Moon v. Rush

• Decision Date: 19 December 2014
• Docket Number: No. 2:11–CV–03102–GEB–CKD.,2:11–CV–03102–GEB–CKD.
• Court: U.S. District Court — Eastern District of California
• Parties: Virginia C. MOON, on her own behalf and on behalf of the Peters Rush Habib & McKenna 401(k) Profit Sharing Plan, Plaintiff, v. David H. RUSH, Mark A. Habib, and James P. McKenna, Defendants. and Related Counterclaim.

69 F.Supp.3d 1035

Virginia C. MOON, on her own behalf and on behalf of the Peters Rush Habib & McKenna 401(k) Profit Sharing Plan, Plaintiff

v. David H. RUSH, Mark A. Habib, and James P. McKenna, Defendants.and Related Counterclaim.

No. 2:11–CV–03102–GEB–CKD.

United States District Court, E.D. California.

Signed Dec. 19, 2014.

Filed Dec. 22, 2014.

Nina R. Wasow, Teresa Renaker, Darin Daniel Ranahan, Lewis, Feinberg, Lee, Renake and Jackson P.C., Oakland, CA, for Plaintiff.

R. Bradford Huss, Sean Travis Strauss, Trucker Huss APC, San Francisco, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS FOR SUMMARY JUDGMENT

GARLAND E. BURRELL, JR., Senior District Judge.

Plaintiff and Counter–Defendant Moon and Defendants Rush, Habib, and McKenna (collectively the “Defendants”) each move for summary judgment on claims one through five in Plaintiff's Complaint (“Compl.”). Defendants also seek summary judgment on the six remaining claims in the Complaint. Counter–Claimant Rush seeks summary judgment on all three claims in his Second Amended Counterclaim (“Countercl.”).

I. LEGAL STANDARD

A party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “A fact is ‘material’ when ... it could affect the outcome of the case.” Thrifty Oil Co. v. Bank of Am. Nat'l Trust & Sav. Ass'n, 322 F.3d 1039, 1046 (9th Cir.2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). An issue of material fact is “genuine” when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

If the movant satisfies its “initial burden,” “the nonmoving party must set forth, by affidavit or as otherwise provided in Fed. Rule Civ. Proc. (“Rule”) 56, ‘specific facts showing that there is a genuine issue for trial.’ ” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (quoting former Rule 56(e)). Summary judgment “evidence must be viewed in the light most favorable to the nonmoving party, and all reasonable inferences must be drawn in favor of that party.” Sec. & Exch. Comm'n v. Todd, 642 F.3d 1207, 1215 (9th Cir.2011) (citing Johnson v. Paradise Valley Unified Sch. Dist., 251 F.3d 1222, 1227 (9th Cir.2001) ).

Further, Local Rule 260(b) prescribes:

Any party opposing a motion for summary judgment ... [must] reproduce the itemized facts in the [moving party's] Statement of Undisputed Facts and admit those facts that are undisputed and deny those that are disputed, including with each denial a citation to the particular portions of any pleading, affidavit, deposition, interrogatory answer, admission, or other document relied upon in support of that denial.

If the nonmovant does not “specifically ... [controvert duly supported] facts identified in the [movant's] statement of undisputed facts,” the nonmovant “is deemed to have admitted the validity of the facts contained in the [movant's] statement.” Beard v. Banks, 548 U.S. 521, 527, 126 S.Ct. 2572, 165 L.Ed.2d 697 (2006).

Because a district court has no independent duty “to scour the record in search of a genuine issue of triable fact,” and may “rely on the nonmoving party to identify with reasonable particularity the evidence that precludes summary judgment,” ... the district court ... [is] under no obligation to undertake a cumbersome review of the record on the [nonmoving party's] behalf.

Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1017 (9th Cir.2010) (quoting Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.1996) ).

II. STATEMENT OF UNCONTROVERTED FACTS

The following uncontroverted facts concern the motions.

A. The Marriage/Dissolution of Moon and Rush

Rush and Moon were married on March 21, 1977. (Pl. Resp. Defs. SUF (“Defs. SUF”) ¶ 1, ECF No. 119.) Moon filed a petition in state family court for dissolution of the marriage in 1994. (Defs. SUF ¶ 14.) In connection with their divorce, Rush and Moon entered into a domestic relations order (“DRO”) “which was intended to divide the marital community's assets in the [Peters, Rush, Habib & McKenna] 401(k) Profit Sharing Plan (“the Plan”).” (Defs. SUF ¶ 19.) The DRO was signed and filed in September 1995, and the final dissolution was entered on September 26, 1995. (Defs. SUF ¶¶ 23, 18.)

Moon, through her family law counsel, served a copy of the DRO on Rush at his home address on October 31, 1995. (Defs. SUF ¶ 27.) Moon did not present the DRO to David Fuller, who was then the Plan Administrator. (Defs. SUF ¶¶ 33, 35.)

The Plan currently holds a 20.2881% interest in a 40–acre Property at 1525 Dayton Road in Chico, California (“the Property”) “for Moon's benefit.” (Defs. SUF ¶ 74.)

B. The Plan

The Plan maintains separate accounts for each individual participant and/or beneficiary. (Defs. Resp. Pl. SUF (“Pl. SUF”) ¶ 1, ECF No. 111.) Each participant and/or beneficiary of the Plan is permitted to direct the investments of the assets in his or her account. (Pl. SUF ¶ 2.)

