Judge Holly J. Fujie, Case Number: 22STCV03159, Date: 2024-11-13 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.

RESPONDING PARTY: Defendant/ Cross-Complainant Seung Jae Baek, aka Andrew Baek (“Baek”)

This action arises out of various alleged fraudulent transfers. The operative first amended complaint filed on July 18, 2022 asserts the following causes of action: (1) intentional misrepresentation; (2) intentional fraudulent concealment; (3) negligent misrepresentation; (4) breach of fiduciary duty; (5) breach of written contract; (6) avoidance and recovery of fraudulent transfers; (7) conversion; (8) accounting; (9) conspiracy to defraud; (10) declaratory relief; (11) indemnity and contribution; (12) aiding and abetting fraudulent transfers; and (13) aiding and abetting breach of fiduciary duty.

On March 9, 2023, Baek, filed a cross-complaint (the “Cross-Complaint”) against Tishbi and Curious Apparel alleging (1) breach of contract; (2) violation of implied covenant of good faith and fair dealing; (3) conversion; (4) unjust enrichment (quasi-contract); and (5) money had and received.

On August 7, 2024, Tishbi filed the instant Motion for Summary Judgment (the “Motion”) seeking an order granting summary judgment as to the entire Cross-Complaint. Baek filed an opposition on October 25, 2024, and Tishbi filed a reply on November 7, 2024.

The Court declines to rule on Objection Nos. 8, 9, 25 and 26 as the matters objected to are not material to the Court’s disposition of this Motion. (Code Civ. Proc. § 437c(q).)

· Objection to Baek’s Responses to Tishbi’s Separate Statement of Undisputed Material Facts: OVERRULED.

Tishbi requests judicial notice of the First Amended Complaint filed on July 18, 2022 (Exh. A); the Cross Complaint filed on March 9, 2023 (Exh. B); and the Opposition to Motion to Compel Deposition filed on August 22, 2023 (Exh. C.). Although unnecessary, as these documents are all part of the records of this case, the request is GRANTED.

As for Baek’s requests for judicial notice, the Court declines to take judicial notice of Item Nos. 1 – 3 as they are irrelevant to the matters at issue in this Motion, but GRANTS the request as to Item Nos. 4 and 5 to the extent reference is made to records already part of this case.

The purpose of a motion for summary judgment “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (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, italics in original and quoting Code Civ. Proc., § 437c, subd. (c).) “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.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2); see Scalf v. D. B. Log Homes, Inc., supra, 128 Cal.App.4th at p. 1520.)

Once the defendant (here the cross-defendant) has met that burden, the burden shifts to the plaintiff (here the cross-complainant) “to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).) To establish a triable issue of material fact, the party opposing the motion “shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Ibid.; see Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

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.)

Here, the Mutual Non-Disclosure Agreement (“NDA”) upon which the Cross-Complaint is based was purportedly entered into by and between Baek and Tishbi. It provides in relevant part:

Tishbi asserts that summary judgment should be granted in his favor because undisputed facts demonstrate that the NDA, which forms the basis of all the causes of action in the Cross-Complaint is an unenforceable contract. Tishbi avers that under the NDA between Baek and Tishbi, Baek would purportedly give up ownership interest in a company known as Curious Apparel, and in another company, Boomerang Industries, Inc. (“Boomerang”) in exchange for money.

Tishbi contends that, as revealed during the discovery process, Baek never had any ownership interest in Curious Apparel that could be released. Tishbi specifically points to Baek’s responses to certain discovery requests as indicator that Baek did not possess any ownership interest to release. (Cross Defendant Tishbi’s Separate Statement of Undisputed Material Facts in Support of Motion for Summary Judgment [“SSUF”], Nos. 12, 13.) Additionally, Tishbi notes that Baek’s deposition testimony suggested he was merely a short-term employee at Curious Apparel and that he never held any ownership interest in the company. (SSUF Nos. 14, 15.) Tishbi asserts that the NDA therefore lacks consideration since Baek has failed to provide any evidence demonstrating an ownership interest in Curious Apparel or Boomerang, which he was required to release under the NDA.

