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Calderon v. Total Wealth Management, Inc.

United States District Court, S.D. California

April 4, 2018

ALBERT CALDERON, an individual on behalf of himself and all others similarly situated, et al., Plaintiffs,



         Before the Court is Defendant Jed Cooper's Motion to Dismiss Plaintiff's Third Amended Complaint. (Docket No. 122.) The motion is fully briefed. For the reasons that follow, Defendant's motion is GRANTED, and the Plaintiff's claims against Defendant are DISMISSED.


         Plaintiffs allege that investors were solicited to invest in Total Wealth Management (“TWM”) and its affiliated companies, Altus Capital Opportunity Fund, LLC (“ACOF”) and Altus Capital Portfolio Series (“ACPS”), primarily through a weekly radio program, financial awareness seminars, and community engagement. Investors were allegedly misled into believing their funds were being safely invested based on investment portfolio risk when in fact, investments were being channeled primarily to Private Placement Capital Notes LLC II (“PPCN”), LJL Secured High Yield Income Fund I, LLC (“LJL”), and Aegis Retail Group LLC (“AEGIS”) in exchange for fees paid by the entities, without disclosure to investors.

         TWM was allegedly under the control or direction of the following defendants by virtue of their ownership or positions as officers: Jacob Cooper, [1] co-founder and majority owner of TWM; Nathan McNamee (“McNamee”), TWM's president and chief compliance officer for relevant periods; and David Shoemaker (“Shoemaker”), co-founder and former chief compliance officer. Plaintiffs assert that at all relevant times Defendant Jed Cooper was a TWM Associate Planner and Client Services Manager, and served as some of the Plaintiffs' contact at TWM.


         The procedural history of this case is well known to the parties and detailed in the Court's January 19, 2017 Order granting dismissal of other defendants from this action and October 11, 2017 Order denying the Plaintiffs' request for entry of default judgment, denying Cooper's motion to dismiss for want of prosecution, and denying the parties' joint motion to stay the action, which the Court incorporates by reference herein. (See Docket No. 81 at pp. 2-3; Docket No. 118 at pp. 2-3.)

         Plaintiffs' operative Third Amended Complaint (“TAC”) alleges five claims for relief against Cooper: (1) control of party making fraudulent sale of securities in violation of California Corporations Code[2] §§ 25501, 25504; (2) fraudulent sale of securities in violation of § 25504.1; (3) suppression of material fact in violation of California Civil Code § 1710; (4) aiding and abetting suppression of material fact; (5) aiding and abetting breach of fiduciary duty. Cooper now moves for dismissal of all claims against him pursuant to Federal Rule of Civil Procedure 12(b)(6).


         “[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, 677-78 (2009). “A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Iqbal, 556 U.S. at 678).

         When considering a Rule 12(b)(6) motion the court must “accept as true facts alleged and draw inferences from them in the light most favorable to the plaintiff.” Stacy v. Rederite Otto Danielsen, 609 F.3d 1033, 1035 (9th Cir. 2010) (citing Barker v. Riverside Cnty. Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009)). On the other hand, bare, conclusory allegations, including legal allegations couched as factual, are not entitled to be assumed to be true. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. at 664.

         Allegations of fraud must be stated with particularity. Fed.R.Civ.P. 9(b). “In order to plead fraud with particularity, the complaint must allege the time, place, and content of the fraudulent representation; conclusory allegations, do not suffice.” Shroyer v. New Cingular Wireless Serv., Inc., 622 F.3d 1035, 1042 (9th Cir. 2010) (citing Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)); Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (requiring plaintiffs plead who, what, when, where, and how). “Rule 9(b) does not allow a complaint to merely lump multiple defendants together, but ‘requires plaintiffs to differentiate their allegations when suing more than one defendant . . . and to inform each defendant separately of the allegations surrounding his alleged participation in the fraud.” Swartz v. KPMG LLP, 476 F.3d 759, 765 (9th Cir. 2007) (quoting Haskin v. R.J. Reynolds Tobacco Co., 995 F.Supp. 1437, 1439 (M.D. Fla. 1998)). “[G]eneral allegations that the ‘defendants' engaged in fraudulent conduct” with only specific allegations as to some, “patently fail[s] to comply with Rule 9(b).” Id. at 765.


         A. Cooper's Motion to Dismiss

         Cooper argues that each of Plaintiffs' claims against him are subject to the heightened pleading standards of Federal Rule of Civil Procedure 9(b), and that dismissal is appropriate due to the TAC's dearth of specific factual allegations to support each of the claims against him. The Court agrees.

         1. Control of Party Making Fraudulent Sale of Securities ...

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