On 01/15/2016 SAM ADAL filed a Property - Other Real Property lawsuit against ANTOUN AMSIH KALIOUNDJI. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are DANIEL S. MURPHY and MARY H. STROBEL. The case status is Pending - Other Pending.
Pending - Other Pending
Stanley Mosk Courthouse
Los Angeles, California
DANIEL S. MURPHY
MARY H. STROBEL
ADAL SAM AKA BASSAM ABOUADAL
DOES 1 THROUGH 100
KALIOUDJI ILHAM AMSIH
KALIOUNDJI ANTOUN AMSIH
GOLDEN STATE PROPERTIES
KALIOUNDJI ANTOUN AMSIH DBA GOLDEN STATE PROPERTIES
MOLDO BYRON Z. ESQ.
DONELL STEPHEN J
LAW OFFICES OF JOHN M. GERRO
GERRO JOHN MICHAEL
GERRO JOHN MICHAEL ESQ.
ROBERTS KENNETH P. LAW OFFICES OF
BINDER DAVID STUART
MOLDO BYRON Z.
6/24/2019: Notice - NOTICE OF ENTRY OF ORDER GRANTING EX PARTS APPLICATION OF REFEREE STEPHEN J. DONELL FOR AN ORDER RE: STIPULATION APPROVING FORM OF NOTICE OF SALE OF REAL PROPERTY AND AUTHORIZING THE REFEREE
2/23/2018: Notice - NOTICE OF ENTRY OF ORDER GRANTING EX PARTE APPLICATION OF REFEREE STEPHEN J. DONELL FOR AN ORDER CONFIRMING THAT REFEREE PERSONALLY OR REFEREESHIP ESTATE ARE NOT HELD LIABLE
12/11/2019: Motion re: - MOTION RE: OF STATE COURT REFEREE TO RESOLVE DISPUTE AND PETITION TO APPROVE INTERIM FEES
12/23/2019: Opposition - OPPOSITION DEFENDANTS OPPOSITION TO REFEREES MOTION TO RESOLVE DISPUTE AND PETITIONT TO APPROVE INTERIM FEES THROUGH FEBRUARY 28, 2019; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION O
11/20/2018: Order - Order Granting Ex Parte Application
4/15/2016: DECLARATION OF ELIZABETH MORAN IN OPPOSITION MOTION FOR ORDER FOR APPOINTMENT OF RECEIVER AND INJUNCTION
7/11/2016: DECLARATION OF RYAN P. TISH IN SUPPORT OF DEFENDANTS' MOTION FOR RECONSIDERATION OF ORDER RE: MOTTO TO DISQUALWY DEFENDANTS' COUNSEL
1/23/2017: Minute Order -
4/26/2017: DEFENDANTS' OPPOSITION TO PLAINTIFFS' EX PARTE APPLICATION FOR AN ORDER SHORTENING TIME TO HEAR A MOTION TO DISQUALIFY. COUNSEL AND CONTINUE TRIAL; DECLARATION OF DAVID S. BINDER
5/15/2017: Minute Order -
5/25/2017: NOTICE OF COURT'S RULING RE PLAINTIFFS' MOTION TO DISQUALIFY DEFENDANTS' COUNSEL AND CONTINUE TRIAL
6/23/2017: Minute Order -
7/13/2017: REQUEST FOR JUDICIAL NOTICE
8/8/2017: PLAINTIFFS' OPPOSITION TO MOTION FOR AN AWARD OF SANCTIONS OF $9,995.00 AGAINST PLAINTIFF, MAHA ADAL, AND HER ATTORNEYS OF RECORD, JOHN GERRO, ESQ. AND JASON BARTH, ESQ. AND THE LAW OFFICES OF JOHN M.
