Wescott v. SC Anderson, Inc. et al

Filing 75

ORDER granting 63 Motion to Dismiss; granting 67 Motion to Dismiss.In the attached order, the court grants the motions to dismiss and dismisses the complaint without prejudice and with leave to amend. The plaintiff must file any amended complaint by August 30, 2018. (Beeler, Laurel) (Filed on 8/9/2018)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

NORTHERN DISTRICT OF CALIFORNIA

10

San Francisco Division

United States District Court
Northern District of California

11

CARL ALEXANDER WESCOTT,

Case No. 17-cv-05676-LB

Plaintiff,

12

ORDER GRANTING MOTIONS TO
DISMISS

v.

13
14

SC ANDERSON, INC., et al.,

Re: ECF No. 63, 67

Defendants.

15
16
17

INTRODUCTION

18

The plaintiff Carl Wescott, who is representing himself, sued the defendants — SC Anderson,

19

Inc., Herrig & Vogt LLP, and Moe’s Process Serving (“Moe’s”) — alleging that they fraudulently

20

obtained a default judgment against him in a California state-court case brought by SC Anderson.1

21

All parties are residents of California.2 Federal jurisdiction is predicated on three alleged

22

violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”); Mr. Wescott also

23

asserts four state claims.3 The defendants move to dismiss Mr. Wescott’s first amended complaint

24
25
26
27
28

1

First Amend. Compl. (“FAC”) – ECF No. 61. Record citations refer to material in the Electronic
Case File (“ECF”); pinpoint citations are to the ECF-generated page numbers at the top of documents

2

Id. at 1–2 (¶¶ 1–4).

3

Id. at 7–14.

ORDER – No. 17-cv-05676-LB 

1

under Rule 12(b)(6).4 The motions can be decided without oral argument. See N.D. Cal. Civ. L.R.

2

7-1(b). The court grants the motions to dismiss and dismisses the amended complaint without

3

prejudice and with leave to amend.

4
STATEMENT

5

Mr. Wescott owned and managed Surprise Development, a now-defunct real-estate-

7

development company.5 Surprise Development and SC Anderson, a construction company,

8

entered a contract for SC Anderson to provide design and engineering services.6 After a downturn

9

in the economy, Surprise Development became unable to pay SC Anderson.7 On October 6, 2011,

10

SC Anderson sued Mr. Wescott for breach of contract in California state court.8 Herrig & Vogt is

11
United States District Court
Northern District of California

6

the law firm that represented SC Anderson, and Moe’s Process Serving is a process server.9 Mr.

12

Wescott alleges that the defendants

13

“entered into a scheme to impose extra-contractual personal liability on [Mr.
Wescott] by: (a) faking a fraud case in general and against [Mr. Wescott]
specifically; (b) obtaining a personal judgment in stealth thus preventing him from
raising dispositive contractual defenses; (c) obtaining the default in knowing
violation of [Mr. Wescott’s] automatic stay in bankruptcy and then; (d)
extortionately using that wrongful and void default to obtain [Mr. Wescott’s]
money and/or property.”10

14
15
16
17
18

He alleges that Anderson and Herrig & Vogt — acting through Moe’s Process Serving — certified

19

a fraudulent proof of service for the state court action and tampered with his mail.11 He alleged

20

that Herrig & Vogt did not “disclose the pendency of [Mr. Wescott’s] bankruptcy and existence of

21
22

4

Motions – ECF Nos. 63, 67.

23

5

FAC – ECF No. 61 at 2–3 (¶ 6).

6

Id.

7

25

Id.

8

Id.

26

9

Id. at 2 (¶¶ 3–4), 3 (¶ 7(a)).

24

27
28

10

Id. at 2–3 (¶ 6).

11

Id. at 3 (¶ 7(c)‒(d)).

ORDER – No. 17-cv-05676-LB

2 

1

the automatic stay to the State Court in obtaining the State Court Case default,” and they did not

2

disclose the default to him until December of 2016.12 Since obtaining the default judgment, the

3

defendants have attempted to collect the debt Mr. Wescott owes SC Anderson.13

4

In his original complaint, Mr. Wescott asserted three RICO claims and four state-law claims.14

5

SC Anderson and Herrig & Vogt moved to dismiss the complaint under Rule 12(b)(6).15 The court

6

granted the motion, dismissed Mr. Wescott’s civil RICO claims for failure to allege fraud with

7

particularity, and declined to exercise supplemental jurisdiction over the remaining state claims.16

