Judge Daniel M. Crowley, Case Number: BC414854, Date: 2024-05-20 Tentative Ruling

Judgment Creditors 8451 Melrose Property, LLC’s and Jack Simantob’s motion to amend the judgment to add Yousef Akhtarzad (also known as Joseph Akhtarzad), Shahpar Akhtarzad, Kourosh Akhtarzad, Shirin Akhtarzad, and Amey Enterprise Inc. as additional judgment debtors is granted.

Judgment Creditors 8451 Melrose Property, LLC’s and Jack Simantob’s motion for attorneys’ fees is granted in the total reduced amount of $348,737.65, comprised of reduced attorneys’ fees in the amount of $347,489.65, and reduced costs in the amount of $1,248.00.

Judgment Creditors 8451 Melrose Property, LLC (“8451 Melrose”) and Jack Simantob (“Simantob”) (collectively, “Judgment Creditors”) move to amend the judgment to add Non-Parties Yousef Akhtarzad (also known as Joseph Akhtarzad) (“Yousef”), Shahpar Akhtarzad (“Shahpar”), Kourosh Akhtarzad (“Kourosh”), Shirin Akhtarzad (“Shirin”), and Amey Enterprise Inc. (“Amey Enterprise”) (collectively, “Partnership Non-Parties”). (Notice Motion Amend, pgs. 1-2; C.C.P. §187.)

Judgment Creditors move for an award of attorneys’ fees incurred in enforcing the judgment in this action in the amount of $388,737.65, including expenses. (Notice Motion Attorney Fees, pgs. 1-2; C.C.P. §§685.040, 685.080.)

In March 2008, Judgment Creditor 8451 Melrose and Debtor Sina Akhtarzad (“Sina”) executed a written lease of the commercial premises located at 8451 Melrose Avenue, West Hollywood, California (“Property”). That lease provided for an eleven-year term at a base annual rent of $660,000, payable in monthly installments of $55,000, with 3% annual increases. 8451 Melrose is the owner of the Property and was the lessor under the lease. Sina was the nominal sole tenant under the lease.

Shortly after the lease took effect, Sina demolished the interior of the Property, ostensibly for the purpose of constructing tenant improvements. Such improvements never were constructed. Instead, the tenant abandoned the Property, leaving it stripped of drywall, light fixtures, plumbing fixtures and ducting. The rent payable for January 2009 and the subsequent months was not paid.

On June 2, 2009, 8451 Melrose filed this action against Sina for breach of the lease. On June 14, 2018, after two trials and an appeal, this Court entered a money judgment in favor of 8451 Melrose and against Sina in the amount of $12,248,584.85, inclusive of prejudgment interest, attorneys’ fees and costs. (The attorneys’ fees and costs were awarded to Judgment Creditors, jointly.) Following a second appeal, in which the judgment was affirmed in its entirety, the Court awarded an additional $261,960.80 in attorneys’ fees and $8,937.03 in costs. Only about $3.8 million has been paid toward the satisfaction of the judgment. The unpaid balance of the judgment is accruing post-judgment interest at the rate of 10% per annum.

In 2011, during the course of the litigation, Sina filed a voluntary bankruptcy petition. The parties stipulated to relief from stay to allow the amount of Sina’s liability to be determined. A relatively small fraction of the judgment was paid out of a reserve established for that purpose by the Bankruptcy Court. The judgment is otherwise unsatisfied.

In an effort to collect the balance of the judgment, Judgment Debtors prosecuted a contested creditor’s claim in the Bankruptcy Court and initiated an adversary proceeding to seek a determination that the judgment is not dischargeable by Sina’s bankruptcy.

Judgment Creditors’ 5/13/24 evidentiary objection to the Declaration of Sina Akhtarzard (“Sina”) is overruled as to No. 1, and sustained as to Nos. 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, and 16.

Partnership Non-parties’ 5/9/24 request for judicial notice of (1) Judgment Creditors’ Brief in Response to Claim 14 Scheduling Order filed in the Bankruptcy Case on February 2, 2021 (PN-COE, Exh. 27); (2) Judgment Creditors’ First Amended Complaint for Malicious Prosecution filed in LASC Case No. 20STCV39690 (PN-COE, Exh. 28); and (3) Stipulation of the Parties to Withdraw the Motion for Sanctions filed in the second adversary proceeding in the Bankruptcy Case (PN-COE, Exh. 29) is granted.

