Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-04024/USCOURTS-cand-3_09-cv-04024-5/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

VIESTE, LLC, et al.,

Plaintiffs,

 v.

HILL REDWOOD DEVELOPMENT, LTD.,

et al.,

Defendants.

 /

No. C 09-04024 JSW

ORDER (1) DENYING

DEFENDANTS’ MOTION TO

DISMISS PLAINTIFFS’ FIRST

THREE CLAIMS AND (2)

GRANTING DEFENDANTS’

MOTION TO STRIKE

Now before the Court is the motion to dismiss and the motion to strike filed by 

defendants Hill International, Inc. (“Hill”) and Redwood Capital Advisors, LLC (“Redwood”)

(collectively, “Defendants”). These matters are now fully briefed and ripe for decision. The

Court finds that these matters are appropriate for disposition without oral argument and the

matters are deemed submitted. See N.D. Civ. L.R. 7-1(b). Accordingly, the hearing set for

April 9, 2010 is HEREBY VACATED. Having considered the parties’ arguments and relevant

legal authority, the Court hereby denies Defendants’ motion to dismiss and grants Defendants’

motion to strike.

BACKGROUND

Plaintiffs Vieste, LLC and Vieste Development, LLC (“Vieste”) allege that they and

defendants Hill, Redwood, Hill Redwood Development, Ltd., and Hill International

Development Ltd. entered into a joint venture to develop projects, including major development 

Case 3:09-cv-04024-JSW Document 44 Filed 03/30/10 Page 1 of 5
United States District Court

For the Northern District of California

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initiatives in Metropolis, Illinois and in Xalapa, Veracruz in Mexico. (First Amended

Complaint (“FAC”), ¶ 22.) As part of that agreement, Vieste alleges that Redwood agreed to

fund all “seed equity” to cover fees and expenses from October 15, 2008 through the project

closings. (Id..) The “seed funding” was to occur upon execution of memoranda of

understanding with each municipality. (Id.) 

In response to the Order granting Defendants’ motion to dismiss their fraud claims for

lack of specificity, in their FAC Vieste allege numerous representations by Kurt Chamberlin of

Hill, S. Dick Sargon, Vice President of Hill until September 2007 and then President of Hill and

Co-Managing Director of Hill Redwood Development, and Steve Goodman, President and

Chief Executive Officer of Redwood and Co-Managing Director of Hill Redwood

Development. (Id., ¶¶ 14-15, 17-18, 22-34, 36.) According to Vieste, such statements were

false and misleading because Defendants never secured the funding from Redwood and knew

that Goodman did not have access to the funding and that the funding was never secured. (Id.,

37.) Defendants move to dismiss Vieste’s revised fraud claims on the grounds that Vieste fails

to allege whether and how each one of the alleged representations were false.

A. Legal Standards Applicable to Motion to Dismiss.

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

pleadings fail to state a claim upon which relief can be granted. The complaint is 

construed in the light most favorable to the non-moving party and all material allegations in the

complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986). The

court, however, is not required to accept legal conclusions cast in the form of factual

allegations, if those conclusions cannot reasonably be drawn from the facts alleged. Clegg v.

Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994) (citing Papasan v. Allain, 478

U.S. 265, 286 (1986)). Conclusory allegations without more are insufficient to defeat a motion

to dismiss for failure to state a claim upon which relief may be granted. McGlinchy v. Shell

Chemical Co., 845 F.2d 802, 810 (9th Cir. 1988). Even under the liberal pleading standard of

Federal Rule of Civil Procedure 8(a)(2), a plaintiff must do more than recite the elements of the

claim and must “provide the grounds of his entitlement to relief.” Bell Atlantic Corporation v.

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Twombly, 550 U.S. 544, 555 (2007) (internal brackets and quotations omitted). The pleading

must not merely allege conduct that is conceivable. Rather, plaintiffs must allege “enough facts

to state a claim to relief that is plausible on its face.” Id. at 570.

Pursuant to Federal Rule of Civil Procedure 9(b), Plaintiffs must allege with

particularity the circumstances constituting fraud. See Greebel v. FTP Software, Inc., 194 F.3d

185, 193 (9th Cir. 1999); Fed. R. Civ. P. 9(b). However, the particularity requirements of Rule

9(b) must be read in harmony with the requirement to make out a “short and plain” statement of

the claim. Fed. R. Civ. P. 8(a)(2). Thus, the particularity requirement is satisfied if the

complaint “identifies the circumstances constituting fraud so that a defendant can prepare an

adequate answer from the allegations.” Moore v. Kayport Package Exp., Inc., 885 F.2d 531,

540 (9th Cir. 1989); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.

