Judge: Gail Killefer, Case: 21STCV14593, Date: 2023-02-22 Tentative Ruling
Case Number: 21STCV14593 Hearing Date: February 22, 2023 Dept: 37
HEARING
DATE: February 22, 2023
CASE
NUMBER: 21STCV14593
CASE
NAME: Bel Air K.A., LLC v. 5 Sites Inc., et al.
MOVING
PARTY: Plaintiff, Bel Air K.A.,
LLC.
OPPOSING
PARTIES: Defendants, 5 Sites
Inc., Olive M.V., LLC., and Atlantic Management, Inc.
TRIAL DATE: March 14, 2023
PROOF OF SERVICE: OK
MOTION: Motion for Summary
Adjudication
OPPOSITION: February 8, 2023
REPLY: February
17, 2023
TENTATIVE The motion for summary adjudication is
denied. Defendants to give notice.
Background
This action
arises in connection with real property located at 643 S. Olive Street, Los
Angeles, California 90014 (the “Property”). Bel Air K.A., LLC (“Plaintiff”) alleges
that it owns an undivided twenty-four and one half (24.50%) percent share of
the Property, Defendant Olive M.V., LLC (“Olive”) owns an undivided twenty-four
and one half percent (24.50%) share of the Property, and Defendant 5 Sites
Inc., (“5 Sites”) owns the other 51 percent. The Complaint further alleges
Defendant Hanmi Bank (“Hanmi”) is the mortgage lender and holder of a Deed of
Trust secured by the Property. The Complaint further alleges Defendant 5 Sites
has enriched itself through self-dealing and the managing of the Property
through its own management entity, Defendant Atlantic Management, Inc. (“AMI”).
The Complaint alleges AMI has charged unreasonable management fees to the
Property and Defendant 5 Sites has excluded Plaintiff from involvement in the
operations of the Property. Plaintiff requests partition of the Property
through the Complaint.
Plaintiff’s
Complaint, filed on April 16, 2021, alleges three causes of action as follows:
(1) partition by sale against 5 Sites and Olive, (2) accounting against 5 Sites
and AMI, (3) negligent interference with prospective economic relations against
5 Sites and AMI.
Plaintiff now
moves for summary adjudication as to the following issue:
Issue No. 1:
Plaintiff is entitled to an interlocutory judgment as a matter of law with
respect to its cause of action for Partition, a determination of interests in
the Property, and entitled to the appointment of a Referee as part of its
Partition cause of action against Defendants, as no triable issue of facts
exists.
Defendants 5 Sites, Olive, and AMI
(collectively “Opposing Defendants”) oppose the motion.
Plaintiff’s
Requests
Plaintiff
requests that the court take judicial notice of the following in support of the
motion:
1. Grant
Deed recorded December 04, 2003 in the Official Records of Los Angeles County
as Instrument No. 03 3668812. (Exhibit
1).
2. Plaintiff’s
Complaint for Partition, Accounting, and Negligent Interference with
Prospective Economic Relations, filed in this action on April 16, 2021.
(Exhibit 2).
3. Defendants’
Verified Answer, filed in this action on June 6, 2022. (Exhibit 3).
Plaintiff’s
request is granted. The existence and
legal significance of these documents is proper matters for judicial notice.
(Evid. Code § 452(d), (h).)
I.
