This case was last updated from Los Angeles County Superior Courts on 12/03/2019 at 10:16:24 (UTC).

RESIDUAL INCOME OPPORTUNITIES INC ET AL VS TRIBUL MERCHANT S

Case Summary

On 08/09/2016 RESIDUAL INCOME OPPORTUNITIES INC filed a Property - Other Property Fraud lawsuit against TRIBUL MERCHANT S. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ERNEST HIROSHIGE, RICHARD FRUIN, DEBRE K. WEINTRAUB, RICHARD L. FRUIN, DEBRE KATZ WEINTRAUB, ERNEST M. HIROSHIGE and YOLANDA OROZCO. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****7326

  • Filing Date:

    08/09/2016

  • 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

ERNEST HIROSHIGE

RICHARD FRUIN

DEBRE K. WEINTRAUB

RICHARD L. FRUIN

DEBRE KATZ WEINTRAUB

ERNEST M. HIROSHIGE

YOLANDA OROZCO

 

Party Details

Plaintiffs and Petitioners

CYPERS RORY

RESIDUAL INCOME OPPORTUNITIES INC.

CYPERS REUVEN

CYPERS REUVEN AKA RORY CYPERS

Defendants and Respondents

CHANIN LIEBA [DOE 6]

MITCHELL C. SHAPIRO

S.E.A. FOREVER LLC [DOE 8]

DOES 1 THROUGH 30

BLESOFSKY RICK

CHANIN SAM

SHAPIRO TAMIR LAW GROUP PLLC

CHANIN SHMUEL

CYNERGY DATA LLC

SHAPIRO MITCHELL C.

BLESOFSKY YERUCHEM

EXCEL BUSINESS SOLUTIONS INC.

EXCEL CORPORATION [DOE 9]

THE SAMUEL CHANIN IRREV. INS. TRUST OF

TRIBUL MERCHANT SERVICES LLC

CHANIN LIEBA

6 More Parties Available

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

CATANZARITE LAW CORPORATION

WOODWARD BRANDON E.

CATANZARITE KENNETH

Defendant and Respondent Attorneys

AKERMAN LLP [CA]

AKERMAN LLP [FL]

ARYEH KAUFMAN LAW OFFICES OF

GHILEZAN MICHAEL ESQ.

KLAUSNER ALYSSA BROOKE

MITCHEL T. STANTON LAW OFFICE OF

STEVEN FINELL ATTORNEY AT LAW

[FL] AKERMAN LLP

[CA] AKERMAN LLP

FINELL STEVEN F.

KAUFMAN ARYEH L.

MANDELL JOSHUA ROBERT

THOMPSON RODERICK M.

THOMPSON RODERICK MANLEY

KAUFMAN ARYEH

MATAYOSHI KELLY

AVRITH CHARLES

 

Court Documents

Memorandum of Costs (Summary)

10/30/2019: Memorandum of Costs (Summary)

Separate Statement

8/15/2019: Separate Statement

Amendment to Complaint (Fictitious/Incorrect Name)

6/12/2019: Amendment to Complaint (Fictitious/Incorrect Name)

Amendment to Complaint (Fictitious/Incorrect Name)

6/12/2019: Amendment to Complaint (Fictitious/Incorrect Name)

PROOF OF SERVICE SUMMONS -

9/14/2016: PROOF OF SERVICE SUMMONS -

PROOF OF SERVICE SUMMONS -

9/29/2016: PROOF OF SERVICE SUMMONS -

STIPULATION FOR EMAIL SERVICE

11/16/2016: STIPULATION FOR EMAIL SERVICE

BLESOFSKY'S REPLY MEMORANDUM IN SUPPORT OF MOTION TO QUASH SERVICE OF SUMMONS

11/16/2016: BLESOFSKY'S REPLY MEMORANDUM IN SUPPORT OF MOTION TO QUASH SERVICE OF SUMMONS

REQUEST FOR ENTRY OF DEFAULT -

12/7/2016: REQUEST FOR ENTRY OF DEFAULT -

ORDER GRANTING APPLICATION FOR ADMISSION OF MICHAEL C. MARSH TO THE BAR OF THIS COURT PRO HAC VICE

1/5/2017: ORDER GRANTING APPLICATION FOR ADMISSION OF MICHAEL C. MARSH TO THE BAR OF THIS COURT PRO HAC VICE

ORDER GRANTING APPLICATION FOR ADMISSION OF JENNIFER C. GLASSER TO THE BAR OF THIS COURT PRO HAC VICE

1/5/2017: ORDER GRANTING APPLICATION FOR ADMISSION OF JENNIFER C. GLASSER TO THE BAR OF THIS COURT PRO HAC VICE

DEFENDANT CYNERGY DATA, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE

4/14/2017: DEFENDANT CYNERGY DATA, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE

NOTICE RE DEFENDANTS SHAPIRO TAMIR LAW GROUP PLLC AND MITCHELL C. SHAPIRO'S MOTION TO QUASH SERVICE

6/9/2017: NOTICE RE DEFENDANTS SHAPIRO TAMIR LAW GROUP PLLC AND MITCHELL C. SHAPIRO'S MOTION TO QUASH SERVICE

REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFFS' OPPOSITION TO CYNERGY DATA, LLC'S MOTION TO STRIKE MADE PURSUANT TO CODE OF CIVIL PROCEDURE, SECTION 425.16

