Burkart, Chapter 11 Plan Administrator v. VLG Investments, LLC, a Delaware limited liability

• Court: United States Bankruptcy Court, N.D. California
• Decided: March 4, 2024
• Docket: 23-03036
• Status: Unknown

Opinion

EDWARD J. EMMONS, CLERK (i □□ □□□ US BAMIGUPTEY COURT Ge iy 1 Signed and Filed: March 4, 2024 □□ 4 ICT 2 oui

5 DENNISMONTALL U.S. Bankruptcy Judge

7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 3 In re ) Bankruptcy Case No. 10 ) 08-32514 HELLER EKHRMAN LLP, ) 11 ) Chapter 11 ) te Debtor(s). )

) Adversary Proceeding No. 14 ||MICHAEL BURKART, CHAPTER 11 PLAN ) 23-03036 ADMINISTRATOR, ) ts a ) HEARING HELD 16 Plaintiff, ) Date: January 12, 2024 V- ) Time: 10:00 a.m. 17 ) Location: Via Zoom VLG INVESTMENTS, LLC, a Delaware ) 18 |{limited liability company; VLG ) 19 INVESTMENTS 2006, LLC, a Delaware ) MEMORANDUM DECISION limited liability company; VLG ) REGARDING MOTIONS TO 20 INVESTMENTS 2007, LLC, a Delaware ) DISMISS limited liability company; VLG ) 21 1|2008, LLC, a Delaware limited ) liability company; JOHN ) 22 ||ROBERTSON, an individual; MARK 23 MEDEARIS, an individual; MARK ) WINDFELD-HANSEN, an individual; ) 24 |}ELIAS BLAWIE, an individual; ) DAVID JARGIELLO, an individual; ) 25 ROBERT J. HELDT, JR. AND KAREN M. ) 26 KRAMER AS COEXECUTORS OR TRUSTEES ) IN THEIR CAPACITIES AS SUCCESSOR ) 27 TO ROSEANNE M. ROTANDARO, TRUSTEE ) OF THE CRAIG W. JOHNSON TRUST ) 28 |/DATED AUGUST 31, 2000; JOHN V. ) =- 1 =-

1 B SA .U T RI US FT FA I, N ,a n J Ri .n ,d i av ni d iu na dl i; v iE dD uM aU lN ;D ) ) and DOES 1 through 10, ) 2 ) 3 Defendants. )

4 I. INTRODUCTION 5 On January 12, 2024, the court held a hearing on the VLGI 6 Defendants’ Motion to Dismiss Complaint (the “VLGI Defendants) 7 (Dkt. 19); Defendant Elias Blawie’s Motion to Dismiss the 8 Chapter 11 Plan Administrator’s Complaint and Joinder in VLGI 9 Defendants’ Motion to Dismiss (Dkt. 22); Defendant David 10 Jargiello’s Notice of Motion and Motion to Dismiss the Chapter 11 11 Plan Administrator’s Complaint and Joinder to VLGI 12 Defendants’ Motion to Dismiss (“Jargielio Motion”) (Dkts. 26, 13 30); John V. Bautista and Edmund S. Ruffin, Jr.’s Motion to 14 Dismiss the Plan Administrator’s Complaint and Joinder in VLGI 15 Defendants’ Motion to Dismiss (Dkt. 32) (together, the “Motions 16 to Dismiss”).1 The court took the matter under submission 17 thereafter. 18 For the reasons set forth below, the court will GRANT the 19 Motions to Dismiss and DISMISS the Chapter 11 Plan 20 Administrator’s Complaint for: (1) Turnover; (2) Breach of 21 Fiduciary Duty; (3) Fraudulent Concealment; (4) Negligent 22 Misrepresentation; (5) Intentional Misrepresentation; (6) 23 Conversion; and (7) Unjust Enrichment (“Complaint”) (Dkt. 1, 24 unredacted at Dkt. 9) with leave to amend as the VLGI Defendants 25 and without leave to amend as to all other defendants. 26 27 1 No similar motion was filed by Robert J. Heldt, Jr. and Karen M. Kramer as Coexecutors or Trustees in Their Capacities as Successor to Roseanne M. 28 Rotandaro, Trustee of The Craig W. Johnson Trust Dated August 31, 2000 (“Johnson”). See discussion at IV, D. 1 II. STANDARDS GOVERNING MOTIONS TO DISMISS2 2 To overcome a motion to dismiss pursuant to Fed. R. Civ. P. 3 12(b)(6) (made applicable by Federal Rule of Bankruptcy 4 Procedure 7012), a plaintiff must plead “enough facts to state a 5 claim to relief that is plausible on its face.” Bell Atlantic 6 Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial 7 plausibility when the plaintiff pleads factual content that 8 allows the court to draw the reasonable inference that the 9 defendant is liable for the misconduct alleged.” Ashcroft v. 10 Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is 11 not akin to a probability requirement, but it asks for more than 12 a sheer possibility that a defendant has acted