Accuire LLC v. Meredith CPAs P.C.

• Court: District Court, E.D. California
• Decided: March 13, 2025
• Docket: 2:24-cv-02018
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ACCUIRE LLC, No. 2:24-cv-02018-DAD-CKD 12 Plaintiff, 13 v. ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS WITH LEAVE TO 14 MEREDITH CPAS P.C., et al., AMEND 15 Defendants. (Doc. Nos. 5, 7) 16 17 18 This matter is before the court on the motions to dismiss filed on August 1, 2024 by 19 defendant Vensure Employer Services Inc. (“defendant Vensure”) (Doc. No. 5) and August 8, 20 2024 by defendant Meredith CPAs P.C. (“defendant Meredith”) (Doc. No. 7). On December 23, 21 2024, the undersigned issued an order relating and reassigning this action to the undersigned. 22 (Doc. No. 24.) For the reasons explained below, defendants’ motions to dismiss plaintiff’s 23 complaint will be granted with leave to amend. 24 BACKGROUND 25 On April 29, 2024, plaintiff initiated this action by filing its complaint in the Sacramento 26 County Superior Court. (Doc. No. 1-1 at 2.) On July 25, 2024, defendants removed the action to 27 this federal court. (Doc. No. 1.) 28 ///// 1 In its complaint, plaintiff alleges as follows. Plaintiff and defendant Vensure are both 2 professional employer organizations providing services related to workers’ compensation 3 insurance, payroll, employee benefits, and human resources to their staffing-company clients. 4 (Doc. No. 1-1 at ¶¶ 1, 3.) Defendant Vensure’s chief operating officer (“COO”) was Kara 5 Childress, though defendant Vensure was fully owned by Alex Campos. (Id. at ¶ 7.) Alex 6 Campos also owned Amazing Insurance, Inc. (“Amazing”). (Id.) Defendant Meredith is a 7 corporation that provides accounting and auditing services. (Id. at ¶ 2.) 8 In another related action in federal court (Case No. 2:19-cv-01349, hereinafter “the 9 Amazing action”), plaintiff Accuire alleged that Amazing, Campos, Childress, “and others” 10 attempted “a fraudulent take-over of plaintiff through various misrepresentations, omissions, 11 concealments and unlawful acts.” (Id. at ¶ 8.) During the attempted takeover described in the 12 Amazing action, Childress allegedly took control of plaintiff’s finances and, as COO of defendant 13 Vensure, managed the debt between plaintiff and defendant Vensure. (Id. at ¶ 9.) 14 In 2018, plaintiff was required to provide Sterling National Bank (“the Bank”) with an 15 independently audited financial statement. (Id. at ¶ 10.) Failure to do so would place plaintiff out 16 of compliance with the terms of its loan from the Bank. (Id.) Childress and defendant Vensure 17 arranged for plaintiff’s audit to be performed by defendant Meredith, a firm with which plaintiff’s 18 management had no prior dealings. (Id. at ¶ 11.) Childress failed to disclose that she had been 19 made a partner in defendant Meredith in 2017 after delivering defendant Vensure as a client to 20 defendant Meredith. (Id. at ¶ 12.) 21 “As a result of this conflict of interest,” defendant Meredith prepared an inaccurate audit 22 report that mischaracterized a debt owed by Amazing to plaintiff as instead being “goodwill.” 23 (Id. at ¶ 13.) Plaintiff alleges that in truth, Amazing had agreed to pay $2.7 million to plaintiff’s 24 owners, but that the audit report prepared by defendant Meredith stated that plaintiff—not 25 Amazing—was responsible for paying the $2.7 million. (Id. at ¶ 14.) The audit reported omitted 26 Amazing’s obligation to reimburse plaintiff for the $2.7 million. (Id. at ¶ 16.) 27 Due to the audit report stating that plaintiff, not Amazing, was obligated to pay the $2.7 28 million debt, the Bank found plaintiff to be out of compliance with its loan. (Id. at ¶ 17.) At the 1 time of the audit report, plaintiff was drawing down millions of dollars on a line of credit with the 2 Bank. (Id.) The false audit report damaged plaintiff’s relationship with the Bank, seriously 3 disrupting plaintiff’s business. (Id.) 4 Based on the above allegations, plaintiff asserts the following two claims in its complaint: 5 (1) fraud; and (2) conspiracy to commit fraud. On August 1, 2024, defendant Vensure filed its 6 motion to dismiss plaintiff’s complaint. (Doc. No. 5.) Plaintiff filed its opposition on 7 September 3, 2024 and on September 12, 2024 defendant Vensure filed its reply thereto. (Doc. 8 Nos. 13, 16.) On August 8, 2024, defendant Meredith filed its motion to dismiss plaintiff’s 9 complaint. (Doc. No. 7.) Plaintiff filed its opposition on August 31, 2024 and on September 9, 10 2024, defendant Meredith filed its reply thereto. (Doc. Nos. 11, 15.) 