Judge Kristin S. Escalante , Case Number: BC714688, Date: 2023-05-19 Tentative Ruling

The Request for Entry of Default / Judgment filed by Plaintiffs Dr. Jerrold S. Dreyer, MD as an individual and trustee, and Rachel Chaim Dreyer on 01/12/2023 is continued to --- at 8:30 am in Department 24 of Stanley Mosk Courthouse.

Plaintiffs have not submitted competent evidence from percipient witnesses to support the amount of damages sought. Plaintiffs are required to prove up the amount of damages with admissible evidence. They cannot rely on a declaration from counsel because counsel’s declaration does not satisfy the requirements of Code of Civil Procedure section 585, subdivision (d), which states the “facts stated in the . . . affidavits shall be within the personal knowledge of the affiant and shall be set forth with particularity.” Any claims of damages must also be supported by a percipient witness declaration with supporting documentation.

As to the interest, Plaintiffs must recalculate the prejudgment interest rate at 10 percent for both agreements. (See Grados v. Shiau (2021) 63 Cal.App.5th 1042, 1054 [“the award is contrary to law because it exceeds the constitutionally allowable maximum interest rate of 10 percent, and thus renders the default judgment void on its face”].) Additionally, Plaintiffs must provide evidence that the date of maturity of the Plainfield Agreement is January 16, 2016, as the agreement itself does not state a maturity date. Finally, the interest calculation should provide the exact number of days Plaintiffs seek prejudgment interest for, not an approximation of “around” how much times has passed.

Plaintiffs have neither dismissed Defendants JM Capital Investments LLC and Does 1 through 50 nor explained why it as appropriate not to dismiss them.

Plaintiffs must submit a proposed order on JUD-100 form.

The court denies Plaintiffs request for judicial notice.

Moving party to give notice.

Plaintiffs Jerrold S. Dreyer, MD, (“Dreyer”) and Rachel Chaim Dreyer (“Rachel”) (collectively “Plaintiffs”) submit an application for entry of default court judgment against Defendants J. David Williams (“Williams”), Marble Arch Entertainment LLC (“Marble LLC”); and Plainfield Pass Media, LLC, (“Plainfield LLC”). Plaintiffs seek a total of $992,825.00 comprised of $450,000 for the two loans and $542,825 in interest.

Plaintiffs’ 1/12/2023 request for judicial notice of an indictment against Williams, a judgment against Williams in a criminal suit, and two different complaints against Williams is denied as irrelevant to the court’s ruling. (See Evid. Code, § 452)

By way of background, this was a breach of contract case. On July 7, 2018, Dreyer—acting as an individual and as Trustee of the Jerrorld S. Dreyer, MD Inc. Pension Fund and Profit Sharing Plan (“Pension Plan”)—brought suit along with Rachel. The operative first amended complaint (“FAC”) is against Defendants JM Capital Investments LLC (“JMCI”), Kathy Macias (“Macias”), Plainfield LLC, Marble LLC, Williams, and Miguel Lluis (“Lluis”) (collectively “Defendants”).

Plaintiffs allege that when Dreyer met Lluis in 1999, Lluis represented that he was a savvy businessman and investor. This began Lluis’ campaign to convince Dreyer that Lluis should be his financial advisor and manage Plaintiffs personal savings and assets. As a result of Lluis’ efforts, Plaintiffs appointed Lluis as Trustee of the Pension Plan. In 2014, Lluis then recommended Plaintiffs obtain an additional financial advisor and introduced Plaintiffs to Macias. Macias represented herself to Plaintiffs as a seasoned financial advisor with substantial connections in the entertainment industry. Macias is the granddaughter of American singer-songwriter Gene Autry. Macias then represented she could help Plaintiffs with their investments, by placing them in her investment company JMCI and her purported business partner Williams’ entertainment entities—Plainfield LLC and Marble LLC. Plaintiffs allege Williams, Plainfield LLC, and Marble LLC are all alter egos of each other.

While Lluis disclosed to Dreyer that Marias and he had a prior extra-marital affair, he falsely represented it was over. Based on information and belief, Plaintiffs allege Macias and Lluis were still engaged in a relationship and were conspiring to misappropriate Plaintiffs’ monies and/or place Plaintiffs’ monies in risky or questionable ventures. Plaintiffs allege that Williams has plead guilty to crimes associate with motion picture related investments. As part of Lluis and Macias relationship, Macias gave Lluis kickbacks whenever Plaintiffs loaned Macias, JMCI and/or Williams monies. Between 2000 and 2017, Lluis and Macias misappropriated $1.3 million od Plaintiffs funds, failed to safeguard the Pension Plan, and failed to invest or reinvest the funds in the Pension Plan.

At the end of 2017 Lluis resigned as Trustee of the Pension Plan. Then in 2018, Macias stated that she would return Plaintiffs’ monies and admitted that she owed money to Plaintiffs in connection with two film projects—Plymouth and Mena.

