casedocs.omniagentsolutions.com...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 27 28 KING & SPALDING LLP Aaron S. Craig (Cal. Bar. No. 204741) 633 West Fifth

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KING & SPALDING LLP Aaron S. Craig (Cal. Bar. No. 204741) 633 West Fifth Street Suite 1600 Los Angeles, CA 90071 Telephone: 213.443.4355 Facsimile: 213.443.4310 Michael Ciatti (pro hac vice admission pending) 1700 Pennsylvania Ave., NW 2nd Floor Washington, D.C. 20006-4707 Telephone: 202.737.0500 Facsimile: 202.626.3737 Edward L. Ripley (pro hac vice admission pending) 1100 Louisiana, Suite 4000 Houston, TX 77002 Telephone: 713.751.3200 Facsimile: 713.751.3290

Attorneys for FK Group Ltd.; FK Partners Ltd.; and Jahid Fazal-Karim

IN THE UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA – LOS ANGELES DIVISION

IN RE:

ZETTA JET USA, INC., a California corporation Debtor.

Lead Case No.: 2:17-bk-21386-SK Jointly administered with: 2:17-bk-21387-SK (Zetta Jet PTE Ltd., a Singaporean corporation)

IN RE:

ZETTA JET PTE Ltd., a Singaporean corporation

CHAPTER 7 CASES ADV. PRO. NO. 2:19-ap-01382-SK DEFENDANTS FK GROUP LTD, FK PARTNERS LTD, AND JAHID

Case 2:19-ap-01382-SK Doc 45 Filed 10/28/19 Entered 10/28/19 12:32:47 DescMain Document Page 1 of 47

2 MOTION TO DISMISS COUNTS I-VI

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Debtor. FAZAL-KARIM’S NOTICE OF MOTION AND MOTION TO DISMISS COUNTS I-VI OF ADVERSARY COMPLAINT

JONATHAN D. KING, solely in his capacity as Chapter 7 Trustee of Zetta Jet USA, Inc. and Zetta Jet PTE, Ltd.,

Plaintiff,

v.

JETCRAFT CORPORATION, JETCRAFT GLOBAL, INC., JETCOAST 5000-5 LLC, ORION AIRCRAFT HOLDINGS LTD., FK GROUP LTD, FK PARTNERS LIMITED JAHID FAZAL-KARIM, BOMBARDIER AEROSPACE CORPORATION, BOMBARDIER, INC., LEARJET, INC., ECN AVIATION INC. F/K/A ELEMENT AVIATION INC., and ECN CAPITAL CORPORATION AS SUCCESSOR TO ELEMENT FINANCIAL CORPORATION,

Defendants.

Date: TBD Time: TBD Place: Courtroom 1575 255 East Temple Street Los Angeles, Ca 90012 Judge: Hon. Sandra R. Klein



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TO THE HONORABLE SANDRA R. KLEIN, UNITED STATES

BANKRUPTCY JUDGE, AND TO PLAINTIFF’S COUNSEL OF RECORD:

PLEASE TAKE NOTICE that Defendants FK Group Ltd.; FK Partners Ltd.,

Jahid Fazal-Karim (collectively, the “FK Defendants”), and Orion Aircraft Holdings

Ltd.1 will and hereby do move (by this “Motion”)2 the Court to dismiss, without

leave to amend, Counts I-VI in the complaint (the “Complaint”) filed in the above-

captioned adversary proceeding, for failure to state a claim upon which relief can be

granted, because the Complaint insufficiently pleads the facts necessary to plausibly

state claims for relief for aiding and abetting breach of fiduciary duty, civil

conspiracy, violation of California Business & Professions Code § 17200, unjust

enrichment, constructive trust and fraud. Moreover, because the alleged wrongdoing

of their agent, Geoff Cassidy, is imputed to the debtors Zetta Jet PTE Ltd. (“Zetta

Singapore”), and Zetta Jet USA Inc. (“Zetta USA”). Claims I–VI are barred by the

in pari delicto doctrine.

PLEASE TAKE FURTHER NOTICE that this Motion is being brought

1 The claims against Orion Aircraft Holdings Ltd., including Counts I-VI, should be

dismissed because Orion was a British Virgin Islands corporation that has been dissolved. See Request for Judicial Notice filed concurrently herewith, Ex. A (Orion Certificate of Dissolution); see also, e.g., Fed. R. Evid. 201(b)(2); Newmark Realty Capital, Inc. v. BGC Partners, Inc., No. 16-CV-01702, 2018 WL 2573192, at *2–3 (N.D. Cal. Apr. 16, 2018) (taking judicial notice of a corporation’s certificate of dissolution). Under BVI law, a defunct corporation is “incapable of being sued.” Wilmington Trust Co. v. Hellas Telecommc’ns, S.A.R.L., No. 12-cv-8686 (JPO), 2016 WL 7339112, at *7 (S.D.N.Y. Aug. 4, 2016). All claims against Orion should therefore be dismissed. Id. (dismissing “all claims”).

2 Defendants Jetcraft Corporation; Jetcraft Global, Inc.; and Jetcoast 5005-LLC (collectively, the “Jetcraft Defendants”) are filing a separate motion and memorandum of law for dismissal of Counts VII, VIII, XVI, and XVII. The FK Defendants hereby join the Jetcraft Defendants’ Motion to Dismiss Counts VII, VIII, XVI & XVII to the extent brought against the FK Defendants, and hereby incorporate by reference the Jetcraft Defendants’ arguments in support of that motion.



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under Federal Rules of Civil Procedure 12(b)(6), 8(a) and 9(b), as made applicable

by Federal Rules of Bankruptcy Procedure 7012, 7008 and 7009, and is based on the

accompanying memorandum of points and authorities, the Court’s files in this

adversary proceeding and the related Chapter 7 case, and such other evidence and

argument as may properly come before this Court at any hearing.

PLEASE TAKE FURTHER NOTICE that Local Rule 9013-1(f) requires

a written response to be filed and served at least 14 days before the hearing.

WHEREFORE, the FK Defendants respectfully request that the Court enter

an order (i) granting the Motion, (ii) dismissing, without leave to amend, each

claim for relief in the complaint for failure to state a claim, and (iii) granting any

and all other relief the Court deems just and necessary.

Dated: October 25, 2019 KING & SPALDING LLP

/s/ Aaron S. Craig . AARON S. CRAIG MICHAEL CIATTI EDWARD L. RIPLEY Attorneys for FK Group Ltd.; FK Partners Ltd.; and Jahid Fazal-Karim


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TABLE OF CONTENTS

I. INTRODUCTION ......................................................................................... 1

II. BACKGROUND ............................................................................................ 2

III. PLEADING STANDARD ............................................................................. 6

IV. ARGUMENT ................................................................................................. 7

A. The Trustee’s Complaint Fails To State A Claim For Aiding And Abetting. 7

1. The Trustee’s pleading fails at the threshold under Rule 9(b). ............ 9

2. The Complaint’s aiding-and-abetting count also fails under Rules 8 and 12(b)(6). .......................................................................... 11

i. The Trustee fails to adequately allege the central factual predicate of his theory—that the aircraft Zetta Singapore bought were overpriced. ........................................................... 11

ii. The Trustee has failed to adequately plead knowledge or intent. ........................................................................................ 13

iii. The Trustee’s failure to plead scienter means he has also failed to adequately plead substantial assistance. ..................... 15

iv. The Trustee fails to plead that the payments proximately caused any breach. .................................................................... 16

3. The Complaint fails to plead facts supporting the “side venture” theory of breach. ................................................................................. 17

B. The Trustee’s Other Counts Fail To State Claims On Which Relief May Be Granted .......................................................................................................... 18

1. The civil conspiracy claim fails. ......................................................... 18

2. The Complaint fails to adequately plead fraud. .................................. 20

i. The Complaint improperly lumps defendants together, and fails under Rule 9(b). ......................................................... 20

ii. The Complaint fails to plead any materially false representation. ........................................................................... 21


ii MOTION TO DISMISS COUNTS I-VI

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iii. The Complaint alleges no facts showing intent to defraud. ..................................................................................... 21

iv. The Complaint fails to adequately plead material omissions. ................................................................................. 23

3. The Complaint’s California unfair competition law claim fails because it fails to allege conduct or injury in California. ................... 24

i. The Trustee alleges no nexus between this case and California. ................................................................................. 24

ii. The Trustee fails to identify any harm to alleged California resident Zetta USA. ................................................. 26

4. The Complaint fails to allege facts to support imposition of a constructive trust. ................................................................................ 27

5. The Trustee fails to adequately plead unjust enrichment. .................. 29

C. Cassidy’s Actions Are Properly Imputed To Zetta Singapore, Barring The Trustee’s Claims Under The In Pari Delicto Doctrine ................................. 29

1. The Trustee’s allegations support the presumption of imputation. .......................................................................................... 30

2. The narrow adverse-interest exception does not apply to any activities with which the Trustee alleges a connection to the FK Defendants. ......................................................................................... 31

3. Cassidy was the sole actor in control of Zetta Singapore. .................. 32

V. CONCLUSION ............................................................................................ 35


iii MOTION TO DISMISS COUNTS I-VI

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TABLE OF AUTHORITIES

Page(s)

Cases

Am. Master Lease LLC v. Idanta Partners, Ltd., 225 Cal. App. 4th 1451 (2014) ....................................................................... 8, 14

Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................... passim

Austin v. Hallmark Oil Co., 134 P.2d 777 (Cal. 1943) .............................................................................. 23, 31

Berg & Berg Enters., LLC v. Sherwood Partners, Inc., 131 Cal. App. 4th 802 (2005) ............................................................................. 19

In re Cal. TD Invs., LLC, 489 B.R. 124 (Bankr. C.D. Cal. 2013) ............................................................... 35

Camp v. Peel, 33 Cal. App. 2d 612 (1939) ................................................................................ 16

Campbell v. Super. Ct., 132 Cal. App. 4th 904 (2005) ............................................................................. 28

Carpenter v. Thrifty Auto Sales, No. EDCV09-02233 DMG (DTBx), 2010 WL 11595928 (C.D. Cal. July 30, 2010) .............................................................................................. 19

Casey v. U.S. Bank N.A., 127 Cal. App. 4th 1138 (2005) ............................................................... 14, 16, 30

Cement & Concrete Workers Dist. Council Pension Fund v. Hewlett Packard Co., 964 F. Supp. 2d 1128 (N.D. Cal. 2013) ............................................................. 32

In re ChinaCast Edu. Corp. Sec. Litig., 809 F.3d 471 (9th Cir. 2015) .............................................................................. 31

Conn. Nat’l Bank v. Trans World Airlines, Inc., 762 F. Supp. 76 (S.D.N.Y. 1991) ......................................................................... 5


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In re Continental Airlines, Inc., 932 F.2d 282 (3d Cir. 1991) ................................................................................. 5

U.S. ex rel. Darian v. Accent Builders, Inc., No. CV 00-10255 FMC (JWJx), 2005 WL 8161676 (C.D. Cal. 2005) ................................................................................................................... 19

Destfino v. Reiswig, 630 F.3d 952 (9th Cir. 2011) .......................................................................... 9, 21

In re Doorman Prop. Maint., No. 15–30912 DM, 2017 WL 90332 (N.D. Cal. Jan. 10, 2017) .......................... 6

Facebook, Inc. v. MaxBounty, Inc., 274 F.R.D. 279 (N.D. Cal. 2011) ....................................................................... 14

Fiol v. Doellstedt, 50 Cal. App. 4th 1318 (1996) ............................................................................. 14

Flores v. Hagobian, No. 1:04–CV–6405 AWI DLB, 2013 WL 4814928 (E.D. Cal. Sept. 9, 2013) ...................................................................................................... 25

In re Ford Tailgate Litig., No. 11–CV–2953–RS, 2014 WL 1007066 (N.D. Cal. Mar. 12, 2014) ................................................................................................................... 29

