On 01/15/2015 ANDREA LOMBARDI filed a Property - Other Real Property lawsuit against RONALD F LOMBARDI AND KATHLEEN A LOMBARDI. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are SUZANNE G. BRUGUERA and MONICA BACHNER. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
SUZANNE G. BRUGUERA
DOES 1 THROUGH 50
LOMBARDI ANDREW J.
LOMBARDI CHRISTOPHER E.
LOMBARDI EUGENE T.
LOMBARDI JONATHAN J.
LOMBARDI NICHOLAS J.
RONALD F. LOMBARDI AND KATHLEEN A.
UM CAPITAL LLC
LOMBARDI SANDRA S.
LOMBARDI RONALD F.
LOMBARDI KATHLEEN A.
LOMBARDI AS TRUSTEE OF THE LOMBARDI FAMILY TRUST
LOMBARDI KATHELEEN A.
LOMBARDI RONALD F.
COSTELL & CORNELIUS LAW CORPORATION
JAURIGUE MICHAEL J. ESQ.
NORIEGA ROBERT J. LAW OFFICES OF
MARX DARIN C ESQ.
MCFARLIN TIMOTHY GEORGE
MARX DARIN C. ESQ.
MCDUFFIE SARA MARIE ESQ.
1/25/2018: NOTICE OF MOTION AND MOTION OF PLAINTIFF ANDREA LOMBARDI, AS TRUSTEE OF THE ANDREA LOMBARDI REVOCABLE TRUST DATED FEBRUARY 11, 2003, FOR LEAVE TO FILE FIRST AMENDED COMPLAINT; ETC.
4/10/2018: SUBSTITUTION OF ATTORNEY
10/2/2018: PLAINTIFF AND CROSS-DEFENDANT ANDREA LOMBARDI'S NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF CROSS-COMPLAINT; ETC.
10/25/2018: Minute Order
4/9/2015: NOTICE OF CONTINUANCE OF CASE MANAGEMENT CONFERENCE
7/15/2015: ORDER FOR PUBLICATION
10/1/2015: SUBSTITUTION OF ATTORNEY
2/5/2016: PLAINTIFF'S NOTICE OF LODGING IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION
5/11/2016: PLAINTIFF'S SUPPLEMENTAL BRIEF IN SUPPORT OF HER MOTION FOR SUMMARY ADJUDICATION AND MOTION FOR APPOINTMENT OF KEVIN SINGER AS REFEREE; DECLARATION OF JEFFREY LEE COSTELL TN SUPPORT THEREOF
9/9/2016: PLAINTIFF'S EX PARTE APPLICATION FOR AN ORDER (1) CONFIRMING THAT THE DISCOVERY MOTION CUTOFF IS CONTINUED TO JANUARY 9, 2017 IN ACCORDANCE WITH THE CURRENT JANUARY 23, 2017 TRIAL DATE, AND ETC.
9/21/2016: PLAINTIFF'S REPLY TO DEFENDANTS' OPPOSITION TO MOTION FOR BIFURCATION OF TRIAL; ETC.
12/29/2016: NOTICE RE: CONTINUANCE OF HEARING
2/1/2017: PLAINTIFF'S WITNESS LIST
4/14/2017: Minute Order
5/8/2017: PLAINTIFF'S NOTICE REGARDING DEFENDANTS' OWELTY CLAIMS
5/10/2017: FINAL STATEMENT OF DECISION
5/11/2017: NOTICE OF: (1) STATUS CONFERENCE; (2) FINAL STATUS CONFERENCE; AND (3) TRIAL
10/17/2017: DEFENDANTS ANDREW J. LOMBARDI AND NICHOLAS J. LOMBARDI'S JOINT STATUS UPDATE REPORT
Brief (Superior Court Referees Report for April 2019 and Notice of Intent Pay Referees Fees and Expense); Filed by Kevin singer (Non-Party)Read MoreRead Less
Notice of Ruling; Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
at 08:30 AM in Department 71, Monica Bachner, Presiding; Hearing on Ex Parte Application (for an Order Specially Setting Demurrer to Second Amended Cross-Complaint and Motion for Summary Judgment) - HeldRead MoreRead Less
at 08:30 AM in Department 71, Monica Bachner, Presiding; Hearing on Motion for Attorney Fees - Held - Motion GrantedRead MoreRead Less
Order ([PROPOSED] ORDER GRANTING PLAINTIFF?S EX PARTE APPLICATION); Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
Ruling; Filed by ClerkRead MoreRead Less
Minute Order ( (MOTION OF PLAINTIFF, ANDREA LOMBARDI, FOR ATORNEYS' FEES AND ...)); Filed by ClerkRead MoreRead Less
Ex Parte Application of an Order Specially Setting the Hearing Dates for Demurrer to Second Amended Cross-Complaint and Motion for Summary Judgment; Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
