Moon v. Rush et al

Filing 131

ORDER signed by Judge Garland E. Burrell, Jr., on 12/19/14 ORDERING that Plaintiff's summary judgment motion is GRANTED IN PART and DENIED IN PART; Defendants' summary judgment motion is GRANTED IN PART and DENIED IN PART; and Counter-claimant's summary judgment motion is DENIED.(Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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VIRGINIA C. MOON, on her own
behalf and on behalf of the
Peters Rush Habib & McKenna
401(k) Profit Sharing Plan,
Plaintiff,

13
v.

14
15

No. 2:11-CV-03102-GEB-CKD

ORDER GRANTING IN PART AND
DENYING IN PART MOTIONS FOR
SUMMARY JUDGMENT

DAVID H. RUSH, MARK A. HABIB,
and JAMES P. MCKENNA,

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Defendants.

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AND RELATED COUNTERCLAIM.

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Plaintiff

and

Counter-Defendant

Moon

and

Defendants

Rush, Habib, and McKenna (collectively the “Defendants”)
move

for

summary

judgment

on

claims

one

through

five

each
in

Plaintiff‟s Complaint (“Compl.”). Defendants also seek summary
judgment on the six remaining claims in the Complaint. CounterClaimant Rush seeks summary judgment on all three claims in his
Second Amended Counterclaim (“Countercl.”).

28
1

1

I.

2

A

seeking

(1986). “A fact is „material‟ when . . .

6

outcome of the case.” Thrifty Oil Co. v. Bank of Am. Nat‟l Trust

7

&

8

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An

9

issue of material fact is “genuine” when “the evidence is such

10

that a reasonable jury could return a verdict for the nonmoving

11

party.” Anderson, 477 U.S. at 248.

Ass‟n,

If

322

the

F.3d

movant

1039,

v.

Catrett,

1046

satisfies

(9th

its

a

genuine

initial

5

Corp.

of

the

material

Celotex

absence

bears

4

fact.

the

judgment

burden

12

demonstrating

summary

3

Sav.

of

party

LEGAL STANDARD

477

U.S.

issue

of

317,

323

it could affect the

Cir.

“initial

2003)

(quoting

burden,”

“the

13

nonmoving party must set forth, by affidavit or as otherwise

14

provided in Fed. Rule Civ. Proc. (“Rule”) 56, „specific facts

15

showing that there is a genuine issue for trial.‟” T.W. Elec.

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Serv., Inc. v. Pac. Elec. Contractors Ass‟n, 809 F.2d 626, 630

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(9th Cir. 1987) (quoting former Rule 56(e)). Summary judgment

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“evidence must be viewed in the light most favorable to the

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nonmoving party, and all reasonable inferences must be drawn in

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favor of that party.” Sec. & Exch. Comm‟n v. Todd, 642 F.3d 1207,

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1215 (9th Cir. 2011) (citing Johnson v. Paradise Valley Unified

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Sch. Dist., 251 F.3d 1222, 1227 (9th Cir. 2001)).

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Further, Local Rule 260(b) prescribes:

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Any party opposing a motion for summary
judgment . . . [must] reproduce the itemized
facts in the [moving party‟s] Statement of
Undisputed Facts and admit those facts that
are undisputed and deny those that are
disputed, including with each denial a
citation to the particular portions of any
pleading,
affidavit,
deposition,
interrogatory answer, admission, or other
2

25
26
27
28

1

document
denial.
If

2
3
4
5
6

12

24
25
26
27

.

.

Cir. 1996)).
II.

STATEMENT OF UNCONTROVERTED FACTS

The following uncontroverted facts concern the motions.
A.

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23

.

(9th Cir. 2010) (quoting Keenan v. Allan, 91 F.3d 1275, 1279 (9th

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22

“specifically

Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1017

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21

that

Because a district court has no independent
duty “to scour the record in search of a
genuine issue of triable fact,” and may “rely
on the nonmoving party to identify with
reasonable particularity the evidence that
precludes summary judgment,” . . . the
district court . . . [is] under no obligation
to undertake a cumbersome review of the
record on the [nonmoving party‟s] behalf.

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20

not

of

statement.” Beard v. Banks, 548 U.S. 521, 527 (2006).

10

19

does

support

admitted the validity of the facts contained in the [movant‟s]

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17

in

statement of undisputed facts,” the nonmovant “is deemed to have

8

14

nonmovant

the

upon

[controvert duly supported] facts identified in the [movant‟s]

7

13

relied

The Marriage/Dissolution of Moon and Rush
Rush and Moon were married on March 21, 1977. (Pl.

Resp. Defs. SUF (“Defs. SUF”) ¶ 1, ECF No. 119.) Moon filed a
petition in state family court for dissolution of the marriage in
1994. (Defs. SUF ¶ 14.) In connection with their divorce, Rush
and Moon entered into a domestic relations order (“DRO”) “which
was intended to divide the marital community‟s assets in the
[Peters, Rush, Habib & McKenna] 401(k) Profit Sharing Plan (“the
Plan”).”
September

(Defs.
1995,

SUF
and

¶

19.)
the

The
final

DRO

was

dissolution

September 26, 1995. (Defs. SUF ¶¶ 23, 18.)

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3

signed
was

and

filed

entered

in
on

1

Moon, through her family law counsel, served a copy of

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the DRO on Rush at his home address on October 31, 1995. (Defs.

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SUF ¶ 27.) Moon did not present the DRO to David Fuller, who was

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then the Plan Administrator. (Defs. SUF ¶¶ 33, 35.)

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The Plan currently holds a 20.2881% interest in a 40-

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acre Property at 1525 Dayton Road in Chico, California (“the

7

Property”) “for Moon‟s benefit.” (Defs. SUF ¶ 74.)

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B.

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The Plan
The

Plan

maintains

separate

accounts

for

each

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individual participant and/or beneficiary. (Defs. Resp. Pl. SUF

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“Pl. SUF”) ¶ 1, ECF No. 111.) Each participant and/or beneficiary

12

of the Plan is permitted to direct the investments of the assets

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in his or her account. (Pl. SUF ¶ 2.)

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Rush

was

a

Discretionary

Trustee

of

the

Plan

until

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January 1, 2013, at which time he became a Special Trustee. (Pl.

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SUF ¶ 3.) He has never been a Plan Administrator. (Defs. SUF ¶

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30.) Habib is the current Plan Administrator. (Pl. SUF ¶ 4.)

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McKenna is a Trustee of the Plan. (Pl. SUF ¶ 5.)

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When Rush received the DRO from Moon in 1995, he did
not share it with other Plan Trustees. (Pl. SUF ¶ 12.)

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C.

The Property

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Sometime in 1995 or 1996 after the divorce, Moon took

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over complete control of the Property. (Defs. SUF ¶ 56.) Moon

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personally held a 79.7119% interest in the Property and the Plan

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held a 20.2881% interest. (Defs. SUF ¶ 55.) In 1997 Rush loaned

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Moon

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ownership interest in the Property with the loan used as partial

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payment. (Defs. SUF ¶¶ 75-76.) In 1998 or 1999, Rush became a

$75,000,

and

they

agreed

4

Moon

would

sell

Rush

a

49%

1

partial

2

interest, Moon personally held a 30.7119% interest, and the Plan

3

held a 20.2881% interest. (Defs. SUF ¶¶ 81-82.) Moon and Rush

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dispute the terms of their 49% ownership agreement. However, it

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is uncontroverted that Rush deposited income generated by the

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Property “into Moon‟s checking account in Chico.” (Defs. SUF ¶

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88.) Moon transferred 2% of her personal ownership interest to

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Rush in January 2000, resulting in Rush having a 51% interest in

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the Property, Moon personally having a 28.7119% interest, and the

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owner

of

the

Property;

he

personally

owned

a

49%

Plan having a 20.2881% interest. (Defs. SUF ¶ 99.)

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In early 2000, Rush told Moon she owed him 49% of the

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Property‟s “net” rental income “for calendar year 1999,” which

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she paid. (Defs. SUF ¶ 94.) In 2002, he sent her an accounting

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statement through December 31, 2001, which Moon paid. In June

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2003, Rush sent Moon an accounting for 2002, which she paid.

