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Sons v. McManus

January 7, 2010


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


In this action in diversity by plaintiff Bruce Sons ("Plaintiff") against defendant Jim McManus ("Defendant"), the Magistrate Judge issued orders on March 5, 2009, directing the parties to submit briefs limited to the issues of (1) whether the requirement of a jurisdictional amount in controversy is met, (2) whether the action is barred by a statute of limitations, (3) whether the statute of frauds bars Plaintiff's remaining claims, and (4) whether a prior judgment in a small claims proceeding precludes any claims in this action. On June 16, 2009, following the submission of limited briefing on the four issues, the Magistrate Judge issued an order construing Defendant's briefing as a motion to dismiss. Pursuant to the court's June 16 order, Plaintiff submitted a brief in opposition to Defendant's original briefing on July 18, 2009, and Defendant submitted an opposition to Plaintiff's original briefing on August 3, 2009. On August 5, 2009, the court vacated the date set for oral argument on these issues and took the matter under submission. Due to the press of business, the court has been delayed in addressing the parties' briefs. With apologies for the delay, the court now returns to the issues raised.


The original complaint in this action was filed on June 13, 2008. On January 5, 2009, the court issued a memorandum opinion and order granting in part and denying in part Defendant's motion to dismiss or for a more definite statement (the "January 5 Order"). The court's January 5 Order granted leave to amend the complaint. Plaintiff filed his First Amended Complaint ("FAC") on January 30, 2009. The Magistrate Judge's order of March 5, 2009, directing further briefing on the issues listed above permitted limited discovery as to those issues. Plaintiff's and Defendant's opening briefs were both filed on June 10, 2009. Plaintiff's responsive brief was filed on July 18, 2009, and Defendant's responsive brief was filed on August 3, 2009. The parties, in addition to submitting their briefs as directed, also submitted as exhibits declarations and depositions taken in the course of the limited discovery allowed by the Magistrate Judge's order. On August 5, 2009, the court vacated the hearing date set for August 10, 2009, and took the matter under submission as of August 10, 2009.

The underlying facts alleged in the FAC are little changed from those listed in the original complaint. Basically, Plaintiff owned a 10-acre parcel of land in Kern County in 1994 that contained a home and a detached workshop. Plaintiff had not made mortgage payments on the property and the property was in foreclosure. A trustee's sale was scheduled for May 10, 1994. Plaintiff's brother, Dwight Sons, approached Defendant proposing a deal whereby Plaintiff would deed the property to Defendant upon the agreement that Defendant would pay the amount owing on the mortgage. Plaintiff alleges he agreed to convey the property to Defendant on the condition Defendant would subdivide the parcel, holding a 2.5 acre subdivided parcel containing the home and workshop "in trust for Plaintiff." Plaintiff alleges Defendant was to keep the remaining 7.5 acres as a "quid pro quo" for aiding Plaintiff. The entire 10-acre parcel was conveyed to Defendant by quitclaim deed. Defendant paid the arrears and late fees on the mortgage. The FAC alleges the property was never subdivided and no portion of the property was ever reconveyed to Plaintiff. The entire 10-acre parcel was ultimately sold by Defendant.

The FAC alleges Plaintiff was incarcerated soon after the property was deeded to Defendant and that Plaintiff remained unaware of Defendant's failure to reconvey the property throughout the term of his incarceration, which lasted until 2006. Plaintiff alleges he did not have actual notice of Defendant's repudiation of the deal, including refusal to compensate Plaintiff for the loss of his 2.5 acre parcel until he talked to Defendant in June, 2008.

Defendant alleges facts that differ in a few respects. Defendant alleges that, as part of the agreement, Plaintiff agreed to take out a loan within 60 days from the date of the transfer and use the proceeds of the loan to compensate Defendant for his "out of pocket expenses." Defendant alleges that no loan was ever taken out and that Plaintiff was incarcerated on the sixty-first day after the date of the transfer of the property. It is not completely clear from Defendant's pleadings whether the obtaining of a loan by Plaintiff was a condition precedent to Defendant's obligation to reconvey the 2.5 acre parcel to Plaintiff. It is also not clear from the pleadings whether the "out of pocket expenses" that Defendant alleges he was due compensation for included the money needed to pay off the arrears and late fees owing on the mortgage.


A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure 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). To withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint must set forth factual allegations sufficient "to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) ("Twombly"). While a court considering a motion to dismiss must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), and must construe the pleading in the light most favorable to the party opposing the motion, and resolve factual disputes in the pleader's favor, Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 869 (1969), the allegations must be factual in nature. See Twombly, 550 U.S. at 555 ("a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do"). The pleading standard set by Rule 8 of the Federal Rules of Civil Procedure "does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) ("Iqbal").

The Ninth Circuit follows the methodological approach set forth in Iqbal for the assessment of a plaintiff's complaint:

"[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."

Moss v. U.S. Secret Service, 572 F.3d 962, 970 (9th Cir. 2009) (quoting Iqbal, 129 S.Ct. at 1950).

"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. Amount in ...

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