Monex Deposit Co. v. Gilliam
Opinion
Proceedings: (IN CHAMBERS) Order Denying Defendants Motion to Dismiss Count Three of First Amended Complaint (fid 6-1-09)
Defendants and Counter Plaintiffs Jason Gilliam, Steven Bowman, and Richard Gilliam (collectively, “Defendants”) move to dismiss the third claim of the First Amended Complaint (“FAC”) under Federal Rule of Civil Procedure 12(b)(6). 1 Plaintiffs and Counter Defendants Monex Deposit Company and Monex Credit Company (collectively, “Monex”) oppose. The motion is DENIED.
I. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss for failure to state a claim upon which relief can be granted. A plaintiff must state “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has “facial plausibility” if the plaintiff pleads facts that “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, — U.S. —, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009).
In resolving a 12(b)(6) motion under Twombly, the Court must follow a two-pronged approach. First, the Court must accept all well-pleaded factual allegations as true, but “[t]hread-bare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Nor must the Court “accept as true a legal conclusion couched as a factual allegation.” Id. (quoting Twombly, 550 *1136 U.S. at 555, 127 S.Ct. 1955). Second, assuming the veracity of well-pleaded factual allegations, the Court must “determine whether they plausibly give rise to an entitlement to relief’ Id. This determination is context-specific, requiring the Court to draw on its experience and common sense, but there is no plausibility “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct.” Id.
II. Discussion
Defendants contend that Monex has failed to state a claim for civil extortion because “Monex never gave in to defendants’ alleged extortion(s).” (Mot. Br. 8.)
Extortion is defined as “the obtaining of property from another, with his consent, or the obtaining of an official act of a public officer, induced by a wrongful use of force or fear, or under color of official right.” CaLPenal Code § 518. 2 California has recognized a civil cause of action for the recovery of money obtained by the wrongful threat of criminal or civil prosecution, whether the claim is denominated as “extortion, menace, or duress.” Fuhrman v. Cal. Satellite Sys., Inc., 179 Cal.App.3d 408, 426, 231 Cal.Rptr. 113 (1986) (citing, inter alia, Leeper v. Beltrami, 53 Cal.2d 195, 204, 1 Cal.Rptr. 12, 347 P.2d 12 (1959)), disapproved on other grounds, Silberg v. Anderson, 50 Cal.3d 205, 212-13, 266 Cal.Rptr. 638, 786 P.2d 365 (1990). 3
Monex’s extortion claim involves threats of “criminal or civil prosecution,” as in Fuhnnan, as well as threats to “business or property interests,” as in Leeper. (See FAC TT 2, 5, 6, 103, 110, 118 (threats to business); id. rif 2, 6-7, 103, 109-10, 112-14, 119 (threats to share information with government); id. 6, 110 (threats to sue).) But, like in Fuhrman and unlike in Leeper, Monex never paid any money or transferred any property in response to Defendants’ threats. (See FAC 101-24.) This is clear on the face of the FAC, which plainly states that “Monex would not pay defendants’ extortion demands.” (Id. ¶ 115.)
In Fuhrman, the California Court of Appeal concluded: “The fatal flaw in plaintiffs action is that she apparently never paid the money defendants demanded.” 179 Cal.App.3d at 426, 231 CaLRptr. 113. At first glance, this statement might suggest that Monex cannot state a claim for civil extortion. However, viewed in its proper factual, historical, and legal context, this statement does not preclude an implied cause of action under California Penal Code section 523, which states:
Every person who, with intent to extort any money or other property from another, sends or delivers to any person any letter or other writing, whether subscribed or not, expressing or implying, or adapted to imply, any threat such as is specified in Section 519, 4 is punishable in the same manner as if such money or property were actually obtained by means of such threat.
CaLPenal Code § 523 (emphasis added). First, the Court agrees with Monex that Fuhnnan is factually distinguishable: *1137 There, the court found that neither attorney fees nor emotional distress asserted legally cognizable and proximately caused damages; here, Monex alleges proximately caused damages. (FAC TT 152-53.) Second, the Court agrees with Monex that Fuhrman predates the California Supreme Court’s adoption of section 874A of the Restatement (Second) of Torts, 5 which states:
When a legislative provision protects a class of persons by proscribing ... certain conduct but does not provide a civil remedy for the violation, the court may, if it determines that the remedy is appropriate in furtherance of the purpose of the legislation and needed to assure the effectiveness of the provision, accord to an injured member of the class a right of action, using a ... new cause of action analogous to an existing tort action.
Restatement (Second) of Torts § 874A (emphases added). Thus, finally, Fuhrman is of limited legal use in determining whether an implied cause of action for civil extortion may be found in the California Penal Code. The Court finds that such a cause of action, either at law or at equity, may be properly found in section 523, which proscribes extortion notwithstanding that the defendant ultimately obtained no money or property by means of his extortionate threats.
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666 F. Supp. 2d 1135 (Monex Deposit Co. v. Gilliam) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.