Declaration (SUPPLEMENTAL DECLARATION OF SARA M. MCDUFFIE, ESQ. IN SUPPORT OF ANDREA LOMBARDI'S REPLIES TO THE OPPOSITIONS TO HER MOTION FOR ATTORNEYS' FEES AND COSTS); Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
Objection (PLAINTIFF ANDREA LOMBARDI'S EVIDENTIARY OBJECTIONS TO THE DELCARATION OF EUGENE T. LOMBARDI IN SUPPORT OF DEFENDANTS' OPPOSITION TO ANDREA LOMBARDI'S AMENDED MOTION FOR ATTORNEYS' FEES AND COSTS); Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
NOTICE OF PENDENCY OF ACTIONRead MoreRead Less
Notice of Case Management Conference; Filed by ClerkRead MoreRead Less
Proof of Service (not Summons and Complaint); Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
PROOF OF SERVICE SUMMONSRead MoreRead Less
PROOF OF SERVICE SUMMONSRead MoreRead Less
Proof of Service (not Summons and Complaint); Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
COMPLAINT FOR: (1) PARTITION BY SALE [HASLEY CANYON PROPERTY]; ETCRead MoreRead Less
Summons; Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
SUMMONSRead MoreRead Less
Complaint; Filed by Andrea Lombardi (Plaintiff)Read MoreRead Less
Case Number: BC569553 Hearing Date: June 26, 2020 Dept: 71
Defendants Andrew Lombardi, Nicholas Lombardi, Jonathan Lombardi, Sandra Lombardi, and Eugene Lombardi’s demurrer to the second amended complaint is sustained without leave to amend as to the 5th and 6th causes of action and overruled as to the 11th and 12th causes of action.
Defendants’ motion to strike Prayer ¶36 is denied. Defendants’ motion to strike the request for punitive damages against Lombardi Sons in Prayer ¶20 is moot. Defendants’ motion to strike the request for punitive damages is denied as to Prayer ¶¶20, 27 35 (as to Eugene), 41 (Eugene and Lombardi Sons), and 47 (Eugene and Sandra).
Defendants Ronald F. Lombardi and Kathleen A. Lombardi’s joinders in the demurrer and motion to strike are denied.
Defendants Andrew Lombardi (“Andrew”), Nicholas Lombardi (“Nicholas”), Jonathan Lombardi (“Jonathan”) (collectively, the “Lombardi Sons”), Sandra Lombardi (“Sandra”), and Eugene Lombardi (“Eugene”) (collectively, “Defendants”) demur to the 5th (breach of fiduciary duty), 6th (aiding and abetting breach of fiduciary duty), 11th (fraudulent transfer), 12th (fraudulent transfer) causes of action in the second amended complaint (“SAC”) filed by Plaintiff Andrea Lombardi, as Trustee of the Andrea Lombardi Revocable Trust dated February 11, 2003 (“Plaintiff”). (Notice of Motion, pgs. 1-2.) On February 10, 2020, Defendants Ronald F. Lombardi (“Ronald”) and Kathleen A. Lombardi (“Kathleen”) filed a notice of joinder to Defendants’ demurrer. (2/10/20 Notice of Joinder.)
The Court notes that the 5th and 11th causes of action are only asserted against the Lombardi Sons, Eugene, Ronald, and Kathleen and not Sandra and that the 12th cause of action is only asserted against Eugene and Sandra, and not the Lombardi Sons. In addition, only the 5th and 9th causes of action are asserted against Ronald and Kathleen.
The hearing on the demurrer, motion to strike, and joinders was originally scheduled for March 20, 2020. Defendants filed the demurrer January 30, 2020, Plaintiff filed her opposition on March 9, 2020, and Defendants filed their reply on March 13, 2020. On March 18, 2020, the Court continued the hearing to May 6, 2020, and thereafter to June 26, 2020, due to COVID-19 related orders. (See 3/18/20 Minute Order; 4/21/20 Minute Order.)
