RONALD E. BUSH, Magistrate Judge.
Currently pending before the Court are the following matters: (1) Plaintiffs' Motion for Leave to Amend Third Cause of Action (Docket No. 130); (2) Defendants Credit Suisse AG, Credit Suisse Securities (USA), LLC, Credit Suisse First Boston, and Credit Suisse Cayman Island Branch's (collectively "Credit Suisse") Motion to Dismiss the Third Amended Complaint (Docket No. 134), (3) Defendant Cushman & Wakefield, Inc.'s ("Cushman & Wakefield") Motion to Dismiss Plaintiffs' Third Amended Complaint (Docket No. 136), and (4) Motion to Intervene as Plaintiffs and to File Complaint in Intervention (Docket No. 159). Having carefully reviewed the record, heard oral argument, and otherwise being fully advised, the Court issues the following (1) Memorandum Decision and Order as to Docket No. 130, and (2) Report and Recommendation as to Docket Nos. 134, 136, and 159:
U.S. District Judge Edward J. Lodge, the presiding judge in this case, had previously entered an order referring to the undersigned the responsibility to consider and recommend to Judge Lodge a decision upon any dispositive pretrial motions in this case. Consistent with that responsibility, this document contains the Court's second ruling upon Motions to Dismiss filed by the Defendants Credit Suisse and Cushman & Wakefield.
The decision deals primarily with legal challenges made by Defendants against the Plaintiffs' Third Amended Complaint. Previously, this Court ruled upon legal challenges made to Plaintiffs' Second Amended Complaint. As with the prior decision, the Court here is making a "Report and Recommendation" to Judge Lodge as to how this judge would decide the issues raised by the Motions to Dismiss. After this Court issued its prior "Report and Recommendation," the matter went to Judge Lodge who considered objections raised by the parties to that Report, and who then issued his own, controlling, decision upon the earlier motions.
The Plaintiffs then filed their Third Amended Complaint, which was followed by Defendants filing their second, now pending, Motions to Dismiss. The Plaintiffs also filed a Motion for Leave to Amend Third Cause of Action, by which they ask the Court to allow them to revive a claim for breach of fiduciary duty against Defendant Cushman & Wakefield which had previously been dismissed, with prejudice. Generally, once a claim has been dismissed with prejudice, it cannot be raised again. Cushman & Wakefield opposes that Motion.
This decision also addresses a Motion to Intervene, filed on behalf of Timothy L. Blixseth and Alfredo Miguel. Blixseth identifies himself as the developer of the Yellowstone Club in Montana, and Miguel identifies himself as one of the developers of the Tamarack Resort in Idaho. Timothy Blixseth and Alfredo Miguel ask to be permitted to join this lawsuit, to prosecute their own claims against Defendants Credit Suisse and Cushman & Wakefield. Defendants oppose that Motion.
Accordingly, this decision (1) rules upon Plaintiffs' Motion for Leave to Amend Third Cause of Action to re-assert the previously-dismissed breach of fiduciary duty claim against Defendant Cushman & Wakefield, (2) recommends to Judge Lodge a decision upon the issues raised by Defendants' Motions to Dismiss, and (3) recommends to Judge Lodge a decision upon the Motion to Intervene filed by Timothy Blixseth and Alfredo Miguel.
The rulings and recommended decisions are summarized here:
1. Plaintiffs' Motion for Leave to Amend Third Cause of Action is granted. Plaintiffs are permitted to amend their pleading to assert a breach of fiduciary duty claim against Cushman & Wakefield.
2. The Court recommends to Judge Lodge that Defendants' Motions to Dismiss be granted, in part, and denied, in part. Plaintiffs' Third Amended Complaint alleges the following claims against Defendants Credit Suisse and Cushman & Wakefield: (1) fraud; (2) negligent misrepresentation; (3) breach of fiduciary duty; (4) tortious interference with contractual relations; (5) negligence; and (6) Consumer Protection Act violations. The Third Amended Complaint also alleges an unjust enrichment claim for relief against Credit Suisse only. Both Credit Suisse and Cushman & Wakefield move to dismiss Plaintiffs' claims; further, Cushman & Wakefield contends that Plaintiffs' class action allegations also should be dismissed. As to each such claim, the Court recommends:
3. Finally, it is recommended that the Motion to Intervene filed by Timothy Blixeth and Alfredo Miguel should be denied.
As to the recommendations made about the issues raised in Defendants' Motions to Dismiss and Proposed Intervenors' Motion to Intervene, the Local Civil Rules allow the parties to file "objections" to the Report and Recommendation to Judge Lodge. If such objections are made, and after Judge Lodge rules upon such objections (or if no objections are made), any claims that are not dismissed will proceed and the case will go forward in the ordinary course. Nothing in the Court's ruling or recommendations is a decision upon the ultimate merits of any claims that remain and are allowed to go forward. The Plaintiffs will still have the burden to prove such claims, and the Defendants will still have the opportunity to defend against those claims.
Plaintiffs purchased real property and homes in resort-style developments known as Lake Las Vegas, Tamarack, Ginn Sur Mer, and Yellowstone Club. This case has many moving parts, evidenced by Plaintiffs' 89-page Third Amended Complaint ("TAC"); however, the general backdrop of Plaintiffs' claims relates to the manner in which Credit Suisse, with appraisals prepared by Cushman & Wakefield, marketed and implemented financing for each of the above-referenced developments.
Specifically, Plaintiffs allege that Credit Suisse masterminded a scheme — made possible by Cushman & Wakefield's creative, yet allegedly unlawful, Total Net Value ("TNV") appraisal methodology — to (1) induce the developers of these exclusive master-planned communities ("MPCs") to borrow huge sums of money through non-recourse loans from Credit Suisse, and (2) persuade these same developers to take out their equity in these developments, capitalizing on misleading future growth projections.
According to Plaintiffs, this deliberate strategy (which Plaintiffs refer to as the "Loan to Own" scheme) not only generated tens of millions of dollars in upfront "loan fees" for Credit Suisse, it also provided Credit Suisse with unfettered access to each MPC's confidential, proprietary, and key business information which, in turn, allowed Credit Suisse to assume lender advisory and "co-developer" roles within the MPCs. Once inside the door, Plaintiffs claim that Credit Suisse was then able to direct the development of, and influence capital decisions for, the MPCs until the expected financial collapse of the developments under the weight of unsustainable debt.
Having "syndicated" its creditor status in the meantime and, thus, allegedly transacting away the inevitable financial consequences of default, Plaintiffs further contend that Credit Suisse intentionally positioned itself to take over the MPCs as a result of the subsequent, but nonetheless anticipated, bankruptcy and/or receivership proceedings — the apparent genesis of Plaintiffs' "Loan to Own" phraseology.
As property owners within these allegedly doomed MPCs, Plaintiffs accuse Defendants of engaging in predatory lending practices. They originally asserted eight causes of action against both Credit Suisse and Cushman & Wakefield in their January 28, 2010 Second Amended Complaint ("SAC"): (1) Racketeer Influenced and Corrupt Organizations Act ("RICO") violations; (2) fraud; (3) negligent misrepresentation; (4) breach of fiduciary duty; (5) tortious interference with contractual relations; (6) unjust enrichment; (7) negligence; and (8) common law conspiracy. See SAC (Docket No. 18). Credit Suisse and Cushman & Wakefield moved to dismiss each of these claims through their respective March 29, 2010 Motions to Dismiss, arguing that Plaintiffs lacked Article III standing and, regardless, Plaintiffs' SAC failed to state cognizable claims. See Credit Suisse's and Cushman & Wakefield's Mots. to Dismiss (Docket Nos. 48 & 51).
