This case was last updated from Los Angeles County Superior Courts on 02/05/2020 at 04:54:28 (UTC).

MICHAEL REACH VS JOHN SPAHI, ET AL.,

Case Summary

On 06/03/2015 MICHAEL REACH filed a Contract - Business lawsuit against JOHN SPAHI, . This case was filed in Los Angeles County Superior Courts, Santa Monica Courthouse located in Los Angeles, California. The Judges overseeing this case are RICHARD A. STONE, GERALD ROSENBERG, CRAIG D. KARLAN, LISA HART COLE and BARBARA R. JOHNSON. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****4263

  • Filing Date:

    06/03/2015

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Business

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Santa Monica Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

RICHARD A. STONE

GERALD ROSENBERG

CRAIG D. KARLAN

LISA HART COLE

BARBARA R. JOHNSON

 

Party Details

Plaintiff

REACH MICHAEL

Defendants and Cross Defendants

APEX INVESTMENT GROUP LTD

ASCAR SEIF

CAVOUR PARTNERS LIMITED LLC

ENENSTEIN RIBAKOFF LAVINA & PHAM

FALUDIAN JANET

HAMBERG KARIC EDWARDS & MARTIN LLP

INCAUDO JOSEPH

JOHN PAUL HANNA A PROFESSIONAL CORP.

OCEAN TOWERS HOUSING CORP.

ORLANDO JOSEPH

ROLLAND WILLIAM

SCHIRO DOROTHEA

SPAHI JOHN

SPAHI OMAR

YOSHIKAWA KAZOU "KAY"

AMBROSE PATRICK

STEIN SHELDON

ALEVIZOS PETER

Defendant and Cross Plaintiff

YOSHIKAWA KAZOU "KAY"

Other

FREEDMAN & TAITELMAN

22 More Parties Available

Attorney/Law Firm Details

Plaintiff and Defendant Attorneys

WITTENBERG JEFFREY

FREEDMAN & TAITELMAN

O'MELVENY & MYERS

ENENSTEIN RIBAKOFF LAVINA & PHAM

EDMOND NASSIRZADEH

KENNETH C. FELDMAN

LEWIS BRISBOIS BISGAARD & SMITH LLP

NASS LAW FIRM

MURPHY PEARSON BRADLEY & FEENEY

MANATT PHELPS PHILLIPS

BAUM ANDREW

BERKE DAVID

GLASER WEIL FINK HOWARD AVCHEN & SHAPIRO

NEMECEK & COLE

ROBERT M. HELLER ESQ

KIMBALL JULIE Z.

FIRM NASS LAW

MURPHY ROSEN LLP

COZEN & O'CONNOR

VARNEN CRAIG I

18 More Attorneys Available

 

Court Documents

Legacy Document - LEGACY DOCUMENT TYPE: NOTICE

7/20/2015: Legacy Document - LEGACY DOCUMENT TYPE: NOTICE

Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

8/3/2015: Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

Minute Order - MINUTE ORDER ENTERED: 2015-11-24 00:00:00

11/24/2015: Minute Order - MINUTE ORDER ENTERED: 2015-11-24 00:00:00

Legacy Document - LEGACY DOCUMENT TYPE: RESPONSE

11/30/2015: Legacy Document - LEGACY DOCUMENT TYPE: RESPONSE

Proof of Service (not Summons and Complaint)

4/26/2017: Proof of Service (not Summons and Complaint)

Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

8/23/2017: Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

2/6/2018: Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

Minute Order - MINUTE ORDER ENTERED: 2018-04-18 00:00:00

4/18/2018: Minute Order - MINUTE ORDER ENTERED: 2018-04-18 00:00:00

Notice - NOTICE OF APPLICATION OF MICHAEL EGGENBERGER TO APPEAR AS COUNSEL PRO HAC VICE AND DECLARATION OF JOHN M. PIERCE IN SUPPORT THEREOF

10/23/2019: Notice - NOTICE OF APPLICATION OF MICHAEL EGGENBERGER TO APPEAR AS COUNSEL PRO HAC VICE AND DECLARATION OF JOHN M. PIERCE IN SUPPORT THEREOF

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE RE: CASE MANAGEMENT ORDER AND DISC...)

11/5/2019: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE RE: CASE MANAGEMENT ORDER AND DISC...)

Answer

11/14/2019: Answer

Notice - STATEMENT OF INTENT TO RESPOND TO FOURTH AMENDED COMPLAINT UPON LIFTING OF THE STAY IF REQUESTED BY COURT

8/15/2019: Notice - STATEMENT OF INTENT TO RESPOND TO FOURTH AMENDED COMPLAINT UPON LIFTING OF THE STAY IF REQUESTED BY COURT

Response - To the Supplemental Statement

7/6/2018: Response - To the Supplemental Statement

Ex Parte Application - To Stay

8/7/2018: Ex Parte Application - To Stay

Other - - RECEIVER'S EX PARTE APPLICATION FOR ORDER APPROVING ATTORNEYS AND PROVIDING PROCEDURES FOR PAYMENT THEREOF

9/19/2018: Other - - RECEIVER'S EX PARTE APPLICATION FOR ORDER APPROVING ATTORNEYS AND PROVIDING PROCEDURES FOR PAYMENT THEREOF

Minute Order - Minute Order (Nunc Pro Tunc Order)

11/7/2018: Minute Order - Minute Order (Nunc Pro Tunc Order)

Certificate of Mailing for - Certificate of Mailing for [Minute Order (Nunc Pro Tunc Order), Minute Order (Nunc Pro Tunc Order)]

