JOE KLEIN ET AL VS ALBERT MALKA ET AL

Tentative Rulings

Case Number: BC498733    Hearing Date: February 23, 2021    Dept: 61

Specially Appearing Third Party Zahera N. Safyari’s Motion for Reconsideration of October 22, 2020 Order is DENIED.

1. MOTION FOR RECONSIDERATION

Code Civ. Proc. § 1008 is the exclusive means for seeking reconsideration of an order or renewing a motion. (Kerns v. CSE Ins. Group (2003) 106 Cal.App.4th 368, 384.) The application to reconsider the matter and modify, amend, or revoke the prior order must be made within 10 days after service upon the party of written notice of entry of the order to the same judge or court that made the order. (Code Civ. Proc. § 1008(a).) A motion for reconsideration may only be brought if the party moving for reconsideration can offer “new or different facts, circumstances, or law” which it could not, with reasonable diligence, have discovered and produced at the time of the prior motion. (Id.) There is a strict requirement of diligence - i.e., the moving party must present a satisfactory explanation for failing to provide the evidence or different facts earlier. (Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 690.) “The burden under section 1008 is comparable to that of a party seeking a new trial on the ground of newly discovered evidence: the information must be such that the moving party could not, with reasonable diligence, have discovered or produced it at the trial.” (New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212–13.)

Safyari asks for reconsideration of this court’s October 22, 2020, order denying Safyari’s ex parte application to stay hearing on the OSC re: Sale of Dwelling and granting the application for sale of dwelling. (Motion at p. 4.) Safyari argues that third party Zahera Safyari (Zahera) filed a third-party claim on January 8, 2020, and later filed an opposition to Plaintiff’s petition for hearing on sale of property on the grounds that her third-party claim had to be adjudicated before any hearing involving sale of the house. (Motion at p. 3.) Safyari argues it was improper for this court to order a sale of the Safyari residence without first adjudicating the validity of the third party claim. (Motion at p. 3.) Safyari also argues that Plaintiff cannot seek to enforce a judgment that as of October 2, 2020, has been ordered to be modified on appeal, when no order of modification has yet been issued by this court. (Motion at p. 4.)

No reconsideration is appropriate here. First, the claim that this court did not properly adjudicate Zahera’s third-party claim is not a new or different fact, circumstance, or law, when the claim was filed on January 8, 2020, months before the court’s ruling. Indeed, Safyari recognizes that this matter was discussed at the very hearing at issue on August 27, 2020. (Motion at p. 3.)

Second, the appeal provides no basis for reconsideration. The court of appeal did not remand this matter for further modifying orders, but rather issued an order itself modifying the judgment and affirming the judgment as modified. (See 12/10/2020 Remittitur.) Nor does the order modifying the judgment obviate the judgment lien upon the property, as provided in Code of Civil Procedure § 697.360:

(a) If a judgment lien on real property has been created under a money judgment that is thereafter modified as to its amount, an abstract of the modified judgment or a certified copy of the order modifying the judgment may be recorded in the same manner as an abstract of judgment or a certified copy of the judgment is recorded to create a judgment lien.

(b) If a judgment lien on real property has been created under a money judgment that is thereafter modified to reduce its amount, the judgment lien continues under the terms of the judgment as modified, whether or not the modification is recorded as provided in subdivision (a).

(Code Civ. Proc. § 697.360, subd. (a), (b).) Thus, the statute specifically provides for the continuing validity of the judgment lien.

Accordingly, the motion for reconsideration is DENIED.

Case Number: BC498733    Hearing Date: January 21, 2021    Dept: 61

Defendant Ben Safyari’s Motion for Additional Offset is GRANTED in part. An evidentiary hearing shall be set to adjudicate the following issues:

• The amount of advance payments Klein received pursuant to § 1(c) of the agreement before the properties were foreclosed;

• The amount of these payments that Klein has refunded, or is obligated to refund;

• The amount of the $175,000 Hart loan that Hart repaid pursuant to § 1(e) of the agreement, or is obligated to repay; and

• The amount of attorney fees paid to Klein’s counsel under § 1(a) of the agreement.

1. MOTION FOR OFFSET

“Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater.” (Code Civ. Proc., § 877.)

