Ronald Grassi; Sally M. Grassi v. Moody’s Investors Services

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RONALD GRASSI; SALLY M. GRASSI,
Plaintiffs - Appellants,
v.
MOODY’S INVESTORS SERVICES;
STANDARD & POOR’S; FITCH
RATINGS; THE MCGRAW-HILL
COMPANIES, INC.; FITCH, INC.,
Defendants - Appellees.
No. 11-17455
D.C. No. 2:09-cv-00543-JM-DAD
MEMORANDUM*
Appeal from the United States District Court
for the Eastern District of California
John A. Mendez, District Judge, Presiding
Argued and Submitted September 11, 2013
San Francisco, California
Before: SCHROEDER and BYBEE, Circuit Judges, and BEISTLINE, Chief
District Judge. **
FILED
OCT 01 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable Ralph R. Beistline, Chief District Judge for the U.S.
District Court for the District of Alaska, sitting by designation.

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Ronald and Sally Grassi brought suit against three bond rating agencies,
Moody’s, Standard & Poor’s, and Fitch. The Grassis allege that they relied on the
agencies’ ratings before they purchased bonds offered by Lehman Brothers. When
Lehman collapsed, the Grassis lost their investment. They filed a complaint
alleging that the rating agencies negligently and intentionally misrepresented the
investment quality of the bonds. The district court dismissed the Grassis’
complaint, but gave the Grassis instructions on how to cure the deficiencies in their
pleading. This appeal rises from the district court’s judgment dismissing their
amended complaint for failure to satisfy the pleading standards of Federal Rules of
Civil Procedure 8 and 9. We have jurisdiction under 28 U.S.C. § 1291. We
review dismissals under Rules 8, 9(b), and 12(b)(6) de novo. Vess v. Ciba-Geigy
Corp. USA, 317 F.3d 1097, 1102 (9th Cir. 2003). We affirm.
Under Rule 8, a complaint must be a “plain statement” that “show[s] that the
pleader is entitled to relief.” We apply the plausibility standard the Supreme Court
articulated in Twombly1 and Iqbal.2 Hebbe v. Pliler, 627 F.3d 338, 341-42 (9th Cir.
2010). Additionally, every claim that alleges fraud or “facts that necessarily
constitute a fraud (even if the word ‘fraud’ is not used),” must satisfy Rule 8 and
1 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).
2 Ashcroft v. Iqbal, 556 U.S. 662 (2009).
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Rule 9(b)’s heightened pleading standard. Vess, 317 F.3d at 1105. Under Rule 9, a
complaint must “state with particularity the circumstances constituting fraud . . .
including the who, what, when, where, and how of the misconduct charged.”
Ebeid ex. rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010)
(internal quotation marks and citation omitted). Rule 9’s heightened pleading
standard applies here because the Grassis’ negligent and intentional
misrepresentation and “aiding and abetting” claims sound in fraud.
The Grassis did not—and cannot—satisfy their burden under Rule 9
because, as the district court found, the complaint “contains very few allegations of
facts that are not conclusory, and those few facts set forth nothing more than . . .
neutral facts . . . .” While “an exception exists [to Rule 9(b)] where . . . the
plaintiffs cannot be expected to have personal knowledge of the facts constituting
wrong-doing,” the exception applies only if a plaintiff’s allegations are
accompanied by specific facts. Wool v. Tandem Computers, Inc., 818 F.2d 1433,
1439 (9th Cir. 1987) (citation omitted). The complaint here includes no such
specific facts. Moreover, granting leave to amend the complaint again would be
futile because, according to the Grassis’ own brief, “there may be NO specific
evidence to cite” in support of their claims.
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Moreover, the Grassis’ complaint also does not satisfy Rule 8 because
conclusory facts do not “show[ ] that the pleader[s] are entitled to relief.”
Twombly, 550 U.S. at 555; see also Hebbe, 627 F.3d at 342 (explaining that a
complaint “may survive a motion to dismiss only if, taking all well-pleaded factual
allegations as true, it contains enough facts to ‘state a claim to relief that is
plausible on its face’” (quoting Iqbal, 556 U.S. at 678)).
Accordingly, because the Grassis’ complaint is nothing “more than labels
and conclusions,” Twombly, 550 U.S. at 555, the district court properly dismissed
the Grassis’ action with prejudice pursuant to Rule 12(b)(6).
AFFIRMED.
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