This case was last updated from Los Angeles County Superior Courts on 08/02/2022 at 11:46:06 (UTC).

RICHARD IRVIN VS BETTY F IRVIN ET AL

Case Summary

On 07/19/2017 RICHARD IRVIN filed a Contract - Other Contract lawsuit against BETTY F IRVIN. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are DAVID S. CUNNINGHAM III, RICHARD J. BURDGE JR., GAIL KILLEFER and ELIZABETH R. FEFFER. The case status is Pending - Other Pending.
Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9629

  • Filing Date:

    07/19/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

DAVID S. CUNNINGHAM III

RICHARD J. BURDGE JR.

GAIL KILLEFER

ELIZABETH R. FEFFER

 

Party Details

Plaintiff

IRVIN RICHARD

Defendants

KUMIVA GROUP LLC

IRVIN BETTY F.

IRVIN DIANE A.

Attorney/Law Firm Details

Plaintiff Attorney

RUSSO J. SCOTT

Defendant Attorney

CROWTHER ROBYN C. ESQ.

 

Court Documents

Jury Instructions

7/26/2022: Jury Instructions

Jury Instructions - JURY INSTRUCTIONS PROPOSED

7/26/2022: Jury Instructions - JURY INSTRUCTIONS PROPOSED

Jury Instructions - JURY INSTRUCTIONS JOINT

7/26/2022: Jury Instructions - JURY INSTRUCTIONS JOINT

Statement of the Case - STATEMENT OF THE CASE JOINT

7/26/2022: Statement of the Case - STATEMENT OF THE CASE JOINT

Witness List - WITNESS LIST JOINT

7/26/2022: Witness List - WITNESS LIST JOINT

Exhibit List - EXHIBIT LIST JOINT TRIAL EXHIBIT LIST

7/26/2022: Exhibit List - EXHIBIT LIST JOINT TRIAL EXHIBIT LIST

Request for Judicial Notice

7/18/2022: Request for Judicial Notice

Motion in Limine - MOTION IN LIMINE #1 TO EXCLUDE EVIDENCE, TESTIMONY AND/OR REFERENCE TO MONIES RECEIVED BY RICHARD IRVIN FROM THE SALE OF ATI SYSTEMS INTERNATIONAL, INC. TO GARDA

7/18/2022: Motion in Limine - MOTION IN LIMINE #1 TO EXCLUDE EVIDENCE, TESTIMONY AND/OR REFERENCE TO MONIES RECEIVED BY RICHARD IRVIN FROM THE SALE OF ATI SYSTEMS INTERNATIONAL, INC. TO GARDA

Motion in Limine - MOTION IN LIMINE #2 TO EXCLUDE THE INTRODUCTION OF EVIDENCE AND/OR TESTIMONY OR REFERENCE TO CLAIMS THAT ARE NO LONGER AN ISSUE IN THE INSTANT MATTER AND PARTIES THAT ARE NO LONGER

7/18/2022: Motion in Limine - MOTION IN LIMINE #2 TO EXCLUDE THE INTRODUCTION OF EVIDENCE AND/OR TESTIMONY OR REFERENCE TO CLAIMS THAT ARE NO LONGER AN ISSUE IN THE INSTANT MATTER AND PARTIES THAT ARE NO LONGER

Motion in Limine - MOTION IN LIMINE #9 TO EXCLUDE TESTIMONY FROM DIANE IRVIN THAT ROBERT IRVIN WOULD HAVE TOLD HER IF HE ENTERED INTO THE ORAL CONTRACT; DECLARATION OF J. SCOTT RUSSO IN COMPLIAN

7/19/2022: Motion in Limine - MOTION IN LIMINE #9 TO EXCLUDE TESTIMONY FROM DIANE IRVIN THAT ROBERT IRVIN WOULD HAVE TOLD HER IF HE ENTERED INTO THE ORAL CONTRACT; DECLARATION OF J. SCOTT RUSSO IN COMPLIAN

Motion in Limine - MOTION IN LIMINE #8 TO EXCLUDE TESTIMONY OF DIANE IRVIN THAT RICHARD IRVIN WAS PROVIDING LEGAL SERVICES; ; DECLARATION OF J. SCOTT RUSSO IN COMPLIANCE WITH LASC LOCAL RULE 3.5

7/19/2022: Motion in Limine - MOTION IN LIMINE #8 TO EXCLUDE TESTIMONY OF DIANE IRVIN THAT RICHARD IRVIN WAS PROVIDING LEGAL SERVICES; ; DECLARATION OF J. SCOTT RUSSO IN COMPLIANCE WITH LASC LOCAL RULE 3.5

Motion in Limine - MOTION IN LIMINE #7 TO EXCLUDE TESTIMONY FROM BETTY IRVIN REGARDING THE ORAL CONTRACT BETWEEN ROBERT IRVIN/KUMIVA AND RICHARD IRVIN; DECLARATION OF J. SCOTT RUSSO IN COMPLIANCE WITH

7/19/2022: Motion in Limine - MOTION IN LIMINE #7 TO EXCLUDE TESTIMONY FROM BETTY IRVIN REGARDING THE ORAL CONTRACT BETWEEN ROBERT IRVIN/KUMIVA AND RICHARD IRVIN; DECLARATION OF J. SCOTT RUSSO IN COMPLIANCE WITH

Request for Judicial Notice

7/19/2022: Request for Judicial Notice

Motion in Limine - MOTION IN LIMINE #6 TO EXCLUDE TESTIMONY BY DEFENDANTS EXPERT NEIL WERTLIEB ON THE APPLICATION OF THE LAW TO THE FACTS; DECLARATION OF J. SCOTT RUSSO IN COMPLIANCE WITH LASC

7/19/2022: Motion in Limine - MOTION IN LIMINE #6 TO EXCLUDE TESTIMONY BY DEFENDANTS EXPERT NEIL WERTLIEB ON THE APPLICATION OF THE LAW TO THE FACTS; DECLARATION OF J. SCOTT RUSSO IN COMPLIANCE WITH LASC

Request for Judicial Notice

7/19/2022: Request for Judicial Notice

Motion in Limine - MOTION IN LIMINE #3 TO EXCLUDE EVIDENCE, TESTIMONY AND/OR REFERENCE TO STATEMENTS MADE BY ROBERT IRVIN TO CHARLES WEISSMAN REFUSING TO PAY $3,000,000 TO PLAINTIFF; DECLARATION OF J.

7/19/2022: Motion in Limine - MOTION IN LIMINE #3 TO EXCLUDE EVIDENCE, TESTIMONY AND/OR REFERENCE TO STATEMENTS MADE BY ROBERT IRVIN TO CHARLES WEISSMAN REFUSING TO PAY $3,000,000 TO PLAINTIFF; DECLARATION OF J.

Motion in Limine - MOTION IN LIMINE #3 TO EXCLUDE EVIDENCE, TESTIMONY AND/OR REFERENCE TO ROBERT IRVINS FEBRUARY 1, 2013 HANDWRITTEN NOTE TO CHARLES WEISSMAN UNLESS INTRODUCED BY PLAINTIFF; DECLARATI

7/19/2022: Motion in Limine - MOTION IN LIMINE #3 TO EXCLUDE EVIDENCE, TESTIMONY AND/OR REFERENCE TO ROBERT IRVINS FEBRUARY 1, 2013 HANDWRITTEN NOTE TO CHARLES WEISSMAN UNLESS INTRODUCED BY PLAINTIFF; DECLARATI

Request for Judicial Notice

7/19/2022: Request for Judicial Notice

206 More Documents Available

 

Docket Entries

  • 08/09/2022
  • Hearing08/09/2022 at 10:00 AM in Department 37 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 08/02/2022
  • Hearing08/02/2022 at 08:30 AM in Department 37 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 07/26/2022
  • DocketJoint Jury Instructions; Filed by Richard Irvin (Plaintiff)

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  • 07/26/2022
  • DocketJury Instructions; Filed by Richard Irvin (Plaintiff)

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  • 07/26/2022
  • DocketProposed Jury Instructions; Filed by Kumiva Group, LLC (Defendant)

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  • 07/26/2022
  • DocketStatement of the Case (Joint); Filed by Richard Irvin (Plaintiff)

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  • 07/26/2022
  • DocketJoint Witness List; Filed by Richard Irvin (Plaintiff)

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  • 07/26/2022
  • DocketJoint Trial Exhibit List; Filed by Richard Irvin (Plaintiff)

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  • 07/19/2022
  • DocketRequest for Judicial Notice; Filed by Richard Irvin (Plaintiff)

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  • 07/19/2022
  • DocketMotion in Limine (#3 to Exclude Evidence, Testimony and/or Reference to Robert Irvin's February 01, 2013 Handwritten Note to Charles Weissman Unless Introduced by Plaintiff); Filed by Richard Irvin (Plaintiff)

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298 More Docket Entries
  • 10/17/2017
  • DocketProof of Service (not Summons and Complaint); Filed by Helene Irvine (Legacy Party)

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  • 10/06/2017
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 10/06/2017
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 09/26/2017
  • DocketAnswer; Filed by Betty F. Irvin (Defendant); Kumiva Group, LLC (Defendant)

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  • 09/26/2017
  • DocketDEFENDANTS' ANSWER TO COMPLAINT

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  • 08/31/2017
  • DocketNotice and Acknowledgment of Receipt; Filed by Richard Irvin (Plaintiff)

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  • 08/31/2017
  • DocketNOTICE OF ACKNOWLEDGEMENT OF RECEIPT - CIVIL

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  • 07/19/2017
  • DocketSUMMONS

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  • 07/19/2017
  • DocketComplaint; Filed by Richard Irvin (Plaintiff)

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  • 07/19/2017
  • DocketCOMPLAINT FOR: 1. BREACH OF CONTRACT; ETC

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Tentative Rulings

Case Number: ****9629 Hearing Date: September 28, 2022 Dept: 37

SUPERIOR COURT FOR THE STATE OF CALIFORNIA,

COUNTY OF LOS ANGELES, CENTRAL DISTRICT

Richard Irvin, an individual,

Plaintiff,

vs.

Kumiva Group, LLC,

Defendant.

Case No.: ****9629

Assigned to: Hon. Gail Killefer

[PROPOSED] JUDGMENT

Trial Date: August 22, 2022

Verdict Date: August 26, 2022

On August 22, 2022, trial in the above-referenced matter commenced with a jury of twelve (12) being empaneled. J. Scott Russo of Russo & Duckworth, LLP appeared on behalf of plaintiff Richard Irvin and Robyn Crowther and Alexander Avery of Steptoe & Johnson, LLP appeared on behalf of defendant Kumiva Group, LLC. The Honorable Gail Killefer presided over the trial.

Background:

Richard Irvin’s First Amended Complaint was filed on February 11, 2019. On March 2021, 2019, Richard Irvin dismissed his:

a. First Cause of Action for Breach of Fiduciary Duty as to defendants Betty F. Irvin as an individual; Betty F. Irvin as trustee of the R. and B. Irvin Living Trust dated March 1, 1990, as completely amended and restated on November 14, 1997, June 14, 2006, and June 28, 2013, and partially amended on December 21, 2014, and June 7, 2015 (hereafter “Living Trust”); and Betty F. Irvin as trustee of the Robert G. Irvin and Betty F. Irvin Revocable Community Property Trust (hereafter “Community Property Trust”); and

b. Second Cause of Action for Fraud as to the defendants Living Trust and Community Property Trust.

On April 15, 2019, the Court sustained Kumiva Group, LLC’s demurrer to Richard Irvin’s Fourth Cause of Action for Breach of Contract against defendants Kumiva Group, LLC, Betty F. Irvin, Trust, and Property Trust.

