Judge: David A. Rosen, Case: 20GDCV00419, Date: 2023-08-18 Tentative Ruling
Case Number: 20GDCV00419 Hearing Date: September 8, 2023 Dept: E
Case No: 20GDCV00419
Hearing Date: 09/08/2023 – 8:30am
Trial Date: 03/04/2025
Case Name: ALFRED JACKSON, et al. v. DELOITTE &
TOUCHE LLP, et al.
The
Notice page of this motion states that “Cross-Defendant EisnerAmper LLP (Eisner)
will and hereby does make this Motion for an order to dismiss or stay this
action based on improper venue.”
For
the reasons set out below, the Court will grant Eisner’s Motion and dismiss the
cross-complaint against Cross-Defendant Eisner.
II.
BACKGROUND
Plaintiffs filed a Complaint on 04/28/2020. Plaintiffs filed a FAC on
08/18/2020. Plaintiffs filed a SAC on 10/27/2020.
Defendant Opus filed a Cross-Complaint on 04/20/2021. A First Amended
Cross-Complaint (FACC) was filed on 02/06/2023. A notice of errata to the FACC
was filed on 2/22/2023.
Plaintiffs in the SAC are investors in Direct Lending Income Fund,
L.P. (DLIF), a private investment fund managed by Direct Lending Investments,
LLC (DLI).
The general background behind Plaintiffs’ allegations is that
Plaintiffs collectively invested over $43,750,00.00 in Direct Lending Income
Fund, L.P. (DLIF), which was formed and controlled by Brendan Ross’s Direct
Lending Investment, Inc. (DLI), to invest primarily in online lending
marketplaces (the Fund). The SAC further alleges that Ross and others
(including Cross-Defendant Quarterspot) engineered false payments on bad loans
in order to prop up returns and overcharge investors on fees, manipulated loan-level
information that it reported to investors, and falsified borrower payment
information to make it appear as though payments had been made by borrowers,
causing DLIF to value many of the nonperforming Quarterspot loans at par when
the value should have been reduced to zero.
The SAC does not bring claims against Ross, the Fund, or alleged bad
actors like Quarterspot, but instead Plaintiffs sued the Fund’s auditor,
Deloitte & Touche LLP and Deloitte Tax, LLP (collectively Deloitte).
Plaintiffs also sued Opus, the Fund’s administrator, who allegedly
represented to Plaintiffs’ registered investment advisors that Opus would
independently value the Fund’s assets.
Opus’s FACC appears to name four Cross-Defendants: (1) Deloitte &
Touche and Deloitte Tax, LLP (collectively Deloitte), (2) Quarterspot, Inc.,
(3) Kroll, and (4) EisnerAmper LLP.
Cross-Defendant, EisnerAmper LLP (Eisner), now
moves to dismiss or stay Opus’s FACC based on a forum-selection clause between
Eisner and DLIF, an entity that is not a party to the FACC or the SAC.
III.
ANALYSIS
As a preliminary matter, Eisner’s motion is somewhat confusingly structured.
It isn’t until page 16 of Eisner’s motion that Eisner finally mentions two
statutes – CCP §§410.30 and 418.10 – that Eisner appears to be basing its
motion on.
“The procedure for enforcing a forum selection clause is a motion to
stay or dismiss for forum non conveniens.” (Olinick v. BMG Entertainment (2006)
138 Cal.App.4th 1286, 1294 citing Berg v. MTC Electronic Technologies (1998)
61 Cal.App.4th 349, 358.)
Eisner argues that a forum-selection clause between Eisner and DLIF (an
entity that is not a party to the FACC or the SAC) provides a basis for Opus’s
FACC to be dismissed with prejudice as to Eisner, or, alternatively, stayed
pending the outcome of an action Opus might file in the proper New York State
venue.
Eisner also argues: (1) The forum-selection clause is presumptively
valid; (2) public policy favors enforcing the forum-selection clause, and (3)
Opus was closely related to the contractual relationship between DLIF and
Eisner.
