Marshall v. Galvanoni et al

Filing 27

ORDER signed by District Judge Kimberly J. Mueller on 11/7/2017 DISMISSING CASE WITH LEAVE TO AMEND. Amended complaint due within 14 days. This resolves ECF Nos. 7, 9, 10, 11. (Hunt, G)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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JOHN MARSHALL,

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No. 2:17-cv-00820-KJM-CKD

Plaintiff,

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v.

ORDER

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DAN P. GALVANONI, et al.,

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Defendants.

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A disgruntled investor sues six companies and four individuals over an investment

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debacle that he says cost him $300,000. Defendant Dan Galvanoni allegedly used puffery and

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lies to lure plaintiff John Marshall to invest in his company’s loan portfolio and then broke his

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promise to pay plaintiff back or acknowledge plaintiff’s priority investor status. Before the court

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are four motions to dismiss: Three individual defendants move to dismiss for lack of personal

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jurisdiction and defendants jointly move to dismiss certain claims as facially implausible. The

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court held a hearing on all four motions. July 14, 2017 Hr’g Mins., ECF No. 21. For the reasons

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below, the court GRANTS all four motions and DISMISSES plaintiff’s complaint, with leave to

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amend.

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I.

BACKGROUND
A.

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Plaintiff’s Allegations
Plaintiff sues a group of Arizona and Georgia companies and individual executives

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for misrepresenting their car loan portfolio, fraudulently inducing plaintiff to invest in it and then

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refusing to honor his repayment rights. Compl. ¶¶ 2-11, 28-32, ECF No. 2 at 15-70. Defendant

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Galvanoni, as the head of the fraudulent operation, enticed plaintiff to invest in the portfolio after

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erroneous assurances that plaintiff “would earn substantial interest[] and there would be enough

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collateral to repay him in full if the loans defaulted.” Id. ¶¶ 28-29. Relying on these assurances,

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plaintiff invested a total of $300,000 in several intervals between June 2015 and March 2016. Id.

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¶¶ 36, 38, 43. Because Galvanoni continuously and falsely reported the portfolio’s health, and

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because Galvanoni and his colleagues held themselves out as having extensive investment

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knowledge, “plaintiff reposed great trust and confidence” in them and continued investing against

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his own intuition. Id. ¶¶ 35-36, 39, 40, 42, 52. Each investment plaintiff made was based on

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verbal assurances rather than signed agreements. Id. ¶ 45.

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Later plaintiff discovered that Galvanoni, despite their agreement, had neither

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invested plaintiff’s funds in car loans nor executed the documents giving plaintiff a legally

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enforceable interest. Id. ¶¶ 46, 47, 50. Instead, Galvanoni siphoned plaintiff’s money off to

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Galvanoni’s family and staff. Id. ¶ 46. Plaintiff then tried to liquidate his investments, but has

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yet to receive a single payment. Id. ¶¶ 48, 54.

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B.

Parties, Claims and Motions
On March 9, 2017, plaintiff filed suit in state court and defendants then removed

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the case to federal court based on diversity jurisdiction. Removal, ECF No. 2 (filed April 18,

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2017). Plaintiff names as defendants five related companies: DPG Investments, LLC; DPG

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Golden Eagle, LLC; Spring Tree Lending, LLC; Spring Tree Holdings, LLC; and Skibo

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Holdings, LLC. Compl. ¶¶ 2-9. He also sues the following four executives: Daniel Galvanoni,

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Gerald Hudspeth, Jerome Joseph and William Brooksbank. Id. ¶¶ 2-11.

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Plaintiff brings the following claims, numbered here as in the complaint. He
brings nine claims against the companies and Galvanoni: (1) Fraud: Intentional misrepresentation;
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(2) Negligent misrepresentation; (3) Fraud: False promise; (5) Violation of California

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Corporations Code section 254011; (10) Breach of oral contract; (11) Breach of the implied

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covenant of good faith and fair dealing; (12) Rescission; (13) Money had and received; and

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(14) Money lent. Id. ¶¶ 33-87, 104-110, 144-68. He brings five additional claims against all

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defendants: (4) Omissions; (6 & 7) Violations of California Corporations Code sections 255042

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and 25504.13; (8) Breach of fiduciary duty; and (9) Professional negligence. Id. ¶¶ 88-103, 111-

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43.

