Peterfai et al v. USA Logistics Inc. et al

Filing 17

ORDER granting in part and denying in part ECF No. 5 , 13 . Defendants shall file an answer to the Complaint no later than thirty days from the date this order is filed. Signed by District Judge William Q. Hayes on 09/24/2024. (stn)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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LASZLO G. PETERFAI, an
individual, SARAH JANE
PETERFAI, an individual, and on
behalf of themselves and others
similarly situated,

Case No.: 23-cv-1695-WQH-KSC
ORDER

Plaintiffs,
v.

USA LOGISTICS INC., dba
USA MOVERS, a California
Corporation; TOP MOVING
SPECIALISTS INC. dba
HERCULES MOVING
SOLUTIONS, a Florida
Corporation; RADO EXPRESS
LOGISTICS, INC., an Illinois
Corporation; GAL ROBI
JEDDAE, an individual; TRAVIS
ACKERMANN, an individual;
RAFAEL OHANESYAN, an
individual; and DOES 1 through
25, inclusive,
Defendants.
HAYES, Judge:

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The matters before the Court are the Motion to Dismiss filed by Defendants Gal

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Robi Jeddae and USA Logistics Inc. (ECF No. 5) and the Motion to Dismiss filed by

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Defendants Top Moving Specialists Inc., Rado Express Logistics, Inc., and Rafael

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Ohanesyan (ECF No. 13).

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I.

BACKGROUND

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On September 14, 2023, Plaintiffs Laszlo G. Peterfai and Sarah Jane Peterfai

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(“Plaintiffs”) initiated this action by filing a Complaint against USA Logistics Inc. (“USA

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Logistics”), Top Moving Specialists Inc. d/b/a Hercules Moving Solutions (“Hercules”),

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Rado Express Logistics, Inc. (“Rado”), Ackermann Express LLC (“Ackermann Express”),

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Monopoly Moving LLC (“Monopoly Moving”), Gal Robi Jeddae, Travis Ackermann, and

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Rafael Ohanesyan (collectively, “Defendants”) (ECF No. 1.)

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On November 29, 2023, Defendants USA Logistics and Jeddae filed the Motion to

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Dismiss. (ECF No. 5.) On December 22, 2023, Plaintiffs filed a Response in opposition to

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the Motion to Dismiss. (ECF No. 11.) On December 28, 2023, Defendants USA Logistics

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and Jeddae filed a Reply. (ECF No. 12.)

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On December 22, 2023, Defendants Travis Ackermann, Ackermann Express, and
Monopoly Moving filed an Answer to the Complaint. (ECF No. 8.)

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On January 11, 2024, Defendants Hercules, Rado, and Ohanesyan filed the Motion

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to Dismiss. (ECF No. 13.) On January 29, 2024, Plaintiffs filed a Response in opposition

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to the Motion to Dismiss. (ECF No. 14.) On February 15, 2024, Defendants Hercules,

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Rado, and Ohanesyan filed a Reply. (ECF No. 15.)

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II.

ALLEGATIONS IN THE COMPLAINT

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“In the fall of 2022, Plaintiffs were moving from California to Texas. While in San

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Diego County, California, Plaintiff Sarah researched online moving companies and was

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directed to Defendant Hercules. On or about September 3, 2022, Defendant Hercules

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communicated via internet and telephone to Plaintiffs to provide a quote and then ‘Binding

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Moving Estimates’ for packing and transporting household goods and furnishings from

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Rancho Santa Fe, California to Houston, Texas.” (ECF No. 1 ¶ 18.)
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In response to Plaintiff Sarah’s request to use a moving “pod,” Defendant Hercules

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represented that it “did not have any pods available until the first week of January 2023,

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but it had a ‘turn around’ truck, which would be less expensive, direct, and only Plaintiffs’

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belongings would be on that truck during the entirety of the transport.” Id. ¶ 19. Defendant

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Hercules additionally represented that it “only hires moving companies with five-star

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ratings,” and “Plaintiffs’ items would not be transferred to another truck during transport.”