Partnership Non-parties’ 5/9/24 request for judicial notice of the second amended complaint filed in this case, Sina’s opposition to the motion for leave to file a second amended complaint, and the 10/20/24 Minute Order is denied because this Court does not need to take judicial notice of filings on the instant docket.

Judgment Creditors’ 5/13/24 request for judicial notice of (1) Amended Schedule(s) and/or Statement(s) [Doc. # 151] filed in In re Akhtarzad, Case No. 11-bk-61640 BB, on October 16, 2012 (JC-RJN, Exh. AA); (2) Declaration of Carol Sheets [Doc. # 186], which authenticates and attaches a transcription of the Section 341(a) Meeting of Creditors in In re Akhtarzad, Case No. 11-bk-61640-BB, filed on March 11, 2013 (JC-RJN, Exh. BB); and (3) Order of Discharge – Chapter 11 [Doc. # 633] filed in In re Akhtarzad, Case No. 11-bk-61640-BB, filed on June 29, 2022 (JC-RJN, Exh. CC) is granted.

Judgment Creditors filed the instant motion on December 11, 2023. Partnership Non-parties filed their opposition on May 9, 2024. Judgment Creditors filed their reply on May 13, 2024. As of the date of this hearing Sina has not filed an opposition.

When jurisdiction is, by the Constitution or this Code, or by any other statute, conferred on a Court or judicial officer, all the means necessary to carry it into effect are also given; and in the exercise of this jurisdiction, if the course of proceeding be not specifically pointed out by this Code or the statute, any suitable process or mode of proceeding may be adopted which may appear most conformable to the spirit of this Code.

“Pursuant to section 187, a trial court has jurisdiction to modify a judgment to add additional judgment debtors.” (McClellan v. Northridge Park Townhome Owners Assn., Inc. (2001) 89 Cal.App.4th 746, 752; see also Carr v. Barnabey’s Hotel Corp. (1994) 23 Cal.App.4th 14, 20.) An amendment of a judgment to add a judgment debtor liable for the original defendant’s obligations is included within §187’s provision for the use of “any suitable process” in the exercise of the trial court’s jurisdiction. (JPV I L.P. v. Koetting (2023) 88 Cal.App.5th 172, 188.) C.C.P. §187 may be used at any time so that the judgment will properly designate the real defendants. (Wells Fargo Bank, N.A. v. Weinberg (2014) 227 Cal.App.4th 1, 7.) “In order to see that justice is done, great liberality is encouraged in the allowance of amendments brought pursuant to Code of Civil Procedure section 187.” (Misik v. D’Arco (2011) 197 Cal.App.4th 1065, 1073.)

“Code of Civil Procedure section 187 contemplates a noticed motion. The trial court is not required to hold an evidentiary hearing. [Citation] Evidence in the form of declarations or deposition testimony is sufficient.” (Wells Fargo Bank, N.A., 227 Cal.App.4th at pg. 9.)

The power to amend a judgment under §187 is typically exercised to add a judgment debtor on the ground that the new judgment debtor is an alter ego of the original judgment debtor. (McClellan, 89 Cal.App.4th at pg. 752.) “[E]ven if all the formal elements necessary to establish alter ego liability are not present, an unnamed party may be included as a judgment debtor if ‘the equities overwhelmingly favor’ the amendment and it is necessary to prevent an injustice.” (Carolina Casualty Insurance Co. v. L.M. Ross Law Group, LLP (2012) 212 Cal.App.4th 1181, 1188-1189, quoting Carr, 23 Cal.App.4th at pg. 22.)

Here, Sina nominally entered into the Lease as an individual, but the evidence obtained in the bankruptcy proceedings shows that he always intended to obtain the Lease for the benefit of his family’s Partnership. The evidence demonstrates Sina intended to have the Partnership assume the responsibility for the Lease expenses, and, to the limited extent that expenses were paid, it did. (Decl. of Taitelman ¶26, Exh. J [“Depo. of Sina”] 113:22-114:9; 116:11-25; 117:6-10; 139:17-22.)

While Sina was the nominal tenant under the terms of the Lease, he intended to have the Lease be part of his family’s partnership business. (Depo. of Sina, 79:15-80:24; 101:15-23; 113:15-21.) Sina’s testimony in his deposition taken on April 20, 2023, made clear his intent:

Q My question was if – if you needed money to perform under the 8451 lease, the money, the source of those funds would be the family business, right?

