This case was last updated from Los Angeles County Superior Courts on 05/29/2019 at 00:25:16 (UTC).

CHRISTOPHER MITCHELL ET AL VS JEREMY DANIELS-STOCK

Case Summary

On 11/10/2016 CHRISTOPHER MITCHELL filed a Contract - Other Contract lawsuit against JEREMY DANIELS-STOCK. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is DENNIS J. LANDIN. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****0352

  • Filing Date:

    11/10/2016

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

DENNIS J. LANDIN

 

Party Details

Plaintiffs and Petitioners

MITCHELL CHRISTOPHER

MONTY DOG

KOI POND

DOG MONTY

POND KOI

Defendants and Respondents

DOES 1 TO 30

DANIELS-STOCK JEREMY

NEWMAN DAN

35TH INVESTORS LLC

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

BOWER DAVID E. ESQ.

BOWER DAVID ELDRIDGE ESQ.

Defendant Attorneys

WU SCOTT D

GREENE RICHARD J.

 

Court Documents

NOTICE OF CASE REASSIGNMENT AND OF ORDER FOR PLAINTIFF TO GIVE NOTICE

2/14/2018: NOTICE OF CASE REASSIGNMENT AND OF ORDER FOR PLAINTIFF TO GIVE NOTICE

Minute Order

7/25/2018: Minute Order

Minute Order

10/30/2018: Minute Order

Stipulation and Order

12/10/2018: Stipulation and Order

Complaint

12/31/2018: Complaint

Minute Order

1/14/2019: Minute Order

Demurrer

2/15/2019: Demurrer

Reply

3/12/2019: Reply

Order

3/21/2019: Order

Minute Order

3/21/2019: Minute Order

Notice

3/26/2019: Notice

Substitution of Attorney

4/15/2019: Substitution of Attorney

Unknown

1/30/2017: Unknown

ANSWER

1/30/2017: ANSWER

Minute Order

3/16/2017: Minute Order

CROSS-DEFENDANTS' VERIFIED ANSWER TO VERIFIED CROSS-COMPLAINT OF JEREMY DANIELS-STOCK

3/16/2017: CROSS-DEFENDANTS' VERIFIED ANSWER TO VERIFIED CROSS-COMPLAINT OF JEREMY DANIELS-STOCK

28 More Documents Available

 

Docket Entries

  • 05/08/2019
  • Request for Dismissal; Filed by Koi Pond (Plaintiff); Christopher Mitchell (Plaintiff); Monty Dog (Plaintiff)

    Read MoreRead Less
  • 04/15/2019
  • Substitution of Attorney; Filed by Dan Newman (Defendant)

    Read MoreRead Less
  • 04/09/2019
  • Amended Complaint (First Amended Complaint); Filed by Koi Pond (Plaintiff); Christopher Mitchell (Plaintiff); Monty Dog (Plaintiff) et al.

    Read MoreRead Less
  • 03/26/2019
  • Notice ( of Non-Availability); Filed by Dan Newman (Defendant)

    Read MoreRead Less
  • 03/21/2019
  • at 08:30 AM in Department 56; Hearing on Demurrer - without Motion to Strike - Held

    Read MoreRead Less
  • 03/21/2019
  • Order (Re: Defendant Dan Newman's Demurrer to Plaintiff's First Amended Complaint); Filed by Clerk

    Read MoreRead Less
  • 03/21/2019
  • Notice of Ruling; Filed by Dan Newman (Defendant)

    Read MoreRead Less
  • 03/21/2019
  • Minute Order ( (Hearing on Demurrer - without Motion to Strike)); Filed by Clerk

    Read MoreRead Less
  • 03/12/2019
  • Reply ( in Support of Demurrer to First Amended Complaint); Filed by Dan Newman (Defendant)

    Read MoreRead Less
  • 03/05/2019
  • Opposition ( TO DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF); Filed by Koi Pond (Plaintiff); Christopher Mitchell (Plaintiff); Monty Dog (Plaintiff)

    Read MoreRead Less
63 More Docket Entries
  • 01/30/2017
  • Case Management Statement; Filed by Jeremy Daniels-Stock (Defendant)

    Read MoreRead Less
  • 01/30/2017
  • CASE MANAGEMENT STATEMENT

    Read MoreRead Less
  • 01/30/2017
  • VERIFIED CROSS-COMPLAINT FOR: 1. BREACH OF WRITTEN CONTRACT 2. DECLARATORY RELIEF FOR QUIET TITLE 3. ACCOUNTING; ETC.

    Read MoreRead Less
  • 12/05/2016
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 12/05/2016
  • NOTICE OF CASE MANAGEMENT CONFERENCE

    Read MoreRead Less
  • 11/14/2016
  • Proof of Service (not Summons and Complaint); Filed by Christopher Mitchell (Plaintiff); Koi Pond (Plaintiff); Monty Dog (Plaintiff)

    Read MoreRead Less
  • 11/14/2016
  • PROOF OF SERVICE OF SUMMONS

    Read MoreRead Less
  • 11/10/2016
  • PLAINTIFFS' COMPLAINT FOR DAMAGES FOR: 1. FRAUD;ETC

    Read MoreRead Less
  • 11/10/2016
  • SUMMONS

    Read MoreRead Less
  • 11/10/2016
  • Complaint; Filed by Christopher Mitchell (Plaintiff); Koi Pond (Plaintiff); Monty Dog (Plaintiff)

    Read MoreRead Less

Tentative Rulings

Case Number: BC640352    Hearing Date: April 6, 2021    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

CHRISTOPHER MITCHELL, et al.,

Plaintiffs,

vs.

JEREMY DANIELS-STOCK, et al.,

Defendants.

AND RELATED CROSS-ACTION

CASE NO.: BC640352

[TENTATIVE] ORDER RE: MOTION FOR TERMINATING SANCTIONS AND MONETARY SANCTIONS

Date: April 6, 2021

Time: 8:30 a.m.

Dept. 56

Jury Trial: April 26, 2021

MOVING PARTIES: Cross-Defendants Christopher Mitchell (“Mitchell”), Koi Pond (“KP”), and Monty Dog (collectively, “Cross-Defendants”)

RESPONDING PARTY: Cross-Complainant Jeremy Daniels-Stock (“Daniels-Stock”)

The Court has considered the moving and opposition papers. No reply papers were filed[1].

BACKGROUND

On February 16, 2021, after a hearing, the Court granted various discovery-related motions[2] filed by Mitchell and KP as to Daniels-Stock. Collectively, the discovery-related motions that were granted ordered Daniels-Stock to: (1) respond to discovery propounded by Mitchell and KP within 30 days of such order; and (2) pay monetary sanctions to Mitchell and KP within 20 days of such order.

