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North American Wellness Center v. Temecula Valley Real Estate ( 2019 )


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  •                            NOT FOR PUBLICATION                           FILED
UNITED STATES COURT OF APPEALS                        JUN 12 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NORTH AMERICAN WELLNESS                         No.    17-56497
CENTER HOLDINGS, LLC,
D.C. No.
Plaintiff-Appellant,            5:16-cv-02010-VAP-DTB
v.
MEMORANDUM*
TEMECULA VALLEY REAL ESTATE,
INC., DBA KW Commercial; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, District Judge, Presiding
Submitted June 10, 2019**
Pasadena, California
Before: WARDLAW, BYBEE, and OWENS, Circuit Judges.
North American Wellness Center Holdings, LLC (“NAWC”) appeals from
the district court’s dismissal of its complaint with prejudice under Federal Rule of
Civil Procedure 12(b)(6). As the parties are familiar with the facts, we do not
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
recount them here.1 We review the district court’s dismissal of the complaint de
novo. See Starr v. Baca,
    652 F.3d 1202
    , 1205 (9th Cir. 2011). We affirm.
1. NAWC alleges several federal securities law violations. Because each
allegation must implicate a “security,” NAWC argues that this transaction involved
an “investment contract.” We review de novo whether a transaction involves a
“security.” See Salameh v. Tarsadia Hotel,
    726 F.3d 1124
    , 1129 (9th Cir. 2013).
Even if the two agreements here – the land sale and advisory arrangement –
constituted a single transaction, see id. at 1131-32, NAWC failed to plausibly
allege the requisite expectation of profit from the efforts of others. See SEC v. W.J.
Howey Co.,
    328 U.S. 293
    , 298-99 (1946). An “investment contract” requires that
“the efforts made by those other than the investor [be] the undeniably significant
ones.” SEC v. Glenn W. Turner Enters., Inc.,
    474 F.2d 476
    , 482 (9th Cir. 1973).
NAWC does not allege that it gave up legal control over the development, nor,
even generously interpreting the complaint, that it practically lacked control over
it. See Hocking v. Dubois,
    885 F.2d 1449
    , 1460-61 (9th Cir. 1989) (en banc)
(“[T]he question of an investor’s control over his investment is decided in terms of
practical as well as legal ability to control.”). Because NAWC retained control
over almost all, if not all, of “the essential managerial efforts which affect[ed] the
failure or success of the enterprise,” Glenn W. Turner Enters., Inc.,
    474 F.2d at 
    1
We grant Appellee’s motion for judicial notice. Dkt. Nos. 19, 21.
2
483, we affirm the district court’s dismissal of the federal securities claims.
2. NAWC also alleges violations of § 1 and § 2 of the Sherman Act. Here,
too, it has insufficiently pled these claims. Regarding § 1, most consequentially,
NAWC alleged only injury to itself, not to any competition. See Brantley v. NBC
Universal, Inc.,
    675 F.3d 1192
    , 1200 (9th Cir. 2012). It “merely recite[s] the bare
legal conclusion that competition has been restrained unreasonably.”
    Id. at 1198
    (citation omitted). Similarly, NAWC’s § 2 claim fails to plausibly allege that
defendants either had the “specific intent to monopolize” or engaged in any
“anticompetitive conduct.” Alaska Airlines, Inc. v. United Airlines, Inc.,
    948 F.2d 536
    , 542 (9th Cir. 1991). Thus, we also affirm the dismissal of the antitrust claims.
3. Lastly, NAWC argues that the district court erred in denying leave to
amend its complaint. We affirm the decision to dismiss with prejudice. NAWC
had a prior opportunity to amend. See Chodos v. W. Publ’g Co.,
    292 F.3d 992
    ,
1003 (9th Cir. 2002) (explaining that a district court has broad discretion to deny
leave to amend when it previously granted this request). Moreover, allowing
NAWC another opportunity to amend would have been futile. No facts – and
NAWC did not proffer any additional facts before the district court, or on appeal –
could transform this generic real estate transaction into either a securities
transaction or an antitrust violation. See Sweaney v. Ada County,
    119 F.3d 1385
    ,
1393 (9th Cir. 1997).
3
AFFIRMED.
4