7/12/2017: REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFFS' OPPOSITION TO CYNERGY DATA, LLC'S MOTION TO STRIKE MADE PURSUANT TO CODE OF CIVIL PROCEDURE, SECTION 425.16

AMENDED PROOF OF SERVICE OF SUMMONS

10/16/2017: AMENDED PROOF OF SERVICE OF SUMMONS

PLAINTIFFS' OPPOSITION TO DEFENDANTS SHAPIRO TAMIR LAW GROUP PLLC AND MITCHELL C. SHAPIROS'S MOTION TO STRIKE FIRST AMENDED COMPLAINT MADE PURSUANT TO CODE OF CIVIL PROCEDURE, 425.16

11/20/2017: PLAINTIFFS' OPPOSITION TO DEFENDANTS SHAPIRO TAMIR LAW GROUP PLLC AND MITCHELL C. SHAPIROS'S MOTION TO STRIKE FIRST AMENDED COMPLAINT MADE PURSUANT TO CODE OF CIVIL PROCEDURE, 425.16

Minute Order -

12/5/2017: Minute Order -

Minute Order -

7/24/2018: Minute Order -

332 More Documents Available

 

Docket Entries

  • 02/03/2020
  • Hearing02/03/2020 at 09:30 AM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 01/21/2020
  • Hearing01/21/2020 at 08:30 AM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 12/04/2019
  • Hearing12/04/2019 at 14:00 PM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Informal Discovery Conference (IDC)

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  • 12/02/2019
  • Docketat 3:00 PM in Department 31, Yolanda Orozco, Presiding; Court Order

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  • 12/02/2019
  • DocketMinute Order ( (Court Order)); Filed by Clerk

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  • 11/21/2019
  • DocketNotice (of Informal Discovery Conference); Filed by Reuven Cypers (Plaintiff); Residual Income Opportunities, Inc. (Plaintiff)

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  • 11/18/2019
  • Docketat 08:30 AM in Department 31, Yolanda Orozco, Presiding; Court Order

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  • 11/18/2019
  • Docketat 08:30 AM in Department 31, Yolanda Orozco, Presiding; Hearing on Motion to Quash Service of Summons - Not Held - Taken Off Calendar by Party

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  • 11/18/2019
  • DocketMinute Order ( (Court Order)); Filed by Clerk

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  • 11/18/2019
  • Docket2nd Amended Complaint; Filed by Reuven Cypers (Plaintiff); Residual Income Opportunities, Inc. (Plaintiff)

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633 More Docket Entries
  • 09/08/2016
  • Docketat 00:00 AM in Department 15; Unknown Event Type - Held - Motion Granted

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  • 09/08/2016
  • DocketMinute Order

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  • 09/08/2016
  • DocketMinute order entered: 2016-09-08 00:00:00; Filed by Clerk

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  • 08/09/2016
  • DocketNotice of Related Case; Filed by Reuven Cypers (Plaintiff)

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  • 08/09/2016
  • DocketNOTICE OF RELATED CASE

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  • 08/09/2016
  • DocketNOTICE OF DEPOSITING JURY FEES

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  • 08/09/2016
  • DocketSUMMONS

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  • 08/09/2016
  • DocketCIVIL DEPOSIT

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  • 08/09/2016
  • DocketComplaint; Filed by Reuven Cypers (Plaintiff); Residual Income Opportunities, Inc. (Plaintiff)

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  • 08/09/2016
  • DocketCOMPLAINT FOR: 1. MALICIOUS PROSECUTION; ETC

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Tentative Rulings

Case Number: BC627326    Hearing Date: February 07, 2020    Dept: 31

DEMURRER OF DEFENDANT CYBERSOURCE IS SUSTAINED WITHOUT LEAVE TO AMEND.

Relevant Background

On August 9, 2016, Plaintiffs Residual Income Opportunities, Inc. and Rueven Cypers filed the instant action. On June 12, 2019, Plaintiffs filed an Amendment to Complaint (Fictitious/Incorrect Name) naming CyberSource Corporation dba Authorize.net (hereinafter “Defendant” or “CyberSource”) as Doe 4. On September 4, 2019, Plaintiffs dismissed without prejudice the first cause of action as to CyberSource. On November 18, 2019, Plaintiffs filed the Second Amended Complaint (“SAC”). The SAC asserts causes of action for:

  1. Malicious Prosecution;

  2. Setting Aside Fraudulent Transfer;

  3. Conspiracy to Defraud; and

  4. Declaratory Relief.

The second, third, and fourth causes of action are asserted against Defendant CyberSource.

Defendant demurs to the second, third, and fourth causes of action arguing that the causes of action fail to allege facts sufficient to state a cause of action against it

Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747. When considering demurrers, courts read the allegations liberally and in context. (Wilson v. Transit Authority of City of Sacramento (1962) 199 Cal.App.2d 716, 720-21.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not on the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) However, it does not accept as true deductions, contentions, or conclusions of law or fact. (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.) A demurrer may be sustained “only if the complaint fails to state a cause of action under any possible legal theory.” (Sheehan v. San Francisco 49ers, Ltd. (2009) 45 Cal.4th 992, 998.)

