Judge: Ashfaq G. Chowdhury, Case: EC065795, Date: 2023-12-22 Tentative Ruling
Case Number: EC065795 Hearing Date: December 22, 2023 Dept: E
Hearing Date: 12/22/2023 – 10:00am
Case No. EC065795
Trial Date: UNSET
Case Name: LEONID TEPLITSKY v. ILANA MALARAN
Moving
Party: Defendants, Ilana Malaran and Naralam, LLC
Responding Party: Plaintiff,
Leonid Teplitsky
Moving Papers: Notice/Motion
Opposition Papers:
Opposition; Evidentiary Objections to Declaration of Ilana Malaran
Reply: Reply
RELIEF REQUESTED¿
Defendants, Ilana Malaran and Naralam, LLC move the Court for an order
modifying the Court’s June 3, 2022, or by allowing the release of some of the
funds held pursuant to that order.
Defendants’
motion will be based upon this notice, the supporting declaration and exhibits
thereto, the entire contents of the Court’s file, and such argument and
evidence as the Court may permit.
BACKGROUND
The instant action involves two consolidated cases. In EC065795,
Leonid Teplitsky alleged a cause of action for fraudulent conveyance against
Ilana Malaran, Stanley Azrilyan, Deanna Azrilyan, Naralam LLC, and RX
Ingredients, Inc. In LC105154, Leonid Teplitsky alleged causes of action for
fraudulent conveyance and imposition of a constructive trust. In each of these
consolidated cases, Plaintiff has alleged that RXI, Stanley, and/or Deanna
fraudulently transferred their assets to Malaran/her companies to avoid having
to pay a judgment they owed to Plaintiff. One of the fraudulent conveyances
involved the property at 3184 Dona Sarita Place in Studio City and the other
involved the property located at 4600 Burnet Avenue in Sherman Oaks.
ANALYSIS
Preliminary Matter
On
06/03/2022, this Court granted the motion to expunge the lis pendens filed by
Ilana Malaran on 05/05/2022.
The Court stated, “The motion to expunge the lis
pendens in both actions is GRANTED because claimant did not meet his burden by
a preponderance of the evidence in establishing the probable validity of his
claims. Further, no undertaking is ordered. If the claimant fails to meet his
or her burden, the court must order that the notice be expunged and may not
order an undertaking be given as a condition of expunging the notice. (CCP §
405.32.) However, the Court intends to Order that a complete and accurate Accounting
be timely provided to all parties when any of the properties discussed herein
are sold, conveyed, transferred, or otherwise encumbered, and that the proceeds
of any such sale(s) remain in trust or escrow so long as these matters are
pending.” (Min. Order 6/3/2022, p. 4.)
Further, after hearing argument, the Court noted, “The
Court modifies its tentative, changing sanctions against Plaintiff and
Plaintiff's counsel, to sanctions against Plaintiff and not Plaintiff's
counsel. The tentative becomes the final order of the Court.” (Min. Order
6/3/2022, p.4-5.)
Legal Basis for the Motion
Movants’
motion does not cite or explain the legal authority by which they believe the
Court can modify the Court’s 6/3/2022 Minute Order.
Their argument and theory as to why the Minute Order
should be modified appears to be based on why the Movants personally think the
order should be modified, based on changed circumstances in the case.
Movants state that since the time of the 6/3/2022
Minute Order, one of the properties at issue in this case – the 3184 Dona
Sarita Property – was sold. Movants also state that the total proceeds to the
Defendant now held in her counsel’s trust account are $2,035,724.80. Movants
now wish to modify the 6/3/2022 Minute Order to allow the release of all but
$700,000.00 of the currently held funds to Defendant Ilana Malaran, and that
the June 3, 2022 order remain in effect as to the Burnet Property should it be sold
during the pendency of this case.
Movants appear to believe that the amount held in her
counsel’s trust account should be allowed to be reduced to $700,000 because:
1. At the time of the Court’s ruling, a trial date
existed, but now the trial date is vacated. Further it is unclear whether
matters in the criminal case will be sufficiently settled to allow a trial date
to be set. Additionally, if the Court were inclined to set a bifurcated trial
date in this matter, it is possible that no trial date will be available until
well into 2024.
2. Since the time of the Court’s ruling, the Dona Sarita
Property was sold, and the total proceeds to the Defendant, now held in her counsel’s
trust account, are $2,035,724.80.
3. The other property in this case was recently
appraised for $2,600,000.00.
4. The Court’s Order struck a balance between the
parties’ interests and was not intended to be punitive towards Defendants’
interests.
