RJC Funding, LLC v. Macaluso et al

Filing 39

ORDER denying defendants' 33 Motion to Dismiss, and ORDER to Show Cause.The Court orders RJC Funding to file a memorandum on or before April 14, 2017, explaining why the Court shouldn't dismiss the remaining claims for failure to comply with Court's order. Signed by Judge Larry Alan Burns on 4/5/17. (All non-registered users served via U.S. Mail Service)(kas)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 RJC FUNDING LLC, a Nevada limited liability company, CASE NO. 15cv2659-LAB (BLM) 12 ORDER DENYING MOTION TO DISMISS AND ORDER TO SHOW CAUSE Plaintiff, 13 14 vs. TODD MACALUSO, etc., et al., 15 Defendants. 16 Former attorney Todd Macaluso pled guilty to wire fraud over a year ago. Macaluso 17 defrauded lenders, including RJC Funding, by forging client signatures in return for advances 18 on litigation loans. Judge Benitez sentenced Macaluso to five months in prison, three years 19 of supervised release, and ordered him to pay fines and restitution totaling $250,000.1 20 Around the same time, RJC Funding filed a civil suit against Macaluso. Last April, the 21 Court granted partial judgment against Macaluso and his business entities for about $2.4 22 million.2 RJC Funding also named Macaluso’s wife, Tonya Macaluso, and his sister, Stacey 23 Macaluso, as defendants who conspired with him to defraud clients and hide assets. Tonya 24 and Stacey moved to dismiss the claims against them. RJC Funding opposed. 25 The motion to dismiss is only five pages, but it’s difficult to understand, doesn’t cite 26 a single case, and appears to have missed that the Court’s already granted partial judgment. 27 28 1 See USA v. Macaluso, 15-cr-948-BEN. 2 Dkt. 26. -1- 15cv2659 1 First, venue is proper since a substantial part of the events giving rise to the claim 2 occurred in this district, and, both Stacey and Tonya are domiciled in San Diego County. 28 3 U.S.C. § 1391. The defendants don’t dispute those facts. Instead, they argue that a 4 settlement agreement RJC Funding entered with Macaluso three years ago contains a 5 mandatory arbitration clause that requires resolution in New York. The Court disagrees. RJC 6 Funding and Macaluso waived any arbitration provision by litigating in this court for the past 7 two years. And the defendants haven’t explained why they have a right to enforce this 8 agreement when they also claim they weren't parties to it. Even if the defendants could 9 enforce the arbitration clause, the agreement provides that RJC Funding "may, at its option, 10 demand arbitration, as stated above, or may institute any legal or equitable action to collect 11 the amount due." Venue is proper. 12 Second, Tonya and Stacey essentially say they didn’t do anything wrong. But at the 13 motion to dismiss stage, the Court must “accept as true all facts pleaded in [the] complaint.” 14 Fry v. Napoleon Cmty. Sch., 137 S. Ct. 743, 751 (2017). RJC Funding has sufficiently pled 15 causes of action against both defendants for conspiracy, unjust enrichment, and fraudulent 16 conveyances. If the defendants believe there’s no evidence to support those claims, then 17 the proper tool is a motion for summary judgment. Defendants’ motion to dismiss is DENIED. 18 When the Court granted partial judgment last April, it warned that it would not “leave 19 this case perpetually open” and ordered RJC Funding “to submit a status report within six 20 months” or face dismissal.3 RJC Funding didn’t file a status report. The Court orders RJC 21 Funding to file a memorandum on or before April 14, 2017, explaining why the Court 22 shouldn’t dismiss the remaining claims for failure to comply with Court’s order. 23 24 IT IS SO ORDERED. DATED: April 5, 2017 25 26 HONORABLE LARRY ALAN BURNS United States District Judge 27 28 3 Dkt. 26. -2- 15cv2659

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