unlawfully.” Id. 13 (internal quotation marks omitted). In considering a Rule 14 12(b)(6) motion, this court must “accept factual allegations in 15 the complaint as true and construe the pleadings in the light 16 most favorable to the nonmoving party.” Manzarek v. St. Paul 17 Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 18 Additionally, “Rule 9(b) requires that, when fraud is 19 alleged, ‘a party must state with particularity the 20 circumstances constituting fraud’ . . . Any averments which do 21 not meet that standard should be “disregarded,” or “stripped” 22 from the claim for failure to satisfy Rule 9(b).” Kearns v. Ford 23 Motor Co., 567 F.3d 1120, 1124 (internal citations omitted). 24 III. BACKGROUND 25 To borrow from the Plaintiff’s own language, the Complaint 26 reads more like a shaggy dog story than an operative complaint.

27 2 Unless otherwise indicated, all chapter, section and rule references are to 28 the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. 1 Complaint Ex. 28. The Complaint runs 65 pages with 208 2 operative paragraphs and 700 pages of exhibits, and details 3 events going back twenty years. While Plaintiff may have felt 4 all of this narrative and history necessary to the Complaint, in 5 reality, many of the events or acts of wrongdoing described do 6 not fit into any of the seven causes of action. 7 The essential background and allegations (though much more 8 detail is expounded on in the Complaint), is thus: now-Debtor 9 Heller Ehrman LLP (“Heller”) merged with Venture Law Group in 10 2003. Part of the compensation structure of Venture Law Group, 11 which then also became part of the compensation structure of 12 Heller, were distributions from investment funds established to 13 invest in Venture Law Group’s startup clients. The major 14 investment vehicle was defendant VLG Investments, LLC (“VLGI”). 15 VLGI would invest in the start-ups of Venture Law Group’s 16 clients, and also allowed certain partners and other attorneys 17 and staff to invest in those clients via VLGI. Or rather, VLGI 18 created annual funds that accomplished the task. Each year, a 19 subfund of VLGI would be established, in which members’ funds 20 were pooled, then investments made and held. Each subfund was 21 denominated by “VLG Investments + YEAR,” such as VLG Investments 22 2002, VLG Investments 2004, and so on. Until 2006, those 23 subfunds, while separately named and maintained, remained part 24 of VLGI. Beginning in 2006, each subfund was incorporated as a 25 separate limited liability company each year, resulting in 26 defendants VLG Investments 2006, LLC; VLG Investments 2007, LLC; 27 and VLG Investments 2008, LLC (together, the “Defendant Funds”). 28 For the years after the merger and prior to 2006, Heller was a 1 member of VLGI and a member of various subfunds, except for the 2 2004 subfund and 2005 subfund. Heller was a member and manager 3 of the Defendant Funds, until, improperly or not, it was removed 4 as a manager during the bankruptcy case in 2008. 5 Emails between individual defendants and others associated 6 with VLGI and Heller discuss the moving of VLGI records to 7 secure locations prior to filing bankruptcy and maintaining the 8 separateness between Heller and VLGI (along with emails that 9 ostensibly have nothing to do with VLGI and only to do with the 10 obvious inability of Heller to pay back capital contributions to 11 departing partners and other creditors). Complaint at ¶¶ 42-70. 12 During Heller’s windup and bankruptcy, a non-defendant, 13 Mark Royer, used available funds from the 2002 subfund to pay 14 out departing attorneys who were owed money from the (apparently 15 illiquid) 2005 subfund. 