On 10/25/2016 AMTAX HOLDINGS 2001 J LLC filed a Property - Other Real Property lawsuit against PRESERVATION PROPERTIES LLC ET. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is RICHARD E. RICO. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
RICHARD E. RICO
AMTAX HOLDINGS 2001-J LLC
PRESERVATION PROPERTIES LLC
PACIFIC HOUSING INC.
WESTERN AMERICAN PROPERTIES LLC
PRESERVATION LA BREA LLC.
PRESERVATION LA BREA L.P.
SQUIER PROPERTIES LLC
CORRIDOR ECONOMIC DEVELOPMENT CORPORATION
PRESERVATION GREENFAIR L.P.
WILLIAMS MARC S. ESQ.
TORAL TODD CHRISTIAN ESQ.
BOYDSTON BRIAN D.
QUIGLEY EDWARD F. ESQ.
3/28/2018: DECLARATION OF BENJAMIN J. BRYSACZ, ESQ. IN SUPPORT OF PLAINTIFFS' MOTION TO QUASH DEFENDANTS' DEPOSITION SUBPOENAS FOR BUSINESS RECORDS TO CITI COMMUNITY CAPITAL AND CITIGROPU, INC. OR ALTERNATIVELY
3/28/2018: SEPARATE STATEMENT OF ITEMS IN DISPUTE IN SUPPORT OF PLAINTIFFS' MOTION TO QUASH DEFENDANTS' DEPOSITION SUBPOENAS FOR BUSINESS RECORDS TO CITI COMMUNITY CAPITAL AND CITIGROUP, INC. OR, ALTERNATIVELY,
4/13/2018: PLAINTIFFS' AND CROSS-DEFENDANTS' NOTICE OF MOTION AND MOTION TO COMPEL FURTHER RESPONSES TO DISCOVERY REQUESTS AND MOTION FOR MONETARY SANCTIONS AGAINST DEFENDANTS
4/13/2018: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' AND CROSS- DEFENDANTS' MOTION TO COMPEL FURTHER RESPONSES TO DISCOVERY REQUESTS AND MOTION FOR MONETARY SANCTIONS AGAINST DEFENDANTS
4/30/2018: ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE
4/30/2018: Minute Order
6/19/2018: STIPULATION AND PROTECTIVE ORDER - CONFIDENTIAL DESIGNATION ONLY
3/22/2019: Motion to Compel Further Discovery Responses
5/6/2019: Proof of Service by Mail
11/4/2016: NOTICE OF RECORDING (CAL. CODE CIV. PRO. 405.22]
11/8/2016: Minute Order
12/1/2016: CROSS-COMPLAINT FOR: (1) DISASSOCIATION OF LIMITED PARTNER; ETC
2/14/2017: REQUEST FOR ENTRY OF DEFAULT
8/30/2017: AMENDED PROOF OF SERVICE
9/28/2017: NOTICE OF DEMURRER AND DEMURRER BY AMTAX HOLDINGS 2001-U, LLC TO SECOND AMENDED CROSS-COMPTAINT OF PRESERVATION LA BREA, L.P. AND PRESERVATION LA BREA, LLC; AND MEMORANDUM OF POINTS AND AUTHORITIES
11/14/2017: OPPOSITION TO AMTAX HOLDINGS 2001-U, LLC'S DEMURRER TO SECOND AMENDED CROSS-COMPLAINT OF PRESERVATION LA BREA, L.P. AND PRESERVATION LA BREA, LLC; ETC
Third Amended Complaint; Filed by Plaintiff/PetitionerRead MoreRead Less
at 08:30 AM in Department 17, Richard E. Rico, Presiding; Hearing on Motion for Summary Adjudication - Not Held - Advanced and VacatedRead MoreRead Less
at 08:30 AM in Department 17, Richard E. Rico, Presiding; Hearing on Motion to Compel Further Discovery Responses - Held - Motion GrantedRead MoreRead Less
Minute Order ( (Hearing on Motion to Compel Further Discovery Responses)); Filed by ClerkRead MoreRead Less
Order Appointing Court Approved Reporter as Official Reporter Pro Tempore; Filed by ClerkRead MoreRead Less
Notice (of Entry of Order); Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
Order (ORDER ON TENTATIVE RULING); Filed by ClerkRead MoreRead Less
Reply (in Support of Motion to Compel Further Responses to Discovery Requests); Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