12/19/2018: Certificate of Mailing for - Certificate of Mailing for [Minute Order (Nunc Pro Tunc Order), Minute Order (Nunc Pro Tunc Order)]

Declaration - DECLARATION DECLARATION OF JEA

5/2/2019: Declaration - DECLARATION DECLARATION OF JEA

910 More Documents Available

 

Docket Entries

  • 11/16/2020
  • Hearing11/16/2020 at 08:30 AM in Department O at 1725 Main Street, Santa Monica, CA 90401; Non-Appearance Case Review

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  • 10/19/2020
  • Hearing10/19/2020 at 10:00 AM in Department O at 1725 Main Street, Santa Monica, CA 90401; Jury Trial

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  • 10/09/2020
  • Hearing10/09/2020 at 09:30 AM in Department O at 1725 Main Street, Santa Monica, CA 90401; Final Status Conference

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  • 06/02/2020
  • Hearing06/02/2020 at 08:30 AM in Department O at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion for Summary Judgment

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  • 04/02/2020
  • Hearing04/02/2020 at 08:30 AM in Department O at 1725 Main Street, Santa Monica, CA 90401; Hearing on Demurrer - without Motion to Strike

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  • 02/28/2020
  • Hearing02/28/2020 at 08:30 AM in Department O at 1725 Main Street, Santa Monica, CA 90401; Case Management Conference

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  • 01/24/2020
  • Docketat 08:30 AM in Department O; Hearing on Demurrer - without Motion to Strike - Not Held - Advanced and Vacated

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  • 01/24/2020
  • Docketat 08:30 AM in Department O; Hearing on Motion for Reconsideration - Not Held - Advanced and Continued - by Court

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  • 01/24/2020
  • Docketat 08:30 AM in Department O; Hearing on Demurrer - with Motion to Strike (CCP 430.10) - Not Held - Taken Off Calendar by Party

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  • 01/17/2020
  • Docketat 10:00 AM in Department O; Informal Discovery Conference (IDC) (Re Motion for Summary Judgment) - Held

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1,785 More Docket Entries
  • 06/16/2015
  • Docketat 08:30 am in Department WEM, Richard A. Stone, Presiding; Affidavit of Prejudice - Motion Granted

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  • 06/16/2015
  • DocketChallenge To Judicial Officer - Peremptory (170.6); Filed by Michael Reach (Plaintiff)

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  • 06/16/2015
  • DocketMiscellaneous-Other (MOTION FOR PEREMPTORY CHALLENGE PURSUANT TO CODE OF CIVIL PROCEDURE 170.6 ); Filed by Attorney for Plaintiff

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  • 06/16/2015
  • DocketMinute order entered: 2015-06-16 00:00:00; Filed by Clerk

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  • 06/03/2015
  • DocketNotice of Posting of Jury Fees; Filed by OCEAN TOWERS HOUSING CORPORATION (Plaintiff)

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  • 06/03/2015
  • DocketComplaint; Filed by Derivatively on behalf of Ocena Towers Housing Corporation (Plaintiff); Michael Reach (Plaintiff); OCEAN TOWERS HOUSING CORPORATION (Plaintiff)

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  • 06/03/2015
  • DocketMiscellaneous-Other (Civil Deposit for Jury Fees ); Filed by Attorney for Plaintiff

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  • 06/03/2015
  • DocketSummons Filed; Filed by Attorney for Plaintiff

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  • 06/03/2015
  • DocketComplaint Filed

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  • 06/03/2015
  • DocketSummons; Filed by Plaintiff

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Tentative Rulings

Case Number: SC124263    Hearing Date: January 28, 2021    Dept: O

Case Name: Reach v. Spahi, et al.

Case No.: SC124263

Hearing: 1-28-21

Calendar #: 7

Notice: OK

Complaint Filed: 6-3-15

Motion C/O: 7-11-21

Discovery C/O: 6-28-21

Trial Date: 7-26-21

______________________________________________________________________________

SUBJECT: MOTION FOR AN ORDER, PURSUANT TO CIVIL CODE SECTION 3295(c) PERMITTING PRETRIAL DISCVOERY OF WRONGFULLY GAINED PROFITS BY AND FINANCIAL CONDITION OF DEFENDANTS JOHN SPAHI, JOSEPH ORLANDO, OMAR SPAHI AND APEX INVESTMENTS GROUP LTD.

MOVING PARTY: Plaintiff Ocean Towers Housing Corporation

RESP. PARTY: Defendant John Spahi

JOINED BY: Defendant Joseph Orlando, Dolrina Schiro, Omar Spahi, Apex Investments Group, Ltd

TENTATIVE RULING

Plaintiff Ocean Towers Housing Corporation’s Motion for Order, Pursuant to Civil Code §3295(c) Permitting Pretrial Discovery of Wrongfully Gained Profits by and Financial Condition of Defendants John Spahi, Joseph Orlando, Omar Spahi and Apex Investments Group Ltd. is GRANTED.

Spahi’s objection to the entire supplemental declaration of Donald Miller filed with the reply memorandum is sustained. Spahi’s remaining objections to the evidence referenced herein are overruled.

Civil Code §3294 authorizes the recovery of punitive damages in non-contract cases “where the defendant has been guilty of oppression, fraud, or malice, express or implied . . . .” “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

“The adjective ‘despicable’ connotes conduct that is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people....Punitive damages are appropriate if the defendant's acts are reprehensible, fraudulent or in blatant violation of law or policy. The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages.... Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff's rights, a level which decent citizens should not have to tolerate.” Lackner v. North (2006) 135 Cal.App.4th 1188, 1210-1211.

