Kingsburg Apple Packers, et al, vs. Ballantine Produce Co., Inc. et al,

Filing 252

ORDER Denying in part and Granting in part Defendant Virgil Rasmussen's 210 Motion to Dismiss signed by Chief Judge Anthony W. Ishii on 03/25/2011. (Flores, E)

Kingsburg Apple Packers, et al, vs. Ballantine Produce Co., Inc. et al,

Doc. 252

1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT FOR THE 7 EASTERN DISTRICT OF CALIFORNIA 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 This case comes before the Court on Defendant Virgil Rasmussen's ("Rasmussen") 24 motion to dismiss plaintiff intervenor Wagon Wheel Farms, Inc.'s ("Wagon Wheel") claims 25 brought under the Perishable Agricultural Commodities Act ("PACA") and related state claims 26 against various defendants. For the reasons that follow, the motion to dismiss will be denied in 27 part and granted in part. 28 KINGSBURG APPLE PACKERS, INC. ) D/B/A KINGSBURG ORCHARDS, et. al. ) ) Plaintiffs, ) ) v. ) ) BALLANTINE PRODUCE CO., INC., ) et. al., ) ) ) Defendants. ) ____________________________________) WAGON WHEEL FARMS, INC., a ) California corporation, ) ) Intervenor Plaintiff, ) ) v. ) ) BALLANTINE PRODUCE CO., INC. ) et. al. ) ) Defendants. ) ____________________________________) NO. 1:09-CV-901-AWI-JLT ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT VIRGIL RASMUSSEN'S MOTION TO DISMISS (Doc. No. 210)

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FACTUAL HISTORY1 Wagon Wheel alleges that in 2008, it entered into an oral contract ("Agreement") with Ballantine Produce Co. ("Ballantine"), whereby Ballantine was to be the "exclusive Commission Merchant and sales broker for all of Wagon Wheel's fruit produced during the 2008-2009 season harvest..." See Third-Amended Complaint ("TAC") ¶ 24. Wagon Wheel alleges that under the Agreement, it retained title to all of the tree fruit delivered to Ballantine and that Ballantine did not possess title to the fruit. Id. Throughout the 2008-2009 harvest season, Wagon Wheel performed all conditions, covenants, and promises required of it under the Agreement by delivering marketable fruit to Ballantine for packing and marketing. See TAC ¶ 26. As of April 2009, Wagon Wheel had delivered fruit to Ballantine worth $1,048,727.52, but Ballantine had only paid Wagon Wheel $30,421.30, leaving a balance owing to Wagon Wheel of $1,018,306.22. See TAC ¶ 27. Wagon Wheel alleges that Ballantine used the proceeds received from Wagon Wheel's fruits for its own uses, including paying off certain creditors, like Bank of the West ("Bank"). See TAC ¶ 29. Wagon Wheel's Alter Ego Allegations Wagon Wheel alleges that Rasmussen abused Ballantine's corporate form and seeks to hold him personally liable for Ballantine's torts and other liabilities under an alter ego theory of liability. Wagon Wheel alleges that Rasmussen was the alter ego of Ballantine. See TAC ¶ 24. Wagon Wheel alleges that Rasmussen was a principal investor, manager, and president of Ballantine, owned stock in Ballantine, and was a "responsible managing officer" of Ballantine and of its Commission Merchant license. See TAC ¶¶ 10, 12. Rasmussen and the other individual defendants solely ran, operated, and completely controlled Ballantine. See TAC ¶ 13. Rasmussen knew that Ballantine was financially unable to do business as a licensed Commission Merchant. Id. Rasmussen knowingly encouraged Wagon Wheel to deliver its

The factual history is provided for background only and does not form the basis of the court's decision; the assertions contained herein are not necessarily taken as adjudged to be true. The legally relevant facts relied upon by the court are discussed within the analysis. 2

