Free Brief - District Court of California - California

Case 3:07-cv-04776-JL

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CARLETON L. BRIGGS, SBN 117361 Law Offices of Carleton L. Briggs 3510 Unocal Place, Suite 209 Santa Rosa, CA 95403-0918 Telephone: (707) 523-2251 Facsimile: (707) 523-2253 E-mail: [email protected] James E. Rice, SBN 213670 GINES & RICE 2319 Polk Street Caldwell, Idaho 83605 Telephone: (208) 455-2302 Facsimile: (208) 377-8722 E-mail: [email protected] Attorneys for Defendant GREENSPRINGS BAPTIST CHRISTIAN FELLOWSHIP TRUST UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BARBARA MILLER, individually and as guardian ad litem of Molly Miller, an individual; ANNE MILLER, an individual; and ROBERT MILLER, an individual, Plaintiffs, vs. GREENSPRINGS BAPTIST CHRISTIAN FELLOWSHIP TRUST, et al., Defendants. Case No. C 07-04776 JL MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GREENSPRINGS' MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED [FRCP 12(b)(6)] __________________________________ Date: June 4, 2008 Time: 9:30 a.m. Courtroom: F, 15th Floor Chief Magistrate Judge: Hon. James Larson Complaint filed: August 17, 2007 First Amended Complaint filed: March 28, 2008 Trial date: None

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TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 THE ALLEGATIONS OF THE FIRST AMENDED COMPLAINT . . . . . . . . . . . . . . . . . . . . . . 1 COURT'S ORDER RE AMENDED COMPLAINT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1. 2. 3. Breach of contract--damages .............................................4

Breach of contract--promissory estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Additional explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. Dismissal is proper where the plaintiffs cannot prove any set of facts that would entitle them to relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Plaintiffs' claim for breach of contract--promissory estoppel is fatally deficient. . . . . . 7 Plaintiffs cannot recover damages for breach of contract. . . . . . . . . . . . . . . . . . . . 7 The purported gift by Elsie Turchen was not enforceable. . . . . . . . . . . . . 8 The $200,000 pledge purportedly made to Seabury Hall does not allege the requisite damages to save this claim. . . . . . . . . . . . . . . . . . . . . . . . . . 10

Plaintiffs' forbearance to pursue a wholly unenforceable claim was not valid consideration to support a new oral contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 An agreement made under duress or threat is voidable. . . . . . . . . . . . . . . . . . . . 12 Plaintiffs cannot establish reasonable reliance on defendant's representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Because Greensprings' payment of $500,000 to plaintiffs would disqualify Greensprings as a tax exempt organization, it would be an act beyond the powers of Greensprings' trustee, and would constitute an illegal contract. . . . . . . . . . . . 13

Plaintiffs breach of contract claim is time-barred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 A. The oral representations occurred more than two years before the First Amended Complaint was filed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 The amendments after the statute of limitations had run do not "relate back" to the original complaint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Plaintiffs have no standing to assert their claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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5. 6.

Plaintiffs cannot recover damages for conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Plaintiffs cannot state a claim for fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 A. B. C. Plaintiffs cannot establish damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Plaintiffs' charge that defendants promised to pay $500,000 without any intent to perform must fail because they did perform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Plaintiffs' claim of "conspiracy" to defraud Elsie Turchen's Estate has been settled, and res judicata prevents reconsideration of those claims. . . . . . . . . . . . 20 Plaintiffs cannot establish reasonable reliance on defendants' representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

6 7 8 7. 9 8. 10 11 12 10. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9. D.

Plaintiffs cannot establish their right to the requested declaratory relief. . . . . . . . . . . . . 21 The Court cannot impose a constructive trust on Greensprings when the $500,000 is held by the Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Plaintiffs cannot obtain specific performance because they merely seek money and have an adequate remedy at law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Plaintiffs' claims for "interference with right to inherit" must fail because they had no right to inherit from Elsie Turchen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

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TABLE OF AUTHORITIES

Besig v. Dolphin Boating and Swimming Club, 683 F.2d 1271 (9th Cir. 1982) . . . . . . . . . . . . . 17 Branch v. Tunnell (9th Cir. 1994) 14 F.3d 449 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Bullfrog Films, Inc. v. Wick, 847 F.2d 502 (9th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Burkle v. Burkle, 141 Cal.App.4th 1029 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Church of Spiritual Technology v. United States, 26 Cl.Ct. 713 (1992) . . . . . . . . . . . . . . . . . . . 14 Conley v. Gibson, 355 U.S. 41 (1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Dateline Builders, Inc. v. City of Santa Rosa, 146 Cal.App.3d 520 (1983) . . . . . . . . . . . . . . . . . 9 Davies v. Krasna, 14 Cal.3d 502 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Fiedler v. Clark, 714 F.2d 77 (9th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Galbraith v. County of Santa Clara (9th Cir. 2002) 307 F.3d 1119 . . . . . . . . . . . . . . . . . . . . . . . 3

