Judge Gail Killefer, Case 20STCV33175 2023-04-10 Tentative Ruling

MOVING PARTIES: Defendants/Cross-Complainants, Frank Levy, Frank Logan Levy and Coya Levy

This action arises out of a divorce settlement between Holly Wiersma (“Plaintiff”) and Cassian Elwes (“Elwes”). According to the operative Third Amended Complaint (“TAC”), Plaintiff and Elwes formally dissolved their marriage in September 2013 and Elwes granted Plaintiff an option (the “Option”) commencing October 2013 and ending September 2015 (the “Option Period”) to purchase a residence located at 7776 Firenze Avenue, Los Angeles, California (the “Property”).

Thereafter, Defendant Frank Logan Levy (“Logan”) and Plaintiff were engaged to marry in September 2013. Logan and Plaintiff moved onto the Property with the intention of buying it. After Logan and Plaintiff moved in, Logan and Defendants Coya Levy and Frank Levy convinced Plaintiff to begin renovations on the Property. On December 15, 2016, Elwes agreed to transfer the Option to Coya Levy and Frank Levy (the “Elwes/Levy Agreement”), following which Frank Levy and Coya Levy exercised the Option and purchased the Property (the “Levy Firenze Purchase”).

Following the Levy Firenze Purchase, Frank Levy and Coya Levy arranged in July 2017 for Logan to take out a loan and purchase the Property through Defendant Lagniappe Properties CA, LLC. (“LP”) In January 2018, after Plaintiff had allegedly vacated the Property following a dispute, Logan started decimating the Property. Thereafter, Plaintiff and Logan reached an agreement for Plaintiff to move back into the Property as a renter (the “Rental Agreement”).

Pursuant to the Rental Agreement, Plaintiff moved back in on July 1, 2018. Plaintiff then began spending money to repair damage to the Property. According to Plaintiff the parties settled their various disputes in December 2019 through a Settlement Agreement (the “Agreement”). The TAC alleges that Plaintiff moved out of the Property as agreed despite continuing to pay all utilities for the Property. Additionally, the TAC alleges that Logan continues to wrongfully withhold Plaintiff’s personal property and wrongfully accuse her of criminal trespass in connection with her attempts to get her personal property.

On January 25, 2022, the court sustained Defendants’ demurrer to the sixth cause of action of Plaintiff’s Second Amended Complaint (“SAC”). On February 23, 2022, Plaintiff filed her Third Amended Complaint.

Plaintiff’s TAC alleges 14 causes of action: (1) breach of written settlement agreement against Logan and LP, (2) breach of the Elwes/Levy Agreement against Frank Levy and Coya Levy, (3) declaratory relief against all defendants, (4) specific performance against all defendants, (5) conversion against all defendants, (6) breach of fiduciary duty against Frank Levy, (7) constructive trust against Logan and LP, (8) unjust enrichment against all defendants, (9) injunction against all defendants, (11) accounting against Logan and LP, (13) fraud against Logan, Frank Levy and Coya Levy, (14) tortious conspiracy against all defendants.[1]

On June 13, 2022, Frank Levy, Logan and Coya Levy (“Cross-Complainants”) filed a Cross-Complaint against Plaintiff. The Cross-Complaint alleges two causes of action: (1) breach of contract and (2) defamation.

On February 21, 2023, the court granted Plaintiff’s motion for summary adjudication as to the breach of contract and defamation claims (“MSJ Order”). Plaintiff was ordered to submit a proposed order and judgment. As part of the MSJ Order, the court found:

“The Settlement Agreement, ¶2d(iii), provides that proceeds from the sale of the Property shall include ‘[p]ayment to Lagniappe and Wiersma of all costs of remodel from and after the date of this Agreement.’ Defendants presented no evidence of their ‘Permitted Deductions’ in their Opposition; therefore, the court cannot consider this item. The court notes that Plaintiff represented that she ‘will not pursue in this Motion her claim for her expenses in renovation of the Residence for sale.’ (Reply, 6.)

The Settlement Agreement, ¶2d(v), provides that the ‘[r]emaining sales proceeds shall be [split] 50-50 between Lagniappe and Wiersma.’ As noted above, Defendants admitted that the Property sold on November 17, 2020, for $5,750,000. (Reply, 3-4; RFA No. 4.) The money owed to Plaintiff under the Settlement Agreement is, therefore, readily calculable.” (MSJ Order, 9.)

Defendants now move to vacate the court’s MSJ Order and for relief pursuant to CCP §473(b). Plaintiff opposes the motion.

