Superior Court, State of California



DATE: October 26, 2021 TIME: 9:00 A.M.

PREVAILING PARTY SHALL PREPARE THE ORDER OR AS OTHERWISE STATED BELOW

(SEE RULE OF COURT 3.1312 - PROPOSED ORDER MUST BE E-FILED BY COUNSEL AND SUBMITTED PER 3.1312(C))

EFFECTIVE JULY 24, 2017, THE COURT NO LONGER PROVIDES OFFICIAL COURT REPORTERS FOR CIVIL LAW AND MOTION HEARINGS. SEE COURT WEBSITE FOR POLICY AND FORMS.

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TROUBLESHOOTING TENTATIVE RULINGS

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|LINE # |CASE # |CASE TITLE |RULING |

|LINE 1 | 21CV381434 |McPharlin Sprinkles & Thomas LLP vs Vasili |Click line 1 (or scroll to line 1) for tentative ruling. |

| | |Stratton et al | |

|LINE 2 |21CV382527 |NEIL CITRARO et al vs WRP PROPERTIES, LLC et |Click line 2 (or scroll to line 2) for tentative ruling. |

| | |al | |

|LINE 3 |20CV371773 |Loretta Lee vs C. Hwang et al |Click line 3 (or scroll to line 3) for tentative ruling. |

|LINE 4 |20CV371773 |Loretta Lee vs C. Hwang et al |Click line 4 (or scroll to line 4) for tentative ruling. |

|LINE 5 |20CV371773 |Loretta Lee vs C. Hwang et al |Tentative ruling included in line 4. |

|LINE 6 |20CV371773 |Loretta Lee vs C. Hwang et al |Tentative ruling included in line 4. |

|LINE 7 |20CV373787 |Richard Espinoza vs Toyota Motor Sales, |Click line 7 (or scroll to line 7) for tentative ruling. |

| | |U.S.A., Inc. | |

|LINE 8 |20CV373787 |Richard Espinoza vs Toyota Motor Sales, |Tentative ruling included in line 8. |

| | |U.S.A., Inc. | |

|LINE 9 |20CV373787 |Richard Espinoza vs Toyota Motor Sales, |Tentative ruling included in line 8. |

| | |U.S.A., Inc. | |

|LINE 10 | 16CV302157 |Jose Gomez vs Juan Arteaga et al |Motion to be relieved as counsel for plaintiff is GRANTED. |

| | | |No opposition filed. |

|LINE 11 | 20CV365776 |Global Aerospace, Inc. et al vs Signature |Click line 11 (or scroll to line 11) for tentative ruling. |

| | |Flight Support LLC et al | |

|LINE 12 | 21CV382658 |Gemma Hwang vs Legacy Roofing & |Petitioner Gemma Hwang’s (“petitioner”) petition and motion to release|

| | |Waterproofing, Inc. |the recorded mechanics’ lien of respondent Legacy Roofing & |

| | | |Waterproofing, Inc. (“respondent”) is GRANTED. Judgment is entered in|

| | | |favor of petitioner, and petitioner’s property described in the |

| | | |petition is released from respondent’s claim of mechanics’ lien. |

| | | |Further, pursuant to subdivision (c) of Civil Code section 8488, |

| | | |petitioner is the prevailing party, and shall recover from respondent |

| | | |reasonable attorneys’ fees of $2,144 which respondent is ordered to |

| | | |pay to petitioner on or before November 26, 2021. |

|LINE 13 | 20CV371773 |Loretta Lee vs C. Hwang et al |Click line 13 (or scroll to line 13) for tentative ruling |

|LINE 14 | 20CV371773 |Loretta Lee vs C. Hwang et al |Tentative ruling is included in line 13. |

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Calendar line 1

Case Name: McPharlin Sprinkles & Thomas, LLP v. Stratton, et al.

Case No.: 21CV381434

According to the allegations of the complaint, Vasili Stratton (“Stratton”), Katherine Stratton as trustee of Stratton Survivors Trust A (“KSST”), Katherine Stratton as trustee of the Stratton Bypass Trust (“KSBT”), and Thalia Stratton as trustee of the Stratton Grandchildren’s Trust (“TSGT”), were members of Samos Enterprises, LLC (“Samos”). (See complaint, ¶¶ 2-5.) In October 2018, Stratton, KSST, KSBT and TSGT reached an agreement wherein KSST, KSBT and TSGT agreed to transfer all their respective membership interest in Samos—75% in total—to Stratton in exchange for $3,000,000. (See complaint, ¶ 10.) The parties to this transaction approached Daniel J. Mash (“Mash”) of plaintiff McPharlin Sprinkes and Thomas LLP (“Plaintiff”) to prepare an agreement to facilitate the transaction. (See complaint, ¶ 11.) Mash prepared a Limited Liability Company Membership Purchase Agreement and agreed to be the escrow agent for the transaction. (See complaint, ¶ 11, exh. A.) On October 21, 2019, Samos recognized Stratton as the sole member in the company. (See complaint, ¶ 12, exh. B.) Pursuant to the agreement, Stratton tendered an initial deposit to Plaintiff in the amount of $200,000, which was deposited in its client trust account. (See complaint, ¶ 13.) On April 26, 2019, Plaintiff received the remaining $2,800,000 which it also deposited into its client trust account. (See complaint, ¶ 13.) Pursuant to the agreement, payments were issued from the client trust account to KSST, KSBT and TSGT; however, thereafter, through their counsel, KSST, KSBT and TSGT returned the funds, and Plaintiff retains the purchase funds in its client trust account. (See complaint, ¶ 14, exh. C.) On June 11, 2019, KSST and KSBT filed an action in Santa Clara County Superior Court seeking to rescind the transaction. (See complaint, ¶ 15.) Plaintiff has sought to transfer the funds to one of the party’s client trust accounts pending the outcome of the action, but a transfer has yet to occur despite numerous drafts of stipulations. (See complaint, ¶ 15.)

On March 11, 2021, Mash was contacted by Jason Skaggs (“Skaggs”), who informed Mash that he now represented KSST and KSBT and that KSST and KSBT now wanted the May 1, 2019 checks reissued to her from the purchase funds. (See complaint, ¶ 16.) Mash informed Skaggs that given the return of the checks and the subsequent litigation, all parties to the escrow, including TSGT, would have to have notice of his clients’ request and consent and/or mutually agree to his check request for a distribution of the purchase funds, or the purchase funds would otherwise be deposited with the court by interpleader. (See complaint, ¶ 16, exh. D.)

On March 15, 2021, Skaggs sent a written instruction to Mash to reissue a portion of the purchase funds to KSST and KSBT no later than March 22, 2021. (See complaint, ¶ 17, exh. E.) Stratton’s attorney, Mr. Arellanez (“Arrellanez”) received the letter and told Mash that he needed to discuss the matter with his client, but Arellanez did not contact Mash by March 22, 2021, so, on March 22, 2021, Mash notified Skaggs and Arellanez that he was obligated to interplead the conflicting claims and money with the court. (See complaint, ¶ 18, exh. F.) In response to an email exchange between Skaggs and Mash, Arellanez instructed Plaintiff to interplead the funds. (See complaint, ¶ 19, exh. G.)

On April 1, 2021, Plaintiff filed a complaint for interpleader against Stratton, KSST, KSBT, TSGT and Samos (collectively, “Defendants”), asserting a single cause of action for interpleader.

