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This case was last updated from Los Angeles County Superior Courts on 03/11/2021 at 14:45:47 (UTC).

KYLE MADISON VS CASA W LLC ET AL

Case Summary

On 04/15/2011 KYLE MADISON filed a Property - Other Property Fraud lawsuit against CASA W LLC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ROLF M. TREU, ANN I. JONES, FREDERICK C. SHALLER, KENNETH R. FREEMAN, MALCOLM MACKEY, SAMANTHA P. JESSNER, CAROLYN B. KUHL, DEBRE K. WEINTRAUB, GREGORY W. ALARCON, EDWARD B. MORETON, YOLANDA OROZCO, SAMANTHA JESSNER, RUTH ANN KWAN, DAVID J. COWAN and KEVIN C. BRAZILE. The case status is Pending - Other Pending.

Case Details Parties Dockets

 

Case Details

  • Case Number:

    ****9696

  • Filing Date:

    04/15/2011

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Property Fraud

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

ROLF M. TREU

ANN I. JONES

FREDERICK C. SHALLER

KENNETH R. FREEMAN

MALCOLM MACKEY

SAMANTHA P. JESSNER

CAROLYN B. KUHL

DEBRE K. WEINTRAUB

GREGORY W. ALARCON

EDWARD B. MORETON

YOLANDA OROZCO

SAMANTHA JESSNER

RUTH ANN KWAN

DAVID J. COWAN

KEVIN C. BRAZILE

 

Party Details

Plaintiffs, Respondents, Appellants and Assignees

MADISON KYLE

MADISON MARJAN

THEODORE MICHAEL

Petitioner

DANNING GILL DIAMOND & KOLLITZ

Defendants, Respondents and Appellants

CASA W LLC

DOES 1 THROUGH 10

THEODORE MICHAEL

Not Classified By Court

TEST PARTY FOR TRUST CONVERSION

DIAMOND RICHARD K.

RICHARD K. DIAMOND FORMER COURT APPOINTED LIQUIDATOR

Attorney/Law Firm Details

Plaintiff Attorneys

BATT WALTER B. ESQ.

MINK LYLE R. ESQ.

RAINES FELDMAN LLP

SELVIN PETER S. ESQ.

LOEB & LOEB LLP

MINK LAW FIRM APC

THE BATT LAW GROUP

MINK LYLE R

Defendant Attorneys

SPIELFOGEL DANIEL J. ESQ.

DANIEL J. SPIELFOGEL LAW OFFICES OF

SPIELFOGEL DANIEL J.

ZELIG STEVEN

KLAPACH JOSEPH SCOTT

Not Classified By Court Attorney

DE LEEST AARON

Court Documents

Court documents are not available for this case.

 

Docket Entries

  • 04/02/2021
  • Hearing04/02/2021 at 08:30 AM in Department 36 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Application for Order for Appearance and Examination

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  • 04/01/2021
  • Hearing04/01/2021 at 08:30 AM in Department 36 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion - Other New Trial, Or, In the Alternative, to Vacate The Judgment

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  • 04/01/2021
  • Hearing04/01/2021 at 08:30 AM in Department 36 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to Tax Costs

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  • 04/01/2021
  • Hearing04/01/2021 at 08:30 AM in Department 36 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to Amend Judgment

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  • 04/01/2021
  • Hearing04/01/2021 at 08:30 AM in Department 36 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Attorney Fees

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  • 03/10/2021
  • DocketProof of Personal Service; Filed by Kyle Madison (Plaintiff)

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  • 03/09/2021
  • Docketat 08:30 AM in Department 36, Gregory W. Alarcon, Presiding; Hearing on Motion to Amend Judgment - Not Held - Rescheduled by Court

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  • 03/08/2021
  • Docketat 08:30 AM in Department 36, Gregory W. Alarcon, Presiding; Hearing on Motion for Attorney Fees - Not Held - Rescheduled by Court

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  • 03/08/2021
  • DocketProof of Personal Service; Filed by Kyle Madison (Plaintiff)

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  • 03/08/2021
  • DocketProof of Service (not Summons and Complaint); Filed by Michael Theodore (Defendant)

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2,366 More Docket Entries
  • 04/18/2011
  • DocketMiscellaneous-Other; Filed by Plaintiff/Petitioner

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  • 04/18/2011
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 04/18/2011
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 04/18/2011
  • DocketDeclaration; Filed by Plaintiff/Petitioner

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  • 04/17/2011
  • DocketDEFENDANTS MICHAEL THEODORE AND CASA W, LLCS NOTICE OF MOTION AND MOTION TO QUASH/MODIFY SUBPOENA PER CODE OF CIVIL PROCEDURE 1987.1; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF DANIEL J. SPIELFOGEL AND DECLARATION OF MICHAEL T

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  • 04/17/2011
  • DocketSEPARATE STATEMENT PURSUANT TO CALIFORNIA RULES OF COURT, RULE 3.1345(A)(5) IN SUPPORT OF MOTION TO QUASH/MODIFY SUBPOENA

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  • 04/15/2011
  • DocketVERIFIED COMPLAINT FOR (1) BREACH OF CONTRACT; etc

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  • 04/15/2011
  • DocketComplaint; Filed by null

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  • 04/15/2011
  • DocketSUMMONS ON VERIFIED COMPLAINT

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  • 04/15/2011
  • DocketSUMMONS SUMMONS ON VERIFIED COMPLAINT

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Tentative Rulings

Case Number: BC459696    Hearing Date: May 4, 2021    Dept: 36

 

*COUNSEL – YOU CANNOT SUBMIT ON THE TENTATIVE PRIOR TO THE HEARING* 

Superior Court of California

County of Los Angeles

Department 36

KYLE MADISON, et al.,

Plaintiffs,

v.

CASA W. LLC, et al.,

Defendants.

and Related Cross-Action

Case No.: BC459696

Hearing Date: 5/4/2021

[TENTATIVE] RULING RE: Judgment Debtor’s Motion to Stay Enforcement of Judgment

The motion is GRANTED pursuant to Code of Civil Procedure, section 916.

Judgment Creditors’ Objections to Defendant’s Evidence

Judgment Creditors Kyle Madison and Marjan Madison (“Judgment Creditors”)’s objections to evidence are each OVERRULED.

Discussion

Judgment Debtor moves for an order confirming that the portion of the Judgment relating to the dissolution and liquidation of Casa W, LLC, including the sale of its Mexican property asset, is subject to the automatic stay under Code of Civil Procedure, section 916; or, alternatively, seeks an order to (1) impose a discretionary stay pending appeal of that portion of the judgment; or (2) to set a bond or undertaking for that portion of the judgment pursuant to Code of Civil Procedure, sections 917.2, 917.3, and/or 917.4.

Judgment Creditors have filed an opposition. Judgment Debtor has filed a reply.

