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1 VICKMAN & ASSOCIATES,
ATTORNEYS
2 James A. Vickman, Esq. (No. 128099)
424 South Beverly Drive
3 Beverly Hills, California 90212
Tel: (310) 553-8533
4 Fax: (310) 553-0557
5 Attorneys for Plaintiff JOSEPH KOCHAV LEV
6
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF LOS ANGELES
10
11 JOSEPH KOCHAV LEV, ) CASE NO.
)
12 Plaintiff, ) COMPLAINT FOR:
)
13 vs. ) 1) BREACH OF CONTRACT
) 2) SPECIFIC PERFORMANCE
14 CAVALIA COMMUNICATIONS, INC. ) 3) CONSTRUCTIVE TRUST
dba NDM COMMUNICATIONS; and ) 4) DECLARATORY RELIEF
15 DOES 1-20, ) 5) ACCOUNTING
)
16 Defendants. ) DEMAND FOR JURY TRIAL
)
17 ____________________________________ )
18
19 FIRST CAUSE OF ACTION
20 BREACH OF CONTRACT
21 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM
22 COMMUNICATIONS, and DOES 1-20, inclusive)
23 1. JOSEPH KOCHAV LEV (“Plaintiff”) is an individual residing in Los Angeles
24 County, State of California.
25 2. Defendant CAVALIA COMMUNICATIONS, INC. dba NDM
26 COMMUNICATIONS, a California corporation (“Defendant corporation” or “Defendant”), is
27 doing business in various counties of California including but not limited to Los Angeles County,
28 California, and other states, providing marketing services in the healthcare and senior living
1
COMPLAINT; DEMAND FOR JURY TRIAL
1 sectors.
2 3. Venue is proper in the Superior Court of California, Los Angeles County, because
3 Plaintiff performed his obligations under the relevant contract in Los Angeles County, State of
4 California. Likewise, venue is proper in Los Angeles County because Defendant corporation’s
5 performance under the relevant contract, i.e. payment for the services Plaintiff performed under
6 the Contract, were due in Los Angeles County, California where Plaintiff resides.
7 4. Plaintiff does not know the true names of defendants sued herein as Does 1 to 20,
8 inclusive. Plaintiff is informed and believes and on that basis alleges, that the true names and
9 capacities, whether individual, corporate, partnership, associate, or otherwise, of defendants
10 DOES 1 through 20, inclusive, are unknown to Plaintiff, who sue each such defendant by such
11 fictitious names. Plaintiff is informed and believes and thereon alleges that each of the
12 defendants designated herein as a fictitiously named defendant, have liability related as to each
13 cause of action asserted below. When Plaintiff ascertains the true names and capacities of
14 DOES 1 through 20, he will amend the Complaint accordingly, either through a Doe
15 Amendment, or otherwise. References in the Complaint to any named defendant includes DOES
16 1 through 20, inclusive.
17 5. Effective as of August 1, 2023, Plaintiff and Defendant corporation entered into a
18 contract entitled “Letter of Engagement,” a true and correct copy of which is attached hereto as
19 EXHIBIT 1 all of which terms are incorporated herein by reference (hereafter, “the Contract”).
20 6. Pursuant to the Contract, Defendant corporation retained Plaintiff, as a consultant,
21 as Defendant’s executive strategic and financial advisor. Specifically, Plaintiff was to provide
22 strategic, financial and operational consulting services to Defendant corporation. Plaintiff was to
23 interface with various individuals working at/with Defendant corporation, on a regular basis and
24 as needed, including providing guidance, mentorship and leadership.
25 7. Pursuant to the Contract, Defendant corporation was obligated to provide
26 Plaintiff, starting as of August 1, 2023, and going forward, each of the following forms of
27 remuneration:
28 ///
2
COMPLAINT; DEMAND FOR JURY TRIAL
1 a. Specified monthly compensation;
2 b. Profit sharing in the amount of 25% of total company profit calculated
3 according to generally accepted accounting principles, such calculation
4 done on a quarterly basis, with payment to then be made to Plaintiff;
5 c. Equity/ownership of Defendant corporation, calculated as set forth in the
6 Contract;
7 d. Profit sharing calculated according to Plaintiff’s equity/ownership that
8 Plaintiff is entitled to, under the Contract, in Defendant corporation;
9 8. Plaintiff timely, competently and fully performed all of his obligations under the
10 Contract. In fact, gross revenues and net profits of Defendant corporation sky-rocketed while
11 Plaintiff was engaged by Defendant. As a result, Defendant corporation’s CEO, Jessie Valencia,
12 decided that Plaintiff’s compensation under the Contract – which Contract Valencia himself
13 signed – was going to increase to levels that Valencia was not comfortable with, and Valencia
14 terminated the Contract. A true and correct copy of Valencia’s termination email to Plaintiff,
15 dated January 31, 2024, is attached hereto as EXHIBIT 2 and incorporated herein by reference.
16 9. In that email, Valencia invented a false scenario that Plaintiff failed to perform
17 satisfactory services under the Contract. Valencia invented the false scenario to mask his true
18 intentions, which were his buyer’s remorse in signing the Contract on behalf of Defendant
19 corporation.
20 10. Pursuant to the Contract, Valencia and Defendant corporation were to provide
21 Plaintiff 60 days notice of termination. However, as set forth in the termination email, Valencia
22 provided only 30 days notice. Further, Valencia set forth that Defendant corporation would not
23 pay to Plaintiff the next two months of consulting fee, through and including the end of March,
24 2024, but rather would pay just one month’s fee, and that the Defendant corporation would not
25 pay any profit-sharing due (and to be due to) to Plaintiff. Valencia further stated in the email that
26 Plaintiff had to relinquish his future right to equity in Defendant corporation, by Valencia stating
27 that the Contract’s 12 month survival clause would be voided.
28
3
COMPLAINT; DEMAND FOR JURY TRIAL
1 11. In response to Valencia’s email, counsel for Plaintiff responded to
2 Valencia/Defendant corporation, setting forth Defendant’s breach of the Contract, and describing
3 the monies and equity owing and that would be owing to Plaintiff. Counsel for Plaintiff also
4 provided notice to Valencia and Defendant corporation to take all necessary and demanded
5 specific steps to preserve all relevant evidence in the dispute, as litigation was pending. A true
6 and correct copy of that demand letter, along with notice to preserve of all relevant evidence, is
7 attached hereto as EXHIBIT 3 and incorporated herein by reference.
8 12. Plaintiff has been damaged by Defendant’s breach of the Contract, in an amount
9 to be proven at time of trial of this matter, but well over the unlimited civil case requirement of
10 this court.
11 13. Further Plaintiff has been denied his upcoming equity position in Defendant
12 corporation, which according to preliminary calculations and projections, will be worth millions
13 of dollars.
14 SECOND CAUSE OF ACTION
15 SPECIFIC PERFORMANCE OF CONTRACT
16 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM
17 COMMUNICATIONS, and DOES 1-20, inclusive)
18 14. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein.
19 15. Defendant corporation refuses to honor its obligation under the Contract to issue
20 to Plaintiff equity in Defendant corporation. Plaintiff has no adequate legal remedy in that
21 regard. Plaintiff is requesting a court order, with the court sitting in equity, to order Defendant to
22 issue to Plaintiff all equity owing to him under the Contract, with all of the rights accompanying
23 such equity allocation.
24 THIRD CAUSE OF ACTION
25 CONSTRUCTIVE TRUST
26 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM
27 COMMUNICATIONS, and DOES 1-20, inclusive)
28 16. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein.
4
COMPLAINT; DEMAND FOR JURY TRIAL
1 17. Plaintiff has a right to equity in Defendant corporation, per the Contract.
2 Defendant corporation has wrongfully refused to issue Plaintiff his future equity interest in
3 Defendant corporation.
4 18. Plaintiff is therefore entitled to a court order imposing a constructive trust on
5 Defendant corporation, that will secure Plaintiff’s equity rights in Defendant corporation.
6 FOURTH CAUSE OF ACTION
7 DECLARATORY RELIEF
8 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM
9 COMMUNICATIONS, and DOES 1-20, inclusive)
10 19. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein.
11 20. Plaintiff claims that Defendant corporation will be required to issue to Plaintiff
12 equity in Defendant corporation, according to the terms of the Contract. Defendant denies that
13 claim, and asserts that it does not need to issue any equity to Plaintiff.
14 21. A court declaration is necessary to resolve these disputing claims.
15 FIFTH CAUSE OF ACTION
16 ACCOUNTING
17 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM
18 COMMUNICATIONS, and DOES 1-20, inclusive)
19 22. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein.
20 23. Plaintiff is entitled to a full accounting of all revenues and expenses of Defendant
21 corporation, from at least January 1, 2023, to date of trial of this dispute, for monies and equity
22 still owing to Plaintiff. In that regard, all net profit and equity calculations under the Contract
23 (with the exception of a merger valuation), are based, in large part, on the gross revenues and
24 expenses of the Defendant corporation, which can only be ascertained through an accounting.
25 PRAYER
26 WHEREFORE, Plaintiff prays for judgment as follows:
27 (1) For monetary damages, including but not limited to consequential damages, for
28 breach of contract, according to proof;
5
COMPLAINT; DEMAND FOR JURY TRIAL
1 (2) For a court order, against Defendant corporation, that Defendant issue to Plaintiff
2 his rightful equity in Defendant corporation.
3 (3) For a court order imposing a constructive trust on Defendant corporation,
4 preserving for all times Plaintiff’s equity interest in Defendant;
5 (4) For a court order declaring that Plaintiff is entitled to equity in Defendant
6 corporation according to the equity calculations set forth in the Contract;
7 (5) For an accounting of all revenues and expenses of Defendant corporation from
8 January 1, 2023, to and including the time of trial of this matter;
9 (6) For attorney’s fees, as may be applicable under the Constructive Trust cause of
10 action;
11 (3) For costs of suit herein;
12 (3) For such other and further relief as the Court may deem just and proper.
13
14 July 3, 2024 VICKMAN & ASSOCIATES, ATTORNEYS
15
16 _______________________________
By: James A. Vickman, Esq., attorney for JOSEPH
17 KOCHAV LEV
18
DEMAND FOR JURY TRIAL
19
Plaintiff demands a jury trial as to all causes of action that are not based in equity.
20
21
VICKMAN & ASSOCIATES, ATTORNEYS
22
23
July 3, 2024 _______________________________
24 By: James A. Vickman, Esq., attorney for JOSEPH
KOCHAV LEV
25
26
27
28
6
COMPLAINT; DEMAND FOR JURY TRIAL
EXHIBIT 1, PAGE 1
EXHIBIT 1, PAGE 2
EXHIBIT 1, PAGE 3
EXHIBIT 1, PAGE 4
------------
From: Jesse Valencia
Sent: Wednesday, January 31, 2024 10:25:20 AM
To: Yosef Sternhart ; Joseph (Yossi) Kochav Lev
Subject: Agreement
Yosef, after a great deal of thought, I would like to terminate our agreement (see attached) effective immediately.
We’ve discussed my reasons during our Teams meeting a couple of weeks ago and in person this past Monday. Below
I’ve summarized a bulleted and short list. I’m happy to provide more detail, but with respect to you and our time, hope
we can come to an amicable resolution.
Primary deliverables in the agreement that were not met:
a. Resolve cashflow difficulties and improve cashflow position and strength of balance sheet:
i. I have had to personally guarantee high-interest loans, twice, since working with Yosef/JKL
as well as loan the company $20,000 from my own personal account. Yosef/JKL has not provided
a viable option for loan or investment, nor improved cashflow since being contracted to do so.
ii. It’s looking like I will, again this week, need to borrow from a high-interest bank in order to
cover payroll.
b. Increase revenue – No revenue increases can be credited to Yosef/JKL.
c. Profitability
1
EXHIBIT 2, PAGE 1
i. If there was a profit in Q3/Q4 of 2023, it was primarily due to the increase in revenue which
Ashley and I brought (~$6+ million in new sales was brought by Jesse and Ashley.)
ii. I also have concerns that Yosef/JKL is determining profitability for 2023, which creates a
conflict of interest, given Yosef/JKL seek to benefit from the profits.
d. JKL Accounting Team
i. ndm paid JKL directly for accounting services.
ii. The accounting services team had multiple problems ranging from late payroll submissions,
to lack of responsiveness to employees and vendors, to Veem and other accounting systems
being set up with little to no security. Ex: Pinny, Yosef and Jesse all had the ability to remove
“approvers” in Veem, giving anyone with any of thier credentials the ability transfer any amount
of money to anyone. I’ve since closed the Veem account to eliminate security risks here.
e. Security breach: highly confidential files (HR, loan documents, payroll, financial documents, etc) from
Yosef/JKL’s computer were added to ndm’s shared Dropbox server by Yosef/JKL (as indicated by
Dropbox records) and viewed by employees, creating a massive problem for ndm with possible legal
implications against ndm. We are addressing the exposed information with employee(s) who saw
personal/employee/financial information.
To close out our agreement, I would be open to paying off all your Monthly Fees through February 28, in full before
February 28 – if – (given the points above) you/we agree to void any profit sharing and eliminate the 12 month survival
clause.
I have serious concerns ndm will not make it in 2024. Additional costs will kill the company.
During our remaining time, all I would ask is that you assist with transferring reports and working files to me.
Per your request, termination is now in writing. Thank you for taking the time to review this email. Feel free to call or
email to finalize our terms.
Thanks Yosef,
Jesse
2
EXHIBIT 2, PAGE 2
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 1
February 5, 2024
BY EMAIL jesse@wearendm.com
BY FIRST CLASS MAIL
Cavalia Communications Inc. dba NDM Communications
2755 Bristol Street, Suite 2900
Costa Mesa, CA 92626
Attn: Jesse Valencia
Dear Mr. Valencia:
I represent Joseph Kochav Lev. The purpose of this letter is to set forth Mr. Kochav Lev's rights
under the contract between Mr. Kochav Lev and Cavalia Communications Inc. dba NDM
Communications (“NDM”), effective as of August 1, 2023 ("the Contract"). I will not address at
all certain statements you have just recently started making about Mr. Kochav Lev's work
performance, including in your January 31, 2024 email, because as far as I can ascertain, your
statements have no basis in fact, whatsoever, but rather are your attempt to "shake down" Mr
Kochav Lev to abandon his rights under the Contract. Also, your offer to Mr. Kochav Lev,
embodied in your January 31 email, is hereby rejected.
Before I explain the overall rights of Mr. Kochav Lev under the Contract, I want to first inform
you that you have materially breached the Contract by terminating Mr. Kochav Lev (in your
January 31 email referenced above) without providing the advance 60 days notice, as required by
Section 6 (sic) [8] of the Contract.
As to the overall rights of Mr. Kochav Lev under the Contract, they include, among others:
1) Monthly compensation already owing and unpaid under the Contract, pursuant to Section
4.a., in the amount of $21,000.00, which monies are payable immediately–please remit
now;
2) Additional monthly compensation hereafter, until March 31, 2024, in the amount of
$40,000.00, which monies are also payable immediately based on your failure to provide
60 days notice of termination;
2) Profit sharing under the Contract, as follows:
a) For the period Aug 1, 2023 to December 31st, 2023, in the amount of
$145,195.00, calculated as follows: $580,780.45 times 25%;
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 1
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 2
b) For the period Jan 1 - Jan 31st 2024, in the estimated amount of $40,000.00,
calculated as follows: $160,000.00 times 25%;
c) For the period Feb 1, 2024, to Mar 31, 2024, to be calculated as soon as profit
determination is made for that time period.
3) 25% equity of NDM company total valuation, less $3 million, based on Section 7 of the
Contract, to be issued through and including January 31, 2025.
On behalf of Mr. Kochav Lev, I hereby demand full compensation/equity, as described above.
If you are represented by counsel, please forward my letter to your counsel to respond on NDM’s
behalf, by no later than February 12, 2024, at close of business. If you/NDM are not represented
by counsel, please directly respond to me, in writing, by that same date and time.
It is my hope that you will take very seriously Mr. Kochav Lev’s demand, which you should if
you recognize that the contract terms I have referenced above are binding legal obligations, and
you negotiate in good faith with Mr. Kochav Lev. However, in the event you do not, and this
matters is litigated, I will now advise you about your legal duties and NDM’s, legal duties, of
preserving evidence for the legal proceeding.
To be specific, this is written notice to you, NDM, and all NDM personnel (hereafter
collectively, “NDM Personnel”), to immediately take all steps necessary to preserve and prevent
the destruction, loss, concealment, or alteration of all documents, tangible things and
electronically stored information (“ESI”) potentially relevant to this matter, even if only remotely
relevant, for the last three years and going forward until this matter is resolved.
I note that you, Jesse Valencia, being that you are President/CEO of NDM, you must personally
take the lead with all NDM Personnel, in terms of insuring that there is full compliance as to all
procedures and actions as immediately now set forth.
The first thing that comes to mind is the requirement for NDM Personnel to preserve all
company emails and other written communications, and all Microsoft Teams transcriptions and
recordings, whether or not involving Mr. Kochav Lev, existing at anytime from January 1, 2020,
three years ago, until this dispute is resolved.
However, NDM Personnel are required to preserve anything at all relating to NDM operations
that in any way could touch upon, even remotely, any of the subject matters that might be
litigated in a legal proceeding, including but not limited to any and all communications that
mention Mr. Kochav Lev, even if he is not part of the actual communication, and any documents
and ESI (see below for definition) that relate to or touch upon any subject matter as to which Mr.
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 2
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 3
Kochav Lev provided services to NDM, at any time. Just by way of example, Mr. Kochav Lev
was involved in, among other things, improving financial reporting and improving operations, so
NDM Personnel must preserve all company-wide written communications, Microsoft Teams
transcripts/recordings, and any documents and ESI, existing anywhere, that in any way touch
upon financial reporting and NDM operations. As you can see, for all intents and purposes,
what this translates to is that NDM personnel must not destroy/delete or otherwise remove from
access almost anything that is currently in existence, created from three years ago until this
matter is resolved.
Obviously, much of the information subject to preservation and subject to disclosure or
responsive to future discovery in this matter, if litigated, is stored on NDM’s current and former
computer systems and other media and devices (including personal digital assistants,
voice-messaging systems, online repositories and cell phones).
Electronically stored information (hereinafter "ESI") must be afforded the broadest possible
definition and includes (by way of example and not as an exclusive list) potentially relevant
information electronically, magnetically or optically stored as:
• Digital communications (e.g., e-mail, texts, voicemail, instant messaging);
• Word processed documents;
• Spreadsheets and tables;
• Accounting Application Data;
• Image and Facsimile Files (e.g., .PDF, .TIFF, .JPG, .GIF images);
• Sound Recordings;
• Video and Animation;
• Databases (e.g., Access, Oracle, SQL Server data, SAP);
• Contact and Relationship Management Data (e.g., Outlook, ACT!);
• Calendar and Diary Application Data (e.g., Outlook PST, Yahoo, blog tools);
• Online Access Data (e.g., Temporary Internet Files, History, Cookies);
• Presentations (e.g., PowerPoint, Corel Presentations)
• Network Access and Server Activity Logs;
• Project Management Application Data;
• Computer Aided Design/Drawing Files; and,
• Back Up and Archival Files (e.g., Zip, .GHO)
ESI resides not only in areas of electronic, magnetic, flash and optical storage media reasonably
accessible to All , but also in areas NDM Personnel may deem not reasonably accessible. NDM
Personnel are obliged to preserve potentially relevant evidence from both these sources of ESI,
even if NDM Personnel do not anticipate producing such ESI. The demand that NDM Personnel
preserve both accessible and inaccessible ESI is reasonable and necessary. Even ESI that NDM
Personnel deem reasonably inaccessible must be preserved in the interim so as not to deprive
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 3
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 4
Mr. Kochav Lev of his right to secure the evidence if this matter is litigated, and if so, for a Court
of Law of its right to adjudicate the issue of production of that evidence.
