Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-02310/USCOURTS-casd-3_10-cv-02310-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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1

 The Record on Appeal, filed in this action as ECF Document Number 3, does not

contain page numbers. Accordingly, the Court cites to the page numbers on the ECF header,

as it appears on this Court’s docket.

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

In Re: JOSEF FRIWAT, 

Debtor. 

JOSEPH FIELDING, an individual,

 Appellant,

v.

MOHAMMED KASKAS, an individual

and UNITED FAMILY, LLC, a business

entity, form unknown,

 Appellees.

 

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Civil No. 10cv2310-WQH-WMc

Bankruptcy No. 08-06940-LT7

Bankruptcy Adversary No. 09-90584-LT

ORDER

HAYES, Judge:

The matter before the Court is the appeal of the Bankruptcy Court’s order granting

summary judgment in favor of Appellees Mohammed Kaskas and United Family, LLC

(“United Family”). (ECF No. 1).

I. Background

On October 16, 2009, Appellant Joseph Fielding filed a Complaint against Kaskas and

United Family in Los Angeles County Superior Court. (Compl., ECF No. 3-1 at 11).1

Case 3:10-cv-02310-WQH-WMC Document 16 Filed 05/26/11 Page 1 of 17
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A. Allegations of the Complaint

In March 2005, Fielding purchased a service station business located at 3401 Long

Beach Boulevard in Long Beach, California from Josef S. Friwat. 

On May 26, 2006, Fielding filed an action against Friwat and others for fraud and deceit

in Orange County Superior Court.

In November 2006, “[b]ecause the business and its financial condition was

misrepresented to Fielding by Friwat ..., Fielding turned the business back to Friwat.” Id. ¶ 8.

On December 3, 2007, a jury returned a verdict in favor of Fielding, finding Friwat

liable and awarding compensatory and punitive damages in the amount of $1,329,000. 

On July 27, 2008, Friwat filed a voluntary Petition for Bankruptcy in the United States

Bankruptcy Court, Southern District of California. 

On December 10, 2008, Friwat filed a motion in his bankruptcy case for an order

authorizing the sale of the subject property to Kaskas for $2,000,000, “which was far less than

the market value and, also, less than the total value of the secured liens against the subject

property.” Id. ¶ 16.

On May 14, 2009, the bankruptcy court conducted an auction sale of the property. The

high bidder at the auction was Ibrahim Guirges, who bid $2,700,000 for the property. The

back-up buyer was Kaskas, “who was affiliated with Friwat as an undisclosed partner, or

Kaskas’s assignee, who bid the sum of $2,275,000.” Id. ¶ 17. “The bankruptcy court ordered

that Fielding’s junior priority judgment lien attach to the net sales proceeds....” Id.

“Guirges could not obtain financing because, subsequent to May 14, 2009, Friwat

presented false and misleading information to Guirges lender, Beach Business Bank, regarding

alleged environmental contamination of the subject property. At the time ..., Kaskas was

Friwat’s partner.” Id. ¶ 18.

On June 30, 2009, “Kaskas’s nominee, Defendant [United Family], funded and closed

the escrow for the sale of the subject property.” Id. ¶ 19.

“Prior to the bankruptcy court ordered auction sale, Kaskas communicated with

prospective bidders/purchasers of the subject property, advising these bidders/purchasers that

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the subject property had severe environmental problems, which statements were intended to

and succeeded in dissuading potential bidders/purchasers from entering the bidding at the

auction sale.” Id. ¶ 20.

The Complaint alleges four causes of action: (1) intentional interference with economic

relations; (2) negligent interference with economic relations; (3) conspiracy to defraud

creditors; and (4) willful misconduct. In support of the first cause of action, the Complaint

alleges: 

As a direct and proximate result of the fraudulent conduct of Friwat and

Defendants Kaskas [and United Family], the prospective buyer for the purchase

of the subject property, Guirges, was unable to go forward with the purchase of

the property. In addition, Defendants’ fraudulent conduct dissuaded prospective

bidders/purchasers from bidding on and purchasing the subject property.

Id. ¶ 22. In support of the second cause of action, the Complaint alleges that “when the

Defendants made the aforementioned statements to Guirges’ lender, Beach Business Bank and

to prospective bidders/purchasers of the subject property at the bankruptcy court ordered

auction sale, they had no reasonable ground for believing them to be true.” Id. ¶ 26. In

support of the third cause of action, the Complaint alleges that Defendants “conspired between

themselves to hinder, delay and defraud [Fielding] in the collection of his claim and resulting

judgment against Friwat.” Id. ¶ 30. In support of the fourth cause of action, the Complaint

alleges that Defendants committed “wilful misconduct” to damage Fielding. Id. ¶ 38.

