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Tentative Rulings

Friday, February 16, 2024 at 8:30 a.m. and 3:00 p.m.** (3:00 p.m. calendar listed after 8:30 a.m. calendar)

2/16 8:30 A.M. LAW & MOTION /4886

2/16 3:00 P.M. LAW & MOTION /4887

1. 23CV00782, Reiter v. Mitchell Landscapes, Inc.

Plaintiffs’ motion for change of venue to Napa County is GRANTED.  The Court will adopt Plaintiffs’ proposed order.

 I.                   Background

 On September 28, 2023, Plaintiffs Marc Reiter and Abigail Moore-Reiter (collectively Plaintiffs) filed a complaint against Mitchell Landscapes and BMC Construction (Defendants), alleging defects in landscaping and concrete work performed by Defendants at Plaintiffs’ property in Napa County.  Defendants have not yet answered, or appeared in this action in any way.

On October 31, 2023, Plaintiffs filed the instant motion for venue change, averring that “This suit was inadvertently and erroneously filed in Sonoma County Superior Court.”

II.                Napa County is the appropriate venue for this lawsuit

“[I]f a defendant has contracted to perform an obligation in a particular county, the superior court in the county where the obligation is to be performed, where the contract in fact was entered into, or where the defendant or any defendant resides at the commencement of the action is a proper court for the trial of an action founded on that obligation, and the county where the obligation is incurred is the county where it is to be performed.”  (CCP § 395(a).)  Under that statute, Napa County, where the obligation was to be performed, would be “a proper court.”  However, the complaint recites that Defendants have their principal places of business in Penngrove and Petaluma, both of which are in Sonoma County, so Sonoma County would also be proper.

Plaintiffs cite to CCP § 1812.10 for the proposition that “in a claim for damages arising under a contract where the goods purchased pursuant to the contract have been so affixed to real property as to become a part of that real property, venue lies in the county of the location of the property.”  Civil Code § 1812.10 (which the Court assumes is what Plaintiffs meant) does say that, but by its own terms the statute applies to “[a]n action on a contract or installment account under this chapter.”  “This chapter” refers to Civil Code §§ 1801 et seq., also known as the Unruh Act, which generally applies to retail and installment contracts.  The Court is not convinced that it applies to the contract at issue here.

However, the Court recognizes that the contract underlying the instant matter was for work to be performed in Napa County and that any breach can only have occurred in Napa County.  The Court accepts the averment in Plaintiffs’ counsel’s declaration that the contract was formed in Napa County.  Accordingly, Napa County is the appropriate venue for this action.  (Jhirmack Enterprises, Inc. v. Superior Court (1979) 96 Cal.App.3d 715, 723-724.)

III.             Conclusion

This matter will be transferred to the Napa County Superior Court.  The Court finds that Defendants will not be prejudiced by the transfer, both because they have not yet appeared in this matter and because they cannot reasonably have anticipated performing work in Napa County without being subject to a lawsuit in Napa County.  The Court will adopt Plaintiffs’ proposed order.

2. SCV-270601, MAHRT v. Cornerstone et al

Pursuant to the parties’ stipulation, the hearing is continued to April 5, 2024 at 8:30 a.m. in Department 18.

This concludes the 8:30 a.m. Calendar....

3:00 P.M. CALENDAR LISTED BELOW
1. MCV-255632, Looney v. Schostag

The unopposed motion of the court-appointed receiver for an Order (i) Approving Final Report and Accounting; (ii) Discharging the Receiver; (iii) Terminating the Receivership, and (iv) Abandoning Books and Records is GRANTED. The Court will sign the proposed order lodged with the moving papers.

The receiver has represented that the liquor license was sold to ULDI, LLC on October 13, 2022 for $40,000. The receiver received $3,174.95 from this amount for compensation based on the previously approved hourly rate of $300 per hour. The receiver’s fees and costs are approved.

2. SCV-226091, Zeppenfeld v. Gordon

Motion to Vacate GRANTED in part, DENIED in part.  As specified further below, the court orders the Renewal of Judgment filed on April 20, 2015 to be vacated and a new, corrected, renewal to be entered in its place.  The court finds the renewal at issue to be incorrect because it incorrectly names Mary Beth Reilley as a judgment debtor and because it misspelled the name of Defendant and judgment debtor Martin Reilley.  The court, as specified below, orders a renewal to be entered correcting these two errors.  The court in all other respects DENIES the motion.  

Facts and History 

Plaintiffs obtained a verdict against Defendant Martin Reilley (“Martin”) for various claims of fraud and negligent misrepresentation after a trial which ended in March 2005.  Judgment was entered in favor of Plaintiffs against Martin.  The surviving court records show a judgment in Plaintiffs’ favor of $621,336.26.  See Judgment filed March 19, 2013; Notice of Entry of Judgment After Remand, filed March 27, 2013 (“Notice of Judgment”).  The Reilleys’ attorney prepared and served the Notice of Judgment. 

Plaintiffs subsequently brought another action against Martin and Mary Beth Reilley (“Mary”) (collectively, Martin and Mary are referred to as the “Reilleys”) for fraudulent transfer, Zeppenfeld v. Reilley, SCV-237676 (the “Second Action”).  They likewise prevailed in the Second Action, after the parties entered into a stipulated judgment for $15,000 in favor of Plaintiffs.  The court record shows both of the Reilleys as Defendants entering into the stipulated judgment but shows only Martin as a judgment debtor in the Second Action. 