Q Just to be clear, when you signed -- at the time you signed the lease, your intent was that the family business would be the source of funds that you would use to pay the rent and other things?

Sina testified that he did not intend use his own income to pay contractors who worked at the Property. (Depo. of Sina, 139:17-23.) The Partnership’s payments to 8541 Melrose were for Partnership business, and therefore did not constitute loans to the nominal tenant, Sina. (Decl. of Sina, 79:15-25.)

The advance rent and the security deposit, which totaled $330,000, were paid from SRS account, the Partnership’s “mother account.” (See Decl. of Simantob ¶5, Exh. B; Depo. of Sina 53:15-18; 148:11-22; 167:2-13.) Property tax and insurance reimbursement was paid by Amey Enterprises, a partnership-associated entity. (See Decl. of Simantob ¶6, Exh. C.) Other Lease-related expenses were charged to Amey Enterprises in the Partnership’s accounting records. (See Decl. of Taitelman ¶28, Exh. L.) Sina unequivocally testified his intention for Amey Enterprise to act as the tenant: “Q So when you signed the 8451 lease, was it your intent that Amy would act as the tenant under that lease? [¶] A Yes.” (Depo. of Sina, 112:19-22.) Sina testified that Amey Enterprise typically acts as the tenant when properties are leased for the Partnership. (Depo. of Sina, 82:24-83:2.)

Each general partner of a partnership is an agent of the partnership for the purpose of its business. (Corp. Code §16301(1).) Sina entered into the Lease for purposes of conducting the Partnership’s business, thereby acting as an agent of the Partnership. “Principals may be liable for contracts executed by agents, even where the principal is not disclosed in the contract.” (Aluma Systems Concrete Construction v. Nibbi Bros. Inc. (2016) 2 Cal.App.5th 620, 628.) Thus, liability under the Judgment properly rests with the Partnership.

Generally, each partner in a general partnership is jointly and severally liable for partnership obligations. (Corp. Code §16306(a).) As partners in the family partnership, Yousef, Kourosh, Shirin, and Shahpar are proper debtors on a judgment based on a Partnership obligation. The Judgment in this case is such a judgment.

Amey Enterprise is also liable additional judgment debtor. Sina intended to have it be the Partnership entity that would act as the tenant. Amey Enterprise paid Partnership expenses, including the property tax and insurance reimbursements. Sina went so far as to have Amey sublet part of the Property to Vera Wang Bridal House, LLC, further evidencing the intent to have it act as the tenant under the master Lease. (Decl. of Taitelman ¶25, Exh. I; Depo. of Sina, 101:1-23.) A judgment against an individual can be amended to add an artificial entity, such as Amey Enterprise, as an additional defendant. (Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214.)

While the individual partners were not separately represented at trial, the Partnership itself was virtually represented through Sina, one of its members. Each of the partners was part of a single enterprise: the “one-for-all” Partnership. (Decl. of Taitelman ¶35, Exh. O at 56:12-16.) When a judgment is entered against one piece of a single enterprise, and the person who controlled the litigation on behalf of that piece dominates the enterprise, the other parts of the enterprise are necessarily virtually represented in the litigation. (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 509.)

Sina was the partner charged with handling leases for the Partnership like the one involved in this case. (Depo. of Sina, 45:22-46:3; 121:4-19.) When it comes to leasing property, Sina dominates the Partnership enterprise. He had charge of the litigation of this on behalf of the Partnership. The attorneys hired for his defense were paid from a Partnership account. The Partnership, and by extension, its individual members, were thus virtually represented in this case. Amey Enterprise was virtually represented by Sina, who had acted as its sole manager. It was the entity through which the Partnership handled the properties they leased, and Sina was the partner who was in charge of such leases.

Sina’s representation in this litigation was vigorous, contesting liability on the merits of the case through two trials and two appeals. Sina’s interest in the underlying dispute was the same as the interests of the Partnership and Amey Enterprise. There thus is no unfairness in adding the other parties who were responsible under the Lease to the Judgment.

The bankruptcy court has already issued a discharge order in Sina’s bankruptcy case. (Decl. of Taitelman ¶13.) Unless Sina’s debt is determined to be nondischargeable in the pending adversary proceeding in the bankruptcy court, the judgment will become uncollectable. (Id.) The discharge order would preclude further collection efforts against Sina, leaving 8451 Melrose without a plain, adequate and speedy remedy. Such an unfair result can be avoided by adding the remaining partners and Amey Enterprise as judgment debtors.