Forest Ambulatory Surgical Assocs., L.P. v. Ingenix, Inc., No. CV 12-2916 PSG (FFMx), 2013 WL 11323601 (C.D. Cal. Dec. 13, 2013) ................................................................................................ 9, 21

Gerritsen v. Warner Bros. Entm’t, Inc., 112 F. Supp. 3d 1011 (C.D. Cal. 2015) .............................................................. 12

Giron v. H.K. & Shanghai Bank Co., Ltd., No. 2:15-cv-08869-ODW-JC, 2016 WL 6662726 (C.D. Cal. June 29, 2016) ............................................................................................................... 9

Gonzales v. Lloyds TSB Bank, PLC, 532 F. Supp. 2d 1200 (C.D. Cal. 2006) ................................................................ 9

In re Grumman Olson Indus., Inc., 329 B.R. 411 (Bankr. S.D.N.Y. 2005) ............................................................... 32


v MOTION TO DISMISS COUNTS I-VI

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Kirschner v. KPMG LLP, 938 N.E.2d 941 (N.Y. 2010) .............................................................................. 32

Lazar v. Super. Ct., 909 P.2d 981 (Cal. 1996) .................................................................................... 20

Lazo v. Summit Mgmt. Co., LLC, No. 1:13-cv-02015-AWI-JLT, 2014 WL 3362289 (E.D. Cal. July 9, 2014) ............................................................................................................... 19

Maron v. Swig, 115 Cal. App. 2d 87 (1952) ................................................................................ 32

McKinnon v. Dollar Thrifty Auto. Grp., Inc., No. 12-4457 SC, 2013 WL 791457 (N.D. Cal. Mar. 4, 2013) ........................... 25

Mendocino Envtl. Ctr. v. Mendocino Cty., 192 F.3d 1283 (9th Cir. 1999) ............................................................................ 20

In re Mortg. Fund ’08 LLC, 527 B.R. 351 (N.D. Cal. 2015) ..................................................................... 30, 33

Namer v. Bank of Am., No. 16-cv-3024 JM(WVG), 2017 WL 2937098 (S.D. Cal. July 10, 2017) ............................................................................................................. 14, 22

Nasrawi v. Buck Consultants LLC, 231 Cal. App. 4th 328 (2014) ......................................................................... 7, 16

Nathanson v. Polycom, Inc., 87 F. Supp. 3d 966 (N.D. Cal. 2015).................................................................. 32

Norwest Mortg., Inc. v. Super. Ct.of San Diego Cty., 72 Cal. App. 4th 214 (1999) ............................................................................... 24

In re Pan Am. Corp., 124 B.R. 960 (Bankr. S.D.N.Y. 1991) ................................................................. 5

Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, 133 Cal. App. 4th 658 (2005) ............................................................................. 31

Price v. Synapse Grp., Inc., No. 16-cv-01524-BAS-BLM, 2017 WL 3131700 (S.D. Cal. July 24, 2017) ............................................................................................................. 10


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Prof’l Tax Appeal v. Kennedy-Wilson Holdings, Inc., 29 Cal. App. 5th 230 (2018) ............................................................................... 29

Schulz v. Neovi Data Corp., 152 Cal. App. 4th 86 (2007) ................................................................................. 7

Scouler & Co. LLC v. Schwartz, No. 11-cv-06377 NC, 2012 WL 1502762 (N.D. Cal. Apr. 23, 2012) ................................................................................................................... 11

Seiden v. Frazer Frost, LLP, No. SACV 18-00588-CJC(KESx), 2018 WL 6137618 (C.D. Cal. July 31, 2018) ............................................................................................... 32, 33

Smith v. Arthur Andersen LLP, 421 F.3d 989 (9th Cir. 2005) .............................................................................. 30

In re SONICblue Inc., No. 03–51775–MM, 2008 WL 2875407 (N.D. Cal. July 23, 2008) .................... 6

Sonora Diamond Corp. v. Super. Ct. of Tuolumne Cty., 83 Cal. App. 4th 523 (2000) ................................................................... 10, 33, 34

Sullivan v. Oracle Corp., 254 P.3d 237 (Cal. 2011) .............................................................................. 24, 27

Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) .......................................................................... 9, 21

Terpin v. AT&T Mobility, LLC, No. 2:18-cv-06975-ODW (KSx), 2019 WL 3254218 (C.D. Cal. July 19, 2019) ..................................................................................................... 25

Tidenberg v. Bidz.com, Inc., No. CV 08-5553 PSG (FMOx), 2009 WL 605249 (C.D. Cal. Mar. 4, 2009) ............................................................................................................... 24

U.S. v. Ritchie, 342 F.3d 903 (9th Cir. 2003) .............................................................................. 12

Uecker v. Zentil, 244 Cal. App. 4th 789 (2016) ............................................................................. 30

Upham v. Fox, No. C 13–3377 MMC, 2014 WL 1379607(N.D. Cal. Apr. 8, 2014) ........... 28, 29


vii MOTION TO DISMISS COUNTS I-VI

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Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) ............................................................................ 21

Walker v. USAA Cas. Ins. Co., 474 F. Supp. 2d 1168 (E.D. Cal. 2007) .............................................................. 29

Wisdom v. Easton Diamond Sports, LLC, No. CV 18-4078 DSF (SSx), 2018 WL 6264994 (C.D. Cal. Oct. 9, 2018) ................................................................................................................... 24

Witty v. Clinch, 207 Cal. 779 (1929) ............................................................................................ 32

In re Yellow Cab Cooperative, Inc., 602 B.R. 357 (Bankr. N.D. Cal. 2019) ............................................................... 30

Statutes

11 U.S.C. § 541(c) ................................................................................................... 30

Cal. Civ. Code § 3517.............................................................................................. 30

Unfair Competition Law ................................................................................... passim

Other Authorities

Bankr. R. 2004 ................................................................................................... 1, 2, 4

Bankr. R. 7009(b) ...................................................................................................... 1

Bankr. R. 7012(b) .................................................................................................. 1, 6

Fed. R. Civ. P. 8 ................................................................................................. 10, 21

Fed. R. Civ. P. 9(b) ........................................................................................... passim

Fed. R. Civ. P 12(b) ......................................................................................... 1, 6, 10

B.E. Witkin et al, Summary of Cal. Law (11th ed. 2019) Torts § 890 ................... 20

Restatement (Third) of Agency § 5.03 (2006) ........................................................ 31


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MEMORANDUM OF POINTS AND AUTHORITIES

In accordance with Federal Rules of Civil Procedure 12(b)(6) and 9(b), and

Bankruptcy Rules 7012(b) and 7009(b), Defendants FK Group Ltd.; FK Partners

Ltd., Jahid Fazal-Karim (collectively, the “FK Defendants”), and Orion Aircraft

Holdings Ltd. respectfully request that this Court dismiss the Adversary Complaint

in this matter filed by the Trustee on behalf of debtors Zetta Jet PTE Ltd. (“Zetta

Singapore”) and Zetta Jet USA Inc. (“Zetta USA”). Despite having access to

extensive pre-suit discovery under Rule 2004, the Trustee fails to allege facts

supporting his conclusory allegations of wrongdoing by the FK Defendants.3

Moreover, because the alleged wrongdoing of their agent, Geoff Cassidy, is imputed

to debtors, Claims I–VI are barred by the in pari delicto doctrine.

I. INTRODUCTION

This case is nothing more than an attempt to shift the blame for Zetta

Singapore’s bankruptcy from Zetta Singapore and its principals—Geoff Cassidy,

James Seagrim, and Matthew Walter—to individuals and entities who, in good faith,

provided Zetta Singapore with the revenue-generating aircraft its business required.

That Zetta Singapore’s charter aircraft business failed, and that Cassidy allegedly

was—unbeknownst to the FK Defendants—buying aircraft that Zetta Singapore

could not afford and embezzling money from Zetta Singapore are Zetta Singapore’s

issues. Zetta Singapore, Cassidy, Seagrim, and Walter—not the FK Defendants—

are responsible for the failure of the business and the alleged embezzlement. This

misguided suit is doomed by the Trustee’s failure to adequately allege that the FK

Defendants knew about Cassidy’s breaches or Zetta Singapore’s financial troubles,

or that any of the FK Defendants knowingly took steps to harm Zetta Singapore.

Quite simply, the Trustee’s claims against the FK Defendants are as bankrupt as 3 During a hearing on September 19, 2019, the Trustee told this Court that he had

access to and reviewed millions of pages of documents prior to filing the Complaint which included significant discovery obtained from third parties under Bankruptcy Rule 2004. See Hr’g Tr. Sept. 19, 2019, pp 33, 36.



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Zetta Singapore itself.

II. BACKGROUND

The Trustee, standing in the debtors’ shoes and asserting their claims,

contends that the debtors’ own managing director, Geoff Cassidy, breached his

fiduciary duties to the corporations that he formed, ran, and thoroughly controlled,

and that the FK Defendants (and others) aided, abetted, and conspired with him. See

Doc. 1 ¶¶ 1, 17, 68 (“Compl.”).

Zetta Singapore was formed by Cassidy, Seagrim, and Walter on July 15,

2015, to conduct revenue-generating charter flights. Id. ¶ 67. At that time, Seagrim

and Walter owned a successful business with a fleet of aircraft catering to high-net-

worth individuals, celebrities, and corporate clients in the United States and Europe,

and they had significant operations experience running an aircraft charter business.

Id. ¶¶ 63, 64.

Zetta Singapore had a business plan centered on chartering private aircraft to

companies and wealthy individuals. Id. ¶¶ 66, 81. To execute that plan, Zetta

Singapore needed to buy aircraft that would allow it to generate revenue by selling

charter hours. Id. Consistent with that plan, Jetcraft sold Zetta Singapore two

aircraft: (1) the first aircraft—the first in Zetta Singapore’s fleet—in December

2015, six months after Zetta Singapore was formed; and (2) the second aircraft in

August 2016, just over one year after Zetta Singapore was formed. Id. ¶¶ 96(a),

96(e), 287, 299.

As the Complaint makes clear, Zetta Singapore had customers willing to pay

tens of thousands of dollars for multi-hour flights on its aircraft. Id. ¶¶ 81–82.

Moreover, it received tens of millions of dollars in funding. Id. ¶ 78. All this led to

the “impression that [Zetta Singapore was] a profitable, growing business.” Id. ¶ 79.

Zetta Singapore’s private charter business nevertheless failed. See id. ¶ 209.

Ignoring the true cause of that failure and the responsibility of Zetta Singapore and

its agent, Cassidy, the Trustee has sued the FK Defendants and others. Those claims



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fail at the threshold.

Specifically, the Complaint focuses on two transactions involving Zetta

Singapore’s acquisition of aircraft from Jetcraft—one for $43.355 million and

another for $49.75 million. The Trustee alleges that these acquisitions were for

“overpriced aircraft that the Debtors could not afford.” Compl. ¶ 245. But the

Complaint pleads no facts to support applying the conclusory label “overpriced.”

For example, there are no facts showing that there was a standard market price for

this type of aircraft, or facts concerning pricing for comparable aircraft in the market,

and that the purchase prices for these two Jetcraft aircraft were markedly excessive

by comparison. Nor does the Complaint plead any facts showing that the FK

Defendants knew that Zetta Singapore could not afford the aircraft—a matter that

falls squarely in the business judgment of Cassidy and the corporation he controlled,

Zetta Singapore.

The Trustee also focuses on two payments of $500,000 that Jetcraft made—

one in each of its two aircraft-sale transactions—that effectively provided ready cash

as part of the financed purchase. See id. ¶¶ 103, 155. Using conclusory (and

inflammatory) labels, the Complaint characterizes these payments as “kickbacks”

intended to induce the purchase of the supposedly “overpriced” aircraft, because

Jetcraft made the payments to Zetta Singapore through Cassidy rather than directly

to Zetta Singapore. Id. ¶¶ 66, 155.

