Judge: Glenda Sanders, Case: 30-2019-01050162, Date: 2023-01-05 Tentative Ruling

Motion to Stay and related requests for relief.

Defendants TwinRock Partners, LLC and TwinRock Holdings, LLC (collectively, TwinRock) seek a stay of this action pending resolution of the Missouri Action.

Defendants Southside Ventures, LLC, Log Hill Properties and Consulting LLC, Greg Logsdon, and Robert Hill (collectively, Southside Defendants) join in the Motion to Stay, or in the alternative, requests bifurcation and a partial stay.

Plaintiff Salvation Investment, LLC (Salvation), Plaintiffs West Coast Lending, Inc., Trenton Rhodes, and California Anchor Consulting, Inc. (collectively, West Coast Plaintiffs), Intervening Plaintiffs Norman Rockmaker, as Trustee of the Norbrite, Inc. Retirement Trust, Alice Noble, as Trustee of the Noble Family Trust dated 11/21/1983), Mike Rozenblatt as Trustee of the Manhattan Revocable Trust dated 4/16/2013 and Eric Windeman (collectively, Intervenors), and Defendant Marcus & Millichap Real Estate Investment Services, Inc. (M&M) oppose the stay.

M&M also seeks consolidation of this action and the Missouri Action.

For the reasons set forth below, the Motion to Stay is DENIED, as are the related requests for relief.  

M&M argues the Court already considered and denied the motion to stay in connection with the motions for approval of the settlement agreements, which were heard on October 6, 2022. ROA 1977, Opp., p. 2:26. It appears that this motion was initially filed on September 14, 2022 with a hearing date of October 6, 2022 and was continued to January 5, 2023. ROA 1711, NOM; ROA 1979, Nolan Decl., ¶2, and Ex. A. The motion to stay was presented as an alternative in the event the settlement agreements were not approved, and the question whether to stay this action until resolution of the Missouri Action was argued by the parties at the 10/6/2022 hearing. See ROA 1979, Nolan Decl., Ex. B, 10/6/2022 Transcript, pp. 24-27, 29-32, 37.

The Court at that time considered the merits of the motion to stay and denied the motion to stay without prejudice. See, ROA 1979, Nolan Decl., Ex. B, 10/6/2022 Transcript, pp. 46:9-47:4. See also, ROA 1810, 10/6/2022 MO [“The Motions are DENIED, without prejudice, as more fully stated on the record. The action is not stayed.”]; ROA 1820, NOR.

Thus, nothing precludes TwinRock from, once again, seeking a stay of this matter.

Further, at the 10/6/2022 hearing the Court ordered that “[a]ll future dates remain”. ROA 1810. This is not a “new” Motion but a “continued” motion that remained on calendar for January 5, 2023 after the 10/6/2022 hearing. ROA 1979, Nolan Decl., ¶2 and Ex. A.

“When an action is brought in a court of this state involving the same parties and the same subject matter as an action already pending in a court of another jurisdiction, a stay of the California proceedings is not a matter of right but within the sound discretion of the trial court. In exercising its discretion, the court should consider the importance of discouraging multiple litigation designed solely to harass an adverse party, and of avoiding unseemly conflicts with the courts of other jurisdictions. It should also consider whether the rights of the parties can best be determined by the court of the other jurisdiction because of the nature of the subject matter, the availability of witnesses, or the stage to which the proceedings in the other courts have already advanced.” (Farmland Irr. Co. v. Dopplmaier (1957) 48 Cal.2d 208, 215.)

TwinRock again contends that this action should be stayed. TwinRock argues many of the same reasons for the stay that this Court has, at least twice, previously rejected, i.e. to prevent waste of resources and burden of prosecuting and defending overlapping litigation, to preclude the risk of inconsistent judicial rulings, to narrow and potentially resolve many of the claims in this action, and to vindicate Missouri’s interest to decide a first-filed lawsuit. Additionally, TwinRock presents a new argument that the Intervening Plaintiffs have caused unnecessary delay and harm in the Missouri Action by giving M&M information and evidence that it will use against MO Murrayfield and TwinRock in the Missouri Action. ROA 1950, Supp. Mem., pp. 5-6. None of these arguments is persuasive.

