Judge Mary H. Strobel, Case 21STCP02028 2022-12-06 Tentative Ruling

Petitioners Glendale Chapter of the Armenian Cultural Foundation (“ACF-Glendale”) and North Hollywood Chapter of the Armenian Cultural Foundation (“ACF-NH”) (collectively “Petitioners”) move for new trial on the grounds of (1) insufficiency of the evidence to justify the decision; and (2) abuse of discretion by the court. (Mot. 2:7-11; see CCP § 657(1) and (6).) Respondent Armenian Cultural Foundation (“Respondent” or “ACF”) opposes the motion.

Respondent’s Request for Judicial Notice (“RJN”) Exhibits 1, 2, 3, 16, 17, 18 – Granted.

Respondent’s Objections to Declarations and Exhibits in Support of Petitioners’ Motion for New Trial

Respondent’s general objections to Petitioners’ declarations and exhibits in support of the motion for new trial are overruled. (See Objections 1:26-3:7.) Petitioners expressly do not move for new trial pursuant to CCP section 657(4) and therefore the reasonable diligence standard of section 657(4) is not at issue. (See Reply 2:18-19.) Petitioners submit the declarations and exhibits as an “offer of proof” for the motion based on section 657(1), and contend that the evidence shows that the court abused its discretion in failing to take live testimony. (See Mot. 7:19-21 and 18-19; Reply 2:18-22.) Neither party cites case law addressing whether new evidence may be submitted for such purpose for a new trial motion. Respondent did not object that the evidence was improper as an “offer of proof” for a new trial motion under section 657(1). On that basis, the general objection is overruled.

On June 25, 2021, Petitioners filed a verified petition for writ of mandate to compel inspection of corporate documents. Respondent answered.

On October 12, 2021, at a trial setting conference attended by counsel for both parties, the court set the petition for hearing on August 25, 2022, and set a briefing schedule pursuant to which the opening brief was due 60 days before the hearing, the opposition 30 days, and the reply 15 days.

On June 23, 2022, the day before Petitioners’ opening brief was due, Petitioners filed an ex parte application to continue the trial date on the grounds that new counsel had just substituted in. The court (Judge James Chalfant) denied the application to continue the trial date but extended the due date for Petitioner’s opening brief. The court ordered Petitioner’s opening brief to be filed by 07/08/2022, Respondent’s opposition brief to be filed 17 days prior to the hearing date, and Petitioner’s reply brief and the joint notebook to be filed 15 days prior to the hearing date. (Minute Order dated 6/23/22.) Petitioners did not seek reconsideration of that briefing schedule from Judge Chalfant, or a modification of the briefing schedule from Judge Strobel.

On July 8, 2022, Petitioners filed their opening brief in support of the instant writ petition and supporting evidence. The court received Respondent’s opposition and opposing evidence, and Petitioners’ reply and reply evidence.

On August 25, 2022, the court held a hearing on the writ petition. After oral argument, the court adopted its tentative ruling denying the petition. The court’s minute order (hereafter “Decision”) sets forth a detailed discussion of the relevant factual background and the court’s legal reasoning. That discussion is not repeated here but is incorporated by reference.

On September 28, 2022, the court entered judgment in favor of Respondent and against Petitioners.

On October 31, 2022, Petitioners filed their motion for new trial. The court has received Respondent’s opposition, Petitioners’ reply, and Respondent’s evidentiary objections.

Petitioners move for new trial on the grounds of (1) insufficiency of the evidence to justify the decision; and (2) abuse of discretion by the court. (Mot. 2:7-11 and 13-19; see CCP § 657(1) [abuse of discretion] and (6) [insufficiency of the evidence].)

CCP section 657 states that “[a] new trial shall not be granted upon the ground of insufficiency of the evidence to justify the verdict or other decision … unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court or jury clearly should have reached a different verdict or decision.” (See also § 657(6).) “ Section 657 by its terms requires the trial court to weigh the evidence and consider the entire record.” (Casella v. SouthWest Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1159.)