On February 17, 2011, the undersigned issued a Report and Recommendation, recommending that Credit Suisse's and Cushman & Wakefield's Motions to Dismiss be resolved as follows:
See 2/17/11 R&R, pp. 50-52 (Docket No. 106).
On March 31, 2011, after objections by the parties, U.S. District Judge Edward J. Lodge adopted in part, and rejected in part, the Report and Recommendation as follows:
See 3/31/11 Order, pp. 28-29 (Docket No. 126).
Essentially, the Report and Recommendation was not adopted as to the Motions to Dismiss the negligence claim and Cushman & Wakefield's Motion to Dismiss the common law conspiracy claim. The Report and Recommendation was adopted in all other respects. See id. at p. 28, n.15. Concerning those claims dismissed without prejudice, Judge Lodge allowed Plaintiffs the opportunity to amend their complaint; furthermore, Judge Lodge permitted Defendants to file a second round of motions to dismiss. See id. at pp. 29-30.
On April 21, 2011, a different set of Plaintiffs
In addition to Plaintiffs' Motion for Leave to Amend Third Cause of Action and Credit Suisse's and Cushman & Wakefield's respective Motions to Dismiss, this Court also considers Intervenors Timothy L. Blixseth's ("Blixseth")
Originally, Plaintiffs asserted a breach of fiduciary duty claim against Cushman & Wakefield; however, Plaintiffs did not respond to Cushman & Wakefield's first Motion to Dismiss on this issue, nor object to the claim's dismissal as to Cushman & Wakefield during oral argument on the initial go-round of dismissal hearings. See 2/17/11 R&R, p. 44, n. 30 (Docket No. 106). With this in mind, the undersigned recommended that Plaintiffs' breach of fiduciary duty claim against Cushman & Wakefield be dismissed with prejudice. See id. at p. 51. Plaintiffs did not object and, on March 31, 2011, Judge Lodge officially dismissed Plaintiffs' breach of fiduciary duty claim against Cushman & Wakefield with prejudice. See 3/31/11 Order, pp. 28 (Docket No. 126).
Since then, however, Plaintiffs claim that new information in the form of an insider account — namely, from Mr. Michael Miller — reveals a conspiracy between Credit Suisse and Cushman & Wakefield to support a breach of fiduciary duty claim against not only Credit Suisse, but also Cushman & Wakefield. See Mem. in Supp. of Mot. to Am., p. 2 (Docket No. 130, Att. 1) ("Very clearly, unknown to Plaintiffs until this past March of 2011, were the details of Cushman & Wakefield's knowing and intentional participation . . . with Credit Suisse to plan, agree to implement, and implement the appraisal and lending scheme perpetrated against the Plaintiffs and others."). Citing to FRCP 15(d), Plaintiffs argue that this newly discovered information warrants an amendment of their third cause of action to add a breach of fiduciary duty claim against Cushman & Wakefield directly. See id. at p. 1 ("This brief is filed pursuant to FRCP 15(d) which permits amendments and supplemental pleadings based upon transactions which have occurred since the filing of the original document.").
FRCP 15(d) is not a good fit for the amendment sought within Plaintiffs' Motion to Amend. As Cushman & Wakefield points out, FRCP 15(d) is inapplicable when considering that the allegations presented within Plaintiffs' proposed breach of fiduciary duty claim do not represent new facts, but, instead, newly-discovered facts that "concern alleged conduct that occurred prior to 2010." See Cushman & Wakefield Opp. to Mot. to Am., p. 6 (Docket No. 144) (emphasis in original). Plaintiffs concede as much when, in response to Cushman & Wakefield's arguments opposing Plaintiffs' amendments, Plaintiffs abandon any reliance upon FRCP 15(d) in favor of FRCP 54(b). See Reply in Supp. of Mot. to Am., p. 1 (Docket No. 154).
Nonetheless, the Court concludes that, at this juncture of the lawsuit, Plaintiffs should not be forever precluded from asserting a breach of fiduciary duty claim without first seeking reconsideration of Judge Lodge's March 31, 2011 Order dismissing that claim. See Cushman & Wakefield Opp. to Mot. to Am., pp. 3-5 (Docket No. 144). Cushman & Wakefield's arguments rely primarily upon the "with prejudice" prong of the breach of fiduciary duty claim's dismissal. The dismissal with prejudice, however, was not the measure of the substantive merits of the claim;
In reaching this ruling, the Court emphasizes that this action remains in an early procedural stage. Cushman & Wakefield has strenuously challenged the Plaintiffs' claims in two comprehensive motions to dismiss. However, no case management order has been entered, no discovery has taken place, and no amendment deadline has been set. Further, this ruling does not measure the actual merits of Plaintiffs' breach of fiduciary duty claim against Cushman & Wakefield (although sufficiently pled, a substantive challenge to its merits may still be raised by Defendants at a later date) and the ruling is within the Court's inherent power to revise a prior ruling when justice so requires at any time before final judgment has been entered in the case. See U.S. v. Asarco Inc., 471 F.Supp.2d 1063, 1067 (D. Idaho 2005). Pursuant to FRCP 54(b):
Fed. R. Civ. P. 54(b). Consistent with this Rule,
In summary, Plaintiffs' breach of fiduciary duty cause of action against Cushman & Wakefield was not initially dismissed following an in-depth consideration of the claim's merits. Moreover, at this procedural stage of the lawsuit, an amendment will not unfairly prejudice Cushman & Wakefield's preparation and related defense. Finally, Plaintiffs' counsel represent as officers of the court that Mr. Miller has insider knowledge of Cushman & Wakefield's alleged coordination with Credit Suisse that presents a new, different, factual backdrop to Plaintiffs' current breach of fiduciary duty claim against Cushman & Wakefield. These reasons combine to warrant the sought-after amendment under FRCP 54(b).
FRCP 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by a Rule 12 motion to dismiss "does not need detailed factual allegations," it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of `entitlement to relief.'" Id. at 557.
In a subsequent case, the Supreme Court identified two "working principles" that underlie Twombly. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Id. "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 1950. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.
Providing too much in the complaint may also be fatal to a plaintiff. Dismissal may be appropriate when the plaintiff has included sufficient allegations disclosing some absolute defense or bar to recovery. See Weisbuch v. County of L.A., 119 F.3d 778, 783, n.1 (9th Cir.1997 (stating that "[i]f the pleadings establish facts compelling a decision one way, that is as good as if depositions and other . . . evidence on summary judgment establishes the identical facts.").
Nonetheless, a dismissal without leave to amend is improper unless it is beyond doubt that the complaint "could not be saved by any amendment." Krainski v. Nevada ex rel. Bd. of Regents, 616 F.3d 963, 972 (9th Cir. 2010) (issued after Iqbal).
Under FRCP 12(b)(6), the Court may consider matters that are subject to judicial notice. See Mullis v. United States Bank, 828 F.2d 1385, 1388 (9th Cir. 1987). The Court may take judicial notice "of the records of state agencies and other undisputed matters of public record" without transforming the motions to dismiss into motions for summary judgment. See Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 (9th Cir. 2004). The Court may also examine documents referred to in the complaint, although not attached thereto, without transforming the motion to dismiss into a motion for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
"A claim of fraud requires the plaintiff to establish nine elements with particularity: (1) a statement or a representation of fact; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity; (5) the speaker's intent that there be reliance; (6) the hearer's ignorance of the falsity of the statement; (7) reliance by the hearer; (8) justifiable reliance; and (9) resultant injury." Mannos v. Moss, 155 P.3d 1166, 1170 (Idaho 2007).
