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Ayers v. Lee

United States District Court, S.D. California

July 27, 2016

KATHRYN AYERS, et al., Plaintiff,
v.
JAMES YIU LEE, Defendant.

          ORDER SUBSTITUTING COUNSEL; ORDER DENYING MOTION TO DISMISS; AND ORDER TO SHOW CAUSE RE: FAILURE TO SERVE AND FAILURE TO PROSECUTE CLAIMS AGAINST DEFENDANT TIMO ETTORE

          HON. LARRY ALAN BURNS, United States District Judge.

         Substitution of Counsel

         On June 9, 2016, Jeffrey Albregts terminated his representation of Defendants James Yiu Lee (“JYL”), Connie Castellanos, and Larissa Ettore. Currently, Matthew Faust is the only attorney representing JYL. JYL has now filed a motion to substitute himself in, pro se, in place of Faust. (Docket nos. 82, 83.) That motion is GRANTED. JYL is now proceeding pro se. Connie Castellanos and Larissa Ettore continue to be represented by Faust.

         The fact that JYL is now proceeding pro se should not be taken by the parties as a reason to delay preparation for trial. The parties should comply with the scheduling order and diligently take action to make this case ready for trial. See Civil Local Rule 16.1(b).

         Motion to Dismiss

         Defendants have filed a motion for partial dismissal under Fed.R.Civ.P. 12(b)(6). They ask the Court to dismiss the claims by Plaintiff S&J Lee Partners amended complaint with prejudice. (Docket no. 66.) The parties agree that Texas law governs Plaintiffs’ claims.

         Legal Standards

         A Rule12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Under Fed.R.Civ.P. 8(a)(2), only "a short and plain statement of the claim showing that the pleader is entitled to relief, " is required, in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-55 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level . . . ." Id. at 555. "[S]ome threshold of plausibility must be crossed at the outset" before a case is permitted to proceed. Id. at 558 (citation omitted). The well-pleaded facts must do more than permit the Court to infer "the mere possibility of misconduct;" they must show that the pleader is entitled to relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

         When determining whether a complaint states a claim, the Court accepts all allegations of material fact in the complaint as true and construes them in the light most favorable to the non-moving party. Cedars-Sinai Medical Center v. National League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. 2007) (citation omitted). The Court does not weigh evidence or make credibility determinations. Acosta v. City of Costa Mesa, 718 F.3d 800, 828 (9th Cir. 2013). But the Court is "not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint, " and does "not . . . necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (citations and quotation marks omitted).

         Discussion

         Plaintiffs allege that JYL defrauded them in connection with the sale of securities. According to the amended complaint, JYL made various misrepresentations that misled them into investing through him, resulting in a total loss of about $5.5 million. Specifically, they allege JYL:

• falsely claimed to be a bona fide investment advisor and broker-dealer with expertise in stocks and options trading. (Am. Compl., ¶ 73.)
• misled them into believing he had the appropriate credentials, expertise, and licensure to be an investment advisor and to trade on their behalf. (Id., ¶ 74.)
• falsely claimed to be an attorney, a tax attorney, a CPA, a Ph.D., a former Wall Street trader, and a former stockbroker for the Dean Witter brokerage and ...

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