1. MCV-226349, CACH v. Reyes
On June 11, 2013, Plaintiff served Requests for Admission, Set One, on the Defendant. Defendant failed to respond. Plaintiff filed this motion seeking to have the requests for admissions deemed admitted, and for monetary sanctions. (CCP § 2033.280.) No opposition to the motion has been filed. Plaintiff's motion is GRANTED and discovery sanctions are ordered in the amount of $270.00.
The Plaintiff is to draft an order consistent with this ruling.
2. SCV-238447, O'Hagin's v. O'Hagin
Pursuant to CCP § 918.5(a), Judgment Debtor O’Hagin’s Inc. (“OHI”) is seeking a stay in the enforcement of the balance of a $10 million dollar judgment against it. OHI contends that certain payments made by it to the Judgment Creditor Harry O’Hagin (“O’Hagin”) have exposed it to tax liability of approximately $900,000. OHI contends that O’Hagin is not in a position to pay the alleged $900,000 dollar tax liability. OHI requests that the court order certain payments OHI receives from a lease and promissory note be placed in a blocked account pending resolution of SCV 252696 (a related action for Indemnity and Declaratory Relief).
O’Hagin contends that the related action filed by OHI is patently frivolous in that all of the payments made to the O’Hagin were made on Form 1099s, and therefore reported to the IRS—and tax withholding was unnecessary. O’Hagin claims the total judgment owed to him by OHI, with interest, now exceeds $16 million dollars.
O’Hagin points out that no audits have been performed, nor has any tax liability been assessed against OHI as a result of the payments made to O’Hagin as 1099 income. O’Hagin further contends that: (1) OHI waived all claims against O’Hagin in 2007, thus any acts taken prior to that time do not constitute actionable claims; (2) the statute of limitations on tax claims based on the 1099 income have long since passed; (3) this court does not have subject matter jurisdiction over Federal Tax Claims; (4) the California state tax claims are hypothetical, and would require an advisory opinion; (5) OHI has not alleged any damages; and (6) OHI has failed to allege an actual case or controversy in SCV 252696’s declaratory judgment action.
In the alternative, O’Hagin argues that assuming that OHI does have a viable indemnity claim for upwards of $1.3 million, he will agree not to collect that amount, if the court orders OHI to place that sum in a blocked account pending further order of this court.
The claims against O’Hagin in this case are based on whether its “advice” to OHI to not withhold taxes on amounts paid to him exposed OHI to potential tax liability. The lawsuit does not allege that there are any enforcement actions, tax liens, audits, or investigations. OHI relies heavily on the opinions stated in the Tasto Declaration—wherein Mr. Tasto opines that OHI (based on his review of the documents provided to him) may have been obligated to withhold taxes pursuant to 26 USC § 1441. Importantly, for purposes of the present motion, Mr. Tasto’s opinions are confined to the independent obligations of OHI under the tax code. As he puts it: “OHI had an independent obligation to withhold taxes on these payments to the extent the payments would be determined to be subject to withholding.” Moreover, Mr. Tasto’s opinions are made under the assumption that the payments from OHI to O’Hagin were made to “a foreign person and not a U.S. person [sic].” This assumption seems faulty given that O’Hagin is a U.S. citizen; notwithstanding the fact that the alleged payments in issue were made to foreign corporations. To bridge this gap in order to claim an offset, OHI relies on the testimony of Carolina Stollenwerk O’Hagin, who claims that OHI was duped into not withholding tax payments on the advice of O’Hagin’s (Harry and Carolina’s) then attorney and CPA.
Even aside from the legal arguments that OHI’s claims were waived and/or are barred by the statute of limitations, OHI has not demonstrated that it is likely to prevail on its indemnity claim and will be awarded a judgment. While OHI may have had an obligation to withhold taxes, this is, as explained by its own expert, an independent duty. OHI has not made any showing establishing that O’Hagin’s acts prevented OHI from satisfying its independent duty.
3. SCV-249254 , FPI Management Company V. Express Plumbing & Heating, Inc., et al.
Attorney Hannan’s motion to be relieved as counsel for all named defendants is granted. Defendant Express Plumbing & Heating is advised that a corporation may not defend itself and must retain counsel. Mr. Hannan is to draft an order for the court’s signature.