The SAC's fraud claim against Credit Suisse was dismissed due to the absence of allegations speaking to Plaintiffs' reliance (or even ability to rely) upon Credit Suisse's alleged misrepresentation(s). See, e.g., 2/17/11 R&R, pp. 39-40 (Docket No. 106) (". . . Plaintiffs' alleged reliance on any representations from Credit Suisse and/or Cushman & Wakefield would seem to be compromised if a certain number of Plaintiffs purchased their properties before either Credit Suisse or Cushman & Wakefield was even involved in the conduct Plaintiffs now complain about. . . . If, in fact, there are Plaintiffs who bought into any of the four resorts prior to Credit Suisse's (and, hence, Cushman & Wakefield's) participation in those projects, rhetorically speaking, how could those Plaintiffs have relied upon any (mis)representations from those parties?") (emphasis in original). Through its latest Motion to Dismiss, Credit Suisse argues that Plaintiffs' TAC does not cure this deficiency and, even if it did, there are no false representations attributable to Credit Suisse that set in motion a fraud claim. See Credit Suisse Mot. to Dismiss, pp. 3-7 (Docket No. 135). Inherent within these challenges, Credit Suisse additionally maintains that Plaintiffs' TAC fails to plead fraud with the requisite level of particularity. See id. at pp. 8-14.
Attacking the fraud claim's most preliminary elements, Credit Suisse argues strenuously that "[t]here was nothing false or misleading in statements — whether published in a developer's press release or passed along by developers — that a loan had been made." See id. at p. 8; see also id. at 7 & 9 ("Plaintiffs can do no better in alleging representations by Credit Suisse to the Plaintiffs than to point to a single press release . . . in which the Tamarack developer announced that he had received a loan from Credit Suisse. . . . . [T]he press release did nothing more than announce the fact — admittedly true — that Credit Suisse made a loan to a developer.") (emphasis in original).
However, Plaintiffs' alleged reliance upon these loans is another matter. Indeed, Credit Suisse points out that "nearly all of the named Plaintiffs purchased their properties well before Credit Suisse even issued its loan, making any reliance on Credit Suisse's alleged statements to the developers impossible." See Credit Suisse Mot. to Dismiss, p. 4 (Docket No. 135) (emphasis in original); see also id. at p. 6 (after discussing timing of various MPC loans vis à vis certain named Plaintiffs' purchases, stating: "[a]ccordingly, seven of the nine named Plaintiffs admittedly purchased properties before Credit Suisse's loans."). Plaintiffs do not dispute this point, but argue that Plaintiffs' reliance upon Credit Suisse's alleged fraudulent non-disclosure and/or partial disclosure (1) can be implied, and (2) regardless, exists in the context of certain Plaintiffs' actions taking place after they purchased property within the MPCs. See Pls.' Opp. to Credit Suisse Mot. to Dismiss, pp. 6-8 (Docket No. 152).
First, Plaintiffs' reliance in a fraud count cannot be implied, particularly in the present procedural posture of this case where the importance of the reliance element is paramount and obvious to all. The roadmap for the nature of the needed amendment on reliance allegations could not have been more clear from the prior motion practice and rulings in this case. Even so, Plaintiffs offer no plausible reasons for finding reliance-by-implication (beyond generically stating its availability "under certain circumstances" (see id. at p. 6) not present here), and such an argument has no starting place given Plaintiffs' prior admission in oral argument that actual reliance must be specifically alleged:
See 7/22/10 Tr. at 66:2-5; 90:2-16. Stating now that reliance is implied, without more, is insufficient. If such reliance existed, Plaintiffs should be able to particularly identify the circumstances and fact of such reliance, independent of oblique inferences. Simply put, absent authentic, plausible, reliance, there is no fraud — regardless of how nefarious the alleged misrepresentations may be characterized.
Second, although claiming that "the TAC specifically pleads . . . plausible reliance by Plaintiffs and Plaintiff Class Members" (see Pls.' Opp. to Credit Suisse Mot. to Dismiss, p. 7 (Docket No. 152)), Plaintiffs cite only Plaintiff Gibson's and Plaintiff LaFleur's Tamarack transactions and how, although purchasing their properties before Credit Suisse's June 1, 2006 loan, they nonetheless relied upon the loan with respect to later investment decisions:
See id. (quoting TAC, ¶¶ 26 & 31 (Docket No. 131)); see also id. at p. 9.
When examining each Plaintiff and their related "investments" at the various MPCs, there is no unified, consistent allegation of reliance. Yes, as to particular Plaintiffs at particular MPCs, reliance appears to be alleged in the TAC; however, elsewhere in the TAC, there either is no reliance or, at best, reliance only possibly exists. For instance:
See also Credit Suisse Mot. to Dismiss, pp. 4-6 (Docket No. 135); see also, e.g., 1/12/12 Tr. at 97:24-98:2 (Docket No. 194) (as to consumer protection act claim, Plaintiffs' counsel stating: "There are a lot of allegations involving misrepresentations, omissions that will be applicable to certain class members, class representatives if they did receive those, if they did rely on those.") (emphasis added).
While the theory supporting Defendants' alleged fraud may be well known in another forum (e.g., U.S. Bankruptcy Judge Ralph Kirscher's bankruptcy court opinions to date (see Docket Nos. 91, Att. 1 & 101)), the Court must consider Plaintiffs' obligation in this case to "state with particularity the circumstances constituting fraud," including the specific details of any alleged misrepresentation(s) and, likewise, Plaintiffs' justifiable reliance. See Fed. R. Civ. P. 9(b). Even in the TAC, most of Plaintiffs' alleged instances of reliance could not even be characterized as a "near miss," when what is needed are allegations of matter-of-fact, particularized, reliance upon Credit Suisse's alleged misrepresentations.
As a result, it is recommended that Plaintiffs' common law fraud claim against Credit Suisse be dismissed with prejudice to the extent the claim is alleged on behalf of a united class and, individually, as to those Plaintiffs who have not adequately pled reliance in the TAC.
Like Credit Suisse, Cushman & Wakefield also takes issue with Plaintiffs' fraud claim, similarly arguing that it never interacted with or had any communications with Plaintiff and, separately, that Plaintiffs did not allege reliance upon its appraisals. See Cushman & Wakefield Mot. to Dismiss, pp. 6-11 (Docket No. 139). As with the previous Report and Recommendation, given the interrelationship between Cushman & Wakefield's appraisals with Credit Suisse's loans, the Court's consideration of Credit Suisse's arguments in these related respects likewise applies to Cushman & Wakefield.
The Court also will consider two additional challenges made by Cushman & Wakefield to Plaintiffs' fraud claim: (1) that Cushman & Wakefield made no false statements of fact because (a) its appraisals are opinions, not statements of fact, (b) its appraisals are not false, and (c) FIRREA and USPAP are not applicable; and (2) Plaintiffs' own allegations cut against any suggestion that Cushman & Wakefield intended to defraud anyone. See Cushman & Wakefield Mot. to Dismiss, pp. 11-18 (Docket No. 139). Having considered the written and oral argument upon these challenges, the Court concludes that they are not persuasive at the motion to dismiss stage of the litigation.
