United States District Court, D. Arizona
Honorable G. Murray Snow United States District Judge
Pending before the Court is Defendants’ Motion to Dismiss (Doc. 13) Plaintiffs’ first amended complaint (“FAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6). For the foregoing reasons, the motion is granted in part and denied in part.
Plaintiffs Zan Kia Ellertson, Marianne J. Ellertson, and Ellertson’s Dobson Ranch Mobil, Inc. (“EDRM”) are the registered owners of “Eazy Picken’ Pawn” (“EP Pawn”), “Eazy Title, ” and “Eazy Tire and Automotive.” All three businesses are located in Mesa, Arizona. On April 1, 2015, Plaintiffs filed a complaint in the Maricopa County Superior Court against Defendants City of Mesa as the municipal corporation liable for the acts of the Mesa Police Department (“Mesa PD”), Mesa PD Detective Nicholas Lien and his spouse, and Mesa PD Detective Steven Berry and his spouse. On April 27, 2015, Defendants removed the case to this Court. And on May 27, 2015, Plaintiffs filed their FAC. Plaintiffs’ FAC raises nine causes of action: (1) violation of civil rights; (2) defamation; (3) false light invasion of privacy; (4) intentional infliction of emotional distress; (5) tortious interference with business expectations; (6) negligence; (7) negligent training and supervision of employees; (8) conversion; and (9) wrongful taking.
Plaintiffs’ claims arise out of two separate searches and seizures conducted by the Mesa PD. The first incident occurred during a June 20, 2013 traffic stop of non-party Aaron Ellertson (“Mr. Ellertson”), Plaintiffs’ Zan and Marianne Ellertson’s son and day-to-day manager of EP Pawn. Mr. Ellertson holds no ownership interest in any of Plaintiffs’ businesses. Incident to the stop, Detective Lien seized $100, 000 worth of jewelry belonging to EDRM that Mr. Ellertson was transporting for Plaintiffs. Initially, Plaintiffs retained counsel and made numerous unsuccessful efforts to retrieve the jewelry from the Mesa PD. At that time, the Mesa PD refused to return the jewelry because it was being held as evidence.
After the traffic stop, Mesa PD continued to investigate Mr. Ellertson. The investigation included the use of undercover detectives who engaged Mr. Ellertson and offered to sell him stolen property while he worked at EP Pawn. At no point did the Mesa PD investigate or implicate the Plaintiffs themselves into Mr. Ellertson’s alleged illegal conduct. Mesa PD’s reports on the investigation noted that Mr. Ellertson never conducted any of his alleged criminal activity in the presence of Plaintiffs and rather took efforts to conceal his actions and any property obtained through his alleged criminal conduct from them. The reports also noted that Mr. Ellertson kept the majority of his alleged stolen property at his personal residence and not at EP Pawn.
A second search and seizure occurred on or about April 2, 2014, when the Mesa PD secured and executed a warrant to search EP Pawn. The search warrant specified certain items to be seized due to their relation to Mr. Ellertson’s alleged criminal activity. But the instant complaint alleges that the Mesa PD seized many items that were in no way connected to the alleged crimes and that during the search, Mesa PD seized almost every item over $20. The FAC further alleges that Mesa PD also breached and destroyed all of EP Pawn’s safes and display cases despite possessing the keys necessary to open said cases and safes without damaging them. In total, it alleges that Mesa PD seized more than 1200 items lawfully owned or possessed by Plaintiffs and being sold at the store. The seized property included items in pawn,  Plaintiffs’ personal property, and items owned by EDRM.
Soon after the incident, the Mesa PD reported the seizure of EP Pawn’s property to the local news, describing EP Pawn as ground zero for a gang syndicate in the business of buying and selling stolen property. As a result of the publically reported seizure, customers of EP Pawn with items in pawn sought the return of their property from Mesa PD. Yet, while the Mesa PD possessed all of the seized property, Detective Lien instructed customers to contact the Plaintiffs directly for the return of their property and provided them with Plaintiffs’ home phone number and address. Plaintiffs received numerous threatening phone calls from irate customers, and individuals vandalized their home. The FAC alleges that as a result of both a troubling encounter with the Mesa PD during their search of EP Pawn and Mesa PD’s damaging public statements, Plaintiff Zan Ellertson suffered emotional and physical distress such as panic attacks, paranoia, and other ailments.
On May 19, 2014, Plaintiffs filed a motion to contravene the search warrant in an effort to recover their seized property from the Mesa PD. The next day, the Maricopa County Attorney’s Office (“MCAO”) filed a notice of seizure for forfeiture and notice of pending forfeiture. On information and belief, Plaintiffs allege that the Mesa PD provided the MCAO false information or withheld exculpatory information related to Plaintiffs’ non-participation in and ignorance of Mr. Ellertson’s alleged criminal activity. In so doing, the Mesa PD prompted the MCAO to file its action seeking forfeiture of Plaintiffs’ property. Plaintiffs opposed the forfeiture action, and on December 26, 2014, the Maricopa County Superior Court entered a partial stipulated judgment ordering all seized property not otherwise claimed by third parties returned to the Plaintiffs. The City of Mesa did not comply with the court order for several months. In fact, not until Plaintiffs filed a motion seeking civil contempt against a number of City of Mesa employees were any items returned. Although the City of Mesa has given back most of the seized property, Plaintiffs received some of their items back damaged, other pieces of Plaintiffs’ personal property as well as several high value items, including four motorcycles, are unaccounted for, and some items still remain with the Mesa PD on an alleged “evidence hold.” Finally, Plaintiffs’ business licenses and documents related to Plaintiffs’ sale of firearms remain missing.
I. Legal Standard
On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), all allegations of material fact are assumed to be true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Dismissal under Rule 12(b)(6) can be based on “the lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To avoid dismissal, a complaint need contain only “enough facts to state a claim for relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The principle that a court accepts as true all of the allegations in a complaint does not apply to legal conclusions or conclusory factual allegations. Ashcroft v. Iqbal, 566 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “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.” Id. “The plausibility standard is not akin to a ‘probability requirement, ’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. To show that the plaintiff is entitled to relief, the complaint must permit the court to infer more than a mere possibility of misconduct. Id.
A. Judicial Notice and Consideration of Extrinsic Evidence
Generally, “a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.” Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001) (citation omitted). Two exceptions exist, however. Id. First, “[i]f the documents are not physically attached to the complaint, they may be considered if the documents' ‘authenticity . . . is not contested’ and ‘the plaintiff's complaint necessarily relies’ on them.” Id. (citation omitted). Second, pursuant to Federal Rule of Evidence 201, a court may take judicial notice of “matters of public record.” Id. (quoting Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)).
Defendant, in its motion to dismiss, attached six exhibits extrinsic to Plaintiffs’ FAC. All six exhibits, as Defendants’ point out, are matters of public record, and include: (1) the State of Arizona’s indictment of Mr. Ellertson; (2) the State of Arizona’s direct complaint against Mr. Ellertson; (3) the MCAO’s notice of seizure for forfeiture and notice of pending forfeiture; (4) the state court’s partial stipulated judgment; (5) the State of Arizona’s complaint in civil forfeiture; and (6) the state court’s order to vacate Plaintiffs’ probable cause hearing. Defendants, citing ...