Cross-Defendants filed a motion (the “Motion”) for an order granting terminating sanctions against Daniels-Stock by dismissing the cross-complaint filed by Daniels-Stock and monetary sanctions in the amount of $1,260.00 against Daniels-Stock and in favor of Cross-Defendants, jointly and severally. The Motion is brought on the grounds that Daniels-Stock failed to comply with the Court’s February 16, 2021 order compelling discovery responses in that he failed to: (1) provide any discovery responses as ordered by the Court; and (2) pay any amount of the ordered monetary sanctions.

DISCUSSION

The discovery statutes evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination. (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992.) Discovery sanctions should be appropriate to the dereliction and should not exceed that which is required to protect the interests of the party entitled to but denied discovery. (Id.) Continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse. (Id.) Where discovery violations are willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with discovery rules, the trial court is justified in imposing the ultimate sanction. (Id.) A trial court has broad discretion to impose discovery sanctions, but two facts are generally a prerequisite to the imposition of nonmonetary sanctions. (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.) Where discovery sanctions are requested against a party, there must be a failure to comply with a court order and the failure must be willful. (Id.) A decision to order terminating sanctions should not be made lightly. (Creed-21 v. City of Wildomar (2017) 18 Cal.App.5th 690, 702.) A trial court can impose a terminating sanction against anyone engaging in conduct that is a misuse of the discovery process. (Id. at 701.) Where a trial court imposes a terminating sanction, a trial court can strike out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process. (Id.) A trial court’s order to impose terminating sanctions will be reversed only if it was arbitrary, capricious, or whimsical. (Id. at 702.) Trial courts have properly imposed terminating sanctions when parties have willfully disobeyed one or more discovery orders. (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 390.) Terminating sanctions are warranted when a party’s lack of compliance with the discovery process has caused the opposing party prejudice. (Doppes, supra, 174 Cal.App.4th 967, 989.)

Issue No.1: Terminating Sanctions

The Court exercises its discretion and finds that terminating sanctions are not appropriate at this time. While the declaration of Matthew A. Young (“Young”) in support of the Motion does declare that Cross-Defendants have been unable to obtain basic documents and information from Daniels-Stock as to the allegations of the cross-complaint and the failure of Daniels-Stock to respond to Cross-Defendants’ discovery requests has impeded their ability to prepare their defense, the Court finds that terminating sanctions are not warranted at this time because this is only the first failure of Daniels-Stock to comply with a discovery-related order. In support of his opposition to the Motion, Daniels-Stock declares that: (1) he has transmitted payment to Cross-Defendants of all outstanding monetary sanctions owed; and (2) he is currently in the process of drafting responses to all of Cross-Defendants’ outstanding discovery, which will be served before the date of the hearing on the Motion. Moreover, Daniels-Stock declares that he encountered financial problems that prevented him from financing his legal representation which resulted in the withdrawal of his former attorneys.

The Court exercises its discretion and DENIES the request of Cross-Defendants to impose terminating sanctions against Daniels-Stock.

The Court, however, does order Daniels-Stock to comply with the Court’s February 16, 2021 order. Daniels-Stock is ordered to comply with such order by serving complete, code-compliant, and verified discovery responses, without objection, by April 13, 2021 as to the discovery at issue in the Court’s February 16, 2021 order[3]. If Daniels-Stock does not comply or flouts the discovery process in another manner, and Cross-Defendants file another motion for terminating sanctions in the future, the Court will consider issuing terminating sanctions.

Issue No.2: Monetary Sanctions

Code Civ. Proc. § Section 2023.030 provides that the court may impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct. A misuse of the discovery process includes disobeying a court order to provide discovery. (Doppes, supra, 174 Cal.App.4th 967, 991.)

The Court exercises its discretion and GRANTS Cross-Defendants’ request for monetary sanctions against Daniels-Stock in the reasonable amount of $460.00. Monetary sanctions are to be paid within 20 days of the date of this order by Daniels-Stock to Cross-Defendants, jointly and severally.

The Motion is therefore GRANTED IN PART. The Court declines to impose terminating sanctions; however, as stated above, the Court will award monetary sanctions to Cross-Defendants.

Moving parties are ordered to give notice of this ruling.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.  If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 6th day of April 2021

Hon. Holly J. Fujie

Judge of the Superior Court


[1] On March 23, 2021, the Court heard oral argument as to Cross-Defendants’ ex parte application to shorten time, and the Court granted such application. The Court’s March 23, 2021 minute order stated that the: (1) opposition to the motion for terminating sanctions was to be filed by March 30, 2021; and (2) reply brief was to be filed by April 2, 2021.

[2] All of these motions were unopposed by Daniels-Stock and the Court’s February 16, 2021 minute order as to the hearing on the motions shows that Daniels-Stock did not appear at the hearing.

[3] Cross-Defendants present evidence in support of the Motion that Daniels-Stock was served with a Notice of Ruling as to the Court’s February 16, 2021 order.

Case Number: BC640352    Hearing Date: October 27, 2020    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

CHRISTOPHER MITCHELL, et al.,

Plaintiffs,

vs.

JEREMY DANIELS-STOCK, et al.,

Defendants.

AND RELATED CONSOLIDATED CASE

CASE NO.: BC640352

[TENTATIVE] ORDER RE: MOTION TO BE RELIEVED AS COUNSEL

Date: October 27, 2020

Time: 8:30 a.m.

Dept. 56

FSC: April 12, 2021

Jury Trial: April 26, 2021

MOVING PARTY: Hunt Ortmann Palffy Nieves Darling & Mah, Inc. (“Hunt”)

Hunt seeks to be relieved as counsel for Jeremy Daniels-Stock (“Daniels-Stock”) and JDS Minions (“JDS”). Hunt’s motion is compliant with California Rules of Court, Rule 3.1362.

DISCUSSION

In connection with the motion to be relieved as counsel for Daniels-Stock and JDS, Dustin Lozano—who is an attorney at Hunt—declares that: (1) counsel cannot continue the representation of Daniels-Stock and JDS due to a breach of counsel’s and client’s agreement which necessitated the filing of the motion to be relieved as counsel; and (2) counsel offers to provide more specific information to the Court by way of an in camera hearing.

The Court has discretion on whether to allow an attorney to withdraw, and a motion to withdraw will not be granted where withdrawal would prejudice the client. (Ramirez v. Sturdevant (1994) 21 Cal.App.4th 904, 915.)

In light of the facts above, the Court GRANTS Hunt’s motion to be relieved as counsel for Daniels-Stock.

In light of the facts above, the Court GRANTS Hunt’s motion to be relieved as counsel for JDS.

As a corporation, however, JDS is not a natural person. As such, JDS cannot appear in this case without an attorney because “a corporation, unlike a natural person, cannot represent itself before courts of record in propria persona, nor can it represent itself through a corporate officer, director or other employee who is not an attorney. It must be represented by licensed counsel in proceedings before courts of record.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.)

For that reason, moving party is to notify JDS of this fact, and of the setting on the Court’s own motion of an OSC re: JDS retaining new counsel for December 1, 2020 at 8:30 a.m.