Ronald and Kathleen’s 2/10/20 Joinder in the Demurrer is denied. The Joinder does not set forth which causes of action Ronald and Kathleen demur to or the basis for such demurrer. (CRC Rule 3.1320(a), 3.1113(a), (b).) Given that Defendants’ demurrer sets forth arguments relating to the sufficiency of the allegations against Lombardi Sons, Eugene, and Sandra, Ronald and Kathleen’s joinder is insufficient and fails to demonstrate how the arguments as to those defendants would apply to them for the 5th cause of action. In addition, Defendants do not demur to the 9th cause of action.
Defendants’ 1/30/20 request for judicial notice is granted. However, the Court will not take judicial notice of the truth of the matters asserted in the Ruling on Defendants’ Motion for Judgment on the Pleadings (“MJOP”) or Defendants’ MJOP. (D-RJN, Exhs. 1-2.)
Plaintiff’s 6/15/20 request for judicial notice is denied. Plaintiff’s request for judicial notice is untimely, as it was not filed in advance of the originally scheduled hearing date, at which time the motion was fully briefed by the parties. Moreover, Plaintiff’s request for judicial notice of the Interspousal Transfer Grant Deed relates to the 11th and 12th causes of action, which the Court finds to be sufficiently alleged, as discussed below. (P-RJN, Exh. 1.)
By way of procedural background, Plaintiff filed the instant action on January 15, 2015 to obtain a judgment for partition by sale of the two Hasley Canyon Properties, the Ponderosa Property, and the Duntly Property (collectively, the “Partition Properties”) that Plaintiff co-owned as a tenant in common with her family members due to her belief that it was in the best interest of the co-tenancy to sell the properties. (SAC ¶16.) Plaintiff’s original complaint alleged five causes of action: four partition by sale causes of action relating to the four properties and a single cause of action for breach of fiduciary duty against Eugene, Kathleen, and Ronald. On June 1, 2016, the Court entered an Interlocutory Judgment finding that title to the properties vested in Plaintiff, Ronald, and the Lombardi Sons as tenants in common. On February 14, 2017, the Court granted Plaintiff’s motion to bifurcate the 5th (breach of fiduciary duty) cause of action from the remaining counts, and a trial was thereafter held on the method of partition in which the Court ordered the properties be partitioned by sale in its May 17, 2017 Interlocutory Judgment. On March 7, 2018, Plaintiff filed her first amended complaint (“FAC”) alleging eight additional causes of action and adding the Lombardi Sons to the 5th (breach of fiduciary duty) cause of action. On July 16, 2018, the Court denied the motion to strike the FAC filed by Ronald and Kathleen, and joined by Defendants, on the grounds that the moving parties improperly used a motion to strike to attack causes of action for failure to allege sufficient facts or for being otherwise barred as a matter of law, which are the purview of a demurrer, not a motion to strike. Ronald and Kathleen filed their answer on July 31, 2018 and Defendants filed their answer on August 3, 2018. Defendants filed a motion for judgment on the pleadings (“MJOP”) as to the FAC on November 18, 2019. Following the December 17, 2019 hearing on the MJOP, the Court took the matter under submission and on December 19, 2019, issued its Ruling on Submitted Matter. The Court denied the MJOP as to the 5th (as to Eugene only), 7th, 8th, and 13th causes of action. The Court granted the MJOP, with leave to amend, as to the 5th (as to the Lombardi Sons only), 6th, 10th, 11th, and 12th causes of action. On December 26, 2019, Plaintiff filed her SAC, and on January 30, 2020, Defendants filed the instant demurrer.
The Court notes that Defendants do not demur to the 10th (intentional interference with contractual relations) cause of action. In addition, a comparison of the 10th cause of action in the FAC and SAC demonstrates that Plaintiff did not amend this cause of action in the SAC, as the allegations in the two pleadings remain the same. (Compare FAC ¶¶98-103 & SAC ¶¶100-105.) The Court granted Defendants’ MJOP with leave to amend based on Plaintiff’s offer of proof that she alleged other conduct by Eugene, set forth in FAC ¶96, constituted a breach of the Settlement. (See 12/19/19 Ruling on Submitted Matter, pg. 9.)
As a preliminary matter, in addition to demurring to the aforementioned causes of action, Defendants request the Court “reconsider and renew any arguments in Defendants’ previous [MJOP] that were mooted by the Court’s rulings on other issues.” (Demurrer, pg. 10.) The Court denies this request. Defendants fail to set forth what arguments the request the Court reconsider or considered renewed and what arguments were mooted by the Court’s rulings on other issues, and the request is procedurally improper.
