FINDINGS & RECOMMENDATIONS
Pending before the court is defendants' motion to dismiss. Upon review of the motions and the documents in support and opposition, upon hearing the arguments of plaintiffs and counsel and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:
Plaintiffs contends that defendants Green Tree Servicing, LLC ("Green Tree"), and National City Mortgage ("National City") are securities brokers. (Compl. at 1-2.) The complaint is purportedly brought by "The Trustee" pursuant to the Securities Exchange Act of 1934. (Id. at 2.)
After presenting a history of securitization in the United States, plaintiffs claim that on or about February 2007, they obtained a mortgage from defendants. (Id. at 5.) Plaintiffs also claim that on or about February 2007, defendants sold shares of stock to plaintiffs in a "Fidelity Investment." (Id. at 6.) Plaintiffs then cite numerous cases for the proposition that defendants owed plaintiffs a duty of care and breached that duty when they: wrongfully manipulated plaintiff's account with excessive sell and buy orders in a manner disproportionate to its size, character, and the objectives and instructions of plaintiff, bought and sold securities within short periods of time, switched securities from one to another without any investment justification other than to generate brokerage commissions for defendants' profit, executed transactions in violation of plaintiff's specific instructions, continuously maintained plaintiff's account at maximum or near maximum allowable margin, thus endangering plaintiff's investments in any declining market, and used plaintiff's account in margin transactions to obtain maximum commissions on executed orders. (Id. at 6.)*fn1 Next, plaintiffs present background on a fraud on the market theory before arguing that defendants "conspired to transfer and conceal assets for the purpose of rendering [Green Tree and National City] insolvent and unable to pay his [sic] creditors." (Id. at 8.)
Plaintiffs' first amended complaint sues Keith Anderson, President of Green Tree; Cheryl Collins, CFO of Green Tree; Green Tree Servicing, LLC; Joe Cartellone, CEO and President of National City; Robert B. Crowl, Sr. Vice-President and Controller of National City; and National City Mortgage for claims arising under the Banking Act of 1933; the GrammLeach-Billey Act, 15 U.S.C. § 6801; the Securities Exchange Act of 1934 §§ 10(b), 12; the Trust Indenture Act of 1939; civil conspiracy under 18 U.S.C. § 371; and state law claims of rescission and scienter.
Plaintiff seeks "[r]escissionary damages" of $387,000.00, punitive damages, attorney's fees and cost of suit.
This action was filed on August 20, 2010 and is proceeding on an amended complaint filed November 12, 2010. Defendants Keith Anderson, Cheryl Collins, and Green Tree filed the present motion to dismiss on November 26, 2010. Defendants Joe Cartellone, Robert B. Crowl, and National City filed a joinder to the motion to dismiss on December 8, 2010. On December 9, 2010, plaintiffs filed an opposition. On December 14, 2010, plaintiffs filed an opposition to the notice of joinder.
On January 3, 2011, plaintiff filed a notice of dismissal of the individual defendants. On January 6, 2011, plaintiff filed a motion for partial judgment on the pleadings and to strike portions of answer.*fn2 On January 19, 2011, plaintiff filed a motion for an order requiring parties to be present at the pretrial conference.*fn3
The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal sufficiency of the complaint. N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1974 (2007). Thus, a defendant's Rule 12(b)(6) motion challenges the court's ability to grant any relief on the plaintiff's claims, even if the plaintiff's allegations are true.
In determining whether a complaint states a claim on which relief may be granted, the court accepts as true the allegations in the complaint and construes the allegations in the light most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989).
The court is permitted to consider material properly submitted as part of the complaint, documents not physically attached to the complaint if their authenticity is not contested and the complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). Matters of public record include pleadings and other papers filed with a court. Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986). The court need not accept as true conclusory ...