The court record shows that on April 20, 2015, Plaintiffs filed an Application for and Renewal of Judgment (the “Renewal”), naming both of the Reilleys as judgment debtors.  This document survives in the court record.  It sets forth a total judgment of $621,336.26, plus costs of $15,031.36, credits of $42,049.88, interest of $585931.66, and the filing fee of $30, for a total of $1,180,279.40.  The record also shows that on June 11, 2015, a notice of entry of renewal of judgment was filed but no such document survives in the court record.  The court issued abstracts of judgment on January 9, 2017 and July 15, 2019, referring to the original abstract pf judgment dated September 6, 2005.  Both abstracts name only Martin as judgment debtor and the forms state that all judgment debtors are named on the abstract.  

On December 18, 2023, Plaintiffs filed a Notice of the Acknowledged Full & Complete Assignment of the Judgment Pursuant to CCP section 673, by which they assigned their interest in the judgment to their attorney, Ira James Harris (“Harris”).

The Reilleys on October 17, 2023 filed a Motion to Vacate, in which they seek to vacate the Renewal.  At the original hearing on the Reilleys’ Motion to Vacate, on January 31, 2024, the court continued the motion in order to allow proper filing of the opposition brief. 

Motion

This matter has once again come on calendar for the Reillys’ Motion to Vacate,  The Reilleys move to vacate the Renewal filed on April 20, 2015 on the grounds that it purports to renew a judgment that does not exist by falsely identifying Mary as a judgment debtor, it inaccurately identifies the amount of the renewed judgment, it misspells Martin’s name, and notice of it was never served as required pursuant to Code of Civil Procedure (“CCP”) section 683.160.

Plaintiffs oppose the motion.  They admit that Harris made three errors regarding the Renewal: 1) they took the identity of the judgment debtors from the Second Action and admit that Mary is not a party or judgment debtor to this action; 2) Harris misspelled Martin’s name; and 3) Harris miscalculated the interest on the fees and costs, but with a figure that was lower than the amount actually owed.  They state that they agree to correcting the Renewal to remove Mary but argue that the other issues should not render the Renewal invalid as to Martin.

The Reilleys reply, arguing that the Renewal should not simply be corrected and specifically addressing claimed issues with Plaintiffs’ evidence, specifically Ex. D, a purported copy of the Renewal and notice thereof.

Requests for Judicial Notice

The Reilleys request judicial notice of the Application for and Renewal of Judgment, as filed in this court on April 20, 2015, and recorded with the Sonoma County Recorded on June 15, 2015.  The court may judicially notice this document, the contents, and the purported legal effect but may not judicially notice the truth of factual assertions made therein.  With this limitation, the court grants the request.  The court notes that this document is, aside from the recordation, evidently identical to the copy in the court’s file and provided in Plaintiff’s opposition as part of their Ex.D, discussed below. 

Plaintiffs filed two requests for judicial notice, the first being part of the evidently incorrectly filed opposition documents which prompted this court to continue the matter in order to allow the full documents to be filed properly.  The two requests appear identical except for the fact that the original one appears to be missing pages.  Confusingly, these are titled as requests “in Opposition to Motion for Judgment on the Pleadings,” but they evidently are in opposition to this motion.  There is no motion for judgment on the pleadings pending nor, indeed, would there be at this point, and they are dated for the hearing on this motion. 

That said, Plaintiffs request judicial notice of various filed court documents and records in this action and the Second Action, a complaint filed in the County of Nevada (the “Nevada Complaint”) in another action which Plaintiffs filed against the Reilleys on February 15, 2023 in (the “Nevada Action”), as well as documents recorded in this state.  The court may judicially notice these documents, the contents, and the purported legal effect but may not judicially notice the truth of factual assertions made therein.  With this limitation, the court grants the request.

Objections

In their reply papers, the Reilleys object to portions of Plaintiffs’ evidence submitted with the opposition, in the declaration of Plaintiffs’ attorney, Harris.  The objections are unpersuasive. 

Of special importance are objections 3 and 6(b) because they go to key evidence regarding service of notice of the Renewal.  The court finds it necessary to explain its decision to overrule these objections because of both the importance of the objections and the fact that the issue is somewhat nuanced. 

In objection 3, the Reilleys object to Harris’s statement that the documents attached as Ex. D include a true and correct copy of a Notice of Entry of Application for and Renewal of Judgment, the Application for and Renewal of Judgment, and proof of service therefore.  In part, the Reilleys’ argument is unpersuasive for they claim that the date discrepancy between the purported notice and poof of service on one hand and the filed application on the other, the latter being three days earlier.  This is to be expected, the service and notice following the filing of the application.  It is also consistent with the court record, showing the filing of the application on April 20, 2015 and the filing of the notice of entry later, in June 2015.  The Reilleys are also not persuasive that the evidence presented demonstrates that Harris has no basis for claiming the purported notice of entry to be true and correct.  The document is no longer extant in the court files and Harris admits in his declaration that he could not find a date-stamped copy.  However, he is simply stating that the copy he provides is a true and correct copy of the notice and proof of service from the files, albeit without a court date stamp, i.e., not an endorsed-filed copy.  This clearly weakens the import of the evidence but does not render it subject to objection.   

The court OVERRULES all objections. 

