Judge: Elaine Lu, Case: BC684506, Date: 2023-06-29 Tentative Ruling

Case Number: BC684506    Hearing Date: June 29, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Background

            On November 22, 2017, plaintiff Christopher Zangara-Payer (“Zangara”) filed the complaint in the instant action against his uncle, defendant David Payer (“Payer”) to seek the dissolution of the Nominal Defendant, Payer Family, LLC. 

            On February 2, 2018, Payer filed a Cross-Complaint against Zangara and Payer Family LLC for (1) Forgery, (2) Lack of Intent/Mistake, (3) Quiet Title, (4) Constructive Trust, (5) Accounting, and (6) Restitution and Offset.  Plaintiff/Cross-Defendant Zangara filed a demurrer to the Cross-Complaint, which the court sustained in its entirety without leave to amend on June 6, 2018.  (Minute Order 6/6/18.)  On July 12, 2019, Payer dismissed the Cross-Complaint without prejudice as to the remaining defendant Payer Family LLC.

            On July 15, 2019, the Court stayed the instant action pending Payer’s petition to reopen the probate matter.  (Minute Order 7/15/19.)  On September 22, 2021, the Court lifted the stay noting that the petition to reopen the probate matter had been denied on September 21, 2021.  (Minute Order 9/22/21.)

            On October 25, 2021, the Court granted Zangara’s motion for leave to file a First Amended Complaint which was filed the same day.  (Order 10/25/21.)  On December 2, 2021, Default was entered against Payer. 

On January 21, 2022, pursuant to the parties’ stipulation, the Court vacated the default of Payer, and the Court permitted Zangara to file a Second Amended Complaint.  (Minute Order 1/21/22.)  On January 25, 2022, Zangara filed the operative Second Amended Complaint (“SAC”).  The SAC asserts causes of action for (1) Judicial Dissolution of Payer Family LLC, (2) Breach of Fiduciary Duty, (3) Constructive Fraud, and (4) Fraud.  On April 8, 2022, Plaintiff dismissed the third and fourth causes of action for constructive fraud and fraud. 

On July 19, 2022, the Court granted Zangara’s motion for summary adjudication as to the first cause of action for judicial dissolution of the Payer Family LLC pursuant to Corporations Code section 17707.3 and as to the existence of a fiduciary duty owed by Payer to Zangara.  (Order 7/19/22.)

On March 10, 2022, Q5778 Group, LLC (“Buyer”) filed the related action – 22SMCV00340 (“Related Action”) – against the Payer Family LLC to enforce the sale of the Subject Property.  On April 22, 2022, the Court found that the instant action was related to the Related Action.  (Minute Order 4/22/22.) 

On August 8, 2022, the parties in the instant action filed a stipulation – which the Court granted – under which the proceeds of the sale of the Subject Property would be deposited and distributed pursuant to the Court’s orders in the instant action.  The stipulation noted that the parties had settled the Related Action on July 18, 2022, and under the settlement, the Subject Property would be sold to Buyer.  On September 19, 2022, in the Related Action, Buyer filed a notice of settlement of the entire case. 

On October 11, 2022, after a jury trial on the remaining claim for breach of fiduciary duty, the jury entered a verdict in favor of Plaintiff Zangara.  On December 13, 2022, Defendant Payer filed a notice of appeal. 

On February 14, 2023, Judgment was entered in favor of Plaintiff Zangara pursuant to the jury verdict and the motion for summary adjudication that the Court had granted.  On April 13, 2023, Court of Appeal issued a remittitur dismissing the appeal. 

On June 5, 2023, Plaintiff Zangara filed the instant motion for distribution of funds deposited with the Court pursuant to the sale of the Subject Property.  No opposition or reply has been filed.

Legal Standard

            “[A]fter determining that all the known debts and liabilities of a limited liability company in the process of winding up, including, without limitation, debts and liabilities to members who are creditors of the limited liability company, have been paid or adequately provided for, the remaining assets shall be distributed among the members according to their respective rights and preferences as follows: [¶] (1) To members in satisfaction of liabilities for distributions pursuant to Sections 17704.04, 17704.05, and 17704.06. [¶] (2) To members of the limited liability company for the return of their contributions. [¶] (3) To members in the proportions in which those members share in distributions.”  (Corp. Code, § 17707.05(a).)

