This case was last updated from Los Angeles County Superior Courts on 12/28/2020 at 00:06:43 (UTC).

EDWIN MINASSIAN VS MICHAEL PANOSIAN, ET AL

Case Summary

On 08/16/2016 EDWIN MINASSIAN filed a Contract - Other Contract lawsuit against MICHAEL PANOSIAN. This case was filed in Los Angeles County Superior Courts, Burbank Courthouse located in Los Angeles, California. The Judges overseeing this case are LAURA A. MATZ, CURTIS A. KIN and SAMANTHA JESSNER. The case status is Disposed - Judgment Entered.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****5533

  • Filing Date:

    08/16/2016

  • Case Status:

    Disposed - Judgment Entered

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

LAURA A. MATZ

CURTIS A. KIN

SAMANTHA JESSNER

 

Party Details

Plaintiffs, Cross Defendants and Respondents

MINASSIAN EDWIN

IBEENA MINASSIAN

MKM & GROUP ASSOCIATES INC. A

MINASSIAN IBEENA

Defendants, Cross Plaintiffs and Appellants

TOUGHBUILT INDUSTRIES INC.

PANOSIAN MICHAEL

Not Classified By Court

L.A. DEPOSITIONS INC.

MYERS PAMELA L.

HAYEK MABEL

O'TOOLE EILEEN K.

Attorney/Law Firm Details

Plaintiff and Cross Defendant Attorneys

LEVIK YARIAN ESQ

YARIAN LEVIK

RIFAT MATTHEW

LEVIK YARIAN LAW OFFICES OF

Appellant Attorney

ESQ LEVIK YARIAN

Defendant and Cross Plaintiff Attorneys

LLOYD DOUGLAS DIX

STRADLING YOCCA CARLSON & RAUTH

ANDERSON JASON

BEAUDIN KAITLYN LEE

 

Court Documents

Unknown

10/18/2018: Unknown

Unknown

10/24/2018: Unknown

Unknown

10/26/2018: Unknown

Minute Order

10/26/2018: Minute Order

Acknowledgment of Satisfaction of Judgment

11/5/2018: Acknowledgment of Satisfaction of Judgment

Acknowledgment of Satisfaction of Judgment

11/5/2018: Acknowledgment of Satisfaction of Judgment

Unknown

11/6/2018: Unknown

Unknown

1/8/2019: Unknown

Substitution of Attorney

4/11/2019: Substitution of Attorney

Substitution of Attorney

4/11/2019: Substitution of Attorney

JUDGMENT BY DEFAULT BY COURT

11/9/2017: JUDGMENT BY DEFAULT BY COURT

JUDGMENT

11/9/2017: JUDGMENT

JUDGMENT

4/12/2018: JUDGMENT

JUDGMENT

4/12/2018: JUDGMENT

Application and Order for Appearance and Examination

7/11/2018: Application and Order for Appearance and Examination

Application and Order for Appearance and Examination

7/17/2018: Application and Order for Appearance and Examination

Proof of Personal Service

7/18/2018: Proof of Personal Service

Proof of Personal Service

7/23/2018: Proof of Personal Service

11 More Documents Available

 

Docket Entries

  • 06/07/2021
  • Hearing06/07/2021 at 09:00 AM in Department E at 600 East Broadway, Glendale, CA 91206; Jury Trial

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  • 05/27/2021
  • Hearing05/27/2021 at 10:00 AM in Department E at 600 East Broadway, Glendale, CA 91206; Final Status Conference

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  • 01/29/2021
  • Hearing01/29/2021 at 08:30 AM in Department E at 600 East Broadway, Glendale, CA 91206; Hearing on Application for Order for Appearance and Examination

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  • 01/29/2021
  • Hearing01/29/2021 at 08:30 AM in Department E at 600 East Broadway, Glendale, CA 91206; Hearing on Motion for an Order to Show Cause Re: Contempt (CCP 1209)

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  • 01/15/2021
  • Hearing01/15/2021 at 14:00 PM in Department E at 600 East Broadway, Glendale, CA 91206; Hearing on Application for Order for Appearance and Examination

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  • 01/15/2021
  • Hearing01/15/2021 at 14:00 PM in Department E at 600 East Broadway, Glendale, CA 91206; Hearing on Motion to Quash 3rd party subpoena of Shabani

