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Laura J. Flam v. Marshall S. Flam

September 5, 2012

LAURA J. FLAM, PLAINTIFF,
v.
MARSHALL S. FLAM, M.D.,
DEFENDANT.



The opinion of the court was delivered by: Dennis L. Beck United States Magistrate Judge

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND (Document 8)

Plaintiff Laura J. Flam ("Plaintiff") filed this Motion to Remand on July 19, 2012. The matter was heard on August 31, 2012, before the Honorable Dennis L. Beck, United States Magistrate Judge. Tim Buchanan appeared on behalf of Plaintiff. Wiley Driskill appeared on behalf of Defendant Marshall S. Flam, M.D. ("Defendant").

BACKGROUND

Plaintiff filed a Summons and Order to Show Cause Complaint ("OSC") in the Fresno County Superior Court on June 8, 2012.*fn1 The OSC sought damages pursuant to California Family Code section 1101(g) for an alleged breach of fiduciary duty in the management and control of Plaintiff's pension account. The OSC also requested attorneys' fees and costs.

On June 27, 2012, Defendant removed the action to this Court based on federal question jurisdiction. According to Defendant, Plaintiff sued him in his capacity as Co-Trustee of the Employment Pension Plan, and the action is therefore preempted by the Employee Retirement Income Security Act of 1974 ("ERISA").

Defendant filed his answer on July 5, 2012.

On July 19, 2012, Plaintiff filed a Motion to Remand the action. Defendant opposed the motion on August 17, 2012. Plaintiff filed a reply on August 22, 2012, and Defendant filed a sur-reply on August 24, 2012.*fn2

PROCEDURAL HISTORY OF SUPERIOR COURT ACTION

On January 26, 2001, the Fresno County Superior Court issued a judgment of dissolution of the marriage between Plaintiff and Defendant. The judgment provided that the parties each receive one-half of the community property portion of the retirement, pension and/or profit-sharing plan known as "Hematology-Oncology Medical Group of Fresno, Inc." (the "Plan"). The judgment further provided that the court "expressly reserves jurisdiction over any and all issues, regardless of nature, relating to the InTrust Pension Account including, but not limited to, issues which may arise concerning the QDRO to effectuate the transfer of same." Declaration of William S. Ryden ("Ryden Dec."), Exh. A.

As of 2001, the community property interests of Plaintiff and Defendant in the Plan, and the separate property interests of Defendant, were maintained at InTrust.*fn3 In 2004, Defendant transferred all of his assets in the Plan from Millennium to an account at Morgan Stanley.

On November 22, 2011, Plaintiff filed an OSC for Enforcement of Judgment and to Implement Division of Community Property Pension in the Fresno County Superior Court action. The order requested that Defendant provide her with an accounting of the parties' community property interests in the Plan. Plaintiff alleges that the OSC was necessary because Defendant refused to advise her of her pension account's location after she learned that it was no longer maintained at its original location. The OSC also requested attorneys' fees and costs. Ryden Dec., ¶ 2.

In response to a deposition notice and request for production of documents, Defendant produced copies of account statements showing that in June 2007, he liquidated Plaintiff's pension account at Millennium in the amount of $431,822.59, and reinvested the funds in an account at Morgan Stanley held in the name of "Marshall S. Flam, Trustee Hematology Oncology Medical Group of Fresno, Inc. Employee Pension Plan fbo MS Flam." Ryden Dec., ¶ 3. Defendant filed a Responsive Declaration to the OSC on May 24, 2012, setting forth this information. Ryden Dec., ¶ 4. The OSC was set to be heard on June 11, 2012.

On June 8, 2012, Plaintiff filed an OSC for Breach of Fiduciary Duty against Defendant in the Fresno County Superior Court action. Plaintiff requested that Defendant pay her $151,263.81 pursuant to California Family Code section 1101(g) as damages attributable to his breach of fiduciary duty to Plaintiff in the management and control of her share of the community property interest in the Plan. She alleges that Defendant is a participant employee in the Plan and Co-Trustee. The acts complained of include Defendant's transfer of assets to Morgan Stanley without Plaintiff's knowledge or consent. Exh. A, attached to Notice of Removal.

The first OSC was heard on June 11, 2012, with only the attorneys' fee issue remaining. On June 18, 2012, Judge Allen-Hill ordered Defendant to pay $12,500.00 in attorneys' fees and found that Defendant's failure and refusal to respond to Plaintiff's requests for the location of her ...


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