Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_06-cv-01496/USCOURTS-casd-3_06-cv-01496-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1051 Trademark Infringement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 1 - 06CV1496

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MATLINK, INC., a California

corporation, et al. ,

Plaintiff,

CASE NO. 06CV1496 R (RBB)

ORDER GRANTING IN PART

AND DENYING IN PART

MOTION FOR A STAY OR IN

THE ALTERNATIVE TO

ABSTAIN, TO DISMISS OR FOR

MORE DEFINITE STATEMENT

vs.

MATLINK, INC., a Nevada corporation,

et al.,

Defendant.

I. Introduction

Defendants Matlink, Inc., a Nevada corporation (“Matlink-NV”), Drayton Richdale

Corporation, Antonio Arnel Maquera, Larry Naritomi, Joseph Henn, Christy Stevenson,

Stephen Lindsley, and Don Wight (collectively “defendants”) have filed a motion for stay of

action or, in the alternative, to abstain, to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), or for

more definite statement pursuant to Fed.R.Civ.P. 12(e). For the reasons set forth below, the

motion is granted in part and denied in part. 

II. Background

Plaintiffs Matlink, Inc., a California corporation (“Matlink-CA”) and Craig Freeman

(collectively “plaintiffs”) entered into an Agreement in Principal with Gemelli Capital Trust

whereby the parties agreed, inter alia, “to pool their resources and combine their expertise in

completing development of new Technology, improving the existing Technology and

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 1 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 - 06CV1496

commercializing this said Technology for financial gain . . . .” At some point, the relationship

between the parties soured, and plaintiffs brought suit in state court against Maquera, both

individually and as Trustee of the Gemelli Capital Trust, against Matlink-NV, which was

allegedly formed by Maquera and which is allegedly a wholly-owned subsidiary of Drayton

Richdale Corporation, and against Drayton Richdale Corporation, of which Maquera is

allegedly an owner, officer, and member of the board of directors. Plaintiffs’ state court

lawsuit focuses on the ownership of certain patented software technology known as the

Materials and Supplies Ordering System or “MSOS.” 

Plaintiffs later brought the present law suit in federal court against defendants, some of

whom are named in the state court action and some of whom are not. Unlike the state court

lawsuit, the present federal lawsuit focuses on defendants’ alleged wrongful use of the Matlink

mark. 

III. Analysis

A. Should the Court Stay or Dismiss the Present Action?

The general rule is that “the pendency of an action in the state court is no bar to

proceedings concerning the same matter in the Federal court having jurisdiction . . . .”

McClellan v. Carland, 217 U.S. 268, 282 (1910). However, as with any general rule, there are

exceptions. 

1. Colorado River Doctrine

In their motion, defendants move pursuant to Colorado River Water Conservation Dist.

v. United States, 424 U.S. 800, 817 (1976) to stay this action pending the outcome of the state

court action. In Colorado River, the Supreme Court concluded that the federal court should

defer to the state court proceeding when both actions involved competing water rights in a

single river system. In Colorado River, the Supreme Court upheld the dismissal of the federal

action. However, the Ninth Circuit has expanded the Colorado River doctrine to justify stays

as well as dismissals. See Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 912 (9th

Cir. 1993); Attwood v. Mendocino Coast Dist. Hosp, 886 F.2d 241, 245 (9th Cir. 1989).

Although various Ninth Circuit cases refer to the Colorado River doctrine as one of abstention,

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 2 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 - 06CV1496

other Ninth Circuit cases have noted that it is not an abstention doctrine. See Attwood, 886

at 243. For purposes of this order, it will be referred to as an abstention doctrine. 

The Colorado River doctrine “rests on ‘considerations of ‘[w]ise judicial administration,

giving regard to conservation of judicial resources and comprehensive disposition of

litigation.’” Attwood, 886 F.2d at 243 (quoting Colorado River, 424 U.S. at 817 (in turn

quoting Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183

(1952))). “In Colorado River, the Court articulated four factors for determining whether

sufficiently exceptional circumstances exist to warrant abstention: (1) whether either the state

or federal court has exercised jurisdiction over a res; (2) the inconvenience of the federal

forum; (3) the desirability of avoiding piecemeal litigation; and (4) the order in which the

forums obtained jurisdiction.” 40235 Washington Street Corp. v. Lusardi, 976 F.2d 587, 588

(9th Cir. 1992) (emphasis added). The Court later added two more considerations: “(5)

whether federal or state law controls the decision on the merits; and (6) whether the state court

can adequately protect the rights of the parties.” Id. This list of factors is not exhaustive, and

other factors may be considered. Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989).