A. Code of Civil Procedure Section 916 – Automatic Stay

“Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the 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(a).)

The trial court is divested of subject matter jurisdiction over any matter embraced in or affected by the appeal during the pendency of that appeal. (See Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 197.) Subsequent trial court proceedings on matters embraced in or affected by the appeal are void. (Id. at 198.)

“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.’” (Id. at 189.)

“[W]hether a matter is ‘embraced’ in or ‘affected’ by a judgment within the meaning of section 916 depends upon whether postjudgment trial court proceedings on the particular matter would have any impact on the ‘effectiveness' of the appeal. If so, the proceedings are stayed; if not, the proceedings are permitted.” (City of Santa Monica v. Stewart as modified on denial of reh'g (Feb. 28, 2005) (Stewart).)

“Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following: (1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action. . . .” (CCP § 917.1(a).)

The Judgment in this action directed: (1) payment of damages by Judgment Debtor; (2) transfer of all right, title and interest in Casa W to Judgment Creditors, by specified procedures; (3) Judgment Creditors’ costs to be determined by separate order after trial; and (4) Judgment Creditors’ attorney’s fees to be determined by separate order after trial. (Judgment.)

As to transfer of Casa W, the Judgment orders: (1) Judgment Creditors are the appropriate persons to wind up the affairs of Casa W, LLC, including the sale of Casa W; (2) Judgment Debtor to execute documents transferring interest in any fideicomiso trust that reflects ownership or title to Casa W; (3) Judgment Debtor to take any and all actions and execute any and all documents necessary to transfer all beneficial interest in Casa W to Judgment Creditors, including if the interest is held in whole or in part by an entity or entities in which Judgment Debtor has an ownership interest; (3) Judgment Debtor to transfer to Judgment Creditors all shares of Judgment Debtor in Mega Point Limited, a British Virgin Islands Corporation, including execution of documents by entities in which Judgment Debtor has an ownership interest; and (4) Judgment Debtor to take all further actions and sign all additional documents necessary to transfer beneficial interest to Judgment Creditors, if the foregoing provisions are not sufficient to transfer all beneficial interest in Casa W to Judgment Creditors. (Judgment at pp. 4-5.)

As an initial matter, Judgment Debtor asserts the exceptions in Code of Civil Procedure, sections 917.1 et seq. do not apply. Judgment Creditors on opposition do not argue that any of the exceptions under Code of Civil Procedure, sections 917.1 to 917.9 apply, and indeed argue that sections 917.2 through 917.4 do not apply as related to a bond. As such, related to the relief requested regarding Casa W, LLC, there appears to be no disagreement that the statutory exceptions under sections 917.1 through 917.9 do not apply.

Judgment Debtor places primary reliance on Havemeyer v. Sup. Ct. (1890) 84 Cal. 327 (Havemeyer). In Havemeyer, the Supreme Court held that where an appeal had been taken from a judgment abrogating the charter of a corporation because of abuse of corporate privileges, the subsequent appointment of a receiver to sell its property and wind up its affairs was a proceeding upon the judgment under the precursor statute to Code of Civil Procedure Section 916, and was void. (Id. at 380-82.) The Court discussed that the purpose of the receiver’s appointment was to carry the judgment into effect by receiving and distributing the property of the corporation, i.e., to enforce the judgment and not merely ancillary to the judgment. (See id. at 381-82.) The authority is persuasive in this matter as related to the transfer of Casa W. The Judgment orders the transfer of Casa W by specified procedures that as a whole contemplate the winding-up of the affairs of Casa W, LLC to effect the sale of Casa W. The purpose of this portion of the Judgment is the distribution of the property of the companies in the Judgment, and is not merely ancillary to the Judgment.

Further, it is reasonable to follow Judgment Debtor’s argument that, if the winding-up takes place pending the appeal, the appeal itself may be rendered ineffective, should the Court of Appeal disagree as to the proper procedures for winding-up of the LLC. (Stewart, supra, at 79.)

Judgment Creditors argue that Havemeyer is inapplicable because the appeal in Havemeyer was solely as to the validity of a judgment of forfeiture and dissolution was valid; here, the Judgment is not for dissolution; and that the court entered an order of dissolution on March 4, 2016. However, for the reasons discussed above, the court finds the authority persuasive on the facts in the instant motion. Judgment Creditors also do not provide authority showing that an ability to appeal the order of dissolution mandates that Judgment Debtor may not appeal the instant Judgment.

Accordingly, the motion is granted.

B. Discretionary Stay; Bond

As the court has found the automatic stay under Code of Civil Procedure, Section 916, applicable to the requested portion of the Judgment, the court does not address the alternative arguments requesting a discretionary stay pursuant to the court’s inherent powers, or to establish terms and conditions of an undertaking in the event no stay is applicable.

Dated: ____________________________

Gregory Alarcon

Superior Court Judge

*********************************************************************************************************************************************************

 

 

Superior Court of California

County of Los Angeles

Department 36

KYLE MADISON, et al.,

Plaintiffs,

v.

CASA W. LLC, et al.,

Defendants.

and Related Cross-Action

Case No.: BC459696

Hearing Date: 5/4/2021

[TENTATIVE] RULING RE: Judgment Creditors’ Motion to Vacate or Amend Minute Order

The motion is denied as moot.

Discussion

Judgment Creditors move for an order pursuant to Code of Civil Procedure, section 128(a)(8) vacating the Minute Order of March 5, 2021, or to clarify it to state that the temporary stay does not apply to the damages awarded under the January 22, 2021 Judgment.

The motion is unopposed.

On February 17, 2021, Judgment Debtor filed an ex parte application seeking a stay of the portion of the Judgment relating to the dissolution and liquidation of Casa W, LLC; or, alternatively, for a discretionary stay of proceedings; or, alternatively, for a bond to be delivered to the court; or, alternatively, for a temporary stay of the portion of the Judgment relating to the dissolution and liquidation of Casa W, LLC until the matter could be heard by a regularly noticed motion. The application was opposed.

The court took the ex parte application under submission on February 18, 2021. On March 5, 2021, the court issued its Order granting a temporary stay, and directed Judgment Debtor to notice a motion on the requested stay of enforcement.

Judgment Creditors have offered evidence in support that a Writ of Execution was rejected on grounds of the Order of March 5, 2021. (Mink Decl. ¶ 3, Exh. 2.)

The temporary stay applied until the matter could be heard by regularly noticed motion. Judgment Debtor has now filed a noticed motion seeking the same relief in the ex parte application and the court has issued its ruling. Accordingly, the Order of March 5, 2021, is now rendered moot, and vacation or modification of the Minute Order is not necessary.

The court notes that both Judgment Debtor’s ex parte application and subsequent noticed motion sought a stay of enforcement as to the portion of the Judgment relating to the dissolution and liquidation of Casa W, LLC, and not to the money portion of the Judgment.