Discussion

CCP section 683.170 governs motions to vacate renewal of judgment.  It states, in full and with emphasis added,

(a) The renewal of a judgment pursuant to this article may be vacated on any ground that would be a defense to an action on the judgment, including the ground that the amount of the renewed judgment as entered pursuant to this article is incorrect, and shall be vacated if the application for renewal was filed within five years from the time the judgment was previously renewed under this article.

(b) Not later than 60 days after service of the notice of renewal pursuant to Section 683.160, the judgment debtor may apply by noticed motion under this section for an order of the court vacating the renewal of the judgment. The notice of motion shall be served on the judgment creditor. Service shall be made personally or by mail.

(c) Upon the hearing of the motion, the renewal may be ordered vacated upon any ground provided in subdivision (a), and another and different renewal may be entered, including, but not limited to, the renewal of the judgment in a different amount if the decision of the court is that the judgment creditor is entitled to renewal in a different amount.

 Accordingly, should the court find a basis for vacating the Renewal, a modified renewal may be entered with the correct information.

Because it attacks the renewed enforceability of a judgment and not an underlying default or default judgment, “[a] successful motion under section 683.170 vacates only the renewal of the judgment thereby precluding its extended enforceability….” Fidelity Creditor Service, Inc. v. Browne (App. 2 Dist. 2001) 89 Cal.App.4th 195, 203-204.

“The judgment debtor bears the burden of proving, by a preponderance of the evidence, that he or she is entitled to relief under section 683.170. [Citations.]” Fidelity Creditor Service, Inc. v. Browne (App. 2 Dist. 2001) 89 Cal.App.4th 195, 199. 

Notice of the Renewal

The Reilleys’ attorney, Brooks, states that when he went to this court’s Civil Clerk’s Office and asked to see a Notice of Renewal of Judgment or a proof of service for such notice, he was informed that there were no such documents.

Harris, Plaintiffs’ attorney, states that he served the notice of the Renewal and, as discussed above, provides a purported copy, albeit not endorsed-filed, of the notice and proof of service for April 2015.  He admits, however, that the court was unable to provide him with a filed copy of the notice and proof of service.  

There is uncertainty over whether, and when, notice of the Renewal was served on the Reilleys.  The fact that there is no endorsed-filed copy of the notice and proof of service weighs somewhat in favor of the Reilleys, but the fact remains that Plaintiffs have provided evidence, imperfect though it is, showing that they served the Reilleys in April 2015, and this comports with a notice of entry of the renewal in the court record for June 2015.  The document is missing, evidently, but the entry for that document remains in the court record.

At this time, the court finds that the uncertainty over service of notice of the renewal to be too problematic to make it a dispositive issue either way.  In other words, there is insufficient basis to deny this motion as untimely, but at the same time there is insufficient basis to find notice of the Renewal to be defective.  The court will also take into account the fact that the court record indicates that a notice of the Renewal was filed, regardless of what it may have said, and that the Reilleys may have received proper notice. 

Mary as Judgment Debtor

It is clear that Mary should never have been named as a judgment debtor in the Renewal.  The case history and details of this and the Second Action, as are available in the court’s own records, as well as Plaintiffs’ own admission, make this clear.  The Reilleys’ attorney, Brooks, also states that he reviewed the docket sheet for this case and found no record of Mary being added as a judgment debtor.  Brooks Dec.  Plaintiffs, moreover, agree to removing Mary as a judgment debtor.  The judgment must be at the very least modified and corrected to remove Mary as a judgment debtor.  However, there is no basis for finding the Renewal void as to Martin, or subject to being vacated with no new renewal replacing it, simply because it incorrectly included Mary.  The Renewal should on this basis be vacated but a new Renewal correcting this error is to be entered in its place.

Misspelling of Martin’s Name

The slight misspelling of Martin’s name, as “Reiley” instead of “Reilley,” i.e., leaving out on “l,” is clearly an error.  However, it is also clearly not a material one.  It requires correction but is insufficient grounds to vacate the Renewal as being void and without entering a proper renewal in its place.  The Renewal should on this basis be vacated but a new Renewal correcting this error is to be entered in its place.  

Incorrect Monetary Amount

The monetary amount appears to be incorrect in some fashion, as both sides state that there is an error, but these differ and it is not at all clear that the Reilleys are correct in their argument or that it supports vacating the Renewal.  Either way, the evidence indicates that at most there is a relatively minor considering the amount of the judgment and otherwise, the Reilleys’ claim lacks sufficient support. 

In their opposition, Plaintiffs state that there is in fact an error, but it is not the error which the Reilleys claim and it is smaller.  According to Plaintiffs, the error is a slightly incorrect computation of the interest owed on the judgment, a difference of about $9,500 out of a sum of over $1,180,000, and the error in the Renewal is in favor of Defendant.  Moreover, the error as Plaintiffs present it is a simple mistake of computation of the interest and is not an error in the fundamental nature of the underlying judgment itself.   The Reilleys have not requested changing the Renewal in this regard and the court finds it inappropriate to do so, given that this specific calculation is not before the court and it was Plaintiffs’ own error so at this point the court is inclined, anyway, to construe it against them. 