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(Defs. SUF ¶¶ 108-09.) Rush sent Moon accounting statements for

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2003-2008. (Defs. SUF ¶¶ 116, 121, 126, 131, 137). Moon received

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the 2003-2008 statements, but did not pay Rush. (Defs. SUF ¶¶

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117, 119, 122, 124, 127, 129, 132, 135, 139, 141.)

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From 2003 to mid-2009 Moon received 100% of the income

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generated by the Property; specifically, $225,500. (Defs. SUF ¶

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143.)

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Property

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federal income tax returns any income related to the Property for

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tax years 2003-2009.” (Defs. SUF ¶ 144.) “Moon has never offered

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or made any effort to transmit any portion of the income she

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received from the Property from 2003 to mid-2009 to the Plan,

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despite

“Although
from

her

Moon

2003

present

received

to

$225,500

mid-2009,

argument

Moon

that
5

the

in

did

income

not

Plan

from

report

was

on

entitled

the
her

to

1

receive some portion of this income.” (Defs. SUF ¶ 145.) “From

2

2003 to 2008, although Rush claimed credit for mortgage interest

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and taxes paid by Moon, he also reported the entirety of all

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income

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received none of it.” (Defs. SUF ¶ 146.) “From 2003, when Moon

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began retaining all rents for the Property, through at least June

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2009, Moon paid alarm monitoring and property tax expenses for

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the

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expenses for the Property in 2003-2008. (Defs. SUF ¶¶ 118, 123,

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earned

from

Property.”

rental

(Defs.

SUF

of

¶

the

Property,

153.)

Rush

even

though

personally

he

advanced

128, 133, 134, 140.)

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In June 2009, Rush began retaining rents received for

12

the

13

account, and since January 1, 2013, Rush has deposited all income

14

from the Property into a segregated savings account. (Defs. SUF

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¶¶ 152, 254.)

16

Property

D.

instead

of

depositing

them

into

Moon‟s

checking

Property Valuations Over Time

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In 1997, a realtor estimated the Property was worth

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between $800,000 and $850,000. (Defs. SUF ¶¶ 191-192.) In 2002,

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the appraised value of the Property was $1,150,000. (Defs. SUF ¶¶

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193-194.) In November 2003 an appraiser opined that the Property

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“was

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extraordinary hypothetical condition that the property would not

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be impacted by the Green Line. (Defs. SUF ¶¶ 171, 173.) The Green

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Line is a boundary line in Chico outside of which development is

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restricted

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“Moon‟s expert witness . . . stated that, „According to the Chico

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City and Butte County planners, the likelihood of altering the

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Green Line at this location is very low.‟” (Defs. SUF ¶ 176.)

worth

$2,600,000”

to

protect

based

on

agricultural

6

the

lands.

assumption

(Defs.

SUF

of

¶

an

175.)

1

In 2009, the Property was appraised at $850,000, and in

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2014, different appraisers valued the Property: one at $500,000

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and the other at $850,000. (Defs. SUF ¶¶ 199, 205, 216.)

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E.

Moon’s Requests for Plan Assets Information

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Habib became the Plan Administrator in either 1996 or

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1997. (Defs. SUF ¶ 36.) Moon did not provide him with a copy of

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the DRO until 2010. (Defs. SUF ¶ 38.)

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9
10

On

February

25,

2010,

Moon‟s

counsel

wrote

Habib

requesting plan documents, including a pension benefit statement.
(Defs. SUF ¶ 233.)

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Habib acknowledged the letter on March 4, 2010. (Defs.

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SUF ¶ 242.) On April 10, 2010, Moon‟s counsel informed Habib that

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his thirty-day period to respond to her document request had

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expired, and counsel reiterated the request for documents. (Pl.

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SUF ¶ 23.)

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On

or

around

June

2,

2010,

Habib

informed

Moon‟s

17

counsel “that he was unable to provide any of the documents

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requested in the February 25, 2010 letter until he received a

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written authorization signed by Moon, which was not included with

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the February 25, 2010 letter.”

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Moon provided written authorization through her counsel on June

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16, 2010, and Habib provided the requested documents on June 22,

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2010. (Defs. SUF ¶¶ 244-245.)

(Defs. SUF ¶ 243, Pl. SUF ¶ 24.)

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Prior to Habib‟s June 2010 request for Moon‟s written

25

authorization to release the documents to her attorney, Moon had

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never received communication from the Plan about the DRO and had

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not been provided a pension benefit statement. (Pl. SUF ¶ 27;

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Defs. SUF ¶ 241.) Habib has not provided Moon with a pension
7

1

benefit statement since his June 2010 communication. (Pl. SUF ¶

2

29.)

3

In October 2011, Moon‟s attorney sent a letter to Habib

4

requesting formal notice that the DRO had gone through the Plan‟s

5

qualification process. Habib responded in November 2011 that the

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Plan did not consider the DRO qualified. (Defs. SUF ¶ 247-249.)

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The Plan first established procedures for qualifying a DRO in

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November 2011. (Pl. SUF ¶ 32.)

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III. DISCUSSION

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A.

Qualification of Moon’s DRO

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Moon alleges in several of her claims that Defendants

12

violated

statutory

13

Retirement Income Security Act (“ERISA”), as a result of her

14

alternate

15

fiduciaries of the Plan.

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Under

payee

duties

Plan

ERISA

beneficiary

a

her

status

fiduciary

owes

duties

to

plan

20

then prevailing that a prudent man acting in like capacity and

21

familiar

22

“trustee is a fiduciary” under ERISA, N.L.R.B. v. Amax Coal Co.,

23

453

24

administrators the fiduciary duty to ensure that an alternate

25

payee's

26

Profit Sharing Plan, 207 F.3d 1143, 1156 (9th Cir. 2000). Rush,

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McKenna and Habib are Plan Trustees and Habib is also a Plan

28

Administrator. (Pl. SUF ¶¶ 3-5.) Therefore, each Defendant owes a

rights

334

are

(1981),

and

protected.”

use

“ERISA

Stewart

8

...”).

v.

forth

as

the care, skill, prudence, and diligence under the circumstances

would

(setting

status

19

322,

1104(a)(1)

their

Employee

fiduciary duties under ERISA, which include the duty to act “with

matters

§

and

the

18

such

U.S.C.

under

beneficiaries.

U.S.

29

to

17

with

See

owed

Further

assigns

Thorpe

a

to

Holding

the

plan

plan

Co.

1

fiduciary duty to plan beneficiaries.

2

ERISA “confers beneficiary status on a nonparticipant

3

spouse . . . in only narrow circumstances delineated by its

4

provisions.” Boggs v. Boggs, 520 U.S. 833, 846 (1997). The ERISA

5

statutory definition of “beneficiary” includes “[a] person who is

6

an alternate payee under a qualified domestic relations order

7

[“QDRO”].” 29 U.S.C. § 1056(d)(3)(J). “A QDRO is a subset of

8

„domestic

9

alternate payee to „receive all or a portion of the benefits

10

payable with respect to a participant under the plan.” Hamilton

11

v. Wash. State Plumbing & Pipefitting Indus. Pension Plan, 433

12

F.3d 1091, 1096 (9th Cir. 2006) (citation omitted).

13

„alternate

14

participant who is recognized by a domestic relations order as

15

having a right to receive all, or a portion of, the benefits

16

payable under a plan.” 29 U.S.C. § 1056(d)(3)(K).

17

relations

payee‟

Further,

orders‟

means

Moon

any

that

.

.

argues

recognizes

.

former

that

the

the

right

spouse.

California

of

an

“The term
.

.

of

Court

a

of

18

Appeal held in In re Marriage of Rush, C070841, 2014 WL 2795475

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(Cal. Ct. App. June 20, 2014)(unpublished disposition) that the

20

DRO is qualified and therefore, she is a beneficiary under the

21

Plan.

22

Defendants counter that Moon has not established she a

23

beneficiary

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September 26, 1995 domestic relations order nor the California

25

Court of Appeals decision in In re Marriage of Rush establish

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that „Moon is a beneficiary of the Plan.‟” (Pl. SUF ¶ 11.)

