Saeid Mohebbi vs U.S. Immigration Investment Center LLC

Filing Date:July 02, 2015

Case:Mohebbi v. Khazen et al

Jurisdiction:Federal District Court for the Northern District of California

Status:Resolved

Civil / Criminal:Civil

Fraud

Securities Violations

This case arises out of a contractual investment relationship. Plaintiff contends that he agreed to invest over $1 million into a partnership in exchange for Defendants’ assistance in helping him qualify for the federal EB-5 immigrant visa program. He now seeks rescission of this investment contract, and brings a Second Amended Complaint with 22 causes of action against Defendants, who he alleges, among other things, fraudulently induced his investment.

Presently before the Court are two motions brought jointly by all Defendants: a motion to compel arbitration and a motion to dismiss. Defendants argue that the arbitration clause contained in the Engagement Agreement between the parties demands that this Court send the case to binding arbitration. Plaintiff, in contrast, argues that the arbitration clause was induced by fraud and is unconscionable, thus precluding its enforcement.

Having reviewed the papers and oral argument of the parties, and the governing law, the Court GRANTS IN PART AND DENIES IN PART Defendants’ motion to compel arbitration. The Court finds that two of Plaintiff’s 22 causes of action, claims for false advertising in violation of the Lanham Act and California Business and Professions Code § 17500, fall outside the ambit of the arbitration agreement. Plaintiff’s § 17500 claim previously survived Defendants’ first motion to dismiss. The Court finds that Plaintiff’s Lanham Act claim states a claim upon which relief could be granted, and therefore DENIES IN PART Defendants’ motion to dismiss with regard to that claim. The Court therefore STAYS Plaintiff’s false advertising claims pending the completion of arbitration. The Court DECLINES TO CONSIDER Defendants’ motion to dismiss with regard to claims referred to arbitration.