Arimilli v. Rezendes ( 2022 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Nirmala Arimilli, No. CV-21-00345-PHX-GMS 10 Plaintiff, ORDER 11 v. 12 Keith Rezendes, 13 Defendant. 14 15 16 Before the Court is Keith Rezendes’s (“Defendant”) Motion to Dismiss (Doc. 16). 17 For the following reasons, Defendant’s motion is granted in part and denied in part. 18 BACKGROUND 19 The following facts from the Third Amended Complaint (“TAC”) (Doc. 15) are 20 construed in a light most favorable to Plaintiff. Plaintiff Nirmala Arimilli (“Plaintiff”) 21 formed a relationship with Defendant between 1999 and 2000. (Doc. 15 at 2.) In March 22 2017, Plaintiff visited Defendant, and was introduced to his purported wife, Ms. Rosen. 23 Id. at 3. During this visit, Defendant asked Plaintiff to invest in his company, Avidbrain 24 Inc., claiming that she was eligible to invest in his company due to a change in the 25 investment laws. Id. Defendant also extended a job offer to Plaintiff, which she accepted. 26 Id. By April 2017, Plaintiff had invested $125,000 in Defendant’s company. 27 While employed by Defendant, Plaintiff noticed “discrepancies in relation to [the] 28 overall success of the company.” Id. Defendant denied any wrongdoing. Id. Plaintiff 1 alleges that, due to her “years long trust in Defendant,” she believed Defendant and 2 maintained communication with Defendant. Id. at 4. After receiving further information 3 that “affirmed [her] doubts and concerns about the company,” Plaintiff confronted 4 Defendant and was subjected to a “torrent of vitriol and verbal abuse.” Id. at 4. Plaintiff’s 5 last communication with Defendant was in November 2017. Id. at 5. 6 Plaintiff filed suit in Maricopa County Superior Court on October 26, 2020. 7 Plaintiff amended her complaint twice in state court. The Second Amended Complaint 8 asserts the following claims against Defendant: fraudulent misrepresentation; negligent 9 misrepresentation; professional negligence; gross negligence; fraudulent inducement; 10 fraudulent concealment; breach of fiduciary duty; conversion, misappropriation; 11 constructive fraud; security and stock fraud; breach of oral agreement; breach of written 12 contract; identity theft; wage theft; unjust enrichment; intentional infliction of emotional 13 distress (“IIED”); defamation; breach of the implied covenant of good faith and fair 14 dealing; civil racketeering; and emergency protective order. (Doc. 1-1 at 130-133.) 15 Defendant removed the case to this Court on February 26, 2021. Defendant 16 subsequently moved to dismiss the complaint pursuant to Federal Rule of Procedure Rule 17 12(b)(6). (Doc. 5 at 1.) The Court granted in part and denied in part Defendant’s motion. 18 (Doc. 14 at 10.) First, Plaintiff’s claims for negligent misrepresentation, breach of 19 fiduciary duty, professional negligence, gross negligence, conversion, misappropriation, 20 constructive fraud, security and stock fraud, identity theft, wage theft, IIED, implied 21 covenant of good faith and fair dealing, and an emergency protective order were dismissed 22 with leave to amend. (Doc. 14 at 10.) Second, Defendant’s motion was denied as to 23 Plaintiff’s claims for defamation, unjust enrichment, and civil racketeering. (Doc. 14 at 24 10.) Finally, the Court denied Defendant’s motion as to Plaintiff’s claims for fraudulent 25 misrepresentation, fraudulent inducement, and fraudulent concealment “to the extent they 26 are based on Defendant’s representation about company filings,” but otherwise dismissed 27 those claims. (Doc. 14 at 10.) Plaintiff subsequently filed a TAC. (Doc. 15 at 1.) 28 Defendant now moves to dismiss the TAC for failure to state a claim. (Doc. 16 at 2.) 1 DISCUSSION 2 I. Legal Standard 3 A. Notice Pleading Requirements 4 Federal Rule of Civil Procedure 8(a) requires a complaint to contain “a short and 5 plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 6 8(a), so that the defendant receives “fair notice of what the . . . claim is and the grounds 7 upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley 8 v. Gibson, 355 U.S. 41, 47 (1957)). To survive dismissal for failure to state a claim 9 pursuant to Federal Rule of Civil Procedure 12(b)(6) after the Supreme Court’s decisions 10 in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Twombly, a plaintiff’s factual allegations in 11 the complaint “must . . . suggest that the claim has at least a plausible chance of success.” 