Defendants KSST and KSBT (collectively, “demurring defendants”) demur to the complaint for interpleader.

DEMURRER TO THE COMPLAINT

Demurring defendants argue that the complaint fails to allege “that the defendants have made conflicting claims to the $2.2 million belonging to KKST and KSBT reflected in checks that McPharlin already issued to KKST and KSBT.” (See Defs.’ memorandum of points and authorities in support of demurrer (“Defs.’ memo”), p.4:17-22.) Defendants cite to Placer Foreclosure, Inc. v. Aflalo (2018) 23 Cal.App.5th 1109, which states that “[a] party ‘against whom double or multiple claims are made,’ that ‘may give rise to double or multiple liability,’ may bring an action against the claimants to compel them to interplead and litigate their claims.” (Id. at p.1113.) “The complaint must show that ‘the defendants make conflicting claims’ to the subject matter, and that the plaintiff ‘cannot safely determine which claim is valid and offers to deposit the money in court.’” (Id., quoting Westamerica Bank v. City of Berkeley (2011) 201 Cal.App.4th 598, 607-608.) “But an interpleader action may not be maintained ‘upon the mere pretext or suspicion of double vexation.’” (Id., quoting Westamerica Bank, supra, 201 Cal.App.4th at p.608.) Demurring defendants contend that Stratton “has no claim against McPharlin or any current claim to the $2.2 million; he has only a ‘possible eventual right’ to the refund of his purchase proceeds from Katherine in the even[t] that she succeeds in her lawsuit. This is insufficient under Placer to provide the basis for an interpleader action.” (Defs.’ memo, p.7:4-7.)

However, the Placer court, at length, discussed Placer’s statutory obligations under section 2924k to disburse surplus funds to Afalo. (See Placer, supra, 23 Cal. App.5th at pp.1113-1114 (rejecting Placer’s contention that “the interpleader complaint was proper because Placer was faced with liability from Pro Value if it distributed the surplus funds to Afalo… [since] Placer could safely distribute the surplus funds to Aflalo as required by statute without any risk of multiple liability… [t]he trustee’s role in preparing for and conducting a nonjudicial foreclosure sale is set forth in detail in Civil Code section 2924 et seq., as part of a comprehensive statutory scheme… [t]he scope and nature of the trustee’s duties are exclusively defined by the deed of trust and the governing statutes… [n]o other common law duties exist… Placer was statutorily required under section 2924k to disburse surplus funds to Aflalo… Section 2924k, subdivision (a) provides that a trustee ‘shall distribute the proceeds’ in the following order of priority: (1) costs and expenses of the sale, (2) payment of the ‘obligations secured by the deed of trust,’ (3) payment to any junior liens or encumbrances, and (4) payment ‘[t]o the trustor’… Placer paid the costs and expenses of the sale and the encumbrances as directed under section 2924k, subdivision (a)(1) through (3), including payment to the lender of record, but did not pay the remaining funds to Aflalo, the trustor… Placer was required to do so… Placer does not cite to any authority that would prevent it from performing its statutory obligation to disburse the sale proceeds as directed under section 2924k… [r]elying on section 2924j, it argues that it was not required to comply with section 2924k when there are ‘disputed unresolved claims’… Placer’s reliance on section 2924j is misplaced… Section 2924j does not apply because the conflicting claims are not between parties who had recorded interests before the sale… [t]he conflicting claims at issue here are not between lienholders, and Placer admits that Pro Value has no claim to the sale proceeds under section 2924k… [n]othing in section 2924j excuses Placer from carrying out its duty of distributing the surplus proceeds in accordance with section 2924k”).) Unlike Placer, Plaintiff is not under any statutory obligation to disburse the subject funds. As stated above, in Placer, there was no common law duty to distribute the surplus proceeds and the duty was thus defined by statute.

The Sixth District has stated that “typical situations permitting interpleader include… an escrow holder of a fund where one claimant notified the escrow holder that the contract was cancelled and nothing should be paid to the other claimant.” (Pac. Loan Management Corp. v. Super. Ct. (Armstrong) (1987) 196 Cal.App.3d 1485, 1490.) Here, the complaint alleges that after receiving the monies for the purchase of all remaining membership interest in Samos from Stratton, Plaintiff deposited those monies into the client trust account and, pursuant to the agreement, issued payments from the client trust account to demurring defendants and TSGT. (See complaint, ¶¶ 13-14.) Thus, Plaintiff fulfilled its obligations as escrow holder pursuant to the term of the escrow and membership purchase agreement. (See complaint, exh. A, §§ 3 (“Purchase Price Allocation”) (stating “[u]pon receipt and after the payment of any debt, costs or expenses, the purchase money shall be distributed to member KSST, member KSBT and member TSGT in in [sic] proportion to their respective membership interest in the Company”), 5 (“Transfer of Interest”) (stating that “[t]he escrow agent, shall hold the membership interest in escrow to be distributed to [Stratton] upon confirmation and verification of [Stratton] funding of the $4,000,000 purchase money to be paid to KSST, KSBT and TSGT”).) However, counsel for demurring parties allegedly then returned the funds and filed an action to rescind the transaction. (See complaint, ¶¶ 14-15.) Counsel for Stratton stated that if Plaintiff did not interplead the funds with the Court, Plaintiff should “hav[e] the funds deposited into a trust account with [Stratton’s counsel’s firm] Clapp Moroney until [demurring defendants’ action to rescind the transaction] is resolved. (See complaint, ¶ 19, exh. G.)

Both parties cite to Westamerica Bank, supra, 201 Cal.App.4th 598, which states that "[a] complaint in interpleader must show that “the defendants make conflicting claims to [the subject matter], and that the [plaintiff] cannot safely determine which claim is valid and offers to deposit the money in court.” (Id. at pp. 607-608.) Demurring defendants contend that “[t]he lawsuit is not relevant to the payment by McPharlin of the $2.2 million it is holding for KKST and KSBT.” (Defs.’ memo, p.6:5-6.) However, in their lawsuit, demurring defendants are seeking to rescind the Membership Purchase Agreement that contained the subject escrow instructions. It is difficult to understand demurring defendants’ assertion that the filing of their lawsuit is not relevant to the escrow holder’s duties. (See Virtanen v. O'Connell (2006) 140 Cal.App.4th 688, 703 (stating that “it is the duty of an escrow holder to comply strictly with the instructions of his principal… and if he disposes of the property of his principal in violation of these instructions, or otherwise breaches that duty, he will be responsible for any loss occasioned thereby… [t]he rule continues to apply when the escrow holder in question is an attorney”).) Whether the monies are deposited with counsel for demurring defendants or counsel for Stratton, Plaintiff is subject to claims from either party.

Demurring defendants also argue that the instructions from Stratton’s attorney were not certain enough so as to state a conflicting claim. (See Defs.’ Memo, p.5:1-14.) The Court disagrees. Stratton’s attorney stated that if the funds were not interplead with the Court, they would “hav[e] the funds deposited into a trust account with Clapp Moroney until this matter is resolved.” This is certainly in conflict with demurring defendants’ claim to have the funds deposited in an account of their attorney.

The demurrer to the complaint is OVERRULED.

The Court will prepare the Order.

- oo0oo -

Calendar line 2

Calendar Line No. 2

Case Name: Neil S. Citraro, et al. v. WRP Properties, LLC, et al.

