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Sanchez v. Aviva Life and Annuity Co.

June 28, 2010


The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge


This matter is before the court on defendant Aviva Life and Annuity Company's ("Aviva") motion to dismiss plaintiff Ernest P. Sanchez' second amended complaint ("SAC"), alleging Aviva conspired with the co-defendants*fn1 to misrepresent and sell sham investments to plaintiff and a class of similarly situated persons whom plaintiff seeks to represent in this putative class action.*fn2

In his second amended complaint, plaintiff alleges the same causes of action that appeared in his first amended complaint (First Am. Compl. ("FAC"), filed Aug. 28, 2009 (Docket #53)):

(1) breach of fiduciary duty; (2) negligence; (3) rescission for mistake and fraud; (4) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.;

(5) violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civil Code § 1750 et seq.; and (6) aiding and abetting. (Second Am. Compl., filed April 2, 2010 (Docket #84), ¶¶ 41-80.)

As was the case with plaintiff's FAC, all of these causes of action hinge on the allegation that Aviva conspired with the co-defendants to defraud plaintiff and the class through a "Ponzi" investment scheme called the "Income Advantage Plan." In its motion to dismiss, Aviva argues that plaintiff's SAC fails to allege adequate facts to establish Aviva's alleged involvement in the Loomis conspiracy, and therefore, plaintiff's SAC must be dismissed. (Def.'s Mot Dismiss ("MTD"), filed May 3, 2010 (Docket # 87).) Alternatively, Aviva argues that even if plaintiff has sufficiently alleged a conspiracy, plaintiff's first, fifth and sixth causes of action fail to state cognizable claims against Aviva because (1) Aviva, as a life insurer, is not a fiduciary to its insured as a matter of law; (2) life insurance is not a "good" or "service" under the CLRA; and (3) a corporate principal cannot aid and abet the commission of a tort by a corporate agent as a matter of law.

In its order granting Aviva's motion to dismiss plaintiff's FAC, this court found, as a threshold matter, that plaintiff's conspiracy allegations were factually deficient and ordered the FAC dismissed. (Mem. & Order on Pl.'s FAC ("Order"), filed Nov. 18, 2009 (Docket #71).) In so ruling, the court did not reach Aviva's alternative arguments with respect to the first, fifth and sixth causes of action. Because the court now finds that plaintiff's SAC has cured the FAC's defective conspiracy allegations, it addresses Aviva's alternative arguments with respect to the specific causes of action. For the reasons set forth below, Aviva's motion to dismiss the first, fifth and sixth causes of action is DENIED, GRANTED, and DENIED, respectively.


The court adopts the factual and procedural background set forth in the Order addressing plaintiff's FAC. (Id.) Additional relevant facts are discussed below:

Following this court's Order granting Aviva's motion to dismiss, plaintiff filed his SAC on April 2, 2010. In the SAC, plaintiff describes in greater detail his allegations against Aviva, specifically addressing the factual deficiencies identified by the court in its Order. Namely, plaintiff's SAC proffers factual allegations regarding the particular nature and logistics of the conspiracy (SAC ¶¶ 17-19, 21-22, 25-26), the direct communication between Loomis and Aviva leading up to the formation of the conspiracy and during the operation of the conspiracy (id. at ¶¶ 17-19, 25-26), the nature and mechanics of the investor seminars, in which plaintiff alleges Aviva played a pivotal role (id. at ¶¶ 21-22, 25), and the motives of the allegedly conspiring parties (id. at ¶¶ 16-18, 20, 28, 30.).


Although Aviva argues Federal Rules of Civil Procedure ("FRCP") 9(b) is the appropriate guideline by which to judge plaintiff's SAC, the court finds that FRCP 8(a) is the appropriate standard. Pointing to the language of FRCP 9(b), Aviva interprets "all averments of fraud" to include any and all conspiracy claims and cites case law which it contends supports that position. (MTD at 8.) The cases relied on by Aviva, however, are factually distinguishable from the instant case and ultimately unavailing. In Wasco, civil conspiracy was not an element of the plaintiff's claim, and both Neubronner and Moore involved securities fraud claims, not conspiracy claims. Wasco Prods. v. Southwall Techs., Inc., 435 F.3d 989 (9th Cir. 2006); Neubronner v. Milken, 6 F.3d 666 (9th Cir. 1993); Moore v. Kayport Package Express, 885 F.2d 531 (9th Cir. 1989). Hence, the courts' decisions to apply the heightened Rule 9(b) pleading standards in those cases is not binding on the present action. Moreover, this court is aware of no case law mandating the use of FRCP 9(b) in civil conspiracy complaints. As was the case in the Order granting Aviva's motion to dismiss the FAC, this court applies FRCP Rule 8(a).

Under FRCP 8(a), a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570. "A claim has facial plausibility when the plaintiff pleads factual ...

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