Lopes v. Vieria
| Decision Date | 16 May 2011 |
| Docket Number | DOC.145,DOC.150,1:06-cv-01243 OWW SMS,DOC. 139,DOC.341,DOC.151,DOC.342,DOC.277,DOC.273 |
| Court | U.S. District Court — Eastern District of California |
| Parties | MANUEL LOPES and MARIANA LOPES, dba LOPES DAIRY; JOSEPH LOPES, Trustee of the RAYMOND LOPES FAMILY TRUST as successor-in- interest to RAYMOND LOPES; JOSEPH LOPES and MICHAEL LOPES, individually and dba WESTSIDE HOLSTEIN; MARIA MACHADO, Trustee of the Machado Family Trust and as the successor-in-interest to ALVARADO MACHADO and TONY ESTEVAM, Plaintiffs, v. GEORGE VIERIA; MARY VIERIA; CALIFORNIA MILK MARKET, a California Corporation; VALLEY GOLD LLC, a California Limited Liability Company; GENSKE-MULDER LLP, a California Limited Liability Partnership; ANTHONY CARY; DOWNEY BRAND LLP, a California Limited Liability Partnership; CENTRAL VALLEY DAIRYMEN, INC., a California Food and Agricultural Nonprofit Cooperative Association, and DOES 1 through 25, inclusive, Defendants. |
DEFENDANTS DOWNEY BRAND LLP'S
AND GENSKE, MULDER &
COMPANY'S MOTIONS FOR SUMMARY
JUDGMENT AGAINST JOSEPH LOPES
AS TRUSTEE OF THE ESTATE OF
RAYMOND LOPES; MANUEL AND
MARIANA LOPES; JOSPEH AND
Defendant Downey Brand LLP ("Downey Brand"), a law firm, moves for summary judgment against Plaintiff Joseph Lopes as trustee of the Estate of Raymond Lopes (Doc. 277); PlaintiffsManuel and Mariana Lopes (Doc. 139); Plaintiffs Joseph and Michael Lopes dba Westside Holsteins (Doc. 151); and Plaintiff Valley Gold (Doc. 341). Joseph Lopes as trustee of the Estate of Raymond Lopes filed an opposition (Doc. 284), to which Downey Brand replied (Doc. 288). Manuel and Mariana Lopes and Joseph and Michael Lopes filed an opposition (Doc. 155), to which Downey Brand replied (Docs. 185, 188). Downey Brand filed a combined supplemental reply to the individual Plaintiffs on February 15, 2011 (Doc. 344), the individual Plaintiffs filed a supplemental opposition on March 15, 2011 (Doc. 363), and Downey Brand filed a second supplemental reply on March 25, 2011 (Doc. 367). Plaintiffs filed an opposition on behalf of Valley Gold (Doc. 349), to which Downey Brand replied (Doc. 351).
Defendant Genske Mulder and Company ("Genske Mulder"), a certified public accounting firm, moves for summary judgment against Joseph Lopes as trustee of the Estate of Raymond Lopes (Doc. 273); Manuel and Mariana Lopes (Doc. 145); Joseph and Michael Lopes (Doc. 150); and Plaintiff Valley Gold (Doc. 342). Joseph Lopes as trustee of the Estate of Raymond Lopes filed an opposition (Doc. 284), to which Genske Mulder replied (Doc. 285). Manuel and Mariana Lopes and Joseph and Michael Lopes filed an opposition (Doc. 155), to which Genske Mulder replied (Docs. 179, 193). Genske Mulder filed a combined supplemental reply against the individual Plaintiffs on February 14, 2011 (Doc. 343), theindividual Plaintiffs filed a supplemental opposition on March 15, 2011 (Doc. 364), and Genske Mulder filed a second supplemental reply on March 25, 2011 (Doc. 366). Plaintiffs filed an opposition derivatively on behalf of Valley Gold (Doc. 346), to which Genske Mulder replied (Doc. 350).
Plaintiffs' Complaint was filed September 11, 2006 (Doc. 1), a First Amended Complaint was filed June 22, 2007 (Doc. 30), and a Second Amended Complaint ("SAC") was filed April 2, 2008 (Doc. 71). The SAC asserts the following Cause of Actions against Downey Brand and Genske Mulder: (1) Fourth Cause of Action for securities fraud: Securities Exchange Act of 1934; (2) Fifth Cause of Action for violation of California securities law; (3) Sixth Cause of Action for negligence; (4) Seventh Cause of Action for intentional misrepresentation; and (5) Eighth Cause of Action for negligent misrepresentation. All allegations asserted derivatively on behalf of Central Valley Dairymen ("CVM") were dismissed. Doc. 340, ¶3.
Downey Brand and Genske Mulder filed motions for summary judgment against Plaintiffs in late 2009, which were heard on December 21, 2009. Summary judgment was granted against Plaintiff Antonio Estevam (Doc. 297) and Plaintiff Maria Machado as trustee of the Machado Family Trust (Doc. 298). By memorandum decisionand order dated September 30, 2010, summary judgment was granted in part, denied in part, and deferred in part against Joseph Lopes as trustee for the Estate of Raymond Lopes. Doc. 301. The memorandum decision granted Downey Brand's and Genske Mulder's motions for summary judgment on (1) the Fifth Cause of Action against Joseph Lopes as trustee for the Estate of Raymond Lopes and (2) claims for consequential damages under the Fourth and Fifth Cause of Actions for failure to receive payment for milk shipped to Central Valley Dairymen, Inc. ("CVD"). Doc. 301, 48, 53.
