Judge: Elaine Lu, Case: 21STCV09634, Date: 2024-01-04 Tentative Ruling

Case Number: 21STCV09634    Hearing Date: January 4, 2024    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On March 11, 2021, Plaintiff Hin Ku (“Plaintiff”) filed the instant action for breach of contract and fraud arising out of a real estate transaction involving Defendants Zhenya He (“He”), Ying Chen (“Chen”), and Le Sky Group, LLC (“Le Sky”) (collectively “Defendants”).  On March 22, 2022, Plaintiff filed the operative Second Amended Complaint (“SAC”).  The SAC asserts three causes of action for (1) Breach of Unsecured Promissory Note, (2) Intentional Misrepresentation, and (3) Negligent Misrepresentation.

On September 27, 2023, Los Angeles Superior Court Case No. 23AHCV00325 (“Related Action”) was deemed related to the instant action (“Lead Action”) with the instant action as the lead case.  (Minute Order 9/27/23.)

On November 16, 2023, Defendants He and Le Sky (jointly “Moving Defendants”) filed the instant motion to consolidate the instant Lead Action with the Related Action.  On December 7, 2023, the Court granted Moving Defendant’s ex parte application and advanced the instant motion to January 4, 2024.  (Minute Order 12/7/23.)  No opposition or reply has been filed.

Allegations of the Operative Complaint

The SAC alleges as follows:

            Defendant Zhenya He owned a residential property in San Marino (“Property”) and used Defendant Le Sky to sell the property.  (SAC ¶¶ 4, 23.)  Defendant Zhenya He is identified in Le Sky’s Operating Agreement as the sole member and manager of Le Sky.  (SAC ¶ 21.)  Defendant Le Sky is the alter ego of Defendant Zhenya He.  (SAC ¶¶ 8-19.)  Defendant Chen was appointed as an additional manager of Le Sky and acted as Le Sky’s agent between September and December 2020.  (SAC ¶¶ 3, 21.)

On October 2, 2020, Plaintiff and his wife entered into an agreement to purchase the Property from Defendant Le Sky for $4,700,000.00 in cash with no contingencies.  (SAC ¶ 20.)  Plaintiff made an initial deposit into escrow of $150,000.  (SAC ¶ 20.)  On October 5, 2020, additional escrow instructions confirmed a closing date of October 27, 2020, an initial deposit of $150,000, and a purchase price of $4,700,000.  (SAC ¶ 22.)

            On October 6, 2020, Defendant Chen as Le Sky’s agent executed a grant deed for the Property from Le Sky to Plaintiff and his wife.  (SAC ¶ 23.)  On October 8, 2020, Defendants proposed an escrow amendment by which Plaintiff and his wife would agree to pay Le Sky $4,550,000 outside of escrow, and Le Sky would inform the escrow holder upon receipt.  (SAC ¶ 24.)  On October 26, 2020, the close of escrow on the Property was delayed to November 18, 2020 by Amendment.  (SAC ¶ 25.) 

            In November 2020, Defendant Zhenya He’s lender for the Property called the $2,671,553.63 note on the Property (“HSBC Loan”).  (SAC ¶ 26.)  However, Defendant Zhenya He did not have the funds to pay the note.  (SAC ¶ 26.)  Therefore, Defendant Zhenya He would have lost the Property to the lender had it not been for Plaintiff’s agreement to pay sums outside of escrow, subject to repayment by a Promissory Note, in connection with the sale of the Property.  (SAC ¶ 26.)

            “In early November 2020, after receipt of the 11-6-2020 notice, in order to entice [Plaintiff] to proceed with purchase of the Property after [Zhenya] He’s lender called the loan on the Property, Defendants Chen, [Zhenya] He and Le Sky through Chen via her POA and position as Manager of Le Sky, in person and/or through [Maggie Chan, the realtor,] represented that sums paid by [Plaintiff] to satisfy the HSBC Loan on the Property would be repaid shortly after escrow closed; that the loan would not and did not increase the purchase price of the property and that there would be little or no risk in that Chen would execute a Promissory Note making herself personally liable; that repayment would be via the cash influx to Le Sky derived from the sales proceeds of the Property to [Plaintiff]; that Le Sky would fund Chen’s repayment of the Note.”  (SAC ¶ 26.)  “Contrariwise, Chen’s execution [of] the Note making her personally liable reasonably inferred that even if [Zhenya] He and/or Le Sky did not fund repayment of the Note Chen would pay the Note for which she was personally liable. Plaintiff relied on the reasonable inference that if [Zhenya] He and/or Le Sky did not fund repayment of the Note, couple[d] with the representation that Plaintiff bore no risk as the Note was personally guaranteed by Chen, that Chen had assets to pay the Note irrespective of funding via [Zhenya] He and/or Le Sky.”  (SAC ¶ 26.)