B. Removal to Bankruptcy Court

On October 27, 2009, Kaskas and United Family removed the Complaint to the United

States Bankruptcy Court for the Central District of California pursuant to 28 U.S.C. § 1441 and

Federal Rule of Bankruptcy Procedure 9027-1. (ECF No. 3-1 at 87-91). The Notice of

Removal states:

Joseph Fielding, the Plaintiff in the removed action, is a judgment creditor of

Josef Friwat, the Debtor in a Chapter 11 case now pending in the Souther

District of California, entitle In Re Josef Friwat, Case No. 08-06940-LT....

United Family LLC, the Defendant in the removed action, is the buyer of the

Debtor Friwat’s Real Property pursuant to 11 U.S.C. § 363. Mohammad

Kaskas, the other Defendant in the removed action, is the managing director of

United Family LLC. United Family LLC was the successful bidder for the

Debtor’s Real Property and purchased the same pursuant to an order of the

bankruptcy court....

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Id. at 88. 

On December 23, 2009, the Complaint was transferred to the United States Bankruptcy

Court for the Southern District of California, where it was assigned Adversary Proceeding No.

09-90584-LT, related to In Re Josef Friwat, Bankruptcy Case No. 08-06940-LT7.

On August 20, 2010, Kaskas and United Family filed a motion for summary judgment.

(ECF No. 3-2 at 2-102).

On September 7, 2010, Fielding filed an opposition to the motion for summary

judgment. (ECF No. 3-3 at 1-156).

C. Evidence Submitted during Summary Judgment Proceedings

In the late 1990’s, a new gasoline service station was constructed on the Long Beach

property at issue. (Snyder Decl. ¶ 2, ECF No. 3-3 at 23). “The construction of the service

station included the placement of double-walled storage tanks and include[d] an extensive

monitoring system to prevent the possibility of gasoline leakage from the dispensers or storage

tanks.” Id. ¶ 3.

In connection with Friwat’s acquisition of the Long Beach property in November 2005,

Friwat executed an agreement wherein Friwat represented that “[a]fter due inquiry and

investigation, [Friwat] has no knowledge, or reason to believe, that there has been any use,

generation, manufacture, storage, treatment, refinement, transportation, disposal, release, or

threatened release of any Hazardous Substances by any person on, under, or about the

Property.” (Werner Decl. ¶ 5, ECF No. 3-3 at 25; see also ECF No. 3-3 at 31).

On December 3, 2007, Friwat testified in the state court trial between Fielding and

Friwat. Friwat testified that he had sold the Long Beach service station business and real

property to a company called Prime Oil Management, LLC for $4,450,000. (Werner Decl. ¶

6, ECF No. 3-3 at 25-26; see also ECF No. 3-3 at 38).

According to Fielding’s attorney, “[o]n December 4, 2007, the day after the jury’s

verdict in the First Action, Fielding filed a new action in Orange County Superior Court ...

against Friwat and others to, inter alia, set aside Friwat’s fraudulent transfer of the Long Beach

property to a limited liability company shortly before the trial of the first action.” (Werner

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Decl. ¶ 7, ECF No. 3-3 at 26).

In December 2007, Encon Solutions, Inc. (“Encon”) performed a Phase I environmental

investigation on the Long Beach property, and in February 2008, Encon performed a Phase II

environmental investigation on the property. (Kim Decl. ¶ 3, ECF No. 3-3 at 19). “The Phase

II environmental investigation was conducted by the utilization of a drilling contractor, who

drilled six (6) separate holes at the property.” Id. Encon’s Phase II investigation found that

there was a “significant level of petroleum hydrocarbon contamination” in three of the six soil

borings from the property. Id. ¶ 4. The other three soil borings “did not reveal a significant

level of petroleum hydrocarbon contamination.” Id. Of the three soil borings which did reveal

contamination, “MTBE was not found to be above laboratory reporting limit. MTBE is a fuel

oxygenate additive which was added to gasoline beginning in the late 1980s and predominantly

after [the] 1990 Clean Air Act.” Id. Encon’s investigation revealed that the property had been

used as a service station, with underground storage tanks, at least since 1963. Id. ¶ 3. Encon

performed the investigations “[f]or its customer, Nara Bank.” Id.

On June 19, 2008, Friwat submitted a declaration in the second state court action

between Fielding and Friwat. Friwat stated that an environmental study on the Long Beach

property, dated January 18, 2008, “revealed contamination on the property.” (Friwat Decl. ¶

3, ECF No. 3-3 at 93). Friwat stated that the study “was a requirement of Nara Bank which

was the bank that proposed to finance the sale of the property” and as a result of the study,

“Nara Bank refused to consummate the purchase loan and the sale never closed.” Id. ¶¶ 2-3.

