This case was last updated from Los Angeles County Superior Courts on 09/09/2021 at 00:16:32 (UTC).

AXIS ENTERTAINMENT INC ET AL VS BOB YARI ET AL

Case Summary

On 05/09/2014 AXIS ENTERTAINMENT INC filed a Property - Other Property Fraud lawsuit against BOB YARI. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ERNEST HIROSHIGE, BARBARA A. MEIERS, GREGORY KEOSIAN, DAVID J. COWAN, WILLIAM F. FAHEY and LISA HART COLE. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****5365

  • Filing Date:

    05/09/2014

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Property Fraud

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

ERNEST HIROSHIGE

BARBARA A. MEIERS

GREGORY KEOSIAN

DAVID J. COWAN

WILLIAM F. FAHEY

LISA HART COLE

 

Party Details

Petitioners and Plaintiffs

AXIS ENTERTAINMENT INC.

GRAYSON MICHAEL

MICHALOV ISAAC

Respondents and Defendants

BOB YARI FILMS LLC

BOB YARI INTERNATIONAL LLC

BOB YARI MUSIC LLC

BROWN DENNIS

DAVAND HOLDINGS LLC

DOES 1 - 20

MIMMERMAN WILLIAM

YARI BOB

YARI FILM GROUP LLC

STRATUS FILM COMPANY LLC - DOE 3

YFG SERVICES INC. - DOE 1

BY EQUITIES LLC [DOE 4]

PERSIK PRODUCTIONS INC. - DOE 2

Attorney/Law Firm Details

Petitioner and Plaintiff Attorneys

SMITH MARC ESQ.

SMITH MARC

LEE KATHERINE P.

Respondent and Defendant Attorneys

NAHAI BEHZAD ESQ.

GROSS IRVING M

NAHAI BEHZAD

 

Court Documents

Stipulation - No Order - STIPULATION - NO ORDER EXTENDING TIME TO BRING ACTION TO TRIAL

10/28/2019: Stipulation - No Order - STIPULATION - NO ORDER EXTENDING TIME TO BRING ACTION TO TRIAL

Motion re: - MOTION RE: MOTION FOR JUDGMENT

12/4/2019: Motion re: - MOTION RE: MOTION FOR JUDGMENT

PLAINTIFFS' EX PARTE APPLICATION FOR (1) TERMINATING SANCTIONS AND MONETARY SANCTIONS, OR, IN THE ALTERNATIVE, ISSUE AND EVIDENCE PRECLUSION SANCTIONS, AN ORDER COMPELLING CODE- COMPLIANT RESPONSES AN

5/10/2017: PLAINTIFFS' EX PARTE APPLICATION FOR (1) TERMINATING SANCTIONS AND MONETARY SANCTIONS, OR, IN THE ALTERNATIVE, ISSUE AND EVIDENCE PRECLUSION SANCTIONS, AN ORDER COMPELLING CODE- COMPLIANT RESPONSES AN

SEPARATE STATEMENT IN SUPPORT OF PLAINTIFFS' MOTION FOR TERMINATING SANCTIONS AND MONETARY SANCTIONS, OR, IN THE ALTERNATIVE, ISSUE AND EVIDENCE PRECLUSION SANCTIONS, AN ORDER COMPELLING CODE-COMPLIAN

6/8/2017: SEPARATE STATEMENT IN SUPPORT OF PLAINTIFFS' MOTION FOR TERMINATING SANCTIONS AND MONETARY SANCTIONS, OR, IN THE ALTERNATIVE, ISSUE AND EVIDENCE PRECLUSION SANCTIONS, AN ORDER COMPELLING CODE-COMPLIAN

SUPPLEMENTAL DECLARATION OF JEFFREY LEWISTON IN SUPPORT OF DEFENDANTS' EX PARTE APPLICATION SEEKING ENTRY OF PROPOSED AMENDED PROTECTIVE ORDER; ETC. DECLARATION OF JEFFREY LEWISTON

10/26/2017: SUPPLEMENTAL DECLARATION OF JEFFREY LEWISTON IN SUPPORT OF DEFENDANTS' EX PARTE APPLICATION SEEKING ENTRY OF PROPOSED AMENDED PROTECTIVE ORDER; ETC. DECLARATION OF JEFFREY LEWISTON

PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION TO BIFURCATE EQUITABLE AND LEGAL CLAIMS AND SET PRIORITY FOR TRIAL; MEMORANDUM OF POINTS AND AUTHORITIES

3/21/2018: PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION TO BIFURCATE EQUITABLE AND LEGAL CLAIMS AND SET PRIORITY FOR TRIAL; MEMORANDUM OF POINTS AND AUTHORITIES

Minute Order -

4/20/2018: Minute Order -

NOTICE OF MOTION AND MOTION IN LIMINE NO.7 ETC.

9/14/2018: NOTICE OF MOTION AND MOTION IN LIMINE NO.7 ETC.

JOINT EXHIBIT LIST

9/28/2018: JOINT EXHIBIT LIST

Reply -

10/9/2018: Reply -

Objection - Objection to Plaintiffs' Evidence in Support of its Opposition to Motion to Dismiss

1/18/2019: Objection - Objection to Plaintiffs' Evidence in Support of its Opposition to Motion to Dismiss

Opposition - OPPOSITION TO DEFENDANTS MOTION IN LIMINE NO. 9 FOR AN ORDER EXCLUDING EVIDENCE REFERRING OR RELATING TO BY EQUITIES LLC, A NEVADA LIMITED LIABILITY COMPANY; MEMORANDUM OF POINTS AND AUT

3/29/2019: Opposition - OPPOSITION TO DEFENDANTS MOTION IN LIMINE NO. 9 FOR AN ORDER EXCLUDING EVIDENCE REFERRING OR RELATING TO BY EQUITIES LLC, A NEVADA LIMITED LIABILITY COMPANY; MEMORANDUM OF POINTS AND AUT

 

Docket Entries

  • 10/26/2021
  • Hearing10/26/2021 at 10:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 10/18/2021
  • Hearing10/18/2021 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 08/26/2021
  • DocketNotice of Ruling; Filed by Dennis Brown (Defendant); Persik Productions, Inc., - Doe 2 (Defendant); Stratus Film Company, LLC, - Doe 3 (Defendant) et al.

