Barker et al v. Gottlieb et al
Filing
102
ORDER GRANTING DEFENDANTS MOTION TO DISMISS PLAINTIFFS THIRD AMENDED COMPLAINT re 94 Motion to Dismiss. Signed by JUDGE LESLIE E. KOBAYASHI on 10/24/2014. Defendants' Motion to Dismiss Plaintiff's Third Amended Complaint, filed July 15, 2014, is HEREBY GRANTED. There being no remaining claims in this case, the Court DIRECTS the Clerk's Office to enter judgment and close the case on November 17, 2014, unless Plaintiff files a timely motion for reconsideration of the instant Order. (eps)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
Plaintiff,
)
)
vs.
)
)
JOSHUA L. GOTTLIEB, JONATHAN )
DUBOWSKY, DONALD BORNEMAN,
)
)
CHARLES HALL, SCOTT HARRIS,
THE VALUE EXCHANGE ADVISORS, )
also known as/doing business )
as TVXA, GEMCO-PACIFIC ENERGY )
)
LLC, aka GPE and ROES 1-25,
)
)
Defendants.
_____________________________ )
CHARLES BARKER III,
CIVIL 13-00236 LEK-BMK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
PLAINTIFF’S THIRD AMENDED COMPLAINT
On July 15, 2014, Defendants Joshua L. Gottlieb,
Jonathan Dubowsky, Donald Borneman, Charles Hall, Scott Harris,
the Value Exchange Advisors (“TVXA”), and GEMCo-Pacific Energy
LLC (collectively “Defendants”) filed their Motion to Dismiss
Plaintiff’s Third Amended Complaint (“Motion”).
[Dkt. no. 94.]
Pro se Plaintiff Charles Barker III (“Plaintiff”) filed his
memorandum in opposition on August 22, 2014, and Defendants filed
their reply on September 22, 2014.
[Dkt. nos. 97, 98.]
On
September 24, 2014, the Court issued an entering order finding
this matter suitable for disposition without a hearing pursuant
to Rule LR7.2(d) of the Local Rules of Practice of the United
States District Court for the District of Hawai`i (“Local
Rules”).
[Dkt. no. 99.]
After careful consideration of the
Motion, supporting and opposing memoranda, and the relevant legal
authority, Defendants’ Motion is HEREBY GRANTED for the reasons
set forth below.
BACKGROUND
The relevant factual and procedural background of this
case is set forth in this Court’s October 16, 2013 Order Granting
in Part and Denying in Part Defendants’ Motion for Judgment on
the Pleadings (“10/16/13 Order”), and this Court’s May 28, 2014
Order Granting in Part and Denying in Part Defendants’ Motion to
Dismiss Second Amended Complaint (“5/28/14 Order”).
44, 88.1]
[Dkt. nos.
This Court will only repeat the background that is
relevant to the instant Motion.
Plaintiff’s Second Amended Complaint, filed January 16,
2014, [dkt. no. 53,] alleged the following claims: fraud
(“Count I”); breach of fiduciary responsibility (“Count II”);
professional misconduct (“Count III”); violations of United
States securities laws (“Count IV”); misrepresentation
(“Count V”); malfeasance (“Count VI”); misappropriation of
corporate funds (“Count VII”); breach of contract (“Count VIII”);
anticipatory breach of contract (“Count IX”); theft of real
property purchase contract (“Count X”); theft of intellectual
1
The 10/16/13 Order is available at 978 F. Supp. 2d 1168,
and the 5/28/14 Order is available at 2014 WL 2215920.
2
property (“Count XI”); theft of work product (“Count XII”);
negligence (“Count XIII”); tortious interference (“Count XIV”);
and violation of interstate commerce laws (“Count XV”).
In the 5/28/14 Order, this Court:
•dismissed with prejudice the portion of Count I alleging fraud
regarding the future availability of financing, and Counts
II, III, IV, V, VIII, IX, X, XI, XII, and XIII; and
•dismissed without prejudice the portion of Count I alleging
fraudulent alteration of agreements, Counts VI, VII, XIV,
and XV.
2014 WL 2215920, at *14.
Plaintiff filed his Third Amended Complaint on June 27,
2014.
[Dkt. no. 89.]
The first fifteen claims in the Third
Amended Complaint (“Amended Count I” through “Amended Count XV”)
allege the same claims as Counts I through XV of the Second
Amended Complaint.
Plaintiff also added a claim titled “Evidence
Suppression & Obstruction of Justice” (“Amended Count XVI”) and a
claim alleging perjury (“Amended Count XVII”).
