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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
Quarles & Brady LLP
Firm State Bar No. 00443100 Renaissance One, Two North Central Ave. Phoenix, AZ 85004-2391
TELEPHONE 602.229.5200

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, L.L.C., Plaintiff, v. LISA JEAN BORODKIN and JOHN DOE BORODKIN, husband and wife; RAMOND MOBREZ and ILIANA LLANERAS, husband and wife; DANIEL BLACKERT and JANE DOE BLACKERT, husband and wife; ASIA ECONOMIC INSTITUTE, LLC, a California limited liability company, DOES 1-10, inclusive, Defendants. Defendant LISA JEAN BORODKIN hereby moves pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the Verified First Amended Complaint for failure to state a claim on which relief can be granted. This Motion is based on the Memorandum of Points and Authorities, Request for Judicial Notice filed and served herewith, and upon No. 2:11-CV-01426-PHX-GMS DEFENDANT LISA JEAN BORODKIN'S MOTION UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) TO DISMISS THE VERIFIED FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION (Assigned to the Honorable G. Murray Snow) (Oral Argument Requested)

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the papers, records and pleadings on file herein, specifically including the motion under Rule 11 for sanctions, supporting declaration and Request for Judicial Notice filed concurrently herewith. I. PRELIMINARY STATEMENT This motion to dismiss the Verified First Amended Complaint (FAC) of Plaintiff, Xcentric Ventures, LLC (Xcentric) against Defendant Lisa Jean Borodkin (Ms. Borodkin), or in the alternative, motion for judgment on the pleadings, should be granted. The allegations in the Verified First Amended Complaint, taken together with the exhibits attached to the pleadings and other matters of which this Court may take judicial notice, show that Plaintiff has raised no plausible claim against Ms. Borodkin for malicious prosecution, or aiding and abetting same, on which relief can be granted. II. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND When ruling on a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice. See Colony Cove Props., LLC v. City of Carson, 640 F.3d 948, 955 (9th Cir. 2011). However, a court need not accept as true conclusory allegations that are contradicted by documents referred to in the complaint. See Ashcroft v. Iqbal, -- U.S. -- , 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009) ("[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."); Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) ("[W]e are not required to accept as true conclusory allegations which are contradicted by documents referred to in the

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complaint, and we do not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations."). On a motion under Rule 12(b)(6), the Court may take judicial notice of matters referenced in the pleadings without converting the motion into one for summary judgment. Under the "incorporation by reference" doctrine, a court is permitted to take into account documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading without converting the motion to dismiss into one for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). A plaintiff may plead himself out of court by attaching documents to the complaint that indicate that he or she is not entitled to judgment. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). With these principles in mind, a summary of Xcentrics pleading, as it concerns Ms. Borodkin, is as follows. A. Xcentrics Business Plaintiff Xcentric operates a website called Ripoff Report at ripoffreport.com. See FAC 2. Members of the public may use Ripoff Report to create and publish complaints about companies or individuals who they believe have wronged them. See FAC 11. Xcentric asserts that it is immune from liability from claims seeking to treat it as the speaker of content contributed from third parties under Section 230 of the Communications Decency Act, 47 U.S.C. 230(c)(1) (Section 230). See FAC 14.1 Xcentric also insists that its policy is never to remove a post. See Giordano v. Romeo, 76 So. 3d 1100, 1102 (Fla. Dist. Ct. App. 3d Dist. 2011), submitted with Request for Judicial More accurately, Xcentric relies on its status as a provider of interactive computer services under 47 U.S.C. 230(f)(2) to exclude itself from liability without also becoming an information content provider under 47 U.S.C. 230(f)(3). See, e.g. Asia Econ. Inst. v. Xcentric Ventures LLC, 2011 U.S. Dist. LEXIS 145380 at *21 (C.D. Cal. May 4, 2011).
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Notice in Support of Defendant Lisa Jean Borodkins Motion Under Rule 12(b)(6) (RJN), Ex. 6. Xcentric sells a service, called the Corporate Advocacy Program (CAP), that allows CAP members to receive preferential treatment. See Asia Econ. Inst. v. Xcentric Ventures LLC, 2011 U.S. Dist. LEXIS 145380 at *8 (C.D. Cal. May 4, 2011). For example, negative reports about CAP members are less prominent in internet searches. See id. Xcentric charges a flat fee of $7,500 to join CAP, plus a monthly fee. See Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370 at *13 (C.D. Cal. July 19, 2010). Xcentric claims that the Corporate Advocacy Program never includes removal of any complaints published on Ripoff Report. See Giordano, 76 So. 3d at 1102, RJN Ex. 6. B. The California Action Prior to Ms. Borodkins involvement, on January 27, 2010, Defendants Asia Economic Institute, Raymond Mobrez (Mobrez) and Iliana Llaneras (Llaneras), represented by Defendant Daniel Blackert, filed an action against Xcentric and its manager, Ed Magedson (Magedson), in Los Angeles County Superior Court, Case No. SC106603, which was later removed to the Central District of California (the California Action). See FAC 27, 28, Ex. A. The California Action, as originally filed, alleged twelve claims for relief against Xcentric and Ed Magedson (Magedson), including two federal RICO claims. See FAC 28, Ex. A. One of the RICO claims was for racketeering predicated on a pattern of attempted extortion. See FAC, Ex. A at 63. Contrary to the allegations of the FAC, the California Action did not contain a stand-alone cause of action for direct extortion or allege racketeering based on a pattern of extortion only a pattern of attempted extortion. On April 19, 2010, the Court in the California Action bifurcated the case to focus on the RICO claim predicated on attempted extortion. See FAC 30. Ms. Borodkins involvement in the California Action began on April 19, 2010. See FAC 30.