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  • 08/25/2021
  • Docketat 08:30 AM in Department 61, Gregory Keosian, Presiding; Hearing on Ex Parte Application (FOR AN ORDER SEEKING CLARIFICATION WHETHER THE #21STCV19745 CASE AND THE BC545365 CASE ARE RELATED AND/OR CONSOLIDATED; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF BRANDON P. BROUSSEAU IN SUPPORT THEREOF; [PROPOSED] ORDER) - Held

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  • 08/25/2021
  • DocketMinute Order ( (Hearing on Ex Parte Application FOR AN ORDER SEEKING CLARIFIC...)); Filed by Clerk

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  • 08/24/2021
  • DocketOpposition (to Plaintiffs Ex Parte Application for Clarification Whether 21stcv19745 and Bc545365 Are Related Or Consolidated); Filed by Dennis Brown (Defendant); Persik Productions, Inc., - Doe 2 (Defendant); Stratus Film Company, LLC, - Doe 3 (Defendant) et al.

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  • 08/24/2021
  • DocketEx Parte Application (FOR AN ORDER SEEKING CLARIFICATION WHETHER THE #21STCV19745 CASE AND THE BC545365 CASE ARE RELATED AND/OR CONSOLIDATED; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF BRANDON P. BROUSSEAU IN SUPPORT THEREOF; [PROPOSED] ORDER); Filed by Axis Entertainment, Inc. (Plaintiff); Michael Grayson (Plaintiff); Isaac Michalov (Plaintiff)

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  • 08/17/2021
  • Docketat 08:30 AM in Department 1, David J. Cowan, Presiding; Hearing on Ex Parte Application (Defendants Amended Ex Parte Application to Reconsider Order Referring Action for Reassignment) - Held - Motion Granted

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  • 08/17/2021
  • DocketMinute Order ( (Hearing on Ex Parte Application Defendants Amended Ex Parte A...)); Filed by Clerk

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  • 08/13/2021
  • DocketReply (Reply to Plaintiffs Opposition to Defendants Ex Parte Application to Reconsider Order Referring Action for Reassignment); Filed by Dennis Brown (Defendant); Persik Productions, Inc., - Doe 2 (Defendant); Stratus Film Company, LLC, - Doe 3 (Defendant) et al.

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772 More Docket Entries
  • 06/03/2014
  • DocketPROOF OF SERVICE OF SUMMONS, COMPLAINT, CIVIL CASE COVER SHEET CIVIL CASE COVER SHEET ADDENDUM AND STATEMENT OF LOCATION, NOTICE OF CASE ASSIGNMENT AND VOLUNTARY EFFICIENT LITIGATION STIPULATIONS UPON DEFENDANT BOB YARI FILMS LLC, A CALIFORNIA LIMITED LIA

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  • 06/03/2014
  • DocketPROOF OF SERVICE OF SUMMONS, COMPLAINT, CIVIL CASE COVER SHEET CIVIL CASE COVER SHEET ADDENDUM AND STATEMENT OF LOCATION, NOTICE OF CASE ASSIGNMENT AND VOLUNTARY EFFICIENT LITIGATION STIPULATIONS UPON DEFENDANT BOB YARI, AN INDIVIDUAL

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  • 06/03/2014
  • DocketPROOF OF SERVICE OF SUMMONS, COMPLAINT, CIVIL CASE COVER SHEET, CIVIL CASE COVER SHEET ADDENDUM AND STATEMENT OF LOCATION, NOTICE OF CASE ASSIGNMENT AND VOLUNTARY EFFICIENT LITIGATION STIPULATIONS UPON DEFENDANT WILLIAM IMMERMAN, AN INDIVIDUAL

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  • 06/03/2014
  • DocketPROOF OF SERVICE OF SUMMONS, COMPLAINT, CIVIL CASE COVER SHEET CIVIL CASE COVER SHEET ADDEIIDUM AND STATEMENT OF LOCATION, NOTICE OF CASE ASSIGNMENT AND VOLUNTARY EFFICIENT LITIGATION STIPULATIONS UPON DEFENDANT YARI FILM GROUP, LLC, A CALIFORNIA LIMITED

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  • 06/03/2014
  • DocketPROOF OF SERVICE OF SUMMONS, COMPLAINT, CIVIL CASE COVER SHEET CIVIL CASE COVER SHEET ADDEIIDUM AND STATEMENT OF LOCATION, NOTICE OF CASE ASSIGNMENT AND VOLUNTARY EFFICIENT LITIGATION STIPULATIONS UPON DEFENDANT BOB YARI MUSIC, LLC, A CALIFORNIA LIMITED L

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  • 05/28/2014
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 05/28/2014
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 05/09/2014
  • DocketSUMMONS

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  • 05/09/2014
  • DocketCOMPLAINT FOR: 1. FRAUDULENT TRANSFER; ETC

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  • 05/09/2014
  • DocketComplaint; Filed by Axis Entertainment, Inc. (Plaintiff); Michael Grayson (Plaintiff); Isaac Michalov (Plaintiff)

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Tentative Rulings

b'

Case Number: BC545365 Hearing Date: August 17, 2021 Dept: 1

Tentative\r\nRuling

\r\n\r\n

Judge\r\nDavid J. Cowan

\r\n\r\n

Department\r\n1

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\r\n\r\n
\r\n\r\n
\r\n\r\n

Hearing Date: Tuesday, August 17, 2021

\r\n\r\n

Case Name: Axis\r\nEntertainment, Inc., et al. v. Bob Yari, et al.

