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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 FOR MORE DEFINITE STATEMENT PURSUANT TO FED. R. CIV. P. 12(e) (Assigned to the Honorable G. Murray Snow) (Oral Argument Requested)

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I.

PRELIMINARY STATEMENT Xcentric Ventures LLC (Xcentric) agrees that meritless claims may be weeded

out via tools such as motions under Rule 12(e). See Response (Doc. 39) at 4:18-22 (citing Galbraith v. County of Santa Clara, 307 F.3d 1119, 1125 (9th Cir. Cal. 2002)). Xcentric also agrees that the decision to grant this motion is firmly in this Courts discretion. See Doc. 39 at 3:11-12 (citing Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure 1376 (3d ed. 2006)). But Xcentric does not argue that it would be prejudiced in any way from the granting of this motion. It cannot. The Court is still considering personal jurisdiction, see Docs. 17-18, 26-27, 32-34, 38,1 and Xcentric has only just recently served Defendant Daniel Blackert. See Doc. 43. By contrast, the Court and Ms. Borodkin would be subjected to unnecessary burden if the pleadings are not clarified. Xcentric does not seriously dispute that many of its key allegations remain ambiguous. See Doc. 39 at 9:1-14, 10:19-21, 10:16-28, 11:15-18, 12:15. Instead, Xcentric urges that any ambiguities in the Complaint can be cleared up in discovery. See Doc. 39 at 4:26-28, 12:10-11. But that would work a grave injustice. Ms. Borodkin has submitted strong prima facie proof that Xcentric intends to subject her to a long court battle unless she provides damaging information about an unrelated third party to Xcentrics manager. See Doc. 25 at 2-3. Since Ms. Borodkin has no such information, all she can do is seek the just, speedy, and inexpensive resolution of this action that Federal Rule 1 contemplates. That starts with the Complaint. Xcentric does not point to any allegations in the Complaint that furnish the details requested. Rather, Xcentric argues against a heightened pleading standard that this motion did not seek. See Doc. 39 at 4:1-22, 9:21Ms. Borodkins Reply on the motion re: personal jurisdiction is due December 2, 2011. See Local Civ. R. 12(b), 56.1(d); Fed. R. Civ. Proc. 5(b)(2)(E), 6(d).
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10:19. Xcentric also extensively argues the sufficiency of its claims, see Doc. 39 at 5:18:28, applying a Rule 8 pleading standard that has been overruled by the Supreme Court. Even if Xcentric could argue a claim that might be consistent with the Complaint, it does not eliminate the Complaints ambiguities regarding the elements of lack of probable cause, malice, Defendants and claims. Xcentrics attempts to explain what its claims might be are as vague and unintelligible as the Complaint. Xcentric seems to suggest that Ms. Borodkin should be on notice that lack of probable cause should be inferred from the bringing of claims that were never brought, compare Doc. 39 at 9:11-14 with Compl. Ex. A at 53-68. Xcentric also argues that Ms. Borodkin should be on notice of malice from allegations of acts she did not commit, see Doc. 39 at 3:2-16, 7:18-8:1-2, 8:12-17, 8:23-25, 12:3 but, in fact, corrected, compare Compl. 51. A more definite statement would enable Ms. Borodkin to tell whether the Complaint is deliberately illogical or just poorly pled. The Response also relies on facts that were never pled. See Doc. 39 at 2:23-24, 8:22-23 11:12-13. Xcentric concedes that Ms. Borodkin is not named in the First Cause of Action. See Doc. 39 at 1:26-28. Xcentric also seems to have a working theory of the elements of its claims. See Doc. 39 at 5:1-7:4. Since Xcentric believes that its Response clarified its claims (which it has not), then Xcentric should be able to reorganize the Complaint so as to plead each element in the Second and Third Causes of Action separately against Ms. Borodkin in non-conclusory terms, without reliance on shotgun-style references to prior allegations, and without referring, puzzle pleading-style, to a rambling narrative. Accordingly, Ms. Borodkin respectfully requests that Xcentric be ordered to provide a more definite statement: (1) identifying which defendants are referred to in paragraphs 2, 9, 53, 58, 75, 82-91 of the Complaint, (2) identifying which claims in the California Action are referred to in Paragraphs 48, 52, 53, 55, 57, 65- 67, 69, 72, 76, 77, 79, 82 and 89, (3) making such references to claims consistent with the Complaints

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Exhibit A, and (4) separately pleading facts, if any, showing that Ms. Borodkin acted without probable cause, and maliciously, so that she can reasonably frame a response. II. LEGAL ARGUMENT A. Xcentrics Characterization of the Complaint