8/28/2017: DEFENDANTS' REPLY TO PLAINTIFF'S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF ISSUES
9/28/2017: DEFENDANTS ANTOUN KALIOUNDJI AND AMSIH KALIOUNDJI'S TRIAL BRIEF
Hearing07/29/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion - Other to Approve and Confirm Final Account and ReportRead MoreRead Less
Hearing07/29/2020 at 08:30 AM in Department 32 at 111 North Hill Street, Los Angeles, CA 90012; Order to Show Cause Re: Final Account and ReportRead MoreRead Less
DocketNotice (of Continuance); Filed by Stephen J Donell (Non-Party)Read MoreRead Less
Docketat 10:00 AM in Department 32, Daniel S. Murphy, Presiding; Court OrderRead MoreRead Less
DocketMinute Order ( (Court Order)); Filed by ClerkRead MoreRead Less
DocketCertificate of Mailing for ((Court Order) of 04/16/2020); Filed by ClerkRead MoreRead Less
DocketMotion re: (to Approve and Confirm Final Account and Report); Filed by Stephen J Donell (Non-Party)Read MoreRead Less
DocketNotice (of Motion of Stephen J. Donell, State Court Referee, to (1) Approve Referee?s Final Account and Report and Compensation; (2) Discharge the Referee; (3) Abandon or Destroy Books and Reco); Filed by Stephen J Donell (Non-Party)Read MoreRead Less
Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Order to Show Cause Re: (Final Account and Report) - Not Held - Advanced and Continued - by CourtRead MoreRead Less
Docketat 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Hearing on Motion - Other (FOR ORDER TO APPROVE FINAL ACCOUNT AND REPORT)Read MoreRead Less
DocketMinute OrderRead MoreRead Less
DocketDECLARATION OF KENNETH P. ROBERTS, ESQ. IN OPPOSITION TO EX PARTE APPLICATIONRead MoreRead Less
DocketMinute order entered: 2016-01-15 00:00:00; Filed by ClerkRead MoreRead Less
DocketDeclaration; Filed by Maha Adal (Plaintiff); Ilham Amsih Kalioudji (Defendant); Antoun Amsih Kalioundji (Defendant) et al.Read MoreRead Less
DocketEx-Parte Application; Filed by Maha Adal (Plaintiff); Sam Adal (Plaintiff); Bassam Abouadal (Legacy Party)Read MoreRead Less
DocketDeclaration; Filed by Maha Adal (Plaintiff); Ilham Amsih Kalioudji (Defendant); Antoun Amsih Kalioundji (Defendant)Read MoreRead Less
DocketDeclaration; Filed by Ilham Amsih Kalioudji (Defendant); Antoun Amsih Kalioundji (Defendant); Golden State Properties (Legacy Party)Read MoreRead Less
DocketOpposition Points & Authorities; Filed by Ilham Amsih Kalioudji (Defendant); Antoun Amsih Kalioundji (Defendant); Golden State Properties (Legacy Party)Read MoreRead Less
DocketNOTICE OF MOTION AND MOTION FOR APPOINTMENT OF RECEIVER; PRELIMINARY INJUNCTION; DECLARATION OF SAM ADAL; DECLARATION OF JOHN M. GERRO; DECLARATION OF THOMAS HENRY COLEMANRead MoreRead Less
DocketComplaint; Filed by Maha Adal (Plaintiff); Sam Adal (Plaintiff)Read MoreRead Less
Case Number: BC607128 Hearing Date: July 29, 2020 Dept: 32
SAM ADAL, et. al.,
ANTOUN AMSIH KALIOUNDJI, et. al.,
Case No.: BC607128
Hearing Date: July 29, 2020
[TENTATIVE] order RE:
motion to approve and confirm final account and report, distribute sales proceeds, discharge referee, and exonerate bond
Plaintiffs Sam Adal and Maha Adal (collectively, Plaintiffs) commenced this action against Defendants Antoun Amsih Kalioundji and Ilham Amsih Kalioundji (collectively, Defendants) on January 15, 2016. The Complaint asserts causes of action for (1) winding up of partnership by receiver, (2) declaratory relief, (3) conversion, (4) breach of fiduciary duty, (5) imposition of a constructive trust, (6) injunctive relief, (7) an accounting, (8) breach of contract, (9) partition, and (10) fraud. Plaintiffs allege that the parties entered into an oral partnership agreement for the purpose of purchasing, operating, and leasing real property (Subject Properties). Plaintiffs allege that they owned a 50% interest in the Subject Properties and seek a partition by sale in this action.