Richard Irvin’s operative complaint was his Amended Second Amended Complaint, filed on April 23, 2019, and amended on November 8, 2021. On December 19, 2019, Richard Irvin dismissed his:

a. First Cause of Action for Breach of Fiduciary Duty as to defendant Diane Irvin; and

b. Second Cause of Action for Fraud as to defendant Diane Irvin.

On December 27, 2019, the Court issued its interim order granting summary adjudication in favor of defendants on:

a. Richard Irvin’s First Cause of Action (Breach of Fiduciary Duty) against defendant Kumiva Group, LLC;

b. Second Cause Action (Fraud) against defendant Kumiva Group, LLC;

c. Fourth Cause of Action (Breach of Contract) against defendant Betty F. Irvin;

d. Fifth Cause of Action (Breach of Contract) against defendant Kumiva Group, LLC;

e. Sixth Cause of Action (Conversion) against defendants Kumiva Group, LLC and Diane Irvin;

f. Seventh Cause of Action (Declaratory Relief) against defendant Kumiva Group, LLC; and

g. Eighth Cause of Action (Goods and Services Rendered) against defendant Betty F. Irvin.

On July 11, 2022, the Court issued its interim order granting summary adjudication on issues pertinent to Richard Irvin’s Third Cause of Action (Accounting) against defendant Kumiva Group, LLC. Richard Irvin conceded that there were no additional accounting issues for trial. Richard Irvin’s Fourth Cause of Action (Breach of Contract) and Eighth Cause of Action (Goods and Services Rendered) against defendant Kumiva Group, LLC were the causes of action that remained to be tried.

After the presentation of evidence and due deliberation, on August 26, 2022, the jury returned a general verdict in favor of Richard Irvin and against Kumiva Group, LLC and awarded damages to Richard Irvin in the amount of $2,084,589.00. The jury further found that Richard Irvin is entitled to pre-judgment interest.

Pre-judgment interest shall be at the rate of 7%, which is a daily rate of $399.78. Pre-judgment interest commenced on February 23, 2017. The number of days from the commencement of prejudgment interest until the verdict is 2,010 days, totaling $803,557.80.

Th principal and pre-judgment interest until the verdict totals $2,888,146.80. Pre-judgment interest shall continue until the entry of judgment.

In accordance with the jury’s findings and verdict, JUDGMENT IS HEREBY ENTERED AS FOLLOWS:

1. The summary adjudication orders of December 27, 2019, and July 11, 2022, adjudicating the First, Second, Third, Fourth, Fifth, Sixth, Seventh, and Eighth Causes of Action are final and incorporated into this Judgment;

2. Richard Irvin is the prevailing party as to Kumiva Group, LLC on his Fourth Cause of Action for Breach of Contract and Eighth Cause of Action for Goods and Services Rendered.

3. Judgment for the damages awarded and pre-judgment interest through the verdict in the amount of $2,890,545 in favor of Richard Irvin and against Kumiva Group, LLC;

4. Additional pre-judgment interest until entry of judgment in the amount of $ in favor of Richard Irvin and against Kumiva Group, LLC;

5. Diane Irvin is the prevailing party on the Sixth Cause of Action adjudicated by summary adjudication on December 27, 2019, and is awarded as and for costs of suit herein against Richard Irvin based on her Memorandum of Costs pursuant to CCP 1033.5.

6. Betty Irvin is the prevailing party on the Fourth and Eighth Causes of Action adjudicated in her favor by summary adjudication on December 27, 2019 and is awarded as and for costs of suit herein against Richard Irvin based on her Memorandum of Costs pursuant to CCP 1033.5.

7. Cost awards to be determined post-judgment, with interest to accrue on the Judgment at the rate of ten percent (10%) per annum from the date of the entry of the cost award until paid.

Dated: , 2022

Honorable Gail Killefer

Judge of the Superior Court



Case Number: ****9629 Hearing Date: July 8, 2022 Dept: 37

CASE NUMBER: ****9629

CASE NAME: Richard Irvin v. Betty F. Irvin, et al.

MOVING PARTY: Defendants, Betty F. Irvin, Kumiva Group, LLC and Diana A. Irvin

OPPOSING PARTY: Plaintiff, Richard Irvin

TRIAL DATE: August 9, 2022

PROOF OF SERVICE: OK

PROCEEDING: Defendants’ Motion for Summary Adjudication

OPPOSITION: June 29, 2022

REPLY: June 30, 2022

TENTATIVE: Defendants’ motion for summary adjudication is granted. Defendants are to give notice.

Background

This case arises in connection with the sale of the assets of ATI Systems International, Inc. (“ATI”) to Garda USA, Inc. (“Garda”). Plaintiff Richard Irvin alleges that he had a 12.02% of ATI while his parents Robert G. Irvin (“Robert Irvin”) and Defendant Betty F. Irvin (“Betty Irvin”) together owned 62.26% of ATI either jointly or through ATI Services, LLC (“ATI Services”), a company for which they were the 100% members. According to the FAC, the shareholders of ATI effectively sold all of the stock and assets of ATI to Garda on April 10, 2007. Under the terms of the Merger Agreement, certain assets were allegedly excluded from the sale, including all of ATI’s fee owned real estate, 51 properties, as well as ATI’s 18% interest in the corporation C Punch Ranch, Inc. (“CPRI”) (the “Excluded Assets”).[1] Defendant Diane A. Irvin (“Diane Irvin”) allegedly was a manager of Kumiva and an officer of CPRI and is also allegedly a primary successor beneficiary or the sole successor beneficiary of the Living Trust and/or Community Property Trust.

Plaintiff alleges that ATI Services changed its name to Kumiva Group, LLC (“Kumiva”) after the merger or sale and secretly deeded or transferred the Excluded Assets to Robert Irvin and Betty Irvin, to Kumiva, or to other entities owned by Kumiva, without properly accounting for the value of the Excluded Assets against Robert Irvin, Betty Irvin, and/or Kumiva’s share of the distribution to the former shareholders of ATI. Plaintiff alternatively alleges that Kumiva improperly assessed only the book value of the Excluded Assets against Robert Irvin, Betty Irvin, and/or Kumiva’s share of the proceeds instead of the fair market value of these assets. Plaintiff seeks to assert these allegations as a class action on behalf of the former shareholders of ATI. Further, Plaintiff alleges that he was supposed to be a “Parent Indemnified Person” under the Agreement, by which ATI would indemnify and defend any Garda and Newco officer, director or employee against any misrepresentation, breach of agreement or fraud by ATI or its directors or officers.

Plaintiff further alleges that Kumiva has also failed to pay Plaintiff monies owed under an oral agreement whereby Plaintiff agreed to devote time and effort to defend against Garda’s claims in a separate litigation regarding the sale of assets in exchange for payment of $300/hour, all reasonable out of pocket expenses, and a $2,000,000 success fee for meeting certain litigation goals (the “Amended Oral Contract”).

In the First Amended Complaint (“FAC”), Plaintiff alleges three class causes of action for: (1) breach of fiduciary duty against Diane Irvin and Kumiva; (2) fraud against Diane Irvin and Kumiva; and (3) accounting against Kumiva; as well as four individual causes of action for: (1) breach of contract against all Defendants but Diane Irvin; (5) breach of contract against Kumiva; (6) conversion against Kumiva and Diane Irvin; and (7) declaratory relief against Kumiva.[2]

On April 15, 2019, the court sustained Defendants’ demurrer to the FAC with ten days leave to amend as to the breach of contract action against all Defendants but Diana Irvin. On April 23, 2019, Plaintiff filed a Second Amended Complaint (“SAC”), pleading additional facts in support of the proposition that the Amended Oral Contract is not for his services as an attorney. On November 8, 2021, the court granted Plaintiff leave to amend the SAC to plead additional facts regarding the remaining fees as part of the litigation and to request an accounting plus an adjustment of the assessment against Plaintiff.

On December 27, 2019, this court ruled on Defendants’ Motion for Summary Judgment, finding “it is also undisputed that Systems shareholders were to indemnify Kumiva pro-rata, based on their relative entitlement to the proceeds from the Merger Agreement, in connection with any losses, damages, liabilities, claims or obligations in connection with the Garda litigation, unless premised on bad faith or willful misconduct.” (December 27, 2019, Minute Order, Defendants’ Motion for Summary Judgment (“Minute Order”), 7.) And further, “[t]he Garda litigation, however, was a claim against the Company for fraud by the Company. That is precisely the type of claim for which Plaintiff’s obligation to reimburse Kumiva pro rata for legal fees came into play. Thus, there is no triable issue of fact relating to extrinsic or parol evidence, and the interpretation of the agreement becomes a question of law for the court.” (Minute Order, 14.)

Defendants Betty Irvin, individually and as trustee of the R. and B. Irvin Living Trust dated March 1, 1990, as amended and restated (“Irvin Trust”), Diane Irvin and Kumiva (“Defendants”) now move for summary adjudication on the following issue:

Whether Plaintiff owes a duty to reimburse Kumiva pro rata for fees, costs, and obligations that Kumiva incurred in connection with its litigation against Garda USA, Inc., regardless of who paid for those fees, costs, and obligations.

Plaintiff opposes the motion.

Evidentiary Objections

1. Defendants’ Objections

Objection to Declaration of Aslan Abregov

Sustained: 1-4, 7-9

Sustained in part: 6

Overruled: 5

Objection to Declaration of Richard Irvin

Sustained: 1-2.

Plaintiff’s Objections

Objection to Defendants’ Exhibit G, the court’s December 27, 2019 Minute Order

Overruled: 1

Factual Background

The material facts relevant to this motion are still largely disputed.

A. Irvin Family Business and General Terms of Sale

Beginning in the 1980’s, Plaintiff became President and shareholder in his family business, ATI Systems International, Inc. (“Systems”). (Minute Order, 5.) Robert Irvin was the Chairman of the Board for Systems. (Id.)

In 2007, Garda acquired Systems for approximately $340 Million. (Id.) Defendants contend that Plaintiff oversaw the sale and merger negotiations with Garda. (Id.)

Following the sale, Kumiva agreed to represent Systems shareholders (the Irvin family and select employees) in certain post-sale matters. (Minute Order, 6.) The undisputed facts further show that Kumiva “would act as a representative for the benefit of the former shareholders of Systems.” (MF 4.)

B. Garda Litigation and Merger Agreement

Following the sale, it is undisputed that litigation broke out between Garda and Kumiva over the final amount of “Net Working Capital” at the closing of the Merger Agreement. (MF 6.)

Defendants contend that while the majority of the litigation award was distributed among the shareholders, a percentage as well as an additional $12 million was held back to account for each shareholder’s “pro-rata share of the legal fees and costs.” (MF 11.)

The example March 27, 2017 letter to shareholders, which both parties cite to regarding the Garda litigation, informs the shareholders that Garda had exhausted all of its appeals with respect to the litigation and provides a breakdown of final numbers. Further, page two provides: “we have set aside $5,000,000 in reserve until all outstanding disputes are resolved and for remaining unpaid legal fees and expenses. Therefore, at this time we are distributing $14,167,121.08.” (Compendium in Support of Motion, Exhibit B.) The letter also provides that it enclosed a spreadsheet providing for an explanation of the break down.

