Judge: Joseph Lipner, Case: 22STCV39209, Date: 2024-11-18 Tentative Ruling
Case Number: 22STCV39209 Hearing Date: November 18, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
TOMMIE MARTIN, JR., Plaintiff, v. EVELYN SCOTT, et al., Defendants. |
Case No:
22STCV39209 Hearing Date: November 18, 2024 Calendar Number: 3 |
Plaintiff Tommie Martin, Jr. (“Plaintiff”) seeks default
judgment against Defendants Evelyn Scott (“Scott”) and Brandon Brinson (“Brinson”).
Although Defendant Rayford Brown (“Brown”) has been defaulted, Plaintiff does
not appear to seek a judgment against Brown.
Plaintiff requests damages in the amount of $1,200,000.00.
The Court CONTINUES Plaintiff’s request for default judgment.
Plaintiff must submit a single Form CIV-100 as to all
defendants against whom he seeks default judgment. In that form, Plaintiff must
include all of the monetary amounts that he seeks as part of the judgment.
If Plaintiff does not intend to seek a judgment against
Brown, Plaintiff must dismiss Brown from this action. If Plaintiff does intend
to seek a judgment against Brown, Plaintiff must include him in the Form
CIV-100 and Proposed Judgment.
On the issue of damages, the Court is prepared to enter
judgment for $500,000.00 based on the expenses paid by Plaintiff. If Plaintiff
wishes to obtain damages for the value of the product and/or the value of the
business, the Court requires evidence that allows it to disaggregate the three
items from each other to ensure that Plaintiff does not receive a
double-recovery. Further, if Plaintiff wishes to obtain damages for the value
of the business, Plaintiff must provide a clear basis for the estimated value.
This case relates to a marijuana dispensary owned by the
parties. Plaintiff alleges that Defendants Scott, Brinson, and Brown
(collectively, “Defendants”) froze him out of the business.
On October 1, 2020, Plaintiff entered into an agreement (the
“Agreement”) signed by Plaintiff, Scott, and Brinson whereby the parties
entered a partnership to operate a business known as The Green Paradise (“Green
Paradise”). (Martin Decl., Ex. 1.) Green Paradise is a cannabis dispensary
located in a store site at 6110 West Pico Boulevard, Los Angeles, California.
The Agreement provided for “50/50 OWNERSHIP OF THE GREEN PARADISE”. (Martin
Decl., Ex. 1 [capitalization in original].)
Plaintiff contends that, although only Plaintiff, Scott, and
Brinson signed the Agreement, Brown was also a party to the agreement. (Complaint
¶ 7; Martin Decl. at p. 6:7-8.) Plaintiff states that although only Scott and
Brinson signed the written Agreement, Plaintiff “was told that Mr. Brinson
(Brown?) was a partner and he was considered a co-owner, along with Ms. Scott
and Mr. Brinson of their 50% ownership interest.” (Martin Decl. at p. 6:9-11.)
Plaintiff provided substantial funding to establish and
operate Green Paradise. Defendants were the primary day-to-day operators of the
business. From the creation of the partnership in 2020 until September 2022,
Plaintiff had access to computer records and financial records of Green
Paradise and its assets.
On September 17, 2022, Defendants changed the locks on Green
Paradise to exclude Plaintiff. Defendants blocked computer access to Plaintiff
for financial records. Defendants additionally submitted reports to the Los
Angeles County Police Department claiming that Plaintiff had no ownership
interest in the property and claiming that Plaintiff was trespassing on the
premises. Plaintiff alleges that he has since been excluded from the business.
Plaintiff filed this action on December 19, 2022. The
operative complaint is now the First Amended Complaint (“FAC”), which raises
claims for (1) breach of contract; (2) accounting; and (3) conversion.
Default was entered as to Brown on January 30, 2024. Default
was entered as to Scott on July 10, 2024. Default was entered as to Brinson on
August 1, 2024.
