JOHN A. KRONSTADT, District Judge.
Andrea Keifer Deputy Clerk
Timothy E. Murphy ("Plaintiff") brought this action against American General Life Insurance Company ("AGL") and DOES 1-100 in the Riverside Superior Court on February 25, 2014. Complaint ("Compl."), Dkt. 1, Ex. 1 at 8. Plaintiff, who is self-represented and an attorney, claims to be a beneficiary of a $5,000,000 life insurance policy ("Policy") purchased by his parents from AGL. Id. The Complaint alleges a breach of contract based on the failure of AGL to pay benefits to Plaintiff after the death of his parents. Id. In response, AGL claimed that, because Plaintiff was never a beneficiary of the Policy, no benefits were owed or payable to him. E.g., Answer, Dkt. 1, Ex. 1 at 14; Dkt. 14-1, Ex. A-G. AGL removed the action based on diversity jurisdiction. Dkt. 1.
Plaintiff moved to remand the action on the ground that the amount in controversy requirement was not satisfied. Dkt. 11. While the motion to remand was pending, Plaintiff filed a First Amended Complaint ("FAC") without first seeking leave as required under Fed.R.Civ.P. 15(a)(2). Dkt. 21. The FAC sought to add a non-diverse party, Shane Murphy ("Shane"),
Plaintiff filed a Second Amended Complaint ("SAC") on October 23, 2014. Dkt. 53. The SAC does not present a claim for breach of contract. Id. Instead, the SAC advances six causes of action against AGL, Shane, American International Group ("AIG"), 18 other named defendants and DOES 1-100, (collectively "Defendants"): (1) breach of fiduciary duty and conspiracy; (2) conversion and conspiracy; (3) money had and received, conspiracy, constructive trust and resulting trust; (4) constructive fraud; (5) tortious intentional interference with expectancy and conspiracy; and (6) an accounting. Id. AGL and AIG moved to dismiss the SAC pursuant to Fed.R.Civ.P. 12(b)(6) on November 10, 2014. Motion to Dismiss ("Motion"), Dkt. 57. Plaintiff filed an opposition. Dkt. 59. AGL and AIG filed a reply. Dkt. 66. The Motion was set for hearing on December 15, 2014. However, the Court determined that the matter was one that could be addressed without a hearing pursuant to Local Rule 7.15, and took the Motion under submission. Dkt. 73.
For the reasons set forth in this Order, Shane Murphy is DISMISSED as a defendant pursuant to 28 U.S.C. § 1447(e), and the Motion is GRANTED without prejudice as to defendants AGL and AIG.
The SAC alleges that Defendants conspired to deprive Plaintiff of his share of the proceeds from the sale of the Policy prior to the death of his parents. SAC ¶ 36. Plaintiff alleges that his parents —
The SAC alleges that, as of November 1, 2005, the beneficiary of the Policy was The Robert and Shirley Murphy Survivorship Trust ("RSMS Trust"). Id. ¶ 32. Plaintiff alleges that Gerald Morlitz ("Morlitz")
The SAC alleges that the beneficiaries of the RSMS Trust were the six children of Robert and Shirley. Id. ¶¶ 34, 35. Plaintiff alleges that on or about November 9, 2005, Morlitz, acting on behalf of the RSMS Trust, assigned its interest in the Policy to RPF "in return for financing some of the premium due thereon." Id. ¶ 37. The SAC also alleges that Plaintiff's siblings have refused to provide to him a copy of the "indenture" of the RSMS Trust. Id. ¶ 35.
The SAC also alleges that, in December of 2007, Mitchell K. Smith ("Smith"),
The SAC alleges that, in July 2008, RIG offered Morlitz $810,000 in exchange for the interest in the Policy held by the RSMS Trust. Id. ¶ 41. It also alleges that Morlitz breached his fiduciary duty to Plaintiff by "failing to disclose the offer to [P]laintiff and/or to act to [P]laintiff's advantage regarding the offer." Id. ¶ 41. The SAC then alleges that Morlitz disclosed RIG's offer to Cohen and the Firm (id. ¶ 42), and that they breached their respective duties to Plaintiff by failing to disclose the offer to him or otherwise to act for his benefit. Id.
