierge, stating they were surprised by the email because they had 

informed Concierge a few days prior that the auction would not go forward. (Id.

¶ 14.) Boston National was copied on the above emails. Plaintiffs state they were 

unaware the Fiji Property owners were refusing to sell the property and therefore 

wired the additional $185,000 to Boston National’s escrow account on July 3, 2017. 

(Id. ¶ 15.)

On July 7, 2017, Plaintiffs discovered the Fiji Property owners were refusing 

to sell and a few weeks later negotiated with the owners to attempt to salvage the 

deal. (Id. ¶ 16.)1 The negotiations were unsuccessful, and Plaintiffs requested 

Boston National provide them with “the escrow instructions.” (Id. ¶ 18.) Boston 

National responded, appearing to have no knowledge of any escrow instructions, and 

stated that no escrow agreement was signed between Plaintiffs and Boston National. 

(Id. ¶ 19.) Boston National told Plaintiffs it had “a fiduciary relationship with 

Concierge” and then asked a Concierge representative to inform Plaintiffs “of what 

is to take place if the seller refuses to sign the contract.” (Id. ¶ 20.) Boston National 

stated if an agreement could not be reached, it would “interplead the funds to the 

appropriate court for disposition.” (Id.) Plaintiffs infer that Concierge instructed 

Boston National not to disburse the funds until Concierge said so. (Id. ¶ 21.)

1 In the midst of this, Plaintiffs state they asked Boston National whether it would return the escrow 

funds. (TAC ¶ 17.)

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On September 28, 2017, Plaintiffs demanded Boston National return their 

funds, and demanded Concierge tell Boston National to do the same. (Id. ¶ 22.) 

Boston National did not do so, appearing to “have given Concierge complete control” 

over the funds. (Id. ¶ 23.) Plaintiffs then filed suit against Concierge for the return 

of the escrow funds and “hundreds of thousands in attorneys’ fees” incurred. (Id.

¶ 24; see 17-cv-2263-BAS-MDD (“the Concierge case”).) Concierge commenced

an arbitration proceeding in New York and told Plaintiffs if they paid $37,500, 

Concierge would dismiss the proceeding and would instruct Boston National to 

release the funds. (TAC ¶ 25.) Plaintiffs did not pay, and the Concierge case 

proceeded. This Court stayed the Concierge case and directed the parties to 

arbitration. (17-cv-2263, ECF No. 30.) 

In April 2018, Plaintiffs again asked Boston National to return the funds. (Id.

¶ 26.) Plaintiffs allege, on information and belief, that Boston National refused to do 

so because it was using the funds “for the benefit of itself, Concierge, or another third 

party.” (Id. ¶ 28.) Plaintiffs then filed the present suit against Boston National on 

May 4, 2018. Boston National returned the $285,000 to Plaintiffs on May 24, 2018. 

(Id. ¶ 47.) 

As to the procedural history of this case, Plaintiffs’ original complaint against 

Boston National was for breach of fiduciary duty, negligence, and an accounting. 

Boston National answered the complaint. (ECF No. 7.) The parties had various 

discovery disputes, the most notable being Plaintiffs’ request for all documents 

related to the escrow account into which Plaintiffs deposited the $285,000. This 

escrow account, held by Wells Fargo Bank, is a repository of funds from customers 

of Concierge and Boston National. Boston National produced redacted statements

for the account so as not to disclose the identification of the customers who also had 

funds in the account. Plaintiffs sought unredacted statements, and Judge Dembin and 

this Court denied the request. (ECF No. 82.)

In the midst of the discovery disputes, Plaintiffs sought leave to file an 

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amended complaint, which the Court granted. The amended complaint contained

nine claims. Boston National moved to dismiss the amended complaint in its 

entirety, which the Court granted in part. (“Prior Order,” ECF No. 83.) Due to an 

erroneous filing of a second amended complaint, (see ECF Nos. 95–98), the present 

complaint is the Third Amended Complaint. Boston National again moves to dismiss 

the Complaint.

II. LEGAL STANDARD

A complaint must plead sufficient factual allegations to “state a claim to relief 

that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal 

quotation marks and citations omitted). “A claim has facial plausibility when the 

plaintiff pleads factual content that allows the court to draw the reasonable inference 

that the defendant is liable for the misconduct alleged.” Id. 

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 

Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. 

Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court 

must accept all factual allegations pleaded in the complaint as true and must construe 

them and draw all reasonable inferences from them in favor of the nonmoving party. 

Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). To avoid a Rule 

12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, 

it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A Rule 12(b)(6) dismissal may 

be based on either a ‘lack of a cognizable legal theory’ or ‘the absence of sufficient 

facts alleged under a cognizable legal theory.’” Johnson v. Riverside Healthcare 

Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (quoting Balistreri v. Pacifica Police 

Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)).

III. ANALYSIS

A. Procedural Issues

Before the Court turns to the merits of the Motion, it must address the 

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documents, evidence, and objections that were filed as attachments to the parties’ 

briefs. As a general rule, “a district court may not consider any material beyond the 

pleadings in ruling on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453

(9th Cir. 1994) (citation omitted). There are two exceptions to this. Lee v. City of 

Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). First, the court may consider 

“material which is properly submitted as part of the complaint” which means the 

documents are either “physically attached to the complaint” or if the “complaint 

necessarily relies” on them and their authenticity is not contested. Id. Second, a 

court may judicially notice “matters of public record.” Fed. R. Evid. 201; Mack v S. 

Bay Beer Distib., 798 F.2d 1279, 1282 (9th Cir. 1986).2

Boston National attached five exhibits to its Motion. The first attachment 

includes excerpts of the deposition of Mr. Appel. (ECF No. 101-2.) The Complaint 

neither refers to nor relies on the deposition, thus, it may not be incorporated by 

reference. And Boston National does not ask the Court to judicially notice the 

deposition, nor could it. Therefore, the Court does not consider the deposition.

Boston National also requests the Court take judicial notice of four documents. 

(ECF No. 101-3.) The first three documents are filings in this case and the related 

case 17-cv-2263. The Court may of course take judicial notice of filings and 

pleadings on its own docket, because such documents are “not subject to reasonable 

dispute because [their authenticity] . . . can be accurately and readily determined from 

sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). 

But such requests are unnecessary; Boston National may cite directly to the docket 

to reference such court filings. See, e.g., Colodney v. Orr, No. EDCV 14–01973–

VAP, 2015 WL 1636818, at *1 (C.D. Cal. Apr. 9, 2015), aff’d, 651 F. App’x. 630 

(9th Cir. 2016) (“As an order in the Court’s own docket, judicial notice is not required 

2 The Court previously incorporated by reference the Bidder Agreement. (Prior Order at 12 n.3.) 

The Court does so again because the Third Amended Complaint relies on the Bidder Agreement.

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in order for the Court to consider Exhibit B.”). Accordingly, the Court grants Boston 

National’s request, but notes that, for future filings, citing directly to the docket is 

preferable.

Boston National also asks the Court to judicially notice the California 

Secretary of State’s business entity registration information for BNT Title Company 

of California and the California Department of Insurance’s business entity 

registration information for BNT Title Company of California. District courts may 

take judicial notice of “records and reports of administrative bodies,” Anderson v. 

Holder, 673 F.3d 1089, 1094 n.1 (9th Cir. 2012), as well as “undisputed matters of 

public record.” Harris v. County of Orange, 682 F.3d 1126, 1131–32 (9th Cir. 2012). 

However, the Defendant in this matter is Boston National Title Agency, LLC. The 

entity listed on the two documents is BNT Title Company of California. Defendant 

argues that it, Boston National Title Agency, LLC “is licensed to provide escrow and 

title services in the State of California, as BNT Title Company of California.” (Mot. 

at 10.) But, this assertion, and the relationship between Boston National and BNT 

Title Company, is not apparent from the judicially noticeable documents. At this 

stage, the Court cannot consider the assertion by Boston National. Therefore, there 

is no point in judicially noticing the registration information for this entity. The 

Court denies the requests.

Finally, as an attachment to its opposition, Plaintiffs include excerpts from a 

deposition. (ECF No. 102-1.) Plaintiffs do not request the Court judicially notice 

this document, and it would not be proper to do so.

3

 The Court does not consider the 

excerpts.

3 Boston National objects to the Court’s consideration of the deposition transcript because it is 

“extraneous evidence” that the Court may not consider in ruling on the Motion to Dismiss. (ECF 

No. 104.) This is strange because Boston National also asked the Court to consider a deposition 

transcript in ruling on its Motion. (ECF No. 101-2.) The Court will not consider either deposition

and requests that counsel be more careful in the future regarding the filing of exhibits and 

objections.

