Judge David S. Cunningham, Case JCCP5267 2023-03-09 Tentative Ruling

Moving Party: Lin Dee Liu dba Lin Dee Liu Services, Eric Liu, Ami Kimoto, Yu Shang Kao, Weimin Liu, Yu Sheng Victor Liu, and Xiang Liu (collectively “Petitioners”)

Opposing Party: Verpresar LLC, Camierda 1, LLC, Jambax 2, LLC, Nivo 1, LLC, D.A. Beec-007, LLC, and Anne Kihagi (collectively “Los Angeles Plaintiffs”) and Verpresar LLC, Camierda 1, LLC, Zoriall, LLC, and Anne Kihagi (collectively “San Francisco Plaintiffs”)

The Lin Dee Liu Loan Cases are five individual actions pending in San Francisco Superior Court and Los Angeles Superior Court. According to Petitioners:

* Anne Kihagi is either a named Plaintiff or the principal of the named Plaintiffs in each case. (See Petitioners Memorandum of Points and Authorities (“MPA”), p. 3.)[1]

* “[T]he lawsuits arise[] from a series of private lender loans made to Plaintiffs which were brokered by Lin Dee Liu, a private real estate agent.” (Ibid.)

* “[A]lthough the various loans are secured by different pieces of real property and involve different combinations of lenders” and Plaintiff companies, the complaints allege that “the entire series of loans constitute one transaction.” (Ibid., emphasis deleted.)

* Plaintiffs claim “their payments and (alleged) setoffs on some of the loans should reduce the balance on the other loans.” (Ibid.)

The Chief Justice and Chair of the Judicial Council issued orders assigning this Court to sit as the coordination motion judge to determine whether the Lin Dee Liu Loan Cases are complex and, if so, whether coordination is appropriate.

“Only cases that are ‘complex’ . . . may be coordinated[.]” (Edmon & Karnow, Cal. Prac. Guide: Civ. Proc. Before Trial (The Rutter Group 2022) ¶ 12:374.5.) A “complex” case requires “exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel.” (Cal. Rules of Court, rule 3.400(a).)

In deciding whether an action is a complex case under (a), the Court must consider, among other things, whether the action is likely to involve:

(1) Numerous pretrial motions raising difficult or novel legal issues that will be time-consuming to resolve;

(2) Management of a large number of witnesses or a substantial amount of documentary evidence;

(4) Coordination with related actions pending in one or more courts in other counties, states, or countries, or in a federal court; or

[A]n action is provisionally a complex case if it involves one or more of the following types of claims:

(7) Insurance coverage claims arising out of any of the claims listed in (c)(1) through (c)(6).

Petitioners contend the individual actions are complex because there have already been numerous motions raising new and difficult legal issues, and there is a substantial amount of documentary evidence. (Petitioners’ MPA, pp. 15-16.)

Los Angeles Plaintiffs and San Francisco Plaintiffs assert that the individual actions do not fall within any of the provisionally complex categories and will not require postjudgment judicial supervision. (See, e.g., Los Angeles Plaintiffs’ Opposition, p. 7.)

The Court agrees with Los Angeles Plaintiffs and San Francisco Plaintiffs. The subject transactions are separate, individual real estate transactions. Each case regards different property, different loans, different combinations of lenders, and different combinations of Plaintiffs. There are no antitrust, construction defect, securities, environmental, toxic tort, mass tort, or class action claims. Rather, the complaints primarily allege standard causes of action for breach of contract, negligence, estoppel, rescission, declaratory relief, and unfair competition. Given the individuality of the transactions and the standard nature of most of the causes of action, it is unlikely that each case will involve numerous pretrial motions raising difficult or novel legal issues, management of a large number of witnesses or separately represented parties, a substantial amount of documentary evidence, or substantial postjudgment supervision.

To the extent Petitioners contend the cases are complex because Los Angeles Plaintiffs and San Francisco Plaintiffs allege that the various loans constitute one transaction, the Court disagrees. For one thing, San Francisco Plaintiffs dispute the contention; they state that they are not alleging one transaction. (See San Francisco Plaintiffs’ Opposition, p. 7.) Additionally, the purported fact that each complaint requests an accounting to determine setoffs (see, e.g., Petitioners’ MPA, p. 3) is insufficient to render the cases complex or to require coordination. Performing an accounting is not a complex matter. Determining setoffs is not a complex matter. Petitioners’ concern about the risk of inconsistent adjudications is overstated. Petitioners have the same attorneys in all five cases. If an accounting or setoff ruling is made in one court that affects a case in another court, defense counsel will be able to give notice to the affected court. Tools such as claim preclusion and issue preclusion will be available to avoid clashing determinations.

The Court finds that the individual actions are not complex, and the petition for coordination should be denied.

Section 404.1 states that a petition for coordination should be granted if doing so will “promote the ends of justice,” taking into account the following seven factors:

[W]hether the common question of fact or law is predominating and significant to the litigation; the convenience of parties, witnesses and counsel; the relative development of the actions and the work product of counsel; the efficient utilization of judicial facilities and manpower; the calendar of the courts; the disadvantages of duplicative and inconsistent rulings, orders, or judgments; and the likelihood of settlement of the actions without further litigation should coordination be denied.

Petitioners argue: “Each of Plaintiffs’ lawsuits arises from the same series of loans, and combines all loan transactions into their damage claims. Each of the lawsuits brings claims for breach of fiduciary duty, violation of Business & Professions Code Sec. 17200, declaratory relief, accounting and restitution.” (Petitioners’ MPA, p. 6.) “Thus, Plaintiffs make similar or identical allegations across the various lawsuits[.]” (Ibid.)