The SAC next alleges that, on July 7, 2008, CNF II, LLC ("CNF")
The SAC alleges that, without the consent of Plaintiff, the Policy was sold to CNF. Id. ¶ 46. This sale was not revealed to Plaintiff immediately. Id. It is alleged that the sale was part of the conspiracy among Morlitz, Cohen, the Firm, Smith, GSFG, RPF, RIG, AIG, AGL, CNF, Mark, Plaintiff's sister — Claudia Semplenski ("Semplenski"),
The SAC alleges that in May 2009, Cohen made a false representation to Plaintiff, i.e., that Cohen represented Robert in various matters, including as to the Policy and his general financial affairs. Id. ¶ 45. It also alleges that Cohen stated the Policy had been sold, but did not disclose his role in that transaction. Id.
The SAC alleges that AGL and AIG are co-conspirators with respect to the allegations in the following causes of action: the First, which is for "breach of fiduciary duty and conspiracy"; the Second, which is for "conversion and conspiracy"; the Third, which is for "money had and received, conspiracy, constructive trust and resulting trust"; and the Fifth, which is for "intentional interference with expectancy and conspiracy." The SAC also seeks an accounting against AIG and AGL. It also alleges that AGL wrote or underwrote the Policy (SAC ¶ 4) and that AIG underwrote the Policy. Id. ¶ 5.
The SAC alleges that AGL and AIG "organized, implemented, assisted, aided and/or abetted the sale of the policy(s) to which this complaint pertains and beneficiary entitlements therein so as to deprive [P]laintiff of his entitlements." Id. It also alleges that staff of AIG and AGL participated in the conspiracy when, after the sale of the Policy to CNF, a new Policy was issued in which CNF is listed as the "owner." Id. ¶ 46. Further, the SAC alleges that AGL refused to produce a copy of the Policy or disclose the named beneficiaries under the Policy in response to Plaintiff's January 2010 demand for this information. Id. ¶ 50. It also alleges that this request was denied again in April 2013. Id. ¶ 51. The SAC alleges that AGL informed Plaintiff
The SAC brings the following causes of action against Shane: the Second, which is for "conversion;" the Third, which is for "money had and received, constructive trust and resulting trust;" and the Sixth, which seeks an "accounting." Plaintiff alleges that Shane, who is domiciled in California, is a "direct and/or indirect beneficiary of one or more of the same life insurance policy(s) of which [P]laintiff was a beneficiary whose interests will necessarily be affected or disposed by the judgment entered in this action." SAC ¶ 3. The SAC alleges that there is no federal question jurisdiction as to the claims against Shane. Id. ¶ 2.
The SAC alleges that Shane received some portion of the proceeds from the sale of the Policy to CNF. Id. ¶ 76.
The October 14, 2014 Order required Plaintiff, who as noted above is an attorney, to submit a memorandum in conjunction with any amended complaint. Dkt. 52. Its purpose was to justify why any defendant other than AGL was necessary with respect to obtaining appropriate relief. Id. at 5. Further, Plaintiff was instructed that an allegation in an amended complaint would not be sufficient as to this issue if its substance were to the effect that "a new defendant is a `necessary and indispensable party' because the person may have an interest in obtaining part of any potential relief awarded to Plaintiff." Id. Plaintiff was required to reflect on the claims proffered in any amended complaint before filing it to ensure that each was warranted, and that none was being asserted for an improper purpose. Id. Claims were also required to have an underlying factual basis, as required under Fed.R.Civ.P. 11(b). Plaintiff submitted a memorandum in response to the October 14, 2014 Order. Dkt. 54.
In the memorandum, Plaintiff argues that Shane is an appropriate defendant because he "received some of the proceeds of the sale of the insurance policies described by the complaint that rightfully belonged to plaintiff." Id. at 2. The memorandum also argues that, because Shane and Plaintiff are both citizens of California, there is no diversity jurisdiction and the matter should be remanded. Id. As to AIG, Plaintiff alleges that it is a necessary party because it underwrote the Policy and was part of the conspiracy to deprive Plaintiff of his right to a portion of the proceeds
Id. at 8.
Generally, leave to amend must be "freely given" absent "any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment" or other similar showings. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); see also Fed.R.Civ.P. 15(a)(2). However, where a proposed amendment would add a non-diverse party after removal — thereby precluding existing, diversity jurisdiction — there is greater discretion in determining whether to allow the amendment. 28 U.S.C. § 1447(e); see also Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir.1998).
