1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 DIMITRI MAYE, No. 2:23-cv-00173-DAD-CKD 12 Plaintiff, 13 v. FINDINGS AND RECOMMENDATIONS 14 ONLINE LAND SALES LLC, et al., 15 Defendant. 16 17 Plaintiff, Dimitri Maye, filed this federal question and diversity jurisdiction action 18 pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367. Plaintiff seeks damages, restitution, and 19 injunctive relief under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 20 U.S.C. §§ 1961 et seq., and the laws of the State of California. 21 In the motion presently before the court, defendants Scott Wigginton (sued as 22 Wiggington) and Classic Country Land LLC move under Rule 12(b)(6) of the Federal Rules of 23 Civil Procedure to dismiss plaintiff’s claims against them. (ECF No. 14.) On October 5, 2023, the 24 presiding district judge referred this matter to the undersigned for the purpose of these findings 25 and recommendations. (ECF No. 18.) See 28 U.S.C. § 636(b)(1). For the reasons set forth below, 26 the undersigned recommends the court grant, in part, the moving defendants’ motion under Rule 27 12(b)(6) and dismiss plaintiff’s first, second, third, and fourth causes of action against them, with 28 leave to amend. 1 ALLEGATIONS IN THE COMPLAINT 2 Plaintiff filed the complaint on March 17, 2021. (ECF No. 1.) Plaintiff alleges the four 3 defendants, Online Land Sales LLC, Brian Quilty, Scott Wigginton, and Classic Country Land 4 LLC, “work in concert to sell inaccessible land through contract-for-deed schemes across the 5 country.” (Id., ¶ 55.) The allegations in this section are taken from the complaint. For purposes of 6 this motion, the well-pleaded factual allegations are assumed to be true. 7 Plaintiff is the owner of a vacant and undeveloped lot of land in Lassen County, California 8 (“Subject Property”), which he purchased from defendant, Online Land Sales LLC (“OLS”). 9 (ECF No. 1, ¶¶ 12-15.) The property is accessible only by a sixty-foot (60), four-wheel-drive dirt 10 trail of Chicken Ranch Road (hereinafter “easement”). (ECF No. 1, ¶ 21.) 11 Plaintiff and OLS contracted for plaintiff’s purchase of the land on February 28, 2018, for 12 the purchase price of $55,000. (ECF No. 1, ¶ 15.) The contract states the land comes “with all 13 rights of ownership associated with the property, including, but not limited to, all easements and 14 rights benefiting the premises, whether or not such easements and rights are of record….” (Id., ¶ 15 36.) The contract provides for immediate access to the land upon execution. (Id., ¶ 19.) 16 On or about June 12, 2018, defendant OLS provided plaintiff with a copy of a contract- 17 for-deed agreement it had with defendant, Classic Country Land LLC (“CCL”), for the subject 18 property. (ECF No. 1 at 5.) 19 On or before June 18, 2018, plaintiff attempted to access the Subject Property and found a 20 locked gate across the easement barring access. (ECF No. 1, ¶ 21.) Plaintiff requested access to 21 the easement to reach the Subject Property but was denied access to the property because his 22 name was not on the deed. (Id., ¶ 24.) 23 Plaintiff inquired at the County Recorder’s Office and discovered that on or about June 24 24, 2010, Johnetta Ford, an unrelated third party, had recorded a contract-for-deed contract with 25 defendant Wigginton for which she had not filed a transfer or quitclaim deed. (ECF No. 1, ¶ 25.) 26 Plaintiff alleges Ms. Ford entered into two such contracts for the Subject Property and defaulted 27 both times. (Id., ¶ 29.) 28 //// 1 Ms. Ford recorded a quitclaim deed on or about June 25, 2018. (ECF No. 1, ¶ 26.) Prior to 2 Ms. Ford’s signing of the quitclaim deed, plaintiff called defendant Wigginton, who assured 3 plaintiff the property had easement access. (Id., ¶ 31.) Plaintiff also sent email correspondence 4 regarding this issue to defendant Quilty, who responded using a general email account for OLS. 5 (Id., 32.) 6 On July 11, 2018, defendant CCL, through its employee Lori Murphy, advised plaintiff 7 and defendant OLS that the 60-foot road that leads from Chicken Ranch Road to plaintiff’s parcel 8 was “a public road.” (ECF No. 1, ¶ 33.) On or about July 16, 2018, defendant OLS, through its 9 employee Eileen Sunga, told plaintiff the property could be “accessed via a small 4WD dirt trail 10 off of Chicken Ranch Road. There is also a 60 ft. legal recorded easement in place….” (Id., ¶ 34.) 11 Plaintiff began developing prospects for commercial farming. (ECF No. 1, ¶ 37.) The 12 United States Department of Agriculture (“USDA”) would not contract with plaintiff until he had 13 guaranteed access to the property. (Id.) 14 Plaintiff’s contract-for-deed with OLS did not provide him legitimate access or rights to 15 the property because defendant OLS was not on title and defendant Wigginton was the record 16 owner. (ECF No. 1, ¶¶ 38, 44.) OLS represented that it had an ownership interest in the Subject 17 Property based on its contract-for-deed agreement with CCL, but neither OLS nor CCL had an 18 ownership interest in the Subject Property. (Id., ¶ 44.) 19 In or about March 2019, plaintiff contacted employees of defendants OLS and CCL and 20 unsuccessfully tried to obtain a lease agreement signed by defendant Wigginton, whose name was 21 on title. (ECF No. 1, ¶¶ 38-41.) Defendant CCL’s employee, Lori Murphy, stated if plaintiff paid 22 off the property, then defendant Wigginton would ensure plaintiff had access to the property. (Id., 23 ¶ 41.) CCL, its employees, and Wigginton then refused to communicate further with plaintiff on 24 the ground that his contract was with defendant OLS. (Id., ¶ 43.) On multiple occasions, plaintiff 25 sent inquiries about land access to defendant OLS, who would forward the inquiries to defendant 26 CCL and then reply to plaintiff. (Id.) 27 Neither OLS nor CCL ever told plaintiff the Subject Property lacked easement access. 28 (ECF No. 1, ¶ 45.) Both acted in concert to make plaintiff believe that if he paid off the land, he 1 would gain access via the easement. (Id.) 2 In an effort to gain access to the land, plaintiff paid off the land in or about May 2021. 3 (ECF No. 1, ¶ 46.) The contract provides both that a deed is to be provided to purchaser “upon 4 total payment of the purchase price” and that time is of the essence “in the performance for each 5 and every term” in the contract. (Id.) 6 On July 17, 2021, defendant Quilty signed a warranty deed transferring title of the 7 property from defendant OLS to plaintiff. (ECF No. 1, ¶ 47.) However, defendant Wigginton did 8 not sign a deed transferring a deed to defendant OLS until August 2, 2021. (Id.) The deed 9 transferring the Subject Property from defendant Wigginton to defendant OLS was recorded on 10 August 9, 2021, and the deed transferring the Subject Property from OLS to plaintiff was 11 recorded on August 16, 2021. (Id.) 12 When plaintiff received his deed and again attempted to access the property, he was 13 denied access because there is no right for the owner of the Subject Property to access the 14 easement. (ECF No. 1, ¶ 49.) Plaintiff tried unsuccessfully to obtain an easement through other 15 routes. (Id., ¶ 52.) Defendants have refused to give plaintiff any information about the basis for 16 their statements that an easement exists. (Id., ¶ 53.) 