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This case was last updated from Los Angeles County Superior Courts on 04/20/2019 at 11:06:04 (UTC).

JANIS F HORN SEPARATE PROPERTY TRUST VS SHAOUL LEVY

Case Summary

On 07/21/2014 JANIS F HORN SEPARATE PROPERTY TRUST filed a Contract - Other Contract lawsuit against SHAOUL LEVY. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are CRAIG D. KARLAN, GERALD ROSENBERG and GAIL FEUER. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****2231

  • Filing Date:

    07/21/2014

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

CRAIG D. KARLAN

GERALD ROSENBERG

GAIL FEUER

 

Party Details

Plaintiffs and Petitioners

JANIS F. HORN SEPARATE PROPERTY TRUST

JANICE F. HORN SEPARATE PROPERTY TRUST

Defendants and Respondents

DOES 1 THROUGH 10

LEVY SHAOUL

HORN JANIS F.

Other

HERZOG IAN LAW OFFICES OF

Not Classified By Court

BENCHMARK RESOLUTION GROUP

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

MILLER DANIEL S.

MILLER LOUIS R. ESQ.

Defendant and Respondent Attorneys

MURPHY ROSEN MEYLAN & DAVITT

MURPHY PAUL D. ESQ.

HERZOG IAN LAW OFFICES OF

 

Court Documents

Minute Order

1/14/2016: Minute Order

Minute Order

1/20/2016: Minute Order

Unknown

1/26/2016: Unknown

Unknown

1/27/2016: Unknown

Unknown

1/27/2016: Unknown

Unknown

2/4/2016: Unknown

Unknown

3/21/2016: Unknown

Unknown

7/21/2016: Unknown

Other -

10/13/2016: Other -

Unknown

10/13/2016: Unknown

Unknown

10/13/2016: Unknown

Proof of Personal Service

1/28/2019: Proof of Personal Service

Ex Parte Application

2/21/2019: Ex Parte Application

Declaration

2/21/2019: Declaration

Order

3/1/2019: Order

ORIGINAL PROOF OF SERVICE OF SUMMONS AND COMPLAINT

8/6/2014: ORIGINAL PROOF OF SERVICE OF SUMMONS AND COMPLAINT

OPPOSITION OF THIRD-PARTIES GREAT AMERICAN CHICKEN CORP., INC. AND U.S. FOODS CORP., INC. TO NOTICE OF RELATED CASES FILED BY THE JANIS F. HORN SEPARATE PROPERTY TRUST

8/8/2014: OPPOSITION OF THIRD-PARTIES GREAT AMERICAN CHICKEN CORP., INC. AND U.S. FOODS CORP., INC. TO NOTICE OF RELATED CASES FILED BY THE JANIS F. HORN SEPARATE PROPERTY TRUST

REPLY IN SUPPORT OF PLAINTIFF?S NOTICE OF RELATED CASES BC55223 SCI2O 155; AND SC120466

8/15/2014: REPLY IN SUPPORT OF PLAINTIFF?S NOTICE OF RELATED CASES BC55223 SCI2O 155; AND SC120466

62 More Documents Available

 

Docket Entries

  • 04/02/2019
  • at 08:30 AM in Department K; Hearing on Motion for Summary Judgment - Not Held - Continued - Court's Motion

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  • 03/01/2019
  • Order ([PROPOSED] Order Adopting the Discovery Referee's Report and Recommendation); Filed by Shaoul Levy (Defendant)

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  • 02/25/2019
  • at 08:30 AM in Department K; Ex-Parte Proceedings - Held

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  • 02/25/2019
  • Minute Order ( (Joint Ex Parte Application to Request Trial Date Continuance)); Filed by Clerk

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  • 02/25/2019
  • Order (on Joint Ex Parte Application to Request Trial Date Continuance)

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  • 02/21/2019
  • Proof of Service (not Summons and Complaint); Filed by Janis F. Horn Separate Property Trust (Plaintiff)

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  • 02/21/2019
  • Declaration (Declaration of David I. Bosko In Support of Joint Ex Parte Application to Request Trial Date Continuance); Filed by Janis F. Horn Separate Property Trust (Plaintiff)

