Judge: Curtis A. Kin, Case: 21STCV46389, Date: 2022-09-15 Tentative Ruling
Case Number: 21STCV46389 Hearing Date: September 15, 2022 Dept: 72
MOTION FOR ORDER APPOINTING REFEREE
DEMURRER
Case: Pacific Green, LLC et al. v.
Hills Group, LLC et al. (22STCV07895)
TENTATIVE RULING:
Plaintiffs Pacific Green, LLC and Big Tree Holding, LLC’s
Motion for Order Appointing Referee is GRANTED.
Defendant Hills One, LLC’s Demurrer to Complaint is taken
OFF-CALENDAR.
As a preliminary matter, defendant Hills One, LLC objects to
the untimely service and filing of the reply. Based on the hearing date of this
motion, the deadline to serve and file the reply was September 8, 2022. (CCP §
1005(b).) The reply was served on September 9, 2022 and filed on September 12,
2022. (Crawford Decl. ¶ 5.) While the Court would be within its discretion to
strike the reply, the Court declines to exercise such discretion here. (Rule of
Court 3.1300(d) [“No paper may be rejected for filing on the ground that it was
untimely submitted for filing. If the court, in its discretion, refuses to
consider a late filed paper, the minutes or order must so indicate”].)
Plaintiffs’ new argument concerning the applicability of Delaware law is not
dispositive of this motion. Accordingly, there is no need for a continuance and
leave to file a sur-reply, as defendant Hills One, LLC requests in its objection.
Plaintiffs Pacific Green, LLC and Big Tree Holdings, LLC
move for appointment of a judicial reference under Section 15.12 of the Limited
Liability Company Agreement of Hills One, LLC (“LLC Agreement”). The parties to
the LLC Agreement are defendant Hills One, LLC (“Hills One”), the “Initial
Members” executing the agreement, and Persons who execute a “Joinder Agreement”
and become Members of Hills One and parties to the LLC Agreement. While the
text of the LLC Agreement provided by plaintiffs does not expressly indicate
that plaintiffs and defendant Hills Group, LLC (“Hills Group”) are parties to
the agreement, neither Hills One nor Hills Group, which joined in Hills One’s
opposition to this motion, disputes that plaintiffs and Hills Group are parties
to the LLC Agreement. (See Hills One Opp. at 2 [“The Limited Liability
Company Agreement of Hills One, LLC . . . was entered into as of July 16, 2018
by and among the Company and the Members. Hills One’s Members included
Defendant Hills Group, LLC, Plaintiff Pacific Green, LLC and Plaintiff Big Tree
Holdings, LLC”].)
Section 15.12 of the LLC Agreement states, in relevant part:
(b) In the event of a dispute, claim or controversy, arising
out of or relating to this Agreement and/or a Member’s investment in the
Company or in an investment opportunity or to the rights, duties and
obligations of the parties arising out of or relating to this Agreement (a
“Dispute”), the complaining party shall deliver to the other a “Dispute
Notice”, which shall describe the Dispute with particularity.
…
(d) The parties agree to waive his, her or its right to jury
trial and agree, pursuant to California Code of Civil Procedure (“CCP”) Section
638(a), to the appointment of a JAMS referee to hear, determine and resolve the
Dispute.
Plaintiffs’ claims in this action arise from their
investments in Hills One based on representations from the principals of Hills
Group. (FAC ¶¶ 86-90, 100-106.) Neither Hills One nor Hills Group argue that
plaintiffs’ claims are not “Disputes” under Section 15.12(b) and (d) of the LLC
Agreement.
Rather, Hills One argues that a referee should not be
appointed due to the risk of inconsistent rulings in Pacific Green, LLC et
al. v. Paul Fiore et al., LASC Case No. 21STCV46389 (“Individual Action”).
(Capozzola Decl. ¶ 2 & Ex. A.) CCP § 638 does not require the Court to appoint
a referee simply because the parties have entered into an otherwise valid
reference agreement. (Tarrant Bell Property, LLC v. Superior Court
(2011) 51 Cal.4th 538, 544.) The Court may refuse to appoint a referee
based on the risk of inconsistent rulings and considerations of judicial
economy. (Id. at 545.)
However, any risk of inconsistent rulings and judicial
economy would be addressed by staying the Individual Action until resolution of
the instant action. With a stay of the Individual Action, the public policy
favoring judicial reference is promoted. (O’Donoghue
v. Superior Court (2013) 219 Cal.App.4th 245, 263.)
Defendant Hills Group opposes the motion on the ground that
plaintiffs did not satisfy the condition precedents set forth in Section 15.12
of the LLC Agreement before appointment of a referee. Section 15.12(b) of the
LLC Agreement requires plaintiffs to provide a Dispute Notice and meet and
confer with Hills Group to attempt to resolve the Disputes. If the meet and
confer is unsuccessful, the Disputes are to be submitted to mediation under
Section 15.12(c) of the LLC Agreement.
However, a party is free to revoke an agreement to mediate
or meet and confer before proceedings before the referee have begun. (Bus.
& Prof. Code § 467.7(a) [“Unless the parties have agreed to a binding
award, nothing in this chapter shall be construed to prohibit any person who
voluntarily enters the dispute resolution process from revoking his or her
consent, withdrawing from dispute resolution, and seeking judicial or
administrative redress”]; see also Kirschenman v. Superior Court (1994)
30 Cal.App.4th 832, 835 [“Petitioners timely sought to withdraw from
participation in mediation prior to the appointment of the mediator. They
should have been permitted to do so”].) Accordingly, plaintiffs may still seek
appointment of a referee under Section 15.2(d) of the LLC Agreement
notwithstanding any failure to submit this action to mediation or meet and confer
beforehand.
The motion is GRANTED. Selection of the referee shall occur
before JAMS unless the parties are unable to agree on a referee, upon which the
Court will select a referee pursuant to CCP § 640. This action is STAYED
pending resolution before the referee.
Because the Court finds that a referee shall resolve this
action, defendant Hills One, LLC’s Demurrer to Complaint is taken OFF-CALENDAR.