Judge: John J. Kralik, Case: 20BBCV00105, Date: 2023-01-06 Tentative Ruling

Case Number: 20BBCV00105    Hearing Date: January 6, 2023    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff Randall Caldron (“Plaintiff”) alleges that in 2013, Barry Green (Plaintiff’s patient and trusted business associate) made a business proposition.  He alleges that Mr. Green and Defendant James Marquardt (“Marquardt”) asked Plaintiff to invest $200,000 with Andy Rapaport, which would yield over 50% returns.  Plaintiff alleges that Marquardt and Mr. Green acted as agents for each other and as a joint venture established an auto body shop known as Collision Body Specialty in North Hollywood.  Plaintiff alleges that Marquardt and Mr. Green asked Plaintiff to invest $100,000 to start a tow truck company called Tow Specialist.  Plaintiff alleges he purchased 2 diesel flatbed tow trucks on April 24, 2013 as a result of Marquardt and Mr. Green’s representations that the trucks would yield over $5,000 a month for Plaintiff.  Plaintiff alleges that he learned that escrow closed sometime on October 4, 2019 without Plaintiff’s invoices for the tow trucks being submitted into escrow.  Thus, Plaintiff alleges that he was not paid and that the 2 trucks were transferred to Defendant Orange Grove Collision, Inc.  Plaintiff alleges that he was asked to invest $150,000 into Collision Body Specialist.  Plaintiff makes allegations about the parties’ business dealings and how Plaintiff was involved in these transactions based on various misrepresentations.

The complaint, filed February 4, 2020, alleges causes of action for: (1) breach of fiduciary duty; (2) breach of loyalty; (3) negligence; (4) breach of contract; (5) usurpation of corporate opportunity; and (6) accounting.

B.     Motion on Calendar

On November 16, 2022, Plaintiff filed a motion for joinder of an indispensable party in order to join Plaintiff’s wife, Luz Vazquez, in this action. 

On December 23, 2022, Marquardt, Sean Oliver, and Orange Grove Collision, Inc. filed an opposition brief.

LEGAL STANDARD

            CCP § 389:

(a) A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.

(b) If a person as described in paragraph (1) or (2) of subdivision (a) cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.

(c) A complaint or cross-complaint shall state the names, if known to the pleader, of any persons as described in paragraph (1) or (2) of subdivision (a) who are not joined, and the reasons why they are not joined.

(d) Nothing in this section affects the law applicable to class actions.

(CCP § 389.)

CCP § 378 states:

(a) All persons may join in one action as plaintiffs if:

(1) They assert any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action; or

(2) They have a claim, right, or interest adverse to the defendant in the property or controversy which is the subject of the action.

(b) It is not necessary that each plaintiff be interested as to every cause of action or as to all relief prayed for. Judgment may be given for one or more of the plaintiffs according to their respective right to relief.

(CCP § 378.) 

EVIDENTIARY OBJECTIONS

            With the opposition brief, Defendants submitted objections to the declaration of Levi Reuben Uku submitted in support of Plaintiff’s moving papers.  The objection to the entirety of the declaration is overruled.

DISCUSSION

            Plaintiff moves to join his wife, Luz Vasquez, as a party to this action.  Plaintiff argues that the money invested in the disputed business was community resources from Plaintiff and Mrs. Vasquez as husband and wife.  Plaintiff also argues that during Marquardt’s deposition, Marquardt questioned Mrs. Vasquez’s transfer of Stock Certificates to Plaintiff and “stated that he will raise hell and sue Vasquez for breach pf[sic] contract.”  (Mot. at pp.4-5.)  Thus, Plaintiff moves to join Mrs. Vasquez as a necessary and indispensable party given the affirmative relief he seeks in this case. 

            Plaintiff’s counsel Levi Reuben Uku states that Defendants have argued during the litigation that Mrs. Vasquez is the holder of the stock certificate and have alluded to challenging Plaintiff’s standing to maintain this action.  (Uku Decl., ¶6.)  Mr. Uku states that joining Mrs. Vasquez will cure any potential issues and will allow for a complete resolution at trial.  (Id., ¶7.)  He states that Mrs. Vasquez is a key witness and party to this action.  (Id., ¶8.) 

            Exhibit A of the complaint includes the Purchase of Assets and Stock of Fair-Grove Automotive Industries, Inc.  In section II (Corporate Documents), the document states that Orange Grove Stock Certificate No. 1 evidences 35 shares held by Luz Vasquez.  (Compl., Ex. A.)  According to the complaint, the shares were then transferred to Plaintiff’s name.  (Compl., ¶19.)  A copy of the certificate is attached to the agreement.  The August 23, 2013 Written Consent in Lieu of First Meeting of the Board of Directors of Orange Grove Collision Center, Inc. states that Mrs. Vasquez was elected Vice President.  Exhibit C includes an Invoice with Mrs. Vasquez’s name to Mr. Marquardt, Sean Oliver, and Orange Grove Collision Center, Inc. for a business loan of $150,000, rental of 2 tow trucks for $144,000, etc.  (Compl., Ex. C.)  The exhibits to the complaint show Mrs. Vasquez’s prior involvement in the transactions alleged in Plaintiff’s complaint.  (See Compl., Ex. D [check details and Mrs. Vasquez’s email].)

            In opposition, Defendants argue that Mrs. Vasquez resigned her position as an officer and director of Orange Grove Collision, Inc. on April 27, 2015 and that she transferred her shares to Plaintiff on September 18, 2019.  Defendants argue that Mrs. Vasquez lacks standing to maintain a direct or derivative suit now that she is no longer a shareholder. They also argue that Plaintiff was aware of Mrs. Vasquez’s former interest prior to the filing of the lawsuit, such that it would be prejudicial to now join her to this action nearly 3 years after the action was commenced.

            It is unclear based on Plaintiff’s papers why Mrs. Vasquez is a necessary party that must be joined to this action.  While she may have been a former shareholder and was previously involved with the affairs of the company, she is no longer a shareholder of the company as it is acknowledged by both parties that Mrs. Vasquez transferred her shares to Plaintiff.  Further, it is unclear why any “threat” that Marquardt would sue Plaintiff for breach of contract would necessarily involve Mrs. Vasquez in this action.  Moreover, at this point, it is speculative whether Defendants will file a cross-claim against Plaintiff that would necessitate Mrs. Vasquez’s involvement in this action.  Finally, Mrs. Vasquez may be a key witness in this action, but being a key witness does not mean that she is an indispensable party or needs to be added as a party to this action.

Plaintiff has not shown how complete relief cannot be afforded if Mrs. Vasquez were absent from the litigation, as Plaintiff is the current shareholder and it does not appear that Mrs. Vasquez is asserting her own individual claims.  As such, the motion to join Mrs. Vasquez as a party to the action is denied.  

CONCLUSION AND ORDER

Plaintiff Randall Caldron’s motion for joinder of Luz Vasquez in this action is denied. 

Plaintiff shall provide notice of this order.