Liberty Natural Products, Inc. et al v. Hoffman et al

Filing 125

ORDER:Granting in Part Denying in Part Motion to Dismiss Case for Lack of Jurisdiction 111 . The Court DIRECTS Plaintiffs to file no later thanNovember 20, 2017, a Third Amended Complaint consistent with this Opinion and Order. The Court als o DIRECTS Plaintiffs to include in the caption of the amended complaint only David Hoffman as the remaining named Defendant in this matter. David Hoffman's Answer to Plaintiffs' Third Amended Complaint will be due no later than December 4, 2017. See order for details. Signed on 10/26/17 by Judge Anna J. Brown. (jy)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
LIBERTY NATURAL PRODUCTS,
INC., and, JAMES R. DIERKING,
Plaintiffs,
v.
VALERIE HAWK HOFFMAN, AKA
VALERIE HOLLAND HAWK, AKA
VALERIE HAWK FUREY, AKA ARDEN
HOFFMAN, AKA ARDEN KOFFMAN,
AKA ALLIE LOUGHLIN, AKA ALLIE
LOUGHLIN; DAVID BOYD HOFFMAN,
AKA DAVID BOYD, AKA DAVID
KOFFMAN; SUNRISE HERBAL
REMEDIES, INC., DISSOLVED;
SAGE ADVICE OF PALM BEACH
INC., DISSOLVED; FRESH HERBS
AND TEAS, INC, LLC; PEACEFUL
PROPERTIES LLC; HOFFMAN AND
HAWK LLC; AND WESLEY AMOS
HAWK; AND UNNAMED PERSONS
AIDING THEM IN COURT
PROCEEDINGS,
Defendants.
ROGER F. DIERKING
13513 NE Beech St.
Portland, OR 97230
[phone]
TIMOTHY J. VANAGAS
800 SE 181st Ave, Suite 101
Portland, OR 97223
[phone]
1 - OPINION AND ORDER

3:13-cv-00886-BR
OPINION AND ORDER

Attorneys for Plaintiffs
WILLIAM D. BRANDT
495 State St., Suite 500B
Salem, OR 97301
[phone]
Attorney for Defendants
BROWN, Judge.
This matter comes before the Court on the Motion (#111) to
Dismiss Under Rule 12(b) and the Alternative Motion (#114) to
Strike Certain Paragraphs of Plaintiffs’ Second Amended Complaint
filed by Defendants Valerie Hawk Hoffman; David Hoffman; Wesley
Amos Hawk; Peaceful Properties, LLC; and Hoffman and Hawk, LLC.
For the reasons that follow, the Court GRANTS in part and
DENIES in part Defendants’ Motion to Dismiss and DENIES as moot
Defendants’ Motion to Strike.

BACKGROUND
The following facts are taken from Plaintiffs’ Second
Amended Complaint and the pleadings submitted by the parties and
are construed in the light most favorable to Plaintiffs.
Plaintiff Liberty Natural Products, Inc., is an Oregon
corporation engaged in the manufacture, marketing, and
distribution of herbal extracts.

Plaintiff James R. Dierking is

the president, CEO, and sole shareholder of Liberty Natural.
Defendant Valerie Hoffman is a Florida resident and was the
president of Defendant Sunrise Herbal Remedies, Inc., a
Connecticut corporation.
2 - OPINION AND ORDER

Sunrise was engaged in the sale and

distribution of herbal extract consumer goods and did business in
Oregon.

On May 1, 2006, Sunrise was dissolved.

On May 23, 2006,

Valerie Hoffman formed Defendant Sage Advice of Palm Beach, LLC,
a Florida corporation, which was also subsequently dissolved.

In

February 2007 Valerie Hoffman formed Defendant Fresh Herbs and
Teas, LLC, a Florida corporation, which was also subsequently
dissolved.

Defendant David Hoffman, the former husband of

Valerie Hoffman, is also a Florida resident and was the manager
and operator of Sunrise and Fresh Herbs.

Defendant Peaceful

Properties, LLC, is a Maine corporation formed by David Hoffman
for the purpose of holding certain real property.

Defendant

Wesley Amos Hawk, who is Valerie Hoffman’s father, is a resident
of Connecticut and was the general manager of Defendant Hoffman
and Hawk, a dissolved Connecticut limited liability company.
Sometime in 2008 Liberty filed an action against Valerie
Hoffman, David Hoffman, and Sunrise in Clackamas County Circuit
Court for debts owed to Liberty Natural.
counterclaim against Liberty.

Valerie Hoffman filed a

In April 2009 Liberty obtained a

judgment in the Clackamas County case for $152,252.91 against
Valerie Hoffman and Sunrise.

David Hoffman was found not liable

for the debts owed by Valerie Hoffman and Sunrise.
In December 2010 Liberty filed another action against
Valerie Hoffman, Sunrise, Sage, and Kevin Brague in Clackamas
County Circuit Court and asserted a claim for wrongful use of
civil proceedings.

On March 2, 2011, Valerie Hoffman filed a

Notice of Removal to federal court, Case No. 3:11-cv-00264.
3 - OPINION AND ORDER

The

removal action was assigned to Magistrate Judge Dennis J. Hubel.
On May 29, 2013, Liberty and James R. Dierking filed a
Complaint in this court, Case No. 3:13-cv-00886, asserting claims
for intentional interference with business relationships and
fraud against all Defendants.

Plaintiffs also sought an

injunction against Defendants and a declaration that Defendants
had violated federal RICO statutes.

The case was assigned to

this judicial officer.
On July 25, 2013, Valerie Hoffman filed a Notice (#10) of
Bankruptcy Filing in which she stated that she had filed a
petition in the United States Bankruptcy Court for the Middle
District of Florida seeking relief under Chapter 13 of the
bankruptcy laws.
On July 29, 2013, the Court directed the parties to file a
notice with this Court and to indicate whether there was a basis
for this action to proceed without obtaining relief in the
bankruptcy court from the automatic stay.

Order (#11).

On August 11, 2013, Plaintiffs filed a Notice (#12) of Basis
to Continue Proceedings Without Obtaining Relief from Automatic
Stay, requested the Court “sever all claims” as to all Defendants
other than Valerie Hoffman, and requested leave to file a motion
for preliminary injunction as to all other Defendants.
Plaintiffs also requested leave to seek relief from the automatic
stay in the bankruptcy court as to Valerie Hoffman.
On August 26, 2013, Valerie Hoffman filed a Response to
Plaintiffs’ Notice and provided a copy of an Order issued by
4 - OPINION AND ORDER

Magistrate Judge Hubel staying the case assigned to him based on
Valerie Hoffman’s bankruptcy filing.
On August 29, 2013, the Court issued a stay in this case.
The Court stated:
[T]here is not any basis to find the automatic stay
does not apply to Defendant Valerie Hoffman in whatever
capacity she may be designated in Plaintiffs’ Complaint
and to the other named Defendants for whose actions
Hoffman is allegedly responsible. Thus, the Bankruptcy
Court is in the best position to determine the extent
to which these litigants’ issues should be resolved in
the bankruptcy proceeding as opposed to this pending
matter. Accordingly, the Court finds the automatic
stay applies in this action, which the Court now STAYS
for all purposes pending an order from the Bankruptcy
Court authorizing relief from stay as to all or part of
this action. . . . Finally, unless such relief [from]
stay is obtained before December 16, 2013, the Court
will then dismiss this action without prejudice to
Plaintiffs’ efforts to pursue its claims in the
Bankruptcy Court.
Order (#16).
On December 15, 2013, Plaintiffs filed a Motion (#24) to
Continue this case pending further proceedings in the Bankruptcy
Court.
On December 28, 2013, the Court granted Plaintiffs’ request,
continued the case, and directed Plaintiffs to file a status
report after relief from the stay was obtained or on resolution
of the bankruptcy matter.

Order (#28).

On January 8, 2015, Plaintiffs filed a Status Report (#38)
and stated the bankruptcy court had issued an order “providing
relief of the automatic stay to Liberty and Dierking to continue
the litigation in the Oregon District Court against non-Debtors
David Boyd Hoffman, Peaceful Properties, LLC, Hoffman and Hawk,
5 - OPINION AND ORDER

LLC, and Wesley Amos Hawk.”
On January 14, 2015, the Court granted Plaintiffs leave to
file a motion to continue these proceedings against the nondebtor Defendants.

Order (#39).

On February 11, 2015,

Plaintiffs filed a Motion (#41) to Continue Proceedings against
the non-debtor Defendants.
On March 2, 2015, the non-debtor Defendants filed a Motion
(#44) to Dismiss Plaintiffs’ Complaint based on lack of personal
jurisdiction, improper venue, lack of proper service, and failure
to state a claim.

The non-debtor Defendants indicated their

Motion to Dismiss was a “Limited Appearance.”

They also filed a

Response (#45) to Plaintiffs’ Motion to Continue Proceedings
against them on the same grounds asserted earlier in their Motion
to Dismiss.
On April 10, 2015, Plaintiffs filed a Motion (#58) to
Postpone Court Action on the Defendants’ Motion to Dismiss Until
Plaintiff Has Made Service upon the Defendants Wesley Hawk and
David Hoffman and Their Depositions Have Been Taken and a Motion
(#59) to Allow Service by Alternative Means.

On April 16, 2015,

the non-debtor Defendants filed their oppositions (#62, #63) to
Plaintiffs’ Motions.
On April 17, 2015, the Court denied Plaintiffs’ Motion to
Postpone Court Action on Defendants’ Motion to Dismiss and set a
briefing schedule for Defendants’ Motion to Dismiss and
Plaintiffs’ Motion for Alternative Service.

Order (#65).

On July 8, 2015, the Court denied Plaintiffs' Motion to
6 - OPINION AND ORDER

Continue Proceedings against David Hoffman, Peaceful Properties,
Hoffman and Hawk, and Hawk.

Order (#78).

The Court stated:

After considering the parties’ Motions, the Court
concludes although the automatic bankruptcy stay no
longer necessitates a stay of this matter as to
Defendants David Boyd Hoffman; Peaceful Properties,
LLC; Hoffman & Hawk, LLC; and Wesley Amos Hawk, the
continuance of a stay is, nonetheless, appropriate in
the exercise of this Court’s case-management discretion
because the claims in this action against the nondebtor Defendants are inextricably intertwined with the
claims against the bankruptcy debtor Defendant Valerie
Hawk Furey (formerly Valerie Hawk Hoffman).
The Court also denied as moot Defendants’ Motion to Dismiss and
Plaintiffs’ Motion for Alternative Service.
On February 9, 2017, Defendants filed a Notice (#93) of
Discharge in Bankruptcy as to Valerie Hoffman.

On March 6, 2017,

the parties filed a Joint Status Report (#95) asserting various
positions regarding the effect of the bankruptcy discharge.
On March 9, 2017, the Court lifted the stay in this case and
directed the parties to file by March 24, 2017, a Joint Statement
of Remaining Issues and a proposed case-management schedule.
On April 3, 2017, in response to the parties’ Joint
Statement, the Court stated:
The Court concludes an important step to moving this
matter to conclusion requires a current statement of
all Plaintiff[s’] claims that Plaintiff[s] contend[]
should be litigated in this proceeding, and, therefore,
the Court concludes in the exercise of its
case-management discretion that Plaintiff[s] should be
permitted to file an Amended Complaint. The Court also
notes because Defendants' original Motion to Dismiss
(#44) was denied as moot (#78) and because that Motion
to Dismiss raised issues of jurisdiction and service,
those fundamental legal matters need to be addressed in
motions against any Amended Complaint if Plaintiff[s]
choose[] to file an Amended Complaint or against the
existing Complaint (#1) together with Defendants'
7 - OPINION AND ORDER

challenge referenced in the Joint Statement (#97) in
which Defendants assert all claims against them are
barred because of the bankruptcy discharge of Valerie
Hoffman.
Order (#99).

The Court subsequently set deadlines for the filing

of Plaintiffs’ Amended Complaint and Defendants’ “answer, motion
to dismiss, or other challenge” to the Amended Complaint.
On July 10, 2017, Plaintiffs filed an Amended Complaint
(#107).

On July 13, 2017, Plaintiffs filed a Second Amended

Complaint (#108) to “correct clerical errors in Plaintiffs’
Amended Complaint” and to assert claims for fraud, intentional
interference with business relations, civil conspiracy, and
violation of the Racketeer Influenced and Corrupt Organizations
Act (RICO), 18 U.S.C. §§ 1961, et seq.

Plaintiffs also seek an

injunction and declaratory judgment referring Defendants to the
United States Attorney for criminal prosecution.
On August 7, 2017, all Defendants filed their Motion (#111)
to Dismiss and Alternative Motion (#114) to Strike.

STANDARDS
I.