Accordingly, the motion is denied as moot.

Dated: ____________________________ Gregory Alarcon Superior Court Judge********************************************************************************************************************************************************* 

Superior Court of California

County of Los Angeles

Department 36

KYLE MADISON, et al.,

Plaintiffs,

v.

CASA W. LLC, et al.,

Defendants.

and Related Cross-Action

Case No.: BC459696

Hearing Date: 5/4/2021

[TENTATIVE] RULING RE: Judgment Creditors’ Motion to Amend Judgment

The motion is denied, without prejudice to renewed motion pending resolution of the appeals to the Judgment.

“Except as provided in subdivision (b), when a writ, notice, order, or other paper is required to be served under [Code of Civil Procedure, Part 2, Title 9] on the judgment debtor, it shall be served on the judgment debtor instead of the attorney for the judgment debtor.” (CCP § 684.020(a).)

Judgment Debtor Michael Theodore argues that the motion was improperly served because it was served on Judgment Debtor’s attorney, rather than Judgment Debtor himself or the proposed new Judgment Debtor, Michael Theodore as Trustee of the Michael Theodore Revocable Trust dated July 21, 2008. Judgment Debtor does not provide citation to a provision under Title 9 that requires the notice or papers to be served on the Judgment Debtor.

Judgment Creditors on Reply argue that the motion is pursuant to Code of Civil Procedure, section 187, which is under Title 2. The motion seeks to amend the judgment, rather than to enforce the judgment under Title 9.

Based on the foregoing, the court does not find procedural impropriety on the failure to serve Judgment Debtor personally pursuant to Title 9.

Motion to Amend Judgment

Judgment Creditors move for an order pursuant to CCP §§ 187, 128, and 526 amending the judgment entered on January 22, 2021 in this action to add (1) Michael Theodore, Trustee of the Michael Theodore Revocable Trust dated July 21, 2008 ("Trust") as a defendant nunc pro tunc, (2) a place to insert an award of attorney fees, and (3) a place to insert an award of costs.

Judgment Debtor on opposition asserts the court does not have jurisdiction to rule on this motion in light of the appeals in this action to the Judgment. Judgment Creditors on reply argued that the court has jurisdiction to rule on the motion. The court requested briefing on jurisdiction for all motions in this action in light of the appeals, which the parties filed on March 29, 2021.

“Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the 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(a).)

“Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following: (1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action. . . .” (CCP § 917.1(a).)

The trial court is divested of subject matter jurisdiction over any matter embraced in or affected by the appeal during the pendency of that appeal. (See Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 197.) Subsequent trial court proceedings on matters embraced in or affected by the appeal are void. (Id. at 198.) “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.’” (Id. at 189.)

“[W]hether a matter is ‘embraced’ in or ‘affected’ by a judgment within the meaning of section 916 depends upon whether postjudgment trial court proceedings on the particular matter would have any impact on the ‘effectiveness' of the appeal. If so, the proceedings are stayed; if not, the proceedings are permitted.” (City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 79, as modified on denial of reh'g (Feb. 28, 2005) (Stewart).)

Judgment Debtor asserts the court is not within jurisdiction to rule on the motion, because the mandatory stay is in effect, and because amendment to add a judgment debtor is a change in substance that affects the appeal. The court has issued its ruling with regard to Judgment Debtor’s requested stay of enforcement, as to the portion of the Judgment relating to the transfer and sale of interests in Casa W, and granted that stay pursuant to Code of Civil Procedure, section 916. That motion does not request or allege entitlement to a stay of enforcement as to the money portion of the Judgment.

Judgment Creditors argue that the court is within its jurisdiction to amend in order to enforce the money judgment portion of the Judgment. Judgment Creditors assert Judgment Debtor has not posted an undertaking under CCP § 917.1, and as such the money judgment portion of the Judgment is not stayed. While this may be true, the request is to add Theodore as Trustee as a Judgment Debtor to the entire Judgment nunc pro tunc, as well as to add places to insert awards of fees and costs.

The Judgment in this action directs: (1) payment of damages by Judgment Debtor; (2) transfer of all right, title and interest in Casa W to Judgment Creditors, by specified procedures; (3) Judgment Creditors’ costs to be determined by separate order after trial; and (4) Judgment Creditors’ attorney’s fees to be determined by separate order after trial. (Judgment.)

Neither party has brought directly binding authority on this court’s jurisdiction to hear the motion to amend the judgment to add a judgment debtor and to add lines for costs and attorney’s fees; nor authority directly applicable to these circumstances, in which there is a money judgment portion of the Judgment as well as a portion of the Judgment that is automatically stayed pending appeal. The more persuasive authority in these circumstances has been brought by Judgment Debtor.

After the perfecting of an appeal, the trial court is deprived of jurisdiction of the cause and “may not vacate or amend a judgment or order valid on its face, or do any other act that would affect the rights of the parties or the condition of the subject matter.” (Witkin, Summary of Calif. Law 11th (2020) ch. XIII § 17.)

Where amendment is requested due to alleged judicial error, rather than clerical error, the court is without jurisdiction to amend its decision. (In re Burnett's Estate (1938) 11 Cal.2d 259, 262.) Amendment due to error is not, however, alleged here.

That a postjudgment proceeding may render the appeal moot and that the postjudgment proceeding “directly or indirectly seek[s] to ‘enforce, vacate or modify [the] appealed judgment or order’” supports that the proceeding affects the effectiveness of the appeal. (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189 (citing Elsea v. Saberi (1992) 4 Cal.App.4th 625, 629 (“The trial court's power to enforce, vacate or modify an appealed judgment or order is suspended while the appeal is pending.”).) Here, the motion directly seeks to modify the appealed judgment by adding a judgment debtor as to the entire Judgment.

Judgment Creditors argue amendment of a judgment to add an alter ego is proper on the theory that the court is not amending the judgment to add a new defendant, but merely inserting the correct name of the real defendant. (See Carr v. Barnabey's Hotel Corp. (1994) 23 Cal.App.4th 14, 21, as modified (Mar. 22, 1994).) “As a general rule, ‘a court may amend its judgment at any time so that the judgment will properly designate the real defendants.’” (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 508 (quoting Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555).) However, these cases did not consider amendment pending appeal.

In Jines v. Abarbanel, the Court of Appeal considered an appeal of a motion to amend the judgment to add a judgment debtor. (See (1978) 77 Cal.App.3d 702, 714-17.) The issue was “whether the superior court had power to add the corporation as a party defendant and judgment debtor after the judgment had been entered and an appeal taken.” (Id. at 715.) The Court found that the “amendment to the judgment was sought and granted as a change of substance: to impose liability on a distinct entity not previously mentioned, and to grant relief not theretofore sought, considered or ordered.” (Id.) The case did not decide the court’s jurisdiction during a pending appeal, but provides support that amendment to add a judgment debtor after an appeal has been filed contemplates a change of substance. (See also Misik v. D’Arco (2011) 197 Cal.App.4th 1065, 1071, as modified (Aug. 9, 2011) (order denying motion to amend the judgment to add a judgment debtor “affects the final judgment by finally determining the rights and liabilities of the parties arising from the judgment.”).)