First, the present record does not establish as a matter of law that Cushman & Wakefield made no false statements. It is true that appraisals generally represent opinions; however, inaccurate or misleading opinions of appraisal value made with an intent to deceive can still be actionable, as Plaintiffs allege here. See Pls.' Opp. to Cushman & Wakefield Mot. to Dismiss, p. 8 (Docket No. 153) (citing Jordan v. Hunter, 124 Idaho 899, 907 (Idaho Ct. App. 1993)); see also, e.g., 26 Williston on Contracts § 69:8 (4th ed.); U.S. v. Hill, 643 F.3d 807, 863 (11th Cir. 2011); Croye v. GreenPoint Mortg. Funding, Inc., 740 F.Supp.2d 788, 795 (S.D. W.Va. 2010). Moreover, for the purposes of its latest Motion to Dismiss, the undersigned has already rejected Cushman & Wakefield's argument that its appraisals are accurate given what they claim to represent. See 2/17/11 R&R, pp. 41-42 (Docket No. 106) ("Such an argument assumes . . . that a reader negotiating the appraisals' provisions understands (or should have understood) the quoted language to mean what Cushman & Wakefield and/or Credit Suisse understood it to mean. . . . . Although one could interpret the appraisals' language through the lenses of Cushman & Wakefield's arguments, the Court must consider the limited record before it on the standards applicable to a motion to dismiss, and accept Plaintiffs' allegations as true. Finally, the application of (let alone violation by virtue of) FIRREA and USPAP to Cushman & Wakefield's appraisals is plainly a disputed matter between Plaintiffs and Cushman & Wakefield. Compare Cushman & Wakefield Mot. to Dismiss, pp. 14-17 (Docket No. 139) with Pls.' Opp. to Cushman & Wakefield Mot. to Dismiss, pp. 13-15 (Docket No. 153). Even if Cushman & Wakefield's position may eventually carry the day, the fact that questions remain as to either authority's applicability here is not fatal to a claim alleging the existence of misrepresentations. Instead, if necessary, they may be presented in the context of a summary judgment motion, after consideration of any remaining, applicable issues following the resolution of Defendants' Motions to Dismiss.
Second, Plaintiffs' TAC allegations do not discount the possibility of Cushman & Wakefield's purported intent to defraud, as Cushman and Wakefield contends. The TAC does allege that certain "appraisers did not know what upper level management at Credit Suisse was doing with these Total Net Value and Total Net Proceeds appraisals that they were ordering" (see TAC, ¶ 671 (Docket No. 131)), thus asserting that some part of the company's employees did not know of the allegedly fraudulent conduct and motives of another part of the company. However, that allegation does not equate to an admission of some sort that all of Cushman & Wakefield was unaware of Credit Suisse's alleged Loan to Own scheme. The allegation, on its face, is to the contrary, and paints a decidedly different picture.
Even though these two arguments are unavailing for Cushman & Wakefield, the undersigned nonetheless recommends dismissal of Plaintiffs' fraud claim against Cushman and Wakefield consistent with its recommendation relative to Plaintiffs' fraud claim against Credit Suisse.
The elements of a negligent misrepresentation claim closely resemble those of a fraud claim. Relying on their arguments in favor of dismissing Plaintiffs' fraud claim, Credit Suisse and Cushman & Wakefield also move to dismiss Plaintiffs' negligent misrepresentation claim. See Credit Suisse Mot. to Dismiss, p. 15 (Docket No. 135) ("Thus, Plaintiffs' negligent misrepresentation claim fails for the same reasons as their fraud count."); Cushman & Wakefield Mot. to Dismiss, pp. 5-18 (Docket No. 139) (attacking Plaintiffs' fraud and negligent misrepresentation claims using identical arguments); see also Pls.' Opp. to Credit Suisse Mot. to Dismiss, p. 9 (Docket No. 152) & Pls.' Opp. to Cushman & Wakefield Mot. to Dismiss, p. 8 (Docket No. 153) ("Much of the material supplied above relative to fraud is equally instructive relative to the Second Cause of Action for Negligent Misrepresentation, and will not be repeated here.").
Given the admitted similarities between fraud and negligent misrepresentation claims, and the corresponding arguments made as to each such claim,
To establish a claim for breach of fiduciary duty in the relevant jurisdictions, a plaintiff must establish that defendants owed plaintiff a fiduciary duty and that the fiduciary duty was breached. See Buschi v. Sage Health Care, PLLC, 203 P.3d 694, 699 (Idaho 2009) (citation and marks omitted); see also Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 880-81 (9th Cir. 2007) (applying Nevada law).
Looking to the allegations within the SAC, the undersigned determined that Plaintiffs had alleged a direct relationship of sorts between Credit Suisse and Plaintiffs, justifying the basis for a breach of fiduciary duty claim. See 2/17/11 R&R, pp. 44-45 (Docket No. 106) (recounting particular allegations within SAC and stating: "While these allegations may be thin proof at present of a legitimate, legally-cognizable fiduciary relationship between Plaintiffs and Credit Suisse, it is of little consequence at this time when Plaintiffs' allegations must be accepted as true. This standard compels a finding that Plaintiffs have alleged a fiduciary relationship between themselves and Credit Suisse."). Judge Lodge upheld the recommendation and denied Credit Suisse's Motion to Dismiss in this respect. See 3/31/11 Order, p. 17 (Docket No. 126) ("The Court has reviewed the SAC and, in particular Paragraphs 74-82 and agrees with the Report that although the Plaintiffs' Fiduciary Duty Claim barely survives, the SAC's allegations are sufficient to survive the inquiry demanded by Twombly and Iqbal. Plaintiffs have alleged representations were made to them by Credit Suisse such that, if true, a fiduciary duty could be found").
Credit Suisse now argues that Plaintiffs' recent "fraud by non-disclosure" arguments (presented in response to Credit Suisse's second Motion to Dismiss) somehow nullifies the previous basis for permitting Plaintiffs' breach of fiduciary duty claim. See Credit Suisse Reply, p. 15 (Docket No. 156) ("With the Plaintiffs having abandoned the slender allegation that the Court found might possibly support a fiduciary duty, it is appropriate for the Court to re-address the claim."). The Court disagrees — at least for now.
Plaintiffs' allegations of fraudulent non-disclosure do not foreclose their ability to also pursue a breach of fiduciary duty claim against Credit Suisse. This is particularly true where the original justification for allowing Plaintiffs' breach of fiduciary duty claim to proceed against Credit Suisse — identified within particular allegations of the SAC — remains within the TAC. For example, as in the SAC, the TAC appears to argue in favor of a fiduciary relationship directly between Plaintiffs and Credit Suisse by alleging:
Compare TAC, ¶¶ 174, 176, 181-82, & 184 (Docket No. 131) with SAC, ¶¶ 75-80 & 287) (Docket No. 18); see also 3/31/11 Order, p. 17 (Docket No. 126).
The point here is not to endorse Plaintiffs' breach of fiduciary duty claim against Credit Suisse but, rather, to point out that Plaintiffs have stated a plausible claim to this point in the litigation. Whether the claim ultimately prevails
Plaintiffs' breach of fiduciary duty claim against Cushman & Wakefield is premised upon Credit Suisse's alleged breaches of its own fiduciary duties to Plaintiffs — that is, by virtue of an alleged conspiracy between the two Defendants, Cushman & Wakefield is also responsible for Credit Suisse's related breaches. See Pls.' Opp. to Cushman & Wakefield Mot. to Dismiss, p. 10 (Docket No. 153).
