Motion for Consolidation in Independent Financial Group, LLC, on Its Own Behalf and as Assignee of Adolfo Ar, et al. vs. FP Transitions, LLC| Trellis.Law

On April 16, 2021 a Motion,Ex Parte was filed involving a dispute between and for Professional Negligence Unlimited (25) in the District Court of Monterey County.

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1 Edward S. Zusman (SBN 154366)
Rick Smith (SBN 298556)
2 MARKUN ZUSMAN & COMPTON LLP
465 California Street, Suite 401
3 San Francisco, California 94104
Telephone: (415) 438-4515
4 Facsimile: (415) 434-4505
5 Attorneys for Plaintiff
6
SUPERIOR COURT OF CALIFORNIA
7

8 IN AND FOR THE COUNTY OF MONTEREY

9
INDEPENDENT FINANCIAL GROUP, Case No.: 21CV001264
10 LLC, on its own behalf and as assignee of
Adolfo Artalejo; Rod Belton and Nancy PLAINTIFF’S MEMORANDUM OF
11 Belton; James Cornelius and June Cornelius; POINTS AND AUTHORITIES IN
John Favero and Philayna Favero; Ray SUPPORT OF MOTION TO
12 Moncada and Vinnie Moncada; Sheryl Peck; CONSOLIDATE
Juanita Stoddard; Ron Taylor and Hazel
13 Taylor; Jane Beery; Joy Chandler; John Day;
Sim Granoff and Virginia Lott; Gretchen Date: March 24, 2023
14 Jackson; William Miller and Sharon Miller; Time: 8:30am
Darryl Prudden; Carolyn Rice; John Romero Dept.: 14
15 and Sandy Romero; Bennie Hill and Lynda
Hill; Ellen Koskinen; George Lynch and Complaint Filed: April 15, 2021
16 Helen Lynch; Mathew Panziera and Jamie
Panziera; and Tom Sgheiza and Mary Trial Date: None Set
17 Sgheiza,

18 Plaintiff,

19 v.

20 FP TRANSITIONS, LLC and DOES 1-50,
INCLUSIVE,
21
Defendants.
22
FP TRANSITIONS, LLC,
23
Cross-Complainant,
24 v.
25
INDEPENDENT FINANCIAL GROUP,
26 LLC, David Marshall, Marshall Wealth
Management Group and ROES 1-25,
27 inclusive,
28 Cross-Defendants.

1
PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1

2
INDEPENDENT FINANCIAL GROUP, Case No.: 22CV001149
3 LLC, on its own behalf and as assignee of
Gene Kondo, Complaint Filed: April 26, 2022
4
Plaintiff, Trial Date: None Set
5
v.
6
FP TRANSITIONS, LLC and DOES 1-50,
7 INCLUSIVE,
8 Defendants.
9

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1 I. INTRODUCTION
2 This motion seeks the consolidation of two matters pending in this court, Independent
3 Financial Group, LLC v. FP Transitions, LLC et al., Case No. 21CV001264 (“21CV001264”),
4 and Independent Financial Group, LLC v. FP Transitions, LLC et al., Case No. 22CV001149
5 (“22CV001149”). The two matters have the same Plaintiff and Defendant. The 21CV001264
6 matter has a Cross-Defendant, David Marshall.
7 Plaintiff Independent Financial Group, LLC (“IFG”) is an SEC registered FINRA-member
8 broker-dealer firm headquartered in San Diego, California.
9 Defendant FP Transitions, LLC (“FP Transitions”) is, and at all times was, a limited
10 liability corporation existing under the laws of the State of Oregon, with its principal place of
11 business in Lake Oswego, Oregon. FP Transitions purports to be the nation’s leading business
12 consulting firm dedicated to independent wealth advisory businesses and claims to have
13 completed more financial services transactions than any investment banker or business broker in
14 the country since 1999.
15 David Marshall (“Marshall”) was a Registered Representative of IFG responsible for the
16 accounts of the Assignors prior to the sale his financial services business, Marshall Wealth
17 Management Group (“MWMG”) to Perry Santillo based on the recommendation of FP
18 Transitions. Marshall is a cross-defendant to FP Transitions’ Cross Complaint.
19 Perry Santillo (“Santillo”) owned or controlled various entities including: First Nationle
20 Solution, LLC; United RL Capital; Percipience Global Corporation; and Middlebury
21 Development. These entities sold notes to investors as part of a Ponzi scheme that fraudulently
22 netted over $115 million nationwide. Santillo has pled guilty to felony charges and admitted to
23 defrauding investors around the country. As the operative Complaints in both matters clearly
24 allege, Defendant represented to Marshall and Plaintiff IFG that Santillo was a suitable buyer of
25 Marshall’s book of business. That is a false representation that Defendant did not have any
26 reasonable grounds for. Moreover, it is a misrepresentation that was made for a business purpose
27 in the course of Defendant’s business. Defendant knew that Marshall needed IFG’s approval to
28 finalize the transaction with Santillo, and Defendant’s misrepresentations were intended to induce