Importantly, while “exact parallelism” between the two actions need not exist, the state

and federal claims must be “substantially similar” in order for the Colorado River doctrine to

apply. Id.; see also Travelers Indem. Co. v. Madonna, 914 F.2d 1364, 1372 (9th Cir. 1990).

Thus, the preliminary issue is whether the state court claims and the claims asserted in the

present action are substantially similar to warrant application of the Colorado River doctrine.

In the present federal action, plaintiffs bring both federal Lanham act claims as well as

state law claims. Plaintiffs seek to preclude defendants from using the Matlink mark and also

seek damages for defendants’ past use of the Matlink mark. In the state court action, plaintiffs

invoke state law and seek declarations regarding the validity of certain agreements and UCC

filings as well as a declaration regarding ownership of the MSOS, which ownership is

dependent upon the interpretation and validity of the parties’ agreements and UCC filings.

Plaintiffs also bring various claims for damages which are predicated upon allegations that the

state court defendants never intended to perform under the Agreement in Principal but, rather,

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 3 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 - 06CV1496

entered into an agreement with plaintiffs in order to position themselves to assume MatlinkCA’s identity and thereby wrongfully reap financial rewards. Finally, plaintiffs in the state

court action seek an injunction enjoining defendants from claiming they are Matlink-CA. As

plaintiffs persuasively explained at oral argument, such an injunction is aimed at precluding

defendants from representing themselves as being the corporation Matlink-CA, as opposed to

precluding defendants from using the Matlink mark per se. 

The state court action, with its focus on the parties’ conduct as it relates to the

ownership of the patent, is not sufficiently similar to the present action, with its focus on

defendants’ use of the Matlink mark, to warrant Colorado River abstention. In other words,

given that the Colorado River doctrine is concerned with conserving judicial resources and

comprehensive disposition of litigation, it is difficult to conclude that the state court claims and

plaintiffs’ present claims are substantially similar in any relevant sense. Cf. Nakash, 882 F.2d

at 1416 (finding actions “substantially similar” where all of the disputes concerned the parties’

conduct since the time of the plaintiffs’ purchase of a portion of the defendants’ company and

where the federal action was “but a ‘spin-off’ of more comprehensive state litigation”);

American Intern. Underwriters (Philippines), Inc. v. Continental Ins. Co., 843 F.2d 1253, 1255

(9th Cir. 1988) (concluding dismissal under Colorado River was appropriate where the plaintiff

brought an action in state court and then, two an one-half years later, brought an action in

federal court “alleging the same facts and claims”); 40235 Washington Street Corp. v. Lusardi,

976 F.2d 587, 588 (9th Cir. 1992) (plaintiff in federal action sought declaration that tax sale

of its property was void after state action was filed by purchaser seeking to quiet title to

property; held, district court properly stayed case pursuant to Colorado River doctrine because

the state and federal cases involved “identical issues”); Tucker v. First Maryland Sav. & Loan,

Inc., 942 F.2d 1401, 1408 (9th Cir. 1991) (concluding that application of Colorado River

doctrine was not warranted where there was no pending state proceeding that was “attempting

to resolve” the claims brought in the federal action). The fact that the claims in the state court

action and the claims in the present action are not substantially similar is sufficient to preclude

application of the Colorado River doctrine. Nonetheless, for the sake of thoroughness, the

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 4 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 - 06CV1496

court will briefly address the other relevant factors. 

