Grant v. Pensco Trust Company, LLC
3:12-cv-06084
N.D. Cal.Apr 15, 2014Background
- Grant invested $683,776.20 from his retirement accounts into a Pensco SDIRA and invested in Gibraltar; Fraud Promoters led him to Pensco and Gibraltar scheme; Pensco’s custodial agreement states Pensco has no fiduciary duty and does not verify asset value; account statements did not reflect true value and Taylor misappropriated funds; Grant filed original complaint in 2012 and FAC in 2013 alleging breach of contract, UCL, and other claims; court dismissed original complaint and is dismissing FAC with prejudice; the dispute centers on whether Pensco owed fiduciary duties and whether the contract/FDPA governs the claims
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pensco owed a fiduciary duty to Grant | Grant alleges Pensco exercised discretion beyond a mere custodian | Custodial agreement states Pensco is not a fiduciary and has no duty to value assets | Pensco owed no fiduciary duty; contract controls |
| Whether the breach of contract claim is viable given the custodial agreement | Contract duties implied by alleged fiduciary duties and value reporting | Custodial agreement explicitly negates duties to appraise or verify FMV | Claim fails as a matter of law; no breach of contract established |
| Whether rescission claim survives based on fraud/consent issues | Fraud inducement supports rescission | Claim fails under Rule 9(b) for fraud; no facts show inducement by Pensco | Rescission claim fails |
| Whether the UCL claim can survive under any prong | Alleges multiple regulatory violations and unfair business practice | Pensco is a custodian, not fiduciary; no underlying predicate acts; alleged fraud not pled with 9(b) specificity | UCL claims fail under all prongs |
Key Cases Cited
- Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811 (Cal. 2011) (elements of contract claim; reliance on contract terms and performance)
- In re Gilead Scis. Sec. Litig., 536 F.3d 1049 (9th Cir. 2008) (pleading standards; plausibility standard for claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (facial plausibility standard for pleading claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (heightened pleading standard; naked assertions not enough)
- Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) (pleading requirements for claims under Rule 9]})