Judge David J. Cowan, Case Number: 20STCV17242, Date: 2025-02-06 Tentative Ruling

TENTATIVE RULINGS ON EXPIRATION OF FIVE-YEAR DATE AND RE: BIFURCATION OF EQUITABLE ISSUES

San Pasqual Fiduciary Trust Company, et al. v. Michael Rosenfeld, et al., Case No. 20STCV17242 (consolidated with Case No. 20STCV18467)

On January 10, 2025, the undersigned conducted an initial trial setting conference in this case – after Dept. 1 determined this case required a long-cause trial, reassigning the case from the department where it was previously pending. At that time, the Court requested briefing on when the five-year deadline under CCP sec. 583.310 would expire given the parties’ claims related to the time it took from when the previously assigned judge believed the case should be sent to a long-cause department for trial (on May 31, 2024) and Dept. 1 making that decision and the first appearance in this department on January 10, 2025. The five-year date from filing the complaint is May 5, 2025. In addition, the Court requested briefing on whether the Court should bifurcate the equitable causes of action for rescission and an accounting prior to the legal issues for a jury. In the interim, the Court scheduled a four-week trial to commence on October 13, 2025 given the Court’s other long-cause cases already set for trial.

The Court finds that the five-year deadline was tolled between May 31, 2024 and January 10, 2025 under CCP 583.340(c), a period of 224 days. In that time, it was for all practical purposes “impossible” for Plaintiffs to bring the case to trial. On May 31, 2024, Judge Scheper advised the parties she would not try the case and that it should be sent to a long-cause department. On June 14, 2024, the parties submitted the long-cause application package. On July 5, 2024, Dept. 1 rejected the package, noting various deficiencies. On July 22, 2024, the parties were due back to report to Judge Scheper. That hearing was continued to August 29, 2024, due to court issues. On September 6, 2024, another application was submitted to Dept. 1. On September 25, 2024, Dept. 1 again rejected the application, noting another deficiency. Finally, on December 19, 2024, the case was accepted into a long-cause courtroom and assigned to this department for trial.

The Court finds that Plaintiffs moved with reasonable diligence during this timeframe to obtain a courtroom for trial. (Tamburina v. Combined Ins. (2007) 147 Cal.App.4^th 323, 328) The Court finds that not having a courtroom for trial was “unavoidable” and not Plaintiffs’ fault that should therefore count against them for purposes of CCP sec. 583.310. (It is not clear whether the deficiencies causing Dept. 1 to be unable to approve the application was Plaintiffs’ or Defendants’ fault or both.) (Sierra-Nev. Memorial Miners Hospital v. Sup. Ct. (1990) 217 Cal.App.3d 464, 472 Reassignment to a long-cause courtroom is not part of the “ordinary incident of proceedings leading up to trial” and is “unusual.” (Gaines v. Fidelity Nat’l. Title (2016) 62 Cal.App.4^th 1081, 1102)

The Court therefore finds that the deadline to start trial, given the tolling for 224 days, is December 15, 2025. Starting trial therefore on the scheduled date of October 13, 2025 will comply with sec. 583.310. Defendants do not dispute that the statute should be tolled during the foregoing timeframe.

The Court also now finds that bifurcation of the equitable causes of action for trial in advance of a jury trial would not serve efficiency here. The equitable issues should be heard concurrently to the causes of action for a jury. The Court will hold the jury trial beginning on October 13, 2025. Hearing the rescission cause of action separately will likely require overlapping evidence with what will need to be heard by the jury for the other causes of action. Multiple witnesses would have to be heard twice. The parties disagree over what could be heard without encroaching on issues for a jury, including whether the transaction was a loan or an investment. In turn, it is not clear what efficiencies would be gained by hearing the accounting cause of action before the other causes of action or why an accounting is required before the other causes of action are heard. Determining any failure to produce requested documents or to comply with orders to compel can be adequately addressed during trial.

In view of these findings, the Court does not need to decide whether starting a bifurcated bench trial on one or both of the equitable causes of action before May 5, 2025 would satisfy start of trial for purposes of CCP sec. 583.310. (See Sagi Plumbing v. Chartered Construction (2004) 123 Cal.App.4^th 443)

San Pasqual Fiduciary Trust Company, et al. v. Michael Rosenfeld, et al., Case No. 20STCV17242 (consolidated with Case No. 20STCV18467)

Plaintiffs argue that Kaufman’s election not to leave anything to her children or grandchildren is irrelevant and unduly prejudicial. Defendants argue that this issue is relevant because Plaintiffs have opened the door on this subject by way of seeking to inform the Court of her charitable giving. Defendants contend they are entitled to place this giving in context. In addition, that Kaufman chose not to leave anything to her family also explains why she relied to such degree on Bookstein, including nominating him to serve as executor of her will on her passing. Where Kaufman seeks to prove her reliance on Bookstein as part of her case, Defendants contend they are entitled to explain the circumstances why she may have done so. They also indicate that this testimony will be short.

The Court agrees with Defendants: Plaintiffs have made what they refer to as her “character” an issue where it might not otherwise have been relevant.[1] Defendants are also entitled to put her generosity in context – even if prejudicial to Plaintiffs. The jury is entitled to the see the entire picture. That character evidence may be precluded does not prevent a party from introducing evidence that goes to credibility. (Evid. Code secs. 785, 1101(c)) The subject is also relevant to Kaufman’s alleged reliance on Bookstein – which may in fact help Plaintiffs.

Plaintiffs again seek to exclude other litigation Kaufman has brought against others as irrelevant to the issues here and unduly prejudicial. Defendants counter by arguing that the litigation Kaufman had with her family concerning her estate plan was one of the reasons Kaufman hired Bookstein and hence is material to her alleged special reliance on him. In addition, Defendants argue that Bookstein’s holding on to various State of Israel bonds that Kaufman had earlier intended to give her family, notwithstanding her alleged request that he discard them, goes to challenging her claim that Bookstein was acting contrary to her interests.

While ordinarily other litigation would not be relevant, Defendants have shown at least some basis here to reject the potentially artificial exclusion of evidence of those cases before trial. The subject of those cases is material to the issues here. As indicated above, this subject should not take much time. If it does so, Plaintiffs can object at trial. It does not appear that these issues are unduly prejudicial to Plaintiffs given the context.

