Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_11-cv-00043/USCOURTS-azd-4_11-cv-00043-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Cheval Farms, LLC, an Ohio limited

liability corporation; Stone Key Corp., an

Ohio corporation, 

Plaintiffs, 

vs.

Trevor William Chalon, et. al., 

Defendants. 

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No. 11-43-TUC-JGZ

ORDER

In this action, Plaintiffs seek to recover investment funds entrusted to Defendant

Trevor William Chalon and his business entities. Plaintiffs allege that Trevor Chalon

fraudulently misappropriated their funds and breached his contractual obligations. Plaintiffs

seek recovery from Trevor Chalon, his business entities, and his parents, Donald and Rita

Chalon (“the Chalons”). Pending before the Court is the Chalons’ Renewed Motion for

Summary Judgment (Doc. 64), seeking dismissal of all claims against them. For the

following reasons, the Motion is granted. 

Procedural Background

Plaintiffs’ Complaint alleged fourteen separate causes of action, thirteen of which

were alleged against the Chalons: (1) Alter ego as to Defendant Trevor Chalon; (2) Breach

of Contract as to all Defendants; (3) Breach of Covenant of Good Faith and Fair Dealing as

to all Defendants; (4) Unjust Enrichment as to all Defendants; (5) Breach of Fiduciary Duty

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against all Defendants; (6) Conversion against all Defendants; (7) Fraud/Fraudulent

Inducement against all Defendants; (8) RICO violations as to all Defendants; (9) Pattern of

Unlawful Activity against all Defendants; (10) Fraudulent Conveyance against all

Defendants; (11) Constructive Trust against all Defendants; (12) Prejudgment Attachment

against all Defendants; (13) Injunctive Relief against all Defendants; and (14) Accounting

against all Defendants. (Doc. 1.) Plaintiffs have been unsuccessful in their attempts to serve

Trevor Chalon and his corporate entities. Plaintiffs served the Chalons, who have appeared

and defended. 

The Chalons initially moved for summary judgment on June 24, 2011. (Doc. 43.)

Plaintiffs opposed the motion, requesting that the Court permit discovery, pursuant to Rule

56(d), Fed.R.Civ.P., as to the source of funds and property provided to the Chalons by their

son. (Doc. 47.) In addition, in their response to the Chalons’ first motion for summary

judgment, Plaintiffs indicated that they did not intend to include the Chalons in certain

counts. On August 10, 2011, the Court dismissed Counts 2-3, 5, 7-9, and 14 as to the

Chalons, and granted Plaintiffs’ Rule 56(d) request to conduct discovery. (Doc. 48.) The six

claims remaining against the Chalons included Counts 4, 6, 10, 11, 12 and 13. 

The parties submitted a Joint Discovery Plan, proposing that all discovery be

completed by December 1, 2011. (Doc. 49.) The Plan provided that discovery could be

made “on any of the claims and defenses asserted in the Complaint and in the Answer.” (Id.)

On November 15, 2011, the parties submitted a Stipulation and Joint Motion to Extend

Deadline for Completing Depositions, requesting that the discovery deadline be extended

to December 30, 2011. (Doc. 57.) By Order dated December 7, 2011, the Court extended

the discovery deadline to January 16, 2012, and ordered that dispositive motions be filed on

or before April 5, 2012. (Doc. 60.) 

The Chalons filed this Renewed Motion for Summary Judgment on February 29,

2012. (Doc. 64.) The Chalons assert they had nothing to do with the Plaintiffs or their son’s

investment transactions at issue in this lawsuit; that they are a retired couple, in their mid 70s,

living on social security; and that Trevor Chalon has been a resident of Asia, living and

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working in Singapore and China for approximately 10 years. (Doc. 64, pp. 3-4.) The

Chalons contend that they are entitled to dismissal from this action because the Plaintiffs

cannot prove any connection between the Chalons and the Plaintiffs’ loss of their investment

funds. 

