Rupert v. Bond

• Decision Date: 22 September 2014
• Docket Number: Case No. 12–cv–05292–BLF
• Citation: 68 F.Supp.3d 1142
• Court: U.S. District Court — Northern District of California
• Parties: William Trick Rupert, Plaintiff, v. Susan Bond, et al., Defendants.

68 F.Supp.3d 1142

William Trick Rupert, Plaintiff

v.Susan Bond, et al., Defendants.

Case No. 12–cv–05292–BLF

United States District Court, N.D. California, San Jose Division .

Signed September 22, 2014

William Trick Rupert, Soctts Valley, CA, pro se.

Devin Noah Robinson, Law Offices of Devin Robinson, P.C., Portland, OR, Kate G Kimberlin, Long and Levit LLP, Kevin K. Eng, Markun Zusman & Compton LLP, San Francisco, CA, James Carnegie Krieg, Allison Lane Cooper, Justin Jeremy Fields, Duane Morris LLP, San Francisco, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS; DENYING DEFENDANTS GILE R. DOWNES AND SCHULTE, ANDERSON, DOWNES, ARONSON & BITTNER, P.C.'S MOTION FOR SANCTIONS

BETH LABSON FREEMAN, United States District Judge

This case involves a family dispute over the Rupert siblings' inheritance rights under their parents' wills and trusts. Plaintiff William Trick Rupert brings this Second Amended Compliant (“SAC”) against a number of Defendants, including two of his siblings, several attorneys, and three law firms, alleging claims under the federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act, the Oregon RICO Act (“ORICO”), and common law claims for conversion and intentional interference with expected inheritance, arising out of a family dispute regarding the disbursement of his parents' trust assets. The Defendants¹ can be divided into four groups: (1) the “Sibling Defendants,” including Plaintiff's sister, Susan Bond, and brother, James Rupert; (2) the “Downes Defendants,” including attorney Gile Downes and his law firm, Schulte, Anderson, Downes, Aronson & Bittner, P.C.; (3) the “Zusman Defendants,” including attorney Edward Zusman and his law firm, Markun Zusman & Compton, LLC; and (4) the “Cartwright Defendants,” including attorneys Matthew Whitman and Michelle Johansson, as well as their law firm, Cartwright Whitman Baer P.C.

Plaintiff categorizes his RICO allegations against the Defendants into five stages, termed “RICO Stage 1” through “RICO Stage 5,” and alleges that the four groups of Defendants, through repetition of a statement that Plaintiff terms “the Big Lie” and various other acts, conspired to deprive him of his inheritance. Before the Court are Motions to Dismiss from each of the four Defendant groups. The Zusman Defendants move to dismiss for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF 114) The Downes Defendants, Sibling Defendants, and Cartwright Defendants each move to dismiss for lack of personal jurisdiction, pursuant to Rule 12(b)(2). (ECF 107, 111, 113) The Downes Defendants separately move for Sanctions under Rule 11. (ECF 130)

Having considered the briefing and oral argument of the parties, as well as the relevant law, the Court GRANTS Defendants' Motions to Dismiss, WITH PREJUDICE. The Court, however, DENIES the Downes Defendants' Motion for Sanctions.

I. BACKGROUND

A. Procedural History

Plaintiff filed his initial Complaint on October 12, 2012. (ECF 1)² Thereafter, Plaintiff filed a First Amended Complaint (“FAC”) on October 26, 2012. The four Defendant groups each moved to dismiss the FAC on the same grounds as they do here: the Zusman Defendants for failure to state a claim upon which relief can be granted (ECF 50), and the Downes, Sibling, and Cartwright Defendants for lack of personal jurisdiction. (ECF 18, 33, 33) The Downes Defendants also moved for sanctions. (ECF 65) After briefing, Judge Lucy H. Koh granted the Motions to Dismiss without prejudice (ECF 100), and denied the Motion for Sanctions. (ECF 101)

Plaintiff filed the operative pleading, a Corrected Second Amended Complaint (“SAC”), on October 7, 2013. (ECF 106) The four groups of Defendants again moved to dismiss: the Downes Defendants (ECF 107), Sibling Defendants (ECF 111), and Cartwright Defendants (ECF 113) claiming lack of personal jurisdiction, and the Zusman Defendants arguing failure to state a claim. (ECF 114) The Downes and Sibling Defendants, as well as Plaintiff, filed Requests for Judicial Notice. (ECF 109, 112, 118) Plaintiff opposed each Motion, and all Defendants timely filed Replies.

After the Motions were fully briefed, on April 17, 2014, this case was reassigned to the undersigned, who heard oral argument on the Motions on July 31, 2014. (See ECF 159)

B. Factual Allegations in the SAC

Having been granted leave to amend, Plaintiff has added nearly forty pages of new allegations to his SAC. (ECF 106) The Court has engaged in a painstaking review of the now–110 page pleading,³ in order to ascertain whether Plaintiff has pled facts sufficient to overcome the jurisdictional and factual deficiencies cited in Judge Koh's Order dismissing the FAC.

