Mirkooshesh v. Elie

Background

The plaintiffs asserted claims arising from a loan agreement concerning a residential property on Spinnaker Street in Foster City, California, and a business property on Mission Boulevard in Hayward, California. According to the First Amended Complaint, the plaintiffs executed a $1,000,000 promissory note in 2016, secured by liens on both properties. They alleged that in 2019 Elie persuaded them to transfer title to each property to him after promising to hold the title and return it when they wanted to refinance. They also alleged that Elie later refused to return title, that the plaintiffs discovered they had been charged a 15% interest rate, and that the business property was sold for $2,200,000 in February 2021.

The plaintiffs originally asserted ten causes of action. After the court granted an earlier motion to dismiss with leave to amend, they filed a First Amended Complaint asserting seven claims: a claim under the Fair Debt Collection Practices Act, fraud, breach of contract, unjust enrichment, conversion, violation of California Business and Professions Code section 17200, and quiet title.

Motion to Dismiss

The defendants moved to dismiss under Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court dismissed the Fair Debt Collection Practices Act claim. It held that the complaint did not sufficiently allege that Elie, individually or as trustee, collected debts owed to another. Although the complaint described Eliecorp as a real estate lending company that regularly lent and collected consumer debts, the court found that statement conclusory and determined that the supporting allegations concerned collection of a debt owed to Eliecorp itself.

The court also held that the plaintiffs did not connect the alleged refusal to transfer title and obstruction of refinancing to debt collection, as required for the asserted Fair Debt Collection Practices Act violations. Because the plaintiffs had not corrected deficiencies identified in the court’s earlier dismissal order, the court dismissed that claim with prejudice.

The court declined to exercise supplemental jurisdiction over the remaining state-law claims after dismissing the federal claim. It therefore dismissed the state-law claims without prejudice, without deciding their merits.

Anti-SLAPP Motion

The defendants separately sought to strike portions of the fraud, unjust-enrichment, and section 17200 claims under California’s anti-SLAPP statute. Because the court declined supplemental jurisdiction over those state-law claims, it denied the anti-SLAPP motion without prejudice to the defendants raising it in a future state-court proceeding.

Disposition

The order granted the defendants’ motion to dismiss the Fair Debt Collection Practices Act claim with prejudice. It dismissed the remaining state-law claims without prejudice. In the body of the order, the court denied the anti-SLAPP motion without prejudice; in the conclusion, it described the anti-SLAPP motion as dismissed without prejudice.