Nguyen v. Sound Solutions Group, Inc. et al

Filing 9

ORDER ADOPTING 6 REPORT AND RECOMMENDATION TO DENY WITHOUT PREJUDICE 2 APPLICATION TO PROCEED IN FORMA PAUPERIS AND TO DISMISS ACTION WITHOUT PREJUDICE. Signed by Judge Beth Labson Freeman on 7/30/2018. (blflc2S, COURT STAFF) (Filed on 7/30/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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KHOA DANG NGUYEN,
Plaintiff,

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Case No. 18-cv-02225-BLF

v.
SOUND SOLUTIONS GROUP, INC., et al.,
Defendants.

ORDER ADOPTING REPORT AND
RECOMMENDATION OF
MAGISTRATE JUDGE; DENYING
APPLICATION TO PROCEED IN
FORMA PAUPERIS AND DISMISSING
ACTION WITHOUT PREJUDICE
[Re: ECF 2, 6]

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On April 13, 2018, pro se Plaintiff Khoa Dang Nguyen (“Mr. Nguyen”) filed a letter

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complaint and an application to proceed in forma pauperis (“IFP”). ECF 1, 2. On May 2, 2018,

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Magistrate Judge Nathanael M. Cousins, to whom the case initially was assigned, issued a

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screening order under 28 U.S.C. § 1915, and requested that Mr. Nguyen file a declaration in

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support of his motion to proceed IFP. See ECF 5. Judge Cousins found that the complaint fails to

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state a claim and fails to satisfy the procedural rules of pleading. Id. Specifically, Judge Cousins

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found that Mr. Nguyen failed to plead federal subject matter jurisdiction and failed to plead fraud

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with particularity. Id. at 3-4. Mr. Nguyen was granted leave to amend by June 1, 2018. Id. Judge

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Cousins also noted that Mr. Nguyen’s IFP application was incomplete and requested that Mr.

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Nguyen file a declaration under penalty of perjury by June 1, 2018 clarifying his monthly income

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and where it goes each month (e.g., in a bank, or spent on something other than on necessary

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expenses). Id. at 2. Judge Cousins advised Mr. Nguyen that the Court will recommend dismissing

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his complaint if he does not amend his complaint by June 1, 2018. Id. at 5.

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Mr. Nguyen did not file any documents in response to the Court’s order. Accordingly, on

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July 10, 2018, Judge Cousins directed that the case be reassigned to a district judge, and issued a

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Report and Recommendation (“R&R”) that the case be dismissed without prejudice for the

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reasons stated in his May 2, 2018 Order. R&R, ECF 6.

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Mr. Nguyen has not filed an objection to the R&R and the time to object has expired. See

United States District Court
Northern District of California

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Fed. R.Civ. P. 6(d), 72(b)(2). The Court finds Judge Cousins’ R&R and Order to be well-

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reasoned and correct in every respect, and ADOPTS the R&R in its entirety. In particular, the

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Court agrees with Judge Cousins’ conclusion that the complaint fails to establish that this Court

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has subject matter jurisdiction. The two main sources of subject matter jurisdiction are federal

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question jurisdiction (also known as “arising under” jurisdiction) and diversity jurisdiction. First,

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with respect to federal question jurisdiction, federal courts have original jurisdiction over civil

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claims “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. A

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claim “arises under” federal law if, based on the “well-pleaded complaint rule,” the plaintiff

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alleges a federal claim for relief. Vaden v. Discovery Bank, 129 S. Ct. 1262, 1272 (2009).

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Here, the complaint fails to establish federal question jurisdiction. Mr. Nguyen’s claim
sounds in fraud, which does not give rise to federal court jurisdiction under 28 U.S.C. § 1331.

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Turning to the whether there is diversity jurisdiction, the complaint must allege that the

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matter in controversy is between citizens of different states and the amount in controversy must

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exceed $75,000 to invoke diversity jurisdiction in an action involving U.S. citizens. 28 U.S.C.

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§1332(a)(1). Diversity jurisdiction requires “complete diversity,” that “plaintiffs and each

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defendant be citizens of different states.” Allen v. Boeing Co., 821 F.3d 1111, 1115 (9th Cir.

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2016). Here, the complaint does not allege the citizenship of any party, although the defendants

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appear to be in Utah. The amount in controversy requirement also appears to be satisfied as Mr.
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Nguyen asks that the Court grant him $137,011.00. However, without allegations of citizenship,

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the Court cannot determine whether complete diversity of citizenship exists.

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Mr. Nguyen’s complaint also insufficiently alleges a claim for fraud. The elements of a

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fraud claim are “‘(a) misrepresentation (false representation, concealment, or nondisclosure ); (b)

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knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable

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reliance; and (e) resulting damage.’” Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir.

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2009) (quoting Engalla v. Permanente Med. Group, Inc., 15 Cal. 4th 951, 974 (1997)). In federal

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court, fraud claims are further subject to Federal Rule of Civil Procedure 9(b) which requires that

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allegations of fraud be stated with particularity. Specifically, the Ninth Circuit has held that
averments of fraud “be accompanied by ‘the who, what, when, where, and how’ of the misconduct

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United States District Court
Northern District of California

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charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v.

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Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). When an “entire claim within a complaint[ ] is

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grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule

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9(b), a district court may dismiss the ... claim.” Id. at 1107.

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The Court agrees with Judge Cousins that at most, Mr. Nguyen has alleged that defendants

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stole his money by making misrepresentations and then absconding with his money. But Mr.

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Nguyen does not address the other elements of fraud and therefore he has not stated a fraud claim

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or complied with Rule 9(b).

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Judge Cousins identified the above deficiencies in his screening order dismissing the

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complaint, and he granted Mr. Nguyen an opportunity to amend the complaint by June 1, 2018.

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See ECF 5. Mr. Nguyen also had an opportunity to address the deficiencies by filing objections to

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Judge Cousins’ R&R. However, Mr. Nguyen has not filed an amended complaint, filed the

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requisite declaration supporting his IFP status, and has not objected to the R&R within the

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allowable time. Because Mr. Nguyen has failed to timely file an amended complaint, the Court

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finds that it is appropriate to dismiss the case. However, the Court also agrees with Judge Cousins

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that dismissal be without prejudice because even though the allegations are insufficient, Mr.

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Nguyen may be able to amend it in a future federal or state court proceeding based on the same

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facts. ECF 6 at 2.
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Accordingly, this action is DISMISSED WITHOUT PREJUDICE. See Fed. R. Civ. P.

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41(b); Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065 (9th Cir. 2004) (“The failure of the

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plaintiff eventually to respond to the court’s ultimatum . . . is properly met with the sanction of a

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Rule 41(b) dismissal.”). In addition, Mr. Nguyen’s application to proceed IFP is DENIED

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WITHOUT PREJUDICE.

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The Clerk shall close the file.

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IT IS SO ORDERED.

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United States District Court
Northern District of California

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Dated: July 30, 2018
______________________________________
BETH LABSON FREEMAN
United States District Judge

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