Tentative Rulings
Case Number: BC605281 Hearing Date: April 30, 2021 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: April 30, 2021 TRIAL DATE: April 30, 2021
CASE: Albert Barrios, et al. v. Joel Leebove, et at.
CASE NO.: BC605281
(1) MOTION TO REJECT THE REFEREE'S RECOMMENDATIONS OR, ALTERNATIVELY, TO CONDITIONALLY REJECT THEM SUBJECT TO PROOF AT TRIAL PURSUANT TO CCP §643;
(2) MOTION TO ADOPT REFEREE’S FINDINGS AND FOR ENTRY OF JUDGMENT
MOVING PARTIES: (1) Plaintiff Albert Barrios, an individual, on behalf of other
stakeholders, and derivatively on behalf of 123 Los Robles, LLC;
(2) Defendants Patrick Chragchian and Joel Leebove
RESPONDING PARTIES: (1) Defendant Patrick Chragchian and Joel Leebove;
(2) Plaintiff Albert Barrios, an individual, on behalf of other
stakeholders, and derivatively on behalf of 123 Los Robles, LLC
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiff alleges that Defendants breached their fiduciary duties to a limited liability
company by giving an easement to an entity Defendants owned which benefited Defendants.
On February 16, 2017, the Court entered an order based on the parties’ stipulation appointing Hon. Eric Younger as a Judicial Referee under Code of Civil Procedure (CCP) §639 and directing him to file a Statement of Decision with the Court.
After the presentation of Plaintiff’s evidence at trial in 2018, Judge Younger issued an eight-page Statement of Decision by Referee, granting Defendants’ motions under CCP §631.8 in their entirety.
On September 17, 2018, Judge Randolph M. Hammock, then sitting in Department 47, ruled on the parties’ motions regarding the referee’s Statement of Decision, adopting it in part and disapproving it in part, terminating the judicial reference, and ruling that the unresolved issues should be set for trial in Department 47.
A bench trial eventually commenced in early 2020 before Judge Hammock, but it was interrupted by a court closure and other administrative restrictions imposed because of the COVID-19 pandemic and the parties’ efforts to conduct additional discovery. By the time the trial was to resume, Judge Hammock was no longer sitting in Department 47 so the Court declared a mistrial and set the matter for rebriefing on the parties’ conflicting views about whether the referee’s Statement of Decision should be adopted or rejected, in whole or in part.
In his briefing, Plaintiff objects to the Statement of Decision and urges the Court to reject it in its entirety and set the matter for trial. In the alternative, Plaintiff asks that the Court conditionally reject the referee’s recommendations subject to proof at trial pursuant to CCP §643.
Defendants oppose Plaintiff’s efforts to reject the referee’s Statement of Decision and seek an order adopting the referee's findings and entering judgment in their favor.
TENTATIVE RULING
Plaintiff's motion for an order disapproving in full the Statement of Decision is
GRANTED IN PART AND DENIED IN PART as set forth below.
Defendant's motion to adopt the referee's findings is GRANTED IN PART as set forth
below. Defendant's request for entry of judgment is DENIED.
Defendants’ Motion to Adopt Statement of Decision and Plaintiff’s Motion to Disapprove In Full or In Part the Statement of Decision
Standard of Review
The Court’s review is guided by CCP §643 and grounded in the parties’ stipulation that led to the judicial referral to Judge Younger. Section 643 provides:
(a) Unless otherwise directed by the court, the referees or commissioner must report their statement of decision in writing to the court within 20 days after the hearing, if any, has been concluded and the matter has been submitted.
(b) A referee appointed pursuant to Section 638 shall report as agreed by the parties and approved by the court.