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Id.

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“On or about September 3, 2022, after instructing Plaintiffs to estimate the

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measurement for the items that Plaintiffs sought to move, Defendant Hercules sent, via the

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internet to Plaintiffs’ computer in Rancho Santa Fe, California, a written ‘Binding Moving

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Estimate’ with Defendant Hercules’ logo at the top, for the interstate move of 652 cubic

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feet of Plaintiffs’ household goods and furnishings from California to Texas.” Id. ¶ 20. The

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Binding Moving Estimate “provided a Total Moving Estimate of $4,536.09 and at that

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time, Plaintiffs paid the requested ‘Customer Payment’ of $1,570.00 by credit card, which

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ultimately reflected on the credit card statement as a payment to Defendant Rado.” Id.

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“On or about September 15, 2022, based on Defendant Hercules’ instructions,

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Plaintiffs communicated again with Defendant Hercules to add a few more items and

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Defendant Hercules sent, via the internet to Plaintiffs’ computer in Rancho Santa Fe,

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California, a second written ‘Binding Moving Estimate’ with Defendant Hercules’ logo at

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the top, for the interstate move of 812 cubic feet of Plaintiffs’ household goods and

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furnishings from California to Texas.” Id. ¶ 21. The second Binding Moving Estimate

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provided a “Total Moving Estimate of $6,597.49 and Plaintiffs paid an additional

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$1,000.00 by credit card at that time to cover the requested ‘Customer Payment.’” Id.

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“On September 16, 2022, a moving truck arrived at Plaintiffs’ home in Rancho Santa

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Fe, California with 7 men, whom Plaintiffs later learned to be associated with Defendant

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USA Logistics.” Id. ¶ 22. “When the moving truck arrived, Plaintiffs were told that the

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items they wanted moved needed to be taken out of Plaintiffs’ home and garage and placed

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on the street and driveway and then placed on the truck. Some of the men proceeded to
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pack some of the items and wrap some of the furniture, while the other men took all of the

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items that Plaintiffs wanted moved out of Plaintiffs’ home and garage, placed them in the

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street and driveway and then started placing them in the moving truck, which appeared to

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be a standard 26 foot box truck.” Id.

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“After Defendant USA Logistics’ men started placing Plaintiffs’ items on the truck

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from the driveway and street, Plaintiffs were told by one of the men, David of USA

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Logistics, that Plaintiffs’ items would ‘fill the entire truck.’ David of USA Logistics then

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said to Plaintiffs that the new cost for the move was $23,000.00, which was more than three

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times the amount contained in the [second Binding Moving Estimate].” Id. ¶ 23. Plaintiff

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Lasz[lo] told the men to stop and that Plaintiffs would not be moving forward with the

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move. “David of USA Logistics then threatened Plaintiffs by saying that if Plaintiffs

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stopped the move, in addition to losing Plaintiffs’ deposit of $2,570.00, Plaintiffs would

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have to pay $5,000.00 more to unload and place Plaintiffs’ belongings in the street and

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driveway; the men would not return the belongings to the house or garage.” Id. ¶ 25.

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“Plaintiffs felt like they had no choice so when David said that Defendant USA Logistics

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would complete the move for $17,500.00, Plaintiffs paid the additional deposit demanded

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of $9,700.00 (at this time the total amount of deposits paid were $12,270). Despite

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Plaintiffs’ protests, once the men from USA Logistics placed Plaintiffs’ remaining items

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in the truck, they immediately drove away with Plaintiffs’ belongings.” Id. ¶ 26.

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“On or about Saturday, September 24, 2022 at around 12:30 pm and without any

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advance notice, a person who identified himself as being from another company named

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Monopoly Moving, and who was later identified as Travis Ackermann of Ackermann

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Express LLC and Monopoly Moving LLC, telephoned Plaintiff Sarah, who was now at

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Plaintiffs’ home in Houston, Texas, and told her that he was going to deliver Plaintiffs’

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items to Plaintiffs’ home in Houston, Texas at 3:00 pm that same day.” Id. ¶ 27. “Defendant

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Ackermann also demanded that Plaintiffs pay a purported remaining balance of $5,225.00

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in cash or money orders upon delivery. Defendant Ackermann asserted that he would only

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take cash or United States Postal Service money orders and no other form of payment.” Id.
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“Plaintiff Sarah protested the cash/money order payment and disputed that Plaintiffs owed

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the money demanded by Defendants Ackermann, Ackermann LLC and Monopoly.

