Source: https://timothymccandless.wordpress.com/2013/01/06/weekly-legal-newsletter-has-arrived/
Timestamp: 2018-04-25 14:18:11
Document Index: 755788889

Matched Legal Cases: ['§ 12', '§ 7012', '§ 12', '§ 7012', '§12', '§ 523']

Weekly legal newsletter has arrived | Serving California only 949-388-7779 & 925-957-9797
Weekly legal newsletter has arrived
Sent: Wednesday, January 02, 2013 5:44 AM
Subject: Weekly legal newsletter has arrived
The topic of the newsletter this week is a brief discussion of some of the issues involved for a party filing a motion to dismiss an adversary complaint for fraud filed against them in United States Bankruptcy Court on the grounds that the adversary complaint fails to state a claim.
This type of motion is often called a 12(b)(6) motion as it is based on Federal Rule of Civil Procedure § 12(b)(6) (FRCP), or Federal Rule of Bankruptcy Procedure § 7012(b)(6) (FRBP. A party may also request in the alternative, that the party be required to provide a more definite statement under FRCP § 12(e) or FRBP § 7012(e).
FRCP and FRBP §§12 (e) states in pertinent part that, “A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. The motion must be made before filing a responsive pleading and must point out the defects complained of and the details desired”.
Many adversary complaints filed in bankruptcy courts are made under 11 U.S.C. § 523(a)(2) on the grounds of fraudulent representations. Note that FRCP 9(b) states in pertinent part that, “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake”. This is a federally imposed requirement. although the Court will examine state law to determine if the elements of fraud have been sufficiently alleged.
“It is established law, in this circuit and elsewhere, that Rule 9(b)’s particularity requirement applies to state-law causes of action. "While a federal court will examine state law to determine whether the elements of fraud have been pled sufficiently to state a cause of action, the Rule 9(b) requirement that the circumstances of the fraud must be stated with particularity is a federally imposed rule." Vess v. Ciba-Geigy Corp. 317 F. 3d 1097, 1103 (9th Cir. 2003) (internal citations omitted).
The reason for the particularity requirement is due to the fact that fraud is a serious charge against another party.
California law requires that four (4) elements be specifically pleaded in any cause of action for fraud.
“A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. Every element must be specifically pleaded.” Service by Medallion, Inc. v. Clorox Co. 44 Cal.App.4th 1807, 1816 (1996).
Whatever form it takes, injury or damage from fraud must not only be distinctly alleged but its causal connection with reliance on representations must be shown…. In order to recover for fraud, as in any other tort, the plaintiff must plead and prove the detriment proximately caused by the defendant’s tortious conduct. Deception without resulting loss is not actionable fraud. Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representations must be shown. Service by Medallion, Inc.,
44 Cal.App.4th 1807, supra at 1818.
While leave to amend is usually granted if a motion to dismiss is successful, the Ninth Circuit has ruled that leave to amend does not need to be granted where amending the complaint would be futile, and that any discretion to deny leave to amend is particularly broad where plaintiff has previously amended their complaint.
“Leave need not be granted where the amendment of the complaint . . . constitutes an exercise in futility," and "the district court’s discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint." Ascon Properties v. Mobil Oil Co. 866 F.2d 1149, 1160 (9th Cir. 1989).
A motion to dismiss and/or a motion for a more definite statement are very useful when used in the right situation as many adversary complaints for fraud are filed but fail to allege the fraud with particularity, or they are so vague and ambiguous that the defendant cannot reasonably prepare a proper response.
In the author’s experience filing a motion to dismiss can be particularly useful when it is obvious that plaintiff has a weak case. This will force plaintiff to seek leave to amend. Once plaintiff has previously amended their adversary complaint some judges will deny leave to amend where the moving party can show that amendment would be futile as plaintiff cannot state a cause of action for fraud.
Please note that the author of this newsletter, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this newsletter is NOT intended to constitute legal advice.
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