Private Client Fiduciary Corp. v. Chopra

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PRIVATE CLIENT FIDUCIARY CORPORATION, a Washington Corporation, as Guardian and Conservator of JOGINDER CHOPRA, M.D., an Incapacitated Person, Plaintiff, v. PHAM SINGH CHOPRA, et al., Defendants.

No. 22-CV-00436-LK

United States District Court, W.D. Washington, Seattle

March 6, 2023

ORDER GRANTING IN PART AND DENYING IN PART PHAM CHOPRA'S MOTION TO DISMISS

Lauren King, United States District Judge

Before the Court is Defendant Pham Singh Chopra's Motion to Dismiss. Dkt. No. 15. The Court grants in part and denies in part the motion.

I. BACKGROUND

In June 2016, Joginder Chopra appointed her brother Pham Chopra to serve as her attorneyin-fact through an instrument titled “General Durable Power of Attorney of Joginder G Chopra, M.D.” Dkt. No. 1 at 3; see id. at 11-30. This instrument vested Mr. Chopra with the authority to “invest and reinvest all or any part of [Dr Chopra's] property in any other property of whatever type: real or personal, tangible or intangible,” a power that encompassed discretion to “invest in securities of all kinds”; “sell or otherwise terminate any investment made by [Dr. Chopra] or on [her] behalf”; “establish and terminate accounts with securities brokers and use brokerage accounts to make short sales and to buy on margin”; and “hire and fire financial and investment advisors.” Id. at 14. The Durable Power of Attorney further granted Mr. Chopra authority to “exercise all rights regarding securities” that Dr. Chopra owned then or in the future. Id. at 16. Specifically, he could “buy, sell, and exchange all types of securities and financial instruments including stocks, bonds, mutual funds, and commodity futures contracts and call and put options on stocks and stock indexes.” Id.

Dr. Chopra “experienced a steep and continuous cognitive decline” following her execution of the Durable Power of Attorney. Id. at 3. She also suffered a stroke in November 2018, which resulted in “aphasia, further cognitive impairment, vertigo, poor concentration, and anhedonia.” Id. Between January and February 2019, Mr. Chopra initiated multiple transfers of cash and stock from Dr. Chopra's Fidelity account to his personal Fidelity account and to that of Akal Institute. Id. at 3-4.^[1] The value of the transferred assets totaled $23,598,340.39. Id. at 3-4; see also Dkt. No. 15 at 3 (table identifying and totaling transferred assets).

Adult Protective Services began investigating allegations against Mr. Chopra for financial exploitation of Dr. Chopra-allegations that were ultimately substantiated. Dkt. No. 1 at 4; see Wash. Rev. Code § 74.34.067 (setting forth Adult Protective Services investigation procedure). He resigned as attorney-in-fact in October 2020. Dkt. No. 1 at 4, 32-33. And in August 2021, the King County Superior Court appointed Private Client Fiduciary Corporation as the guardian of Dr. Chopra and her estate. Id.; see also In Re Joginder Chopra, No. 21-4-03546-2-SEA (King County Superior Court). The court further ordered Mr. Chopra to return all funds from his personal Fidelity account and that of Akal Institute to Private Client (as Dr. Chopra's guardian). Dkt. No. 1 at 4. The resulting transfer included cash and stocks totaling $50,684,890.90. Id. at 4-6; see also Dkt. No. 15 at 4 (table identifying and totaling transferred assets).

In April 2022, Private Client sued Mr. Chopra and Akal Institute for breach of fiduciary duty, unjust enrichment, and conversion. Dkt. No. 1 at 6-8. The complaint alleges that Mr. Chopra (individually and as president of Akal Institute) commingled funds, spent funds for his or Akal Institute's own benefit, engaged in high-risk investment and trading decisions, caused investments to suffer substantial losses, and incurred significant tax liabilities. Id. at 6. As particularly relevant here, Private Client claims that Mr. Chopra's “initial conversion of Dr. Chopra's funds . . . and the subsequent transfer of funds[] has caused Dr. Chopra to incur a tax liability that would otherwise not have been incurred in an amount to be proven at trial but no less than $5,000,000.” Id. at 7.

