American General Life Insurance Company v. Razmik Khachatourians et al

Filing 173

ORDER by Judge Dean D. Pregerson: denying 144 Defendant Bryan Mansons Motion for Summary Judgment. (lc). Modified on 10/24/2012 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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AMERICAN GENERAL LIFE
INSURANCE COMPANY,

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Plaintiff,
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v.
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RAZMIK KHACHATOURIANS,
individually and as a
principal of LIGHTHOUSE
INSURANCE MARKETING, and
principal of PROLINKS
INSURANCE SERVICES, INC.;
CONRAD RIOS, an individual;
EDUARDO LABINPUNO, et al.,
Defendants.
___________________________

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Case No. CV 08-06408 DDP (RZx)
ORDER DENYING PLAINTIFF’S MOTION
FOR SUMMARY JUDGMENT AS TO THE
SECOND AMENDED COMPLAINT

[Docket No. 144]

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Presently before the court is Defendant Bryan Manson’s

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(“Defendant”) Motion for Summary Judgment on Plaintiff/ Assignee

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National Financial Corp.’s (“Plaintiff”) Second Amended Complaint

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(“SAC”).

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DENIES Defendant’s Motion in its entirety.

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I.

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After reviewing the parties’ moving papers, the court

Background
American General Life Insurance Company (“AGLIC”) has assigned

its claims against Defendant to Plaintiff.

Defendant seeks summary

judgment on Plaintiff’s three claims against him: conspiracy t

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commit fraud, aiding and abetting fraud, and fraud.

(Defendant’s

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Memorandum in Support of Defendant’s Motion for Summary Judgment

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(“Motion”)

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licensed California attorney, who was the in-house counsel for

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Prolinks.

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Statement of Genuine Issues (“SGI”) ¶¶ 4-5.)

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corporation that submitted life insurance applications to AGLIC,

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through an intermediary agency.

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resulting from several such applications are at issue in this case.

at 1:12-22; SAC ¶¶ 130-44, 166-70.)1

Defendant is a

(Plaintiff/ Assignee National Financial Partners Corps
Prolinks is a

(SGI ¶¶ 7-8.)

The policies

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(SGI ¶¶ 8, 10.)

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insurance policy to certify that the person paying for the policy

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was the insured, the insured’s family, or the insured’s employer.

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(See Klappa Decl.; Klappa Decl. Exs. A-D.)

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was allegedly made for the policies now at issue.

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alleged that Defendant wrote checks for premium payments on these

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policies to make it look like the insured had paid Defendant’s

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company.

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financed these payments, and bought the beneficiary interest in the

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policy soon after it was issued.

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Opposition to Defendant’s Motion for Summary Judgment (“Opp’n”) at

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10:18-25; Plaintiff/Assignee NFP’s Separate Statement of Genuine

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Issues and Material Fact (“SSGI”) ¶¶ 6-10.)

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whether there is evidence that Defendant knew of and participated

AGLIC allegedly required the agent issuing a life

(Opp’n at 14:11-28.)

Such a certification
Id.

It is

However, Deutsche Bank allegedly

(Plaintiff’s Memorandum in

Key to this motion is

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This order has been issued for all three related cases between Plaintiff
and Defendant: AGLIC v. Fernandez, et al. (CV 09-03198 DDP (RZx)); AGLIC v.
Munshi, et al. (CV 08-06439 DDP (RZx));AGLIC v. Khachatourians et al. (CV 0806408 DDP (RZx)). These cases involve the same issues, claims, and facts, and
were not consolidated because a motion to do so was filed after the same trial
date was set for each. (See Order Granting Defendant’s Motion for Leave to File
a First Amended Answer and Vacated the Motion to Consolidate Three Related Cases
as Moot.) All citations to the record refer to the 09-03198 case number.

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in the alleged misrepresentation regarding the source of payment

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for these policies.

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II. Legal Standard

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Summary judgment shall be granted when a movant “shows that

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there is no genuine dispute as to any material fact and the movant

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is entitled to judgment as a matter of law.”

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56(a).

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a party who fails to make a showing sufficient to establish the

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existence of an element essential to that party’s case, and on

FED. R. CIV. P.

