Snegirev et al v. Ovchinnikov et al

Filing 57

ORDER: Plaintiffs' Motion for Summary Judgment 45 is granted. Defendant Fred Ovchinnikov's Motion for Order 17 and Motion for Summary Judgment 48 are denied. Because Victor breached his fiduciary duty, Victor is removed as co-trustee of the Trust. Because the two July 30, 2013 conveyances were without any consideration, the two conveyances are set aside. The Property is an asset of the Trust. Because the Property is an asset of the Trust, the United States of America's tax liens and judgments attached only to Victor's fractional beneficiary interest. Signed on 8/10/2017 by Judge Michael J. McShane. (cp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
AGAFYA SNEGIREV, individually and as
co-trustee of the Yakov Ovchinnikov Trust,
et al,
Plaintiffs,
v.

Civ. No. 6:16-cv-02132-MC
OPINION AND ORDER

VICTOR OVCHINNIKOV, individually
and as co-trustee of the Yakov Ovchinnikov
Trust, et al.,
Defendants.
_____________________________
MCSHANE, Judge:
Plaintiff Agafya Snegirev and Defendant Victor Ovchinnikov are co-trustees of a family
Trust which had contained a parcel of real property before Victor conveyed the Property from
the Trust to himself and then from himself to his wife, Defendant Penny Ovchinnikov. No
consideration was paid for the conveyances. Because there are federal tax liens and judgments

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for debts owed by Defendants Victor and Penny Ovchinnikov, when Victor transferred the
Property into his name individually those liens and judgments attached to the Property.
Plaintiffs bring this suit to set aside the conveyances and have the Property returned to
the Trust. Plaintiffs assert three claims: (1) breach of Fiduciary Duty; (2) to Set Aside
Conveyance; and (3) for Quiet Title against defendants Victor Ovchinnikov, Fred Ovchinnikov,
Penny Ovchinnikov, and United States of America. Before this Court is Plaintiffs’ motion for
summary judgment on those three claims. Pl.s’ MSJ, ECF No. 45.
Defendant Fred Ovchinnikov responds with a Motion for Order (ECF No. 17) and
Motion for Summary Judgment (ECF No. 48). Fred argues he is the valid owner of parcel 3 of
the Property in that he is the original purchaser of the property, and only through a serious of
unauthorized transfers did the property become an asset of the Trust before being transferred to
Victor and then to Penny.
United States of America has expressed an interest in preserving the amount and validity
of its tax liens against Victor, but otherwise does not take a position on Plaintiffs’ claims. USA’s
Resp. 2-3, ECF No. 51. If the Property is held by Victor or Penny Ovchinnikov, then the federal
tax liens against Victor encumber the entire property. Id. If the property is held by the Trust, then
the tax liens encumber only Victor’s beneficiary interest share of the property. Id.
Because Victor as a co-trustee conveyed the Property from the Trust to himself
individually without any consideration, Victor acted contrary to the beneficiaries’ interest,
breached his fiduciary duty, and is ordered removed as co-trustee of the Trust. Because the two
July 30, 2013 conveyances were without any consideration, the two conveyances are set aside.
The Property is deemed to be an asset of the Trust. Because the two conveyances are set aside,
the United States of America’s tax liens and judgments attached only to Victor’s fractional

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beneficiary interest.

Plaintiffs’ Motion for Summary Judgment (ECF No. 45) is GRANTED.

