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Yu-Sze Yen, et al., Plaintiffs v. Ronald Buchholz

March 20, 2013

YU-SZE YEN, ET AL., PLAINTIFFS,
v.
RONALD BUCHHOLZ, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Ronald M. Whyte United States District Judge

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AGAINST PLAINTIFF KWEI CHOONG'S FOURTH AMENDED COMPLAINT [Re Docket No. 202]

Pursuant to Federal Rule of Civil Procedure 56, defendants William Buchholz ("Pastor Buchholz") and Family Community Church ("FCC") (collectively "defendants") move for summary 19 judgment on the three claims asserted against them by plaintiff Kwei "Kelli" Choong's in plaintiffs' 20 Fourth Amended Complaint (Breach of Fiduciary Duty, Misrepresentation and Concealment, and 21 Constructive Fraud). On July 20, 2012, the court held a hearing on defendants' motion. Having 22 considered the papers submitted by the parties and the arguments of counsel, and for the reasons set 23 forth below, the court grants defendants' motion for summary judgment as to the claims by Choong. 24

I.BACKGROUND

This case concerns several real estate-related investment opportunities in which plaintiffs

26 claim they were fraudulently induced to invest. As relevant to the present motion, plaintiff Kwei 27

"Kelli" Choong ("plaintiff" or "Choong") claims that she was induced by Pastor Buchholz to invest 28 with his children, Ron and Charice, to her detriment. Although Choong in her opposition has introduced evidence of facts bearing on the alleged inducement of other investors, the court limits its 2 summary and analysis to the facts relevant to Choong's claims against Pastor Buchholz and FCC. 3

Choong first met Pastor Buchholz when she began attending FCC in 2001. Dkt. No. 203-5

(Dep. of Kwei "Kelli" Choong ("Choong Dep.")) at 8:19-21. Choong's involvement with FCC was 5 mainly limited to attending sermons, with the exception of her additional participation in the singles 6 ministry. Id. at 8:22-9:8. In connection with her singles ministry work, Choong had numerous 7 conversations with Pastor Buchholz. Id. at 9:9-15. 8 9 and Christian Stewardship, called "Dollars and Sense." Dkt. No. 202-2 (Affid. of William E.

Flyers for one of the workshops, signed "Pastor Bill," stated: "While there is no guarantee that 14 anyone can make on being able to achieve a 10% consistent return, it is important to bring education 15 to our people in practical areas of stewardship that have the potential to realize substantial 16 investment growth. Equity Enterprises has a strong record of helping people invest wisely so we felt 17 it would be a service to our membership to bring this seminar to our campus for convenience' sake." 18

Id. Choong, however, does not claim to have read the flyer, or attended any of the workshops that 19 followed the "Dollars and Sense" sermon series. 20

21 limited email correspondence with Steve Pruitt, the pastor of Gateway Church, about investing with 22

Buchholz testified that Pastor Pruitt initiated the conversation: "[He] had asked me about my son and 24 about possible ways to be able to get connected to him. We were at a luncheon meeting, at a 25 ministers meeting, and he came up and asked me about it." Dkt. No. 203-3 (Dep. of William E. 26

Pastor Pruitt indicated that he had heard some troubling "rumors" about Solomon Capital: 28

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AGAINST PLAINTIFF KWEI CHOONG'S FOURTH AMENDED COMPLAINT-Case No. C-08-03535 RMW

Beginning in January 2003, Pastor Buchholz delivered a four-part sermon series on Tithing Buchholz ("Buchholz Affid.")) ¶ 17; Dkt. No. 202-5. Following this sermon series, Pastor Buchholz invited parishioners to attend a variety of educational workshops about estate planning, investment, and retirement planning that were designed and led by outside professionals. Buchholz Affid. ¶ 18. 13 Beginning in December 2003 and continuing through May 2004, Pastor Buchholz engaged in Solomon Capital, a company affiliated with Ron and Charice. Dkt. No. 203-4, Ex. 52. Pastor 23 Buchholz ("Buchholz Dep.")) at 67:9-15. On May 25, 2004, following several previous emails, 27 One question-when I discussed this with my Board after I had lunch with Ron, one of the guys said that he had "heard" that people at FCC had mortgaged their houses to invest and had never gotten their money back. I know, that usually in these "rumors" there is a lot more to it, or wires are crossed and may not be applicable to what Ron does at all. But I wanted to give Ron a "head's up" so he will not be blindsided. Dkt. No. 203-4, Ex. 52. Pastor Buchholz did not respond to Pastor Pruitt's email, later explaining 4 that "[t]here was no response for me to have to it. I didn't know what he was talking about and I had 5 not heard that . . . I never heard anything more about it." Buchholz Dep. at 70:5-13. 6