(c) A referee appointed pursuant to Section 639 shall file with the court a report that includes a recommendation on the merits of any disputed issue, a statement of the total hours spent and the total fees charged by the referee, and the referee's recommended allocation of payment. The referee shall serve the report on all parties. Any party may file an objection to the referee's report or recommendations within 10 days after the referee serves and files the report, or within another time as the court may direct. The objection shall be served on the referee and all other parties. Responses to the objections shall be filed with the court and served on the referee and all other parties within 10 days after the objection is served. The court shall review any objections to the report and any responses submitted to those objections and shall thereafter enter appropriate orders. Nothing in this section is intended to deprive the court of its power to change the terms of the referee's appointment or to modify or disregard the referee's recommendations, and this overriding power may be exercised at any time, either on the motion of any party for good cause shown or on the court's own motion.
(Bold emphasis added.)
Defendants describe the proceeding before Judge Younger as a consensual judicial reference under CCP §639 and urge the Court to accord “great deference” to the Statement of Decision and adopt the referee’s findings so long as they are supported by “substantial evidence.” (Defendant Chraghcian’s Brief, p. 6.) In contrast, Plaintiff contends that this Court should give no deference to Judge Younger’s recommendations and review both the factual findings and legal determinations using a de novo standard of review.
In their stipulation of February 16, 2017, the parties agreed that the Court should compel the appointment of Judge Younger pursuant to CCP §639(a)(1)-(5), based on the specific terms agreed to by the parties. Among other things, the parties explicitly agreed that the referee was to prepare a Statement of Decision and that the Court shall, “upon motion of any party [or on the Court’s own motion] . . . approve in full, approve in part, disapprove in full or disapprove in part the Statement of Decision and shall be permitted to review all findings of fact and conclusions of law under the de novo standard of review.” (Stipulation and Order Thereon for Judicial Reference, etc., p. 2 [bold emphasis added; brackets in original].) The stipulation also declared the parties’ intention “to be subject to the Court’s order requiring the parties to proceed with the judicial reference as though the Motion for a Judicial Referee had been timely filed and ruled on by the Court and hereby disclaim that they consented to such judicial reference.” (Id., p. 3.) Thus, the stipulation makes clear that the judicial reference is not to be considered a “consensual” proceeding and that this Court is to conduct a de novo review of the Statement of Decision, not an examination that grants any deference to the factual or legal determinations made by Judge Younger.
Accordingly, the Court declines Defendants’ invitation to accord great deference to the Statement of Decision and affirm it so long as it is grounded on substantial evidence. Instead, the Court honors the parties’ stipulation by evaluating the Statement of Decision using a de novo standard of review. The Court’s recognition and application of the parties’ stipulated standard of review is also consistent with CCP §643(c)’s language preserving the Court’s “overriding power” to “modify or disregard the referee’s recommendations.” (CCP §643(c).)
Plaintiff’s Causes of Action for Breach of Fiduciary Duty
In his first two cause of action, Plaintiff alleges that Defendants breached their common law fiduciary duties and their duty of loyalty and care under Corporations Code 17704.09 in several ways. (Third Amended Complaint, p. 6.) Plaintiff contends that Defendants engaged in self-dealing when they burdened Plaintiff’s interest in the Burton building, which was owned by 123 Los Robles LLC and managed by Defendants as its members, by giving subterranean parking and ramp access to the adjacent Campbell property, which Defendants also owned and managed. (Id., ¶20.) Plaintiff also alleged that Defendants failed to market and sell units in another building, the Hotel Livingstone, and instead used them for their own personal benefit. (Id., ¶¶ 21-22.) In addition, Plaintiff alleges that Defendants improperly built the Burton property to encroach upon the Campbell building, thereby “forcing The Burton to give up valuable rights to offset [Defendants’] negligence.” (Id. ¶ 23.)
In rejecting Plaintiff’s fiduciary breach claims, the referee made two primary rulings that are challenged by Plaintiff and commended by Defendants. First, the referee apparently determined that, as members and managers of an LLC, Defendants owed no fiduciary duties to Plaintiff. Second, the referee held that the transactions at issue were “fair and reasonable to the Company” within the meaning of the Operating Agreement.
