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Ito v. Brighton/Shaw

August 7, 2008

NAOKO ITO, ET AL., PLAINTIFFS,
v.
BRIGHTON/SHAW, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART CROSS-DEFENDANT CRAIG DAVIS' MOTION FOR SUMMARY JUDGMENT (Document # 142) AND RELATED CROSS-CLAIMS

This case comes before the Court on a motion for summary judgment or, in the alternative, partial summary judgment brought by Defendant and Cross-Defendant Craig Davis ("Davis"). Davis seeks summary judgment in his favor on a cross-claim brought against him by Defendant and Cross-Claimant Robert Carson ("Carson") on December 3, 2007. For the reasons that follow, the motion for summary judgment will be granted in part and denied in part.

FACTUAL BACKGROUND

In May 1994, the Brighton Hills Limited Partnership ("Brighton Hills") was formed, with Carson as General Partner, to own and invest in real property located in the County of Fresno, California. Between 2001 and 2002, Carson became engaged in a dispute with the limited partners in Brighton Hills over his actions as General Partner. Carson retained Davis as an attorney to represent him in the dispute and also to assist him with a transfer of property in Brighton Hills. After a series of negotiations, Carson entered into a Mutual Release, Assignment & Indemnity Agreement with Brighton Hills in or around May 2002.

In or around March 2002, a few months before the agreement was signed, Davis assisted Carson with the purported assignments of twelve disputed partnership units in Brighton Hills. In 1996, Japanese investors Fumitoshi Ito ("Ito") and Shizuo Miyoshi ("Miyoshi") had each transferred $1,000,000 to Carson to be put toward a group referred to as "IQ Properties," which was to provide them with an interest equal to 12 partnership units in Brighton Hills. However, on March 21, 2002, Carson, with the legal assistance of Davis, arranged for John Quiring ("Quiring"), as "Authorized Partner" of IQ Properties, to purportedly assign those twelve units in Brighton Hills to Carson personally. Four days later, on March 25, 2002, Carson, again with the legal assistance of Davis, purportedly assigned seven of those twelve units (later reduced to five) to Davis and his wife Cindy Davis ("Cindy"), as joint tenants. Both assignments took place without the knowledge, consent or approval of Ito or Miyoshi and neither Ito nor Miyoshi received any compensation or return on their investment before or after the assignments.

Carson executed both assignments in his capacity as General Partner of Brighton Hills. On or around May 30, 2002, after signing the agreement, Carson resigned as the General Partner of Brighton Hills and Brighton/Shaw, Inc. ("Brighton/Shaw") became the General Partner in his place.

PROCEDURAL HISTORY

On August 25, 2006, the heirs and successors in interest to Ito and Miyoshi, Naoko Ito, Toshie Ito, Takafumi Ito, Michiko Morinaga and Kimiko Miyoshi Price ("Plaintiffs"), filed a complaint in this Court with seven causes of action stemming from alleged fraudulent activity involving the twelve limited partnership units of Brighton Hills in which Ito and Miyoshi held interests. Since then, some defendants have been dismissed from the action and other defendants have initiated cross-claims and counter-claims.

On December 3, 2007, Carson filed an amended cross-claim against Davis and Brighton Hills. Carson alleged that Davis conducted legal malpractice when he acted as Carson's attorney for the transfer of the disputed partnership units in Brighton Hills and the subsequent litigation involving the units. Carson claimed that Davis's actions were self-interested and breached numerous duties of care owed to him. Carson also claimed that Davis breached an agreement to perform legal services for Carson related to claims against the disputed units. Accordingly, Carson brought the following causes of action against Davis, for which he requested compensatory damages, punitive damages and costs: (1) professional malpractice; (2) breach of fiduciary duty; and (3) breach of contract.

On December 21, 2007, Plaintiffs filed a motion for summary judgment for conversion of the twelve units against Carson, Quiring, Davis and Cindy Davis, and for breach of fiduciary duty against Quiring. This Court found Carson and Quiring liable for conversion of the twelve units. On June 4, 2008, the Court denied Carson's motion for reconsideration of the Court's decision regarding the conversion cause of action. The next day, on June 5, 2008, Davis filed the instant motion for summary judgment against Carson.

Davis seeks summary judgment in his favor on each of the causes of action brought against him in Carson's cross-claim. Generally, Davis argues that all three of Carson's claims related to the twelve disputed partnership units are barred by the doctrine of unclean hands, since this Court found Carson liable for the conversion of those units. More specifically to the individual causes of action, Davis argues that (1) Carson cannot prove that Davis committed professional malpractice because he failed to designate an expert; (2) Carson has produced no evidence that Davis breached any duty of fiduciary care; and (3) Davis cannot be liable for breach of contract because the alleged contract is unenforceable under the statute of frauds.