Rush was a Discretionary Trustee of the Plan until January 1, 2013, at which time he became a Special Trustee. (Pl. SUF ¶ 3.) He has never been a Plan Administrator. (Defs. SUF ¶ 30.) Habib is the current Plan Administrator. (Pl. SUF ¶ 4.) McKenna is a Trustee of the Plan. (Pl. SUF ¶ 5.)

When Rush received the DRO from Moon in 1995, he did not share it with other Plan Trustees. (Pl. SUF ¶ 12.)

C. The Property

Sometime in 1995 or 1996 after the divorce, Moon took over complete control of the Property. (Defs. SUF ¶ 56.) Moon personally held a 79.7119% interest in the Property and the Plan held a 20.2881% interest. (Defs. SUF ¶ 55.) In 1997 Rush loaned Moon $75,000, and they agreed Moon would sell Rush a 49% ownership interest in the Property with the loan used as partial payment. (Defs. SUF ¶¶ 75–76.) In 1998 or 1999, Rush became a partial owner of the Property; he personally owned a 49% interest, Moon personally held a 30.7119% interest, and the Plan held a 20.2881% interest. (Defs. SUF ¶¶ 81–82.) Moon and Rush dispute the terms of their 49% ownership agreement. However, it is uncontroverted that Rush deposited income generated by the Property “into Moon's checking account in Chico.” (Defs. SUF ¶ 88.) Moon transferred 2% of her personal ownership interest to Rush in January 2000, resulting in Rush having a 51% interest in the Property, Moon personally having a 28.7119% interest, and the Plan having a 20.2881% interest. (Defs. SUF ¶ 99.)

In early 2000, Rush told Moon she owed him 49% of the Property's “net” rental income “for calendar year 1999,” which she paid. (Defs. SUF ¶ 94.) In 2002, he sent her an accounting statement through December 31, 2001, which Moon paid. In June 2003, Rush sent Moon an accounting for 2002, which she paid. (Defs. SUF ¶¶ 108–09.) Rush sent Moon accounting statements for 2003–2008. (Defs. SUF ¶¶ 116, 121, 126, 131, 137). Moon received the 2003–2008 statements, but did not pay Rush. (Defs. SUF ¶¶ 117, 119, 122, 124, 127, 129, 132, 135, 139, 141.)

From 2003 to mid–2009 Moon received 100% of the income generated by the Property; specifically, $225,500. (Defs. SUF ¶ 143.) “Although Moon received $225,500 in income from the Property from 2003 to mid–2009, Moon did not report on her federal income tax returns any income related to the Property for tax years 2003–2009.” (Defs. SUF ¶ 144.) “Moon has never offered or made any effort to transmit any portion of the income she received from the Property from 2003 to mid–2009 to the Plan, despite her present argument that the Plan was entitled to receive some portion of this income.” (Defs. SUF ¶ 145.) “From 2003 to 2008, although Rush claimed credit for mortgage interest and taxes paid by Moon, he also reported the entirety of all income earned from rental of the Property, even though he received none of it.” (Defs. SUF ¶ 146.) “From 2003, when Moon began retaining all rents for the Property, through at least June 2009, Moon paid alarm monitoring and property tax expenses for the Property.” (Defs. SUF ¶ 153.) Rush personally advanced expenses for the Property in 2003–2008. (Defs. SUF ¶¶ 118, 123, 128, 133, 134, 140.)

In June 2009, Rush began retaining rents received for the Property instead of depositing them into Moon's checking account, and since January 1, 2013, Rush has deposited all income from the Property into a segregated savings account. (Defs. SUF ¶¶ 152, 254.)

D. Property Valuations Over Time

In 1997, a realtor estimated the Property was worth between $800,000 and $850,000. (Defs. SUF ¶¶ 191–192.) In 2002, the appraised value of the Property was $1,150,000. (Defs. SUF ¶¶ 193–194.) In November 2003 an appraiser opined that the Property “was worth $2,600,000” based on the assumption of an extraordinary hypothetical condition that the property would not be impacted by the Green Line. (Defs. SUF ¶¶ 171, 173.) The Green Line is a boundary line in Chico outside of which development is restricted to protect agricultural lands. (Defs. SUF ¶ 175.) “Moon's expert witness ... stated that, ‘According to the Chico City and Butte County planners, the likelihood of altering the Green Line at this location is very low.’ ” (Defs. SUF ¶ 176.)

In 2009, the Property was appraised at $850,000, and in 2014, different appraisers valued the Property: one at $500,000 and the other at $850,000. (Defs. SUF ¶¶ 199, 205, 216.)

E. Moon's Requests for Plan Assets Information

Habib became the Plan Administrator in either 1996 or 1997. (Defs. SUF ¶ 36.) Moon did not provide him with a copy of the DRO until 2010. (Defs. SUF ¶ 38.)

On February 25, 2010, Moon's counsel wrote Habib requesting plan documents, including a pension benefit statement. (Defs. SUF ¶ 233.)

Habib acknowledged the letter on March 4, 2010. (Defs. SUF ¶ 242.) On April 10, 2010, Moon's counsel informed Habib that his thirty-day period to respond to her document request had expired, and counsel...