Proof of Service by Mail; Filed by Preservation La Brea, L.P. (Defendant); Preservation La Brea, LLC. (Defendant); Preservation Properties, LLC (Defendant) et al.Read MoreRead Less
Response (to separate statement); Filed by Preservation La Brea, L.P. (Defendant); Preservation La Brea, LLC. (Defendant); Preservation Properties, LLC (Defendant) et al.Read MoreRead Less
NOTICE OF RECORDING (CAL. CODE CIV. PRO. 405.22]Read MoreRead Less
Notice; Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
Notice of Related Case; Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
NOTICE OF RELATED CASERead MoreRead Less
FIRST AMENDED COMPLAINT FOR: (1) BREACH OF WRITTEN CONTRACT; ETC.Read MoreRead Less
Complaint ((1st)); Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
First Amended Complaint; Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
SUMMONSRead MoreRead Less
COMPLAINT FOR: (1) BREACH OF WRITTEN CONTRACT; ETCRead MoreRead Less
Complaint (Amended: 2016-11-01); Filed by Amtax Holdings 2001-J, LLC (Plaintiff)Read MoreRead Less
Case Number: BC638420 Hearing Date: October 20, 2020 Dept: 17
Superior Court of California
County of Los Angeles
AMTAX HOLDINGS 2001-J, LLC, et al.
PRESERVATION PROPERTIES, LLC, et al.
Case No.: BC638420
(Consolidated With: BC638505)
Hearing Date: October 20, 2020
Plaintiffs’ motion to compel further responses is GRANTED. Defendants are ordered to produce all discoverable Section 7.4.I communications and all discoverable attorney-client communications in keeping with this ruling and this Court’s 5/17/19 Order.
On October 1, 2018, Amtax Holdings 2001-U, LLC (Amtax U) filed a third amended complaint (TAC) against Preservation La Brea, LLC, Corridor Economic Development Corporation n/k/a Ausar Economic Development Corporation, James Perley, Western American Properties, LLC, Anita Landecker, Squier Properties, David Perel, and Preservation La Brea, LP as a nominal Defendant, alleging: (1) breach of written contract; (2) breach of written contract; (3) breach of implied covenant of good faith; (4) breach of fiduciary duty (directly); and (5) breach of fiduciary duty (indirectly).
On October 1, 2018, Amtax Holdings 2001-J, LLC (Amtax J) filed a third amended complaint (TAC) against Preservation La Brea, LLC, Corridor Economic Development Corporation n/k/a Ausar Economic Development Corporation, James Perley, Western American Properties, LLC, Anita Landecker, Squier Properties, David Perel, and Preservation La Brea, LP as a nominal Defendant, alleging: (1) breach of written contract; (2) breach of written contract; (3) breach of implied covenant of good faith; (4) breach of fiduciary duty (directly); (5) breach of fiduciary duty (indirectly); (6) declaratory relief; (7) judicial dissolution; and (8) foreclosure.
Defendants/Cross Complainants Preservation La Brea, LP and Preservation La Brea LLC filed a second amended cross-complaint (SAXC) against Amtax U and Amtax J (collectively, Amtax). The SAXC asserts claims for: (1) disassociation of limited partner; (2) breach of contract; (3) breach of the implied covenant of good faith and fair dealing; (4) intentional interference with prospective economic damage; (5) intentional interference with contract; (6) declaratory relief—approval of financing; and (7) declaratory relief—termination.
