1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division BENJAMIN L. TOMPKINS (Cal. Bar No. 305024) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6165 Facsimile: (213) 894-0115 E-mail: Benjamin.tompkins@usdoj.gov Attorneys for United States of America UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION SERGIO SALVADOR BONILLA, et al., Plaintiffs, v. JOSE EULOGIO BONILLA, et al., Defendants. Case No. 8:17-cv-00578-JLS-JEM DEFENDANT UNITED STATES OF AMERICA’S MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR PARTITION OF PARTNERSHIP BUSINESSES IN KIND; and [PROPOSED] ORDER ATTACHED Hon. JOSEPHINE L. STATON Hearing: June 9, 2017 at 2:30 p.m. Courtroom 10A Ronald Reagan Federal Building and United States Courthouse 411 W. 4th St. Santa Ana, CA 92701 PLEASE TAKE NOTICE that defendant United States of America, pursuant to Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 1 of 14 Page ID #:584 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Rules 12(b)(1), (6) and (7) of the Federal Rules of Civil Procedure, hereby requests that the Court dismiss Plaintiffs case for lack of jurisdiction, failure to state a claim and/or failure to join an indispensable party. Specifically, (i) Plaintiffs’ partition claims are not ripe so long as the three businesses are under the control of a receiver, (ii) Plaintiffs failed to include all of the allegations required for a partition of a partnership interest under California Code of Civil Procedure § 872.730 and (iii) this Court cannot adjudicate Plaintiffs’ claims without adding the state court Receiver, Bellann Raile, who operates the three businesses that are subject to the partition action as a defendant. In effect, this lawsuit is an attempt to circumvent the authority of the court-appointed Receiver. This motion is based upon this notice and the complete files and records of this action, the attached Memorandum of Points and Authorities, and the documents previously filed into the record by Bohm, Matsen, Kegel & Aguilera.1 [Dkts. 1-1, 10, 12 & 13.] On May 5, 2017, in accordance with Local Rule 7-3, undersigned counsel for the United States conducted a teleconference with Plaintiffs’ counsel. The parties were unable to resolve their respective differences regarding the reasons the United States seeks to dismiss Plaintiffs’ first amended complaint. Finally, please take notice that this matter will come on for hearing on June 9, 2017 at 2:30 p.m., or as soon thereafter as the matter may be heard by the Honorable Josephine L. Staton, United States District Court Judge, in Courtroom 10A, located at 411 W. 4th St., Santa Ana, California 92701. 1 The United States joins in the request for judicial notice to the materials attached to the Motion to Dismiss filed by Bohm, Matsen, Kegel and Aguilera [Dkts. 10, 12 & 13.] Fed. R. Evid. 201. Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 2 of 14 Page ID #:585 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Respectfully Submitted, SANDRA R. BROWN United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division Dated: May 12, 2017 /s/ BENJAMIN L. TOMPKINS Assistant United States Attorney Attorneys for Defendant United States of America Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 3 of 14 Page ID #:586 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. Introduction Pursuant to Fed. R. Civ. P. 12(b)(1), (6), and (7), this Court should dismiss Plaintiffs’ first amended complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. Plaintiffs filed suit seeking the partition of Sergio Salvador Bonilla’s (“Sal”), Jose Luis Bonilla’s (“Louie”), and Luis Alfred Bonilla’s (“Alfred”) (collectively the Bonilla brothers) undivided ownership interests in El Toro Market, El Toro Tortilleria, and El Toro Liquor. Both the Plaintiffs and Defendants have been involved in litigation related to these entities for years and each of these businesses has been under the control of the state court appointed Receiver (Bellann Raile) since September 2011, without the day-to-day involvement of the Bonilla brother. As made clear in paragraphs 12 and 13 of the first amended complaint, this lawsuit represents an attempt by the Plaintiffs to circumvent the control of the Receiver by first convincing a court to partition the ownership interests in these three businesses, rather than first obtaining the removal of the receiver. [Dkts. 10 & 13 (detailing past actions by the Plaintiffs to challenge the receiver).] Even if the Receiver’s fees are excessive, the time- period to repay the judgment creditors debts will take six years and she has failed to make payments towards their tax liabilities on the ongoing profits, this Court cannot decide those issues. Furthermore, to consider those arguments in favor of the partition would be to second guess and interfere with the actions taken by the Receiver under the control of the state