Case 1:10-cv-00700-SOM-BMK Document 95 Filed 07/11/13 Page 1 of 11 PageID #: 450
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
CIVIL NO. 10-00700 SOM/BMK
ORDER DISMISSING COUNTS 3 AND
4 OF THE COMPLAINT WITH LEAVE
HARMER RADIO AND ELECTRONICS,
S&S FIRE APPARATUS CO., DOUG
KELLEY, CINDY VAN GORDON,
CHRISTINA OLSON, LEE FINLEY,
JOHN DOES 1-10, JANE DOES 1-
10, DOE CORPORATIONS 1-10,
DOE PARTNERSHIPS 1-10 and DOE
ORDER DISMISSING COUNTS 3 AND 4
OF THE COMPLAINT WITH LEAVE TO AMEND
On November 26, 2010, Plaintiff Harmer Radio and
Electronics, Inc., filed a complaint against Defendants S&S Fire
Apparatus Co., Doug Kelley, Cindy Van Gordon, Christina Olson,
and Lee Finley. Harmer Radio says that it contracted with S&S
for the purchase of a fire truck. Defendants Kelley, Gordon,
Olson, and Finley were employed by S&S. Harmer Radio says that,
on Defendants’ instruction, it sent S&S $350,000 for S&S to
transmit to the company that would make the fire truck chassis.
Harmer Radio alleges that S&S kept the money for itself. Harmer
Radio asserts claims of breach of contract against S&S, unjust
enrichment against S&S, fraud against all Defendants, and
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conspiracy to commit fraud against all Defendants. See ECF No.
On May 28, 2013, Kelley filed a motion to dismiss the
Complaint. See ECF No. 76. On May 30, 2013, Van Gordon filed a
motion for judgment on the pleadings. See ECF No. 78. The court
dismisses the claims of fraud and conspiracy to commit fraud
asserted in Counts 3 and 4 against Kelley and Van Gordon because
those counts fail to plead fraudulent conduct with particularity.
However, to the extent Kelley seeks dismissal of the Complaint
with prejudice for failure to timely serve the Complaint on him,
the motion is denied.
In June 2008, Harmer Radio executed a contract with the
County of Maui to provide it with a fire truck in exchange for
the payment of $565,673.64. See Complaint, ECF No. 1, ¶ 16.
Harmer Radio says it contracted with S&S for the building and
delivery of the fire truck in exchange for the payment of
$428,424. See id. ¶¶ 18, 20.
According to Harmer Radio, S&S required a deposit of
$350,000 to begin manufacturing the truck. Id. ¶ 23. Harmer
Radio says that S&S, Kelley, Van Gordon, Olson, and Finley each
told Harmer Radio that the $350,000 was needed to pay Tatra, a
Czech Republic company, to build the chassis for the fire truck.
Id. ¶ 26. The Complaint alleges that each Defendant knew that
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the representation was false but that Harmer Radio would rely on
it. Id. ¶¶ 27, 29. Harmer Radio says it paid S&S $220,000 on
April 21, 2008, and the remaining $130,000 on July 11, 2008. Id.
¶ 24. Harmer Radio alleges that Maui County subsequently
reimbursed Harmer Radio for the $350,000 deposit. Id. ¶ 25.
S&S allegedly promised Harmer Radio that the completed
fire truck would be shipped to San Diego, California, for
deployment to Hawaii on or before April 25, 2009. Id. ¶ 33.
Harmer Radio says that not only did S&S fail to deliver the fire
truck, it never even began construction of the fire truck. Id.
¶¶ 34, 35.
When Harmer Radio did not receive a fire truck from
S&S, it allegedly sought to fulfill its contract with Maui County
by purchasing the fire truck chassis from Tatra directly and
paying SVI Trucks, a Colorado-based manufacturer, to “upfit” it
to specifications. Harmer Radio says the total cost of this
truck was $469,400. Id. ¶ 36.
Harmer Radio filed the Complaint in this matter on
November 26, 2010. On July 13, 2011, Harmer Radio filed an ex
parte motion seeking leave to serve the Complaint by publication.
See ECF No. 13. That motion was granted the following day. See
ECF No. 14. Default was entered on October 4, 2011. See ECF No.
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On January 18, 2012, Harmer Radio filed a motion for
default judgment. See ECF No. 27. On August 29, 2012, the
Magistrate Judge assigned to this case issued Findings and a
Recommendation that the motion for default judgment be granted
(“F&R”). See ECF No. 35.
