United States District Court, D. Oregon
S. Johnson and Darlene D. Pasieczny, Samuels Yoelin Kantor
LLP, Of Attorneys for Plaintiffs.
Bradley W. Andersen and Phillip J. Haberthur, Landerholm, PS,
Of Attorneys for Defendant.
OPINION AND ORDER
Michael H. Simon, United States District Judge
2005, Plaintiffs Waldemar Maya, Van Shaw, and CKH Family
Limited Partnership invested a total of $1.4 million in a
real estate development plan orchestrated by Defendant Greg
Kubicek. Plaintiffs are now suing Kubicek and three entities
associated with Kubicek for: (1) rescission under Oregon
Revised Statutes (“ORS”) § 59.115(2); (2)
misrepresentation; (3) breach of fiduciary duty by
self-dealing; and (4) aiding and abetting an unlawful sale of
securities in violation of ORS § 59.115(3). Before the
Court are the parties' cross-motions for summary
judgment. For the reasons discussed, Defendants' motion
for summary judgment is granted, and Plaintiffs' motion
for summary judgment is denied as moot.
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).
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. Pac. 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.
are CKH Family Limited Partnership (“CKH”), a
Texas limited partnership, and two individuals: Waldemar Maya
and Van Shaw. Shaw is an attorney in Texas. Maya is a
business associate of Doug Hickok, who is the general partner
and principal of CKH. Defendants are Holt Homes, Inc.
(“Holt Homes”), a Washington Corporation;
Clackamas Homes, Inc. (“CHI”), an Oregon
Corporation; MGD/CCP Acquisition LLC (“the
Company”), an Oregon limited liability company; and
Greg Kubicek. ECF 1-1 at 39, ECF 5 at 2. CHI is the manager
of the Company, and Holt Homes is an affiliate of CHI. ECF
1-1 at 39 ¶ 4, ECF 5 at 2 ¶ 4. Kubicek is the sole
shareholder of both CHI and Holt Homes. ECF 5 at 2 ¶ 5.
Formation of the Company and Plaintiffs'
formed the Company in August 2005 for the purpose of
acquiring a portfolio of properties in Clackamas County,
Oregon from retiring developers Don and Maria Oakley. ECF 1-1
at 39 ¶ 2, ECF 5 at 2 ¶ 2. The properties at issue
were held by two of the Oakleys' limited liability
companies-MGD Properties, LLC (“MGD”) and Cascade
Community Properties, LLC (“CCP”). ECF 15 at 2
planned to develop the properties and presented Plaintiffs
with the opportunity to invest in the development. Kubicek
detailed his prior development experience to the prospective
investors. Kubicek also issued a Private Placement Memorandum
(“PPM”), which described plans for the
acquisition and development of the properties. ECF 5 at 3,
¶ 8; ECF 15 at 2-3, ¶ 7. Between late September and
early October, 2005, Plaintiffs collectively invested $1.4
million in the Company. CKH invested $750, 000, Maya invested
$150, 000, and Shaw invested $500, 000. Each of the
Plaintiffs signed a Subscription Agreement, agreeing to the
terms and conditions of an Operating Agreement that would
govern the operation of the Company. ECF 15-5; ECF 17
(Operating Agreement). After Kubicek formed the Company, the
Company acquired 99 percent of MGD and CCP. ECF 15 at 2
¶ 6. CHI, of which Kubicek was the sole owner, and which
Kubicek formed to manage the Company, owned the remaining one
percent of MGD and CCP. Id.
The Holt Homes Acquisition Loan
Company acquired the properties on or about October 3, 2005.
ECF 17 at 254. Shortly before the acquisition, the Company
had collected just under $6 million in outside investment.
ECF 17 at 156. According to Defendants, Kubicek had reason to
believe, based on promises from investors, that the Company
would raise $9, 500, 000, which Kubicek had represented was
needed. ECF 15 at 4.
close the deal, Holt Homes loaned the Company $3, 606, 984.40
(“the Holt Homes loan”). ECF 15 at 4. According
to Defendants, this loan was intended to bridge the gap
between the money already invested (just under $6 million)
and money that had been committed but not yet delivered
(approximately $9.5 million). Id. According to
Defendants, after investors contributed their committed
funds, the Company repaid Holt Homes from those funds. Holt
Homes did not charge interest on this loan. Payments to Holt
Homes were made between November 16, 2005 and December 23,
2005. By this point, the balance owed on the Holt Homes loan
was reduced to $406, 984. ECF 15 at 4. The Holt Homes loan
was completely repaid by 2006. ECF 17 at 190.
Company ultimately sold ten of the individual property
developments between October 2005 and 2014. ECF 15 at 5,
¶ 18. In 2006, the Company made one capital
distribution, in the amount of ten percent, to the investors.
ECF 5 at 4, ¶ 15. The Company did not, however, achieve
the success that Kubicek or the investors had hoped. ECF 5 at
4, ¶ 15. Defendants blame this on the economic recession
of 2007. ECF 15 at 5, ¶ 18. According to Kubicek, after
the start of the recession the Company completed and sold as
many lots and homes as it could, and held on to other assets
and options to purchase other properties in the hope that the
Company could weather the storm. ECF 15 at 5, ¶ 19.
2003 and 2015, the Company issued 17 or 18 “member
updates.” ECF 15-9. The first report made to investors
came in February 2006. The update contained a balance sheet
that listed, as a line item, $406, 984 owed to Holt Homes.
Id. at 6, 8. It also indicated that Holt Homes had
previously been owed $1, 506, 984, and had been paid $1, 100,
000 in the period ending December 31, 2005. According to
Plaintiffs, Hickok made several attempts, over the course of
twelve years, to obtain more detailed financial information
from the Company. ECF 18 at 2, ...