Breach of Fiduciary Duty (5th COA) – Lombardi Sons
Defendants assert that the fifth cause of action fails to allege sufficient facts to state a cause of action against the Lombardi Sons for breach of fiduciary duty. (Notice of Demurrer, pg. 3.) “To establish a cause of action for breach of fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary relationship, breach of that duty and damages. [Citations]” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.)
A fiduciary duty is founded upon a special relationship imposed by law or under circumstances in which “confidence is reposed by persons in the integrity of others,” who voluntarily accept the confidence. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1150; see CACI 4100, et seq.) “‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’” (City of Hope Nat'l Med. Ctr. v. Genentech (2008) 43 Cal.4th 375, 386.)
“[B]ecause of ‘[t]he vagueness of the common law definition of the confidential relation that gives rise to a fiduciary duty, and the range of the relationships that can potentially be characterized as fiduciary,’ the ‘essential elements’ have been distilled as follows: ‘1) The vulnerability of one party to the other which 2) results in the empowerment of the stronger party by the weaker which 3) empowerment has been solicited or accepted by the stronger party and 4) prevents the weaker party from effectively protecting itself.’ (Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 272 (“Richelle”).) In short, vulnerability ‘is the necessary predicate of a confidential relation,’ and ‘the law treats [it] as “absolutely essential”’…” (Persson v. Smart Inventions (2005) 125 Cal.App.4th 1141, 1161.)
The Court previously granted the MJOP as to 5th cause of action asserted against the Lombardi Sons on the grounds that Plaintiff did not allege facts establishing that a relationship of trust and confidence existed between her and the Lombardi Sons sufficient to establish a fiduciary duty, and that Plaintiff’s opposition to the MJOP did not identify case law establishing that familial relation alone is sufficient to cause a relationship of “trust and confidence.” (12/19/19 Ruling on Submitted Matter, pg. 4.) The Court noted that the holding in Wilson v. S.L. Rey, Inc. (1993) 17 Cal.App.4th 234 (“Wilson”) suggests Lombardi Sons did not owe Plaintiff a fiduciary duty solely by virtue of their co-tenancy given that they acquired their interests at different time through different interests and given that Plaintiff failed to allege facts suggesting a relationship of trust; however, the Court did not make a dispositive ruling as to whether there were “no fiduciary duties between the parties” given they acquired their interests at different times and through different instruments, as asserted by Defendants. (Demurrer, pgs. 4-5.) In addition, the Court found the FAC sufficiently alleged facts to suggest a breach and damages as to Lombardi Sons. (12/19/19 Ruling on Submitted Matter, pgs. 4-6.)
Plaintiff’s amended allegations assert the following: (1) Plaintiff and Lombardi Sons owned the Properties with Ronald and Kathleen as tenants in common; (2) on information and belief, Lombardi Sons assumed Eugene’s fiduciary duties with respect to the Properties; (3) the Properties have been owned by members of the Lombardi Family for decades with the express understanding that they were to be used for the common benefit of family members; (4) Plaintiff reposed confidence and trust in the Lombardi Sons (her nephews) with respect to the Properties, namely that they would not impair Plaintiff’s or other cotenants/Lombardi family members interest in the Properties; (5) Lombardi Sons accepted and assumed Plaintiff’s confidence and undertook to act for the benefit of Plaintiff’s and the Lombardi Family’s interest in the Properties. (SAC ¶69.)
Plaintiff’s amended allegations are insufficient to allege the existence of a fiduciary duty between Lombardi Sons and Plaintiff with respect to the Properties. Plaintiff’s allegation that a “relationship of trust and confidence” existed between Lombardi Sons and Plaintiff is based only on their familial relationship and the ownership of the Properties by the Lombardi Family for decades with the understanding that they were to be used for the benefit of family members. (SAC ¶69.) However, familial relation alone is not sufficient to establish a confidential fiduciary relationship. (Estate of Lingehfeher (1952) 38 Cal.2d 571, 585 [“Consanguinity of itself does not create a fiduciary relationship.”].) In addition, allegations that members of the family owned the Properties for decades with the express understanding that they were to be used for the common benefit of family members are conclusory as to the Lombardi Sons’ understanding of such an agreement and do not establish a confidential or fiduciary relationship between the parties. (SAC ¶69.)