Carson filed an opposition to the motion on June 20, 2008. Davis filed a reply on July 1, 2008.

LEGAL STANDARD

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Fortyune v. American Multi-Cinema, Inc., 364 F.3d 1075, 1080 (9th Cir. 2004); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985). Where summary judgment requires the court to apply law to undisputed facts, it is a mixed question of law and fact. See Sousa v.Unilab Corp. Class II (Non-Exempt) Members Group Benefit Plan, 252 F. Supp.2d 1046, 1049 (E.D. Cal. 2002). Where the case turns on a mixed question of law and fact and the only dispute relates to the legal significance of the undisputed facts, the controversy for trial collapses into a question of law that is appropriate for disposition on summary judgment. See Union Sch. Dist. v. Smith, 15 F.3d 1519, 1523 (9th Cir. 1994); Sousa, 252 F.Supp.2d at 1049.

Under summary judgment practice, the moving party always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the 'pleadings, depositions, answers to interrogatories, and admissions on file.'" Id. Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, 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. Id. at 322. "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. In such a circumstance, summary judgment should be granted, "so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied." Id. at 323.

If a moving party fails to carry its burden of production, then "the non-moving party has no obligation to produce anything, even if the non-moving party would have the ultimate burden of persuasion." Nissan Fire & Marine Ins. Co. v. Fritz Companies, 210 F.3d 1099, 1102-03 (9th Cir. 2000). If the moving party meets it initial burden, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Nissan Fire & Marine Ins., 210 F.3d at 1103; Nolan v. Cleland, 686 F.2d 806, 812 (9th Cir. 1982); Ruffin v. County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir. 1979). A fact is "material" if it might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); Thrifty Oil Co. v. Bank of America Nat'l Trust & Savings Assn, 322 F.3d 1039, 1046 (9th Cir. 2002). A "genuine issue of material fact" arises when the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Anderson, 477 U.S. at 248-49; Thrifty Oil, 322 F.3d at 1046.

In attempting to establish the existence of a factual dispute, the opposing party may not rely upon the mere allegations or denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Fed. R. Civ. P. 56(e); Matsushita, 475 U.S. at 586 n.11; First Nat'l Bank, 391 U.S. at 289; Willis v. Pacific Maritime Ass'n, 244 F.3d 675, 682 (9th Cir. 2001). However, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 290; Hopper v. City of Pasco, 248 F.3d 1067, 1087 (9th Cir. 2001). Thus, the "purpose of summary judgment is to 'pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587; Mende v. Dun & Bradstreet, Inc., 670 F.2d 129, 132 (9th Cir. 1982).

In resolving a summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. See Fed. R. Civ. P. 56(c); Fortyune, 364 F.3d at 1079-80. The court has the discretion in appropriate circumstances to consider materials that are not properly brought to its attention, but the court is not required to examine the entire file for evidence establishing a genuine issue of material fact where the evidence is not set forth in the opposing papers with adequate references. See Southern Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003); Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001). The evidence of the opposing party is to be believed and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. See Anderson, 477 U.S. at 255; Matsushita, 475 U.S. at 587; Stegall v. Citadel Broad, Inc., 350 F.3d 1061, 1065 (9th Cir. 2003). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Mayweathers v. Terhune, 328 F.Supp.2d 1086, 1092-93 (E.D. Cal. 2004); UMG Recordings, Inc. v. Sinnott, 300 F.Supp.2d 993, 997 (E.D. Cal. 2004). "A genuine issue of material fact does not spring into being simply because a litigant claims that one exist or promises to produce admissible evidence at trial." Del Carmen Guadalupe v. Agosto, 299 F.3d 15, 23 (1st Cir. 2002); see Galen v. County of Los Angeles, 477 F.3d 652, 658 (9th Cir. 2007); Bryant v. Adventist Health System/West, 289 F.3d 1162, 1167 (9th Cir. 2002).

Finally, to demonstrate a genuine issue, the opposing party "must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita, 475 U.S. at 587 (citation omitted). "A motion for summary judgment may not be defeated, however, by evidence that is 'merely colorable' or 'is not significantly probative.'" Anderson, 477 U.S. at 249-50; Hardage v. CBS Broad. Inc., 427 F.3d 1177, 1183 (9th Cir. 2006). If the nonmoving party fails to produce evidence sufficient to create a genuine issue of material fact, the moving party is entitled to summary judgment. See Nissan Fire & Marine, 210 F.3d at 1103.

DISCUSSION

Both parties in this case submitted a Separate Statement of Uncontroverted Material Facts ("SUF"). After examining the record, the Court has determined that the ...


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