5. According to Plaintiff’s 2/28/2023 Trial Brief, the
current balance owed on the underlying judgment is $637,862.50. Therefore, the
amount held in the trust is more than three times the current balance owed in
Plaintiff’s 2/28/2023 Trial Brief. Further, the total value of the Burnet
Property according to the recent appraisal is another four times that amount.
6. The Burnet Property and $700,000.00 would in effect
equal approximately five times the amount of Plaintiff’s claim, rather than
seven times the amount, and would thus strike a more equitable balance of the
parties’ competing interests.
In Opposition, Plaintiff argues that the subject
motion should be denied as an untimely motion for reconsideration of the June
3, 2022 Order. Plaintiff cites to CCP §1008(a), (b), and (e).
Discussion – Legal Basis for the Motion
Plaintiff’s
argument that this motion is an untimely motion under CCP §1008(a) appears to
be availing. CCP §1008(a) states, “When an application for an order has been
made to a judge, or to a court, and refused in whole or in part, or granted, or
granted conditionally, or on terms, any party affected by the order may, within
10 days after service upon the party of written notice of entry of the order
and based upon new or different facts, circumstances, or law, make application
to the same judge or court that made the order, to reconsider the matter and
modify, amend, or revoke the prior order. The party making the application
shall state by affidavit what application was made before, when and to what
judge, what order or decisions were made, and what new or different facts,
circumstances, or law are claimed to be shown.” (CCP §1008(a).)
This argument appears availing because Movants did not
move within 10 days after service of written notice of entry of the order.
Further, the Reply did not attack Opposition’s argument on this point.
As to whether this motion is untimely under 1008(b)
and (e), the Court is unclear. The Court is unclear if this is untimely under 1008(e)
because Opposition doesn’t explain why it is untimely under 1008(e). Further,
Reply does not explain why this motion is timely under 1008(e). CCP §1008(e)
states, “This section specifies the court’s jurisdiction with regard to
applications for reconsideration of its orders and renewals of previous
motions, and applies to all applications to reconsider any order of a judge or
court, or for the renewal of a previous motion, whether the order deciding the
previous matter or motion is interim or final. No application to reconsider any
order or for the renewal of a previous motion may be considered by any judge or
court unless made according to this section.” (CCP §1008(e).)
As to 1008(b), CCP §1008(b) states, “A party who
originally made an application for an order which was refused in whole or part,
or granted conditionally or on terms, may make a subsequent application for the
same order upon new or different facts, circumstances, or law, in which case it
shall be shown by affidavit what application was made before, when and to what
judge, what order or decisions were made, and what new or different facts,
circumstances, or law are claimed to be shown. For a failure to comply with
this subdivision, any order made on a subsequent application may be revoked or
set aside on ex parte motion.” (CCP §1008(b).)
As to 1008(b), Plaintiff’s Opposition argues:
CCP section
1008(b) is not an escape route for Malaran and Naralam because they are not
seeking the "same order" in the Subject Motion as previously sought
and there are no "new or different facts, circumstances, or law." The
fact that the trial of this case was vacated on May 8, 2023 is not something
that could not have been foreseen. Moreover, on May 8, 2023, when the Court
asked counsel for Malaran and Naralam whether the trial date should be vacated
because of the pending criminal proceedings against Stanley, Malaran's attorney
responded in the affirmative.
In June, 2022
Malaran and Naralam had to know the value of the Dona Sarita and the Burnet
Properties and the amount being claimed by plaintiff in this case. There is no
evidence that the value of the Dona Sarita Property increased between June,
2022 and the date when Malaran entered into a contract to sell that property.
Thus, Malaran and Naralam knew, or should have known, when the June 3, 2022
Order was entered how much equity Malaran had in that property and the value of
the Burnet Property. Therefore, there are no changed circumstances.
(Oppo. p. 5-6.)
In Reply, it is
unclear if the Reply is attacking Opposition’s argument on 1008(b). One portion
of the Reply looks as if it may attack Opposition’s argument on 1008(b) and it
states:
While Plaintiff
argues – based purely upon supposition – that MALARAN and NARALAM, LLC “had to
know the value” of the properties (Opposition, 6:2), a more important
consideration would be, Did the Court know? And in fact, the Court had not
solicited that information from the parties prior to its June 3, 2022, ruling,
and neither party briefed the issue. As could be gleaned from a cursory reading
of the motion to expunge, the opposition, etc., the value of the properties,
was not addressed by either side. The Court’s June 3, 2022 ruling crafted an
unusual compromise, one of the virtues of which was its originality. Code of
Civil Procedure section 405.38, etc., does not propose the mechanism arrived at
by the Court as a counterweight to expunging lis pendens.
[Footnote 1 state,
“Moreover, the lis pendens had been in place by that point for close to six
years, from the filing of this case in October 2016, to June, 2022. During that
entire time the property was unmarketable – and real estate markets are
notoriously fickle and dynamic. Suggesting that Defendant “had to know” ignores
the circumstantial facts which Plaintiff himself helped shape.”]
