arrow left
arrow right
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
  • On, Omar Jay vs Stephen A Vannucci, MD, Inc et alcivil document preview
						
                                

Preview

1 SHARTSIS FRIESE LLP RICHARD F. MUNZINGER (Bar #217902) 2 DANIEL M. PONIATOWSKI (Bar #306754) One Maritime Plaza, Eighteenth Floor 9/30/2020 3 San Francisco, CA 94111-3598 Telephone: (415) 421-6500 4 Facsimile: (415) 421-2922 Email: rmunzinger@sflaw.com 5 Email: dponiatowski@sflaw.com 6 Attorneys for Kafele T. Hodari, MD, Inc 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF BUTTE 10 OMAR JAY ON and BARBARA ON, Case No. 19cv03856 11 Petitioners, 12 SAN FRANCISCO, CA 94111-3598 v. KAFELE T. HODARI, MD, INC’S SHARTSIS FRIESE LLP ONE MARITIME PLAZA OPPOSITION TO MOTION TO SET EIGHTEENTH FLOOR 13 STEPHEN A. VANNUCCI, M.D., INC. and ASIDE AND VACATE JUDGMENT IN 14 NORTH VALLEY DERMATOLOGY FAVOR OF KAFELE T. HODARI, MD, CENTER, INC 15 Respondents. Date: October 14, 2020 16 Time: 9:00 a.m. Dept: 7 17 Judge: Hon. Sandra L. McLean 18 19 20 21 22 23 24 25 26 27 28 Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC 1 Respondent KAFELE T. HODARI, MD, INC (“KHI”) hereby opposes Petitioners OMAR 2 JAY ON and BARBARA ON’s (“Petitioners”) Motion to Set Aside and Vacate Judgment in 3 Favor of KHI (“Motion to Vacate”). 4 I. INTRODUCTION 5 The instant motion arises from an arbitration proceeding resulting in an award (the 6 “Arbitration Award”) in favor of Petitioners and against North Valley Dermatology Center, a 7 California partnership (“NVDC”), and Steven A. Vannucci M.D., Inc. (“SAVI”), a partner of 8 NVDC. KHI, a former partner of NVDC, was never named as a party to the arbitration. On 9 December 31, 2019, Petitioners instituted the above-captioned proceeding to confirm the 10 Arbitration Award as a judgment. NVDC filed for bankruptcy and all proceedings against it were 11 stayed, but Petitioners obtained a judgment on the Arbitration Award against SAVI (the “SAVI 12 Judgment”). Petitioners then brought a motion to amend the SAVI Judgment to include, among SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 other things, KHI as an additional judgment debtor (the “Motion to Amend”). That motion was 14 denied with prejudice, and as to KHI, judgment was entered on September 17, 2020 (the “KHI 15 Judgment”). A true and correct copy of the KHI Judgment, which appends the Court’s original 16 Order denying the Motion to Amend, is attached as Exhibit 1 to the declaration of Daniel M. 17 Poniatowski, submitted herewith (the “Poniatowski Decl.”). 18 By the instant Motion, Petitioners seek to set aside and vacate the KHI Judgment. But as 19 discussed in detail below, Petitioners are not entitled to the relief they seek. The KHI Judgment is 20 a final determination of Petitioners’ attempt to hold KHI liable for the Arbitration Award. As the 21 authorities cited in the KHI Judgment explain, because KHI was not a party to the arbitration, it 22 cannot be held liable now for any judgment resulting from those arbitration proceedings. 23 Accordingly, the KHI Judgment is proper and the Motion to Vacate should be denied. 24 II. LEGAL STANDARD 25 “A judgment is the final determination of the rights of the parties in an action or 26 proceeding.” Civ. Proc. Code § 577. Court’s look to the substance and effect of the adjudication 27 rather than its form to determine whether it constitutes a final determination sufficient to satisfy 28 Section 577. Melbostad v. Fisher, 165 Cal. App. 4th 987, 995-96 (2008). A judgment is proper -1- Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC 1 where no issue among the parties is left for future consideration and no further judicial action is 2 required to finally determine the rights of the parties. Id. Where multiple parties are involved in 3 a proceeding, a judgment is appropriate if it “leaves no issue to be determined as to one party.” 4 Nguyen v. Calhoun, 105 Cal. App. 4th 428, 437 (2003). 