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Individual defendants Brooksbank, Joseph and Hudspeth move to dismiss under

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Federal Rule of Civil Procedure 12(b)(2) for lack of specific personal jurisdiction. Brooksbank

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Mot., ECF No. 9; Joseph Mot., ECF No. 10; Hudspeth Mot., ECF No. 11. All named defendants

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jointly move to dismiss claims one through four, eight and nine as facially implausible under

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Federal Rule of Civil Procedure 12(b)(6). Joint Mot., ECF No. 7. Plaintiff opposes all motions.

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Joint Opp’n, ECF No. 16; Opp’n to Brooksbank, ECF No. 15-2; Opp’n to Joseph, ECF No. 15-1;

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Opp’n to Hudspeth, ECF No. 15-3.

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II.

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PERSONAL JURISDICTION
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Legal Standard
A federal court must ensure it has personal jurisdiction over every party.

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Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 430 (2007). Defendants

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Joseph, Brooksbank and Hudspeth each contest the court’s personal jurisdiction over them

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“It is unlawful for any person to offer or sell a security in this state . . . by means of any
written or oral communication that includes an untrue statement of a material fact or omits to
state a material fact necessary to make the statements made, in the light of the circumstances
under which the statements were made, not misleading.” Cal. Corp. Code § 25401.
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This section attaches joint and several liability over every person who directly or
indirectly controls or materially aids “the act or transaction constituting the violation.” Cal. Corp.
Code § 25504. Here, the relevant alleged violation is selling securities through material
misstatements or omissions. Cal. Corp. Code § 25401.
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“Any person who materially assists in [] violat[ing specified code sections] . . . . with
intent to deceive or defraud, is jointly and severally liable with any other person liable under this
chapter for such violation.” Cal. Corp. Code § 25504.1.
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because they say all relevant conduct happened outside California, and they live and work outside

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California.

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When a defendant moves to dismiss for lack of personal jurisdiction it is the

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plaintiff’s burden to show jurisdiction is appropriate. Schwarzenegger v. Fred Martin Motor Co.,

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374 F.3d 797, 800 (9th Cir. 2004) (citation omitted). The court asks whether [the plaintiff’s]

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pleadings make a prima facie showing of personal jurisdiction.” Id. (citation and quotation marks

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omitted). Where the defense presents evidence that contradicts the jurisdictional allegations in

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the complaint, the plaintiff must go beyond the pleadings and present affirmative proof of

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personal jurisdiction through affidavits and declarations. AT&T v. Compagnie Bruxelles

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Lambert, 94 F.3d 586, 588 (9th Cir. 1996). So although the complaint’s uncontroverted

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allegations are presumed true, id. at 588, the plaintiff cannot “simply rest on the bare allegations

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of its complaint,” Amba Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977).

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To assess personal jurisdiction, a federal court applies the test of the state in which

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it sits. Schwarzenegger, 374 F.3d at 800 (citation omitted). California’s test, which mirrors

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federal due process requirements, mandates “minimum contacts” with California. Int’l Shoe Co.

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v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945)

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(citation omitted); Schwarzenegger, 374 F.3d at 800-01 (citation omitted); see also Cal. Code

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Civ. P. § 410.10 (“A court of this state may exercise jurisdiction on any basis not inconsistent

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with the Constitution of this state or of the United States.”). There are two avenues through

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which a plaintiff may establish the requisite minimum contacts, general jurisdiction or specific

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jurisdiction. See Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 nn.8-9

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(1984). Plaintiff here relies only on the latter.