Defendant Fred Ovchinnikov’s Motion for Order (ECF No. 17) and Motion for Summary
Judgment (ECF No. 48) are DENIED.
PROCEDURAL BACKGROUND
This action was original filed in the Circuit Court of Marion County, Oregon, where the
Property at issue is located. Defendant United States removed this case to the U.S. District Court
of Oregon pursuant to 28 U.S.C. § 1444.
Entry of Default has been entered against Defendant Midland Funding LLC and
Defendant Christopher Vandaam for failure to answer or otherwise appear. Entry of Default was
entered against the State of Oregon with consent from the state with the understanding that a
money judgment against the State of Oregon is prohibited under ORS 30.360(3). See Order, ECF
No. 34 and Order, ECF No. 44.
FACTUAL BACKGROUND
Plaintiffs Agafya Snegirev, Kathy Efimov, Julie Ovchinnikov, and Tina Cesce, and
Defendants Victor Ovchinnikov and Fred Ovchinnikov are siblings and the adult children of
Yakov Ovchinnikov (“Yakov”) and Irina Ovchinnikov (“Irina). Declaration of Agafya Snegirev
(“Snegirev Decl.”) ¶ 2, ECF No.46.
In September 1997, Yakov created the Yakov Ovchinnikov Trust (“the Trust”) where he
was the sole Trustee of the Trust during his lifetime. Sengirev Decl. ¶ 3 & Ex. 1, ECF No. 46;
Pollock Decl. Ex. 10, Victor Ovchinnikov Depo, 7:24-8:1, ECF No. 47. Yakov then conveyed
into the Trust title to the parcel of real property:
Parcel 3 of Partition Plan No. 95-67, recorded in Reel 1244, Page 574, Marion
County Microfilm Records, together with a thirty (30) foot private access as
delineated on said partition plat.
(the “Property”) Snegirev Decl. Ex. 2, ECF No. 46.
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Yakov died three days later on September 8, 1997. Snegirev Decl. ¶ 5, ECF No. 46. Upon
Yakiov’s death, his widowed wife Irina became the sole Trustee of the Trust. Snegirev Decl. ¶ 5
& Ex. 1 p. 12, ECF No. 46.
Then in January 2012 Irina died. Snegirev Decl. ¶ 5, ECF No. 46. Following Irina’s
death, the two siblings Plaintiff Agafya Snegirev (“Agafya”) and Defendant Victor Ovchinnikov
(“Victor”) became co-trustees of the Trust. Snegirev Decl. ¶ 6 & Ex. 1 p. 12, ECF No. 46. The
Trust provided that following the deaths of Yakov and Irina, the Family Trust shall be divided
into equal shares, one share for each of the six siblings who is then surviving and one share, by
right of representation, for the surviving lineal descendants of each deceased sibling. Snegirev
Decl. Ex. 1 p. 8, sec. B 3, ECF No. 46.
A. Fred sues Agafya and Victor in state court
In April 2012, Defendant Fred Ovchinnikov (“Fred”) and his wife Vassa Ovchinnikov
(“Vassa”) filed a lawsuit 1 in state court against Fred’s five siblings to include Agafya and Victor.
Snegirev Decl. ¶ 8 & Ex.’s 3 and 4; ECF No. 46. Agafya and Victor were sued individually and
in their capacities as co-trustees of the Trust. Snegirev Decl. Ex. 4; ECF No. 46.
At trial Fred sought quiet title in the Property against his siblings. Decl. Ex. 4, ECF No.
46. Fred and Vassa alleged that they had purchased the Property in around July 1994. Id. After
purchasing the Property, Fred and Vassa had the Property partitioned from two tax parcels into
three parcels. Id. Parcel 1 was the residence; Parcel 2 included the septic system for the
residence; and Parcel 3 was surrounding farm land. Id. Fred alleged that in 1995 he believed he
had a drinking problem and consequently, asked his father Yakov to receive and hold title to all

1

Fred Ovchinnikov, et al. v. Agafya Snegirev, et al., Case No. 12-C14634, Marion County
Circuit Court, State of Oregon.

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three parcels for the benefit of Fred and Fred’s family. Id. Yakov allegedly agreed to hold title
and to return ownership when Yakov passed away. Id.
On September 5, 1997, three days before Yakov’s death and unbeknownst to Fred and
Vassa, Yakov had transferred Parcel 3 of the Property into the Trust. Id. After Yakov’s death,
Fred’s mother Irina transferred Parcels 1 and 2 of the Property back to Fred and Vassa, but she
did not transfer Parcel 3 which stayed in the Trust. Irina passed away in January 2012. Id.
Agafya and Victor, as defendants in that state lawsuit, contended that because Parcel 3 is titled in
the Trust’s name, Parcel 3 was a valid asset of the Trust. Id.
i. Findings of Fact and Conclusions of Law
Trial in the state suit occurred on May 22, 2015 with all siblings either in attendance or
present through their attorney of record. Snegirev Decl. Ex. 5, ECF No. 46. The state court found
that Fred and Vassa had contributed a significant share of the outstanding contract balance to
complete the purchase of the Property, but that the family’s financial relationship—both
generally and specifically to the Property—were “opaque and muddled at least in part
deliberately so.” Id. ¶ 2.
The original sellers conveyed title of the entire Property to Fred and Vassa on August 11,
1995. Snegirev Decl. Ex. 5, ECF No. 46. On August 21, 1995, Fred and Vassa convoyed Parcel
2 and Parcel 3 to Yakov and Irina. Id. Based on the evidence at trial, the Court found that the
conveyance of Parcel 3 was meant to be treated as “a sort of family farm” demonstrated by the
fact that family members individually planted on the land, and each treated as owning what they
individually planted and grew. Id. ¶ 6. The court dismissed Fred and Vassa’s suit for quiet title.
Snegirev Decl. Ex. 6, General Judgment, ECF No. 46.
B. Victor transfers the Property from the Trust to himself and then to his wife

