Wescott v. Block

CARL A. WESCOTT, Plaintiff, v. ROBERT J. BLOCK, et al., Defendants.

No. 22-cv-00543-DMR

United States District Court, N.D. California

April 18, 2022

ORDER GRANTING IFP APPLICATION AND REPORT &amp RECOMMENDATION SCREENING COMPLAINT PURSUANT TO 28 U.S.C § 1915(E)

Donna M. Ryu United States Magistrate Judge

Plaintiff filed a complaint and an application for leave to proceed in forma pauperis (“IFP”). [Docket Nos 1, 3.] Having considered Plaintiff's papers, the court grants the IFP application and finds that the complaint fails to state a claim on which relief may be granted pursuant to 28 U.S.C. § 1915(e). As Plaintiff declined jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 636(c) (Docket No. 5), the court issues this Report and Recommendation and orders reassignment of this case to a district judge, with the recommendation that Plaintiff's complaint be dismissed with leave to file a First Amended Complaint that addresses the deficiencies identified in this screening order by May 18, 2022.

I. BACKGROUND

Plaintiff is a resident of Scottsdale, Arizona. Compl. ¶ 1. Defendants Robert J. Block, Monette Stephens, Terry Szucsko, Milla Lvovich, and the law firm Lvovich & Szucsko, P.C. (collectively, “Defendants”) are residents of San Francisco, California, and Chicago, Illinois. Plaintiff alleges that Defendants engaged in a conspiracy to steal information he provided to his attorneys during his divorce.^[1] Id. ¶¶ 2-6. Specifically, in 2014, Plaintiff filed for divorce in San Francisco Superior Court against his wife, Defendant Monette Stephens. Id. ¶ 15. In 2017, the family court issued an order pertaining to custody and financial matters. Id. ¶ 17. Plaintiff decided to appeal and hired non-party Robert D. Shearer, a Chicago-based attorney who is now deceased, to review the family court decision. Id. ¶¶18-19. Block, a disbarred Illinois attorney, worked as a paralegal in Shearer's office. Id. ¶ 20.

Plaintiff alleges that Stephens and her divorce attorney Terry Szucsko concocted a scheme to bribe Block to steal privileged and confidential information held by Shearer's law office. Compl. ¶¶ 21-23. Plaintiff says that Block had signed a written confidentiality agreement and “non-circumvent.” Id. ¶ 29. Plaintiff does not describe the “non-circumvent, ” or the information that was subject to the confidentiality agreement, or whether the confidential information pertained to him. See generally id. ¶¶ 22-52.

According to Plaintiff, Stephens allegedly started to make a series of monthly payments to Block, totaling over $1, 000, plus other unspecified non-cash “inducements, ” to acquire the confidential information. Id. ¶¶ 24-26. In 2018, Plaintiff discovered that Block had contacted Stephens. Id. ¶ 30. Block promised not to do so again, and the parties signed an agreement in which Block agreed to pay $10, 000 in liquidated damages for every contact made with Plaintiff's “legal adversaries.” Id. ¶ 31. Plaintiff notified Szucsko of this agreement. Id. ¶ 33.

Plaintiff then started consulting for Salveo Capital, a venture capital fund. Compl. ¶ 34. Plaintiff avers that just before he was due to help Salveo raise more capital and earn $255, 000, Szucsko and Stephens secured information about the fund from Block that was held in Shearer's law office. On or around February 19, 2019, Szucsko and Stephens allegedly filed a Petition for an Assignment Order seeking to levy proceeds from Plaintiff's commercial dealings with Salveo. Id. ¶ 37. Plaintiff contends that they intended to deprive him of revenue and interfere with his child support payments, and that they did not take any steps to collect the $255, 000 Plaintiff was to earn from Salveo. Id. ¶ 39. However, he claims that Szucsko and Stephens misused stolen confidential and privileged information and defrauded the court by not disclosing their “thefts and related crimes.” Id. ¶ 38.