The Partnerships were formed in October 2000. (TAC-J ¶ 12.) The PLBLP Agreement was amended April 20, 2001 and remains operative. (TAC-U ¶ 16.) The PGLP Agreement was amended June 30, 2001 and remains operative. (TAC-J ¶ 17.) Each of the Partnerships operates an apartment complex that qualifies for low-income housing tax credits as provided in Section 42 of the Internal Revenue Code, with the tax credits distributed to the partners of the Partnership according to their percentage equity interests. (SAXC ¶ 13.) Amtax is the sole limited partner in each Partnership, and it owns a 99.99% interest in each Partnership. (TAC-U ¶ 18; TAC-J ¶ 19.) Thus, under the terms of the agreements, virtually all the tax credits go to Amtax as the sole investor-limited partner. The Administrative General Partners of each Partnership are solely responsible for managing and operating the complexes. (SAXC ¶¶ 14-15.)
The Agreements contain provisions that allow Amtax to leave the Partnerships after the tax credits expired. Specifically, the Agreements allow Amtax to make a request after January 1, 2016 to the General Partners to either (1) sell the property to a third party, or (2) purchase or arrange for a third party to purchase Amtax’s interest in the Partnership for the fair market value of that interest, subject to approval by Amtax. (TAC-J ¶ 24; Agreement, Art. VII, § 7.4 (the “Election Clause”).) Upon receiving that request, the General Partners is to “(1) ‘determine which course of action it desires to utilize’ (i.e., arrange for a sale or purchase), and (2) ‘use its best efforts in order to close the purchase or sale’ within a two-year period.” (TAC-J ¶ 25 (quoting Agreement, Art. VII, § 7.4).)
A separate provision of the Agreements provides that each Partnership may refinance loans or replace Letters of Credit only if it first receives Amtax’s prior written consent. (TAC-J ¶ 29.) The Agreements also explicitly provide that the Administrative General Partners do not have any authority to increase or otherwise refinance any Partnership indebtedness. (TAC-J ¶ 30.)
As of December 2015, there were several debt instruments encumbering the Sacramento Complex, including an irrevocable Letter of Credit set to expire 12/14/16. (SAXC ¶¶ 16-21.) Unless the Letter of Credit was renewed, replaced, or the bond debt refinanced, the trustee for the tax-exempt bonds was required to send out a notice of redemption and draw on the letter of credit before it expired. (SAXC ¶ 21.)
In anticipation of these deadlines, in March 2016, PPLLC (the Administrative General Partner of PGLP) informed Amtax that PPLLC was attempting to obtain replacement financing. (SAXC ¶ 24.) Here, Amtax’s version of the story is that it refused to approve refinancing because refinancing would not have been in the best economic interest of the Partnership. (TAC-U ¶ 42.) Defendants’ version of the story is that, via letter dated May 4, 2016, Amtax refused to approve refinancing unless PPLLC agreed to buyout terms that would allow Amtax to exit the Partnerships. (SAXC ¶ 25.) PPLLC would not agree to this proposal, and as a result Amtax did not approve of any refinancing.
On August 10, 2016, Amtax notified PPLLC that it was exercising its right to dissolve the Partnership, as well as its right under the Election Clause to force a sale of the Complex or a buyout of its interest. (SAXC ¶ 28.) PPLLC elected to buy Amtax’s interest rather than sell the Sacramento Complex. (SAXC ¶ 29.) However, Amtax continues to refuse to approve the refinancing. (SAXC ¶¶ 32-35.) As a result, some of the debt instruments went into default. (SAXC ¶¶ 40-44.) Because no refinancing has occurred, the Partnership cannot meet the Complex’s underlying loan obligations, and as a result is at risk of losing the Sacramento Complex to foreclosure, which would render Defendants’ interest in the Partnerships worthless. (Ibid.)
The discovery process between the parties has a tortured history. The parties are again at an impasse, this time with regard to Defendants’ refusal to produce: (1) Communications relating to Section 7.4I of the parties Limited Partnership Agreements; and (2) Communications relating to “litigation.”
