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Dyer Law Firm
Michael J. Dyer, #109297
Dustin J. Dyer, #274308
5250 Claremont Ave., Ste. 119
Stockton, CA 95207
Telephone: (209) 472-3668
Facsimil (209) 472-3675
Email: ddverg-dyerlawlirm.com
Electronically Filed
McCormick, Barstow, Sheppard,
Wayte & Carruth LLP 3/17/2021 4:53 PM
D. Greg Durbin, #81749 Superior Court of California
we durhinamecormickbarstow.com
AU County of Stanislaus
Scoit J . Ivy, #197681 Clerk of the Court
scold mecormickharstow. com By: Christine Zulim, Deputy
Paul R. Gaus, #319979
paul. gaus‘qanccormicharstow, com
7647 North Fresno Street
10 Fresno, California 93720
Telephone: (559) 433-1300
lL Facsimile: (559) 433-2300
12 Attorneys for Plaintiff
Capital Equity Management Group, Inc.
13
14 SUPERIOR COURT OF THE STATE OF CALIFORNIA
15 COUNTY OF STANISLAUS
16 CAPITAL EQUITY MANAGEMENT Case No. 2023519
GROUP, INC.,
17 COMBINED MEMORANDUM OF POINTS
Plaintiff, AND AUTHORITIES IN OPPOSITION TO
18 DEFENDANTS RICK CLEMENTS, JAMEE
v LYNN CLEMENTS, SWAN
19 CONSTRUCTION, SWAN INVESTMENTS,
STEVEN A. SWANGER, et al., INC., SWANGER PROPERTIES, LLC,
20 NORTHERN CALIFORNIA
Defendants. INVESTMENTS, LP AND RICK
21 NORTHCUTT’S DEMURRER TO
PLAINTIFF’S SECOND AMENDED
22 COMPLAINT AND EACH DEFENDANT'S.
JOINDER TO SAID DEMURRER.
23
Hearing Date: April 1, 2021
24 Hearing Time: 8:30 a.m.
Judge: Hon. John R. Mayne
25 Dept.: 21
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27
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
INTRODUCTION
The present demurrer was filed in September of 2017 by the above stated Defendants’ former
counsel. Over the last three and a half years, the parties to the present litigation have agreed to have
the present litigation be placed on hold while the accompanying litigation filed in 2014 (Stanislaus
County Case No. 2009158; hereinafter “2014 Litigation”) proceeded. This complied with
Defendants’ position that “this action must be abated as a matter of right”. (Defendant P&As Pg. 6:
9-10), Plaintiff has attempted to contact Defendants” counsel to continue the agreement to abate the
litigation until resolution of the Litigation 2014, which begins trial on September 28, 2021. To date,
Plaintiff has been unable to reach Defendants’ counsel.
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Unlike the accompanying Swanger Demurrer which only presents a statute of limitations
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argument, the present demurrer is based upon several separate legal issues.
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Defendants first argument in support of demurrer is that “CEMG Cannot Allege Here That
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Defendants Caused It To Suffer Damages” (Clements Demurrer P& As 1:4). This argument is barred
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given that Defendants have failed to present the argument in their two prior demurrers. Additionally,
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Defendants are improperly attempting to stretch their flawed interpretation of two paragraphs of a
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2015 Federal RICO Complaint into a demurrer defense in the present litigation. Defendants brazenly
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and inaccurately argue that “CEMG does not specifically allege damages in its fraud-based causes
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of action...” (Defendants’ P&As Pg. 5:16-17).Plaintiff’s fraud cause of action states “As a direct
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and proximate result PLAINTIFF suffered damages for lost profits that it would have made by
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acquiring, repairing and reselling or renting the properties.” (Second Amended Complaint 28
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hereinafter “SAC”). Additionally, Plaintiffs conspiracy to commit fraud/deceit cause of action
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states “As a proximate result of the conspiracy and conduct of the all DEFENDANTS as herein
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alleged, PLAINTIFF sustained monetary damage in a sum according to proof.” (SAC {| 32).
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Defendants’ second argument is that Plaintiff's fraud cause of action fails to provide the
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requisite specificity. Defendants failed on a similar argument in the 2014 Litigation. The SAC, adds
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an additional nine paragraphs of factual allegations in support of the each of the remaining causes
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of action. These detailed allegations put each Defendant on notice of definite charges of fraud which
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’*S SECOND AMENDED COMPLAINT
can be intelligently met, and show an existing economic relationship. CEMG requests this Court to
overrule Defendants’ demurrer. Although it is true that a fraud cause of action requires a heightened
pleading standard, this standard “is relaxed when it is apparent from the allegations that the
defendant necessarily possesses the knowledge of the facts.” (Quelimane v. Stewart Title Guaranty
Co. (1998) 19 Cal.4" 26, 47, Also See Bradley v. Harford Ace. & Indem. Co., (1973) 30 Cal.App.3d
818, 825. Given the increase specificity of the Second Amended Complaint and the relaxed standard
based upon Defendants knowledge, Defendants’ demurrer must fail.
Finally, Defendants argue that an accounting cause of action should be barred because it is
duplicative of Plaintiff's tort and contract claims and fails to show a relationship between Plaintiff
10 and Defendants. In order to make this argument. Defendants misstate and misinterpret California
ll law. Contrary to Defendants’ argument, Plaintiff's accounting cause of action is both sufficiently
12 pleaded and fully actionable against all Defendants.
13 Given the above stated arguments, Defendants demurrer must fail. However, if the Court
14 determines that the SAC is deficient in any manner, Plaintiff requests leave to amend the complaint
15 to cure any such stated deficiency.
16 ILSUMMARY OF FACTS
17 1, CEMG and the Agent Defendants
18 CEMG at all time mentioned was in the business of buying, repairing and selling distressed
19 California properties for a profit. (SAC, 1.) Defendants Steven Swanger, Kenneth Swanger,
20 Brenda Gillum, Rick Clements, Jamie Lynn Clements, Mark Tillotson, Mary Rose Carter and
21 William Keith Carter (the “Agent Defendants”) were agents of CEMG who were tasked with
identifying, evaluating, acquiring at auctions and private sales, rehabilitating and them preparing
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for sale distressed properties on behalf of CEMG. (SAC, § 2.)