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Summer 2008 harvested fruit to Ballantine, who was financially broke and under-capitalized. See TAC ¶ 13. When Ballantine took delivery of Wagon Wheel's fruit, sold the fruit, and then collected the sales proceeds, Ballantine was completely under-capitalized. See TAC ¶ 13. Rasmussen, as president and signor of Ballantine's checks, knew Ballantine had no capital to handle fruit as a Commission Merchant. Rasmussen knew Ballantine did not own title to Wagon Wheel's fruit or fruit's proceeds. See TAC ¶ 13. Rasmussen knew that Ballantine was not treating Wagon Wheel's sales proceeds separately as a fiduciary account. Id. Rasmussen knew that Bank was on the verge of cutting of Ballantine's line of credit to run the Ballantine Packinghouse. Id. Rasmussen knew that Ballantine's workers and janitors had not been paid for months. Id. Rasmussen and other individual defendants directed the commingling of Wagon Wheel's $1,300,000.00 of grower/consigner funds with Ballantine's funds. See TAC ¶ 12. The commingled funds were used to pay individual defendant's expenses. See TAC ¶ 12. Rasmussen knew that Ballantine did not own title to Wagon Wheel's fruit proceeds and Rasmussen, as president, wrote checks to benefit himself and other defendants from these proceeds. See TAC ¶¶ 13, 14. The individual defendants personally guaranteed millions of dollars of equipment purchases and leases to be used by Ballantine due to Ballantine's financial problems. See TAC ¶ 12. PROCEDURAL BACKGROUND On October 28, 2009, Wagon Wheel filed a motion to determine the validity of its PACA claims. See Doc. No. 117. On February 9, 2010, the Court found that Wagon Wheel did not have a valid PACA claim because it had failed to preserve its trust assets. On February 5, 2010, Wagon Wheel filed a first-amended complaint in intervention ("FAC"). See Doc. No. 146. On July 6, 2010, the Court granted Bank's motion to dismiss Wagon Wheel's FAC. See Doc. No. 201. On July 20, 2010, Wagon Wheel filed a second-amended complaint. On July 30, 2010,

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Wagon Wheel filed its TAC. Wagon Wheel's TAC alleges the following claims for relief: (1) Breach of Commission Merchant Contract against Defendant Ballantine, and against alter ego defendants David Albertson ("David A."), Eric Albertson ("Eric A."), Richard Graham ("Graham"), and Virgil Rasmussen ("Rasmussen");2 (3) Violation of PACA, 7 U.S.C. § 499b(4) - Failure to Account and Pay Promptly against defendants Ballantine, David A., Eric A., Graham, and Rasmussen; (4) Violation of PACA, 7 U.S.C. § 499b(4) - False and Misleading Statement Relating to a PACA transaction against defendants Ballantine and David; (5) Breach of Fiduciary Duty against defendants Ballantine, David A., Eric A., Graham, and Rasmussen; (6) Conversion of Plaintiff's Sales Proceeds against defendants Ballantine, David A., Eric A., Graham, Rasmussen, and Bank; (7) Constructive Fraud against defendants Ballantine, David A., Eric A., Graham, and Rasmussen; (8) Constructive Trust and Accounting against all defendants; and (9) Quantum Meruit (i.e. Restitution of the Misappropriated Funds) against defendants Redwood Farms and Babijuice. Rasmussen now moves to dismiss Wagon Wheel's First, Third, Fifth, Sixth, and Seventh, claims for relief for failure to state a claim. On September 3, 2010, Wagon Wheel filed an opposition. On September 13, 2010, Rasmussen filed a reply. LEGAL STANDARD

