United States District Court, N.D. California
SUZANNE D. JACKSON, Plaintiff,
v.
WILLIAM FISCHER, et al., Defendants.
ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT, AND
DENYING MOTION FOR DEFAULT JUDGMENT AS TO UPPER
ORBIT
PHYLLIS J. HAMILTON, United States District Judge
The
motions of plaintiff Suzanne D. Jackson
(“Jackson”) and defendant Joshua Rosen
(“Rosen”) for summary judgment came on for
hearing before this court on January 11, 2017. Jackson
appeared by her counsel Alan Kaufman and Robert Stumpf, and
defendant Rosen appeared by his counsel Mark Peterson and
Matthew Cate. Also appearing was Kyle Withers, counsel for
defendants Jon Sabes, Steven Sabes, Marvin Siegel, and Brian
Campion (“SpeciGen defendants”). Having read the
parties' papers and carefully considered their arguments
and the relevant legal authority, the court hereby DENIES the
motions.
BACKGROUND
The
procedural and factual background of this case is as set
forth in the September 21, 2015, order re defendants'
motions to dismiss and motions to strike certain claims
asserted against them in the fourth amended complaint
(“4thAC”). Briefly, Jackson alleges that she and
Fischer met in October 2006, and that he falsely represented
himself as having extensive investment and management
experience; that he fraudulently induced her to place her
money in various risky investments that he claimed were sound
investments; and that she lost $8.25 million in those
investments.
In June
2011, Jackson filed the present action against numerous
individual and corporate defendants, including Fischer and
the companies in which she invested and the officers and
directors of those companies. She asserted claims of primary
liability for securities fraud under § 10(b) of the 1934
Securities Exchange Act, and Rule 10b-5 promulgated
thereunder, and claims of “control-person
liability” under § 20(a) of the Exchange Act,
along with claims under the California Corporations Code and
the federal Investment Advisers Act. She also alleged common
law claims including fraud, negligent misrepresentation, and
breach of fiduciary duty.
In
April 2012, Fischer filed for Chapter 7 bankruptcy protection
in the Bankruptcy Court for the District of Minnesota.
See In re William Richard Fischer, 12-bk-42128
(Bankr. D. Minn.). He indicated that his sole creditor was
Jackson, based on the claims asserted in the present action.
The Bankruptcy Court discharged the debt. On July 17, 2012,
Jackson filed a complaint in the Bankruptcy Court in
Adversary No. 12-ap-4183 (“the adversary
proceeding”) to determine the dischargeability of
Fischer's debt under 11 U.S.C. § 523(a)(2) and
(a)(4).
Jackson
and Fischer litigated the adversary proceeding, and engaged
in extensive discovery. None of the other defendants in the
present action were involved, although two of the SpeciGen
defendants (Jon Sabes and Steven Sabes) unsuccessfully
attempted to intervene after Jackson moved for an order
compelling them to respond to discovery subpoenas.
On
December 15, 2013, Jackson and Fischer entered into a
confidential Settlement Agreement, pursuant to which Fischer
agreed to pay Jackson a total of $500, 000, with scheduled
payments spread out over nine or ten years. Fischer also
agreed to stipulate to entry of judgment for the
non-dischargeability of Jackson's $8.25 million claim
against Fischer, based on the applicability of 11 U.S.C.
§ 523(a)(2)(A) (money obtained through false pretenses,
false representations, and actual fraud), though not on the
applicability of 11 U.S.C. § 523(a)(4) (money obtained
through embezzlement and larceny).
On
December 17, 2013, Jackson and Fischer filed a stipulation
for judgment, in which Fischer admitted - notwithstanding the
above-described agreement to pay Jackson $500, 000 - that
"he is indebted to plaintiff Suzanne D. Jackson in the
amount of $8, 250, 000.00 as [p]laintiff alleged in her
complaint filed in the above-captioned adversary
proceeding[;] and that "his debt to plaintiff Suzanne D.
Jackson in the amount of $8, 250, 000.00 is non-dischargeable
under 11 U.S.C. § 523(a)(2)(A) because such debts were
obtained by means of false pretenses, false representations,
and actual frauds committed against [p]laintiff as she
alleged in her adversary complaint." On December 18,
2013, the Bankruptcy Court entered a judgment of
non-dischargeability, ordering that Jackson was entitled to
recover from Fischer the sum of $8.25 million, and that the
debt represented by this judgment "is excepted from the
defendant's discharge pursuant to 11 U.S.C. §
523(a)(2)(A)."
DISCUSSION
A.
Legal Standard
A party
may move for summary judgment on a “claim or
defense” or “part of . . . a claim or
defense.” Fed.R.Civ.P. 56(a). Summary judgment is
appropriate when there is no genuine dispute as to any
material fact and the moving party is entitled to judgment as
a matter of law. Id.
A party
seeking summary judgment bears the initial burden of
informing the court of the basis for its motion, and of
identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). Material facts are those that might affect
the outcome of the case. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A dispute as to a
material fact is “genuine” if there is sufficient
evidence for a reasonable jury to return a verdict for the
nonmoving party. Id.
Where
the moving party will have the burden of proof 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). On an issue where the nonmoving party will
bear the burden of proof at trial, the moving party can
prevail merely by pointing out to the district court that
there is an absence of evidence to support the nonmoving
party's case. Celotex, 477 U.S. at 324-25. If
the moving party meets its initial burden, the opposing party
must then set out specific facts showing a genuine issue for
trial in order to defeat the motion. Anderson, 477
U.S. at 250; see also Fed.R.Civ.P. 56(c), (e). When
deciding a summary judgment motion, a court must view the
evidence in the light most favorable to the nonmoving party
and draw all justifiable inferences in its favor.
Anderson, 477 U.S. at 255; Hunt v. City of Los
Angeles, 638 F.3d 703, 709 (9th Cir. 2011).
B.
Plaintiff's Motion
In a
renewed attempt to establish Fischer's “primary
liability” under § 10(b) of the Exchange Act and
Rule 10b-5 promulgated thereunder, Jackson asserts that the
judgment of non-dischargeability in the adversary proceeding
in the Minnesota bankruptcy case is res judicata as to the
Exchange Act claims against Fischer, and that the judgment
also creates collateral estoppel as to "facts and
issues" underlying the primary claims asserted against
Fischer.
Previously,
the defendants moving to dismiss the 4thAC argued that
Jackson had failed to state a claim against them for
“control-person liability” under § 20(a) of
the Exchange Act because she had failed to allege facts
sufficient to state a claim for primary liability against
Fischer under § 10(b) and Rule 10b-5. In opposing the
motions, Jackson asserted that based on the stipulated
judgment in the Minnesota adversary proceeding, defendants
were barred ...