Judge Michael D. Washington, Case Number: 37-2022-00033608-CU-OR-NC, Date: 2024-04-26 Tentative Ruling

Judge: Michael D. Washington, Case: 37-2022-00033608-CU-OR-NC, Date: 2024-04-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - April 11, 2024

04/12/2024 01:30:00 PM N-31 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Michael D Washington

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Civil - Unlimited Other Real Property Summary Judgment / Summary Adjudication (Civil) 37-2022-00033608-CU-OR-NC PACIFIC MANAGEMENT GROUP INC VS SCHAU [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Summary Judgment and/or Adjudication, 01/26/2024

The Motion for Summary Judgment brought by plaintiffs/cross-defendants Ronald Fleming (Mr.

Fleming) and Pacific Management Group Inc. (the Panama Corporation) (collectively, Plaintiffs) is DENIED.

Request for Judicial Notice The Request for Judicial Notice brought by Plaintiffs is GRANTED pursuant to Evidence Code § 451, et seq., but only as to the existence and legal effect of the documents – not as to the truth of the matters stated therein.

Objections to Evidence The Objections to Evidence brought by defendant/cross-complainant John Schau (Mr. Schau) are disposed as set forth below. With regard to Objection Nos. 11-17, the Court expressly notes that the objections to these items as evidence are immaterial to the outcome of the motion and thus need not be expressly ruled on. (Code of Civil Procedure § 437c(q).) Each of said objections pertain to pleadings and/or court orders that are already on file as a matter of record in this case.

Objection No. 1: Overruled Objection No. 2: Overruled Objection No. 3: Overruled Objection No. 4: Overruled Objection No. 5: Overruled Objection No. 6: Overruled Objection No. 7: Overruled Objection No. 8: Overruled as to lay testimony, but sustained to the limited extent that the declarant is not an expert Objection No. 9: Overruled as to the fact that an invitation was received, but sustained as to the characterization of 'exemplary' or 'dedicated' and 'professionalism' Objection No. 10: Overruled Objection No. 11: Immaterial Objection No. 12: Immaterial Objection No. 13: Immaterial Objection No. 14: Immaterial Objection No. 15: Immaterial Objection No. 16: Immaterial Objection No. 17: Immaterial Calendar No.: Event ID: TENTATIVE RULINGS

3091435 CASE NUMBER: CASE TITLE: PACIFIC MANAGEMENT GROUP INC VS SCHAU [IMAGED] 37-2022-00033608-CU-OR-NC Merits of Motion Though nominally different in terms of how it is labeled, the instant motion amounts to the functional equivalent of a motion for reconsideration of this Court's prior ruling on Plaintiffs' Demurrer to Second Amended Cross-Complaint. (ROA 170.) All of the evidentiary support for the present motion provided by the moving party, as can be seen in the Separate Statement (ROA 208), comes from pleadings that were previously filed in this case. There is nothing new provided such as a declaration, a deposition, or new documents. Further, most of the argument – particularly the lead argument regarding the statute of limitations – is the same as in the prior demurrer. In fact, the overlap is so great and so stark that the Court concludes that it could be appropriate to simply deem the instant motion a motion for reconsideration and deny it on grounds of failure to comply with the requirements of Code of Civil Procedure § 1008. The Court ultimately declines to do so in order to reach the merits of the motion.

Notably, a motion for summary judgment is subject to a different legal standard, with the moving party having both a burden of production and persuasion, and with the opposing party having an obligation to demonstrate a triable issue of material fact. Nonetheless, the evidence is to be construed narrowly against the moving party and liberally in favor of the opposing party.

In light of the near-total overlap between the statute of limitations argument being made in the instant motion and the one made in the prior demurrer, the Court first quotes the language of its prior ruling: The operative complaint tells a narrative, alleging fraud, that spans a time period beginning as early as 2000 and continuing through December 2021 when defendant/cross-complainant John Schau...

purportedly learned of the recording of a Grant Deed that had been executed many ears ago in 2004. On demurrer, the Court must indulge all facts as alleged. As the recording of the Grant Deed appears to be critical to the damages element of the claims being made, such that the statute of limitations may not have begun to run until those damages accrued, the demurrer cannot be sustained on statute of limitations grounds. Moreover, the arguments of the parties on this issue appear to be factually-intensive and thus inappropriate for resolution on demurrer.