Plaintiff alleged that the Lombardi Sons and Plaintiff were cotenants of the Properties; however, for such allegations to establish a fiduciary relationship, Plaintiff must also allege the existence of a relationship of trust and confidence between Plaintiff and the Lombardi Sons. (See Wilson at 243 [“But where, as here, cotenants acquire their interests at different times through different instruments, and no relationship of trust and confidence exists between them, then no fiduciary relationship can be found to exist…” (Emphasis Added)].) Plaintiff has not alleged facts suggesting the existence of a relationship of trust and confidence between her and the Lombardi Sons. Specifically, Plaintiff has not alleged facts suggesting the four elements of a confidential relationship required in Richelle exist between Plaintiff and Lombardi Sons, namely, facts suggesting Plaintiff was vulnerable to the Lombardi Sons which resulted in the empowerment of the Lombardi Sons by Plaintiff, which empowerment was solicited or accepted by Lombardi Sons and prevented Plaintiff from effectively protecting herself. (Richelle, supra, at 272.) Plaintiff did not alleged facts suggesting the necessary element of her vulnerability to the Lombardi Sons to establish a confidential relationship to support the existence of a fiduciary duty between Lombardi Sons and Plaintiff. (Reply, pgs. 3-5.)
Plaintiff bears the burden of proving there is a reasonable possibility of amendment. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) While Plaintiff requests leave to amend her pleading to the extent the Court sustains the demurrer in any respect, Plaintiff does not address how the defects of the SAC can be cured via amendment. (Opposition, pgs. 12-13.) Accordingly, Plaintiff has not met her burden.
Based on the foregoing, Defendants’ demurrer as to the 5th cause of action is sustained without leave to amend.
Aiding and Abetting Breach of Fiduciary Duty (6th COA) – Eugene
“California has adopted the common law rule for subjecting a defendant to liability for aiding and abetting a tort. Liability may... be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person.” (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 744.)
Plaintiff’s aiding and abetting cause of action is still based on allegations that Eugene knew the Lombardi Sons were committing or going to commit breaches of fiduciary duties that they owed to Plaintiff and that Eugene gave the Lombardi Sons substantial assistance and/or encouragement in connection with their breaches of fiduciary duties. (SAC ¶¶76-77.)
Defendants argue that Plaintiff’s failure amend the allegations of the cause of action makes the Court’s ruling granting the MJOP as to that cause of action final, and that the demurrer should be sustained on those grounds. (Demurrer, pg. 5.) The Court granted the MJOP as to the 6th cause of action on the grounds that Plaintiff failed to allege the existence of a fiduciary duty between Plaintiff and Lombardi Sons in support of her 5th cause of action. However, as discussed above, Plaintiff still fails to sufficiently allege the existence of a fiduciary duty between her and the Lombardi Sons, and as such, has failed to allege sufficient facts to support the instant cause of action.
Plaintiff bears the burden of proving there is a reasonable possibility of amendment and, as discussed above, Plaintiff has not met her burden.
Based on the foregoing, Defendants’ demurrer as to the 6th cause of action is sustained without leave to amend.
Fraudulent Transfer (11th COA) – Eugene & Lombardi Sons
“A fraudulent conveyance claim is set forth in the Uniform Fraudulent Transfer Act (UFTA), which is codified in Civil Code section 3439 et seq. ‘A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.’ [Citation] A transfer under the UFTA is defined as ‘every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset…, and includes payment of money, release, lease, and creation of a lien or other encumbrance.’ [Citation] ‘A transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay or defraud any creditor [actual fraudulent transfer], or (2) without receiving reasonably equivalent value in return [constructive fraudulent transfer], and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]’ [Citations]” (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648 (Emphasis Added).) (See also Civil Code §§3439.01, 3439.04, 3439.05.)
Civil Code §§3439.01(b), (c), (e) define key terms for their use in the UFTA. First, a creditor is, “a person that has a claim… of a debtor.” Second, a debtor is a person who is liable on a claim.” Finally, a claim is, “a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”
Plaintiff’s fraudulent transfer cause of action is based on the following amended allegations: (1) Eugene executed deeds transferring his interests in the Partition Properties to the Lombardi Sons, without reasonably equivalent value or consideration in exchange, on or about December 31, 2012; (2) that Eugene did not record the deeds reflecting these transfers until August 12, 2015 (Hasley Canyon Property), September 3, 2013, and September 3, 2013, (Ponderosa and Duntley Properties); (3) that Plaintiff is a creditor of Eugene based on her claims against him in the instant action involving Eugene’s breach of fiduciary duties owed to Plaintiff, Eugene’s actions causing a diminution in value of the Properties, and Eugene’s mismanagement of the Properties including his hindering the parties’ ability to sell the Properties in 2004, 2011, and 2015; (4) that Eugene transferred his interests in the Properties with the intent to hinder, delay, and/or defraud his creditors, including Plaintiff; and (5) that the transfer of interests in the Partition Properties depleted Eugene’s assets such that he was rendered insolvent and unable to pay his debts as they became due. (SAC ¶¶107-122.) The Court notes that Plaintiff filed her original complaint in the instant action on January 15, 2015.
