Judge: Joseph Lipner, Case: 21STCV22508, Date: 2024-06-18 Tentative Ruling

Case Number: 21STCV22508    Hearing Date: June 18, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendants John Alexander Gianoutsos Rigas and Mission n95 Holdings, LLC (“Mission”) (collectively, the “Rigas Defendants”) move for summary judgment or, in the alternative, summary adjudication, on the causes of action in the First Amended Complaint (“FAC”) filed by Plaintiffs Jay Hooper, UW International Corp. (“UW”), and Crown Estate Holding LLC (“CEH”) (collectively, “Plaintiffs”)

The Court GRANTS the motion for summary judgment.

Background

This case relates to a business venture whereby Rigas, Hooper, and Xenofon Ted Stavropoulos (collectively, the “Principals”) formed a limited liability company (Defendant Mission) in the spring of 2020 to procure and provide personal protective equipment during the Covid-19 pandemic.

On May 6, 2020, the Principals executed Mission’s Operating Agreement. (Undisputed Material Fact (“UMF”) 6; Rigas Decl., Ex. 1 (“Operating Agreement”).) The Operating Agreement provided that each of the Principals would be members of Mission. (UMF 7.) Rigas also served as Mission’s Chief Executive Officer (UMF 8.)

Mission’s largest deal in 2020 was a purchase order from the State of California.

On June 11, 2020, the Principals executed an agreement (the “General Agreement”) which set forth the terms by which UW and Mission would cooperate regarding the California order. (UMF 9; Rigas Decl., Ex. 2 (“General Agreement”).) The parties also used Hooper’s warehouse, owned by CEH, to store certain goods, which storage Plaintiffs allege Defendants did not pay for.

An initial dispute arose between the parties relating to the order. Rigas and Stavropoulos believed that Hooper failed to contribute to the business by failing to source suppliers for the necessary product or secure financing that he had committed to provide. Rigas and Stavropolous also believed that Hooper had misappropriated funds that were to be used in connection with fulfilling the California order. Hooper believed that the other two principals were improperly withholding Mission profits that were owed to him.

Near the end of December 2020, the Principals executed several agreements (collectively, the “December Agreements”):

1. The Mutual General Release Agreement (“Mutual General Release”), dated December 29, 2020, signed by Hooper, his wife Rebecca Hooper (consenting to her husband’s execution of the agreement), Stavropoulos, and Rigas individually and on Mission’s behalf;

2. The Rescission Agreement, dated December 29, 2020, signed by the same four people in their same capacities as the Mutual General Release;

3. The First Amendment to General Agreement (“Amended General Agreement”), dated December 29, 2020, signed by Hooper on behalf of UW and Rigas on behalf of Mission; and

4. The Employment Agreement, which was dated as of May 6, 2020, signed by Rigas on behalf of Mission and Hooper as an Employee of Mission.

(UMF 10.)

            The December Agreements rescinded Mission’s Operating Agreement (thereby eliminating Hooper and Stavropoulos’s interests in Mission and share in the company’s profits), wound down the General Agreement between Mission and UW to confirm that they no longer had any obligations to each other, memorialized Hooper and Stavropoulos’s roles as employees of Mission and provided for their compensation (including a payment to Hooper of more than $5.5 million), and had the parties release each other from any past, existing, or future claims connected in any way with their business. (UMF 10.)

            The Mutual General Release contained a provision whereby each of the parties released the others from any and all past, present, or future claims, lawsuits, or other liabilities, whether known or unknown and whether suspected or unsuspected, based on any actions or omissions taken prior to its effective date. (Rigas Decl., Ex. 3 (“Mutual General Release”) at pp. 1-2.) The Mutual General Release contained a clause waiving Civil Code, section 1542, under which parties cannot ordinarily waive unsuspected claims that would have materially affected the settlement. (Rigas Decl., Ex. 3 (“Mutual General Release”) at p. 2.)

            Each of the Mutual General Release, Rescission Agreement, and Employment Agreement contained a provision whereby the parties acknowledged that they had the opportunity to be represented by independent legal counsel in the negotiation and execution of the agreement and were entering into the agreement voluntarily, freely, and with full consent. (UMF 11.)