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1 IFG’s reliance. Accordingly, Defendant’s misrepresentations were intended to influence Plaintiff
2 and Defendant is therefore liable to Plaintiff for those misrepresentations. The representations
3 regarding Santillo’s suitability were false and were made negligently and with reckless disregard
4 for the truth or falsity of the representations.
5 Adolfo Artalejo; Rod Belton and Nancy Belton; James Cornelius and June Cornelius;
6 John Favero and Philayna Favero; Ray Moncada and Vinnie Moncada; Sheryl Peck; Juanita
7 Stoddard; Ron Taylor and Hazel Taylor; Jane Beery; Joy Chandler; John Day; Sim Granoff and
8 Virginia Lott; Gretchen Jackson; William Miller and Sharon Miller; Darryl Prudden; Carolyn
9 Rice; John Romero and Sandy Romero; Bennie Hill and Lynda Hill; Ellen Koskinen; George
10 Lynch and Helen Lynch; Mathew Panziera and Jamie Panziera; and Tom Sgheiza and Mary
11 Sgheiza (“the 21CV001264 Assignors”) were customers who were defrauded by Santillo. The
12 21CV001264 Assignors all assigned their claims against FP Transitions to IFG by valid
13 assignments. Gene Kondo was also a customer who was defrauded by Santillo. He too assigned
14 his claims against FP Transitions to IFG. Mr. Kondo’s claims are the only claims asserted in the
15 22CV001149 matter. The factual underpinning of all of the Assignors’ claims is essentially
16 identical as described below.
17 II. COMMON FACTUAL BACKGROUND
18 The following facts are common to both matters. On or about March 2016, Marshall, then
19 a Registered Representative of IFG, entered into a contract with FP Transitions for the purposes
20 of selling his financial services business, Marshall Wealth Management Group (“MWMG”).
21 Marshall intended to retire, and sought to sell his business, clients of which included the
22 Assignors (including Mr. Kondo), and engaged Defendant FP Transitions to select qualified,
23 trustworthy, and capable buyers. FP Transitions held themselves out as experts in the field of
24 financial service business sales coordination.
25 FP Transitions provided its assurances to Marshall and IFG that, based upon its expertise
26 in financial business sales transactions, it would source a qualified, trustworthy buyer. The
27 securities business in which Marshall and IFG operate is highly regulated and the sale of a
28 registered representative’s book of business can have implications for the broker-dealer that must

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1 be considered. Finding suitable buyers for such business operations is a key part of FP
2 Transitions’ business. Accordingly, FP Transitions is well aware of the importance of finding a
3 qualified, suitable buyer. FP Transitions identified and endorsed Perry Santillo as a qualified,
4 trustworthy, and experienced buyer. Based on FP Transitions’ representations to IFG and
5 Marshall that Perry Santillo was the best, most reputable, and most thoroughly vetted candidate,
6 Marshall executed a contract with Santillo, drafted by FP Transitions, for the sale of MWMG.
7 Despite FP Transitions’ repeated assurances and endorsements of Santillo as a
8 trustworthy, experienced financial services professional, he turned out to be the ringleader of a
9 large scale Ponzi-scheme, which, to date, has defrauded investors nationwide of over $100
10 million.
11 Assignors, clients of Marshall and IFG who were defrauded by Santillo, brought claims
12 against IFG through FINRA to recover their misappropriated monies pilfered by Santillo.
13 Assignors contended, among other things, that IFG was negligent in failing to properly vet
14 Santillo prior to the sale of MWMG to Santillo by Marshall.
15 Based on the foregoing, Assignors have alleged claims against IFG. Those claims against
16 IFG have been settled in exchange for valuable consideration.
17 IFG is informed and believes that FP Transitions, intentionally omitted material facts
18 regarding Santillo in its discussions with Marshall and IFG of the sale of MWMG to Santillo
19 and/or otherwise improperly influenced Marshall to sell MWMG to Santillo and thereby caused
20 damages to Assignors and IFG.
21 III. PROCEDURAL BACKGROUND
22 In the 21CV001264 matter, the original complaint was filed on April 16, 2021. That
23 original complaint was amended before Defendant responded to it on April 26, 2021. On August
24 30, 2021, FP Transitions demurred to the First Amended Complaint. On October 19, 2021, the
25 court granted Defendant’s demurrer in part as to the negligent misrepresentation claim. On
26 November 18, 2021, IFG filed a Second Amended Complaint which added the claims of Assignor
27 Gene Kondo (these claims are now the sole claims asserted in the 22CV001149 matter). On
28 December 21, 2021, FP Transitions filed a demurrer and motion to strike as to the Second