"In order to allege conspiracy to hold one accountable for the conduct of an alleged co-conspirator, Plaintiffs must allege a combination of two or more persons who, by some concerted action, intended to accomplish some unlawful objective for the purpose of harming another which resulted in damage." Cushman & Wakefield Mot. to Dismiss, p. 24 (Docket No. 139) (citing Vieux v. E. Bay Reg'l Park Dist., 906 F.2d 1330, 1334 (9th Cir. 1990)). Cushman & Wakefield argues that there are no allegations supporting a finding of collusion or conspiracy here. See Cushman & Wakefield Opp. to Mot. to Amend, p. 8 (Docket No. 144). However, after Plaintiffs' amendment, the TAC does contain allegations of a civil conspiracy between Cushman & Wakefield and Credit Suisse relative to Credit Suisse's alleged breach of fiduciary duty.
According to the TAC:
See TAC, ¶ 190; see also id. at ¶ 101 & p. 82, n.5.
"One who intentionally and improperly interferes with the performance of a contract . . . between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability. . . ." Wesco Autobody Supply, Inc. v. Ernest, 243 P.3d 1069, 1083 (Idaho 2010) (quoting Restatement (Second) of Torts § 766 (1979)). "Tortious interference with contract has four elements: (1) the existence of a contract; (2) knowledge of the contract on the part of the defendant; (3) intentional interference causing a breach of the contract; and (4) injury to the plaintiff resulting from the breach." Id. (citation and quotations omitted).
In light of the TAC's latest allegations, (1) Credit Suisse asks this Court to "re-address" its earlier ruling (see Credit Suisse Reply, p. 15, n.17 (Docket No. 156)), and (2) Cushman & Wakefield moves to dismiss Plaintiffs' re-asserted tortious interference with contractual relations claim (previously dismissed, without prejudice) against it (see Cushman & Wakefield Mot. to Dismiss, pp. 19-20 (Docket No. 139)).
Credit Suisse argues that, "[g]iven the TAC, the Court also may want to re-address its ruling retaining the tortious interference with contract claim, since the TAC still fails to identify the contract pursuant to which the Plaintiffs allegedly were promised perpetual operation of golf courses or ski lifts such as might be susceptible of interference. See Credit Suisse Reply, p. 15, n.17 (Docket No. 156). It is unclear whether this request from Credit Suisse operates as a motion to reconsider or as a new, separate argument in support of its latest Motion to Dismiss (presented for the first time in a footnote on the last page of their reply in support of Motion to Dismiss). Regardless, in adopting the undersigned's original Report and Recommendation as to Plaintiffs' tortious interference with contractual relations claim, Judge Lodge preemptively addressed Credit Suisse's renewed argument, stating:
See 3/31/11 Order, p. 27 (Docket No. 126). Therefore, thus far, Plaintiffs' have at least alleged a tortious interference with contractual relations claim against Credit Suisse. As a result, it is recommended that Credit Suisse's Motion to Dismiss be denied as to this claim.
This Court previously found that, "as pleaded, Cushman & Wakefield's involvement in the alleged Loan to Own scheme is too attenuated to presume (as Plaintiffs' [SAC] and briefing requires us to do) Cushman & Wakefield's awareness of and, separately, intent to disrupt the resort developers' obligations to build out certain amenities. The lack of allegations relating to Cushman & Wakefield's particular understanding of and subjective intent to accomplish the alleged interference warrants the claim's dismissal." 2/17/11 R&R, p. 47 (Docket No. 106); see also 3/31/11 Order, pp. 25-27, (Docket No. 126). Cushman & Wakefield argues that Plaintiffs' TAC "add[s] nothing in response to the Court's concerns to mandate an alternative result," arguing that Plaintiffs do not (1) identify the contractual rights allegedly interfered with, (2) allege that Cushman & Wakefield was aware of such rights, and (3) allege Cushman & Wakefield's intent to interfere with any contractual rights. See Cushman & Wakefield Mot. to Dismiss, pp. 19-20 (Docket No. 139). The Court disagrees.
According to the TAC, the contractual rights allegedly interfered with are Plaintiffs' rights to the resort amenities. See supra at pp. 34-35; see also TAC, p. 82 (identifying fourth cause of action as: "Tortious Interference with Plaintiffs' Existing Rights, Amenities, and Privileges at Each Resort Against All Defendants"), id. at ¶ 193 (Docket No. 131) ("Plaintiffs and the Class had substantively uniform contracts with the developers of each MPC, which contracts provided for the construction and maintenance of the rights, amenities, and privileges running with the lands . . . and which were known to Defendants at all times relevant hereto."). The TAC further alleges that Cushman & Wakefield was aware of, and interfered with, these rights. For example:
See TAC, ¶¶ 8, 77, & 194 (Docket No. 131) (emphasis in original).
Therefore, while the undersigned still has reservations concerning Plaintiffs' ability to ultimately prove their tortious interference with contractual relations claim against Cushman & Wakefield, Plaintiffs have nonetheless stated a plausible claim at this time. Therefore, it is recommended that Cushman & Wakefield's Motion to Dismiss be denied.
Generally speaking, a claim for unjust enrichment exists when a defendant improperly accepts a benefit (without payment) from a plaintiff. See 2/17/11 R&R, p. 48 (Docket No. 106). The undersigned previously recommended that Plaintiffs' unjust enrichment claim against Credit Suisse be dismissed because the benefit Credit Suisse allegedly improperly accepted, was not a benefit conferred by Plaintiffs. See id. ("The problem for Plaintiffs, however, is that they were not the ones who conferred the claimed benefit. Plaintiffs cannot seek to recover a benefit for which they were not responsible."). Plaintiffs offered no objection to the claim's dismissal and, on March 31, 2011, Judge Lodge adopted the Report and Recommendation in this respect. See 3/31/11 Order, p. 29 (Docket No. 126). Credit Suisse now argues that Plaintiffs' latest unjust enrichment claim against it should be dismissed for the same reason, "since the TAC does not add a single allegation that addresses the pleading deficiencies" already identified by this Court. See Credit Suisse Mot. to Dismiss, p. 17 (Docket No. 135). The undersigned agrees.
Within the body of their earlier unjust enrichment claim, Plaintiffs' SAC alleged in relevant part:
Pls.' SAC, ¶ 299 (Docket No. 18). Even after the Court's criticism of Plaintiffs' original unjust enrichment claim, Plaintiffs' TAC makes the identical allegation — albeit only against Credit Suisse this time:
Pls.' TAC, ¶ 201 (Docket No. 131).
For the same reasons expressed in the Report and Recommendation, Plaintiffs' latest unjust enrichment claim fails to identify benefits flowing from Plaintiffs to Credit Suisse.
The undisputed "essential elements" of a negligence claim require a plaintiff to establish: "(1) a duty, recognized by law, requiring the defendant to conform to a certain standard of conduct; (2) a breach of duty; (3) a causal connection between the defendant's conduct and the resulting injuries; and (4) actual damage." Jones v. Starnes, 245 P.3d 1009, 1012 (Idaho 2011) (quoting Hansen v. City of Pocatello, 184 P.3d 206, 208 (Idaho 2008)). Applying FRCP 9(b)'s particularity requirement to Plaintiffs' negligence claims, Judge Lodge rejected the recommendation that Defendants' original Motions to Dismiss be denied as to Plaintiffs' negligence claims sounding in fraudulent conduct, finding:
3/31/11 Order, p. 22 (Docket No. 126). As such, Judge Lodged dismissed Plaintiffs' negligence claims against Defendants, without prejudice. See id. at pp. 22-23.
