Judge: Christopher K. Lui, Case: 19STCV03557, Date: 2023-02-28 Tentative Ruling
Case Number: 19STCV03557 Hearing Date: February 28, 2023 Dept: 76
Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein. As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue. Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776. If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.
Plaintiff is the former interim
Chief Financial Officer, Consultant and Advisory Board Member of Loton Corp.
which eventually merged with Defendant LXL after Plaintiff stepped down from
his roles at Loton. Plaintiff alleges that Defendants wrongfully prevented
Plaintiff from receiving a stock certificate (#1382 for 100,000 shares of Loton
common stock) which would enable him to participate in a reverse stock split
without first signing a lock-up agreement, which Plaintiff refused to do.
Plaintiff alleges that Defendants Ellin makes misrepresentations and threats to
shareholders in order to prevent them from rightfully trading shares on the
open market so that he can manipulate stock prices of Defendant LiveXLive (“LXL”)
stock, of which he is a major shareholder.
Defendant LiveXLive Media, Inc. filed a (now-dismissed) Cross-Complaint against Plaintiff, alleging that Plaintiff breached the Advisory Board Consulting Agreement and Employment Agreements by failing to adequately and fully perform the services required thereunder. As a result, Plaintiff’s shares of the Company never vested, and he has refused to return the shares for cancellation.
Plaintiff moves to determine prevailing party status and/or tax or strike costs.
TENTATIVE RULING
Plaintiff Barry Regenstein moves to
determine prevailing party status and/or tax or strike costs. The Court finds
Plaintiff to be the prevailing party for purposes of CCP § 1032(a)(4), and Plaintiff
may seek to recover costs by way of a memorandum of costs. The Court notes that
Plaintiff filed a memorandum of costs on December 27, 2022, and Defendants filed
a motion to tax costs set to be heard on March 30, 2023. However, that hearing may
be moot in light of today’s ruling.
As such, Plaintiff’s request to strike Defendants’ memorandum of costs filed on December 27 and 28, 2022 is GRANTED.
ANALYSIS
Motion
To Determine Prevailing Party Status and/or Tax or Strike Costs
Plaintiff moves to determine
prevailing party status and/or tax or strike costs sought by Defendants LiveXLive
Media, Inc. and Robert S. Ellin.
CCP §
1032(a)(4) provides:
(4) “Prevailing
party” includes the party with a net monetary recovery, a defendant in whose
favor a dismissal is entered, a defendant where neither plaintiff nor defendant
obtains any relief, and a defendant as against those plaintiffs who do not
recover any relief against that defendant. If any party recovers other than
monetary relief and in situations other than as specified, the “prevailing party”
shall be as determined by the court, and under those circumstances, the court,
in its discretion, may allow costs or not and, if allowed, may apportion costs
between the parties on the same or adverse sides pursuant to rules adopted
under Section 1034.
(Civ. Proc. Code, § 1032(a)(4))
Generally, Code of Civil
Procedure section 1032, subdivision (a)(4) defines ‘prevailing party’ as
encompassing a ‘defendant in whose favor a dismissal is entered . . . .’ The
voluntary dismissal of a complaint is a ‘dismissal’ within the meaning of Code
of Civil Procedure section 1032.” (County of Santa Barbara v. David R.
(1988) 200 Cal.App.3d 98, 101.)
However, where a plaintiff dismisses
a defendant in exchange for a net monetary recovery, this is not a dismissal in
defendant’s favor for purposes of § 1032(a)(4), and the Court may consider the nature
of the consideration given in exchange for the dismissal. (DeSaulles v. Cmty. Hosp. of Monterey
Peninsula (2016) 62 Cal.4th
1140, 1158.)