At the outset, the Court notes its dismay about the referee’s apparent disregard of his duty to explain the legal standards applicable to Plaintiff’s causes of action and provide explicit reasons for his adoption of those standards and for his decisions to reject legal arguments advanced by one side or the other. The fact that the factual conclusions in the Statement of Decision are untethered to any statutory provisions, case law or other legal authority causes the Court grave concern about the propriety of adopting the conclusions set forth therein. Because Judge Younger failed to explain what law he was applying, the Court lacks confidence about the soundness of his conclusions on mixed questions of law and fact, like whether certain transactions were “fair and reasonable to the Company” and whether Defendants breached their fiduciary duties. While the Court declines to reject the entire Statement of Decision on this basis, its concerns about the absence of any legal foundation for the referee’s rulings imbues the Court’s examination of the specific findings with substantial skepticism.
The referee’s only discussion of the law applicable to the fiduciary breach claims is on page 3 of the Statement of Decision, where the referee criticizes Plaintiff’s reliance on cases addressing the fiduciary duties of trustees. The referee first described the relationship between the parties as lacking any fiduciary responsibilities, commenting that minority owners in the LLC, like Plaintiff, should have understood that they would have “little ‘say’ in the running of the operation” and would be deferring to the business judgments made by “sophisticated high-net-worth individuals,” like Defendants, and that Plaintiff’s only other option was to have “stay[ed] out of the investment” entirely. (SOD, p. 3.) Turning to several fiduciary duty cases relied on by Plaintiff, the referee dismisses them as “having nothing to do” with the case between the parties here.
The Court is highly critical of the referee’s refusal to acknowledge or describe the fiduciary duties that Defendants had as managers and owners of the LLC. Recent case law confirms that LLC managers have fiduciary duties imposed on them by law. (American Master Lease LLC v. Idanta Partners, Ltd. (2014). In American Master, the Court of Appeal for the Second District rejected the idea that conduct of the defendants LLC managers in that case were to be judged only against the terms of the LLC’s operating agreement, explaining:
The fiduciary duties of [the LLC managers], however, were not created exclusively or even primarily by the Operating Agreement, but were imposed by law on them as members and managers of AML. (See Corp. Code, § 17153 [“[t]he fiduciary duties a manager owes to the limited liability company and to its members are those of a partner to a partnership and to the partners of the partnership”];n18 former Corp. Code, former § 17001, subd. (w) [“manager” includes each of the members unless the articles of organization state that one or more members will manage the company]; Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 410 [58 Cal.Rptr.3d 527] [“[t]he duty of loyalty arises not from a contract but from a relationship...”]; Manok v. Fishman (1973) 31 Cal.App.3d 208, 213 [107 Cal.Rptr. 266] [although “[a]n express agreement between the parties may govern their relationship, ... to the extent that their respective rights and duties are not spelled out in an express agreement, the law imposes obligations arising out of the nature of their fiduciary relationship”]; see also Federal Deposit Ins. Corp. v. McSweeney (S.D.Cal.1991) 772 F.Supp. 1154, 1157 [“a cause of action for breach of fiduciary duty is its own ‘right sued on’ and cannot be compartmentalized into another rubric for time-bar purposes”].)
n18 The events of this case are governed by former section 17153 of the Corporations Code. Corporation Code section 17704.09, which replaced Corporations Code section 17153, “applies only to the acts or transactions by a limited liability company or by the members or managers of the limited liability company occurring, or contracts entered into by the limited liability company or by the members or managers of the limited liability company, on or after January 1, 2014. The prior law governs all acts or transactions by a limited liability company or by the members or managers of the limited liability company occurring, or contracts entered into by the limited liability company or by the members or managers of the limited liability company, prior to that date.” (Corp. Code, § 17713.04, subd. (b).) The new statute provides that members of a limited liability company owe fiduciary duties of loyalty and care to the limited liability company, including the duties to “refrain from dealing with a limited liability company in the conduct or winding up of the activities of a limited liability company as or on behalf of a party having an interest adverse to a limited liability company” and to “refrain from competing with a limited liability company.” (Corp. Code, § 17704.09, subd. (b)(2), (3); see id., subd. (d) [“[a] member shall discharge the duties to a limited liability company and the other members under this title or under the operating agreement and exercise any rights consistent with the obligation of good faith and fair dealing”].)