Section 1447(e) provides: "[i]f after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court." Thus, under § 1447(e), a district court has two options. Stevens v. Brink's Home Sec., Inc., 378 F.3d 944, 949 (9th Cir.2004). It may deny joinder and retain diversity jurisdiction in the case. Id. Alternatively, it may permit joinder; however, if joinder is permitted, the case must be remanded to state court. Id.
Section 1447(e) does not state the factors to be considered when making a determination of whether joinder should be permitted or denied. However, district courts have considered the following factors:
Hardin v. Wal-Mart Stores, Inc., 813 F.Supp.2d 1167, 1173-74 (E.D.Cal.2011); Oum v. Rite Aid Corp., No. CV08-7741-GHK, 2009 WL 151510, at *1 (C.D.Cal.
An analysis of the first six factors is sufficient to inform an exercise of discretion with respect to the Motion.
To state a claim of conversion, a plaintiff must allege facts supporting an inference that: (1) the plaintiff owns or has a right of personal possession to the personal property; (2) the defendants' disposition of the property is in a manner "that is inconsistent with the plaintiff's property rights"; and (3) plaintiff sustained damages as a result. Fremont Indem. Co. v. Fremont Gen. Corp., 148 Cal.App.4th 97, 119, 55 Cal.Rptr.3d 621 (2007). Plaintiff must have a claim of ownership at the time of the alleged conversion. Baldwin v. Marina City Properties, Inc., 79 Cal.App.3d 393, 410, 145 Cal.Rptr. 406 (1978) (sustaining a demurrer because plaintiff — owner of a security interest — did not adequately allege title or right to possession and damages). "A trust beneficiary has no legal title or ownership interest in the trust assets; his or her right to sue is ordinarily limited to the enforcement of the trust, according to its terms." Saks v. Damon Raike & Co., 7 Cal.App.4th 419, 427, 8 Cal.Rptr.2d 869 (1992).
The statute of limitations period for a claim of conversion is three years. See Cal.Code Civ. Proc. § 338(c)(1) (a claim must be brought within three years in an "action for taking, detaining, or injuring any goods or chattels, including actions for the specific recovery of personal property"); see also AmerUS Life Ins. Co. v. Bank of Am., N.A., 143 Cal.App.4th 631, 639, 49 Cal.Rptr.3d 493 (2006) (applying § 338(c)(1)). Time to file commences upon "the act of wrongfully taking property." AmerUS, 143 Cal.App.4th at 639, 49 Cal.Rptr.3d 493; accord Bono v. Clark, 103 Cal.App.4th 1409, 1433, 128 Cal.Rptr.2d 31 (2002).
Plaintiff argues that the SAC adequately pleads a claim of conversion against Shane. Plaintiff provides no support for this assertion other than that he is a beneficiary of the RSMS Trust because he is assumed to be the natural object of his parents' affection. This argument is unpersuasive.
The SAC does not allege that Plaintiff was ever named as a beneficiary of the Policy. It alleges that the RSMS Trust was the beneficiary of the Policy. As stated in Saks, a beneficiary has no legal title or ownership interest in trust assets. Further, the SAC contains no allegations as to how the assets of the RSMS Trust were to be distributed among its beneficiaries. Indeed, the SAC contains no allegations as to whether Morlitz, as trustee, was required to distribute RSMS Trust assets, or whether he had any discretion in doing so. Even if such allegations were included in the SAC, a claim of improper distribution must be made against the trustee. Thus, the only path by which Plaintiff could
Furthermore, even if there were a valid conversion claim against Shane, it appears that it would be time barred. Thus, the statute of limitations period commenced no earlier than 2008, when the policy was sold, and no later than May 2009, when Plaintiff learned of the sale. There is a three-year limitations period. Cal.Code Civ. Proc. § 338(c)(1). It likely expired no later than May 2012. This action was brought after that date. Thus, it appears that a conversion claim against Shane — even if well-pled — would be time barred.
"A cause of action is stated for money had and received if the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff." Gutierrez v. Girardi, 194 Cal.App.4th 925, 937, 125 Cal.Rptr.3d 210 (2011) (internal quotation marks omitted). There must be an allegation that the defendant "has received money which belongs to [the plaintiff], and which in equity and good conscience should be paid over to the [the plaintiff]." Id. (internal quotation marks omitted); accord Weiss v. Marcus, 51 Cal.App.3d 590, 599, 124 Cal.Rptr. 297 (1975) (defendants owed plaintiff a portion of settlement proceeds received "by virtue of his lien for the reasonable value of legal services rendered").