Xcentrics own description of the Complaint highlights the ambiguities identified by this motion. Xcentric claims that the Complaint provides a narrative. See Doc. 39 at 1:21. But the narrative is constructed in such a way that it creates ambiguities. As Xcentric notes, Rule 8 demands more than an unadorned, the-defendant-harmed me accusation. See Response at 4:10-13 (citing Ashcroft v. Iqbal, 556 U.S. 662, --, 129 S.Ct. 1937, 1949, 173 L. Ed. 2d 868, 883 (2009)). Xcentric then argues that only the Second and Third Causes of Action are presented against Ms. Borodkin because they relate to her conduct after joining the case. See Doc. 39 at 1:27-28 (emphasis added). However, Xcentrics explanations relate only to conduct of the other defendants. In Part I, Xcentric irrelevantly discusses its theory that the other defendants manufactured racketeering claims in the underlying California Action, see Doc. 39 at 2:1-6, 2: 17-20, and that one of the three plaintiffs in the California Actions had no revenues,2 see Doc. 39 at 2:7-16. In Part II.b, Xcentric again repeats the actions of the other defendants, see. Doc. 39 at 7:18-23, with the inclusion of additional statements and conduct of Mr. Blackert, see Doc. 39 at 7:24-8:2.3 In Part II.e, Xcentric again repeats that the RICO claims in the California Action were fabricated. See Doc. 39 at 11:7-8. But again, this predated Ms. Borodkins conduct, as the Complaint also alleges. This argument by Xcentric is a logical fallacy known as denying the antecedent. The Complaint alleges that there were three plaintiffs in the California Action Raymond Mobrez, Iliana Llaneras as well as Asia Economic Institute LLC. However, the Complaint does not allege that Mobrez or Llaneras had no damages. 3 The Complaints Exhibit I discloses that Ms. Borodkin was not copied on the email that Xcentric argues should have made its theory obvious to her. See Compl. 78, Ex. I.
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Bizarrely, the Complaint alleges only that Ms. Borodkin acted to correct the one wrongful act complained of, the filing of false declarations. See Compl. 51. Xcentrics Response accuses Ms. Borodkin of having violated court orders in the California Action, see Doc. 39 at 2:23-25, but no such allegation appears in the Complaint. Xcentric claims that each claim in the California Action was resolved in favor of Xcentric in two separate summary judgment motions. See Doc. 39 at 9:7-10, 11:11-14. Xcentric states that the Court in the California Action found each claim groundless, see Doc. 39 at 11:12-13,4 but again, the Complaint contains no such allegation. In fact, the Complaints Exhibit H discloses that the Court in the California Action denied Xcentrics two Rule 11 motions, suggesting the contrary.5 The Complaint contains no other non-conclusory allegations as to why the racketeering claims (or any other claims) in the California Action were baseless but in the one respect that Ms. Borodkin allegedly corrected. See Compl. 51. The Complaint contains no non-conclusory allegations of Ms. Borodkins malice or improper purpose. Those allegations remain vague and ambiguous. Hence, this motion. B. Xcentric Concedes that References to Defendants Are Ambiguous.

Xcentric does not dispute that it has not separated Ms. Borodkins conduct from that of the other defendants. See Doc. 39 at 10:19-23. Instead, Xcentric suggests that Ms. Borodkin has the responsibility of understanding or differentiating her own conduct from

Xcentric did not receive summary judgment on the RICO claims predicated on wire fraud. As noted in the order cited by Xcentric as 2011 WL 2469822 (C.D. Cal. May 4, 2011), the plaintiffs voluntarily dismissed the RICO claim predicated on wire fraud. Xcentric did not receive a favorable determination on the merits on those claims. 5 Arizona uses the same standard for the lack of probable cause element in malicious prosecution claims as the Federal Rule 11 standard. See See Wolfinger v. Cheche, 206 Ariz. 504, 510 (Ariz. Ct. App. 2003); Verve, L.L.C. v. Hypercom Corp., 2006 U.S. Dist. LEXIS 58398 at *7 (D. Ariz. Aug. 16, 2006).