5 III. THE KHI JUDGMENT IS A FINAL DETERMINATION OF PETITIONERS’ 6 ATTEMPT TO HOLD KHI LIABLE FOR THE ARBITRATION AWARD 7 Examining the totality of Petitioner’s Motion To Amend and the reasoning and effect of 8 the resulting KHI Judgment, it is clear that the KHI Judgment was a final determination and 9 forecloses Petitioner from adding KHI as an additional judgment debtor on a judgment arising 10 from the arbitration proceedings. 11 A. Petitioners’ Motion To Amend Was Exhaustive And Resulted In A Final Judgment On The Merits As To KHI. 12 SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 As an initial matter, Petitioners seek to cast the proceeding against KHI as a narrow, 14 limited attempt to add KHI to the SAVI Judgment arising out of the Arbitration Award. 15 Petitioners argue that their Motion to Amend only relied on Code of Civil Procedure section 187, 16 and that the resulting KHI Judgment denying their Motion to Amend was limited to only those 17 grounds. But that is not the case. On the contrary, while the Motion to Amend cited Section 187, 18 it invoked legal authorities well beyond that in an attempt to hold KHI liable for the SAVI 19 Judgment. While the Motion to Amend relied on the Court’s “broad inherent power to control, 20 supervise, and administer matters before [it] - which powers are partially codified in sections 128 21 and 187 of the Code of Civil Procedure,” it also argued that “the authority of courts to make such 22 orders as to effectuate justice are not limited to statutory enactments - rather that authority derives 23 from the California State Constitution as based upon the historic powers of the judiciary.” 24 Poniatowski Decl., Ex. 2 at 7:10-20. The Motion to Amend also relied on a theory of joint and 25 several partnership liability under Corporations Code § 16306 (id. at 1:19-2:9) as well as 26 arguments for continued liability under the Bankruptcy Code (id. at 9:5-13:26). Petitioners’ 27 Motion to Amend was thus exhaustive, leaving no stone unturned with respect to legal theories. 28 -2- Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC 1 All of these arguments were presented to the Court via Petitioners’ briefing and evidence 2 in support of their Motion to Amend, and Petitioners’ counsel was given a chance to argue them 3 at the hearing on the motion. Having received these arguments and evidence, the Court denied 4 the portion of Petitioners’ motion seeking to add KHI as a judgment debtor to the SAVI Judgment 5 with prejudice. Poniatowski Decl., Ex. 1 at Ex. A at 2:19-22. The Court ultimately entered the 6 KHI Judgment, at issue here, which provides in part as follows: “The Court, having denied 7 Petitioners’ motion to add KHI as an additional judgment debtor to the February 13, 2020 8 judgment, IT IS ORDERED THAT: Judgment denying Petitioners’ motion is hereby entered in 9 favor of Respondent KAFELE T. HODARI, MD, INC and against Petitioners OMAR JAY ON 10 and BARBARA ON.” Id. at 2:1-4. The KHI Judgment is clear and leaves no issue to be 11 determined as to KHI. 12 SAN FRANCISCO, CA 94111-3598 B. The Judgment Resolves All Arguments Petitioners Have Raised Or Could Raise SHARTSIS FRIESE LLP In The Future To Add KHI To A Judgment Arising From The Arbitration ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 Proceedings. 14 The legal authorities cited in the KHI Judgment foreclose any possibility of Petitioners 15 adding KHI to any judgment arising from the arbitration proceedings because KHI was never a 16 party to those proceedings. The KHI Judgment cites Fazzi v. Peters, 68 Cal. 2d 590 (1968), 17 which is controlling. Poniatowski Decl., Ex. 1 at 1:14-15. In Fazzi, the plaintiff sued a 18 partnership but did not include the partners of the partnership as defendants. Id. at 591. Despite 19 this, the trial court entered default judgment against both the partnership and the partners, later 20 denying the motion of one of the partners to set aside the judgment. Id. at 592. The California 21 Supreme Court reversed