In other words, summary judgment should be entered “against

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which that party will bear the burden of proof at trial.”

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Pomona Valley Hosp. Med. Ctr., 630 F.3d 794, 798-99 (9th Cir.

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2010)(internal quotation marks omitted).

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Parth v.

To satisfy its burden at summary judgment, a moving party must

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produce facts for each element which it has the burden of proof at

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trial “sufficient for the court to hold that no reasonable trier of

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fact could find other than for the moving party.”

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United States, 799 F.2d 254, 259 (6th Cir. 1986) (emphasis

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omitted).

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either produce evidence negating an essential element of the

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nonmoving party’s claim or defense or show that the nonmoving party

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does not have enough evidence of an essential element to carry its

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ultimate burden of persuasion at trial.”

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Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000);

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see also Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001)

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(en banc) (“When the nonmoving party has the burden of proof at

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trial, the moving party need only point out ‘that there is an

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absence of evidence to support the nonmoving party’s case.’”)

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(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986), and

Calderone v.

A moving party without the burden of persuasion “must

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Nissan Fire & Marine Ins.

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citing Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th

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Cir. 2000) (holding that the Celotex “showing” can be made by

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“pointing out through argument–

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plaintiff’s claim”)).

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If the party moving for summary judgment meets its initial
burden of identifying for the court the portions of the
materials on file that it believes demonstrate the absence
of any genuine issue of material fact, the nonmoving party
may not rely on the mere allegations in the pleadings in
order to preclude summary judgment[, but instead] must set
forth, by affidavit or as otherwise provided in Rule 56,
specific facts showing that there is a genuine issue for
trial.
T.W. Elec. Serv., Inc., v. Pac. Elec. Contractors Ass’n, 809 F.2d

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the absence of evidence to support

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626, 630 (9th Cir. 1987) (internal citations, quotation marks, and
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emphasis omitted).
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At the summary judgment stage, the Court does not make
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credibility determinations or weigh conflicting evidence, and views
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all evidence and draws all inferences in the light most favorable
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to the non-moving party.

See id. at 630-31 (citing Matsushita

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Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587
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(1986)); see also Hrdlicka v. Reniff, 631 F.3d 1044 (9th Cir.
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2011); Miranda v. City of Cornelius, 429 F.3d 858, 860 n.1 (9th
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Cir. 2005).

Speculative testimony in affidavits and motion papers

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is insufficient to raise genuine issues of fact and defeat summary
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judgment.

Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730,

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738 (9th Cir. 1979).

As the Supreme Court has stated, “[t]he mere

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existence of a scintilla of evidence . . . will be insufficient;
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there must be evidence on which the jury could reasonably find for
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the [non-moving party].”

Anderson v. Liberty Lobby, Inc., 477 U.S.

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242, 252 (1986).
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It is not the Court’s task “to scour the record in search of a

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genuine issue of triable fact.”

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1279 (9th Cir. 1996). Counsel has an obligation to lay out their

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support clearly. Carmen v. San Francisco Unified Sch. Dist., 237

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F.3d 1026, 1031 (9th Cir. 2001). The Court “need not examine the

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entire file for evidence establishing a genuine issue of fact,

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where the evidence is not set forth in the opposing papers with

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adequate references so that it could conveniently be found." Id.

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III. Analysis

Keenan v. Allan, 91 F.3d 1275,

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A. Fraud

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Defendant argues that Plaintiff cannot prove one or more of

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the essential elements of its fraud claim.

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The elements of fraud are: “a) misrepresentation (false

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representation, concealment, or nondisclosure); (b) knowledge of

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falsity (or “scienter”); (c) intent to defraud, i.e., to induce

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reliance; (d) justifiable reliance; and (e) resulting damage.”

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Engalla v. Permanente Med. Grp. Inc., 15 Cal. 4th 951, 974, 938

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P.2d 903 (1997).

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(See Motion at 15-20.)

Defendant first argues that there is no triable issue of fact

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as to whether he made a misrepresentation.

To be actionable, a

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misrepresentation must be false when made.