Legal Standard
“The purpose of the law of summary judgment is to provide
courts with a mechanism to cut through the parties’ pleadings in order to
determine whether, despite their allegations, trial is in fact necessary to
resolve their dispute.”¿ (Aguilar v. Atlantic Richfield Co.¿(2001) 25
Cal.4th 826, 843.)¿ Pursuant to CCP § 437c(a):¿
A party may
move for summary judgment in any action or proceeding if it is contended that
the action has no merit or that there is no defense to the action or proceeding.¿
The motion may be made at any time after 60 days have elapsed since the general
appearance in the action or proceeding of each party against whom the motion is
directed or at any earlier time after the general appearance that the court,
with or without notice and upon good cause shown, may direct….¿ The motion
shall be heard no later than 30 days before the date of trial, unless the court
for good cause orders otherwise.¿ The filing of the motion shall not extend the
time within which a party must otherwise file a responsive pleading.¿
“The motion shall be supported by affidavits, declarations,
admissions, answers to interrogatories, depositions, and matters of which
judicial notice shall or may be taken.¿ The supporting papers shall include a
separate statement setting forth plainly and concisely all material facts that
the moving party contends are undisputed.¿ Each of the material facts stated
shall be followed by a reference to the supporting evidence.¿ The failure to
comply with this requirement of a separate statement may in the court’s
discretion constitute a sufficient ground for denial of the motion.”¿ (CCP §
437c(b)(1);¿see also¿Cal. Rules of Court, rule 3.1350(c)(2) &
(d).)¿¿¿
In analyzing motions for summary judgment, courts must
apply a three-step analysis: “(1) identify the issues framed by the pleadings;
(2) determine whether the moving party has negated the opponent's claims; and
(3) determine whether the opposition has demonstrated the existence of a
triable, material factual issue.”¿ (Hinesley¿v.¿Oakshade¿Town Center¿(2005)
135 Cal.App.4th 289, 294 (Hinsley).)¿ Pursuant to CCP § 437c(p)(1):¿
A¿plaintiff
or cross-complainant has met his or her burden of showing that there is no
defense to a cause of action if that party has proved each element of the cause
of action entitling the party to judgment on the cause of action. Once the
plaintiff or cross-complainant has met that burden, the burden shifts to the
defendant or cross-defendant to show that a triable issue of one or more
material facts exists as to the cause of action or a defense thereto. The
defendant or cross-defendant shall not rely upon the allegations or denials of
its pleadings to show that a triable issue of material fact exists but,
instead, shall set forth the specific facts showing that a triable issue of
material fact exists as to the cause of action or a defense thereto.¿
The court must “view the evidence in the light most
favorable to the opposing party and accept all inferences reasonably drawn
therefrom.”¿ (Hinesley,¿135 Cal.App.4th at p. 294;¿Dore v.
Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389 [courts “liberally
construe the evidence in support of the party opposing summary judgment and
resolve doubts concerning the evidence in favor of that party.”].)¿ A motion
for summary judgment must be denied where the moving party’s evidence does not
prove all material facts, even in the absence of any opposition (Leyva v.
Sup. Ct.¿(1985) 164 Cal.App.3d 462, 475).¿
II.
Discussion
Plaintiff moves
for summary adjudication as to its first cause of action for partition. Specifically,
Plaintiff seeks an interlocutory order to have the Property partitioned by sale,
a determination of the parties’ interests, and to appoint a partition referee.
A. Plaintiff’s Burden
“A partition action may be commenced and maintained by any
of the following persons: (1) A co-owner of personal property. (2) An owner of an estate of
inheritance, an estate for life, or an estate for years in real property where
such property or estate therein is owned by several persons concurrently or in
successive estates.” (CCP § 872.210(a).) “The
court shall order that the property be divided among the parties in accordance
with their interests in the property as determined in the interlocutory
judgment.” (CCP § 872.810.)
“Notwithstanding¿Section 872.810, the court shall order
that the property be sold and the proceeds be divided among the parties in
accordance with their interests in the property as determined in the
interlocutory judgment in the following situations: (a) The parties agree to
such relief, by their pleadings or otherwise. (b) The court determines
that, under the circumstances, sale and division of the proceeds would be more
equitable than division of the property. For the purpose of making the
determination, the court may appoint a referee and take into account
[the referee’s] report.” (CCP § 872.820.)
The co-owner of a property has “an absolute right to
partition unless barred by a valid waiver.” (LEG Investments v. Boxler
(2010) 183 Cal.App.4th 484, 493.) Under the prior law, the party seeking
partition by sale as opposed to partition in kind had the burden to establish
sale was necessary to avoid “great prejudice.” (Butte Creek Island
Ranch v. Crim (1982) 136 Cal.App.3d 360, 365.) But the Legislature’s
1976 enactment of CCP §§ 872.810 and 872.820 expanded the availability of
partition by sale and while the statutes continued the preference for partition
in kind, the standard was reduced from a burden to show “great prejudice” to a
showing that partition by sale would be “more equitable.” (Ibid.;
Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 754.) This was in part
due to a recognition that “[i]n
many modern transactions, sale of the property
is preferable to physical division since the value of the divided parcels
frequently will not equal the value of the whole parcel before division.
Moreover, physical division may be impossible due to zoning restrictions or may
be highly impractical, particularly in the case of urban property.” (Butte
Creek, supra, 136 Cal.App.3d at 365.) But the statutes did not overturn the
burden of proof remaining on the party seeking partition by sale instead of
partition in kind. Partition in kind remains favored by the law, and in the
absence of proof to the contrary, the presumption for partition in kind will
prevail because a forced sale is strongly disfavored. (Ibid.)