See id. at pg. 2.
In the instant Motion, Defendants ask this Court to
dismiss all of Plaintiff’s claims in the Third Amended Complaint
with prejudice.
DISCUSSION
I.
Claims Previously Dismissed with Prejudice
Defendants first argue that this Court should disregard
Plaintiff’s restatement of claims that the 5/28/14 Order
dismissed with prejudice.
In the Third Amended Complaint,
3
Plaintiff acknowledges that the 5/28/14 Order dismissed many of
the claims in the Second Amended Complaint with prejudice, but he
states that he objects to the rulings in the 5/28/14 Order.
He
has restated those claims so that they will be “preserved for the
record on appeal.”
[Third Amended Complaint at ¶ 1.]
First,
Plaintiff did not file a motion for reconsideration of the
5/28/14 Order.
This Court declines to construe Plaintiff’s
statements in the Third Amended Complaint as a motion for
reconsideration.
In addition, the Ninth Circuit has stated that, “[f]or
claims dismissed with prejudice and without leave to amend, we
will not require that they be repled in a subsequent amended
complaint to preserve them for appeal.”
Lacey v. Maricopa Cnty.,
693 F.3d 896, 928 (9th Cir. 2012) (en banc).
Only claims that
are voluntarily dismissed are deemed waived if the plaintiff
fails to replead them in the amended complaint.
Id.
Thus, it
was not necessary for Plaintiff to reallege the claims that the
5/28/14 Order dismissed with prejudice.
This Court GRANTS the Motion insofar as this Court
DISMISSES the following claims WITH PREJUDICE: the portion of
Amended Count I alleging fraud regarding the future availability
of financing; and Amended Counts II, III, IV, V, VIII, IX, X, XI,
XII, and XIII.
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II.
New Claims
In the 5/28/14 Order, this Court stated:
This Court emphasizes that Plaintiff does not
have leave to add new parties, claims, or theories
of liability. If Plaintiff wishes to make other
amendments, he must file a motion showing good
cause for an amendment to the Rule 16 Scheduling
Order because the deadline to add parties and
amend pleadings was May 9, 2014. See Rule 16
Scheduling Order, filed 2/3/14 (dkt. no. 61), at
2.
2014 WL 2215920, at *15 (emphases added).
By adding the new
claims in Amended Counts XVI and XVII, Plaintiff violated both
the 5/28/14 Order and the Rule 16 Scheduling Order.
This Court
therefore GRANTS Defendants’ Motion as to Amended Counts XVI and
XVII.
See Fed. R. Civ. P. 41(b) (“If the plaintiff fails
to . . . comply with . . . a court order, a defendant may move to
dismiss the action or any claim against it.”).
Amended Counts XVI and XVII are DISMISSED WITH
PREJUDICE.
Although the dismissal is without leave to amend in
the instant case, this Order is not a ruling on the merits of
those claims and does not preclude Plaintiff from bringing
Amended Counts XVI and XVII in a separate action.
III. Amended Claims
A.
Amended Count XV
In the 5/28/14 Order, this Court ruled that Count XV,
alleging violation of interstate commerce laws, failed to state a
plausible claim for relief because it only alleged that the
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violations subjected him to “‘potential tax liabilities and
penalties.’”
2014 WL 2215920, at *4 (emphasis in 5/28/14 Order)
(quoting Second Amended Complaint at ¶ 139).
Thus, Count XV did
not allege an injury in fact, and Plaintiff did not plead a
sufficient basis for his standing to pursue that claim.
This
Court dismissed Count XV without prejudice, finding that
Plaintiff could cure the defects in that claim if he could
“allege that he faces actual or imminent tax liabilities or
penalties as a result of Defendants’ alleged violations of
federal and state tax laws.”
Id. at *5 (citation omitted).
Plaintiff’s only amendment to address that portion of
the 5/28/14 Order was to include the allegation that: “The
financial extent of [Defendants’ violation of state and federal
tax laws] is as yet unknown, and this Court has refused thus far
to compel the production of documents which are necessary to
reveal the extent of the potential tax liabilities.”
Amended Complaint at ¶ 139.]
[Third
The Third Amended Complaint does
not allege that Plaintiff, either individually or through his
interests in the entities relevant to his claims,2 faces actual
or imminent tax liabilities or penalties as a result of
2
Plaintiff refers to the following entities as “the
Relevant LLCs:” Cogentech-Pacific LLC; Honoka`a Energy LLC;
Kama`aina Earth Products LLC, also known as 808 Topsoil (“KAEP”);
Kuleana Management LLC; Kuleana Energy; Mama Makoaleo Power LLC;
Mana Makoaleo Bioenergy LLC; Moku Nui BioEnergy LLC; and Moku Nui
Power Co. LLC. [Third Amended Complaint at pgs. 6-7.]