27
28

under

the

Plan,

and

argue

that

“[n]either

the

Defendants‟ argument disregards the content of the DRO
and the evident holding In re Marriage of Rush.
9

The appellate

1

court held in In re Marriage of Rush that the subject DRO is

2

“presumptively qualified, subject only to modifications agreed

3

upon by the parties or ordered by the court to save the DRO from

4

being legally ineffective.”

Id. at *2.

5

Further, the context in which In re Marriage of Rush

6

issued, indicates the decision rebuked Habib‟s attempt to avoid

7

his obligations to Moon under the Plan.

8

Moon‟s

9

Administrator

counsel

requested

Habib

that

written
Moon‟s

In December 2011, after
confirmation

DRO

was

from

qualified,

Plan
Habib

10

responded that it was not qualified and then intervened in the

11

long dormant divorce proceedings between Moon and Rush seeking to

12

have the state court determine if Moon‟s DRO was qualified. The

13

state court held the DRO was not qualified “because it did „not

14

provide

15

interest in the plan and what is the community interests.‟” Id.

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at *3 (alterations in original). Moon appealed, and the Court of

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Appeal reversed in In re Marriage of Rush, holding the family

18

court‟s “ruling on qualification was erroneous.” Id. at *5-6. The

19

Court of Appeal stated:

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21
22
23
24
25
26
27
28

a

basis

for

determining

what

is

[Rush‟s]

The „pivotal question‟ [in determining if a
DRO is qualified] is whether the dissolution
order contains enough information for the
plan administrator to make an informed
decision
about
distribution.
Substantial
compliance
with
the
requirements
is
sufficient.
Inclusion
of
the
term
“community
interest” in the DRO does not render the DRO
unqualified. The wording may create some
ambiguity in this case, but not enough to
render the plan unqualified at such a late
date.
Community property interests are those
acquired during marriage. [Rush] declared
10

separate

1

that he could not distinguish contributions
he made to the plan during his marriage to
[Moon]
from
those
he
made
beforehand.
However, both [Rush] and Habib had access to
the plan‟s records, including the dates and
amounts for [Rush‟s] contributions to the
plan. Neither claimed to have made an attempt
to identify or trace
[Rush‟s] separate
property interest.

2
3
4
5
6

Before
the
dissolution,
[Rush]
and
[Moon] were required by law to disclose to
one another and to the family court “[a]ll
material facts and information regarding the
characterization
of
all
assets
and
liabilities.” When parties divide pension
assets, the party with better access to
information about the assets “must acquire
and disclose such information to the other
spouse.” In this case, [Rush] necessarily had
superior (and perhaps exclusive) access to
information about his own pension assets,
including the extent to which his pension
fund‟s investment in the disputed real
property was traceable to separate rather
than
community
property.
He
had
an
affirmative duty to discover and disclose the
facts to [Moon] before they dissolved their
marriage and he offers no explanation for not
disclosing the same facts to his law partner,
the plan administrator, in order to identify
and
segregate
any
separate
property
interests. Tellingly, [Rush] did not ask the
family court to characterize some or all of
the disputed property interest as separate;
he asked the family court to declare the
order he had negotiated unqualified and
ineffective.

7
8
9
10
11
12
13
14
15
16
17
18
19
20

Id. at *3-4 (citations omitted).

21
22
23
24
25
26
27
28

The appellate court also explained in In re Marriage of
Rush

that

the

Plan‟s

challenge

to

Moon‟s

status

as

beneficiary was untimely, stating:
If a plan administrator fails to timely
object to a DRO, however, “it makes no sense
to punish a spouse for a plan‟s dereliction.”
Rather, a DRO may be declared a QDRO based on
the plan administrator‟s inaction. And the
plan need not be a party to a dissolution
proceeding to be bound by the terms of a
QDRO.
11

a

Plan

1

The plan‟s request for a declaration
that the DRO was not qualified—brought 16
years after [Rush] signed the DRO as a party
and trustee, and 18 months after the plan
administrator acknowledged it in writing—was
unreasonable and untimely. . . .

2
3
4

. . . .

5

A QDRO does not create a new property
interest, but renders enforceable an already
existing interest, so the alternate payee‟s
right to an enforceable QDRO is presumed
during any period of DRO refinement. Here,
the DRO was clearly intended by [Rush] and
[Moon], and by the family court in 1995, to
effectively transfer the entire community
share of the disputed property to [Moon]. The
family court‟s ruling on qualification was
erroneous.

6
7
8
9
10
11
12

The family court order. . . is reversed.
Id. at *5-6 (emphasis and citations omitted).

13
14
15
16
17

It is evident that the state court DRO is a QDRO under
ERISA and that the Plan Administrator‟s indication otherwise is
not supported by the record. Further, Moon is an alternate payee
under the QDRO and a Plan beneficiary within the meaning of 29
U.S.C. § 1056(d)(3)(K).

18

B.

19

1. Claim 1: 29 U.S.C. § 1025(a)

20
21
22
23
24
25
26
27

Claims 1 and 2: Breach of Statutory Duty

Moon and Habib each seek summary judgment on claim one
in

Moon‟s

Complaint,

in

which

Moon

alleges

that

as

Plan

Administrator Habib breached the statutory duty he owed her under
ERISA 29 U.S.C. § 1025(a), which require him to provide her a
pension benefit statement at least once each calendar quarter
beginning January 1, 2007.

Habib has only sent Moon one pension

benefit statement for the second quarter of 2010. (Pl. SUF ¶¶ 27,
29; Defs. SUF ¶ 241.)

28
12

1

Section 1025(a) prescribes in part:

2

The administrator of an individual account
plan . . . shall furnish a pension benefit
statement--

3
4

(i) at least once each calendar quarter to a
participant or beneficiary who has the right
to direct the investment of assets in his or
her account under the plan . . . .

5
6
7
8
9
10
11
12
13
14

It is uncontroverted that beneficiaries of the Plan are
permitted to direct the investment of the assets in their own
accounts. (Pl. SUF ¶ 2.) It is also uncontroverted that Habib has
been the Plan Administrator since 2007; that prior to June 22,
2010 he never provided Moon with a pension benefit statement; and
since June 22, 2010 he has not provided Moon with another pension
benefit statement. (Defs. SUF ¶ 26; Pl. SUF ¶¶ 27-29.) Therefore,
Moon has shown Plan Administrator Habib violated his statutory
duty pursuant to § 1025(a).

15

2. Claim 2: 29 U.S.C. § 1024(b)(4)

16
17
18
19
20
21
22
23
24
25
26
27

Moon and Habib each seek summary judgment on claim two
in

Moon‟s

Complaint,

Administrator

Habib

in

which

breached

the

Moon

alleges

statutory

that

duty

he

as

Plan

owed

her,

ERISA under 29 U.S.C § 1024(b)(4), which requires him to timely
provide her requested plan documents. Section 1024(b)(4) provides
that

“[t]he

administrator

shall,

upon

written

request

of

any

participant or beneficiary, furnish a copy of the latest updated
summary

plan

terminal
contract,

description,

report,
or

the

other

and

the

bargaining
instruments

latest

annual

agreement,
under

report,

trust

which

the

any

agreement,
plan

is

established or operated.” 29 U.S.C. § 1132(c)(1) requires a Plan
Administrator to respond within thirty days of a written request

28
13

1

or risk sanctions of up to $110 per day for delay.

2

Moon contends in her capacity as a Plan beneficiary she

3

sent Habib a written request for plan documents dated February

4

25, 2010. Habib acknowledged receipt of the letter on March 4,

5

2010. (Defs. SUF ¶ 242.) Moon argues Habib “did not provide the

6

[requested] documents until June 22, 2010.” (Pl. Mot. 10:11.)

7

Habib

8

provided Moon copies of the requested documents eight days after

9

Moon sent him, through her attorney, written authorization to

10

release the requested documents to her attorney. (Defs. Unsealed

11

Notice & Mot. Summ. J. (“Defs. Mot.”) 8:15-17, ECF No. 107.)

