Teed v. Chen ( 2023 )

1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 10 RICHARD BURDEN TEED, Case No. 22-cv-02862-CRB 11 Plaintiff, ORDER GRANTING MOTION TO 12 v. DISMISS 13 JAMES “JIMMY” CHEN, et al., 14 Defendants. 15 Plaintiff Richard Burden Teed (“Teed”) brings breach of contract, fraud, negligent 16 misrepresentation, conversion, replevin, breach of fiduciary duty, violation of 17 C.F.R. 17 § 1.20(a), fraudulent solicitation, and negligence claims against Defendants James 18 “Jimmy” Chen and Chen Trading Management, LLC (together, “Chen”), for allegedly 19 mismanaging Teed’s Bitcoin. FAC (dkt. 34). Teed alleges that Chen fraudulently induced 20 Teed’s Bitcoin investment and failed to uphold promises to repay that investment. Id. 21 Chen moves to dismiss Teed’s claims for fraud, negligent misrepresentation, 22 replevin, and Securities Act violation for failure to state a claim under Federal Rule of 23 Civil Procedure 12(b)(6). Mot. (dkt. 38). Teed opposed the motion. Opp’n (dkt. 42). 24 Chen replied. Reply (dkt. 43). Because Teed fails to state each of the challenged claims, 25 the Court GRANTS Chen’s motion to dismiss. 26 I. BACKGROUND 27 Teed alleges the following: 1 with Chen’s opportunity fund, the Silverstream Opportunity Fund, LLC. FAC ¶ 29. Teed 2 received a Silverstream Opportunity Fund booklet that represented that “Silverstream is a 3 fully-liquid fund. Limited Partners are able to withdraw capital anytime. There are no 4 hard lockups.” Id. ¶¶ 37–38. 5 Chen purported to be skilled in cryptocurrency management and trading, 6 representing that he was earning 400% returns on his Bitcoin investments by using a 7 “magic box” algorithm that could time cryptocurrency transactions to maximize returns on 8 investment. Id. ¶¶ 33–34. Chen also sent Teed screenshots showing investment returns of 9 28% for April 2019 and 41% for the preceding seven months. Id. ¶ 35. Moreover, Chen 10 emphasized his impending partnership with Bill Barhydt, the CEO of Abra, a well-known 11 expert of Internet and Mobile Technologies. Id. ¶ 36. 12 Trusting in Chen’s apparent expertise, Teed liquidated 90 Bitcoins and transferred 13 the funds to Chen for investing and trading on Teed’s behalf. Id. ¶ 43. Teed then 14 entrusted an additional $250,000 (worth about 45 Bitcoins) to Chen for the same purpose. 15 Id. ¶ 49. 16 After receiving Teed’s funds, however, Chen did not purchase any Bitcoins for 17 weeks. Id. ¶ 50. During this time, the purchase price of Bitcoin rose from around $4,000 18 per Bitcoin to over $7,500 per Bitcoin. Id. ¶ 51. Eventually, Chen purchased an 19 unspecified amount of Bitcoin with Teed’s money at the price of $7,500 per Bitcoin. Id. 20 ¶ 52. 21 Dissatisfied with the timing and price of Chen’s Bitcoin purchase, Teed demanded 22 the return of his money. Id. ¶ 53. But Chen did not repay Teed. Id. Instead, Chen offered 23 to place Teed’s funds into arbitrage to “maintain safe trades and get back the lost Bitcoin.” 24 Id. ¶ 54. 25 A. March 2021 Investment Management Agreement 26 On March 3, 2021, Teed and Chen entered into an Investment Management 27 Agreement (“Investment Agreement”). Id. ¶ 58; id. Ex. D (dkt. 34-4). The Investment 1 the custody and management of Teed’s Bitcoin. Id. ¶ 59; id. Ex. D. at 1. 2 Teed authorized the deposit of 94 Bitcoins into the Account. Id. ¶ 60. The 3 Investment Agreement authorized Teed to “withdraw all or any portion of the assets in the 4 Account upon one (1) business day prior written notice to [Chen Trading Management, 5 LLC], and the amount so withdrawn shall be immediately distributed to [Teed] by [Chen 6 Trading Management, LLC] to the wallet set forth in such written notice.” Id. ¶ 61; id. Ex. 7 D. at 1. All of Teed’s Bitcoin would remain in the Account and would not be “distributed, 8 exchanged, sold or otherwise transferred or assigned, in whole or in part, to any other 9 wallet or account, except in connection with a termination of [the] Agreement . . . or with 10 prior written consent of [Teed].” Id. ¶¶ 56–57; id. Ex. D. at 5. 