Judge: H. Jay Ford, III, Case: 23SMCV01797, Date: 2024-12-10 Tentative Ruling

Case Number: 23SMCV01797    Hearing Date: December 10, 2024    Dept: O

  Case Name:  Simon v. Anastasia Beverly Hills, LLC, et al.

SUBJECT:                 MOTION FOR SUMMARY JUDGMENT

MOVING PARTY:   Defendants Anastasia Beverly Hills, LLC and Anastasia Soare

RESP. PARTY:         Plaintiff Arnold Simon

TENTATIVE RULING

            Defendants Anastasia Beverly Hills, LLC and Anastasia Soare’s Motion for Summary Judgment is DENIED. Defendant failed to meet its burden to show that Plaintiff cannot establish one or more to the claims asserted in the complaint.

, LLC.his ory relief that Plaintiff is a shareholder ve Complaints causes of action, nor that no disputed facts exist as to the causes of action. If Defendant had met their burden to show not triable issues of fact exist, Plaintiff meets their burden to show triable issues of fact as to the causes of action within the Complaint.

            Plaintiff Arnold Simon’s Objection is OVERRULED.

REASONING

            Defendants Anastasia Beverly Hills, LLC (“ABH”) as successor to A.A.S Cosmetic Company, Inc. (“AAS”) and Anastasia Soare’s (“Soare”) (collectively “Defendants”) move for summary judgment of Plaintiff Arnold Simon’s (“Simon”) Complaint for Declaratory Relief and Violation of Corp. Code § 1601. In his complaint, Simon seeks a judicial declaration of that Simon continues to own a 50% ownership interest in Anastasia Beverly Hills and an order compelling Defendant’s to make the books and records available for inspection under Corporations Code §1604. (See Compl., p. 5:23–26.)

“To allege facts sufficient to state a cause of action for declaratory relief, the plaintiff must allege two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.” Childhelp, Inc. v. City of Los Angeles (2023) 91 Cal.App.5th 224, 235, as modified (May 5, 2023), [internal citations omitted].) “The “actual controversy” language in Code of Civil Procedure section 1060 encompasses a probable future controversy relating to the legal rights and duties of the parties.” (Environmental Defense Project of Sierra County v. County of Sierra (2008) 158 Cal.App.4th 877, 885, as modified (Jan. 9, 2008).)

            Defendants argue that Simon’s claims are barred by the terms of the 2000 Termination Agreement (“Termination Agreement”) entered into by the Defendants and Simon on 9-1-2000, in which A.A.S and Soare would buy Simon out for the sum of $1,487,155. (SSUF, ¶¶ 3, 18; Soare Decl., ¶ 6, Ex. 4 (“Termination Agreement”).)

            Under the Termination Agreement, A.A.S. and Soare were required to pay Simon $1,487,155, plus interest, by 12-31-04. (SSUF, ¶¶ 4, 19; Termination Agreement, at §C.1; Soare Decl., ¶ 5, Ex. 3 (“Security Agreement”).) The Termination Agreement separately provided:

Within thirty (30) days after all of the principal and interest owing to Simon under the Demand Note has been paid in full, Simon shall resign from the Board of Directors of AAS and from any position as an officer of AAS, and shall convey to Soare without further consideration all the shares of stock in AAS then held by Simon.”

(SSUF, ¶¶ 5, 20; Termination Agreement, at § C.3.)

            Defendants argue by the express terms of the Termination Agreement, Simon’s resignation and stock transfer was not conditioned on a specific payment date, but strictly upon the payment of the principal and interest owed to Simon. Defendants argue and provide evidence that by 1-25-06 Defendants paid Simon a total of $1,489,740.42, in which Defendants argue was the total due under the agreement including interest, ultimately abiding by the Amendment payment schedule. (SSUF, ¶ 15; Soare Decl., ¶¶ 9–10, Ex. 7.) However, Defendants evidence does not show that the total of $1,489,740.42 is the total principle, plus interest, owed to Simon. Thus, the Court cannot find as a matter of law that Defendants have paid Simon in full to trigger the express terms if the termination agreement. Moreover, Simon provides admissible evidence from his certified public accountant and White, Zuckerman, Warsavsky, Luna, & Hunt LLC Partner, Jackie Adams-Ings (“JAI”), stating that Defendants remain indebted to Simon in the amount of $229,507.07 under the Termination Agreement, with default interest accrued through 12-31-24. (SSUF, ¶¶ 14–15; JAI Decl., ¶¶ 11–13, Ex. B.)

In addition, Defendants appear to acknowledge there are disputed issues of fact regarding Defendant’s performance of the amendment to the March 19, 200 Termination Agreement (“Amendment”), and the authenticity and validity of the purported assignment of Simons shares to Soare dated March 19, 2001. Simply put, Defendants fail to show Simon ever conveyed his shares of stock in AAS to Soare in accordance with the terms of the Termination Agreement, or that his ownership of those share was otherwise terminated. Based on the evidence presented the Court cannot declare as a matter of law Simon does not own a 50% interest in AAS. 

            Defendants next argue that Simon’s claims are barred by the four-year breach of contract claim Statute of limitations since Simon’s claims, although styled as one for declaratory relief, arise from a breach of contract—the Termination Agreement. (See Code. Civ. Proc. § 337 [four-year statute of limitations for actions upon “any contract, obligation or liability founded upon an instrument in writing”].) “The statute of limitations that applies to an action is governed by the gravamen of the complaint, not the cause of action pled.” (Professional Collection Consultants v. Lujan (2018) 23 Cal.App.5th 685, 691, as modified (May 25, 2018).) [“Thus, if a complaint alleges acts of actual and constructive fraud but frames its cause of action as one for breach of fiduciary duty, the statute of limitations for fraud applies.”]

Defendants’ reliance on the stature of limitations for breach of contract is misplaced. In each case relied on by Defendants, the complaints specifically alleged the existence of an oral agreement. Here, the Complaint does not allege the existence or breach of any agreement, and only prays for a declaration that Simon still owns his 50% shares within ABS/A.A.S. As stated in Bendien, the character of the action is determined by the allegations within the complaint, and thus since no agreement is alleged in the Complaint, the Court cannot extend the allegations in the Complaint to include the existence of a contract thus making the gravamen of the Complaint a breach of contract cause of action. (See Professional Collection Consultants, supra, 23 Cal.App.5th at p. 691.) 

Indeed, under California law, a cause of action based on a corporation's failure to recognize a shareholder's status accrues when the shareholder has knowledge that the corporation has denied the shareholder's rights to attend meetings, vote, share in dividends, or otherwise participate in its affairs. See Maguire v. Hibernia Savs. & Loan Soc'y, (1944) 23 Cal.2d 719; Schneider v. Union Oil Co., (1970) 6 Cal.App.3d 987, 993–94; Yenidunya Investments, Ltd. v. Magnum Seeds, Inc. (9th Cir. 2014) 562 Fed.Appx. 560, 561. Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 559 (“[I]f lapse of time can bar an action by a member or stockholder to establish his interest in a corporation, the statutory period does not commence to run until the stockholder has knowledge or notice that his rights are denied or that his status is repudiated or controverted by the corporation.... The underlying theory is that a corporation holds its property in trust for the benefit of its shareholders and occupies a fiduciary position with respect to them; as a result the shareholder is entitled to assume that the corporation will not assert any adverse claim against him.”