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24 2. Defendants’ Scheme
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CEMG’s claims arise out of Defendants’ fraudulent and wrongful scheme of diverting
26 distressed real properties that CEMG would otherwise have purchased in the ordinary course of
27 business (the “Diverted Properties”), to themselves to purchase, rehabilitate and sell for a profit
28 and thereby deprive CEMG of the benefit of the use of its information and processes and the fruits
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
of the efforts of CEMG’s agents, including the Agent Defendants. (SAC, {ff 10-11.) A list of more
than 200 Diverted Properties is attached to the SAC. (SAC, Exhibit A). The scheme required both
participants who were working for CEMG (the Agent Defendants) and other participants (the
Non-Defendants) who supplied money to purchase and repair the Diverted Properties and took.
title to the Diverted Properties and transferred such title among themselves and to third-party
buyers as part of concealing from CEMG the scheme and the profits Defendants derived
therefrom. (SAC, §§ 10-11.)
Under the scheme, the Agent Defendants gathered information, evaluated properties for
CEMG, attended the auctions and private sales as CEMG’s agents, and were supposed to make
bids at the auctions and private sales on CEMG’s behalf. to acquire the properties for CEMG.
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Instead the Agent Defendants did not bid on behalf of CEMG but purchased and aided other
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Defendants in purchasing the properties, rehabilitating then and reselling them for a profit. (SAC,
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4 10-11.)
13
The Agent Defendants fraudulently diverted the Diverted Properties away from CEMG
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and to themselves and the other defendants. (SAC, §] 19-22, 23-29.) Throughout the scheme, the
15 Agent Defendants did not disclose to and concealed from CEMG material facts such as the
16 distressed properties they were aware of that CEMG would have in the ordinary course of business
17 evaluated and sought to purchase, and that the Diverted Properties were purchased by one of the
18 Defendants in cooperation with the Agent Defendants. (SAC, ff 19-22, 23-29.)
19 The Agent Defendants concealed and did not disclose the true facts with the intent to
20 induce CEMG to continue to provide the Agent Defendants with access to CEMG’s confidential
21 information, processes and personnel, to continue to have the Agent Defendants participate in the
22 auctions and sales supposedly on behalf of CEMG, to not participate in such auctions and sales
23 through individuals who were not a part of the scheme, and to cover up the scheme. (SAC, §f 19-
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22, 23-29.)
25 3. Continuing Concealment of the Diversion Scheme and Fraud
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Defendants agreed to and did actively conceal their diversion of the Diverted Properties
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from CEMG in order to keep their profits and benefits from the scheme and to avoid CEMG
28 taking actions on such diversions. (SAC, 4 11.) For example, the Swanger Defendants (Steve
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
Swanger, Kenneth Swanger and Brenda Gillum) told Plaintiff's officers that each of the diverted
properties sold for a price above the amount Plaintiff set as a maximum bid price. (SAC § 11).
“Thus. all defendants agreed to conceal from Plaintiff the disclosure of its
confidential information by SWANGERS. and/or TILLOTSON, and/or GILLUM
to all other defendants. the actual purchase price of the diverted properties, the
identity of the actual purchaser of each property diverted and the source of funds
used to purchase each property. Defendants knew that given the fact that thousands
of properties were considered for purchase by Plaintiff. Plaintiff would not discover
the diversion so long as some properties were purchased as planned for Plaintiff
and all defendants concealed the use of the confidential information and concealed
the purchase of diverted properties. (SAC { 11).
On or about November 10, 2014, Plaintiff filed its initial complaint in the 2014 Litigation.
At the time Plaintiff filed the 2014 litigation, it was Plaintiff's belief that all diverted properties of
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Defendants” scheme were discovered. Unbeknownst to Plaintiff, there were hundreds of properties
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which Defendants were actively concealing. The filing of the 2014 Litigation complaint did not
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stop Defendants’ coordinated active concealment of the facts from Plaintiff. In December of 2015,
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the Castleberry Defendants (George Castleberry, Richard Castleberry, Norcal Redevelopment
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Corp.) held a meeting with Plaintiff in which the Castleberry Defendants and their counsel
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knowingly misrepresented to Plaintiff that they were only involved in four properties with the
16 Swanger Defendants and Northeutt. (SAC §{ 16-17). In 2016, a former Defendant in the 2014
17 Litigation, Wiley Chandler, broke away from the other Defendants and identified that the
18 remaining Defendants were actively concealing several properties from Plaintiff and provided
19 Plaintiff with avenues to discover the full breath of Defendants’ scheme. (SAC 4 18). As a result
20 of these communications with Chandler and subsequent discovery, Plaintiff uncovered the
21 additional properties which are attached to Plaintiff SAC as Exhibit A. (SAC § 18). Following the
22 discovery of these properties, Plaintiff filed the present litigation (“2017 Litigation”) on February
23 3, 2017.
24 In the present litigation, Mark Tillotson appeared for a deposition on August 10, 2017.
During the deposition, he identified only two properties in which he participated in the purchase
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with other Defendants. (See RJN # 2). However, during discovery in the 2014 Litigation it became
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apparent that Defendant Tillotson was not truthful in his testimony and that at least four additional
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properties were purchased by him through his entity Neverland Equities, LLC (RJN # 3). The
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
2014 Litigation has uncovered numerous additional efforts to conceal information and properties
from Plaintiff. This information has been uncovered through extensive written and oral discovery.
It. LEGAL ARGUMENT
A The Standards Defendants Must Meet To Support A Demurrer.
The court must assume that the “complaint’s properly pleaded material allegations are true
and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their
context.” Moore v. Regents of Univ. of Cal.(1990) 51 Cal.3d 120, 150), Zelig v County of Los
Angeles (2002) 27 Cal. 4" 1112, 1126 [same]. In passing on the sufficiency of a pleading, its
allegations must be liberally construed with view to substantial justice between parties. AZ G.
