Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01376/USCOURTS-caed-2_06-cv-01376-3/pdf.json

Parties Involved:
Richard Andrew Malott
Plaintiff
Ridgewood Associates, Inc
Plaintiff
Michael Trumpower
Defendant

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

RIDGEWOOD ASSOCIATES, INC.,a

Nevada corporation; RIDGEWOOD

ASSOCIATES, INC., a California

corporation; and RICHARD ANDREW

MALOTT, an individual,

NO. CIV.S-06-1376 LKK/GGH

Plaintiffs,

v.

O R D E R

MICHAEL TRUMPOWER, an individual;

DOES 1 through 10, inclusive;

and ROE CORPORATIONS 1 through 10,

inclusive,

Defendants.

 /

Plaintiffs have sued defendant to recover money lost in

various unsuccessful financial ventures, including a real estate

purchase, art acquisitions, and the recovery of gold from the

Phillippines. The claims at issue include breach of contract,

breach of good faith and fair dealing, and unjust enrichment.

Pending before the court are cross motions for summary judgment.

The court resolves the matter upon the parties’ papers and after

oral argument. For the reasons set forth below, plaintiffs’ motion

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for summary judgment is denied and defendant’s motion for summary

judgment is granted.

I. Facts1

The plaintiffs in this action, Ridgewood Associates, Inc. of

Nevada, Ridgewood Associates, Inc. of California, and Richard

Malott, Jr., have brought suit against defendant Michael Trumpower,

who is a resident of Arizona. Plaintiff's Statement of Undisputed

Fact ("PSUF") ¶¶ 1-5. The parties met in 1996 and became business

associates thereafter. PSUF ¶ 7. Defendant was essentially a

matchmaker who paired investors with investment opportunities.

PSUF ¶ 10.

Three business ventures gave rise to the present suit. First,

plaintiffs maintain that they provided defendant with a refundable

fee of $150,000 in 1996 in order to find additional investors for

an undivided interest real estate venture. PSUF ¶ 16. Pursuant

to a written agreement, Trumpower was to use his best efforts to

obtain $15 million dollars on an unrestricted basis within 90 days,

and if he was not able to obtain this financing, he was to return

the $150,000 to Ridgewood California. PSUF ¶ 19. Trumpower was

not able to find any investors for the venture and did not return

the $150,000 fee. PSUF ¶ 20.

Second, in 1996-97, plaintiffs spent a total of approximately

$610,000 in connection with a venture to obtain gold located in

caves in the Phillippines. PSUF ¶ 37. During one of the trips to

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the Phillippines financed by plaintiffs, defendant gave $340,000

in cash to his contacts, who were then to notify defendant when a

ton of gold bars would be ready for pick-up. PSUF ¶ 34.

Ultimately, though, no gold was ever delivered, and the parties

decided not to continue with the venture. PSUF ¶ 36. Plaintiffs

contend (and defendant disputes) that defendant orally agreed to

reimburse the expenses incurred. PSUF ¶ 39.

Third, plaintiffs claim that $225,000 was spent in connection

with a venture to obtain art that had been looted from the Emir of

Kuwait during the Gulf War. PSUF ¶ 40. The parties made several

trips to the Middle East to look at the various art and artifacts,

including paintings, sculptures, and gold coins. PSUF ¶ 42.

Defendant smuggled two or three paintings back with him to the U.S.

but was unable to have them evaluated by auction houses in the U.S.

PSUF ¶ 47-48. In order to document plaintiffs' financing of the

art venture, defendant signed a promissory note for $175,000 in

1997. PSUF ¶ 44. Plaintiffs also maintain that an additional

$50,000 was provided to "clean up” the conclusion of the art

venture. PSUF ¶ 51.

On November 6, 2001, defendant signed a letter agreement --

the lynchpin of the present litigation -- that purportedly

constituted an acknowledgment of the otherwise time-barred debts

to plaintiffs. PSUF ¶ 52. The original version drafted by

plaintiffs read: "In consideration of the cash sums advanced you

agree to return by January 4, 2002, an amount equal to 200%, or

$1,970,000." PSUF ¶ 54. Defendant did not sign the original

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agreement. 