See Edmunds v. Valley

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Circle Estates, 16 Cal. App. 4th 1290, 1301 (1993). However, “[a]

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misrepresentation need not be oral; it may be implied by conduct.”

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Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App. 4th 1559, 1567, 473-74

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(1996).

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The checks Defendant wrote for the initial premium payments of

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the policies at issue in this case constitute the alleged

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misrepresentation.

(Opp’n at 14:11-28.)
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Plaintiff claims that

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since Defendant knew AGLIC forbade issuing life insurance policies

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that were not funded by the insured, the insured’s employer, or the

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insured’s family, his checks implicitly asserted that the policies

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were funded in accordance with AGLIC’s rules.

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Defendant’s checks are actionable misrepresentations depends on

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whether Defendant knew of AGLIC’s policy and the alleged fraudulent

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scheme.

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Id.

Thus, whether

Plaintiff has provided evidence of both.

Defendant admits in his deposition that he was “99 percent”
sure that he had reviewed a blank AGLIC life insurance application.

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(Fredericks Decl. Ex. 2 at 195-196.)

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at Prolinks, said he retrieved “copies of every [insurance]

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company’s paperwork” that Prolinks did business with, and had

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Defendant “go through [it]” so that he could answer agents’

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questions.

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contained an “Agent Certification Form,” which required agents to

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certify that the insured, the insured’s employer, or the insured’s

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family was paying for the premiums.

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Id. at 117-118.

Tigran Khrlobian, a principal

AGLIC’s applications allegedly

(See Klappa Decl. Ex. A-D.)

Tigran Khrlobian, a supervisor at Prolinks, testified that on

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behalf of Prolinks Defendant participated in negotiations with

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Deutsche Bank that led to the creation of the alleged fraudulent

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scheme.

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that the scheme involved Deutsche Bank both paying individuals, who

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Prolinks identified, to take out life insurance policies and

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funding the premiums on these policies.

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47:4-49:5; Fredericks Decl. Ex. 1 at 31:21-33:7; Fredericks Decl.

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Ex. 2 119:25-121:7.)

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accounts that funded the initial policy premium payments.

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22.)

(Fredericks Decl. Ex. 1 at 31:21-33:7.)

Testimony alleges

(Fredericks Decl. Ex. 1 at

Defendant admits that he opened the bank
(SSGI ¶

Plaintiff argues that Defendant opened these accounts to mask
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the funds’ source, Deutsche Bank.

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on these checks are the Defendant’s and a trust in the name of the

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insured, a reasonable jury could believe Plaintiff’s

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interpretation.

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Ricarda Magbual 2007 Insurance Trust
Brian A Manson Trustee
(Fredericks Decl. Ex. 7.) A misrepresentation “may be implied by

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conduct,” so a reasonable jury could find that Defendant, Prolinks’

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in-house counsel, implicitly represented that the funds were not

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coming from a third party.

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Since the only names that appear

One check’s header reads:

Thrifty-Tel, 46 Cal. App. 4th at 473-

74.
Next, Defendant argues there is insufficient evidence that he

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intended to defraud AGLIC.

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show that the defendant had “the intent to induce reliance.”

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Gutierrez v. Wells Fargo & Co., 622 F. Supp. 2d 946, 958 (N.D. Cal.

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2009) (emphasis in original).

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fact that he made the representation with knowledge that plaintiffs

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would act in reliance thereon.”

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488, 275 P.2d 15 (1954).

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proper” on issues concerning “a party's motive or intent.”

Atkins

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v. Union Pac. R. Co., 685 F.2d 1146, 1149 (9th Cir. 1982).

For

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reasons discussed supra, there is a triable issue of fact as to

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whether Defendant knew of and participated in a scheme to defraud

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AGLIC.

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applications at issue in this case conformed to the alleged

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fraudulent scheme, there is no evidence that he was

aware that

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they were part of the scheme.

Therefore, he

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could not have intended to defraud, because he lacked knowledge

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that these particular applications were fraudulent.

In a fraud claim, a plaintiff need only

Intent may “be inferred from the

Gagne v. Bertran, 43 Cal. 2d 481,

Summary judgment, though, “is rarely

Defendant seems to argue that even if the life insurance

(Motion at 17:4-24.)

