Judge: Maurice A. Leiter, Case: 21STCV28185, Date: 2023-07-20 Tentative Ruling

Case Number: 21STCV28185    Hearing Date: March 11, 2024    Dept: 54

Hearing Date: March 11, 2024

Department 54, Judge Maurice Leiter

(2) Motions for Summary Adjudication

T/R:     DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION IS DENIED.

PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION IS DENIED.

PLAINTIFF TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, oppositions, and replies.

BACKGROUND

On February 24, 2022, Plaintiff Martina Silas filed the operative first amended complaint against Defendants The Fox Law Corporation, Inc., Steven Robert Fox, and Barry Roger Wegman, asserting causes of action for fraudulent transfer, fraud, conversion, and money had and received. Plaintiff alleges she obtained a judgment and assignment order against third-party James Arden for approximately $300,000.00 in 2011. At some point, Arden filed for bankruptcy. Plaintiff alleges that Arden paid Defendants, his purported attorneys in the bankruptcy proceedings, with money that belonged to Plaintiff per the assignment order.

EVIDENCE OBJECTIONS

“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion.” (CCP § 437c(q).) Plaintiff’s objections to the Say declaration are OVERRULED.

ANALYSIS

“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (CCP § 437c(f)(1).)

A. Defendants’ Motion for Summary Adjudication

Defendants move for summary adjudication of Plaintiff’s eleventh cause of action for declaratory relief and Defendants’ fifteenth affirmative defense for lack of ownership. Defendants assert that the majority of funds Arden used to pay Defendants were Arden’s inheritance funds, which are not subject to the assignment order obtained by Plaintiff against Arden.

Defendants present the declaration and report of CPA Richard Say. Say performed a Lowest Intermediate Balance analysis of the Inheritance Funds deposited in the Arden Accounts between 2017 and 2019. Say declares that this analysis showed $71,450.80 in inheritance funds and $16,602.50 of funds subject to the assignment order were paid to Defendants. Defendants request that the Court “grant the motion for summary adjudication and completely dispose of Plaintiff’s eleventh cause of action and Defendants’ fifteenth affirmative defense by finding and concluding that only $16,602.50 in funds paid to Defendants between 2017 and 2019 is subject to Silas’s claim under the assignment order and Plaintiff has no interest in $71,450.81 in inheritance funds paid to the Fox Defendants from and after 2017.”

In opposition, Plaintiff asserts this motion cannot be granted because it does not completely dispose of a cause of action or affirmative defense. The Court agrees. As stated, “a motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (CCP § 437c(f)(1).) Defendants’ own motion admits that some of the funds paid to Defendants were subject to the assignment order. The Court cannot dispose completely of the eleventh cause of action or fifteenth affirmative defense.

CCP § 437c(t) allows a party to move for summary adjudication of a claim for damages that does not completely dispose of a cause of action or affirmative defense if the parties jointly stipulate to the issues to be adjudicated, and declare “the motion will further the interest of judicial economy by decreasing trial time or significantly increasing the likelihood of settlement.” There is no such stipulation or declaration here. Defendants do not address these procedural defects in reply.

Defendants’ motion for summary adjudication is DENIED.

B. Plaintiff’s Motion for Summary Adjudication

Plaintiff moves for summary adjudication of Defendant’s fifteenth affirmative defense for lack of ownership of funds. Plaintiff argues Arden held any funds subject to Plaintiff’s assignment order in a constructive trust and therefore any subsequent deposits from non-assigned funds remain part of the trust.

Plaintiff presents evidence showing Arden’s gross earnings have been assigned to Plaintiff since December 2011; from that time to 2019, Arden earned, and deposited in Wells Fargo Bank, at least $255,235.92 that he failed to pay Plaintiff; from 2013 to 2019 Arden paid the Defendants at least $109,858.23 from the same Wells Fargo Bank account; and, through the last payments to Defendants, SILAS received only $1,105.51 in interest.

In opposition, Defendants present evidence showing at least $71,450.81 of funds paid to Defendants were from Arden’s inheritance, which is not subject to Plaintiff’s assignment order, using the Lowest Intermediate Balance analysis of Arden’s accounts.

The parties dispute whether the “lowest intermediate balance” analysis is necessary to determine whether Plaintiff was the rightful owner of funds paid to Defendants. The Court of Appeal has discussed this issue as follows:

Chrysler urges us to adopt an exception to the intermediate balance rule. It has been held that where a trustee commingles personal funds with trust funds, and dissipates the commingled funds such that the trust funds are affected, and then deposits additional personal funds into the account, it may be presumed that the trustee was intending to reimburse the trust funds. In such a situation, the trust funds will be replenished. The case law does not recognize this exception in a situation such as exists here and in our view this exception, if broadly applied, would completely emasculate the rule. Rather, it is properly limited to contests between trustee and beneficiary, where the trustee essentially embezzles trust funds and subsequently intends to, and does, replace them. A different situation exists where, as here, third parties have competing interests in the funds at issue.

(Chrysler Credit Corp. v. Superior Court (1993) 17 Cal.App.4th 1303, 1317.)

Here, there are third parties (Defendants) who have competing interests in the funds purportedly belonging to Plaintiff. This is not an action against Arden directly.

Defendants have established a triable issue of fact as to the fifteenth affirmative defense. Plaintiff’s motion for summary adjudication is DENIED.