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Defendant Ackermann refused to deliver Plaintiffs’ items and threatened to dump

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Plaintiffs’ belongings in the desert unless Plaintiffs paid him the full amount demanded in

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cash or United States Postal Service money orders.” Id. ¶ 28. “Plaintiffs requested that the

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delivery be delayed until at least Monday, September 26, 2022 so that cash or money orders

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could be obtained to pay the ransom payment as Defendant Ackermann had demanded.

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Defendant Ackermann never responded.” Id. “On Monday, September 26, 2022, Plaintiff

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Sarah rushed as quickly as she could in the morning to get cash from her bank and then to

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the United States Post Office to get money orders to pay the $5,225.00 ransom demand.

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Then Plaintiff Sarah went back to Plaintiffs’ home and waited.” Id. ¶ 31.

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“On September 26, 2022, shortly after Plaintiff Sarah returned home from the post

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office, Defendants Ackermann, Ackermann LLC and Monopoly showed up in a truck that

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was not the same truck that picked up Plaintiffs’ belongings, shoved a bunch of paperwork

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in front of Plaintiff Sarah to sign, took Plaintiffs’ money orders, dumped boxes of

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Plaintiffs’ items in the garage and on the driveway of Plaintiffs’ home, and refused to give

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Plaintiffs copies of the paperwork, including but not limited to the Bill of Lading[.]” Id.

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¶ 32.

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“Upon unpacking and inspecting their belongings, Plaintiffs found that a vast

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majority of Plaintiffs’ items were either damaged or missing. Since Plaintiffs had been told

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by Defendant Hercules that Plaintiffs had insurance that covered their items, Plaintiffs

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submitted an insurance claim only to find out that USA Logistics was somehow involved

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in the insurance process, and for a claim of over $32,164.00 in damaged or missing items,

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Plaintiffs were offered payment of $375.60, which would require Plaintiffs to sign a

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Release Form. Plaintiffs did not accept and refused to sign the Release Form.” Id. ¶ 33.

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“None of the Defendants possess or possessed the required certifications and/or

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licenses from the Department of Consumer Affairs, Bureau Of Household Goods And

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Services in California.” Id. ¶ 34. “Defendants’ custom and practice to similarly extort
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interstate customers like Plaintiffs out of cash for their property is shown in the many

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complaints of other consumers[.]” Id. ¶ 35.

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“Defendants operated as if they were a single business entity by operating and

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working through affiliated companies named USA Logistics, Hercules, Rado, Monopoly,

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and other entities presently unknown.” Id. ¶ 45. “Individual Defendants owned, operated,

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and/or worked as employees, members, and associates of the affiliated companies.” Id.

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¶ 46. “[E]ach of the Defendants amongst each other agreed to commit, and did so commit,

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at least two acts of racketeering activity.” Id. ¶ 52.

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Plaintiffs bring the following causes of action against Defendants: (1) violations of

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the Racketeer Influenced and Corrupt Organizations Act (“RICO”); (2) violations of the

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Carmack Amendment; (3) violations of the California Control of Profits of Organized

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Crime Act (“CA RICO”); (4) Conversion/Civil Theft; (5) Fraudulent Inducement;

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(6) Rescission of Contract; (7) Breach of Fiduciary Duty; (8) Constructive Fraud;

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(9) Negligence; and (10) violations of Unfair Competition Laws. Plaintiffs seeks the

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following relief: preliminary and permanent injunctions on behalf of themselves and others

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similarly situated, enjoining and restraining Defendants from continuing the wrongful,

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unlawful, unfair and fraudulent business practices as set forth above; disgorgement;

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statutory and treble damages and penalties; compensatory damages; special damages;

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general damages; punitive damages; interest and prejudgment interest; reasonable

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attorney’s fees’ and costs; and such other relief as the Court deems just and proper.

