Pruco Life Insurance Company v. California Energy Development, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PRUCO LIFE INSURANCE Case No.: 18cv2280 DMS (AHG) COMPANY, an Arizona Corporation, 12 ORDER (1) DENYING LIFE Plaintiff, 13 ADVANCE, LLC’S MOTIONS FOR v. SUMMARY JUDGMENT AND (2) 14 GRANTING IN PART AND CALIFORNIA ENERGY 15 DENYING IN PART LIFE DEVELOPMENT, INC., a dissolved ADVANCE LLC’S MOTIONS FOR 16 California Corporation, TIMOTHY FINDINGS OF FACT BRYSON, an individual, MICKEY 17 NICHOLSON, an individual, JOHN J. 18 WALSH, an individual, EDWARD SPOONER, trustee of the LIVING 19 TRUST OF EDWARD SPOONER, LIFE 20 ADVANCE, LLC, a Nevada corporation, DOES 1-10,, 21 Defendants. 22 23 AND ALL RELATED CROSS CLAIMS AND THIRD PARTY CLAIMS. 24 25 26 At issue are proceeds from a life insurance policy (“Policy”) that have been 27 deposited into the registry of the Court by Plaintiff Pruco Life Insurance Company 28 (“Pruco”) through the present action for interpleader. In early 2016, James Roberts was 1 terminally ill and battling “Stage 4 cancer of the throat and lymph glands[.]” (Decl. of 2 Timothy Bryson in Supp. of Opp’n to Mot. (“Bryson Decl.”), 4/25/16 Memorandum from 3 Timothy Bryson to Bob Mansueto.) At that time, Roberts was the President and CEO of 4 a solar company, California Energy Development, Inc. (“Company”), which was 5 controlled by a small handful of officers and directors and a few “equity stake holders.” 6 Corporate formalities were not followed and struggles over control of the Company were 7 common. In the short life of the Company, six lawsuits were filed in state and federal 8 courts, including the present one. When the Company was purportedly dissolved ten 9 months after it was formed, it had one significant asset, the $1 million “key-man” Policy 10 issued by Pruco on the life of Roberts. Defendant Mickey Nicholson contends he initiated 11 the process of obtaining the Policy by contacting a broker in November 2015, and ensured 12 the Company was designated as owner and sole beneficiary of the Policy. But shortly 13 after the Policy issued in January 2016, Roberts purported to change ownership of the 14 Policy from the Company to himself and substitute his wife and children as beneficiaries 15 in place of the Company. Roberts acted fraudulently and had no authority to make those 16 changes, according to Nicholson and Timothy Bryson, an officer of the Company. 17 Amidst the turmoil, Roberts sold his interest in the Policy to a viatical settlement 18 company, Defendant Life Advance, LLC, for approximately $110,000—purportedly 19 making Life Advance the owner and sole beneficiary of the Policy. The sale was hotly 20 contested by Nicholson and Bryson; Roberts did not have long to live, and in fact took 21 his own life in April 2019, about one year after he sold his interests in the Policy.1 22 23 24 1 The Policy provides that “[i]f the Insured … dies by suicide within two years from the 25 issue date, this contract will end and [Pruco] will return the premium paid … [with] no further benefit.” (Decl. of Russell M. DePhillips in Supp. of Mot. (“DePhillips Decl.”), 26 Ex A at 20 (Policy Suicide Exclusion)). Roberts’ suicide occurred outside the two year 27 period. The Policy further provides Pruco “will not contest the contract after it has been in force during the Insured’s lifetime for two years from the issue date.” (Id. at 21 (Policy 28 1 This case now comes before the Court on Life Advance’s motions for summary 2 judgment or, in the alternative, findings of fact without substantial controversy, on its 3 cross-claims against Nicholson and its third-party claims against Jason Voelker, who 4 claims an equity ownership interest in the Company by virtue of an assignment of rights 5 from Nicholson. Life Advance claims it has a “clear chain of ownership” from the 6 Company to Roberts and eventually to itself, and therefore it is the owner of the Policy 7 and sole beneficiary of the Policy proceeds. It also claims the Company entered into a 8 settlement in 2017 in one of the five other related lawsuits and relinquished all claims to 9 the Policy. Nicholson and Voelker, proceeding pro se, claim Roberts lacked authority to 10 change ownership of the Policy, and the settlement in the related case did not relinquish 11 the Company’s claims to the Policy because the settlement agreement was not signed by 12 a representative of the Company. Since Nicholson and Voelker claim they are the “equity 13 stake holders” in the Company, they claim entitlement to the Policy proceeds as they stand 14 in the shoes of the Company. 