Mehta v. Farukhi

Defendants' Motion for Judgment on the Pleadings

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Plaintiffs sued defendant, their CPA, for advising them to invest in a private light manufacturing company (in which the CPA was a director) and allegedly inducing them to hold on to their investments by periodically telling them that "everything was great" or "things are fine." The company regularly provided plaintiffs with copies of the quarterly and annual financials, audited reports from Deloitte, and discussed the status of the company at shareholder meetings, which put plaintiffs on actual notice as to the company's performance. Defendant's motion for judgment on the pleadings asserts that generalized positive statements about the company's performance cannot be fraudulent as a matter of law, and do not give rise to a direct action against a director. To the extent any action could have been brought, it had to have been brought as a derivative action on behalf of the shareholders. Having failed to state a claim, the Fourth Amended Complaint must be dismissed with prejudice.

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Reference Info:Legal Memoranda: Motion Addressed to Pleadings | State, 9th Circuit, California | United States


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