The limitations period for bringing a claim of money had and received is two years. See Cal.Code Civ. Proc. § 339(1) (two-year period for liabilities not founded on written instruments); see also Warren v. Lawler, 343 F.2d 351, 360 (9th Cir.1965) ("the theory of money had and received [is an] action on an implied contract" and is subject to the two-year statute of limitations period in Cal.Code Civ. Proc. § 339(1)).
AGL and AIG argue that the money had and received claim against Shane lacks the necessary allegations of its substantive elements. Plaintiff did not respond to this argument. The SAC contains no allegations that Shane incurred a debt to Plaintiff and received money that was for Plaintiff's benefit. Further, even if it did, once again, it appears that the limitations period expired before this action was commenced in February 2014. As noted, this potential claim would have accrued no earlier than 2008, when the Policy was sold, and no later than May 2009, when Plaintiff learned of its sale. Thus, the limitations period likely expired no later than May 2011, which was well before the present action was filed. Accordingly, this claim does not appear to be valid for purposes of assessing jurisdiction.
Cal. Civ.Code § 2224 provides that: "[o]ne who gains a thing by fraud,
"A resulting trust arises by operation of law from a transfer of property under circumstances showing that the transferee was not intended to take the beneficial interest." In re Estate of Yool, 151 Cal.App.4th 867, 874, 60 Cal.Rptr.3d 526 (2007). There must be a "relationship between the resulting trustee and beneficiary" such that "one, in good faith, acquires property belonging to another. The law implies an obligation on the part of the one in whom title has vested to hold the property for the owner's benefit and eventually convey it to the owner." Id. (emphasis in original). "The trustee has no duties to perform, no trust to administer, and no purpose to pursue except the single purpose of holding or conveying the property according to the beneficiary's demands." Id. A classic case of a resulting trust is where one person finances the purchase of property that is then placed in the name of another. Id. Under such circumstances, the party named as the owner becomes the trustee of a resulting trust whose corpus is the property and whose beneficiary is the person whom the financing party intended to be the owner. Id.
The limitations period for bringing a claim for a resulting trust is four years. Cal.Code Civ. Proc. § 343; In re Estate of Yool, 151 Cal.App.4th at 875, 60 Cal.Rptr.3d 526. "The statute of limitations does not begin to run against a voluntary resulting trust in the absence of repudiation by the trustee, that is, until a demand has been made upon the trustee and the trustee refuses to account or convey." In re Estate of Yool, 151 Cal.App.4th at 875, 60 Cal.Rptr.3d 526.
AGL and AIG argue that the constructive trust and resulting trust claims against Shane are invalid because they lack adequate allegations. Plaintiff did not respond. As to the constructive trust claim, the SAC does not allege that Shane acquired his allegedly disproportionate share of the proceeds derived from the sale of the Policy through his own fraud or wrongdoing. Rather, the SAC alleges only that Shane accepted what Morlitz gave him as a beneficiary of the RSMS Trust. Further, the SAC does not allege that Plaintiff was ever entitled to any of these proceeds. Accordingly, the claim that a constructive trust should be imposed against Shane is not well pleaded, and appears to lack force.
A similar analysis applies to the resulting trust claim. The SAC alleges that Shane is a beneficiary of the RSMS Trust. As such, he was an intended beneficiary of any RSMS Trust assets, including those that Morlitz allegedly distributed to him following the sale of the Policy. Further, there are no allegations that Morlitz asked
"An accounting is an equitable proceeding which is proper where there is an unliquidated and unascertained amount owing that cannot be determined without an examination of the debts and credits on the books to determine what is due and owing." Prakashpalan v. Engstrom, Lipscomb & Lack, 223 Cal.App.4th 1105, 1136-37, 167 Cal.Rptr.3d 832 (2014). Because equitable principles govern, "plaintiff must show the legal remedy is inadequate." Id. at 1137, 167 Cal.Rptr.3d 832. Accounting is proper where "the books and records are so complicated that an action demanding a fixed sum is impracticable ...." Id. There must be "[s]ome underlying misconduct on the part of the defendant" to "invoke the right to this equitable remedy." Id.
AGL and AIG argue that the accounting claim against Shane is substantively inadequate. Once again, Plaintiff did not respond. There are no allegations of affirmative wrongdoing by Shane. The SAC alleges only that he Shane accepted the funds that were distributed to him by the Trustee of the RSMS Trust. There is no further showing of the need for the application of this separate remedy, which is dependent on the merits of the related claims. Accordingly, this claim also lacks force, for purposes of the present analysis.