15 The machinations of the parties have created a Gordian Knot that even a trier of 16 fact will have difficulty untying, and certainly it is one that cannot be undone as a matter 17 of law through summary judgment. The chain of ownership from the Company to Life 18 Advance is bound up in triable questions of fact. So, too, is the Company’s interest in the 19 Policy—as the 2017 settlement between the Company and Roberts is now challenged on 20 grounds that cannot be resolved on the present motions. The matter has been fully briefed 21 and submitted. The motions for summary judgment are denied for the reasons set forth 22 below, and the request for findings of fact is granted in part and denied in part as explained 23 below. 24 / / / 25 / / / 26 27 treated for or diagnosed with cancer, (id. at 15 (Application)), the period to contest that 28 1 I. 2 BACKGROUND 3 On January 23, 2016, when the Policy was issued on the life of Roberts, Roberts 4 was the Company’s CEO and the Company was both the owner of the Policy and sole 5 designated beneficiary. Life Advance claims to be the current owner and sole beneficiary 6 of the Policy pursuant to a series of transfers of the Policy between various individuals 7 and entities. Specifically, Life Advance asserts the Policy was transferred from: (1) the 8 Company to Roberts, (2) Roberts to Edward Spooner as Trustee of the Living Trust of 9 Edward Spooner, (3) Spooner to Life Capital Group, Inc., and finally, (4) Life Capital to 10 Life Advance. 11 Nicholson and Voelker contend they are the shareholders and owners of the 12 Company, and as such, they are entitled to the Policy proceeds, not Life Advance. 13 Nicholson asserts it was his idea to obtain the Policy for the benefit of the Company. 14 Nicholson and Voelker contend Roberts illegally dissolved the Company and sold the 15 Policy for $110,000, without authorization from the Company and while a lawsuit was 16 pending against him in San Diego Superior Court for breach of fiduciary duty and 17 “pillaging” the Company. See California Energy Development, Inc. v. James Roberts, 18 Theodore Haenggi, San Diego Superior Court, County of San Diego, Case No. 37-2016- 19 00015524-CU-BT-CTL (May 10, 2016).2 Nicholson and Voelker further contend Life 20 21 2 Five more lawsuits by Nicholson and Pruco, including the present case, followed: (1) 22 Pruco v. California Energy Development, Inc., Roberts, Bryson, Eric Porter, Robin 23 Simon, United States District Court, Southern Dist. of Cal., Case No. 17cv2362-L (WVG) (November 21, 2017) (the “2017 Action”); (2) Nicholson v. California Energy 24 Development, Inc., Pruco, Roberts, Bryson, Haenggi, San Diego Superior Court, County 25 of San Diego, Case No. 37-2018-00023974-CU-BC-CTL (May 16, 2018); (3) Pruco v. California Energy Development, Inc., Roberts, Nicholson, United States District Court, 26 Southern Dist. of Cal., Case No. 18cv1524-L (WVG) (July 3, 2018); (4) Pruco v. 27 California Energy Development, Inc. v. Bryson, Nicholson, John Walsh, Spooner, Life Advance, Voelker, United States District Court, Southern Dist. of Cal., Case No. 28 1 Advance was “repeatedly” told about the litigation and that Roberts was not authorized 2 to sell the Policy. Accordingly, Nicholson and Voelker assert Life Advance is not a bona 3 fide purchaser and the sale of the Policy to Life Advance is invalid. 