Plaintiffs seek to exclude any evidence of Kaufman terminating the employment of those assisting her as again irrelevant to the issues here and unduly prejudicial. Defendants contend that Kaufman is allegedly unduly concerned that people might steal from her and takes excessive action against those who may be doing so, including terminating her financial advisor David Hou -- allegedly due to his testifying at his deposition in favor of Bookstein.

Terminating employment of others for similar claims to those here – that Defendants wrongfully took money that belonged to her - goes to her credibility. If those other steps were unwarranted, for sake of argument, Defendants would have the right to argue that the claims here should be looked at in that light. Whether that will work remains to be seen. It may be also that under the circumstances Kaufman was more than justified in having these concerns and as a result raising these other suits at trial may backfire. In turn, while there is no apparent claim that Hou took money he should not have from her, that Bookstein recommended Hou and she continued to use him may also go to whether Bookstein intended to take actions adverse to her – as she claims. On the other hand, Defendants have a right to confront Kaufman as to whether she terminated Hou due to his testimony – which again may go to her credibility. Hence, these issues are relevant. If it appears at trial that determination of these collateral issues becomes too lengthy, Plaintiffs can object at that time. As above, it does not appear that these issues are unduly prejudicial to Plaintiffs given the context.

Plaintiffs’ Reply states their agreement to Defendants’ proposal that their only making a “bland reference” to the DBD transaction would not trigger Defendants’ right to call Phan as a witness. The Court has several concerns nonetheless:

The Court does not what would constitute more than “bland reference.” Should such reference be made at trial and Defendants then called Phan as a witness, this would likely prejudice Plaintiffs’ case where his credibility may be put at issue. (See generally Calif. Rules of Prof. Conduct, Rule 3.7, prohibiting a lawyer acting as advocate at trial unless that testimony related to an uncontested issue) The Court wishes to avoid such issue occurring during trial and causing the potential for a mistrial in this long-cause matter.

It is also not clear if Plaintiffs are still claiming liability and damages arising from Defendants’ involvement in the DBD / Leonard Ross transaction. The First Amended Complaint (“FAC”) makes such claim. Is that part of the complaint dismissed? Given Plaintiff’s age and seeming lack of involvement with her adult children (from what the Court can glean from what it has read so far) from whom she might otherwise receive independent advice, the Court wishes to ensure that she is not relinquishing this claim (if she is) in order that Phan can act as counsel herein. Under Rule 3.7(a)(3), a lawyer who is a witness as well as an advocate in the trial of a contested matter requires “informed written consent from the client.” (See Rule 1.0.1(e)) It is not clear why Phan has been counsel to date in this matter where he is also lead counsel and it does not appear there is any dispute that he had material involvement in how Plaintiff addressed the failure of the DBD transaction. The Court appointed discovery referee previously recommended that Defendants be permitted to take Phan’s deposition, notwithstanding the requirements to take the deposition of an attorney in a case, which recommendation Judge Scheper adopted. Defendants have presented argument that Plaintiffs failed to mitigate her damages – in which decision Phan was acting for Kaufman as her general counsel.

Further, from review of Defendants’ MIL No. 1, it appears Plaintiffs have also agreed not to call Phan as a witness to address Defendants’ statute of limitations defense. Hence, leaving aside whether Defendants call Phan as a witness, it appears this agreement may make it difficult for Plaintiffs to rebut any evidence Defendants indicate they intend to offer that the action is barred by reason of the statute of limitations due to Phan’s investigations on behalf of Kaufman into these investments (allegedly as her general counsel). Hence, the Court has further concern that Phan’s involvement here – whatever his exact title – may go beyond the DBD transaction and compromise Plaintiffs’ case – that it is the purpose of Rule 3.7 to prevent – and which would not be true if her lead counsel was not also a witness. The Court wishes to ensure trial is conducted consistent with the rules and avoid potential further litigation thereafter.

It may be that San Pasqual can provide the Court with assurances in this regard where, unlike Phan, it does not have the same concern on this issue. Alternatively, Phan may wish to consider providing the Court with evidence of Kaufman’s informed written consent – potentially in camera, if necessary, and without objection.

Plaintiffs seek to exclude Defendants from referencing other investments Plaintiffs had with or through Defendants on grounds of relevance and undue consumption of time contrasted to its limited probative value under Evid. Code sec. 352. They argue also that the amount of profits on these other investments would be unduly prejudicial to her in front of the jury when they learn the amount of profits on those other transactions.

In opposition, Defendants make the following arguments: The entitlement transactions preceding the Horizon investment (which was one of the nine investments), that were profitable, help explain why Kaufman made the Horizon investment and hence are relevant though separate transactions. Other investments used similar structures or documentation to those used in the nine investments have selected but Kaufman did not complain about such structuring when those investments were profitable. On another successful transaction, Kaufman advised Defendants that that due diligence was not required. The $19 million in total profits Kaufman obtained through Defendants is relevant to inform the jury of the complete relationship they had with Kaufman. She cannot keep what the jury hears only to ones that were unsuccessful. The nature of that relationship, and the reason Kaufman relied on Defendants must be put in the context of the money they also helped her make. Finally, though apparently no longer making the Ross transaction as one that is subject of the complaint, there remains an issue Kaufman seeks to raise concerning Armanino not disclosing certain financial information.

In reply, Plaintiffs point to a district court decision in New York that they contend excluded parallel information in an investment case. In addition, they argue that the Court should still exclude other investments that Defendants did not manage. Finally, they argue that even if other transactions are made the subject of trial, the jurors do not need to know the amount of profits on those transactions.

Understanding the nature of Kaufman’s relationships with Defendants is a central subject at trial. Plaintiffs cannot limit that evidence to only situations where they lost money. Defendants are entitled to lay out the context. While that will not mean the trial will go unnecessarily through all the details of those other transactions (objection to which can be asserted at trial if necessary), it also does not mean that the Court can now exclude all evidence as to those transactions. Defendants have also shown how those other transactions may help explain the nine investments that are in question. While the Court recognizes that the amount of profits on the other transactions may alone seem unduly prejudicial to Plaintiffs, knowing the amount of those profits is relevant to evaluating the losses on the nine investments. The Court was not provided the details as to which investments Defendants did not manage. Even assuming Defendants did not manage them, that they may have recommended them may be relevant. Finally, the Court was not given sufficient information as to how the Ross transaction might still be relevant.

