Pending - Other Pending
Contract - Other Contract
RAFAEL A. ONGKEKO
MICHAEL L. STERN
DOES 1 TO 20
FORSHPAN CAPITAL LLC
FORSHPAN CAPITAL LLC
MOJAVE SQUARE LLC
VICTORVILLE-LUNA PROPERTIES LLC
STALWART LAW GROUP
DECLERCQ WILLIAM B
DECLERCQ WILLIAM BENJAMIN
MCCOLLUM MICHAEL B.
3/6/2018: NOTICE OF RULING
8/1/2018: REQUEST FOR REFUND
1/10/2019: Substitution of Attorney
2/13/2019: Notice of Change of Address or Other Contact Information
2/13/2019: Proof of Service by Mail
2/13/2019: Proof of Service by Mail
3/14/2019: Stipulation and Order
3/15/2019: Ex Parte Application
3/15/2019: Minute Order
DocketOpposition (PLAINTIFF GARY HOFFMAN?S OPPOSITION TO DEFENDANT FORSHPAN CAPITAL, LLC?S MOTION IN LIMINE NO. 3 TO PRECLUDE PLAINTIFF FROM PRESENTING EVIDENCE RELATING TO CLAIMS REGARDING OTHER INVESTMENT PROPERTIES, LAWSUITS, AND/OR UNPROVEN ALLEGATIONS NOT INCLUDED IN); Filed by Gary Hoffman (Plaintiff)[+] Read More [-] Read Less
DocketOpposition (PLAINTIFF GARY HOFFMAN?S OPPOSITION TO DEFENDANT FORSHPAN CAPITAL, LLC?S MOTION IN LIMINE NO. 1 TO EXCLUDE EVIDENCE OF ALLEGED ?BAD ACTS? AND CLAIMS BARRED BY THE STATUTE OF LIMITATIONS); Filed by Gary Hoffman (Plaintiff)[+] Read More [-] Read Less
DocketOpposition (PLAINTIFF GARY HOFFMAN?S OPPOSITION TO DEFENDANT FORSHPAN CAPITAL, LLC?S MOTION IN LIMINE NO. 2 TO PRECLUDE PLAINTIFF FROM OFFERING EVDIENCE OF DAMAGES AND/OR VALUE OF PROPERTY); Filed by Gary Hoffman (Plaintiff)[+] Read More [-] Read Less
DocketRequest for Judicial Notice; Filed by Gary Hoffman (Plaintiff)[+] Read More [-] Read Less
DocketDeclaration (OMNIBUS DECLARATION OF GARY HOFFMAN IN SUPPORT OF OPPOSITIONS TO MOTIONS IN LIMINE NOS. 1, 2, AND 3 BY DEFENDANT FORSHPAN CAPITAL, LLC); Filed by Gary Hoffman (Plaintiff)[+] Read More [-] Read Less
DocketDeclaration (OMNIBUS DECLARATION OF ROWENNAKETE P. BARNES IN SUPPORT OF OPPOSITIONS TO MOTIONS IN LIMINE NOS. 1, 2, AND 3 BY DEFENDANT FORSHPAN CAPITAL, LLC); Filed by Gary Hoffman (Plaintiff)[+] Read More [-] Read Less
DocketMotion in Limine (NO. 2 BY FORSHPAN CAPITAL, LLC TO PRECLUDE PLAINTIFF FROM OFFERING EVIDENCE OF DAMAGES AND/OR VALUE OF PROPERTY); Filed by Forshpan Capital, LLC (Defendant)[+] Read More [-] Read Less
DocketMotion in Limine (NO. 3 TO PRECLUDE PLAINTIFF FROM PRESENTING EVIDENCE RELATING TO CLAIMS REGARDING OTHER INVESTMENT PROPERTIES, LAWSUITS, AND/OR UNPROVEN ALLEGATIONS NOT INCLUDED IN THE THIRD AMENDED COMPLAINT; and DECLARATION OF WILLIAM B DECLERCQ); Filed by Forshpan Capital, LLC (Defendant)[+] Read More [-] Read Less
DocketDeclaration (OF WILLIAM B. DECLERCQ ESQ IN SUPPORT OF MOTION IN LIMINE NO 1); Filed by Forshpan Capital, LLC (Defendant)[+] Read More [-] Read Less
DocketMotion in Limine (No 1 to Exclude Evidence of Alleged "Bad Acts" and Claims Barred by the Statute of Limitations); Filed by Forshpan Capital, LLC (Defendant)[+] Read More [-] Read Less
DocketMinute order entered: 2017-11-14 00:00:00; Filed by Clerk[+] Read More [-] Read Less
DocketNotice of Case Management Conference; Filed by Clerk[+] Read More [-] Read Less
DocketOSC-Failure to File Proof of Serv; Filed by Clerk[+] Read More [-] Read Less
DocketNOTICE OF CASE MANAGEMENT CONFERENCE[+] Read More [-] Read Less
DocketORDER TO SHOW CAUSE HEARING[+] Read More [-] Read Less
DocketNotice of Related Case; Filed by GARY HOFFMAN (Plaintiff)[+] Read More [-] Read Less
DocketCOMPLAINT FOR: 1. BREACH OF CONTRACT; ETC[+] Read More [-] Read Less
DocketSUMMONS[+] Read More [-] Read Less
DocketNotice of Related Cases[+] Read More [-] Read Less
DocketComplaint; Filed by GARY HOFFMAN (Plaintiff)[+] Read More [-] Read Less