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Id.

However,

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acting in conformance with a fraudulent scheme is sufficient to

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create a triable issue of fact as to whether Defendant knew he was

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committing fraud on particular occasions.

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Emergency Med. Grp. Inc., 102 Cal. App. 4th 125, 141(2002)(finding

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that it is reasonable to infer intent when actions conform to

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general practice).

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Biren v. Equal.

Defendant next claims that AGLIC did not justifiably rely on

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his misrepresentation.

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the causation element of fraud.

(Motion at 18-20.) Justified reliance is
Alliance Mortg. Co. v. Rothwell,

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10 Cal.4th 1226, 1239(1995).

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plaintiff's] reliance upon the truth of the fraudulent

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misrepresentation be the sole or even the predominant or decisive

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factor in influencing his conduct.... It is enough that the

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representation has played a substantial part, and so has been a

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substantial factor, in influencing his decision.”

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Cal.4th at 976–77 (alterations in original).

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inappropriate for summary adjudication: “Because of the highly

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subjective nature of a causation analysis, the Supreme Court of

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California has instructed that the question whether a party

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detrimentally relied on the misrepresentation of another party is

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properly left to a jury.”

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Commc’ns, 365 F.3d 835, 840 (9th Cir. 2004).

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“It is not ... necessary that [a

Engalla, 15

Causation is almost

City Solutions, Inc. v. Clear Channel

Defendant claims that Wells Fargo was listed as the trustee of

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each policy at issue, and accordingly AGLIC could not have

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justifiably relied on Defendant’s initial premium checks, which

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allegedly indicate that he was the trustee of the insurance

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policies.

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broader than Defendant’s characterization.

(Motion at 18-20.)

However, Plaintiff’s claim is

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As discussed supra,

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Plaintiff claims that Defendant’s checks implicitly misrepresented

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that the policies were issued in accordance with AGLIC’s rules

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regarding third party financing.

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evidence that AGLIC would not have issued the policies had it known

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about their true source of funding, there is a triable issue of

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fact as to whether there was justified reliance.

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Decl. ¶ 5); see Engalla, 15 Cal.4th at 976–77.

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B. Conspiracy and Aiding and Abetting

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Defendant claims that Plaintiff cannot meet the essential

Since Plaintiff has provided

(See Plotkin

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elements of both conspiracy and aiding and abetting.

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11-13.)

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formation and operation of the conspiracy and damage resulting to

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plaintiff from an act or acts done in furtherance of the common

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design.”

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4th 503, 511 (1994) (citations omitted).

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aiding and abetting if he “(a) knows the other's conduct

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constitutes a breach of duty and gives substantial assistance or

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encouragement to the other to so act or (b) gives substantial

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assistance to the other in accomplishing a tortious result and the

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person's own conduct, separately considered, constitutes a breach

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of duty to the third person.” Casey v. U.S. Bank Nat'l Ass'n, 127

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Cal. App. 4th 1138, 1144 (2005). For the reasons the court

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announced supra in its fraud analysis, there is a triable issue of

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fact as to whether Defendant knew of and actively participated in a

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scheme to defraud AGLIC.

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(Motion at

“The elements of an action for civil conspiracy are the

Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal.
A defendant is liable for

Regarding civil conspiracy specifically, Defendant argues that

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he is not liable for this claim, because the alleged fraud did not

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violate California insurable interests laws.
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(Motion at 11-12.)

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Civil conspiracy does not require a “criminal act” or “statutory

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violation.”

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California Supreme Court has held that “commission of an actual

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tort” can “activate” civil conspiracy liability. Applied Equip., 7

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Cal. 4th at 511.

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Rogers v. Grua, 215 Cal. App. 2d 1, 7 (1963).

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Thus, Defendant’s argument fails.

Defendant also argues that Plaintiff’s claims for conspiracy

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to commit fraud and aiding and abetting fraud must be summarily

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adjudicated, because Plaintiff’s complaint does not seek damages

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against Defendant for these torts.

(Motion at 14-15.)