4 Specifically, Nicholson and Voelker contend that by March 2016, shortly after the 5 Policy issued, Roberts began exhibiting “troubling conduct[,]” resigned as CEO, 6 abandoned the Company, and stopped paying the Policy premiums, which caused 7 Nicholson to pay past due premiums in the sum of $4,836.76 and arrange for another 8 investor, John Walsh, to invest $50,000 to assist the Company with future premium 9 payments. (Mem. of P. & A. in Supp. of Opp’n to Mot. at 3-4; Nicholson Decl. ¶¶9, 10; 10 Bryson Decl. ¶¶11-15). After Roberts resigned, Bryson “assumed the role of acting CEO 11 and CFO” of the Company and the board of directors voted to file suit against Roberts for 12 “pillaging company assets and stealing client deposits.” (Mem. of P. & A. in Supp. of 13 Mot. at 4; Nicholson Decl. ¶11; Bryson Decl. ¶15). Thereafter, Roberts “devised a plan 14 to transfer and sell ownership of the … Policy to several viatical companies” without 15 notice to or authorization from the “shareholders or the board of directors” of the 16 Company. (Mem. of P. & A. in Supp. of Mot. at 4; Nicholson Decl. ¶13). Nicholson 17 claims that when he “discovered this scheme, he attempted to block the sale of the Policy 18 to each viatical company” and directed all interested parties, including Life Advance, to 19 the lawsuit the Company had filed against Roberts and informed them that Roberts was 20 not authorized to sell Policy. (Mem. of P. & A. in Supp. of Mot. at 5; Nicholson Decl. 21 ¶16; Bryson Decl. ¶17). 22 On July 19, 2016, “without shareholder notice or authorization” and while the 23 lawsuit was pending against him, Roberts filed a Statement of Information (“SOI”) with 24 the California Secretary of State removing all officers and listing himself as CEO, 25 26 27 v. Pruco, California Energy Development, Inc., Life Advance, Roberts, Craig Stack, United States District Court, Northerners Dist. of Cal., Case No. 18cv6554-JSC (October 28 1 Secretary and CFO of the Company and installing “his own children” as the new directors. 2 (Mem. of P. & A. in Supp. of Mot. at 5; Nicholson Decl. ¶16). That same day Roberts 3 submitted a request to Pruco to change ownership of the Policy from the Company to 4 himself. On August 11, 2016, Roberts “illegally” dissolved the Company by filing a 5 Domestic Stock Corporation Short Form Certificate of Dissolution with the California 6 Secretary of State without notice to or authorization from shareholders, directors or 7 creditors. (Mem. of P. & A. in Supp. of Mot. at 5; Nicholson Decl. ¶17.) 8 On March 1, 2018, Roberts created the Spooner Trust. (Mem. of P. & A. in Supp. 9 of Mot. at 7; Nicholson Decl. ¶ 21). Nicholson and Voelker contend the Spooner Trust 10 is the alter ego of Roberts as the trust was created for the “sole purpose of illegally 11 obtaining viatical settlement proceeds[,]” and Roberts was the ultimate decision maker 12 concerning the distribution of funds received from the viatical company. (Mem. of P. & 13 A. in Supp. of Mot. at 7.) 14 As a result of these events, Nicholson filed a second lawsuit in San Diego Superior 15 Court on May 16, 2018, against the Company, Roberts, Pruco, Bryson and Theodore 16 Haenggi (another purported officer and director) for fraudulent conveyance and 17 declaratory relief. (Id. at 8) (referencing Nicholson v. California Energy Development, et 18 al., Case No. 37-2018-00023974-CU-BC-CTL). Pruco also acted and filed three of its 19 own lawsuits in this Court to determine ownership of the Policy. The first was filed on 20 November 21, 2017, and sought declaratory relief against the Company, Roberts, Bryson, 21 and Eric Porter and Robin Simon (purported directors of the Company). Nicholson, 22 Voelker and Life Advance were not part of the 2017 Action. Pruco thereafter filed the 23 present lawsuit on October 1, 2018, again seeking declaratory relief regarding ownership 24 of the Policy (and interpleader of the Policy proceeds), and adding as defendants 25 Nicholson, Voelker, Life Advance, Spooner and Walsh, as well as the Company and 26 Bryson. Various cross-claims and third-party claims were also filed by Defendants, 27 including the claims at issue in the present motion. 28 / / / 1 II. 2 DISCUSSION 3 Life Advance now moves for summary judgment on its claims for declaratory relief 4 and interference with contract against Nicholson and Voelker. These claims are addressed 5 below. 6 A. Legal Standard 7 Summary judgment is appropriate if there is no genuine dispute as to any material 8 fact, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). 