            The parties agreed and executed an addendum to the escrow instructions on November 20, 2020 that provided that the Defendants would execute a promissory note for any amounts paid by Plaintiff under the purchase agreement in excess of the purchase price.  (SAC ¶ 28.) 

            On November 21,2020, Defendant Chen, executed an Unsecured Promissory Note in favor of Plaintiff in the amount of $1,127,676.71 to be repaid in thirty (30) days plus interest.  (SAC ¶ 29.)  However, when Defendant Chen signed the Promissory Note, she had no way to pay the note nor any reasonable expectation that she could pay the note.  (SAC ¶ 29.)  To date, and despite demand from Plaintiff, Defendants have failed to make any payment on the November 21, 2020 Unsecured Promissory Note.  (SAC ¶ 29.) 

Legal Standard

California Rules of Court Rule 3.350(a) states in relevant part:

(1) A notice of motion to consolidate must:

(A) List all named parties in each case, the names of those who have appeared, and the names of their respective attorneys of record;

(B) Contain the captions of all the cases sought to be consolidated, with the lowest numbered case shown first; and

(C) Be filed in each case sought to be consolidated.

(2) The motion to consolidate:

(A) Is deemed a single motion for the purpose of determining the appropriate filing fee, but memorandums, declarations, and other supporting papers must be filed only in the lowest numbered case;

(B) Must be served on all attorneys of record and all non-represented parties in all of the cases sought to be consolidated; and

(C) Must have a proof of service filed as part of the motion.

(Cal. Rules of Court, Rule 3.350(a).) Also, the consolidation statute, Code of Civil Procedure § 1048, states in relevant part:

(a) When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.

(b) The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of this state or of the United States.

(CCP § 1048(a).) The granting or denial of the motion to consolidate rests in the sound discretion of the trial court, and will not be reversed except upon a clear showing of abuse of discretion. (See Fellner v. Steinbaum (1955) 132 Cal.App.2d 509, 511.)

Discussion

Moving Defendants seeks to consolidate the Lead Action and Related Action for purposes of trial.

            “Code of Civil Procedure section 1048, subdivision (a), authorizes the trial court, when appropriate, to ‘order a joint hearing or trial’ or to ‘order all the actions consolidated.’ Under the statute and the case law, there are thus two types of consolidation: a consolidation for purposes of trial only, where the two actions remain otherwise separate; and a complete consolidation or consolidation for all purposes, where the two actions are merged into a single proceeding under one case number and result in only one verdict or set of findings and one judgment.”  (Hamilton v. Asbestos Corp., Ltd. (2000) 22 Cal.4th 1127, 1147.)  “Consolidation under Code of Civil Procedure section 1048 is permissive, and it is for the trial court to determine whether the consolidation is for all purposes or for trial only.”  (Id. at p.1149.)  Moreover, there is no requirement that the parties be identical for a complete consolidation. (See e.g., Jefferson Street Ventures, LLC v. City of Indio (2015) 236 Cal.App.4th 1175, 1206 [noting in action involving multiple but not completely overlapping parties that “consolidation appears particularly appropriate in this case—the cases are in the same court, involve the same property, and many (if not all) of the same damages.”] [italics added].)

            Here, numerous factors support a consolidation for trial.  For example, the instant Lead Action seeks to enforce promissory notes that were issued in conjunction with the sale of the Property.  (SAC ¶¶ 31-38.)  However, the complaint in the Related Action alleges that the sale of the Property Ying Chen improperly effected the sale of the property without authority and that Ying Chen falsely claimed to be an agent of Zhenya He.  (Related Action First Amended Complaint ¶¶ 5-30.)   Thus, the Related Action seeks to quiet title to the Property.  In light of the significant overlap in facts and the overlap in parties, a consolidated trial would avoid obviate the unnecessary presentation of the same evidence to two separate juries, promote judicial economy, and avoid possible inconsistent verdicts.

            Moreover, no party has opposed the consolidation of the Lead and Related Actions.  Accordingly, Moving Defendant’s motion to consolidate the Lead Action and Related Action for trial is GRANTED. 

CONCLUSION AND ORDER

Based on the forgoing, Defendants Zhenya He and Le Sky Group, LLC’s motion to consolidate 21STCV09634 and 23AHCV00325 for trial is GRANTED.  Consolidation is ordered for purposes of trial under Case No. 21STCV09634. 

Moving Parties are to give notice and file proof of service of such.

DATED: January ___, 2024                                                   ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court