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Iverson, Yoakum, Papiano & Hatch

633 West Fifth Street, Suite 6400 Los Angeles, CA 90071
TELEPHONE: 213.624.7444

Lisa J. Borodkin (CA Bar #196412) lborodkin@iyph.com Admitted Pro Hac Vice
Firm State Bar No. 00443100 Renaissance One, Two North Central Ave. Phoenix, AZ 85004-2391
TELEPHONE 602.229.5200

Quarles & Brady LLP

John S. Craiger (#021731) John.Craiger@quarles.com David E. Funkhouser III (#022449) David.Funkhouser@quarles.com Attorneys for Defendant Lisa Jean Borodkin IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA XCENTRIC VENTURES, LLC, an Arizona limited liability company, Plaintiff, v. LISA JEAN BORODKIN and JOHN DOE BORODKIN, husband and wife; RAMOND MOBREZ and ILIANA LLANERAS, husband and wife; DANIEL BLACKERTS and JANE DOE BLACKERTS, husband and wife; ASIA ECONOMIC INSTITUTE, LLC, a California limited liability company, DOES 1-10, inclusive Defendants. No. 2:11-CV-01426-PHX-GMS DEFENDANT LISA JEAN BORODKIN'S REPLY IN FURTHER SUPPORT OF MOTION TO STRIKE PURSUANT TO FED. R. CIV. P. 12(e) OR, IN THE ALTERNATIVE, MOTION FOR MORE DEFINITE STATEMENT (Assigned to the Honorable G. Murray Snow) (Oral Argument Requested)

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I.

PRELIMINARY STATEMENT Despite a second bite at the apple, Plaintiff Xcentric Ventures LLC (Xcentric)

is either unable or unwilling to separately plead Defendant Lisa Jean Borodkin (Ms. Borodkin)s malice on its claim for malicious prosecution under California law. Xcentrics Opposition to Ms. Borodkins Motion to Strike Pursuant to Federal Rule of Civil Procedure 12(e), or in the Alternative, Motion for More Definite Statement (Doc. 65) does not show that Xcentrics amended pleading has furnished sufficient details to satisfy this Courts Order of March 1, 2012 regarding [Defendant] Borodkins alleged improper motives and purposes in litigating the underlying California Action on which this action for malicious prosecution is based. See Doc. 52 at 19:22 (emphasis added). The Verified First Amended Complaint (FAC), filed March 16, 2012 (Doc. 52) is both untimely and fails to furnish any additional factual details suggesting that Ms. Borodkin acted with malice in the underlying California Action. In addition, the only new allegations against Ms. Borodkin are allegedly jointly against both Ms. Borodkin and Defendant Daniel Blackert. This makes it impossible for Ms. Borodkin to discern which alleged improper motives, if any, apply specifically to her. As such, this Motion to Strike under Rule 12(e) should be granted, striking the FAC as against Ms. Borodkin without leave to replead, or, in the alternative, this Motion for More Definite Statement under Rule 12(e) should be granted, requiring Xcentric to furnish particularized, non-conclusory allegations as to Ms. Borodkins alleged malice, if any, without combining them with allegations about any other party. II. LEGAL ARGUMENT A. The FAC May Be Stricken As Untimely.

Xcentric does not dispute that Rule 12(e) permits a Court to strike a pleading that is not filed within 14 days after the Court has ordered a more definite statement. See Fed. R.

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Civ. Proc. 12(e) (If the court orders a more definite statement and the order is not obeyed within 14 days after notice of the order or within the time the court sets, the court may strike the pleading or issue any other appropriate order.). Notice of this Courts Order of March 1, 2012 was given through the Courts ECF filing system on March 1, 2012. See Doc. 52. Xcentric concedes that its FAC was due 14 days after March 1, 2012, pursuant to Federal Rule of Civil Procedure 6(a)(1). See Doc. 65 at 2:26-28. Since the day of the event triggering the time period is excluded (i.e., March 1, 2012), but intervening Saturdays and Sundays are not, see Fed. R. Civ. Proc. 6(a), then the FAC should have been filed on March 15, 2012 a Thursday. It was not. Accordingly, this Court may strike the FAC as against Ms. Borodkin on that basis alone. See, e.g., Von Poppenheim v. Portland Boxing & Wrestling Com., 442 F.2d 1047, 1053 (9th Cir. 1971); 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure 1379, p. 640 (2d ed. 1990). B. The FAC Contains No New, Non-Conclusory Allegations Regarding Ms. Borodkins Purported Malice. Xcentric does not dispute that the only new allegations concerning Ms. Borodkins purported malice are in Paragraph 82 of the FAC. See Doc. 65 at 2:9. Xcentric concedes that the FAC lacks any further factual enhancement as to Ms. Borodkins specific alleged malicious actions, other than what was in the original Complaint. See Doc. 65 at 4:11-16. The conclusory allegations added by Paragraph 82 of the FAC regarding Ms. Borodkins and Defendant Daniel Blackerts alleged state of mind do not nudge Xcentrics claim for malicious prosecution against Ms. Borodkin over the line from conceivable to plausible, as required by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L. Ed. 2d 929, 949 (2007); and Ashcroft v. Iqbal, 556 U.S. 662, 696 (2009) (the Federal Rules do not require courts to credit a complaint's conclusory statements without reference to its factual context.).