16 Also in 2002, VLGI, via the 2002 subfund, purchased or 17 acquired a combination of common and preferred stock from 18 fledgling start-up SpaceX. Each type of share was purchased for 19 the benefit of the members of the 2002 subfund. Defendants 20 Ruffin, Johnson (through the trustee of his trust), and Bautista 21 also personally purchased SpaceX stock. At the time of those 22 personal purchases, it was VLGI policy for partners to 23 personally purchase no more than 30% of any stock offered to 24 VLGI or its subfunds (known as the 70/30 rule). The personal 25 purchases were in excess of the 30% of what was acquired by the 26 2002 Subfund. 27 By 2021, the value of SpaceX stock skyrocketed. Individual 28 defendants Medearis, Windfeld-Hansen, and Robertson, acting on 1 behalf of VLGI, engaged in a stock-buyback with SpaceX, 2 resulting in a large multimillion dollar payout and distribution 3 to both the 2002 and 2005 subfund members, including a $2.6 4 Million payout to Heller of only preferred stock. 5 However, certain Defendants relied on unsigned and 6 unexecuted amended subfund documents to determine that Heller 7 only held some interest in preferred stock, but not common 8 stock. This determination that Heller only had an interest in 9 preferred stock, along with the connection of the 2002 subfund 10 (of which Heller was a member) and the 2005 subfund (of which 11 Heller was not) both worked to limit Heller’s distribution of 12 SpaceX stock to an amount far less than what Plaintiff contends 13 it should have been. Defendants then apparently worked to 14 actively conceal from the Plaintiff facts that might have 15 revealed a larger amount owed to Heller. 16 Though this is the crux of the Complaint, the additional 17 details of the Complaint work to muddy the waters considerably. 18 For instance, a portion of the Complaint (¶¶ 76-92) consists of 19 allegations that Robertson misled the Plaintiff by expressing an 20 interest in acquiring some of the Heller assets at a very low 21 price. It is of note, however, that notwithstanding repeated 22 attempts by Robertson, “the Plan Administrator did not pursue 23 the sale of remnant assets to Robertson.” (¶ 92). As another 24 example, ¶¶ 156-166, rather than reading like operative 25 provisions of a complaint for recovery on a cause of action, 26 read more like a discovery problem that the Plaintiff should 27 have dealt with by seeking relief from this court under well 28 1 established discovery procedures. It does not relate to any 2 claim for relief in this adversary proceeding. 3 A remarkable absence from the Complaint is any reference to 4 a comprehensive settlement with dozens of Heller former 5 partners, including six of the individual defendants. That 6 settlement (described in more detail in the following 7 discussion) was comprehensive and appears to the court as an 8 absolute defense to claims against those settling defendants 9 arising at or prior to that time. 10 IV. DISCUSSION 11 A. Defendants John Robertson; Mark Medearis; Mark Windfeld-Hansen; Elias Blawie; John V. Bautista; and 12 Edmund S. Ruffin Are Released as to Claims Arising 13 Prior to 2021. 14 On August 13, 2010, this court entered the Order Granting 15 Motion for an Order Approving Settlements with Former Heller 16 Shareholders and Determining That Such Settlements Will 17 Constitute “Good Faith” Settlements Under California Code of 18 Civil Procedure 877 (“Release”) in the main bankruptcy case 19 (Main Case Dkt. 1443). The various settlements encompassed by 20 the Release are incredibly broad and released from liability the 21 above-named Defendants and others from any future claims, known 22 or unknown to the Heller at the time of the release, including 23 the claims Plaintiff makes in this Complaint. As the docket 24 history reflects, the Release was the result of a long 25 bargaining process. The court, having presided over this case 26 from the outset, is quite familiar with the Release, including 27 the carve-out for the unfinished business doctrine (later 28 reversed on appeal), which requires that “any income generated 1 through the winding up of unfinished business [of a dissolved 2 partnership] is allocated to former partners according to their 3 respective interests in the partnership”, Jewel v. Boxer, 156 4 Cal.App.3d 171, 176 (Cal. Ct. App. 1984). 