Bond Safeguard Insurance Company v. Kramer et al

Filing 17

ORDER signed by Judge John A. Mendez on 3/6/15 DENYING Defendant Kramer's 14 Motion to Dismiss and Plaintiff's request for fees and costs. (Manzer, C)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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BOND SAFEGUARD INSURANCE
COMPANY,

No.

2:14-cv-01896-JAM-CKD

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Plaintiff,
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ORDER DENYING DEFENDANT GEORGE
KRAMER’S PARTIAL MOTION TO
DISMISS

v.
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GEORGE KRAMER and DEBORAH
SWEANEY,

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Defendants.

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Plaintiff Bond Safeguard Insurance Company (“Plaintiff”)

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issued bonds for which Defendant George Kramer (“Defendant”) owes

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money.

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sister alleging a fraudulent scheme to avoid payment.

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Plaintiff’s allegations are sufficiently detailed, the Court

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DENIES Defendant’s partial motion to dismiss. 1

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Plaintiff brings this suit against Defendant and his
Because

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for February 25, 2015.
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I.

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FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

In 2005, Defendant assisted the company Jimmy Camp

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Development, Inc. in acquiring bonds from Plaintiff.

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¶ 12.

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an agreement with Plaintiff and Defendant, which made Defendant

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liable for over $64,000 in unpaid premiums.

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Defendant failed to pay in full.

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sought to collect on this debt by placing a lien on Defendant’s

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house.

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Compl.

When the company defaulted on the bonds, it entered into

Compl. ¶¶ 13, 23.

Compl. ¶ 22.

Plaintiff then

Compl. ¶ 73.

Meanwhile, Defendant and his sister, Deborah Sweaney

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(“Sweaney”), allegedly concocted a scheme to let Defendant escape

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liability.

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purporting to make Sweaney the senior lienholder on the home.

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See Compl. ¶¶ 55, 57, 73.

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nullity and should be voided” because the note purportedly

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securing the deed never existed.

Compl. ¶ 54.

The two created a deed of trust

Plaintiff alleges the deed was “a

Compl. ¶¶ 58, 61.

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Plaintiff sued Defendant and Sweaney, alleging (1) breach of

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an indemnity agreement, (2) “Premiums – Open Account,” (3) unjust

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enrichment, (4) “Implied Contract,” (5) fraudulent transfers, and

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(6) 2 “Conspiracy.”

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filed this partial motion to dismiss the sixth and seventh claims

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only (Doc. #14).

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///

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Sweaney answered (Doc. #8), and her brother

Plaintiff opposes the motion (Doc. #15).

The complaint incorrectly labels the fifth and sixth causes of
action as the “Sixth” and “Seventh” claims respectively. This
order refers to them as the “sixth” and “seventh” claims for
purposes of consistency with the pleadings and briefs.
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II.

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A.

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Discussion
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OPINION

Federal Rule of Civil Procedure 9(b)

Defendant argues that the Court must dismiss the sixth and

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seventh causes of action because the allegations do not meet the

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particularity requirements of Federal Rule of Civil Procedure

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9(b).

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deficient because it does not describe the “specific

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circumstances” in which Sweaney stated that the promissory note

Mot. at 3-4.

Defendant asserts that the complaint is

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“never existed.”

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Plaintiff first argues that Rule 9(b) does not govern claims for

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“constructive” fraudulent conveyance.

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Mot. at 4:4-9; see Compl. ¶ 59.

In response,

Opp. at 3.

Federal Rule of Civil Procedure 9(b) requires a plaintiff

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to plead allegations of fraud with particularity, including the

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“circumstances constituting fraud or mistake.”

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standard applies to causes of action that “sound in fraud.”

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Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir.

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2003).

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This pleading

Plaintiff here brings the sixth claim under California’s

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Uniform Fraudulent Transfers Act.

See Compl. ¶ 76.

But the

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complaint does not identify which part of that Act Defendant

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allegedly violated.

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invoke language from two parts of the Act: California Civil Code

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section 3439.04 and section 3439.05.

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(using language from section 3439.04(a)(1)); id. ¶ 71 (using

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language from section 3439.05).