As a

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preliminary matter, Defendant seems to confuse the standard for

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summary judgment, which asks whether there is a triable issue of

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fact, with a motion to dismiss for failure to state a claim, which

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asks whether a complaint has sufficiently alleged the elements of a

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claim.

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(1986), with

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California, each member of a civil conspiracy is jointly liable for

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all harm done in furtherance of the conspiracy.” 5 Witkin, Summary

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of California Law, Torts § 45, (10th ed. 2005).

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“California law allows for joint liability of aiders and abettors

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to an intentional tort.”

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Dist., 2010 WL 3633737 (E.D. Cal. Sept. 14, 2010).

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the fraud section supra, Plaintiff seeks damages for, among others,

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the commissions it paid as a result of issuing the policies that

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fraudulently violated its rules against third party financing.

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Since these damages stem from the alleged fraud, conspiracy, and

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aiding and abetting, there is a triable issue of fact as to

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damages.

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related to the aiding and abetting and conspiracy claims, because

Compare Celotex Corp. v. Catrett, 477 U.S. 317, at 327
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

In

Similarly,

Newman v. San Joaquin Delta Cmty. Coll.
As analyzed in

Moreover, Defendant had sufficient notice of damages

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the SAC explicitly sought damages from Defendant’s alleged joint

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tortfeasors.

(SAC at 38:23-27, 41:6-9.)

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C. Agent’s Immunity Rule and Sole Actor Rule

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Defendant claims that the agent’s immunity rule and the single

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actor rule bar Plaintiff’s claims for aiding and abetting fraud and

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conspiracy to commit fraud.

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immunity rule states: “When a corporate employee acts in the course

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of his or her employment, on behalf of the corporation, there is no

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entity apart from the employee with whom the employee can

(See Motion at 7-11.)

The agent’s

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conspire.”

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also Sanchez v. Aviva Life & Annuity Co., 2010 WL 2606670, at *7

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(E.D. Cal. June 28, 2010) (applying the agent’s immunity rule to

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aiding and abetting claims).

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Defendant calls the single actor rule.

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Cal. App. 4th 1318, 1326 (1996) (describing the agent’s immunity

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rule as similar to the principle that, “an employee acting on

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behalf of the employer cannot be acting in concert with the

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employer, as there is in law only a single actor).

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immunity rule is an affirmative defense, so the defendant bears the

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burden of proving its application.

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determination of whether an employee has acted within the scope of

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employment presents a question of fact.” 6 Witkin, Summary of

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California Law, Agency § 176, (10th ed. 2005). Other jurisdictions

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have persuasively argued that deciding a scope-of-employment issue

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is “rarely appropriate” for summary adjudication. Webb v. United

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States, 24 F. Supp. 2d 608, 614 (W.D. Va. 1998).

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Black v. Bank of Am., 30 Cal. App. 4th 1, 6 (1994); see

This rule is equivalent to what
See Fiol v. Doellstedt, 50

The agent’s

See CACI 3602. “[T]he

As the court found supra in its fraud analysis, there is
sufficient evidence to show that Defendant and his supervisor at
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Prolinks, Tigran Khrlobian, conceptualized and executed a plan to

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defraud AGLIC.

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scope of their employment at Prolinks, then there can be no

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conspiracy between them.

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Khrlobian, however, was also an appointed agent with AGLIC. SGI ¶

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6.

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issue in this case, and they neither indicate nor does his

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signature suggest that he was signing on Prolinks’ behalf.

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is no mention either on the form or in his alleged signature that

If Defendant and Khrlobian were acting within the

See Black, 30 Cal. App. 4th at 6.

Khrlobian allegedly signed the Agent’s Certification Forms at

There

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he was signing on behalf of Prolinks.

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The only companies mentioned anywhere on the form is AIG and AGLIC–

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the name “Prolinks” is completely absent.

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individuals signing on behalf of their corporation are supposed to

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explicitly indicate as much.

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Agency § 198, (10th ed. 2005)(citing numerous California cases).

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Since no such indication exists on the form, there is a triable

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issue of fact whether Khrlobian was acting within the scope of his

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employment while participating in the allegedly fraudulently

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scheme.

