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Molus v. Swan

January 22, 2009


The opinion of the court was delivered by: Hon. Michael M. Anello, United States District Judge


Before the Court in the above-captioned case are the following pending motions: (1) Defendant Frank Swan's Motion for Summary Judgment [Doc. No. 234], joined by Defendants Christopher Kiernan and Diana Mailly [Doc. No. 246]; (2) Defendant Christopher Kiernan's Motion for Summary Judgment [Doc. No. 236], joined by Defendants Frank Swan and Diana Mailly [Doc. No. 247]; and (3) Plaintiff Carol and Michael Molus' ("Plaintiffs") Motion to Amend/Correct Complaint [Doc. No. 262]. Plaintiffs filed a single opposition to both summary judgment motions [Doc. Nos. 258 -- 261]. Defendants' filed a reply and objected to and moved to strike portions of the evidence offered by Plaintiffs in support of their opposition [Doc. No. 263 & 264]. Defendant Swan filed an opposition to Plaintiffs' motion to amend, joined by Defendants Kiernan and Mailly [Doc. Nos. 268 -- 270]. Plaintiffs filed a reply [Doc. No. 271]. The motions were taken under submission on the pleadings pursuant to Local Civil Rule 7.1(d).

For the following reasons, the Court GRANTS Defendant Swan's motion for summary judgment, FINDS MOOT Defendant Kiernan's motion for summary judgment, and DENIES Plaintiffs' motion to amend their complaint.


The instant case arises from an attorney-client relationship between Gerald Wilson,*fn1 Frank Swan, Diana Mailly, Christopher Kiernan and their former clients, Plaintiffs Carol and Michael Molus during the time period beginning on or about January 1996 and terminating on March 6, 2001. The following facts are not in dispute.*fn2

Plaintiffs were investigated and charged with crimes related to failure to pay income taxes between 1991-1994. Plaintiffs hired attorneys Wilson and Swan beginning on or about January 1996 to represent them against charges of criminal tax evasion. Swan and Wilson retained Mailly, a certified public accountant, and Kiernan, also an attorney, to assist with Plaintiffs' defense. Plaintiffs terminated Swan, Wilson, Mailly, and Kiernan from their employ on March 6, 2001. Plaintiffs were convicted of tax evasion in February 2002.

Thereafter, Plaintiffs pursued malpractice claims against Swan and Wilson. Plaintiffs initially filed complaints in California state court in 2003 on state law claims which were dismissed.*fn3 The instant case was filed by Plaintiffs on March 7, 2005, alleging multiple claims against Swan and Wilson pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et sec.*fn4 The complaint alleged that Swan and Wilson engaged in a conspiracy to defraud Plaintiffs of their money and property during the period they served as Plaintiffs' defense counsel. (Complaint ¶ 30.) The Court dismissed Swan from the case for Plaintiffs' failure to serve process. Plaintiffs filed a first amended complaint ("FAC") on June 16, 2006, naming Wilson, Swan, Mailly, and Kiernan as defendants. The FAC alleged four causes of action under California state law -- fraud, misrepresentation, conversion, and breach of contract -- and four claims under the RICO statutes. (See First Amended Complaint, Doc. No. 52.) On March 21, 2007, the Court dismissed all causes of action against Wilson with prejudice based on res judicata from Plaintiffs' state court actions. As to Swan, Mailly, and Kiernan, the state law claims were dismissed with prejudice as barred by the applicable statutes of limitations. Additionally, these claims were previously raised and dismissed on the same grounds in Plaintiffs' state court cases. The four RICO claims were dismissed with leave to amend. Plaintiffs failed to plead their RICO claims with specificity under Federal Rule of Civil Procedure 9(b) and the claims as alleged were barred by the applicable statute of limitations.*fn5 Additionally, one count failed to state a claim under Rule 12(b)(6), and one count required a more definite statement under Rule pleading in the case. The SAC names Swan, Mailly, and Kiernan as defendants and pleads four counts under the RICO statutes. The focus of the SAC, and the basis for the RICO claims, is the alleged fraudulent billing scheme engaged in by Defendants Swan, Mailly, and Kiernan and their associate (former defendant) Wilson during the course of their attorney-client relationship with Plaintiffs. Mailly and Kiernan moved separately for the Court to dismiss the SAC pursuant to Rule 12(b)(6), arguing the RICO claims were time-barred. The Court dismissed all pre-June 16, 2002 claims against Mailly and Kiernan based on this ground. The Court also granted summary judgment in Defendants' favor with respect to a post-June 16, 2002 claim for $19,870, finding the claim barred by the statute of limitations.

