Judge Cherol J. Nellon, Case Number: 22STCV04328, Date: 2024-11-08 Tentative Ruling

Judge: Cherol J. Nellon, Case: 22STCV04328, Date: 2024-11-08 Tentative Ruling

Case Number: 22STCV04328 Hearing Date: November 8, 2024 Dept: 14

MOTION FOR DEFAULT JUDGMENT

Facts of the Case: This is an action for fraud and breach of fiduciary duty. Plaintiff alleges that he established an online resale platform for high end sneakers called Secret Sauce with John Miller and Michael Schneider. In 2020, Miller sold his membership interest to Goldstone and Schneider. In 2021, a third-party investor, Castro, and Schneider conspired to oust Goldstone and strip Secret Sauce of its assets.

Procedural History:

Plaintiff filed his Complaint against Defendant Louie Castro on February 3, 2022.

On March 7, 2022, Plaintiff filed a Doe Amendment naming Louie Castro, LLC as a defendant in this action.

On October 25, 2023, default was entered against Defendant Louie Castro.

On February 26, 2024, Plaintiff dismissed Louie Castro, LLC from this action.

On May 15, 2024, the Court denied Plaintiff’s application for entry of default judgment because Plaintiff failed to complete form CIV-100 and request dismissal of the Doe Defendants.

On May 15, 2024, Plaintiff dismissed the Doe Defendants in this action.

Submitted: The requirements of CRC Rule 3.1800 have been met.

Principal Requested: $534,096

Interest: $2,229.96

Recommendation: GRANT once Plaintiff submits a new JUD-100 specifying in item 8 that any payment in the judgment against Schneider will reduce Castro’s obligation on this judgment and vice versa.

The Court previously denied Plaintiff’s application for default judgment because Plaintiff’s form CIV-100 was incomplete. Plaintiff’s new form is complete.

The Court previously noted that Plaintiff relied on the arbitration award in another matter against Schneider as evidence of damages. Because the damages amount stated in the arbitration award is hearsay, Plaintiff failed to provide evidence of his damages. Plaintiff’s declaration now states that he lost income due to the conspiracy between Castro and Schneider totaling $367,872. (Goldstone Decl., ¶¶50-54.) Additionally, Plaintiff incurred attorney’s fees to regain control of his company from Schneider. (Id., ¶55.) Plaintiff’s demand for damages is now supported by evidence.

The Court previously denied Plaintiff’s request for attorney’s fees associated with the arbitration against Schneider because Plaintiff provided no authority that he was entitled to fees in that matter. Plaintiff now cites Copenbarger v. Morris Cerullo World Evangelism, Inc. (2018) 29 Cal.App.5th 1, 9, where a court held that a plaintiff may recover attorney’s fees which were proximately caused by a defendant’s breach of contract as compensatory damages. Copenbarger involved a breach of contract action whereas this case is for fraud and breach of fiduciary duty. Attorney’s fees are not typically recoverable as damages in fraud cases where a defendant is a fiduciary. (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 507.) However, there is an exception to the general rule that each party must pay his own fees. The so-called “tort of another” exception provides that if a party is required to expend in defending or prosecuting an action because of the tort of another, the party may recover the attorney’s fees incurred in an action by or against a third party. (Pederson v. Kennedy (1982) 128 Cal.App.3d 976, 979.)

Here, the Court agrees that the attorney’s fees Plaintiff incurred to regain control of the company were incurred as a result of Defendant’s fraud and breach of his fiduciary duties to Plaintiff. Therefore, Plaintiff’s attorney’s fees incurred in the action against Schneider are recoverable as damages. Plaintiff’s attorney’s fees are properly supported by a declaration from counsel.

Finally, Plaintiff is confused by the Court’s order that the proposed judgment must reference the judgment in the action against Schneider.

“It is the rule that ‘if one joint tortfeasor satisfies a judgment against all joint tortfeasors the judgment creditor cannot obtain a double recovery by collecting the same judgment from another of the tortfeasors.’ [Citation.] The rationale is that ‘[a]n injured person is entitled to only one satisfaction of judgment for a single harm, and full payment of a judgment by one tortfeasor discharges all others who may be liable for the same injury.’ [Citation.] ... ‘[W]here fewer than all of the joint tortfeasors satisfy less than the entire judgment, such satisfaction will not relieve the remaining tortfeasors of their obligation under the judgment. Stated otherwise, ‘partial satisfaction has the effect of a discharge pro tanto [for so much].’” (Howard v. American National Fire Ins. Co. (2010) 187 Cal.App.4th 498, 517.

Here, the Court is concerned about double recovery because this judgment concerns the same injury as the injury in the judgment against Schneider: Plaintiff’s damages incurred as a result of the conspiracy between Schneider and Castro. To prevent double recovery, the proposed judgment here must reference the judgment against Schneider and specify that any payment made on the judgment against Schneider will reduce Castro’s obligation and vice versa. Plaintiff’s application for default judgment will be granted once Plaintiff submits an updated JUD-100 reflecting this instruction in item 8.