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California’s specific personal jurisdiction test requires plaintiff to show (1) each

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defendant purposefully directed his or her activities to California or purposefully availed himself

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of California’s forum, and (2) plaintiff’s claims arise from or relate to those activities.

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Schwarzenegger, 374 F.3d at 802. If plaintiff makes both showings, the burden shifts to

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defendants to show haling them into court here would be unreasonable. Id.

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B.

Discussion
Plaintiff alleges on information and belief that “Galvanoni, Hudspeth, Brooksbank,

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and Joseph solicited and/or effected the securities transactions” he made with them from June

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2015 to March 2016. Compl. ¶ 51. Hudspeth, Brooksbank and Joseph argue the court does not

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have personal jurisdiction over them because they each live and work outside California, each

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works for a company that has a limited California presence, their alleged correspondence with

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plaintiff was sent from outside California, and the bulk of plaintiff’s complaint centers on

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Galvanoni’s conduct directed to California and not theirs. See Brooksbank Mot. Ex. 1

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(Brooksbank Decl.) ¶ 3, ECF No. 9 at 15-20 (lives and works in Arizona); Joseph Mot. Ex. 1 at 1

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(Joseph Decl.) ¶¶ 3, 9, ECF No. 10 (same); Hudspeth Mot., Ex. 1 (Hudspeth Decl.) ¶¶ 3, 9, ECF

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No. 11 (lives and works in Georgia). Establishing purposeful “direction” or “availment,”

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therefore, requires plaintiff to show these defendants committed intentional acts aimed at

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California that they knew would likely cause harm here, and show a causal connection between

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those intentional acts and the claims against them. Schwarzenegger, 374 F.3d at 802-03.

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As explained below, plaintiff has done neither. The complaint pleads it was

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Galvanoni’s actions alone that solicited plaintiff’s trust and funds. See, e.g., Compl. ¶ 28

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(“Galvanoni solicited [p]laintiff to make the first of the investments at issue herein”); id. ¶ 39

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(“Galvanoni convinced [p]laintiff to stay invested and to invest additional monies”); id. ¶ 40

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(plaintiff “agreed . . . to invest an additional $100,000.00 into DPG/DPG-GE, based on the

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representations and assurances from D. Galvanoni and other personnel employed by

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[d]efendants”). The sporadic references to Hudspeth, Brooksbank and Joseph as well as “other

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[unidentified] personnel employed by defendants,” without any allegations showing the three

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blamed individuals’ involvement, is too conclusory and vague to invoke this court’s power over

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them. See Amba Mktg. Sys., 551 F.2d at 787 (plaintiff cannot “simply rest on the bare allegations

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of its complaint”).

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In his opposition briefs, plaintiff attempts to link his bare jurisdictional allegations

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to emails each defendant sent to him in California. Opp’n to Brooksbank at 6-11; Opp’n to

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Joseph at 5-10; Opp’n to Hudspeth at 7-11. But plaintiff has not shown this correspondence
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caused his harm, and as discussed below, the emails contradict his allegation that these

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defendants were involved in soliciting his investments. For example, plaintiff attaches an email

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he sent to all three defendants months after his final investment that states, “Joe [Joseph] and

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others, I just want to give a little bit of background to what has taken place over this last year and

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half. Dan [Galvanoni] solicited me to invest and loan/invest money to him . . . ,” and then details

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plaintiff’s negotiations with Galvanoni. See Pl.’s Decl. Ex. 2 at 3, Opp’n to Joseph (email dated

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Aug. 7, 2016). This email undermines plaintiff’s allegation that Hudspeth, Joseph and

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Brooksbank solicited plaintiff’s investments. It suggests instead plaintiff’s view that they were

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unaware of his negotiations with Galvanoni and needed to be briefed.

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Individualized arguments plaintiff makes regarding each defendant, discussed
below, also do not establish personal jurisdictional over these three defendants.

