United States District Court, E.D. California
PASKENTA BAND OF NOMLAKI INDIANS; and PASKENTA ENTERPRISES CORPORATION, Plaintiffs,
INES CROSBY; et al., Defendants.
MEMORANDUM AND ORDER
MORRISON C. ENGLAND, JR UNITED STATES DISTRICT JUDSE
February 21, 2017, the Court entered final judgment in favor
of eight Defendants in this suit after all claims against
them had been dismissed pursuant to various prior motions.
See Mem. & Order, ECF No. 378; Final J., ECF No.
379. Umpqua Bank; Umpqua Holdings Corp. (collectively,
“Umpqua”); Cornerstone Community Bank; and
Associated Pension Consultants, Inc. (“APC”)
subsequently filed motions for attorney's fees. ECF Nos.
382, 384, 388. These Defendants, as well as Garth Moore and
Garth Moore Insurance and Financial Services, Inc.
(collectively, “Moore”), also filed bills of
costs, ECF No. 383, 385-87, to which Plaintiffs Paskenta Band
of Nomlaki Indians (“the Tribe”) and Paskenta
Enterprises Corp. (“PEC”) filed objections, ECF
No. 403. For the reasons that follow, the Umpqua
Defendants' and APC's motions for attorney's fees
are DENIED, and Cornerstone's motion is GRANTED.
Furthermore, the Court OVERRULES Plaintiffs' objections
to the bills of costs.
Court has recounted in prior orders, Plaintiffs allege that
Ines Crosby, John Crosby, Leslie Lohse, and Larry Lohse
(collectively, the “Employee Defendants”)- all
employed by the Tribe in executive positions for more than a
decade-used their positions to embezzle millions of dollars
from the Tribe and its principal business entity, PEC.
According to Plaintiffs, the Employee Defendants stole these
funds from Plaintiffs' bank accounts-including accounts
at Umpqua Bank and Cornerstone Community Bank-by withdrawing
large sums for their personal use. Plaintiffs further allege
that the Employee Defendants caused the Tribe to invest in
two unauthorized retirement plans for the Employee
Defendants' personal benefit: a defined benefit plan and
a 401(k) (collectively, “Tribal Retirement
Plans”). The Employee Defendants allegedly kept their
activities hidden from Plaintiffs by various means including
harassment, intimidation, and cyber-attacks on the
go on to assert that Cornerstone, Umpqua, APC, and Moore
knowingly assisted the Employee Defendants in aspects of
their scheme. They contend that Umpqua and Cornerstone
controlled banks where Plaintiffs maintained accounts and,
despite knowing the Employee Defendants were withdrawing
money from these accounts for their personal benefit,
permitted the Employee Defendants to continue making
withdrawals, and failed to notify Plaintiffs of the Employee
Defendants' actions. According to Plaintiffs, APC and
Moore-as the third-party administrator for the Tribal
Retirement Plans and financial advisor, respectively-assisted
the Employee Defendants in setting up and administering the
unauthorized Tribal Retirement Plans.
October 19, 2016, the Court dismissed all the claims against
Umpqua and APC with prejudice for failure to state a claim
pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No.
299. In that same Memorandum and Order, the Court also
granted Moore's Motion for Judgment on the Pleadings
pursuant to Rule 12(c), resolving all claims against it.
Id. On January 24, 2017, the Court granted the
Cornerstone Defendants' Motions for Summary Judgment,
similarly resolving all claims against them. ECF No. 358.
Motions for Attorney's Fees
claims that it is entitled to attorney's fees based on
the contract APC and the Tribe entered into when APC was
hired to design, structure, and administer the Tribal
Retirement Plans. Mem. of P. & A. in Supp. of APC's
Mot. for Attorney's Fees (“APC's Mot.”),
ECF No. 389, at 2. The relevant language in that contract
Employer and Trustee agree to indemnify and hold APC harmless
from and against all claims, losses, damages, liabilities,
costs, and other expenses (including all attorneys' fees,
collection fees or court costs) arising from or in connection
with the operation of the Plan or the rendering of
plan-related services by Employer, Plan Administrator, or any
third party. This indemnification does not include claims,
losses, damages, liabilities, costs, and expenses
attributable solely to any gross negligence or willful
misconduct by APC in the performance of services under this
Decl. of Marc Roberts, ECF No. 391, Ex. 1, at 7.
moving papers, APC appears to give two different, conflicting
interpretations of this language. In its Memorandum of Points
and Authorities in support of its motion, APC claims that the
agreement provides attorney's fees for all claims
made “by the Employer (i.e., the Tribe), Plan
Administrator (i.e., the Tribe), or third parties”
against APC. APC's Mot., at 5. However, in its Reply, APC
claims instead that the indemnification clause identifies two
separate instances in which it is triggered: (1) when claims
“aris[e] from . . . the operation of the Plan, ”
or (2) when claims “aris[e] from ‘the rendering
of plan-related services by Employer, Plan Administrator or
any third party.'” See APC's Reply,
ECF No. 420, at 3.
advance yet a third reading of the contract. They read the
provision to indemnify APC from liability only when claims
arise from actions taken “by Employer, Plan
Administrator or any third party.” See
Pls.' Opp'n to APC's Mot., ECF No. 416, at 4.
That is, they read the provision to indemnify APC for actions
taken by anyone beside APC. They bolster this interpretation
by pointing to the specific carve out for “willful
conduct by APC.” See id. at 5. Accordingly,
they argue that the attorney's fees clause does not apply
to this action because APC's actions were the basis of
its alleged liability. See id.
Court agrees that Plaintiffs' reading of the contract is
the most natural one. It makes little sense to artificially
sever the phrase “by the Employer, Plan Administrator
or any third party” from the rest of the relevant
sentence as APC urges. Plaintiffs' reading also more
closely tracks standard indemnification provisions. At the
very least, the contract is ambiguous, and under California
law, ambiguities are “resolved against the
drafter” of the contract. Winters v. Costco
Wholesale Corp., 49 F.3d 550, 554 (9th Cir. 1995)
(quoting Kunin v. Benefit Tr. Life Ins. Co., 910
F.2d 534, 539 (9th Cir. 1990)). As APC drafted the contract
at issue, this rule also counsels adopting the narrower
reading advocated by Plaintiffs. Accordingly, APC's
motion is DENIED.