However, on September 12, 2012, Defendant Lee Finley
filed a motion to dismiss for lack of personal jurisdiction and
lack of service of process, as well as a motion to set aside the
entry of default. See ECF Nos. 36 and 41. On November 6, 2012,
a stipulation to set aside the entry of default with respect to
Finley was filed. See ECF No. 53. All claims asserted against
Finley were then dismissed with prejudice. See ECF No. 54.
On December 19, 2012, this court rejected the F&R,
reasoning that once Harmer Radio had the ability to contact
Finley, it might be able to locate other Defendants. See ECF No.
56. Having been subsequently located, Kelley and Van Gordon have
now responded to the claims against them by filing separate
Under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a party “may assert the following defense by motion:
. . . (6) failure to state a claim upon which relief can be
granted[.]” Dismissal under Rule 12(b)(6) may be based on
either: (1) lack of a cognizable legal theory, or
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(2) insufficient facts under a cognizable legal theory.
Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.
1988) (citing Robertson v. Dean Witter Reynolds, Inc., 749 F.2d
530, 533-34 (9th Cir. 1984)).
All allegations of material fact are taken as true and
construed in the light most favorable to the nonmoving party.
Fed’n of African Am. Contractors v. City of Oakland, 96 F.3d
1204, 1207 (9th Cir. 1996). Conclusory allegations of law,
unwarranted deductions of fact, and unreasonable inferences are
insufficient to defeat a motion to dismiss. Sprewell, 266 F.3d
at 988; Syntex Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir.
“[T]o survive a Rule 12(b)(6) motion to dismiss,
factual allegations must be enough to raise a right to relief
above the speculative level, on the assumption that all the
allegations in the complaint are true even if doubtful in fact.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks omitted); accord Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (“the pleading standard Rule 8 announces does not
require ‘detailed factual allegations,’ but it demands more than
an unadorned, the-defendant-unlawfully-harmed-me accusation”).
“While a complaint attacked by a Rule 12(b)(6) motion
to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the ‘grounds’ of his
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‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550 U.S. at 555. The
complaint must “state a claim to relief that is plausible on its
face.” Id. at 570. “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 677. “Naked assertions
devoid of further factual enhancement” that suggest only a “mere
possibility of misconduct” are not enough to state a claim for
relief. Id. at 698. Additionally, “[t]hreadbare recitals of
elements of a cause of action supported by mere conclusory
statements” do not suffice. Id. at 679.
The Complaint Does Not Allege Fraud With
The court grants Kelley’s motion to dismiss and Van
Gordon’s motion for judgment on the pleadings with respect to the
fraud and conspiracy to commit fraud claims asserted in Counts 3
and 4 of the Complaint. With respect to those claims, the
Complaint fails to meet the heightened pleading requirement of
Rule 9(b) of the Federal Rules of Civil Procedure
, which requires
a party to “state with particularity the circumstances
constituting fraud or mistake.”
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Allegations of fraud must be “specific enough to give
defendants notice of the particular misconduct which is alleged
to constitute the fraud charged so that they can defend against
the charge and not just deny that they have done anything wrong.”
Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001). A
party alleging fraud must therefore “set forth more than the
neutral facts necessary to identify the transaction.” Kearns v.
Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). Fraud
claims must allege the “time, place, and specific content of the
false representations as well as the identities of the parties to
the misrepresentation.” Edwards v. Marin Park, Inc., 356 F.3d
1058, 1066 (9th Cir. 2004). In other words, “[a]verments of
fraud must be accompanied by the who, what, when, where, and how
of the misconduct charged.” Kearns, 567 F.3d at 1124 (quotation
Additionally, if there are allegations of fraud
asserted against multiple defendants, a complaint must identify
the false statements made by each defendant. Swartz v. KPMG LLP,
476 F.3d 756, 764 (9th Cir. 2007). Rule 9(b) does not allow a
complaint to “merely lump multiple defendants together but
‘require[s] plaintiffs to differentiate their allegations when
suing more than one defendant . . . and inform each defendant
separately of the allegations surrounding his alleged
participation in the fraud.’” Id. at 764-765. A plaintiff must
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attribute particular fraudulent statements to individual
defendants. Moore v. Kayport Package Express, Inc., 885 F.2d
531, 540 (9th Cir. 1989). At a minimum, a plaintiff must
identify the role of each defendant in the alleged fraudulent
scheme. Swartz, 476 F.3d at 765.