“Upon motion by the plaintiff ... the court may at any time enter an order permitting the discovery otherwise prohibited by this subdivision if the court finds, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established that there is a substantial probability that the plaintiff will prevail on the claim [for punitive damages].” CC §3295(c). “[B]efore a court may enter an order permitting discovery of a defendant's financial condition, it must (1) weigh the evidence submitted in favor of and in opposition to motion for discovery, and (2) make a finding that it is very likely the plaintiff will prevail on his claim for punitive damages.” Jabro v. Supr. Ct. (2002) 95 Cal.App.4th 754, 758. Under CC §3295, the words “substantial probability” are interpreted to mean “very likely” or “a strong likelihood” and not “reasonable probability” or simply “probability” which would imply a lower threshold of “more likely than not.” Id.

Plaintiff alleges breach of fiduciary duty, aiding and abetting fiduciary duty, conversion, and fraud. Plaintiff’s evidence establishes a substantial probability that it will prevail on its punitive damages claim based on these causes of action. Plaintiff submits the declaration of board member Mitchell Levy, who testifies that his investigation of the HOA’s check registers revealed numerous contracts with Progressive Builders and other books and records of transactions with Progressive Builders. See Dec. of M. Levy, ¶¶5-6. None of these documents reference any individual point of contact with Progressive Builders, and the address listed on the contracts is non-existent. Id. Plaintiff also submits the document reviewed by Levy that reflect transfers to Progressive Builders, as well as Nick Construction. See Dec. of D. Miller, Exs. 2-3, 8, 11-13.

Plaintiff also submits the declarations of Durrell Thomas Quarles and Kevin Cooke, the two individuals who were listed as Key Executives and Authorized Signers for the Progressive Account at Wells Fargo. See Dec. of K. Cooke, ¶2; Dec. of D. Quarles, ¶20. Cooke testifies that he had nothing to do with the Progressive Account or Progressive Builders, and the signature on the account is not his. See Dec. of K. Cooke, ¶¶8-10. Cooke’s testimony establishes that his information was stolen to fraudulently create Progressive Builders and the Progressive Account.

According to Quarles, Omar confessed the entire fraudulent scheme to him, admitting that he stole Quarles’ identity to open the Progressive Account, that he did so at the direction of his father, and that the purpose of the fraud was to embezzle money through Progressive Builders. See Dec. of D. Quarles, ¶¶4-19. Quarles testifies that he had nothing to do with the Progressive Account or Progressive Builders, the signature on the account is not his and any signature of his was forged. Id. at ¶¶20-22.

Plaintiff submits emails from Orlando to the HOA’s outside accountants instructing them to wire funds directly to Progressive Builders, a fraudulent entity. See Dec. of D. Miller, ¶11. Levy testifies that he saw no evidence of any construction work performed by Progressive Builders.

In addition, the financial information sought is fundamental to Plaintiff’s substantive claims of conversion through a series of fraudulent alter ego entities, including Apex. As such, financial information is discoverable without having to resort to CC §3295, as it goes to the heart of Plaintiff’s underlying claim of liability against it. See Rawnsley v. Superior Court (1986) 183 Cal.App.3d 86, 91 (trial court abused its discretion by refusing to compel discovery into financial status of company based on CC §3295 where such information was fundamental to plaintiff’s claims of conversion of funds through alter ego entities).

Spahi fails to address any of this evidence of fraud and embezzlement, except to state that his interrogatory responses are truthful. Spahi fails to point to any interrogatory response that would directly challenge the evidence of embezzlement through fraudulent entities.

Spahi’s claim that Plaintiff fails to submit evidence of the legal viability of its underlying claims is unsupported. Plaintiff’s evidence submits its fraud, conversion and breach of fiduciary duty claims.

Spahi’s statute of limitations argument is unpersuasive. Spahi fails to submit any argument or evidence that these causes of action are clearly and affirmatively time barred, such that demurrer would be sustained without leave to amend.

Spahi fails to provide any evidentiary support for his position that the demurrer must be heard first. A demurrer is not an evidentiary based motion and only attacks the sufficiency of the pleading. Spahi fails to establish that the demurrer would more likely than not require dismissal of Plaintiff’s claims. A motion for pretrial financial discovery under CC §3295 is an evidentiary based motion, and Plaintiff satisfies the standard to allow such discovery.

Case Number: SC124263    Hearing Date: January 21, 2021    Dept: O

Case Name: Reach v. Spahi, et al.

Case No.: SC124263

Hearing: 1-21-21

Calendar #: 4

Notice: OK

Complaint Filed: 6-3-15

Motion C/O: 7-11-21

Discovery C/O: 6-28-21

Trial Date: 7-26-21

______________________________________________________________________________

SUBJECT: MOTIONS CONTESTING DETERMINATION OF GOOD FAITH SETTLEMENT AMONG PLAINTIFF OCEAN TOWERS AND DEFENDANTS JOSEPH INCAUDO, PATRIC AMBROSE AND KAZUO YOSHIKAWA;

[APPLICATION FOR DETERMINATION OF GOOD FAITH SETTLEMENT [CCP § 877.6(a)(2)] (FILED 10-13-20)]

MOVING PARTIES: Defendants, John Spahi, Omar Spahi, Defendant Apex Investments Group Ltd. d/b/a Apex Investments Inc.

RESP. PARTIES: Plaintiff Ocean Tower Housing Corporation (“HOA”) and Defendants Joseph Incaudo, Patrick Ambrose and Kazuo Yoshikawa (“Settling Defendants”

TENTATIVE RULING

Defendant’s Motion Contesting Determination of Good Faith Settlement Among Plaintiff and Defendants Joseph Incaudo, Patric Ambrose and Kazuo Yoshikawa is DENIED. Defendant’s request for a continuance is DENIED. Defendant Omar Spahi and Defendant Apex Investments Group Ltd. d/b/a Apex Investments Inc. requests for joinder are GRANTED. Responding parties are to submit the proposed order.