The Trustee’s own allegations explain why the payments were made to

Cassidy. Those allegations show that Zetta Singapore and Cassidy were effectively

one and the same. See, e.g., id. ¶¶ 68, 77, 94, 95, 96(g), 125, 188, 192, 194, 255

(referring to Zetta Singapore’s business, debts, and customers as Cassidy’s—“his”—

business, debts, and customers). The Complaint includes only the conclusory

allegation that certain of the FK Defendants “knew that [these payments] had no

legitimate purpose.” Id. ¶¶ 106 & 158. But the Complaint pleads no facts suggesting

that the payments were used for anything but a legitimate purpose, much less that



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any of the FK Defendants would have known if they had been used for any improper

purpose.4 Moreover, the Complaint pleads no facts showing that the payments from

Jetcraft caused Zetta Singapore to receive anything other than fair value in the

transactions—it simply repeats, again and again, the baseless assertion that the

aircraft Zetta Singapore bought were “overpriced.” The absence of any well-pleaded

allegations supporting the FK Defendants’ alleged wrongdoing is all the more

striking in light of the extensive pre-suit discovery that the Trustee obtained under

Rule 2004.

Other than these two straightforward and well-documented sale transactions,

little in the Complaint has to do with the FK Defendants. The Trustee alleges that

Zetta Singapore purchased (or agreed to purchase) a number of additional aircraft

from Bombardier, that Mr. Fazal-Karim was somehow “involved” in some of those

transactions, Compl. ¶¶ 109–11; 119-120; 159, and that he negotiated two other

transactions, id. at ¶¶ 126–27. As with the two Jetcraft transactions, there are no

factual allegations that any of these aircraft were overpriced or that Mr. Fazal-Karim

or Bombardier knew that Zetta Singapore did not need or could not afford them. As

part of his attempt to cast doubt on every action taken by defendants, the Trustee

alleges that these and other Zetta Singapore aircraft transactions involved “disguised

financings,” insinuating that the structure of the transactions themselves is reason

for suspicion. E.g., Compl. ¶¶ 100, 111, 130. Not so. Sale-leaseback transactions

of the type at issue have long been common in the airline industry. E.g., In re

Continental Airlines, Inc., 932 F.2d 282, 284 (3d Cir. 1991) (“[S]ale-leaseback

4 Two motions to seal the Complaint were filed in this matter—one on behalf of the

FK Defendants and one on behalf of the Bombardier defendants. Doc. 2 (filed Sep. 16, 2019), Doc. 10 (filed Sep. 18, 2019). The declaration of Mr. Fazal-Karim explains the purpose of these payments and further explains that neither Mr. Fazal-Karim nor any of the other FK Defendants had any knowledge of Cassidy’s alleged misdeeds. Doc. 10-1 ¶¶ 4, 18.



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transactions are widely used in the airline industry as a means of raising working

capital.”).5 These allegations not only fail to support the Trustee’s claims, they

demonstrate the Trustee’s fundamental lack of understanding of how this industry

works.

The Trustee then points to a transaction in which Jetcraft bought an aircraft

from Zetta Singapore as another allegedly nefarious deal that Cassidy entered into

supposedly to benefit Fazal-Karim. Compl. ¶ 160–64. But the Trustee fails to allege

any facts suggesting how this transaction benefitted Mr. Fazal-Karim or was harmful

to Zetta Singapore. To the contrary, the Trustee alleges that the transaction

benefitted Zetta Singapore—the alleged agreement provided Zetta Singapore with a

portion of any profit that was made on the re-sale of the aircraft. Id. ¶ 163.

The Trustee also goes on at length about Cassidy’s career as an alleged

fraudster, Compl. ¶¶ 58–60; the “extravagant purchases” Cassidy allegedly made

with money that had no connection to any defendant, id. ¶¶ 2, 89, 124, 168–71; an

alleged failed side venture in which Cassidy did not pay for his share of a yacht

intended to be co-owned with Mr. Fazal-Karim, id. ¶¶ 172–81; and his alleged

embezzlement, unconnected to any of the FK Defendants, of other funds, id. ¶ 236.

The effect of these voluminous but largely irrelevant allegations, if not the intent, is

to create the impression of a single, continuous course of wrongdoing by Cassidy

(i.e., the “Ponzi scheme”) and to insinuate that the FK Defendants were in on it. But

that is not how pleading works—particularly when, as here, Federal Rule 9(b)’s

heightened pleading standard applies.

5 See also In re Pan Am. Corp., 124 B.R. 960 (S.D.N.Y. 1991) (describing “Sale-

Leasebacks in which the Debtors ‘sold’ Aircraft … which had been part of their fleet … to financiers, who then leased that same Aircraft … back to the Debtors”); Conn. Nat’l Bank v. Trans World Airlines, Inc., 762 F. Supp. 76, 77–78 (S.D.N.Y. 1991) (“The Agreement is what is commonly known as a Sale/Leaseback. Simply, it provided that the Bank would purchase ten aircraft … from TWA, and would then lease them back to TWA ….”).



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The Court should dismiss with prejudice Counts I–VI for failure to state a

claim. As set forth below, Counts I–VI are also barred by the in pari delicto doctrine

based upon the alleged wrongdoing of the corporations whose shoes the Trustee fills.

III. PLEADING STANDARD

Federal Rule of Civil Procedure Rule 12(b) applies. See Bankr. R. 7012(b).

Accordingly, to survive a motion to dismiss, the Complaint “must contain sufficient

factual matter, accepted as true, to state a claim to relief that is plausible on its face.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks omitted); see also, e.g.,

In re Doorman Prop. Maint., No. 15–30912 DM, 2017 WL 90332, at *1 (N.D. Cal.

Jan. 10, 2017) (applying the Twombly/Iqbal pleading standard to an adversary

complaint); In re SONICblue Inc., No. 03–51775–MM, 2008 WL 2875407, at *11

(N.D. Cal. July 23, 2008) (same). The Trustee must show “more than a sheer

possibility that [the FK Defendants] ha[ve] acted unlawfully” or facts that are

“merely consistent with” those Defendants’ liability. Iqbal, 556 U.S. at 678. And a

complaint “supported by mere conclusory statements[] do[es] not suffice,” and this

Court is “not bound to accept as true a legal conclusion couched as a factual

allegation.” Id. Additionally, the Trustee’s allegations sound in fraud. See, e.g.,

Compl. ¶¶ 2–4 (describing Cassidy’s misdeeds as “fraud”); ¶ 92 (“fraud and

embezzlement scheme”); id. ¶¶ 272–85 (fraud claim based on the same underlying

conduct as other counts). Thus, the heightened pleading standard of Federal Rule

9(b) applies, and the Trustee must “state with particularity the circumstances

constituting fraud.” Id.



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IV. ARGUMENT

A. The Trustee’s Complaint Fails To State A Claim For Aiding And

Abetting.

The Trustee’s centerpiece claim is that the FK Defendants aided and abetted

Cassidy’s alleged breach of fiduciary duties he owed to the Debtors.6 See Compl.

¶¶ 233–42 (Count I). The Complaint alleges that the FK Defendants took two

actions that “aided and abetted” Cassidy’s breaches of fiduciary duty: first, that

Jetcraft and Orion “pa[id] Cassidy kickbacks in exchange for causing the Debtors to

purchase overpriced aircraft,” and, second, that Mr. Fazal-Karim “entered into

various side ventures that Fazal-Karim knew or should have known Cassidy could

not afford without embezzling funds from the debtors.” ¶ 236. Both theories are

meritless.

The elements of aiding and abetting a breach of fiduciary duty under

California law are: (1) a third party’s breach of fiduciary duties owed to the plaintiff;

(2) the defendant’s actual knowledge of that breach; (3) substantial assistance of that

breach; and (4) defendant’s conduct was a substantial factor in causing harm to

plaintiff.7 Nasrawi v. Buck Consultants LLC, 231 Cal. App. 4th 328, 343 (2014).

Moreover, California courts have required an additional element: the defendant’s

6 As discussed in the Jetcraft Defendants’ memorandum in support of its motion to

dismiss, the Trustee’s repeated generic references to “the Debtors” without distinguishing between them provides an independent reason to dismiss the Complaint in its entirety.

7 This Motion assumes arguendo that California law applies to the claims at issue,

except where the FK Defendants argue otherwise. See, e.g., infra Section III.B.3. The FK Defendants nevertheless reserve the right to argue that the law of another jurisdiction—including but not limited to the law of New York (which governed the purchase agreements) or the law of Singapore (where substantially all the alleged conduct the Trustee complains of allegedly took place)—applies to the Trustee’s claims.



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specific intent to facilitate the wrongful conduct. See id.; Schulz v. Neovi Data

Corp., 152 Cal. App. 4th 86, 95 (2007); Am. Master Lease LLC v. Idanta Partners,

Ltd., 225 Cal. App. 4th 1451, 1477 (2014).8

The Complaint fails to adequately plead the requisite elements of this claim

under either of the Trustee’s two theories. First, the allegations fail under Rule 9(b)

because the Trustee has lumped the defendants together throughout the Complaint,

with the result that the Complaint fails to plead claims with the requisite

particularity. Second, the Trustee fails to allege any facts supporting the central

factual predicate of his primary theory—namely, that the planes were “overpriced.”

Third, the Complaint alleges no facts sufficient to support the necessary scienter as

to each FK defendant—and, for the same reason, because California law makes

knowledge a key to “substantial assistance,” the Complaint fails to allege that

entering into aircraft-sale transactions with Zetta Singapore constituted “substantial

assistance” to any alleged breach of duty. Fourth, the Complaint makes clear that

Cassidy—not the FK Defendants—was the proximate cause of any injury Zetta

Singapore suffered. And, fifth, the Trustee fails to allege any facts supporting his

secondary “side venture” theory: there are no allegations that Cassidy paid any

money at all to any of the FK Defendants (or anyone else) in connection with the

yacht mentioned above—much less that he paid any money embezzled from (or

otherwise belonging to) either Debtor.

Each of these failures standing alone is fatal to the Trustee’s claims. Together,

they show how far the Trustee has overreached.

8 California also recognizes a second theory of aiding and abetting when “the aider

and abettor owe[s] a fiduciary duty to the victim.” Am. Master Lease, 225 Cal. App. 4th at 1477. But the Trustee does not and cannot plead that arms’-length counterparties like the FK Defendants owed any fiduciary duty to either Debtor.



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1. The Trustee’s pleading fails at the threshold under Rule 9(b).

Because the Complaint also alleges that the conduct underlying the breach of

fiduciary duty constitutes fraud, see Compl. ¶¶ 272–85, the Trustee’s aiding-and-

abetting claim sounds in fraud, and Rule 9(b)’s heightened pleading standard

applies. See Giron v. H.K. & Shanghai Bank Co., Ltd., No. 2:15-cv-08869-ODW-

JC, 2016 WL 6662726, at *3 (C.D. Cal. June 29, 2016); Gonzales v. Lloyds TSB

Bank, PLC, 532 F. Supp. 2d 1200, 1207 (C.D. Cal. 2006). Under Rule 9(b), the

Trustee must make specific factual allegations about each individual defendant. See

Swartz v. KPMG LLP, 476 F.3d 756, 764–65 (9th Cir. 2007) (holding Rule 9(b)

requires “plaintiffs to differentiate their allegations when suing more than one

defendant” and “inform each defendant separately of the allegations surrounding his

alleged participation in the fraud”). The Trustee may not simply refer to groups of

the defendants collectively. Thus, each time the Trustee pleads that “the

Defendants” or “the FK Defendants” knew of something or took some action, the

Trustee is improperly “lumping” them together—running afoul of Rule 9(b)’s

heightened fraud-pleading standard. Destfino v. Reiswig, 630 F.3d 952, 958 (9th

Cir. 2011) (under Rule 9(b) plaintiffs must “differentiate their allegations when

suing more than one defendant” and a complaint should be dismissed when it

“lump[s] multiple defendants together”) (original alterations and citations omitted);

Forest Ambulatory Surgical Assocs., L.P. v. Ingenix, Inc., No. CV 12-2916 PSG

(FFMx), 2013 WL 11323601, at *11 (C.D. Cal. Dec. 13, 2013) (similar). Because

the aiding-and-abetting claim relies on these categorically defective allegations,

Compl. ¶¶ 238–40, it must be dismissed.9

9 In an apparent attempt to craft a grand conspiracy, the Trustee makes repeated,

conclusory allegations that Mr. Fazal-Karim was “involved” in other transactions without explaining what the alleged “involve[ment]” consisted of. Compl. ¶¶ 109, 115, 120, 159; see also id. ¶ 96(c) & (f). These allegations demonstrate the need for particularized pleading in allegations of conduct sounding in fraud—they fail



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The Trustee attempts to evade this important pleading requirement by

asserting in conclusory fashion that the FK Defendants and Jetcraft Defendants are

“alter egos” of one another, but this attempt fails. Alter-ego liability requires

showing a “unity of interest” between the purported alter egos, as well as an

inequitable result from treating them as separate. See Sonora Diamond Corp. v.