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On or about June 30, 2013, Victor, in his capacity as the co-trustee of the Trust, executed
and then recorded a Quitclaim Deed in which he conveyed the Property from the Trust to himself
as an individual. Pollock Decl. Ex. 10, Victor Depo. 11:8-12:1, ECF No. 47. Victor testified at
his deposition that he conveyed the Property to himself out of concerns with the litigation
brought by Fred and Vassa. Id. Victor Depo. 12:16-23. Victor did not pay any consideration to
the Trust for the conveyance of the Property. Id. Victor Depo. 17:13-18:17. The same day Victor
then executed and recorded a Warranty Deed in which he conveyed the Property from himself
individually to his wife, Defendant Penny Ovchinnikov (“Penny”). Id. Victor Depo. 13:7-17.
Penny did not pay any consideration for the conveyance of the Property to her. Pollock Decl. Ex.
8, Penny Depo. 10:21-11:9, ECF No. 47. Penny is not a beneficiary of the Trust. Snegirev Decl.
¶ 11; ECF No. 46. Agafya, the other co-trustee of the Trust, did not have any knowledge of these
conveyances and did not authorize either conveyance in her capacity as a co-trustee of the Trust.
Id. ¶ 12. Victor and Penny have not returned the Property to the Trust. Id. ¶ 13.
C. Unpaid tax liens attach to the Property
At the time that Victor deeded the Property to himself, he has a number of judgments
recorded against him to include federal tax liens against him. Pollock Decl. Ex. 10, Victor Depo.
14:5-15:2, ECF No. 47. The federal tax liens and judgments have attached to the Property as a
result of the July 30, 2013 conveyances. Snegirev Decl. ¶ 14, ECF No. 46; Pollock Decl. Ex. 9,
ECF No. 47. The liens are for debts and obligations belonging to Victor and Penny, and not the
Trust. Pollock Decl. Ex. 9 & Ex. 10, Victor Depo. 14:5-15:2, ECF No. 47.
STANDARD OF REVIEW
The court must grant summary judgment if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). An issue is

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“genuine” if a reasonable jury could return a verdict in favor of the non-moving party. Rivera v.
Phillip Morris, Inc., 395 F.3d 1142, 1146 (9th Cir. 2005) (citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)). A fact is “material” if it could affect the outcome of the case. Id. The
court reviews evidence and draws inferences in the light most favorable to the non-moving party.
Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir. 2006) (quoting Hunt v.
Cromartie, 526 U.S. 541, 552 (1999)). When the moving party has met its burden, the nonmoving party must present “specific facts showing that there is a genuine issue for trial.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (quoting Fed. R. Civ. P.
56(e)).
DISCUSSION
Plaintiffs allege that Defendant Victor Ovchinnikov abused his authority as a co-trustee
of the trust by conveying the Property from the trust to himself individually, and then to his wife.
The First Claim for Relief is for Breach of Fiduciary Duty under Oregon’s Uniform Trust Code.
A. Oregon’s Uniform Trust Code
Oregon’s Uniform Trust Code sets forth the duties that a trustee or co-trustee owes a trust
and its beneficiaries. ORS 130.650 et seq. A trustee has a duty to “administer the trust in good
faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in
accordance with [the Oregon Uniform Trust Code].” ORS 130.650. A trustee is required to
administer a trust “solely in the interests of the beneficiaries of the trust.” ORS 130.655(1).
Where a trustee violates their duty and is in breach of trust, the law provides a list of
remedies for which a court may impose. ORS 130.800. Remedies include a court’s authority to
remove a trustee. ORS 130.800(2)(g). A trustee may be removed if the court finds that a trustee
has committed a serious breach of trust or if the removal best serves the interests of all the