Plaintiffs also claim that Attorney Schau lacks standing to bring a quiet title claim to the Carlsbad property in question because it was conveyed to his trust. Plaintiffs' argument to appears to be a semantic or technical one about which of these two entities (Attorney Schau individually or Attorney Schau in his capacity as trustee of his trust) can sue. The facts indicate a number of purported conveyances. Indeed, Plaintiffs are suing Attorney Schau in both capacities claiming some of his transfers have been improper.

As such, the Court views that allegations, as they currently stand, as sufficient to encompass 'in the alternative' theories, which are allowable under California law, such that wherever a fact-finder ultimately determines the ownership to reside, it is possible that it may reside with Attorney Schau either individually or in his capacity as a trustee. Given that Attorney Schau remains the trustee of his trust, the facts alleged are sufficient to establish standing and overcome demurrer. (ROA 170 (some emphasis in original) (bold added).) Virtually nothing about the case has changed in terms of how the present motion is argued. The same questions of fact that plagued the prior demurrer now plague the instant Motion for Summary Judgment.

In ruling on the instant motion, the Court notes two additional legal principles.

First, Plaintiffs have brought only a motion for summary judgment – not a motion for summary adjudication. As such, whether addressing the statute of limitations issue or the standing issue, as long as any one claim remains viable in the operative cross complaint, summary judgment must be denied.

Second, the party driving the instant case is Plaintiffs, who seek to recover title to property as well as obtain certain damages. To the extent that Plaintiffs are attempting to invoke the statute of limitations defense as to the cross claims made against them, Code of Civil Procedure § 431.70 expressly exempts claims that can be used as an 'offset' from being barred by the statute of limitations – at least up to the Calendar No.: Event ID: TENTATIVE RULINGS

3091435 CASE NUMBER: CASE TITLE: PACIFIC MANAGEMENT GROUP INC VS SCHAU [IMAGED] 37-2022-00033608-CU-OR-NC amount of any liability that such claims could be used to 'offset.' Mr. Schau has asserted his cross claims in what appears to be a defensive manner – though he notably has not asserted an actual affirmative defense of 'offset.' Nonetheless, there appears to be a colorable argument that even if Mr.

Schau's cross claims were subject to the statute of limitations (an argument that, at present, Plaintiffs will have to make to a fact-finder), they may be exempt from the statute of limitations at least up to the amount of liability they could potentially offset that Mr. Schau might owe to Plaintiffs – making summary judgment all the more inappropriate.

Finally, as to the argument that Mr. Schau lacks evidence for his claims for rescission, fraud, misrepresentation, failure to disclose, and conversion, the fact that the moving papers are essentially a re-hash of their demurrer arguments and relies upon pleadings there is a great deal of credence to the Mr. Schau's argument in opposition that: The motion for summary judgment is premature given that a host of depositions have not been completed. This is evident from the complete lack of evidence submitted in support of the Motion for Summary Judgment. At least five depositions are scheduled for investors who were also defrauded by Fleming, and expert depositions have not taken place. (Sadock Decl. ¶¶ 6-10.) Schau expects that these investors will corroborate Fleming's scheme to defraud Schau and all other investors, and that not a single U.S. investor received a penny for their investment. Only part 1 of PMG's Person Most Knowledgeable's deposition has been taken, with Schau's deposition and the PMK's of the remaining Defendants still needing to be deposed. (Opposition, p. 11:10-17.) Indeed, there appears to be future discovery motions currently on-calendar in this case. Under the law: If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion, order a continuance to permit affidavits to be obtained or discovery to be had, or make any other order as may be just... (Code of Civil Procedure § 437c(h).) Under this authority, the Court concludes that a denial of the motion is proper. The Court is not inclined to exercise any discretion to continue or preserve the instant motion in light of the fact that Plaintiffs appear to have done no substantive work to uncover facts in support of their motion; rather, they simply re-hashed their prior demurrer arguments and relied upon the pleadings.

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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