The judgment of partition is left to the discretion of the
trial court. The determination of whether partition by sale is more equitable
than physical division requires a factual inquiry by the court, and when the
evidence, even though conflicting, permits the court to reasonably conclude
partition by sale would be more equitable to the owners, such decision should
be upheld absent an abuse of discretion. (See Richmond v. Dofflemyer
(1980) 105 Cal.App.3d 745, 758-59, 765-66; Formosa Corp. v. Rogers
(1951) 108 Cal.App.2d 397, 411-12 [abuse of discretion standard applied under
prior version of partition law requiring showing of “great prejudice” for
finding of partition by sale].) This is because “a partition suit is in equity”
and “a court of equity has broad powers and comparatively unlimited discretion
to apply.” (Richmond, supra, 105 Cal.App.3d at 758; Cunningham
v. Frymire (1958) 160 Cal.App.2d 726, 729 [the trial court’s decision will
not be disturbed “if there is any substantial evidence” in support and an
appellate court will not weigh questions of fact determined by the trial court
in a partition action].)
Based on the above, Plaintiff must
prove the following: (1) Plaintiff has an ownership interest in the Property;
(2) a partition by sale of the Property is more equitable than a partition in
kind; and (3) Plaintiff did not waive the right to partition the Property.
Plaintiff has provided evidence that evinces
its ownership interest in the Property with RJN, Exh. 1 and Exhibit 5 of
Plaintiff’s Evidence. (Plaintiff’s Decl., Exh. 1, 5.) The recorded Grant Deed
and the Title Report for the Property both show Plaintiff’s recorded ownership
stake in the Property. (Id.) It is further undisputed between the parties.
(UMF ¶¶3-6.)
However, Plaintiff, in its moving papers, states “plaintiffs do not seek
a determination of the manner of partition. They believe a partition by sale
and division of the proceeds is inevitable, in light of (among other things)
the difficulty in physically dividing the Property, which is a 10 story
commercial property. However, unless all of the parties stipulate to the manner
of partition by the time of the hearing on this motion, the Plaintiff requests
that the Court appoint a referee to provide a report for the Court’s
consideration and determination of the issue of whether partition by sale and
division of the proceeds would be more equitable than physical division of the
property. (Motion, 6-7.)
As such, Plaintiff merely contends
that partition by sale is “inevitable” given “the difficulty in physically
dividing the Property,” without a clear showing, or introduction of evidence to
support, that a partition by sale is indeed more equitable. (Id.)
Plaintiff further merely contends
Opposing Defendants “have not met the burden to present facts that could
lead a reasonable person to conclude by clear and convincing evidence that
Plaintiff has waived her right [sic] to partition.” (Motion, 5.) While Plaintiff muddies
the relevant standard here, Opposing Defendants do have the burden of
introducing evidence to show that there are triable issues of material fact
which must be left to a trier of fact to decide.
In opposition, Defendants contend
triable issues of material fact remain regarding Plaintiff’s waiver of a right
to partition here, pointing to deposition testimony to assert “Plaintiff admits
it signed an agreement setting forth the parties’ rights and obligations
as between each other, although he [sic] claims he cannot now find it.
However, Defendants have confirmed the Partnership Agreement presented to
Plaintiff at its deposition is the only agreement exchanged between and
agreed to by the parties.” (Opp., 6-7.) In support, Opposing Defendants
reference the declarations of corporate officers representing the Defendants,
Mehran Verdi and Faramaz Lavaei, to assert that the referenced Partnership
Agreement was the only agreement deliberated and signed between the parties.
(Verdi Decl. ¶4; Lavaei Decl. ¶3.)
The Partnership Agreement Defendants
contend Plaintiff signed states, in relevant part:
“9B. Restrictions Regarding the Property. Each Partner agrees
that it will continue to hold title to its undivided interest in the Property
on behalf of the Partnership and will not sell, transfer, assign or encumber
said interest, or any part therein, without the written consent of the other
Partners. Further, each Partner hereby waives its right to file an action
to partition the Property. In the even [sic] a Partner shall
engage in any of the foregoing, such transaction shall be null and void and, in
the event that Partner should attempt to perform any of the foregoing, either
of the other Partners shall have the right to enjoin such threatened action, it
being agreed that such action would cause irreparable damage to the Partners
and the Partnership. The Partners agree to cause a memorandum to be recorded
with the office of the Los Angeles County Recorder setting for the foregoing
restrictions on the interest of a Partner in the Property.” (emphasis added)
(Lavaei Decl. , Exh. A.)