“For [defendant] to demonstrate that it was ‘so closely related to the
contractual relationship’ that it is entitled to enforce the forum selection
clause, it must show by specific conduct or express agreement that (1) it
agreed to be bound by the terms of the purchase agreement, (2) the contracting
parties intended [defendant] to benefit from the purchase agreement, or (3)
there was sufficient evidence of a defined and intertwining business
relationship with a contracting party.” (Bugna v. Fike (2000) 80
Cal.App.4th 229, 233 citing Bancomer, S.A. v. Superior Court (1996) 44
Cal.App.4th 1450, 1461.)
Here, having reviewed the briefs and the supporting declarations, the
Court concludes that Eisner has demonstrated that Opus was “so closely related
to the contractual relationship” that “it is entitled to enforce the forum
selection clause . . . .” (Id.)
As Eisner notes, the basis for Opus’s claims against Eisner are in
fact founded on the engagement agreements between Eisner and DLIF. Without those engagement agreements, Opus
would appear to have no basis for any claim against Eisner. (See FACC ¶¶ 14-25.) This seems to be the primary obstacle that all
of Opus’s arguments come up against: Why
is Opus suing Eisner? It seems the
answer is because it relied on Eisner as a result of the intertwined
relationships that DLIF, Eisner, and Opus had.
(See Bugna, 80 Cal.App.4th at 233-35; Bancomer S.A.,
44 Cal.App.4th at 1461; Lu v. Dryclean-U.S.A. of Calif., Inc. (1992)
11 Cal.App.4th 1490, 1493-94.)
The intertwined relationships of DLIF, Eisner, and Opus are at issue in
the Plaintiffs’ FAC and Opus’s FACC: “The Plaintiffs in this action have
alleged that the services provided by Opus as administrator to DLIF contained
false information. Opus relied on Eisner Amper’s and Deloitte’s Audit reports
and other services they provided to the Funds that are at issue in the SAC, and
Opus relied upon the valuation policies and procedures created by Eisner Amper
and Deloitte to provide administration services to DLIF that are at issue in
the SAC.” (FACC ¶25.)
The Court is, for similar reasons, also persuaded by Eisner’s argument
that Opus was acting as DLIF’s agent in carrying out many of DLIF’s obligations
under the Eisner engagement agreements.
The Court concludes that Eisner has established, for the purposes of
this motion, that the allegations and evidence presented on this motion support
the conclusion that there was sufficient evidence of a defined and intertwined
business relationship with a party bound by the forum-selection clause. (See
Bugna, 80 Cal.App.4th at 233-34.)
“For [a party] to demonstrate that [a non-contracting party] was ‘so
closely related to the contractual relationship’ that it is entitled to enforce
the forum selection clause [against the non-contracting party], it must show by
specific conduct or express agreement that (1) it agreed to be bound by the
terms of the purchase agreement, (2) the contracting parties intended [the
non-contracting party] to benefit from the purchase agreement, or (3) there was
sufficient evidence of a defined and intertwining business relationship [between
the non-contracting party and] a contracting party.” (Bugna v. Fike (2000)
80 Cal.App.4th 229, 233 citing Bancomer, S.A. v. Superior Court (1996)
44 Cal.App.4th 1450, 1461.)
Here, having reviewed the briefs and the supporting declarations, the
Court concludes that Eisner has demonstrated that Opus was “so closely related
to the contractual relationship” that “it is entitled to enforce the forum
selection clause . . . .” (Id.)
Eisner’s argument that public policy favors enforcing the forum-selection
clause is further justifies the conclusion that the forum-selection clause
should be enforced.
IV.
Request
for Judicial Notice
Eisner requests that the Court take judicial notice of various legal
filings in federal court.
The Court takes judicial notice of the requested materials. (Evid Code. §§ 452-53.) The requested materials do not alter the Court’s
ruling.
V.
Tentative
Ruling
For the reasons set out above, Eisner’s motion is GRANTED and the Cross-Complaint
against Cross-Defendant Eisner is DISMISSED pursuant to CCP § 410.30.