Motion to Dismiss
To survive a motion to dismiss a complaint must contain

sufficient factual matter, accepted as true, to “state a claim
for relief that is plausible on its face.”
Twombly, 550 U.S. 544, 545 (2007).

Bell Atlantic v.

A claim has facial

plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
8 - OPINION AND ORDER

defendant is liable for the misconduct alleged.

Id. at 556.

“The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.”

Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009)(quoting Twombly, 550 U.S. at 546).

When a

complaint is based on facts that are “merely consistent with” a
defendant's liability, it “stops short of the line between
possibility and plausibility of entitlement to relief.” Iqbal,
556 U.S. at 678 (citing Twombly, 550 U.S. at 557).
Atlantic, 550 U.S. at 555-56.

See also Bell

The court must accept as true the

allegations in the complaint and construe them in favor of the
plaintiff.

Din v. Kerry, 718 F.3d 856, 859 (9th Cir. 2013).

The pleading standard under Federal Rule of Civil Procedure
8 “does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmedme accusation.”
U.S. at 555).

Iqbal, 556 U.S. at 678 (quoting Twombly, 550
See also Federal Rule of Civil Procedure 8(a)(2).

“A pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’”
Id. (citing Twombly, 550 U.S. at 555).

A complaint also does not

suffice if it tenders “naked assertion[s]” devoid of “further
factual enhancement.”

Id. at 557.

“In ruling on a 12(b)(6) motion, a court may generally
consider only allegations contained in the pleadings, exhibits
9 - OPINION AND ORDER

attached to the complaint, and matters properly subject to
judicial notice."

Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th

Cir. 2007)(citing Jacobson v. Schwarzenegger, 357 F. Supp. 2d
1198, 1204 (C.D. Cal. 2004)).

A court, however, "may consider a

writing referenced in a complaint but not explicitly incorporated
therein if the complaint relies on the document and its
authenticity is unquestioned."

Id. (quoting Parrino v. FHP,

Inc., 146 F.3d 699,706 (9th Cir. 1998), superseded by statute on
other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676
(9th Cir. 2006)).
II.

Motion to Strike
Motions to strike are disfavored and are not the proper

vehicle to dismiss a claim for failure to state a claim.
Pinnacle Sys., Inc. v. XOS Tech., Inc., No. C-02-03804, 2003 WL
21397845, at *4 (N.D. Cal., May 19, 2003).

Federal Rule of Civil

Procedure 12(f) allows the court to strike any “redundant,
immaterial, impertinent, or scandalous material.”

To be

impertinent or immaterial, the allegations must not have any
possible bearing on the controversy.

Employers Ins. of Wausau v.

Musick, Peeler, & Garrett, 871 F. Supp. 381, 391 (S.D. Cal.
1994), opin. amended on reconsideration, 948 F. Supp. 942 (S.D.
Cal. 1995).

“Immaterial matter” within the meaning of Rule 12(f)

is material that does not have any essential or important
relationship to the claim or the defenses being pleaded.
10 - OPINION AND ORDER

Van

Slyke v. Capital One Bank, 503 F. Supp. 2d 1353, 1367 (N.D. Cal.
2007).
When considering a motion to strike, the court must view the
pleadings in the light most favorable to the nonmoving party.
In re 2TheMart.com Secs. Litig., 114 F. Supp. 2d 955, 965 (C.D.
Cal. 2000).

DISCUSSION
In their Second Amended Complaint Plaintiffs allege a myriad
of facts regarding actions by and between the parties over many
years in Maine, Florida, and Oregon.

The basis of this action is

the inability of Plaintiffs to collect a judgment they obtained
in Oregon against Valerie Hoffman and the allegedly fraudulent
conduct by Defendants that kept Plaintiffs from collecting that
judgment.
I.

Defendants’ Motion to Dismiss
Defendants move to dismiss Plaintiffs’ claims on the grounds

that (1) Plaintiffs’ claims against Valerie Hoffman violate the
discharge that she obtained in the bankruptcy proceeding and the
settlement agreement between the parties; (2) Plaintiffs have not
properly served Defendants David Hoffman, Wesley Amos Hawk,
Peaceful Properties, and Hoffman and Hawk (non-debtor
Defendants); (3) non-debtor Defendants are not subject to the
personal jurisdiction of this Court; (4) Plaintiffs’ claims

11 - OPINION AND ORDER

against all Defendants are barred by the applicable statute of
limitations; (5) Plaintiffs fail to state a claim against all
Defendants; and (6) Plaintiffs’ claims against all Defendants are
barred by the doctrine of res judicata.

Defendants also contend

Plaintiffs do not have standing to request that the Court refer
this matter to the United States Attorney for criminal
prosecution.
In their Response Plaintiffs contend (1) Defendants’ Motion
to Dismiss is not timely, (2) Valerie Hoffman is an indispensable
party, (3) non-debtor Defendants were properly served and are
subject to the jurisdiction of this Court, (4) Plaintiffs have
adequately stated claims against all Defendants, and
(5) Plaintiffs’ claims against all Defendants are not barred by
the statute of limitations or by res judicata.
A.

Claims against Valerie Hoffman

As noted, the Court stayed this case on August 29, 2013,
based on the automatic stay imposed by the bankruptcy court at
the time Valerie Hoffman filed for bankruptcy.

Plaintiffs,

nevertheless, contend Valerie Hoffman is “an indispensable
party.”

Plaintiffs, however, fail to provide any legal authority

to support their proposition, and the Court’s Orders (#16, #78)
relied on by Plaintiffs do not support their position.

In those

Orders the Court concluded the automatic stay imposed by Valerie
Hoffman’s bankruptcy petition applied to this action and was
appropriate because the claims asserted against the non-debtor
Defendants were “inextricably intertwined” with the claims
12 - OPINION AND ORDER

against Valerie Hoffman to such a degree that Plaintiffs’ claims
against the non-debtor Defendants might become moot if Valerie
Hoffman was discharged in bankruptcy.
In addition, Defendants attach to their Motion to Dismiss a
copy of the Settlement Agreement dated November 7, 2014, between
Plaintiffs and Valerie Hoffman.

In that Settlement Agreement the

parties agreed Plaintiffs would withdraw their opposition to
Valerie Hoffman’s discharge in bankruptcy and agreed
[u]pon the filing by [Plaintiffs] of a motion for
relief from the automatic stay to continue
litigation in Oregon and Florida against nondebtor defendants, David Hoffman and Wesley Hawk,
[Valerie Hoffman] will consent to, or not oppose,
the relief requested in such motions, so long as
such motions are limited to seeking relief from
the automatic stay to continue litigation against
the non-debtor defendants only.
Decl. of William Brandt (#113), Ex. 3 at ¶ 6.
Based on the discharge in bankruptcy obtained by Valerie
Hoffman and the Settlement Agreement between the parties, the
Court concludes Plaintiffs’ claims against Valerie Hoffman are
barred.

On this record, therefore, the Court concludes Valerie

Hoffman is not an indispensable party for purposes of this
litigation.

Accordingly, the Court GRANTS Defendants’ Motion to

Dismiss as to Plaintiffs’ claims against Valerie Hoffman.
B.

Timeliness of Defendants’ Motion to Dismiss

Plaintiffs contend Defendants’ Motion is not timely on the
ground that it was filed more than four years after this action
was commenced and after the Court’s Order (#16) “established
jurisdiction.”
13 - OPINION AND ORDER

Federal Rule of Civil Procedure 12 requires a defendant to
file a responsive pleading or motion within 21 days of being
served with summons and complaint.

Plaintiffs’ initial Complaint

in this case was filed on May 29, 2013.

On July 17, 2013,

Valerie Hoffman filed a Notice (#7) of Related Case advising the
Court of the pending case before Magistrate Judge Hubel.

On

July 25, 2013, Valerie Hoffman filed her Notice (#10) of
Bankruptcy Filing.

As noted, the Court indicated its intention

to stay this matter pursuant to the bankruptcy notice.

Although

Plaintiffs objected and requested this case to continue without
obtaining any relief from the automatic stay, the Court,
nevertheless, entered an Order (#16) on August 29, 2013, staying
this case “for all purposes.”
On January 8, 2015, Plaintiffs filed a Notice (#38) on
Bankruptcy Motion Status stating the bankruptcy court had issued
an order on December 16, 2014, providing relief from the
automatic stay to allow Plaintiffs to continue the case in this
Court as to the non-debtor Defendants.
On February 22, 2015, Plaintiffs filed a Motion (#41) to
Continue Proceedings Against Non-Debtor Defendants.
On March 2, 2015, non-debtor Defendants filed a Motion (#44)
to Dismiss Plaintiffs' Complaint on the grounds of lack of
personal jurisdiction, improper venue, lack of service, and
failure to state a claim.

Non-debtor Defendants indicated their

Motion was a “limited appearance.”
On April 20, 2015, Plaintiffs filed a Motion (#58) to
14 - OPINION AND ORDER

Postpone Court Action on Defendants’ Motion to Dismiss and a
Motion (#59) to Allow Service by Alternative Means on David
Hoffman and Hawk.
On July 8, 2015, the Court continued the stay in this case
and denied as moot non-debtor Defendants’ Motion (#44) to Dismiss
and Plaintiffs’ Motion (#59) to Allow Alternative Service.

Order

(#78).
On March 9, 2017, the Court lifted the stay in this case.
Order (#96).

The Court also noted the outstanding issues raised

by non-debtor Defendants’ original Motion (#44) to Dismiss filed
in 2015 and the possibility that Plaintiffs “may choose to file
an amended complaint.”
On April 5, 2017, the parties filed a Supplemental Joint
Case Management Statement (#100) in which they indicated
Plaintiffs intended to file an amended complaint.

The Court set

a deadline of June 5, 2017, for Plaintiffs to file their amended
complaint and on June 9, 2017, extended that deadline to July 10,
2017.

On July 10, 2017, the Court extended the deadline for

Defendants’ response to August 7, 2017.
On July 10, 2017, Plaintiffs filed their Amended Complaint
(#107) and on July 13, 2017, filed a Second Amended Complaint
(#108) “to correct clerical errors.”

On August 7, 2017,

Defendants filed their Motion (#111) to Dismiss.
On this record the Court concludes Defendants’ Motion
to Dismiss was timely filed.

15 - OPINION AND ORDER

C.

Service on Non-Debtor Defendants

Non-debtor Defendants contend they have not been properly
served with summons and complaint in accordance with Rule 4©)
because they have not been personally served.
1.

The Law

Federal Rule of Civil Procedure 4(e) provides an
individual within a judicial district of the United States may be
served (1) by following state law for serving a summons in an
action brought in courts of general jurisdiction in the state
where the district court is located, (2) by personal service,
(3) by service at the individual’s dwelling or usual place of
abode to someone of suitable age who also resides there, or
(4) by service upon an agent authorized to receive service.
Oregon Rule of Civil Procedure 7D(2)(d)(I) provides
service of a summons and complaint may be accomplished by
personal service, substitute service, office service, or service
by mail.

Service by mail requires mailing true copies of the

summons and complaint to the defendant by first class mail and by
certified, registered, or express mail with return receipt
requested.

Under Oregon Rule of Civil Procedure 7D(2)(d)(ii)

service is accomplished when the defendant signs a receipt for
the mailing or seven days after the mailing if mailed to an
address outside of the state.

2.

Or. R. Civ. P. 7D(2)(d)(ii).

David Hoffman has been properly served.

Plaintiffs argue the Court should conclude David
16 - OPINION AND ORDER

Hoffman has been served “because of the adverse inference
stemming from his egregious misconduct” in avoiding personal
service.

Plaintiffs contend, in any event, David Hoffman was

served through his attorney.
On February 11, 2015, Plaintiffs filed the Declaration
(#43) of Roger Dierking in Support of Plaintiffs’ Motion (#41) to
Continue Proceedings Against Non-Debtors.

Attached to the

Declaration is an Affidavit of Due Diligence and Evasion
submitted by a process server listing service attempts at David
Hoffman’s residence in Florida on June 29, July 10, July 12, and
July 20, 2013, that were unsuccessful.

Decl. Dierking at Ex. 11.

On July 2, 2013, Plaintiffs mailed a copy of the Summons and
Complaint to David Hoffman at his Florida residence by first
class and certified mail.

These mailings were returned as

“unclaimed,” “unable to forward,” and “return to sender.”
Although David Hoffman concedes the Florida address to
which these mailings were sent was his residence, he contends he
“was only in Florida on and off during the summer months of
2013.”
Pursuant to the Federal Rules of Civil Procedure and
the Oregon Rules of Civil Procedure, service by mail is allowed
and is complete seven days after mailing to an out-of-state
address.

Plaintiffs’ mailing to David Hoffman at his residence

in Florida was made July 2, 2013, and, therefore, service was
completed on him as of July 9, 2013.
3.

Hawk, Peaceful Properties, and Hoffman and Hawk
have not been properly served.

