Evans et al v. ZB, N.A.

Filing 50

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 12/18/2019 GRANTING 45 Request to Seal Victim Impact Statements (Ex. H), and ORDERING that 44 Motion to Dismiss is GRANTED IN PART as to the following claims: (1) intentional inte rference with contract; and (2) aiding and abetting breach of fiduciary duty; and DENIED IN PART as to the following claims: (1) aiding and abetting fraud; (2) conspiracy to commit fraud; (3) securities fraud based on transactions or acts after 5/26/2012; and (4) violation of Penal Code § 496. Plaintiff is GIVEN 14 days from the date this Order is filed to file a Second Amended Complaint. (Huang, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RONALD C. EVANS, an
individual; JOAN M. EVANS, an
individual; DENNIS TREADAWAY,
an individual; and all others
similarly situated,

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Plaintiffs,

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NO. 2:17-cv-01123 WBS DB

MEMORANDUM AND ORDER RE: MOTION
TO DISMISS

v.
ZB, N.A., a national banking
association, dba California
Bank & Trust,

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Defendant.

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Ronald C. Evans, Joan M. Evans, and Dennis Treadaway

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(collectively “plaintiffs”) initiated this action on behalf of

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over fifty people against defendant ZB, N.A., a national banking

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association, doing business as California Bank & Trust (“CB&T”),

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for allegedly knowingly providing substantial assistance to a

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fraudulent scheme initiated by International Manufacturing Group,

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Inc. (“IMG”).

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to Dismiss plaintiffs’ First Amended Complaint.

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I.

Presently before the court is defendant’s Motion
(Docket No. 44).

Relevant Allegations and Procedural Background
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IMG is a California corporation allegedly created to

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import latex surgical gloves and related medical products

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manufactured in Asia for resale in the United States.

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1 (Docket No. 42).)

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operating a Ponzi scheme directed by its Chief Executive Officer,

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Deepal Wannakuwatte (“Wannakuwatte”), who has pled guilty to

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federal fraud charges and is serving twenty years in prison.

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(Compl. ¶¶ 78, 85.)

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their money would be used to purchase latex gloves from Asian

(Compl. ¶

As has since been determined, IMG was

IMG solicited investors by telling them

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manufacturers that would then be sold to IMG’s purported

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customers.

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promissory notes.

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however, used for the intended purpose.

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the funds were deposited at CB&T and used to pay back prior

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investors.

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(Compl. ¶ 1.)

In exchange for the money, IMG issued

(Compl. ¶ 91.)

The investors’ funds were not,
(Compl. ¶ 6.)

Instead,

(Compl. ¶ 24.)

Before October 2009, CB&T made nine loans to IMG.

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(Compl. ¶ 95.)

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investor money into IMG’s accounts.

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inception of the loans, the monthly interest was to be paid out

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of the IMG General Account #7631 with automatic debits.

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¶ 25.)

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there were insufficient funds.

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dollars in overdraft fees at CB&T.

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CB&T monitored, on a daily basis, the deposits of
(Compl. ¶ 24.)

At the

(Compl.

However, the automatic debit process did not work because
(Id.)

IMG accrued millions of

(Id.)

Despite being aware of IMG’s insufficient cashflow,

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over the course of their lending relationship, CB&T ignored IMG’s

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defaults and waived late charges and interest penalties, granted

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20 maturity date extensions and 21 collateral swaps, adjusted

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loan rates of interest over 20 times, and accepted personal
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guarantees from Wannakuwatte at least 7 times. (Compl. ¶¶ 58, 62,

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100.)

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IMG had both cash investors as well as investors who

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provided Standby Letters of Credit (“SLOC’s”) in favor of CB&T.

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(Compl. ¶ 16).

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and thereby monitor the manufacturing of medical gloves in Asia

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being purchased by IMG as part of IMG’s business.

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SLOCs were not intended to be direct loan payments to IMG.

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After continued defaults by IMG, CB&T foreclosed on the SLOC

The purpose of each SLOC was for CB&T to finance

(Id.)

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pledged by a non-local investor.

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to foreclose on the security pledged by eight local Sacramento

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area SLOC investors.

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(Id.)

(Compl. ¶ 19.)

CB&T, however, refused

(Id.)

