Judge Jon R. Takasugi, Case 21STCV25223 2023-02-27 Tentative Ruling

DIMG’s motion for summary judgment is DENIED. Similarly, DIMGs motion for summary adjudication is DENIED.

On 7/8/2021, Plaintiffs Faramarz Fred Khalili, Lotus Medical Management, Inc., and Royal Management Services, Inc. filed suit against Downey Industrial Medical Group (DIMG), alleging: (1) breach of oral agreement; (2) breach of implied agreement; (3) promissory estoppel; (4) unjust enrichment; (5) account stated; (6) money had and received; (7) accounting; (8) constructive trust; (9) conversion; and (10) unfair business practices.

On 10/19/2022, Plaintiffs Faramarz Fred Khallili (Khallili) and Lotus Medical Management (Lotus) filed a dismissal with prejudice, leaving only Royal Management Services, Inc. (Royal) as Plaitniff in this action.

Now, DIMG moves for summary judgment, or in the alternative summary adjudication, of Plaintiff’s Complaint.

As a preliminary matter, Plaintiffs Khallili and Lotus are no longer parties to this action. As a result, the Court limits its analysis of DIMG’s motion to arguments concerning Royal alone.

DIMG argues that Royal cannot state a claim against it because there are no allegations or evidence that Royal had a contractual relationship with DIMG.

In support, DIMG submitted evidence that Royal issued the following discovery responses:

SPECIAL INTERROGATORY NO. 25: If YOU contend that YOU entered into any agreement with DIMG, state the terms of any such agreement.

Q: If Royal Management Services, Incorporated, did not have a contract with Downey Industrial Medical Group, why is Royal Management suing Downey Industrial Medical Group for breach of contract?

THE WITNESS: Asked and answered.· There you go.· Objection.· Asked and answered.

Do you attribute any loss of income or earning capacity to the INCIDENT? (If your answer is “no,” do not answer interrogatories 8.2 through 8.8).

The Court agrees that DIMG’s evidence supports a reasonable inference that Royal cannot maintain a claim against it because it has admitted it was not in contract with DIMG and did not suffer any damages. Accordingly, the burden shifts to Royal to disclose a triable issue of material fact.

In opposition, Royal argues that DIMG’s motion relies on outdated responses to Form Interrogatories, and that during the course of discovery and months after Royal served its initial Form Interrogatory responses, testimonial evidence was obtained which support its claims. Pursuant to CCP section 2030.310, Royal included as part of their opposition updated discovery responses. Royal contends that DIMG cannot argue that it is prejudiced by the timing of the amended Form Interrogatory responses because DIMG has been aware of the evidence supporting the amended responses for nearly four months.

To show that a contract existed between Royal and DIMG and that Royal was damaged, Royal submitted evidence that:

- On 10/12/2022, Khalili testified that: (i) at all times relevant to this action, he was the sole shareholder and officer of Royal; (ii) that Royal had deposited approximately $1,000,000 into the DIMG account; (ii) that he notified Dr. Russman that these deposits were being made into the DIMG Account; (iii) that the employees of DIMG who were responsible for its day-to-day operations were aware of these deposits; and (iv) that these deposits were never intended as a “gift” to DIMG. (Rondeau Declaration, ¶ 6; Exh. D.)

A. I believe it was close to a million dollars. I don’t recall the exact number, but it was close to a million dollars.

Q. All right. Let’s back up. Earlier you said that you had some form of communication with Nancy and/or Yvette about the fact that Royal was depositing money into DIMG’s accounts.

A. But you are asking (indiscernible audio)and I told you Yvette and Nancy -- because some of those checks was -- I handed to Yvette or Nancy to go to Wells Fargo and deposit. Because some of those checks was -- I handed to Yvette or Nancy to go to Wells Fargo and deposit.

THE WITNESS. Okay. So I repeat it again. The reason that I’m saying Nancy or Yvette knew that checks were written by -- on Royal’s check is because sometimes those Royal checks, I would hand them to Nancy or Yvette. And at their lunchtime, they would take it to Wells Fargo Bank to deposit it. And every time, they would look at it and they knew it was Royal bank -- I mean Royal account.

Q. During either of those two meetings that you had, the first one in approximately August or September of 2018, and the second meeting which was in or about December or January, December 2018 or 2019, did you tell Dr. Russman that the money that you were putting into the account to Royal was a gift to DIMG?

A. Never said that. Look, let me make clarification. For most of that, even though she didn't sign the contract or anything, Russman said she doesn't have money for the overhead and (indiscernible) for the business. And that's why I said -- even one time Joe was there too. I said, That's why I'm financing it. I’m providing the loan.

Royal also submitted the following amended responses to Form Interrogatories Nos. 9.1, 9.2, 17.1, and 50.1 wherein Royal clarified that it had been damaged by DIMG’s failure to repay approximately $900,000 in loans, and submitted as supporting evidence cancelled checks issued by Royal TO DIMG from a Wells Fargo bank account maintained by DIMG.

To show DIMG was aware of Royal’s clarified position, Royal contends that copies of the canceled checks proving Royal made deposits into the DIMG account were produced in late September 2022. Royal also submitted the following exchange from the 10/14/2022 deposition of Dr. Russman:

Q: Have you become aware, subsequent to the discovery responses, which you verified a few months ago, that documents had been provided to your Attorney substantiating the fact that ROYAL Services, which is, essentially, Plaintiff in this case, was providing or has provided substantial funding to DIMG via direct deposit into their account?

Q: So we don’t have any dispute between us -- when I say “us” I mean between the Plaintiff and Defendant – with respect to the fact that those records are reflective of deposits made into the account of DIMG during that period of time between, approximately, July of 2018 and, let's say, August of 2019, or thereabouts?

Q: If I were to ask you questions about how the money that was deposited into the account by Royal Management was used, would you be able to tell me how it was used?

Based on this evidence, Royal argues that the facts here are distinguishable from those in Field v. U.S. Bank (2022) 79 Cal. App. 5th 703. The Court agrees.

In Field, the Court of Appeal held that the plaintiff, who was attempting as part of her opposition to update her prior responses, was bound to her initial discovery responses because she could not “create a disputed issue of fact with assertions she had failed to formulate or to disclose during discovery.” (Field at p. 707 – 709).

Here, Royal’s evidence supports a reasonable inference that it produced bank statements showing deposits by Royal into accounts maintained by DIMG in late September 2022, and deposed Dr. Russman about these funds back in October 2022. As such, Royal is not attempting to revise its responses for the first time in opposition. Moreover, Royal’s amended responses are based on credible evidence which supports its claims, and “[c]ourts have consistently refused to apply the D’Amico rule[1] to exclude evidence adduced in opposition to a summary judgment motion when either evidence adduced on the motion credibly explains or contradicts a party’s earlier admissions.” (Ahn v. Kumho Tire U.S.A., Inc. (2014) 223 Cal. App. 4th 133, 144-145.)

Taken together, Royal’s evidence supports a reasonable inference that it entered into a contract with DIMG, and was damaged by DIMG’s failure to repay the loaned amounts.

Based on the foregoing, DIMG’s motion for summary judgment is denied. Similarly, DIMGs motion for summary adjudication is denied.

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org. If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If all parties to a motion submit, the court will adopt this tentative as the final order. If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.

Due to Covid-19, the court is strongly discouraging in-person appearances. Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk. The court encourages the parties wishing to argue to appear via L.A. Court Connect. For more information, please contact the court clerk at (213) 633-0517. Your understanding during these difficult times is appreciated.

[1] The D’Amico rule holds that a party cannot create an issue of fact by a declaration which contradicts his prior discovery responses. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1.)