Moving party is ordered to give notice of this ruling.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.  If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 27th day of October 2020

Hon. Holly J. Fujie

Judge of the Superior Court

Case Number: BC640352    Hearing Date: June 29, 2020    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

CHRISTOPHER MITCHELL, et al.,

Plaintiffs,

vs.

JEREMY DANIELS-STOCK, et al.

Defendants.

AND RELATED CONSOLIDATED CASE

CASE NO.: BC640352

[TENTATIVE] ORDER RE: DEMURRER TO FIRST AMENDED COMPLAINT; MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT

Date: June 29, 2020

Time: 8:30 a.m.

Dept. 56

MOVING PARTIES: Defendants Jeremy Daniels-Stock (“Daniels-Stock”) and JDS Minions, Inc. (“JDS”); Plaintiffs Christopher Mitchell (“Mitchell”), Monty Dog, 35th Investors, LLC, and Koi Pond, Inc.

RESPONDING PARTIES: Plaintiff Koi Pond, Inc.; Defendants Jeremy Daniels-Stock (“Daniels-Stock”) and JDS Minions, Inc. (“JDS”)

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

On April 9, 2019, Mitchell, Monty Dog, 35th Investors, LLC, and Koi Pond, Inc. filed the operative First Amended Complaint (the “Lead Case FAC”) in Christopher Mitchell et al. v. Jeremy Daniels-Stock et al., LASC Case No. BC640352 (the “Lead Case”), which alleges eleven causes of action arising from alleged wrongful actions in connection with investments in real estate ventures. The Lead Case is related and consolidated with Koi Pond, Inc. v. Jeremy Daniels Stock et al., LASC Case number 19STCP03959 (the “2d Case”) which was filed on September 12, 2019. A First Amended Complaint (the “2d Case FAC”) was filed in the 2d Case on January 9, 2020, which alleges causes of action for: (1) breach of fiduciary duty; and (2) quiet title.

The Demurrer with Respect to the 2d Case FAC

Daniels-Stock and JDS filed a demurrer to the 2d Case FAC[1]. Defendants assert that in addition to causes of action clearly and explicitly asserted in the 2d Case FAC, Plaintiff is asserting causes of action for conversion and injunction and Defendants also filed a demurrer to those additional causes of action and contend that such causes of action are not separately numbered in the FAC. Plaintiff Koi Pond, Inc. opposes the demurrer of Daniels-Stock and JDS to the 2d Case FAC.

The operative 2d Case FAC to which Defendants filed the instant demurrer arises from alleged wrongful actions in connection with real estate investments.

Motion for Leave to File a Third Amended Complaint

Mitchell, Koi Pond, Monty Dog, and 35th Investors, LLC (“Plaintiffs”) filed a motion for an order permitting them to file a Third Amended Complaint (“TAC”) in the Lead Case. Plaintiffs’ motion is made on the grounds that if their motion to file a TAC is granted, they will dismiss the 2d Case and will proceed solely on the Lead Case. Initially, upon review of the filings in the Lead Case, the Court finds that a Second Amended Complaint was never filed in the Lead Case as the Lead Case FAC is still the operative pleading in the Lead Case. Thus, if Plaintiffs’ motion is granted, Plaintiffs will be filing a Second Amended Complaint in the Lead Case. For purposes of the Court’s analysis and consistency, and to avoid confusion as to the parties, the Court will refer to the proposed pleading as the TAC. Plaintiffs’ motion is compliant with California Rules of Court, Rule 3.1324.

Plaintiffs assert that: (1) the Court has authority to grant them leave to amend; (2) their motion is timely; and (3) Defendants will not be prejudiced by the filing of an amended complaint.

Defendants Daniels-Stock and JDS oppose Plaintiffs’ motion on the grounds that: (1) the claims against JDS are time-barred; (2) the relation-back doctrine does not apply; and (3) Plaintiffs have failed to provide any support beyond a conclusory statement in their motion that the relation-back doctrine applies. Defendants fail to address Plaintiffs’ arguments with respect to timeliness and lack of prejudice. Therefore, the Court finds that Defendants have conceded on those two points of argument. (Heglin v. F.C.B.A. Market (1945) 70 Cal.App.2d 803, 806.)

The Court will address the respective motions filed by the parties in this one ruling.

MEET AND CONFER

The meet and confer requirement has been met.

DEMURRER

“A demurrer tests the sufficiency of a complaint as a matter of law.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) “[T]he court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Id.) “The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.” (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer “[t]he complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) “On demurrer, all material facts properly pleaded and all reasonable inferences which can be drawn therefrom are deemed admitted.” (Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 198.) A general demurer is allowed when the complaint on its face shows that an action is barred by the statute of limitations. (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 300.) “It is established that a demurrer which merely states that the cause of action set forth in the complaint is on its face barred by the statute of limitations is sufficient to raise that defense.” (Williams v. International Longshoremen’s and Warehousemen’s Union, Local No. 10 (1959) 172 Cal.App.2d 84, 87.) “A plaintiff may not avoid a demurrer by pleading facts or positions in an amended complaint that contradict the facts pleaded in the original complaint or by suppressing facts which prove the pleaded facts false.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1491.) A demurrer to a cause of action will be sustained without leave to amend unless “there is a reasonable possibility that the defect can be cured by amendment.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “The burden of proving such reasonable possibility is squarely on the plaintiff.” (Id.)

Issue No. 1: First Cause of Action

“The statute of limitations for breach of fiduciary duty is three or four years, depending on whether the breach is fraudulent or nonfraudulent.” (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.) In the context of a breach of fiduciary duty cause of action “where the gravamen of the claim is deceit” the statute of limitations is three years. (Fuller v. First Franklin Financial Corp. (2013) 216 Cal.App.4th 955, 963.) “The nature of the right sued on, not the form of action demanded, determines the applicability of the statute of limitations.” (Schneider v. Union Oil Co. (1970) 6 Cal.App.3d 987, 993.) “An important exception to the general rule of accrual is the discovery rule, which postpones accrual of a cause of action until the plaintiff discovers, or as reason to discover, the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “A plaintiff has reason to discover a cause of action when he or she has reason to at least suspect a factual basis for its elements.” (Id.) “Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period.” (Id.) “A cause of action under this discovery rule accrues when plaintiff either (1) actually discovered his injury and its negligent cause or (2) could have discovered injury and cause through the exercise of reasonable diligence.” (McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 108.) In order to invoke the benefit of the discovery rule a plaintiff must “specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (NBCUniversal Media, LLC v. Superior Court (2014) 225 Cal.App.4th 1222, 1232.) The statute of limitations for conversion is three years under California Code of Civil Procedure, Section 338(c)(1). The statute of limitations for breach of oral contract is two years under California Code of Civil Procedure, Section 339.

