Preview
Electronically Filed
2/6/2020 11:57 AM
WILLIAM H. PARISH, PC
Superior Court of California
William H. Parish (State Bar No. 95913)
parish@parishlegal.com County of Stanislaus
David M. Austin (State Bar No. 215371) Clerk of the Court
daustin@parishlegal.com By: Sabrina Bouldt, Deputy
1919 Grand Canal Boulevard, Suite A-5
Stockton, California 95207-8114
Telephone: (209) 952-1992
Facsimile: (209) 952-0250
Attorneys for Defendants
NORCAL REDEVELOPMENT CORP., RICHARD CASTLEBERRY,
and GEORGE CASTLEBERRY
KDH LAW
Kurt D. Hendrickson (State Bar No. 251509)
kurt@kdhendrickson.com
2101 Stone Boulevard, Suite 120
10 West Sacramento, CA 95691-4056
Telephone: (916) 993-5226
11
Attorneys for Defendants
2% 12
ge STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA
13 GILLUM, RICK CLEMENTS, JAMIE LYNN CLEMENTS, SWAN
Es
CONSTRUCTION, SWAN INVESTMENTS, INC., SWANGER
PROPERTIES, LLC; NORTHERN CALIFORNIA INVESTMENTS,
L.P., and RICHARD NORTHCUTT
ae
16 SUPERIOR COURT OF CALIFORNIA
17 COUNTY OF STANISLAUS
18 CAPITAL EQUITY MANAGEMENT GROUP, Case No. 2023519
INC.,
19 JOINT AND PARTIAL OPPOSITION TO
20
Plaintiff, PLAINTIFF’S MOTION FOR ABATEMENT
VS. OF THE CURRENT ACTION, INCLUDING
21 THE PENDING DEMURRERS, UNTIL
STEVEN A. SWANGER; ET AL., DETERMINATION OF STANISLAUS
22 SUPERIOR COURT CASE NO.: 2009158
Defendants.
23
24 Date: February 20, 2020
Time: 8:30 a.m.
25 Dept.: 21
Judge: Hon. Marie S. Silveira
26
27
28
1
JOINT AND PARTIAL OPPOSITION TO PLAINTIFFS MOTION FOR ABATEMENT OF THE CURRENT ACTION
Defendants NORCAL REDEVELOPMENT CORP., RICHARD CASTLEBERRY, GEORGE
CASTLEBERRY, STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA GILLUM, RICK
CLEMENTS, JAMIE LYNN CLEMENTS, SWAN CONSTRUCTION, SWAN INVESTMENTS,
INC., SWANGER PROPERTIES, LLC; NORTHERN CALIFORNIA INVESTMENTS, L.P., and
RICHARD NORTHCUTT (“Defendants”) jointly oppose Plaintiff CAPITAL EQUITY
MANAGEMENT GROUP, INC. (“Plaintiff’)’s Motion for Abatement of the Current Action, Including
the Pending Demurrers, Until Determination of Stanislaus Superior Court Case No.: 2009158 on the
following grounds:
1 Plaintiff lacks standing to make this motion. Abatement of an action because “another
10 action [is] pending between the same parties on the same cause” is a defect appearing on the face of a
11 complaint or from judicially noticeable matters. (Code Civ. Proc. § 430.10(c); see also Cal. Prac. Guide
2% 12 Civ. Pro. Before Trial (Rutter Group 2019) 4 3:123.60.) It is, therefore, a ground for a defendant’s
13 demurrer. (/bid.) Alternatively, a defendant may assert a plea in abatement may as an affirmative
Gs
defense if factual issues need to be resolved. (Code Civ. Proc. § 597; see also 5 Witkin, California
SSS zg
Procedure (11th Ed. (Supp.) 2019) § 1138.) In fact, the objection is waived if not asserted at the first
ze
ae Ba
16 opportunity. (Martin v. Pacific Southwest Royalties (1940) 41 C.A.2d 161, 171; 5 Witkin, supra, §
17 1138.) Plaintiff cannot demur to or answer its own complaint so the instant motion is improper.
18 Furthermore, Defendants have raised this objection by demurrer so Plaintiff's motion is also
19 unnecessary.
20 2 The court should dismiss this action rather than merely staying it. A party asserting a
21 plea in abatement “may obtain a trial court ruling on the issue by a motion to dismiss or abate or a motion
22 for summary judgment. (People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4th
23 760, 771 [internal citations omitted].) Here, the only substantive difference between Plaintiff's claims
24 in this case and those it asserts in Case No. 2009158 is that after filing the earlier case, Plaintiff
25 discovered “numerous additional distressed properties not previously listed in the 2014 Action.”