It is undisputed that the Merger Agreement governing the Garda and Systems sale contains an indemnification clause governing “Parent Indemnified Person,” which is defined as Garda, Newco, and their officers, directors, and employees. (Compendium, Exhibit C.) It is also undisputed that the Merger Agreement states in relevant part:

“Each Former Holder shall indemnify, pro rata based upon the portion of the Purchase Price to which such holder is entitled pursuant to this Agreement, the Representative against all losses, damages, liabilities, claims, obligations, costs and expenses, including reasonable attorneys', accountants' and other experts' fees and the amount of any judgment against them, of any nature whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claims whatsoever), arising out of or in connection with any claim, investigation, challenge, action or proceeding, or in connection with any appeal thereof, relating to the acts or omissions of the Representative hereunder, or under the Escrow Agreement or otherwise...”

(Exhibit C, 66.)

Discussion

I. Legal Standard

“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP 437c(a) provides:

A party may move for summary judgment in any action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding. The motion may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct…. The motion shall be heard no later than 30 days before the date of trial, unless the court for good cause orders otherwise. The filing of the motion shall not extend the time within which a party must otherwise file a responsive pleading.

A motion for summary judgment may be granted “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., 437c, subd. (c).)

“The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken. The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court’s discretion constitute a sufficient ground for denial of the motion.” (CCP 437c(b)(1); see also Cal. Rules of Court, rule 3.1350(c)(2) & (d).)

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294 (Hinsley).) CCP 437c(p)(2) provides:

A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.

(CCP 437c(p)(2).) The court must “view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom.” (Hinesley, 135 Cal.App.4th at p. 294; Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389 [Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”].) A motion for summary judgment must be denied where the moving party’s evidence does not prove all material facts, even in the absence of any opposition (Leyva v. Sup. Ct. (1985) 164 Cal.App.3d 462, 475).

II. Analysis

A. Issue One: Plaintiff’s duty to reimburse Kumiva

Defendants contend that summary adjudication of this issue is warranted, as it pertains to Plaintiff’s duty to reimburse, because Plaintiff still had an obligation as a Systems shareholder to pay a pro rata share of the legal fees that Kumiva incurred in the Garda litigation, based on Article 9 of the Merger Agreement. Article 9 provides:

“Each Former Holder shall indemnify, pro rata based upon the portion of the Purchase Price to which such holder is entitled pursuant to this Agreement, the Representative against all losses, damages, liabilities, claims, obligations, costs and expenses, including reasonable attorneys', accountants' and other experts' fees and the amount of any judgment against them, of any nature whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claims whatsoever), arising out of or in connection with any claim, investigation, challenge, action or proceeding, or in connection with any appeal thereof, relating to the acts or omissions of the Representative hereunder, or under the Escrow Agreement or otherwise; provided, however, that the foregoing indemnification shall not apply in the event of any action or proceeding which finally adjudicates the liability of the Representative hereunder for its bad faith or willful misconduct. In the event of any indemnification hereunder, upon written notice from Representative to the Former Holders as to the existence of a deficiency toward the payment of any such indemnification amount, each Former Holder shall promptly deliver to the Representative full payment of his or her ratable share of the amount of such deficiency (pro rata based upon the portion of the Purchase Price to which such holder is entitled pursuant to this Agreement); provided that no such holder shall be liable for that portion of any claim of indemnification, individually or in the aggregate, that is in excess of such holder's pro rata portion of the Purchase Price to which such holder is entitled pursuant to this Agreement.”

(Motion, 6-7; Compendium, Exhibit C at p. 66.) Defendants also argue that this court in its Minute Order has already established that the Garda litigation “is precisely the type of claim for which Plaintiff’s obligation to reimburse Kumiva pro rate for legal fees came into play.” (Motion, 5; citing Minute Order, 14.) Defendants then point out that Plaintiff “amended his third cause of action for accounting in his Second Amended Complaint to allege that Plaintiff has no duty to reimburse Kumiva for the Garda expenses that were paid for by Robert G. Irvin and Betty F. Irvin through their individual and revocable trust accounts.” (Motion, 6.) Defendants therefore argue that any distinctions regarding litigation expenses paid for by Garda or the Irvins individually does not affect Plaintiff’s obligation to reimburse pro rate for the expenses. (Motion, 7-8.) “To incur an obligation is an event independent of paying the obligation. Absent conditional or connecting language, Plaintiff’s duty to reimburse Kumiva for the obligation it incurred remains similarly independent of Kumiva’s fulfillment of that obligation. The Garda expenses were incurred by Kumiva, so Plaintiff owes a duty to reimburse Kumiva for his share of the entirety of the Garda expenses, regardless of who ultimately paid for the expenses.” (Id.)

In opposition, Plaintiff points to disputed payments, and seeks to define the “intent of the indemnity clause” as he alleges Defendants’ reading of the provision creates “a windfall for Kumiva.” (Opposition, 5-6.) Plaintiff then seeks to litigate his cause of action regarding the necessity of an accounting regarding the fees and costs, seeking to create issues of fact with regards to his assessment of the expenses. (Opposition, 8-9.) However, Plaintiff fails to explain how such facts are material here, or how they speak to Plaintiff’s duty, the relevant inquiry before the court. Plaintiff then contends that there are disputed facts regarding what was “incurred” and cites Generally Accepted Accounting Principles. (Opposition, 10-11.)

“Plaintiff contends that the intent of the indemnity clause was to reimburse Kumiva for the legal fees and expenses it pays to defend or prosecute claims on behalf of itself and the Former Holders arising from the sale to Garda. Kumiva contends the indemnity clause should be interpreted to include legal fees and expenses it did not pay but could have paid but for someone else paying them with no obligation for Kumiva to repay, even if it creates a windfall. Given that applying the facts to GAAP and the tax law requires Plaintiff’s contention to be correct, Plaintiff’s submits that the Court should rule that Plaintiff’s interpretation is correct and deny the MSA on that basis, but if the Court is not willing to so rule than at a minimum there is a triable issue of fact over the intent.”

(Opposition, 12-13.)

Plaintiff fails to explain how the language of the provision is in any way uncertain, or sufficiently broad, to afford Plaintiff and the court the opportunity to look past the language of the provision and to provisions of tax law or the GAAP. (Opposition, 12; citing Loree v. Robert F. Driver Co. (1978) 87 Cal.App.3d 1032, 1039-1040.) As Defendants correctly point out in their reply, “Extrinsic evidence may not be admitted to create a doubt or uncertainty.” (Reply, 4; citing Civ. Code 1639.)

On reply, Defendants also correctly explain that Plaintiff’s critiques of Howell are unpersuasive. “The Court there distinguished between expenses that are expended and those that are incurred. (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 556.) An expense need not have been paid by a party in order for it to have been incurred. Similarly, Plaintiff is not entitled to avoid his contractual obligation to pay a portion of the Garda Litigation fees and expenses because Kumiva and Bob Irvin agreed that Bob would pay some of the expenses that Kumiva incurred, as Plaintiff is a stranger to that relationship.” (Reply, 4-5.)

In their reply, Defendants argue that ““A clause that contains the words “indemnify” and “hold harmless” generally obligates the indemnitor to reimburse the indemnitee for any damages the indemnitee becomes obligated to pay third persons.” (Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 600.) This language does not require that the indemnitee actually pay those expenses, just that it is obligated to do so.” (Reply, 5.) Defendants also correctly contend “GAAP should not apply to the Merger Agreement—it is not a financial statement or an accounting document, and it does not discuss which parties to the Merger Agreement may or may not claim tax deductions.” (Reply, 6; citing Abregov Deposition.)

Here, the court again looks to its Minute Order, where this court has already established:

“The parties agree that Plaintiff was a ‘parent indemnified person.’ As such, under the merger agreement, he would be indemnified against claims by the ‘Company’ for misrepresentation or breach of the agreement by Parent. The Garda litigation, however, was a claim against the Company for fraud by the Company. That is precisely the type of claim for which Plaintiff’s obligation to reimburse Kumiva pro rata for legal fees came into play. Thus, there is no triable issue of fact relating to extrinsic or parol evidence, and the interpretation of the agreement becomes a question of law for the court.”

(Minute Order, 14.)

Given the foregoing and viewing the evidence submitted in the light most favorable to Plaintiff, the court finds that there are no disputes of material facts, or questions of contractual interpretation which necessitate the looking to parol evidence. The parties have already disputed interpretations of the Merger Agreement, and have conceded the operation of the indemnity provision. (Minute Order, 7-8.) As such, the court’s reading of Article 9 is not broad or uncertain, and it maintains consistency with its prior rulings on the applicability of the indemnity provisions here. The court reaffirms its prior ruling that Plaintiff had an obligation and duty to reimburse Kumiva pro rata for legal fees. The factual disputes regarding a specific accounting are not material to the duty Plaintiff had to indemnify, and will be resolved at a later juncture.

Accordingly, the court grants summary adjudication as to this issue.

III. Conclusion

Defendants’ motion for summary adjudication is granted. Defendants are to give notice.


[1] Plaintiff asserts claims against Defendant Betty Irvin in her individual capacity and as trustee of the R. and B. Irvin Living Trust dated March 1, 1990 (the “Living Trust”) and as trustee of the Betty F. Irvin and Robert G. Irvin Revocable Community Property Trust (the “Community Property Trust”).

[2] Plaintiff originally also asserted the first cause of action against the Betty Irvin, the Living Trust, and the Community Property Trust and asserted the second cause of action against the Living Trust and the Community Property Trust. Plaintiff dismissed these causes of action as to these Defendants on March 20 and 21, 2019.



b"

Case Number: ****9629 Hearing Date: November 8, 2021 Dept: 37

HEARING DATE: November 8, 2021

CASE NUMBER: ****9629

CASE NAME: Richard Irvin v. Betty F. Irvin, et al.

MOVING PARTY: Plaintiff, Richard Irvin

OPPOSING PARTIES: Defendants, Betty F. Irvin, Trustee of the R and B. Irvin Living Trust dated March 1, 1990, as amended and restated, Betty F. Irvin, and Kumiva Group, LLC

TRIAL DATE: November 23, 2021

PROOF OF SERVICE: OK

PROCEEDING: Plaintiff’s Motion for Leave to File Second Amended Complaint

OPPOSITION: October 26, 2021

REPLY: October 29, 2021

TENTATIVE: The parties should be prepared to discuss scheduling issues and their impact on whether to proceed with this motion.

Background

This case arises in connection with the sale of the assets of ATI Systems International, Inc. (“ATI”) to Garda USA, Inc. (“Garda”). Plaintiff Richard Irvin alleges that he had a 12.02% of ATI while his parents Robert G. Irvin (“Robert Irvin”) and Defendant Betty F. Irvin (“Betty Irvin”) together owned 62.26% of ATI either jointly or through ATI Services, LLC (“ATI Services”), a company for which they were the 100% members. According to the FAC, the shareholders of ATI effectively sold all of the stock and assets of ATI to Garda on April 10, 2007. Under the terms of the Merger Agreement, certain assets were allegedly excluded from the sale, including all of ATI’s fee owned real estate, 51 properties, as well as ATI’s 18% interest in the corporation C Punch Ranch, Inc. (“CPRI”) (the “Excluded Assets”).[1] Defendant Diane A. Irvin (“Diane Irvin”) allegedly was a manager of Kumiva and an officer of CPRI and is also allegedly a primary successor beneficiary or the sole successor beneficiary of the Living Trust and/or Community Property Trust.

Plaintiff alleges that ATI Services changed its name to Kumiva Group, LLC (“Kumiva”) after the merger or sale and secretly deeded or transferred the Excluded Assets to Robert Irvin and Betty Irvin, to Kumiva, or to other entities owned by Kumiva, without properly accounting for the value of the Excluded Assets against Robert Irvin, Betty Irvin, and/or Kumiva’s share of the distribution to the former shareholders of ATI. Plaintiff alternatively alleges that Kumiva improperly assessed only the book value of the Excluded Assets against Robert Irvin, Betty Irvin, and/or Kumiva’s share of the proceeds instead of the fair market value of these assets. Plaintiff seeks to assert these allegations as a class action on behalf of the former shareholders of ATI. Further, Plaintiff alleges that he was supposed to be a “Parent Indemnified Person” under the Agreement, by which ATI would indemnify and defend any Garda and Newco officer, director or employee against any misrepresentation, breach of agreement or fraud by ATI or its directors or officers.

