This case was last updated from Los Angeles County Superior Courts on 06/27/2019 at 07:02:32 (UTC).

BROADWAY SPRING CENTER VS CRA/LA ET AL

Case Summary

On 02/23/2018 BROADWAY SPRING CENTER filed an Other - Writ Of Mandamus lawsuit against CRA/LA. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is JAMES C. CHALFANT. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****2653

  • Filing Date:

    02/23/2018

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other - Writ Of Mandamus

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

JAMES C. CHALFANT

 

Party Details

Plaintiff and Petitioner

BROADWAY SPRING CENTER

Respondents and Defendants

MCCOY BARRON IN HIS AOFFICIAL CAPACITY A

CRA/LA

DOES 1 TO 50

VALENZUELA ESTEVAN IN HIS OFFICIAL

KAHN DANIEL IN HIS OFFICIAL CAPACITY AS

VALENZUELA ESTEVAN

MCCOY BARRON

SLJ SPRING STREET LLC A DELAWARE LIMITED LIABILITY COMPANY

FRADIN MICHAEL

KAHN DANIEL

Attorney/Law Firm Details

Plaintiff and Petitioner Attorney

COLANTUONO MICHAEL G.

Respondent and Defendant Attorney

DALTON DOLORES BASTIAN ESQ.

 

Court Documents

PEREMPTORY CHALLENGE TO JUDICAIL OFFICER

4/30/2018: PEREMPTORY CHALLENGE TO JUDICAIL OFFICER

PROOF OF SERVICE SUMMONS

5/3/2018: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

5/3/2018: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

5/3/2018: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

5/3/2018: PROOF OF SERVICE SUMMONS

NOTICE OF TRIAL SETTING CONFERENCE

5/8/2018: NOTICE OF TRIAL SETTING CONFERENCE

PROOF OF SERVICE OF NOTICE OF ACKNOWLEDGMENT OF RECEIPT

5/11/2018: PROOF OF SERVICE OF NOTICE OF ACKNOWLEDGMENT OF RECEIPT

AMENDED-VERIFIED PETITION FOR WRIT OF MANDATE AND DECLARATORY RELIEF FOR VIOLATIONS OF THE RALPH M. BROWN ACT (CALIFORNIA GOVERNMENT CODE 54957) WITH EXHIBITS

5/21/2018: AMENDED-VERIFIED PETITION FOR WRIT OF MANDATE AND DECLARATORY RELIEF FOR VIOLATIONS OF THE RALPH M. BROWN ACT (CALIFORNIA GOVERNMENT CODE 54957) WITH EXHIBITS

STIPULATION AND ORDER EXTENDING RESPONSE DEADLINE AND CONTINUING TRIAL SETTING CONFERENCE

5/21/2018: STIPULATION AND ORDER EXTENDING RESPONSE DEADLINE AND CONTINUING TRIAL SETTING CONFERENCE

NOTICE OF ENTRY OF ORDER EXTENDING RESPONSE DEADLINE AND CONTINUING TRIAL SETTING CONFERENCE

5/29/2018: NOTICE OF ENTRY OF ORDER EXTENDING RESPONSE DEADLINE AND CONTINUING TRIAL SETTING CONFERENCE

DECLARATION OF DEMURRING PARTY IN SUPPORT OF AUTOMATIC EXTENSION

6/18/2018: DECLARATION OF DEMURRING PARTY IN SUPPORT OF AUTOMATIC EXTENSION

DECLARATION OF DEMURRING PARTY IN SUPPORT OF AUTOMATIC EXTENSION

6/18/2018: DECLARATION OF DEMURRING PARTY IN SUPPORT OF AUTOMATIC EXTENSION

Minute Order

7/18/2018: Minute Order

FIRST AMENDED VERIFIED PETITION FOR WRIT OF MANDATE ANT) COMPLAINT FOR DAMAGES AND RELATED DECLARATORY AND INJUNCTIVE RELIEP L WRIT OF MANDATE FOR VIOLATION OF ILKALIH AND SAFETY CODE SECTIONS 34177,

7/30/2018: FIRST AMENDED VERIFIED PETITION FOR WRIT OF MANDATE ANT) COMPLAINT FOR DAMAGES AND RELATED DECLARATORY AND INJUNCTIVE RELIEP L WRIT OF MANDATE FOR VIOLATION OF ILKALIH AND SAFETY CODE SECTIONS 34177,