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  • 12/23/2020
  • DocketStipulation and Order (Granting Defendants? Attorney?s Fees Related To The Judgment Debtor?s Examination); Filed by MICHAEL PANOSIAN (Defendant); TOUGHBUILT INDUSTRIES, INC. (Defendant)

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  • 12/11/2020
  • Docketat 08:30 AM in Department E, Curtis A. Kin, Presiding; Hearing on Motion for Attorney Fees - Not Held - Rescheduled by Court

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  • 12/04/2020
  • Docketat 08:30 AM in Department E, Curtis A. Kin, Presiding; Hearing on Application for Order for Appearance and Examination (of Edwin Minassian) - Held - Continued

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  • 12/04/2020
  • DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore (Toni Fenimore, CSR 6661); Filed by MICHAEL PANOSIAN (Defendant); TOUGHBUILT INDUSTRIES, INC. (Defendant)

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464 More Docket Entries
  • 08/26/2016
  • DocketProof-Service/Summons; Filed by EDWIN MINASSIAN (Plaintiff)

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  • 08/26/2016
  • DocketProof-Service/Summons; Filed by EDWIN MINASSIAN (Plaintiff)

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  • 08/16/2016
  • DocketNotice of Case Management Conference

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  • 08/16/2016
  • DocketSummons; Filed by null

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  • 08/16/2016
  • DocketComplaint filed-Summons Issued; Filed by null

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  • 08/16/2016
  • DocketSummons Filed

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  • 08/16/2016
  • DocketComplaint filed-Summons Issued

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  • 08/16/2016
  • DocketNotice (of osc)

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  • 08/16/2016
  • DocketNotice of Case Assignment - Unlimited Civil Case

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  • 08/16/2016
  • DocketCivil Case Cover Sheet

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Tentative Rulings

Case Number: EC065533    Hearing Date: April 23, 2021    Dept: E

MOTION TO QUASH SERVICE OF PROCESS

Case: Edwin Minassian v. Michael Panosian et al. (EC065533)

TENTATIVE RULING:

Third party Ibeena Minassian’s Motion to Quash for Ineffective Service of Process is DENIED.

It is undisputed that Ibeena Minassian was not personally served with the Order to Appear for Examination. (Anderson Decl. ¶ 6 & Ex. 7.) Defendants Michael Panosian and Toughbuilt Industries, Inc., however, contend that CCP §§ 708.110(d) and 415.20(b) allow them to serve Ibeena Minassian by substitute service.

CCP § 708.110(d) states: “The judgment creditor shall personally serve a copy of the order on the judgment debtor not less than 10 days before the date set for the examination. Service shall be made in the manner specified in Section 415.10.” CCP § 415.10 states: “A summons may be served by personal delivery of a copy of the summons and of the complaint to the person to be served.” CCP § 415.20(b) provides for substitute service “in lieu of personal delivery of a copy of the summons and complaint to the person to be served.” Thus, by its explicit terms, CCP § 708.110(d) pertains to service on the judgment debtor, not a third person.

By contrast, CCP § 708.120 pertains to an order to appear for examination that is directed to a third person who has possession or control of property in which the judgment debtor has an interest. CCP § 708.120(b)(1) explicitly requires such an order to appear to be personally served on the third person. Accordingly, substitute service on Ibeena Minassian of the order at issue was not permitted.

Defendants argue in the alternative that Ibeena Minassian has waived her right to contest service by submitting to this Court’s jurisdiction by seeking to stay enforcement of this Court’s order for restitution against Edwin Minassian. In the instant motion, Ibeena Minassian specifically requests that this Court grant her affirmative relief under CCP § 918.5 by “stay[ing] the enforcement of [such] judgment” pending resolution of a separate action Edwin Minassian has brought in the Los Angeles County Superior Court (case number 20STCV08740). (See Mot. at 6 & Ex. 4.) “[A] party who seeks relief on any basis other than a motion to quash for lack of personal jurisdiction will be deemed to have made a general appearance and waived all objections to defects in service, process, or personal jurisdiction.” (Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 52.) Thus, by seeking relief under CCP § 918.5(a), Ibeena Minassian has waived the right to contest this Court’s jurisdiction over her or any defect in service. Indeed, Ibeena Minassian does not argue otherwise in the reply.

