Judge: Armen Tamzarian, Case: 22STCV32334, Date: 2024-11-22 Tentative Ruling

Case Number: 22STCV32334    Hearing Date: November 22, 2024    Dept: 52

Plaintiff Lee Ouye’s Motion for Summary Adjudication of His First and Fourth Causes of Action

Plaintiff Lee Ouye, Trustee of the Lee and Lorraine Ouye Trust Dated June 8, 1994, moves for summary adjudication of his first cause of action for breach of contract and his fourth cause of action for dissolution of partnership. 

Requests for Judicial Notice

            Ouye requests judicial notice of nine exhibits.  Defendant Mertz Del-Amo requests judicial notice of three exhibits.  Assuming the documents are subject to judicial notice, taking judicial notice of them is unnecessary.  (See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6; Appel v. Superior Court (2013) 214 Cal.App.4th 329, 342, fn. 6.)  All requests for judicial notice are denied.

Evidentiary Objections

            Ouye makes 10 objections to the declaration of Ronald Hegge.  All objections are overruled.           

Legal Standard for Summary Adjudication by Plaintiff

            A plaintiff moving for summary adjudication must prove each element of each cause of action; once the plaintiff does so, the burden shifts to the defendant to show a triable issue of at least one material fact.  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849; Code Civ. Proc., § 437c, subd. (p)(1).) 

1st Cause of Action: Breach of Partnership Agreement

            Ouye does not meet his initial burden on summary adjudication of this cause of action.  The elements of breach of contract are: “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.”  (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) 

Ouye does not meet his burden of proving the element of damages.  When damages are an element of the cause of action, the moving plaintiff must establish “both the fact and the amount of damages.”  (Pajaro Valley Water Management Agency v. McGrath (2005) 128 Cal.App.4th 1093, 1106.)  “[A] plaintiff cannot obtain judgment on a breach of contract cause of action in an amount of damages to be determined later.”  (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 241.)  Damages are an element of this cause of action.  Ouye’s motion does not purport to establish the amount of damages. 

In his reply to defendant William J. Beverly’s opposition, plaintiff argues he established he suffered $445,000 in damages because the partnership paid that amount to Mertz Management in management fees.  (UMF No. 30.)  Beverly responded that this fact was undisputed.  But Ouye does not show that amount constitutes damages resulting from a breach of the partnership agreement. 

Ouye argues Mertz Management could not recover those $445,000 in management fees because it had no “broker’s license to collect rents from tenants” as required under Business and Professions Code section 10131, subdivision (b).  (Motion, pp. 13-14.)  Ouye fails to show that collecting rents in violation of the Business and Professions Code breached any contract between the parties.  That is a statute, not a term of the contract. 

Even if the contract prohibits payments for collecting rent in violation of the Business and Professions Code, Ouye fails to meet his burden on summary adjudication for two other reasons. 

First, Ouye must show the entire amount of $445,000 in damages was for services that required a real estate broker’s license.  (See MKB Management, Inc. v. Melikian (2010) 184 Cal.App.4th 796, 805 [court could not conclude “that all of the services provided under the property management agreement were dependent upon or inextricably related to the acts for which a real estate broker’s license was required”].)  Ouye does not do so.

Second, the real estate licensing law “merely prevents one who is required to be [licensed] from bringing or maintaining an action to recover compensation.”  (Broffman v. Newman (1989) 213 Cal.App.3d 252, 261.)  An unlicensed person may still “defend[] an action to recover compensation already paid to him.”  (Ibid.)  Ouye’s cause of action for breach of contract is not an unlicensed person’s action to recover compensation.

4th Cause of Action: Dissolution of Partnership

            Triable issues of material fact preclude summary adjudication of this cause of action.  A partner may dissolve a general partnership “when any of the following occurs: (A) The economic purpose of the partnership is likely to be unreasonably frustrated.  (B) Another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on the business in partnership with that partner.  (C) It is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement.”  (Corp. Code, § 16801, subd. (5).)  Ouye does not show that, based on the undisputed facts, any of these bases for dissolution apply.

Ouye’s evidence demonstrates a serious dispute between some of the partners.  That does not necessarily mean a dissatisfied partner is entitled to judicial dissolution of the partnership.  The partnership was designed to be managed by a minority of its members.  The “restatement of partnership agreement” provides, “The management and control of the partnership shall be exercised by a Management Committee consisting of three (3) Managing General Partners.”  (Ouye Decl., Ex. 3, ¶ 7.)  Ouye’s evidence shows there are (or were in 2021) 15 partners.  (Id., Ex. 5, ¶ 3.)  The partnership agreement thus provides that only three of 15 partners will manage the business.  That a non-managing partner objects to the managing partners’ conduct, or the validity of the appointment of those managing partners, does not mean that partner can unilaterally dissolve the partnership. 

The record includes evidence permitting a reasonable trier of fact to conclude the partnership’s economic purpose is not unreasonably frustrated and that it is reasonably practicable to carry on the business.  The partnership’s business is managing a mobile home park.  The partnership hired a property management company to do that.  (Mertz Del-Amo Separate Statement, Nos. 11-12.)  Ronald Hegge testifies that the property management company “is managing the business of the partnership and the Park very successfully,” that all “partners are receiving detail[ed] financial statements on a monthly basis, and each partner has received financial distributions since the Committee assumed its role in June 2022.”  (Hegge Decl. ISO Mertz Del-Amo Opp., ¶ 11.)  Based on this evidence, a factfinder could determine that, despite the disputes between some partners, the partnership business continues to operate smoothly and in conformity with the partnership agreement.

The court cannot conclude that, as a matter of law, the partnership must be dissolved.  Ouye provides no authority on summary adjudication or summary judgment of a claim for dissolution of partnership.  He cites three cases, all of which were appeals from judgments after trial.  (Owen v. Cohen (1941) 19 Cal.2d 147; Navarro v. Perron (2004) 122 Cal.App.4th 797, 801; Vangel v. Vangel (1953) 116 Cal.App.2d 615, 619.) 

Disposition

Plaintiff Lee Ouye’s motion for summary adjudication is denied.