Opinion ID: 2555874
Heading Depth: 2
Heading Rank: 5

Heading: The Second Amended Complaint in the Federal District Court.

Text: On 29 September 2008, a federal trial judge dismissed the first amended complaint, but gave Respondents leave to refile. See Proctor v. Metro. Money Store Corp., 579 F.Supp.2d 724, 727 (D.Md.2008). In seeking dismissal, Chaudhry and Farahpour argued that [Respondents] have failed to state a claim . . . because they have failed to make specific factual allegations as to how either of these individuals participated in the alleged scheme. Proctor, 579 F.Supp.2d at 742. In other words, by grouping together Chaudhry, Farahpour, and Ballesteros in their first amended complaint, Respondents suggested that all [of the defendants] delivered one check, recorded one deed, instructed one buyer to sign a document, and received one fax. Proctor, 579 F.Supp.2d at 743 (internal quotation marks and citations omitted). The federal district court held that this repeated grouping must be read as an allegation that one of the three [defendants] did each act and, therefore, is deficient speculation under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Proctor, 579 F.Supp.2d at 744. Thus, in any subsequent complaint, Respondents were obliged to allege what specifically each Defendant did (not what the group did) to fulfill his role in the scheme. Id. Respondents filed a more specific, second amended complaint on 14 November 2008, alleging that Mr. Ballesteros defrauded [homeowner clients], and that Mr. Chaudhry and Mr. Farahpour failed to supervise Mr. Ballesteros, thereby facilitating the fraud. Respondents removed Ballesteros as a defendant, however, because, like Sussex, Ballesteros had sought the protective harbor of bankruptcy. Although this version of the complaint, again, did not name Norman as a defendant, it identified him by name in certain averments. In this regard, the second amended complaint alleged that:  The payments to Ballesteros were items paid out of the share of monthly proceeds to Farahpour, Chaudhry, and Norman.  Sussex is an entity owned and controlled by Farahpour, Chaudhry, and a third person, Steven Norman. . . . Sussex changed its name from CapTitle and filed for bankruptcy in the U.S. Bankruptcy Court of Maryland in late 2007. Based on the testimony of Norman in connection with the bankruptcy case, Sussex was operated for the financial benefit of the three owners since Ali Farahpour would review the company's records and make an equal monthly distribution to each of the three based on the money received by the company during the given month after payment of expenses and leave some amount of reserve for future expenses.  Wilbur Ballesteros was paid a salary out of Chaudhry, Farahpour and Norman's share of the revenues generated by the operation of Sussex as well as a bonus per settlement in which he was involved.  Upon information and belief, the fees and other charges collected by Sussex in connection with this transaction were disbursed at the direction of Farahpour to Farahpour, Chaudhry and Norman.  Farahpour participated through the use of his entity Money Tree Funding and by dividing up the funds received from these transactions to himself, Chaudhry, and Norman.[ [9] ]