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Michael Mendez, Mark Anthony Mendez, and Brenda Mendez v. James W. Keeling

April 13, 2011

MICHAEL MENDEZ, MARK ANTHONY MENDEZ, AND BRENDA MENDEZ,
PLAINTIFFS,
v.
JAMES W. KEELING, AN INDIVIDUAL; KAREN DICK, AN INDIVIDUAL;
QUALITY CONNECTION SALES AND INSTALLATION, LTD., A CANADIAN CORPORATION; AND
FUNDACION TARRAS, A PANAMANIAN CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Hon. Roger T. Benitez United States District Judge

ORDER: JUDGMENT

* GRANTING PLAINTIFFS' MOTION FOR SUMMARY

* DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

[Dkt. Nos. 38, 40]

INTRODUCTION

Defendants James W. Keeling, Karen Dick, Quality Connection Sales and Installations, Ltd., and Fundacion Tarras and Plaintiffs Michael Mendez, Mark Mendez, and Brenda Mendez have filed cross motions for summary judgment. (Dkt. Nos. 38, 40.) Defendants argue that Plaintiffs' claims are precluded by the doctrines of res judicata and election of remedies. Plaintiffs argue that there are no genuine issues of material fact and Plaintiffs are entitled to judgment as a matter of law. For the reasons discussed below, Defendants' motion for summary judgment is DENIED and Plaintiffs' motion for summary judgment is GRANTED.

BACKGROUND

Plaintiffs and Defendant Keeling were parties to a proceeding before the Probate Division in San Diego Superior Court. Plaintiffs and Defendant Keeling resolved their dispute and entered into a settlement agreement. The settlement agreement required the transfer of two pieces of property to Defendant Keeling - 2044 E. Tenth Street and 2016 E. Tenth Street in National City, California. The settlement also required Defendant Keeling to pay Plaintiffs $225,000 within sixty days of approval of the settlement by the probate court. The settlement agreement further provided that if the $225,000 payment was not paid within sixty days, interest would accrue at 6% per year.

The probate court approved the settlement agreement at a hearing on May 4, 2009 and ordered the parties to perform according to the terms of the agreement, i.e., properties transferred to Defendant Keeling and Defendant Keeling's payment of $225,000 to Plaintiffs within 60 days (July 3, 2009). In approving the settlement, the probate court refused to find that the settlement agreement contained implied concurrent conditions - that the distribution of the property was conditioned on payment. The probate court also refused to immediately enter judgment against Defendant Keeling. The probate court found that, under the settlement agreement, the property distribution and payment were expressly nonconcurrent and entry of judgment was improper because Defendant Keeling still had sixty days to make payment. At a hearing on June 2, 2009, the probate court reiterated that Defendant Keeling must pay by July 3, 2009.

On June 18, 2009, in accordance with the settlement agreement, the trustee distributed the two properties to Defendant Keeling. Six days later, on June 24, 2009, Defendant Keeling transferred the 2016 E. Tenth St. property to Defendant Karen Dick and the 2044 E. Tenth St. property to Quality Connections. On July 6, 2009, the probate court entered judgment against Defendant Keeling for $207,647.04.*fn1 Defendant Quality then transferred the 2044 E. Tenth St. property to Defendant Dick. On August 6, 2009, Plaintiffs recorded a lis pendens against both properties. And on August 17, 2009, Defendant Dick transferred both of the properties to Defendant Fundacion Tarras. The parties dispute whether the transfers were without consideration. The quitclaim deeds indicate the transfers were gifts for no consideration, but Defendant Keeling now claims that all the transfers were to satisfy legal expenses. Defendant Keeling has a longstanding business and personal relationship with Defendant Dick who is a director of Quality and Fundacion. Defendant Keeling admitted in his Answer that he is the controlling owner/principal of Defendant Fundacion, although he now claims otherwise.

After the probate court entered judgment, Plaintiffs sought a number of remedies to enforce the settlement agreement including avoidance of fraudulent transfer, a judgment lien on real property, an injunction against further disposition, appointment of a receiver, and an order for a judgment debtor's examination. On September 25, 2009, the probate court denied Plaintiffs' requests for a number of reasons without reaching the merits. First, the probate court found that Plaintiffs were seeking relief beyond the scope of California Code of Civil Procedure § 664.6, the only basis for the probate court's jurisdiction. Second, the probate court found that the entry of judgment constituted the only relief the probate court was authorized to grant under the circumstances. Third, the probate court found that it did not have personal jurisdiction over the transferees of the property. But, the probate court advised Plaintiffs to pursue other available legal procedures to collect the judgment in civil court, including, as examples, a judgment lien on the property, a judgment debtor examination, and attorney's fees and costs for enforcing the judgment.

Shortly thereafter, Plaintiffs filed this action. Plaintiffs assert five claims for relief: (1) Racketeer Influenced and Corrupt Organizations Act (RICO); (2) Fraudulent Transfer; (3) Creditors Action; (4) Imposition of Judgment Lien Against Real Property; and (5) Promissory Fraud.

DISCUSSION

Summary judgment should be granted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED.R. CIV. P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). If the moving party meets this burden, the burden then shifts to the opposing party to set forth specific facts showing that a genuine issue remains for trial. Id. "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Federal Rule of Civil Procedure 1)).

"[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that their be no genuine issue of material fact." Anderson, 477 U.S. at 247-48. Evidence raises a genuine issue of material fact if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.. at 248. The Court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 252.

"Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . . The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). "A 'justifiable inference' is not necessarily the most likely inference or the most persuasive inference. Rather, 'an inference as to another material fact may be drawn in favor of the nonmoving party . . . if it is rational or reasonable.'" United Steelworkers of America v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989) (quoting T.W. Elec. Serv. v. Pac. Elec. Contractors, 809 F.2d 626, 631 (9th Cir. 1987)).

I. Defendants' Motion for Summary Judgment

Defendants argue that Plaintiffs' claims are precluded under the doctrines of res judicata and election of remedies. But, because the probate court did not rule on the claims Plaintiffs are pursuing here and because the remedies Plaintiffs seek are consistent with the probate court's rulings, the Court finds ...


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