Judge: H. Jay Ford, III, Case: 22SMCV02665, Date: 2023-02-07 Tentative Ruling

Case Number: 22SMCV02665    Hearing Date: February 7, 2023    Dept: O

Case Name:  Ghilzean v. Huber, et al.

SUBJECT:                 MOTION TO CHANGE VENUE

MOVING PARTY:   Defendants James Huber, Christopher Dryden, Global Legal Law Firm LLP, Gracehollandcannon, LLC, CRD Legal Services Inc.

RESP. PARTY:         Plaintiff Michael Ghilezan

TENTATIVE RULING

            Defendants’ Motion for Change of Venue is GRANTED. Defendants’ request for sanctions is DENIED. 

Defendants’ Evidentiary Objections—SUSTAIN as to Objection Nos. 10 (“Mr. Levaton stated that he was fine…myself agreed), 11, 12 (“Our partnership agreement was formed in Los Angeles”), 18, 22, 23, 24, 27, 47, 55 and OVERRULE as to Objection Nos. 1-10 (“On March 20, 2018, Huber and Dryden traveled…that Mr. Levaton would refer to me as partner of Global.”), 12 (“Huber and Dryden further affirmed…shook hands to bind our deal”), 13-17, 19-21, 25-26, 28-46, 48-54, 56-58. 

I.  Applicable Law

“Except as otherwise provided by law and subject to the power of the court to transfer actions or proceedings as provided in this title, the superior court in the county where the defendants or some of them reside at the commencement of the action is the proper court for the trial of the action… Subject to subdivision (b), if a defendant has contracted to perform an obligation in a particular county, the superior court in the county where the obligation is to be performed, where the contract in fact was entered into, or where the defendant or any defendant resides at the commencement of the action is a proper court for the trial of an action founded on that obligation, and the county where the obligation is incurred is the county where it is to be performed, unless there is a special contract in writing to the contrary.”  CCP §395(a). 

Pursuant to CCP §395.2, “[i]f an unincorporated association has filed a statement with the Secretary of State pursuant to statute, designating its principal office in this state, the proper county for the trial of an action against the unincorporated association is the same as it would be if the unincorporated association were a corporation and, for the purpose of determining the proper county, the principal place of business of the unincorporated association shall be deemed to be its principal place of business in this state listed in the statement.” 

“The general rule is that venue is proper only in the county of the defendant's residence. It is well established that a defendant is entitled to have an action tried in the county of his or her residence unless the action falls within some exception to the general venue rule.”  Williams v. Superior Court for County of Contra Costa (2021) 71 Cal.App.5th 101, 108 (quoting Brown v. Sup.Ct. (C.C. Myers, Inc.) (1984) 37 Cal.3d 477, 488) (plaintiff’s allegation of physical ailment as a result of harassment claim based on emails did not qualify as “injury to person” under CCP §395(a); defendant therefore entitled to transfer of the action to her county of residence). 

“Thus, the right of a plaintiff to have an action tried in a county other than that of the defendant's residence is exceptional. If the plaintiff would claim such right he must bring himself within the exception.  Moreover, when the plaintiff contends that the case fits within an exception to the general rule that venue is proper in the county of defendant's residence, any ambiguities in the complaint must be construed against the plaintiff towards the end that the defendant will not be deprived of the right to a trial in the county of his or her residence.”  Id. at 109.

Venue must be proper as to all causes of action and defendants joined. If not, any defendant is entitled to seek a change of venue: “In cases with mixed causes of action, a motion for change of venue must be granted on the entire complaint if the defendant is entitled to a change of venue on any one cause of action.”  Brown v. Sup.Ct. (C.C. Myers, Inc.) (1984) 37 Cal.3d 477, 488.  Where the main relief sought is personal, the action is transitory. Where the main relief relates to rights in real property, the action is local.  Id.

II.  Application to Facts

As moving party, Defendants have the burden of demonstrating that the plaintiff's venue selection is not proper under any of the statutory grounds.  See Fontaine v. Supr. Ct. (2009) 175 Cal.App.4th 830, 836.  Defendants have the burden of “negating the propriety of venue as laid on all possible grounds”: i.e., it must show that the county selected by plaintiff was not the place of injury or contracting, etc.  See Karson Indus., Inc. v. Sup.Ct. (Triangle Auto Sales, Inc.) (1969) 273 Cal.App.2d 7, 8-9. 