17 - OPINION AND ORDER

In their Response to Defendants’ Motion to Dismiss
Plaintiffs do not provide any arguments regarding service on
Hawk, Peaceful Properties, or Hoffman and Hawk.

In their Second

Amended Complaint, however, Plaintiffs allege Hawk was served
with summons and complaint by serving his attorney.
Service on an attorney does not qualify as service on
the party unless the agent is authorized to receive process.
Or. R. Civ. P. 7D(1).

See also Bishop v. OBEC Consulting Eng'rs,

160 Or. App. 548, 555 (1999).
In summary, the Court concludes on this record that David
Hoffman has been properly served with summons and complaint and
Hawk, Peaceful Properties, and Hoffman and Hawk have not been
properly served with summons and complaint.

Accordingly, the

Court DENIES Defendants’ Motion to Dismiss as to David Hoffman
and GRANTS the Motion as to Hawk, Peaceful Properties, and
Hoffman and Hawk on the basis that these non-debtor Defendants
have not been properly served.
D.

Personal Jurisdiction

Even if Hawk, Peaceful Properties, and Hoffman and Hawk had
been properly served, non-debtor Defendants contend this Court
lacks personal jurisdiction over any of the non-debtor Defendants
because they have not engaged in any conduct in Oregon sufficient
to subject them to the jurisdiction of this Court.
Plaintiffs contend David Hoffman is subject to the
jurisdiction of this Court on the grounds that he made regulatory
complaints in Clackamas County that were intended to further the
18 - OPINION AND ORDER

conspiracy to damage and to intimidate Plaintiffs in their Oregon
business.

Plaintiffs also contend non-debtor Defendants entered

a general appearance in this Court and subjected themselves to
the Court’s jurisdiction by filing an unopposed motion for
extension of time to answer Plaintiffs’ Amended Complaint.
1.

The Law

The party seeking to invoke the personal jurisdiction
of the federal court has the burden to establish that
jurisdiction exists.

Data Disc, Inc. v. Sys. Tech. Assoc., Inc.,

557 F.2d 1280, 1285 (9th Cir. 1977).

When "a defendant moves to

dismiss a complaint for lack of personal jurisdiction, the
plaintiff bears the burden of demonstrating that jurisdiction is
appropriate." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d
797, 800 (9th Cir. 2004).
"The court may consider evidence presented in
affidavits to assist it in its determination and may order
discovery on the jurisdictional issues."

Doe v. Unocal Corp.,

248 F.3d 915, 922 (9th Cir. 2001)(citing Data Disc, Inc. v. Sys.
Tech. Assoc., Inc., 557 F.2d at 1285).

If the court makes a

jurisdictional decision based only on pleadings and affidavits
submitted by the parties, "the plaintiff need make only a prima
facie showing of jurisdictional facts to withstand the motion to
dismiss."

Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498

(9th Cir. 1995)).

When determining whether the plaintiff has met

the prima facie showing, the court must assume the truth of
19 - OPINION AND ORDER

uncontroverted allegations in the complaint.

Ochoa v. J.B.

Martin and Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002).
If the court rules on a defendant's motion to dismiss for lack of
personal jurisdiction without holding an evidentiary hearing, the
plaintiff's version of the facts, unless directly contravened, is
taken as true and the court must resolve factual conflicts in the
parties' affidavits in favor of the plaintiff.

Harris Rutsky &

Co. Ins. Serv., Inc. v. Bell & Clements LTD, 328 F.3d 1122, 1129
(9th Cir. 2003).
a.

General Personal Jurisdiction

For general personal jurisdiction to exist over a
nonresident defendant, the defendant must engage in “continuous
and systematic general business contacts” that “approximate
physical presence” in the forum state.

Id. (citing Helicopteros

Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984),
and Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d
1082, 1086 (9th Cir. 2000)).
b.

Specific Personal Jurisdiction

When a court lacks general jurisdiction, the court
may, nonetheless, determine it has specific personal jurisdiction
when (1) the nonresident defendant purposefully directs his
activities or consummates some transaction with the forum, or
purposefully avails himself of the privilege of conducting
activities in the forum, thereby invoking the benefits and
protections of its law; (2) the claim arises out of or relates to
20 - OPINION AND ORDER

the defendant’s forum-related activities; and (3) the exercise of
jurisdiction comports with fair play and substantial justice
(i.e., it must be reasonable).

Schwarzenegger, 374 F.3d at 802

(citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)).

The

plaintiff bears the burden of satisfying the first two
requirements of this test.

If the plaintiff fails to satisfy

either of these requirements, personal jurisdiction is not
established in the forum state.

If the plaintiff succeeds in

satisfying the first two requirements, the burden shifts to the
defendant to “present a compelling case” that the exercise of
personal jurisdiction would not be reasonable.

Id. (citing

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)).
2.

David Hoffman is subject to the personal
jurisdiction of this Court.

Plaintiffs allege claims for fraud, intentional
interference with business relations, civil conspiracy, and RICO
violations.

Although Plaintiffs allege numerous acts by David

Hoffman that occurred outside of the State of Oregon, Plaintiffs
specifically allege David Hoffman filed a land-use complaint with
Clackamas County in Oregon regarding Plaintiffs’ business
operations and that complaint as well as other complaints made by
David Hoffman to the FDA and EPA interfered with Plaintiffs’
“contractual and prospective economic advantage” and constitute
sufficient contacts with this state to confer personal
jurisdiction over David Hoffman.

Plaintiffs allege David Hoffman

filed complaints with Clackamas County and other federal agencies
regarding Plaintiffs’ business operations in Oregon, and
21 - OPINION AND ORDER

Plaintiffs’ claim of intentional interference with business
relations arises out of or relates to these activities.

David

Hoffman’s conduct supports the conclusion that he purposefully
availed himself of the privilege of conducting activities in this
state.
David Hoffman concedes he made statements against
Plaintiffs in Oregon, but he contends the statements are
privileged and, therefore, do not constitute sufficient contacts
with the forum state to subject him to the personal jurisdiction
of this Court.
Here the Court finds the facts related to David
Hoffman’s conduct in Oregon as alleged in this case fall short of
being “continuous and systematic,” and, therefore, they do not
establish this Court’s general jurisdiction over David Hoffman.
David Hoffman, however, has not submitted any evidence that
presents a “compelling case” that this Court lacks personal
jurisdiction over him.

David Hoffman’s contention that his

communications are “privileged” does not defeat the Court’s
exercise of personal jurisdiction over him.

Such contention

relates only to the legal efficacy of Plaintiffs’ claim rather
than whether this Court has personal jurisdiction over him.
On this record, therefore, the Court concludes
Plaintiffs have met their burden to establish that David Hoffman
is subject to the personal jurisdiction of this Court.
Accordingly, the Court DENIES Defendants’ Motion to Dismiss for
lack of personal jurisdiction as to David Hoffman.
22 - OPINION AND ORDER

3.

Hawk, Peaceful Properties, and Hoffman and Hawk
are not subject to the personal jurisdiction of
this Court.

Plaintiffs have not submitted any evidence nor made any
argument in response to Defendants’ assertions that this Court
does not have personal jurisdiction over Hawk, Peaceful
Properties, or Hoffman and Hawk except to state that non-debtor
Defendants’ unopposed Motion (#109) for Extension of Time to
Answer Amended Complaint constitutes a “general appearance”
and subjects them to the personal jurisdiction of this Court.
Non-debtor Defendants, in turn, contend such a motion is not an
appearance sufficient to confer jurisdiction.
“Defendants can waive the defect of lack of personal
jurisdiction by appearing generally without first challenging the
defect in a preliminary motion, or in a responsive pleading.”
Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 1982).

“An

appearance ordinarily is an overt act by which the party comes
into court and submits to the jurisdiction of the court, and that
overt act affirms an intention to appear.”

Benny v. Pipes, 799

F.2d 489, 493 (9th Cir. 1986)(holding the defendants’ three
motions to extend time to respond to the complaint did not
constitute

a general appearance).

In Blankenship v. Account

Recovery Services, Inc., the court held the defendant’s
participation in a telephone discovery conference and signing of
the proposed discovery plan did not result in a general
appearance.

No. 15-cv-2551, 2017 WL 1653159, at *2 (S.D. Cal.,

May 2, 2017).
23 - OPINION AND ORDER

Here the first "appearance" in this case by Hawk,
Peaceful Properties, and Hoffman and Hawk was their Motion (#44)
to Dismiss filed March 2, 2015, in response to Plaintiffs’ Motion
to Continue Proceedings against them.

In that Motion they

specifically stated they were making a “limited appearance” and
asserted the same defenses raised in their current Motion to
Dismiss, which they also note is a “limited appearance.”
On this record the Court concludes it does not have
personal jurisdiction as to Hawk, Peaceful Properties, and
Hoffman and Hawk.

Accordingly, the Court GRANTS Defendants’

Motion to Dismiss as to Plaintiffs’ claims against Hawk, Peaceful
Properties, and Hoffman and Hawk.
E.

Statute of Limitations

Even if this Court had personal jurisdiction over Hawk,
Peaceful Properties, and Hoffman and Hawk, Defendants contend
Plaintiffs’ claim for fraud against all non-debtor Defendants is
barred by the statute of limitations.

Defendants assert the

alleged fraudulent conduct (i.e., the promise in 2006 or 2007 to
pay Valerie Hoffman’s debt by using property in Maine and
Connecticut) purportedly took place more than two years before
this action was filed in 2013.

Defendants contend Plaintiffs

knew or reasonably should have known about any alleged fraudulent
conduct when Plaintiffs filed their action in Clackamas County
against Valerie and David Hoffman.
In response Plaintiffs assert the two-year statute of
limitations does not apply because Plaintiffs could not have
24 - OPINION AND ORDER

known of any fraudulent conduct by David Hoffman since the
litigation in Maine between Plaintiffs and David Hoffman
regarding the alleged fraudulent transfer of property was still
pending and had not been completely litigated.

Plaintiffs have

since filed a Notice (#124) on Related Case Status and provided a
copy of the Memorandum Decision of the Maine Supreme Court
affirming that trial court’s judgment in favor of David Hoffman
that he did not fraudulently transfer the property in Maine to
Valerie Hoffman.
1.

The Law

Plaintiffs’ claim for common-law fraud arises under
Oregon law and is controlled by Oregon’s statute of limitations.
“[In] a diversity case, substantive issues are controlled by
state law and procedural issues are controlled by federal law.”
Erie R. Co. v. Tomkins, 304 U.S. 64 (1938). “[S]tate law
determines when an action is commenced for statute of limitations
purposes.”

Burroughs v. Shinn, No. 04-cv-1019, 2006 WL 305910,

at *3 (D. Or. Feb. 7, 2006)(citing Walker v. Armco Steel Corp.,
446 U.S. 740, 751 (1980)).
In Oregon an action for fraud must be brought within
two years of the discovery of the allegedly fraudulent conduct.
Or. Rev. Stat. § 12.110(1).

For purposes of this statute a

plaintiff “discovers” the fraud “when the plaintiff knew or
should have known of the alleged fraud.”

Bell v. Benjamin, 232

Or. App. 481, 486 (2009)(citing Mathies v. Hoeck, 284 Or. 539,
542–43 (1978)). “Whether the plaintiff should have known of the
25 - OPINION AND ORDER

alleged fraud depends on a two-step analysis.

First, it must

appear that plaintiff had sufficient knowledge to excite
attention and put a party upon his guard or call for an inquiry.
If plaintiff had such knowledge, it must also appear that a
reasonably diligent inquiry would disclose the fraud.”

2.

Id.

Analysis

Plaintiffs filed their original Complaint in this Court
on May 29, 2013.

In their Second Amended Complaint Plaintiffs

allege their “claims are based on the Defendants’ fraudulent
activities against Plaintiffs in Plaintiff[s'] 2008 to 2009
Circuit Court of Clackamas County, Oregon proceedings and related
prior and subsequent fraudulent and unlawful activities from 1994
to the present time in Connecticut, Maine and Florida Courts and
in Oregon Circuit Court of Clackamas County, the Oregon United
States District Court and the Florida Middle District Bankruptcy
Court.”
Although Plaintiffs allege numerous acts by Defendants
that were purportedly fraudulent, many of which occurred more
than two years before Plaintiffs filed their Complaint in this
Court, Plaintiffs do not identify when they learned about these
acts nor do Defendants provide any evidence as to this issue.
Defendants, however, argue a reasonable person in
Plaintiffs’ position would have investigated the financial status
of Valerie and David Hoffman after failing to receive payment in
2006 or 2007 for their indebtedness as promised, and a reasonable
26 - OPINION AND ORDER

person, therefore, would have had notice that they had a possible
claim against Valerie and David Hoffman.