The Reilleys claim that the error is related to a failure to give a proper credit for a sum which Plaintiffs obtained.  The error which they claim is larger, but still no more than about $16,000, and their evidence is unclear at best.  The Reilleys argue that the Renewal incorrectly calculates a possible credit, but this is not persuasive and nothing demonstrates that they are correct.  They base this claim entirely on the complaint in the Nevada Action, another lawsuit prosecuted as part of the efforts to collect on the judgment in this action.  They note that the Renewal lists a credit of  $42,049.88, as noted above, but argue that in the complaint in the Nevada Action Plaintiffs admitted that in fact they “received $50,000 on the Judgment and the $15,000 in costs due on the Stipulated Judgment  in Action No. SCV-237676 as of April 27, 2011” and $9,398.47 from wage garnishments to enforce the Judgment in this action.  See Plaintiffs’ RJN Ex.I, ¶¶5-6.  This contention has two problems.  First, the Reilleys do not provide any direct evidence of the claimed credits; in their declarations they do not even state simply that they paid this amount or that Plaintiffs collected it.  The Relleys instead rely on the indirect evidence of Plaintiffs’ allegations in a separate lawsuit.  Second, even assuming that the allegations in the Nevada Complaint could be taken to be a judicial admission, they do not support the Reilleys’ position.  The credit for the $9,398.47 in wage garnishment is clear, but it is alone immaterial and does not in any way show that the credit listed on the Renewal is incorrect.  That amount could easily be simply part of the much large credit total listed in the Renewal and nothing demonstrates to the contrary.  The Reilleys also do not base their argument on this portion of the allegations, anyway, but merely add it to the real number on which they rely: the $50,000 mentioned in the Nevada Complaint.  Crucially, the allegations actually state that the Plaintiffs obtained that amount for the judgment in the Second Action, not this action.  The Second Action was, of course, part of an effort to enforce the Judgment in this action but it has its own terms and judgment, and included its own fraud claims, specifically fraudulent transfer, and there is no basis whatsoever for assuming that all of a payment on that Second Action must, or even could, be credited to the Judgment in this action. 

Plaintiffs, moreover, explain that the $50,000 credit for the judgment in the Second Action was in fact apportioned between both this action and the Second Action, with $32,661.59 credited to the underlying claim on this action.  Harris Dec., ¶¶2,5.  Notably, this figure plus the amount stated to have been obtained through wage garnishment total $42,060.06, almost identical to the figure given for the credit in the Renewal.  The court does not a slight discrepancy between the two of $10.18, but nothing more.

The Reilleys fail to provide evidence or analysis to allow the court to find the claimed error while the evidence on the whole is contrary to their position.  This possible error also does not go to the core of the underlying judgment itself but only to a potential credit for other payments on it.  Even if the Reilleys are correct, such an issue may be resolved without finding the Renewal to be incorrect or void. Moreover, again, should this figure be incorrect as they claim, the appropriate solution would be to vacate the Renewal and then enter a corrected one.  However, as stated, there is insufficient basis for finding the Renewal to be incorrect. 

Conclusion

Motion to Vacate GRANTED in part, DENIED in part.  As specified further above, the court orders the Renewal of Judgment filed on April 20, 2015 to be vacated and a new, corrected, renewal to be entered in its place.  The court finds the Renewal to be incorrect because it incorrectly names Mary as a judgment debtor and because it misspelled the name of Defendant and judgment debtor Martin.  The court, as specified above, orders a renewal to be entered correcting these two errors.  The court in all other respects DENIES the motion.   The prevailing party shall prepare and serve a proposed order consistent with this tentative ruling within five days of the date set for argument of this matter. Opposing party shall inform the preparing party of objections as to form, if any, or whether the form of order is approved, within five days of receipt of the proposed order. The preparing party shall submit the proposed order and any objections to the court in accordance with California Rules of Court, Rule 3.1312.

3-7. SCV-267688, Oak Grove Construction Co., Inc. v. Kelly

RULING ON CROSS-DEFENDANT JOHN KELLY’S DEMURRER TO THE FIRST AMENDED CROSS-COMPLAINT & MOTION TO STRIKE

This is a joint ruling on Cross-Defendant John Kelly (hereafter, “John”)’s demurrer to the First Amended Cross-Complaint (“FACC”) and motion to strike portions thereof. The demurrer to the FACC is SUSTAINED without leave to amend. John’s request for judicial notice is GRANTED. Cross-Complainant Thomas Kelly, III (hereafter, “Thomas”)’s objection to John’s oversized opening brief is SUSTAINED. While John’s opening brief is only one page over the limit of the Rules of Court, there is a pattern of John filing oversized briefs without first obtaining leave of Court. Thus, the Court exercises its discretion not to consider the last page of John’s opening brief. Thomas’s request for judicial notice is GRANTED. Counsel for John shall submit a written order consistent with this tentative ruling and in compliance with Rule 3.1312.

Due to the sustaining of the demurrer without leave to amend, the motion to strike portions of the FACC is MOOT.

Analysis:

This Court previously sustained John’s demurrer to Thomas’s Cross-Complaint and issued a detailed order after hearing addressing each of the arguments made in opposition by Thomas. The Court granted Thomas leave to amend due to the defects being “potentially capable of remedy through amendment.” Thomas has now amended the Cross-Complaint but has asserted substantially the same allegations in support of the causes of action, with no new facts that would establish liability for John. Thomas’s opposition to this demurrer reasserts arguments that were raised and addressed by this Court during the first demurrer proceedings. This Court will not again respond to each argument re-asserted. The Court will instead incorporate the June 21, 2023 Ruling on Cross-Complainant/Cross-Defendant’s Demurrer to Cross-Complaint into this ruling and will direct the parties to it. The Court will address any new facts alleged in the complaint and any new arguments made in the opposition.

