Judge: Kevin C. Brazile, Case: 22STCV22928, Date: 2023-05-19 Tentative Ruling

Hearing Date: June 21, 2023

Case Name: Vassilev, et al. v. Valkov, et al.

Case No.: 20STCP03753 

Matter: Motion for Summary Judgment/Adjudication

Moving Party: Plaintiffs Vess Vassilev, Victoria Nesheva, and Krassmir Illiev 

Responding Party: Defendant Vlado Valkov

Notice: OK

Ruling: The Court will enter an order of dissolution, but the Motion is 

otherwise denied.

Moving parties to give notice.

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, 2021, Plaintiffs Vess Vassilev, Victoria Nesheva, and Krassmir Illiev filed the operative First Amended Complaint (“FAC”) against Defendant Vlado Valkov for (1) involuntary dissolution of LLC, (2) partition, (3) breach of fiduciary duty, (4) constructive fraud, and (5) an accounting.

Plaintiffs allege, “The sole asset of SIV, LLC are two parcels of property located in the County of Los Angeles, city of Los Angeles and commonly known as 1330 N. Braeridge Dr., Los Angeles, CA 90210 (Accessor Parcel No. 4355 006 045) and 1340 N. Braeridge Dr., Los Angeles, CA 90210 (Accessor Parcel No. 4355 006 046), hereinafter collectively referred to as the ‘Braeridge Property’.”  They further allege that “[a]t Defendant V. VALKOVs’ behest, the LLC purchased the Subject Property to develop a single–family home on the Braeridge Property. Defendant V. VALKOV is an architect who convinced the other partners to fund the project and buy the property such that he could design a large single-family home for the Braeridge Property. He made certain representations that he had researched the Braeridge Property and that it could sustain a large single-family home. . . . After purchase completion, Defendant V. VALKOV, for the first time, stated he now believed it would be too expensive to develop the purchased lots due to the current soil conditions. Given the unprofitable business proposition to develop the Subject Property the other members desired to sell the property and extinguish the ongoing liability and tax obligations. However, Defendant V. VALKOV refused and continues to refuse to agree to sell the real property and dissolve the LLC.”

Plaintiffs now seek summary judgment or, alternatively, summary adjudication of all causes of action against Vlado Valkov.

Previously, the Court continued the Motion so that Defendant could file an opposition.  While an Opposition was filed with the Court on March 28, 2023, Plaintiffs filed a declaration on June 14, 2023, stating they had never been served with the Opposition and that they had retrieved the Opposition that day through their own efforts.  

The law of summary judgment provides courts “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. (2001) 25 Cal.4th 826, 843.)  In reviewing a motion for summary judgment or adjudication, courts employ a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”  (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)  The moving party bears the initial burden of production to make a prima facie showing of the nonexistence of any triable issue, in which case the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue.  (Code Civ. Proc. § 437c(p)(2).)  To show a triable issue of material fact exists, the opposing party may not rely on the mere allegations or denials of the pleadings, but instead must set forth the specific facts showing that a triable issue exists as to that cause of action or a defense thereto.  (Aguilar, at p. 849.)  Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

As an initial matter, the Opposition does not have a real separate statement of undisputed fact.  Notably, “Failure to comply with this requirement of a separate statement may constitute a sufficient ground, in the court’s discretion, for granting the motion.”  (Code Civ. Proc. § 437c(b)(3).)

The Motion is premised on facts deemed admitted by the Court on October 6, 2022.  Specifically, among others, the following requests have been deemed admitted: 

1. Admit that YOU currently own a 12% interest in SIV, LLC;

2. Admit that YOU are the managing member of SIV, LLC;

3. Admit that, prior to the Parties’ purchase of the SUBJECT PROPERTY, YOU represented to PLAINTIFFS that YOU researched the potential for building upon the SUBJECT PROPERTY;

4. Admit that, prior to the Parties’ purchase of the SUBJECT PROPERTY, YOU represented to PLAINTIFFS that the SUBJECT PROPERTY was fit for the purpose of constructing a large home;

5. Admit that the SUBJECT PROPERTY is unbuildable;

6. Admit that YOU never reviewed any records from the City of Los Angeles Department of Building and Safety regarding the SUBJECT PROPERTY prior to the PARTIES’ purchase of the SUBJECT PROPERTY;

7. Admit that YOU never possessed a valid California architect license;

8. Admit that YOU did not pay any portion of the property taxes due on the SUBJECT PROPERTY in the years 2014-2022; and 

9. Admit that YOU did not pay any portion of the California state LLC tax return fees for the SIV, LLC in 2014-2022.

1. Breach of Fiduciary Duty & Constructive Fraud

“The elements of the cause of action for constructive fraud are: (1) fiduciary relationship; (2) nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4) reliance and resulting injury (causation).”  (Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 517.)