“The offset provided for in section 877 assures that a plaintiff will not be enriched unjustly by a double recovery, collecting part of his total claim from one joint tortfeasor and all of his claim from another.” (Reed v. Wilson (1999) 73 Cal.App.4th 439, 444.) It is “proper to exclude evidence of the pretrial settlement by one joint tortfeasor from the jury's consideration, leaving it to the court to apply Code of Civil Procedure section 877 to reduce the verdict.” (Knox v. County of Los Angeles (“Knox”) (1980) 109 Cal.App.3d 825, 834–35.)

Section 877 “does not require any defendant to prove that settling codefendants were in fact liable, only that they were ‘claimed to be liable’ for the same tort.” (Knox, supra, 109 Cal.App.3d at p. 833.)

The burden of establishing the value of a settlement is properly placed on the settling party. (See Garcia v. Duro Dyne Corp. (2007) 156 Cal.App.4th 92, 106.) “[T]he amount of the setoff is, in the absence of a stipulation, ‘the amount of the consideration paid for [the release or dismissal].’ But the amount of consideration paid within the meaning of section 877, subdivision (a) is not necessarily the amount of money paid. Often ‘the amount of the offset is clouded by injection of noncash consideration into the settlement.’ [Citations.] ‘In a situation where the cash amount of the settlement does not dictate the amount of the offset, the settling parties must include an allocation or a valuation in their agreement.’ [Citation.]” (Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1557.)

This court on December 6, 2016, granted in part Safyari’s motion for an offset. The court declined to grant Safyari a $757,000 offset based on value that Klein purportedly received from the settlement for “Klein’s pre-joint venture investment expenses.” (12/6/2016 Order at p. 10.) Safyari justified the value of the claimed offset by citing the “final waterfall repayment of the funds from the sale of the Multiview properties, which are split 50/50 between ADY and Klein ‘as a return of their capital investment in the project and the Property and a return thereon.’” (Ibid.) The court, however, declined to award this offset, as it was grounded on “anticipated future recovery,” particularly the “future sale of the property, plus four separate repayments through the ‘waterfall’ before any funds would go to Klein to repay his capital investment.” (Id. at p. 11.) The court nonetheless “retain[ed] jurisdiction to further amend the Judgment upon sale of the properties.” (Id. at p. 11.)

Safyari now seeks an offset of $127,000, and requests that this order be entered before it order any sale of Safyari’s home in satisfaction of the judgment, since a grant of the offset would render the sale unnecessary. (Motion at p. 6.)

Safyari contends that all three properties at issue in this case have been sold as of September 23, 2019. (Motion at p. 8.) Safyari notes that per Klein’s settlement agreement with the ADY Defendants, he was to receive $3,500 per month from March 16, 2016, until the close of escrow on the properties at issue. (Motion at p. 8.) Once escrow closed, Klein would be able to keep half of the amount paid him ($1,750.00 per month), but would refund the other half at the time of sale. (Motion at p. 8.) Safyari contends that he is entitled to a $15,750 offset based on non-refundable payments made by the ADL defendants to Klein in the nine months after this court’s December 2016 order awarding a partial offset on the same grounds. (Motion at p. 9.)

Safyari further argues that, notwithstanding the settlement’s requirement that Klein refund half of the $3,500 payments, he has not done so, and Safyari is therefore entitled to an offset of the entire amounts paid from the ADL defendants to Klein from March 2016 to June 2017, or $26,250 ($1,750 x 15 months). (Motion at p. 10.)

Safyari also argues that the operative settlement agreement secured a $420,000 loan for the parites, of which Klein was to obtain $170,000 for his personal use. (Motion at pp. 10–11.) Per the terms of the agreement, Klein was obliged to pay back only half of this amount ($85,000), and the court in its order of December 6, 2016, ordered that amount of guaranteed value offset from the judgment. Safyari now contends that Klein has failed to repay any portion of the loan proceeds directed to him, thus requiring another offset in the amount of $85,000. (Motion at p. 11.)

Klein in opposition contests Safyari’s characterization of the properties having been “sold.” Klein argues that while the settlement agreement contemplated a sale of the properties by Klein or the ADL defendants following their development, in reality Klein and the ADL parties lost the properties to foreclosure by Samuel Hart, the source of the loan mentioned in the settlement agreement that Safyari points to as another potential offset. (Opposition at p. 3.) Another entity, Crescent Properties, LLC, acquired the properties, before losing them in bankruptcy sales in 2019. (Opposition at pp. 2–3.)