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Xcentric attempts to argue that Ms. Borodkins alleged malice can be inferred from the other facts in the FAC (which are in every other respect the same as in the original Complaint). However, the only two factual theories which Xcentric advances ignore this Courts express guidance that [a]n improper ulterior motive held by a client is not imputable to counsel in a malicious prosecution action under California law. See Doc. 52 at 18:17-18 (quoting Estate of Tucker ex rel. Tucker v. Interscope Records, Inc., 515 F.3d 1019, 1032-33 (9th Cir. 2008)). As this Court explained in its March 1, 2012 Order: [A]n attorney is only liable for his own improper purposes, and not those of his client. See [Zeavin v. Lee, 136 Cal. App. 3d 766, 772 (1982)]. See also RESTATEMENT (SECOND) OF TORTS 674, cmt d ([E]ven if [counsel] has no probable cause and is convinced that his clients claim is unfounded, he is still not liable if he acts primarily for the purpose of aiding his client in obtaining a proper adjudication of his claim.). See Doc. 52 at 18:27-19:3 (emphasis added). Despite this, Xcentric asks that Ms. Borodkins malice be inferred from the allegations that (1) Ms. Borodkins clients commenced litigation against Xcentric which was founded upon perjured facts which were fabricated from whole cloth, see Doc. 65 at 4:18-20, and (2) that despite discovering very early on that the action was completely groundless, Ms. Borodkin continued to actively and aggressively pursue the case for as long as she possibly could despite knowing that the case had no basis, see Doc. 65 at 4:21-23. These inferences are exactly what the Restatement (Second) of Torts 674, comment d, expressly forbids, given Xcentrics failure to plead any facts indicating that Ms. Borodkin acted for any reason other than to secure the just adjudication of her clients claim. Xcentrics citation to Soukup v. Law Offices of Herbert Hafif, 39 Cal. 4th 260, 296 (Cal. 2006), see Doc. 65 at 4:9-11, is readily distinguishable. Soukup was an appeal from

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the denial of the defendants motion to strike the malicious prosecution complaint of the plaintiff under Californias Anti-SLAPP statute. In Soukup, the plaintiff, Peggy Soukup, had been a legal secretary and paralegal employed by attorney Herbert Hafif until June 1993. See id. at 269. In July 1994, Hafif sued Soukup, along with a former associate and former clients, for fraud, malicious prosecution, defamation, breach of fiduciary duty, tortious interference with business relationships and invasion of privacy, allegeing that Soukup had conspired with the other defendants to sue and defame Hafif. See Soukup 39 Cal. 4th at 272. Upon being served with the complaint, Soukup told Hafif's lawyers that she should not have been named in the action because she had no involvement in the claims asserted in the action nor had she conspired with any of the codefendants. See id. at 273. When Soukup asked to be dismissed from the action, Hafifs lawyers refused. See id. During a deposition, Soukup asked one of Hafifs attorneys What does Mr. Hafif want from me? and was told, Well, he doesn't want your money, and added, Mr. Hafif wants to make sure that you don't make any trouble for him in the future. See id. During the deposition of Hafif, when Soukup asked him how she had assisted her co-defendant Hutton in filing Huttons complaint against Hafif, Hafif replied, I don't think you [Soukup] had anything to do with it. See id.i at 274. Similarly, when Soukup asked Hafif how she had assisted her co-defendant Jones, Hafif testified, You [Soukup] may not have been involved in the filing of the complaint. You were involved in the general work of implementing the attack on me for whatever reason. See id. When Soukup asked Hafif whether he would be producing any witnesses to testify to my [Soukups] assistance in the malicious prosecution, Hafif testified, No. See id. In the same deposition, while again insisting that Soukup was part of the conspiracy to extort money from [Hafif] at the threat of [Hafifs] reputation, Hafif testified, I have no idea in her case as to what motivated her [Soukup]. See id.

