PETER C. McKITTRICK, Bankruptcy Judge.
This matter came before the Court on October 24, 2017,
Plaintiff moved for summary judgment on defendants' second counter-claim, for wrongful initiation of civil proceedings. Doc. 199 (hereinafter "Plaintiff's Motion").
The court shall grant summary judgment when the moving party shows that there is no genuine dispute of material facts and that the party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Fed. R. Bankr. P. 7056. In deciding the motion, the court must view the evidence in the light most favorable to and draw all justifiable inferences in favor of the non-moving party.
With the exception of the RICO claim, plaintiff's claims are all based on state law. As a result, this court must first determine which state's law applies. "In federal question cases with exclusive jurisdiction in federal court, such as bankruptcy, the court should apply federal, not forum state, choice of law rules."
The substantive claims at issue are tort claims. The Second Restatement states a "general principle" for tort claims:
The applicable statute of limitations is also at issue in several of plaintiff's claims. The Ninth Circuit has adopted the following analytical framework for addressing statute of limitations issues:
Plaintiff's first claim, for conversion, alleges that defendants converted both real and personal property belonging to him when, in 2005, they took possession of 105 Baywood Ave., Hillsborough, CA (the "Baywood Property") and personal property that plaintiff stored there. Complaint, ¶¶ 103-14. Defendants seek summary judgment on this claim on several grounds. Defendants' Memorandum in Support of Defendants' Motion for Partial Summary Judgment, Doc. 217 (hereinafter "Defendants' Memo"). I conclude that, because plaintiff's claim for conversion of personal property is barred by the statute of limitations, I need not reach defendants' other arguments about converted personal property. The remainder of plaintiff's claim fails, because real property cannot form the basis of a conversion claim.
This court applies federal common law, as it must, to determine the applicable statute of limitations to the conversion claim. Pursuant to federal common law, the forum state statute of limitations applies if it would bar the claim. If it would allow the claim, the forum state statute of limitations applies unless the forum state has no interest in the claim and the statute of limitations of a state having a more significant relationship to the parties and the occurrence would permit the claim.
Under Oregon law, a claim for conversion must be brought within six years and accrues when the plaintiff knew or reasonably should have known the elements of his claim.
On June 5, 2009, plaintiff filed a First Amended Cross-Complaint in the Superior Court of California in Orange County ("2009 Complaint") against several of the same defendants named in this action.
Plaintiff briefly addressed the statute of limitations in his Response. He first argued without explanation that a pending action in state court related to the Paul and Klara Szanto Revocable Trust's (hereinafter the "Trust") ownership of the Baywood Property tolls the statute of limitations. However, plaintiff cited no law supporting his position and this court found none. Plaintiff further argued that Cal. Prob. Code § 10382 operates to toll the statute of limitations, because a final accounting for the Trust was not made to plaintiff. Plaintiff argues that, if Oregon law applies, ORS 115.005(5)(a) exempts his cause of action from any statute of limitations, because part of the relief he seeks in this claim is to reform the title of the Baywood Property or quiet title in his favor.
As explained above, Oregon law applies. However, ORS 115.005 is inapplicable. This statute relates to claims against the estate of a decedent. None of the defendants in this adversary proceeding is an estate. Accordingly, plaintiff's arguments that the statute of limitations applicable to his claims was tolled are not well taken. Moreover, Cal. Prob. Code § 10382 does not aid plaintiff. Cal. Prob. Code § 10382 sets out when an action may be maintained against a personal representative of a trust pursuant to Cal. Prob. Code § 10380. Plaintiff's claim for conversion is not a claim under Cal. Prob. Code § 10380. Therefore, although there is very little case law interpreting Cal. Prob. Code § 10382, this statute does not appear to apply to the context in which plaintiff seeks to put it to use.
Plaintiff knew of his conversion claim at least by June 2009, thus the claim accrued more than seven years before plaintiff filed this adversary proceeding in December 2016.
Plaintiff also claims conversion of the Baywood property itself. Because the claim fails under either Oregon or California law, I need not determine which state's law should apply.
Oregon adopts the definition of conversion set forth in
Under California law, "[t]he basic elements of the tort of conversion are (1) plaintiff's ownership or right to possession of personal property; (2) defendant's disposition of property in a manner inconsistent with plaintiff's property rights; and (3) resulting damages."
Because real property cannot form the basis of a conversion claim under either Oregon or California law, this portion of plaintiff's conversion claim also fails.
Summary judgment for defendants will be entered on plaintiff's first claim for relief.