12

Habib

13

request

14

authorization from Moon authorizing her attorney to receive the

15

documents on her behalf.

counters

contends

16

did

he

his
not

has

not

violated

obligation
commence

§

1024(b)(4)

to

respond

until

he

to

because

Moon‟s

received

a

he

document
written

A Plan Administrator is not “obliged to disclose any

17

documents

18

authorization from” the beneficiary. Bartling v. Fruehauf Corp.,

19

29 F.3d 1062, 1072 (6th Cir. 1994). However:

20
21
22
23
24
25
26
27
28

to

[a

Plaintiff‟s]

attorney

without

a [P]lan [A]dministrator is not entitled to
ignore
a
request
for
pension
benefits
information made by an attorney on behalf of
a participant . . . Instead, a [P]lan
[A]dministrator
must
either
provide
the
requested information to the plan beneficiary
. . . or must . . . inform the attorney that
the information will be released upon the
receipt of an authorization signed by the
plan participant. A [P]lan [A]dministrator
who fails to take either of these steps
within the thirty day period imposed by 29
U.S.C. § 1132(c) is subject to the fines
authorized by that same provision, at the
discretion of the district court.
Minadeo v. ICI Paints, 398 F.3d 751, 758 (6th Cir. 2005).
14

written

1

Since it is uncontroverted that Habib received Moon‟s

2

February 25, 2010 plan document request by March 4, 2010, he had

3

an obligation to respond within thirty days, by either providing

4

the requested documents to Moon or informing Moon‟s attorney that

5

the documents would only be released upon receipt of written

6

authorization from Moon. He did neither. (Defs. SUF ¶ 244.) Habib

7

did not provide Moon with the documents until well beyond the

8

thirty

9

respond. Therefore, Moon has shown Habib violated § 1024(b)(4).

day

statutory

period

within

which

he

was

required

to

10

3. Statutory Penalties

11

An administrator who fails to comply with his duties

12

under either section 1025(a) or section 1024(b), “may in the

13

court's

14

beneficiary for statutory penalties. 29 U.S.C. § 1132(c)(1); 29

15

C.F.R.

16

from $100 per day to $110 per day for violations occurring after

17

July 29, 1997). “Whether to impose statutory penalties and the

18

amount of those penalties (up to $110 a day) is discretionary.”

19

Hemphill v. Estate of Ryskamp, 619 F. Supp. 2d 954, 975 (E.D.

20

Cal. 2008).

21

[1]

22

administrator, [2] the length of the delay, [3] the number of

23

requests made and documents withheld, and [4] the existence of

24

any prejudice to the participant or beneficiary.” Hemphill, at

25

976 (citing Romero v. SmithKline Beecham, 309 F.3d 113, 129 (3d

26

Cir. 2002)); Zann Kwan v. Andalex Group LLC,737 F.3d 834, 848

27

(2nd Cir. 2013)(same).

28

in the nature of punitive damages, designed more for the purpose

discretion

bad

§2575.502c-1

be

personally

(increasing

the

liable”

to

maximum

the

requesting

statutory

penalty

“Appropriate factors to be considered . . . include

faith

or

intentional

misconduct

on

the

part

of

the

Section 1132 penalties are “meant to be

15

1

of punishing the violator than compensating the participant or

2

beneficiary.” Scott v. Suncoast Beverage Sales, Ltd., 295 F.3d

3

1223, 1232 (11th Cir. 2002); see also Starr v. Metro Sys., Inc.

4

461 F.3d 1036, 1040 (8th Cir. 2006) (“The purpose of [ERISA‟s

5

statutory penalties] is to provide plan administrators with an

6

incentive to comply with the requirements of ERISA. . . and to

7

punish noncompliance.”).

8

a.

9

Moon

Penalties for Claim One

seeks

the

maximum

statutory

penalty

under

§

10

1025(a) for every day in each calendar quarter in which Habib

11

failed

12

January 1, 2007 through the first quarter of 2010, and from the

13

third quarter of 2010 to the present.

to

provide

14

her

with

a

pension

benefit

statement

from

1. Bad Faith or Intentional Misconduct

15

Plan Administrator Habib argues his failure to provide

16

Moon a pension benefit statement was not because of bad faith or

17

intentional misconduct, since he was not the Plan Administrator

18

when Moon‟s DRO was signed and he did not have knowledge of the

19

DRO until 2010.

20

Moon argues Habib‟s lack of knowledge about the “QDRO

21

prior to 2010” does not prevent a finding that he acted in bad

22

faith

23

statements because he “knew about Mr. Rush‟s divorce from Ms.

24

Moon, and was aware for years that both the Plan and Ms. Moon

25

individually owned interests in the . . . [P]roperty, but never

26

asked

27

involved

28

affected the Plan in any way.”

for

Mr.

failing

Rush
in

the

to

or

provide

anyone

divorce

else

her

quarterly

whether

settlement

or

any

pension

Plan

whether

benefit

assets
the

were

divorce

(Pl. Mot. 12:11-16.) Moon also
16

1

argues that Habib‟s bad faith is evidenced by his refusal to

2

provide her quarterly pension benefit statements even after the

3

California appellate court ruled that the DRO is qualified.

4

Moon has not shown that Habib‟s failure to provide her

5

with quarterly pension benefit statements before his receipt of

6

Moon‟s February 25, 2010 letter demonstrates that his failure

7

stemmed from bad faith or intentional misconduct. However, Habib

8

did not begin sending Moon quarterly pension benefit statements

9

after

he

received

February

failure

25,

12

2014

13

beneficiary

14

presumptively qualified”.

15

acted in bad faith or committed intentional misconduct when he

16

failed to provide her quarterly pension benefit statements after

17

receiving the February 25, 2010 communication.

of

18

the

2.

19

Moon

argues

on

Plan

June

pursuant

20,

the

Moon‟s

appellate court made clear in In re Marriage of Rush, C070841,
*2,

after

from

11

at

even

letter

counsel.

2795475,

continued

2010

10

WL

This

the

2014

that

the

California

DRO

to

Moon
which

is

a

“is

Therefore, Moon has shown that Habib

Length of Delay
Habib

continues

to

violate

§

1025(a)

20

because he has not provided her with a quarterly pension benefit

21

statement

22

calendar quarter. (Pl. SUF ¶ 29.) Habib failed to respond to this

23

argument.

24

quarterly pension benefit statements is ongoing since he has not

25

provided Moon with a quarterly pension benefit statement since

26

June 2010 and his ongoing violation weighs in favor of imposing a

27

penalty.

28

///

since

June

Therefore,

2010,

and

Habib‟s

she

delay

17

is

in

entitled

to

providing

one

Moon

each

with

1

3.

2

Habib

Number of Requests

argues

Moon‟s

weighs

single

pension

statement

4

counters

that

5

ERISA does not require her to request pension benefit statements

6

before Habib‟s obligation to provide them to her is triggered.

7

4.

8
9

written

request

a

a

benefit

her

imposing

for

3

unlike

against

request

for

penalty.
plan

Moon

documents,

Prejudice

Habib argues Moon suffered no prejudice as a result of
his

failure

to

timely

provide

her

with

quarterly

benefit

10

statements, contending that from the time she and Rush signed the

11

DRO

12

attributable to the Plan under the DRO; and, therefore even if

13

had been alerted to the dispute regarding her ownership in the

14

Plan‟s

15

additional income from the Plan. Habib also argues any prejudice

16

Moon claims to have suffered is due to her own inaction rather

17

than his breach since she failed to communicate with the Plan

18

Administrator for fifteen years after the DRO was entered.

19

in

1995

until

interest

Moon

in

2009,

the

contends

she

Property

she

received

she

“has

100%

could

invested

of

not

the

have

years

income

received

and

many

20

thousands of dollars in attorney‟s fees in trying to obtain a

21

clear statement of her interest in the Plan, and since Defendants

22

have repudiated the Pension Benefits Statement, she still does

23

not even have one.” (Pl. Mot., 11:8-10, ECF No. 97.) Moon further

24

argues: “If she had been provided with complete and accurate

25

quarterly statements as she should have been, she would have

26

known since at least 2006 that there was a dispute as to her

27

ownership of the Plan‟s interest in the . . . [P]roperty, because

28

the statement would have had to indicate the value of her portion
18

1

(as opposed to Rush‟s asserted separate property portion).” (Pl.