Sometime in 2009, but prior to October 2009, CB&T

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submitted “bogus” sales invoices to draw upon a $9 million SLOC

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obtained by applicant Jamestown Health & Medical Supply, LLC from

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Bank of America for CB&T.

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CB&T gave notice to IMG that it was terminating further secured

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lending but would still allow IMG to deposit new investors’ money

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into IMG’s Wholesale Account #4841.

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repaid in full by February 2011.

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(Compl. ¶¶ 63, 121.)

In October 2009,

(Compl. ¶ 29.)

CB&T was

(Compl. ¶ 30.)

On January 21, 2014, one day after IMG filed for

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bankruptcy protection, Ronald Evans and his wife, Joan Evans,

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each invested $50,000 with IMG.

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2007 and 2014, and presumably before IMG filed for bankruptcy on

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May 30, 2014, Dennis Treadaway invested more than $2 million with

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IMG.

(Compl. ¶ 49.)

(Compl. ¶¶ 40, 48.)

Between

On May 8, 2014, Wannakuwatte pled guilty to

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federal fraud charges.1

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both declared bankruptcy.

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bankruptcy trustee filed a fraudulent conveyance action in the

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IMG Bankruptcy Proceeding against CB&T seeking to avoid and

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recover IMG’s loan repayments on the loans.

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The trustee’s complaint revealed facts about CB&T’s confidential

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relationship with IMG.

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On May 30, 2014, IMG and Wannakuwatte
(Compl. ¶ 78.)

On May 6, 2016, IMG’s

(Compl. ¶ 77, 84.)

(Compl. ¶ 84.)

On May 26, 2017, plaintiffs filed this action against
CB&T for allegedly aiding and abetting the torts of IMG.

This

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court dismissed plaintiffs’ complaint because it found that CB&T

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did not owe a duty to plaintiffs that would give rise to tort

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liability.

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court found that plaintiffs did not plead sufficient facts to

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give rise to a plausible inference that defendant knew IMG was

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misappropriating funds.

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(Mem. & Order at 2-3 (Docket No. 28).)

Further, this

(Id. at 3-4.)

The Ninth Circuit reversed.

The court first found

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that, under California law, if a bank knowingly takes part in a

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fraud, it has a duty to “make good the loss that results from the

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misappropriation.”

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The court then found plausible plaintiffs’ allegations that CB&T

(Mem., No. 18-15094, at 3 (Docket No. 37).)

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The court takes judicial notice of Wannakuwatte’s Plea
Agreement. (Def.’s Req. for Judicial Notice in Supp. of Mot. to
Dismiss, Ex. 1 (Docket No. 44-2).) District courts may take
judicial notice of their own records, and documents that are
public records and capable of accurate and ready confirmation by
sources that cannot be reasonably questioned. United States v.
Wilson, 631 F.2d 118, 119 (9th Cir. 1980). Wannakuwatte’s Plea
Agreement was entered in United States v. Deepal Wannakuwatte,
Case No. 14-CR-00067 TLN (E.D.C.A.). Accordingly, because the
Plea Agreement is part of a court record, this court may take
judicial notice of it.
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knew IMG’s business “was a sham” because through its monitoring

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of the account, CB&T knew that IMG had “virtually no income from

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its latex glove import business.”

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plausible, the court continued, that CB&T knew it IMG was

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misappropriating funds because CB&T knew it was being repaid with

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investor funds and not revenue.

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allegations of CB&T’s “atypical banking procedures” while IMG was

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in default were sufficient to allege that CB&T helped facilitate

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IMG’s solicitation of cash.

(Id. at 4.)

(Id. at 5.)

(Id. at 6.)

It is also

Plaintiffs’

The court thus found

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that plaintiffs plausibly stated three claims for relief: (1)

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aiding and abetting fraud; (2) breach of fiduciary duty; (3)

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conspiracy to commit fraud.

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of whether the statute of limitations bars these claims

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“involve[s] factual determinations,” the Ninth Circuit left it

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for this court to consider on remand.

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(Id. at 8-9.)

Because the question

(Id. at 11.)