Defendants move for summary judgment on plaintiff's identity theft claim on the basis that plaintiff has no evidence to support his claim. Defendants support their contention with deposition testimony from plaintiff in which plaintiff testified that his brothers Victor and Anthony Szanto had motive, opportunity, and ability to steal his identity and that the timing coincided with contentious litigation between the parties related to the probate of their parents' estate.
As an initial matter, it appears that both Oregon and California recognize a private right of action for identity theft. Under California law:
Although Oregon appellate courts do not appear to have directly addressed the issue, Oregon district courts have interpreted "chattels" to include intangible property such as broadcast licenses, the right to bring a lawsuit, and patent rights.
Because the elements of the cause of action are substantially different in Oregon and California, a choice of law issue exists. Applying federal conflict of law analysis, this court must next determine "the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties," as determined by the place of the conduct and injury, the domicile or residence of the parties, and the place where the parties' relationship is centered.
At the time of the alleged conversion, all parties were located in California and at least some, including plaintiff, were citizens of California. Moreover, the alleged conversion took place in California. None of plaintiff's allegations related to this claim implicate people who were Oregon citizens at the time, Oregon property, or Oregon law. Moreover, this claim does not present any novel issues that would hinder this court in applying California law. By contrast, novel issues do exist under Oregon law. Accordingly, California has the most significant relationship to the occurrence and parties and California law will be applied.
Defendants argue that plaintiff failed to provide any evidence to support his claim. Mere allegations that the defendants had a motive and opportunity to improperly use plaintiff's personal identifying information are insufficient to defeat a motion for summary judgment.
However, plaintiff failed to produce
Taking together plaintiff's allegations in his complaint and his deposition testimony, and plaintiff's failure to present any specific evidence of identity theft, plaintiff's allegations amount to mere conclusory statements and are insufficient to overcome defendants' summary judgment motion on this claim. Accordingly, judgment for defendants will be entered on plaintiff's second claim for relief.
Plaintiff's third claim, a claim for relief under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), is based on alleged collusion by defendants to deprive him of the same property addressed by his conversion and identity theft claims discussed above. Defendants move for summary judgment on the basis that plaintiff has failed to produce any evidence in support of his claims that defendants acted improperly with respect to any of the allegations leveled against them. "To state a [RICO claim], a plaintiff must allege `(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.'"
Plaintiff alleges that defendants' theft of his identity constitutes a "racketeering activity." However, the court need not reach that issue. As discussed above, plaintiff produced no evidence to support his underlying claims of identity theft. As a result, the RICO claim based on the same allegations also fails.
Plaintiff also claims that defendants violated RICO when they converted his interest in the Baywood Property and his personal property located there. Defendants argue that no evidence exists to support plaintiff's claims. Defendants' Memo, p. 20. Although plaintiff does not address defendants' Motion as it relates to the RICO claim specifically, plaintiff alleges that defendants failed to produce the evidence contained within "boxes and boxes and boxes" of documents from his mother that are in Victor Szanto's custody.
Specifically, plaintiff argues that defendants withheld relevant documents in the "boxes and boxes and boxes" in Victor Szanto's possession. Presumably, plaintiff is arguing that he was prevented from producing sufficient evidence because defendants failed to turn over discovery plaintiff specifically requested in the discovery process. Beyond his argument regarding the "boxes" of documents, plaintiff does not address defendants' motion with respect to his RICO claim, much less supply the court with any evidence in support of his claim.
At the time of his deposition on June 8, 2017, Victor Szanto testified that he had boxes of documents from his parents' estate that he had not "begun to comb through yet." Plaintiff's Response, Ex. C, p. 2-3. However, on August 8, 2017, defendants filed the Declaration of Victor Szanto in Support of Defendants' Response to Plaintiff's Third Motion to Compel Production of Documents, Doc. 184, p. 64-66 (hereinafter "Victor Szanto Declaration"), which stated that "I have produced all documents that are in any way related to Plaintiff Peter Szanto, his allegations in this case, or the defenses asserted by the Defendants in this case." Plaintiff produced no credible evidence of his own to challenge the Victor Szanto Declaration and merely speculates that defendants' production is incomplete. Although the court recognizes that requiring a party to prove the existence of documents to which he does not have access presents a significant challenge, plaintiff has provided no documentation of any sort to support his claims. If the facts alleged in the Complaint are true, the court would expect that there would be some evidence beyond the "boxes and boxes" of documents sought by plaintiff. In the absence of something more than plaintiff's mere speculation that defendants' production was inadequate and in light of the evidence submitted in Victor Szanto's Declaration, the court does not find plaintiff's arguments regarding the "boxes" of documents meritorious.