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Plaintiff faults Joseph for his fraudulent involvement in plaintiff’s investments, yet

Joseph

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the first interaction they had was by email initiated by plaintiff four months after plaintiff’s final

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investment. Joseph Opp’n, Ex. 1 at 2 (email dated July 21, 2016). Plaintiff’s opening line in the

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email to Joseph reads, “you may not be up to speed. I have loaned/invested $300,000 plus. My

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money was to go into loans and be secured by those loans.” Id. Plaintiff’s own words suggest

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Joseph did not solicit his investments. Galvanoni’s email to plaintiff that same day said, “Joe

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[Joseph] is handling the info for you and all our shareholders now.” Id. at 3. Joseph’s only

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communications with plaintiff related to plaintiff’s claims were as a conduit, relaying messages

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from Galvanoni after plaintiff’s initial investment. Joseph Decl. ¶¶ 12-13. While Joseph had

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some substantive discussions with plaintiff in 2015, those discussions were about business

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unrelated to this jurisdiction analysis. Id. ¶ 10. Plaintiff has not established this court’s power

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over Joseph.

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2.

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Plaintiff hinges his jurisdictional arguments as to Brooksbank on the “multiple

Brooksbank

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iterations of a draft agreement” Brooksbank emailed him that “purported to memorialize the

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terms of [plaintiff’s] investment.” Compl. ¶ 34. Although plaintiff cites emails as examples of
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Brooksbank’s purposefully directing harmful conduct to him in California, several of the emails

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plaintiff cites do not originate with Brooksbank; rather, they were forwarded by Galvanoni. See

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Brooksbank Opp’n at 5 (citing Pl.’s Decl. Exs. 1-4). Even if Brooksbank had sent these emails,

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plaintiff has not shown how they induced plaintiff’s investments. Plaintiff admits he never signed

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the draft agreements Brooksbank sent. Compl. ¶ 34. Plaintiff argues he nonetheless relied on the

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information and projections Brooksbank also emailed, Pl.’s Decl. ¶ 12, attached to Brooksbank

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Opp’n, but these emails show Brooksbank merely packaging projections as Galvanoni’s

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messenger, not as an independent decision-maker. See, e.g., id., Ex. 5 (email to plaintiff stating

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“Dan [Galvanoni] thought you might offer a 10% cumulative preferred coupon . . . I suggest you

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discuss the possible range of terms for each investor with Dan.”). Plaintiff has not adequately

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shown his investment decisions were attributable to any of Brooksbank’s activity directed to

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California. Plaintiff has not established this court’s jurisdiction over Brooksbank.

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Plaintiff’s allegations as to Hudspeth are likewise unavailing. Although plaintiff

Hudspeth

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alleges Hudspeth, along with the others, initially solicited plaintiff’s investment, Compl. ¶ 51,

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Hudspeth joined the entities’ management team only in October 2015, months after plaintiff made

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his initial investments. Hudspeth Decl. ¶¶ 9-11. Plaintiff also alleges he “talked to Hudsepth and

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other personnel employed by [d]efendants about the status of his investments in early 2016.”

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Compl. ¶ 41. But by this time plaintiff had already made his investments; his after-the-fact status

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checks with Hudspeth do not show Hudspeth purposefully directed potentially harmful activity to

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plaintiff in California, let alone that this activity spawned plaintiff’s claims against him. Plaintiff

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has not established this court’s jurisdiction over Hudspeth.

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C.

Conclusion
In sum, based on the current allegations, the court cannot exercise personal

jurisdiction over Joseph, Brooksbank or Hudspeth.

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III.

FAILURE TO STATE A CLAIM

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The remaining defendants, Galvanoni and the five named companies, jointly move

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to dismiss plaintiff’s claims for fraud, misrepresentation, breach of fiduciary duty and

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professional negligence.