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Defendants’ alleged violations of federal and state tax laws.
Although Plaintiff protests that he has been denied the
opportunity to obtain discovery from Defendants, such discovery
is not necessary for Plaintiff to determine whether he has been
subjected to additional tax liabilities and/or penalties.
Thus,
Plaintiff has still failed to plead an injury in fact, and he has
still failed to plead sufficient factual allegations that would
support a reasonable inference that he has standing to pursue the
claims alleged in Amended Count XV.
See 5/28/14 Order, 2014 WL
2215920, at *5 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678, 129
S. Ct. 1937 (2009)).
Insofar as Plaintiff had the opportunity to correct the
defects identified in the 5/28/14 Order and failed to do so, this
Court finds that further amendment would be futile.
This Court
therefore GRANTS the Motion as to Amended Count XV, which is
DISMISSED WITH PREJUDICE.
See Johnson v. Am. Airlines, Inc., 834
F.2d 721, 724 (9th Cir. 1987) (noting that “courts have
discretion to deny leave to amend a complaint for futility”
(citation and quotation marks omitted)).
B.
Remaining Claims Regarding Losses Suffered by the LLCs
The remaining claims in the Third Amended Complaint
are: the portion of Amended Count I alleging fraudulent
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alteration of agreements;3 and Amended Counts VI, VII, and XIV.
These are state law claims that are based upon losses suffered by
the Relevant LLCs but that do not seek to enforce agreements
which the entities are parties to but Plaintiff, individually, is
not.
See 5/28/14 Order, 2014 WL 2215920, at *7-8.
In the 5/28/14 Order, this Court concluded that
Plaintiff lacked standing to pursue, inter alia, Counts I, VI,
VII, and XIV “because each claim seeks to recover losses by, or
other damages to, the LLCs,[4] and these claims do not assert
that Plaintiff, as an individual, suffered an injury in fact as a
result of Defendants’ allegedly wrongful actions.”
Id. at *8.
This Court found that:
it is arguably possible for Plaintiff to cure the
standing defects in these claims. Plaintiff’s
Supplemental Memorandum[, filed 5/8/14 (dkt. no.
85),] indicates that he may be able to allege a
plausible basis for standing because he has a
distributional interest in the assets of LLCs.
See Haw. Rev. Stat. § 428-501(b) (stating that
“[a] distributional interest in a limited
liability company is personal property”).
Plaintiff, however, must allege how Defendants’
allegedly wrongful acts resulted in the decrease
in Plaintiff’s distributional share of the LLCs’
assets. . . .
Id. (footnote omitted) (some alterations in 5/28/14 Order).
3
For the remainder of this Order, “Amended Count I” will
refer only to the portion of that count alleging fraudulent
alteration of agreements.
4
In the 5/28/14 Order, “the LLCs” refers to CogentechPacific, LLC and Haleakala Holdings LLC. 2014 WL 2215920, at *2.
8
The Third Amended Complaint describes the Relevant LLCs
as “Entities, in which Plaintiff Charles Barker has a Membership
Interest” and a “Distributional Interest.”
Complaint at pgs. 6-7.]
[Third Amended
Plaintiffs’ assertion that he has a
distributional interest in the Relevant LLCs is a factual
allegation, which this Court must accept as true in ruling on the
instant Motion.
See John Doe I v. Nestle USA, Inc., 766 F.3d
1013, 1018 (9th Cir. 2014) (“A dismissal for failure to state a
claim is reviewed de novo.
All factual allegations in the
complaint are accepted as true, and the pleadings construed in
the light most favorable to the nonmoving party.” (citation and
quotation marks omitted)).
The 5/28/14 Order put Plaintiff on notice that, to cure
the defects in Counts I, VI, VII, and XIV, he must plead, not
only that he had a distributional interest in the Relevant LLCs,
but also how Defendants’ allegedly wrongful acts resulted in the
decrease in his distributional share of the Relevant LLCs’
assets.
The Third Amended Complaint includes allegations such
as:
•“Defendants have caused loss of opportunity, plus substantive
and demonstrable financial harm to Plaintiff Barker
personally, and to his distributional interests in the
Relevant LLCs.” [Third Amended Complaint at ¶ 25.]
