Found. of Human Understanding v. Talk Radio Network, Inc.

FOUNDATION OF HUMAN UNDERSTANDING, Plaintiff, v. TALK RADIO NETWORK, INC., Defendant.

Civ. No. 1:20-cv-01652-AA

United States District Court, D. Oregon, Medford Division

December 23, 2022

OPINION & ORDER

ANN AIKEN, U.S. District Judge

This comes before the Court on a Motion for Partial Summary Judgment and Motion for Judicial Notice filed by Plaintiff Foundation of Human Understanding (“FHU”), ECF No. 72, and on Motion for Partial Summary Judgment filed by Defendant Talk Radio Network, Inc. (“TRN”), ECF No. 84. For the reasons set forth below, Plaintiff's Motion is GRANTED in part and DENIED in part and Defendant's Motion is DENIED.

LEGAL STANDARD

Summary judgment is appropriate if the pleadings, depositions answers to interrogatories, affidavits, and admissions on file, if any, show “that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986).

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.

Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W Elec., 809 F.2d at 630-31.

JUDICIAL NOTICE

Plaintiff Foundation of Human Understanding (“FHU”) requests that the Court take judicial notice of the records of prior litigation between Mark Masters and FHU. Pahl Decl. Ex. 1-19. ECF No. 73. FHU has raised issues of claim preclusion and federal courts may take judicial notice of documents filed in another case to determine what issues were before the court and actually litigated. Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006); see also Mfr'd Home Cmty., Inc. v. City of San Jose, 420 F.3d 1022, 1037 (9th Cir. 2005) (taking “judicial notice of a state court decision and the briefs filed in that court to determine if an issue was raised and decided by the state court for res judicata purposes.”).

Here, the materials offered by FHU in Exhibits 1 through 19 of the Pahl Declaration are filings from related litigation in California and Oregon. The Court concludes that these are appropriate subjects for judicial notice and so GRANTS FHU's motion for judicial notice.

BACKGROUND

I. FHU and TRN

The Foundation of Human Understanding was founded by Roy Masters to “promote [his] spiritual ministry,” which it does through media platforms, “including radio, web, broadcasting, books, lectures, and seminars.” Alan Masters Decl. ¶ 2. ECF No. 74. FHU is a California 501(c)(3) non-profit corporation. Second Mark Masters Decl. ¶ 3. ECF No. 85.^[1] “Under Article III of the foundation's original bylaws, Roy Masters served in the role of Founder, and the office of the Founder had sole authority to appoint or remove directors.” Foundation of Human Understanding v. Masters, 313 Or.App. 119, 121 (2021).

Mark Masters was a member of the FHU Board and vice president of FHU until his removal from the organization in late 2016. Second Mark Masters Decl. ¶ 3.

Mark Masters asserts that on September 28, 2003, the FHU Board adopted an amendment to the FHU Bylaws under which Mark Masters would become the Successor Founder upon the incapacity or death of the original Founder, Roy Masters (the purported “2003 Amendment”). Mark Masters Decl. ¶¶ 22-23. ECF No. 81.

In 2004, FHU and Mark Masters signed a comprehensive contract selling TRN to Mark Masters. Alan Masters Decl. ¶ 10. Mark Masters is the CEO of TRN. Mark Masters Decl. ¶ 2.

On September 27, 2016, Roy Masters removed Mark Masters and David Masters from the FHU Board pursuant to FHU's 1984 Bylaws. Alan Masters Decl. ¶ 14.

In 2017, nearly a year after being removed from the FHU Board, Mark Masters, David Masters, and Michael Lofrano declared themselves to the be sole directors of FHU. Alan Masters Decl. ¶ 14. Lofrano sent a letter to then-members of the FHU Board notifying them that they had been removed from the Board and replaced by Lofrano, Mark Masters, and David Masters. Id. In response, FHU initiated a declaratory judgment action in Josephine County Circuit Court, seeking a declaration that Mark Masters, David Masters, and Lofrano were not members of the FHU Board. The details of the various lawsuits concerning control of FHU are laid out in more detail below, but for purposes of this chronology it is sufficient to say that FHU prevailed in the Josephine County lawsuit and secured a declaration naming Roy Masters, Wendy Taylor, Charles Williams, Alan Masters, and Dianne Linderman as the lawful members of the FHU Board as well as a declaration that Mark Masters, David Masters, and Lofrano were not officers or directors of FHU and that they had no right or authority to participate in FHU management or control or to control assets of FHU. This judgment was subsequently affirmed on appeal.

