1 2 3 *NOT FOR PUBLICATION* 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 KEVEN MARANI, Case No. 4:19-cv-05538-YGR
9 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART MOTION TO ENFORCE 10 v. SETTLEMENT AGREEMENT, OR, IN THE ALTERNATIVE, MOTION TO DISMISS 11 MICHAEL CRAMER, ET AL., Defendants. Re: Dkt. No. 34 12
13 14 Plaintiff Keven Marani brings this action against defendants Michael Cramer, Jon Hanna, 15 Florence Cramer, Mark Cramer, Scott Cramer, Zhanna Cramer, Travis Capson, Harvey Flemming, 16 Gateway Financial Concepts Limited, New Zealand, and Gateway Financial Concepts Limited, 17 Panama. Marani brings seven causes of actions including: (1) a civil Racketeer Influenced 18 Corrupt Organizations (“RICO”) claim under 18 U.S.C. sections 1961-1968; (2) conspiracy to 19 commit a violation of RICO under 18 U.S.C. section 1962(d); (3) fraud and deceit based on 20 intentional misrepresentation; (4) fraud and deceit based on concealment; (5) conversion; (6) 21 unjust enrichment; and (7) breach of contract. 22 Now before the Court is one defendant’s, Travis Capson, motion to enforce a settlement 23 agreement, or, in the alternative, motion to dismiss pursuant to Federal Rule of Civil Procedure 24 12(b)(6). (Dkt. No. 34.) Marani opposes the motion. (Dkt. No. 37.) The matter is fully briefed. 25 (See also Dkt. No. 38.) Having carefully considered the pleadings in this action and the papers 26 submitted on each motion, and for the reasons stated on the record at oral argument on January 26, 27 2021, and more fully set forth below, Capson’s motion to enforce the settlement agreement, or, in 1 The Court begins with the legal framework. The standard for a Rule 12(b)(6) motion are 2 well known and not in dispute.1 With respect to a motion to enforce settlement agreement: “It is 3 well settled that a district court has the equitable power to enforce summarily an agreement to 4 settle a case pending before it.” Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987) (citations 5 omitted); see TNT Marketing, Inc. v. Agresti, 796 F.2d 276, 278 (9th Cir.1986); Metronet Services 6 Corp. v. U.S. West Communications, 329 F.3d 986,1013-1014 (9th Cir. 2003) (cert. granted and 7 judgment vacated on other grounds by Quest Corp. v. Metronet Services Corp., 540 U.S. 1147 8 (2004)); Doi v. Halekulani Corporation, 276 F.3d 1131,1136-1138 (9th Cir. 2002); In re City 9 Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994) (citations omitted). To be enforced, a 10 settlement agreement must meet two requirements: first, it must be a complete agreement. Callie, 11 829 F.2d at 890 (citations omitted). This requires that the parties have reached agreement on all 12 material terms. Id. at 891. Second, the parties “must have either agreed to the terms of the 13 settlement or authorized their respective counsel to settle the dispute.” Marks– Foreman v. 14 Reporter Pub. Co., 12 F.Supp.2d 1089, 1092 (S.D. Cal. 1988) (citing Harrop v. Western Airlines, 15 Inc., 550 F.2d 1143, 1144-45 (9th Cir. 1977)). 16 Here, Capson highlights the following provision from a settlement agreement into which 17 he and his affiliated entities entered with Mariani:
18 If and to the extent Marani is paid the sum of $590,000 out of Escrow, Marani, on the one hand, and Denari, Sarkar, Capson, and 19 ECT, on the other hand, shall be deemed to have fully released and forever discharged the other and each of their owners, spouses, 20 trusts, shareholders, officers, directors, managers, members, employees, alleged employees, agents, alleged agents, attorneys, 21 assigns, successors, predecessors, partners, investors, indemnitors, guarantors, insurer(s), reinsurer(s), obligors, subsidiaries, parent 22 companies, affiliates, associations, management companies, and other related persons and entities (“Related Persons”), against all 23 past, present and future claims, demands, causes of action, obligations, damages (direct, consequential, or otherwise), losses, 24 costs, attorneys' fees, and/or expenses, based on a contract, statute, tort, or otherwise between them, including, without limitation, those 25 concerning any and all claims raised in or that could have been raised affirmatively, or in defense of or via compulsory or non- 26