11 On June 15, 2021, the Investment Agreement expired. Id. ¶ 64. Chen had not paid 12 any Bitcoins to Teed. Id. ¶¶ 65–70. 13 On June 18, 2021, Chen emailed Teed acknowledging that Chen was “in default” 14 and “had every intention to pay back the 106 [Bitcoin] that [wa]s in default alongside any 15 penalties that w[ould] be mutually discussed later on.” Id. ¶ 66; see id. Ex. A (dkt. 34-1) at 16 3. On June 19, 2021, Chen emailed Teed again, saying that Chen was “willing to do 17 whatever it takes to make [Teed] whole, and [would] be working 24/7 . . . to make sure it 18 happen[ed].” Id. ¶ 60; see id. Ex. B. (dkt. 34-2) at 3. 19 Teed asserts that Chen did not take any steps to “make [him] whole.”1 Id. ¶ 69. 20 Instead, Chen claimed that he sent Teed’s Bitcoin overseas to a Chinese citizen named 21 “Max,” who was refusing to return the Bitcoin. Id. ¶ 121. Chen provided Teed with 22 screenshots of this alleged transfer. Id. ¶ 122. 23 B. September 2021 Settlement Agreement 24 Then, on September 7, 2021, Teed and Chen entered into a Settlement and Release 25 Agreement (“Settlement Agreement”), which established a schedule for Chen’s repayment 26 27 1 Teed emphasized that Chen’s “displays of extravagance”—living in a lavish house in the Bay 1 of Teed’s Bitcoin. Id. ¶ 74; id. Ex. C. (dkt. 34-3). The Settlement Agreement also set 2 contingencies for late payments and non-payment. Id. ¶ 77; id. Ex. C. at 3. 3 Chen did not make any payments under the payment plan. Id. ¶ 78. As of 4 November 2022, Chen owed Teed a total of 136.5 Bitcoins, the value of which is more 5 than $5.1 million. Id. ¶ 155. Under the terms of the Settlement Agreement, the amount 6 owed continually increases with every payment milestone that Chen misses.2 Id. Ex. C. at 7 4. 8 C. Teed’s Allegations 9 Teed brings eleven causes of action against Chen: (1) breach of the March 2021 10 Investment Agreement, id. ¶¶ 87–95; (2) breach of the September 2021 Settlement 11 Agreement, id. 96–102; (3) fraud, id. 103–33; (4) negligent misrepresentation, id. ¶¶ 134– 12 53; (5) conversion, id. ¶¶ 154–59; (6) replevin, id. ¶¶160–70; (7) breach of fiduciary duty, 13 id. ¶¶ 171–77; (8) violation of 17 C.F.R. § 1.20(a), id. ¶¶ 178–81; (9) fraudulent 14 solicitation in violation of 7 U.S.C. §§ 9(1), 25(A)(1)(B), (C)(IV), and Rule 180.1, id. 15 ¶¶ 182–89; (10) fraudulent solicitation in violation of Securities 5 and 12(a)(1) of the 16 Securities Act, id. ¶¶ 190–99; and (11) negligence, id. ¶¶ 200–07. 17 The Court previously granted Chen’s motion as to fraud and violations of the 18 Commodity Exchange Act and Securities Act, with leave to amend; granted Chen’s motion 19 as to claim and delivery, without leave to amend; and denied Chen’s motion as to breach 20 of contract and conversion. Teed v. Chen, No. 22-cv-02862-CRB, 2022 WL 16839496, at 21 *1 (N.D. Cal. Nov. 9, 2022). Teed amended his complaint, renewing all the claims he was 22 able to under the prior order, and added new claims for negligent misrepresentation and 23 replevin without the Court’s leave. FAC ¶¶ 134–59. 24 Chen moves to dismiss Teed’s claims for fraud, negligent misrepresentation, 25 26 2 The Settlement Agreement sets the following requirement: “[I]f, for any reason, timely payment 27 in full as outlined above . . . does not occur, the entirety of the balance 121.6 Bitcoin less any Bitcoin payment timely made shall be immediately due and owing by Chen to Teed without 1 replevin, and Securities Act violation (claims 3, 4, 6, and 10, respectively). Chen does not 2 move to dismiss Teed’s claims for breach of contract (claims 1 and 2), conversion (claim 3 5), breach of fiduciary duty (claim 7), violation of 17 C.F.R. § 1.20(a) (claim 8), fraudulent 4 solicitation in violation of 7 U.S.C. §§ 9(1), 25(A)(1)(B), (C)(IV), and Rule 180.1 (claim 5 9), and negligence (claim 11). See Mot.3 6 II. LEGAL STANDARD 7 A complaint may be dismissed for failure to state a claim for which relief may be 8 granted. Fed. R. Civ. P. 12(b)(6). Rule 12(b)(6) applies when a complaint lacks either a 9 “cognizable legal theory” or “sufficient facts alleged” under such a theory. Godecke v. 10 Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019). Whether a complaint contains 11 sufficient factual allegations depends on whether it pleads enough facts to “state a claim to 12 relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 13 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible 14 “when the plaintiff pleads factual content that allows the court to draw the reasonable 15 inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. 