9 The moving party has the initial burden of demonstrating that summary judgment is 10 proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The moving party must 11 identify the pleadings, depositions, affidavits, or other evidence that it “believes 12 demonstrates the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 13 477 U.S. 317, 323 (1986). “A material issue of fact is one that affects the outcome of the 14 litigation and requires a trial to resolve the parties’ differing versions of the truth.” S.E.C. 15 v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982). 16 The burden then shifts to the opposing party to show that summary judgment is not 17 appropriate. Celotex, 477 U.S. at 324. The opposing party’s evidence is to be believed, 18 and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc., 19 477 U.S. 242, 255 (1986). However, to avoid summary judgment, the opposing party 20 cannot rest solely on conclusory allegations. Berg v. Kincheloe, 794 F.2d 457, 459 (9th 21 Cir. 1986). Instead, it must designate specific facts showing there is a genuine issue for 22 trial. Id.; see also Butler v. San Diego District Attorney’s Office, 370 F.3d 956, 958 (9th 23 Cir. 2004) (stating if defendant produces enough evidence to require plaintiff to go 24 beyond pleadings, plaintiff must counter by producing evidence of his own). To do so, 25 the non-moving party must “go beyond the pleadings” and by “the depositions, answers 26 to interrogatories, and admissions on file,” designate “specific facts showing that there is 27 a genuine issue for trial.” Celotex, 477 U.S. at 324 (quoting Fed. R. Civ. P. 56(e)) (internal 28 quotation marks omitted). 1 More than a “metaphysical doubt” is required to establish a genuine issue of 2 material fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 3 (1986). The opposing party must show that evidence in the record could lead a rational 4 trier of fact to find in its favor. Id. at 587. “[M]ere disagreement or the bald assertion 5 that a genuine issue of material fact exists no longer precludes the use of summary 6 judgment.” Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir. 1989) (citation omitted). 7 “Credibility determinations, the weighing of the evidence, and the drawing of legitimate 8 inferences are jury functions, not those of a judge, [when] he [or she] is ruling on a motion 9 for summary judgment.” Anderson, 477 U.S. at 255. “[I]f direct evidence produced by 10 the moving party conflicts with direct evidence produced by the nonmoving party, the 11 judge must assume the truth of the evidence set forth by the nonmoving party with respect 12 to that fact.” TW. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 631 13 (9th Cir. 1987). 14 B. Declaratory Relief 15 The first and primary claim in this case is for declaratory relief, and in this motion, 16 Life Advance seeks a judicial declaration that it is both the owner and sole beneficiary of 17 the Policy. In support of this request, Life Advance argues it is the owner of the Policy 18 by virtue of the transfers set out above. Life Advance also asserts that Nicholson and 19 Voelker, as alleged equity stakeholders in the Company, are collaterally estopped from 20 asserting ownership of the Policy by virtue of the Court’s dismissal order in the 2017 21 Action in Pruco v. California Energy, Case No. 17cv2362 L(WVG). 22 1. The Chain of Ownership 23 On its first argument, Life Advance relies on “a clear chain of ownership” of the 24 Policy, (Mem. of P. & A. in Supp. of Mot. at 9), which, according to Life Advance, ends 25 with it taking ownership of the Policy and becoming its sole beneficiary. The evidence, 26 however, does not establish a clear chain of ownership to Life Advance. Aside from the 27 factual disputes set out by Nicholson and Voelker on ownership of the Policy, Life 28 Advance fails to come forward with sufficient evidence in support of its ownership claim. 1 The evidence establishes that Pruco issued the Policy with a “Contract Date” of 2 February 3, 2016. (See DePhillips Decl., Ex. A; Decl. of Craig Stack in Supp. of Mot. 3 (“Stack Decl.”), Ex. A.) According to the Policy, Roberts is the insured and “California 4 Energy Development Inc. of San Diego, California, its successors or assigns” is the owner 5 and sole beneficiary. 