Judge: Daniel M. Crowley, Case: 22SMCV02702, Date: 2023-04-12 Tentative Ruling

Case Number: 22SMCV02702    Hearing Date: April 12, 2023    Dept: 207

Background

Plaintiff Ebby Shakib (“Plaintiff”) brings this action against Defendant Jamshid Goltche (“Defendant”) and several nominal defendants, centered around an alleged partnership formed between Plaintiff and Defendant. Defendant brings two motions to require Plaintiff to furnish bonds under sections 800 and 17709 of the Corporations Code based on Plaintiff’s alleged failure to satisfy the pre-filing requirements imposed by those sections on litigants bringing derivative actions on behalf of corporations and limited liability companies. Plaintiff opposes Defendant’s motions. As the motions concern overlapping issues, the Court will address them together.

Analysis

Defendant moves to require Plaintiff to furnish bonds pursuant to Corporations Code §§ 800(c) and 17709.02(b). Defendant’s motions are based, in part, on Plaintiff’s alleged failure to comply with the pre-filing requirements to bring derivative causes of action on behalf of corporations as set forth in Corporations Code §§ 800(b) and 17709.02(a). After Defendant filed these motions, Plaintiff made the requisite demands to the boards of these entities and filed a First Amended Complaint alleging the same. Defendant acknowledges this demand may be sufficient to cure the defects identified in its moving papers, and asks the Court to continue the hearing on his motions for 45 to 60 days to see if the entities’ act on Plaintiff’s demand. Presumably, if the boards do not take the action demanded by Plaintiff, then the First Amended Complaint would satisfy the pre-filing requirements of sections 800 and 17709.02, which would simplify the determination of the instant motions. And if the boards do take the action demanded by Plaintiff, certain of Plaintiff’s causes of action will become moot, narrowing the scope of this litigation. The Court thus finds a brief continuance of these motions would prevent the parties and the Court from unnecessarily expending resources to litigate and adjudicate potentially moot issues.

In addition, on April 7, 2023, on Defendant’s motion for a Temporary Restraining Order, the Court and the parties discussed the wisdom of having a forensic accountant review the parties’ dealings with the hope of forming an intelligent and expeditious resolution of the parties’ disputes.  The parties are to report back to the Court on April 12, 2023 as to their progress. 

In light of these issues, the Court continues the hearing on Defendant’s motions set for April 12, 2023 to June 7, 2023. At least five days before the continued hearing date, the parties are to file and serve supplemental briefs, not to exceed 10 pages, as to whether or what extent the respective boards have acted on Plaintiff’s demand and the impact such action has on Defendant’s motions.

Conclusion

The hearing on Defendant’s motions is continued to June 7, 2023.