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Cotton v. Geraci

United States District Court, S.D. California

February 28, 2018

LARRY GERACI, an individual; REBECCA BERRY, an individual; GINA AUSTIN, an individual AUSTIN LEGAL GROUP, a professional corporation; MICHAEL WEINSTEIN, an individual; FERRIS & BRITTON, a professional corporation; CITY OF SAN DIEGO, a public entity; and DOES 1 through 10, inclusive,, Defendant.



         On February 9, 2018, Plaintiff Darryl Cotton (“Plaintiff”), proceeding pro se, filed a complaint against Defendants Larry Geraci, Rebecca Berry, Gina Austin, Austin Legal Group, Michael Weinstein, Ferris & Britton, and the City of San Diego (“Defendants”) alleging eighteen causes of action under federal and state law as well as declaratory and injunctive relief. Plaintiff concurrently filed a motion for leave to proceed in forma pauperis (“IFP”) under 28 U.S.C. § 1915(a) (“§ 1915(a)”). (Dkt. No. 2.) Furthermore, Plaintiff filed an ex parte application for a temporary restraining order (“TRO”), as well as a motion for appointment of counsel. (Dkt. Nos. 3, 6.) Based on the reasoning below, the Court GRANTS Plaintiff's motion to proceed IFP, sua sponte STAYS the case pursuant to the Colorado River doctrine, and DENIES Plaintiff's ex parte motion for TRO and motion for appointment of counsel as MOOT.


         A. Motion to Proceed In Forma Pauperis

         All parties instituting any civil action, suit, or proceeding in a district court of the United States, except an application for writ of habeas corpus, must pay a filing fee of $400. See 28 U.S.C. § 1914(a).[1] An action may proceed despite a plaintiff's failure to prepay the entire fee only if he is granted leave to proceed IFP pursuant to § 1915(a). See Andrews v. Cervantes, 493 F.3d 1047, 1051 (9th Cir. 2007); Rodriguez v. Cook, 169 F.3d 1176, 1177 (9th Cir. 1999). The plaintiff must submit an affidavit demonstrating his inability to pay the filing fee, and the affidavit must include a complete statement of the plaintiff's assets. 28 U.S.C. § 1915(a)(1). When a plaintiff moves to proceed IFP, the court first “grants or denies IFP status based on the plaintiff's financial resources alone and then independently determines whether to dismiss the complaint” pursuant to 28 U.S.C. § 1915(e)(2) (“§ 1915(e)(2)”). Franklin v. Murphy, 745 F.2d 1221, 1226 n.5 (9th Cir. 1984).

         Here, Plaintiff submitted a declaration reporting that he is currently unemployed, and he receives $192 a month from public assistance and $600 a month from “Recycled Material Processing.” (Dkt. No. 2 at 2.) Plaintiff declares that he has real estate valued at $400, 000 and a car valued at $1, 400. (Id. at 3.) Plaintiff reported no debts nor dependents. (Id. at 3.) He has living expenses totaling $2, 935.00. (Id. at 4-5.)

         In consideration of Plaintiff's application, the Court finds that Plaintiff has sufficiently demonstrated that he is unable to pay the required filing fee and meets the § 1915(a) requirements to proceed IFP. Therefore, the Court GRANTS Plaintiff's motion for leave to proceed IFP.

         B. Sua Sponte Dismissal Pursuant to 28 U.S.C. § 1915(e)(2)

         A complaint filed by any person proceeding IFP pursuant to § 1915(a) is subject to mandatory sua sponte review and dismissal by the Court if it is “frivolous, or malicious; fails to state a claim upon which relief may be granted; or seeks monetary relief against a defendant immune from such relief.” 28 U.S.C. § 1915(e)(2)(B); Calhoun v. Stahl, 254 F.3d 845, 845 (9th Cir. 2001) (“[T]he provisions of 28 U.S.C. § 1915(e)(2)(B) are not limited to prisoners.”); Lopez v. Smith, 203 F.3d 1122, 1126-27 (9th Cir. 2000). § 1915(e)(2) mandates that a court reviewing a complaint filed pursuant to the IFP provisions of 28 U.S.C. § 1915 make and rule on its own motion to dismiss before directing that the complaint be served by the U.S. Marshal pursuant to Federal Rule of Civil Procedures 4(c)(2). Lopez, 203 F.3d at 1127.

