Judge Holly J. Fujie, Case 20STCV33773 2023-05-17 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.

MOVING PARTY: Plaintiff in 20STCV33773 and Defendant in 20STCV35819 Exposition Bar Group, LLC (“EBG”)

RESPONDING PARTY: Defendant in 20STCV33773 and Defendant in 20STCV35819 Daniel Salin (“Salin”)

This action arises out of two consolidated cases regarding a dispute over the management and control of a bar located in downtown Los Angeles. EBG’s operative first amended complaint in 20STCV33773 (the “FAC”) alleges: (1) conversion; (2) breach of fiduciary duty; (3) accounting; and (4) declaratory relief. Salin’s operative fourth amended complaint in 20STCV35819[1] (the “4AC”) alleges: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) intentional interference with prospective economic advantage; (4) defamation; (5) claim and delivery; (6) unfair competition; (7) declaratory relief; and (8) accounting.

EBG filed a motion for summary adjudication (the “Motion”) to the first and second causes of action alleged in the FAC and to the first through fourth and sixth causes of action alleged in the 4AC on the grounds that there are no triable issues of material fact as to these causes of action and EBG is entitled to judgment on these claims as a matter of law.

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.) California Code of Civil Procedure (“CCP”) section 437c, subdivision (c) requires the 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.)

A plaintiff moving for summary judgment or summary adjudication meets the burden of showing that there is no defense to a cause of action if the plaintiff has proved each element of the cause of action entitling them to judgment on that cause of action. (CCP § 437c, subd. (p)(1).) Courts liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of the opposing party. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the moving party has met its burden, the burden shifts to the opposing party 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.) The opposition papers must include a separate statement that responds to each of the material facts that the moving party claims to be undisputed. (CCP § 437c, subd. (b)(3).) If the opposing party disputes a fact, then the opposing party must reference supporting evidence. (Id.)

In support of the Motion, EBG provides evidence that Salin and Al Almeida (“Almeida”) hired Allen Matkins (“Matkins”) to draft offering documents (the “Offering Documents”) that were distributed to potential investors. (Separate Statement of Undisputed Material Facts (“UMF”) 1, 4.) The Offering Documents stated that Salin and Almeida would serve as the managers of EBG and that EBG sought to raise $600,000 in investor capital with an additional $50,000 contribution from Salin and Almeida, for a total of $700,000 to be used to fund the start-up and initial operating costs of the bar. (UMF 5-6.) The Offering Documents also set forth an estimation of how the investment capital would be used. (See id.)

Section 2.07(a) of EBG’s Operating Agreement (the “OA”) states that “No Member shall receive compensation for performing services on behalf of the Company without the prior written approval of the Managers, and a Majority-in-Interest of the Members.” (UMF 14.) Section 2.06 of the OA provides, “The Company shall reimburse the Managers and/or any Affiliate or other representative thereof for any and all costs and expenses incurred by such manager or such affiliate on behalf of the company that directly relate to the business and/or affairs of the company.” (Exhibit 2 at 267.) Section 2.09 allows for the removal of a manager under certain circumstances with the unanimous written consent of EBG members. (Exhibit 2 at 268.)

Salin paid himself around $225 per day to perform construction services between March 2015 through September 15, 2018 without receiving written approval and despite not having a contractor’s license. (See UMF 15-16, 21.) Between March 2015 through September 15, 2018, Salin withdrew $144,912.68 from EBG’s bank account. (UMF 23.) On June 17, 2019, all EBG members (with the exception of Almeida) agreed to remove Salin as a manager due to his use of EBG’s bank account for his personal expenses. (UMF 31.)

Drawing all inferences in the non-moving party’s favor, the Court finds that summary adjudication is inappropriate in light of the current state of the evidence. While EBG’s Motion relies on figures derived from Salin’s own accounting that he produced during discovery, both the FAC and 4AC also allege accounting claims that were not the subject of the Motion and have not yet been resolved.[2] As a result, there cannot be a clearly ascertainable amount found to have been owed to EBG as damages for its conversion and breach of fiduciary duty claims unless and until an accounting has been performed. Without a determination of damages, summary adjudication of these claims cannot be given. There is also a dispute regarding whether Almeida served as a member when Salin was removed as a manager, which precludes summary adjudication on the contract claims and unfair competition claim in Salin’s 4AC.[3]

With respect to the 4AC’s defamation and intentional interference with prospective economic advantage claims, Salin’s 4AC alleges that on or before June 17, 2019, members of EBG made statements calling him a “fraud” and an “embezzler.” (4AC ¶ 151.) On July 21, 2020, an email was sent wherein a member stated that Salin mismanaged EBG, embezzled funds and converted money for his personal use. (Id., Exhibit F.) Beginning in November 2021, EBG published statements on social media claiming that Almeida was the sole designer of the bar. (4AC ¶ 153.)

The Motion does not address the allegations in the 4AC regarding the November 2021 social media posts. EBG thus has not presented evidence to dispose of the entirety of the defamation claim. The Court therefore DENIES the Motion to the defamation and intentional interference with prospective economic advantage claims in the 4AC.

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] This pleading erroneously refers to itself as the Third Amended Complaint. (4AC p. 2, line 2.)

[2] The Court notes, however, that the evidence offered in support of the Motion demonstrates that there was no basis for Salin to claim a wage for his construction services, as there was no written approval of a majority-in-interest of EBG’s members.

[3] The Motion does not include evidence of Salin’s and Almeida’s sale of their membership interests.