United States District Court, D. Oregon, Medford Division
ABDUL JALEEL M. REDHA. aka A.J. REDHA, Plaintiff,
BENJAMIN B. ZARE, as an individual and as Trustee of the Zare Loving Trust dated Oct. 14, 1996, LINDA M. ZARE as an individual and as Trustee of the Zare Loving Trust dated Oct. 14, 1996, and REDHA CORPORATION, an Oregon Corporation Defendants.
OPINION & ORDER
D. CLARKE UNITED STATES MAGISTRATE JUDGE
Abdul Jaleel M. Redha ("Redha"') brings claims
of fraud, conversion, breach of fiduciary duty, unjust
enrichment, constructive trust, breach of contract,
accounting, inspection of records, and derivative action by
shareholder against defendants Benjamin B. Zare ("Mr.
Zare"). Linda M. Zare (Ms. Zare) (together, "the
Zares"), and Redha Corporation (the
"Defendants"). This matter comes before the Court
on Defendant Ms. Zare's second motion to make more
definite, and alternatively to dismiss (#41), as well as Mr.
Zare and the Corporation's motion to make more definite
(#42). For the reasons stated below, Ms. Zare's motion to
make more definite, and alternatively to dismiss is DENIED,
and Mr. Zare and the Corporation's motion to make more
definite is DENIED.
action arises out of a failed business venture between
Plaintiff Abdul Jaleel M. Redha ("Redha") and the
Zares. See First Am. Compl. ("FAC"). In 1993,
Redha, who knew the Zares because his brother was married to
Mr. Zare's sister, agreed with the Zares to form the
Corporation for the purpose of buying, developing, and
selling properties. FAC at ¶¶ 7, 8. They agreed
that Redha would be the sole shareholder and receive 75% of
the net profit, while Mr. Zare would manage the Corporation
and receive 25% of the net profit. FAC at ¶ 8.
lived in Kuwait and relied on the Zares to run the
Corporation in Redha's "best interests."'
FAC at ¶¶ 11, 12. Redha alleges that Mr. Zare
repeatedly told him that the Corporation was not profitable.
FAC at ¶ 13. The Corporation ultimately failed, but in
2016, a business associate of Redha's visited Jackson
County and allegedly discovered evidence that the Corporation
had actually been profitable. FAC at ¶ 16. As a result
of this discovery, Redha alleges that the Zares fraudulently
misrepresented the profitability of the Corporation and
improperly retained funds and proceeds received in the
management of the Corporation. See FAC.
claims must meet a heightened pleading standard under Federal
Rule of Civil Procedure 9(b), which requires a party to
"state with particularity the circumstances constituting
fraud.'" The plaintiff must plead with particularity
'"the who, what, when, where, and how of the
misconduct charged." Vess v. Ciba-Geigy Corp.
USA, 317 F.3d 1097, 1106 (9th Cir.2003) (internal
quotation marks omitted). "Rule 9(b) demands that, when
averments of fraud are made, the circumstances constituting
the alleged fraud be specific enough to give defendants
notice of the particular misconduct so that they can defend
against the charge and not just deny that they have done
anything wrong." Id. at 1108.
to Rule 12(b)(6), a motion to dismiss will be granted where
the plaintiff fails to state a claim upon which relief may be
granted. In order to state a claim for relief, a pleading
must contain "a short and plain statement of the claim
showing that the pleader is entitled to relief."
Fed.R.Civ.P. 8(a)(2). "A motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6) for failure to state a claim
upon which relief can be granted 'tests the legal
sufficiency of a claim.'" Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting
Navarro v. Block, 250 F.3d 729, 732 (9th Cir.
under Rule 12(b)(6) is proper "if there is a 'lack
of a cognizable legal theory or the absence of sufficient
facts alleged under a cognizable legal theory.'"
Id. (quoting Balistreri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). To
survive a motion to dismiss for failure to state a claim
pursuant to Rule 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.'"
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Bell All. Corp. v. Twombly, 550 U.S. 544, 570
(2007)): Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating
a motion to dismiss, the court must accept the allegations of
material fact as true and construe those allegations in the
light most favorable to the non-moving party. Odom v.
Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007)
(internal citations omitted).
Ms. Zare's Motion to Dismiss
Zare argues that allegations of fraud in the FAC do not meet
the heightened pleading standard of Rule 9(b), and must be
made more definite and certain to comply. More precisely. Ms.
Zare argues that the allegations do not specify a "when,
where, or how" sufficient to allege fraud, nor does the
FAC include information that explains why the allegations
against her would constitute fraud. The Court disagrees with
Ms. Zare that the FAC does not adequately allege fraud with
the requisite specificity demanded under Rule 9(b).
Redha's allegations against Ms. Zare may not be the model
for pleading fraud, they are sufficient in this case. Redha
has made a good faith effort in the FAC to more specifically
allege tacts that constitute fraud against Ms. Zare. The FAC
includes allegations that Ms. Zare took various actions with
Mr. Zare to usurp control of the Corporation and retain the
benefits, contrary to the parties' agreement.
See FAC at ¶ 31. Redha also alleges, though
rather indirectly, that these fraudulent actions took place
at least by "early 1998" in Jackson County. where
Redha's business associate discovered evidence that the
Corporation may have been profitable. See FAC at
¶¶ 17, 31. These allegations help to establish the
"when, where, or how'" necessary to plead
"[w]here fraud consists of omissions on the part of the
defendants, the plaintiff may find alternative ways to plead
the particular circumstances of the fraud. For example, a
plaintiff cannot plead either the specific time of the
omission or the place, as he is not alleging an act, but a
failure to act." Washington v. Baenziger, 673
F.Supp. 1478, 1482 (N.D. Cal.1987) (international citations
and quotations omitted). The FAC alleges that Ms. Zare was
aware that the Corporation was profitable, but helped to
conceal that fact from Redha. FAC at % ...