We recognize that sometimes parties may overlook the issue
of costs in their settlement agreements. Through inadvertence,
defendants may find themselves with a bill for costs that substantially
increases the amount owed to the plaintiff. Trial courts should take these
realities into account when performing their gatekeeping function pursuant
to section 664.6. (See California State Auto. Assn., supra, 50 Cal.3d at p. 664). Although
not required by law, it is advisable that trial courts inquire into whether the
parties in a given case have resolved the allocation of costs in their
settlement agreement, or whether they wish to have the court resolve the issue,
before placing a judicial imprimatur on the agreement.
In sum, we hold that a dismissal pursuant to a
monetary settlement is not a dismissal in the defendant's “favor” as that term
is used in section 1032(a)(4). We further hold that a
plaintiff that enters into a stipulated judgment to be paid money in exchange
for a dismissal has obtained a “net monetary recovery” within the meaning
of section 1032(a)(4), whether or not the judgment mentions the
settlement. Our holdings establish a default rule that applies only when the
parties have not resolved the matter of costs in their settlement agreement
or have not stipulated “to alternative procedures for awarding costs.” (§ 1032, subd. (c).) We disapprove the contrary holding of Chinn v. KMR Property
Management, supra, 166 Cal.App.4th 175, 185–190.
(DeSaulles v. Cmty. Hosp. of Monterey
Peninsula (2016) 62 Cal.4th 1140, 1158
[bold emphasis added].)
Thus, the
fact that Plaintiff dismissed this action after the parties came to an
agreement does not render Defendant the prevailing party for purposes of CCP §
1032(a)(4).
Per Plaintiff, his only cause of
action which remained after the Court’s rulings on demurrers, a motion for
judgment on the pleadings and a motion for summary judgment was the sixteenth
cause of action for declaratory relief.
The Sixteenth cause of action for declaratory
relief pled in the operative 2AC seeks the following relief:
144. The foregoing and subsequent allegations are realleged
and incorporated by
reference as if fully set forth herein.
145. An actual controversy has arisen among the parties
whereby Plaintiff contends that is entitled to the #1382 Certificate and
unrestricted Shares therein. Defendants and each of them dispute
Plaintiff’s contention.
146. Plaintiff desires a judicial determination that he is entitled
to the #1382 Certificate to the Shares in an electronic format, without restrictions,
in a form readily salable.
147. A judicial declaration of Plaintiff’s right to the
#1382 Certificate, and therefore the Shares is necessary.
(Bold emphasis added.)
An examination of the Complaint reveals that the primary relief Plaintiff sought, including his dismissed causes of action, was the #1382 Certificate and unrestricted Shares that he could sell on the public market. (See 2AC,¶¶ 34, 41, 42, 48 – 50, 58, 64, 68, 81, 88, 97, 106, 131, 145.)
Plaintiff has presented evidence that Defendant agreed to provide the share certificates Plaintiff sought or provide assurance so that he could obtain them. (See Declaration of James F. Warren IV, ¶ 2.) Plaintiff has also presented evidence that on August 15, 2022, Plaintiff’s counsel received unrestricted stock certificate #1382 from LiveXLive’s transfer agent and on October 31, 2022, counsel received unrestricted stock certificate #1103 from LiveXLive’s transfer agent. (Declaration of Barry Regenstein, ¶ 2.)
This places the circumstances in the “other than monetary relief” category of CCP § 1032(a)(4), whereby the court is to determine the prevailing party and may allow costs.
As for the
Cross-Complaint, Cross-Complainant LiveXLive Media dismissed it, so it cannot
be the prevailing party as to the Cross-Complaint.
In light of
the foregoing, the Court finds Plaintiff to be the prevailing party for
purposes of CCP § 1032(a)(4), and Plaintiff may seek to recover costs by way of
a memorandum of costs. The Court notes that Plaintiff filed a memorandum of
costs on December 27, 2022, and Defendants filed a motion to tax costs set to be
heard on March 30, 2023. However, that hearing may be moot in light of today’s
ruling.
As such, Plaintiff’s
request to strike Defendants’ memorandum of costs filed on December 27 and 28,
2022 is GRANTED.