17 Plaintiff asserts five causes of action against all defendants: (1) a civil violation of 18 Racketeer Influenced and Corrupt Organizations (“RICO”) (Count One); (2) intentional 19 misrepresentation (Count Two); (3) fraudulent concealment (Count Three); (4) conversion (Count 20 Four); and (5) unfair business practices (Count Five). (ECF No. 1 at ¶¶ 56-24.) 21 On May 8, 2023, defendant Wigginton and defendant CCL (“CCL defendants”) filed the 22 motion to dismiss presently before the court. (ECF No. 14.) Plaintiff’s opposition to the motion 23 (ECF No. 16) and defendants’ reply (ECF No. 17) are also before the court. On October 5, 2023, 24 the presiding district judge referred this matter to the undersigned for the purpose of these 25 findings and recommendations. (ECF No. 18.) 26 LEGAL STANDARD 27 The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal 28 sufficiency of the complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1 1983). In ruling on such a motion, the court may consider material that is properly submitted as 2 part of the complaint, documents that are not physically attached to the complaint where their 3 authenticity is not contested and the plaintiffs’ complaint necessarily relies on them, and matters 4 of public record. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). 5 “Dismissal can be based on the lack of a cognizable legal theory or the absence of 6 sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 7 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to 8 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A 9 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw 10 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 11 Iqbal, 556 U.S. 662, 678 (2009). 12 In determining whether a complaint states a claim on which relief may be granted, the 13 court accepts as true the allegations in the complaint and construes the allegations in the light 14 most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v. 15 United States, 915 F.2d 1242, 1245 (9th Cir. 1989), abrogated on other grounds by DaVinci 16 Aircraft, Inc. v. United States, 926 F.3d 1117 (9th Cir. 2019). However, the court need not 17 assume the truth of legal conclusions cast in the form of factual allegations. U.S. ex rel. Chunie v. 18 Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual 19 allegations, “it demands more than an unadorned, the-defendant-unlawfully-harmed-me 20 accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere “labels and 21 conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. 22 at 555; see also Iqbal, 556 U.S. at 676 (“Threadbare recitals of the elements of a cause of action, 23 supported by mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to 24 assume that the plaintiff “can prove facts that it has not alleged or that the defendants have 25 violated the ... laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. 26 v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). 27 //// 28 //// 1 ANALYSIS 2 The CCL defendants argue plaintiff’s grounds one through four should be dismissed for 3 failure to state a claim. (ECF No. 14 at 1-2.)1 Defendants assert all five grounds are barred by the 4 applicable statutes of limitations.2 (Id.) The undersigned first considers the statute of limitations 5 arguments advanced. 6 I. Statute of Limitations 7 A. RICO (First Cause of Action) 8 The four-year limitations period for a civil RICO action begins to run when a plaintiff 9 knows or should know of the injury that underlies his cause of action. Grimmett v. Brown, 75 10 F.3d 506, 510 (9th Cir. 1996). The moving defendants argue plaintiff’s RICO claim is untimely 11 because he knew of his injury in June of 2018 and filed suit more than four and a half years later. 12 (ECF No. 14-1 at 10.) 13 Plaintiff responds that he pleaded fraudulent concealment, and thus that the statute of 14 limitations did not begin running until discovery of the truth. (ECF No. 16 at 9, 20-22.) Under the 15 complaint’s allegations, plaintiff discovered the truth sometime after July 17, 2021. (ECF No. 1, 16 ¶¶ 47, 49.) Defendants argue in reply that plaintiff had, at a minimum, constructive notice of the 17 injury on or before June of 2018. (ECF No. 17 at 3-4.) 18 “A statute of limitations may be tolled if the defendant fraudulently concealed the 19 existence of a cause of action in such a way that the plaintiff, acting as a reasonable person, did 20 not know of its existence.” Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055, 1060 (9th Cir. 21 2012). The doctrine of fraudulent concealment is invoked only if the plaintiff both pleads and 22 proves the defendant actively misled him, and that he had neither actual nor constructive 23
24 1 Citations to page numbers in the parties’ briefs refer to the page numbers assigned by CM/ECF at the top of the page. 25
2 Defendants’ notice of motion and a heading in their supporting brief indicate they move to 26 dismiss plaintiff’s fifth claim for unfair business practices for failure to state a claim. (See ECF 27 No. 14 at 2, 24) However, the substance of the argument addresses the statute of limitations (Id. at 24). 28 1 knowledge of the “facts constituting his cause of action” despite his due diligence. Grimmett, 75 2 F.3d at 514. If the party “had available all the facts necessary to discover [the] cause of action 3 with due diligence[,]” the limitations period does not toll simply because the party remained 4 ignorant of the cause of action. Id. at 515. 5 “To plead fraudulent concealment, the plaintiff must allege that: (1) the defendant took 6 affirmative acts to mislead the plaintiff; (2) the plaintiff did not have ‘actual or constructive 7 knowledge of the facts giving rise to its claim’; and (3) the plaintiff acted diligently in trying to 8 uncover the facts giving rise to its claim.” In re Animation Workers Antitrust Litig., 123 F. Supp. 9 3d 1175, 1194 (N.D. Cal. 2015) (quoting Hexcel, 681 F.3d at 1060). A plaintiff “must plead with 10 particularity the circumstances of the concealment and the facts supporting its due diligence.” 