Judge: Elaine W. Mandel, Case: 22SMCV02187, Date: 2024-05-09 Tentative Ruling

Case Number: 22SMCV02187    Hearing Date: May 9, 2024    Dept: P

Tentative Ruling

WVM Holdings, LLC v. Victor Franco Noval, et al., Case No. 22SMCV02187

Hearing date May 9, 2024

Defendant Secured Capital Partners, LLC’s Motion to Strike

Plaintiff WVM Holdings, LLC sued defendants Secured Capital Partners, Victor Franco Noval (“Noval Jr.”) and Jake Noval, alleging fraudulent transfer. On January 31, 2008 the court entered a $1,000,000 judgment in favor of KGMAC, LLC against Charles Dickens and Tower Park Properties, LLC (Los Angeles Superior Court Case No. BC339033) (“Original Action”). Plaintiff is the assignee of KGMAC, LLC. Dickens and Victor Noval Sr. (“Noval Sr.”) were managing members of Tower Park when judgment was entered in the Original Action.

In 2008 Dickens and Noval Sr. filed for Chapter 11 bankruptcy protection for Tower Park. One of Tower Park’s assets is the “Mountain,” 157 acres in Beverly Hills. With the Mountain protected from foreclosure, Dickens and Noval Sr. sold parts of Tower Park’s interest in the Mountain to a Kuwaiti investor. Plaintiff alleges the Noval brothers, at their father’s direction, created sham entities and trusts to conceal and protect the proceeds of the sale from creditors, including plaintiff. As part of the sale, between 2010 and 2015, the Kuwaiti investor wired over $100 million to Dickens and Noval Sr. The funds were wired to the sham entities and trusts held in the names of the Noval brothers, even though it was Tower Park’s interest in the Mountain that was sold to the Kuwaiti investor. Plaintiff alleges defendants used part of the proceeds to purchase property in Upland.

On March 22, 2017 a renewed judgment of $1,915,089.80 was issued against Tower Park and Dickens in the Original Action. Via this action, plaintiff seeks to set aside the allegedly fraudulent transfers related to the Upland property and any other assets the Noval brothers received purchased with funds traceable to the sale. Plaintiff also seeks to add the Noval brothers and Secured Capital as judgment debtors to the Renewed Judgment.

Defendant Secured Capital moves to strike punitive damages sought of $10,000,000 against each defendant, costs and attorneys’ fees.

Punitive damages are allowable only when plaintiff proves defendant is guilty of oppression, fraud or malice. Cal. Civ. Code §3294(a). Facts giving rise to a claim for punitive damages must be pleaded specifically; vague or conclusory allegations are insufficient. G.D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29. Conclusory requests for punitive damages without factual support are subject to a motion to strike. E.g., Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316-317; Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 164. On a motion to strike, allegations in a pleading must be treated as true. E.g., Clauson v. Sup. Ct. (1998) 67 Cal.App.4th 1253, 1255.

Under Civ. Code §3295(e), “[n]o claim for exemplary damages shall state an amount or amounts.” Plaintiff’s request for “at least ten million dollars” in punitive damages against each defendant is improper. The amounts requested in punitive damages are stricken, but the request for punitive damages is properly alleged.

Secured Capital argues the complaint fails to plead specific facts sufficient to infer malice, oppression or fraud.

The complaint alleges the following as to Secured Capital:

·         Secured is solely owned by Noval Jr. as trustee of the Rexford Trust. Compl. at ¶4.

·         Secured tendered $57.5 million as debt payment to the Mark Hughes Trust, another one of Tower Park’s creditors. The funds came from the Kuwaiti investor, who first attempted to wire the funds to sham entity 8484 Wilshire. The funds were eventually deposited in an account owned by sham entity BHRE Holdings. Subsequently, Tower Park’s attorney Bubman tendered the $57.5 million “on behalf of” Secured. Id. at ¶ 29.

·         Secured conspired with Noval Sr., Dickens and Tower Park to defraud plaintiff. Id. at ¶ 36.

·         As part of that conspiracy, Secured used money received from the sale of the Mountain to purchase the Upland property. Id. at ¶ 37.

·         Secured identified plaintiff as a creditor in its bankruptcy. Id. at ¶ 38.

·         After Secured was kicked out of bankruptcy for misuse of process, Noval Jr. transferred title of the Upland property from Secured to Jake Noval for no consideration. Id. at ¶ 38.

·         Noval Jr. was acting within the course and scope of his employment as Secured’s manager member when he took all actions described above. Id. at ¶ 42.

·         Punitive damages against Secured are warranted based on the malicious, oppressive and fraudulent actions taken by its managing agent, Noval Jr., which were done within the course and scope of his employment. Id. at 43.

Plaintiff cites Berger v. Varum (2019) 35 Cal. App. 5th 1013, where the court found punitive damages are warranted where defendants conspired with the judgment debtor to hinder, delay and defraud judgment creditor’s collection efforts. This is similar to the case herein. The complaint alleges sufficient facts to support a claim for punitive damages at the pleading stage. The motion is granted as to the specific amount of damages requested only.

“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties[.]” Code Civ. Proc. §1021. “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” Civ. Code §1717(a), emphasis added.

Plaintiff’s request for attorney’s fees is “based on the settlement agreement.” Compl., Prayer for Relief. The alleged settlement agreement is referenced in the complaint: “in the Original Action, judgment debtors Dickens and Tower Park signed a settlement agreement resolving the case against them for $1 million. However, they never paid the funds, which caused this Court to enter the Original Judgment under Code of Civil Procedure 664.6.” Id., ¶ 17.

While a contract may be pleaded by its legal effect, “plaintiff must allege the substance of its relevant terms.” Heritage Pac. Fin., LLC v. Monroy (2013) 215 Cal. App. 4th 972, 993. Plaintiff did not attach a copy of the agreement, nor allege the substance of its relevant terms. There is no basis for the court to infer that there is a contractual provision of attorney’s fees. Absent such, the motion is GRANTED.