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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 UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(f) TO STRIKE PARAGRAPHS 2, 42, 44, 50 AND 51 OF THE VERIFIED COMPLAINT (Assigned to the Honorable G. Murray Snow) (Oral Argument Requested)

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I.

PRELIMINARY STATEMENT Xcentric Ventures LLC (Xcentric) has stated that this is a civil action for

malicious prosecution, and malicious prosecution only.1 Xcentric concedes that this is neither a perjury prosecution nor a California State Bar disciplinary proceeding. Yet Xcentrics Response (Doc. 40) chronically confuses criminal law with civil law, and mistakenly equates motions directed at the pleadings with motions on the merits. Nowhere does Xcentric provide a reasoned basis for labeling the conduct in Paragraphs 2, 42, 44, 50 and 51 of the Complaint with the inaccurate legal terms perjury, subornation of perjury, and ethics violations. Xcentric has not explained why Ms. Borodkins actions deserve the label ethics violation in Paragraph 2 of the Complaint, or how such an allegation is relevant to any issue in its claim. According to the Complaint, Ms. Borodkin did nothing more than correct the testimony of her client and continue litigating a claim. Xcentrics counsel did the same thing. See Doc. 36 at 8:18-19. Xcentric has not explained how the allegation in Paragraph 51 that Ms. Borodkin knowingly suborned perjury (regarding incoming phone calls from Ripoff Report) is relevant to any issue in this malicious prosecution case. Testimony about incoming calls have no tendency to show that a RICO claim predicated on attempted extortion solely through writing, see Doc. 36 at 10:20-11:2, was continued without probable cause. Xcentric does not dispute that the alleged perjury pertained to an irrelevant issue in the California Action. See Doc. 36 at 9:10-11:2. The Corporate Advocacy Program was described in email, to Mobrez and others, and Xcentric does charge a $7,500 initial fee Xcentric states that the First and Second Causes of Action in the Complaint are both for malicious prosecution. See Doc. 39 at 5:10-6:2; Doc. 40 at 3:25-26. Xcentric also takes the position that the primary tort in the Third Cause of Action is malicious prosecution. See Doc. 39 at 12:1-5.
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and a monthly fee to make negative listings on search engines into a positive along with all the Reports on the Ripoff Report. See Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370 at *20 (C.D. Cal. July 19, 2010). Thus, Xcentric does not dispute that the RICO claim in the California Action relied on written, not oral threats. See Doc. 36 at 10:16-21. Xcentric fails to show how allegations of perjury regarding telephone calls would tend to prove the lack of probable cause or malice element of its claim. Even if perjury or attorney ethics were at issue in this case (which they are not), Xcentrics position is problematic. Xcentric does not dispute that it and its counsel have unclean hands, having contributed to the confusion that led to the false testimony. Not striking the allegations would deprive Ms. Borodkin of the protection of Rule 12(f). The allegations are harmful to her reputation. Not striking the allegations would beget discovery disputes in the illogical, specious vein of Xcentrics Response here. The prejudice to her is compounded by the Complaints use of group pleading, see Doc. 35 at 5:21-8:11, Doc. 44 at 4:16-6:21, and deliberate placement of Ms. Borodkin as the first named defendant, even though she is named in the fewest claims. Xcentric has articulated no prejudice it would suffer from striking these allegations. Everything Xcentric could possibly say it has said again, in its Response, using different words. Compare Wailua Assocs. v. Aetna Cas. & Sur. Co., 183 F.R.D. 550, 556 (D. Haw. 1998). Accordingly, this motion should be granted, striking all of Paragraphs 2 and 42, and references to perjury in paragraphs 44, 50 and 51 of the Complaint. II. Legal Argument A. Xcentric Does Not Explain How Allegations of Criminal Conduct Are Relevant to Any Issue in this Action.

Ostensibly, the Complaint, stripped to its essentials, alleges that details of Mobrezs and Llaneras May 3, 2010 declarations and Mobrezs May 7, 2010 deposition testimony