Plaintiffs filed this action on June 16, 2021. The operative complaint is now the FAC, which raises claims for (1) breach of partnership agreement; (2) breach of contract; (3) fraud – intentional misrepresentation; (4) fraud – concealment; (5) conversion; (6) theft under Penal Code sections 496, 484(a), and 532; (7) breach of fiduciary duties; (8) breach of fiduciary duty by attorney; (9) breach of contract; (10) fraud – intentional misrepresentation; (11) conversion; (12) theft under Penal Code sections 496, 484(a), and 532; (13) breach of fiduciary duties; (14) breach of fiduciary duty by attorney; (15) breach of contract; (16) fraud – intentional misrepresentation; (17) conversion; (18) heft under Penal Code sections 496, 484(a), and 532; (19) breach of fiduciary duties; and (20) declaratory relief. Claims 1-8 are alleged by Hooper against Defendants. Claims 9-14 are alleged by UW against Defendants. Claims 15-19 are alleged by CEH against Defendants. Claim 20 is alleged by all Plaintiffs against Defendants.

The Rigas Defendants moved for summary judgment on February 15, 2024. Plaintiffs filed an opposition and the Rigas Defendants filed a reply.

Evidentiary Objections

The Court sustains the following objections to the declaration of Jay Hooper:

7 (lack of foundation); 21 (contradicts prior sworn testimony as to the phrase “Rigas attempted to force me into receiving less money in late December, 2020”); 22 (contradicts prior sworn testimony); 23 (contradicts prior sworn testimony).

The Court sustains the following objections to the declaration of Rebecca Hooper:

3 (lack of foundation); 5 (lack of foundation).

The Court sustains the following objections to the declaration of Edward Y. Lee:

1 (lack of foundation); 2 (misstates testimony).

The Court overrules the remaining objections for purposes of summary judgment.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “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., supra, 25 Cal.4th at p. 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.) 

“In ruling on the motion, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom [citation] and must view such evidence [citations] and such inferences [citations] in the light most favorable to the opposing party.” (Aguilar, supra, at pp. 844-845 [quotation marks omitted].) 

“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 or summary adjudication “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 . . . cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).)

“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 the cause of action or a defense thereto.” (Ibid.) 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.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

Discussion

General Release

A valid release of claims bars an action on a claim that is the subject of the release. (San Diego Hospice v. County of San Diego (1995) 31 Cal.App.4th 1048, 1053.) Further, a general release that explicitly covers known and unknown claims and specifically waives Civil Code, section 1542 is enforceable and acts as a complete bar to all claims. (Ibid.) A general release will support summary judgment of claims falling within its scope. (Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 588.)

Plaintiffs do not dispute that their claims fall within the scope of release in the December Agreements.

Undue Influence

Plaintiffs argue that Rigas obtained Hooper’s signatures on the December Agreements through undue influence and that the December Agreements are therefore voidable.

“Undue influence consists:

1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;

2. In taking an unfair advantage of another's weakness of mind; or,

3. In taking a grossly oppressive and unfair advantage of another's necessities or distress.”

(Civil Code, § 1575.)

            “[T]here are no fixed definitions or inflexible formulas. Rather, [courts] are concerned with whether from the entire context it appears that one's will was overborne and he was induced to do or forbear to do an act which he would not do, or would do, if left to act freely.” (Keithley v. Civil Service Bd. (1970) 11 Cal.App.3d 443, 451.) “Undue influence, in the sense we are concerned with here, is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, persuasion which overcomes the will without convincing the judgment. The hallmark of such persuasion is high pressure, a pressure which works on mental, moral, or emotional weakness to such an extent that it approaches the boundaries of coercion.” (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 130 [citations omitted].) However, “[u]ndue influence cannot be used as a pretext to avoid bad bargains or escape from bargains[.]” (Id. at p. 132.) The party asserting undue influence must show “undue susceptibility in the servient person”, which “need not be long-lasting nor wholly incapacitating, but may be merely a lack of full vigor due to age, physical condition, emotional anguish, or a combination of such factors. The reported cases have usually involved elderly, sick, senile persons alleged to have executed wills or deeds under pressure.” (Id. at p. 131 [citations omitted].)

Here, Plaintiff’s discovery admissions show that his execution of the December Agreements was not the result of undue influence by Defendants.

Judicial admissions are “conclusive concessions of the truth of a matter and have the effect of removing it from the issues.” (Uram v. Abex Corp. (1990) 217 Cal.App.3d 1425, 1433.) A party can therefore rely on judicial admissions when moving for summary judgment. (Ibid.) “A judicial admission is a party's unequivocal concession of the truth of a matter, and removes the matter as an issue in the case.” (Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 48.) “This principle has particular force when the admission hurts the conceder's case. An express concession against one's interest is regarded as highly competent, credible evidence.” (Ibid.)