Plaintiffs' TAC attempts to more specifically outline the basis for their negligence claim against both Credit Suisse and Cushman & Wakefield; even so, Defendants move to dismiss the claim. Targeting the TAC's revised allegations, Credit Suisse argues that Plaintiffs' negligence claim is now a statute-based negligence claim and, with that understanding, Plaintiffs fail to properly plead the requirements for negligence per se. See Credit Suisse Mot. to Dismiss, pp. 19-23 (Docket No. 135). Relatedly, Cushman & Wakefield argues that it owed no duty to Plaintiffs, thus eviscerating Plaintiffs' negligence claim. See Cushman & Wakefield Mot. to Dismiss, pp. 20-22 (Docket No. 139).
As has always been the case, the gravamen of Plaintiffs' negligence claim remains clear — at least to the undersigned:
2/17/11 R&R, p. 49 (Docket No. 106). This becomes more apparent when examining the revised allegations within the TAC, where Plaintiffs state in part:
TAC, ¶¶ 6, 78-79, 98-99, 102, & 104 (Docket No. 131).
It can be argued that these allegations remain unacceptably generalized and conclusory (as reflected by the unfocused, regurgitated laundry list of alleged statutory duties at paragraph 79(b) that may or may not apply to this action and, if so, how they were never fulfilled). However, they nonetheless succeed in discussing the statutory bases for Defendants' alleged duties and, in doing so, define the "alleged sources of negligence-based duties" that previously troubled Judge Lodge in his March 31, 2011 Order.
This is not to say that these allegations are substantively persuasive. Indeed, both Credit Suisse and Cushman & Wakefield offer cogent reasons why, even when considering the TAC's allegations, Plaintiffs' negligence claims may not ultimately prevail (see Credit Suisse Mot. to Dismiss, pp. 20-23 (Docket No. 135); Cushman & Wakefield Mot. to Dismiss, pp. 20-22 (Docket No. 139)) and, therefore, should be dismissed. Still, in the Court's mind, these arguments are more appropriately addressed on motions for summary judgment, not motions to dismiss. Suffice it to say that, at this time, the Court is satisfied that the TAC's allegations extend just beyond the threshold of stating a negligence claim and, while likely to be challenged on summary judgment, state a plausible claim, and should not be dismissed before the allegations are even tested further. Therefore, it is recommended that Credit Suisse's and Cushman & Wakefield's Motions to Dismiss be denied as to Plaintiffs' negligence claim.
With their final cause of action, Plaintiffs allege that Defendants violated Idaho's and Nevada's consumer protection statutes in a "deceptive, misleading, and unfair/unconscionable course of conduct, inter alia: their contraventions of FIRREA and USPAP; their deceptive and misleading engagement in their Loan to Own scheme; and their failures to disclose material information necessary to render their commercial conduct and representations . . . accurate and not misleading." TAC at ¶ 211 (Docket No. 131).
In response, Plaintiffs argue that federal cases, interpreting federal rules, endorse the manner in which they have pled their consumer protection act claims in the TAC. See Pls.' Opp. to Credit Suisse Mot. to Dismiss, pp. 17-18 (Docket No. 152); Pls.' Opp. to Credit Suisse Mot. to Dismiss, pp. 15-16 (Docket No. 153). The undersigned agrees with Defendants.
First, as a matter of sensible consistency, where Plaintiffs' fraud claims must be pled with a certain level of specificity and particularity, so too must Plaintiffs' consumer protection act claim. As it now stands, the allegations fall short of actually informing Defendants of (1) what was specifically required of them by way of particular mandates of the applicable consumer protection act laws, and (2) how their respective conduct specifically ran afoul of those same mandates. Second, while Plaintiffs overstate that Credit Suisse "largely cites state-law cases" in support of its argument, they fail to address the federal authority actually referenced in support of Credit Suisse's position. Moreover, the case law Plaintiffs go on to rely upon is from other jurisdictions — North Carolina, Illinois, New York, the Seventh Circuit, and Pennsylvania — not dealing with either the ICPA or the NDTPA. Third, given that the ICPA and NDTPA apply more seamlessly (but not necessarily limited) to situations involving goods and services, the need for more specificity is understandably apparent when dealing with different factual scenarios — like those alleged in Plaintiffs' TAC. See, e.g., Credit Suisse Reply, p. 12, n.15 (Docket No. 156).
Together, these reasons combine to require more specificity in this case. Thus far, Plaintiffs' TAC does not adequately allege a plausible consumer protection act claim against Credit Suisse and Cushman & Wakefield. Defendants' Motions to Dismiss should therefore be granted in this respect.
There is no question that some relationship between Plaintiffs and Defendants is necessary in order for Plaintiffs to have standing under either the ICPA or the NDTPA — the extent of that relationship, however, is at issue here. Defendants argue that there is simply no recognized relationship between the parties and, thus, no standing (see Credit Suisse Mot. to Dismiss, pp. 24-25 (Docket no. 135); Cushman & Wakefield Mot. to Dismiss, p. 23 (Docket No. 139)); on the other hand, Plaintiffs argue that they, as the alleged victim of consumer fraud, are situated within the "nexus" relationship between injured and offending parties that establish their own standing to bring a consumer protection act claim. See Pls.' Opp. to Credit Suisse Mot. to Dismiss, pp. 18-21 (Docket No. 152); Pls.' Opp. to Cushman & Wakefield Mot. to Dismiss, pp. 16-18 (Docket No. 153).
In Idaho, "to have standing under the [ICPA] . . . the aggrieved party must have been in a contractual relationship with the party alleged to have acted unfairly or deceptively." Taylor, 243 P.3d 642, 662. Without addressing Taylor, Plaintiffs argue that they are third-party beneficiaries to the agreements between Defendants and the MPCs. See Pls.' Opp. to Credit Suisse Mot. to Dismiss, p. 20 (Docket No. 152); Pls.' Opp. to Cushman & Wakefield Mot. to Dismiss, p. 18 (Docket No. 1153). However, as Credit Suisse and Cushman & Wakefield point out, Plaintiffs point to no Idaho authority extending the ICPA's contractual relationship requirement to third party beneficiaries and, even if such authority did exist, Plaintiffs have not adequately pled the elements of third-party-beneficiary status beyond several gratuitous references within the TAC. See Credit Suisse Reply, p. 13 (Docket No. 156); Cushman & Wakefield Reply, pp. 12-13 (Docket No. 155). For these reasons, the TAC does not allege the necessary contractual relationship to confer standing upon Plaintiffs to bring a claim under the ICPA.