11 Conmar Corp. v. Mitsui & Co. (U.S.A.), 858 F.2d 499, 502 (9th Cir. 1988); see also Fed. R. Civ. 12 P. 9(b) (“In alleging fraud or mistake, a party must state with particularity the circumstances 13 constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind 14 may be alleged generally.”). To satisfy this standard, a “complaint must identify the who, what, 15 when, where, and how of the misconduct charged, as well as what is false or misleading about the 16 purportedly fraudulent statement, and why it is false.” Salameh v. Tarsadia Hotel, 726 F.3d 1124, 17 1133 (9th Cir. 2013) (quotation marks and citation omitted); Swartz v. KPMG LLP, 476 F.3d 18 756, 764 (9th Cir. 2007) (“Federal Rule of Civil Procedure 9(b) requires… an account of the 19 ‘time, place, and specific content of the false representations as well as the identities of the parties 20 to the misrepresentations.’” (citation omitted)). 21 Plaintiff argues the following sufficed to plead defendants’ affirmative acts to mislead the 22 plaintiff: (1) he alleged in ¶¶ 31, 79, and 101 of the complaint that in or about June of 2018, 23 defendant Wigginton told him over the telephone that easement access existed and would ensure 24 plaintiff obtained access; (2) in ¶ 33, he alleged Lori Murphy, employee of CCL, falsely advised 25 plaintiff on or around July 11, 2018, that the easement access was a public road; (3) in ¶ 94, he 26 alleged both defendants, through Lori Murphy on or around August 13, 2020, sent an email 27 stating there was “no [ ] problem accessing and using the lot….” (ECF No. 16 at 21.) 28 //// 1 The allegations in ¶ 31, as to the date, and in ¶¶ 33, 79, and 101, as to manner of the 2 communication, could be set forth with even greater particularity, and should be set forth with 3 more particularity to the extent possible in any amended complaint. Nevertheless, the undersigned 4 finds the current allegations suffice to “give defendants notice of the particular misconduct which 5 is alleged to constitute the fraud charged so that they can defend against the charge and not just 6 deny that they have done anything wrong.” Swartz, 476 F.3d at 764; see also Neubronner v. 7 Milken, 6 F.3d 666, 672 (9th Cir. 1993) (“A pleading is sufficient under Rule 9(b) if it identifies 8 the circumstances constituting fraud so that the defendant can prepare an adequate answer from 9 the allegations.” (internal quotation marks and citation omitted)); Silving v. Wells Fargo Bank, 10 NA, 800 F. Supp. 2d 1055, 1074 (D. Ariz. 2011) (“Although time, place, and exact excerpts may 11 not always be necessary, Plaintiffs are required to plead what they know with enough 12 specificity.”). 13 Defendants argue -- and plaintiff concedes -- the complaint does not allege each of the 14 specific statements listed in the paragraph above was known to be false and made for the purpose 15 of misleading plaintiff. (See ECF No. 16 at 21.) Plaintiff offers to add such an allegation through 16 amendment, if necessary. (Id.) However, the complaint alleges the defendants knew the Subject 17 Property had no easement access and worked together to cause plaintiff to believe otherwise. 18 (ECF No. 1, ¶¶ 114, 115.) Knowledge and intent may be alleged generally. See Fed. R. Civ. P. 19 9(b). Thus, the complaint adequately pleads defendants’ affirmative acts to mislead plaintiff in 20 support of their alleged fraudulent concealment of the civil RICO claim. 21 The complaint also sufficiently pleads that plaintiff did not have actual or constructive 22 knowledge of the facts giving rise to his claim. Under the complaint’s allegations, the county plat 23 map shows an easement that traverses the parcels between Chicken Ranch Road and the Subject 24 Property. (ECF No. 1, ¶ 35.) The contract between plaintiff and OLS states the land conveyed 25 comes with all existing easements, whether recorded or not. (Id., ¶ 36.) The defendants and others 26 allegedly represented to plaintiff that the property had easement access. Viewing the allegations 27 in a light favorable to plaintiff, the lack of easement access could not have been discovered by a 28 reasonable person because defendants were the ones who possessed that information. Notably, 1 defendants do not identify any reasonably diligent conduct that, if taken by plaintiff, would have 2 led to discovery of the cause of action. 3 The complaint also adequately pleads facts that plaintiff acted diligently in trying to 4 uncover the facts giving rise to his claim. Diligent inquiry is required “when facts exist that would 5 excite the inquiry of a reasonable person.” Conmar, 858 F.2d at 504. Plaintiff discovered a locked 6 gate barring easement access to the Subject Property on or before June 2018. (ECF No. 1, ¶ 21.) 7 Plaintiff requested access to the easement but was denied because his name was not on the deed. 8 (Id., ¶ 24.) Plaintiff attempted to inquire at the County Recorder’s Office about easement access, 9 at which time he learned of Ms. Ford’s contract-for-deed with defendant Wigginton. (Id., ¶ 25.) In 10 or about June 2018, plaintiff called defendant Wigginton to ask about easement access. (Id., ¶¶ 11 31, 101.) Plaintiff also sent email correspondence asking about easement access to the OLS 12 defendants. (Id., ¶ 32.) Although some of plaintiff’s actions constituting reasonable diligence 13 could have been pleaded with greater specificity as to timing, the undersigned finds the complaint 14 adequately pleads fraudulent concealment of the civil RICO claim. Thus, the undersigned 15 recommends the motion to dismiss be denied on the asserted statute of limitations ground as to 16 the civil RICO claim. 17 B. Intentional misrepresentation and fraudulent concealment (Second 18 and Third Causes of Action) 19 The statute of limitations applicable to plaintiff’s second and third causes of action for 20 fraud—intentional misrepresentation and fraudulent concealment, respectively—is three years. 21 See Cal. Civ. Proc. Code § 338(d) (the statute of limitations is three years for “[a]n action for 22 relief on the ground of fraud or mistake”). “The cause of action… is not deemed to have accrued 23 until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Id.) 24 The courts interpret discovery in [the context of Cal. Civ. Proc. Code § 338(d)] to mean not when the plaintiff became aware of the specific 25 wrong alleged, but when the plaintiff suspected or should have suspected that an injury was caused by wrongdoing. The statute of 26 limitations begins to run when the plaintiff has information which would put a reasonable person on inquiry. A plaintiff need not be 27 aware of the specific facts necessary to establish a claim since they can be developed in pretrial discovery. 28 1 Kline v. Turner, 87 Cal. App. 4th 1369, 1374 (2001) (citing Jolly v. Eli Lilly & Co. 44 Cal.3d 2 1103, 1110-11 (1988)). “Under this rule constructive and presumed notice or knowledge are 3 equivalent to knowledge.” Parsons v. Tickner, 31 Cal. App. 4th 1513, 1525 (1995). 4 The CCL defendants argue plaintiff admitted he first learned of the nature of the 5 easements and the general accessibility of the property in or around June 2018, but filed suit in 6 January 2023. (ECF No. 14-1 at 19.) Defendants also argue plaintiff had constructive knowledge 7 of his alleged inability to access the property in June 2018. (ECF No. 17 at 4.) 