Case No.: 21-CV-382527

Demurrer to the Complaint by Defendant Stead Financial, Inc.

Factual and Procedural Background

This is an action for fraud and breach of contract.

Plaintiffs Neil S. Citraro (“Neil”) is an individual residing in Santa Clara County and trustee of The Neil S. Citraro 2017 Revocable Trust. (Complaint at ¶ 1.) Plaintiffs Anne Walker Citraro (“Anne”) and Corey Addison (“Addison”) are also individuals residing in Santa Clara County. (Id. at ¶¶ 2-3.) Plaintiffs Neil, Anne, and Addison are collectively identified as “Plaintiffs.”

Defendant WRP Properties, LLC (“WRP”) is a California limited liability company doing business in Santa Clara County. (Complaint at ¶ 4.) Defendant Stead Financial, Inc. (“Stead Financial”) is a California limited liability company doing business in Santa Clara County and the managing member of WRP. (Id. at ¶ 5.)

Defendants Michael Corbin Stead (“Stead”) and Thomas Johansen (“Johansen”) are directors/officers/controlling persons of Stead Financial. (Complaint at ¶¶ 7-8.) Defendant Norman A. Barnes (“Barnes”) is a member/manager of one of the entities that stood to benefit financially from the subject investment/transaction mentioned below. (Id. at ¶ 9.) Defendants WRP, Stead Financial, Stead, Johansen, and Barnes are collectively referred to as “Defendants.”

According to the operative complaint, in late 2018, Defendants presented an investment opportunity to Plaintiffs with respect to real property located at 1555 Mercy Street in Mountain View, California (the “Subject Property”). (Complaint at ¶ 12.) The Subject Property is a residential property comprised of a main house in addition to a detached triplex comprised of three two-bedroom, one-bathroom units. (Ibid.) WRP had purchased the Subject Property on March 24, 2017. (Ibid.)

In addition to the Subject Property, WRP had also purchased two other properties located at 23691 Camino Hermoso Drive in Los Altos Hills and 755 Sutter Avenue in the City of Palo Alto. (Complaint at ¶ 13.) Defendants Stead Financial and Stead invested approximately $2,000,000 in the three projects. (Ibid.) Prior to Plaintiffs’ involvement, WRP sold the Camino Hermoso and Sutter properties. (Ibid.) As a consequence, Stead Financial, as managing member of WRP, received distributions from WRP. (Ibid.)

Furthermore, when selling the Camino Hermoso property, WRP agreed to seller carryback financing in the amount of $310,000. (Complaint at ¶ 14.) WRP received a promissory note from the buyer which was secured by a deed of trust in second position against the Camino Hermoso property. (Ibid.)

The Subject Property was WRP’s sole remaining project at the time Plaintiffs were approached, and WRP was allegedly undercapitalized due to prior distributions to Stead and Stead Financial relating to properties. (Complaint at ¶ 15.) WRP, however, painted a different picture of its financial condition to Plaintiffs in inducing them to invest in the Subject Property. (Ibid.)

According to Defendants, the investment had two parts. (Complaint at ¶ 16.) First, plaintiffs Neil and Addison would lend money to WRP by way of a note to be secured by a second deed of trust, and those funds would be used to fund the renovation of the Subject Property. (Ibid.) Second, WRP and Plaintiffs would enter into a “Project Development Agreement” (“PDA”) whereby Anne would act in the role of “Developer” (i.e., project manager for Barnes, who represented himself as a licensed contractor) as well as listing broker for the sale of the Subject Property once the project was completed. (Ibid.) In exchange for her services as “Developer,” plaintiff Anne would receive twenty percent (20%) of the net proceeds from the sale of the Subject Property. (Ibid.)

In presenting this opportunity to Plaintiffs in January 2019, Defendants represented that: (1) WRP was run by experienced individuals that could pay the debt owed to Plaintiffs; (2) that WRP was adequately capitalized; (3) that WRP would not take on any additional debt and Plaintiffs’ investment would be secured; (4) that the Subject Property was worth approximately $2,700,000 to $2,800,000, and would be worth $3,500,000 to $3,600,000 once the tenants were removed and $100,000 of work was completed; (5) that the estimated costs of improvement were $100,000; (6) that defendant Barnes was a licensed contractor with three decades of experience and would act as a general contractor for the project; (7) that defendant Johansen was extremely experienced and sophisticated with respect to real estate investments and similar fix-up projects; (8) that there was more than adequate equity in the Subject Property so as to allow a renovation and a return on Plaintiffs’ investment; (9) that Plaintiffs would receive a preferred return of 22% based upon a note and deed of trust drafted by Barnes himself, and which Barnes and Johansen (who represented himself as a sophisticated, experienced loan broker) represented would be enforceable to provide the promised 22% preferred return; (10) that WRP would sell the Subject Property immediately upon completion of the improvements; and (11) that as listing broker, plaintiff Anne would be permitted to market and sell the Subject Property on the MLS. (Complaint at ¶ 17.) In addition, Defendants concealed that, when they refinanced the Subject Property just months beforehand in November 2018, Stead Financial received a distribution of the loan proceeds that depleted WRP’s capital to the detriment of its creditors. (Ibid.)

Defendants knew these representations were false when they made them, but did so to induce Plaintiffs to lend $550,000 to WRP and to enter into a PDA. (Complaint at ¶ 18.)

In reliance on these representations, plaintiffs Neil and Addison signed a Balloon Payment Note dated February 20, 2019 under which they agreed to lend $275,000 each for a total of $550,000 to WRP (“Balloon Payment Note”) with a preferred return of 22% and transferred $550,000 to WRP. (Complaint at ¶ 19.) The Balloon Payment Note was secured by a second deed of trust against the Subject Property. (Ibid.) The deed of trust was recorded against the Subject Property on March 18, 2019 in Santa Clara County. (Ibid.)

Also, in reliance on Defendants’ representations, Plaintiffs signed a PDA with WRP dated February 20, 2019. (Complaint at ¶ 20.) Under the terms of the PDA, plaintiffs Neil and Addison agreed to loan $550,000 to WRP. (Ibid.) In addition, under the terms of the PDA, WRP was to utilize these funds toward particular expenses and, upon the sale of the Subject Property, plaintiff Anne is to receive a sum equal to twenty (20%) of the net proceeds from the sale, if any. (Ibid.) The terms of the PDA further set forth the order of priority for satisfaction of WRP’s financial obligations upon sale of the Subject Property. (Ibid.)

After signing the Balloon Payment Note, lending the $550,000, and signing the PDA, the parties began renovating the Subject Property. (Complaint at ¶ 21.) As the project progressed, Defendants claimed there were insufficient funds to cover the costs of the improvements. (Id. at ¶ 22.) In that regard, Defendants sought an additional $100,000 from plaintiffs Neil and Addison. (Ibid.) Defendants falsely represented to them that the additional $100,000 would cover the additional cost of improvements and WRP was adequately capitalized. (Ibid.)

Relying on these false representations, plaintiffs Neil and Addison signed an Amended and Restated Balloon Payment Note dated October 15, 2019 in which they agreed to lend an additional $100,000 to WRP for a total of $650,000 (“Amended and Restated Balloon Payment Note”). (Complaint at ¶ 23.) Under the terms of the Amended and Restated Balloon Payment Note, the entire outstanding principal balance and all accrued and unpaid preferred return was due and payable on February 1, 2020 by WRP to Neil and Addison. (Ibid.) The Amended and Restated Balloon Payment Note also provides for a preferred return at the rate of twenty-two percent (22%). (Ibid.)