The offered cases interpreting Nevada's standing requirements under the NDTPA, while less clear, nonetheless convince this Court that an underlying contract's incidental impact on a remote third-person is likewise not enough to establish that third-person's standing. See, e.g., William Lyon Homes, Inc. v. Partington, 2010 WL 1292296, *2 (D. Nev. 2010) (dismissing NDTPA claim, holding that "[t]he Court is not persuaded that Plaintiff has the right to insert itself into a transaction between Defendants and the homeowners for purposes of consumer fraud or that Plaintiffs are victims within the meaning of N.R.S. § 41.600."); Windisch v. Hometown Health Plan, Inc., 2010 WL 786518, *1, 6, & 7 (D. Nev. 2010) (allowing claim for consumer fraud where (1) plaintiff contracted with defendants, (2) defendants provided services to putative class, (3) misrepresentations were made to plaintiff medical provider's own enrollees, and (4) direct misrepresentations were made to plaintiff and putative class); Southern Serv. Corp. v. Excel Bldg. Servs., Inc., 617 F.Supp.2d 1097, 1099 (D. Nev. 2007) (acknowledging that NDTPA does not define "victim of consumer fraud," while holding that business competitors harmed by deceptive trade practices are victims of consumer fraud).
Plaintiffs' TAC does not allege the necessary relationship between themselves and Defendants to establish Plaintiffs' standing to assert claims under either the ICPA and the NDTPA. As a result, Defendants' Motions to Dismiss should be granted in this respect.
Pointing again to the timing of the appraisals and loans in relation to Plaintiffs' purchases in the MPCs, Defendants argue that Plaintiffs do not plead the requisite ascertainable losses at the hands of Defendants' alleged conduct. See Credit Suisse Mot. to Dismiss, p. 25 (Docket No. 135); Cushman & Wakefield Mot. to Dismiss, p. 23 (Docket No. 139). Yet, given that the element of reliance is less significant as to a consumer protection act claim than as to a fraud claim (see infra at p. 49), the Court rejects Defendants' arguments in these respects, finding that the timing of any alleged misrepresentations giving rise to a consumer protection act claim is inconsequential to Plaintiffs' ability to claim subsequent damages relating thereto.
Regarding damages, Plaintiffs allege that, by virtue of Defendants' allegedly deceitful conduct, certain amenities at certain MPCs were never built; without these amenities, Plaintiffs claim to have suffered losses regardless of when they purchased into the MPCs — in short, the absence of expected amenities represents the resulting ascertainable losses. See Pls.' Opp. to Cushman & Wakefield's Mot. to Dismiss, pp. 18-19 (Docket No. 153). Plaintiffs' counsel compared the circumstance to cellular phone services in oral argument:
See 1/12/12 Tr. at 99:4-19 (Docket No. 194).
Because Plaintiffs have alleged ascertainable losses attributable to Defendants' alleged conduct, their consumer protection act claim should not be dismissed on this basis.
To the extent either Credit Suisse or Cushman & Wakefield oppose Plaintiffs' consumer protection act claims due to a lack of reliance (see Credit Suisse Mot. to Dismiss, p. 26 (Docket No. 135); Cushman & Wakefield Mot. to Dismiss, p. 22 (Docket No. 139)), those arguments are misplaced. See In re Beach, 447 B.R. 313, 319, n.4 (Bkrtcy. D. Idaho 2011) ("Notably, neither reliance by an injured party nor the offending party's intention to deceive must be demonstrated in a successful ICPA claim."); Picus v. Wal-Mart Stores, Inc., 256 F.R.D. 651, 658 (D. Nev. 2009) (limiting need for reliance to cases alleging affirmative misrepresentations as basis for NDTPA claim). Therefore, Plaintiffs' consumer protection act claim should not be dismissed on this basis.
Cushman & Wakefield lastly attacks Plaintiffs' class allegations, arguing that the class claims should be dismissed in light of the individual questions and circumstances that predominate Plaintiffs' collective claims. See Cushman & Wakefield Mot. to Dismiss, pp. 26-28 (Docket No. 139). Cushman & Wakefield's arguments in these respects have the undersigned's attention in that this Court has already questioned Plaintiffs' ability to allege reliance in support of their fraud and negligent misrepresentation claims. Even so, dismissal of Plaintiffs' class claims (in whatever form they may take following the Court's complete consideration of the pending Motions to Dismiss) at this point in the litigation is premature.
The present question before the Court is not whether the class should be certified, but whether the class allegations in the TAC should be stricken. In this respect, Cushman & Wakefield does not contest that Plaintiffs have alleged the prerequisites of FRCP 23(a); instead, it argues that, from the face of the TAC (and particularly with respect to those claims where reliance is an issue), individual questions inherently predominate Plaintiffs' claims such that Plaintiffs are unable to allege a class pursuant to FRCP 23(b)(3). However, adopting Cushman & Wakefield's arguments requires a settled understanding of the actual scope of Plaintiffs' claims. Plaintiffs' fraud and negligent misrepresentation claims may be dismissed in part; however, even if they are not, Plaintiffs' counsel indicated during oral argument that certain claims may be certified class-wide, while others may not. See 1/12/12 Tr. at 107:8-10 (Docket No. 194) ("We may not try to certify fraud. Fraud is quintessentially a claim that is difficult to certify."). Add to this the fact that no discovery has taken place thus far on the merits of any one claim and it becomes clear that taking up Cushman & Wakefield's arguments and striking Plaintiffs' class allegations is inappropriate at this time. Indeed, Cushman & Wakefield's cited authority suggest as much. See, e.g., Bessette v. Avco Fin. Servs., Inc., 279 B.R. 442, 451 (D.R.I. 2002) ("Although defendant may ultimately be proven correct, at the initial stages of litigation, prior to discovery, defendant cannot prevail because it has a hunch or even a reasonable basis to believe that plaintiff will fail to meet Rule 23's requirements for class action."); Mills v. Foremost Ins. Co., 511 F.3d 1300, 1309 (11th Cir. 2008) ("However, precedent also counsels that the parties' pleadings alone are often not sufficient to establish whether class certification is proper, and the district court will need to go beyond the pleadings and permit some discovery and/or evidentiary hearing to determine whether a class may be certified."); Picus v. Wal-Mart Stores, Inc., 256 F.R.D. 651, 655 (D. Nev. 2009) ("Indeed, `dismissal of class allegations at the pleading stage should be done rarely and . . . the better course is to deny such a motion because the shape and form of a class action evolves only through the process of discovery.'") (quoting In re Wal-Mart Stores, Inc. Wage & Hour Litig., 505 F.Supp.2d 609, 615 (N.D. Cal. 2007));
For the foregoing reasons, it is recommended that Plaintiffs' class allegations not be dismissed at this time. If procedurally proper following resolution of the Motions to Dismiss, discovery should be allowed on class certification issues at which point the Court will consider any motion to certify a class and any related objections thereto.
Proposed Intervenors Timothy L. Blixseth and Alfredo Miguel seek to intervene pursuant to FRCP 24(a)(2) and (b)(1), espousing the underlying similarities between their claims and Plaintiffs' claims, while arguing that "Credit Suisse, through its loans to the Yellowstone Club and Tamarack, and Cushman & Wakefield, through its inflated appraisals of the resorts, created a parade of horribles for Proposed Intervenors and the existing Plaintiff. The damages suffered by Proposed Intervenors and the Plaintiffs all stem from substantially the same facts involving Credit Suisse's loans to the Yellowstone Club, Tamarack, Lake Las Vegas, and Ginn Sur Merr." Mot. to Intervene, p. 1 (Docket No. 159, Att. 1). Credit Suisse and Cushman & Wakefield oppose these intervention efforts as separate and unrelated to the action now positioned before this Court. See, e.g., Credit Suisse Opp. to Mot. to Intervene, p. 5 (Docket no. 161) ("[T]he Complaint in Intervention is plainly a separate action based, in part, on different facts, and is not a true attempt to intervene into the underlying class action."); Cushman & Wakefield Opp. to Mot. to Intervene, p. 15 ("These are all `new and unrelated' allegations and claims, and thus render intervention as of right under Rule 24(a) impermissible.").
