Lim v. Brown

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
CAROLINE BROWN,
Debtor.
SUMI LIM,
Plaintiff,
vs.
CAROLINE BROWN,
Defendant.
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Case No. 09-32424 TEC
Chapter 7
Adv. Proc. No. 09-3201 TC
MEMORANDUM RE DEFENDANT’S RULE 12(b)(6)
MOTION TO DISMISS FIRST AMENDED COMPLAINT
On May 21, 2010, the court held a hearing on Defendant’s Rule
12(b)(6) Motion to Dismiss Plaintiff’s First Amended Complaint (the
Motion). 	Plaintiff appeared in pro per. 	Wayne A. Silver appeared
on behalf of Defendant. 	Upon due consideration, and for the
reasons stated herein, the court determines that the amended
complaint fails to state a claim upon which relief can be granted,
and that the amended complaint should be dismissed without leave to
Signed and Filed: October 15, 2010
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
October 18, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-03201 Doc# 30 Filed: 10/15/10 Entered: 10/18/10 11:03:04 Page 1 of 4

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amend, because Plaintiff has not alleged in either complaint that
Debtor committed fraud.
On November 16, 2009, pursuant to section 523(a)(2), Plaintiff
filed a complaint seeking to render nondischargeable in Debtor’s
bankruptcy case a loan made by Plaintiff to invest in a luxury
apartment complex in Arizona. 	The complaint alleged that Plaintiff
invested an unspecified sum in the Arizona property, because
Debtor’s husband Terry Brown, who is not a debtor in bankruptcy,
was an experienced and successful real estate developer.
On January 29, 2010, the court granted Debtor’s motion to
dismiss the complaint, on the grounds that Plaintiff had failed to
allege: (1) to whom Plaintiff loaned the money and the amount of
the loan; (2) what specific representations Debtor made to
Plaintiff and when they were made; (3) whether those
representations were false when made; (4) whether Debtor intended
to deceive Plaintiff in making the representations; (5) whether
Plaintiff justifiably relief on Debtor’s statement or conduct; and
(6) whether Plaintiff’s damage was proximately caused by her
reliance of Debtor’s statements or conduct.
The order granting the motion to dismiss incorporated the
parties’ stipulation that Plaintiff could bring a state-court
action to enforce the guaranty against Terry Brown.
On March 5, 2010, Plaintiff filed an amended complaint. 	Like
the original complaint, the amended complaint alleges a single
claim under section 523(a)(2)(A). 	The amended complaint alleges
the amount of money Plaintiff loaned ($50,000), the date on which
it was loaned (March 22, 2006), and the payee (Real Estate Trust
Account). 	The amended complaint alleges that the loan was
Case: 09-03201 Doc# 30 Filed: 10/15/10 Entered: 10/18/10 11:03:04 Page 2 of 4

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guaranteed by Debtor and by Terry Brown. 	The amended complaint
alleges that Plaintiff loaned the money after attending several
presentations by Terry Brown, who held himself out to be an
experienced and successful real estate developer. 	The amended
complaint does not allege any representations made by Debtor to
Plaintiff, or any of the other elements material to a section
523(a)(2)(A) claim, such as when the misrepresentations were made,
whether they were false when made, whether Debtor intended to
deceive Plaintiff in making the representations, whether Plaintiff
justifiably relied on Debtor’s statement or conduct, and whether
Plaintiff’s damage was the proximately caused by her reliance on
Debtor’s statements or conduct. 	Nor does the amended complaint
allege that Debtor a partner in her husband’s alleged fraud. 	Thus,
the amended complaint does not state a claim under section
523(a)(2). 	Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1246
(9th Cir. 2001); In re Tsurukawa, 287 B.R. 515 (9th Cir. BAP 2002);
see McClellan v. Cantrell, 217 F.3d 890 (7th Cir. 2000).
Because neither the complaint nor the first amended complaint
allege any fraud by Debtor or active participation by Debtor in a
fraudulent scheme with her husband, it is appropriate to dismiss
the amended complaint with prejudice. 	See Allen v. City of Beverly
Hills, 911 F.2d 367, 373-74 (9th Cir. 1990) (court has broad
discretion to deny leave to amend when plaintiff has previously
amended its complaint).
**END OF MEMORANDUM**
Case: 09-03201 Doc# 30 Filed: 10/15/10 Entered: 10/18/10 11:03:04 Page 3 of 4

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Court Service List
Sumi Lim
1815 Spruce St, #203
Berkeley, CA 94709
Case: 09-03201 Doc# 30 Filed: 10/15/10 Entered: 10/18/10 11:03:04 Page 4 of 4