Discussion

Second Cause of Action for Setting Aside Fraudulent Transfer

“The UVTA, formerly known as the Uniform Fraudulent Transfer Act [citations], “permits defrauded creditors to reach property in the hands of a transferee.” [Citation.] “A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.” [Citation.] The transferee “holds only an apparent title [to the transferred property], a mere cloak under which is hidden the hideous skeleton of deceit, the real owner being the scheming and shifty judgment debtor ....” [Citation.] The purpose of the voidable transactions statute is “ ‘to prevent debtors from placing property which legitimately should be available for the satisfaction of demands of creditors beyond their reach ....’ ” [Citation.]” (Lo v. Lee (2018) 24 Cal.App.5th 1065, 1071.)

Pursuant to Civil Code section 3439.08, a judgment may be entered against the following:

  1. The first transferee of the asset or the person for whose benefit the transfer was made.

  2. Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee.

(Civil Code § 3439.08(b).)

Defendant demurs to the second cause of action for setting aside fraudulent transfer arguing that Plaintiffs’ second cause of action does not apply to it, as Plaintiffs admit that CyberSource was the “global payment gateway management company” that facilitated the allegedly fraudulent transfers. (SAC ¶ 18.) Defendant asserts that the UTVA does not allow an action to be brought against the mere processor of the allegedly fraudulent transfer that was not in fact a recipient of the funds. Defendant contends that Plaintiffs have not alleged that Defendant was the entity that initiated any transfer nor the recipient of the transferred funds. Defendant asserts that accordingly, a judgment cannot be made against it under the UVTA.

The Court finds that Plaintiffs have failed to allege facts sufficient to state a cause of action for setting aside fraudulent transfer. As noted by Defendant, the SAC fails to allege that Defendant was the recipient or beneficiary of the transfer, such that a judgment cannot be entered against Defendant setting aside a fraudulent transfer.

The burden is on the plaintiff to prove there is a reasonable possibility that any defects in the pleading can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) As Plaintiffs have failed to file an opposition, Plaintiffs have failed to carry their burden.

Based on the foregoing, Defendant’s demurrer to the second cause of action is SUSTAINED without leave to amend.

Third Cause of Action for Conspiracy

“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. [Citation.] By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. [Citation.] In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.

Standing alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort. “‘A civil conspiracy, however atrocious, does not per se give rise to a cause of action unless a civil wrong has been committed resulting in damage.’” [Citations.]

We have summarized the elements and significance of a civil conspiracy: “‘The elements of an action for civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act or acts done in furtherance of the common design.... In such an action the major significance of the conspiracy lies in the fact that it renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong, irrespective of whether or not he was a direct actor and regardless of the degree of his activity.’” [Citation.]” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510–511.)

Defendant demurs to the third cause of action for conspiracy arguing that it is not a separate cause of action and thus should be dismissed. Defendant asserts that even if conspiracy was a separate cause of action, Plaintiffs have not pled facts to hold CyberSource liable as a part of a civil conspiracy. Defendant contends that the SAC only makes vague and conclusory allegations that “Defendants entered into a conspiracy, combination and collaboration with each other” and that they “deliberately and fraudulently transferred away” cash and accounts. (SAC ¶ 89-90.) Defendant argues that such conclusory allegations are insufficient to withstand demurrer and fail to plead an actual agreement or conspiracy.

The Court finds that Plaintiffs have failed to allege a theory of liability for conspiracy sufficient to withstand demurrer. “Irrespective of the labels attached by the pleader to any alleged cause of action, we examine the factual allegations of the complaint, “to determine whether they state a cause of action on any available legal theory.” [Citation.]” (Adelman v. Associated Intern. Ins. Co. (2001) 90 Cal.App.4th 352, 359.) Here, while Plaintiffs have sufficiently alleged a conspiracy to commit a fraudulent transfer, as noted above, a judgment for fraudulent transfer may only be entered as to a transferee or beneficiary of a transfer. Because Plaintiffs have failed to allege that Defendant is a transferee or beneficiary of the transfer, Plaintiffs cannot use conspiracy to commit a fraudulent transfer to hold Defendant liable under their cause of action to set aside fraudulent transfer.

The burden is on the plaintiff to prove there is a reasonable possibility that any defects in the pleading can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) As above, Plaintiffs have failed to file an opposition, and thus, Plaintiffs have failed to carry their burden.

Based on the foregoing, Defendant’s demurrer to the third cause of action for conspiracy is SUSTAINED without leave to amend.

Fourth Cause of Action for Declaratory Relief

Code of Civil Procedure section 1060 provides that a person may bring an action for declaratory relief if he or she “desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property . . . .” (Code Civ. Proc., § 1060.) A request for declaratory relief may be brought alone or with other relief. (See id.)

To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

“Declaratory relief operates prospectively to declare future rights, rather than to redress past wrongs. [Citation.] Where, as here, a party has a fully matured cause of action for money, the party must seek the remedy of damages, and not pursue a declaratory relief claim. [Citation.]” (Canova v. Trustees of Imperial Irrigation Dist. Employee Pension Plan (2007) 150 Cal.App.4th 1487, 1497.)

“The court . . . may sustain a demurrer without leave to amend if it determines that a judicial declaration is not ‘necessary or proper at the time under all the circumstances.”’ (DeLaura v. Beckett (2006) 137 Cal.App.4th 542, 545; see also Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 648 (demurrer properly sustained where no allegations that declaratory relief would “have any practical consequences.”).)