Defendants contend that abstention is appropriate because the state court has asserted

jurisdiction over certain property (which defendants contend includes the Matlink mark) and

is in the process of determining the rightful owner of said property. Defendants cite Farmers

Loan & Trust Co. v. Lake Street Elevated Railroad Company, 177 U.S. 51 (1900), which was

decided long before Colorado River. In that case, a federal action was brought and then a state

action involving the same issues was brought. The court concluded that the defendants could

not defeat the federal court’s jurisdiction “by bringing suit in another court and procuring an

ex parte injunction seeking to restrain the service of process already issued.” Id. at 61. The

court explained:

The possession of the res vests the court which has first acquired jurisdiction

with the power to hear and determine all controversies relating thereto, and for

the time being disables other courts of co-ordinate jurisdiction from exercising

a like power. This rule is essential to the orderly administration of justice, and

to prevent unseemly conflicts between courts whose jurisdiction embraces the

same subjects and persons.

Nor is this rule restricted in its application to cases where property has been

actually seized under judicial process before a second suit is instituted in another

court, but it often applies as well where suits are brought to enforce liens against

specific property, to marshal assets, administer trusts, or liquidate insolvent

estates, and in suits of a similar nature where, in the progress of the litigation,

the court may be compelled to assume the possession and control of the property

to be affected. [citations omitted]

Id. Here, the res involved in the state court suit is the MSOS, whereas the res in the present

action is the Matlink mark. Thus, the state court will not, as defendants suggest, be compelled

to assume possession and control of the Matlink mark. Moreover, defendants’ contention to

the contrary notwithstanding, the state court has not exercised, and has not purported to

exercise, jurisdiction over the Matlink mark. This is evident from a review of the preliminary

injunction, which was prepared by plaintiffs and which makes no mention of the state

defendants’ use of the Matlink mark. Rather, the state court injunction is focused solely on the

patent. It enjoins the state court defendants from filing changes to the power of attorney or

filing patent assignments with the USPTO regarding the MSOS, prevents the state court

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 5 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 - 06CV1496

defendants from filing UCC financing statements regarding the MSOS, precludes the state

court defendants from raising capital based on a claim of ownership of the MSOS, and

precludes the state court defendants from taking any action that in any way interferes with the

ownership rights of the MSOS. Because the state court has not asserted jurisdiction over the

Matlink mark and there is no reason to believe that it will do so in the future, this factor does

not weigh in favor of application of the Colorado River doctrine.

Another factor to consider is whether the imposition of a stay will help avoid piecemeal

litigation. “Piecemeal litigation occurs when different tribunals consider the same issue,

thereby duplicating efforts and possibly reaching different results.” See American Intern.

Underwriters (Philippines), Inc., 843 F.2d at 1258 (emphasis added). Defendants have failed

to demonstrate that allowing the present federal action to proceed will result in piecemeal

litigation. Defendants’ apparent defense in both actions is that they have a secured interest in

the property at issue (there, the patents; here, the Matlink mark) as a result of agreements

between the parties and certain UCC filings. And, as a result of this defense, it very well may

be that the state court and this court will have to examine those agreements and filings.

However, the state court will be looking for an agreement regarding the patents, and this court

will be looking for an agreement regarding the Matlink mark. Moreover, the state court will

consider whether the UCC filing created a secured interest in the patent, while this court must

consider whether the UCC filing created a secured interest in the Matlink mark. Because these

inquiries are different, the result will not be piecemeal litigation. Thus, this factor weighs

against the imposition of a stay.

 Another factor weighing against the entry of a stay is the fact that there is no basis for

finding that the federal forum is inconvenient.

Factors weighing in favor of abstention is that the state court action was filed first and

the fact that the claims asserted in this action could be brought in the state court action because

state courts have concurrent jurisdiction over Lanham Act claims. 

Finally, both federal and state law control the decision on the merits of the claims in the

present action. Thus, this factor is neutral. 

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 6 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 - 06CV1496

In summary, having considered the relevant factors, the court concludes that abstention

under Colorado River is not warranted. The claims in the state court action and the present

action are not substantially similar, and, therefore, there is little chance of this court and the

state court duplicating efforts. Moreover, the state court has not exercised jurisdiction over the

Matlink mark, and there is no reason to believe that it will do so in the future. Because the

purpose behind the doctrine is not implicated here, the motion to stay this action pursuant to

Colorado River is denied with respect to plaintiffs’ Lanham Act and state law trademark

claims. 