6 Life Advance asserts the next link in the chain of ownership occurred on July 19, 7 2016, when Roberts submitted a request to Pruco to change ownership of the Policy from 8 the Company to himself, and to change the beneficiary of the Policy from the Company 9 to his wife, son and daughter. (Statement of Uncontroverted Facts and Conclusions of 10 Law in Supp. of Mot. (“SOF”), Fact O.) Life Advance asserts Pruco processed this 11 request on August 3, 2016. (Id., Fact P.) In support of these alleged facts, Life Advance 12 relies on the allegations in Pruco’s Second Amended Complaint (“SAC”) in this case, 13 which is one of the documents included in Life Advance’s request for judicial notice. 14 (See DePhillips Decl. ¶¶15-16; Req. for Judicial Notice in Supp. of Mot. ¶8.) The SAC 15 includes allegations consistent with Life Advance’s proffer, (see SAC ¶¶13-14), but Life 16 Advance has not shown these allegations are either (1) generally known within the 17 territorial jurisdiction of the trial court or (2) capable of accurate and ready determination 18 by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 19 201(b). Moreover, the SAC is not verified. Accordingly, the Court declines to take 20 judicial notice of these facts. See Cox v. Ametek, Inc., No. 3:17-cv-01211-GPC-AGS, 21 2017 WL 4792424, at *4 (S.D. Cal. Oct. 24, 2017) (“the Court may take notice of the fact 22 that these pleadings were filed and that the pleadings contain certain assertions; it may 23 not, however, assume the factual truth of those assertions.”) Without them, there is no 24 “clear chain of ownership” to the Policy, which defeats Life Advance’s request for 25 summary judgment on its declaratory relief claims. 26 Life Advance requests that the Court find other facts established pursuant to 27 Federal Rule of Civil Procedure 56(g). The Court finds the following facts relating to the 28 “chain of ownership” have been established: (1) On July 5, 2018, Pruco processed a 1 request to change ownership of the Policy to “Edward Spooner, Trustee(s) of the Living 2 Trust of Edward Spooner under agreement dated March 01, 2018, as amended, or the 3 successor(s) in trust.” (Decl. of Craig Stack in Supp. of Reply, Ex. A.) Four days after 4 that, Spooner and Roberts entered into a Viatical Settlement Contract with Life Capital 5 Group under which Life Capital purchased the Policy from Spooner for $110,000. (Stack 6 Decl., Ex. D.) Approximately ten days later, Pruco processed a request to change 7 ownership of the Policy to Life Advance LLC. (Stack Decl., Ex. C.) 8 Thus, the only link in the chain that has not been established is the first involving 9 the transfer of the Policy from the Company to Roberts. This is a notable link in that this 10 transfer required approval of the directors of the Company—whoever they might have 11 been at that time. As Life Advance points out, the “authority to manage the business and 12 affairs of a corporation is vested in its board of directors, not in its shareholders.” (Mem 13 of P. & A. in Supp. of Mot. at 11) (citing Cal. Corp. Code § 300(a)). Life Advance has 14 not provided undisputed evidence in support of the Company’s transfer of ownership to 15 Roberts, which dooms its request for summary judgment. 16 Life Advance cites an SOI filed with the California Secretary of State on July 19, 17 2016, in which Roberts is listed as CEO, Secretary and CFO of the Company and the 18 directors are identified as Roberts’ wife and children, Angel, James and Valentine 19 Roberts. That same day, Roberts also submitted a request to Pruco to change ownership 20 of the Policy from the Company to himself, apparently based on the foregoing SOI. But 21 Nicholson and Bryson contend that Roberts had already resigned from the Company in 22 March of 2016 and that Bryson, through “a majority of the Board’s approval” was then 23 “acting CEO and CFO” of the Company. (Bryson Decl. ¶15.) It is unclear who the board 24 members were at that time, as they are not identified by Bryson or Nicholson. 