16 “Threadbare recitals of the elements of a cause of action, supported by mere conclusory 17 statements, do not suffice” to survive a 12(b)(6) motion. Id. (citing Twombly, 550 U.S. at 18 555). When evaluating a motion to dismiss, the Court “must presume all factual 19 allegations of the complaint to be true and draw all reasonable inferences in favor of the 20 nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). 21 However, the Court is “not bound to accept as true a legal conclusion couched as a factual 22 allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986); Clegg v. Cult Awareness 23 Network, 18 F.3d 752, 754–55 (9th Cir. 1994). 24 25 3 Chen also argues that Teed’s claims should be barred by the doctrine of judicial estoppel. See Mot. at 9–10. Judicial estoppel does not apply here, because an “amended complaint supersedes 26 the original complaint, and the original complaint is treated as non-existent.” Burchfield v. Corel Corp., No. 13-CV-02025-LHK, 2013 WL 12120088, at *1 (N.D. Cal. Sept. 12, 2013) (citations 27 and quotation marks omitted). “Any motion to dismiss attacking an original complaint when an amended complaint has been filed is moot.” Id. Because Teed’s FAC supersedes his original 1 If a court dismisses a complaint for failure to state a claim, it should “freely give 2 leave” to amend “when justice so requires.” Fed. R. Civ. P. 15(a)(2). But leave to amend 3 “is not to be granted automatically.” In re W. States Wholesale Nat. Gas Antitrust Litig., 4 715 F.3d 716, 738 (9th Cir. 2013). A court has discretion to deny leave to amend due to 5 “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to 6 cure deficiencies by amendment previously allowed, undue prejudice to the opposing party 7 by virtue of allowance of the amendment, [and] futility of amendment.” Leadsinger, Inc. 8 v. BMG Music Publ’g, 512 F.3d 522, 532 (9th Cir. 2008) (citing Foman v. Davis, 371 U.S. 9 178, 182 (1962)). To determine whether amendment would be futile, courts examine 10 whether the complaint can be amended to cure the defect requiring dismissal “without 11 contradicting any of the allegations of [the] original complaint.” Reddy v. Litton Indus., 12 Inc., 912 F.2d 291, 296–97 (9th Cir. 1990). 13 III. DISCUSSION 14 The Court discusses the claims in the following order: fraud (claim 3), negligent 15 misrepresentation (claim 4), replevin (claim 6), and fraudulent solicitation in violation of 16 Sections 5 and 12(a)(1) of the Securities Act (claim 10). 17 A. Fraud (Claim 3) 18 Teed alleges that Chen is liable for fraud for using false representations to induce 19 Teed into investing money and Bitcoin with Chen and to induce him into signing the 20 Investment and Settlement Agreements. FAC ¶¶ 103–33. Chen argues that Teed fails to 21 allege claims with sufficient particularity under Rule 9(b). Mot. at 5, 7–10.4 22 23 4 Chen makes three additional arguments, all without merit: (1) Teed inappropriately uses screenshots; (2) Teed’s claims are contradicted by the exhibits; and (3) given that Teed is a 24 “sophisticated business person,” he cannot plausibly plead justifiable reliance on Chen’s false representations. Reply at 7–9. First, Teed does not inappropriately use screenshots, because the 25 screenshots form the basis of his complaint and are subject to incorporation by reference. Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1002 (9th Cir. 2018). Second, Chen’s argument that 26 the exhibits contradict Teed’s claim is irrelevant. Chen argues that Teed’s allegation that Chen “did nothing for weeks” after receiving $250,000 from Teed is contradicted by Exhibit D (the 27 Investment Agreement), which gives Chen wide discretion in managing Teed’s money. Reply at 9–10. However, this is not relevant to Teed’s claim for fraud, which alleges that Chen made false 1 In the Court’s prior order on Chen’s first motion to dismiss, the Court held that 2 Teed’s allegations did not meet the particularity requirements of Rule 9(b), because “Teed 3 omitted the context(s) in which Chen made the allegedly false or misleading statements, 4 and the reasons that those statements were false.” Teed, 2022 WL 16839496, at *8. A 5 plaintiff must allege facts concerning the time and place of the alleged fraudulent activity. 6 Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007); Vess v. Ciba-Geigy Corp. USA, 7 317 F.3d 1097, 1106 (9th Cir. 2003). Moreover, to allege fraud with sufficient 8 particularity under Rule 9(b), “[t]he plaintiff must set forth what is false or misleading 9 about a statement, and why it is false.” In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 10 (9th Cir. 1994) (en banc). 11 Teed did not materially alter his fraud allegation in the amended complaint to 12 “allege facts concerning the circumstances of the alleged fraud, and why Chen’s 13 statements were false when made,” as instructed by the Court in its prior order. Teed, 14 2022 WL 16839496, at *8–9; compare Compl. (dkt. 1) ¶ 98 (alleging that Chen made false 15 representations “in and throughout September of 2019”), with FAC ¶ 104 (alleging that 16 Chen made false representations “in and throughout August and September 2019”), and 17 Compl. ¶ 103 (alleging that “Defendants, knowing their above-described representations to 18 be false, made them with the intent to deceive and defraud Teed to act in reliance”), with 19 FAC ¶ 105 (alleging that “[u]pon information and belief, these representations were 20 intentionally false and designed to induce Teed to invest with Defendants”). Teed failed to 21 specify when these false representations were made5 and failed to provide the context 22 explaining why Chen’s statements were false at the time they were made.6 23 24 relied on Chen’s false representations, based on Chen’s claimed skills, connections, and success. FAC ¶ 105. 25 5 The Court’s prior order confirms that Chen making statements “‘[i]n and throughout September 2019’ are insufficiently particular to satisfy Rule 9(b).” Teed, 2022 WL 16839496, at *8; see also 26 Glen Holly Ent., Inc. v. Tektronix, Inc., 100 F. Supp. 2d 1086, 1094 (C.D. Cal. 1999) (stating that “allegations such as ‘[d]uring the course of discussions in 1986 and 1987’ and ‘in or about May 27 through December 1987’ do not make the grade under Rule 9(b)”). 6 Teed alleges that “upon information and belief,” Defendants’ representations were “intentionally 1 Accordingly, Teed has not sufficiently alleged the “who, what, when, where, and 2 how” of his fraud claim. See Vess, 317 F.3d at 1106. The Court GRANTS Chen’s motion 3 to dismiss Teed’s claim for fraud without leave to amend.7 4 B. Negligent Misrepresentation (Claim 4) 5 Chen moves to dismiss Teed’s claim for negligent misrepresentation, because the 6 Court did not give Teed leave to amend his complaint to add a new cause of action. Mot. 7 at 10–11. Teed argues that the Court, by allowing Teed to amend his complaint, did not 8 explicitly state that he could not bring new causes of action in the amended pleading. 9 Opp’n at 18. 10 The Court’s prior order granted Teed leave to amend his claim for fraudulent 11 inducement, so that he “may allege facts concerning the circumstances of the alleged 12 fraud” and explain “why Chen’s statements were false when made.” Teed, 2022 WL 13 16839496, at *8. The Court specifically set these limitations in granting leave to amend. 14 Teed, however, without leave of the Court or Chen’s written consent, added this claim for 15 negligent misrepresentation. Fed. R. Civ. P. 15(a)(2). As such, the Court strikes Teed’s 16 claim for negligent misrepresentation, because the Court did not give Teed leave to add 17 this new claim. See, e.g., Saloojas, Inc. v. Cigna Healthcare of California, Inc., No. 22-cv- 18 03270-CRB, 2023 WL 1768117, at *3 (N.D. Cal. Feb. 3, 2023) (striking a new claim 19 because the court did not give plaintiff leave to amend to add new claims). 