(Ibid.) Thus, the California Corporations Code has long recognized and imposed fiduciary duties on LLC managers and owners, like Defendants, whether the applicable standard in a particular context stems from the current Revised Uniform Limited Liability Company Act or from its pre-2014 predecessor, the Beverly-Killea Limited Liability Company Act. Because the referee did not acknowledge these standards, and in fact seems to hold that they do not exist, the Court concludes that the referee failed to apply the correct legal standard in ruling on Plaintiff’s fiduciary breach claims.
While they cannot point to any legal analysis by Judge Younger, Defendants argue that the Statement of Decision reflects the proper standards by simply applying the terms of the governing Operating Agreement. Defendants contend that the Beverly-Killea Limited Liability Company Act that was in effect prior to 2014 applies to this case and that, under that statute, “[t]he fiduciary duties of a manager to the limited liability company and to the members of the limited liability company may only be modified in a written operating agreement with the informed consent of the members,” citing the former Corporations Code § 17005. (Corp. Code, former § 17005.) Based on these authorities – none of which are discussed in the Statement of Decision – Defendants argue that the issue should be judged solely by section 5.8 of the LLC’s Operating Agreement, which Judge Younger did rely upon.
The Court finds Defendants’ efforts to shore up the absence of legal standards in the Statement of Decision to be inadequate for several reasons.
First, nothing in the Statement of Decision reflects a conclusion that the pre-2014 Act should govern the parties’ dispute. While Defendants may be correct, Judge Younger did not so hold. Indeed, as noted above, it appears that he found that Defendants owed no fiduciary duties to Plaintiff or the LLC.
Second, Defendants’ brief only quotes and relies on one sentence in former § 17005. Before its repeal, Section 17005 was entitled “Relations among members of limited liability companies and between members and the limited liability companies; governing provisions; restrictions” and provided as follows:
(a) Except as provided in subdivisions (b) and (c), relations among members and between the members and the limited liability company are governed by the articles of organization and operating agreement. To the extent the articles of organization or operating agreement do not otherwise provide, this title governs relations among the members and between the members and the limited liability company.
(b) The effect of the provisions of this title may be varied as among the members or as between the members and the limited liability company by the articles of organization or operating agreement, provided, however, that the provisions of Sections 17059, 17103, 17104, 17152, 17154, and 17155 may only be varied by the articles of organization or a written operating agreement. Notwithstanding the first sentence of this subdivision, neither the articles of organization nor the operating agreement may:
(1) Vary the definitions in Section 17001, except as specifically provided therein.
(2) Eliminate the right of a member pursuant to subdivision (c) of Section 17100 to assert that a provision in the operating agreement governing the termination of that member's interest and the return of that member's contribution was unreasonable under the circumstances existing at the time the agreement was made.
(3) Vary the voting requirements or voting rights set forth in subdivisions (b) and (c) of Section 17103.
(4) Vary a member's rights under Sections 17106 and 17453.
(c) The provisions of Chapter 2 (commencing with Section 17050), Chapter 8 (commencing with Section 17350), Chapter 10 (commencing with Section 17450), Chapter 11 (commencing with Section 17500), Chapter 12 (commencing with Section 17550), and Chapter 13 (commencing with Section 17600) may be varied by the articles of organization or by a written operating agreement only to the extent expressly provided in those chapters.
(d) The fiduciary duties of a manager to the limited liability company and to the members of the limited liability company may only be modified in a written operating agreement with the informed consent of the members.
(e) The presence in certain provisions of this title of the words “unless otherwise provided in the articles of organization or operating agreement” or words of similar import does not imply that the effect of other provisions may not be varied as among the members by the articles of organization or operating agreement.
(f) If any provision of the articles of organization conflicts with one or more provisions of a written operating agreement, the articles of organization shall control.