15 Gladstone Realtors v. Village of Bellwood, 441 U.S. 91 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . 17 16 Glue-Fold, Inc. v. Slautterback Corp., 82 Cal.App.4th 1018 (2000) . . . . . . . . . . . . . . . . . . . . . 22 17 Gonsalves v. Hodgson, 38 Cal.2d 91 (1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 18 Hagan v. Fairfield, 238 Cal.App.2d 197 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 19 Haigler v. Donnelly, 18 Cal.2d 674 (1941) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 20 Hartman Ranch Co. v. Associated Oil Co., 10 Cal.2d 232 (1937) . . . . . . . . . . . . . . . . . . . . . . . . 9 21 In re Stac Electronics Securities Litig. (9th Cir. 1996) 89 F.3d 1399 . . . . . . . . . . . . . . . . . . . . . . 3 22 Kashani v. Tsann Kuen China Enterprise Co., 118 Cal.App.4th 531 (2004) . . . . . . . . . . . . 14, 15 23 Marriage of Smith & Maescher, 21 Cal.App.4th 100 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . 9, 23 24 McDermott v. Bear Film Co., 219 Cal.App.2d 607 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 25 Merchants' Collection Agency v. Roantree (1918) 37 Cal.App. 88 . . . . . . . . . . . . . . . . . . . . . . 12 26 Rice v. Crow, 81 Cal.App.4th 725 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 27 28
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Service by Medallion, Inc. v. Clorox Co., 44 Cal.App.4th 1807 (1996) . . . . . . . . . . . . . . . . . . . 19 Smith v. City and County of San Francisco, 225 Cal.App.3d 38 (1990) . . . . . . . . . . . . . . . . . . . . 7 SMS Financial, Ltd. Liability Co. v. ABCO Homes Inc., 167 F.3d 235 (5th Cir. 1999) . . . . . . . 16 State of California v. Oroville-Wyandotte Irrigation Dist., 409 F.2d 532 (9th Cir. 1969) . . . . . 21 Uhlmann v. Kin Daw, 97 Or. 681 (1920) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 United States v. Hays, 515 U.S. 737 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 US Ecology, Inc. v. State of California, 129 Cal.App.4th 887 (2005) . . . . . . . . . . . . . . . . . . . . . . 8 Vu v. California Commerce Club, Inc., 58 Cal.App.4th 229 (1997) . . . . . . . . . . . . . . . . . . . . . . 18 Wendy L. Parker Rehabilitation Foundation, Inc. v. Commissioner, 52 TCM 51 (1986) . . . . . 14 Wheeler v. Travelers Ins. Co., 22 F.3d 534 (3rd Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Yukon River Steamboat Co. v. Gratto, 136 Cal.538 (1902) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

STATUTES 26 U.S.C. § 501(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 28 U.S.C. § 2201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Civil Code § 1559 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Civil Code § 1570 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Civil Code § 1667 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Code of Civil Procedure § 1060 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Code of Civil Procedure § 339 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Oregon Rev. Stats. § 130.650 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Oregon Rev. Stats. § 130.665 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Probate Code § 16000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Probate Code § 16200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Probate Code § 21700 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Probate Code § 6450 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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Probate Code § 6451 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Probate Code § 9832(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

RULES 26 C.F.R. § 1.501(c)(3)-1(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 26 C.F.R. § 1.501(c)(3)-1(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 26 C.F.R. § 1.501(c)(3)-1(c)(1)-(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Federal Rules of Civil Procedure, Rule 12(b)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3, 4, 5, 7 Federal Rules of Civil Procedure, Rule 15(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Federal Rules of Civil Procedure, Rule 8(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

OTHER AUTHORITY 1 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2005) "Contracts" § 244 . . . . . . . . . . . . . . . 7 1 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2007) "Contracts" § 211 . . . . . . . . . . . . . . 11 13 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2005) "Trusts" § 319 . . . . . . . . . . . . . . . 22 2 Schwarzer, et al., CAL. PRACTICE GUIDE: FEDERAL CIVIL PROCEDURE BEFORE TRIAL (rev. ed. 2007) § 9:187 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 28 WILLISTON ON CONTRACTS (4th ed. 1990) § 71:8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5 Witkin, CALIFORNIA PROCEDURE (4th ed. 1997) "Pleading," § 660 . . . . . . . . . . . . . . . . . . . . 18

19 5 Witkin, CALIFORNIA PROCEDURE (4th ed. 1997) "Pleading" § 741 . . . . . . . . . . . . . . . . . . . . . 23 20 21 5 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2005) "Torts," § 772 . . . . . . . . . . . . . . . . . 19 22 RESTATEMENT (2D) CONTRACTS § 175 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 23 24 25 26 27 28
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INTRODUCTION
Plaintiff Barbara Miller, individually and as guardian ad litem for her adopted daughter Molly Miller; Anne Miller, the natural daughter of Barbara and Robert Miller; and Robert Miller have sued to recover, or obtain a declaration that they are entitled to, the sum of $500,000. The first amended complaint alleges causes of action for "breach of contract--promissory estoppel, conversion, fraud, declaratory relief, constructive trust, specific performance, intentional interference with the right to inherit, and negligent interference with the right to inherit." Yet the facts alleged affirmatively show that plaintiffs do not now and never have owned or had any right to possess the $500,000, and they have suffered no damage as a result of defendants' purportedly wrongful conduct. Because these defects appear on the face of the first amended complaint, the Court may properly dismiss under FRCP 12(b)(6) for failure to state a claim upon which relief can be granted.

THE ALLEGATIONS OF THE FIRST AMENDED COMPLAINT
Before her death, Elsie G. Turchen, Molly Miller's natural great grandmother, expressed in writing her intent to give a substantial gift to Anne and Molly. In a letter to Barbara and Robert Miller dated November 23, 2000, she asked the Millers if they would "consider" a gift to Anne and Molly of a house located at 325 Malcolm [sic] Avenue, Belmont, California. The first amended complaint alleges that it was Elsie's clear intent to give the Belmont house to Anne and Molly, but Elsie died 17 days later, on December 10, 2000. There is no allegation that the gift was completed. First Amended Complaint ("FAC"), ¶ 37. After Elsie's death, defendant Christine Dillon, who had told Barbara Miller that she was the personal representative of Elsie's estate, said that Grace Parish Christian Church would pay $500,000 to a charity or charities of Barbara and Robert Miller's choice on behalf of Anne and Molly. The first amended complaint alleges that defendant Dillon knew of Elsie's intended gift to Anne and Molly and proposed the charitable payment so that Anne and Molly would not make

