Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-03394/USCOURTS-cand-5_03-cv-03394-18/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

**E-Filed 1/11/06**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

EDWARD L. SCARFF, et al.,

 Plaintiffs,

 v.

WELLS FARGO BANK, N.A., et al.,

 

 Defendants.

No. C 03-03394 JF (PVT)

 C 03-04829 JF (PVT)

 C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED

DISPOSITION 

On January 6, 2006, the Court heard oral argument with respect to five motions in the

instant case: (1) Defendant Comerica Bank (“Comerica”) moves for partial summary

adjudication on the issue of damages; (2) Defendants Wells Fargo Bank, N.A. (“Wells Fargo”)

and Carol Barber (“Barber”) move for summary judgment on Plaintiffs’ third, fourth, sixth,

ninth, eleventh, twelfth, and fourteenth claims; (3) Defendant Kelly Hvegholm (“Hvegholm”)

moves for summary judgment on Plaintiffs’ third and fourth claims; (4) Defendants Intuit Inc.

(“Intuit”), Computing Resources Inc. (“CRI”), and Lisa Ciccotti (“Ciccotti”) move for summary

judgment on Plaintiffs’ third and fourth claims; Wells Fargo, Barber, and Hvegholm join in this

motion; (5) Wells Fargo, Intuit, CRI, Barber, and Ciccotti move to exclude the expert

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 1 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

declarations of John Britt (“Britt”), Vicki Lambert (“Lambert”), and David Moore (“Moore”);

Comerica joins in this motion as to the declarations of Britt and Moore. 

At the hearing, the Court advised counsel that in light of the proximity of the trial date, it

would set forth its intended disposition of the motions in a brief memorandum and issue a formal

order setting forth its reasoning at a later date. Having reviewed the moving, opposing and reply

briefs and the relevant portions of the evidentiary record, and having considered the arguments of

counsel presented at the hearing, the Court intends to dispose of the pending motions as follows:

1. Comerica

Comerica’s motion for partial summary adjudication on the issue of damages will be

denied. In light of the totality of the circumstances, a reasonable jury could find that Plaintiff

Edward L. Scarff (“Scarff”) did not have notice of facts that would have put a reasonable person

on inquiry, and that he would not have discovered such facts through reasonable diligence.

2. Intuit and CRI

The motion for summary judgment of Defendants Intuit and CRI on Plaintiffs’ third

claim, for secondary liability for fraud and deceit in connection with the “payroll scheme,” and

on the fourth claim, for secondary liability for conversion in connection with the “payroll

scheme,” will be granted on two grounds. First, Plaintiffs have not shown that they have any

competent evidence that they were damaged by the alleged “payroll scheme.” At oral argument,

Plaintiffs represented that their interrogatory responses provide evidence of damages caused by

the alleged “payroll scheme.” However, Plaintiffs do not provide any written support for this

representation in their opposition papers; Plaintiffs’ interrogatories do not include or refer to any

supporting documentary evidence; and, apart from the fact that it is not the Court’s responsibility

to comb the record for evidence, the Court is not readily able to find such evidence. Second, the

doctrine of respondeat superior does not make Intuit or CRI vicariously liable for the actions of

Hvegholm or Ciccotti, because these individuals, if they engaged in the alleged illegal conduct,

acted outside the scope of their employment.

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 2 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

3. Hvegholm and Ciccotti

The motions for summary judgment of Defendants Hvegholm and Ciccotti on Plaintiffs’

third claim, for secondary liability for fraud and deceit in connection with the “payroll scheme,”

and on the fourth claim, for secondary liability for conversion in connection with the “payroll

scheme,” will be granted. As stated above, Plaintiffs have not shown that they have any

competent evidence that they were damaged by the alleged “payroll scheme.”

4. Wells Fargo 

The motion for summary judgment of Defendant Wells Fargo will be granted in part and

denied in part.

a. Claims three and four. Wells Fargo’s motion for summary judgment on Plaintiffs’

third claim, for secondary liability for fraud and deceit in connection with the “payroll scheme,”

and on the fourth claim, for secondary liability for conversion in connection with the “payroll

scheme,” will be granted on two grounds. First, as stated above, Plaintiffs have not shown to the

Court that they have any competent evidence that they were damaged by the alleged “payroll

scheme.” Second, the doctrine of respondeat superior does not make Wells Fargo liable for the

alleged illegal conduct of employees of Intuit or CRI, the companies with whom Wells Fargo

contracted to provide payroll services. 

b. Claim nine. Wells Fargo’s motion for summary judgment on Scarff’s ninth claim, for

fraud and deceit in connection with the alleged “credit line scheme,” will be denied. Although in

the Court’s judgment the evidence for such an inference is not strong, Plaintiff has identified

sufficient evidence from which a reasonable jury could infer that Barber, Wells Fargo’s agent,

had actual knowledge of the alleged “credit line scheme” and that this scheme was concealed

from Plaintiff. Plaintiffs’ inartful use of the term “constructive knowledge” in certain

interrogatory responses does not change the probative value of the evidence supporting an

inference of actual knowledge.

c. Claim eleven. Wells Fargo’s motion for summary judgment on Scarff’s eleventh

claim, for negligence in connection with the alleged “credit line scheme,” will be granted. 