Thus, NDM personnel are required to immediately initiate a litigation hold for potentially
relevant ESI, plus tangible documents and tangible things, and to act diligently and in good faith
to secure and audit compliance with that litigation hold. NDM personnel are also required to
preserve and not destroy all passwords, decryption procedures (including, if necessary, the
software to decrypt the files), network access codes, ID names, manuals, tutorials, written
instructions, decompression or reconstruction software, and any and all other information and
things necessary to access, view, and (if necessary) reconstruct any ESI. NDM Personnel should
not pack, compress, purge, or dispose of any file or any part thereof.
NDM Personnel must act immediately, starting today, to preserve potentially relevant ESI
including, without limitation, all information concerning any matters described above. Adequate
preservation of ESI requires more than simply refraining from efforts to destroy or dispose of
such evidence. NDM Personnel must actively intervene to prevent loss due to routine operations
and employ proper techniques and protocols suited to protection of ESI. Please note that sources
of ESI are altered and erased simply by use of computers and other devices. Booting a drive,
examining its contents or running any application will irretrievably alter the evidence it contains
and may constitute unlawful spoliation of evidence. Consequently, alteration and erasure may
result from NDM Personnel’s failure to immediately act diligently and responsibly to prevent
loss or corruption of ESI. Nothing in this demand for preservation of ESI should be understood
to diminish NDM Personnel’s concurrent obligation to preserve documents, tangible things and
other potentially relevant evidence.
NDM Personnel are directed to immediately, today, February 5, 2024, to initiate this litigation
hold for potentially relevant ESI, documents and tangible things, and to act diligently and in good
faith to secure and audit compliance with such litigation hold. NDM Personnel are further
directed to immediately identify and modify or suspend features of NDM’s information systems
and devices that, in routine operation, operate to cause the loss of potentially relevant ESI.
Examples of such features and operations include:
• Purging the contents of e-mail repositories by age, capacity or other criteria;
• Using data or media wiping, disposal, erasure or encryption utilities or devices;
• Overwriting, erasing, destroying or discarding back up media;
• Re-assigning, re-imaging or disposing of systems, servers, devices or media;
• Running antivirus or other programs effecting wholesale metadata alteration;
• Releasing or purging online storage repositories;
• Using metadata stripper utilities;
• Disabling server or 1M logging; and,
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 4
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 5
• Executing drive or file defragmentation or compression programs.
Also, NDM Personnel should anticipate that is employees, officers or others may seek to hide,
destroy or alter ESI and act to prevent or guard against such actions. Especially where company
machines have been used for Internet access or personal communications, NDM Personnel
should anticipate that users may seek to delete or destroy information they regard as personal,
confidential or embarrassing and, in so doing, may also delete or destroy potentially relevant ESI.
This concern is not one unique to NDM or to NDM employees and officers. It's simply an event
that occurs with such regularity in electronic discovery efforts that any custodian of ESI and their
counsel are obliged to anticipate and guard against its occurrence.
NDM Personnel should take affirmative steps to prevent anyone with access to NDM Personnel’s
data, systems and archives from seeking to modify, destroy or hide electronic evidence on
network or local hard drives (such as by deleting or overwriting files, using data shredding and
overwriting applications, defragmentation, re-imaging or replacing drives, encryption,
compression, stenography or the like). With respect to local hard drives, one way to protect
existing data on local hard drives is by the creation and authentication of a forensically qualified
image of all sectors of the drive. Such a forensically qualified duplicate may also be called a
bitstream image or clone of the drive. Be advised that a conventional back up of a hard drive is
not a forensically qualified image because it only captures active, unlocked data files and fails to
preserve forensically significant data that may exist in such areas as unallocated space, slack
space and the swap file.
With respect to the hard drives and storage devices, demand is made that any person, including
but not limited to NDM Personnel, likely to have information pertaining to the instant matter on
their computer hard drive(s) immediately obtain, authenticate and preserve forensically qualified
images of the hard drives in any computer system (including portable and home computers) used
by that person during the period from three years ago until this matter is resolved.
Once obtained, each such forensically qualified image should be labeled to identify the date of
acquisition, the person or entity acquiring the image and the system and medium from which it
was obtained. Each such image should be preserved without alteration.
NDM Personnel should anticipate that certain ESI, including but not limited to spreadsheets and
databases, will be sought in the form or forms in which it is ordinarily maintained. Accordingly,
NDM Personnel should preserve ESI in such native forms, and NDM Personnel should not select
methods to preserve ESI that remove or degrade the ability to search NDM Personnel’s ESI by
electronic means or make it difficult or burdensome to access or use the information efficiently in
the litigation. NDM Personnel should additionally refrain from actions that shift ESI from
reasonably accessible media and forms to less accessible media and forms if the effect of such
actions is to make such ESI not reasonably accessible.
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 5
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 6
NDM Personnel should further anticipate the need to disclose and produce system and
application metadata and act to preserve it. System metadata is information describing the history
and characteristics of other ESI. This information is typically associated with tracking or
managing an electronic file and often includes data reflecting a file's noone, size, custodian,
location and dates of creation and last modification or access. Application metadata is
information automatically included or embedded in electronic files bul which may not be
apparent to a user, including deleted content, draft language, commentary, collaboration and
distribution data and dates of creation and printing. Be advised that metadata may be overwritten
or corrupted by careless handling or improper steps to preserve ESI. For electronic mail,
metadata includes all header rouling data and Base 64 encoded attachment data, in addition to the
To, From, Subject, Received Date, CC and BCC fields.
With respect to servers like those used to manage electronic mail (e.g. , Microsoft Exchange and
Gmail) or network storage (often called a user's "network share"), the complete contents
of each user's network share and e-mail account must be preserved. There are several ways to
preserve the contents of a server depending upon, e.g., its RAID configuration and whether it can
be downed or must be online 24/7.
Though I expect that NDM Personnel will act swiftly to preserve data on office workstations and
servers, NDM Personnel should also determine if any home or portable systems may contain
potentially relevant data. To the extent that officers, board members or employees have sent or
received potentially relevant e-mails or created or reviewed potentially relevant documents away
from the office, NDM Personnel must preserve the contents of systems, devices and media used
for these purposes (including not only potentially relevant data from portable and home
computers, but also from portable thumb drives, CD-R disks and the user's PDA, smart phone,
voice mailbox or other forms of ESI storage.). Similarly, if NDM Personnel, and employees,
officers or board members used online or browser-based email accounts or services (such as
Gmail, Yahoo Mail or the like) to send or receive potentially relevant messages and attachments,
the contents of these account mailboxes (including Sent, Deleted and Archived Message folders)
must be preserved.
NDM Personnel must also preserve documents and other tangible items that may be required to
access, interpret or search potentially relevant ESI, including logs, control sheets, specifications,
indices, naming protocols, file lists, network diagrams, flow charts, instruction sheets, data entry
forms, abbreviation keys, user ID and password rosters or the like. NDM Personnel must
preserve any passwords, keys or other authenticators required to access encrypted files or run
applications, along with the installation disks, user manuals and license keys for applications
required to access the ESI. NDM Personnel must preserve any cabling, drivers and hardware, if
needed to access or interpret media on which ESI is stored. This includes tape drives, bar code
readers, zip drives, external hard drives, flash drives, and other legacy or proprietary devices.
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 6
Vickman &
Associates
Attorneys Jesse Valencia
February 5, 2024
Page 7
Note that hard copies do not preserve electronic searchability or metadata. They are not an
adequate substitute for, or cumulative of, electronically stored versions. If information exists in
both electronic and paper forms, NDM personnel must preserve both forms.
NDM Personnel’s preservation obligation extends beyond ESI in NDM Personnel’s care,
possession or custody, and also includes ESI in the custody of others that is subject to NDM
Personnel’s direction or control. Accordingly, NDM Personnel must notify any current or former
agent, attorney, employee, custodian or contractor in possession of potentially relevant ESI to
preserve such ESI to the full extent of NDM Personnel’s obligation to do so, and NDM
Personnel must take reasonable steps to secure their compliance.
Yours truly,
James A. Vickman, Esq.
Vickman & Associates, Attorneys
Attorneys for Joseph Kochav Lev
Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414
telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com
EXHIBIT 3, PAGE 7
EXHIBIT 4, PAGE 1
EXHIBIT 4, PAGE 2
EXHIBIT 4, PAGE 3
EXHIBIT 4, PAGE 4
EXHIBIT 4, PAGE 5
EXHIBIT 4, PAGE 6
EXHIBIT 4, PAGE 7
EXHIBIT 4, PAGE 8
EXHIBIT 4, PAGE 9
Related Content
in Los Angeles County
Ruling
BORIS BELJAK, ET AL. VS CHRISTOPHER CHO KLEIN, ET AL.
Jul 25, 2024 |
23SMCV04468
Case Number:
23SMCV04468
Hearing Date:
July 25, 2024
Dept:
205
Superior Court of California
County of Los Angeles
West District
Beverly Hills
Courthouse /
Department
20
5
A&M ENGINEERING, INC.
,
Plaintiff,
v.
CHRISTOPHER KLEIN,
et al.
,
Defendant
s
.
Case No.:
2
3
SMCV0
4468
Hearing Date:
June
28
,
2024
[
TENTATIVE] ORDER
RE:
PLAINTIFFS
APPLICATIONS
FOR
WRIT
OF
ATTACHMENT
BACKGROUND
This action arises from a
breach of promissory notes
.
Plaintiff A&M Engineering Inc.
made three short-term loans to two Defendants
,
Global Automotive Solutions LLC (GAS) and GASs successor
-
in
-
interest,
Stelaro
LLC (
Stelaro
)
.
The loans total $14 million, only $1 million of which
Plaintiff claims
has been repaid
.
The loans were
purportedly used
to buy cars in Mexico which were re-sold for a profit in other countries
.
Defendant Christopher Klein served as the CEO of GAS and
Stelaro
.
Defendant
Alondra Group, LLC is the sole shareholder of
Stelaro
.
Plaintiff has sued other corporate defendants
who it
claims
are the alter egos of
Klein
, including
Christopher Klein Enterprises
LLC (CKE),
Executive Auto Rentals, LLC
(EAR)
, and
Luxury Lift
,
LLC
(L
uxury
)
(together with Alond
r
a, the Alter Ego Defendants)
.
Plaintiff has also sued Instant Infosystems, Inc.
(Instant), an entity owned by Christopher Kleins father, which Plaintiff claims received a fraudulent transfer
.
Plaintiff filed the instant action alleging
ten causes of action for (1) breach of contract, (2) fraud-misrepresentation, (3) fraud-concealment, (4) negligent misrepresentation, (5) receiving stolen property Penal Code
§ 496(a), (c); (6) fraudulent transfer Civ. Code § 3439 et seq.; (7) breach of fiduciary duty, (8) unfair competition Bus. & Prof. Code § 17200; (9) constructive trust, and (10) unjust enrichment
.
Plaintiff
filed applications for right to attach orders
.
On February 20, 2024, the Court denied the applications
.
Plaintiff filed
a petition for
writ of mandate
.
On April 9, 2024, the Court of Appeal issued its order and alternative writ of mandate commanding the Court to either respond to an order to show cause or vacate your order of February 20,
2024
& and thereafter make a new and different order setting the petitions for a hearing to determine whether an attachment should issue based on the courts evaluation of the record and the probable outcome of the litigation.
On May 1, 2024,
the Court vacate
d
the February 20 order and set
this
hearing on the applications to consider the probable validity of Plaintiffs claims
.
LEGAL STANDARD
Upon the filing of the complaint or at any time thereafter, the plaintiff may apply pursuant to this article for a right to attach order and a writ of attachment by filing an application for the order and writ with the court in which the action is brought.¿ (C
ode
C
iv.
P
roc.
§ 484.010.)
¿¿
The application shall be executed under oath and must include: (1) a statement showing that the attachment is sought to secure the recovery on a claim upon which an attachment may be issued; (2) a statement of the amount to be secured by the attachment; (3) a statement that the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based; (4) a statement that the applicant has no information or belief that the claim
is discharged or that the prosecution of the action is stayed in a proceeding under the Bankruptcy Act (11 U.S.C. section 101
et seq.
); and (5) a description of the property to be attached under the writ of attachment and a statement that the plaintiff is informed and believes that such property is subject to attachment.¿ (C
ode
C
iv.
P
roc.
§ 484.020.)¿
¿
The application [for a writ of attachment] shall be supported by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based.¿ (C
ode
C
iv.
P
roc.
§ 484.030.)¿¿
¿
The Court shall issue a right to attach order if the Court finds
all of
the following:
¿
(1) The claim upon which the attachment is based is one upon which an attachment may be issued.
¿
(2) The plaintiff has
established
the probable validity of the claim upon which the attachment is based.
¿
(3) The attachment is not
sought
for a purpose other than the recovery
on
the claim upon which the attachment is based.
¿
(4) The amount to be secured by the attachment is greater than zero.
¿
CCP § 484.090.
¿
A claim has probable validity where it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim.¿ (C
ode
C
iv.
P
roc.
§ 481.190.)
In
determining
the probable validity of a claim where the defendant makes an appearance, the court must consider the relative merits of the positions of the respective parties and
make a determination
of the probable outcome of the litigation.¿ (See
Loeb & Loeb v. Beverly Glen Music, Inc.
(1985) 166 Cal.App.3d 1110, 1120.)
¿
This procedure is similar to a bench trial.
¿
(Hobbs v. Weiss (1999) 73 Cal.App.4
th
76, 81.)
At the times prescribed by C
ode Civ. Proc.
§
1005(b), the defendant must be served with summons and complaint, notice of application and hearing, and the application and supporting evidence.¿ (C
ode
C
iv.
P
roc.
§ 484.040.)¿¿
¿
Attachment is a drastic remedy in that it provides for
the collection of a debt by seizure in advance of trial and judgment, as security for the eventual satisfaction of the judgment
.
Thus, under California law
, attachment is a purely statutory remedy, subject to strict construction
.
(
Epstein v. Abrams
¿(1997) 57 Cal.App.4th 1159, 1168.)
REQUEST FOR JUDICIAL NOTICE
Instant seeks judicial notice of the first amended complaint filed in this action and the declaration of David Klein in support of Instants Opposition to A&Ms application for a right to attach order, writ of attachment and temporary protective order,
previously
filed in this action on November 29, 202
3
.
It is
unnecessary
to ask the court to take¿
judicial notice
of materials previously¿
filed
in this case
.
[A]
ll
that is necessary is to¿
call
the court
s¿
attention
to such papers.
(
Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial
(The Rutter Group 2016) ¶ 9:53.1a
)
.)
Accordingly
, the Court denies Instants request for judicial notice.
Plaintiff requests judicial notice
of
(1) the
Grant Deed from Dror Alperovich and Gila Leibovitch to Christopher Klein dated July 1, 2020 for the real property known as 1315 Schuyler Road, Los Angeles, CA 90210; (2) the Deed of
T
rust from borrower Christopher Klein to lender OCMBC, Inc., dated September 9, 2020 secured by the real property
located
at 1315 Schuyler Road, Los Angeles, CA 90210, (3) the Entity Information page pertaining to
Stelaro
, LLC on the Nevada Secretary of States website as of December 18, 2023, (4) the Entity Information page pertaining to Alondra Group, LLC on the Nevada Secretary of States website as of December 18, 2023; (5) the Statement of Information, Limited Liability Company filed by
Christopher Klein Enterprises LLC with the State of California Office of the Secretary of State on July 5, 2023; (6) the Statement of Information, Limited Liability Company filed by Christopher Klein Enterprises LLC with the State of California Office of the Secretary of State on August 31, 2021; (7) the Articles of Organization of a Limited Liability Company for Christopher Klein Enterprises LLC, filed with the Secretary of State for the State of California and dated June 26, 2015; (8) the Statement of Information, Limited Liability Company filed by Executive Auto Rentals LLC with the State of California Office of the Secretary of State on July 5, 2023; (9) the Statement of Information, Limited Liability Company filed by Executive Auto Rentals LLC with the State of California Office of the Secretary of State on July 16, 2021
; (10) the
Amendment to Articles of Organization of a Limited Liability Company for Executive Auto Rentals, LLC, filed with the Secretary of State for the State of California and dated January 14, 2021
; (11) the
Articles of Organization of a Limited Liability Company for
Andares
Car Rental, LLC, filed with the Secretary of State for the State of California and dated January 8, 2021
; (12) the
Summary for Luxury Lifts LLC found on the Colorado Secretary of States website on November 21, 2023
; (13) the
Statement of Change Changing the Registered Agent Information filed by Luxury Lifts LLC on July 6, 2023 with the Colorado Secretary of State
; (14) the
Articles of Organization for a Limited Liability Company filed by Luxury Lifts LLC on February 3, 2022 with the Colorado Secretary of State
; (15)
Defendants Consolidated Opposition to Ex
Parte
Applications for Right to Attach Orders etc., filed in this matter on October 6, 2023
; (16) the
Opposition of Defendants
Stelaro
, LLC and Alondra Group, LLC to Applications for Right to Attach Orders etc., filed in this matter on November 29, 2023
; (17)
Defendant
Stelaro
, LLCs Answer to Unverified Complaint filed in this matter on November 17, 2023
; (18)
Defendant Alondra Group, LLCs Answer to Unverified Complaint filed in this matter on November 17,
2023
;
(19)
Order and Alternative Writ of Mandate dated April 9, 2024 in A&M Engineering, Inc. v. Superior Court of Los Angeles County, Court of Appeal for the Second Appellate District case number B335766
l; (20)
Letter dated May 2, 2024 from Leah C. Gershon, Court Counsel, to the Justices of Division Seven of the Court of Appeal for the Second Appellate District pertaining to case number B335766
; (21)
Brief of Defendants
Stelaro
, LLC and Alondra Group, LLC Regarding the Courts Response to the Court of Appeals Order and Alternative Writ of Mandate dated April 24, 2024 and filed in this matter
; and (22)
Preliminary Opposition of Real Parties in Interest
Stelaro
, LLC and Alondra Group, LLC to Petition for Writ of Mandate or Other Appropriate Relief dated April 5, 2024 and filed in A&M Engineering, Inc. v. Superior Court of Los Angeles County, Court of Appeal for the Second Appellate District case number B335766.
The Court
takes
judicial notice of Exhibits 1 and 2 as recorded documents
pertaining to
ownership of property as official acts of the County of Los Angeles or as facts and propositions that are not
reasonably subject
to dispute and are capable of immediate and
accurate
determination by resort to sources of
reasonably indisputable
accuracy. (Evid. Code, § 452, subds. (c), (g), (h)
.)