court. Instead, Plaintiffs should dismiss this action without prejudice and move the state court to remove the receiver and/or challenge those actions or inactions in that forum. Because the Plaintiffs refuse to dismiss their amended complaint and any partition claims are not ripe while these businesses remain under the control of the state court, this Court should dismiss Plaintiffs’ amended complaint for lack of jurisdiction since their claims are not yet ripe.2 As a result, because this Court cannot decide Plaintiffs’ partition 2 The United States was not a party to the state court action. The government was a defendant in a declaratory judgment action brought by the receiver that went to trial in January 2015 and is further described below. Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 4 of 14 Page ID #:587 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 claims while a receiver appointed by the state court remains in place, this Court should dismiss this action for lack of subject matter jurisdiction. If the Court concludes that these claims are ripe, this Court should still dismiss the amended complaint for failure to join an indispensable party with leave to add the receiver as a defendant. II. Factual Allegations and Procedural History On March 29, 2007, Jose Eulogio Bonilla (Joe) commenced an action in the Orange County Superior Court against Juan Carlos Bonilla (John), Jose Luis Bonilla (Louie), and Sergio Salvador Bonilla (hereinafter Sal), regarding the El Toro businesses. Bonilla v. Bonilla, Case No. 07CC04418 (O.C. Sup. Ct. 2007) (the “Ownership Action” and the court is referred to as the state court). [Am. Compl. at ¶ 10; see also Dkt. 13-1 (exhibits referencing the state court action and includes a copy of the complaint).] Luis Alfred Bonilla (Alfred) was later named as a defendant. [Id.] Joe Bonilla was represented by Artists Village Law Group (Artists Village), Hess-Verdon & Associates (Hess-Verdon), and Bohm, Matsen, Kegel & Aguilera, LLP (BMKA). [Id.] On June 3, 2011, Joe Bonilla prevailed against John, Louie, Sal and Alfred, and was awarded a judgment in the amount of $3,371,765.98, plus costs and legal fees, plus post-judgment interest at the rate of ten percent per year. [Am. Compl. at ¶ 11; see also Dkt. 1-1, Ex. 5.] The Court entered the judgment against Louie, Sal, Alfred and John. [Id.] The Court also determined the respective ownership of the El Toro Businesses as follows: Joe - 20%; Alfred - 20%; Louie - 30%; Sal - 30%; and John - 0%. [Id. at ¶¶ 7 & 8; Dkt. 1-1, Ex. 5.] On July 18, 2011, Joe Bonilla filed a motion for an order to charge the partnership interests in the El Toro Businesses of Louie, Sal, Alfred and John with Joe’s Judgment. [Dkt. 13-1, copies of relevant state court actions.] On September 6, 2011, this Court granted Joe’s Charging Order motion and appointed a receiver to take over the businesses, and the receiver has been running these businesses under the oversight of the state court. [Id. at ¶ 11; see also Dkt. 13-1, copy of the September 6, 2011 Charging Order; Dkt. 1-1, Ex. 6 (Sept. 6, 2011 Order appointing the receiver).] In appointing the Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 5 of 14 Page ID #:588 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 state court receiver, the state court provided the receiver with powers that included the following: 6. The Receiver shall establish a priority of payments by the business including the payment first of all fees and expenses incurred by the receiver in carrying out her duties, second to the operating expenses of the business and third to the payment of any taxes that if not paid would form the basis for a lien on the business; 7. The Receiver shall take possession of, collect, sell and/or preserve property as necessary to satisfy the outstanding judgment; 8. The Receiver shall take possession of the share of the distributions due or to become due to the judgment debtors in respect of the businesses and shall distribute those funds to the judgment creditor until the outstanding judgment is satisfied in accordance with any charging order issued by this Court; 9. The Receiver shall establish internal controls to assure the assets of the business are being safeguarded, properly handled and accounted for…. [September 6, 2011 Order appointing the receiver, Dkt. 1-1, Ex. 6.] As Receiver, the Receiver filed suit against several defendants, including the United States, seeking to determine the priority of the judgment liens that attached to the interests of the partners. [Dkt. 13-1 at 60 (Ex. H - Complaint for Declaratory Relief), Raile, et al., v. Bonilla, et al., Case No. 30-2013-00629722.] After a January 2015 trial, the state court determined that the United States’ lien had first priority vis-à-vis the interests of Sal and Louie. [Dkt. 13-1 at 77, July 2015 judgment.] The United States did not assert