5 Given this long history, the court is surprised that the 6 Plaintiff now argues this Release was not part of the Complaint 7 and thus cannot be considered. This argument ignores settled 8 Ninth Circuit precedent to the contrary. See Parrino v. FHP, 9 Inc. 146 F.3d 699, 706 (9th Cir. 1998) (superseded by statute on 10 other grounds) (courts may take judicial notice of “documents 11 crucial to the plaintiff’s claims, but not explicitly 12 incorporated in his complaint”). The Release is crucial to the 13 propriety of many of Plaintiff’s claims, and this court can and 14 will take judicial notice of relevant documents that have been 15 on its docket for the past 13 years. 16 Plaintiff’s alternative argument that the Release was 17 limited to actions taken in 2007 or 2008 is also not well-taken. 18 The Release and underlying settlements speak for themselves. 19 Accordingly, the claims against the above-named six 20 defendants encompassed by the Release must be dismissed without 21 leave to amend, namely, any cause of action based on the 22 following: 23  Removing Heller as a manager of VLGI and other 24 subfunds in 2008; 25  Partner purchases of SpaceX stock in excess of the 26 70/30 policy (discussed below) in 2002; 27 28 1  Defendants allowing or directing the 2005 subfund to 2 repurchase the interests of the departing members of 3 the 2002 subfund in 2008. 4  Any other conduct prior to August 13, 2010. 5 B. The Plaintiff Does Not State a Plausible Claim for Turnover 6 7 Turnover is a remedy designed to deal with assets that were 8 clearly the debtor’s and then subsequently converted or 9 transferred. U.S. v. Whiting Pools, Inc. 462 U.S. 198, 205-06 10 (1983); In re Century City Doctors Hosp., LLC, 466 B.R. 1, 19 11 (Bankr. C.D. Cal. 2012) (“A turnover proceeding is not intended 12 as a remedy to determine the disputed rights of parties to 13 property; rather it is intended as a remedy to obtain what is 14 acknowledged to be property of the bankruptcy estate.”) (quoting 15 Lauria v. Titan Sec. Ltd., 243 B.R. 705, 708 (Bankr. N.D. Ill. 16 2000). 17 As noted above, turnover is a remedy as to undisputed funds 18 only. See Heller Ehrman LLP v. Gregory Canyon Ltd. (In re 19 Heller Ehrman LLP), 461 B.R. 606, 608 (Bankr. N.D. Cal. 2011) 20 (“Here, the amounts, if any, owed to Source by MCI are in 21 dispute and this dispute rests on breach of contract issues.”) 22 The Plaintiff alleges a claim for turnover as to all 23 defendants. However, the Complaint’s citations regarding 24 turnover pursuant to 11 U.S.C. § 542(a) only serve to reinforce 25 the point that turnover is simply not appropriate here: In re 26 Process America, Inc. 588 B.R. 82 (Bankr. C.D. Cal. 2018) 27 (turnover appropriate for a contractual right to credit card 28 processing residuals); Sonoma West Medical Center, Inc. 2021 WL 1 4944089, at *6–7 (Bankr. N.D. Cal. Oct. 22, 2021) (account 2 receivables). The seminal case involving turnover, Whiting 3 Pools, detailed a physical asset seized by the IRS prior to 4 bankruptcy. All of these cases involved physical assets or 5 money—a far cry from a contingent right to a distribution of 6 stock in the far future based on joint ownership in an 7 investment fund. This is what is at stake here—how much of 8 distribution is owed (as Heller did receive millions of dollars 9 in a previous distribution in 2021), not even ownership of the 10 stock itself. 11 Accordingly, the Plaintiff’s claim for turnover will be 12 dismissed as to all defendants without leave to amend. 