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  • 02/21/2019
  • Ex Parte Application (Joint Ex Parte Application to Request Trial Date Continuance); Filed by Janis F. Horn Separate Property Trust (Plaintiff)

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  • 02/07/2019
  • Response (Response to Janis F. Horn Separate Property Trust's Objection to Discovery Referee's Report; Declaration of Paul D. Murphy); Filed by Shaoul Levy (Defendant)

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  • 01/28/2019
  • Proof of Service (not Summons and Complaint); Filed by Janis F. Horn Separate Property Trust (Plaintiff)

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406 More Docket Entries
  • 07/30/2014
  • First Amended Complaint; Filed by Janis F. Horn Separate Property Trust (Plaintiff)

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  • 07/30/2014
  • SUMMONS

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  • 07/30/2014
  • FIRST AMENDED COMPLAINT FOR: (1) BREACH OF CONTRACT; ETC

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  • 07/30/2014
  • Summons; Filed by Janis F. Horn Separate Property Trust (Plaintiff)

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  • 07/21/2014
  • Complaint Filed

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  • 07/21/2014
  • COMPLAINT FOR: (1) BREACH OF CONTRACT; ETC

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  • 07/21/2014
  • SUMMONS

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  • 07/21/2014
  • Complaint; Filed by Janice F. Horn Separate Property Trust (Plaintiff); Janis F. Horn Separate Property Trust (Plaintiff)

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  • 12/31/1951
  • Response; Filed by Janice F. Horn Separate Property Trust (Plaintiff)

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  • 12/31/1951
  • Response ( PLF JANIS HORN SEPARATE PROPERTY TRUST'S RESPONSE TO DEFT SEPARATE STATEMENT ); Filed by Attorney for Plaintiff

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Tentative Rulings

Case Number: BC552231    Hearing Date: February 05, 2021    Dept: P

Tentative Ruling

Janis F. Horn Separate Property Trust v. Levy et al., Case No. BC552231

Hearing Date February 5, 2021

Defendant’s Motion for Judgment on the Pleadings/Receipt of Stolen Property COA

Defendant moves for judgment on the pleadings as to plaintiff’s fifth cause of action for receipt of stolen property under Pen. Code §496(c).

A motion for judgment on the pleadings is essentially identical to a demurrer and can be used to target “defects disclosed on the face of the pleadings or by matters that can be judicially noticed.” Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999. Under Pen. Code §496(c), “[a]ny person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff[.]” A statutory penalty provides for “recovery of damages additional to actual losses incurred, such as double or treble damages. E.g. G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 277. When a cause of action is based on a statutory penalty or forfeiture, the action must be brought within one year. Code of Civ. Proc. §340(a).

Defendant argues the fifth cause of action seeks a statutory penalty under Pen. Code §496, so is subject to the one year statute of limitations. The SAC concedes the Horn Trust became aware of defendant’s alleged theft in 2012. Defendant argues that since the initial complaint was not filed until July 2014, the statute of limitations bars the §496 claim.

A defendant is estopped from invoking the statute of limitations when his own conduct induced plaintiff to refrain from instituting legal proceedings. Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 43. Whether estoppel exists is generally a question of fact, not law. Id. Plaintiff alleges it was induced to delay filing the lawsuit by defendant’s promise to repay the funds taken from the entities. If true, this would establish estoppel and prevent running of the statute of limitations. The truth of the allegation is determined by weighing evidence and cannot be resolved at the pleading stage. It is a question of fact, not properly decided on MJP. DENIED.

Final Ruling on Anti-SLAPP Motion (taken under submission)

The court took the anti-SLAPP motion under consideration to evaluate the arguments made in court. Plaintiff argued the court should not have reached the second phase of the anti-SLAPP analysis, since the litigation activity alleged constitutes evidence of wrongdoing but was not the underlying conduct complained of. The court disagrees. The filing of the 2014 lawsuit and the 2020 letter are the only substantive conduct alleged via the complaint. If both allegations were removed, there would be no factual basis for any of the causes of action. Therefore, the lawsuit is based on protected activity, and the court must move on the second phase of the anti-SLAPP analysis.  

