Frank W Cutler et al v. Rancher Energy Corp et al

Filing 59

MINUTES (IN CHAMBERS): ORDER by Judge David O. Carter: denying 51 Motion to Dismiss ; denying 52 Motion to Dismiss. (twdb)

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date: June 2, 2014

Case No. SACV 13-0906-DOC (JPRx)

Title: FRANK W. CUTLER, ET AL. V. RANCHER ENERGY CORP., ET AL.

PRESENT:
THE HONORABLE DAVID O. CARTER, JUDGE
Julie Barrera
Courtroom Clerk

Not Present
Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFF:

ATTORNEYS PRESENT FOR DEFENDANT:

None Present

None Present

PROCEEDINGS (IN CHAMBERS): ORDER DENYING MOTION TO
DISMISS [51] [52]
Before the Court is Defendant’s renewed Motion to Dismiss (Dkts. 51, 52). The
Court finds this matter appropriate for resolution without oral argument. See Fed. R. Civ.
P. 78; L.R. 7-15. Having considered the moving and opposing papers and the entirety of
the record, the Court DENIES the motion.
I.

BACKGROUND

The Court described fully the facts of the case in its prior order. Plaintiffs Frank
W. Cutler et al. (“Plaintiffs”) brought this lawsuit against Defendants Rancher Energy
Corp. (“Rancher”) and John Works (CEO of Rancher) based on representations made to
Plaintiffs regarding investments.
After an initial Motion to Dismiss by Defendant Works, the Court dismissed
without prejudice Plaintiffs’ negligent misrepresentation claim. See Order, March 11,
2014 (Dkt. 44). The Court found that Plaintiffs had failed to sufficiently allege the lack
of reasonable grounds for belief in the alleged misrepresentations’ truth. Id. at 11.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SACV 13-0906-DOC (JPRx)

Date: June 2, 2014
Page 2

Plaintiffs filed a Third Amended Complaint (“TAC”) on March 25, 2014 (Dkt.
47). Defendants filed the instant motion on April 15, 2014, alleging that Plaintiffs did not
cure the deficiency in their Second Amended Complaint.
II.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed
when a plaintiff’s allegations fail to set forth a set of facts which, if true, would entitle the
complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order
to survive a motion to dismiss). The pleadings must raise the right to relief beyond the
speculative level; a plaintiff must provide “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.
at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). On a motion to dismiss, this
court accepts as true a plaintiff’s well-pled factual allegations and construes all factual
inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire &
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The court is not required to accept
as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.
Dismissal without leave to amend is appropriate only when the court is satisfied
that the deficiencies in the complaint could not possibly be cured by amendment.
Jackson v. Carey, 353 F.3d 750, 758 (9th Cir. 2003); Lopez v. Smith, 203 F.3d 1122,
1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be granted even
if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure
states that leave to amend should be freely given “when justice so requires.” This policy
is applied with “extreme liberality.” Morongo Band of Mission Indians v. Rose, 893 F.2d
1074, 1079 (9th Cir. 1990).
III.

ANALYSIS

Plaintiffs added allegations in the TAC that are very similar to the text of a
California Court of Appeal case cited in the Court’s prior order. The additional
allegations are, essentially, as follows
38. Plaintiffs are informed and believe and based thereon allege that the
representations, promises, assurances and expressions of opinion by
defendant Works were false at the time they were made, and that he made
them negligently, carelessly and recklessly with no reasonable grounds for
believing they were true. Defendant Works, as a corporate officer and
director, lacked reasonable grounds for believing that the substance of his

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SACV 13-0906-DOC (JPRx)

Date: June 2, 2014
Page 3

statements, representations, promises, assurances and expressions of
opinion were true because he failed to utilize the degree of skill, prudence
and diligence commonly possessed by corporate officers and corporate
directors, and if he had utilized such skill, prudence and diligence, he
would not have made such statements, representations, promises,
assurances and expressions of opinion.
TAC ¶ 38. Plaintiffs pull the bulk of this language from B.L.M. v. Sabo & Deitsch, 55
Cal. App. 4th 823, 835 (1997). Defendants argue that this addition does not actually
articulate new facts. Further, Defendants point out that the Sabo & Deitsch case is
irrelevant to the present motion because the case is a California case decided before Iqbal
and Twombly. The Court agrees that the case is not directly on point nor is it binding
authority. However, the Court finds the minimal additions sufficient to bring Plaintiffs’
allegations over the Iqbal burden. The Second Amended Complaint already described in
detail the allegedly false facts and their allegedly truthful counterparts. Plaintiffs’
additions provide some explanation of why Defendant Works’ belief in these
representations’ truthfulness was unreasonable. The Court therefore DENIES the motion
to dismiss.
IV.

DISPOSITION
Accordingly, the Court DENIES Defendant’s Motion to Dismiss.
The Clerk shall serve this minute order on the parties.

MINUTES FORM 11
CIVIL-GEN

Initials of Deputy Clerk: jcb