KC INVESTMENT COMPANY VS KUNG FU OF GOLDEN DRAGON, LLC

Tentative Rulings

Case Number: SC124337    Hearing Date: January 07, 2021    Dept: P

Tentative Ruling

KC Investment Company v. Kung Fu of Golden Dragon LLC Case No. SC124337

Hearing Date January 7, 2021

Defendants’ Motion for Leave to File Cross-Complaint

This began as a commercial unlawful detainer. After the tenants moved out, this became a breach of lease claim. Defendants allege plaintiff agreed to dismiss in exchange for financial documentation proving defendants were judgment proof. Defendants claim plaintiff breached that agreement by proceeding with the action after the documents were provided. Defendants seek leave to file a cross-complaint for breach of contract.

Leave to file a cross-complaint may be granted in the interest of justice at any time during a civil action. Cal. Code of Civ. Proc. §428.10. Defendants argue it would serve the interests of justice and efficiency to allow their breach of contract claims to be adjudicated as a cross-claim in this action, rather than as a separate suit. Motion at pg. 5. Plaintiff argues the motion is untimely. Plaintiff has not shown prejudice, given that trial is not scheduled. GRANTED.

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

Case Number: SC124337    Hearing Date: November 03, 2020    Dept: P

Tentative Ruling

KC Investment Company v. Kung Fu of Golden Dragon LLC Case No. SC124337

Hearing Date November 3, 2020

Defendants’ Motion for Leave to File Cross-Complaint

This began as a commercial unlawful detainer with three shopping center tenants that failed to pay rent. After the tenants vacated, the action converted to a breach of lease claim for damages. Defendants allege plaintiff agreed to dismiss in exchange for financial documentation proving defendants were judgment proof. Defendants claim plaintiff breached by proceeding after the documents were provided. Defendants seek leave to file a cross-complaint for breach of contract.

Leave to file a cross-complaint may be granted in the interest of justice at any time during a civil action. Cal. Code of Civ. Proc. §428.10. Defendants argue it would serve the interests of justice and efficiency to allow these claims to be adjudicated as a cross-claim, rather than requiring the filing of a new lawsuit. Plaintiff argues the motion is untimely, as the alleged breach occurred in June 2019, and delay. Plaintiff has not shown significant prejudice if the motion is granted. As trial is not scheduled, no significant prejudice outweighs the efficiency of adjudicating these claims together, and the court is mindful of the policy in favor of granting leave. GRANTED.

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

Case Number: SC124337    Hearing Date: October 13, 2020    Dept: P

Tentative Ruling

KC Investment Company v. Kung Fu of Golden Dragon, LLC, Case No. SC124337

Hearing Date October 13, 2020

Defendants’ Motion for Summary Judgment/ Adjudication – Supplemental Declaration

Defendants moved for summary judgment, arguing the case settled via an accord and satisfaction requiring plaintiff to review defendant’s financial condition and dismiss if plaintiff determined, after a good-faith review, that defendants were judgment-proof. On August 21, 2020 the court issued a tentative ruling denying summary judgment but continued the matter to allow plaintiff to submit a supplemental declaration establishing that he considered defendants’ documents in good faith and explaining the basis for his determination they were inadequate.

Objections

OVVERULED. Defendants’ objections’ dispute the logic and reliability of the conclusions of Yadegar’s declaration, but do not provide a basis for inadmissibility.

Yadegar’s declaration states he is an owner of KC Investment Company and is a commercial real property landlord and mortgage broker with experience reviewing financial documents to determine whether someone is judgment-proof. Yadegar declaration ¶¶3-5. He reviewed the documents and, after a good faith analysis, determined they were incomplete and did not show defendants to be judgment-proof. Id. ¶¶24-25.

Defendants argue the settlement agreement should be interpreted using an objective good faith standard, rather than Yadegar’s subjective good faith. There is a general preference for using an objective “reasonable person” standard “when factors of commercial value or financial concern” are involved. Storek v. Storek, Inc. v. Citicorp Real Estate, Inc. (2002) 100 Cal.App.4th 44, 59-60. The parties’ agreement imposed a “reasonable person” standard for determining good faith.

Defendants argue Yadegar failed to provide a reasonable basis for determining, contrary to defendants’ own declaration and expert evidence, that defendants are not judgment proof. Yadegar’s declaration states he reviewed the documents, and he substantiates his opinion that they are insufficient to make such a determination (e.g., limited financial statements, no tax returns, W2 forms from companies controlled by defendant, lack of accounting for certain ventures, etc.). Yadegar declaration ¶¶13-25. There is a triable issue of fact as to whether a reasonable person could determine, based on the financials provided and Yadegar’s analysis, that defendants are not judgment proof. The prior tentative ruling is the final ruling. Summary judgment is DENIED.

