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Barsky v. Spiegel Accountancy Corporation

United States District Court, N.D. California

February 11, 2015

GENNADY BARSKY, Plaintiff,
v.
SPIEGEL ACCOUNTANCY CORPORATION, et al., Defendants.

ORDER GRANTING DEFENDANTS' PARTIAL MOTION TO DISMISS COMPLAINT

THELTON E. HENDERSON, District Judge.

This matter is before the Court on Defendants' partial motion to dismiss Plaintiff's complaint. The Court has carefully considered the arguments of the parties in the papers submitted, and finds this matter suitable for resolution without oral argument, pursuant to Civil Local Rule 7-1(b). Defendants' motion is hereby GRANTED, for the reasons set forth below.

BACKGROUND

Until the fall of 2012 and spring of 2013, Plaintiff Gennady Barsky ("Plaintiff") managed multiple investment organizations, including Pharaoh Investments, LLC ("Pharaoh") and Lodgepole Investments, LLC ("Lodgepole") with his partners Max Michael Berman ("Berman") Margaret Louise Taylor ("Taylor"), and John William Simonse. Compl. ¶¶ 15, 18, 20, 37, 45 (Docket No. 1). However, a series of events starting in early 2012 resulted in Plaintiff's falling out with his partners, his resignation from these investment organizations, his bankruptcy, and a lawsuit against him by Lodgepole and Taylor. Id. ¶¶ 20, 22, 43, 45. Plaintiff, Lodgepole and Taylor settled that lawsuit in September of 2013, for the transfer of certain real estate properties and cash from Plaintiff to Lodgepole and Taylor, for which Plaintiff estimated the value to be approximately $10, 500, 000. Id. ¶ 49; Ex. 8 to id. at 8 (Docket No. 1-3).

Defendant Jeffrey Spiegel is the manager of Defendant Spiegel Accountancy Corporation (collectively "Defendants"). Compl. ¶ 21. Defendants were hired as accountants for Pharaoh and Lodgepole following Plaintiff's resignation from these entities. Compl. ¶ 21, 45. Plaintiff alleges that, in the course of providing accounting services to Pharaoh, Lodgepole, and other clients, Defendants violated the Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO"), and also committed various torts. Compl. ¶¶ 69-129.

Defendants now move to dismiss the RICO claims, as well as the claims of intentional interference with prospective economic advantage, conversion, and aiding and abetting the same. Mot. at 1 (Docket No. 12). However, Defendants do not move to dismiss the claims for breach of fiduciary duty, negligence, or breach of contract. Id.

LEGAL STANDARD

Rule 12(b)(6) requires dismissal when a plaintiff's allegations fail "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility does not equate to probability, but it requires "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

In ruling on a motion to dismiss, a court must "accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party." Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007). Courts are not, however, "bound to accept as true a legal conclusion couched as a factual allegation." Iqbal, 556 U.S. at 678. A court may consider the pleadings, along with any exhibits properly attached thereto. Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989).

"[I]f a complaint is dismissed for failure to state a claim upon which relief can be granted, leave to amend may be denied, even if prior to a responsive pleading, if amendment of the complaint would be futile." Albrecht v. Lund, 845 F.2d 193, 195 (9th Cir. 1988).

DISCUSSION

Defendants move to dismiss six of Plaintiff's nine causes of action: the first and second causes of action, alleging RICO violations and a RICO conspiracy; the sixth cause of action, alleging intentional interference with prospective economic advantage; the seventh cause of action, alleging conversion; the eighth cause of action, alleging conspiracy to commit intentional interference with prospective economic advantage and conversion; and the ninth cause of action, alleging the aiding and abetting of intentional interference with prospective economic advantage and conversion. As discussed below, Plaintiff has failed to state any of these claims, requiring their dismissal.

I. Plaintiff Has Failed to State a Claim for RICO Violations

"The elements of a civil RICO claim are as follows: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as predicate acts') (5) causing injury to plaintiff's business or property.'" Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir. 2005) (quotation omitted) (citing 18 U.S.C. §§ 1962(c), 1964(c)).

Here, Plaintiff's allegations do not plausibly allege any racketeering activity. Moreover, even if they did, they do not make out a pattern of such activity for RICO purposes.

A. Plaintiff has not alleged any plausible racketeering activity

As relevant to this case, the "predicate acts" that constitute racketeering activity include "any act which is indictable under" statutes proscribing mail fraud and wire fraud, as well as "any offense" involving fraud in connection with a bankruptcy proceeding. 18 U.S.C. § 1961(1)(B), (D). Mail or wire fraud consists of using the mail or wires to perpetrate a "scheme or artifice to defraud." 18 U.S.C. §§ 1341, 1343. Bankruptcy fraud consists of "knowingly and fraudulently... mak[ing] a false entry in any recorded ...


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