Chamberlain & Co. v. Simpson (1959) 173 Cal. App. 2d 263, 267 (Emphasis added). A demurrer
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cannot properly be based on evidence or other extrinsic matters, and a defendant is not permitted to
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allege facts in his demurrer which, if true, would make complaint vulnerable. Cravens v. Coghlan
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(1957) 154 Cal. App. 2d 215, 218.
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B. Each of Plaintiff's Causes of Action, Including the Fraud-Based Causes of Action
14 Provide Proper Allegations that Plaintiff Suffered Damages as a Result of Defendants’
Bad Acts
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Defendants first argue that “CEMG Cannot Allege Here That Defendants Caused It To
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Suffer Damages” (Demurrer P&As 1:4). In this argument Defendants assert that Plaintiff cannot
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allege damages because Plaintiff's 2015 Federal Lawsuit bars such a claim. Defendants additionally
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argue that “CEMG does not specifically allege damages in its fraud-based causes of action...”
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(Demurrer P& As 5:16-17),
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This argument is barred given that Defendants have failed to present the argument in their
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two prior demurrers. (CCP § 430.41(b); also see O'Callaghan v. Bode, (1890) 84 Cal. 489).
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Defendants have filed a demurrer to both the Initial Complaint and the First Amended Complaint.
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In each of their prior demurrers, Defendants have failed to present the argument that Plaintiff has
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failed to properly allege damages. By failing to make the argument on prior demurrers, Defendants
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have waived their rights to make such an argument in the present demurrer.
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Additionally, Defendants argue that two paragraphs of a 2015 Federal RICO Complaint bar
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Plaintiffs’ ability to allege damages in the present litigation. Defendants incorrectly summarize that
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
Plaintiff was forced out of the market in December of 2011 and thus cannot allege damages. This
argument is flawed for numerous reasons. First, Plaintiffs damages as alleged in the SAC span from
2009 through 2013. (SAC § 9). Even if Defendants allegations were true that Plaintiff left the market
in December 2011, Plaintiff's allegations demonstrate that it incurred damages at the very least from
2009 through 2011. Based on this fact alone the present motion must fail. Second, Defendant’s
interpretation of the two paragraphs of the 2015 RICO Lawsuit are not accurate. The 2015 RICO
Lawsuit demonstrates that it was more difficult for Plaintiff to continue in the market after the bad
acts of Defendants; it does not however state that Plaintiff left the market. Plaintiff has consistently
participated in the market since prior to 2009 and was not “driven out of the market after Katakis’
10 indictment in 2011” (Clements Demurrer P&As 5:21-22). Given Defendants’ misinterpretation of
lL the allegations of the 2015 RICO lawsuit, it is clear that the present litigation in not in conflict with
12 the 2015 RICO lawsuit. Finally, Defendants improperly attempt to invoke the “sham pleading”
13 doctrine by stating that the present lawsuit is contradictory to the 2015 RICO Lawsuit. However,
14 the two litigations’ allegations are not in conflict with each other as identified above. Additionally,
15 the “sham pleading” doctrine only applies to inconsistent pleadings in the same litigation. “While
16 a party may not allege inconsistent facts in his pleading in the same case, inconsistent allegations in
17 separate actions create, at the most, only "evidentiary admissions," which, if verified, can be used
18 by the adversary only to impeach the pleader or to rebut his contentions as unfounded in fact. The
19 inconsistency, no matter how glaring. is not a basis for a motion to strike or for a dismissal, (Katz
20 vy. Feldman, (1972) 23 Cal. App. 3d 500, 504; Witkin, Cal. Evidence (2d ed. 1966) §§ 501-503. pp.
21 472-474, (internal citations omitted)) As such, Defendant argument must fail.
22 Defendants argue that “CEMG does not specifically allege damages in its fraud-based causes
23 of action...” (Demurrer P&As 5:16-17). This argument is knowingly false. Plaintiff's fraud cause
24 of action states “As a direct and proximate result PLAINTIFF suffered damages for lost profits that
25 it would have made by acquiring, repairing and reselling or renting the properties.” (SAC { 28).
26 Additionally, Plaintiff's conspiracy to commit fraud/deceit cause of action states “As a proximate
27 result of the conspiracy and conduct of the all DEFENDANTS as herein alleged, PLAINTIFF
28 sustained monetary damage in a sum according to proof.” (SAC { 32). Contrary to Defendants
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
argument, Plaintiff has specifically alleged damages in each fraud-based cause of action. Given the
clear failure of each of Defendants’ arguments, this demurrer must be denied.
Cc Plaintiff has Sufficiently Pleaded its Fraud and Conspiracy Causes of Action
Defendants next argue in their moving papers that Plaintiffs SAC fails to provide the
necessary facts to withstand a demurrer attack. This is a boilerplate attack which is argued by every
defendant in a fraud litigation. Although it is true that a fraud cause of action requires a heightened
pleading standard, this standard “is relaxed when it is apparent from the allegations that the
defendant necessarily possesses the knowledge of the facts.” (Quelimane v. Stewart Title Guaranty
Co, (1998) 19 Cal.4" 26, 47. Also See Bradley v. Harford Ace. & Indem. Co., (1973) 30 Cal.App.3d
818, 825. Less specificity is required when “it appears from the nature of the allegations that the
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defendant must necessarily possess full information concerning the facts of the controversy.” (Id).
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Obviously, the nature of the allegations of Plaintiff's SAC shows that Defendants possess the
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knowledge of facts necessary to understand the allegations of the causes of action against each of
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them. Each named defendant must know what part they played in diverting the purchase of
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properties from Plaintiff to Defendants.
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Additionally, Defendants cite Lazar v. Superior Court, (1996) 12 Cal. 4th 631 in support of
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their claim lack of specificity in pleading. Defendants incorrectly argue that in alleging fraud against
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a corporation an “even greater” burden exists than alleging fraud against an individual. This
18 assertion by Defendants is patently incorrect. The Court in Lazar dealt with a former employee
19 suing a former employer for fraud and other causes of action. The Court found “A plaintiff's burden
20 in asserting a fraud claim against a corporate employer is even greater” than a typical fraud case.