2. Younger Abstention

In their reply, defendants change tack and seek a stay or dismissal pursuant to Younger

v. Harris, 401 U.S. 37 (1971). The Younger doctrine is not predicated upon concerns

regarding inconsistent results between state and federal proceedings; rather, Younger and its

progeny “espouse a strong federal policy against federal-court interference with pending state

judicial proceedings absent extraordinary circumstances.” Middlesex County Ethics

Committee v. Garden State Bar Ass'n, 457 U.S. 423, 431-432 (1982) (emphasis added); see

also Hirsh v. Justices of Supreme Court of State of Cal., 67 F.3d 708, 712 (9th Cir. 1995);

Meredith v. Oregon, 321 F.3d 807, 817 (9th Cir. 2003). As explained in M&A Gabaee v.

Community Redevelopment Agency of City of Los Angeles, 419 F.3d 1036 (9th Cir. 2005):

 The principle behind the Supreme Court's initial invocation of the abstention

doctrine in Younger was its conviction that “[s]ince the beginning of this

country's history Congress has, subject to few exceptions, manifested a desire

to permit state courts to try state cases free from interference by federal courts.”

401 U.S. at 43, 91 S.Ct. 746. Under the system the Court called “Our

Federalism,” it explained, “the National Government, anxious though it may be

to vindicate and protect federal rights and federal interests, always endeavors

to do so in ways that will not unduly interfere with the legitimate activities of the

States.” Id. at 44, 91 S.Ct. 746. Thus, the Court concluded, “the normal thing to

do when federal courts are asked to enjoin pending proceedings in state courts

is not to issue such injunctions.” Id. at 45, 91 S.Ct. 746. In short, the driving

principle behind Younger was that in matters of special concern to the states,

federal courts should avoid depriving the state courts of the opportunity to

adjudicate constitutional issues.

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 7 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 - 06CV1496

Id. at 1039-40 (emphasis added). Thus, “[a]s a threshold matter, for Younger abstention to

apply, the federal relief sought must interfere in some manner with the state litigation.” Baffert

v. California Horse Racing Bd., 332 F.3d 613, 617 (9th Cir. 2003). 

A federal court “must abstain to avoid interference in a state-court civil action when

three tests are met.” M&A Gabaee, 419 F.3d at 1039. First, there must be ongoing state

proceedings with which the federal action would interfere. Id. Second, the state proceedings

must “implicate important state interests.” Id. Third, there must be “an adequate opportunity

in the state proceedings to raise federal questions.” Gartrell Constr. Inc. v. Aubry, 940 F.2d

437, 441 (9th Cir. 1991) (citing Middlesex County Ethics Comm., 457 U.S. at 432); see also

Woodfeathers, Inc. v. Washington County, Or., 180 F.3d 1017, 1020 (9th Cir. 1999) (citing

Gartrell)

The classic factual scenario justifying Younger abstention is where a plaintiff in a

federal action seeks to enjoin a state proceeding. In such a case, the maintenance of the

federal action would clearly interfere with the state action. See, e.g., Younger, 401 U.S. 37

(declining to enjoin earlier-filed state court criminal prosecution); Middlesex County Ethics

Comm., 457 U.S. 423 (finding Younger abstention appropriate where federal action was filed

to enjoin pending state attorney disciplinary proceedings on the ground that the disciplinary

rules violated federal constitutional rights). Here, plaintiffs seek to enjoin defendants, not the

state court proceedings. Thus, this is not a classic case for Younger abstention. And,

defendants have failed to explain how any such injunction issued in the present case could

possibly interfere with the state court proceedings. 

Plaintiffs also seek damages. The maintenance of a damages action will not usually

interfere with a state proceedings. However, the Ninth Circuit has recognized that the

maintenance of a federal action for damages will interfere with state proceedings where a

damages award “would have the same practical effect as a declaration or injunction on pending

state proceedings.” Gilbertson v. Albright, 381 F.3d 965, 968 (9th Cir. 2004). 