26 (Memorandum of Points and Authorities in Support of Motion for Abatement of the Current Action,
27 Including the Pending Demurrers, Until Determination of Stanislaus Superior Court Case No.: 2009158
28 p. 2:24-25.) The number of properties Defendants allegedly diverted from Plaintiff
in the course of their
2
JOINT AND PARTIAL OPPOSITION TO PLAINTIFFS MOTION FOR ABATEMENT OF THE CURRENT ACTION
supposed conspiracy is only relevant to the extent of Plaintiff's damages, not whether Plaintiff has a
substantive claim arising out of each act of diversion. Accordingly, this action is entirely duplicative of
the “2014 Action” and should be dismissed “in the interest of judicial economy” as Plaintiff asserts as
the primary reason for its motion.! Because Plaintiff's claims in both actions are substantively identical
in terms of liability, any relief it seeks in this case could be obtained in the 2014 Action, dismissing this
action would obviate the need for the same parties and the same witnesses to participate in discovery
and trial in two different cases concerning nearly identical issues.
3 To the extent that the court is disinclined abate this action via dismissal, Defendants
respectfully request that the court rule on their pending demurrers to Plaintiff's Second Amended
10 Complaint. If the court sustains those demurrers without leave to amend, this case effectively would be
11 over. If it overrules them, or sustains them with leave to amend, the court would provide much needed
2% 12 guidance to the parties regarding the viability of Plaintiff's claims and, correspondingly, the direction
13 this action will take once any stay in abatement is lifted.
Ekoe
5s
Os
215 DATED: February 6, 2020 WILLIAM H. PARISH, P.C.
ze
ae Ba
16
17
By, LM M hae
WILLIAM H. PARISH
DAVID M. AUSTIN
18 Attorneys for Defendants
NORCAL REDEVELOPMENT CORP., RICHARD
19 CASTLEBERRY, and GEORGE CASTLEBERRY
20 DATED: February 6, 2020 kD
21
By,
1)
22 KURT D. HENDRICKSON
Attorneys for Defendants
23 STEVEN A. SWANGER, KENNETH A.
SWANGER, BRENDA GILLUM, RICK
24 CLEMENTS, JAMIE LYNN CLEMENTS, SWAN
CONSTRUCTION, SWAN INVESTMENTS, INC.,
25 SWANGER PROPERTIES, LLC; NORTHERN
CALIFORNIA INVESTMENTS, L.P., and
26 RICHARD NORTHCUTT
27 ' A matrix demonstrating the substantial overlap between the core allegations that Plaintiff has made in the two actions is
attached to this Opposition as Exhibit 1. Defendants previously submitted and authenticated the contents of Exhibit | in
28 connection with their Memorandum of Points and Authorities in Support of Demurrer to Plaintiff's Amended Complaint
filed in this action on June 9, 2017.
3
JOINT AND PARTIAL OPPOSITION TO PLAINTIFFS MOTION FOR ABATEMENT OF THE CURRENT ACTION
this does not change the abatement analysis: This action must be abated because CEMG can (and
has) raised all of the same claims in the first suit. While it theoretically could join the new parties
in the 2014 case, as shown below, the limitations period has long since run on CEMG’s claims.
Il. BACKGROUND AND ALLEGATIONS OF THE COMPLAINT
A This Complaint Repeats The Allegations And Claims Made In A Nearly Identical
Complaint Filed In November 2014.
The First Amended Complaint in this 2017 case (“2017 FAC”) repeats allegations made by
CEMG in a November 2014 Complaint also filed in Stanislaus County, Case No. 2009158 (the
“2014 Complaint”), Request for Judicial Notice (““RJN”) Ex. 1. (To avoid unnecessary
10 duplication, Defendants will refer to the RJN filed on April 7, 2017, in connection with the initial
IL demurrer.) In both cases, CEMG alleges that defendants were supposed to work for CEMG in
12 buying distressed properties, but they secretly decided to buy certain properties for themselves. In
13 both cases, CEMG set out the core factual allegations in just a few paragraphs, using nearly
14 identical language to tell the same story:
15 Core Allegations in 2014 Complaint Core Allegations in 2017 FAC
16 9. In or about January 2009 through
6. In or about January 2009 through
\7 December 2013, in various counties December 2011, in various counties
throughout California Plaintiff engaged in the throughout California, including Stanislaus
18 County, Plaintiff engaged in the practice of
practice of buying distressed real estate
19 properties at various bank and/or buying distressed real estate properties at
governmental and/or private property sales various bank and/or governmental and/or
20 private property sales with the intent to
with the intent to acquire properties, repair
21 those properties and then resale them at a acquire the properties, repair those properties
profit or retaining such properties for long and then resale them at a profit or retaining
22 .. To this end PLAINTIFF such properties for long term rentals. .. To
term rentals.
