United States District Court, W.D. Washington, Seattle
CAROLYNNE R. HARRIS, as Trustee of the EDITH HEINEMANN HARRIS TRUST, Plaintiff,
DAVID S. MUNDEL, as Trustee of the AUGUST B. MUNDEL and JOAN WEBB MUNDEL TRUST, Defendant.
HONORABLE RICHARD A. JONES UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendant David S.
Mundel's Motion to Dismiss. Dkt. # 4. Plaintiff Carolynne
R. Harris opposes the Motion. Dkt. # 10. For the reasons set
forth below, the Court GRANTS
Defendant's Motion. Dkt. # 4.
preliminary matter, Defendant submitted several documents in
support of his Motion. Dkt. ## 5-7. Defendant requests that
the Court take judicial notice of some of the documents
because their contents are alleged in the Complaint and
Plaintiff does not question their authenticity. Defendant
further requests that the Court take judicial notice of the
other submitted documents because they are documents from
state court proceedings that he alleges are related to this
Federal Rule of Evidence 201, “[t]he court may
judicially notice a fact that is not subject to reasonable
dispute because it: (1) is generally known within the
court's territorial jurisdiction; or (2) can be
accurately and readily determined from sources whose accuracy
cannot reasonably be questioned.” Fed.R.Evid. 201. A
court can take judicial notice of undisputed matters of
public record, including documents on file in federal or
state courts. Lee v. City of Los Angeles, 250 F.3d
668, 689 (9th Cir. 2001); see also Bennett v. Medtronic,
Inc., 285 F.3d 801, 803 n. 2 (9th Cir. 2002). Documents
not attached to a complaint may be considered if no party
questions their authenticity and the complaint relies on
those documents. Lee, 250 F.3d at 688; Harris v.
Cty. of Orange, 682 F.3d 1126, 1131-32 (9th Cir. 2012).
Court takes judicial notice of the amended version of the
1988 Trust Agreement (Dkt. # 12 Ex. 1), the Edith Heinemann
Harris Trust Agreement (Dkt. # 5 Ex. 2.), the Demand
Promissory Note (09) (Dkt. # 5 Ex. 4), and the Demand
Promissory Note (10) (Dkt. # 5 Ex. 5). All of these documents
are documents “whose contents are alleged in a
complaint and whose authenticity no party questions, but
which are not physically attached to the [Plaintiff's]
pleading.” Knivel v. ESPN, 393 F.3d 1068, 1076
(9th Cir. 2005). Plaintiff filed this lawsuit as trustee of
the Edith Heinemann Harris Trust (“Heinemann Harris
Trust”) and the Complaint specifically references both
Demand Promissory Notes. The amended version of the 1988
Trust Document was submitted by Plaintiff in response to
Defendant's Motion, and neither party questions its
authenticity. The Court also takes judicial notice of the
remaining documents submitted by both parties as they are
documents on file in other state courts. Dkt. # 5 Ex. 3; Dkt.
# 6 Exs. 6-16; Dkt. # 7 Exs. 17-19; Dkt. # 12 Ex. 2.
following is taken from Plaintiff's Complaint, which is
assumed to be true for the purposes of this motion to
dismiss, as well as other documents that have been judicially
noticed as noted above. Sanders v. Brown, 504 F.3d
903, 910 (9th Cir. 2007).
is Trustee of the Heinemann Harris Trust. Dkt. # 1. Defendant
is a trustee of the August B. Mundel and Joan Webb Mundel
Trust (the “1988 Trust”). Id. at ¶
2. The 1988 Trust has two co-trustees: Defendant, and
Laurence Harris. Dkt. # 12 Ex. 1; Dkt. # 5 at ¶ 4; Dkt.
# 11 at ¶ 3. Laurence Harris is the husband of
Plaintiff. Dkt. # 11 at ¶ 4. The 1988 Trust was formed
by August B. Mundel and Joan Webb Mundel, who married in
1969. Dkt. # 5 at ¶ 2. Joan had three children from a
previous marriage: Timothy Harris, Laurence Harris, and
Geoffrey Harris (the “Harris Family”).
Id. All three Harris children are beneficiaries of
the 1988 Trust. Defendant and two of his nieces, Helaine
Libowitz Miserendino and Wendy Waxman (the “Mundel
Family”), are also beneficiaries of the 1988 Trust.
about July 3, 2007, the Mundel Family, filed a lawsuit
against Timothy Harris in the New York Supreme Court for
Westchester County (the “New York Lawsuit”),
alleging that Timothy had misappropriated nearly $1, 000, 000
in assets from the 1988 Trust. Dkt. # 6 Ex. 6. On June 10,
2010, the parties in the New York Lawsuit reached a
settlement. Dkt. # 6 Ex. 8. At that time, Anthony Piscionere
represented that he was counsel for the Harris Family. Dkt. #
6 Ex. 7. Laurence Harris and Geoffrey Harris were not named
parties in that dispute. Dkt. # 5 Ex. 3. The parameters of
the stipulation of settlement were stated on the record. Dkt.
# 5 Ex. 3. The parties agreed that their experts would work
together to determine the “amount of monies that should
be in all of the trusts and the Estate of Joan Webb Mundel,
” and that the trusts included “the 1988 Trust .