Accordingly, plaintiff's bare allegations that defendants have not been fully compliant with the requirements of discovery are not sufficient to sustain his RICO claim. Plaintiff has not provided sufficient evidence to sustain his RICO claim and summary judgment will be granted.
Defendants move for summary judgment on plaintiff's fourth claim for relief, breach of fiduciary duty, on the basis that plaintiff lacks any evidence to support his claim.
Under both California and Oregon law, "[t]he elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach."
In support of their motion as it relates to plaintiff's breach of fiduciary duty claim, defendants argue that plaintiff failed to (1) establish a fiduciary relationship and (2) demonstrate proof of any breach of such a duty.
In support of defendants' first argument, that plaintiff failed to prove the existence of a fiduciary duty, defendant Victor Szanto provided a declaration to which was attached a true and correct copy of Klara Szanto's last will (Ex. 13), an instrument entitled "The Paul and Klara Szanto Revocable Trust" (Ex. 14), an instrument entitled "The Paul Szanto Survivor's Trust" (Ex. 15), and Paul Szanto's last will (Ex. 16). Defendants argue that none of the attached documents establish a fiduciary relationship between plaintiff and any of the defendants. In response, plaintiff provided a copy of an earlier iteration of the Paul and Klara Szanto Revocable Trust document. Plaintiff's Response, Ex. H. This earlier iteration, unlike the iteration submitted by defendants, includes plaintiff as a beneficiary of the Trust. Plaintiff appears to argue that the changes resulting in the later iteration were obtained by improper methods and, therefore, the later iteration is void. However, I agree with defendants that plaintiff provides insufficient evidence to support this argument.
Plaintiff alleged that defendants obtained the changes to the trust through various types of elder abuse and manipulation. Complaint, ¶¶ 58-65. When asked about these allegations, plaintiff testified in his deposition that he had no direct evidence in support of the allegations he made but instead that he deduced these facts from vague statements made by his mother in combination with her failure to answer certain questions he put to her over the telephone. Henderson Decl. Ex. 1, pp. 13-15. In plaintiff's Response, he repeats the allegations that his parents were subjected to "enormous psychological and physical pressure, both emotional and physical," Plaintiff's Response, p. 13, but again fails to provide any evidence in support of this allegation. Plaintiff's vague allegations are insufficient to survive summary judgment. Plaintiff's sole basis for asserting abuse of his mother was a telephone conversation he had with his mother at a time when plaintiff was purportedly located in a hospital bed in Israel.
Plaintiff has not demonstrated that anything beyond a "scintilla of evidence" exists to support his claims that a fiduciary relationship exists between plaintiff and Victor and Anthony Szanto. Accordingly, defendants' motion for summary judgment as to plaintiff's breach of fiduciary duty claim will be granted.
For his fifth claim, fraud, plaintiff alleges that defendants made false and fraudulent statements "regarding plaintiff's identity which they knew to be untrue (particularly that they had right (or implication of the right) to use plaintiff's identity)." Complaint, ¶ 137. Plaintiff further alleges that he was damaged by these representations because banks and other lenders relied on these representations and loaned money on that basis, which was never repaid. Complaint, ¶¶ 140-42. Plaintiff alleges he suffered further damage when the unrepaid loans resulted in collection activities and negative credit reporting. Complaint, ¶¶ 142-43.
Defendants seek summary judgment on this claim, arguing that plaintiff inadequately pled his claim and cannot satisfy his burden of proof on at least two of the elements of fraud: (1) defendants' intent that plaintiff rely on their alleged misrepresentations; and (2) actual reliance.
Under Oregon law,
Under California law,
Under both California and Oregon law, it is settled that, to state a cause of action for deceit based on a misrepresentation, a plaintiff must plead that he or she actually relied on the misrepresentation.
Plaintiff's fraud claim is based on the same set of facts as plaintiff's identity theft claim. Under either California or Oregon law, plaintiff's claim fails: Plaintiff's pleadings state that defendants' alleged representations "induce[d] others (ie — banks and other lenders) to act on their false representations." Complaint, ¶ 140. Nowhere does plaintiff allege or provide proof that plaintiff relied on false representations made by defendants. Accordingly, plaintiff failed to adequately plead a claim for fraud against defendants. Moreover, plaintiff failed to produce
Accordingly, defendants' motion for summary judgment on plaintiff's fifth claim for relief will be granted.
Plaintiff's claim for conspiracy is rooted solely in his identity theft claim. Complaint, ¶ 147. With limited exceptions that are not applicable here, "conspiracy is not an independent tort under Oregon law" and "civil conspiracy is not a separate theory of recovery . . . ."
