Judge: Cherol J. Nellon, Case: 18STCV02568, Date: 2023-10-24 Tentative Ruling

Case Number: 18STCV02568    Hearing Date: March 14, 2024    Dept: 14

Case Background

Plaintiff Kerry Moy (“Kerry”) and Defendant Kin Hui (hereinafter “Hui”) are business partners; each owns half of their set of Chinese restaurants. Apparently, Plaintiff Kerry also works for Cross-Defendant Morgan Stanley. Plaintiff Kerry alleges that Defendant Hui is keeping the restaurants from paying their leases and certain large loans. Defendant Hui alleges that he only entered the business venture because he thought it was part of an investment program run by Morgan Stanley. Defendant Hui further alleges that Plaintiff Kerry mismanaged construction on the restaurants and forced Defendant Hui to finish the projects.

Lead Case (18 STCV 02568)

On April 24, 2019, Plaintiffs K Moy, LLC (“Moy LLC”) and Kerry filed their First Amended Complaint (“FAC”) for (1) Fraud, (2) Conversion, and (3) Declaratory Relief against Defendants Monkee Restaurant, LLC dba Li Orient (“Monkee Restaurant”), Monkee Restaurant Holding Company, LLC (“Monkee Holding”) (collectively “Monkee Entities”), Triple 8 Restaurant, LLC (“Triple 8 Restaurant”), Triple 8 Holding Company, LLC (“Triple 8 Holding”) (collectively “Triple 8 Entities”), Tasty Dining Group, LLC (“Tasty Dining”), Hui, and DOES 1-10.

On May 9, 2019, Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, and Hui filed their Answer to the FAC.

On October 17, 2019, Defendants Monkee Entities, Triple 8 Restaurant, and Hui, along with 8^th and Hoover EB5, LP (“Hoover”),[1]  filed their Second Amended Cross-Complaint (“SAXC”) for (1) Intentional Misrepresentation, (2) Aiding and Abetting, (3) Constructive Fraud, (4) Negligent Misrepresentation, (5) Breach of Fiduciary Duty, (6) Negligence, (7) Violation of Corporations Code § 25401, (8) Indemnity, (9) Contribution, and (10) Implied/Equitable Indemnity against Plaintiffs/Cross-Defendants and Cross-Defendants The M2K Group, LLC, a California company (“M2K California”), Morgan Stanley Smith Barney, LLC (“Morgan Stanley”), and ROES 1-100.

The first cause of action is asserted against the Moy Parties, only; the second cause of action is asserted against Defendant Morgan Stanley, only.

On November 20, 2019, Plaintiffs/Cross-Defendants filed their Answer.

On January 31, 2020, this court granted Cross-Defendant Morgan Stanley’s motion to compel arbitration.

On March 17, 2020, Cross-Defendant M2K California filed its Answer.

18 STCV 04217

On November 7, 2018, Plaintiff Huis Investment, LLC (“Huis Investment”) filed its First Amended Complaint (“FAC”) for (1) Default Under Promissory Note and (2) Judicial Foreclosure against Defendants Kerry individually and as Trustee of the Kerry Moy Revocable Trust Dated 10-15-1998 (“Trust”) and DOES 1-20.

On December 10, 2018, Defendants Kerry and Trust filed their Answer.

On March 26, 2019, Defendants Kerry and Trust filed their First Amended Cross-Complaint for (1) Fraud and (2) Conversion against Plaintiff/Cross-Defendant and DOES 1-10.

On January 22, 2019, Plaintiff/Cross-Defendant Huis Investment filed its Answer.

As Consolidated

            On February 26, 2020, this court ordered Case Nos. 18 STCV 02568 and 18 STCV 04217 consolidated. Case No. 18 STCV 02568 was designated the lead case.

Moy SAC

On May 6, 2022, Plaintiffs Moy LLC and Kerry filed their Second Amended Complaint (“SAC”) for (1) Fraud, (2) Conversion, (3) Declaratory Relief, (4) Express Contractual Indemnity, and (5) Equitable/Implied Indemnity against Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hui, and DOES 1-10.

On June 7, 2022, Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, and Hui filed their joint Answer to the SAC.

M2K Cross-Complaint

On March 17, 2020, Cross-Defendant M2K California filed its Cross-Complaint for (1)-(2) Express Indemnity, (3) Equitable/Implied Indemnity, and (4) Contribution against Cross-Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, Hui, and ZOES 1-50.

On May 6, 2020, Cross-Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, and Hui filed their joint Amended Answer.