The Court previously granted Defendants’ MJOP as to the 11th cause of action on the grounds that Plaintiff failed to allege sufficient facts to establish that she was a “creditor” for the purpose of her fraudulent transfer cause of action. (12/19/20 Ruling on Submitted Matter, pg. 11.)
Plaintiff’s amended allegations are sufficient, for the purposes of a demurrer to state a cause of action of fraudulent transfer against Eugene and the Lombardi Sons. The Court notes that Plaintiff’s allegations that Eugene transferred the Properties with intent to prevent Plaintiff and creditors to reach that asset are conclusory and not based on facts; especially given that the allegations still do not make clear how Eugene had such intent in 2012 without alleging facts as to when his knowledge of Plaintiff’s claims against him would have arisen, and if that would have been before 2012, given Plaintiff did not file the instant action until 2015. However, Plaintiff did allege sufficient facts, for the purposes of a demurrer, to suggest that Eugene transferred the Properties “without receiving reasonably equivalent value in return, and… [that Eugene] … reasonably should have believed, that he… would incur debts beyond his… ability to pay as they became due. (Kirkeby v. Superior Court, supra, 33 Cal.4th at 648.) Plaintiff’s amended pleadings suggest that while she did not become a creditor until after Eugene transferred the properties in 2012, given that he had allegedly breached his fiduciary duties and mishandled the properties prior to this date, he reasonably should have believed that he would soon incur debts beyond his ability to pay as they became due, and therefore, he transferred his assets to his sons such that they could not be reached. As noted above, a transfer can be fraudulent as to a creditor whether it is made before or after the creditor’s claim arose. As such, Plaintiff’s allegations are sufficient to state a cause of action for fraudulent transfer notwithstanding the fact Plaintiff’s claims against Eugene may have arisen after the transfer.
In its prior ruling, the Court addressed the sufficiency of Plaintiff’s allegations that Eugene had the requisite intent of avoiding Plaintiff’s claims against him asserted in the current lawsuit, when he transferred the Properties to conclude that Plaintiff’s conclusory assertion that she became a creditor prior to the December 31, 2012 transfer was unsupported. However, Plaintiff’s amended allegations suggest that while she may have become a creditor after the transfer, Eugene made the transfer knowing, or when he should have known, that he was about to incur debts beyond his ability to pay them.
Based on the foregoing, Defendants’ demurrer as to the 11th cause of action is overruled.
Fraudulent Transfer (12th COA) – Eugene & Sandra
Plaintiff’s fraudulent transfer cause of action against Eugene and Sandra is based on the following allegations: (1) on August 8, 2008, Eugene executed an Interspousal Grant Deed transferring his interest in the Manchester Property, real property Eugene and Sandra had acquired as joint tenants in 1985, to Sandra as her sole and separate property; (2) Defendants concealed the Deed until it was recorded seven years later in May 2015; (3) Plaintiff is a creditor of Eugene because of her claims against him for breach of fiduciary duty for his actions with respect to the Properties, mismanagement of the Properties, and hindering the parties’ ability to sell the Properties to viable third party purchasers in 2004, 2011 and 2015; (4) Eugene’s transfer of the Manchester Property was made without reasonably equivalent value being exchanged and with the intent to hinder, delay and/or defraud Eugene’s creditors; (5) the transfer depleted Eugene’s assets rendering him insolvent; (6) on information and belief, Sandra received Eugene’s interest in the Manchester Property with knowledge that he intended to hinder and defraud creditors; and (7) after Eugene executed the interspousal deed, he continued residing at the Manchester Property. (SAC ¶¶124-136.)