In September 2019, Plaintiffs informed defendant Johansen that additional funds would be needed to finish renovating the triplex. (Complaint at ¶ 24.) Defendant Johansen, on behalf of WRP and Stead Financial, instructed Plaintiffs to pay the expenses and assured them they would be reimbursed for the same. (Ibid.) Relying on these representations, plaintiff Neil advanced two different checks totaling $66,450 to the contractor on October 25 and 31, 2019. (Ibid.) In addition, plaintiff Neil paid the contractor the remaining $80,000 (ultimately negotiated down to $70,000) owed after multiple complaints by the contractor. (Ibid.) Defendants’ representations however were false as they refused to reimburse Plaintiffs for the advanced funds. (Ibid.)

In December 2019, plaintiff Anne obtained and presented a $3,050,000 offer from a potential buyer to Defendants. (Complaint at ¶ 26.) But, Defendants refused to respond to or consider the offer thereby frustrating her ability to perform under the PDA. (Ibid.) Moreover, Defendants never intended to allow plaintiff Anne to sell the Subject Property. (Ibid.)

WRP failed to pay the entire outstanding principal balance and all accrued and unpaid preferred return by February 1, 2020 to plaintiffs Neil and Addison in breach of the Amended and Restated Balloon Payment Note. (Complaint at ¶ 25.)

In April 2020, unbeknownst to Plaintiffs, WRP assigned its interest in the $310,000 promissory note and deed of trust to Stead Financial, effectively sweeping the last remaining asset of WRP. (Complaint at ¶ 27.) Plaintiffs allege the $310,000 promissory note and deed of trust were an asset of WRP, and that Stead Financial and Stead arranged for that asset to be assigned to them instead, to the detriment of WRP’s creditors who had no other recourse given that the Subject Property was or was about to be in foreclosure. (Ibid.) Defendants thereafter allowed the Subject Property to be foreclosed on. (Ibid.)

On April 16, 2021, Plaintiffs filed the operative complaint against Defendants alleging causes of action for: (1) breach of promissory note; (2) breach of contract – PDA; and (3) fraud.

On July 6, 2021, defendant Stead filed his answer to the complaint and a cross-complaint against plaintiff Anne setting forth causes of action for: (1) implied equitable indemnity; (2) contribution; and (3) tort of another.

On August 13, 2021, defendant Stead Financial filed the motion presently before the court, a demurrer to the complaint. Plaintiffs filed written opposition. Defendant Stead Financial filed reply papers.

A further case management conference is set for April 5, 2022.

Demurrer to the Complaint

Defendant Stead Financial argues the third cause of action is subject to demurrer for failure to state a claim. (Code Civ. Proc., § 430.10, subd. (e).)

Timeliness

As a preliminary matter, the court notes the demurrer appears to be untimely filed. A party may file a demurrer within 30 days of service of the complaint. (Code Civ. Proc., § 430.40, subd. (a).) Plaintiffs served defendant Stead Financial with the summons and complaint via substitute service on June 3, 2021. The instant demurrer was not filed until August 13, 2021, well beyond the statutory deadline and is therefore untimely.

Even so, the court has discretion to consider an untimely demurrer. (See Code Civ. Proc., 473, subd. (a)(1); see also Jackson v. Doe (2011) 192 Cal.App.4th 742, 750 [appellate court determined that trial court properly exercised its discretion in considering untimely demurrer]; McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, 282 [appellate court held that trial court’s decision to entertain second demurrer did not affect plaintiff’s substantial rights].) Here, the court finds that consideration of the demurrer will not affect Plaintiffs’ substantial rights. In fact, Plaintiffs do not raise any objection to the untimely filing and do not appear to be prejudiced having submitted substantive opposition addressing the demurrer. This court also adheres to the policy that cases be tried on the merits whenever possible. (See Juarez v. Wash Depot Holdings, Inc. (2018) 24 Cal.App.5th 1197, 1202 [policy of the law is to have every litigated case tried upon its merits].) The court thus exercises its discretion to consider the demurrer.

Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’ ” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

Third Cause of Action – Fraud

“The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.)

“Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793 (West), citation and quotation marks omitted.)

Courts enforce the specificity requirement in consideration of its two purposes. (West, supra, 214 Cal.App.4th at p. 793.) The first purpose is to give notice to the defendant with sufficiently definite charges that the defendant can meet them. (Ibid.) The second is to permit a court to weed out meritless fraud claims on the basis of the pleadings; thus, the pleading should be sufficient to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud. (Ibid.)

Defendant Stead Financial argues the fraud claim lacks the required specificity to state a valid cause of action. In support, defendant Stead Financial refers to misrepresentations alleged in paragraphs 17 and 45 in the complaint. Defendant Stead Financial contends: (1) as Plaintiffs broadly allege “Defendants” made the misrepresentations, it is impossible to determine who exactly made each alleged misrepresentation; (2) Plaintiffs do not allege how or by what means Defendants made the alleged misrepresentations; (3) Plaintiffs do not allege where Defendants made the misrepresentations; (4) it is unclear when the misrepresentations were made or whether they were made over a period of time; and (5) Plaintiffs do not plead specific facts to satisfy the pleading standard for a fraud claim against a corporate entity. (See Memo of P’s & A’s at p. 5:2-20.)

But, as the opposition points out, the fraud claim is not based simply on misrepresentations, but also on a concealment of facts.

“Concealment is a species of fraud or deceit. [Citations.] ‘[T]he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’ [Citations.]” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.)

Along with misrepresentations, Plaintiffs allege also that:

“Defendants concealed that when they refinanced the Subject Property just months beforehand in November 2018 that Stead Financial received a distribution of the loan proceeds that depleted the WRP’s capital to the detriment of WRP’s creditors.”

(Complaint at ¶¶ 17, 45.)

The moving papers fail to address the concealment allegations in connection with the motion and a party cannot demur to a portion of a cause of action. (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778 [“[A] defendant cannot demur generally to part of a cause of action”] see also PH II, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action”]; Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274 [“A demurrer challenges a cause of action and cannot be used to attack a portion of a cause of action”].) Therefore, the demurrer is not sustainable on this ground.

Consequently, the demurrer to the third cause of action on the ground that it fails to state a claim is OVERRULED.

Disposition

The demurrer to the third cause of action on the ground that it fails to state a valid claim is OVERRULED.

The court will prepare the Order.

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Case name: Loretta Lee v. C. Gemma Hwang, et al.

Case no.: 20CV371773

Background

On October 8, 2020, plaintiff Loretta Lee (“plaintiff”) filed complaint against defendants C. Gemma Hwang (“Gemma”), Rosemead Hwang LLC (“Rosemead”), Monument 3: Realty Fund VII, Ltd. (“Monument 3,, Realty 7”), Monument 3: Realty Fund VIII, Ltd. (“Monument 3, Realty 8”) Willowbend Apartments Hwang, L.P, (“Willowbend Apartments”) and Willowbend Hwang LLC (“Willowbend Hwang”). The complaint alleges nine causes of action arising from plaintiff’s membership interest in Rosemead, limited partner interest in Monument 3, Realty 7, Monument 3, Realty 8, Willowbend Apartments and Willowbend Hwang, and alleged breach of fiduciary and statutory duties owed to plaintiff, and violations of the Corporations Code. The complaint seeks compensatory damages, punitive damages, accounting, declaratory relief and attorney fees.