Super. Ct. of Tuolumne Cty., 83 Cal. App. 4th 523, 538 (2000). The allegations in

the Complaint fall far short of making either showing. Unity of interest is indicated

by “commingling of funds and other assets of the two entities,” “the holding out by

one entity that it is liable for the debts of the other,” “the use of one as a … conduit

for the affairs of the other,” “inadequate capitalization,” and “disregard of corporate

formalities.” Id. at 538–39; Price v. Synapse Grp., Inc., No. 16-cv-01524, 2017 WL

3131700, at *11 (S.D. Cal. July 24, 2017). The Complaint fails to allege any facts

of this kind that would support the requisite unity of interest and instead contains

only bare legal conclusions and recitations of the elements of an alter-ego theory

pleaded “on information and belief.” See Sandoval v. Ali, 34 F.Supp.3d 1031, 1040

(N.D. Cal. 2014) (finding plaintiffs’ alter-ego allegations made “on information and

belief” were “too conclusory to survive a motion to dismiss”).

Specifically, the Complaint nowhere alleges facts suggesting that the FK

Defendants’ or Jetcraft Defendants’ funds are commingled; that one entity holds

itself out as liable for the debts of any other; that the entities are inadequately

capitalized; or that the entities fail to segregate their corporate records. See Sonora

Diamond, 83 Cal. App. 4th at 538–39. Moreover, the Complaint contains only the

most conclusory assertion that any inequity would result from this Court correctly

treating the FK Defendants as what they are—separate entities. Compl. ¶ 48.

Because the Complaint’s allegations fail as a matter of law to meet either prong of

the alter-ego test, the contention that the FK Defendants are alter egos fails, and the

to put any of the FK Defendants on notice of what the alleged “involve[ment]” was or what, if anything, the Trustee is actually claiming.



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Court should dismiss the Complaint as to the FK Defendants for failure to satisfy

Rule 9(b).

2. The Complaint’s aiding-and-abetting count also fails under

Rules 8 and 12(b)(6).

i. The Trustee fails to adequately allege the central

factual predicate of his theory—that the aircraft Zetta

Singapore bought were overpriced.

The Complaint’s central allegation against the FK Defendants is that they

induced Zetta Singapore to buy overpriced aircraft from Jetcraft. See, e.g., Compl.

¶ 236. The Trustee’s theory is that Cassidy “violated his fiduciary duties” to Zetta

Singapore by “taking kickbacks … in exchange for purchasing overpriced aircraft.”

Id. ¶ 235. This theory of breach works, if at all, only if the aircraft were actually

overpriced—otherwise, Cassidy was merely buying market-priced aircraft in

furtherance of Zetta Singapore’s business plan, not breaching any duty he owed the

company. See Compl. ¶ 81 (describing business plan calling for Zetta Singapore to

acquire aircraft).

Without this central foundation, the Trustee’s allegations of a grand

conspiracy involving no fewer than 12 third parties collapse into a simple

embezzlement dispute between Cassidy and his former business partners. See ¶ 95.

Despite the claim’s critical importance—and the Trustee’s extensive pre-filing

discovery—nowhere in the Complaint’s four hundred paragraphs does the Trustee

plead any facts whatsoever that support his repeated, conclusory allegation that the

aircraft were “overpriced.” See Compl. ¶¶ 1, 92, 134, 151, 235–36, 245, 249, 278.

The Trustee’s failure to back up his conclusory allegation that the aircraft were

“overpriced” is fatal to his claim. See Scouler & Co. LLC v. Schwartz, No. 11-cv-

06377, 2012 WL 1502762, at *6 (N.D. Cal. Apr. 23, 2012) (“conclusory allegation”

that company “failed to receive reasonably equivalent value in exchange” is

“insufficient to state a claim”).



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The Complaint fails to plead facts showing that—in the niche, high-end

market for aircraft that meet the requirements of the clientele Cassidy sought to

attract, and for these aircraft in particular—there was, then or now, a recognized or

uniform market price for the aircraft Cassidy purchased or identify what that market

price might have been if it existed. The Trustee does not plead that any other aircraft

would have been comparable to those Cassidy and Zetta Singapore bought—or, if

there were such aircraft, that any comparable aircraft would have been available for

purchase at markedly lower prices in the same timeframe. And, even if the Trustee

had made such allegations (he has not), the documents referenced in the Complaint

show that Jetcraft made significant enhancements to these aircraft before delivering

them, such that the Trustee would also have to plead facts showing that those costly

additions could not account for any differences as compared to prices of other

aircraft.10 The Trustee has done none of this.

The Trustee’s tale about the alleged downturn in the private-jet market, id.

¶¶ 71–74, also avails him nothing. The Trustee alleges (again, in a conclusory

fashion) that Cassidy “paid at or very close to the asking price for these aircraft”

despite a “market flush with aircraft sellers desperate to make sales.” Id. ¶ 73. But

he identifies no other sellers of “Bombardier Global 5000s and 6000s,” nor does he

identify the “asking price” (or, for most of the transactions at issue, the price paid).

He fails to allege any facts showing that any other sellers would have sold for a lower

price than Jetcraft, or that the Jetcraft prices were excessive in light of other sellers’

prices. And though the Trustee refers in passing to Bombardier competitor

Gulfstream, e.g., id. ¶ 70, he does not plead what Gulfstream charged for its

aircraft—aircraft that, according to the Trustee’s own allegations, would not have

10 The Aircraft Purchase Agreements referenced in Schedule 2 of the Complaint make clear that Jetcraft made significant enhancements to these aircraft before delivering them.



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met Cassidy’s needs in any event, see id. ¶ 66. As alleged by the Trustee, such

aircraft were not suitable for Zetta Singapore’s business plan: before the business

was founded, Cassidy informed Seagrim and Walter that success required using

“Bombardier Global 5000s and 6000s” to attract “wealthy Chinese clientele.” Id.

¶ 66. Seagrim and Walter agreed to this plan, see id. ¶ 67 and the purchases Cassidy

and Zetta Singapore made were consistent with the plan.

In addition to this failure to come forward with well-pleaded allegations, other

of the Trustee’s allegations render his “overpriced” theory utterly implausible. For

example, the Trustee acknowledges that Zetta Singapore’s board—which included

two experienced private-aircraft executives—supported Cassidy’s business

judgment about the prices he paid for these aircraft. Compl. ¶¶ 64, 87, 104, 156 (the

board “agreed to go through with” the Element transactions).

In short, the Complaint simply pleads no facts even “consistent with” the

Trustee’s theory that Zetta Singapore overpaid for aircraft here, much less facts

making his claims plausible. See Iqbal, 556 U.S. at 678. This failure to allege facts

supporting the central factual predicate of his theory requires dismissal of the aiding-

and-abetting claim.

ii. The Trustee has failed to adequately plead knowledge

or intent.

To survive dismissal, the Complaint must adequately plead that (1) the

defendant had knowledge of the alleged breach and (2) the defendant had specific

intent—that the defendant “ma[de] a conscious decision to participate in tortious

activity for the purpose of assisting another in performing a wrongful act.” Am.

Master Lease, 225 Cal. App. 4th at 1477 (quotation marks omitted); see also

Facebook, Inc. v. MaxBounty, Inc., 274 F.R.D. 279, 285 (N.D. Cal. 2011)

(dismissing aiding-and-abetting claim in part because conclusory allegations of

knowledge “merely provide a formulaic recitation of the cause of action and lack

factual support”) (quotation marks omitted). The Complaint fails to properly allege



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either type of scienter.

The Trustee alleges only that “[e]ach of the Defendants were [sic] aware of

Cassidy’s breaches of fiduciary duty.” Compl. ¶ 238. This conclusory allegation is

wholly insufficient to show knowledge. A complaint must “set forth sufficient

allegations to establish” that the defendant “had reason to believe that [Cassidy] was

engaged in fraudulent activity.” Namer v. Bank of Am., No. 16-cv-3024 JM(WVG),

2017 WL 2937098, at *6 (S.D. Cal. July 10, 2017). But the Complaint pleads no

facts that suggest that any of the FK Defendants had any reason to believe Zetta

Singapore could not afford the aircraft, or that any of the FK Defendants were aware

Cassidy was embezzling money from the company. To the contrary, the Complaint

alleges that Cassidy was able to attract well-heeled clients and tens of millions of

dollars of funding, Compl. ¶ 78, which created the “impression that [Zetta Singapore

was] a profitable, growing business,” id. ¶ 79.

Given the failure to adequately plead knowledge of the supposed breach, the

Trustee also fails to plead any “conscious decision to participate in tortious activity”

by any of the Defendants. Casey, 127 Cal. App. 4th at 1146; see also Fiol v.

Doellstedt, 50 Cal. App. 4th 1318, 1326 (1996) (“Mere knowledge that a tort is being

committed and the failure to prevent it does not constitute aiding and abetting.”).

Equally unavailing is the Trustee’s conclusory allegation that the FK

Defendants paid “kickbacks” to Cassidy. This inflammatory term refers to the

$500,000 payments in each transaction that served as additional funding financed

through Element and paid to Cassidy as part of the Element transactions. By using

this term, the Trustee merely assumes what he must actually plead: that each of the

FK Defendants knew that these $500,000 payments were wrongful and intended to

assist in a breach. Compl. ¶¶ 103–06 & 147–48. But the Trustee nowhere alleges

that Cassidy used the payments for anything other than Zetta Singapore’s

operations—a telling silence given the Trustee’s recitations of how Cassidy used

other funds he allegedly stole from the Debtors. E.g., id. ¶¶ 124, 168.



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Nor does the Complaint sufficiently allege any distinction between Cassidy

and Zetta Singapore such that paying Cassidy directly would have been aiding and

abetting some theoretical breach of duty between Cassidy and the company he

dominated. To the contrary, the Trustee’s allegations repeatedly demonstrate that

Cassidy and Zetta Singapore were one and the same, reinforcing why there was

nothing inherently wrong with paying Cassidy directly. See, e.g., id. ¶¶ 68, 77, 94,

95, 96(g), 125, 188, 192, 194, 255 (referring to Zetta Singapore’s business, debts,

and customers as Cassidy’s—“his”—business, debts, and customers); see also infra

Section III.C.3.

Instead, the Trustee seeks to support one conclusory allegation with another:

he claims that certain of the FK Defendants “knew that [these payments] had no

legitimate purpose.” Id. ¶¶ 106 & 158; see also id. ¶ 238 (alleging that the FK

Defendants “were aware of Cassidy’s breaches”). This, again, is merely the

Trustee’s conclusion, unsupported by any well-pleaded facts. See Iqbal, 556 U.S. at

678. The Trustee’s failure to plead this essential element of his claim requires

dismissal.

iii. The Trustee’s failure to plead scienter means he has

also failed to adequately plead substantial assistance.