8 Plaintiff argues he adequately invoked the delayed discovery exception to the statute of 9 limitations. (ECF No. 16 at 10-12.) Plaintiff argues the facts clearly outline that he was prevented 10 from discovering the true nature of access issues by the four defendants acting together. (Id. at 11 10.) 12 To adequately allege the delayed discovery exception applies, a plaintiff must allege “(1) 13 the time and manner of discovery and (2) the inability to have made earlier discovery despite 14 reasonable diligence.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808 (2005) (citation 15 omitted) (emphasis in original). The discovery rule “postpones accrual of a cause of action until 16 the plaintiff discovers, or has reason to discover, the cause of action.” WA Southwest 2, LLC v. 17 First Am. Title Ins. Co., 240 Cal. App. 4th 148, 156 (2015) (quoting Fox, 35 Cal. 4th at 807). “A 18 plaintiff has reason to discover a cause of action when he or she has reason to at least suspect a 19 factual basis for its elements.” Fox, 35 Cal. 4th at 807 (internal quotation marks and citation 20 omitted). “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry 21 notice of the cause of action.” Fox, 35 Cal. 4th at 807. 22 Plaintiff has not adequately pleaded the delayed discovery exception to the statute of 23 limitations because the complaint alleges only general facts for the first prong of the test 24 regarding the time and manner of discovery. (See ECF No. 1, ¶¶ 47, 49.) Under the complaint’s 25 allegations, plaintiff apparently received the deed sometime after July 17, 2021, and allegedly 26 discovered the truth sometime after that. (See id., ¶ 47.) Plaintiff does not meet his burden to 27 plead specific facts to show the time and manner of discovery. See Yumul v. Smart Balance, Inc., 28 733 F. Supp. 2d 1117, 1130 (C.D. Cal. 2010) (“A plaintiff whose complaint shows on its face that 1 his claim would be barred without the benefit of the discovery rule must specifically plead facts 2 to show [ ] the time and manner of discovery…” (quoting E–Fab, Inc. v. Accountants, Inc. 3 Services, 153 Cal.App.4th 1308, 1319 (2007)). 4 Plaintiff had information that would put a reasonable person on inquiry in June of 2018 5 and filed suit in January 2023. The complaint’s current allegations fail to adequately invoke the 6 delayed discovery exception to the statute of limitations for the second and third causes of action. 7 Thus, the undersigned recommends the motion to dismiss be granted on the asserted statute of 8 limitations grounds as to the second and third causes of action. 9 C. Conversion (Fourth Cause of Action) 10 The statute of limitations is also three years for “[a]n action for taking, detaining, or 11 injuring goods or chattels[.]” Cal. Civ. Proc. Code § 338(c)(1). The statute of limitations period 12 commences upon “the act of wrongfully taking property.” Murphy v. Am. Gen. Life Ins. Co., 74 13 F. Supp. 3d 1267, 1279 (C.D. Cal. 2015) (quoting AmerUS Life Ins. Co. v. Bank of Am., N.M., 14 143 Cal.App.4th 631, 639 (2nd Dist. 2006), as modified Oct. 30, 2006. 15 Defendants argue Maye’s conversion claim accrued at the time of the first payment to 16 OLS because plaintiff was unable to access the property at that time. (ECF No. 14-1 at 24.) 17 Plaintiff counters “the payoff happened in May 2021,” and defendant Wigginton was paid in 18 August 2021, such that the limitation period did not expire as to the moving defendants until May 19 2024 at the earliest.3 (ECF No. 16 at 13.) Neither party cites authority for their position on the 20 date of accrual beyond the fact that limitations period commences upon the act of wrongfully 21 taking property. 22 As set forth below, plaintiff has not pleaded a plausible conversion claim. Pertinent to the 23 statute of limitations issue, it is not clear under the complaint’s allegations when the moving 24 defendants committed the act of wrongfully taking plaintiff’s money. Accordingly, the 25 undersigned will recommend the motion to dismiss be denied on the asserted statute of limitations 26 3 Plaintiff also asserts the statute “includes a provision for commencement of the statute of 27 limitations based upon delayed discovery.” (ECF No. 16 at 12.) As set forth, though, the complaint does not adequately invoke California’s delayed discovery exception to the statute of 28 limitations. 1 ground as to the conversion claim and granted for failure to state a claim for the reasons set forth 2 below. 3 D. Unfair Business Practices (Fifth Cause of Action) 4 California unfair competition claims are subject to a four-year statute of limitations 5 period. Aryeh v. Canon Bus. Solutions, Inc., 55 Cal. 4th 1185, 1196 (2013); Cal. Bus. & Prof. 6 Code § 17208. The date of accrual of an unfair competition claim is subject to equitable 7 exceptions and modifications. See Aryeh, 55 Cal. 4th at 1196 (stating nonstatutory exceptions to 8 the basic limitations period apply); Baja Ins. Servs., Inc. v. Shanze Enterprises, Inc., No. 2:14- 9 CV-02423-KJM-AC, 2016 WL 1267999, at *6-7 (E.D. Cal. Mar. 31, 2016) (citing Aryeh to hold 10 “an unfair competition claim is subject to a number of equitable exceptions and modifications, 11 such as the discovery rule, equitable tolling, fraudulent concealment, the continuing violation 12 doctrine, and the theory of continuous accrual”). 13 Defendants bear the initial burden of proving plaintiff’s unfair competition claim is barred 14 by section 17208’s four-year limitations period. See Aryeh, 55 Cal. 4th at 1197. Thereafter, the 15 burden shifts to plaintiff to demonstrate his claim survives based on one or more common law 16 exceptions to the basic date of accrual. See id. “That burden may be imposed even at the pleading 17 stage.” Id. 18 Defendants argue the limitation period for their alleged unfair business practices began to 19 run on the date the cause of action accrued, not on the date of discovery. (ECF No. 14-1 at 25.) 20 Defendants argue the limitations period began to run when plaintiff contracted with OLS in 21 February 2018. (ECF No. 14-1 at 24-25.) 22 Plaintiff argues defendants’ authority that the limitations period begins to run on the date 23 of accrual, and not on the date of discovery, was disapproved by the California Supreme Court in 24 Aryeh, 55 Cal.4th at 1194, n.4. (ECF No. 16 at 13-14.) Plaintiff argues his initial ability to access 25 the property was “predicated on his ownership interest, not on the true lack of physical access.” 26 (Id. at 14.) 