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employees because a corporation cannot conspire with itself. See

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Black, 30 Cal. App. 4th at 6. If Khrlobian was acting outside the

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scope of his employment (perhaps acting as an individual or as an

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AGLIC agent) the agent’s immunity rule is irrelevant to Defendant’s

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case.

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which Khrlobian signed the Agent’s Certification Forms.

(See Klappa Decl. Exs. A-D.)

(See id.)

Generally,

3 Witkin, Summary of California Law,

The agent’s immunity rule only shields a corporate

See id.

A jury will, thus, have to decide the capacity in

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D. Election of Remedies

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Defendant claims that Plaintiff’s tort claims must be

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summarily adjudicated, because Plaintiff has elected the contract
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remedy of recission.

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doctrine is an affirmative defense on which Defendant carries the

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burden.

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plaintiff from collecting both contract damages and tort damages

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from a defendant for the same harm.

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California Law, Torts § 829, (10th ed. 2005).

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Arkansas has persuasively clarified that, “the election-of-remedies

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doctrine is designed to prevent double recovery for a single

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injury, but it does not prevent a party from pursuing multiple

See id.

(Motion at 20.)

The election of remedies

The election of remedies doctrine will prevent a

See 5 Witkin, Summary of
A federal court in

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claims against multiple parties until full satisfaction is had.”

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GeoVera Specialty Ins. Co. v. Rogers, 2012 WL 931983, at *1 (E.D.

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Ark. Mar. 20, 2012).

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Defendant argues that since each life insurance policy at

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issue has been rescinded, Plaintiff may not now seek to collect in

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tort against Defendant.

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Defendant, however, did not take out a life insurance policy with

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AGLIC, and Plaintiff does not seek to rescind any contract that

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Defendant was a party to.

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Defendant seeks recompense for is the amount it paid in commissions

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for the policies that violated AGLIC’s standards.

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cannot escape liability for the harm he allegedly caused simply

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because Plaintiff has received compensation from different

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defendants for different harms.

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Co.,2012 WL 931983, at *1.

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IV. Defendant’s Objections

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(SGI ¶¶ 35-38; Motion at 20-22.)

(See Opp’n at 18-19.)

The harm

Id.

Defendant

See GeoVera Specialty Ins.

Defendant makes various objections.

Almost all of which are

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moot as they were not material to the court’s analysis.

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deserve some discussion, though. First, Defendant objects to the
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Two

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Agent’s Certification Forms, which were originally part of the

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Frederick’s declaration, as having an insufficient foundation.

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This defect was cured, though, when they were resubmitted with the

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Klappa declaration. (See Klappa Decl.; Klappa Decl. Exs. A-D.)

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the October 15, 2012, hearing on Defendant’s Motion for Summary

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Judgment, Defendant made a general objection to the Klappa

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declaration (and presumably also to the Agent’s Certification Forms

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attached to it), broadly claiming the declaration was inadmissible.

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However, objections must be “sufficiently specific” to make a judge

At

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understand exactly what is objected to and the grounds for that

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objection.

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Cir. 1950) (ruling that, “[i]t is elementary that objections to

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offered evidence must be sufficiently specific to bring their point

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home to the trial judge.”)

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this standard.

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Cont'l Oil Co. v. United States, 184 F.2d 802, 814 (9th

Defendant’s objection plainly fails

Defendant has also objected to the checks that he allegedly

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wrote for the initial policy premium.

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are inadmissible hearsay to the extent they identify Defendant as a

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trustee.

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opponent hearsay exemption.

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effect on the listener– namely that AGLIC believed Defendant was a

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trustee and relied upon that.

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was insufficient foundation for admitting the checks.

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Defendant testified that the signatures on these checks appear to

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be his.

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///

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///

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///

Defendant claims that they

However, the checks are admissible under the party
They are also admissible to prove the

Defendant also objects that there

(Fredericks Decl. Ex. 2 187:13-193:4.)

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However,

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V. Conclusion
Based on the preceding analysis, the court DENIES Defendant’s
Motion for Summary Judgment in its entirety.

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IT IS SO ORDERED.

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Dated: October 24, 2012
DEAN D. PREGERSON
United States District Judge

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17
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19
20
21
22
23
24
25
26
27
28
15