The Court describes Plaintiff's allegations below, with particular emphasis on those allegations newly-added to the SAC. The factual allegations are presumed to be true for purposes of deciding the Motions to Dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

1. Creation of the Rupert Trusts and the Dispute over Trust Management

Samuel Rupert, Plaintiff's father, created a revocable living trust in Michigan in 1995 (“the Samuel Rupert Trust”), which made Irene Rupert, his wife, the “life income beneficiary” and their three children, Susan, William, and James, remainder beneficiaries. (SAC ¶ 35) Irene was the first nominated successor trustee, and the three siblings were named, “jointly, as co-alternate successor trustees.” (Id. at ¶ 36) That same year, Irene Rupert also created a trust (“the Irene Rupert Trust”). (Id .) In 2004, Plaintiff alleges that both trusts were amended to name Plaintiff as the “sole alternate successor trustee, with Susan [Bond] as the second choice, and James [Rupert] the third [choice].” (Id. at ¶ 37) In 2006, Samuel and Irene Rupert moved to Oregon, and in October 2008, Samuel Rupert died. (Id. at ¶¶ 41, 42)

After Samuel's death, a dispute arose between Plaintiff and Susan regarding the management of the trust (SAC ¶¶ 42–48), with Susan claiming that she had documents “subsequent to the 2004 amended estate plans” which placed her in charge of the trusts. (Id. at ¶ 42) Among other acts, Plaintiff alleges that Susan “used fraud and deceit to trick William into drafting a document entitled Amendment to Trust Agreement” (id. at ¶ 45), and caused four brokerage accounts containing trust assets “to be transferred from Michigan to California.” (Id. at ¶ 47)

Plaintiff eventually informed his sister of her duty to “submit periodic accountings,” and Susan provided such an accounting on May 12, 2009. (SAC ¶¶ 48–49) On May 17, 2009, Plaintiff objected in writing to the accounting as “inadequate and insufficient” (id. at ¶ 50), and demanded that Susan “relinquish control [of the trust] to William, fully account for her actions, and make whatever restitution might be necessary.” (Id. ) Susan refused, and retained an attorney, Mr. Downes. (Id. at ¶¶ 51–53)

2. “The Big Lie”

Plaintiff alleges that Susan and Downes conspired to exploit Irene Rupert “through a scheme to interfere with William's trusteeships and expected inheritance” (id. at ¶ 55), and that Downes, through this scheme, “came up with the ‘Big Lie’ that has been so damaging to Plaintiff's trusteeship interests.” (Id. at ¶ 7) “The Big Lie,” according to Plaintiff, is the statement that Irene Rupert, and not Plaintiff, was the trustee of the Samuel Rupert Trust. (See id. at ¶ 7; see also id. at ¶ 56) Plaintiff alleges that Downes stated “the Big Lie” in a June 10, 2009 letter sent to Plaintiff (“June 10 Letter,” id. at ¶¶ 58, 59a), and that “the Big Lie” was repeatedly invoked by Downes and others during Plaintiff's various lawsuits regarding this dispute over the Samuel Rupert Trust. (See, e.g., id. at ¶¶ 73, 74, 83, 108, 110) Plaintiff alleges that “the Big Lie” is untrue because Irene Rupert “rejected her nomination to be the successor trustee of the Samuel Rupert Trust.” (Id. at ¶ 60a; see also id. at ¶ 60c (“[T]here has never been one scintilla of evidence to show a lawful acceptance [of her nomination].”))

Plaintiff describes this June 10 Letter as “threatening and fraudulent.” (SAC ¶ 58) He states that the misrepresentations contained in the letter were relied upon by his mother, causing Irene Rupert to retain Mr. Downes to prepare “drastically different Oregon estate plans” that disinherited William from “the combined assets of the late Samuel and Irene Rupert.” (Id. at ¶ 61)

3. Plaintiff's First Lawsuit in this District (Rupert I)

Following his dispute with Susan over the management of the family's trust assets, and the exchange of letters between Plaintiff and Susan's attorneys, Plaintiff filed a tort suit in this District, Rupert I, naming his sister, Mr. Downes, and the Schulte Anderson Downes law firm as defendants. (Id. ¶ 64) This case was assigned to District Judge Jeremy Fogel. Plaintiff thereafter joined Irene Rupert as a Defendant. (Id. at ¶¶ 64, 69) Plaintiff alleges that Mr. Downes and Susan, after learning of the suit, schemed to “further deceive the late Irene Rupert, by telling her William's federal lawsuit was unfounded, baseless and outrageous.” (Id. at ¶ 66) Plaintiff further argues that Susan paid Mr. Downes a “hidden bribe” of nearly $10,000 in order to make material misrepresentations of fact to Irene Rupert. (Id. at ¶ 67)

Following the filing of an FAC, the Rupert I Defendants filed a joint motion to dismiss for lack of personal jurisdiction. Ms. Bond and Ms. Rupert were represented by Mr. Zusman, among others, and Mr. Downes and his firm were represented by two firms who are alleged to be nonparty co-conspirators. (Id. at ¶ 71) Judge Fogel granted this Motion.⁴ Plaintiff alleges that “knowingly false declarations were procured and filed with the Court” (id. ), including the declarations of Irene Rupert, Susan Bond, and Mr. Downes, which made a number of statements regarding the identity of the trustee of both family trusts,...