As explained above, summary judgment will be granted for defendants on plaintiff's identity theft claim based on plaintiff's failure to demonstrate that there is a material issue of fact in support of his claim. Because there is no independent claim for conspiracy, and in any event the claim underlying plaintiff's conspiracy claim does not survive summary judgment, defendants' motion for summary judgment as to plaintiff's conspiracy claim will also be granted.
Plaintiff's seventh claim, that defendants improperly created income tax liability in plaintiff's name, also fails. Plaintiff alleges that defendants stole his identity, incurred debt in his name and, when that debt was forgiven, he was charged with forgiveness of indebtedness income, resulting in tax liability.
Plaintiff's claim fails for the same reason that plaintiff's identity theft claim fails: Plaintiff has failed to produce any credible evidence that defendants stole his identity. He did not provide any evidence of any debts incurred in his name that were forgiven. In response to discovery requests regarding debts incurred in his name, plaintiff asserted he had requested such information from the IRS and it would be forthcoming. However, as outlined above, there is no reason why plaintiff would not have direct access to bank statements, credit card statements and other financial information substantiating his claim, without having to rely on the IRS. Moreover, given that the identity theft and alleged debts date back several years, plaintiff has had ample time to obtain such documents. Plaintiff was unable to produce even a "scintilla of evidence" that defendants stole his identity or that there were debts created in his name that were forgiven. Therefore, summary judgment will be granted on his claim for improper creation tax liability based on that theft.
Plaintiff's emotional distress claim is based on the "psychic injuries" he alleges he sustained as a result of defendants' alleged conversion of his real and personal property and identity. Complaint, ¶¶ 151-52. Defendants argue that plaintiff failed to produce any evidence of the underlying harm and, therefore, cannot make out a claim for either intentional or negligent infliction of emotional distress. Defendants' Supplemental Memorandum in Support of Defendants' Motion for Summary Judgment (hereinafter "Defendants' First Supplemental Memo"), Doc. 302. Defendants also argue that plaintiff's claim is barred by the applicable statute of limitations. Defendants' Second Supplemental Memorandum in Support of Defendants' Motion for Partial Summary Judgment (hereinafter "Defendants Second Supplemental Memo"), Doc. 312.
Because this is a state law claim, the court must first determine which state's law to apply.
Under Oregon law, a plaintiff may recover emotional distress damages only when the harm is tied to a physical injury.
Under California law,
Both Oregon and California apply a two-year statute of limitations to emotional distress claims. ORS 12.110; Cal. Civ. Proc. § 335.1;
Plaintiff's emotional distress claim is based on the alleged conversion of plaintiff's property and theft of his identity. For the reasons set out above, as of June 5, 2009, plaintiff knew or should have known about the existence of his claims for emotional distress related to the alleged conversion of his money, real property, and personal property. Accordingly, the claim falls outside the two-year statute of limitations and is barred.
Plaintiff argues that the statute of limitations with regard to conversion of property is tolled by the presence of ongoing litigation or litigation that never resulted in a final judgment against him.
In support of his proposition that existence of prior litigation addressing some of the same factual allegations made in the present litigation tolls applicable statutes of limitations here, plaintiff cites
The
The 2006 litigation to which plaintiff refers appears to be Case No. 115212 in the Superior Court of the State of California in and for the County of San Mateo, which is a "Petition for Order Confirming Transfer of Trust Assets" pursuant to Probate Code § 172001.1 (hereinafter "2006 Case"), attached as Exhibit D to Plaintiff's Motion for Summary Judgment. The 2006 Case was filed by plaintiff's father and brother Victor. In addition to the complaint in that case, plaintiff supplied an undated "Case Information" sheet that shows that the case is "active" and lists defendants Victor and Anthony Szanto as "petitioners." However, plaintiff provides no evidence that his claims in this action were compulsory counterclaims, or that he either asserted them or is not yet required to assert them. As explained above, where the moving party has properly supported its motion for summary judgment, the party opposing judgment must provide specific facts showing that there is a genuine issue for trial.
The second portion of plaintiff's emotional distress claim stems from the alleged theft of his identity. As discussed above, plaintiff produced no evidence to support his claim of identity theft. As a result, plaintiff's emotional distress claim as it relates to the alleged identity theft fails to meet the requirement that plaintiff demonstrate evidence that defendants engaged in outrageous conduct that caused plaintiff's emotional distress.
For these reasons, plaintiff has failed to demonstrate that any triable issue of fact remains on his emotional distress claim. Accordingly, summary judgment will be entered for defendants.
Plaintiff argues in his summary judgment motion that transfers of assets of his parents' trust should be declared void, relying on state voidable transactions laws. Defendants respond correctly that plaintiff has not pled a claim for avoidance of transfers. Plaintiff asks in his reply that he be allowed to amend his complaint to add a claim to avoid the transfers.