I.                    Standards on Demurrer

A demurrer tests whether the complaint sufficiently states a valid cause of action.  (Hahn v. Merda (2007) 147 Cal.App.4th 740, 747.)  Complaints are read as a whole, in context and are liberally construed.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see also, Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.)  In reviewing the sufficiency of a complaint, courts accept as true all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law, or the construction of instruments pleaded, or facts impossible in law.  (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43; see also, South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)  Matters which may be judicially noticed are also considered. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)

It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) However, “Leave to amend should be denied where the facts are not in dispute and the nature of the claim is clear, but no liability exists under substantive law.” (Lawrence v. Bank of Am. (1985) 163 Cal.App.3d 431, 436.) The burden is on the plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading. (Goodman, supra, at 349.)

II.                 First Cause of Action for Breach of Fiduciary Duty

This Court previously found that Thomas had not alleged the existence of a duty owed to him by John. Despite the Court’s previous ruling, Thomas continues to allege, with no new facts asserted in support that, “As the trustee for the Trust and as counsel for a trustee, Cross-Defendants both had an affirmative fiduciary duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration pursuant to California Probate Code § l6060.” Many cases cited and arguments made in opposition to this point have previously been raised in opposition and addressed by the Court in the prior demurrer proceedings. The Court will not now re-analyze them. This is especially so given that Thomas has not alleged any new facts that would suggest a duty owed to him by John.

To the extent Thomas might assert that newly asserted facts concerning the Law Corporation give rise to a duty owed by John to him (which is not argued in the opposition, but the Court will address nonetheless), such an argument would be unavailing. Thomas alleges in the Cross-Complaint that the Law Corporation is the property of the trust, that John is the “current registered agent,” and Cross-Defendants failed to protect the Law Corporation by failing to prepare and file tax returns and failing to maintain the corporate status. Thomas has not provided any authority, and the Court is aware of none, which provides that the person who is merely listed as the agent for service for a corporation has a duty to file tax returns and maintain the corporate status.

Thomas cites several cases not previously relied upon for the assertion that “a trust

beneficiary can pursue a cause of action against a third party who actively participates in a

trustee's breach of trust.” This is true. However, each of the cases cited involved some financial or other benefit alleged to have been gained by the third party participating in the breach. Thomas has not alleged any financial or other benefit gained by John.

Thomas also cites several cases in support of his argument that John owed him an independent duty as an attorney not to engage in fraud. First, as will be discussed below, Thomas has not alleged a viable claim for fraud against John. Second, as explained in Pavicich v. Santucci (2000) 85 Cal.App.4th 382, cited by Thomas, “…an attorney, acting in the scope of his or her official duties, and not for individual gain, can be liable to third parties in certain circumstances. But those circumstances will always require that the attorney have a duty to the third party.” (Id. at 395.) “A nonfiduciary as well as a fiduciary owes a duty not to engage in actual fraud, but only a fiduciary owes a duty not to engage in constructive fraud.” (Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1597. Italics in original.) John is not alleged to be the fiduciary of Thomas, thus the duty owed by John is to not engage in actual fraud. Even if Thomas had successfully pleaded a viable fraud claim against John, it is a constructive fraud claim because Thomas has not alleged any facts to suggest actual fraud, in other words, an affirmative misrepresentation made by John. Accordingly, this argument is also unpersuasive.

Thomas has failed to allege facts supporting a duty owed to him by John. Under substantive law, it is clear that there is no liability for John for this cause of action. Thomas has not attempted to demonstrate in his opposition how the defects in this pleading can be cured by amendment, as is his burden.

III.              Second Cause of Action for Fraud

As explained in the Court’s previous order on demurrer, Thomas’s fraud claim against John depends on arguments of fraud through concealment. Fraud through concealment requires a duty to disclose (Civ. Code, § 1710 (3); Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613). As explained above, Thomas has not alleged facts nor cited law which support a duty owed by John to disclose information to Thomas.

Furthermore, the Cross-Complaint still fails to allege detrimental reliance. The Court previously stated, “Thomas must plead that he was unaware of the failure to obtain tail coverage and would not have acted as he did if he had known, and as a result of the concealment or suppression of this fact, he sustained damages…Thomas must allege each element of fraud, factually and specifically to survive demurrer…Thomas makes no effort to elucidate any alternative course of action, and therefore expresses no reliance.” (Italics added.)

Thomas has now alleged in paragraph 53 that he was unaware that the Trustee failed to secure the tail coverage. However, Thomas has not alleged any facts whatsoever to suggest that he would have acted differently if he had known of the lack of coverage, nor how he would have acted differently if he had known. Thomas makes arguments to this point in his opposition, but these allegations were not included in the FACC. Even if they were, as stated in the opposition, they would not meet the heightened fraud standards. Even if Thomas could plead this element with specificity, he has not alleged a duty to disclose and has not explained how this defect could be cured by amendment.

Thomas has not met his burden on this motion to show how the defects herein stated could be cured by amendment. It is clear based on the facts and the pleadings that there is no liability for John under substantive law for these causes of action. The demurrer is sustained without leave to amend.

