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Hooper v. Hooper

March 24, 2009

RITA T. HOOPER AND LOUIS G. HOOPER AS TRUSTEES OF THE GORDON HOOPER REAL ESTATE, INC. EMPLOYEES' PENSION AND PROFIT SHARING PLAN; RITA T. HOOPER, INDIVIDUALLY; LOUIS G. HOOPER, INDIVIDUALLY; GORDON HOOPER REAL ESTATE, INC., PLAINTIFFS,
v.
KENDRICK HOOPER, DEFENDANT.
KENDRICK HOOPER, COUNTER-CLAIMANT,
v.
RITA T. HOOPER AND LOUIS G. HOOPER AS TRUSTEES OF THE GORDON HOOPER REAL ESTATE, INC. EMPLOYEES' PENSION AND PROFIT SHARING PLAN; RITA T. HOOPER, INDIVIDUALLY; LOUIS G. HOOPER, INDIVIDUALLY; GORDON HOOPER REAL ESTATE, INC., COUNTER-DEFENDANTS.



ORDER GRANTING DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS

This matter comes before the Court on Defendant Kendrick Hooper's motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. Plaintiffs Gordon Hooper Real Estate, Inc., Rita T. Hooper, and Louis G. Hooper (collectively "Plaintiffs") oppose the motion. For the reasons set forth below, Defendant's motion is GRANTED.

I. JURISDICTION AND VENUE

This Court has exclusive jurisdiction of this action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq.; 29 U.S.C. § 1132(e)(1). The Court has jurisdiction over the state claims under 28 U.S.C. § 1367(a). After carefully balancing whether to dismiss Plaintiffs' supplemental claims, this Court finds the ERISA claims predominate over the supplemental claims and thus, the Court grants supplemental jurisdiction. Venue is proper under 29 U.S.C. § 1132(e)(2) because the acts of Defendant giving rise to the complaint occurred in this jurisdiction, and Plaintiffs and Defendants are residents of the Eastern District.

II. FACTUAL AND PROCEDURAL BACKGROUND

The factual background underlying this case is more fully outlined in the Court's previous order denying Plaintiffs' motion for writ of possession and for injunctive relief. See Order, filed January 21, 2009, at Docket ("Doc.") # 47. The present motion for judgment on the pleadings focuses on Plaintiffs' third, fourth, and fifth claims for relief as alleged by Louis G. Hooper and Rita T. Hooper, individually and as trustees of the Gordon Hooper Real Estate, Inc. Employees' Pension and Profit Sharing Plan (the "Plan") and the sixth claim for relief as alleged by Rita T. Hooper, individually. Def.'s Mot. for Judgment on the Pleadings ("Def's Mot."), Doc. # 48. Plaintiffs oppose the motion. Pl's Opposition ("Pl's Opp."), Doc. # 62.

III. OPINION

A. Legal Standard

Judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c), is proper only when there is no unresolved issue of fact, and no question remains that the moving party is entitled to judgment as a matter of law. Honey v. Distelrath, 195 F.3d 531, 532-33 (9th Cir. 1999). It must appear beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Sun Savings and Loan Ass'n v. Dierdorff, 825 F.2d 187, 191 (9th Cir. 1987).

The standard applied on a Rule 12(c) motion is essentially the same as that applied on a motion to dismiss pursuant to Federal Rule of Civil Procedure (12)(b)(6). See Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). Thus, the allegations of the non-moving party are accepted as true, and all inferences reasonably drawn from those facts must be construed in favor of the responding party. Id. However, conclusory allegations and unwarranted inferences are insufficient to defeat a motion for judgment on the pleadings. In re Syntex Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir. 1996).

B. Plaintiffs' Third, Fourth, and Fifth Claims: Breach of Fiduciary Duty, Diversion of Real Estate Commissions, and Seizure of Corporate Opportunities

Plaintiffs' third, fourth, and fifth claims allege breach of fiduciary duty, diversion of real estate commissions, and seizure of corporate opportunities, respectively. Complaint ("Compl.") ¶¶ 21-38. Plaintiffs seek to recover commissions from real estate deals run through Gordon Hooper Real Estate, Inc. (the "Corporation"), corporate real estate offices, and corporate equipment, supplies, and fixtures. Id. Though the Corporation has brought these claims in its own capacity, Plaintiffs also seek to bring these claims in their capacities as individual shareholders and trustees.*fn1 Defendant contends that Louis and Rita Hooper cannot bring claims for any alleged injury to Gordon Hooper Real Estate, Inc. because the Corporation has itself brought such claims directly and on its own behalf. Def's Mot. at 4-6.

In opposition, Plaintiffs maintain that they suffered injuries independent of those to the Corporation. Pls.' Opp. at 2-5. Plaintiffs also assert that the standards for precluding dual claims by a corporation and its shareholders differ where corporations have a small number of shareholders, as is the case here. Id. at 2. Specifically, Plaintiffs argue that in such cases, courts allow dual corporate and shareholder suits when "the acts of one officer/shareholder directly impacts [sic] both corporation and the other shareholders." Id.

California law precludes shareholders from bringing individual claims seeking redress for corporate injuries. The corporation is a legal entity that maintains the sole right to bring claims seeking remedy for the harms it suffers. See Jones v. H.F. Ahmanson & Co., 1 Cal.3d 93, 107 (Cal. 1969). If the corporation fails to bring suit, shareholders can bring a derivative suit on the corporation's behalf where management (or any third party) breaches a duty owed to the corporation and the corporation fails to assert its own cause of action. See Grosset v. Wenaas, 42 Cal. 4th. 1100, 1108 (Cal. 2008); Schuster v. Gardner, 127 Cal. App. 4th 305, 312 (Cal. Ct. App. 2005). If the corporation brings suit, a shareholder cause of action exists only if damages to the shareholder are separate from and independent of the corporation's injuries. See Jones, 1 Cal.3d at 107.

In this case, the Corporation brought suit directly, asserting the same causes of action as Plaintiffs. Therefore, Plaintiffs cannot bring individual claims unless they successfully demonstrate that their asserted injuries are more than incidental to the Corporation's injuries. See id. Plaintiffs have failed to satisfy this burden. Plaintiffs' injuries are neither separate nor distinct from the Corporation's injuries. The crux of Plaintiffs' claims involves alleged misuse of corporate property resulting in dissipated company assets. See Compl. at 6-9. In ...


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