11 LEGAL STANDARD 12 The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal 13 sufficiency of the complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 14 1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of 15 sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 16 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to 17 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A 18 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw 19 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 20 Iqbal, 556 U.S. 662, 678 (2009). 21 In determining whether a complaint states a claim on which relief may be granted, the 22 court accepts as true the allegations in the complaint and construes the allegations in the light 23 most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). However, 24 the court need not assume the truth of legal conclusions cast in the form of factual allegations. 25 U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not 26 require detailed factual allegations, “it demands more than an unadorned, the-defendant- 27 unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers 28 mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” 1 Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements 2 of a cause of action, supported by mere conclusory statements, do not suffice.”). It is 3 inappropriate to assume that the plaintiff “can prove facts that it has not alleged or that the 4 defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen. 5 Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). 6 In ruling on a motion to dismiss brought under Rule 12(b)(6), the court is permitted to 7 consider material that is properly submitted as part of the complaint, documents that are not 8 physically attached to the complaint if their authenticity is not contested and the plaintiffs’ 9 complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles, 10 250 F.3d. 668, 688–89 (9th Cir. 2001). 11 ANALYSIS 12 A. Defendant Vensure’s Motion to Dismiss 13 In its motion to dismiss, defendant Vensure argues that plaintiff’s claims are barred by 14 California’s three-year statute of limitations applicable to actions grounded in fraud. (Doc. No. 5 15 at 10.) Defendant Vensure points out that plaintiff’s allegations concern conduct that allegedly 16 occurred in 2018, but plaintiff did not file its complaint in state court until April 29, 2024. (Id.) 17 Moreover, defendant Vensure argues, the delayed discovery rule is inapplicable here where 18 plaintiff has alleged neither the time or manner of its discovery of the alleged fraud nor its 19 inability to have discovered the alleged fraud earlier despite the exercise of reasonable diligence. 20 (Id. at 11.) Finally, defendant Vensure contends that plaintiff should be denied leave to amend its 21 pleadings because plaintiff had inquiry notice of the alleged fraud by no later than September 11, 22 2019, the date plaintiff filed its counterclaim in the Amazing action alleging similar fraudulent 23 conduct. (Id. at 12–15.) 24 In its opposition, plaintiff acknowledges that a three-year statute of limitations applies to 25 its claims but argues that the delayed discovery rule is applicable here. (Doc. No. 13 at 2–5.) 26 Plaintiff states that it was able to discover the alleged fraud when the fraud was disclosed by 27 ///// 28 ///// 1 Childress in her deposition conducted on April 27, 2021.1 (Id. at 3.) Plaintiff contends that until 2 April 27, 2021, plaintiff reasonably believed that defendants Vensure and Meredith were acting in 3 the best interests of Accuire in preparing the audit report and accepted the audit’s accuracy and 4 fairness. (Id. at 3–4.) Furthermore, plaintiff argues that “California courts have consistently held 5 that the statute of limitations is tolled in situations where the defendant has taken active steps to 6 conceal the fraud” (id. at 3), though plaintiff does not cite any such decisions in its opposition.2 7 In reply, defendant Vensure argues that plaintiff “provides no evidence of the deposition” 8 of Childress on April 27, 2021, nor any allegations regarding when plaintiff discovered the 9 alleged fraud. (Doc. No. 16 at 5, 8.) Defendant Vensure also notes that plaintiff did not respond 10 to its argument regarding the timing of plaintiff’s counterclaim brought in the Amazing action. 