Instead, defendant revised the document to read: "In

consideration of the cash sums advanced you agree to return as soon

as MATCO has available, an amount equal to 200%, or $1,970,000."

PSUF ¶ 55. The signature line was also changed from simply

"Michael Trumpower" to "Michael Trumpower" above the words "MATCO,

Inc." MATCO was a corporation, headed by defendant, that was

fighting off an involuntary bankruptcy petition by early 2001.

Def.'s Statement of Undisputed Fact ("DSUF") ¶ 24-25. In short,

defendant maintains that the November 2001 agreement was signed in

an agency capacity for MATCO, and that any obligation to pay would

only be triggered upon MATCO’s future success.

II. Standard

Summary judgment is appropriate when it is demonstrated

that there exists no genuine issue as to any material fact, and

that the moving party is entitled to judgment as a matter of

law. Fed. R. Civ. P. 56(c); see also Adickes v. S.H. Kress &

Co., 398 U.S. 144, 157 (1970); Secor Ltd. v. Cetus Corp., 51

F.3d 848, 853 (9th Cir. 1995).

Under summary judgment practice, the moving party

[A]lways bears the initial responsibility of

informing the district court of the basis for its

motion, and identifying those portions of "the

pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits,

if any," which it believes demonstrate the absence of

a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[W]here the

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

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dispositive issue, a summary judgment motion may properly be made

in reliance solely on the 'pleadings, depositions, answers to

interrogatories, and admissions on file.'" Id. Indeed, summary

judgment should be entered, 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. See id. at 322. "[A] complete failure of proof concerning

an essential element of the nonmoving party's case necessarily

renders all other facts immaterial." Id. In such a circumstance,

summary judgment should be granted, "so long as whatever is before

the district court demonstrates that the standard for entry of

summary judgment, as set forth in Rule 56©, is satisfied." Id. at

323.

If the moving party meets its initial responsibility, the

burden then shifts to the opposing party to establish that a

genuine issue as to any material fact actually does exist.

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

586 (1986); see also First Nat'l Bank of Ariz. v. Cities Serv. Co.,

391 U.S. 253, 288-89 (1968); Secor Ltd., 51 F.3d at 853. 

In attempting to establish the existence of this factual

dispute, the opposing party may not rely upon the denials of its

pleadings, but is required to tender evidence of specific facts in

the form of affidavits, and/or admissible discovery material, in

support of its contention that the dispute exists. Fed. R. Civ.

P. 56(e); Matsushita, 475 U.S. at 586 n.11; see also First Nat'l

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Bank, 391 U.S. at 289; Rand v. Rowland, 154 F.3d 952, 954 (9th Cir.

1998). The opposing party must demonstrate that the fact in

contention is material, i.e., a fact that might affect the outcome

of the suit under the governing law, Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986); Owens v. Local No. 169, Ass’n of

Western Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1992)

(quoting T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n,

809 F.2d 626, 630 (9th Cir. 1987)), and that the dispute is

genuine, i.e., the evidence is such that a reasonable jury could

return a verdict for the nonmoving party, Anderson, 477 U.S. 248-

49; see also Cline v. Indus. Maint. Eng’g & Contracting Co., 200

F.3d 1223, 1228 (9th Cir. 1999).

In the endeavor to establish the existence of a factual

dispute, the opposing party need not establish a material issue of

fact conclusively in its favor. It is sufficient that "the claimed

factual dispute be shown to require a jury or judge to resolve the

parties' differing versions of the truth at trial." First Nat'l

Bank, 391 U.S. at 290; see also T.W. Elec. Serv., 809 F.2d at 631.

Thus, the "purpose of summary judgment is to 'pierce the pleadings

and to assess the proof in order to see whether there is a genuine

need for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed. R.

