Judge: Daniel S. Murphy, Case: 22STCV18523, Date: 2022-09-30 Tentative Ruling

Case Number: 22STCV18523    Hearing Date: September 30, 2022    Dept: 32

BACKGROUND

            On June 6, 2022, Plaintiff Fraser Ross filed this action against Defendants Jonny Tucker (“Jonny”) and Carolyn Tucker (“Carolyn”), alleging the following eight causes of action: (1) fraud, (2-3) breach of fiduciary duty, (4) accounting, (5) breach of contract, (6) declaratory relief, (7) conversion, and (8) quantum meruit.  

            Plaintiff alleges that Defendants induced him into a joint business venture and promised him 50% ownership interest. Plaintiff and Jonny formed Los Angeles Trading Company, LLC (“LATC”) to operate the new business. Plaintiff contributed financially to the business and also provided his guidance and expertise, which increased LATC’s success. Jonny allegedly mismanaged the company and used LATC assets to pay for his and Carolyn’s personal expenses. When Defendants became dissatisfied with Plaintiff over Plaintiff’s focus on profits, Jonny repudiated Plaintiff’s ownership stake in LATC, claiming that Plaintiff never formally obtained such an interest. The parties never signed a written contract memorializing their oral agreement, though an unsigned draft was exchanged. Afterwards, Jonny held a vote of the LATC membership to dissolve the company without notifying Plaintiff and then petitioned the court to wind up the company.

            On July 25, 2022, Defendants filed the instant demurrer based on exclusive concurrent jurisdiction on the grounds that Plaintiff’s current action overlaps substantially with Jonny’s earlier action for winding up. Defendants request a stay of the current action because Jonny’s petition was filed first.  

LEGAL STANDARD

“Under the rule of exclusive concurrent jurisdiction, when two California superior courts have concurrent jurisdiction over the subject matter and all parties involved in litigation, the first to assume jurisdiction has exclusive and continuing jurisdiction over the subject matter and all parties involved until such time as all necessarily related matters have been resolved. The rule is based upon the public policies of avoiding conflicts that might arise between courts if they were free to make contradictory decisions or awards relating to the same controversy, and preventing vexatious litigation and multiplicity of suits.” (People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4th 760, 769-770.)

“[T]he rule of exclusive concurrent jurisdiction does not require absolute identity of parties, causes of action or remedies sought in the initial and subsequent actions.” (Garamendi, supra, 20 Cal.App.4th at p. 770.) “Moreover, the remedies sought in the separate actions need not be precisely the same so long as the court exercising original jurisdiction has the power to litigate all the issues and grant all the relief to which any of the parties might be entitled under the pleadings.” (Ibid.)

DISCUSSION

            Defendants argue that Jonny’s earlier petition overlaps with Plaintiff’s present action because “the Court in the Earlier Action will determine all of the questions and issues of ownership, distributions, creditor claims, dissolution, and the order of winding up of the Company that are purported to be presented by the Complaint in this action.” (Dem. 9:9-12.) As a result, according to Defendants, “the matters of the Earlier Action will dispose of the predominance, if not all, of the disputes sought by the Plaintiff to be presented in this action.” (Dem. 10:2-7.)

            However, Plaintiff’s present action seeks to recover damages for harm done to him personally through Defendants’ alleged fraud, breach of fiduciary duty, breach of contract, and conversion. These are not claims that Plaintiff can assert in a petition for winding up the LLC brought pursuant to the Corporations Code, which is being heard in a writs and receivers courtroom. In other words, it is not true that the first court “has the power to litigate all the issues and grant all the relief to which any of the parties might be entitled under the pleadings.” (See Garamendi, supra, 20 Cal.App.4th at p. 770.) “Issues of ownership, distributions, creditor claims, dissolution, and the order of winding up of the Company” do not overlap with a determination of damages for torts and breach of contract. The two actions were deemed not related on June 20, 2022.

CONCLUSION

            Defendants’ demurrer is OVERRULED.