the lower court and ordered that the judgment against the partner, who 22 was never a party to the underlying proceeding, be vacated and set aside. Id. at 598. The 23 Supreme Court reasoned that “a judgment may not be entered either for or against a person who is 24 not a party to the proceeding, and any judgment which does so is void to that extent.” Id. at 594 25 (internal citations and quotations omitted); see also id. at 597 (disproving of case “insofar as it 26 holds than an individual judgment may be rendered against a partner not joined as a defendant in 27 an action against the partnership of which he is, or is alleged to be, a member”). The other case 28 -3- Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC 1 cited by the KHI Judgment, Triplett v. Farmers Ins. Exchange, 24 Cal. App. 4th 1415 (1994), 2 holds similarly. Id. at 1420 (“Although section 187 has been interpreted to allow flexibility in 3 proceedings, it has never been construed to allow imposition of liability on an entity which was 4 never a party to the action.”). 5 Fazzi analyzed former Code of Civil Procedure section 338, a statue providing partnership 6 creditors with a path to hold the partners of a partnership liable for the obligations of the 7 partnership. 68 Cal. 2d at 592. But the Supreme Court in Fazzi explained that former Section 8 338 “was never intended to abrogate that principle in suits against unincorporated business 9 associations. . . . that a judgment may not be entered either for or against one not a party to an 10 action or proceeding.” Id. at 594 (internal quotations omitted). Today’s version of the statute, 11 codified as Code of Civil Procedure section 369.5, makes this plain: 12 SAN FRANCISCO, CA 94111-3598 A member of the partnership or other unincorporated association SHARTSIS FRIESE LLP may be joined as a party in an action against the unincorporated ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 association. If service of process is made on the member as an 14 individual, whether or not the member is also served as a person upon whom service is made on behalf of the unincorporated 15 association, a judgment against the member based on the member’s personal liability may be obtained in the action, whether the 16 liability is joint, joint and several, or several. 17 18 Civ. Proc. Code § 369.5(b) (emphasis added). 19 In their Motion to Vacate, Petitioners recycle arguments raised in their Motion to Amend 20 that they are entitled pursue KHI for the Arbitration Award via Corporations Code section 16306 21 (Motion to Vacate at 7:1-7) and the Bankruptcy Code (id. at 7:8-17). These arguments were 22 raised and denied in the Motion to Amend, and are not subject to re-litigation here. See supra, 23 III.A. Even so, neither of these theories support Petitioners. Corporations Code section 16306 24 provides that partners are liable jointly and severally for partnership obligation “unless otherwise 25 agreed by the claimant or provided by law.” Corp. Code § 16306(a). Importantly, Corporations 26 Code section 16307 provides that “[a] judgment against a partnership is not by itself a judgment 27 against a partner. A judgment against a partnership may not be satisfied from a partner’s assets 28 unless there is also a judgment against the partner.” Corp. Code § 16307(c). Here, there is no -4- Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC 1 judgment against KHI as Petitioner’s Motion to Amend was denied, and Petitioners are entirely 2 foreclosed from obtaining a judgment against KHI on the Arbitration Award because KHI was 3 not a party to the arbitration, as discussed in detail above. 4 Petitioners arguments under the Bankruptcy Code fail for the same reason. Petitioners 5 rely on Section 723(a) of the Bankruptcy Code, which provides that the bankruptcy trustee of a 6 partnership in bankruptcy may make a claim against partners of the partnership for any deficiency 7 between property of the partnership and the amount of allowed claims against the partnership “to 8 the extent that under applicable nonbankruptcy law such general partner is personally liable for 9 such deficiency.” 