The Court takes judicial notice of Exhibits 3 through 14 as enactments of the offices of the Secretaries of State of California, Nevada, and Colorado, or as official acts of those Secretaries of State. (Evid. Code, § 452, subds. (b) & (c).) The Court
denies the request for judicial
notice of Exhibits 15 through 22 as
unnecessary as they are documents filed in this case
.
EVIDENTIARY OBJECTIONS
The Court overrules
the Alter Ego Defendants
Objection
Nos. 1,
2, 3, 4,
5,
8, 9
and sustains Objection Nos.
6, 7,
10,
11, 12,
13,
14, 15
, 16,
17, 18,
19,
to the Declaration of Boris
Beljak
,
Jr.
The Court
sustains
the Alter Ego Defendants
Objection Nos.
20, 21
, 22 to the Declaration of Anthony Brown
.
The Court
sustains
the Alter Ego Defendants
Objection No.
23
to the Declaration of
Ryan
Thomas Dunn
.
The Court sustains
the Alter Ego Defendants
Objection Nos. 24 and 25 to the Declaration of Ivonne Franco
.
The Court sustains Instants Objection Nos. 1,
2, 3, 4, 5,
6 to the Declaration of Boris
Beljak
,
Jr.
ANALYSIS
Basis of Attachment
Section 483.010, subd
.
(
a
)
provides that except as otherwise provided by statute, a writ of attachment can be
issued
only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500) exclusive of costs, interest, and attorney's fees. (C
ode
C
iv.
P
roc.
§ 483.010(a).)
The purpose of the fixed and readily ascertainable requirement is [t]o ensure that the defendant has meaningful notice of what she is contending with, and to ensure that the attachment amount may be accurately determined in summary proceedings prior to trial. (
Royals v. Lu
(2022) 81 Cal.App.5
th
328, 350.)
It is a well-recognized rule of law in this state that an attachment will lie upon a cause of action for damages for a breach of contract where the damages are readily ascertainable by reference to the contract and the basis of the computation of damages appears to be reasonable and definite. The fact that the damages are unliquidated is not determinative
.
But the contract sued on must
furnish
a standard by which the amount due may be clearly
ascertained
and there must exist a basis upon which the damages can be
determined
by proof. (See
CIT Group/Equipment Financing, Inc. v. Super DVD, Inc.
(2004) 115 Cal.App.4
th
537, 541.)
Here, the amount owed is
readily
ascertainable
,
and there is a basis upon which
the damages can be determined
.
A&M
submitted
the three outstanding promissory notes, which totaled $14,000,000
.
(
Exs
.
B, C, D
to
Beljak
Decl.)
A&M also
submitted
A
&M
bank statements showing that
Stelaro
had repaid A&M $1,000,000
.
(Ex. E to
Beljak
Decl
.) The promissory
notes and bank records are properly authenticated in the declaration of Boris
Beljak
.
(
Beljak
Decl.
¶¶
12, 18,
21,
24-25
.
)
A&M now seeks the unpaid balance on the promissory notes of $13,000,000
.
A
ccordingly
,
the
notes
sued on
furnish
a standard by which the amount due can be calculated and the
amount
of damages can be
determined
by
resort to proof (
i.e.
,
the notes and
the bank statements
)
.
Probable Validity
Stelaro
Plaintiff has shown the probable validity of its claims against
Stelaro
.
There is no dispute that
Stelaro
borrowed $14 million from Plaintiff
.
The parties dispute the amount that has been repaid, but even under
Stelaros
version of events, it owes $
11,065,000
($14 million in loans less
the
$
2,935,000
Stelaro
claims it paid)
.
(C. Klein Decl.
¶
2
;
Ex
s
. 1
.)
Stelaro
argue
s
that
Plaintiff is barred from recovery due to the usurious nature of
its
loans
.
Stelaro
has offered no facts to support this defense
--
only the vague legal conclusion that there are usury issues A&M must rebut
.
(
Stealor
Resp. Br. At 4.)
But
even if a usury defense were available in this case, Plaintiff is entitled to repayment of the principal amount on the notes which is the only amount
it is
seeking
to attach
.
(
Gibbo
v. Berger
(2004) 123 Cal.App.4
th
396, 403
(
When a loan is usurious, the creditor is entitled to repayment of the principal sum only.).)
The Court has credited all the amounts allegedly paid by
Stelaro
to principal, as Plaintiff has not shown what
portion
(if any) should be credited to interest
.
Accordingly
, whether Plaintiff has charged usurious interest is simply not relevant to this application
.
Stelaro
also argues that
Boris
Beljaks
declaration is conclusory
,
and
the amount due is
inadequately documented
.
The Court disagrees
.
The declaration
contains
sufficient detail
regarding
the amounts due under the promissory notes
and is supported by the notes and bank
statements
.
(
Beljak
Decl.
¶¶
24-25.)
A declaration signed under penalty of perjury, as
Beljaks
is, is sufficient to show A&M, of which
Beljak
is owner and CEO, disbursed the loan funds.
However,
while the Court concludes Plaintiff has shown the probable validity of its claim
s against
Stelaro
, t
he evidence is in equipoise as to the amount owed
.
The parties have filed dueling declarations
that
are equally credible
.
A
ccordingly
,
because Plaintiff bears the burden of proof,
a
conclusion
that the evidence is
equal
ly balanced
means the Court
can
grant the application for only the amount that is undisputed:
$
11,065,000
.
Al
ter Ego Defendants
Plaintiff has not shown
the
probable validity of
its claim
s
against
the Alter Ego Defendants
.
Plaintiffs claims against
these defendants
are
based on an alter ego theory
.
A
lter ego liability
requires two elements
: (1) such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, and (2) whether adherence to the fiction of separate existence would, under the circumstances, promote fraud or injustice. (
Watson v. Commonwealth Ins. Co.
¿(1936) 8 Cal.2d 61, 68
.)
¿
Factors a trial court may consider when deciding unity of interest and whether the fiction of a separate existence would promote fraud and injustice include the following: Commingling of funds and other assets & ; the treatment by an individual of the assets of the corporation as his own [citations]; & the failure to maintain & adequate corporate records & ; & sole ownership of all of the stock in a corporation by & the members
of a family [citations]; & the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual & ; & [the] concealment of personal business activities [citations]; the use of the corporate entity to procure labor, services or merchandise for another person or entity [citations];
& or the use of a corporation as a subterfuge of illegal transactions. (
Associated Vendors, Inc. v. Oakland Meat Co.
¿(1962) 210 Cal.App.2d 825, 838840
.)
Alter ego is an extreme remedy, sparingly used
.
(
Sonora Diamond Corp. v. Superior Court
(2000) 83 Cal. App. 4th 523, 539
;
see also
Mesler v. Bragg Management Co.
(1985) 39 Cal.3d 290, 301 (the corporate form will be disregarded only in narrowly defined circumstances and only when the ends of justice so require);
Las Palmas Associates v. Las Palmas Center Associates
(1991) 235 Cal.App.3d 1220, 1249 (sound public policy dictates that imposition of alter ego liability be approached with caution).)
Plaintiff
argues
it has met eight
Associated Vendors
factors
.
In doing so, Plaintiff relies heavily on
the declaration of Boris
Beljak
, Jr., but
Beljak
lacks personal knowledge to attest to
most (if not all) of these factors
.
Plaintiff also
fails to
systematically show it has met the eight
Associated Vendors
factors as to
each
Alter Ego Defendant
.
For example,
it argues
it has met the common ownership factor,
but it has only shown common ownership
of
Stelaro
and Alondra
.
It claims there is a commingling of assets; but it has only shown commingling of assets between
Stelaro
and CKE
.
It argues
there is a sharing of offices,
but it has only shown one defendant (Alondra) who has the same office as
Stelaro
.
In any event, e
ven if Plaintiff
has
alleged sufficient facts to show unity of interest, the Court concludes
it has not
alleged facts to show an inequitable result would occur if the Court
failed to
pierce
Stelaros
corporate veil
.
Without
citing
any evidence, Plaintiff
conclusorily
argues
that Klein will
simply drain
Stelaro
of available funds (if he hasnt already) by transferring
Stelaros
funds to the alter ego entities, leaving
Stelaro
without assets to satisfy a judgment against it.
But t
here is no
evidence
that
Stelaro
is
undercapitalized, is
insolvent or cannot pay a judgment issued against it
.
Accordingly
, Plaintiff has not shown the probable validity of its claim against
the Alter Ego Defendants,
and the Court denies its application as to
the Alter Ego Defendants
.
Instant
Plaintiff has shown
it is more likely than not that it will prevail on its
sole claim for fraudulent transfer
against Instant
.
A fraudulent transfer under the
UVTA
is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor
from reaching that interest to satisfy its claim. [Citation.] (
Kirkeby v. Superior Court
(2004) 33 Cal.4th 642, 648.) Under the
U[V]TA
, a transfer can be invalid either because of actual fraud (
Civ. Code, § 3439.04, subd. (a)
) or constructive fraud (
id.
,
§§ 3439.04, subd. (b)
,
3439.05
)
& .
(
Mejia
v. Reed
(2003)
31 Cal.4
th
657,
661
.)
Actual fraud under the
UVTA
is shown when a transfer is made, or an obligation is incurred, [w]
ith
actual intent to hinder, delay, or defraud any creditor of the debtor. (
Civ. Code
§ 3439.04, subd. (a)(1)
.)
Such a transfer is voidable as to a creditor of the debtor, whether the creditor
s claim arose before or after the transfer was made or the obligation was incurred. (
Civ. Code
§ 3439.04, subd. (a)
.)
It is not voidable, however, against a person that took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee or
obligee
. (
Civ. Code
§ 3439.08, subd. (a)
.
)
To
determine
whether there is an actual intent to defraud, the Court looks to eleven badges of fraud. (
Nagel v. Westen
(2021) 59 Cal.App.5th 740, 748.)
The factors are:
(1) Whether
the transfer or obligation was to an insider. [¶] (2) Whether the debtor
retained
possession or control of the property transferred after the transfer. [¶] (3) Whether the transfer or obligation was
disclosed
or concealed. [¶] (4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit. [¶] (5) Whether the
transfer was of
substantially all
the debtor
s assets. [¶] (6) Whether the debtor absconded. [¶] (7) Whether the debtor removed or concealed assets. [¶] (8) Whether the value of the consideration received by the debtor was
reasonably equivalent
to the value of the asset transferred or the amount of the obligation incurred. [¶] (9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred. [¶] (10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred. [¶] [and] [¶] (11) Whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.
(
Civ. Code
§ 3439.04, subd. (b)
.)
None of these factors is determinative, and no minimum or maximum number of factors is required.
(
Aghaian
v. Minassian, supra
, 59 Cal.App.5th at p. 456; see also
Filip
v.
Bucurenciu
(2005)
129 Cal.App.4th
825,
834
.)
In
Filip
, the court explained the factors do not create a mathematical formula to
establish
actual intent. There is no minimum number of factors that must be present before the scales tip in favor of finding of actual intent to defraud
.
This list of factors is meant to provide guidance to the trial court, not compel a finding one way or the other.
(
Id.
at p. 834
.)
The presence of one or more badges of fraud does not create a presumption of fraud
.
Rather, it is merely evidence from which an inference of fraudulent intent may be drawn.
(
Legis. Com. com., Deering's Ann. Civil Code, § 3439.04
.)
Constructive fraud under the UVTA can be shown in either of two ways
.
First, a transfer is constructively fraudulent where a debtor makes a transfer or incurs an obligation [w]
ithout
receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either: [¶] (A) [w]as engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction[; or] [¶] (B) [
i
]
ntended
to incur, or believed or reasonably should have believed that the debtor
would incur, debts beyond the debtor
s ability to pay as they became due. (
Civ. Code
§ 3439.04, subd. (a)(2)
.)
As with actual fraud, this form of transfer is
voidable as
to a creditor no matter whether the creditor
s claim arose before or after the transfer. (
Civ. Code
§ 3439.04, subd. (a)
.)
Second, a transfer is constructively fraudulent when a debtor makes a transfer or incurs an obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation. (
§ 3439.05, subd. (a)
.) This form of transfer is voidable as to a creditor whose claim arose before the transfer was made. (
Id.
)
Here,
Stelaro
made two transfers to Instant
: (1)
in
March 2022 for $600,000 to repay
Instants loan to CKE
, and
(2)
monthly payments
totaling over $50,000 for rent
allegedly
owed by
Stelaro
to CKE
.
(D. Klein Decl.
¶
¶
3
, 8
.)
As to the first transfer,
Plaintiff argues there is actual fraud because the
transfer was made
from son to father, and
Stelaro
received no
reasonably equivalent
value because
it was paying Instant
$600,000
to satisfy a loan made by
a completely separate
entity, CKE
.
(D. Klein Decl.
¶ 3.)
There are also no contemporaneous documents showing that the loan was ever made
such as a note or loan agreement
.
Instant relies on a balance sheet as of 8/31/2020
to prove the loan was made
but it is unclear when the balance sheet was created
.
(Ex. A
to
D. Klein
Decl
.)
In opposition, Instant argues there was no intent to
hinder, delay or
defraud because
at the time these
this transfer was made in March 2022
, and through October 23, 2022, Plaintiff admits it was still receiving payments for the interest owed on its loans from
Stelaro
.
There is no evidence
Stelaro
was insolvent at the time of the transfers, or that it is in fact insolvent today
.
The Court concludes
that
this transfer bears
four
badges of fraud
.
First
, the transfer was made
to an insider
; Instant and
Stelaro
are wholly owned by members of the same family
.
(
Menick v. Goldy
(1955) 131 CAl.App.2d 542, 547 (The relationship of parent and child, when coupled with other suspicious circumstances, may be sufficient to raise an inference of fraud in the conveyance.).)
Second
,
the
value of the consideration received by
Stelaro
was not
reasonably equivalent
to the value of the asset transferred
.
There
is no dispute that
the transfer here was made to repay the loan of a separate entity, CKE, and therefore,
Stelaro
received no consideration from the transfer
.
Third
,
the transfer occurred shortly after
Stelaro
incurred a substantial debt
.
Stelaro
transferred $600,000 to Instant in March 2022, just seven days after A
&
M loaned
Stelaro
$5,000,000
.
Fourth
, while not a badge of fraud
identified
in
Civ. Code
§ 3439.04, subd. (b)
, the Court finds compelling the fact that there are no contemporaneous documents supporting the existence of the loan
from Instant
.
While Instant is correct that most of the badges of fraud are not present here,
[t]
here is no minimum number of factors that must be present before the scales tip in favor of finding of actual intent to defraud
.
This list of factors is meant to provide guidance to the trial court, not compel a finding one way or the other.
(
Filip
,
129
Cal.App.4th
at
834
.)
As to the second transfer
for rental payments, there
are
also no contemporaneous documents supporting
the existence of any liability or debt owed by
Stelaro
to Instant
.
For example, there is
no rental agreement
.
The absence of this documentation coupled with the relationship between the owners of
Stelaro
and Instant supports a finding of an actual intent to hinder, delay or defraud creditors
.
Accordingly
, the Court also concludes Plaintiff has shown it is more probable than not that it will prevail on its fraudulent transfer claim again
st Instant for the transfers
for alleged rent payments
.
Purpose and Amount of Attachment
Code of Civil Procedure section 484.090 states that the Court shall issue a right to attach order if the attachment is not sought for a purpose other than the recovery on the claim upon which the attachment is based . . . [and] the amount to be secured by the attachment is greater than zero. Plaintiff declares that attachment is not
sought
for a purpose other than the recovery
on
Plaintiffs claim
.
(Appl. ¶ 4.) The amount to be secured is greater than zero.
Subject Property
Code of Civil Procedure section 487.010(a) provides that [w]here the defendant is a corporation, all corporate property for which a method of levy is provided is subject to attachment
.
S
ection 487.010(a) also applies to LLCs
.
Defendants cite no authority to the contrary
.
Exemptions
Defendants have not claimed any specific exemptions
.
Also, generally, corporate defendants may not claim exemptions.
Reduction of Amount to be Secured
Code of Civil Procedure section 483.015(b) provides that the amount to be secured by the attachment shall be reduced by,
inter alia
:
(2) The amount of any indebtedness of the plaintiff that the defendant has claimed in a cross-complaint filed in the action if the defendants claim is one upon which an attachment could be issued.
(3) The amount of any claim of the defendant asserted as a defense in the answer
pursuant to
Section 431.70 if the defendant's claim is one upon which an attachment could be issued had an action been brought on the claim when it was not barred by the statute of limitations.
[T]o sustain reduction in a writ amount, most courts require that the defendant provide enough evidence about its counterclaims and/or defenses to prove a prima facie case [for
attachment against Plaintiff]. (Ahart,
California Practice Guide: Enforcing Judgments and Debts
, ¶ 4:64 (1998 rev.).)
Defendants have not supported an attachable defense or claim for offset
.
Undertaking
Instant argues that Plaintiff should
be required
to post an undertaking of $150,000 which
represents
the amount of fees Instant will incur to litigate this action to prove the attachment was wrongful
.
The Court disagrees
.
Code of Civil Procedure section 489.210 requires the plaintiff to file an undertaking before issuance of a writ of attachment
.
Code of Civil Procedure section 489.220 provides, with exceptions, for an undertaking
in the amount of
$10,000
.
However, that amount is subject to augmentation [
i
]f, upon objection to the undertaking, the court determines that the probable recovery for wrongful attachment exceeds the amount of the undertaking, in which case the court must order the amount of the undertaking increased to the amount it determines to be the probabl
e recovery for wrongful attachment if it is ultimately determined that the attachment was wrongful. (Code Civ. Proc.
§
489.220(b).)
An attachment is wrongful if a plaintiff does not
ultimately recover
judgment in the underlying action
.
(Code Civ Proc.
§490.010(b).) A plaintiffs liability for a wrongful attachment includes (1) all damages proximately caused to the defendant by the wrongful attachment, and (2) all costs and expenses, including attorneys fees,
reason
ably expended
in defeating the attachment
.
(Code Civ. Proc. §490.020(a).
)
There is ambiguity and uncertainty as to what the Legislature intends a trial court to consider in
determining
a
probable recovery for wrongful attachment under § 489.220(b)
.
(
N. Hollywood Marble Co. v. Superior Court
(1984)
157 Cal. App. 3d 683, 688
.
)
In
N. Hollywood
Marble Co.
, the California Court of Appeal held that the term
probable
recovery
in
§
489.220(b)
should be construed as giving the trial court discretion to consider the probability of a plaintiff prevailing in the underlying action in determining a defendant
s
probable recover
y
for wrongful attachment
under
§
489.220(b)
and, accordingly, denied the defendant
s motion to increase the plaintiff's undertaking because the defendant effectively conceded the merits of the plaintiff's claim.
(
Id.
at 688
.
)
There,
the plaintiff sued the defendant for breach of contract, obtained a right-to-attach order to seize inventory, equipment, and supplies of defendant
s business equal to the amount of plaintiff
s breach of contract claim, and posted the statutory undertaking.
(
Id.
at 686
.
)
The defendant moved to increase the plaintiff
s undertaking
pursuant to
§
489.220(b)
.
(
Id.
)
The trial court denied the defendant
s motion, finding that
section 489.220[b]
contemplates the trial court
s consideration of the probable validity of the plaintiff
s claim
in the process of determining
the
probable recovery
of defendant for
wrongful attachment.
(
Id.
at 688
.