\r\n\r\n

Case No.: 21STCV19745 and BC545365

\r\n\r\n

Motion: Reconsideration of\r\nOrders Accepting Peremptory Challenge and Transferring Related Cases

\r\n\r\n

Moving Party: Defendants\r\nYari, et al.

\r\n\r\n

Responding Party: Plaintiffs Axis Entertainment, et al.

\r\n\r\n

Notice: OK

\r\n\r\n
\r\n\r\n
\r\n\r\n
\r\n\r\n

Ruling: The\r\nApplication for Reconsideration of the Order Accepting Peremptory Challenge to\r\nJudge Keosian is GRANTED.

\r\n\r\n

\r\n\r\n

The Application\r\nfor Reconsideration of the Order Transferring BC545365 is DENIED as moot.

\r\n\r\n

\r\n\r\n

Yari\r\nto give notice.

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\r\n\r\n
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\r\n\r\n

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BACKGROUND

\r\n\r\n

On July 14, 2008, Axis\r\nEntertainment, Isaac Michalov and Michael Grayson (“Plaintiffs” herein) filed\r\nthe operative Third Amended Complaint against Syndicate Films International,\r\nLLC ("Syndicate"), David C. Glasser, Michele Tritt-Glasser, Richard\r\nGlasser and Rosalie Glasser (individually and as Trustees of the Richard and\r\nRosalie Glasser Family Trust), and Does 1-20 stating causes of action for\r\nbreach of oral agreement (three counts), breach of the implied covenant of good\r\nfaith and fair dealing (three counts), declaratory relief (five counts), breach\r\nof written contract (two counts), fraudulent misrepresentation, negligent\r\nmisrepresentation, unjust enrichment, slander per se, fraudulent transfer,\r\nconspiracy to defraud, constructive trust (two counts), accounting (three\r\ncounts), unfair competition, and common counts for money due and money had and\r\nreceived (LASC case no. LC077567, the "2007 Action").

\r\n\r\n

On July 13, 2010, the Court entered\r\njudgment in Plaintiffs\' favor against Syndicate.

\r\n\r\n

On January 21, 2015, Plaintiffs filed\r\na First Amended Complaint against Bob Yari, Yari Film Group, LLC, Bob Yari\r\nFilms, LLC, Bob Yari International, LLC, Bob Yari Music, LLC, William Immerman,\r\nDennis Brown, Davand Holdings, LLC and Does 1-20 stating causes of action for fraudulent\r\ntransfer, unjust enrichment, unfair competition, "alter-ego," and\r\ndeclaratory relief (LASC case no. BC545365, the "2014 Action").\r\nPlaintiffs subsequently substituted Does 1 through 4 for YFG Services, Inc.,\r\nPersik Productions, Inc., Stratus Film Company, LLC and BY Equities, LLC. The\r\nFAC alleges a Judgment was entered against Syndicate in favor of Plaintiffs,\r\nwhich has not been satisfied. Plaintiffs allege Syndicate\'s directors and\r\nrelated entities "entered into a conspiracy . . . to defraud Plaintiffs\r\nand deprive them from collection of the SFI Judgment" by\r\n"encumber[ing] the assets of Syndicate Fims so that there would be no\r\nequity from which to satisfy any portion" of the Judgment and thus\r\n"place the assets of Syndicate . . . beyond the reach of creditors, in\r\nparticular, Plaintiffs."

\r\n\r\n

In support of their claims,\r\nincluding the alter ego assertions, Plaintiffs alleged:

\r\n\r\n

"[E]ach and all the Defendants\r\n. . . commingl[ed] assets and liabilities including, but not limited\r\nto, the film libraries of Syndicate; failing to segregate funds of the\r\ncorporate and individual defendants so that Yari, Brown, Immerman and the\r\ncorporate defendants were operating as a single entity; failing to adequately\r\ncapitalize Syndicate Films; failing to have adequate of [sic] corporate assets\r\nand undercapitalizing Syndicate Films; using of Syndicate as a mere shell,\r\ninstrumentality or conduit for the business of the Yari, Brown, Immerman and\r\nthe corporate defendants; trading by Yari, Brown, and Immerman of the assets of\r\nthe corporation as their own single entity; the unauthorized diversion of corporate\r\nfunds or assets for other than corporate uses; failing to maintain minutes or\r\nadequate corporate records; confusing of the books and records of Yari, Brown,\r\nImmerman and the corporate defendants; the identical equitable ownership of\r\nYari, Brown, Immerman and the corporate defendants; the common ownership and\r\ndomination and control of Yari, Brown, and Immerman over the corporate\r\ndefendants; common directors and officers of the Defendants in the responsible\r\nsupervision and management; the sole ownership of all of the stock in the defendant\r\ncorporations by Yari or Yari\'s related persons including Brown and Immerman and\r\ntheir related entities; using the same office or business location by Yari,\r\nBrown, Immerman and the corporate defendants; employing the same employees by\r\nYari, Brown, Immerman and the corporate defendants; the common responsible\r\nownership, management and financial interest of Yari, Brown, Immerman and the\r\ncorporate defendants and Syndicate Films; concealing of business activities of\r\nYari, Brown, and Immerman in their manipulation of the corporate defendants for\r\ntheir personal benefit; disregarding legal formalities and the failing to\r\nmaintain arm\'s length relationships among related corporate defendants; using\r\nof said defendants to procure labor and services from Syndicate Films and the\r\ncorporate defendants for themselves, or entities they own or control; diverting\r\nof assets from the corporate defendants by or to Yari or other related persons\r\nincluding Brown and Immerman or related entities, to the detriment of creditors\r\nincluding Plaintiffs; manipulating assets and liabilities between corporate\r\nentities so as to concentrate the assets in one and the liabilities in another;\r\ncontracting with each other with the intent to avoid performance by use of the\r\ncorporate defendants as a shield against personal liability of Yari, Brown and\r\nImmerman, and the forming and using of the defendants\' corporations to transfer\r\nit to the existing liability of another person or entity." (FAC, para.\r\n41.)