Pertinent Allegations of the 2d Case FAC

The 2d Case FAC alleges that: (1) Daniels-Stock represented he was getting all necessary permits and inspections when in actuality Daniels-Stock was using unlicensed contractors and was being untruthful about obtaining the necessary permits and inspections (2d Case FAC at ¶ 19); (2) over the last six months of 2014 and the beginning of 2015, Daniels-Stock drained Plaintiff’s bank account and effectively stole the money from Plaintiff (Id.); (3) in January 2016, Daniels-Stock took the funds he had stolen from Plaintiff and used those funds to form JDS (Id. at ¶ 25); and (4) Daniels-Stock breached his fiduciary duty to Plaintiff by converting Plaintiff’s funds, hiring unlicensed individuals, failing to obtain permits, failing to properly account for the use of funds, failing to timely and accurately report on the status of the rehabilitation of the two projects, and creating JDS to convert Plaintiff’s funds for his own personal benefit. (Id. at ¶ 48.) The 2d Case FAC alleges two property rehabilitation projects—the Dauphine and St.Philip projects—began in 2014 and 2015, respectively.

The 2d Case FAC alleges that: (1) Daniels-Stock drained Plaintiff’s bank account with respect to the Dauphine project over the last six months of 2014 and the beginning of 2015 (2d Case FAC at ¶ 19); (2) with respect to the St.Philip project, Daniels-Stock paid himself $32,000.00 from Plaintiff’s bank account without producing receipts to validate that figure (Id. at ¶ 21); (3) in November 2015, Daniels-Stock took another $30,000.00 from Plaintiff’s bank account (Id. at ¶ 22); and (4) by February 2016, it was obvious that Daniels-Stock was not doing his job with respect to the St. Philip project and that he was taking money out of Plaintiff’s bank account for his own use rather than spending it on any remodeling of the St. Philip project. (Id. at ¶ 24.)

Analysis

Initially, the Court finds that Plaintiff cannot invoke the discovery rule as to discovery of the wrongdoing by Daniels-Stock because the 2d Case FAC does not plead facts showing reasonable diligence on behalf of Plaintiff as required by NBCUniversal. In fact, the 2d Case FAC alleges that Plaintiff knew about wrongdoing of Daniels-Stock in February of 2016 with respect to it being “obvious that [Daniels-Stock] was not doing the job, and was taking money out of [Plaintiff’s] bank account for his own use rather than spending it on any remodeling of the St. Philip Project.” (Id.) Thus, despite Plaintiff alleging that it did not discover until August 22, 2019, after Daniels-Stock provided substantive discovery responses, that it learned that he misappropriated its funds to form JDS (2d Case FAC at ¶ 43), one of the bases of the breach of fiduciary duty cause of action is the wrongful use of Plaintiff’s funds. (Id. at ¶ 48.) Thus, Plaintiff had a reason to suspect some breach of fiduciary duty as early as February of 2016 as to Daniels-Stock.

The Court finds that Plaintiff’s first cause of action for breach of fiduciary duty is barred by the statute of limitations. The Court finds that the gravamen of the first cause of action is the deceit of Daniels-Stock based on the allegations of the 2d Case FAC that Daniels-Stock made various representations that were contrary to the truth in order for him to convert Plaintiff’s funds. Even if the Court found that the gravamen of the first cause of action was conversion, the applicable statute of limitations would still be three years. The 2d Case FAC alleges that: (1) with respect to the Dauphine project, Daniel-Stock’s wrongful actions concluded by the beginning of 2015 (2d Case FAC at ¶ 19); (2) the discovery of Daniel-Stock’s wrongful actions in connection with the St.Philip project was revealed by February 2016 when Mitchell had to take over that project (Id. at ¶ 24); and (3) Daniels-Stock created JDS on or about January 21, 2016 and used funds he had stolen from the bank account of Plaintiff to start JDS. (Id. at ¶ 25.) The complaint in this action was not filed until September 12, 2019. The complaint was filed more than three years after the last action took place that gives rise to the breach of fiduciary duty cause of action.

Therefore, the Court SUSTAINS the demurrer of Defendants to the first cause of action in the 2d Case FAC without leave to amend under Blank with respect to the allegations against Daniels-Stock. This is the second iteration of Plaintiff’s complaint as Plaintiff was on notice of the defects in its pleading pursuant to the Court’s ruling on the demurrer to the complaint in the 2d Case. Plaintiff has not met its burden in showing that there is a reasonable possibility that the complaint can be amended to state a cause of action for breach of fiduciary duty as to Daniels-Stock.

With respect to JDS, however, the 2d Case FAC alleges that it did not discover any wrongdoing with respect to JDS and the formation of JDS until August 2019, which is when Plaintiff received substantive discovery responses from Daniels-Stock. (Id. at ¶ 43.) Despite Plaintiff’s lack of reasonable diligence as to Daniels-Stock, the Court finds that Plaintiff may be able to re-allege this cause of action so as to make sufficient allegations as to JDS. The Court therefore SUSTAINS WITH 20 DAYS LEAVE TO AMEND the demurrer of Defendants to the first cause of action of the 2d Case FAC with respect to the allegations against JDS.

Issue No.2: Second Cause of Action

A quiet title cause of action is insufficient where the complaint is not verified. (Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1866.)

Plaintiff’s opposition concedes that the 2d Case FAC is not verified. (Opposition at 2:8-12.)

Therefore, Defendants’ demurrer to the second cause of action in the 2d Case FAC is SUSTAINED with 20 days leave to amend. The Court wishes to give Plaintiff one more opportunity to file a verified complaint; however, the Court will consider sustaining without leave to amend any demurrer filed to the quiet title cause of action if such pleading is not verified.

Issue No. 3: Conversion and Injunction Causes of Action

Plaintiff acknowledges in its opposition that it is indeed asserting causes of action for conversion and injunction in the 2d Case FAC. (Opposition at 5:24-25.) Plaintiff also concedes that the 2d Case FAC is not compliant with California Rules of Court, Rule 2.112. (Id. at 6:2-5.)

California Rules of Court, Rule 2.112 requires that each cause of action asserted in a complaint be separately numbered and the nature of such cause of action identified. “Following an order sustaining a demurrer . . . with leave to amend, the plaintiff may amend his or her complain only as authorized by the court’s order.” (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) “The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.” (Id.)

Here, the Court sustained Defendants’ demurrer to the first and second causes of action in the complaint in the 2d Case with leave to amend. The complaint only asserted causes of action for breach of fiduciary duty and quiet title. The Court’s December 19, 2019 minute order did not grant Plaintiff permission to assert additional causes of action. The Court’s minute order only granted Plaintiff permission to amend the two causes of action asserted in the complaint. Plaintiff’s addition of the causes of action for injunction and conversion in the 2d Case FAC is improper under Harris. Moreover, the purported conversion and injunction causes of action are not compliant with California Rules of Court, Rule 2.112.

Therefore, the Court SUSTAINS without leave to amend the demurrer to the conversion and injunction causes of action in the 2d Case FAC.