The Trustee fails to plead facts showing that the $500,000 payments to Zetta

Singapore through Cassidy were a substantial factor in bringing about the aircraft-

purchase transactions he complains of. Although California courts have not spoken

clearly on what constitutes “substantial assistance” in the context of “ordinary

business transactions,” courts require that, at a minimum, the alleged aider-and-

abettor must “actually kn[o]w th[e] transactions were assisting the [counterparty] in

committing a specific tort.” Casey, 127 Cal. App. 4th at 1145. The aider-and-

abettor’s “[k]nowledge is the crucial element” in showing that an otherwise ordinary

business transaction amounted to substantial assistance. Id. The Casey court

reviewed earlier California cases finding it necessary to “[f]ind[] the defendants had



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actual knowledge of all the facts relative to the scheme and knowingly assisted in its

consummation.” Id. at 1146 (quotation marks omitted). That Court further tied the

substantial-assistance requirement to the underlying tort’s specific-intent

requirement. Id. (quoting Howard v. Super. Ct., 2 Cal. App. 4th 745, 748–49

(1992)). Thus, even if the Trustee had adequately pleaded that the aircraft were

“overpriced” and even if the purchase of overpriced aircraft were a breach of

fiduciary duty, the Trustee’s claim would still fail because he has failed to adequately

plead either knowledge or specific intent.

Moreover, the Complaint contains no allegations of fact tying any activity by

any FK defendant to Cassidy’s alleged embezzlement. The Trustee alleges no facts

suggesting that any of the FK Defendants’ actions were in any way a “substantial

factor” in causing Cassidy’s alleged embezzlement. Nasrawi, 231 Cal. App. 4th at

343.

iv. The Trustee fails to plead that the payments

proximately caused any breach.

The Trustee appears to suggest that, but for the purported “kickbacks” that

allegedly induced the purchases, Zetta Singapore would not have bought

“overpriced” aircraft from Jetcraft. Even if the Trustee had backed that conclusory

assertion with factual allegations, that but-for cause is not the proximate cause of

any harm to Zetta Singapore. See, e.g., Camp v. Peel, 33 Cal. App. 2d 612, 615

(1939) (distinguishing “but-for” causes that “did nothing more than furnish the

condition or give rise to the occasion by which the injury was made possible” from

“proximate cause,” the “distinct, successive, unrelated, and efficient cause of the

injury”). Instead, the proximate cause of whatever loss the Court might determine

the Trustee has alleged was Cassidy’s domination of the corporation and his alleged

decision to operate it as a “Ponzi-like” scheme. Compl ¶ 78. That decision meant

that Zetta Singapore necessarily needed to buy aircraft in order to attract continued

investment. Indeed, that is precisely what the Trustee alleges: that Cassidy would



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have had to continue buying aircraft from somewhere in order to keep his scheme

going and that Cassidy, in fact, allegedly threatened to do so. Compl. ¶ 192. The

Complaint contains no plausible factual allegations that any action by the FK

Defendants—rather than by Zetta Singapore’s mastermind—drove the transactions

of which the Trustee complains. Indeed, the lack of any factual allegations that the

aircraft were “overpriced” forecloses that requisite causal showing.

3. The Complaint fails to plead facts supporting the “side

venture” theory of breach.

The Trustee alleges that Cassidy entered into “side ventures that Fazal-Karim

knew or should have known Cassidy could not afford without embezzling funds

from the Debtors.” See Compl. ¶¶ 235–36. Importantly, the Trustee fails to allege

any facts suggesting that Mr. Fazal-Karim or any of the other defendants knew that

Cassidy could not afford the alleged “side ventures” or was embezzling money.

Rather, this conclusory paragraph asserts only that Mr. Fazal-Karim allegedly must

have had an assumed understanding and is faulty on its face.

Notably, although the Trustee alleges that Cassidy “us[ed] the Debtors’ funds

to enter into various side ventures with Fazal-Karim,” the Complaint describes only

a single alleged “side venture,” in which “Cassidy agreed to purchase half a

superyacht with Fazal-Karim.” Compl. ¶ 172. Further, the Trustee does not allege

that Cassidy paid Mr. Fazal-Karim any money at all for that “side venture.” Id. ¶ 174

(“It is unclear whether Cassidy ever paid his half ….”). The Trustee’s theory is that

Mr. Fazal-Karim must have known that Cassidy was embezzling money because that

is the only way Cassidy could afford to enter the side venture. But that theory is

fatally undermined by the Trustee’s failure to allege any facts suggesting that

Cassidy actually paid Mr. Fazal-Karim for the boat, id. ¶ 174, as well as his

allegation that Cassidy held himself out as “independently wealthy,” id. ¶ 66.

Indeed, Cassidy’s failure to pay is more consistent with the conclusion that, from

Mr. Fazal-Karim’s perspective, Cassidy was not embezzling funds from anyone.



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And in any event, there are no factual allegations that Mr. Fazal-Karim knew

anything about Cassidy’s personal financial situation. Therefore, even if the Trustee

alleged that Cassidy paid for the boat, there are no facts alleged that make it plausible

that Mr. Fazal-Karim would have had any idea the money he would have used was

embezzled. The Complaint fails again to allege a single fact that would move this

claim into the realm of the plausible. See Iqbal, 556 U.S. at 678.

* * *

The Trustee offers two theories of aiding and abetting, but does not plead

sufficient facts to support the basic elements of the claim, much less render either

theory plausible. Because the allegations in the Complaint are not even “consistent

with” the FK Defendants’ liability—much less sufficient to render the Trustee’s

theory “plausible”—the aiding-and-abetting claim must be dismissed. Iqbal, 556

U.S. at 678.

B. The Trustee’s Other Counts Fail To State Claims On Which Relief

May Be Granted

The Trustee’s remaining common-law and California statutory claims—

Counts II through VI—are, in effect, nothing but variations on his faulty aiding-and-

abetting claim, warmed over and served anew. With those claims, the Trustee tries

with decreasing success to wedge the scant handful of relevant facts he has pleaded

into increasingly inapposite causes of action—and then into claims for remedies that

do not even amount to causes of action. The claims fail for the same reasons as the

aiding-and-abetting claim—in particular, the Trustee’s utter failure to plead facts to

back up his central theory that the aircraft were “overpriced.” But each claim also

fails for other, independent reasons.

1. The civil conspiracy claim fails.

The Complaint’s civil conspiracy (Count II) claim essentially rehashes a

portion of his aiding-and-abetting claim. Compare Compl. ¶¶ 243–51, with id.

¶¶ 233–42. His failure to plead facts supporting aiding and abetting a breach of



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fiduciary duty similarly requires dismissal of his conspiracy claim. See supra

Section III.A.

To survive dismissal, the Trustee must adequately “allege that the defendant

had knowledge of and agreed to both the objective and the course of action that

resulted in the injury.” Berg & Berg Enters., LLC v. Sherwood Partners, Inc., 131

Cal. App. 4th 802, 823 (2005). When, as here, a complaint fails to allege “a meeting

of the minds on the objective and course of action,” it must be dismissed. See U.S.

ex rel. Darian v. Accent Builders, Inc., No. CV 00-10255 FMC (JWJx), 2005 WL

8161676, at *5 (C.D. Cal. 2005). Moreover, when, as here, the alleged object of the

conspiracy was a fraud, the agreement must be pleaded with the particularity

required by Rule 9(b). Carpenter v. Thrifty Auto Sales, No. EDCV09-02233 DMG

(DTBx) 2010 WL 11595928, at *5 (C.D. Cal. July 30, 2010); see also Lazo v.

Summit Mgmt. Co., LLC, No. 1:13-cv-02015, 2014 WL 3362289 (E.D. Cal. July 9,

2014).

The Trustee’s conspiracy claim alleges that the FK Defendants agreed to “pay

Cassidy kickbacks in exchange for his purchase of overpriced aircraft that the

Debtors could not afford.” Compl. ¶ 245. Because the Complaint is devoid of facts

concerning the market value for any of the aircraft, see supra Section III.A.2.i, it

similarly fails to establish that the parties agreed to buy or sell aircraft at prices

“significantly higher than their market value.” See Compl. ¶ 248.11 And, critically

for the conspiracy claim, the Complaint fails to allege facts demonstrating any

11 The Complaint also alleges that Mr. Fazal-Karim’s alleged “side venture”—in

which Cassidy did not pay for his half of a yacht—somehow forms a part of the conspiracy. Id. ¶ 245. It is unclear how allegations that two parties sought to participate together in a potential business transaction, especially a failed one, can without more support a theory that the parties conspired to embezzle. The Trustee does not even attempt to connect those unrelated concepts with anything more than the conclusory assertion that Mr. Fazal-Karim somehow “knew or should have known” about Cassidy’s financial situation.



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meeting of the minds on the supposed central object of the alleged conspiracy. The

failure to plead facts means the Complaint does not even satisfy the Iqbal pleading

standard, much less the heightened Rule 9(b) standard. That failure is an

independent reason to dismiss the civil conspiracy claim. See Mendocino Envtl. Ctr.

v. Mendocino Cty., 192 F.3d 1283, 1301 (9th Cir. 1999) (to establish liability for

conspiracy “a plaintiff must demonstrate the existence of an agreement or meeting

of the minds” (internal quotation marks omitted)).

2. The Complaint fails to adequately plead fraud.

The Trustee has failed to adequately plead fraud (Count VI). As with his

conspiracy claim, the Trustee’s fraud claim merely repackages the aiding-and-

abetting claim, and it should be dismissed for the same reasons. See supra Section

III.A. Moreover, the Complaint also fails to plead either intent or a materially false

statement by any of the FK Defendants.

To plead common-law fraud, the Trustee must allege (1) a false

representation, (2) knowledge of the representation’s falsity, (3) an intent to defraud,

(4) justifiable reliance on the part of the plaintiff, and (5) resulting damage. Lazar

v. Super. Ct., 909 P.2d 981, 984 (Cal. 1996); see also B.E. Witkin et al, Summary of

Cal. Law (11th ed. 2019) Torts § 890. Moreover, a party asserting a fraud claim is

subject to a heightened pleading standard and must allege “with particularity the

circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Because the Trustee has

failed to allege the requisite knowledge or intent to defraud, and failed to allege false

representations, and because the Trustee’s fraud allegations do not clear the high bar

set by Rule 9(b), the fraud claim must be dismissed.

i. The Complaint improperly lumps defendants together,

and fails under Rule 9(b).

The Trustee generally alleges that “Defendants intended that the Debtors

would rely” on various “representations and omissions.” Compl. ¶ 275. “Lumping”

all defendants together as the Trustee has done completely fails to satisfy the



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particularity requirement and independently requires dismissal of the fraud claim.

Destfino, 630 F.3d at 958; Forest Ambulatory, 2013 WL 11323601, at *10.

ii. The Complaint fails to plead any materially false

representation.

Rule 9(b) requires that a plaintiff allege “the who, what, when, where, and

how of the misconduct charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,

1106 (9th Cir. 2003) (internal quotation marks omitted). The complaint must include

“an account of the time, place, and specific content of the false representations as

well as the identities of the parties to the misrepresentation.” Swartz v. KPMG LLP,

476 F.3d 756, 764 (9th Cir. 2007) (internal quotation marks omitted).

The Trustee utterly fails to carry that burden. The Complaint generically

alleges that aircraft purchase agreements executed by Zetta Singapore contained

“representations that were false,” Compl. ¶ 274, and that the Debtors relied on these

unspecified false representations, id. ¶¶ 275–76. But the Trustee does not allege

what representations in the aircraft purchase agreements were false, nor the content

of the representations themselves. The Trustee instead alleges only that various

parties “entered into” or “executed” aircraft purchase agreements. Id. ¶¶ 99, 134,

163. This allegation is a mere “label[] or conclusion[]” that fails to meet the general

pleading standard under Rule 8, much less the heightened fraud-pleading standard.