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Soukup secured the dismissal of Hafifs complaint against her under californias anti-SLAPP law, see id. and thereafter sued Hafif for malicious prosecution. See id. at 275. Hafif sought to strike Soukups complaint against him under the anti-SLAPP law. See id. at 276. On these very extreme (and eminently distinguishable facts), the Court found that Soukup had made a threshold showing of actual malice to support her claim of malicious prosecution. See id. at 276. The Court based this conclusion on the very extreme facts above as well as the following: Soukup also cites evidence of attitudes ranging from open hostility to indifference (Grindle v. Lorbeer, [(1987) 196 Cal. App. 3d 1461,] at p. 1465) that satisfies the requirement of a showing of minimal merit to her malicious prosecution claim so as to defeat defendants' motions. For example, she cites evidence that Hafif physically threatened her when she refused to accept unregistered stock as part of LOHH's distribution of its pension plan, the event she alleges ultimately resulted in her having been named as a defendant in the underlying action; that Stock told her Hafif had named her in the underlying action to prevent her from making trouble for him in the future; that Hafif admitted at a deposition he had no witnesses to testify to her involvement in the malicious prosecution cause of action in the underlying action; that Gregory Hafif threatened the lawyer Soukup retained to look into the pension plan matter with lawsuits and attorney fee claims; that Aitken failed to provide her with an explanation as to why she had been named a defendant in the underlying action and refused her request to be dismissed from the action; and that Stock refused to dismiss Hafif's appeal of the dismissal of the underlying action after she prevailed on her anti-SLAPP motion.

19 Soukup v. Law Offices of Herbert Hafif, 39 Cal. 4th 260, 296 (Cal. 2006) (emphasis added). 20 Nothing in the FAC approaches this level of factual detail showing Ms. Borodkins 21 22 23 24 25 26 purported malice. Nothing in the FAC supports an inference that Ms. Borodkin bore an attitude anywhere on the spectrum of open hostility to indifference as under Soukup or Grindle v. Lorbeer, 196 Cal. App. 3d 1461 (1987). Xcentrics theory is generally that the plaintiffs in the California Action changed their testimony after the May 7, 2010 deposition of Raymond Mobrez after recordings

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referred to in Paragraphs 40-41 of the FAC purportedly revealed inconsistencies in the testimony. See FAC 39. The FAC does not indicate that Ms. Borodkin was indifferent to this one defect in the California Action that Xcentric continually harps upon to argue that all of the claims in the California Action were fabricated. Quite contrary to any plausible theory that Ms. Borodkin litigated these claims with indifference, the FAC in fact alleges that Ms. Borodkin corrected the prior testimony of Raymond Mobrez in the California Action. See FAC 50. The FAC is completely bereft of any factual allegations that Ms. Borodkin acted with open hostility. Moreover, Xcentrics Opposition completely mischaracterizes the bases on which the Central District of California resolved the California Action. Xcentric argues that the California District Court ultimately resolved each and every claim on the merits against Ms. Borodkins former clients for the same reasons known to Ms. Borodkin in May 2010. See Doc. 65 at 5:1-3 (emphasis added). This argument implies that the clients inaccurate accounts of Mobrez telephone conversations with Magedson furnished the basis of the courts resolution of all the claims in the California Action, and that Ms. Borodkin would have known this upon learning of the recordings referenced in Paragraphs 40-41 of the FAC. This is untrue, and nothing more than a post-hoc rationalization for asserting its illthought out claims against Ms. Borodkin. The recordings on which this entire malicious prosecution action is based, (referenced at Paragraph 40-41 of the FAC) did not, in May 2010, or any time thereafter, indicate to Ms. Borodkin that the entire California Action was baseless. The Court in the California Action, in fact, found that those recordings were inconclusive, since Xcentric refused to identify the vendor who made the recordings: Plaintiffs have presented facts indicating that the recordings may not be accurate or trustworthy. Specifically, Mobrez's phone records indicate the duration of each of the calls made from Mobrez to Magedson in March and April 2009. . . . In most