Issue No. 4: Streamlining the Lead Case and the 2d Case

Plaintiff asserts that the Court should streamline the Lead Case and the 2d Case by allowing it to amend the Lead Case to seek the relief sought in this action. Plaintiff contends that both cases involve many of the same background facts and includes the same parties with the exception of JDS. Plaintiff indicates that it wishes to amend the Lead Case to allege the current claims as opposed to maintaining two separate actions. Defendants’ reply brief does not address this argument advanced in Plaintiff’s opposition.

California Code of Civil Procedure, Section 128(a)(3) provides that a court is empowered “[t]o compel obedience to its judgments, orders, and process, and to the orders of a judge out of court, in an action or proceeding pending therein.” California Code of Civil Procedure, Section 128(a)(8) says that a court is empowered “[t]o amend and control its process and orders so as to make them conform to law and justice.” A trial court “has the power to exercise a reasonable control over all proceedings connected with the litigation before it. Such power necessarily exists as one of the inherent powers of the court and such power should be exercised by the courts in order to insure the orderly administration of justice.” (Hays v. Superior Court in and for Los Angeles County (1940) 16 Cal.2d 260, 264.)

The Court finds it appropriate to streamline the Lead Case and 2d Case. The Court GRANTS Plaintiff’s request to streamline the Lead Case and the 2d Case. The Court orders Plaintiff to file a consolidated amended complaint in the Lead Case taking into account the Court’s ruling on Defendants’ demurrer with regard to the sustaining of demurrers without leave to amend.

Daniels-Stock and JDS are ordered to give notice of this ruling with respect to the demurrer.

MOTION FOR LEAVE TO FILE THE TAC

California Code of Civil Procedure, Section 473 permits the trial court in its discretion to allow amendments to pleadings in the furtherance of justice. California Code of Civil Procedure, Section 576 says that “[a]ny judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order.” “There is a policy of great liberality in permitting amendments to the pleadings at any stage of the proceeding.” (Berman v. Bromberg (1997) 56 Cal.App.4th 936, 945.) “An application to amend a pleading is addressed to the trial judge’s sound discretion.” (Id.) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.” (Morgan v. Superior Court of Cal. In and For Los Angeles County (1959) 172 Cal.App.2d 527, 530.) “Where no prejudice is shown to the adverse party, the liberal rule of allowance prevails.” (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564.) A judge may deny a motion for leave to amend where a plaintiff has been dilatory in seeking leave to amend and such delay has prejudiced defendant. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490.) Prejudice exists where amendment would: (1) cause a delay of trial; (2) increase preparation costs; (3) change the focus of the complaint; or (4) increase discovery burdens. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.)

Declaration of Plaintiffs’ Counsel

Matthew A. Young (“Young”), counsel for Plaintiffs Koi Pond, Inc. and Monty Dog, relevantly declares that: (1) the effect of the proposed amendment would simply be to combine the Lead Case and 2d Case into one for the sake of conserving the parties’ and the Court’s time and resources (Young Decl. at ¶ 5); (2) if this motion is granted, Plaintiffs would dismiss the 2d Case and would proceed solely on the Lead Case (Id.); (3) with the small exception of a new Paragraph 19—which only serves to add one more example to the list of Defendants’ many wrongdoings—Plaintiffs do not intend to introduce any new substantive allegations which were not already asserted in these consolidated proceedings whether it be in the Lead Case or 2d Case (Id.); (4) Plaintiffs bring this motion now because Koi Pond’s former counsel of record failed to provide it with an opportunity to review the operative pleading in the 2d Case prior to its filing (Id. at ¶ 6); (5) Plaintiffs were never given the chance to even consider whether the proposed amendment should or could have been made earlier (Id.); (6) current counsel for Koi Pond was not involved in this matter until February 3, 2020 and, after being retained and familiarizing themselves with the facts and procedural history, determined that the Lead Case and 2d Case should be merged into one and sought the relief requested herein (Id.); (7) the amendment is necessary and proper because the claims contained in the 2d Case are more properly asserted in the Lead Case (Id. at ¶ 8); (8) the filing of the TAC would serve to vitiate the statute of limitations grounds in Defendants’ pending demurrer in the 2d Case because the allegations at issue would now relate-back to the initial filing date of the Lead Case (Id.); the proposed amendment would significantly streamline this litigation (Id.); (9) the facts giving rise to the proposed TAC arose only after the August 22, 2019 informal discovery conference in this action that Plaintiffs learned, for the first time after reviewing discovery responses and documents that Daniels-Stock subsequently produced, that he misappropriated funds from Koi Pond’s bank account for the purpose of forming JDS (Id.); and (10) despite Plaintiffs’ most diligent efforts, they could not have possibly discovered this information before reviewing Daniels-Stock’s discovery responses and documents in the summer of 2019.

Issue No.1: Legal Sufficiency of the Proposed TAC

Defendants assert that the motion of Plaintiffs should be denied because proposed amendments as to JDS are time-barred by the statute of limitations and the relation-back doctrine does not apply. Initially, the Court finds that Defendants’ citation to Royalty Carpet Mills is factually and procedurally distinguishable as that case involved a petition for writ of mandate and not leave to amend a complaint. (Royalty Carpet Mills, Inc. v. City of Irvine (2005) 125 Cal.App.4th 1110, 1115.) “[A]n opinion is not authority for a proposition not therein considered.” (Ginns v. Savage (1964) 61 Cal.2d 520, 524, fn.2.)

“[It] is well settled that when [a] complaint does not state a cause of action and it is evident that neither by a proper offer to amend, nor any offer to amend, it can be made to do so, a refusal by the court to permit an amendment cannot be said to be an abuse of discretion.” (Robertson v. City of Long Beach (1937) 19 Cal.App.2d 676, 679.) “The right to amend a pleading should be denied if it appears to a certainty that no relief could possibly be granted under the amended pleading.” (Robinson & Wilson, Inc. v. Stone (1973) 35 Cal.App.3d 396, 413.) “When amendment would be futile because the amended petition would be barred by the statute of limitations, the trial court does not abuse its discretion in denying the motion for leave to amend.” (Royalty Carpet Mills, Inc. v. City of Irvine (2005) 125 Cal.App.4th 1110, 1124.) “[T]he failure of a proposed amendment to state facts sufficient to constitute a cause of action or defense may support an order denying a motion to amend.” (California Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 280, emphasis added.) “When . . . the legal sufficiency of [a] proposed [complaint] [is in question] . . . the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer.” (Id. at 281.) “Such proceeding might serve to develop the factual content of the proposed [complaint] and to refine the language in which it is pleaded.” (Id.)

The Court incorporates its ruling with respect to the demurrer to the 2d FAC in the 2d Case from above and applies it to the Court’s discussion of the instant motion for leave to file a TAC in the Lead Case. As indicated above, the Court has given Plaintiff Koi Pond, Inc. the opportunity to plead sufficient facts with respect to JDS in connection with the breach of fiduciary duty cause of action. If Defendants wish to challenge the sufficiency of the new pleading that Plaintiffs will file, then Defendants may attack such pleading via a demurrer pursuant to California Casualty.