CCP section 657(1) authorizes a new trial on the grounds of “irregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial.” “Evidentiary rulings by which relevant evidence was erroneously excluded (or conversely, irrelevant evidence erroneously admitted) may be ground for a new trial if prejudicial to the moving party's right to a fair trial. “ (Rutter, Cal. Prac. Guide, Civil Trials and Evidence, Chap. 18-B, ¶ 18:134.1, citing Townsend v. Gonzalez (1957) 150 Cal.App.3d 241, 249-250.)

“The right to a new trial is purely statutory, and a motion for a new trial can be granted only on one of the grounds enumerated in the statute.” (Fomco, Inc. v. Joe Maggio, Inc. (1961) 55 Cal.2d 162, 166.)

Petitioners contend that the evidence was insufficient to justify the court’s finding that Petitioners made the inspection demands for an improper purpose, specifically “to support interests in the ‘larger dispute’ over control of ARFDW.” (Mot. 13-16; Decision at 22.)[1]

As a preliminary matter, Petitioners do not fully summarize the court’s ruling or provide sufficient context for the court’s discussion of the “timeline of events” and other relevant evidence. (Mot. 14-15.) The court did not, as Petitioners state, identify only “three pieces of material evidence.” (Mot. 14.) Rather, the court “consider[ed] the entire evidentiary record, including the other lawsuits filed concerning control of ARFDW, and determine[d] whether the inspection demands made by Petitioners in April 2021 are ‘reasonably related’ to their interests as members of ACF.” (Decision at 20.) As the court noted, Petitioners conceded that “this writ petition is brought in the context of a larger dispute over control of ARFDW and ACF.” (Ibid., citing Reply 3.) The court found that the “timeline of events” and “other evidence in the record,” including statements in the petition and in Petitioners’ declarations, supported a reasonable inference that “Petitioners made the inspection demands to support interests in the ‘larger dispute’ over control of ARFDW.” (Decision at 20-21.) The court found that this inference was supported by the Bloch declaration, which quoted Petitioners’ former attorney, Steve Cameron, as stating that Petitioners demanded corporate records from ACF “to disseminate such information to the membership of ACF’s affiliate … ARFDW.” (Decision 18-19 and 21.) The court also considered the evidence of standing, including declarations and discovery responses showing that Bedig Kazandjian, who served the demand of ACF-Glendale, was involved in the “‘larger dispute’ over control of ARFDW and the various chapters of ACF” in late February 2021, shortly before the demands were made in April 2021. (Decision at 21-22.)

After considering the record evidence, the court concluded as follows: “Petitioner[s] ACF-Glendale and ACF-NH made the inspection demands to support interests in the ‘larger dispute’ over control of ARFDW. Making inspection demands for that purpose is improper because it does not relate to ACF-Glendale or ACF-NH’s interests as members of ACF…. [T]he Court of Appeal has held that a member of a corporation that makes an inspection demand for an improper purpose cannot circumvent section 6333 by also asserting a proper purpose for the demand. (Parker, supra, 10 Cal.App.5th at 33 and fn. 2.) Accordingly, in light of the court’s conclusion that the demands were made for an improper purpose, the other alleged purposes for the inspection demands are not determinative.” (Decision at 22-23.)

“Section 657 by its terms requires the trial court to weigh the evidence and consider the entire record.” (Casella v. SouthWest Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1159.) Consistent with that direction, the court has weighed the record evidence available at the time of trial and reaches the same conclusion as it did in the Decision.

Petitioners contend that attorney Bloch speculated about Petitioners’ purpose in making the inspection demands. (Mot. 14:19-25, citing Bloch Decl. ¶¶ 3-4.) However, contrary to Petitioners’ assertion, the court did not rely on Bloch’s opinion that the purpose of the demands was “to elicit information that could be used to continue to the campaign of character assassination that was the subject of a pending RICO Action … and charge the Board of Directors of ARFDW, … with misconduct without any basis.” (Bloch Decl. ¶ 4.) Rather, the court relied on Bloch’s recollection that attorney Cameron “expressly informed me during telephonic meet and confer efforts that the purpose of eliciting information from ACF was to disseminate such information to the membership of ACF’s affiliate, ARF Dashnaktsutyun, Western, U.S.A. (‘ARFDW’).” (Ibid. and Decision 18-19 and 21.) The court also considered that Petitioners did not rebut that declaration evidence in their reply papers.