23 researched numerous properties (Exhibit A this end Plaintiff researched numerous
attached hereto identifies the properties in properties (Exhibit A attached hereto
24 identifies the properties in question that are
question that are currently known by Plaintiff
25 .. .) identifying their current acquisition currently known by Plaintiff . . .) identifying
value, physical condition, title encumbrances, their current acquisition value, physical
26 condition, title encumbrances, repaired resale
repaired resale value and maximum bid price
27 in targeting the properties to be sought for value and maximum bid price in targeting the
purchase by Plaintiff. properties to be sought for purchase by
28
MEMO. OF POINTS & AUTHORITIES IN SUPPORT OF DEFENDANTS’ DEMURRER
2+
Exhibit 1
Core Allegations in 2014 Complaint Core Allegations in 2017 FAC
Plaintiff.
7. Defendants Swangers and Gillum were 10. Agent Defendants! were agents of
agents of Plaintiff tasked with seeking to Plaintiff tasked with seeking to purchase the
purchase the properties at the various actions properties at the various auctions and/or
and/or private sales using the Plaintiff's private sales using the Plaintiff's gathered
gathered research information including research information including, but not
maximum bid price. [D]efendant Clements limited to the “AS IS” value and repaired
and DOES 1-20 were agents of all other value of the property, rehabilitation costs,
defendants working on their behalf for in property condition, maximum bid price. [A]ll
concert with them secreting the purchase of Defendants were agents of all other
the properties on all Defendants behalf rather
defendants working on their behalf or in
than Plaintiff. Plaintiff instructed the concert with them secreting the purchase of
10 Individual Defendants which of the properties the properties on all Defendants behalf rather
to seek to buy at auctions and/or private sales than Plaintiff. Plaintiff instructed the Agent
Il
for the benefit of Plaintiff solely. Defendants which of the properties to seek to
12
buy at auctions and/or private sales for the
13 benefit of Plaintiff solely.
14 11. Throughout the period of 2009 to 2011
Messrs. Clements, Northcutt and.
15
Castleberrys had knowledge of the agency
16 relationship between Plaintiff and the Agent
Defendants. Despite this knowledge [they]
17
partnered with the Agent Defendants to
18 purchase properties in direct competition
with Plaintiff. Clements, Northcutt and
19
Castleberry knowingly accepted the
20 information wrongfully disseminated
information and research and used this
21
information to benefit themselves, at the
22 expense of Plaintiff.
23 8. Throughout the period of 2009 to 2012, 12. Throughout the period of 2009 to 2013,
24 all Defendants entered into a criminal all Defendants entered into a criminal
conspiracy to rig the bidding process of conspiracy to rig the bidding process of
25 properties in order to acquire the properties on properties in order to acquire the properties
26
' The 2017 Complaint defines the “Agent Defendants” as all of the individual defendants other
27 than Richard Northcutt, Rick Clements, George Castleberry, and Richard Castleberry. 2017 FAC,
99 2-3.
28
MEMO. OF POINTS & AUTHORITIES IN SUPPORT OF DEFENDANTS’ DEMURRER
3:
Exhibit 1
Core Allegations in 2014 Complaint Core Allegations in 2017 FAC
their own behalf rather than Plaintiff's. Under on their own behalf rather than Plaintiff's.
