Hip Hop Beverage Corp. v. Jpmorgan Chase Bank ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 3 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
HIP HOP BEVERAGE CORPORATION, a No. 16-56899
Nevada corporation,
D.C. No.
Plaintiff-Appellant, 2:16-cv-03275-MWF-AGR
v.
MEMORANDUM*
JUNEICE DEANNA MICHAUX, an
individual; ANHM FZCO, LLC, a
California Limited Liability Company;
JPMORGAN CHASE & CO., a national
banking association; DOES, 1 through 100,
inclusive,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted June 8, 2018
Pasadena, California
Before: LIPEZ,** TALLMAN, and OWENS, Circuit Judges.
Hip Hop Beverage Corporation (HHBC) appeals the district court’s grant of
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Kermit V. Lipez, United States Circuit Judge for the
First Circuit, sitting by designation.
judgment on the pleadings in favor of defendant JPMorgan Chase Bank, N.A.
(Chase). We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the
judgment on the pleadings de novo, Lyon v. Chase Bank USA, N.A., 656 F.3d 877,
883 (9th Cir. 2011), and the denial of leave to amend for abuse of discretion,
Gonzalez v. Planned Parenthood of L.A., 759 F.3d 1112, 1114 (9th Cir. 2014). We
affirm.
1. HHBC did not plead facts about its discovery of Michaux’s alleged
embezzlement with the specificity necessary to invoke the delayed discovery rule.
Therefore, its claim is time-barred.
HHBC’s Third Amended Complaint (TAC) did not describe the “time and
manner” of its discovery of Michaux’s wrongdoing. Fox v. Ethicon Endo-Surgery,
Inc., 110 P.3d 914, 920–21 (Cal. 2005) (emphasis added). It stated that “[o]n or
about May 19, 2012, Plaintiff became aware of records that indicated additional
Company accounts were maintained at Bank of America and Chase,” and it
instructed an employee to obtain information regarding those accounts, which
revealed “substantial irregularities.” But it did not explain how HHBC “became
aware” of those records in the first place. In other words, the TAC satisfied the
“time” requirement, but not the “manner” requirement.
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In its briefing on appeal, HHBC repeated the allegations in the TAC but did
not offer any further explanation about how it uncovered Michaux’s
embezzlement.
Because HHBC failed to allege specific facts regarding how it “became
aware” of the records that revealed Michaux’s wrongdoing, the delayed discovery
rule is unavailable here. Fox, 110 P.3d at 920–21. The lack of specificity makes it
impossible to ascertain whether HHBC could have made its discovery earlier. See
id. Therefore, HHBC has failed to carry its burden of establishing diligence. See
id.The statute of limitations for HHBC’s claim against Chase for aiding and
abetting a fraudulent breach of fiduciary duty is three years. Am. Master Lease
LLC v. Idanta Partners, Ltd., 171 Cal. Rtpr. 3d 548, 570 (Ct. App. 2014). Chase
employee Cotton’s last act in aid of Michaux’s embezzlement scheme allegedly
took place on September 29, 2011, and HHBC did not file suit against Chase until
May 13, 2015. Because the delayed discovery rule does not apply, HHBC’s claim
is time-barred.
2. Because we conclude that HHBC’s claim is time-barred, we need not
reach the merits of the aiding and abetting claim.
3. We affirm the district court’s denial of leave to amend because
amendment would be futile. See Carolina Cas. Ins. Co. v. Team Equipment, Inc.,
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741 F.3d 1082, 1086 (9th Cir. 2014) (“A complaint should not be dismissed
without leave to amend unless amendment would be futile.”); see also Ruiz v.
Snohomish Cty. Pub. Util. Dist. No. 1, 824 F.3d 1161, 1168 (9th Cir. 2016) (“We
may affirm the district court on any ground supported by the record . . . .”). As
described above, the allegations in HHBC’s TAC are insufficient for the
application of the delayed discovery rule. At oral argument, when asked what facts
it would add to its complaint if granted leave to amend, Hip Hop replied, “not
many.” Given this concession, further amendment would be futile. See Kendall v.
Visa U.S.A., Inc., 518 F.3d 1042, 1052 (9th Cir. 2008) (“Appellants fail to state
what additional facts they would plead if given leave to amend . . . . Accordingly,
amendment would be futile.”).
Costs are awarded to Appellee JPMorgan Chase & CO.
AFFIRMED.
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