Wells Fargo N.A. v. Chill, No. 3:2010cv05348 - Document 27 (W.D. Wash. 2012)
Court Description: ORDER granting 23 Plaintiff's Motion for Partial Summary Judgment by Judge J Richard Creatura.(SH) Modified on 8/14/2012 to indicate copy of Order mailed to defendant (SH).
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Wells Fargo N.A. v. Chill Doc. 27 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 8 9 10 11 12 WELLS FARGO N.A., successor-ininterest to WACHOVIA SBA LENDING, INC., doing business as Wachovia Small Business Capital, Plaintiff, 13 14 15 v. CASE NO. 10-cv-05348 JRC ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT DONALD CHILL, individually and on behalf of the marital community, 16 Defendant. 17 18 19 20 This Court has jurisdiction pursuant to 28 U.S.C. § 636(c), Fed. R. Civ. P. 73 and Local Magistrate Judge Rule MJR 13 (see also Joint Status Report, ECF No. 9; Order on Consent to Proceed Before a United States Magistrate Judge, ECF No. 10). 21 THIS MATTER has come before the Court on the plaintiff’s Motion for Partial 22 Summary Judgment (ECF No. 23). The Court has reviewed plaintiff’s Motion for Partial 23 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 1 Dockets.Justia.com 1 Summary Judgment (ECF No. 23), the Declaration of Jason W. Alexander (ECF No. 24) 2 and the Declaration of Christiana Anderson (ECF No. 25). 3 4 5 The Court noted that when plaintiff filed this notice for summary judgment against this pro se prisoner defendant, plaintiff did not provide notice consistent with the Ninth Circuit authority, which requires that a pro se prisoner be given special notice before the 6 court grants summary judgment against him or her. See Rand v. Rowland, 113 F.3d 1520 7 (9th Cir. 1997). The Ninth Circuit has ruled that this notice applies not only in Section 8 9 10 1983 cases but other civil cases that impact pro se prisoners. See S.E.C. v. Nite, 207 F.3d 1134 (9th Cir. 2000). This special notice is required because of the unique status of 11 prisoners required to handle complex legal matters without legal representation. Very 12 recently, the Ninth Circuit held that such notice should be provided contemporaneously 13 with the summary judgment motion. See Woods v. Carey, 09-15548, __ F.3d __ (9th Cir. 14 2012). Therefore, this Court provided notice to defendant and re-noted the motion (see 15 ECF No. 26). Defendant has not provided any further response. 16 17 18 Defendant has previously admitted to falsifying his business’ books and records and falsifying loan documents. Defendant is currently serving a sentence for bank fraud and mail fraud due, in part, to those actions. Defendant is subject to a civil judgment in 19 addition to the criminal penalties. This Court GRANTS plaintiff’s Motion for Partial 20 Summary Judgment. 21 22 23 FACTUAL SUMMARY Defendant has chosen not to respond to plaintiff’s Motion for Partial Summary 24 Judgment. Therefore, the following facts are taken from plaintiff’s uncontradicted ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 2 1 declarations and are accepted as true. Defendant Donald Chill was the owner and sole 2 shareholder of Charles Prescott Restoration, Company (“CPR”) from approximately 1995 3 until 2007 (ECF No. 23, Exhibit 1, page 6, ¶10A. CPR was a disaster restoration 4 5 company specializing in rehabilitating real and personal property damaged by fire, flood and other disasters (id.). Much of the work came from insurance companies (id.). 6 According to a plea agreement signed by the defendant, beginning in 2004, at his 7 direction, CPR submitted false and fraudulent information to Mutual of Enumclaw 8 9 10 Insurance Company relating to CPR’s insurance reimbursements. Id. at ¶10(c). Defendant fabricated competing estimates, altered invoices, and increased CPR’s claimed 11 amounts (id.). In the ten (10) jobs that were the subject of the plea agreement, defendant 12 had fraudulently overbilled Mutual of Enumclaw by approximately $3.2 million (id.). 13 In May of 2007, CPR entered into a stock purchase agreement with Matthew 14 Smith Company, Inc. (“MSC”), which applied for a Small Business Administration loan 15 from plaintiff in connection that transaction (ECF No. 25, ¶3, Anderson Declaration; 16 Exhibit 1, page 7, ¶10(e)). As part of that transaction, defendant submitted a “Sellers 17 18 Certification” which represented that CPR had no exposure for false billings and that CPR had obtained business through legitimate means and followed applicable laws (id.). 19 Defendant admits that this representation was materially false. (ECF No. 24, Exhibit 1, 20 page 8, ¶10(e). 21 22 23 In this criminal case, defendant agreed to provide restitution in the amount of $1,708, 062.72 in relation to these transactions (id., Exhibit 2). 