AMENDED SUMMONS

8/1/2018: AMENDED SUMMONS

AMENDED SUMMONS

8/1/2018: AMENDED SUMMONS

PROOF OF SERVICE SUMMONS

8/6/2018: PROOF OF SERVICE SUMMONS

NOTICE OF ACTION (LIS PENDENS)

8/10/2018: NOTICE OF ACTION (LIS PENDENS)

60 More Documents Available

 

Docket Entries

  • 05/30/2019
  • Request for Refund / Order; Filed by Broadway Spring Center (Plaintiff)

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  • 04/22/2019
  • Petition for Writ of Mandate (Third); Filed by Broadway Spring Center (Plaintiff)

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  • 04/22/2019
  • Third Amended Verified Petition for Writ of Mandate and Complaint for Damages and Related Declaratory and Injunctive Relief; Filed by Broadway Spring Center (Plaintiff)

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  • 04/22/2019
  • Motion re: (to Amend); Filed by Broadway Spring Center (Plaintiff)

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  • 04/08/2019
  • Order (Proposed Order); Filed by Broadway Spring Center (Plaintiff)

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  • 04/08/2019
  • Stipulation and Order (Stipulation for Electronic Service); Filed by Broadway Spring Center (Plaintiff)

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  • 04/04/2019
  • at 09:30 AM in Department 86; Ruling on Submitted Matter

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  • 04/04/2019
  • Certificate of Mailing for (Minute Order (Ruling on Submitted Matter- Hearing on Demurrer; Hearing on M...) of 04/04/2019); Filed by Clerk

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  • 04/04/2019
  • Minute Order ( (Ruling on Submitted Matter- Hearing on Demurrer; Hearing on M...)); Filed by Clerk

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  • 03/27/2019
  • at 09:30 AM in Department 86; Trial Setting Conference - Held - Continued

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104 More Docket Entries
  • 05/01/2018
  • Notice of Trial Setting Conference and Attached Orders Thereon; Filed by Clerk

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  • 05/01/2018
  • NOTICE OF TRIAL SETTING CONFERENCE & ATTACHED ORDERS THEREON

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  • 04/30/2018
  • PEREMPTORY CHALLENGE TO JUDICAIL OFFICER

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  • 04/30/2018
  • Challenge To Judicial Officer - Peremptory (170.6); Filed by CRA/LA (Defendant)

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  • 03/02/2018
  • Notice of Trial Setting Conference and Attached Orders Thereon; Filed by Clerk

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  • 03/02/2018
  • NOTICE OF TRIAL SETTING CONFERENCE & ATTACHED ORDERS THEREON

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  • 03/02/2018
  • Notice of Trial Setting Conference and Attached Orders Thereon; Filed by Clerk

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  • 02/23/2018
  • VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR DAMAGES AND RELATED INJUNCTIVE RELIEF 1. WRIT OF MANDATE FOR VIOLATION OF HEALTH AND SAFETY CODE SECTIONS 34177, 34191.3, 34191.4, AND 34191.5; ETC

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  • 02/23/2018
  • SUMMONS

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  • 02/23/2018
  • Petition; Filed by null

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Tentative Rulings

b'

Case Number: BS172653 Hearing Date: September 8, 2021 Dept: 86

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BROADWAY\r\nSPRING CENTER v. CRA/LA

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Case Number: BS172653

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Hearing Date: September 8, 2021

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[Tentative] ORDER CONTINUING MOTION TO COMPEL\r\nCOMPLIANCE AND SANCTIONS

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Defendant and Real Party in Interest, SLJ Spring Street, LLC (SLJ),\r\nmoves for a court order compelling Petitioner, Broadway Spring Center\r\n(Broadway), to comply with its statements of compliance made as part of its discovery\r\nresponses. SLJ also request attorney’s fees against Broadway and its counsel of\r\nrecord in the amount of $21,500.[1]\r\n

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Broadway filed an opposition. Broadway also requests monetary sanctions\r\nof $12,000.

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While the court is inclined to grant the motion, the motion is briefly\r\ncontinued. The request for sanctions is also continued. The court requires additional\r\ninformation—further explanation—from Broadway to rule on this motion.