The party asserting the lack of good faith has the burden of proof. CCP §877.6(d).  The party asserting lack of good faith should demonstrate, if he can, that the settlement is so far “out of the ballpark” in relation to these factors as to be inconsistent with the objective of §877.6. Tech-Bilt at 500-501. A determination that the settlement was in good faith would “bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.”  CCP 877.6(c).  Any existing cross-complaints for such claims would be subject to dismissal.

While an unopposed application for good faith settlement may be granted on bare bones facts, an opposed application requires the Court to consider the settlement based on the Tech-Bilt factors. See City of Grand Terrace, supra, 192 Cal.App.3d at 1261. This requires the settlor to provide the Court with “sufficient evidentiary basis to enable the court to consider and evaluate the various aspects of the settlement.” Id. at 1263. “Because Tech-Bilt mandates a rough approximation of the settling defendant's proportionate liability and consideration of all other defendants' proportionate liability and consideration of all other factors that might affect the fairness of the settlement as respects non-settling defendants, the affidavits, declarations or other evidence should provide the court with the facts necessary to evaluate the settlement in terms of the factors contemplated by Tech-Bilt. Without the facts, in a contested hearing, it is impossible for a court to exercise its discretion in an appropriate fashion.” Id.

I. Rough Approximation of Plaintiff’s Total Recovery and Settling Defendants’ Proportionate Liability

Plaintiff provides substantial evidence that Settling Defendants are minimally liable, if at all, for those damages arising from the UD/Unit Scheme. The SLC Report and John Spahi’s discovery responses are substantial evidence that Settling Defendants were not involved in those schemes. See Settling Defendants’ Compendium of Exhibits, Exs. 1 and 6. Nonsettling Defendants fail to establish that the SLC Report is inadmissible.

The objecting Defendants fail to refute Plaintiff’s good faith position that Settling Defendants’ liability for the UD/Unit scheme is minimal.

II. Amount Paid in Settlement

Settling Defendants agree to pay Plaintiff $2.5 million in cash immediately. Settling Defendants also agree to waive any right to seek indemnification from the HOA. Settling Defendants agree never to run for board member again. Settling Defendants also agree to a waiver and release under CC §1542. The Court also cannot say that the settlement is “disproportionately low.” Whether the settlement is “disproportionately low” requires sufficient evidence supporting a rough approximation of Plaintiff’s recovery and Defendant’s proportionate liability. The Court must weigh the value of the settlement against these rough approximations to determine whether the settlement was reasonable under Tech-Bilt.

IV. Recognition that a settlor should pay less in settlement than he would if he were found liable after a trial

No one disputes that the settlement is less than what Settling Defendants would have to pay if found liable after trial.

V. Financial conditions and insurance policy limits of settling defendants

In opposition, Settling Defendants submit sufficient evidence of their financial condition and insurance policy limits. Settling Defendants do not have any applicable insurance coverage. The financial information is sufficient for the Court to evaluate the settlement and no additional discovery is justified.

VI. Existence of collusion, fraud, or tortious conduct aimed to injure the interest of the nonsettling defendants

Plaintiff submits evidence that the settlement was not the product of collusion, fraud or tortious conduct. The settlement was the result of mediation overseen by Judge Cole and a “mediator’s proposal.”

VII. No basis to order discovery

The Court finds no basis to allow for additional discovery.

Case Number: SC124263    Hearing Date: November 19, 2020    Dept: O

Case Name: Reach v. Spahi, et al.

Case No.: SC124263

Hearing: 11-19-20

Calendar #: 8

Notice: OK

Complaint Filed: 6-3-15

Motion C/O: 7-11-21

Discovery C/O: 6-28-21

Trial Date: 7-26-21

______________________________________________________________________________

SUBJECT: (1) MOTION TO QUASH DEPOSITION SUBPOENA

(2) MOTION TO QUASH DEPOSITION SUBPOENA

MOVING PARTY: (1) Defendant Joseph Orlando and CID Services, Inc.

(2) Defendant Joseph Orlando and Condo Services, Inc.

RESP. PARTY: Plaintiff Ocean Towers Housing Corporation

TENTATIVE RULING

Defendant Joseph Orlando and Nonparty CID Services, Inc.’s Motion to Quash Deposition Subpoena is DENIED.

Defendant Joseph Orlando and Nonparty Condo Services, Inc.’s Motion to Quash Deposition Subpoena is DENIED.

Plaintiff’s Request for Sanctions is DENIED. Plaintiff requested sanctions in the amount of $11,300 (14.2 hours @ $650/hr, 4 hours @ $675/hr).

Both motions make identical arguments as to two subpoenas served on Bank of America seeking discovery regarding accounts held by (1) CID Services, Inc. and (2) Condo Services, Inc. According to moving parties, both CID Services, Inc. and Condo Services, Inc. provided property management services to OTHC and are run by Orlando’s wife. The motions will be discussed together.

I. Relevance

The deposition subpoenas seek documents in connection with the bank accounts of CID Services, Inc. and Condo Services, Inc., because they are directly relevant to the allegations of embezzlement against Defendants. The Sixth Amended Complaint was filed after these motions to quash and it added causes of action for embezzlement. The embezzlement claims allege that Defendants embezzled money through various entities. Given the broad scope of discovery under CCP §2017.010, the requested documents are directly relevant to Plaintiff’s embezzlement causes of action.