Plaintiff further alleges that Kumiva has also failed to pay Plaintiff monies owed under an oral agreement whereby Plaintiff agreed to devote time and effort to defend against Garda’s claims in a separate litigation regarding the sale of assets in exchange for payment of $300/hour, all reasonable out of pocket expenses, and a $2,000,000 success fee for meeting certain litigation goals (the “Amended Oral Contract”).

In the First Amended Complaint (“FAC”), Plaintiff alleges three class causes of action for: (1) breach of fiduciary duty against Diane Irvin and Kumiva; (2) fraud against Diane Irvin and Kumiva; and (3) accounting against Kumiva; as well as four individual causes of action for: (1) breach of contract against all Defendants but Diane Irvin; (5) breach of contract against Kumiva; (6) conversion against Kumiva and Diane Irvin; and (7) declaratory relief against Kumiva.

On December 19, 2019, Plaintiff filed a Request for Dismissal as to Diane Irvin.

On December 29, 2019, Defendants Betty F. Irvin, individually and as Trustee of the R and B. Irvin Living Trust dated March 1, 1990, as amended and restated, Diane Irvin and Kumiva Group, LLC’s motion for summary judgment or, in the alternative, summary adjudication was granted with respect to the following issues, other than as to the accounting cause of action in issue number 3:

  1. Issue one: Plaintiff’s fifth cause of action for breach of contract, sixth cause of action for conversion, and seventh cause of action for declaratory relief should be dismissed because they are premised on an incorrect interpretation of the merger agreement.

  2. Issue three: Plaintiff’s first cause of action for breach of fiduciary duty, second cause of action for fraud, and third cause of action for accounting are improperly brought against Kumiva because it is merely a holding company and representative of shareholders, whereas the alleged fraudulent representations were made by Robert Irvin in his individual capacity

  3. Issue five: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed against Betty Irvin because she did not make any representations or enter into an agreement with Plaintiff.

The motion was deemed moot as to the first and second causes of action against Diane Irvin and otherwise denied.

On September 27, 2021, Plaintiff filed an Ex Parte Application for Leave to File Second Amended Complaint, which was denied without prejudice. The court’s ruling indicated that it was willing to consider a noticed motion for leave to amend.

On September 29, 2021, Plaintiff filed the instant Motion for Leave to File Second Amended Complaint. Defendants Betty F. Irvin, Trustee of the R and B. Irvin Living Trust dated March 1, 1990, as amended and restated, Betty F. Irvin, and Kumiva Group, LLC oppose the motion.

Discussion

  1. Legal Standard

California law holds that leave to amend is to be granted liberally, to accomplish substantial justice for both parties. (Code Civ. Proc., ; 473, subd. (a); Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 488-489 (Hirsa)) “Assuming proper notice, the trial court has wide discretion in determining whether to allow the amendment, but the appropriate exercise of that discretion requires the trial court to consider a number of factors: ‘including the conduct of the moving party and the belated presentation of the amendment.

The law is well settled that a long-deferred presentation of the proposed amendment without a showing of excuse for the delay is itself a significant factor to uphold the trial court's denial of the amendment.” (Leader v. Health Ind. of America, Inc. (2001) 89 Cal.App.4th 603, 613.) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….” (Morgan v. Sup. Ct. (1959) 172 Cal.App.2d 527, 530.) Prejudice includes “delay in trial, loss of critical evidence, or added costs of preparation.” (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1448.) “The power to permit amendments is interpreted very liberally as long as the plaintiff does not attempt to state facts which give rise to a wholly distinct and different legal obligation against the defendant.” (Herrera v. Superior Court (1984) 158 Cal.App.3d 255, 259.) The court, however, has the discretion to deny an amendment that fails to state a cause of action or defense. (Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 230.)

  1. Analysis

  1. Procedural Considerations

    A party requesting leave to amend must comply with California Rules of Court, rule 3.1324. A motion to amend a pleading before trial must state which allegations were deleted from and which allegations were added to the previous pleading and identify the changes “by page, paragraph, and line number.” (Cal. Rules of Court, rule 3.1324(a).)

    According to Plaintiff’s Notice of Motion, Plaintiff seeks leave to file a Second Amended Complaint which alleges the following:

  1. Paragraph 81a.: In a letter dated March 27, 2017, from Kumiva Group, LLC (“Kumiva”) (the “Legal Fees Letter”) to the former shareholders of ATI, Diane Irvin states that the “fees and costs paid in connection with this litigation from 2008 through September 2016 were $11,767.386.63” which were paid “by either Kumiva Group, LLC or by Bob and Betty personally through their individual or revocable trust accounts”. The Legal Fees Letter further states that “all fees from 2008-2012 will be borne by the Trust. These fees totaled $6,749,897.” The Legal Fees Letter indicates that $5,017,489.88 was incurred from January 2013 forward (the “Remaining Fees”). Plaintiff was charged/assessed his percentage share (12.02%) of the Remaining Fees ($603,102.28) pursuant to Article 9 of the Merger Agreement. Plaintiff is informed and believes, and based thereon alleges, that Kumiva did not pay all of the Remaining Fees. Rather, Kumiva paid $1,961,055.34 of the Remaining Fees and $3,056,434.54 of the Remaining Fees were paid by Robert G. Irvin or Property Trust. Consequently, and pursuant to Article 9 of the Merger Agreement, Plaintiff should have only been charged/assessed his percentage share of the $1,961,055.34 paid by Kumiva, said sum being $235,718.85. As such, Kumiva owes to Plaintiff the sum of $367,383.43. Plaintiff requests an accounting of the Remaining Fees and an adjustment of the assessment against Plaintiff.

  2. Prayer, paragraph 6a.: For an accounting of the legal fees and costs incurred and assessed by Kumiva against the distribution to Plaintiff in or about March 2017, and that Kumiva pay to Plaintiff the minimum sum of $367,383.43, plus interest at the maximum legal rate since March 27, 2017.

    Plaintiff has demonstrated compliance with California Rules of Court, rule 3.1324(a).

    Additionally, “[a] separate declaration must accompany the motion and must specify: (1) The effect of the amendment; (2) Why the amendment is necessary and proper; (3) When the facts giving rise to the amended allegations were discovered; and (4) The reasons why the request for amendment was not made earlier.” (Cal. Rules of Court, rule 3.1324(b).)

    Plaintiff submits the declaration of his counsel, J. Scott Russo (“Russo”) in support of the instant motion. Russo attests that on February 11, 2020, he served Requests for Production of Documents, Set Seven to Kumiva asking that it produce all documents reflecting attorney’s fees and costs as referenced in a letter dated March 27, 2017 (the “Legal Fees Letter”) (Declaration of J. Scott Russo (“Russo Decl.”), ¶ 2, Exh. 1.) Kumiva served its responses on April 8, 2020, indicating that it did not have responsive documents. (Russo Decl. ¶ 3, Exh. 2.) On August 10, 2021, Russo attests that he noticed the deposition of Kumiva’s Person Most Knowledgeable regarding the Legal Fees Letter. (Russo Decl. ¶ 4.) Kumiva also produced responsive documents on August 10, 2021. (Id.) On September 22, 2021, Russo attests that he took the deposition of Kumiva’s PMK regarding the Legal Fees Letter and that through this deposition, he learned that Kumiva did not pay all of the remaining legal fees. (Russo Decl. ¶ 5.) The instant motion was filed shortly thereafter, seeking leave to allege facts regarding the remaining legal fees. (Id.) According to Russo, the amendment is necessary and proper as it seeks to add and clarify the third cause of action based on Kumiva’s September 21, 2021 document production and the deposition of its PMK. (Russo Decl. ¶¶ 7-8.)

    The Russo Declaration is sufficient for purposes of California Rules of Court, rule 3.1324(b).

  1. Substantive Considerations ;

    Generally, motions for leave to amend will be granted unless the party seeking to amend has been dilatory in bringing the proposed amendment before the court and the delay in seeking leave to amend will cause prejudice to the opposing party. ; (See ;Atkinson v. Elk Corp. ;(2003) ;109 Cal.App.4th 739, 761 [“ ‘[I]t is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.’ [Citations.] ; Furthermore, ‘it is irrelevant that new legal theories are introduced as long as the proposed amendments “relate to the same general set of facts.” [Citation.]’ ”]; ;Hirsa, ;supra, ;118 Cal.App.3d at p. 490.) ; Indeed, “courts are much more critical of proposed amendments ... when offered after long unexplained delay or on the eve of trial [citations], or where there is a lack of diligence, or there is prejudice to the other party [citations].” ; (Permalab-Metalab ;Equipment Corp. v. Maryland ;Cas. Co. ;(1972) 25 Cal.App.3d 465, 472.) ; ; ;

Plaintiff contend that leave to amend must be granted because Plaintiff waited one and a half years for Kumiva to respond to discovery regarding the Legal Fee Letter and after Kumiva finally produced such information, Plaintiff promptly sought leave to amend to allege facts regarding the Legal Fee Letter. (Motion, 11-12.) According to Plaintiff, there will be no prejudice to Defendants by allowing this amendment because it does not alter the legal theories upon which Plaintiff is seeking relief as the amendment only seeks to clarify the third cause of action for accounting. (Id.) Additionally, Plaintiff asserts that there will be no discovery that must be redone and that any delay was caused by Kumiva’s failure to produce documents in a timely manner. (Id.)

In opposition, Defendants contend that Plaintiff’s motion must be denied because the proposed amendment expands the scope of the lawsuit. (Opposition, 3.) Additionally, Defendants assert that the proposed amendment is meritless because Section 9.1 of the Merger Agreement states that Plaintiff is responsible for his pro rata share of the attorney fees incurred in connection with the Garda litigation. (Opposition, 3-4.) Finally, Defendants assert that Plaintiff’s motion must be denied because trial is less than a month away. (Opposition, 4-5.)

In reply, Plaintiff asserts that the proposed amendment does not expand the scope of the action because an accounting has been contemplated by the parties and acknowledged by counsel for Defendants prior to the instant motion. (Reply, 2-3.) Specifically, Plaintiff asserts that the focused of the proposed amendment is the fact that Kumiva only paid “$1,961,055.34 of the legal fees, not the $5,017,489.88 as represented,” which has always been a part of the third cause of action. (Id.) Plaintiff further asserts that the Merger Agreement does not conflict with the proposed amendment. (Reply, 3-4.) Finally, Plaintiff represents that he is willing to continue trial for a “reasonable time” to allow Kumiva to file a dispositive motion and to have the dispositive motion briefed and heard on shortened time. (Reply, 4-5.)

The SAC alleges that to date, Plaintiff has not received a final accounting from the sale of the Merger Agreement. (SAC, ¶ 67.) Further, SAC alleges that Kumiva is Plaintiff’s fiduciary for purposes of the accounting for the “assets of ATI not transferred to Garda” and that there is a “balance due to Plaintiff” from the proceeds of the sale of ATI to Garda and assets of ATI not sold to Garda. (SAC ¶¶ 80-82.) Plaintiff demands an accounting for these proceeds as well as an accounting for all sums paid “by Garda to Kumiva from and after the Merger Agreement.” (SAC ¶ 83.)