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SLJ’s objection to Broadway’s evidence is sustained on foundation grounds.\r\n

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ALLEGATIONS\r\nIN THE FIFTH AMENDED PETITION (5-AP)

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Broadway’s petition seeks to unwind the sale of certain public\r\nassets by Respondent, CRA/LA, to Real Party in Interest, Michael Fradin,\r\nTrustee of the 2008 Schlesinger Children Trust. \r\n

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In 1986, the former redevelopment agency for the City of Los\r\nAngeles agreed to lease to Broadway real property located at 313-325, 333,\r\n341-343 Spring Street, 210-214 W. Third Avenue, and 332, 336 and 340 S.\r\nBroadway in Los Angeles (the Property) for the purpose of building and\r\noperating a parking garage. Thereafter, Broadway executed a note (Note) in\r\nfavor of the City’s former redevelopment agency to finance operating deficits\r\narising from the construction and operation of the parking structure.

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In 2011, the Legislature dissolved California’s redevelopment\r\nagencies, and mandated successor agencies, such as CRA/LA, dispose of the\r\nassets of the former redevelopment agencies. On November 27, 2013, CRA/LA\r\nsubmitted its long-range property management plan (LRPMP) addressing the\r\ndisposition and use of the real property of the former redevelopment agency for\r\napproval by the state’s department of finance. In its LRPMP, CRA/LA listed the\r\nProperty as Asset 172 and certain transferable development rights (TDRs) as\r\nAsset 527. Broadway alleges that CRA/LA\r\ndid not list the Note in its LRPMP. (5-AP ¶ 45.)

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On July 16, 2015, CRA/LA mailed a notice to Broadway advising it that\r\nCRA/LA intended to sell the Property, which it referenced as “343 S. Spring\r\nStreet, Los Angeles CA, CRA/LA Asset #172 and #527.” (5-AP ¶ 47.) The notice\r\nwas silent as to the Note. Broadway alleges had the notice informed it the Note\r\nwas for sale, Broadway would have bid on it because Broadway’s purchase of the\r\nNote would have reduced the exercise price of its option to buy the fee. (5-AP\r\n¶ 47.)

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On September 8, 2015, Broadway requested CRA/LA provide notice of\r\nCRA/LA’s efforts to market the Property including notice of when the Property\r\nmight be placed under contract. (5-AP ¶\r\n48.) Broadway alleges CRA/LA publicly marketed the Property and TDRs without\r\npublicly marketing the Note. (5-AP ¶¶ 50-53.) On September 7, 2017, CRA/LA sold\r\nthe Property, TDRs, and Note to Fradin. (5-AP ¶¶ 55-58.) CRA/LA’s Governing\r\nBoard approved the sale of the Property, TDRs, and Note for $1.8 million. (5-AP\r\n¶ 62.)

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On February 23, 2018, Broadway filed its petition and complaint.

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ANALYSIS

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SLJ moves for a court order compelling Broadway to comply with the\r\nstatements of compliance it made in response to SLJ’s Demands for Production of\r\nDocuments numbers 3 through 14.

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“If a party filing a response to a demand for inspection . . .\r\nthereafter fails to permit

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the inspection . . . in accordance with that party’s statement of\r\ncompliance, the

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demanding party may move for an order compelling compliance.”\r\n(Code Civ. Proc. § 2031.320, subd (a).)

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The Demands at issue are as follows:[2]\r\n

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 3:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe marketing of the FEE for sale.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 4:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe availability of the FEE for sale.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 5:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe transfer of the FEE.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 6:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe NOTE.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 7:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe marketing of the NOTE for sale.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 8:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe availability of the NOTE for sale.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 9:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe sale of the NOTE.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 10:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe interconnection or relationship between the FEE and the NOTE.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 11:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe July 16, 2015 notice Broadway Spring Center received from CRA/LA, as\r\nalleged in paragraph 47 of 5-AP.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 12:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe September 8, 2015 request Broadway Spring Center’s counsel made to CRA/LA,\r\nas alleged in paragraph 48 of 5-AP.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 13:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nthe Cushman & Wakefield opinion referenced in paragraph 50 of the 5-AP.

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DEMAND FOR PRODUCTION OF DOCUMENTS NO. 14:\r\nAll DOCUMENTS, including communications, concerning, discussing, or relating to\r\nany offers YOU made to purchase the FEE and/or NOTE.

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In response to each of the demands, Broadway incorporates certain\r\nboilerplate preliminary objections and then represents: Broadway “will produce\r\nany non-privileged documents responsive to this request as concerns the\r\ntransaction at issue in this case and that are within its possession, custody,\r\nor control after a reasonable search.”[3]

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SLJ contends notwithstanding Petitioner’s agreement to produce\r\ndocuments, Petitioner has not produced a single internal email, text message,\r\nletter, memorandum, analysis, note, or other communication internal to Broadway’s\r\noperations. SLJ advises Broadway has taken the position such internal documents\r\ndo not exist. (Motion 6:22.) SLJ argues Broadway’s position is “preposterous”\r\nand that “is inconceivable that no such records exist, especially considering\r\nthe alleged importance of this transaction to [Broadway], as evidenced by the\r\nferocity with which [Broadway] has pursued this litigation.” (Motion 6: 25, 12:23-25.)