Judgment Creditors cite to Oyakawa v. Gillett, in which the court discussed whether amendment to add a spouse as a judgment debtor. (See (1992) 8 Cal.App.4th 628, 630-32.) The opinion did not address the authority of the superior court pending the appeal and expressly did not rule on the court’s jurisdiction. (See id. at 630, fn. 2.)

The court does not follow Judgment Debtor’s authorities arguing that a ruling on a motion to amend the judgment pursuant to CCP § 187 shows the court has no power to amend the judgment, as those authorities relate to the court’s discretion on the motion to amend, rather than whether any alleged error in the order or Judgment was a matter of the court’s discretion.

Though not argued by the parties, the court notes as well that it is the general rule under Code of Civil Procedure, section 916, which provides a stay of execution without an undertaking, while section 917.1 is an exception from the general rule.

Based on the foregoing, the court concludes that at this point in the proceedings, in light of the stay to a portion of the Judgment pursuant to Code of Civil Procedure, section 916, the court is without jurisdiction to amend the Judgment to add a judgment debtor to the entire Judgment nunc pro tunc.

Accordingly, the motion is denied, without prejudice to renewed motion pending resolution of the appeals to the Judgment.

Dated: ____________________________ Gregory Alarcon Superior Court Judge*********************************************************************************************************************************************************

Superior Court of California

County of Los Angeles

Department 36

KYLE MADISON, et al.,

Plaintiffs,

v.

CASA W. LLC, et al.,

Defendants.

and Related Cross-Action

Case No.: BC459696

Hearing Date: 5/4/2021

[TENTATIVE] RULING RE: Judgment Creditors’ Motion to Enforce Judgment

The motion is denied, without prejudice to renewed motion pending resolution of the appeals to the Judgment.

Judgment Creditors’ Objections to Defendant’s Evidence

Judgment Creditors Kyle Madison and Marjan Madison (“Judgment Creditors”)’s  objections to evidence are each OVERRULED.

Discussion

Judgment Creditors move for an order pursuant to CCP §§ 128, 187, and 526(a)(3) enforcing the January 22, 2021 judgment by (1) deeming all shares of Mega Point Limited, a British Virgin Islands corporation, transferred to Kyle Madison and Marjan Madison, (2) appointing Kyle Madison the director of Mega Point Limited, and (3) ordering Michael Theodore to deliver his U.S. passport to the clerk for copying within ten days, and provide the same to Plaintiffs’ counsel.

Judgment Debtor Michael Theodore has filed an opposition. Judgment Creditors have filed a reply.

A. Sister State Judgment

As an initial matter, the motion is styled as a Motion to Enforce Sister State Judgment. Under California law, sister state money judgments are enforceable under California’s Sister State Money Judgments Act in Code of Civil Procedure, sections 1710.10-1710.65. The notice and body of the instant motion do not seek enforcement of a sister state judgment and instead seek to enforce the Judgment in this action by specified requests pursuant to Code of Civil Procedure sections 128, 187, and 526(a)(3), and as such the motion has been improperly filed.

B. Effect of Appeal

Judgment Debtor on opposition asserts the court does not have jurisdiction to rule on this motion in light of the appeals in this action to the Judgment. Judgment Creditors on reply argued that the court has jurisdiction to rule on the motion. The court requested briefing on jurisdiction for all motions in this action in light of the appeals, which the parties filed on March 29, 2021.

The court has issued its ruling with regard to Judgment Debtor’s requested stay of enforcement, as to the portion of the Judgment relating to the transfer and sale of interests in Casa W, and granted that stay pursuant to Code of Civil Procedure, section 916.

This motion seeks to enforce the same portion of the Judgment as to which the court has granted a stay of enforcement pending resolution of the appeals. While Judgment Creditors assert that an appeal bond was not posted and thus enforcement is not stayed, the provision upon which Judgment Creditors rely relates to the money judgment portion of the Judgment under Code of Civil Procedure, section 917.1; but the instant motion seeks enforcement of the portion of the Judgment as related to the transfer and sale of Casa W.

Accordingly, the motion is denied, without prejudice to renewed motion pending resolution of the appeals to the Judgment.

Dated: ____________________________ Gregory Alarcon Superior Court Judge*********************************************************************************************************************************************************

Superior Court of California

County of Los Angeles

Department 36

KYLE MADISON, et al.,

Plaintiffs,

v.

CASA W. LLC, et al.,

Defendants.

and Related Cross-Action

Case No.: BC459696

Hearing Date: 5/4/2021

[TENTATIVE] RULING RE: Judgment Debtor’s Motion to Tax Costs

The motion is granted in part and denied in part.

 

Judgment Debtor’s Objections to Judgment Creditors’ Evidence

Judgment Debtor Michael Theodore’s objections to the declaration of Kyle Madison are each sustained. (Evid. Code §§ 702(a), 1200.)

Procedural Issues

The motion to strike or tax costs was timely filed and served on February 10, 2021, after service of the Memorandum of Costs on January 26, 2021. (Cal. Rules of Court, Rule 3.1700(b)(1).)

“Unless objection is made to the entire cost memorandum, the motion to strike or tax costs must refer to each item objected to by the same number and appear in the same order as the corresponding cost item claimed on the memorandum of costs and must state why the item is objectionable.” (Cal. Rules of Court, Rule 3.1700(b)(2).) The motion to strike does not comply with this requirement. Nonetheless, the court is able to ascertain the objected-to items, and does not deny the motion on this basis.

Legal Standard

A prevailing party is entitled as a matter of right to recover costs in any action or proceeding, unless otherwise expressly provided by statute. (CCP § 1032(b).) Recoverable costs are limited to those both “reasonably necessary to the conduct of the litigation” and “reasonable in amount.” (CCP §§ 1033.5(c)(2), (3).)

A losing party may file and serve a motion to strike or tax costs within 15 days after service of the cost memorandum. (Cal. Rules of Court, Rule 3.1700(b)(1).)

“When a motion to tax costs is filed, the court has the duty to ascertain the costs to be allowed [Citation.]. It is left to the court's discretion to determine the reasonableness of the fees claimed.” (Beneficial Standard Properties, Inc. v. Scharps (1977) 67 Cal.App.3d 227, 232.)

If the items on a verified memorandum of costs appear to be permitted by statute, the “‘verified memorandum of costs is prima facie evidence of the propriety’ of the items listed on it, and the burden is on the party challenging these costs to demonstrate that they were not reasonable or necessary.” (Adams v. Ford Motor Co. (2011) 199 Cal.App.4th 1475, 1486.) To meet the burden, the losing party must present evidence and prove that the costs are not recoverable. (See Litt v. Eisenhower Medical Center (2015) 237 Cal.App.4th 1217, 1224.)

