United States District Court, D. Oregon, Portland Division
BIBIJIINDERJIT KAUR PURI; RANBIR SINGH BHAI; KAMALJ1T KAUR KOHLI; KULBIR SINGH PURI, Plaintiffs,
SOPURKH KAUR KHALSA; PERAIM KAUR KHALSA; SIRI RAM KAUR KHALSA; KARTAR SINGH KHALSA; KARAM SINGH KHALSA; SIRI KARM KAUR KHALSA; ROY LAMBERT; SCHWABE, WILLIAMSON & WYATT, an Oregon Professional Corporation; LEWIS M. HOROWITZ; LANE POWELL PC, an Oregon Professional Corporation; UNTO INFINITY, LLC, an Oregon Limited Liability Company; SIRI SINGH SAHIB CORPORATION, an Oregon non-profit corporation; GURUDHAN SINGH KHALSA; GURU HARI SINGH KHALSA; AJEET SINGH KHALSA; EWTC MANAGEMENT, LLC; DOES, 1-5, Defendants.
OPINION AND ORDER
MICHAEL W. MOSMAN CHIEF UNITED STATES DISTRICT JUDGE
matter comes before me on Defendants' five Motions to
Dismiss the Second Amended Complaint ("SAC"). [245,
247, 249, 250, 257], For the reasons below, I GRANT in part
and DENY in part the Motion to Dismiss or in the Alternative
Motion to Strike  filed by Defendants Kartar Singh
Khalsa, Sopurkh Kaur Khalsa, Unto Infinity, LLC
("UI"), Siri Karm Kaur Khalsa, Peraim Kaur Khalsa,
Siri Singh Sahib Corporation ("SSSC"), and Karam
Singh Khalsa; GRANT the Motion to Dismiss  filed by
Defendants Lewis Horowitz and Lane Powell; GRANT the Motion
to Dismiss  filed by Defendant Siri Ram Kaur Khalsa;
GRANT the Motion to Dismiss  filed by Defendants
Schwabe, Williamson & Wyatt ("Schwabe") and Roy
Lambert; and GRANT the Motion to Dismiss  filed by
Defendants Gurudhan Singh Khalsa, EWTC Management, LLC
("EWTC"), Guru Hari Singh Khalsa, and Ajeet Singh
this Court granted Defendants' Motions to Dismiss the
First Amended Complaint ("FAC") [215, 220], the
Ninth Circuit affirmed in part, vacated in part, and
remanded. In a published opinion, the Ninth Circuit concluded
that dismissal pursuant to the ministerial exception was not
warranted and that this Court could address Plaintiffs'
claims without violating the First Amendment. Puri v.
Khalsa, 844 F.3d 1152 (9th Cir. 2017). In an
accompanying unpublished memorandum disposition, the Ninth
Circuit: (1) affirmed the dismissal with prejudice of all
derivative claims; (2) ordered this Court to dismiss without
prejudice Plaintiffs' fraud claim against all Defendants
other than Sopurkh, Kartar, Lambert, and Schwabe for failure
to plead fraud with particularity; (3) affirmed the dismissal
with prejudice of Plaintiffs' claim for negligent
misrepresentation as to Lane Powell and Horowitz and ordered
this Court to dismiss without prejudice as to the other
Defendants for failure to plead fraud with particularity; (4)
ordered this Court to dismiss without prejudice
Plaintiffs' claim for tortious interference with
prospective economic advantage for failure to plead fraud
with particularity, as to all defendants other than
Sopurkh, Lambert, and Schwabe; (5) ordered this
Court to dismiss without prejudice Plaintiffs' RICO/ORICO
claim for failure to plead fraud with particularity, as to
all defendants other than Sopurkh, Lambert, and
Schwabe. Puri v. Khalsa, 674 Fed.Appx. 679
(9th Cir. 2017).
Second Amended Complaint ("SAC"), Plaintiffs bring
five claims: (1) Claim One for declaratory relief (Claim One
in the FAC); (2) Claim Two for fraud (Claim Three in the
FAC); (3) Claim Three for negligent misrepresentation (Claim
Four in the FAC); (4) Claim Four for tortious interference
with prospective economic advantage (Claim Five in the FAC);
and (5) Claim Five for RICO/ORICO (Claim Eight in the FAC).
SAC . In the SAC, Plaintiffs added four
Defendants: Gurudhan, Hari, Ajeet, and ETWC Management, LLC.
Kartar, Sopurkh, UI, Kami, Peraim, SSSC, and Karam filed a
Motion to Dismiss , arguing the Court should dismiss
Claim One for declaratory relief, or in the alternative,
strike the derivative requests for relief; dismiss Claim Two
for fraud as to each of these Defendants other than Sopurkh
and Kartar; dismiss Claim Three for negligent
misrepresentation as to each of these Defendants; dismiss
Claim Four for tortious interference with prospective
economic advantage as to each of these Defendants other than
Sopurkh; and dismiss Claim Five for RICO/ORICO as to each of
these Defendants. . The Motion to Dismiss filed by
Lambert and Schwabe  argues the derivative claims and
the ORICO/RICO claims should be dismissed as to both of these
Defendants and that the claims against Schwabe for
declaratory relief and negligent misrepresentation as to
Plaintiffs Ranbir, Kamaljit, and Kulbi should also be
dismissed. , The Motions to Dismiss filed by Defendants
Horowitz and Lane Powell , Ram , and by Gurudhan,
Hari, Ajeet, and ETWC Management, LLC  each argue the
Court should dismiss all claims against these defendants.
