SHERREL INVESTMENT GROUP, LLC VS G.H. COOPER PROPERTIES

Tentative Rulings

Case Number: SC125434    Hearing Date: January 26, 2021    Dept: P

Tentative Ruling

Michael Singer et al. v. G.H. Cooper Properties, Inc. et al., Case No. SC125940; Sherrell Investment Group et. Al. v. G.H. Cooper Properties, Inc., Case No. SC125434 (related cases)

Hearing Date January 26, 2021

Defendant Todd Grayson’s Motions for Summary Judgment (UNOPPOSED)

A defendant is entitled to summary judgment if moving party shows “there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Cal. Code of Civ. Proc. §437c. If a party has already moved for summary judgment on an issue, that party may file a renewed motion based on “newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion.” Cal. Code of Civ. Proc. §437c(f)(2). Defendant Grayson previously moved for summary judgment on September 13, 2018 in case no. SC125940. That motion was denied. Grayson renews the motion due to newly discovered facts and documents.

Alter Ego

Alter ego liability exists when the party asserting it shows (1) a unity of interest and ownership between the entity and the individual such that corporate separateness never exists, (2) there would be an inequitable result if the alleged acts were treated as the entity’s alone. Sonora Diamond Corp. v. Super. Ct. (2000) 83 Cal.App.4th 523, 539. Courts generally refuse to impose alter ego liability in the absence of an ownership interest. E.g. Las Palmas Associates v. Las Palmas Center Associates (1992) 235 Cal.App.3d 1220, 1249. A “unity of interest” can be shown with factors including, but not limited to, inadequate capitalization and comingling of assets, the use of the same office and employees, failure to observe corporate formalities, and comingling of personal and corporate assets. Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft (1999) 69 Cal.App.4^th 223, 251.

In both cases, several of plaintiffs’ causes of action arise out of alleged violations of GHCP’s operating agreement and/or the trust agreement. See Sherrell complaint ¶¶68-74, 82-86, 95-100, 109-114, Singer complaint ¶¶81-88, 107-112, 89-106, 119-146. Neither party disputes that Grayson was not a party to either agreement. Therefore, his liability depends on plaintiffs’ theory that GHCP was his alter ego.

Grayson provides evidence that he never had an ownership interest in GHCP. Defendant’s separate statement Sherrell no. 2. Ownership is generally required before alter ego liability can be imposed. Additionally, defendant argues plaintiffs’ discovery responses and document production show GHCP was adequately capitalized and Grayson did not comingle his own funds with GHCP’s funds. Separate Statement Sherrell 5-20. This cuts against a finding of alter ego liability and is sufficient to shift the summary judgment burden to plaintiffs. Since plaintiffs do not oppose this motion, the motion is GRANTED.

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

Case Number: SC125434    Hearing Date: October 30, 2019    Dept: P

Los Angeles County Superior Court, West District, Department P

TENTATIVE RULING

Sherrel Investment Group, LLC. V. G.H. Cooper Properties, Inc. Case No.: SC125434

Plaintiffs’ Motion to Dissolve Stipulated Preliminary Injunction

Hearing Date: 10/30/2019

Plaintiffs were members of various LLCs; defendant GHCP was manager. Plaintiffs alleged GHCP improperly distributed the LLCs’ assets. Plaintiffs and GHCP stipulated to a preliminary injunction preventing distribution until the litigation concluded. The matter has resolved, and plaintiffs move to dissolve the injunction and distribute assets. Defendant Grayson, a former executive of the LLCs, opposes the dissolution, alleging he is entitled to payments from GHCP and the LLCs.

Under Cal. Code of Civ. Proc. §553, the court may “on notice modify or dissolve an injunction or temporary restraining order upon a showing that there has been a material change in the facts upon which the injunction or temporary restraining order was granted.” The parties’ settlement – approved by both this court and a bankruptcy court -- represents such a “material change in the facts.”

Grayson opposes the dissolution, arguing a distribution would hamper his ability to obtain indemnification from GHCP or recover payments he claims he is owed from the LLCs. Opposition at pgs. 12-13. Grayson was not a party to the stipulation that created the injunction, nor was the injunction issued to protect Grayson’s interest in the entities’ funds.

Grayson’s claims that he is owed payments are speculative and not at issue. He has not sued to enforce his entitlement to indemnity or payments, nor has he sought a preliminary injunction. It would be improper to allow him to “piggy back” on the existing injunction created by the other parties or to block its dissolution. Additionally, as the injunction was created by stipulation, it is reasonable and equitable that it be similarly dissolved by stipulation. GRANTED.