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SLJ reports Broadway did produce 3,277 records (18,292 pages). Of\r\nthose documents, however, only 18 were email communications involving Broadway\r\npersonnel or its three general partners. (Motion 10:5-7.) Broadway did produced\r\na privilege log initially consisting of only three records and later increased\r\nthe number of documents on that log to seven. (Motion 10:23, 11:19.)

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Broadway provides no admissible evidence concerning the search it\r\nundertook—that is, the manner of the search—consistent with its discovery obligations.\r\n(The court sustained SLJ’s single evidentiary objection to Attorney Gershman’s\r\ndeclaration.) The court acknowledges the declarations of David Damus, Nathan\r\nRubin and Bruce Silberman. (Gershman Decl., Exs. 9-11.) Those declarations, however,\r\nprovide limited explanation about the search undertaken. While the declarants\r\nmay attest all responsive records have been produced, there is no explanation\r\nhow the employees of the general partners conducted the search.

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Broadway’s counsel represents he supervised a team of attorneys\r\nwho reviewed more than 20,300 documents. (Gershman Decl., ¶ 5.) Moreover, based\r\non conservative estimates, according to counsel, the document review (of the\r\nmore than 20,300 documents) took over 150 attorney hours and cost roughly\r\n$90,000 in fees. (Gershman Decl., ¶ 5.) Broadway thereafter produced over\r\n18,000 pages of records and provided a privilege log. (Gershman Decl., ¶ 6.) Broadway\r\nalso made a supplemental production and provided an updated privilege log. (Gershan\r\nDecl., ¶¶ 6, 13.) Thus, Broadway claims it already complied with its discovery responses\r\nthat Broadway would “produce any non-privileged documents responsive to this\r\nrequest as concerns the transaction at issue in this case and that are within\r\nits possession, custody, or control after a reasonable search.”

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Based on SLJ’s successful evidentiary objection, Petitioner has failed\r\nto show a diligent and good faith attempt to search and produce documents in\r\ncompliance with its discovery responses. The general partners declarations do\r\nnot fill that evidentiary gap.

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Further, while the court is not inclined to find noncompliance\r\nbased solely on SLJ’s belief or suspicion that more documents must exist, the\r\ncourt cannot find on this record Broadway has complied with its discovery obligations.\r\nAlthough Broadway suggests that the documents sought by SLJ are contained in\r\nthe privilege log, as noted by SLJ, there are only seven email communications in\r\nthe privilege log, and several of those post-date the sale of the Property and Note.\r\n(Gershman Decl., Ex. 20 [updated privilege log].)

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SLJ also contends that to the extent Broadway is withholding\r\nrecords under its “boilerplate” objections, Broadway should be compelled to\r\nproduce those documents.

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With respect to the discovery objections, it is unclear whether\r\nSLJ actually challenges the objections.[4]\r\nTo the extent it does, the court finds any challenge to the asserted objections\r\nis untimely. SLJ argues “[w]hile [Broadway] agreed to extend SLJ’s deadline to\r\nfile a motion to compel further responses to May 5, 2021 (Shadoff Decl. ¶ 15,\r\nEx. K at 2), that deadline is irrelevant to this Motion. See CCP § 2031.320\r\n(imposing no time limit, unlike CCP § 2031.310).” (Motion 12, fn. 8.) However,\r\nonly SLJ’s request that Broadway comply with its responses is governed\r\nby Code of Civil Procedure section 2031.320. As this motion was not filed until\r\nMay 13, 2021, any challenge to the boilerplate objections is a motion to compel\r\na further response and subject to Code of Civil Procedure section 2031.310. As\r\nsuch, the court is without authority to rule on the merits of these objections.\r\n(Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410.)

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Based on the foregoing, the court has no competent evidence before\r\nit to demonstrate Broadway has satisfied its discovery obligations by way of an\r\nappropriate search or other explanation for why no such communications would\r\nexist.[5]\r\nA fulsome declaration from an employee of Broadway (or its general partners) detailing\r\nthe efforts undertaken to search for documents may allow the court to conclude\r\nBroadway has, in fact, complied with its discovery obligations. The court, of\r\ncourse, is not limiting Broadway to what evidence it may produce. For example,\r\nif Broadway elected to provide an explanation for why such internal communications\r\ndo not exist, the court may have a more complete understanding of Broadway’s discovery\r\ncompliance.