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that of the other parties. See Doc. 39 at 10:20-21. Moreover, Xcentric seems to merge Ms. Borodkins purported knowledge of what the other defendants may have done with her conduct. See Doc. 39 at 10:22-23 (Even assuming Ms. Borodkin was not aware of the exact actions of her co-defendants, the remedy for this situation is not found in Rule 12(e).) This does not put Ms. Borodkin on notice of the claims, as the Complaint only alleges that Ms. Borodkin promptly took remedial measures to correct the other defendants declarations as soon as she discovered they were inaccurate. See Compl. 51. As cited, a Rule 12(e) motion is the most appropriate vehicle for addressing ambiguous allegations to multiple defendants. See, e.g., Cobb v. Regions Bank, 2010 U.S. Dist. LEXIS 49544 at *8-9 (W.D. Tenn. May 19, 2010) (Plaintiff refers to Defendants and leaves it to those unspecified Defendants to determine which paragraphs of the Complaint might refer to them); Ames v. Dep't of Marine Res. Comm'r, 256 F.R.D. 22, 31 (D. Me. 2009); Babb v. Bridgestone/Firestone, 861 F. Supp. 50, 52 (M.D. Tenn. 1993) (complaint should identify with greater specificity who did what to whom); Van Dyke Ford, Inc. v. Ford Motor Co., 399 F. Supp. 277, 284 (E.D. Wis. 1975) (Specific identification of the parties to the activities alleged by the plaintiffs is required in this action to enable the defendant to plead intelligently). In Thomas v. Independence Twp., 463 F.3d 285, 302 (3d Cir. 2006), the court remanded the case with instructions for the district court to treat the motion to dismiss under Rule 12(b)(6) as one for a more definite statement under Rule 12(e), with instructions to grant the motion. See id. Xcentric has not responded to any of these citations. C. Xcentric Ignores the Strong Judicial Policies Served By Requiring the Repleading of Impermissible Shotgun Pleadings.

Part II.d of Xcentrics Response is entitled Additional Comments re: Specificity of Allegations/Shotgun/Puzzle Pleading. See Doc 39 at 9:15-16. However, Xcentric does not discuss the shotgun nature of the Complaint anywhere in its Response. Xcentric also

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does not discuss the cases cited in this motion in which courts have either granted motions under Rule 12(e) to decipher shotgun pleading, see, e.g., Cobb, 2010 U.S. Dist. LEXIS 49544 at *8-9, or stating that the defendant should have, but did not, make a motion under Rule 12(e) to address shotgun pleading. See, e.g., Byrne v. Nezhat, 261 F.3d 1075, 1129 (11th Cir. 2001) (RICO); Anderson v. District Bd. of Trustees of Cent. Fla. Community College, 77 F.3d 364, 366-367 (11th Cir. 1996)(wrongful discharge). In cases such as Magluta v. Samples, 256 F.3d 1282, 1284 (11th Cir. 2001), federal appellate courts have reversed and remanded cases involving shotgun pleadings with orders for the District Court to require a more definite statement. Xcentrics suggestion that Ms. Borodkin should respond to the unintelligible Complaint with general denials under Rule 8(b)(5), see Doc. 39 at 10:22-28, would only heap unnecessary work upon the Court, and increase the expense of litigating this action. Such a suggestion shows great disregard for the efficient administration of justice and the scarcity of court resources. In Byrne v. Nezhat, 261 F.3d 1075, 1129 (11th Cir. 2001), the Court of Appeals described at length how failing to promptly address shotgun pleadings through Rule 12(e) waters down the rights of the parties to have valid claims litigated efficiently: [A] shotgun complaint leads to a shotgun answer. . . . Such disjointed pleadings make it difficult, if not impossible, to set the boundaries for discovery. Hence, discovery disputes are inevitable. Resolving them can be time-consuming. If the court does not intervene and require the parties to narrow the issues, the discovery disputes continue unabated--until a motion for summary judgment or a pretrial conference brings them to a halt. At that point, the court is confronted with the time-consuming tasks it avoided earlier--rearranging the pleadings and discerning whether the plaintiff has stated a claim, or claims, for relief, and whether the defendant's affirmative defenses are legally sufficient. Byrne, 261 F.3d at 1129. In addition, shotgun pleadings wreak havoc on the judicial system, effectively depriving meritorious cases of court resources:

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Cases framed by shotgun pleadings consume an inordinate amount of a court's time. As a result, justice is delayed, if not denied, for litigants who are standing in the queue waiting to be heard. . . . Shotgun pleadings, if tolerated, harm the court by impeding its ability to administer justice. The time a court spends managing litigation framed by shotgun pleadings should be devoted to other cases waiting to be heard. Wasting scarce judicial and parajudicial resources impedes the due administration of justice and, in a very real sense, amounts to obstruction of justice. Byrne, 261 F.3d at 1130-31. Granting this motion would conserve judicial resources. D. Requiring a Plaintiff to Replead Puzzle Pleading Is Not the Same As a Heightened Pleading Standard, As Xcentrics Authorities Concede.