27 1 The Court assumes familiarity with the underlying allegations in this matter in order to compulsory cross- complaint arising out of, connected with, or in 1 any way related to the Investment from the beginning of time to the Effective Date (collectively, the “Released Matters”). 2 3 (See Capson Decl. Ex. A (Dkt. No. 34-1).) Capson contends that both requirements are met where 4 the above provision releases all claims to the date of the settlement agreement, and where the 5 settlement agreement was signed by both Capson and Marani, and was otherwise executed by all 6 the parties. 7 Marani does not dispute the existence of this settlement agreement, but rather, argues that 8 the waiver of liability clause is barred under Cal. Civ. Code section 1668. Section 1668 relevantly 9 provides that: “[a]ll contracts which have for their object, directly or indirectly, to exempt anyone 10 from responsibility for his own fraud . . . are against the policy of the law.” Marani notes that 11 such provisions “may stand only if it does not involve the ‘public interest.’” Tunkl v. Regents of 12 University of California, 60 Cal.2d 92, 95 (1963). In short, Marani asserts that “the settlement 13 agreement itself is a tool to further a larger fraud scheme.” (Dkt. No. 37 at 4.) 14 While Marani cites correctly to the law, he does not persuade here, at least not on the facts 15 alleged in the complaint. In general, section 1668 applies only to concurrent or future torts. SI 59 16 LLC v. Variel Warner Ventures, LLC, 29 Cal.App.5th 146, 152-153 (2018) (“[w]e are not aware of 17 any case law applying section 1668 to torts where all elements are past events . . . the weight of 18 authority recogniz[e] that section 1668 applies only to concurrent or future torts.”). In other 19 words, this provision is meant to prohibit contracts releasing liability for future or concurrent torts 20 not to prohibit settlements of disputes relating to past conduct. City of Santa Barbara v. Superior 21 Court, 41 Cal.4th 747, 754–755 (2007). That said, courts have applied section 1668 “to negate 22 exemption clauses that would otherwise proscribe liability for fraudulent inducement of the very 23 contracts with the exemption clauses.” SI 59, 29 Cal.App.5th at 152 (citing Blankenheim v. E. F. 24 Hutton & Co., 217 Cal.App.3d 1463, 1471–1473 (1990) (plaintiffs were fraudulently induced into 25 signing agreements with hold harmless clauses; section 1668 prevented the defendant from relying 26 on the hold harmless clauses to exempt it from “responsibility for its own misrepresentations”); 27 Simmons v. Ratterree Land Co., 217 Cal. 201, 204 (1932) (citing section 1668 and stating “a seller 1 into the contract)). Moreover, courts have permitted civil RICO claims to proceed where the 2 “behavior . . .
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1 2 3 *NOT FOR PUBLICATION* 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 KEVEN MARANI, Case No. 4:19-cv-05538-YGR
9 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART MOTION TO ENFORCE 10 v. SETTLEMENT AGREEMENT, OR, IN THE ALTERNATIVE, MOTION TO DISMISS 11 MICHAEL CRAMER, ET AL., Defendants. Re: Dkt. No. 34 12
13 14 Plaintiff Keven Marani brings this action against defendants Michael Cramer, Jon Hanna, 15 Florence Cramer, Mark Cramer, Scott Cramer, Zhanna Cramer, Travis Capson, Harvey Flemming, 16 Gateway Financial Concepts Limited, New Zealand, and Gateway Financial Concepts Limited, 17 Panama. Marani brings seven causes of actions including: (1) a civil Racketeer Influenced 18 Corrupt Organizations (“RICO”) claim under 18 U.S.C. sections 1961-1968; (2) conspiracy to 19 commit a violation of RICO under 18 U.S.C. section 1962(d); (3) fraud and deceit based on 20 intentional misrepresentation; (4) fraud and deceit based on concealment; (5) conversion; (6) 21 unjust enrichment; and (7) breach of contract. 22 Now before the Court is one defendant’s, Travis Capson, motion to enforce a settlement 23 agreement, or, in the alternative, motion to dismiss pursuant to Federal Rule of Civil Procedure 24 12(b)(6). (Dkt. No. 34.) Marani opposes the motion. (Dkt. No. 37.) The matter is fully briefed. 25 (See also Dkt. No. 38.) Having carefully considered the pleadings in this action and the papers 26 submitted on each motion, and for the reasons stated on the record at oral argument on January 26, 27 2021, and more fully set forth below, Capson’s motion to enforce the settlement agreement, or, in 1 The Court begins with the legal framework. The standard for a Rule 12(b)(6) motion are 2 well known and not in dispute.1 With respect to a motion to enforce settlement agreement: “It is 3 well settled that a district court has the equitable power to enforce summarily an agreement to 4 settle a case pending before it.” Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987) (citations 5 omitted); see TNT Marketing, Inc. v. Agresti, 796 F.2d 276, 278 (9th Cir.1986); Metronet Services 6 Corp. v. U.S. West Communications, 329 F.3d 986,1013-1014 (9th Cir. 2003) (cert. granted and 7 judgment vacated on other grounds by Quest Corp. v. Metronet Services Corp., 540 U.S. 1147 8 (2004)); Doi v. Halekulani Corporation, 276 F.3d 1131,1136-1138 (9th Cir. 2002); In re City 9 Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994) (citations omitted). To be enforced, a 10 settlement agreement must meet two requirements: first, it must be a complete agreement. Callie, 11 829 F.2d at 890 (citations omitted). This requires that the parties have reached agreement on all 12 material terms. Id. at 891. Second, the parties “must have either agreed to the terms of the 13 settlement or authorized their respective counsel to settle the dispute.” Marks– Foreman v. 14 Reporter Pub. Co., 12 F.Supp.2d 1089, 1092 (S.D. Cal. 1988) (citing Harrop v. Western Airlines, 15 Inc., 550 F.2d 1143, 1144-45 (9th Cir. 1977)). 16 Here, Capson highlights the following provision from a settlement agreement into which 17 he and his affiliated entities entered with Mariani:
18 If and to the extent Marani is paid the sum of $590,000 out of Escrow, Marani, on the one hand, and Denari, Sarkar, Capson, and 19 ECT, on the other hand, shall be deemed to have fully released and forever discharged the other and each of their owners, spouses, 20 trusts, shareholders, officers, directors, managers, members, employees, alleged employees, agents, alleged agents, attorneys, 21 assigns, successors, predecessors, partners, investors, indemnitors, guarantors, insurer(s), reinsurer(s), obligors, subsidiaries, parent 22 companies, affiliates, associations, management companies, and other related persons and entities (“Related Persons”), against all 23 past, present and future claims, demands, causes of action, obligations, damages (direct, consequential, or otherwise), losses, 24 costs, attorneys' fees, and/or expenses, based on a contract, statute, tort, or otherwise between them, including, without limitation, those 25 concerning any and all claims raised in or that could have been raised affirmatively, or in defense of or via compulsory or non- 26
27 1 The Court assumes familiarity with the underlying allegations in this matter in order to compulsory cross- complaint arising out of, connected with, or in 1 any way related to the Investment from the beginning of time to the Effective Date (collectively, the “Released Matters”). 2 3 (See Capson Decl. Ex. A (Dkt. No. 34-1).) Capson contends that both requirements are met where 4 the above provision releases all claims to the date of the settlement agreement, and where the 5 settlement agreement was signed by both Capson and Marani, and was otherwise executed by all 6 the parties. 7 Marani does not dispute the existence of this settlement agreement, but rather, argues that 8 the waiver of liability clause is barred under Cal. Civ. Code section 1668. Section 1668 relevantly 9 provides that: “[a]ll contracts which have for their object, directly or indirectly, to exempt anyone 10 from responsibility for his own fraud . . . are against the policy of the law.” Marani notes that 11 such provisions “may stand only if it does not involve the ‘public interest.’” Tunkl v. Regents of 12 University of California, 60 Cal.2d 92, 95 (1963). In short, Marani asserts that “the settlement 13 agreement itself is a tool to further a larger fraud scheme.” (Dkt. No. 37 at 4.) 