2

Mot. 11:10-14.) She also argues she was “hampered in her ability

3

to

4

administration of the Plan and Rush‟s self-dealing with respect

5

to the Property because she had no idea there was any issue with

6

the QDRO‟s allocation of the Plan‟s interest in the Property to

7

her” as a result of Habib‟s failure to perform his duties as Plan

8

Administrator. (Pl. Reply ISO Mot. Summ. J. (“Pl. Mot. Reply,”)

9

8:6-9, ECF No. 120.)

pursue

fiduciary

breach

claims

based

on

Defendants‟

10

Moon also submits a declaration in which she declares

11

that she “did not know before 2011 that Mr. Rush believe[d] that

12

he has a separate property interest in the Plan‟s share of the

13

[Property] or that there was any problem with the QDRO.” (Decl.

14

Moon ISO Opp‟n Countercl. Rush‟s MSJ ¶ 14, ECF No. 117.)

15

Moon

has

shown

she

is

still

deprived

of

quarterly

16

pension benefit statements.

17

has suffered prejudice as a result of Habib‟s ERISA statutory

18

violations,

19

failure to timely provide Moon with Plan documents. Godwin v. Sun

20

Life Assur. Co. of Canada, 980 F.2d 323, 327 (5th Cir. 1992)

21

(“section 1132 does not require the claimant to show he was

22

prejudiced to be entitled to penalties”); Kaiser Permanente Emp.

23

Pension Plan v. Bertozzi, 849 F. Supp. 692, 702 (N.D. Cal. 1994)

24

(“Although prejudice is not required to prevail on a section

25

1132(c) penalty claim, most courts do inquire as to whether the

26

claimant has suffered some type of prejudice before exercising

27

the discretion vested in them under section 1132(c).”).

28

a

lack

Considering

of

Although it is unclear whether she

prejudice

the

factors
19

does

not

involved

exonerate

with

the

Habib‟s

statutory

1

penalty

2

granted and Habib‟s motion is denied. Habib is ordered to pay

3

Moon $20 a day for his failure to provide Moon with pension

4

benefit statements for two quarters in 2010 beginning on July 1,

5

2010 and until the date this order issues.

See Treadwell v.

6

Schweiker,

1983)

7

calendar quarter to mean the period of three months ending on

8

March 31, June 30, September 30, or December 31).

decision,

698

Moon‟s

F.2d

9

b.

137,

motion

138

for

n.1

(2d

statutory

Cir.

penalties

is

(finding

a

Penalties for Claim Two

10

Moon also seeks the maximum statutory penalty under §

11

1024(b)(4) for each of the eighty-seven days that Habib delayed

12

in

13

penalty should be calculated from the date her counsel mailed

14

Habib a request for Plan documents, February 25, 2010.

providing

her

15

the

requested

plan

documents,

arguing

the

1. Bad Faith or Intentional Misconduct

16

Habib argues he did not engage in any conduct that

17

could be characterized as bad faith, and timely responded to

18

Moon‟s inquiry and request; and that he did not know about Moon‟s

19

DRO until 2010.

20

Moon argues Habib acted in bad faith when he failed to

21

timely provide her with the documents she requested since “if Mr.

22

Habib was actually concerned about an unauthorized request for

23

information, he could have sent documents directly to Ms. Moon”

24

rather than to her counsel and because he did not, “[h]is delay

25

is indicative of bad faith.” (Pl. Mot. 13:15-17.)

26

Moon has not shown that Habib‟s decision to communicate

27

with Moon through counsel rather than directly evinces bad faith

28

or intentional misconduct.
20

1

2.

Length of Delay

2

Habib argues his delay in providing Moon the requested

3

Plan documents was reasonable under the circumstances since Moon

4

did not provide him with written authorization that he could

5

release the Plan documents to her counsel until June 16, 2010,

6

and he sent her the documents eight days after that authorization

7

was received. (Defs. SUF ¶ 244-45.) Habib also argues his delay

8

was caused by Moon‟s counsel since when Habib contacted her to

9

discuss the matter in May 2010, she did not respond. (ECF No.

10

100-20.)

11

Moon rejoins that Habib cannot justify his delay by

12

focusing on the date Moon provided him with written authorization

13

to release the documents because Habib did not communicate his

14

need for Moon‟s written authorization until at least three months

15

after her initial request.

16

Habib‟s explanation for his delay in waiting until June

17

2010 to respond to Moon‟s request for Plan documents in her

18

February 25, 2010 letter is not in compliance with § 1024(b).

19

Although

20

authorization justifying release of the documents to her counsel

21

until

22

authorization until earlier that month. (Def. SUF ¶¶ 244-245.)

23

Habib has shown that e-mail communications with Moon‟s counsel

24

evince that Moon‟s counsel was not immediately responsive to his

25

attempts to speak with her. However, the e-mails contain nothing

26

about

27

requested documents would be provided. (Wasow Decl. MSJ Ex. 20,

28

(“May 31 E-mail”) ECF No. 100-20) (e-mail communication between

Habib

June

Moon‟s

16,

argues

2010,

written

Moon

Habib

did

not

did

authorization

21

provide

not

him

request

being

with

Moon‟s

required

written

written

before

the

1

Moon‟s counsel and Habib).

2

3.

Number of Requests

3

Habib argues Moon‟s single request for Plan documents

4

weighs against imposing a penalty. Moon counters that in addition

5

to the request in her February 25, 2010 letter, her counsel also

6

told Habib on April 19, 2010 and June 1, 2010 that Habib had not

7

responded to the request in the February 25, 2010 letter. (ECF

8

Nos. 100-17, 100-19, 100-21.)

9

4.

10
11

Prejudice

Moon has not shown that she was prejudiced by Habib‟s
delay in responding to her document request.

12

Considering

factors

Moon‟s

motion

involved

the

14

granted and Habib motions is denied. Habib is ordered to pay $30

15

a day for each of the eighty days he violated 29 U.S.C. § 1024

16

from when he sent notice to Moon‟s counsel that he had received

17

her request for documents on March 4, 2010 until he provided the

18

documents on June 22, 2010. (Defs. SUF ¶¶ 241, 245.)
Claims

3-7:

Prohibited

or

statutory

statutory

penalty

C.

for

with

13

19

decision,

the

Conflict

penalties

of

is

Interest

20

Transactions; Breach of Fiduciary Duty

21

Moon seeks summary judgment on claims three through

22

five. Rush seeks summary judgment on claims three through seven,

23

and Defendants Habib and McKenna seek summary judgment on claims

24

five and six. Moon alleges in claims three through seven that

25

certain Defendants, in their capacity as a Plan Trustee, breached

26

one or more

fiduciary duties owed to the Plan.

27

1. Application of 29 U.S.C. § 1113

28

Defendants argue claims three through seven are barred
22

1

by the limitations periods prescribed in 29 U.S.C. § 1113 are “to

2

the extent they rely on any events that occurred earlier than (1)

3

October 28, 2004, if Moon had no knowledge of the underlying

4

events, or (2) October 28, 2007, if she had such knowledge.”

5

(Defs. Mot.” 11:8-11.)

6

29 U.S.C. § 1113 prescribes:

7

No action may be commenced . . . with respect
to
a
fiduciary's
breach
of
any
responsibility, duty, or obligation . . .
after the earlier of--

8
9
10
11
12
13
14
15
16
17

(1) six years after (A) the date of the last
action which constituted a part of the breach
or violation, or (B) in the case of an
omission the latest date on which the
fiduciary could have cured the breach or
violation, or
(2) three years after the earliest date on
which the plaintiff had actual knowledge of
the breach or violation; except that in the
case of fraud or concealment, such action may
be commenced not later than six years after
the date of discovery of such breach or
violation.
a.