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regarding his 2009 telephone conversations with Magedson were false. See Compl. 3340, 43, Exs. C-D. The remainder of the substantive allegations concern Ms. Borodkin and her co-counsel withdrawing the testimony in corrected declarations on May 20, 2010, see id. 51, Exs. F-G, and alleging that Ms. Borodkin and her co-counsel suborned perjury by including references to an incoming phone call from Ripoff Report in Mobrezs corrected May 20, 2010 declaration, see id. 51, Ex. F. Xcentrics chief grievance against Ms. Borodkin seems to be that she and her cocounsel did not comply with Xcentrics May 11, 2010 ultimatum to make their clients dismiss the California Action (with an agreement to pay all Xcentrics fees), see Compl. Ex. E at 4, or withdraw from the case, based on Xcentrics counsels2 selective interpretation of the California state bar rules, see Compl. 44-47, Ex. E at 2-3.3 Apparently dissatisfied with choice-of-law rulings and denial of its Rule 11 motions in California, Xcentric has come to Arizona, hoping for better results. Xcentric argues that the allegations of perjury, subornation of perjury and unethical and illegal conduct in the Complaint are relevant to the elements of lack of probable cause and malice of its claims for malicious prosecution. See Doc. 40 at 3:15-17, 24-4:2. But nowhere does Xcentric show how these loaded terms make any fact at issue in this case more likely than not under Federal Rule of Evidence 401. Xcentric argues that these allegations are not gratuitous because it must allege some factual detail for its claims, see Doc. 40 at 3:24-25, 4:3-8, then immediately puts the lie to that argument by describing the Xcentrics counsel is also a member of the California Bar. Section II.C. of the May 11, 2010 letter sent by Xcentrics counsel, General Settlement Points, expressly conditioned settlement on the furnishing of full, complete, and truthful explanation of each and every third party who aided, solicited, and/or encouraged them to make their false extortion claims in [the California Action]. This pattern is very similar to the demand made of Ms. Borodkin in this case. Compare Compl. Ex. E at 4 with Doc. 25 at 2-3.
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same conduct in other words, see Doc. 40 at 4:15-17, 4:22-24. Ironically, Xcentric cites De Lamos v. Mastro, 2010 U.S. Dist. LEXIS 108058 at *8-9 (D. Ariz. Sept. 17, 2010)4 see Doc. 40 at 3:18-22, for the principle that matter is immaterial if it has no essential or important relationship to the claim for relief. See Doc. 40 at 18-22. The Court in De Lamos struck allegations of criminal conduct (even if true) because they were irrelevant. De Lamos was a fraud case arising out of the sale of a golf center, in which the plaintiff included allegations of the defendants shared criminal history and alleged ties to organized crime. See id. at *8. The plaintiff argued that this was factual material that explained how the disputed transaction arose. See id. The court struck the allegations, both as immaterial and impertinent under Rule 12(f) and as violating Rule 8(a)s short and plain pleading requirement. See id. at *8-9 (They do not provide any meaningful insight into how the alleged fraud might have occurred, and are therefore not necessary to support the claims.) Begging the question, Xcentric argues, If Mr. Mobrez and Ms. Llaneras lied about the material facts of their claims, then . . . they could have not had probable cause to reasonably believe[] in the existence of the facts upon which the claim is based. See Doc. 40. At 4:22-24 (emphasis added). But Xcentric has not shown that the facts allegedly lied about are material. Xcentric does not dispute that the racketeering claim in the California Action was based on the Corporate Advocacy Program as a whole. See Compl. Ex. A at 62-65, Doc. 36 at 10:8-15, 10:20-11:2. Xcentric makes no attempt to discuss the Courts findings in the California Action that the RICO claim predicated on attempted extortion relied only on written communications such as email, under California Penal Code 524. See Doc. De Lamos was marked Not for Publication but was cited in Xcentrics Response. See Doc. 40 at 3:18-22.
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9:10-11:2; Asia Econ. Inst. v. Xcentric Ventures, LLC, 2010 U.S. Dist. LEXIS 133370 at *46 (C.D. Cal. July 19, 2010).5 Although the phone calls were immaterial to the California Action, Xcentric also does not dispute its own unclean hands in contributing to the alleged perjury. See Doc. 36 at 8:15-9:9. Magedson lied in his March and April declarations about having a 2009 phone conversation with Mobrez in which the latter threatened him. See Doc. 36 at 8:16-26. Xcentrics counsel discovered the lies on April 20, 2010,6 see Doc. 36 at 8:21-26, but left his clients declarations uncorrected until May 11, 2010,7 see Doc. 36 at 8:18. Meanwhile, Xcentric elicited testimony from Mobrez on May 7, 2010 while Mobrez was influenced by Magedsons false recollections. See Compl. 40. In Mobrezs corrected declaration of May 20, 2010, Mobrez indicated that Magedsons detailed, yet fictitious, recollection of their phone calls contributed to his confus[ing] some of what was said in my telephone conversations with what was written in the e-mail correspondence, see Compl. 49-51, Ex. L at 2:27-3:1. There are significant jurisdictional issues, too, arising from the fact that Xcentrics sole theory of perjury depends on a combination of self-serving representations and recordings for which an evidentiary foundation was never laid. See Asia Econ. Inst., 2010 U.S. Dist. LEXIS 133370 at *41. Moreover, the Court in the California Action found the recordings described in Compl. 41-43 inadmissible under California law, in any action arising under diversity. See Asia Econ. Inst., 2010 U.S. Dist. LEXIS 133370 at *34-35, fn. 12. Xcentric never appealed that ruling. Arguably, Xcentric is now precluded from relitigating the admissibility of those recordings in any action arising under state law. Inadvertently mis-cited in the moving brief as 2010 U.S. Dist. LEXIS 13337. See AEI v. Xcentric, C.D. Cal No. 10-cv-1360 (Doc. 31) at 7 (May 11, 2010), available at https://ecf.cacd.uscourts.gov/doc1/031110147370. 7 See id.
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Accordingly, allegations of perjury, and subornation of perjury in Paragraphs 2, 42, 44, 50 and 51 are not relevant and should be stricken, B. Xcentric Does Not Show that Allegations that Ms. Borodkin Committed Ethics Violations Are Relevant to Any Issue in This Action.