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instances, the duration of the calls is considerably longer than the length of the recorded conversation submitted to the Court. Thus, Plaintiffs suspect that the recordings may have been altered or edited. While Defendants have a ready explanation for the time discrepancy that is, that the third party vendor does not begin recording the calls until after the caller has navigated through an automated series of prompts, which takes some time neither the Court nor the Plaintiffs can verify this without testimony from the third party vendor who actually recorded the conversations. See Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370, at *40-41 (C.D. Cal. July 19, 2010) (emphasis added). The Court in the California Action found that Xcentric had refused to reveal the name of the third party vendor to the Plaintiffs despite the Plaintiffs' reasonable request. See id. at *39-40. Thus, if Xcentrics theory is that the recordings alleged in the FAC at 40-41 are the reasons that Ms. Borodkin should have known that the California Action was baseless, Xcentrics theory would have required Ms. Borodkin to credit Xcentrics explanation for the missing chunks of time in the recordings, as even the Court in the California Action found itself unable to verify Xcentrics explanation for the discrepancies in the recording times. This falls far short of a plausible allegation that Ms. Borodkin knew the California Action was baseless in its entirety. However, the recordings actually played no role in the legal resolution of the claims in the California Action. As the Court in the California Action found, the plaintiffs relied exclusively on the written communications for their RICO claim predicated on attempted extortion. See Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370 (C.D. Cal. July 19, 2010) at *46. The remainder of the claims in the California Action, none of which involved the recordings referred to at Parargraphs 40-41 of the FAC, were decided in a separate order on May 4, 2011. See Asia Econ. Inst. v. Xcentric Ventures LLC, 2011 U.S. Dist. LEXIS 145380 (C.D. Cal. May 4, 2011). Xcentric has articulated no other factual basis, aside from the recordings referenced

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1 at paragraphs 40-41 of the FAC, from which it could plausibly be inferred that Ms. 2 Borodkin litigated the California Action with malice. Xcentric has failed to adequately 3 furnish any particulars indicating Ms. Borodkins malice in continuing the California 4 Action. The type of conclusory allegations of motive alleged in Paragraph 82 of the FAC, 5 are unaccompanied by any factual details regarding Ms. Borodkins actions. Therefore the 6 FAC is subject to dismissal for the same reasons applicable to the conclusory allegations in 7 Twombley, 550 U.S. at 570, 127 S.Ct. at 1974, 167 L. Ed. 2d at 949 (2007); and. Iqbal, 556 8 U.S. at 696. 9 Finally, the FAC does not fulfill the practical purpose of enabling Ms. Borodkin to

10 reasonably frame a response. Each and every new allegation against her is pleaded 11 collectively against her and Daniel Blackert, together. As Ms. Borodkin cannot reasonably 12 answer for Mr. Blackerts subjective motives, the ambiguous new Paragraph 82 does not 13 clarify the pleadings, and will create additional burdens and expenses in the form of 14 discovery disputes, should this matter proceed on the current pleadings. 15 III. 16 17 18 19 20 21 22 23 24 25 26 RESPECTFULLY SUBMITTED this 27th day of April, 2012. CONCLUSION For the foregoing reasons, Ms. Borodkin respectfully requests this Court to strike

the First Amended Complaint under Rule 12(e) as against her, without leave to replead. Alternatively, Ms. Borodkin respectfully requests this Court to order Xcentric to provide a more definite statement regarding Ms. Borodkins alleged improper purpose, separate and apart from that of Mr. Blackert, so that she can reasonably frame a response, not be left to guess which allegations refer to her, as opposed to herself and/or Mr. Blackert, and be afforded the full protection of Rule 11.

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IVERSON,th YOAKUM, PAPIANO & HATCH 633 West 5 Street, 64th Floor Los Angeles, CA 90071 By /s/ Lisa J. Borodkin Lisa J. Borodkin Admitted Pro Hac Vice QUARLES & BRADY LLP Renaissance One, Two North Central Avenue Phoenix, AZ 85004-2391 John S. Craiger David E. Funkhouser III Attorneys for Lisa Jean Borodkin

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CERTIFICATE OF SERVICE I hereby certify that on April 27, 2012, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrant: David S. Gingras, Esq. (David@GingrasLaw.com) Attorneys for Plaintiff Raymond Mobrez pro se (raymond@asiaecon.org) Iliana Llaneras pro se (iliana@asiaecon.org) /s/ Lisa J. Borodkin

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