Judge Kevin C. Brazile, Case 19STCV31371 2022-10-06 Tentative Ruling

TENTATIVE RULINGS

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STANLEY MOSK COURTHOUSE, DEPARTMENT 20 - JUDGE KEVIN C. BRAZILE

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Notice: OK for MSA; NOT OK for Plaintiffs’ Opposition; OK for Defendants’ Reply

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.

On June 9, 2022, Plaintiffs filed their Second Amended Complaint (SAC), alleging breach of contract against Defendants Istwani and Jackson Cafe for failure to pay compensation for services rendered.

“A party may move for summary adjudication as to one or more causes of action within an action . . . if the party contends that the cause of action has no merit . . . .” (Code Civ. Proc., § 437c(f)(1).)

“A defendant . . . 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, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. 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. The plaintiff . . . shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action of a defense thereto.” (Code Civ. Proc., § 437c(p)(2).)

Defendant claims Plaintiffs’ SAC is stylized as including only two causes of action, but they can be broken down to include 16 causes of action which Defendants move for summary adjudication on the grounds that they are time barred and Plaintiffs cannot maintain a cause of action for breach of contract.

The contracts contemplated for causes of action 1-7 are Engagement 1 (Signed). The contract contemplated for cause of action 8 is Engagement 2 (Signed). The contract contemplated for cause of action 10 is Engagement 4 (Signed).

Defendants claim causes of actions 1-8 and 10 are barred by the four-year statute of limitations for written contracts because they were not timely filed and Plaintiffs’ claims do not relate back. (Mot. p. 3.) Defendants argue that Plaintiffs’ addition of Art of Management LLP as a new party on July 20, 2021 makes this date the relation back date and not the initial filing date because a complaint may not be amended after the statute has run to add a new party. (Mot. p. 3-4.)

Plaintiffs claim the relation back doctrine applies when the addition of a new plaintiff rests on the same general set of facts and does not require a defendant to answer a wholly different legal liability from that originally pled. (Oppo. pp. 6-9.) Plaintiffs claim the purpose of the amendment was to correct a technical defect in Plaintiffs’ status. (Oppo. p. 9.)

“Courts have permitted plaintiffs who have been determined to lack standing, or who have lost standing after the complaint was filed, to substitute as plaintiffs the true real parties in interest. (Branick v. Downey Sav. & Loan Assn. (2006) 39 Cal.4th 235, 243.) “The important limitation on the rule just mentioned is that the plaintiff proposed to be substituted may not ‘state facts which give rise to a wholly distinct and different legal obligation against the defendant.’ [Citation.] For this purpose, ‘[i]n determining whether a wholly different cause of action is introduced by the amendment technical considerations or ancient formulae are not controlling; nothing more is meant than that the defendant not be required to answer a wholly different legal liability or obligation from that originally stated.’ [Citation.]” (Id. at p. 243-244.)

Here, Plaintiffs have sufficiently shown that the addition of Art of Management LLP as a new plaintiff did not “give rise to a wholly distinct and different legal obligation against” Defendants. (Branick v. Downey Savings Loan Association, supra, 39 Cal.4th at p. 243.) Plaintiffs’ First Amended Complaint (FAC) is nearly identical as its original Complaint aside from adding the new plaintiff’s name and changing “plaintiff” to “plaintiffs.” (Davis Decl., Exh. 2.) The Court finds that Plaintiffs did not assert a wholly different cause of action with the addition of Art of Management LLP as a new plaintiff in its amended complaint. Furthermore, the Court finds that Defendants have not suffered prejudice since there are no new causes of action asserted against them and it was reasonably foreseeable that Art of Management LLP would have been added as a plaintiff. The Court agrees that Art of Management LLP and Art of Management LLC function as the same entity. (Johnson Decl. ¶¶ 2-3, 11, 13.) It is undisputed that the engagement letters which cover causes of action 1-8 and 10 are written contracts. (Mot. pp. 13-14.) Thus, the relation back doctrine applies to the addition of Art of Management LLP as a plaintiff such that the amended complaint relates back to September 4, 2019, the day the action was commenced, and causes of action 1-8 and 10 are timely.

Therefore, the Court DENIES summary adjudication as to causes of action 1-8 and 10.

2. Statute of Limitations for Oral or Implied Contracts (Causes of Action 3, 5, 14, and 16)

The contract contemplated for causes of action 3 and 5 are Engagement 1 (Signed). The contract contemplated for cause of action 14 is Engagement 3 (Unsigned). The contract contemplated for cause of action 16 is Art of Management LLC’s claim pursuant to purported oral instructions, “Tax Consulting Services as needed.”

Defendants claim causes of action 3, 5, 14, and 16 are barred by the two-year statute of limitations for oral or implied contracts because these contracts accrued by April 2017, and the statute of limitations expired by April 2019. (Mot. p. 4.) Defendants claim Defendant Istwani never signed the agreements that are the subject of causes of action 3, 5, 14, and 16. (Defendant’s Undisputed Material Facts (DUMF) 9:1.)

Plaintiffs dispute that the written engagement was not executed because they claim it was an oral contract confirmed by an instrument in writing, which is sufficient to trigger the four-year statute of limitations for breach of written contract despite not being signed by the party to be charged. (Plaintiff’s Undisputed Material Facts (PUMF) 9:1.)