Civ. P. 56(e) advisory committee's note on 1963 amendments); see

also Int’l Union of Bricklayers & Allied Craftsman Local Union No.

20 v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).

In resolving the summary judgment motion, the court examines

the pleadings, depositions, answers to interrogatories, and

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admissions on file, together with the affidavits, if any. Rule

56©; see also In re Citric Acid Litigation, 191 F.3d 1090, 1093

(9th Cir. 1999). The evidence of the opposing party is to be

believed, see Anderson, 477 U.S. at 255, and all reasonable

inferences that may be drawn from the facts placed before the court

must be drawn in favor of the opposing party, see Matsushita, 475

U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654,

655 (1962) (per curiam)); See also Headwaters Forest Def. v. County

of Humboldt, 211 F.3d 1121, 1132 (9th Cir. 2000). Nevertheless,

inferences are not drawn out of the air, and it is the opposing

party's obligation to produce a factual predicate from which the

inference may be drawn. See Richards v. Nielsen Freight Lines, 602

F. Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898, 902

(9th Cir. 1987).

Finally, to demonstrate a genuine issue, the opposing party

"must do more than simply show that there is some metaphysical

doubt as to the material facts. . . . Where the record taken as a

whole could not lead a rational trier of fact to find for the

nonmoving party, there is no 'genuine issue for trial.'"

Matsushita, 475 U.S. at 587 (citation omitted).

III. Analysis

A. Breach of Contract

First, the parties move for summary judgment on the breach of

contract claim. Plaintiffs maintain that the November 6, 2001

letter operates as an acknowledgment of defendant’s previous debt.

Although they concede that the statute of limitations has run on

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any previous contracts between themselves and the defendant, they

argue that the letter creates a new agreement and, in turn, the

running of a new statute of limitations. Even if the letter

constituted a sufficient acknowledgment of the debt, however, it

contained a condition -- that MATCO have sufficient funds available

-- that was never satisfied. As such, the plaintiffs’ claim fails

as a matter of law.

California Code of Civil Procedure section 360 provides that

an acknowledgment of an existing debt signed by the party to be

charged is sufficient to renew the statute of limitations. Cal.

Code Civ. Pro. § 360. In interpreting this provision, California

courts require that an acknowledgment contain “a distinct and

unqualified admission . . . without intimation of an intent to

refuse payment.” Southern Pacific Co. v. Prosser, 122 Cal. 413,

416 (1898) (citations omitted). The standard, however, is not

rigid, and courts have found that even informal language is

sufficient, so long as it identifies the debt. See, e.g., Bronne

Shirt Co. v. Matthess, 88 F. Supp. 698 (S.D. Cal. 1950); Buescher

v. Lastar, 61 Cal. App. 3d 73 (1976); Hayes v. O’Marr, 81 Cal.

App. 210 (1927). Importantly, “[t]he postponement of [payment] to

a future time . . . does not make the acknowledgment uncertain.

It merely imposes an additional condition and makes it incumbent

on the plaintiff to allege and prove its existence before he can

sue on the new promise and recover.” Bronne Shirt Co., 88 F. Supp.

at 700; see also Hayes, 81 Cal. App. at 212 (requiring “pleading

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 This latter assumption is particularly questionable, given 2

that defendant specifically revised to the letter agreement to read

“Michael Trumpower MATCO, Inc.”, rather than just “Michael

Trumpower,” and inserted the phrase “as soon as MATCO has

available.” While plaintiffs maintain that defendant’s deposition

testimony indicates that he intended to pay the debt out of profits

from MATCO, that extrinsic evidence would only be relevant if the

agreement were ambiguous, which is doubtful. Furthermore, if the

debt was intended to be repaid from defendant’s personal profits,

there would be no need for defendant to reference his capacity as

an agent for MATCO; if they were personal profits, defendant could

do with them whatever he chose.

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and proof that the condition has come into being, on which the

promise was made”).

