Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-00964/USCOURTS-cand-3_07-cv-00964-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1446 Breach of Contract- Insurance

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CAL-AGREX, Inc., a California

Corporation,

Plaintiff,

v.

DEE VAN TASSELL, JERRY GOODWIN, and

DOES 1 through 20, inclusive, 

Defendants. 

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No. C-07-0964 SC

ORDER GRANTING IN

PART AND DENYING IN

PART DEFENDANT JERRY

GOODWIN'S MOTION TO

DISMISS CLAIMS 2, 3,

AND 4 OF PLAINTIFF'S

FIRST AMENDED

COMPLAINT

I. INTRODUCTION

Before the Court is Defendant Jerry Goodwin's ("Goodwin")

Motion to Dismiss Claims 2, 3, and 4 of Plaintiff's First Amended

Complaint. See Mot., Docket No. 21. Plaintiff Cal-Agrex, Inc.

("Plaintiff" or "Cal-Agrex") opposed the motion, and Goodwin filed

a reply. See Docket Nos. 25, 32. 

For the reasons stated herein, the Court DENIES Goodwin's

motion as to the Second and Fourth Claims, and GRANTS the motion

as to the Third Claim.

II. FACTUAL BACKGROUND

According to the First Amended Complaint, on December 23,

2004, Cal-Agrex entered into a written agreement to purchase

10,000 metric tons of non-fat dry milk powder ("NFDM") from

Goodwin and Dee Van Tassell ("Van Tassell," together with Goodwin

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1Neither party explains who Sun Nan Lin is, or why Lin

purportedly gave Defendants $500,000 towards performance of CalAgrex's obligations under the contract. Although it appears that

Lin signed the Agreement on behalf of Cal-Agrex, see Agreement, the

parties distinguish the $500,000 Lin paid Defendants from the

$1,000,000 that Cal-Agrex paid. The five claims in the First

Amended Complaint focus only on the $1,000,000 that Cal-Agrex

deposited.

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referred to as "Defendants"). See First Am. Compl., Docket No.

16, ¶ 8; Ex. A ("Agreement"). The Agreement required Defendants

to ship the first 3,000 metric tons of NFDM in January, 2005. 

Id., ¶ 9. The Agreement required Cal-Agrex to wire a deposit of

$2,000,000 to the account of Van Tassell for the benefit of Van

Tassell and Goodwin. Id., ¶ 10.

Between December 24, 2004 and January 13, 2005, Plaintiff

initiated a series of wire transfers, depositing a total of

$1,000,000 in Van Tassell's account. Id., ¶ 12. Sun Nan Lin

deposited an additional $500,000 into Van Tassell's account.1 Id.

 Plaintiff alleges that when it asked Defendants why it had not

received a shipment of NFDM, Defendants acknowledged that they had

not sent a shipment yet, and Defendants waived the remaining

deposit required by the written agreement until the shipments

began. Id., ¶ 13.

Finally, Plaintiff alleges that Defendants have refused to

deliver any NFDM. Id., ¶ 16.

Plaintiff's Second Claim alleges that following the deposit

of $1,000,000 into Van Tassell's account, Plaintiff still owned

these funds, and that by refusing to return the funds to

Plaintiff, Defendants unlawfully converted said funds. See id.,

¶¶ 22-28. Plaintiff's Third Claim alleges that Defendants

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promised to deliver NFDM to Plaintiff and personally guaranteed

the return of Plaintiff's deposited funds if they failed to

deliver, but that Defendants never intended to perform such

promises. See id., ¶¶ 29-36. Plaintiff's Fourth Claim alleges

that Defendants are indebted to Plaintiff in the sum of $1,000,000

for money had and received by Defendants for Plaintiff's benefit,

and that Defendants refuse to pay Plaintiff that money. See id.,

¶¶ 37-40.

III. DISCUSSION

A. Second and Fourth Claims

In the Second Claim, Cal-Agrex alleges conversion. In the

Fourth, Cal-Agrex alleges money had and received. Upon review of

the Complaint, the Court finds that Cal-Agrex's allegations are

sufficient to state a claim upon which relief may be granted. See

Fed. R. Civ. P. 12(b)(6). The Court therefore DENIES Goodwin's

motion to dismiss the Second and Fourth Claims.