Thus, while it may be true that section 5.8 of the Operating Agreement sets the standard for measuring Defendants’ compliance with their duties to Plaintiff, Defendants have failed to analyze what it claims to be the applicable statute to reach this bare conclusion.
Third, and of even greater significance, Judge Younger failed to cite to former section 17005 or hold it to be applicable, much less analyze its application to this case. Nowhere does the Statement of Decision address, for example, whether the LLC’s Operating Agreement that limited the fiduciary duties of the LLC’s managers was adopted after securing “informed consent of the members” or whether any of the exceptions to a restrictive Operating Agreement are pertinent to the transactions challenged in Plaintiff’s claims.
Fourth, the Statement of Decision does not address or apply all aspects of the Operating Agreement’s provisions related to self-dealing. Citing to Section 5 of the Operating Agreement, Judge Younger made several rulings to the effect that “the transactions under consideration, including, but not limited to, the LLC’s entry into the Reciprocal Easement Agreement . . . were fair and reasonable to the Company,” “appropriate,” and “very likely desirable.” (SOD, p. 2.) In addition to the Reciprocal Easement Agreement, the Statement of Decision refers to: the configuration of the underground driveway which “appeared sensible” to Judge Younger; access to open space and balconies, which Judge Younger considered to be an “additional benefit” and Plaintiff’s objection to be “strange”; and Defendants’ rental of the several vacant condominiums rather than offering them for sale, on which Judge Younger commented that “something is better than nothing.” (Id., p. 4.)
Even assuming that Judge Younger did a legal analysis and concluded that the terms of Section 5 applied to his evaluation of the challenged transactions, the reasoning in the Statement of Decision does not reflect the applicable standards from the Operating Agreement.
Section 5.8 of the Operating Agreement provides:
Transactions between the Company and the Managers
Notwithstanding that it may constitute a conflict of interest, the Managers may, and may cause their Affiliates to, engage in any transaction (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any service, or the establishment of any salary, other compensation, or other terms of employment) with the Company so long as such transaction is not expressly prohibited by this Agreement, and so long as the terms and conditions of such transaction, on an overall basis, are fair and reasonable to the Company, and are at least, as favorable to the Company as those that are generally available from Persons capable of similarly performing them and in similar transactions parties operating at arm’s length. . . .
A transaction between the Managers and/or their Affiliates, on the one hand, and the Company on the other hand, shall be conclusively determined to constitute a transaction on terms and conditions, on an overall basis, fair and reasonable to the Company and at least as favorable to the Company as those generally available transaction parties operating at arm’s length if a Majority Interest of the Members having no interest in such transaction (other than their interests as a Members) affirmatively vote or consent in writing approve the transaction. Notwithstanding the foregoing, the Managers shall not have any obligation, in connection with any such transaction between the Company and the Managers or an Affiliate of the Managers, to seek the Consent of the Members.
(Defendants’ Exh. E, pp. 14-15.)
Under the Operating Agreement, a Manager acts in compliance with his or her obligations to the LLC if a self-dealing transaction satisfies three requirements: (1) the transaction is not prohibited by the Operating Agreement; (2) the transaction’s terms and conditions are, on an overall basis, fair and reasonable the Company; and (3) the transaction’s terms and conditions are at least, as favorable to the Company as those that are generally available from Persons capable of similarly performing them and in similar transactions parties operating at arm’s length. Further, the Operating Agreement provides that the last two prerequisites can be “conclusively determined” by a vote of approval or consent in writing by a “Majority Interest of the Members having no interest in such transaction (other than their interests as a Members).”
Nothing in the Statement of Decision exhibits any ruling that the transactions at issue were not otherwise prohibited by the Operating Agreement. Similarly, Judge Younger declined to scrutinize the transactions to explore whether their terms and conditions were equal to or better than what would have been available in a similar transaction with parties operating at arm’s length. Nor did he even mention the existence of any vote or consent by a majority of the LLC members who had no interest in the challenged transactions other than their interests as members of the LLC. The last two requirements are of particular importance since they examine whether the conflict of interest inherent in the targeted transactions resulted in any economic detriment to the LLC and its non-interested members. Without these factors satisfied, there is virtually no showing of the actual fairness of any self-dealing transactions.