27 Defendants have not met their initial burden of demonstrating plaintiff’s unfair 28 competition claim is time-barred based on the alleged start of their unfair business practices in 1 February 2018. See Aryeh, 55 Cal. 4th at 1196 (rejecting cases holding the limitations period 2 necessarily begins to run on the date of accrual and holding “the common law last element 3 accrual rule is the default”). Accordingly, based on Aryeh, 55 Cal. 4th at 1196, undersigned 4 recommends the motion to dismiss be denied on the statute of limitations ground as to the fifth 5 cause of action for unfair business practices. 6 II. Adequacy of the Complaint’s Allegations 7 A. RICO (First Cause of Action) 8 The elements of a civil RICO claim are as follows: “(1) conduct (2) of an enterprise (3) 9 through a pattern (4) of racketeering activity (known as “predicate acts”) (5) causing injury to the 10 plaintiff’s ‘business or property.’” Grimmett, 75 F.3d at 510 (citing 18 U.S.C. §§ 1964(c), 11 1962(c)). Each of the four elements is discussed further below. The moving defendants argue 12 plaintiff failed to adequately allege each element. 13 1. Enterprise 14 “Section 1961(4) describes two categories of associations that come within the purview 15 of the ‘enterprise’ definition. The first encompasses organizations such as corporations and 16 partnerships, and other ‘legal entities.’ The second covers ‘any union or group of individuals 17 associated in fact although not a legal entity.’” United States v. Turkette, 452 U.S. 576, 581-82 18 (1981) (citing 18 U.S.C. § 1961(4)). The “enterprise,” 18 U.S.C. § 1962(c), must be a distinct 19 entity from a defendant, “not simply the same ‘person’ referred to by a different name.” Cedric 20 Kushner Promotions, Ltd. v. King, 533 U.S. 158 (2001). 21 An “association-in-fact enterprise is ‘a group of persons associated together for a common 22 purpose of engaging in a course of conduct.’” Boyle v. U.S., 556 U.S. 938, 946 (2009). “Such an 23 enterprise ... is proved by evidence of an ongoing organization, formal or informal, and by 24 evidence that the various associates function as a continuing unit.” Id. at 945. “[A]n association- 25 in-fact enterprise must have at least three structural features: a purpose, relationships among those 26 associated with the enterprise, and longevity sufficient to permit these associates to pursue the 27 enterprise’s purpose.” Id. 28 //// 1 2. Conduct 2 In order to have RICO liability, the defendant must “conduct or participate, directly or 3 indirectly, in the conduct of [the] enterprise’s affairs.” 18 U.S.C. § 1962(c); see Reves v. Ernst & 4 Young, 507 U.S. 170, 179 (1993) (“one must have some part in directing [the enterprise’s] 5 affairs”). RICO liability attaches only to “those who participate in the operation or management 6 of an enterprise through a pattern of racketeering activity.” Reves, 507 U.S. at 184. Liability 7 “depends on showing that the defendants conducted or participated in the conduct of the 8 ‘enterprise’s affairs,’ not just their own affairs.” Cedric Kushner Promotions, Ltd., 533 U.S. at 9 163. 10 3. Racketeering 11 Racketeering activity requires commission of one of the predicate acts enumerated in 18 12 U.S.C. § 1961(1). In this case, the predicate acts are alleged to be mail and wire fraud under 18 13 U.S.C. §§ 1341 and 1343. “The mail and wire fraud statutes are identical except for the particular 14 method used to disseminate the fraud, and contain three elements: (A) the formation of a scheme 15 to defraud, (B) the use of the mails or wires in furtherance of that scheme, and (C) the specific 16 intent to defraud.” Eclectic Properties E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 997 17 (9th Cir. 2014). 18 4. Pattern 19 A “‘pattern of racketeering activity’ requires at least two acts of racketeering activity, one 20 of which occurred after the effective date of this chapter and the last of which occurred within ten 21 years (excluding any period of imprisonment) after the commission of a prior act of racketeering 22 activity.” 18 U.S.C. § 1961(5). A pattern requires the showing of a relationship between the 23 predicates, and the threat of continuing activity rather than sporadic activity. H.J. Inc. v. Nw. Bell 24 Tel. Co., 492 U.S. 229, 239 (1989). 25 5. Discussion of the RICO Elements 26 Defendants argue the complaint fails to sufficiently allege the CCL defendants were 27 participants in any enterprise. (ECF No. 14-1 at 12-14.) Defendants argue the complaint is devoid 28 of any non-conclusory allegations supporting an enterprise, as opposed to non-actionable business 1 relationships. (Id. at 13.) They argue plaintiff has merely alleged routine business 2 communications and conduct in the defendants’ own affairs. (Id. at 11-12.) Defendants argue a 3 “single episode” containing multiple predicate acts cannot sustain a RICO claim. (Id. at 15.) 4 Defendants argue plaintiff has not pleaded sufficient predicate acts or the specific intent to 5 defraud with each predicate act. (Id. at 16.) Defendants also argue plaintiff lacks standing. (Id. at 6 17-19.) 7 As to conduct of an enterprise, plaintiff responds that he has adequately pleaded that 8 defendants worked together to get him to pay for a piece of property without access, promising 9 him access upon payment to induce him to pay. (ECF No. 16 at 16.) Plaintiff argues the 10 complaint sufficiently pleads fraud, which cannot be classified as part of defendants’ routine 11 business acts. (Id. at 16-17.) Similarly, plaintiff argues he has adequately pleaded the existence of 12 an enterprise because he alleged the parties worked together to get plaintiff to pay for a piece of 13 property with no access, and because the allegations identified specific actions taken by the 14 defendants that cannot be classified as usual business transactions. (Id. at 16-17.) While not 15 conceding the complaint does not adequately plead a pattern of racketeering and sufficient 16 predicate acts, plaintiff’s argument merely concludes these elements are satisfied and asks for 17 leave to amend. (Id. at 17.) 18 The court should reject a pleading strategy that attempts to transform a standard fraud 19 claim into a RICO claim. See, e.g., Gomez v. Guthy-Renker, LLC, No. EDCV14-01425-JGB- 20 KKX, 2015 WL 4270042, at *9 (C.D. Cal. July 13, 2015) (noting widespread consensus among 21 courts that routine business relationships are insufficient to impose RICO liability, even if there 22 have been varying opinions as to which particular RICO requirement fails under such 23 circumstances). Merely identifying actions defendants took that plaintiff alleges were fraudulent, 24 and therefore not within defendants’ usual business transactions, does not suffice to state a claim. 25 See Shaw v. Nissan N. Am., Inc., 220 F. Supp. 3d 1046, 1056 (C.D. Cal. 2016) (conclusory 26 allegations that defendants “shared a common fraudulent purpose” in taking certain actions did 27 not satisfy the common purpose requirement and failed to suggest more than ordinary business 28 activity); In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Pracs., & Prod. Liab. 1 Litig., 826 F. Supp. 2d 1180, 1202-03 (C.D. Cal. 2011) (no claim stated because “the SAC alleges 2 no more than that Defendants’ primary business activity… was conducted fraudulently”). 