Petitioners contend that “as this Court recognized, the statement attributed to Cameron makes no sense.” (Mot. 14, citing Exh. 2 at 7:22-25.) As evidence, Petitioners cite to a discussion between their attorney, David Rosen, and the court at the hearing on the writ petition. Attorney Rosen addressed Bloch’s quotation of Cameron, as follows:

There’s nothing in this statement… that is nefarious, even accepting it as 100 percent true, even accepting – not knowing what the context is accepting it as true, because the members of ARFDW and the members of ACF are one in the same. They’re the same people. And that’s in our declarations we submitted and it’s in our papers. They’re literally the identical people, the members of ARFDW and the members of ACF.” (Mot. Exh. 2 at 7:12-20.)

The court then asked, “But then the statement doesn’t really make any sense then, doesn’t it?” To which Mr. Rosen said, “That’s my point, it doesn’t make any sense.” (Exh. 2 at 7:22-25.)

Attorney Rosen was not under oath at the hearing and his statement that “the members of ARFDW and the members of ACF are one in the same” is not evidence. While declarations support that ACF and ARFDW “work[] in conjunction with each other” and have the same boards of directors (see Kazandjian Decl. filed 7/8/22 ¶ 2 and Izmirlian Decl. ¶¶ 2-3), Petitioners have not cited evidence that the memberships are identical. As Kazandjian stated, “each is a separate entity.” (Kazandjian Decl. filed 7/8/22 ¶ 2.) Regardless of whether the intent is “nefarious,” it can nonetheless be improper for members of one non-profit corporation to make an inspection demand under Corporations Code section 6333 for the specific purpose of obtaining corporate records to share with members of separate organization. Thus, in the context of the “larger dispute” over control of ARFDW, Petitioners’ alignment with the Dimejian petitioners, the timeline of events, and other evidence summarized in the Decision, attorney Cameron’s statement was “highly probative of an improper purpose of the inspection demands.” (Decision at 21.) Petitioners did not rebut Cameron’s statement in their reply papers or at the hearing on the writ petition.

Petitioners also misinterpret the court’s question “the statement doesn’t really make any sense then, doesn’t it?” The court was commenting that if attorney Rosen’s assertion that members of ACF and ARFDW are “identical” were true, it would be nonsensical for Cameron to state he was requesting the records so he could disseminate that information to the same people who are members of the requesting party. The court was not suggesting that Cameron misspoke or that Bloch misheard him. (See Mot. 15:4-10.)

Petitioners contend that “[n]either Respondent nor the court in its decision identified what possible use there could be in the other litigation for ACF’s accounting books and records.” (Mot. 16.) Petitioners contend that “Dimejian was an extremely narrow statutory action that answered one question and one question only: did the ARFDW election comply with California law.” (Ibid.) Contradictorily, Petitioners also state that “even if Petitioners did intend to use the information from the demand in Dimejian, the purpose nonetheless would have been proper … because the Dimejian action—an action seeking to set aside an election that resulted in the improper appointment of the current ACF Board—is reasonably related to Petitioners’ interests as members of ACF.” (Ibid.)

These arguments do not show that the Decision is clearly against the weight of the evidence. While Respondent “has the burden of proving that the member ‘will allow use of the information for purposes unrelated to the person's interest as a member,’” and while “mere speculation” will not meet that burden, Petitioners cite no authority that Respondents needed to show in detail how the information was intended to be used in a different lawsuit. (See Parker v. Tract No. 7260 Assn., Inc. (2017) 10 Cal.App.5th 24, 31-32.) Indeed, unless the member who made the demand admitted to such improper purpose, it would be difficult to obtain evidence of the member’s internal, and presumably attorney-client privileged reasons, for making the demand to use records in a different lawsuit. Because Respondent showed that the inspection demand was “related” to Petitioners’ interests in the Dimejian action and the larger dispute over control of ARFDW, and that the demand was made to support such interests, Respondent met its burden to show that the demand was made for an improper purpose. As stated in the court’s ruling on the writ petition, “a corporation that makes an inspection demand for an improper purpose cannot circumvent section 6333 by also asserting a proper purpose for the demand. (Parker, supra, 10 Cal.App.5th at 33 and fn. 2.) Accordingly, in light of the court’s conclusion that the demands were made for an improper purpose, the other alleged purposes for the inspection demands are not determinative.” (Decision at 22-23.)