Tishbi further claims that any purported promise to pay money under the NDA was illusory, since the language of the NDA provides for a future agreement, i.e., a “final figure to be agreed upon between the parties.” (SSUF No. 28.) Thus, Tishbi contends that the NDA is unenforceable.

In his opposition, Baek asserts that he has or had[1] an ownership interest in Curious Apparel and submits in evidence a Partnership Agreement purportedly entered into by and between Baek, Stephen Jung and Ben Cho for the purpose of forming a partnership. (Declaration of Seung Jae Baek [“Baek Decl.”], ¶ 10, Exh. 3.) The Partnership Agreement identifies the name of the partnership as “Curious Apparel.” Under Section 5 thereof, it provides:

The initial capital and ownership interest of the partnership shall be allocated as follows:

The partners shall contribute in proportionate shares any additional capital they may deem necessary for the operation of the business.

Baek asserts that Tishbi’s promise to pay him the accounts payable and his initial investment was not illusory. He avers that Tishbi promised to pay him the unpaid balance after the financial audit, which was finished on August 19, 2019. Tishbi, however, did not pay him, and that when Baek demanded payment, Tisbhi responded stating “You have your protection. You have an Agreement, that’s very good for you.” (Baek Decl., ¶ 27, Exh. 8.) He submits in evidence a screenshot of a purported exchange of text messages between Tishbi and Baek, where Tishbi appears to give assurance to Baek that Baek was protected as he had the agreement, purportedly referring to the NDA. (Id.)

Baek also explains that in providing his responses to Tishbi’s discovery requests pertaining to ownership interests in the subject entities, he had misunderstood the question based on his supposition that “I [Baek] as an individual could not have individually owned legal ENTITIES at law.” (Baek Decl., ¶ 18.) Again, the meaning of this representation is unclear to the Court; however, as Baek is self-represented, the Court interprets this statement as meaning to state that Baek had understood that an individual cannot own an entity such as a partnership. While this is not a correct statement of the law, it does provide a reason why a person might incorrectly answer an interrogatory.

In reply, Tishbi argues that the Partnership Agreement, which Baek cites to support his claim of ownership interest in Curious Apparel, should be excluded as evidence. Tishbi asserts this is warranted because Baek submitted the document in his opposition, despite having previously confirmed in his discovery responses that he did not possess any ownership interest in Curious Apparel. Tishbi contends that this evidence should be rejected because it was not produced during discovery and it contradicts Baek’s verified discovery responses and deposition testimony. Tishbi also asserts that even if Baek’s evidence of the Partnership Agreement is considered, the NDA remains unenforceable for lack of consideration because Tishbi’s purported promise is illusory.

Under the D’Amico rule, a trial court may disregard declarations by a party that contradict their own discovery responses unless there is a reasonable explanation for the discrepancy.
(Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, citing D’Amico v. Board of Medical Examiners (2005) 128 Cal.App.4th 1510.) For example, in Whitmire v. Ingersoll-Rand Co., the court disregarded a declaration that contradicted prior interrogatory responses because no explanation for the contradiction was provided. (Whitmire v. Ingersoll-Rand Co. (2010) 184 Cal.App.4th 1078.) Courts, however, have consistently refused to apply the D’Amico rule to exclude evidence if the evidence subsequently adduced credibly explains or contradicts a party’s earlier admissions. For instance, in Scalf v. D. B. Log Homes, Inc, the court noted that the D’Amico rule does not countenance ignoring other credible evidence that contradicts or explains a party’s answers or demonstrates genuine issues of factual dispute. (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510.)