CCP § 585 permits entry of a judgment after a Defendant has
failed to timely answer after being properly served. A party seeking judgment on the default by
the Court must file a Form CIV-100 Request for Court Judgment, and:
(1) Proof of service of the complaint and summons;
(2) A dismissal of
all parties against whom judgment is not sought (including Doe defendants) or
an application for separate judgment under CCP § 579, supported by a showing of
grounds for each judgment (CRC 3.1800(a)(7));
(3) A declaration
of non-military status as to the defendant (typically included in Form CIV-100)
(CRC 3.1800(a)(5));
(4) A brief summary of the case (CRC 3.1800(a)(1));
(5) Admissible
evidence supporting a prima facie case for the damages or other relief
requested (Johnson v. Stanhiser (1999)
72 Cal.App.4th 357, 361-362);
(6) Interest computations as necessary (CRC 3.1800(a)(3));
(7) A memorandum of
costs and disbursements (typically included in Form CIV-100 (CRC 3.1800(a)(4));
(8) A request for
attorney’s fees if allowed by statute or by the agreement of the parties (CRC
3.1800(a)(9)), accompanied by a declaration stating that the fees were
calculated in accordance with the fee schedule as per Local Rule 3.214. Where a request for attorney fees is based on
a contractual provision the specific provision must be cited; (Local Rule
3.207); and
(9) A proposed form
of judgment (CRC 3.1800(a)(6));
(10) Where an
application for default judgment is based upon a written obligation to pay
money, the original written agreement should be submitted for cancellation (CRC
3.1806). A trial court may exercise its discretion to accept a copy where the
original document was lost or destroyed by ordering the clerk to cancel the
copy instead (Kahn v. Lasorda's Dugout, Inc. (2003) 109 Cal.App.4th
1118, 1124);
(11) Where the
plaintiff seeks damages for personal injury or wrongful death, they must serve
a statement of damages on the defendant in the same manner as a summons (Code
Civ. Proc. § 425.11, subd. (c), (d)).
(California Rules
of Court rule 3.1800.)
Pursuant to Code Civ. Proc., § 1033.5(a)(1), items are
allowable as costs under Section 1032 if they are “filing, motion, and jury
fees.”
A party who defaults only admits facts that are well-pleaded
in the complaint or cross-complaint. (Molen v. Friedman (1998) 64
Cal.App.4th 1149, 1153-1154.) Thus, the complaint must state a claim for the
requested relief.
According
to the proof of service filed on October 5, 2023, Defendant was served on
August 24, 2023 at 2616 Griffith Ave, Los Angeles, CA 90011 via substitute
service on Blanca Jaurigui.
The Doe defendants were dismissed from the action on September
11, 2024, pursuant to Plaintiff’s request.
The Court notes that the proposed judgment that Plaintiff
has filed reflects a proposed judgment against Defendants Scott and Brinson,
but not Defendant Brown. If Plaintiff does not intend to seek a judgment
against Brown, Plaintiff must dismiss Brown from this action.
On January 30, 2024, Plaintiff filed a Form CIV-100 seeking
entry of default against Brown. On July 10, 2024, Plaintiff filed a Form
CIV-100 seeking entry of default against Scott. On August 1, 2024, Plaintiff
filed a Form CIV-100 seeking entry of default against Brinson. Default was
entered as to both parties.
In each of the above forms, Plaintiff checked the boxes for
both entry of default and entry of a court judgment. In each form, Plaintiff
listed no amounts for the money judgment that he seeks.
In order to seek default judgment, Plaintiff must submit a
single Form CIV-100 as to all defendants against whom he seeks default
judgment. In that form, Plaintiff must include all of the monetary amounts that
he seeks as part of the judgment.
Robert Schachter avers to each Defendant’s non-military
status.
Plaintiff provides a brief summary of the case in his Application
for Judgment After Default and Statement of Facts. Plaintiff adequately pleads his
causes of action in the Complaint.