Plaintiffs contend that Armanino failed to produce its merger agreement with RBZ when Plaintiffs requested it in discovery, affirmatively stated in response to interrogatories there was no merger agreement, which contention was further testified to by one of the two PMK persons designated by Armino for deposition on this subject, Ken Coehlo. They contend that that they did not receive the agreement until it was filed as part of Armanino’s opposition to their motion for summary adjudication in March 2024 – by when it was too late to conduct further discovery on the agreement given the discovery cut-off date. As a result, they contend Defendants should not be able to argue that Armanino has no such liability, or in the alternative, exclude the agreement.

In opposition, Defendants argue that they did not know that Plaintiffs were seeking liability against Armanino - from either the complaint or the first amended complaint - for actions of RBZ, LLP (the former accounting firm of defendant Bookstein) prior to the purchase by Armanino from RBZ of certain of its assets and certain liabilities, instead believing that the liability asserted against it was for vicarious responsibility for actions of Bookstein after the agreement between RBZ and Armanino. Moreover, they indicate the “Contribution Agreement” of July 1, 2015 was not a merger of the two entities into one surviving company (which would thereby take on liabilities of the predecessor entity (see Corp. Code secs. 15911.16 and 16914)) but rather merely the purchase by Armanino of certain assets but without the assumption of any liabilities of RBZ for conduct occurring prior to that agreement. Defendants indicate they disclosed that there was no merger agreement in December 2022 and argue further that the deposition testimony of the other of Armanino’s PMK, Cameron Menteer, disclosed that there was an asset purchase agreement, not a merger. Hence, they contend Plaintiffs have known about the agreement well in advance of the discovery cut-off and that the real issue is that until the last-minute Plaintiffs did not make clear what conduct was at issue as far as Armanino was concerned. Therefore, they contend that granting this motion would be unduly prejudicial to them as the agreement constitutes one of their defenses - at least for conduct occurring before the agreement was reached.

In reply, Plaintiffs continue to argue they were not informed of the agreement until a date too late to conduct discovery concerning, that Armanino’s earlier discovery responses and testimony at deposition of Ken Coehlo that as far as he was aware there was a merger, were false and misleading. Further, the testimony of Menteer had no weight where he had no personal knowledge concerning the agreement. Accordingly, Plaintiffs had every reason to believe Armanino had assumed pre-agreement liabilities of RBZ. Further, they note that one of Armanino’s affirmative defenses was that it had no responsibility for actions of others over whom it had no control and therefore it had to have known what liability Plaintiffs were asserting against it. Finally, they contend that under the Contribution Agreement Armanino has a right to indemnity from RBZ for any such liabilities.

It appears here the parties were in some ways “two ships passing in the night” related to the agreement. Plaintiffs asked the wrong questions. Armanino’s deponents – not lawyers – stated what they understood – further deepening the problem – where their understandings may not have been accurate. The Court does not find, however, Armanino took wrongful actions, or misused the discovery process, or that its witnesses provided false testimony, related to disclosure of the agreement. The legal effect of the agreement will be decided at trial. Assuming it is an asset purchase agreement, that disclaims responsibility for earlier incurred liabilities of RBZ, and does not effect a merger as the PMK’s understood it may have, it would be unduly prejudicial to exclude this agreement from consideration by the jury or Court at trial. The agreement may be a dispositive defense at least for pre-agreement liabilities. That Armanino may elect to seek indemnity from RBZ, if as a practicable matter of any value, does not mean Armanino is bound to assume liabilities of RBZ. Indemnity merely provides recourse in the event Armanino suffers a loss.

Plaintiffs make the following five principal contentions concerning the original agreements that they argue supports the exclusion of secondary evidence of these agreements as “unfair” under Evid. Code sec. 1521(a)(2), relying on Dart Industries v. Commercial Union (2002) 28 Cal.4^th 1059 (requiring “rigid inquiry” of evidence as to which there is suspicion as to authenticity.)

First, Defendants did not produce original signed versions of six of the agreements at issue. Relatedly, they contend that Defendants admitted to having destroyed agreements with original signatures and delaying production of original documents until October 2023 - just before the discovery cut-off.

Second, Defendants routinely requested that Kaufman sign blank signature pages as a part of “signature packages” without her knowing what she was signing. They point to evidence on this issue as to the above-referenced DBD / Century City Plaza transaction.

Third, Defendants engaged in a pattern of backdating documents. Plaintiffs point to correspondence indicating that a person at Armanino did not know whether Kaufman’s remittance to Rosenfeld’s personal bank account in 2015 (and then transferred to Horizon) of some $27 million was a loan or an investment in Horizon. Further, though the payment was in 2015, Plaintiffs point to evidence showing that Horizon’s books and records were shown in August 2018 to indicate Kaufman’s funds were an investment as of January 1, 2017 though those records also indicated this money was an advance from Rosenfeld. They also question the validity of an undated “Assignment of Economic Interests” that was not reflected in the financial records.

Fourth, metadata of Defendants’ records shows the agreements were manipulated. They point to data showing creation of the Horizon agreement on December 20, 2017 and other versions on later dates.

Fifth, the agreements conflict with IRS filings and other financial statements from 2015.

First, Plaintiffs point only to the Horizon agreement yet seek exclusion of all six agreements without reason to exclude the other agreements.

Second, the motion does not disclose that Bookstein’s lawyer, Martin Burton, produced several original signed agreements at his deposition on August 2, 2023. In addition, Rosenfeld’s then lawyer indicated in June 2023 that they had offered to make original documents available for inspection two or more years beforehand.

Third, they contest Plaintiffs’ narrative of what occurred related to Horizon and in any event this would be an issue for the jury, not for decision on a motion in limine.

Fourth, they question the relevance of the authenticity issue where Plaintiffs are no longer claiming Kaufman’s signatures were forged or further pursuing the claim of wrongdoing as to the Century Plaza transaction. Hence, there is no need for any “rigid inquiry.”

Fifth, they argue that Plaintiffs have not pointed to any evidence showing the practice Defendants and Kaufman engaged in concerning her signing documents was wrong or that Kaufman did not know what she was doing when remitting funds to Rosenfeld.