21 (Id. at 645). However, in the present litigation Plaintiff is not suing a former employer. The Court
22 in Hisun Motors Corp., U.S.A. v. Auto. Testing & Dey. Servs., 2012 U.S. Dist. LEXIS 27560 dealt
23 with a similar argument where a party attempted to apply Lazar to a fraud cause of action against a
24 non-employer. The Court in Hisun found that since Hisun was not an employee who was alleging
25 fraud against a corporate employer, the Lazar standard does not apply. It has been established the
26 “even greater” burden of alleging fraud only exists in employee/employer fraud cases. Therefore,
Defendant’s argument on this issue must fail.
27
Since the filing of the present motion, three and a half years have passed, and extensive
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO.
PLAINTIFF’S SECOND AMENDED COMPLAINT
discovery has been conducted in the 2014 action. This discovery includes numerous depositions,
dozens of subpoenas and over 200,000 documents exchanged. As a result, Plaintiff has substantially
more information to further identify each Defendant’s role in the fraudulent scheme. If the Court
deems the SAC deficient in any manner, Plaintiff requests leave to amend the complaint to provide
further specificity.
D. Plaintiff has Sufficiently Pleaded its Accounting Cause of Action.
A complaint sufficiently states a cause of action in equity for an accounting by alleging (1)
a relationship between the parties or other circumstances that require an accounting in equity (or, in
other words. circumstances showing that legal remedies are inadequate); and (2) that an unknown
balance is due that cannot not be ascertained without an accounting, the means of which are within
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the knowledge of the defendant (Whann vy. Doell (1923) 192 Cal. 680, 684; Kritzer vy, Lancaster
11
(1950) 96 Cal. App. 2d 1, 7). Defendants argue that Plaintiff's accounting cause of action fails
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because “CEMG has not and cannot allege facts to show a relationship between it and the non-agent
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defendants. However, once again Defendants are seeking the have the Court decide their demurrer
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based upon an improper standard of law. An alternative ground for establishing that legal remedies
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are inadequate exists when accounts are so complicated that an ordinary legal action demanding a
16 fixed sum is impracticable. Thus, an accounting cause of action may be sought in such cases when
17 there is no fiduciary relationship between the parties (Civic Western Corp. v. Zila Industries, Inc.
18 (1977) 66 Cal. App. 3d 1, 14). Thus, a party is permitted to allege an accounting cause of action
19 against another party despite the absence of a fiduciary relationship in a complex case such as this.
20 Similarly, Defendants’ claim that Plaintiff's accounting cause of action contains conclusory
21 claims due to Plaintiffs assertion that the amount of money due is unknown and cannot be
22 ascertained without an accounting fails to have any legal support. A claim for accounting requires
23 that a party not be able to determine the exact balance due from the pleadings. A complaint does
24 Not state a cause of action for accounting if all the facts necessary for the calculation of the amount
sought are either alleged in the pleadings or can be alleged in supplemental pleadings (see Kinley v.
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Thelen (1910) 158 Cal. 175, 183; St. James Church v. Superior Court (1955) 135 Cal. App. 2d 352,
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359). How can Plaintiff possibly know what its damages are until Defendants account for their
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purchase price. rehabilitation costs of the various properties and the resale price. If Plaintiff was
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
able to provide non-general terms of these amounts from Defendants, a calculation would be able
to be ascertained and an accounting cause of action would not be necessary. However, there is no
way to attain this information until Defendants disclose the needed numbers.
Contrary to Defendants’ assertions, a Plaintiff does not have to decide to proceed on either
a fraud cause of action or an accounting cause of action and both may be maintained. The Court in
Teselle v. McLoughlin, (2009) 173 Cal. App. 4th 156, as well and numerous other California cases,
have permitted a party to maintain these two distinct causes of action not only past the demurrer
stage but also past the motion for summary judgment stage. In fact, a cause of action for accounting
may properly be based on a breach of fiduciary duty; circumstances where the accounts were
complicated; and fraud. “These are proper grounds for an accounting. (Smith v. Blodget (1921) 187
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Cal. 235, 242 [fiduciary relationship]; Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.
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App. 3d 1, 14 [complicated accounts when there is a dispute as to whether money is
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owed]; Fairbairn y. Fairbairn (1961) 194 Cal. App. 2d 501, 513 [fraud].” Union Bank v. Superior
13
Court, (1995) 31 Cal. App. 4th 573, 593). Plaintiff's accounting cause of actions contains each of
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these elements. Therefore, Defendants’ motion must fail.
15 E. The Present Litigation Should be Abated Until the Conclusion of the 2014 Litigation
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Plaintiff agrees with Defendants’ argument that the present action should be abated until
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the 2014 action is concluded. Pursuant to Plaintiff's Fourth Amended Complaint in the 2014
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Litigation (filed in 2019), many of the properties in the 2017 Litigation are now present in the
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2014 Litigation. All Defendants in the 2014 litigation have filed answers to the Fourth Amended
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Complaint and the case is at issue. The parties have agreed to abate/continue the present litigation
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and the present motion for the last three and a half years while proceeding in the 2014 litigation.
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The 2014 litigation had a trial date of June 2020, but it was forced to be continued due to the Court
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ordered stay and other issues. With a September 28, 2021 trial date in the 2014 Litigation, the
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Court should maintain this litigations status quo and abate this action until resolution of the 2014
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Litigation.
26 Iv.
CONCLUSION
27 For all the reasons set forth above, Defendants’ Demurrer to each of the challenged causes
28 of action should be overruled. Plaintiff additionally requests this litigation be abated until the
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
PLAINTIFF’S SECOND AMENDED COMPLAINT
1 conclusion of the 2014 Litigation.