18 Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the 19 plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A 20 dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the 21 absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside 22 Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th 23 Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken 24 25 26 27 28 Wagon Wheel notes in its TAC that its second claim for relief -Enforcement of PACA Trust, 7 U.S.C. §499 (e)(c)(4) has been dismissed as to all defendants by the Court's February 9, 2010 Order. See Doc. No. 147. 4
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1 as true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet 2 Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 3 1999). The Court must also assume that general allegations embrace the necessary, specific facts 4 to support the claim. Smith v. Pacific Prop. and Dev. Corp., 358 F.3d 1097, 1106 (9th Cir. 2004); 5 Peloza v. Capistrano Unified Sch. Dist., 37 F.3d 517, 521 (9th Cir. 1994). But, the Court is not 6 required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, 7 or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 8 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Although they may 9 provide the framework of a complaint, legal conclusions are not accepted as true and 10 "[t]hreadbare recitals of elements of a cause of action, supported by mere conclusory statements, 11 do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009); see also Warren v. Fox 12 Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). Furthermore, Courts will not 13 assume that plaintiffs "can prove facts which [they have] not alleged, or that the defendants have 14 violated . . . laws in ways that have not been alleged." Associated General Contractors of 15 California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). As the 16 Supreme Court has explained: 17 18 19 20 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, to "avoid a Rule 12(b)(6) dismissal, 21 "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that 22 is plausible on its face." Iqbal, 129 S. Ct. at 1949; see Twombly, 550 U.S. at 570; see also Weber 23 v. Department of Veterans Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008). "A claim has facial 24 plausibility when the plaintiff pleads factual content that allows the court draw the reasonable 25 inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949. 26 The plausibility standard is not akin to a `probability requirement,' but it asks more 27 28 5 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. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

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than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of `entitlement to relief.' ... Determining 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. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged ­ but it has not shown ­ that the pleader is entitled to relief.

7 Iqbal, 129 S. Ct. at 1949-50. "In sum, for a complaint to survive a motion to dismiss, the non8 conclusory `factual content,' and reasonable inferences from that content, must be plausibly 9 suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 10 F.3d 962, 969 (9th Cir. 2009). 11 12 13 Rasmussen's Argument 14 Rasmussen argues that Wagon Wheel's allegations do not support an alter ego theory of 15 liability because it merely recites elements of the alter ego doctrine without a factual basis. 16 Rasmussen namely argues that Wagon Wheel fails to allege what it is that each defendant did that 17 would justify piercing the corporate veil. Rasmussen contends that the undercapitalization factor 18 must be established as of the time the entity was formed. Rasmussen asserts that Wagon Wheel 19 fails to allege how any alleged commingling of funds within Ballantine involves any of the 20 individual defendants. 21 Wagon Wheel's Argument 22 Wagon Wheel argues that its alter ego allegations are sufficient because it alleges that 23 Rasmussen was the alter ego of Ballantine, was the president of Ballantine, had knowledge of 24 Ballantine's undercapitalization, commingled funds, knew that Ballantine was not treating Wagon 25 Wheel's grower funds separately from Ballantine's money, used Wagon Wheel's grower funds to 26 pay himself and to pay his personally guaranteed debt to Bank and other lenders. See Wagon 27 28 6 I. DISCUSSION First Claim for Relief -Breach of Commission Merchant Contract based on Alter Ego Theory of Liability

1 Wheel's Opposition at 3. 2 3 Resolution Wagon Wheel asserts that Rasmussen was an alter ego of Ballantine. The Court finds that

4 the TAC's allegations are sufficient to plead an alter ego relationship as to Rasmussen and 5 Ballantine. 6 In order for the acts of a corporation to be legally recognized as being controlled by an

7 individual person, California law requires: 8 9 10 First, that the corporation is not only influenced and governed by that person, but that there is such a unity of interest and ownership that the individuality, or separateness of the said person and corporation has ceased; [and] second, that the factors are such that an adherence to the fiction of the separate existence of the corporation, would under the particular circumstances, sanction a fraud or promote injustice.

11 Firstmark Capital Corp. v. Hempel Financial Corp., 859 F.2d 92, 94 (9th Cir. 1988) (citing Wood 12 v. Elling Corp., 20 Cal. 3d 353 (1977)). The factors to be considered in determining whether the 13 alter ego doctrine applies include, the commingling of funds and other assets, the individual 14 holding himself out as liable for the debts of the corporation, ownership and control of the 15 corporation by the individual, inadequate capitalization, disregard of corporate formalities, lack of 16 segregation of corporate records, and failure to segregate the funds of the separate entities. See 17 Sonora Diamond Corp. v. Superior Court of Tuolumme County, 83 Cal. App. 4th 523, 538-39 18 (2000); MidCentury Insurance Co. v. Gardner, 9 Cal. App. 4th 1205, 1213, n.3 (1992); Associated 19 Vendors, Inc., v. Oakland Meat Co., 210 Cal. App. 2d 825, 838 (1962). 20 As to the second requirement for finding alter ego, the Ninth Circuit has stated that "under