Friwat attached to his declaration a copy of a report dated January 18, 2008 from American

Scientific Laboratories, LLC, which found that soil samples from the property “contained

detectable levels of ... gasoline organics.” (ECF No. 3-3 at 107).

On July 27, 2008, Friwat filed a voluntary Petition for Bankruptcy under Chapter 7 of

the United States Bankruptcy Code in United States Bankruptcy Court, Southern District of

California, Case No. 08-06940-LT7. American Scientific Laboratories, LLC was listed as an

unsecured creditor in Friwat’s July 27, 2008 bankruptcy petition. (ECF No. 3-3 at 135).

On December 10, 2008, Friwat filed a motion in his bankruptcy case for an order

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authorizing the sale of the subject property to Kaskas for $2,000,000, subject to overbids at a

court conducted auction sale. (S.D. Cal. Bankr. Case No. 08-06940, ECF No. 62-1).

The Notice of Bankruptcy Sale for the Long Beach property, which was approved by

order of the bankruptcy court, provided the following:

The Property has been used as a gas station with underground gasoline storage

tanks located on the Property. The Debtor is informed that both Phase I and

Phase II environmental reports have been performed on the Property. The

Debtor has conflicting information as to the existence of toxic remediation

issues, thus any prospective buyer should obtain its own environmental reports.

The Debtor will also turn over any environmental reports in his possession.

(ECF No. 4-1 at 7). The bankruptcy court ordered that the notice of auction sale be advertised

for no less than 45 days prior to the May 14, 2009 auction sale.

Ron Reger, a real estate salesperson, saw the notice of auction sale advertised on the

internet during April of 2009. (Reger Decl. ¶ 3, ECF No. 3-3 at 21). In a declaration, Reger

stated that, on May 6, 2009, he spoke on the telephone with Friwat’s bankruptcy attorney,

Thomas Polis. Reger stated:

Mr. Polis told me that there was a great deal of interest in the property,

which had generated at least four separate offers and four separate deposits of

$100,000 into escrow, which was required by any potential bidder in order to be

able to participate in the bidding at the auction sale.

Approximately thirty minutes after I spoke to Mr. Polis, I contacted the

escrow holder ... and spoke to escrow officer Kimberly Mills. Ms. Mills told me

that there was only one deposit of $100,000 that was submitted by any bidder

and that the bidder was Mohammed Kaskas.

I knew Mr. Kaskas from prior dealings with him involving the purchase

and sale of service station business properties. I called him on May 6, 2009 and

told him that I might have a buyer for the Long Beach property. Mr. Kaskas told

me that the property was contaminated and that I should not have my client bid

on the property. Mr. Kaskas suggested that we meet and discuss the matter

further....

On May 12, 2009, I met with Mr. Kaskas in Chino Hills, California.

Once again, he told me that my client should not be interested in the property

because of the environmental contamination found at the Long Beach property.

He further told me that my client would never be able to get financing because

of the contamination issue. I asked Mr. Kaskas how, with the environmental

contamination on the property, he could obtain financing for his purchase of the

Long Beach property. He told me that his partner was the owner of the Long

Beach property and had already obtained financing, which he would simply

assume.

In further discussions with Mr. Kaskas that day, he told me that his

partner in the Long Beach property was Josef Friwat. He made multiple

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references in our discussion to his partner Mr. Friwat.

Id. ¶¶ 4-8.

In a deposition, Kaskas testified that he met with Reger in Chino Hills, and discussed

the Long Beach property and the ARCO company. (Kaskas Dep. at 82, ECF No. 3-3 at 148).

Kaskas testified that he told Reger about the contamination of the Long Beach property.

(Kaskas Dep. at 85, ECF No. 3-3 at 149).

On May 14, 2009, the bankruptcy court conducted an auction sale of the Long Beach

property and two bidders appeared: Ibrahim Guirges, who won with a bid of $2,700,000, and

Kaskas, who bid $2,275,000. (ECF No. 3-1 at 23-25; see also Kaskas Decl. ¶¶ 3-4, ECF No.

3-2 at 2). According to the bankruptcy court’s order approving the sale of the property,

Guirges had until June 15, 2009 to close escrow and complete the transaction for Guirges’ bid

amount. (ECF No. 3-1 at 24). The order provided that, in the event Guirges did not timely

complete the sale, Kaskas would have until July 2, 2009 to complete the sale for Kaskas’ bid

amount. Id. The order was approved as to form and content by, inter alia, counsel for

Fielding. Id. at 25.