Sixth, they indicate there would be an innocent technical explanation for the metadata and that this does not prove the agreements were not entered when indicated.

Finally, they contend there was no reason for internal financial documents to record the 2015 transfer related to Horizon.

In reply, Plaintiffs note: Defendants do not dispute that they did not produce the agreements other than the Horizon transaction referenced in the motion. What Burton provided at his deposition were not these other agreements. Similarly, Defendants do not contest that they asked Kaufman to sign her name on blank signature pages. Relatedly, they argue Defendants have not explained how Kaufman’s remittance of $27 million changed from a loan to an investment or why Armanino also did not know how to record the transaction.

The Court will not exclude the agreements based on when any agreements that were produced or not produced - as the case may be. Production of records is a discovery issue that if there was one should have been raised by a discovery motion before Judge Scheper. It is too late to raise discovery issues after the discovery and motion cut-off dates. Moreover, even the motion does not provide grounds to exclude all agreements based on the record presented. For example, the Court has an inadequate record of what Burton did or did not produce.

In addition, the motion presents numerous factual issues as to the parties’ relationship and in particular concerning how Kaufman indicated her agreement to transactions and as to what she may have known regardless of what she may have signed or not signed. These are issues that will have to be decided at trial – either by the jury or potentially outside the presence of the jury concerning laying a foundation for admission of these agreements and or to address authenticity issues. Though Plaintiffs have presented concerns warranting further review, that review cannot be done in a vacuum without hearing testimony. The Court reaches no conclusions one way or another as to whether admissibility of the agreements would be “unfair” under Evid. Code sec. 1521(a)(2).

Plaintiffs refer this Court to the prior history of discovery disputes related to Plaintiffs’ obtaining documents from Rosenfeld and Bookstein, including numerous hearings before a discovery referee, whose recommendations to compel production and later to compel compliance Judge Scheper adopted, as well as a further ruling by Judge Scheper denying a motion for reconsideration of an order compelling compliance. Plaintiffs seek an order precluding Defendants offering any evidence that they should have already produced in response to those orders.

Defendants oppose the motion on the basis that it is too broadly framed such that the Court can assess which documents would thereby be excluded, citing the need for specificity on a motion in limine. (Kelly v. New West Fed. Sav. (1996) 49 Cal.App.4^th 659, 670) Instead, the Court should determine admissibility of documents on a case-by-case basis at trial.

LASC Local Rule 3.57(a)(1) requires motions in limine include “specific identification of the matter alleged to be inadmissible and prejudicial.” This motion wholly fails to meet this requirement or Kelly, supra. Though there is or should be a joint exhibit list, Plaintiffs do not identify what specific exhibits on that list which Defendants seek admission of that run afoul of the orders to compel and or to compel compliance. While as a general proposition a party may not introduce documents that it did not produce in response to a court order, the Court cannot make that order without reference to specific documents. Plaintiffs should know what those are. Plaintiffs’ objections on this basis are reserved for trial.

Plaintiffs seek to exclude Sussman, a CPA, whom Bookstein designated as a supplemental expert, on the basis that Bookstein did not make him available for deposition before the then trial date. Bookstein allegedly did not do so based on an objection to Plaintiffs’ expert, Eric Rolph, which Plaintiffs contend would be an issue for the Court to decide, not Defendants.

Defendants filed opposition only on January 24, 2025 – after filing their motion to exclude Plaintiffs’ expert, Eric Rolph, discussed below. Defendants have not taken Sussman’s deposition. Defendants argue now that the Court should exclude Rolph’s testimony and hence it is not necessary to take Sussman’s deposition and that likewise the Court should in turn grant this motion since it is not necessary to hear from Sussman.

As discussed below, the Court rejects Defendants’ arguments at least in part concerning Rolph. Hence, Sussman may testify in rebuttal. Defendants can take Sussman’s deposition if they wish to do so within the next thirty days. In view of the change in trial dates, there is good cause to allow Defendants to take Sussman’s deposition. With the opportunity now to take that deposition, the basis for this motion is removed.

1. EVIDENCE AS TO NEGLIGENCE AND BREACH OF FIDUCIARY DUTY IS IRRELEVANT AS THOSE CAUSES OF ACTION ARE BARRED AS A MATTER OF LAW BY THE STATUTE OF LIMITATIONS

Defendants contend that evidence supporting the first and second causes of action for breach of fiduciary duty against respectively, Rosenfeld, and in turn, Bookstein and Armanino, and seventh causes of action for negligence against all defendants are time-barred and therefore irrelevant: The breach of fiduciary duty causes of action are barred as a matter of law based on a two-year statute of limitation where the “gravamen” of those causes of action is in negligence (as opposed to the four-year statute that would otherwise apply under CCP sec. 343)[2] and in turn the negligence cause of action is similarly barred based on a two-year statute of limitation under CCP sec. 339. Defendants contend that it must be undisputed that Plaintiffs were on “inquiry notice” as to the transactions in question (except as the HAR-57^th Street transaction) when they made demand on Defendants on March 31, 2017 to provide them information concerning all transactions they were managing in view of a concern raised by Plaintiffs’ bank, Citibank, involving Nate Paul, as to the HAR-CMBS I, LLC transaction. Defendants argue that March 31, 2017 would be the date Plaintiffs were put on inquiry notice of any wrongdoing for purposes of triggering running of the statute of limitations. This action was filed more than two years later – on May 6, 2020.

Defendants argue that this motion in limine is not a disguised or improper motion for summary adjudication where it was not possible for them to seek summary adjudication of this issue since one of the transactions was not subject to these defenses; namely, the HAR-57^th Street investment which Plaintiffs made after March 31, 2017. In support of this position, they rely principally on Macy’s v. Sup. Ct. (1995) 41 Cal.App.4^th 744, 748, n.2, and De Castro West, et al. v. Sup. Ct. (1996) 47 Cal.App.4^th 410.

