Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01376/USCOURTS-caed-2_06-cv-01376-4/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 sued defendant to recover money lost in various

unsuccessful financial ventures, which included a real estate

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

Phillippines. On April 25, 2007, the court granted defendant’s

motion for summary judgment and denied plaintiffs’ motion for

summary judgment. Pending before the court is plaintiffs’ motion

for reconsideration, which seeks to introduce new evidence in order

to revive the breach of the implied covenant of good faith and fair

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 The court’s previous April 25, 2007 order set forth the 1

facts pertinent to this case. Accordingly, the court provides only

a short summary here. 

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dealing claim. For the reasons set forth below, the court denies

the motion.

I. Background1

Plaintiffs lost a significant amount of money by investing in

various financial ventures with defendant. These debts were

undisputedly time-barred, but in November 2001 defendant signed a

letter agreement acknowledging the debt. The original draft of the

letter agreement stated: “In consideration of the cash sums

advanced you agree to return by January 4, 2002, an amount equal

to 200%, or $1,970,000.” Defendant refused to sign this agreement

and instead modified it 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.” MATCO was a corporation,

headed by defendant, that was already fighting off bankruptcy by

early 2001. Defendant then changed the signature line to add the

words “MATCO, Inc.” below his name.

In granting defendant’s motion for summary judgment, the court

ruled on the narrowest grounds possible. The court found that even

if defendant signed the agreement in his personal capacity, rather

than in his capacity as president of MATCO, defendant’s duty to

perform was contingent upon MATCO having sufficient funds available

for payment -- a condition that undisputedly never came to

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 Accordingly, the court never expressly resolved the issue 2

of whether there was a genuine dispute as to the capacity in which

defendant signed the letter (i.e., personal versus representative).

Nevertheless, in a footnote, the court noted that it was highly

unlikely that plaintiffs would be able to prove that defendant

signed the letter in his personal capacity. Order at 9 n.2.

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fruition.2

With regard to the good faith and fair dealing claim, the

court held that plaintiffs failed to allege or present any evidence

that the defendant took any action to thwart the fulfillment of the

contract condition. As an example, the court parenthetically noted

that defendant’s deliberate impairment of MATCO’s financial health

might give rise to a triable issue of fact but also pointed out

that plaintiffs had failed to make any such argument. In fact, in

plaintiffs’ moving papers, they “moved” on their good faith and

fair dealing claim by devoting all of three sentences to the issue.

The court recites, in full, plaintiffs’ briefing on the claim:

The elements of a cause of action for breach

of the covenant of good faith and fair dealing are:

(1) an agreement between the parties, (2)

plaintiff’s performance, (3) defendant engaged in

conduct separate and apart from the performance of

obligations under the agreement without good faith

and for the purpose of depriving plaintiff of

rights and benefits under the agreement and (4)

damages to plaintiff. [Citation]

Assuming, for the sake of argument, that the

Court determines that Trumpower did not breach the

specific terms of the above-described oral and

written contracts, there can be no doubt that

Trumpower, by not paying back his $985,000

indebtedness, has engaged in conduct separate and

apart from the performance obligations under the

contracts without good faith and for the purpose of

depriving Plaintiff of rights and benefits under

the contracts. For these reasons, Trumpower is

alternately liable under a breach of the covenant

of good faith and fair dealing theory. 

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The only thing that “there can be no doubt” about is that

plaintiffs failed to offer any analysis, evidence, or explanation

in support of their claim. They recited the law and stated a

conclusion, but omitted any argument to bridge the two. Plaintiffs

assertion that defendant “engaged in conduct separate and apart

from the performance obligations under the contracts” is just that

-- an assertion.

Similarly, in plaintiffs’ opposition to defendant’s motion for

summary judgment, the only statement made concerning the breach of

good faith and fair dealing claim was wholly conclusory: “Summary

judgment as to Plaintiffs’ claims for breach of contract and

contractual breach of the covenant of good faith and fair dealing,

is properly awarded in favor of Plaintiffs and against Trumpower.”

In short, plaintiffs wholly failed to meet their burden of coming

forward with evidence.

II. Standard

Generally, absent unusual circumstances, reconsideration is

appropriate only where (1) the party presents the court with newly

discovered evidence that could not have been previously discovered

with due diligence, (2) the court committed clear error or the

initial decision was manifestly unjust, or (3) there is an

intervening change in controlling law. See Sch. Dist. No. 1J,

Multnomah County, Oregon v. AC&S, Inc., 5 F.3d 1255, 1263 (9th Cir.

1993); see also Nunes v. Ashcroft, 375 F.3d 805, 807 (9th Cir.

2003). Here, although plaintiffs do not so expressly state, the

court presumes that the motion for reconsideration is brought

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pursuant to Rule 60(b)(2). Fed. R. Civ. P. 60(b)(2).