Xcentric does not explain the relevance of the allegations that Ms. Borodkin violated California Rules of Professional Conduct, see Compl. 2, and intentionally suborned perjury, see Compl. 51. Rather, Xcentric argues: [T]he allegations . . . that Ms. Borodkin and/or8 Mr. Blackert suborned perjury from [the Mobrez Defendants] and otherwise acted unethically and unlawfully, are directly relevant and material to the merits of this case. See De Lamos v. Mastro, 2010 WL 3809936, *3 (D. Ariz. 2010). See Doc. 40 at 3:15-19 (italics added). However, nowhere does Xcentric substantiate its accusation that Ms. Borodkin violated the California Rules of Professional Conduct. Even if it had a theory of how Ms. Borodkin violated the California Rules of Professional Conduct, Xcentric does not explain how that would be probative of any element of its Second Cause of Action against Ms. Borodkin, Wrongful Continuation of Civil Proceedings (WCCP). See Compl. 75-84.9 Xcentric concedes that its claim for WCCP requires it to prove that each defendant acted without probable cause and acted with malice, see Doc. 40 at 4:3-5. But Xcentric does not explain how vague allegations that Ms. Borodkin committed ethics violations Xcentrics vexatious use of and/or for an accusation as serious as professional misconduct confirms the need for an order requiring Xcentric to replead in a more definite statement, as requested by Ms. Borodkins motion under Rule 12(e). See Docs. 35, 44. 9 Xcentrics Response to the Motion for More Definite Statement indicates that it intends to argue, under California law, that because one claim in the California Action was continued without probable cause, then the entire action supports a malicious prosecution claim. See Doc. 39 at 7:13-16 (citing 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)).
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or suborned an irrelevant fact from Mobrez would tend to prove that Ms. Borodkin continued any claim in the California Action without probable cause or with malice. Xcentric seems to suggest that it is Ms. Borodkins burden to prove her innocence: Ms. Borodkin [sic] attempting to obtain what amounts to a summary disposition of the merits of Xcentrics allegations without a hearing and without providing the Court with any evidence other than her own counsels arguments as to her innocence. This effort is both procedurally inappropriate and factually unwarranted. . . Carroll v. Kalar, 112 Ariz. 595, 599, 545 P.2d 411, 415 (1976). See Doc. 40 at 3:9-14. Similarly, Xcentric argues, in a conclusory manner: The allegations of unethical, criminal, and tortious conduct by Ms. Borodkin and her co-defendants relate directly to the merits of Xcentrics claims [sic] this case. . . striking these allegations at the pre-Answer stage would be tantamount to granting summary judgment in favor of Defendants. See Doc. 40 at 5:23-25. These arguments and the citation to Carroll v. Kalar misunderstand the function of a Rule 12(f) motion to strike. The function of a Rule 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial. See Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010); Torres v. Goddard, 2008 U.S. Dist. LEXIS 35291 at *2 (D. Ariz. Apr. 22, 2008). It is not to shift the burden to defendants to disprove the merits of irrelevant allegations. Xcentric draws a false analogy to this civil common law claim and the civil RICO claim in the California Action: Ms. Borodkin did not hesitate to repeatedly accuse Xcentric of serious criminal conduct including extortion, attempted extortion, and wire fraud. Although those allegations against Xcentric were factually false, the alleged criminal conduct was a material part of the claims in that case. See Doc. 40 at 5:16-20. The analogy is specious.