In opposing Defendants' summary judgment motions, Plaintiffs relied on cl aims that were not alleged in the SAC. Plaintiffs were granted leave to file a Third Amended Complaint ("TAC") (Doc. 329), which they filed November 1, 2010 (Doc. 330). The Fourth through Eighth Cause of Actions asserted against Downey Brand and Genske Mulder in the SAC remain in the TAC. Plaintiffs also assert the Sixth Cause of Action for Negligence derivatively on behalf of Valley Gold.
Plaintiffs were permitted to, but did not, file supplemental oppositions to the summary judgment motions before January 25, 2011 (Doc. 329, 36). Downey Brand filed a combined supplemental reply on February 15, 2011 (Doc. 344), and Genske Mulder filed a combined supplemental reply on February 14, 2011 (Doc. 343). Plaintiffs were permitted to file supplemental oppositions on orbefore March 15, 2011 (Doc. 352), and did so (Docs. 363, 364). Downey Brand and Genske Mulder filed second supplemental replies March 25, 2011 (Docs. 366, 367). The motions were heard April 1 and 6, 2011.
The individual Plaintiffs have never retained Downey Brand to represent them nor have they ever spoken to, or recall anything said by a Downey Brand attorney related to the Valley Gold offering, CVD, or their milk.
On March 25, 2003, Downey Brand led a meeting at its Stockton office to discuss the steps needed to secure capitalization for Valley Gold and to complete Valley Gold's acquisition of a cheese plant in Gustine, California. Genske Mulder accountants, Valley Gold counsel Anthony Cary, Valley Gold manager Curtis Colaw, George Vieira, and local CVD board members were present.
Paul Anema, a Genske Mulder partner, drafted Valley Gold's business plan; Downey Brand was not retained to prepare Valley Gold's business plan and played no role in preparing it. Downey Brand was not retained to give Valley Gold financial or business advice of any kind. Downey Brand took responsibility for preparing the Offering Memorandum. Downey Brand's lead attorney, Jeffrey Koewler, understood that the Offering Memorandum neededto "meaningfully convey pertinent information to potential investors."
On April 11, 2003, Mr. Koewler called James Cecchi, a New Jersey attorney who represented Mr. Vieira in the United States Attorney's Office and the Securities and Exchange Commission's New Jersey Suprema Specialties criminal investigation of Mr. Vieria. Mr. Koewler read a disclosure statement that had already been drafted concerning Mr. Vieira's involvement or potential involvement in the criminal investigation. Mr. Cecchi confirmed that the disclosure was accurate. The disclosure regarding Mr. Vieira was inserted in the final Offering Memorandum on April 22, 2003.
Mr. Cecchi did not disclose that Vieira was involved in plea negotiations. Mr. Cecchi had a confidential, attorney-client relationship with Mr. Vieria and there is no evidence that Mr. Cecchi either communicated the specific terms of the plea bargain to Genske Mulder or Downey Brand before April 23, 2003. Doc. 340, ¶5. The court made the undisputed factual finding that Genske Mulder and Downey Brand could not disclose before April 23, 2003, that Mr. Vieria was in plea negotiations in New Jersey in the Supreme Specialties investigation. Id.
On April 21, 2003, Downey Brand led a meeting of the Valley Gold Management Committee and reviewed the then-existing draft of the Offering Memorandum. The Valley Gold Management Committeevoted to approve the April 21, 2003 version of the Offering Memorandum and to "authorize and direct the Designated Officers, acting individually or collectively, to take all steps necessary to complete the offering on behalf of the Company, including the acceptance of subscriptions for Membership interests The draft Offering Memorandum and documents in the offering packet urged potential investors to consult their own attorneys and financial advisors before investing in Valley Gold.
On April 22, 2003, Tim Brasil, one of the designated officers of Valley Gold, distributed the April 21, 2003 version of the Offering Memorandum to Joseph Lopes, Raymond Lopes, Manuel Lopes, and Mariana Lopes. The April 21, 2003 version did not include any disclosure concerning the New Jersey United States Attorney's Office's criminal investigation of Mr. Vieira. Raymond Lopes, Manuel Lopes and Joseph Lopes did not read the Offering Memorandum before investing in Valley Gold.
The final Offering Memorandum contains the following disclosure:
Mr. Vieria, one of the principal organizers of the Company and this transaction is currently the chief executive officer of CVD. George Vieria, was, for a short period of time, an officer of Suprema West, Inc. ("Suprema West"). Suprema West is a subsidiary of Suprema Specialties, Inc. ("Suprema"). Suprema and Suprema West are in bankruptcy. Suprema is also the subject of an investigation being conducted by the Securities and Exchange Commission and the U.S. Attorney's Office. Assertions have been made that financial data for Suprema was also misrepresented. Mr. Vieira has been contacted by the U.S. Attorney's Office andmay be a subject of this investigation. No formal...
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