Although each contract is different in the Los Angeles County Superior Court cases, with different parties and different facts, the Los Angeles County Superior Court cases do allege similar claims, and therefore will address similar legal issues, although each with its own set of facts. “There is no legal issue that [the court] can decide that will decide all of the cases.” [Citation.] The San Francisco County Superior Court cases are distinct, with different legal issues, as well as different facts. Coordinating all five cases is not supported by similar claims and facts for all five case.

Plaintiff’s counsel is informed and believes that the two cases involved in the San Francisco County Superior Court address wrongful foreclosure claims, which do not address the similar claims in the Los Angeles Superior Court cases.

The premise of Defendants’ motion is based on their one, single misrepresentation to the Judicial Council: Defendants state, “Plaintiffs affirmatively allege that the entire series of loans constituted one transaction.” That is not true. Defendants are hard money lenders, comprised of outof-state family members who keep one collective, commingled loan fund from which they loan money at exorbitant interest rates to needy borrowers. The principal hard money lender is Defendant LIN DEE LIU dba LIN DEE LIU SERVICES. Each loan was secured by a promissory note and deed of trust secured by the rental properties of the LLC Plaintiffs. Defendant LIN DEE LIU fell below the standard of care for a loan broker/private lender by failing to make requisite, statutory disclosures to the borrowers prior to funding the loans (ie., failing to disclose LIU’s role as a lender and a loan broker, and the commingled loan fund, amongst other things). By application of statute, Defendants are barred from profiting on their hard money loans.

The nondisclosure problem is the only common allegation in the five lawsuits involving Defendant LIN DEE LIU dba LIN DEE LIU SERVICES and her relatives in the Los Angeles and San Francisco lawsuits.

Unlike the Los Angeles cases, the two San Francisco actions involve the wrongful sales of the Plaintiffs VERPRESAR, LLC’s, and CAMIERDA 1, LLC’s and ZORIALL, LLC’s properties that secured Defendants’ separate loans. Each loan is evidenced by a promissory note and deed of trust. The cases could be tried in another county, but it is entirely unnecessary (and improper and confusing) for one court or one judge to treat all of Defendants’ loans as one loan and one accounting. It would be confusing and certainly unauthorized by the foreclosure statutes that govern secured real property transactions.

This factor favors denial. To reiterate, each case involves different property, different loans, different combinations of lenders, and different combinations of Plaintiffs – i.e., each case involves different facts. Different facts give rise to different legal issues. And the allegedly similar requests for an accounting are not enough to make common issues predominate over individual issues. The Court finds that individual issues predominate.

This factor is neutral or favors denial. Deciding common issues in one forum typically conveniences the parties, witnesses, and counsel, but the situation here is distinguishable. Due to the non-complexity of the cases, the significant differences, and the predominating individual issues, and because the parties and counsel appear to live and work in multiple cities and states (Los Angeles, Hollywood, Huntington Beach, San Francisco, Freemont, Los Altos Hills, and Sacramento, California and Chicago, Illinois), the Court is inclined to find that coordination would be inconvenient.

This factor is neutral or favors denial. Four of the five cases appear to be at an early stage. (See, e.g., Petitioners’ MPA, pp. 4-5, 13 [representing that, other than motions for preliminary injunctions being denied, there has been no discovery, no responsive pleadings filed, and no trial dates set].) The fifth case (NIVO-1, LLC v. Kimoto, Los Angeles Superior Court (21STCV33378)), however, is set for trial on 5/30/23. (See id. at p. 5.) “The imminence of a trial in any action otherwise appropriate for coordination may be a ground for summary denial of a petition for coordination, in whole or in part.” (Cal. Rules of Court, rule 3.521(d).)

This factor favors denial. The analysis is the same as sections I, II.A., and II.B. The cases are not complex, significant differences exist, and individual issues appear to predominate, so the threat of separate courts duplicating case efforts on the same issues and claims is low.

This factor is neutral. Petitioners state that the Los Angeles and San Francico Superior Courts have crowded dockets and backlogged trials. (See Petitioners’ MPA, p. 14.) Petitioners contend coordination will ease the calendar of one of the Superior Courts. (See ibid.) While generically true, the contention is vague and unhelpful because Petitioners fail to cite evidence addressing the specific, individual court calendars.

This factor favors denial. The analysis is the same as sections I, II.A., II.B., and II.D. The likelihood that the courts will make duplicative or inconsistent key rulings, orders, or judgments if coordination is denied is minimal.

This factor is neutral or favors denial. No case has settled so far, but coordination may cause NIVO-1’s May 2023 trial to be moved, which might negatively impact settlement there. Nothing in the record leads the Court to conclude that coordination will increase the chance of settlement.[2]

On balance, the coordination factors support denial. The Court finds that the petition for coordination should be denied.

The factors considered in making a recommendation for the site of the coordination proceedings include: “[t]he number of included actions in particular locations;” “[w]hether the litigation is at an advanced stage in a particular court;” “[t]he efficient use of court facilities and judicial resources;” “[t]he locations of witnesses and evidence;” “[t]he convenience of the parties and witnesses;” “[t]he parties' principal places of business;” “[t]he office locations of counsel for the parties;” and “[t]he ease of travel to and availability of accommodations in particular locations.” (Cal. Rules of Court, rule 3.530(b).)

Petitioners ask the Court to stay the included actions pending coordination. (See Petitioners’ MPA, p. 16.)

[1] Petitioners represent that Anne Kihagi is a vexatious litigant. (See Sahae Decl., ¶ 4.)

[2] Petitioners admit that “[s]ettlement appears unlikely regardless of coordination.” (Id. at p. 15.)