Judge: Melvin D. Sandvig, Case: 22CHCP00085, Date: 2022-07-25 Tentative Ruling

Case Number: 22CHCP00085    Hearing Date: July 25, 2022    Dept: F47

Dept. F47

Date: 7/25/22

Case #22CHCP00085 (related to 22CHCP00086)

MOTION TO STRIKE

Motion filed on 5/10/22.

MOVING PARTY: Defendants Santa Clarita Real Estate Partners, Ltd., Santa Clarita Studios Corp. and Mark Deutsch

RESPONDING PARTY: Plaintiff George R. Dahlquist

NOTICE: ok

RELIEF REQUESTED: An order striking Plaintiff’s Application Made Pursuant to Corporations Code 15908.03(d) for Order of Judicial Supervision to Wind Up Limited Partnership Including Appointment Of Stephen J. Donell, CCIM, CPM, As Person To Wind Up Limited Partnership’s Activities (Application).  

RULING: The motion is granted without leave to amend. 

On 3/14/22, Plaintiff George R. Dahlquist (Plaintiff) filed the underlying Application Made Pursuant to Corporations Code 15908.03(d) for Order of Judicial Supervision to Wind Up Limited Partnership Including Appointment Of Stephen J. Donell, CCIM, CPM, As Person To Wind Up Limited Partnership’s Activities (Application).

In the Application, Plaintiff alleges that he is a limited partner of Defendant Santa Clarita Real Estate Partners, Ltd. (SCREP).  (Application ¶4).  Defendant Santa Clarita Studios Corp. (SCSC) is the general partner of SCREP.  (Id. ¶6).  Plaintiff contends that SCREP’s Limited Partnership Agreement (LPA) provides that “the term of existence will end on December 31, 2020.”  (Id.

¶18).  Plaintiff alleges that an extension of SCREP’s term of existence required the approval of all partners.  Id.  Plaintiff alleges that on or about May 11, 2021, “Defendants sought Plaintiff’s consent to extend SCREP’s term of existence by 15 years,” but Plaintiff refused to approve the requested extension.  (Id. ¶¶ 26-27).  Therefore, Plaintiff contends that, because he refused to extend the term of the partnership, SCREP’s term of existence expired on December 31, 2020.  (Id. ¶¶2, 28).  Plaintiff contends that the expiration of SCREP’s term was an event of dissolution under the LPA.  (Id. ¶¶18, 28).  

Plaintiff further alleges that Defendants SCREP, SCSC and Mark Deutsch (Deutsch) (collectively, Defendants) have “failed and refused to acknowledge that SCREP has in fact dissolved,” and have failed to “take any steps to wind up” the limited partnership.  (Id. ¶¶2, 29).  Plaintiff contends that instead of winding up the limited partnership, Defendants “are continuing and intend to continue SCREP’s business, as though it has not dissolved.”  (Id. ¶30).  Plaintiff alleges that in doing so “SCSC and/or Deutsch have caused SCREP to incur obligations, including without limitation attorney fees, by acts not appropriate for winding up the [sic] SCREP’s activities, and are thus liable to SCREP for the damages.”  (Id. ¶31).

On the other hand, Defendants contend that the LPA was amended by a vote of the majority in interest of the limited partners by Amendment No. 3, which deleted the expiration date of December 31, 2020 from Paragraph 1.4 of the SCREP Agreement, and replaced it with December 31, 2035.  Defendants contend that this amendment was appropriate pursuant to Paragraph 17.1  of the LPA.  (See Application, Ex.A ¶17.1).  In other words, Defendants dispute that the partnership is dissolved.    

On 3/14/22, Plaintiff filed the subject Application which seeks orders: (1) that SCREP shall continue only for purposes of winding up its activities; (2) for judicial supervision of the winding up including the appointment of Stephen J. Donell to wind up the allegedly dissolved limited partnership’s activities; (3) granting broad powers to Mr. Donell and directing him to take certain actions to wind up the operation of SCREP; (4) that the expenses of the winding up, including reasonable compensation to Stephen J. Donell, be paid by SCREP; (5) that the Court award Plaintiff his attorney fees and costs of suit for having to pursue this Application as permitted by contract, statute or other law; and (6) for such other and further relief as the court deems just and proper.

On 5/10/22, Defendants filed the instant motion for an order striking Plaintiff’s Application.  Plaintiff has opposed the motion. 

“A civil action is prosecuted by one party against another for the declaration, enforcement or protection of a right, or the redress or prevention of a wrong.”  CCP 30.  “The pleadings allowed in civil actions are complaints, demurrers, answers, and cross-complaints.”  CCP 422.10.  In the Application, Plaintiff seeks the enforcement and protection of his asserted right as a limited partner that SCREP be wound up and its assets liquidated within a reasonable time after its dissolution and prevention of an alleged “wrong” by Defendants, in continuing to operate SCREP’s business and incurring liabilities.  (See Application ¶¶1, 3, 19-20, 31-32, Prayer for Relief).  As such, this case falls within the definition of a civil action, not the definition of a “special proceeding” which is defined as “every other remedy.”  See CCP 23; CCP 30; Part 3 of the Code of Civil Procedure “Of Special Proceedings of a Civil Nature,” generally, which does not list the Application among the types of special proceedings of a civil nature).  Since an “application” is not one of the pleadings permitted in a civil action, Plaintiff’s Application was not filed in conformity with the laws of this State and is subject to a motion to strike.  See CCP 436(b).

Even if the Application could be deemed a special proceeding, it fails because it presumes that the partnership has dissolved.  Corporations Code 15908.03, under which the Application is brought, is titled “Winding up after dissolution.”  Nothing in the Application asks this Court to determine whether there has actually been a dissolution.  Such a determination must be agreed upon by the parties or determined by a Court, neither of which has occurred here, before this Court may order judicial supervision of the winding up under Corporations Code 15908.03(d).

Plaintiff cannot simply amend the Application to request such a determination as such an amendment would change the entire nature of case.  Rather, Plaintiff must file and serve a proper civil action with the appropriate pleading which will protect the parties’ due process rights, including the right to conduct discovery, file necessary and/or dispositive motions, proceed to trial, if necessary, etc. 

Plaintiff’s Motion for Appointment of Receiver and Temporary Restraining Order in Aid of Receiver is denied as moot based on the ruling on the Motion to Strike.