Hill v. Opus Corp.
2011 U.S. Dist. LEXIS 152705
C.D. Cal.2011Background
- Opus West, a high-risk, highly leveraged real estate developer, collapsed after 2008–2009 market downturn and other Opus entities allegedly funded Opus West to meet loan covenants, leading to bankruptcy proceedings in Texas; plaintiffs are former Opus West executives asserting they are owed deferred compensation and benefits under unfunded plans; two ERISA plans (80/20 and Presidents) and a SAR plan are central to the dispute; Opus West paid benefits from its general assets, with various intercompany loans and transfers at issue; the bankruptcy court previously held certain claims were estate assets or not, affecting the present action; the district court must determine whether plaintiffs’ state-law claims are property of the bankruptcy estate or barred by the bankruptcy plan and injunction; the court grants summary judgment on non-ERISA state-law claims while preserving ERISA claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs’ state-law claims are property of the bankruptcy estate. | Estate status divests claims from plaintiffs. | Plan and injunction preclude or transfer claims to estate. | The court has jurisdiction to determine estate ownership of the claims. |
| Whether collateral estoppel prevents challenging the bankruptcy estate status. | Bankruptcy court previously allowed claims; estoppel should apply. | Amended complaints change scope; no full and fair opportunity to litigate. | Collateral estoppel does not bar current challenge; some claims are not precluded due to amendments. |
| Whether Opus Corp. and Opus LLC are obligated under the 80/20 Plan to pay benefits. | Entities are obligated under plan terms; extrinsic evidence allowed due to ambiguity. | Only the employer maintaining accounts owes payments; plan unambiguous. | Ambiguity exists; triable issues of fact preclude summary judgment. |
| Whether Opus Corp. and Opus LLC are obligated under the Presidents Plan to pay benefits. | Similar to 80/20 Plan; extrinsic evidence should interpret obligations. | Plan language unambiguously ties obligations to the respective Company/Subsidiary maintaining accounts. | Ambiguity exists; triable issues of fact prevent summary judgment. |
| Whether UCL claims can be maintained given unfunded/top-hat nature of plans. | Plan participants have ownership interests and can seek restitution. | Plans unfunded; participants have unsecured claims; no restitution under UCL. | UCL claims fail as to non-ERISA benefits; restatement limited to injunctive relief and restitution not available for lack of ownership. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden and standard)
- Gruntz v. County of Los Angeles, 202 F.3d 1074 (9th Cir. 2000) (en banc; applicability of automatic stay)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005) (district court may determine automatic stay scope)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (U.S. 2009) (collateral estoppel in bankruptcy context)
- Smith v. Arthur Andersen LLP, 421 F.3d 989 (9th Cir. 2005) (standing and scope of trustee; injury to the debtor vs. creditors)