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III.

LEGAL STANDARD

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Rule 12(b)(6) of the Federal Rules of Civil Procedure permits dismissal for “failure

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to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In order to state

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a claim for relief, a pleading “must contain … a short and plain statement of the claim

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showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Dismissal under Rule

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12(b)(6) “is ‘proper only where there is no cognizable legal theory or an absence of

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sufficient facts alleged to support a cognizable legal theory.’” Shroyer v. New Cingular

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Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (quoting Navarro v. Block, 250

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F.3d 729, 732 (9th Cir. 2001)).

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“To survive a motion to dismiss, a complaint must contain sufficient factual matter,

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

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662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim

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has facial plausibility when the plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

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However, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

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requires more than labels and conclusions, and a formulaic recitation of the elements of a

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cause of action will not do.” Twombly, 550 U.S. at 555 (quoting Fed. R. Civ. P. 8(a)). While

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a pleading “does not require ‘detailed factual allegations,’” Rule 8 nevertheless “demands

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more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556

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U.S. at 678 (quoting Twombly, 550 U.S. at 555). A court is not “required to accept as true

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allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable

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inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “In

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sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content,

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and reasonable inferences from that content, must be plausibly suggestive of a claim

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entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).

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IV.

DISCUSSION

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Defendants USA Logistics, Jeddae, Hercules, Rado, and Ohanesyan move to dismiss

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the claims against them on the following grounds: (1) the Bill of Lading limits their liability

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to $.60 per pound for damaged, lost, or destroyed property; (2) the Carmack Amendment

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preempts Plaintiffs’ California statutory and common law claims; (3) Plaintiffs fail to

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adequately plead claims for civil RICO (4) Plaintiffs fail to adequately plead claims of

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conversion and constructive fraud against Defendant Rado; (5) Plaintiffs fail to adequately

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allege a Carmack Amendment claim against Defendant Hercules; and (6) Plaintiffs fail to

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plead personal liability against Defendants Jeddae and Ohanesyan.

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A. Bill of Lading

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Defendants first contend that the Bill of Lading limits their liability to $.60 per pound

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for Plaintiffs’ damaged, lost, or destroyed property, and that Plaintiffs agreed to this

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limitation. (ECF No. 5 at 5; ECF No. 13 at 6.) However, the Complaint alleges that all

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contractual agreements have been rescinded. (ECF No. 1 ¶ 102.) Plaintiffs’ allegations

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must be accepted as true for purposes of a 12(b)(6) motion. Additionally, Plaintiffs do not

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attach the Bill of Lading to their Complaint, and neither party has requested the Court

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consider the terms of the Bill of Lading pursuant to the incorporation-by-reference

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doctrine. See, e.g., Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).

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B. Preemption of State Law Claims

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“A fundamental principle of the Constitution is that Congress has the power to

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preempt state law.” Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000). A

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federal statute completely preempts a state action when “the scope of a statute indicates

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that Congress intended federal law to occupy a field exclusively.” Freightliner Corp. v.

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Myrick, 514 U.S. 280, 287 (1995). The Carmack Amendment, enacted in 1906, was

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designed to establish a “national scheme of carrier liability for goods damaged or lost

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during interstate shipment.” Campbell v. Allied Van Lines Inc., 410 F.3d 618, 620 (9th Cir.

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2005). The Carmack Amendment “provides the exclusive cause of action” against carriers

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for interstate shipping contract claims, and “it completely preempts state law claims

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alleging delay, loss, failure to deliver, and damage to property.” White v. Mayflower

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Transit, LLC, 543 F.3d 581, 584 (9th Cir. 2008); Hall v. N. Am. Van Lines, Inc., 476 F.3d

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683, 688 (9th Cir. 2007) (holding that the Carmack Amendment is the “exclusive cause of

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action” against a carrier of interstate goods, and this extends to “all manner of harms”

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arising from loss or damage to the shipment); N.Y., New Haven & Hartford RR Co. v.

