Vyas v. Vyas

          ORDER RE: MOTION TO DISMISS OF DEFENDANT BHASKAR VYAS AS TO FIRST AMENDED COMPLAINT [FRCP 12(B)(1) AND 12(B)(6)] [27]

          Honorable Ronald S.W. Lew Senior U.S. District Judge

         Currently before the Court is Defendant Bhaskar Vyas’s (“Defendant”) Motion to Dismiss Plaintiff’s First Amended Complaint [27] (“Motion”). The present Motion stems from a pension and securities fraud action arising under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”) and the U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5, 17 C.F.R. § 240.10b-5. Plaintiff Dr. Sujata Vyas (“Plaintiff”) filed this Action claiming undisclosed and undivided community assets in the form of a Lockheed Martin Pension Plan (“Lockheed Plan”) and Rollover Individual Retirement Accounts (“Rollover IRAs”) that Defendant Bhaskar Vyas (“Defendant”) allegedly concealed from Plaintiff during their divorce proceedings in state court. For the reasons set forth below, the Court GRANTS in part and DENIES in part Defendant’s Motion.

         I. BACKGROUND

         Plaintiff is a California resident who married Defendant in 1981. First Am. Compl. (“FAC”) 10:8-11:6, ECF No. 19. Their divorce was finalized in 2009. Id. During their marriage, Plaintiff and Defendant accumulated assets, specifically in the form of the Lockheed Plan and Rollover IRAs. Plaintiff alleges she is the alternate payee of these ERISA assets, and Defendant is the beneficiary. Id.

         On December 21, 2015, the Orange County Superior Court Family Law Division finalized the division of the parties’ marital assets, which was reflected in the Qualified Domestic Relations Order (“QDRO”). Id. However, neither the Lockheed Plan nor the Rollover IRAs appear on the QDRO, because, as Plaintiff alleges, Defendant concealed these plans from Plaintiff throughout all court-mandated disclosures and proceedings. Id. at 10:8-12:20. Plaintiff maintains that she only recently learned of these plans when Nancy Bunn (“Bunn”), the jointly stipulated QDRO attorney, discovered them whilst drafting and filing the QDRO documents. Id. at 15:12-16:11. Thus, the assets have not been presented to any state court. Id. Plaintiff argues generally that Defendant’s failure to disclose the assets violates both ERISA and federal securities laws. Id.

         In August 2014, Plaintiff claims that Defendant gained discretionary control of the Lockheed Pension Plan when he became eligible to take a lump sum distribution or an annuity. Id. at 13:2-23. Plaintiff contends that this qualifies Defendant as a fiduciary with respect to this Plan under ERISA and federal securities regulations. Id. In addition, Plaintiff argues that Defendant is a fiduciary of any and all undisclosed Rollover IRAs. Id.

         On an undisclosed date, Plaintiff filed a Notice of Objection to the QDRO at the Orange County Family Law Court. Id. at 18:1-17. Furthermore, Plaintiff maintains that she made multiple attempts, to no avail, to add the missing plans by calling Bunn. Id. On December 21, 2015, the Orange County court finalized the QDRO. Id. at 18:18-19:2. Plaintiff alleges that the court never provided her the opportunity to be heard before issuing the final order. Id.

         II. DISCUSSION

         A. Legal Standards

         1. Federal Rules of Civil Procedure Rule 12(b)(1) Federal Rules of Civil Procedure Rule 12(b)(1) allows a litigant to seek dismissal of an action for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). A motion to dismiss for lack of standing pertains to the Court’s subject matter jurisdiction, and is properly raised under Federal Rule of Civil Procedure 12(b)(1). White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). The party bringing the action bears the burden of establishing standing. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006). If a plaintiff lacks standing, the court has no subject matter jurisdiction over the case and must dismiss it. See Cole v. Oroville Union High Sch. Dist., 228 F.3d 1092, 1099 (9th Cir. 2000).

         A facial challenge to the Court’s subject matter jurisdiction asserts that “the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). When evaluating a facial attack on the court's subject matter jurisdiction, the court “must accept all of the plaintiff's factual allegations as true.” Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (citations and quotation marks omitted). By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. Safe Air, 373 F.3d at 1039.

         2. Federal Rules of Civil Procedure Rule 12(b)(6)

         Federal Rules of Civil Procedure Rule 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss on 12(b)(6) grounds, a complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). Dismissal can be based on a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

         In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A court must presume all factual allegations of the complaint to be true and draw all reasonable ...