Assuming, arguendo, that the November 2001 letter

constitutes an acknowledgment sufficient to renew the statute of

limitations and, further, that Mr. Trumpower is personally liable

for the debt, the promise to pay is based on the fulfillment of 2

a condition. The letter expressly states that the money will be

paid “as soon as Matco has [the funds] available.” Pls.’ Mot.

for Summary Judgment, Ex. A. This language constitutes a

condition that must be satisfied before plaintiffs can recover

the alleged debt. In Bronne Shirt, for instance, the defendant

promised to pay an old debt “as soon as [he could] build up a

safe reserve,” which the court found was a contractual condition

(not merely hope as to time or manner of payment) whose existence

plaintiff had to prove in order to sue on the new promise. 88

F. Supp. at 700 (describing satisfaction of condition as

“contingency” for suit). Similarly, plaintiffs here must prove

that “the condition has come into being.” Hayes, 81 Cal. App.

at 212. 

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Fatally for plaintiffs, they are unable to prove the

fulfillment of the relevant condition. Because Matco is

bankrupt, it does not have the funds available to repay the debt.

Therefore, the condition specified in the letter remains

unfulfilled, and plaintiffs’ claim fails as a matter of law.

Accordingly, the court denies plaintiffs’ motion for summary

judgment and grants defendant’s motion for summary judgment

regarding the breach of contract claim.

B. Breach of the Covenant of Good Faith and Fair Dealing

The parties also seek summary judgment on the issue of

whether defendant has breached the covenant of good faith and

fair dealing. “In every contract there is an implied covenant

of good faith and fair dealing that neither party will do

anything which injures the right of the other to receive the

benefits of the agreement.” Brown v. Superior Court of Los

Angeles County, 34 Cal. 2d 559, 564 (1949) (citations omitted).

As noted above, the November 2001 letter agreement contains a

condition that defendant will repay the debt when MATCO has the

funds available. Plaintiffs do not allege nor present any

evidence that the defendant took any action to thwart the

fulfillment of that condition (e.g., deliberately impairing the

financial health of MATCO), and accordingly, the claim fails as

a matter of law.

C. Unjust Enrichment

Next, the parties move for summary judgment on the claim of

unjust enrichment. This claim is subsumed and barred by the

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contracts covering the same subject matter. See California

Medical Ass’n v. Aetna U.S. Healthcare of California, 94 Cal.

App. 4th 151, 168 (2001) (“[A]s a matter of law, a quasi-contract

action for unjust enrichment does not lie where, as here, express

binding agreements exist and define the parties' rights.”); Lance

Camper Manufacturing Corp. v. Republic Indemnity Co., 44 Cal.

App. 4th 194, 203 (1996) (“[A]n implied-in-fact or quasi-contract

cannot lie where there exists between the parties a valid express

contract covering the same subject matter.”). 

Here, a written agreement governed the real estate venture,

just as a promissory note governed the art acquisition venture.

The fact that the statute of limitations expired on enforcement

of those contracts does not render them invalid. Furthermore,

the November 2001 acknowledgement embraces all three of the

ventures at issue. Accordingly, the courts grants defendant’s

motion for summary judgment on the unjust enrichment claim.

D. Failure to Join Necessary Parties

Defendant contends that the case should be dismissed for the

failure to join necessary parties under Federal Rule of Civil

Procedure 19, because he would otherwise be subject to multiple

legal obligations. The basis for defendant’s concern is that the

November 2001 letter referenced seven entities, not all of whom

are plaintiffs in the case. However, it appears that the

entities lent money to plaintiff Malott (who then lent money to

defendant); accordingly, money is owed to these individuals by

plaintiff, not defendant, and these individuals are not necessary

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parties to this action.

IV. Conclusion

For the reasons set forth above, the court orders as

follows:

1. Plaintiffs’ motion for summary judgment is denied.

2. Defendant’s motion for summary judgment is granted.

3. Defendant’s motion to extend the time for discovery

is denied as moot.

IT IS SO ORDERED. 

DATED: April 25, 2007.

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