7 – OPINION AND ORDER

beneficiaries, and if there has been a substantial change of circumstances, a suitable co-trustee is
available, and the trustee to be removed fails to establish by clear and convincing evidence that
removal is inconsistent with a material purpose of the trust. ORS 130.625(2).
As a co-trustee, Victor owed a fiduciary duty to the beneficiaries of the Trust, whom each
are entitled to a distribution of equal shares pursuant to the terms of the Trust. By conveying the
Property out of the Trust without paying any consideration into the Trust, Victor has deprived the
beneficiaries of property for which they are entitled. Because Victor has committed a serious
breach of trust by depriving the Trust beneficiaries of valued property, Victor is in breach of his
fiduciary duty. Plaintiffs’ motion for summary judgment as to claim one is GRANTED. Because
Victor’s removal as a co-trustee will best serve the interests of all beneficiaries, Victor
Ovchinnikov is ordered removed as co-trustee. Agafya Snegirev is available to continue to serve
as the trustee. There is no evidence that Victor’s removal would be inconsistent with the any
material purpose of the Trust.
B. Setting Aside the Conveyances
Plaintiffs’ Second Claim for Relief is to set aside the conveyances. Under Oregon law, a
deed can be set aside where no consideration has been given for the deed. Ward Cook, Inc. v.
Davenport, 243 Or. 301, 312 (1966). The record is clear that neither Victor nor Penny paid any
consideration for the conveyances of the Property. Because consideration was not paid for either
the July 30, 2013 Quitclaim Deed or the July 30, 2013 Warranty Deed, both are ordered set
aside. Plaintiffs’ Motion for Summary Judgment as to claim two is GRANTED. Under ORS
130.800(2), the trustee is ordered to take such steps so as to restore the Property to the Trust.
Any liens there may be shall attach only to Victor’s interest in the Property as one of
beneficiaries of the Trust.

8 – OPINION AND ORDER

C. Quiet Title
Plaintiffs’ final claim is for quiet title against Defendants Victor Ovchinnikov, Penny
Ovchinnikov, Fred Ovchinnikov, and United State of America. An action for quiet title is to
resolve a dispute relating to adverse or conflicting claims to real property. Spears v. Dizick, 235
Or. App. 594, 597 (2010). To prevail on a quiet title claim, the plaintiff must establish that they
have a substantial interest in, or claim to, the disputed property and that their title is superior to
that of the defendants. Coussens v. Stevens, 200 Or. App. 165, 171 (2005). Evidence of
ownership must be based on the strength of the plaintiff’s own title and not on the weakness of
the defendant’s title. Id.; Faw v. Larson, 274 Or. 643, 646 (1984).
Yakov Ovchinnikov convoyed the Property into the Trust on September 5, 1997. The
Property remained in the Trust until Victor breached his fiduciary duties as a co-trustee by
conveying the Property out of the Trust and without consideration. Plaintiffs as beneficiaries
have a substantial interest in the Property. With the setting aside of the July 30, 2013
conveyances, Penny does not have any interest in the Property. Victor’s only interest in his share
as a beneficiary of the trust, which is the same interest his siblings have.
Fred Ovchinnikov has moved for quiet title and adverse possession. Fred’s motion
however raises the same claim and argument that he pursued in the earlier lawsuit that he filed in
state court. The doctrine of claim preclusion prohibits a party from re-litigating a cause of action
against the same opposing party involving the same factual transaction as was litigated or in the
previous adjudication, if there has been a final judgment in the first action. Krisor v. Lake Cnty.
Fair Bd., 256 Or. App. 190, 193, rev. denied, 354 Or. 61 (2013). Under claim preclusion it is
enough that an issue that could have been raised, even if that issue was not actually raised, in the
earlier proceeding. Bloomfield v. Weakland, 193 Or. App. 784, 792-93 (2004). This court must

9 – OPINION AND ORDER

apply Oregon law in determining the preclusive effect of judgments rendered by Oregon state
courts. Hiser v. Franklin, 94 F.34 1287, 1290 (9th Cir. 1996). The state circuit court has
previously adjudicated Fred’s claims and found in a final judgment that Fred did not have a
superior title in the Property to the Trust. Snegirev Decl. Ex. 5 Order Incorporating Findings of
Fact and Conclusions of Law & Ex. 6, General Judgment, ECF No. 46. Fred cannot now relitigate those claims. Fred’s interest is the same as the interests of his siblings as beneficiaries fo
the Trust.
Because the United States of America’s liens and judgments are against Victor
individually, United States’ interest in the Property is limited to Victor’s beneficiary interest in
the Trust.
CONCLUSION
Plaintiffs’ Motion for Summary Judgment (ECF No. 45) is GRANTED. Defendant Fred
Ovchinnikov’s Motion for Order (ECF No. 17) and Motion for Summary Judgment (ECF No.
48) are DENIED. Because Victor breached his fiduciary duty, Victor is removed as co-trustee of
the Trust. Because the two July 30, 2013 conveyances were without any consideration, the two
conveyances are set aside. The Property is an asset of the Trust. Because the Property is an asset
of the Trust, the United States of America’s tax liens and judgments attached only to Victor’s
fractional beneficiary interest.
IT IS SO ORDERED.
Dated this 10th day of August, 2017.
_______/s/Michael J. McShane_________
Michael J. McShane
United States District Judge

10 – OPINION AND ORDER