            Defendants argue actions for involuntary dissolution must be brought in the county in which the corporation has its principal executive office, citing Corporations Code §§177 and 1800.  Per Corp. C. §177, “proper county” means “where the principal office of the corporation is located or, if the principal office of the corporation is not located in this state, or the corporation has no such office, the County of Sacramento.”  Per Corp. C. §1800, “[a] verified complaint for involuntary dissolution of a corporation on any one or more of the grounds specified in subdivision (b) may be filed in the superior court of the proper county…”

Plaintiff seeks to dissolve a partnership, not a corporation, pursuant to Corporations Code §16801(5).  Defendants fail to cite any provision of the Uniform Partnership Act pertaining to venue of an action for dissolution of a partnership similar to Corp. C. §1800. 

            Defendants show none of the Defendants reside in LA County or maintain their principal offices in LA County. Defendants show all individual defendants reside in San Diego County and the entity defendants maintain their principal offices in San Diego County.  This evidence argument negates the propriety of general venue based on the Defendants’ residence under CCP §395. 

However, Plaintiff alleged venue in LA County is based on where “Defendants’ acts and conduct giving rise to the Complaint” took place and the location of Defendant Global’s Los Angeles office.  See Complaint, ¶16.  Plaintiff argues in opposition that venue is proper under CCP §395 in LA County, where the partnership agreement was entered into and performed.  Pursuant to Rudnick, an action for dissolution of a partnership is a “transitory action based on the partnership agreement and controlled as to venue by the provisions of section 395 of the Code of Civil Procedure.”  Rudnick, supra, 140 Cal.App.2d at 264. 

Under CCP §395, “if a defendant has contracted to perform an obligation in a particular county, the superior court in the county where the obligation is to be performed, where the contract in fact was entered into, or where the defendant or any defendant resides at the commencement of the action is a proper court for the trial of an action founded on that obligation, and the county where the obligation is incurred is the county where it is to be performed, unless there is a special contract in writing to the contrary.”  Code Civ. Proc., § 395.

            “The basic rule is that the contract is deemed made at the place where the last act necessary for its effectiveness is done.”  3 Witkin, Cal. Proc. (6^th ed. 2022), Actions §916.  “An oral agreement within the statute of frauds is nevertheless a contract, and the place of making is where the oral agreement takes place, not where the written memorandum is prepared or delivered.  The situation is quite different, however, where an oral agreement (either within or outside the statute of frauds) is superseded by a written integration. By virtue of the parol evidence rule the writing is the contract, and the place of making is the place where the writing is executed.”  Id.

Defendants submit a copy of the Amendment to the Partnership Agreement executed by Huber, Dryden and Ghilezan making Ghilezan a limited partner of Global.  See Dec. of C. Dryden, Ex. 4, Partnership Amendment Agreement dated April 1, 2018. The Amendment contains an integration clause.  Id. at Sec. 5, ¶7.  As such, the place where the Partnership Agreement was made is where it was executed.  Likewise, the place of performance is where the contract was executed, absent a special contract in writing to the contrary. 

However, Defendant Huber testifies in his declaration in opposition to Plaintiff’s preliminary injunction that the April 1, 2018 Amendment was executed by himself, Dryden and Ghilezan at Global’s office in Solano Beach, which is located in San Diego County.  See Dec. of J. Huber ISO Opposition to Plaintiff’s Application for Preliminary Injunction, ¶18.  Huber testifies that witnesses were present at the signing.  Id.  On reply, Defendants submit the declaration of Dryden corroborating Huber’s testimony that the April 1, 2018 Amendment making Ghilezan a partner was executed in Global’s office in Solana Beach, San Diego County.  See Dec. of C. Dryden filed on 1-31-23 in Reply, ¶2.

Plaintiff’s declaration fails to mention that he signed a written Partnership Agreement or that one exists between the parties.  Plaintiff claims he accepted the offer to merge his firm with Global in LA County on March 20, 2018 and concludes “our partnership agreement was formed in Los Angeles.”  See Dec. of M. Ghilezan ISO Opposition to Motion to Change Venue, ¶10.  Plaintiff’s declaration does not address or rebut the Defendants’ evidence that an Amendment to the Partnership Agreement making Ghilezan a limited partner at Global was executed after March 20, 2018 on April 1, 2018 and that the Amendment contains an integration clause. 