At most, Xcentric musters a weak argument crudely equating this Rule 12(e) motion to one requesting a heightened pleading standard. See Doc 39 at 4:1-4, 9:17-10:28. This is a straw man, and does not fairly characterize the arguments in this motion. Nowhere did this motion argue for the type of specifics that would be required under Rule 9(b). In fact, the moving papers cited Cox v. Maine Maritime Academy, 122 F.R.D. 115, 116 (D. Me. 1988), stating that Rule 12(e) motions strike at unintelligibility, rather than at lack of detail in the complaint. See Doc. 35 at 5:13-15. Requiring a plaintiff to furnish sufficient factual allegations to put a defendant on notice of the nexus between her own actions and the plaintiffs legal claims is not, as Xcentric argues, tantamount to imposing a heightened pleading standard. See Doc. 39 at 4:1-22, 9:21-10:19. Xcentric cites Galbraith v. County of Santa Clara, 307 F.3d 1119, 1125 (9th Cir. 2002), to state that the Ninth Circuit has rejected a heightened pleading standard for cases under 42 U.S.C. 1983. Galbraith was abrogated by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L. Ed. 2d 929 (2007), as noted in Yadin Co. v. City of Peoria, 2008 U.S. Dist. LEXIS 109501, at *13-14 (D. Ariz. Mar. 25, 2008). Twombly now requires plaintiffs in all civil cases to plead facts showing that claims have been nudged over the line from conceivable to plausible, not merely allegations that could conceivably support relief

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under any set of facts consistent with the pleadings. See Twombly, 550 U.S. at 570, 127 S. Ct. at 1974, 167 L. Ed. 2d at 949; Yadin, 2008 U.S. Dist. LEXIS 109501, at *13. As Xcentric concedes, even Galbraith approved of motions under Rule 12(e) as one of the other procedural devices available as an alternative to a heightened pleading standard (other procedural devices under the Federal Rules - including a motion for more definite statement under Rule 12(e) . . . as tools to weed out meritless claims). See also Educadores Puertorriquenos En Accion v. Hernandez, 367 F.3d 61, 67 (1st Cir. 2004) ([A]lternatives are available to aid trial courts in early detection of potentially meritless claims. . . . A trial court may . . . grant the defendant's request for a more definite statement.). Clearly, if two things are the same, one cannot be an alternative to the other. Xcentrics Response discusses only one case cited in the motion regarding puzzle pleadings, Teamsters Local 617 Pension & Funds v. Apollo Group, Inc., 633 F. Supp. 2d 763 (D. Ariz. 2009). Although Apollo was only one of many such cases cited in the motion, Xcentric turns that discussion, too, into an irrelevant argument against heightened pleading standards. See Doc. 39 at 9:17-10:16. In light of Twombly, Xcentric has argued no principled reason why its malicious prosecution claim should not be well pled. E. Xcentric Concedes that References to Malice Are Ambiguous.

Xcentric acknowledges that a cause of action for wrongful continuation of civil proceedings (WCCP) under Arizona law must include the following elements (1) the defendant took active part in the prosecution of a civil proceeding against the plaintiff, (2) the proceeding terminated in the plaintiffs favor, (3) the defendant acted without probable cause, (4) the defendant acted with malice, and (5) the malicious conduct was a cause of injury, damage, loss or harm to the plaintiff. See Revised Arizona Jury Instructions, Civil, 4th ed.; Intentional Torts 19 (emphasis added), cited at Doc. 39 at 5:17-20. Xcentric also concedes that its Third Cause of Action, admittedly vague, is one for aiding and abetting

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WCCP. See Doc. 39 at 12:2-5. Thus, both are claims for WCCP. Xcentric does not point to any allegation setting forth the factual basis for its ambiguous allegations that Ms. Borodkinas opposed to other defendantsacted with malice. Xcentric points to paragraphs 48-64 of the Complaint, see Doc. 39 at 7:59, but none of those allegations state that Ms. Borodkin acted for any purpose other than litigating the claims in the California Action. Xcentric also claims that malice is pled at paragraphs 84 and 91, see Doc. 39 at 7:9, but both paragraphs are only bare recitations of legal conclusions against all defendants. Finally, Xcentric points to paragraph 78, see Doc. 39 at 7:23-8:2, but that paragraph concerns only Blackerts conduct. Xcentric is not even sure whether California or Arizona law governs its claim. See Doc. 39 at 7:11-17. Although Xcentric argues that malice can be inferred from facts establishing lack of probable case, it cites only the California cases of Soukup v. Law Offices of Herbert Hafif, 39 Cal.4th 260, 293, 139 P.3d 30, 52, 46 Cal.Rptr.3d 638, 664 (Cal. 2006), and Grindle v. Lorbeer, 196 Cal.App.3d 1461, 146566, 242 Cal.Rptr. 562 (1987), and no Arizona cases, for that proposition. See Doc. 39 at 7:15-17. Even if malice could reasonably be inferred under Arizona law from lack of probable cause for continuing one of several claims in an action, Xcentrics references to the claim is so variable, as discussed below, that it is also ambiguous. Accordingly, any such allegations of Ms. Borodkins malice are ambiguous. F. Xcentric Concedes that References to Claims Are Ambiguous. As noted in the moving papers, Xcentric uses the term claim inconsistently in the Complaint to allege that Ms. Borodkin continued a claim for extortion or attempted extortion after learning that this claim had no merit. See Doc. 39 at 13:2-15:12. This is another straw man. Xcentric vexatiously misquotes the moving papers to state, according to the motion, the actual claim at issue was attempted extortion not extortion. See Doc. 39 at