In opposition, Plaintiffs argue this motion is in direct conflict with LASC Local Rule 3.57(b) that prohibits a motion for summary adjudication brought as a motion in limine. In addition, they note that the reason a motion in limine was permitted in Macy’s, supra, was that the court there deemed the evidence sought to be excluded as going to an item of damages as opposed to a cause of action and that the Court’s comment in the footnote as to use of a motion in limine as to evidence as to a cause of action was merely dicta. They instead rely on Pantoja v. Anton (2011) 198 Cal.App.4^th 87, 93 and Tung v. Chicago Title (2021) 63 Cal.App.5^th 734, 740, 758-759 that a motion in limine cannot be used for the purpose Defendants propose.

Initially, Plaintiffs argue that as concerns the breach of fiduciary causes of action, the motion fails to explain what parts would be concerned with a duty of care with a two-year statute as opposed to a duty of loyalty with a four-year statute – so the Court could determine which evidence would be relevant and which would not. Further, they argue in any event that whether the complaint was filed within the statute of limitations is typically a factual issue that cannot be decided on a motion for summary judgment for that matter (see Clark v. Baxter Healthcare (2000) 83 Cal.App.4^th 1048), let alone on a motion in limine without the necessary supporting evidence that it Defendants’ burden to produce, and moreover what the Court was presented with demonstrates there is a factual issue that this Court cannot now decide.[3] For example, they contend that Phan’s request for information was more limited in scope than Defendants represent, consistent with the summary reports they received in response. Plaintiffs dispute that these facts represent “inquiry notice” as to the issues alleged in the FAC.

The Court finds that the motion is improper. (R & B Auto Ctr. v. Farmer’s Group (2006) 140 Cal.App.4^th 327, 371) Defendants could have sought summary adjudication pursuant to CCP sec. 437c(t) and hence the rationale of Macy’s, supra, for use of a motion in limine is inapplicable here.[4] Further, unlike in Macy’s, the issue here is not solely one of damages but of causes of action. As such, this makes the motion effectively one for summary adjudication that is precluded by Local Rule 3.57(b).[5] Further, where the FAC also has additional causes of action to the ones at issue here, which may turn on some of the same evidence as the causes of action at issue on this motion, an order precluding evidence pertaining to breach of fiduciary duty and negligence would potentially improperly preclude evidence offered in support of the other causes of action - beyond the scope of this motion.

Even were the Court to exercise its “inherent powers” to control trial, notwithstanding the foregoing concerns, as permitted but discouraged in Amtower v. Photon Dynamics (2008) 158 Cal.App.4^th 1582, 1593-1595, however, the Court still finds on the merits (and in the interests of avoiding further potential motions at trial on this issue) that it is not an “inescapable conclusion” that as a matter of law (using a “best case scenario” for Plaintiffs, and assuming the facts they allege, as required (see Amtower, supra), that these causes of action are wholly barred by the statute of limitations:

It is not as clear as Defendants suggest from what evidence was submitted that Kaufman was on inquiry notice as to wrongdoing by these defendants, even if she was on inquiry notice concerning issues raised by Paul’s alleged wrongdoing. While Phan’s request sought information concerning all transactions Defendants were managing, the Court does not know which transactions they were managing or if that would necessarily cover all issues – where some of these appear to pertain to how the transactions were structured as opposed to managed.[6] Indeed, Kaufman reiterated her trust in Bookstein to Citibank and continued to do business with him and hence it is not clear that she was able to discover the circumstances at issue here. The conflicts of interest alleged here go beyond the issues that arise by reason of Paul’s conduct or more generally, management by Defendants. As Defendants acknowledge in their Reply, evidence would still be admissible to address the breach of fiduciary duty causes of action concerning a breach of Defendants’ duty of loyalty (as opposed to duty of care) to Kaufman. Based on these issues, the Court cannot find assuming Plaintiffs’ contentions to be true that the statute of limitations would necessarily bar these causes of action (even after considering Neches’ opinion testimony concerning when a breach of an accountant’s duty of care arises.)[7]

Defendants still argue, however, that even if the Court cannot grant the motion as to all transactions vi-a-vis breach of fiduciary duty, it must do so where there can be no dispute related to Kaufman inquiring concerning the HAR-CMBS I transaction in which Paul was involved and Citibank was asking about. Further, they argue that evidence related to negligence would still be irrelevant as that cause of action is barred. However, as noted above, as to both these points, the Court cannot as a practical matter - without causing likely jury confusion - rule evidence is irrelevant for one transaction or one cause of action but not for other transactions or causes of action where at least some of the same evidence is seemingly likely to be offered concerning transactions or cause of actions that are not allegedly time-barred.

2. PLAINTIFFS’ CLAIMS ARE DERIVATIVE, NOT INDIVIDUAL, AND HENCE IRRELEVANT

Defendants contend that the action here is a derivative claim, as opposed to an individual claim, and therefore is governed by wholly different rules, including pre-suit demand on the manager of the limited liability companies, determination by the court as opposed to a jury and application of different standards for determining any liability here where the LLCs at issue here are governed by Delaware as opposed to California law. Relatedly, they argue that allegations in the FAC, and by her expert Neches, as to what happened to “Kaufman’s money” are inaccurate and would cause a jury confusion where the money was not Kaufman’s but was rather money of the LLCs in which Plaintiffs invested. Any claim by Plaintiffs to wrongful use of LLC funds against the manager would be in her capacity as a member of the LLC rather than as an individual and again be governed by derivative rules, as well as potentially decided by arbitration pursuant to provisions of the operating agreements.

Plaintiffs oppose the motion on the basis initially that this motion in limine is essentially one for summary judgment or adjudication and therefore improper for the same reasons set forth above concerning Defendants’ MIL no. 1. In turn, on the merits, Plaintiffs contend that under California law their claims are ones that are unique to her individually rather than ones that would be identical for all members of the LLCs and therefore the derivative rules are not applicable here. (Jones v. Ahmanson (1969) 1 Cal.3d 93, Jara v. Suprema Meats (2004) 121 Cal.App.4^th 1238, 1244)

Defendants’ Reply argues that the distinction Plaintiffs assert as to different types of shareholder or member claims do not apply here where there is no such distinction under Delaware law. (Blaustein v. Lord Baltimore Cap., 84 A.3d 954, 958 (Del. 2014), Feldman v. Cutaia, 951 A.2d 727, 734 (Del. 2008) In turn, they reiterate why under Delaware law the claims here are not appropriately brought by her individually.