. . a 1988 [sic] Trust, a 2005 Trust, and the Heinemann
Harris Trust, to the extent that it applies to these
parties' monies.” Id. at 3. On August 10,
2011, Steven Kaplan was appointed as an “impartial
accountant” and instructed to ascertain the value of
all of the assets of the 1988 Trust, the Mundel Life
Insurance Trust (the “1998 Trust”), the 2005 Joan
Webb Mundel Living Trust (the “2005 Trust”), and
the Heinemann Harris Trust “to the extent that trust
contains assets of the aforementioned Mundel Trusts and any
other trust containing assets of August or Joan
Mundel.” Dkt. # 6 Ex. 8 at 2; Dkt. # 5 at ¶ 6. The
August 10, 2011 Order also states that after Kaplan
determined the value of all of the assets, the determination
would be binding on all of the parties and on Laurence Harris
and Geoffrey Harris, and that the Court would then issue an
order and judgment distributing the assets in the agreed upon
percentages as set forth in the June 10, 2010 stipulation of
settlement. Id. Kaplan made interim determinations
in November 2013 and March 2014, and a final arbitrator's
determination in September of 2014. Dkt. # 6 Exs. 9-11.
October 3, 2014, the Mundel Family moved to confirm the
September 2014 arbitrator's determination and for entry
of judgment. Dkt. # 6 Ex. 12. Timothy Harris' counsel
filed a response to the Motion requesting that the New York
state court stay execution of a final judgment until the
parties' related obligations and payments were determined
and satisfied. Dkt. # 6 Ex. 13. On November 15, 2014, Timothy
Harris died. Upon his death, Laurence Harris took his place
as co-trustee of the 1988 Trust. On September 8, 2015, the
New York state court granted the Mundel Family's motion
to confirm the arbitration award. Dkt. # 6 Ex. 14. Timothy
Harris' executor did not oppose the confirmation of the
award, arguing instead that the Mundel Family was not
entitled to the judgment until the trust's assets were
liquidated to satisfy the arbitration award. Id. The
judgment was then amended on April 6, 2016. Dkt. # 6 Ex. 16.
On May 25, 2016, the Mundel Family registered the September
8, 2015 Judgment in Snohomish County, Washington. Dkt. # 7
Ex. 17. On October 28, 2016, Laurence Harris, in his capacity
as co-trustee of the 2005 Trust, beneficiary of the Estate of
Joan Webb Mundel, and co-trustee of the 1988 Trust, and
Plaintiff, as co-trustee of the 2005 Trust, filed a motion
for order vacating the September 8, 2015 Judgment. Dkt. # 7
Ex. 18. On November 28, 2016, the New York state court issued
an order to show cause and temporary restraining order
imposing a stay of all actions and efforts to enforce the
September 8, 2015 Judgment. Dkt. # 7 Ex. 19. Pursuant to this
November 28, 2016 Order, the parties to the Washington state
court proceedings agreed to stay the matter pending
resolution of the New York Lawsuit. Id.
are two promissory notes at issue in this case: Demand
Promissory Note (09) and Demand Promissory Note (10). Dkt. #
1 ¶¶ 7, 8. Both promissory notes are dated February
21, 2007 and are made out to Plaintiff. Dkt. # 5 Exs. 4, 5.
Demand Promissory Note (09) is for the original principal sum
of $192, 664.35 and is witnessed by Laurence Harris and
signed by Timothy Harris in his capacity as trustee of the
1988 Trust. Dkt. # 5 Ex. 4. Demand Promissory Note (10) is
for the original principal sum of $85, 219.99 and is also
witnessed by Laurence Harris and signed by Timothy Harris in
his capacity as trustee of the 1988 Trust. Dkt. # 5 Ex. 5.
The total original principal sum of both promissory notes is
$277, 884.34. The Heinemann Harris Trust is the assignee and
holder of both promissory notes. Dkt. # 1 at ¶ 11.
Defendant alleges that these notes were included as part of
the settlement of the New York Lawsuit.
Heinemann Harris Trust is mentioned in all three arbitration
determinations issued in the New York Lawsuit. In the
November 2013 determination, Kaplan noted that funds were
transferred from the 1988 Trust to the Heinemann Harris Trust
and subsequently transferred back. Kaplan questioned the
propriety of the transaction. Dkt. # 6 Ex. 9. In the March
and September 2014 updated arbitration determinations, Kaplan
stated that he received additional information from Laurence
Harris, some of which related to “the issues of loans
and [settlement] related issues concerning the Heinemann
Trust.” Dkt. # 6 Exs. 10, 11. According to Kaplan,
Laurence Harris expressed his view that “loans 9 and 10
are Investments in demand promissory notes totaling $277,
884.34. [Laurence Harris] further annotated that loans 9 and
10 are unregistered securities. The gist of this is that he
justified the loans as investment securities. . . .”
Id. Kaplan further stated that, whether or not the
loans were lawful by the terms of the trust, “[the
Heinemann Harris Trust] has put forth funds with an
expectation of repayment and such outstanding balances shall
be respected.” Id. However, “as with all
other loans discussed in the initial determination, there
shall be no provision for interest.” Id.
filed this lawsuit on July 21, 2017, seeking entry of a
judgment against the 1988 Trust for the amount owed on both
promissory notes, legal fees, and other costs. Dkt. # 1.
Defendant moves to dismiss Plaintiff's Complaint pursuant