20 Even if the Court had allowed Teed to add this new claim for negligent 21 misrepresentation, the claim would still fail to meet Rule 9(b)’s particularity requirements. 22 “[N]egligent misrepresentation is a species of fraud.” Gilmore v. Wells Fargo Bank N.A., 23 75 F. Supp. 3d 1255, 1269 (N.D. Cal. 2014). While there is no binding authority in the 24 Ninth Circuit as to whether the particularity requirements of Rule 9(b) apply to negligent 25 26 these allegations are “conclusory statements” that do not satisfy the requirements of Rule 12(b)(6). See Iqbal, 556 U.S. at 678. 27 7 The Court’s prior order granted leave to amend so that Teed may allege facts concerning the circumstances of the alleged fraud and why Chen’s statements were false when made. Because 1 misrepresentation claims, the Court has recently applied the particularity requirements of 2 Rule 9(b) to negligent misrepresentation claims. See Chevron Prods. Co. v. Advanced 3 Corrosion Techs. & Training, LLC, No. 20-CV-90905-CRB, 2021 WL 2156467, at *3–4 4 (N.D. Cal. May 27, 2021). Because Teed’s negligent misrepresentation claim, like Teed’s 5 fraud claim, fails to specify when Chen made these false representations and why Chen’s 6 representations were false when made, it fails to satisfy Rule 9(b). 7 Therefore, the Court strikes Teed’s claim for negligent misrepresentation. 8 C. Replevin (Claim 6) 9 Teed alleges that Chen wrongfully detained his 136.5 Bitcoins by failing and 10 refusing to return them upon demand. FAC ¶¶ 165–66. Teed demands the Bitcoin to be 11 immediately returned under this claim for replevin. Id. ¶ 169. Chen argues that his claim, 12 like Teed’s claim for negligent misrepresentation, also violated Federal Rule of Civil 13 Procedure 15, because Teed added this claim without leave of Court. Mot. at 12. 14 The Court’s prior order granted Chen’s motion to dismiss Teed’s claim for claim 15 and delivery without leave to amend, because amendment would be futile. Teed, 2022 WL 16 16839496, at *10. Despite this, Teed amended his complaint to add a similar claim for 17 replevin, demanding that Chen immediately return his Bitcoin. FAC ¶¶ 160–70. At the 18 outset, as discussed above, this new claim exceeds the scope of leave to amend granted by 19 the Court in its prior order. Teed, 2022 WL 16839496, at *8–10, 12. Because the Court 20 did not give Teed leave to amend this claim, like Teed’s claim for negligent 21 misrepresentation, this claim should also be stricken. 22 However, even if this claim did not exceed the scope of leave to amend previously 23 granted, Teed nonetheless fails to state a claim for replevin. Under California law, a 24 plaintiff filing a claim for replevin seeks to recover wrongfully seized property. Benedict 25 v. Hewlett-Packard Co., No. 13-CV-00119-LHK, 2014 WL 234218, at *9 (N.D. Cal. Jan. 26 21, 2014). The plaintiff “never ceases to claim the property as his own, but seeks to obtain 27 it rather than its value.” Harris v. Dixon Cadillac Co., 132 Cal. App. 3d 485, 490 (1982) 1 at the beginning of the action, or that defendant had the power to make delivery of the 2 property. Cal. Packing Corp. v. Stone, 64 Cal. App. 488, 492 (1923). However, Teed 3 alleges that Chen sent Teed’s Bitcoin to “Max,” a Chinese citizen residing in China. FAC 4 ¶ 71. Max allegedly refuses to return the Bitcoin, which means that Chen did not have 5 possession of Teed’s property at the beginning of this action and Chen does not have the 6 power to make delivery. Id. Teed argues that “[t]o the best knowledge, information, and 7 belief,” Chen is detaining his property for his own personal gain. Id. ¶ 165. But based on 8 his allegations regarding Max, this assertion is speculative and does not meet the elements 9 of replevin. 