Judge Holly J. Fujie, Case Number: 20STCP04290, Date: 2024-11-15 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

This action was filed in December 2020. On March 16, 2023, Plaintiff David Seyde (“Seyde”) filed the operative Fifth Amended Complaint (“5AC”) alleging six causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) breach of fiduciary duty; (4) fraud; (5) intentional interference with contractual relations; and (6) aiding and abetting breach of fiduciary duty. The fifth and sixth causes of action are asserted only against NTGS Acquisition, LLC (“NTGS”).

On July 1, 2022, Regency Outdoor Advertising, Inc. (“Regency”) and Brian Kennedy (“Brian”)[1] filed a cross-complaint against Seyde and his company, Porter 24, LLC, asserting nine claims: (1) breach of fiduciary duty; (2) breach of implied covenant of good faith and fair dealing; (3) misappropriation of trade secrets; (4) common law right of publicity; (5) statutory misappropriation of name and likeness; (6) trademark infringement; (7) intentional interference with prospective economic relations; (8) unfair business practices; and (9) unjust enrichment.

On or about August 12, 2024, NTGS filed a Motion for Summary Judgment or in the Alternative Motion for Summary Adjudication (the “MSJ”), seeking an order granting summary judgment as to the 5AC in its entirety on the basis that the causes of action alleged by Seyde against NTGS lacks merit. In the alternative, NTGS moves for summary adjudication of the causes of action for intentional interference with contractual relations as well as for aiding and abetting breach of fiduciary duty. Seyde filed an opposition to the MSJ on November 1, 2024, and NTGS filed a reply on November 8, 2024.

On August 15, 2024, Brian filed a Motion to Compel Further Responses to Requests for Admission, Set One, Numbers 1, 9, 8, 12 and 13 (“RFAs Motion”) and a Motion to Compel Further Responses to Form Interrogatory No. 17.1 (“FIs Motion”). On November 1, 2024, Seyde filed his opposition to the RFAs Motion and to the FIs Motion. No reply has been filed.

In his opposition to the MSJ, Seyde requests judicial notice of documents in the related matter, Kennedy, et. al v. Kennedy, et. al., Case Number 18STCP02617 filed in the Los Angeles Superior Court. The Court takes judicial notice of the records’ existence, but not of the truth of the assertions made within. (Evid. Code, § 452(c), (d); Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

NTGS objects to portions of the declarations of Robby S. Naoufal and Seyde submitted in support of Seyde’s opposition to the MSJ. The Court declines to rule on the objections as the matters objected to are not material to the Court’s disposition of this motion. The objections, however, are preserved. (Code Civ. Proc. § 437c(q) [“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.”].)

As to NTGS’s objections to Seyde’s Request for Judicial Notice, the Court takes judicial notice only of the existence of the referenced records, but not as to the truth of the assertions made therein.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP Section 437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

On April 1, 2017, Brian, Drake Kennedy (“Drake”), Stephanie Kennedy and Seyde (on behalf of themselves and all relevant entities in which they had an ownership interest) settled a prior lawsuit through mediation and memorialized the terms in a confidential settlement agreement entitled “Binding Term Sheet” (“BTS”), in which the parties agreed to sell the assets then owned by Regency and its affiliates (the “Regency Companies”), and all real properties jointly owned by Drake and Brian. (NTGS’s Separate Statement of Undisputed Facts in Support of Motion for Summary Judgment [“SSUF”] 3.) Pursuant to the terms of the BTS, Seyde was to receive a percentage of the sale price for certain of the Regency Companies’ assets and to be paid $12,500 per month until the assets were sold. (SSUF 4.) On October 22, 2018, Drake filed an action in the Los Angeles Superior Court, which resulted in the appointment of a receiver for the limited purpose of selling the assets of the Regency Companies (the “Assets”) pursuant to the terms of the BTS. (SSUF 5.)

In 2020, NTGS became involved in the potential purchase of the Assets through the receivership process, during which NTGS conducted due diligence, including reviewing documents related to the receivership action and the history between Drake, Brian and the Regency Companies. During this process, NTGS became aware of the obligations owed to Seyde under the BTS, including the receivership order requiring the sale of the assets to be consistent with the terms of the BTS, and the requirement to pay Seyde his compensation under the BTS. (Seyde’s Additional Material Facts in Response to NTGS’S Separate Statement [“AMF”] 22-25.)