Defendant argued plaintiff’s equity arguments, which the court analyzed as part of the second anti-SLAPP prong, should fail, because plaintiff could have exercised his buy/sell rights between initiation of the 2014 lawsuit and expiration of the shareholder agreements, but he chose not to. It is clear any attempt to exercise those rights while the 2014 litigation was ongoing would have been futile, since defendant took the position that plaintiff forfeited those rights. Defendant is correct that the traditional elements of equitable estoppel or equitable tolling are not present here. Nonetheless, as in Doe v. Martin, defendants induced plaintiff to forgo commencement of an action to exercise his buy/sell rights. Therefore, the court will exercise its broad equitable authority and allow plaintiff to exercise those rights if it is determined that he did not forfeit them by withdrawing money from the entities. The court’s prior tentative ruling will become the final ruling. The anti-SLAPP motion is DENIED.  

DUE TO THE ONGOING COVID-19 PANDEMIC, PARTIES AND COUNSEL ARE ENCOURAGED TO APPEAR VIA LA COURT CONNECT.

Case Number: BC552231    Hearing Date: January 28, 2021    Dept: P

Tentative Ruling

Shaoul Levy v. Janis F. Horn, Case No. BC552231

Hearing Date January 28, 2021

Defendants’ Special Motion to Strike (Anti-SLAPP), Demurrer, and Motion for Sanctions

Plaintiff’s and Defendant’s Motions to Bifurcate Trial

Plaintiff and defendants co-own real estate companies. Defendant Janis F. Horn’s late father Leonard Feldman formed the companies with plaintiff subject to written shareholder agreements, each containing a “buy-sell” provision allowing either party to buy out the other’s interest.

In 2014 defendant Horn, as trustee of the Janis F. Horn Trust, sued plaintiff Levy in a separate action (the 2014 action) alleging he wrongfully withdrew money from the companies. Horn argued that, because of the alleged misconduct, plaintiff forfeited buy-sell and management rights. Plaintiff argued the withdrawals were allowed, and he retained the buy-sell rights. In 2020 defendants’ counsel sent plaintiff a letter informing him the shareholder agreements’ 20-year term expired, so any buy-sell provisions were no longer effective.

In this action, plaintiff alleges the Horn Trust wrongfully denied his management and buy-sell rights. He alleges plaintiff’s filing of the 2014 lawsuit tolled expiration of the agreements, so if that litigation resolves in his favor, he should be allowed to exercise contractual rights despite expiration of the 20-year period. Plaintiff also alleges that under an oral agreement with Leonard Feldman, he may exercise buy-sell rights after expiration of the written agreements.

Defendants move to strike portions of the first cause of action and the entire second cause of action (anti-SLAPP), arguing plaintiff’s allegations arise out of protected litigation activity. Defendants also demur and move to strike allegations regarding existence of an “initial agreement” on the grounds that they contradict plaintiff’s testimony in the 2014 action. Finally, defendants seek sanctions. Both sides move to bifurcate.

Anti-SLAPP Motion

Courts resolving an anti-SLAPP motion under Cal. Civ. Code §425.16 follow a two-step process. Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733. In prong one, the court determines whether conduct underlying the plaintiff’s cause of action arises from the defendant’s constitutional rights of free speech or petition. Baral v. Schnitt (2016) 1 Cal. 5th 376, 395. This is a threshold issue. Jarrow, supra, 31 Cal.4th at 733. Under the second prong, the burden shifts to plaintiff to prove a legally sufficient claim and to prove with admissible evidence a reasonable probability of prevailing. E.g. Navellier v. Sletten (2002) 29 Cal.4th 82, 88.

Any written or oral statement made in connection with litigation is protected activity under the first anti-SLAPP prong. Code of Civ. Proc. §425.16(e)(2). Statements, writings, and pleadings that “relate to the substantive issues in litigation and are directed to persons having some interest in the litigation,” are protected activity. Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1261. Where a plaintiff’s claim is based upon an “action or decision” it is not enough that “some protected activity is the means of communicating that action or decision, or that some protected activity constitutes evidence of that action or decision. To fall under the anti-SLAPP statute, the challenged action must itself be the protected activity.” Mission Beverage Co. v. Pabst Brewing Co., LLC (2017) 15 Cal. App. 5th 686.