3 The complaint’s allegations also fail to show how “the defendants conducted or 4 participated in the conduct of the ‘enterprise’s affairs,’ not just their own affairs.” Cedric Kushner 5 Promotions, Ltd., 533 U.S. at 163. Conclusory allegations of common purpose do not suffice to 6 state a claim. Comm. to Protect our Agric. Water v. Occidental Oil & Gas Corp., 235 F. Supp. 3d 7 1132, 1174-75 (E.D. Cal. 2017). 8 In addition, plaintiff has not pleaded adequate facts that show a RICO enterprise with a 9 cohesive structure, as necessary to allege an enterprise and pattern of racketeering activity. See 10 Comm. to Protect our Agric. Water,235 F. Supp. 3d at 1176. The complaint does not contain 11 factual allegations explaining the structure of the alleged enterprise. 12 Moreover, allegations of isolated incidents do not suffice to meet the “continuing unit” 13 requirement. See Comm. to Protect our Agric. Water, 235 F. Supp. 3d at 1176; Sever v. Alaska 14 Pulp Corp., 978 F.2d 1529, 1535 (9th Cir. 1992). “RICO’s continuity requirement is not satisfied 15 if plaintiffs have merely alleged a single fraud perpetrated on a single victim.” United Energy 16 Owners Comm., Inc. v. U.S. Energy Mgmt. Sys., Inc., 837 F.2d 356, 360 (9th Cir. 1988). A 17 plaintiff must allege “two or more RICO predicate acts, occurring over a significant period of 18 time, evidencing a threat of continuing activity.” Id. at 361; see also Palantir Techs. Inc. v. 19 Abramowitz, No. 19-CV-06879-BLF, 2021 WL 2400979, at *7 (N.D. Cal. June 11, 2021) (“the 20 Ninth Circuit rarely upholds a finding of continuity where there is only a single victim”) (citing 21 Sever, 978 F.2d at 1535 (affirming dismissal of RICO claim because collective conduct was “a 22 single episode” rather than a “series of separate, related acts”) and Schreiber Distrib. Co. v. Serv- 23 Well Furniture Co., 806 F.2d 1393, 1399 (9th Cir. 1986) (affirming dismissal of RICO claims 24 where “complaint alleged the fraudulent diversion of a single shipment,” thus it was an isolated 25 event and did not have threat of continuing activity) (further citations omitted)). 26 Here, defendants argue the only other possible victim of the scheme alleged could be 27 Johnetta Ford. (See ECF No. 14-1 at 15.) The complaint alleges Ms. Ford signed a contract for 28 deed and was unable to meet its alleged high-interest payment plan twice, causing her to default 1 on her mortgage. (ECF No. 1, ¶ 29.) The complaint does not allege defendants perpetrated the 2 same scheme against plaintiff and Ms. Ford. Plaintiff’s opposition to the motion to dismiss also 3 does not identify how the complaint’s allegations evidence a threat of continuing activity to show 4 a pattern of racketeering by the moving defendants. (See ECF No. 16 at 17.) 5 Setting aside the conclusory allegations, the complaint pleads routine business activities 6 alleged to have been undertaken fraudulently against plaintiff as a single victim. However, “RICO 7 was not meant to address discrete instances of fraud[.]” Bryant v. Mattel, 573 F.Supp.2d 1254, 8 1263 (C.D. Cal. 2007). The complaint fails to sufficiently allege a RICO enterprise with a 9 common purpose and a cohesive structure. The complaint does not contain sufficient factual 10 matter to state a plausible claim to relief under RICO.4 11 B. Intentional Misrepresentation (Second Cause of Action) 12 To establish a claim for deceit based on intentional misrepresentation, a plaintiff must 13 prove seven essential elements: 14 (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew 15 that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for 16 its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the 17 representation; (6) the plaintiff was harmed; and (7) the plaintiff’s reliance on the defendant’--s representation was a substantial factor 18 in causing that harm to the plaintiff. 19 Manderville v. PCG&S Grp., Inc., 146 Cal. App. 4th 1486, 1498 (2007) (footnote omitted). 20 The parties dispute whether plaintiff has adequately alleged the element of reasonable or 21 justifiable reliance. “Reliance exists when the misrepresentation or nondisclosure was an 22 immediate cause of the plaintiff’s conduct which altered his or her legal relations, and when 23 without such misrepresentation or nondisclosure he or she would not, in all reasonable 24 4 Because the complaint does not state a plausible RICO claim for relief, the court need not 25 address whether plaintiff has standing under 18 U.S.C. § 1964(c), which is an issue requiring analysis of the specific RICO violations alleged. See Canyon Cnty. v. Syngenta Seeds, Inc., 519 26 F.3d 969, 972 (9th Cir. 2008) (“To have standing under § 1964(c), a civil RICO plaintiff must 27 show: (1) that his alleged harm qualifies as injury to his business or property; and (2) that his harm was ‘by reason of’ the RICO violation, which requires the plaintiff to establish proximate 28 causation.”). 1 probability, have entered into the contract or other transaction.” All. Mortg. Co. v. Rothwell, 10 2 Cal. 4th 1226, 1239 (1995). “Except in the rare case where the undisputed facts leave no room for 3 a reasonable difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a 4 question of fact.” Id. (citations omitted). “[W]hether a party’s reliance was justified may be 5 decided as a matter of law if reasonable minds can come to only one conclusion based on the 6 facts.” Id. (citation omitted). 7 Defendants argue the complaint fails to show plaintiff’s justifiable reliance on any of their 8 representations to Maye because their alleged misrepresentations did not prompt Maye’s 9 immediate action. (ECF No. 14-1 at 19-21.) Defendants note their alleged statements occurred 10 after Maye had purchased the property. (Id. at 20.) In addition, defendants argue, their statements 11 occurred in June 2018, July 2018, and August 2020, and thus were not the “immediate cause” of 12 Maye’s decision to pay off the contract for deed in May 2021. (Id. at 21.) Citing ¶¶ 45 and 46 of 13 the complaint, defendants argue plaintiff would have paid off the property regardless of their 14 alleged statements because the complaint alleges plaintiff relied on OLS’s representations and the 15 contract with OLS. (ECF No. 17 at 7-8.) 16 Plaintiff points out the authority relied upon by defendants does not define “immediate” in 17 the way they construe it, or at all. (ECF No. 16 at 20.) Plaintiff argues he pleaded in ¶ 46 that he 18 paid off the property in or about May 2021 and did so “in an effort to gain the access he had been 19 promised.” (Id.) 20 Defendants do not provide any authority that defines “immediate cause” for reliance. The 21 Judicial Council of California’s jury instruction for intentional misrepresentation does not include 22 the “immediate cause” language or require proof of “immediate” timing. See CACI No. 1900. 