this scheme defendants Swangers, Gillum, Under this scheme defendants Agent
Clements, and DOES 1-20 attended the Defendants valued properties for Plaintiff,
auctions/private sales as Plaintiff's agents and attended the auctions/private sales as
were supposed to make bids at the Plaintiff's agents and were supposed to make
auction/private sales on Plaintiffs behalf up bids at the auction/private sales on Plaintiff's
to predetermined amounts in effort to acquire behalf up to predetermined amounts in effort
the properties for Plaintiff. Instead the to acquire the properties for Plaintiff. Instead
Individual Defendants made bids and bought Agent Defendants knowingly misstated the
the properties on behalf of one or more value and/or rehabilitation costs and/or
Defendants at or below the predetermined condition of properties to Plaintiff to increase
maximum bid price .... After acquiring the Plaintiff's maximum bid price, made bids and
10 properties the Individual Defendants told bought the properties on behalf of one or
Plaintiff's representative that the properties more Defendants at or below the
il went to third parties above the predetermined predetermined maximum bid price . . . . After
12 maximum bid price. acquiring the properties, the Agent
Defendants told Plaintiff's representative that
13 the properties went to third parties above the
14 predetermined maximum bid price and they
were unable to acquire the property. Asa
15 result of these numerous misrepresentations,
all Defendants benefitted financially.
16
17
9. Plaintiff, and its owners did not, and 13. Plaintiff first became aware of the
18 could not with the use of reasonable scheme related to properties identified in
19 discovery, learn of the scheme of Exhibit A through discovery related to a
Defendants until within the last year. criminal litigation in 2016. Given
20
Defendants fraudulent actions and
21 subsequent cover up, Plaintiff could not
have discovery the facts related to this
22
complaint earlier through reasonable
23 diligence.
24
25
CEMG asserts, based on this alleged scheme, the same causes of action in both the 2014
26
Complaint and the 2017 Complaint: (1) fraud and deceit; (2) conspiracy to commit fraud and
2
deceit; (3) breach of fiduciary duty; (4) accounting; (5) intentional interference of prospective
2:
MEMO. OF POINTS & AUTHORITIES IN SUPPORT OF DEFENDANTS’ DEMURRER
4.
Exhibit 1
PROOF OF SERVICE
Capital Equity Management Croup, Inc. v. Swanger; et al.
Stanislaus Count County Superior Court, Case No. 2023519
I hereby certify that I am a citizen of the United States, over the age of eighteen years, and not a
party to the within action. My business address is 1919 Grand Canal Boulevard, Suite A-5, Stockton,
California, 95207, which is located in the county where the service described below occurred.
On this date, February 6, 2020, I served the foregoing document entitled:
JOINT AND PARTIAL OPPOSITION TO PLAINTIFF’S MOTION FOR ABATEMENT OF
THE CURRENT ACTION, INCLUDING THE PENDING DEMURRERS, UNTIL
DETERMINATION OF STANISLAUS SUPERIOR COURT CASE NO.: 2009158
I served the document on:
10 VIA FIRST CLASS USPS MAIL VIA FIRST CLASS USPS MAIL
and EMAIL Jennifer Hane
ll Attorneys for Plaintiff United States Department of Justice
Mr. Dustin J. Dyer 450 Golden Gate Avenue, Room 10-0101
12 DYER LAW FIRM San Francisco, CA 94102-3478
5250 Claremont Avenue, Suite 119
13
agg Stockton, CA 95207
Ose
>is
VIA FIRST CLASS USPS MAIL
zee 315 Attorneys for Defendant Mark Tillotson
Sogzs
aos
naa3 Mr. Gerald Brunn
as
16 LAW OFFICES OF BRUNN & FLYNN
928 12" Street, Suite 200
17
Modesto, CA 95354
18
19 {1 FIRST CLASS USPS MAIL: by enclosing the documents in a sealed envelope with postage
thereon fully prepaid, into a box designated by my employer for collection and processing of
20 correspondence for mailing with the United States Postal Service, addressed as set forth below.
I am readily familiar with the business practices of my employer, PARISH GUY CASTILLO,
21
PC, for the collection and processing of correspondence for mailing with the United States Postal
22 Service. Under that practice, the correspondence placed in the designated box is deposited with
the United States Postal Service at Stockton, California, the same day in the ordinary course of
23 business.
24 EMAIL/ELECTRONIC TRANSMISSION: by transmitting a true copy thereof to be transmitted
via electronic mail based on a court order or an agreement of the parties to accept service by e-mail
25 or electronic transmission, I caused the documents to be sent to the persons at the e-mail addresses
listed above. I did not receive, within a reasonable time after the transmission, any electronic
26 message or other indication that the transmission was unsuccessful.
27
I declare under penalty of perjury under the laws of the State of California that the foregoing is
28
true and correct.