4. SCV-250399, CITIMORTGAGE INC. v. YATES, et al.
Appearances are required.
5. SCV-251296, O'Hagin v Stollenwerk
Status conference; appearances required. All counsel are authorized to appear by court call.
6. SCV-252125, Davis v. Mazza
On June 26, 2013, this court granted a motion to compel responses to discovery served by Plaintiff that Defendant had not answered. The court ordered Defendant to provide responses, without objections, within 20 days. Defendant’s responses contained objections and did not satisfy Plaintiff.
On October 8, 2013, Plaintiff filed a motion to compel further responses. With respect to that motion, the parties participated in the county’s discovery facilitator program. Pursuant to meeting with a discovery facilitator, the parties entered into a written stipulation that resolved all of the issues raised by the motion to compel further responses. The parties jointly requested that this court grant Plaintiff’s motion and order Defendant to provide further responses, in accordance with the stipulation. The court notes that the stipulation contains a typographical error, in that in the second section referencing Special Interrogatory 14, the interrogatory number should be 15.
Subject to the correction noted and in accordance with the parties stipulation, the Plaintiff’s Motion to Compel Further Responses is granted. Plaintiff is to draft an order consistent with this opinion.
7. SCV 252696, O’Hagin’s Inc. v. O’Hagin
Defendants Jalerm and Charter Stars (collectively the “Defendant Entities”), appearing specially, move to quash service of the summons and complaint for lack of jurisdiction. Plaintiff contends the Defendant Entities have extensive, systematic or continuous ties to California. Defendants aver that they have no property, bank accounts, phone or mail service, in California and that they do not conduct any business whatsoever in California. Defendants further contend that they have not directed any activities toward California that would subject them to specific jurisdiction.
Plaintiff asserts jurisdiction based on the years of payments made to the Defendant Entities. Plaintiff also relies on alleged acts of attorney Patterson and CPA Gaggs, as demonstrating the Defendants’ contacts with California support jurisdiction. Finally, Plaintiff relies on a declaration from Carolina Stollenwerk in which she testifies that she was approached by Mr. Patterson to assign her patent rights to the Defendant Entities. Ms. Stollenwerk claims this discussion took place (over ten years ago) in the context of an attorney client relationship with Mr. Patterson, and that the assignment to the Defendant Entities was intended to enable her to avoid taxes.
Plaintiff also relies on the fact that Defendants Gaggs and Patterson are directors/owners of the Defendant Entities. Plaintiff contends that Defendants Gaggs and Patterson, acting as agents of the Defendant Entities, induced the Plaintiff to not withhold taxes on payments made to Harry O’Hagin (“O’Hagin”), which were routed through the Defendant Entities. Plaintiff contends it was exposed to tax liability as a result. Plaintiff contends this provides a basis for this court to exercise specific jurisdiction over the Defendants. Plaintiff argues that Defendants Gaggs and Patterson are the alter-egos of the Defendants, which establishes another basis for asserting jurisdiction over the Defendant Entities.
Initially, Defendants note that Plaintiff has offered no evidence at all in with respect to Defendant Entity Charter Star. Defendants contend that the use of two off-shore companies is necessary for O’Hagin because he is a long-term resident of Thailand, where it is very difficult to repatriate funds. Thus, O’Hagin keeps his money in Singapore and only takes the money he needs into Thailand. He contends this arrangement is not tax-driven but rather a means to deal with the difficulties of living in Thailand. Defendants refute the claim that O’Hagin has not been paying taxes all along.
When a defendant challenges in personam jurisdiction, the plaintiff has the burden to prove, by a preponderance of the evidence, the factual basis for the exercise of jurisdiction. (Vons, supra, 14 Cal.4th at 449.) It is well settled that when a defendant properly challenges service of process, the burden is on the plaintiff to prove the facts that give the court jurisdiction. Until the plaintiff makes at least a prima facie showing, the defendant need not offer any evidence whatever. (Floveyor Int'l, Ltd. v Superior Court (1997) 59 Cal.App.4th 789.) Jurisdiction over a nonresident corporate defendant exists when that defendant has certain “minimum contacts” with the forum state such that the “maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.”' (International Shoe Co. v. Washington (1945) 326 U.S. 310, 316.)