Defendants negate the only grounds for venue in Los Angeles County presented by Plaintiff, i.e. CCP §395 based on contract.  Plaintiff fails to demonstrate that Los Angeles County is the proper venue for this action on some other ground.  Defendants’ Motion for Change of Venue is GRANTED. 

III. Sanctions are denied.

            “In its discretion, the court may order the payment to the prevailing party of reasonable expenses and attorney's fees incurred in making or resisting the motion to transfer whether or not that party is otherwise entitled to recover his or her costs of action. In determining whether that order for expenses and fees shall be made, the court shall take into consideration (1) whether an offer to stipulate to change of venue was reasonably made and rejected, and (2) whether the motion or selection of venue was made in good faith given the facts and law the party making the motion or selecting the venue knew or should have known. As between the party and his or her attorney, those expenses and fees shall be the personal liability of the attorney not chargeable to the party. Sanctions shall not be imposed pursuant to this subdivision except on notice contained in a party's papers, or on the court's own noticed motion, and after opportunity to be heard.”  CCP §396(b).

The attorney, rather than the client, is charged with knowledge of the venue rules. Hence, the attorney is personally liable for payment of such sanctions to the other party and “[a]s between the party and … attorney, those expenses and fees shall be the personal liability of the attorney not chargeable to the party.”  CCP § 396b(b).

In deciding on fees, the court considers (1) whether an offer to stipulate to change of venue was reasonably made and rejected; and (2) the party's “good faith”—given the facts and law known to such party—in making the motion or selecting the venue originally.  CCP § 396b(b); Mission Imports, Inc. v. Sup.Ct. (Monterey Bay Co., Inc.) (1982) 31 Cal.3d 921, 931-932.

            Defendants do not submit any evidence that they attempted to obtain a stipulation to change venue.  However, counsel met and conferred with Plaintiff’s counsel in an effort to resolve the venue dispute.  See Dec of P. Tencer ISO Reply, Ex. 1.  Plaintiff’s counsel responded to Defense counsel’s email in a rude and unprofessional manner. 

Plaintiff’s counsel maintains venue was proper, because the partnership was formed in LA County and Defendants’ alleged fraud was directed at LA County.  Id.  Plaintiff’s counsel knew or should have known that Ghilezan became a limited partner of Global pursuant to the April 1, 2018 Amendment to the Partnership Agreement, which was executed after the March 2018 meeting in LA County.  He also knew or should have known that the Amendment contained an integration clause, and that it was executed in Solano Beach in San Diego County.  Yet, the opposition papers make no mention of the April 1, 2018 Amendment. 

However, Defendants fail to adequately respond to Plaintiff’s objection that fees are not recoverable under Trope v. Katz (1995) 11 Cal.4^th 274.  Defendants are not appearing in pro per and they have hired outside counsel. However, Defendants’ request for sanctions is based on the declaration Joshua Herndon, who is an associate attorney at Defendant Global Resources, LLP.  Herndon testifies that he worked 8 hours on the motion at a rate of $350/hr. 

Defendants fail to address whether appearance through outside counsel would allow them to recover fees based on work performed by one of their own associates.  A pro per litigant who pays an attorney to assist on a case may recover fees based on those payments, even if that attorney is not counsel of record.  See Mix v. Tumanjan Dev. Corp. (2002) 102 Cal.App.4th 1318, 1324–1325; West Coast Development v. Reed (1992) 2 Cal.App.4^th 693, 706 ($5000 fees incurred by pro per litigant to attorney who was not attorney of record were recoverable as 128.5 sanctions). 

Here, the reverse situation is presented.  Defendants have hired outside counsel to represent them as attorneys of record, but the declaration in support of the requested sanctions attests to work performed by Defendants’ own associate.  Based on Trope and Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4^th 44, 93-95, Defendants are not entitled to recover those fees incurred by its own associate on this motion to change venue.  See Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4^th 44, 93-95 (plaintiff who was a partner at law firm that represented him pursuant to written retainer agreement could not recover those fees incurred in the action that were attributable to him; such representation amounted to self-representation).  Defendants’ hiring of outside counsel does not change the outcome of the analysis.  Defendants have only sought to recover fees attributable to their own associate, which are not recoverable pursuant to Trope and Gorman. 

Defendants’ request for sanctions is DENIED.  The Defendants’ evidence in support of the amount of sanctions requested shows Defendants’ own associate, not outside counsel, performed the work on this motion to change venue.