12 Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (quoting In re Century Aluminum 13 Co. Sec. Litig., 729 F.3d 1104, 1107 (9th Cir. 2013)). Factual allegations in the complaint 14 are accepted as true, and the pleading is construed “in the light most favorable to the 15 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 16 (9th Cir. 2008). But “allegations in a complaint ... may not simply recite the elements of a 17 cause of action [and] must contain sufficient allegations of underlying facts to give fair 18 notice and to enable the opposing party to defend itself effectively.” Levitt, 765 F.3d at 19 1135 (quoting Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th 20 Cir. 2014)). Further, legal conclusions couched as factual allegations are not given a 21 presumption of truthfulness, and “conclusory allegations of law and unwarranted 22 inferences are not sufficient to defeat a motion to dismiss.” Pareto v. F.D.I.C., 139 F.3d 23 696, 699 (9th Cir. 1998). 24 Allegations in a pro se complaint are held to “less stringent standards than formal 25 pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). Pro se 26 complaints must be liberally construed and afforded the benefit of any doubt. Hebbe v. 27 Pliler, 627 F.3d 338, 342 (9th Cir. 2010). 28 1 B. Fraud Pleading Requirements 2 Federal Rule of Civil Procedure 9(b) requires that “[i]n alleging fraud or mistake, a 3 party must state with particularity the circumstances constituting fraud or mistake.” Fed. 4 R. Civ. P. 9(b). “To satisfy the particularity of circumstances, statements of the time, place, 5 and nature of the alleged fraudulent activities are sufficient, while mere conclusory 6 allegations of fraud are not.” Arnold & Assocs., Inc. v. Misys Healthcare Sys., 275 F. Supp. 7 2d 1013, 1028 (D. Ariz. 2003). In addition to setting out the “who, what, when, where, 8 and how” of the misconduct, Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997), a 9 plaintiff must “set forth what is false or misleading” about a particular statement, “and why 10 it is false.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting 11 Decker v. GlenFed, Inc. (In re GlenFed, Inc. Sec Litig.), 42 F.3d 1541, 1548 (9th Cir. 12 1994), superseded by statute on other grounds as recognized in Avakian v. Wells Fargo 13 Bank, N.A., 827 F. App’x 765, 766 (9th Cir. 2020)). 14 II. Analysis 15 A. Previously Dismissed Claims 16 Plaintiff’s TAC reasserts several claims previously dismissed by the Court. 17 Defendant moves to dismiss these claims, arguing that Plaintiff has failed to cure the 18 deficiencies that led to the Court’s dismissal of these claims in its earlier order. (Doc. 16 19 at 3.) 20 1. Gross Negligence 21 The Court previously dismissed Plaintiff’s claim for gross negligence because 22 Plaintiff did “not allege that Defendant knew or had reason to know that his conduct would 23 create an unreasonable risk of bodily harm.” (Doc. 14 at 8); see Walls v. Ariz. Dep’t of 24 Pub. Safety, 170 Ariz. 591, 595, 826 P.2d 1217, 1221 (Ct. App. 1991). Count 2 of the 25 TAC, alleging gross negligence, is identical to the dismissed claim for gross negligence in 26 the SAC. (Doc. 15 at 8.) Plaintiff argues the allegations are sufficient because “gross 27 negligence is not limited to unreasonable risk of bodily harm but also includes 28 unreasonable risk of financial harm,” but cites no authority in support. (Doc. 17 at 2–3.) 1 Plaintiff also argues that the Court should consider the emotional harm she suffered in 2 determining whether Defendant knew or had reason to know his conduct would create an 3 unreasonable risk of bodily harm. Id. 4 Neither argument has merit. First, the Court is unaware of any cases supporting 5 Plaintiff’s proposition that gross negligence under Arizona law encompasses financial 6 harm as well as bodily harm. See, e.g., Noriega v. Town of Miami, 243 Ariz. 320, 328, 407 7 P.3d 92, 100 (Ct. App. 2017) (reaffirming the definition of gross negligence set forth in 8 Walls). Second, to the extent Plaintiff argues her emotional distress should be considered 9 bodily harm for the purposes of a gross negligence claim, her argument is not well taken. 10 Even though emotional distress may cause bodily harm, emotional distress itself is not a 11 form of bodily harm under Arizona law. See Keck v. Jackson, 122 Ariz. 114, 115–16, 593 12 P.2d 668, 669–70 (1979) (requiring, in the NIED context, that “the shock or mental anguish 13 . . . must be manifested as a physical injury” for there to be recovery, because “[d]amages 14 for emotional disturbance alone are too speculative”). Plaintiff’s claim for gross 15 negligence is dismissed. 