In contradiction to their argument that the demand had no relevance to Dimejian, Petitioners also argue, in the alternative, that use of the information from the demand in Dimejian would be proper. (Mot. 16-17.) The court disagrees. While ACF was not a party to Dimejian, if the Dimejian petitioners needed financial records of ACF to support their case, they could have pursued those records through subpoena or other discovery methods in Dimejian. It is not a proper purpose for a member of one corporation to make an inspection demand to obtain records to use in other litigation. (See Parker v. Tract No. 7260 Assn., Inc. (2017) 10 Cal.App.5th 24, 31-32.)

Having weighed the evidence and considered the entire record, including reasonable inferences therefrom, the court does not find that the court clearly should have reached a different decision. Accordingly, the motion for new trial pursuant to section 657(6) is denied.

The Court Did Not Abuse its Discretion in Conducting the Trial by Written Declaration; and Petitioners Never Requested Oral Testimony or a Jury Trial on Any Question

Petitioner contends that the court prejudicially abused its discretion by “failing to hold an evidentiary hearing or trial on the factual issues.” (Mot. 17.) Specifically, Petitioner contends that it was entitled to a bench or jury trial on two disputed fact questions: (1) whether ACF-Glendale had standing to demand an inspection; and (2) whether Petitioners made the inspection demand for an improper purpose. (Mot. 17-19.) These arguments are not persuasive for several reasons.

The writ petition was brought pursuant to CCP section 1085 and Corporations Code section 6333 and sought a writ of mandate directing Respondent to permit an inspection of corporate records. (See Pet. Prayer ¶ 1; Minute Order dated 8/25/22 at 9-10.) For a “writ of mandate hearing, the trial court has broad discretion to decide a case on the basis of declarations and other documents rather than live, oral testimony.” (American Federation of State, County & Municipal Employees v. Metropolitan Water Dist. (2005) 126 Cal.App.4th 247, 263 [“AFSCME”].) While a trial court may order questions to be tried by a jury in mandate proceedings, that procedure is discretionary with the court. (CCP § 1090; English v. City of Long Beach (1952) 114 Cal.App.2d 311, 316-17.) See also LASC local rule 3.231(h): “In traditional mandamus, … the evidence is presented by way of declarations, deposition testimony, and documentary evidence …. Although the court has discretion to do so, it will rarely permit oral testimony.”

Contrary to Petitioners’ assertion, the court did hold an evidentiary hearing on the questions of standing, and whether Petitioners made the inspection demand for improper purpose. The court considered an extensive evidentiary record submitted with the opening brief, opposition, and reply. The court also considered oral argument, including counsels’ citations to evidence in the record. “The facts were thoroughly presented by the declarations, exhibits, and other evidence presented by the parties.” (AFSCME, supra, 126 Cal.App.4th at 263.)

Petitioners never asked to present oral testimony and did not follow the procedure for so doing. Cal. Rules of Court, Rule 3.1306(b) requires: “A party seeking permission to introduce oral evidence … must file, no later than three court days before the hearing, a written statement stating the nature and extent of the evidence proposed to be introduced and a reasonable time estimate for the hearing.” Nor did Petitioners ever request a jury trial on any issues pursuant to CCP section 1090.

In a writ of mandate proceeding, the court may resolve a factual conflict based on the declarations themselves, and also based on other evidence in the record that would tend to corroborate or impeach the declarants. In this case, the court considered the entire record in making credibility determinations for the question of ACF-Glendale’s standing, including the declarations of Kazandjian, Izmirlian, and Karazian, minutes submitted by Petitioners, and Kazandjian’s discovery responses in the RICO action. (Decision at 10-14.) Petitioners had the opportunity to rebut Respondents’ opposition evidence with their reply. Based on the detailed factual record presented, the court did not find oral testimony or a jury trial necessary to resolve the factual conflicts regarding ACF-Glendale’s standing. The court also did not find oral testimony or a jury trial necessary to determine whether Petitioners made the inspection demand for an improper purpose. Petitioners do not show that any special circumstance in this case required oral testimony or a jury trial for the court to make its determinations.