5
JOINT AND PARTIAL OPPOSITION TO PLAINTIFF’S MOTION FOR ABATEMENT OF THE CURRENT ACTION
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JOINT AND PARTIAL OPPOSITION TO PLAINTIFF?S MOTION FOR ABATEMENT OF THE CURRENT ACTION
Preview
Electronically Filed 2/6/2020 11:57 AM WILLIAM H. PARISH, PC Superior Court of California William H. Parish (State Bar No. 95913) parish@parishlegal.com County of Stanislaus David M. Austin (State Bar No. 215371) Clerk of the Court daustin@parishlegal.com By: Sabrina Bouldt, Deputy 1919 Grand Canal Boulevard, Suite A-5 Stockton, California 95207-8114 Telephone: (209) 952-1992 Facsimile: (209) 952-0250 Attorneys for Defendants NORCAL REDEVELOPMENT CORP., RICHARD CASTLEBERRY, and GEORGE CASTLEBERRY KDH LAW Kurt D. Hendrickson (State Bar No. 251509) kurt@kdhendrickson.com 2101 Stone Boulevard, Suite 120 10 West Sacramento, CA 95691-4056 Telephone: (916) 993-5226 11 Attorneys for Defendants 2% 12 ge STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA 13 GILLUM, RICK CLEMENTS, JAMIE LYNN CLEMENTS, SWAN Es CONSTRUCTION, SWAN INVESTMENTS, INC., SWANGER PROPERTIES, LLC; NORTHERN CALIFORNIA INVESTMENTS, L.P., and RICHARD NORTHCUTT ae 16 SUPERIOR COURT OF CALIFORNIA 17 COUNTY OF STANISLAUS 18 CAPITAL EQUITY MANAGEMENT GROUP, Case No. 2023519 INC., 19 JOINT AND PARTIAL OPPOSITION TO 20 Plaintiff, PLAINTIFF’S MOTION FOR ABATEMENT VS. OF THE CURRENT ACTION, INCLUDING 21 THE PENDING DEMURRERS, UNTIL STEVEN A. SWANGER; ET AL., DETERMINATION OF STANISLAUS 22 SUPERIOR COURT CASE NO.: 2009158 Defendants. 23 24 Date: February 20, 2020 Time: 8:30 a.m. 25 Dept.: 21 Judge: Hon. Marie S. Silveira 26 27 28 1 JOINT AND PARTIAL OPPOSITION TO PLAINTIFFS MOTION FOR ABATEMENT OF THE CURRENT ACTION Defendants NORCAL REDEVELOPMENT CORP., RICHARD CASTLEBERRY, GEORGE CASTLEBERRY, STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA GILLUM, RICK CLEMENTS, JAMIE LYNN CLEMENTS, SWAN CONSTRUCTION, SWAN INVESTMENTS, INC., SWANGER PROPERTIES, LLC; NORTHERN CALIFORNIA INVESTMENTS, L.P., and RICHARD NORTHCUTT (“Defendants”) jointly oppose Plaintiff CAPITAL EQUITY MANAGEMENT GROUP, INC. (“Plaintiff’)’s Motion for Abatement of the Current Action, Including the Pending Demurrers, Until Determination of Stanislaus Superior Court Case No.: 2009158 on the following grounds: 1 Plaintiff lacks standing to make this motion. Abatement of an action because “another 10 action [is] pending between the same parties on the same cause” is a defect appearing on the face of a 11 complaint or from judicially noticeable matters. (Code Civ. Proc. § 430.10(c); see also Cal. Prac. Guide 2% 12 Civ. Pro. Before Trial (Rutter Group 2019) 4 3:123.60.) It is, therefore, a ground for a defendant’s 13 demurrer. (/bid.) Alternatively, a defendant may assert a plea in abatement may as an affirmative Gs defense if factual issues need to be resolved. (Code Civ. Proc. § 597; see also 5 Witkin, California SSS zg Procedure (11th Ed. (Supp.) 2019) § 1138.) In fact, the objection is waived if not asserted at the first ze ae Ba 16 opportunity. (Martin v. Pacific Southwest Royalties (1940) 41 C.A.2d 161, 171; 5 Witkin, supra, § 17 1138.) Plaintiff cannot demur to or answer its own complaint so the instant motion is improper. 18 Furthermore, Defendants have raised this objection by demurrer so Plaintiff's motion is also 19 unnecessary. 20 2 The court should dismiss this action rather than merely staying it. A party asserting a 21 plea in abatement “may obtain a trial court ruling on the issue by a motion to dismiss or abate or a motion 22 for summary judgment. (People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4th 23 760, 771 [internal citations omitted].) Here, the only substantive difference between Plaintiff's claims 24 in this case and those it asserts in Case No. 2009158 is that after filing the earlier case, Plaintiff 25 discovered “numerous additional distressed properties not previously listed in the 2014 Action.” 