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Yen v. Buchholz

February 7, 2009

YU-SZE YEN, ET AL., PLAINTIFFS,
v.
RONALD BUCHHOLZ, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Ronald M. Whyte United States District Court For the Northern District of California

ORDER GRANTING MOTIONS TO DISMISS WITH LEAVE TO AMEND

[Re Docket Nos. 39, 46, 55, 64 and 65]

Plaintiffs are a group of investors in an allegedly unlawful real estate scheme promoted and 19 sold by Ronald Buchholz ("Buchholz"), Charice Fischer ("Fischer"), and a group of other individuals and corporate entities. Currently before the court are two motions to dismiss; one on behalf of Ronald Buchholz' father William E. Buchholz ("Pastor Buchholz") and Family Community Church (collectively the "Church defendants"), and a second on behalf of defendants Jonathan Vento, Grace Capital, LLC, Donald Zeleznak, Zeleznak Property Management, Z-Loft, LLC, Vento Investments, LLC, and Vento Family Trust (collectively, the "Grace defendants"). For the reasons stated below, the court grants both defendants' motions to dismiss with thirty days leave to amend except as to any punitive damages allegations against the Church defendants. Plaintiffs represented that they are not seeking punitive damages against the Church defendants based upon their complaint.

I. BACKGROUND

Plaintiffs are alleged to have purchased security interests in, or made loans to, various real estate entities owned or controlled by defendants. Plaintiffs claim that misrepresentations were made to them or that material facts were concealed from them.

II. ANALYSIS

A. Church Defendants' Motion to Dismiss

1. Punitive Damages

The Church defendants move to dismiss the punitive damage claims against them because the complaint fails to satisfy the requirements in California Civil Procedure Code § 425.14 for seeking punitive damages from a religious organization. Plaintiffs state in their opposition that they are not seeking punitive damages against the Church defendants. Therefore, any claim for punitive damages against the Church defendants is dismissed as against them.

2. Motion to Dismiss for Failure to State a Claim for Relief

The Church defendants also move to dismiss any claims brought against them for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The court finds that no claim for relief has been successfully stated and therefore grants the motion. Plaintiffs are given thirty days leave to amend.

B. Grace Defendants' Motion to Dismiss

1. Personal Jurisdiction

The Grace defendants contend that the court does not have personal jurisdiction over them such that the causes of action against them must be dismissed under Rule 12(b)(2). Plaintiffs, in response, contend that the court has jurisdiction over defendants by virtue of nationwide service provisions for both the alleged federal securities fraud and RICO violations. In the alternative, plaintiffs assert that the court has both specific and general jurisdiction over the Grace defendants. Because the court finds that plaintiffs have not adequately alleged a claim upon which relief can be granted, the Securities Exchange Act of 1934 and the RICO statute cannot serve as a basis for jurisdiction. The court also finds that facts alleged are insufficient to establish specific or general jurisdiction ...


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