Monkee Cross-Complaint

On January 26, 2021, Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, and Hui filed their Consolidated Cross-Complaint for (1) Intentional Misrepresentation, (2) Aiding and Abetting, (3) Constructive Fraud, (4) Negligent Misrepresentation, (5) Breach of Fiduciary Duty, (6) Negligence, (7) Violation of Corporations Code § 25401, (8) Indemnity, (9) Contribution, (10) Implied/Equitable Indemnity, (11) Breach of Contract, (12) Breach of Written Contract, (13) Breach of Fiduciary Duty, (14) Fraud and Deceit, (15) Unfair Business Practices, (16) Contribution, (17) Implied/Equitable Indemnity, (18) Breach of Oral Contract, (19) Fraud and Deceit, (20) Breach of Fiduciary Duty, (21) Equitable Indemnity, (22) Unfair Business Practices, (23) Breach of Written Contract, (24) Breach of Fiduciary Duty, (25) Fraud and Deceit, (26) Unfair Business Practices, (27) Contribution, (28) Implied/Equitable Indemnity, and (29) Breach of Oral Contract against Plaintiffs/Cross-Defendants Moy LLC and Kerry and Cross-Defendants M2K California, Morgan Stanley, Kwan, Zao, QPack, Volcano, M2K Delaware, and ROES 1-100.

On March 22, 2021, Plaintiffs/Cross-Defendants Moy LLC and Kerry filed their joint Answer.

On May 20, 2021, Cross-Defendants Kwan, Zao, QPack, and Volcano filed their joint Answer.

On the same date, Cross-Defendants M2K California and M2K Delaware filed their respective Answers.

On May 6, 2022, Cross-Defendants M2K California, Kwan, Zao, QPack, Volcano, and M2K Delaware filed their Consolidated Cross-Complaint for (1) Express Indemnity, (2) Money Had and Received, (3) Conversion, (4) Unfair Business Practices, (5) Express Indemnity, (6) Money Had and Received, (7) Conversion, (8) Unfair Business Practices, (9) Money Had and Received, (10) Conversion, (11) Unfair Business Practices, (12) Fraud – Concealment, (13) Equitable/Implied Indemnity, (14) Contribution, (15) Express Indemnity, (16) Equitable/Implied Indemnity, and (17) Contribution against Cross-Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, Hui, Singpoli (Hop Kin) Construction & Decoration (Nevada), Inc., Singpoli Construction, Singpoli Capital Corporation (collectively “Singpoli Parties”), Evolution Management Group, LLC (“Evolution”), and JOES 1-25.

On June 6, 2022, Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, and Hui filed their joint Answer.

Operative Pleadings

            The currently operative pleadings in this case are:

Moy SAC

The May 6, 2022, SAC filed by Plaintiffs Moy LLC and Kerry for (1) Fraud, (2) Conversion, (3) Declaratory Relief, (4) Express Contractual Indemnity, and (5) Equitable/Implied Indemnity against Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hui, and DOES 1-10.

On June 7, 2022, Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, and Hui filed their joint Answer to the SAC.

Huis Investment FAC

The November 7, 2018, FAC filed by Plaintiff Huis Investment for (1) Default Under Promissory Note and (2) Judicial Foreclosure against Defendants Kerry individually and as Trustee of the Kerry Moy Revocable Trust Dated 10-15-1998 (“Trust”); and DOES 1-20.

On December 10, 2018, Defendants Kerry and Trust filed their Answer.

Moy Cross-Complaint

The March 26, 2019, First Amended Cross-Complaint filed by Defendants Kerry and Trust for (1) Fraud and (2) Conversion against Cross-Defendant Huis Investment and DOES 1-10.

On January 22, 2019, Huis Investment filed its Answer.

Monkee Cross-Complaint

The January 26, 2021, Consolidated Cross-Complaint filed by Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, and Hui for (1) Intentional Misrepresentation, (2) Aiding and Abetting, (3) Constructive Fraud, (4) Negligent Misrepresentation, (5) Breach of Fiduciary Duty, (6) Negligence, (7) Violation of Corporations Code § 25401, (8) Indemnity, (9) Contribution, (10) Implied/Equitable Indemnity, (11) Breach of Contract, (12) Breach of Written Contract, (13) Breach of Fiduciary Duty, (14) Fraud and Deceit, (15) Unfair Business Practices, (16) Contribution, (17) Implied/Equitable Indemnity, (18) Breach of Oral Contract, (19) Fraud and Deceit, (20) Breach of Fiduciary Duty, (21) Equitable Indemnity, (22) Unfair Business Practices, (23) Breach of Written Contract, (24) Breach of Fiduciary Duty, (25) Fraud and Deceit, (26) Unfair Business Practices, (27) Contribution, (28) Implied/Equitable Indemnity, and (29) Breach of Oral Contract against  Plaintiffs/Cross-Defendants and Cross-Defendants M2K California, Morgan Stanley, Kwan, Zao, QPack, Volcano, M2K Delaware, and ROES 1-100.