Klein’s argument regarding the “sale” of the properties is unpersuasive. The reason this court retained jurisdiction in its December 2016 order specifically “to further amend the judgment upon sale of the properties” was because various obligations in the ADY settlement were triggered or limited by the prospective sale of the properties, such that to render an order on their value at the time would have been speculative. If a sale has occurred — or if a foreclosure has occurred such that a sale by the ADY parties or Klein is no longer possible — then in either case, the amounts discussed no longer rest upon a speculative foundation, and may be ruled upon.

It being unconstested that the properties are no longer ADY’s or Klein’s to dispose of, the burden then falls upon Klein to prove the value of the settlement against Safyari’s contentions. (See Garcia v. Duro Dyne Corp. (2007) 156 Cal.App.4th 92, 106.) Klein argues correctly that Safyari’s testimony concerning what Malka told him about Klein’s payments are inadmissible hearsay, but this does not absolve Klein of having to rebut Safyari’s contentions in light of the fact of sale.

In Knox v. County of Los Angeles (1980) 109 Cal.App.3d 825, a defendant was faced with a settlement between a plaintiff and a jointly liable co-defendant, but there was no evidence in the record of “how much had been paid in settlement” or of any allocation. (Id. at p. 835.) So the defendant alleged what they “apparently believed to be the amount paid . . . and asked for an offset of the total amount.” (Id. at p. 836.) The plaintiff declined to produce evidence in rebuttal, merely arguing that “there is no factual or legal basis for a setoff.” (Ibid.) The trial court adopted the defendant’s estimates of the amounts paid, and the court of appeal affirmed. (Ibid.) The appellate court held: “Plaintiffs' response at most created an issue of fact as to the amount of an offset to which County Defendants were entitled. By failing to deny the allegation that the amount of settlement was $4,000 per plaintiff, it justified a finding that that was the sum paid.” (Ibid.) Here, now that the properties have been sold or otherwise removed from Klein’s and ADY’s control, an accurate estimation of value is possible, and it is Klein’s burden as the settling plaintiff to establish it.

Safyari’s contention regarding the $15,750.00 in nine non-refundable payments of $1,750 occupies the same posture as the facts of Knox above. Given the sale of the properties, Safyari has offered what appears to be the best guess as to the number of non-refundable payments made, and Klein offers in rebuttal only a conclusory argument as that Safyari’s contentions are not made with evidence, without any actual dispute or contrary evidence provided.

As to the $26,250 in refundable payments that Safyari claims that Klein has not refunded, Klein responds that no offset can be provided against the judgment for money that it is obligated under the settlement to pay back. (Opposition at pp 9–10.) The settlement agreement itself states that the $3,500 payments shall continue “until the close of escrow for the last Multiview Property to be sold,” and that “50% of the advances thereafter shall be deducted from the MJK Parties’ proceeds from the sale of the last Multiview Property to close escrow and distributed to ADY.” (Danreshad Decl. Exh. C, § 1(c).) Thus, while Klein claims he is obligated to repay these payments, it is not apparent from the agreement, given Klein’s representations that no sale of the kind contemplated in the agreement took place, that any obligation exists in the absence of proceeds from a sale.

Klein makes a similar argument as to the $170,000 Hart loan proceeds: that there can be no offset for monetary benefits he is obligated to repay. (Opposition at pp. 8–9.) This court previously ruled that Safyari was entitled to an offset for half this amount — $85,000 — since the maximum amount Klein would be required to pay back in the event the proceeds of any sale were insufficient to cover the balance of the loan was “one-half of the unpaid balance of the MJK Component [i.e. one half of the $170,000 loaned for Klein’s exclusive benefit].” (Danreshad Decl. Exh. C § 1(e).) Safyari alleges that Klein has not paid back even the other half, and is not in fact obligated to do so since the obligation has resulted in foreclosure on the properties that secured the loan. (Reply at p. 9.)