a claim against Joe or Alfred. In compliance with the July 2015 judgment, the partnership profits for Sal and Louie have been paid to the United States. By sometime in 2018, the tax liens against Sal and Louie should be satisfied (with the liens against Sal possibly satisfied in 2017 if the Receiver continues to make regular quarterly payments). After removing this case to federal court, the United States now moves to dismiss this amended complaint. The Receiver continues to operate these three businesses under the supervision of the state court and continues to distribute the Bonilla brothers’ share of the profits in accordance with the court’s July 2015 judgment. This Court should dismiss Plaintiffs’ amended complaint, because any partition claim is not ripe as long as Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 6 of 14 Page ID #:589 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the Receiver remains in place and continues to operate the businesses. III. ARGUMENT A. Applicable Standards Federal courts are courts of limited jurisdiction, and may adjudicate only those cases authorized by the Constitution and by Congress. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994); Attorneys Tr. v. Videotape Computer Products, Inc., 93 F.3d 593, 594-95 (9th Cir. 1996). In this case, this Court should dismiss Plaintiff’s claim because they cannot establish that their claims are ripe. Furthermore, this Court should dismiss Plaintiffs’ claims based upon principles of comity where the assets that Plaintiffs seek to partition are under the control of a receiver appointed by the state court. A complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While Rule 8 does not require “detailed factual allegations,” it requires “more than an unadorned, the defendant- unlawfully -harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plaintiff cannot meet his burden with (i) ‘“labels and conclusions,’” (ii) ‘“a formulaic recitation of the elements of a cause of action. . .,’” or (iii) “‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 & 557 (2007)). Instead, the complaint must contain sufficient factual matter that if accepted as true could have a facial plausibility that the defendant is liable for the alleged misconduct. See id. A Rule 12(b)(6) motion to dismiss tests the formal sufficiency of a statement of claim for relief. A complaint may be dismissed as a matter of law for failure to state a claim for two reasons: (1) lack of a cognizable legal theory; or (2) insufficient facts under a cognizable legal theory. See Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990) (as amended). In determining whether the complaint states a claim on which relief may be granted, its allegations of material fact must be taken as true and construed in the light most favorable to plaintiffs. See Love v. United States, 915 F.2d Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 7 of 14 Page ID #:590 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1242, 1245 (9th Cir. 1990) (as amended); see also Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. Further, since Plaintiff is appearing pro se, the Court must construe the allegations of the complaint liberally. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam); see also Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010) (as amended). A Rule 12(b)(7) motion determines whether a plaintiff has failed to bring suit against an indispensable party under the requirements outlined in Rule 19. In deciding a Rule 12(b)(7) motion, the Court looks at (1) whether the absent party is necessary (i.e., required to be joined if feasible) under Rule 19(a); (2) if so, whether it is feasible to order that absent party to be joined; and (3) if joinder is not feasible, whether the case can proceed without the absent party, or whether the absent party is indispensable such that the action must be dismissed. See Salt River Project Agric. Improv. & Power Dist. v. Lee, 672 F.3d 1176, 1179 (9th Cir. 2012). “The Ninth Circuit has held that a court should grant a 12(b)(7) motion to dismiss only if the court determines that joinder would destroy jurisdiction and the nonjoined party is necessary and indispensable.” Biagro W. Sales Inc. v. Helena Chem. Co., 160 F.Supp.2d 1136, 1141 (E.D. Cal. 2001) (citing Shermoen v. United States, 982 F.2d 1312, 1317-18 (9th Cir. 1992)). The moving party has the burden to prove whether the party is indispensible. Id.; see also Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir.1990). B. Plaintiffs’ Partition Claims should be Dismissed for Lack of Jurisdiction and/or Failure to State a Claim 1. California Partition Law Under California law, the right to partition concurrent property interests is a matter of right unless barred by waiver or altered by agreement. See Cal. Code Civ. Proc. (“CCCP”) § 872.710; see also 14859 Moorpark Homeowner’s Ass’n