While Plaintiff
objects to Defendant indicating that she would like to use some of the money to
open an education savings account for her child, the specificity of the
objection misses the quite obvious point that ordinary people can think of
countless good and useful things to do with their own money. Plaintiff’s
suggestion to put the money into an interest-bearing account is similarly off the
mark. Bank interest rates on deposits are universally pitiful, and as a basic
principal of property rights, people should be able to use their money as they
wish. As set forth in Article I, Section 1 of the California Constitution, the
enumerated “inalienable rights” include acquiring and “possessing . . .
property.”
(Reply p. 5-6.)
As to 1008(b), the Court finds
Opposition’s argument persuasive, particularly that this motion is improper
under 1008(b) because Movants don’t seek the same order. Further, in Reply,
Movants don’t explain in any clear or understandable manner how 1008(b)
applies. Most importantly, under 1008(b), it appears to be Movants’ burden to
establish that 1008(b) has been met, and Movants do not do that in any type of
understandable manner. Additionally, Movants didn’t even state that they were
moving under 1008(b) in their moving papers. In fact, the moving papers did not
cite any legal authority as to their basis for this motion.
In Reply, Movants cite to State of California v. Superior Court (Flynn) and
argue that the constraints of 1008 do not apply to the matter sub judice.
“Even without a change of law, a trial court has the inherent power to
reconsider its prior rulings on its own motion at any time before entry of
judgment.” (State of California v. Superior Court (Flynn) (2016) 4
Cal.App.5th 94, 100.)
As to this argument, Movants’ citation
appears to be accurate. However, the Court has concerns about notice because
Movants did not provide this as a basis under which they were seeking relief
until their Reply. “A notice of motion must state in the opening paragraph the
nature of the order being sought and the grounds for issuance of the order.”
(CRC, Rule 3.110(a).) At the hearing,
the court will hear argument as to whether or not State of California v.
Superior Court (Flynn) provides a legal basis for Movants to seek relief, and
whether this grounds for relief was properly noticed before the Court.
In Reply, Movants also argue:
While the Court
without a doubt crafted an original compromise on June 3, 2022, at the time of
that ruling, a trial date had been set in this case. The June 3, 2022 ruling,
at the time, did not appear to be what now amounts to the practically limitless
withholding of more than two million dollars of a Defendant’s money – after she
prevailed on her motion to expunge. Despite expunging the lis pendens, the
Court effectively granted Plaintiff an attachment – though an actual attachment
would require that Plaintiff show through competent evidence the probable
validity of his claim (Code of Civ. Proc. §484.010), which the Court expressly
found Plaintiff did not do, and would further require posting a bond (Code of Civ.
Proc. §484.090(b)). None of the due process requirements which must be met for
the issuance of a right to attach order were met.
(Reply p. 4-5.)
As to this argument, the Court finds it
unavailing because Movants provide no legal authority to assess whether this
argument has merit. Movants simply conclude that due process requirements were
not met without providing a legal standard as to how they have established that
argument.
Arguments Asserted by the Parties Not
Rooted in Law
Both
parties in Opposition and Reply assert arguments that don’t appear to be tied
to any legal authority but according to their own equitable principles.
Opposition argues that the funds from the
sale of the Dona Sarita Property need to remain in the trust account of the
attorney for Malaran and Naralam to protect Plaintiff if he obtains a judgment
against them and an award of punitive damages.
Opposition argues as follows:
The principal amount
of the Judgment is $688,670.18. Thus, that is a component of the damages being
claimed by plaintiff in each of the Subject Actions.
Punitive damages
are requested in each of the Subject Actions. In cases such as the Subject
Actions, a general measure of punitive damages if they are awarded would be a
multiple of three of the general damages. This assumes that the defendants have
the financial ability to pay such an amount but that appears to be the case
with regard to Malaran and her companies.
If the general
damages are $688,670.18, the punitive damages, if awarded, could likely be
$2,066,010.54. That would result in a total judgment of $2,754,680.72 (the
"Potential Judgment"). Therefore, that is the amount plaintiff
believes is necessary to have reserved in accordance with the June 3, 2022
Order.
The Impounded
Funds are less than the amount of the Potential Judgment. Therefore, those
funds should not be released. Otherwise,
plaintiff will not have the protection that was to be afforded by the June 3,
2022 Order. This is especially important to plaintiff because of the history of
this matter and Stanley's long history of felony convictions.
