File motion to dismiss an adversary complaint for fraud in United States Bankruptcy Court

File a motion to dismiss an adversary complaint for fraud in United States Bankruptcy Court is the topic of this blog post. A motion to dismiss is generally filed on the grounds that the adversary complaint fails to state a claim.

This type of motion is often called a 12(b)(6) motion as it is based on Federal Rule of Civil Procedure 12(b)(6) (FRCP), or Federal Rule of Bankruptcy Procedure 7012(b)(6) (FRBP). A party may also request in the alternative, that the party be required to provide a more definite statement under FRCP 12(e) or FRBP 7012(e).

FRCP and FRBP 12 (e) both state in pertinent part that, "A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. The motion must be made before filing a responsive pleading and must point out the defects complained of and the details desired".

The motion for a more definite statement may be joined with the motion to dismiss pursuant to FRCP and FRBP 12(g).

Many adversary complaints filed in bankruptcy courts are made under 11 U.S.C. § 523(a)(2) on the grounds of fraudulent representations. Note that FRCP 9(b) states in pertinent part that, "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake".  The Ninth Circuit Court of Appeals has stated that this is a federally imposed requirement although the Court will examine state law to determine if the elements of fraud have been sufficiently alleged.

The reason for the particularity requirement is due to the fact that fraud is a serious charge against another party.

As the author generally works on cases from California, the great majority of the cases he works on are from one of the Districts in California, so any fraud claims would most likely be a California cause of action.

California law requires that four (4) elements be specifically pleaded in any cause of action for fraud

"A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. Every element must be specifically pleaded." Service by Medallion, Inc. v. Clorox Co. 44 Cal.App.4th 1807, 1816 (1996).

And in California, pursuant to Code of Civil Procedure § 338(d) there is a three-year statute of limitations for an action for relief on the ground of fraud or mistake. The cause of action is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.

An action based on fraud may be brought more than three years after the fraud occurred if the plaintiff shows not only that he did not discover the facts but he could not with reasonable diligence have discovered them within that time.

While leave to amend is usually granted if a motion to dismiss is successful, the Ninth Circuit has ruled that leave to amend does not need to be granted where amending the complaint would be futile, and that any discretion to deny leave to amend is particularly broad where plaintiff has previously amended their complaint. 

A motion to dismiss and/or a motion for a more definite statement are very useful when used in the right situation as many adversary complaints for fraud are filed which fail to allege the fraud with particularity, or they are so vague and ambiguous that the defendant cannot reasonably prepare a proper response.

In the author’s experience filing a motion to dismiss can be particularly useful when it is obvious that plaintiff has a weak case. This will force plaintiff to seek leave to amend. Once plaintiff has previously amended their adversary complaint some judges will deny leave to amend where the moving party can show that amendment would be futile as plaintiff cannot state a cause of action for fraud.

Attorneys or parties who would like to view a portion of a sample 10 page motion to dismiss adversary complaint for fraud in United States Bankruptcy Court containing a memorandum of points and authorities with citations to case law and statutory authority and proof of service by mail sold by the author can use the link shown below.

Sample motion to dismiss adversary complaint for fraud

 

The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

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Motion to dismiss adversary complaint for fraud in United States Bankrutpcy Court

A motion to dismiss an adversary complaint for fraud in United States Bankruptcy Court is the topic of this blog post. The motion to dismiss is generally made on the grounds that the adversary complaint fails to state a claim. This type of motion is often called a 12(b)(6) motion as it is based on Federal Rule of Civil Procedure 12(b)(6) (FRCP), or Federal Rule of Bankruptcy Procedure 7012(b)(6) (FRBP).

A party may also request in the alternative, that the party be required to provide a more definite statement under FRCP 12(e) or FRBP 7012(e).

FRCP and FRBP 12 (e) both state in pertinent part that, "A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. The motion must be made before filing a responsive pleading and must point out the defects complained of and the details desired".

The motion for a more definite statement may be joined with the motion to dismiss pursuant to FRCP and FRBP 12(g).

Most adversary complaints filed in bankruptcy courts are made under 11 U.S.C. § 523(a)(2) on the grounds of fraudulent representations. Note that FRCP 9(b) states in pertinent part that, "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake".

"It is established law, in this circuit and elsewhere, that Rule 9(b)'s particularity requirement applies to state-law causes of action. "While a federal court will examine state law to determine whether the elements of fraud have been pled sufficiently to state a cause of action, the Rule 9(b) requirement that the circumstances of the fraud must be stated with particularity is a federally imposed rule." Vess v. Ciba-Geigy Corp. 317 F. 3d 1097, 1103 (9th Cir. 2003) (internal citations omitted).

The reason for the particularity requirement is due to the fact that fraud is a serious charge against another party.

As the author mainly works on cases from California any fraud claims would most likely be a California cause of action.

California law requires that four (4) elements be specifically pleaded in any cause of action for fraud.