If a nonresident defendant's activities may be described as “extensive or wide-ranging” or “substantial, continuous and systematic,” there is a constitutionally sufficient relationship to warrant jurisdiction for all causes of action asserted against him. (Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 711.) “Substantial evidence” is not synonymous with “any evidence,” but is rather evidence of ponderable legal significance, i.e., evidence which is reasonable in nature, credible, and of solid value. (Kroopf v. Guffey (1986)183 Cal.App.3d 1351, 1356.)
If, however, the defendant's activities in the forum are not so pervasive as to justify the exercise of general jurisdiction over him, then jurisdiction depends upon the quality and nature of his activity in the forum in relation to the particular cause of action. For specific jurisdiction, plaintiff's claim must “arise out of” or be “related to” defendant's forum activities. (See Burger King Corp. v. Rudzewicz (1985) 471 US 462, 477–478; and Vons Cos., Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 452.)
Here, there is no evidence that either of the Defendant Entities had regular, continuous and substantial contacts with California such that it would be subject to the general jurisdiction of California courts. (See generally Gaggs Declaration.) The Defendant Entities did allegedly received nearly $4 million from the Plaintiff for the benefit of O’Hagin. However, there is no evidence that the Defendant Entities were anything other than holding companies for O’Hagin. The evidence submitted by the Plaintiff suggests that the reason that the payments were directed to the Defendant Entities had to do with the bank delays to clearing checks for such large amounts. (See Exhibit A to the Daniels Dec. [letter from Patterson re directing payments to Defendant Jalerm’s bank account; notably, no mention of taxes is made.].)
The court therefore must determine whether the evidence establishes that the Defendants had sufficient minimum contacts with the forum state to permit California to exercise limited personal jurisdiction with respect to instant lawsuit.
The only direct evidence that either of the Defendant Entities was in any way involved in the transactions that underlie the plaintiff’s claims in this action, is the testimony of Greg Daniels. In his Declaration he testifies that Defendant Gaggs “representing Harry, Carolina Stollenwerk and O’Hagin’s Inc. advised O’Hagin’s Inc. … that O’Hagin’s Inc. would not need to withhold any tax funds in connection with these payments.” (Dec. Daniels ¶ 6.) Mr. Daniels does not allege that Mr. Gaggs was acting on behalf of either of the Defendant Entities. There is no other evidence submitted by the Plaintiff that shows or tends to show that the Defendant Entities are implicated in the charging allegations of the complaint; namely instructing the Plaintiff not to withhold taxes from payments made to O’Hagin. The other evidence provided does not provide a basis for this court to exercise specific jurisdiction over the Defendant Entities. Moreover, Defendants are correct, the Plaintiff has presented no evidence regarding its allegations with respect to Defendant Charter Star. All of the evidence submitted only refers to Defendant Jalerem.
The Plaintiff’s arguments regarding the negotiations between the Defendant Entities and Ms. Stollenwerk are not related in any way to the instant lawsuit, or the causes of action pled against the Defendant Entities. Ms. Stollenwerk alleges that Gaggs and Patterson pitched a patent licensing scheme to her in Thailand, in 2002, which would have been subject to California law. This meeting in Thailand has no bearing on the gravamen of this case—indemnity for allegedly counseling the Plaintiff not to withhold taxes. There are no allegations that the Defendant Entities pursued this discussion beyond that time frame.
Plaintiff’s request for a continuance to pursue discovery to determine the nature and extent of the Defendant Entities’ California contacts, if any, is denied. (See Mihlon v. Sup.Ct. (Murkey) (1985) 169 Cal.App.3d 703, 711.) Plaintiff has not shown that discovery would be likely produce evidence of additional “contacts.” (Beckman v. Thompson (1992) 4 Cal.App.4th 481, 486–487.)
8. SCV – 253194 Ekube v. Santa Rosa City Schools
Plaintiff seeks an order allowing him to amend his complaint to add a claim involving another promotion that he applied for in May 2013 and was denied. Plaintiff alleges that he was denied the promotion in retaliation for the instant lawsuit.
Defendant urges the court to deny the amendment because it is likely that the Plaintiff will continue to apply for positions and may continue to be denied. Defendant argues that the additional claims will require additional discovery.
Plaintiff argues that Defendant has shown no prejudice.