\r\n\r\n

\r\n\r\n

On February 20, 2018, Judge Keosian\r\ngranted summary judgment in favor of Immerman, Brown, Davand Holdings and Bob\r\nYari Music, finding these defendants not liable under an alter ego theory.

\r\n\r\n

On April 11, 2018, Judge Keosian bifurcated\r\ntrial into two phases: (1) determination by bench trial of Axis\'s equitable\r\nclaims for declaratory relief, alter-ego, unjust enrichment and unfair\r\ncompetition and (2) determination by jury trial of the legal claim for\r\nfraudulent transfer.

\r\n\r\n

On November 8, 2019, Syndicate filed\r\nfor Chapter 7 bankruptcy, initiating bankruptcy case No. 2:19-bk-23232-BR (In\r\nre Syndicate Films International, LLC).

\r\n\r\n

On November 17, 2020, after a\r\nbifurcated bench trial on the issue of alter ego liability, Judge Keosian\r\nissued a Final Statement of Decision finding Yari, Brown, Persik Productions,\r\nYFG Services and Stratus Film Company not liable under an alter ego theory. Plaintiffs\r\n"failed to convince" Judge Keosian "that there was such a unity\r\nof interest and ownership between defendants and Syndicate so that the\r\nseparateness of each ceased to exist." It was "clear to th[e] court .\r\n. . that the evidence presented in Plaintiff\'s case in chief does not support a\r\npiercing of the corporate veil." Judge Keosian entered judgment in favor\r\nof those Defendants.

\r\n\r\n

On January 6, 2021, the Syndicate Bankruptcy\r\nTrustee filed in the bankruptcy case a Motion to Approve Compromise with Yari,\r\nBrown, Yari Film Group, Bob Yari Films, Bob Yari International, YFG Services,\r\nPersik Productions and Stratus Film Company of claims pending in the 2014\r\nAction." The Trustee sought to sell the state court causes of action held\r\nby Syndicate against the Yari Parties and Brown to Bob Yari himself for\r\n$20,000.00.

\r\n\r\n

On March 18, 2021, the bankruptcy\r\ncourt granted in part and denied in part the Motion, declining to approve the\r\ncompromise but authorizing the Trustee to "sell, assign and/or transfer to\r\n[Axis, Michalov and Grayson] . . . the bankruptcy estate\'s claims, causes of\r\naction, rights, interests and the State Court Causes of Action . . . against\r\nthe Yari Parties . . . in exchange for" $25,000.00 and "the waiver of\r\nany claim in this bankruptcy case, which includes the immediate withdrawal of .\r\n. . Official Claim No. 3, in the amount of $1,929,315.06, filed by the Axis\r\nParties" in the bankruptcy case.

\r\n\r\n

On May 25, 2021, two months after\r\napproval of the sale of Syndicate’s claims to Plaintiffs, Plaintiffs, as Syndicate\'s\r\nsuccessors in interest, filed a Complaint against Yari, Brown, David Glasser,\r\nPersik Productions, YFG Services, Stratus Film Company, Yari Film Group, Yari\r\nFilm Group Releasing, Bob Yari Films, Bob Yari International, Bob Yari Music,\r\nSchizophrenic Productions, LLC, BY Equities, Davand Holdings and Does 1-100\r\n(LASC case no. 21STCV19745, the "2021 Action"). The Complaint asserts\r\nclaims for breach of fiduciary duty by Yari, Brown and Glasser; claims for\r\naiding and abetting breach of fiduciary duty by Yari, Brown, Glasser and the\r\n"Entity Defendants"; and claims for indemnity, unjust enrichment\r\naccounting and declaratory relief. In particular, Plaintiffs allege Yari, Brown\r\nand David Glasser commingled their personal assets and assets of other business\r\nventures with Syndicate\'s assets, placed their personal interests and their\r\nother business ventures\' interests ahead of Syndicate\'s interests, incorrectly\r\nallocated liabilities and assets, and failed to pursue "claims and avenues\r\nof recovery available to Syndicate necessary to protect Syndicate from its\r\ncreditors." (2021 Complaint, para. 45, 50, 55.) Further, the indemnity\r\naction is expressly predicated upon the Judgment, seeking indemnification in\r\nfavor of Syndicate from the individual and entity defendants to obtain payment\r\non the Judgment.