II. Privacy

The privacy interest at stake is not Orlando’s but CID Services, Inc. and Condo Services, Inc. Although some right to privacy is afforded corporate entities, the parameters and application of that right depend on the circumstances. See Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 797. “It is clear to us that the law is developing in the direction that the strength of the privacy right being asserted by a nonhuman entity depends on the circumstances. Two critical factors are the strength of the nexus between the artificial entity and human beings and the context in which the controversy arises.” Id. Thus, the financial information sought from a corporate party that is unrelated to the action at all is generally afforded privacy protection. Ameri-Medical Corp. v. WCAB (1996) 42 Cal.App.4th 1260, 1286–1289 (professional medical corporation retained privacy interest in financial and employment information unrelated to preparation of medical reports sought by workers' compensation insurers).

Here, the financial records sought are directly related to the action. In fact, the CID and Condo Services both are owned by Orlando’s wife and provided property management services to Plaintiff. Plaintiff alleges a scheme by Orlando and other directors to use corporate entities to embezzle funds from Plaintiff. The circumstances do not support privacy protection over the records at issue.

Even if the CID and Condo Services had protectible privacy interests in the requested information, moving parties fail to establish that those interests justify denial of relevant discovery. First, moving parties rely on outdated case law requiring a compelling interest when a privacy objection was raised. As stated in Williams v. Supr. Ct. (2017) 3 Cal.5th 531, 552, a party need not demonstrate a compelling need for discovery protected by the right of privacy in every instance. A “compelling interest” only required to justify an obvious invasion of an interest “fundamental to personal autonomy,” such as freedom from sterilization. See Williams, supra, 3 Cal.5th at 552.

Moreover, moving parties bear the initial burden of establishing that their privacy interests justify quashing the subpoenas. “In Hill, we established a framework for evaluating potential invasions of privacy. The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.” Williams v. Superior Court (2017) 3 Cal.5th 531, 552 (citing Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35).

In general, the court should not proceed to balancing unless a satisfactory threshold showing is made. A defendant is entitled to prevail if it negates any of the three required elements. A defendant can also prevail at the balancing stage. An otherwise actionable invasion of privacy may be legally justified if it substantively furthers one or more legitimate competing interests. (Hill, at p. 40, 26 Cal.Rptr.2d 834, 865 P.2d 633.) Conversely, the invasion may be unjustified if the claimant can point to ‘feasible and effective alternatives’ with ‘a lesser impact on privacy interests.” County of Los Angeles v. Los Angeles County Employee Relations Com. (2013) 56 Cal.4th 905, 926.

Financial information is clearly protected by the right of privacy and there is a reasonable expectation of privacy over one’s financial records. “There is a right to privacy in confidential customer information whatever form it takes, whether that form be tax returns, checks, statements, or other account information.” Fortunato v. Sup.Ct. (Ingrassia) (2003) 114 Cal.App.4th 475, 481.

While it is undisputed that the subpoenas seek financial information, any privacy interest therein is weak given CID and Condo Services corporate status. In addition, there is no showing of a serious intrusion on Defendant’s privacy. Any privacy objection was addressed by the Court’s 9-23-20 protective order. As discussed above, the records sought are also directly relevant to questions at the heart of the litigation, and moving parties fail to identify feasible alternatives to obtain the same information without impacting CID and Condo Services’ privacy interests.

In light of these circumstances, the motion to quash are DENIED. The Court finds the motions were brought with substantial justification and no sanctions are imposed under CCP §1987.2.

Case Number: SC124263    Hearing Date: September 15, 2020    Dept: O

Case Name: Reach v. Spahi, et al.

Case No.: SC124263

Hearing: 9-15-20

Calendar #: 9

Notice: OK

Complaint Filed: 6-3-15

Motion C/O: 7-11-21

Discovery C/O: 6-28-21

Trial Date: 7-26-21

______________________________________________________________________________

SUBJECT: MOTION FOR LEAVE TO FILE SIXTH AMENDED COMPLAINT

MOVING PARTY: Plaintiff Ocean Towers Housing Corporation

RESP. PARTY: Defendant Joseph Orlando

TENTATIVE RULING

Plaintiff OTHC’s Motion for Leave to File Sixth Amended Complaint is GRANTED.

Plaintiff complies with CRC Rule 3.1324. Plaintiff includes a copy of the proposed amended pleading and identifies by line and page number those allegations being added or deleted from the operative complaint. See Dec. of D. Miller filed on 8-6-20, ¶¶2 and 4.

Plaintiff’s counsel testifies to the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amended allegations were discovered and the reasons why the request for amendment was not made earlier. Id. at ¶¶14-18. The amendment will add new causes of action for (1) violation of Penal Code §496 against Defendant Omar Spahi; (2) conversion against Defendants John Spahi, Joseph Orlando, Omar and Apex Investments Group Ltd.; (3) fraud against Spahi and Orlando; and (4) aiding and abetting fraud against Omar. Id. at ¶14. Plaintiff discovered the embezzlement of $6.2 million through the sham contractor Progressive Builders, Inc. in April 2020, after Wells Fargo produced documents in response to the HOA’s subpoenas. Id. at ¶16. Plaintiff attempted to obtain discovery regarding the issue directly from Defendants in May, but they responded with objections. Id. at ¶17. Plaintiff filed this motion for leave to amend on 8-6-20 after attempting to obtain a stipulation for leave to amend. Id. at ¶¶9-13.

A delay of 4 months since discovery of the new facts giving rise to the amendment is not undue delay. The trial date is set for July 2021. The 5th Amended Complaint contained allegations regarding Defendants misuse of HOA funds to make excessive payments to contractors for kickbacks to them personally. See Dec. of D. Miller filed on 8-6-20, ¶59(h) and (m). These new allegations expand upon the same general scheme of abusing contractor payments to include formation of a fake contractor entity to embezzle payments to Defendants for their personal use. Id. at ¶16.

