Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01306/USCOURTS-caed-2_06-cv-01306-0/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 28:1441 Petition for Removal- Racketeering (RICO) Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

PAUL YANG, 

Plaintiff,

v.

FAI YEE XIONG, et al., 

Defendants. 

 No. Civ.S-06-1306 DFL GGH

MEMORANDUM OF OPINION

AND ORDER

Defendants Fai Yee Xiong, Kayeng Xiong, Wang Cha Lo, Zam Lo

Vue, Chai Chue Lee, Chong Theng Lee, Xaiv Chi Vang, Long Lee, Yu

Koua Thao and the Hmoob Sacramento Koom Tshav Ntuj (“HSKTN”) move

to dismiss plaintiff Paul Yang’s action, arguing that Yang lacks

standing and fails to plead sufficient facts under Federal Rules

of Civil Procedure 9(b) and 12(b)(6). For the reasons below, the

court: (1) denies defendants’ motion to dismiss Yang’s breach of

contract claim and (2) grants defendants’ motion to dismiss

Yang’s fraud-based claims. 

I.

Plaintiff Yang alleges that defendants, lacking an insurance

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 Defendants dispute plaintiff’s translation of certain 1

Hmong words, including the phrase “Hmoob Sacramento Koom Tshav

Ntuj.” These disputes are immaterial to the resolution of this

motion. 

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license, offered him a $25,000 life insurance policy for his

mother. First Am. Compl. (“FAC”) at 3-4. Yang alleges that he

signed a contract for benefits but was denied payment following

his mother’s death. Id. At 3. To the complaint, Yang attached

alleged translations of an “exemplar” HSKTN life insurance

contract, FAC, Exh. A, and the “Letter of Membership

Cancellation” he received from HSKTN, FAC, Exh. B. Yang alleges 1

(1) breach of contract, (2) fraud, (3) RICO fraud, 18 U.S.C.

§§ 1961-1968, and (4) unfair business practices, Cal. Bus. &

Prof. Code § 17200. 

Defendants filed a motion to dismiss, arguing that plaintiff

lacks standing to bring the suit and fails to state his claims

with sufficient particularity. 

II.

A. Standing

Defendants argue that Yang fails to “allege personal injury

fairly traceable to the defendant’s allegedly unlawful conduct

. . . and likely to be redressed by the requested relief.” 

Motion to Dismiss (“Mot.”) at 4 (quoting Allen v. Wright, 468

U.S. 737, 751 (1984)). Yang alleges that he signed a life

insurance contract with defendants under which he would receive

benefits upon his mother’s death. FAC at 3. When his mother

died, he alleges that defendants refused to pay and cancelled his

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policy. Id. He seeks damages based upon the alleged benefit

amount. Id. at 2. These allegations sufficiently demonstrate

Yang’s standing. 

B. Contract Claim 

Defendants argue that the exemplar contract attached to

Yang’s complaint contradicts the factual allegations in his

breach of contract claim. Mot. at 5. The exemplar contract is

silent as to defendants’ obligation to pay death benefits. FAC,

Exh. A. However, this silence does not necessarily contradict

Yang’s allegations, because additional agreements between the

parties could have supplemented the terms of the one attached

document. This matter can be resolved by a motion for partial

adjudication.

C. Fraud Claims

Yang’s remaining claims for fraud, RICO fraud, and unfair

business practices rest upon allegations that defendants

fraudulently offered life insurance policies. FAC at 4-10. 

Defendants argue that Yang’s claims fail to meet the heightened

pleading standards for fraud under Fed. R. Civ. P. 9(b). Rule

9(b) “requires a pleader of fraud to detail with particularity

the time, place, and manner of each act of fraud, plus the role

of each defendant in each scheme.” Lancaster Cmty. Hosp. v.

Antelope Valley Hosp. Dist., 940 F.2d 397, 405 (9th Cir. 1991);

see also Cooper v. Pickett, 137 F.3d 616, 625-26 (9th Cir. 1997)

(applying Rule 9(b) to allegations of fraud against an entity

defendant). 

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4

Yang’s fraud claims against both individual defendants and

HSKTN lack sufficient particularity. Yang’s allegations use only

the generic “defendants” and “they.” Yang does not attribute

conduct to particular defendants or provide a sufficiently

specific explanation of what each defendant did and when. For

the RICO claim, Yang also fails to plead sufficient predicate

acts such as the specific dates of fraudulent communications. 

See Lancaster, 940 F.2d at 405 (holding that allegations of RICO

fraud claim must state dates of “specific mailings”). 

Yang argues that his allegations are sufficient under the

group published information presumption. See Wool v. Tandem

Computers, Inc., 818 F.2d 1433, 1440 (9th Cir. 1987) (“In cases

of corporate fraud where the false and misleading information is

conveyed in prospectuses, registration statements, annual

reports, press releases, or other ‘group published information,’

it is reasonable to presume that these are the collective actions

of the officers.”). The group published information presumption,

however, requires that the complaint “contain allegations that [a

defendant] either participated in the day-to-day corporate

activities, or had a special relationship with the corporation,

such as participating in preparing or communicating group

information at particular times.” In re GlenFed, Inc. Sec.

Litig., 60 F.3d 591, 593 (9th Cir. 1995). Yang does not

sufficiently allege the defendants’ individual roles in HSKTN and

does not specifically identify the group published information he

challenges as fraudulent. See Moore v. Kayport Package Express,

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Inc., 885 F.2d 531, 540 (9th Cir. 1989) (refusing to apply group

published information presumption to plaintiff’s fraud

allegations). Yang cannot rely upon the presumption to cure the 

lack of specificity in the complaint. 

Pursuant to Rule 9(b), Yang’s fraud, RICO fraud, and unfair

business practices claims against both individual defendants and

HSKTN are dismissed. 

III.

For these reasons, the court: (1) denies defendants’ motion

to dismiss Yang’s breach of contract claim and (2) grants

defendants’ motion to dismiss Yang’s fraud, RICO fraud, and

unfair business practices claims. Plaintiff may file an amended

complaint within 28 days of the date of this order.

IT IS SO ORDERED.

Dated: 11/2/2006

DAVID F. LEVI

United States District Judge

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