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a claim against Elsie's estate. FAC, ¶ 38. On August 11, 2002, two checks totaling $500,000 were issued to First Hawaiian Title Company. The checks were issued to a title company because the Millers' chosen charity, Maui Preparatory Academy, was in the process of buying real property for use as a school, and the $500,000 was to be used for that purchase. The two checks were drawn on an account owned by Real Estate Trust, which plaintiffs believe is a "dba" for defendant Greensprings. The checks were signed by defendant Bohn, and "were intended to be performance on the agreement by defendant Dillon (and now by Defendant Greensprings) to fulfill Elsie Turchin's [sic] promise to make a gift to Anne and Molly as indicated in Elsie's November 23, 2000 letter." FAC, ¶ 39. Barbara and Robert Miller later learned that there was no entity named First Hawaiian Title Company, and in an October 9, 2002 letter to defendants Bohn and Dillon, they asked that the checks be reissued in the name of First Hawaii Title Corporation. After not hearing from Bohn and Dillon for some time, in January 2005 the Millers demanded that they reissue a check to Maui Preparatory Academy. On January 10, 2005, defendant Bohn delivered to the Millers a cashier's check for $500,000 made out to Maui Preparatory Academy. FAC ¶ 39. The purpose of making the check to Maui Preparatory Academy was to make a gift to the Academy on behalf of Anne and Molly. Again, it was believed to be more efficient to make the payment directly to Maui Preparatory Academy rather than for Anne and Molly to receive the money directly, as intended by Elsie Turchen. Mr. and Mrs. Miller wrote to Bohn and Dillon still believing that they had the authority to issue checks for this purpose. Thereafter, on January 10, 2005, a cashier's check was delivered by Defendant Greensprings to Mr. and Mrs. Miller in the amount of $500,000 made out to Maui Preparatory academy, exactly as directed by the Millers. Up until this point, neither Bohn, Dillon, nor anyone at Greensprings ever indicated that they were unauthorized to issue checks as requested by Mr. and Mrs. Miller. FAC, ¶ 40. This reference to the fact that plaintiffs "directed" Bohn and Dillon as to the issuance of a check for $500,000 is a reference to a letter of November 14, 2004, from plaintiffs "Bob & Barbara Miller On [six] behalf of Molly Miller" to Christine Dillon and Don Bohn, attached to

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defendants' accompanying Request for Judicial Notice as Exhibit I.1 The letter in fact states that defendants Dillon's and Bohn's behavior would tend to suggest that you have something to hide and that more importantly you are afraid of any inquiry that might result in discovery . . . . [I]f you decide not to [issue a check for $500,000], you will be forcing us to commence an investigation of your handling of Grandma Teddy's estate if for no other reason than to find out the reason for your peculiar behavior and just what it is you are trying to hide with respect to Grandma Teddy's along with Grandpa Ward's respective estates. Many months after receiving the cashier's check payable to Maui Preparatory Academy, the Millers again asked defendants Bohn and Dillon to reissue the check, this time as three checks totaling $500,000 payable to Stanford University, Seabury Hall, and West Maui Carden Academy. In a telephone conversation on August 10, 2005, defendant Bohn told Barbara Miller that it would be done the next day. FAC, ¶ 42. At the same time, Barbara Miller wrote a letter to Carleton L. Briggs, who plaintiffs believe is a member of defendant Greensprings' board of directors, to explain why the three checks were needed instead of one. The next day, Briggs wrote back to Barbara Miller asking that the $500,000 cashier's check payable to Maui Preparatory Academy be returned because of litigation against Greensprings, Bohn, and Dillon by Penny D. Anderson, who is Elsie Turchen's granddaughter and Molly Miller's birth mother. Briggs's letter said that a motion would have to be made in the "Anderson v. Greensprings" litigation to have the checks reissued; that such a motion would be made with all possible haste; and that the $500,000 would be maintained in a separate, interest-bearing account earmarked for the three charities named by the Millers. Barbara Miller returned the cashier's check on August 16, 2005, but no motion was made to

Documents referred to in the complaint may be attached to a Rule 12(b)(6) motion to show that they do not support the plaintiff's claim. See Branch v. Tunnell (9th Cir. 1994) 14 F.3d 449, 454 (overruled on other grounds in Galbraith v. County of Santa Clara (9th Cir. 2002) 307 F.3d 1119, 1127). Documents may be considered if the complaint refers to such document; the document is "central" to the plaintiff's claim; and no party questions the authenticity of the copy attached to the 12(b)(6) motion. Branch v. Tunnell, supra, 14 F.3d at 454. These elements are met here. The complaint states that the Millers wrote to Bohn and Dillon but does not attach the letter; the contents are central to their claim; and the document was produced by plaintiffs in discovery and is between the parties to this action, so that its authenticity can readily be determined. The court may consider the full text of the document. See In re Stac Electronics Securities Litig. (9th Cir. 1996) 89 F.3d 1399, 1405. 3 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GREENSPRINGS' FRCP 12(b)(6) MOTION

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reissue the three checks, and plaintiffs allege that the $500,000 was never put in a separate, interest-bearing account earmarked for the charities. FAC, ¶¶ 43-44.

COURT'S ORDER RE AMENDED COMPLAINT
Defendants Greensprings and Donald Bohn brought motions for dismissal of the original complaint under FRCP 12(b)(6). On March 24, 2008, the Court granted the 12(b)(6) motions and gave plaintiffs Barbara Miller, as guardian ad litem for Molly, and Anne Miller leave to amend their complaint. The Court specifically directed the plaintiffs to address the following points in their amended complaint:

1.

Breach of contract--damages
The court directed plaintiff Barbara Miller to explain how and why she was damaged in the amount of $500,000 if the alleged agreement with defendants was for a gift of that amount to a charity or charities. As pled, Miller has at most stated facts sufficient to show damages only if her breach of contract claim was based on a third-party beneficiary contract theory. Order Granting Defendants' Motions to Dismiss With Leave to Amend, 5:9-13. In apparent response to this directive, plaintiffs amended their complaint to add plaintiffs

18 Barbara Miller and Robert Miller, as individuals. They also have added allegations that they 19 have sustained damages of $500,000, or alternatively, of $200,000, because, in reliance upon 20 their expectation of receiving $500,000 from Greensprings, Barbara and Robert Miller pledged a 21 gift of $200,000 to Seabury Hall, and that Seabury Hall is now pursuing collection of the 22 Millers' pledge from them personally. FAC, ¶ 45. 23 The first amended complaint adds Barbara and Robert Miller, in their individual 24 capacities, as new plaintiffs, together with new claims that they individually suffered damages, 25 claims for specific performance and intentional and negligent interference with the right to 26 inherit. These amendments were done without leave of this Court and exceed the scope of the 27 28
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Court's order granting defendants' first FRCP 12(b)(6) motion with leave to amend. Nor have plaintiffs Barbara Miller and Robert Miller sought to intervene as provided by FRCP 24. Accordingly, concurrently with this motion, defendant Greensprings has moved to strike improper allegations of the first amended complaint under FRCP 12(f). The new allegation concerning the alleged $200,000 damage Barbara and Robert Miller have sustained--albeit improperly added--does nothing to remedy the first amended complaint's fatal deficiency. Plaintiffs have made no attempt to state a valid claim under a third-party beneficiary theory and still cannot establish the requisite elements to state a claim for breach of contract for any of the named plaintiffs. Moreover, amending the complaint to add the new plaintiffs was improper because a claim by these plaintiffs individually is barred by the statute of limitations. Finally, there is evidence suggesting that plaintiffs' allegations concerning the $200,000 pledge to Seabury Hall may be false and misleading.