16 2. Security and Stock Fraud, Misappropriation, Identity Theft, and 17 Wage Theft 18 Plaintiff’s claims for security and stock fraud, misappropriation, identity theft, and 19 wage theft were previously dismissed because Plaintiff did not indicate the legal basis for 20 bringing the claims. (Doc. 14 at 5.) In the TAC, Plaintiff does not identify a statutory or 21 common law basis for any of these claims, nor does she cite any cases in her response that 22 would aid the Court and the parties in identifying the legal basis for her claims. 23 Consequently, Plaintiff has not put Defendant on “fair notice of the claim asserted and the 24 ground upon which it rests” for any of these claims. Rosal v. First Fed. Bank of Cal., 671 25 F. Supp. 2d 1111, 1125 (N.D. Cal. 2009). These claims are therefore dismissed. 26 3. Breach of Fiduciary Duty 27 Plaintiff’s claim for breach of fiduciary duty was dismissed because she did “not 28 affirmatively allege a fiduciary duty.” (Doc. 14 at 6.) The claim alleged in the TAC is 1 practically identical to the claim dismissed in the Court’s prior order. (Compare Doc. 1-1 2 at 117 with Doc. 15 at 13.) As before, Plaintiff has failed to allege the existence of a 3 relationship between herself and Defendant that would have imposed a fiduciary duty on 4 Defendant. This claim is likewise dismissed. 5 4. Conversion 6 The Court dismissed Plaintiff’s claim for conversion because she did “not clearly 7 identify the chattel that she bases her conversion claim on.” (Doc. 14 at 6.) In the TAC, 8 Plaintiff specifies that the “conversions include but are not limited to; payments to 9 employees, payments on luxury goods and services, repayment of personal debts, and 10 vacations.” Under Arizona law, money may be the subject of an action for conversion only 11 if it “can be described, identified or segregated, and an obligation to treat it in a specific 12 manner is established.” Autoville, Inc. v. Friedman, 20 Ariz. App. 89, 91, 510 P.2d 400, 13 402 (1973); see also Case Corp. v. Gehrke, 208 Ariz. 140, 145–46, 91 P.3d 362, 367–68 14 (Ct. App. 2004) (allowing claim for conversion of funds to lie when plaintiff possessed a 15 security interest in the funds in question, allowing for identification of funds even when 16 commingled with other funds). Because Plaintiff has not alleged the existence of a security 17 interest or other means of describing, identifying, or segregating the monies allegedly 18 transmitted to Defendant, she has not met her burden to show that hers is not “a debt that 19 could be paid by money generally.” Case Corp., 208 Ariz. at 145, 91 P.3d at 367. 20 Plaintiff’s claim for conversion is dismissed. 21 5. Constructive Fraud 22 Plaintiff’s claim for constructive fraud was dismissed because it was “only based on 23 misrepresentations that are not sufficiently particular.” (Doc. 14 at 7.) Plaintiff’s TAC 24 adds allegations that Defendant misrepresented his marital status, and that he “made 25 numerous false representations regarding his company’s success and the truthfulness of its 26 filings,” for “the purpose of inducing the Plaintiff to rely on [his] representation.” (Doc 15 27 at 17.) However, as before, these allegations are insufficiently definite to satisfy Rule 9. 28 They do not identify particular statements that were false or misleading, nor do they 1 identify the reason any such statements were false or misleading. Plaintiff’s claim for 2 constructive fraud is dismissed. 3 6. IIED 4 In Arizona, plaintiffs must sufficiently allege three elements to plead Intentional 5 Infliction of Emotional Distress (“IIED”) claim: “first, the conduct by the defendant must 6 be ‘extreme’ and ‘outrageous’; second, the defendant must either intend to cause emotional 7 distress or recklessly disregard the near certainty that such distress will result from his 8 conduct; and third, severe emotional distress must indeed occur as a result of defendant’s 9 conduct.” Ford v. Revlon, Inc., 153 Ariz. 38, 43, 734 P.2d 580, 585 (Ariz. 1987). Conduct 10 is extreme and outrageous under Arizona law when it goes “beyond all possible bounds of 11 decency, and to be regarded as atrocious, and utterly intolerable in a civilized community 12 . . . in which . . . an average member of the community would . . . exclaim, ‘Outrageous!’” 