Defendant finally demurs to the fourth cause of action for declaratory relief arguing that Plaintiffs’ cause of action improperly asks the court to make a declaration based on past conduct. Defendant asserts that Plaintiffs’ declaratory relief cause of action alleges that the residuals transferred pursuant to the relevant agreements were “shams and a fraudulent conveyance” (SAC ¶ 110) and seeks a “judicial determination and declaration” that the residuals “transferred” “be set aside,” and an accounting be made “for the benefit of Plaintiffs” (SAC ¶ 111). Defendant contends that put another way, Plaintiffs seeks the money that they allege was fraudulently transferred.

The Court finds that Plaintiffs have failed to state a cause of action for declaratory relief because Plaintiffs do not plead the existence of an actual, present controversy, but rather seeks redress of past wrongs.

The burden is on the plaintiff to prove there is a reasonable possibility that any defects in the pleading can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Again, as Plaintiffs have failed to file an opposition, Plaintiffs have failed to carry their burden.

Based on the foregoing, Defendant’s demurrer to the fourth cause of action for declaratory relief is SUSTAINED without leave to amend.

Conclusion

Defendant’s demurrer to the second, third, and fourth causes of action is SUSTAINED without leave to amend. As these are the only causes of action alleged against Defendant CyberSource in the SAC, this case is dismissed as to Defendant CyberSource with prejudice.

Moving party is ordered to give notice.

Case Number: BC627326    Hearing Date: January 28, 2020    Dept: 31

MOTION FOR ATTORNEYS' FEES IS GRANTED, IN PART.

Relevant Background

On August 9, 2016, Plaintiffs Residual Income Opportunities, Inc. and Rueven Cypers filed the instant action. On February 8, 2017, Plaintiffs filed the First Amended Complaint (“FAC”). The FAC asserts causes of action for:

  1. Malicious Prosecution;

  2. Setting Aside Fraudulent Transfer;

  3. Conspiracy to Defraud; and

  4. Declaratory Relief.

On July 25, 2018, the Court granted Defendant Cynergy Data, LLC’s (hereinafter “Defendant”) Anti-SLAPP Motion. On February 8, 2018, the Court granted Defendant’s motion for attorney fees and costs associated with the Anti-SLAPP, awarding $53,915.50 in attorney fees and $3,567.77 in costs. Plaintiffs appealed the award and on August 29, 2019, the Court of Appeal entered its order, affirming the attorney fees award and reversing the order awarding costs.

Defendant moves for an order awarding attorneys’ fees in the amount of $72,155.28 against Plaintiffs, jointly and severally, incurred in connection with the appeal, post-judgment litigation and discovery, and the instant motion.

Legal Standard

Pursuant to CCP § 425.16(c), a prevailing defendant is entitled to recover attorneys’ fees and costs associated with the motion. Under CRC 3.1702 and CRC 8.104, a request for attorneys’ fees must be made within 60 days of service of the notice of entry of judgment. A defendant may only recover fees and costs related to the motion to strike. (Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1383.) This includes fees associated with bringing the motion for fees. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141 (“an award of fees may include not only the fees incurred with respect to the underlying claim, but also the fees incurred in enforcing the right to mandatory fees under Code of Civil Procedure section 425.16.”).) Additionally, “[a]ny fee award must also include those incurred on appeal. [Citation.]” (Trapp v. Naiman (2013) 218 Cal.App.4th 113, 122.)

“A trial court assessing attorney fees begins with a touchstone or lodestar figure, based on the ‘careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1321.) The Court “need not simply award the sum requested. To the contrary, ascertaining the fee amount is left to the trial court's sound discretion.” (Id.) “The reasonableness of attorney fees is within the discretion of the trial court, to be determined from a consideration of such factors as the nature of the litigation, the complexity of the issues, the experience and expertise of counsel and the amount of time involved. The court may also consider whether the amount requested is based upon unnecessary or duplicative work.” (Wilkerson v. Sullivan (2002) 99 Cal.App.4th 443, 448.)

Discussion

Costs on Appeal

California Rules of Court Rule 8.278 provides in relevant part:

(a) Award of costs

(1) Except as provided in this rule, the party prevailing in the Court of Appeal in a civil case other than a juvenile case is entitled to costs on appeal.

(2) The prevailing party is the respondent if the Court of Appeal affirms the judgment without modification or dismisses the appeal. The prevailing party is the appellant if the court reverses the judgment in its entirety.

(3) If the Court of Appeal reverses the judgment in part or modifies it, or if there is more than one notice of appeal, the opinion must specify the award or denial of costs.

(4) In probate cases, the prevailing party must be awarded costs unless the Court of Appeal orders otherwise, but the superior court must decide who will pay the award.

(5) In the interests of justice, the Court of Appeal may also award or deny costs as it deems proper. . . .

(d) Recoverable costs . . .

(2) Unless the court orders otherwise, an award of costs neither includes attorney's fees on appeal nor precludes a party from seeking them under rule 3.1702.

(Cal. Rules of Court, 8.278(a),(d).)

Plaintiffs oppose the instant motion exclusively arguing that the motion must be denied because the Court of Appeal specifically stated, “Each party is to bear its own costs on appeal.” (Catanzarite Decl., Exh. 1.)