Guirges applied to Beach Business Bank for a loan to purchase the Long Beach

property. (Bond Dep. at 6-7, ECF No. 3-2 at 81-82). Phillip J. Bond, the Chief Credit Officer

for Beach Business Bank, testified that Beach Business Bank commissioned a Phase I

environmental report conducted by a company named Odic Environmental. (Bond Dep. at 9,

ECF No. 3-2 at 84). The Odic report, dated June 9, 2009, stated that there had been an oil well

on the Long Beach property from 1925 to approximately 1994, as well as gasoline service

station operations from 1958 to 2008. (ECF No. 3-2 at 59). The Odic report stated: “Based

on significant levels of petroleum hydrocarbons found in soil at depths of 30 feet, further

delineation and assessment of site conditions should be conducted to determine the vertical and

horizontal extent of contamination, including evaluation of groundwater conditions beneath

the site.” Id. Bond testified “the bank declined the loan” to Guirges “solely [because of] the

Odic report and the condition of the property that is reported in that report.” (Bond Dep. at 12,

15, ECF No. 3-2 at 11, 19). Bond testified the bank also had a copy of an earlier Phase I report

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conducted by a company named Heron, which revealed “no evidence of environmental

conditions.” (Bond Dep. at 27-28, ECF No. 3-3 at 143-44). Bond testified that “given what

was contained in the Odic report, [the bank] just decided [it] did not want to touch the

property.” (Bond Dep. at 26, ECF No. 3-3 at 142).

Kaskas testified that he took over the Long Beach property at the end of June 2009.

(Kaskas Dep. at 125, ECF No. 3-3 at 150). Kaskas testified that ARCO provided Kaskas with

$500,000 financing to brand the Long Beach property as an ARCO “am/pm” service station,

which began operating in December 2009. (Kaskas Dep. at 125-26, ECF No. 3-3 at 150-51).

Kaskas testified that he paid Friwat $1,300 to transport pumps to the property, but otherwise

he had not paid Friwat any money. Id. Kaskas testified that, between June 2009 (when he

took over the property) and April 2010 (when his deposition was taken), Kaskas had not yet

“done anything to determine what the costs would be to remedy” any contamination of the

property. (Kaskas Dep. at 127, ECF No. 3-3 at 152). Kaskas testified that he planned to

contact the State of California about remedying the contamination during the summer of 2010.

Id. Kaskas testified that “[a]ny contamination [of the property] has to be before” 1999, when

California required all stations to install fiberglass underground storage tanks. (Kaskas Dep.

at 130, ECF No. 3-3 at 153).

Kaskas submitted a declaration stating: 

I am not now nor have I ever been a partner in any business or activity with the

Debtor Friwat. The only business dealings I, or any entity in which I have had

an interest has had with Friwat is the purchase of some pumps and registers from

him for the Long Beach station. Since United Family LLP purchased the

station, Friwat has had no interest in the station or in United Family LLP directly

or indirectly.

(Kaskas Decl. ¶ 5, ECF No. 3-2 at 2).

D. Order Granting Summary Judgment

On October 21, 2010, the bankruptcy court issued an order granting summary judgment

in favor of Kaskas and United Family. The bankruptcy court summarized the allegations of

the complaint and set forth the following findings and conclusions:

1. Plaintiff Joseph Fielding filed his complaint on October 16, 2009 in the

Superior Court for the County of Los Angeles. The action was removed by

Defendants and transferred to this Court. No appeal was taken from the order

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denying remand or transferring the action to this Court.

2. The order approving the sale of Debtor Josef Friwat’s ... gas station located

at 3401 Long Beach Blvd., Long Beach, CA (‘Property’) to the successful

bidder, Ibrahim Guirges, for $2,700,000, and to Defendant United Family LLC

as a back-up buyer for $2,275,000, was entered on June 16, 2009. The order

recites that both Mr. Guirges and Defendant Kaskas/United Family LLC are

good faith purchasers pursuant to 11 USC § 363(m). No appeal was taken from

this order.

....

4. With respect to the allegation that Defendants or the Debtor interfered with

the ability of the highest bidder, Ibrahim Guirges, to secure financing, Plaintiff

presented no evidence to counter that offered by Defendants in the form of the

deposition testimony of Phillip Bond, Chief Loan Officer for Beach Business

Bank. Mr. Bond testified that the loan was declined solely because of the

contamination found by its environmental consultant, Odic Environmental. The

Odic report referred to a limited Phase 2 subsurface examination conducted by

Encon Solutions, Inc. and given to Odic by the Debtor. In January of 2008,

Encon Solutions performed six soil borings and found petroleum hydrocarbons

in the soil at depths of 30 feet. Based on the Encon findings, Odic

recommended to Beach Business Bank that a Phase 2 environmental assessment

be commissioned. Guirges did not obtain a Phase 2, and therefore Beach

Business Bank denied his loan application.

5. Plaintiff does not dispute that Beach Business Bank declined the Guirges’

loan because of the contamination described in the Odic Environmental report.

