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WELLS FARGO BANK v. BOURNS

August 5, 1994

WELLS FARGO BANK, Plaintiff,
v.
BOURNS, INC., Defendants.


PATEL


The opinion of the court was delivered by: MARILYN HALL PATEL

Plaintiff Wells Fargo Bank ("Wells") brought this action against defendant Bourns, Inc. ("Bourns") seeking reimbursement for costs and liabilities incurred in connection with a Department of Labor investigation of an employee benefit plan sponsored by Bourns. The action is based on an Indemnity Agreement ("Agreement") between Wells and Bourns. Now before this court are the parties' cross-motions for summary judgment. Having considered the parties' submissions and arguments, the court enters the following memorandum and order.

 BACKGROUND

 Bourns is the named fiduciary of the Bourns, Inc. Employee Profit Sharing and Savings Plan ("the Plan"), an employee benefit pension plan under the Employee Retirement Income Security Act of 1974 ("ERISA"), section 3(2)(A), 29 U.S.C. § 1002(2)(A). In 1986, Wells became the Plan's directed trustee as defined in ERISA section 403(a), 29 U.S.C. § 1103(a). This provision authorizes plan trustee duties relating to plan investments to be made "subject to the direction of a named fiduciary who is not a trustee, in which case the trustees shall be subject to proper directions of such fiduciary which are made in accordance with the terms of the plan and which are not contrary to this act." 29 U.S.C. § 1103(a).

 In 1987, at Wells' request, Bourns and Wells entered into the Agreement, which is not part of the Plan. Joint Statement of Undisputed Facts (J.S.) PP 6-7. The Agreement stated in relevant part that Bourns:

 
shall indemnify and hold harmless the Trustee [Wells], its officers, employees and agents from and against all liabilities, losses, expenses and claims (including reasonable attorney's fees and costs of defense) arising out of the Trustee's compliance with instructions from the Investment Advisory Committee . . . relating to real estate investments, and Trustee's performance of its duties, or any breach or alledged [sic] breach of its duties with respect to the Plan, participants, and beneficiaries, unless the Trustee commits a breach of its duties by reason of its negligence or willful misconduct. Expenses incurred by the Trustee which it believes to be subject to indemnification hereunder shall be paid by the Company upon the Trustee's request, provided the Trustee undertakes to repay such amounts plus interest thereon at the legal rate from the date of such payment in the event that in the final judgement [sic] of a court of competent jurisdiction the expenses are not subject to indemnification hereunder.

 J.S., Ex. 3.

 After MVH failed, the United States Department of Labor ("DOL") found that Bourns, its board of directors and the IAC had breached their fiduciary duties under ERISA with respect to the MVH investments and ordered Bourns to restore to the Plan all losses related to those investments.

 As a result of the DOL investigation, Wells has incurred various expenses defending against the claims that it improperly followed IAC instructions. In an earlier civil action, Bourns sued Wells before this court for breach of fiduciary duties under ERISA and for breach of contract under California law. This court found that Bourns' claims under ERISA were barred by ERISA's statute of limitations and that Bourns' state law claims were preempted by ERISA. See Bourns v. Wells Fargo, C-93-3961 (order filed Feb. 2, 1994). In 1993, Wells sought reimbursement from Bourns pursuant to the Agreement. Bourns has paid $ 43,411.00 to Wells, but has refused to pay any additional amounts. Wells has requested reimbursement from Bourns under the terms of the Agreement for expenses totalling $ 175,508.28 and has brought this action in order to compel payment by Bourns.

 LEGAL STANDARD

 Under Federal Rule of Civil Procedure 56, summary judgment shall be granted

 
against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.

 Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The moving party bears the initial burden of identifying portions of the record which show that the nonmoving party has disclosed no "significant probative evidence tending to support the complaint." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 290, 20 L. Ed. 2d 569, 88 S. Ct. 1575 (1968). The burden then shifts to the nonmoving party to "go beyond the pleadings, and by [its] own affidavits, or by the 'depositions, answers to interrogatories, or admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324 (citations omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (a dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.").

 Although the moving party is not required to support its motion with affidavits or other material, Celotex, 477 U.S. at 323, it does not surmount its burden through conclusory allegations as to the state of the record. The moving party discharges its burden by showing that the nonmoving party has not disclosed the existence of any "significant probative evidence tending to support the complaint." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 290, 20 L. Ed. 2d 569, 88 S. Ct. 1575 (1969).

 The court's function on a motion for summary judgment is not to make credibility determinations. Anderson, 477 U.S. at 249. The inferences to be drawn from the facts must be viewed in a light most favorable to the party opposing the motion.

 In the instant case, both parties are moving for summary judgment. They agree, therefore, that no genuine issues of fact remain and that the question presented is purely a matter of law. See Starsky v. Williams, 512 F.2d 109, 111 (9th Cir. 1975).

 DISCUSSIO ...


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