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The Court now addresses each cause of action in turn.

B. Accounting

The $285,000 has been returned, but Plaintiffs request an accounting of those 

funds, as “it is unclear” whether the funds were the original escrow funds, or whether 

Boston National used those funds and “paid Plaintiffs with someone else’s money.” 

(TAC ¶ 41.) Plaintiffs also request an accounting of any interest Boston National 

earned from the funds during the time it held them and “any use of profits” realized 

through the funds. (Id. ¶¶ 40.)

The Court previously partially denied Boston National’s motion to dismiss this 

claim; Boston National’s current Motion does not convince the Court to deviate from 

this ruling. For the same reasons detailed in the Court’s prior order, (Prior Order at 

6) the Court DENIES the Motion to Dismiss this cause of action.

C. Violation of California Unfair Competition Law

California’s Unfair Competition Law (“UCL”) prohibits “any unlawful, unfair 

or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. “Each prong 

of the UCL is a separate and distinct theory of liability.” Kearns v. Ford Motor Co., 

567 F.3d 1120, 1127 (9th Cir. 2009). Plaintiffs alleges Boston National violated the 

UCL through fraudulent and misleading advertising.

First, to the extent the alleged misrepresentations or fraud stem from 

information in the Bidder Agreement, Boston National argues it is not responsible 

for anything in the Bidder Agreement as it was not a party to that agreement, nor is 

it responsible for anything Concierge told Plaintiffs. The Court previously found 

that Plaintiffs have not pled Boston National had any responsibility for the 

information disclosed in the Bidder Agreement. (Prior Order at 7.) This holding 

remains the same and the claims concerning Boston National’s “misrepresentations 

that all escrow services related to the Fiji Property, ‘shall be exclusively provided by 

Boston National Title (“Escrow Agent”,)’ contained within the Bidders Agreement”

(TAC ¶ 44) and all other claims of misrepresentations made by Concierge or in the 

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Bidder Agreement are DISMISSED.

Plaintiffs allege Boston National’s conduct is fraudulent because the company 

falsely advertised it was licensed to do business in California and licensed as an 

escrow agency. (TAC ¶ 44.) Boston National argues that “to the extent Plaintiffs’ 

claims for ‘False Advertising’ or ‘Unfair Business Practices’ rely on BNT’s website 

referencing a ‘San Diego Office’ or statements regarding licensing to provide 

services in 42 states, there is no allegation in the TAC as to how BNT being licensed 

in California was relevant to their participation in an auction for a property in the 

Republic of Fiji.” (Mot. at 11 (citing TAC ¶ 8).) The Court also previously analyzed 

this issue of Plaintiffs’ reliance on this allegedly false advertising. “[P]laintiff must 

show that he personally lost money or property because of his own actual and 

reasonable reliance on the allegedly untrue or misleading statements.” Rosado v. 

eBay, Inc., 53 F. Supp. 3d 1256, 1264–65 (N.D. Cal. 2014). The Court dismissed 

the claim because Plaintiffs had not sufficiently pled they relied on Boston National’s 

representation that it could conduct services in California. (Prior Order at 8.) The 

Court held: 

Plaintiffs do not assert how or why they believed Boston National was 

licensed in California before entering into the agreement with 

Concierge, or even that they had any information at all about Boston 

National before sending the escrow funds. Plaintiffs do not assert they 

looked up Boston National’s webpage before entering into the 

agreement nor do they argue they only agreed to participate in the 

auction because Boston National was licensed locally. Instead, 

Plaintiffs were in possession of the Bidder Agreement which lists 

Boston National’s address in North Carolina, and they do not allege 

they asked anyone about this representation or expressed concerns 

about Boston National’s location. Therefore Plaintiffs have not 

plausibly pled they relied on any specific misrepresentation or omission 

before entering into the agreement. 

(Id at 8–9.)

Plaintiffs now state they have “remedied the UCL claim issues.” (Opp’n at 

11.) They specifically allege, “[b]eginning on or before June 5, 2017, as part of 

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[their] due diligence concerning their attempted purchase of real property located in 

the Republic of Fiji, Plaintiff Appel reviewed Boston National’s website, at which 

time Plaintiff Appel observed Boston National’s misrepresentations that ‘Boston 

National is directly licensed to provide our services and issue title policies in 42 states 

plus the District of Columbia,’ and California is highlighted as one of the 42 States.” 

