Carlos Lazo v. Steven P. Roberts, et al.

Filing 19

MINUTES OF DEFENDANT GARDEN CITY GROUP, LLC'S MOTION TO DISMISS 13 Motion Hearing held before Judge Christina A. Snyder. In accordance with the foregoing, plaintiff's complaint is DISMISSED, as to defendant Garden City Group, without prejudice. Plaintiff shall have until Monday, November 23, 2015 to file an amended complaint. Failure to do so may result in dismissal with prejudice. IT IS SO ORDERED. Court Reporter: Laura Elias. (lom)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Title

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.

Present: The Honorable

Date

October 26, 2015

CHRISTINA A. SNYDER, U.S. DISTRICT JUDGE

CONNIE LEE
Deputy Clerk

LAURA ELIAS
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

John Richards

Daniel Heaton

Proceedings:

I.

DEFENDANT GARDEN CITY GROUP, LLC’S MOTION TO
DISMISS (Dkt. 13, filed September 22, 2015)

INTRODUCTION

On August 7, 2015, plaintiff Carlos Lazo (“plaintiff”) filed the instant complaint
in the Santa Barbara County Superior Court against attorney Steven P. Roberts
(“Roberts”); Belsher, Becker, Roberts & Connell (the “Belsher Law Firm”); American
Airlines, Inc. (“American Airlines”); and the Garden City Group, LLC (“GCG”)
(collectively, “defendants”). The gravamen of the allegations in the instant complaint is
that defendants were negligent in failing to provide plaintiff with certain information in
connection with a prior personal injury lawsuit (the “underlying personal injury suit”) in
which current-defendants Steven Roberts and the Belsher Law Firm represented plaintiff
against American Airlines. This Court dismissed with prejudice plaintiff’s underlying
personal injury suit in an order dated November 18, 2014. See Case No. 2:12-cv-04864CAS-PJW, Dkt. 17 (Order granting with prejudice American Airlines’s motion to dismiss
plaintiff’s underlying personal injury suit); Dkt. 20 (Judgment Order entering judgment
in favor of American Airlines in plaintiff’s underlying personal injury suit).1

1. On

September 11, 2015, defendant American Airlines submitted a request for judicial
notice. See Dkt. 10. The Court takes judicial notice of Exhibit A (Plaintiff’s May 11,
2012 complaint in the underlying personal injury suit), Exhibit B (This Court’s
November 17, 2014 order dismissing with prejudice plaintiff’s underlying personal injury
suit), Exhibit C (Order entering judgment in favor of American Airlines in the underlying
personal injury suit), and Exhibit D (October 21, 2013 Bankruptcy Confirmation Order).
See Dkts. 10-1, 10-2, 10-3, 10-4.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Date

Title

October 26, 2015

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.

Plaintiff’s complaint in the instant suit asserts the following claims: (1) negligence,
against defendants Steven P. Roberts and the Belsher Law Firm; (2) negligence, against
defendants American Airlines and GCG; and (3) “Negligence - Equitable Estoppel,”
against defendants American Airlines and GCG. On September 4, 2015, defendants
removed plaintiff’s action to federal court. See Dkt. 1. In their Notice of Removal,
defendants assert that this Court has original jurisdiction pursuant to 28 U.S.C. §1334
because plaintiff’s complaint “arises under, arises in, or is related to a bankruptcy case in
which the bankruptcy court has retained exclusive jurisdiction,” as well as 28 U.S.C.
§1331 because plaintiff’s claims arise under treaties of the United States. Dkt. 1, at 2.
On September 11, 2015, defendant American Airlines filed a motion to dismiss
plaintiff’s complaint. Dkt. 9. On September 22, 2015, defendant GCG filed a separate
motion to dismiss plaintiff’s complaint. Dkt. 13. Plaintiff did not file an opposition to
defendants’ respective motions to dismiss; accordingly, both motions remain unopposed.
On October 21, 2015, plaintiff and defendant American Airlines, through their
respective counsel of record, filed a joint stipulation pursuant to Federal Rule of Civil
Procedure 41(a)(1) to dismiss this action with prejudice as to defendant American
Airlines. Dkt. 15. On October 22, 2015, defendant American Airlines was accordingly
dismissed from this action with prejudice. Dkt. 16. Having considered GCG’s motion to
dismiss, the Court finds and concludes as follows.
II.