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 3 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

Despite the fact that an argument based on the account agreements was asserted expressly in

Defendants’ brief, Scarff offers no substantive opposition to Wells Fargo’s contention that the

account agreements bar this claim. Although Scarff might have successfully opposed this aspect

of the motion, the Court is not required to search for evidence that creates a genuine issue of fact

or to do its own legal research.

d. Claim fourteen. Wells Fargo’s motion for summary judgment on Scarff and Nancy

Scarff’s fourteenth claim, for slander of title, will be granted. Plaintiffs have not identified

sufficient evidence from which a reasonable jury could conclude that Wells Fargo recorded the

deed of trust on the Scarff residence with the requisite knowledge of falsity or disregard of the

truth. Additionally, assuming arguendo that Plaintiffs did properly allege a claim of slander of

title based on the foreclosure proceedings initiated by Wells Fargo, introduction of documents in

foreclosure proceedings is subject to the litigation privilege, which is absolute.

e. Punitive damages. Wells Fargo’s motion for summary judgment on the issue of

punitive damages will be granted. Plaintiffs have not identified sufficient evidence from which a

reasonable jury could conclude that any officer, director, or managing agent of Wells Fargo had

advance knowledge and conscious disregard, authorization, ratification of the alleged “credit line

scheme” or was personally guilty of oppression, fraud, or malice.

f. Pentoga. Wells Fargo’s motion for summary judgment on all claims brought by

Pentoga will be granted. The Pentoga partnership was dissolved at the time it was first named as

a party in the instant case, and thus it lacks the legal capacity to sue. 

g. Damages limited by statutes of limitation. Wells Fargo’s motion for summary

judgment on the issue of whether damages should be limited by the applicable statutes of

limitations will be denied for the reasons stated above with respect to Comerica. 

5. Barber 

The motion for summary judgment of Defendant Barber will be granted in part and

denied in part.

a. Claims three and four. Barber’s motion for summary judgment on Plaintiffs’ third

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 4 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

claim, for secondary liability for fraud and deceit in connection with the “payroll scheme,” and

on the fourth claim, for secondary liability for conversion in connection with the “payroll

scheme,” will be granted on two grounds. First, as stated above, Plaintiffs have not shown that

they have any competent evidence that they were damaged by the alleged “payroll scheme.” 

Second, Plaintiffs have identified no evidence that Barber knew of or was involved in the alleged

“payroll scheme.” 

b. Claim six. Barber’s motion for summary judgment on Plaintiffs’ sixth claim, for

violation of 12 U.S.C. § 503 and 18 U.S.C. § 215 in connection with the alleged “payroll

scheme,” will be granted. As stated above, Plaintiffs have not shown that they have any

competent evidence that they were damaged by the alleged “payroll scheme.”

c. Claim nine. Barber’s motion for summary judgment on Plaintiff Edward Scarff’s ninth

claim, for fraud and deceit in connection with the alleged “credit line scheme,” will be denied for

the reasons stated above with respect to Wells Fargo.

d. Claim eleven. Barber’s motion for summary judgment on Scarff’s eleventh claim, for

negligence in connection with the alleged “credit line scheme,” will be granted for the reason

stated above with respect to Wells Fargo. 

e. Claim twelve. Barber’s motion for summary judgment on Plaintiffs’ sixth claim, for

violation of 12 U.S.C. § 503 and 18 U.S.C. § 215 in connection with the alleged “credit line

scheme,” will be denied. Although in the Court’s judgment the evidence for such an inference is

not strong, Plaintiff has identified sufficient evidence from which a reasonable jury could infer

that Barber had actual knowledge of and participation in the alleged “credit line scheme.”

f. Pentoga. Barber’s motion for summary judgment on all claims brought by Pentoga 

will be granted for the reason stated above with respect to Wells Fargo. 

g. Damages limited by statutes of limitation. Barber’s motion for summary judgment on

the issue of whether damages should be limited by the applicable statutes of limitations will be

denied for the reasons stated above with respect to Comerica. 

