Opinion
No. CIV. S-14-00603 LKK/CKD
06-04-2014
PAUL SINGH, Plaintiff, v. BHUPINDER BAIDWAN, Defendant.
ORDER
The court has determined that this matter may be decided based upon the papers currently before the court, and without the need for oral argument. The hearing on this motion, currently scheduled for June 23, 2014, is therefore VACATED.
For the reasons set forth below, plaintiff's breach of contract claim will be dismissed, with prejudice, under the unclean hands doctrine, and the remainder of his claims will be dismissed, with prejudice, for failure to prosecute.
I. BACKGROUND
The allegations of the Complaint are set forth in this court's order of May 13, 2014. ECF No. 21. In short, the Complaint alleges that plaintiff Paul Singh and defendant Bhupinder Baidwan sought to deceive a lender into financing Singh's purchase of a gas station, and to deceive BP Corporation into "assigning" the gas station (or the franchise) to plaintiff. They sought to do this by making defendant a straw buyer, since plaintiff did not qualify for the financing or the assignment on his own. Under the scheme, once the financing and assignment were complete, defendant would transfer the gas station to plaintiff, upon plaintiff's demand.
Plaintiff asserts that defendant reneged on this scheme, refusing to turn over the gas station to him. Plaintiff now comes here, asking a federal district court to enforce the scheme.
II. PROCEDURAL HISTORY
Defendant moved to dismiss all the claims as barred by the statute of limitations and the statute of frauds, and for failure to state a claim. Defendant does not raise the defense of the "unclean hands" doctrine by name, although that doctrine fairly leaps from the allegations of the Complaint. The court nevertheless interprets defendant's following argument to raise the issue of unclean hands:
Singh has openly admitted that the purpose of the agreement was not only to defraud BP, but also lenders. Providing false financial information to a franchisor and lender to induce them into a contract is clearly an illegal purpose and against public policy.ECF No. 6 at 13. Under that doctrine, this court would "leave the parties as [it] found them." Wong v. Tenneco, Inc., 39 Cal. 3d 126, 138 (1985).
Plaintiff filed an "opposition" (ECF No. 16), that contained no opposition of any kind to defendant's motion to dismiss for failure to state a claim. Although plaintiff argued that his claims were not barred by the statute of limitations or the statute of frauds, he did not respond to defendant's arguments that the Complaint failed to state a claim for breach of contract, "libel per se," unjust enrichment, or any of the other claims in the Complaint. The court accordingly ordered plaintiff to address defendant's arguments, and also to show why the court should not dismiss the complaint under the unclean hands doctrine. See Wong, 39 Cal. 3d at 134 ("[t]he trial court properly declined to involve our courts in this flagrant effort to circumvent Mexican law"); California Crane School, Inc. v. National Commission for Certification of Crane Operators, 22 6 Cal. App. 4th 12 (5th Dist. 2014) (discussing the doctrine).
Plaintiff has now filed an amended opposition. ECF No. 22. The amended opposition argues that the court should not dismiss the complaint under the unclean hands doctrine, in order to avoid unjust enrichment of defendant. It also argues that the court should not dismiss the breach of contract claim.
III. ANALYSIS
A. Unclean Hands.
Plaintiff argues that the courts can enforce an illegal contract when necessary to avoid unjust enrichment of the defendant. Even assuming this is so under California law, plaintiff has not asserted that any of its cited cases authorizes the court to enforce a scheme designed, as is apparently the case here, to defraud innocent third parties.
Plaintiff has labeled the claim one for breach of contract. However, the relief sought is equitable in nature, namely, the compelled return of property and profits, rather than contract damages.
According to the Complaint, plaintiff hatched this fraudulent scheme, recruited defendant and another to participate in it, and then found himself to be the victim when the defendant turned on him. This court will "leave the parties as [it] found them," and will not participate in plaintiff's attempt to defraud innocent third parties. See Wong, 39 Cal. 3d at 138; California Crane School ___ Cal. App. 4th ___, 2014 WL 1848297. The breach of contract claim will be dismissed in its entirety, with prejudice.
B. Other Claims.
Plaintiff has not defended any of his other claims against defendant's assertions that they each fail to state a claim. Plaintiff asserts that it would be "a waste of time" for him to do so since he does not know whether the court will find the contract to be enforceable. See ECF No. 22 at 7. The court rejects this excuse, as plaintiff has not explained, nor does it appear from the Complaint, why his "libel per se" claim, for example, is dependent on the outcome of the breach of contract claim. Plaintiff has simply failed to respond to defendant's motion to dismiss his individual claims, once again.
The court stated in its prior order that failure to address these arguments would result in a dismissal for failure to state a claim, with prejudice. Accordingly, those claims will be dismissed with prejudice, for lack of prosecution.
III. CONCLUSION
For the reasons set forth above:
1. The breach of contract claim ("First Cause of Action") is dismissed in its entirety, with prejudice, under the "unclean hands" doctrine;
2. The remainder of this lawsuit is dismissed in its entirety, with prejudice, for lack of prosecution; and
3. The Clerk is directed to close this case.
IT IS SO ORDERED.
__________
LAWRENCE K. KARLTON
SENIOR JUDGE
UNITED STATES DISTRICT COURT