26 (Memorandum of Points and Authorities in Support of Motion for Abatement of the Current Action, 27 Including the Pending Demurrers, Until Determination of Stanislaus Superior Court Case No.: 2009158 28 p. 2:24-25.) The number of properties Defendants allegedly diverted from Plaintiff in the course of their 2 JOINT AND PARTIAL OPPOSITION TO PLAINTIFFS MOTION FOR ABATEMENT OF THE CURRENT ACTION supposed conspiracy is only relevant to the extent of Plaintiff's damages, not whether Plaintiff has a substantive claim arising out of each act of diversion. Accordingly, this action is entirely duplicative of the “2014 Action” and should be dismissed “in the interest of judicial economy” as Plaintiff asserts as the primary reason for its motion.! Because Plaintiff's claims in both actions are substantively identical in terms of liability, any relief it seeks in this case could be obtained in the 2014 Action, dismissing this action would obviate the need for the same parties and the same witnesses to participate in discovery and trial in two different cases concerning nearly identical issues. 3 To the extent that the court is disinclined abate this action via dismissal, Defendants respectfully request that the court rule on their pending demurrers to Plaintiff's Second Amended 10 Complaint. If the court sustains those demurrers without leave to amend, this case effectively would be 11 over. If it overrules them, or sustains them with leave to amend, the court would provide much needed 2% 12 guidance to the parties regarding the viability of Plaintiff's claims and, correspondingly, the direction 13 this action will take once any stay in abatement is lifted. Ekoe 5s Os 215 DATED: February 6, 2020 WILLIAM H. PARISH, P.C. ze ae Ba 16 17 By, LM M hae WILLIAM H. PARISH DAVID M. AUSTIN 18 Attorneys for Defendants NORCAL REDEVELOPMENT CORP., RICHARD 19 CASTLEBERRY, and GEORGE CASTLEBERRY 20 DATED: February 6, 2020 kD 21 By, 1) 22 KURT D. HENDRICKSON Attorneys for Defendants 23 STEVEN A. SWANGER, KENNETH A. SWANGER, BRENDA GILLUM, RICK 24 CLEMENTS, JAMIE LYNN CLEMENTS, SWAN CONSTRUCTION, SWAN INVESTMENTS, INC., 25 SWANGER PROPERTIES, LLC; NORTHERN CALIFORNIA INVESTMENTS, L.P., and 26 RICHARD NORTHCUTT 27 ' A matrix demonstrating the substantial overlap between the core allegations that Plaintiff has made in the two actions is attached to this Opposition as Exhibit 1. Defendants previously submitted and authenticated the contents of Exhibit | in 28 connection with their Memorandum of Points and Authorities in Support of Demurrer to Plaintiff's Amended Complaint filed in this action on June 9, 2017. 3 JOINT AND PARTIAL OPPOSITION TO PLAINTIFFS MOTION FOR ABATEMENT OF THE CURRENT ACTION this does not change the abatement analysis: This action must be abated because CEMG can (and has) raised all of the same claims in the first suit. While it theoretically could join the new parties in the 2014 case, as shown below, the limitations period has long since run on CEMG’s claims. Il. BACKGROUND AND ALLEGATIONS OF THE COMPLAINT A This Complaint Repeats The Allegations And Claims Made In A Nearly Identical Complaint Filed In November 2014. The First Amended Complaint in this 2017 case (“2017 FAC”) repeats allegations made by CEMG in a November 2014 Complaint also filed in Stanislaus County, Case No. 2009158 (the “2014 Complaint”), Request for Judicial Notice (““RJN”) Ex. 1. (To avoid unnecessary 10 duplication, Defendants will refer to the RJN filed on April 7, 2017, in connection with the initial IL demurrer.) In both cases, CEMG alleges that defendants were supposed to work for CEMG in 12 buying distressed properties, but they secretly decided to buy certain properties for themselves. In 13 both cases, CEMG set out the core factual allegations in just a few paragraphs, using nearly 14 identical language to tell the same story: 15 Core Allegations in 2014 Complaint Core Allegations in 2017 FAC 16 9. In or about January 2009 through 6. In or about January 2009 through \7 December 2013, in various counties December 2011, in various counties throughout California Plaintiff engaged in the throughout California, including Stanislaus 18 County, Plaintiff engaged in the practice of practice of buying distressed real estate 19 properties at various bank and/or buying distressed real estate properties at governmental and/or private property sales various bank and/or governmental and/or 20 private property sales with the intent to with the intent to acquire properties, repair 21 those properties and then resale them at a acquire the properties, repair those properties profit or retaining such properties for long and then resale them at a profit or retaining 22 .. To this end PLAINTIFF such properties for long term rentals. .. To term rentals. 