BACKGROUND

In his now-dismissed underlying personal injury suit, plaintiff had alleged that he
was injured by an American Airlines flight attendant while aboard an American Airlines
flight on March 16, 2010. Dkt. 10-4 (November 18, 2014 Dismissal Order), at 2-3.
Although the alleged injury occurred in March 2010, plaintiff did not file his underlying
personal injury suit in federal court until May 11, 2012, more than two years after the
alleged incident. Id. at 6. Accordingly, this Court dismissed plaintiff’s underlying
personal injury suit as untimely under the applicable two-year statute of limitation period
imposed by the Montreal Convention, which “has been construed strictly by the Ninth

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Date

Title

October 26, 2015

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.

Circuit and other courts, does not permit tolling pursuant to state or federal law, and
therefore bar[red] plaintiff’s untimely claim.”2 Id. at 10.
In the instant suit (from which defendant American Airlines has been dismissed),
plaintiff’s remaining claims are for (1) negligence against defendants Roberts and the
Belsher Law Firm for their alleged failure to properly represent and advise plaintiff on
issues of international law and bankruptcy in connection with the underlying personal
injury suit; and (2) negligence and “equitable estoppel” against GCG for alleged
misrepresentations that GCG made in its role as the claim administrator for American
Airlines’s Chapter 11 bankruptcy proceedings, which were commenced on or about
November 29, 2011 in the United States District Court for the Southern District of New
York. Compl. ¶ 15.
As is relevant to GCG’s motion to dismiss, plaintiff alleges that on or about
January 27, 2012, he filed a claim for $600,000 with the bankruptcy court in connection
with American Airline’s Chapter 11 proceedings. Id. ¶ 15. Plaintiff further alleges that
in the months following his lodging of the claim with the bankruptcy court, he had
numerous correspondences with representatives from American Airlines and GCG in
which they “reiterated” and “advised” that “he would not need to file a separate civil
action for his injuries in federal court because he was, and would continue to be,
‘protected’ and/or ‘covered’ by the filing of this bankruptcy claim in [the bankruptcy
proceeding].” Id. ¶ 16; see also id. ¶¶ 16-19 (describing GCG’s communications and
plaintiff’s reliance thereupon). Accordingly, plaintiff’s claims in the instant suit for
“negligence” and “equitable estoppel” arise from GCG’s alleged misrepresentations
regarding the need for plaintiff to file his underlying personal injury claim in federal
court.
III.

LEGAL STANDARD

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence

2

See Convention for the Unification of Certain Rules for International Carriage by
Air, May 28, 1999, S. Treaty Doc. No. 106-45, 1999 WL 33292734.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Date

Title

October 26, 2015

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.

of sufficient facts alleged under a cognizable legal theory.’ ” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Polic Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.g., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles,
250 F.3d 668, 689 (9th Cir. 2001).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Date

Title

October 26, 2015

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.

As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th
Cir. 2000).
IV.

DISCUSSION
A.

Defendant Garden City Group’s Motion to Dismiss
1.

Local Rule 7-12 Regarding Unopposed Motions

As an initial matter, the Court notes that plaintiff, who is represented by counsel,
has not opposed defendant GCG’s motion to dismiss. Under Local Rule 7-12, “[t]he
failure to file any required document, or the failure to file it within the deadline, may be
deemed consent to the granting or denial of the motion.” C.D. Cal. L.R. 7–12.
Accordingly, pursuant to Local Rule 7-12, defendant GCG’s motion to dismiss may be
granted. See Ghazali v. Moran, 46 F.3d 52, 53-54 (9th Cir.1995) (per curiam) (affirming
grant of an unopposed motion to dismiss under local rule by deeming a pro se litigant’s
failure to oppose as consent to granting the motion); Holt v. I.R.S., 231 Fed. App’x. 557,
at *1 (9th Cir. 2007) (same; and rejecting a pro se litigant’s contention that the district
court should have warned her of the consequences of failing to file an opposition).
2.