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Nothnagle, 346 U.S. 128, 131 (1953) (“Congress superseded diverse state laws with a

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nationally uniform policy governing interstate carriers’ liability for property loss.”).

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Plaintiffs concede that the Carmack Amendment preempts their conversion and

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negligence claims against USA Logistics and Hercules, who are alleged to be “carriers”
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within the meaning of the Carmack Amendment. However, Plaintiffs contend that the

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Carmack Amendment does not preempt claims based on conduct independent from the loss

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or damage of Plaintiffs’ belongings, such as Plaintiffs’ RICO claims, which arise out of

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allegations of fraud and extortion. In Hall, the Ninth Circuit held that “the Carmack

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Amendment completely preempts a contract claim alleging the late delivery of goods, even

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without loss or property damage.” Hall, 476 F.3d at 688. The Ninth Circuit reasoned that

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“making finer distinctions between the types of contract damages would ‘defeat the

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purpose of the statute, which was to create uniformity out of disparity.’” Id. Since

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Plaintiffs’ allegations of fraud and extortion arise out of Defendants’ alleged refusal to

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deliver Plaintiffs’ items, such claims against Defendants USA Logistics and Hercules are

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preempted by the Carmack Amendment. See Titans Trading Corp. v. JTS Express, No. CV

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09-00714 MMM (RCx), 2009 WL 537515, at *3 (C.D. Cal. Mar. 3, 2009) (concluding that

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claims based on similar conduct were preempted by the Carmack Amendment because

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“courts have consistently held that the amendment preempts all state claims related to a

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shipping agreement”); White v. Mayflower Transit, LLC, 481 F. Supp. 2d 1105, 1109 n.3

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(C.D. Cal. 2007) (holding that claims “for contractual fraud, insurance coverage, general

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negligence, and property damage relate[d] to the loss of, or damage to, plaintiff’s personal

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belongings, [were] … preempted.”).

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To the extent Defendants contend the Carmack Amendment preempts state law

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claims against Rado, Jeddae, and Ohanesyan, these Defendants are not alleged to be

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“carriers” within the meaning of the Carmack Amendment. Based upon the allegations of

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the Complaint, the Carmack Amendment does not apply to these Defendants, and therefore,

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the Court does not find, at this stage in the proceedings, that the Carmack Amendment

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preempts the state law claims against them. See Chubb Grp. of Ins. Cos. v. H.A. Transp.

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Sys., Inc., 243 F. Supp. 2d 1064, 1068–69 (C.D. Cal. 2002) (“[T]he Carmack Amendment

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does not apply to brokers. … Consequently, most courts hold that brokers may be held

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liable under state tort or contract law in connection with shipments.”); FNS, Inc. v.

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Bowerman Trucking, Inc., No. 09–CV–0866–IEG (PCL), 2010 WL 532421, at *4 (S.D.
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Cal. Feb. 9, 2010) (“The Court agrees that the Carmack Amendment does not preempt state

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law claims against brokers[.]”).

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The Motions to Dismiss the state law claims, as preempted by the Carmack
Amendment are granted as to USA Logistics and Hercules and otherwise denied.

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C. RICO Claims

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The RICO Act provides for civil and criminal liability. Odom v. Microsoft Corp.,

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486 F.3d 541, 545 (9th Cir. 2007) (citing Pub. L. No. 91-452, § 901, 84 Stat. 922 (1970))

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(codified at 18 U.S.C. § 1964(c)). The elements of a civil RICO claim are “(1) conduct (2)

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of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate acts’)

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[and] (5) causing injury to plaintiff's business or property.” United Bhd. of Carpenters &

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Joiners of Am. v. Bldg. & Constr. Trades Dep’t, AFL-CIO, 770 F.3d 834, 837 (9th Cir.