Under these facts, leave to amend must be granted unless the Defendants can establish prejudice. “The trial court may, in its discretion, allow amendments ‘in furtherance of justice.’ (C.C.P. 473(a)(1).) The trial court has wide discretion in allowing amendment of pleadings and, as a matter of policy, the trial court's ruling will be upheld unless a manifest or gross abuse of discretion is shown. The policy of great liberality in permitting amendments at any stage of the proceeding was declared at an early date and has been repeatedly restated.” 5 Witkin, Cal. Proc. (5th ed. 2008), Plead §1194. “Courts must apply a policy of liberality in permitting amendments at any stage of the proceeding, including during trial, when no prejudice to the opposing party is shown.” P&D Consultants, Inc. v. City of Carlsbad (2010) 190 Cal.App.4th 1332, 1345. Prejudice exists, for example, where the plaintiff unduly delayed in seeking leave to amend, and the amendment will require a trial continuance and a reopening of discovery on the eve of trial Id. (leave to amend properly denied where plaintiff offered no explanation for one-year delay in seeking leave to amend, amendment was requested after trial readiness conference, amendment would require additional discovery and amendment would likely trigger a demurrer or other pretrial motions); Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 488 (“Where the trial date is set, the jury is about to be impaneled, counsel, the parties, the trial court, and the witnesses have blocked the time, and the only way to avoid prejudice to the opposing party is to continue the trial date to allow further discovery, refusal of leave to amend cannot be an abuse of discretion”).

Defendants John and Omar Spahi did not oppose the motion. Defendant Orlando filed an opposition claiming prejudice due to (1) the loss of his right to file a x-complaint against Peter Alevizos and Sheldon Stein due to the Court’s approval of their good faith settlement on 2-28-20 per CCP §877.6(c) and (2) the loss of his right to seek arbitration due to relation back of the 6th Amended Complaint to the 5th Amended Complaint.

Defendant Orlando’s arguments in opposition do not establish the type of prejudice that would justify denying leave to amend under these circumstances. Orlando’s alleged loss of his right to x-complain against Alevizos’s and Stein’s good faith settlement is not prejudice attributable to the amendment or any undue delay, nor is the potential finding that he waived his right to arbitrate the new causes of action.

In addition, Orlando is incorrect that he would be able to “x-complain” against Alevizos and Stein if Plaintiff were forced to file the proposed amendment as a separate action. A “good faith” determination bars all claims for indemnification or contribution by nonsettling parties. Far West Fin'l Corp. v. D & S Co., Inc. (1988) 46 Cal.3d 796, 815-816. This includes separate lawsuits for indemnity as well as indemnity cross-complaints in the underlying tort case. See Mid-Century Ins. Exch. v. Daimler-Chrysler Corp. (2001) 93 Cal.App.4th 310, 315. Moreover, the words “indemnity” or “contribution” need not be used; the substance of the claim is determinative. See Cal-Jones Properties v. Evans Pac. Corp. (1989) 216 Cal.App.3d 324, 327-328.

Plaintiff did not unduly delay in seeking leave to amend. Orlando fails to demonstrate that he will be prejudiced if leave to amend were granted. Plaintiff’s motion for leave to file a Sixth Amended Complaint is GRANTED. Plaintiff is to file a copy of the Sixth Amended Complaint under separate cover today.