Plaintiffs’ argument is unavailing, as California Rules of Court Rule 8.278(d) specifically states that an award of costs does not include attorneys’ fees on appeal nor does it preclude a party from seeking them. Because the Court of Appeal did not explicitly preclude Defendant from seeking attorneys’ fees pursuant to Code of Civil Procedure section 425.16(c), which includes attorneys’ fees on appeal, the Court finds that Defendant is entitled to seek such fees. The Court thus turns to the merits of the motion.

Hourly Rate

“The reasonable hourly rate is that prevailing in the community for similar work.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) “The experienced trial judge is the best judge of the value of professional services rendered in [her] court.” (Ibid.)

Defendant seeks to recover for 4 attorneys and 3 paralegals. Their hourly rates are as follows:

For each attorney, attorney Joshua Mandell attests to their legal experience. (Mandell Decl. ¶ 4-13.)

Defendant asserts that the Court of Appeal already affirmed the hourly rates of its counsel as reasonable. (Catanzarite Decl., Exh. 1, p. 8.) Defendant contends that, as before, Defendant does not seek the full value of its counsel’s fees, but instead seeks recovery of the discounted fees paid by Defendant.

The Court finds that the hourly rates requested by Defendant are reasonable and commensurate with rates charged by attorneys with comparable skill and expertise.

Reasonable Hours Incurred

“A trial court assessing attorney fees begins with a touchstone or lodestar figure, based on the ‘careful compilation of the time spent and reasonable hourly compensation of each attorney ... involved in the presentation of the case.” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1321.) “The reasonableness of attorney fees is within the discretion of the trial court, to be determined from a consideration of such factors as the nature of the litigation, the complexity of the issues, the experience and expertise of counsel and the amount of time involved. The court may also consider whether the amount requested is based upon unnecessary or duplicative work.” (Wilkerson v. Sullivan (2002) 99 Cal.App.4th 443, 448.)

While not per se objectionable, block billing can exacerbate the vagueness of an attorney fee request and support a court’s finding that time entries were inflated and non-compensable. (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1325-1326.)

Defense counsel provides detailed billing records for fees incurred on appeal. (Mandell Decl., Exh 1.)

Defendant argues that it incurred reasonable fees in the amount of $57,155.28 in connection with its continuing success on appeal and responding to abusive post-judgment litigation and discovery. Defendant asserts that this includes analyzing the opening brief, preparing the respondent’s brief, and preparing for and attending oral argument. Defendant contends that incredibly, counsel for Defendant learned from the Justices at the commencement of oral argument that appellants waived argument just moments before but did not bother to notify defense counsel. Defendant argues that additionally, despite Defendant’s complete victory on the anti-SLAPP motion, Plaintiffs persisted in repeatedly attempting to take the deposition of Defendant’s person most knowledgeable by means of a Notice of Deposition. Defendant asserts that Plaintiffs’ conduct forced it to serve objections to the deposition notices.

Defendant additionally contends that it will incur approximately $15,000 in fees associated with making the instant motion, including the preparation of a reply and attending the hearing.

The Court finds that the amount of fees requested is unreasonable. Because Defendant moves for attorneys’ fees pursuant to Section 425.16(c), which are fees incurred in relation to the Anti-SLAPP motion and subsequent appeal, Defendant may not recover for services performed relating to post-judgment litigation and discovery. Defendant may only recover for fees related to the Anti-SLAPP and the appeal related to the Anti-SLAPP. Accordingly, a total of $13,280.83 representing 26.60 hours billed is deducted from the total amount of fees requested.

Additionally, the Court is not persuaded that Defendant will incur an additional $15,000.00 preparing and appearing for the instant motion. Defendant has not provided a break down of how the hours will be allocated or who will be working on the motion. Assuming attorney Joshua Mandell worked on and appeared at the hearing for the motion at a rate of $650 per hour, the highest rate among the attorneys Defendant seeks to recover fees for, Mr. Mandell would have to spend more than 23 hours preparing the instant motion, the reply, and appearing at the hearing. The Court finds that amount of time is excessive and unreasonable. Moreover, the fee requested in relation to the instant motion constitutes nearly 20% of the total fees requested. Accordingly, a total of $8,450.00 representing 13 hours billed is deducted from the total amount of fees requested.

Having analyzed the instant motion and the billing statements provided, the Court determines that a reasonable lodestar in this case, to limit any duplicative and excessive fees, is $50,424.45.

Conclusion

Defendant’s motion for attorney fees is GRANTED in part. The Court awards Defendant attorneys’ fees in the amount of $50,424.45.

Moving party to give notice.

Case Number: BC627326    Hearing Date: October 28, 2019    Dept: 31

MOTIONS TO QUASH SERVICE ARE GRANTED.

Relevant Background

On August 9, 2016, Plaintiffs Residual Income Opportunities, Inc. and Rueven Cypers filed the instant action. On February 8, 2017, Plaintiffs filed the First Amended Complaint (“FAC”). The FAC asserts causes of action for:

  1. Malicious Prosecution;

  2. Setting Aside Fraudulent Transfer;

  3. Conspiracy to Defraud; and

  4. Declaratory Relief.

On June 12, 2019, Plaintiffs filed Amendments to Complaint (Fictitious/Incorrect Name), substituting Asher Margy, aka Asher Mimon, and Global Processing Group LLC as Does 1 and 3, respectively. On August 14, 2019, Specially Appearing Defendants Asher Margy (hereinafter “Margy”) and Global Processing Group LLC (hereinafter “GP Group”) (collectively referred to as “Specially Appearing Defendants” or “Defendants”) filed the instant motions to quash service of summons for lack of personal jurisdiction.