8

The court dismissed the claims against SC Anderson and Herrig & Vogt without prejudice and

9

with leave to amend.17
On June 14, 2018, Mr. Wescott filed an amended complaint.18 The amended complaint largely

11
United States District Court
Northern District of California

10

alleges the same facts as the original complaint.19 Mr. Wescott adds the following new allegations

12

to the amended complaint:

13



Mr. Wescott “made no important representations to Anderson . . . and [] the
[d]efendants never relied on any representations, having recently judicially
admitted in Madera County filings that they were specifically aware of the risk that
[Mr. Wescott] would not acquire the property in question with the result that
[d]efendant Anderson would not be paid for its services.”20



Mr. Wescott “attended one meeting, one conference calls, and signed paperwork.”21

14
15
16
17
18
19
20
12

Id. at 4‒5 (¶¶ 7(f), 9).

13

22

Id. at 5 (¶ 10).

14

Id. at 6–12 (¶¶ 16–38).

23

15

Motion – ECF No. 22.

16

Order – ECF No. 57 at 8.

17

25

Id.

18

FAC – ECF No. 61.

26

19

Compare Compl. – ECF No. 1 with FAC – ECF No. 61.

20

FAC – ECF No. 61 at 3 (¶ 7(a)).

21

FAC – ECF No. 61 at 4 (¶ 8(c)).

21

24

27
28

ORDER – No. 17-cv-05676-LB

3 



1
2

Moe’s certified that a black-haired lady was served at Mr. Wescott’s house but his
ex-wife was blonde and had a different height and weight than what the proof of
service certified.22

In the amended complaint, Mr. Wescott asserts seven claims (three federal RICO claims and

3
4

four state claims): (1) maintaining a RICO enterprise engaged in a pattern of racketeering activity;

5

(2) conducting and participating in a RICO enterprise engaged in a pattern of racketeering activity;

6

(3) conspiracy to engage in a pattern of racketeering activity; (4) abuse of process; (5) intentional

7

infliction of emotional distress; (6) common-law fraud; and (7) breach of fiduciary duty.23 The

8

defendants filed motions to dismiss the complaint under Rule 12(b)(6).24

9
GOVERNING LAW

10

A complaint must contain a “short and plain statement of the claim showing that the pleader is

United States District Court
Northern District of California

11
12

entitled to relief” to give the defendant “fair notice” of what the claims are and the grounds upon

13

which they rest. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A

14

complaint does not need detailed factual allegations, but “a plaintiff’s obligation to provide the

15

‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic

16

recitation of the elements of a cause of action will not do. Factual allegations must be enough to

17

raise a claim for relief above the speculative level . . . .” Id. (internal citations omitted).
To survive a motion to dismiss, a complaint must contain sufficient factual allegations, which

18
19

when accepted as true, “‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

20

U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when

21

the plaintiff pleads factual content that allows the court to draw the reasonable inference that the

22

defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a

23

‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted

24

unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). “Where a complaint pleads facts that are

25
26
27
28

22

FAC – ECF No. 61 at 3 (¶ 7(c)).

23

FAC – ECF No. 61 at 7‒13.

24

Motion – ECF No. 63: Motion – ECF No. 67.

ORDER – No. 17-cv-05676-LB

4 

1

merely consistent with a defendant’s liability, it stops short of the line between possibility and

2

plausibility of ‘entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557) (internal quotation

3

marks omitted).

4

Fraud allegations — like those required for the civil RICO claims here — elicit a more
demanding standard. Rule 9(b) provides: “In alleging fraud . . . , a party must state with

6

particularity the circumstances constituting fraud . . . . Malice, intent, knowledge, and other

7

conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). This means that

8

“[a]verments of fraud must be accompanied by the ‘who, what, when, where, and how’ of the

9

misconduct charged.” Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Like

10

the basic “notice pleading” demands of Rule 8, a driving concern of Rule 9(b) is that defendants

11
United States District Court
Northern District of California

5

be given fair notice of the charges against them. See, e.g., In re Lui, 646 F. App’x 571, 573 (9th

12

Cir. 2016) (“Rule 9(b) demands that allegations of fraud be specific enough to give defendants

13

notice of the particular misconduct . . . so that they can defend against the charge and not just deny

14

that they have done anything wrong.”) (quotation omitted); Odom v. Microsoft Corp., 486 F.3d

15

541, 553 (9th Cir. 2007) (Rule 9(b) requires particularity “so that the defendant can prepare an