21 California law the kind of equitable result that makes alter ego liability appropriate is an abuse of 22 the corporate form, such as under-capitalization or misrepresentation of the corporate form to 23 creditors." Firstmark, 859 F.2d at 94 (citing Orloff v. Allman, 819 F.2d 904, 909 (9th Cir. 1987)). 24 "[I]t is not sufficient to merely show that a creditor will remain unsatisfied if the corporate veil is 25 not pierced, and thus set up such an unhappy circumstance as proof of an `inequitable result.'" 26 Associated Vendors, 210 Cal. App. 2d at 842. "The purpose of the doctrine is not to protect every 27 28 7

1 unsatisfied creditor, but rather to afford him protection, where some conduct amounting to bad 2 faith makes it inequitable, under the applicable rule above cited, for the equitable owner of a 3 corporation to hide behind its corporate veil." Id. 4 Rasmussen argues that the TAC fails to allege what it is that he did that would justify

5 piercing the corporate veil as to him. Wagon Wheel's allegations are sufficient to plead an alter 6 ego relationship as to Rasmussen because the TAC identifies his alleged unity of interest with 7 Ballantine and his wrongful conduct, including the following: (1) Rasmussen was a principal 8 investor, manager, and president of Ballantine, owned stock in Ballantine3, and was a "responsible 9 managing officer" of Ballantine and its Commission Merchant License (see TAC ¶¶ 10, 12); (2) 10 Rasmussen knew that Ballantine was inadequately capitalized and was financially unable to do 11 business as a licensed Commission Merchant and induced Wagon Wheel to deliver fruit (see TAC 12 ¶13 ); (3) Rasmussen knew that Ballantine was not treating Wagon Wheel's sales proceeds 13 separately from Ballantine's funds (see TAC ¶ 13); (4) Rasmussen knew that Ballantine did not 14 own title to Wagon Wheel's fruit proceeds and Rasmussen, as president, wrote checks to benefit 15 himself and other defendants from these proceeds (see TAC ¶¶ 13, 14); (5) Rasmussen 16 intentionally commingled Wagon Wheel's $1,300,000.00 of grower funds with Ballantine's funds 17 (see TAC ¶ 12); (6) Rasmussen and the individual defendants personally guaranteed millions of 18 dollars of equipment purchases and leases to be used by Ballantine due to Ballantine's financial 19 problems. (see TAC ¶12); and (7) Rasmussen used Wagon Wheel's grower funds to pay himself 20 and to pay his personally guaranteed debt to Bank and other lenders (see TAC ¶ 12). The Court 21 finds that the allegations listed above give Rasmussen adequate notice of the alleged wrongful 22 conduct that is attributed to him. 23 24 25 26 27 28 Rasmussen also argues that Wagon Wheel's allegations regarding his ownership in Ballantine are insufficient because they do not account for any percentage of his ownership. This argument has no merit as Rasmussen does not cite to any valid authority for this proposition. Rasmussen also argues that he was not an owner of Ballantine. At the motion to dismiss stage, Rasmussen's argument is irrelevant as Wagon Wheel's allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Marceau, 540 F.3d at 919. 8
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Rasmussen also argues that the undercapitalization factor must be established as of the

2 time the entity was formed. However, the authority cited by Rasmussen does not establish this 3 requirement.4 The California Court of Appeal has stated that: "The obligation to provide 4 adequate capital begins with incorporation and is a continuing obligation thereafter during the 5 corporation's operations." Hill v. State Farm Mut. Auto. Ins. Co., 166 Cal. App. 4th 1438, 693 6 (2008). In any event, inadequate capitalization is, at best, merely one factor to be considered by 7 courts in deciding whether or not to pierce the corporate veil. In the instant matter, Wagon Wheel 8 has alleged several factors in addition to inadequate capitalization. 9 Accordingly, Rasmussen's motion to dismiss Wagon Wheel's First Claim for Relief based

