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Farmers Insurance Company of Oregon v. Gelfand

United States District Court, D. Oregon

July 24, 2015

FARMERS INSURANCE COMPANY OF OREGON; FARMERS INSURANCE EXCHANGE; TRUCK INSURANCE EXCHANGE; MID-CENTURY INSURANCE COMPANY; and FARMERS NEW WORLD LIFE INSURSANCE COMPANY, Plaintiffs,
v.
MITCHELL S. GELFAND; KAREN A. GELFAND; DEPARTMENT OF REVENUE, STATE OF OREGON; MCNARY ESTATES BUSINESS CENTER, LLC; and N.W. PREFFERED FEDERAL CREDIT UNION, Defendants,
v.
UNITED STATES OF AMERICA, Intervenor Defendant.

Timothy W. Snider, STOEL RIVES LLP, Portland, OR, Of Attorneys for Plaintiffs.

Ellen F. Rosenblum, Attorney General, Kristin A. Gilman, Assistant Attorney General, OREGON DEPARTMENT OF JUSTICE, Salem, OR, Of Attorneys for Defendant Oregon Department of Revenue.

David J. Zarosinski and Eric C. Hartwig, ZAROSINSKI HARTWIG P.C., Portland, OR, Of Attorneys for Defendant Karen Gelfand.

Mark B. Comstock, GARRETT HEMANN ROBERTSON P.C., Salem, Oregon Of Attorneys for Defendant McNary Estates Business Center, LLC.

Caroline D. Ciraolo, Acting Assistant Attorney General, Dylan C. Cerling, Trial Attorney, Washington D.C., Of Attorneys for Intervenor Defendant United States of America.

OPINION AND ORDER

MICHAEL H. SIMON, District Judge.

This is an interpleader action brought by Farmers Insurance Company of Oregon and related entities (collectively, "Farmers") to resolve competing claims made on certain funds held by Farmers on behalf of Defendant Mitchell S. Gelfand ("Mr. Gelfand"). Pending before the Court are cross-motions for summary judgment filed by Defendant McNary Estates Business Center, LLC ("McNary") and Defendant Karen A. Gelfand ("Ms. Gelfand"). Dkts. 24, 27.[1] For the reasons that follow, McNary's motion is granted and Ms. Gelfand's motion is denied.[2]

STANDARDS

A party is entitled to summary judgment if the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge... ruling on a motion for summary judgment, " the "mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient...." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted). Where parties file cross-motions for summary judgment, the court "evaluate[s] each motion separately, giving the non-moving party in each instance the benefit of all reasonable inferences." A.C.L.U. of Nev. v. City of Las Vegas, 466 F.3d 784, 790-91 (9th Cir. 2006) (quotation marks and citation omitted); see also Pintos v. P. Creditors Ass'n, 605 F.3d 665, 674 (9th Cir. 2010) ("Cross-motions for summary judgment are evaluated separately under [the] same standard."). In evaluating the motions, "the court must consider each party's evidence, regardless under which motion the evidence is offered." Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir. 2011). "Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case." In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010). Thereafter, the non-moving party bears the burden of designating "specific facts demonstrating the existence of genuine issues for trial." Id. "This burden is not a light one." Id. The Supreme Court has directed that in such a situation, the non-moving party must do more than raise a "metaphysical doubt" as to the material facts at issue. Matsushita, 475 U.S. at 586.

BACKGROUND AND PROCEDURAL HISTORY

Mr. Gelfand was a district manager employed by Farmers. As a benefit of Mr. Gelfand's employment, Farmers held a contract value payment fund[3] on his behalf valued at more than $300, 000. For reasons not relevant to the present action, sometime before August 2012, Mr. Gelfand abandoned his insurance practice without paying his debts, failed to report or pay state and federal taxes for several years, and neglected to provide financial support to his then-wife, Ms. Gelfand, and the couple's two children. As a result of Mr. Gelfand's actions, each of the defendants in this matter claimed some interest in the contract value payment fund held by Farmers. Simply put, this matter involves deciding the relative priority of each party's interest in Mr. Gelfand's contract value payment fund. Becuase a determination regarding the priority of each party's interest largely turns on when that party perfected its interest, the Court lays out the following background and procedural history in roughly chronological order.

On August 6, 2012, Ms. Gelfand filed a Petition for Dissolution of Marriage in Clackamas County Circuit Court in Oregon (the "Gelfand Divorce Proceeding") seeking, among other things: divorce, division of marital property, spousal support, child custody, and child support from Mr. Gelfand. On August 7, 2012, the Clackamas County Circuit Court entered a Mutual Property Restraining Order under Or. Rev. Stat. ยง 107.093 to "restrain each party in the dissolution action from taking certain actions to transfer encumber, conceal, or dispose of property in which the other party has an interest."

On September 5, 2012, McNary filed a complaint against Mr. Gelfand in Marion County Circuit Court. On November 30, 2012, that court entered a default judgment against Mr. Gelfand. On December 3, 2012, McNary issued a writ of garnishment to Farmers naming as debtors Mr. Gelfand and his business.

On March 18, 2013, a Default General Judgment and Decree of Dissolution (the "Divorce Judgment") was entered in the Gelfand Divorce Proceeding. In the Divorce Judgment, Ms. Gelfand was awarded, among other things, the following:

B. To the extent it is not claimed by parties with a superior legal interest, $200, 000 of the Farmers [contract value payment fund] shall be distributed to Wife, Karen Gelfand, at the earliest of such time or times as it is subject to distribution to Husband for the purposes of meeting Husband's spousal and child support obligations to his wife and children.
C. After the payment of $200, 000 to Wife for support, the balance in the Farmers [contract value payment fund], if any, shall be equally divided between Husband and Wife.

Dkt. 28, Ex. 6. The Divorce Judgment further notes that the contract value payment fund was "the only financial resource there is for the payment" of ...


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