Plaintiff's request to amend the complaint to assert an avoidance action comes too late. Although leave to amend should be freely given under Fed. R. Civ. P. 15, that liberality is limited by the scheduling order entered in this case pursuant to Fed. R. Civ. P. 16. That scheduling order, entered in November 2016, Doc. 21, requires that amendments to pleadings occur within 120 days of the filing of the complaint. Plaintiff does not assert any new information or facts that he has learned that would justify extending that deadline to allege a new claim based on the same facts that he has known since at least 2009. Therefore, his request to amend his complaint to add a voidable transfer claim is denied.
The parties filed cross-motions for summary judgment on defendants' second counter-claim for wrongful initiation of civil proceedings. Plaintiff moves for summary judgment against defendants' claim on the basis that defendants lack adequate evidence to support their claim.
Under Oregon law, a claim for wrongful use of civil proceeding requires the claimant to show:
Under California law, the analogous tort — malicious prosecution — "is committed whenever a prior action is brought with malice and without probable cause by the plaintiff, and is subsequently terminated in favor of the defendant."
Plaintiff argues that defendants failed to produce documents plaintiff properly requested substantiating their claim and therefore should be sanctioned in the form of a bar to their claim. During discovery, plaintiff requested production of "all documents which substantiate and confirm" Anthony Szanto's claim during his deposition that plaintiff had sued him between 60 and 100 times, to which defendants responded that no documents exist. Plaintiff's Motion, Ex. C-2. All parties agree that plaintiff has not sued Anthony Szanto between 60 and 100 times.
Despite failing to produce any documents of incidents where plaintiff had sued defendants in the past, in response to plaintiff's motion for summary judgment, defendants provided a list of prior lawsuits by plaintiff against defendants, along with declarations of Victor Szanto, Anthony Szanto, and Evye Szanto listing lawsuits plaintiff had filed against them. Defendants' Response to Plaintiff's Concise Statement of Material Facts, Sch. 1; Decl. of Victor Szanto; Decl. of Anthony Szanto, Decl. of Evye Szanto (Doc. 231).
The court finds it troubling that, despite plaintiff's request for documents to substantiate their claim of wrongful initiation of civil proceedings, defendants failed to provide any documents and instead stated that none exist. Now, in response to plaintiff's motion for summary judgment, they list lawsuits on which they rely for their claim. Nonetheless, plaintiff does not appear to have been prejudiced by defendants' failure. Plaintiff presumably has equal knowledge of and access to documents related to the number of times he has sued defendants. Moreover, because summary judgment will be denied to both sides, defendants will be required to present evidence in support of their claim and plaintiff will be afforded the opportunity to rebut their evidence.
Plaintiff's motion for summary judgment is more accurately characterized as a motion for sanctions based on defendants' failure to produce documents regarding litigation between the parties. However, if plaintiff wished to seek a discovery sanction based on this discovery issue, he should have filed a motion for discovery sanctions. He elected not to do that. A motion for summary judgment is not the appropriate vehicle for requesting such relief. Moreover, based on the evidence before the court, there remains a genuine issue of material fact as to the number of times plaintiff has sued defendants and the outcome of those suits. Accordingly, plaintiff's motion will be denied.
As to defendants' motion for summary judgment on their counter-claim for wrongful use of civil proceedings, plaintiff argues that defendants failed to put him on adequate notice of the basis for their motion for summary judgment. I agree.
Defendants failed to provide sufficient information about their claim to allow the court to determine whether Oregon of California law applies. However, the law in both states requires a showing that plaintiff lacked probable cause to bring the complained of litigation and that the litigation was terminated in defendants' favor. Defendants have failed to carry this burden on summary judgment.
Defendants' Memo merely lists the elements of their claim and states that "the evidence submitted herewith demonstrates that the first four elements have been satisfied." Defendants' Memo, p. 21.
Defendants' Concise Statement of Material Fact in Support of Defendants' Motion for Summary Judgment (Doc. 218, hereinafter "Defendants' CSOF") references several instances of litigation between plaintiff and at least some of the defendants.
Defendants do not provide sufficient evidence from which the court can discern the ultimate conclusion of the 2005 litigation involving Phillip Szanto.
The court has considered the other arguments raised by the parties. For the reasons stated above, the court need not reach them or they are moot, immaterial, or otherwise without merit and will not be addressed separately.
Defendants' motion for summary judgment motion will be granted as to all of plaintiff's claims. Plaintiff's and defendants' cross-motions for summary judgment as to defendants' second counter-claim will be denied.