\r\n\r\n

Notably, the Complaint in the 2021\r\nAction alleges the individual and entity defendants are alter egos of each\r\nother. Plaintiffs allege:

\r\n\r\n

“[E]ach\r\nand all the Defendants . . . commingl[ed] assets and liabilities including, but\r\nnot limited to, the film libraries of Syndicate; failing to segregate funds of\r\nSyndicate from Defendants such that they were operating as a single entity;\r\nusing of Syndicate as a mere shell, instrumentality or conduit for the business\r\nof the Defendants; trading by the Defendants of Syndicate assets as their own\r\nsingle entity; the unauthorized diversion of Syndicate funds or assets for\r\nother than corporate uses; failing to maintain minutes or adequate corporate\r\nrecords; confusing of the books and records of Syndicate with the books and\r\nrecords of Defendants; the common ownership and domination and control of the\r\nDefendants over Syndicate; common directors and officers of the Defendants in\r\nthe responsible supervision and management; the sole ownership of all of the\r\nstock in the Defendants by the Fiduciary Defendants or other Entity Defendants\r\nand their related entities; using the same office or business location by\r\nDefendants and Syndicate; employing the same employees by Defendants and\r\nSyndicate; using the same prior attorney by Defendants and Syndicate; the\r\ncommon responsible ownership, management and financial interest of the\r\nDefendants and Syndicate; concealing of business activities of the Defendants\r\nin their manipulation of the Defendants and Syndicate for their personal\r\nbenefit; disregarding legal formalities and the failing to maintain arm\'s\r\nlength relationships among related Defendants; using of said Defendants to\r\nprocure labor and services from Syndicate for themselves, or entities they own\r\nor control; diverting of assets from Syndicate by or to the Defendants and\r\nrelated entities, to the detriment of Syndicate; manipulating assets and\r\nliabilities between Syndicate so as to concentrate the assets in Defendants and\r\nthe liabilities in Syndicate; contracting with each other with the intent to\r\navoid performance by use of the Entity Defendants as a shield against personal\r\nliability the Fiduciary Defendants, and the forming and using of the Entity\r\nDefendants to transfer liability to another person or entity, including\r\nSyndicate.” (Complaint, para. 31-32.)

\r\n\r\n

\r\n\r\n

On June 25, 2021, Plaintiffs filed a\r\nNotice of Related Case indicating the 2014 and 2021 Actions are related.

\r\n\r\n

On July 8, 2021, the Court related\r\nthe 2021 Action to the 2014 Action and reassigned the former from Judge Maureen\r\nDuffy-Lewis in Department 38 to Judge Keosian in Department 61, wherein the\r\n2014 Action was pending.

\r\n\r\n

On July 19, 2021, Plaintiffs Axis,\r\nMichalov and Grayson filed a peremptory challenge to Judge Keosian in the 2021\r\nAction.

\r\n\r\n

On August 2, 2021, Judge Keosian\r\naccepted the peremptory challenge and referred the 2014 and 2021 Actions to\r\nDepartment 1 for reassignment "or in the alternative, to sever the cases\r\nfor [Judge Keosian] to retain [the 2014 Action] and return [the 2021 Action] to\r\nthe Court in which it was originally assigned.”

\r\n\r\n

On August 4, 2021, Department 1\r\nissued an order unrelating the 2014 and 2021 Actions on the grounds that the\r\ninterests of justice would not be served by reassigning the 2014 Action to a\r\nnew bench officer. Department 1 reassigned the 2014 Action to Judge Keosian and\r\nthe 2021 Action to Judge Maureen Duffy-Lewis, the original assignments for the\r\ncases before relation.

\r\n\r\n

On August 5, 2021, the Yari Parties\r\nfiled in Department 1 (under the 2014 Action) an Ex Parte Application for\r\nreconsideration of Judge Keosian\'s August 2, 2021 Order transferring the cases\r\nto Department 1 for reassignment. By this time, Department 1 had already\r\nunrelated the cases and reassigned the 2014 Action to Judge Keosian and the\r\n2021 Action to Judge Duffy-Lewis. The Yari Parties also filed in Department 1\r\n(under the 2021 Action) an Ex Parte Application for reconsideration of that\r\nportion of Judge Keosian\'s August 2, 2021 Order accepting Plaintiffs’\r\nperemptory challenge.

\r\n\r\n

On August 6, 2021, the Yari Parties\r\nfiled a "Supplement" asserting their Application in the 2014 Action had\r\nbeen mooted by Department 1\'s order unrelating and reassigning the cases.

\r\n\r\n

On August 11, 2021, Plaintiffs filed\r\nan Opposition to the Application in the 2014 Action.

\r\n\r\n

On August 13, 2021, Yari filed a Reply\r\nin support of the Application in the 2014 Action,

\r\n\r\n

\r\n\r\n

DISCUSSION

\r\n\r\n

At the outset, Department 1 must\r\naddress the Application for reconsideration of the order accepting Plaintiffs’\r\nperemptory challenge due to Judge Keosian’s unavailability. "Where the\r\njudge who made the initial ruling is unavailable to reconsider the motion, a\r\ndifferent judge may entertain the reconsideration motion." (In re\r\nMarriage of Oliverez (2015) 238 Cal.App.4th 1242, 1248.) Judge Keosian is\r\nunavailable due to his acceptance of Plaintiffs’ peremptory challenge.

\r\n\r\n

The record does not reflect any\r\nbriefing or discussion of the continuation rule, which limits the availability\r\nof peremptory challenges in later-filed cases emerging out of and continuing an\r\nearlier-filed case. (See McClenny v. Superior Court (1964) 60\r\nCal.2d 677, 684 (for purposes of one-challenge-per-action rule, "a\r\nproceeding is a continuation of the original action out of which it arises if\r\nit involves ‘substantially the same issues\' as the original action."))\r\nThere is no indication this issue was raised at any hearing before Judge\r\nKeosian. It thus was not considered in accepting the challenge. (See La Seigneurie\r\nU.S. Holdings, Inc. v. Superior Court (1994) 29 Cal.App.4th 1500, 1505\r\n(peremptory challenge in proper form should be granted “even if the court\r\nsuspects that the party has abused its right to utilize section 170.6.”)) Thus,\r\nthe Application in the 2021 Action to reconsider acceptance of the peremptory\r\nchallenge is based on grounds which were not raised before Judge Keosian, as\r\nthe continuation rule is “new or different” law that could not with reasonable\r\ndiligence have been presented earlier. (CCP sec. 1008.)