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2014) (quoting Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361

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(9th Cir. 2005)). “‘Racketeering activity’ includes, inter alia, ‘any act which is indictable’

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under the Hobbs Act, 18 U.S.C. § 1951, or ‘any act or threat involving … extortion, …

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which is chargeable under State law.’” Id. (quoting 18 U.S.C. § 1961(1)(A), (B)) (cleaned

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up). “A ‘pattern of racketeering activity’ requires at least two predicate acts of racketeering

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activity, as defined in 18 U.S.C. § 1961(1) within a period of ten years.” Canyon County.

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v. Syngenta Seeds, Inc., 519 F.3d 969, 972 (9th Cir. 2008) (citing 18 U.S.C. § 1961(5)).

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The Ninth Circuit has observed that “[t]he identification of a pattern of racketeering has

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proven a challenging task for courts.” Sever v. Ala. Pulp Corp., 978 F.2d 1529, 1535 (9th

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Cir. 1992) (quotation omitted). The Supreme Court in H.J. Inc. v. Nw. Bell Telephone Co.,

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492 U.S. 229 (1989), “considered the term in an effort to provide some guidance to lower

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courts struggling with it” and “held that to show a pattern of racketeering activity, a RICO

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plaintiff must ‘show that the racketeering predicates are related, and that they amount to or

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pose a threat of continued criminal activity.’” Sever, 978 F.2d at 1535 (quoting H.J. Inc.,

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492 U.S. at 239).

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Federal Rule of Civil Procedure 9(b)’s “requirement that ‘in all averments of fraud

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or mistake, the circumstances constituting fraud or mistake shall be stated with
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particularity’ applies to civil RICO fraud claims.” Edwards v. Marin Park, Inc., 356 F.3d

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1058, 1065–66 (9th Cir. 2004) (quoting Alan Neuman Productions, Inc. v Albright, 862

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F.2d 1388, 1392 (9th Cir. 1989)). Rule 9(b) “requires a pleader of fraud to detail with

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particularity the time, place, and manner of each act of fraud, plus the role of each

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defendant in each scheme.” Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940

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F.2d 397, 405 (9th Cir. 1991). While state of mind may be generally alleged, “the factual

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circumstances of the fraud must be alleged with particularity.” Odom, 486 F.3d at 554.

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Plaintiffs assert the Complaint “provides facts that show or are the

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misrepresentations, how misrepresentations were made, dates, places, names of those

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involved, and by what means the representations were tendered.” (ECF No. 11 at 16.)

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However, Plaintiffs frequently utilize group terms such as “Defendants,” “Individual

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Defendants” and “Moving Enterprise,” suggesting that all Defendants were involved in

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nearly all actions. (ECF No. 1 ¶ 38–56.) Under Rule 9(b)’s heightened pleading standard,

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Plaintiffs cannot “lump together the defendants without identifying the particular acts or

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omissions that each defendant committed.” Mostowfi v. i2Telecom Int’l., Inc., 269 Fed.

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Appx. 621, 624 (9th Cir. 2008); see, e.g., Thomas Land & Development, LLC v. Vratsinas

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Construction Company, No. 18-CV-1896-AJB-NLS, 2019 WL 3842995, at *7 (explaining

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that “Plaintiff’s frequent use of ‘ENTITY DEFENDANTS’ suggests that every named

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defendant was involved in nearly every alleged scheme and all collusive practices. This

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term prevents the Court from being able to distinguish which defendant was engaged in

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what wrongful conduct, more so if every named defendant was involved, it prevents the

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Court from understanding how they played a role.”).

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Furthermore, Plaintiffs allege “each of the Defendants” committed “at least two acts

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of racketeering activity in the conduct of the affairs of the Moving Enterprise.” (ECF No.