FHU's Bylaws were amended on March 22, 2019 and the Second Amended and Restated Bylaws (the “2019 Bylaws”) are the current and operative bylaws of FHU. Alan Masters Decl. ¶ 17. The 2019 Bylaws were unanimously adopted by the FHU Board immediately after FHU prevailed in the Josephine County Circuit Court declaratory action against Mark Masters. Id. at ¶ 18.

Under the 2019 Bylaws, Roy Masters was recognized as the Founder of FHU and in that capacity Roy Masters possessed “broad authority over many of the decisions of FHU, including appointment and removal of FHU Board members and officers.” Alan Masters Decl. ¶ 19. The 2019 Bylaws provided that Roy Masters would relinquish his authority as Founder if he were to (1) die; (2) resign; (3) become incapacitated; or (4) be appointed by the Board to serve as an Emeritus Director. Id. at ¶ 20. An Emeritus Director is not a voting director and does not possess the powers of the Founder. Id. at ¶ 22. The 2019 Bylaws provide that upon the Founder's death or resignation, “the position of Founder, as described in these Bylaws, shall cease to exist.” Id. at ¶ 23.

On August 6, 2019, the FHU Board voted to appoint Roy Masters as the Emeritus Director. Alan Masters ¶ 21. On April 22, 2021, Roy Masters died. Id. at ¶ 22.

On July 8, 2021, the Oregon Court of Appeals affirmed the judgment of the Josephine County Circuit Court concerning the composition of the lawful FHU Board.

On September 3, 2021, Mark Masters sent a letter to Alan Masters asserting that Mark Masters was the sole holder of the Founder's Office as the “Successor Founder,” and purporting to remove all members of the FHU Board. Alan Masters Decl. ¶ 12; Ex. 10.

II. The Central Point Properties

Three parcels of land on 724, 734, and 744 East Pine Street in Central Point, Oregon (collectively, the “Central Point Properties,”) were transferred to FHU on March 11, 1998 “by execution and delivery of deeds from lawful sellers.” Alan Masters Decl. ¶ 5. FHU immediately recorded the 1998 deed and considered the Central Point Properties to be a “primary asset” of the organization. Id. FHU has paid the Jackson County property taxes on the Central Point Properties continuously since 1998 and no other entity has paid property taxes on the Central Point Properties. Id. at ¶ 6; Ex. 3.

TRN asserts that the FHU Board unanimously voted to transfer the Central Park Properties to TRN on October 1, 1999. Mark Masters Decl. ¶¶ 4-5. At that point, TRN was a wholly owned subsidiary of FHU. Alan Masters affirms that in October 1999, FHU was contemplating the sale of TRN to a third party, Shanahan. Alan Masters Decl. ¶ 9. Alan Masters asserts that the FHU Board executed a Unanimous Written Consent to authorize the transfer of the Central Point Properties to TRN in anticipation of and conditioned upon the sale of TRN to Shanahan. Id.

“However, the Shanahan sale fell through and the consent to action was never finalized or included in the corporate minute book.” Id. Alan Masters asserts that the transfer of the Central Point Properties to TRN as part of the sale of TRN to Shanahan would have been for meaningful consideration, but “transferring valuable real property from a non-profit like FHU to a for-profit company like TRN for nominal consideration would have been pointless and possibly unlawful.” Id. Mark Masters asserts that the transfer of the Central Point Properties “was NOT conditioned on any potential joint venture, investment or sale to Shanahan being closed or upon any other preconditions.” Mark Masters Decl. ¶ 7.

Mark Masters maintains that the transfer of the Central Point Properties was authorized by the FHU Board and that Mark Masters, who was a member of the Board at the time, executed a bargain and sale deed on October 1, 1999. Mark Masters Decl. ¶ 8. However, Mark Masters “did not see any immediate need to record [the deed] at that time as [he] understood that the conveyance of Central Point [Properties] to OTRN was complete upon the execution and delivery of the deed to OTRN.” Id. at ¶ 11. Mark Masters then forgot about the deed for 22 years. TRN Resp. to TRO, at 7. ECF...