Defendants argue the allegations arise out of litigation protected activities – the 2014 complaint alleging plaintiff wrongfully withdrew funds from the companies he formed with Feldman and a 2020 letter from defendants’ counsel to plaintiff regarding expiration of the shareholder agreements.

The three causes of action all arise out of the dispute about whether plaintiff can exercise rights under the written shareholder agreements and alleged oral agreements. The cause of action for anticipatory breach explicitly references the 2014 complaint and the 2020 letter. Complaint at ¶47. The complaint and letter constitute protected activity; both arise out of the 2014 litigation and are relevant to issues in that litigation. Plaintiff argues the complaint and letter are not themselves the “challenged actions.” He argues his complaint arises out of defendants’ decision to cease honoring the terms of the shareholder agreements – which is not protected activity -- and the 2014 complaint and letter are evidence of defendants’ breach, not the underlying basis of plaintiff’s lawsuit.

Plaintiff argues this is like Mission Beverage, wherein an anti-SLAPP motion was denied. That court ruled a letter notifying plaintiff a distribution contract was terminated was protected activity but was not the specific wrongful action giving rise to litigation. The complaint was based on non-protected activity (a decision to terminate a contract), and the letter was merely evidence of separate, non-protected activity. Mission, supra, 15 Cal.App.5th at 700-701.

Defendants argue Mission does not apply because plaintiff alleges no “prior conduct” other than filing of the lawsuit and sending a letter in the context of that lawsuit. The court agrees. The 2014 complaint and letter are the only specific conduct alleged in the complaint. Plaintiff alleges nothing else that would constitute a breach of the parties’ agreement. If the 2014 complaint and letter were absent from the complaint, there would be nothing indicating defendant breached the shareholder agreements, nor would there be factual support for the causes of action. The complaint is based on litigation activity, protected under the anti-SLAPP statute and the constitutional right to petition the government. The first prong is fulfilled.

The burden shifts to plaintiff to show the complaint’s minimal merit; plaintiff must make a “prima facie factual showing sufficient to sustain a favorable judgment. It accepts plaintiff’s evidence as true, and evaluates defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law.” The second step is a “summary-judgment-like procedure.” Baral, supra, at 384-385.

Defendants argue the complaint contains sham allegations, as the oral “initial agreement” between plaintiff and Feldman for a buy-sell provision independent of the written shareholders agreements contradict plaintiff’s prior deposition testimony. Complaint ¶26.

If a party’s allegations are clearly and conclusively inconsistent with discovery responses in a separate or concurrent action, and if the inconsistencies are fatal to causes of action alleged in the complaint, the sham pleading doctrine applies. E.g. Dones v. Live Ins. Co. of N.A. (2020) 55 Cal.App.5th, 668; Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 384. A plaintiff can avoid the application of the sham pleading doctrine by plausibly explaining the perceived inconsistency. Owens, supra, 198 Cal.App.3d at 384.

The complaint alleges an “initial agreement,” predating the written shareholder agreements which allegedly contained buy-sell provisions between plaintiff and Feldman that survives even after expiration of the 20-year term. Complaint at ¶4. Plaintiff’s suit is in part based on allegations that defendants repudiated the buy-sell agreement. Defendants argue that, in depositions, plaintiff was asked about oral agreements related to the real estate companies. Defendants’ RJN Ex. 17 at 141:15-16, Ex. 18 405:3-7. Plaintiff did not mention these agreements, though he identified other oral agreements. During depositions, plaintiff stated “no, not that I can recall right now[,]” or “[n]ot that I recall[.]” Id. This is not a conclusive, unequivocal denial, so does not foreclose existence of an oral agreement. Plaintiff argues he understood the questions to refer only to oral agreements made in 1999, not to previous oral agreements. Levy decl. at ¶11. This is not implausible, so the sham pleading doctrine does not apply.