13 C. No Cause of Action is Properly Plead Against the Defendant Funds 14 15 The claim for turnover having been disposed, the only 16 claims asserted against the Defendant Funds are for conversion 17 and unjust enrichment. The only facts plead as to the Defendant 18 Funds is Debtor’s alleged improper removal as manager (but not 19 member) of the Defendant Funds at the time of the bankruptcy 20 filing (for which any remedy is time-barred), and a bare 21 statement that the Defendant Funds are “Related Entities” with 22 VLGI, meaning all acts of VLGI should also be attributed to the 23 Defendant Funds, Complaint at ¶ 30. There are no facts asserted 24 that these Defendant Funds, which are indeed separate legal 25 entities from VLGI (even if management agreements empower 26 various boards of directors to steer the Defendant Funds in 27 similar directions), were part of the alleged concealment or 28 conversion of SpaceX funds for which Plaintiff ultimately seeks 1 recovery. There are no facts plead that there was any 2 distribution from the Defendant Funds that was not made to 3 Heller due to the Debtor’s removal as a manager, any other fact 4 implicating the Defendant Funds in a conversion scheme, nor any 5 facts that the Defendant Funds were themselves a recipient of 6 the SpaceX distribution or any other unjust enrichment. 7 Instead, what is plead amounts to a discovery dispute—because 8 Heller has not received any distributions from the Defendant 9 Funds and the terms of the fully executed operating agreements 10 have not been disclosed to Plaintiff “by Robertson, Medearis, 11 Windfeld-Hansen, VLGI 2006, VLGI 2007, and VLGI 2008, it is 12 unclear at this point as to what [Heller’s] ownership interest 13 in the entities is and whether amounts are owed[.]” Complaint at 14 ¶ 141. This grievance does not track to any cause of action but 15 amounts only to speculation about what might be established 16 through further discovery. 17 Because no facts regarding conversion or unjust enrichment 18 are plausibly plead as to the Defendant Funds, the Defendant 19 Funds will be dismissed from this action without leave to amend. 20 D. No Cause of Action is Properly Plead Against Defendant Johnson, and No Cause of Action Against Any Defendant 21 Can Properly be Based on a Violation of the 70/30 22 Rule. 23 Plaintiff also asserts causes of action for conversion and 24 unjust enrichment against all Defendants. The court focuses on 25 these causes of action as they relate to Defendants Johnson, 26 Ruffin, and Bautista. 27 Even though Johnson (or rather, Johnson’s representatives) 28 did not respond to the Complaint, the court will dismiss these 1 two claims against him (as noted above, the court is also 2 dismissing the turnover claim against Johnson and all other 3 defendants). The only facts alleged against Johnson in the 4 narrative of the Complaint are that Johnson, via the trustee of 5 his trust, personally purchased SpaceX stock in excess of 6 Venture Law Group and VLGI’s so-called 70/30 policy, which 7 dictated that Venture Law Group partners should not personally 8 purchase more than 30% of any stock offered by Venture Law 9 Group’s clients to VLGI or its subfunds. 10 Plaintiff does not allege what harm to Heller or VLGI 11 resulted from violation of this policy. For instance, Plaintiff 12 does not allege that the 70/30 policy is in place to ensure that 13 partners do not hoard stock for themselves, when it could be 14 purchased by relevant subfunds for the benefit of all members. 15 Nor does Plaintiff allege that had the policy not been violated, 16 a larger share of stock would have been available to (and 17 presumably purchased by) the appropriate VLGI subfund, and 18 Heller would have received a larger distribution nineteen years 19 later, leading to a claim for conversion and/or unjust 20 enrichment. 