As with Defendants’ MIL No. 1, the Court finds that this motion is in effect one for summary judgment and cannot be decided without reference to review of the evidence – whether Defendants could not have brought a motion for summary adjudication previously (which the Court finds they could have.) Hence, this case is not like the cases Defendants rely upon where a decision could be made on the motion irrespective of the evidence. Again, however, the Court reaches the merits to streamline the long-cause trial going forward:

The motion assumes the claims here are brought by Plaintiffs as members of the LLCs as against the manager of the LLCs (Rosenfeld) for mismanagement of the assets or operation of the LLCs. The FAC shows that the allegations against Bookstein and Armanino are relevant to the advice or other services they did or not provide Kaufman and hence any liability would not turn on Plaintiffs’ status as a member of the LLCs. In turn, as concerns Rosenfeld, though there are allegations against him related to his management of the LLCs, as with the other defendants, the allegations also raise issues as to what he did before Kaufman became a member, including whether she intended to become a member at all (to the extent she asserts she made a loan rather than an investment.) Therefore, the Court rejects the general proposition that Plaintiffs were required to follow the rules for derivative actions to pursue liability in the causes of action asserted.

In turn, references to “Kaufman’s money” or the like are not subject to exclusion at this time where this may be accurate – even as to events occurring after establishment of the LLCs - if she was the sole contributing member.

That said, determination of damages (assuming a jury were to find liability), as well as liability of Rosenfeld for actions taken as manager, may require consideration of Delaware law. All damages may not arise solely from how the transactions were structured or from Defendants’ conduct but may arise from subsequent events for which Defendants still have responsibility, including how the LLCS were operated and with whom they did business. If Plaintiffs’ damages are to reduction in the value of their membership interests in the LLCs, this may be due to conduct subject to different rules.

The Court requests the parties brief (and in conjunction therewith submit proposed applicable special jury instructions) as to whether or how the relevant standard of care (i.e., application of the business judgment rule) under Delaware law would apply in determining liability of Rosenfeld (as manager) and in determining damages. In this regard, the Court will then consider whether also the claims against Rosenfeld as manager ( as opposed to other claims against him) must be tried before the Court as opposed to a jury, if derivative, and in turn if the claims against him in this regard are nevertheless still individual claims if the evidence shows that Plaintiffs were the only members of the LLCs such that treating the claim as derivative would make no difference. The Court does not now have that evidence but will hold a further hearing on these issues that should be raised by the applicable motion so they can be decided before the start of trial.

Relatedly, as will be discussed at the hearing, if the Court hears the rescission claims before a jury hears the balance of the claims, the outcome of that part of trial – whichever side were successful - might significantly change whether the Court needs to address some or all these issues.

Defendants move to exclude speculative damages, taking into consideration that certain of the investments at issue are still active or “open” and allegedly may become profitable. They contend therefore that damages would not be “reasonably certain.” (Piscatelli v. Friedenberg (2001) 87 Cal.App.4^th 953, 989) They raise the specter of Plaintiffs securing a windfall should they receive damages and in turn profits from the investments thereafter.

Plaintiffs oppose the motion and argue that where some of these investments are now more than ten years old and have yet to make a profit. They contend the motion does not show how they will make a profit that double recovery might be an issue. Further, they argue that an award of future damages would thereby substitute for any further obligation of the wrongdoer to perform, citing Coughlin v. Blair (1953) 41 Cal.2d 587, 598, Noble v. Tweedy (1949) 90 Cal.App.2d 738.

This motion requires that the Court weigh in on what will ultimately be for the jury to decide: whether Plaintiffs have suffered damages, and if so, in what amount, taking account what Plaintiffs may have received already and what they might still obtain, if at all, given the timeframes involved on each investment and the likelihood of such occurring. The jury can be instructed in this regard to avoid the prospect of any potential for double recovery. The jury may find that such potential further recovery is unrealistic and or that it would not mitigate what Plaintiffs may have suffered already. Further, the Court is asked here to consider each investment separately without the necessary evidence to know whether future profits would be “speculative” to grant this motion. In turn, the motion assumes Plaintiffs’ contributions were by way of investment and not a loan – an issue still pending. If the contributions were a loan, this issue would not be applicable. Further, that the LLCs may generate future profit, for sake of argument, does not necessarily mean that should be in mitigation of damages caused by Defendants. The LLCs are not parties here.

Moreover, the motion is not limited to “specific evidence,” as required for an order in advance of trial. Whether specific evidence is excluded as speculative at trial remains to be seen.

Defendants request that the Court receive this agreement into evidence and preclude Plaintiffs contending there was a “merger” between Armanino and RBZ. They contend that the deposition testimony of Armanino’s witness, who is not a lawyer, was only based on that witness’ limited understanding of the agreement and that this agreement was produced timely. That Plaintiffs did not name RBZ does not give Plaintiffs a right to now make a claim against Armanino for pre-agreement conduct.

Plaintiffs argue in opposition that they will be severely prejudiced by the admission of the agreement as it may provide Armanino a defense – that they did not know about until after the close of discovery – when the agreement was attached to Defendants’ opposition to their motion for summary judgment in March 2024. Previously, Armanino had stated in response to a discovery request concerning a merger agreement that it did not have any merger agreement – without advising Plaintiffs of this agreement. In addition, Plaintiffs did not identify the agreement when asked for all documents pertaining to its affirmative defense that it was not responsible for conduct over which it had no control. Plaintiffs argue that it was not proper for Armanino to have not disclosed the agreement when its own witness stated there was a merger.

Sec. 1.3 of the Agreement states specifically that Armanino is not assuming any professional liability claim against RBZ or an RBZ partner arising prior to the closing date, June 1, 2015. As noted above, there is no competent evidence of a merger of RBZ and Armanino. There is also no offer of proof that the agreement does not reflect the entire agreement between the parties. Hence, the testimony of Armanino’s witness about a merger is likely inadmissible. He lacks sufficient knowledge to rebut the terms of the written agreement or create any ambiguity.