Accordingly, the motion is DENIED. The examination of Ibeena Minassian shall go forward as ordered on April 23, 2021, at 10:00 a.m., in Department E of the Glendale Courthouse.

As for defendants’ request for sanctions, even assuming CCP § 1987.2’s sanctions provision for violations of CCP sections 1987 or 1987.1 were to apply here, which is far from a certain proposition (cf. CCP § 708.200 [providing for protective order from debtor’s examination]), defendants’ request for sanctions is DENIED. Because Ibeena Minassian was not personally served with the Order to Appear for Examination, as is required by CCP § 708.120(b)(1), the Court finds she brought the instant motion with substantial justification.

Case Number: EC065533    Hearing Date: January 29, 2021    Dept: E

MOTION FOR ORDER TO SHOW CAUSE RE CONTEMPT FOR PLAINTIFF’S FAILURE TO COMPLY WITH COURT’S ORDER

[CCP § 1211 et seq.]

Date: 1/29/21 (8:30 AM)

Case: Edwin Minassian v. Michael Panosian et al. (EC065533)

TENTATIVE RULING:

Defendants Michael Panosian and Toughbuilt Industries, Inc.’s Motion for Order to Show Cause re Contempt for Plaintiff’s Failure to Comply with Court’s Order is DENIED.

On April 12, 2018, default judgment was entered against defendants Michael Panosian and Toughbuilt Industries, Inc., awarding plaintiff Edwin Minassian $235,541.58 and a 7% ownership interest in Toughbuilt. On September 13, 2018, defendants satisfied the judgment by paying plaintiff $252,949 (which included 10% interest on the judgment) and by providing 376,367 shares of common stock of Toughbuilt. (See 6/22/20 Minute Order.)

On June 22, 2020, pursuant to defendants’ Motion for Order for Restitution of Funds Paid to Satisfy a Reversed Default Judgment, the Court found that, due to the reversal of the default judgment by the Court of Appeal, under CCP § 908, defendants were entitled to $226,869 restitution and the return of the 7% interest in Toughbuilt Industries, Inc., namely, the 376,367 shares of common stock. The Court ordered such restitution to be made within 15 days (“Restitution Order”). (Anderson Decl. ¶ 7 & Ex. E.)

To date, plaintiff has not transferred the shares of stock. Defendants contend that plaintiff is willfully violating the June 22, 2020 Restitution Order by failing to transfer the stock to defendants. Defendants seek an order to show cause directing plaintiff to explain why he should not be held in contempt for violating the June 22, 2020 order.

In applying for an order to show cause re contempt, “[w]hen the contempt is not committed in the immediate view and presence of the court, or of the judge at chambers, an affidavit shall be presented to the court or judge of the facts constituting the contempt, or a statement of the facts by the referees or arbitrators, or other judicial officers.” (CCP § 1211(a).) The charging affidavit must set forth the following facts: (1) rendition of a valid order; (2) respondent’s actual knowledge of the order; (3) respondent’s ability to comply with the order; and (4) respondent’s willful disobedience of the order. (Conn v. Superior Court (1987) 196 Cal.App.3d 774, 784.)

Defendants demonstrate the rendition of a valid order. (Anderson Decl. ¶ 7 & Ex. E.) Defendants also demonstrate plaintiff’s knowledge of the Restitution Order. On June 23, 2020, defendants served notice of the Restitution Order on plaintiff. (Anderson Decl. ¶¶ 7, 8.) Plaintiff himself also acknowledged the Restitution Order in an email to defendants’ counsel. (Anderson Decl. ¶ 8 & Ex. F.)

At issue in this motion is whether defendants demonstrated that plaintiff could comply with the Restitution Order and whether plaintiff is willfully disobeying the order. On July 13, 2020, defendants provided a pre-filled vStock Transfer Instruction Form to plaintiff with instructions to complete the form and take the form to a financial institution that can provide a medallion guarantee stamp. (Anderson Decl. ¶ 10 & Ex. G.) Plaintiff argues he opened an account with Wells Fargo to obtain the medallion stamp, but Wells Fargo would not issue a medallion stamp without the original stock certificates. (Anderson Decl. ¶ 14; Minassian Decl. ¶ 11.) Plaintiff points to the language on the bottom of Transfer Instruction Form stating, “Please submit your original certificates along with this form as well as applicable W-8/W-9 forms.” (Anderson Decl. Ex. G.)