•“[T]he actions and inactions of the Defendants have caused
Plaintiff Barker and to [sic] his distributional interests
in the Relevant LLCs to suffer loss of investment
opportunities and income production prospects at level [sic]
in the tens of millions of dollars.” [Id. at ¶ 31.]
9
•“Defendants then began a series of continued, repeated and
increasingly amorphous attempts to change the relationship,
which would be to the extreme detriment of Plaintiff Barker,
and diminution of the distributional interest participation
shares in the Relevant LLCs owned by Plaintiff Barker.”
[Id. at ¶ 84.]
•“Defendant Dubowsky has accepted and disbursed funds for KAEP
company business wholly outside and without company review
and approval . . . . This . . . has caused significant
financial harm to Plaintiff Barker and to his distributional
interests in the Relevant LLCs.” [Id. at ¶ 105.]
These and the other similar allegations in the Third Amended
Complaint do not identify how Defendants’ wrongful conduct
alleged in the remaining claims resulted in the decrease of
Plaintiff’s distributional interest in the Relevant LLCs.
Even
in the Calculation of Damages section of the Third Amended
Complaint, Plaintiff merely added the allegations that the
amounts previously listed in the Second Amended Complaint were
for his distributional interests in the LLCs.
For example,
Plaintiff alleges that his damages from the “Kama`aina Earth
Products Topsoil & Natural Resources Business” consist of:
Cash Flow Per Kama`aina Earth Products report
prepared by Roger Kunhns for Defendant Dubowsky:
$3,196,926 to $7,793,481
taking the median of these two figures:
(3,196,926 + 7,793,481)/2 = $5,495,203
Amount belonging to Plaintiff as his
distributional interest in the Relevant LLC:
50% of that belonging to TVXA and 50% to
Kuleana Management.
25% of KAEP (under Ho`ola Land & Soil Co) is
owned by Plaintiff
10
.50 x .25 x 5,495,203 = $ 549,523
[Id. at pg. 58 (emphasis omitted).]
At most, Plaintiff’s calculation of damages appears to
rely on his argument that Defendants failed to secure financing
for their various business ventures and, if Defendants had
secured the necessary financing, he would have received part of
the profits from those ventures through his distributional
interest in the Relevant LLCs.
Plaintiff’s claims based on the
failure to secure financing, however, are no longer before this
Court.
See 5/28/14 Order, 2014 WL 2215920, at *7-8 (dismissing
with prejudice claims attempting to enforce agreements by the
LLCs); id. at *10 (dismissing with prejudice claims alleging that
Defendants made fraudulent representations about their ability to
secure financing).
As to Amended Counts I, VI, VII, and XIV,
Plaintiff has merely pled conclusory allegations that Defendants’
conduct harmed his distributional interests in the Relevant LLCs.
These are not sufficient to survive a motion to dismiss.
See
Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555, 127 S. Ct. 1955 (2007) (“we are not bound to
accept as true a legal conclusion couched as a factual
allegation” (internal quotation marks omitted))).
This Court finds that the Third Amended Complaint does
not plead sufficient factual allegations to allow this Court to
draw the reasonable inference that he has standing to pursue the
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remaining claims regarding losses suffered by the Relevant LLCs.
See id. (“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” (quoting
Twombly, 550 U.S. at 570, 556, 127 S. Ct. 1955)).
This Court
therefore concludes that the Third Amended Complaint does not
state a plausible basis for Plaintiff’s standing to bring Amended
Counts I, VI, VII, and XIV.
This Court previously identified the standing defects
in these claims.
Plaintiff failed to cure the defects in the
Third Amended Complaint, and he has not indicated that he can
amend these claims further to cure the defects.
This Court
therefore finds that further amendment would be futile.
This
Court GRANTS Defendants’ Motion and dismisses Amended Counts I,
VI, VII, and XIV WITH PREJUDICE.
CONCLUSION
On the basis of the foregoing, Defendants’ Motion to
Dismiss Plaintiff’s Third Amended Complaint, filed July 15, 2014,
is HEREBY GRANTED.
There being no remaining claims in this case,
the Court DIRECTS the Clerk’s Office to enter judgment and close
the case on November 17, 2014, unless Plaintiff files a timely
motion for reconsideration of the instant Order.
IT IS SO ORDERED.
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DATED AT HONOLULU, HAWAII, October 24, 2014.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
CHARLES BARKER III VS. JOSHUA L. GOTTLIEB, ET AL; CIVIL 13-00236
LEK-BMK; ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S
THIRD AMENDED COMPLAINT
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