)
On appeal, the defendant argued that the trial
court was precluded from considering the
probable validity of the plaintiff's claim
in
determining
its
probable recovery for wrongful attachment
under
section 489.220(b)
.
(
Id.
at 689, 691
.
)
Like
Instant
here, the defendant in
N. Hollywood Marble Co.
advanced a reading of
§
489.220(b)
that was confined to a determination of a monetary amount
, i.e.,
a determination of the
likely
amount
of the recovery for wrongful attachment, and whether it exceeds the
amount
of the posted undertaking
.
(
Id.
at 689
.
)
As explained by the California Court of Appeal, under the defendant
s posited reading of
§
489.220
, a court should simply assume the attachment is wrongful and increase the undertaking to the
total damages [or amount the] defendant competently demonstrates it is likely to sustain from
the attachment.
(
157 Cal. App. 3d at 689
.
)
This reading, in effect, equates
probable recovery
with
probable loss.
(
Id.
)
The
N. Hollywood Marble Co.
court rejected the defendant
s construction of
§
489.220(b)
as contrary to the purpose of the attachment remedy.
(
Id.
at 689-91
.
)
As
stated
by the court, the purpose of the attachment procedure is to protect an unsecured creditor plaintiff from the dissipation of the defendant
s assets before the plaintiff can obtain and enforce a judgment against the defendant, by allowing the plaintiff to attach certain assets in satisfaction of the plaintiff
s claim.
(
Id.
at 690
.
)
This purpose would be frustrated by the defendant
s proffered
construction of
§
489.220, because a plaintiff would then
be required
to unnecessarily finance a
massive undertaking on a claim of certain merit.
(
Id.
at 690
.
)
Under the specific facts of
Hollywood Marble Co.
, the court concluded that enforcing a literal interpretation of
section 489.220
would lead to an absurd result in the case before it, because the defendant had
essentially conceded
the merits of plaintiff
s underlying claim.
(
Id.
at 691
.
)
Instead, the court adopted a more expansive construction of the term
probable recovery.
It construed the term as giving
the trial court discretion to consider . . . the probability that plaintiff will prevail on his claim in the action
in
determining
a defendant
s probable recovery for wrongful attachment
.
(
Id.
at 689, 691-92
.
)
The court concluded that the
ambiguous language of
section 489.220, subdivision (b)
, does not reflect a clear legislative intent to divest trial courts of [their inherent discretion] and to preclude the consideration of facts that are critical to the purpose of attachment.
(
Id.
at 692
.
)
Applying the principles in
N. Hollywood Marble Co.
,
this court finds no evidence in the record to suggest that
Instant
is more likely to prevail than
Plaintiff
.
As such, the court finds that the amount of Plaintiff's undertaking should
not
be increased.
CONCLUSION
For the foregoing reasons, the Court
GRANTS
Plaintiffs
applications for writ of attachment against
Stelaro
in the amount of
$11,065,000;
GRANTS
as to
Instant and
DENIES
as to Alondra
,
Klein,
CKE,
EAR
and Luxury
.
Plaintiff
is required to
make an undertaking of $10,000.
IT IS SO ORDERED.
DATED:
June
28
, 2024
___________________________
Edward B. Moreton, Jr.
Judge of the Superior Court
Superior Court of California
County of Los Angeles
West District
Beverly Hills
Courthouse /
Department
20
5
A&M ENGINEERING, INC.
,
Plaintiff,
v.
CHRISTOPHER KLEIN,
et al.
,
Defendant
s
.
Case No.:
2
3
SMCV0
4468
Hearing Date:
Ju
ly
1
8
, 2024
[
TENTATIVE] ORDER
RE:
DEFENDANTS
CHRISTOPHER KLEIN,
GLOBAL AUTOMOTIVE SOLUTIONS,
LLC, STELARO, LLC, ALONDRA GROUP,
LLC, CHRISTOPHER KLEIN
ENTERPRISES, LLC, LUXURY LIFTS,
LLC
AND EXECUTIVE AUTO RENTALS,
LLCS
DEMURRER TO COMPLAINT
BACKGROUND
This action arises from a
breach of promissory notes
.
Plaintiff A&M Engineering Inc.
made three short-term loans to two Defendants
,
Global Automotive Solutions LLC (GAS) and GASs successor
-
in
-
interest,
Stelaro
LLC (
Stelaro
)
.
The loans total $14 million, only $1 million of which
Plaintiff claims
has been repaid
.
The loans were
purportedly used
to buy cars in Mexico which were re-sold for a profit in other countries
.
Defendant Christopher Klein served as the CEO of GAS and
Stelaro
.
Defendant
Alondra Group, LLC is the sole shareholder of
Stelaro
.
Plaintiff has sued other corporate defendants
who it
claims
are the alter egos of
Klein
, including
Klein Enterprises
LLC (CKE),
Executive Auto
Rentals, LLC
(EAR)
, and
Luxury Lift
,
LLC
(L
uxury
)
.
Plaintiff has also sued Instant Infosystems, Inc. (Instant), a company owned by Christopher Kleins father (David Klein), which Plaintiff claims received fraudulent transfers from
Stelaro
.
Plaintiff filed the instant action alleging
ten causes of action for (1) breach of contract, (2) fraud-misrepresentation, (3) fraud-concealment, (4) negligent misrepresentation, (5) receiving stolen property Penal Code
§ 496(a), (c); (6) fraudulent transfer Civ. Code § 3439 et seq.; (7) breach of fiduciary duty, (8) unfair competition Bus. & Prof. Code § 17200; (9) constructive trust, and (10) unjust enrichment
.
This hearing is on
Defendants Klein, GAS,
Stelaro
, Alondra, CKE, Luxury and EARs
(Moving Defendants)
demurrer
.
Moving
Defendants argue that (1) the second, third and fourth causes of action fail because Plaintiff has not plead fraud with specificity
;
(2) the fourth cause of action fails because Plaintiff has not alleged theft or receipt of stolen property with the requisite criminal intent, and (3) the ninth and tenth causes of action fail because they are not causes of action.
N
o opposition
has been
filed
.
MEET AND CONFER
¿
Code Civ. Proc. §430.41 requires that [b]
efore
filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (C
ode
C
iv.
P
roc.
§ 430.41(a).)¿ The parties are to meet and confer at least five days before the date the responsive pleading is due. (C
ode
C
iv.
P
roc.
§ 430.41(a)(2).)¿ Thereafter, the demurring party shall file and serve a declaration detailing their
meet
and confer efforts. (C
ode
C
iv.
P
roc.
§ 430.41(a)(3).)¿
Moving Defendants
submit
the declaration of
Johnny White
attesting that counsel
met and conferred by phone on May 13, 2024, the same date
Moving Defendants
filed their
demurrer
.
This does not satisfy the meet and confer requirements
.
However, the Court cannot overrule a demurrer based on an insufficient meet and confer
.
(Code Civ. Proc. § 430.41(a)(4).)¿
LEGAL STANDARD
A demurrer to a complaint may be general or special
.
A general demurrer challenges the legal sufficiency of the complaint on the
ground
it
fails to
state
facts sufficient to constitute a cause of action. (
Code Civ. Proc., § 430.10, subd. (e);
Lewis v. Safeway, Inc.
(2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable
.
(See
Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994 (in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents).) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (
Aubry v. Tri-City Hosp. Dist.
(1992) 2 Cal.4th 962, 967.)
A special demurrer challenges other defects in the complaint, including whether a pleading is uncertain. (
Code Civ. Proc., § 430.10, subd. (f)
.) The term uncertain
means
the pleading is ambiguous and unintelligible.
(
Id.
) A demurrer for uncertainty should be sustained if the complaint is drafted in such a manner that the defendant cannot
reasonably respond
,
i.e.
, the defendant cannot
determine
what issues must be admitted or denied, or what counts are directed against the defendant. (
Khoury v. Maly's of California, Inc.
(1993) 14 Cal.App.4th 612, 616
.)
Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (
See Goodman v. Kennedy
(1976) 18 Cal.3d 335, 349 (court shall not sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment);
Kong v. City of Hawaiian Gardens Redevelopment Agency
(2002) 108 Cal.App.4th 1028, 1037 (A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a
reasonable possibility the defect can be cured by amendment.).) The burden is on the complainant to show the Court that a pleading can be amended successfully. (
Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.)
ANALYSIS
Fraud
and Negligent Misrepresentation
Claims
Defendants argue that Plaintiff has not
plead
fraud
or negligent misrepresentation
with sufficient particularity
.
The Court disagrees.
The ele
ments of fraud are (a) a misrepresentation (false representation, concealment or nondisclosure), (b) scienter or knowledge of its falsity, (c) intent to induce reliance, (d) justifiable reliance, and (e) resulting damage.
(
Hinesley v.
Oakshade
Town Ctr.
(2005) 135 Cal.App.4
th
289, 294.)
The facts
constituting
the fraud must be alleged factually and specifically as to every element of fraud, as the policy of liberal construction of the pleadings will not ordinarily be invoked
.
(
Lazar v. Superior Court
(1996) 12 C
a
l.4
th
631, 645.)
The particularity requirement demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered. (
Id.
)
The elements of a cause of action for negligent misrepresentation include [m]
isrepresentation
of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce anothers reliance on the fact misrepresented, ignorance of the truth, and justifiable reliance on the misrepresentation by the party to whom it was directed and resulting damage. (
Hydro-Mill Co. Inc.
v
. Hayward
, Tilton & Rolapp Ins. Associates, Inc.
(2004) 115 Cal.App.4
th
1145, 1154.)
Negligent misrepresentation, like fraud, must be pled with specificity
.
(
Small v. Fritz Companies, Inc.
(2003) 30 Cal.4th 167, 184
.)
Here, the Complaint alleges that Defendants misrepresentations fall into two categories
:
(1) misrepresentations about GASs and
Stelaros
financial status and outl
ook and (2) misrepresentations about how Defendants would use the loan money received from Plaintiff
.
(First Amended Complaint (FAC)
¶121.)
As to the first category, Plaintiff alleges Klein provided him with false financial statements in the beginning of 20
20, 2021 and 2022
.
(FAC ¶
¶
123
, 124, 125.)
The financial statement
s
falsely
inflated
the assets, revenues, and
equity of
Stelaro
.
(
Id.
) Plaintiff also alleges
seven
specific statements
in
other documents, primarily
powerpoint
and Zoom
presentations that purpo
r
tedly touted the financial health of
Stelaro
, including that it was
awarded exclusive rights
by
Mercedes Benz Direct Fleet Sales for Export of all Mercedes Models to Middle East
, Africa, and Asia,
that it was a profitable $60 million business with a path to double the
companys revenue to $125 million over the next 18 months
,
that it sold vehicles to 125 different customers in 12 countries,
that it
maintained a procurement network of over 100 different dealerships in and across Mexico, and
that in 2019, GAS sold 602 cars, resulting in $33,107,000 total sales and a net profit of $2,689,000.
(
Id.
¶127.)
As to the second category, Plaintiff alleges
Klein misrepresented how he would use the proceeds of loans received from
Plaintiff
.
Smith repeatedly told
Beljak
that GAS and STELARO would use the money
[Plaintiff]
loaned and invested to buy cars for resale to customers in China and other foreign countries which was the essence of GAS/STELARO business.
(
Id.
¶130.) Plaintiff
identifies
four specific misrepresentations made by Klein that Defendants intended to use
Plaintiffs loans
t
o buy cars for resale
.
(
Id.
¶¶132-135.)
For example, Klein sent
B
e
ljak
on January 17,
2020
a
powerpoint
presentation
which
represented
that GASs $10
Million
Deb Offering was To Fund Monthly Mercedes B
e
nz Direct Distribution of 300-500 Vehicles per
month. (
Id.
¶132.)
These allegations are sufficient to meet the
particularity
requirement for pleading fraud and negligent misrepresentation
.
Moving
Defendants
argue
that the
bulk of the
alleged mis
statements were
not made by Klein but were instead made by
Scott
Smith
(a confessed embezzler and a CFO of both Plaintiff and
Stelaro
)
.
This argument may
ultimately prevail
, but it is not
appropriate on
a demurrer where the Court must accept Plaintiffs allegations as true
.
In
any event,
the Complaint alleges that Smith is an agent of the other Defendants (FAC ¶20), and on this basis, his misrepresentations may be attributed to
Moving Defendants
.
Moving
Defendants
also take issue with
particular misrepresentations
, arguing they are opinions and not statements of fact
.
Even if that were so, false financial statements can clearly be the basis of a fraud claim
.
And to the extent
other
misstatements
identified
by Plaintiff are mere
puffery or sales talk
,
this still does not support a demurrer as a demurrer cannot be made to only part of a claim
.
(
Venice Town Council, Inc. v. City of Los Angeles
(1996) 47 Cal.App.4th 1547, 1562;
PH II, Inc. v. Superior Court
(1995) 33 Cal.App.4th 1680, 1681;
Grieves v. Superior Court
(1984) 157 Cal. App. 3d 159, 163-164.)
Moving Defendants further argue that the second category of misrepresentations (relating to how Plaintiffs loans would be used) is controverted by the promissory notes which do not
state
how the loans would be used
.
While this argument may
ultimately prevail
, it is a challenge to the merits of Plaintiffs allegations which the Court cannot consider on a demurrer
.
The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations
.
(
Ion Equip. Corp. v. Nelson
(1980) 110 Cal.App.3d 868, 881
.)
Moving Defendants also argue that
Plaintiff has made fundamentally inconsistent allegations
regarding
Klein
.
The Complaint alleges that Klein revealed Mr. Smiths embezzlement to Plaintiff
.
(FAC
¶¶
74-75.)
If Klein was
operating
a Ponzi s
cheme
, taking investor money to pay himself and family members, then, according to Defendants, it makes no sense that he would reveal
Smiths embezzlement
and
transmit
records of it to Plaintiff
.
Again, while this argument
has some appeal
, the Court cannot weigh the evidence on a demurrer
.
(
Ion Equip. Corp.
,
110 Cal.App.3d at 881.)
In sum,
the Court concludes that Plaintiff has sufficiently
stated
a claim for fraud
and
negligent misrepresentation
, and the Court overrules the demurrer to the second and fourth causes of action
.
Fraudulent Concealment
The elements of fraudulent concealment are (1) concealment or suppression of a material fact; by a defendant with a duty to disclose the fact to the plaintiff; (3) intent to defraud the plaintiff by intentionally
concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) the plaintiff sustained damage as a result of the concealment or suppression of fact. (
Hambridge v. Healthcare Partners Medical Group, Inc.
(2015) 238 Cal.App.4th 124, 162
.)
For a cause of action for fraudulent concealment to be actionable, there generally must exist a fiduciary relationship between the parties
.
(
Fink v. Weisman
(1933), 132
Cal.App
. 724, 730
.)
In addition, courts have found other circumstances in which nondisclosure or concealment may
constitute
actionable fraud: (1) possession of exclusive knowledge of material facts not known to the plaintiff; (2) active concealment of a material fact from the plaintiff; or (3) when partial representations are made but a material fact is withheld
.
(
LiMandri v. Judkins
(1997) 52 Cal.App.4th 326, 336
.)
Concealment is a species of fraud, and
[f]
raud
must be pleaded with
specificity.
(
Blickman
Turkus, LP v. MF Downtown Sunnyvale, LLC
(2008) 162 Cal.App.4th 858, 878
(bold emphasis added).)
However,
the standard particularity requirement is relaxed
as to fraudulent concealment claim
s
.
(
See
Alfaro v. Community Housing Improvement System & Planning Assn., Inc.
(2009) 171 Cal.App.4th 1356, 1384
(
less particularity is required when the facts lie more in the knowledge of the opposing party
);
see also
Committee on Children
s Television, Inc. v.
General Foods Corp.
(1983) 35 Cal.3d 197, 216
-
217
(less particularity
required
where it appears from the nature of allegations that defendant necessarily
possesses
full information concerning facts
in
controversy).
)
Here, Plaintiff alleges Defendants failed to disclose (1) they were using Plaintiffs loans for expenses other than vehicle purchases and they were instead using the loan proceeds to pay for personal expenses (FAC
¶150), (2)
Stelaro
had not filed tax returns for 2019, 2020 or 2021 (FAC ¶151)
, (3)
Stelaro
was losing money on sales in Europe (FAC ¶152), (4)
Stelaro
was consistently falling short of its sales goals (FAC ¶153
),
and
(5)
Stelaro
had negative cash flow; it lost money each year between 2019 and 2022 (FAC ¶154.)
Plaintiff further alleges Defendants had a duty to
disclose
these facts because they made partial representations
regarding
the financial health of
Stelaro
, while omitting these material facts
.
(FAC ¶156.) The Court concludes these allegations are sufficient to meet the more relaxed particularity requirement for a concealment claim
.
Accordingly
, the Court overrules the demurrer to the third cause of action
.
Receipt of Stolen Property
Moving Defendants argue that Plaintiff has not properly
stated
a claim for receipt of stolen property under Penal Code § 496
.
The Court agrees.
Section 496(a)
provides, in relevant part, that:
Every person who buys or receives any property that has been stolen or that has been
obtained in any manner constituting theft ..., knowing the property to be so stolen or
obtained ... shall
be punished by imprisonment in a county jail for not more than one
year, or imprisonment
pursuant to
subdivision (h) of Section 1170
.
Section 496(c)
states that
[a]
ny
person who has been injured by a violation of
subdivision (a)
... may bring an action for three times the
amount
of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney
s fees.
Cal. Penal Code § 496(c)
.
California courts have held that
[s]
ection
496(a)
extends to property
that has been obtained in any manner constituting theft.
(
Bell v.
Feibush
(2013)
212 Cal.App.4th 1041)
.
Penal Code
§
484 defines theft and states that
[e]very person ... who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, ... is guilty of theft.
(
Cal. Penal Code § 484(a)
.
)
Additionally,
[t]he elements required to show a violation of
section 496(a)
are simply that (
i
) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property.
(
Switzer v. Wood
(2019)
35 Cal.App.5th 116)
.
The California Supreme Court has emphasized that not all commercial or consumer disputes alleging that a defendant obtained money or property through fraud, misrepresentation, or breach of a contractual promise will amount to a theft. (
Siry Inv., L.P. v.
Farkhondehpour
(2022) 13 Cal. 5th 333, 361.)
Here, Plaintiff alleges that it
is owed
$13,000,000 in loans, and Defendants have engaged in fraudulent transfers
.
These allegations do not amount to theft
.
Plaintiff voluntarily made loans to
Stelaro
LLC for which it allegedly received some but not all repayments
.
Defendants did not steal Plaintiffs money
.
Accordingly
, the Court sustains the demurrer to the fifth cause of action
.
Constructive Trust
Moving Defendants argue that there is no cause of action for constructive trust
.
The Court agrees.
In California, constructive trust is a remedy, not a cause of action. (
PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
(2007) 150 Cal. App. 4th 384, 398 (A constructive trust, however, is an equitable remedy, not a substantive claim for relief.).) Because California does not recognize constructive trust as a cause of action, plaintiff does not, and can never, state facts sufficient to constitute a cause of action for constructive trust
.
Pleading constructive trust as a cause of action instead of a remedy subjects the claim to demurrer. (
Stanfield v. Starkey
(1990) 220 Cal. App. 3d 59, 76.)