Mr. Chopra moved to dismiss Private Client's complaint for lack of subject matter jurisdiction and failure to state a claim. Dkt. No. 15 at 1-2; see Fed.R.Civ.P. 12(b)(1), (b)(6).

II. DISCUSSION

The Court first considers Mr. Chopra's Rule 12(b)(1) challenge because his Rule 12(b)(6) challenge “will become moot if the court lacks subject matter jurisdiction.” Sager v. McHugh, 942 F.Supp.2d 1137, 1141 (W.D. Wash. 2013).^[2]

A. Rule 12(b)(1) Motion - Subject Matter Jurisdiction

There are two types of Rule 12(b)(1) jurisdictional attacks: facial and factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). “In a facial attack, the challenger asserts that the allegations contained in the complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Mr. Chopra “brings a facial challenge” to the complaint. Dkt. No. 15 at 5. “The district court resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6): Accepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, the court determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). The Court's inquiry is confined to the allegations in the complaint. Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003).^[3]

“Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A district court is thus “presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock W., Inc. v. Confederated Tribes of the Coleville Rsrv., 873 F.2d 1221, 1225 (9th Cir. 1989). The party asserting jurisdiction has the burden of establishing it. United States v. Orr Water Ditch Co., 600 F.3d 1152, 1157 (9th Cir. 2010). Relevant here is 28 U.S.C. § 1332(a)(1), which grants district courts “original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States[.]” Mr. Chopra targets both statutory requirements.

1. Complete Diversity

Mr. Chopra first contends that Private Client has failed to sufficiently plead Akal Institute's citizenship for purposes of complete diversity. Dkt. No. 15 at 2 n.2; see Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005).^[4] Because Private Client's response brief does not address this argument, see generally Dkt. No. 19, the Court ordered it to show cause why this case should not be dismissed for lack of subject matter jurisdiction, Dkt. No. 30 at 3. As the Court observed in its Order, Private Client failed to sufficiently allege its own principal place of business, Akal Institute's principal place of business, and the citizenship of Jane Doe Chopra. See id. at 2-3.

Private Client thereafter filed a timely response identifying its principal place of business as Washington. Dkt. No. 31 at 4. It also presented facts sufficient for the Court to conclude that Akal Institute's principal place of business is either Virginia or California. Indeed, Private Client's response demonstrates that it obtained all reasonably available information related to Akal Institute's principal place of business, and there is no reason to believe that it is a citizen of Washington. Id. at 2-4; see Carolina Cas. Ins. Co. v. Team Equipment, Inc., 741 F.3d 1082, 1088 (9th Cir. 2014) (“[W]hen information regarding a defendant that is necessary to establish diversity of citizenship is not reasonably available to a plaintiff, the plaintiff should be permitted to plead jurisdictional allegations as to those defendants on information and belief and without affirmatively asserting specific details regarding the citizenship of those defendants.”).

The Court remains skeptical of Jane Doe Chopra's citizenship. An individual's state citizenship is “determined by her state of domicile, not her state of residence,” and “[a] person's domicile is her permanent home, where she resides with the intention to remain or to which she intends to return.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). Private Client appears to suggest that Jane Doe Chopra is a citizen of California by nature of her marriage to Mr. Chopra: “The inclusion of Jane Doe Chopra in the Complaint is to provide for [the] unknown spouse of Defendant Pham Chopra and their marital community. It is established that Pham Chopra's citizenship is the State of California. Jane Doe Chopra's citizenship is the same.” Dkt. No. 31 at 4. Although it may be (and perhaps likely is) true that Jane Doe Chopra permanently resides in California with Mr. Chopra and has every intent of staying there, that is not necessarily true. Private Client's conclusory reliance on the Chopras' marital status to establish Jane Doe Chopra's citizenship is accordingly misguided.

This is but one example of why the Ninth Circuit generally disfavors “Doe” pleading. Gillespie v. Civiletti 629 F.2d 637, 642 (9th Cir. 1980); see also Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 1187, 1191 (9th Cir. 1970) (the proper course of action is to later add the party pursuant to Federal Rule of Civil Procedure 15(c)). “However, situations arise . . . where the identity of alleged defendants will not be known...