The Court previously granted the MJOP as to this cause of action for Plaintiff’s failure to allege facts to support the conclusory allegation that she was a creditor of Eugene’s since 2008. As with her other fraudulent transfer cause of action, Plaintiff’s amended allegations and opposition suggest she is no longer alleging that she was a creditor of Eugene’s in/prior to 2008, and that instead she became a creditor after the transfer based on claims arising in the instant lawsuit. However, Plaintiff must still allege facts suggesting Eugene made the transfer, “without receiving reasonably equivalent value in return and… [when he] reasonably should have believed, that he… would incur debts beyond his… ability to pay as they became due.” Plaintiff’s allegations that Eugene continued living in the property after the transfer and that the transfer depleted his assets to the point where he is unable to pay debts owed suggests that he made the 2008 transfer knowing or when he should have known he would incur debts beyond his ability to pay them.
Based on the foregoing, Defendants’ demurrer as to the 12th cause of action is overruled.
Defendants’ demurrer is sustained without leave to amend as to the 5th and 6th causes of action and overruled as to the 11th and 12th causes of action.
B. Motion to Strike
Defendants move to strike portions of Plaintiff’s SAC. The Court notes that Defendants’ Notice of Motion sets forth a number of allegations sought to be struck, Nos. 1-22, and in connection with each, refers to the specific paragraph and line numbers that correspond to the allegations described. It appears the Notice of Motion includes some typos and/or incorrect references, and as such, for clarity, the paragraphs noted below reflect the paragraph number of the requests for punitive damages and/or relevant allegations as set forth in the SAC based on the SAC’s numeration.
First, in Nos 1-17, Defendants move to strike the following factual allegations that Defendants assert are irrelevant or immaterial: SAC ¶¶70(a),(b),(k),(l),(n),(q),(s),(t); 72(d),(h),(i),(l),(m),(n); 83(g),(h). (Notice of Motion, pgs. 1-3.) In Nos. 18-22, Defendants move to strike the allegations seeking an award for punitive damages from the Prayer of the SAC: Prayer ¶20 [5th (breach of fiduciary duty) COA against Eugene and Lombardi Sons], ¶27 [7th (intentional interference with prospective economic relations (“IIPER”)) COA against Eugene], ¶35 [10th (intentional interference with contractual relations (“IICR”)) COA against Eugene], ¶41 [11th (fraudulent transfer) COA against Eugene and Lombardi Sons], and ¶47 [12th (fraudulent transfer) COA against Eugene and Sandra]. (Notice of Motion, pgs. 3-4.) Finally, in No. 23, Defendants move to strike allegations seeking to execute a judgment that Defendants assert is impossible [SAC Prayer ¶36]. (Notice of Motion, pg. 4.) C.C.P. §§435, 436.)
Kathleen and Ronald’s 2/10/20 Joinder in the Motion to Strike is denied. The Joinder does not set forth which allegations Ronald and Kathleen seek to strike, or the underlying grounds. (CRC Rule 3.1322(a), 3.1113(a), (b).)
As a preliminary matter, Defendants withdrew their motion to strike Nos. 1-17 from the SAC; as such the Court does not address Defendants’ argument as to those allegations. (Reply, pg. 8.) In addition, while Defendants’ Notice of Motion seeks to strike SAC Prayer ¶36 [No. 23: allegations seeking to execute a judgment and order setting aside conveyance(s) in connection with the 11th COA], the Motion and Reply make no argument in reference to this allegation. As such, the Court denies the motion to strike ¶36 of the Prayer as unsupported. (See Opposition, pg. 4.) Finally, in light of the Court’s ruling sustaining Defendants’ demurrer to the 5th cause of action as to the Lombardi Sons and the 6th cause of action as to Eugene, Defendants’ motion to strike Plaintiff’s request for punitive damages in connection with these causes of action as to these defendants is moot. The Court notes Defendants did not move to strike the request for punitive damages in connection with the 6th cause of action in Prayer ¶24. The Court also notes that in light of its 12/19/19 ruling denying Defendants’ MJOP on the 5th cause of action as to Eugene only, the 5th cause of action, and its corresponding request for punitive damages in the prayer of the SAC, is still operative as to Eugene.
Based on the foregoing, Defendants’ motion to strike Prayer ¶36 is denied. In addition, Defendants’ motion to strike Prayer ¶20 as to the Lombardi Sons is moot.
Accordingly, the only allegations that remain at issue in Defendants’ motion to strike are the requests for punitive damages in Prayer ¶¶20 (as to Eugene), 27, 35, 41, and 47, discussed below.
Civil Code §3294(a) provides, as follows: “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”
“‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civil Code §3294(c)(1)-(3).)