Plaintiff allegedly possesses evidence of Stephens's payments to Block as well as “dozens of emails” between them, “including Block sending confidential and privileged information (including regarding Salveo) to Stephens in exchange for said kickbacks and commercial bribery.” Compl. ¶ 41. Plaintiff also allegedly has emails from Szucsko indicating he is “part of the conspiracy to steal confidential and privileged information” from Plaintiff and Shearer's law firm, including emails in which Szucsko refers to Block. Id. ¶ 42. Plaintiff sent two demand letters to Szucsko setting forth his allegations, which are attached to the complaint and to which he received no response. Plaintiff contends that Defendants are “actively plotting to seal and misuse more confidential and privileged information.” Id. ¶¶ 43-46; see Compl. Exs. A-B. Finally, Plaintiff refers to “dozens of issues with these defendants not covered in this legal complaint, ” including additional steps Stephens and Szucsko took to deprive him of over $3 million from accelerator and venture capital funds, which he asserts will be addressed in future and related complaints. Id. ¶ 47-49.

II. LEGAL STANDARD

A court may allow a plaintiff to prosecute an action in federal court without prepayment of fees or security if the plaintiff submits an affidavit showing that he or she is unable to pay such fees or provide such security. See 28 U.S.C. § 1915(a). A court is under a continuing duty, however, to dismiss a case filed without the payment of the filing fee whenever it determines that the action “(i) is frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B)(i)-(iii). If the court dismisses a case pursuant to 28 U.S.C. § 1915(e)(2)(B), the plaintiff may still file the same complaint by paying the filing fee. This is because the court's section 1915(e)(2)(B) dismissal is not on the merits, but rather an exercise of the court's discretion under the IFP statute. Denton v. Hernandez, 504 U.S. 25, 32 (1992).

To make the determination under 28 U.S.C. § 1915(e)(2)(B), courts assess whether there is an arguable factual and legal basis for the asserted wrong, “however inartfully pleaded.” Franklin v. Murphy, 745 F.2d 1221, 1227-28 (9th Cir. 1984). Courts have the authority to dismiss complaints founded on “wholly fanciful” factual allegations for lack of subject matter jurisdiction. Id. at 1228. A court can also dismiss a complaint where it is based solely on conclusory statements, naked assertions without any factual basis, or allegations that are not plausible on their face. Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); see also Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (per curiam). Dismissal is proper where “no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). A claim has facial plausibility when a plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 677-78.

Although pro se pleadings are liberally construed and held to a less stringent standard than those drafted by lawyers, see Erickson, 551 U.S. at 94, a complaint, or portion thereof, should be dismissed for failure to state a claim if it fails to set forth “enough facts to state a claim to relief that is plausible on its face, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007); see also Fed.R.Civ.P. 12(b)(6). “[A] district court should not dismiss a pro se complaint without leave to amend unless it is absolutely clear that the deficiencies of the complaint could not be cured by amendment.” Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012).

III. DISCUSSION

Having evaluated Plaintiff's financial affidavit, the court finds that he satisfies the economic eligibility requirement of 28 U.S.C. § 1915(a) and grants his application to proceed IFP. However, the court recommends that Plaintiff's complaint be dismissed for the reasons set forth below.

The complaint alleges that Defendants violated federal and state laws prohibiting misappropriation of trade secrets and unfair debt collection practices, along with numerous tort claims. See Compl. ¶¶ 53-161.^[2] The court concludes that none of Plaintiff's allegations state cognizable claims for relief. Many of the claims are conclusory-that is, they simply restate the applicable legal standard without providing sufficient facts to establish a plausible legal violation.

A. Claims against Defendants Lvovich & Szucsko and Milla Lvovich

Plaintiff does not allege any specific facts about Szucsko's firm, Defendant Lvovich & Szucsko, apart from boilerplate allegations of liability under agency theories. Id. ¶¶ 11, 14. He also does not allege any facts against Lvovich but suggests that he will issue further complaints and lawsuits about her. Id. ¶¶ 14-15.

The court recommends dismissal without prejudice of all claims against Lvovich and Lvovich & Szucsko, P.C., because the complaint does not contain allegations sufficient to suggest that those parties are liable for any alleged conduct. See Compl. ¶¶ 8-14.

B. Misappropriation of Trade Secrets

Plaintiff alleges that Defendants unlawfully misappropriated trade secrets that relate to Salveo's IPO by conspiring to obtain the confidential information held at Shearer's law office. Compl. ¶¶ 53-68. He brings claims for trade secrets under the federal Defend Trade Secrets Act (“DTSA”) and California's Uniform Trade Secrets Act (“UTSA”). See 18 U.S.C. 1836 et seq.; Cal. Civ. Code § 3426 et seq.^[3] The court analyzes the two claims together because they are substantially similar. See InteliClear LLC v. ETC...