Citing a discussion with a representative of vStock Transfer over the phone and with a friend at Wells Fargo, defendants maintain that plaintiff is not required to submit the original stock certificates. (Anderson Decl. ¶ 14.) Without any declarations from the vStock Transfer representative or counsel for defendants’ friend at Wells Fargo, this assertion is based on inadmissible hearsay not falling within any exception to the hearsay rule. Defendants argue that plaintiff did not provide any evidence that Wells Fargo insists on the original stock certificates to issue a medallion stamp. (Anderson Decl. ¶ 14.) Defendants also argue that plaintiff fails to demonstrate that he attempted to obtain the medallion stamp at another institution beside Wells Fargo. It remains undisputed, however, that plaintiff does not have the original stock certificates to submit with the Transfer Instruction Form. As the moving party, defendants, not plaintiff, have the burden to demonstrate that plaintiff can comply with the Restitution Order and that plaintiff is willfully disobeying the order. Accordingly, regardless of which financial institution plaintiff submits the Transfer Instruction Form, based on the language on the form requiring original certificates, defendants fail to establish that plaintiff will be able to obtain the medallion stamp.

The motion is DENIED.

Case Number: EC065533    Hearing Date: January 15, 2021    Dept: E

MOTION TO QUASH DEPOSITION SUBPOENAS, OR IN THE ALTERNATIVE, GRANT A PROTECTIVE ORDER

Date: 1/15/21 (2:00 PM)                                         

Case: Edwin Minassian v. Michael Panosian et al. (EC065533)

TENTATIVE RULING:

 

Defendants Michael Panosian and Toughbuilt Industries, Inc.’s Motion to Quash Deposition Subpoenas, or in the Alternative, Grant a Protective Order is GRANTED.

Defendants move to quash deposition subpoenas to third parties Katsiaryna Sharapa, Linda Moossaian, Edwin Moossaian, Martin Galstyan, and Zareh Khacahtourian, or in the alternative, for a protective order.

Plaintiff contends that a motion to quash can only be based on technical defects in the subpoenas and not on grounds of relevance or undue burden. (Opp. at 6-7.) Because CCP § 1987.1 allows the Court to “make any other order as may be appropriate to protect the person from unreasonable or oppressive demands,” defendants may seek to quash the subpoena based on undue burden and lack of relevance.

With respect to Linda Moossaian, Edwin Moossaian, Zareh Khacahtourian, and Martin Galstyan, plaintiff does not dispute that these individuals are high-ranking corporate officials at Toughbuilt. Accordingly, these individuals are “apex” witness as described in Liberty Mutual Ins. Co. v. Superior Court (1992) 10 Cal.App.4th 1282. Other than speculation, plaintiff has not provided any evidence that these individuals have “unique or superior knowledge” concerning the allegations of the Complaint, including information pertinent to the alleged existence of an oral agreement between plaintiff and defendants concerning the development of the rugged cell phone. (Liberty Mutual, 10 Cal.App.4th at 1289.) Plaintiff does not contend that these individuals were present on the airplane where the parties in this action allegedly reached an oral agreement. (Compl. ¶¶ 43, 45.) Accordingly, any depositions of these individuals would consist of repetitive, second-hand knowledge that would not be probative of the existence of the oral agreement.

Even if these individuals have unique or superior knowledge, plaintiff has not demonstrated that he has pursued less intrusive means to obtain the information, such as written interrogatories to the individuals, the deposition of lower-level employees, or the deposition of Panosian and the Person Most Knowledgeable of Toughbuilt. (Liberty Mutual, 10 Cal.App.4th at 1289.)

With respect to Katsiaryna Sharapa, her deposition is precluded by spousal privilege. A “married person has a privilege not to testify against his spouse in any proceeding.” (Evid. Code § 970.) Plaintiff argues that an exception to the spousal privilege applies under Evidence Code § 973(b), which provides that there “is no privilege under this article in a civil proceeding brought or defended by a married person for the immediate benefit of his spouse or of himself and his spouse.” (Evid. Code § 973(b).) Here, it is undisputed that Sharapa was not a party to the alleged oral contract and not employed by Toughbuilt. Accordingly, any interest Sharapa may have in this action is implicated solely through her marriage to Panosian. (Fam. Code § 910 [community estate liable for spouse’s debts incurred before or during marriage].) This is not the type of “immediate benefit” implicated by Evidence Code § 973(b). (Duggan v. Superior Court (1981) 127 Cal.App.3d 267, 270 [spouse who is neither a signatory to a contract being litigated, nor a party to the litigation, is not a person for whose “immediate benefit” an action is brought, solely by virtue of a potential community interest which the plaintiff may obtain].) Accordingly, the deposition of Sharapa is barred by spousal privilege.