Defendants argue

Plaintiffs also were or should have been aware that the promise
to pay was false when they sued the Hoffmans in Oregon in 2008.
The Court notes, however, the fact that Plaintiffs sued
Valerie and David Hoffman to collect the delinquent debt that the
Hoffmans had promised to pay does not, standing alone, support an
inference that Plaintiffs at that time had knowledge of any
fraudulent conduct by the Hoffmans.
On this record the Court cannot conclude as a matter of
law that Plaintiffs had reasonable knowledge or had a reason to
know that David Hoffman or any other Defendant had committed a
fraudulent act more than two years before Plaintiffs filed their
Complaint in this Court.

Accordingly, the Court DENIES

Defendants’ Motion to Dismiss Plaintiffs’ fraud claim based on
the statute of limitations with leave to Defendants to litigate
this defense as a disputed issue of fact to be resolved by a
jury.
F.

Res Judicata

Defendants contend Plaintiffs’ claims for fraud and
intentional interference with business relations are, in any
event, barred by the doctrine of res judicata.

Defendants assert

Plaintiffs could have litigated their fraud claim in the breachof-contract action that Plaintiffs filed in Clackamas County in
2008 and/or in the actions filed in Maine and Florida.
In response Plaintiffs note there was not a claim for
27 - OPINION AND ORDER

intentional interference with business relations in any of the
other actions between the parties.

Plaintiffs also point out

that they are not seeking the same relief that was sought in
other litigation.
1.

The Law

The preclusive effect of a judgment is defined by claim
preclusion and issue preclusion, which are collectively referred
to as “res judicata.”
(2008).

Taylor v. Sturgell, 553 U.S. 880, 892

"Claim preclusion bars any subsequent suit on claims

that were raised or could have been raised in a prior action."
Cumbre, Inc. v. State Compensation Ins. Fund, No. 09-17190, 2010
WL 4643044, at *1 (9th Cir. Nov. 17, 2010)(citing Cell Therapeutics, Inc. v. Lash Group, Inc., 586 F.3d 1204, 1212 (9th Cir.
2009)).

"'It is immaterial whether the claims asserted

subsequent to the judgment were actually pursued in the action
that led to the judgment; rather, the relevant inquiry is whether
they could have been brought.'"

Tahoe-Sierra Pres. Council, Inc.

v. Tahoe Reg'l Planning Agency, 322 F.3d 1064, 1078 (9th Cir.
2003)(quoting United States ex rel. Barajas v. Northrop Corp.,
147 F.3d 905 (9th Cir. 1998)).

Issue preclusion, in contrast,

bars “successive litigation of an issue of fact or law actually
litigated and resolved in a valid court determination essential
to the prior judgment” even if the issue recurs in the context of
a different claim.

Taylor, 553 U.S. at 892.

By “preclud[ing] parties from contesting matters that
28 - OPINION AND ORDER

they have had a full and fair opportunity to litigate,” these two
doctrines protect against “the expense and vexation attending
multiple lawsuits, conserv[e] judicial resources, and foste[r]
reliance on judicial action by minimizing the possibility of
inconsistent decisions.”

Id. (citing Montana v. United States,

440 U.S. 147, 153–54 (1979)).
2.

Analysis

In 2008 Plaintiffs filed an action in Clackamas County
Circuit Court against Valerie and David Hoffman to collect the
account receivable owed by Valerie Hoffman.

In 2011 Plaintiffs

filed an action in Maine against Valerie and David Hoffman to set
aside the transfer of property in 2007 from the Hoffmans to
Peaceful Properties, LLC.

In 2011 Plaintiffs also filed an

action in Florida against the Hoffmans to set aside another
transfer of property between the Hoffmans.

Plaintiffs argue the

transfers in Maine and Florida were fraudulent, and Plaintiffs
contend they were trying to set aside those property transfers in
order to use that property to satisfy the judgment obtained
against Valerie Hoffman in 2009 in the Oregon case.
Although the claims that Plaintiffs bring in this case
arise from the numerous interactions the parties have had over
the years, including the various lawsuits between them,
Plaintiffs’ claims are effectively based on the Hoffmans’
allegedly fraudulent or misleading statements that Plaintiffs
assert were intended to deter Plaintiffs in their efforts to
collect the judgment obtained in Oregon state court.
29 - OPINION AND ORDER

In other

words, Plaintiffs do not seek to set aside the property
transfers, but instead seek separate and distinct damages based
on the allegedly fraudulent misrepresentations and conduct by the
Hoffmans.
On this record the Court concludes Plaintiffs’ claims
do not involve the same rights and interests established in prior
litigation or in a previous judgment.
Accordingly, the Court DENIES Defendants’ Motion to
Dismiss based on res judicata.
G.

Failure to State a Claim

Defendants also contend Plaintiffs fail to allege facts
sufficient to support their claims.
1.

Plaintiffs’ Claim of Intentional Interference with
Business Relations

Defendants contend Plaintiffs cannot state a claim for
interference with business relations based on David Hoffman’s
complaint to Clackamas County authorities regarding Plaintiffs’
use of their property.

Moreover, Defendants argue any such

communications were “privileged” in light of the litigation
between Plaintiffs and the County.
Plaintiffs contend a privilege does not apply, and,
even if it did, there was not any pending litigation at the time
that David Hoffman made the statements to Clackamas County landuse authorities.

As a result of David Hoffman’s complaint,

Clackamas County issued a cease-and-desist order that Plaintiffs
contend caused injury to their business and resulted in damages
to their business.
30 - OPINION AND ORDER

The parties’ contentions, including David Hoffman’s
contention that his actions are privileged, raise issues of fact
that cannot be resolved at this stage of the proceedings.

As

noted, the Court must construe the pleadings in the light most
favorable to the Plaintiffs, and, therefore, the Court concludes
on this record that Plaintiffs have alleged sufficient factual
matter, accepted as true, to “state a claim for relief that is
plausible on its face.”
Accordingly, the Court DENIES Defendants’ Motion to
Dismiss Plaintiffs’ claim against David Hoffman for intentional
interference with business relations.
2.

Plaintiffs’ Civil Conspiracy Claim

Defendants contend Plaintiffs' claim for civil
conspiracy is not a separate theory of recovery and is not an
independent cause of action.
Plaintiffs did not respond to Defendants’ Motion as to
this issue.
As noted, common-law claims are governed by Oregon
state law, and under Oregon law civil conspiracy is not a
separate theory of recovery.

See, e.g., Elkins v. City of

Portland, No. 08-cv-799, 2009 WL 928686, at *8 (D. Or., April 2,
2009)(citing Bonds v. Landers, 279 Or. 169, 175 (1977)); Bliss v.
Southern Pac. Co., 212 Or. 634, 642 (1958).

“[C]onspiracy to

commit or aiding and assisting in the commission of a tort are
two of several ways in which a person may become jointly liable
for another's tortious conduct.”
31 - OPINION AND ORDER

Id. (citing Granewich v.

Harding, 329 Or. 47, 55 (1999)).

Thus, “[t]he damage in a civil

conspiracy flows from the overt acts and not from the
conspiracy.”

Id.

See also Schmitz v. Mars, Inc., 261 F. Supp.

2d 1226, 1233 (D. Or. 2003) (“Plaintiff cannot state a separate
common law claim based on conspiracy.”).
Here Plaintiffs allege Defendants conspired by
fraudulent conduct to prevent Plaintiffs from collecting the
judgment obtained against Valerie Hoffman.

In other words,

Defendants conspired to commit the tort of fraud and Plaintiffs’
damages flow from the overt acts of fraud rather than from the
conspiracy.
Accordingly, the Court GRANTS Defendants’ Motion to
Dismiss as to Plaintiffs’ civil conspiracy claim.
3.

Plaintiffs’ RICO Claim

Defendants contend Plaintiffs fail to allege sufficient
facts to state a claim for violation of RICO.
Plaintiffs failed to respond to Defendants’ Motion as
to this issue.

a.

The Law

A violation of RICO statutes requires proof of
“1) conduct 2) of an enterprise 3) through a pattern 4) of
racketeering activity."

Howard v. Am. Online Inc., 208 F.3d 741,

746 (9th Cir. 2000)(quoting Sedima S.P.R.L. v. Imrex Corp., 473
U.S. 479, 496 (1985)).

32 - OPINION AND ORDER

Under § 1962(c) an enterprise includes any
"individual, partnership, corporation, association, or other
legal entity, and any union or group of individuals associated in
fact although not a legal entity."

18 U.S.C. § 1961(4).

To

establish the existence of an associated-in-fact enterprise, a
plaintiff must produce both "evidence of an ongoing organization,
formal or informal" and "evidence that the various associates
function as a continuing unit."
F.3d 541, 552 (9th Cir. 2007).

Odom v. Microsoft Corp., 486
In addition, a plaintiff must

establish there is an enterprise "separate and apart from" the
pattern of racketeering.

Id. at 549-50.

A group cannot be an

enterprise, however, unless it exists independently from the
racketeering activity in which it engages.

It must have a

structure for making decisions and mechanisms for controlling and
directing the affairs of the group on an on-going basis rather
than an ad hoc basis.

A conspiracy is not a RICO enterprise.

Rotec Indus., Inc. v. Mitsubishi Corp., 163 F. Supp. 2d 1268,
1279 (D. Or. 2001), aff'd, 348 F.3d 1116 (9th Cir. 2003).
RICO defines a “pattern of racketeering activity”
as follows:

A "pattern of racketeering activity requires at

least two acts of racketeering activity, one of which occurred
after the effective date of this chapter and the last of which
occurred within ten years . . . after the commission of a prior
act of racketeering activity."

33 - OPINION AND ORDER

18 U.S.C. § 1961(5).

RICO

defines “acts of racketeering” in pertinent part as follows:
any act or threat involving murder, kidnapping,
gambling, arson, robbery, bribery, extortion,
dealing in obscene matter, or dealing in a
controlled substance or listed chemical . . .,
which is chargeable under State law and punishable
by imprisonment for more than one year.
18 U.S.C. § 1961(1).
b.

Analysis

Although Plaintiffs allege Defendants engaged in
numerous activities, none of their allegations meet the
requirements of the statutory language.

On this record,

therefore, the Court concludes Plaintiffs have not alleged
sufficient facts to “state a claim for relief that is plausible
on its face.”
Accordingly, the Court GRANTS Defendants’ Motion to Dismiss
as to Plaintiffs' RICO claim.
H.

Declaratory Judgment for Referral for Criminal
Prosecution and Civil RICO

In their Second Amended Complaint Plaintiffs seek
declaratory judgment that Defendants have violated RICO and
request referral of this matter to the United States Attorney for
the District of Oregon and the Attorney General of the United
States for criminal prosecution.
Based on the Court’s determination that Plaintiffs have not
stated a claim for violation of RICO statutes, the Court GRANTS
Defendants’ Motion to Dismiss as to this issue and STRIKES
Plaintiffs’ request for declaratory judgment.
34 - OPINION AND ORDER

II.

Defendants’ Alternative Motion to Strike
Defendants also move to strike numerous allegations of

Plaintiffs’ Second Amended Complaint pursuant to Federal Rule of
Civil Procedure 12(f) on the grounds that they are “redundant,
immaterial, impertinent, or scandalous.”
In light of the Court’s rulings on Defendants’ Motion to
Dismiss, the Court directs Plaintiffs to file a Third Amended
Complaint in order to remove allegations and references related
to the civil conspiracy and RICO claims.

The Court also directs

Plaintiffs to amend their complaint to set forth the factual
allegations in chronological order as they relate to the
remaining claims of fraud and intentional interference with
business relations.
Accordingly, the Court DENIES as moot Defendants’ Motion to
Strike.

CONCLUSION
For these reasons, the Court GRANTS in part Defendants’
Motion (#111) to Dismiss as follows:
1. DISMISSES with prejudice each of Plaintiffs’ claims
against Valerie Hoffman as barred by the discharge in bankruptcy;
2. DISMISSES with prejudice as to bringing such claims in
this Court all of Plaintiffs’ claims against non-debtor
Defendants Wesley Amos Hawk, Peaceful Properties, and Hoffman and
Hawk for lack of service and lack of the Court’s personal
35 - OPINION AND ORDER

jurisdiction over these Defendants;
3. DISMISSES with prejudice Plaintiffs’ claim for civil
conspiracy and RICO violations against non-debtor Defendant David
Hoffman for failure to state a claim; and
4. STRIKES Plaintiffs’ request for declaratory judgment and
referral for criminal prosecution.
In all other respects, the Court DENIES Defendants’ Motion
to Dismiss.
The Court DENIES as moot Defendants’ Alternative Motion
(#114) to Strike.
The Court DIRECTS Plaintiffs to file no later than
November 20, 2017, a Third Amended Complaint consistent with this
Opinion and Order.

