United States District Court, C.D. California
ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS [52,
D. WRIGHT, III UNITED STATES DISTRICT JUDGE.
United States of America (the “Government”)
brings two claims against Defendants Stephen Ronca
(“Stephen”), Cynthia Ronca
(“Cynthia”), and Joseph Ronca
“Defendants”) under the Federal Debt Collection
Procedures Act, 28 U.S.C. § 3001, et seq. The Government
files this civil action to recover proceeds from the sale of
real property on October 26, 2017 to satisfy a restitution
debt. (Compl. ¶ 1.)
Stephen and Joseph move to dismiss on the grounds that the
Government failed to: (1) state a claim; and (2) join the
escrow company under Federal Rule of Civil Procedure
(“Rule”) 19. (See generally Mot. to Dismiss
Compl. (“Stephen Mot.”), ECF No. 52.; Mot. to
Dismiss Compl. (“Joseph Mot.”), ECF No.
reasons that follow, the Court DENIES Defendants' Motions
an action to recover proceeds of a real property sale to
satisfy restitution owed by Stephen Ronca for embezzling
money. (Compl. ¶ 9.) Stephen, Cynthia, and
Joseph are siblings. (Compl. ¶¶ 5-7.) Stephen is a
licensed attorney. (Compl. ¶ 9.) On May 30, 2017, the
Government filed an indictment against Stephen for embezzling
money from his client. (Compl. ¶ 9.)
real property in issue is located at 625 Al-Hil Drive, San
Luis Obispo, CA 93405 (“Al-Hil Property”).
(Compl. ¶ 10.) In February 2008, Stephen became the sole
owner of the Al-Hil Property through two grant deeds. (Compl.
¶ 11.) In the first grant deed, John Ronca, father of
the Defendants, transferred half of the interest to Stephen
and half to his revocable trust. (Compl. Ex. A, ECF No. 1-1.)
Three weeks later, John Ronca transferred the half interest
in his trust to Stephen through a second deed. (Compl. Ex. B,
ECF No. 1-1.)
October 26, 2017, Stephen sold the Al-Hil Property to
“Trustees of the Shotts Living Trust dated August 22,
2000” for a net proceed of $394, 560.97, which was
deposited in Cynthia's account. (Compl. ¶¶
12-14.) The following day, Cynthia withdrew three
cashier's checks in the amount of $100, 000, $111, 500,
and $150, 700. (Compl. ¶ 15.) Cynthia deposited the
checks in the amount of $100, 000 and $111, 500 in two
separate bank accounts under her name. (Compl. ¶ 16.)
She then immediately withdrew $100, 000 from the account in
which she had deposited the $100, 000 check. (Compl. ¶
16.) Cynthia gave Joseph the third check in the amount of
$150, 700. (Compl. ¶ 17.)
November 3, 2017, the Government brought suit against
Defendants alleging fraudulent transfers of funds pursuant to
28 U.S.C. §§ 3304(b)(1)(A) & (b)(1)(B). (See
Compl.) From December 13, 2017 to January 16, 2019, this
civil action was stayed pending resolution of the criminal
matter. (See Order Regarding Deposit of Funds into the
Court's Registry, ECF No. 12; Order Lifting Stay, ECF No.
21.) On August 27, 2019, Defendants Stephen and Joseph filed
motions to dismiss. (See Stephen Mot.; Joseph Mot.)
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. 1988).
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 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, 678 (2009)
(internal quotation marks omitted).
determination of whether a complaint satisfies the
plausibility standard is a “context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679. A
court is generally limited to the pleadings and must construe
all “factual allegations set forth in the complaint . .
. as true and . . . in the light most favorable” to the
plaintiff. Lee v. City of Los Angeles, 250 F.3d 668,
679 (9th Cir. 2001). But a court need not blindly accept
conclusory allegations, unwarranted deductions of fact, and
unreasonable inferences. Sprewell v. Golden State Warriors,
266 F.3d 979, 988 (9th Cir. 2001). Plaintiffs pleading fraud
must do so with heightened particularity. See Fed.R.Civ.P.
9(b). Rule 9(b) establishes that an allegation of
“fraud or mistake must state with particularity the
circumstances constituting fraud.” The
“circumstances” required by Rule 9(b) are the
“who, what, when, when, where, and how” of the
fraudulent activity. Cafasso v. Gen. Dynamics C4 Sys.,
Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). In addition,
the allegation “must set forth what is false or
misleading about a statement, and why it is false.”
Id. This heightened pleading standard ensures that
“allegations of fraud are specific enough to give
defendants notice of the particular misconduct which is
alleged to constitute the fraud charged so that they can
defend against the charge and not just deny that they have
done anything wrong.” Semegen v. Weidner, 780 F.2d 727,
731 (9th Cir. 1985).
district court grants a motion to dismiss, it should provide
leave to amend unless it is clear that the complaint could
not be saved by any amendment. Manzarek v. St. Paul Fire
& Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
Leave to amend, however, “is properly denied . . . if
amendment would be futile.” Carrico v. City & Cty.
of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011).
Rule 12(b)(7), a party may seek dismissal of a complaint for
failure to join an indispensable party under Rule 19.
Fed.R.Civ.P. 12(b)(7). Rule 19 states “[a] person who
is subject to service of process and whose joinder will not
deprive the court of subject-matter jurisdiction must be
joined” if “in that person's absence, the
court cannot accord complete relief among existing
parties.” Fed.R.Civ.P. 19. If joinder is not feasible,
“the court must ...