21 It is also not alleged, nor is it known to the court, that 22 had Johnson, Ruffin, Bautista, and others not purchased SpaceX 23 stock personally, then that stock would have (1) been available 24 for purchase by the 2002 subfund, and (2) actually been 25 purchased by the 2002 subfund. Plaintiff instead appears to 26 rely on the court making the above inferences for the claims 27 based on a bare violation of policy, with no actual harm alleged 28 in connection with that policy violation. That is simply not a 1 proper pleading under the standards of Rule 12(b)(6), let alone 2 the heightened standards of Rule 9(b). 3 Further still, this violation would have taken place in 4 2002, over twenty years prior to this Complaint, long after the 5 three-year statute of limitations on a cause of action for 6 conversion would have run. Cal. Code Civ. Proc. § 338(c). While 7 the Plaintiff argues that the fraudulent concealment of the 8 Defendants tolled the statute of limitations, the court rejects 9 this argument in relation to Defendant Johnson:

10 To the extent our courts have recognized a “discovery rule” exception to toll the 11 statute, it has only been when the defendant 12 in a conversion action fraudulently conceals the relevant facts or where the defendant 13 fails to disclose such facts in violation of his or her fiduciary duty to the plaintiff. 14 In those instances, “the statute of 15 limitations does not commence to run until the aggrieved party discovers or ought to 16 have discovered the existence of the cause of action for conversion. 17 18 AmerUS Life Ins. Co. v. Bank of America, N.A., 143 Cal.App.4th 19 631, 639 (internal citations omitted). Here, Plaintiff cannot 20 invoke this tolling rule because Johnson was not a fiduciary to 21 Heller. Breach of fiduciary duty appears elsewhere as a cause 22 of action in the Complaint, and Johnson is not one of the named 23 fiduciaries. Having alleged no duty to Heller, the Plaintiff 24 cannot claim the statute of limitations has been tolled. 25 Accordingly, since the only claims alleged against 26 Defendant Johnson are based on the alleged violation of the 27 70/30 rule, he will be dismissed as a party to this action 28 without leave to amend. For the same reason, the court will not 1 consider violations of the 70/30 rule as a basis for any cause 2 of action alleged against Ruffin or Bautista. 3 E. No Cause of Action is Properly Plead Against Defendant Jargiello. 4 5 The Plaintiff asserts causes of action for fraudulent 6 concealment, conversion, and unjust enrichment against Defendant 7 Jargiello. At the time of the merger with Heller, Jargiello 8 served as general counsel of Venture Law Group. Post-merger, 9 Jargiello served as general counsel for Heller and for VLGI as 10 contemplated by the merger documents (Jargiello Motion, Dkt. 11 30). The operative facts of the Complaint as to Jargiello allege 12 that he was involved in a string of emails close to Heller’s 13 bankruptcy filing in 2008 discussing potential creditor 14 assertions that VLGI and the subfunds are assets of Heller, with 15 Jargiello recommending “maintaining absolute separateness” and 16 recommending keeping further discussions confidential and 17 privileged and potentially engaging outside counsel on the 18 matter. Complaint at ¶¶ 23 and 52 (same email). Jargiello was 19 also included in emails in which Defendant Blawie notified other 20 individual defendants he had moved VLGI records after Heller’s 21 bankruptcy filing. 22 Though it is clear from the Complaint that Jargiello 23 engaged in conversations surrounding basic risk assessment 24 regarding the ways in which potential creditors would attack 25 VLGI assets in the event of Heller’s bankruptcy, the Plaintiff 26 spins this conversation into Jargiello and other defendants’ 27 concealment of material facts “to create the impression that 28 VLGI, and other Funds and assets of VLGI and the Funds were not 1 property of the bankruptcy estate.” Jargiello is not accused of 2 moving records, of failure to turn over records to the 3 Plaintiff, nor of any other actions that may have done anything 4 to actually change the status quo between Heller and VLGI and 5 the subfunds. 