Harmer Radio’s allegations are insufficient to properly
plead claims of fraud and conspiracy to commit fraud, which
requires all the elements of fraud and a civil conspiracy. See
Mosarah v. SunTrust Mortgage, 2012 WL 844508 (E.D. Cal. March 12,
2012). Although the Complaint alleges that each Defendant
knowingly made false representations concerning S&S’s intention
to send Harmer Radio’s $350,000 to Tatra, see ECF No. 1, ¶¶ 26
and 29, the Complaint is not specific enough to give each
Defendant notice of the particular misconduct allegedly committed
by that Defendant and giving rise to the fraud and conspiracy to
commit fraud claims against that Defendant. Nor does the
Complaint allege even generally how, where, and when the
misrepresentations occurred. Because the court is limited to the
contents of the Complaint in reviewing these motions, the court
does not consider the evidence submitted by Harmer Radio to
supplement the factual allegations of the Complaint. The claims
of fraud and conspiracy to commit fraud are insufficiently pled
and are dismissed.
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Harmer Radio is Granted Leave to Amend its
Kelley and Van Gordon request dismissal with prejudice,
arguing that granting Harmer Radio leave to amend would be
futile. Kelley and Van Gordon argue that, even with an amended
Complaint, Harmer Radio would be unable to state claims of fraud
and conspiracy to commit fraud with particularity. Additionally,
Kelley and Van Gordon note that, based on Harmer Radio’s own
allegations, Harmer Radio, having been reimbursed for the
$350,000 deposit made to S&S, may not base any fraud claim on
that deposit. However, at this point, Harmer Radio’s allegations
must be taken as true and viewed in the light most favorable to
Harmer Radio. See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,
338 (9th Cir. 1996). Harmer Radio contends that it was indeed
harmed by having paid the $350,000 deposit to S&S but having had
to nevertheless make its own arrangements to obtain the truck.
The court notes that the Complaint alleges that Harmer Radio
ended up paying more for the truck than the County had contracted
“[Leave to amend should be granted if it appears at all
possible that the plaintiff can correct the defect.” Balisteri
v. Pacifica Police Dep’t, 901 F.2d 696, 701 (9th Cir. 1988). The
court notes that, although Rule 12(c) does not mention leave to
amend, courts have discretion to grant a Rule 12(c) motion with
leave to amend or simply grant dismissal of the action instead of
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entry of judgment. See Spring Technology PCS, L.P. v. County of
San Diego, 311 F. Supp. 2d 898, 903 (S.D. Cal. 2004); Lonberg v.
City of Riverside, 300 F. Supp. 2d 942, 945 (C.D. Cal. 2004).
Dismissal with leave to amend is appropriate if the pleadings
might be cured by further factual enhancement. Sheehan v. County
of Kauai, 2013 WL 1242364 (D. Haw. Mar. 29, 2013) (Gillmor, J.);
see also Whitson v. Bumbo, 2009 WL 1515597, at *8 (N.D. Cal. Apr.
Under the circumstances presented here, leave to amend
is appropriate because Harmer Radio might be able to allege facts
supporting fraud and conspiracy to commit fraud claims against
Kelley and Van Gordon.
Kelley’s Request for Dismissal for Lack of
Prosecution is Denied.
Kelley seeks dismissal of the Complaint for lack of
prosecution, arguing that the Complaint was filed on November 26,
2010, but not personally served on him until February 25, 2013.
However, given the court’s order allowing service on Kelley via
publication in July 2011 and the entry of default in October
2011, the court cannot say that, under the circumstances
presented here, Harmer Radio has failed to prosecute this action
diligently. If Kelley ultimately establishes that he has
suffered some concrete disadvantage because of the delay, he may
bring an appropriate motion then.
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The court grants the motions by Kelley and Van Gordon
to dismiss Counts 3 and 4 of the Complaint and gives Harmer Radio
leave to file an amended Complaint by August 5, 2013.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, July 11, 2013.
/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge
Harmer Radio and Electronics, Inc. v. S&S Fire Apparatus Co., et al., Civ. No. 10-
00700 SOM/BMK; ORDER DISMISSING COUNTS 3 AND 4 OF THE COMPLAINT WITH LEAVE TO AMEND