On August 13, 2021 plaintiff filed the following motions to compel set for hearing on October 26, 2021:

1. Further responses from Gemma to discovery (form interrogatories, set 1 (“FI”) and special interrogatories, set 1 (“SI”)

2. Production of documents from Gemma (filed August 19, 2021) (“RPD”)

3. Further responses from Rosemead to discovery (requests for admission, set 1 (“RFA”), form interrogatories, set 1 (“FI”), special interrogatories, set 1 (“SI”) and request for production of documents, set 1 (“RPD”)

4. Further responses from Monument 3, Realty 7 to discovery (requests for admission, set 1 (“RFA”), form interrogatories, set 1 (“FI”), special interrogatories, set 1 (“SI”) and request for production of documents, set 1 (“RPD”)

5. Further responses from Monument 3, Realty 8 to discovery (requests for admission, set 1 (“RFA”), form interrogatories, set 1 (“FI”), special interrogatories, set 1 (“SI”) and request for production of documents, set 1 (“RPD”)

On October 13, 2021, the responding defendant to each motion to compel filed opposition.

Line 3 – Motion to compel further responses from Gemma to plaintiff’s FI, SI and RPD

Form Interrogatories

FI No. 2.9

Motion to compel further response is GRANTED. Objections are OVERRULED, and the response is nonresponsive to the FI. Gemma shall serve a further response.

FI No. 2.10

Motion to compel further response is GRANTED. Objections are OVERRULED, and the response is nonresponsive to the FI. Gemma shall serve a further response.

FI No. 12.1

Motion to compel further response is DENIED. Although “INCIDENT” is defined in the judicial council FI, definitions in the judicial council form are not absolute. Here, the definition refers to accident, injury other occurrences or breach of contract giving rise to the action. Plaintiff’s complaint alleges many occurrences or breach of duties over a period of time from plaintiff’s perspective, and the definition requires speculation, guess and conjecture of defendant to identify each such occurrence or breach that may be alleged or inferred from the complaint. The SI requires specificity in description, time and scope. Objection vague and ambiguous is SUSTAINED. No further response is required. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response.

FI No. 12.2

Motion to compel further response is DENIED. Although “INCIDENT” is defined in the judicial council FI, definitions in the judicial council form are not absolute. Here, the definition refers to accident, injury other occurrences or breach of contract giving rise to the action. Plaintiff’s complaint alleges many occurrences or breach of duties over a period of time from plaintiff’s perspective, and the definition requires speculation, guess and conjecture of defendant to identify each such occurrence or breach that may be alleged or inferred from the complaint. The SI requires specificity in description, time and scope. Objection vague and ambiguous is SUSTAINED. No further response is required. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response.

FI No. 12.3

Motion to compel further response is DENIED. Although “INCIDENT” is defined in the judicial council FI, definitions in the judicial council form are not absolute. Here, the definition refers to accident, injury other occurrences or breach of contract giving rise to the action. Plaintiff’s complaint alleges many occurrences or breach of duties over a period of time from plaintiff’s perspective, and the definition requires speculation, guess and conjecture of defendant to identify each such occurrence or breach that may be alleged or inferred from the complaint. The SI requires specificity in description, time and scope. Objection vague and ambiguous is SUSTAINED. No further response is required. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response.

FI No. 12.4

Motion to compel further response is DENIED. Although “INCIDENT” is defined in the judicial council FI, definitions in the judicial council form are not absolute. Here, the definition refers to accident, injury other occurrences or breach of contract giving rise to the action. Plaintiff’s complaint alleges many occurrences or breach of duties over a period of time from plaintiff’s perspective, and the definition requires speculation, guess and conjecture of defendant to identify each such occurrence or breach that may be alleged or inferred from the complaint. The SI requires specificity in description, time and scope. Objection vague and ambiguous is SUSTAINED. No further response is required. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response.

FI No. 15.1

Motion to compel further response is GRANTED. Objections are OVERRULED, and response is non responsive to SI and further, is not in compliance with subdivisions (a)(1) and (a)(3) of Code of Civil Procedure section 2030.300. Gemma shall serve a further response.

FI No. 17.1

Motion to compel further response is GRANTED as to request for admissions nos. 1-3, 5-9, 11, 16-27. Gemma shall serve a further response.

FI 50.1

Motion to compel further response is GRANTED. Objections are OVERRULED, and response is non responsive to SI and further, is not in compliance with subdivisions (a)(1) and (a)(3) of Code of Civil Procedure section 2030.300. Gemma shall serve a further response.

FI No. 50.2

Motion to compel further response is GRANTED. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response. Gemma shall serve a further response. To the extent Gemma claims privilege or work product doctrine, Gemma shall serve a privilege log.

FI No. 50.3

Motion to compel further response is GRANTED. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response. Gemma shall serve a further response. To the extent Gemma claims privilege or work product doctrine, Gemma shall serve a privilege log.

FI No. 50.4

Motion to compel further response is GRANTED. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response. Gemma shall serve a further response. To the extent Gemma claims privilege or work product doctrine, Gemma shall serve a privilege log.

FI No. 50.5

Motion to compel further response is GRANTED. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response. Gemma shall serve a further response. To the extent Gemma claims privilege or work product doctrine, Gemma shall serve a privilege log.

FI 50.6

Motion to compel further response is GRANTED. Incorporation of general, introductory objections are OVERRULED as specific objections, as applicable to each SI, should be set forth in each response. Gemma shall serve a further response. To the extent Gemma claims privilege or work product doctrine, Gemma shall serve a privilege log.

All further responses shall be served on or before November 15, 2021.

Special Interrogatories

SI No. 1

Motion to compel further response is GRANTED. Gemma shall serve further response specifically identifying each person and/or entity Gemma refers to in the response wherever “Defendant” is stated.

SI No. 2

Motion to compel further response is GRANTED. The response is not sufficiently responsive to the SI. Gemma shall serve further response.

SI No. 3

Motion to compel further response is GRANTED. Gemma shall serve further response.

SI No. 4

Motion to compel further response is GRANTED. Gemma shall serve further response.

SI No. 5

Motion to compel further response is GRANTED. Gemma shall serve further response.

SI No. 6

Motion to compel further response is GRANTED. Gemma shall serve further response.

SI No. 7

Motion to compel further response is GRANTED. Gemma shall serve further response.

SI No. 8

Motion to compel further response is GRANTED. Gemma shall serve further response, without objection.

SI No. 9

Motion to compel further response is GRANTED. Gemma shall serve further response, without objection.

SI No. 10

Motion to compel further response is GRANTED. Gemma shall serve further response, without objection.

SI No. 11

Motion to compel further response is GRANTED. Gemma shall serve further response, without objection.

SI No. 12

Motion to compel further response is GRANTED. Gemma shall serve further response, without objection.

SI No. 13

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 14

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 16

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 17

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 18

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 19

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 20

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 21

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 22

Motion to compel further response is GRANTED. Gemma shall serve further response. If Gemma exercises the option to produce writings, all writings responsive to the SI shall be served by Gemma with the further response. If privilege is asserted, Gemma shall serve a privilege log with the response.

SI No. 23

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 24

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 25

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 26

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 27

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 28

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 29

Motion to compel further response is GRANTED; the response is incomplete, stating conclusions without supporting facts. Gemma shall serve further response without objection.