13 Id. at 43, 734 P.2d at 585 (quoting Restatement (Second) of Torts § 46 cmt. d (Am. L. Inst. 14 1965)). The “conduct necessary to sustain an intentional infliction claim falls at the very 15 extreme edge of the spectrum of possible conduct.” Watts v. Golden Age Nursing Home, 16 127 Ariz. 255, 258, 619 P.2d 1032, 1035 (1980). It is the duty of the Court to determine 17 whether “the defendant’s conduct may reasonably be regarded as so extreme and 18 outrageous as to permit recovery.” Id. (quoting Restatement (Second) of Torts § 46 cmt. 19 h). “[A]s the terms ‘outrageous conduct’ and ‘severe emotional distress’ are not readily 20 capable of precise legal definition, a case-by-case analysis is required.” Lucchesi v. 21 Frederic N. Stimmell, M.D., Ltd., 149 Ariz. 76, 79, 716 P.2d 1013, 1016 (1986). Courts 22 should not dismiss IIED claims “if reasonable minds could differ about whether the 23 conduct is sufficiently outrageous.” Johnson v. McDonald, 197 Ariz. 155, 160, 3 P.3d 24 1075, 1080 (Ct. App. 1999). 25 The new allegations in the TAC sufficiently state a claim for IIED. Plaintiff now 26 alleges that Defendant engaged in emotionally manipulative tactics in the workplace to 27 keep Plaintiff from questioning him. (Doc. 15 at 25.) Defendant also allegedly monitored 28 Plaintiff’s private communications and interactions with others, attempted to incriminate 1 Plaintiff for his actions, “caused her lack of housing and employment, isolated her from 2 friends and family, and subjected her to long term emotional and psychological abuse.” Id. 3 Finally, Defendant allegedly interfered with Plaintiff’s “ability to refill a prescription.” Id. 4 The end goal, according to the TAC, was for Defendant to conceal his fraud by making 5 Plaintiff appear unbelievable. Id. Taken as true, Plaintiff was subjected to an array of 6 abusive behavior in an attempt to prevent her from blowing the whistle on Defendant’s 7 alleged fraud. Moreover, Defendant’s behavior, if true, cannot be ascribed to any 8 legitimate business purpose. See Mintz v. Bell Atl. Sys. Leasing Int’l, Inc., 183 Ariz. 550, 9 554, 905 P.2d 559, 563 (Ct. App. 1995) (noting that a “relevant factor” in determining 10 whether conduct is extreme and outrageous is whether the defendant had a “legitimate 11 business purpose” in acting as it did). As reasonable minds could differ about whether 12 Defendant’s conduct was extreme or outrageous, the TAC adequately alleges the first 13 element of IIED.1 14 The second and third elements are likewise satisfied. It can be inferred from the 15 complaint that Defendant intended to cause emotional distress when he attempted to 16 (1) incriminate Plaintiff, (2) cause her to lose her home, (3) isolate her from friends and 17 family, and (4) interfere with her ability to refill prescriptions. And the TAC adequately 18 alleges that Plaintiff suffered emotional distress as a result of the Defendant’s actions. 19 Plaintiff’s IIED claim remains. 20 7. Breach of Implied Covenant of Good Faith and Fair Dealing 21 In its prior Order, the Court dismissed Plaintiff’s claim for breach of the implied 22 covenant of good faith and fair dealing as time-barred. (Doc. 14 at 4.) The TAC does not 23 contain any new allegations that alter the Court’s prior analysis. This claim remains time- 24 barred and is dismissed with prejudice. 25 1 The Court held in its prior order that Plaintiff’s claim for IIED was time-barred to the extent it “is based on her interactions with Defendant” because Plaintiff did not provide 26 any basis for inferring she could not have known the basis for her IIED claim in 2017. The TAC does not state when she claims to have become aware that Defendant was responsible 27 for her loss of housing and missed prescriptions. As alleged, the Court cannot determine at the 12(b)(6) stage when Plaintiff’s claim for IIED on these new facts accrued. Therefore, 28 the Court declines to dismiss Plaintiff’s amended IIED claim on timeliness grounds at this time. 1 8. Emergency Protective Order 2 The Court previously dismissed Plaintiff’s claim for emergency protective order 3 because the appropriate avenue for seeking such relief is by motion, not through a cause of 4 action in a complaint. In her response, Plaintiff acknowledges that “this needs to be sought 5 through a motion.” (Doc. 17 at 8.) Therefore, Plaintiff’s claim for emergency protective 6 order is also dismissed. Because Plaintiff cannot plead any set of facts which would state 7 a legally sufficient claim for emergency protective order, this claim is dismissed with 8 prejudice. 