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1 Amended Complaint. The demurrer again sought dismissal of the negligent misrepresentation
2 claim and was sustained as to that claim. The motion to strike sought to strike the addition of the
3 assigned claims of Mr. Kondo. The motion to strike was granted. FP Transitions answered the
4 SAC on April 28, 2022 and also filed a cross-complaint against IFG and David Marshall that
5 same day. IFG answered the cross-complaint on June 21, 2022. On September 28, 2022, FP
6 Transitions filed an ex parte application to serve cross-Defendant David Marshall by publication.
7 That application was granted on December 6, 2022. The 21CV001264 matter is pending in
8 Department 14 of this court. A true and correct copy of the operative Complaint in the
9 21CV001264 matter is attached as Exhibit A to the Declaration of Rick Smith filed concurrently
10 herewith.
11 In the 22CV001149 matter, the original complaint was filed on April 26, 2022. On
12 August 15, 2022, IFG filed an amended complaint following meet and confer discussions with FP
13 Transitions as to the sufficiency of the original complaint. On January 27, 2023, FP Transitions
14 answered the First Amended Complaint in the 22CV001149 matter. ON that same date FP
15 Transitions filed a demurrer and motion to strike as to the First Amended Complaint. The
16 22CV001149 matter is pending in Department 15 of this court. A true and correct copy of the
17 operative Complaint in the 22CV001149 matter is attached as Exhibit B to the Declaration of
18 Rick Smith filed concurrently herewith. The operative complaints in both matters are essentially
19 identical in terms of the factual allegations and legal claims.
20 IV. ARGUMENT
21 A. The Court Should Consolidate the Actions Because They Are Located In the
22 Same Court and Involve Common Questions of Law and Fact.
23 California Code of Civil Procedure section 1048(a) authorizes the trial court to "order all
24 the actions consolidated" when "actions involving a common question of law or fact are pending
25 before the court" whenever it can be done without prejudice to a substantial right. See also
26 Hamilton v. Asbestos Corp., Ltd. (2001) 22 Cal.4th 1127,1148. The essential purpose of
27 consolidation is to promote trial convenience and economy by avoiding duplication of procedure,
28 particularly in the proof of issues common to both actions. McClure v. Donovan (1949) 33 Cal.2d

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1 717, 722. Consolidation of actions lies within the sole discretion of the trial court and it is for the
2 trial court to determine whether the consolidation is for all purposes or for trial only. Hamilton,
3 22 Cal.4th at 1147-49; Sales Dimensions v. Superior Court of San Francisco (1979)
4 90 Cal.App.3d 757, 764.
5 1. The Actions Are Pending in the Same Court.

