Judge: Lynne M. Hobbs, Case: 21STCV39048, Date: 2024-09-03 Tentative Ruling

Case Number: 21STCV39048    Hearing Date: September 3, 2024    Dept: 61

TITANIUM GROUP, LLC vs NEW AGE KALEIDOSCOPE, LLC, et al.

TENTATIVE

Plaintiff Titanium Group, LLC’s Motion to Enforce Settlement is DENIED.

Plaintiff to give notice.

DISCUSSION

Code Civ. Proc. section 664.6 states that:

If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.

“Section 664.6 permits the trial court judge to enter judgment on a settlement agreement without the need for a new lawsuit. [Citation.] It is for the trial court to determine in the first instance whether the parties have entered into an enforceable settlement. [Citation.] In making that determination, ‘the trial court acts as the trier of fact, determining whether the parties entered into a valid and binding settlement. [Citation.] Trial judges may consider oral testimony or may determine the motion upon declarations alone. [Citation.] When the same judge hears the settlement and the motion to enter judgment on the settlement, he or she may consult his [or her] memory. [Citation.]’ [Citation.]” (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1359–1360.)

Plaintiff Titanium Group LLC (Defendant moves to enforce a global settlement entered in this case with Defendant New Age Kaleidoscope, LLC (Defendant), as well as the parties in the related case of Newage Garden Grove, LLC v. Titanium Group, LASC Case No. 2STCV39048.

The settlement requires the Newage entities to purchase the Titanium entities’ interests in the Newage entities for $7.5 million. (Miller Decl. Exh. A.) The Newage entities have also agreed to pay half of the tax liabilities associated with the settlement, up to $1.5 million, as follows:

New Age Kaleidoscope, LLC and/or Newage Garden Grove shall pay for one-half of TG3 and Titanium Group, LLC’s actual combined net tax liability associated with the purchases/share transfers contemplated by this agreement based on the Titanium/TG3/pr Sue Yen Leo Pelletier estimated federal and state tax liabilities in an amount not to exceed the lesser of 50% or $1.5 million to New Age Kaleidoscope, LLC/Newage Garden Grove, LLC. Titanium and TG3 agree to share all tax and financial documents reasonably necessary to determine the amount owed under this agreement. (Miller Decl. Exh. A.)

Plaintiff argues that Defendant has breached the settlement agreement by refusing to pay the agreed amount, on the pretense that Defendant has not allowed it to inspect the tax returns of the Titanium entities and their owner, Sue Yen Leo Pelletier. (Motion at p. 7.) Plaintiff argues that they have provided a report and calculation of their tax liabilities (which would warrant a payment of the full $1.5 million maximum), and that Defendant is in possession of other materials, namely K-1 forms already prepared by the Newage entities, that would allow it to confirm the accuracy of this conclusion. (Motion at p. 8; Pelletier Decl. ¶ 12.)

Plaintiff, in its concurrent motion *(now withdrawn but referenced in its opposition) argued that they seek the tax returns for the Titanium entities and Pelletier (whose tax liability on the purchases is also being paid as part of the settlement) for the past three years, and are willing to have a CPA examine the returns, in a confidential setting outside Plaintiff’s presence, in order to verify the tax liability payment. (Plaintiff’s Motion at pp. 5–6.) Defendant, meanwhile, argues that they previously offered to have Plaintiff’s CPA discuss tax liability with Pelletier, herself a CPA, and thereafter determine what information was needed to verify the liability. (Motion at pp. 8–9.)

Defendant has not shown a breach of the settlement agreement. Under the terms of the settlement, it was obligated “to share all tax and finance documents reasonably necessary to determine the amount owed under this agreement.” To date, the only documents shared have been a single-page worksheet in which Pelletier outlines her calculation as to tax liability. (Plaintiff’s Motion, Exh. B.) Defendant’s assertion that Plaintiff can verify the total amount owed from documents already in its possession and the assertions of Pelletier is at odds with the language of the settlement agreement, which expresses Plaintiff’s right to documentary verification of the tax liability owed by reference to Defendant’s tax and financial documents, not merely the calculations of Defendant’s principal.

The motion is therefore DENIED.