            “[W]hen discovery has produced an admission or concession on the part of the party opposing summary judgment which demonstrates that there is no factual issue to be tried, certain of those stern requirements applicable in a normal case are relaxed or altered in their operation.” (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 21.) “Where … there is a clear and unequivocal admission by the plaintiff, himself, in his deposition ... we are forced to conclude there is no substantial evidence of the existence of a triable issue of fact.” (Ibid [internal citation and quotation marks omitted].) “Where a declaration submitted in opposition to a motion for summary judgment motion clearly contradicts the declarant's earlier deposition testimony or discovery responses, the trial court may fairly disregard the declaration and conclude there is no substantial evidence of the existence of a triable issue of fact.” (Whitmire v. Ingersoll-Rand Co. (2010) 184 Cal.App.4th 1078, 1087 [internal citation and quotation marks omitted].)

            Hooper testified in his deposition that he did not want to sign the December Agreements and was planning to sue Rigas at the time when he signed the agreements. (Ardebili Decl., Ex. 11 at p. 473:19-474:4.) Hooper testified that “[he] was forced by [his] wife to sign the agreement. That’s the reason why [he] sign[ed].” (Ardebili Decl., Ex. 11 at p. 474:10-22.) Hooper testified that it did not matter to him what was in the agreements, because he did not agree. (Ardebili Decl., Ex. 11 at p. 474: 19-22.) Hooper testified that, although he understood that when one signs an agreement, one commits to fulfill any duties they have under the agreement, he nevertheless signed the December Agreements with no intention to be bound by them. (Ardebili Decl., Ex. 11 at p. 475:1-14.) When asked if he wanted to get the money and then sue afterwards for more money, Hooper testified: “Yes.” (Ardebili Decl., Ex. 11 at p. 47:15-17.) Hooper testified that at the time when he signed the December Agreements, he did not care whether they were enforceable. (Ardebili Decl., Ex. 11 at p. 488:16-19.)

In response to the question “[y]ou testified earlier that you were forced to sign these four December 29, 2020 agreements. Who forced you to sign them?”, Hooper answered “Rebecca Hooper, my wife.” (Ardebili Decl., Ex. 11 at p. 476:18-21.) Hooper testified that his wife forced him to sign the agreements by saying that they needed the money. (Ardebili Decl., Ex. 11 at p. 477:7-9.) Although Hooper initially testified that Rigas forced him to sign the agreements as well (Ardebili Decl., Ex. 11 at p. 476:22-24), Plaintiff later admitted that Rigas did not say anything to Hooper to coerce him to sign the agreements. (Ardebili Decl., Ex. 11 at p. 477:21-24.) Hooper testified that, other than his wife pressuring him to sign the documents as quickly as possible, there was no time pressure on him in terms of reviewing or signing the December Agreements. (Ardebili Decl., Ex. 11 at p. 478-7-11.)

            Plaintiffs argue that Hooper had limited time to consult an attorney because the December Agreements were presented to him at the beginning of a holiday weekend, and he was asked to sign the following Monday. However, when asked why Hooper did not consult with an attorney prior to December 29, 2020, Hooper testified that he did not have time, and that the only reason he was under time pressure was because his wife was pressuring him to sign the agreements due to how much money they would receive. (Ardebili Decl., Ex. 11 at p. 499:1-10.)

            Hooper’s deposition thus demonstrates clear, unequivocal, and repeated admissions that Rigas did not pressure him into signing the December Agreements, and that the only pressure on Rigas was from his wife. Plaintiff cannot now contradict his unequivocal discovery admissions in order to oppose summary judgment.

            Plaintiffs argue that Rigas knew Hooper was in a financially vulnerable position and that Rigas was sending threatening messages to Hooper’s wife shortly prior to the execution of the December Agreements to leverage Hooper’s position. Exhibit 22 to Rebecca Hooper’s declaration shows the text message in question, reads as follows:

“2020-12-28 21:46:33 to Rebecca Hooper

As a courtesy to you, I want you to know that I am fed up with all of your [husband’s] words. I have tried very hard to make him understand. I have a 12pm appointment with my lawyers to do what now must be done without concern for the consequences to Jay. Nothing short of receiving, in my hand, the executed agreements that I left with him, will reverse what will become irreversible.”

(Rebecca Hooper Decl., Ex. 22.)  Such a pre-litigation demand by Rigas—especially coupled with Hooper’s repeated concessions in his deposition—does not create a triable issue of fact concerning undue influence.  The text by its terms is a last-ditch effort to seek an agreement and prevent legal action.  It does not create a basis for Hooper to decide to take the initial money offered and then to nevertheless sue in contradiction to the release that Hooper provided.