For the foregoing reasons, the motion is GRANTED. The deposition subpoenas of Katsiaryna Sharapa, Linda Moossaian, Edwin Moossaian, Martin Galstyan, and Zareh Khacahtourian are QUASHED. (Anderson Decl. ¶¶ 5-9 & Exs. C-G.) This ruling is made without prejudice to plaintiff seeking the depositions of Linda Moossaian, Edwin Moossaian, Martin Galstyan, and Zareh Khacahtourian should subsequently obtained evidence demonstrate good cause.

Case Number: EC065533    Hearing Date: November 20, 2020    Dept: E

(1) MOTION TO STAY JUDGMENT DEBTOR EXAMINATION

(2) MOTION FOR ATTORNEY FEES FOR PLAINTIFF’S FAILURE TO APPEAR AT JUDGMENT DEBTOR EXAMINATION

Case: Edwin Minassian v. Michael Panosian et al. (EC065533)

TENTATIVE RULING:

Plaintiff Edwin Minassian’s Motion to Stay Judgment Debtor Examination is DENIED. Defendants Michael Panosian and Toughbuilt Industries, Inc.’s Motion for Attorney Fees for Plaintiff’s Failure to Attend Judgment Debtor Examination is GRANTED.

I. MOTION TO STAY JUDGMENT DEBTOR EXAMINATION

On April 12, 2018, default judgment was entered against defendants Michael Panosian and Toughbuilt Industries, Inc., awarding plaintiff Edwin Minassian $235,541.58 and a 7% ownership interest in Toughbuilt. On September 13, 2018, defendants satisfied the judgment by paying plaintiff $252,949 (which included 10% interest on the judgment) and by providing 376,367 shares of common stock of Toughbuilt. (See 6/22/20 Minute Order.)

On June 22, 2020, pursuant to defendants’ Motion for Order for Restitution of Funds Paid to Satisfy a Reversed Default Judgment, the Court found that, due to the reversal of the default judgment by the Court of Appeal, defendants were entitled to $226,869 restitution pursuant to CCP § 908. The Court also ordered plaintiff to return to defendants the 7% interest in Toughbuilt Industries, Inc., namely, the 376,367 shares of common stock. The Court ordered such restitution to be made within 15 days.

On July 24, 2020, pursuant to defendants’ application, the Court issued an order for plaintiff to appear for a judgment debtor examination on September 11, 2020. On September 9, 2020, plaintiff filed this motion to stay judgment debtor examination pursuant to CCP § 918.5.

The Court finds that CCP § 918.5 does not apply here. The language of the statute states that the judgment debtor (i.e., plaintiff) must have “another action pending on a disputed claim against the judgment creditor.” (CCP § 918.5(a).) In considering whether to stay execution of the restitution order, the Court must consider the “likelihood of the judgment debtor prevailing in the other action.” (CCP § 918.5(b)(1).) On the face of CCP § 918.5, a separate action is required for plaintiff to seek a stay of the judgment debtor examination. (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1003 [“In interpreting a statute where the language is clear, courts must follow its plain meaning”].) Here, plaintiff has no other action against defendants where the recovery would offset the judgment for restitution issued in this action. The judgment for restitution and collection thereon arise from this same action. Accordingly, the motion is DENIED.

II. MOTION FOR ATTORNEY FEES FOR PLAINTIFF’S FAILURE TO ATTEND JUDGMENT DEBTOR EXAMINATION

CCP § 708.170(a)(2) states, “If an order requiring a person to appear for an examination was served by a sheriff, marshal, a person specially appointed by the court in the order, or a registered process server, and the person fails to appear: [¶] (2) If the person’s failure to appear is without good cause, the judgment creditor shall be awarded reasonable attorney’s fees incurred in the examination proceeding. Attorney’s fees awarded against the judgment debtor shall be added to and become part of the principal amount of the judgment.”