Moreover, even if constructive trust was a cause of action,
P
laintiff cannot satisfy the conditions for the imposition of a constructive trust
.
[A] constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it.
(
Communist Party v. 522 Valencia, Inc.
(1995) 35 Cal. App. 4th 980, 990.
)
Here, there is no
res
as to which
P
laintiff has any colorable claim of right that can be subject to a constructive trust
.
Plaintiff merely has a generalized claim for money allegedly owed
.
(
Kraus v. Willow Park Public Golf Course
(1977) 73 Cal. App. 3d 354, 373 ([A] constructive trust is an equitable remedy imposed where the defendant holds title or some interest in certain property which it is inequitable for him to enjoy as against the plaintiff.);
Michaelian v. State Comp. Ins. Fund
(1996) 50 Cal. App. 4th 1093, 1114 (specific identifiable property to which defendant has title is a pleading requirement).)
A constructive trust is not
an appropriate remedy
for a claim that is essentially one for money damages.
(
Evans v. Scribe One Ltd. LLC
(
D. Ariz.
Jan. 21, 2022)
2022 U.S. Dist. LEXIS 11600 *28.)
In sum,
California law holds that constructive trust is a remedy, and not a standalone cause of action,
and Plaintiff has not
identified
a specific identifiable property that could be subject to a constructive trust
.
Accordingly
, the Court sustains the demurrer to the
ninth cause of action
.
Unjust Enrichment
Moving Defendants argue there is no cause of action for unjust enrichment
.
The Court agrees
.
[T]here is no cause of action in California for unjust enrichment. (
Melchior v. New Line Prods. Inc.
(2003) 106 Cal. App. 4th 779, 79
3
.)
It is a general principle rather than a
remedy in its own right
.
(
Id.
)
It describes the theory underlying a claim that a defendant has been unjustly conferred a benefit by the plaintiff
.
Return of that benefit is the remedy typically sought in a quasi-contract cause of action. (55 Cal. Jur. 3d (2024) Restitution § 2; Munoz v. MacMillan (2011) 195 Cal. App. 4th 648, 661.)
However, a plaintiff may not plead the existence of an enforceable contract and simultaneously maintain a quasi
-
contract claim unless the plaintiff also pleads facts suggesting that the contract may be unenforceable or invalid.
(
Berlanga v. Univ. of San Francisco
(2024) 100 Cal. App. 5th 75, 89.)
Here,
P
laintiff does not plead
a
quasi-contract
cause of action
. There are also express contracts under which
P
laintiff
seeks
to recover
,
and no allegations as to how those contracts are or may become invalid or unenforceable
.
Accordingly
, the Court sustains the demurrer to the tenth cause of action
.
CONCLUSION
For the foregoing reasons, the Court
SUSTAINS IN PART
and
OVERRULES IN PART
Moving
Defendants demurrer
without leave to amend
.
IT IS SO ORDERED.
DATED:
July
25
, 2024
___________________________
Edward B. Moreton, Jr.
Judge of the Superior Court
Ruling
SARGON RESTORATION, INC., A CALIFORNIA CORPORATION, ET AL. VS MORRISON STUDIOS, LTD. L.P.
Jul 26, 2024 |
23BBCV01735
Case Number:
23BBCV01735
Hearing Date:
July 26, 2024
Dept:
NCB
Superior Court of California
County of Los Angeles
North Central District
Department B
sargon restoration, inc.
,
et al.
,
Plaintiffs,
v.
morrison studios, ltd. lp
,
Defendant.
Case No.:
23BBCV01735
Hearing Date:
July 26, 2024
[
TENTATIVE] order RE:
Motion for attorneys fees pursuant to CCP § 8488 in the amount of $4,550.00
BACKGROUND
A.
Allegations
Plaintiffs Sargon Restoration, Inc. (Restoration), Environmental Abatement, Inc. (Abatement), and L.Y. Environmental, Inc. (L.Y.) allege that they each entered into an agreement with Defendant Morrison Studios, Ltd. L.P. (Defendant) by which Plaintiffs each agreed to furnish certain labor, services, equipment, and materials for a work of improvement at the property located at 5001 Lankershim Boulevard, North Hollywood, CA 91601.
Plaintiffs allege that they performed all conditions and obligations required, but Defendants breached their contractual obligations by failing and refusing to compensate each of the Plaintiffs.
Plaintiffs allege that the reasonable value and market price of said labor, services, equipment, and materials when provided and at all relevant times herein mentioned and now is as follows: (1) the sum of $378,950.05 to Restoration for fire and water restoration &; (2) the sum of $16,000.00 to Abatement for construction and fire/water restoration &; and (3) the sum of $6,375.00 to L.Y. for environmental testing&.
(FAC, ¶13, Exs. B-D.)
The first amended complaint (FAC), filed July 2, 2024, alleges causes of action for: (1) breach of written contract (Restoration); (2) breach of oral contract (Abatement); (3) breach of oral contract (L.Y.); (4) Quantum Meruit (Restoration); (5) Quantum Meruit (Abatement); and (6) Quantum Meruit (L.Y.).
B.
Relevant Background and Motion on Calendar
On April 30, 2024, Defendant filed a petition for removal of the mechanics lien on the property located at 5001 Lankershim Blvd., North Hollywood, CA 91601.
On May 13, 2024, Plaintiffs filed an opposition brief.
On May 16, 2024, Defendant filed a reply brief.
On May 31, 2024, the Court granted Defendants petition to release the property from the mechanics lien.
On May 31, 2024, the Court signed the Order on the Petition to Remove Mechanics Lien from Property Pursuant to Civil Code, § 8480.
LEGAL STANDARD
Civil Code, § 8488 states:
(a) At the hearing both (1) the petition [for an order to release the property from the claim of lien] and (2) the issue of compliance with the service and date for hearing requirements of this article are deemed controverted by the claimant. The
petitioner has the initial burden of producing evidence on those matters.
The petitioner has the burden of proof as to the issue of compliance with the service and date for hearing requirements of this article. The
claimant
has the burden of proof as to the validity of the lien.
(b) If judgment is in favor of the petitioner, the court shall order the property released from the claim of lien.
(c)
The prevailing party is entitled to reasonable attorney's fees
.
(Civ. Code, § 8488 [emphasis added].)
DISCUSSION
Defendant moves for attorneys fees in the amount of $4,550.00 pursuant to Civil Code, § 8488(c).
[1]
In opposition, Plaintiffs acknowledge that Defendant succeeded on the merits of its petition but argue that the attorneys fees claimed are excessive.
(Opp. at p.2.)
Plaintiff does not take issue with defense counsels hourly rate of $350, but argues that the 13 hours she spent on a simple petition in light of her accomplished experience is unreasonable when Defendants motion to remove the lien and the motion for attorneys fees appear to be forms that were reproduced with dates and information to fill in.
(
Id.
)
As stated above, the parties do not dispute that Defendant prevailed on the petition for removal of the mechanics lien.
As such, Defendant is entitled to recover reasonable attorneys fees from Plaintiffs.
The only issue is whether the $4,550.00 requested by Defendant is reasonable in amount.
Defense counsel, Araksya Boyadzhyan, provides her declaration in support of the motion for attorneys fees.
Ms. Boyadzhyan states that her hourly rate is currently $350/hour.
(Boyadzhyan Decl., ¶5.) She details her legal experience; she was admitted into practice in Claifornia in December 2014 and spearheaded Mgdesyan Law Firms civil litigation department.
(
Id.
, ¶¶6-7.)
She states that she spent 13 hours on this action, which included: 0
.5 hour expended drafting correspondence and meeting and conferring with Plaintiffs counsel regarding the removal of the mechanics lien; .4 hours researching in preparing the Petition; 3 hours expending in drafting the Petition to Remove the Mechanics Lien, the Request for Judicial Notice, and my declaration in support of the Petition; 2 hours expended on researching and drafting the Reply to Plaintiffs Opposition to the Petition; 1 hour to attend the hearing on the Petition; 0.5 hour expended drafting the Proposed Order on Removal of the Mechanics Lien; and 2 hours expended in researching and drafting the instant motion for attorneys fees.
(
Id.
, ¶8.)
Ms.
Boyadzhyan anticipates spending additional time if the motion for attorneys fees is opposed.
(
Id.
, ¶9.)
Plaintiffs argue that Ms.
Boyadzhyans 4 hours spent in researching to prepare the petition and 3 hours to draft the petition are unreasonable in light of Plaintiffs belief that the petition was clearly a form documents with dates and names filled in.
(Opp. at p.2.)
They also argue that spending 2 hours on this motion for attorneys fees is also unreasonable when it is a form motion with stock declarations with blanks filled in.
(
Id.
)
The Court finds that the time spent by Ms. Boyadzhyan to research and prepare the Petition is not unreasonable.
The Court will not make a determination regarding whether the Petition or this attorneys fees motion were forms as claimed by Plaintiffs.
Regardless of whether they were form documents, Ms. Boyadzhyan would still have had to have expended time to research the law and the facts of the particular case before her, prepare the Petition and attorneys fees motion, and draft the requisite accompanying papers (declarations, requests for judicial notice, etc.).
The expenditure of 13 hours for two law and motion matters is not unreasonably high.
Ms. Boyadzhyan has adequately explained the time she has spent and the Court sees no grounds to reduce the fees.
The requested sum is reasonable for the work done on the Petition and the attorneys fees motion and is not excessive in amount.
The motion for attorneys fees is granted in the amount of $4,550.00.
CONCLUSION AND ORDER
Defendant Morrison Studios, Ltd. L.P.s motion for attorneys fees is granted in the amount of $4,550.00.
Defendant shall provide notice of this order.
DATED: July 26, 2024
___________________________
John J. Kralik
Judge of the Superior Court
[1]
(The Court notes that Defendants make reference to the Code of Civil Procedure, § 8488, but the correct section is
Civil Code
, § 8488(c).)
Ruling
HOSS ZARGARAN VS ROBERT ABEDIAN, ET AL.
Jul 29, 2024 |
Echo Dawn Ryan |
23STCV14923
Case Number:
23STCV14923
Hearing Date:
July 29, 2024
Dept:
26
07/29/24
Dept. 26
Hon. Rolf Treu, Judge presiding
ZARGARAN v. ABEDIAN, et al.
(
23STCV14923
)
Counsel for Plaintiff/opposing party: Hoss Zargaran (Pro Per)
Counsel for Defendant/moving party:
Vicken Sonentz-Papzian (Sunderland McCutchan, LLP)
demurrer to FIRST AMENDED complaint
(
filed by Defendant Abedian on 12/18/23)
TENTATIVE RULING
The Court SUSTAINS Defendant Abedians demurrer to the Plaintiffs First Amended Complaint without leave to amend.
I. BACKGROUND
On June 27, 2023, Plaintiff Hoss Zargaran (Plaintiff) filed the instant action against Defendant Robert Abedian (Abedian) and Hnrick Nazarian aka Henrick Nazarian (Nazarian) (jointly Defendants). On October 16, 2023, the Court sustained Defendant Abedians demurrer to the complaint with leave to amend. (Order 10/16/23.)
On November 16, 2023, Plaintiff filed the operative First Amended Complaint (FAC) against Defendants. The FAC asserts four causes of action for (1) Accounting, (2) Quantum Meruit, (3) Conspiracy to Commit Fraud, and (4) Fraud.
The FAC alleges the following.
Plaintiff is a long-time experienced manager, marketer and supervisor of restaurants and culinary establishments in the County of Los Angeles, State of California. (FAC ¶ 2.) Plaintiff assisted Defendants in managing, overseeing, and supervising their restaurant Miro an upscale Italian restaurant in downtown Los Angeles since 2018. (FAC ¶ 8.) Recently, Miro permanently closed. (FAC ¶ 8.)
Plaintiff is informed and believes, and thereon alleges, that at all times herein mentioned and during Plaintiffs employment history with them at MIRO, [Defendants] represented to [Plaintiff] that they would pay Plaintiff a base salary of $ 4,000 per month for his work thereat [sic] and other appropriate and applicable employment benefit, compensation and income due him. The base salary was subsequently increased to $5,500 monthly after the General Manager was fired. (FAC ¶ 10.)
Within the last two (2) years, in the County of Los Angeles, State of California, Plaintiff is owed the sum of approximately $ 35,000 from said Defendants, with legal interest thereon, pending further discovery, according to proof and an accounting. (FAC ¶ 11.) It is necessary that [Plaintiff] obtain a proper and due accounting from [Defendants], so that he can receive the balance of any sums due and owed him, according to proof. To date, [Defendants], have failed and refused to provide the records, accounting and pay any sums owed and due Plaintiff, according to proof. (FAC ¶ 12.)
In or about January, 2023, and at all other times relevant hereto, [Defendants] agreed on a common and unlawful plan, and acted in concert, to commit the fraudulent act of not paying Plaintiff substantial monies and sums due him for services rendered in their restaurant business, to their unjust enrichment, as herein alleged. (FAC ¶ 24.)
In or about January, 2023, [Defendants] represented to Plaintiff that they would pay back any monies and sums and compensation owed by them to him. Plaintiff detrimentally relied upon said representation. The true facts were that [Defendants] had no intention of paying him amounts owed for services rendered. Had Plaintiff known the true facts, he would not have relied upon said representation by these Defendants. (FAC ¶ 30.)
On April 2, 2024, judgment was entered in favor of Defendant Hnreck Nazarian against Plaintiff Hoss Zargarian.
On December 18, 2023, Defendant Abedian filed the instant demurrer to the FAC, arguing:
·
Defendant demurs to Plaintiffs entire FAC arguing Plaintiffs claims are barred by the statute of limitations
o
Plaintiffs admission at an earlier October 19, 2023 court hearing, which is a part of the court record and may be judicially noticed, establishes that Plaintiff has failed to file this Complaint within the time afforded under the statute of limitations for each cause of action.
·
Defendant also demurs to each of Plaintiffs causes of action for failure to state a claim.
·
Defendant argues that Plaintiff wrongfully added/substituted in a new cause of action for quantum meruit without permission of the Court
No other opposition or response was filed.
II. ANALYSIS
A.
Legal Standard for Demurrer
A demurrer tests the sufficiency of whether the complaint states a cause of action. (
Hahn v. Mirda
(2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in contextany defects must be apparent on the face of the pleading or via proper judicial notice. (
Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleading alone, and not the evidence or facts alleged. (
E-Fab, Inc. v. Accountants, Inc. Servs.
(2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaints properly pleaded or implied factual allegations. (
Id
.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (
Hahn
, supra, 147 Cal.App.4th at p. 747.)
B.
Request for Judicial Notice
Defendant Abedian requests judicial notice of the October 19, 2023 Notice of Ruling with attached Court Order, filed with the Court and part of the Court record.
As the Court may take judicial notice of court records and actions of the State, (See Evid. Code, § 452(c)(d)), Defendants unopposed request for judicial notice is GRANTED as to the facts and documents cited above. However, the Court does not take judicial notice of the truth of assertions within. (See
Herrera v. Deutsche Bank National Trust Co.
(2011) 196 Cal.App.4th 1366, 1375.)
C.
Meet and Confer Requirement
Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., § 430.41, subd. (a).)
Here, counsel for Defendant submitted a declaration stating he attempted to meet and confer with Plaintiff but did not receive a response.
(Papazian Decl., ¶¶ 2-4.)
The Court finds the moving party satisfied its obligations to meet and confer and the Court proceeds on the merits.
D.
Statute of Limitations
Defendant Abedian demurs to Plaintiffs entire FAC on the grounds that Plaintiffs claims are barred by the statute of limitations.
A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. In order for the bar ... to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred. (
Committee for Green Foothills v. Santa Clara County Bd. of Supervisors¿
(2010) 48 Cal.4th 32, 42.) A demurrer based on statute of limitations is also appropriate on matters that the court may or must take judicial notice of. (
Aaronoff v. Martinez-Senftner
(2006) 136 Cal.App.4th 910, 918 [A demurrer based on a statute of limitations is appropriate if the ground appears on the face of the complaint or from matters of which the court may or must take judicial notice.].)
[T]he nature of the right sued upon, not the form of action or the relief demanded, determines the applicability of the statute of limitations. (
Jefferson v. J. E. French Co.
(1960) 54 Cal.2d 717, 718.) The statute of limitations usually commences¿when a cause of action accrues, and it is generally said¿that an action accrues on the date of injury. [Citation.] (
Vaca v. Wachovia Mortgage Corp.
(2011) 198 Cal.App.4th 737, 743.)
Plaintiffs first cause of action is for accounting. (FAC ¶¶ 14-16.) The statute of limitations for an accounting is determined by the underlying right or obligation sued upon. (
Jefferson v. J. E. French Co.
(1960) 54 Cal.2d 717, 718719 [accounting claim was subject to the statute of limitations for the underlying claim for breach of an oral contract];
Bell v. Bank of Cal.
(1908) 153 Cal. 234, 242 [accounting was subject to the statute of limitations for the underlying claim for conversion].) Here, the only funds allegedly owed to Plaintiff that could need accounting would be from Plaintiffs employment with Defendant. (FAC ¶¶ 10-12.) This is further confirmed by Plaintiffs second and underlying claim for quantum meruit stating as such: [Defendants] became indebted to Plaintiff for the sum of approximately $35,000.00, with legal interest thereon from date of breach, on account of monies owed to Plaintiff for services rendered pursuant to the aforesaid employment relationship. (FAC ¶ 18.)
As there is no allegation that Plaintiffs employment relationship with Defendants is based on a written contract, the statute of limitation for the underlying contract claim would be two years. (CCP § 339.) The FAC is silent as to when Plaintiffs employment relationship with Defendants terminated and merely alleges that Plaintiff demanded an accounting on January 2, 2023. (FAC ¶ 15.) However, the date of accounting does not run from a demand from accounting but rather breach of the underlying claim. (See
Jefferson, supra,
54 Cal.2d at pp.718719.)
Critically, the Court notes the judicially noticed record shows that Plaintiff was terminated in May of 2018. Specifically, as set forth in the notice of ruling filed on October 19, 2023 by Defendant Abedian containing the Courts Tentative Order which was adopted by the Court at footnote 1, Plaintiff admitted in open court that he was terminated by Defendants in May 2018 and Plaintiff stated that he will make this clear in his First Amended Complaint. (Defs Request for Judicial Notice RJN Ex. A, p. 8;
see also
Minute Order 10/19/23.) Thus, as the instant action was not filed until June 27, 2023 over five years after Plaintiffs termination the first cause of action for accounting is barred by the statute of limitations.
Similarly, the second cause of action, for quantum meruit is based on Plaintiffs employment relationship. (FAC ¶ 18, [[Defendants] became indebted to Plaintiff for the sum of approximately $35,000.00, with legal interest thereon from date of breach, on account of monies owed to Plaintiff for services rendered pursuant to the aforesaid employment relationship.].) As Plaintiffs employment relationship self admittedly ended in May 2018, as noted in the judicially noticed record, (Defs RJN, Ex. A, p. 8), the second cause of action is also barred by the statute of limitations.
The Court notes that Plaintiff did not file an opposition. A party who has not timely filed written opposition to a motion&may not be afforded an opportunity to offer oral argument at the hearing. (
Sexton v. Superior Court
(1997) 58 Cal.App.4th 1403, 1410.) The failure to file opposition creates an inference that the motion or demurrer is meritorious.¿ (
Id
.)¿ In such cases, the court may hear argument limited to a request for a continuance of the hearing in order to afford an opportunity for written opposition.¿ (
Id
.)¿ [T]he rule is patently intended to prevent the introduction of legal theories without prior notice to opposing counsel and the court.¿ (
Id
.)