2.

Breach of contract--promissory estoppel
Next, the Court noted that the promissory estoppel claim was deficient because plaintiffs

had not alleged what claims they would have had against Greensprings as a result of decedent's gift of the Belmont house to Greensprings. Order, 5:14-18. In apparent response, plaintiffs now allege the existence of a conspiracy among defendants "to fraudulently induce Elsie Turchen into transferring over $20 million in real and personal property to Greensprings, mostly on January 12, 1999 (including the Malcolm [sic] Avenue property.)" FAC ¶ 41. But this entire matter was litigated in the Anderson v. Dillon case and settled; the complaint against Greensprings and the other named defendants was dismissed with prejudice; and notices of lis pendens filed on the real property were withdrawn, including the lis pendens filed on the Malcomb Avenue, Belmont property allegedly offered by Elsie Turchen to Anne and Molly Miller. Thus, the doctrine of res judicata prohibits reconsideration of the matter in this case.

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The Court further noted, "there does not appear to have been an enforceable agreement between the decedent and her great grandchildren for the gift of the house at 325 Malcomb Avenue, Belmont, California." The Court directed plaintiffs to explain "how the decedent's apparent intent to give a gift to Anne and Molly provides Miller with grounds to bring a claim against either Greensprings or the Estate, or both." Plaintiffs' FAC makes no attempt to explain how the unenforceable, failed, and void gift gives plaintiffs the right to bring any such claim.

3.

Additional explanation
Finally, the Court noted that plaintiffs "may wish to further develop the factual record to

explain the following: (1) why the $500,000 went to the Estate or, the issues in the Anderson v. Greensprings litigation and their relevance to this case; (2) how reliance on Defendants' representations was reasonable, specifically, that reliance on Atty. Briggs' representations (on behalf of Greensprings) was reasonable even after learning of the Anderson v. Greensprings litigation; (3) what obligations Miller has to any charities as a result of the agreement with Defendants; (4) why the Estate is NOT an indispensable party OR why Defendants should not be dropped from the lawsuit altogether if it is the Estate, and not the Defendants, that is in possession of the $500,000; and (5) anything else Miller thinks is necessary to support or explain the causes of action in her amended complaint. In apparent response to the first item, plaintiffs have added a section under "Background Facts: Conspiracy to Misappropriate Elsie Turchen's Estate," which simply incorporates allegations from the Anderson v. Greensprings litigation. See Request for Judicial Notice served and filed herewith, Exhibits A through C. But that case was settled and all claims dismissed with prejudice (see Request for Judicial Notice, Exhibit E); thus, claims raised there can provide no basis for plaintiffs' claims here. Plaintiffs have made no attempt whatsoever to address the issues of how reliance on defendants' representations was reasonable; why the Estate of Elsie Turchen is not an indispensable party; or why defendants should not be dropped from the lawsuit, since plaintiffs no longer dispute that it is the Estate--not defendants--that is in possession of the $500,000.

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ARGUMENT 1. Dismissal is proper where the plaintiffs cannot prove any set of facts that would entitle them to relief.
A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FRCP 8(a)(2). A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." FRCP 12(b)(6). In ruling on a Rule 12(b)(6) motion to dismiss, the court must construe the complaint in the light most favorable to the plaintiff, accept all well-pleaded factual allegations as true, and determine whether the plaintiff can prove facts to support a claim that would merit relief. 2 Schwarzer, et al., CAL. PRACTICE GUIDE: FEDERAL CIVIL PROCEDURE BEFORE TRIAL (rev. ed. 2007) § 9:187, at 9-53. "A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Even under these liberal rules, plaintiffs' first amended complaint must be dismissed because the facts alleged affirmatively show that plaintiffs are not entitled to relief.

2.

Plaintiffs' claim for breach of contract--promissory estoppel is fatally deficient.

A.

Plaintiffs cannot recover damages for breach of contract. The complaint's first claim is for "breach of contract--promissory estoppel." Under the

doctrine of promissory estoppel, a promisor is bound by the promise if he or she should reasonably expect a substantial change of position in reliance on the promise, and injustice can be avoided only by its enforcement. Smith v. City and County of San Francisco, 225 Cal.App.3d 38, 48 (1990). The promisor may be bound to perform the promise despite lack of consideration because "the estoppel is a substitute for consideration." 1 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2005) "Contracts," § 244, at 275.

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Promissory estoppel claims are essentially contract actions without the consideration element, and any damages recoverable, as in contract cases, are limited to those the breaching party caused. US Ecology, Inc. v. State of California, 129 Cal.App.4th 887 (2005). [W]hile conceptually, promissory estoppel is distinct from contract in that the promisee's justifiable and detrimental reliance on the promise is regarded as a substitute for consideration required as an element of an enforceable contract, there appears to be no rational basis for distinguishing the two situations in terms of the damages that may be recovered. Id. at 903 (internal quotation marks, brackets and ellipses omitted).

