Anders Karlsson v. John Mangan, III

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 23, 2018
• Docket: 16-55175
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION AUG 23 2018 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANDERS KARLSSON, No. 16-55175

Plaintiff-Appellant, D.C. No. 2:14-cv-04514-R-JPR v.

JOHN LEO MANGAN III; et al., MEMORANDUM*

Defendants-Appellees,

and

ART FORCE, LLC; et al.,

Defendants.

Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding

Argued and Submitted August 7, 2018 Pasadena, California

Before: McKEOWN, CALLAHAN, and NGUYEN, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Anders Karlsson agreed to invest in a number of expensive pieces of artwork

including paintings by Jackson Pollock and a sculpture by Max Ernst. He filed this

lawsuit in the District Court for the Central District of California alleging that a

number of defendants wrongfully induced him to purchase a number of works of

art, some of which were overpriced and some of which were not authentic, and also

to purchase an overpriced motor pleasure yacht. The district court dismissed, with

leave to amend, Karlsson’s First Amended Complaint (FAC) as seriously deficient

for failing to inform the defendants of the specific acts that exposed them to

liability. Karlsson filed a Second Amended Complaint (SAC). The district court

found that the SAC was also seriously deficient and dismissed the SAC without

leave to amend. The court also awarded defendants $91,670.16 in attorneys’ fees.

Karlsson appeals. We affirm the district court’s dismissal of the SAC, vacate the

denial of leave to amend, and vacate the award of attorneys’ fees.1

1. A dismissal of a complaint for failure to state a claim for relief is

reviewed de novo. Carlin v. DairyAmerica Inc., 705 F.3d 856, 866 (9th Cir.

2013). A complaint must give the defendants fair notice of the claim and the

ground upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

1 Because the parties are familiar with the factual and procedural history of the case, we need not recount it here. 2 A review of the SAC confirms that although Karlsson may have been misled or

defrauded by some or all of the defendants, the district court correctly determined

that the SAC’s allegations “lack specificity, are devoid of particularity, and are

comprised of vague and conclusory statements” such that the defendants “do not

have fair notice of the accusations against them.” Accordingly, the district court’s

dismissal of the SAC is affirmed.

2. A denial of leave to amend is reviewed for abuse of discretion.

Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 507 (9th Cir.

2013). Leave to amend should be granted unless the pleadings could not possibly

be cured by amendment or where the plaintiff “has failed to cure the complaint’s

deficiencies despite repeated opportunities.” AE ex rel Hernandez v. County of

Tulare, 666 F.3d 631, 636 (9th Cir. 2012). Because Karlsson filed his FAC before

the defendants’ initial motion to dismiss could be considered, the SAC was his first

effort to address the deficiencies noted by the district court when it dismissed his

FAC. Although the SAC fails to state a claim for relief, it appears that Karlsson

may be able to state a claim against one or more of the defendants who have

allegedly received over two million dollars from Karlsson. As the Supreme Court

has counseled that leave to amend should be freely given, Foman v. Davis, 371

U.S. 178, 182 (1962), the denial of leave to amend is vacated and Karlsson is

3 granted leave to file a third amended complaint that corrects the deficiencies in the

SAC that led the district court to dismiss it.

3. Because we grant Karlsson leave to amend, the defendants, at this time,

are no longer the prevailing parties and the attorneys’ fee award is accordingly

vacated. Should defendants again seek attorneys’ fees, they would be well advised

to avoid the mathematical problems they acknowledged at oral argument and to

present a further contractual basis for an award that covers all the claims in the

complaint.

The district court’s dismissal of Karlsson’s Second Amended Complaint is

AFFIRMED, the denial of leave to amend is VACATED, and the award of

attorneys’ fees is VACATED. The parties shall bear their own costs.