On December 27, 2020, Brian and NTGS entered into an Asset Purchase Agreement, pursuant to which NTGS agreed to purchase a portion of the assets at issue. (AMF 30-31.) On January 25, 2021, Brian and Drake filed under seal a Joint Stipulation and Settlement Agreement (the “Settlement Agreement”), which the court approved the same day. (SSUF 8.) The Settlement Agreement completed the restructuring of the sale process, providing Drake with his share of the purchase price, seven specified real property assets, and various cash distributions, while making no provision for payment of Seyde’s interests under the BTS. (AMF 47.) On February 5, 2021, Seyde learned through a public announcement that a sale of the Assets to NTGS had closed, even though no public court order had approved such a sale. (AMF 49.)

Seyde now contends that through Drake and Brian’s Settlement Agreement, he has been completely deprived of his contractually guaranteed share of the sale proceeds under the BTS, and that to date, Seyde has not received any funds from the sale proceeds arising from the BTS that he was to be paid at closing. As to NTGS, Seyde asserts that NTGS’s conduct enabled the settlement between Brian and Drake, which was intended to circumvent the receivership – and thus the obligation to pay Seyde under the BTS. On that basis, Seyde asserts, as against NTGS, causes of action for intentional interference with contractual relations and aiding and abetting breach of fiduciary duty are valid.

“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55, as modified (Sept. 23, 1998) (quoting Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126).)

Here, Seyde fails to provide any evidence to support the third element of intentional interference with contractual relations – NTGS’s intentional acts designed to induce a breach or disruption of the contractual relationship. NTGS served special interrogatories, form interrogatories and requests for production of documents on Seyde, asking for facts to support Seyde’s specific allegations against NTGS. Seyde served responses that neither establish a basis for liability as against NTGS nor point to evidence necessary to establish Seyde’s claims against NTGS. (SSUF 24, 51, 78, 20. 47, 74.) Seyde mainly asserts that NTGS played a pivotal role in financing and closing the sale of the Assets, despite possessing knowledge that doing so would result in breaches of the BTS, and that NTGS’s agreement to purchase a portion of the Assets was crucial to Brian and Drake’s settling between themselves and circumventing the receivership. (AMF 22-34.) No agreement executed by NTGS, however, makes reference to Seyde, or to agreements between NTGS and any party to the BTS to interfere with performance of the BTS. (SSUF 14, 15, 41, 42, 68, 69.) To the contrary, NTGS received express written assurances from Brian’s counsel that any liabilities or payments owed, including those to Seyde, would be the responsibility of Brian. (SSUF 13, 14; Richheimer Decl., ¶¶ 12-14, 16-18; Exh. KC-S-2; Exh. KC-B.)

Thus, while NTGS may have had knowledge or awareness of Brian’s obligations to Seyde under the BTS during NTGS’s conduct of due diligence, there is no evidence of a triable issue of material fact on the issue of whether NTGS intentionally prevented Brian’s performance under the BTS. NTGS was not a party to the Settlement Agreement. Merely financing a portion of the sale of the Assets does not amount to inducing the breach or disruption of the contractual relationship between Seyde and Brian. (Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199 Cal.App.4th 1132, 1144–1145 (“Thus, a party ‘cannot avoid summary judgment by asserting facts based on mere speculation and conjecture, but instead must produce admissible evidence raising a triable issue of fact.’”) (internal citation omitted). In other words, based on the evidence submitted, no reasonable juror could conclude that NTGS did anything to induce Brian and Drake to evade their obligations to Seyde under the BTS.

The Court thus finds there is no evidence to support NTGS’s wrongful interference claim. Accordingly, NTGS’s motion for summary judgment as to the fifth cause of action for intentional interference with contractual relations is GRANTED.

The elements of a claim for aiding and abetting a breach of fiduciary duty are: (1) a third party’s breach of fiduciary duties owed to plaintiff; (2) defendant’s actual knowledge of that breach of fiduciary duties; (3) substantial assistance or encouragement by defendant to the third party’s

breach; and (4) defendant’s conduct was a substantial factor in causing harm to plaintiff. (Nasrawi

Seyde contends that the evidence suggests that Brian breached his fiduciary duties by structuring a sale that circumvented the BTS and by failing to ensure that Seyde received his rightful share of the proceeds as stipulated in the BTS. In support of his claim against NTGS, Seyde points out that NTGS conducted extensive due diligence, reviewing documents related to

the receivership action and the history between the parties. (AMF 22.) Seyde further contends that NTGS was directly involved in negotiating the terms of the Asset Purchase Agreement,

including explicit discussions about liabilities owed to Seyde. (AMF 22-25; Naoufal Decl. ¶¶ 10-