To some extent, Plaintiff’s argument that this amendment does not change the causes of action suggests that the amendment is unnecessary. However, Defendant argues that it does add a new theory of recovery less than two weeks before the final status conference. Defendant further argues that it will be prejudiced by the inability to file a dispositive motion before trial. While the motion likely would be the subject of a motion in limine, but that is not an appropriate use of a motion in limine. Plaintiff has agreed to a trial continuance to permit the filing of the motion. Unfortunately, the court’s trial calendar is overloaded with cases that were continued during the pandemic such that it may be some time before a new trial date can be scheduled. In any event, a continuance of at least 4 months, if not more, would be required to obtain a hearing date for the proposed MSA.

The court finds that some cause exists to grant Plaintiff leave to file the proposed amendment, but that any such amendment should be conditioned on a trial continuance sufficient to allow Defendants to file a dispositive motion as to the amended claim. The proposed amendment states an additional basis for demanding an accounting and factual allegations in support of this additional basis. In addition, Plaintiff has demonstrated that it filed the instant motion shortly after it received responsive documents from Kumiva on September 21, 2021 and took the deposition of Kumiva’s PMK on September 22, 2021. The court is cognizant of Defendants’ argument that the proposed amendment is contradicted by the Merger Agreement. The meaning and applicability of the Merger Agreement and whether the Merger Agreement conflicts with the proposed amendment ideally would be determined after briefing and detailed consideration at a later time and not in response to a motion to amend.

The parties should be prepared to discuss scheduling issues and their impact on whether to proceed with this motion.


[1] Plaintiff asserts claims against Defendant Betty Irvin in her individual capacity and as trustee of the R. and B. Irvin Living Trust dated March 1, 1990 (the “Living Trust”) and as trustee of the Betty F. Irvin and Robert G. Irvin Revocable Community Property Trust (the “Community Property Trust”).

"


Case Number: ****9629    Hearing Date: December 27, 2019    Dept: 37

HEARING DATE: December 27, 2019

CASE NUMBER: ****9629

CASE NAME: Richard Irvin v. Betty F. Irvin, et al.

MOVING PARTY: Defendants, Betty F. Irvin, Kumiva Group, LLC and Diana A. Irvin

OPPOSING PARTY: Plaintiff, Richard Irvin

TRIAL DATE: May 12, 2020

PROOF OF SERVICE: OK

PROCEEDING: Defendants’ Motion for Summary Judgment

OPPOSITION: December 13, 2019

REPLY: December 20, 2019

TENTATIVE: Defendants’ motion for summary judgment or, in the alternative, summary adjudication is GRANTED with respect to issues number one, three and five. The motion is MOOT with respect to issue 2 and is otherwise DENIED with respect issues four, six, seven and eight. Defendants are to give notice.

Background

This case arises in connection with the sale of the assets of ATI Systems International, Inc. (“ATI”) to Garda USA, Inc. (“Garda”). Plaintiff Richard Irvin alleges that he had a 12.02% of ATI while his parents Robert G. Irvin (“Robert Irvin”) and Defendant Betty F. Irvin (“Betty Irvin”) together owned 62.26% of ATI either jointly or through ATI Services, LLC (“ATI Services”), a company for which they were the 100% members. According to the FAC, the shareholders of ATI effectively sold all of the stock and assets of ATI to Garda on April 10, 2007. Under the terms of the Merger Agreement, certain assets were allegedly excluded from the sale, including all of ATI’s fee owned real estate, 51 properties, as well as ATI’s 18% interest in the corporation C Punch Ranch, Inc. (“CPRI”) (the “Excluded Assets”).[1] Defendant Diane A. Irvin (“Diane Irvin”) allegedly was a manager of Kumiva and an officer of CPRI and is also allegedly a primary successor beneficiary or the sole successor beneficiary of the Living Trust and/or Community Property Trust.

Plaintiff alleges that ATI Services changed its name to Kumiva Group, LLC (“Kumiva”) after the merger or sale and secretly deeded or transferred the Excluded Assets to Robert Irvin and Betty Irvin, to Kumiva, or to other entities owned by Kumiva, without properly accounting for the value of the Excluded Assets against Robert Irvin, Betty Irvin, and/or Kumiva’s share of the distribution to the former shareholders of ATI. Plaintiff alternatively alleges that Kumiva improperly assessed only the book value of the Excluded Assets against Robert Irvin, Betty Irvin, and/or Kumiva’s share of the proceeds instead of the fair market value of these assets. Plaintiff originally sought to assert these allegations as a class action on behalf of the former shareholders of ATI; however, Plaintiff filed a request to dismiss the class allegations on August 22, 2019. Plaintiff also alleges that he was supposed to be a “Parent Indemnified Person” under the Agreement, by which ATI would indemnify and defend any Garda and Newco officer, director or employee against any misrepresentation, breach of agreement or fraud by ATI or its directors or officers.

Plaintiff further alleges that Kumiva has also failed to pay Plaintiff monies owed under an oral agreement whereby Plaintiff agreed to devote time and effort to defend against Garda’s claims in a separate litigation regarding the sale of assets in exchange for payment of $300/hour, all reasonable out of pocket expenses, and a $2,000,000 success fee for meeting certain litigation goals (the “Amended Oral Contract”).

In the First Amended Complaint (“FAC”), Plaintiff alleges three class causes of action for: (1) breach of fiduciary duty against Diane Irvin and Kumiva; (2) fraud against Diane Irvin and Kumiva; and (3) accounting against Kumiva; as well as four individual causes of action for: (1) breach of contract against all Defendants but Diane Irvin; (5) breach of contract against Kumiva; (6) conversion against Kumiva and Diane Irvin; and (7) declaratory relief against Kumiva.[2]

On April 15, 2019, the court sustained Defendants’ demurrer to the FAC with ten days leave to amend as to the breach of contract action against all Defendants but Diana Irvin. On April 23, 2019, Plaintiff filed a Second Amended Complaint (“SAC”), pleading additional facts in support of the proposition that the Amended Oral Contract is not for his services as an attorney. The SAC now also includes an eighth cause of action for “goods and services rendered.”

Defendants Betty Irvin, individually and as trustee of the R. and B. Irvin Living Trust dated March 1, 1990, as amended and restated (“Irvin Trust”), Diane Irvin and Kumiva (“Defendants”) now move for summary judgment, or in the alternative, summary adjudication, on the following issues:

  1. Issue one: Plaintiff’s fifth cause of action for breach of contract, sixth cause of action for conversion, and seventh cause of action for declaratory relief should be dismissed because they are premised on an incorrect interpretation of the merger agreement;

  2. Issue two: Plaintiff’s first cause of action for breach of fiduciary duty and second cause of action for fraud are improperly brought against Diane Irvin because she never made a fraudulent representation

  3. Issue three: Plaintiff’s first cause of action for breach of fiduciary duty, second cause of action for fraud, and third cause of action for accounting are improperly brought against Kumiva because it is merely a holding company and representative of shareholders, whereas the alleged fraudulent representations were made by Robert Irvin in his individual capacity;

  4. Issue four: Plaintiff’s first cause of action for breach of fiduciary duty, second cause of action for fraud, and third cause of action for accounting should be dismissed because the statute of limitations for fraud and related claims has run;

  5. Issue five: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed against Betty Irvin because she did not make any representations or enter into an agreement with Plaintiff;

  6. Issue six: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed because the parties never entered into an oral agreement;

  7. Issue seven: Plaintiff’s fourth cause of action for breach of contract and eight cause of action for goods and services rendered should be dismissed because the claims arise from Plaintiff’s unclean hands;

  8. Issue eight: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed because the oral contract would have been entered into under duress.

Plaintiff opposes the motion.

Evidentiary Objections

  1. Defendants’ Objections

Objection to Declaration of Aslan Abregov

Overruled: 1

Sustained: 2, 3

Objection to Declaration of Richard Irvin

Overruled: 1-3, 5-6, 8-9, 11, 15-16, 25, 28, 30

Sustained: 7, 12-14, 17-22, 24, 26-27, 29, 31, 34-35

Sustained in part: 4, 23, 32, 33

Objection 4: sustained-in-part as to everything except “what was reported on the financial statements was never anything I was involved with.” Otherwise overruled

Objection 23: sustained-in-part as to “sales proceeds,” witness has not established expertise to testify to this characterization.

Objection 32: sustained-in-part as to “not based on third party appraisals or company valuations and that real estate professionals were not involved.” Otherwise, overruled.

Objection 33: sustained-in-part as to everything after “2008.” Otherwise overruled.

  1. Plaintiff’s Objections

Objection to Declaration of Betty Irvin

Overruled: 2

Sustained: 1

Objection to Deposition of Charles Weissman

Overruled:

Sustained: 1-2

Objection to Deposition of Gerald Blitstein

Overruled: 1-2

Sustained:

Objection to Declaration of Diane Irvin

Overruled: 1-6, 9-11

Sustained: 7-8, 12

Objection to Robert Irvin’s Note (Exhibit M)

Objection 1: sustained

Factual Background

The material facts relevant to this motion are largely disputed.

  1. Irvin Family Business and General Terms of Sale

Beginning in the 1980’s, Plaintiff became President and shareholder in his family business, ATI Systems International, Inc. (“Systems”). (Separate Statement in Support of Motion (“DSS”), ¶ 1; Compendium of Evidence Exhibit B (Irvin Deposition), 12:14-22.) Robert Irvin was the Chairman of the Board for Systems. (DSS, ¶ 2; Irvin Deposition, 12:1-13.)

In 2007, Garda acquired Systems for approximately $340 Million. (DSS, ¶ 3.) Defendants contend that Plaintiff oversaw the sale and merger negotiations with Garda. (DSS, ¶ 4; Irvin Deposition, 62:12:14-63:10, 69:9-70:2; 74:15-76:2; Compendium Exhibit C (Weissman Deposition), 18:5-12, 32:19-33:12; Compendium Exhibit E (Blitstein Deposition) 13:8-14:17; 32:23-33:11, 34:20-35:20, 40:25-41:15; 59:4-22, 93:6-25.) Plaintiff disputes this, and contends that he was not very involved, while Gerald Blitstein, Charles Weismann and Robert Irvin were primarily involved. (Separate Statement of Material Facts in Support of Opposition (“PSS”), ¶ 4, Declaration of Richard Irvin (“Irvin Decl.”), ¶¶ 13, 15, 16.)

As part of this sale, Defendants contend that ATI Services, LLC (“Services”), a subsidiary of Systems, was not sold but remained wholly owned by Robert and betty Irvin and renamed Kumiva. (DSS, ¶ 5; Weissman Deposition at 29:2-30:5.) Plaintiff disputes this and contends that Systems transferred the membership interest in Services to the Irvin Trust, changing its name to Kumiva. (PSS, ¶ 5; Irvin Decl., ¶ 25.)

Following the sale, Kumiva agreed to represent Systems shareholders (the Irvin family and select employees) in certain post-sale matters. (DSS, ¶¶ 6, 7.) Plaintiff appears to dispute the generality of this statement and contends that Kumiva agreed to serve as the “exclusive agent and attorney-in-fact” on behalf of each Systems shareholder who consents to the Merger Agreement with Garda. (PSS, ¶ 6; Irvine Decl., ¶ 18, 24, 25, 27; Compendium in Support of Opposition Exhibit 4 and 5.)