9 B. Previously Limited Fraud Claims 10 The Court preserved Plaintiff’s claims for fraudulent misrepresentation, fraudulent 11 inducement, and fraudulent concealment, but only to the extent these claims were based on 12 Defendant’s representation that “all company filings were accurate.” (Doc. 14 at 7.) As 13 with Plaintiff’s claim for constructive fraud, these fraud claims are governed by Federal 14 Rule of Civil Procedure 9’s heightened pleading standard. Fed. R. Civ. P. 9(b). To prevail 15 on a common law fraud claim, Plaintiff must show: 16 (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity or ignorance of its truth; 17 (5) his intent that it should be acted upon by and in the manner reasonably contemplated; (6) the hearer’s ignorance of its 18 falsity; (7) his reliance on the truth; (8) his right to rely thereon; and (9) his consequent and proximate injury. 19 20 Peery v. Hansen, 120 Ariz. 266, 269, 585 P.2d 574, 577 (Ct. App. 1978). 21 In the TAC, Plaintiff reiterates her fraud claims on all prior bases, both dismissed 22 and retained, and also alleges an additional basis for fraud: That Defendant held himself 23 out as married to a woman identified in the TAC as “Ms. Rosen,” and that Ms. Rosen was 24 involved in making various misrepresentations about Defendant’s ventures to Plaintiff. 25 (Doc. 15 at 3, 4, 9.) However, Plaintiff does not identify with sufficient particularity the 26 specific misrepresentations made by Defendant about his marriage, when they occurred, 27 why they were misleading, and why they were false. Moreover, even if Plaintiff has 28 satisfied Rule 9(b)’s heightened pleading standard, the TAC fails to establish that these 1 misrepresentations were material, that they induced Plaintiff to invest, or that she had a 2 right to rely on these misrepresentations in making her investments. See Peery, 120 Ariz. 3 at 269, 585 P.2d at 577. Therefore, Plaintiff’s amended fraud claims must be dismissed in 4 part. Plaintiff’s claims for fraudulent misrepresentation, fraudulent inducement, and 5 fraudulent concealment remain, but only to the extent allowed by the Court’s prior order. 6 (Doc. 14 at 7.) 7 C. Previously Retained Claims 8 1. Unjust Enrichment 9 The Court previously denied Defendant’s motion to dismiss Plaintiff’s claim for 10 unjust enrichment pursuant to the economic loss doctrine. (Doc. 14 at 8.) Defendant now 11 moves to dismiss the same claim on the merits, arguing Plaintiff has failed to allege the 12 elements of the claim with the requisite specificity. (Doc. 16 at 14.) “An unjust enrichment 13 claim requires proof of five elements: ‘(1) an enrichment, (2) an impoverishment, (3) a 14 connection between the enrichment and impoverishment, (4) the absence of justification 15 for the enrichment and impoverishment, and (5) the absence of a remedy provided by 16 law.’” Wang Elec., Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 318, 283 P.3d 45, 49 17 (Ct. App. 2012) (quoting Freeman v. Sorchych, 226 Ariz. 242, 251, 245 P.3d 927, 936 (Ct. 18 App. 2011)). Plaintiff argues that Defendant unjustly enriched himself when Plaintiff 19 invested in his company because of “false and misleading statements regarding his marital 20 status and company performance along with failing to file truthfully with” the Arizona 21 Corporation Commission. (Doc. 15 at 24.) Plaintiff alleges that she invested $125,000 in 22 the company based on these representations. (Doc. 15 at 3.) 23 The TAC contains sufficient allegations to state a claim for unjust enrichment. By 24 investing $125,000, Plaintiff impoverished herself by that amount. Moreover, the TAC 25 plausibly alleges that Defendant—not his company—received this money, and used it for 26 his personal gain and enrichment. (Doc. 15 at 3.) As Plaintiff impoverished herself by 27 $125,000 to invest in a company—not to enrich Defendant personally—the TAC alleges a 28 lack of justification for the enrichment and impoverishment. Finally Plaintiff may lack an 1 adequate remedy at law. “[A] plaintiff may plead an unjust enrichment claim in the 2 alternative” when other potential grounds for recovery are disputed. SiteLock LLC v. 3 GoDaddy.com LLC, --- F. Supp. 3d. ----, 2022 WL 613226, at *16 (D. Ariz. Mar. 2, 2022). 4 As Defendant has not conceded the validity of any contract governing his relationship with 5 Plaintiff, and disputes other potential bases for liability, Plaintiff’s unjust enrichment claim 6 survives because Plaintiff may not have an adequate remedy at law. Cf. id. at *17 7 (dismissing unjust enrichment claim at summary judgment when the defendant conceded 8 that its relationship with the plaintiff was governed by a valid contract). 9 2. Defamation 10 As relevant to the defamation claim, the TAC alleges: 11 Defendant made false slanderous statements to staff, associates, contractors, and investors. These statements 12 include, but are not limited to Plaintiff’s employment status with the company, Plaintiff’s ability to perform required job 13 functions, Plaintiff’s investment status, and aspects of personal life. [Defendant] stated to employees she acted arbitrarily in 14 decisions under no guidance from [Defendant]. 