On July 24, 2020, the Court issued an order for plaintiff Edwin Minassian to appear for a judgment debtor examination on September 11, 2020 at 8:30 a.m. in Department E. (Beaudin Decl. ¶ 4 & Ex. B.) On August 21, 2020, a registered process server served the order to appear on plaintiff. (Beaudin Decl. ¶ 7 & Ex. D.) While plaintiff’s counsel for the limited scope of the judgment debtor examination specially appeared, plaintiff Minassian himself failed to appear for the judgment debtor examination. (Beaudin Decl. ¶ 12.)

With respect to the instant motion, plaintiff has filed a conditional opposition, conceding that defendants are entitled to an award of fees but contesting the amount of such award. Accordingly, pursuant to CCP § 708.170(a)(2), defendants, as the judgment creditors, are entitled to an award of reasonable attorney’s fees.

Plaintiff argues that the $4,711.45 charged for service of process is excessive. (Beaudin Decl. ¶ 16 & Ex. J.) The process server charged for surveillance, but plaintiff maintains that defendants did not provide any evidence that plaintiff evaded service. However, before plaintiff was personally served on August 21, 2020, after defendants’ initial attempts to personally serve plaintiff were unsuccessful, defendants twice attempted to obtain plaintiff’s notice and acknowledgement of receipt to avoid the need for a stake out. (Beaudin Decl. ¶¶ 5, 6.) Defendants received no response from plaintiff. (Beaudin Decl. ¶ 6.) Accordingly, given defendants’ difficulties in personally serving plaintiff, surveillance was a reasonable cost.

Plaintiff also disputes the defense counsel’s hourly rate of $470. Given counsel’s four years of experience in business litigation, the Court finds that $470 is a reasonable hourly rate. (Beaudin Decl. ¶ 4.)

Accordingly, the motion is GRANTED. Pursuant to CCP § 708.170(a)(2), plaintiff Edwin Minassian is ordered to pay $12,546.45, comprised of $7,285 in fees and $5,261.45 in costs, to defendants’ counsel within 30 days hereof. (Beaudin Decl. ¶¶ 15, 16 & Exs. H & J.)

Case Number: EC065533    Hearing Date: June 22, 2020    Dept: E

(1) MOTION FOR LEAVE TO WITHDRAW ADMISSIONS

(2) MOTION FOR RESTITUTION OF FUNDS PAID TO SATISFY A DEFAULT JUDGMENT

Date: 6/22/20 (3:30 PM)

Case: Edwin Minassian v. Michael Panosian et al. (EC065533)

TENTATIVE RULING:

I. BACKGROUND AND PRELIMINARY MATTERS

On February 7, 2017, pursuant to plaintiff Edwin Minassian’s motion, the Court ordered Requests for Admission admitted against defendants Michael Panosian and Toughbuilt Industries, Inc. (Anderson Decl. ¶ 5 & Ex. A.) Based on defendants’ failure to respond to discovery, including the Requests for Admission, the Court subsequently granted plaintiff’s motion for terminating sanctions and struck the answer filed by defendants. (See 5/4/17 minute order.) Ultimately, plaintiff obtained a default judgment against defendants for $235,541.58 and a 7% interest in Toughbuilt. (Anderson Decl. ¶ 14 & Ex. N.) The Court of Appeal reversed the judgment in a decision issued November 1, 2019, and ordered that the trial court grant defendants’ CCP § 473(b) motion for relief from default and permit them to file an Answer. (Anderson Decl. ¶ 18 & Ex R.) The remittitur issued December 3, 2019. (Anderson Decl. Ex. S.)

Pursuant to the Court of Appeal’s direction, the Court hereby vacates the entry of default against both defendants nunc pro tunc as of December 3, 2019. Accordingly, defendants’ unsigned Answer, filed February 4, 2020, shall be deemed filed as of that date upon their filing a signed Answer with the Court within 10 days hereof. The Court also deems defendants’ filings in this Court subsequent to issuance of the remittitur to have been filed on the dates they were submitted to the Court.

II. DEFENDANTS’ MOTION FOR LEAVE TO WITHDRAW ADMISSIONS

Defendants Michael Panosian and Toughbuilt Industries, Inc.’s Motion for Leave to Withdraw Admissions is GRANTED.