\r\n\r\n

“All the cases applying the\r\ncontinuation rule to preclude a peremptory challenge in the second proceeding\r\ninvolve the same parties at a later stage of their litigation with each other,\r\nor they arise out of conduct in or orders made during the earlier proceeding.”\r\n(NutraGenetics, LLC v. Superior Court (2009) 179 Cal.App.4th 243, 257.) The\r\n“second proceeding must arise out of the first proceeding—not merely . . . out\r\nof the same incidents or events that gave rise to the first proceeding.” (Id.)\r\nFor example, in Pickett v. Superior Court (2012) 203 Cal.App.4th 887,\r\nthe “record reveal[ed] no effort to enforce, modify, or avoid any order\r\ngenerated in [the earlier-filed] case or otherwise to obtain a recovery based\r\non some aspect of [the earlier] action.” (Id. at 895.) Hence, where\r\nthere is “clear evidence of . . . intent to avoid an unfavorable ruling in the\r\nprior proceeding” by initiating another action, the continuation rule prevents\r\ngamesmanship by precluding a peremptory challenge in the later-filed action. (Birts\r\nv. Superior Court (2018) 22 Cal.App.5th 53, 60.)

\r\n\r\n

Here, there is sufficient evidence\r\nto support the conclusion that Plaintiffs are seeking to avoid Judge Keosian’s\r\nruling on the issue of alter ego liability in the 2014 Action.[1] In\r\nparticular, Judge Keosian concluded Plaintiffs could not prevail on their claims\r\nagainst Yari, Brown, Immerman, Davand Holdings, Persik Productions, YFG\r\nServices, Stratus Film Company and Bob Yari Music on the theory that these\r\nindividuals and entities are alter egos of Syndicate. Plaintiffs subsequently\r\npurchased Syndicate’s interests in claims against these parties and filed the\r\n2021 Action. In that action, Plaintiffs alleged largely the same parties are\r\nthe alter egos of Syndicate and each other on virtually all of the same grounds\r\nasserted in the 2014 Action. (2014 FAC, para. 40; compare 2021\r\nComplaint, para. 31.) Further, Plaintiffs alleged these alter ego defendants fraudulently\r\ndissipated the assets of Syndicate to avoid judgment.

\r\n\r\n

Both the 2021 Action and 2014 Action\r\ntherefore involve the same issue—whether the same Defendants wrongfully\r\ndepleted assets of Syndicate to avoid collection of the Judgment from LC077567.\r\nMoreover, the same Plaintiffs are asserting the same alter ego theory against\r\nthe same Defendants in seeking to collect on the Judgment in their favor. While\r\nPlaintiffs are now proceeding as Syndicate’s successors in interest, the claims\r\nare substantially identical and brought for the same purpose.

\r\n\r\n

The latter point is clear from the\r\nchronology of the litigation. Syndicate filed for bankruptcy on the eve of\r\ntrial in the 2014 Action, naming Plaintiffs as the primary creditors. The Yari\r\nParties subsequently attempted to purchase Syndicate’s interests in the 2014\r\nAction. Plaintiffs indicate they purchased Syndicate’s interests to prevent the\r\nYari Parties from purchasing those interests. (2021 Complaint, para. 24-28.) The\r\nmotive for doing so is clearly to continue pursuing the claims in the 2014\r\nAction—to wit, that the Yari Parties have fraudulently transferred and depleted\r\nSyndicate’s assets to avoid the Judgment. The substantive identity of these\r\nclaims does not depend on whether the claims are brought as Syndicate’s\r\ncreditors or its successors in interest. Rather, Plaintiffs purchased these\r\ninterests in order to continue pursuing in a new forum the fraudulent\r\ntransfer claims Judge Keosian had bifurcated in the 2014 Action. In view of\r\nJudge Keosian’s two adverse decisions on Plaintiffs’ alter ego theory,\r\nPlaintiffs had a clear motive to initiate a new action as Syndicate’s successor\r\nin interests to pursue the alter ego claims before a new bench officer.

\r\n\r\n

In sum, while Syndicate is\r\ntechnically a new party, its claims are being pursued by the same Plaintiffs\r\nfrom the 2014 Action and those claims are substantially identical to\r\nPlaintiffs’ individual claims asserted in that action. However, Plaintiffs\r\nargue the continuation rule cannot apply here because they are pursuing claims\r\nas Syndicate’s successors in interest, not individually as in the 2014 Action.\r\nThis position is unsupported by authority. (See Nat. Fin. Lending,\r\nLLC v. Superior Court (2013) 222 Cal.App.4th 262, 277 (continuation rule\r\n"did not require that there be a precise identity between the parties in\r\nboth proceedings but instead required that there be an identity of interests in\r\nboth proceedings.")) More significantly, it would elevate form over\r\nsubstance by ignoring Plaintiffs’ apparent interest in pursuing these claims on\r\nbehalf of Syndicate, which emerges from the 2014 Action and Judge Keosian’s\r\nadverse rulings therein. “Acceptance of [Plaintiffs’] position would permit\r\nlitigants to obtain . . . a perpetually fresh forum for testing disadvantageous\r\ndecisions” by proceeding with the same arguments concerning the same defendants\r\nfor the same reasons, merely in a different capacity. (Id. at 278.) Plaintiffs\'\r\nposition is simply not supported by Nissan Motor Corp. v. Superior Court\r\n(1992) 6 Cal.App.4th 150, which did not involve the same parties asserting\r\nsubstantially overlapping claims in different legal capacities in two actions, as\r\nis the case here. Syndicate is therefore not in reality a new party entitled to\r\nassert a peremptory challenge. The real parties in interest are the same in\r\nboth actions—Axis, Grayson and Michalov.