“[A] motion to strike may lie where the facts alleged do not rise to the level of ‘malice, fraud or oppression’ required to support a punitive damages award.” (Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2019) ¶¶7:185, citing Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63.) “[However,] conclusory allegations will not be stricken where they are supported by other, factual allegations in the complaint… [For example, an allegation] that defendant was guilty of ‘oppression, fraud and malice’ could not be stricken where the complaint contained sufficient facts to support such allegation.” (Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2019) ¶¶7:181.)
Defendants argue that the allegations of the SAC do not support a claim for punitive or exemplary damages and assert that Plaintiff’s request for punitive damages is based on the conclusory allegation that Defendants acted in a “fraudulent, outrageous, malicious and/or oppressive manner.” (Motion, pgs. 4-5.)
In opposition, Plaintiff argues that the SAC alleges numerous facts showing “Defendants’ acts and omissions amount to fraud and a willful disregard of Plaintiff’s rights,” entitling Plaintiff to punitive damages. (Opposition, pg. 2.) Specifically, Plaintiff cites to her general allegations that Defendants engaged in a pattern of excluding Plaintiff from matters concerning the properties, that Defendants ignored Plaintiff’s opinions regarding the properties’ disposition, that Defendants rejected offers to purchase the properties, and that Eugene “waged an ongoing war” against Plaintiff to retain control of the properties and scuttle efforts to market and sell them. (Opposition, pg. 2, citing SAC ¶¶15, 16.) Plaintiff also cites to allegations supporting her 5th (breach of fiduciary duty) cause of action, namely, that “Defendants” excluded Plaintiff from participating in decisions regarding the properties, denied Plaintiff access to the properties, fraudulently concealed and misrepresented that Defendants executed deeds transferring interests in the properties, failed to disclose the intent of their challenge to the iStar development, excluded Plaintiff from their dealings with iStar, and disregarded Plaintiff’s wishes with respect to the properties. (Opposition, pgs. 2-3; citing SAC ¶¶70 [Eugene], 72 [moot, as this pertains to Lombardi Sons].) Plaintiff cites to allegations supporting her 7th (IIPER) cause of action, that Eugene falsely held himself out to Plaintiff and third parties as the owner of the Hasley Canyon properties after transferring his property interests to Lombardi Sons so that Eugene could disrupt the sale of the Hasley Canyon Properties under false pretenses. (Opposition, pg. 3, citing SAC ¶83.) Finally, Plaintiff cites to allegations in support of her 11th and 12th (fraudulent transfer) causes of action, that Eugene transferred his interests in the certain properties to Lombardi Sons and his wife to make it difficult or impossible for his creditors, including Plaintiff, to collect payment. (Opposition, pg. 3; citing SAC ¶¶116, 132.)
Prayer ¶¶20, 27 & 35 (5th, 7th & 10th COAs, only as to Eugene)
Plaintiff’s factual allegations are sufficient to support her request for punitive damages in connection with the 5th, 7th and 10th causes of action. The allegations that Eugene concealed the transfer of his interests in the properties to the Lombardi Sons, are sufficient allegations for an award of punitive damages. (See SAC ¶66-68, 70(j).)
Based on the foregoing, Defendants’ motion to strike the request for punitive damages in Prayer ¶¶20, 27 and 35 as to Eugene is denied.
Prayer ¶41 (11th COA – Eugene & Lombardi Sons) & ¶47 (12th COA – Eugene & Sandra)
The 11th and 12th causes of action are based in fraud. In support of her 11th cause of action, Plaintiff alleged that Eugene fraudulently transferred property interests to Lombardi Sons with the intent of hiding assets from his creditors, including Plaintiff. (SAC ¶116.) Similarly, Plaintiff’s 12th cause of action is based on allegations that Eugene fraudulently transferred property interests to Sandra with the intent of hiding assets from his creditors, including Plaintiff. (SAC ¶132.) As to all properties, Plaintiff also alleged the deeds were transferred without reasonably equivalent value or consideration in exchange suggesting the Lombardi Sons and Sandra participated in fraud. (SAC ¶¶112, 128.)
Based on the foregoing, Defendants’ motion to strike the request for punitive damages in Prayer ¶¶41 and 47 is denied as to Eugene, the Lombardi Sons and Sandra.
Defendants’ motion to strike Prayer ¶36 is denied. Defendants’ motion to strike the request for punitive damages against Lombardi Sons in Prayer ¶20 is moot. Defendants’ motion to strike the request for punitive damages is denied as to Prayer ¶¶20, 27, 35 (as to Eugene), 41 (as to Eugene and Lombardi Sons), and 47 (as to Eugene and Sandra).
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