FRCP 24 allows an applicant to intervene either as of right or permissibly. An applicant may intervene as of right if the applicant meets four requirements: (1) "the applicant must timely move to intervene"; (2) "the applicant must have a significantly protectable interest related to the property . . . that is the subject of the action"; (3) the applicant must prove that "the disposition of the action may impair or impede" the applicant's ability to protect that interest; and (4) "the applicant's interest must not be adequately represented by existing parties." Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003); see also Fed. R. Civ. P. 24(a)(2). In general, courts construe FRCP 24(a) liberally in favor of intervention. See Southwest Center for Biological Diversity v. Berg, 268 F.3d 810, 818 (9th Cir. 2001). Moreover, the Court's evaluation is "guided primarily by practical considerations," not technical distinctions. Id. Nonetheless, the "[f]ailure to satisfy any one of the requirements is fatal to the application." Perry v. Prop. 8 Official Proponents, 587 F.3d 947, 950 (9th Cir. 2009).
Comparing and contrasting Plaintiffs' existing action with Proposed Intervenors' arguments in favor of intervention highlights the Proposed Intervenors' inability to satisfy these pertinent requirements. Most notably, after oral argument, it became clear that Proposed Intervenors' issue with Defendants does not relate to the way the loans themselves were engineered on the front end (as Plaintiffs' currently argue), but rather in the personal fall-out resulting therefrom:
See 1/12/12 Tr. at 132:13-134:25, 157:19-159:6 (Docket No. 194) see also id. at 159:7-21.
Even though there is some possible common cross-section of facts between Plaintiffs and Proposed Intervenors, given the distinct angles of the two camps' claims and accompanying timing of those claims, it cannot be said that there is a significantly protectable interest that is possibly impaired in the event intervention is not allowed. If, and to the extent Proposed Intervenors are also homeowners/members of the Plaintiff Class (see id at 157:1-5), their interests are adequately represented; however, where their individual claims depart from those common to the rest, their separate status as intervenors in this action cannot stand. For these reasons, intervention as a matter of right is not proper.
An applicant who seeks permissive intervention under FRCP 24(b)(1)(B) must prove that it meets three threshold requirements: (1) it shares a common question of law or fact with the main action; (2) its motion is timely; and (3) the court has an independent basis for jurisdiction over the applicant's claims. See Donnelly v. Glickman, 159 F.3d 405, 412 (9th Cir. 1998). Courts must also consider "whether intervention will unduly delay the main action or will unfairly prejudice the existing parties." Id.; see also Fed. R. Civ. P. 24(b)(3). Even if an applicant has proven independent jurisdiction and therefore meets the requirements for permissive intervention, a court has discretion to deny permissive intervention. See id.
Alongside the shortcomings in seeking intervention as of right, the interests between Plaintiffs and Proposed Intervenors cannot be massaged enough to conclude that common questions of law and/or fact exist between the two that warrant permissive intervention. Additionally, the undersigned is concerned about the seeming conflict of interest between Proposed Intervenors — the principal developer of the Yellowstone Club and one of the principal developers of Tamarack (see Mot. to Intervene, p. 1 (Docket No. 159, Att. 1)) — and Plaintiffs. This concern was emphasized when, during oral argument, the Court and one of Plaintiffs' counsel (who, while representing Timothy Blixseth in other matters elsewhere, is also representing Plaintiffs here) had the following exchange:
See 1/12/12 Tr. at 137:8-139:14 (Docket No. 194); see also 2/17/11 R&R, p. 22 (Docket No. 106) ("There are numerous other factors that could have led to the resorts' absence of built-out amenities here . . . [including] . . . the developers' own professional ineptitude or decision to use the Credit Suisse loan proceeds for anything other than the complete build-out of the developments' amenities."); id. at 25-26 (discussing RICO claim, stating: ". . . it was the inability of the injured developers to pay the debt service and complete the promised amenities that directly caused Plaintiffs' injuries.") (emphasis in original).
Add to this concern, the fact that this action is already extraordinarily complex — even at this procedurally early stage — and that certain causes of action (asserted in Proposed Intervenors' proposed Complaint in Intervention) are being pursued and/or have already been dismissed with prejudice (saying nothing of what Judge Lodge may order by way of the recommended dismissal of claims here).
Like intervention as of right, these concerns auger strongly against Proposed Intervenors' request for permissive intervention. It is therefore recommended that Proposed Intervenors' Motion to Intervene be denied in this respect.
For the foregoing reasons, IT IS HEREBY ORDERED that Plaintiffs' Motion for Leave to Amend Third Cause of Action (Docket No. 130) is GRANTED.
For the foregoing reasons, IT IS HEREBY RECOMMENDED that:
1. Plaintiffs' fraud claim be dismissed with prejudice to the extent the claim is alleged on behalf of a united class and, individually, as to those Plaintiffs who have not adequately pled reliance in the TAC (Jennings, Mushkin, LaFleur, Griffen, Land, and Dominguez); and Plaintiffs' fraud claim not be dismissed as to those Plaintiffs who properly allege reliance (Gibson, Blixseth, and Koenig).
2. Plaintiffs' negligent misrepresentation claim be dismissed with prejudice to the extent the claim is alleged on behalf of a united class and, individually, as to those Plaintiffs who have not adequately pled reliance in the TAC (Jennings, Mushkin, LaFleur, Griffen, Land, and Dominguez); and Plaintiffs' negligent misrepresentation claim not be dismissed as to those Plaintiffs who properly allege reliance (Gibson, Blixseth, and Koenig).
3. Plaintiffs' breach of fiduciary duty claim not be dismissed;
4. Plaintiffs' tortious interference with contractual relations claim not be dismissed;
5. Plaintiffs' unjust enrichment claim be dismissed with prejudice;
6. Plaintiffs' negligence claim not be dismissed; and
7. Plaintiffs' Consumer Protection Act claim be dismissed with prejudice.
1. Plaintiffs' fraud claim be dismissed with prejudice to the extent the claim is alleged on behalf of a united class and, individually, as to those Plaintiffs who have not adequately pled reliance in the TAC (Jennings, Mushkin, LaFleur, Griffen, Land, and Dominguez); and Plaintiffs' fraud claim not be dismissed as to those Plaintiffs who properly allege reliance (Gibson, Blixseth, and Koenig).
2. Plaintiffs' negligent misrepresentation claim be dismissed with prejudice to the extent the claim is alleged on behalf of a united class and, individually, as to those Plaintiffs who have not adequately pled reliance in the TAC (Jennings, Mushkin, LaFleur, Griffen, Land, and Dominguez); and Plaintiffs' negligent misrepresentation claim not be dismissed as to those Plaintiffs who properly allege reliance (Gibson, Blixseth, and Koenig).
3. Plaintiffs' breach of fiduciary duty claim not be dismissed;
4. Plaintiffs' tortious interference with contractual relations claim not be dismissed;
5. Plaintiffs' negligence claim not be dismissed;
6. Plaintiffs' Consumer Protection Act claim be dismiss with prejudice; and
7. Plaintiffs' Class Allegations not be dismissed.