However, plaintiff fails to provide evidence indicating an initial oral agreement was not superseded by the later written agreements. Plaintiff states Feldman “insisted on having a buy-sell provision that covered that business relationship[,]” and he “never does any deals without a buy-sell[.]” Levy decl. ¶¶4-5. Plaintiff admits the agreements were subject to 20-year terms. Complaint ¶23, opposition ¶7. All evidence suggests plaintiff and Feldman discussed the buy-sell provisions when they became business partners and included such provisions in their written agreements. A separate, perpetual “initial agreement” would render the written shareholder agreements redundant. Further, plaintiff’s testimony does not set forth facts indicating Feldman and plaintiff orally agreed on clear buy-sell terms prior to forming the written agreements, only that they generally agreed their partnership would include a buy-sell option. Levy decl. at ¶¶4-5. There is no compelling evidence of a separate, indefinite oral agreement that supersedes the 20-year expiration.

Plaintiff fails to show a reasonable probability of success on the merits based on existence of an oral “initial agreement” that continues indefinitely. For plaintiff’s claims to survive the second step of anti-SLAPP analysis, plaintiff must present evidence the written agreements are enforceable despite expiration of the 20-year term.

Equitable Relief-- Tolling/Estoppel

Defendants argue plaintiff retains no buy-sell rights, since those rights expired 20 years from 1999. Defendant’s RJN Ex.1-4, §5.1. The contracts’ language is clear and unambiguous. Under equitable estoppel, when a party has “intentionally and deliberately led another party to believe a particular thing true and to act upon such belief,” that party is not “permitted to contradict it.” Matthews v. Happy Valley Conference Ct., Inc. (2019) 43 Cal.App.5th 236, 258. Equitable estoppel may be created where defendant harbored no intent to mislead but still reasonably “induced the plaintiff to delay commencement of an action[.]” Doe v. Martin (2020) 49 Cal.App.5th 1022, 1028. Under equitable tolling, a statute of limitations is suspended or extended when necessary to ensure “fundamental practicality and fairness.” California Restaurant Mgmt. Systems v. San Diego (2011) 195 Cal.App.4th 1581, 1593. A court has broad equitable powers to “create new remedies to deal with novel factual situations[.]” Oceanside Cmty. Ass’n. v. Oceanside Land Co. (1983) 147 Cal.App.3d 166, 177.

Equitable tolling does not apply, since plaintiff does not seek to extend a statute of limitations and provides no authority that this doctrine can extend a contract’s expiration date. Plaintiff provides no evidence that defendants deliberately contradicted their current position that the buy-sell provisions terminated in 2020. Nonetheless, it was reasonable for plaintiff to refrain from seeking to exercise his buy-sell rights after defendants’ assertion -- dating to at least 2014 – that his alleged wrongful withdrawal of funds from the companies forfeited his right to exercise the buy-sell provision. Equitable estoppel may be appropriate under Doe v. Martin, since defendants’ action induced plaintiff to forgo enforcement of the buy-sell provision. Additionally, if plaintiff prevails in the 2014 litigation and his withdrawal of funds is deemed valid, it would be inequitable to prevent him from exercising the contractual buy-sell rights because the agreements expired while litigation was pending. Plaintiff presents a colorable argument in equity that his rights under the shareholder agreements have not expired.

Statute of Limitations --- Breach of Contract

The statute of limitations for breach of a written contract is four years. Code of Civ. Proc. §337. When there are ongoing contractual obligations, plaintiff may elect to rely on the contract despite a breach, and the statute of limitations does not begin to run until plaintiff elects to treat the breach as terminating the contract. Romano v. Rockwell Int’l. (1996) 14 Cal.4th 479, 489.

Defendants argue the breach occurred in 2014, and the action was filed in 2020. Under Romano, since the parties’ obligations under the buy-sell provisions were ongoing after 2014, plaintiff validly relied on the contract despite defendant’s alleged breach, and the statute of limitations did not expire. Defendants succeeded on the first step of anti-SLAPP analysis, showing the complaint is based on protected litigation activity. Plaintiff, however, set forth a potentially valid argument that equitable principles prevent expiration of his rights under the shareholder agreements while the 2014 litigation was pending. Plaintiff prevails on the second prong of the analysis. DENIED.