The purported gift by Elsie Turchen was not enforceable. Plaintiffs cannot prove that they have been damaged: Elsie Turchen never made a gift to

plaintiffs. The elements of a gift are: (1) a donor competent to contract; (2) a voluntary intent on the donor's part to make a gift; (3) delivery of the gift, either actual or symbolic; (4) the donee's acceptance, either actual or imputed; (5) complete divestment of all control by the donor; and (6) lack of consideration. Burkle v. Burkle, 141 Cal.App.4th 1029, 1036 fn. 5 (2006). The first amended complaint alleges that Elsie Turchen intended to give the Belmont house to plaintiffs, or that she promised to make such a gift, but it is apparent that the gift was not completed. Indeed, plaintiffs acknowledge that the gift from Elsie was not completed. They allege that the $500,000 check payable to Maui Preparatory Academy was "intended to be performance on the agreement by defendant Dillon to fulfill Elsie Turchin's [sic] promise to make a gift to Anne and Molly as indicated in Elsie's November 23, 2000 letter." FAC, ¶ 39 (emphasis added). The allegation that defendant Dillon agreed "to fulfill [Elsie's] promise to make a gift" effectively alleges that Elsie did not fulfill that promise.2

Plaintiffs repeatedly allege that Elsie Turchen "promised" to make a gift, but in the November 23, 2000 letter (quoted in ¶ 11 of the first amended complaint), which purportedly contains the promise, Elsie posed a question to the Millers, i.e., would they consider the gift of a house for the plaintiffs? This question has somehow been transformed into a promise. Yet even if Elsie had "promised" to make such a gift, it would not have been enforceable. A prospective donee has no right to compel a gift not yet made. And while a contract to make a will or devise is enforceable, it must be a contract supported by consideration. Cal. Probate Code § 21700. Plaintiffs repeatedly allege that they were induced not to make a claim against Elsie Turchen's estate, but the first amended 8 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GREENSPRINGS' FRCP 12(b)(6) MOTION

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Thus, the promise that plaintiffs seek to enforce is not Elsie Turchen's alleged promise to make a gift of the Belmont house to plaintiffs, but defendants' alleged promise to make a $500,000 payment to the charity or charities of Barbara and Robert Miller's choice on behalf of Anne and Molly. FAC, ¶ 38. If that promise is enforceable as a contract, whether based on consideration or promissory estoppel, it would be a third-party beneficiary contract, i.e., one made expressly for the benefit of a third person (the charity or charities). The third-party beneficiary can enforce such a contract (Civil Code § 1559), but the extent of the promisee's enforcement is limited if the third party is a donee beneficiary rather than a creditor beneficiary.3 Here, the first amended complaint expressly alleges that the purpose of making the $500,000 check payable to Maui Preparatory Academy "was to make a gift to the Academy on behalf of Anne and Molly." FAC, ¶ 40. Thus, if the charities in question are third-party beneficiaries, they are donee beneficiaries. If a promisor does not perform its obligation to a donee beneficiary, the promisee is not liable to the beneficiary for such performance and suffers no actual damage. Marriage of Smith & Maescher, 21 Cal.App.4th 100, 106-107 (1993). Accordingly, if a promisor does not perform its obligation to a donee beneficiary, the promisee "has no cause of action for breach of contract damages." Id., at 107. Thus, even if plaintiffs can prove the facts alleged in their first amended complaint, those facts would establish that plaintiffs have not been damaged. In short, plaintiffs cannot prove any set of facts that would entitle them to recover damages for breach of contract.

complaint's other allegations demonstrate that plaintiffs had no claim against Elsie's estate. At most, Elsie promised to make a gift to plaintiffs (i.e., there was no enforceable agreement supported by consideration), of a house she already had deeded to Greensprings in 1999, and then failed to complete the gift before her death. A third party is a "donee beneficiary" if the promisee's contractual intent is to make a gift to the third party. Dateline Builders, Inc. v. City of Santa Rosa, 146 Cal.App.3d 520, 526 (1983). A third party is a "creditor beneficiary" if "no intention to make a gift appears from the terms of the promise, and performance of the promise will satisfy a duty of the promisee to the beneficiary." Hartman Ranch Co. v. Associated Oil Co., 10 Cal.2d 232, 244 (1937). If a promisor does not pay the promisee's debt to a creditor beneficiary, the promisee remains liable to the creditor beneficiary and may recover damages from the promisor for breach of contract. 9 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GREENSPRINGS' FRCP 12(b)(6) MOTION
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(2)

The $200,000 pledge purportedly made to Seabury Hall does not allege the requisite damages to save this claim. Plaintiffs Barbara and Robert Miller now allege that, in reliance on defendants'

representations that $500,000 would be paid by Greensprings "as demanded by Plaintiffs" (FAC ¶ 54), they made a pledge of $200,000 to Seabury Hall, and that "on March 20, 2007, Seabury Hall began pursuit of the payment of the pledge by Barbara Miller and Robert Miller." FAC ¶ 57. Plaintiffs are referring to a March 20, 2007 letter to Bob and Barbara Miller from the Headmaster and President of the Board of Trustees. See Exhibit J of the Request for Judicial Notice served and filed herewith. The letter notes that Seabury Hall has not received payment on the $200,000 pledge and then states, "We were very pleased to honor the Miller Family Foundation for these wonderful gifts by including the name of the Foundation on the major donor plaque, the classroom, and the all-donor plaque." The letter goes on to suggest that those families or foundations that do not fulfill their pledges may have their names removed from the commemorative donor plaques. Even if this allegation concerning Barbara and Robert Miller's alleged $200,000 damage had been properly added,4 it cannot save the first amended complaint. It appears that the pledge plaintiffs rely on in claiming that they have suffered damages of $500,000, or perhaps $200,000, was in fact made by the Miller Family Foundation, a separate legal entity, not by Barbara or Robert Miller individually. Thus, it does not appear that Barbara and Robert Miller face any personal liability or damage should they fail to pay the pledge, other than perhaps having the Miller Family Foundation's name removed from the school plaques. If in fact a separate legal entity made the pledge to Seabury Hall, then the allegations of the first amended complaint appear to be misleading at best and may constitute a fraud upon the Court. In any event, they do not establish that Molly Miller or Anne Miller have sustained any damages.

4

In fact, it was not properly added. See defendant's concurrent motion to strike under FRCP 12(f).

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The element of damages is in fact missing from each and every cause of action stated by Anne and Molly Miller. Plaintiffs Barbara and Robert Miller are attempting to assert damages that they allegedly have sustained to satisfy the requisite element of damages for Anne and Molly Miller. But this they cannot do. Each plaintiff must be able to state a claim that meets all the elements of each cause of action. The new allegations concerning the alleged $200,000 pledge to Seabury Hall do nothing to remedy the lack of damages sustained by Anne or Molly Miller.