Case Number: ****0434 Hearing Date: December 07, 2020 Dept: 73
Rafael Ongkeko, Judge presiding
GARY HOFFMAN, et al. v. FORSHPAN CAPITAL LLC, et al. (****0434, r/t BC642674,lead case; currently stayed pending arbitration)
Counsel for Plaintiff Hoffman/opposing party: Ethan Brown, Rowennakete Barnes (Brown Neri Smith & Khan)
Counsel for Defendant Forshpan Capital/moving party: William DeClercq (Taylor English Duma, LLP)
Other counsel: Omitted.
MOTION TO TRIFURCATE TRIAL (filed 8/7/2019)
The motion is denied. The case will be re-set for trial.
Relevant Procedural History
The related cases (Hoffman- ****0434, and Smith; BC642674) pertain to similar claims against the same two Defendants, Forshpan Capital LLC, and its sole member, Morton (Morty) Forshpan.
All Plaintiffs are investors who entered an agreement with Defendants to invest into an entity (or entities) to purchase and develop vacant commercial property located in Victorville, California. Specifically:
In 2004 Gary Hoffman (Plaintiff in ****0434) invested $300,000 into Victorville Luna LLC to purchase property located at the intersection of Luna and Highway 395.
In 2005 Steven Smith, Oscar George, Robert Margolis, and Tirso George Jr. (Plaintiffs in the lead case BC642674) and Hoffman (Plaintiff in ****0434) entered into agreements with Defendants to invest money into Mojave Square LLC to purchase property located on the corner of Mojave Drive and Amethyst Road. Hoffman invested $200,000. Smith, George, Margolis, and George Jr. invested $600,000.
Both operating agreements designated Forshpan Capital as the Operating Manager responsible for managing the respective property, including the payment of property taxes.
All Plaintiffs expected to receive a return of the investment either as rents received from leases or from flipping the property after its value increased. However, Plaintiffs did not because:
(Applicable only to Hoffman) In 2014, Forshpan Capital sold one acre of the Victorville-Luna Property to pay for past taxes due. Forshpan allegedly promised Hoffman that $150,000 of the sale would be reserved to pay for future tax obligations. In September 2017 Hoffman allegedly first learned that Forshpan had not reserved the $150,000 for tax obligations and the property was in default. The Victorville-Luna property is still owned by Victorville-Luna LLC, but the property is not developed and remains vacant/unused.
(Applicable to both cases) In June 2015 Forshpan contacted the Mojave Square LLC members (i.e., Plaintiffs in both related actions), stating that $130,000 in delinquent taxes were due in nine months. The investors rejected the cash call. Per the terms of the agreement, Forshpan Capital was obligated to provide the necessary funds. However, Forshpan did not. In May 2016 the real property was sold at a tax sale for a fraction of its fair market value. The tax sale netted a small surplus ($54,600), which Forshpan allegedly took for himself.
The Smith Lawsuit BC642674
On December 2, 2016 Steven Smith, Oscar George, Robert Margolis, and Tirso George Jr. filed a complaint against Defendants for claims arising from their Mojave Square investment:
C/A 1: Against all Defendants for Breach of Contract (Mojave Square)
C/A 2: Against all Defendants for Breach of Fiduciary Duty (Mojave Square)
C/A 3: Against all Defendants for Negligence (Mojave Square)
C/A 4: Against all Defendants for Accounting (Mojave Square)
On January 5, 2018 the court granted Forshpan Defendants’ petition to compel arbitration filed in the Smith action and stayed litigation pending arbitration. A post-arbitration status conference is on calendar for 5/6/21.