Klein responds that this court did not leave open the adjudication of the value of the loan, and expressly stated the offset for the loan was “at most $85,000.” (Opposition at pp. 8–9.) He further argues that if the court is revisiting this offset, it should also address the $100,000 offset awarded for attorney fees, which was conditioned upon the sale of the properties, which never occurred. (Opposition at pp. 8–10; Danreshad Decl. Exh. C, § 1(a).) Safyari in reply argues that Klein conceded the $100,000 offset at the original hearing and has waived all arguments on this point. (Reply at p. 8.) However, this argument was not waived, as Klein’s opposition to Safyari’s initial motion for offset specifically argued that no offset was appropriate because the funds for the fees were “profits from the sale of property which Joe Klein was entitled to before any settlement.” (10/7/2016 Opposition at p. 12.) Likewise, the attorney fee provision is plainly conditioned on the existence of proceeds from the sale of the property, which is what the court retained jurisdiction to examine. (Danreshad Decl. Exh. C § 1(a).)

The court finds that Safyari’s allegations regarding sale of the properties, which Klein confirms in opposition were sold in foreclosure, are sufficient to raise triable issues of fact in the following areas:

• The amount of $3,500 advance payments Klein received pursuant to § 1(c) of the agreement before the properties were foreclosed;

• The amount of these payments that Klein has refunded, or is obligated to refund;

• The amount of the $175,000 Hart loan that Hart repaid pursuant to § 1(e) of the agreement; and

• The amount of attorney fees paid to Klein’s counsel under § 1(a) of the agreement.

The court agrees with Safyari that an evidentiary hearing is appropriate to determine the final amount to offset from the judgment, specifically limited to adjudication of the above issues raised in the parties’ moving papers. (Motion at p. 9, citing Knox v. County of Los Angeles (1980) 109 Cal.App.3d 825, 836–37 [holding that plaintiffs had to answer defendants’ allegations concerning settlement, and any factual issues could be resolved with an evidentiary hearing].)

The motion is therefore GRANTED in part. An evidentiary hearing on the above issues shall be set by the court.

Case Number: BC498733    Hearing Date: July 07, 2020    Dept: 61

Defendant Ben Safyari’s Motion for Additional Offset is DENIED.

1. MOTION FOR OFFSET

“Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater.” (Code Civ. Proc., § 877.)

“The offset provided for in section 877 assures that a plaintiff will not be enriched unjustly by a double recovery, collecting part of his total claim from one joint tortfeasor and all of his claim from another.” (Reed v. Wilson (1999) 73 Cal.App.4th 439, 444.) It is “proper to exclude evidence of the pretrial settlement by one joint tortfeasor from the jury's consideration, leaving it to the court to apply Code of Civil Procedure section 877 to reduce the verdict.” (Knox v. County of Los Angeles (“Knox”) (1980) 109 Cal.App.3d 825, 834–35.)

Section 877 “does not require any defendant to prove that settling codefendants were in fact liable, only that they were ‘claimed to be liable’ for the same tort.” (Knox, supra, 109 Cal.App.3d at p. 833.) In Know, the Complaint alleges that the settling codefendant engaged in a conspiracy and joint venture with nonsettling defendants and that they were agents of the nonsettling defendants relating to the allegations at hand. (Id. at pp. 832–833.)

The burden of establishing the value of a settlement is properly placed on plaintiffs. (See Garcia v. Duro Dyne Corp. (2007) 156 Cal.App.4th 92, 106.) “[T]he amount of the setoff is, in the absence of a stipulation, ‘the amount of the consideration paid for [the release or dismissal].’ But the amount of consideration paid within the meaning of section 877, subdivision (a) is not necessarily the amount of money paid. Often ‘the amount of the offset is clouded by injection of noncash consideration into the settlement.’ [Citations.] ‘In a situation where the cash amount of the settlement does not dictate the amount of the offset, the settling parties must include an allocation or a valuation in their agreement.’ [Citation.]” (Franklin Mint Co. v. Superior Court (2005) 130 Cal.App.4th 1550, 1557.)