As to the third and fourth causes of action, the claim is based on allegations of fraud. (Complaint ¶¶ 23-31.) An action for relief on the grounds of fraud or mistake must be commenced within three years. (
Kline v. Turner
(2001) 87 Cal.App.4th 1369, 1373; CCP § 338(d).) Here, the alleged fraud occurred at some point in January of 2023 which is within the limitations period. (FAC ¶¶ 24, 30.)
Accordingly, Defendant Abedians demurrer to the FAC based on the statute of limitations is SUSTAINED as to the first and second causes of action and OVERRULED as to the third and fourth causes of action.
E.
Demurrer to the Third Cause of Action: Conspiracy to Commit Fraud
Defendant Abedian asserts that the third cause of action is not sufficiently alleged. The Court agrees.
Civil conspiracy is not an independent tort. (
City of Industry v. City of Fillmore
(2011) 198 Cal.App.4th 191, 211.) Rather, it is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves,¿share with the immediate tortfeasors a common plan or design in its perpetration. (
Applied Equipment Corp. v. Litton Saudi Arabia Ltd.
¿(1994) 7 Cal.4th 503, 510511.)
The elements of liability under conspiracy are: (1) formation and operation of the conspiracy; (2) wrongful conduct in furtherance of the conspiracy; and (3) damages arising from the wrongful conduct. (
Spencer v. Mowat
(2020) 46 Cal.App.5th 1024, 1037.)
Where fraud is alleged to be the object of the conspiracy, the claim must be pleaded with particularity. (
Prakashpalan v. Engstrom, Lipscomb & Lack
(2014) 223 Cal.App.4th 1105, 1136.) Fraud allegations involve a serious attack on character and therefore are pleaded with specificity. [Citation.] General and conclusory allegations are insufficient. [Citation.] The particularity requirement demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered. [Citation.] (
Cansino v. Bank of America
(2014) 224 Cal.App.4th 1462, 1469.) Moreover, [e]ach element of a fraud count must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any basis for the cause of action[.] (
Chapman v. Skype Inc.
(2013) 220 Cal.App.4th 217, 231.)
Here, Plaintiff vaguely alleges that [i]n or about January, 2023, and at all other times relevant hereto, [Defendants] agreed on a common and unlawful plan, and acted in concert, to commit the fraudulent act of not paying Plaintiff substantial monies and sums due him for services rendered in their restaurant business, to their unjust enrichment, as herein alleged. (FAC ¶ 24.) These allegations are insufficient to state a civil conspiracy based on fraud.
There is no specific allegation of any specific overt act by Defendants support the fraud claim as required to state a claim for civil conspiracy based on fraud. Similarly, there is no allegation of when any specific fraud occurred other than at some point in January 2023. There is no indication which Defendant did what unspecified overt act. Further there is no indication as to what the claimed fraud is. Finally, as discussed further below, the underlying claim for fraud fails to state a claim.
Accordingly, Defendant Abedians demurrer to the third cause of action for conspiracy to commit fraud is SUSTAINED.
F.
Demurrer to the Fourth Cause of Action: Fraud
Defendant Abedian asserts that the fourth cause of action for fraud is not sufficiently alleged. The Court agrees.
The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. (
Hinesley v. Oakshade Town Center
(2005) 135 Cal.App.4th 289, 294.) As noted above, Fraud allegations involve a serious attack on character and therefore are pleaded with specificity. [Citation.] General and conclusory allegations are insufficient. [Citation.] The particularity requirement demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered. [Citation.] (
Cansino, supra,
224 Cal.App.4th at p.1469.)
Here, the FAC merely alleges that [i]n or about January, 2023, [Defendants] represented to Plaintiff that they would pay back any monies and sums and compensation owed by them to him. Plaintiff detrimentally relied upon said representation. The true facts were that [Defendants] had no intention of paying him amounts owed for services rendered. Had Plaintiff known the true facts, he would not have relied upon said representation by these Defendants. (FAC ¶ 30.)
These allegations for fraud are deficient.
There is no indication of which Defendant made what specific representation to Plaintiff, how these misrepresentations were made, where these misrepresentations were made, or specifically when these misrepresentations were made. Further, there is no indication of what specifically was stated to Plaintiff or the context of such misrepresentation. Finally, there is no allegation of any reliance or harm caused by these misrepresentations. As alleged, Defendants already owed Plaintiff some unspecified sum of money. A representation that Defendants would pay Plaintiff back money already owed without some action taken by Plaintiff in response to said misrepresentations reflects a lack of reliance. Similarly, it is unclear what damages Plaintiff suffered because of Defendants misrepresentation(s) because Plaintiff was already owed the funds, and Plaintiff does not allege any harm caused by Plaintiffs action(s) or inaction(s) in reliance on the unspecified misrepresentations.
Accordingly, Defendant Abedians demurrer to the fourth cause of action for fraud is SUSTAINED.
G.
Leave to Amend
Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (
Goodman v. Kennedy
(1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (
Goodman v. Kennedy, supra
, 18 Cal.3d at p.348;
Lewis v. YouTube, LLC
(2015) 244 Cal.App.4th 118, 226.)
Here, there is no indication that Plaintiff can successfully amend the FAC.
Given that Plaintiff failed to file an opposition identifying how the FAC could be successfully amended, and the lack of any substantial changes between the Complaint and FAC, the Court concludes that there is no reasonable possibility of a successful amendment. Accordingly, leave to amend is DENIED.
III. DISPOSITION
The Court SUSTAINS Defendant Abedians demurrer to the Plaintiffs First Amended Complaint without leave to amend.
Ruling
CURTIS R. OLSON VS VIDALA AARONOFF, ET AL.
Jul 26, 2024 |
19STCV46503
Case Number:
19STCV46503
Hearing Date:
July 26, 2024
Dept:
50
Superior Court of California
County of Los Angeles
Department
50
curtis r. olson
,
Plaintiff,
vs.
vidala aaronoff,
et al.
,
Defendants.
Case No.:
19STCV46503
Hearing Date:
July 26, 2024
Hearing Time:
10:00 a.m.
[TENTATIVE] ORDER RE:
MOTIONS TO BE RELIEVED AS COUNSEL
AND RELATED CROSS-ACTION
Gregory K. Sabo of Chapman Glucksman
(Counsel) moves to be relieved as counsel for Defendants
Gloria Martinez-Senftner and Martinez Law Group, P.C.
The Court finds that Counsel has complied with the relevant procedural requirements (CRC 3.1362) and has provided sufficient reason for withdrawal. Accordingly, the motions to be relieved as counsel will be granted.¿
The Court notes that on July 15, 2024, after the instant motions were filed, the Court issued a minute order providing,
inter alia
, that
[p]ursuant to written stipulation, the Hearing on Application for Order for Appearance and Examination scheduled for 07/16/2024 is continued to 09/16/24 at 10:00 AM in Department 50 at Stanley Mosk Courthouse.
Thus,
the Court will change the date listed in Items 7(a) of the proposed orders (Forms MC-053) from 7/16/24 to 9/16/24.
Counsel is ordered to give notice of this order.¿
DATED:
July 26, 2024
________________________________
Hon. Teresa A. Beaudet
Judge, Los Angeles Superior Court
Ruling
FIRST UTAH BANK VS JOHN RENZULLI, III, ET AL.
Jul 25, 2024 |
23TRCV02840
Case Number:
23TRCV02840
Hearing Date:
July 25, 2024
Dept:
8
Tentative Ruling¿
HEARING DATE: July 25, 2024
CASE NUMBER: 23TRCV02840
CASE NAME: First Utah Bank vs. Chicken Bone Effects, Inc., et al.
MOVING PARTY: Plaintiff, First Utah Bank
RESPONDING PARTY: Defendants, Chicken Bone Effects, Inc. and John Renzulli III
TRIAL DATE: Not Set.
MOTION: (1) Motion for Summary Judgment, or in the alternative, Summary Adjudication
Tentative Rulings: (1) GRANTED.
I. BACKGROUND
A. Factual On August 29, 2024, Plaintiff, First Utah Bank (Plaintiff) filed a complaint against Defendant, Chicken Bone Effects, Inc. (CBE) and John Renzulli III (Renzulli), and DOES 1 through 20. The complaint alleges causes of action for: (1) Breach of Contract; (2) Breach of Guaranty; (3) Common Count (Money Lent); and (4) Recovery of Personal Property. The complaint alleges that prior to the filing of this current action, SLIM Capital, LLC entered into written Equipment Finance Agreement (the Agreement) with CBE whereby SLIM Capital, LLC agreed to finance CBEs purchase of certain equipment from a vendor selected by CBE. (Complaint, ¶ 8.) In consideration therefore, Plaintiff contends that CBE obligated itself to make certain specified monthly payments to SLIM Capital, LLC, which obligation was absolute and unconditional. (Complaint, ¶ 8.) Plaintiff asserts that SLIM Capital, LLC subsequently assigned the Agreement to Plaintiff. (Complaint, ¶ 8.) Plaintiff notes that it remains the holder of the agreement and has performed all of the obligations which it was required to perform under the Agreement. (Complaint, ¶ 9.) Plaintiff alleges that CBE defaulted on the agreement when it failed to make the payments pursuant to the Agreement. (Complaint, ¶ 10.) As a result of CBEs default, Plaintiff alleges it accelerated the balance due under the Agreement and made demand on CBE for immediate payment of the accelerated balance. (Complaint, ¶ 11.) Plaintiff contends the accelerated balance due under the agreement at the time it filed its complaint was $73,972.77, plus interest thereon at the contract rate of 10% per annum from May 2, 2023. (Complaint, ¶ 12.) Plaintiff further asserts that the accelerated balance has not been paid. (Complaint, ¶ 12.) Plaintiff alleges that the agreement provides that CBE shall pay the attorneys fees and costs incurred by Plaintiff in enforcing its rights thereunder. (Complaint, ¶ 13.) Plaintiff now files a Motion for Summary Judgment or in the alternative, Motion for Summary Adjudication.
B. Procedural On April 18, 2024, Plaintiff filed a Motion for Summary Judgment, or in the alternative, Summary Adjudication. To date, no opposition has been filed. II. REQUEST FOR JUDICIAL NOTICE With Plaintiffs moving papers, Plaintiff also requested this Court take judicial notice of the following documents: 1. Complaint filed in this action by Plaintiff FIRST UTAH BANK on August 29, 2023. (Exhibit F to the Table of Exhibits.) 2. Answers to the Complaint filed in this action on January 10, 2024 by Defendants CHICKEN BONE EFFECTS, INC. and JOHN RENZULLI III. (Exhibit G to the Table of Exhibits.) This Court GRANTS this request and takes judicial notice of the above documents. III. ANALYSIS A. Legal Standard The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP Section 437(c) requires the trial judge to grant summary judgment if all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.¿ (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)¿ The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.¿ (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.) As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520. ) Courts liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party. (Dore v. Arnold Worldwide, Inc.(2006) 39 Cal.4th 384, 389.) Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) B. Discussion Plaintiff moves for summary judgment on the grounds that it argues the first and second causes of action: (1) have been established by undisputed facts; (2) that there are no material issues of fact with respect to Defendants liability on Plaintiffs first and second causes of action tat remain to be determined; (3) that Defendants have not established any defense to Plaintiffs first and second causes of action; and (4) that Plaintiff is entitled to judgment against Defendants on the first and second causes of action in the principal amount of $52,240.41, pre-judgment interest in the amount of $6,544.56, attorneys fees to be determined by noticed motion, and court costs. Further, Plaintiff moves for summary judgment as to the third cause of action on the grounds that: (1) Plaintiffs third cause of action for common count of money lent against Defendants have been established by undisputed facts; (2) that no material issue of fact with respect to Defendants liability on Plaintiffs third cause of action remains to be determined; (3) that Defendants have not established any defense to Plaintiffs third cause of action; and (4) that Plaintiff is entitled to judgment against Defendants on the third cause of action in the principal amount of $52,240.41, pre-judgment interest in the amount of $6,544.56, attorneys fees to be determined by noticed motion, and court costs. First and Second Causes of Action for Breach of Contract and Breach of Guaranty Plaintiff first argues that undisputed facts establish Plaintiffs first and second causes of action. To state a cause of action for breach of contract, Plaintiff must be able to establish (1) the existence of the contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendants breach, and (4) the resulting damages to the plaintiff. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of contract claim is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference. (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also plead the legal effect of the contract rather than its precise language. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.) Here, Plaintiff argues that each element of its first and second cause of action against Defendants CBE and Renzulli for breach of the Agreement and Guaranty are established by undisputed facts. First, Plaintiff argues that the Agreement and Guaranty were executed by Plaintiffs assignor and Defendants, which were later assigned to Plaintiff. (Plaintiffs SSUMF 1, 3.) In support of this, Plaintiff refers to the declaration of Don Rudy (Rudy Decl.), who is the VP, Asset Management Group and custodian of records for the finance agreement for First Utah Bank. (Rudy Decl., ¶¶ 1-2.) Rudy notes that on August 1, 2019, SLIM Capital, LLC entered into a written Equipment Finance Agreement No. 2586 (the Agreement) with Defendant, CBE whereby SLIM Capital, LLC agreed to finance CBEs purchase of certain equipment from a vendor selected by CBE. (Rudy Decl., ¶ 3.) Rudy contends Plaintiff subsequently changed the account number to 8313011606. (Rudy Decl., ¶ 3.) As consideration therefore, Rudy contends that CBE obligated itself to make certain specified monthly payments to SLIM Capital, LLC, which obligation was absolute and unconditional. (Rudy Decl., ¶ 3.) Rudy asserts that Plaintiff entered into an agreement to purchase the Agreement from SLIM Capital, LLC and the account number for that transaction is 8313011606. Rudy attached the copy of the Agreement as Exhibit A, and attached the assignment as Exhibit B. (Rudy Decl., ¶ 3, Exhibits A, B.) Based on the evidence presented by Plaintiff, the Court finds that Plaintiff has carried its initial burden in showing that a contract and assignment between the parties existed. Next, Plaintiff argues that it remains the holder of the Agreement and Guaranty and has performed all other obligations required of it. (Plaintiffs SSUMF 4, 5.) Rudys declaration asserts that Plaintiff has performed all things it was required to perform under the Agreement and Guaranty, and still remains the holder of the Agreement and Guaranty. (Rudy Decl., ¶¶ 6-7.) Plaintiffs Exhibit D contains the Continuing Guaranty of Indebtedness that appears to have the signature of Renzulli. The Court notes that the continuing guaranty of indebtedness appears to have been sent from Renzulli to SLIM Capital, LLC, not directly to Plaintiff. Third, Plaintiff contends that Defendants breached the Agreement and Guaranty by failing to make the payments that were required thereunder. (Plaintiffs SSUMF 6.) Rudys declaration states that CBE and Renzulli defaulted on the Agreement and Guaranty by failing to make the payment that was due on June 1, 2023, and all subsequent payments thereafter. (Rudy Decl., ¶ 8.) Plaintiff has included, in its Table of Exhibits, Exhibit E Statement of Account, which evidences the past due amounts in the account linked to Defendants. As such, this Court finds that Plaintiff has carried its initial burden that Defendants have breached the contract and guaranty. Lastly, this Court finds that Plaintiff has also carried its initial burden in showing that it has suffered damages as a result of the alleged breach. Based on the above, this Court tentatively holds that Plaintiff has carried its initial burden in showing that undisputed facts establish Plaintiffs first and second causes of action. This Court notes that after a moving party has carried its initial burden, the burden then shifts to the opposing party to show that disputed issues of material fact exist. However, Defendants here have failed to file an opposition brief. Thus, they have failed to carry their shifted burden. On these grounds, the Court tentatively GRANTS Plaintiffs motion for summary judgment. Defendants may present oral argument as to why they have failed to respond to the motion. Third Cause of Action for Money Lent Plaintiff also argues that the undisputed facts establish Plaintiffs Third Cause of Action for Money Lent. The required elements of a claim for money lent are (1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment. A cause of action for money had and received is stated if it is alleged the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460, citation and quotation marks omitted.) Here, Plaintiff argues that each element of Plaintiffs third cause of action against Defendant, for money lent, is established by the undisputed facts. First, Plaintiff argues that Defendants became indebted after Plaintiff paid the vendor for the equipment that Defendants purchased. (Plaintiffs SSUMF 13.) Rudy contends that CBE and Renzulli became indebted to Plaintiff after Plaintiff paid the vendor for the equipment that CBE leased. (Rudy Decl., ¶¶ 3-4.) Plaintiff also attached the UCC-1 filing with the California Secretary of State, showing that Plaintiff perfected its security interest in the Equipment. (Exhibit C.) Next, Plaintiff argues that Defendants failed to pay Plaintiff for all amounts due as agreed for leasing the Equipment. (Plaintiffs SSUMF 14-16.) Rudy notes that as a result of Defendants default under the Agreement and Guaranty, the outstanding balance due is $52,240.41. (Rudy Decl., ¶ 9, Exhibit E.) Rudy further asserts that despite demand, no part of the outstanding balance has been paid and Defendants have failed to deliver the Equipment to Plaintiff. (Rudy Decl., ¶ 10.) Further, Rudy notes that interest on the balance from and after May 1, 2023, the date of the last payment, through July 25, 2024, the hearing date for the current motion, pursuant to the statutory rate of 10% totals $6,544.56. (Rudy Decl., ¶ 11, Exhibit E.) As such, Plaintiff contends that as of the motion hearing date, the total amount due, including interest, is $58,784.97. (Rudy Decl., ¶ 12, Exhibit E.) Based on the above, this Court tentatively holds that Plaintiff has carried its initial burden in showing that undisputed facts establish Plaintiffs third cause of action. Again, because this Court found that Plaintiff carried its burden, the burden would then shift to Defendants. However, because Defendants here have failed to file an opposition brief, they have failed to carry their shifted burden. On these grounds, the Court tentatively GRANTS Plaintiffs motion for summary judgment, subject to any oral argument by Defendants at the hearing as to why they have failed to respond to the motion. IV. CONCLUSION
For the foregoing reasons, this Courts tentative ruling is to GRANT Plaintiffs Motion for Summary Judgment. Plaintiff is ordered to give notice.
Ruling
WILLIAM FARMER, ET AL. VS LISA THELMA LONG
Jul 26, 2024 |
19BBCV00384
Case Number:
19BBCV00384
Hearing Date:
July 26, 2024
Dept:
NCB
Superior Court of California
County of Los Angeles
North Central
District
Department B
william farmer
,
et al.
,
Plaintiffs,
v.
lisa thelma long,
Defendant.
Case No.:
19BBCV00384
Hearing Date:
July 26, 2024
[
TENTATIVE] order RE:
motion for an order assigning defendants interest in earnings
BACKGROUND
A.
Allegations
Plaintiffs William Farmer and Jennifer Farmer (Plaintiffs) allege that on April 4, 2018, they entered into a written Promissory Note agreement with Defendant Lisa Thelma Long (Defendant).
Plaintiffs allege that on April 20, 2018, Defendant failed to repay the loan.
Plaintiffs allege that they suffered $50,000 plus interest at the legal rate of $10% since April 4, 2018.