Case Number: SC124263    Hearing Date: June 30, 2020    Dept: O

Case Name: Reach v. Spahi, et al. 
Case No.: SC124263
Hearing: 6-30-20
Calendar #: 6
Notice: OK 
Complaint Filed: 6/3/15
Motion C/O: 10-5-20
Discovery C/O: 9-21-20
Trial Date: 10-19-20 
______________________________________________________________________________
SUBJECT: DEMURRER TO 5TH AMENDED COMPLAINT
MOVING PARTY: Defendant John Spahi
RESP. PARTY: Plaintiff Ocean Towers Housing Corporation 
TENTATIVE RULING
Defendant John Spahi’s Demurrer to the 5th Amended Complaint is OVERRULED.  Defendant is to answer in 10 days.  Defendant’s Request for Judicial Notice is GRANTED.
I.  Defendant’s Demurrer based on res judicata is OVERRULED
A.  The NCB FAXC and USB Federal Action did not involve the same “causes of action” alleged in this action  
“California adheres to a ‘primary rights’ theory in determining whether the claims or causes of action are the same.  The significant factor is whether the claim or cause of action is for invasion of a single primary right.  Whether the same facts are involved in both suits is not conclusive…Moreover, more than one act may constitute a single cause of action. Under Pomeroy's primary rights theory,  a cause of action consists of 1) a primary right possessed by the plaintiff, 2) a corresponding primary duty devolving upon the defendant, and 3) a derelict or wrong done by the defendant which consists in a breach of such primary right and duty.  Thus, two actions constitute a single cause of action if they both affect the same primary right.”  Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1684.  
Defendant argues the prior actions are res judicata as to this action, because they involved the same nucleus of facts and therefore the “same causes of action” are at issue in this litigation as were litigated in the NCB FAXC and the US Bank Federal Action.  The mere fact that the NCB FAXC, the US Bank Federal action and this action involved allegations of the same allegations of wrongdoing by Defendant Spahi does not establish that all three litigations involve the “same causes of action” for purposes of res judicata.  
California adheres to the “primary rights” theory of whether causes of action are the same and “whether the same facts are involved in both suits is not conclusive.”  See Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1684 (federal court order granting summary judgment of defamation claim pled in federal court was res judicata on defamation claim alleged in state court based on same defamatory statements).  Where “the same injury to the plaintiff and the same wrong by the defendant” are alleged, then the same primary right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks different forms of relief and/or adds new facts supporting recovery.”  Le Parc Community Ass'n v. Workers' Compensation Appeals Bd. (2003) 110 Cal.App.4th 1161, 1170.  
Here, Plaintiff HOA is suing Defendant John Spahi for abusing his authority and power as the HOA’s fiduciary, director and officer.  That injury was never alleged as the basis of either NCB’s FAXC or the US Bank federal action, nor could it have been brought by NCB or US Bank.  They lack standing to do so.  Neither NCB nor US Bank are the HOA’s privity for purposes of asserting damage to the HOA as a result of John Spahi’s abuse of his authority and power as the HOA’s fiduciary, director and officer.  
Thus, even if the same wrongful conduct by Defendant John Spahi is alleged in this litigation, the NCB FAXC and the US Bank federal action, a different injury by a different plaintiff is being alleged in this litigation.  Defendant John Spahi is not even named as a defendant in the NCB FAXC.  As such, these three litigations do not involve the “same causes of action” for purposes of res judicata and res judicata does not apply. 
Moreover, on their face, the NCB FAXC and the US Bank alleged different causes of action.  The US Bank federal action alleged that the HOA breached the parties’ Recognition Agreement, to which Spahi was not personally a party.  The US Bank Federal Action also alleged that all the named parties, including John Spahi, fraudulently transferred assets to avoid the HOA’s obligations under the Recognition Agreement.  The causes of action alleged were breaches of contract and fraudulent transfer.  See Defendant’s RJN, Ex. 5.
The NSB FAXC also alleged breaches of a Recognition Agreement as to three specific units, nor was John Spahi named as a defendant.  See Defendant’s RJN, Ex. 1.  Spahi was not personally a party to the Recognition Agreement.  Id.  While the NSB FAXC also alleged three causes of action for breach of fiduciary duty based on NSB’s status as a shareholder, those fiduciary duty claims were alleged as to three specific units in NSB’s capacity as a shareholder against the HOA, not John Spahi.  Id. at p. Here, Plaintiff HOA is bringing claims on behalf of the HOA against a former director and officer.
Plaintiff HOA’s causes of action are entirely distinct from those pled in the US Bank and NSB FAXC.  The HOA is alleging breaches of fiduciary duty against Defendant John Spahi and a claim under Penal Code §496.  
Defendant John Spahi fails to establish that the “same causes of action” litigated in the NCB FAXC and the US Bank Federal Action are being litigated in this litigation.  Defendant fails to establish that res judicata bars Plaintiff HOA’s causes of action for breach of fiduciary duty, aiding and abetting and violation of Penal Code §496.  
B.  NCB and US Bank were not Plaintiff’s privities in the prior actions
“In order for res judicata to apply, the party against whom the defense is asserted must have been “a party or was in privity with a party to the prior adjudication.  [¶]  In the context of a res judicata determination, privity refers to a mutual or successive relationship to the same rights of property, or to such an identification in interest of one person with another as to represent the same legal rights and, more recently, to a relationship between the party to be estopped and the unsuccessful party in the prior litigation which is sufficiently close so as to justify application of the doctrine of collateral estoppel.  The determination of privity depends upon the fairness of binding appellant with the result obtained in earlier proceedings in which it did not participate. Whether someone is in privity with the actual parties requires close examination of the circumstances of each case.  This requirement of identity of parties or privity is a requirement of due process of law.”  Consumer Advocacy Group, Inc., supra, 168 Cal.App.4th at 689–690.  
In addition to involving different causes of action, NCB and US Bank were not litigating the prior actions as privities of Plaintiff HOA.  NCB and US Bank were in an adversarial relationship with Plaintiff HOA and they were not vindicating the “same legal rights” that Plaintiff is vindicating here.  Plaintiff is not suing as the successor of NCB or US Bank to the same legal rights alleged in the prior litigations.  As discussed in connection with the “same cause of action” element of res judicata, neither NCB and US Bank had standing to sue for Defendant Spahi’s violation of his duties to the HOA as an officer and director of the HOA.  
Plaintiff is therefore not suing as the privy of NCB and US Bank, nor were NCB and US Bank suing as the privy of Plaintiff in the prior actions.  Defendant fails to establish the essential element of privity of a res judicata defense.
C.  Defendant’s fails to establish affirmative defense of res judicata bars Plaintiff’s complaint