Nor does he dispute the findings of Odic or Encon Solutions. When asked if

Plaintiff had any evidence that the two environmental reports were a product of

fraud or subterfuge, counsel conceded that he had none. Further, counsel agreed

that the Debtor’s gas station is contaminated, but maintains that the

contamination occurred prior to 1999 when new underground storage tanks were

installed. The Court does not take issue with this assertion, it is not disputed by

Defendants, and it does not create a triable issue here.

6. In support of his allegation that Defendants deterred potential bidders,

Plaintiff offered the Declaration of Ron Reger, a real estate broker. Mr. Reger

stated that Defendant Kaskas told him that Reger’s client should not be

interested in the Debtor’s gas station because the property was contaminated,

and that the contamination would make financing impossible. Mr. Reger did not

identify his client or state that his client was deterred from bidding. Nor did Mr.

Reger state that he was deterred from procuring possible bidders as a result of

Defendant Kaskas’ statements to him. Mr. Reger also stated that Defendant

Kaskas told him he was a partner with the Debtor, but Plaintiff presented no

evidence regarding this partnership.

7. Any statement by the Defendants to any interested person that the Property

is contaminated is simply the truth.

8. As for Defendant Kaskas’ statement that financing would be difficult or

impossible due to the contamination, this is a statement of opinion. In fact, the

successful bidder, Guirges, was unable to secure financing precisely because the

Property was contaminated.

9. The Court finds that the Declaration of Ron Reger and the Declaration of Lee

Werner do not establish or create a triable issue that Defendants deterred anyone

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from bidding on the Debtor’s Property, or that Ron Reger himself was deterred

from procuring potential bidders. The Reger Declaration also does not establish

that the Debtor and Defendant Kaskas were involved in a partnership the

purpose of which was to sabotage or compromise the Bankruptcy Court sale of

the Debtor’s Property. Plaintiff’s counsel conceded that he had no other

evidence on these points, but asked the Court to infer that these things could

have occurred. The Court declines to make such inferences without any

evidentiary support; such inferences are not sufficiently plausible to raise a

triable issue of material fact.

10. This Court’s order establishing the sale procedures for the Debtor’s Property

required that it be advertised for 52 calendar days. Further, the Notice of Sale

warned of contamination, required the Debtor to turn over environmental reports

in his possession, and advised bidders to conduct their own environmental

examination. The Encon Solutions report states that the Property is

contaminated. The sales environment described by Plaintiff’s counsel in

argument was no more nor less than that described in the Notice of Bankruptcy

Sale. Further, the sales environment did not preclude Guirges from making a

substantial bid of $2,700,000 at the auction.

11. The Plaintiff’s evidence does not raise triable issues of material fact. The

Reger and Werner Declarations, viewed in the light most favorable to Plaintiff,

raise no more than a ‘metaphysical’ doubt—not a triable issue of material fact.

The Snyder and Kim Declarations confirm that contamination exists, but that it

was not caused recently; they do not create any triable issue. The Court

concludes that a trier of fact could not find in favor of Plaintiff based on the

evidence presented.

(ECF No. 10 at 3-5).

E. Appeal

On November 8, 2010, Fielding filed a notice of appeal of the bankruptcy court’s

October 21, 2010 order granting summary judgment. (ECF No. 1).

After the record on appeal was filed and the parties filed their respective briefs, the

Court conducted oral argument on May 20, 2011.

II. Standard of Review

The district court has jurisdiction to hear appeals from final judgments, orders or

decrees of the bankruptcy court. See 28 U.S.C. § 158(a); cf. Fed. R. Bankr. P. 8013 (“On an

appeal the district court ... may affirm, modify, or reverse a bankruptcy judge’s judgment,

order, or decree or remand with instructions for further proceedings.”). The bankruptcy court’s

decision granting summary judgment is subject to de novo review. See In re AFI Holding, Inc.,

525 F.3d 700, 702 (9th Cir. 2008).

Summary judgment is appropriate if there is no genuine issue as to any material fact and

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the moving party is entitled to judgment as a matter of law. See FED.R.CIV. P. 56(c); see also

Fed. R. Bankr. P. 7056 (“Rule 56 [of the Federal Rules of Civil Procedure] applies in adversary

proceedings.”). A “material” fact is one that is relevant to an element of a claim or defense and

whose existence might affect the outcome of the suit. Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 587 (1986). The materiality of a fact is determined by the

substantive law governing the claim or defense. See Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 252 (1986). The moving party has the initial burden of demonstrating that summary

judgment is proper. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 152 (1970). The burden

then shifts to the opposing party to provide admissible evidence beyond the pleadings to show

that summary judgment is not appropriate. See Celotex Corp. v. Catrett, 477 U.S. 317, 322,

324 (1986). The opposing party’s evidence is to be believed, and all justifiable inferences are

to be drawn in his favor. See Anderson, 477 U.S. at 256.