For summary judgment purposes, deposition answers are simply evidence. Subject to the self-impeachment limitations of D’Amico, they are considered and weighed in conjunction with other evidence. They do not constitute incontrovertible judicial admissions. D’Amico has never stood for the proposition that highly inculpatory testimony elicited from a party in a deposition may be sufficient by itself to warrant summary judgment, or that it relieves the moving party of its ordinary burden of showing the absence of a genuine factual dispute. (Scalf, supra, at 1522-1523; Niederer v. Ferreira (1987) 189 Cal.App.3d 1485 at p. 1503 [apparent contradiction between plaintiff’s declaration and her deposition testimony may be explained by her supplemental declaration and other evidence; D’Amico rule does not extend to mistaken legal conclusions.].)

“The purpose of the summary judgment procedure is not to try the issues but merely to discover ... whether the parties possess evidence which demands the analysis of trial.” (Colvin v. City of Gardena (1992) 11 Cal.App.4th 1270, 1275.) While the D’Amico rule permits a trial court to disregard declarations by a party which contradict his or her own discovery responses (absent a reasonable explanation for the discrepancy), it does not countenance ignoring other credible evidence that contradicts or explains that party’s answers or otherwise demonstrates there are genuine issues of factual dispute. (Scalf, supra, at 1525, citing People ex rel. Dept. of Transportation v. Ad Way Signs, Inc. (1993) 14 Cal.App.4th 187, 200.)

Thus, in Scalf, the Court of Appeal concluded that the trial court abused its discretion in declining to consider evidence in opposition to the motion for summary judgment in conflict with Scalf’s deposition statements or evidence which otherwise disclosed the presence of triable issues of fact. (Id.) Here, the Court concludes that Baek’s seemingly contradictory discovery and deposition responses did not carry Tishbi’s burden of demonstrating the absence of a factual dispute, considering that Baek, who is in pro per, not only explained his misunderstanding of the questions in the discovery requests, but also presented evidence that creates a factual dispute as to the issue of whether he held an ownership interest in the subject entity.

“In reviewing the evidence, we strictly construe the moving party’s evidence and liberally construe the opposing party’s and accept as undisputed only those portions of the moving party’s evidence that are uncontradicted.” (Herberg v. California Institute of the Arts (2002) 101 Cal.App.4th 142, 148.) “Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial. ‘Any doubts about the propriety of summary judgment ... are generally resolved against granting the motion, because that allows the future development of the case and avoids errors.’ ” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.)

Accordingly, the Court shall proceed to consider the Partnership Agreement as evidence, which creates a factual dispute as to Baek’s purported ownership interest in Curious Apparel, and consequently on the enforceability of the NDA.

When a contract includes terms that require satisfaction or agreement between parties, however, courts often imply a requirement of reasonableness or good faith to avoid rendering the contract illusory. For example, if a condition precedent to performance calls for satisfaction as to commercial value, the promisor’s ability to claim dissatisfaction is limited by the standard of reasonableness, making the contract not illusory. (Storek & Storek, Inc. v. Citicorp Real Estate, Inc. (2006) 100 Cal.App.4th 44.) Similarly, a promise conditional upon the promisor’s satisfaction is not illusory if it requires an honest judgment. (Mattei v. Hopper (1958) 51 Cal.2d 119.)

Thus, a promise in a contract is considered illusory if it does not bind the promisor to any definite obligation, leaving performance entirely at the promisor’s discretion. Here, however, agreement to pay under the NDA is “based on audited financial numbers” is sufficiently definite and is therefore enforceable. Notwithstanding that the amount is to be determined at a future time, it is not illusory as the agreement does not leave essential terms for future determination without a clear standard, and the performance is not entirely at the promisor’s discretion. Therefore, Tishbi’s future promise to pay is not a basis for declaring the NDA unenforceable.

In sum, the Court finds there are triable issues of material fact, and thus Tishbi is not entitled to judgment as a matter of law.

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] Much of Seung Jae Baek’s declaration is difficult to understand and in some places unintelligible. Moreover, he does not clarify that he is apparently also known as “Andrew Baek” and/or “Andrew Bak.” Nevertheless, giving him the benefit of the doubt only for the purpose of this Motion, the Court extrapolates from what is presented to make this ruling. This will not be the case at trial.