         C. Factual Background

         On March 21, 2017, Defendant Larry Geraci filed a complaint against Plaintiff Cotton in San Diego Superior Court alleging breach of contract, breach of the covenant of good faith and fair dealing, specific performance and declaratory relief. (Dkt. No. 3-11, P's RJN, Ex. 2, State Court Compl.) According to the state court complaint, the parties entered into a written agreement for the purchase and sale of Cotton's real property located 6176 Federal Boulevard, San Diego, CA on November 2, 2016. (Id., Compl. ¶ 7.) A copy of the written agreement is attached as exhibit A to the state court complaint. (Id., Ex. A.) On that day, Geraci paid Cotton $10, 000 good faith earnest money to be applied to the sales price of $800, 000 and to remain in effect until a conditional use permit (“CUP”) is approved by the City of San Diego. (Id. ¶ 8.) Geraci made efforts and spent money to obtain a CUP which is a long and time-consuming process, including hiring a consultant to coordinate the CUP efforts, Defendant Rebecca Berry, as well as an architect. (Id. ¶ 9.) The state court complaint claims that Cotton has anticipatorily breached the contract stating he will not perform according to the terms of the written contract. (Id. ¶ 11.) Specifically, Geraci alleges that Cotton “has stated that, contrary to the written terms, the parties agreed to a down payment or earnest money in the amount of $50, 000.00 and that he will not perform unless GERACI makes a further down payment. COTTON has also stated that, contrary to the written terms, he is entitled to a 10% ownership interest in the PROPERTY and that he will not perform unless GERACI transfers to him a 10% ownership interest. COTTON has also threatened to contact the City of San Diego to sabotage the CUP process by withdrawing his acknowledgment that GERACI has a right to possession or control of the PROPERTY if GERACI will not accede to his additional terms and conditions and, on March 21, 2017, COTTON made good on his threat when he contacted the City of San Diego and attempted to withdraw the CUP application.” (Id.)

         At some point, Cotton filed a cross-complaint against Geraci and Rebecca Berry. (Dkt. No. 3-13, P's RJN, Ex. 5.) On December 6, 2017, Cotton, with counsel, filed an ex parte application for temporary restraining order and order to show cause regarding preliminary injunction. (Dkt. No. 3-13, P's RJN, Ex. 4.) It sought an injunction against Geraci and Berry to recognize Cotton as a co-applicant on the CUP. (Id. at 6.[2]) On December 7, 2017, the Superior Court denied the request for TRO and set a date for hearing on preliminary injunction for January 25, 2018. (Id., Ex. 6.) On December 12, 2017, the state court denied Cotton's, now proceeding pro se, ex parte application for reconsideration of the state court's ruling on the TRO. (Id., Ex. 7.)

         On January 25, 2018, the state court held a hearing on Cotton's writ of mandate and motion for preliminary injunction, and Geraci and Berry's motion to compel Cotton's deposition. (Id., Ex. 8.) In its brief order, the state court noted no additional papers were filed, and denied Cotton's writ of mandate and denied his motion for a preliminary injunction, and granted Geraci and Berry's motion to compel Cotton's deposition. (Id.)

         On February 9, 2018, Plaintiff Cotton filed the instant complaint alleging breach of contract of the agreement between him and Geraci on November 2, 2016 as well as seventeen causes of action. (Dkt. No. 1, Compl.) Cotton's property at 6176 Federal Boulevard, San Diego, CA, qualifies for a Conditional Use Permit (“CUP”) for the establishment of a Medical Marijuana Consumer Collective (“MMCC”) (Id. ¶ 2.) If the CUP is approved, the value of the property will potentially be greater than $100 million. (Id. ¶¶ 2, 3.) On November 2, 2016, Cotton and Geraci orally agreed to terms for the sale of Cotton's property. (Id. ¶ 44.) The oral agreement contained condition precedents prior to closing. (Id. ¶ 45.) The Agreement required that Geraci provide a $50, 000 non-refundable deposit for Cotton to keep if the CUP was not issued; a total purchase price of $800, 000 if the CUP was issued; and a 10% equity stake in the MMCC with a guaranteed monthly equity distribution of $10, 000. (Id. ΒΆ 46.) According to Cotton, Geraci provided Cotton with $10, 000 cash to be applied toward the non-refundable deposit of $50, 000 and had Cotton execute a document to record his receipt of the money and promised to have his attorney, Gina Austin, ...

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