United States District Court, C.D. California
MATTHEW JOHNSON; NATHAN JOHNSON; GEMINI PARTNERS, INC.; and ALACRITY CAPITAL OFFSHORE FUND LTD., Plaintiff,
DAVID MAZZA; PAUL M. WEST; ANTHONY ALLEN WOOD; CHRISTOPHER ALLEGRETTI; HBK SORCE FINANCIAL, LLC; HA&W WEALTH MANAGEMENT LLC; HABIF, AROGETI & WYNNE, LLP; and DOES 1 through 50, inclusive, Defendants.
ORDER DENYING DEFENDANTS' MOTION TO DISMISS
D. WRIGHT, II UNITED STATES DISTRICT JUDGE
February 12, 2016, Plaintiffs Matthew Johnson, Nathan
Johnson, Gemini Partners Inc., and Alacrity Capital Offshore
Fund, LTD. (collectively "Plaintiffs") filed their
First Amended Complaint against multiple defendants,
including specially appearing Defendants David Mazza, Paul M.
West, and Anthony Allen Wood (collectively,
"Defendants"), alleging fraud. (First Am. Compl.
("FAC"), ECF No. 38.) Defendants move to dismiss
the First Amended Complaint for improper venue pursuant to
Fed.R.Civ.P. 12(b)(3). (Def.'s Mot. to Dismiss Pl.'s
First Am. Compl. ("Mot."), ECF No. 41.) For the
reasons discussed below, the Court DENIES
Defendants' Motion to Dismiss.
are brothers who together formed Gemini Partners, Inc.
("Gemini") in 2001 and Alacrity Capital Offshore
Fund, Ltd. ("Alacrity") in 2009. (FAC ¶ 26.)
Gemini is an investment bank that provides capital-market
services to medium-sized businesses. (Id.) Alacrity
is a fund that provides secured loans to companies that are
not able to obtain traditional financing on their own.
were introduced to Defendant Mazza by a mutual friend.
(Id. ¶ 28.) Defendants at the time were
promoting a new business model, under the name Alethean, and
were soliciting business from Plaintiffs. (Id.)
Plaintiff Johnson informed Defendants that he was a resident
of California and that he conducted his business primarily in
California. (Id.) Defendants contacted Plaintiffs
several times over the phone in order to discuss their
business proposal. (Id. ¶ 30.) The business
proposal offered Gemini an exclusive on investment banking
deals through CPA360, a web-based portal that matched
CPA's clients in need of financial services with
financial services providers, such as Gemini. (Id.
¶ 38.) In turn, Alacrity would provide Alethean with a
$1 million loan. (Id.) Defendants assured Plaintiffs
that revenues generated as a result of the deal would exceed
$5 million and that two of the top-100 accounting firms in
the country-Defendants HBK Sorce Financial, LLC, and HA&W
Wealth Management LLC-were fully committed to Alethean.
(Id. ¶¶ 37- 38, 40, 42.)
passed without significant deal flow to Gemini and without
proper payments from Alethean to Alacrity. (Id.
¶¶ 48, 50.) After making a formal demand for
payment, Defendants Wood, West, and Mazza, among others,
began taking the position that they were no longer involved
in the Alethean business model. (Id. ¶ 50.)
Plaintiffs filed suit against the Alethean entities in
California state court. (Id. ¶¶ 50- 51.)
The court granted default judgment in December 2013.
(Id. ¶ 51.) In early 2015, while trying to
collect on the default judgment, Plaintiffs discovered a
bankruptcy and a number of lawsuits filed against several
Defendants named in this action. (Id. ¶¶
52-53.) After reviewing the documents involved in the
lawsuits, Plaintiffs discovered that Alethean was neither
unique nor proprietary and had never been fully implemented
or deployed, as previously stated. (Id. ¶¶
October 29, 2015, Plaintiffs filed their Complaint in Los
Angeles County Superior Court, asserting the following causes
of action: (1) fraud; (2) fraudulent inducement; (3)
fraudulent transfer; and (4) constructive fraudulent
transfer. (Pl.'s Original Complaint ¶¶ 124-155,
ECF No. 1-2.) On November 25, 2015, the case was removed to
this Court. (Notice of Removal, ECF No. 1.) On December 9,
2015, Defendants Mazza, West, and Wood filed a Motion to
Dismiss for lack of personal jurisdiction. (Def.'s Mot.
to Dismiss, ECF No. 10.) On January, 29, 2016, this Court
granted Defendants' Motion to Dismiss with leave to
amend. (ECF No. 36.)
February, 12, 2016, Plaintiffs filed their First Amended
Complaint, asserting the same four causes of action. (FAC
¶¶ 128-159.) On February 26, 2016, Defendants West,
Wood, and Mazza filed this Motion to Dismiss for improper
venue pursuant to Fed.R.Civ.P. 12(b)(3). (Mot. 2.) A timely
opposition and reply were filed. (Pl.'s Opp'n to
Def.'s Mot. to Dismiss ("Opp'n"), ECF No.
49; (Def.'s Reply to Pl.'s Opp'n
("Reply"), ECF No. 50.) This Motion is now before
the Court for consideration.
Rule of Civil Procedure 12(b)(3) provides that if a party
brings an action in the wrong court, a defendant can move to
dismiss for improper venue. Fed.R.Civ.P. 12(b)(3). Parties
may, by contract, designate a forum in which any litigation
arising under the contract will take place. Comm. Network
Servs. Corp. v. COLT Telcomms., 2004 U.S. Dist. LEXIS
18049, at *7. Litigation commenced elsewhere may be subject
to dismissal for improper venue. See Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585, 595. Most
forum-selection clauses enjoy strong presumptions of
validity, Spradlin v. Lear Siegler Management. Services
Co., 926 F.2d 865, 868 (9th Cir. 1991), and
enforceability, Murphy v. Schneider National, Inc.,
362 F.3d 1133, 1140 (9th Cir. 2004). A number of courts,
including the Ninth Circuit, hold that a forum-selection
clause is grounds for a rule 12(b)(3) motion to dismiss for
"improper venue." See Argueta v. Banco
Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996);
Albany Ins. Co. v. Almacanadora Somex, S.A., 5 F.3d
907, 909, fn.3 (5th Cir. 1993).
motion to enforce a forum-selection clause is made pursuant
to Fed.R.Civ.P. 12(b)(3), the pleadings need not be accepted
as true, and the court may consider facts outside of the
pleadings. Murphy, 362 F.3d at 1137 (citing
Richards v. Lloyd's of London, 135 F.3d 1289, 1292
(9th Cir.1998) and Argueta v. Banco Mexicano, S.A.,
87 F.3d 320, 324 (9th Cir. 1996)).
sets a new standard for evaluating a 12(b)(3) motion to
dismiss pursuant to a forum-selection clause. If there are
contested facts bearing on the enforceability of the
forum-selection clause, with respect to the non-moving
party's "meaningful day in court, " the court
is obligated to draw all reasonable inferences in favor of
the non-moving party and resolve all factual conflicts in
favor of the non-moving party. Murphy, 362 F.3d. at
1138. If the facts asserted by the non-moving party are
sufficient to preclude enforcement of a forum-selection
clause, the non-moving party survives a 12(b)(3) motion.
Id. at 1139.