16

adequate answer”). This heightened-pleading standard can apply even to claims that do not

17

innately require proof of fraud. E.g., Vess, 317 F.3d at 1103–05. If such a claim nonetheless avers

18

fraudulent conduct, then at least those averments must satisfy Rule 9(b); and, if a claim rests

19

“entirely” on a “unified course of fraudulent conduct,” then “the pleading of that claim as a whole

20

must satisfy the particularity requirement of Rule 9(b).” Id. at 1103–04. Finally, “[a] motion to

21

dismiss a complaint or claim ‘grounded in fraud’ under Rule 9(b) for failure to plead with

22

particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to

23

state a claim.” Id. at 1107.

24

If a court dismisses a complaint, it should give leave to amend unless the “pleading could not

25

possibly be cured by the allegation of other facts.” Cook, Perkiss and Liehe, Inc. v. Northern

26

California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).

27
28
ORDER – No. 17-cv-05676-LB

5 

1

ANALYSIS

2

The issues are whether the statute of limitations bars the claims and whether Mr. Wescott

3

pleaded civil RICO claims. Mr. Wescott did not plead fraud with particularity, and the court thus

4

dismisses the RICO claims and declines to declines to exercise supplemental jurisdiction over the

5

state claims.

6
7

1. Statute of Limitations
For the reasons set forth in the court’s May 21 order, the court does not dismiss the complaints

8
9

on the ground that the claims are time barred.25

10

United States District Court
Northern District of California

11

2. Civil RICO Claims
The next sections set forth the law governing civil RICO claims and analyze whether Mr.

12
13

Wescott plausibly pleads civil RICO claims.

14

2.1

15

To establish a civil RICO claim, a plaintiff must allege “(1) conduct (2) of an enterprise (3)

Governing Law

16

through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing injury to the

17

plaintiff’s ‘business or property.’” Grimmet v. Brown, 75 F.3d 506, 510 (9th Cir. 1996); see

18

Synopsys, Inc. v. Ubiquiti Networks, Inc., No. 17-cv-00561-WHO, 2017 WL 3485881, at *12

19

(N.D. Cal. August 15, 2017) (citing Eclectic Properties East, LLC v. Marcus & Millichap Co., 751

20

F.3d 990, 997 (9th Cir. 2014)).“Racketeering activity, the fourth element, requires predicate acts,

21

which in this case are alleged to be mail and wire fraud under 18 U.S.C. §§ 1341 and 1343.”

22

Eclectic Properties East, LLC., 751 F.3d at 997. The only difference between mail and wire fraud

23

statutes is the method of carrying out the fraud. Id. There are three elements of mail and wire

24

fraud: “(A) the formation of a scheme to defraud, (B) the use of the mails or wires in furtherance

25

of that scheme, and (C) the specific intent to defraud.” Id. (citing Schreiber Distrib. Co. v. Serv–

26

Well Furniture Co., Inc., 806 F.2d 1393, 1399 (9th Cir.1986). “‘The intent to defraud may be

27
28

25

Order – ECF No. 57 at 6–7.

ORDER – No. 17-cv-05676-LB

6 

1

inferred from a defendant’s statement and conduct.’” Eclectic Properties East, LLC., 751 F.3d at

2

997 (quoting United States v. Peters, 962 F.2d 1410, 1414 (9th Cir. 1992)).
Rule 9(b)’s heightened pleading standard applies to civil RICO claims predicated on fraud.

3
4

Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065–66 (9th Cir. 2004). A plaintiff alleging

5

fraudulent predicate acts must “‘state the time, place, and specific content of the false

6

representations as well as the identities of the parties to the misrepresentation.’” Id. at 1066

7

(quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).

8
2.2

9

SC Anderson and Herrig & Vogt

Mr. Wescott’s new allegation about SC Anderson and Herrig & Vogt is that they “filed sham

10

United States District Court
Northern District of California

11

litigation in Kern County and Madera County” against Mr. Wescott.26 Mr. Wescott alleges that the

12

litigation “was fraudulent and a sham because [Mr. Wescott] individually made no important

13

representations to Anderson . . . and because the Defendants never relied on any representations,

14

having recently admitted in Madera County filings that they were specifically aware of the risk the

15

Kern County Defendants would not acquire the property in question with the result that Defendant

16

Anderson would not be paid for its services.”27 Mr. Wescott also states that Anderson knew of the

17

risk that it would not be paid for their services, Mr. Wescott made no important representations to