Legal Standard

In California, courts are authorized to “exercise jurisdiction over parties on any basis not inconsistent with the Constitution of [California] or the United States.” (Code Civ. Proc., § 410.10.) “Personal jurisdiction may be either general or specific.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.) The extent to which a California court may exercise jurisdiction over a defendant depends on the nature and quality of that defendant’s contacts with the state.

Nonresident defendants whose commercial activities impact California on a substantial, continuous, and systematic basis are subject to general jurisdiction in California. (See Vons Companies, supra, 14 Cal.4th at 445-446.) However, if the defendant’s activities in California are insufficient to justify the exercise of general jurisdiction over him or her, then the cause of action must arise out of an act done or transaction consummated in the forum such that the defendant may be subject to specific jurisdiction. (Cornelison v. Chaney (1976) 16 Cal.3d 143, 147-148.)

A plaintiff “bears the burden of proof by a preponderance of evidence to demonstrate the defendant has sufficient minimum contacts with the forum state to justify jurisdiction.” (Thomson v. Anderson (2003) 113 Cal.App.4th 258, 266.) The Court must assess each defendant’s contacts with the forum state individually. (Anglo Irish Bank, PLC v. Superior Court (2008) 165 Cal.App.4th 969, 978.)

Evidentiary Objections

Specially Appearing Defendants submit several objections to the Declaration of Kenneth J. Catanzarite. Objections 1-3 are SUSTAINED on the grounds of improper legal conclusion. Objection 4 is SUSTAINED on the grounds that it constitutes an improper argument of counsel.

Specially Appearing Defendants also submit several objections to the Declaration of Reuven Cypers. Objections 1-5 are OVERRULED.

Discussion

Specially Appearing Defendants move for an order quashing service of summons on the grounds that the Court lacks personal jurisdiction and dismissing Plaintiffs’ FAC as against them.

Timeliness

Code of Civil Procedure section 418.10 provides in relevant part:

(e) A defendant or cross-defendant may make a motion under this section and simultaneously answer, demur, or move to strike the complaint or cross-complaint.

(3) Failure to make a motion under this section at the time of filing a demurrer or motion to strike constitutes a waiver of the issues of lack of personal jurisdiction, inadequacy of process, inadequacy of service of process, inconvenient forum, and delay in prosecution.

Although the statute mentions only a demurrer or motion to strike, it is interpreted to mean the time of filing any response. (See Roy v. Superior Court (2005) 127 Cal.App.4th 337, 342, fn. 5.) The result is consistent with long-standing precedents making it “the defendant’s obligation to raise the jurisdictional defect at the first possible instance.” (Id. at 344.)

Plaintiffs first oppose the motions on the grounds that it is untimely pursuant to Section 418.10. Plaintiffs argue that Margy received the summons, as he later made threatening phone calls to Plaintiff Cypers between July 2nd and 28th. (Catanzarite Decl. ¶ 19, Cypers Decl. ¶¶ 19-21, Exhs. 11-12.) Plaintiffs assert that Defendants did not file their motions to quash on or before their last day to plead, which was July 29, 2019 or at the latest August 8, 2019. (CCP § 415.40.) Plaintiffs contend that Defendants cannot show good cause for any extension for their motions to quash as (1) no request was ever made to the Court prior to the required response date; (2) Defendants’ counsel’s conferral indicated an intent to demurrer; (3) Defendants’ declarations omitted key information as to when Defendants were served; and (4) Defendants’ motions were filed nearly 30-days late and contain no explanation for their untimeliness.

In reply, Defendants argue that the Court can and should use its discretion to hear the motions to quash on its merits. Defendants assert that no default was entered before they filed their motions to quash and are therefore timely.

The Court finds that Defendants’ motions to quash are timely. Although Plaintiffs argue that “it is clear [Margy] received the summons,” Plaintiffs have failed to provide Proofs of Service attesting to the date upon which Defendants were actually served. Accordingly, the Court has no basis for determining the timeliness of Defendants’ motion. Further, as noted by Defendants, no default was entered against Defendants and given that these are Defendants’ first special appearances in this case, Defendants have raised the jurisdictional defect at the first possible instance.

Based on the foregoing, the Court turns to the merits of the motions.

Specific Jurisdiction

The California Supreme Court has held that three requirements must be met before specific jurisdiction may be exercised: (a) defendant purposefully availed himself of the forum benefits, (b) the controversy is related to or arises from defendant’s contacts with California, and (c) the assertion of jurisdiction would comport with fair play and substantial justice. (Pavlovich v. Sup. Ct. (2002) 29 Cal.4th 262, 269.) “A plaintiff opposing a defendant’s motion to quash service has the burden of establishing factor Nos. (1) (the defendant’s purposeful availment) and (2) (lawsuit relates to the defendant’s contacts with state).” (People ex rel. Harris v. Native Wholesale Supply Co. (2011) 196 Cal.App.4th 357, 362 [citing Bridgestone Corp. v. Superior Court (2002) 99 Cal.App.4th 767, 774].) “If the plaintiff does so, the burden then shifts to the defendant to show factor No. (3), that the exercise of jurisdiction would be unreasonable.” (Ibid.)