SI No. 30

Motion to compel further response is GRANTED. Gemma shall serve further response without objection.

SI No. 31

Motion to compel further response is GRANTED; the response is incomplete, including, but not limited to, stating conclusions without supporting facts. Gemma shall serve further response without objection.

Date for serving further responses

All further responses shall be served on or before November 15, 2021.

Sanctions

Plaintiff was successful in bringing the motion to compel further responses from defendant Gemma Hwang to form interrogatories and special interrogatories. Defendant Gemma and her attorneys shall pay to plaintiff attorneys’ fees of $1,250 as sanctions payable on or before November 15, 2021.

Request for Production of Documents

Plaintiff did not file and serve a separate statement pursuant to Cal Rules of Ct 3.1345.

Additionally, after filing the motion to compel, a stipulation for protective order and order was entered and filed, and defendants Gemma, Rosemead, Monument 3, Realty 7 and Monument 3, Realty 8 have served documents in response to the requests for production of documents served separately on each defendant. However, plaintiff asserts that the defendants collectively produced the documents, and failed to specify which specific defendants produced the documents, and failed to serve a response to the requests, with one exception. Gemma’s opposition does not dispute these assertions.

The motion to compel production of documents shall be continued. In the interim, Gemma, individually, shall serve an amended response identifying the documents that will be produced for each request number, and the documents shall be served with the response. The amended response and production of documents shall be served on or before November 15, 2021.

On or before 15 days after service of the amended response and production of documents, plaintiff shall file and serve a separate statement pursuant to Cal Rules of Ct 3.1345 as to issues, if any, with the amended response and production, and the court will issue rulings in connection therewith. The parties shall promptly notify the court by email if issues with the motion are resolved after further meet and confer.

Further response and sanctions

The court reserves jurisdiction over the motion to compel a further response from Gemma and sanctions in connection with the motion. Hearing on this motion is continued to January 13, 2022, at 9:00 a.m., in Dept. 2.

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Case name: Loretta Lee v. C. Gemma Hwang, et al.

Case no.: 20CV371773

Background

On October 8, 2020, plaintiff Loretta Lee (“plaintiff”) filed complaint against defendants C. Gemma Hwang (“Gemma”), Rosemead Hwang LLC (“Rosemead”), Monument 3: Realty Fund VII, Ltd. (“Monument 3,, Realty 7”), Monument 3: Realty Fund VIII, Ltd. (“Monument 3, Realty 8”) Willowbend Apartments Hwang, L.P, (“Willowbend Apartments”) and Willowbend Hwang LLC (“Willowbend Hwang”). The complaint alleges nine causes of action arising from plaintiff’s membership interest in Rosemead, limited partner interest in Monument 3, Realty 7, Monument 3, Realty 8, Willowbend Apartments and Willowbend Hwang, and alleged breach of fiduciary and statutory duties owed to plaintiff, and violations of the Corporations Code. The complaint seeks compensatory damages, punitive damages, accounting, declaratory relief and attorney fees.

On August 13, 2021 plaintiff filed the following motions to compel set for hearing on October 26, 2021:

1. Further responses from Gemma to discovery (form interrogatories, set 1 (“FI”) and special interrogatories, set 1 (“SI”)

2. Production of documents from Gemma (filed August 19, 2021)

3. Further responses from Rosemead to discovery (form interrogatories, set 1 (“FI”), special interrogatories, set 1 (“SI”) and request for production of documents, set 1 (“RPD”)

4. Further responses from Monument 3, Realty 7 to discovery (requests for admission, set 1 (“RFA”), form interrogatories, set 1 (“FI”), special interrogatories, set 1 (“SI”) and request for production of documents, set 1 (“RPD”)

5. Further responses from Monument 3, Realty 8 to discovery (requests for admission, set 1 (“RFA”), form interrogatories, set 1 (“FI”), special interrogatories, set 1 (“SI”) and request for production of documents, set 1 (“RPD”)

On October 13, 2021, the responding defendant to each motion to compel filed opposition.

Motion to compel further responses from Rosemead to plaintiff’s RFA, FI, SI and RPD

Request for Production of Documents

The RPD and responses attached to the motion relate to 25 RPD, whereas plaintiff’s separate statement refers to 32 RPD and responses. The sets do not match. Accordingly, the rulings below relate only to the RPD and responses set forth in the separate statement. Counsel shall meet and confer to clarify the issue for the court.

RPD No. 15

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 16

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No, 17

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 18

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 19

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 20

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 21

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 22

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 23

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 24

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 25

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 26

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 27

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No 28

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 29

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 30

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 31

Motion to compel is GRANTED; the response is not code-compliant. Rosemead shall serve a specific further response.

RPD No. 32

The separate statement did not set forth the response, and as noted the RPD and responses attached to the motion stop at request no. 25. Motion to compel is therefore DENIED and no further response is required.

Sanctions

Pending clarification from counsel regarding which set of RPD are the subject of the motion, the court reserves determination of sanctions.

Form Interrogatories and Special Interrogatories

There are common issues in the lawsuit involving the individual and entity defendants, and many of the interrogatories, objections and responses present similar discovery issues as those ruled on by the court in connection with the motion to compel further responses from defendant Gemma Hwang.

While the parties have met and conferred and have participated in informal discovery conferences with the court and court discovery facilitator, the disputes persist without progress towards resolution. This indicates a breakdown in effective meet and confer that is expected from counsel, and possible failure to conform to the Code of Professionalism adopted in Santa Clara County Superior Court local rules of court. Considering that the issues on hand are discovery, the parties have already consumed an appreciable amount of court time and resources.

Accordingly, considering the similarity of the discovery issues, counsel for the parties shall meet and confer forthwith, face to face (telephone/Zoom/Teams/Skype), to resolve or reduce the number of disputed issues in the remaining discovery motions on calendar, using the rulings issued by the court on the motions to compel further responses to FI and SI from Gemma and motion to compel production of documents from Rosemead, as guidelines to resolve the issues.

Lines 5-6

Motions to compel further responses from Monument 3, Realty 7 (line 5) and Monument 3, Reality 8 (line 6)

For the reasons previously stated, hearing on the motions to compel in lines 5-6 are continued to January 13, 2022, at 9:00 a.m., in Dept. 2. Following meet and confer, plaintiff-moving party shall file and serve a supplemental declaration listing sequentially the remaining unresolved interrogatories, requests to produce, ect. for each motion set on January 13, 2022, and which a separate statement has been filed. Further argument is unnecessary. The declaration shall be filed on or before January 6, 2022.

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Case name: Richard Espinosa v. Toyota Motor Sales, U.S.A., Inc.

Case no.:20CV373787

Background

On November 19, 2020, plaintiff Richard Espinosa (“plaintiff”) filed complaint against defendant Toyota Motor Sales, U.S.A., Inc. (“defendant”) relating to a 2020 Toyota Tacoma manufactured by defendant and purchased by plaintiff. The complaint alleges that the vehicle required repair under warranty, and that after five attempts at repair, the problems with the vehicle persist. It is alleged that the conduct of defendant is in violation of the Song-Beverly Consumer Warranty Act.

On June 2, 2021, plaintiff filed three motions to compel further responses from defendant: (1) to special interrogatories, set one; (2) to form interrogatories, set one; and (3) to request for production of documents, set one.

