United States District Court, C.D. California
PRESENT: THE HONORABLE DAVID O. CARTER, JUDGE
CIVIL MINUTES - GENERAL
(IN CHAMBERS): ORDER REMANDING ACTION TOSUPERIOR COURT,
DENYING AS MOOT DEFENDANTS' MOTION TO DISMISS , AND
DENYING AS MOOT DEFENDANTS' MOTION TO STRIKE
the Court is Defendants Allen, Haight & Monaghan LLP
(“AHM”) and Thomas Monaghan's
(“Monaghan”) (collectively “AHM &
Monaghan”) Motion to Dismiss Case (“MTD”)
(Dkt. 18) and Motion to Strike Portions of Plaintiff's
Complaint (“MTS”) (Dkt. 19). The Court finds this
matter appropriate for resolution without oral argument.
Fed.R.Civ.P. 78; L.R. 7-15. Having reviewed the moving papers
and considered the parties' arguments, the Court REMANDS
the action the Superior Court of the State of California for
the County of Orange, DENIES AS MOOT Defendants' Motion
to Dismiss, and DENIES AS MOOT Defendants' Motion to
following allegations are taken from Plaintiffs C&H
Family LLC (“C&H”), Integra Capital Group,
Inc. doing business as Century Business Solutions
(“Century”), Calvin Lim (“Lim”), and
Helen Chu's (“Chu”) Complaint
(“Compl.”) (Dkt. 1-1) against Defendants AHM,
Monaghan, Jeffrey M. Verdon (“Verdon”), Jeffrey
M. Verdon Law Group, LLP (“Verdon Law Group”),
Lindzey M. Cain (“Cain”), Michael L. Meyer
(“Meyer”), and Indiana Endowment Fund, Inc.
Plaintiff Century is an S Corporation providing credit card
processing services, and software for credit card processing.
Compl. ¶ 2. Plaintiffs Lim and Chu (collectively
“Individual Plaintiffs”) are
“shareholder[s], officer[s] and employee[s]” of
Plaintiff Century. Id. ¶¶ 3-4.
February 3, 2016, Plaintiffs Century, Lim, and Chu met with
Defendant Jeffrey M. Verdon (“Verdon”) to discuss
“comprehensive business planning and legal
services.” Id. ¶ 18. Verdon recommended
that Plaintiffs use Defendant Allen, Haight &
Monaghan's services for tax planning and preparation.
Id. The next day, Plaintiffs entered into an
agreement to receive legal and business services from
Defendant Verdon Law Group, paying an initial retainer of
$25, 000. Id. ¶ 19. On February 19, 2016,
Plaintiffs took Verdon's advice, and signed an agreement
with Defendant AHM for both Verdon and AHM to conduct a
review of Plaintiffs' tax and accounting records.
Id. ¶ 21.
December 2016, Defendants Verdon, Lindzey M. Cain
(“Cain”), and Thomas Monaghan
(“Monaghan”) met to discuss year-end tax and
business planning. Id. ¶ 22. Verdon, Cain, and
Monaghan recommended that Plaintiffs use the tax services of
Defendant Michael L. Meyer (“Meyer”).
Id. A few days later, Meyer gave a presentation
regarding his charitable tax plan (“Meyer Tax
Plan” or “Tax Plan”). Id. ¶
23. Meyer, Verdon, and Monaghan assured Plaintiffs that
Meyer's plan was consistent with tax regulations and
Generally Accepted Accounting Principles. Id.
agreed to Meyer's plan. Id. ¶ 25. Pursuant
to the plan, Plaintiffs transferred five promissory notes to
an Indiana LLC which Meyer had previously created.
Id. The notes were read and approved by Defendant
Monaghan. Id. Meyer renamed the LLC to C&H
Family LLC, adding Plaintiffs Lim and Chu as members.
Id. ¶¶ 24, 27. Meyer then caused
Plaintiffs to donate an interest in C&H to the Indiana
Endowment Fund (“IEF”), a Donor-Advised Fund
which he controlled. Id. ¶¶ 24, 27.
Finally, Meyer issued Plaintiffs a Form 8283, which allowed
Plaintiffs to deduct the non-cash contribution of their LLC
interest from their taxes. Id. ¶ 24. The value
of the contribution was appraised by IEF. Id.
25, 2018, C&H received a third-party subpoena from the
Tax Division of the Department of Justice. Id.
¶ 29. Through this subpoena, Plaintiffs learned that
Meyer was the defendant in a civil case against Meyer filed
by the federal government. Id. Plaintiffs learned
that Meyer had been engaged in a tax evasion scheme.
Id. ¶ 27. Pursuant to this scheme, Meyer would
create an LLC, and then advise participants to transfer
assets to the LLC. Id. Meyer would then cause scheme
participants to transfer an interest in the LLC to a sham
501(c)(3) non-profit organization. Id. Meyer falsely
“appraised” the transferred interests in a manner
inconsistent with their legally ascertainable value.
Id. Finally, Meyer would issue scheme participants a
Form 8283, allowing them to deduct the appraised value of the
transferred interest from their taxes. Id.
Plaintiffs state they had no way of knowing that Meyer's
plan was illegal before learning about the federal case
against him. Id. ¶ 30.
allege that Meyer recruited participants in the scheme
through the use of Certified Public Accounts like Defendant
Monaghan, and local attorneys like Defendant Verdon, who
vouch for the legitimacy of the Meyer Tax Plan. Id.
Accordingly, Plaintiffs brought the instant suit against
Defendants for breach of contract, professional malpractice,
negligent misrepresentation, breach of fiduciary duty,
constructive fraud, and unfair competition. Id.
filed the Complaint in the instant action before the Superior
Court of the State of California, County of Orange on May 24,
2019. Compl. at 1. On July 11, 2019, Defendant Meyer removed
the case to this Court, arguing that the Court has federal
question jurisdiction under 28 U.S.C. § 1331. Notice of
Removal (Dkt. 1) at 5-9.
18, 2019, Defendants Monaghan and AHM filed a Motion to
Dismiss Case (“MTD”) (Dkt. 18), as well as a
Motion to Strike Portions of ...