“The nonresident defendant must have purposefully directed its activities at forum residents, or purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of local law.” (Weil & Brown, Civ. Proc. Before Trial (The Rutter Group 2017) ¶ 3:226.) When individuals “purposefully derive benefit” from their interstate activities, it is unfair to allow such individuals to escape having to account for their activities in the state from which they purposefully derived a benefit, for the consequences that arise from such activities. (Burger King (1985) 471 U.S. 462, 471-74.) Minimum contacts can be electronic or created through the use of the telephone, mail, or e-mail. (Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1344, 1346-1347.) What is important “is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” (World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297.)

Specially Appearing Defendants argue that they do not have sufficient minimum contacts with California to permit the exercise of personal jurisdiction. Defendants assert that none of the “traditional” bases for personal jurisdiction apply to them because they do not have any presence in California, are not domiciled in California, and do not consent to California’s jurisdiction over them for the purposes of this litigation. (GP Group-Margy Decl. ¶ 1-5; Margy Decl. ¶ 1-5.) Defendants contend that the only remaining ground for personal jurisdiction upon which Plaintiffs may rely is to establish that Defendants have sufficient minimum contacts with the State of California, but they do not.

Defendant GP-Group contends that it is a New York corporation existing under the laws of the State of New York with its principal place of business in Nassau County, New York. (GP-Group Margy Decl. ¶ 2.) Defendant GP-Group argues that it is a money lending and investment business that does business only in New York. (GP-Group Margy Decl. ¶ 3.) GP-Group asserts that it holds no bank accounts in California, has no business dealings in California, and has only one employee, Defendant Margy, who has ever conducted any business in or with the State of California. (GP-Group Margy Decl. ¶ 4-7.) Defendant GP-Group contends that it is not licensed to do business in California, does not have an agent for service of process in California, and does not maintain a place of business, telephone number, fax number, or address anywhere in the State of California. (GP-Group Margy Decl. ¶ 8-10.) Defendant GP-Group argues that it also has never executed a contract in the State of California, has never paid taxes in or to the State of California, and has never sought to do business in California, has never advertised in California, or directed any of its activities to the State of California. (GP-Group Margy Decl. ¶ 11-15.)

As to Defendant Margy, Margy asserts that he is an individual that mainly resides in Israel, but goes to New York every couple of months to see family and conduct business. (Margy Decl. ¶ 2.) Defendant Margy contends that he holds no bank accounts in California, has no business dealings in California, and none of the companies he owns have any employees, salespersons, representatives, agents, or servants that conduct any business for Margy in the State of California. (Margy Decl. ¶ 3-6.) Margy argues that none of his businesses are licensed to do business in California, he does not maintain a place of business, a telephone number, fax number, or address anywhere in the State of California, and has never executed a contract in the State of California. (Margy Decl. ¶ 7-9.) Defendant Margy also asserts that he has never paid taxes in or to the State of California, has never sought to do business in California, has never advertised in California, or directed any of his activities to the State of California. (Margy Decl. ¶ 10-13.)

Specially Appearing Defendants argue that California does not have a sufficient relationship with them to make it reasonable to require them to defend the present action in California. Defendants assert that it is not fair or reasonable to force them to litigate a case in a state that is over 3,000 miles from their home state of New York where no conduct of Defendants establishes sufficient minimum contacts with the state, and where they have not availed themselves of the benefits and protections of the laws of California.

Purposeful Availment

Defendants argue that they have not purposefully availed themselves of the benefits of the State of California. Defendants assert that the only allegation that deals with jurisdiction in the FAC is in paragraph 22, and it merely states that the Court has personal jurisdiction because “a substantial portion of the actions and events giving rise to this complaint occurred in Los Angeles County, California.” Defendants contend that this singular conclusory allegation does not suffice to confer personal jurisdiction over out-of-state defendants with no contacts or business dealings with California. Defendants argue that there are no allegations that allege they purposefully availed themselves of any of California’s benefits or directed any activities at California. Defendants further assert that there are no allegations that even allege what out-of-state conduct might give rise to personal jurisdiction.

In opposition, Plaintiffs argue that Defendants’ contacts with California and Plaintiffs are sufficient to confer specific personal jurisdiction over Defendants. Plaintiffs assert that Defendants received and continue to receive monies in the form of residuals from Defendant CyberSource, who has conducted business in California since 1998, and whose principal business office is located at 900 Metro Center Blvd., Foster City, California. Plaintiffs contend that Defendant CyberSource processes and distributes the residuals from the Authorize.net Portfolio that Defendants are alleged to have been fraudulently transferred from Defendant Tribul Merchant Services, LLC. Plaintiffs argue that the Authorize.net Porfolio includes California Merchants’ credit-card transactions from California residents.

Plaintiffs assert that Defendant Margy also continues to receive his proportional share of residuals from co-defendant Excel, to whom other Defendant Tribul assets were allegedly transferred in the form of Merchant Accounts. Plaintiffs contend that the Merchant accounts are believed to amount to nearly 6,000 accounts, including accounts located in California. Plaintiffs argue that Defendant Margy continues to receive his proportionate 5.92 share of such residuals from those 6,000 accounts stemming from what is known as the Cooperation-Agreement.

