United States District Court, C.D. California
Andrew Kulick, Attorneys Present for Plaintiffs.
Charles Perschon, William Nash (By Telephone), Attorneys Present for Defendants.
CIVIL MINUTES - GENERAL
CHRISTINA A. SNYDER, District Judge.
Proceedings: DEFENDANTS EMI, NAC, and THOMAS PAINTER'S MOTION FOR SUMMARY JUDGMENT (Dkt. No. 53, filed October 6, 2014)
DEFENDANTS EWI, EWII, EMI, NAC, and THOMAS PAINTER'S MOTION FOR SANCTIONS (Dkt. No. 42, filed September 18, 2014)
This lawsuit commenced on February 8, 2012, when plaintiff Frank DuFour ("DuFour") filed a complaint in Los Angeles County Superior Court. DuFour filed the operative Fourth Amended Complaint ("FAC") on December 27, 2013, also in Superior Court. See Dkt. No. 1-2. The FAC names as defendants Robert Allen ("Allen"), Enlightened Wealth Institute International, L.C. ("EWII"), Enlightened Wealth Institute, L.C. ("EWI"), Prosper Inc. ("Prosper"), Green Planet Services, Opteum Financial Services, Midland Mortgage Company, Aurora Loan Services, Sherson Lehman, Millennium Home Loans ("Millennium"), Charlie Payne, and Does 1 through 100. Id . Movants Enlightened Millionaire Institute ("EMI"), National Acceptance Corporation ("NAC"), and Thomas Painter ("Painter") were later named as Doe defendants. In brief, the FAC asserts that defendants schemed to induce plaintiff to enroll in a fraudulent real estate investment course and buy fraudulently marketed properties, from which the defendants reaped additional profits through undisclosed relationships with management and financing companies. See generally FAC.
On February 28, 2014, the Federal Deposit Insurance Corporation (the "FDIC") was appointed as receiver of defendant Millennium Bank, N.A., a failed bank. See Dkt. No. 1. On July 19, 2014, the FDIC removed this action to federal court based on federal question jurisdiction. Id . The case was originally assigned to the Honorable District Judge Ronald S.W. Lew on July 21, 2014. Dkt. No. 5. However, because it is related to a case previously pending in this Court, the case was transferred to the undersigned on July 25, 2014. Dkt. No. 10.
On September 18, 2014, EMI, EWI, EWII, NAC, and Painter filed a motion for sanctions against DuFour and his counsel, Andrew J. Kulick ("Kulick"). Dkt. No. 42. On October 6, 2014, DuFour filed an opposition. Dkt. No. 52. A reply was filed on October 13, 2014. Dkt. No. 60. On October 6, 2014, movants EMI, NAC and Painter filed a motion for summary judgment. Dkt. No. 54. On October 20, 2014, in lieu of filing an opposition, plaintiff's counsel filed a declaration in support of a request for denial or continuance of the motion pursuant to Federal Rule of Civil Procedure 56(d). Dkt. No. 64. On October 21, 2014, movants filed an opposition to this Rule 56(d) request. Dkt. No. 66. On October 27, 2014, plaintiff filed a reply to this Rule 56(d) opposition. Dkt. No. 67. On November 10, 2014, the Court held a hearing at which counsel for movants and non-movants appeared. After considering the parties' arguments, the Court concludes that the motion for summary judgment should be granted, for the following reasons.
II. FACTUAL BACKGROUND
A. The FAC's Allegations
Although the FAC asserts five claims for relief, it pleads only one claim for fraud and misrepresentation against movants EMI, NAC, and Painter. See FAC ¶ 75-97. The FAC alleges that Allen is the co-founder of EWI, an entity which offers real estate investment instruction. Id . ¶ 5. Dufour alleges that EMI is another incarnation of Allen's same business model, id., and that Painter is a friend of Allen's who partners with Allen to offer bogus investment courses through NAC, a corporation controlled by Painter, id. ¶¶ 75, 76. DuFour claims that Allen or EWI contacted him in January 2006 and invited him to attend a wealth building seminar. Id . ¶ 30. DuFour contends that, after a sham interview process, he subsequently paid thousands of dollars to enroll in a real estate investment course and was thereafter tricked into purchasing deceptively marketed investment properties in Mississippi and financing those purchases through entities and persons involved in the fraudulent scheme. See generally id. ¶¶ 31-58.
DuFour contends that Allen and Painter profited from the alleged real estate investment schemes by having NAC enter into a series of licensing and royalty agreements with EWI and EMI. Id . ¶ 80. DuFour alleges that defendants' scheme included "cooperat[ing] with one another in the marketing by... providing the names of people as leads who had visited their websites... in order to aid in the distribution and sale of... Allen and Painter's real estate investment scheme." Id . ¶ 87. The FAC claims that the educational program offered by defendants is deceptive and involves "nothing more than a variety of high risk property flipping schemes which are themselves deceptive [and] likely illegal using the no money down' or seller financed purchase' [model." Id . ¶ 89(b). DuFour also alleges that success stories advertised by defendants made money not by investing in real ...