“The elements of a cause of action for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2) the breach of that duty; and (3) damage proximately caused by that breach. [Citation.]” (Mosier v. Southern Cal. Physicians Ins. Exchange (1998) 63 Cal.App.4th 1022, 1044.)

The Court cannot summarily adjudicate the claims for breach of fiduciary duty and constructive fraud because both claims relate to damages (FAC ¶¶ 45, 55), but the Motion does not show a lack of triable issues with respect to the element of damages.  Actually, the issue of the amount of damages is not specifically discussed in the moving papers.

2. Involuntary Dissolution

Corp. Code § 17707.03 states, “(a) Pursuant to an action filed by any manager or by any member or members of a limited liability company, a court of competent jurisdiction may decree the dissolution of a limited liability company whenever any of the events specified in subdivision (b) occurs.  (b)(1) It is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. (2) Dissolution is reasonably necessary for the protection of the rights or interests of the complaining members. (3) The business of the limited liability company has been abandoned. (4) The management of the limited liability company is deadlocked or subject to internal dissension. (5) Those in control of the limited liability company have been guilty of, or have knowingly countenanced, persistent and pervasive fraud, mismanagement, or abuse of authority.”

Based on the admitted facts and the lack of an opposing separate statement of undisputed fact (see supra), the Court will enter an order of dissolution.  Indeed, it seems the LLC cannot function because its sole property cannot be developed and there are no other practical means to otherwise carry on the business.  The issue of selling the subject property has apparently caused dissension within management.  

However, the wind up of the LLC remains an issue, including the sale of the subject property.  

3. Partition

“It is . . . the accepted doctrine of the more recent authors upon the subject as well as of the appellate courts of this state that a cotenant is entitled to partition as a matter of absolute right; that he need not assign any reason for his demand; that it is sufficient if he demands a severance; and that when grounds for a sale are duly established it may be demanded as of right. To grant it is not a mere matter of grace.”  (De Roulet v. Mitchel (1945) 70 Cal.App.2d 120, 123-124.)  “However, the right of a cotenant to partition property may be modified or waived by reason of an agreement, express or implied, between him and his cotenant permitting a variance from the ordinary incidents of such cotenancy.”  (Williams v. Williams (1967) 255 Cal. App. 2d 648, 651.)  “If the court finds that the plaintiff is entitled to partition, it shall make an interlocutory judgment that determines the interests of the parties in the property and orders the partition of the property and, unless it is to be later determined, the manner of partition.”  (Code Civ. Proc. § 872.720(a).)  The opposing party may defeat a motion for interlocutory judgment for partition by demonstrating that there exist triable issues of fact.  (Williams v. Williams (1967) 255 Cal. App. 2d 648, 652.)

Should partition be appropriate, “[t]he court shall order that the property be divided among the parties in accordance with their interests in the property as determined in the interlocutory judgment.”  (Code Civ. Proc. § 872.810(a).) “Notwithstanding Section 872.810, the court shall order that the property be sold and the proceeds be divided among the parties in accordance with their interests in the property as determined in the interlocutory judgment in the following situations: (a) The parties agree to such relief, by their pleadings or otherwise. (b) The court determines that, under the circumstances, sale and division of the proceeds would be more equitable than division of the property.  For the purpose of making the determination, the court may appoint a referee and take into account his report.”  (Code Civ. Proc. § 872.820.)

Here, while Defendant has been deemed to admit that he has a 12% interest in the subject property, Plaintiffs have failed to show a lack of triable issues as to their ownership interest in the subject property.  They claim they have an 88% interest, but provide no evidence in support of this.  This was not an admitted fact.  They point to their FAC and Defendant’s Answer thereto, but Defendant specifically denied the paragraph in which Plaintiffs alleged an 88% interest.  The ownership interests still being in dispute, the Motion is denied as to the partition claim.  

4. Accounting

The Motion does not discuss the propriety of summary adjudication with respect to the claim for accounting.  Therefore, the Motion is denied as to this cause of action.

5. Summary

In sum, the Court will enter an order of dissolution, but the Motion is otherwise denied.

Moving parties to give notice. 

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.