CCP § 473(b) provides for two distinct types of relief—commonly differentiated as “discretionary” and “mandatory”—from certain prior actions or proceedings in the trial court. (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1124 (Luri).) “Under the discretionary relief provision, on a showing of ‘mistake, inadvertence, surprise, or excusable neglect,’ the court has discretion to allow relief from a ‘judgment, dismissal, order, or other proceeding taken against’ a party or his or her attorney. Under the mandatory relief provision, on the other hand, upon a showing by attorney declaration of ‘mistake, inadvertence, surprise, or neglect,’ the court shall vacate any ‘resulting default judgment or dismissal entered.’ ” (Ibid., internal citations and quotation marks omitted, quoting CCP § 473(b).) “Applications seeking relief under the mandatory provision of section 473 must be ‘accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.’ (§ 473(b).) The mandatory provision further adds that ‘whenever relief is granted based on an attorney’s affidavit of fault [the court shall] direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.’ [Citations.]” (Luri, ibid.)

CCP § 473(b) allows a court to vacate a prior order upon a showing that the order was entered due to a party’s mistake, inadvertence, surprise, or excusable neglect. Additionally, the motion “shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” The terms mistake, inadvertence, surprise, and excusable neglect which warrant relief under section § 473(b) are defined as follows:

Mistake is not a ground for relief under section 473, subdivision (b), when ‘the court finds that the “mistake” is simply the result of professional incompetence, general ignorance of the law, or unjustifiable negligence in discovering the law ....’ [Citation] Further, ‘[t]he term “surprise,” as used in section 473, refers to “some condition or situation in which a party ... is unexpectedly placed to his injury, without any default or negligence of his own, which ordinary prudence could not have guarded against.” [Citation] Finally, as for inadvertence or neglect, ‘[t]o warrant relief under section 473 a litigant's neglect must have been such as might have been the act of a reasonably prudent person under the same circumstances. The inadvertence contemplated by the statute does not mean mere inadvertence in the abstract. If it is wholly inexcusable it does not justify relief.’ [Citation] (Henderson v. Pacific Gas & Electric Co. (2010) 187 Cal.App.4th 215, 229-230.)

CCP § 1008 applies to applications for relief under CCP § 473(b). (Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 837.) Failure to comply with CCP § 1008’s requirements for a renewed motion is grounds to deny a renewed application for relief from default under CCP § 473(b). (Id. at 829.)

"Section 1008, which governs applications for reconsideration and renewed applications, appears in a chapter of the Code of Civil Procedure (pt. 2, tit. 14, ch. 4, §§ 1003-1008) setting out rules generally applicable to motions and orders. One of those rules, section 1008, subdivision (b), provides; ‘A party who originally made an application for an order which was refused in whole or part, or granted conditionally or on terms, may make a subsequent application for the same order upon new or different facts, circumstances, or law, in which case it shall be shown by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown. For a failure to comply with this subdivision, any order made on a subsequent application may be revoked or set aside on ex parte motion.’ Courts have construed section 1008 to require a party filing an application for reconsideration or a renewed application to show diligence with a satisfactory explanation for not having presented the new or different information earlier. [citations omitted]

Section 1008’s purpose is ‘‘to conserve judicial resources by constraining litigants who would endlessly bring the same motions over and over, or move for reconsideration of every adverse order and then appeal the denial of the motion to reconsider.’’ (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 1067 (2011-2012 Reg. Sess.) as amended Apr. 25, 2011, p. 4.) To state that purpose strongly, the Legislature made section 1008 expressly jurisdictional, as subdivision (e) explains; ‘This section specifies the court’s jurisdiction with regard to applications for reconsideration of its orders and renewals of previous motions, and applies to all applications to reconsider any order of a judge or court, or for the renewal of a previous motion, whether the order deciding the previous matter or motion is interim or final. No application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section.’ (§ 1008, subd. (e).) To deter parties from filing noncompliant renewed applications, the Legislature provided that ‘[a] violation of this section may be punished as a contempt and with sanctions as allowed by Section 128.7.’ (§ 1008, subd. (d).)" (Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC, (2015) 61 Cal. 4th 830, 839-40.)

Defendants contend that the MSJ Order must be vacated pursuant to CCP § 473 “on the grounds that the proposed award of damages fails to take into account $4,572,702.51 of deductions expressly called for by the parties’ Settlement Agreement because Defendants’ counsel through mistake, inadvertence and/or excusable neglect failed to include this evidence in Defendants’ Opposition papers and which, if disregarded, would create a gross inequity, a miscarriage of justice, and an unwarranted windfall to Plaintiff that this Court has the power to rectify by conducting an accounting of the permitted deductions called for by the parties’ Settlement Agreement before entering Final Judgment in this case.” (Motion, 1.) Defendants contend that pursuant to the Settlement Agreement between the parties, the court should provide relief for Defendants from the MSJ Order for:

“$2,372,702.51 of Permitted Deductions incurred by Defendants (which include: closing costs and escrow fees of $434,007.37, other related fees and costs (capital gains taxes) of $659,159, remodeling costs of $1,279,536.14) and the payment of $2,200,000 to Defendant Lagniappe are to be deducted from the gross proceeds of the sale of the real property prior to splitting proceeds between Defendant Lagniappe and the Plaintiff.” (Motion, 2-3.)