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While the court cannot compel Broadway to produce documents it does\r\nnot have, the evidence submitted is insufficient for the court to conclude no other\r\ndocuments exist.

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CONCLUSION

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Based on the foregoing, the motion and request for sanctions are\r\ncontinued

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IT\r\nIS SO ORDERED.

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September 8, 2021 ________________________________

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Hon. Mitchell\r\nBeckloff

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Judge of the\r\nSuperior Court

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[1] The\r\nbasis for $21,500 as sanctions is unclear. Attorney Shadoff’s declaration\r\nindicates SLJ’s attorney’s fees approximate $6,875.

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[2]\r\nThe term “FEE” means the fee interest in the real property underlying the large\r\nparking structure and commercial building known as the Broadway Spring Center,\r\nlocated in downtown Los Angeles at 343 South Spring Street. The term “NOTE”\r\nmeans the Amended and Restated Promissory Note dated November 1, 2004 between Broadway\r\nSpring Center and CRA/LA.

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[3] Broadway\r\ndefined “the transaction at issue in this case” as “the sale of a note, fee\r\ninterest, and [development rights].” (Shadoff Decl., ¶ 7, Ex. D at 4.)

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[4]\r\nIn its moving papers, SLJ states: “To the extent that [Broadway] is relying on\r\nany of its objections to the Demands as limiting its broad statements of\r\ncompliance, those boilerplate objections are meritless and do not justify [Broadway’s]\r\nfailure to produce its responsive internal emails and other documents.” (Motion\r\n2:17-20.) However, in reply, SLJ argues the objections are irrelevant. (Reply\r\n8, fn. 3.)

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[5] In\r\na letter between counsel, Broadway advises SLJ the Note’s sale was “largely\r\nconducted in secret” such that it makes sense there would no internal\r\ncommunications about the Note’s sale. (Gershman Decl., Ex. 19.)

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Case Number: BS172653    Hearing Date: July 10, 2020    Dept: 86

[Tentative] ORDER SUSTAINING DEMURRER TO ELEVENTH CAUSE OF ACTION IN FIFTH AMENDED PETITION FOR WRIT OF MANDAMUS


Respondent, CRA/LA, demurrers to the eleventh cause of action in the Fifth Amended Petition (5AP) filed by Petitioner, Broadway Spring Center. Petitioner opposes the demurrer.

Respondent’s unopposed request for judicial notice (RJN) is granted.

The demurrer is sustained with/without leave to amend. (See below.)

STANDARD OF REVIEW

A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code Civil Proc. § section 430.30, subd. (a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “We assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law.” (California Logistics, Inc. v. State (2008) 161 Cal.App.4th 242, 247.)

A demurrer may be sustained without leave to amend when there is no reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan, supra, 39 Cal.3d at 318.) Indeed, where the facts are not in dispute and the nature of the plaintiff's claim is clear, but no liability exists under substantive law and no amendment would change the result, the sustaining of a demurrer without leave to amend is proper. (City of Ceres v. City of Modesto (1969) 274 Cal. App. 2d 545, 554.) The burden is on the plaintiff to show how the complaint might be amended so as to cure the defect. (Ass’n of Community Orgs. for Reform Now v. Dept. of Industrial Relations (1995) 41 Cal.App.4th 298, 302.)

ANALYSIS

This matter has been before the court on several occasions with challenges made to the pleadings. In this action, Petitioner seeks to set aside the sale of certain real property, transferrable development rights (TDRs) and a promissory note (Note).

Respondent is a successor agency to the former redevelopment agency for the City of Los Angeles. As part of its duties, Respondent is charged with disposing of assets of the city’s former redevelopment agency. The issue before the court in the first cause of action is whether Respondent properly compiled with its statutory duty when it sold certain real property, the TDRs and Note.

Eleventh Cause of Action:

The eleventh cause of action to the 5AP alleges, on September 7, 2017, Respondent’s Governing Board approved sale of the property, TDRs and Note. (5AP ¶ 62.) A week later, on September 14, 2017, Respondent’s Oversight Board approved the transaction by its Resolution No. OB17-14. (5AP ¶ 222.) Thereafter, employees of Respondent continued to negotiate the sale of the assets with the buyer resulting in an Amended and Restated Purchase and Sale Agreement (Amended Purchase Agreement). (5AP ¶ 222.) Respondent’s employee Valenzuela signed the Amended Purchase Agreement “purportedly for” Respondent. Neither Respondent’s Governing Board nor its Oversight Board reviewed or approved the Amended Purchase Agreement signed by Respondent’s employee. (5AP ¶ 222.)