(TAC ¶ 8.) Plaintiffs claim they “relied upon Boston National’s false advertising 

that it could conduct business and perform escrow services in the State of California

and that it was an expert in its field by wiring its Escrow Funds to Boston National.” 

(TAC ¶ 75.) The Court finds that Plaintiffs have plausibly pled they relied on Boston 

National’s representations, which induced them to enter into the agreement and then 

deposit escrow funds. The Court DENIES the Motion to Dismiss these claims.

D. Violation of False Advertising Law

Plaintiffs allege Boston National violated California’s False Advertising Law 

(“FAL”) because it “advertised and adopted . . . the position that it was the exclusive 

escrow agent for Concierge, that it could conduct business and perform escrow 

services in the State of California, and that it was an expert in its field.” (TAC ¶ 73.) 

Plaintiffs provide no information as to how Boston National may have “adopted” 

Concierge’s statements. The fact that Concierge may have advertised Boston 

National in a certain way, without Boston National’s contribution, is not a claim 

against Boston National. “In the context of false advertising, there is no duty to 

investigate the truth of statements made by others.” Parent v. Millercoors LLC, No 

15-cv-1204-GPC-WVG, 2016 WL 3348818 at *7 (S.D. Cal. June 16, 2018). The 

Court DISMISSES these claims.

The Court again turns to the allegations that Boston National made false 

representations regarding its ability to lawfully conduct business in California. 

Boston National again contests Plaintiffs’ reliance on this allegedly false advertising. 

Standing under California’s False Advertising law is limited to “any person who has 

suffered injury in fact and has lost money or property as a result of” a defendant’s 

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alleged misrepresentations. Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 321 

(2011) (quoting California Business & Professions Code § 17535). Most courts have 

interpreted the FAL’s “as a result of” language to require that plaintiffs “allege their 

own reliance on the alleged misrepresentations.” L.A. Taxi Coop., Inc. v. Uber 

Techs., Inc., 114 F. Supp. 3d 852, 866–67 (N.D. Cal. 2015) (citing cases). As 

Plaintiffs’ false advertising claims stem from the same allegations as their unfair 

competition claims, the same analysis as above applies here. Plaintiffs have 

plausibly pled they relied on Boston National’s untrue statements and were thus 

induced into depositing funds. The Court DENIES the Motion to Dismiss these 

claims.

E. Fraudulent Concealment

Fraudulent concealment consists of five elements: “(1) the defendant must 

have concealed or suppressed a material fact, (2) the defendant must have been under 

a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally 

concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the 

plaintiff must have been unaware of the fact and would not have acted as he did if he 

had known of the concealed or suppressed fact, and (5) as a result of the concealment 

or suppression of the fact, the plaintiff must have sustained damage.” Kaldenbach v. 

Mut. of Omaha Life Ins. Co., 178 Cal. App. 4th 830, 850 (2009). 

Plaintiffs’ fraudulent concealment claim is based on two allegations: first, that 

Boston National concealed “the fact that Concierge would have exclusive control 

over the Escrow Funds when the sale of the Fiji Property did not close, despite the 

terms of the void Bidder Agreement, which Boston National erroneously believes 

controlled the Escrow Funds” (TAC ¶54) and second, that Boston National concealed 

that fact that the Fiji Property owners refused to sell the property on July 3, 2017 (id.

¶ 55).

As to the first contention, as the Court previously found, the general premise 

of this claim is unclear. Plaintiffs contend the Bidder Agreement is void because 

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Concierge conducted “illegal, unlicensed real estate broker activities within 

California” and “fraudulently induced Plaintiffs” into signing the agreement. (TAC 

¶ 9.) This contention does not appear to be relevant to the assertion that Boston 

National concealed that Concierge would exclusively control the funds. It is also

unclear why Plaintiffs contend Boston National “erroneously” believes the 

Agreement controlled the escrow funds; if the Agreement in fact does not control the 

funds, then why is it fraudulent for Boston National to allegedly conceal that 

Concierge had control over the funds? Further, Boston National is not a party to the 

Bidder Agreement. The Court also noted in its prior order that Plaintiffs have not 

pled Boston National’s intention to defraud as it relates to this allegedly concealed 

fact. (Prior Order at 13.) Plaintiffs have not cured this deficiency; thus, the Court 

DISMISSES this portion of the fraudulent concealment claim.