Plaintiffs' forbearance to pursue a wholly unenforceable claim was not valid consideration to support a new oral contract. Plaintiffs contend that their forbearance from making any claim against the Turchen

Estate is sufficient consideration to support an oral contract to pay them $500,000. Forbearance to sue on a claim or compromise of a claim, either valid, doubtful, or disputed (but not void) is good consideration. 1 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2007) Contracts § 211 at 246-247. But "[i]f a claim is wholly invalid, neither forbearance to sue nor compromise thereof can be good consideration." Id. § 220 at 253. Plaintiffs contend that a letter dated November 23, 2000, from Elsie Turchen shows that it was her "clear" intent to give Anne and Molly Miller the house located at 325 Malcomb Avenue, Belmont, California. But this property already had been given by Elsie G. Turchen, as Trustee of the Penny Trust, to the Greensprings Fellowship Trust by grant deed dated January 12, 1999, subsequently recorded in 2005. (So the Court may have a complete picture, all the recorded deeds to Greensprings, including that for the Malcomb Avenue house, are attached as Exhibit F to the Request for Judicial Notice served and filed herewith.) Elsie Turchen's original alleged promise to make a gift to Anne and Molly Miller was wholly unenforceable: Elsie Turchen already had deeded the Belmont property to Greensprings well before she allegedly offered it to the Millers on November 23, 2000. Moreover, the gift was

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not completed during her lifetime. On both these bases, the purported gift was wholly void. Therefore, forbearance to bring the claim against the Estate could not provide valid consideration for another promise--e.g., a promise to pay $500,000. Plaintiffs do not allege that defendant Dillon made any such promise on Greensprings' behalf, or that anyone promised to pay money to plaintiffs themselves. The alleged initial promise was that Grace Parish would make a donation to charity, not that the Estate of Elsie Turchen would make a gift to plaintiffs. FAC ¶ 38.

C.

An agreement made under duress or threat is voidable. The reference in Plaintiffs' amended complaint (FAC, ¶ 40) to the fact that plaintiffs

"directed" Bohn and Dillon as to the issuance of a check for $500,000 is a reference to a letter of November 14, 2004, from plaintiffs "Bob & Barbara Miller On [sic] behalf of Molly Miller" to Christine Dillon and Don Bohn, attached to defendants' accompanying Request for Judicial Notice as Exhibit I. That letter states that, if defendants do not issue a check for $500,000 as directed by plaintiffs, "you will be forcing us to commence an investigation of your handling of Grandma Teddy's estate if for no other reason than to find out the reason for your peculiar behavior and just what it is you are trying to hide with respect to Grandma Teddy's along with Grandpa Ward's respective estates." An agreement made under duress is voidable. See REST.2D, CONTRACTS § 175; 28 WILLISTON ON CONTRACTS (4th ed. 1990) § 71:8. The threat of duress or "menace" is defined under Civil Code § 1570 as a threat of unlawful and violent injury to the person or property of any person or a threat of injury to the character of a person. A threat of criminal prosecution is a threat of injury to the character and constitutes menace. In Merchants' Collection Agency v. Roantree (1918) 37 Cal.App. 88, 90, a bookkeeper and manager was charged by the head of the firm with having withdrawn more money than he was entitled to take as salary and threatened with prosecution for embezzlement unless he signed a note for the alleged overdraft. The court

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held that the note was unenforceable. Id. Plaintiffs' November 14, 2004 letter contains what may be considered a threat to have defendants "investigated" if they did not issue a $500,000 check as "directed" by plaintiffs. Thus, any agreement to issue such a check is unenforceable as made under duress.

D.

Plaintiffs cannot establish reasonable reliance on defendant's representations. Plaintiffs contend that they acted reasonably in relying on defendant Dillon's alleged

promise to pay $500,000 from Estate funds to a charity of their choice on behalf of Anne and Molly Miller, in forbearing to make a claim against the Estate of Elsie Turchen for payment of the $500,000. But it was not reasonable for plaintiffs to believe that Dillon was the personal representative of Elsie Turchen's estate when they had received notice of the Anderson v. Dillon litigation, clearly indicating that the plaintiff in that action, Penny D. Anderson (Molly's birth mother), was suing in her capacity as representative of the Estate. Furthermore, it was not reasonable for plaintiffs to think that any personal representative could unilaterally pay out $500,000 from an estate on his or her own initiative and without court authorization. Probate Code § 9832(b) requires court authorization for the compromise or settlement of a matter that requires the estate to pay out any amount in excess of $25,000. Finally, it was unreasonable for plaintiffs not to protect their alleged interest by making some kind of claim in the probate proceeding or at least by intervening in the Anderson v. Dillon litigation, where plaintiffs knew the rightful ownership of the returned $500,000 was to be determined.

E.

Because Greensprings' payment of $500,000 to plaintiffs would disqualify Greensprings as a tax exempt organization, it would be an act beyond the powers of Greensprings' trustee, and would constitute an illegal contract. The promise the first amended complaint alleges is a promise to pay $500,000 to a

charity or charities, not a promise to pay that sum (or any other) to plaintiffs. Greensprings would not and could not promise to pay the money to plaintiffs because doing so would
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disqualify it as a tax exempt organization under the tests established in 26 C.F.R. § 1.501(c)(3)-1(a)(1), § 1.501(c)(3)-1(b)(1), and § 1.501(c)(3)-1(c)(1)-(2).5 Greensprings' payment of $500,000 to plaintiffs would be fatal to its status as an exempt organization, and Greensprings could not and did not engage in any such transaction. Moreover, paying plaintiffs $500,000 would be an act contrary to Greensprings' exempt purpose and in excess of its trustee's powers. It would be analogous to an ultra vires act by a corporation. McDermott v. Bear Film Co., 219 Cal.App.2d 607, 610 (1963) (an ultra vires act is one "beyond the purpose or power of the corporation"). Greensprings is an Oregon trust, and the payment of $500,000 to plaintiffs would be an act beyond the powers of its trustee under applicable California and Oregon statutes.6 Finally, any contract to pay plaintiffs $500,000 would be an illegal contract in violation of state and federal laws. An illegal contract is void. Kashani v. Tsann Kuen China Enterprise Co., 118 Cal.App.4th 531, 541 (2004); Uhlmann v. Kin Daw, 97 Or. 681 (1920) ("an agreement may not be enforced if it is illegal."). A contract is illegal if it is: (1) contrary to an express provision of law; (2) contrary to the policy of express law, though not expressly prohibited; or