v. VRT Corp., 74 Cal. Rptr. 2d 712, 717 (1998) (“the term partition encompasses division of interests by judicial action and by voluntary agreement of the parties”). This right is governed by Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 8 of 14 Page ID #:591 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 principles of equity and fairness. See Elbert, Ltd., v. Federated Income Prop., 261 P.2d 743, 745 (1953); Am. Med. Int’l, Inc., v. Feller, 131 Cal. Rptr. 270, 274 (1976). However, an exception to this general rule is the partition of partnership interests. See CCCP § 872.730. For the partition of partnership interests, the Court must determine that partition would be “a suitable remedy” and would not prejudice the rights of unsecured creditors of the partnership. Id. Courts have interpreted this to mean that partition would be an appropriate remedy if the partnership affairs are sufficiently settled and what remains is the division or sale of property. 2. Plaintiffs’ Partition Claims are not Ripe Plaintiffs cannot meet their burden to establish that their claims are ripe - that they are definite and concrete as opposed to hypothetical or abstract - when these businesses remain under the control and operation of a state court appointed receiver. A complaint can be dismissed for lack of subject matter jurisdiction where the claims are not ripe. See Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). “Whether a claim is ripe for adjudication goes to the court's subject matter jurisdiction under the case or controversy clause of article III of the federal Constitution.” St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). “Like other challenges to a court's subject matter jurisdiction, motions raising the ripeness issue are treated as brought under Rule 12(b)(1) even if improperly identified by the moving party as brought under 12(b)(6).” Id. “When subject matter jurisdiction is challenged under Federal Rule of Procedure 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion.” Tosco Corp. v. Cmtys. for a Better Env't., 236 F.3d 495, 499 (9th Cir. 2001), abrogated on other grounds by Hertz Corp. v. Friend, 559 U.S. 77, 130 S. Ct. 1181, 175 L. Ed. 2d 1029 (2010). “Ripeness has both constitutional and prudential components.” Wolfson v. Brammer, 616 F.3d 1045, 1058 (9th Cir. 2010). “Whether framed as an issue of standing or ripeness, the inquiry is largely the same: whether the issues presented are definite and concrete, not hypothetical or abstract.” Id. (internal quotation marks omitted). Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 9 of 14 Page ID #:592 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In this case, the state court previously divided the partner’s interest in the three businesses. [Am. Compl. at ¶10; Dkt. 1-1, Ex. 5 (copy of June 2011 judgment).] Now, Plaintiffs seek a separation of the businesses so that each partner would in essence receive a separate business to run, even though the Receiver is running those businesses and each individual brother’s share of the profits is being distributed in accordance with the state court’s July 2015 Judgment. [Dkt. 13-1 (copy of July 2015 Judgment).] In this respect, it is unclear if Plaintiff is seeking a partition of two of the businesses for the Plaintiffs and one of the businesses for Jose Bonilla or some other combination. This Court should dismiss Plaintiffs’ amended complaint for lack of jurisdiction where their claims are not yet ripe. This Court cannot partition the three businesses when they are under the control of the Receiver and under the supervision of the state court that has been overseeing the receiver for almost six years. In order to determine whether Plaintiffs are entitled to a partition, the Court would necessarily need to decide the role of the receiver, whether it would make sense to separate out these businesses and whether such a partition would interfere with the current business operations. While Plaintiffs may disagree with the fees and costs paid by the Receiver and the Receiver’s failure to pay the income tax liability resulting from their share of the partnership profits, this Court would not be the proper forum to decide any challenges to those expenditures. Regardless of the factual questions surrounding (i) whether that would be an appropriate partition, (ii) the businesses’ value and (iii) whether any of the creditors would be prejudiced through such a partition, Plaintiffs claims are not ripe so long as the state court’s September 2011 order appointing the receiver remains in force. Dismissing Plaintiffs’ claims for lack of jurisdiction is consistent with other courts that have addressed similar issues. In Sherburne v. Miami Coal Co., the Indiana Court of Appeals dismissed a stockholder’s partition claim for lack of jurisdiction where the plaintiff sought the sale of a company’s real estate in order to satisfy his lien where the business was under the control of a receiver in another court. 