Legal Standard

A court must grant summary judgment if the pleadings and supporting documents,

show that there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477

U.S. 317, 323 (1986). At the summary judgment stage, the moving party bears the initial

responsibility of presenting the basis for its motion and identifying those portions of the

record, together with affidavits, which it believes demonstrate the absence of a genuine issue

of material fact. Id. at 323. If the moving party meets its initial responsibility, the burden

then shifts to the opposing party who must demonstrate the existence of a genuine issue of

material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248 (1986). 

When considering a summary judgment motion, the court examines the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits,

if any. Fed.R.Civ.P. 56(c). At summary judgment, the judge’s function is not to weigh the

evidence and determine the truth but to determine whether there is a genuine issue for trial.

Anderson, 477 U.S. at 249. The evidence of the non-movant is “to be believed, and all

justifiable inferences are to be drawn in his favor.” Id. at 255. Although the evidence must

be viewed in a light most favorable to the non-moving party, and all reasonable inferences

must be drawn in the non-moving party’s favor, “the inferences are limited to those upon

which a reasonable jury might return a verdict.” U.S. ex rel. Anderson v. Northern Telecom,

Inc., 52 F.3d 810, 815 (9th Cir. 1995). 

In cases where the nonmoving party will bear the burden of proof at trial on a

dispositive issue, the moving party need only point out that there is an absence of evidence

to support its opponent’s claim; it does not need to disprove its opponent’s claim. Celotex,

477 U.S. at 324-325. “The plain language of Rule 56(c) mandates the entry of summary

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judgment, after adequate time for discovery and upon motion, against a party who fails to

make a showing sufficient to establish the existence of an element essential to that party’s

case, and on which that party will bear the burden of proof at trial.” Id. at 322. In this

situation, there can be no genuine issue as to any material fact, because a complete failure

of proof concerning an essential element of the nonmoving party’s case necessarily renders

all other facts immaterial. Id. at 322-323. 

Discussion

Plaintiffs contend that Trevor Chalon commingled and used Plaintiffs’ funds to the

benefit of his parents, and therefore summary judgment is inappropriate. Plaintiffs assert that

an inference as to the Chalons’ involvement in the fraud is evidenced by the fact that: (1) the

Chalons admit that their son received Plaintiffs’ investment funds; (2) Trevor Chalon paid

off a $50,000 personal credit card debt owed by the Chalons; and (3) the Chalons shared a

common bank account with their son, into which money was deposited and withdrawn for

a variety of purposes including paying the Chalons’ debts and bills. (Doc. 72, pp. 1-2.)

Plaintiffs contend that this testimony establishes a reasonable inference that Trevor Chalon

commingled Plaintiffs’ money with his own and the Chalons’ money and that he and the

Chalons used it to pay personal debts owed to or by the Chalons. (Id.) Alternatively,

Plaintiffs ask that the Court deny the Motion without prejudice or at least defer consideration

of it pursuant to Rule 56(d)(1) or (2), Fed.R.Civ.P., because Plaintiffs have not had an

opportunity to conduct discovery with Trevor Chalon and his business entities.

I. Plaintiffs are not entitled to further discovery under Fed. R. Civ. P. 56(d).

Rule 56(d), Fed. R. Civ. P., provides: “If a nonmovant shows by affidavit or

declaration that, for specified reasons, it cannot present facts essential to justify its

opposition, the court may: (1) defer considering the motion or deny it; (2) allow time to

obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate

order.” The party seeking the continuance bears the burden to show what specific facts it

hopes to discover. Cont’l Mar. of San Francisco v. Pac. Coast Metal Trades Dist. Council,

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Cases decided before 2010 cite to Rule 56(f); however, the rule was amended in 2010

and renumbered as Rule 56(d). “Subdivision (d) carries forward without substantial change

the provisions of former subdivision (f).” Fed. R. Civ. P. 56 advisory committee’s notes.

For clarity, this Court refers to this rule in all case law discussions as Rule 56(d). 

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Metal Trades Dep’t, AFL-CIO, 817 F.2d 1391, 1395 (9th Cir. 1987).1

 The moving party

must show: “(1) it has set forth in affidavit form the specific facts it hopes to elicit from

further discovery; (2) the facts sought exist; and (3) the sought-after facts are essential to

oppose summary judgment.” Family Home and Finance Center, Inc. v. Federal Home Loan

Mortgage Corp., 525 F.3d 822, 827 (9th Cir. 2008). “Failure to comply with these

requirements is a proper ground for denying discovery and proceeding to summary

judgment.” Id. (internal citations omitted). 