10 on an alter ego theory of liability is denied. 11 12 Rasmussen's Argument 13 Rasmussen argues that Wagon Wheel's Third and Fifth Claims for Relief are deficient 14 because they lump all of the individual defendants together with Ballantine. 15 Wagon Wheel's Argument 16 Wagon Wheel argues that Rasmussen's motion to dismiss does not attack each of Wagon 17 Wheel's claims for relief individually but rather makes broad based attacks as to the TAC in 18 general. 19 Resolution 20 With respect to the Third Claim for Relief Wagon Wheel alleges that Ballantine, David A., 21 Eric A., Graham, and Rasmussen failed to accurately account for the amounts due for the produce 22 sold and failed to make payments of the proceeds of those transactions. With respect to the Fifth 23 24 25 26 27 28 Rasmussen cites to Pearl v. Shore, 17 Cal. App.3d 608, 617 (1971) and Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal. App. 2d 825, 842 (1962). In reply, Rasmussen argues that TAC fails to allege what facts set up any duty for Rasmussen. See Rasmussen's Reply at 5. Given that the issue was not properly briefed pursuant to Local Rule 230, the Court expresses no opinion on this matter. 9
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II.

Third Claim for Relief- Violation of PACA Failure to Account and Pay Promptly and Fifth Claim for Relief-Breach of Fiduciary Duty5

1 Claim for Relief, Wagon Wheel alleges that Ballantine, David A., Eric A., Graham, and 2 Rasmussen, breached their fiduciary duties to Wagon Wheel for various reasons. Rasmussen's 3 argument is not persuasive as he does not provide any authority for the proposition that Wagon 4 Wheel may not allege that both Rasmussen as an individual defendant and Ballantine as the 5 corporate defendant failed to account and pay promptly for the produce sold and breached their 6 fiduciary duties. 7 Accordingly, Rasmussen's motion to dismiss Wagon Wheel's Third and Fifth Claims for

8 Relief is denied. 9 10 11 III. Sixth Claim for Relief-Conversion of Sale Proceeds

Rasmussen's Argument Rasmussen argues that Wagon Wheel's conversion claim fails because there are no

12 allegations that Rasmussen got any of the funds that were supposed to be paid to Wagon Wheel. 13 14 Wagon Wheel's Argument Wagon Wheel argues that there is no requirement that Rasmussen personally receive funds

15 converted by Ballantine for liability to attach. Wagon Wheel argues that it retained title and right 16 of possession of the fruit proceeds and that Rasmussen and the individual defendants used the 17 proceeds to pay Ballantine's creditors. 18 19 Resolution In a conversion action, a plaintiff has to allege the following: (1) that it had ownership or a

20 right to possession of the property at the time of the conversion; (2) the defendant's conversion by 21 wrongful act or disposition of property rights; and (3) damages. Oakdale Village Group v. Fong, 22 43 Cal. App. 4th 539, 543-44 (1996). Rasmussen's argument fails as the elements of a conversion 23 action do not require that Wagon Wheel allege that Rasmussen personally received converted 24 funds.6 Here, Wagon Wheel has alleged that it retained title and the right of possession to the fruit 25 26 27 28 Even though this is not a required element in a conversion claim, Wagon Wheel nonetheless alleges in the TAC that the defendants converted the fruit proceeds for "Defendant's own individual use." See TAC ¶¶ 51-53. 10
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1 proceeds that were derived from the sale of its fruit, and that Rasmussen and other individual 2 defendants wrongfully converted the fruit proceeds and that as a result of the conversion, Wagon 3 Wheel suffered damages in the sum of approximately $1,018,306.22. 4 5 denied. 6 7 8 IV. Seventh Claim for Relief- Constructive Fraud Accordingly, Rasmussen's motion to dismiss Wagon Wheel's Sixth Claim for Relief is

Rasmussen's Argument Rasmussen argues that Wagon Wheel's fraud allegations are deficient because they are not

9 plead with specificity pursuant to Fed. R. Civ. P. 9(b). Rasmussen contends that the TAC fails to 10 include allegations regarding the time, place, content of any misrepresentations, and an 11 explanation of why the statement was misleading. Rasmussen argues that the allegations are also 12 insufficient because they lump all of the defendants together. 13 14 Wagon Wheel's Argument Wagon Wheel argues that it is not alleging a claim of actual fraud but rather is asserting a