Claims Three, Four and Seven Alleging Rush

18

Breached

19

His

Fiduciary

Duties

as

a

Plan

Trustee

20

The third, fourth, and seventh claims in the Complaint

21

concern Rush‟s dual role as a Trustee of the Plan and a part

22

owner of the Property in his individual capacity. Moon alleges

23

while in this dual role Rush breached his fiduciary duties as

24

Plan Trustee by entering agreements “for the payment of rent to

25

him[self] on Plan property, . . . failing to transmit the Plan‟s

26

share of the rents to the Plan,” “making decisions regarding

27

leasing, maintaining and selling the [Property],” and “placing

28

himself in a conflicted position with respect to the Plan. . . by
23

1

taking for himself rents and tax benefits attributable to the

2

Property owned by the Plan.” (Compl. ¶¶ 69, 74, 91.)

3

Rush
in

purchased

the

and

testified during her deposition that Rush is at least partially

6

responsible for managing the Property and collecting rents from

7

the tenants. (Huss Decl. Ex. 2 (“Moon Dep. Tr.”) 96:11-16, ECF

8

NO. 90-2.) Rush testified during his deposition that Moon is not

9

always

decisions

(Pl.

he

SUF

individual

5

the

1999.

an

interest

with

since

maintained

4

involved

Property

has

made

¶

14.)

regarding

Moon

the

10

Property. (Waslow Decl. Opp‟n, Ex. 2 (Dep. David Rush) 210:6-23.)

11

Neither party provides evidence demonstrating precisely when Rush

12

allegedly engaged in the asserted prohibited transactions.

13

Disputed evidence precludes deciding precisely whether

14

or when Moon had actual knowledge of the asserted violations and

15

when was the “latest date on which [Rush] could have cured the

16

breach or violation.” 29 U.S.C. § 1113. Therefore, Moon‟s motion

17

on claims three and four and Rush‟s time barred motion on claims

18

three, four and seven are denied.

19

b. Claims Five and Six

20

Moon alleges in her fifth claim that in violation of

21

Defendants‟ fiduciary duties imposed by ERISA Defendants “failed

22

to ensure that the Plan made a determination as to qualification

23

[of

24

determination within a reasonable period of time, [failed to]

25

segregate[]

26

account, or provide[] her with an initial accounting or periodic

27

statement of account” and “fail[ed] to properly establish written

28

procedures to determine the qualified status of the QDRO and

Moon‟s

DRO],

the

[failed

assets

to]

allocated

24

notif[y]

to

Ms.

Ms.

Moon

Moon

in

a

of

such

separate

1

inform Ms. Moon ... of these procedures.” (Compl. ¶¶ 80-81).

2

Moon

alleges

in

her

sixth

claim

that

Defendants

3

“breached their [fiduciary] duties as Trustees . . . by . . .

4

failing

5

investment . . .

to

investigate,

oversee,

and

account

for

the

Plan‟s

in the [Property].” (Compl. ¶ 87.)

6

Here too disputed evidence precludes deciding precisely

7

whether or when Moon had actual of the asserted violations and

8

when was the “latest date on which [Defendants] could have cured

9

the

10
11
12

breach

or

violation.”

29

U.S.C.

§

1113.

Therefore,

each

motion is denied.
2.

Claims 3, 4 and 7 Concerning Whether Rush Breached
His Fiduciary Duties to the Plan

13

Rush seeks summary judgment on claims three, four and

14

seven, in which Moon alleges he breached his fiduciary duties to

15

the Plan, arguing “discovery . . . reveal[s] . . . no basis in

16

fact” to support the claims. (Defs. Mot. 15:19-20.)

17

Moon counters that the facts show Rush made unilateral

18

decisions regarding the sale and management of the Property at a

19

time when he was acting in a dual capacity as Plan fiduciary and

20

individual owner of an interest in the Property, which violated

21

his fiduciary duties to the Plan.

22

(“Defs. Mot. Opp‟n”) 22:23-24, ECF No. 115.)

(Pl. Opp‟n Defs. Mot. Summ. J.

23

ERISA requires that a fiduciary “discharge his duties

24

with respect to a plan solely in the interest of the participants

25

and beneficiaries and . . . for the exclusive purpose of . . .

26

providing benefits to participants and their beneficiaries.” 29

27

U.S.C. § 1104(a)(1). ERISA further requires that “[a] fiduciary

28

with respect to a plan shall not ... deal with the assets of the
25

1

plan in his own interest or for his own account.” Id. § 1106(b).

2

However,

disputed

factual

issues

concerning

whether

3

Rush‟s actions breached his fiduciary duties preclude decision on

4

the motion. Therefore, Rush‟s motion on these claims is denied.

5

3.

Claim

6

5

Concerning

Whether

Defendants

Breached

Their Fiduciary Duties to the Plan

7

Defendants seek summary judgment on Moon‟s fifth claim

8

in which she alleges they failed to establish written procedures

9

to determine if her DRO was qualified in violation of 29 U.S.C. §

10

1056(d)(3).

11

a. McKenna

12

Defendant
because

McKenna
has

he

alleged

is
“no

entitled

13

judgment

14

facts

or

to

summary

regarding his involvement. (Defs. Mot. 122:12-13.)

15

Moon

argues

evidence”

Moon did not counter McKenna‟s showing that the record

16

is

devoid

of

17

“specific facts showing that there is a genuine issue for trial.”

18

T.W. Elec. Serv., Inc., 809 F.2d at 630 (quoting former Rule

19

56(e)). Therefore, McKenna‟s summary judgment motion is granted

20

on claim five.

21

facts

to

support

the

claim

against

him

with

b. Rush and Habib

22

Rush and Habib argue they cannot be held liable for

23

failing

24

determine the qualified status of the QDRO and [and for failing

25

to] inform Ms. Moon . . . of these procedures” since they had no

26

obligation to do these things until Moon presented the QDRO to

27

the Plan Administrator in 2010.

28

in

1995

Moon

“to

properly

counters

that

establish

under
26

the

written

terms

procedures

of

the

to

QDRO,

1

presenting

2

Habib‟s obligations to her. Moon argues it is uncontroverted both

3

that she mailed the QDRO to Rush in 1995 and that the Plan did

4

not establish written procedures to determine whether a domestic

5

relation order is qualified until fifteen years later.

it

to

Rush

was

sufficient

to

trigger

Rush‟s

and

6

“Upon obtaining a domestic relations order in a state

7

court proceeding, an alternate payee who seeks to establish a

8

right to payment . . . must present the order to the pension plan

9

administrator for determination of whether it is a QDRO.” Trs. of

10

Dirs. Guild of Am.-Producer Pension Benenfits Plans v. Tise, 234

11

F.3d 415, 410 (9th Cir. 2000).

12

During their divorce proceeding Moon and Rush signed a

13

DRO designed to divide their community assets in the Plan. (Defs.

14

SUF ¶ 20.) Moon‟s family law counsel drafted the DRO, which

15

states in part: “The undersigned parties and/or fully authorized

16

agents agree . . .

17

shall be bound by the following orders of the court.” (Wasow

18

Decl. MSJ, Ex. 8, (“DRO”) ECF No. 100-8.) (emphasis added).

19

the time Moon and Rush signed the DRO, Rush was a Trustee of the

20

Plan.

21

“Notice/Identification” section detailing how each party: Rush,

22

Moon and the Plan, was to receive notices relating to the DRO.

23

In the notice section, Rush made a handwritten interlineation to

24

the draft Moon‟s family law counsel prepared. (Wasow Decl. MSJ,

25

(“DRO”) Ex. 8 (“DRO”), ECF No. 100-8.) The draft includes the

26

following

27

“Name: Peters et al Profit Sharing Plan f/b/o David H. Rush c/o

28

Administrator: David H. Rush Address: 414 Salem Street, Chico,

(Pl.

that the parties including claimant plan ...

SUF

information

¶

3.)

about

The

the

27

DRO

Plan‟s

also

contact

contains

At

a

information:

1

California.” (Id.) In the signed copy, Rush crossed out the word

2

“Administrator”

3

mailed

4

Companeros, Chico, CA, 95926 in 1995. (Defs. SUF ¶ 27.) Rush

5

received

6

Trustee or the then-Plan Administrator David Fuller. (Defs. SUF ¶

7

33; Pl. SUF ¶ 12.)

a

copy

the

and
of

DRO,

wrote
the

but

DRO

did

“Trustee”
to

in

Rush‟s

not

share

its

home

it

place.