25 An SOI filed with the California Secretary of State on November 9, 2015, identifies 26 Roberts, Simon and Porter as directors of the Company. The lawsuit filed by the 27 Company against Roberts and Haenggi on May 10, 2016, identifies only those two 28 defendants as directors. The July 19, 2016 SOI identifies three of Roberts’ family 1 members as directors. Other names appear in the various documents submitted to the 2 Court, including John Walsh and Robert Mansueto. They appear to be investors in the 3 Company, though their roles are not clearly specified. At various times throughout the 4 tumultuous history of the Company it appears everyone—whoever was present—had a 5 vote, no matter their role with the Company. Nicholson states that in March 2016, after 6 Roberts purportedly resigned and abandoned the Company, the “remaining members of 7 the Company, including myself, voted to continue the Company and continue doing 8 business." (Nicholson Decl. ¶ 11.) It is unclear who the “members” are, who voted and 9 in what capacity. 10 These events demonstrate that a material dispute exists over who controlled the 11 Company at relevant times, and whether Roberts had authority to act on behalf of the 12 Company and change ownership of the Policy to himself on July 19, 2016. Given the 13 failure of Life Advance to prove ownership, and the triable questions of fact raised by 14 Nicholson and Voelker regarding Roberts’ authority, summary adjudication of ownership 15 of the Policy is denied. 16 2. Collateral Estoppel 17 Life Advance also argues it is entitled to summary judgment on its declaratory 18 relief claims based on collateral estoppel. Specifically, Life Advance asserts Nicholson 19 and Voelker, as alleged equity stakeholders in the Company, are collaterally estopped 20 from claiming proceeds of the Policy by virtue of the Court’s dismissal order in the 2017 21 Action. 22 “The doctrine of collateral estoppel promotes judicial economy and protects parties 23 from the burden of successive litigation by barring the relitigation of issues in certain 24 circumstances.” Maciel v. C.I.R., 489 F.3d 1018, 1023 (9th Cir. 2007). Those 25 circumstances are: 26 (1) “‘the issue necessarily decided at the previous proceeding is identical to the one which is sought to be relitigated;’” Af-Cap, Inc. v. Chevron Overseas 27 (Congo) Ltd., 475 F.3d 1080, 1086 (9th Cir. 2007) (citation omitted); 28 1 (2) “‘there was a full and fair opportunity to litigate the issue in the previous action;’” In re Palmer, 207 F.3d 566, 568 (9th Cir. 2000) (citation omitted); 2 3 (3) “‘the issue was actually litigated in that action;’” id. (citation omitted); 4 (4) “‘the issue was lost as a result of a final judgment in that action;’” id. 5 (citation omitted); and 6 (5) “‘the party against whom collateral estoppel is asserted was a party or in 7 privity with a party at the first proceeding.’” Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 (9th Cir. 2006) (citation omitted). 8 9 The party invoking collateral estoppel bears the burden of establishing each of these 10 elements. Pardo v. Olson & Sons, Inc., 40 F.3d 1063, 1066 (9th Cir. 1994) (citation 11 omitted). Life Advance has not shown all of the elements of collateral estoppel are met. 12 To the extent Life Advance seeks to collaterally estop Nicholson and Voelker from 13 challenging ownership, they were not parties or in privity with a party to that lawsuit. As 14 Life Advance notes, a “corporation is a distinct legal entity separate from its 15 stockholders.” (Mem. of P. & A. in Supp. of Mot. at 11) (citing Maxwell Café v. 16 Department of Alcohol Control, 142 Cal. App. 2d 73, 78 (1956)). While the Company 17 was a party to the 2017 Action (and could be bound by the settlement), Nicholson and 18 Voelker as alleged shareholders were not. 19 In addition, Life Advance acknowledges case law declining to bar re-litigation of 20 issues following dismissal of an action if the issues, as here, were not actually litigated or 21 did not result in a final judgment. (See Mem. of P. & A. in Supp. of Mot. at 14.) 22 Moreover, Nicholson has raised issues about the settlement itself and whether an 23 authorized representative signed for the Company. 24 Pruco alleges in the SAC in the present action that “[o]n or about January 10, 2017, 25 Bryson, acting as CFO of [the Company], … signed a settlement agreement relinquishing 26 claims to the Policy, including his forms to effect assignment to Walsh, recognizing 27 Roberts as having ‘assumed ownership and control of the [Policy],’ and that [the 28 1 Company] ‘releases all claims on the [P]olicy.’” (SAC ¶18.) But Bryson has a different 2 take on the settlement: 3 The parties in that [2017] matter ultimately agreed to settle and dismiss the case without prejudice. However, we did so in our individual capacities and 4 not on behalf of the Company. Indeed, I made sure at the time that I was 5 signing in my personal capacity and not as a representative of the [C]ompany. 