Under CCP section 473(a)(1), amendments are left to the sound discretion of the trial court. Judicial policy favors amendment to allow resolution of all potential claims and disputes between parties, so such motions are examined liberally. (Nestlé v. Santa Monica (1972) 6 Cal.3d 920, 939.)
Here, the motion is timely and the Defendant has not demonstrated that it will be prejudiced by the proposed amendment. Accordingly, the motion should be granted.
The Plaintiff shall submit an order consistent with this ruling within ten days. Plaintiff is to file the amended complaint within ten days of the date of service of the written ruling.
9. SCV-253402, Starski v Costco
Plaintiff has filed a motion for an order to strike Defendant Costco Wholesale’s general denial. Plaintiff claims that a general denial is improper when the complaint was verified, or in an unlimited civil case. Defendant opposed, contending that the complaint was not verified, and that the motion was untimely—it was not filed within 10 days of service of the answer.
The instant motion was not filed within the timeframe prescribed by statute, and therefore was untimely. (See Code Civ. Proc. §§ 430.40(b), 435(d).)
Accordingly, the Plaintiff’s motion to strike is DENIED. The court will not order any sanctions. The Plaintiff is to draft an order consistent with this ruling.
10. SCV-253817, Cervantes v. Downing
The general and special demurrers to the entire Complaint are overruled. The general and special demurrers to the First through Eleventh Causes of Action are overruled.
The motion to strike is denied with respect to items numbered 2, 3, 4, 5, 6, 7, 8, 9, 12, 14 and 17. (Punitive damages).
The motion to strike is denied with respect to items 15 and 16 in defendant’s motion. (Statutory penalties).
The motion to strike is denied with respect to items numbered 1, 10, 11, and 13. (Attorney’s fees).
Plaintiff shall draft an order consistent with this ruling.
11. SCV-253973, Brandon R v Roe
Plaintiff’s Motion for Order Sealing the Record is denied without prejudice. California Rules of Court rule 2.551(b)(1) states, “A party requesting that a record be filed under seal must file a motion or an application . . . The motion or application must be accompanied by . . . a declaration containing facts sufficient to justify the sealing.” (Italics added.) Here, Plaintiff has not provided a declaration. Without a declaration, there is no evidence before the court from which to balance the interest of Plaintiff in sealing the record with the right of public access. (See Cal. Rules of Court, rule 2.550(d).)
12. SCV-254048, Zamvil v. Sonoma County.
The “County” defendants’ demurrers to the 17th, 18th and 19th causes of action are SUSTAINED WITHOUT LEAVE TO AMEND on the grounds that each of these claims fails to allege facts stating a cause of action (CCP Sec.430.10(e)) due to the fact that the County defendants have immunity against these claims pursuant to Gov.C.Sec.821.6 and Govt.C.Sec.815.2(b).
The “County” defendants’ demurrers to the 1st through 10th and 13th through 16th causes of action are SUSTAINED WITH LEAVE TO AMEND on the grounds that each of these causes of action fail to allege facts sufficient state a cause of action (CCP Sec.430.10(e)) due to plaintiff’s failure to allege compliance with the Government Claims Act’s pre-filing claim requirement. In light of the failure to allege compliance, the Court need not reach the question of whether those causes of action fail to allege “recognized” causes of action or whether they fail to state facts satisfying the elements of “recognized” causes of action.
The “County” defendants’ demurrer to the punitive damages claim is OVERRULED. A complaint is not demurrable due to an improper prayer for relief. Gomez v. Volkswagen of America, Inc. (1985) 169 CA3d 921, 925. No motion to strike was filed.
Defendants are to prepare an order consistent with this ruling.
13. SCV-254126, Robello v. Livie
The motion to strike is DENIED. The Exhibit is not being offered as evidentiary support for ultimate facts contained in the complaint. Instead, the Exhibit is incorporated by reference to merely allege additional ultimate facts in support of the causes of action. The allegation in the Exhibit that defendants’ actions constitute a “nuisance,” although arguably a legal conclusion, is generally permitted where such a conclusion is supported by other factual allegations in the complaint. Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6; Weil & Brown Civil Procedure Before Trial (The Rutter Group) Sec.7.181. The motion is DENIED.
Defendants shall prepare an order for the Court’s signature.