The complaint, filed May 9, 2019, alleges causes of action for: (1) breach of contract; (2) common counts; and (3) fraud.
B.
Relevant Background
On September 10, 2019, the default of Defendant was entered.
On August 11, 2020, default judgment was entered against Defendant in the amount of $109,073.00.
On August 13, 2020, Plaintiffs filed a writ of execution (money judgment) for the amount of $109,157.76, which was returned and filed on August 14, 2020.
On January 7, 2021, Plaintiffs filed a writ of execution (money judgment) for the amount of $113,008.64.
On March 30, 2021, Plaintiffs filed an Abstract of Judgment.
On June 4, 2024, Plaintiffs filed a writ of execution (money judgment) for the amount of $150,267.46.
C.
Motion on Calendar
On June 21, 2024, Plaintiff filed a motion for an order assigning Defendants interest in earnings.
The Court is not in receipt of an opposition brief.
LEGAL STANDARD
CCP § 695.010(a) states:
Except as otherwise provided by law, all property of the judgment debtor is subject to enforcement of a money judgment.
CCP § 708.510 provides in relevant part:
(a) Except as otherwise provided by law, upon application of the judgment creditor on noticed motion, the court may order the
judgment debtor to assign to the judgment creditor
or to a receiver appointed pursuant to Article 7 (commencing with Section 708.610) all or part of a right to payment due or to become due, whether or not the right is conditioned on future developments, including but not limited to the following types of payments:
(1) Wages due from the federal government that are not subject to withholding under an earnings withholding order.
(2) Rents.
(3) Commissions.
(4) Royalties.
(5) Payments due from a patent or copyright.
(6) Insurance policy loan value.
(b) The
notice
of the motion shall be served on the judgment debtor. Service shall be made personally or by mail.
(c) Subject to subdivisions (d), (e), and (f), in determining whether to order an assignment or the amount of an assignment pursuant to subdivision (a), the court may take into consideratio
n all relevant factors
, including the following:
(1) The reasonable requirements of a judgment debtor who is a natural person and of persons supported in whole or in part by the judgment debtor.
(2) Payments the judgment debtor is required to make or that are deducted in satisfaction of other judgments and wage assignments
, including earnings assignment orders for support
.
(3) The amount remaining due on the money judgment.
(4) The amount being or to be received in satisfaction of the right to payment that may be assigned.
(d) A right to payment may be assigned pursuant to this article
only to the extent necessary to satisfy the money judgment.
(CCP § 708.510(a)-(d).)
When an application is made pursuant to Section 708.510 or thereafter, the judgment creditor may apply to the court for an order restraining the judgment debtor from assigning or otherwise disposing of the right to payment that is sought to be assigned. The application shall be made on noticed motion if the court so directs or a court rule so requires. Otherwise, it may be made ex parte.
(CCP § 708.520(a).)
The court may issue an order pursuant to this section upon a showing of need for the order. The court, in its discretion, may require the judgment creditor to provide an undertaking.
(CCP § 708.520(b).)
The court may modify or vacate the order at any time with or without a hearing on such terms as are just.
(CCP § 708.520(c).)
DISCUSSION
Plaintiffs/Judgment Creditors move for an assignment order against Defendant, assigning
Defendants interest in any earnings for acting and/or directing in any performance, whether television, movies, commercials, plays, or other forms of media and all payment thereunder, to Plaintiffs to the extent necessary to pay the judgment in full, including interest thereon.
Plaintiffs also seek an order restraining Defendant, any agent, employee, or attorney of Defendant, whether alone or in concert, from encumbering, assigning, disposing or spending her interest in the right to be assigned listed above.
In support of the motion, Plaintiffs provide the declaration of counsel Derek L. Tabone. Mr. Tabone states that nothing has been collected on the default judgment entered on August 14, 2020.
(Tabone Decl., ¶¶4-5.)
He states that the most recent writ of execution issued on June 4, 2024 is for the amount
of $150,267.46.
(
Id.
, ¶6.)
Counsel states that Defendant is, among other things, an actress who does work in commercials, movies, and television shows and her IMDB website shows that she has worked in multiple movies or television shows every year, as well as doing voice overs in over 170 commercials.
(
Id.
, ¶¶7-8, Ex. C.)
The website states that Defendant has 3 theatrical agents: Stewart Talent, Elev8, and Taylor Talent Services.
(
Id.
, ¶9.)
Plaintiffs seek an order assigning all of Defendants right to payment for her movie, television, and commercial work until Defendants judgment has been paid.
(
Id.
, ¶10.)
The Court considers the factors under CCP § 708.510(c).
First, Defendant is a natural person.
There is no information on whether she is supporting any other persons. As the motion is unopposed, Defendant has not provided any statements that she is supporting any other persons.
Second, it does not appear that Defendant has made any effort to make payments towards the judgment.
According to Mr. Tabone (Plaintiffs counsel), the judgment is still unpaid.
Plaintiffs have not indicated whether there are any other assignment orders or wage assignments, etc. and Defendant has not filed an opposition to provide such information.
Third, Plaintiffs argue that Defendant owes $150,267.46, based on the June 4, 2024 writ of execution.
Fourth, Plaintiffs seek an assignment of Defendants right to payment for her movie, television, and commercial work until Defendants judgment has been paid.
The approximate amount of how much Defendant is paid for her acting work is not provided.
Since the judgment has not been satisfied and the motion is not opposed, there are grounds to issue an assignment order pursuant to CCP § 708.510.
The Court hereby grants Plaintiffs request for assignment orders.
CONCLUSION AND ORDER
Plaintiffs William Farmer and Jennifer Farmers
motion for an order assigning
Defendant Lisa Thelma Longs interest in her earnings from her
movie, television, and commercial work is granted.
Defendant, as well as
any agent, employee, or attorney of Defendant, whether alone or in concert, shall be restrained from encumbering, assigning, disposing or spending her interest in the aforementioned earnings.
Plaintiffs shall give notice of this order.
DATED: July 26, 2024
___________________________
John Kralik
Judge of the Superior Court
Ruling
C&M LOGISTICS SERVICES INC., A CALIFORNIA CORPORATION VS LJ SUPPLY CHAIN INC., A CALIFORNIA CORPORATION
Jul 30, 2024 |
23PSCV03430
Case Number:
23PSCV03430
Hearing Date:
July 30, 2024
Dept:
K
Plaintiff
C&M Logistics Services, Inc.s
Application for Default Judgment is
GRANTED;
however
, attorneys fees are reduced from $2,000.00 to $1,256.08, pursuant to Local Rule
3.214(a).
Background
Plaintiff C&M Logistics Services, Inc. (Plaintiff) alleges as follows: LJ Supply Chain Inc. (Defendant) and Plaintiff entered into a General Service Agreement (Agreement) dated February 1, 2023. Per the Agreement, Defendant requested that Plaintiff provide it with temporary workers (lumpers) to unload containers at their warehouse. Plaintiff provided Defendant with lumpers and sent Defendant invoices. Defendant has failed to pay the invoices.
On November 3, 2023, Plaintiff filed a complaint, asserting causes of action against Defendant and Does 1-25 for:
1.
Breach of Contract
2.
Common Counts
On January 9, 2024, Defendants default was entered. An Order to Show Cause Re: Default Judgment is set for July 30, 2024.
Discussion
Plaintiffs Application for Default Judgment is granted;
however
, attorneys fees are reduced
from $2,000.00 to $1,256.08, pursuant to Local Rule 3.214(a).
Ruling
KPG HEALTHCARE LLC, AN ARIZONA LIMITED LIABILITY COMPANY VS SAVANT CARE INC., A CALIFORNIA NONPROFIT CORPORATION, ET AL.
Jul 30, 2024 |
23STCV29725
Case Number:
23STCV29725
Hearing Date:
July 30, 2024
Dept:
48
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT
KPG HEALTHCARE LLC,
Plaintiff,
vs.
SAVANT CARE INC., et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
CASE NO.: 23STCV29725
[TENTATIVE] ORDER GRANTING PLAINTIFFS MOTION TO COMPEL RESPONSES TO FORM INTERROGATORIES; GRANTING PLAINTIFFS MOTION TO DEEM RFAs ADMITTED
Dept. 48
8:30 a.m.
July 30, 2024
On
December 5, 2023, Plaintiff KPG Healthcare LLC filed this action against Defendant Mindful Values and others.
On March 14, 2024, Plaintiff served Form Interrogatories, Set One and Requests for Admission on Defendant.
After an extension of time, the deadline for Defendant to respond was May 31, 2024, but to date, no responses have been received.
On June 25 and 26, 2024, Plaintiff filed motions to compel responses to the Form Interrogatories and to deem the RFAs admitted.
Where a party fails to serve timely responses to discovery requests, the court may make an order compelling responses.
(Code Civ. Proc., §§ 2030.290, 2031.300;
Healthcare Consulting, Inc. v. Pacific Healthcare Consultants
(2007) 148 Cal.App.4th 390, 403.)
A party that fails to serve timely responses waives any objections to the request, including ones based on privilege or the protection of attorney work product.
(Code Civ. Proc., §§ 2030.290, subd. (a), 2031.300, subd. (a).)
When a party fails to timely respond to a request for admission, the propounding party may move for an order that the genuineness of any documents and the truth of any matters specified in the requests be deemed admitted.
(Code Civ. Proc., § 2033.280, subd. (b).)
The party who failed to respond waives any objections to the demand, unless the court grants them relief from the waiver, upon a showing that the party (1) has subsequently served a substantially compliant response, and (2) that the partys failure to respond was the result of mistake, inadvertence, or excusable neglect.
(Code Civ. Proc., § 2033.280, subds. (a)(1)-(2).)
The court shall grant a motion to deem admitted requests for admissions, unless it finds that the party to whom the requests for admission have been directed has served, before the hearing on the motion, a proposed response to the requests for admission that is in substantial compliance with Section 2033.220.
(Code Civ. Proc., § 2033.280, subd. (c).)
Defendant filed no opposition to these motions and did not serve timely responses.
It does not appear that Defendant served substantially compliant responses prior to the hearing.
Accordingly, the motions are GRANTED.
Defendant is ordered to provide verified responses, without objections, to Form Interrogatories, Set One within 30 days.
The Requests for Admission served on March 14, 2024 are deemed admitted.
The request for sanctions is granted in part.
Defendants counsel is ordered to pay total sanctions of $2,000.00 to Plaintiff within 30 days.
Moving party to give notice.
Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit.
If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.
Dated this 30th day of July 2024
Hon. Thomas D. Long
Judge of the Superior Court
Preview
1 VICKMAN & ASSOCIATES, ATTORNEYS 2 James A. Vickman, Esq. (No. 128099) 424 South Beverly Drive 3 Beverly Hills, California 90212 Tel: (310) 553-8533 4 Fax: (310) 553-0557 5 Attorneys for Plaintiff JOSEPH KOCHAV LEV 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF LOS ANGELES 10 11 JOSEPH KOCHAV LEV, ) CASE NO. ) 12 Plaintiff, ) COMPLAINT FOR: ) 13 vs. ) 1) BREACH OF CONTRACT ) 2) SPECIFIC PERFORMANCE 14 CAVALIA COMMUNICATIONS, INC. ) 3) CONSTRUCTIVE TRUST dba NDM COMMUNICATIONS; and ) 4) DECLARATORY RELIEF 15 DOES 1-20, ) 5) ACCOUNTING ) 16 Defendants. ) DEMAND FOR JURY TRIAL ) 17 ____________________________________ ) 18 19 FIRST CAUSE OF ACTION 20 BREACH OF CONTRACT 21 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM 22 COMMUNICATIONS, and DOES 1-20, inclusive) 23 1. JOSEPH KOCHAV LEV (“Plaintiff”) is an individual residing in Los Angeles 24 County, State of California. 25 2. Defendant CAVALIA COMMUNICATIONS, INC. dba NDM 26 COMMUNICATIONS, a California corporation (“Defendant corporation” or “Defendant”), is 27 doing business in various counties of California including but not limited to Los Angeles County, 28 California, and other states, providing marketing services in the healthcare and senior living 1 COMPLAINT; DEMAND FOR JURY TRIAL 1 sectors. 2 3. Venue is proper in the Superior Court of California, Los Angeles County, because 3 Plaintiff performed his obligations under the relevant contract in Los Angeles County, State of 4 California. Likewise, venue is proper in Los Angeles County because Defendant corporation’s 5 performance under the relevant contract, i.e. payment for the services Plaintiff performed under 6 the Contract, were due in Los Angeles County, California where Plaintiff resides. 7 4. Plaintiff does not know the true names of defendants sued herein as Does 1 to 20, 8 inclusive. Plaintiff is informed and believes and on that basis alleges, that the true names and 9 capacities, whether individual, corporate, partnership, associate, or otherwise, of defendants 10 DOES 1 through 20, inclusive, are unknown to Plaintiff, who sue each such defendant by such 11 fictitious names. Plaintiff is informed and believes and thereon alleges that each of the 12 defendants designated herein as a fictitiously named defendant, have liability related as to each 13 cause of action asserted below. When Plaintiff ascertains the true names and capacities of 14 DOES 1 through 20, he will amend the Complaint accordingly, either through a Doe 15 Amendment, or otherwise. References in the Complaint to any named defendant includes DOES 16 1 through 20, inclusive. 17 5. Effective as of August 1, 2023, Plaintiff and Defendant corporation entered into a 18 contract entitled “Letter of Engagement,” a true and correct copy of which is attached hereto as 19 EXHIBIT 1 all of which terms are incorporated herein by reference (hereafter, “the Contract”). 20 6. Pursuant to the Contract, Defendant corporation retained Plaintiff, as a consultant, 21 as Defendant’s executive strategic and financial advisor. Specifically, Plaintiff was to provide 22 strategic, financial and operational consulting services to Defendant corporation. Plaintiff was to 23 interface with various individuals working at/with Defendant corporation, on a regular basis and 24 as needed, including providing guidance, mentorship and leadership. 25 7. Pursuant to the Contract, Defendant corporation was obligated to provide 26 Plaintiff, starting as of August 1, 2023, and going forward, each of the following forms of 27 remuneration: 28 /// 2 COMPLAINT; DEMAND FOR JURY TRIAL 1 a. Specified monthly compensation; 2 b. Profit sharing in the amount of 25% of total company profit calculated 3 according to generally accepted accounting principles, such calculation 4 done on a quarterly basis, with payment to then be made to Plaintiff; 5 c. Equity/ownership of Defendant corporation, calculated as set forth in the 6 Contract; 7 d. Profit sharing calculated according to Plaintiff’s equity/ownership that 8 Plaintiff is entitled to, under the Contract, in Defendant corporation; 9 8. Plaintiff timely, competently and fully performed all of his obligations under the 10 Contract. In fact, gross revenues and net profits of Defendant corporation sky-rocketed while 11 Plaintiff was engaged by Defendant. As a result, Defendant corporation’s CEO, Jessie Valencia, 12 decided that Plaintiff’s compensation under the Contract – which Contract Valencia himself 13 signed – was going to increase to levels that Valencia was not comfortable with, and Valencia 14 terminated the Contract. A true and correct copy of Valencia’s termination email to Plaintiff, 15 dated January 31, 2024, is attached hereto as EXHIBIT 2 and incorporated herein by reference. 16 9. In that email, Valencia invented a false scenario that Plaintiff failed to perform 17 satisfactory services under the Contract. Valencia invented the false scenario to mask his true 18 intentions, which were his buyer’s remorse in signing the Contract on behalf of Defendant 19 corporation. 20 10. Pursuant to the Contract, Valencia and Defendant corporation were to provide 21 Plaintiff 60 days notice of termination. However, as set forth in the termination email, Valencia 22 provided only 30 days notice. Further, Valencia set forth that Defendant corporation would not 23 pay to Plaintiff the next two months of consulting fee, through and including the end of March, 24 2024, but rather would pay just one month’s fee, and that the Defendant corporation would not 25 pay any profit-sharing due (and to be due to) to Plaintiff. Valencia further stated in the email that 26 Plaintiff had to relinquish his future right to equity in Defendant corporation, by Valencia stating 27 that the Contract’s 12 month survival clause would be voided. 28 3 COMPLAINT; DEMAND FOR JURY TRIAL 1 11. In response to Valencia’s email, counsel for Plaintiff responded to 2 Valencia/Defendant corporation, setting forth Defendant’s breach of the Contract, and describing 3 the monies and equity owing and that would be owing to Plaintiff. Counsel for Plaintiff also 4 provided notice to Valencia and Defendant corporation to take all necessary and demanded 5 specific steps to preserve all relevant evidence in the dispute, as litigation was pending. A true 6 and correct copy of that demand letter, along with notice to preserve of all relevant evidence, is 7 attached hereto as EXHIBIT 3 and incorporated herein by reference. 8 12. Plaintiff has been damaged by Defendant’s breach of the Contract, in an amount 9 to be proven at time of trial of this matter, but well over the unlimited civil case requirement of 10 this court. 11 13. Further Plaintiff has been denied his upcoming equity position in Defendant 12 corporation, which according to preliminary calculations and projections, will be worth millions 13 of dollars. 14 SECOND CAUSE OF ACTION 15 SPECIFIC PERFORMANCE OF CONTRACT 16 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM 17 COMMUNICATIONS, and DOES 1-20, inclusive) 18 14. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein. 19 15. Defendant corporation refuses to honor its obligation under the Contract to issue 20 to Plaintiff equity in Defendant corporation. Plaintiff has no adequate legal remedy in that 21 regard. Plaintiff is requesting a court order, with the court sitting in equity, to order Defendant to 22 issue to Plaintiff all equity owing to him under the Contract, with all of the rights accompanying 23 such equity allocation. 24 THIRD CAUSE OF ACTION 25 CONSTRUCTIVE TRUST 26 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM 27 COMMUNICATIONS, and DOES 1-20, inclusive) 28 16. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein. 4 COMPLAINT; DEMAND FOR JURY TRIAL 1 17. Plaintiff has a right to equity in Defendant corporation, per the Contract. 2 Defendant corporation has wrongfully refused to issue Plaintiff his future equity interest in 3 Defendant corporation. 4 18. Plaintiff is therefore entitled to a court order imposing a constructive trust on 5 Defendant corporation, that will secure Plaintiff’s equity rights in Defendant corporation. 6 FOURTH CAUSE OF ACTION 7 DECLARATORY RELIEF 8 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM 9 COMMUNICATIONS, and DOES 1-20, inclusive) 10 19. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein. 11 20. Plaintiff claims that Defendant corporation will be required to issue to Plaintiff 12 equity in Defendant corporation, according to the terms of the Contract. Defendant denies that 13 claim, and asserts that it does not need to issue any equity to Plaintiff. 14 21. A court declaration is necessary to resolve these disputing claims. 15 FIFTH CAUSE OF ACTION 16 ACCOUNTING 17 (By JOSEPH KOCHAV LEV against CAVALIA COMMUNICATIONS, INC. dba NDM 18 COMMUNICATIONS, and DOES 1-20, inclusive) 19 22. Plaintiff re-alleges paragraphs 1 through 14 above as though fully set forth herein. 20 23. Plaintiff is entitled to a full accounting of all revenues and expenses of Defendant 21 corporation, from at least January 1, 2023, to date of trial of this dispute, for monies and equity 22 still owing to Plaintiff. In that regard, all net profit and equity calculations under the Contract 23 (with the exception of a merger valuation), are based, in large part, on the gross revenues and 24 expenses of the Defendant corporation, which can only be ascertained through an accounting. 25 PRAYER 26 WHEREFORE, Plaintiff prays for judgment as follows: 27 (1) For monetary damages, including but not limited to consequential damages, for 28 breach of contract, according to proof; 5 COMPLAINT; DEMAND FOR JURY TRIAL 1 (2) For a court order, against Defendant corporation, that Defendant issue to Plaintiff 2 his rightful equity in Defendant corporation. 3 (3) For a court order imposing a constructive trust on Defendant corporation, 4 preserving for all times Plaintiff’s equity interest in Defendant; 5 (4) For a court order declaring that Plaintiff is entitled to equity in Defendant 6 corporation according to the equity calculations set forth in the Contract; 7 (5) For an accounting of all revenues and expenses of Defendant corporation from 8 January 1, 2023, to and including the time of trial of this matter; 9 (6) For attorney’s fees, as may be applicable under the Constructive Trust cause of 10 action; 11 (3) For costs of suit herein; 12 (3) For such other and further relief as the Court may deem just and proper. 13 14 July 3, 2024 VICKMAN & ASSOCIATES, ATTORNEYS 15 16 _______________________________ By: James A. Vickman, Esq., attorney for JOSEPH 17 KOCHAV LEV 18 DEMAND FOR JURY TRIAL 19 Plaintiff demands a jury trial as to all causes of action that are not based in equity. 