[247, 249, 257].
reviewing a motion to dismiss, the court must "accept
all factual allegations in the complaint as true and construe
the pleadings in the light most favorable to the nonmoving
party." Kmevelv. ESPN, 393 F.3d 1068, 1072 (9th
Cir. 2005). A court need not accept legal conclusions as true
because "[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice." Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). To survive a motion to dismiss for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6),
"a complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face."' Id. (quoting
Bell All. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A pleading that offers only "labels and
conclusions" or '"naked assertion[s]'
devoid of 'further factual enhancement'" will
not suffice. Id. (quoting Twombly, 550 U.S.
at 555, 557). While a plaintiff does not need to make
detailed factual allegations at the pleading stage, the
allegations must be sufficiently specific to give the
defendant "fair notice" of the claim and the
grounds on which it rests. See Erickson v. Pardits,
551 U.S. 89, 93 (2007) (per curiam) (citing Twombly,
550 U.S. at 555).
provides that a court should freely give leave to amend a
complaint "when justice so requires." Fed.R.Civ.P.
15(a)(2). As such, when a court dismisses a complaint for
failure to state a claim, "leave to amend should be
granted 'unless the court determines that the allegation
of other facts consistent with the challenged pleading could
not possibly cure the deficiency.'" DeSoto v.
Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir.
1992) (quoting Schreiber Distrib. Co. v. Serv-
Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.
1986)). If amendment would be futile, the court need not
grant leave to amend. Id. "Leave to amend may
also be denied for repeated failure to cure deficiencies by
previous amendment." Abagninm v. AMVAC Chem.
Corp., 545 F.3d 733, 742 (9th Cir. 2008).
concede in their briefing on the Motions to Dismiss that the
following claims in their SAC should be dismissed: (1) Claim
One for declaratory relief as to all Defendants except UI and
SSSC; (2) Claim Two for fraud as to UI and SSSC; (3) all
Plaintiffs' Claim Three for negligent misrepresentation
as to Sopurkh, Peraim, Siri Ram, Karm, Kartar, Karam,
Gurudhan, Hari, Ajeet, EWTC, UI, and SSSC, and Ranbir's,
Kamaljit's, and Kulbir's Claim Three against Lambert
and Schwabe; (4) Claim Four for tortious interference with
prospective economic advantage against Karam, Gurudhan, Hari,
Ajeet, EWTC, UI, and SSSC; and (5) Claim Five for ORICO
against all Defendants and for RICO against UI and SSSC,
 at 9-11,  at 9,  at 13,  at 9,  at
2-3, Accordingly, I GRANT Defendants' Motions as to these
Plaintiffs' conceded claims are dismissed, the claims
still before this Court in these Motions to Dismiss are:
• Claim One for declaratory relief: claimed by all
Plaintiffs against UI and SSSC.
• Claim Two for fraud: claimed by all Plaintiffs against
all Defendants other than UI and SSSC.
• Claim Three for negligent misrepresentation: claimed
by Bibiji against Defendants Lambert and Schwabe.
• Claim Four for tortious interference with prospective
economic advantage: claimed by all Plaintiffs against
Defendants Sopurkh, Peraim, Ram, Karm, Karter, Lambert,
Schwabe, Horowitz, and Lane Powell.
• Claim Five for RICO: federal RICO claims by all
Plaintiffs against all Defendants other than UI and SSSC.
address the arguments raised by the parties as to each of
these claims in turn.
Claim One: Declaratory Relief
Declaratory Judgments Act ("DJA") states: "In
a case of actual controversy within its jurisdiction . . .
any court of the United States . . . may declare the rights
and other legal relations of any interested party seeking
such declaration." 28 U.S.C. § 2201(a), Plaintiffs
seek declaratory relief against UI and SSSC in the form of a
• 3 9.1 That BIBIJI has been a Manager of UI from and
after July 26, 2004.
• 39.2 That every act by the Board of Managers of UI
after July 26, 2004, and all actions taken by Defendants as
Managers of UI from and after July 26, 2004, are void for
lack of proper notice.
• 39.3 That all amendments to the Organization Agreement
from and after July 26, 2004 are void for lack of proper
• 39.4 That the Settlement Agreement is invalid.
• 39.5 That Defendants SOPURKH, RAM, PERAIM, KARTAR and
KARM KAUR KHALSA have breached their fiduciary duties and are
not fit to serve as Managers/Members of UI.
• 39.6 That Plaintiff is the sole remaining legitimate
Manager of UI.
 ¶¶ 39.1-39.6. Plaintiffs also "request
that the Court issue a judgment declaring that Plaintiffs are
managers/directors/trustees of SSSC." SAC  ¶
SSSC argue that these requests for relief are derivative and
therefore barred by the Ninth Circuit's ruling affirming
this Court's dismissal with prejudice of Plaintiffs'
derivative claims.  at 15-16. Plaintiffs argue they are
not seeking derivative relief and instead "[t]he
allegations defendants complain about are necessary
background to Plaintiffs' claims and related to the
conspiratorial nature of the Defendants['] acts."
Response  at 9.
SSSC are correct that Paragraphs 39.2 to 39.6 ask for
derivative relief. Under Oregon law, which applies in this
case because UI and SSSC are Oregon LLCs, if "a
shareholder has a 'special' injury, then the
shareholder has standing to assert a direct claim. A special
injury is established where there is a wrong suffered by the
shareholder not suffered by all shareholders generally or
where the wrong involves a contractual right of the
shareholders, such as the right to vote." Loewen v.
Galligan,882 P.2d 104, 111 (Or. Ct. App. 1994). Here,
Plaintiffs have not alleged they suffered special injury by
actions of the board (including the settlement agreement), by
any alleged breaches of fiduciary duties, or by the presence
of other board members. But paragraphs 39.1 and 40, which ask
for declaratory relief as to Plaintiffs' membership on
the SSSC board and Bibiji's membership on the UI board,
are injuries special to Plaintiffs. I therefore GRANT in part