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

Case Number: SC124337    Hearing Date: August 21, 2020    Dept: P

Tentative Ruling

KC Investment Company v. Kung Fu of Golden Dragon, LLC Case No. SC124337

Hearing Date 8/21/2020

Supplemental briefing re: Motion for Summary Judgment

On July 7, 2020, the court issued a tentative ruling granting defendants’ motion for summary judgment on the grounds that defendants provided the requested documentation settling the matter. Plaintiff argued the March 28, 2019 email did not constitute an enforceable settlement agreement. The court permitted the parties to provide supplemental briefing.

A court may enter judgment pursuant to the terms of a settlement if “parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof[.]” Cal. Code of Civ. Proc. §664.6 The litigants themselves must sign a written settlement agreement for it to be enforceable under §664.6. Levy v. Superior Court (1995) 10 Cal.4th 578. An accord is an agreement to accept something different from or less than what the person is entitled. Cal. Civ. Code §1521.

Plaintiff argues the email is not an enforceable settlement agreement under Cal. Code of Civ. Proc. §664.6 because it was not signed by the parties. Further, plaintiff argues accord and satisfaction do not apply because “attorneys do not inherently have the power to enter into any contract for or on behalf of their clients,” and plaintiff did not explicitly approve the purported accord.

Defendants argue the March 28 email does not constitute a settlement under §664.6 but an accord, so no signature is required. As an accord does not require parties’ signatures to be enforceable, the absence of a signature is not dispositive. The emails between counsel (Def. Exhs. 8 and 9) show plaintiff consented to consider the requested documents and agreed make a good-faith determination of whether they showed defendants were judgment proof. The only reasonable interpretation of the emails is that they were an offer of an accord, which defendants accepted by sending the requested financial documents.

The Yadegar declaration, together with the June 21, 2019 letter stating plaintiff received the requested documents, constitute evidence that the documents were considered and rejected in good faith, according to the terms of the parties’ proposed accord. Def. Exh. 10, Yadegar decl. ¶6-7. Defendants object to the Yadegar declaration, arguing Yadegar is not a qualified expert witness and failed to provide a foundation for his opinion that defendants are not judgment-proof.

The declaration is relevant to show Yadegar considered and rejected defendants’ documents, not for his opinion regarding defendants’ solvency. The offered accord required only that plaintiff consider defendants’ documents in good faith, not that it make an accurate or well-informed determination regarding defendants’ financial status. Yadegar has personal knowledge regarding his review of the documents; his ability to opine on defendants’ financial status is irrelevant.

There is a triable issue of fact as to whether the documents presented by defendants were considered in good faith as required in the accord. The motion for summary judgment is DENIED.

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 AVAILABLE.

Case Number: SC124337    Hearing Date: July 07, 2020    Dept: P

Tentative Ruling

KC Investment Company v. Kung Fu of Golden Dragon, LLC, Case No. SC124337

Hearing Date July 7, 2020

1. Plaintiff’s Motion for Summary Judgment or Summary Adjudication

2. Defendants’ Motion for Summary Judgment or Summary Adjudication

Defendant leased property from plaintiff to operate a martial arts studio; the lease required monthly rent payments. Defendants Valeriy Prosvirov and Elena Prosvirova guaranteed the lease. Plaintiff alleges defendants failed to pay amounts due. Defendants vacated the property. Plaintiff sues for outstanding rent. Both sides file motions for summary judgment/adjudication.

Plaintiffs’ Motion

Plaintiff argues undisputed evidence shows defendant owes rent, as defendants failed to pay beginning in July 2012. Plaintiff’s separate statement at 16-19. In written correspondence, defendants acknowledge the breach and promise to pay their “rental debt.” Plaintiff’s declaration states defendants have not paid the rent. This fulfills plaintiff’s initial burden, which shifts to defendant to show a triable issue of fact as to breach of contract.

Defendants argue accord and satisfaction. To establish this affirmative defense, defendant must prove (1) a bona fide dispute, (2) debtor made it clear that acceptance of the amount tendered was in full satisfaction of the claim, and (3) creditor clearly understood when accepting the payment that debtor intended such remittance to constitute payment in full. Potter v. Pacific Coast Lumber Co. (1951) 37 Cal.2d 592.

Defendants argue they provided financial documents, in exchange for which plaintiff allegedly promised to dismiss the case. Motion at pg. 12. Defendants present a letter from plaintiff’s counsel stating “[plaintiff] is willing to go with your proposal regarding your clients’ submission of financial documents in exchange for dismissal if there is a good faith determination that your clients are judgment proof.” Defendants’ exhibit 4-C. Defendants turned over the requested documents. Aba Decl. at 22-25.