In October 2017, Plaintiffs accepted Defendants’ CCP section 998 offer. Pursuant to that offer, the parties agreed that Defendants would pay Plaintiffs $250,000 and a court-appointed referee would liquidate all partnership assets, including the Subject Properties, and split those proceeds equally between the parties.
On October 30, 2017, the Court issued an interlocutory order appointing Stephen Donnell (Referee) as referee with “full authority to manage and partition the Properties by sale.”
The Referee moves for a court order (1) approving and confirming the Referee’s Final Account and Report, (2) terminating the Refereeship and discharging the Referee from all further duties, liabilities, and responsibilities in this matter, (3) approving the Referee’s total costs and fees through the termination of the Refereeship in the sum of $278,854.11, (4) approving the total costs of the Referee’s counsel, Ervin Cohen & Jessup LLP (ECJ), through the termination of the Refereeship in the sum of $237,645.18, (5) authorizing the Referee to pay the outstanding portion of his approved compensation and costs in the amount of $4,751.07 from the funds in his possession, (6) authorizing the Referee to pay the outstanding portion of ECJ’s approved compensation and costs in the amount of $30,329.22 from the funds in his possession, (7) instructing the Referee regarding the distribution of the remaining funds in his possession, (8) holding the Referee and Refereeship Estate free and harmless from any and all claims that may arise in the future that relate to the Refereeship Estate, (9) approving all of the Referee’s acts in his capacity as Referee for this Refereeship as being right and proper and in the best interests of the Refereeship Estate and the parties to this action, (10) approving all distributions for compensation and costs to the Referee made during the Refereeship period, (11) releasing the Referee and the Refereeship Estate from all liability for any and all claims that may have directly or indirectly arisen from the Refereeship Estate prior to, during, or after the Refereeship period that were not brought before the Court before the time of hearing on the Final Account and Report, (12) authorizing the Referee to abandon or destroy all books and records of the Refereeship Estate under his control, and (13) exonerating the Referee’s bond.
Defendants maintain a host of objections to issuance of the proposed court order.
A. Timeliness of Motion
Defendants contend that this motion is untimely because the interlocutory order required the Referee to file and serve a motion for approval of the Referee’s Final Report and Account “[n]o later than sixty (60) days after all of the [Subject] Properties have been closed escrow.” (Interlocutory Order, ¶ 32.) Defendants assert that all fees charged by the Referee and ECJ after this 60-day period should be rejected because of the motion’s untimeliness.
In response, the Referee acknowledges that the motion is untimely but asserts that any resulting harm was de minimis. The Referee notes that timely filing this motion would not have resulted in a reduction in fees. The Referee also emphasizes that courts sitting in equity have “broad discretion to fashion relief.”
The Referee’s points are well-taken. While this motion was untimely filed, Defendants have failed to substantiate any prejudice resulting from the delay. The Court, in its discretion, shall not deduct fees based on this harmless delay.
B. Fees for Fee Dispute Motion
Defendants claim that the Referee and ECJ should not be compensated for fees charged in connection with their efforts to circumscribe their fee agreement with Defendants. As Defendants note, the Referee moved for an order approving $39,098.51 in fees owed to him and ECJ based on the discovery that they had made mathematical errors in calculating fees (Fee Dispute Motion). The Court denied this motion because the Referee and ECJ had expressly assumed the risk of such a mistake in a fee agreement with Defendants. Defendants state that ECJ has billed $10,050 and the Referee has billed $1,694 in connection with this unnecessary motion work.
In response, the Referee acknowledges that work in connection with the Fee Dispute Motion should not be reimbursed. However, the Referee states that Defendants’ proposed deductions are overbroad. The Referee points out that Defendants have sought deductions based on fee entries that describe services relating in part to another motion — a motion to approve the Referee’s determinations regarding allowance and disallowance of certain claims (Claims Motion). As the Referee notes, work incurred in the Claims Motion is compensable because it benefitted the Refereeship estate. Accordingly, the Referee and ECJ have agreed to deduct $6,675.25 of ECJ’s fees and $1,039.50 of the Referee’s fees in connection with the Fee Dispute Motion. (Ref. Supp. Decl. ¶ 10; Moldo Decl. ¶ 5.)