6 (Bryson Decl. ¶26.) Under the circumstances, the Court declines to apply the doctrine of 7 collateral estoppel and allow Life Advance to use it as a bar to litigating whether the 8 Company relinquished its claims to the Policy. (See Mem. of P. & A. in Supp. of Mot. at 9 13) (stating “The fact that Life Advance is not a party to the 2017 [A]ction does not 10 preclude its collaterally estopping [the Company], who is a party.”) Notably too, Life 11 Advance relies on Roberts’ authority to act on behalf of the Company to secure its “chain 12 of ownership,” yet Roberts purportedly dissolved the Company on August 11, 2016. It 13 appears a dissolved corporation can act to effect a settlement. See Cal. Corp. Code § 14 2010(a).3 But who would act on behalf of the Company to affect the settlement: Roberts 15 or Bryson? The SOI filed on November 9, 2015 lists Roberts as CEO and Bryson as 16 Secretary and CFO, (Nicholson Decl., Ex. I), while the SOI filed on July 19, 2016 lists 17 Roberts as CEO, Secretary and CFO and drops Bryson altogether. (Id., Ex. J). Under the 18 circumstances, collateral estoppel is unavailable and does not warrant summary judgment 19 for Life Advance on its claims for declaratory relief. 20 C. Interference with Contract 21 The only other claims at issue here are Life Advance’s claims against Nicholson 22 and Voelker for interference with contract. 23 / / / 24 25 3 California Corporation Code § 2010(a) provides a “corporation which is dissolved 26 nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and 27 defending actions by or against it and enabling it to collect and discharge obligations, dispose of and convey its property and collect and divide its assets, but not for the purpose 28 1 The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract 2 between plaintiff and a third party; (2) defendant’s knowledge of this contract; 3 (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual 4 relationship; and (5) resulting damage. 5 6 Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1126 (1990). 7 Life Advance asserts it has established all of these elements as against Nicholson 8 and Voelker, and thus it is entitled to summary judgment on these claims. However, as 9 discussed, Life Advance has failed to show the first element, namely that it is the owner 10 of the Policy, and thus has a valid contract with Pruco. Absent that showing, Life 11 Advance is not entitled to summary judgment on these claims. 12 III. 13 CONCLUSION AND ORDER 14 This is an intractable entanglement of the parties’ own making. If Nicholson and 15 Voelker prevail at trial on the ownership issue, Life Advance is entitled to nothing under 16 the Policy. If Life Advance prevails on its assertion that the Company relinquished all 17 claims to the Policy, then Nicholson and Voelker—as alleged shareholders of the 18 Company—are entitled to nothing under the Policy. Meanwhile, the Policy proceeds are 19 deposited in the registry of the Court and await disbursement, but to whom?4 20 The parties will contact the magistrate judge assigned to the case and schedule a 21 settlement conference to occur within 30 days from issuance of this Order. For the 22 23 24 4 Even if the Company is found not to have relinquished its claims to the Policy and Life 25 Advance is found not to be the owner of the Policy, it is unclear how the Company’s assets, i.e., the Policy proceeds, would be divided. Life Advance contends the consulting 26 agreement submitted by Nicholson in opposition to the present motions “does not make 27 [him] an employee of [the Company], nor does it purport to give him any ownership interest in [the Company].” (Reply Br. at 2.) Also, “[t]here are no corporate documents 28 1 |/reasons set out above, Life Advance’s motion for summary judgment is denied, and its 2 ||request for findings of fact is granted in part and denied in part as set out above. 3 IT IS SO ORDERED. 4 ||Dated: August 25, 2020 J J 5 a Yn. Hon. Dana M. Sabraw 6 United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28