Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-02643/USCOURTS-cand-3_16-cv-02643-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ARVIN KAM CONSTRUCTION 

COMPANY,

Plaintiff,

v.

ENVIRONMENTAL CHEMICAL 

CORPORATION,

Defendant.

Case No.16-cv-02643-JD 

ORDER RE MOTION TO DISMISS

Plaintiff Arvin Kam Construction Company (“AKCC”), an Afghanistan corporation, has 

sued defendant Environmental Chemical Corporation (“ECC” or “ECCI”) on fraud and contract 

claims relating to a United States Army Corps of Engineers contract. Dkt. No. 1. ECC has moved 

to dismiss the complaint, Dkt. No. 12, and the Court finds that dismissal is warranted, although on 

different grounds. Gillibeau v. City of Richmond, 417 F.2d 426, 431 (9th Cir. 1969) (court may

dismiss sua sponte). 

The fundamental problem with the complaint is that fails to allege “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 claim has facial plausibility when the pleaded factual content allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While the Court will assume that 

AKCC’s factual allegations are true and will construe all reasonable inferences in its favor, 

Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002), it will not “accept as true allegations 

that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re 

Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quotation omitted). 

Case 3:16-cv-02643-JD Document 22 Filed 01/10/17 Page 1 of 3
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United States District Court

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Even when reviewed under these relatively generous standards, the “Statement of Facts” 

and other portions of the complaint are cursory and disjointed to the point of obscurity. AKCC 

starts with the allegation that the Army Corps of Engineers awarded a contract to ECC in 

September 2010 for construction work in northern Afghanistan. Dkt. No. 1 ¶¶ 6-8. ECC hired 

AKCC as a local subcontractor, but in July 2012, the “Commander of USCENTCOMM 

determined that AKCC was actively supporting an insurgency” in Afghanistan. Id. ¶ 11. ECC 

wasn’t sure what do with that information, and asked a contracting officer how to proceed. Id. 

The officer “directed” ECC to terminate the AKCC contract, which it did in August 2012. Id. ¶¶ 

12-13. Even though the contract appears to have been cancelled on public policy grounds for 

doing business with an enemy of the United States, AKCC alleges that it signed a “Settlement 

Agreement and Release of Claims (the ‘Agreement’)” with ECC in January 2013 for $1.5 million 

dollars. Id. ¶ 14. 

The next set of fact allegations is almost impossible to follow. AKCC says that the parties 

subsequently entered into “two agreements called Further Clarification of Settlement Agreement 

and Release of Claims” to address “the issue of Request for Equitable Adjustments (‘REA’)”. Id.

¶ 15. The complaint states (in two paragraphs numbered “16”):

16. Under Clarification #1, ECCI agreed to process the 

REA for additional work on Task Order 78 as approved by 

the United States government in the amount of 

$414,240.00. ECCI agreed to deduct $100,000 and 

$50,000 to compensate ECCI for REAs submitted to date.

16. Under Clarification #2, AKCC was obligated to assist 

ECCI with all supporting documentations for submitting 

future REAs. To effectuate this obligation, AKCC was 

mandated to bring its engineers to Dubai United Arab 

Emirates and assist ECCI in writing the future REAs. 

AKCC paid for cost of travel and lodging of several 

engineers and employees and wrote the REAs for ECCI. 

AKCC’s REAs totaled in the amount of $3,252,205.00.

These events, which are not explained in any more detail or with greater clarity, allegedly 

occurred after AKCC’s contract had been terminated on enemy insurgent grounds.

The complaint then returns to the settlement agreement to state that an employee signed it 

without authorization while AKCC’s owner and president was in jail. Id. ¶¶ 18-19. It concludes 

Case 3:16-cv-02643-JD Document 22 Filed 01/10/17 Page 2 of 3
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United States District Court

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with cryptic references to ECC’s compensation for an REA and an administrative claim it 

allegedly filed. Id. ¶¶ 20-22. 

That is the sum total of the operative facts, and what they amount to legally, if anything, is 

an utter mystery. AKCC alleges several claims sounding in fraud, but does not even come close to 

stating, as Federal Rule of Civil Procedure 9(b) requires, “‘the who, what, when, where, and how’ 

of the misconduct charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) 

(quotation omitted). The contract claims are equally deficient. Among other problems, none of 

the actual terms of any alleged agreement are presented and no specific breach is spelled out or 

identified. AKCC also says some of the agreements with ECC were “unconscionable,” see, e.g.,

Dkt. No. 1 ¶ 43, but puts no meat at all on that bare bone. A claim for promissory estoppel simply 

parrots the elements without anything more, a defect that affects several other claims as well. 

Overall, the complaint falls far short of the pleading requirements of Federal Rule of Civil 

Procedure 8(a) and applicable case law. The Court could dismiss it under Rule 41(b) on that 

ground, see Nevijel v. N. Coast Life Ins. Co., 651 F.2d 671, 673 (9th Cir. 1981), but will allow 

AKCC one opportunity to amend. Any amendment is due by January 24, 2017. No new parties 

or claims may be added. 

The parties’ dueling requests for sanctions under 28 U.S.C. § 1927 are denied. The parties 

are advised that requests for sanctions should be reserved for the most egregious and serious 

instances of misconduct, and not casually added to motions papers. In the future, the Court will 

summarily strike sanction requests that do not follow this guideline, and may award fees and costs, 

and other sanctions, against the offending party. 

IT IS SO ORDERED.

Dated: January 10, 2017

JAMES DONATO

United States District Judge

Case 3:16-cv-02643-JD Document 22 Filed 01/10/17 Page 3 of 3