Serving Seniors Care, Inc. v. Serratore-Rebong Group of Companies Corp

Background

Serving Seniors Care, Inc. and Raquel Heck sued Serratore-Rebong Group of Companies Corp. in California state court. Serving Seniors allegedly hired Serratore-Rebong for accounting services connected to a loan, while Heck allegedly hired the company to prepare and file tax returns and prepare a loan application. Plaintiffs alleged that Serratore-Rebong’s CEO, Jean Serratore, falsely claimed to be a Certified Public Accountant and that the company overstated the hours billed for its services.

Each plaintiff asserted a breach-of-contract claim and a fraud claim. Each alleged that the amount of overpayment did not exceed $75,000. Serratore-Rebong removed the case to federal court based on diversity jurisdiction, moved to transfer the case to the District of Nevada, and moved to dismiss the fraud claims.

Motion to Remand

The court denied plaintiffs’ motion to remand, which sought to return the case to state court. It found that each plaintiff’s claim had to be evaluated separately rather than aggregating the claims.

Because the complaint was ambiguous about whether the amount in controversy exceeded $75,000, the court applied the preponderance-of-the-evidence standard. Under that standard, Serratore-Rebong had to show that it was more likely than not that more than $75,000 was at stake.

The court did not count unpaid invoices from a related Nevada action as part of the amount in controversy because those amounts represented Serratore-Rebong’s own claims against plaintiffs. The evidence did, however, show that plaintiffs had already paid substantial amounts for the services, some of which plaintiffs sought to recover. The court also found it more likely than not that attorney’s fees could be part of the amount in controversy. It concluded that Serratore-Rebong met its burden and denied remand.

Motion to Transfer Venue

The court found that venue was proper in the District of Nevada because Serratore-Rebong is a Nevada corporation and asserted that the services were performed by employees physically located there.

The court nevertheless denied the motion to transfer under 28 U.S.C. § 1404(a). It gave deference to the California plaintiffs’ choice to sue in California and found that Serratore-Rebong had not made the strong showing of inconvenience needed to overcome that choice. The court noted that transferring the case would benefit Serratore-Rebong and its witnesses but would create corresponding inconvenience for plaintiffs. It also found that California’s interest in the claims of its residents outweighed the defendant’s stated reasons for transfer.

Motion to Dismiss Fraud Claims

Serratore-Rebong moved under Rule 12(b)(6) to dismiss both fraud claims for failing to satisfy Rule 9(b), which requires fraud to be pleaded with particularity. The court explained that a fraud complaint generally must identify who made the alleged misrepresentation, what was said, when and where it was said, and how it was false.

The court found the complaint insufficient because it did not identify where or how the alleged false statements about billed hours were made, whether the statements concerned all invoices or only some, or which specific bills were involved. The complaint also did not adequately explain the connection between Serratore’s alleged false claim of being a Certified Public Accountant and plaintiffs’ fraud theories.

Although Rule 9(b) may be relaxed for facts within the defendant’s knowledge, the court held that plaintiffs still had to state what was false or misleading and why. Merely alleging that plaintiffs believed they had been overcharged was insufficient. The court therefore granted the motion to dismiss the fraud claims.

Disposition

Plaintiffs’ motion to remand was DENIED. Serratore-Rebong’s motion to transfer venue was DENIED, and its motion to dismiss was GRANTED as to the fraud claims. Plaintiffs may file a motion, on the normal 35-day schedule, seeking permission to file an amended complaint and must attach a proposed amended complaint explaining how it would cure the identified deficiencies.