Fairway Restaurant Equipment Contracting, Inc. v. Makino
2:13-cv-02155
D. Nev.Apr 8, 2015Background
- Fairway obtained a $650,000 state-court judgment (2009) against Makino Premium Outlet LV, LLC (Makino Premium), which remained unpaid.
- Makino Premium filed Chapter 11 in 2012 (converted to Chapter 7) while Fairway’s execution on assets was ongoing; Fairway alleges defendants diverted assets to frustrate collection.
- Defendants include Kaku Makino and others; Makino is not alleged to own Makino Premium but licensed his trade name and had alleged access to funds via Zebra Moon, LLC (managed by a non-party, Naoyuki Kuroda).
- Fairway identifies specific transfers and distributions from Makino Premium (e.g., $151,201 and $191,803 in 2009–2010), mortgage and car payments, and other insider payments it contends were fraudulent transfers.
- Fairway pleaded causes of action including fraudulent transfer, intentional interference, unjust enrichment, constructive trust, civil conspiracy, and accounting; Makino moved to dismiss for lack of subject-matter jurisdiction and for failure to state a claim.
- The court found diversity jurisdiction satisfied (amount in controversy > $75,000) but concluded Fairway’s complaint did not plead Makino’s personal involvement in the alleged fraudulent transfers with Rule 9(b) particularity; the court granted leave to amend and denied the 12(b)(6) dismissal as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (diversity) | The action arises from a $650,000 unpaid judgment and specific transfers exceeding $75,000, so amount-in-controversy satisfied | Amount-in-controversy not sufficiently alleged | Court: Diversity satisfied; amount in controversy pled in good faith (denied dismissal) |
| Sufficiency of fraud-based allegations under Rule 9(b) | Complaint alleges a unified course of fraudulent transfers and identifies specific sums and transactions | Complaint fails to plead with particularity Makino’s role in transfers (who, when, how, amount) | Court: Claims sound in fraud; plaintiff failed to plead Makino’s personal participation with required particularity |
| Failure to state a claim under Rule 12(b)(6) | Complaint states plausible claims based on alleged transfers and conspiracy | Facts insufficient to show Makino’s liability | Court: Dismissal for failure to state a claim denied as moot because plaintiff is granted leave to amend |
| Leave to amend (Rule 15 / Local Rule compliance) | Requests leave to amend to cure specificity defects | Opposing brief offered limited substantive defense; argued procedural shortcomings | Court: Grant leave to amend despite plaintiff’s procedural noncompliance (sua sponte waiver of LR 15-1) and order amended complaint within 14 days |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts plausibly suggesting liability)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (two-step plausibility/legal-conclusion analysis for motions to dismiss)
- Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089 (9th Cir. 2003) (diversity jurisdiction requires complete diversity and amount-in-controversy threshold)
- Crum v. Circus Circus Enters., 231 F.3d 1129 (9th Cir. 2000) (amount in controversy normally determined from the complaint)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (fraud-based claims or those grounded in a unified fraudulent course must satisfy Rule 9(b))
- Starr v. Baca, 652 F.3d 1202 (9th Cir. 2011) (post-Iqbal pleading standard and need for factual allegations to give fair notice)
- Cafasso v. U.S. ex rel. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) (fraud allegations must be both particular and plausible)
- Foman v. Davis, 371 U.S. 178 (1962) (liberal standard for granting leave to amend)