11 (Id. at 10–11.)3 12 When a federal court’s “jurisdiction rests on the parties’ diversity of citizenship, [the 13 federal court must] apply substantive state law, including state law regarding statutes of 14 limitations and tolling.” G&G Prods. LLC v. Rusic, 902 F.3d 940, 946 (9th Cir. 2018). “In 15 California, the statute of limitations for fraud and conspiracy to commit fraud claims is three 16 years . . . .” MSP Recovery Claims, Series LLC v. Avanir Pharms., Inc., No. 22-cv-01026-DOC- 17 KES, 2022 WL 17220647, at *4 (C.D. Cal. Oct. 20, 2022); see also Cal. Civ. Proc. Code § 338(d) 18 (establishing a three-year statute of limitations for an “action for relief on the ground of fraud”). 19 1 Plaintiff does not address the fact that its complaint was stamped by the Sacramento County 20 Superior Court as having been electronically filed on April 29, 2024, rather than April 27, 2024. (See Doc. No. 1-1 at 1.) However, defendant Vensure states that because April 27, 2024 was a 21 Saturday, Federal Rule of Civil Procedure 6(a) extended the statute of limitations until the following weekday, which was Monday, April 29, 2024. (Doc. No. 16 at 5 n.1.) Because neither 22 defendant challenges the application of Rule 6(a) to the statute of limitations here, and because 23 plaintiff’s claims must be dismissed as time-barred in any event, the court does not consider whether Rule 6(a) applies here. 24 2 Indeed, plaintiff cites no authority in support of its argument that its claims are not barred by 25 the applicable statute of limitations. (See id. at 2–5.)

26 3 Defendant Vensure also requests that the court find plaintiff’s opposition to be untimely filed 27 and to construe that filing as a notice of non-opposition to the granting of its motion to dismiss. (Doc. No. 16 at 5, 6.) The court declines to do so and will instead dismiss plaintiff’s claims on 28 the merits for the reasons explained in this order. 1 Here, the alleged fraud occurred in 2018. (Doc. No. 1-1 at ¶ 10.) Plaintiff did not file its 2 complaint initiating this action until 2024. (Doc. No. 1-1 at 1.) Plaintiff’s claims are time-barred 3 unless some exception to the applicable statute of limitations, such as the discovery rule or active 4 concealment, acts to save plaintiff’s claims. 5 The discovery rule does not aid plaintiff here. “The discovery rule, ‘where applicable, 6 postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the 7 cause of action.’” Rand v. Midland Nat’l Life Ins., 857 F. App’x 343, 347 (9th Cir. 2021).4 8 “When a plaintiff’s complaint clearly establishes that ‘his claim would be barred without benefit 9 of the discovery rules,’ the discovery rule will only apply when the complaint ‘specifically 10 plead[s] facts to show (1) the time and manner of discovery and (2) the inability to have made 11 earlier discovery despite reasonable diligence.’” Id. (alterations in original) (quoting Fox v. 12 Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808 (2005)). Here, plaintiff has failed to allege the 13 time and manner of its discovery. While plaintiff contends in opposition that it discovered the 14 alleged fraud on April 27, 2021, no such allegation appears in its complaint. Nor does plaintiff 15 allege any facts regarding its inability to discover the alleged fraud despite reasonable diligence. 16 Plaintiff’s claims must be dismissed on this basis alone. See Fin. Indem. Co. v. Messick, 606 F. 17 Supp. 3d 996, 1002 (E.D. Cal. 2022) (granting the defendant’s motion to dismiss where “[n]either 18 [the plaintiff’s] original complaint nor its first amended complaint state any facts about the time 19 and manner of the discovery or the circumstances surrounding [the plaintiff’s] earlier failure to 20 identify the mistake”). Accordingly, defendant Vensure’s motion to dismiss will be granted. 