The Court has reviewed the billing statements and found the Referee’s and ECJ’s allocation of fees between the Fee Dispute Motion and the Claims Motion to be reasonable. The Court shall deduct $6,675.25 of ECJ’s fees and $1,039.50 of the Referee’s fees.
C. Property Management Fees
Defendants seek to deduct property management fees incurred after the properties were sold. Defendants claim that these fees are not reimbursable because the sales should have rendered such fees unnecessary. In response, the Referee explains that the fees identified by Defendants are referee fees, not property management fees.
The Court shall make no deductions on this basis.
D. Outstanding Fees Owed to the Referee and ECJ
Defendants contend that ECJ should not be reimbursed $30,329.22 in outstanding fees because ECJ failed to submit invoices corroborating these fees.
In the moving papers, the Referee requested these fees based on an estimate that ECJ will incur the fees “to fully and completely terminate the Refereeship Estate.” (Ref. Decl. ¶ 32.) In reply, an ECJ attorney explains that these fees “relate to the completion of legal services in this matter for the period of time after December 31, 2019. The fees sought are for services related to, but not limited to, preparing the Referee’s final account, reviewing the Opposition, preparing this Reply, appearing at the hearing on the Motion, and preparing the proposed order to be filed by the Court.” (Moldo Decl. ¶ 4, Ex. I.) ECJ provides a breakdown of fees and costs reflecting that ECJ’s total fees incurred in these matters is $25,002.50 and the total costs incurred is $250. (Reply at 10.) Based on this evidence, the Court shall reduce the amount of ECJ’s fees for these matters to $20,000.
Defendants argue that the Referee should not be reimbursed $4,751.07 in fees because the Referee has not explained what work supports these fees and because he has already billed $7,837.50 for anticipated work. The Referee responds that the $4,751.07 is for outstanding fees and costs incurred in January and February 2020 (Ref. Supp. Decl. ¶ 7), whereas the $7,837.50 was for work relating to this motion such as review and preparation of the Final Report and Account (Opp. at 9; Reply at 6). The Referee’s explanation is persuasive. The Court shall not deduct this sum from the Referee’s fees.
E. Accounting Fees
Defendants claim that the Referee should not be reimbursed for accounting fees and costs of $7,000 because the Referee has not submitted corroborating invoices or explained the nature of these fees.
In response, the Referee explains that these fees are for his accountant, SL Biggs, based on February and March 2020 invoices. (Ref. Supp. Decl. ¶ 12, Ex. D.)
The Court finds the Referee’s evidence acceptable and shall make no deductions on this basis.
F. Release of Liability
Defendants object to the Referee’s request for a release of liability. Defendants state that such a release is unjustified and contrary to accepted principles of jurisprudence.
The Referee responds that a release is justified “[i]n light of the checkered past of the Properties that the Referee successfully managed to liquidate, coupled with Defendants’ spirited zest to continuously litigate every step of the way.” (Reply at 12.)
While the Court finds some merit in the Referee’s position, the Court is reluctant to provide the Referee and the Refereeship with a total release of liability absent legal authority supporting such a release. As such, the Referee’s request is denied.
The Referee’s motion is granted in large part.
The Court hereby (1) approves and confirms the Referee’s final account and report, (2) terminates the Refereeship and discharges the Referee from all further duties, liabilities, and responsibilities in this matter, (3) authorizes the Referee to pay the outstanding portion of his approved compensation and costs in the amount of $3,711.57 from the funds in his possession, (4) authorizes the Referee to pay the outstanding portion of ECJ’s approved compensation and costs in the amount of $13,324.75 from the funds in his possession, (5) authorizes the Referee to abandon or destroy all books and records of the Refereeship estate under his control, and (6) exonerates the Referee’s bond. The Referee shall distribute the remaining funds in his possession to the parties.
 The Court has deducted the $1,039.50 in fees relating to the Fee Dispute Motion from the Referee’s outstanding fees. (Moldo Decl. ¶ 5.)
