Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00462/USCOURTS-casd-3_15-cv-00462-0/pdf.json

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

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

KERRY BOULTON,

Plaintiff,

CASE NO. 15cv462-GPC(RBB)

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS WITH LEAVE TO

AMEND

[Dkt. No. 3.]

vs.

AMERICAN TRANSFER

SERVICES, INC., a Delaware

corporation; RUBEN SANCHEZ, an

individual; ANA GUERRA DURAN,

an individual; and DOES 1-50,

inclusive

Defendants.

Before the Court is Defendants’ motion to dismiss the complaint for failure to

state a claim. (Dkt. No. 3.) Plaintiff filed an opposition on April 24, 2015. (Dkt. No.

6.) Defendants filed a reply on April 30, 2015. (Dkt. No. 7.) Based on the reasoning

below, the Court GRANTS Defendants’ motion to dismiss with leave to amend. 

Background

On March 2, 2015, Plaintiff Kerry Boulton (“Plaintiff”) filed a complaint1

In their brief, Defendants raise a previous filed action by Plaintiff in case no.

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14cv175-GPC(RBB) where Plaintiff alleges the same fraudulent acts and where

Defendants moved to dismiss based on failure tomeet the heightened pleading standard

under Federal Rule of Civil Procedure 9(b). While Defendants moved to dismiss on

the same grounds as this motion, the Court never ruled on the merits of Defendants’

motion to dismiss because the Court granted Plaintiff leave to amend. The case was

eventually dismissed based on a stipulation by the parties. Therefore, the prior action

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against Defendants American Transfer Services, Inc. (“ATS”), Ruben Sanchez (“Mr.

Sanchez”), and his wife, Ana Guerra De Sanchez (“Mrs. Sanchez”) alleging state law

causes of action for fraud, conversion, violation of California Penal Code section 496,

and money had and received. (Dkt. No. 1.) 

Plaintiff is a resident of Melbourne, Australia. (Id. ¶ 2.) According to the

complaint, in August 2013, Plaintiff attended a webinar about purchasing tax deeds

and/or tax liens on real property situated in the United States. (Id. ¶ 14.) Defendants

advertised their services to Plaintiff and “represented that ATS is an exclusive service

provider capable of assisting foreign individuals with creating legal business entities

for the purpose of investing in real property that is subject to tax liens and/or tax deeds

within the United States.” (Id.) Based on their representations, Plaintiff decided to

allow Defendants to assist her with prospective investments. (Id.) 

Around September 2013, Defendants informed Plaintiff that she needed to wire

funds to a Bank of America account that was designated solely for incoming wire

transfers. (Id. ¶ 15.) Defendants informed Plaintiff that once the funds were received,

they would create a separate bank account and transfer the wired monies for the sole

benefit of Plaintiff. (Id.) They provided Plaintiff with specific wiring instructions and

she complied. (Id. ¶ 16.) Around October 2013, Plaintiff transferred $1,000 to

Defendants and Defendants confirmed receipt of the $1,000 but failed to create a

separate bank account. (Id.) They said they would “be providing a[n] account number

and routing number for [Mrs. Boulton] shortly.” (Id.) 

Around November 2013, Plaintiff discovered real property located in the County

of Miami-Dade in Florida that was subject to a tax deed and/or tax lien that she wished

to purchase as an investment. (Id. ¶ 17.) She informed Defendants of her intention to

purchase the property and they instructed her to wire the necessary funds to ATS. (Id.) 

She explained that she intended to transfer $155,000 to ATS for the purpose of

purchasing the real property located in Miami-DadeCounty, Florida and explained that

has no effect on the instant complaint. 

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$7,500 was to be deposited with the Miami-Dade County Clerk of Court in order to

allow her to participate in the purchasing of that property. (Id.) Defendants stated they

understood Plaintiff’s intentions as well as her specific instructions regarding the

transferring of funds and provided her with wiring instructions to transfer $155,000 to

ATS. (Id. ¶ 18.) Plaintiff completed the wire transfer around November 18, 2013. 

(Id.) She confirmed delivery of the funds with Defendants and provided transfer

instructions for the $7,500 to be deposited with the Miami-Dade County Clerk of

Court. (Id. ¶ 19.) However, the deposit was never made to the Miami-Dade County

Clerk of Court. (Id. ¶ 20.) Several days after the $155,000 wire transfer, Defendants

produced a transfer receipt of $7,500 from ATS to the Miami-Dade County Clerk of

Court. (Id.) She later learned the transfer receipt was forged when she contacted the

Miami-Dade County Clerk of Court and was informed there was no record of any

money received from, or on behalf of, Plaintiff. (Id.) 

Upon learning this, Plaintiff immediately contacted Defendants and demanded

an explanation. (Id. ¶ 21.) However, Defendants terminated all communications with

Plaintiff by refusing to respond to all attempts of correspondence. (Id.) She repeatedly

demanded the return of her money but Defendants have refused to return the $156,000

unlawfully obtained by Defendants from Plaintiff. (Id.) 

Discussion

A. Legal Standard as to Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure (“Rule”) 12(b)(6) permits dismissal for “failure

to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal

under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory

orsufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police

Dep’t., 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure

8(a)(2), the plaintiff is required only to set forth a “short and plain statement of the

claim showing that the pleader is entitled to relief,” and “give the defendant fair notice

of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v.

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Twombly, 550 U.S. 544, 555 (2007). 