23 researched numerous properties (Exhibit A this end Plaintiff researched numerous attached hereto identifies the properties in properties (Exhibit A attached hereto 24 identifies the properties in question that are question that are currently known by Plaintiff 25 .. .) identifying their current acquisition currently known by Plaintiff . . .) identifying value, physical condition, title encumbrances, their current acquisition value, physical 26 condition, title encumbrances, repaired resale repaired resale value and maximum bid price 27 in targeting the properties to be sought for value and maximum bid price in targeting the purchase by Plaintiff. properties to be sought for purchase by 28 MEMO. OF POINTS & AUTHORITIES IN SUPPORT OF DEFENDANTS’ DEMURRER 2+ Exhibit 1 Core Allegations in 2014 Complaint Core Allegations in 2017 FAC Plaintiff. 7. Defendants Swangers and Gillum were 10. Agent Defendants! were agents of agents of Plaintiff tasked with seeking to Plaintiff tasked with seeking to purchase the purchase the properties at the various actions properties at the various auctions and/or and/or private sales using the Plaintiff's private sales using the Plaintiff's gathered gathered research information including research information including, but not maximum bid price. [D]efendant Clements limited to the “AS IS” value and repaired and DOES 1-20 were agents of all other value of the property, rehabilitation costs, defendants working on their behalf for in property condition, maximum bid price. [A]ll concert with them secreting the purchase of Defendants were agents of all other the properties on all Defendants behalf rather defendants working on their behalf or in than Plaintiff. Plaintiff instructed the concert with them secreting the purchase of 10 Individual Defendants which of the properties the properties on all Defendants behalf rather to seek to buy at auctions and/or private sales than Plaintiff. Plaintiff instructed the Agent Il for the benefit of Plaintiff solely. Defendants which of the properties to seek to 12 buy at auctions and/or private sales for the 13 benefit of Plaintiff solely. 14 11. Throughout the period of 2009 to 2011 Messrs. Clements, Northcutt and. 15 Castleberrys had knowledge of the agency 16 relationship between Plaintiff and the Agent Defendants. Despite this knowledge [they] 17 partnered with the Agent Defendants to 18 purchase properties in direct competition with Plaintiff. Clements, Northcutt and 19 Castleberry knowingly accepted the 20 information wrongfully disseminated information and research and used this 21 information to benefit themselves, at the 22 expense of Plaintiff. 23 8. Throughout the period of 2009 to 2012, 12. Throughout the period of 2009 to 2013, 24 all Defendants entered into a criminal all Defendants entered into a criminal conspiracy to rig the bidding process of conspiracy to rig the bidding process of 25 properties in order to acquire the properties on properties in order to acquire the properties 26 ' The 2017 Complaint defines the “Agent Defendants” as all of the individual defendants other 27 than Richard Northcutt, Rick Clements, George Castleberry, and Richard Castleberry. 2017 FAC, 99 2-3. 28 MEMO. OF POINTS & AUTHORITIES IN SUPPORT OF DEFENDANTS’ DEMURRER 3: Exhibit 1 Core Allegations in 2014 Complaint Core Allegations in 2017 FAC their own behalf rather than Plaintiff's. Under on their own behalf rather than Plaintiff's. this scheme defendants Swangers, Gillum, Under this scheme defendants Agent Clements, and DOES 1-20 attended the Defendants valued properties for Plaintiff, auctions/private sales as Plaintiff's agents and attended the auctions/private sales as were supposed to make bids at the Plaintiff's agents and were supposed to make auction/private sales on Plaintiffs behalf up bids at the auction/private sales on Plaintiff's to predetermined amounts in effort to acquire behalf up to predetermined amounts in effort the properties for Plaintiff. Instead the to acquire the properties for Plaintiff. Instead Individual Defendants made bids and bought Agent Defendants knowingly misstated the the properties on behalf of one or more value and/or rehabilitation costs and/or Defendants at or below the predetermined