If the Burnet
Property is sold, then plaintiff would then be willing to have the net sales
proceeds received by the seller in excess of the difference between the amount
of the Potential Judgment and the funds being held in connection with the sale
of the Dona Sarita Property released to the seller provided that Malaran and
her companies stipulate that the total Impounded Funds from the sale of the two properties can be
used to satisfy any judgment in favor of plaintiff in connection with either of
the Subject Actions.
If Malaran and
Naralam are concerned about the Impounded Funds being in a trust account where
the interest is paid to the State Bar, that can be easily remedied by having
the Impounded Funds deposited into a separate account where the interest will
be paid to Malaran, not the State Bar.
As to Malaran's
statement that she would like to use some of the Impounded Funds.to create an
education savings account for her seven year old daughter, there is no evidence
that those funds cannot be deposited from some other source or that they are
now necessary.
(Oppo. p. 6-7.)
In Reply, Movants’ arguments as to this
issue appear to be on pages 2-4 of the Reply
TENTATIVE RULING
ON MOTION TO MODIFY THE 6/3/2022
MINUTE ORDER
The Court’s
inclination is to grant the motion, if the Movants can appropriately address
the notice issues discussed above.
The Court will
hear argument as to the Plaintiff’s evidentiary objections.
TENTATIVE
RULING – MOTION TO BIFURCATE TRIAL
Moving Party: Defendants, Ilana Malaran, 4600 Group
LLC, and Naralam LLC
Responding Party: Plaintiff, Leonid Teplitsky
Moving Papers: Notice/Motion
Opposition Papers: Opposition
Reply: Reply
RELIEF REQUESTED¿
Defendants, Ilana Malaran, 4600 Group, LLC, and Naralam, LLC move the Court for an order bifurcating the
trial – specifically, allowing the trial to proceed against all defendants
except defendant Stanley Azrilyan, against whom a stay has been imposed.
Defendants’ motion will be based
upon this notice, the supporting declaration and exhibits thereto, the entire
contents of the Court’s file, and such argument and evidence as the Court may
permit.
Legal Standard - Bifurcation
C.C.P. §598 provides as follows:
The court may,
when the convenience of witnesses, the ends of justice, or the economy and
efficiency of handling the litigation would be promoted thereby, on motion of a
party, after notice and hearing, make an order, no later than the close of
pretrial conference in cases in which such pretrial conference is to be held,
or, in other cases, no later than 30 days before the trial date, that the trial
of any issue or any part thereof shall precede the trial of any other issue or
any part thereof in the case, except for special defenses which may be tried
first pursuant to Sections 597 and 597.5. The court, on its own motion, may
make such an order at any time. Where trial of the issue of liability as to all
causes of action precedes the trial of other issues or parts thereof, and the
decision of the court, or the verdict of the jury upon such issue so tried is
in favor of any party on whom liability is sought to be imposed, judgment in
favor of such party shall thereupon be entered and no trial of other issues in
the action as against such party shall be had unless such judgment shall be
reversed upon appeal or otherwise set aside or vacated. If the decision of the
court, or the verdict of the jury upon the issue of liability so tried shall be
against any party on whom liability is sought to be imposed, or if the decision
of the court or the verdict of the jury upon any other issue or part thereof so
tried does not result in a judgment being entered pursuant to this chapter,
then the trial of the other issues or parts thereof shall thereafter be had at
such time, and if a jury trial, before the same or another jury, as ordered by
the court either upon its own motion or upon the motion of any party, and
judgment shall be entered in the same manner and with the same effect as if all
the issues in the case had been tried at one time.
(CCP §598.)
C.C.P. §1048(b) provides, as follows, “ The
court, in furtherance of convenience or to avoid prejudice, or when separate
trials will be conducive to expedition and economy, may order a separate trial
of any cause of action, including a cause of action asserted in a
cross-complaint, or of any separate issue or of any number of causes of action
or issues, preserving the right of trial by jury required by the Constitution
or a statute of this state or of the United States.
“The major objective of bifurcated trials is to
expedite and simplify the presentation of evidence.” (Foreman &
Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 888.)
Bifurcation frequently occurs when the determination
of one issue, such as an affirmative defense, renders other issues moot.
(See, e.g., Buran Equipment v. H& C Investment Co. (1983)
142 Cal.App.3d 338, 343-344.) Trial courts also often bifurcate
equitable and legal issues, resolving the issues of equity first in order to
promote judicial economy. (Darbun Enters, Inc. v. San Fernando
Community Hosp. (2015) 239 Cal.App.4th 399, 408-409.)
TENTATIVE RULING
MOTION TO BIFURCATE
The Court’s
tentative is to grant this motion, but the Court will ask the parties to
further address the issues. In
particular, the Court will ask the movants to explain how a bifurcated trial
could be conducted without running afoul of the one-judgment rule and
potentially conflicting findings.