United States District Court, N.D. California
JAMES R. JOHNSON, an individual, Plaintiff,
STEVEN L. MYERS, an individual dba MYERS ENGINEERING INTERNATIONAL, INC., a business entity believed to be incorporated, STEPHEN A. BURKE, an individual, VORTIS TECHNOLOGY, LTD., a corporation duly organized under the laws of Great Britain, MYERS JOHNSON INC., a California corporation, and DOES 1-50, Defendants.
ORDER GRANTING DEFENDANTS' MOTION TO
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.
a sequel lawsuit to litigation lost by our plaintiff five
years ago, recast as a quiet title action. This order holds
that the claims asserted may not be resurrected.
January 2011, plaintiff James R. Johnson and eighteen other
shareholder plaintiffs filed an action in federal court in
San Jose against defendants Steven Myers and Myers
Engineering International, Inc. (“MEI”)
(see Def.'s RJN, Exhs. 1-3). Johnson v.
Myers, No. C-11-00092 WHA (“Johnson
I”). That complaint asserted claims for (1) breach
of fiduciary duty, (2) misrepresentation and concealment, (3)
fraudulent misrepresentation and concealment, (4) negligence,
(5) breach of contract, (6) violation of Section 17200 of the
California Business and Professions Code, and (7) conversion
(Exh. 1). The claims derived from the allegedly fabricated
insolvency of Scottish company Vortis Technology, Ltd., which
Myers allegedly orchestrated to fraudulently transfer the
company's technology to himself.[*]
Jeremy Fogel held British law applied to all claims except
plaintiffs' breach of contract claim because they were
based upon Myers's activities as director or manager of
Vortis and concerned the internal affairs of Vortis. Judge
Fogel therefore dismissed those claims without leave to amend
because plaintiffs could not bring a derivative claim under
British law “[o]nce a company has been dissolved or
ceased to exist.” The plaintiffs “were required
to seek remedy . . . through the liquidator during the
liquidation proceeding” (Exh. 2 at 16).
Fogel also dismissed the breach of contract claim under
California law because plaintiffs failed to show that they
made the necessary demands to Vortis's board to take
action (id. at 17). The order also concluded that
the complaint failed to mention defendant MEI and therefore
dismissed it with leave to amend as to MEI for lack of
personal jurisdiction. The initial complaint was dismissed
with leave to amend regarding the issue of intra-district
venue because it was filed in San Jose. It was then
reassigned to the undersigned judge.
additional briefing, the undersigned judge found that further
amendment of the breach of contract claim would be futile.
The plaintiffs did not show that any shareholder made a
demand upon Vortis or the liquidators regarding a breach of
contract claim as required for a derivative claim on behalf
of Vortis. The claim was dismissed without leave to amend
(Exh. 3). That occurred in 2012.
forward five years. Johnson filed the instant complaint in
the Superior Court of California, County of San Mateo (Dkt.
No. 1). He again named Myers and MEI as defendants and added
Stephen A. Burke, Vortis Technology, Ltd., Myers Johnson,
Inc. (“MJI”), and Does 1 through 50 as
defendants. To the extent comprehensible, the complaint
asserts claims for (1) declaratory relief, (2) quiet title,
and (3) violation of Section 8723 of California's
Corporation Code (see Dkt. No. 1 at 7, 10, 13-14,
April 2017, Myers and MEI removed the action to federal
court. As of the date of this order, the other defendants
have not been served (Dkt. No. 1 at 2). Myers and MEI now
move to dismiss the action for failure to state a claim. This
order follows full briefing and oral argument.
survive a motion to dismiss, a plaintiff's claim must
plead “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim has facial
plausibility when the party asserting it pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). While the court generally “may not consider any
material beyond the pleading, ” Hal Roach Studios,
Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555
n.19 (9th Cir. 1999), it “may consider material . . .
relied upon in the complaint” or “subject to
judicial notice.” Ellis v. Phillips ...