(Id.)

address,

635

with

any

other

Moon
Paseo

Plan

8

Since Rush altered the DRO to indicate that he was a

9

Plan Trustee, but left his name as the person to receive notices

10

on behalf of the Plan, when he signed the DRO he authorized Moon

11

to send notice to the Plan through him. It is uncontroverted that

12

Moon sent Rush a copy of the DRO to his home address in 1995.

13

(Defs. SUF ¶ 27.) Defendants‟ argument that service on Rush was

14

improper because it was sent to his home address rather than his

15

work address as listed in the DRO is unsupported by authority.

16

Habib argues that if the Plan received notice of the

17

QDRO when Moon mailed it to Rush in 1995, then he cannot be held

18

liable for the Plan‟s failure to qualify the DRO at that time

19

since he was not yet a Plan fiduciary. ERISA prescribes that “no

20

fiduciary shall be liable with respect to a breach of fiduciary

21

duty under this subchapter if such breach was committed before he

22

became a fiduciary.” 29 U.S.C. § 1109(b). It is undisputed that

23

Moon served a copy of the QDRO on Rush in 1995 and that in 1995

24

Habib was not yet Plan Administrator. (Defs. SUF ¶¶ 27, 36.)

25

Therefore, Habib cannot be liable for a failure to act in 1995

26

because ERISA does not make him liable for breaches that preceded

27

his role as a fiduciary. Accordingly, Habib‟s motion for summary

28

judgment on claim five is granted and Moon‟s motion for summary
28

1

judgment against Habib on claim five is denied.

2

Rush argues that he cannot be held liable for claim

3

five

because

he

4

acknowledges

5

alleges Rush violated in claim five, 29 U.S.C. § 1056(d)(3)(G)-

6

(H) imposes “duties . . . on pension plan administrators.” (Pl.

7

Mot. 13:28) (emphasis added). However, Moon counters that even

8

though Rush was never a Plan Administrator, the Ninth Circuit‟s

9

precedent in Stewart permits liability against him for violating

10

section 1056(d)(3). Moon contends in Stewart, the court imposed

11

section 1056(d)(3) liability on an ex-spouse who received notice

12

of a DRO when the ex-spouse was a Plan Trustee as Rush is here.

in

has
her

never
motion

been
that

a
the

Plan

Administrator.

provisions

of

ERISA

Moon
she

13

Rush replies that Stewart does not create liability

14

against an ex-spouse who is not a Plan Administrator, and that

15

the

16

Administrator.

ex-spouse

in

Stewart

was

both

a

Trustee

and

Plan

17

Moon has not shown that Stewart authorizes liability

18

against Rush for failing to perform a Plan Administrator‟s duties

19

about which she complains.

20

Plan Administrator. Stewart, 207 F.3d at 1143 (holding that each

21

member

22

constructive notice of the DRO once plaintiff provided it to her

23

husband who was both a trustee and member of the committee of

24

plan administrators). The handwritten changes Rush made on the

25

DRO

26

“Administrator” next to his name and replaced it with “Trustee.”

27

(Wasow

28

Rush‟s motion for summary judgment on claim five is granted.

of

the

clarified

Decl.

plan‟s

his

MSJ,

Stewart concerned the function of a

committee

status

Ex.

8

where

(“DRO”),

29

of

plan

he

ECF

administrator‟s

crossed

No.

out

100-8.)

the

had

word

Therefore,

1

4.

Claim

2

6

Concerning

Whether

Defendants

Breached

Their Fiduciary Duties to the Plan

3

Defendants seek summary judgment on Moon‟s sixth claim

4

in which Moon alleges they failed “to investigate, oversee, and

5

account for the Plan‟s investment[] [in the Property,]” arguing

6

Moon

7

Property

8

decrease in value cannot be linked to the Defendants. (Defs. Mot.

9

19:15-20:19.)

lacks

10

credible

decreased

Moon

evidence
between

counters

demonstrating

2003

that

and

the

2009,

value

and

appraisals

of

any

the

of

the

alleged

Property

11

demonstrate a genuine issue as to whether the Property‟s value

12

decreased and that “Defendants have not demonstrated the absence

13

of

14

administration of the Plan, nor have they shown by undisputed

15

facts that the Property has not suffered a diminution in value as

16

a result of their imprudent behavior.” (Defs. Mot. Opp‟n 25:6-8.)

17

A fiduciary‟s “duties are „the highest known to law‟”

18

and “[t]o enforce them, [a] court focuses on not only the merits

19

of

20

investigation

21

Shay, 100 F.3d 1484, 1488 (9th Cir. 1996). Each Defendant owed

22

the Plan a fiduciary duty.

any

the

23

triable

issues

transaction,
into

Moon
facts

the

opposes

concerning

but

also

merits

the

preclude

of

motion

the
the

management

thoroughness
transaction.”

with

evidence

the

Howard

showing

that

following

26

performed

27

investigating

28

Property. Rush gave deposition testimony that he did not know

his

fiduciary
and

issue

duties

evaluating

the

30

of
to

whether
the

Plan‟s

submits

v.

25

the

Moon

of

disputed

on

judgment.

and

24

testimony

summary

their

each

Plan

by

investment

the

Defendant
properly
in

the

1

anything about

2

gave deposition testimony that he did not recall the Property

3

ever being discussed at a meeting of the trustees; and McKenna‟s

4

gave deposition testimony that indicating he is not familiar with

5

the Plan and its administration. (Wasow Decl. Opp‟n, Ex. 2 (Dep.

6

David Rush,) 40:11-13, ECF No. 116-2; Ex. 7 (Dep. Mark Habib,)

7

114:13-15, ECF No. 116-7; Ex. 10 (Dep. James McKenna,) 25:9-19;

8

29:4-17; 36:7-21; 55:9-16, ECF No. 116-10.)

9

fiduciary obligations imposed by ERISA; Habib

It is uncontroverted that over time, appraisals of the

10

Property‟s

11

$2,600,000 in 2003 and $850,000 in 2009 (Defs. SUF ¶¶ 173, 199.)

12

These

13

testimony about the degree of care they used in investigating and

14

evaluating the Plan‟s investment in the Property preclude summary

15

judgment on this claim. Therefore, Defendants‟ motion for summary

16

judgment on claim six is denied.

17

value

have

appraisals

D.

Claims

and

8

and

decreased.

the

9:

The

Defendants‟

Accounting

Property

was

referenced

and

valued

at

deposition

Conversion;

Rush’s

18

Counter-Claims for Accounting; Breach of Oral and/or

19

Implied in Fact Contract; and Account Stated

20

Rush seeks summary judgment on Moon‟s accounting and

21

conversion claims (eight and nine) in which Moon alleges since

22

2009, Rush has wrongfully withheld from her and the Plan income

23

he obtained from the Property. These claims depend on the terms

24

of the Property income agreement between Rush and Moon. Rush‟s

25

counterclaims for accounting, breach of oral/and or implied in

26

fact contract and accounts stated are also based on the terms of

27

the Property income agreement.

28

Rush argues “he and Moon agreed to split income and
31

1

expenses associated with [the Property] in proportion to their

2

ownership interests.” (Counter Cl. Mot. 6: 17-20, ECF No. 99.)

3

Moon gave deposition testimony that under the Property income

4

agreement, Rush deposited all rents from the Property into Moon‟s

5

bank account, and she was entitled to retain all the rental

6

income.

7

Virginia

8

rejoins

9

supported

10

(Defs.

SUF

Moon,)
the

¶¶

94:16-23,

Property

by

88-89;

Decl.

109:11-110:3,

income

“documentary

Wasow

agreement

evidence

Opp‟n,

ECF

No.

Moon

and

Ex

1

(Dep.

116-1.)

Rush

describes

[the]

is

not

behavior

of

the

parties.” (Defs. Mot. 21:20-22.)

11

Moon‟s deposition testimony and Rush‟s conduct create a

12

genuine

13

Property

14

motion

15

counterclaims is denied.

16

issue

of

income
on

material

agreement.