On March 22, 2021, Plaintiffs/Cross-Defendants filed their Answer.

On May 20, 2021, Cross-Defendants Kwan, Zao, QPack, and Volcano filed their joint Answer.

On the same date, Cross-Defendants M2K California and M2K Delaware filed their respective Answers.

Kwan Cross-Complaint

The May 6, 2022, Consolidated Cross-Complaint filed by Cross-Defendants M2K California, Kwan, Zao, QPack, Volcano, and M2K Delaware for (1) Express Indemnity, (2) Money Had and Received, (3) Conversion, (4) Unfair Business Practices, (5) Express Indemnity, (6) Money Had and Received, (7) Conversion, (8) Unfair Business Practices, (9) Money Had and Received, (10) Conversion, (11) Unfair Business Practices, (12) Fraud – Concealment, (13) Equitable/Implied Indemnity, (14) Contribution, (15) Express Indemnity, (16) Equitable/Implied Indemnity, and (17) Contribution against Cross-Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, Hui, Singpoli (Hop Kin) Construction & Decoration (Nevada), Inc., Singpoli Construction, Singpoli Capital Corporation (collectively “Singpoli Parties”), Evolution Management Group, LLC (“Evolution”), and JOES 1-25.

On June 6, 2022, Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, and Hui filed their joint Answer.

No Proof of Service has been submitted for the Singpoli Parties or Cross-Defendant Evolution, nor has any responsive pleading been filed by them.

Trial Date

Jury Trial is currently set for March 14, 2024.

Instant Motion

Plaintiffs Moy LLC and Kerry, together with Cross-Parties M2K California, Kwan, Zao, QPack, Volcano, and M2K Delaware, now move the court for an order imposing terminating sanctions against Defendants/Cross-Defendants Monkee Entities, Triple 8 Entities, Tasty Dining, Hoover, Hui, and Huis Investment. In the alternative, the moving parties seek issue and evidentiary sanctions. This motion was filed on March 5, 2024.

Decision

            The motion is TAKEN OFF-CALENDAR.

Discussion

            Discovery closed in this case on March 25, 2023. The sole exception, through multiple court orders, has been the taking of a series of depositions to which counsel agreed on March 20, 2023. That agreement, and the subsequent court orders, referenced only the taking of depositions, not document discovery. The only written discovery re-opened by the court was the exchange of expert information. (Order filed January 8, 2024).

In fact, the parties no longer have a right to bring this motion. Motions “concerning discovery” must be heard at least 15 days before trial. Code of Civil Procedure § 2024.020(a); Pelton-Shepherd Industries, Inc. v. Delta Packaging Products (2008) 165 Cal.App.4^th 1568, 1585-90. This includes motions for discovery sanctions. This motion for sanctions was filed on March 5, 2024, the day after this case was called for trial.

The last request to re-open discovery in this case was made to this court via a motion which was heard on January 8, 2024. In its order on that motion, this court directed that non-expert discovery must be completed by February 9, 2024. (Order filed January 8, 2024, p. 8). The court directed that expert discovery should be completed by February 22, 2024. (Id.). No special adjustment was made to the motion deadline. The order also warned counsel that, after those deadlines ran, “the case must be settled or tried, in whatever state it may be.” (Id.).

On February 22, 2024, counsel for the various parties brought three ex parte applications regarding non-expert discovery. But by then, both the court’s February 9, 2024, deadline and the statutory 15-day deadline had already passed. None of the three ex parte applications requested that the court re-open discovery proceedings, and all were denied. Only a fourth application, seeking to shorten time for a hearing on a motion for leave to amend the complaint, was granted.

At this point, counsel’s remedy for the late receipt of written discovery is a motion in limine to exclude the evidence, or for a relevant jury instruction, or some other trial-related sanction. Likewise, counsel’s remedy for refusal to sit for deposition, or evasion or refusal to answer certain questions, is a motion in limine to restrict testimony, or for a relevant jury instruction, or some other trial-related sanction.

Even had the motion been filed and set for hearing in a timely fashion, the court would still have directed the parties to proceed by motion in limine. Orders that limit or shape the evidence to be presented at trial should be made at trial, to ensure that (a) the sanctions are appropriately tailored to the case as it has been developed and (b) they achieve the intended goals.

Conclusion

            Discovery is now closed. The deadline for hearing discovery motions has passed. No timely request to re-open was made. Therefore, the court cannot hear a motion for discovery sanctions. But even if it could, the court would direct counsel to present their sanctions requests as motions in limine at the time of trial. Handling evidentiary issues in advance of trial is difficult; the better practice is to address them at time of trial when all the evidence can be marshaled and discussed at once.

            For all these reasons, the motion for sanctions filed on March 5, 2024, is TAKEN OFF-CALENDAR.