Plaintiffs contend that this Court must give them an adequate opportunity to conduct

more discovery because critical evidence necessary to mount a defense is within the

possession of Trevor Chalon. Plaintiffs state that further discovery is necessary because

Trevor Chalon has only recently been served. Plaintiffs suggest that after Trevor Chalon

appears in this action, Plaintiffs will conduct discovery and uncover additional evidence

supporting their accusations that Trevor fraudulently conveyed funds obtained from Plaintiffs

to his parents. 

Plaintiffs have failed to file the required affidavit setting forth specific facts they

expect to elicit from further discovery; Plaintiffs’ memoranda is inadequate to obtain relief

under Fed. R. Civ. P. 56(d). See State of Cal., on Behalf of Cal. Dept. of Toxic Substances

Control v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998) (stating that references in

memoranda and declarations to a need for discovery are not motions under Rule 56(d)).

Plaintiffs’ noncompliance with the terms of Rule 56(d) is independently an adequate ground

to deny their request for more discovery. See id. In addition, Plaintiffs fail to point to any

evidence that could be discovered that might support Plaintiffs’ claims as to the Chalons.

Plaintiffs’ mere hope that further evidence may develop prior to trial is an insufficient basis

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2

Plaintiffs are aware of the requirements of Rule 56(d) as demonstrated by their earlier

Rule 56(d) motion, which the Court granted on August 10, 2011. (Doc. 48.) The discovery

deadline, as stipulated to by the parties and ordered by the Court, was January 16, 2012.

(Doc. 60.) Plaintiffs conducted discovery over a five month period, including propounding

interrogatories and deposing Donald and Rita Chalon. Plaintiffs have requested no extension

of the discovery period prior to the Chalons’ filing of their motion for Summary Judgment.

3

The basis for the Court’s jurisdiction is diversity of citizenship, and therefore Arizona

law controls substantive questions of law. Gasperini v. Center for Humanities, Inc., 518 U.S.

415, 427 (1996). 

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for a continuance under Rule 56(d). See Cont’l Mar. of San Francisco, 817 F.2d at 1395.2

II. There is no genuine issue of material fact as to the claims against the Chalons.

The Chalons contend that there is no genuine issue of material fact as to any of the

remaining counts alleged against the Chalons. The Court agrees. 

A. Count Four: Unjust Enrichment

Plaintiffs do not identify a genuine issue of material fact which would prevent entry

of summary judgment as to their unjust enrichment claim. Recovery under a theory of unjust

enrichment requires a showing of five elements: “(1) an enrichment; (2) an impoverishment;

(3) a connection between the enrichment and the impoverishment; (4) absence of justification

for the enrichment and the impoverishment and (5) an absence of a remedy provided by

law.” City of Sierra Vista v. Cochise Enterprises, Inc., 697 P.2d 1125, 1131 (Ariz. App.

1985).3

 A plaintiff must demonstrate that the defendant received a benefit, that by receipt

of that benefit the defendant was unjustly enriched at the plaintiff’s expense, and that the

events were such that in good conscience the defendant should provide compensation.

Freeman v. Sorchych, 245 P.3d 927, 936 (Ariz. App. 2011).

Plaintiffs have failed to produce any evidence demonstrating a connection between

the Chalons’ alleged enrichment and the Plaintiffs’ impoverishment. It is undisputed that

the Chalons did not participate in any investment with the Plaintiffs and did not receive any

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Citation to the parties’ statements of facts are abbreviated as follows: Defendants’

Statement of Facts (Doc. 65), “DSOF”; Plaintiff’s Statement of Facts in Opposition to

Defendant’s Summary Judgment (Doc. 73), “PSOF”. 