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9:5-6. This is as disingenuous as the Complaint. Xcentrics counsel cannot claim inadvertence, as this motion clearly pointed out that the operative claim in the California Action at the relevant time was RICO predicated on attempted extortion, as disclosed by Exhibit A to the Complaint. See Doc. 35 at 13:22-23, 14:6-7, 14:10-11. The difference is critical, because RICO makes actionable a pattern of conduct that harms plaintiffs, even where there is no first-party reliance on defendants conduct, provided the relationship is direct enough. See, e.g. Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 658-59, 128 S. Ct. 2131, 170 L. Ed. 2d 1012 (2008); c.f. Wodka v. Causeway Capital Mgmt. LLC, 2011 U.S. App. LEXIS 9959 at *4 (9th Cir. May 16, 2011).. Xcentric calls such distinctions hair-splitting, hyper-technical and

immaterial, see Doc. 39 9:1-14. However, it is very material. The Complaint, stripped to its essentials, relies entirely on the theory that Ms. Borodkin wrongfully continued a claim that was never brought. Moreover, the Complaint also alleges that the one defect in the claim from which Xcentric now argues that lack of probable cause (and thus malice) should be inferred was, in fact, corrected by Ms. Borodkin. See Compl. 51. Neither the Response nor the Complaint advance any other reason why that or any other claim in the California Action was continued without probable cause. Accordingly, the Complaints references to claims are ambiguous and do not give Ms. Borodkin fair notice of Xcentrics claims, if any, against her. G. The Equities Warrant Granting this Motion.

Xcentric does not claim that it would be harmed by granting this motion. Xcentric cites general statements that Rule 12(e) motions should not be used to complicate and delay cases, but Xcentric does not claim that granting this motion would complicate or delay this case. See Doc. 39 at 3:11-16. Granting this motion would make this case less complicated, not more. Moreover, granting this motion would not delay this case. This Court is still considering the threshold issue of personal jurisdiction. See Docs. 17-18, 26-

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27, 32-34, 38. Xcentric only recently served Mr. Blackert. See Doc. 43. Accordingly, Xcentric would not be prejudiced by repleading in a more definite statement. By contrast, Ms. Borodkin would be prejudiced by being forced into discovery on Xcentrics unintelligible claims. Xcentrics manager expressly threatened that this will be a a long and drawn out legal battle and will only make you look worse than you already do unless she provides information on things an unrelated party did wrong. Doc. 25 at 2. As Ms. Borodkin has no such information, the Complaint should be repled. IV. CONCLUSION For the foregoing reasons, Ms. Borodkin respectfully requests that this Court grant this motion for a more definite statement under Rule 12(e). In addition, should the Court find it warranted, it is respectfully requested that the Court award Ms. Borodkin the cost of preparing this Reply as a sanction under 28 U.S.C. 1927 for Xcentrics counsels bad faith in misrepresenting this motions argument regarding the claim that is the sole basis of the Complaint against Ms. Borodkin, should the Court find that it vexatiously multiplied the proceedings. Compare Doc. 39 at 13:2-15:12 with Doc. 35 at 13:22-23, 14:6-7, 14:10-11. In light of the Response, it cannot be denied that Xcentrics counsel is determined to put Ms. Borodkin on trial for continuing a claim that was never brought. RESPECTFULLY SUBMITTED this 22nd day of November, 2011. 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 November 22, 2011, 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 Hartwell Virginia Harris (hartwell@hartwellharris.com) Attorney for Defendants Mobrez, Llaneras and Asia Economic Institute LLC /s/ Lisa J. Borodkin

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