As an initial matter, the Court rejects plaintiff’s argument that the instant motion is untimely because it was filed on February 3, 2020, approximately three years from February 7, 2017, the date on which the Requests for Admission were deemed admitted. CCP § 2033.300 does not set forth any time limit to file a motion for leave to withdraw admissions. Moreover, because defendants have been in default for essentially the entire period after the requests for admissions were deemed admitted, defendants have been prevented from appearing in the action to request withdrawal of the admissions. (See Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385-86 [“A defendant against whom a default has been entered is out of court

and is not entitled to take any further steps in the cause affecting plaintiff's right of action.”].) Defendants’ only remedy was to move to set aside the default and terminating sanctions leading to the default, which they did. Within two months of the Court of Appeals issuance of the remittitur, defendants brought the instant motion, which this Court finds to be timely.

On the merits, the Court notes that, in the affidavit of fault submitted in support of defendants’ § 473(b) motion to set aside default, defendants’ former counsel Lloyd Douglas Dix avers that, while representing defendants, his wife experienced severe seizures beginning in June 2016, after which he delegated work to other attorneys who then failed to handle the representation of defendants. (Anderson Decl. ¶ 9 & Ex. I [11/15/17 Dix Decl. ¶¶ 5, 8, 9].) Former counsel believed that defendants were being adequately represented, but later discovered through plaintiff’s meet and confer efforts that the attorneys to whom he delegated representation of defendants failed to answer discovery. (Dix Decl. ¶ 12, 13.) Neither former counsel nor anyone acting on his behalf informed defendants that they failed to respond to discovery responses or that the Court had deemed admitted the Requests for Admission. (Dix Decl. ¶¶ 13, 15, 16.) Former counsel further averred that the failure to respond to discovery was solely his fault. (Dix. Decl. ¶ 20.)

The policy behind allowing withdrawal of admissions is to prevent “undeserved windfalls” and favor “resolution of lawsuits on the merits.” (Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 983.) Even though former counsel admits to stipulating to the order deeming the Requests for Admissions admitted, former counsel’s declaration explains that his preoccupation with his wife’s illness resulted in his complete failure to adequately supervise the attorneys charged with representing defendants and ultimate failure to oppose—indeed, his stipulation to accept—the Court’s decision deeming the Requests for Admissions admitted. Significantly, former counsel explains that defendants neither participated in nor were even aware of counsel’s failure to meet discovery obligations which led to the requests for admissions being deemed admitted. While the Court finds former counsel’s conduct (or lack of conduct, to be precise) shocking and worthy of reprove, the Court also finds that, under the circumstances, former counsel’s neglect in failing to respond to the Requests for Admission was excusable, or, at the very least, not clearly inexcusable. (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1420–21 [“Because the law strongly favors trial and disposition on the merits, any doubts in applying section 2033.300 must be resolved in favor of the party seeking relief. Accordingly, the court's discretion to deny a motion under the statute is limited to circumstances where it is clear that the mistake, inadvertence, or neglect was inexcusable . . . .”].)

While it is also true that the Court of Appeal’s order reversing the default judgment does not discuss this Court’s order deeming the Requests for Admission admitted, it is clear that deeming requests for admission admitted here would effectively operate as a terminating sanction. For example, Requests for Admission Nos. 7-12 if deemed admitted would establish conclusively plaintiff’s claims that defendants agreed to provide plaintiff a 7% interest in Toughbuilt, a position in Toughbuilt, and a salary and commissions in exchange for plaintiff’s assistance in developing a cell phone for Toughbuilt. (Compare Motion, Exs. 1, 2 with Compl. ¶¶ 67-70.) The Court of Appeal has found that, based on the same attorney affidavit of fault, defendants are entitled to relief both from default and from the order granting terminating sanctions. (See Anderson Decl. Ex. S at pp. 11-13.) Where, as here, the order deeming requests for admission

admitted amounts to a terminating sanction and resulted from the same attorney fault that led to the order for terminating sanctions and entry of default, it would be an empty gesture for defendants to prevail on appeal with respect to the order for terminating sanctions and entry of default if the order deeming Requests for Admissions admitted were permitted to stand. (Matera v. McLeod (2006) 145 Cal.App.4th 44, 62 [“To vacate the defaults without reinstating defendants' answer would be an empty gesture.”].)

The Court also finds plaintiff would not be prejudiced by the withdrawal of admissions, because there is no showing that plaintiff could not otherwise proceed with discovery and prove the elements of his case.