Petitioners submit new declarations and exhibits as an “offer of proof” for the motion based on section 657(1), and contend that the evidence shows that the court abused its discretion in failing to take live testimony. (See Mot. 7:19-21 and 18-19; Reply 2:18-22.) Petitioners did not move for new trial based on newly discovered evidence pursuant to CCP section 657(4). Petitioners cannot circumvent the reasonable diligence requirement of section 657(4) by purporting to submit new evidence as an “offer of proof” for a new trial motion under section 657(1). Petitioners could have submitted this evidence either with their opening brief in support of the petition or with their reply. In any event, Petitioners’ submission of new written evidence does not establish that the court abused its discretion in failing to take oral testimony or hold a jury trial. Rather, it shows that Petitioners have new evidence but have not satisfied the reasonable diligence requirement of section 657(4).

While the argument is not fully developed, Petitioners imply that the briefing schedule prejudiced Petitioners’ ability to respond to opposition evidence in reply. (See Mot. 10 fn. 2, 12:23-28, 18:12-24, 19:1-4.) Petitioners state that “[t]he briefing schedule was adjusted such that Petitioners only had two days to reply” and “in order to ensure Petitioners would have the least amount of time possible, Respondent served its 750-page submission at 11:49 p.m. on the day it was due.” (Mot. 10, fn. 2.) A similar statement was included in a footnote for Petitioner’s reply for the writ hearing, filed August 10, 2022, but without any request for additional time to respond to opposition evidence. (Reply 3, fn. 1.)

Petitioners’ suggestion that the briefing schedule necessitated oral testimony or jury trial is unpersuasive. (Mot. 18:18-24.) Petitioners’ counsel moved for a continuance of the writ hearing the day before the opening brief was due. Petitioners’ counsel specifically agreed to, or at least did not object to, the modified briefing schedule proposed by Judge Chalfant. (Bloch Decl. ¶ 8.) Petitioners’ counsel did not move for reconsideration of Judge Chalfant’s denial of a continuance or modification of the briefing schedule. Petitioners’ counsel never requested a continuance of the hearing to submit additional evidence. At the hearing on the writ petition, Petitioners’ counsel stated “I know it’s my fault because we had to go in ex-parte because of my substitution in the case and the briefing schedule changed.” (See Rosen Decl. Exh. 2 at pp. 6-7 of transcript.) In these circumstances, it was not an abuse of discretion for the court to decide a writ petition based on the submitted evidence, after a full hearing on the merits.

Petitioners indeed did submit evidence with the reply, including declarations of Levon Baronian, David Rosen, and Vicken Moses. Petitioners also note that they submitted a declaration of Kazandjian in a different action “literally the day before the hearing on the writ petition.” (Mot. 18:28-19:1.) Petitioners could have submitted a declaration of Kazandjian with the reply if they wished to do so. Furthermore, while Petitioners’ counsel stated at the hearing that he did not have access to attorney Cameron (Bloch Decl. Exh. 2 at p. 7 of transcript), Petitioners have now submitted a declaration of Cameron, and they do not show that his declaration could not, with reasonable diligence, have been obtained and submitted with the reply papers for the writ hearing.

Finally, Petitioners argue that “ACF and ARF Dashnaktsutyun, Western U.S.A. (‘ARFDW’) have used this Court’s ruling to argue that ACF-Glendale and many other local ACF chapters have no standing to bring any action against ACF or ARFDW” or have referred to this court’s finding of an “improper purpose” in other actions. (Mot. 5-6; Reply 3-4.) Whether or not “ACF is seeking to give larger import to the Court’s ruling” (see Mot. 6), Petitioners had a fair trial and sufficient opportunity to present their evidence for the evidentiary hearing that was held. Petitioners or the responding parties in these other actions may address any characterizations of the court’s ruling or its impact that they believe are inaccurate.

Based on the foregoing, Petitioners do not show the court prejudicially abused its discretion by “failing to hold an evidentiary hearing or trial on the factual issues.” (Mot. 17.) The court did hold an evidentiary hearing. Petitioners did not request oral testimony or a jury trial, nor have they shown either was compelled to resolve factual conflicts.

[1] Petitioners have not challenged the sufficiency of the evidence to support the court’s finding that ACF-Glendale lacked standing, which was an alternative basis upon which the court denied the petition of ACF-Glendale. (Mot. 13-16.)