23 Justifiable reliance is normally a question of fact for a jury, and this is not one of the “rare cases” 24 in which there is only one conclusion that reasonable minds could reach based on the allegations 25 in the complaint. See All. Mortg. Co., 10 Cal.4th at 1239. Thus, the complaint adequately pleads 26 the elements for an intentional misrepresentation fraud claim in the second cause of action. 27 //// 28 //// 1 C. Fraudulent Concealment (Third Cause of Action) 2 The elements of a fraudulent concealment claim are as follows: “(1) the defendant 3 concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to 4 the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with the intent to 5 defraud the plaintiff; (4) the plaintiff was unaware of the fact and would not have acted as he did 6 if he had known of the concealed or suppressed fact; and (5) as a result of the concealment or 7 suppression of the fact, the plaintiff sustained damage.” Burch v. CertainTeed Corporation, 34 8 Cal. App. 5th 341, 348 (2019). 9 The moving defendants argue the complaint merely alleges they made incorrect 10 statements to plaintiff and lacks allegations they suppressed material facts regarding access. (ECF 11 No. 14-1 at 23.) As set forth above, however, knowledge and intent for fraud “may be alleged 12 generally.” Fed. R. Civ. P. 9(b). The complaint’s allegations suffice on the element of intentional 13 concealment. 14 Defendants also argue the claim for fraudulent concealment fails because they had no 15 duty to disclose any details about the Subject Property to plaintiff. (ECF No. 14-1 at 21-23.) 16 Plaintiff responds that active concealment exists where a party who is under no duty to speak 17 does so and makes misleading statements or suppresses material facts. (ECF No. 16 at 21.) See 18 Vega v. Jones, Day, Reavis & Pogue, 121 Cal. App. 4th 282, 294 (2004) (rejecting argument that 19 fraud based on nondisclosure always requires an “independent duty of disclosure” and citing 20 collected cases); Valencia v. Merck & Co., No. 1:07-CV-00388-OWW-GSA, 2009 WL 3365848, 21 at *5 (E.D. Cal. Oct. 16, 2009) (applying Vega to reject requirement of a special relationship for a 22 fraud claim on the ground that one who volunteers information must be truthful). 23 Defendants reply that the fraudulent concealment claim cannot withstand dismissal in the 24 absence of a special relationship. (ECF No. 17 at 8.) They argue the cases cited in plaintiffs’ 25 opposition, including Vega, 121 Cal. App. 4th 282, and Valencia, 2009 WL 3365848, are 26 factually distinguishable from this litigation. (Id.) 27 “California law generally recognizes four forms of deceit: intentional misrepresentation, 28 negligent misrepresentation, concealment, and failure to perform a promise.” Finch Aerospace 1 Corp. v. City of San Diego, 8 Cal. App. 5th 1248, 1252 (2017). “To maintain a cause of action for 2 fraud through nondisclosure or concealment of facts, there must be allegations demonstrating that 3 the defendant was under a legal duty to disclose those facts.” Immobiliare, LLC v. Westcor Land 4 Title Ins. Co., 424 F. Supp. 3d 882, 888 (E.D. Cal. 2019) (emphasis in original) (quoting Los 5 Angeles Memorial Coliseum Com. v. Insomniac, Inc., 233 Cal. App. 4th 803, 831 (2015). 6 As set forth above, in Vega, the California Supreme Court held a fraud claim could be 7 based on nondisclosure without an independent duty to disclose. See 121 Cal. App. 4th at 287. 8 However, plaintiff’s argument based on Vega would support his fraud claim based on intentional 9 misrepresentation, but not his fraud claim based on concealment. See Immobiliare, 424 F. Supp. 10 3d at 889-90 (“While a claim for fraudulent concealment requires a duty to disclose, a claim for 11 affirmative misrepresentation does not.”); Elizabeth M. Byrnes, Inc. v. Fountainhead Com. Cap., 12 LLC, No. CV-20-04149-DDP-RAO-X, 2021 WL 3501518, at *2, n. 2 (C.D. Cal. Aug. 6, 2021) 13 (requiring special duty to be alleged where the complaint alleged “only fraudulent concealment, 14 not an affirmative misrepresentation”). 15 “Where ‘a sufficient relationship or transaction does not exist, no duty to disclose arises 16 even when the defendant speaks.’” W. Pac. Elec. Co. Corp. v. Dragados/Flatiron, 534 F. Supp. 3d 17 1209, 1247-48 (E.D. Cal. 2021) (quoting Bigler-Engler v. Breg, Inc., 7 Cal. App. 5th 276, 312 18 (2017). “A sufficient relationship has been found ‘when the defendant is in a fiduciary 19 relationship with the plaintiff,’ or when it is ‘a result of some sort of transaction between the 20 parties,’ e.g., ‘between seller and buyer, employer and prospective employee, doctor and patient, 21 or parties entering into any kind of contractual agreement.’” W. Pac. Elec. Co. Corp., 534 F. 22 Supp. 3d at 1247-48 (quoting LiMandri v. Judkins, 52 Cal. App. 4th 326, 336-37 (1997)). 23 Plaintiff has not alleged the existence of any kind of transactional or other relationship 24 between himself and the moving defendants. The moving defendants did not owe plaintiff a duty 25 of disclosure, and his fraudulent concealment claim fails. See W. Pac. Elec. Co. Corp. v. 26 Dragados/Flatiron, 534 F. Supp. 3d at 1247-48; Bigler-Engler, 7 Cal. App. 5th at 312. 27 //// 28 //// 1 D. Conversion (Fourth Cause of Action) 2 Defendants argue the conversion claim contains only threadbare allegations and legal 3 conclusions that all defendants shared in the money and refused to return eighty percent of 4 Maye’s money, and that Maye “did not consent to the taking of his money and opportunity by 5 deceit[.]” (ECF No. 14-1 at 23.) Defendants argue the allegation they shared in the money is 6 insufficient to state a plausible claim. (Id. at 24.) Defendants argue that because they were not in 7 contractual privity with Maye, it is implausible they refused to return his money. (Id. at 24.) 8 Plaintiff argues the complaint incorporated all allegations into the cause of action and that 9 defendants’ sharing of the money is a factual assertion rather than a conclusion. (ECF No. 16 at 10 22.) He argues he alleged defendants stated they would provide the requisite access if he paid off 11 the land, suggesting they were receiving the money. (Id.) Plaintiff argues he was in contractual 12 privity with the moving defendants for an implied contract concerning “early payoff for access 13 provided by moving defendants.” (Id. at 23.) 14 Defendants reply that plaintiff did not plead a contract with the moving defendants. (ECF 15 No. 17 at 9.) Moreover, defendants argue, by characterizing Lori Murphy as a mere employee, the 16 complaint arguably acknowledges that Lori Murphy does not have the authority to contract on the 17 moving defendants’ behalf. (Id. at 10.) 