As to the second contention, Plaintiffs state they would not have deposited the 

escrow funds or proceeded with the purchase of the property had Boston National 

not concealed the Fiji Property owners’ refusal to sell on July 3, 2017. (TAC ¶ 57.) 

Boston National responds that Plaintiffs could have learned this information from 

Concierge. (Mot. at 14.) Even so, this does not negate a claim of concealment. 

Boston National also argues that Plaintiffs knew on at least July 7 that the deal had 

fallen through and “since Plaintiffs clearly knew of the Fiji Property owners’ dispute, 

this information cannot be a basis for a fraudulent concealment or misrepresentation 

claim.” (Id. at 15.) This is not so; Plaintiffs claim if they had known of the refusal 

to sell on July 3, they would not have wired extra money, thus, the fact that they 

learned of it four days later harmed them. Accordingly, Plaintiffs have sufficiently 

pled that Boston National concealed a fact from them with the intention of inducing 

Plaintiffs to wire more money, and Plaintiffs relied on this to their detriment. The 

Court DENIES the Motion to Dismiss this portion of the fraudulent concealment 

claim.

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F. Fraudulent Misrepresentation and Negligent Misrepresentation

The elements of a claim for intentional misrepresentation are: “(1) a 

misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) actual 

and justifiable reliance, and (5) resulting damages.” Cisco Sys., Inc. v. 

STMicroelectronics, Inc., 77 F. Supp. 3d 887, 897 (N.D. Cal. 2014). The elements 

for negligent misrepresentation are the same, except there is no requirement of 

knowledge of falsity, instead, there must be no reasonable ground for believing the 

misrepresentation to be true. Wells Fargo Bank, N.A. v. FSI Fin. Sols., Inc., 196 Cal.

App. 4th 1559, 1573 (2011).

The first basis of Plaintiffs’ misrepresentation claims is Boston National’s 

alleged misrepresentation that it could perform services in California. The Court has 

found above that this allegation is sufficiently pled to form the basis of Plaintiffs’ 

UCL and false advertising claims. The Court finds that Plaintiffs have plausibly pled 

that Boston National intentionally and/or negligently misrepresented this and the 

Court DENIES the Motion to Dismiss these claims under both the intentional and 

negligent misrepresentation causes of action.

Plaintiffs also contend that Boston National negligently misrepresented “that 

in order to return the Escrow Funds, it required Concierge’s consent, which it had no 

reasonable ground to believe.” (TAC ¶ 68.) Plaintiffs merely state in a conclusory 

fashion that they “reasonably” relied on the misrepresentation. (Id. ¶ 70.) This is 

not enough, considering Plaintiffs also allege they continued to ask Boston National 

for the return of their funds despite Boston National’s assertion. (See TAC ¶¶ 20–

22; Opp’n at 3 n.1.) This shows they did not rely on the assertion, nor were they 

damaged by it. The Court DISMISSES this part of the negligent misrepresentation 

cause of action.

G. Conversion

The Court previously denied the motion to dismiss Plaintiffs’ conversion 

claim. Boston National’s argument in its current Motion for the dismissal of the

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conversion claim is based on a typographical error of a date listed by Plaintiffs, which 

they address in their opposition. (Mot. at 18–19, Opp’n at 21 n.10.) For the same 

reasons the Court stated in its prior order, the Court DENIES the Motion to Dismiss 

the conversion claim.

H. Tort of Another Doctrine

Plaintiffs allege that their efforts to recover the escrow fees has forced them to 

incur “hundreds of thousands of dollars in attorneys’ fees” in the suit against 

Concierge, which Plaintiffs seek from Boston National “pursuant to the tort of 

another doctrine.” (TAC ¶ 24.)

Under the American rule, each party must generally pay his or her own 

attorney fees. Gray v. Don Miller & Assocs., Inc., 35 Cal. 3d 498, 504 (1984). This 

rule is subject to several exceptions, one of which is the “tort of another,” or “third

party tort” exception, which allows recovery of attorney fees where the plaintiff is 

required to employ counsel to prosecute or defend an action against a third party 

because of the tort of the defendant. Id. at 505. The seminal California case 

establishing the tort of another doctrine is Prentice v. North American Title Guaranty 

Corp., 59 Cal. 2d 618 (1963), where the California Supreme Court held:

A person who through the tort of another has been required to act in the 

protection of his interests by bringing or defending an action against a 

third person is entitled to recover compensation for the reasonably 

necessary loss of time, attorney’s fees, and other expenditures thereby 

suffered or incurred.