 The Court has deducted the $6,675.25 in fees relating to the Fee Dispute Motion from ECJ’s outstanding fees. (Moldo Decl. ¶ 5.)
Case Number: BC607128 Hearing Date: January 08, 2020 Dept: 32
SAM ADAL, et. al.,
ANTOUN AMSIH KALIOUNDJI, et. al.,
Case No.: BC607128
Hearing Date: January 8, 2020
[TENTATIVE] order RE:
(1) Motion to approve the referee’s determinations regarding allowance and disallowance of claims and authorizing distribution of funds to pay allowed claims
(2) motion to resolve dispute and approve interim fees
Plaintiffs Sam Adal and Maha Adal (collectively, “Plaintiffs”) commenced this action against Defendants Antoun Amsih Kalioundji and Ilham Amsih Kalioundji (collectively, “Defendants”) on January 15, 2016. The Complaint asserts causes of action for (1) winding up of partnership by receiver, (2) declaratory relief, (3) conversion, (4) breach of fiduciary duty, (5) imposition of a constructive trust, (6) injunctive relief, (7) an accounting, (8) breach of contract, (9) partition, and (10) fraud. In the Complaint, Plaintiff alleges that the parties entered into an oral partnership agreement for the purpose of purchasing, operating, and leasing real property (“Subject Properties”). Plaintiff allegedly owned a 50% interest in the Subject Properties and sought a partition by sale in this action.
In October 2017, Plaintiffs accepted Defendants’ CCP section 998 offer. Pursuant to that offer, Defendants agreed to pay Plaintiffs $250,000. The parties also agreed that a referee appointed by the Court would liquidate all partnership assets, including the Subject Properties, and that those proceeds would be split equally between the parties.
On October 30, 2017, the Court issued an Interlocutory Order for Appointment of a Court Referee appointing Stephen Donnell (“Referee”) as referee with “full authority to manage and partition the Properties by sale.”
On December 19, 2018, the Court authorized the Referee to establish a claims procedure regarding the Subject Properties. Pursuant to that claims procedure, “[a]ll persons and entities … with claims or demands” against the Subject Properties were “required to present their claims to the Referee” within 60 days from the date of the order. The claims procedure provided that, after submission of the claims, the Referee would “review the claims and determine whether the claims submitted should be accepted, accepted in part, rejected, or rejected due to insufficient information and documentation.” The claims procedure instructs that, after completing his review, the Referee must “file with the Court an accounting of all claims submitted, together with a petition for instructions regarding those claims which the Referee believes should be rejected.”
DISCUSSION RE: ALLOWANCE OF CLAIMS
The Referee moves for an order (1) approving his determinations regarding the allowance and disallowance of claims and (2) authorizing him to distribute funds to pay allowed claims.
During the claims period, the Referee received four claims: (1) a claim from the Housing Authority of the City of Los Angeles (“HACLA”) for $1,149, (2) a claim from Golden State Properties (“GSP”) for $11,890.25, (3) a claim from Miller Ward Aziz (“MWA”) for $56,152, and (4) a claim from Antoun A. Kalioundji (“Antoun”) for $19,246.55. The Referee recommends the approval of HACLA’s claim, the rejection of GSP’s and Antoun’s claim, and the partial approval of MWA’s claim.
Defendants challenge the Referee’s recommendations on the claims submitted by GSP, MWA, and Antoun.
A. GSP’s Claim
GSP’s claim is comprised of two parts: (1) $8,852.50 for services performed and (2) $3,037.75 for signage reimbursement. (Ref. Decl. ¶ 7B.)
Defendants contends that the services for which GSP seek compensation are compensable because they were performed in response to the Referee’s instructions that GSP obtain records, review correspondence and documents, and provide information related to the Subject Properties. (See Ref. Decl. Ex. F (invoice).) The Referee responds that these service costs are not allowable because (1) they occurred after his appointment and (2) he did not ask GSP to provide these services or expect GSP to “turn around and request compensation for services allegedly provided.” (Ref. Supp. Decl. ¶ 3.) The Referee reasons that “Defendants are co-owners of the property, not third-party vendors, and any services provided were their responsibility to provide as it directly benefitted them.” (Ibid.)