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Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a claim

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“based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a

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cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

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Although a complaint need only contain “a short and plain statement of the claim showing that

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the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), that statement “must contain sufficient

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factual matter . . . to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678

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(quoting Twombly, 550 U.S. at 570). A plausible claim requires more than “an unadorned, the-

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defendant-unlawfully-harmed-me accusation” or “‘labels and conclusions’ or ‘a formulaic

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recitation of the elements of a cause of action.’” Id. Although the court must construe the

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complaint in the plaintiff’s favor and accept all factual allegations as true, Erickson v. Pardus,

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551 U.S. 89, 93-94 (2007), the court need not accept as true “‘a legal conclusion couched as a

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factual allegation,’” Papasan v. Allain, 478 U.S. 265, 286 (1986) (citation omitted), or

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“allegations that contradict matters properly subject to judicial notice” or to material referenced in

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the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001).

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Defendants seek to dismiss plaintiff’s fraud-based claims under the economic loss

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doctrine, plaintiff’s fiduciary breach claim for failing to allege a fiduciary relationship and

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plaintiff’s professional negligence claim for failing to allege any professional services agreement.

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Joint Mot. at 2-7, 10-14.

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A.

Economic Loss Doctrine
Defendants argue the economic loss doctrine bars plaintiff’s fraud-based claims of

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intentional and negligent misrepresentation, false promises, and fraudulent omissions because

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their factual underpinnings are the same as plaintiff’s breach of contract claim. Id. at 2-6.

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Plaintiff argues the doctrine does not apply because defendants’ alleged fraudulent acts are

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distinct from their contractual obligations. Joint Opp’n at 9.
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Put simply, “the economic loss rule ‘prevent[s] the law of contract and the law of

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tort from dissolving one into the other.’” Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th

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979, 988 (2004) (rule precludes recovery for “purely economic loss due to disappointed

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expectations, unless [the plaintiff] can demonstrate harm above and beyond a broken contractual

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promise.”) (citation omitted). The doctrine’s underlying tenet is that tort remedies are

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inappropriate vehicles to enforce contractual agreements. When a plaintiff links its fraud claim to

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a party’s alleged failure to comply with a contractual duty, the proper claim is breach of contract,

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not fraud.

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As with most rules, there are exceptions. As relevant here, a plaintiff can recover

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in both tort law and contract law where the defendant breaches a legal duty in tort that is

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independent of the breached contract. Id. at 989-91. Robinson Helicopter, which first recognized

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this exception, involved a helicopter manufacturers’ contract breach, in the making of

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nonconforming clutches, and a related tortious act of issuing false certificates that the clutches did

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in fact conform to specifications. Id. The court held the economic loss rule did not bar the tort

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law claim because issuing the false certificates was unquestionably an “affirmative intentional

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misrepresentation” that amounted to a “tortious conduct [] separate from the breach itself[.]” Id.

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at 991.

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Robinson Helicopter’s economic loss rule exception is narrow. To benefit from

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the exception, the tortious claim must allege an affirmative misrepresentation distinct from the

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contract breach, and the claim must allege damages beyond what the contract breach caused. Id.

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at 893; Cty. of Santa Clara v. Atl. Richfield Co., 137 Cal. App. 4th 292, 328 (2006) (interpreting

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Robinson Helicopter); cf. BNSF Ry. Co. v. San Joaquin Valley R.R. Co., No. 1:08-cv-01086, 2011

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WL 3328398, at *9 (E.D. Cal. Aug. 2, 2011) (dismissing fraud claim under economic loss

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doctrine where misrepresentation claim was an “inseparable component” of the alleged contract

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breach).

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Here, because plaintiff’s fraud and contract claims as pled are inseparable, the

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Robinson Helicopter exception does not apply. Plaintiff’s fraud claims allege defendants

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fraudulently induced plaintiff to invest in their car loan portfolio through affirmative and
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intentional misrepresentations. Unlike in Robinson Helicopter, where the fraud claim relied on

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the separate affirmative act of issuing false compliance certificates that was distinct from the act

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that breached the contract, namely the making of nonconforming helicopter clutches, plaintiff’s

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fraud claims here duplicate his contract claims: The legal theory, factual allegations and relief

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sought under his fraud-based tort claims mirror those sought under his breach of contract claims.