Partnership Non-parties’ argument that Judgment Creditors’ motion should be denied based on laches is unavailing. “Laches is an equitable, affirmative defense which requires a showing of both an unreasonable delay by the plaintiff in bringing suit, ‘plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay.’” (Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 282.) “Prejudice is never presumed; rather it must be affirmatively demonstrated by the defendant in order to sustain his burdens of proof and the production of evidence on the issue.” (Miller v. Eisenhower Medical Center (1980) 27 Cal. 3d 614, 624.)

Partnership Non-parties have not carried their burden of proof on the issue of laches. First, they have not shown an unreasonable delay in bringing the motion to amend the judgment, which occurred within a few months after Judgment Creditors’ discovery of the “one-for-all” Family Partnership. Second, they have not shown any acquiescence in the non-payment of the Judgment. Finally, Partnership Non-parties have not offered any evidence that they suffered any form of prejudice.

Similarly, Partnership Non-parties’ argument that Judgment Creditors’ motion violates the Order of Discharge in In re Akhtarzad, Case No. 11-bk-61640-BB in favor of Sina and Ramesh. However, the Order of Discharge states, “[t]he debtor has no personal liability for personal liability for debts discharged under 11 U.S.C. Section 727 (or) 1141, except those debts determined by order of a court of competent jurisdiction not to be discharged.” (JC-RJN, Exh. CC at ¶1.) The Order of Discharge forbids creditors from collecting discharged debts “as personal liabilities of the debtor.” (JC-RJN, Exh. CC at ¶3.) The Discharge Order is silent as to liabilities of non-debtors for the same debts.

Partnership Non-parties’ citation to 11 U.S.C. §524 is inapposite. 11 U.S.C. §524 includes a provision that a discharge order operates as an injunction against seeking to collect a discharged debt “as a personal liability of the debtor.” (11 U.S.C. §524(a)(2).) The statute has another provision that specifies that the injunction does not apply to enforcement of the debt against other people who were not bankruptcy debtors: “Except as provided in subsection (a)(3) of this section, discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.” (11 U.S.C. §524(e).) Here, the exception to the general rule is inapplicable because 11 U.S.C. §524(a)(3) applies only to community claims against the spouse of the debtor.

It has repeatedly been held that 11 U.S.C. §525(e) “precludes bankruptcy courts from discharging the liabilities of non-debtors.” (In re Lowenschuss (9th Cir. 1995) 67 F.3d 1394, 1401.) Section 524(e) “plainly provides that the discharge only protects the debtor and not any other person who is liable with the debtor.” (In re RS Air, LLC (BAP 9th Cir. 2023) 651 B.R. 538, 544.) That limitation on the scope of the discharge applies even when the other person is alleged to be an alter ego of the debtor. (Id. at pgs. 544-546.) Therefore, the Order of Discharge has no impact on the instant motion.

The equities favor having Sina’s partners share in the liability under the Judgment. Therefore, the Judgment is amended to join Yousef, Kourosh, Shirin, Shahpar, and Amy Enterprise as additional Judgment Debtors.

Judgment Creditors’ motion to amend the Judgment is granted. The Judgment is amended to join Yousef, Kourosh, Shirin, Shahpar, and Amy Enterprise as additional Judgment Debtors.

Judgment Creditors filed the instant motion on July 28, 2022. The parties stipulated to continue the motion on several occasions. Sina filed his opposition on May 6, 2024. Judgment Creditors filed their reply on May 13, 2024.

The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. . . . Attorney’s fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.

C.C.P. §1033.5(a)(10)(A) provides for the recovery of contractually authorized attorneys’ fees as an element of costs. Thus, when the underlying judgment provides for recovery of attorneys’ fees pursuant to a contract, the

judgment creditor is entitled to recover attorneys’ fees incurred in enforcing that judgment.

§29.21 of the Lease that was the subject of the litigation. (Judgment, pgs. 2-3.) Accordingly, Judgment Creditors are entitled to recover attorneys’ fees and costs incurred in enforcing the Judgment. Judgment Creditors specifically move for attorneys’ fees incurred in connection with the enforcement of the judgment between July 29, 2020, and June 30, 2022, within the two-year window specified by §685.080. (Motion, pgs. 4-5.)