The Hoffman Lawsuit (****0434)
On October 19, 2017 Gary Hoffman, on behalf of himself and as trustee of the Hoffman Family Trust of 1988, filed a complaint against Defendants for claims arising from both his Mojave Square and Victorville Luna investments. The case was assigned to Department 62. On February 27, 2018, the court (Dept. 62; Judge Stern) denied Defendants’ petition to compel arbitration because “[t]here is no arbitration agreement.”
On September 4, 2018 Hoffman filed the operative Third Amended Complaint for:
C/A 1: Derivatively Against Forshpan Capital for Breach of Contract (Victorville Luna)
C/A 2: Derivatively Against Forshpan Capital for Breach of Fiduciary Duty (Victorville Luna)
C/A 3: Derivatively Against Forshpan Capital for Breach of Fiduciary Duty (Mojave Square)
C/A 4: Derivatively Against Forshpan Capital for Accounting (Victorville Luna)
C/A 5: Against all Defendants for Accounting (Mojave Square)
On October 19, 2018 Forshpan Capital filed a cross-complaint against Victorville Luna Properties LLC, Mojave Square LLC, and Gary Hoffman for:
C/A 1: Against Victorville Luna Properties LLC for Indemnity
C/A 2: Against Mojave Square LLC for Indemnity
C/A 3: Against Hoffman Declaratory Relief (Victorville Luna)
C/A 4: Against Hoffman for Declaratory Relief (Mojave Square)
On August 23, 2019 the cases were related and assigned to Department 73.
On November 7, 2019 (1) Hoffman filed a motion to stay proceedings only as to the Mojave Square-based claims; and (2) Forshpan Capital filed a motion to sever the Mojave Square-based claims from the Victorville Luna-based claims. On December 4, 2019 the court ruled on those motions as follows:
Plaintiff Hoffman’s motion to stay is GRANTED as to his Mojave Square-related claims.
Defendant Forshpan Capital’s motion to sever is GRANTED IN PART. The motion is granted
only as to severing the Victorville Luna-based claims from the Mojave Square-based claims.
In short, the parties are continuing to litigate the instant Hoffman lawsuit, but only as it pertains to the Victorville Luna claims.
Pending Motion to Trifurcate
On August 7, 2019 Forshpan filed a motion to trifurcate the trial, setting its affirmative defenses and declaratory relief claims in advance of Plaintiff’s claims. On August 16, 2019 Plaintiff filed an opposition. On August 21, 2019 Forshpan filed a reply. The initial hearing date of 8/29/19 was calendared in Dept. 62 but was not re-calendared after the case was transferred to this department on 8/23/19. The motion was re-calendared for this date when the parties brought the motion to the court’s attention on 11/6/20.
“When the answer pleads that the action is barred by the statute of limitations, the court may, either upon its own motion or upon the motion of any party, proceed to the trial of the special defense or defenses before the trial of any other issue in the case, and if the decision of the court, or the verdict of the jury.” (Cal. Civ. Proc. Code ; 597). Further, “[t] he court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of this state or of the United States.” (Cal. Civ. Proc. Code ; 1048(b)).
Forshpan argues that the court should: (1) first hold a separate bench trial on whether or not Hoffman’s action is barred by the statute of limitations (2) then hold a bench trial on Forshpan’s declaratory relief claim on whether or not Forshpan is entitled to express contractual indemnity and (3) if necessary, hold a jury trial on Hoffman’s remaining claims. As only the parties are only moving forward with the Victorville Luna claims at this time, the court’s ruling is limited to those claims.
Statute of Limitations
“Questions concerning whether an action is barred by the applicable statute of limitations are typically questions of fact. But when ‘the relevant facts are not in dispute, the application of the statute of limitations may be decided as a matter of law.’” (Sahadi v. Scheaffer (2007) 155 Cal.App.4th 704, 713-714).
Forshpan argues that the applicable statute of limitations for a breach of fiduciary duty must be brought within three years and may be extended to four years if the breach is nonfraudulent. It argues that the misconduct Plaintiff alleges all occurred before October 2010. Hoffman did not file this action until October 2017. Accordingly, Forshpan argues that the court’s ruling on the issue of the statute of limitations could bar all of Plaintiff’s claim such that a trial on the merits would be unnecessary.
Hoffman raises post-2014 misconduct. Hoffman alleges that Forshpan took funds in 2014 and caused the Victorville-Luna Properties to incur tax penalties after October 2013, which Hoffman argues falls within the four-year statute of limitations.
Forshpan replies that Hoffman concedes that all misconduct before the applicable statute of limitations should be excluded at trial. If not, a trial on the statute of limitations should proceed first.