            Plaintiffs argue that there is a presumption of undue influence here.

            “[A] presumption of undue influence arises when there is a concurrence of the following elements: (1) the existence of a confidential or fiduciary relationship between the testator and the person alleged to have exerted undue influence; (2) active participation by such person in preparation or execution of the [instrument]; and (3) an undue benefit to such person or another person under the [instrument] thus procured.” (Estate of Gelonese (1974) 36 Cal.App.3d 854, 861–862 [citations and quotation marks omitted].) “The presumption of undue influence, when established, is a rebuttable presumption.” (Id. at p. 862.) “The effect of a presumption affecting the burden of proof is to impose upon the party against whom it operates the burden of proof as to the nonexistence of the presumed fact.” (Id. at p. 863 [citation and quotation marks omitted].)

            Plaintiffs argue that Rigas held a position of trust and confidence as the managing member of Mission. Plaintiffs argue that Rigas obtained an undue benefit because Rigas allegedly retained an amount that Plaintiff was owed in profits well in excess of what Plaintiff received under the December Agreements. And naturally, Rigas participated in the December Agreements’ formation.

Even assuming for the sake of argument that a presumption of undue influence exists, Defendants have rebutted it. Plaintiff’s discovery admissions show that any strong influence on him to sign the December Agreements came not from Rigas, but from his wife.

Economic Duress

Plaintiffs argue that Rigas exerted economic duress on Hooper in the formation of the December Agreements. Plaintiffs argue that Hooper’s family was short on money to meet their financial obligations, that Rigas knew this, and that Rigas used that fact to pressure Hooper into accepting the December Agreements.

As discussed above, Hooper has admitted that the pressure on him to sign the agreements came from his wife, and not from Rigas. Hooper had reasonable alternative to accepting the December 2020 Agreements – he could negotiate further, contact a lawyer as he planned to do, or bring a legal action, as he also planned to do. Hooper did not take any of those options. Instead, Hooper testified that he decided on a plan to take the money, and then to ignore the settlement agreements and sue for more money. (Ardebili Decl., Ex. 11 at p. 47:15-17.)

This case is not like Rich & Whillock, Inc. v. Ashton Development, Inc. (1984) 157 Cal.App.3d 1154 (Rich), on which Plaintiffs rely. In Rich, the defendants, after encouraging the plaintiff to complete its work on a project without expressing any disagreement with progress billings, suddenly and without warning refused to pay the balance of plaintiff’s bill at a time plaintiff faced financial collapse.  Here, by contrast, the dispute over the amount to be paid to Plaintiffs was raised with Hooper at least six months before the December 2020 Agreements.  In Rich, plaintiff said at the time of signing the agreement and release that he considered the proposal “blackmail” and that he was signing it only to survive. (Id. at p. 1157.)  Here, there was no such statement by Hooper. Moreover, Rich relied in part on defendants’ own creation of plaintiff’s financial problems by encouraging the expenditures, which is not the case here.  (See Chan v. Lund (2010) 188 Cal.App.4th 1159, 1175 [distinguishing Rich because defendant did not cause plaintiff’s financial problems and because defendants were not aware of any claim at the time that plaintiff felt coerced].)

Breach of Fiduciary Duty by Attorney – Eighth and Fourteenth Claims

Plaintiffs argue that their claims for breach of fiduciary duty by attorney may survive because Rigas acted as an attorney for Hooper or UW earlier in 2020. (Opposition at p. 18:1-27.)

The gravamen of these claims is that Rigas failed to pay Hooper one-third of the profits of Mission from the California order. These claims fall squarely within the general release in the December Agreements.

CEH’s Claims

The Rigas Defendants argue that CEH is bound by the releases in the December Agreements because it is an alter ego of Hooper and UW.

In addressing CEH’s claim for unpaid storage fees and to explain why he changed invoices such that they would be issued by CEH rather than UW, Hooper testified that UW and CEH were both his companies. (UMF 35; Ardebili Decl., Ex. 13 at p. 331:3-7.) Hooper is the sole member, manager, and registered agent for service of process for CEH. (UMF 1.) Both CEH and UW use the exact same address. (UMF 2, 7.) Most importantly, Plaintiffs make no attempt to address this argument in their opposition. The Court therefore concludes that CEH is bound by the general release in the December Agreements.

Because all of the claims in this case are covered by the general release in the December Agreements, the Court grants the Rigas Defendants’ motion for summary judgment.