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Wakefield v. Global Financial Private Capital, LLC

United States District Court, S.D. California

June 15, 2015



JEFFREY T. MILLER, District Judge.

Plaintiff Celia Wakefield, individually and as the executor of the estate of Charles T. Wakefield, deceased, and as the Trustee of the Wakefield Family Trust ("Trust"), moves to remand the action to the Superior Court of California, County of San Diego. Defendants Global Financial Private Capital, LLC ("Global Financial") and G.F. Investment Services, LLC ("G.F. Investment") oppose the motion and separately move to dismiss Plaintiff's complaint on res judicata grounds. Plaintiff opposes the motion to dismiss. Pursuant to Local Rule 7.1(d)(1), the court finds the matters presented appropriate for resolution without oral argument. For the reasons set forth below, the court denies the motion to remand, permits jurisdictional discovery, vacates Defendants' motion to dismiss, and issues an Order to Show Cause re: Why the Court Should Not Compel Arbitration of Plaintiff's Claims ("OSC"). The parties shall file responsive briefs to the OSC within 14 days of entry of this order, and reply briefs may be filed seven days later.


The Notice of Removal

On February 2, 2015, Defendants removed this action from the Superior Court based upon diversity jurisdiction under 28 U.S.C. §§ 1332, 1441(d), and 1446. Defendants allege that they are both Florida limited liability companies ("LLCs") with licenses to do business in California, Plaintiff is a California citizen, and the amount in controversy exceeds $75, 000, exclusive of costs and interest. (Ct. Dkt. 1 ¶¶3-9). The Notice of Removal ("Notice") does not allege the citizenship of the members of the LLCs.

The Complaint

Filed on December 9, 2014, the Complaint alleges eight causes of action for (1) breach of fiduciary duty; (2) violation of the California Consumer Legal Remedies ("CLRA:); (3) tort of another claim for attorney's fees; (4) violation of Elder Abuse Welf. and Insti. Code Section 15610, et. seq.; (5) violation of Cal. Bus. and Prof. Code Section 17200; (6) breach of contract; (7) breach of duty to supervise; and (8) declaratory relief. Plaintiff's claims arise from the following generally described conduct.

In mid-summer 2007, Plaintiff and her late husband, Charles T. Wakefield, (collectively, the "Wakefields") attended a free financial seminar presented by Mr. Reid Johnson. On July 18, 2007, the Wakefields entered into an agreement with Reid Johnson, through his company The Planning Group of Scottsdale, LLC and a WRAP fee investment advisory contract with Global Financial.[1] Plaintiff alleges that Johnson was an agent of Global Financial. At the time, Plaintiff was in her late 80s and Charles T. Wakefield was in his late 70s.[2]

In essence, Plaintiff alleges she and her husband were advised to sell their investments and to reinvest the proceeds in a series of unsuitable investments and insurance transactions that caused the Wakefields harm. (Compl. ¶¶29, 40). Plaintiff alleges damages of about $1.6 million. (Compl. ¶49). Plaintiff also alleges that Johnson, the advisor, failed to disclose material adverse information, including that he owed about $11 million in taxes to the IRS. In broad brush, Plaintiff alleges that Defendants failed to adequately supervise Johnson and caused her harm.

This action is related to an earlier filed action that commenced on April 30, 2013, in the Superior Court for the State of California, County of San Diego (Wakefield v. Reid Stuart Johnson, et al., Case No. 37-2013-000-046502-CU-FR-CTL, the "Johnson Action"). The thrust of the Johnson Action is that Johnson, the financial advisor, breached fiduciary duties to Plaintiff and violated several state consumer statutes. The state court complaint does not identify any role played by Global Financial and/or G.F. Investment in the underlying misconduct. Following mediation, on February 21, 2014, the Johnson Action settled. (Plaintiff's Exh. 7).

After the Johnson Action settled, Plaintiff's counsel discovered the existence of the relationship between the Wakefields and Defendants. After Mr. Wakefield passed away in 2010, Plaintiff had no recollection that she and her husband had entered into a separate contract with Defendants. Neither Plaintiff nor her counsel were allegedly aware that there existed an advisory contract with Global Financial. (Compl. ¶45, 46).

On December 8, 2012, Plaintiff's counsel sent a letter to Global Financial requesting copies of relevant documents. Plaintiff's counsel did not receive a response to this letter. (Compl. ¶43). On June 14, 2013, counsel for Johnson in the Johnson Action provided a copy of the Global Financial WRAP contract to Plaintiff. Plaintiff alleges that she recently learned of the role of G.F. Investment in the alleged wrongdoing.


The Motion to ...

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