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See Compl. ¶¶ 147(A)-(E); 56(A)-(E), (H); 75(A)-(F); 93(B), (E), (H), and id. ¶¶ 70, 87, 103, 149

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(seeking identical relief on all claims). The economic loss rule applies to bar the non-contract

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claims. The court DISMISSES claims 1, 2, 3 and 4.

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Defendants alternatively move to dismiss plaintiff’s fraud-based claims for not

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meeting Rule 9(b)’s heightened pleading standard. Joint Mot. at 7-9. Because the economic loss

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rule bars each fraud-based claim, the court does not reach this Rule 9(b) analysis.

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B.

Professional Negligence
Defendants also move to dismiss plaintiff’s professional negligence claim, arguing

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defendants never provided or agreed to provide professional services. Plaintiff contends

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defendants implicitly agreed to provide professional brokering services. Joint Opp’n at 19.

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To withstand dismissal, plaintiff must allege defendants provided specified

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professional services that created a duty to satisfy a standard of care under tort law. In re Daisy

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Sys. Corp., 97 F.3d 1171, 1175 (9th Cir. 1996) (“To establish a claim for professional negligence,

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a plaintiff must demonstrate [] the duty of the professional to use such skill, prudence and

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diligence as other members of his profession commonly possess and exercise[.]”) (citing Jackson

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v. Johnson, 5 Cal. App. 4th 1350, 1355 (1992)).

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Plaintiff alleges defendants “held themselves out to be professionals in []

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securities, investments, banking and financing” and that plaintiff retained them for these services.

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Compl. ¶¶ 137-38. Merely alleging defendants advertised superior knowledge in a given field

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does not show they agreed to provide professional services imposing a duty under tort law. Kim

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v. Westmoore Partners, Inc., 201 Cal. App. 4th 267, 284 (2011) (emphasizing focus is on what

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parties agreed to, not on what services parties offer generally). Plaintiff has pled neither the

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requisite agreement to provide professional services nor the details to support a claim such
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services were provided. Rather, the complaint shows only a creditor-debtor investment

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agreement with defendants. See Compl. ¶ 145. Creditor-debtor relationships do not trigger the

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tort law duties required for a professional negligence claim. See Kim, 201 Cal. App. 4th at 284

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(dismissing professional negligence claim where plaintiff and defendant had creditor-debtor

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relationship). Because plaintiff’s professional negligence claim essentially restates his contract

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claim and does not allege a distinct agreement to provide professional investment broker services,

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the court DISMISSES claim 9.

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C.

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Fiduciary Claim
Defendants argue plaintiff’s fiduciary breach claim fails as matter of law because

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defendants owed plaintiff no such duty. A fiduciary relationship is “any relation existing between

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parties to a transaction wherein one of the parties is in duty bound to act with the utmost good

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faith for the benefit of the other party.” Cleveland v. Johnson, 209 Cal. App. 4th 1315, 1338

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(2012) (citation and quotation marks omitted). To withstand dismissal, plaintiff must show either

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defendants’ knowing agreement to become a fiduciary, or the law’s involuntary imposition of a

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fiduciary duty upon defendants. City of Hope Nat’l Med. Ctr. v. Genentech, Inc., 43 Cal. 4th 375,

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386 (2004).

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Only certain legal relationships trigger automatic fiduciary duties. See Gilman v.

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Dalby, 176 Cal. App. 4th 606, 614 (2009). Examples include joint ventures, partnerships and

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agency relationships. Genentech, 43 Cal. 4th at 386. A plaintiff cannot generally “turn an

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ordinary breach of contract claim into a breach of fiduciary duty.” Gilman, 176 Cal. App. 4th at

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614 (citing Wolfe v. Superior Court, 107 Cal. App. 4th 25, 30 (2003)). Fiduciary duties attach to

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a contractual relationship only when the relationship requires that the fiduciary act with undivided

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loyalty on behalf of the beneficiary and never profit or advantage from the parties’ dealings. See

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Wolfe, 107 Cal. App. at 30.

