Judge: Gail Killefer, Case: BC682875, Date: 2023-02-24 Tentative Ruling
Case Number: BC682875 Hearing Date: February 24, 2023 Dept: 37
HEARING DATE: February 24, 2023
CASE NUMBER: BC682875
CASE NAME: Ambulnz Health, LLC v. AmeriCare MedServices, Inc., et al.
MOVING PARTY: Defendant, Michael S.
Summers
OPPOSING PARTY: Plaintiffs, Ambulnz Health,
LLC
TRIAL DATE: Not Set.
PROOF OF SERVICE: OK
MOTION: Motion for Order to Show Cause
Regarding Contempt Against Plaintiff
OPPOSITION: February 2, 2023
BRIEF IN SUPPORT: February 9, 2023
REPLY: Untimely Filed—February 14, 2023,
in violation of this court’s briefing schedule.
TENTATIVE: Defendant
Summers’ motion for order to show cause re contempt is granted. Plaintiff is
found in contempt of court under CCP § 1209. Plaintiff and Plaintiffs’ counsel,
jointly and severally, are sanctioned $1,000.00 pursuant to CCP § 1218, to be
paid by March 6, 2023. The compliance
date is set for March 31, 2023, for Plaintiff to discharge all
outstanding payment obligations to Defendant, and further Order to Show Cause
re: Contempt and re: Dismissal of Plaintiff’s Complaint against Summers is set
for April 14, 2023 at 8:30 a.m.
Plaintiff’s brief addressing why Plaintiff’s Complaint against Summers
should not be dismissed is due March 31, 2023; Summers’ response is due April
7, 2023. Summers is to give notice.
Background
This action arises in connection with an alleged Asset
Purchase Agreement (the "APA") between Plaintiff Ambulnz
("Ambulnz") as Buyer, Defendant AmeriCare Medservices, Inc.
("AmeriCare") as Seller and Defendant Michael S. Summers
("Summers") as the Owner of AmeriCare on September 29, 2016.
Plaintiff alleges that it purchased AmeriCare's business and assets and began
operating the business after paying a $1 million down-payment. Plaintiff
further alleges that on or about April 4, 2017, the parties entered into a
Management Services Agreement ("MSA"), pursuant to which Plaintiff
was entitled to operate the business while Plaintiff worked toward obtaining
certain permits and licenses in its own name.
According to Plaintiff, it subsequently discovered that many
of AmeriCare's representations and warranties in the APA were false when made
and that the business was worth far less than the price to which the parties
had agreed. Plaintiff further alleges that Defendants repeatedly interfered
with its ability to operate the business for which it had paid, including by
preventing Plaintiff from accessing mission critical data contained on
AmeriCare's IT systems and through a systematic campaign by Summers to try and
destroy the value of the business that Plaintiff acquired. AmeriCare allegedly
had a business bank account with Defendant California Bank and Trust
("CBT"). Plaintiff further alleges that CBT wrongfully assisted
Summers in obtaining signatory control over the bank account and AmeriCare's
assets.
In the First Amended Complaint ("FAC"), Plaintiff
alleges 6 causes of action: (1) declaratory relief against all Defendants; (2)
injunction against all Defendants; (3) breach of fiduciary duty against Summers
and CBT; (4) conversion against Summers and CBT; (5) accounting/request for
constructive trust against CBT; and (6) intentional interference with
contractual relations against Summers.
On June 22, 2018, the court granted Defendants’ motion to
compel arbitration and compelled Plaintiff’s claims against both Americare and
Summers to arbitration. The action against CBT was stayed pending the
completion of arbitration.
On August 11, 2020, the court entered judgment in favor of
Ambulnz by confirming the arbitration award.
On March 10, 2022, the 2nd District Courts of Appeal,
Division 7, Case No. B307874, reversed this court’s decision to grant the
motion to compel arbitration as to Summers, and further reversed the
arbitration award as to Summers, finding Summers should not have been compelled
to arbitrate his claims. (“Appeal Order”)
On September 1, 2020, Plaintiff and Americare commenced the
second arbitration proceedings as between the two parties only (“Second
Arbitration”). Plaintiff dismissed Summers from the Second Arbitration.
On November 4, 2022, the court granted Plaintiff’s motion
for a stay in arbitration, pending completion of the instant action between
Plaintiff and Defendant Summers. The court also granted Defendants’ motion for
restitution pursuant to CCP § 908 of $93,000.00 and awarded attorney fees and
interest to Defendants as well. (“November 4 Order”).
On January 19, 2023, this court set the instant Motion for
Order to Show Cause re Contempt against Plaintiff for hearing on February 24,
2023. The court instructed Plaintiff’s Brief to be filed on or before February
2, 2023, and Defendant Summers’ Brief to be due on February 9, 2023. On
February 14, 2023, Plaintiff filed a “Reply,” outside of this court’s briefing
schedule and in violation of the January 19, 2023 setting forth the deadlines
for the parties’ papers. The court therefore sustains Defendant Summers’
objection and disregards the February 14, 2023 filing completely.