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On May 11, 2010, Xcentrics attorney in the California Action, David Gingras, sent Ms. Borodkin a letter purporting to advise her that her clients, Mobrez and Llaneras, had committed perjury and that their claims against XCENTRIC and Magedson were completely groundless. See FAC 43-46, Ex. E. Borodkin did not withdraw from representing Mobrez and Llaneras. See FAC 47. However, Xcentric alleges that on May 20, 2010, Borodkin caused Mobrez to file a corrected declaration, correcting allegedly false statements in Mobrezs earlier declaration. See FAC 49-50, Ex. F. Among the statements in Mobrezs May 20, 2010 declaration was a statement that Mobrez had been confused by, among other things, erroneous assumptions drawn from Mr. Magedsons prior declarations. See FAC Ex. F at 6. On May 11, 2010, Magedson had filed a declaration in the California Action recanting a previous affidavit filed March 22, 2010. See Request for Judicial Notice in Support of Motion for Sanctions Pursuant to Fed. R. Civ. Proc. 11 (Rule 11 RJN), Ex. 2.2 After Borodkin allegedly participated in correcting Mobrez and Llaneras May 3, 2010 declarations, no aspect of the plaintiffs case for racketeering predicated on attempted extortion in the California Action depended on the oral conversations between In his May 11, 2010 declaration, Magedson confessed that a conversation that he had recalled in great and specific detail in a March 22, 2010 Affidavit and again in an April 5, 2010 affidavit in the California Action had not, in fact, taken place at all. Magedson had previously sworn that: During my phone conversations with Mr. Mobrez, he became very threatening towards me, stating that he had people in Arizona who could find me which I interpreted as a threat. I repeated this same statement in another short affidavit filed in this matter on April 5, 2010. See Rule 11 RJN, Ex. 2 at 3. After listening to recordings of the calls, Magedson stated that he realized that Mobrez had never threatened him. See Rule 11 RJN at 8.
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the parties; the remainder of the claim relied exclusively on written communications between the parties. See Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370 at *43 (C.D. Cal. July 19, 2010). The RICO claim predicated on attempted extortion was dismissed by summary judgment on July 19, 2010. See FAC 56. On July 27, 2010 the plaintiffs in the California Action filed the Amended Complaint. See FAC 57; RJN Exs. 8-10. The First Amended Complaint shows that whether Mobrez and Llaneras perjured themselves in their account of the earlier telephone calls to Magedson was irrelevant to the bulk of the action. The gravamen of the California Action, as clarified in the First Amended Complaint filed on July 27, 2010, was whether Xcentrics statements to the public about CAP were accurate, whether Xcentric adequately disclosed the high costs of joining the CAP, or whether its failure to do so was false advertising or an unfair business practice that harmed those affected in a manner that was actionable under California law. See RJN Ex. 8 at 22-24. The First Amended Complaint also focused on whether Xcentrics claims that it never removed reports were accurate, given that Xcentrics communications about CAP to potential members indicated that Xcentric had redacted substantial portions of reports for CAP members. See RJN, Ex. 8 at 138-195. Finally, in July 2010, there was a lack of clarity under the law as to whether Xcentric should be made a defendant in defamation claims that were primarily asserted against the authors or reports, but published through Ripoff Report, due to Xcentrics unusual policy of claiming that it would not remove reports without a court order. See, e.g. Blockowicz v. Williams, 630 F.3d 563, 570 (7th Cir. Ill. 2010); Giordano, RJN Ex. 6. On November 1, 2010, Ms. Borodkin made a motion in the California Action for leave to conduct discovery under Federal Rule of Civil Procedure 56(f). See FAC. 60. Xcentrics allegations that Ms. Borodkin claimed a Rule 56(f) continuance was needed due to her inability to obtain ROGERS deposition prior to the November 1, 2010

