Judge: Maurice A. Leiter, Case: 23STCV14289, Date: 2024-06-24 Tentative Ruling

Case Number: 23STCV14289    Hearing Date: June 24, 2024    Dept: 54

Hearing Date: June 24, 2024

Department 54, Judge Maurice Leiter

Demurrer to First Amended Complaint

Moving Party: Cross-Defendant Jeffrey Silverman

Responding Party: Cross-Complainants Arrow Tools, Fasteners & Saw, Inc. and Stephanie Silverman

T/R:     CROSS-DEFENDANT'S DEMURRER IS SUSTAINED WITHOUT LEAVE TO AMEND.

CROSS-DEFENDANT TO FILE AND SERVE AN ANSWER TO THE FIRST AMENDED CROSS-COMPLAINT WITHIN 20 DAYS OF NOTICE OF RULING.

CROSS-DEFENDANT 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, opposition, and reply.

BACKGROUND

On March 13, 2024, Plaintiff Jeffrey Silverman, individually and derviatively on behalf of Arrow Tools, Fasteners & Saw, Inc. And Arrow Building Supply, filed the operative third amended complaint against Defendants Arrow Tools, Fasteners & Saw, Inc., Stephanie Silverman, Stewart Epstein, and Susan Epstein asserting ten causes of action for breach of fiduciary duty, breach of contract, wrongful termination, and equitable and declaratory relief. On January 5, 2024, Arrow Tools, Fasteners & Saw, Inc., Stephanie Silverman, Stewart Epstein, and Susan Epstein filed a cross-complaint against Plaintiff Silverman, asserting 16 causes of action for breach of fiduciary duty, breach of contract, fraud, conversion, and declaratory and equitable relief.

Each side alleges the other side mismanaged Arrow Tools, Fasteners & Saw, Inc. (ATFSI).

REQUESTS FOR JUDICIAL NOTICE

The parties’ requests for judicial notice are GRANTED as to the existence of the documents, but not has to the truth of the matters asserted in them.

ANALYSIS

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action stated in it.  (CCP § 430.50(a).)  A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations.  (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.)  The court must treat as true the complaint's material factual allegations, but not contentions, deductions or conclusions of fact or law.  (Id. at 732-33.)  The complaint is to be construed liberally to determine whether a cause of action has been stated.  (Id. at 733.)

Plaintiff/Cross-Defendant Jeffrey Silverman demurs to the FACC’s fifteenth and sixteenth causes of action for conversion and declaratory relief. These causes of action concern a 2011 loan made by Jeffrey to ATFSI for $250,000.00. Cross-Complainant Stephanie, Jeffrey’s former spouse, alleges that this loan was made with community property funds. She alleges that she is entitled to 50% of the funds paid by ATFSI to Jeffrey on the 2011 Note and that Jeffrey has converted her 50% share of the funds paid by ATFSI on the 2011 Note.

A. Fifteenth Cause of Action for Conversion

Jeffrey demurs to the fifteenth cause of action for conversion on the ground that this Court does not have jurisdiction over the dispute. Jeffrey asserts that disputes over community property are under the exclusive jurisdiction of the family court that presided over Jeffrey’s and Stephanie’s divorce proceedings. In opposition, Stephanie argues that this Court has jurisdiction over the claim because the Note was not specifically identified in the divorce judgment. Stephanie also argues that the claim is a compulsory crossclaim because Jeffrey alleges ATFSI breached the note in the TAC.

Generally, “[a]fter a family law court acquires jurisdiction to divide community property in a dissolution action, no other department of a superior court may make an order adversely affecting that division.” (Askew v. Askew (1994) 22 Cal.App.4th 942, 961.) Family Code § 2556 provides, “[i]n a proceeding for dissolution of marriage, for nullity of marriage, or for legal separation of the parties, the court has continuing jurisdiction to award community estate assets or community estate liabilities to the parties that have not been previously adjudicated by a judgment in the proceeding. A party may file a postjudgment motion or order to show cause in the proceeding in order to obtain adjudication of any community estate asset or liability omitted or not adjudicated by the judgment. In these cases, the court shall equally divide the omitted or unadjudicated community estate asset or liability, unless the court finds upon good cause shown that the interests of justice require an unequal division of the asset or liability.”

This Court does not have jurisdiction over whether the loan was made with community property. The Family Code states that community assets that were not previously adjudicated in a divorce proceeding remain under the continuing jurisdiction of the Family Court. Stephanie does not cite authority directly stating otherwise.

The demurrer to the fifteenth cause of action is SUSTAINED without leave to amend.

B. Sixteenth Cause of Action for Declaratory Relief

Jeffrey demurs to the sixteenth cause of action for declaratory relief on the ground that there is no ongoing controversy. Cross-Complainants seek declaratory relief that ATFSI need not pay the remaining balance of the 2011 note because Jeffrey concealed that the note was made with community property and has not paid Stephanie her share of the loan proceeds. As discussed, whether the note is community property is not properly before this Court.

The demurrer to the sixteenth cause of action is SUSTAINED without leave to amend.