Roth v. First in Awareness, LLC et al

Filing 28

ORDER by Judge Laporte granting 21 Motion to Dismiss (edllc1, COURT STAFF) (Filed on 9/13/2011)

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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 United States District Court For the Northern District of California 10 STEVEN ROTH, 11 12 No. C -11-01452-EDL Plaintiff, ORDER GRANTING MOTION TO DISMISS v. 13 FIRST IN AWARENESS, 14 Defendant. 15 16 / Introduction 17 This case involves two “penny” stock transactions that occurred in the Spring of 2010. 18 Plaintiff Steven Roth claims that he paid Defendants First in Awareness LLC (“FIA”) and sole 19 managing member Jerry Williams $600,000 for shares of two different penny stocks, but that he did 20 not timely receive a proper stock certificate for one of the stocks and never received a certificate for 21 the other stock and was damaged as a result. Plaintiff makes claims against FIA and Mr. Williams 22 for rescission and restitution, fraud, and breach of fiduciary duty. Additionally, Plaintiff alleges that 23 Mr. Williams’ assistant, Defendant Melanie Wood Harvey, conspired with Williams to defraud him. 24 Ms. Harvey has moved to dismiss the conspiracy claim against her based on lack of personal 25 jurisdiction and failure to state a claim. Instead of opposing Ms. Harvey’s persuasive arguments in 26 favor of her dismissal, Plaintiff’s response does not contest but implicitly concedes the merits of 27 these arguments and asks for leave to amend. Plaintiff contends that he could bring a federal 28 securities law claim against Ms. Harvey which would confer personal jurisdiction over her in this Court. Ms. Harvey counters that leave to amend would be futile, Plaintiff should be required to file 1 a proper motion and proposed amended complaint, and Ms. Harvey should recover her costs for 2 bringing the motion to dismiss. For the following reasons, Ms. Harvey’s motion to dismiss is 3 GRANTED. If Plaintiff wants to amend his complaint to attempt to state a claim against Ms. 4 Harvey, he must bring a properly noticed motion. Any grant of leave to amend will be conditioned 5 on Plaintiff’s payment of Ms. Harvey’s costs in connection with this motion. 6 7 Discussion 8 9 A. Motion to Dismiss United States District Court For the Northern District of California 10 Plaintiff has not opposed Ms. Harvey’s motion to dismiss for lack of personal jurisdiction or 11 failure to state a claim. The claim against Ms. Harvey fails for lack of personal jurisdiction, and Ms. 12 Harvey’s motion is GRANTED. 13 Personal jurisdiction is determined by the applicable state personal jurisdiction statute and 14 constitutional principles of due process. See Data Disc, Inc. v. Systems Tech. Assocs., Inc., 557 F. 15 2d 1280, 1286 (9th Cir. 1977). Due process requirements allow California courts to exert personal 16 jurisdiction only where the nonresident defendant has sufficient minimum contacts with the state so 17 that maintenance of the suit does not offend traditional notions of fair play and substantial justice. 18 See, e.g., International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Plaintiff bears the 19 burden of establishing that this matter is in the proper forum. See Data Disc, 557 F.2d at 1285. 20 Here, Ms. Harvey has established that she is a citizen of Arizona who has visited California 21 only once for personal reasons. Compl. ¶ 4; Harvey Decl. ¶ 2-4. The allegations against her are that 22 she was an employee or agent of Mr. Williams and FIA in Arizona, and that she conspired with Mr. 23 Williams in an unexplained manner to defraud Plaintiff in connection with the sale of securities. 24 Compl. ¶ 40-46. The complaint alleges that she emailed and spoke on the phone with Plaintiff in her 25 capacity as Mr. Williams’ assistant a week after the securities sales took place. Compl. ¶ 14-17. 26 There is nothing indicating that she “purposefully availed” herself of the privilege of conducting 27 activities in California through her work as an assistant or that Plaintiff’s claim of conspiracy against 28 her arises out of her minimal contact with him in California, which did not occur until a week after 2 1 the challenged stock transactions took place. This Court has no personal jurisdiction over Ms. 2 Harvey under these circumstances, and Plaintiff does not offer any argument to the contrary. 3 Therefore, Ms. Harvey’s motion is GRANTED and the Court need not reach the other bases for 4 dismissal addressed in her papers. 5 6 B. Leave to Amend 7 Instead of opposing Ms. Harvey’s motion to dismiss, Plaintiff’s response seeks leave to 8 amend the complaint to assert a federal securities law claim. Ms. Harvey counters that any 9 securities claim against her would be futile so leave to amend should be denied. United States District Court For the Northern District of California 10 Plaintiff has not filed a properly noticed motion for leave to amend or provided a copy of his 11 proposed amended complaint as required by Local Rule 10-1. Therefore, it would be premature for 12 the Court to determine whether leave to amend should be allowed or would be futile at this time. 13 Plaintiff must file a properly noticed motion for leave to amend and present a proposed amended 14 pleading within two weeks of the date of this Order if he wishes to pursue a new legal theory against 15 Ms. Harvey. 16 17 C. 18 Ms. Harvey argues that any leave to amend should be conditioned on Plaintiff paying her Costs and Fees 19 costs and fees incurred in bringing the unopposed motion to dismiss. See Gen. Signal Corp. v. MCI 20 Telecommunications Corp., 66 F.3d 1500, 1514 (9th Cir. 1995) (“a district court, in its discretion, 21 may impose costs pursuant to Rule 15 as a condition of granting leave to amend in order to 22 compensate the opposing party for additional costs incurred because the original pleading was 23 faulty”). In this case, the original pleading against Ms. Harvey was meritless, and Ms. Harvey 24 pointed this out to Plaintiff but he refused to amend the complaint to state valid claim against her in 25 order avoid the need for this motion. See Reply Decl. ¶¶ 4-7. Under the unique circumstances of 26 this case, if Plaintiff intends to pursue amending his complaint, he will very likely be required to 27 compensate Ms. Harvey for her reasonable fees and costs in bringing the motion to dismiss before 28 leave to amend will be granted. Ms. Harvey shall therefore file evidence of her reasonable fees and 3 1 costs incurred in preparing the motion to dismiss within one week of the date of this Order. Plaintiff 2 may challenge the reasonableness of Ms. Harvey’s claimed costs and fees if and when he files a 3 motion for leave to amend. The Court will determine whether and in what amount an award of 4 reasonable costs and fees is appropriate if it determines that leave to amend should be granted. 5 6 7 IT IS SO ORDERED. Dated: September 13, 2011 ELIZABETH D. LAPORTE United States Magistrate Judge 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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