Therefore, the Court will decline Defendants’ request to deny Plaintiffs’ motion due to the claims of Plaintiffs in the proposed TAC being time-barred as to JDS.

Issue No.2: Timeliness and Prejudice

As indicated above, Defendants have conceded to Plaintiffs’ arguments with respect to their motion being timely and Defendants not being prejudiced by the proposed amendment[2].

Thus, the Court exercises its discretion under Berman and GRANTS Plaintiffs’ motion for leave to file a TAC in the Lead Case. As stated above, Plaintiffs have indicated that upon the Court’s granting of their motion they intend to dismiss the 2d Case and proceed solely on the Lead Case.

Plaintiffs Mitchell, Monty Dog, 35th Investors, LLC, and Koi Pond, Inc. are ordered to give notice of this ruling with respect to the motion to file a TAC.

In consideration of the current COVIC-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by CourtCall if the parties do not submit on the tentative.  If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 29th day of June 2020

Hon. Holly J. Fujie

Judge of the Superior Court


[1] The demurrer at issue herein was filed in the Lead Case and Defendants indicate they are demurring to the First Amended Complaint filed on January 9, 2020. That pleading was filed in the 2d Case and not in the Lead Case. The discussion of this demurrer is based upon an analysis of the 2d Case FAC and not to the Lead Case FAC referenced in the demurrer itself.

[2] Defendants also failed to provide the Court with any declaration or other evidence in support of their opposition to Plaintiffs’ motion to file the TAC. The Court finds that Defendants have not made a showing of prejudice. “In law and motion practice, factual evidence is supplied to the court by way of declarations.” (Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.)

Case Number: BC640352    Hearing Date: June 24, 2020    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

CHRISTOPHER MITCHELL, et al.,

Plaintiffs,

vs.

JEREMY DANIELS-STOCK, et al.

Defendants.

AND RELATED CONSOLIDATED CASE

CASE NO.: BC640352

[TENTATIVE] ORDER RE: DEMURRER TO FIRST AMENDED COMPLAINT

Date: June 24, 2020

Time: 8:30 a.m.

Dept. 56

MOVING PARTIES: Defendants Jeremy Daniels-Stock (“Daniels-Stock”) and JDS Minions, Inc. (“JDS”)

RESPONDING PARTY: Plaintiff Koi Pond, Inc.

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

Plaintiff filed a complaint in Koi Pond, Inc. v. Jeremy Daniels Stock et al., Los Angeles Superior Court case number 19STCP03959 (the “Consolidated Case”) on September 12, 2019 which arises from alleged wrongful actions in connection with investing in real estate ventures for profit. The Consolidated Case is related and consolidated with the lead case entitled Christopher Mitchell et al. v. Jeremy Daniels-Stock et al., Los Angeles Superior Court case number BC640352 (the “Lead Case”). The operative First Amended Complaint (“FAC”) in the Lead Case arises from alleged wrongful actions in connection with real estate investments. Plaintiff filed the operative FAC against Defendants alleging causes of action for: (1) breach of fiduciary duty; and (2) quiet title.

Defendants filed a demurrer to the entire FAC. Defendants assert that in addition to the above cases of action, Plaintiff is asserting causes of action for conversion and injunction; however, Defendants demur to those additional causes of action and contend that such causes of action are not separately numbered in the FAC.

MEET AND CONFER

The meet and confer requirement has been met.

DEMURRER

“A demurrer tests the sufficiency of a complaint as a matter of law.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) “[T]he court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Id.) “The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.” (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer “[t]he complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) “On demurrer, all material facts properly pleaded and all reasonable inferences which can be drawn therefrom are deemed admitted.” (Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 198.) A general demurer is allowed when the complaint on its face shows that an action is barred by the statute of limitations. (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 300.) “It is established that a demurrer which merely states that the cause of action set forth in the complaint is on its face barred by the statute of limitations is sufficient to raise that defense.” (Williams v. International Longshoremen’s and Warehousemen’s Union, Local No. 10 (1959) 172 Cal.App.2d 84, 87.) “A plaintiff may not avoid a demurrer by pleading facts or positions in an amended complaint that contradict the facts pleaded in the original complaint or by suppressing facts which prove the pleaded facts false.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1491.) A demurrer to a cause of action will be sustained without leave to amend unless “there is a reasonable possibility that the defect can be cured by amendment.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “The burden of proving such reasonable possibility is squarely on the plaintiff.” (Id.)

Issue No. 1: First Cause of Action

“The statute of limitations for breach of fiduciary duty is three or four years, depending on whether the breach is fraudulent or nonfraudulent.” (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.) In the context of a breach of fiduciary duty cause of action “where the gravamen of the claim is deceit” the statute of limitations is three years. (Fuller v. First Franklin Financial Corp. (2013) 216 Cal.App.4th 955, 963.) “The nature of the right sued on, not the form of action demanded, determines the applicability of the statute of limitations.” (Schneider v. Union Oil Co. (1970) 6 Cal.App.3d 987, 993.) “An important exception to the general rule of accrual is the discovery rule, which postpones accrual of a cause of action until the plaintiff discovers, or as reason to discover, the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “A plaintiff has reason to discover a cause of action when he or she has reason to at least suspect a factual basis for its elements.” (Id.) “Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period.” (Id.) “A cause of action under this discovery rule accrues when plaintiff either (1) actually discovered his injury and its negligent cause or (2) could have discovered injury and cause through the exercise of reasonable diligence.” (McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 108.) In order to invoke the benefit of the discovery rule a plaintiff must “specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (NBCUniversal Media, LLC v. Superior Court (2014) 225 Cal.App.4th 1222, 1232.) The statute of limitations for conversion is three years under California Code of Civil Procedure, Section 338(c)(1). The statue of limitations for breach of oral contract is two years under California Code of Civil Procedure, Section 339.

The FAC alleges that: (1) Daniels-Stock represented he was getting all necessary permits and inspections when in actuality Daniels-Stock was using unlicensed contractors and was being untruthful about obtaining the necessary permits and inspections (FAC at ¶ 19); (2) over the last six months of 2014 and the beginning of 2015, Daniels-Stock drained Plaintiff’s bank account and effectively stole the money from Plaintiff (Id.); (3) in January 2016, Daniels-Stock took the funds he had stolen from Plaintiff and used those funds to form JDS (Id. at ¶ 25); and (4) Daniels-Stock breached his fiduciary duty to Plaintiff by converting Plaintiff’s funds, hiring unlicensed individuals, failing to obtain permits, failing to properly account for the use of funds, failing to timely and accurately report on the status of the rehabilitation of the two projects, and creating JDS to convert Plaintiff’s funds for his own personal benefit. (Id. at ¶ 48.) The FAC alleges two property rehabilitation projects—the Dauphine and St.Philip projects—began in 2014 and 2015, respectively.