________________________________________________________________________________________________________________________________________________________________________ 

CROSS-DEFENDANT WILLIAM KELLY’S DEMURRER TO THE FIRST AMENDED CROSS-COMPLAINT

Cross-Defendant William Kelly (hereafter, “William”)’s demurrer to the First Amended Cross-Complaint (“FACC”) is SUSTAINED without leave to amend. The Probate Court has exclusive jurisdiction over the conflict between these parties. William’s request for judicial notice is GRANTED. Cross-Complainant, Thomas Kelly, III (hereafter, “Thomas”)’s request for judicial notice GRANTED. Counsel for William shall submit a written order consistent with this tentative ruling and in compliance with Rule 3.1312.

Due to the sustaining of the demurrer without leave to amend, the motion to strike portions of the FACC is MOOT.

Analysis:

I.                    Standards on Demurrer

A demurrer tests whether the complaint sufficiently states a valid cause of action.  (Hahn v. Merda (2007) 147 Cal.App.4th 740, 747.)  Complaints are read as a whole, in context and are liberally construed.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see also, Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.)  In reviewing the sufficiency of a complaint, courts accept as true all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law, or the construction of instruments pleaded, or facts impossible in law.  (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43; see also, South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)  Matters which may be judicially noticed are also considered. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)

It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) However, “Leave to amend should be denied where the facts are not in dispute and the nature of the claim is clear, but no liability exists under substantive law.” (Lawrence v. Bank of Am. (1985) 163 Cal.App.3d 431, 436.) The burden is on the plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading. (Goodman, supra, at 349.)

II.                 The Probate Court has Exclusive Jurisdiction over this Conflict.

Probate Court § 17000(a) provides that the superior court having jurisdiction over the trust has “exclusive jurisdiction of proceedings concerning the internal affairs of trusts.” Subsection (b) provides, that the superior court having jurisdiction over the trust also has concurrent jurisdiction over “(1) Actions and proceedings to determine the existence of trusts. (2) Actions and proceedings by or against creditors or debtors of trusts. (3) Other actions and proceedings involving trustees and third parties.”

According to Probate Code § 17200(b), proceedings concerning the internal affairs of a trust include, in pertinent part, “passing upon the acts of the trustee, including the exercise of discretionary powers…” and “Compelling redress for breach of the trust by any available remedy.” (Prob. Code, § 17200(b)(5)&(12).)

Here, Thomas’s claims in the FACC against William, the Trustee of the Thomas P. Kelly, Jr. Trust, concern the internal affairs of the trust because they pass upon the discretionary acts of the trustee and they seek to compel redress for breach of the trust.

Thomas argues in opposition that it is error to conflate venue with jurisdiction. However, this argument is unpersuasive and Thomas’s attempt to distinguish the authority of Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419 is unavailing. As the Saks Court pointed out, The Law Revision Commission Comment to [Prob. Code § 17000] states that “‘[i]t is intended that the department of the superior court that customarily deals with probate matters will exercise the exclusive jurisdiction relating to internal trust affairs provided by subdivision (a).’”  (Id. at 429.)

“Section 17001 of the Probate Code makes clear that the court with exclusive probate jurisdiction ‘is a court of general jurisdiction and has all the powers of the superior court.’ In sum, the provisions of the Probate Code control the parties and the subject matter of Saks and King's litigation by setting forth the applicable remedies and the proceedings to be followed. Under these provisions, the probate department has exclusive jurisdiction over proceedings involving the internal affairs of the Trust.”

(Ibid.)

As explained by a case cited by Thomas in opposition which discussed whether a related civil complaint should be heard in the probate department, “by statute, the probate department has exclusive jurisdiction of the [trust petition],” and “concurrent jurisdiction of the civil complaint.” (Est. of Bowles (2008) 169 Cal.App.4th 684, 695.) “The probate court has the power to determine the whole controversy including the civil action.” (Id. at 696.)

Here, Thomas filed a verified petition to remove William as the trustee in the Probate Department of the Sonoma County Superior Court in case number SPR-095583. The petition (and the cross-complaint) also alleges that William, as trustee, previously filed a Heggstad petition in the Sonoma County Probate Court regarding the Thomas P. Kelly, Jr. Trust in case number SPR-094988. The Probate Department of the Sonoma County Superior Court has jurisdiction over the Thomas P. Kelly, Jr. Trust.

Thomas’s trust petition references Thomas’s cross-complaint against William in this civil action. The facts underlying the trust petition are nearly identical to the facts underlying Thomas’s cross-complaint against William, except for the newly alleged facts regarding the Law Corporation in the FACC. After alleging nearly identical facts as those alleged in this civil case, the trust petition cites: “Probate Code § 17200(a) provides that a beneficiary of a trust may petition the Court concerning the internal affairs of the trust, including the removal of a trustee under Probate Code § 17200(b)(10).” The trust petition describes the basis for removal as being “breach of trust” pursuant to Probate Code § 16420, as well as “actions both personally and through his counsel John A. Kelly deliberately calculated to conceal these breaches of his duty as a trustee.” (RJN, Ex. 1, ¶ 97-11.)