Iqbal, 556 U.S. at 678.

iii. The Complaint alleges no facts showing intent to

defraud.

The Trustee fails to plead any facts backing up his conclusory and deficient

allegations of intent. Id. ¶¶ 275 & 281. Although intent may be pleaded generally,

the Trustee must plead at least some facts making the inference of intent plausible.

See Namer v. Bank of Am., N.A., No. 16-cv-3024 JM(WVG), 2017 WL 2937098, at

*6 (C.D. Cal. July 10, 2017).

As discussed above, the Trustee nowhere alleges facts showing that the FK



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Defendants were aware that Zetta Singapore was performing poorly financially (or

any other relevant details), much less that the FK Defendants intended to defraud

Zetta Singapore. To the contrary, the facts alleged in the Complaint raise the

plausible inference that, as outside parties, the FK Defendants would have seen Zetta

Singapore as a “profitable, growing business,” Compl, ¶ 79, with access to well-

heeled customers, id. ¶¶ 81–82, and tens of millions of dollars in outside funding

available at Cassidy’s request, id. ¶ 78.

Similarly, as discussed above, see Section III.A.2.i, the Trustee’s central

premise—that these aircraft transactions were “fraudulent” because Zetta Singapore

purchased the aircraft at unfair prices—is entirely without factual support. Because

the Trustee pleads no facts showing the aircraft were “overpriced,” the Trustee’s

allegations fail to support an inference that Defendants intended to defraud Zetta

Singapore by selling it “overpriced” aircraft.

The Complaint alleges that the two $500,000 payments were not properly

disclosed to Zetta Singapore. Id. ¶¶ 104, 105; see id. ¶ 278 (“Among other material

omissions, the Defendants concealed that they were paying kickbacks and bribes to

Cassidy ….”). But no facts appear in the Complaint suggesting that the FK

Defendants intended that this information be withheld. Again—consistent with the

Trustee’s repeated allegations that Cassidy ran and dominated Zetta Singapore—the

FK Defendants believed that there was no difference between paying Zetta

Singapore and paying Cassidy directly. See infra Section III.C.3.

The allegations regarding Cassidy’s “superyacht” “side venture” suffer from

the same omissions. See Compl. ¶¶ 172–81. The Complaint pleads no facts

indicating that Mr. Fazal-Karim intended to hide the yacht’s purchase from Zetta

Singapore—indeed, the Complaint alleges that a consultant hired by Zetta Singapore

managed the yacht and Zetta Singapore paid for the insurance for the yacht. Id.

¶¶ 178–79. And, in any event, Mr. Fazal-Karim had every reason to think that Zetta

Singapore was aware of these transactions because Cassidy was aware of them.



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Austin v. Hallmark Oil Co., 134 P.2d 777, 784 (Cal. 1943) (the knowledge of an

officer is presumably imputed to the company); see infra Section III.C. And

although the Complaint discloses internal emails between Cassidy, Walter, and

Seagrim making clear that they were all aware of the company’s financial straits,

e.g. id. ¶ 87, there is no factual allegation in the Complaint that any of the FK

Defendants even knew about Zetta Singapore’s financial problems.

iv. The Complaint fails to adequately plead material omissions.

The Trustee offers further conclusory allegations that the FK Defendants

“concealed or suppressed material facts from the Debtors.” Compl. ¶¶ 276–81.

These supposed omissions rely, again, on the Trustee’s assertion that “kickbacks”

were paid and that the aircraft purchases were “overpriced,” id. ¶ 278, allegations

both unsupported and conclusory—and ones that are certainly not pleaded with the

particularity required to satisfy Rule 9(b)’s heightened standard. Moreover, the

Complaint fails to plead facts sufficient to support the Trustee’s claim that the FK

Defendants “exclusively knew” the alleged “material facts,” much less that they

intended to defraud Zetta Singapore. See id. ¶¶ 278–81.

To the contrary, the board approved the two Element deals. Id. ¶¶ 104 & 156;

id. Schedule 2. And as discussed below, see infra Section III.C, Cassidy’s

knowledge—including his knowledge of the two $500,000 payments—is properly

imputed to Zetta Singapore, the corporation that he wholly dominated. Even if the

FK Defendants had had knowledge of Cassidy’s wrongdoing (they did not), even if

the FK Defendants’ payments had been “kickbacks” to Cassidy (they were not), and

even if the FK Defendants’ payments had caused Cassidy to buy “overpriced”

aircraft (they did not), the FK Defendants could scarcely conceal knowledge of

Cassidy’s transactions with them from Cassidy—and hence from Zetta Singapore.



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3. The Complaint’s California unfair competition law claim

fails because it fails to allege conduct or injury in California.

i. The Trustee alleges no nexus between this case and

California.

To recover on its Unfair Competition Law (“UCL”) claim—Count III—the

Trustee must allege a nexus to California. This is because the “presumption against

extraterritorial application” of California’s statutory law applies in “full force” to

UCL claims. Sullivan v. Oracle Corp., 254 P.3d 237, 248 (Cal. 2011). In Sullivan,

the California Supreme Court held that “[n]either the language of the UCL nor its

legislative history provides any basis for concluding the Legislature intended the

UCL to operate extraterritorially.” Id. Accordingly, a plaintiff who is not a resident

of California has standing under the UCL only when (1) the plaintiff’s injury

occurred in California, or (2) the defendant’s conduct occurred in California.

Wisdom v. Easton Diamond Sports, LLC, No. CV 18-4078 DSF (SSx), 2018 WL

6264994, at *4 (C.D. Cal. Oct. 9, 2018) (citing Sullivan, 254 P.3d at 248–49); see

also Norwest Mortg., Inc. v. Super. Ct. of San Diego Cty., 72 Cal. App. 4th 214,

222–25 (1999). A court may dismiss UCL claims if a plaintiff fails to allege the

required nexus to California. See, e.g., Tidenberg v. Bidz.com, Inc., No. CV 08-5553

PSG (FMOx), 2009 WL 605249, at *4–5 (C.D. Cal. Mar. 4, 2009) (dismissing UCL

claim because non-resident plaintiff failed to allege nexus to California). Nor is a

Plaintiff’s California “residence alone is not sufficient to bring claims under the UCL

… where the injuries occur outside of California.” Terpin v. AT&T Mobility, LLC,

No. 2:18-cv-06975-ODW (KSx), 2019 WL 3254218, at *6 (C.D. Cal. July 19,

2019); see also McKinnon v. Dollar Thrifty Auto. Grp., Inc., No. 12-4457 SC, 2013

WL 791457, at *2 & *5 (N.D. Cal. Mar. 4, 2013).

Here, not only does the Complaint fail to allege a nexus to California on its

UCL claim, but the few relevant facts pleaded in the Complaint affirmatively show

that this case has no nexus to California. As an initial matter, the Trustee stands in



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the shoes of Zetta Singapore. See, e.g., Flores v. Hagobian, No. 1:04–CV–6405

AWI DLB, 2013 WL 4814928, at *4 (E.D. Cal. Sept. 9, 2013) (“[A] bankruptcy

trustee can only sue to recover claims belonging to the estate itself.”). And,

obviously, Zetta Singapore is a Singapore resident. Compl. ¶ 67 (noting Zetta

Singapore was incorporated in Singapore). The Trustee alleges neither that the

Debtors’ injury occurred in California nor that the FK Defendants’ conduct occurred

in California.

Location of Injury. To the extent that Zetta Singapore suffered any injury,

the injury occurred in Singapore, not California. The Trustee alleges that Zetta

Singapore was incorporated in Singapore. Compl. ¶ 67. Zetta Singapore’s finance

department, and all of the financial records of Zetta USA, were located entirely in

Singapore . Id. ¶ 68. Zetta Singapore’s bank account was based in Singapore. See

id. ¶¶ 119. Moreover, Cassidy himself lived and conducted business in Singapore.

See id. ¶¶ 67 (“Cassidy, Seagrim, and Walter incorporated Zetta PTE in

Singapore ….”), 68 (“Zetta PTE’s finance department was located in Singapore

….”), 89 (referencing Cassidy’s “high-end apartment in Singapore”), 116

(referencing Cassidy’s “Singapore residence”), 124 (same). By contrast, the Trustee

alleges no facts demonstrating that Zetta Singapore’s injuries occurred in California.

And as discussed in greater detail below, the Complaint is similarly bare of

allegations that Zetta USA suffered any injury at all—much less injuries in

California.

Defendants’ Conduct. The Trustee also frequently omits allegations about

where relevant conduct took place. For instance, the Trustee does not allege where

the “Li Qi” and “Minsheng” “Transactions” were consummated, see id. ¶¶ 115–25,

nor does he allege the location of the “Second Element Transaction,” see id. ¶¶ 130–

58. The Trustee similarly fails to plead any facts indicating a nexus to California

with respect to the “Falconwing Transaction,” see id. ¶¶ 160–67, and with respect to

Cassidy’s two yacht ventures. See id. ¶¶ 168–81.



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The few locational details the Trustee does plead regarding the FK

Defendants’ conduct make clear that the conduct did not occur in California. Zetta

Singapore was incorporated in Singapore and conducted its business there. Compl.

¶¶ 67–68. The Trustee alleges that Mr. Fazal-Karim was involved in the “Asian

private jet industry,” which mainly consisted of the Chinese market. Compl. ¶¶ 71,

72; see also id. ¶ 184 (alleging that Mr. Fazal-Karim was Bombardier’s exclusive

representative for “Southeast Asia”). Bombardier’s dealings with Zetta Singapore

occurred because Bombardier wanted to “enhance its sales, particularly in Asia.” Id.

¶ 76. The Trustee’s allegations regarding specific transactions fare no better. The

aircraft that Jetcraft sold to Zetta Singapore as part of the “First Element

Transaction” operated out of Singapore. See id. ¶ 98 n.12 (citing press release)

(“The aircraft will operate out of the company’s Asian hub in Singapore ….”); see

also id. ¶ 117 n.14 (citing press release).

The Trustee similarly pleads no locational facts with respect to the

“Challenger Transactions”—though the press release he cites in a footnote indicates

that the purchase agreements were signed in Orlando, Florida. Id. ¶ 159 n.16

(referencing “the signature of a strategic agreement” between “Minsheng Financial

Leasing and Zetta Jet” at “the National Business Aviation Association’s (NBAA)

2016 Convention and Exhibition in Orlando, Florida”). Nor does the Trustee allege

the location of the “negotiat[ions]” that Mr. Fazal-Karim allegedly participated in

with regard to the “Bombardier Purchase Agreements.” Id. ¶ 126. Because the

Complaint alleges no facts establishing a nexus to California, see Sullivan, 254 P.3d

at 248–49, the Trustee’s UCL claim must be dismissed.

ii. The Trustee fails to identify any harm to alleged

California resident Zetta USA.

Aside from Singapore resident Zetta Singapore, the other debtor the Trustee

represents—Zetta USA—is allegedly a California corporation, “based in

California.” Compl. ¶ 15. Even if this Court concludes that Zetta USA’s California



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citizenship allows it to bring a UCL claim despite the fact that the only injuries

alleged in the Complaint occurred outside California, the Trustee nowhere offers any

factual allegation suggesting that Zetta USA was injured. The only allegation that

Zetta USA was somehow involved in any transaction is that, before its purchase by

Zetta Singapore, Zetta USA “agreed to guarantee the operating lease on” Plane 1 in

the “First Element Transaction.” Compl. ¶ 99; see also id. ¶ 15. The Trustee does

not claim that Zetta USA was ever called on to satisfy this guarantee—nor allege,

for that matter, that it was injured in any other way. Indeed, the Complaint fails to

allege any business dealings between Zetta USA and any FK defendant on which a

UCL claim could be predicated.