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summary judgment hearing, see FAC 60, is contradicted by the actual pleading referred to by Xcentric, see RJN Ex. 11. As shown by the actual motion that was filed, the Rule 56(f) motion was based on a number of legitimate grounds, chiefly that Xcentric had previously failed to identify the existence of additional witnesses, of which Mr. Rogers was one. See id. In addition, Ms. Borodkin could not have taken a deposition even if Xcentric had consented, because the Court in the California Action had stayed discovery and the filing of Xcentrics special motion to strike had also stayed discovery. See id. Xcentric attempts to plead an array of improper motives it ascribes to Ms. Borodkin, see FAC 82, but does not allege any actual actions taken by Ms. Borodkin that would indicate malice on her part. None of the pleadings attached or referred to in Xcentrics First Amended Complaint support the accusations that Ms. Borodkin used the California Action to improperly attain unwarranted publicity for her own career, investigate Mr. Magedsons personal life, or any other improper purpose. The Rule 56(f) motion referred to in Paragraph 60 of the FAC shows that the plaintiffs in the California Action had no choice but to include Xcentric as a defendant in any defamation action they hoped to pursue against the authors of the reports about them, in the event they could obtain an injunction against the authors. See RJN Ex. 11, Ex. 3. This was because, at that time, Xcentric was then litigating an appeal in the Seventh Circuit case Blockowicz v. Williams, 630 F.3d 563, 570 (7th Cir. Ill. 2010), in which the plaintiffs had obtained an order enjoining the author of a report on Ripoff Report to remove the post, but with which Xcentric refused to comply on the grounds that they had not been made a defendant to the lawsuit. See id. (argued September 23, 2010, decided December 27, 2010). Finally, the FAC discloses in Exhibit H that Xcentric made two motions for sanctions that were denied in the June 15, 2011 final order disposing of the California Action. See FAC Ex. H. The Court may take judicial notice that Xcentrics Rule 11

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motions against Ms. Borodkin in the California Action were unsuccessful. See Rule 11 RJN at Ex. 5, p. 14. III. LEGAL ARGUMENT. A. Motions Under Rule 12(b)(6).

A complaint must contain "enough facts to state a claim to relief that is plausible on its face" in order to survive a motion to dismiss. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has allegedbut it has not shownthat the pleader is entitled to relief." See id. at 1950 (brackets and internal quotation marks omitted). To survive a dismissal for failure to state a claim under to Rule 12(b)(6), a complaint must contain more than a formulaic recitation of the elements of a cause of action[;] it must contain factual allegations sufficient to raise a right to relief above the speculative level. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). And while [a]ll allegations of material fact are taken as true and construed in the light most favorable to the non-moving party, Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996), conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim. See In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (internal quotations marks omitted). [O]nly a complaint that states a plausible claim for relief survives a motion to dismiss. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). Although detailed factual allegations are not required to survive a Rule 12(b)(6)

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motion to dismiss, a complaint that "offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007)). Rather, the complaint must allege sufficient facts to support a plausible claim to relief. See id. B. The Second Cause of Action Fails to State a Claim for Wrongful Continuation of Civil Proceedings