10 As a result, the Court strikes Teed’s claim for replevin.8 11 D. Fraudulent Solicitation in Violation of Sections 5 and 12(a)(1) of the Securities Act (Claim 10) 12 Teed alleges that Chen violated Sections 5 and 12(a)(1) of the Securities Act by 13 “fail[ing] to file with the SEC a registration statement for the offer and sale of Bitcoin 14 pursuant to the investment contract, no registration statement was in effect at the time, and 15 no exemption to the registration requirement was available.” FAC ¶ 198. Teed further 16 alleges that his invested monies and Bitcoin qualify as securities within the meaning of the 17 Securities Act. FAC ¶¶ 192–95. 18 Chen argues that the Court should dismiss Teed’s Securities Act claim because 19 Teed fails to plead a “common enterprise” under the Howey test.9 Mot. at 13. In response, 20 Teed points out that by failing to maintain his assets in a separate wallet and by pooling the 21 monies together, Chen’s actions reflect horizontal commonality. Opp’n at 17. 22 23 24 8 Although Teed requests that the Court grant leave to amend nunc pro tunc to November 30, 2022 for his claims for negligent misrepresentation and replevin, this request is misplaced. Reply at 19. 25 Nunc pro tunc “may be used only where necessary to correct a clear mistake and prevent injustice.” United States v. Sumner, 226 F.3d 1005, 1009–10 (9th Cir. 2000). It is limited to 26 “making the record reflect what the . . . court actually intended to do at an earlier date, but which it did not sufficiently express or did not accomplish due to some error or inadvertence.” Id. 27 Because the Court is not correcting an earlier ruling, nunc pro tunc does not apply, and Teed’s request is denied. 1 The Court previously granted Chen’s motion to dismiss with leave to amend, 2 because Teed failed to allege any facts to establish a “common enterprise” between the 3 parties. Teed, 2022 WL 16839496, at *11. Teed did not allege facts showing horizontal 4 commonality (such as “‘pool[ing] their investments together and split[ting] the net 5 profits’”) or vertical commonality (such as facts showing that “his and Chen’s fortunes 6 were linked”). Teed, 2022 WL 16839496, at *12 (quoting Hocking v. Dubois, 839 F.2d 7 560, 566 (9th Cir. 1988)). 8 Teed again has not alleged sufficient facts for horizontal or vertical commonality in 9 the FAC. Teed has alleged that, under the Investment Agreement, Chen promised to keep 10 Teed’s Bitcoin in a “separate wallet.” FAC ¶¶ 59; 140. Although Teed alleges that Chen 11 did not maintain Teed’s assets in a separate wallet and instead pooled the monies together, 12 Teed does not allege facts showing that Teed and Chen “split the net profits.” Id. ¶¶ 45, 13 140; Opp’n at 17. Additionally, Teed has not alleged sufficient facts to show that his and 14 Chen’s fortunes were linked (i.e., no vertical commonality): the amended complaint does 15 not contain any facts concerning Chen’s compensation for managing Teed’s Bitcoin, and 16 the Investment Agreement expressly provides that “[Chen Trading Management, LLC,] 17 shall not be entitled to any compensation or fees in connection with the services provided . 18 . . hereunder other than the release [of claims] by [Teed].” FAC Ex. D. at 4; see S.E.C. v. 19 R.G. Reynolds Enters. Inc., 952 F.2d 1125, 1130 (9th Cir. 1991). Thus, the amended 20 complaint and the Investment Agreement do not allege sufficient facts to plead that the 21 Bitcoin transactions between Teed and Chen were an “investment contract” under the 22 Securities Act. 23 Accordingly, the Court GRANTS Chen’s motion to dismiss Teed’s Securities Act 24 claim, without leave to amend.10 25 26 27 10 The previous order granted Teed leave to amend so that he may allege facts concerning the “common enterprise” between the parties in their Bitcoin dealings. Because Teed still does not IV. CONCLUSION For the foregoing reasons, the Court GRANTS Chen’s motion to dismiss Teed’s 2 claims for fraud, negligent misrepresentation, replevin, and under the Securities Act. 3 IT IS SO ORDERED. 4 S& a —— Dated: February 28, 2023 5 CHARLES R. BREYER 6 United States District Judge 7 8 9 10 11 12 E 13 15 16 5 17 5 18 19 20 21 22 23 24 25 26 27 28