15 (Doc. 15 at 27.) Defendant argues these allegations are too broad to effectively state a 16 claim, as Plaintiff is required to allege with specificity the “substance of the defamatory 17 statement.” (Doc. 16 at 17.) 18 “A defamation action compensates damage to reputation or good name caused by 19 the publication of false information.” Godbehere v. Phx. Newspapers, Inc., 162 Ariz. 335, 20 341, 783 P.2d 781, 787 (1989). To state a claim for defamation under Arizona law, a 21 plaintiff must show that the defendant (1) made a false statement, (2) published it to a third 22 party, and (3) either knew the statement was false, or acted negligently or recklessly in 23 disregard of the truth. Peagler v. Phx. Newspapers, Inc., 114 Ariz. 309, 315, 560 P.2d 24 1216, 1222 (1977); Donahoe v. Arpaio, 869 F. Supp. 2d 1020, 1061 (D. Ariz. 2012). 25 Under the Federal Rules of Civil Procedure, a “plaintiff cannot plead a defamation 26 claim by simply alleging that defamatory or libelous statements were made.” Stoyanof v. 27 Crocodiles Not Waterlilies, L.L.C., Civ. No. 11-00384 HWG, 2011 WL 13232088, at *5 28 (D. Ariz. June 23, 2011). While defamatory statements need not be set forth verbatim in 1 the complaint, they must be “‘specifically identified,’ such that the ‘defendant may 2 adequately defend itself.’” Ultimate Creations, Inc. v. McMahon, No. CV-06-0535-PHX- 3 ROS, 2007 WL 9735048, at *2 (D. Ariz. Feb. 5, 2007) (quoting Silicon Knights, Inc. v. 4 Crystal Dynamics, Inc., 983 F. Supp. 1303, 1314 (N.D. Cal. 1997)). Flowers v. Carville 5 held that a complaint adequately stated a claim for defamation when it listed “the precise 6 statements alleged to be false and defamatory, who made them and when,” even though it 7 only alleged “the required state of mind generally.” 310 F.3d 1118, 1131 (9th Cir. 2002). 8 By contrast, the Stoyanof court found insufficient an allegation that the defendant made 9 “false, derogatory, or maliciously critical” statements “concerning, but not limited to, [the 10 plaintiffs’] responsibility for the lease of Defendants’ former facility, the use of money 11 invested by others in [the plaintiffs’ business venture], and allegations of securities fraud,” 12 and did not allege “when or how these alleged defamatory statements were made.” 13 Stoyanof, 2011 WL 13232088, at *5. 14 Like in Stoyanoff, the TAC in this case makes “generalized allegations regarding 15 [Defendant]’s alleged defamatory statements.” Id. It does not “specify when or how these 16 alleged defamatory statements were made,” and lacks specifics as to the content of the 17 statements at issue. Id. Therefore, Plaintiff’s defamation claim is insufficiently specific, 18 and is dismissed pursuant to Rule 12(b)(6). Because Plaintiff represents in her Response 19 that she possesses greater detail about this claim that she is willing to adduce at a later stage 20 in the proceedings, she is permitted to amend this claim to plead it with greater specificity. 21 D. New Claims 22 1. Promissory Estoppel 23 “[P]romissory estoppel rests upon a promise to do something in the future . . . and 24 is to be applied . . . if injustice can be avoided [o]nly by enforcement of the promise.” 25 Trollope v. Koerner, 106 Ariz. 10, 18, 470 P.2d 91, 99 (1970). It requires “a justifiable 26 right to rely on the part of the representee or promisee.” Id. 27 Plaintiff claims she had a justifiable right to rely on Defendant’s representation that 28 he would “return the Plaintiff’s and any investors [sic] funds upon request,” and that he 1 supported this representation by giving examples of times in the past when he returned an 2 investment upon request. (Doc. 15 at 12.) Defendant argues it was unreasonable to rely 3 on this representation because “[a] reasonable person knows that investments involve risk, 4 and a ‘promise’ that an investment will reap high returns cannot amount to more than a 5 prediction.” (Doc. 16 at 10 (quoting Zowine v. Prussin, No. CV-14-00892-PHX-GMS, 6 2016 WL 558550, at *8 (D. Ariz. Feb. 12, 2016)).) However, Zowine is distinguishable 7 from the instant case. In Zowine, the representation at issue was an assurance that an 8 investment would be successful. Zowine, 2016 WL 558550, at *8. The TAC alleges, by 9 contrast, that Defendant represented he would return Plaintiff’s investment upon request, 10 and that he had done so in the past for others. (Doc. 15 at 12.) While a promise of future 11 investment success is inherently speculative, a promise to refund an investment on request 12 is fully within the control of the promisor. As alleged, Plaintiff had a justifiable right to 13 rely on Defendant’s promise to refund her investment given Defendant’s representations 14 about his past conduct in similar situations. Plaintiff’s claim for promissory estoppel 15 survives. 