Judge Kerry Bensinger, Case Number: 24STCV10839, Date: 2024-10-17 Tentative Ruling

In 2017, a dispute arose between brothers Govind Vaghashia (Govind) and Prashant Vaghashia (Prashant) regarding the Vaghashia family businesses, which includes Atmaswaroop Investments LLC, Five Stars Hospitality LLC, Sherman Oaks First Plaza LLC, Oak Park First Plaza LLC, Bellflower First Plaza LLC, Graphic RSCH Properties, LLC (f/k/a Graphic Research, LLC), and VBANKS Management Inc. (collectively, Vaghashia Family Businesses). In 2018, Govind retained Enenstein, Pham, Glass & Rabbat LLP (Enenstein) to litigate against Prashant in the case titled Vaghashia v. Vaghashia, Los Angeles County Superior Court Case No. BC696133 (the Underlying Action). Govind and the Vaghshashia Family Businesses (collectively, the Govind Parties) were eventually added as parties to the Underlying Action.

The Underlying Action, which included cross-actions, related and consolidated actions in state and federal court, proceeded to trial. After the initial phase of trial Govind agreed to settle the case. The settlement document contained various errors including but not limited to imposing unquantifiable obligations on the Govind Parties and setting forth gift and personal injury allocations of the settlement payments which violated federal and state tax law. Despite containing these terms, Enenstein advised Govind to sign the settlement. Moreover, the settlement that Enenstein advised Govind to sign differed substantively from prior drafts. In 2022, Enenstein was substituted out as counsel of record. In all, Govind incurred approximately $7 million in attorney fees during Enenstein’s representation.

On January 3, 2023, the Govind parties filed a motion to vacate and/or set aside the settlement agreement in the Underlying Action. The court denied the motion on April 25, 2023. The Govind Parties sought reconsideration of the order, which was also denied. The Govind Parties appealed the April 25, 2023, order denying the motion to vacate or set aside the settlement agreement. Oral argument is scheduled for October 24, 2024 in the Second District Court of Appeal.

The parties agreed to toll the Govind Parties potential legal malpractice claims. However, Enenestein declined to toll beyond April 30, 2024. As such, on April 30, 2024, the Govind Parties filed a legal malpractice action against Enenstein.

On September 13, 2024, the Govind Parties filed this Motion for Stay of Proceedings pending resolution of the appeal.

The court has “the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489; Code Civ. Proc., § 128, subd. (a).) The California Supreme Court has recognized that “trial courts have inherent authority to stay malpractice suits, holding them in abeyance pending resolution of underlying litigation.” (Adams v. Paul (1995) 11 Cal.4th 583, 593.)

2. Excerpts of their opening brief in Vaghashia v. Vaghashia, Second District Court of Appeal, Division 8, Case No. B331073.

1. Cross-Defendants’ Motion for Mistrial in Govind Vaghashia v. Prashant Vaghashia, et al., Los Angeles Superior Court, Case No. BC696133.

2. Plaintiffs and Cross-Defendants Govind Vaghashia and Sonal Vaghashia’s Motion to Enforce the Settlement Agreement Under C.C.P 664.6 RE: Dismissal of Complaint with Prejudice and Other Provisions in Govind Vaghashia v. Prashant Vaghashia, et al., Los Angeles Superior Court, Case No. BC696133.

3. “Declaration of Hari S. Lal, Esq. Plaintiffs Govind Vaghashia and Sonal Vaghashia’s Notice of Motion and Motion to Enforce Settlement Agreement Under C.C.P 664.6 And Breach of Agreement by Defendant” in Govind Vaghashia v. Prashant Vaghashia, et al., Los Angeles Superior Court, Case No. BC696133 (exhibits to this document omitted).

4. Govind Parties’ Notice of Motion and Motion to Vacate and/or Set Aside Settlement in Govind Vaghashia v. Prashant Vaghashia, et al., Los Angeles Superior Court, Case No. BC696133.

5. Opposition of Prashant and Mita Vaghashia to Motion to Vacate and/or Set Aside Settlement (exhibits to this document omitted).

6. Docket of Court of Appeal in Vaghashia v. Vaghashia bearing Case No. B331073.

7. Dockets of Court of Appeal for All Appeals taken from Govind Vaghashia v. Prashant Vaghashia, et al., Los Angeles Superior Court, Case No. BC696133.

8. Meet and Confer Email dated September 11, 2024 from Tim Harris to Joshua R. Furman.

9. Letter dated September 12, 2024 with Petition to Arbitrate Fee Dispute – Govind Vaghashia v. EPG, submitted to Orange County Bar Association (exhibits omitted).

The Govind Parties’ request and Enenstein’s request nos. 1-7 are GRANTED. (Evid. Code, § 452, subd. (d)(1).) The court however does not take judicial notice of the truth of hearsay statements in the court files, including pleadings, affidavits, testimony, or statements of fact. (See Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360, 382, citing Williams v. Wraxall (1995) 33 Cal.App.4th 120, 130, fn. 7.)

Enenstein’s request nos. 8 and 9 are DENIED. Correspondence between counsel is not the proper subject of judicial notice.

Govind Parties move for an order staying this action, arguing that until the Court of Appeal decides whether the motion to vacate or set aside the settlement agreement was properly decided, the Govind Parties’ damages cannot properly be evaluated. Further, if the Court of Appeal decides in Govind Parties’ favor, the Govind Parties may decide to not pursue their legal malpractice claim against Enenstein.

Enenstein opposes on two grounds. First, Enenstein argues that the Govind Parties delayed in filing this action for over two years which has prejudiced Enenstein by the loss of evidence. Second, the appeal will not modify the need for the discovery Enenstein seeks. For instance, Govind has paid approximately $3.5 million pursuant to the settlement agreement which Govind will seek to recover from Enenstein regardless of the Court of Appeal’s decision. For these reasons, Enenstein contends a stay of this case should be denied.

Enenstein’s argument regarding delay is not persuasive. Enenstein makes vague references to the loss of evidence, including the death of Govind’s brother (who is not identified) and fading memories, but does not demonstrate how the information that Govind’s brother possessed is relevant to the claims in this action. The specter of fading memories is likewise undeveloped. Moreover, the time for stay will not be long, given the upcoming oral argument date. As to the $3.5 million, if the Court of Appeal sets aside the settlement agreement, any sums paid pursuant to that agreement will likely be returned. Moreover, Enenstein fails to address the principal issue raised by the motion: the Court of Appeal’s pending decision is determinative of the Govind Parties’ damages, if any, in this action.

Based on the foregoing, the court finds a stay of proceedings is appropriate. The Court of Appeal’s decision will clarify the issues in this case, and perhaps, it will determine whether Govind Parties proceed with this case at all. A stay will serve the interests of justice by preventing potentially unnecessary litigation.

The motion to stay is GRANTED. This action is stayed pending resolution of the appeal in the Underlying Action.

The court sets a Status Conference re: Appeal for January 14, 2025 at 9:00 a.m. Govind Parties are to file an update of the status of the appeal within 5 court days of the Court of Appeal’s decision.

Kerry Bensinger

Judge of the Superior Court