> FIR
2 Dated: March 16, 2021 DYER
By LD Lip
in JADyer
Attomeys for P laintiff,
Capital Equity Management Group, Inc
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MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO
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Dyer Law Firm Michael J. Dyer, #109297 Dustin J. Dyer, #274308 5250 Claremont Ave., Ste. 119 Stockton, CA 95207 Telephone: (209) 472-3668 Facsimil (209) 472-3675 Email: ddverg-dyerlawlirm.com Electronically Filed McCormick, Barstow, Sheppard, Wayte & Carruth LLP 3/17/2021 4:53 PM D. Greg Durbin, #81749 Superior Court of California we durhinamecormickbarstow.com AU County of Stanislaus Scoit J . Ivy, #197681 Clerk of the Court scold mecormickharstow. com By: Christine Zulim, Deputy Paul R. Gaus, #319979 paul. gaus‘qanccormicharstow, com 7647 North Fresno Street 10 Fresno, California 93720 Telephone: (559) 433-1300 lL Facsimile: (559) 433-2300 12 Attorneys for Plaintiff Capital Equity Management Group, Inc. 13 14 SUPERIOR COURT OF THE STATE OF CALIFORNIA 15 COUNTY OF STANISLAUS 16 CAPITAL EQUITY MANAGEMENT Case No. 2023519 GROUP, INC., 17 COMBINED MEMORANDUM OF POINTS Plaintiff, AND AUTHORITIES IN OPPOSITION TO 18 DEFENDANTS RICK CLEMENTS, JAMEE v LYNN CLEMENTS, SWAN 19 CONSTRUCTION, SWAN INVESTMENTS, STEVEN A. SWANGER, et al., INC., SWANGER PROPERTIES, LLC, 20 NORTHERN CALIFORNIA Defendants. INVESTMENTS, LP AND RICK 21 NORTHCUTT’S DEMURRER TO PLAINTIFF’S SECOND AMENDED 22 COMPLAINT AND EACH DEFENDANT'S. JOINDER TO SAID DEMURRER. 23 Hearing Date: April 1, 2021 24 Hearing Time: 8:30 a.m. Judge: Hon. John R. Mayne 25 Dept.: 21 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT INTRODUCTION The present demurrer was filed in September of 2017 by the above stated Defendants’ former counsel. Over the last three and a half years, the parties to the present litigation have agreed to have the present litigation be placed on hold while the accompanying litigation filed in 2014 (Stanislaus County Case No. 2009158; hereinafter “2014 Litigation”) proceeded. This complied with Defendants’ position that “this action must be abated as a matter of right”. (Defendant P&As Pg. 6: 9-10), Plaintiff has attempted to contact Defendants” counsel to continue the agreement to abate the litigation until resolution of the Litigation 2014, which begins trial on September 28, 2021. To date, Plaintiff has been unable to reach Defendants’ counsel. 10 Unlike the accompanying Swanger Demurrer which only presents a statute of limitations VW argument, the present demurrer is based upon several separate legal issues. 12 Defendants first argument in support of demurrer is that “CEMG Cannot Allege Here That 13 Defendants Caused It To Suffer Damages” (Clements Demurrer P& As 1:4). This argument is barred 14 given that Defendants have failed to present the argument in their two prior demurrers. Additionally, 15 Defendants are improperly attempting to stretch their flawed interpretation of two paragraphs of a 16 2015 Federal RICO Complaint into a demurrer defense in the present litigation. Defendants brazenly 17 and inaccurately argue that “CEMG does not specifically allege damages in its fraud-based causes 18 of action...” (Defendants’ P&As Pg. 5:16-17).Plaintiff’s fraud cause of action states “As a direct 19 and proximate result PLAINTIFF suffered damages for lost profits that it would have made by 20 acquiring, repairing and reselling or renting the properties.” (Second Amended Complaint 28 21 hereinafter “SAC”). Additionally, Plaintiffs conspiracy to commit fraud/deceit cause of action 22 states “As a proximate result of the conspiracy and conduct of the all DEFENDANTS as herein 23 alleged, PLAINTIFF sustained monetary damage in a sum according to proof.” (SAC {| 32). 24 Defendants’ second argument is that Plaintiff's fraud cause of action fails to provide the 25 requisite specificity. Defendants failed on a similar argument in the 2014 Litigation. The SAC, adds 26 an additional nine paragraphs of factual allegations in support of the each of the remaining causes 27 of action. These detailed allegations put each Defendant on notice of definite charges of fraud which 28 1 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’*S SECOND AMENDED COMPLAINT can be intelligently met, and show an existing economic relationship. CEMG requests this Court to overrule Defendants’ demurrer. Although it is true that a fraud cause of action requires a heightened pleading standard, this standard “is relaxed when it is apparent from the allegations that the defendant necessarily possesses the knowledge of the facts.” (Quelimane v. Stewart Title Guaranty Co. (1998) 19 Cal.4" 26, 47, Also See Bradley v. Harford Ace. & Indem. Co., (1973) 30 Cal.App.3d 818, 825. Given the increase specificity of the Second Amended Complaint and the relaxed standard based upon Defendants knowledge, Defendants’ demurrer must fail. Finally, Defendants argue that an accounting cause of action should be barred because it is duplicative of Plaintiff's tort and contract claims and fails to show a relationship between Plaintiff 10 and Defendants. In order to make this argument. Defendants misstate and misinterpret California ll law. Contrary to Defendants’ argument, Plaintiff's accounting cause of action is both sufficiently 12 pleaded and fully actionable against all Defendants. 13 Given the above stated arguments, Defendants demurrer must fail. However, if the Court 14 determines that the SAC is deficient in any manner, Plaintiff requests leave to amend the complaint 15 to cure any such stated deficiency. 16 ILSUMMARY OF FACTS 17 1, CEMG and the Agent Defendants 18 CEMG at all time mentioned was in the business of buying, repairing and selling distressed 19 California properties for a profit. (SAC, 1.) Defendants Steven Swanger, Kenneth Swanger, 20 Brenda Gillum, Rick Clements, Jamie Lynn Clements, Mark Tillotson, Mary Rose Carter and 21 William Keith Carter (the “Agent Defendants”) were agents of CEMG who were tasked with identifying, evaluating, acquiring at auctions and private sales, rehabilitating and them preparing 22 for sale distressed properties on behalf of CEMG. (SAC, § 2.) 