Judge Younger’s failure to address these key factors for evaluating the propriety of the challenged transactions renders his conclusions about their “fair and reasonable” character to be entirely suspect. Further, it appears that Judge Younger assessed each facet of the central property transaction individually, rather than evaluating whether the transaction was fair and reasonable “on an overall basis.” Thus, there is nothing in the Statement of Decision, for example, that assesses the market value of the balconies and open space purportedly given to the LLC as compared to the economic burden of sharing a driveway with an adjacent building and the lost value of being deemed in perpetuity to be joined with that adjacent building as a single parcel of real estate. Even if the Court agreed with Judge Younger’s assessment of the constituent parts of the transaction, there is nothing in the Statement of Decision that purports to provide an overall assessment of the transaction. Significantly, the Statement of Decision does not even mention the Lot Tie Agreement – which was explicitly required by the City of Pasadena -- much less include it in an overarching evaluation of the benefits to the LLC.
For all these reasons, the Court declines to adopt any aspect of Judge Younger’s rulings on Plaintiff’s Causes of Action I and II for breach of fiduciary duty. The Court also declines to send this issue back to the referee and instead will include these claims in the trial to be held in this Court.
Plaintiff’s Causes of Action for Declaratory Relief
The rulings on Plaintiff’s declaratory relief claims suffer from the same deficiencies. The claim raising indemnification issues is derivative of Plaintiff’s underlying fiduciary breach claims. As noted above, the Court finds that Judge Younger failed to address the legal standards for evaluation such claims, appears to have concluded that Defendants have no fiduciary duties, and ignored three of the four key provisions in the Operating Agreement that govern self-dealing transactions. Given the overlap in the fiduciary breach claims and the action for declaratory relief as to Defendants’ indemnity for defending against such claims, the Court rejects the suggestion that it adopt the referee’s ruling on this claim, declines to send it back to the referee for resolution, and sets the matter for trial in this Court.
Turning to the request for declaratory relief on whether Defendants complied with the profit participation provision of the Operating Agreement, the Court also concludes that the Statement of Decision is deficient and must be rejected. This claim seeks a construction of the Preferred Return Profit Participation clause of the Operating Agreement that, according to Plaintiff, entitled the LLC members to a return of 8 percent of the unreimbursed portion of the amounts paid for the Units that were sold and an 8 percent return on all capital invested, and in the event of a partial return of invested capital, the unreturned capital shall accrue 8 percent interest until returned. (Operating Agreement, § 6.2, pp. 16-17.) During the trial before the referee, the parties disputed how this provision should be construed with Plaintiff arguing, inter alia, for distributions after each unit sale and Defendants contending that the clause is only triggered if profits have been generated by the LLC. Tellingly, the Statement of Decision neither addresses the relevant language nor applies it to the facts presented to the referee. Instead, Judge Younger simply opined that any failure to make payments under the Preferred Return Profit Participation clause was excused by the Great Recession and that Plaintiff should have been satisfied with getting “his principal back.” (SOD, p. 6.) This conclusion fails to lay out the applicable legal standards, ignores the obligation to construe the disputed terms of the Operating Agreement, and relies on few facts and even less evidence.
Neither side squarely addresses the reliability of Judge Younger’s brief ruling on Plaintiff’s contention that Defendants improperly diverted funds and caused delay in the sale of units. Given the Court’s deep distrust of the rulings in the Statement of Decision, the lack of any legal standard used by Judge Younger to evaluate this contention, and the fact that Plaintiff’s other declaratory relief claims will subject to a court trial, the Court declines to follow the referee’s ruling on this issue.
For these reasons, the Court discards the referee’s rulings on Plaintiff’s Causes of Action III and IV for declaratory relief and will resolve them in a court trial.