Plaintiffs filed a First Amended Complaint alleging six

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claims: (1) Aiding and Abetting Fraud; (2) Securities Fraud

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pursuant to California Corporations Code §§ 25110, 25401,

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25504.1; (3) Conspiracy to Commit Fraud; (4) Aiding and Abetting

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Breach of Fiduciary Duty; (5) Intentional Interference with

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Contract; and (6) violation of California Penal Code § 496.

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(Docket No. 42.)

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No. 44.)

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II.

Defendant moves to dismiss all claims.

(Docket

Request to Seal

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As a preliminary matter, the court considers

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defendant’s Request to Seal Ronald Evans and Treadaway’s Victim

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Impact Statements (Ex. H), submitted on November 15, 2019.

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Pursuant to Local Rule 141(a), “[d]ocuments may be sealed only by
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written order of the Court, upon the showing required by

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applicable law.”

E.D. Cal. L.R. 141(a).

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The documents at issue here appear to contain

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information which is sensitive and confidential. (See Declaration

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of Jarrett Osborne-Revis, Req. to Seal, Ex. H, at ¶ 8.)

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information was designated “Confidential” in the accompanying

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criminal action.

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available.

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privacy of the individuals if this request to seal were not

(Id. ¶ 6.)

(Id. ¶ 7.)

This

The information is not publicly

Further, his information would invade the

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granted.

(Req. to Seal at 4.)

Accordingly, the court concludes

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that CB&T has presented “good cause” to rebut the presumption in

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favor of public access.

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447 F.3d 1172, 1189 (9th Cir. 2006).

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III.

See Kamakana v. City & Cty. of Honolulu,

Legal Standard

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On a Rule 12(b)(6) motion, the inquiry before the court

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is whether, accepting the well-pleaded allegations in the

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complaint as true and drawing all reasonable inferences in the

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plaintiff’s favor, the plaintiff has stated a claim to relief

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that is plausible on its face.

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662, 678 (2009).

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as true allegations . . . that are merely conclusory, unwarranted

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deductions of fact, or unreasonable inferences.”

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Filmed Entm't, Ltd. v. Content Media Corp. PLC, 733 F.3d 1251,

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1254 (9th Cir. 2013).

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a ‘probability requirement,’ but it asks for more than a sheer

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possibility that a defendant has acted unlawfully.”

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IV.

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See Ashcroft v. Iqbal, 556 U.S.

The court, however, is “not required to accept

“The plausibility standard is not akin to

Statute of Limitations
A.

Seven Arts

Fraud Claims
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Id.

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The statute of limitations for actions “for relief on

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the ground of fraud” is three years.

Cal Code. Civ. Proc. §§

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338(c)(1), (d); Hatch v. Collins, 225 Cal. 3d 1104, 1100 (1990).

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Thus, a plaintiff must bring a cause of action for aiding and

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abetting fraud, conspiracy to commit fraud, and aiding and

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abetting breach of fiduciary duty rooted in fraud, within three

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years after the cause of action accrues.

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determine that accrual occurs when the cause of action is

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complete with all of its elements.

Courts generally

Norgart v. Upjohn Co., 21

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Cal. 4th 383, 384 (1999).

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courts will postpone a cause of action’s accrual date until the

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plaintiff discovers, or has reason to discover, the cause of

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action.

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begin until “the plaintiff has notice or information of

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circumstances to put a reasonable person on inquiry” that the

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cause of action exists.

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4th 1236, 1251 (2d Dist. 2013).

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Id.

However, under the “discovery rule,”

In other words, the limitations period does not

Alexander v. Exxon Mobil, 219 Cal. App.

Here, defendant argues that the statute of limitations

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began when Wannakuwatte pled guilty to wire fraud on May 8, 2014,

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or, at the latest, when Ronald Evans and Treadaway submitted

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their Victim Impact Statements on May 24, 2014.

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Dismiss at 22-23.)

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Complaint until May 26, 2017, defendant argues their claim for

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aiding and abetting fraud, as well as all other claims related to

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fraud, is time-barred.

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agreement did not impute knowledge of the facts contained in it

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to plaintiffs on the date it was filed, and that even if

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plaintiffs had been aware of the plea agreement on May 8, 2014,

(Defs.’ Mot. to

Because plaintiffs did not file their

Plaintiffs contend that the plea

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the plea agreement did not put plaintiffs on reasonable notice

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that they had in fact been injured by CB&T.