\r\n\r\n

Indeed, Plaintiffs were unable to show\r\nthe claims in the 2014 Action are not again at issue in the 2021 Action. Plaintiffs\r\nassert the 2021 Action involves "a much broader range of claims related to\r\n[the] mismanagement" of Syndicate and attempt to analogize this case to City\r\nof Hanford v. Superior Court (1989) 208 Cal.App.3d 580. (Opposition, p. 5.)\r\nThis analogy is not persuasive—in Hanford, environmental groups sued the\r\nCity challenging its approval of the construction of a coal power plant. After\r\nthe City successfully defended against the claims in the first action seeking\r\nto stop the construction from going forward, the City issued a moratorium on\r\nconstruction of coal power plants. The contractor filed a new action\r\nchallenging the moratorium. The City filed a peremptory challenge to the judge\r\npresiding over the later-filed case, which was denied as untimely on the\r\ngrounds that the later case was a continuation of the earlier case. The Court\r\nof Appeal reversed, finding the "legal issues raised by the two actions\r\nare quite distinct." (Id. at 593.) Indeed, this conclusion is\r\nunsurprising given the earlier case sought to prevent the construction of the\r\nplant and the later case sought to remove an obstacle to that construction\r\nwhich was put in place only after the earlier case.

\r\n\r\n

The Court does not find Hanford\r\ninstructive here. In that case, the environmental groups in the first action\r\nsought to prevent the construction of a coal power plant by suing the city and\r\ncontractor. After the first action by the environmental groups failed, the city\r\non its own initiative issued a moratorium precluding construction of coal power\r\nplants. The contractor then filed a separate action against the city\r\nchallenging the moratorium. The purpose of the two actions was totally\r\ndistinct—the first action was intended to derail the construction project while\r\nthe latter was intended to clear the way for construction of the power plant. Further,\r\nthe plaintiffs in the first case and second case did not overlap at all.

\r\n\r\n

By contrast, here, Plaintiffs again\r\nallege the Yari Parties are the alter egos of each other and Syndicate on the\r\nsame grounds asserted in the earlier-filed action. (2014 FAC, para. 40; 2021\r\nComplaint, para. 31.) The same parties are pursuing the same alter ego\r\nliability theory in both actions. This was not the case in Hanford,\r\nwhere the plaintiffs in the first case and second case had diametrically\r\nopposed interests. Here, the plaintiffs in both actions are exactly the\r\nsame—Axis, Michalov and Grayson—albeit in different legal capacities. It\r\nis not dispositive that the later-filed case raises some issues beyond those in\r\nthe earlier-filed case. Rather, it appears the issues raised in the 2014 Action\r\nare subsumed within the 2021 Action. The 2021 Action therefore represents a\r\ncontinuation of the issues in the 2014 Action even as it raises additional\r\nissues regarding Syndicate’s management.

\r\n\r\n

Plaintiffs next rely on NutraGenetics\r\nin arguing this case does not “arise out of” the 2014 Action. On the\r\ncontrary, the 2021 Action arises directly out of the 2014 Action and the\r\nconnected bankruptcy case. Syndicate filed for bankruptcy on the eve of trial\r\nin the 2014 Action and Plaintiffs then purchased Syndicate’s interests from the\r\nbankruptcy trustee. After purchasing Syndicate’s interests, Plaintiffs\r\ninitiated the 2021 Action relating to mismanagement of Syndicate by the Yari\r\nParties, which Plaintiffs allege are the alter egos of each other and\r\nSyndicate. Plaintiffs took precisely the same position in the 2014 Action. Thus,\r\nthere are not only overlapping issues between the cases—the 2021 Action is a\r\ndirect consequence of Syndicate’s bankruptcy filing in connection with the 2014\r\nAction and reasserts issues already litigated at least in part in the 2014\r\nAction.

\r\n\r\n

The 2021 Action is thus a “second\r\nproceeding involv[ing] the same parties at a later stage of their litigation\r\nwith each other.” (NutraGenetics, supra, 179 Cal.App.4th at 257.) Moreover,\r\nthe 2021 Action appears to “arise out of . . . orders made during the earlier\r\nproceeding” to the extent that Judge Keosian’s orders on the alter ego issues\r\nmotivated Plaintiffs to pursue the same alter ego theory before a new bench\r\nofficer by purchasing Syndicate’s interests in the same breaches of fiduciary duty at issue in the 2014\r\nAction. (Id.) The “record reveals [an] effort to . . . avoid . . .\r\norder[s] generated in [the earlier-filed] case.” (Pickett, supra, 203\r\nCal.App.4th at 895.) Put another way, the record supports an inference of\r\nPlaintiffs’ “intent to avoid an unfavorable ruling in the prior proceeding” by\r\ninitiating another action regarding the same alleged breaches of fiduciary\r\nduty. (Birts, supra, 22 Cal.App.5th at 60.)