Summers’ brief argues that Plaintiff should be held in
contempt for failure to obey the court’s November 4 Order, and subsequent November
18, 2022 Order, and that Plaintiff and Plaintiff’s counsel should be sanctioned
and order to comply with all outstanding payment obligations.
Discussion
CCP § 128(a)(4) provides that every
court shall have the power to compel obedience of its judgments, orders, and
process. CCP § 1209(a)(5) provides that
disobedience of any lawful order constitutes contempt of the authority of the
Court. Per CCP § 1211(a), when this contempt is not committed in the presence
of the Court, an affidavit “shall be presented to the court or judge of the
facts constituting the contempt.” Further, CCP § 1218(a) provides that the
court, upon answer and evidence taken, shall determine if the party is guilty
of contempt, and may impose a fine not exceeding $1,000, payable to the Court.
The elements necessary to show contempt are: (1) the making of the order, (2)
knowledge of the order, (3) ability of the accused to render compliance, and
(4) willful disobedience of the order. (Conn v. Superior Court (1987)
196 Cal.App.3d 774, 784.)
The party seeking to charge another with
contempt must complete service of the affidavit provided for in CCP § 1211(a)
through personal service. (Koehler v. Superior Court (2010) 181
Cal.App.4th 1153, 1169.)
In opposition, Plaintiff first argues that a “money judgment
or debt in a civil action such as this is not enforceable by contempt,” without
explaining how an order for restitution of funds is a “money judgment,” and
without providing any supporting authorities for such a conclusory contention.
(Opposition, 1.)
Second, Plaintiff also contends
this proceeding is “procedurally improper,” as Plaintiff’s due process rights
“requires that Summers move for contempt by filing a formal motion and
affidavit outlining the basis for the purported contempt charges. Ambulnz would
then be afforded the right to address each of the issues set forth in the
moving papers. As a result of such procedural defects, this Court also lacks
proper jurisdiction over this contempt proceeding.” (Id.)
Plaintiff again fails to explain which due process rights
would be violated by this proceeding, and this court further notes that CCP § 128(a)(4)
authorizes and empowers this court to compel compliance with its orders. The
court therefore finds this argument unavailing and nonsensical.
Further, Plaintiff fails to explain how, or point to
supporting authorities to show, an order for restitution of funds, as granted
in the November 4 and 18, 2022 Orders, is a “money judgment” as defined by CCP
§§ 708.410-708.480. (Opp., 2-3.)
Plaintiff argues that a lack of an affidavit providing
adequate notice precludes this court from a finding of contempt, as it is a
“jurisdictional prerequisite to a contempt proceeding...” (Opp., 3-4.) However,
on January 19, 2023, notice regarding this OSC was provided during the hearing
to counsel for both parties, and importantly, the court ordered “Notice
waived.” (January 19, 2023 Order.) The court therefore finds this argument also
unavailing.
Lastly, Plaintiff contends Summers cannot establish the
elements to make a finding of contempt against Plaintiff since:
“Summers has not, and cannot, submit any proof showing
Ambulnz’s ability to comply with the [November 4 and 18, 2022 Orders.] And,
while it is not Ambulnz's burden to prove its inability to pay the restitution
award, the fact of the matter is that Ambulnz has been struggling financially,
in large part due to (i) the losses incurred as a result of Summers' and
Americare's fraudulent conduct underlying this dispute, (ii) Americare's
refusal to pay the money judgment against it, and (iii) Summers' campaign to
sue Ambulnz (either personally or through one of his entities) at eve turn
despite his prior, material misrepresentations. In fact, Ambulnz recently
notified agencies that it has commenced shutting down operations.” Further
contending “Ambulnz's financial position would be obviously much different had
Summers' alter-ego Defendant Americare, paid the judgment that Ambulnz secured
against it more than two years ago. Yet while Summers seeks contempt against
Ambulnz for failing to pay the Restitution Award, he is conspicuously silent as
to whether Ambulnz would be entitled to hold Americare in contempt for failing
to pay for the last two years.” (Opp., 6-7.)
In response, Defendant Summers first correctly contends that
the November 4 and 18, 2022 rulings were not money judgments but restitution
orders. “Plaintiff does not offer any
authority that stands for the proposition that an order awarding a party
restitution of its own monies constitutes ‘debt’ which cannot be enforced by
the Court’s contempt powers when unpaid... the order is clearly not a judgment
because such a judgment would not be entered until Plaintiff’s claims against
the Defendant are resolved.” (S. Brief, 5-7.)