Plaintiffs have two remaining RICO claims, including the $19,870 claim against Swan, and a claim for $4,250 against Swan, Kiernan, and Mailly. Defendants seek an order granting summary judgment in their favor with respect to these claims, arguing that the claims are time-barred under the RICO statute of limitations, and alternatively, that the $4,250 claim is without any evidentiary support. Plaintiffs oppose the motions, arguing that the claims arose after June 16, 2002, and billing records and other documentation currently before the Court create a genuine issue of fact as to whether the claims are untimely. Plaintiffs also argue that a genuine issue of material fact exists with respect to the various elements of their RICO claims, rendering the case suitable for trial on the merits.


As an initial matter, Defendant Swan has requested the Court take judicial notice of its prior orders, referred to above. Federal Rule of Evidence 201 governs judicial notice of adjudicative facts. FED. R. EVID. 201(a). "A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." FED. R. EVID. 201(b). If supplied with the necessary information and requested by a party, the Court must take judicial notice. FED. R. EVID. 201(d). Courts may take judicial notice of their own records. U.S. v. Author Services, 804 F.2d 1520, 1523 (9th Cir. 1986) (citing Shuttlesworth v. City of Birmingham, 394 U.S. 147, 157 (1969); Diamond v. Pitchess, 411 F.2d 565, 566 (9th Cir. 1969). Because this Court's prior orders directly relate to the matter before the Court, the Court GRANTS Defendant Swan's request and takes judicial notice of Exhibits 1, 3, 5, and 10.

In addition, Defendant Swan requests the Court take judicial notice of various pleadings, as well as a declaration of Plaintiff Carol Molus previously filed in the case in support of Plaintiffs' opposition to a prior defense motion. The existence of court records is a proper subject of judicial notice. See United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980). Accordingly, the Court GRANTS Defendant Swan's request and takes judicial notice of Exhibits 2, 4, 6, 7, 8, 9, 11, and 12. However, the Court is careful to note it is only taking judicial notice of the existence of these documents and the specific statements and/or allegations contained within the documents. It would be improper for the Court to rely upon these documents to determine disputed factual issues.


Pursuant to Federal Rule of Civil Procedure 56(c), a party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). It is beyond dispute that "[t]he moving party bears the initial burden to demonstrate the absence of any genuine issue of material fact." Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007)(citation omitted). "Once the moving party meets its initial burden, . . . the burden shifts to the nonmoving party to set forth, by affidavit or as otherwise provided in Rule 56, specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (internal quotation marks and citations omitted).

A mere scintilla of evidence is not sufficient "to defeat a properly supported motion for summary judgment; instead, the nonmoving party must introduce some 'significant probative evidence tending to support the complaint.'" Fazio v. City & County of San Francisco, 125 F.3d 1328, 1331 (9th Cir. 1997) (quoting Anderson, 477 U.S. at 249, 252). Thus, in opposing a summary judgment motion it is not enough to simply show that there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (citations omitted). However, when assessing the record to determine whether there is a "genuine issue for trial," the court must "view the evidence in the light most favorable to the nonmoving party, drawing all reasonable inferences in h[er] favor." Horphag, 475 F.3d at 1035 (citation omitted). On a summary judgment motion, the court may not make credibility determinations; nor may it weigh conflicting evidence. See Anderson, 477 U.S. at 255. Thus, as framed ...

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