37 N.E. 2d 12, 17 (Ind. Ct. Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 10 of 14 Page ID #:593 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 App. Oct. 23, 1941). Applying principles of concurrent jurisdiction, the court dismissed the case under the rule of comity finding “it seems to be well established that where two courts having concurrent jurisdiction of actions involving different issues, but affecting the same res, that court which first gains possession of the res will retain jurisdiction thereover, and retain it to the end. See id. (citing Farmers’ Loan etc. Co. v. Lake St. Rd. Co., 177 U.S. 51, 61 (1900) (providing examples of this jurisdictional issue)). In support of its opinion, the court held that the federal district court that appointed the receiver had constructive possession of the assets that the plaintiff sought to partition and that “it is elementary that such possession cannot be disturbed, except by the permission of said court, until the receivership of the Miami Coal Company is fully administered and the jurisdiction of the court involved fully exhausted.” Id. at 18. See also Riehle v. Margolies, 279 U.S. 218, 224 (1929) (“[o]f course, no one can obtain any part of the assets, or enforce a right to specific property in the possession of a receiver, except upon application to the court which appointed him”). Furthermore, in Percy v. Suchar, Civil No. 00-191-P-C, 2001 U.S. Dist. LEXIS 26764, at *12 (D. Maine March 8, 2001), the district court ruled that a partition action was not ripe where there was an ownership dispute over the commercial fishing boat at issue. While there is not an ongoing ownership dispute, there is a dispute about the role of the receiver, especially when the state court provided her specific enumerated powers, including the power to sell the businesses that Plaintiffs seek to partition. In this case, the Plaintiffs’ Amended Complaint does not deny that the Receiver is operating the three businesses at issue, has the power to sell the businesses that Plaintiffs seek to partition and the authority to distribute profits to satisfy two of their judgment liens. Furthermore, while Plaintiffs claim in paragraph 16 that they bring this action for the common benefit of the parties, they fail to allege that this would not interrupt or interfere with the Receiver’s operation of the businesses, especially when she has paid in total several million dollars to the secured creditors, including the United States. As such, because granting the Plaintiffs’ partition claims would impact the Receiver’s Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 11 of 14 Page ID #:594 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 running of these businesses, any attempts by the Receiver to sell these businesses and the distribution of the profits that are sanctioned by Court’s July 2015 Judgment, this Court should dismiss Plaintiffs’ claims as unripe until they either obtain an order removing the receiver and/or receive an order from the state court that pursuing a partition action would not interfere with the ongoing activities of the receiver. 3. Plaintiff’s claims fail to satisfy the requirements of CCP § 872.730 Plaintiffs’ Amended Complaint is entitled “First Amended Complaint for Partition of Partnership Businesses in Kind.” Previously, as alleged in the First Amended Complaint, the state court found that a valid partnership agreement existed, awarded a judgment in favor of one of the Bonilla brothers and then ordered that a receiver should run the businesses for the benefit of Jose Eulogoi Bonilla and the other creditors. [E.g., Dkt. 1-1.] While CCP §872.730 allows for the partition of partnership interests, the statute requires that the Plaintiffs specifically establish that the partnership’s unsecured creditors will not be prejudiced. While Plaintiffs named as Defendants the secured creditors of the individual partners, including the United States, the Franchise Tax Board and certain law firms, and alleged that the partition of these three businesses will be in their best interests, Plaintiffs fail to allege that the requested partition will not prejudice the partnership’s unsecured creditors. Indeed, Plaintiffs only references CCP § 872.140 that allows a partition based upon principles of equity and CCP § 873.260 that Plaintiffs assert would permit the Court to find that certain liens of the individual partner are charged against that individual partner’s interest, presumably a specific company. Furthermore, while paragraph 8 includes allegations related to DOES 1 through 100, that paragraph does not allege that those unknown individuals are unsecured creditors and does not allege that they not be prejudices. As such, Plaintiffs partition action fails to state a