Julian Pollok v. the Vanguard Group, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 6, 2019
• Docket: 17-56814
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 6 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

JULIAN A. POLLOK, individually and as No. 17-56814 Administrator with Will Annexed, for The Estate of Edward S. Salkin, D.C. No. 2:16-cv-06482-JLS-JCG Plaintiff-Appellant,

v. MEMORANDUM*

THE VANGUARD GROUP, INC., a Pennsylvania corporation; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Josephine L. Staton, District Judge, Presiding

Argued and Submitted July 9, 2019 Pasadena, California

Before: M. SMITH and FRIEDLAND, Circuit Judges, and AMON,** District Judge.

Appellant Julian Pollok appeals the district court’s grant of Vanguard Group,

Inc., Vanguard Marketing Corp., and Vanguard Brokerage Services’ (collectively

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Carol Bagley Amon, United States District Judge for the Eastern District of New York, sitting by designation. “Vanguard”) motion for summary judgment and the denial of Pollok’s motion for

reconsideration and to amend his complaint. We have jurisdiction pursuant to 28

U.S.C. § 1291, and we affirm.

I. Summary Judgment

The district court did not err in granting Vanguard’s motion for summary

judgment because Vanguard did not owe any of the statutory or bailment duties

Pollok alleges it breached.

With respect to the statutory duties, California Financial Code § 1450 does

not control because none of the named Vanguard entities are banks. California

Commercial Code § 8507(a) does not control because it applies only “[i]n the

absence of agreement.” Here, the Vanguard accounts at issue were governed by an

agreement. And the Court will not consider Pollok’s argument concerning the

California Probate Code because he forfeited it by failing to raise it below. See R.L.

Inv. Ltd. Partners v. I.N.S., 273 F.3d 874, 874–75 (9th Cir. 2001).

With respect to the common-law bailment duties, Vanguard complied with

the contract terms governing the accounts when it froze the accounts. The contract

provisions superseded any bailment duties allegedly owed by Vanguard. See Dan

B. Dobbs, et al., The Law of Torts § 68 (2d ed. 2019). The relevant contracts, which

included the Vanguard Brokerage Account Agreement, the IRA Custodial Account

Agreement, and the prospectuses governing the individual funds, permitted

2 Vanguard to place trade and disbursement restrictions on the accounts in the event

of reasonable notice of a dispute over the accounts’ ownership and to rely on a court

order in determining the rightful owner. Vanguard acted in compliance with those

agreements when it froze the accounts after receiving a contingent temporary

restraining order from the Superior Court, which provided Vanguard with reasonable

notice of a dispute. Vanguard also complied with the agreements when it turned the

accounts over upon court order. Further, none of the agreements permitted

Vanguard to exercise its discretion in modifying the investments, so Vanguard

cannot have breached any duty to prevent the accounts from declining in value while

the freeze was in place.

Pollok attempts to avoid this conclusion by arguing that the relevant contracts

were not enforceable because: (1) there is no evidence that the contracts were ever

delivered; (2) the contracts are unsigned and were promulgated many years after the

accounts were opened; and (3) the contracts are unconscionable. However, the

uncontroverted record establishes that Vanguard’s standard practice was to mail

these contracts to clients when they were issued. Under both state and federal law,

a properly mailed letter is presumed to have been received. See Cal. Evid. Code

§ 641; Schikore v. BankAmerica Supplemental Ret. Plan, 269 F.3d 956, 961 (9th Cir.

2001). Pollok failed to offer evidence sufficient to rebut this presumption.

3 That the contracts were never signed and that they were promulgated many

years after the accounts were opened does not affect our conclusion. These contracts

were unilateral in nature. As such, Vanguard was permitted to modify them and

“[c]ontinuing to [perform] after the . . . modification constitute[d] acceptance of

the new . . . terms.” Asmus v. Pac. Bell, 999 P.2d 71, 78 (Cal. 2000). And these

contracts, by their terms, provided that they would be accepted if the accountholder

kept his accounts open.

The district court did not abuse its discretion by refusing to consider Pollok’s

argument concerning the contracts’ unconscionability because he did not raise it

until his motion for reconsideration. Arguments that could have been raised at the

time of a district court’s initial decision are not appropriate grounds for

reconsideration. See C.D. Cal. Local Civ. R. 7-18. Nor will we consider them for

the first time on appeal. See Tibble v. Edison Int’l, 843 F.3d 1187, 1193 (9th Cir.

2016) (en banc).

II. Leave to Amend

Pollok filed his motion to amend eight months after the deadline for doing so

and many months after he learned of the contracts that formed the basis for his new

claims. He was not diligent in seeking leave to amend and therefore failed to

establish “good cause” to excuse his failure to comply with the district court’s

scheduling order. Cf. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609–

4 10 (9th Cir. 1992); In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716,

736–39 (9th Cir. 2013).

* * *

The Court has considered Pollok’s remaining arguments and finds them to be

without merit. For these reasons, the district court’s judgment is AFFIRMED.