"A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. Every element must be specifically pleaded." Service by Medallion, Inc. v. Clorox Co. 44 Cal.App.4th 1807, 1816 (1996).

Whatever form it takes, injury or damage from fraud must not only be distinctly alleged but its causal connection with reliance on representations must be shown.... In order to recover for fraud, as in any other tort, the plaintiff must plead and prove the detriment proximately caused by the defendant's tortious conduct. Deception without resulting loss is not actionable fraud.

Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representations must be shown. Service by Medallion, Inc. at 1818.

And in California, pursuant to Code of Civil Procedure § 338(d) there is a three-year statute of limitations for an action for relief on the ground of fraud or mistake. The cause of action is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.

An action based on fraud may be brought more than three years after the fraud occurred if the plaintiff shows not only that he did not discover the facts but he could not with reasonable diligence have discovered them within that time. The complaint must set forth specifically (1) the facts of the time and manner of discovery; and (2) the circumstances which excuse the failure to have made an earlier discovery. Olson v. County of Sacramento 274 Cal.App 2d 316, 327 (1969) (internal citations omitted).

While leave to amend is usually granted if a motion to dismiss is successful, the Ninth Circuit has ruled that leave to amend does not need to be granted where amending the complaint would be futile, and that any discretion to deny leave to amend is particularly broad where plaintiff has previously amended their complaint.

Leave need not be granted where the amendment of the complaint . . . constitutes an exercise in futility," and "the district court's discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint." Ascon Properties v. Mobil Oil Co. 866 F.2d 1149, 1160 (9^thCir. 1989).

A motion to dismiss and/or a motion for a more definite statement are very useful when used in the right situation as many adversary complaints for fraud are filed but fail to allege the fraud with particularity, or they are so vague and ambiguous that the defendant cannot reasonably prepare a proper response.

Attorneys or parties in California who would like to view a portion of a sample motion to dismiss an adversary complaint can use the link shown below.

http://www.scribd.com/doc/55067234/Sample-Motion-to-Dismiss-Adversary-Complaint-for-Fraud

The author of this article, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995.  

Subscribe to his weekly newsletter with legal tips and tricks for California and Federal litigation.  http://www.legaldocspro.net/newsletter.htm

Opposing a motion to dismiss under Rule 12(b)(6)

Opposing a motion to dismiss under Rule 12(b)(6) in United States District Court is the topic of this blog post.

A Motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure as used in the Federal Courts is analogous to a general demurrer as is used in California Courts. The motion seeks to have a Complaint dismissed on the grounds that it fails to state facts sufficient to constitute a cause or causes of action. The motion to dismiss can also be used in Bankruptcy Court litigation as well.

While motions to dismiss under Rule 12(b)(6) are often filed they are rarely successful as numerous Appellate Courts have ruled that a motion to dismiss under Rule 12(b)(6) is disfavored and is rarely granted.

A motion to dismiss under Rule 12(b)(6) is disfavored and rarely granted.  Hall v. City of Santa Barbara, 833 F.2d 1270, 1274 (9th Cir. 1986) ("It is axiomatic that '[t]he motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted.'") (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure 1357, at 598.

The issue is not whether the plaintiff will prevail or not. The issue is whether the plaintiff is entitled to offer evidence in support of their claims.

The U.S. Supreme Court has stated: "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence in support of the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely, but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). Rather, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

"In reviewing the allegations, this Court construes the complaint in a light most favorable to the plaintiff, accepting all of the factual allegations as true and determines whether the plaintiff can prove no set of facts in support of his claims that would entitle him to relief." Arrow v. Fed. Reserve Bank of St. Louis, 358 F.3d 392, 393 (6th Cir. 2004).

Even a cause of action for fraud which must be specifically pleaded satisfies the particularity requirement for fraud if it identifies circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations. Deutsch v. Flannery, 823 F.2d 1361, 1365 (9th Cir.1987).

And Courts rarely grant a dismissal of a complaint without leave to amend.

"Dismissal without leave to amend is improper unless it is clear, upon de novo review, that the complaint could not be saved by any amendment." Schneider v. California DOC, 151 F.3d 1194, 1196 (9th Cir. 1998).

"Amendment should be refused only if it appears to a certainty that plaintiff cannot state a claim." Wright and Miller, Federal Practice and Procedure, vol 5A, 1357.

Attorneys or parties who wish to view a portion of a sample opposition to a motion to dismiss for sale by the author please use the link shown below.

http://www.scribd.com/doc/25605615/Sample-Opposition-to-Motion-to-Dismiss-under-Rule-12-b-6


The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal that has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

If you are in need of assistance with any California or Federal litigation matters, Mr. Burman is available on a freelance basis. Mr. Burman may be contacted by e-mail at DivParalgl@yahoo.com for more information. He accepts payments through PayPal which means that you can pay using most credit or debit cards.

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