            “On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor's transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.”  (Corp. Code, § 17705.03(a).)

Discussion

            Plaintiff Zangara seeks the distribution of the sale proceeds from the sale of 905 Dickon Street, Marina Del Rey, California 90292 (“Subject Property”).   

            The Subject Property was the sole asset of the Payer Family LLC.  (Zangara Decl. ¶ 3.)  However, the Subject Property was subject to a sale agreement to Buyer that Defendant Payer secretly entered into on December 16, 2021 during the pendency of the instant action seeking in part determination of ownership of the Payer Family LLC.  (Zangara Decl. ¶ 5; see also Judgment entered 2/14/23.)  As the property was owned by Payer Family LLC, and Defendant Payer was only a 50% owner of Payer Family LLC, the sale was unable to be consummated resulting in the Related Action by Buyer seeking to enforce the sale.  (Zangara Decl. ¶¶ 3, 5.)  On July 18, 2022, the Payer Family LLC and Buyer entered into a settlement agreement to sell the Subject Property for $2 million resolving the Related Action.  (Zangara Decl. ¶ 5.)

            On July 19, 2022, pursuant to the granted motion for summary adjudication, the Court found that Plaintiff Zangara was 50% owner of the Payer Family LLC with Defendant Payer the other 50% owner.  (Order 7/19/22; Zangara Decl. ¶ 6, Exh. A.)  In addition, as part of granting the motion for summary adjudication as to the first cause of action, the Court also ordered an involuntary dissolution of the Payer Family LLC.  (Order 7/19/22; Zangara Decl. ¶ 6, Exh. A.) 

            On August 8, 2022, the parties entered into a stipulation to distribute the net proceeds from the sale of the Subject Property with the Court pending resolution of the instant action.  (Stipulation filed 8/8/22; Zangara Decl. ¶ 7, Exh. B.)  Upon close of the sale of the Subject Property, the net sale proceeds of $1,855,948.50 (“Sales Proceeds”) were deposited with the court.  (Zangara Decl. ¶ 8, Exhs. C-D.)

            Pursuant to the parties’ August 8, 2022 stipulation, the Sale Proceeds are to be distributed pursuant to this Court’s orders in the instant action.  (Stipulation filed 8/8/22; Zangara Decl. ¶ 7, Exh. B.)  Moreover, as the Court has ordered the involuntary dissolution of the Payer Family LLC the Court is impowered to distribute the remaining assets of the Payer Family LLC – i.e., the Sales Proceeds.  (Corp. Code, § 17707.05(a).)

            As Plaintiff Zangara and Defendant Payer have both been found to be 50% owners of the Payer Family LLC, and the sole asset of the Payer Family LLC was the Subject Property, Plaintiff Zangara and Defendant Payer are each entitled to 50% of the Sales Proceeds – i.e., $927,974.25 each.  Accordingly, 50% of the Sales Proceeds –$927,974.25 – is to be distributed to Plaintiff Zangara.

            In addition to this distribution, on February 14, 2023 the Court entered judgment pursuant to the jury verdict on Plaintiff Zangara’s breach of fiduciary duty claims against Defendant Payer for $2,951,258.00.  (Judgment entered 2/14/23; Zangara Decl. ¶ 9, Exh. E.)  Thus, Plaintiff Zangara seeks Defendant Payer’s portion of the Sales Proceeds – the remaining $927,974.25 – to be distributed to Zangara as partial payment of this judgment.  Accordingly, the remaining portion of $927,974.25 is to be distributed to Plaintiff Zangara to partially satisfy the judgment entered against Defendant Payer.

CONCLUSION AND ORDER

Based on the foregoing, Plaintiff Christopher Zangara-Payer’s motion for distribution of the Sales Proceeds from the sale of 905 Dickson Street, Marina Del Rey, California 90292 is GRANTED.

The Clerk is directed to transfer the entirety of the sales proceeds from the sale of 905 Dickson Street, Marina Del Rey, California 90292 consisting of $1,855,948.50 to Plaintiff Christopher Zangara-Payer.

Of these Sales Proceeds 50% -- $927,974.25 – is to serve as a partial satisfaction of Plaintiff Christopher Zangara-Payer’s judgment against Defendant David Payer.

Moving Party is to give notice and file proof of service of such.

DATED:  June 29, 2023                                                         ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court