To avoid summary judgment, the opposing party cannot rest solely on conclusory

allegations of fact or law. See Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir. 1986). “[T]he

nonmoving party must come forward with specific facts showing there is a genuine issue for

trial.” Matsushita, 475 U.S. at 587 (quotation omitted). Neither an unverified complaint nor

unsworn statements made in the parties’ briefs can be considered as evidence at this stage. See

Moran v. Selig, 447 F.3d 748, 759 & n.16 (9th Cir. 2006) (noting that unverified complaint

cannot be considered as evidence on motion for summary judgment); British Airways Bd. v.

Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978) (“[L]egal memoranda ... are not evidence[.]”).

Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment.

See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987)

(citing Anderson, 477 U.S. at 248).

III. Contentions of the Parties

Fielding contends:

Essentially, the gist of what Fielding alleged in his state court action, that was

removed to the bankruptcy court, was that appellees, along with their partner,

Friwat, engaged in a fraud upon the marketplace to dissuade potential bidders

from participating in the bankruptcy court ordered auction sale of the Long

Beach property. 

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(ECF No. 7 at 25). Fielding contends:

The Reger declaration established that both Polis, Friwat’s attorney, and Kaskas,

Friwat’s partner, made false and misleading statements to Reger, who

represented potential bidders at the auction sale. By inference, the

circumstances surrounding the transaction and the relationship and interest of

Friwat and Kaskas, it is also reasonable to infer that Reger was not the only

person to whom Polis and Kaskas made false and misleading statements. Friwat

and Kaskas and their agents, in furtherance of their scheme to poison the

marketplace for the auction sale of the Long Beach property, certainly provided

the same false information to other potential bidders for the property.

In short, there were multiple triable issues of material fact that precluded the

granting of a summary judgment for appellees.

Id. at 26. Fielding contends that, “[c]ontrary to California law, the bankruptcy court simply

ignored the proof presented by Fielding’s declarations, which showed a fraudulent scheme by

Friwat and Kaskas both directly and ‘by inference, by circumstances surrounding the

transaction, and the relationship and interest of the parties.’” Id. (quoting Dyke v. Zaiser, 80

Cal. App. 2d 639, 654 (1947)). 

Kaskas and United Family contend:

The problem with Plaintiff’s appeal is that his evidence does not measure up to

his imagination and the rhetorical flourish of his brief or his complaint....

Understandably, Plaintiff would have liked for the gas station to have sold for

a higher price. But the answer to his frustration is not to sue Mr. Kaskas or his

company and make wild accusations. If Plaintiff had evidence that something

untoward occurred with regard to the bankruptcy court sale, the summary

judgment motion was the time to present it. He did not, and admitted he could

not. His appeal should therefore be denied and the judgment of the Bankruptcy

Court affirmed.

(ECF No. 11 at 17).

IV. Discussion

In each of the four causes of action, Fielding contends that the wrongful act or

misconduct is fraud or fraudulent misrepresentation. See Compl. ¶¶ 22, 26, 31, 35-39, ECF

No. 3-1 at 16-18; see also ECF No. 7 at 25-26 (“the gist of what Fielding alleged ... was that

appellees, along with their partner, Friwat, engaged in a fraud upon the marketplace”;

“Fielding’s declarations ... showed a fraudulent scheme by Firwat and Kaskas”); ECF No. 13

at 5-6 (“the bankruptcy court erred by refusing to consider proof of fraud offered by

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 The four causes of action alleged are: (1) intentional interference with economic

relations; (2) negligent interference with economic relations; (3) conspiracy to defraud

creditors; and (4) willful misconduct. To establish a claim for intentional or negligent

interference with prospective economic relations, “a plaintiff must plead that the defendant

engaged in an independently wrongful act. An act is not independently wrongful merely

because defendant acted with an improper motive.... [A]n act is independently wrongful if it

is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common

law, or other determinable legal standard.” Korea Supply Co. v. Lockheed Martin Corp., 29

Cal. 4th 1134, 1153 (2003) (intentional interference); see also Venhaus v. Shultz, 155 Cal.

App. 4th 1072, 1077 (2007) (negligent interference). The only independently wrongful acts

alleged in the Complaint or discussed in Fielding’s briefs are acts Fielding labeled as fraud or

fraudulent. Cf. Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 410 (1995)

(“The independently tortious means that commonly appear in this context, includ[e] ... fraud

and deceit.”) (citations omitted).

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appellant”).2 The elements of fraud under California law are “(a) misrepresentation; (b)

defendant’s knowledge of the statement’s falsity; (c) intent to defraud (i.e., to induce action

in reliance on the misrepresentation); (d) justifiable reliance; and (e) resulting damage.”