Demurrer

Defendants’ demurrer and motion to strike largely rely on the same arguments made in the anti-SLAPP motion. Defendants argue plaintiff’s allegation regarding an oral “initial agreement” contradicts deposition testimony, rendering the complaint a sham pleading. The court considers and rejects that argument, as above. Although the court determined plaintiff provided insufficient evidence supporting existence of an “initial agreement” for purposes of anti-SLAPP analysis, those allegations are not stricken as a sham. Plaintiff has a colorable claim for equitable relief from the agreements’ expiration.

The unlimited term of the alleged initial agreement conflicts with the 20-year term of the later written agreements. E.g. In re Ferrero’s Estate (1956) 142 Cal.App.2d 473, 478. Supremacy of the written agreement, with its 20-year term, over an alleged prior unlimited agreement covering the same subject matter, precludes plaintiff’s request for a declaration that the initial agreement still governs his buy-sell rights.

The demurrer also argues plaintiff improperly seeks a declaration that the corporations were de facto dissolved once the shareholder agreements expired. Plaintiff alleged de facto dissolution of the company. De facto dissolution occurs only when companies have begun liquidating assets and abandoned their business without going through statutory procedures for liquidation. E.g. CB Richard Ellis, Inc. v. Terra Nostra Consultants (2014) 230 Cal.App.4th 405, 413. There are no allegations assets have been dissolved or the business abandoned, so plaintiff cannot obtain the requested declaration.

Finally, defendants argue there is no existing dispute as to indemnity, since by the terms of the shareholder agreement indemnity would be owed by the non-party companies, not the Horn Trust. Plaintiff is not seeking indemnification from the Trust, but acknowledgment that he has a right to indemnification. This is a sufficient controversy to sustain a cause of action for declaratory relief.

SUSTAINED as to the declaration requested in paragraph 41a of the complaint, OVERRULED as to the rest of the complaint.

Defendant’s Motion for Sanctions

Defendants argue the is frivolous and was brought to harass and delay resolution of the 2014 lawsuit. The court finds merit in several of plaintiff’s arguments. Plaintiff’s allegation regarding the initial agreement is not a sham, and plaintiff’s equitable theories regarding expiration of the shareholders’ agreements are not unsupported by law. No sanctions will issue. DENIED.

Plaintiff’s and Defendant’s Motions to Bifurcate Trial Cal. Code Civ. Proc.§1048(b).

When an answer sets up “any defense not involving the merits of the plaintiff’s cause of action but constituting a bar or ground of abatement to the prosecution thereof, the court may, either upon its own motion or the motion of any party, proceed to the trial of the special defense or defenses before the trial of any other issue in the case[.]” Cal. Code of Civ. Proc. §597. When a case involves both legal and equitable issues, equitable issues may be tried first to “dispense with the legal issues and end the case.” Moss v. Bleumm (1964) 29 Cal.App.2d 70, 73.

Plaintiff seeks to bifurcate claims regarding defendant’s withdrawals from defendant’s claims regarding rights under the shareholder agreements. Plaintiff argues these causes of action will require the court to hear substantial evidence, while defendant’s claims only involve contract interpretation, with no extrinsic evidence. Plaintiff alleges resolving defendant’s contract claims will obviate the need for a second trial. The court disagrees. Regardless of whether an initial trial establishes the written contracts have expired, both sides will present evidence regarding whether defendant was permitted to make the withdrawals.

Defendant moves to bifurcate issues of standing and laches, arguing if the court rules in its favor on either defense, all other issues would be mooted. Resolving the standing and laches defenses would likely involve the same evidence and testimony as plaintiff’s claims. If plaintiff prevailed at the bench trial on the defenses, the subsequent jury trial would require significant duplication of effort. Defendant fails to establish the affirmative defenses are case-dispositive.

Both motions to bifurcate are DENIED.

DUE TO THE ONGOING COVID-19 PANDEMIC, PARTIES AND COUNSEL ARE ENCOURAGED TO APPEAR VIA LA COURT CONNECT.