Malicious prosecution is a disfavored action. See Daniels v. Robbins, 182 Cal. App. 4th 204, 216 (Cal. App. 4th Dist. 2010). This is due to the principles that favor open access to the courts for the redress of grievances. Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 493. [T]he elements of the [malicious prosecution] tort have historically been carefully circumscribed so that litigants with potentially valid claims will not be deterred from bringing their claims to court by the prospect of a subsequent malicious prosecution claim. Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 872. Three elements must be pleaded and proved to establish the tort of malicious prosecution: (1) A lawsuit was commenced by or at the direction of the defendant [which] was pursued to a legal termination in plaintiffs favor; (2) the prior lawsuit was brought without probable cause; and (3) the prior lawsuit was initiated with malice. Daniels v. Robbins, 182 Cal. App. 4th 204, 216 (citing Citi-Wide Preferred Couriers, Inc. v. Golden Eagle Ins. Corp. (2003) 114 Cal.App.4th 906, 911 [8 Cal.Rptr.3d 199]). In this case, Xcentric has failed to plead facts supporting a lack of probable cause, and facts showing that Ms. Borodkin continued the California lawsuit with malice. The First Amended Complaint lacks any allegations that the California Action was continued by Ms. Borodkin without probable cause or with malice. By contrast, the

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documents attached to and referenced in the FAC, and other matters of which this Court can take judicial notice show, as a matter of law, that Ms. Borodkin had probable cause to continue the California Action, and did so for legitimate reasons. The Giordano and Levitt cases that were being litigated at the time, in 2010 and 2011, that Ms. Borodkin was continuing the California Action, show that reasonable legal minds could disagree as to whether a claim under Californias unfair business practices law could be maintained against a review site such as Yelp! or Ripoff Report for failing to disclose that preferential treatment was being given to paying participants. See RJN at Ex. 6, 7. The Florida Court of Appeal, in Giordano, found the business practices of Xcentric to be appalling: The business practices of Xcentric, as presented by the evidence before this Court, are appalling. Xcentric appears to pride itself on having created a forum for defamation. No checks are in place to ensure that only reliable information is publicized. Xcentric retains no general counsel to determine whether its users are availing themselves of its services for the purpose of tortious or illegal conduct. Even when, as here, a user regrets what she has posted and takes every effort to retract it, Xcentric refuses to allow it. Moreover, Xcentric insists in its brief that its policy is never to remove a post. It will not entertain any scenario in which, despite the clear damage that a defamatory or illegal post would continue to cause so long as it remains on the website, Xcentric would remove an offending post.
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See id. The Northern District of California called Xcentrics conduct in deliberate[ly] manipulat[ing] HTML code for paying customers to make certain reviews more visible in online search results an example of conduct that arguably constitute[s] bad faith. See Levitt v. Yelp! Inc., 2011 U.S. Dist. LEXIS 124082 at *25 (N.D. Cal. Oct. 26, 2011), submitted with RJN Ex. 7. The court in Levitt noted that Section 230 would not immunize a website from a false advertising or California unfair business practices claim for failing to disclose that it manipulates ratings in favor of those who buy advertising with the website:

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[I]t could be argued that the harm to the public (and potentially to businesses), which relies on the purported neutrality of Yelp's service, stems from an alleged misrepresentation about Yelp's posting criteria and failure to disclose its alleged practice of manipulating ratings in favor of those who advertise. Claims of misrepresentation, false advertising, or other causes of action based not on Yelp's publishing conduct but on its representations regarding such conduct, would not be immunized under 230(a)(1). See Levitt, (citing Anthony v. Yahoo Inc., 421 F. Supp. 2d 1257, 1263 (N.D. Cal. 2006); Barnes, 570 F.3d 1096, 1108-09 (9th Cir. 2009)), RJN Ex. 7. This was exactly the theory that the plaintiffs were litigating in the California Action. The First Amended Complaint filed in the California Action presented valid legal questions that were not affected by the correction of the plaintiffs testimony. Therefore, Ms. Borodkin was not objectively unreasonable at the time, as a matter of law, in seeking a judicial remedy for these business practices. Although Xcentric complains about the way that the claims in the California Action were litigated, the FAC includes no specific factual allegations that the claims in the California Action were baseless, other than conclusory allegations that the action was based in part upon perjury. Xcentric would not be able to show that Ms. Borodkin acted in an objectively unreasonable way, in continuing the California Action. An attorney is not obligated to credit an adversarys account of the facts above her clients, and the court in the California Action noted that Xcentric refused to provide discovery regarding the making of the recordings, see Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370, at * 39-40 (C.D. Cal. July 19, 2010), which would have enabled Ms. Borodkin to verify or discredit one version of the facts. Xcentric would not even be able to use the recordings described at Paragraphs 25 and 40 of the FAC to show that Mobrez or Llaneras had committed perjury, because Xcentric admits that Mobrez and Llaneras did not