The court finds that there are questions of fact regarding when each “harm” occurred for purposes of determining the statute of limitations. There are various doctrines relating to when the statute of limitations begins to accrue—e.g., continuous accrual, continuing violation, delayed discovery—that all require a determination of (1) all of the harms that occurred (2) when those harms occurred and (3) when the statute of limitations began accruing for each harm (or all of the harm combined together as one continuing violation). Even if pre-October 2013 misconduct is outside of the statute of limitations (for which Hoffman would not be able to recover damages), that does not mean that misconduct is not admissible or relevant in establishing circumstantial evidence of fraud/breach/etc. for the post-October 2013 conduct. Further, a trier of fact must also determine the nature of each harm (fraud-based harm for which the 3-year statute of limitation applies or contract-based harm for which the 4-year statute of limitation applies). Because the questions of what/when/and the nature of each “harm” are necessary for the determination of Forshpan’s statute of limitation affirmative defenses, and because these overlap with the crux of the evidence that Hoffman must present for Hoffman’s case-in-chief (i.e., breach), the court does not find efficiency would be promoted with a bench trial on the issue of the statute of limitations first. It would require the parties to present, the witnesses to appear, and the court/trier of fact to hear the same substantive evidence twice. Having a separate trial on this issue does not promote judicial economy or efficiency. Should further developments arise, the court can always revisit this issue.
Forshpan argues that the operating agreement contains an indemnification clause, which can be tried by the court in advance of a jury trial. According to Forshpan, whether or not the indemnification clause applies is a question of pure contractual interpretation that the court can easily decide. The court’s doing so may make Plaintiff’s claims moot as against Forshpan.
Plaintiff argues that the court must first determine if Forshpan met its fiduciary duties. The indemnification clause in the Victorville Luna operating agreement states, in relevant part:
“SECTION 5.7. Any persons made or threatened to be made a party to an action or proceeding whether civil or criminal, by reason of the fact that he…then, is, or was a manager, Member, employee or agent of the Company….shall be indemnified by the Company against reasonable expenses, judgments, fines and amounts actually and necessarily incurred in connection with the defense of such action or proceeding or in connection with an appeal therein, to the fullest extent permissible by the Act. Such right to indemnification shall not be deemed exclusive of any other rights to which such person may be entitled.”
(Third Amended Complaint, Ex. A, Section 5.7; emphasis added.)
Accordingly, the operating agreement requires that a member be indemnified “to the fullest extent permissible by the Act.” (Id.) Under Corp. Code ; 17704.08(a) (in the LLC Act), indemnification is only allowed if “the member or manager complied with the duties stated in Section 17704.09” which are fiduciary duties.
Further, Plaintiff argues that although Forshpan calls its claims “equitable,” it is based on an express contractual indemnification (the indemnification is express and not implied by law). Accordingly, it is a legal claim in which a jury should decide—not the court sitting in equity in a bench trial.
The court agrees with Plaintiff. Whether or not Forshpan fulfilled its fiduciary duties and/or whether or not Forshpan is entitled to enforce the indemnification clause (e.g., by materially breaching the agreement, Forshpan may not be entitled to enforce performance) goes to the substantive merits of Hoffman’s claims. These are factual questions that must be answered first by a trier of fact before a trier of fact can decide the applicability of the indemnification clause. Because the case does not involve a pure question of contractual interpretation as Forshpan contends, the motion is denied.
 On March 15, 2018 Hoffman filed a First Amended Complaint. The FAC alleges: C/A 1: Breach of Contract (Victorville Luna), C/A 2: Breach of Fiduciary Duty (Victorville Luna), C/A 3: Negligence (Victorville Luna), C/A 4: Breach of Contract (Mojave Square), C/A 5: Breach of Fiduciary Duty (Mojave Square), C/A 6: Negligence (Mojave Square), C/A 7: Accounting (Victorville Luna), C/A 8: Accounting (Mojave Square).
On May 31, 2018 Hoffman filed a Second Amended Complaint, suing derivatively on behalf of Victorville Luna Properties LLC and Mojave Square LLC. The SAC alleges: C/A 1: Breach of Contract (Victorville Luna), C/A 2: Breach of Fiduciary Duty (Victorville Luna), C/A 3: Negligence (Victorville Luna), C/A 4: Breach of Contract (Mojave Square), C/A 5: Breach of Fiduciary Duty (Mojave Square), C/A 6: Negligence (Mojave Square), C/A 7: Accounting (Victorville Luna), C/A 8: Accounting (Mojave Square), C/A 9: Conversion (Victorville Luna), C/A 10: Conversion (Mojave Square), C/A 11: Conversion (Victorville Luna), C/A 12: Conversion (Mojave).
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