condition of properties to Plaintiff to increase maximum bid price .... After acquiring the Plaintiff's maximum bid price, made bids and 10 properties the Individual Defendants told bought the properties on behalf of one or Plaintiff's representative that the properties more Defendants at or below the il went to third parties above the predetermined predetermined maximum bid price . . . . After 12 maximum bid price. acquiring the properties, the Agent Defendants told Plaintiff's representative that 13 the properties went to third parties above the 14 predetermined maximum bid price and they were unable to acquire the property. Asa 15 result of these numerous misrepresentations, all Defendants benefitted financially. 16 17 9. Plaintiff, and its owners did not, and 13. Plaintiff first became aware of the 18 could not with the use of reasonable scheme related to properties identified in 19 discovery, learn of the scheme of Exhibit A through discovery related to a Defendants until within the last year. criminal litigation in 2016. Given 20 Defendants fraudulent actions and 21 subsequent cover up, Plaintiff could not have discovery the facts related to this 22 complaint earlier through reasonable 23 diligence. 24 25 CEMG asserts, based on this alleged scheme, the same causes of action in both the 2014 26 Complaint and the 2017 Complaint: (1) fraud and deceit; (2) conspiracy to commit fraud and 2 deceit; (3) breach of fiduciary duty; (4) accounting; (5) intentional interference of prospective 2: MEMO. OF POINTS & AUTHORITIES IN SUPPORT OF DEFENDANTS’ DEMURRER 4. Exhibit 1 PROOF OF SERVICE Capital Equity Management Croup, Inc. v. Swanger; et al. Stanislaus Count County Superior Court, Case No. 2023519 I hereby certify that I am a citizen of the United States, over the age of eighteen years, and not a party to the within action. My business address is 1919 Grand Canal Boulevard, Suite A-5, Stockton, California, 95207, which is located in the county where the service described below occurred. On this date, February 6, 2020, I served the foregoing document entitled: JOINT AND PARTIAL OPPOSITION TO PLAINTIFF’S MOTION FOR ABATEMENT OF THE CURRENT ACTION, INCLUDING THE PENDING DEMURRERS, UNTIL DETERMINATION OF STANISLAUS SUPERIOR COURT CASE NO.: 2009158 I served the document on: 10 VIA FIRST CLASS USPS MAIL VIA FIRST CLASS USPS MAIL and EMAIL Jennifer Hane ll Attorneys for Plaintiff United States Department of Justice Mr. Dustin J. Dyer 450 Golden Gate Avenue, Room 10-0101 12 DYER LAW FIRM San Francisco, CA 94102-3478 5250 Claremont Avenue, Suite 119 13 agg Stockton, CA 95207 Ose >is VIA FIRST CLASS USPS MAIL zee 315 Attorneys for Defendant Mark Tillotson Sogzs aos naa3 Mr. Gerald Brunn as 16 LAW OFFICES OF BRUNN & FLYNN 928 12" Street, Suite 200 17 Modesto, CA 95354 18 19 {1 FIRST CLASS USPS MAIL: by enclosing the documents in a sealed envelope with postage thereon fully prepaid, into a box designated by my employer for collection and processing of 20 correspondence for mailing with the United States Postal Service, addressed as set forth below. I am readily familiar with the business practices of my employer, PARISH GUY CASTILLO, 21 PC, for the collection and processing of correspondence for mailing with the United States Postal 22 Service. Under that practice, the correspondence placed in the designated box is deposited with the United States Postal Service at Stockton, California, the same day in the ordinary course of 23 business. 24 EMAIL/ELECTRONIC TRANSMISSION: by transmitting a true copy thereof to be transmitted via electronic mail based on a court order or an agreement of the parties to accept service by e-mail 25 or electronic transmission, I caused the documents to be sent to the persons at the e-mail addresses listed above. I did not receive, within a reasonable time after the transmission, any electronic 26 message or other indication that the transmission was unsuccessful. 27 I declare under penalty of perjury under the laws of the State of California that the foregoing is 28 true and correct. 5 JOINT AND PARTIAL OPPOSITION TO PLAINTIFF’S MOTION FOR ABATEMENT OF THE CURRENT ACTION CHANNEL SWAIN 10 11 12 &2: 34 Bog 13 Ed aeeyegee go 2aa 16 17 18 19 20 21 22 23 24 25 26 27 28 6 JOINT AND PARTIAL OPPOSITION TO PLAINTIFF?S MOTION FOR ABATEMENT OF THE CURRENT ACTION