Hunter v. Up-Right, Inc., 6 Cal. 4th 1174, 1184 (1993) (fraud) (citation omitted).

Fielding points to evidence of representations by Kaskas to Ron Reger, a real estate

salesperson, that the Long Beach property was contaminated; that Reger “should not have [his]

client bid on the property”; that Reger’s client “would never be able to get financing because

of the contamination issue”; and that Kaskas was planning to purchase the property by

assuming the financing of Kaskas’ partner, Friwat. (Reger Decl. ¶¶ 6-7, ECF No. 3-3 at 22).

With respect to the representation that the property was contaminated, there is

undisputed evidence in the record that, as of December 2007, soil samples from the property

contained a “significant level of petroleum hydrocarbon contamination.” (Kim Decl. ¶ 4, ECF

No. 3-3 at 20). Although a reference was made during the Bond deposition of a Phase I report

conducted by a company named Heron, which revealed “no evidence of environmental

conditions,” Bond Dep. at 27-28, ECF No. 3-3 at 143-44, there was no designated evidence

showing when and how the Heron investigation was conducted, including whether soil samples

were examined. Absent this evidence, the Court cannot find that there is an issue of fact as to

whether the property was, in fact, contaminated. Accordingly, Fielding failed to create a

genuine issue of material fact as to the truthfulness of Kaskas’ statement that the property was

contaminated. Cf. Masters v. San Bernardino County Emps. Ret. Ass’n, 32 Cal. App. 4th 30,

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40 n.6 (1995) (in order to demonstrate fraud, a plaintiff must produce sufficient evidence for

a reasonable jury to find that the defendant’s representation was false or untrue)

Even if there was an issue of fact as to whether the property was contaminated, Fielding

also must produce sufficient evidence for a reasonable jury to find that Kaskas knew that the

property was not contaminated, and that a prospective bidder relied upon the representation

that the property was contaminated. See Hunter, 6 Cal. 4th at 1184. Fielding has failed to

proffer any evidence that Kaskas knew the property was not contaminated. Likewise, there

is no evidence of any potential bidders who failed to bid on the property due to Kaskas’

statements or statements attributable to Kaskas. Reger stated in his declaration that he told

Kaskas that he “might have a buyer” for the property, but Reger did not state that he relayed

Kaskas’ comments to this prospective buyer, and that the prospective buyer then relied upon

those comments in deciding not to bid on the property. (Reger Decl. ¶ 6, ECF No. 3-3 at 22).

With respect to Kaskas’ other representations to Reger—i.e., that Kaskas was planning

to purchase the property by assuming Friwat’s financing and that Reger’s client should not bid

on the property and would not be able to get financing—these statements cannot constitute

actionable misrepresentations because they are opinions or statements regarding future events.

See San Francisco Design Ctr. Assocs. v. Portman Cos., 41 Cal. App. 4th 29, 44 (1995) (“[A]n

actionable misrepresentation must be made about past or existing facts; statements regarding

future events are merely deemed opinions.”); Tarmann v. State Farm Mut. Auto. Ins. Co., 2

Cal. App. 4th 153, 158 (1991) (“[P]redictions as to future events, or statements as to future

action by some third party, are deemed opinions, and not actionable fraud.”) (quotation

omitted).

Fielding contends that statements made by Friwat and Friwat’s bankruptcy attorney,

Polis, should be attributable to Kaskas and United Family because Kaskas told Reger that

Friwat was his “partner.” (Reger Decl. ¶ 8, ECF No. 3-3 at 22). Polis told Reger that there

were “at least four separate offers and four separate deposits of $100,000 into escrow.” (Reger

Decl. ¶ 4, ECF No. 3-3 at 21). Thirty minutes after speaking to Polis, Reger spoke with the

escrow officer, who told Reger that there was only one deposit in escrow. (Reger Decl. ¶ 4,

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ECF No. 3-3 at 21). Even if Polis’ misrepresentation could be attributed properly to Kaskas

and United Family, there is no evidence that Reger or his client relied upon the

misrepresentation.

Fielding contends that the reports of contamination were “generate[d]” by Friwat. (ECF

No. 7 at 21). Fielding points to evidence that American Scientific Laboratories, LLC was

listed as an unsecured creditor in Friwat’s July 27, 2008 bankruptcy petition. (ECF No. 3-3

at 135). However, even if a jury were to infer from this that Friwat paid for the January 18,

2008 American Scientific Laboratories, LLC study, this would not contradict Friwat’s

statement that the study “was a requirement of Nara Bank which was the bank that proposed

to finance the sale of the property.” (Friwat Decl. ¶ 2, ECF No. 3-3 at 93). Moreover, Fielding

has not introduced evidence to contradict the evidence that the December 2007 and February

2008 Encon investigations were performed for Encon’s “customer, Nara Bank.” (Kim Decl.

¶ 3, ECF No. 3-3 at 19). And even if there was evidence that Friwat “generate[d]” the

contamination reports, as discussed above, there is no evidence that the reports were false.