In Gilbertson, the federal plaintiff “was a land surveyor whose Oregon license to survey

was revoked and not reinstated by the State Board of Examiners for Engineering and Land

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 8 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 9 - 06CV1496

Surveying (the Board).” Id. While his appeal of the Board’s decision was pending before the

Oregon Court of Appeals, Gilbertson filed a federal action seeking money damages from

members of the Board for violating his federal constitutional rights. The Ninth Circuit, sitting

en banc, concluded that Younger applied despite the fact that Gilbertson was bringing an

action at law for damages. 

Clearly, for Gilbertson to be entitled to damages in the federal action, there would have

to have been a determination that the state proceeding violated Gilbertson’s rights, which

determination would have the same practical effect in terms of interfering with the state

proceeding as a declaration that the state proceeding violated his rights or an injunction

enjoining the proceeding on the grounds that it violated his rights. Here, as noted supra, the

state court action is focused on ownership of a patent, while the claims asserted in the present

action are focused on defendants’ allegedly wrongful use of the Matlink mark. Defendants

have failed to explain how an award of damages for the wrongful use of the Matlink mark will

have the “same practical effect” as a injunction on the state court proceedings so as to interfere

with the state court proceedings. 

Because defendants have failed to demonstrate that the maintenance of the present

action would interfere with the state court action, application of the Younger doctrine is not

warranted. 

An additional reason why Younger abstention is in appropriate is that the state court

action does not involve important state interests. “Younger abstention is appropriate only if

the federal action would affect important state interests that are ‘vital to the operation of state

government.’” Polykoff v. Collins, 816 F.2d 1326, 1332-33 (9th Cir. 1987) (quoting Dayton

Christian Schools, 106 S.Ct. at 2723). Defendants’ contention to the contrary notwithstanding,

Harper v. Public Service Com'n of W. Va., 396 F.3d 348 (4th Cir. 2005) is not authority for

the proposition that an important state interest is at issue in the state court suit because

Harper’s reference to the state having an important interest in property law was a reference to

real property law, not intellectual property law. See id. at 352 (“Similarly, property law

concerns, such as land use and zoning questions, are frequently “important” state interests

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 9 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 10 - 06CV1496

justifying Younger abstention.”); see also Joseph A. ex rel. Corrine Wolfe v. Ingram, 275 F.3d

1253, 1274 (10th Cir. 2002) (noting that “zoning and land use issues are of traditional

significance to states”). Simply put, California does not have a strong interest in determining

the ownership of the federal patent at issue in the state court action. If such an interest were

to be found here, it would be hard to imagine a state court suit which did not implicate an

important state interest. 

B. Motion to Dismiss for Failure to State a Claim

Defendants also move to dismiss certain claims for failure to state a claim pursuant to

Fed.R.Civ.P.12(b)(6).

1. Failure to Plead with Particularity Civil Conspiracy to Commit Fraud

Defendants, relying on Wasco Products, Inc. v. Southwall Technologies, Inc., 435 F.3d

989, 992 (9th Cir. 2006), contend that plaintiffs have failed to properly allege a civil

conspiracy. “[U]nder federal law a plaintiff must plead, at a minimum, the basic elements of

a civil conspiracy if the object of the conspiracy is fraudulent.” Id. at 991. Moreover,

“California law does not appear to differ from federal law on this issue.” Id. at 992. “Under

California law, ‘[t]o state a cause of action for conspiracy, the complaint must allege (1) the

formation and operation of the conspiracy, (2) the wrongful act or acts done pursuant thereto,

and (3) the damage resulting from such act or acts.’” Id. (quoting Cellular Plus, Inc. v. Superior

Court, 14 Cal.App.4th 1224, 18 Cal.Rptr.2d 308, 314 (1993) (internal quotations and citations

omitted)). 

Here, plaintiffs do not sufficiently allege the formation and operation of the conspiracy,

nor do they sufficiently allege the overt acts committed in furtherance of the conspiracy.

Accordingly, the motion is granted with respect to plaintiffs’ conspiracy allegations; however,

plaintiffs will be given leave to amend the complaint to add the necessary allegations. 