Id. at 620. 

Fifteen years later, the California Supreme Court revisited the tort of another 

doctrine. In Davis v. Air Technical Industries, Inc., 22 Cal. 3d 1, 6 (1978), the Court 

limited the scope of Prentice. The Court held “the Prentice exception was not meant 

to apply in every case in which one party’s wrongdoing causes another to be involved 

in litigation with a third party.” Id. Instead, the rule is limited to cases involving 

“exceptional circumstances.” Id. (citing Prentice, 59 Cal. 2d at 620.) The Court had 

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no intention of letting the exception swallow the general rule that parties were to pay 

their own attorney’s fees. Id. (citing Cal. Civ. Code § 1021).

A claim under the tort of another doctrine thus involves three parties: the 

claimant, the tortfeasor, and the third party; and the tortfeasor must have committed 

a tort against the claimant. Burger v. Kuimelis, 325 F. Supp. 2d 1026, 1041 (N.D. 

Cal. 2004.) “[W]hen a defendant’s tortious conduct requires the plaintiff to sue a 

third party, or defend a suit brought by a third party, attorney fees the plaintiff incurs 

in this third party action ‘are recoverable as damages resulting from a tort in the same 

way that medical fees would be part of the damages in a personal injury action.’”

Third Eye Blind, Inc. v. Near N. Entm’t Ins. Servs., LLC, 127 Cal. App. 4th 1311, 

1325 (2005).

The tort of another doctrine does not apply “to one of several joint tortfeasors.” 

Vacco Indus. Inc. v. Van den Berg, 5 Cal. App. 4th 34 (1992). The doctrine “does 

not reach so far as to allow plaintiffs to pick and choose which one of several joint 

tortfeasors should absorb the costs of the plaintiffs litigating with the other 

tortfeasors.” Gorman v. Tassajara Dev. Corp., 178 Cal. App. 4th 44, 81 (2009); see 

MJT Secs., LLC v. Toronto Dominion Bank, No. 04-16362, 2006 WL 123661, at *2 

(9th Cir. 2006) (holding the doctrine can be used if two parties commit “separate and 

distinct tort[s]” but not if they are joint tortfeasors). “Joint tortfeasors” is defined 

as “[t]wo or more tortfeasors who contributed to the claimant’s injury and who may 

be joined as defendants in the same lawsuit.” Joint tortfeasors, BLACK’S LAW 

DICTIONARY (11th ed. 2019). “[T]he term has also been used to describe one whose 

negligence, in concurrence with the negligence of another, has caused a single 

injury.” Mayhugh v. County of Orange, 141 Cal. App. 3d 763, 768 (1983) 

(McDaniel, J., dissenting) (citing cases).

The Court previously found Plaintiffs had not plausibly pled the tort of another 

doctrine, for the following reason:

Plaintiffs did not join Concierge and Boston National in one lawsuit, 

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but Plaintiffs have alleged the same conduct by Concierge and Boston 

National (not returning the funds) contributed to a single injury (the loss 

of the use of the funds). Plaintiffs clearly already sued Concierge for 

the same conduct they now allege against Boston National. (See 17-

cv-2263-BAS-MDD, ECF No. 12 (Plaintiffs allege Concierge 

committed, inter alia, conversion and breached its fiduciary duty to 

Plaintiffs by refusing to return the escrow funds).) The Court finds 

Plaintiffs have alleged the two Defendants are joint tortfeasors. See TSI 

Seismic Tenant Space, Inc. v. Superior Court, 149 Cal. App. 4th 159, 

167 n.3 (2007) (finding the plaintiff had sufficiently alleged the 

defendants to be joint tortfeasors when it was alleged that the two 

“owed a tort duty of care to it and that their combined negligence 

contributed to its damages”). Plaintiffs have alleged that both 

Defendants’ tortious action in not returning the escrow funds caused 

Plaintiffs damages. But Plaintiffs made the choice to sue Concierge 

“based on Boston National’s refusal to return” the funds, and Plaintiffs 

offer no reason why they could not have only sued Boston National. 