On September 8, 2021, defendant served opposition to the motions to compel further responses. On September14, 2021, plaintiff served and filed reply.

Tentative ruling

Following consideration of the authority and argument of counsel in the papers in support, opposition and reply, the court makes the following tentative ruling:

Special Interrogatories, set one:

Special interrogatory No. 2

Motion to compel further response is GRANTED. Defendant shall serve further response disclosing the home address and personal telephone number (home or cell) of each person identified in the supplemental response to the interrogatory.

Special interrogatory No. 5

Motion to compel further response is GRANTED. Defendant shall serve further response disclosing the home address and personal telephone number (home or cell) of each person identified in the supplemental response to the interrogatory.

Special interrogatory No. 8

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 9

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 11

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 12

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 14

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 16

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 17

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 18

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 19

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No 20

Motion to compel further response is GRANTED, and objections are OVERRULED. Defendant shall serve further response identifying all dealerships that repaired or serviced the subject vehicle.

Special interrogatory No. 21

The objection of overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 22

Motion to compel further response is GRANTED, and objections are OVERRULED. Identification of a document does not disclose content that may be considered confidential propriety information. Defendant shall serve further response, identifying all documents that are responsive to the interrogatory, and if a document is asserted confidential proprietary information, a confidential information log shall be prepared and served with the response.

Special interrogatory No. 23

The objection of burdensome and oppressive is SUSTAINED. The interrogatory is also overbroad. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 29

Motion to compel further response is GRANTED, and objection is OVERRULED. Defendant shall serve further response identifying any defined person of defendant who made the decision not to repurchase or replace plaintiff’s vehicle.

Special interrogatory No. 30

Motion to compel further response is GRANTED, and objection is OVERRULED. Defendant shall serve further response.

Special interrogatory No. 31

The objection vague, ambiguous and overbroad is SUSTAINED. Motion to compel is DENIED and no further response is required.

Special interrogatory No. 34

Motion to compel further response is GRANTED, and objection is OVERRULED. Defendant shall serve further response.

Form Interrogatories, set one:

Form interrogatory no. 12.1

Motion to compel further response is GRANTED. Defendant shall serve further response disclosing the home address and personal telephone number (home or cell) of each person identified in the supplemental response to the interrogatory.

Form interrogatory no. 12.2

Motion to compel further response is GRANTED. Defendant shall serve further response disclosing the home address and personal telephone number (home or cell) of each person identified in the supplemental response to the interrogatory.

Form interrogatory no. 17.1

Motion to compel further response is GRANTED. Defendant shall serve further response in connection with plaintiff’s request for admission nos. 4, 5, and 6.

Further responses shall be served on or before October 12, 2021.

Request for production of documents, set one:

Request for production no. 10

The objections stated in defendant’s response are OVERRULED. Motion to compel is GRANTED. Defendant shall serve further response and produce documents responsive to the request.

Request for production no. 11

The objections stated in defendant’s response are OVERRULED. Motion to compel is GRANTED. Defendant shall serve further response and produce documents responsive to the request.

Request for production no. 12

The objection that the request is overbroad and burdensome is SUSTAINED. Motion to compel is DENIED, and no further response is required.

Request for production no. 27

The objection that the request is overbroad and burdensome is SUSTAINED. Motion to compel is DENIED, and no further response is required.

Request for production no. 28

The objections stated in defendant’s response are OVERRULED. Motion to compel is GRANTED. Defendant shall serve further response and produce documents responsive to the request.

Request for production no. 31

The objections of relevancy and that the request is overbroad and burdensome are SUSTAINED. Motion to compel is DENIED, and no further response is required.

Further responses shall be served on or before October 12, 2021, and responsive documents served on or before October 18, 2021.

Sanctions

Plaintiff and defendant were near equally successful in bringing and defending the motions to compel further responses. Importantly, each party had substantial justification for the majority of their respective positions. The court declines to award or assess sanctions to or against either party.

Defendant shall prepare the order.

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Case name: Global Aerospace, Inc. v. Signature Flight Service Corporation, et al.

Case No.: 20CV365776

Background

On March 18, 2020, plaintiff Global Aerospace, Inc. (“plaintiff”) filed complaint against defendants Signature Flight Service Corporation (“Signature”) and Robert Higura (“Higura”), an employee of Signature, for damage to plaintiff’s insured’s aircraft at San Jose International Airport.

On August 2, 2021, plaintiff filed the instant motion for leave to amend first amended complaint (“FAC”) to add three causes of action. The three causes of action arise from two incidents, each separate from the subject incident that occurred at San Jose International Airport, and separate from each other, one that occurred on December 8, 2019 d at an airport in Miami, Florida and the other that occurred on January 29, 2020 at an airport in Washington D.C. In all events, it is alleged that Signature damaged aircraft owned by insureds of plaintiff.

Summary of contentions

Plaintiff asserts that the three incidents involve plaintiff and Signature, and claims of damage to aircraft owned by insureds of plaintiff caused by the negligence/conduct of Signature and/or its agents, employees or representatives. Trial is not set in the instant matter, and granting leave to amend effectively adding the two incidents to the lawsuit will not delay trial, add discovery to or otherwise prejudice Signature or Higura. Instead, leave to amend will promote efficient resolution of all claims between the parties thereby promoting the interests of justice and judicial economy and efficiency.

In opposition, Signature asserts that the two additional incidents occurred before the San Jose Airport incident, and the facts were known to plaintiff from the outset, yet plaintiff delayed 16 months in filing the motion for leave to amend, after substantial discovery has been done to prepare the case for disposition. Other than plaintiff and Signature being parties in each airport incident, the events are unrelated, occurring in different airports across the United States, under different facts and circumstances, involving three separate sets of percipient witnesses, different aircraft and owners. Each incident will require separate discovery, none which has started for either the Miami or Washington D.C, incidents, including depositions of separate sets of witnesses. Instead of promoting judicial efficiency, the three events will delay setting of trial, triple the trial time and demands on court resources, subject one jury to hear three separate trials and reach three verdicts, and complicate and potentially confuse the issues to the jury, all to the prejudice of Signature. It is further asserted that this unnecessarily burdens witnesses located in Miami and Washington D.C. to travel for testimony in Santa Clara County, at Signature’s expense.

Analysis

In the furtherance of justice, a court may allow a party to amend any pleading at any time, even after commencement of trial. Code of Civil Procedure sections 474 and 576. See Hong Sang Market, Inc. v. Peng (2018) 20 Cal.5th 473. Courts are generally liberal in permitting amendments, as long as the statute of limitations has not expired and the opposing party will not be prejudiced by the amendment, such as a delay in the trial of the case, loss of critical evidence, or added costs of trial preparation. Harris v. City of Santa Monica (2013) 56 Cal.4th 203.

Here, plaintiff knew or should have known the facts involving the incidents at the Miami and Washington D.C. airports at the time of filing the complaint, but for unexplained reasons, brought the instant motion 16 months later to add those incidents to the present action by FAC.

Plaintiff does not dispute defendant’s assertions that:

1. Substantial discovery has been completed in the lawsuit;

2. If the Miami and Washington D.C. airports are added to the lawsuit, discovery will start from square one for each incident;

3. The three incidents involve separate sets of facts and witnesses;

4. Trial will require a separate trial stage for each incident and one jury will be required to hear the three stages and render three verdicts, substantially increasing time for trial in this jurisdiction, and presenting risk of confusing the issues; and

5. Witnesses in the Miami and Washington D.C airport incidents will be inconvenienced by travel to Santa Clara County for trial testimony at defendant’s expense.

