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Johnson v. Mazza

United States District Court, C.D. California

February 17, 2017

MATTHEW JOHNSON; NATHAN JOHNSON; GEMINI PARTNERS, INC.; and ALACRITY CAPITAL OFFSHORE FUND, LTD., Plaintiffs,
v.
DAIVD MAZZA; PAUL M. WEST; ANTHONY ALLEN WOOD; JOSEPH D. SIMMS; CHRISTOHPER ALLEGRETTI; HILL BARTH & KING LLC; HA&W WEALTH MANAGEMENT LLC; HABIF, AROGETI & WYNNE, LLP; and DOES 1 through 50, inclusive, Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION TO DISMISS [90], DENYING PLAINTIFFS' MOTION TO STRIKE, AND GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS [95]

          OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This case involves claims and counterclaims directed toward various plaintiffs and defendants individually and as groups. For purposes of the motions discussed herein, all Plaintiffs/Counterdefendants (Matthew Johnson, Nathan Johnson, Gemini Partners, Inc. (“Gemini”), and Alacrity Capital Offshore Fund, Ltd. (“Alacrity”) (collectively, “Plaintiffs”)) bring motions and defenses as a group. However, two distinct groups of defendants have emerged for purposes of the motions discussed in this Order: Defendants Christopher Allegretti and Hill, Barth & King LLC (“HBK”), and Defendants David Mazza, Paul M. West, and Anthony Allen Wood (collectively, “Mazza”).

         On September 20, 2016, the Court granted Allegretti and HBK's first Motion for Judgment on the Pleadings, giving Plaintiffs leave to amend their claims directed at Allegretti and HBK involving fraud. (ECF No. 80.) On October 4, 2016, the Court granted Plaintiffs' first Motion to Dismiss Mazza's counterclaims. (ECF No. 81.) That Order dismissed Mazza's counterclaims for intentional interference with a contract, negligent interference with a contract, equitable estoppel, fraud, and conspiracy. It granted leave to amend for all causes of action except equitable estoppel.

         Following those two orders, Plaintiffs filed a second amended Complaint (ECF No. 83), Allegretti and HBK filed a new Answer (ECF No. 87), and Mazza filed a new Answer with associated counterclaims (ECF No. 89.) Defendant HA&W Wealth Management LLC also filed a separate answer. (ECF No. 88.) Plaintiffs then filed a Motion to Dismiss and/or Strike Mazza's counterclaims (ECF No. 90), and Allegretti and HBK filed a Motion for Judgment on the Pleadings (ECF No. 95.) Those motions are fully briefed and ready for decision.[1] For the reasons discussed below, the Court GRANTS Plaintiffs' Motion to Dismiss, DENIES Plaintiffs' Motion to Strike, and GRANTS Allegretti and HBK's Motion for Judgment on the Pleadings.

         II. FACTUAL BACKGROUND

         Matthew and Nathan Johnson are brothers who together formed Gemini in 2001 and Alacrity in 2009. (Second Am. Compl. (“SAC”) ¶ 25, ECF No. 83.) Gemini is an investment bank that provides capital market services to medium-sized businesses, and Alacrity is a fund that provides secured loans to companies unable to obtain traditional financing. (Id.)

         The Johnson brothers met David Mazza in 2010 in the context of a new business model Mazza was promoting under the name Alethean. (Id. ¶ 27.) Mazza solicited business from the Johnsons, offering Gemini an exclusive on investment banking deals through CPA360, a web-based portal. (Id. ¶¶ 31-32, 37.) CPA360 was allegedly designed to match CPA clients in need of financial services with financial services providers, such as Gemini. (Id.) In turn, Alacrity would provide Alethean with a $1 million loan. (Id. ¶ 37.) Mazza assured Johnson 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 and HA&W Wealth Management LLC-were fully committed to Alethean. (Id. ¶¶ 37, 48.) Moreover, Plaintiffs allege that representatives of HBK and HA&W made assurances to Plaintiffs about their respective firms being fully committed to the Alethean model. (Id. ¶ 44.) Plaintiffs claim to have “relied heavily” on those assurances. (Id. ¶ 48.)

         After the parties entered into a formal agreement, years passed without significant deal flow to Gemini and without the required loan payments from Alethean to Alacrity. (Id. ¶¶ 51-56.) The Johnson brothers made a formal demand for payment, at which point Defendants Wood, West, and Mazza, among others, took the position that they were no longer involved with Alethean. (Id. ¶ 55.) In 2013, Johnson filed suit against the Alethean entities in California state court. (Id. ¶¶ 57.) The state court granted default judgment in December 2013. (Id.) In early 2015, while trying to collect on the default judgment, Johnson discovered a bankruptcy and a number of lawsuits filed against several of the Defendants named in this action. (Id. ¶¶ 58-59.) After reviewing the documents involved in those lawsuits, Johnson discovered that Alethean was neither unique nor proprietary and had never been fully implemented or deployed. (Id. ¶¶ 59-61.)

         Mazza also asserts counterclaims against Plaintiffs. Mazza's position, alternatively, is that Johnson perpetrated a scheme to defraud Mazza through the loan agreement and through the court system. (See generally Answer with Countercl.)

         III. DISCUSSION

         The Court begins by addressing Plaintiffs' Motion to Dismiss and/or Strike and then addresses Allegretti and HBK's Motion for Judgment on the Pleadings.

         A. Plaintiffs' Motion to Dismiss and/or Strike

         Mazza asserts five counterclaims against Plaintiffs: intentional interference with a contract; Defendant West's separate counterclaim for intentional interference with a contract; intentional interference with a prospective economic advantage; fraud; and conspiracy. (Answer with Countercl.) In moving to strike and/or dismiss those causes of action, Johnson argues that Mazza has failed to state a claim on which relief can be granted. See Fed. R. of Civ. P. 12(b)(6); (Mot. to Dismiss or Strike.) Alternatively, as to Mazza's counterclaims for fraud and conspiracy, Johnson makes a special Motion to Strike under California's Anti-SLAPP statute (Cal. Civ. Proc. Code § 425.16). (Id.) The Court analyzes the relevant grounds for dismissal in connection with each cause of action in turn.

         1. Legal Standard

         A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To survive a dismissal motion, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, the complaint ...


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