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know their phone calls were being recorded, see FAC 40, and recordings thus obtained with out all parties consent are inadmissible in any civil proceeding.3 In this case, too, Xcentric has failed to allege specific facts showing any malice on the part of Ms. Borodkin. In California, an attorneys subjective malice must be pleaded with something more beyond a mere lack of probable cause: [A] lack of probable cause in the underlying action, by itself, is insufficient to show malice. (HMS Capital, [118 Cal.App.4th, 204, 218 (Cal. App. 2004) [A lack of probable cause is a factor that may be considered in determining if the claim was prosecuted with malice [citation], but the lack of probable cause must be supplemented by other, additional evidence.]; see also Downey Venture, [66 Cal.App.4th 478,] 498 [the lack of legal tenability, as measured objectively without more, would not logically or reasonably permit the inference that such lack of probable cause was accompanied by the actors subjective malicious state of mind].) Indeed, in Jarrow Formulas, the Supreme Court noted that even if no competent evidence was adduced in discovery to support claims in an underlying action, this does not, on its own, support a finding of malice in a section 425.16 hearing. (Jarrow Formulas, [31 Cal.4th 728, 743 (2003)]) Daniels v. Robbins, 182 Cal. App. 4th at 225. In this case, Xcentric has utterly failed to plead any facts showing Ms. Borodkins malice. The only facts that Xcentric alleges that could conceivably be construed in support of a finding of malice was that from May 7 to May 20, 2010, Gingras made Ms. Borodkin aware that that there were recordings showing that Mobrez purportedly lied about having been extorted in telephone conversations with Magedson. But this would not demonstrate malice, because the FAC admits that on May 20, 2010, Ms. Borodkins clients recanted their testimony as to the oral threats. Therefore, the only question was a purely legal one of whether Xcentrics CAP amounted to a pattern of attempted extortion. This is a claim that was very similar to one that had survived a motion to dismiss in Hy Under California law, recordings made in violation of California Penal Code 632 are inadmissible in any civil proceeding. See Cal. Penal Code 632(d).
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Cite Corp. v. Badbusinessbureau, 418 F. Supp. 2d 1142, 1150 (D. Ariz. 2005). There, the Court had written: Defendants operate a website. Plaintiff alleges that Defendants create and solicit false and defamatory complaints against businesses, but will cease this conduct for a $50,000 fee and $ 1,500 monthly retainer. Remedying the publication of false and defamatory complaints, which Defendants allegedly created and solicited, does not give Defendants the right to collect fees. . . . Plaintiff has properly alleged threatened extortion. Id. Another open legal question was whether Mobrez and Llaneras would have standing as victims of a RICO scheme predicated on attempted extortion even if they were not directly solicited for money. In Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 649 (U.S. 2008), the reasoning of the Supreme Court would give a broad reading of the RICO statute to provide a right of action to "[a]ny person" injured by the RICO violation, suggesting a breadth of coverage not easily reconciled with an implicit requirement that the plaintiff show reliance in addition to injury in his business or property. Id. To hold otherwise would create a nonsensical rule that a victim of a scheme of racketeering based on attempted extortion would have to pay money in order to maintain a claim. That is, if a victim refused to pay a bully protection money and thereafter suffered property damage from the bully, then that victim would have no remedy unless it had actually paid protection money. In this case, the First Amended Complaint filed in the California Action contained specific allegations and exhibits showing that subjects of Ripoff Report had, in fact, been offered preferential treatment if they would pay the $7,500 initiation fee, but that they had to agree that Doing this program, both parties agree they will have no claims against each other and jurisdiction for any disputes is Maricopa County, Arizona in order to qualify to apply for the program. See RJN at Ex. 9. Applicants to the CAP also had to agree BY