A complaint may survive a motion to dismiss only if, taking all well-pleaded

factual allegations as true, it contains enough facts to “state a claim to relief that is

plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,

550 U.S. at 570). “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. “Threadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not suffice.” Id. “In sum, for

a complaint to survive a motion to dismiss, the non-conclusory factual content, and

reasonable inferences from that content, must be plausibly suggestive of a claim

entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.

2009) (quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as

true all facts alleged in the complaint, and draws all reasonable inferences in favor of

the plaintiff. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). 

Where a motion to dismiss is granted, “leave to amend should be granted ‘unless

the court determines that the allegation of other facts consistent with the challenged

pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc.,

957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well

Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to

amend would be futile, the Court may deny leave to amend. See DeSoto, 957 F.2d at

658; Schreiber, 806 F.2d at 1401. 

B. Legal Standard as to Federal Rule of Civil Procedure 9(b)

Where a plaintiff alleges fraud in the complaint, Rule 9(b) requires a plaintiff to

“statewith particularity the circumstances constituting fraud ormistake. Malice,intent,

knowledge, and other conditions of a person’s mind may be alleged generally.” Fed.

R. Civ. P. 9(b). A party must set forth “the time, place, and specific content of the false

representations as well as the identities of the parties to the misrepresentation.” Odom

v. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007) (internal quotation marks

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omitted). Rule 9(b) also applies to claims that are “grounded in fraud” or “sound in

fraud.” Vess v. Ciba-Geigy Corp., U.S.A., 317 F.3d 1097, 1103-04 (9th Cir. 2003). 

As to multiple fraud defendants, a plaintiff “must provide each and every

defendant with enough information to enable them ‘to know what misrepresentations

are attributable to them and what fraudulent conduct they are charged with.’” Vegas

v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 1115 (E.D. Cal. 2009) (quoting

Pegasus Holdings v. Veterinary Centers of America, Inc., 38 F. Supp. 2d 1158, 1163

(C.D. Cal. 1998)). A plaintiff cannot lump multiple defendants but must state the

allegations as to each defendant separately concerning that defendant’s alleged

participation in the fraud. Swartz v. KPMG LLP, 476 F.3d 756, 764-65 (9th Cir. 2007)

(quotation omitted). In a fraud action against a corporation, a plaintiff must “allege the

names ofthe persons whomade the allegedly fraudulentrepresentations, their authority

to speak, to whom they spoke, what they said or wrote, and when it was said or

written.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 157 (1991).

Defendants argue that the complaint fails to meet the heightened pleading

requirements under Rule 9(b) by failing to allege the time, place, and specific content

of the false representations, or the identities of the parties that made the alleged

representations. They also argue that the complaint fails to set forth an explanation as

to why the alleged statement or omissions were false or misleading, or why Defendants

knew they were false or misleading at the time they were allegedly made. 

First of all, state of mind of the defendants do not have to be alleged with

specificity. See Fed. R. Civ. P. 9(b). Moreover, the Court concludes that the complaint

provides sufficient facts as to the time, place, and specific content of the false

representations, but does not identify the acts of each defendant separately. Instead,

Plaintifflumpsthe defendants together as “Defendants.” Plaintiff does not differentiate

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between ATS, Mrs. Sanchez and Mr. Sanchez. Moreover, as to ATS, Plaintiff has

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failed to sufficiently identify the “names of the persons who made the allegedly

fraudulentrepresentations, their authority to speak, to whomthey spoke, what they said

or wrote, and when it was said or written.” See Vega, 654 F. Supp. 2d at 1115. 

Defendants also argue that Rule 9(b) applies to all the causes of action in the

complaint because they are grounded in fraud. The Court agrees. The causes of action

for conversion, California Penal Code section 496, and money had and received are

based on the same course of fraudulent conduct that is alleged in the fraud cause of

action. See e.g. Fields v. Wise Media, LLC, No. C 12-5160 WHA, 2013 WL 3187414,

at *3 (N.D. Cal. June 21, 2013) (conversion claim, and money had and received were

grounded in fraud and must meet Rule 9(b) pleading requirement). Therefore, Plaintiff

must also meet the heightened pleading requirement under Rule 9(b) asto these causes

of action. Since Plaintiff has failed to properly allege specific facts on the fraud cause

of action, the same conclusion applies to the remaining causes of action. 

Conclusion

Based on the above, the Court GRANTS Defendants’ motion to dismiss with

leave to amend. Plaintiff shall file an amended complaint on or before May 18, 2015. 

/ / / /

/ / / /

/ / / /

/ / / /

/ / / /

In their reply, Defendants argue that the complaint should be dismissed with

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prejudice as to Mrs. Sanchez. They contend because Plaintiff dismissed Mrs. Sanchez

fromthe prior case, 14cv175-GPC(RBB), with ample opportunity to conduct discovery

and the fact that no facts are alleged as to Mrs. Sanchez in the instant complaint, Mrs.

Sanchez should be dismissed with prejudice. Defendants’ argument is without merit. 

First, Defendants provide no legal authority that the Court has discretion to dismiss

Mrs. Sanchez with prejudice based on their argument. Moreover, it does not appear

that discovery commenced in the prior case since the Federal Rules state that discovery

may not commence until the Rule 26(f) conference is held. See Fed. R. Civ. P.

26(d)(1). In the prior case, the Rule 26(f) conference wasto be held on March 4, 2015. 

(Dkt. No. 50.) The case was dismissed prior to that date on February 17, 2015. 

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The hearing set for May 8, 2015 shall be vacated. 

IT IS SO ORDERED.

DATED: May 5, 2015

HON. GONZALO P. CURIEL

United States District Judge

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