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1 ¶ 52.) However, Plaintiffs fail to identify the “who, what, when, where, and how” of the

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alleged acts, as required under Rule 9(b). See Vess v. Ciba-Geirgy Corp. USA, 317 F.3d

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1097, 1106 (9th Cir. 2003) (“Averments of fraud must be accompanied by ‘the who, what,

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when, where, and how’ of the misconduct charged.”) (quoting Cooper v. Pickett, 137 F.3d
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616, 627 (9th Cir. 1997)). Although some specific factual allegations underlying the RICO

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claims against non-moving Defendants Travis Ackermann, Ackermann Express, and

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Monopoly Moving can be identified in the Complaint (see, e.g., ECF No. 1 ¶¶ 27–32,) the

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RICO claim fails to detail which of the moving Defendants are alleged to have committed

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which predicate acts, leaving the moving Defendants unable to determine whether or to

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what extent their alleged conduct was the subject of the extortion predicate acts.

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Because Plaintiffs’ civil RICO claims do not identify the “who, what, when, where,

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and how” of the alleged fraud, and impermissibly lump Defendants’ actions together,

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failing to identify their individual acts with specificity, the Motions to Dismiss the civil

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RICO claims against the moving Defendants are granted.

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D. Constructive Fraud and Conversion Claims against Rado

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Defendant Rado moves to dismiss the constructive fraud and conversion claims.1

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First, Rado contends Plaintiffs fail to allege constructive fraud against it because Rado does

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not owe fiduciary duties to Plaintiffs. While Plaintiffs allege Rado is a “broker” under the

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Carmack Amendment, Rado contends that the “transportation laws do not have any

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‘fiduciary’ designations to brokers of household goods.” (ECF No. 13 at 16.)

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“Constructive fraud is a unique species of fraud applicable only to a fiduciary or

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confidential relationship.” Salahutdin v. Valley of Cal., Inc., 24 Cal. App. 4th 555, 562 (Ct.

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App. 1994) (citation omitted). To succeed in a constructive fraud claim, a plaintiff must

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show: (1) the existence of a fiduciary or confidential relationship; (2) nondisclosure; (3)

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intent to deceive; and (4) reliance and resulting injury. Younan v. Equifax Inc., 111 Cal.

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App. 3d 498, 516 n.14 (Ct. App. 1980). “Like fraud claims, constructive fraud claims

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[under California law] are subject to the particularity requirements of Rule 9(b).” See

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Edumoz, LLC v. Republic of Mozambique, No. CV 13-02309-MMM, 2014 WL 12802921,

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at *30 (C.D. Cal. July 21, 2014).

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As stated above, based upon the allegations of the Complaint, the Carmack Amendment preempts state
law claims against USA Logistics and Hercules but does not preempt state law claims against Rado.
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Under the Carmack Amendment, a “broker” is defined as “a person, other than a

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motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells,

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offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise

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as selling, providing, or arranging for, transportation by motor carrier for compensation.”

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49 U.S.C. § 13102(2). Plaintiffs contend that Rado, as a broker, owed fiduciary duties to

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Plaintiffs because a broker acts as an agent of Plaintiffs. (ECF No. 14 at 9 (“[A] fiduciary

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relationship is a recognized legal relationship such as guardian and ward, trustee and

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beneficiary, principal and agent, or attorney and client.”).)

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However, Plaintiffs cite no authority for the assertion that a broker acts as an agent

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of the party who owns the shipped goods, or otherwise owes the owner a fiduciary duty.

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See Oak Harbor Freight Lines v. Sears Roebuck & Co., 420 F. Supp. 2d 1138, 1147 (W.D.

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Wash. 2006) (“NLC has failed to provide any case law supporting its argument that the

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definitions of ‘brokerage services’ and ‘non-brokerage services,’ see 49 C.F.R.

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§§ 371.1(c)–(d), automatically make all brokers agents because they act ‘on behalf of’

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someone else. NLC’s argument overlooks the definition of broker in 49 U.S.C. § 13102(2),

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which explicitly states that a broker is a person who acts ‘as a principal or agent’ in

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arranging for transportation by motor carrier for compensation.”). Moreover, where fraud

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is alleged against a corporation, a plaintiff must also “allege the names of the employees

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or agents who purportedly made the fraudulent representations or omissions, or at a

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minimum identify them by their titles and/or job responsibilities.” UMG Recordings, Inc.