14 While Marani cites correctly to the law, he does not persuade here, at least not on the facts 15 alleged in the complaint. In general, section 1668 applies only to concurrent or future torts. SI 59 16 LLC v. Variel Warner Ventures, LLC, 29 Cal.App.5th 146, 152-153 (2018) (“[w]e are not aware of 17 any case law applying section 1668 to torts where all elements are past events . . . the weight of 18 authority recogniz[e] that section 1668 applies only to concurrent or future torts.”). In other 19 words, this provision is meant to prohibit contracts releasing liability for future or concurrent torts 20 not to prohibit settlements of disputes relating to past conduct. City of Santa Barbara v. Superior 21 Court, 41 Cal.4th 747, 754–755 (2007). That said, courts have applied section 1668 “to negate 22 exemption clauses that would otherwise proscribe liability for fraudulent inducement of the very 23 contracts with the exemption clauses.” SI 59, 29 Cal.App.5th at 152 (citing Blankenheim v. E. F. 24 Hutton & Co., 217 Cal.App.3d 1463, 1471–1473 (1990) (plaintiffs were fraudulently induced into 25 signing agreements with hold harmless clauses; section 1668 prevented the defendant from relying 26 on the hold harmless clauses to exempt it from “responsibility for its own misrepresentations”); 27 Simmons v. Ratterree Land Co., 217 Cal. 201, 204 (1932) (citing section 1668 and stating “a seller 1 into the contract)). Moreover, courts have permitted civil RICO claims to proceed where the 2 “behavior . . . is extrinsic to the contractual relationship and could not possibly have been within 3 the contemplation of the contracting parties.” See Monterey Bay Military Housing LLC v. 4 Pinnacle Monterey LLC, 116 F. Supp. 3d 1010, 1051 (N.D. Cal. 2015). 5 Here, as currently pled, Marani’s factual allegations as to Capson stop with the settlement 6 agreement. The allegations concern Capson’s past actions prior to the enactment of the settlement 7 agreement and appear to be intrinsic to the contractual relationship. The complaint is bare of 8 factual allegations which would support extending section 1668 to this case. While much 9 supposition exists regarding the connection between Capson and the other defendants, the bald 10 assumptions are insufficient. Thus, section 1668 does not appear to block the enforcement of the 11 settlement agreement as currently pled. 12 Section 1668 may apply if the the settlement agreement was a “key tool” in the fraud 13 underpinning the civil RICO claim and done in furtherance of the goal, and that the settlement 14 agreement itself was a fraud. (See generally Dkt. No. 37.) As noted above, courts have barred 15 such waiver provisions under section 1668 in circumstances where an agreement was fraudulently 16 induced, or where the agreement was part of the RICO scheme itself. However, as Capson 17 correctly highlights, Marani does not plead any of this. For instance, Marani does not plead any 18 allegations that: (1) Capson committed or contributed to, or even had knowledge of, any other act 19 in furtherance of the alleged enterprise after the return of Marani’s funds that would form a pattern 20 of racketeering activity; (2) Capson made any misrepresentation that postdate the settlement 21 agreement and/or the return of Marani’s funds; (3) the settlement agreement was fraudulently 22 induced; or (4) that the settlement agreement itself was part of the civil RICO scheme to defraud 23 Marani. 24 In sum, these arguments made in Marani’s opposition are not currently alleged and 25 properly before the Court. Given that the complaint is already 87 pages long and heavy with 26 factual allegations, the Court is not convinced that it can be amended currently consistent with 27 Rule 11. However, leave to amend is generally appropriate under the policy of liberal amendment. 1 amendment, if possible, and upon motion, if discovery reveals facts which would support an 2 appropriate amendment. 3 For the foregoing reasons, the Court GRANTS the motion to dismiss with leave to amend 4 and DENIES Capson’s motion to enforce settlement agreement as moot.” Should plaintiff choose 5 to amend at this juncture, he shall file an amended complaint within twenty-one (21) days of the 6 || date of this Order.? Defendants shall thereafter file a response within twenty-one (21) days from 7 the date of the filing of the amended complaint. If an amended complaint if not filed within that 8 || timeframe, plaintiff must comply with the federal rules and file a motion for leave to amend. 9 This Order terminates Docket Number 34. 10 IT Is SO ORDERED. 11 Dated: January 26, 2021 12
13 4 YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT JUDGE 15 16
18 19 20 21 22 23 24 25 26 ? Given the disposition of this Order, the Court declines to reach Capson’s motion in the alternative to dismiss for forum non conveniens. 27 3 If a short extension not exceeding 14 days is further required by Marani, Marani may 2g || request such additional time.