To calculate a lodestar amount, the Court must first determine the reasonableness of the hourly rates sought by Judgment Creditors’ counsel. The Supreme Court of California has concluded that a reasonable hourly lodestar rate is the prevailing rate for private attorneys “conducting non-contingent litigation of the same type.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133, emphasis added.)

Judgment Creditors’ Counsel declares the following hourly rates for attorneys who worked on this case: (1) Lewis R. Landau ($545/hour in 2020, $595/hour in 2021, and $645/hour in 2022); (2) Michael Taitelman ($450/hour in 2020, $500/hour in 2021, and $550/hour in 2022); (3) Steven E. Formaker ($450.00/hour); and (4) Tamar Yeghiayan ($395.00/hour). (Decl. of Landau ¶¶9, 11, Exh. A; Decl. of Taitelman ¶¶7-10, 12, Exh. B.) Judgment Creditors have sufficiently demonstrated their counsel’s hourly rates are reasonable in their community of practice in their specialized area of law. (Decl. of Landau ¶¶9, 11, Exh. A; Decl. of Taitelman ¶¶7-10, 12, Exh. B.)

Judgment Debtor argues Judgment Creditors’ motion should be denied because Judgment Creditors have already been paid everything to which they are entitled under a stipulation made in his bankruptcy case. However, the stipulation in question, at Paragraph 17, preserves Judgment Creditors’ rights with respect to the dischargeability proceeding, stating: “This Stipulation does not prejudice, and shall not impair any of the Debtors’ or Melrose’s rights concerning their claims in adversary proceeding number 2:12-ap-01538 BB or Superior Court case number 20STCV39690.” (Decl. of Rosenstein ¶2, Exh. A [“Stipulation”] at ¶17.)

The adversary proceeding in the Stipulation is Judgment Creditors’ dischargeability proceeding. Paragraph 17 of the Stipulation empowers Judgment Creditors to proceed with their effort to obtain a determination that the judgment rendered in this action is not dischargeable. If such a determination is obtained, Judgment Creditors will be free to fully enforce their judgment, which means Judgment Creditors will be able to recover any attorney’s fees awarded pursuant to C.C.P. §685.040. Therefore, the Stipulation thus does not preclude an award of the attorneys’ fees sought by this motion.

Judgment Debtor does not challenge Judgment Creditors’ counsel’s hourly rates and thereby concedes Judgment Creditors’ counsel’s rates are reasonable.

The party seeking fees and costs bears the burden to show “the fees incurred were allowable, were reasonably necessary to the conduct of the litigation, and were reasonable in amount.” (Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99, 104.)

In this case, the declarations and billing records provided by Judgment Creditors’ counsel are sufficient to meet the burden of proving the reasonableness of the claimed fees in terms of amounts and tasks. To satisfy this burden, evidence and descriptions of billable tasks must be presented in sufficient detail, enabling the court to evaluate whether the case was overstaffed, the time attorneys spent on specific claims, and the reasonableness of the hours expended. (Lunada Biomedical v. Nunez (2014) 230 Cal.App.4th 459, 486-487.)

Judgment Creditors’ counsel requests compensation for 456.50 hours billed for a total of $267,917.50 for Landau. (Decl. of Landau ¶¶9, 11, Exh. A.) Judgment Creditors’ counsel from Freedman and Taitelman requests compensation for 250.80 hours billed and requests a combined $119,572.15 for attorneys’ fees and reimbursable expenses, which is not of great assistance to the Court in calculating the lodestar for attorneys’ fees. (See Decl. of Taitelman ¶¶14, 15, Exh. B.)

Judgment Debtor objects to Judgment Creditors’ hours billed on the grounds it is difficult to determine how much time Judgment Creditors’ counsel actually spent on many of the discrete tasks billed due to rampant “block billing,” which is well taken. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1011.) Accordingly, the Court reduces Judgment Creditors’ requested fees by $20,000.00 for each billing attorney, for a total reduction of $40,000.

Accordingly, Judgment Creditors’ requested fees are granted in the reduced amount of $347,489.65.

Judgment Creditors request $1,248.00 in costs advanced by Landau. (Decl. of Landau ¶¶10-11, Exh. A.) Judgment Creditors’ counsel from Freedman and Taitelman does not provide a standalone value for its request for costs and expenses. Therefore, the Court is only inclined to grant costs requested by Landau and not Freedman and Taitelman.

Accordingly, Judgment Creditors’ requested costs are granted in the reduced amount of $1,248.00.

Hon. Daniel M. Crowley

Judge of the Superior Court