As this court has already considered and reviewed the Settlement Agreement, and has accepted the preliminary payment of “2.2 million” to Lagniappe before the splitting of sale proceeds, the court disregards the $2,200,000 now asserted by Defendants again. (MSJ Order, 5-7.) Further, in support of their motion for relief regarding capital gains taxes and “other related fees,” Defendants fail to explain how these costs specifically are “Permitted Deductions” as considered and defined by the Settlement Agreement. (Motion, 4-7.) As part of the MSJ Order, this court reviewed Paragraph 2d(i) which stated: “Payment of all closing costs, escrow fees, transfer costs and related costs and fees...” (MSJ Order, 5.) Defendants fail to explain how capital gains taxes fall into the category of such defined costs.

In opposition, Plaintiff contends that the motion must be denied because Defendants cannot demonstrate any basis to vacate the Order. (Opposition, 2.) According to Plaintiff, the motion is actually a disguised motion for reconsideration which has not been brought in accordance with CCP § 1008(a). (Opposition, 2-3.) Additionally, Plaintiff asserts that the motion should also be denied because the “claimed expenses” are not admissible as

“there are no authenticated invoices at all and only vague concocted invoices with one line and no detail, including a purported invoice of one line for alleged expenses of $658,812 stating only ‘FIRENZE EXPENSES, LABOR AND MATERIALS.’ There is no proof of any payment, or even proof that the expenses related to the Residence as opposed to any other property that Defendants were renovating. Defendants even attempt to deduct Logan’s own capital gains taxes that are not only not authenticated but also not deductible pursuant to the Settlement Agreement. Escrow and closing fees are based on an estimated Closing Statement, even after this Court admonished counsel at the hearing on November 28, 2022, for not producing the final approved and verified Closing Statement which would be readily available from the Escrow Company. Defendants have had two and half years to pull together the evidence for any deductible expenses and have failed to do so.” (Opposition, 2-3.)

Plaintiff further contends that even if the motion is a disguised motion for reconsideration, there is “no such affidavit submitted by Defendants that there are any new or different facts that were not available to Defendants prior to responding to the MSJ.” (Opp., 4.) Further, Plaintiff contends that even if the jurisdictional and procedural flaws are disregarded, the motion further fails since “Defendants have failed to demonstrate [or] show any facts that demonstrate ‘his or her mistake, inadvertence, surprise, or excusable neglect’ as compared to a conscious and strategic decision not to present such evidence and withhold it for trial.” (Opp., 4.) The court agrees.

Moreover, Plaintiff contends Defendants fail to show how the evidence presented before the court now was not available during the filing of their Opposition to the summary adjudication motion, and “presenting a page with numbers on it is a far cry from proving that such expenses were incurred for the Firenze property, as compared to another property that Defendants renovated, such as the property recently sold in February 2023, and were actually paid for. As this Court may recall, evidence not produced by November 28, 2022 would be precluded, so any attempt to provide back-up detail at this late date would be excluded.” (Opp., 5.)

The court agrees with Plaintiff that the instant motion seeks reconsideration of the Order without complying with the requirements of CCP § 1008. Contrary to Defendants’ assertions, Defendants had the opportunity to present their Permitted Deductions at several points throughout this litigation, including most significantly in their opposition to summary adjudication, and failed to meet their burden. The court noted Defendants’ lack of evidence in the MSJ Order’s reasoning. (MSJ Order, 9.)

Plaintiff’s Reply in support of summary adjudication even specifically noted Defendants’ failure to produce discoverable evidence regarding Permitted Deductions even after several attempts to request such information before the summary adjudication motion. (Plaintiff’s Reply in support of MSJ, 4-6.) Further, Defendants’ motion here seeks reconsideration of the MSJ Order, but does so without complying with the requirements set forth by CCP § 1008, and namely, fails to explain what new discoveries of fact can justify a reconsideration at this time.

Finally, the court finds that Defendants’ motion, and the Logan declaration, are insufficient to demonstrate a basis for relief. Even after several attempts by this court, and by Plaintiff, for discovery of relevant and admissible evidence regarding Permitted Deductions, Defendants failed to include any admissible evidence in their Opposition, and now have further fail to include authenticated, admissible evidence in their motion for relief. While Defendants’ motion declares a mistake or excusable neglect on the part of their counsel in failing to include such evidence in their Opposition to the summary adjudication, the court finds this repeated failure to provide discoverable evidence to not be indicative of any mistake or inadvertence which justifies or merits relief. (Henderson v. Pacific Gas & Electric Co. (2010) 187 Cal.App.4th 215, 229-230.) This constitutes an additional reason to deny Defendants’ motion.

[1] Plaintiff also filed a Fourth Amended Complaint (“4AC”) on April 28, 2022, alleging identical causes of action and omitting the sixth cause of action. The filing of the 4AC was rejected; the operable complaint is the TAC.