Fed.R.Civ.P. 19(a) provides that joinder is required if, in the absence of the person, "the court cannot accord complete relief among existing parties" or if that person "claims an interest relating to the subject of the action and is so situated" that proceeding without the person would "impair the person's ability to protect the interest" or would "leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest." In sum, a party is necessary under Fed. R.Civ.P. 19(a) if a "failure to join will lead to separate and redundant actions." Aqua Connect, 2012 WL 1535769, at *2; accord IBC Aviation Servs., Inc. v. Compania Mexicana de Aviacion, S.A. de C.V., 125 F.Supp.2d 1008, 1012 (N.D.Cal.2000).
Joinder of a person is not required, however, if it would destroy subject matter jurisdiction under Fed.R.Civ.P. 19(a). Lopez v. Gen. Motors Corp., 697 F.2d 1328, 1332 (9th Cir.1983); IBC Aviation, 125 F.Supp.2d at 1012. Moreover, joinder pursuant to § 1447(e) is not appropriate if the non-diverse defendant whose joinder is sought is only "tangentially related to the cause of action or would not prevent complete relief." Id. Further, under § 1447(e), a court has discretion to deny joinder of a party "whose identity was ascertainable and thus could have been named in the first complaint." Boon v. Allstate Ins. Co., 229 F.Supp.2d 1016, 1023 (C.D.Cal.2002).
Plaintiff argues that joinder of a beneficiary is appropriate. Thus, such a person is a necessary party when the interests of different trust beneficiaries are in conflict and the action is brought
Plaintiff's arguments are not persuasive. Plaintiff may obtain complete relief from Morlitz — the trustee of the RSMS Trust — should he prevail on his claim that trust assets were improperly distributed. Cal. Prob.Code §§ 16400,
Further, Plaintiff has not explained why he waited to bring claims against Shane until after this action was removed. The facts supporting the claims of conversion, money had and received and accounting against Shane arose from a transaction that occurred over six years ago. The SAC alleges that Plaintiff was aware that the Policy was being offered for sale as early as July
Plaintiff argues that he only became aware of the facts supporting the claims brought against Shane through discovery in this action. However, Plaintiff has not identified the basis for this assertion. Thus, he has not explained what he first learned. Nor does he provide any persuasive explanation for his claimed failure to become aware of the facts underlying his claim against his brother long before bringing this action. Thus, the present record, which is comprised largely of Plaintiff's allegations, reflects that he was in a position to have determined in May 2009 that the present claims against Shane had accrued.
Because joinder of Shane is not necessary to afford Plaintiff the ability to obtain complete relief, because there has been an unexplained delay in bringing the asserted claims against him, and because these claims were presented after removal in what appears to be an effort to defeat diversity jurisdiction, this factor weighs against permitting joinder.
When a claim is timely filed in state court and then removed, a finding that the statute of limitations would preclude the filing of a new, separate action against a party whose joinder has been denied in the federal proceeding, may warrant remand. See Petrosyan, 2013 WL 3989234, at *5. Remand is generally preferable to dismissal "when the statute of limitations on the plaintiff's state-law claims has expired before the federal court has determined that it should relinquish jurisdiction over the case." Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351-52, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988) (addressing whether a district court had discretion to remand when only state law claims remained).
The question here is not whether a timely filed claim would be precluded if the joinder of Shane is not permitted. The relevant statutes of limitations likely expired years before Plaintiff filed this action in the Superior Court. Thus, Plaintiff would be precluded from bringing his claim independent of the forum.
Accordingly, this factor does not weigh in favor of joinder.
To evaluate the timeliness factor, courts must do more than determine whether a motion was "filed within the period of time allotted by the district court in a Rule 16 scheduling order." AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir.2006). Instead, courts must consider whether the "moving party knew or should have known the facts and theories raised by the amendment in the original pleading." Id. (quoting Jackson v. Bank of Haw., 902 F.2d 1385, 1388 (9th Cir.1990)) (an "eight month delay between the time of obtaining a relevant fact and seeking a leave to amend is unreasonable").
