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Sons v. McManis

January 2, 2009


The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge


This is an action in diversity by plaintiff Bruce Sons ("Plaintiff") against defendant Jim McManus ("Defendant"). The complaint alleges four untitled claims for relief under California common law. The claims arise out of an alleged agreement wherein about 10 acres of land was conveyed from Plaintiff to Defendant for the purpose of development with the expectation that a 2.5 acre portion of the land would be reconveyed from Defendant to Plaintiff. The reconveyance did not occur. In the instant motion, Defendant seeks to dismiss all or portions of the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Diversity jurisdiction exists pursuant to 28 U.S.C. 1332. Venue is proper in this court.


The facts of this case are simply stated and are largely undisputed. In 1994 Plaintiff owned a parcel of land in Kern County consisting of approximately ten acres. Although the complaint sets forth no dates for the transfer, quitclaim deeds submitted by Plaintiff as attachments to his opposition to defendant's motion to dismiss indicate the transfer occurred on or about May 10, 1994, and the transfer was subsequently corrected by a reconveyance of a portion of the property by quitclaim deed on or about June 29, 1994. The complaint alleges the transfer was subject to an agreement between the parties that Defendant would hold two and one-half acres of the land "in trust" for Plaintiff's benefit and, after subdividing and developing the land, Defendant would reconvey the 2.5 acres back to Plaintiff. The reconveyance never occurred.

The complaint alleges four claims for relief that are untitled but generally track the elements of claims under California common law for breach of fiduciary duty, breach of contract, unjust enrichment, and fraud. In the instant motion, Defendant moves to dismiss Plaintiff's fourth claim for relief for fraud on the ground Plaintiff's complaint fails to plead the elements of fraud and on the ground the complaint fails to plead the elements of fraud with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure.*fn1 Defendant also moves to dismiss Plaintiff's first claim for relief for breach of fiduciary duty for failure to allege facts to support the existence of a fiduciary relationship. Plaintiff also moves to dismiss the complaint in its entirety on the ground Plaintiff has not sufficiently alleged facts to support the existence of an agreement to hold property in trust -- an allegation that underlies each of Plaintiff's claims for relief -- because there is no allegation of a writing sufficient to satisfy the statute of frauds. In the alternative, Defendant moves for a more definite statement.

Defendants motion to dismiss or for a more definite statement was filed on October 15, 2008. Plaintiff's opposition was filed on November 14, 2008, and Defendant's reply was filed on November 20, 2008. The matter was taken under submission as of November 25, 2008


A complaint may be dismissed under Rule 12(b)(6) if it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle him to relief. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). A Rule 12(b)(6) dismissal can be based on the failure to allege a cognizable legal theory or the failure to allege sufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984). In considering a motion to dismiss, the court must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), construe the pleading in the light most favorable to the party opposing the motion, and resolve all doubts in the pleader's favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969). In deciding a Rule 12(b)(6) motion, courts do not "assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981).

"As a general rule, 'a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.' [Citation.]" Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, a district court may consider materials in a 12(b)(6) motion to dismiss that are not part of the pleadings but that are 'matters of public record' of which the court may take judicial notice pursuant to Federal Rule of Evidence 201. Id. Specifically, a district court may take judicial notice of public records related to legal proceedings in both state courts and in the district court. See Miles v. State of California, 320 F.3d 986, 987 (9th Cir. 2003) (district court taking judicial notice of related state court proceedings); Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1894) (district court takes notice of prior related proceedings in the same court).


I. Plaintiff's Claim for Fraud

Defendant alleges two grounds for dismissal of Plaintiff's fourth claim for relief for fraud. First, Defendant alleges Plaintiff has failed to allege all the elements of fraud; specifically, that Plaintiff failed to allege intent to defraud (that is, to induce reliance) and justifiable reliance.

Second, Defendant alleges Plaintiff's claim for fraud must be dismissed for failure to plead the elements of fraud with particularity as required by Rule 9(b).

The elements of fraud are "'(a) misrepresentation (false representation, concealment, or non-disclosure); (b) knowledge of falsity (or "scienter"); (c) intent to defraud, i.e. to induce reliance; (d) justifiable reliance; and (e) resulting damage.'" Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996). Promissory fraud, which Plaintiff alleges is the claim he asserts, is a subspecies of the action for fraud and deceit wherein the misrepresentation is the promise to do something with no present intent to perform. Id. Thus, where promissory fraud is alleged, the elements of misrepresentation and knowledge of falsity ...

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