23 24 2. Defendants’ Scheme 25 CEMG’s claims arise out of Defendants’ fraudulent and wrongful scheme of diverting 26 distressed real properties that CEMG would otherwise have purchased in the ordinary course of 27 business (the “Diverted Properties”), to themselves to purchase, rehabilitate and sell for a profit 28 and thereby deprive CEMG of the benefit of the use of its information and processes and the fruits 2 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT of the efforts of CEMG’s agents, including the Agent Defendants. (SAC, {ff 10-11.) A list of more than 200 Diverted Properties is attached to the SAC. (SAC, Exhibit A). The scheme required both participants who were working for CEMG (the Agent Defendants) and other participants (the Non-Defendants) who supplied money to purchase and repair the Diverted Properties and took. title to the Diverted Properties and transferred such title among themselves and to third-party buyers as part of concealing from CEMG the scheme and the profits Defendants derived therefrom. (SAC, §§ 10-11.) Under the scheme, the Agent Defendants gathered information, evaluated properties for CEMG, attended the auctions and private sales as CEMG’s agents, and were supposed to make bids at the auctions and private sales on CEMG’s behalf. to acquire the properties for CEMG. 10 Instead the Agent Defendants did not bid on behalf of CEMG but purchased and aided other ll Defendants in purchasing the properties, rehabilitating then and reselling them for a profit. (SAC, 12 4 10-11.) 13 The Agent Defendants fraudulently diverted the Diverted Properties away from CEMG 14 and to themselves and the other defendants. (SAC, §] 19-22, 23-29.) Throughout the scheme, the 15 Agent Defendants did not disclose to and concealed from CEMG material facts such as the 16 distressed properties they were aware of that CEMG would have in the ordinary course of business 17 evaluated and sought to purchase, and that the Diverted Properties were purchased by one of the 18 Defendants in cooperation with the Agent Defendants. (SAC, ff 19-22, 23-29.) 19 The Agent Defendants concealed and did not disclose the true facts with the intent to 20 induce CEMG to continue to provide the Agent Defendants with access to CEMG’s confidential 21 information, processes and personnel, to continue to have the Agent Defendants participate in the 22 auctions and sales supposedly on behalf of CEMG, to not participate in such auctions and sales 23 through individuals who were not a part of the scheme, and to cover up the scheme. (SAC, §f 19- 24 22, 23-29.) 25 3. Continuing Concealment of the Diversion Scheme and Fraud 26 Defendants agreed to and did actively conceal their diversion of the Diverted Properties 27 from CEMG in order to keep their profits and benefits from the scheme and to avoid CEMG 28 taking actions on such diversions. (SAC, 4 11.) For example, the Swanger Defendants (Steve 3 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT Swanger, Kenneth Swanger and Brenda Gillum) told Plaintiff's officers that each of the diverted properties sold for a price above the amount Plaintiff set as a maximum bid price. (SAC § 11). “Thus. all defendants agreed to conceal from Plaintiff the disclosure of its confidential information by SWANGERS. and/or TILLOTSON, and/or GILLUM to all other defendants. the actual purchase price of the diverted properties, the identity of the actual purchaser of each property diverted and the source of funds used to purchase each property. Defendants knew that given the fact that thousands of properties were considered for purchase by Plaintiff. Plaintiff would not discover the diversion so long as some properties were purchased as planned for Plaintiff and all defendants concealed the use of the confidential information and concealed the purchase of diverted properties. (SAC { 11). On or about November 10, 2014, Plaintiff filed its initial complaint in the 2014 Litigation. At the time Plaintiff filed the 2014 litigation, it was Plaintiff's belief that all diverted properties of 10 Defendants” scheme were discovered. Unbeknownst to Plaintiff, there were hundreds of properties il which Defendants were actively concealing. The filing of the 2014 Litigation complaint did not 12 stop Defendants’ coordinated active concealment of the facts from Plaintiff. In December of 2015, 13 the Castleberry Defendants (George Castleberry, Richard Castleberry, Norcal Redevelopment 14 Corp.) held a meeting with Plaintiff in which the Castleberry Defendants and their counsel 15 knowingly misrepresented to Plaintiff that they were only involved in four properties with the 16 Swanger Defendants and Northeutt. (SAC §{ 16-17). In 2016, a former Defendant in the 2014 17 Litigation, Wiley Chandler, broke away from the other Defendants and identified that the 18 remaining Defendants were actively concealing several properties from Plaintiff and provided 19 Plaintiff with avenues to discover the full breath of Defendants’ scheme. (SAC 4 18). As a result 20 of these communications with Chandler and subsequent discovery, Plaintiff uncovered the 21 additional properties which are attached to Plaintiff SAC as Exhibit A. (SAC § 18). Following the 22 discovery of these properties, Plaintiff filed the present litigation (“2017 Litigation”) on February 23 3, 2017. 24 In the present litigation, Mark Tillotson appeared for a deposition on August 10, 2017. During the deposition, he identified only two properties in which he participated in the purchase 25 with other Defendants. (See RJN # 2). However, during discovery in the 2014 Litigation it became 26 apparent that Defendant Tillotson was not truthful in his testimony and that at least four additional 27 properties were purchased by him through his entity Neverland Equities, LLC (RJN # 3). The 28 4 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT 2014 Litigation has uncovered numerous additional efforts to conceal information and properties from Plaintiff. This information has been uncovered through extensive written and oral discovery. It. LEGAL ARGUMENT A The Standards Defendants Must Meet To Support A Demurrer. The court must assume that the “complaint’s properly pleaded material allegations are true and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their context.” Moore v. Regents of Univ. of Cal.(1990) 51 Cal.3d 120, 150), Zelig v County of Los Angeles (2002) 27 Cal. 4" 1112, 1126 [same]. In passing on the sufficiency of a pleading, its allegations must be liberally construed with view to substantial justice between parties. AZ G. Chamberlain & Co. v. Simpson (1959) 173 Cal. App. 2d 263, 267 (Emphasis added). A demurrer 10 cannot properly be based on evidence or other extrinsic matters, and a defendant is not permitted to 11 allege facts in his demurrer which, if true, would make complaint vulnerable. Cravens v. Coghlan 12 (1957) 154 Cal. App. 2d 215, 218. 