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The RICO claims in the California Action were civil causes of action that require, as an element, proof of the elements of certain statutorily enumerated violations. This case, by contrast, is a malicious prosecution action arising under common law. Xcentric concedes that malicious prosecution does not require, as an element, proof of the elements of any criminal or administrative violation. See Doc. 40 at 3:26-4:2. Moreover, Xcentric falsely claims that it chose not to make motions to strike in the California Action. See Doc. 5 at 20-22 (rather than ask the court to strike the claims, Xcentrics remedy was simply to prove that the allegations were groundless). In fact, Xcentric made three motions to strike pleadings in the California Action, all unsuccessful. On March 22, 2010, Xcentric made a special motion to strike the Complaint under Californias Anti-SLAPP statute, Code of Civil Procedure 425.16.10 On August 23, 2010, Xcentric made a motion under Rule 12(f) to strike matter from two motion-related documents.11 On September 27, 2010, Xcentric made a special motion to strike the Amended Complaint under Californias Anti-SLAPP statute, Code of Civil Procedure 425.16.12 None were granted. C. Ms. Borodkin Would Be Prejudiced if the References to Alleged Criminal Conduct and Ethics Violations Were Not Stricken.

Xcentric generally does not discuss the authorities cited in the motion, except for Nault. Ironically, the cases cited by Xcentric were those in which courts granted motions to strike, or illustrate exactly the distinctions that make this a case for doing so. Xcentric cites XY Skin Care & Cosmetics, LLC v. Hugo Boss United States, Inc., See AEI v. Xcentric, C.D. Cal No. 10-cv-1360 (Doc. 9) (March 22, 2010), available at https://ecf.cacd.uscourts.gov/doc1/03119842894. 11 See AEI v. Xcentric, C.D. Cal No. 10-cv-1360 (Doc. 124) (August 23, 2010), available at https://ecf.cacd.uscourts.gov/doc1/031110747694. 12 See AEI v. Xcentric, C.D. Cal No. 10-cv-1360 (Doc. 154) (Sept. 27, 2010), available at https://ecf.cacd.uscourts.gov/doc1/031110952801.

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2009 U.S. Dist. LEXIS 69866 (D. Ariz. Aug. 4, 2009) for the general rule that motions to strike should be denied if there is any doubt. See Doc. 40 at 6:1-2. The Court in XY Skin Care granted the motion to strike before it. See id. at *7. According to XY Skin, the chief requirement of motions under Rule 12(f) is that the movant needs to show prejudice. See id. at *5-6. Prejudice is easily shown here. First, Ms. Borodkin is prejudiced by having allegations of ethics violations, perjury, and subornation of perjury, appear on the front page of the Complaint -- even ahead of federal subject matter jurisdiction. See Compl. 2. They are gratuitous because the Complaint never refers to them again. They are prejudicial because they reflect negatively on Ms. Borodkins professional reputation. Second, the group nature of the allegations is prejudicial as well. See Compl. 2, 51. They do not distinguish between Ms. Borodkins acts and those of other parties, as more fully briefed in the Motion for More Definite Statement. See Docs. 35, 44. Third, the Complaint is prejudicial to Ms. Borodkin by design. On August 30, 2011, Xcentrics counsel advised Ms. Borodkin, that her name appears first in the caption intentionally,13 even though she is only named in the Second and Third Causes of Action. Even if Ms. Borodkin prevails early, her name will forever be associated with this case. Ms. Borodkin has already submitted proof that Magedson desires this action to be a long and drawn out legal battle and will only make you look worse than you already do unless she provides damaging information about an unrelated third party. See Doc. 25 at 2-3. Fourth, the allegations are designed to justify conducting harassing, burdensome discovery on immaterial issues. Xcentric argues, illogically, that this motion to strike amounts to a summary disposition of the merits of Xcentrics allegations without a hearing and without providing the Court any evidence as to her own counsels arguments
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A copy of the email can be provided to the Court upon request.

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as to her innocence. See Doc. 40 at 3:9-12. This argument misunderstands the role of pleadings. Allegations do not give Xcentric license to hound a defendant until she proves her innocence. It is Xcentrics burden to articulate an intelligible claim, and show a plausible entitlement to relief before it can take any discovery. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (U.S. 2007). So far, Xcentric has failed to do so. Xcentric is not entitled to take discovery on its allegations of perjury and ethics violations. See, e.g., De Lamos v. Mastro, 2010 U.S. Dist. LEXIS 108058 at *8-9 (D. Ariz. Sept. 17, 2010). Accordingly, they should be stricken. IV. CONCLUSION For the foregoing reasons, Ms. Borodkin respectfully requests that this Court grant this motion under Rule 12(f) striking all of Paragraphs 2 and 42, and references to perjury in paragraphs 44, 50 and 51 of the Complaint. RESPECTFULLY SUBMITTED this 25th 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 25, 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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