The FAC alleges that: (1) Daniels-Stock drained Plaintiff’s bank account with respect to the Dauphine project over the last six months of 2014 and the beginning of 2015 (FAC at ¶ 19); (2) with respect to the St.Philip project, Daniels-Stock paid himself $32,000.00 from Plaintiff’s bank account without producing receipts to validate that figure (Id. at ¶ 21); (3) in November 2015, Daniels-Stock took another $30,000.00 from Plaintiff’s bank account (Id. at ¶ 22); and (4) by February 2016, it was obvious that Daniels-Stock was not doing his job with respect to the St. Philip project and that he was taking money out of Plaintiff’s bank account for his own use rather than spending it on any remodeling of the St. Philip project. (Id. at ¶ 24.)

Initially, the Court finds that Plaintiff cannot invoke the discovery rule because the FAC does not plead facts showing reasonable diligence on behalf of Plaintiff as required by NBCUniversal. In fact, the FAC alleges that Plaintiff knew about wrongdoing of Daniels-Stock in February of 2016 with respect to it being “obvious that [Daniels-Stock] was not doing the job, and was taking money out of [Plaintiff’s] bank account for his own use rather than spending it on any remodeling of the St. Philip Project.” (Id.) Thus, despite Plaintiff alleging that it did not discover until August 22, 2019, after Daniels-Stock provided substantive discovery responses, that he misappropriated its funds to form JDS (FAC at ¶ 43), one of the bases of the breach of fiduciary duty cause of action is the wrongful use of Plaintiff’s funds. (Id. at ¶ 48.) Thus, Plaintiff had a reason to suspect some breach of fiduciary duty as early as February of 2016. Plaintiff did not file the complaint in this action until September of 2019.

The Court finds that Plaintiff’s first cause of action for breach of fiduciary duty is barred by the statute of limitations. The Court finds that the gravamen of the first cause of action is the deceit of Daniels-Stock based on the allegations of the FAC that Daniels-Stock made various representations that were contrary to the truth in order for him to convert Plaintiff’s funds. Even if the Court found that the gravamen of the first cause of action was conversion, the applicable statute of limitations would still be three years. The FAC alleges that: (1) with respect to the Dauphine project, Daniel-Stock’s wrongful actions concluded by the beginning of 2015 (FAC at ¶ 19); (2) the discovery of Daniel-Stock’s wrongful actions in connection with the St.Philip project was revealed by February 2016 when Mitchell had to take over that project (Id. at ¶ 24); and (3) Daniels-Stock created JDS on or about January 21, 2016 and used funds he had stolen from the bank account of Plaintiff to start JDS. (Id. at ¶ 25.) The complaint in this action was not filed until September 12, 2019. The complaint was filed more than three years after the last action took place that gives rise to the breach of fiduciary duty cause of action.

Therefore, the Court SUSTAINS the demurrer of Defendants to the first cause of action in the FAC without leave to amend under Blank. This is the second iteration of Plaintiff’s complaint as Plaintiff was on notice of the defects in its pleading pursuant to the Court’s ruling on the demurrer to the complaint in this action. Plaintiff has not met its burden in showing that there is a reasonable possibility that the complaint can be amended to state a cause of action for breach of fiduciary duty.

Issue No.2: Second Cause of Action

A quiet title cause of action is insufficient where the complaint is not verified. (Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1866.)

Plaintiff’s opposition concedes that the FAC is not verified. (Opposition at 2:8-12.)

Therefore, Defendants’ demurrer to the second cause of action in the FAC is SUSTAINED without leave to amend under Blank for the reasons set forth above for sustaining the demurrer without leave to amend with respect to the first cause of action in the FAC.

Issue No. 3: Conversion and Injunction Causes of Action

Plaintiff acknowledges in its opposition that it is indeed asserting causes of action for conversion and injunction in the FAC. (Opposition at 5:24-25.) Plaintiff also concedes that the FAC is not compliant with California Rules of Court, Rule 2.112. (Id. at 6:2-5.)

California Rules of Court, Rule 2.112 requires that each cause of action asserted in a complaint be separately numbered and the nature of such cause of action identified. “Following an order sustaining a demurrer . . . with leave to amend, the plaintiff may amend his or her complain only as authorized by the court’s order.” (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) “The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.” (Id.)

Here, the Court sustained Defendants’ demurrer to the first and second causes of action in the complaint with leave to amend. The complaint only asserted causes of action for breach of fiduciary duty and quiet title. The Court’s December 19, 2019 minute order did not grant Plaintiff permission to assert additional causes of action. The Court’s minute order only granted Plaintiff permission to amend the two causes of action asserted in the complaint. Plaintiff’s addition of the causes of action for injunction and conversion in the FAC are improper under Harris. Moreover, the purported conversion and injunction causes of action are not compliant with California Rules of Court, Rule 2.112.

Therefore, the Court SUSTAINS without leave to amend the demurrer to the conversion and injunction causes of action in the FAC.

Issue No. 4: Streamlining the Lead Case and the Consolidated Case

Plaintiff asserts that the Court should streamline the Lead Case and the Consolidated Case by allowing it to amend the Lead Case to seek the relief sought in this action. Plaintiff contends that both cases involve many of the same background facts and includes the same parties with the exception of JDS.

“There is nothing novel in the concept that a trial court has the power to exercise a reasonable control over all proceedings connected with the litigation before it. Such power necessarily exists as one of the inherent powers of the court and such power should be exercised by the courts in order to insure the orderly administration of justice.” (Hays v. Superior Court in and for Los Angeles County (1940) 16 Cal.2d 260, 264.)

The Court finds that Plaintiff’s argument is factually incorrect. Pursuant to the Court’s October 29, 2019 minute order which related the Lead Case and the Consolidated Case, case number BC640352 which is the case subject to Defendants’ demurrer to the FAC is the Lead Case. The Court exercises its discretion and DENIES Plaintiff’s request to streamline the Lead Case and the Consolidated Case under Hays.

Moving parties are ordered to give notice of this ruling.

In consideration of the current COVIC-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by CourtCall if the parties do not submit on the tentative.  If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 24th day of June 2020

Hon. Holly J. Fujie

Judge of the Superior Court

Case Number: BC640352    Hearing Date: December 19, 2019    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

CHRISTOPHER MITCHELL, et al.,

Plaintiffs,

vs.

JEREMY DANIELS-STOCK, et al.

Defendants.

AND RELATED CONSOLIDATED CASE

CASE NO.: BC640352

[TENTATIVE] ORDER RE: DEMURRER TO COMPLAINT

Date: December 19, 2019

Time: 8:30 a.m.

Dept. 56

MOVING PARTIES: Defendants Jeremy Daniels-Stock (“Daniels-Stock”) and JDS Minions, Inc. (“JDS”)

RESPONDING PARTY: Plaintiff Koi Pond, Inc.