Tax exempt status: To qualify as a tax exempt organization described in 26 U.S.C. § 501(c)(3), the organization must be organized and operated for one or more exempt purposes. 26 C.F.R. § 1.501(c)(3)-1(a)(1). The organizational test is met if the organization's articles limit its purposes to one or more exempt purposes and do not expressly empower the organization to engage, other than as an insubstantial part of its activities, in activities that do not further exempt purposes. Id., § 1.501(c)(3)-1(b)(1). The operational test is met if the organization operates exclusively for exempt purposes, has no substantial nonexempt purpose, and if no benefits inure from it to private individuals. Id., § 1.501(c)(3)-1(c)(1)-(2); Church of Spiritual Technology v. United States, 26 Cl.Ct. 713, 730 (1992). In Wendy L. Parker Rehabilitation Foundation, Inc. v. Commissioner, 52 TCM 51 (1986), a foundation created to aid coma victims sought a declaratory judgment that it was an exempt organization under § 501(c)(3). Approximately 30% of its income was expected to be expended for the benefit of Wendy L. Parker, a recovering coma patient whose father, mother, and brother were the foundation's president, secretary-treasurer, and vice president respectively. The Tax Court held that the foundation was not an exempt organization. Id. at 54. Act in excess of trustee's power Trustees have a duty to administer the trust "according to the trust instrument." Cal. Probate Code § 16000; Oregon Rev. Stats. § 130.650 ("the trustee shall administer the trust in good faith, in accordance with its terms and purposes . . . ."). They have the powers conferred by the trust instrument, the powers conferred by statute except as limited by the trust instrument, and the power to perform "any act that a trustee would perform for the purposes of the trust under the standard of care provided in Section 16040 or 16047." Cal. Prob. Code § 16200 (emphasis added); Oregon Rev. Stats. § 130.665 ("A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements and other circumstances . . . ." (emphasis added)). 14 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GREENSPRINGS' FRCP 12(b)(6) MOTION
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(3) otherwise contrary to good morals. Civ. Code § 1667. A violation of federal law constitutes a violation of law for purposes of determining whether a contract is unenforceable as contrary to California's public policy. Kashani, supra, at 543. Any contract to pay plaintiffs $500,000 would violate state law because it would be an act contrary to Greensprings' purpose and in excess of its trustee's powers. Such a contract also would violate federal law prohibiting the transfer of an exempt organization's assets for the benefit of private individuals, which would cause Greensprings to lose its exempt status.

3.

Plaintiffs breach of contract claim is time-barred.
Code of Civil Procedure § 339 provides that an action on an oral contract must be

brought within two years.

A.

The oral representations occurred more than two years before the First Amended Complaint was filed. Plaintiffs rely on several key oral representations they allege defendants made on behalf

of Greensprings; they contend that these representations constituted an oral contract to pay them $500,000. Plaintiffs contend that defendant Dillon made an oral representation that Grace Parish Christian Church would pay $500,000 (in place of the gift of the Malcomb Avenue property) to a charity or charity of Barbara and Robert Miller's choice on behalf of Anne and Molly Miller at some time before August 11, 2002, when two checks were issued to First Hawaiian Title Company. FAC, ¶¶ 38-39. After rejecting those checks, plaintiffs allege that on January 10, 2005, at plaintiffs' request, Greensprings agreed to and did issue a $500,000 check to Maui Preparatory Academy. FAC, ¶ 40. On July 22, 2005, plaintiffs requested that the checks be reissued to three new charities, and plaintiffs contend that defendant Bohn agreed to do so on August 10, 2005. FAC, ¶ 40. Finally, plaintiffs allege that, in a telephone conversation of August 11, 2005, Carleton Briggs requested the return of the $500,000 cashier's check that had
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been issued by Greensprings, represented that a motion would be made in the Anderson v. Dillon litigation for issuance of a check to the Miller's latest choice of charities, and stated that funds to cover the $500,000 would be maintained in an interest bearing account. FAC ¶ 44. The last act in this series of oral representations on which plaintiffs rely occurred on August 11, 2005. The complaint was filed on August 17, 2008, and the first amended complaint was filed on March 28, 2008, both after the two-year statute of limitations on the alleged oral contract had run.

B.

The amendments after the statute of limitations had run do not "relate back" to the original complaint. The first amended complaint added Barbara Miller and Robert Miller as plaintiffs in their

individual capacities. The FAC also added a new claim that, in reliance on defendants' promise that Greensprings would pay $500,000 to a charity or charities of their choice (FAC ¶ 54), they pledged a gift of $200,000 to Seabury Hall (FAC ¶ 57) , and that Seabury Hall has begun "pursuit of the payment of the pledge by Barbara Miller and Robert Miller." FAC ¶ 57. Thus, Barbara and Robert Miller now claim that they have been damaged in their individual capacities in the amount of $200,000. FAC ¶ 60. But even if this claim were properly added, the two-year statute of limitations on their claim for breach of an oral contract would have run on or about August 11, 2007, and the first amended complaint was not filed until March 28, 2008. FRCP 15(c),7 which governs relation back of amendments, does not specifically address whether amendments adding or changing plaintiffs "relate back" to the date the original

(1) When an Amendment Relates Back. An amendment to a pleading relates back to the date of the original pleading when: A) the law that provides the applicable statute of limitations allows relation back; (B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out--or attempted to be set out--in the original pleading; or (c) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity. 16 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GREENSPRINGS' FRCP 12(b)(6) MOTION

