Judge: Kenneth J. Medel, Case: 37-2023-00004798-CU-BC-CTL, Date: 2024-04-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 18, 2024

04/19/2024  09:30:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

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Civil - Unlimited  Breach of Contract/Warranty Motion Hearing (Civil) 37-2023-00004798-CU-BC-CTL CADY VS GLADSTONE [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Leave to Amend, 01/10/2024

Plaintiff's Motion for Leave to Amend is GRANTED. Plaintiff to file the First Amended Complaint within 5 days of this order.

Plaintiff's Motion to Compel Further Production of Documents is GRANTED. Based in the papers, it appears that the following requests are at issue: Nos. 5, 8, 18, 20 and 31. (See Opposition at 5-6). The Court makes the following general analysis applicable to these documents: Pre-October 2019 Documents Defendants argue that Cady is not entitled to pre-October 2019 documents. Defendants also argue that they produced bank statements from 2016 and hundreds of pages of other documents from pre-October 2019. (Opp'n, pp. 5-6.) The documents are likely to lead to the discovery of admissible evidence. Cady's membership right derives from loans he made in the 2016-Oct 2019 time period. This time period is significant.

Defendants themselves have produced hundreds of documents from before October 2019. (See Supp.

Panish Decl. [ROA # 112], ¶ 29) Gladstone's capital contributions to the company were made in this time frame. Plaintiff now alleges that the capital contributions by Gladstone were not what she represented.

Specifically, Gladstone claims that the 'PWestern 12/16 $157,606.00' line-item entry 'was an additional cash contribution I made to secure the construction loan.' Gladstone also claims that the 'P Western 12/16 $495,000.00' line-item entry 'reflects my cash contribution that originated from a refinance of my home.' Plaintiff states that Gladstone still has yet to produce documents to prove her claims, and Cady has the right to 'test' the sources of the funds for the two checks.

Plaintiff wants source documents related to alleged capital contributions to determine whether the source funds were Gladstone's personally and would thus qualify as Gladstone's capital contribution, or whether the source funds were Company assets (such as a loan the Company took out secured by a bank on the Company land/real estate asset) and thus would not constitute a capital contribution from Gladstone. Plaintiff is disputing whether Gladstone made 50% capital contributions as she stated and therefore, whether Gladstone has a 50% interest in the company as she asserts.

MAI Appraisal Gladstone allegedly acquired a company asset - commercial condominium unit #1, for $1,470,000.

(Cady MPA, p. 8:5-6; Novack Decl., ¶ 4, Ex. 3.) Plaintiff alleges self-dealing with respect to this acquisition. Specifically, before acquiring the BRC asset, Gladstone applied for a loan, made representations to her lender as to the unit's value and obtained an MAI appraisal of the unit. (Ibid.) While Gladstone received the BRC asset here valued at '$1.47M,' plaintiff alleges that she gerrymandered its value downward claiming it was worth much less than '$1.47M' and only '1.2M, or $270K less than paid.' Thereafter, Gladstone 'reimbursed' herself for her claimed $270,000 overpayment estimate, pocketing the benefit of $ 270,000 for herself by only 'crediting' a payment of $1.2m for a $1.47m property. (Id., ¶ 6, Ex. 4; Mem. at 9.) Calendar No.: Event ID:  TENTATIVE RULINGS

3097079  31 CASE NUMBER: CASE TITLE:  CADY VS GLADSTONE [IMAGED]  37-2023-00004798-CU-BC-CTL Plaintiff is seeking key documents to prove this self-dealing and alleged breach of fiduciary duty: the MAI appraisal, the loan application, the conveyance/escrow documents, and her 'repayment' processes/decisions that she alone made. (See Novack Decl., ¶ 4, Ex. 3; id., ¶ 6, Ex. 4.) Cady requested both the MAI appraisal and the loan application in RFP No. 18, but Gladstone refused to produce both on the grounds that '[t]hese are not the 'books and records' of BRC to which Plaintiff is entitled based on the allegations of the Complaint,' i.e. relevance. (Opp'n at 6, 10.) Further documents are to be produced within 20 days of notice of this order.

The Court further orders defendants to pay sanctions in the amount of $16,345.00. (Novack Decl., ¶ 28–29.) Calendar No.: Event ID:  TENTATIVE RULINGS

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