In newly added allegations, Petitioner alleges:

The version of the Purchase and Sale Agreement presented to the Governing Board and Oversight Board contained a blank page with only the words:  Exhibit C- Assignment and Assumption of Lease and Exhibit D- Assignment and Assumption of ODL Promissory Note.  That version contained no terms whatsoever regarding the Assignment and Assumption of the Lease or the Assignment and Assumption of the ODL Promissory Note.  By contrast, the version of the [Amended Purchase Agreement] signed by [Respondent’s employee] on behalf of [Respondent] CRA/LA contained the specific terms of the assignments. These two versions differ materially.” (5AP ¶ 222 [emphasis added].)

Thus, the Petition alleges Respondent’s act of purportedly approving the Amended Purchase Agreement which materially differed from the purchase and sale agreement constituted an unlawful delegation. Petitioner contends so because Respondent’s Governing Board, Oversight Board as well as the Department of Finance were all required to approve the sale pursuant to Health and Safety Code section 34181, subdivision (f).

Based on these facts, Petitioner alleges it is entitled to relief pursuant to Code of Civil Procedure section 1085 based on an unconstitutional delegation of power in violation of Article III, section 3 of the California Constitution. Petitioner’s claim all turns on materiality. That is, Petitioner alleges the original approved purchase and sale agreement is materially different from the Amended Purchase Agreement executed by for Respondent by Respondent’s employee.

As previously noted by this court on the demurrer to the fourth amended petition (the first and only time this cause of action has been considered by the court), the Amended Purchase Agreement is identical to the purchase and sale agreement approved by the Oversight Board in all material terms; it lists identical property, sets the purchase price at $1,800,000 (RJN Ex. G at 211), describes the Note and its proposed transfer in the Recitals (RJN Ex. G at 212), provides identical definitions for "Allonge to ODL Promissory Note," "Assignment of the ODL Promissory Note," (RJN Ex. G at 212) and "ODL Promissory Note" (RJN Ex. G at 214), and describes the same escrow process with respect to the Note (RJN Ex. G at 221-222).

In the prior iteration of Petitioner’s claim, it alleged merely that the purchase and sale agreement was “different” than that approved by the Governing Board and Oversight Board. (Fourth Amended Petition [4AP] ¶ 222.) The court granted leave to amend to allow Petitioner to allege sufficient facts by which to conclude a material difference in the two agreements.

It is not entirely true, as argued by Respondent, “Petitioner simply repeated its claim that the approved Agreement did not include the text of the actual assignment.” (Reply 11:12-13.) Petitioner attached to the 5AP redlined versions of the two agreements allegedly “showing the material difference in the terms that were presented to the Governing and Oversight Boards.” (5AP ¶ 222.)

Despite Petitioner’s assertion materiality is a factual question for the jury, this court can determine as a matter of law when no material difference exists. For example, there appears to be no material difference between the purchase and sale agreement and the Amended Purchase Agreement. To be sure, there are differences, but those differences—at least as they have been presented to the court in the 5AP—are insignificant reflecting things like the correct name of the buyer, a deposit having already been given and an escrow agent’s agreement to serve. (5AP Ex. 4.)

Is it Petitioner’s position that materiality is established merely by the inclusion of the assignment documents?

Further, Petitioner concedes it is not alleging the Oversight Board delegated a “fundamental policy issue” to Respondent. (Opposition 16.) Petitioner also agrees it is not alleging a delegation of authority without ascertainable standards. Thus, it apparently recognizes it mounts no constitutional challenge here.

Instead, it seems Petitioner’s delegation argument turns on materiality. As previously determined, Health and Safety Code section 34179, subdivision (c) authorizes the Oversight Board to “direct the staff of the successor agency to perform work in furtherance of the oversight board’s and successor agency’s duties and responsibilities under this part.” The statute therefore dictates Respondent had the authority to delegate and did properly delegate finalization of the agreement.

Petitioner’s claim seems to Respondent’s “negotiation” and inclusion of the assignments in the Amended Purchase Agreement was not mere finalization. That issue, however, is about materiality.

The demurrer is sustained. The court notes while this is the 5AP, the court has only once before considered this cause of action.

Parties shall be prepared to argue whether leave to amend should be granted.

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