The Court does not find that Armanino committed abuse of the discovery process such that this agreement should be excluded from evidence. The Court agrees with Plaintiffs that Armanino’s discovery responses were misleading and incomplete. However, it also appears that Armanino’s counsel did disclose this agreement in December 2022 (9 months before the close of discovery) at the deposition but that then Plaintiffs’ counsel failed to follow up on the offer to provide the agreement. Moreover, Plaintiffs have had the agreement for almost a year and have done nothing in the interim to seek relief from not having received this agreement earlier. Plaintiffs do not show how having this agreement earlier would make any difference at least as to Armanino. Plaintiffs also did not request the ability to now name RBZ as a defendant where it knows that Armamino may not have responsibility for conduct occurring before entering into the agreement. In addition, it is not clear that it would make any difference for Plaintiffs to add RBZ where RBZ’s principal, Bookstein, is already a party. If RBZ’s assets were sold to Armanino, it is not clear whether RBZ would not now be judgment proof. Hence, Plaintiffs have not shown sufficient prejudice to seek exclusion of the agreement.

On the other hand, the purpose of a motion in limine is to exclude evidence, not for evidence to be received. Armanino will have to seek admission of the agreement at trial absent a stipulation. In turn, where the Court does not have all the evidence concerning the circumstances surrounding RBZ and Armanino entering into the agreement, the Court cannot now rule that there was not a merger. Armanino’s witness seemed to think there was. On the other hand, the witness also testified RBZ remained an entity – refuting that there was a merger. Plaintiffs are entitled to further pursue this issue at trial if they wish. Armanino is not unduly prejudiced thereby and can refer to the agreement and that RBZ remained active in defense of any such claim.

Defendants seek to exclude the expert opinion of Neches, a CPA and fraud examiner, as set forth in an attached eighteen-page declaration, on three bases: he is providing a legal conclusion as to ultimate facts that are for a jury or court to decide (citing Property Calif, et al. v. Leamy (2018) 25 Cal.App.5^th 1155, Towns v. Davidson (2007) 147 Cal.App.4^th 461, 477, Piscitelli, supra, 87 Cal.App.4^th at 972); specifically that Defendants’ action show “indicia” or are likely “indicator” of fraud, and that he relies on hearsay and documents that lack necessary authentication.

In opposition, Plaintiffs argue that at trial they will establish the admissibility of the statements they are relying upon, as well as sufficient authentication. Hence, it would be improper to grant the motion on these bases at this time. Turning to Neches’ conclusion related to fraud, they argue that it is permissible for an expert to “embrace” an ultimate issue if otherwise supported by admissible evidence. (Evid. Code sec. 805, Swanson v. Marley-Wylain, et al. (2021) 65 Cal.App.5^th 1007, 1019, People v. Frederick (2006) 142 Cal.App.4^th 400, 412, as well as two unpublished federal district court decisions) In summary, they argue that an accountant can give an expert opinion as to how certain reviewed documents demonstrate indicia of fraud.

In reply, Defendants argue that in front of a jury prefacing the conclusion with language like “indicia” will be meaningless and that Neches is essentially providing an opinion Defendants committed fraud. They argue that his providing such opinion would be without foundation where Neches admitted at his deposition that he did not have information about critical elements of fraud including knowledge of falsity, intent, reasonable reliance and damage.

Initially, the Court denies the motion to the extent it is based on reliance on hearsay or unauthenticated documents. The Court does not now know whether or which statements or documents fall within these categories. If Plaintiffs cannot meet these requirements at trial, Defendants may reassert these objections thereafter.

Evid. Code sec. 805 puts some check on the traditional rule that an expert may not invade the decisionmaker on the ultimate issue in stating that the opinion may “embrace” the ultimate issue. Further, the Law Revision Commission comments to sec. 805 state: “Although several older cases indicated that an opinion could not be received on an ultimate issue, more recent cases have repudiated this rule.” That said, the recent cases Defendants rely upon show the rule to still be in effect. Moreover, even if an opinion may “embrace” the ultimate opinion – which may be another way of saying that this opinion is part of an otherwise permissible opinion – this turns the question to whether Neches has an otherwise permissible opinion.

Neches may properly give an opinion that based on his expertise that the financial statements are not in compliance with GAAP, fail to comply with applicable standards and or are incomplete or misleading - as to which he also has opinions. However, based upon his admissions at this deposition, he does not have sufficient information to conclude as an expert that there was fraud, aa indicated above. Moreover, in this light, saying that there is an indicia or indicator of fraud is “speculative” and hence inadmissible. Further, the jury may be misled to believe there was in fact fraud rather than merely a likelihood of fraud.

Swanson, supra, that Plaintiffs rely upon, concerned the trial court applying California rather than Michigan law in an asbestos case where an expert gave testimony that the injury was caused by the product in question, applying the California standard for causation. Swanson did not address the different issue here about giving an opinion on the ultimate issue as opposed to the element of that conclusion – that was at stake in that case. Hence, Swanson does not change the Court’s conclusion.

The Court also concurs with Defendants’ reading of the other cases Plaintiffs cite that they do not support allowing Neches here to give an opinion lacking foundation, even if an accountant can provide a more limited opinion related to rules of accounting practice or what might be normally expected. Indeed, review of Neches’ declaration likewise shows an absence of explanation for his reaching an opinion about the likelihood of fraud – even if he otherwise permissibly drew conclusions concerning the documents and statements as to whether they were consistent with how they should have been prepared.

Defendants seek to exclude evidence of Kaufman having executed a guaranty of a loan for redevelopment of the Century Plaza (allegedly due to wrongful conduct by Defendants) on relevance grounds where Plaintiffs are not seeking affirmative relief concerning that guaranty where the lender did not make demand on Kaufman based on the guarantee after default on the loan.

Plaintiffs oppose the motion only if this does not preclude their introducing documents arising from this investment that they contend shows Defendants were asking her to sign documents without informing her what it was she was signing or guaranteeing by way of a blank document. They do not otherwise seek to raise relief concerning this transaction.

In reply, Defendants argue that they do not agree to this exception where they would then want to introduce other documents showing that Defendants did not ask Kaufman to sign blank documents - which would otherwise be prejudicial to them as to the other transactions (where Plaintiffs are arguing Defendants did the same thing.) If this transaction is not to be mentioned, it should prohibit both sides from offering evidence arising therefrom.