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Claims against different defendants may accrue at

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different times.

E-Fab, Inc. v. Accountants, Inc. Servs., 153

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Cal. App. 4th 1308, 1322 (6th Dist. 2007).

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reasonable and diligent investigation discloses only one kind of

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wrongdoing when the injury was actually caused by tortious

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conduct of a wholly different sort, the discovery rule postpones

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accrual of the statute of limitations on the newly discovered

“If a plaintiff’s

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claim.”

Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 813

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(2005).

In this case, the question is whether “a reasonable

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investigation at the time would . . . have revealed a factual

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basis for that particular cause of action” against CB&T.

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803.

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on notice “of [CB&T’s] independent wrongdoing.”

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App. 4th at 1323.

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Id. at

The court therefore evaluates when plaintiff was first put
E-Fab, 153 Cal.

It is clear that plaintiffs knew of IMG’s alleged

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fraudulent scheme by May 8, 2014, when Wannakuwatte pled guilty

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to committing wire fraud.

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admitted that he lied to his investors, and that he used

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investment money to pay himself, to make lulling payments, and to

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pay outstanding debts.

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20.)

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inquiry notice of IMG’s fraudulent conduct with respect to them,

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and therefore discovered, or at least had reason to discover,

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that a cause of action for fraud against IMG existed.

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In his guilty plea, Wannakuwatte

(Osborne-Revis. Decl. ¶ 6, Ex. B, at 19-

Thus, by this date, at the latest, plaintiffs had at least

Wannakuwatte’s admissions, however, describe only his
and IMG’s fraud, not CB&T’s involvement in the fraud.
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The court

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finds that plaintiffs were not on notice of CB&T’s alleged

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involvement in the fraud until May 6, 2016, when the bankruptcy

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trustee disclosed previously unknown confidential information

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about IMG and CB&T’s lending relationship in her fraudulent

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transfer complaint against CB&T.

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even if plaintiffs wanted to inquire into IMG’s relationship with

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CB&T, they could not because IMG and Wannakuwatte were subject to

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bankruptcy proceedings starting May 30, 2014.

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review of the Victims’ Impact Statements filed under seal, the

(See Compl. ¶ 84.)

Indeed,

Further, upon

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court finds no suggestion in those statements that CB&T could be

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a willful participant in IMG’s fraudulent scheme.

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Defendants contend, however, that in a separate action

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between Bank of America (BofA) and Jamestown Health & Medical

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Supply (JHMS) in Washington State court, a publicly filed

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pleading put plaintiffs on notice of CB&T’s role in the fraud.

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(See Supp. of Mot. to Dismiss, Ex. J (Docket No. 47-3).)2

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12, 2011, JHMS filed a third-party complaint against IMG and

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Wannakuwatte.

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pleading noted (1) that CB&T was IMG’s lender, (2) that CB&T

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extended credit to IMG, (3) that BofA informed JHMS that it would

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not renew the SLOC, and (4) that CB&T drew upon the $9 million

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SLOC after BofA accepted the JHMS purchase orders to IMG that

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CB&T submitted to BofA.

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(See Defs.’ Reply in Supp. of Mot. to Dismiss at 7-8 (Docket No.

(See id., Ex. K.)

On May

Defendants argue that the

Notably, BofA did not allege fraud.

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The court takes judicial notice of Complaint, Bank of
America v. Jamestown Health and Medical Supply Company, LLC, No.
10-2-37091-9 SEA (Super. Ct. Wash. Oct. 10, 2011). Because the
pleading is part of a court record, this court may take judicial
notice of it. See supra at 3-4 n.1.
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47).)

Defendants argue that these facts give plaintiffs a reason

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to know CB&T was involved in IMG’s fraud.

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Those allegations did not put plaintiffs on notice that

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CB&T could be involved in IMG’s multimillion-dollar Ponzi scheme.

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Those allegations involve ordinary business transactions and

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would not have been sufficient to plead a plausible cause of

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action for fraud with particularity against CB&T back in 2014.

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See Fed. R. Civ. P. 9(b).

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plaintiffs pled actual knowledge of fraudulent activity because

Further, the Ninth Circuit found that

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CB&T allegedly monitored deposits, ignored IMG’s multiple

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defaults, and conducted “atypical banking procedures.”