Seyde presents no evidence, however, that NTGS knew or should have known that agreeing to provide partial financing for Brian’s purchase of the Assets and/or entering into the Asset Purchase Agreement would undermine Brian’s fiduciary obligations under the BTS. To the contrary, the record demonstrates that (1) NTGS was a third party buyer of the billboard assets and participated in an arms-length transaction to buy the Assets [SSUF 12, 39, 66]; (2) NTGS was given assurances that any liabilities attached to the Assets including any payment obligations owed would stay with Brian [SSUF Nos. 13, 14; Richheimer Decl., ¶¶ 12-14, 16-18; Exh. KC-S-2; Exh. KC-B.) (Stueve Bros. Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 324.) “[A]iding-abetting focuses on whether a defendant knowingly gave ‘substantial assistance’ to someone who performed wrongful conduct, not on whether the defendant agreed to join the wrongful conduct.” ’ ”].) Thus, mere agreement by NTGS to purchase a portion of the Assets does not equate to assistance to a purported wrongful conduct by Brian.

The Court finds there is no evidence to establish that NTGS provided assistance or encouragement to aid in Brian’s breach, which Seyde purports to have occurred. Accordingly, Seyde’s cause of action asserted against NTGS for aiding and abetting a breach of fiduciary duty fails as a matter of law. Therefore, NTGS’s MSJ as to this cause of action is GRANTED.

A motion to compel further responses may be brought based on responses to requests for admission (“RFAs”) that: (1) provide evasive or incomplete answers; or (2) make unmeritorious or overly-generalized objections. (Code Civ. Proc., § 2033.290(a).)

A motion to compel further responses to form or specially prepared interrogatories may be brought if the responses contain: (1) answers that are evasive or incomplete; (2) an unwarranted or insufficiently specific exercise of an option to produce documents in lieu of a substantive response; or (3) unmerited or overly generalized objections. (Code Civ. Proc., § 2030.300(a).)

Motions to compel further responses must always be accompanied by a meet-and confer-declaration (per Code Civ. Proc., § 2016.040) demonstrating a “reasonable and good faith attempt an informal resolution of each issue presented by the motion.” (Id., §§ 2030.300(b), 2031.310(b)(2), 2033.290(b).) They must also be accompanied by a separate statement containing the requests and the responses, verbatim, as well as reasons why a further response is warranted. (Cal. Rules of Court, rule 3.1345(a).) The separate statement must also be complete in itself; no extrinsic materials may be incorporated by reference. (Id., rule 3.1345(c).)

Here, based on the declarations of Allyssa J. Rose in support of the motions to compel further responses, the Court finds that the meet and confer requirements have been met.

In February 2024, Brian served RFAs upon Seyde, containing 13 requests. (Declaration of Allyssa Rose ISO RFAs Motion [“Rose RFAs Decl.”], ¶4, Ex. R-3.) On March 26, 2024, Seyde served objection-only responses. (Id., ¶5, Exs. R-5, R-6.) On July 2, 2024, Seyde’s counsel provided supplemental responses. (Id. at ¶8, Ex. R-8.) Kennedy’s counsel sent a meet and confer letter on August 2, 2024, explaining that Seyde’s responses to RFA Nos. 1, 8, 9, 12, and 13 were deficient. (Id. at ¶10, Ex. R-11.) On August 9, 2024, Seyde’s counsel responded, stating that they refused to supplement the responses to these Requests any further, standing firmly on their position that the responses were complete. (Id. at ¶11, Ex. R-12.) Brian now files the RFAs Motion, asking the Court to compel Seyde to respond, in full, to RFA Nos. 1, 8, 9, 12, and 13.

In February 2024, Brian also served upon Seyde Form Interrogatories-General, Nos. 1 and 17.1, which correlates with the RFAs. (Declaration of Allyssa Rose ISO FIs Motion [“Rose FIs Decl.”], ¶4, Exs. R-3, R-4.) On March 26, 2024, Seyde served objection-only responses. (Id., ¶5, Exs. R-5, R-6.) On July 2, 2024, Seyde’s counsel provided supplemental responses. (Id. at ¶9, Exs. R-9, R-10.) Brian’s counsel sent a meet and confer letter on August 2, 2024, explaining why Seyde’s responses to FI No. 17.1 was deficient. (Id. at ¶10, Ex. R-11.) On August 9, 2024, Seyde’s counsel responded, refusing to supplement the responses any further. (Id. at ¶11, Ex. R-12.) Brian now files the FIs Motion, asking the Court to compel Seyde to respond, in full, to FI No. 17.1 as it relates to Seyde’s unqualified admissions to RFA Nos. 1 and 4 through 8.