16 2. Alter Ego 17 Plaintiff’s claim for alter ego must be dismissed because it fails to state a claim for 18 which relief can be granted. Fed. R. Civ. P. 12(b)(6). Under Arizona law, an alter ego 19 claim “is not itself a cause of action,” but rather a tool by which to ascribe liability to an 20 individual or entity for the actions of a separate corporate entity. Specialty Cos. Grp., LLC 21 v. Meritage Homes of Ariz., Inc., 251 Ariz. 365, 367, 492 P.2d 308, 310 (2021); Airbus DS 22 Optronics GmbH v. Nivisys LLC, 183 F. Supp. 3d 986, 990 (D. Ariz. 2016) (“Arizona does 23 not recognize piercing the corporate veil or alter ego as an independent cause of action.”). 24 As Plaintiff has not asserted claims against any corporate entities, her claim for alter ego 25 does not state a claim for relief. 26 3. Quantum Meruit 27 Quantum meruit is “the measure of damages imposed when a party prevails on the 28 equitable claim of unjust enrichment.” W. Corrs. Grp., Inc. v. Tierney, 208 Ariz. 583, 590, 1 96 P.3d 1070, 1077 (Ct. App. 2004). Both sides agree that Plaintiff’s derivative claim for 2 quantum meruit therefore rises and falls with Plaintiff’s claim for unjust enrichment. (Doc. 3 16 at 12); (Doc. 17 at 15.) Because the unjust enrichment claim is not subject to dismissal 4 at this time, the claim for quantum meruit survives too. 5 4. Theft 6 Theft is not a civil cause of action. See Ariz. Rev. Stat. § 13-1802. As Plaintiff can 7 plead no set of facts that would establish civil liability for theft, this claim is dismissed with 8 prejudice. 9 5. Intentional Interference with Economic Advantage 10 Under Arizona law, a plaintiff asserting a claim of intentional interference with 11 economic advantage must allege “(1) the existence of a valid business expectancy; (2) the 12 interferer’s knowledge of the business expectancy; (3) the interferer intentionally induced 13 or caused termination of the business expectancy; and (4) damage suffered as a result of 14 termination of the business expectancy.” Dube v. Likins, 216 Ariz. 406, 412, 167 P.3d 93, 15 99 (Ct. App. 2007). To adequately allege the first element, “there must be a colorable 16 economic relationship between the plaintiff and a third party with the potential to develop 17 into a full contractual relationship.” Id. at 414, 167 P.3d at 101 (quoting Haw. Med. Ass’n 18 v. Haw. Med. Serv. Ass’n, 148 P.3d 1179, 1217–18 (Haw. 2006)). 19 The TAC alleges several possible economic relationships for the purposes of this 20 claim. First, it alleges that an economic relationship was created between Defendant and 21 Plaintiff when Defendant advised Plaintiff to prepare to move from Minnesota to Arizona 22 in the summer of 2017. (Doc. 15 at 26.) This economic relationship was then disrupted 23 when Defendant told Plaintiff to stay in Minnesota on the day before her scheduled move. 24 Id. This allegation cannot give rise to liability because it does not show that Defendant 25 interfered with Plaintiff’s relationship with a third party that had the “potential to develop 26 into a full contractual relationship.” Dube, 216 Ariz. at 414, 167 P.3d at 101. The relevant 27 relationship, as alleged, was between Plaintiff and Defendant. 28 However, the TAC also alleges that Defendant’s representations induced Plaintiff 1 to break her lease and leave her job. (Doc. 15 at 26.) These are relevant relationships with 2 third parties, which the TAC plausibly alleges Defendant had knowledge of. The TAC 3 alleges that Defendant intended to “render the Plaintiff homeless and unemployed,” and 4 that Plaintiff suffered damages as a result. The TAC’s allegations about Defendant’s 5 interference with Plaintiff’s lease and employment in Minnesota are sufficient to state a 6 claim for intentional interference with economic advantage. Defendant’s motion is denied 7 as to this claim. 8 6. Intrusion Upon Seclusion 9 Arizona follows the Restatement (Second) of Torts for claims of intrusion upon 10 seclusion. Hart v. Seven Resorts, Inc., 190 Ariz. 272, 279, 947 P.2d 846, 853 (Ct. App. 11 1997). According to the Restatement, 12 One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or 13 concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a 14 reasonable person. 