“When a party has agreed to the writing, there is no reason to invoke the two-year statute of limitations applicable to oral agreements. The four-year statute of limitations, unlike the statute of frauds, does not require that the writing be signed by the party to be charged. Had the Legislature meant to make a signature mandatory for a writing to qualify for the longer period of limitations it would have so provided as it did in section 360 of the Code of Civil Procedure, which requires that a new promise to perform under an old contract be signed to start the statute running anew. (Amen v. Merced County Title Co. (1962) 58 Cal. 2d 528, 533.)

Here, the Court finds that the oral contracts contemplated in causes of action 3, 5, 14, and 16 are subject to the four-year statute of limitations because Plaintiffs have provided evidence that the parties contemplated the unsigned agreements to be binding. (PUMF 9:1; Johnson Decl. ¶¶ 4-9, 13-19; Davis Decl.; Exh. 3, pp. 18-20.) The agreements under causes of action 3, 5, 14, and 16 are not oral contracts despite the lack of a signed writing by the party to be charged, which is not necessary for invoking the four-year statute of limitations for a written contract. The Court finds it sufficient that Plaintiffs have alleged there was a contract between the parties, which is evidenced by a written agreement. Thus, the contracts contemplated in causes of action 3, 5, 14, and 16 are timely.

Therefore, the Court DENIES summary adjudication as to causes of action 3, 5, 14, and 16.

Defendants claim that Plaintiffs did not have a written contract with Defendants for the agreement contemplated in Cause of Action 9, making this subject to the two-year statute of limitations for oral contracts. (Mot. p. 14.)

Plaintiffs claim that there was a written contract because there was an Engagement Letter (Istwani Engagement 3 (Unsigned)), which although was unsigned, should trigger the four-year statute of limitations. (Oppo. p. 10.)

For the reasons discussed above, the Court agrees and finds that the contract contemplated in Cause of Action 9 is subject to the four-year statute of limitations for written contracts and that this claim is timely.

Defendants claim there was no contemplated oral or written contract for the work Plaintiffs claim they did pursuant to oral instructions. (Mot. p. 14.)

Plaintiffs claim this cause of action pertains to additional miscellaneous services it performed pursuant to the “Tax Consulting Services as needed” provision in each of the written engagement letters. (Johnson Decl. ¶¶ 6-7.) Plaintiffs claim these miscellaneous services were directly governed by the four written engagement letters and are subject to the four-year statute of limitations. (Oppo. p. 11.)

The Court finds that the “Tax Consulting Services” provision in each of the written contracts contemplated in the various causes of action Defendant has structured is sufficient to render Plaintiffs’ work in cause of action 11 to be a governed by a written contract, and that it is timely.

Defendants claim that they did not enter into any signed agreements with Art of Management, LLC. (Mot. p. 15.)

Plaintiffs claim the engagement letters provide that it governs all services provided by both Art of Management entities, including Art of Management, LLC. (Johnson Decl. ¶¶ 2-3, 6, 13; Davis Decl.; Exh. 3 pp. 10, 14, 18, 22.) Plaintiffs argue that Art of Management LLC and Art of Management LLP are a single entity. (Oppo. p. 17.)

The Court finds that Plaintiffs’ argument has merit, and that the Engagement 2 contract covers Art of Management LLC, and that cause of action 12 was timely since it is subject to the four-year statute of limitations as a written contract.

Defendants claim that Plaintiffs cannot establish a breach of contract claim as specified in causes of action 13 (Art of Management LLC for Breach of Engagement 2 (Signed)) and 15 (Art of Management LLC for Breach of Engagement 4 (Signed)). For Cause of Action 13, Defendants claim that Plaintiffs failed to identify the contract under which the work was performed by failing to identify a single billing entry for business management services where Art of Management LLC performed work under Engagement 2 (Signed). (DUMF 13:2.) For Cause of Action 15, Defendants claim the same as in Cause of Action 13 in addition to the fact that Art of Management LLC explicitly admitted that it did not perform services on any invoice sent to Jackson Cafe. (DUMF 15:3.)

Plaintiffs claim they did establish a breach of contract claim because the Art of Management and Jackson Cafe entered into a written engagement letter, dated September 13, 2016, encompassing the preparation of Jackson Cafe’s 2015 corporate tax return, which was signed by Istwani on behalf of Jackson Cafe on September 15, 2016. (Johnson Decl. ¶ 6; Davis Decl. Exh. 3, p. 23.)

The Court finds that Plaintiffs can maintain a breach of contract claim because the written engagement letter is sufficient to show the existence of a contract, and Plaintiffs have sufficiently alleged breach in its complaint.

Therefore, the Court DENIES summary adjudication as to causes of action 13 and 15.

Plaintiffs request judicial notice of the following: (1) “Cross-Complaint of Fawaz Istwani and Jackson Cafe, Inc.”; (2) Ruling of Judge Kevin C. Brazile in Department 20, granting Art of Management LLC’s Motion for Leave to Amend the Complaint, entered on July 15, 2021; and (3) “Memorandum of Points and Authorities in Support of Defendants Fawaz Istwani and Jackson Cafe, Inc.’s Motion for Summary Adjudication.”

The Court grants all of Plaintiffs’ requests for judicial notice under Evidence Code Section 452 (d).

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.