If, however, the claimed items are not expressly allowed by statute, and are properly objected to by a motion, the burden of proof is on the party claiming them as costs to show the charges were reasonable and necessary. (Foothill-De Anza Community College Dist. v. Emerich (2007) 158 Cal.App.4th 11, 30.)

Discussion

Judgment Debtor Michael Theodore moves for an order striking or taxing costs pursuant to CRC Rule 3.1700 and CCP § 1033.5 on grounds that various costs are not allowable, are excessive or unsubstantiated.

A summary of the costs requested in this action follows:

1. Filing and motion fees

$4,874.90

2. Jury fees

(p. 37)

$300

4. Deposition costs

Reporters, Depositions and Transcript expenses (p. 7)

$18,391.71

Kamryn Whitney Services (pp. 8-9)

$74,239.13

5. Service of process

Subpoenas and Service of Process (Janney and Janney Attorney Service) (pp. 10-11)

$5,893.12

Messenger Service fees  (p. 12)

$2,361.03

CountryWide Process Servers

$175

7. Surety bond premiums

(p. 38)

$2,400.00

8. Witness fees

Ordinary Witness fees (p. 26)

$873.30

Court appointed expert witness fees – Wax-Semus / WS Enterprises (p. 20)

$32,646.82

Expert witness fees – Anna Leh / Krycler, Evin, Taubman & Kaminsky, AAC (p. 36)

$82,758.50

10. Attorney fees

[per motion – excluded from total]

12. Models, enlargements, and photocopies of exhibits

$26,689.34

14. Fees for electronic filing or service

PACTRACK Legal Services (Filing Services) (p. 22)

$3,166.50

16. Other

Advanced Discovery – Litigation support, copies (pp. 13-15)

$31,900.19

Athanor Books – Legal research service (p. 16)

$523.25

Court call fees (p. 17)

$296.00

Outside attorney’s fees (pp. 18-19)

$135,989.48

Bank of America Photocopies (p. 23)

$2,023.88

Wells Fargo Photocopies (p. 24)

$1,156.72

Settlement with Diamond (p. 25)

$262,500.00

Legal Vision Services - Litigation support, copies (pp. 28-29)

$27,569.51

Westlaw (pp. 30-31)

$12,757.05

Postage (pp. 32-33)

$318.49

FedEx (pp. 34-35)

$1,919.39

Life Style Management - Casa W Property Management (pp. 39-40)

$60,458.20

TOTAL

$792,181.55

A. Costs per Judgment

Judgment Debtor objects to several items as not permitted under the statutory provisions for costs under Code of Civil Procedure, section 1033.5(a)(1). Judgment Creditors argue that the Judgment supersedes CCP § 1033.5. The Judgment as related to costs reads: “During the trial, the parties stipulated that all costs and expenses (statutory, nonstatutory, expert fees, liquidator fees, and attorney fees) would be presented after trial. Plaintiffs may file their cost bill under Rule 3.1700, and costs will be determined by separate order.” (Judgment, at p. 6.) Judgment Debtor replies that there is no argument or showing in support that Judgment Debtor waived the right to challenge any claim of costs, nor stipulated to the same, and that there is no evidence in support of the argument. Judgment Creditors’ argument is rejected. There is no showing before the court of a stipulation to recover all fees. The Judgment states that costs would be presented, not recovered; there is also no evidence offered in support of stipulation or waiver.

B. Deposition Costs

The Memorandum of Costs represents that Reporters, Depositions and Transcript expenses of $18,391.71, plus fees for Kamryn Whitney Services of $74,239.13, should be stricken. Recoverable fees include “[t]aking, video recording, and transcribing necessary depositions” and “[t]ranscripts of court proceedings ordered by the court.” (CCP § 1033.5(a)(3)(A), (a)(9).) The burden is on Judgment Debtor to show impropriety. (Adams, supra, at 1486.) In response, Judgment Debtor has not specifically indicated which, if any, deposition transcripts are not recoverable or which, if any, court transcripts were not ordered by the court. Judgment Debtor does not meet this burden by representing that the majority of the transcripts are not recoverable and should be disallowed and has not offered evidence in support of the arguments. The motion to strike is denied as to deposition costs.

C. Service of Process

The Memorandum of Costs lists costs of $5,893.12 for Janney and Janney Attorney Service for “Subpoenas and Service of Process” and $2,361.03 for Messenger Service fees.

Recoverable fees include “Service of process by a public officer, registered process server, or other means . . . .” (CCP § 1033.5(a)(4).)

Messenger service fees are not expressly allowed by statute, but may be recovered in the court’s discretion if reasonably necessary. (Foothill-De Anza Community College Dist. v. Emerich (2007) 158 Cal.App.4th 11, 30.) The burden is on Judgment Creditors to show the charges were reasonable and necessary. On Opposition, Judgment Creditors address the argument and have offered evidence in support of necessity to use messenger services for the transport of papers. (See Mink Decl. ¶ 3.) Judgment Creditors satisfy the burden. The motion to strike is denied as to messenger service fees.

For Janney & Janney Attorney Service, first, a number of the charges state that they are for service of process. For these entries, the burden is on Judgment Debtor to show the charges are not reasonable or necessary. Judgment Debtor does not satisfy the burden to show that the entries for service are not necessary or reasonable.

Next, numerous entries for Janney & Janney provide no information, and thus the court cannot conclude that the charges facially appear to be allowed by statute. Judgment Debtor objects on grounds that it appears numerous entries are for messenger service for delivery of documents. The burden is on the Judgment Creditors to show the charges were reasonable and necessary. On opposition, Judgment Creditors do not address this contention, offer no argument, and have not offered any evidence in support that the charges were necessary or reasonable.

Accordingly, the motion to strike is granted in part as to entries for Janney and Janney Attorney Service, striking $3,628.17 of fees. Fees are awarded in the reduced sum of $2,264.95 for Janney and Janney Attorney Service; and awarded in full for claimed messenger fees.

D. Surety Bond Premiums

The Memorandum of Costs lists costs of $2,400 for surety bond premiums.

Recoverable fees include “Premiums on necessary surety bonds.” (CCP § 1033.5(a)(6).) The costs are facially permitted and the burden is on Judgment Debtor. Judgment Debtor argues that an injunction requiring bond services was not granted in this case and as such bond services for an injunction are not necessary in this case. No evidence is offered in support of the argument. On reply, Judgment Debtor argues, without evidence, that at least one of the bonds for which bond premiums are sought, is for a different case. Judgment Creditors argue that injunctive relief was necessary in this action. Judgment Debtor has not carried the burden to support the argument with evidence and show that the bond premiums are not recoverable as being sought in a different action. The motion to strike is denied as to surety bond premiums.