Plaintiff has not explained the basis for his argument that he did not know, and with the exercise of reasonable diligence could not have known, of the basis for his claims against Shane, until October 23,
Plaintiff has provided no legal authority in support of his argument that his delay should be excused because he believed he risked angering his father and being disinherited. Further, implicit in this argument is an admission that Plaintiff was aware of facts that would have justified bringing suit as early as 2009. Thus, Plaintiff has not explained why he delayed five years before bringing this action against Shane. Accordingly, this factor weighs heavily against allowing joinder.
Courts are to consider the motive of a plaintiff in joining a non-diverse party with "particular care" when "the presence of a new defendant will defeat the court's diversity jurisdiction and will require a remand to the state court." Desert Empire Bank v. Ins. Co. of N. Am., 623 F.2d 1371, 1376 (9th Cir.1980)
Plaintiff argues that his only purpose in adding Shane is to ensure that he can
SAC ¶ 2.
The subsequent allegations against Shane consist of the conclusory statement that he received a disproportionate share of the proceeds from the sale of the Policy to CNF and that his tortious conduct created liability to Plaintiff. For the reasons explained above, Plaintiff can obtain complete relief as to his claims with asserting separate ones against Shane. Thus, by naming his brother — the only non-diverse defendant — after removal, Plaintiff has raised concerns as to whether the claims are valid, or instead asserted for the purpose of defeating diversity jurisdiction. Accordingly, this factor weighs substantially against joinder.
In determining whether a plaintiff would suffer prejudice, courts have considered whether denial of leave to amend would require parallel in state and federal court proceedings or would lead the plaintiff to forgo claims against the non-diverse defendants. E.g., Khoshnood, 2012 WL 751919, at *5; Negrete, 2012 WL 254039, at *9. Because none of the claims against Shane appears valid, there is no basis to conclude that Plaintiff would be prejudiced even if he could not pursue them in a separate action in a Superior Court. This Order does not make a final, substantive determination as to the viability of any claims asserted against Shane. Rather, under 28 U.S.C. § 1447(e), it addresses only whether the asserted claims against Shane appear to be valid. They do not. To avoid any prejudice, however, the effective date of this Order as to the denial of joinder shall be stayed for 14 days following its entry to permit Plaintiff to file a separate action against Shane in the Superior Court while his claims against Shane in this action remain pending. Finally, to the extent that Plaintiff brings such claims, the burden of parallel actions could be addressed by having one action proceed while the other is stayed. See Cal.Code Civ. Proc. §§ 404-404.9; Cal. Rules of Court 3.515, 3.520, 3.529; see also Morris v. S. San Joaquin Irrigation Dist., 2 Cal.2d 492, 493, 41 P.2d 537 (1935); Conrad v. West, 98 Cal.App.2d 116, 118, 219 P.2d 477 (1950). Accordingly, Plaintiff will not be prejudiced, and this factor weighs heavily against allowing joinder.
For the reasons stated above, none of the six factors favors allowing joinder and five of the six weigh heavily against it. Most significant are the findings that none of the asserted claims against Shane appears valid and that the apparent reason for the proposed joinder is to add a party whose presence would defeat diversity jurisdiction. Accordingly, the joinder of Shane proposed through the SAC is denied, and he is DISMISSED as a Defendant from the SAC, without prejudice to Plaintiff seeking to renew these claims in the Superior Court. This element of this Order shall be stayed for 14 days from its entry to permit the filing of such an action while this one remains pending as to Shane.
Fed.R.Civ.P. 8(a), provides that a "pleading that states a claim for relief must
A party may move to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Dismissal is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support one. Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.2008). In considering a motion to dismiss, the allegations in the challenged complaint are deemed true and must be construed in the light most favorable to the non-moving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-338 (9th Cir.1996). However, a court need not "accept as true allegations that contradict matters properly subject to judicial notice or by exhibit. Nor is the court required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Sciences Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.2008) (citing Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001)).
"Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration." Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 510-11, 28 Cal.Rptr.2d 475, 869 P.2d 454 (1994). A claim of conspiracy requires that "two or more persons agree to perform a wrongful act ...." Wyatt v. Union Mortgage Co., 24 Cal.3d 773, 784, 157 Cal.Rptr. 392, 598 P.2d 45 (1979). By agreeing to a common plan or design to commit a tort, coconspirators "incur liability co-equal with the immediate tortfeasors" because they effectively adopt "the torts of other coconspirators within the ambit of the conspiracy." Applied Equip. Corp., 7 Cal.4th at 511, 28 Cal.Rptr.2d 475, 869 P.2d 454. A "plaintiff is entitled to damages from those defendants who concurred in the tortious scheme with knowledge of its unlawful purpose." Wyatt, 24 Cal.3d at 785, 157 Cal.Rptr. 392, 598 P.2d 45.