The Court agrees with the Referee. The claims procedure was not put in place for a party like GSP to submit claims for compensation for administrative tasks. Such tasks are incidental to a refereeship and are expected to be performed by the party when the referee so instructs. Compensation is not owed for these tasks unless the appointment order so provides. The Interlocutory Order provides that “[e]xcept for the parties’ attorney fees, [a]ll reasonable expenses incurred in connection with the hiring and retention of authorized personnel and counsel shall be expenses of the Properties and shall be paid from the refereeship estate.” (Order, p. 4.) The Interlocutory Order explains that the Referee “is authorized to hire, employ, retain, and terminate consultants, property managers, real estate brokers, professionals and any other personnel or employees, which the Referee deems necessary to assist him in the discharge of his duties.” (Order, p. 5.) The Interlocutory Order, as written, does not support GSP’s claim for these costs which resemble attorney fees and which were mostly, if not completely, undertaken without the Referee’s instructions. (See Ref. Supp. Decl. ¶ 3.)
The signage reimbursement costs originate from GSP’s efforts to make and install signs at the four Subject Properties. (See Ref. Decl. Ex. F (invoice).) Defendants contend that GSP is entitled to these costs because the Referee’s agents mistakenly destroyed these signs. The Referee responds that no reimbursement is warranted because the signs “were approximately 20 years old, rusted, and a visible blight.” (Ref. Supp. Decl. ¶ 4.) Moreover, the Referee responds that the signs were unusable “because once the Properties were subject to [his] management and control, the signs included incorrect information including, but not limited to, Antoun’s office phone number and Properties, and the signs required updated information since [he] was responsible for managing and marketing the Properties.” (Ref. Supp. Decl. ¶ 4.)
The Referee’s justification is persuasive. The Referee acted within his purview in removing the signs and not reimbursing Defendants for the same because those signs were in poor condition, contained incorrect information, and impeded his duties.
GSP’s claim for $11,890.25 is rejected.
B. MWA’s Claim
Defendants object to the Referee’s partial allowance of MWA’s claim because liability for that claim rests with Plaintiffs. The Referee responds that payment for that claim is indeed being made using Plaintiff’s proceeds from the sale of 9436-9250 Corbin Avenue, Northridge, CA, not the refereeship estate. (Ref. Supp. Decl. ¶ 5.) Accordingly, no dispute exists with respect to this claim.
MWA’s claim is partially allowed in the amount of $20,000.
C. Antoun’s Claim
Antoun’s claim for $19,246.55 consisted of six items. Defendants are challenging only the last two items: (1) $1,800 as reimbursement of a security deposit for 7817 Whitsett Unit 17 and (2) $239.96 as reimbursement for business taxes paid to the City of Los Angeles with respect to the Corbin Square property. Defendants contend that they are owed these amounts because Plaintiffs did not pay their 50% share of these financial obligations.
In response, the Referee asserts that Defendants are not entitled to reimbursement of the security deposit because Defendants received the entire deposit amount from the tenant and were therefore required to reimburse the money back to the tenant. (Ref. Supp. Decl. ¶ 5.) The Referee notes that Defendants have not provided evidence to the contrary. (Ibid.) The Court agrees. This is a critical evidentiary shortcoming which renders these costs disallowable.
The Referee asserts that the refereeship cannot reimburse Defendants for business taxes paid by Defendants with respect to the Corbin Square property because the refereeship does not include that Property. The Court disagrees. The refereeship extends over 9436-9250 Corbin Avenue, Northridge, CA (Interlocutory Order, p. 2), which is known as Corbin Square (Compl. ¶ 11). Because the Refereeship covers Corbin Square, Defendants are entitled to $119.98, i.e., Plaintiffs’ 50% obligation for the tax payments. (See Ref. Supp. Decl. ¶ 7.)
Antoun’s claim is partially allowed in the amount of $119.98.
HACLA’s claim for $1,149 is accepted. GSP’s claim is rejected. MWA’s claim is partially allowed in the amount of $20,000. Antoun’s claim is partially allowed in the amount of $119.98.