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

Plaintiff filed a complaint in Koi Pond, Inc. v. Jeremy Daniels Stock et al., Los Angeles Superior Court case number 19STCP03959 (the “Consolidated Case”) on September 12, 2019 which arises from alleged wrongful actions in connection with investing in real estate ventures for profit. The Consolidated Case is related and consolidated with the lead case entitled Christopher Mitchell et al. v. Jeremy Daniels-Stock et al., Los Angeles Superior Court case number BC640352 (the “Lead Case”). The complaint in the Consolidated Case alleges causes of action for: (1) breach of fiduciary duties; and (2) quiet title.

Defendants filed a demurrer to the first and second causes of action with respect to the Consolidated Case. Defendants assert that Plaintiff’s complaint in the Consolidated Case is time barred on its face.

MEET AND CONFER

The meet and confer requirement has been met.

DEMURRER

“A demurrer tests the sufficiency of a complaint as a matter of law.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) “[T]he court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Id.) “The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.” (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer “[t]he complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) “On demurrer, all material facts properly pleaded and all reasonable inferences which can be drawn therefrom are deemed admitted.” (Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 198.) A general demurer is allowed when the complaint on its face shows that an action is barred by the statute of limitations. (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 300.) “It is established that a demurrer which merely states that the cause of action set forth in the complaint is on its face barred by the statute of limitations is sufficient to raise that defense.” (Williams v. International Longshoremen’s and Warehousemen’s Union, Local No. 10 (1959) 172 Cal.App.2d 84, 87.) “A plaintiff may not avoid a demurrer by pleading facts or positions in an amended complaint that contradict the facts pleaded in the original complaint or by suppressing facts which prove the pleaded facts false.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1491.)

Issue No. 1: First Cause of Action

“The statute of limitations for breach of fiduciary duty is three or four years, depending on whether the breach is fraudulent or nonfraudulent.” (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.) In the context of a breach of fiduciary duty cause of action “where the gravamen of the claim is deceit” the statute of limitations is three years. (Fuller v. First Franklin Financial Corp. (2013) 216 Cal.App.4th 955, 963.) “The nature of the right sued on, not the form of action demanded, determines the applicability of the statute of limitations.” (Schneider v. Union Oil Co. (1970) 6 Cal.App.3d 987, 993.) “An important exception to the general rule of accrual is the discovery rule, which postpones accrual of a cause of action until the plaintiff discovers, or as reason to discover, the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “A plaintiff has reason to discover a cause of action when he or she has reason to at least suspect a factual basis for its elements.” (Id.) “Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period.” (Id.) “A cause of action under this discovery rule accrues when plaintiff either (1) actually discovered his injury and its negligent cause or (2) could have discovered injury and cause through the exercise of reasonable diligence.” (McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 108.) In order to invoke the benefit of the discovery rule a plaintiff must “specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (NBCUniversal Media, LLC v. Superior Court (2014) 225 Cal.App.4th 1222, 1232.) The statute of limitations for conversion is three years under California Code of Civil Procedure, Section 338(c)(1). The statue of limitations for breach of oral contract is two years under California Code of Civil Procedure, Section 339.

Plaintiff’s complaint alleges that: (1) Daniels-Stock represented he was getting all necessary permits and inspections when in actuality Daniels-Stock was using unlicensed contractors and was lying about permits which he never obtained (Complaint at ¶ 19); (2) over the last six months of 2014 and the beginning of 2015, Daniels-Stock drained the Koi Pond bank account and effectively stole the money from Koi Pond (Id.); (3) in January 2016, Daniels-Stock took the funds he had stolen from Koi Pond and used those funds to form JDS (Id. at ¶ 25); and (4) Daniels-Stock breached his fiduciary duty to Koi Pond by converting Koi Pond’s funds, hiring unlicensed individuals and failing to obtain permits, failing account for funds, failing to timely and accurately report on the status of the rehab of the two projects, and creating JDS to convert Koi Pond’s funds for his own personal benefit. (Id. at ¶ 43.) The complaint alleges two property rehab projects—the Dauphine and St.Philip projects—began in 2014 and 2015, respectively. The complaint alleges that: (1) Daniels-Stock drained the Koi Pond bank account with respect to the Dauphine project over the last six months of 2014 and the beginning of 2015 (Complaint at ¶ 19); (2) with respect to the St.Philip project, Daniels-Stock paid himself $32,000.00 from the Koi Pond bank account without producing receipts to validate that figure (Id. at ¶ 21); (3) in November 2015, Daniels-Stock took another $30,000.00 from the Koi Pond bank account (Id. at ¶ 22); and (4) by February 2016, it was obvious that Daniels-Stock was not doing his job with respect to the St. Philip project and that he was taking money out of the Koi Pond bank account for his own use rather than spending it on any remodeling of the St. Philip project. (Id. at ¶ 24.)

Initially, the Court finds that Plaintiff cannot invoke the discovery rule because the complaint does not plead the manner of discovery of the alleged wrongful actions at issue, and the complaint does not plead facts showing reasonable diligence on behalf of Plaintiff as required by NBCUniversal.

The Court finds that Plaintiff’s first cause of action is barred by the statute of limitations. The Court finds that the gravamen of the first cause of action is the deceit of Daniels-Stock based on the complaint’s allegations that Daniels-Stock made various representations that were contrary to the truth in order for him to convert Koi Pond’s funds. Even if the Court found that the gravamen of the first cause of action was conversion, the applicable statute of limitations would still be three years. The complaint indicates that: (1) with respect to the Dauphine project, Daniel-Stock’s wrongful actions concluded by the beginning of 2015 (Complaint at ¶ 19); (2) the discovery of Daniel-Stock’s wrongful actions in connection with the St.Philip project was revealed by February 2016 when Mitchell had to take over that project (Id. at ¶ 24); and (3) Daniels-Stock created JDS on or about January 21, 2016 and used funds he had stolen from the bank account of Koi Pond to start JDS. (Id. at ¶ 25.) The complaint in the Consolidated Case was filed on September 12, 2019. The complaint was filed more than three years after the last action took place that gives rise to the breach of fiduciary duty cause of action.

Therefore, the Court SUSTAINS the demurrer of Defendants to the first cause of action in the complaint with 20 days leave to amend.

Issue No.2: Second Cause of Action

A quiet title cause of action is insufficient where the complaint is not verified. (Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1866.)

Plaintiff’s opposition fails to even address Defendants’ argument that the quiet title cause of action is based on the faulty breach of fiduciary duty cause of action, and that the quiet title cause of action is insufficient because the complaint is unverified. The Court finds that Plaintiff’s failure to address these arguments indicates a concession to such arguments. (Heglin v. F.C.B.A. Market (1945) 70 Cal.App.2d 803, 806.)

Therefore, Defendants’ demurrer to the second cause of action in the complaint is SUSTAINED with 20 days leave to amend.

Moving parties are ordered to give notice of this ruling.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 19th day of December 2019

Hon. Holly J. Fujie

Judge of the Superior Court

related-case-search

Dig Deeper

Get Deeper Insights on Court Cases


Latest cases represented by Lawyer WU SCOTT D.

Latest cases represented by Lawyer GREENE RICHARD J.