13 B. Each of Plaintiff's Causes of Action, Including the Fraud-Based Causes of Action 14 Provide Proper Allegations that Plaintiff Suffered Damages as a Result of Defendants’ Bad Acts 15 Defendants first argue that “CEMG Cannot Allege Here That Defendants Caused It To 16 Suffer Damages” (Demurrer P&As 1:4). In this argument Defendants assert that Plaintiff cannot 17 allege damages because Plaintiff's 2015 Federal Lawsuit bars such a claim. Defendants additionally 18 argue that “CEMG does not specifically allege damages in its fraud-based causes of action...” 19 (Demurrer P& As 5:16-17), 20 This argument is barred given that Defendants have failed to present the argument in their 21 two prior demurrers. (CCP § 430.41(b); also see O'Callaghan v. Bode, (1890) 84 Cal. 489). 22 Defendants have filed a demurrer to both the Initial Complaint and the First Amended Complaint. 23 In each of their prior demurrers, Defendants have failed to present the argument that Plaintiff has 24 failed to properly allege damages. By failing to make the argument on prior demurrers, Defendants 25 have waived their rights to make such an argument in the present demurrer. 26 Additionally, Defendants argue that two paragraphs of a 2015 Federal RICO Complaint bar 27 Plaintiffs’ ability to allege damages in the present litigation. Defendants incorrectly summarize that 28 5 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT Plaintiff was forced out of the market in December of 2011 and thus cannot allege damages. This argument is flawed for numerous reasons. First, Plaintiffs damages as alleged in the SAC span from 2009 through 2013. (SAC § 9). Even if Defendants allegations were true that Plaintiff left the market in December 2011, Plaintiff's allegations demonstrate that it incurred damages at the very least from 2009 through 2011. Based on this fact alone the present motion must fail. Second, Defendant’s interpretation of the two paragraphs of the 2015 RICO Lawsuit are not accurate. The 2015 RICO Lawsuit demonstrates that it was more difficult for Plaintiff to continue in the market after the bad acts of Defendants; it does not however state that Plaintiff left the market. Plaintiff has consistently participated in the market since prior to 2009 and was not “driven out of the market after Katakis’ 10 indictment in 2011” (Clements Demurrer P&As 5:21-22). Given Defendants’ misinterpretation of lL the allegations of the 2015 RICO lawsuit, it is clear that the present litigation in not in conflict with 12 the 2015 RICO lawsuit. Finally, Defendants improperly attempt to invoke the “sham pleading” 13 doctrine by stating that the present lawsuit is contradictory to the 2015 RICO Lawsuit. However, 14 the two litigations’ allegations are not in conflict with each other as identified above. Additionally, 15 the “sham pleading” doctrine only applies to inconsistent pleadings in the same litigation. “While 16 a party may not allege inconsistent facts in his pleading in the same case, inconsistent allegations in 17 separate actions create, at the most, only "evidentiary admissions," which, if verified, can be used 18 by the adversary only to impeach the pleader or to rebut his contentions as unfounded in fact. The 19 inconsistency, no matter how glaring. is not a basis for a motion to strike or for a dismissal, (Katz 20 vy. Feldman, (1972) 23 Cal. App. 3d 500, 504; Witkin, Cal. Evidence (2d ed. 1966) §§ 501-503. pp. 21 472-474, (internal citations omitted)) As such, Defendant argument must fail. 22 Defendants argue that “CEMG does not specifically allege damages in its fraud-based causes 23 of action...” (Demurrer P&As 5:16-17). This argument is knowingly false. Plaintiff's fraud cause 24 of action states “As a direct and proximate result PLAINTIFF suffered damages for lost profits that 25 it would have made by acquiring, repairing and reselling or renting the properties.” (SAC { 28). 26 Additionally, Plaintiff's conspiracy to commit fraud/deceit cause of action states “As a proximate 27 result of the conspiracy and conduct of the all DEFENDANTS as herein alleged, PLAINTIFF 28 sustained monetary damage in a sum according to proof.” (SAC { 32). Contrary to Defendants 6 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT argument, Plaintiff has specifically alleged damages in each fraud-based cause of action. Given the clear failure of each of Defendants’ arguments, this demurrer must be denied. Cc Plaintiff has Sufficiently Pleaded its Fraud and Conspiracy Causes of Action Defendants next argue in their moving papers that Plaintiffs SAC fails to provide the necessary facts to withstand a demurrer attack. This is a boilerplate attack which is argued by every defendant in a fraud litigation. Although it is true that a fraud cause of action requires a heightened pleading standard, this standard “is relaxed when it is apparent from the allegations that the defendant necessarily possesses the knowledge of the facts.” (Quelimane v. Stewart Title Guaranty Co, (1998) 19 Cal.4" 26, 47. Also See Bradley v. Harford Ace. & Indem. Co., (1973) 30 Cal.App.3d 818, 825. Less specificity is required when “it appears from the nature of the allegations that the 10 defendant must necessarily possess full information concerning the facts of the controversy.” (Id). 11 Obviously, the nature of the allegations of Plaintiff's SAC shows that Defendants possess the 12 knowledge of facts necessary to understand the allegations of the causes of action against each of 13 them. Each named defendant must know what part they played in diverting the purchase of 14 properties from Plaintiff to Defendants. 