The Court also DIRECTS Plaintiffs to include

in the caption of the amended complaint only David Hoffman as the
remaining named Defendant in this matter.
David Hoffman’s Answer to Plaintiffs’ Third Amended
Complaint will be due no later than December 4, 2017.
After Defendant David Hoffman’s Answer has been filed,
the Court will schedule a Rule 16 Conference to set further
case-management dates.
IT IS SO ORDERED.
DATED this 26th day of October, 2017.

/s/ Anna J. Brown
ANNA J. BROWN
United States Senior District Judge

36 - OPINION AND ORDER

37 - OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
LIBERTY NATURAL PRODUCTS,
INC., and, JAMES R. DIERKING,
Plaintiffs,
v.
VALERIE HAWK HOFFMAN, AKA
VALERIE HOLLAND HAWK, AKA
VALERIE HAWK FUREY, AKA ARDEN
HOFFMAN, AKA ARDEN KOFFMAN,
AKA ALLIE LOUGHLIN, AKA ALLIE
LOUGHLIN; DAVID BOYD HOFFMAN,
AKA DAVID BOYD, AKA DAVID
KOFFMAN; SUNRISE HERBAL
REMEDIES, INC., DISSOLVED;
SAGE ADVICE OF PALM BEACH
INC., DISSOLVED; FRESH HERBS
AND TEAS, INC, LLC; PEACEFUL
PROPERTIES LLC; HOFFMAN AND
HAWK LLC; AND WESLEY AMOS
HAWK; AND UNNAMED PERSONS
AIDING THEM IN COURT
PROCEEDINGS,
Defendants.
ROGER F. DIERKING
13513 NE Beech St.
Portland, OR 97230
[phone]
TIMOTHY J. VANAGAS
800 SE 181st Ave, Suite 101
Portland, OR 97223
[phone]
1 - OPINION AND ORDER

3:13-cv-00886-BR
OPINION AND ORDER

Attorneys for Plaintiffs
WILLIAM D. BRANDT
495 State St., Suite 500B
Salem, OR 97301
[phone]
Attorney for Defendants
BROWN, Judge.
This matter comes before the Court on the Motion (#111) to
Dismiss Under Rule 12(b) and the Alternative Motion (#114) to
Strike Certain Paragraphs of Plaintiffs’ Second Amended Complaint
filed by Defendants Valerie Hawk Hoffman; David Hoffman; Wesley
Amos Hawk; Peaceful Properties, LLC; and Hoffman and Hawk, LLC.
For the reasons that follow, the Court GRANTS in part and
DENIES in part Defendants’ Motion to Dismiss and DENIES as moot
Defendants’ Motion to Strike.

BACKGROUND
The following facts are taken from Plaintiffs’ Second
Amended Complaint and the pleadings submitted by the parties and
are construed in the light most favorable to Plaintiffs.
Plaintiff Liberty Natural Products, Inc., is an Oregon
corporation engaged in the manufacture, marketing, and
distribution of herbal extracts.

Plaintiff James R. Dierking is

the president, CEO, and sole shareholder of Liberty Natural.
Defendant Valerie Hoffman is a Florida resident and was the
president of Defendant Sunrise Herbal Remedies, Inc., a
Connecticut corporation.
2 - OPINION AND ORDER

Sunrise was engaged in the sale and

distribution of herbal extract consumer goods and did business in
Oregon.

On May 1, 2006, Sunrise was dissolved.

On May 23, 2006,

Valerie Hoffman formed Defendant Sage Advice of Palm Beach, LLC,
a Florida corporation, which was also subsequently dissolved.

In

February 2007 Valerie Hoffman formed Defendant Fresh Herbs and
Teas, LLC, a Florida corporation, which was also subsequently
dissolved.

Defendant David Hoffman, the former husband of

Valerie Hoffman, is also a Florida resident and was the manager
and operator of Sunrise and Fresh Herbs.

Defendant Peaceful

Properties, LLC, is a Maine corporation formed by David Hoffman
for the purpose of holding certain real property.

Defendant

Wesley Amos Hawk, who is Valerie Hoffman’s father, is a resident
of Connecticut and was the general manager of Defendant Hoffman
and Hawk, a dissolved Connecticut limited liability company.
Sometime in 2008 Liberty filed an action against Valerie
Hoffman, David Hoffman, and Sunrise in Clackamas County Circuit
Court for debts owed to Liberty Natural.
counterclaim against Liberty.

Valerie Hoffman filed a

In April 2009 Liberty obtained a

judgment in the Clackamas County case for $152,252.91 against
Valerie Hoffman and Sunrise.

David Hoffman was found not liable

for the debts owed by Valerie Hoffman and Sunrise.
In December 2010 Liberty filed another action against
Valerie Hoffman, Sunrise, Sage, and Kevin Brague in Clackamas
County Circuit Court and asserted a claim for wrongful use of
civil proceedings.

On March 2, 2011, Valerie Hoffman filed a

Notice of Removal to federal court, Case No. 3:11-cv-00264.
3 - OPINION AND ORDER

The

removal action was assigned to Magistrate Judge Dennis J. Hubel.
On May 29, 2013, Liberty and James R. Dierking filed a
Complaint in this court, Case No. 3:13-cv-00886, asserting claims
for intentional interference with business relationships and
fraud against all Defendants.

Plaintiffs also sought an

injunction against Defendants and a declaration that Defendants
had violated federal RICO statutes.

The case was assigned to

this judicial officer.
On July 25, 2013, Valerie Hoffman filed a Notice (#10) of
Bankruptcy Filing in which she stated that she had filed a
petition in the United States Bankruptcy Court for the Middle
District of Florida seeking relief under Chapter 13 of the
bankruptcy laws.
On July 29, 2013, the Court directed the parties to file a
notice with this Court and to indicate whether there was a basis
for this action to proceed without obtaining relief in the
bankruptcy court from the automatic stay.

Order (#11).

On August 11, 2013, Plaintiffs filed a Notice (#12) of Basis
to Continue Proceedings Without Obtaining Relief from Automatic
Stay, requested the Court “sever all claims” as to all Defendants
other than Valerie Hoffman, and requested leave to file a motion
for preliminary injunction as to all other Defendants.
Plaintiffs also requested leave to seek relief from the automatic
stay in the bankruptcy court as to Valerie Hoffman.
On August 26, 2013, Valerie Hoffman filed a Response to
Plaintiffs’ Notice and provided a copy of an Order issued by
4 - OPINION AND ORDER

Magistrate Judge Hubel staying the case assigned to him based on
Valerie Hoffman’s bankruptcy filing.
On August 29, 2013, the Court issued a stay in this case.
The Court stated:
[T]here is not any basis to find the automatic stay
does not apply to Defendant Valerie Hoffman in whatever
capacity she may be designated in Plaintiffs’ Complaint
and to the other named Defendants for whose actions
Hoffman is allegedly responsible. Thus, the Bankruptcy
Court is in the best position to determine the extent
to which these litigants’ issues should be resolved in
the bankruptcy proceeding as opposed to this pending
matter. Accordingly, the Court finds the automatic
stay applies in this action, which the Court now STAYS
for all purposes pending an order from the Bankruptcy
Court authorizing relief from stay as to all or part of
this action. . . . Finally, unless such relief [from]
stay is obtained before December 16, 2013, the Court
will then dismiss this action without prejudice to
Plaintiffs’ efforts to pursue its claims in the
Bankruptcy Court.
Order (#16).
On December 15, 2013, Plaintiffs filed a Motion (#24) to
Continue this case pending further proceedings in the Bankruptcy
Court.
On December 28, 2013, the Court granted Plaintiffs’ request,
continued the case, and directed Plaintiffs to file a status
report after relief from the stay was obtained or on resolution
of the bankruptcy matter.

Order (#28).

On January 8, 2015, Plaintiffs filed a Status Report (#38)
and stated the bankruptcy court had issued an order “providing
relief of the automatic stay to Liberty and Dierking to continue
the litigation in the Oregon District Court against non-Debtors
David Boyd Hoffman, Peaceful Properties, LLC, Hoffman and Hawk,
5 - OPINION AND ORDER

LLC, and Wesley Amos Hawk.”
On January 14, 2015, the Court granted Plaintiffs leave to
file a motion to continue these proceedings against the nondebtor Defendants.

Order (#39).

On February 11, 2015,

Plaintiffs filed a Motion (#41) to Continue Proceedings against
the non-debtor Defendants.
On March 2, 2015, the non-debtor Defendants filed a Motion
(#44) to Dismiss Plaintiffs’ Complaint based on lack of personal
jurisdiction, improper venue, lack of proper service, and failure
to state a claim.

The non-debtor Defendants indicated their

Motion to Dismiss was a “Limited Appearance.”

They also filed a

Response (#45) to Plaintiffs’ Motion to Continue Proceedings
against them on the same grounds asserted earlier in their Motion
to Dismiss.
On April 10, 2015, Plaintiffs filed a Motion (#58) to
Postpone Court Action on the Defendants’ Motion to Dismiss Until
Plaintiff Has Made Service upon the Defendants Wesley Hawk and
David Hoffman and Their Depositions Have Been Taken and a Motion
(#59) to Allow Service by Alternative Means.

On April 16, 2015,

the non-debtor Defendants filed their oppositions (#62, #63) to
Plaintiffs’ Motions.
On April 17, 2015, the Court denied Plaintiffs’ Motion to
Postpone Court Action on Defendants’ Motion to Dismiss and set a
briefing schedule for Defendants’ Motion to Dismiss and
Plaintiffs’ Motion for Alternative Service.

Order (#65).

On July 8, 2015, the Court denied Plaintiffs' Motion to
6 - OPINION AND ORDER

Continue Proceedings against David Hoffman, Peaceful Properties,
Hoffman and Hawk, and Hawk.

Order (#78).

The Court stated:

After considering the parties’ Motions, the Court
concludes although the automatic bankruptcy stay no
longer necessitates a stay of this matter as to
Defendants David Boyd Hoffman; Peaceful Properties,
LLC; Hoffman & Hawk, LLC; and Wesley Amos Hawk, the
continuance of a stay is, nonetheless, appropriate in
the exercise of this Court’s case-management discretion
because the claims in this action against the nondebtor Defendants are inextricably intertwined with the
claims against the bankruptcy debtor Defendant Valerie
Hawk Furey (formerly Valerie Hawk Hoffman).
The Court also denied as moot Defendants’ Motion to Dismiss and
Plaintiffs’ Motion for Alternative Service.
On February 9, 2017, Defendants filed a Notice (#93) of
Discharge in Bankruptcy as to Valerie Hoffman.

On March 6, 2017,

the parties filed a Joint Status Report (#95) asserting various
positions regarding the effect of the bankruptcy discharge.
On March 9, 2017, the Court lifted the stay in this case and
directed the parties to file by March 24, 2017, a Joint Statement
of Remaining Issues and a proposed case-management schedule.
On April 3, 2017, in response to the parties’ Joint
Statement, the Court stated:
The Court concludes an important step to moving this
matter to conclusion requires a current statement of
all Plaintiff[s’] claims that Plaintiff[s] contend[]
should be litigated in this proceeding, and, therefore,
the Court concludes in the exercise of its
case-management discretion that Plaintiff[s] should be
permitted to file an Amended Complaint. The Court also
notes because Defendants' original Motion to Dismiss
(#44) was denied as moot (#78) and because that Motion
to Dismiss raised issues of jurisdiction and service,
those fundamental legal matters need to be addressed in
motions against any Amended Complaint if Plaintiff[s]
choose[] to file an Amended Complaint or against the
existing Complaint (#1) together with Defendants'
7 - OPINION AND ORDER

challenge referenced in the Joint Statement (#97) in
which Defendants assert all claims against them are
barred because of the bankruptcy discharge of Valerie
Hoffman.
Order (#99).

The Court subsequently set deadlines for the filing

of Plaintiffs’ Amended Complaint and Defendants’ “answer, motion
to dismiss, or other challenge” to the Amended Complaint.
On July 10, 2017, Plaintiffs filed an Amended Complaint
(#107).

On July 13, 2017, Plaintiffs filed a Second Amended

Complaint (#108) to “correct clerical errors in Plaintiffs’
Amended Complaint” and to assert claims for fraud, intentional
interference with business relations, civil conspiracy, and
violation of the Racketeer Influenced and Corrupt Organizations
Act (RICO), 18 U.S.C. §§ 1961, et seq.

Plaintiffs also seek an

injunction and declaratory judgment referring Defendants to the
United States Attorney for criminal prosecution.
On August 7, 2017, all Defendants filed their Motion (#111)
to Dismiss and Alternative Motion (#114) to Strike.

STANDARDS
I.

Motion to Dismiss
To survive a motion to dismiss a complaint must contain

sufficient factual matter, accepted as true, to “state a claim
for relief that is plausible on its face.”
Twombly, 550 U.S. 544, 545 (2007).

Bell Atlantic v.

A claim has facial

plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
8 - OPINION AND ORDER

defendant is liable for the misconduct alleged.