To the contrary, the Trustee makes clear that all of the transactions that he

claims harmed “the Debtors” were in fact only Zetta Singapore’s transactions. For

example, although the Trustee alleges that “Cassidy caused the Debtors to sign

purchase agreements for fifteen Bombardier aircraft,” Compl. ¶ 85, he later clarifies

that these were in fact “Zetta PTE’s [i.e., Zetta Singapore’s] fifteen aircraft

transactions,” id. ¶ 93; see also id. Schedule 1 (identifying Zetta Singapore as party

to aircraft transactions, and not mentioning any involvement by Zetta USA). Loans

from Li Qi went only to Zetta Singapore, not Zetta USA. ¶ 117–18. Cassidy

allegedly embezzled Zetta Singapore’s money, not Zetta USA’s. See id. ¶ 205.

Absent some plausible factual allegation of injury to Zetta USA by the FK

Defendants, the Trustee’s UCL claim on Zetta USA’s behalf fails regardless of its

California citizenship.

4. The Complaint fails to allege facts to support imposition of a

constructive trust.

To adequately plead facts sufficient to support the imposition of a constructive

trust (Count V), the Trustee must plead (1) the existence of a res, (2) the Trustee’s

right to the res, and (3) a wrongful acquisition or detention of the res by the

Defendants. Campbell v. Super. Ct., 132 Cal. App. 4th 904, 920 (2005).



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A constructive trust is not a cause of action, but an equitable remedy. Id. For

this reason alone, Count V should be dismissed. Upham v. Fox, No. C 13–3377

MMC, 2014 WL 1379607, at *5–6 (N.D. Cal. Apr. 8, 2014) (dismissing constructive

trust claim because constructive trust “is not a substantive device but merely a

remedy” and the statutes of limitations on the underlying substantive claims had

run).

The “claim” also fails on its merits. At the threshold, the Trustee has failed

to sufficiently identify a “res.” He alleges that the “res” constitutes “any money

gained by the Defendants at the Debtors’ expense as a result of the Defendants’

wrongful conduct.” Compl. ¶ 267. But the only “money” that fits this vague

description comprises whatever funds the FK Defendants acquired as part of the sale

of supposedly “overpriced” aircraft to Zetta Singapore—a description that fails

because the Trustee has failed to allege that the aircraft were overpriced. As

discussed above, the Complaint alleges no facts showing (i) that the aircraft were

“overpriced,” (ii) the fair market value of any of the aircraft, or (iii) what Zetta

Singapore actually paid for any of the aircraft. See supra Section III.A.2.i.

Moreover, even if the Trustee had identified a res, he pleads no facts showing

that he has a right to these funds, that any FK Defendant retained the funds, or that

the retention of the “res” was “wrongful.” To the contrary, the Trustee alleges that

Zetta Singapore’s business plan required it to buy aircraft, that Zetta Singapore

agreed to buy aircraft, and that the aircraft were bought pursuant to the terms of

purchase agreements Zetta Singapore signed. Id. ¶¶ 81, 109–14, 126–29, 134, 159.

And the Trustee acknowledges that Zetta Singapore’s board approved these

transactions. See ¶¶ 104 & 156. The Trustee pleads no facts showing that the FK

Defendants had the intent to defraud debtors—or even knew of Cassidy’s allegedly

improper conduct. See supra Section III.A.2.ii. Accordingly, the Complaint fails to

allege sufficient facts to support the imposition of a constructive trust.



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5. The Trustee fails to adequately plead unjust enrichment.

The Trustee fails to plead unjust enrichment (Count IV). As an initial matter,

to the extent the Complaint pleads unjust enrichment as a standalone cause of action,

the claim must be dismissed—because, like a constructive trust, unjust enrichment

is not a cause of action but an equitable remedy. See In re Ford Tailgate Litig., No.

11–CV–2953–RS, 2014 WL 1007066, at *5 (N.D. Cal. Mar. 12, 2014) (recognizing

that “California, among other jurisdictions, has rejected independent unjust

enrichment claims” and dismissing this “claim” with prejudice); Upham, 2014 WL

1379607, at *4 (recognizing that “[u]njust enrichment is not a cause of action

recognized under California law”); Walker v. USAA Cas. Ins. Co., 474 F. Supp. 2d

1168, 1174 (E.D. Cal. 2007) (“Because California law does not recognize Plaintiff’s

claim for unjust enrichment, there are no facts Plaintiff could prove to support this

claim.”).

The Complaint also fails to plead facts showing that the FK Defendants have

“unjust[ly]” retained any benefit. See Prof’l Tax Appeal v. Kennedy-Wilson

Holdings, Inc., 29 Cal. App. 5th 230, 238 (2018). The Trustee pleads no facts

showing that the aircraft were overpriced, see supra Section III.A.2.i, and no facts

showing fraud, see supra Section III.B.1. The Complaint thus fails to plead facts

that support unjust enrichment.

C. Cassidy’s Actions Are Properly Imputed To Zetta Singapore,

Barring The Trustee’s Claims Under The In Pari Delicto Doctrine

The Trustee stands in the shoes of the debtors. Smith v. Arthur Andersen LLP,

421 F.3d 989, 1002 (9th Cir. 2005). He takes the property of the estate as it existed

at the time of the petition. See 11 U.S.C. § 541(c). Assuming that California law

applies here, it presumes that the knowledge of a corporation’s managing director is

imputed to the corporation. The Trustee’s allegations in this case offer nothing to

rebut that presumption—to the contrary, they affirmatively demonstrate that Cassidy

thoroughly dominated Zetta Singapore. As a result, Cassidy’s knowledge and



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wrongdoing are imputed to Zetta Singapore.

Under these circumstances, the in pari delicto doctrine applies. When one

participant in alleged fraudulent or inequitable conduct seeks to recover from

another participant in that conduct, the two participants are in pari delicto—equally

at fault—and the law will “leave them where it finds them.” Casey v. U.S. Bank

N.A., 127 Cal. App. 4th 1138, 1143 n.1 (2005); see also Cal. Civ. Code § 3517 (“No

one can take advantage of his own wrong.”). Under both federal and California law,

the in pari delicto defense bars claims by the bankruptcy trustees of debtors who

have participated in the wrongdoing those trustees allege. See In re Yellow Cab

Cooperative, Inc., 602 B.R. 357, 360 (Bankr. N.D. Cal. 2019); Mortg. Fund ’08, 527

B.R. at 366; Uecker v. Zentil, 244 Cal. App. 4th 789, 798 (2016).

Here, the Trustee makes clear that Cassidy (and hence Zetta Singapore) was

the mastermind of all the wrongful acts the Trustee now complains of. Cassidy

concocted and executed the alleged scheme. Compl. ¶¶ 1, 78. He orchestrated the

purchase of the aircraft. Id. ¶ 3. He organized the aircraft’s refinancing. Id. ¶ 123.

He allegedly demanded bribes. Id. ¶ 4. There are no non-conclusory factual

allegations that the FK Defendants were involved in any of the wrongdoing the

Trustee complains of, but even if they had been, the Complaint itself demonstrates

why the Trustee’s claims must be dismissed.

1. The Trustee’s allegations support the presumption of

imputation.

Under longstanding California law, a corporation “is presumed to know what

is known to its managing officers and directors.” Austin v. Hallmark Oil Co., 134

P.2d 777, 784 (Cal. 1943); see also Peregrine Funding, Inc. v. Sheppard Mullin

Richter & Hampton LLP, 133 Cal. App. 4th 658, 680 (2005). This presumption is

rooted in a strong public policy that allocates responsibility for the actions of a

corporation’s officers and agents to the entity most appropriately charged with that

responsibility—the corporation itself—and not to the third parties or the public at



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large that might engage in dealings with the corporation. See In re ChinaCast Edu.

Corp. Sec. Litig., 809 F.3d 471, 478 (9th Cir. 2015) (holding that imputation serves

the “public policy goals” of “fair risk allocation and ensuring close and careful

oversight of high-ranking corporate officials”); Restatement (Third) of Agency

§ 5.03 (2006), comment b (“Imputation creates incentives for a principal to choose

agents carefully and to use care in delegating functions to them. Additionally,

imputation encourages a principal to develop effective procedures for the

transmission of material facts, while discouraging practices that isolate the principal

or coagents from facts known to an agent.”).

Here, Cassidy “was at all relevant times the Debtors’ Managing Director.”

Compl. ¶ 17. Accordingly, his knowledge and conduct are presumed to be imputed

to Zetta Singapore. See Austin, 134 P.2d at 784. The Trustee has the burden to offer

well-pleaded factual allegations rebutting this presumption of imputation—i.e.,

factual allegations showing that Cassidy’s conduct was thoroughly adverse to Zetta

Singapore. As shown below, the Trustee fails to do so.

2. The narrow adverse-interest exception does not apply to any

activities with which the Trustee alleges a connection to the

FK Defendants.

The narrow exception to the presumption of imputation does not apply here.

“The adverse interest exception is narrow and generally requires an agent to

completely abandon the principal’s interests and act entirely for his own purposes.”

Cement & Concrete Workers Dist. Council Pension Fund v. Hewlett Packard Co.,

964 F. Supp. 2d 1128, 1144 (N.D. Cal. 2013) (quotation marks omitted). A

corporation may escape imputation of its agent’s scienter only when the agent’s

actions are “so adverse to the principal as to practically destroy the relation of

agency.” Nathanson v. Polycom, Inc., 87 F. Supp. 3d 966, 981 (N.D. Cal. 2015)

(quotation marks omitted); see also In re Grumman Olson Indus., Inc., 329 B.R. 411,

426 (Bankr. S.D.N.Y. 2005) (adverse interest exception did not apply when the



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defendant was fulfilling the corporation’s board’s “prime directive” in trying to sell

the company). The Trustee’s allegations demonstrate that this exception does not

apply.

Although Cassidy’s alleged embezzlement is clearly adverse to the

corporation, it does not help the Trustee. Under California law, the “adverse

interest” exception is considered on a transaction-by-transaction basis. See Witty v.

Clinch, 207 Cal. 779, 798 (1929); Maron v. Swig, 115 Cal. App. 2d 87, 91 (1952).

That is, even if Cassidy undertook some transactions that were adverse to the

corporation, his knowledge of other transactions in which he was not acting

adversely will be imputed to Zetta Singapore. See id.

Here, the transactions of which the Trustee complains are that the FK

Defendants sold Zetta Singapore two aircraft that the Trustee asserts were

“overpriced.” Compl. ¶¶ 103, 147. But even if this conduct involved fraudulent, a

transaction that benefits the corporation is not adverse to the corporation’s interests,

even if motivated by the agent’s desire for personal gain. See Kirschner v. KPMG

LLP, 938 N.E.2d 941, 952 (N.Y. 2010). Indeed, “[i]f the agent’s wrongdoing

benefits the corporation in any way, the exception does not apply.” Seiden v. Frazer

Frost, LLP, No. SACV 18-00588-CJC(KESx), 2018 WL 6137618, at *8 (C.D. Cal.

July 31, 2018) (quotation marks omitted; emphasis added). Here, there can be no

doubt that these transactions “benefit[ed] the corporation in [some] way,” see id.: in

each transaction, Zetta Singapore received a multimillion-dollar aircraft that it was

then able to use to conduct its business according to the plan laid out at the business’s

inception, with Zetta Singapore receiving thousands or tens of thousands of dollars

for each flight. See id. ¶¶ 81–82.