Charice, given their involvement in the real estate business. Id. at 12:5-16. Following this 9 conversation, over the course of approximately a two-week period, Pastor Buchholz and plaintiff 10 exchanged a number of emails on the subject: On July 28, 2005, plaintiff thanked Pastor Buchholz for taking the time to talk with her, and indicated that she wanted to peruse Ron and Charice's company website before looking at a prospectus. Dkt. No. 203-4, Ex. 59. 13 14 requested the Luxury Development prospectus for "another potential investor for you that is a single 15 gal at our church with some $$$to invest." Id. Keirstead advised that the company could not 16 provide a prospectus until the potential investor completed an Investor Information Form. Id. 17 Form, with instructions that she must fill it out and mail it to Solomon Capital to determine her 19 eligibility to invest. Id. In the same email, Pastor Buchholz stated: "FYI, Melody and I have 20 invested in several of these Solomon Capital projects and so have other churches with great 21 satisfaction." Id. On Saturday, July 30, 2005, Pastor Buchholz sent an additional email to plaintiff, 22 in which he said, "This is probably your best way to go to get long term gain . . . . Melody and I have 23 had several projects we have invested in and done very well. So have at least 20 other individuals at 24 FCC 3 churches in Silicon Valley. The 3 churches have invested over $700,000 in Ron's projects 25 and when their projects were completed and profits paid they reinvested the entire amounts again." 26 Id. Pastor Buchholz explained that he described real estate investment to plaintiff as the "best way 27 to go to get long term gain" because, during their initial conversation, plaintiff had indicated that In 2005, plaintiff approached Pastor Buchholz to ask for a realtor recommendation. Choong Dep. at 11:16-12:4. Pastor Buchholz suggested that plaintiff speak with his son, Ron, or daughter, 8 United States District Court

For the Northern District of California

11

12

The next day, in an email to Anna Keirstead of Solomon Capital, Inc., Pastor Buchholz

Subsequent to this exchange, Pastor Buchholz emailed plaintiff a copy of the Investor Information 18

"she would really prefer to get into something where she didn't have to have hands on." Buchholz

Case5:08-cv-03535-RMW Document226 Filed03/20/13 Page4 of 11

Dep. at 93:12-21. Pastor Buchholz did not share with plaintiff the "rumors" that Pastor Pruitt related 2 to him in May 2004. See id. at 70:16-71:6 ("I don't remember doing anything because he called 3 them rumors. And I've heard a lot of rumors in my day and, if I responded to all the rumors, I'd 4 never get anything done."); Dkt. No. 203-1 ("Choong Decl.") ¶¶ 14-17. 5

6 correspondence, until plaintiff sent an email on Thursday, August 11. Dkt. No. 203-4, Ex. 59. In 7 this email, plaintiff thanked Pastor Buchholz for the referral to Ron and Charice, and then inquired 8 about whether or not Solomon Capital makes any exceptions to the requirement that an investor have 9 at least one million dollars in net worth. Id. Pastor Buchholz responded later that afternoon with a 10 simple question: "How much are you trying to invest?" Id. Plaintiff replied (also on August 11) that

11

12

Following the July 30 exchange, there was a lapse in plaintiff and Pastor Buchholz's

she intended to invest approximately fifty thousand dollars. Id. Following these emails, there is no

United States District Court

For the Northern District of California

evidence of additional communication between plaintiff and Pastor Buchholz regarding plaintiff's 13 decision to invest in Solomon Capital. Pastor Buchholz declares that he never gave any investment 14 materials to Choong and did not learn that she had invested until the initiation of this lawsuit. Dkt. 15

Some of Pastor Buchholz's investments with Ron and Charice were lost, including

17 approximately $342,000 he invested in Solomon Towers. Dkt. No. 203-3 (Buchholz Dep.) at 98:2-18

99:7; Dkt. No. 207-1, Ex. G (chart showing Pastor Buchholz's investments and when, or if, they paid 19 out). However, Pastor Buchholz asserts he did not lose money in Solomon Towers until mid-2007, 20 long after he had communicated with Choong about investing. Dkt. No. 207 at 17 ¶ 7. Mark 21

2006 that "the money invested was lost, at specific projects," although he could not identify which 23 projects. Dkt. No. 203-6 (Dep. of Mark Putney) at 123:10-124:21. There is no evidence that Pastor 24

Buchholz informed Choong of his losses, but there is no evidence that he had suffered any loss at the 25 time of his communications with Choong. 26 27 28

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AGAINST PLAINTIFF KWEI CHOONG'S FOURTH AMENDED COMPLAINT-Case No. C-08-03535 RMW

No. 207 (Buchholz decl. ¶ 11). 16

Putney, formerly a consultant for Solomon Capital, testified that he learned after leaving FCC in fall 22

Case5:08-cv-03535-RMW Document226 Filed03/20/13 Page5 of 11

3

4 that defendants owed and breached a fiduciary duty to plaintiff. Pellegrini v. Weiss, 165 Cal. App. 5

4th 515, 524 (2008) ("The elements of a cause of action for breach of fiduciary duty are: 1) the 6 existence of a fiduciary duty; 2) a breach of the fiduciary duty; and 3) resulting damage."); Gold v. 7

II.ANALYSIS

A.Claims for Breach of Fiduciary Duty and Constructive Fraud

Plaintiff's claims for breach of fiduciary duty and constructive fraud both require a showing

Los Angeles Democratic League, 49 Cal. App. 3d 365, 373 (1975) ("'Constructive fraud' arises from 8 a breach of duty by one in a confidential or fiduciary relationship to another which induces a 9 justifiable reliance by the latter to his prejudice."). 10

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