Cause of Action for Dissolution, Winding Up, Appointment of Receiver and Accounting
The predicate for Plaintiff’s claim for dissolution is a contention that Defendants sold “substantially all” the LLC’s assets, thereby triggering the contractual right to dissolution under § 10.1.E of the Operating Agreement. While the Statement of Decision mentions the absence of the “need or desirability” of dissolution, that it is operating without a deadlock and has not abandoned its business, Judge Younger made no ruling on the factual predicate for dissolution. Nor did he even allude to the contractual basis for the claim.
Accordingly, the Court rejects the referee’s rulings on Plaintiff’s Causes of Action V-VIII for dissolution, winding up, appointment of receiver and accounting and will set these claims for a court trial. Based on Plaintiff’s explanation that his misappropriations contention arises in the context of these corporate administration claims, the Court declines to follow the referee’s dismissal of this claim and instead will set it for trial along with other related claims.
Remaining Claims
The Statement of Decision mentions additional claims that were either stricken (Causes of Action X and XI for Alleged Partnership), abandoned (Cause of Action IX under Corporations Code § 17704.1), or voluntarily dismissed (Causes of Action XII, XIII, and XIV for Breach of Contract, Negligence and Breach of Duty of Care). The Court affirms and adopts the referee’s confirmation of the manner that these claims were resolved.
In summary, Defendants’ motion that the Court adopt the referee’s findings is GRANTED IN PART and DENIED IN PART, as set forth above. The request for entry of judgment based on the Statement of Decision is DENIED.
Plaintiff’s motion to reject the referee’s findings is GRANTED IN PART and DENIED IN PART, as set forth above.
Plaintiff is to give notice, unless waived.
IT IS SO ORDERED.
Dated: April 30, 2021 ___________________________________
Theresa M. Traber
Judge of the Superior Court
Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.
Case Number: BC605281 Hearing Date: February 10, 2020 Dept: 47
Albert Barrios, et al. v. Joel Leebove,
et al.
MOTION
FOR ORDER OF RECONSIDERATION
MOVING PARTY: Plaintiff Albert Barrios, an individual, on behalf of
other stakeholders, and derivatively on behalf of 123 Los Robles, LLC
RESPONDING PARTY(S): Defendant Patrick
Chraghchian
STATEMENT
OF FACTS
Plaintiff
alleges that Defendants breached their fiduciary duties to a limited liability
company by giving an easement to an entity Defendants owned which benefited
Defendants.
Plaintiff
moves for reconsideration of the Court’s order adopting the Judicial Referee’s
finding that the Reciprocal Easement Agreement entered into by the derivative
party and 105 LR, LLC, an entity owned and controlled by the derivative
defendants, was “fair and reasonable” to the member investors of 123 Robles LLC.
TENTATIVE RULING:
Plaintiff’s
motion for reconsideration is DENIED.
DISCUSSION:
Motion for
Reconsideration
Plaintiff moves for reconsideration
of a September 2018 order of the Court adopting the Judicial Referee’s finding
that the Reciprocal Easement Agreement entered into by the derivative party and
105 LR, LLC, an entity owned and controlled by the derivative defendants, was
“fair and reasonable” to the member investors of 123 Los Robles LLC.
Plaintiff cites no statutory basis
for this motion in his opening brief and devotes no space to explaining the
criteria for a motion for consideration, and it is therefore perhaps not
surprising that Defendant assumed that it was brought under CCP § 1008(a). In
reply, for the first time, Plaintiff indicates that he intended to bring the
motion under CCP § 1008(b) and (c). CCP
§ 1008(c) provides only that the Court may reconsider its prior orders “on its
own motion,” and therefore that subsection is inapplicable where, as here, a
party has brought a motion for reconsideration.
CCP § 1008 provides, in relevant
part:
(b) A party who originally
made an application for an order which was refused in whole or part, or granted
conditionally or on terms, may make a subsequent
application for the same order upon new
or different facts, circumstances, or law, in which case it shall be shown by affidavit what application was
made before, when and to what judge, what order or decisions were made, and
what new or different facts, circumstances, or law are claimed to be shown.