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v. Glob. Eagle Entm’t, Inc., 117 F. Supp. 3d 1092, 1108 (C.D. Cal. 2015). Plaintiffs fail to

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allege any acts by employees or agents of Rado. As such, the Complaint fails to adequately

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allege a constructive fraud claim against Rado.

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Rado also contends Plaintiffs fail to adequately allege conversion against Rado

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because “Plaintiffs failed to demonstrate any wrongful dominion of Plaintiffs’ property, or

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that [Rado] ha[s] been unjustly enriched.” (ECF No. 13 at 13.) “The elements of a

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conversion cause of action are (1) plaintiffs’ ownership or right to possession of the

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property at the time of the conversion; (2) defendants’ conversion by a wrongful act or
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disposition of plaintiffs’ property rights; and (3) damages.” Graham-Sult v. Clainos, 756

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F.3d 724, 737 (9th Cir. 2014) (alteration omitted).

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Here, the Complaint alleges that Rado “substantially interfered with Plaintiffs’

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property by knowingly and/or intentionally preventing Plaintiffs from having access to

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their personal property and/or destroying Plaintiffs’ personal property and/or refusing to

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return certain items of Plaintiffs’ personal property after Plaintiffs demanded their return.”

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(ECF No. 1 ¶ 82.) The Complaint alleges that this conduct “damaged Plaintiffs by

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interfering with and preventing access to their property and by way of payment of fees for

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an interstate move Defendants conducted illegally.” Id. These allegations are sufficient to

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state a claim for conversion against Rado.
The Motion to Dismiss the constructive fraud claim against Rado is granted, and the

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Motion to Dismiss the conversion claim against Rado is denied.

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E. Carmack Amendment Claim against Hercules

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Defendant Hercules moves to dismiss the Carmack Amendment claim. Defendant

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contends that the Complaint alleges Hercules is a broker, rendering the Carmack

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Amendment inapplicable to Hercules. The Carmack Amendment “subjects common

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carriers and freight forwarders transporting cargo in interstate commerce to absolute

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liability for actual loss or injury to property.” Ins. Co. of N. Am. v. NNR Aircargo Serv.

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(USA), Inc., 201 F.3d 1111, 1115 (9th Cir.2000) (emphasis added) (citing 49 U.S.C.

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§ 14706(a)). The Carmack Amendment does not impose liability on brokers. See Chubb,

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243 F. Supp. 2d at 1068–69. However, the Complaint alleges that Hercules “operates a

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common carrier business and/or as a purported broker.” (ECF No. 1 ¶ 5.) Plaintiffs’

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allegations must be accepted as true for purposes of a 12(b)(6) motion. At this stage in the

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proceedings, Plaintiffs’ contention that Hercules operates a common carrier business is

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sufficient to plausibly allege the Carmack Amendment is applicable to Hercules.

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Accordingly, the Motion to Dismiss the Carmack Amendment claim against Hercules is

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denied.

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F. Remaining Claims Against Jeddae and Ohanesyan

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Defendants move to dismiss the conversion, rescission of contract, negligence, and

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unfair competition claims against Defendants Jeddae and Ohanesyan for lack of allegations

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supporting individual liability of these defendants. The Complaint fails to allege any facts

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specific to the conduct of Jeddae and Ohanesyan. The Motions to Dismiss the remaining

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claims against Defendants Jeddae and Ohanesyan are granted.

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V.

CONCLUSION

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IT IS HEREBY ORDERED the Motions to Dismiss (ECF Nos. 5, 13) are granted in

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part and denied in part, as discussed above. All claims dismissed in this Order are dismissed

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without prejudice and with leave to amend.

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IT IS FURTHER ORDERED that no later than twenty-one days from the date this

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Order is filed, Plaintiffs may file a first amended complaint that addresses the deficiencies

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identified in this Order. If no first amended complaint is filed, Defendants shall file an

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answer to the Complaint no later than thirty days from the date this Order is filed.

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Dated: September 24, 2024

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