Id. at 556.

“The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that
a defendant has acted unlawfully.”

Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009)(quoting Twombly, 550 U.S. at 546).

When a

complaint is based on facts that are “merely consistent with” a
defendant's liability, it “stops short of the line between
possibility and plausibility of entitlement to relief.” Iqbal,
556 U.S. at 678 (citing Twombly, 550 U.S. at 557).
Atlantic, 550 U.S. at 555-56.

See also Bell

The court must accept as true the

allegations in the complaint and construe them in favor of the
plaintiff.

Din v. Kerry, 718 F.3d 856, 859 (9th Cir. 2013).

The pleading standard under Federal Rule of Civil Procedure
8 “does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmedme accusation.”
U.S. at 555).

Iqbal, 556 U.S. at 678 (quoting Twombly, 550
See also Federal Rule of Civil Procedure 8(a)(2).

“A pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’”
Id. (citing Twombly, 550 U.S. at 555).

A complaint also does not

suffice if it tenders “naked assertion[s]” devoid of “further
factual enhancement.”

Id. at 557.

“In ruling on a 12(b)(6) motion, a court may generally
consider only allegations contained in the pleadings, exhibits
9 - OPINION AND ORDER

attached to the complaint, and matters properly subject to
judicial notice."

Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th

Cir. 2007)(citing Jacobson v. Schwarzenegger, 357 F. Supp. 2d
1198, 1204 (C.D. Cal. 2004)).

A court, however, "may consider a

writing referenced in a complaint but not explicitly incorporated
therein if the complaint relies on the document and its
authenticity is unquestioned."

Id. (quoting Parrino v. FHP,

Inc., 146 F.3d 699,706 (9th Cir. 1998), superseded by statute on
other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676
(9th Cir. 2006)).
II.

Motion to Strike
Motions to strike are disfavored and are not the proper

vehicle to dismiss a claim for failure to state a claim.
Pinnacle Sys., Inc. v. XOS Tech., Inc., No. C-02-03804, 2003 WL
21397845, at *4 (N.D. Cal., May 19, 2003).

Federal Rule of Civil

Procedure 12(f) allows the court to strike any “redundant,
immaterial, impertinent, or scandalous material.”

To be

impertinent or immaterial, the allegations must not have any
possible bearing on the controversy.

Employers Ins. of Wausau v.

Musick, Peeler, & Garrett, 871 F. Supp. 381, 391 (S.D. Cal.
1994), opin. amended on reconsideration, 948 F. Supp. 942 (S.D.
Cal. 1995).

“Immaterial matter” within the meaning of Rule 12(f)

is material that does not have any essential or important
relationship to the claim or the defenses being pleaded.
10 - OPINION AND ORDER

Van

Slyke v. Capital One Bank, 503 F. Supp. 2d 1353, 1367 (N.D. Cal.
2007).
When considering a motion to strike, the court must view the
pleadings in the light most favorable to the nonmoving party.
In re 2TheMart.com Secs. Litig., 114 F. Supp. 2d 955, 965 (C.D.
Cal. 2000).

DISCUSSION
In their Second Amended Complaint Plaintiffs allege a myriad
of facts regarding actions by and between the parties over many
years in Maine, Florida, and Oregon.

The basis of this action is

the inability of Plaintiffs to collect a judgment they obtained
in Oregon against Valerie Hoffman and the allegedly fraudulent
conduct by Defendants that kept Plaintiffs from collecting that
judgment.
I.

Defendants’ Motion to Dismiss
Defendants move to dismiss Plaintiffs’ claims on the grounds

that (1) Plaintiffs’ claims against Valerie Hoffman violate the
discharge that she obtained in the bankruptcy proceeding and the
settlement agreement between the parties; (2) Plaintiffs have not
properly served Defendants David Hoffman, Wesley Amos Hawk,
Peaceful Properties, and Hoffman and Hawk (non-debtor
Defendants); (3) non-debtor Defendants are not subject to the
personal jurisdiction of this Court; (4) Plaintiffs’ claims

11 - OPINION AND ORDER

against all Defendants are barred by the applicable statute of
limitations; (5) Plaintiffs fail to state a claim against all
Defendants; and (6) Plaintiffs’ claims against all Defendants are
barred by the doctrine of res judicata.

Defendants also contend

Plaintiffs do not have standing to request that the Court refer
this matter to the United States Attorney for criminal
prosecution.
In their Response Plaintiffs contend (1) Defendants’ Motion
to Dismiss is not timely, (2) Valerie Hoffman is an indispensable
party, (3) non-debtor Defendants were properly served and are
subject to the jurisdiction of this Court, (4) Plaintiffs have
adequately stated claims against all Defendants, and
(5) Plaintiffs’ claims against all Defendants are not barred by
the statute of limitations or by res judicata.
A.

Claims against Valerie Hoffman

As noted, the Court stayed this case on August 29, 2013,
based on the automatic stay imposed by the bankruptcy court at
the time Valerie Hoffman filed for bankruptcy.

Plaintiffs,

nevertheless, contend Valerie Hoffman is “an indispensable
party.”

Plaintiffs, however, fail to provide any legal authority

to support their proposition, and the Court’s Orders (#16, #78)
relied on by Plaintiffs do not support their position.

In those

Orders the Court concluded the automatic stay imposed by Valerie
Hoffman’s bankruptcy petition applied to this action and was
appropriate because the claims asserted against the non-debtor
Defendants were “inextricably intertwined” with the claims
12 - OPINION AND ORDER

against Valerie Hoffman to such a degree that Plaintiffs’ claims
against the non-debtor Defendants might become moot if Valerie
Hoffman was discharged in bankruptcy.
In addition, Defendants attach to their Motion to Dismiss a
copy of the Settlement Agreement dated November 7, 2014, between
Plaintiffs and Valerie Hoffman.

In that Settlement Agreement the

parties agreed Plaintiffs would withdraw their opposition to
Valerie Hoffman’s discharge in bankruptcy and agreed
[u]pon the filing by [Plaintiffs] of a motion for
relief from the automatic stay to continue
litigation in Oregon and Florida against nondebtor defendants, David Hoffman and Wesley Hawk,
[Valerie Hoffman] will consent to, or not oppose,
the relief requested in such motions, so long as
such motions are limited to seeking relief from
the automatic stay to continue litigation against
the non-debtor defendants only.
Decl. of William Brandt (#113), Ex. 3 at ¶ 6.
Based on the discharge in bankruptcy obtained by Valerie
Hoffman and the Settlement Agreement between the parties, the
Court concludes Plaintiffs’ claims against Valerie Hoffman are
barred.

On this record, therefore, the Court concludes Valerie

Hoffman is not an indispensable party for purposes of this
litigation.

Accordingly, the Court GRANTS Defendants’ Motion to

Dismiss as to Plaintiffs’ claims against Valerie Hoffman.
B.

Timeliness of Defendants’ Motion to Dismiss

Plaintiffs contend Defendants’ Motion is not timely on the
ground that it was filed more than four years after this action
was commenced and after the Court’s Order (#16) “established
jurisdiction.”
13 - OPINION AND ORDER

Federal Rule of Civil Procedure 12 requires a defendant to
file a responsive pleading or motion within 21 days of being
served with summons and complaint.

Plaintiffs’ initial Complaint

in this case was filed on May 29, 2013.

On July 17, 2013,

Valerie Hoffman filed a Notice (#7) of Related Case advising the
Court of the pending case before Magistrate Judge Hubel.

On

July 25, 2013, Valerie Hoffman filed her Notice (#10) of
Bankruptcy Filing.

As noted, the Court indicated its intention

to stay this matter pursuant to the bankruptcy notice.

Although

Plaintiffs objected and requested this case to continue without
obtaining any relief from the automatic stay, the Court,
nevertheless, entered an Order (#16) on August 29, 2013, staying
this case “for all purposes.”
On January 8, 2015, Plaintiffs filed a Notice (#38) on
Bankruptcy Motion Status stating the bankruptcy court had issued
an order on December 16, 2014, providing relief from the
automatic stay to allow Plaintiffs to continue the case in this
Court as to the non-debtor Defendants.
On February 22, 2015, Plaintiffs filed a Motion (#41) to
Continue Proceedings Against Non-Debtor Defendants.
On March 2, 2015, non-debtor Defendants filed a Motion (#44)
to Dismiss Plaintiffs' Complaint on the grounds of lack of
personal jurisdiction, improper venue, lack of service, and
failure to state a claim.

Non-debtor Defendants indicated their

Motion was a “limited appearance.”
On April 20, 2015, Plaintiffs filed a Motion (#58) to
14 - OPINION AND ORDER

Postpone Court Action on Defendants’ Motion to Dismiss and a
Motion (#59) to Allow Service by Alternative Means on David
Hoffman and Hawk.
On July 8, 2015, the Court continued the stay in this case
and denied as moot non-debtor Defendants’ Motion (#44) to Dismiss
and Plaintiffs’ Motion (#59) to Allow Alternative Service.

Order

(#78).
On March 9, 2017, the Court lifted the stay in this case.
Order (#96).

The Court also noted the outstanding issues raised

by non-debtor Defendants’ original Motion (#44) to Dismiss filed
in 2015 and the possibility that Plaintiffs “may choose to file
an amended complaint.”
On April 5, 2017, the parties filed a Supplemental Joint
Case Management Statement (#100) in which they indicated
Plaintiffs intended to file an amended complaint.

The Court set

a deadline of June 5, 2017, for Plaintiffs to file their amended
complaint and on June 9, 2017, extended that deadline to July 10,
2017.

On July 10, 2017, the Court extended the deadline for

Defendants’ response to August 7, 2017.
On July 10, 2017, Plaintiffs filed their Amended Complaint
(#107) and on July 13, 2017, filed a Second Amended Complaint
(#108) “to correct clerical errors.”

On August 7, 2017,

Defendants filed their Motion (#111) to Dismiss.
On this record the Court concludes Defendants’ Motion
to Dismiss was timely filed.

15 - OPINION AND ORDER

C.

Service on Non-Debtor Defendants

Non-debtor Defendants contend they have not been properly
served with summons and complaint in accordance with Rule 4©)
because they have not been personally served.
1.

The Law

Federal Rule of Civil Procedure 4(e) provides an
individual within a judicial district of the United States may be
served (1) by following state law for serving a summons in an
action brought in courts of general jurisdiction in the state
where the district court is located, (2) by personal service,
(3) by service at the individual’s dwelling or usual place of
abode to someone of suitable age who also resides there, or
(4) by service upon an agent authorized to receive service.
Oregon Rule of Civil Procedure 7D(2)(d)(I) provides
service of a summons and complaint may be accomplished by
personal service, substitute service, office service, or service
by mail.

Service by mail requires mailing true copies of the

summons and complaint to the defendant by first class mail and by
certified, registered, or express mail with return receipt
requested.

Under Oregon Rule of Civil Procedure 7D(2)(d)(ii)

service is accomplished when the defendant signs a receipt for
the mailing or seven days after the mailing if mailed to an
address outside of the state.

2.

Or. R. Civ. P. 7D(2)(d)(ii).

David Hoffman has been properly served.

Plaintiffs argue the Court should conclude David
16 - OPINION AND ORDER

Hoffman has been served “because of the adverse inference
stemming from his egregious misconduct” in avoiding personal
service.

Plaintiffs contend, in any event, David Hoffman was

served through his attorney.
On February 11, 2015, Plaintiffs filed the Declaration
(#43) of Roger Dierking in Support of Plaintiffs’ Motion (#41) to
Continue Proceedings Against Non-Debtors.

Attached to the

Declaration is an Affidavit of Due Diligence and Evasion
submitted by a process server listing service attempts at David
Hoffman’s residence in Florida on June 29, July 10, July 12, and
July 20, 2013, that were unsuccessful.

Decl. Dierking at Ex. 11.

On July 2, 2013, Plaintiffs mailed a copy of the Summons and
Complaint to David Hoffman at his Florida residence by first
class and certified mail.

These mailings were returned as

“unclaimed,” “unable to forward,” and “return to sender.”
Although David Hoffman concedes the Florida address to
which these mailings were sent was his residence, he contends he
“was only in Florida on and off during the summer months of
2013.”
Pursuant to the Federal Rules of Civil Procedure and
the Oregon Rules of Civil Procedure, service by mail is allowed
and is complete seven days after mailing to an out-of-state
address.

Plaintiffs’ mailing to David Hoffman at his residence

in Florida was made July 2, 2013, and, therefore, service was
completed on him as of July 9, 2013.
3.

Hawk, Peaceful Properties, and Hoffman and Hawk
have not been properly served.

17 - OPINION AND ORDER

In their Response to Defendants’ Motion to Dismiss
Plaintiffs do not provide any arguments regarding service on
Hawk, Peaceful Properties, or Hoffman and Hawk.