“Code of Civil Procedure section 580 prohibits the entry of
a default judgment in an amount in excess of that demanded in the complaint.” (Kim v. Westmoore Partners, Inc. (2011)
201 Cal.App.4th 267, 286.) Moreover, “a statement of damages cannot be relied
upon to establish a plaintiff's monetary damages, except in cases of personal
injury or wrongful death.” (Ibid.) “In all other cases, when recovering
damages in a default judgment, the plaintiff is limited to the damages
specified in the complaint.” (Ibid.)
A plaintiff must submit admissible evidence supporting a
prima facie case for the damages or other relief requested (Johnson v. Stanhiser (1999) 72
Cal.App.4th 357, 361-362.) “ ‘In a default case the judge's duty in connection
with the default process is ‘to act as a gatekeeper, ensuring that only the
appropriate claims get through.’ [Citation] The judge must take time to analyze
the complaint to ensure that it supports the judgment that plaintiff is seeking
and to determine whether the evidence ... supports the requested damages.” (LCPFV,
LLC v. Somatdary Incorporated (Cal. Ct. App., Nov. 13, 2024, No. B325599)
--- Cal.Rptr.3d---, 2024 WL 4762549, at *3.)
There are several problems with Plaintiff’s request for
damages.
As an initial matter, Plaintiff seeks damages in excess of
the demand of the FAC. Plaintiff seeks $1,200,000.00 in compensatory damages.
The FAC demands $1,000,000.00 in compensatory damages. Plaintiff therefore
cannot recover more than that without amending the complaint.
Plaintiff
claims the following items as compensatory damages:
(1)
$500,000.00 for the costs and expenses that Plaintiff paid for Green Paradise.
(2)
$300,000.00, representing 50 percent of the value of the product that Plaintiff
contends was on-side as of September 2022.
(3)
$400,000.00, representing 50 percent of Plaintiff’s estimate of the value of
Green Paradise.
Both
the second and third items of damages – the value of the product on-site and
the value of the business were it to be sold – appear to be duplicative of the
damages for Plaintiff’s financial input, and of each other. Plaintiff does not
allege that his payments to cover expenses constituted a loan to be paid back.
Rather, Plaintiff appears to have invested money in the business. Thus,
Plaintiff cannot recover both his initial investment and his rightful profits.
Furthermore, the value of the Green Paradise, were it to be sold, would
necessarily include the business’s assets – including the product held on-site.
The third item of damages is thus partially duplicative of the second.
Plaintiff
states that Green Paradise was almost exclusively a cash business due to the
nature of the cannabis industry. (Martin Decl. at p. 7:27-28.) Financial
institutions typically will not handle funds from the cannabis business due to
federal law. (Martin Decl. at p.8:1-2.) Most of the payments that Plaintiff
made to fund Green Paradise were made in cash, and Defendant Scott kept all of
the receipts, so Plaintiff does not have them. (Martin Decl. at p. 7:1-7.) Plaintiff’s
estimates that he provided over $500,000.00 to Green Paradise. (Martin Decl. at
p. 8:3-4.)
Plaintiff
provided cash for the following portions of the business:
1.
Purchase of products;
2.
Payment of vendors;
3.
Rent;
4.
Payroll; and
5.
Construction costs.
(Martin Decl. at p. 7:12-17.)
Plaintiff
declares that he provided first- and last-month’s rent up front to rent the
property used for the business, totaling $32,000.00. (Martin Decl. at p.
6:20-21.) Monthly rent for the property was $16,000.00, as well as an extra
$2,000.00 each month to cover back rent that Green Paradise owed from its
previous lease at a different location. (Martin Decl. at p. 6:22-24.) Plaintiff
declares that he “provided funds on most months for rent and other expenses.”
(Martin Decl. at p. 6:24.)
Plaintiff
provides records that he was able to locate for May through August of 2022.
(Martin Decl., Ex. 2.) Plaintiff additionally provides a large number of text
messages which he declares reflect payments made by him to Defendants. (Martin
Decl. at pp. 10:3-11:28; Ex. 3.) The text messages document roughly $204,375.00
in payments made by Plaintiff to Defendants. Some of these payments appear to
reflect rent payments that Plaintiff made.