2003) (“Rule 9(b) demands that, when averments of fraud are made, the circumstances

constituting the alleged fraud be specific enough to give defendants notice of the particular

misconduct . . . so that they can defend against the charge and not just deny that they have done

anything wrong.”) (internal quotation marks and citations omitted). Accordingly, “[a]verments

of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct

charged.” Vess, 317 F.3d at 1107 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.

1997)). 

Documents whose contents are alleged in a complaint and whose authenticity no party

questions, but which are not physically attached to the pleading, may be considered in ruling on

a Rule 12(b)(6) motion to dismiss. Such consideration does not convert the motion to dismiss

into a motion for summary judgment. See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994);

United States v. Ritchie, 343 F.3d 903, 908 (9th Cir. 2003). 

B. Defendants’ Motion to Dismiss Plaintiffs’ Fraud Claims.

Pursuant to Rule 9(b), plaintiffs must allege with particularity the circumstances

constituting fraud. See Greebel v. FTP Software, Inc., 194 F.3d 185, 193 (9th Cir. 1999); Fed.

R. Civ. P. 9(b). In the Ninth Circuit, negligent misrepresentation claims are subject to the

heightened pleading requirements under Rule 9(b). See Neilson v. Union Bank of California,

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N.A., 290 F. Supp. 2d 1101, 1141 (C.D. Cal. 2003) (“It is well-established in the Ninth Circuit

that both claims for fraud and negligent misrepresentation must meet Rule 9(b)’s particularity

requirements.); see also Glen Holly Entertainment, Inc. v. Tektronix, Inc., 100 F. Supp. 2d

1086, 1093 (C.D. Cal. 1999) (“Claims for fraud and negligent misrepresentation must meet the

heightened pleading requirements of Rule 9(b)”); Rosal v. First Federal Bank of California,

2009 WL 2136777, *10 (N.D. Cal. July 15, 2009). The facts supporting a claim for

constructive fraud also must be alleged with particularity under Rule 9(b). See In re Verisign,

Inc., Derivative Litigation, 531 F. Supp. 2d 1173, 1219 (N.D. Cal. 2007) (finding that plaintiffs

failed to allege constructive fraud claim with particularity as required in federal court); see also

Munday v. Real Estate Advisors, Inc., 1995 WL 549015, *2 (N.D. Cal. Sept. 12, 1995). Upon

review of the FAC, the Court finds that Vieste has alleged misrepresentations with sufficient

particularity. Therefore, the Court DENIES Defendants’ motion to dismiss.

C. Defendants’ Motion to Strike.

 Defendants move pursuant to Federal Rule of Civil Procedure 12(f) (“Rule 12(f)”) to

strike Vieste’s request for attorneys’ fees in their FAC. Rule 12(f) provides that a court may

“order stricken from any pleading any insufficient defense or any redundant, immaterial,

impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Immaterial matter “is that which has

no essential or important relationship to the claim for relief or the defenses being pleaded.” 

California Dept. of Toxic Substance Control v. ALCO Pacific, Inc., 217 F. Supp. 2d 1028, 1032

(C.D. Cal. 2002) (internal citations and quotations omitted). Impertinent material “consists of

statements that do not pertain, or are not necessary to the issues in question.” Id. “[M]otions to

strike should not be granted unless it is clear that the matter to be stricken could have no

possible bearing on the subject matter of the litigation.” Colaprico v. Sun Microsystems Inc.,

758 F. Supp 1335, 1339 (N.D. Cal. 1991). Ultimately, the decision as to whether to strike

allegations is a matter within the Court’s discretion. Id.

Vieste does not dispute that they are not entitled to recover attorneys’ fees under any of

their claims. In response to Defendants motion, Vieste argues that they are preserving their

right to pursue attorneys’ fees as a sanction for any discovery or other litigation abuses. 

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However, because Vieste do not argue, or provide any authority, to demonstrate that they may

be entitled to recover attorneys’ fees under any of their claims, the Court grants Defendants’

motion and strikes Vieste’s request for attorneys’ fees. This Order is without prejudice to

Vieste requesting attorneys’ fees as a sanction if, during the course of this litigation, Defendants

engage in discovery or other litigation abuses that would warrant such a sanction.

CONCLUSION

For the foregoing reasons, the Court DENIES Defendants’s motion to dismiss Vieste’s

first three claims in the FAC but GRANTS Defendants’ motion to strike Vieste’s request for

attorneys’ fees.

IT IS SO ORDERED.

Dated: March 30, 2010 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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