Fielding’s attorney submitted a declaration stating that, on February 26, 2008 and

March 3, 2008, Friwat submitted declarations in the second state court action between Fielding

and Friwat, and “[n]either declaration hinted at any environmental or contamination problem

with the Long Beach property.” (Werner Decl. ¶ 8, ECF No. 3-3 at 26). After review of the

Friwat declarations, neither the February 26, 2008 declaration nor the March 3, 2008

declaration contains any representations regarding whether the property is, or is not,

contaminated. (ECF No. 3-3 at 39-43). Fielding points to Friwat’s representation in October

2005 that Friwat had no knowledge of any hazardous substance on the property. (ECF No. 3-3

at 31; see also ECF No. 7 at 9; ECF No. 13 at 2-3). However, it is undisputed that the first

discovery of contamination on the property occurred in December 2007 through February

2008.

Fielding contends that, “[c]ontrary to California law, the bankruptcy court simply

ignored the proof presented by Fielding’s declarations, which showed a fraudulent scheme by

Friwat and Kaskas both directly and ‘by inference, by circumstances surrounding the

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transaction, and the relationship and interest of the parties.’” Id. (quoting Dyke v. Zaiser, 80

Cal. App. 2d 639, 654 (1947)). However, under California law, a fraud claim may not “be

based on inference piled on inference.” Webb v. State Bar, 47 Cal. 2d 866, 871 (1957).

“Where ... the plaintiff seeks to prove an essential element of her case by circumstantial

evidence, she cannot recover merely by showing that the inferences she draws from those

circumstances are consistent with her theory. Instead, she must show that the inferences

favorable to her are more reasonable or probable than those against her.” Leslie G. v.. Perry

& Assocs., 43 Cal. App. 4th 472, 483 (1996) (citations omitted); see also Bowman v. Wyatt,

186 Cal. App. 4th 286, 312 (2010) (same); Joseph E. Di Loreto, Inc. v. O’Neill, 1 Cal. App.

4th 149, 161 (1991) (“When opposition to a motion for summary judgment is based on

inferences, those inferences must be reasonably deducible from the evidence, and not such as

are derived from speculation, conjecture, imagination, or guesswork.”) (citation omitted).

Based upon the evidence submitted, it is not a reasonable inference that, for example, Kaskas’

statements that the property was contaminated were false and he knew them to be false at the

time. Based upon the evidence submitted, the Court finds that Fielding has failed to create a

genuine issue of material fact concerning whether there was an actionable misrepresentation

attributable to Kaskas, as well as justifiable reliance on that misrepresentation by any potential

bidder.

In addition to showing an actionable misrepresentation and justifiable reliance, Fielding

has the burden of demonstrating that he suffered damages. Fielding has failed to designate

evidence that the reasonable value of the Long Beach property exceeded the $2,275,000 paid

by Kaskas, given the undisputed evidence of contamination. Such evidence would be

necessary to show that Fielding was damaged by the sale of the property to Kaskas and United

Family. In its June 16, 2009 order approving the sale of the property to Guirges as buyer and

Kaskas as back-up buyer, the bankruptcy court found that “[b]oth the Buyer and the Back-Up

Buyer are deemed to be a purchaser in good faith and thus the Real Property is sold pursuant

to Section 363(m) of the Bankruptcy Code.” (ECF No. 3-1 at 25). This order was approved

as to form and content by Fielding’s counsel, and no appeal was taken from the sale order. A

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“good faith purchaser” pursuant to 11 U.S.C. § 363(m) “is one who buys in good faith and for

value.” In re Ewell, 958 F.2d 276, 281 (9th Cir. 1992) (quotation omitted); cf. Annod Corp.

v. Hamilton & Samuels, 100 Cal. App. 4th 1286, 1294 (2002) (under California law, “if a

transfer is made both in good faith and for a reasonably equivalent value, then the transfer is

not a fraudulent transfer”).

After review of the record and the submissions of the parties, the Court finds that there

is insufficient evidence for a reasonable fact-finder to find in favor of Fielding on his

Complaint against Kaskas and United Family. Accordingly, summary judgment is proper for

Kaskas and United Family as to all of Plaintiff’s claims, and the decision of the bankruptcy

court is affirmed.

V. Conclusion

IT IS HEREBY ORDERED that the order of the bankruptcy court granting summary

judgment in favor of Kaskas and United Family is AFFIRMED. The Clerk of the Court shall

enter judgment in favor of Appellees and against Appellant.

DATED: May 26, 2011

WILLIAM Q. HAYES

United States District Judge

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