Judge: Mark C. Kim, Case: NC061797, Date: 2023-03-21 Tentative Ruling
Case Number: NC061797 Hearing Date: March 21, 2023 Dept: S27
1. Background
Facts
Plaintiff, Serena Young filed this
action against Defendants, Philip E. Hill, Philip E. Hill, M.D., Inc., Long
Beach Advanced Orthopedic Medical Center, Inc., and Orthoworks of Southern
California, LLC for breach of contract, breach of implied-in-fact contract,
fraud by concealment, breach of fiduciary duty, involuntary dissolution of
corporation accounting, and conspiracy. The
crux of the complaint, which Plaintiff filed on 3/17/18, was that Young and
Hill were each 50% owners of Advanced Orthopedic Medical Group, Inc., which
subsequently was amended to the name Long Beach Advanced Orthopedics Medical
Center. In 2017, Plaintiff learned that Hill
was diverting funds and failing to properly account for income.
Hill filed a cross-complaint
against Young in her individual capacity and also against Serena Young, M.D., a
professional corporation. The cross-complaint
included causes of action for breach of contract, breach of implied covenant of
good faith and fair dealing, and breach of fiduciary duty. The crux of the cross-complaint was that Young
honored her partnership obligations until at least 2015, but in 2016 and 2017 stopped
honoring her obligations, stopped taking call, and reduced her hours unilaterally.
The case proceeded to trial by
jury, and concluded with special verdict forms on 3/13/20. The jury’s special verdict on Young’s claims found
in Young’s favor on the breach of contract, breach of implied covenant of good
faith and fair dealing, and breach of fiduciary duty claims, and found Young
was damaged in the total amount of $1,057,737.
This amount included $535,570 in profits taken by Hill, $300,000 as the value
of half of the business, and $222,167 as interest on profits taken by
Hill. The jury’s special verdict on Hill’s
claims found in favor of Young on all claims in the cross-complaint.
Young submitted a proposed
judgment, and Hill submitted objections.
On 4/01/20, the Court signed the Judgment. The Judgment is in favor of Young and against
Hill on the claims for breach of contract, breach of the implied covenant of
good faith and fair dealing, and breach of fiduciary duty; it is in the amount
of $1,057,737.
Thereafter, Hill filed motions for
new trial and JNOV. The Court ruled on the
motions on 6/10/20. The Court ordered a
conditional new trial on the issue of damages only unless Plaintiff accepted
two reductions: first, the Court reduced the damages for half of the value of
the business from $300,000 to $150,000, as the business had been valued based
on two doctors working for it, and there was not only one. Second, the Court eliminated the $222,167 in
prejudgment interest, as entitlement to interest should not have been submitted
to the jury and was a matter for court determination. The Court scheduled a non-appearance case
review re: verdict reductions for 7/10/20.
Plaintiff agreed to the proposal,
and submitted an amended judgment on 7/06/20 in accordance with the terms of
the 6/10/20 order; the Court signed the judgment.
Young and Hill have both appealed
the judgment.
2. Motion
to Amend Judgment (9/29/20)
On 9/29/20, the Court heard Young’s
motion to amend the judgment to include findings concerning Young’s fifth cause
of action for dissolution of Long Beach Advanced Orthopedic, Inc. (“LBAO”). Alternatively, she sought an order dissolving
LBAO and appointing a receiver to oversee the wind-down and dissolution process.
The Court denied all motions. The Court found the parties had improperly
appealed from a “final judgment” while the fifth cause of action was still
pending. The Court found it had no
ability to hold a trial or take other action concerning the fifth cause of
action unless and until the COA ruled on the parties’ appeal.
3. Motion
for Evidentiary Sanctions
At this time, Young seeks an evidentiary sanction against Hill. Specifically, she seeks an order precluding
Hill from providing any evidence concerning the value of LBAO subsequent to
5/17/18, which was the date the complaint was filed in this case. She contends the order is proper because Hill
has been thwarting all attempts to obtain post-judgment discovery and documents
in this case.
Hill opposes the motion on numerous
grounds. The Court, however, is concerned,
once again, about the procedural posture of the case. Post-judgment discovery in this case has been
just that: post-judgment discovery. The purpose
of that discovery has been to permit Young to recover on her monetary judgment against
Hill. There have also been ongoing
proceedings concerning injunctions and receiverships to stop Hill from mis-using
LBAO’s assets in the face of the judgment against him and pending the outcome
of the parties’ appeals.
There has not, however, been any discovery
concerning the still outstanding fifth cause of action for dissolution of
LBAO. This is so because the Court
previously held that it will not go forward with proceedings on the cause of
action until the parties’ appeals are complete.
The Court is not clear on how it can issue evidentiary sanctions in connection
with the remaining fifth cause of action when no discovery specifically
targeting that cause of action has been properly propounded to date.
The Court reviewed the appellate
docket for the parties’ case, and it appears the case is scheduled for oral
arguments in the near future. The Court
cannot review the actual appellate documents, and can only see the document
titles. The Court sees a docket entry
dated 2/08/23 indicating the case is fully briefed, as well as several between
2/16/23 and 2/21/23 concerning oral argument.
The Court wishes to hear from the parties,
at the hearing, about the status of the appeal.
The case has been pending on appeal since 7/22/20, and it appears the appeal
was dismissed but then reinstated. It is
highly unusual for a case to be pending on appeal for almost three years.
The motion for sanctions is
denied. The Court is not making any
findings concerning whether Hill has acted properly or not. The Court is finding only that it cannot
impose evidentiary sanctions concerning a cause of action that is not currently
before it and that has been expressly stayed pending the outcome of the
appeal.
The Court asks Counsel to make
arrangements to appear remotely at the hearing on this matter.