2. Allegations Against Stephen Lindsley

Defendant Lindsley moves to dismiss the complaint as to him on the ground that

plaintiffs have not complied with California law regarding the maintenance of a lawsuit against

an attorney arising out of the attorney’s representation of the client. However, from the

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 10 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 11 - 06CV1496

allegations of the complaint, it appears defendant Lindsley is being sued in his capacity as an

owner, officer and member of the board of directors of defendant Drayton and Matlink-NV

and not in his capacity as an attorney representing a client. Accordingly, the motion to dismiss

the complaint as to defendant Lindsley is denied.

3. Failure to Plead Fraud With Particularity

Defendants claim that plaintiffs have failed to allege fraud with particularity. A review

of the present complaint reveals that plaintiffs are not alleging a fraud claim per se. Rather,

in paragraphs 10 and 18 plaintiffs are alleging it would promote and sanction a fraud if the

court treats Matlink-NV, Drayton and the individual defendants as separate and distinct for

purposes of imposing liability. In other words, plaintiffs are essentially arguing that the court

should “pierce the corporate veil” and impose liability under an “alter ego” theory of liability.

Under such circumstances, the alleged fraud would be the result of the court’s failure to apply

these doctrines, not from defendants’ conduct. Under such circumstances, Rule 9(b) does not

require that plaintiffs plead fraud with particularity. 

4. Failure to Properly Plead the Alter Ego Theory of Liability

Finally, defendants contend that plaintiffs have failed to plead the alter ego theory of

liability with particularity. Fed.R.Civ.P. 9 does not require that the alter ego theory be alleged

with particularity. However, a plaintiff must plead sufficient facts to demonstrate “(1) that

the person exercised such complete dominion and control ‘in respect to the transaction

attacked’ that the corporation had ‘at one time’ no separate will of its own; and (2) that this

domination was used to ‘commit fraud or wrong’ against the plaintiff, which proximately

caused the plaintiff's injury.” Kaplan v. Aspen Knolls Corp., 290 F.Supp.2d 335, 340

(E.D.N.Y. 2003) (quoting American Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d

Cir.1988)). Here, plaintiffs have failed to sufficiently allege that the defendants’ misuse of

the corporate form caused plaintiffs’ injury. See id. (“Even assuming these claims establish

Mazzuoccola was using the corporate defendant as an alter ego, these allegations do not

establish that Mazzuoccola's use of the corporate defendant harmed plaintiff.”). Accordingly,

the motion to dismiss on this ground will be granted. However, because it is not beyond doubt

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 11 of 12
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 12 - 06CV1496

that plaintiff cannot amend to state a claim for alter ego liability, plaintiff will be granted leave

to file an amended complaint. 

C. Motion for More Definite Statement

Finally, defendants contend in a conclusory fashion that the court should order plaintiffs

to provide a more definite statement pursuant to Rule 12(e). Rule 12(e) provides in relevant

part that “[i]f a pleading to which a responsive pleading is permitted is so vague or ambiguous

that a party cannot reasonably be required to frame a responsive pleading, the party may move

for a more definite statement before interposing a responsive pleading.” Defendant has failed

to demonstrate that the complaint is so vague and ambiguous that it cannot reasonably be

required to frame a responsive pleading. Thus, the motion for more definite statement is

denied. 

IV. Conclusion

For the reasons set forth below, defendant’s motion for stay of action or, in the

alternative, to abstain, to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), or for more definite

statement pursuant to Fed.R.Civ.P. 12(e) is granted in part and denied in part. Should plaintiffs

wish to proceed on the ground that defendants were engaged in a civil conspiracy to commit

fraud and on the theory of alter ego liability, plaintiffs must file an amended complaint that

contains more specific allegations as set forth in this order. The amended complaint shall be

filed on or before Monday, December 4, 2006. The time for defendants to file an answer or

other responsive pleading shall begin to run on December 4, 2006. The motion is denied in

all other respects.

IT IS SO ORDERED.

DATED: November 16, 2006

John S. Rhoades, Judge

United States District Court

Case 3:06-cv-01496-R-RBB Document 23 Filed 11/16/06 Page 12 of 12