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Here, plaintiff has shown only a creditor-debtor relationship, which gives rise to

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no automatic fiduciary obligations. He pleads no greater statement of trust and expertise than is

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expected in any creditor relationship. See, e.g., Compl. ¶ 145 (alleging he agreed to invest money

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with defendants in exchange for a secured interest and annual payments of his principal plus
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interest). “Every contract requires one party to repose an element of trust and confidence in the

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other to perform.” Wolf, 107 Cal. App. 4th at 31. In his opposition, plaintiff embellishes his

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fiduciary relationship to defendants, characterizing himself as an equity owner and non-managing

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partner of the defendant entities, yet he cites no plausible support for this characterization. See

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Joint Opp’n at 17. He also attempts to characterize Galvanoni as a “promotor,” a role which can

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induce unique fiduciary obligations, see id., yet nowhere in the complaint does plaintiff plausibly

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support this conclusory label.

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The court DISMISSES claim 8.
IV.

LEAVE TO AMEND
Plaintiff has requested leave to amend his complaint. The federal rules mandate

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that leave to amend “be freely given when justice so requires.” Fed. R. Civ. P. 15(a). “This

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policy is to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d

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1048, 1051 (9th Cir. 2003) (citation and quotation marks omitted). Before granting leave, a court

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considers any potential bad faith, delay, or futility regarding the proposed amendment, and the

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potential prejudice to the opposing party. Foman v. Davis, 371 U.S. 178, 182 (1962); see also

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Smith v. Pac. Prop. Dev. Co., 358 F.3d 1097, 1101 (9th Cir. 2004). “The party opposing

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amendment bears the burden of showing prejudice.” DCD Programs, Ltd. v. Leighton, 833 F.2d

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183, 187 (9th Cir. 1987). Absent prejudice, there is a strong presumption in favor of granting

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leave to amend. Eminence Capital, 316 F.3d at 1052.

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Here, plaintiff may be able to cure his pleading deficiencies as to each claim and

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each defendant this order dismisses and defendants have not shown any undue prejudice that

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allowing amendment may cause. Accordingly, the court will GRANT plaintiff fourteen days to

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amend his complaint.

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The following eight claims as currently pled may be included in any amended

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complaint: Violation of California Corporations Code §§ 25401, 25504, 25504.1 (claims 5, 6, 7);

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Breach of oral contract (claim 10); Breach of the implied covenant of good faith and fair dealing

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(claim 11); Rescission (claim 12); Money had and received (claim 13); Money lent (claim 14).

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The following defendants also may remain as named: DPG Investments, LLC; DPG Golden
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Eagle, LLC; Spring Tree Lending, LLC; Spring Tree Holdings, LLC; Skibo Holdings, LLC; and

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Daniel P. Galvanoni.

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V.

CONCLUSION

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The court GRANTS defendants’ motions to dismiss as follows, in that it:

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

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DISMISSES the entire complaint against Joseph, Brooksbank and Hudspeth
for lack of specific personal jurisdiction;

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DISMISSES claims 1, 2, 3 and 4 under the economic loss doctrine because

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plaintiff’s fraud-based claims and contract claims derive from identical

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conduct;

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defendants affirmatively agreed to provide professional services;
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DISMISSES claim 9 because the complaint does not adequately show

DISMISSES claim 8 because the complaint does not establish the requisite
fiduciary relationship; and

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GRANTS plaintiff fourteen days to amend claims 1, 2, 3, 4, 8 and 9, as well as

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his jurisdictional allegations as to defendants Joseph, Brooksbank and

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Hudspeth.

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This resolves ECF Nos. 7, 9, 10, 11.

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IT IS SO ORDERED.

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DATED: November 7, 2017.

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UNITED STATES DISTRICT JUDGE

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