Case Number: BC552231    Hearing Date: August 19, 2020    Dept: P

Tentative Ruling

Janis F. Horn Separate Property Trust v. Shaoul Levy, Case No. BC552231

Hearing Date August 19, 2020

Cross-Defendant’s Motion for Leave to Amend Answer to First Amended Cross-Complaint

Plaintiff accuses defendant of wrongfully withdrawing approximately $8 million from jointly-owned companies. Defendant alleges the withdrawal was an allowed loan. In the cross-complaint, defendant/cross-complainant alleges plaintiff/cross-defendant breached an oral agreement for repayment of the loan and preventing him from taking out further loans. Horn asserted the statute of limitations as a defense to the cross-complaint and seeks leave to amend the answer to specify the code section and subdivision of the applicable statute of limitations.

Under Cal. Code of Civ. Proc. §458, to plead the statute of limitations a litigant must generally state “that the cause of action is barred by the provisions of Section _____ (giving the number of the section and subdivision thereof, if it is so divided, relied upon)[.]” Failure to allege the proper subdivision waives the defense. Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, fn. 4. Though section 458 is strictly construed, a party seeking to enforce the code section requirement must diligently object to a defective pleading – the insufficiency of the sections pleaded may not be raised for the first time at trial or on appeal. Choi v. Sagemark Consulting (2017) 18 Cal.App.5th, 308 fn. 7; Coy v. County of Los Angeles (1991) 235 Cal.App.3d 1077, fn. 5. A trial court has broad discretion to permit amendment of an answer to raise a statute of limitations defense. Sprague v. City of San Diego (2003) 106 Cal.App.4th 119, 132; Royal Thrift & Loan Co. v. City Escrow, Inc. (2004) 123 Cal.App.4th 24, 41.

Cross-defendant concedes her answer to the first amended cross-complaint did not identify the applicable code section but argues cross-complainant’s failure to raise that defect on demurrer shows a lack of diligence. Additionally, she argues leave to amend should be granted due to public policy. Under Choi and Coy, a party must raise waiver under §458 before appeal or before trial is well underway. The liberal public policy in favor of amendment applies. Cross-complainant will not be prejudiced by allowing amendment. Cross-complainant has been aware that cross-defendant intends to raise a statute of limitations defense, and the factual allegations make clear which statute of limitations defense is being asserted. To deny leave would deprive cross-defendant of the right to assert all potentially valid defenses on purely technical grounds. GRANTED. First Amended Cross-complaint to be filed within 20 days.

DUE TO THE ONGOING COVID-19 PANDEMIC, PARTIES AND COUNSEL ARE STRONGLY ENCOURAGED TO AVOID IN-PERSON APPEARANCES AND TO APPEAR REMOTELY. LA COURT CONNECT IS NOW AVAILABLE.

Case Number: BC552231    Hearing Date: July 08, 2020    Dept: P

 

TENTATIVE RULING

Janis F. Horn Separate Property Trust v. Shaoul Levy, Case No. BC552231

Hearing Date July 8, 2020

Cross-Defendant Horn Trust’s Motion for Summary Adjudication

Cross-defendant is trustee of the Horn Trust, which provided capital to acquire and manage commercial real estate in partnership with cross-complainant Levy. Horn alleged Levy improperly took money from the partnership. Levy alleges the withdrawals were loans allowed under a 1999 oral agreement with Feldman, the trust’s prior trustee. In his cross-complaint, Levy alleges the Trust breached the Feldman agreement by requesting repayment of the loans and barring him from borrowing further from partnership funds. Cross-defendant Horn moves for summary adjudication on statute of limitations grounds.

A cause of action for breach of contract accrues at the time of breach, which starts the limitations period running. Cochran v. Cochran (1997) 56 Cal.App.4th 1115, 1120. The statute of limitations for breach of oral contract or promissory estoppel based on an oral promise is two years. Code of Civ. Proc. §339(1). Generally, determination of whether a communication provided sufficient notice to start the running of the statute of limitations is a question of fact. Yuba City Unified School District v. California State Teachers’ Retirement System (2017) 18 Cal.App.5th 648, 655.