Moon‟s

fact

regarding

Therefore,

accounting

and

the

terms

Rush‟s

summary

conversion

claims

of

the

judgment
and

his

Rush also argues his motion on Moon‟s accounting and

17

conversion

claims

18

granted, because the Property income agreement Moon testified to

19

in her deposition amounts to “federal income tax fraud,” making

20

it legally unenforceable. (Defs. Mot. 21:17-21, 23:10-12.) Moon

21

testified that under the terms of their agreement, although she

22

was entitled to retain all income from the Property, she was not

23

required to report any of it on her tax returns. (Defs. SUF ¶¶

24

88-89,

25

unenforceable, and when a court is faced with an unenforceable

26

agreement like the one Moon describes, it should “apply the[]

27

legal default,” which would require “cotenants [to] share the

28

rental income received ... in accordance with their proportionate

93.)

Rush

and

each

argues

of

such

32

his

an

counterclaims

agreement

should

is

be

legally

1

undivided interests.” (Defs. Mot. 23:27-24:13.)

2

Rush

does

not

support

this

argument

with

binding

3

authority. He does not cite any supporting state law and the

4

Ninth Circuit language he does cite is dicta. (Defs. Mot. 24:4-

5

13.) Therefore, Rush has not shown the argument is suitable for

6

summary judgment.

7

For

stated

Moon‟s

reasons,

accounting

and

Rush‟s

motion

conversion

for

summary

8

judgment

9

counterclaims for accounting, breach of oral and/or implied in

10

on

the

claims

and

his

fact contract and account stated is denied.

11

E.

12

Claim 10: Waste
Rush seeks summary judgment on Moon‟s tenth claim for

13

waste

in

which

Moon

14

property

15

selection and failure to care for the residence on the property

16

... the appraised value of the . . . [Property] decreased from

17

$2.6

18

although

19

depreciate,

20

valuation

21

Property‟s] value [is attributable] to Rush.” (Defs. Mot. 24:19-

22

21, 25:3-5.)

management,

million

to

Moon

and

as

$850,000.”
alleges

she
of

alleges:

has

the

a

result

(Compl.

Rush

not

“[u]nder

¶

Mr.
of

Mr.

106).

caused

the

demonstrated

the

Property”

or

that

Rush‟s

Rush‟s

Rush

“actual

tenant

argues

Property

“the

negligent

value

fair

decrease

in

that
to

market
[the

23

Moon counters with an appraiser‟s report showing that

24

at a time when Rush was involved in maintaining the Property, it

25

fell

26

feasible to rehabilitate” it because the cost of repair could not

27

be recaptured even if the Property was sold. (Huss Decl. MSJ, Ex

28

52 (Johnson Appraisal Report) at 35, ECF No. 93-1; Wasow Decl.

into

such

disrepair

that

33

“it

would

not

be

financially

1

Opp‟n, Ex. 2 (Dep. David Rush,) 24:1-8, ECF No. 116-2.)

2

Rush replies that the referenced appraiser‟s report is

3

based “on an „extraordinary‟ hypothetical condition,” that “has

4

never occurred and is highly unlikely to occur . . . .” (Defs.

5

Mot. 20:1-7.)

6

In California, “[w]aste is a tort actionable for the

7

protection of an owner of an interest in land.” Cal. Dep‟t. of

8

Toxic Substances Control v. Payless Cleaners, College Cleaners,

9

368 F. Supp. 2d 1069, 1082 (E.D.Cal. 2005); see also Cal. Civ.

10

Code

§

11

omission, on the part of the person in possession of the property

12

which impairs the value of the lender‟s security.” Evans v. Cal.

13

Trailer Court, Inc., 28 Cal. App. 4th 540, 553 (1994).

14

732.

Waste

includes

“conduct,

by

both

commission

and

The appraisal report on which Moon relies could support

15

drawing

16

decreased during the period Rush managed it. (Huss Decl. MSJ, Ex

17

52 (Johnson Appraisal Report) at 35, ECF No. 93-1; Wasow Decl.

18

Opp‟n, Ex. 2 (Dep. David Rush,) 24:1-8, ECF No. 116-2.) Although

19

Rush challenges the credibility of this appraisal, “[c]redibility

20

determinations. . . [are a] jury function[], not [the function

21

of] of a judge, whether ruling on a motion for summary judgment

22

or for a directed verdict.” Anderson, 477 U.S. at 255.

23
24
25

a

reasonable

Therefore,

inference

Rush‟s

that

summary

the

judgment

Property‟s

motion

on

value

Moon‟s

waste claim is denied.
F.

Claim 11: Declaratory Relief

26

Defendants seek summary judgment on Moon‟s declaratory

27

relief claim in which she requests “a declaration from the Court

28

that [she] is a beneficiary under the Plan and is entitled to a
34

1

segregated account within the Plan.” Defendants argue Moon fails

2

to show she would benefit from declaratory relief since she “has

3

always personally received the benefit of the income from the

4

Plan‟s ownership interest in the Property.” (Defs. Mot. 25:12-

5

14.)

6

However,

Moon

provides

evidence

that

she

has

not

7

received any income from the Property in her individual capacity

8

or in her capacity as the Plan beneficiary since 2009. (Pl. SUF ¶

9

20.) Therefore, Defendants‟ summary judgment motion is denied.

10

G.

Moon’s Statute of Limitations Defense against Rush’s

11

Accounting Counterclaim

12

Rush

seeks

summary

judgment

on

Moon‟s

statute

of

13

limitations defense asserted against his accounting counterclaim.

14

Moon

15

because she ceased reimbursing him for Property expenses in 2003,

16

yet Rush did not raise his accounting counterclaim until well

17

after the statute of limitations expired.

asserts

Rush‟s

accounting

counterclaim

is

time-barred

18

Rush counters that the statute of limitations on this

19

claim did not begin running when Moon ceased reimbursing him in

20

2003 because, at that time, Moon continued to perform additional

21

obligations

22

alarm monitoring expenses on the Property. Rush argues because

23

Moon continued to perform some of her contractual obligations,

24

the

25

contract as still alive” by performing his obligations until he

26

decided to treat the contract as breached and ceased performing

27

his own obligations. Rush asserts he treated the contract as

28

breached in 2009 when he stopped depositing the Property‟s rental

waiver

under

of

the

breach

agreement

doctrine

35

by

paying

permitted

property

Rush

to

taxes

“treat

and

the

1

income into Moon‟s account. Rush contends, therefore, the statute

2

of limitations on his accounting counterclaim began to run in

3

2009 when he failed to remit the rental income to Moon; and thus,

4

his

5

tolling agreement in 2010. (Counter Cl. Mot. 9:11-13.)

claim

was

still

timely

when

the

parties

entered

into

a

6

Moon replies that her agreement to pay property taxes

7

and alarm monitoring expenses on the Property was a separate

8

agreement

9

California law did not entitle Rush to “treat the contract as

10

still alive” when she ceased reimbursing him for expenses in

11

2003.

12

from

In

the

Property

California,

income

“when

agreement

there

are

and,

ongoing

therefore,

contractual

13

obligations [under an agreement and one party ceases to perform

14

some of his or her contractual obligations,] the [other party to

15

the

16

breach, and the statute of limitations does not begin to run

17

until [that party] has elected to treat the breach as terminating

18

the contract.” Romano v. Rockwell Internat., Inc., 14 Cal. 4th

19

479, 489 (1996) (citing 1 Witkin, Summary of Cal. Law, (9th ed.

20

1987), Contracts, §§ 800-801, pp. 723-724).

agreement]

21

may

elect

to

rely

on

the

contract

despite

a

Disputed factual issues exists on the question whether

22

Moon‟s

agreement

23

expenses was part of the Property income agreement or part of a

24

second subsequent agreement that preclude granting the motion.

25

Therefore,

26

issue.

27

///

28

///

Rush‟s

to

pay

summary

property

judgment

36

taxes

and

motion

is

alarm

monitoring

denied

on

this

1

IV.

CONCLUSION

2

For the stated reasons, Plaintiff‟s summary judgment

3

motion is GRANTED IN PART and DENIED IN PART; Defendants‟ summary

4

judgment

5

Counter-claimant‟s summary judgment motion is DENIED.

6

Dated:

motion

is

GRANTED

IN

December 19, 2014

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
37

PART

and

DENIED

IN

PART;

and