Exculpation Pursuant to the United States Bankruptcy Court’s
October 21, 2013 Confirmation Order

GCG offers various arguments in support of its contention that the instant case
must be dismissed. Among these arguments is GCG’s assertions that (1) plaintiff’s
complaint “arises out of and is related to matters concerning the bankruptcy action filed
by American Airlines on November 29, 2011 in the United States District Court for the
Southern District of New York, entitled In Re: AMR Corporation, et al. (Case Number
11-15463),” and that (2) GCG is “expressly exculpated by name for the present claims
under the Bankruptcy Court’s Confirmation Order.” Motion at 2. In advancing its
argument, GCG relies upon the following language in the bankruptcy court’s October 21,
2013 Confirmation Order:
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Date

Title

October 26, 2015

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.
54. Exculpation . . . [T]o the maximum extent permitted by
applicable law, neither the Debtors, . . . The Garden City
Group, Inc. (including as claims and noticing agent,
administrative agent, and as a Disbursing Agent) . . . nor any of
their respective members . . . officers, directors, employees,
counsel, advisors, professionals, or agents shall have or incur
any liability to any holder of a Claim or Equity Interest for any
act or omission in connection with, related to, or arising out of
the Chapter 11 Cases; negotiations regarding or concerning the
Plan . . . except for actions found by Final Order to be willful
misconduct, gross negligence, fraud, malpractice, criminal
conduct, unauthorized use of confidential information that
causes damages, breach of fiduciary duty (to the extent
applicable), and ultra vires acts.

Dkt. 10-4, at 64-65, ¶ 54 (emphasis added). In light of this provision in the Confirmation
Order, GCG argues that it is exculpated from liability for any alleged negligent conduct
arising out of the Chapter 11 proceedings.
“The trend among bankruptcy courts . . . has been to confirm chapter 11 plans with
express discharge or indemnification provisions for nondebtors if they meet certain
tailored criteria or overall necessity.” In re Birting Fisheries, Inc., 300 B.R. 489, 504
n.16 (B.A.P. 9th Cir. 2003) (citing In re WCI Cable, Inc., 282 B.R. 457, 467-80 (Bankr.
D. Or. 2002)). Although “in general[] decisions in the Ninth Circuit appear not to favor
exculpation or indemnification provisions that limit liability for negligence or breaches of
fiduciary duties,” In re WCI Cable, 282 B.R. at 479, in light of plaintiff’s non-opposition
to defendant’s motion to dismiss, and the fact that numerous courts have upheld
comparable exculpation provisions, the Court finds it appropriate to dismiss without
prejudice in the instant case. See In re PWS Holding Corp., 228 F.3d 224, 245 (3d Cir.
2000) (upholding exculpation clause limiting liability of the debtors, the reorganized
debtors, the creditors committee and their respective officers, directors, employees, and
agents, among others, to liability arising with respect to the subject chapter 11 cases as a
result of willful misconduct or gross negligence); In re Halpern, 248 B.R. 43 (Bankr.
S.D.N.Y. 2000) (approving an investment advisor contract that provided for
indemnification of the investment advisor for its own acts of negligence).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:15-cv-07037 CAS (PJWx)

Title

CARLOS LAZO v. STEVEN P. ROBERTS, ET AL.

V.

Date

October 26, 2015

CONCLUSION

In accordance with the foregoing, plaintiff’s complaint is DISMISSED, as to
defendant Garden City Group, without prejudice. Plaintiff shall have until Monday,
November 23, 2015 to file an amended complaint. Failure to do so may result in
dismissal with prejudice.
IT IS SO ORDERED.

00
Initials of
Preparer

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:

01

CL

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