III. Analysis

Plaintiffs seek to introduce new evidence purporting to

substantiate the allegation that defendant did, in fact,

deliberately harm MATCO. There are two pieces of new evidence at

issue: first, a criminal indictment against defendant, and second,

a civil complaint filed against defendant in another district

court. As explained below, neither of these pieces of evidence

could not have been obtained through due diligence and neither

changes the court’s analysis with respect to the good faith and

fair dealing claim.

A. Criminal Indictment

The first piece of evidence is the criminal indictment against

defendant filed in this district. Ex. A., Indictment in U.S. v.

Michael A. Trumpower, 06-CR-445-DFL. The indictment asserts that

defendant “knowingly and willfully devised a scheme and artifice

to defraud, and to obtain money from various investors in an oil

exploration venture managed by Matco, Inc., by means of materially

false and fraudulent pretenses, representations, and promises, and

for the purpose of executing such scheme and artifice to defraud.”

Ex. A. at 2. The indictment goes on to state that defendant “made

numerous material misrepresentations to investors relating to the

business operations and financial prospects of Matco, Inc.,

including the nature and status of Matco, Inc.’s contracts,

capitalization, funding, and need for short-term loans.” Id.

This evidence is unavailing for three independent reasons.

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 Plaintiffs attempt to defend their failure to present 3

evidence by arguing that defendant had, in its opposition to

plaintiffs’ motion for summary judgment, failed to address the good

faith and fair dealing claim. Of course, plaintiffs also failed

to meet their initial burden in moving for summary judgment, and

failed once again to meet their burden of production in their

opposition to defendant’s motion for summary judgment. On the

latter ground, summary judgment was appropriately granted.

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First, it could have been discovered through due diligence. The

indictment was unsealed on February 13, 2007. Plaintiffs filed

their motion for summary judgment on March 23, 2007, and the court

did not issue its order until April 25, 2007. More importantly,

plaintiffs do not explain why they could not have discovered the

underlying evidence that supports the indictment through

traditional discovery devices at an even earlier date. 

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Second, even if the court were inclined to take judicial

notice of the indictment, and at such a late juncture, it would

only take notice of its existence, not the truth of the matters

asserted in the indictment. Rather, plaintiffs would need to

present evidence, in a timely fashion, for the court to perform the

latter task.

Third, plaintiffs assume that the existence of criminal or

fraudulent behavior by defendant as the head of MATCO would prove

that he had breached the implied covenant of good faith and fair

dealing. It is worth remembering, however, that the November 2001

agreement stated that defendant would repay plaintiffs $2 million

dollars in the event that MATCO had sufficient funds available.

Defendant would have breached the implied covenant if he had done

something to cut the legs from beneath the contract and deny

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This evidence is not technically “new”: in plaintiffs’ 4

response to defendant’s statement of undisputed fact #26, which

recited basic information about when MATCO was formed and where it

was incorporated, plaintiffs stated that the court “can take

judicial notice of Case No. 3:05-cv-0161-ECR-RAM, United States

District Court, District of Nevada, wherein it is alleged that

Matco, through Trumpower, was actually engaged in the business of

defrauding its investors of almost $17,000,000.” Nevertheless,

there was no mention of the Nevada complaint in plaintiffs’ brief.

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plaintiffs of the benefit of the bargain, such as preventing MATCO

from obtaining $2 million dollars.

Defendant’s alleged criminal behavior does not prove that

there was any action to deprive MATCO of $2 million dollars that

it would have otherwise possessed. Far from proving that defendant

took action to deny funds that it would have otherwise obtained,

the indictment proves the opposite: defendant’s alleged financial

crimes show that MATCO obtained money that it should not have

otherwise possessed. In short, there is no evidence that defendant

breached the implied covenant as applied to the facts of this case

and the specific contract that existed between the parties.

B. Civil Complaint

The second piece of evidence is a civil complaint filed in the

District of Nevada on August 11, 2006 by some of the same

plaintiffs in this case. Plaintiffs have now provided the court 4

with a copy of the complaint, which generally alleges that

defendant committed acts of fraud, but also includes an allegation

that defendant spent money intended for MATCO on defendant’s

personal real property investments, airplane leases, and charitable

and political contributions.

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The same problems regarding the first piece of evidence also

plague this second piece of evidence. Even if the court were

inclined to take judicial notice of the Nevada complaint, it would

only acknowledge its existence, not the truth of the allegations

contained therein. To the extent those allegations are supported

by evidence, plaintiffs should have presented that evidence to this

court when it was adjudicating the parties’ cross-motions for

summary judgment. Plaintiffs’ present attempt to introduce

portions of defendant’s deposition not previously submitted nor

discussed is a far cry from evidence that could not have been

previously obtained through due diligence, particularly as the

deposition was already in plaintiffs’ possession.

IV. Conclusion

For the reasons set forth above, the motion for

reconsideration is DENIED. The hearing currently set for July 2,

2007 at 10:00 a.m. is hereby VACATED.

IT IS SO ORDERED.

DATED: June 27, 2007.

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