E. Witness Fees

The Memorandum of Costs lists $873.30 for ordinary witness fees; $32,646.82 for fees for Pamela Wax-Semus/WS Enterprises; and $82,758.50 for expert witness fees for Anna Leh / Krycler, Evin, Taubman & Kaminsky, AAC.

Recoverable fees include “[o]rdinary witness fees pursuant to Section 68093 of the Government Code” and “[f]ees of expert witnesses ordered by the court.” (CCP § 1033.5(a)(8), (a)(9).)

Judgment Debtor objects to $437.50 in witness fees for Darryl Zengler on grounds that it appears to be a fee as an expert for having his deposition taken, rather than an ordinary witness fee. Judgment Creditors appear to concede the point on opposition. (See Opp. at p. 9.) Judgment Creditors thus bear the burden and fail to show on opposition that the cost is reasonable and necessary. The motion to strike is granted as to the witness fee for Darryl Zengler, and $437.50 is stricken from witness fees, section 2.a.

Judgment Debtor objects to all fees for Ms. Wax-Semus on grounds that she was originally retained as a joint expert by the parties, rather than a court-appointed expert. On Opposition, Judgment Creditors have offered evidence in support that Ms. Wax-Semus was a court-appointed expert appointed an expert per ruling dated January 11, 2013. (Mink Decl. Exh. 2 (Court Order of March 24, 2017).) On reply, Judgment Debtor argues without evidence that Ms. Wax-Semus was not appointed as an expert until March 24, 2016 and does not address Judgment Creditors’ evidence. The court notes that the same Order offered by Judgment Creditors addresses as well Ms. Wax-Semus’s appointment as a referee on March 4, 2016. (See Mink Decl. Exh. 2, at p. 4.) There is sufficient showing that Ms. Wax-Semus was a court-appointed expert. The motion to tax is denied on these grounds.

Judgment Debtor also objects to all fees for Ms. Wax-Semus on grounds that she was subsequently disqualified as an expert. The burden is on Judgment Debtor. Judgment Debtor has provided no argument that the fees sought are not reasonable or not necessary. The information from Wax-Semus’s investigation was subsequently used by Ms. Leh, and the court has rejected that the information from Ms. Wax-Semus’s investigation should be distrusted. (See Amended Statement of Decision, at pp. 27-30.) The motion to tax is denied on these grounds.

Last, Judgment Debtor alleges that the fact that only $32,646.82 is being requested for the fees for Ms. Wax-Semus shows a fraud on the court, as the fees were to be split evenly, but Judgment Debtor paid $124,933.72. (See Mot. at p. 6.) Judgment Creditors on opposition argue that they have obtained evidence in support that Kyle Madison in fact paid $133,846.20. (Opp. at p. 8.) However, the court has sustained evidentiary objections to the evidence. On Reply, Judgment Debtor no longer raises the argument. Based on the foregoing, the court neither increases nor reduces the costs for Ms. Wax-Semus / WS Enterprises; the motion to strike is denied as to fees for Ms. Wax-Semus / WS Enterprises.

Judgment Debtor next objects that fees for Anna Leh cannot be recovered under Code of Civil Procedure, section 1033.5(b) because Anna Leh was not a court-ordered expert. Fees that are not recoverable include “[f]ees of experts not ordered by the court.” (CCP § 1033.5(b)(1).) Judgment Creditors’ sole argument is based on the Judgment superseding statutory costs, which the court has above rejected. The motion to strike is granted as to fees for Ms. Leh.

F. Postage, Photocopying, FedEx Charges

Fees that are not recoverable include “[p]ostage, telephone, and photocopying charges, except for exhibits.” (CCP § 1033.5(b)(3).)

The Memorandum of Costs lists $318.49 for postage, and $1,919.39 for Federal Express charges. Judgment Debtor objects on grounds that postage is not recoverable. The court agrees. The motion to strike is granted as to postage, including Federal Express charges.

The Memorandum of Costs lists $2,023.88 for Bank of America photocopies and $1,156.72 for Wells Fargo photocopies. Judgment Debtor objects on grounds that photocopying is not recoverable. The court agrees. The motion to strike is granted as to these photocopying charges.

G. Outside Litigation Support, Legal Research, Legal Services, Outside Counsel

The Memorandum of Costs lists $3,166.50 in costs for Pactrack Legal Services (Filing Services); $31,900.19 for Advanced Discovery (Litigation support, copies); $523.25 for Athanor Books (Legal research service); $135,989.48 for Outside attorney’s fees; and $27,569.51 for Legal Vision Services (Litigation support, copies).

As to each of these charges, Judgment Debtor objects as fees that are not covered under the statute. Citation to the legal authority showing that they are either permitted or not permitted under the statute has not been provided by either party. As such, the burden is on Judgment Creditors. On opposition, Judgment Creditors argue that the Judgment supersedes statutory costs, which the court has above rejected. Mr. Madison attests that the fees for outside attorneys were paid. (Madison Decl. ¶ 5.) However, argument in support that the fees are reasonable and necessary in the litigation, either prior to or supplementary to Judgment Creditors’ counsel for whom attorneys’ fees are already sought, is not provided. To the extent that Judgment Creditors intended to obtain attorney’s fees for prior counsel in this matter, the appropriate method is to move for attorney’s fees, as in the related motion. Furthermore, several of the fees include investigation expenses, which are expressly disallowed. (CCP § 1033.5(b)(2).)

Based on the foregoing, the motion to strike is granted as to each of the above-listed costs.

H. Miscellaneous Costs

The Memorandum of Costs lists $262,500 for Settlement with Diamond; $296.00 for court call fees; $12,757.05 for Westlaw database; and $60,458.20 for Life Style Management (Casa W Property Management).

For the claimed costs of settlement with Mr. Diamond, the court-appointed liquidator, Judgment Debtor objects that the settlement cost is not listed as a recoverable item, and Mr. Diamond’s costs were unnecessarily incurred, as they were rendered moot by the subsequent conduct of Mr. Mink and Judgment Creditors. (Mot. at p. 11.) The burden is on Judgment Creditors. Judgment Creditors oppose that Mr. Diamond’s appointment was required due to Judgment Debtor’s refusal to sell, dissolve, and wind-up Casa W and Casa W LLC, and to produce financial records of Casa W, LLC. Judgment Creditors explain that, after the discharge of Mr. Diamond, a Judgment had been entered (in a separate suit) and Mr. Madison arranged settlement of the matter. Legal authority in support that a party may, in one suit, recover settlement funds as costs in another suit has not been provided. Further, no evidence is provided in support of Judgment Creditors’ argument. Judgment Creditors do not carry the burden. The motion to strike is granted as to settlement costs for Mr. Diamond.