Defendant fails to establish that the defense of res judicata appears on the face of the 5th Amended Complaint and the judicially noticeable documents.  Defendant’s demurrer on grounds of res judicata is OVERRULED.  
II.  Defendant’s demurrer to the 4th c/a for violation of Penal Code §496 is OVERRULED
“Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170.”  Pen. Code §496(a).  
Theft is defined in Penal Code §484(a).  “Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property…is guilty of theft.”  Pen. Code §484(a).  
Defendant argues Plaintiff does not allege Defendant’s receipt of stolen property.  However, Plaintiff alleges receipt of stolen property in ¶¶8-27, 59(c), (d), (h) and 85 of the 5th Amended Complaint.  Moreover, all of the acts alleged in ¶¶8-27, 59(c), (d), (h) and 85 also qualify as obtaining property in a manner constituting theft.  Defendant’s argument that he was entitled under his authority as director and officer to use the funds and assets of the HOA as he saw fit is a defense.  Defendant’s argument ignores the Plaintiff’s allegations that his use of the funds and assets were an abuse of his authority as director and officer and exceeded the consent of the members of the HOA and the CC&Rs.  Plaintiff’s 4th c/a is sufficiently alleged and Demurrer to the 4th c/a is OVERRULED.  
III.  Defendant’s Reply is unpersuasive
On reply, Defendant Spahi argues Reach’s Derivative Shareholder suit against him “could have been” raised in Ocean Towers v. NCB, FSB, BC507616, and therefore the same primary right was at stake in BC507616 as is at stake here.  Spahi argues Reach/the HOA was “required” to bring Reach’s derivative claims or the HOA’s direct claims against Spahi and the Board as a x-complaint in intervention to NCB’s FAXC.  Spahi emphasizes he and Omar Spahi were named x-defendants in the NCB FAXC.  
“Under the doctrine of res judicata, a valid, final judgment on the merits is a bar to a subsequent action by parties or their privies on the same cause of action...In California, a ‘cause of action’ is defined by the ‘primary right’ theory.  The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action.  In particular, the primary right theory provides that a cause of action consists of (1) a primary right possessed by the plaintiff, (2) a corresponding duty devolving upon the defendant, and (3) a delict or wrong done by the defendant which consists of a breach of the primary right.  If the matter was within the scope of the action, related to the subject matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it.... The reason for this is manifest. A party cannot by negligence or design withhold issues and litigate them in consecutive actions. Hence the rule is that the prior judgment is res judicata on matters which were raised or could have been raised, on matters litigated or litigable.”  Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 575–576.
Spahi interprets the “could have been raised” prong of res judicata, which is claim preclusion, too broadly.  A matter “could have been raised” in a prior action only if (1) it was within the scope of the prior action; (2) it was related to the subject matter in the prior action and (3) relevant to the issues.  Spahi fails to demonstrate that the internal dispute between the HOA and its Board members meets these requirements.
For the reasons stated in connection with the primary rights analysis above, the HOA’s claims against its Board would not have been within the scope of the HOA’s Third Amended Complaint for declaratory relief in BC507616 or NCB’s FAXC, nor would it have been relevant to those actions.  The HOA’s dec relief action sought an order declaring that it had an interest in three specific units in the building.  NCB’s FAXC alleged that the Spahis and the HOA worked together to interfere with NCB’s rights to those same units as a lienholder.  Nowhere in NCB’s FAXC did NCB raise or question the validity of John Spahi’s acts in concert with the HOA, nor did NCB’s FAXC allege that John Spahi’s and the Board’s acts were breaches of their fiduciary duty to the HOA.  As stated above, NCB would not have been entitled to allege these claims as it lacked standing to do so.  
Likewise, an action by the HOA against its own Board members for breaches of fiduciary duty and fraud would not have been within the scope of or related to the HOA’s underlying complaint against NCB regarding its ownership rights in those three units.  John Spahi fails to demonstrate how the Board’s breaches of fiduciary duty to the HOA would have been determinative of the HOA’s rights to the units vis a vis NCB.
Defendant Spahi’s demurrer and reply also misapply the concepts of intervention and x-complaints.  First, a x-complaint by Reach for derivative shareholder claims would not have been intervention.  CCP §387(a) defines intervention as, “when a nonparty, deemed an intervenor, becomes a party to an action or proceeding between other persons by doing any of the following: (1) Joining a plaintiff in claiming what is sought by the complaint.  (2) Uniting with a defendant in resisting the claims of a plaintiff.  (3) Demanding anything adverse to both a plaintiff and a defendant.”
Reach’s derivative claims belonged to the HOA and the HOA was the real party in interest.  See Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995, 1003 ( “the particular stockholder who brings the suit is merely a nominal party plaintiff” and “the corporation is the real party plaintiff in the action”).  His claims therefore would not technically be those of a “nonparty.”  Reach’s derivative claims did not seek what was already being sought in the HOA TAC or the NCB FAXC, did not unite the HOA with any existing defendant in resisting the claims of any plaintiff and did not demand anything adverse to all three existing parties, the HOA, NCB and the Spahis. 
Second, the “x-complaint in intervention” proposed by Defendant Spahi would have been a x-complaint by one x-defendant (the HOA) against another x-defendant (John Spahi) for claims unrelated to NCB’s x-complaint or the HOA’s underlying complaint in BC507616.  Such a x-complaint would also have had to name as x-defendants the other Board members, who were not named in either the HOA’s underlying Third Amended Complaint against NCB or NCB’s FAXC in BC507616.  
Such a x-complaint by the HOA against its Board members would have been a permissive x-complaint.  CCP §428.50.  Compulsory x-complaints are by definition against the plaintiff, and the HOA’s breach of fiduciary duty claims would have been against John Spahi, who was only a x-defendant.  Compulsory x-complaints are also related to the subject matter of the underlying complaint, and as discussed above, the HOA’s claims against its own Board members for breaches of fiduciary duty are not related to the subject matter of the HOA’s TAC or NCB’s FAXC in BC507616.  See CCP §426.30; AL Holding Co. v. O'Brien & Hicks, Inc. (1999) 75 Cal.App.4th 1310, 1313-1314.  
Compulsory x-complaints must be brought in the underlying action and are statutorily barred from being brought in separate action.  CCP §426.30.  There is no such statutory bar to bringing permissive x-complaints in separate or subsequent actions.  CCP §428.50 clearly states that a defendant “may” bring a permissive x-complaint in the underlying action but is not required to do so.  Spahi fails to cite any authority barring a defendant from filing a permissive x-complaint against a co-defendant and nonparties as a separate action based on res judicata.  Such a rule would contradict CCP §428.50’s permissive language.  
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