6 Consolidation is appropriate only where the cases in question are pending in the same
7 court. Code Civ. Proc., § 1048(a); Cochrane v. Superior Court/or Los Angeles County (1968)
8 261 Cal.App.2d 201. Here, both actions are pending before the Superior Court of the State of
9 California, County of Monterey.
10 2. The Actions Involve Common Questions of Law and Fact.
11 As noted above, the common questions of law and fact predominate here. Indeed, the
12 factual background underpinning both operative Complaints is identical. There are no questions
13 of law or fact that are unique to either matter.
14 B. Consolidating These Actions Is Proper Because (1) None of the Parties'
15 Substantial Rights Would Be Adversely Affected; (2) No Unnecessary
16 Complexity Will Be Created; and (3) The Motion is Timely.
17 1. Consolidation Will Not Adversely Prejudice the Parties' Substantial
18 Rights.
19 Consolidation is appropriate where the parties do not lose a substantial right because of
20 consolidation. Johnson v. Western Air Exp. Corp. (1941) 45 Ca1.App.2d 614, 621-622. Here,
21 there would not be any resulting prejudice to substantial rights of any of the parties if the matters
22 were to be consolidated. Neither matter is at issue. Limited discovery has taken place in the
23 21CV001264 matter. No trial date has been set in either matter. Accordingly, no substantial
24 rights of FP Transitions would be affected by the consolidation of the two matters.
25 2. Consolidation Would Not Render Trial Too Confusing or Complex.
26 Given the overlapping questions of law and fact including the same witnesses and very
27 likely the same experts, a single trial would not be confusing.
28 3. This Motion is Timely and Consolidation Neither Delays the Case Nor

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1 Hinders Discovery.
2 A court will examine "whether granting consolidation would delay the trial of any of the
3 cases involved, or whether discovery in one or more of the cases has proceeded without all parties
4 present." Weil & Brown, CAL. PRACTICE GUIDE: CIVIL PROCEDURE BEFORE TRIAL
5 (The Rutter Group 2003) 12:362. No trial date has been set in either matter. FP Transitions has
6 conducted limited discovery in the 21CV001264 matter.
7 C. The Motion Complies With California Rule of Court 3.350.
8 Rule of Court 3.350 requires a motion to consolidate "(A) List all named parties in each
9 case, the names of those who have appeared, and the names of their respective attorneys of
10 record; (B) Contain the captions of all the cases sought to be consolidated, with the lowest
11 numbered case shown first; and (C) Be filed in each case sought to be consolidated." The
12 Motion's caption page lists both cases' captions sought to be consolidated, with the lowest
13 numbered case shown first. The motion is being filed in each case sought to be consolidated. The
14 Declaration of Rick Smith submitted herewith contains the name of the respective attorneys of
15 record.
16 V. CONCLUSION
17 Based on the facts and law cited above, the two actions should be consolidated for all
18 purposes or, alternatively, at this time for discovery and pre-trial matters.
19

20 Respectfully submitted,
21 MARKUN ZUSMAN & COMPTON LLP
22

23
Dated: January 31, 2023 By: _______________________________
24

25 Edward S. Zusman (SBN 154366)
Rick Smith (SBN 298556)
26 MARKUN ZUSMAN & COMPTON LLP
465 California Street, Suite 401
27 San Francisco, California 94104

28 Attorneys for Plaintiff

PLAINTIFF’S MPA ISO MOTION TO CONSOLIDATE
1

2
PROOF OF SERVICE
3
I am employed in the County of San Francisco, State of California, over the age of
4 eighteen years, and not a party to this action. My business address is Markun Zusman & Compton
LLP, 465 California Street, Suite 401, San Francisco, California 94104.
5

6 On January 31, 2023, I served the within documents:

7  PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT
OF MOTION TO CONSOLIDATE
8  PLAINTIFF’S NOTICE AND NOTICE OF MOTION TO CONSOLIDATE
 DECLARATION OF RICK SMITH IN SUPPORT OF PLAINTIFF’S NOTICE OF
9 MOTION AND MOTION TO CONSOLIDATE

10 on the interested party(ies) in this action, by placing a true copy thereof enclosed in a sealed
envelope as follows:
11

12  (By Electronic Mail) I caused said document(s) to be mailed electronically to the parties
listed below.
13
Bryan L. Saalfeld
14 Thomas F. Mazzucco
Murphy, Pearson, Bradley, & Feeney
15
580 California Street, Suite 1100
16 San Francisco, CA 94104-1001
BSaalfeld@mpbf.com
17 TFMazzucco@mpbf.com
18 Attorney Defendants and Cross-Complainant
FP Transitions, LLC.
19

21 I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
22

23 Executed on January 31, 2023. _______ __________
Hector Cebreros
24

1
PROOF OF SERVICE, CASE NO. 21CV001149; 21CV001264

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Document Filed Date

February 01, 2023

Case Filing Date

April 16, 2021

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Motion,Ex Parte: Independent Financial Group, LLC, on Its Own Behalf and as Assignee of Adolfo Ar, et al. vs. FP Transitions, LLC

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