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complaint was filed. But rules regarding adding defendants are applied by analogy. SMS Financial, Ltd. Liability Co. v. ABCO Homes Inc., 167 F.3d 235, 245, fn. 29 (5th Cir. 1999). Amendments naming new parties plaintiff are permissible only if there is no change in the claim being asserted. Besig v. Dolphin Boating and Swimming Club, 683 F.2d 1271, 1278 (9th Cir. 1982). "Relation back imposes no prejudice when an amendment restates a claim with no new facts . . . . An amendment changing plaintiffs may relate back when the relief sought in the amended complaint is identical to that demanded originally." Ibid. Plaintiffs Barbara Miller and Robert Miller improperly seek to assert a new claim on their own behalf--not merely in a representative capacity as guardian ad litem for Molly Miller-- after the statute of limitations has run on a claim for breach of an oral contract. This claim does not "relate back" to the time of filing the original complaint and is therefore clearly time-barred. Moreover, as discussed in the accompanying motion to strike, these new plaintiffs have not followed the rules prescribed for intervening in this case. FRCP 24 requires plaintiffs to make a written motion to intervene that must be filed and served under FRCP Rule 5. The motion must state the grounds for intervention and be accompanied by the pleading that sets out the claim for which intervention is sought. Rule 24(c).

4.

Plaintiffs have no standing to assert their claims.
Standing to sue in federal court is governed by federal law, even in diversity cases based

on state law claims and in actions removed from state court. Wheeler v. Travelers Ins. Co., 22 F.3d 534, 537 (3rd Cir. 1994); Fiedler v. Clark, 714 F.2d 77 (9th Cir. 1983) 79-80 (state statute cannot confer standing where none exists under federal law). Article III constitutional requirements require, among other things, "injury in fact." Standing generally requires a showing that the plaintiff has suffered actual loss, damage, or injury, or is threatened with impairment of his or her own interests. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 100 (1979); Bullfrog Films, Inc. v. Wick, 847 F.2d 502, 506 (9th Cir. 1988). Plaintiffs must demonstrate standing separately for each form of relief sought
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(i.e., damages, specific performance, etc.). Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 184 (2000). Moreover, the issue of standing is not subject to waiver and must be considered by federal courts even if the parties fail to raise it. United States v. Hays, 515 U.S. 737, 742 (1995). Plaintiffs' action suffers from a fatal defect: they cannot prove that they have suffered damages. There simply was never any promise made by defendants to pay any amount of money to them. Anne and Molly Miller have suffered no loss; neither have Barbara or Robert Miller. What's more, the Millers have no standing to bring a claim on behalf of the third-party charities who would have been the donee-beneficiaries of defendants' alleged promises. There has been no allegation that plaintiffs have any authority to represent or otherwise bring a claim on behalf of Seabury Hall or any other would-be beneficiary. They simply cannot amend to cure this defect, and thus they cannot state a proper claim for relief.

5.

Plaintiffs cannot recover damages for conversion.
The elements of a claim for conversion are: (1) plaintiff's ownership or right to

possession of tangible property at the time of the conversion; (2) defendant's conversion (wrongful taking or disposition); and (3) damages. 5 Witkin, CALIFORNIA PROCEDURE (4th ed. 1997) "Pleading," § 660, at 116. It has long been established that one who has neither title nor any right to possession of the property may not sue for conversion. Yukon River Steamboat Co. v. Gratto, 136 Cal.538, 542 (1902). Money can be the subject of conversion only if a specific, identifiable sum is involved. Haigler v. Donnelly, 18 Cal.2d 674, 681 (1941); Vu v. California Commerce Club, Inc., 58 Cal.App.4th 229, 235 (1997). But possession of a check made out to someone else is not the equivalent of possession of money. Whether or not the $500,000 here in question is a sufficiently specific, identifiable sum so as to be subject to conversion, plaintiffs can prove no set of facts that would establish their claim for conversion because they never owned or had any right to possess that sum. Elsie Turchen made no gift to them, in that amount or any other, and defendants' alleged promise was
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to pay that sum to third parties. The first amended complaint alleges that the funds were in an account owned by defendant Greensprings (FAC, ¶ 39), and absent the alleged conversion the funds would have been delivered to a charity or charities, not to plaintiffs. The latter fact also establishes that plaintiffs have not been damaged. If the alleged "conversion" had not occurred, plaintiffs would be in exactly the same position they are in now. As with their claim for breach of contract, plaintiffs simply cannot prove any set of facts that would establish a claim for conversion.

6.

Plaintiffs cannot state a claim for fraud.
The elements of fraud are: "(a) misrepresentation (false representation, concealment, or

nondisclosure); (b) knowledge of falsity (or `scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." 5 Witkin, SUMMARY OF CALIFORNIA LAW (10th ed. 2005) "Torts," § 772, at 1121. Plaintiffs' fraud claim alleges false promise fraud, i.e., a promise made without any intent of performing it, which is deemed a factual misrepresentation of the promisor's state of mind. Id., § 781, at 1131. Each of the above elements must be proved in order to recover for fraud, including damages. Gonsalves v. Hodgson, 38 Cal.2d 91, 101 (1951) ("The absence of any one of these elements will preclude recovery."). As one court succinctly put it: "Deception without resulting loss is not actionable fraud." Service by Medallion, Inc. v. Clorox Co., 44 Cal.App.4th 1807, 1818 (1996).

A.

Plaintiffs cannot establish damages. Plaintiffs' fraud claim includes a conclusory allegation that they have been damaged in

the sum of $500,000 (FAC ¶ 76), but that simply cannot be true in light of the first amended complaint's other allegations. The essence of plaintiffs' claims is that defendants promised to pay $500,000 to a charity or charities and failed to do so. Plaintiffs would not have received the $500,000 under the alleged circumstances, and they are not liable to the charities for that sum. Thus, plaintiffs' position is exactly the same as it would be absent the alleged fraud. Since
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damage is a necessary element of a fraud claim, plaintiffs can prove no set of facts that will establish their claim, because the facts alleged in the first amended complaint show that they were not damaged.

B.

Plaintiffs' charge that defendants promised to pay $500,000 without any intent to perform must fail because defendants did perform. Plaintiffs charge that defendants promised to "pay the $500,000 as Elsie desired" without

any intent to perform. FAC ¶