The Court authorizes the Referee to disburse $1,149 to HACLA and $119.98 to Antoun.
DISCUSSION RE: APPROVAL OF INTERIM FEES
The Referee moves for an order (1) resolving a fee dispute between the Referee and Defendants and (2) approving interim fees of the Referee and his counsel through February 28, 2019.
On April 24, 2019, the Referee and his counsel entered into an agreement (“Agreement”) with Defendants for payment of outstanding fees and costs to Referee and his counsel through February 28, 2019. (Ref. Decl. ¶ 3, Ex. 1.) Pursuant to the Agreement, the Referee received $62,846.58 in lieu of his demand for $73,937.15 and his counsel received $103,092.80 in lieu of its demand for $121,285.65. (Ref. Decl. Ex. 1.) In exchange, Defendants agreed to forego their right to seek Court approval of these payments. (Ibid.) The Agreement warns in pertinent part: “The undersigned represent, warrant and agree that in executing this Agreement they do so with full knowledge of any and all rights which they may have with respect to the other party with regard to the facts involved and the controversies herein compromised with regard to their rights and asserted rights arising out of said facts. The undersigned states that they do not rely and have not relied on any representation or statement by any party or by any of his or her officers, attorneys, agents or representatives with regard to their rights or asserted rights, and in connection therewith hereby assume the risk of mistake of fact or law in connection with the true facts involved in said controversies or with regard to any facts which are now unknown relating thereto.” (Ibid.)
After the close of escrow, the Referee and his counsel discovered that they had made mathematical errors that resulted in an underpayment of fees in the aggregate amount of $39,098.51, with $25,221.29 owed to the Referee and $13,877.22 owed to his counsel. (Ref. Decl. ¶ 4.) The errors occurred because certain bills had not been inputted into the Receiver’s accounting system as “unpaid.” (Ref. Decl. ¶ 5.)
The Referee requests that the Court cure this error and approve an additional payment of $39,098.51 to the Referee and his counsel.
Defendants respond that the Court cannot cure this error because the parties expressly assumed the risk of a mistake of fact. Unfortunately, the Court must agree.
A party claiming a unilateral mistake of fact must establish that (1) the claimant made a mistake regarding a basic assumption upon which the claimant made the contract; (2) the mistake has a material effect upon the agreed exchange of performances that is adverse to the claimant; (3) the claimant does not bear the risk of the mistake; and (4) the effect of the mistake is such that enforcement of the contract would be unconscionable. (Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 282.) Critically, “[a] contracting party bears the risk of a mistake when the agreement so provides or when the party is aware of having only limited knowledge of the facts relating to the mistake but treats this limited knowledge as sufficient.” (Grenall v. United of Omaha Life Ins. Co. (2008) 165 Cal.App.4th 188, 193 (citing Rest.2d Contracts, § 154).)
In the Agreement, the Referee and his counsel agreed to “assume the risk of mistake of fact or law in connection with the true facts involved in said controversies or with regard to any facts which are now unknown relating thereto.” (Ref. Decl. Ex. 1.) In so agreeing, the Referee and his counsel assumed the risk of a mistake in the Agreement as a matter of law. As a result, the Referee cannot rescind the Agreement on the basis of this calculation error, a unilateral mistake, and the Court must enforce the Agreement’s terms as they are set forth.
Under the terms of the Agreement, the Referee and his counsel are not entitled to this additional $39,098.51. Therefore, the Referee’s motion for an order approving these additional fees is DENIED.
 The Referee responds that this is a proceeding in equity so the Court’s discretion is therefore not “bound by any strict rules of procedure.” (Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 766.) However, contract law is not a procedural rule. Moreover, exercising equity in this fashion would completely undermine the purpose of contract law — “to enforce legally binding agreements between parties.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514; see also Ben-Zvi v. Edmar Co. (1995) 40 Cal.App.4th 468, 475 (“The purpose of the law of contracts is to protect the reasonable expectations of the parties.”).) For this reason, discarding Defendants’ contractual expectations creates its own equity concerns.
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