These considerations significantly outweigh the policy of liberal grant of leave to amend pleadings. While leave is requested to file a FAC, no explanation is provided, much less good cause shown, to explain plaintiff’s delay in bringing the motion. Discovery has proceeded in the meantime, and the fourth case management conference is set on December 7, 2021, at which time the court will be considering mediation or trial setting conference. This case is nearing readiness for disposition.

The court finds that a grant of leave to amend here will delay setting trial or other timely disposition of the lawsuit, add significant costs of trial preparation, including discovery and transportation expenses, and unnecessarily inconvenience witnesses in Miami and Washington D.C. Trial of the three separate airport incidents will require three phases of trial, and adds complexity and potential confusion of the issues not otherwise present. All of these factors are prejudicial to defendants.

Further, leave to amend would require significantly more time for trial and potentially additional time for law and motion and other court hearings, further expending court time and resources. While an argument can be made that hearing three airport incidents in one proceeding overall may save collective court time; here, the incidents occur in three separate jurisdictions, and the court in Santa Clara County, California is asked to absorb the entire cost and demand for resources.

For all of these reasons, neither the interests of justice nor the economy and efficiency of this court are promoted by a grant of leave to amend. Plaintiff’s motion for grant of leave to amend is therefore, DENIED.

Signature shall prepare the order.

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Case name: Loretta Lee v. C. Gemma Hwang, et al.

Case no.: 20CV371773

Background

On October 8, 2020, plaintiff Loretta Lee (“plaintiff”) filed complaint against defendants C. Gemma Hwang (“Gemma”), Rosemead Hwang LLC (“Rosemead”), Monument 3: Realty Fund VII, Ltd. (“Monument 3,, Realty 7”), Monument 3: Realty Fund VIII, Ltd. (“Monument 3, Realty 8”) Willowbend Apartments Hwang, L.P, (“Willowbend Apartments”) and Willowbend Hwang LLC (“Willowbend Hwang”). The complaint alleges nine causes of action arising from plaintiff’s membership interest in Rosemead, limited partner interest in Monument 3, Realty 7, Monument 3, Realty 8, Willowbend Apartments and Willowbend Hwang, and alleged breach of fiduciary and statutory duties owed to plaintiff, and violations of the Corporations Code. The complaint seeks compensatory damages, punitive damages, accounting, declaratory relief and attorney fees.

Motion to quash subpoena

On July 15, 2021, defendants Gemma, Rosemead, Monument 3, Realty 7 and Monument 3, Realty 8 (“defendants”) filed motion to quash subpoena to non-party Rosbrugh Accountancy Corporation, and Gemma filed a companion motion to compel plaintiff’s responses to form interrogatories, special interrogatories and request for production of documents. The motions were set for hearing on October 21, 2021, and continued to October 26, 2021.

On October 7, 2021, plaintiff filed opposition to the motions and on October 14, 2021, Gemma filed reply.

Analysis

Defendants move to quash subpoena served on Rodbrugh Accountancy Corporation, asserting procedural grounds that plaintiff failed to service notice to consumer per CCP 1985.3; and substantive grounds of (1) rights of privacy of Dr. Hwang, defendant C. Gemma Hwang’s husband, who is not a party to the lawsuit, concerning his personal financial and income tax records; and (2)) relevancy.

It is not disputed that plaintiff did not serve any of the parties with a notice of consumer pursuant to Code of Civil Procedure section 1985.3. The section requires that the notice to consumer be served on a consumer whose personal records are maintained by a “witness” which includes organizations and professionals, including accountants. A “consumer” is defined as “…any individual, partnership of five or fewer persons, association, or trust which has transacted business with, or has used the services of, the witness …” (subdivision (a)(2) …)

Records of a business or entity are by definition “business” records. However, section 1985.3 affords consumer protections of notice where the business organization is a partnership of five or less individuals. Records of partnerships encompassed in this definition of a consumer are effectively “personal” records of the individual partners.

Defendants’ attorney’s declaration declares that statements included in the declaration are based on personal knowledge, including that the defendant partnerships have five or less individual partners. In opposition, plaintiff questions the foundation for the testimony, and in reply, defendants indicate counsel’s knowledge is based on information derived from representation of defendants, including information from documents. The court finds this is sufficient foundation of personal knowledge about the number and composition of the partners of the defendant partnerships.

The court finds that the individual partners of defendants are entitled to notice to consumer pursuant to CCP 11985.3. Plaintiff failed to comply with this mandatory provision of notice, and accordingly, defendants’ motion to quash service of subpoena is GRANTED, without prejudice to plaintiff of serving an amended subpoena with notice to consumer.

Based on this finding, ruling on the procedural ground, ruling on the substantive grounds of privacy and relevancy the motion is unnecessary at this time.

Sanctions

Defendants were successful in bringing the motion to quash on a procedural ground which plaintiff had substantial justification in opposing. The court declines to award or impose monetary sanctions for or against a party.

Motion to compel plaintiff’s responses to form interrogatories, special interrogatories, and request for production of documents

On May 7, 2021, Gemma served plaintiff with form interrogatories – general, set one; special interrogatories, set one, request for production of documents, set one (collectively “Gemma’s discovery requests”). Plaintiff’s responses to Gemma’s discovery requests were due June 11, 2021. These facts are undisputed.

As of July 19, 2021, plaintiff did not serve Gemma with responses to Gemma’s discovery requests, and Gemma filed the instant motion to compel responses without objections.

On October 7, 2021, plaintiff filed opposition and on October 14, 2021, Gemma filed reply.

Analysis

In opposition, plaintiff asserts that on July 19, 2021, plaintiff served Gemma with plaintiff’s responses to Gemma’s discovery requests, and that plaintiff would be filing a motion for relief from waiver of objections for failing to serve responses to interrogatories and demand for inspection of documents, when due.

However, plaintiff has neither filed nor served a motion to set aside the waiver of objections.

Subdivision (b) of Code of Civil Procedure section 2030.290 provides that the failure of the responding party to serve a response to interrogatories when due waives any objection to the interrogatories, including privilege or attorney work product.

Similarly, subdivision (a) of Code of Civil Procedure section 2031.010 provides that the failure of the responding party to response to a demand for inspection when due waives any objection to the demand, including privilege or attorney work product.

Here, while plaintiff has served a response to the interrogatories and request to produce, service of the responses are untimely, and there is no motion filed by plaintiff showing that the responses are in substantial compliance with the discovery statutes or that plaintiff’s failure to serve a timely response was the result of mistake, inadvertence, or excusable neglect.

Disposition

Accordingly, Gemma’s motion to compel plaintiff’s responses to Gemma’s discovery requests is GRANTED, and plaintiff shall serve Gemma with responses to Gemma’s discovery requests, without objections, on or before November 15, 2021.

Sanctions

Defendant Gemma Hwang successfully brought motion to compel responses. Plaintiff served responses, albeit late, and bears the consequence of waiver of objections. Under these circumstances, plaintiff and her attorneys are ordered to pay attorneys’ fees of $750 as monetary sanctions, payable on or before November 15, 2021. Monetary sanctions in excess of this amount would be unjust under the circumstances.

Defendants shall prepare the order.

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