20 21 VICKMAN & ASSOCIATES, ATTORNEYS 22 23 July 3, 2024 _______________________________ 24 By: James A. Vickman, Esq., attorney for JOSEPH KOCHAV LEV 25 26 27 28 6 COMPLAINT; DEMAND FOR JURY TRIAL EXHIBIT 1, PAGE 1 EXHIBIT 1, PAGE 2 EXHIBIT 1, PAGE 3 EXHIBIT 1, PAGE 4 ------------ From: Jesse Valencia Sent: Wednesday, January 31, 2024 10:25:20 AM To: Yosef Sternhart ; Joseph (Yossi) Kochav Lev Subject: Agreement Yosef, after a great deal of thought, I would like to terminate our agreement (see attached) effective immediately. We’ve discussed my reasons during our Teams meeting a couple of weeks ago and in person this past Monday. Below I’ve summarized a bulleted and short list. I’m happy to provide more detail, but with respect to you and our time, hope we can come to an amicable resolution. Primary deliverables in the agreement that were not met: a. Resolve cashflow difficulties and improve cashflow position and strength of balance sheet: i. I have had to personally guarantee high-interest loans, twice, since working with Yosef/JKL as well as loan the company $20,000 from my own personal account. Yosef/JKL has not provided a viable option for loan or investment, nor improved cashflow since being contracted to do so. ii. It’s looking like I will, again this week, need to borrow from a high-interest bank in order to cover payroll. b. Increase revenue – No revenue increases can be credited to Yosef/JKL. c. Profitability 1 EXHIBIT 2, PAGE 1 i. If there was a profit in Q3/Q4 of 2023, it was primarily due to the increase in revenue which Ashley and I brought (~$6+ million in new sales was brought by Jesse and Ashley.) ii. I also have concerns that Yosef/JKL is determining profitability for 2023, which creates a conflict of interest, given Yosef/JKL seek to benefit from the profits. d. JKL Accounting Team i. ndm paid JKL directly for accounting services. ii. The accounting services team had multiple problems ranging from late payroll submissions, to lack of responsiveness to employees and vendors, to Veem and other accounting systems being set up with little to no security. Ex: Pinny, Yosef and Jesse all had the ability to remove “approvers” in Veem, giving anyone with any of thier credentials the ability transfer any amount of money to anyone. I’ve since closed the Veem account to eliminate security risks here. e. Security breach: highly confidential files (HR, loan documents, payroll, financial documents, etc) from Yosef/JKL’s computer were added to ndm’s shared Dropbox server by Yosef/JKL (as indicated by Dropbox records) and viewed by employees, creating a massive problem for ndm with possible legal implications against ndm. We are addressing the exposed information with employee(s) who saw personal/employee/financial information. To close out our agreement, I would be open to paying off all your Monthly Fees through February 28, in full before February 28 – if – (given the points above) you/we agree to void any profit sharing and eliminate the 12 month survival clause. I have serious concerns ndm will not make it in 2024. Additional costs will kill the company. During our remaining time, all I would ask is that you assist with transferring reports and working files to me. Per your request, termination is now in writing. Thank you for taking the time to review this email. Feel free to call or email to finalize our terms. Thanks Yosef, Jesse 2 EXHIBIT 2, PAGE 2 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 1 February 5, 2024 BY EMAIL jesse@wearendm.com BY FIRST CLASS MAIL Cavalia Communications Inc. dba NDM Communications 2755 Bristol Street, Suite 2900 Costa Mesa, CA 92626 Attn: Jesse Valencia Dear Mr. Valencia: I represent Joseph Kochav Lev. The purpose of this letter is to set forth Mr. Kochav Lev's rights under the contract between Mr. Kochav Lev and Cavalia Communications Inc. dba NDM Communications (“NDM”), effective as of August 1, 2023 ("the Contract"). I will not address at all certain statements you have just recently started making about Mr. Kochav Lev's work performance, including in your January 31, 2024 email, because as far as I can ascertain, your statements have no basis in fact, whatsoever, but rather are your attempt to "shake down" Mr Kochav Lev to abandon his rights under the Contract. Also, your offer to Mr. Kochav Lev, embodied in your January 31 email, is hereby rejected. Before I explain the overall rights of Mr. Kochav Lev under the Contract, I want to first inform you that you have materially breached the Contract by terminating Mr. Kochav Lev (in your January 31 email referenced above) without providing the advance 60 days notice, as required by Section 6 (sic) [8] of the Contract. As to the overall rights of Mr. Kochav Lev under the Contract, they include, among others: 1) Monthly compensation already owing and unpaid under the Contract, pursuant to Section 4.a., in the amount of $21,000.00, which monies are payable immediately–please remit now; 2) Additional monthly compensation hereafter, until March 31, 2024, in the amount of $40,000.00, which monies are also payable immediately based on your failure to provide 60 days notice of termination; 2) Profit sharing under the Contract, as follows: a) For the period Aug 1, 2023 to December 31st, 2023, in the amount of $145,195.00, calculated as follows: $580,780.45 times 25%; Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 1 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 2 b) For the period Jan 1 - Jan 31st 2024, in the estimated amount of $40,000.00, calculated as follows: $160,000.00 times 25%; c) For the period Feb 1, 2024, to Mar 31, 2024, to be calculated as soon as profit determination is made for that time period. 3) 25% equity of NDM company total valuation, less $3 million, based on Section 7 of the Contract, to be issued through and including January 31, 2025. On behalf of Mr. Kochav Lev, I hereby demand full compensation/equity, as described above. If you are represented by counsel, please forward my letter to your counsel to respond on NDM’s behalf, by no later than February 12, 2024, at close of business. If you/NDM are not represented by counsel, please directly respond to me, in writing, by that same date and time. It is my hope that you will take very seriously Mr. Kochav Lev’s demand, which you should if you recognize that the contract terms I have referenced above are binding legal obligations, and you negotiate in good faith with Mr. Kochav Lev. However, in the event you do not, and this matters is litigated, I will now advise you about your legal duties and NDM’s, legal duties, of preserving evidence for the legal proceeding. To be specific, this is written notice to you, NDM, and all NDM personnel (hereafter collectively, “NDM Personnel”), to immediately take all steps necessary to preserve and prevent the destruction, loss, concealment, or alteration of all documents, tangible things and electronically stored information (“ESI”) potentially relevant to this matter, even if only remotely relevant, for the last three years and going forward until this matter is resolved. I note that you, Jesse Valencia, being that you are President/CEO of NDM, you must personally take the lead with all NDM Personnel, in terms of insuring that there is full compliance as to all procedures and actions as immediately now set forth. The first thing that comes to mind is the requirement for NDM Personnel to preserve all company emails and other written communications, and all Microsoft Teams transcriptions and recordings, whether or not involving Mr. Kochav Lev, existing at anytime from January 1, 2020, three years ago, until this dispute is resolved. However, NDM Personnel are required to preserve anything at all relating to NDM operations that in any way could touch upon, even remotely, any of the subject matters that might be litigated in a legal proceeding, including but not limited to any and all communications that mention Mr. Kochav Lev, even if he is not part of the actual communication, and any documents and ESI (see below for definition) that relate to or touch upon any subject matter as to which Mr. Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 2 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 3 Kochav Lev provided services to NDM, at any time. Just by way of example, Mr. Kochav Lev was involved in, among other things, improving financial reporting and improving operations, so NDM Personnel must preserve all company-wide written communications, Microsoft Teams transcripts/recordings, and any documents and ESI, existing anywhere, that in any way touch upon financial reporting and NDM operations. As you can see, for all intents and purposes, what this translates to is that NDM personnel must not destroy/delete or otherwise remove from access almost anything that is currently in existence, created from three years ago until this matter is resolved. Obviously, much of the information subject to preservation and subject to disclosure or responsive to future discovery in this matter, if litigated, is stored on NDM’s current and former computer systems and other media and devices (including personal digital assistants, voice-messaging systems, online repositories and cell phones). Electronically stored information (hereinafter "ESI") must be afforded the broadest possible definition and includes (by way of example and not as an exclusive list) potentially relevant information electronically, magnetically or optically stored as: • Digital communications (e.g., e-mail, texts, voicemail, instant messaging); • Word processed documents; • Spreadsheets and tables; • Accounting Application Data; • Image and Facsimile Files (e.g., .PDF, .TIFF, .JPG, .GIF images); • Sound Recordings; • Video and Animation; • Databases (e.g., Access, Oracle, SQL Server data, SAP); • Contact and Relationship Management Data (e.g., Outlook, ACT!); • Calendar and Diary Application Data (e.g., Outlook PST, Yahoo, blog tools); • Online Access Data (e.g., Temporary Internet Files, History, Cookies); • Presentations (e.g., PowerPoint, Corel Presentations) • Network Access and Server Activity Logs; • Project Management Application Data; • Computer Aided Design/Drawing Files; and, • Back Up and Archival Files (e.g., Zip, .GHO) ESI resides not only in areas of electronic, magnetic, flash and optical storage media reasonably accessible to All , but also in areas NDM Personnel may deem not reasonably accessible. NDM Personnel are obliged to preserve potentially relevant evidence from both these sources of ESI, even if NDM Personnel do not anticipate producing such ESI. The demand that NDM Personnel preserve both accessible and inaccessible ESI is reasonable and necessary. Even ESI that NDM Personnel deem reasonably inaccessible must be preserved in the interim so as not to deprive Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 3 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 4 Mr. Kochav Lev of his right to secure the evidence if this matter is litigated, and if so, for a Court of Law of its right to adjudicate the issue of production of that evidence. Thus, NDM personnel are required to immediately initiate a litigation hold for potentially relevant ESI, plus tangible documents and tangible things, and to act diligently and in good faith to secure and audit compliance with that litigation hold. NDM personnel are also required to preserve and not destroy all passwords, decryption procedures (including, if necessary, the software to decrypt the files), network access codes, ID names, manuals, tutorials, written instructions, decompression or reconstruction software, and any and all other information and things necessary to access, view, and (if necessary) reconstruct any ESI. NDM Personnel should not pack, compress, purge, or dispose of any file or any part thereof. NDM Personnel must act immediately, starting today, to preserve potentially relevant ESI including, without limitation, all information concerning any matters described above. Adequate preservation of ESI requires more than simply refraining from efforts to destroy or dispose of such evidence. NDM Personnel must actively intervene to prevent loss due to routine operations and employ proper techniques and protocols suited to protection of ESI. Please note that sources of ESI are altered and erased simply by use of computers and other devices. Booting a drive, examining its contents or running any application will irretrievably alter the evidence it contains and may constitute unlawful spoliation of evidence. Consequently, alteration and erasure may result from NDM Personnel’s failure to immediately act diligently and responsibly to prevent loss or corruption of ESI. Nothing in this demand for preservation of ESI should be understood to diminish NDM Personnel’s concurrent obligation to preserve documents, tangible things and other potentially relevant evidence. NDM Personnel are directed to immediately, today, February 5, 2024, to initiate this litigation hold for potentially relevant ESI, documents and tangible things, and to act diligently and in good faith to secure and audit compliance with such litigation hold. NDM Personnel are further directed to immediately identify and modify or suspend features of NDM’s information systems and devices that, in routine operation, operate to cause the loss of potentially relevant ESI. Examples of such features and operations include: • Purging the contents of e-mail repositories by age, capacity or other criteria; • Using data or media wiping, disposal, erasure or encryption utilities or devices; • Overwriting, erasing, destroying or discarding back up media; • Re-assigning, re-imaging or disposing of systems, servers, devices or media; • Running antivirus or other programs effecting wholesale metadata alteration; • Releasing or purging online storage repositories; • Using metadata stripper utilities; • Disabling server or 1M logging; and, Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 4 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 5 • Executing drive or file defragmentation or compression programs. Also, NDM Personnel should anticipate that is employees, officers or others may seek to hide, destroy or alter ESI and act to prevent or guard against such actions. Especially where company machines have been used for Internet access or personal communications, NDM Personnel should anticipate that users may seek to delete or destroy information they regard as personal, confidential or embarrassing and, in so doing, may also delete or destroy potentially relevant ESI. This concern is not one unique to NDM or to NDM employees and officers. It's simply an event that occurs with such regularity in electronic discovery efforts that any custodian of ESI and their counsel are obliged to anticipate and guard against its occurrence. NDM Personnel should take affirmative steps to prevent anyone with access to NDM Personnel’s data, systems and archives from seeking to modify, destroy or hide electronic evidence on network or local hard drives (such as by deleting or overwriting files, using data shredding and overwriting applications, defragmentation, re-imaging or replacing drives, encryption, compression, stenography or the like). With respect to local hard drives, one way to protect existing data on local hard drives is by the creation and authentication of a forensically qualified image of all sectors of the drive. Such a forensically qualified duplicate may also be called a bitstream image or clone of the drive. Be advised that a conventional back up of a hard drive is not a forensically qualified image because it only captures active, unlocked data files and fails to preserve forensically significant data that may exist in such areas as unallocated space, slack space and the swap file. With respect to the hard drives and storage devices, demand is made that any person, including but not limited to NDM Personnel, likely to have information pertaining to the instant matter on their computer hard drive(s) immediately obtain, authenticate and preserve forensically qualified images of the hard drives in any computer system (including portable and home computers) used by that person during the period from three years ago until this matter is resolved. Once obtained, each such forensically qualified image should be labeled to identify the date of acquisition, the person or entity acquiring the image and the system and medium from which it was obtained. Each such image should be preserved without alteration. NDM Personnel should anticipate that certain ESI, including but not limited to spreadsheets and databases, will be sought in the form or forms in which it is ordinarily maintained. Accordingly, NDM Personnel should preserve ESI in such native forms, and NDM Personnel should not select methods to preserve ESI that remove or degrade the ability to search NDM Personnel’s ESI by electronic means or make it difficult or burdensome to access or use the information efficiently in the litigation. NDM Personnel should additionally refrain from actions that shift ESI from reasonably accessible media and forms to less accessible media and forms if the effect of such actions is to make such ESI not reasonably accessible. Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 5 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 6 NDM Personnel should further anticipate the need to disclose and produce system and application metadata and act to preserve it. System metadata is information describing the history and characteristics of other ESI. This information is typically associated with tracking or managing an electronic file and often includes data reflecting a file's noone, size, custodian, location and dates of creation and last modification or access. Application metadata is information automatically included or embedded in electronic files bul which may not be apparent to a user, including deleted content, draft language, commentary, collaboration and distribution data and dates of creation and printing. Be advised that metadata may be overwritten or corrupted by careless handling or improper steps to preserve ESI. For electronic mail, metadata includes all header rouling data and Base 64 encoded attachment data, in addition to the To, From, Subject, Received Date, CC and BCC fields. With respect to servers like those used to manage electronic mail (e.g. , Microsoft Exchange and Gmail) or network storage (often called a user's "network share"), the complete contents of each user's network share and e-mail account must be preserved. There are several ways to preserve the contents of a server depending upon, e.g., its RAID configuration and whether it can be downed or must be online 24/7. Though I expect that NDM Personnel will act swiftly to preserve data on office workstations and servers, NDM Personnel should also determine if any home or portable systems may contain potentially relevant data. To the extent that officers, board members or employees have sent or received potentially relevant e-mails or created or reviewed potentially relevant documents away from the office, NDM Personnel must preserve the contents of systems, devices and media used for these purposes (including not only potentially relevant data from portable and home computers, but also from portable thumb drives, CD-R disks and the user's PDA, smart phone, voice mailbox or other forms of ESI storage.). Similarly, if NDM Personnel, and employees, officers or board members used online or browser-based email accounts or services (such as Gmail, Yahoo Mail or the like) to send or receive potentially relevant messages and attachments, the contents of these account mailboxes (including Sent, Deleted and Archived Message folders) must be preserved. NDM Personnel must also preserve documents and other tangible items that may be required to access, interpret or search potentially relevant ESI, including logs, control sheets, specifications, indices, naming protocols, file lists, network diagrams, flow charts, instruction sheets, data entry forms, abbreviation keys, user ID and password rosters or the like. NDM Personnel must preserve any passwords, keys or other authenticators required to access encrypted files or run applications, along with the installation disks, user manuals and license keys for applications required to access the ESI. NDM Personnel must preserve any cabling, drivers and hardware, if needed to access or interpret media on which ESI is stored. This includes tape drives, bar code readers, zip drives, external hard drives, flash drives, and other legacy or proprietary devices. Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 6 Vickman & Associates Attorneys Jesse Valencia February 5, 2024 Page 7 Note that hard copies do not preserve electronic searchability or metadata. They are not an adequate substitute for, or cumulative of, electronically stored versions. If information exists in both electronic and paper forms, NDM personnel must preserve both forms. NDM Personnel’s preservation obligation extends beyond ESI in NDM Personnel’s care, possession or custody, and also includes ESI in the custody of others that is subject to NDM Personnel’s direction or control. Accordingly, NDM Personnel must notify any current or former agent, attorney, employee, custodian or contractor in possession of potentially relevant ESI to preserve such ESI to the full extent of NDM Personnel’s obligation to do so, and NDM Personnel must take reasonable steps to secure their compliance. Yours truly, James A. Vickman, Esq. Vickman & Associates, Attorneys Attorneys for Joseph Kochav Lev Vickman & Associates, Attorneys, 424 South Beverly Drive, Beverly Hills, California 90212-4414 telephone 310/553-8533 facsimile 310/553-0557 email jv@vickmanassociates.com www.vickmanassociates.com EXHIBIT 3, PAGE 7 EXHIBIT 4, PAGE 1 EXHIBIT 4, PAGE 2 EXHIBIT 4, PAGE 3 EXHIBIT 4, PAGE 4 EXHIBIT 4, PAGE 5 EXHIBIT 4, PAGE 6 EXHIBIT 4, PAGE 7 EXHIBIT 4, PAGE 8 EXHIBIT 4, PAGE 9