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No. 18-15094, at 3-6).

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to make these allegations did not come to light until May 6,

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2016.

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6, 2019, three years after plaintiff was first put on notice “of

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[CB&T’s] independent wrongdoing,” to file suit.

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Cal. App. 4th at 1323.

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barred.

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(Mem.,

The information required for plaintiffs

(Compl. at ¶ 84.)

Accordingly, plaintiffs had until May

See E-Fab, 153

The fraud claims therefore are not time-

B. Securities Fraud

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Plaintiffs allege that defendant violated California

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Corporations Code § 25504.1.

Section 25504.1 states that any

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person who materially assists in any violation of Corporations

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Code section 25401 or 25110, with the intent to deceive or

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defraud, is jointly and severally liable with any other person

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liable for a violation of those sections.

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25504.1.

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is not timely.

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46).)

Cal. Corp. Code. §

Plaintiffs concede that their claim under Section 25110
(Pls.’ Opp. to Mot. to Dismiss at 18 (Docket No.

The court therefore evaluates only the claim under Section
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25401.

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Section 25401 makes it unlawful for any person, in

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connection with the offer or sale of a security, to directly or

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indirectly employ a scheme to defraud by making untrue statements

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of material fact or to omit a material fact necessary to make the

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statements made not misleading.

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Plaintiffs claim that CB&T materially assisted IMG in its

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violation of section 25401.

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have been initiated “before the expiration of five years after

Cal. Corp. Code. § 25401.

(Compl. ¶ 146.)

This claim must

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the act or transaction constituting the violation or the

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expiration of two years after the discovery by the plaintiff of

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the facts constituting the violation, whichever shall first

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expire.”

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Cal. Corp. Code §§ 25501, 25506(b).
The Complaint was filed on May 26, 2017.

Any of the

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claims stemming from acts that occurred before May 26, 2012 are

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time-barred based upon section 25506(b)’s five-year limitation

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period.3

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assisted IMG’s violation of Section 25401.

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(e).)

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2012 and some did not.

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invested in IMG in 2014, while Treadaway invested in IMG in a

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series of transactions from 2007 to 2014.

Plaintiffs specifically allege five ways in which CB&T
(Compl. ¶ 146(a)-

Some of those actions clearly occurred before May 26,
For example, Ronald and Joan Evans

(Compl. ¶ 40, 48, 49.)

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The May 26, 2012 cutoff governs. As discussed above,
plaintiff was unaware of CB&T’s role in the scheme until May 6,
2016, which would render an expiration date of May 6, 2018 under
the statute’s two-year limit. However, Section 25506(b) requires
the court to observe the earliest date. Because the complaint
was filed before May 6, 2018, any act within the five years prior
to the filing of the complaint may sustain this action.
3

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The court does not dismiss this claim insofar as it relies on

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deposits, check clearings, and investor referrals that occurred

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after May 26, 2012.

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C. Intentional Interference with Contract

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“California recognizes a cause of action against

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noncontracting parties who interfere with the performance of a

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contract.”

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997 (2d Dist. 2018).

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interfered with plaintiff’s contracts with IMG by assisting IMG’s

Redfearn v. Trader Joe's Co., 20 Cal. App. 5th 989,
Here, plaintiffs allege CB&T intentionally

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use of the investors’ money to pay other investors.

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160.)

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interference with contractual relations are ‘(1) the existence of

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a valid contract between the plaintiff and a third party; (2) the

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defendant’s knowledge of that contract; (3) the defendant’s

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intentional acts designed to induce a breach or disruption of the

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contractual relationship; (4) actual breach or disruption of the

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contractual relationship; and (5) resulting damage.’”

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(quoting Reeves v. Hanlon, 33 Cal. 4th 1140, 1148 (2004)).

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statute of limitations for intentional interference with

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contractual relations is two years.

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339(1); Trembath v. Digardi, 43 Cal. App. 3d 834, 836 (1st Dist.

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1974).

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(Compl. ¶

“The elements of a cause of action for intentional

Id.
The

See Cal. Code Civ. P. §

Plaintiff could not have pled this claim in 2014

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because information about CB&T’s alleged “intentional acts” to

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disrupt IMG and plaintiffs’ contractual relationship was not

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available to plaintiffs then.

