(PS) Malik v. Malik
2:23-cv-01344
| E.D. Cal. | May 17, 2024Background
- Dr. Ghaus Malik, a retired physician, alleges that his sons, Farhan and John Malik, unlawfully dissolved their family almond orchard LLC (GPM), misappropriated the proceeds from a $7.2 million sale, and conspired with financial advisor Robin Arias and Wells Fargo to do so.
- Malik claims he lost control over the LLC’s funds after his sons allegedly transferred money out of the LLC accounts without his consent.
- Malik accuses Wells Fargo and Arias of breaching fiduciary duties and facilitating the alleged theft, but only seeks relief from Wells Fargo.
- Malik’s amended complaint asserts claims for fraud, breach of fiduciary duty, elder abuse, and civil conspiracy, requesting over $50 million in damages.
- Defendants moved to dismiss the complaint under Rule 12(b)(6) for failure to state a claim and on jurisdictional grounds, arguing inadequate factual and legal pleading and lack of federal diversity jurisdiction due to speculative damages.
- The court granted the motions to dismiss, but gave Malik leave to amend due to his pro se status, specifying that any amended complaint must cure the deficiencies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Failure to state a claim | Maliks, Arias, and Wells Fargo committed fraud and conspiracy by misappropriating LLC funds | Complaint lacks specific legal claims or supporting facts | Dismissed; factual allegations insufficient under Rule 8 and 12(b)(6) |
| Breach of fiduciary duty | Arias and Wells Fargo breached duties by authorizing illicit fund transfers | No facts establishing fiduciary relationship or breach | Dismissed; insufficient factual allegations |
| Civil conspiracy | Malik brothers and Arias/Wells Fargo conspired to hide theft of funds | No agreement or overt acts sufficiently alleged | Dismissed; insufficient factual allegations |
| Diversity jurisdiction | Amount in controversy ($50 million) sufficient | Damages claim is speculative and not in good faith | Dismissed; complaint does not establish diversity jurisdiction |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (sets standard for pleading factual matter sufficient to state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (explains plausibility requirement in federal pleadings post-Twombly)
- Haines v. Kerner, 404 U.S. 519 (pro se complaints are to be liberally construed)
- Lopez v. Smith, 203 F.3d 1122 (leave to amend must be freely given, especially for pro se plaintiffs)
- Kantor v. Wellesley Galleries, Ltd., 704 F.2d 1088 (diversity jurisdiction strictly construed; amount in controversy must have good faith basis)