However, the Court finds that the Second and Fourth Claims

are redundant and unnecessary. Prevailing on these claims will

require Cal-Agrex to prove the very same facts necessary for it to

prevail on its claim for breach of contract — that Cal-Agrex gave

Defendants $1,000,000 in exchange for NFDM, that Defendants did

not deliver any NFDM, and that Defendants did not return the

$1,000,000 to Cal-Agrex. Cal-Agrex will either prevail on all

three claims, or on none, and the amount of any potential recovery

will not be increased for having brought three claims as opposed

to one. Therefore, pursuant to Federal Rule of Civil Procedure

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2Rule 12(f) provides that upon motion of a party "or upon the

court's own initiative at any time, the court may order stricken

from any pleading any insufficient defense or any redundant,

immaterial, impertinent, or scandalous matter."

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Although Goodwin claims that Utah law governs the Agreement,

he concedes that "there is no conflict of law with respect to the

issues presented." Mot. at 4 n.5. The Court will therefore apply

California law. See Paracor Fin., Inc. v. Gen. Elec., 96 F.3d

1151, 1164 (9th Cir. 1996)(the court applies the forum state's

choice-of-law rules in determining applicable law); Wash. Mut. Bank

v. Superior Court, 15 P.3d 1071, 1080-81 (Cal. 2001) (the party

advocating application of a foreign state's law has the burden of

showing a material difference between that state's law and

California law).

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12(f), the Court STRIKES the Second and Fourth Claims on its own

initiative.2

B. Third Claim

Under California law, the elements of a claim for fraud are:

"(1) representation; (2) falsity; (3) knowledge of falsity; (4)

intent to deceive; and (5) reliance and resulting damage

(causation)." Vega v. Jones, Day, Reavis & Pogue, 17 Cal. Rptr.

3d 26, 32 (Ct. App. 2004).3 Goodwin asserts two deficiencies in

Cal-Agrex's claim for fraud: first, Goodwin argues that Cal-Agrex

failed to plead a false promise; second, he argues that Cal-Agrex

did not plead the factual allegations of fraud with sufficient

particularity.

Pursuant to Federal Rule of Civil Procedure 12(b)(6), the

court will grant a motion to dismiss if the plaintiff fails "to

state a claim upon which relief can be granted." Fed. R. Civ. P.

12(b)(6). When evaluating a motion to dismiss, the court accepts

the facts as stated by the nonmoving party and draws all

inferences in its favor. See Everest & Jennings, Inc. v. Am.

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Motorists Ins. Co., 23 F.3d 226, 228 (9th Cir. 1994). 

Furthermore, the court must assume that all general allegations

"embrace whatever specific facts might be necessary to support

them." Peloza v. Capistrano Unified Sch. Dist., 37 F.3d 517, 521

(9th Cir. 1994). At the pleading stage, the plaintiff "need only

show that the facts alleged, if proved, would confer standing upon

him." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1140

(9th Cir. 2003). 

Cal-Agrex alleges that Defendants represented that they would

deliver NFDM or return the deposit if they did not deliver NFDM. 

See First Am. Compl., ¶¶ 9, 11, 30. Cal-Agrex further alleges

that Defendants did not deliver NFDM and did not return the

deposit, making that representation false. See id., ¶¶ 13, 14. 

Cal-Agrex alleges that at the time Defendants made this

representation, they had no intention of delivering NFDM or

returning the deposit, and therefore they knew the representation

was false. Id., ¶ 31. Cal-Agrex also alleges that Defendants

intended to induce Cal-Agrex to deposit cash with them. Id., ¶

32. Finally, Cal-Agrex alleges that it relied on Defendants'

representation and deposited $1,000,000 with Defendants, which

they did not return, damaging Plaintiff in the amount of

$1,000,000. Treating all of these allegations as true, as the

Court must, Cal-Agrex has stated a claim for which relief may be

granted. 

