Cagno v. Supreme Mortgage Lending, Inc.

Background

Joe Cagno sued his former employer, Everett Financial, Inc., which he had sued under the name “Supreme Mortgage Lending, Inc.,” along with unidentified defendants. Cagno alleged that he worked as a Retail Mortgage Executive from August 4, 2023, until December 1, 2023, when he was terminated because he was male. He also alleged that he was constantly harassed because of his gender and that supervisors and managers knew about the harassment but did not stop it.

Cagno further alleged that the employer had agreed in writing to pay him $485,000 in incentives to work there, but later refused to pay any of that amount. He claimed that the promise was made without an intent to perform it and was intended to induce him to accept the job.

After receiving a notice of the right to sue from the California Civil Rights Department, Cagno filed five claims in state court: gender discrimination under the California Fair Employment and Housing Act, failure to prevent harassment under that Act, hostile work environment under that Act, breach of contract, and fraud. The employer removed the case to federal court and moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim.

Court’s Analysis

The court explained that a complaint must contain enough factual material to make a claim plausible, rather than merely repeat the legal elements of a claim. Fraud claims also must identify the specific circumstances of the alleged deception, including who made the statement, what was said, when and where it was said, and how it was communicated.

Gender discrimination. The court found that Cagno alleged he was male, performed his job satisfactorily, and was fired because he was male, but provided no facts about the circumstances of his termination that would support an inference of discriminatory motive. The court granted the motion to dismiss this claim with leave to amend.

Failure to prevent harassment. This claim relied on the same harassment allegations. Because the court found that Cagno had not adequately pleaded an underlying harassment or discrimination claim, it granted the motion to dismiss the failure-to-prevent claim with leave to amend.

Hostile work environment. Cagno alleged that he was constantly harassed throughout his employment because of his gender, but did not identify who was involved, when or where incidents occurred, or what happened. He also did not provide facts showing that the alleged harassment was connected to his gender or was sufficiently severe or pervasive to alter his working conditions. The court granted the motion to dismiss this claim with leave to amend.

Breach of contract. Cagno alleged that the employer offered in writing to pay him $485,000, that he accepted the offer and worked for the employer, and that the employer breached the agreement by paying nothing. The court found the allegations too vague because Cagno did not attach the contract, identify the specific provisions allegedly breached, explain what conditions entitled him to payment, describe how the payments were structured, or specify how the employer breached its obligations. The court granted the motion to dismiss this claim with leave to amend.

Fraud. The court found that Cagno did not plead fraud with the required specificity. He alleged that the employer promised to pay $485,000 without intending to perform, but did not identify who made the promise, the specific statements made, when or where they were made, or how they were communicated. The court granted the motion to dismiss the fraud claim with leave to amend.

Disposition

Judge Peter H. Kang ordered that the employer’s motion to dismiss was granted. The complaint was dismissed without prejudice under Rules 12(b)(6) and 9(b) for failure to state a claim for relief. Cagno was granted leave to file an amended complaint addressing the identified deficiencies no later than March 12, 2025.