Thomas now argues in opposition that the cross-complaint in this matter, which alleges nearly identical facts and nearly identical injuries, does not concern the “internal affairs” of the trust. This argument is unpersuasive. To the extent that the FACC now alleges new facts regarding the Law Corporation, the Law Corporation is alleged to be trust property and Thomas is alleging the trustee failed to adequately manage and protect it. This is also an internal affair of the trust. It is clear that the allegations asserted against William in the FACC concern the internal affairs of the trust and thus the Probate Department of this Court has exclusive jurisdiction over this matter.
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CROSS-DEFENDANT JOHN KELLY’S MOTION FOR ATTORNEY’S FEES AND COSTS

Cross-Defendant John Kelly (hereafter “John”)’s motion for attorney’s fees and costs is GRANTED in the total amount of $29,170.00. This consists of $20,470.00 in fees and costs for the anti-SLAPP motion and appeal and $8,700.00 in fees and costs for this motion. John’s request for judicial notice is GRANTED. Cross-Complainant Thomas Kelly, III (hereafter, “Thomas”)’s objection to John’s oversized opening brief is SUSTAINED. While John’s opening brief is only one page over the limit of the Rules of Court, the brief contains significant footnotes and there is a pattern of John submitting oversized briefs in this matter. Thus, the Court exercises its discretion not to consider the last page of John’s opening brief. Counsel for John shall submit a written order consistent with this tentative ruling and in compliance with Rule 3.1312.

As an initial matter the Court notes that the Court is referring to the parties by their first names. This is because the parties are related and have the same last names. No disrespect is intended.

Analysis:

I.                    John is Entitled to Attorney’s Fees.

“[A] prevailing defendant on a special motion to strike shall be entitled to recover that defendant's attorney's fees and costs.” (CCP § 425.16.) “Given the express legislative preference for awarding fees to successful anti-SLAPP defendants, a party need not succeed in striking every challenged claim to be considered a prevailing party within the meaning of section 425.16.” (Mann v. Quality Old Time Serv., Inc. (2006) 139 Cal.App.4th 328, 339.) “On the other hand…Where the results of the motion are ‘minimal’ or ‘insignificant’ a court does not abuse its discretion in finding the defendant was not a prevailing party.” (Id. at 340.) “We thus hold that a party who partially prevails on an anti-SLAPP motion must generally be considered a prevailing party unless the results of the motion were so insignificant that the party did not achieve any practical benefit from bringing the motion. The determination whether a party prevailed on an anti-SLAPP motion lies within the broad discretion of a trial court.” (Ibid. Emphasis added. See also Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation (2019) 33 Cal.App.5th 38, 45.)

“An award of attorney fees to a partially prevailing defendant under section 425.16, subdivision (c) thus involves competing public policies: (1) the public policy to discourage meritless SLAPP claims by compelling a SLAPP plaintiff to bear a defendant's litigation costs incurred to eliminate the claim from the lawsuit; and (2) the public policy to provide a plaintiff who has facially valid claims to exercise his or her constitutional petition rights by filing a complaint and litigating those claims in court.” (Mann, supra, at 344.) “In balancing these policies, we conclude a defendant should not be entitled to obtain as a matter of right his or her entire attorney fees incurred on successful and unsuccessful claims merely because the attorney work on those claims was overlapping.” (Id. at 344-345.) “Instead, the court should first determine the lodestar amount for the hours expended on the successful claims, and, if the work on the successful and unsuccessful causes of action was overlapping, the court should then consider the defendant's relative success on the motion in achieving his or her objective, and reduce the amount if appropriate.” (Id. at 345.)

“This analysis includes factors such as the extent to which the defendant's litigation posture was advanced by the motion, whether the same factual allegations remain to be litigated, whether discovery and motion practice have been narrowed, and the extent to which future litigation expenses and strategy were impacted by the motion.” (Ibid.) “The fees awarded to a defendant who was only partially successful on an anti-SLAPP motion should be commensurate with the extent to which the motion changed the nature and character of the lawsuit in a practical way.” (Ibid.) “The court should also consider any other applicable relevant factors, such as the experience and abilities of the attorney and the novelty and difficulty of the issues, to adjust the lodestar amount as appropriate.” (Ibid.)

“‘[T]he anti-SLAPP statute's definitional focus is not the form of the plaintiff's cause of action but, rather, the defendant's activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.’” (Baral v. Schnitt (2016) 1 Cal.5th 376, 393.) “The anti-SLAPP procedures are designed to shield a defendant's constitutionally protected conduct from the undue burden of frivolous litigation. It follows, then, that courts may rule on plaintiffs' specific claims of protected activity, rather than reward artful pleading by ignoring such claims if they are mixed with assertions of unprotected activity.” (Ibid.) “Restricting anti-SLAPP motions to indivisible ‘causes of action’ as determined by primary right theory would be inconsistent with the Legislature's use of the term “special motion to strike.” (Id. at 394.)

Here, the Court of Appeal directed this Court, and this Court did, strike Thomas’s fraud crossclaim to the extent it was based on the representations made in the email referred to as the “March 18, 2021 email.” John has demonstrated that he gained a practical benefit from the partial grant of his anti-SLAPP motion in that such grant has assisted him in successfully challenging the remaining claims asserted against him by Thomas. Thomas argues that John did not gain any practical benefit from the granting of the anti-SLAPP motion because Thomas’s fraud claim was not completely disposed by the motion. However, Thomas has not cited any authority which dictates that an entire cause of action must be stricken for a party to be considered prevailing under the statute. Rather, reaching such a conclusion would be contrary to Baral v. Schnitt (2016) 1 Cal.5th 376, as previously cited.

It is true, as Thomas argues, that the majority of Thomas’s claims survived the anti-SLAPP motion. John only prevailed on one claim alleged as one of multiple bases for relief under one cause of action. Nonetheless, the test for whether John prevailed is not a simple tally of successful claims versus unsuccessful claims. Furthermore, the disproportion in successful versus unsuccessful claims was taken into account when considering how much to reduce the fee award.