Goodwin asserts that because Cal-Agrex did not deliver the

originally agreed-upon deposit of $2,000,000, he has not broken a

promise, intentionally or otherwise. See Mot., at 10-11. This

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argument has no merit. Cal-Agrex alleges that it performed its

contractual obligations in full, as the contract was purportedly

modified to reduce the amount of the deposit. None of the factual

allegations necessary for Cal-Agrex's claim depends on its

performance. If, as Cal-Agrex alleges, Defendants did not intend

to deliver NFDM or return any monies deposited at the time the

parties entered into the Agreement, Defendants' promises to do so

could have been fraudulent regardless of Cal-Agrex's conduct. 

Goodwin's citation to La Cava v. Breedlove, 174 P.2d 880 (Cal. Ct.

App. 1946), is unavailing. In that case, the court explicitly

noted that the party alleging fraud did not allege or offer to

prove that the other party had no intention of performing at the

time the promise was made. See id. at 882. 

Although the Third Claim is sufficient to satisfy Rule

12(b)(6), it does not meet the heightened pleading requirements of

Rule 9(b). To satisfy Federal Rule of Civil Procedure 9(b),

"allegations of fraud must be specific enough to give defendants

notice of the particular misconduct which is alleged to constitute

the fraud charged so that they can defend against the charge and

not just deny that they have done anything wrong." Bly-Magee v.

California, 236 F.3d 1014, 1019 (9th Cir. 2001) (internal

quotations omitted). "Averments of fraud must be accompanied by

'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)

(quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). 

Cal-Agrex alleges that both Van Tassell and Goodwin promised

to deliver NFDM in exchange for money, and that both promised to

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4

When considering a motion to dismiss, the court is generally

limited to the allegations in the complaint, without extrinsic

evidence. See e.g., Hal Roach Studios, Inc. v. Richard Feiner &

Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989). However, where

another document is attached to the complaint, as it was here, the

court may treat that document as part of the complaint and consider

it when ruling on a motion to dismiss. See id.; Fed. R. Civ. P.

10(c) ("A copy of any written instrument which is an exhibit to a

pleading is a part thereof for all purposes."). The Court

therefore considers the Agreement between Cal-Agrex and Defendants

as part of the First Amended Complaint.

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return Cal-Agrex's money in the event they did not deliver NFDM. 

See First Am. Compl., ¶¶ 9, 11. Cal-Agrex further alleges that

Van Tassell and Goodwin made this promise on or about December 23,

2004, by entering into the Agreement. See id., ¶ 8; Ex. A.4

Thus, Cal-Agrex sufficiently alleges Defendants' promises to

deliver NFDM or return the deposit, including when and how those

promises were made.

The promise to deliver NFDM or return the money, however, was

conditioned on Cal-Agrex depositing $2,000,000 with Defendants. 

Cal-Agrex alleges that after it made a partial deposit, Defendants

waived the remainder of the deposit requirement. See id. ¶¶ 13,

30. Plaintiff only says that this waiver occurred in January of

2005. Plaintiff does not specify the date, which of the two

Defendants communicated the waiver to Plaintiff, or how they

communicated the waiver (i.e., by telephone, e-mail, etc.). In

order for either Goodwin or Van Tassell to defend against this

charge, they must know exactly what actions and communications are

at issue. To the extent that Cal-Agrex's claim for fraud relies

on its allegation that Defendants waived the deposit requirement,

the allegations of that waiver in the First Amended Complaint lack

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the necessary specificity to satisfy Rule 9(b).

IV. CONCLUSION

For the reasons described herein, the Court hereby GRANTS IN

PART and DENIES IN PART Defendant Jerry Goodwin's Motion to

Dismiss Claims 2, 3, and 4 of Plaintiff's First Amended Complaint,

and ORDERS as follows:

1. The Second and Fourth Claims of the First Amended

Complaint are hereby STRICKEN.

2. The Third Claim of the First Amended Complaint is hereby

DISMISSED WITHOUT PREJUDICE. Cal-Agrex may file a

Second Amended Complaint to address the deficiencies

described above no later than 30 (thirty) days following

the date of this Order.

IT IS SO ORDERED.

Dated: September 7, 2007

 UNITED STATES DISTRICT JUDGE

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