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 3 1 Plaintiff is the successor in interest to Wachovia SBA Lending, Inc. pursuant to an 2 assignment (ECF No. 25, at ¶7). 3 4 5 The stock purchaser, MSC, also obtained a judgment against defendant for rescission of the stock purchase agreement and for violation of the Washington State Securities Act in the Superior Court of Washington for Clark County, Case No. 08-2- 6 00611 9 (ECF No. 24, Exhibit 3). MSC assigned the MSC judgment against defendant to 7 plaintiff (id., Exhibit 4). 8 9 10 11 12 13 14 15 16 Plaintiff filed this complaint in federal court alleging, among other things, common law fraud. According to plaintiff: Plaintiff filed this lawsuit in order to preserve and enforce its community property collection right, as well as preserve its discharge defense rights should Defendant seek bankruptcy protection. These rights and protections are not certain to be available under the Criminal Restitution Award, the MSC Judgment, or the Borrower Judgment for various reasons. Plaintiff is not seeking to collect more than the amount it had been damaged. As such, once a judgment is entered in this case, for every dollar collected, it will provide credit not only under the judgment entered in this case, but also under the MSC Judgment, Borrower Judgment and the Criminal Restitution Award. 17 ECF No. 26, page 5-6. 18 19 Defendant’s spouse is not named as a party in this action, nor does this Court offer any opinion regarding the liability of the community for defendant’s actions. This Order 20 is limited specifically to plaintiff’s Motion for Partial Summary Judgment on the issue of 21 liability. 22 Plaintiff states that it has collected amounts pursuant to the Criminal Restitution 23 24 Award and as of June 25, 2012 is owed the principal sum of $1,187,084.45, together with ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 4 1 interest thereon in the amount of $862,542.20 and that interest will continue accrue on the 2 principal sum from June 26, 2012 at the rate of 10.5%, which calculates to $341.49 per 3 day (ECF No. 25, ¶8). Defendant has also been assessed late fees in the amount of 4 5 $1,349.22 (id.). STANDARD FOR SUMMARY JUDGMENT 6 According to Fed. R. Civ. P. 56(c), summary judgment is appropriate where there 7 is no genuine issue as to any material fact and the moving party is entitled to judgment as 8 9 10 a matter of law. The moving party must present admissible evidence to support its factual assertions. Once the initial burden is satisfied, the burden shifts to the opponent 11 to demonstrate that there remains an issue of material fact. Celotex Corp. v. Katrett, 477 12 U.S. 317, 323 (1986). If the moving party has the initial burden of proof, then the 13 movant must submit evidence of the elements of the case. In order to prove fraud, 14 plaintiff has the burden of proving: (1) a representation of an existing fact; (2) its 15 materiality; (3) its falsity; (4) the speaker’s knowledge of its falsity or ignorance of its 16 truth; (5) the speaker’s intent that the falsehood should be acted on by the person to 17 18 whom it is made; (6) ignorance of its falsity by the person to whom it is made; (7) reliance on the truth of the representation; (8) his right to rely upon it; and (9) consequent 19 damages. Pedersen v. Bibioff, 64 Wn. App. 710, 723 (1992). 20 All of these elements have been met by the admission made in defendant’s plea 21 22 23 agreement and has been offered against him in this action (ECF No. 24, Exhibit 1, ¶10). Additionally, Christina Anderson, on behalf of plaintiff has verified that plaintiff relied 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 5 1 on defendant’s statements and had a right to rely on defendant’s statements, resulting in 2 damages (ECF No. 25, ¶¶5-6). 3 4 5 Defendant’s admissions in the plea agreement are not hearsay and are admissible under Federal Rule of Evidence 801(d) (2). Additionally, statements in a plea agreement are preclusively established for the matters asserted therein. In re Reed, 525 F.3d 805, 6 812-13 (9th Cir. 2008). 7 For these reasons, this Court enters summary judgment in favor of plaintiff on the 8 9 10 fraud claim contained in the second cause of action in the principal sum of $1,187,084.45, together with interest of $867,664.55 ($862,542.20 (through 6/25/2012), 11 plus $5,122.35 (6/26/2012 though 7/10/2012)), plus interest which will continue to accrue 12 at the rate of 10.5% at the rate of $341.49 per day, plus late fees in the amount of 13 $1,349.22, plus plaintiff’s costs and disbursements herein. 14 Dated this 14th day of August, 2012. 15 A 16 17 J. Richard Creatura United States Magistrate Judge 18 19 20 21 22 23 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT - 6
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