Thomas further argues that John is not the prevailing party pursuant to California Rules of Court, Rule 8.278, because the Court of Appeal did not award him costs on appeal. However, the Rule states, “Unless the court orders otherwise, an award of costs neither includes attorney's fees on appeal nor precludes a party from seeking them under rule 3.1702.” (CRC, Rule 8.278(d)(2).) Rule 3.1702 applies in civil cases to claims for statutory attorney fees and claims for contractual attorney fees. “A ‘prevailing party’ with respect to an appellate cost award is not necessarily the same as a ‘prevailing party’ under the anti-SLAPP statute.” (Mann, supra, 139 Cal.App.4th at 341.) Since there is a statutory basis for fees under CCP § 425.16, this argument is unavailing.

II.                 The Motion is Timely.

Thomas argues in opposition that the motion is untimely because John is seeking to recover fees for an appeal and CRC § 8.278(c)(1) sets a time limit of 40 days after issuance of the remittitur to serve and file a memorandum of costs. John is not seeking his costs on appeal in this motion. Therefore, Rule 8.278(c)(1) does not apply. According to Carpenter v. Jack in the Box Corp. (2007) 151 Cal.App.4th 454, 461-468, this motion is timely.

III.              The Fees Shall be Reduced to Account for John’s Level of Success.

As explained above, Mann v. Quality Old Time Services, Inc. provides that the Court should first determine the loadstar and then reduce the fees attributable to the causes of action that remained in the litigation. (139 Cal.App.4th at 344-345.)

The Court will note initially that, except for one “example,” Thomas has not specifically opposed any particular aspect of John’s request, such as the hourly rate sought, or any specific line item in the billing descriptions provided. Rather, John objects to the entire request as being “totally unreasonable” and provides a purported example of “padding the bill” without any further explanation or foundation for how this example is an inflated request.

John’s counsel represents in paragraph 92 of his declaration that the total fees claimed by him for services as John’s counsel in the anti-SLAPP proceedings in this Court and the Court of Appeal is $81,380.00. Despite this, John is requesting $40,000 as a good faith reduction in fees for his anti-SLAPP motion and appeal, and $500 for costs incurred at the trial court, not the appellate court. John also seeks $15,250 in fees for the instant motion.

John’s counsel’s normal hourly rate is $500 per hour, which the Court finds to be reasonable for an attorney of his experience given the local market. Counsel represents that his hourly rate for appellate work is $650 per hour. The Court finds this to be reasonable.

The Court also finds the number of hours requested to be reasonable. Counsel for John has provided a detailed billing description in his declaration. The Court does not find the unsupported opposing allegation of inflated billing to be persuasive. Therefore, the loadstar is $81,380.00, plus costs in the amount of $500.00. The total amount before reduction is $81,880.00

Because the fees awarded to a partially successful defendant “should be commensurate with the extent to which the motion changed the nature and character of the lawsuit in a practical way,” the Court finds that the loadstar should be reduced by 75%. While John has represented that the granting of the anti-SLAPP assisted him on demurrer, the demurrer was with leave to amend, Thomas has amended, and another demurrer and motion to strike is currently pending. Therefore, the ultimate success of John’s attack on the pleading has yet to be determined. Otherwise, the same factual allegations remain in the case and John has not shown that discovery or motion practice have been narrowed. (See Mann, supra, at 345.) Based on a consideration of all of the factors, the Court finds a 75% reduction to be appropriate. Accordingly, John shall be entitled to fees and costs for the anti-SLAPP motion and appeal in the total amount of $20,470.00.

As for fees for this motion, John seeks $15,250.00 based on 30.5 hours at $500 per hour. The Court finds this request to be unreasonable given the fact that the motion repeats much of the information provided in previous briefs filed by John, John’s counsel’s declaration is unnecessarily 45 pages long, repeats pages of factual allegations already included in the opening brief or not relevant to the Court’s analysis on this motion, and the fact that, again, John has submitted an oversized brief without first obtaining leave of Court to do so. The declaration in support of this motion does not provide the supporting billing information until paragraph 99. Claiming 18.2 hours to prepare this motion, which is purportedly a good faith reduction from 36.2 hours, is still excessive given the above considerations. John also claims 8 hours for responding to the opposition, which is apparently a reduction from 15+ projected hours. The Court finds 12 hours to be reasonable for preparing the motion and 5 hours to be reasonable for responding, given that the opposition is only 5 pages long. Accordingly, John shall be entitled to fees for the instant motion in the total amount of $8,500.00.

The Court notes that John listed an entry of .3 hours for preparing and filing the notice of entry of order of the June 5, 2023, order of Judge Pardo on the Anti-SLAPP motion and 4 hours for preparing three drafts of said order. That order is not related to this fees motion. This time will not be granted as fees for preparing this motion.

John seeks costs for this motion in the amount of $500, which includes a projection of $300 if a court reporter is necessary at the hearing. The uncertain court reporter fees for this motion are denied. The remaining fees are granted. John is awarded total costs for this motion of $200.
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OSC HEARING

On October 9, 2023 the Court issued an order to show cause ordering Cross-Complainant Thomas Kelly, III (hereafter, “Thomas”) to show cause why he should not be sanctioned or held in contempt for violating the Court’s ex parte orders issued in this case on September 5 & 25, 2023. The Court now finds that Thomas has shown sufficient good cause. The order to show cause is vacated.

 

 

 

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