Based
on the evidence that Plaintiff has presented, Plaintiff’s estimate of
$500,000.00 for the payments he made to the business appears accurate.
Special Martin (“Special”), Plaintiff’s sister, was the
manager of the dispensary at the time when Plaintiff was locked out, and was
locked out along with Plaintiff. (Special Martin Decl. at p. 1: 7-13.) Special
declares that there was a substantial amount of cannabis products in the store
on September 17, 2022. (Special Martin Decl. ¶ 10-13.) Special was familiar
with the pricing of the products at the store and declares that, in her
opinion, there was over $600,000.00 of product (cost) at Green Paradise at the
time that Plaintiff was locked out. (Special Martin Decl. at p. 1:14-16.)
The Court finds that Plaintiff has provided adequate
evidence of the value of the products at Green Paradise at the time when
Plaintiff was locked out.
Plaintiff has attached limited evidence of the business’s
gross revenue from August 14, 2022 to September 16, 2022. (Martin Decl. at pp.
8:27-9:8, Ex. 3.) Plaintiff draws an average daily income of $3,504.03 per day.
(Martin Decl. at p.8:7-8.) Plaintiff
then states that, based on that daily income, the total income per month would
be $125,120.90 and the total yearly income would be $1,261,450.80. (Martin
Decl. at p. 9:9-10.)
The problem is that this is not a good statistical method.
Plaintiff bases the entire calculation on only four weeks of data. Weekly
revenue figures range from $24,482.25 to $39,727.84, with a range of $15,245.59
– around 38 to 62 percent of the revenue on any given week. The variance is
simply too great for the Court to conclude, particularly on default judgment,
that the average revenue of these particular weeks can be fairly and accurately
extrapolated to a term of over a year.
Furthermore, there is not a clear through-line from this
estimate of yearly revenue (not profit – the estimate does not account for the
business’s costs) to Plaintiff’s estimate of the value of the business.
Plaintiff conclusorily states that “[i]n [his] opinion, the business could be
sold for over $800,000.00 and [Plaintiff’s] 50% would be $400,000.00.” (Martin
Decl. at p. 12:24-25.) Plaintiff does not explain the evidentiary basis for
this valuation. There are no experts cited, no methods provided, and no
arms-length offers from potential buyers submitted.
The Court therefore finds that Plaintiff has not adequately
evidenced his estimate of the value of the business.
Plaintiff has provided evidence showing that the amounts
stated for his first two items of damages are likely accurate. However, as
discussed above, there appears to be substantial overlap between each of the
three items of damages.
The Court is prepared to enter judgment for $500,000.00
based on the expenses paid by Plaintiff. If Plaintiff wishes to obtain damages
for the value of the product and/or the value of the business, the Court
requires evidence that allows it to disaggregate the three items from each
other to ensure that Plaintiff does not receive a double-recovery. Further, if
Plaintiff wishes to obtain damages for the value of the business, Plaintiff
must provide a clear basis for the estimated value.
Plaintiff does not seek interest.
Plaintiff
does not seek attorney’s fees.
Plaintiff
has submitted a proposed form of judgment.
As discussed above, the proposed judgment that Plaintiff has
filed reflects a proposed judgment against Defendants Scott and Brinson, but
not Defendant Brown. If Plaintiff does not intend to seek a judgment against
Brown, Plaintiff must dismiss Brown from this action.
California
Rule of Court 3.1806 states that “unless otherwise ordered” judgment upon a
written obligation to pay money requires a clerk’s note across the face of the
writing that there has been a judgment. Here, Plaintiff has not submitted the
original documents. The Court does not discern any practical need for such a
clerk’s note on the written obligation in the current case and therefore orders
that it need not be included. If this causes any issues for any party or
non-party, they are authorized to bring the matter to the Court’s
attention.
Plaintiff does not need to submit a statement of damages
because this is not a personal injury or wrongful death case.