Plaintiff provides no evidence it determined in good faith that defendants are not judgment proof. There is still a triable issue of fact as to whether plaintiffs determined in good faith that defendant had the ability to pay a judgment. Motion DENIED.

Defendants’ Motion

Defendants argues the case has already been settled, as plaintiff agreed to dismiss if defendants produced financial documents showing defendants’ insolvency. Motion at pg. 6; Separate Statement 1, 7. Finally, defendants present expert testimony that they are judgment proof. Separate Statement 3. This satisfies the initial burden on summary judgment. The burden then shifts to plaintiff.

Plaintiff argues it considered defendants' documents and determined in good faith defendants are not judgment proof. Opposition at pgs. 7-8. Plaintiff does not, however, cite to any evidence or reason to support this conclusory statement. Further, plaintiff fails to provide additional facts in its separate statement, providing only conclusory refutations of defendants' facts, without evidentiary support. Plaintiff failed to carry its burden of proving an issue of material fact. Because plaintiff provides no evidence showing it made a good faith determination that defendants are not judgment proof, the motion is GRANTED.

DUE TO THE ONGOING COVID 19 PANDEMIC, THE PARTIES ARE STRONGLY ENCOURAGED TO APPEAR REMOTELY, VIA COURT CALL.

Case Number: SC124337    Hearing Date: March 05, 2020    Dept: P

Tentative Ruling

KC Investment Company v. Kung Fu of Golden Dragon, LLC, Case No. SC124337

Hearing Date: March 5, 2020

Defendants’ Motion for Leave to Open Discovery

This began as an unlawful detainer action based on nonpayment of rent at a commercial property. Defendants vacated by August 2015. As possession is no longer at issue, this became a breach of contract action.

Defendants allege in March 2019 the parties reached an agreement that plaintiff would dismiss the action, contingent on defendants presenting financial documents showing they were judgment proof. Defendants allege they produced the requested documents, but plaintiff refused to dismiss the action.

Trial has been continued to May 18, 2020. The court granted defendants leave to amend their answer with new defenses related to the March 2019 settlement. The discovery cut-off date, based on the original trial, has passed. Defendants seek to reopen discovery, so they may gather information and documents necessary to prove their new defenses.

A court may, in its discretion, reopen discovery upon motion by any party. Cal. Code of Civ. Proc. 2024.050. In exercising its discretion, the court will consider the necessity of discovery, the diligence of the party seeking discovery, any likelihood that allowing discovery will result in further delays of trial, and the extent to which trial has already been delayed.

Defendants diligently sought to reopen discovery by meeting and conferring with opposing counsel immediately after the court continued trial. Reopening discovery is not likely to cause trial to be further delayed and is necessary since defendants seek to add new defenses in their third amended answer. Plaintiff does not oppose the motion. GRANTED.

Case Number: SC124337    Hearing Date: December 17, 2019    Dept: P

Superior Court of California, County of Los Angeles, Department P

TENTATIVE RULING

KC Investment Company v. Kung Fu of Golden Dragon, LLC et al., Case no. SC124337

Defendant’s Motion for Leave to File Amended Answer

Hearing Date: December 17, 2019

This originated as an unlawful detainer action and has converted to a breach of contract case. Plaintiff and defendants allegedly agreed in mediation that plaintiff would dismiss the action once defendants produced documents showing they were judgment-proof. Defendants allege plaintiff refused to dismiss the action after production of the documents, violating the agreement. Defendants seek leave to amend the answer to add a new affirmative defense of settlement.

A trial court may, in its discretion, allow amendment to any pleading – including an answer – in the furtherance of justice and on such terms as may be proper. Cal. Code of Civ. Proc. §473(a). The public policy favoring amendment is especially strong when dealing with amendments to answers. Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159.

Defendants argue they will be unable to present a complete defense at trial if they cannot add this affirmative defense. Additionally, they argue they could not have raised this defense in an earlier pleading because the factual basis for the defense did not arise until June 27, 2019.

Trial has been continued to 5/18/2020. Plaintiff argues there was no settlement agreement; defendant argues otherwise. This is a factual dispute and is not a proper basis for denying the motion. Granting this motion does not mean defendant’s affirmative defense succeeds, only that it may be presented at trial. There is a strong public policy in favor of allowing a defendant to present all colorable affirmative defenses at trial. Granting this motion does not conflict with the court’s prior ruling denying plaintiff leave to file a first amended complaint, since different questions of law and fact were at issue previously. GRANTED. Defendant to amend within 15 days.