In the RFAs Motion, Brian contends that the RFAs have been tailored specifically to the matters of this litigation and to seek Seyde’s admissions regarding his obligations under the BTS that Seyde alleges were breached. More specifically, the RFAs at issue pertain to Seyde’s purported failure to perform his obligation of delivering the Luxe Asset to be sold as part of the sale of assets contemplated by the BTS.

In his opposition, Seyde asserts that he has properly denied the requests in the RFAs at issue and that no further response is necessary. Form Interrogatory No. 17.1 essentially asks for an explanation as to why any RFA was not admitted. Seyde contends that in his response, he explained the basis for his denials, with specific facts and supporting documents. As such, Seyde asserts that he has fully complied with the Code of Civil Procedure, sections 2030.210, and that no further response is required.

As reflected in the BTS, Seyde agreed to relinquish his rights in the Luxe asset to be sold as part of the sale of assets contemplated by that agreement. (Delaration of Robby S. Naoufal ISO Opposition to RFAs Motion [“Naoufal RFAs Decl.”], Ex. A at Ex. A § 2(A) [“DS [David Seyde], individually and through his Edge entities, to relinquish all rights to or claims with respect to the Luxe upon closing of such sale.”] (emphasis added).)

RFA No. 1 seeks an admission that “under the TERM SHEET [BTS], YOU [Seyde] agreed,

on behalf of EDGE, to deliver the LUXE ASSET to be sold as part of the sale of assets subject to

the TERMS SHEET [BTS].” (Naoufal RFAs Decl., Ex. F at no. 1.) Similarly, RFA No. 9 asks Seyde to admit that he “failed to deliver” the Luxe; and RFA No. 13 asks Seyde to admit that he “cannot deliver” the Luxe. (Id., at nos. 9 and 13.) The Court agrees with Seyde that RFA Nos. 1, 9 and 13 are vague and ambiguous with respect to the meaning of “deliver,” particularly because the BTS makes no reference to any party being required to “deliver” the Luxe. RFA No. 12 similarly seeks an admission that Seyde cannot comply with the BTS. On this basis, Seyde’s denials in RFA Nos. 1, 9, 12 and 13 are proper, since under the terms of the BTS, he was required to “relinquish” his claims to the Luxe, whereas the RFAs seek admissions to “deliver” the Luxe.

As for RFA No. 8, the request seeks an admission regarding compensation related to the Luxe from April 1, 2017 through January 31, 2021. Plaintiff contends that he never received compensation after July 2020 and on that basis, he denied the request, stating thus: “Deny as to any period after July 2020.” (Naoufal RFAs Decl., Ex. F at no. 8.) Seyde’s response also clarified that Plaintiff did not receive compensation after July 2020. The Court finds that the denial is justified. (CCP, § 2033.220 (requiring that the answer shall “[d]eny so much of the matter involved in the request as is untrue.”).

The Court, therefore, finds that with respect to the RFAs at issue, Seyde properly denied the requests. A motion to compel further responses cannot compel the admission of matters already denied. (Holguin v. Superior Court (1972) 22 Cal.App.3d 812, 821.) Brian cannot force Seyde to admit that which he denies in this lawsuit.

In Seyde’s response to the corresponding Form Interrogatory 17.1, Seyde stated, for each of the RFAs: (a) the number of the request; (b) the facts on which he based his denial; (c) the identity and information of the individuals with knowledge of those facts; and (d) the records (including Bates-stamped document citations) that support his responses, including a detailed showing that he fully complied with his obligations with respect to the Luxe and did everything possible to preserve its value throughout the sale process. (Naoufal FIs Decl. Ex. D at 17.1.)

In sum, the Court finds that there is no basis to compel further responses to the RFAs and FIs at issue. Accordingly, the RFAs Motion and the FIs Motion are DENIED. The Court exercises its discretion to decline to impose the monetary sanctions requested by both parties.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] The Court uses first names for persons with the same last name to avoid confusion. No disrespect is intended.