claim upon which relief may be granted. Cfri Nca Palladium Venture LLC v. Nca Argyle LP, Case No. BC412918, 2010 Cal. Super. LEXIS 1501, at *5-*6 (LA Super. Ct., Jan. 8, 2010) (expunged notice of lis pendens when plaintiff could not establish that partnership’s Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 12 of 14 Page ID #:595 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 unsecured creditors would not be prejudiced through partition). C. If the Amended Complaint is not Dismissed, the Court should Order the Joinder of the Receiver under Fed. R. Civ. P. 19(a) Under Fed. R. Civ. P. 19(a)(1), a person must be joined as a party if “[i]n that person’s absence, the court cannot accord complete relief among existing parties.” In this case, assuming the Court does not otherwise dismiss Plaintiffs’ amended complaint, it should order that Plaintiffs add the Receiver as a Defendant. The Receiver is a necessary party since she operates the three businesses at issue, has the authority to sell the businesses and has the discretion to determine how much money should be paid to the judgment creditors. [Dkt. 13-1, Sept. 2011 Receiver Order.] Furthermore, as provided in the September 2011 receiver appointment order, the Receiver has an interest in these businesses in that the state court ordered her to continue to operate these businesses using her business judgment to the benefit of the Defendants, as well as the Plaintiffs. The Receiver also has the explicit authority to sell the businesses at issue. Thus, without the addition of the Receiver, her interest may be impaired or impeded since her interests will not necessarily be adequately represented by the other Defendants. Next, this Court can order Plaintiffs to add the Receiver as a defendant since she is subject to service of process and does not deprive the Court of jurisdiction as long as the United States remains a defendant. Because complete relief cannot be granted without adding the Receiver as a defendant, especially as it concerns the equitable and fairness determinations that are required for any partition order, this Court should order the Plaintiffs to amend their complaint to add the Receiver. Fed. R. Civ. P. 19(a)(1). If Plaintiffs do not comply, this Court should dismiss Plaintiffs’ amended complaint for failure to join an indispensable party. IV. CONCLUSION For the foregoing reasons, this Court should dismiss the Plaintiffs’ amended complaint for lack of jurisdiction and/or failure to state a claim upon which relief may be Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 13 of 14 Page ID #:596 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 granted. In the alternative, if the Court does not dismiss Plaintiffs’ claims, the Court should order that Plaintiffs add the state court appointed Receiver (Bellann Raile) as a Defendant. Respectfully submitted, SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division Dated: May 12, 2017 /s/ BENJAMIN L. TOMPKINS Assistant United States Attorney Attorneys for the United States of America Case 8:17-cv-00578-JLS-JEM Document 19 Filed 05/12/17 Page 14 of 14 Page ID #:597 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division BENJAMIN L. TOMPKINS (Cal. Bar No. 305024) Assistant United States Attorney Federal Building, Suite 7211 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-6165 Facsimile: (213) 894-0115 E-mail: Benjamin.tompkins@usdoj.gov Attorneys for United States of America UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION SERGIO SALVADOR BONILLA, et al., Plaintiffs, v. JOSE EULOGIO BONILLA, et al., Defendants. Case No. 8:17-cv-00578-JLS-JEM [proposed] ORDER UNITED STATES OF AMERICA’S MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT After consideration of the Defendant United States of America’s motion to dismiss, the remainder of the record, and for good cause shown, the Court determines that this Court lacks jurisdiction to decide at this time Plaintiffs Sergio Salvador Bonilla’s, Jose Luis Bonilla’s and Luis Alfred Bonilla’s first amended complaint for partition of partnership businesses in kind. Furthermore, because any amendment would be futile, the Court denies the Plaintiff the opportunity to file a second Case 8:17-cv-00578-JLS-JEM Document 19-1 Filed 05/12/17 Page 1 of 2 Page ID #:598 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 amended complaint. As such, the case against all of the defendants will be dismissed without prejudice for lack of jurisdiction. IT IS SO ORDERED. Date: JOSEPHINE L. STATON United States District Judge Respectfully presented by, SANDRA R. BROWN Acting United States Attorney THOMAS D. COKER Assistant United States Attorney Chief, Tax Division /s/ BENJAMIN L. TOMPKINS Assistant United States Attorney Attorneys for Defendant United States of America Case 8:17-cv-00578-JLS-JEM Document 19-1 Filed 05/12/17 Page 2 of 2 Page ID #:599