"Standing alone, a conspiracy does no harm and engenders no tort liability." Applied Equip. Corp., 7 Cal.4th at 511, 28 Cal.Rptr.2d 475, 869 P.2d 454. "A bare agreement among two or more persons to harm a third person cannot injure the latter unless and until acts are actually performed pursuant to the agreement." Id. (internal quotation marks omitted).
"The elements of a conspiracy claim are the formation and operation of the conspiracy and damage resulting to [a] plaintiff from an act or acts done in furtherance of the common design." Applied Equip. Corp., 7 Cal.4th at 511, 28 Cal.Rptr.2d 475, 869 P.2d 454 (internal quotation marks omitted). Concurrence and knowledge "may be inferred from the nature of the acts done, the relation of the parties, the interests of the alleged conspirators,
The limitations period that applies to a conspiracy claim is the same as the one that applies to the underlying conduct that is purpose of the alleged conspiracy. See Wyatt, 24 Cal.3d at 786, 157 Cal.Rptr. 392, 598 P.2d 45 (applying the statute of limitations period for the underlying tort of fraud). The time does not begin to accrue until the "last overt act" of the conspiracy has been completed. Id.
Plaintiff alleges that AGL and AIG were co-conspirators in connection with the alleged conduct that provides the basis for the claims of breach of fiduciary duty, conversion, money had and received and tortious interference with an expected right to receive funds. The allegations of a conspiracy in the SAC are conclusory. The following excerpts are illustrative:
These same conclusory allegations are repeated throughout the SAC. There are no allegations concerning when or where such a conspiracy was conceived. There are no allegations concerning who — as a representative for AGL and/or AIG — conceived of, entered into or carried out the conspiracy. Further, the only alleged conduct of AGL or AIG that relates to the establishment of the conspiracy or the efforts to effect its alleged goals was the issuance of a new policy after the sale of the Policy to CNF. Id. — 46(a-b). According to the SAC, this was part of the plan conceived to deprive Plaintiff of his share of the proceeds from the sale of the Policy. However, there are no allegations that support even an inference that, prior to either the sale of the Policy or the distribution of the resulting proceeds, AGL and AIG agreed with Morlitz and the other defendants to deprive Plaintiff of benefits to which he may have been entitled with respect to the assets held by the RSMS Trust. Thus, the SAC does not sufficiently allege the formation of the conspiracy.
An accounting is an equitable remedy that requires a showing that legal remedies are inadequate and that there has been wrongful conduct. As noted, the SAC does not present allegations sufficient to support even the inference of wrongful conduct by AGL or AIG. Plaintiff argues that an accounting is necessary because some or all of the proceeds from the sale of the Policy to CNF were used to pay premiums that were in arrears.
This argument is inconsistent with Plaintiff's claim that he was denied the benefits of the distribution of the proceeds from the sale of the Policy. It also fails to support an inference that legal remedies are inadequate. Plaintiff has not explained why the amount of distributions and those to whom they were made could not be determined by an examination of documents during discovery. Further, as discussed above, Plaintiff has not stated any legal claim against AGL or AIG. Thus, he has alleged no wrongful conduct that would support a claim of accounting.
Because the SAC does not contain sufficient allegations supporting any of the five claims brought against AIG or AGL, the Motion is GRANTED. In the original complaint and FAC, Plaintiff alleged a breach of contract claim against AGL; he brought that claim against AIG in the FAC. He has not included that claim in the SAC. Instead, Plaintiff relies on an inadequate conspiracy theory as the basis for the alleged liability of AIG and AGL. Notwithstanding this procedural history, the Court will allow Plaintiff a final opportunity to seek to assert meritorious claims against these parties. Once again, Plaintiff is reminded that he is subject to the requirements of Fed.R.Civ.P. 11 in connection with asserting any amended claims. Should it later be shown that in any amended pleading he did not comply with that longstanding rule, an award of sanctions could result.
AGL and AIG argue that the claims against the other diverse defendants are invalid because there is no personal jurisdiction, the statute of limitations has passed and the SAC fails to state a claim against them. Because AGL and AIG lack standing to raise these arguments, they are not addressed.
For the reasons set forth in this Order, Shane Murphy is