15 Restatement (Second) of Torts § 652B. The TAC alleges that “Defendant and/or 16 accomplices intentionally hacked into the Plaintiff’s personal email accounts and possibly 17 the Plaintiff’s cloud account,” that the intrusion was offensive, and caused “a great deal of 18 stress and anguish.” (Doc. 15 at 27.) The basis for this claim, according to the TAC, is 19 Plaintiff’s belief, “based on assertions by the Defendant, that the Defendant and / or a 20 co-conspirator have hacked into her personal email accounts.” (Doc. 15 at 4.) Plaintiff’s 21 allegations are threadbare and fail to provide sufficient factual specificity to raise her claim 22 for relief “above the speculative level.” Twombly, 550 U.S. at 555. As the Supreme Court 23 has repeatedly held, “naked assertions devoid of further factual enhancement” are 24 insufficient to state a claim for relief. Iqbal, 556 U.S. at 678 (cleaned up). The TAC offers 25 no details about when this intrusion took place, how Plaintiff became aware of it, or why 26 she believes an intrusion happened in the first place. Nor can the Court consider the 27 additional factual allegations contained in Plaintiff’s response, as the Court is limited to 28 considering the TAC on a motion to dismiss. Plaintiff’s claim for intrusion upon seclusion 1 is dismissed, with leave to amend should Plaintiff wish to plead additional facts to support 2 her claim. 3 7. Civil Conspiracy 4 To state a claim for civil conspiracy under Arizona law, a plaintiff must allege that 5 (1) two or more persons, (2) agreed to accomplish either (3) an unlawful purpose, or (4) a 6 lawful object by unlawful means. Rowland v. Union Hills Country Club, 157 Ariz. 301, 7 306, 757 P.2d 105, 110 (Ct. App. 1988). Civil conspiracy is a derivative tort that requires 8 underlying tortious conduct for liability to attach. Id.; see also Tovrea Land & Cattle Co. 9 v. Linsenmeyer, 100 Ariz. 107, 131, 412 P.2d 47, 63 (1966) (noting that civil conspiracy is 10 not a standalone cause of action). “[N]ot all members of a conspiracy need be named 11 defendants for one member to be found liable.” Rowland, 157 Ariz. at 306, 757 P.2d at 12 110. 13 The TAC alleges that Defendant conspired with Ms. Rosen to defraud Plaintiff by 14 obtaining an investment from her under false pretenses. (Doc. 15 at 29.) However, as 15 discussed above, Plaintiff’s allegations about Ms. Rosen’s actions are insufficient to state 16 a claim for fraud under Rule 9(b) of the Federal Rules. Therefore, the civil conspiracy 17 claim, as derivative of Plaintiff’s fraud claims, is likewise insufficient. 18 E. Leave to Amend 19 When a court grants a Rule 12(b)(6) motion to dismiss, but a defective complaint 20 can be cured, a plaintiff is ordinarily entitled to amend the complaint before the action is 21 dismissed. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000); see also Fed. R. Civ. P. 22 15(a) (“The court should freely give leave [to amend] when justice so requires.”). Rule 23 15’s policy favoring amendment “should be applied with extreme liberality,” DCD 24 Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987), especially when a plaintiff 25 is pro se. Lopez, 203 F.3d at 1130–31. Leave to amend should be withheld, however, if 26 “amendment: (1) prejudices the opposing party; (2) is sought in bad faith; (3) produces an 27 undue delay in litigation; or (4) is futile.” AmerisourceBergen Corp. v. Dialysist W., Inc., 28 465 F.3d 946, 951 (9th Cir. 2006). Because amendment would be futile as to Plaintiff’s || claims for theft, breach of the implied covenant of good faith and fair dealing, and || emergency protective order, those claims are dismissed with prejudice. As to all other || dismissed claims, Plaintiff is granted leave to amend her complaint in a manner consistent 4|| with this Order. 5 CONCLUSION 6 IT IS ORDERED that Defendant’s Motion to Dismiss (Doc. 16) is GRANTED in part and DENIED in part as follows: 8 1. Counts 18, 23, and 26 are dismissed with prejudice. 9 2. Counts 2, 6, 7, 8,9, 10, 11, 14, 15, 21, 22, and 24 are dismissed with leave to amend. 10 3. Counts 1, 3, 5, and 20 remain as limited by this order. 11 4. Counts 4, 12, 13, 16, 17, 19, and 25 remain as pled. 12 IT IS FURTHER ORDERED granting Plaintiff leave to amend her complaint in 13 || a manner consistent with this Order. Plaintiff will have thirty days from the date of this order to file a Fourth Amended Complaint. 15 Dated this 24th day of May, 2022. 16 “) 7 Mersey Bette! 18 Chief United States District Judge 19 20 21 22 23 24 25 26 27 28 -17-