6 Jargiello was then relieved of his duties as general 7 counsel after Heller filed bankruptcy, so no actions can be 8 attributed to him after that point. 9 Without any facts plead as to Jargiello that go beyond 10 emails regarding risk assessment in 2008, no cause of action for 11 fraudulent concealment, conversion, or unjust enrichment can be 12 properly plead. 13 Additionally, the court agrees with Jargiello’s assessment 14 (Jargiello Motion, Dkt. 30) that time has long since run to 15 bring a claim against him. Cal. Code Civ. Proc. § 340.6, Lee v. 16 Hanley 61 Cal.4th 1225 (Cal. 2015) (statute of limitations for 17 claims relating to an attorney’s alleged breach of fiduciary 18 duty is either one-year from the date of discovery of wrong- 19 doing, “or four years from the date of the wrongful act or 20 omission, whichever occurs first”). 21 Accordingly, Jargiello will be dismissed as a party to the 22 Complaint without leave to amend. 23 F. The Causes of Action Related to Facts From 2021 Are Viable. 24 25 As discussed above, the Plaintiff describes the events 26 surrounding the 2021 buyback of SpaceX stock, which appears to 27 be the crux of the Complaint: (1) VLGI distributed proceeds 28 based on unsigned and incomplete operating agreements and index 1 for the 2002 subfund at the direction of Medearis, Robertson, 2 and Windfeld-Hansen; and (2) VLGI made a distribution of SpaceX 3 funds to the 2005 subfund and its members, which did not exist 4 at the time of the initial SpaceX stock purchases and which 5 Heller is not a member. 6 These facts may indeed be aligned with claims for breach of 7 fiduciary duty, fraudulent concealment, negligent 8 misrepresentation, intentional misrepresentation, conversion, or 9 unjust enrichment against VLGI and Medearis, Robertson, and 10 Windfeld-Hansen. Any amended complaint should eliminate 11 unnecessary allegations and focus on conduct that would 12 constitute a plausible claim for relief based on these recent 13 actions. 14 V. CONCLUSION 15 For the reasons set forth above, the court will DISMISS the 16 Complaint without leave to amend in part, and with leave to 17 amend in part. The court will issue concurrent orders relating 18 to the following: 19  Granting the VLGI Defendants' Motion to Dismiss 20 Complaint (Dkt. 19) with leave to amend as to the 21 discrete events occurring during or after 2021 described above; 22  Granting Defendant Elias Blawie’s Motion to Dismiss 23 the Chapter 11 Plan Administrator’s Complaint and 24 Joinder in VLGI Defendants’ Motion to Dismiss (Dkt. 25 22) without leave to amend; 26  Granting Defendant David Jargiello’s Notice of 27 Motion and Motion to Dismiss the Chapter 11 Plan 28 Administrator’s Complaint and Joinder to VLGI 1 Defendants’ Motion to Dismiss (Dkts. 26, 30) without 2 leave to amend; 3  Granting John V. Bautista and Edmund S. Ruffin, Jr.’s Motion to Dismiss the Plan Administrator’s 4 Complaint and Joinder in VLGI Defendants’ Motion to 5 Dismiss (Dkt. 32) without leave to amend; and 6  Dismissing Defendant Johnson as a party from this 7 adversary proceeding without leave to amend. 8

9 **END OF MEMORANDUM DECISION** 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 COURT SERVICE LIST Robert J. Heldt, Jr. and Karen M. Kramer 2 as Co-Executors or Trustees 3 in Their Capacities as Successor to Roseanne M. Rotandaro, Trustee of the 4 Craig W. Johnson Trust Dated August 31, 2000 25100 La Loma Drive 5 Los Altos Hills, CA 94022 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28