15 constructive fraud claim. Wagon Wheel asserts that constructive fraud comprises of any act, 16 omission, or concealment involving a breach of a legal or equitable duty, trust or confidence 17 which results in damage to another even though the conduct is not otherwise fraudulent. Wagon 18 Wheel contends that it alleged the necessary elements. 19 20 Resolution7 Wagon Wheel's constructive fraud claim, which is grounded in fraud, is subject to Rule

21 9(b)'s heightened requirements. See Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, 634 F. 22 Supp. 2d 1009, 1021 (N.D. Cal. 2007); Guerrero v. Greenpoint Mortg. Funding, Inc., 2010 WL 23 4117102, *1 (9th Cir. Oct. 20, 2010) (holding that Rule 9(b) applies to constructive fraud claims). 24 25 26 27 28 The Court notes that Rasmussen does not raise any specific arguments in his motion to dismiss with respect to Wagon Wheel's Eighth Claim for Relief-Constructive Trust and Accounting. To the extent that Rasmussen is moving to dismiss the Eighth Claim for Relief, the motion is denied as he provides no arguments in support. 11
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1 The California Court of Appeal has described constructive fraud as follows: 2 3 4 In its generic sense, constructive fraud comprises all acts, omissions and concealments involving a breach of legal or equitable duty, trust, or confidence, and resulting in damage to another. Constructive fraud exists in cases in which conduct, although not actually fraudulent, ought to be so treated,-that is, in which such conduct is a constructive or quasi fraud, having all the actual consequences and all the legal effects of actual fraud.

5 Efron v. Kalmanovitz, 226 Cal. App. 2d 546, 559-60 (1964). Because constructive fraud consists 6 of conduct that should be treated like fraud, this Court agrees with Rasmussen that Rule 9(b)'s 7 pleading requirements apply. 8 Wagon Wheel does not satisfy Rule 9(b)'s requirements. Allegations of fraud should

9 specifically include "an account of the time, place, and specific content of the false representations 10 as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 11 756, 764 (9th Cir. 2007). Wagon Wheel does not include the above listed information required by 12 Swartz. Also, Rule 9(b) "does not allow a complaint to merely lump multiple defendants together 13 but require[s] plaintiffs to differentiate their allegations when suing more than one defendant . . . 14 and inform each defendant separately of the allegations surrounding his alleged participation in 15 the fraud." Swartz, 476 F.3d at 764-65. Here, Wagon Wheel lumps Ballantine, David A., Eric 16 A., Graham, and Rasmussen together and fails to distinguish the defendants' particular roles in the 17 alleged misrepresentations. 18 Accordingly, Rasmussen's motion to dismiss Wagon Wheel's Seventh Claim for Relief is

19 granted with prejudice.8 20 21 22 23 24 25 26 27 28 The Court dismisses Wagon Wheel's Seventh Claim for Relief with prejudice in light of the fact that Wagon Wheel was already given an opportunity to amend and cure the above noted deficiencies with respect to its Constructive Fraud claim for relief and has failed to do so. See Doc. No. 202 at 9-10. 12
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ORDER For the reasons discussed above, IT IS HEREBY ORDERED that: (1) Rasmussen's motion to dismiss Wagon Wheel's First Claim for Relief based on an alter ego theory of liability against him is DENIED;

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(2) Rasmussen's motion to dismiss Wagon Wheel's Third and Fifth Claim for relief are DENIED; (3) Rasmussen's motion to dismiss Wagon Wheel's Sixth Claim for Relief is DENIED; (4) Rasmussen's motion to dismiss Wagon Wheel's Seventh Claim for Relief is GRANTED with prejudice; and (5) Rasmussen's motion to dismiss Wagon Wheel's Eighth Claim for Relief is DENIED.

7 IT IS SO ORDERED. 8 Dated: 9 0m8i78 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 March 25, 2011 CHIEF UNITED STATES DISTRICT JUDGE