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allegations about CB&T’s close monitoring of IMG’s deposits and

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CB&T’s atypical banking behavior to accommodate IMG’s lack of

As discussed above, facts and

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cash flow did not come to light until 2016.

2

State Court pleading does not include allegations that CB&T did

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anything other than extend credit to IMG.

4

infer from the fact that CB&T, a bank, lent money to IMG that

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CB&T intended to disrupt the contracts between IMG and the

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investors.

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6, 2018, the claim is not time-barred.

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Even the Washington

Plaintiffs could not

Because plaintiffs filed their complaint before May

D. Penal Code Violation

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California Penal Code Section 496 prohibits the

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receiving of stolen property or any property “that has been

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obtained in any manner constituting theft.”

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496(a).

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theft.

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by a violation of the statute may bring an action for treble

15

damages, costs of suit, and attorney’s fees.

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496(c).

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under Penal Code § 496(a), plaintiff must allege “(1) that the

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particular property was stolen, (2) that the accused received,

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concealed or withheld it from the owner thereof, and (3) that the

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accused knew that the property was stolen.”

21

v. Bidna & Keys, APLC, 238 Cal. App. 4th 200, 213 (4th Dist.

22

2015).

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claim is three years.

24

Von Saher v. Norton Simon Museum of Art at Pasadena, 578 F.3d

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1016, 1029-30 (9th Cir. 2009).

26

Cal. Penal Code §

The fraudulent appropriation of property constitutes
Cal. Penal Code § 484.

Any person who has been injured

Cal. Penal Code §

To establish a claim for receipt of stolen property

Finton Constr., Inc.

The statute of limitations applicable to a Section 496
Cal. Code Civ. Proc. §§ 338(c), (d); see

Plaintiffs could not have filed a claim before May 6,

27

2016 because plaintiffs did not have enough information to

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suspect that CB&T knew the money IMG deposited was stolen.
13

The

1

Ninth Circuit found that plaintiffs’ allegations that CB&T was

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aware of IMG’s fraudulent scheme by 2009 were sufficient.

3

However, the information that led plaintiffs to infer CB&T’s

4

awareness of the fraud, namely CB&T’s close monitoring of

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deposits, ignorance of IMG’s multiple defaults, and “atypical

6

banking procedures” (Mem., No. 18-15094, at 3-6), did not come to

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light until the bankruptcy trustee filed the complaint against

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CB&T in 2016.

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information available that would lead them to conclude that, when

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IMG was depositing money into CB&T, CB&T knew that money had been

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fraudulently misappropriated.

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on IMG’s banking relationship with CB&T and CB&T’s banking

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behavior.

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within three years of May 6, 2016, this claim is timely.

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Absent this information, plaintiffs had no

Plaintiffs needed further details

Accordingly, because plaintiffs filed their complaint

In conclusion, all six of plaintiffs’ claims are

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timely.

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V.

Sufficiency of the Pleadings

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In addition to the statute-of-limitations challenges

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discussed above, defendants contest the sufficiency of the

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pleadings for plaintiffs’ claims for aiding and abetting breach

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of fiduciary duty and intentional interference with contract.

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A.

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Aiding and Abetting Breach of Fiduciary Duty
Plaintiffs allege defendant aided and abetted the

24

breach of the fiduciary duty that Wannakuwatte owed to

25

plaintiffs.4

(Compl. ¶¶ 154-157.)

Defendant argues that

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The Ninth Circuit concluded that CB&T owed plaintiffs a
fiduciary duty but did not evaluate the relationship between IMG
and plaintiffs.
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4

1

Wannakuwatte owed plaintiffs no such duty.

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A fiduciary duty is either “imposed by law” or

3

“undertaken by agreement.”

Maglica v. Maglica, 66 Cal. App. 4th

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442, 447 (4th Dist. 1998).

Plaintiffs do not allege that

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Wannakuwatte owed plaintiffs a fiduciary duty by law.

6

plaintiffs rely on Wannakuwatte’s closeness to the community from

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which he solicited funds to establish a fiduciary duty undertaken

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by agreement.

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Instead,

(Compl. ¶ 156.)

“A fiduciary duty is undertaken by agreement, when one

10

party enters into a ‘confidential relationship’ with another.”