Defendants contend that all shareholders, including Plaintiff, reviewed and approved of the Merger Agreement. (DSS, ¶ 8; Irvin Deposition at 80:25-81:21; Compendium in Support of Motion, Exhibit G; Diane Irvin Declaration at ¶¶ 4-5, 7.) Plaintiff disputes that the shareholders reviewed or approved the valuation. (PSS, ¶ 9; Irvin Decl., ¶¶ 21, 22, 25.) Once the sale of Systems was approved, Defendants contend that Plaintiff signed the Merger Agreement on behalf of other shareholders and accepted millions as his share of the proceeds. (DSS, ¶ 9; Irvin Deposition at 86:19-87:16.) Plaintiff disputes that he had any involvement with Kumiva. (PSS, ¶ 9; Irvin Decl., ¶ 25.)

  1. Garda Litigation and Merger Agreement

Following the sale, it is undisputed that litigation broke out between Garda and Kumiva over the final amount of “Net Working Capital” at the closing of the Merger Agreement. (DSS, ¶¶ 10-11.) The litigation ended favorable for Systems with no finding of fraud as to Systems and an award of compensatory damages against Garda. (Id.)

Defendants contend that while the majority of the litigation award was distributed amongst the shareholders, a percentage as well as an additional $12 million was held back to account for each shareholder’s “pro-rata share of the legal fees and costs.” (DSS, ¶¶ 12-13; Compendium in Support of Motion, Exhibit H (Garda Litigation Letter to Shareholders).) Plaintiff disputes that there was ever an accounting system pertaining to the sale of Systems or with regard to distributing the litigation award. (PSS, ¶¶ 12-13; Compendium in Support of Opposition Exhibit 17 (Diane Irvin Deposition) at 111:15-112:17, 170:25-171:25; 172:17-22; Irvin Decl., ¶¶ 46, 58-59; Compendium in Support of Opposition, Exhibit 15.)

The example March 27, 2017 letter to shareholders, which both parties cite to regarding the Garda litigation, informs the shareholders that Garda had exhausted all of its appeals with respect to the litigation and provides a break down of final numbers. Further, page two provides: “we have set aside $5,000,000 in reserve until all outstanding disputes are resolved and for remaining unpaid legal fees and expenses. Therefore, at this time we are distributing $14,167,121.08.” (Compendium in Support of Motion, Exhibit H.) The letter also provides that it enclosed a spreadsheet providing for an explanation of the break down.

It is undisputed that the Merger Agreement governing the Garda and Systems sale contains an indemnification clause governing “Parent Indemnified Person,” which is defined as Garda, Newco, and their officers, directors, and employees. (DSS, ¶ 15.) It is also undisputed that the Parent Indemnified Persons were to be indemnified from any fraud by Systems or its directors or officers in connection with the Merger Agreement. (DSS, ¶ 16.) Finally, it is undisputed that the Merger Agreement permitted Kumiva to rely on counsel or experts in conducting any aspect of the sale and that any error by Kumiva pursuant to this advice should subject Kumiva to liability to any Systems shareholders. (DSS, ¶ 18.) Plaintiff asserts that Kumiva has not offered evidence that it relied on any such experts. (PSS, ¶ 18.)

Finally, it is also undisputed that Systems shareholders were to indemnify Kumiva pro-rata, based on their relative entitlement to the proceeds from the Merger Agreement, in connection with any losses, damages, liabilities, claims or obligations in connection with the Garda litigation, unless premised on bad faith or willful misconduct. (DSS, ¶ 19.)

  1. Real Estate Assets

Defendants contend that Systems owned many real estate assets which were excluded from Systems’ sale to Garda. (DSS, ¶ 29; Compendium in Support of Motion, Exhibit D (Merger Agreement) at Schedule 1.1(a).) Plaintiff disputes that Systems was in ownership of these assets before the completion of the Merger Agreement and contends that Systems transferred its membership interest to the Services, who transferred its interest to the Irvin Trust, “and the name was changed to Kumiva.” (PSS, ¶ 29; Irvin Decl., ¶¶ 10, 26, 66; Compendium in Support of Opposition, 21 (Deeds from Systems to Services to Kumiva).)

Defendants contend that Plaintiff knew about Systems’ assets as its President and CEO and would have talked to Robert Irvin about the assets. (DSS, ¶ 30; Irvin Deposition at pp. 20:12-21:16, 27:20-28.5.) Plaintiff disputes this and contends that he knew little about real estate and was prevented from learning such information. (PSS, ¶ 30; Irvin Decl., ¶¶ 5-8; 38, 65.) Specifically, Plaintiff contends that notwithstanding his signature on various documents connected to Systems real estate, he was told by Robert Irvin that Systems’ real estate was “none of his business.” (Id.) Plaintiff also contends that despite any financial reports he may have reviewed in 2006-2007, these financial reports would never listed the fair market value of the real estate but only represented book value and that Plaintiff was never privy to information on the fair market value. (PSS, ¶¶ 76-78; Irvin Decl., ¶¶ 6-8, 12.)

Defendants further contend that Robert and Betty Irvin chose to distribute to each shareholder a portion of their ownership interest in the excluded assets at the time of sale (valued to be worth $60 million total.) (DSS, ¶ 31; Irvin Deposition at pp. 55:17-56:17, 83:22-84:9; Compendium in Support of Motion, Exhibit C (Weissman Deposition) at pp. 24:14-25:4, 31:1-19.) Plaintiff disputes the valuation and contends that it was a made-up number. (PSS, ¶ 31; Irvin Decl., ¶¶ 10, 25, 33, 63-64, 66; Diane Irvin Deposition at pp. 41:25-46:4, 170:25-17:25; Compendium in Support of Opposition Exhibit 18 (Davidoo Deposition) at pp. 95:13-19, 96:1-97:2; Weissmann Deposition at pp. 18:19-19:1.)

It is undisputed that Robert Irvin was in charge of the sale price offered for Systems and the value for the real estate assets. (DSS, ¶ 32.) It is also undisputed that Plaintiff did not claim fraud until the deposition of certified public accountant Albert Davidoo in August 2018. (DSS, ¶ 34.)

Defendants contend that Defendant, Diane Irvin never made any fraudulent representations in connection with the real estate. (DSS, ¶ 36; Irvin deposition at pp. 30:17-31:2; Diane Irvin Decl., ¶ 3.) Plaintiff contends that Kumiva group made these fraudulent representations and that Diane Irvin is liable as its manager, treasurer and vice president. (PSS, ¶ 36; Amended Operating Agreement. Plaintiff also contends that Robert Irvin made fraudulent representations about the value of real estate in his capacity as CEO and President of Kumiva. (Irvin Decl., ¶¶ 66-67.) Defendants contend that Plaintiff never asked Robert Irvin how he came to the final value of the excluded real estate (DSS, ¶ 79; Irvin Deposition at pp. 132:4-22.) Plaintiff appears to disagree and contend that he did not know Robert Irvin was involved in the valuation, just that he understood the valuation to involve third party appraisals by experts. (PSS, ¶ 79; Irvin Decl., ¶¶ 6, 16-17, 21-22, 65.)

  1. Oral Contract Based on Garda Litigation

During the Garda litigation, Plaintiff assisted Kumiva’s legal counsel. (DSS, ¶ 91; Irvin Decl., ¶¶ 43-45.) Defendants contend that Robert Irvin “eventually” began paying Plaintiff an hourly rate for the work he performed. (DSS, ¶ 92; Irvin Deposition at pp. 136:3-138:1, 140:18-142:2.) Plaintiff contends that all work was performed pursuant to an Oral agreement for services, and that some invoices were paid by Kumiva while others were paid by Robert Irvin. (PSS, ¶ 92; Irvin Decl., ¶¶ 43-49; Compendium in Support of Opposition, Exhibits 8-10.)

Defendants contend that even if there was an oral agreement to pay Plaintiff for his services, it did not include a “success fee.” (DSS, ¶ 93.) Plaintiff contends that it did include such a fee, which was reduced to $2 million on or about January 28, 2013 and then “affirmed by performance” (PSS, ¶ 93; Irvin Decl., ¶¶ 43-48.) Plaintiff contends that Betty Irvin was present when the initial oral agreement was struck on or about October 1, 2011 and did not object to the agreement. (Irvin Decl., ¶¶ 44-48.)

It is undisputed that while Plaintiff prepared a letter outlining the oral agreement, it was never executed by Robert Irvin. (DSS, ¶ 109, Irvin Deposition at pp. 140:18-146:9, 151:9-152:11.) Plaintiff contends that the agreement was nevertheless ratified orally and by performance. (PSS, ¶ 109, Irvin Decl., ¶¶ 47-48; Exhibits 8-10 in Support of Opposition.)

Defendants contend that Kumiva’s legal counsel testified to being concerned about the alleged success fee provision to the oral agreement. (DSS, ¶ 111; Exhibit C to Compendium of Exhibits (Weissman deposition) at pp. 43:12-45:20, 51:6-14, 52:4-15, 56:5-17.) Plaintiff contends that Kumiva’s legal counsel only testified as to a concern about Diane Irvin not honoring the agreement after Robert Irvin’s passing. (PSS, ¶ 111, Weissman Deposition at pp. 40:19-41:18, 56:6-47:7, 47:12-48:3, 48:8-17, 52:4-16.)

With regard to why the agreement remained oral, Defendant contends that Plaintiff admitted to not pursuing a written contractual agreement because he was in the middle of a contentious divorce and was “more likely to be able to conceal the additional funds” by using an oral agreement. (DSS ¶ 133; Irvin Deposition at pp. 151:9-152:11.) Plaintiff disputes this and contends that Plaintiff was not concerned about the divorce, but instead, that Robert Irvin thought he was doing Plaintiff “a favor” by not signing a written agreement. (PSS, ¶ 133; Irvin Decl. ¶¶ 45-49; Weissmann Deposition at pp. 47:12-48:3.)

Discussion

I. Legal Standard

“The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Pursuant to Code of Civil Procedure, section 437c, subdivision (a):

A party may move for summary judgment in any action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding. The motion may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct…. The motion shall be heard no later than 30 days before the date of trial, unless the court for good cause orders otherwise. The filing of the motion shall not extend the time within which a party must otherwise file a responsive pleading.

(Code Civ. Proc., ; 437c, subd. (a).) A motion for summary judgment may be granted “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., ; 437c, subd. (c).)

“The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken. The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court’s discretion constitute a sufficient ground for denial of the motion.” (Code Civ. Proc., ; 437c, subd. (b)(1); see also Cal. Rules of Court, rule 3.1350(c)(2) & (d).)

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294 (Hinsley).) Pursuant to Code Civ. Proc., ; 437c, subdivision (p)(2):

A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.

(Code Civ. Proc., ; 437c, subd. (p)(2).) The court must “view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom.” (Hinesley, 135 Cal.App.4th at p. 294; Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389 [Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”].) A motion for summary judgment must be denied where the moving party’s evidence does not prove all material facts, even in the absence of any opposition (Leyva v. Sup. Ct. (1985) 164 Cal.App.3d 462, 475).

II. Analysis

  1. Issue One: Plaintiff’s fifth cause of action for breach of contract, sixth cause of action for conversion, and seventh cause of action for declaratory relief should be dismissed because they are premised on an incorrect interpretation of the merger agreement.

To state a claim for breach of contract, a Plaintiff must allege sufficient facts to establish: (1) a contract between the parties; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff from the breach. (See e.g. Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178 (Wall Street).) A written contract must be pled verbatim in the body of the complaint, be attached to the complaint and incorporated by reference, or be pled according to its legal effect. (Bowden v. Robinson (1977) 67 Cal.App.3d 705, 718.) An allegation of an oral agreement must “set[] forth the substance of its relative terms.” (Gautier v. General Tel. Co. (1965) 234 Cal.App.2d 302, 305.)

