Judge: Barbara M. Scheper, Case: 22STCV04546, Date: 2023-09-14 Tentative Ruling

Case Number: 22STCV04546    Hearing Date: September 14, 2023    Dept: 30

Dept. 30

Calendar No. 

Robb Evans & Associates, LLC vs. Redwood Scientific Technologies, Inc, et. al.,  Case No. 22STCV04546

Tentative Ruling re:  Cross-Complainant’s Motion for Summary Judgment

Defendant/Cross-Complainant True Pharmastrip, Inc. (TPI) moves for summary judgment against all Defendants and Cross-Defendants for a judicial declaration that TPI owns the first $948,589.60 of the interpleader funds. The motion is granted.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party can show evidentiary support for a pleading or claim and if not to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Atlantic Richfield).) Code of Civil Procedure Section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc, § 437c, subd. (p)(2).) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the moving party has met that burden, the burden shifts to the opposing party to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

            The Court’s “role on summary judgment is simply to decide whether the parties possess evidence requiring the fact-weighing procedures of a trial. (Soto v. County of Riverside (2008) 162 Cal.App.4th 492, 496.) “The purpose of the summary judgment procedure is not to try the issues, but merely to determine whether there are issues to be tried.” (Orser v. George (1967) 252 Cal.App.2d 660, 668.)

Plaintiff-in-Interpleader Robb Evans & Associates, LLC commenced this interpleader action on April 15, 2022, as the appointed Receiver in Federal Trade Commission v. Jason Cardiff, et al., in the United States District Court for the Central District of California (Case No. 5:18-cv-02104-DMG-PLA). (Comp. ¶ 2.)

TPI was incorporated in Canada by Jacques Poujade and Jason Cardiff in July 2018. (UMF 1.) On October 10, 2018, the FTC filed suit against Jason Cardiff, his wife Eunjung Cardiff, and several of their U.S.-based companies for violations of consumer protection laws. (UMF 10.) In October and November 2018, the district court entered a temporary restraining order (TRO) and then a preliminary injunction (PI) consisting of, among other things, an asset freeze on all assets owned or controlled by Jason or Eunjung Cardiff, and a directive that any entity or person with control over the Cardiffs’ assets should hold, preserve, and refrain from transferring those assets. (Spertus Decl., Ex. 8 [118].) The PI also established a Receiver, and ordered that any person holding the Cardiffs’ assets immediately transfer those assets to the Receiver. (Id. [136].)

            On October 29, 2019, the district court found that Jacques Poujade was in contempt of the Court’s TRO and PI orders, based on a finding that Poujade assisted the Cardiffs in transferring out $1.56 million CAD controlled by the Cardiffs in TPI’s bank account, rather than deposit those funds with the Receiver. (Watson Decl., Ex. C [10].) As the district court explained, “[t]o resolve in part Poujade’s contempt, TPI voluntarily authorized the freeze and deposit of $1.2 million USD ($1.56 million CAD) into a trust account held by TPI and Poujade’s attorney, James Spertus. The Court ordered that those funds held by Spertus be turned over to the Receiver and, if TPI and Poujade have ‘concerns regarding the final disposition of those funds at a later date in time,’ would have their ‘day in court to make certain claims and provide evidence to the Court that suggests that [they were] duped by the Cardiffs and the monies deposited are rightfully [theirs]. There may be other claimants also here.’ [Citation.] The Deposited Funds were subsequently transferred to the Receiver ‘for the purpose of maintaining those funds pending further order of the Court.’ ” (Watson Decl., Ex. D [18].)

On July 20, 2021, the district court denied Poujade and TPI’s request for immediate release of the disputed funds, stating that the funds were Receivership Property because “[t]he evidence clearly showed that the Cardiffs utilized the TPI Account for personal expenses and that Jason maintained sufficient control of the funds such that he, in concert with Poujade, could transfer the funds to a separate trust account, in violation of the Asset Freeze.” (Watson Decl., Ex. D [19].)

On August 5, 2021, the district court wrote in an order that it “reviewed the evidentiary record with regard to the question of ownership of the Deposited Funds and makes the preliminary findings that TPI is a corporate entity with a duly constituted board of directors, the Deposited Funds were raised from third-party investors, and neither Jason Cardiff nor Eunjung Cardiff own the funds, though Jason previously did have access to and control over the funds.” (Spertus Decl., Ex. 9 [145].)

On September 20, 2021, the Receiver issued its Final Report, which stated that $948,589.60 of the funds deposited by TPI remained in the Receiver Estate for distribution following apportionment of receivership fees and costs. (Spertus Decl., Ex. 11 [158].) On December 2, 2021, the district court adopted the Receiver’s recommendations and ordered,

“[t]he Receiver shall file an interpleader action and dissolve the Receivership...” (Spertus Decl., Ex. 12 [182].)

TPI’s evidence satisfies its initial burden to show entitlement to the first $948,589.60 of the interpleader funds. The evidence shows that TPI initially deposited those funds with the district court pursuant to the PI, and that the district court ultimately concluded that TPI, not the Cardiffs, owned the funds. (Spertus Decl., Ex. 9 [145].)

Defendant/Cross-Defendant Orange County Department of Child Support Services (DCSS) opposes TPI’s motion, arguing that it is entitled to priority over the disputed funds based on an Abstract of Judgment recorded against Jason Cardiff for unpaid child support on July 16, 2021. (DCSS RJN, Ex. A.)

The Court agrees with TPI that DCSS’s claim fails because it does not relate to the thing, debt, or duty that is the subject of this interpleader action. “When a person may be subject to conflicting claims for money or property, the person may bring an interpleader action to compel the claimants to litigate their claims among themselves.” (City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114, 1122; Code Civ. Proc. § 386, subd. (b).) In an action for interpleader, it is necessary “that the claimants seek the same thing, debt, or duty. . . . If the claims do not relate to the same thing, debt, or duty, then interpleader is improper.” (City of Morgan Hill, 71 Cal.App.4th at 1123.)

Here, DCSS’s claim arises out of the child support judgment against Jason Cardiff. That judgment has no relation to the funds held by the Receivership pursuant to the TRO and PI, and so does not concern the same thing, debt, or duty at issue in this interpleader action. While DCSS argues that it is entitled to the funds deposited by TPI based on the district court’s findings that those funds were Receivership Property (Watson Decl., Ex. D [19]), this fails to show how DCSS’s judgment against Jason Cardiff satisfies the “same thing, debt, or duty” requirement. Furthermore, DCSS  does not address the evidence showing that the district court subsequently found “the Deposited Funds were raised from third-party investors, and neither Jason Cardiff nor Eunjung Cardiff own the funds, though Jason previously did have access to and control over the funds.” (Spertus Decl., Ex. 9 [145].)

Because DCSS has failed to show any triable dispute of material fact as to its entitlement to the interpled funds and no other party has opposed the motion, TPI’s motion for summary judgment is granted.