11 U.S.C. § 723(a). Accordingly, here Section 723(a) looks to state law to 10 determine KHI’s liability to Petitioners. Of course, as discussed in detail above, no such liability 11 exists because no judgment exists against KHI for the Arbitration Award, nor can a judgment 12 ever exist because KHI was not a party to the arbitration. SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 The bankruptcy court in Ehrenberg v. WSCR, Inc. (In re Hoover WSCR Assocs.), 268 B.R. 14 227 (Bankr. C.D. Cal. 2001), aff’d 2005 Bankr. LEXIS 3267 (B.A.P. 9th Cir.), confronted and 15 rejected the very arguments Petitioners make here. In Ehrenberg, the bankruptcy trustee of a 16 limited partnership sought to hold a general partner liable under Section 723(a) for a judgment 17 against the limited partnership even though the general partner was not a party to the underlying 18 litigation and not a judgment debtor. Id. at 228-29. The Court refused to grant the trustee this 19 relief, reasoning that Section 723(a) required looking to state law and that the issue was 20 controlled by Code of Civil Procedure section 369.5, which sets forth the “procedure by which a 21 partnership creditor may obtain a judgment against a partner.” Id. at 234. The court held as 22 follows: 23 The general provision for the liability of partners under Cal. Corp. 24 Code § 16306(a) does not establish the liability of any particular partner, it merely provides a basis for liability. The establishment 25 of liability of any specific partner under Cal. Corp. Code § 16306(a) requires compliance with the procedural mandate of Cal. 26 Civ. Proc. Code § 369.5. To rule otherwise would render that provision of California law a nullity. In addition, Cal. Corp. Code 27 § 16306(a) provides that partners are liable for partnership debts 28 “unless otherwise .. . provided by law” (emphasis added). In this -5- Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC 1 case, Cal. Corp. Code § 16307(c) is just such a provision, as is the statute of limitations which bars Koukladases from obtaining 2 judgment against WSCR. Cal. Corp. Code § 16307(c) specifically 3 insulates a partner’s assets from the claims of partnership creditors unless the latter has a judgment against the partner on the 4 partnership debt. It defies logic to conclude that California law should be read to say that a partner is “personally liable” for a 5 partnership debt which may not be satisfied from that partner’s personal assets. California law does not support that reasoning, § 6 723(a) does not demand it and I will not apply it here. 7 The Koukladases can never obtain a judgment against WSCR on 8 its claim against the debtor. Therefore, WSCR is not “personally liable” for that partnership debt. By application of § 723(a), then, 9 WSCR is not liable to the trustee for any portion of that claim in this proceeding. 10 11 Id. at 235 (underlining added, italics in original). 12 In sum, the KHI Judgment is a clear denial of the relief Petitioners seek against KHI, SAN FRANCISCO, CA 94111-3598 SHARTSIS FRIESE LLP ONE MARITIME PLAZA EIGHTEENTH FLOOR 13 which is to add KHI to a judgment emanating from the arbitration proceedings to which KHI was 14 not a party. Pursuant to the authorities cited in the KHI Judgment and discussed in detail above, 15 there is no path to Petitioners obtaining such a judgment in the future. The KHI Judgment is 16 proper and should not be disturbed. 17 IV. CONCLUSION 18 For the foregoing reasons, the KHI Judgment should stand, and Petitioners’ Motion to 19 Vacate should be denied. 20 Dated: September 30, 2020 SHARTSIS FRIESE LLP 21 22 /s/ Daniel M. Poniatowski By: DANIEL M. PONIATOWSKI 23 Attorneys for Kafele T. Hodari, MD, Inc 24 8773571 25 26 27 28 -6- Case No. OPPOSITION TO MOTION TO SET ASIDE AND VACATE 19cv03856 JUDGMENT IN FAVOR OF KAFELE T. HODARI, MD, INC