\r\n\r\n

Finally, Plaintiffs’ Opposition did\r\nnot address a critical point in Yari’s moving papers: that Plaintiffs would\r\nhave had standing to pursue the breach of fiduciary duty claims herein even if\r\nthey had not acquired Syndicate’s interests. While “corporate directors do not\r\nowe a fiduciary duty to creditors by reason of the corporation being in the\r\nzone or vicinity of insolvency,” a different rule applies in the event of “actual\r\ninsolvency.” (Berg & Berg Enterprises LLC v. Boyle (2009) 178\r\nCal.App.4th 1020, 1046-47.) The directors of an actually insolvent corporation\r\n“continue to owe fiduciary duties to shareholders and to the corporation but\r\nalso owe creditors the duty to avoid diversion, dissipation, or undue risk to\r\nassets that might be used to satisfy creditors\' claims.” (Id. at 1047.) The\r\ncreditors of an actually insolvent corporation may therefore bring a derivative\r\naction against the directors for breach of fiduciary duty for conduct which\r\ndiverted or dissipated assets which “might be used to satisfy creditors’\r\nclaims,” such as a judgment against the corporation. As the "risk\r\nbearers" of an insolvent corporation, creditors "have the right, like\r\nstockholders, to bring a derivative action in the corporation\'s name against\r\ndirectors who \'unduly risk\' corporate assets." (In re AWTR Liquidation,\r\nInc. (2016) 548 B.R. 300, 325; Berg, supra, 178 Cal.App.4th at 1041\r\nn. 22; accord Quadrant Structured Prods. Co., Ltd. v. Vertin\r\n(Del.Ch. 2015) 115 A.3d 535, 546 ("After a corporation becomes insolvent,\r\ncreditors gain standing to assert claims derivatively for breach of fiduciary\r\nduty."))

\r\n\r\n

As Syndicate declared bankruptcy\r\nwell in advance of the filing of the 2021 Action, it appears Plaintiffs—as\r\nSyndicate’s creditors—would have standing to bring a derivative action on\r\nSyndicate’s behalf against Syndicate’s directors for dissipating assets which\r\ncould have been used to satisfy their Judgment. It is therefore unclear that it\r\nwas necessary for Plaintiffs to acquire Syndicate’s interests and proceed as\r\nits successor in interests to pursue breach of fiduciary duty claims premised\r\non the diversion of Syndicate’s assets. Further, "this duty upon insolvency\r\nis . . . essentially, if not exactly, the same as the overall duty to\r\nstockholders and the corporation outside of insolvency: to exercise business\r\njudgment in an informed and good faith effort to preserve and grow the\r\ncorporation\'s value." (AWTR, supra, 548 B.R. at 325.) It is\r\ntherefore likely Plaintiffs would have had standing to bring the breach of\r\nfiduciary duty claims in the TAC even if not expressly based on diversion or\r\ndissipation of assets to the extent Plaintiffs contend the directors failed to\r\nexercise business judgment in managing Syndicate.

\r\n\r\n

In view of this, the Court gives\r\nlittle weight to the fact that Plaintiffs are proceeding as Syndicate’s\r\nsuccessors in interest. The continuation rule does “not require that there be a\r\nprecise identity between the parties in both proceedings but instead require[s]\r\nthat there be an identity of interests in both proceedings." (Nat. Fin.\r\nLending, supra, 222 Cal.App.4th at 277.) Even before the acquisition of\r\nSyndicate’s claims, Plaintiffs had an interest in pursuing a derivative claim\r\non its behalf for the diversion and mismanagement of assets which could have\r\nbeen used to satisfy their Judgment against Syndicate. Thus, while Plaintiffs\r\nare technically proceeding in a distinct capacity than in the 2014 Action, the\r\nrelevant interests are the same. In both cases Plaintiffs seek to pursue claims\r\nfor breach of fiduciary duty based on the diversion of Syndicate’s assets.\r\nPlaintiffs’ theories of liability in both actions hinge on the allegations that\r\nthe individual and entity Defendants are alter egos of each other. (2014 FAC,\r\npara. 41; 2021 Complaint, para. 31.)

\r\n\r\n

Given the foregoing, the challenge\r\nis untimely. Judge Keosian has already “decided a contested fact issue relating\r\nto the merits” of the 2014 action—whether certain defendants therein were alter\r\negos of each other or Syndicate. “[I]f a party would be barred for any reason\r\nfrom exercising a peremptory challenge in a particular proceeding—e.g., because\r\ntrial commenced [cite, or] the court decided a contested fact issue relating to\r\nthe merits…—the party is likewise barred from exercising a peremptory challenge\r\nin a later proceeding that qualifies as a continuation of—i.e., involves\r\nsubstantially the same issues as—the earlier proceeding in which the challenge\r\nwould have been barred.” (Stephens v. Superior Court (2002) 96\r\nCal.App.4th 54, 62-63.) The challenge therefore could not have been filed in\r\nthe 2014 Action after Judge Keosian’s decisions on the alter ego issues. The\r\nchallenge was thus untimely in the 2021 Action, which is a continuation of the\r\n2014 Action.

\r\n\r\n

Further,\r\nthe Court DENIES AS MOOT Yari’s Ex Parte Application filed in the 2014 Action.\r\nThe 2014 Action was returned to Judge Keosian in unrelating the cases; the\r\norder transferring that case to Judge Duffy-Lewis is vacated as the peremptory\r\nchallenge was untimely.

\r\n\r\n

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[1] On the other\r\nhand, the Court recognizes Defendant Yari is seeking to set aside the\r\nacceptance of Plaintiffs’ peremptory challenge at least in part due to Judge\r\nKeosian’s decision favorable to Defendants on this issue. However, Yari is not\r\nseeking to “avoid an unfavorable ruling in the prior proceeding,” unlike\r\nPlaintiffs. The Court expresses no view as to the merits of the fraudulent\r\ntransfer claim but recognizes that Judge Keosian’s previous Orders are relevant\r\nto disposition of that claim. The ultimate disposition of that claim is\r\nproperly for Judge Keosian and/or a jury.

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