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3439.04 but not to section 3439.05.

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2014 WL 94197, at *5-*6 (N.D. Cal. Jan. 9, 2014); Sunnyside Dev.

The allegations under the sixth claim

See, e.g., Compl. ¶ 62

Rule 9(b) applies to section

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See Kelleher v. Kelleher,

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Co. LLC v. Cambridge Display Tech. Ltd., 2008 WL 4450328, at *6,

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*8, *9 (N.D. Cal. Sept. 29, 2008).

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allegations support a claim under section 3439.04, the Court

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applies Rule 9(b).

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Thus, to the extent the

Plaintiff next argues that even if Rule 9(b) applies, the

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allegation about Sweaney’s statement is “evidentiary material

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that did not need to be plead [sic].”

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Opp. at 4:26-27.

The Court agrees that Plaintiff’s sixth cause of action is
pled with adequate specificity under Rule 9(b) even absent the

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challenged allegation.

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the entire claim because Plaintiff did not specify the

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circumstances of Sweaney’s alleged statement.

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statement was not part of the purported fraud; under the

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complaint’s facts, the fraud occurred when Defendant and Sweaney

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created a fraudulent deed of trust intending to make Sweaney the

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senior lienholder.

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adequately describe the circumstances of the alleged fraud.

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even if the Court were to ignore the allegation about Sweaney’s

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statement, the rest of the claim’s allegations satisfy Rule

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9(b).

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Defendant asks the Court to throw out

See Compl. ¶¶ 54-70.

But Sweaney’s

These allegations
So

Resolving the issue as to the sixth cause of action on this

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basis, the Court does not reach the parties’ further arguments,

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including that the circumstances of Sweaney’s statement

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comprised “intent, knowledge, [or] other condition of a person’s

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mind [that] may be alleged generally[,]” and that Defendant’s

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9(b) argument was waived when Sweaney filed an answer.

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3:26-27, 5.

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Opp. at

Defendant next seeks dismissal of the seventh cause of
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action (“Conspiracy”) on the basis that it also does not meet

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the requirements of 9(b).

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Rule 9(b) applies to the conspiracy claim, Defendant offers no

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argument as to why the seventh claim’s allegations are

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insufficient.

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sixth cause of action, which the Court finds adequate.

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Defendant’s argument therefore fails.

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Mot. at 3.

But besides stating that

The seventh claim relies on allegations in the

Because the sixth and seventh causes of action comply with
Rule 9(b), the Court denies Defendant’s motion to dismiss on
that basis.
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Damages

Defendant argues that “Plaintiff fails to articulate how it

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has been damaged by the lien in favor of Sweeney [sic] [.]”

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at 4:14-15.

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further justification for his position.

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responds that it has suffered damage because Defendant worked

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with his sister to fraudulently make Sweaney a senior creditor

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with respect to Plaintiff, thereby affecting Plaintiff’s ability

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to collect.

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Mot.

Defendant points to no case law and provides no
Plaintiff in turn

Opp. at 5.

The Court agrees with Plaintiff that the complaint

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adequately alleges damages.

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73 state that “Plaintiff is entitled to attachment . . . against

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the house and its proceeds” but cannot access the house or

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proceeds, because Sweaney’s fraudulent lien is senior to

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Plaintiff’s rights.

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motion to dismiss based on damages.

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3.

Specifically, paragraphs 71 through

The Court therefore denies Defendant’s

Plaintiff’s Request for Fees and Costs

In its opposition, Plaintiff “requests that it be awarded
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legal fees and costs arising from the need to respond to

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[Defendant’s] Motion.”

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makes this request on the grounds that the motion to dismiss

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“delayed the case without good cause” and was “an improper

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tactic.”

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basis by which the Court could make such an award, so the request

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is denied.

Opp. at 5:22-23.

Opp. at 4:20, 5:21.

Plaintiff apparently

Plaintiff does not state any legal

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III.

ORDER

For the reasons set forth above, the Court DENIES Defendant

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George Kramer’s motion to dismiss and Plaintiff’s request for

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fees and costs.

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IT IS SO ORDERED.
Dated: March 6, 2015

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