15 Additionally, Defendants cite Lazar v. Superior Court, (1996) 12 Cal. 4th 631 in support of 16 their claim lack of specificity in pleading. Defendants incorrectly argue that in alleging fraud against 17 a corporation an “even greater” burden exists than alleging fraud against an individual. This 18 assertion by Defendants is patently incorrect. The Court in Lazar dealt with a former employee 19 suing a former employer for fraud and other causes of action. The Court found “A plaintiff's burden 20 in asserting a fraud claim against a corporate employer is even greater” than a typical fraud case. 21 (Id. at 645). However, in the present litigation Plaintiff is not suing a former employer. The Court 22 in Hisun Motors Corp., U.S.A. v. Auto. Testing & Dey. Servs., 2012 U.S. Dist. LEXIS 27560 dealt 23 with a similar argument where a party attempted to apply Lazar to a fraud cause of action against a 24 non-employer. The Court in Hisun found that since Hisun was not an employee who was alleging 25 fraud against a corporate employer, the Lazar standard does not apply. It has been established the 26 “even greater” burden of alleging fraud only exists in employee/employer fraud cases. Therefore, Defendant’s argument on this issue must fail. 27 Since the filing of the present motion, three and a half years have passed, and extensive 28 7 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO. PLAINTIFF’S SECOND AMENDED COMPLAINT discovery has been conducted in the 2014 action. This discovery includes numerous depositions, dozens of subpoenas and over 200,000 documents exchanged. As a result, Plaintiff has substantially more information to further identify each Defendant’s role in the fraudulent scheme. If the Court deems the SAC deficient in any manner, Plaintiff requests leave to amend the complaint to provide further specificity. D. Plaintiff has Sufficiently Pleaded its Accounting Cause of Action. A complaint sufficiently states a cause of action in equity for an accounting by alleging (1) a relationship between the parties or other circumstances that require an accounting in equity (or, in other words. circumstances showing that legal remedies are inadequate); and (2) that an unknown balance is due that cannot not be ascertained without an accounting, the means of which are within 10 the knowledge of the defendant (Whann vy. Doell (1923) 192 Cal. 680, 684; Kritzer vy, Lancaster 11 (1950) 96 Cal. App. 2d 1, 7). Defendants argue that Plaintiff's accounting cause of action fails 12 because “CEMG has not and cannot allege facts to show a relationship between it and the non-agent 13 defendants. However, once again Defendants are seeking the have the Court decide their demurrer 14 based upon an improper standard of law. An alternative ground for establishing that legal remedies 15 are inadequate exists when accounts are so complicated that an ordinary legal action demanding a 16 fixed sum is impracticable. Thus, an accounting cause of action may be sought in such cases when 17 there is no fiduciary relationship between the parties (Civic Western Corp. v. Zila Industries, Inc. 18 (1977) 66 Cal. App. 3d 1, 14). Thus, a party is permitted to allege an accounting cause of action 19 against another party despite the absence of a fiduciary relationship in a complex case such as this. 20 Similarly, Defendants’ claim that Plaintiff's accounting cause of action contains conclusory 21 claims due to Plaintiffs assertion that the amount of money due is unknown and cannot be 22 ascertained without an accounting fails to have any legal support. A claim for accounting requires 23 that a party not be able to determine the exact balance due from the pleadings. A complaint does 24 Not state a cause of action for accounting if all the facts necessary for the calculation of the amount sought are either alleged in the pleadings or can be alleged in supplemental pleadings (see Kinley v. 25 Thelen (1910) 158 Cal. 175, 183; St. James Church v. Superior Court (1955) 135 Cal. App. 2d 352, 26 359). How can Plaintiff possibly know what its damages are until Defendants account for their 27 purchase price. rehabilitation costs of the various properties and the resale price. If Plaintiff was 28 8 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT able to provide non-general terms of these amounts from Defendants, a calculation would be able to be ascertained and an accounting cause of action would not be necessary. However, there is no way to attain this information until Defendants disclose the needed numbers. Contrary to Defendants’ assertions, a Plaintiff does not have to decide to proceed on either a fraud cause of action or an accounting cause of action and both may be maintained. The Court in Teselle v. McLoughlin, (2009) 173 Cal. App. 4th 156, as well and numerous other California cases, have permitted a party to maintain these two distinct causes of action not only past the demurrer stage but also past the motion for summary judgment stage. In fact, a cause of action for accounting may properly be based on a breach of fiduciary duty; circumstances where the accounts were complicated; and fraud. “These are proper grounds for an accounting. (Smith v. Blodget (1921) 187 10 Cal. 235, 242 [fiduciary relationship]; Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal. 11 App. 3d 1, 14 [complicated accounts when there is a dispute as to whether money is 12 owed]; Fairbairn y. Fairbairn (1961) 194 Cal. App. 2d 501, 513 [fraud].” Union Bank v. Superior 13 Court, (1995) 31 Cal. App. 4th 573, 593). Plaintiff's accounting cause of actions contains each of 14 these elements. Therefore, Defendants’ motion must fail. 15 E. The Present Litigation Should be Abated Until the Conclusion of the 2014 Litigation 16 Plaintiff agrees with Defendants’ argument that the present action should be abated until 17 the 2014 action is concluded. Pursuant to Plaintiff's Fourth Amended Complaint in the 2014 18 Litigation (filed in 2019), many of the properties in the 2017 Litigation are now present in the 19 2014 Litigation. All Defendants in the 2014 litigation have filed answers to the Fourth Amended 20 Complaint and the case is at issue. The parties have agreed to abate/continue the present litigation 21 and the present motion for the last three and a half years while proceeding in the 2014 litigation. 22 The 2014 litigation had a trial date of June 2020, but it was forced to be continued due to the Court 23 ordered stay and other issues. With a September 28, 2021 trial date in the 2014 Litigation, the 24 Court should maintain this litigations status quo and abate this action until resolution of the 2014 25 Litigation. 26 Iv. CONCLUSION 27 For all the reasons set forth above, Defendants’ Demurrer to each of the challenged causes 28 of action should be overruled. Plaintiff additionally requests this litigation be abated until the 9 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT 1 conclusion of the 2014 Litigation. > FIR 2 Dated: March 16, 2021 DYER By LD Lip in JADyer Attomeys for P laintiff, Capital Equity Management Group, Inc 10 ll 122 13 14 < 15 16 17 18 19 20 221 22 22 23 24 25 26 27 28 10 MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF*°S SECOND AMENDED COMPLAINT