MN Investment Inc. et.al. v. Nguyen

Background

Morgan Nguyen, MN Investment Inc., and M International sued Do Nguyen and Amour International based on alleged misrepresentations concerning investments in Amour International. The plaintiffs alleged that Do Nguyen promised them, among other things, stock, a management role and board seat for Morgan Nguyen, profit sharing, and the ability to have their interests repurchased after Amour became profitable.

MN Investment allegedly invested $350,000, and M International allegedly invested $190,000. The complaint asserted claims for fraud, breach of contract, and breach of fiduciary duty. The complaint also included a claim involving money allegedly owed to Morgan Nguyen, but the court had previously dismissed that eighth claim after the parties stipulated to dismiss three defendants for lack of personal jurisdiction.

Anti-SLAPP Motion

The defendants moved to dismiss under Texas’s or, alternatively, California’s anti-SLAPP statute. An anti-SLAPP motion seeks early dismissal of claims based on conduct protected by speech or petitioning rights. The defendants argued that the plaintiffs’ claims involved protected activity and that the statute of frauds and litigation privilege prevented the plaintiffs from prevailing.

The court applied California’s anti-SLAPP statute because it found no material difference between the Texas and California laws that would affect the result. Under the statute’s two-step test, the defendant first must show that the claims arise from conduct advancing protected speech or petitioning activity connected with a public issue. If that showing is made, the plaintiff must then show a probability of prevailing.

The court held that the defendants failed at the first step. The defendants did not identify how their actions or statements fit within the categories of protected conduct in the statute. The court also held that the claims were based on private business negotiations, not speech connected with a public issue. The record did not indicate that the alleged representations were made during or in anticipation of litigation that was under serious consideration.

Because the defendants failed to satisfy the first step, the court did not reach the second step or decide the statute-of-frauds defense. The court denied the anti-SLAPP motion and denied the defendants’ request for attorney’s fees because they did not prevail on that motion.

Other Procedural Rulings

The defendants filed an amended answer approximately a year after their original answer. The court noted that amendment as of right is generally allowed only within twenty-one days after service, but it assumed that the plaintiffs had provided written consent because they had not objected. The court also stated that the amendment was allowable because the pleading deadline had not yet passed and granted permission for the amended answer.

The defendants separately filed a counterclaim. The court held that the federal rules do not allow a counterclaim to be filed as a standalone pleading; it must be included in the defendant’s answer. The court therefore struck the standalone counterclaim. The court stated that any further amendment would require the plaintiffs’ written consent or a request for the court’s permission.

Disposition

The court denied the defendants’ motion, resolving ECF No. 80. It also allowed the amended answer and struck the standalone counterclaim.