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BEING A PART OF THIS PROGRAM YOU ARE ALSO AGREEING TO NEVER SUE A CUSTOMER FOR FILING A RIP-OFF REPORT, an unreasonable demand, given the harm a false report could cause a business. See RJN Ex. 9. The plaintiffs in the California Action were uniquely situated to obtain a judicial determination on whether the CAP amounted to racketeering; since anyone who actually applied to join CAP would have been fearful of being sued in Arizona in the event of any dispute with Xcentric or with the authors of Ripoff Reports. See RJN at Ex. 9. Finally, as described in Levitt, the gravamen of the claims in the First Amended Complaint in the California Action were not attempts to hold Xcentric liable as a publisher, but for Xcentrics own statements about the nature of its CAP program. See RJN, Ex. 8. The FAC contains no allegations of facts that would support an inference that Ms. Borodkin acted with malice. The Rule 56(f) motion referred to in the FAC contains no indication that Ms. Borodkin improperly attempted to investigate Magedsons personal life. See RJN Ex. 11. In fact, the evidence Ms. Borodkin submitted with the Rule 56f motion shows that James Rogers and other witnesses had evidence that would have supported the California Actions allegations. See RJN Ex. 11. In short, the FACs allegations fall short of the plausibility standard required under Twombly and Iqbal. Accordingly, the FAC fails to state a cause of action showing that Xcentric is entitled to relief, and this motion should be granted. C. The Third Cause of Action Fails to State a Claim that Ms. Borodkin Aided and Abetted the Tort of Malicious Prosecution.

Under California law, a defendant may be liable for aiding and abetting the commission of an intentional tort if the plaintiff can establish that the defendant: "(a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct,

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separately considered, constitutes a breach of duty to the third person." Casey v. U.S. Bank National Ass'n, 127 Cal. App. 4th 1138, 1144, 26 Cal. Rptr. 3d 401, 405 (2005); see also In re First Alliance Mortgage Co., 471 F.3d 977, 993 (9th Cir. 2006). Xcentric attempts to plead that Ms. Borodkin had actual knowledge of the commission of a tort through her knowledge that Mobrez had allegedly lied in his declaration. However, the FAC does not allege that Ms. Borodkin gave any assistance to the lies. In fact, the FAC pleads that Ms. Borodkin participated in correcting that declaration. See FAC 50. The FAC pleads no other facts to support a theory that Ms. Borodkin aided and abetted an action that was brought without probable cause. The Complaint alleges that Ms. Borodkin assisted in the preparation of a corrected declaration that contended that there were incoming calls to Mobrez from Ripoff Report. However, that statement -- even if false -- was irrelevant because the Court in the California Action found specifically that the AEI parties did not rely on any theory of threats made in phone calls. See Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370 at *43 (C.D. Cal. July 19, 2010). Therefore, the FAC lacks any allegations that Ms. Borodkin took any actions that aided the presentation of a meritless legal theory. The only other factual allegations of actions personally taken by Ms. Borodkin were that she made a Rule 56(f) motion for more discovery to prolong the California Action. But these actions do not establish aiding and abetting a tort unless she knew that the California Action continued the tort of malicious prosecution. As discussed above, the tort is missing allegations of lack of probable cause as to the totality of the action, and the Rule 56(f) motion itself shows that Ms. Borodkin acted with probable cause to seek potentially relevant discovery. See RJN Ex. 11. Accordingly, this motion to dismiss should be granted.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 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 RESPECTFULLY SUBMITTED this 31st day of July 2012. IV. CONCLUSION The FAC is insufficient to state the essential elements of a cause of action against Ms. Borodkin. The FAC fails to plead facts supporting a plausible claim that Ms. Borodkin continued the California Action without objective probable cause or with subjective malice. The FAC also fails to plead facts supporting a plausible claim that Ms. Borodkin aided or abetted the tort of malicious prosecution. Accordingly, the Complaint fails to state a cause of action against Ms. Borodkin and should be dismissed under Rule 12(b)(6). For the reasons in the concurrently filed Rule 11 motion this dismissal should also be with prejudice, with an award of attorneys fees to Ms. Borodkin in defending this action.

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CERTIFICATE OF SERVICE I hereby certify that on July 31, 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 Defendant Raymond Mobrez, pro se Defendant Iliana Llaneras, pro se /s/ Lisa J. Borodkin

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