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 5 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

6. Expert declarations

The motions to exclude the expert declarations of Britt, Lambert, and Moore will be

granted in part and denied in part.

a. Britt. The Court will exclude the Britt declaration for purposes of Wells Fargo’s and

Barber’s motions for summary judgment. Plaintiffs have not demonstrated that their late

disclosure was substantially justified or harmless. The Court will not exclude the Britt

declaration at trial. If Defendants believe that admission of the Britt declaration at trial will

cause them prejudice, Defendants may move for a postponement of the trial date so that they may

conduct further discovery with regard to the declaration.

b. Lambert. The Court will not exclude the Lambert declaration because it applies only

to the alleged “payroll scheme,” as to which the Court has indicated that it intends to grant

summary judgment in favor of all Defendants.

c. Moore. The Court will not exclude the Moore declaration, either for purposes of

Wells Fargo’s and Barber’s motions or at trial, because the late submission is harmless. 

Moreover, at oral argument, Defendants represented to the Court that the Moore declaration is

not of concern to them. However, pursuant to Plaintiffs’ representations, the Moore declaration

will be deemed a final, rather than a “preliminary,” declaration.

7. Trial date

If, having considered the Court’s intended dispositions of the instant motions, any party

wishes to seek postponement of the trial date, that party shall make an appropriate motion by

January 18, 2006.

Dated: January 11, 2006

/s/ electronic signature authorized 

JEREMY FOGEL

United States District Judge

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 6 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

This Order has been served upon the following persons:

Rebecca M. Archer EfilingRMA@cpdb.com, rmg@cpdb.com

Jonathan R. Bass EfilingJRB@cpdb.com, mjc@cpdb.com

William Bates , III bill.bates@bingham.com

Geoffrey Scott Beckham geoff.beckham@bingham.com,

Carolyn Chang cchang@fenwick.com, vschmitt@fenwick.com

A. Marisa Chun EfilingAMC@cpdb.com, pjd@cpdb.com

Joseph W. Cotchett plee@cpsmlaw.com,

Joseph N. Demko JND@JMBM.com, eap@jmbm.com

John W. Easterbrook jwe@hopkinscarley.com, dgraff@hopkinscarley.com

Gilbert Eisenberg g.eisenberg@sbcglobal.net, 

William Henry Gavin gavin@gclitigation.com,

Philip L. Gregory pgregory@cpsmlaw.com, jacosta@cpsmlaw.com

Alan F. Hunter hunter@gclitigation.com,

Susan K. Jamison EfilingSKJ@cpdb.com, aaa@cpdb.com

William S. Klein bklein@hopkinscarley.com, ttellez@hopkinscarley.com

Martin H. Kresse mkresse1@earthlink.net,

C. Laine Lucas lainelucas@bindermalter.com,

Julian W. Mack pmack@ buchalter.com,

Frank M. Pitre fpitre@cpsmlaw.com, mnewman@cpsmlaw.com

Elizabeth C Pritzker epritzker@cpsmlaw.com, zml@girardgibbs.com

Dori Lynn Yob dyob@hopkinscarley.com, ash@hopkinscarley.com

Jennifer Coleman

Jeffer Mangels Butler & Marmaro LLP

Two Embarcadero Center

Fifth Floor

San Francisco, CA 94111-3824

Tod C. Gurney tgurney@hopkinscarley.com, ttellez@hopkinscarley.com

Hopkins & Carley

70 S. First Street

San Jose, CA 95113

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 7 of 8
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Case No. C 03-03394 JF (PVT), C 03-04829 JF (PVT), and C 03-05871 JF (HRL)

MEMORANDUM OF INTENDED DISPOSITION

(JFLC1)

Nanci E. Nishimura

Cotchett Pitre Simon & McCarthy

840 Malcolm Road, Suite 200

Burlingame, CA 94010

Peter G. Bertrand

Buchalter Nemer Fields & Younger

333 Market Street, 29th Floor

San Francisco, CA 94105-2130

Heinz Binder

Binder & Malter LLP

2775 Park Avenue

Santa Clara, CA 95050

Robert G. Harris

Binder & Malter, LLP

2775 Park Avenue

Santa Clara, CA 95050

USBC Manager-San Jose

US Bankruptcy Court

280 South First Street

Room 3035

San Jose, CA 95113

Arthur S. Weissbrodt

U.S. Bankruptcy Court

280 South First Street

Room 3035

San Jose, CA 95113

Case 5:03-cv-03394-JF Document 356 Filed 01/11/06 Page 8 of 8