In the prayer for relief, Plaintiffs request damages in excess of the jurisdiction limit of the court, pre and post judgment interests, and costs of the suit. Plaintiffs do not state a specific amount of money. In the third cause of action for breach of contract against Macias, JMCI, Williams, Plainfield, and Marble Arch, Plaintiffs request “in amount no less than $450,000, plus interest at the applicable contractual and/or legal rate.” Thus, it is the third cause of action which is the basis of the default judgment.

“To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff.” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98 [internal citation omitted].) For a written contract, the plaintiff may “plead the legal effect of the contract rather than the price language.” (Ibid.) To “plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ ” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

Here, Plaintiff have stated a cause of action for breach of contract. Plaintiffs allege that in December 2014 Pension Plan and Plainfield LLC—by and through—Williams entered into a loan agreement (“Plainfield Agreement”). The Pension Plan provided a $250,000 print and advertising loan. Plaintiffs attach the Loan Agreement as Exhibit F to the FAC. In July 2015, Pension Plan entered into a Bridge Loan Agreement with Marble LLC for $200,000 (“Marble Agreement”). Plaintiffs allege they performed all conditions under the agreements and provided the funds through the Pension Plan. However, Plainfield LLC, Williams and Marble LLC have not retuned the loans. As such Plaintiffs have been deprived of $450,000.00 plus interest.

The court previously instructed Plaintiffs’ counsel to resubmit a declaration in accordance with discussions at the March 17, 2023 hearing. (Minute Order, Mar. 17, 2023.) As of May 16, 2023, counsel has not done so.

1. ¿ DEFAULT ENTERED?

If “No”, route to clerk’s office for consideration whether to enter default.

2. ¿ ENTRY OF DEFAULT NOT VOID?

(b) Has defendant appeared (answer or other response filed) before default was entered?

(c) In a personal injury or wrongful death action, did plaintiff fail to serve a statement of damages before the default was entered? (Service must be in the same manner as a summons.) (Code Civ. Proc., § 425.11, subds. (c)-(d).)

If “Yes” to any of the questions in (a)-(c), clerk to prepare minute order striking entry of default.

3. ¿ BASIC REQUIREMENTS OF THE FORM ARE SATISFIED?

4. ¿ BASIC REQUIREMENTS FOR AN AWARD ARE MET?

(a) Plaintiff has dismissed all parties against whom a default judgment is not sought or there is an application for entry of separate relief on grounds that the claims are severable?

Moving Party has not dismissed JMCI or Does, or explained why they have not been dismissed, i.e., the claims are severable.

(b) There is an affidavit or declaration under penalty of perjury under the laws of the State of California in support of the judgment sought.

If the answer is “No” to any of the questions in Nos. 1-4 above, use the “Notice of Rejection – Application for Default Judgment by Court – Collections Case” form and check boxes giving the reasons for rejection (items checked “No”).

5. ¿ OTHER ITEMS TO BE CHECKED BEFORE BENCH OFFICER REVIEW

If the answer is “Yes” the bench officer will decide whether or not to proceed with entry of default judgment.

(b) In an action not involving personal injury or death, the principal amount requested is less than or equal to the principal amount requested in complaint?

If the answer is “No” the bench officer will not award more than the amount requested in the complaint. If No, amount requested in complaint is _______________

(c) In a personal injury or wrongful death action, the principal amount requested is less than or equal to the principal amount requested in the statement of damages?

If the answer is “No” the bench officer will not award more than the amount requested in the statement of damages. If No, amount requested in statement of damages is $

6. ¿ AWARD OF PRINCIPAL

Does the submitted evidence properly support the principal amount of damages sought?

Declarant is Plaintiffs’ attorney John Ly (“Declarant”). He does not have percipient knowledge of the events which transpired. The declaration does not satisfy the requirements of Code of Civil Procedure section 585, subdivision (d), which states the “facts stated in the . . . affidavits shall be within the personal knowledge of the affiant and shall be set forth with particularity.”

(b) Declarant provides adequate authenticated foundation for exhibits (e.g., ledger, accounting, invoice or summary of amounts showing balance due by defendant). See LASC Rule 3.205(b) (“Unauthenticated documents will not be received in evidence unless their authenticity has been pleaded in the complaint and admitted by entry of default.”)

“Plaintiffs in a default judgment proceeding must prove they are entitled to the damages claimed.” (Kim v. Westmoore Partners, Inc (2011) 201 Cal.App.4th 267, 288].) But the plaintiff need only make a prima facie showing of damages. (See Johnson v. Stanhiser (1999) 72 Cal.App.4th 357, 361-362 [trial court erred in applying a preponderance of the evidence standard].) A decision regarded the award is reviewed for substantial evidence. (See Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1150; Ostling v. Loring, supra, 27 Cal.App.4th at p. 1746).

Here, the Declarant attaches the complaint which attaches the underlying contract. However, Declarant does not lay any foundation for the contracts.

(c) If action is on a promissory note or “written obligation to pay money,” the original is provided for cancellation or a declaration explaining loss or unavailability of original is provided with a proposed order to accept a copy in lieu of original.