Horn presents evidence of a meeting between the parties in March 2012, where Levy was asked to repay funds taken from the partnership. Cross-Defendant’s (CD) Exhibit 7. Additionally, April 2012 emails demanded and/or requested repayment of the loans, which Levy admits receiving. CD Exhibits 10, 11. Horn argues the statute expired in April 2014.

Levy provides evidence that negotiation regarding the loans continued after the April 2012 emails and argues the emails were not a repudiation of the contract. Levy argues the statute began running several months later, when Horn sent another email containing a demand for repayment. The April 27, 2017 email reads “[w]e would like you to repay the loans[,]” and “[f]uture borrowings . . . should be approved first by the other party[.]” This supports Levy’s argument that the April 2012 emails constituted a request and/or the initiation of a discussion, not an unambiguous demand for repayment or repudiation of the contract. After April 2012, Levy and Trust representatives continued discussing the terms of future loans. An October 22, 2014 email from Horn “insist[s] you pay back in full.” Cross-complainant’s Exh. 4.

Express repudiation of a contract occurs when there is a clear, positive, unequivocal refusal to perform, while an implied repudiation results from conduct where the promisor puts it out of his power to perform so as to make substantial performance impossible. Taylor v. Johnston, et al. (1975) 15 Cal.3d 130, 137.

Moving party makes the initial showing regarding the statute, shifting the burden, but Levy’s evidence creates a triable issue of fact as to when the statute began to run – April or October 2014. A reasonable finder of fact could find the April email did not constitute a clear breach of the contract, but rather the beginning of negotiations regarding future loans, and the contract was not breached until the October “pay back in full” email. The court finds a triable issue of material fact as to the date the statute commenced. Motion DENIED.

Plaintiff Horn Trust’s Motion to File Second Amend Complaint

Horn Trust seeks leave to file a second amendment complaint. Under the proposed amendment, defendant’s seventh cause of action for declaratory relief will argue the shareholder agreements governing partnership-owned entities expired pursuant to their own terms.

There is a strong public policy in California in favor of amending pleadings if the non-amending party is not significantly prejudiced. Atkinson v. Elk Corp. (2003) Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939.

When this action was filed in 2014, the Horn Trust sought a declaratory judgment stating Levy cannot exercise his rights under the shareholder agreements due to his alleged material breaches. The Horn Trust seeks to amend arguing Levy’s rights under the agreements expired and requests declaratory judgment confirming that expiration.

The Horn Trust presents four shareholder agreements, each executed January 1, 1999 by Horn and Levy and expiring on the 20 year anniversary of their execution. Schechter Decl., Exhibits A-D, ¶5.1. Since the agreements did not terminate until 2019, the Horn Trust could not have included these new allegations when the complaint was filed in 2014.

Levy filed a separate action in February 2020, seeking a declaration stating he retains the right to manage the partnership entities and to execute buy-sell provisions under the Shareholders’ Agreements regardless of the 20-year terms set forth in ¶5.1 of each agreement. Levy’s Exhibit A at 1(b). Levy argues the issues in the Trusts’ proposed amendment are identical to the issues raised in his February 2020 lawsuit, the original case should proceed to trial, and the Trust should raise its declaratory relief claim in the new lawsuit.

While the claims to be litigated in the February 2020 lawsuit are substantively identical to the new issue the Trust seeks to raise, Levy fails to show that allowing the proposed amendment results in substantial prejudice. Levy does not specify what further discovery will be required. The proposed amendment relates to a purely legal issue—the scope and application of the expiration provision. Levy has not argued these provisions are ambiguous, so no extrinsic evidence is required to interpret them. Additionally, the proposed amendment does not seek to introduce a new issue, since the declaratory relief claim already encompasses Levy’s continuing contract rights. Finally, due to COVID-19, the jury trial scheduled for this month will be continued.

While the Trust has not explained its delay in seeking the requested amendment, the Court finds no articulated prejudice to Levy. Thus, the court adheres to the public policy in favor of liberality and allow the amendment. GRANTED.

BECAUSE OF THE ONGOING COVID-19 PANDEMIC, PARTIES AND COUNSEL ARE STRONGLY ENCOURAGED TO AVOID IN-PERSON APPEARANCES AT COURT AND TO APPEAR VIA COURT CALL.

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