21 Plaintiff has requested to leave to amend. (Doc. No. 13 at 9.) Plaintiff has not described 22 any specific factual allegations in its opposition that it might provide in an amended complaint. 23 However, given the policy of “extreme liberality” and the fact that the court has not previously 24 dismissed plaintiff’s claims, the court will nonetheless grant plaintiff leave to amend out of an 25 abundance of caution. Rosenberg Bros. & Co. v. Arnold, 283 F.2d 406, 406 (9th Cir. 1960; see 26 also Cook, Perkiss, and Liehe, Inc. v. N. Cal. Collection Servs., 911 F.2d 242, 247 (9th Cir. 1990) 27 4 Citation to this unpublished Ninth Circuit opinion is appropriate pursuant to Ninth Circuit 28 Rule 36-3(b). 1 (noting that a district court “should grant leave to amend even if no request to amend the pleading 2 was made, unless it determines that the pleading could not possibly be cured by the allegation of 3 other facts.”). While the court may be skeptical that plaintiff will be able to do so, the court 4 cannot determine with certainty that its complaint could not “possibly” be cured by the allegation 5 of additional facts. Cook, 911 F.2d at 247. Importantly, plaintiff should only file a first amended 6 complaint if it has a good faith basis for alleging new, additional facts that would support a 7 finding that its claims are not barred by the statute of limitations.5 8 B. Defendant Meredith’s Motion to Dismiss 9 Defendant Meredith argues that plaintiff’s claims brought against it are time-barred for the 10 same reasons argued by defendant Vensure. (See Doc. No. 7-1 at 7–9.) With respect to why 11 plaintiff’s claims are not time-barred, plaintiff’s opposition is virtually identical to its opposition 12 to defendant Vensure’s motion to dismiss. (See Doc. No. 11 at 2–4.) Consequently, for the same 13 reasons discussed above in addressing the motion to dismiss filed by defendant Vensure, the 14 motion to dismiss filed by defendant Meredith will also be granted. Plaintiff will be granted leave 15 to amend, with the same cautions as are set forth above. 16 CONCLUSION 17 For the reasons explained above, 18 1. The motion to dismiss filed by defendant Vensure Employer Services Inc. (Doc. 19 No. 5) is GRANTED, with leave to amend; 20 5 The court further urges plaintiff to file a first amended complaint only if it has a good faith 21 basis upon which to allege facts—not legal conclusions—showing that its counterclaim in the Amazing action, filed on September 11, 2019, does not demonstrate that plaintiff was on inquiry 22 notice of the alleged fraud at that time. (See Amazing, Doc. No. 16.) The court may consider the 23 existence of that counterclaim, the authenticity of which plaintiff does not—and cannot reasonably—dispute. See Lee, 250 F.3d at 689–90 (holding that a court may take judicial notice 24 of “the existence” of “matters of public record” that are not “subject to reasonable dispute”); Valenzuela v. Nationwide Mut. Ins. Co., 686 F. Supp. 3d 969, 974 (C.D. Cal. 2023) (“The Court 25 finds it is an undisputed matter of public record that the [complaints] exist and were filed by Valenzuela in various courts as Nationwide describes. Accordingly, the Court will take judicial 26 notice that these documents exist and are as Nationwide describes.”) (internal citation omitted) 27 (citing Lee, 250 F.3d at 690). Furthermore, the court notes that any amended complaint filed by plaintiff should address all of the deficiencies in its pleadings, such as any potential failure to 28 allege fraud with the particularity required by Federal Rule of Civil Procedure 9(b). 1 2. The motion to dismiss filed by defendant Meredith CPAs P.C. (Doc. No. 7) is 2 GRANTED, with leave to amend; 3 3. Within twenty-one (21) days of the date of entry of this order, plaintiff shall file 4 either a first amended complaint or a notice of its intent not to do so. 5 IT IS SO ORDERED. ° | Dated: _Mareh 12, 2025 Dab A. 2, sxe 7 DALE A. DROZD 3 UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28