Defendants contend that summary adjudication must be granted on this issue because Plaintiff is relying on a clearly erroneous interpretation of the Merger Agreement’s indemnity provision. (Motion, 9-11.) The Merger Agreement’s indemnity provision states:

“(a) Except as otherwise limited by this Article 8, ATI Services agrees, from and after the Effective Time, to indemnify, defend, and hold Parent and Newco and their respective officers, directors, employees, equity holders and agents (collectively, the "Parent Indemnified Persons") harmless from and against and in respect of any Damages suffered, incurred, or realized by the Parent Indemnified Persons arising out of or resulting from or relating to:

(i) any misrepresentation or breach of warranty made by the Company in this Agreement (other than the representation at Section 2.12(c);provided that for purposes of this Section S.2(a)(i), with respect to any representation or warranty qualified by materiality or Material Adverse Effect (other than any representation or warranty in Section 3.18(c)), a breach of such representation or warranty shall be deemed to occur if there would have been a breach of such representation or warranty absent such qualifications;

(ii) any breach of any covenant or agreement undertaken by the Company in this Agreement to be performed prior to the Effective Time;

(vii) any fraud by the Company, its directors or officers or Representative in connection with this Agreement or the transactions contemplated herein (“Fraud Claim”).”

(Compendium in Support of Motion, Exhibit D, ; 8.2(a).)

Parent was defined in the introduction to mean Garda USA, Inc. (Id. at p. 1.)

Defendants contend that Plaintiff’s interpretation of the indemnification provision also is erroneous because Plaintiff still had an obligation as a Systems shareholder to pay a pro rata share of the legal fees that Kumiva incurred in the Garda litigation, based on Article 9 of the Merger Agreement, which provides as follows:

“Each Former Holder shall indemnify, pro rata based upon the portion of the Purchase Price to which such holder is entitled pursuant to this Agreement, the Representative against all losses, damages, liabilities, claims, obligations, costs and expenses, including reasonable attorneys', accountants' and other experts' fees and the amount of any judgment against them, of any nature whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claims whatsoever), arising out of or in connection with any claim, investigation, challenge, action or proceeding, or in connection with any appeal thereof, relating to the acts or omissions of the Representative hereunder, or under the Escrow Agreement or otherwise; provided, however, that the foregoing indemnification shall not apply in the event of any action or proceeding which finally adjudicates the liability of the Representative hereunder for its bad faith or willful misconduct. In the event of any indemnification hereunder, upon written notice from Representative to the Former Holders as to the existence of a deficiency toward the payment of any such indemnification amount, each Former Holder shall promptly deliver to the Representative full payment of his or her ratable share of the amount of such deficiency (pro rata based upon the portion of the Purchase Price to which such holder is entitled pursuant to this Agreement); provided that no such holder shall be liable for that portion of any claim of indemnification, individually or in the aggregate, that is in excess of such holder's pro rata portion of the Purchase Price to which such holder is entitled pursuant to this Agreement.”

(Compendium in Support of Motion, Exhibit D at p. 66.) On reply, Defendants reiterate their contention that Plaintiff’s obligation to pay a pro rata share of Kumiva’s legal fees in defending claims by Garda (i.e., Parent under the Agreement) is independent from and contradictory to Plaintiff’s contention that he should be indemnified as a “Parent Indemnified Person.” (Reply, 1-3.)

Plaintiff contends on opposition that triable issues of material fact exist with respect to this issue. (Opposition, 18-19.) Plaintiff contends that he believes he is a Parent Indemnified Person under the Merger Agreement, section 8.2(a) because he was required to be an employee of Garda. In support of this proposition, Plaintiff points to his own declaration, where he attests to his belief, and the deposition testimony of Charles Weismann.

Charles Weismann testified as follows with respect to this issue:

Q: “So in drafting this agreement, was the intent to include that Richard Irvin, as a employee/officer of Newco, would be a parent indemnified person for misrepresentations made by ATI?

A: “Yes.”

(Weismann Deposition at p. 35:3-8.)

There really is no disputed issue of fact on these issues. The parties agree that Plaintiff was a “parent indemnified person.” As such, under the merger agreement, he would be indemnified against claims by the “Company” for misrepresentation or breach of the agreement by Parent. The Garda litigation, however, was a claim against the Company for fraud by the Company. That is precisely the type of claim for which Plaintiff’s obligation to reimburse Kumiva pro rata for legal fees came into play. Thus, there is no triable issue of fact relating to extrinsic or parol evidence, and the interpretation of the agreement becomes a question of law for the court.

Accordingly, the court GRANTS summary adjudication as to this issue.

  1. Issue two: Plaintiff’s first cause of action for breach of fiduciary duty and second cause of action for fraud are improperly brought against Diane Irvin because she never made a fraudulent representation

Defendants first contend that summary adjudication must be granted as to Defendant Diane Irvin because Plaintiff has conceded that Diane never made representations to Plaintiff, fraudulent or not, regarding the value of real estate. (Motion, 11; DSS ¶¶ 36, 54, 72.)

On opposition, Plaintiff contends that he has already dismissed the second cause of action for fraud against Diane Irvin. (Opposition, 5.) Plaintiff filed a request for dismissal on December 19, 2019, dismissing the first and second causes of action as to Diane Irvin. Accordingly, the court finds this portion of Defendants’ motion MOOT.

  1. Issue three: Plaintiff’s first cause of action for breach of fiduciary duty, second cause of action for fraud, and third cause of action for accounting are improperly brought against Kumiva because it is merely a holding company and representative of shareholders, whereas the alleged fraudulent representations were made by Robert Irvin in his individual capacity

Defendants next contend that summary adjudication must be granted as to Kumiva on this issue because any representations by Robert Irvin cannot be imputed to Kumiva. (Motion, 11-12.) Specifically, Defendants contend that Kumiva had no interest in the real estate until after the merger was complete, at which time Kumiva took title to the real estate placed in Services by Robert and Betty Irvin and began serving as a representative of former Systems shareholders. (Id.; DSS ¶ 51.) Defendants point to deposition testimony from Plaintiff in support of their argument, in which Plaintiff repeatedly affirms that Robert Irvin was the only one responsible for setting the sale price for Systems and for valuing the real estate in connection with the sale. (see, eg. Irvin Deposition at pp. 51:6-11, 65:12-16, 74:15-76:12.)

Plaintiff’s opposition as to this issue mainly argues that that Robert Irvin’s actions as a Chairman of the Board of Systems can be imputed to Kumiva, where he also served as CEO and President at the time of the Merger Agreement. (Motion, 20.) Plaintiff relies on various cases, including Sanders v. Magill (1937) 9 Cal.2d 145 for the proposition that knowledge of an officer within the scope of his duties is imputable to the corporation.

Plaintiff is correct in this reliance. Knowledge of an officer “within the scope of his duties” is imputed to the corporation, unless the officer collaborates with outsiders to defraud the corporation. (Uecker v. Zentil (2016) 244 Cal.App.4th 789, 797.) This is a well settled proposition of California law. Here, Plaintiff does not allege in his operative complaint that Robert Irvin collaborated with any outsiders to defraud either Systems or Kumiva and, as such, the exception does not apply.

Plaintiff, however, overlooks the timing of the various transactions involved. Robert Irvin’s valuations and representation to the shareholders of Systems and even to Garda were made before the transaction was approved. After the transaction was approved by the Systems’ Board and shareholders, and as part of the merger transaction, the Services was transferred to Robert and Betty and the trusts, who then put all the assets in Kumiva. Thus, any breaches of fiduciary duty, if any, occurred before Services was transferred or before Kumiva had any assets.

Accordingly, the court GRANTS summary adjudication on this issue.

  1. Issue four: Plaintiff’s first cause of action for breach of fiduciary duty, second cause of action for fraud, and third cause of action for accounting should be dismissed because the statute of limitations for fraud and related claims has run.

Defendants next argue that regardless of the merit of Plaintiff’s claims, they are time-barred by the three-year statute of limitations governing fraud and breach of fiduciary duty claims. (Motion, 12-14.) Defendants argue that because the merger occurred in 2007, the latest that Plaintiff should have filed his action would have been 2010 with respect to his fraud and breach of fiduciary duty claims. (Id.) Further, Defendants argue that no tolling argument would apply to Plaintiff’s claims, because Plaintiff could not establish that he did not have an ability to find out about Defendants’ fraudulent actions “despite reasonable diligence.” (Id.)

Defendants rely on Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582 (Amtower) and WA Southwest 2, LLC v. First American Title Insurance Company (2015) 240 Cal.App.4th 148 (WA Southwest) for the proposition that tolling does not occur, notwithstanding any fiduciary relationship, when the nature of the relationship does not prevent Plaintiff from discovering the misrepresentations he later alleges. Plaintiff contends on opposition that Amtower and WA Southwest does not stand for this proposition. (Opposition, 22-23.)

In Amtower, Plaintiff alleged that defendant, in merging with another company, violated section 11 of the federal Securities Act of 1933, breached their fiduciary duty and misrepresented and concealed certain facts about the transferability of Plaintiff’s stock in connection with the merger. (Amtower, supra, 158 Cal.App.4th at 1587.) A section 11 claim carries a one-year statute of limitations. (Id. at 1592.) At Plaintiff continued deposition before trial, Plaintiff testified that he had read the S-4 statement in 1999. (Id.) Defendants contended through a motion in limine that Plaintiff’s section 11 claim was barred by the statute of limitations and the Court of Appeal agreed, finding that defendants “disclosed the facts necessary to support the section 11 cause of action in December 1999,” when Plaintiff read the S-4 statement. (Id. 1597.)

In WA Southwest, real estate investors brought action against escrow companies for breach of fiduciary duty, fraud and conversion. (WA Southwest, supra, 240 Cal.App.4th at 151.) The applicable statutes of limitations for Plaintiffs’ actions ranged from one year to four years, while the initial complaint was not filed until more than six years after Plaintiffs purchased their interests in the property. (Id. at 156.) Although Plaintiffs argue that the statute of limitations on their claims only began to run when they consulted with tax and accounting experts in 2012, the Court of Appeal disagreed, finding that a reasonably diligent investor in Plaintiffs’ circumstances would have reviewed the private placement memorandum on plaintiffs’ investments before investing, as the memorandum disclosed the fees, expenses, commissions and risk that Plaintiffs were to undertake. (Id. at 157.)

Here, Defendants contend that Plaintiff’s situation is similar to both Plaintiffs in Amtower and WA Southwest in that nothing prevented Plaintiff from obtaining information earlier. (Motion, 13-14.) Specifically, Defendants contend that Plaintiff was President and CEO of Systems and that he had access to appraisals and other information about Systems’ real estate as early as 2006. (DSS, ¶¶ 76-78.) Defendants also contend that Plaintiff knew his father, Robert Irvin, was responsible for setting the price and value of Systems’ assets but that he never asked his father for how the values were reached. (DSS, ¶ 79.)

Plaintiff does not dispute the holdings in Amtower and WA Southwest but contends that his situation is dissimilar in that he was prevented from learning full and complete information about his claims. (Opposition, 20-23; PSS, ¶¶ 76-78.) Specifically, Plaintiff contends that while he was tasked with signing leases, his signatures were added to leases without his review of same. (PSS, ¶ 76; Irvin Decl., ¶¶ 6-8.) Plaintiff also attests that his father would tell him not to be involved in real estate and that it was “none of your business.” (Irvin Decl., ¶ 6.)

Given the foregoing and viewing the evidence in the light most favorable to Plaintiff the court finds that Defendants have failed to demonstrate the absence of a triable issue of fact with respect to whether Plaintiff’s claims are time-barred. Although Defendants argue that Plaintiff was not prevented from learning about information to support his claims given his position of power with Systems and relationship with his father, Plaintiff has presented admissible evidence to the contrary. Accordingly, triable issues of material fact exist with respect to whether Plaintiff was actually prevented from learning about facts to support his claims “despite reasonable diligence.”

