The opinion of the court was delivered by: Oliver W. Wanger United States District Judge
MOTION FOR SUMMARY JUDGMENT MEMORANDUM DECISION REGARDING (Doc. 478)
This case is a consolidation of three actions: An action commenced by Plaintiff Fox Hollow of Turlock Homeowners' Association ("Fox Hollow") against Richard Sinclair, Brandon Sinclair, Gregory Mauchley, Lairtrust, LLC, Capstone, LLC, Mauctrst, LLC, and Stanley Flake as Trustee of Capstone Trust, Case No. CV-F-03-5439 OWW/DLB ("Fox Hollow Action"); an action commenced by California Equity Management Group, Inc. ("CEMG") against Mauctrst LLC, Gregory Mauchley, Diana Mauchley, Lairtrust LLC, Richard Sinclair, Deborah Sinclair, Sinclair Enterprises, Inc., Capstone, LLC, Brandon Sinclair, Stanley Flake, and Stanley Flake as Trustee of the F. Hanse Trust and of the Julie Insurance Trust Case No. CVF- 03-5774 OWW/DLB ("CEMG Action"); and an action commenced by Lairtrust LLC, Mauctrst LLC, and Capstone LLC against Fox Hollow, Andrew Katakis, and California Equity Management Group, Inc. in the Stanislaus County Superior Court, Case No. 322675 ("Lairtrust Action"), removed to this Court and consolidated with the Fox Hollow and CEMG Actions by Order filed on October 6, 2003 ("Consolidated Federal Actions").
On August 10, 2010, Defendants Gregory Mauchley, Richard Sinclair, and Brandon Sinclair ("Inidividual Defendants") filed a cross-complaint against Plaintiffs. (Doc. 425). Plaintiffs Fox Hollow and CEMG ("Plaintiffs") filed a motion to dismiss, or in the alternative, sever and stay Individual Defendants cross-complaint on September 3, 2010. (Docs. 431, 432). On January 21, 2011, the court issued a memorandum decision granting in part Plaintiffs' motion to stay and terminating Plaintiff's motion for a more definite statement without prejudice. (Doc. 473 at 6). The court denied Plaintiffs' motion to stay claims arising out of "(i) Plaintiffs' alleged breach of the 2007 settlement agreement, and
(ii) Plaintiffs' alleged conduct during and after trial of the state court action;" the court authorized Plaintiffs to file a separate motion to stay regarding these claims. Individual Defendants' claims arising out of the purported 2007 agreement have been stayed. (Doc. 563).
Plaintiffs filed a motion for summary judgment on February 4, 2011; Plaintiffs motion seeks judgment on Individual Defendants' claims arising out of ownership interests in Lot 1 during and after trial of the state court action. (Doc. 478). Individual Defendants filed opposition on March 14, 2011. (Doc. 493). Plaintiffs filed a reply on March 21, 2011. (Doc. 505). The court heard Plaintiffs' motion on May 2, 2011.
This action arises out of an alleged fraudulent scheme concerning a thirty-five unit town home complex in Turlock, California, known as Fox Hollow of Turlock ("the Property"). Plaintiff Fox Hollow is the home owners' association ("HOA") for the Property. Plaintiff CEMG is the record owner of lots contained within the Property, the successor in interest to lenders who extended loans secured by lots within the Property, and the assignee of the rights of certain tenants who entered into leases for units contained in the Property. Mauctrst, Lairtrust, and Capstone are limited liability companies ("LLC Defendants")that were allegedly used to convert HOA funds, effect property transfers, obtain loans, prosecute dilatory lawsuits, and to carry out other parts of the alleged schemes that form the basis for Plaintiffs' claims. Individual Defendants Gregory Mauchley, Richard Sinclair, and Brandon Sinclair are individuals who where principals, directors, or employees of the LLC Defendants during times relevant to the parties' respective claims.
Individual Defendants' cross-complaint asserts twenty-seven causes of action against Plaintiffs arising out of various transactions and conduct related to the Property. Individual Defendants unsuccessfully asserted most of their cross-claims in an action filed on April 24, 2003 in the Stanislaus County Superior Court. Judgment was entered against Individual Defendants in the state court action on August 18, 2009; Individual Defendants appealed. Resolution of Individual Defendants' appeal of the state court judgment is currently pending in the California Court of Appeal.
On January 21, 2011, the court issued a memorandum decision granting Plaintiffs' motion to stay as to all claims asserted in the counter-complaint except for claims arising out of "(i) Plaintiffs' alleged breach of the 2007 settlement agreement, and (ii) Plaintiffs' alleged conduct during and after trial of the state court action." (Doc. 473). On April 29, 2011, the court issued a memorandum decision granting Plaintiffs' motion to stay claims arising out of the purported 2007 settlement agreement. (Doc. 563). Defendants' only remaining unstayed cross-claims are those arising out of "conduct during and after trial of the state court action;" these claims are the target of Plaintiffs' instant motion for summary judgment.
The cross-complaint's allegations concerning the unstayed claims are unclear. The only allegations asserted in the cross-complaint that appear to qualify as allegations concerning "conduct during and after trial of the state court action" are contained at pages 12 through 13 of the cross-complaint in paragraphs 33 through 36.*fn1 Paragraph 34 of the cross-complaint alleges that "Richard Sinclair as a member manager of Lairtrust LLC acquired legal title to Lot 1 [of the Property]." In paragraphs 35 through 36 of the cross-complaint, Individual Defendants allege that Andrew Katakis, acting on behalf of the Fox Hollow HOA: (1) violated certain provisions of the Conditions, Covenants, and Restrictions ("CC&R's") by failing to make repairs on Lot 1 within the Property and by failing to place Sinclair and/or Lairtrust on the Board of Directors of the HOA; (2) inadequately accounted for reserve accounts maintained by the Fox Hollow HOA; (3) "assessed extra assessments on Lot 1 and then proceeded to wrongfully foreclose;" and (4) refused to remove "a judgment lien from Richard C. Sinclair that Richard Sinclair had paid off years earlier despite written requests for Defendant to do so." (Doc. 425 at 12-13).
Summary judgment/adjudication is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The movant "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, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (internal quotation marks omitted).
Where the movant will have the burden of proof on an issue at trial, it must "affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party." Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). With respect to an issue as to which the non-moving party will have the burden of proof, the movant "can prevail merely by pointing out that ...