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money from Plaintiff Cheval Farm, LLC or Stone Key Corp. (DSOF 11; PSOF 11.)4

Plaintiffs contend they have been impoverished by Trevor Chalon, and “it is Plaintiffs’

position that they were impoverished because the Chalons were enriched using Plaintiffs’

funds.” (Doc. 72, pg. 6.). Plaintiffs’ belief that the Chalons received enrichment from their

son conveying funds to them and/or paying debts or bills on their behalf, including paying

the mortgage on their residence does not establish a claim for unjust enrichment to the

Plaintiffs’ detriment. Although the Chalons received money from their son, this fact, in and

of itself, is insufficient to demonstrate a connection between Plaintiffs’ loss and the Chalons’

enrichment, or that the enrichment was unjust. See Freeman, 245 P.3d at 936 (“[T]he mere

receipt of a benefit is insufficient to entitle a plaintiff to compensation.”) (internal citations

omitted). 

B. Conversion

“Conversion is an intentional exercise of dominion or control over a chattel which so

seriously interferes with the right of another to control it that the actor may justly be required

to pay the other the full value of the chattel.” Focal Point, Inc. v. U-Haul Co. of Ariz., 746

P.2d 488, 489 (Ariz. App. 1986). Plaintiffs have failed to offer any evidence that the

Chalons intentionally exercised dominion or control over Plaintiffs’ monies. As detailed

above, the Chalons did not receive any monies directly from Plaintiffs and there is no

evidence that the Chalons received Plaintiffs’ monies from their son or that they knew

monies from their son were fraudulently obtained from Plaintiffs. 

C. Fraudulent Conveyance

Similarly, Plaintiffs fail to demonstrate a disputed issue of material fact with respect

to their fraudulent conveyance claim. The Arizona Uniform Fraudulent Transfer Act defines

a fraudulent conveyance as follows:

A. A transfer made or obligation incurred by a debtor is

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fraudulent as to a creditor, whether the creditor’s claim arose

before or after the transfer was made or the obligation was

incurred, if the debtor made the transfer or incurred the

obligation under any of the following:

1. With actual intent to hinder, delay or defraud any creditor of

the debtor.

2. Without receiving a reasonably equivalent value in exchange

for the transfer or obligation, and the debtor either:

(a) Was engaged or was about to engage in a business or a

transaction for which the remaining assets of the debtor were

unreasonably small in relation to the business or transaction.

(b) Intended to incur, or believed or reasonably should have

believed that he would incur, debts beyond his ability to pay as

they became due.

A.R.S. § 44-1004. 

Plaintiffs state that they “believe” that Trevor Chalon, acting in concert with his

parents, fraudulently transferred to his parents, Plaintiffs’ monies, in an attempt to hide the

assets from Plaintiffs. There is no evidence that Plaintiffs’ monies were directed to the

Chalons. Trevor made payments to his parents before Plaintiffs invested with Trevor Chalon

and both Donald and Rita Chalon testified they had loaned money to Trevor, and the funds

they received from Trevor were loan repayments. There is no evidence connecting loan

repayments that Trevor Chalon made to the Chalons and Plaintiffs’ investments. Nor is there

evidence linking any monies that Plaintiffs directly invested with Trevor Chalon’s entities

to the loan repayments Trevor Chalon made to the Chalons. Consequently, summary

judgment in favor of the Chalons on the fraudulent conveyance claim is proper. 

D. Remaining Counts

Plaintiffs correctly note that their remaining claims for constructive trust, prejudgment

attachment and injunctive relief are all based on Plaintiffs’ assertions that the Chalons

received funds to which Plaintiffs’ may assert a valid legal claim. As the Court has

concluded that Plaintiffs have failed to raise a disputed issue of fact as to the validity of their

legal claims to the Chalons’ funds, it follows that the Plaintiffs are not entitled to these asset

protecting remedies. 

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Conclusion

 THEREFORE, IT IS ORDERED as follows:

1. Defendants Donald and Rita Chalon’s Renewed Motion for Summary Judgment

(Doc. 64) is GRANTED.

2. Plaintiffs’ Rule 56(d) request for additional time to conduct discovery (Doc. 72)

is DENIED.

3. Defendants Donald and Rita Chalon are dismissed from this case with prejudice.

The Clerk of the Court shall terminate Donald and Rita Chalon as parties in this case. 

Dated this 27th day of August, 2012. 

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