Plaintiffs assert that between July 2 and July 28, 2019, Defendant Margy made numerous phone calls to Plaintiff Cypers purportedly in relation to the Authorize.net Portfolio. Plaintiffs contend that when Plaintiff Cypers refused Defendant Margy’s demand to dismiss Specially Appearing Defendants, Defendant Margy threatened Plaintiff Cypers. Plaintiffs argue that Defendant Margy thus contacted Plaintiff Cypers in California numerous times as to the Authorize.net Portfolio.

In reply, Specially Appearing Defendants argue that Plaintiffs do not cite to any case law that holds that receiving money in a foreign state in the form of residuals from a company “located” in California is sufficient minimum contacts. Defendants assert that Plaintiffs fail to discuss why they believe the residuals are originating from CyberSource in California, as opposed to one of the dozens of other locations CyberSource maintains throughout the United States. Defendants contend that CyberSource is a Delaware entity with a foreign registration allowing it to do business in California. Defendants argue that CyberSource is not like a bank that a person can walk into and draw out their residual payments from, and the Authorize.net Portfolio is not like a physical asset. Defendants assert that even if the residual payments are originating in California, which point Defendants do not concede, and even if there are California merchants in the Authorize.net-Portfolio, which Defendants also do not concede, that would not establish specific jurisdiction over Defendants. Defendants contend that the continuous and systematic contacts analysis is a general jurisdiction analysis, and Plaintiffs state that they are seeking to establish specific jurisdiction.

Defendants argue that Specially Appearing Defendants did not choose to direct their activities at California. Defendants asserts that A & S, another company owned by Defendant Margy, was forced to take the Authorize.net Portfolio or potentially lose over one million dollars. Defendants contend that Plaintiffs have not proffered any evidence that suggests Defendants even knew CyberSource was located in California. Defendants argue that Plaintiffs were required to show that Defendants directed their own activities at the State of California. Defendants assert that the Authorize.net Portfolio residuals came to Defendants by the acts of others.

Defendants contend that when there was an issue with the Authorize.net Portfolio and the payment of the residuals to A & S, the Chanin Parties and A & S brought suit in the State of New York against CyberSource to release the payments to A & S; the suit was not brought in California. Defendants argue that this is an additional reason why Defendants could not have expected to be dragged into Court in the State of California.

As to the Cooperation-Agreement and Defendant Margy’s purported ownership of stock, Defendants assert that it is unclear from the opposition how that would establish personal jurisdiction over Specially Appearing Defendants. Defendants contend that Plaintiffs’ claims regarding Defendant Margy’s ownership of stock and the amount of merchant accounts that were purportedly transferred to Defendant Excel are unsupported by evidence.

As to Defendant Margy’s “threats” to Plaintiff Cyprus, Defendants argue that the calls are immaterial to the jurisdictional analysis, as the evidence shows that the calls to Plaintiff Cyprus were regarding this case, and not the Authorize.net Portfolio. Defendants assert that additionally, the calls were made after the FAC was served, and such post-service calls about the case are not sufficient contacts to establish personal jurisdiction.

The Court finds that Plaintiffs have failed to establish by a preponderance of the evidence that Specially Appearing Defendants purposefully availed themselves of the benefits of the State of California, or purposefully directed their activities at forum residents such as to warrant the Court’s exercise of jurisdiction over them.

As noted above, Specially Appearing Defendant GP-Group is not licensed to do business in California, has not executed a contract in California, and has only one employee, Defendant Margy, who has eever conducted any business in or with the State of California. Further, Specially Appearing Defendant Margy mainly resides in Israel and makes trips to New York every couple of months to see family and conduct business, has no bank accounts in the State of California, and owns no property or assets in California. Aside from Defendant Margy’s post-service phone calls to Plaintiff Cyprus and the unsupported contention that Defendant Margy is a shareholder in co-Defendant Excel, the only contact that Plaintiffs assert Defendants had with California is the fact that they receive residuals from a purportedly California-based company that processes a portfolio which contains California merchants’ credit-card transactions from California residents. The Court finds that such a contact with California is too far removed to establish that Specially Appearing Defendants either directed their activities at California residents or purposefully availed themselves of the benefits of the laws of California. While Defendants may be receiving money in the form of residuals from California merchants’ credit-card transactions, nothing indicates to the Court that Defendants were doing business in California or were directing their activities to California residents. As noted by Defendants, Plaintiffs have failed to provide case law indicating that receiving money in the form of residuals from a company purportedly located in California establishes sufficient minimum contacts to exercise specific jurisdiction over a defendant.

As to Defendant Margy’s calls to Plaintiff Cyprus after the FAC was served, the Court finds that the calls were not made with the intention of creating a business relationship or doing business in California. Accordingly, such a contact with the State of California does not establish that Specially Appearing Defendants purposefully availed themselves of the benefits of California or purposefully directed their activities, which give rise to the controversy, at California residents.

As Plaintiffs have failed to establish by a preponderance of the evidence that Specially Appearing Defendants purposefully availed themselves of the benefits of California, the Court need not consider the other factors under the specific jurisdiction analysis.

Based on the foregoing, Specially Appearing Defendants Asher Margy and Global Processing Group LLC’s motions to quash service of summons for lack of personal jurisdiction are GRANTED.

Plaintiffs’ request for jurisdictional discovery is DENIED as Plaintiffs fail to explain how any discovery will lead to evidence establishing that this Court has personal jurisdiction over Specially Appearing Defendants Asher Margy and Global Processing Group LLC.

Moving parties to give notice.