18

Anderson and Herrig & Vogt, and Mr. Wescott had very few interactions with Anderson.28 Filing

19

a frivolous lawsuit does not amount to fraud. See Myser v. Tangen, No. C14-0608JLR, 2015 WL

20

502316, at *1 (W.D. Wash. Feb. 5, 2015), aff’d, 671 F. App'x 1006 (9th Cir. 2016) (“the court

21

found that [the plaintiff’s] claims regarding a frivolous lawsuit by his former employees . . . would

22

not amount to fraud on the court even if plausibly pleaded.”) Mr. Wescott’s other claims about the

23

SC Anderson and Herrig & Vogt’s actions in the lawsuit — including the allegation that the

24
25
26
27
28

26

FAC – ECF No. 61 at 3 (¶ 7(a)).

27

Id.

28

FAC – ECF No. 61 at 3‒4 (¶ 7(a), 8(c)‒(d)).

ORDER – No. 17-cv-05676-LB

7 

1

defendants never intended to serve him — are the same allegations in the prior complaint and fail

2

to allege fraud with particularity. See Fed. R. Civ. P. 9(b).

3

The court dismisses the civil RICO claims against SC Anderson and Herrig & Vogt.

4

2.3

5

Mr. Wescott alleges that Moe’s Processing fraudulently obtained a proof of service in his

6

state-court case. He alleges that

7

Moe’s… perjuriously certified a fraudulent proof of service on the Defendant in
connection with a state court action brought by SC Anderson . . . . On the day of
the alleged service [Mr. Wescott] and his now-ex-wife were both in Santa Barbara.
Moe’s certified that a lady was served at [Mr. Wescott’s] house, with black hair.
[Mr. Wescott’s] ex-wife was blonde and of a completely different height and
weight than what the proof of service certified. In certifying and transmitting
fraudulent proof of service, Moe’s utilized both mails and the wires in violation of
18 U.S.C. 1961.29

8
9
10
11
United States District Court
Northern District of California

Moe’s Processing

. . . Moe’s unlawfully accessed and tampered with the defendant’s mail by gaining
unauthorized access to his closed United States Postal mailbox . . . .in aid of an
attempt to extort [Mr. Wescott].30

12
13
14

Taking the allegations as true, they do not establish that Moe’s Processing fraudulently

15

obtained proof of service or committed wire fraud. The allegations about an allegedly improper

16

execution of service do not sufficiently allege bad faith amounting to fraud. See Rodrigo v.

17

Barclays Bank Delaware, No. 16CV808-JAH (JMA), 2017 WL 1155373, at *7 (S.D. Cal. Mar.

18

27, 2017) (finding no inference of bad faith for a default judgment where the plaintiff “argu[ed]

19

that she was never personally served with the summons and complaint, and the individual

20

described as accepting service was, allegedly, not her.”); Tejada v. Sugar Foods Corp., No. CV

21

10-05186 MMM JEMX, 2010 WL 4256242, at *4 (C.D. Cal. Oct. 18, 2010) (“[G]iven the

22

inherent difficulties in judging height and weight accurately, this does not, by itself, constitute

23

strong and convincing evidence that the proof of service is inaccurate.”) The fraud allegations

24

about tampering with the mailbox are not sufficient either, and Mr. Wescott pleads no particular

25
26
27
28

29

FAC – ECF No. 61 at 3 (¶ 7(c)).

30

FAC – ECF No. 61 at 3 (¶ 7(d)).

ORDER – No. 17-cv-05676-LB

8 

1

facts suggesting extortion. The allegations fail to state the “who, what, when, where, and how” of

2

the alleged mail fraud and extortion. Vess, 317 F.3d at 1106.

3

The court dismisses the civil RICO claims against Moe’s.

4
5
6

3. The State Claims
Because the court dismisses the federal claims, it declines to exercise supplemental jurisdiction

7

over the state claims and dismisses them without prejudice to Mr. Wescott’s raising them in state

8

court. 28 U.S.C. § 1367(c)(3).

9
CONCLUSION

10

United States District Court
Northern District of California

11
12

The court grants the motions to dismiss and dismisses the complaint without prejudice and with
leave to amend. The plaintiff must file any amended complaint by August 30, 2018.

13
14

IT IS SO ORDERED.

15

August 9, 2018
______________________________________
LAUREL BEELER
United States Magistrate Judge

16
17
18
19
20
21
22
23
24
25
26
27
28
ORDER – No. 17-cv-05676-LB

9