The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge
ORDER DENYING MOTION TO DISMISS AND MOTION FOR SUMMARY JUDGMENT
Defendants Mary Suzanne Icenhower and Brian S. Icenhower have filed a Motion to Dismiss the Fraud Claim [Doc. 55]. Also pending is Defendants' Motion for Summary Judgment on a variety of claims [Doc. 56]. For the following reasons, the Court DENIES Defendants' Motion to Dismiss and DENIES Defendants' Motion for Summary Judgment.
The Court set forth the facts of this case more comprehensively in its Order dated October 28, 2009. (See Doc. 19.) Here, the Court only recites the allegations in the Third Amended Complaint ("TAC") that are necessary for the resolution of the pending motion to dismiss and motion for summary judgment. The Court's recitation of the alleged facts are taken from the TAC and are not factual findings.
At its core, this is a suit for damages arising out of the fraudulent sale of a Mexican villa. The TAC alleges that Hobert Icenhower (deceased), along with Defendants Jerry Icenhower and Ramiro Salcedo, conspired to defraud Plaintiffs by selling them a Mexican villa that had undisclosed encumbrances. (TAC ¶¶ 3, 14--16.) At the time these Defendants caused the villa to be transferred to Plaintiffs, Jerry Icenhower was in a Chapter 7 bankruptcy proceeding. (TAC ¶ 24.) In the process of consolidating and collecting Jerry Icenhower's assets, the trustee filed an avoidance action against Plaintiffs, which set forth in detail the facts underlying Plaintiffs' claims here. (TAC ¶ 29; Order dated Oct. 28, 2009, Doc. 19, at 5.) Plaintiffs defended the avoidance action, but eventually the bankruptcy court ruled that the sale of the villa to Plaintiffs was an avoidable transfer, and ordered Plaintiffs to transfer ownership of the villa to the bankruptcy estate. (TAC ¶ 33.) Plaintiffs, however, did not immediately comply with the order and were assessed remedial and coercive sanctions totaling nearly $1,500,000. (TAC ¶ 34.) Plaintiffs eventually executed an agreement that the bankruptcy court deemed satisfied the terms of the judgment. (Id.) Plaintiffs have appealed both the order to transfer the villa to the estate and the contempt order. (Id.)
Plaintiffs' First Amended Complaint alleged four causes of action: (1) fraud; (2) constructive trust; (3) equitable subrogation and indemnification; and (4) negligence per se. The Court dismissed all causes of action as time barred, except the claim for equitable subrogation and indemnification. (Order dated Oct. 28, 2009, Doc. 19.) The Court permitted Plaintiffs to file a Second Amended Complaint ("SAC"), which Plaintiffs filed on November 12, 2009 [Doc. 20].
The SAC added new allegations of a conspiracy and alleged that Hobert Icenhower and Defendants Jerry Icenhower and Ramiro Salcedo conspired to defraud Plaintiffs, take wrongful possession of Plaintiffs' money, and then launder and conceal that money. (SAC ¶¶ 3, 14--17.) Defendants Brian and Mary Icenhower moved to dismiss the SAC [Doc. 21], as did Defendants Donna and Jerry Icenhower [Doc. 22]. The Court granted Defendants' Motion to Dismiss the conspiracy allegations and denied the Defendants' Motion to Dismiss the equitable subrogation and indemnification claims [Doc. 33]. Plaintiffs then filed a Motion for Reconsideration based on the existence of a tolling agreement between Hobert Icenhower and Plaintiffs [Doc. 42]. The Court granted Defendants' Motion for Reconsideration [Doc. 51] and permitted Plaintiffs to file a Third Amended Complaint, which they filed on April 26, 2010 [Doc. 54].
The TAC alleges three claims against the Hobert G. "Ike" Icenhower Defendants: (1) fraud; (2) imposition of constructive trust (unjust enrichment); and (3) money had and received. The TAC also alleges claims of equitable subrogation and indemnity against all Defendants.
Defendants Mary Suzanne Icenhower and Brian S. Icenhower have moved to dismiss the fraud claim, arguing that the fraud claim is not pleaded with enough particularity to satisfy the requirements of Federal Rule of Civil Procedure 9(b). Although there has not yet been any discovery, Defendants have also moved for summary judgment on the remaining claims of equitable subrogation and indemnity, imposition of constructive trust, and money had and received.
A. Motion to Dismiss the Fraud Claim
Defendants have moved to dismiss the fraud claim, arguing it is not pled with sufficient particularity to meet the standard of Federal Rule of Civil Procedure 9(b). A claim of fraud must have the following elements: "(a) a misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." In re Estate of Young, 160 Cal. App. 4th 62, 79 (2008) (quoting Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996) (internal quotation marks omitted)). Federal Rule of Civil Procedure 9(b) requires that each of these elements be pled with particularity. The Ninth Circuit has "interpreted Rule 9(b) to mean that the pleader must state the time, place and specific content of the false representations as well as the identities of the parties to the misrepresentation." Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392-93 (9th Cir. 1988). Averments of fraud must be accompanied by the "who, what, when, where, and how" of the misconduct charged.
Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997).
Plaintiffs' fraud claim has been pled with sufficient particularity. Their allegations regarding Jerry Icenhower's filing for bankruptcy, creation of the shell company H&G, transfer of the villa to H&G and then to Plaintiffs, are all detailed enough to meet the requirements of Rule 9(b). They allege several specific misrepresentations that Jerry Icenhower made to Plaintiffs: (1) H&G was properly formed and capitalized, (2) H&G was owned by a group of Las Vegas investors, (3) Jerry Icenhower's personal bankruptcy would not affect the villa, and (4) there were no outstanding liens on the villa. (Compl. 41.) They further plead facts showing that Jerry Icenhower knew these representations to be false and intended to defraud Plaintiffs. Plaintiffs plead they ...