18 “Conversion is the wrongful exercise of dominion over the property of another. The 19 elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the 20 property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and 21 (3) damages.” Lee v. Hanley, 61 Cal. 4th 1225, 1240 (Cal. 2015) (quoting Welco Elecs., Inc. v. 22 Mora, 223 Cal.App.4th 202, 208 (Cal. Ct. App. 2014)). Except to state the basic elements of a 23 conversion claim, neither party cites any further authority on the elements as applied to the facts 24 of this case. 25 At the outset, whether plaintiff pleaded an implied contract with the moving defendants to 26 support the conversion claim does not determine the issue, because “[a] plaintiff may not 27 ordinarily recover for the tort of conversion for the breach of duties that merely restate contractual 28 obligations.” Nguyen v. Stephens Inst., 529 F. Supp. 3d 1047, 1058 (N.D. Cal. 2021) (citing Aas 1 v. Superior Court, 24 Cal. 4th 627, 643 (2000)); Beluca Ventures LLC v. Aktiebolag, 622 F. 2 Supp. 3d 806, 814 (N.D. Cal. 2022). Moreover, defendants’ alleged refusal to refund plaintiff’s 3 money cannot itself be the basis for the conversion. See Welco Elecs., Inc., 223 Cal. App. 4th at 4 214 (“a simple failure to pay money owed does not constitute conversion”); Haas v. Travelex Ins. 5 Servs. Inc., 555 F. Supp. 3d 970, 983 (C.D. Cal. 2021) (“the conversion claim fails because 6 Haas’s claim amounts to no more than one for reimbursement of a payment”). 7 Nevertheless, money can sometimes be the subject of conversion “if the claim involves a 8 specific, identifiable sum[.]” Welco Elecs., Inc., 223 Cal. App. 4th at 209 (citing Haigler v. 9 Donnelly, 18 Cal.2d 674, 681 (1941)). In Welco Elecs., Inc., the court held the use of the 10 plaintiff’s credit card on the defendant’s credit card terminal to improperly transfer specific sums 11 of money to defendant’s bank account was a conversion. 223 Cal. App. 4th at 205. In addition, “a 12 conversion claim does not require that a specific lump sum of money be entrusted to defendant; 13 the plaintiff must merely prove a specific, identifiable sum of money that was taken from it.” Id. 14 at 216. However, Welco involved an unauthorized transfer of money, see id. at 208-09, and the 15 factual allegations of this case are quite different. 16 Under the complaint’s allegations and plaintiff’s argument, the moving CCL defendants 17 induced plaintiff to make payments to the OLS defendants by their alleged fraudulent statements. 18 Because the wrongful acts alleged here are predicated in fraud, this claim is subject to heightened 19 pleading requirements. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). 20 If a plaintiff “allege[s] a unified course of fraudulent conduct and rel[ies] entirely on that course 21 of conduct as the basis of a claim…, the claim is said to be “grounded in fraud” or to “sound in 22 fraud,” and the pleading of that claim as a whole must satisfy the particularity requirement of 23 Rule 9(b).” Id. at 1103-04. 24 The complaint’s conversion allegations grounded in fraud do not meet Rule 9(b)’s 25 heightened pleading standard. Plaintiff has not sufficiently alleged an ownership interest in or 26 right to possess his money at the time of the conversion. It is also not clear how the CCL 27 defendants’ wrongfully exercised dominion over plaintiff’s property. Finally, the acts that 28 allegedly constituted the conversion are not adequately pleaded, including when they took place. 1 California “cases recognizing claims for the conversion of money ‘typically involve those 2 who have misappropriated, commingled, or misapplied specific funds held for the benefit of 3 others.’” Voris v. Lampert, 7 Cal. 5th 1141, 1152 (2019) (citing collected cases) (quoting PCO, 4 Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 150 Cal. App. 4th 384, 5 396 516 (2007)); see also Beluca Ventures LLC v. Aktiebolag, 622 F. Supp. 3d 806, 815 (N.D. 6 Cal. 2022) (citing collected cases). Unlike a typical case involving conversion of money, 7 plaintiff’s conversion claim does not involve a person or entity, such as an attorney or real estate 8 agent, holding funds for the benefit of the client. Moreover, plaintiff fails to identify allegations 9 pleaded with the requisite particularity to support the conversion claim which is grounded in 10 fraud. The complaint fails to state a plausible conversion claim against the moving defendants. 11 CONCLUSION AND RECOMMENDATION 12 Based on the foregoing, defendants’ motion to dismiss should be granted in part and 13 denied in part. Plaintiff has requested leave to amend, which the undersigned recommends that 14 request be granted. See Fed. R. Civ. P. 15(a); Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection 15 Servs., 911 F.2d 242, 247 (9th Cir. 1990) (A district court “should grant leave to amend even if 16 no request to amend the pleading was made, unless it determines that the pleading could not 17 possibly be cured by the allegation of other facts.”). 18 In accordance with the above, IT IS RECOMMENDED as follows: 19 1. Defendant’s motion to dismiss be granted in part, as follows: 20 a. As to the civil RICO claim, the first cause of action, denied on the asserted 21 statute of limitations ground and granted for failure to state a claim; 22 b. As to the intentional misrepresentation claim, the second cause of action, 23 granted on the asserted statute of limitations ground and denied for failure to state a claim; 24 c. As to the fraudulent concealment claim, the third cause of action, granted on the 25 asserted statute of limitations ground and granted for failure to state a claim; 26 d. As to the conversion claim, the fourth cause of action, denied on the asserted 27 statute of limitations ground and granted for failure to state a claim; 28 //// 1 e. As to the unfair business practices, the fifth cause of action, denied on the 2 || asserted statute of limitations ground. 3 2. Plaintiff be granted leave to amend. 4 These findings and recommendations are submitted to the United States District Judge 5 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) 6 || days after being served with these findings and recommendations, any party may file written 7 || objections with the court and serve a copy on all parties. Such a document should be captioned 8 | “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 9 || shall be served on all parties and filed with the court within fourteen (14) days after service of the 10 || objections. The parties are advised that failure to file objections within the specified time may 11 || waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 12 | 1998); Martinez v. YIst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 13 | Dated: January 31, 2024 / ae □□ / a Ly a 4 CAROLYN K DELANEY 15 UNITED STATES MAGISTRATE JUDGE 16 | 8 maye23cv173.mtd 17 18 19 20 21 22 23 24 25 26 27 28 24