This court on December 6, 2016, granted in part Safyari’s motion for an offset. The court declined to grant Safyari a $757,000 offset based on value that Klein purportedly received from the settlement for “Klein’s pre-joint venture investment expenses.” (12/6/2016 Order at p. 10.) Safyari justified the value of the claimed offset by citing the “final waterfall repayment of the funds from the sale of the Multiview properties, which are split 50/50 between ADY and Klein ‘as a return of their capital investment in the project and the Property and a return thereon.’” (Ibid.) The court, however, declined to award this offset, as it was grounded on “anticipated future recovery,” particularly the “future sale of the property, plus four separate repayments through the ‘waterfall’ before any funds would go to Klein to repay his capital investment.” (Id. at p. 11.) The court nonetheless “retain[ed] jurisdiction to further amend the Judgment upon sale of the properties.” (Id. at p. 11.)

Safyari now moves for a total of $428,000 in additional offsets, representing $127,000 in offsets purportedly resulting from Klein’s settlement with ADY and the sale of the properties since the court’s December 2016 order, and $301,000 in equitable offsets resulting from Klein’s purported refusal to honor the promissory notes that Safyari holds against him. (Motion at p. 6.)

The parties dispute whether this court has jurisdiction to order the requested offsets, based on the appeal that Safyari now seeks against the judgment he now seeks to amend. “[T]he perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc. § 916, subd. (a).)

The purpose of the automatic stay provision of section 916, subdivision (a) is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.

To accomplish this purpose, section 916, subdivision (a) stays all further trial court proceedings upon the matters embraced in or affected by the appeal. In determining whether a proceeding is embraced in or affected by the appeal, we must consider the appeal and its possible outcomes in relation to the proceeding and its possible results. Whether a matter is ‘embraced’ in or ‘affected’ by a judgment [or order] within the meaning of [section 916] depends on whether postjudgment [or postorder] proceedings on the matter would have any effect on the ‘effectiveness' of the appeal. If so, the proceedings are stayed; if not, the proceedings are permitted.

The fact that the postjudgment or postorder proceeding may render the appeal moot is not, by itself, enough to establish that the proceeding affects the effectiveness of the appeal and should be stayed under section 916. Rather, something more is needed. For example, the trial court proceeding must directly or indirectly seek to enforce, vacate or modify [the] appealed judgment or order. Or the proceeding must substantially interfere with the appellate court's ability to conduct the appeal.

(Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4^th 180, 189–90, internal quotation marks and citations omitted.)

Safyari argues that this court possesses jurisdiction to grant his offsets because the motion concerns a matter collateral to the judgment that does not compromise the effectiveness of the pending appeal, and alternatively because the present motion is in reality one to enforce the judgment, not alter it. (Motion at pp. 9–13.)

This court lacks jurisdiction to hear the motion, and both arguments fail. Safyari relies on cases holding that a court may rule on collateral matters, like attorney fees and costs, while an appeal is pending. (See Bankes v. Lucas (1992) 9 Cal.App.4^th 365, 368–69) But Safyari here does not seek a post-judgment award of fees, but rather to amend the judgment currently on appeal to reflect certain desired offsets. This is something that the court lacks jurisdiction to do. (See Laidlaw Waste Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Cal.App.4^th 630, 641 [“After perfection of an appeal, the trial court may not vacate or amend a judgment or order valid on its face, or do any other act which would affect the rights of the parties or the condition of the subject matter.”] internal quotation marks omitted.) This court may not even “cure any purported defect in the judgment or order appealed from.” (Varian Medical Systems, Inc., supra, 35 Cal.4^th at p. 197.) Although Safyari purports to rely upon this court’s order of December 2016 (entered before the appeal was filed) in which the court retained jurisdiction to hear further arguments as to offsets after the relevant properties were sold, the court expressly characterized its jurisdiction as being “to further amend the Judgment upon sale of the properties.” (12/6/2016 Order at p. 11, italics added.) The court previously recognized that the claimed offsets were amendments to the judgment, and the court may not amend the judgment that is currently on appeal, especially when the damage items to be off-set (such as the $300,000 promissory notes) are those very same items for which Safyari seeks relief on appeal.

Nor may Safyari characterize the present matter as one to enforce the judgment. The reason this matter concerns “enforcement” under Safyari’s argument is because the amount of the judgment determines the amount that Klein may seek to collect from Safyari in enforcement proceedings. (Motion at pp. 12–13.)[1] But it is generally true that substantive amendments to a judgment may mitigate a party’s ability to enforce it; that does not make proceedings to amend the judgment into enforcement proceedings.

Accordingly, Safyari’s Motion for Offsets is DENIED.