Judge: Mark H. Epstein, Case: 20SMCV01963, Date: 2025-04-16 Tentative Ruling

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Case Number: 20SMCV01963    Hearing Date: April 16, 2025    Dept: I

The issue is whether to stay the action or have it go forward.  Although the suit names two entities as parties, it is really two people: Harold Wrobel (plaintiff) and Jamie Sherrill (defendant).  When the court refers to plaintiff and defendant it means the individual humans, not the entities, unless otherwise stated.

Plaintiff claims that there was an oral agreement entered into before he and defendant were married by which they formed an informal enterprise that included H&J and Beauty Park.  Plaintiff says that under the agreement, he has a contract with defendant by which he would provide services to Beauty Park.  In return, H&J—an entity owned by both parties but controlled by plaintiff—was going to get defendant’s share of the Beauty Park profits, which would in turn be divided between the parties.  (Beauty Park is an entity that plaintiff cannot own.  Defendant owns 49% of it and a third party, who is a doctor, owns the other 51%.  That third party is not a party to this lawsuit.)  According to plaintiff, this agreement continued after the marriage.  Defendant contends that H&J has no such right.  While this case was pending, the parties were also obtaining a dissolution.  That matter was heard by the Family Court, Judge Juhas presiding.  This court stayed proceedings in this civil action because the court believed that the Family Court proceeding would either resolve the case completely or at least significantly alter the landscape.  The Family Court matter has concluded, but the judgment is currently being appealed by plaintiff.  Plaintiff’s position is that the Family Court proceeding did not resolve the instant case, and therefore this case ought to go forward.  Defendant takes the contrary position.

The Family Court’s thorough decision touches on many of the aspects of the case now at issue.  While the Family Court did not purport to—and did not—issue rulings defining how it believed the civil case should resolve, it did issue many rulings.  First, it gave no effect to the alleged oral agreement, meaning that it did not view the oral agreement as changing any of the Family Court decisions.  That court concluded that defendant’s interest in Beauty Park was her separate property and that plaintiff had no right to it.  The Family Court concluded that H&J had no value and must be dissolved.  The Family Court therefore did not conclude that the community had any ongoing interest in Beauty Park that needed to be divided as part of the dissolution.

Plaintiff here claims that the Family Court acted outside of its jurisdiction when it issued those rulings to the extent that they might have any impact on the matters presently before this court.  In the alternative, plaintiff argues that the Family Court in fact issued no such rulings.

This court tends to agree with defendant.  First, as to the jurisdiction issue, that issue was actively litigated to the Family Court judge, who disagreed with plaintiff.  The matter is now on appeal and this court will not weigh in.  The jurisdictional issue will be decided on appeal, and no purpose would be served by this court accepting plaintiff’s invitation to find that the Family Court lacked jurisdiction when the Court of Appeal may come to a contrary conclusion.

Plaintiff also contends that it does not matter because nothing in the Family Court decision can affect this court.  This court is not sure how that can be.  The Family Court concluded that H&J is of no value and must be dissolved.  H&J is the plaintiff here, at least technically (although the Family Court was unsure whether H&J even existed in reality).  Under plaintiff’s theory of the case, H&J provides plaintiff’s services to Beauty Park and has the right to get defendant’s share of Beauty Park’s profits.  If the entity who is technically a plaintiff here must be dissolved, that surely affects these proceedings.  More to the point, H&J asserts a chose in action here—that is, it is bringing a lawsuit that H&J contends has merit.  If H&J is correct, then by definition H&J is not valueless.  Rather, it has a value—the value of the chose in action.  While that value might be hard to quantify with precision, if the instant case has potential merit, the value is not zero.  That strongly suggests that the Family Court has concluded that in fact the alleged oral agreement by which the parties agreed that the profits from Beauty Park (to the extent not given to the 51% owner) would be shared between them through H&J in perpetuity is not binding or enforceable.  Had it felt differently, the Family Court would have needed to determine what the community’s interest in H&J was, if anything, to account for it in the judgment.  True, it might not have had to divide the ownership because the ownership was purportedly 50/50 and was set before the marriage, but whether the entity has any value at all is certainly something of weight here.

The court understands plaintiff’s contention that there is an oral agreement that predates the marriage to form a partnership between the various entities as described above, which plaintiff and the Family Court referred to as the Medical Services Organization Agreement, or MSO.  It is plaintiff’s view that the MSO was created before the marriage and thus was outside the Family Court’s purview and had no bearing on the Family Court resolution or judgment.  According to plaintiff, the rights created under the MSO—which predated the marriage—are each party’s separate property (and, presumably, H&J’s property as well), and that is why the MSO was outside the Family Court’s jurisdiction.  The court is not sure how that theory can survive the Family Court’s decision that Beauty Park is defendant’s sole and separate property or that H&J has no value and ought to be dissolved.  Further, the Family Court ruled that the existence and terms of the alleged MSO “form the primary disputes in this case.”  It is hard to see, in light of that quote, how the Family Court decision has no bearing on the case now before the court.

At a minimum, the Family Court’s decision will shape the proceedings here, if not eliminate them entirely.  The court therefore believes that the correct course of action is to STAY this case until the appeal in that case is concluded.