For a failure to comply with this subdivision, any order made on a subsequent
application may be revoked or set aside on ex parte motion.
(CCP § 1008(b) (bold emphasis added).)
In connection with a motion for
reconsideration, there must be “a satisfactory explanation for failing to
provide the evidence earlier, which can only be described as a strict
requirement of diligence.” (Garcia v.
Hejmadi (1997) 58 Cal.App.4th 674, 690; see
also Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658 [“With
regard to new facts, ‘the party seeking reconsideration must provide not only
new evidence but also a satisfactory explanation for the failure to produce
that evidence at an earlier time.’”].)
Here, Plaintiff argues that the
“new or different . . . circumstances” justifying reconsideration arose in
December 2019, when Defendant “designated several expert witnesses on the
propriety of the Reciprocal Easement Agreement.” (Motion, at p. 2.) Plaintiff
argues that he should be able to argue that the Reciprocal Easement Agreement
was not “fair and reasonable” if Defendant plans to “defend the Breach of
Fiduciary Duty – Lot Tie Agreement with facts that can only be attributed to
the Reciprocal Easement Agreement.” (Ibid.)
This is not, however, a “changed circumstance” that would have led the Court to
reach a different decision regarding the Reciprocal Easement Agreement. Moreover,
Defendant has indicated that its designated expert, Keith Strohl, would be
testifying regarding the Lot-Tie Agreement, not the Reciprocal Easement
Agreement. The Court’s 2018 ruling is clear in adopting the Referee’s finding
on the Reciprocal Easement Agreement. (Final Ruling, 9/17/18, at p. 5.) It is
also clear regarding which issues will be tried in Court, including whether the
Lot-Tie Agreement was fair and reasonable. (Ibid.)
The Court does not intend to retry issues that have already been decided.
Other than Defendant’s expert
witness designation, Plaintiff points to no “new or different facts,
circumstances, or law” that would justify reconsideration. Plaintiff’s other
arguments either were raised or could have been raised back in 2018. For
example, Plaintiff argues that the “Judicial Referee’s finding that the garages
under the Burton and the Campbell building were ‘spacious and elegant’
misunderstands the ‘reciprocal’ part of the Reciprocal Easement Agreement in
that the Campbell tenants must access the underground parking garage of the
Burton to exit while the Burton tenants have no legal access to the Campbell
garage; and if the Burton garage is spacious and elegant then defendants must
‘reciprocate’ with something of value that is equal to a 2 level spacious and
elegant garage – defendants didn’t even come close to this required proof.”
(Motion, at p. 2.) This is not new information, and Plaintiff either raised or
could have raised this argument in 2018. (See,
e.g., Plaintiff’s Bench Brief Re: Tentative Ruling, 09/04/18, at p. 8 [“The
Burton tenants had no right (and no need) to go under The Campbell; only The
Campbell tenants had the right to go under The Burton.”].)
In addition, as Defendant notes,
Plaintiff did not comply with the procedural requirements of CCP § 1008. The
subsection on which Plaintiff purports to rely requires the moving party to
show “by affidavit what application
was made before, when and to what judge, what order or decisions were made, and
what new or different facts, circumstances, or law are claimed to be shown.”
(CCP § 1008(b) (bold emphasis added).) The Declaration of Bruce Altschuld
submitted with this motion addresses none of those required issues.
Thus, Plaintiff has not presented
any new or different facts, law or circumstances which were not previously
considered by the Court in issuing its September 17, 2018 ruling. Accordingly,
the motion for reconsideration is DENIED.
Moving party
to give notice, unless waived.
IT IS SO ORDERED.
Dated: February 10,
2020 ___________________________________
Randolph
M. Hammock
Judge
of the Superior Court
Any
party may submit on the tentative ruling by contacting the courtroom via
email at Smcdept47@lacourt.org