(See FAC ¶ 23; Opp’n at 18.) Therefore, Plaintiffs’ attorney’s fees

against Concierge “were caused by its decision to pursue a joint 

tortfeasor, rather than simply seek a recovery based on [Boston 

National’s] negligence.” Elec. Elec. Control, Inc. v. L.A. Unif. Sch. 

Dist., 126 Cal. App. 4th 601, 617 (2005).

(Prior Order at 17.)

In response, Plaintiffs claim that Concierge’s misconduct is fraudulently 

inducing Plaintiffs to deposit funds into an escrow account and deprive Plaintiffs of 

those funds, and this is different than Boston National’s misconduct of concealing 

from Plaintiffs the Fiji Property owners’ refusal to sell and the refusal to return the 

funds. (TAC n.1.) This is partially true; while Plaintiffs certainly sued Concierge 

for fraudulent inducement, they also sued Concierge for failure to return the funds. 

(See 17-cv-2263-BAS-MDD, ECF No. 12.) And, regardless, it is the combined 

actions of Concierge and Boston National that caused the harm of Plaintiffs not 

having access to the funds for a period of time. While Plaintiffs claim that this case

arose from their deposit of the funds with Boston National, (Opp’n at 23) in reality, 

this matter as a whole arose from Plaintiffs participating in Concierge’s auction, 

which led to them depositing funds with Boston National and having issues with both 

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companies. Thus, the two are joint tortfeasors; the joint conduct of both companies 

caused the injury. (See TAC ¶ 21 (“Concierge (through counsel) instructed Boston 

National not to disburse the Escrow Funds until Concierge provided further 

instructions.”).) It was not only Boston National’s conduct that led Plaintiffs to sue 

Concierge. Plaintiffs have not pled that the tort of another theory applies to justify 

their recovery of damages under these circumstances, thus, the Court GRANTS the 

Motion to Dismiss the tort of another claims.

I. Punitive Damages

Boston National moves to dismiss Plaintiffs’ claim for punitive damages 

because Plaintiffs have not alleged a sufficient state of mind. The Court previously 

dismissed Plaintiffs’ punitive damages claim because Plaintiffs had not sufficiently 

alleged punitive conduct nor had they alleged punitive actions of any individual. 

(Prior Order at 18–19.)

When a plaintiff alleges a claim for punitive damages, a court may dismiss 

the claim if the plaintiff fails to allege sufficient facts to show “oppression, fraud, or 

malice.” Cal. Civ. Code § 3294(a). It is insufficient when the plaintiff asserts 

“nothing more than conclusory allegations” of oppression, fraud, or malice. Kelley

v. Corrections Corp. of Am., 750 F. Supp. 2d 1132, 1147 (E.D. Cal. 2010).

Plaintiffs now state that Boston National’s Chief Compliance Officer, Keith 

Lewis, “acted maliciously” by refusing Plaintiffs’ repeated demands for the return of 

their funds” despite Boston National’s knowledge of the Fiji Property owners’ refusal 

to sell. (TAC ¶ 1.) Because Plaintiffs’ have sufficiently alleged fraudulent conduct

and misrepresentation, as analyzed herein, the Court finds that whether Boston 

National’s actions (through Mr. Lewis) do in fact rise to a level that justifies punitive 

damages is an issue that must remain unresolved at this stage of the litigation. If 

Plaintiffs are unable to support their allegations with probative evidence, their 

punitive damages claim may later fail either on a motion for summary judgment or 

at trial. Thus, the Court DENIES the Motion to Dismiss the punitive damages

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claim.4

IV. CONCLUSION

The Court denies in part and grants in part Boston National’s Motion as 

detailed above. The dismissals are with prejudice, as the Court has given Plaintiffs 

opportunities to correct any deficiencies in their Complaint such that any further 

leave to amend would be futile. Boston National is to file an answer to the remaining 

causes of action or portions of causes of action on or before June 24, 2020.

IT IS SO ORDERED.

DATED: June 10, 2020

4 Further, because the above causes of action and the punitive damages claim survive the Motion 

to Dismiss, the Court disagrees with Boston National that Plaintiffs have not sufficiently pled it has 

suffered any damages. (See Mot. at 18.)

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