In their Second

Amended Complaint, however, Plaintiffs allege Hawk was served
with summons and complaint by serving his attorney.
Service on an attorney does not qualify as service on
the party unless the agent is authorized to receive process.
Or. R. Civ. P. 7D(1).

See also Bishop v. OBEC Consulting Eng'rs,

160 Or. App. 548, 555 (1999).
In summary, the Court concludes on this record that David
Hoffman has been properly served with summons and complaint and
Hawk, Peaceful Properties, and Hoffman and Hawk have not been
properly served with summons and complaint.

Accordingly, the

Court DENIES Defendants’ Motion to Dismiss as to David Hoffman
and GRANTS the Motion as to Hawk, Peaceful Properties, and
Hoffman and Hawk on the basis that these non-debtor Defendants
have not been properly served.
D.

Personal Jurisdiction

Even if Hawk, Peaceful Properties, and Hoffman and Hawk had
been properly served, non-debtor Defendants contend this Court
lacks personal jurisdiction over any of the non-debtor Defendants
because they have not engaged in any conduct in Oregon sufficient
to subject them to the jurisdiction of this Court.
Plaintiffs contend David Hoffman is subject to the
jurisdiction of this Court on the grounds that he made regulatory
complaints in Clackamas County that were intended to further the
18 - OPINION AND ORDER

conspiracy to damage and to intimidate Plaintiffs in their Oregon
business.

Plaintiffs also contend non-debtor Defendants entered

a general appearance in this Court and subjected themselves to
the Court’s jurisdiction by filing an unopposed motion for
extension of time to answer Plaintiffs’ Amended Complaint.
1.

The Law

The party seeking to invoke the personal jurisdiction
of the federal court has the burden to establish that
jurisdiction exists.

Data Disc, Inc. v. Sys. Tech. Assoc., Inc.,

557 F.2d 1280, 1285 (9th Cir. 1977).

When "a defendant moves to

dismiss a complaint for lack of personal jurisdiction, the
plaintiff bears the burden of demonstrating that jurisdiction is
appropriate." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d
797, 800 (9th Cir. 2004).
"The court may consider evidence presented in
affidavits to assist it in its determination and may order
discovery on the jurisdictional issues."

Doe v. Unocal Corp.,

248 F.3d 915, 922 (9th Cir. 2001)(citing Data Disc, Inc. v. Sys.
Tech. Assoc., Inc., 557 F.2d at 1285).

If the court makes a

jurisdictional decision based only on pleadings and affidavits
submitted by the parties, "the plaintiff need make only a prima
facie showing of jurisdictional facts to withstand the motion to
dismiss."

Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498

(9th Cir. 1995)).

When determining whether the plaintiff has met

the prima facie showing, the court must assume the truth of
19 - OPINION AND ORDER

uncontroverted allegations in the complaint.

Ochoa v. J.B.

Martin and Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002).
If the court rules on a defendant's motion to dismiss for lack of
personal jurisdiction without holding an evidentiary hearing, the
plaintiff's version of the facts, unless directly contravened, is
taken as true and the court must resolve factual conflicts in the
parties' affidavits in favor of the plaintiff.

Harris Rutsky &

Co. Ins. Serv., Inc. v. Bell & Clements LTD, 328 F.3d 1122, 1129
(9th Cir. 2003).
a.

General Personal Jurisdiction

For general personal jurisdiction to exist over a
nonresident defendant, the defendant must engage in “continuous
and systematic general business contacts” that “approximate
physical presence” in the forum state.

Id. (citing Helicopteros

Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984),
and Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d
1082, 1086 (9th Cir. 2000)).
b.

Specific Personal Jurisdiction

When a court lacks general jurisdiction, the court
may, nonetheless, determine it has specific personal jurisdiction
when (1) the nonresident defendant purposefully directs his
activities or consummates some transaction with the forum, or
purposefully avails himself of the privilege of conducting
activities in the forum, thereby invoking the benefits and
protections of its law; (2) the claim arises out of or relates to
20 - OPINION AND ORDER

the defendant’s forum-related activities; and (3) the exercise of
jurisdiction comports with fair play and substantial justice
(i.e., it must be reasonable).

Schwarzenegger, 374 F.3d at 802

(citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)).

The

plaintiff bears the burden of satisfying the first two
requirements of this test.

If the plaintiff fails to satisfy

either of these requirements, personal jurisdiction is not
established in the forum state.

If the plaintiff succeeds in

satisfying the first two requirements, the burden shifts to the
defendant to “present a compelling case” that the exercise of
personal jurisdiction would not be reasonable.

Id. (citing

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)).
2.

David Hoffman is subject to the personal
jurisdiction of this Court.

Plaintiffs allege claims for fraud, intentional
interference with business relations, civil conspiracy, and RICO
violations.

Although Plaintiffs allege numerous acts by David

Hoffman that occurred outside of the State of Oregon, Plaintiffs
specifically allege David Hoffman filed a land-use complaint with
Clackamas County in Oregon regarding Plaintiffs’ business
operations and that complaint as well as other complaints made by
David Hoffman to the FDA and EPA interfered with Plaintiffs’
“contractual and prospective economic advantage” and constitute
sufficient contacts with this state to confer personal
jurisdiction over David Hoffman.

Plaintiffs allege David Hoffman

filed complaints with Clackamas County and other federal agencies
regarding Plaintiffs’ business operations in Oregon, and
21 - OPINION AND ORDER

Plaintiffs’ claim of intentional interference with business
relations arises out of or relates to these activities.

David

Hoffman’s conduct supports the conclusion that he purposefully
availed himself of the privilege of conducting activities in this
state.
David Hoffman concedes he made statements against
Plaintiffs in Oregon, but he contends the statements are
privileged and, therefore, do not constitute sufficient contacts
with the forum state to subject him to the personal jurisdiction
of this Court.
Here the Court finds the facts related to David
Hoffman’s conduct in Oregon as alleged in this case fall short of
being “continuous and systematic,” and, therefore, they do not
establish this Court’s general jurisdiction over David Hoffman.
David Hoffman, however, has not submitted any evidence that
presents a “compelling case” that this Court lacks personal
jurisdiction over him.

David Hoffman’s contention that his

communications are “privileged” does not defeat the Court’s
exercise of personal jurisdiction over him.

Such contention

relates only to the legal efficacy of Plaintiffs’ claim rather
than whether this Court has personal jurisdiction over him.
On this record, therefore, the Court concludes
Plaintiffs have met their burden to establish that David Hoffman
is subject to the personal jurisdiction of this Court.
Accordingly, the Court DENIES Defendants’ Motion to Dismiss for
lack of personal jurisdiction as to David Hoffman.
22 - OPINION AND ORDER

3.

Hawk, Peaceful Properties, and Hoffman and Hawk
are not subject to the personal jurisdiction of
this Court.

Plaintiffs have not submitted any evidence nor made any
argument in response to Defendants’ assertions that this Court
does not have personal jurisdiction over Hawk, Peaceful
Properties, or Hoffman and Hawk except to state that non-debtor
Defendants’ unopposed Motion (#109) for Extension of Time to
Answer Amended Complaint constitutes a “general appearance”
and subjects them to the personal jurisdiction of this Court.
Non-debtor Defendants, in turn, contend such a motion is not an
appearance sufficient to confer jurisdiction.
“Defendants can waive the defect of lack of personal
jurisdiction by appearing generally without first challenging the
defect in a preliminary motion, or in a responsive pleading.”
Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 1982).

“An

appearance ordinarily is an overt act by which the party comes
into court and submits to the jurisdiction of the court, and that
overt act affirms an intention to appear.”

Benny v. Pipes, 799

F.2d 489, 493 (9th Cir. 1986)(holding the defendants’ three
motions to extend time to respond to the complaint did not
constitute

a general appearance).

In Blankenship v. Account

Recovery Services, Inc., the court held the defendant’s
participation in a telephone discovery conference and signing of
the proposed discovery plan did not result in a general
appearance.

No. 15-cv-2551, 2017 WL 1653159, at *2 (S.D. Cal.,

May 2, 2017).
23 - OPINION AND ORDER

Here the first "appearance" in this case by Hawk,
Peaceful Properties, and Hoffman and Hawk was their Motion (#44)
to Dismiss filed March 2, 2015, in response to Plaintiffs’ Motion
to Continue Proceedings against them.

In that Motion they

specifically stated they were making a “limited appearance” and
asserted the same defenses raised in their current Motion to
Dismiss, which they also note is a “limited appearance.”
On this record the Court concludes it does not have
personal jurisdiction as to Hawk, Peaceful Properties, and
Hoffman and Hawk.

Accordingly, the Court GRANTS Defendants’

Motion to Dismiss as to Plaintiffs’ claims against Hawk, Peaceful
Properties, and Hoffman and Hawk.
E.

Statute of Limitations

Even if this Court had personal jurisdiction over Hawk,
Peaceful Properties, and Hoffman and Hawk, Defendants contend
Plaintiffs’ claim for fraud against all non-debtor Defendants is
barred by the statute of limitations.

Defendants assert the

alleged fraudulent conduct (i.e., the promise in 2006 or 2007 to
pay Valerie Hoffman’s debt by using property in Maine and
Connecticut) purportedly took place more than two years before
this action was filed in 2013.

Defendants contend Plaintiffs

knew or reasonably should have known about any alleged fraudulent
conduct when Plaintiffs filed their action in Clackamas County
against Valerie and David Hoffman.
In response Plaintiffs assert the two-year statute of
limitations does not apply because Plaintiffs could not have
24 - OPINION AND ORDER

known of any fraudulent conduct by David Hoffman since the
litigation in Maine between Plaintiffs and David Hoffman
regarding the alleged fraudulent transfer of property was still
pending and had not been completely litigated.

Plaintiffs have

since filed a Notice (#124) on Related Case Status and provided a
copy of the Memorandum Decision of the Maine Supreme Court
affirming that trial court’s judgment in favor of David Hoffman
that he did not fraudulently transfer the property in Maine to
Valerie Hoffman.
1.

The Law

Plaintiffs’ claim for common-law fraud arises under
Oregon law and is controlled by Oregon’s statute of limitations.
“[In] a diversity case, substantive issues are controlled by
state law and procedural issues are controlled by federal law.”
Erie R. Co. v. Tomkins, 304 U.S. 64 (1938). “[S]tate law
determines when an action is commenced for statute of limitations
purposes.”

Burroughs v. Shinn, No. 04-cv-1019, 2006 WL 305910,

at *3 (D. Or. Feb. 7, 2006)(citing Walker v. Armco Steel Corp.,
446 U.S. 740, 751 (1980)).
In Oregon an action for fraud must be brought within
two years of the discovery of the allegedly fraudulent conduct.
Or. Rev. Stat. § 12.110(1).

For purposes of this statute a

plaintiff “discovers” the fraud “when the plaintiff knew or
should have known of the alleged fraud.”

Bell v. Benjamin, 232

Or. App. 481, 486 (2009)(citing Mathies v. Hoeck, 284 Or. 539,
542–43 (1978)). “Whether the plaintiff should have known of the
25 - OPINION AND ORDER

alleged fraud depends on a two-step analysis.

First, it must

appear that plaintiff had sufficient knowledge to excite
attention and put a party upon his guard or call for an inquiry.
If plaintiff had such knowledge, it must also appear that a
reasonably diligent inquiry would disclose the fraud.”

2.

Id.

Analysis

Plaintiffs filed their original Complaint in this Court
on May 29, 2013.

In their Second Amended Complaint Plaintiffs

allege their “claims are based on the Defendants’ fraudulent
activities against Plaintiffs in Plaintiff[s'] 2008 to 2009
Circuit Court of Clackamas County, Oregon proceedings and related
prior and subsequent fraudulent and unlawful activities from 1994
to the present time in Connecticut, Maine and Florida Courts and
in Oregon Circuit Court of Clackamas County, the Oregon United
States District Court and the Florida Middle District Bankruptcy
Court.”
Although Plaintiffs allege numerous acts by Defendants
that were purportedly fraudulent, many of which occurred more
than two years before Plaintiffs filed their Complaint in this
Court, Plaintiffs do not identify when they learned about these
acts nor do Defendants provide any evidence as to this issue.
Defendants, however, argue a reasonable person in
Plaintiffs’ position would have investigated the financial status
of Valerie and David Hoffman after failing to receive payment in
2006 or 2007 for their indebtedness as promised, and a reasonable
26 - OPINION AND ORDER

person, therefore, would have had notice that they had a possible
claim against Valerie and David Hoffman.

Defendants argue

Plaintiffs also were or should have been aware that the promise
to pay was false when they sued the Hoffmans in Oregon in 2008.
The Court notes, however, the fact that Plaintiffs sued
Valerie and David Hoffman to collect the delinquent debt that the
Hoffmans had promised to pay does not, standing alone, support an
inference that Plaintiffs at that time had knowledge of any
fraudulent conduct by the Hoffmans.
On this record the Court cannot conclude as a matter of
law that Plaintiffs had reasonable knowledge or had a reason to
know that David Hoffman or any other Defendant had committed a
fraudulent act more than two years before Plaintiffs filed their
Complaint in this Court.

