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Credit Managers Association of California v. Rewards Network Establishment Services Inc.

IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA


March 12, 2009

CREDIT MANAGERS ASSOCIATION OF CALIFORNIA, A CALIFORNIA NONPROFIT CORPORATION, PLAINTIFF,
v.
REWARDS NETWORK ESTABLISHMENT SERVICES INC., A DELAWARE CORPORATION; AND DOES 1-50, DEFENDANTS.

The opinion of the court was delivered by: Hon. Manuel L. Real United States District Judge

[PROPOSED] ORDER AND JUDGMENT DISMISSING FIRST AMENDED COMPLAINT WITH PREJUDICE

Pursuant to the Notice Of Motion And Motion To Dismiss First Amended Complaint Pursuant To Rules 9(b) And 12(b)(6) (the "Motion") [Docket No. 6],*fn1 Defendant Rewards Network Establishment Services Inc. ("Defendant"), moved pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b) for an order dismissing the First Amended Complaint (the "FAC") of Plaintiff Credit Managers Association of California ("Plaintiff").

After the Motion was fully briefed, a hearing on the Motion was held in open court on March 2, 2009 before the Honorable Manuel L. Real. After consideration of the papers submitted by both parties, oral argument presented and good cause appearing therefor, it is hereby:

ORDERED that Defendant's Motion is granted in all respects and all of the claims asserted by Plaintiff in the FAC are hereby dismissed with prejudice, pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), for the reasons stated on the record at the March 2, 2009 hearing, including but not limited to the following:

A) Plaintiff's usury based claims asserted in the FAC, Claim 1 for usury, Claim 2 for unfair business practices, Claim 3 for declaratory relief, and Claim 7 for money had and received, are hereby dismissed pursuant to Rule 12(b)(6) because they were released by RMS in the Settlement Agreement attached as an Exhibit to the FAC and, therefore, considered by the Court in connection with the Motion without objection.

B) Plaintiff's usury-based claims asserted in the FAC -- Claim 1 for usury, Claim 2 for unfair business practices, Claim 3 for declaratory relief, and Claim 7 for money had and received -- are also hereby dismissed pursuant to Rule 12(b)(6) for the independent and dispositive reason that usury claims are generally not assignable under California law. Plaintiff has not pled any facts in the FAC justifying an exception to this rule and has not alleged that it could plead facts in an amended pleading justifying an exception to the rule.

C) Plaintiff's state law preference claim (Claim 6 in the FAC), is hereby dismissed pursuant to Rule 12(b)(6) because such a claim is preempted by federal bankruptcy law under Sherwood Partners v. Lycos, 394 F.3d 1198 (9th Cir. 2005).

D) Plaintiff's fraudulent transfer claims, Claims 4 and 5 in the FAC, are hereby dismissed pursuant to Rule 12(b)(6) because the Settlement Agreement explicitly states that Save The Queen, LLC, was to make the payment to Defendant, so Plaintiff is not in privity with the transferor and is barred from asserting the fraudulent transfer claims asserted in this matter.

E) Plaintiff's fraudulent transfer claim with actual intent (Claim 4) is also dismissed pursuant to Rule 9(b) for the independent and dispositive reason that Plaintiff failed to plead such claim with particularity.

IT IS FURTHER ORDERED that, based on the foregoing, all of the claims asserted in the FAC (Claims 1-7) are dismissed with prejudice because all of the claims are subject to dismissal based on independent and dispositive legal grounds, and any further amendment of the complaint is futile in this case as the deficiencies cannot be cured through amendment.

This Order issued this 12th day of March, 2009, at 2:30 p.m.


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