As previously explained in the Court’s 7/2/2020 ruling denying a stay, which the Court incorporates by reference and adopts here (ROA 820, 7/2/2020 Minute Order), while there are some overlapping parties and issues, there are key differences. In particular, this action is broader than the Missouri Action, involves direct and derivative claims, and involves 3 distinct investment properties. ROA 1479, West Coast SAC; ROA 902, Salvation TAC. Additionally, the parties are not the same or substantially identical (Farmland Irr. Co., v. Dopplmaier, supra, 48 Cal.2d at 215; Gregg v. Superior Court (1987) 194 Cal.App.3d 134, 137); this action involves misrepresentations made in the marketing and sale of 4 investments while the Missouri Actions involves misrepresentations made in the purchase and sale of real property in Missouri; there are claims in this action, including violations of the California Corporations, Civil and Penal Codes, that will not be resolved in the Missouri Action; there is no trial date set in the Missouri Action (ROA 1997, Lopez Decl., Ex. F [“By agreement of the parties, the cause remains stayed until Jan. 23, 2023 under the same terms and conditions set forth in the Court?s (sic) prior order. By Jan. 23, 2023, the parties shall submit a joint proposed scheduling order and the parties shall also submit available dates for a 15-day jury trial during the time frame of mid-May 2023 through June 2024.”]); and staying this case is calculated to minimize cooperation and/or coordination among and between the parties in both actions regarding discovery and depositions, resulting in duplicative discovery.

Moreover, the Court has previously heard and rejected TwinRock’s argument that Intervening Plaintiffs have harmed MO Murrayfield and delayed the Missouri Action. ROA 1980, 12/21/2022 MO, p. 5 [“although TwinRock Defendants provide a list of ways Intervenors have adversely affected Murrayfield, closer examination of the reasons does not support TwinRock Defendants’ position. …”]

Importantly, many of the allegations regarding bad actions by TwinRock that TwinRock contends support a stay have been alleged by all plaintiffs, including Intervenors, and M&M was already aware of them. ROA 1977, Supp. Opp., p. 3. M&M has represented that those facts are relevant to its defenses in this action and the Missouri Action and that it is entitled to conduct discovery on them in both actions. As such, TwinRock has not adequately explained how duplication will be avoided by staying this action when M&M, as well as other parties, are likely to seek the same discovery in both actions.

Accordingly, TwinRock has not demonstrated that a stay, in full or in part, is warranted at this time.

The Southside Defendants Joinder is also DENIED. As an alternative to a complete stay, Southside Defendants requested that the Court, on its own motion, bifurcate and stay the derivative causes of action against Southside Defendants. The Court declines to do so. If Southside Defendants wish to seek bifurcation and a partial stay, Southside Defendants should file an appropriate motion.

Similarly, the Court DENIES M&M’s request to the Court to consider, on its own motion, whether to consolidate this action with the Missouri Action. If M&M seeks consolidation of this action and the Missouri Action, then M&M must file an appropriate motion to do so.

The denials herein are all made without prejudice. The parties may file new motions based on changed circumstances, if warranted.

The Court GRANTS West Coast Plaintiffs’ unopposed Request for Judicial Notice (ROA 1982) of filings in the Missouri Action.

Motion to Seal.

TwinRock seeks to seal certain records that contain the settlement agreements that were not approved in this matter. ROA 1706. Specifically, TwinRock seeks to seal (1) Consolidated and Amended Objection of Five Members of MO Murrayfield LLC to Salvation Investment LLC’s Proposed Settlement and West Coast Lending, Inc.’s Proposed Dismissal; Request For Attorney’s Fees; and (2) Declaration of Daniel A. Rozenblatt in Support of Amended Objection of Five Members of MO Murrayfield LLC to Proposed Settlement and Proposed Dismissal (collectively, the Documents). These Documents contain the unredacted versions of the settlement agreements that were not approved in this matter. ROA 1667, Redacted Documents; ROA 1729, Unredacted Documents.

The Court previously granted a request to seal the same records. ROA 1742, 9/21/2022 Minute Order.

However, after reconsideration, the Court has determined that there is no overriding interest to seal the records, or prejudice if the records are not sealed. The Court has not approved the settlement agreements and the settlement agreements should be disclosed to all members of the investment properties at issue. Further, at the time approval of the settlements was being considered, the confidentiality agreements in the settlement agreements appeared to be used to hide the unfavorable terms, e.g. dismissals with prejudice, from nonmanaging members or shareholders. The settlement agreements have also been pointed to as evidence of TwinRock’s self-dealing and conflicts with MO Murrayfield, and may be evidence in this case or the Missouri Action.

Consequently, the Motion to Seal is DENIED. The prior order sealing the settlement agreements is vacated.

The Court notes that there is a pending Motion to Seal the same records that is set to be heard on January 19, 2023. ROA 1765. Given the ruling in this matter, the Court vacates the hearing on January 19, 2023.

TwinRock is ordered to give notice.