For the foregoing reasons, the motion is GRANTED. Defendants Michael Panosian and Toughbuilt Industries, Inc.’s admissions to plaintiff Edwin Minassian’s Requests for Admissions, Set One are withdrawn. Defendants’ responses to the Requests for Admissions attached to the motion as Exhibits 1 and 2 are deemed the operative responses.

In the exercise of its discretion under CCP § 2033.300, the Court denies plaintiff’s request for reimbursement of costs. In this regard, the Court notes, as detailed below, that, in connection with the motion for terminating sanctions and other motions to compel discovery, the trial court imposed monetary sanctions, which were incorporated into the default judgment and paid by defendants.

III. DEFENDANTS’ MOTION FOR RESTITUTION OF FUNDS

Defendants Michael Panosian and Toughbuilt Industries, Inc.’s Motion for Restitution of Funds Paid to Satisfy a Reversed Default Judgment is GRANTED IN PART.

As discussed above, on April 12, 2018, default judgment was entered against defendants Michael Panosian and Toughbuilt Industries, Inc., awarding plaintiff Minassian $235,541.58 and a 7% ownership interest in Toughbuilt. On September 13, 2018, to avoid the time and expense of a judgment debtor examination, defendants satisfied the judgment by paying plaintiff $252,949 (which included 10% interest on the judgment) and by providing 376,367 shares of common stock of Toughbuilt. (Anderson Decl. ¶¶ 17, 18 & Exs. Q, S.)

Because the default judgment was reversed by the Court of Appeal, defendants are entitled to restitution under CCP § 908, which this Court is authorized to award. (Gunderson v. Wall (2011) 196 Cal.App.4th 1060, 1065 [recognizing a court whose order or judgment has been reversed has the “inherent power” to provide restitution under section 908].) In doing so, “[t]he fundamental rule guiding the court in [such] proceeding[s] [i]s, so far as possible, to place the parties in as favorable a position as they could have been in had the judgments not been enforced pending appeal.” (Ibid.)

The Court takes judicial notice of the declarations plaintiff Minassian and his counsel Trevor R. Hiddin submitted in support of the default judgment entered by the Court. Those declarations make clear that the $235,541.58 requested of and entered by the Court in its default judgment contained unpaid amounts awarded by the Court for fees and sanctions independent of plaintiff’s

claim for damages in the complaint. (See Minassian Decl. ¶¶ 38(a), (d) & (e) [filed 4/2/18]; Hindin Decl. ¶¶ 8, 11, 18 [filed 4/2/18].) Specifically, the default judgment encompasses: (1) $3,960 in monetary sanctions for defendants’ discovery violations, payable within 30 days of a 2/3/17 hearing (see 2/7/17 Order); (2) $860 in monetary sanctions for discovery violations, payable within 30 days of a 4/14/17 hearing (see 4/14/17 Minute Order); and (3) $21,040 and $220 in mandatory attorneys’ fees and costs under CCP § 425.16 to Minassian as the prevailing party on his special motion to strike the cross-complaint (see 4/21/17 Notice of Ruling). The orders imposing these fees and costs (totaling $26,080) were not appealed from and remain valid.

Accordingly, the Court finds that defendants are entitled to restitution in the amount of $226,869, which is based on the $252,949 defendants paid in satisfaction of the judgment on September 13, 2018 (Anderson Decl. ¶ 17 & Exs.Q, R, S), minus the aforementioned $26,080 in fees and costs to which plaintiff is still entitled. In addition, with respect to the $226,869 in restitution, the Court also finds that defendants are entitled to 10% interest from the September 13, 2018 date of satisfaction. The Court finds the 10% interest rate to fairly place the parties in the position they would have been had the judgment not been paid. Indeed, the Court notes in this regard that, if plaintiffs had instead prevailed on appeal and the judgment remained unsatisfied, plaintiff would have been entitled to the statutory post-judgment interest rate of 10% per annum on the unpaid award.

The Court additionally orders that, pursuant to CCP § 908, plaintiff return to defendants the 7% interest in Toughbuilt Industries, Inc., namely, the 376,367 shares of common stock.

For the foregoing reasons, the defendants’ Motion for Restitution is GRANTED IN PART. Plaintiff shall make such restitution as ordered herein within 15 days hereof.

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