11

Maglica, 66 Cal. App. 4th at 447.

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imposing fiduciary duties does not arise every time two parties

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share confidences with one another.”

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Channel Commc'ns, Inc., 201 F. Supp. 2d 1048, 1050 (N.D. Cal.

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2002).

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relationships the parties reposed trust and confidence in each

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other does not impose any corresponding fiduciary duty.”

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(quoting Worldvision Enter., Inc. v. Am. Broad. Cos., Inc., 142

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Cal. App. 3d 589, 595 (2d Dist. 1983)).

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relationship” arises only “where a confidence is reposed by one

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person in the integrity of another, and . . . the party in whom

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the confidence is reposed . . . voluntarily accepts or assumes to

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accept the confidence.”

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Lindsey & Newsom Claim Servs., Inc., 83 Cal. App. 4th 409, 417

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(4th Dist. 2000)).

“A ‘confidential relationship’

City Sols., Inc. v. Clear

“The mere fact that in the course of their business

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Id.

A “confidential

Id. (quoting GAB Bus. Servs., Inc. v.

Plaintiffs allegations are insufficient to establish

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that Wannakuwatte undertook a fiduciary duty to IMG investors by

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agreement.

Plaintiffs allegations about Wannakuwatte’s
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1

relationship with IMG investors describe only what the community

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in general thought of Wannakuwatte.

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“the community’s clear substantive belief that Deepal” is

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trustworthy); id. (alleging that “people . . . looked up to

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Deepal as a respected ‘elder’”).)

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describe the relationship between Wannakuwatte and the IMG

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investors as one of “trust and confidence.”

8

Cal. App. 3d at 595.

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plaintiffs entrusting Wannakuwatte with confidential information.

(E.g., Compl. ¶ 156 (noting

The complaint does not

See Worldvision, 142

There are no allegations, for example, of

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Indeed, the complaint does not describe the specific

11

relationships between actual investors and Wannakuwatte at all.

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Accordingly, the court finds that the complaint does not

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sufficiently allege a fiduciary duty and dismisses this claim

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with leave to amend.

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16

B.

Intentional Interference with Contract
As discussed above, to plead a claim for intentional

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interference with contract, plaintiff must plead facts plausibly

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showing that defendant CB&T actually knew about the contractual

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relationships between IMG and plaintiffs.

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5th at 997.

21

Redfearn, 20 Cal. App.

The court finds that plaintiffs fails to plead

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sufficient facts to sustain this claim.

Plaintiffs allegations

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do not satisfy the pleading standard because they are conclusory.

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See Seven Arts, 733 F.3d at 1254.

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that “CB&T knew the specific terms, conditions and obligations

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articulated in each contract,” plaintiff alleges no fact that

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supports such a conclusion.

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does not establish how, when, or why CB&T acquired this

Although the complaint asserts

(See Compl. ¶ 159.)

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The complaint

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information.

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deposited their investment money at CB&T (Compl. ¶¶ 33, 34, 50),

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such allegations do not give rise to the inference that CB&T knew

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the details of the contracts or that CB&T knew that a contract

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existed at all.

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leave to amend.

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8

While plaintiffs do allege that plaintiffs

The court will therefore dismiss this claim with

IT IS THEREFORE ORDERED that CB&T’s Request to Seal Victim
Impact Statements (Ex. H) be, and the same hereby is, GRANTED.

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IT IS FURTHER ORDERED that defendant’s Motion to Dismiss

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(Docket No. 44) be, and the same hereby is, GRANTED IN PART as to

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the following claims: (1) intentional interference with contract;

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and (2) aiding and abetting breach of fiduciary duty.

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IT IS FURTHER ORDERED that defendant’s Motion to Dismiss be,

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and the same hereby is, DENIED IN PART as to the following

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claims: (1) aiding and abetting fraud; (2) conspiracy to commit

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fraud; (3) securities fraud based on transactions or acts after

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May 26, 2012; and (4) violation of Penal Code § 496.

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Plaintiff is given 14 days from the date this Order is filed

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to file a Second Amended Complaint if it can do so consistent

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with this Order, and the court can go through the tedious process

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of hearing another motion to dismiss that complaint.

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Dated:

December 18, 2019

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