For the claimed CourtCall fees, Judgment Debtor objects that the settlement cost is not listed as a recoverable item. CourtCall fees are not specifically listed under section 1033.5, and as such the court has discretion to award them. (CCP § 1033.5(c)(4).) The fees are reasonable, and thus approved. The motion to strike is denied as to CourtCall fees.

For the claimed Westlaw database access costs, Judgment Debtor objects that the cost is a cost for legal research, including legal research, that constitutes investigation expenses in preparing the case for trial, and thus is expressly disallowed under section 1033.5(b). Fees that are not recoverable include “[i]nvestigation expenses in preparing the case for trial.” (CCP § 1033.5(b)(2).) “Fees for legal research, computer or otherwise, may not be recovered under section 1033.5.” (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 776.) On opposition, Judgment Creditors assert that fees for legal services are recoverable, as addressed in Subsection G, above. As above, Judgment Creditors do not carry the burden. The motion to strike is granted as to Westlaw database costs.

For the claimed costs for Lifestyle Management (Casa W Property Management), Judgment Debtor objects that the cost is not listed as a recoverable item, and that the parties were ordered to share in the expenses of the Casa W property going forward. These costs are not listed under section 1033.5(a) or (b). The burden is on Judgment Creditors. Judgment Creditors on opposition argue that Judgment Debtor should pay the expense, because it was caused solely by him when he prevented the liquidator, Mr. Diamond, from selling Casa W; and on grounds the expense is permitted under the superseding Judgment. On reply, Judgment Debtor alleges that the expenses associated with standard maintenance are required of any rental property, and Judgment Creditors refused to sell the property before the lawsuit was filed. The court declines to delve into the parties’ continued assertions on the issues in this action after Judgment has been entered. The Judgment awards monetary damages considering expenses and provides for distribution of costs and proceeds of the sale of Casa W going forward. There is no argument as to how the expenses are not included, or could or should not have been included, in the damages awarded under the Judgment. Further, no evidence is provided in support of Judgment Creditors’ argument. Judgment Creditors do not carry the burden. The motion to strike is granted as to costs for Lifestyle Management.

Dated: ____________________________

Gregory Alarcon

Superior Court Judge

Case Number: BC459696    Hearing Date: April 1, 2021    Dept: 36

 

*COUNSEL – YOU CANNOT SUBMIT ON THE TENTATIVE PRIOR TO THE HEARING* 

Superior Court of California

County of Los Angeles

Department 36

KYLE MADISON, et al.,

Plaintiffs,

v.

CASA W. LLC, et al.,

Defendants.

and Related Cross-Action

Case No.: BC459696

Hearing Date: 4/1/2021

[TENTATIVE] RULING RE: Judgment Debtor’s Motion for New Trial

Judgment Debtor Michael Theodore’s Motion for New Trial is denied.

Judgment Creditors’ Objections to Judgment Debtor’s Evidence

Judgment Creditors Kyle Madison and Marjan Madison (“Judgment Creditors”)’s objections to arguments made for the first time in reply are SUSTAINED. Judgment Creditors object to argument made for the first time in the Reply that the Madisons, Lyle Mink, and Pamela Wax-Semus acted together in committing fraud on the court. “The salutory rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) The argument is made on grounds that fees in the Cost Bill indicate Judgment Creditors paid only around $35,000 for fees, despite that Ms. Wax-Semus testified she was appointed as an independent expert being paid equally by the parties, and Judgment Debtor paid around $125,000 in fees. However, the Cost Bill was filed on January 26, 2021, 23 days prior to Judgment Debtor’s filing the instant Motion for New Trial.

Judgment Creditors’ objections to the Declaration of Steven Zelig are each OVERRULED.

Judgment Creditors’ objection to the Declaration of Michael Theodore is OVERRULED.

Judgment Creditors’ objections to the Declaration of Daniel Spielfogel are ruled on as follows: Objections 1-2, 4-6: OVERRULED. Objection 3: SUSTAINED.

Judgment Creditors’ objection to the Declaration of Kristen Bingham is OVERRULED.

Legal Standard

A new trial is a re-examination of an issue of fact in the same court after a trial and decision by a jury, court, or referee. (CCP § 656.) Under CCP § 657, a party can seek a new trial on the grounds of: (1) irregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial; (2) misconduct of the jury; (3) accident or surprise, which ordinary prudence could not have guarded against; (4) newly discovered evidence, material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the trial; (5) excessive or inadequate damages; (6) insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law; and (7) error in law, occurring at the trial and excepted to by the party making the application.

A party intending to move for a new trial must file with the clerk and serve upon each adverse party a notice of his intention to move for a new trial, designating the grounds upon which the motion will be made and whether the same will be made upon affidavits or the minutes of the court or both, either: (1) before the entry of judgment; or (2) within 15 days of the date of mailing of notice of entry of judgment by the clerk of the court pursuant to CCP § 664.5, or service upon him by any party of written notice of entry of judgment, or within 180 days after the entry of judgment, whichever is earliest. (CCP § 659.) Within 10 days of filing the notice of intention to move for a new trial, the moving party shall serve upon all other parties and file any affidavits intended to be used upon such motion. (CCP § 659a.) Other parties shall have 10 days after such service within which to file and serve upon the moving party any opposing briefs and counter-affidavits. (Id.)

The power of the court to rule on a motion for a new trial shall expire 75 days after the mailing of notice of entry of judgment by the clerk of the court pursuant to Section 664.5 or 75 days after service on the moving party by any party of written notice of entry of judgment, whichever is earlier, or if that notice has not been given, 75 days after the filing of the first notice of intention to move for a new trial. (CCP 660(c).)

Timely Filing

Judgment Creditors mailed a Notice of Entry of Judgment on January 26, 2021 by electronic mail. On February 8, 2021, Judgment Debtor timely filed and served by mail and electronic mail a Notice of Intention to Move for New Trial. (CCP § 659.)

Judgment Debtor timely filed and served the motion for new trial on February 18, 2021 by electronic service within 10 days after filing the Notice of Intention. (CCP § 659a; Cal. Rules of Court, Rule 3.1600(a).) An affidavit was served within 10 days of filing the Notice of Intention. (CCP 659a.) Judgment Creditors timely opposed on March 1, 2021. (CCP § 659a; Cal. Rules of Court, Rule 3.1600(a).) Judgment Debtor replied on March 8, 2021. Extending the time for electronic service by two days, Judgment Debtor’s reply was timely. (CCP § 1010.6(a)(4)(B); CCP § 659a.)

Motion for New Trial

Judgment Debtor Michael Theodore moves for a new trial on grounds: (1) the court made an error of law in permitting testimony of Anna Leh, who was not qualified to serve as an expert (CCP § 657(7)); (2) the court made an error of law because uncontradicted evidence demonstrated Judgment Creditors materially breached the Operating Agreement (CCP § 657(7)); (3) the court made an error of law in excluding Judgment Debtor from participating in the winding-up process (CCP § 657(7)); (4) damages awarded were excessive (CCP § 657(5)); and (5) the Judgment is not supported by sufficient evidence as it was based upon the testimony of Anna Leh (CCP § 657(6)). Each statutory ground is included in the Notice of Intent.