As discussed above in connection with Plaintiffs’ MIL No. 4 concerning the guaranty of the DBD transaction, the Court has concern why Plaintiffs apparently withdrew that claim – which it appears Plaintiffs are also doing on this other transaction Kaufman guaranteed. It is presumably based on withdrawal of this claim that they do not now in principle oppose the motion. However, at the same time, it would not be fair for Plaintiffs to be able to still introduce the part of this transaction that they believe is favorable to them but not allow Defendants to explain what they did by reference to other evidence. Hence, if other evidence offered by Defendants is permitted to explain this issue, then the Court cannot grant the motion because that would conflict with Defendants being able to put on that evidence.

Conversely, the Court could exclude all evidence related to the guaranty, including the document that Plaintiffs seek to introduce; however, this would likely be unduly prejudicial to Plaintiffs where these documents are apparently evidence that would help them prove the same wrongful conduct concerning other transactions. This alleged wrongful conduct does not have to be exclusively as to the transactions involved – as Defendants argue – to the extent Plaintiffs can establish some pattern of the same conduct. Hence, the Court must deny this motion, though the transaction involved is not otherwise part of Plaintiffs’ claimed damages.

In turn, as discussed above, this ruling may further implicate whether Phan would have to be a witness at trial.

By this motion, Defendants seek to exclude potential lost opportunity damages had Plaintiffs not executed the transactions at issue, as speculative.

In opposition, Plaintiffs contend they could not agree to excluding damages beyond damages that did not reflect “actual loss of funds” as it was unclear whether this would exclude prejudgment interest, statutory damages and attorneys’ fees. They state, however, they now agree not to seek damages that are “amounts which Plaintiffs contend they would have received had they invested the funds at issue in another investment vehicle.”

In reply, Defendants agree to limit the scope of the requested order to not preclude evidence pertaining to actual loss of funds, contract damages, prejudgment interest, statutory damages under the elder abuse statute, attorneys’ fees and punitive damages (in any Phase 2 of trial).

Based on the foregoing, the Court can grant the motion to the extent it does not infringe on any of these claims.

Defendants seek to exclude the testimony of Rolph, a real estate broker, on the grounds that he is not qualified to testify concerning the fiduciary duties of Defendants where what little knowledge he demonstrated at his deposition was in error and in turn that he lacked any knowledge of those duties under Delaware law – which is the law that the limited liability companies at issue operate under. Further, they contend that were the Court to exclude Rolph’s testimony, the Court would not need to hear Defendants’ responding expert, Sussman (nor make it necessary for Plaintiffs to take his deposition.)

In opposition, Plaintiffs argue initially that the motion (filed January 14, 2025) is untimely and should have been filed with the other MIL. On the merits, they argue that Rolph is a real estate broker with significant life-long experience in real estate projects that provide him the “special knowledge” required to give the opinions as to which he was designated to have. Rolph is fully able to testify as to what duties of care (as opposed to fiduciary duties) Defendants would have and whether they met them- the second and third subjects in the designation. What errors Defendants claim he made would go to the weight his testimony should be given - not to his qualifications – that would be the only basis to exclude his testimony at this time. Rolph is more than qualified to state opinions about duty of care. Rolph does not now intend, however, to testify as to fiduciary duties of managers – the first of the subjects in the designation. Hence, that he has no knowledge of Delaware law is irrelevant. Plaintiffs instead intend to rely on what instructions the Court gives the jurors as to Defendants’ fiduciary duties. Finally, Plaintiffs argue that this motion is merely a belated attempt to avoid the consequences of not having previously taken Sussman’s deposition.

In reply, Defendants explain why the motion is still timely and is necessary in view of Plaintiffs’ related MIL No. 9 discussed above. On the merits, they argue that Rolph testifying as to duty of care is effectively allowing him to testify about fiduciary duty – when Rolph acknowledged he could not testify about the latter. Further, they argue that under Delaware law, the duty of care of managers (which would be a gross negligence standard) is only owed to the LLC itself, not its members.

Defendants are not sued solely as managers. At least Bookstein and Rosenfeld are sued related to how the initiating transactions were put into place – which is a different focus than management of the companies. Whether Rolph can opine concerning some obligation of Defendants that was grossly negligent – and independent of fiduciary duties – remains to be seen. The Court does not now know what his testimony will be precisely. It may be that what he contends was grossly negligent is in fact a fiduciary duty. If so, Defendants can object or move to strike at time of trial. That said, based on his admissions in his deposition, he will not be able to testify as to fiduciary duty or obligations under Delaware law – the first subject in the expert designation.

[1] Character evidence is evidence of a person’s propensity to act in a certain way and under certain circumstances may not be used to show a person has such propensity to commit the act in question. (Evid. Code secs. 1101(a)) It is not clear here, however, how Kaufman’s charitable giving is relevant to the issues. It is Defendants’ actions which primarily are in question.

[2] Defendants rely on Hydro-Mill v. Hayward, Tilton, et al. (2004) 115 Cal.App.4^th 1145, 1159 and Curtis v. Kellogg & Andelson (1999) 73 Cal.App.4^th 492, 503 for this proposition.

[3] Relatedly, Plaintiffs also argue that the Court already denied their motion for summary adjudication – finding there were triable issues. Those same triable issues would also be here on Defendants’ equivalent counter motion concerning the same facts.

[4] DeCastro, West, supra, is concerned only with when a summary adjudication motion is not possible, not with when a motion in limine can take up what cannot be done by way of motion for summary adjudication.

[5] On the other hand, the Court disagrees with Plaintiffs that granting this motion would create havoc in terms of review by the Court of Appeal. Were the Court to grant the motion, review would not have to wait until a final judgment after trial, as they argue. The exclusive means of review of an order on a motion in limine is by way of petition for writ of mandate. (Sheehy v. Chicago Title (2025) DJDAR 519 (order filed Jan. 21, 2025)

[6] Further, Phan submitted a declaration stating that as of March 2017 he was not acting as Kaufman’s general counsel or business advisor, contending that he did not take on such duties until a year or two later. He instead contends that he was merely acting as her attorney on certain litigation matters. Though this request for information would seem to fit more into the roles Defendants contend he had, it is still a factual issue – whether material remains to be seen.

[7] Further, the Court cannot determine what specific claims of breach of fiduciary duty would be governed by the four-year versus two-year statute to be able to even grant this motion in part.