This court notes, however, that the
attached exhibit does not contain the signatures of any of the parties to this
instant action. (Id.) However, Defendants point to the testimony of
Plaintiff’s Managing member, Mehran Haghani, to contend the officer “admitted
during his deposition that he signed an agreement circulated between the owners
that would govern their rights and duties, although he claimed he could not
find it.” (Opp., 3-4.) Opposing Defendants contend that regardless of the
signature of the Partnership Agreement, “[a]t a bare minimum, the issue
presents a question of disputed fact that cannot be resolved on summary
judgment, short of trial.” (Opp., 6-7.)
In reply, Plaintiff contends
“Defendants attempt to conveniently and self-servingly cherry pick [sic]
Plaintiff’s deposition to promote the premise that Plaintiff acknowledged
signed an agreement in 2004 that waived its right to partition,” and that the
deposition testimony “clearly shows that Plaintiff did not admit to signing an
agreement that waived its right to partition...” (Reply, 4-5.) Specifically,
Plaintiff points to testimony by the corporate officer stating that he did not
“[recall] of [the] paperwork,” presented to him during the deposition. (Id.)
Plaintiff therefore argues “this cannot lawfully serve as clear and convincing
evidence that Plaintiff waived its right to partition,” given that Plaintiff’s
managing officer could not “recall” “signing a contract that [he] understood
would govern the rights and obligations between the owners within the first
year of [their] ownership...” (Id.) Plaintiff’s managing officer further
testified he thought “we never had an agreement between us.” (Id.)
Plaintiff then also argues that such a
Partnership Agreement was not “produced to Plaintiff in response to its
discovery requests,” and further, was not recorded onto the Property’s deed as
the language of Paragraph 9(B) asks the parties to do. (Reply, 5-6.)
The testimony of Plaintiff’s Managing
Member states, in relevant part:
“Q Do you recall after acquiring -- after Bel Air acquired an
interest in the Olive property, do you recall receiving a written agreement
that outlined what the rights and duties would be between the owners?
A We looked for it. We never find
anything. I thought we had something in the beginning. But all of us looked for it. They couldn't find
anything.
...
Q Do you recall having seen something
that you just can't recall what it was?
A I don't remember, but I signed it.”
(Vivoli Decl., Exh. B.)
Here, the court first finds the Plaintiff
does provide evidence regarding the parties’ interests to meet the relevant
requirement. (See Summers v. Superior
Court (2018) 24 Cal.App.5th
138, 143 [“First, an interlocutory judgment in a
partition action is to include two elements: a determination of the parties’
interests in the property and an order granting the partition. (§ 872.720,
subd. (a).) Second, the court agrees with Plaintiff that the manner of
partition—i.e., a physical division or sale of the property—is to be decided
when or after the parties’ ownership interests are determined, but not
before.”].) As such, the court considers only whether
there is a triable issue of fact regarding the parties’ respective interests.
Here, viewing
the evidence in the light most favorable to the non-moving Defendants, the
court finds triable issues of material fact remain regarding Plaintiff’s waiver
of its right to partition the Property. The court notes the parties dispute the
language of an agreement, the existence of an agreement, its relevance and
enforcement here, but Plaintiff’s Managing Member’s testimony establishes that
an agreement between the parties was likely signed, which may affect the
partition rights of the parties agreeing to be bound by the contract. While Defendants
have failed to present a signed and recorded agreement as the contract states,
evidence is sufficient to show a triable issue of fact regarding the ownership
interests in the Property, and specifically whether the parties have explicitly
waived their rights to partition, and, as such, Defendants have met their
burden. Defendants need not prove the waiver of the right to partition in
opposing this motion for summary adjudication, but only need to show that
triable issues preclude Plaintiff from proving that any such waiver of the
partition right does not exist. (Leyva v. Sup. Ct. (1985) 164 Cal.App.3d
462, 475 [motion for summary adjudication must be denied where the moving
party’s evidence does not prove all material facts]; Salasguevara v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384,
387 [motion must similarly be denied where moving party fails to establish all
material facts and elements, even when the opposition is weak; Mann v.
Cracchiolo (1985) 38 Cal.3d 18, 39 [the court does not engage in the
weighing of evidence].) Defendants have therefore shown issues
of material fact exist regarding the signing and enforcement of an agreement
between the parties, and the potential waiver of the partition right to the
Property, which cannot be decided at this junction and must be left to a trier
of fact to determine.
The court
need not discuss the parties’ remaining arguments.
For these
reasons, the motion for summary adjudication is denied.
Conclusion
The motion
for summary adjudication is denied. Defendants are to give notice.