3. Cassidy was the sole actor in control of Zetta Singapore.

Even if the Court were to determine that the adverse-interest exception to the

presumption of imputation applied, there is a further exception to that exception, and

it plainly applies here. Under the “sole actor” rule, even if an agent’s conduct is



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completely adverse to the principal, the agent’s knowledge will be imputed to the

principal when the agent and the principal are essentially one and the same—such

as when the agent wholly dominates the corporation, or uses it as his alter ego. See

In re Mortg. Fund ’08 LLC, 527 B.R. 351, 369 (N.D. Cal. 2015) (A “defrauded entity

cannot escape the imputation of knowledge … when the defrauded entity and the

alleged bad actors are one and the same.”). Here, the Trustee’s allegations

repeatedly demonstrate that Cassidy dominated Zetta Singapore, such that his

knowledge and conduct are imputed to the company and the in pari delicto doctrine

applies.12

From the outset, the Trustee acknowledges Cassidy’s domination of Zetta

Singapore: “Zetta PTE was formed and run by Geoff Cassidy.” Compl. ¶ 1

(emphasis added). Cassidy was “at all relevant times [Zetta Singapore’s] Managing

Director,” and as soon as Zetta Singapore was “formed, … Cassidy began to take

control of the company,” giving him “approval rights for transfers of funds … at all

relevant times.” Id. ¶¶ 17, 68. The Trustee further alleges that “Cassidy used the

Debtors as an instrumentality to conduct his fraud,” Compl. ¶ 2—in other words,

that he “use[d] [Zetta Singapore] as a … conduit for [his] affairs.” See Sonora

Diamond, 83 Cal. App. 4th at 539. The Trustee also alleges that Cassidy

“commingl[ed]” Zetta Singapore’s funds with his own, id. at 538: in the Trustee’s

words, Cassidy “conducted the affairs of the Debtors as if they were his personal

piggy bank,” Compl. ¶ 2. And the Trustee’s Complaint is premised entirely on the

idea that Zetta Singapore was at all times “inadequate[ly] capitaliz[ed].” Sonora

Diamond, 83 Cal. App. 4th at 539; see, e.g., Compl. ¶¶ 3 (Zetta Singapore faced

“repeated cash crunches”); 78 (Zetta Singapore’s “available cash … was insufficient

to repay the debt service on the aircraft”); 86 (“the Debtors were insolvent almost

12 Indeed, they are sufficient to make even the more demanding showing of a unity

of interest between Zetta Singapore and Cassidy. See Sonora Diamond, 83 Cal. App. 4th at 538.



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from inception” and “almost never able to pay their bills on time”); 165 (Zetta

Singapore was “desperate for … money” and “needed ‘urgent immediate cash’”).

Far from drawing any distinction between Zetta Singapore and Cassidy, the

Trustee’s allegations throughout the Complaint affirmatively conflate man and

corporation, showing that even in the Trustee’s view Cassidy thoroughly dominated

the company. The Complaint refers to Zetta Singapore’s certificate as “his part 135

certificate,” id. ¶ 68; Zetta Singapore’s customers as “his customers,” id. ¶ 77; Zetta

Singapore’s dealings with aircraft sellers as “his business,” id. ¶¶ 94, 188, 192, 194,

255; and Zetta Singapore’s jet purchase transactions as “his … transactions,” id.

¶ 95. Each of these allegations, moreover, demonstrates that Cassidy was

“disregard[ing] … corporate formalities.” See Sonora Diamond, 83 Cal. App. 4th at

539. The Trustee even “hold[s] out” that Cassidy was “liable for the debts” of Zetta

Singapore, identifying Zetta Singapore’s creditors as “his creditors,” id. ¶ 96(g), and

Zetta Singapore’s debt as “his aircraft debt,” id. ¶ 125. See Sonora Diamond, 83

Cal. App. 4th at 539. If Cassidy and Zetta Singapore had in fact been separate, the

Trustee would have a strong litigation incentive to allege a strict separation between

them, to avoid the imputation of Cassidy’s scienter and bad acts to the corporation.

See, e.g., In re Cal. TD Invs., LLC, 489 B.R. 124, 129 (Bankr. C.D. Cal. 2013). The

Trustee’s repeated and presumably intentional decision to frame his allegations

otherwise is telling.

Even if the limited adverse-interest exception applied, therefore, the sole actor

exception to that exception requires imputing Cassidy’s scienter to Zetta Singapore.

Id. Zetta Singapore was thus in pari delicto, and the Trustee may not recover on its

behalf.



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V. CONCLUSION

For the foregoing reasons, and given the Trustee’s admitted access to

extensive pre-suit discovery, the Trustee’s Adversary Complaint should be

dismissed with prejudice.


/s/ Aaron S. Craig . AARON S. CRAIG MICHAEL CIATTI EDWARD L. RIPLEY Attorneys for FK Group Ltd.; FK Partners Ltd.; and Jahid Fazal-Karim


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KING & SPALDING LLP Aaron Craig (Cal. Bar. No. 204741) 633 West Fifth Street Suite 1600 Los Angeles, CA 90071 Telephone: 213.443.4355 Facsimile: 213.443.4310 Michael Ciatti (pro hac vice admission pending) 1700 Pennsylvania Ave., NW 2nd Floor Washington, D.C. 20006-4707 Telephone: 202.737.0500 Facsimile: 202.626.3737 Edward L. Ripley (pro hac vice admission pending) 1100 Louisiana, Suite 4000 Houston, TX 77002 Telephone: 713.751.3200 Facsimile: 713.751.3290

Attorneys for Jetcraft Corporation, Jetcraft Global, Inc.; JetCoast 5000-5, LLC; Jetcraft Asia Limited; FK Group Ltd.; FK Partners Ltd.; and Jahid Fazal-Karim

IN THE UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA – LOS ANGELES DIVISION

IN RE:

ZETTA JET USA, INC., a California corporation Debtor.

Lead Case No.: 2:17-bk-21386-SK Jointly administered with: 2:17-bk-21387-SK (Zetta Jet PTE Ltd., a Singaporean corporation)

IN RE:

ZETTA JET PTE Ltd., a Singaporean corporation

CHAPTER 7 CASES ADV. PRO. NO. 2:19-ap-01382-SK

Case 2:19-ap-01382-SK Doc 45-1 Filed 10/28/19 Entered 10/28/19 12:32:47 Desc Request for Judicial Notice Page 1 of 7

REQUEST FOR JUDICIAL NOTICE

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Debtor.

FK DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS COUNTS I-VI OF ADVERSARY COMPLAINT

JONATHAN D. KING, solely in his capacity as Chapter 7 Trustee of Zetta Jet USA, Inc. and Zetta Jet PTE, Ltd.,

Plaintiff,

v.

JETCRAFT CORPORATION, JETCRAFT GLOBAL, INC., JETCOAST 5000-5 LLC, ORION AIRCRAFT HOLDINGS LTD., FK GROUP LTD, FK PARTNERS LIMITED JAHID FAZAL-KARIM, BOMBARDIER AEROSPACE CORPORATION, BOMBARDIER, INC., LEARJET, INC., ECN AVIATION INC. F/K/A ELEMENT AVIATION INC., and ECN CAPITAL CORPORATION AS SUCCESSOR TO ELEMENT FINANCIAL CORPORATION,

Defendants.

Date: TBD Time: TBD Place: Courtroom 1575 255 East Temple Street Los Angeles, Ca 90012 Judge: Hon. Sandra R. Klein


1 REQUEST FOR JUDICIAL NOTICE

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INTRODUCTION

Defendants FK Group Ltd., FK Partners Ltd., Jahid Fazal-Karim

(collectively, the “FK Defendants”), and Orion Aircraft Holdings Ltd. respectfully

request that the Court take judicial notice of documents identified below, pursuant

to Federal Rule of Evidence 201.

ARGUMENT

The Court may take judicial notice of facts that are not subject to

“reasonable dispute” because they “can be accurately and readily determined from

sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid.

201(b)(2). Accordingly, the Court may take judicial notice of “undisputed matters

of public record” at the motion to dismiss stage. Harris v. Cty. of Orange, 682

F.3d 1126, 1131–32 (9th Cir. 2012); Dang v. Samsung Elecs. Co. Ltd., No. 14-CV-

00530-LHK, 2018 WL 6308738, at *27 n.4 (N.D. Cal. Dec. 3, 2018). Courts in

this Circuit have taken judicial notice of certificates of dissolution for corporations

because their accuracy cannot reasonably be questioned. Newmark Realty Capital,

Inc. v. BGC Partners, Inc., No. 16-CV-01702, 2018 WL 2573192, at *2–3 (N.D.

Cal. Apr. 16, 2018) (taking judicial notice of a corporation’s certificate of

dissolution).

Here, Exhibit A consists of two certificates of dissolution whose accuracy

“cannot be reasonably disputed.”

Defendants thus request that the Court take judicial notice of the following

documents, as follows:

EXHIBIT A: Certificates of dissolution from the British Virgin Islands for

Orion Aircraft Holdings Ltd. (BVI Company No. 1842283) and Mercury

Management Group Ltd. (BVI Company No. 1834333).


2 REQUEST FOR JUDICIAL NOTICE

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CONCLUSION

For the foregoing reasons, Defendants respectfully requests that the Court

take judicial notice of the certificates of dissolution attached hereto as Exhibit A.


By:/s/ Aaron S. Craig Attorneys for FK Group Ltd.; FK Partners Ltd.; and Jahid Fazal-Karim


Exhibit A


TERRITORY OF THE BRITISH VIRGIN ISLANDSBVI BUSINESS COMPANIES ACT, 2004

CERTIFICATE OF DISSOLUTION

(SECTION 208)

The REGISTRAR OF CORPORATE AFFAIRS, of the British Virgin Islands HEREBY CERTIFIES that, pursuant to the BVI Business

Companies Act, 2004, all the requirements of the Act in respect of dissolution having been complied with,

Orion Aircraft Holdings Limited

BVI COMPANY NUMBER 1842283 was dissolved on the 31st day of May, 2019.

for REGISTRAR OF CORPORATE AFFAIRS31st day of May, 2019

2009DFE014


TERRITORY OF THE BRITISH VIRGIN ISLANDSBVI BUSINESS COMPANIES ACT, 2004

CERTIFICATE OF DISSOLUTION

(SECTION 208)

The REGISTRAR OF CORPORATE AFFAIRS, of the British Virgin Islands HEREBY CERTIFIES that, pursuant to the BVI Business

Companies Act, 2004, all the requirements of the Act in respect of dissolution having been complied with,

Mercury Management Group Limited

BVI COMPANY NUMBER 1834333 was dissolved on the 31st day of May, 2019.

for REGISTRAR OF CORPORATE AFFAIRS31st day of May, 2019

452FBC9B8E


This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

PROOF OF SERVICE OF DOCUMENTI am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:

A true and correct copy of the foregoing document entitled (specify): __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner stated below:

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date) _______________, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated below:

Service information continued on attached page

2. SERVED BY UNITED STATES MAIL: On (date) _______________, I served the following persons and/or entities at the last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed.


3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date) _______________, I served the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed.


I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

Date Printed Name Signature

King & Spalding LLP, 633 W. 5th Street, 16th Floor, Los Angeles, CA 90071

Defendants FK Group Ltd, FK Partners Ltd, and Jahid Fazal-Karim's Notice of Motion and Motion to Dismiss Counts I-VI of Adversary Complaint; FK Defendants' Request for Judicial Notice in Support of Motion to Dismiss Counts I-VI of Adversary Complaint

10/25/2019

UNITED STATES TRUSTEE: [email protected] ATTORNEY FOR PLAINTIFF: John K. Lyons, [email protected] ATTORNEY FOR BOMBARDIER AEROSPACE CORPORATION AND BOMBARDIER, INC.: Matthew S. Walker, [email protected]

10/25/2019

Hon. Sandra R. Klein (via personal delivery) ATTORNEY FOR ECN AVIATION, INC. AND ECN CAPITAL United States Bankruptcy Court Leo T. Crowley, [email protected] (via email) 255 East Temple Street, Suite 1582 UNITED STATES TRUSTEE Los Angeles, CA 90012 Dare Law, [email protected] (via email)

10/25/2019 Aaron S. Craig /s/ Aaron S. Craig

Case 2:19-ap-01382-SK Doc 45-2 Filed 10/28/19 Entered 10/28/19 12:32:47 Desc Proof of Service (flat) Page 1 of 1

Documents

casedocs.omniagentsolutions.com...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 27 28 KING & SPALDING LLP Aaron S. Craig (Cal. Bar. No. 204741) 633 West Fifth