Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01499/USCOURTS-azd-2_10-cv-01499-3/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 28:1331 Fed. Question: Securities Violation

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Avant-Garde, LLC, 

Plaintiff, 

vs. 

Mountain Spa Properties, LLC, et al., 

Defendants.

No. CV 10-01499-PHX-NVW

ORDER 

Before the Court is Defendant Rebecca Mendenhall’s motion to dismiss (Doc. 

127). The motion will be denied. 

Mendenhall presents two arguments for dismissal. First, she attaches various 

documents, e-mails, and so forth that supposedly show she is not liable for the conduct 

alleged. This material is outside the scope of Avant-Garde’s complaint. Some of it may 

be subject to judicial notice as public records, see Lee v. City of Los Angeles, 250 F.3d 

668, 688–89 (9th Cir. 2001), but even so, Mendenhall does no more than present her side 

of the story. Avant-Garde presents a different story. At this stage of the case, the Court 

has no power to resolve conflicting accounts, but instead must accept all of the plaintiff’s 

plausible factual allegations as true and construe the pleadings in a light most favorable to 

the plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Mendenhall’s first 

argument therefore fails. 

Mendenhall’s second argument is that Avant-Garde’s complaint does not state a 

claim with the specificity required by the Private Securities Litigation Reform Act 

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(PSLRA). However, Mendenhall answered the complaint over a year ago (Doc. 8) and 

the parties are well into the discovery phase (see Docs. 102, 105, 108, 111, 113, 114, 121, 

128). 

No authority answers whether a party must raise a PSLRA pleading-specificity 

objection at the outset. However, it is well settled that a party waives any objection to 

Fed. R. Civ. P. 9(b)’s special fraud pleading requirements if not raised at the outset. 

Davsko v. Golden Harvest Prods., Inc., 965 F. Supp. 1467, 1474 (D. Kan. 1997); Todaro 

v. Orbit Int’l Travel, Ltd., 755 F. Supp. 1229, 1234 (S.D.N.Y. 1991); United Nat’l 

Records, Inc. v. MCA, Inc., 609 F. Supp. 33, 39 (N.D. Ill. 1984). Although the PSLRA 

standards are more strict than Rule 9(b)’s, there is no basis in logic or sound 

administration to treat the PSLRA differently with respect to waiver. The point of the 

PSLRA pleading requirements is to screen cases early for “nuisance filings.” Merrill 

Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 81 (2006). A securities fraud 

defendant may not therefore answer the complaint and go forward with discovery, all the 

while holding a pleading objection in reserve in case the going gets rough. Such lategame procedural dismissals are precisely what the Federal Rules are meant to avoid. 

Accordingly, Mendenhall’s PSLRA argument fails. 

IT IS THEREFORE ORDERED that Defendant Rebecca Mendenhall’s motion to 

dismiss (Doc. 127) is DENIED. 

Dated this 25th day of October, 2011. 

Case 2:10-cv-01499-NVW Document 137 Filed 10/25/11 Page 2 of 2