Accordingly, the Court DENIES

Defendants’ Motion to Dismiss Plaintiffs’ fraud claim based on
the statute of limitations with leave to Defendants to litigate
this defense as a disputed issue of fact to be resolved by a
jury.
F.

Res Judicata

Defendants contend Plaintiffs’ claims for fraud and
intentional interference with business relations are, in any
event, barred by the doctrine of res judicata.

Defendants assert

Plaintiffs could have litigated their fraud claim in the breachof-contract action that Plaintiffs filed in Clackamas County in
2008 and/or in the actions filed in Maine and Florida.
In response Plaintiffs note there was not a claim for
27 - OPINION AND ORDER

intentional interference with business relations in any of the
other actions between the parties.

Plaintiffs also point out

that they are not seeking the same relief that was sought in
other litigation.
1.

The Law

The preclusive effect of a judgment is defined by claim
preclusion and issue preclusion, which are collectively referred
to as “res judicata.”
(2008).

Taylor v. Sturgell, 553 U.S. 880, 892

"Claim preclusion bars any subsequent suit on claims

that were raised or could have been raised in a prior action."
Cumbre, Inc. v. State Compensation Ins. Fund, No. 09-17190, 2010
WL 4643044, at *1 (9th Cir. Nov. 17, 2010)(citing Cell Therapeutics, Inc. v. Lash Group, Inc., 586 F.3d 1204, 1212 (9th Cir.
2009)).

"'It is immaterial whether the claims asserted

subsequent to the judgment were actually pursued in the action
that led to the judgment; rather, the relevant inquiry is whether
they could have been brought.'"

Tahoe-Sierra Pres. Council, Inc.

v. Tahoe Reg'l Planning Agency, 322 F.3d 1064, 1078 (9th Cir.
2003)(quoting United States ex rel. Barajas v. Northrop Corp.,
147 F.3d 905 (9th Cir. 1998)).

Issue preclusion, in contrast,

bars “successive litigation of an issue of fact or law actually
litigated and resolved in a valid court determination essential
to the prior judgment” even if the issue recurs in the context of
a different claim.

Taylor, 553 U.S. at 892.

By “preclud[ing] parties from contesting matters that
28 - OPINION AND ORDER

they have had a full and fair opportunity to litigate,” these two
doctrines protect against “the expense and vexation attending
multiple lawsuits, conserv[e] judicial resources, and foste[r]
reliance on judicial action by minimizing the possibility of
inconsistent decisions.”

Id. (citing Montana v. United States,

440 U.S. 147, 153–54 (1979)).
2.

Analysis

In 2008 Plaintiffs filed an action in Clackamas County
Circuit Court against Valerie and David Hoffman to collect the
account receivable owed by Valerie Hoffman.

In 2011 Plaintiffs

filed an action in Maine against Valerie and David Hoffman to set
aside the transfer of property in 2007 from the Hoffmans to
Peaceful Properties, LLC.

In 2011 Plaintiffs also filed an

action in Florida against the Hoffmans to set aside another
transfer of property between the Hoffmans.

Plaintiffs argue the

transfers in Maine and Florida were fraudulent, and Plaintiffs
contend they were trying to set aside those property transfers in
order to use that property to satisfy the judgment obtained
against Valerie Hoffman in 2009 in the Oregon case.
Although the claims that Plaintiffs bring in this case
arise from the numerous interactions the parties have had over
the years, including the various lawsuits between them,
Plaintiffs’ claims are effectively based on the Hoffmans’
allegedly fraudulent or misleading statements that Plaintiffs
assert were intended to deter Plaintiffs in their efforts to
collect the judgment obtained in Oregon state court.
29 - OPINION AND ORDER

In other

words, Plaintiffs do not seek to set aside the property
transfers, but instead seek separate and distinct damages based
on the allegedly fraudulent misrepresentations and conduct by the
Hoffmans.
On this record the Court concludes Plaintiffs’ claims
do not involve the same rights and interests established in prior
litigation or in a previous judgment.
Accordingly, the Court DENIES Defendants’ Motion to
Dismiss based on res judicata.
G.

Failure to State a Claim

Defendants also contend Plaintiffs fail to allege facts
sufficient to support their claims.
1.

Plaintiffs’ Claim of Intentional Interference with
Business Relations

Defendants contend Plaintiffs cannot state a claim for
interference with business relations based on David Hoffman’s
complaint to Clackamas County authorities regarding Plaintiffs’
use of their property.

Moreover, Defendants argue any such

communications were “privileged” in light of the litigation
between Plaintiffs and the County.
Plaintiffs contend a privilege does not apply, and,
even if it did, there was not any pending litigation at the time
that David Hoffman made the statements to Clackamas County landuse authorities.

As a result of David Hoffman’s complaint,

Clackamas County issued a cease-and-desist order that Plaintiffs
contend caused injury to their business and resulted in damages
to their business.
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The parties’ contentions, including David Hoffman’s
contention that his actions are privileged, raise issues of fact
that cannot be resolved at this stage of the proceedings.

As

noted, the Court must construe the pleadings in the light most
favorable to the Plaintiffs, and, therefore, the Court concludes
on this record that Plaintiffs have alleged sufficient factual
matter, accepted as true, to “state a claim for relief that is
plausible on its face.”
Accordingly, the Court DENIES Defendants’ Motion to
Dismiss Plaintiffs’ claim against David Hoffman for intentional
interference with business relations.
2.

Plaintiffs’ Civil Conspiracy Claim

Defendants contend Plaintiffs' claim for civil
conspiracy is not a separate theory of recovery and is not an
independent cause of action.
Plaintiffs did not respond to Defendants’ Motion as to
this issue.
As noted, common-law claims are governed by Oregon
state law, and under Oregon law civil conspiracy is not a
separate theory of recovery.

See, e.g., Elkins v. City of

Portland, No. 08-cv-799, 2009 WL 928686, at *8 (D. Or., April 2,
2009)(citing Bonds v. Landers, 279 Or. 169, 175 (1977)); Bliss v.
Southern Pac. Co., 212 Or. 634, 642 (1958).

“[C]onspiracy to

commit or aiding and assisting in the commission of a tort are
two of several ways in which a person may become jointly liable
for another's tortious conduct.”
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Id. (citing Granewich v.

Harding, 329 Or. 47, 55 (1999)).

Thus, “[t]he damage in a civil

conspiracy flows from the overt acts and not from the
conspiracy.”

Id.

See also Schmitz v. Mars, Inc., 261 F. Supp.

2d 1226, 1233 (D. Or. 2003) (“Plaintiff cannot state a separate
common law claim based on conspiracy.”).
Here Plaintiffs allege Defendants conspired by
fraudulent conduct to prevent Plaintiffs from collecting the
judgment obtained against Valerie Hoffman.

In other words,

Defendants conspired to commit the tort of fraud and Plaintiffs’
damages flow from the overt acts of fraud rather than from the
conspiracy.
Accordingly, the Court GRANTS Defendants’ Motion to
Dismiss as to Plaintiffs’ civil conspiracy claim.
3.

Plaintiffs’ RICO Claim

Defendants contend Plaintiffs fail to allege sufficient
facts to state a claim for violation of RICO.
Plaintiffs failed to respond to Defendants’ Motion as
to this issue.

a.

The Law

A violation of RICO statutes requires proof of
“1) conduct 2) of an enterprise 3) through a pattern 4) of
racketeering activity."

Howard v. Am. Online Inc., 208 F.3d 741,

746 (9th Cir. 2000)(quoting Sedima S.P.R.L. v. Imrex Corp., 473
U.S. 479, 496 (1985)).

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Under § 1962(c) an enterprise includes any
"individual, partnership, corporation, association, or other
legal entity, and any union or group of individuals associated in
fact although not a legal entity."

18 U.S.C. § 1961(4).

To

establish the existence of an associated-in-fact enterprise, a
plaintiff must produce both "evidence of an ongoing organization,
formal or informal" and "evidence that the various associates
function as a continuing unit."
F.3d 541, 552 (9th Cir. 2007).

Odom v. Microsoft Corp., 486
In addition, a plaintiff must

establish there is an enterprise "separate and apart from" the
pattern of racketeering.

Id. at 549-50.

A group cannot be an

enterprise, however, unless it exists independently from the
racketeering activity in which it engages.

It must have a

structure for making decisions and mechanisms for controlling and
directing the affairs of the group on an on-going basis rather
than an ad hoc basis.

A conspiracy is not a RICO enterprise.

Rotec Indus., Inc. v. Mitsubishi Corp., 163 F. Supp. 2d 1268,
1279 (D. Or. 2001), aff'd, 348 F.3d 1116 (9th Cir. 2003).
RICO defines a “pattern of racketeering activity”
as follows:

A "pattern of racketeering activity requires at

least two acts of racketeering activity, one of which occurred
after the effective date of this chapter and the last of which
occurred within ten years . . . after the commission of a prior
act of racketeering activity."

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18 U.S.C. § 1961(5).

RICO

defines “acts of racketeering” in pertinent part as follows:
any act or threat involving murder, kidnapping,
gambling, arson, robbery, bribery, extortion,
dealing in obscene matter, or dealing in a
controlled substance or listed chemical . . .,
which is chargeable under State law and punishable
by imprisonment for more than one year.
18 U.S.C. § 1961(1).
b.

Analysis

Although Plaintiffs allege Defendants engaged in
numerous activities, none of their allegations meet the
requirements of the statutory language.

On this record,

therefore, the Court concludes Plaintiffs have not alleged
sufficient facts to “state a claim for relief that is plausible
on its face.”
Accordingly, the Court GRANTS Defendants’ Motion to Dismiss
as to Plaintiffs' RICO claim.
H.

Declaratory Judgment for Referral for Criminal
Prosecution and Civil RICO

In their Second Amended Complaint Plaintiffs seek
declaratory judgment that Defendants have violated RICO and
request referral of this matter to the United States Attorney for
the District of Oregon and the Attorney General of the United
States for criminal prosecution.
Based on the Court’s determination that Plaintiffs have not
stated a claim for violation of RICO statutes, the Court GRANTS
Defendants’ Motion to Dismiss as to this issue and STRIKES
Plaintiffs’ request for declaratory judgment.
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II.

Defendants’ Alternative Motion to Strike
Defendants also move to strike numerous allegations of

Plaintiffs’ Second Amended Complaint pursuant to Federal Rule of
Civil Procedure 12(f) on the grounds that they are “redundant,
immaterial, impertinent, or scandalous.”
In light of the Court’s rulings on Defendants’ Motion to
Dismiss, the Court directs Plaintiffs to file a Third Amended
Complaint in order to remove allegations and references related
to the civil conspiracy and RICO claims.

The Court also directs

Plaintiffs to amend their complaint to set forth the factual
allegations in chronological order as they relate to the
remaining claims of fraud and intentional interference with
business relations.
Accordingly, the Court DENIES as moot Defendants’ Motion to
Strike.

CONCLUSION
For these reasons, the Court GRANTS in part Defendants’
Motion (#111) to Dismiss as follows:
1. DISMISSES with prejudice each of Plaintiffs’ claims
against Valerie Hoffman as barred by the discharge in bankruptcy;
2. DISMISSES with prejudice as to bringing such claims in
this Court all of Plaintiffs’ claims against non-debtor
Defendants Wesley Amos Hawk, Peaceful Properties, and Hoffman and
Hawk for lack of service and lack of the Court’s personal
35 - OPINION AND ORDER

jurisdiction over these Defendants;
3. DISMISSES with prejudice Plaintiffs’ claim for civil
conspiracy and RICO violations against non-debtor Defendant David
Hoffman for failure to state a claim; and
4. STRIKES Plaintiffs’ request for declaratory judgment and
referral for criminal prosecution.
In all other respects, the Court DENIES Defendants’ Motion
to Dismiss.
The Court DENIES as moot Defendants’ Alternative Motion
(#114) to Strike.
The Court DIRECTS Plaintiffs to file no later than
November 20, 2017, a Third Amended Complaint consistent with this
Opinion and Order.

The Court also DIRECTS Plaintiffs to include

in the caption of the amended complaint only David Hoffman as the
remaining named Defendant in this matter.
David Hoffman’s Answer to Plaintiffs’ Third Amended
Complaint will be due no later than December 4, 2017.
After Defendant David Hoffman’s Answer has been filed,
the Court will schedule a Rule 16 Conference to set further
case-management dates.
IT IS SO ORDERED.
DATED this 26th day of October, 2017.

/s/ Anna J. Brown
ANNA J. BROWN
United States Senior District Judge

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