I. Communications relating to Section 7.4.I
Plaintiffs argue that Defendants continue to withhold communications regarding the buy-out provision in the partnership agreement.
This Court’s previous order makes clear that Defendants may only withhold those communications which, “were made wholly in furtherance of Defendants’ interests alone, with no furtherance whatsoever of the interests of the Partnership.” (See 5/17/19 Order.)
Plaintiffs argue that communications between Defendants regarding their exercise of their right under Section 7.4.I concern the interests of both the Partnership and Defendants because “[t]he decision of whether or not to sell each Partnership’s Apartment Complex, is without a doubt, a fundamental matter of each Partnership’s business—each Partnership’s very purpose includes “operating and selling and otherwise disposing of the Apartment Complex.” (Motion, 8: 23-26.) In other words, because Defendants Section 7.4.I communications concern if, and how, the Partnership will be disposed of, the communications necessarily concern the interest of the Partnership.
In opposition, Defendants argue that these communications wholly concern Defendants’ interest because the right to buy out the interests of the limited partners in the Partnership “was given only to [Defendants] and not to the Partnerships, and these communications further only the interest of AGPs.”
The Court is unpersuaded by Defendants’ argument. Given the clear impact that any exercise of the section 7.4.1 right has on the interests of the Partnership, Defendants cannot reasonably contend that such communications were made wholly in furtherance of Defendants’ interests alone.
Defendants are ordered to produce all discoverable Section 7.4.I communications in keeping with this ruling and the 5/17/19 Order.
II. Communications relating to “Litigation”
Plaintiffs argue that Defendants also continue to withhold communications on the basis that they pertain to “litigation,” in violation of the 5/17/19 order.
The 5/17/19 order provided:
[T]o the extent that any post-May 4, 2016 emails contain attorney-client communications that could reasonably be said to further both the interests of the Partnerships and the individual interests of Defendants, Defendants must produce a narrowly-redacted version of the communications. To the extent that any material in the communications furthers both the Partnerships’ interests and Defendants’ individual interests, the material must remain unredacted. If Defendants believe that a responsive attorney-client communication was made wholly in furtherance of Defendants’ interests alone, with no furtherance whatsoever of the interests of the Partnerships, Defendants may produce a privilege log that lists the communication and the reason it is withheld. Defendants are reminded that communications that have been disclosed to third parties are not privileged and may not be withheld on this basis.
Plaintiffs argue that the privilege logs submitted by Defendants make no effort to distinguish between communications which were made between Defendants and Castle Cox wholly to further the interests of the Defendants, and those which were made to further the interests of both Defendants and the Partnership.
In opposition, Defendants do not make entirely clear whether they are contending that the privilege log already includes only those communications which were made wholly to further Defendants’ exclusive interest, or whether they are arguing that they need not disclose communications which were made to further both Defendants’ and the Partnership’s interests.
To be clear, Defendants must disclose any communications which were not made wholly in furtherance of the Defendants interest. As the Court noted in Wortham v. Van Liew v. Superior Court (1987) 188 Cal.App.3d 927, “[t] attorney must divulge all partnership information to all partners.” Plaintiffs are therefore entitled to communications made while Castle Cox continued to represent the Partnerships.
Defendants are ordered to produce all discoverable attorney-client communications in keeping with this ruling and the 5/17/19 Order.
It is so ordered.
Dated: , 2020
Hon. Jon R. Takasugi Judge of the Superior Court
Parties who intend to submit on this tentative must send an email to the court at firstname.lastname@example.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org. If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If all parties to a motion submit, the court will adopt this tentative as the final order. If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.
Due to Covid-19, the court is strongly discouraging in-person appearances. Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk. The court encourages the parties wishing to argue to appear via L.A. Court Connect. For more information, please contact the court clerk at (213) 633-0517. Your understanding during these difficult times is appreciated.
 On February 28, 2019, Amtax dismissed its dissolution cause of action.
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