(d) If plaintiff seeks separate relief against less than all defendants, there are grounds to find the claims severable. (See CCP 578-579)

(d) If default is sought against multiple defendants, plaintiff has shown liability as to each defendant and the recovery is not duplicative.

See also section 11 below regarding additional requirements for particular types of cases.

7. ¿ AWARD OF ATTORNEYS FEES – Not sought

8. ¿ AWARD OF INTEREST

(a) Plaintiff is entitled to prejudgment interest only when the amount of principal damages was “certain, or capable of being made certain by calculation” prior to entry of judgment (Civ. Code, § 3287).

Original amount was $450,000 between two different agreements: (1) the Marble Agreement for $200,000 (Compl., ¶4, Ex. G at p. 1), and (2) the Plainfield Agreement for $250,000 (Compl., ¶45, Ex. F).

(b) If interest is sought, plaintiff has provided the interest calculation. (Cal. Rules of Court 3.1800 (a)(3).)

(c) In a contract-based case, Plaintiff’s request is based on the default prejudgment interest rate of 10% per annum unless a different rate is specified by contract (Civ. Code § 3289).

Attached to the complaint are the two purported agreements that are the basis of the breach of contract complaint which states the interest on the Plainfield loan is 15% per annum and interest on the Marble Arch loan is 20% interest. (FAC, Ex. F, at p. 2; Ex. G, at p. 1.) However, the court cannot award greater than 10% interest. Under the California Constitution, the maximum allowable interest rate is 10 percent. (See Cal. Const., art. XV, § 1; Grados v. Shiau, supra, 63 Cal.App.5th at p. 1054.)

An award of prejudgment interest at 15 and 20 is contrary to law, exceeds the trial court’s jurisdiction, and would void that portion of the default judgment. (See Grados v. Shiau (2021) 63 Cal.App.5th 1042, 1054 [“the award is contrary to law because it exceeds the constitutionally allowable maximum interest rate of 10 percent, and thus renders the default judgment void on its face”]; 311 South Spring Street Co. v. Department of General Services (2009) 178 Cal.App.4th 1009, 1014 [award of postjudgment interest at a rate that violated the California Constitution “is void because it constitutes relief which the court had no power to grant”]; see also Falahati v. Kond (2005) 127 Cal.App.4th 823, 830 [a default judgment is void “if the court granted relief which it had no power to grant”].)

For loans that purport to charge interest greater than 10 percent, Plaintiffs are entitled to interest only at the legal rate and only after the maturity date of each loan, until the entry of judgment. “ ‘The attempt to exact the usurious rate of interest renders the interest provisions of a note void. [Citation.] The usurious provisions, however, do not affect the right of the payee to recover the principal amount of the note when due. [Citation.] The inclusion of a usurious interest provision, therefore, results, in effect, in a note payable at maturity without interest.’ Accordingly, the lender is entitled ‘to interest at the legal rate from the date the note matures until the date of judgment.’” (Grados, supra, 63 Cal.App.5th at p. 1056; see Epstein v. Frank (1981) 125 Cal.App.3d 111, 123 [“the payee of a note with a usurious interest provision [is] entitled to damages in the nature of interest at the legal rate for that period of time which the obligor on the note withheld the principal beyond the date of maturity”].)

Second, it is unclear when prejudgment interest began accruing on the Plainfield Agreement.

Prejudgment interest begins accruing on the dates of maturity, for each loan. (See also Soleimany v. Narimanzadeh (2022) 78 Cal.App.5th 915, 918 [“if any of the principal amount is unpaid at the date of maturity, the lender is entitled to damages in the form of prejudgment interest on any such unpaid amount from the date of maturity of the loan to the date of judgment”].) The Marble Agreement states that the maturity date of the loan is January 16, 2016 (Compl., ¶4, Ex. G at p. 1) However the Plainfield Agreement does state a maturity date. (Compl., ¶45, Ex. F) The moving papers state both agreements matured on January 16, 2016, however, there is no evidence to support that the Plainfield Agreement matured on January 16, 2016.

Third, Plaintiffs do not provide the number of days which the interest spans based on the date of maturity and the date of judgment. Instead, they provide an estimation of “around 6.98 years” and “around 7.03 years.” (Memo., at pp. 10:20-11:08) This is insufficient.

Therefore, Plaintiffs must (i) recalculate the interest rate at 10 percent for both agreements (ii) either provide evidence that the date of maturity of the Plainfield Agreement is January 16, 2016, or not seek prejudgment interest on the Plainfield Agreement, and (iii) provide the court with the exact number of days Plaintiffs seek prejudgment interest for.

(d) In a non-contracts case, Plaintiff’s request is based on a prejudgment interest rate of 7% (Cal. Const., Art. 15 § 1).

(e) If the principal amount includes interest in the balance owed, prejudgment interest may be awarded from the date of the balance until the date when the default judgment is entered. Any interest calculation must avoid awarding “interest on interest.”

Note: If no computation is provided, do not reject the default, but rather award the principal (with or without attorneys fees) without interest.