As such, the court DENIES summary adjudication with respect to this issue.

  1. Issue Five: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed against Betty Irvin because she did not make any representations or enter into an agreement with Plaintiff.

Defendants next contend that summary adjudication should be granted as to the fourth and eighth cause of action against Betty Irvin because she did not make any representations against Plaintiff. (Motion, 15.) Specifically, Defendants contend that while Betty Irvin may have been present during Plaintiff and his father’s discussions, she herself did not make Plaintiff any representations or agree to pay a success fee. (Id.; DSS ¶ 94.)

Plaintiff does not seem to directly oppose this argument in his opposition. Plaintiff appears to dispute Defendants’ statement regarding Betty Irvin’s involvement in the oral agreement, but states that Betty Irvin was present when the oral agreement was struck and “did not object to the agreement.” (PSS, ¶ 94; Irvin Decl., ¶¶ 44-48.) Plaintiff also contends that Betty Irvin did not object to the amendment to Plaintiff and Robert Irvin’s oral agreement. (Id.)

Defendants submit the declaration of Betty Irvin in support of their motion on this issue. Betty Irvin declares that she was never involved in the family business and never acted on behalf of Systems, Services or Kumiva. (Declaration of Betty Irvin in Support of Motion, ¶ 3.) Betty Irvin further attests that she was present one day when Plaintiff came to speak with Robert Irvin about the business but does not know exactly what was discussed. (Id. ¶¶ 4-6.)

Plaintiff submits his own declaration in support of his contention, as well as a copy of the Consulting Agreement he contends accurately reflects the oral agreement with Robert Irvin. Plaintiff attests that on or about October 1, 2011, his father [Robert Irvin] “on behalf of himself, my mother and Kumiva” asked him to work on the Garda litigation. (Irvin Decl., ¶ 44.) Plaintiff’s declaration makes no other reference to Betty Irvin’s role in the oral agreement, other than that she was present in 2013 when the agreement was modified.

Given the foregoing and viewing the evidence in the light most favorable to Plaintiff, the court finds that Defendants have established the absence of a triable issue of material fact with respect to this issue. Defendants contend that alleged oral agreement providing for Plaintiff to be paid a success fee cannot be enforced against Betty Irvin because she was never party to the agreement and did not make Plaintiff any representations. Plaintiff appears to oppose this contention, but has only produced evidence, at best, which suggests that Robert Irvin may have made the oral agreement on his own behalf and on behalf of Kumiva and Betty Irvin. Plaintiff’s opposition otherwise only refers to Betty Irvin as an owner or shareholder and makes no reference to any representations or agreements she entered into. Thus, the court finds this insufficient to raise a triable issue with regard to Betty Irvin’s liability under the alleged oral agreement to pay Plaintiff.

Accordingly, the court GRANTS summary adjudication with respect to this issue.

  1. Issue Six: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed because the parties never entered into an oral agreement.

Defendants next contend that Plaintiff’s fourth and eighth causes of action should be dismissed in their entirety because no oral agreement was entered into. (Motion, 15-16.) Defendants contend that Plaintiff’s only evidence in support of an oral agreement is his own self-serving statement and that given the evidence to the contrary, no oral agreement actually existed. (Id.) Specifically, Defendants contend that the following evidence supports that no oral agreement existed: (1) Betty Irvin denies that an agreement existed (DSS ¶ 114), Weissman testified that Robert Irvin told him that he never agreed to pay Plaintiff a success fee (DSS ¶ 111), Plaintiff’s draft agreement makes no mention of a success fee (DSS ¶ 109), and Robert Irvin’s handwritten note indicating that Kumiva should not execute Plaintiff’s contract for services (DSS ¶ 110.) On reply, Defendants reiterate these contentions. (Reply, 7-9.)

Plaintiff contends that he and Robert Irvin entered into an oral agreement for his services on the Garda litigation. (Irvin Decl., ¶¶ 43-48.) Plaintiff further contends that the oral agreement was affirmed by Robert Irvin verbally and by both Robert Irvin and Kumiva through their actions of paying him his fees. (Compendium of Exhibits in Support of Opposition, exhibits 8, 10.) Plaintiff points to his own declaration, in which he attests to the formation of the contract, and to check stubs he received from both Robert Irvin and Kumiva, in support of his contention.

Given the foregoing and viewing the evidence in the light most favorable to Plaintiff, the court finds that Defendants have failed to establish the absence of a triable issue of material fact. Defendants contend that notwithstanding Plaintiff’s statements indicating that an oral agreement existed, the only reasonable explanation is that no oral agreement existed. However, this is insufficient for purposes of summary judgment because Plaintiff contends on opposition that an oral agreement did exist and because Plaintiff has submitted admissible evidence in support of his contention. Further, Defendants’ submitted evidence is insufficient to establish no triable issue of material fact as to the oral agreement, as Defendants’ only evidence (Betty Irvin and Charles Weissman’s testimony) is largely hearsay without exception.

Accordingly, the court DENIES summary adjudication on this issue.

  1. Issue Seven: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed because the claims arise from Plaintiff’s unclean hands.

Defendants next contend that Plaintiff’s fourth and eighth causes of action should be dismissed because Plaintiff chose to enter into the oral agreement rather than commit the agreement to writing for purposes of allegedly defrauding his ex-wife, which Defendants contend constitutes unclean hands. (Motion, 16-17; DSS ¶ 133.)

Plaintiff contends that he was not concerned with dividing assets with his ex-wife as his divorce had been finalized. (PSS, ¶ 133; Irvin Decl., ¶¶ 46-49; Weissmann Deposition, 47:12-48:3.) Plaintiff contends that instead, only Robert Irvin was concerned with keeping the oral agreement oral as Robert Irvin allegedly believed doing so would benefit Plaintiff. (Id.) Plaintiff points to his own declaration and Charles Weissmann’s deposition in support of his contention.

Charles Weissmann testifies to his understanding of Robert Irvin’s handwritten note regarding the agreement, as follows:

“Q: And was there an issue with putting it in writing because of Richard’s divorce?

A: Yes.

Q: So we knew that there was an agreement of some sort, but it couldn’t be documented –

A: That’s exactly what Bob was alluding to in the note.

Q: was the issue that Helene Irvin was going to claim it as an asset of the family estate?

A; I don’t know, but clearly, that was the indication.”

(Weissmann Deposition at pp. 47:12-22.)

Further, Plaintiff testified that he spoke to Robert Irvin about signing the agreement and that Robert Irvin told him he had concerns about Plaintiff’s ex-wife. (Irvin Deposition, 151:9-152:11.) Plaintiff testifies that sometime thereafter, he and Robert Irvin spoke again about the matter and apparently came to an agreement about the terms. (Id.)

Given the foregoing and viewing the evidence submitted in the light most favorable to Plaintiff, the court finds that Defendants have failed to establish the absence of a triable issue of material fact with respect to whether Plaintiff only entered into an oral agreement for the purpose of defrauding his ex-wife. Although Defendants contend that Plaintiff chose an oral agreement only for that purpose, the testimony they submit in support of their contention only appears to demonstrate that Robert Irvin, not Plaintiff, was concerned about Plaintiff’s ex-wife having access to his assets. Plaintiff testified to Robert Irvin’s concerns in his deposition, as well as Charles Weissman in his deposition. Thus, triable issues of material fact exist with regard to why Plaintiff chose to enter into an oral, not written agreement with Robert Irvin over his payment in connection with the Garda litigation. Moreover, even if Plaintiff was attempting to withhold financial information during litigation with his wife/ex-wife, that would have been unclean hands as to her; not as to the Defendants in this action.

Accordingly, the court DENIES summary adjudication on this issue.

  1. Issue Eight: Plaintiff’s fourth cause of action for breach of contract and eighth cause of action for goods and services rendered should be dismissed because the oral contract would have been entered into under duress.

Finally, Defendants contend that Plaintiff’s fourth and eighth causes of action should be dismissed because the oral agreement would have been entered into under duress. (Motion, 17-18.) Specifically, Defendants contend that Plaintiff reached an agreement with Robert Irvin on January 28, 2013 after a heated exchange in which Plaintiff threatened his father and, as such, any agreement is invalid because it would have occurred under duress. (Id.)

“An apparent consent is not real or free when obtained through duress…” (Cal. Civ. Code ; 1567.) “Duress envisions some unlawful action by a party by which one’s consent is obtained through fear or threats.” (Keithley v. Civil Services Board (1970) 11 Cal.App.3d 443, 450.) Duress consists of “unlawful confinement of another’s person, or relatives, or property . . .” (Cal. Civ. Code ; 1569.) Duress is sufficient to invalidate a contract if the amount applied affected the individual so as to “deprive him of contractual volition.” (McIntosh v. McIntosh (1962) 209 Cal.App.2d 371, 373.)

Defendants mainly rely on the Declaration of Betty Irvin in support of their contentions on this issue. Betty Irvin declares that she was present “one day” when Plaintiff arrived at she and Robert Irvin’s home to speak about the business, but that she does not know exactly what was discussed. (Betty Irvin Decl., ¶¶ 4, 6.) Betty Irvin further declares that Plaintiff was “angry” and that she heard him “make threatening remarks.” (Id.) Betty Irvin also attests that Plaintiff was standing while Robert Irvin was lying on the couch and that she believed Plaintiff “was going to choke Bob” at one point during the conversation. (Id. ¶ 5.) Betty Irvin also declares that she believed Plaintiff “appeared to be ready to kill Bob.” (Id. ¶ 6.)

Plaintiff disputes each of these statements and objects to Betty Irvin’s declaration, as discussed above. Overall, Plaintiff contends that there were no threats or intimidation and that he has never sought to threaten or intimidate Robert Irvin, his father. (Irvin Decl., ¶ 46.)

Given the foregoing and viewing the evidence submitted in the light most favorable to Plaintiff, the court finds that Defendants have failed to demonstrate the absence of a triable issue of material fact with respect to whether the oral agreement was formed under duress. Defendants’ only evidence in support of this contention is the declaration of Betty Irvin. Betty Irvin, by her own admission, has never been involved in Systems, Services or Kumiva. Further, Betty Irvin, by her own admission, did not know what was discussed on or about January 2013 when Plaintiff came to their home to speak with Robert Irvin. Moreover, Plaintiff has submitted his own declaration in support of his contention that he never engaged in threats, intimidation or other actions constituting duress towards Robert Irvin. Thus, the court finds that triable issues of material fact exist regarding whether the oral agreement or any portion thereof was entered into as a result of duress.

Accordingly, the court DENIES summary adjudication with respect to this issue.

III. Conclusion

Defendants’ motion for summary judgment or, in the alternative, summary adjudication is GRANTED with respect to issues number one, three and five. The motion is MOOT with respect to issue 2 and is otherwise DENIED with respect issues four, six, seven and eight. Defendants are to give notice.


[1] Plaintiff asserts claims against Defendant Betty Irvin in her individual capacity and as trustee of the R. and B. Irvin Living Trust dated March 1, 1990 (the “Living Trust”) and as trustee of the Betty F. Irvin and Robert G. Irvin Revocable Community Property Trust (the “Community Property Trust”).

[2] Plaintiff originally also asserted the first cause of action against the Betty Irvin, the Living Trust, and the Community Property Trust and asserted the second cause of action against the Living Trust and the Community Property Trust. Plaintiff dismissed these causes of action as to these Defendants on March 20 and 21, 2019.



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