Further, Summers contends no affidavit was necessary as CCP §
1211 “clearly allows for summary contempt orders when a litigant and/or its
agent engages in direct contempt in immediate view and presence of the Court,”
and that “Plaintiff’s counsel made contemptuous statements in the immediate
presence of the Court, at the January 19, 2023 Post-Mediation Status
Conference,” where “Plaintiff’s counsel made an improper and conclusory ‘alter
ego’ argument in an effort to explain why Plaintiff had not and should not have
to comply with the orders.” (S. Brief, 7-8.) Defendant further contends that in
any event, sufficient notice was provided “as part of Defendant’s January 6,
2023 filing,” where counsel’s declaration “clearly set forth specific facts
informing Plaintiff and the Court of Plaintiff’s failure to pay restitution of
Summers’ monies by December 30, 2022.” (Id.) The court agrees.
Further, Defendant contends the
element to establish a finding of contempt are “clearly met” here as it “is
unquestionable that the Court issued the order requiring Plaintiff to pay back
Summers his $93,000 as restitution, by December 30, 2022,” and even assuming
that “Plaintiff did not find out about the November 18, 2022 order until
December 29, 2022, Plaintiff has had knowledge of the order for over 42 days,”
and “as of February 9, 2023, Plaintiff remains noncompliant with the November
18, 2022 order and has deliberately refused to comply while making disingenuous
arguments that are refuted in this brief or that have been refuted earlier in
this lawsuit.” (S. Brief, 9-10.)
With regards to Plaintiff’s ability to comply with the
order, Defendant further contends “there exists no evidence to the contrary”
since “Plaintiff remains an active company with the California Secretary of
State,” “is not part of any active bankruptcy proceedings in any federal
district court,” and “remains an active Plaintiff or Cross-Complainant in at
least seven (7) cases pending before the Los Angeles Superior Court, Orange
County Superior Court and San Diego Superior Court wherein Plaintiff is seeking
affirmative relief.” (S. Brief, 11.)
Lastly, Defendant contends Plaintiff’s counsel should also
be found to be in contempt since “the attorneys’ conduct has contributed to the
Plaintiff’s ongoing willful violation of the November 4, 2022 and November 18,
2022 Orders.” (S. Brief, 11-12.) Summers argues counsel’s conduct “constitutes
a willful violation” of the attorneys’ “duty of candor to the Court and also
amount to an unlawful interference with the process or proceedings of the
Court,” pursuant to CCP §§ 1209(a)(5)
and (9). (S. Brief, 12-13.) The court agrees.
The court agrees with Defendant that the facts of this
instant action show Plaintiff was ordered to return monies in restitution to
Defendant by December 30, 2022, failed to do so by the given date, argued
before the court during the January 19, 2023, Post-Mediation Status Conference that
it should not have to comply with the aforementioned orders, and now contends
that it cannot afford to comply with the order requiring restitution of funds.
Plaintiff’s arguments regarding its inability to comply is unavailing here, as the
restitution order clearly determined those monies do not belong to Plaintiff in
the first place, therefore Plaintiff’s inability to pay back monies it should
not have possessed to begin with is unpersuasive before this court, given
Plaintiff’s willful defiance of such order and Plaintiff’s notice of such order
over the course of several months now.
Plaintiff was given an opportunity to dispute the ruling for
restitution before the order was made, had an opportunity to present its case
in its papers and at the hearing before this court, and had the opportunity to
move for the court to reconsider a prior order. Plaintiff has been given
adequate notice of its responsibility to obey this court’s order, and only
after failing to comply with this court’s order, has now argued during a
January 19, 2023 hearing that it should not have to pay back monies it should
not have possessed in the first place.
Defendant requests this court: (1) find Plaintiff in
contempt of court under CCP § 1209; (2) sanction Plaintiff and Plaintiff’s
counsel, jointly and severally for $1,000 pursuant to CCP § 1218 for the
wrongful conduct; (3) set a compliance date at a specific date for Plaintiff to
discharge all outstanding payment obligations to Defendant which arise out of
the Court’s November 4, 2022, November 18, 2022 and January 9, 2023 orders; and
(4) set a further Order to Show Cause re: Contempt and re: Dismissal of
Plaintiff’s Complaint against Summers, for
Exercising its discretion under CCP § 128(a)(4) and for the reasons explained above, Summers’
motion for order to show cause re contempt is granted.
Conclusion
Defendant Summers’ motion for order to
show cause re contempt is granted. Plaintiff is found in
contempt of court under CCP § 1209.
Plaintiff and Plaintiffs’ counsel, jointly and severally, are
sanctioned $1,000.00 pursuant to CCP § 1218, to be paid by March 6, 2023. . The
compliance
date is set for March 31, 2023, for
Plaintiff to discharge all outstanding payment obligations to
Defendant, and further Order to Show
Cause re: Contempt and re: Dismissal of Plaintiff’s
Complaint against Summers is set for April
14, 2023, at 8:30 a.m. Plaintiff’s brief
addressing
why Plaintiff’s Complaint against Summers
should not be dismissed is due March 31, 2023;
Summers’ response is due April 7,
2023. Summers is to give notice.