Error in Law

A judge may grant a new trial based on “[e]rror in law, occurring at the trial and excepted to by the party making the application.” (CCP § 657(7).)

Judgment Debtor first asserts the court made an error of law in considering the expert testimony of Anna Leh, as she was unqualified to serve as an expert. Judgment Debtor appears to place reliance on a New York District Court ruling on the admissibility of expert evidence under the Federal Rules of Evidence. (See Mot. at p. 3 (citing MF Global Holdings Ltd. v. PricewaterhouseCoopers LLP see Evid. Code §§ 720, et seq.) nor is the New York Federal District Court’s ruling binding on this court, and no California authority is provided to show an error of law. Next, no evidence has been brought in support of the argument. This court has considered these arguments during the trial and in briefing and has found that Anna Leh is qualified as an expert fraud examiner and was not disqualified from testifying. (See Amended Statement of Decision, at p. 23.)

Judgment Debtor next asserts the court made an error of law by relying on the prior report and testimony of Pamela Wax-Semus. (Mot. at p. 13.) Grounds for alleged error as a matter of law have not been provided, nor evidence provided in support of reliance on the report of Ms. Wax-Semus rather than its data. Further, the court considered and wholly rejected the argument that the information from Wax-Semus’s investigation as used by Ms. Leh should be distrusted. (See Amended Statement of Decision, at pp. 27-30.)

Judgment Debtor next asserts the court made an error of law by enforcing the Operating Agreement when uncontradicted evidence at trial showed the Madisons failed to provide 10 hours of work per week on behalf of the LLC from the time of execution of the Operating Agreement through 2009. (Mot. at p. 13.) Again, no evidence is offered in support of this contention. The allegation is based on the definition of “Terminated Member” as a Member who fails to devote at least 10 hours per week of services to the Company, except in the case of disability. (Trial Exhibit 3.18, Compl. Exh. A, at p. 18.) The phrase “Terminated Member” is mentioned in Paragraph 9.1 which provides for an “Optional Purchase Event” in the event that a Member becomes a Terminated Member rather than stating a failure of a material term under the contract. (See id. at ¶ 9.1.) Next, the court has found that the failure to provide 10 hours a week of work were not issues preventing the Plaintiffs from fulfilling their contract duties, and were not material breaches of the contract, nor caused any damage to the Judgment Debtor. (See Amended Statement of Decision, p. 46, fn. 42.)

Judgment Debtor next asserts the court made an error of law by excluding Judgment Debtor as a Member of the LLC from participating in the winding-up process of the LLC under Corporations Code, section 17707.04. (Mot. at pp. 13-14.) “The managers who have not wrongfully dissolved the limited liability company, or, if none, the members, or, if none, the person or a majority of the persons signing the articles of organization, may wind up the affairs of the limited liability company . . . .” (Corp. Code, § 17707.04(a).) Judgment Debtor alleges a statutory right to participate in winding up the LLC. This exact argument was made by Judgment Debtor in objections to the Proposed Judgment, and the court considered the argument and overruled it. (See Amended Statement of Decision, at fn. 49 (pp. 61-62).) Judgment Debtor has still not shown grounds to show that the Judgment Debtor has a statutory entitlement to winding up of the LLC; even if “the members” was intended to refer to all members, rather than the members who have not wrongfully dissolved the LLC, the statutory language is permissive, not mandatory. (Corp. Code, § 17707.04(a).) As the court has previously found, no authority has been provided that the court may not so order. (See Amended Statement of Decision, at fn. 49 (pp. 61-62).)

Excessive Damages / Insufficient Evidence

“A new trial shall not be granted upon . . . the ground of excessive or inadequate damages, unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court or jury clearly should have reached a different verdict or decision.” (CCP § 657.) “[A]ny time a new trial is granted for excessive damages, the court in effect is finding the evidence to have been insufficient to support the jury’s award.” (Dell’Oca v. Bank of New York Trust Co., N.A. (2008) 159 Cal.App.4th 531, 549.) “[A] motion asserting inadequate or excessive damages is governed by the same standards and principles as one asserting that the evidence is insufficient to sustain the verdict.” (Ryan v. Crown Castle NG Networks Inc. (2016) 6 Cal.App.5th 775, 784.)

Judgment Debtor alleges that the damages awarded are excessive as they were based upon the damage analysis of Ms. Leh, who made flawed assumptions and methodology; and that the damages are unsupported by sufficient evidence for the same reasons. (Mot. at pp. 3-12.) “An expert's opinion which rests upon guess, surmise or conjecture, rather than relevant, probative facts, cannot constitute substantial evidence.” (Garza v. Workmen's Comp. App. Bd. (1970) 3 Cal.3d 312, 318.) The court “may inquire into, not only the type of material on which an expert relies, but also whether that material actually supports the expert’s reasoning. ‘A court may conclude that there is simply too great an analytic gap between the data and the opinion offered.’” (Waller v. FCA US LLC (2020) 48 Cal.App.5th 888, 894, reh'g denied (May 26, 2020), review denied (Aug. 19, 2020).)

There is no evidence provided in this motion by means of affidavit or declarations apart from the damage analysis of Darryl Zengler. (See Klapach Decl. ¶ 2, Exhs. A, B.) There is thus no evidence in support that Ms. Leh’s assumptions or methodology were based upon conjecture, or that there was the alleged analytic gaps in the data and opinion, such that the court “clearly should have reached a different verdict or decision.” (CCP § 657.)

Next, the grounds alleged are those set forth by Judgment Debtor’s expert, Darryl Zengler. (See Mot. at p. 4.) The court found Mr. Zengler’s approach less credible than Ms. Leh’s, on grounds that Mr. Zengler was not a forensic accountant or certified fraud examiner and had no experience in fraud investigations; Mr. Zengler did not look at the Casa W LLC bank account; Mr. Zengler did not verify payments actually made by Judgment Debtor; and certain contentions made by Mr. Zengler were not supported by the Operating Agreement’s terms. (See Amended Statement of Decision, at pp. 30-33.) In addition, Mr. Zengler heavily relied on Gecko Statements in reaching his conclusions, which Ms. Leh had stated were not consistently verifiable. (See id. at p. 31; see also id. at pp 26. 27, fn. 34 (as to Gecko Statements).) To the extent that the argument is directed at the data provided by Ms. Wax-Semus, as discussed above, the court has rejected the argument that the information provided must be distrusted.

Conclusion

The motion for new trial is denied.

Dated: ____________________________

Gregory Alarcon

Superior Court Judge

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