Judge: Michael D. Washington, Case: 37-2023-00028529-CU-BC-NC, Date: 2024-05-31 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - May 30, 2024

05/31/2024  10:30:00 AM  N-31 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Michael D Washington

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Civil - Unlimited  Breach of Contract/Warranty Summary Judgment / Summary Adjudication (Civil) 37-2023-00028529-CU-BC-NC PAYLEASE, LLC VS CORPHOUSING LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Summary Judgment and/or Adjudication, 02/02/2024

RULING ON MOTION FOR SUMMARY ADJUDICATION The Motion for Summary Adjudication brought by plaintiff PayLease LLC dba Zego (Zego or Plaintiff) is GRANTED.

The Request for Judicial Notice brought by Zego is disposed as follows: --GRANTED as to Exhibits 1-4 and 7 pursuant to Evidence Code § 451, et seq.

--GRANTED as to Exhibit 6 pursuant to Evidence Code § 451, et seq., but only as to the existence and fact of the filing with the U.S. Securities and Exchange Commission, not as to the truth of the assertions made in the document --DENIED as to Exhibit 5, which is a press release The matter has been properly noticed, with proof of service on file. Zego has established, with evidence, that it entered into a contract with defendant CorpHousing LLC dba CorpHousing Group which has updated its name to LuxUrban Hotels Inc. (hereinafter, Defendant); that it did all or substantially all of the significant things that the contract required it to do and/or was excused from having to do certain things; that Defendant failed to do something that the contract required it to do (namely make payment on 'chargebacks'); that it was harmed; and that Defendant's breach was a substantial factor in causing that harm. (CACI No. 303.) Accordingly, Zego has met the burden of production for summary adjudication of its breach of contract claim. As to the burden or persuasion, the motion is unopposed and failure to oppose constitutes an admission and/or waiver that a motion is meritorious.

RULING ON DISCOVERY MOTIONS The Motion to Compel Responses to Plaintiff's First Set of Form Interrogatories brought by Zego is GRANTED.

The Motion to Compel Production and Further Responses to Requests for Production of Documents brought by Zego is GRANTED.

The Motion to Deem Admissions Admitted, or, in the Alternative, Compel Further Responses brought by Zego is GRANTED.

The Request for Monetary Sanctions brought by Zego jointly as to all three discovery motions is GRANTED in the amount of $20,460.00.

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3113306 CASE NUMBER: CASE TITLE:  PAYLEASE, LLC VS CORPHOUSING LLC [IMAGED]  37-2023-00028529-CU-BC-NC This Court previously issued a tentative ruling on two of the three motions described above. (ROA 54.) At that time, the Court noted that the amount of monetary sanctions being sought was quite high. The Court further noted at that time that, generally, the time spent engaging in the meet and confer process is not compensable as a monetary sanction absent special circumstances. This Court's prior, albeit tentative, ruling, indicated as follows: Balanced against this principle, however, is the fact that Plaintiff's arguments are persuasive as to the underlying substantive issues – i.e. it does appear that Defendants' responses are either half-hearted or evasive. Defendants have failed to use appropriate language to make unconditional statements of compliance, have referred Plaintiff to the SEC website to essentially do their own investigation, and have restated responses narrowly to evade the entirety of the request. In light of these poor tactics, the fact that Plaintiff's counsel was required to spend more time in the meet and confer process essentially 'spinning their wheels' and getting nowhere tempers some of the otherwise inflatedness of the request for $20,460.00 in monetary sanctions.

Weighing these several factors and circumstances, the Court concludes that some amount of sanctions will need to be granted (likely in the range of about $4,000.00-$8,000.00 for the 'omnibus' style motions).

As to the remaining approximately $12,000.00-$16,000.00 currently being sought by Plaintiff, the reasonableness of this request will be reflected in Defendants' subsequent efforts to comply as ordered above. In other words, Defendants admit that they 'did not do a good job meeting their obligations to meet and confer...,' but Plaintiff is now contending that Defendants also did not do a good job producing subsequent responses that were adequate. To the extent that attorney fees are only warranted for meet and confer efforts in rare or unique circumstances, a complete lack of effort or diligence on the part of the responding party or, worse, an evasive approach, might be the kind of circumstance in which monetary sanctions for meet and confer efforts is appropriate – precisely because the efforts were not genuine, substantive, or in good faith.

The Court's view is this: if this is an issue that can be resolved by Defendants' diligent efforts, then Defendants should diligently seek to remedy all problems being raised by Plaintiff and, by doing so, temper the rather high monetary sanctions being sought by Plaintiff. However, if Defendants are unwilling to do so, then Plaintiff's rather high monetary sanctions request begins to look much more reasonable and could be appropriately granted – not only in the original amount, but also in the additional amount incurred to review supplemental production and file supplemental briefing. The message should be clear: if Defendants wish to avoid the high monetary sanctions (as they are requesting in their opposition), then they should work diligently and aggressively to give Plaintiff everything it is requesting so that this production issue resolves. Failing to do so will negate the earnestness and credibility of Defendants' request for a reduction of monetary sanctions. (ROA 54, pp.

2-3 (some emphasis in original) (bold added).) At the time of the above tentative ruling, the Court's tentative was to continue the hearings on two of the discovery motions so that it would coincide with the third discovery motion. Additionally, the Court ordered further meet and confer efforts and a supplemental briefing schedule so that Zego could evaluate the supplemental responses it had received while the original briefing was pending. The tentative ruling, however, never became final because the Zego filed a conditional Notice of Settlement of Entire Case. (ROA 53.) However, as that settlement was conditional, the parties requested that the motions be continued rather than fully taken off-calendar.

Neither party filed supplemental documentation to apprise the Court of the status of the settlement or the upcoming hearings. Instead, the Calendar Clerk contacted the moving party to find out whether the pending motions were to remain on-calendar in light of the settlement and was informed that the settlement had fallen through.

This case is largely about collections efforts on an underlying contract between a landlord and/or property manager and a technology company that produces an app that tenants can use to do things like pay their rent, make a request for maintenance, view their utility usage and billing, etc. According to Calendar No.: Event ID:  TENTATIVE RULINGS

3113306 CASE NUMBER: CASE TITLE:  PAYLEASE, LLC VS CORPHOUSING LLC [IMAGED]  37-2023-00028529-CU-BC-NC the information provided, the landlord and/or management company – Defendant – has failed to pay certain reimbursements for 'chargebacks' that occur when a credit card company initially pays money through the app but then later has the credit card customer disputes the charge that appears on their credit card. After this problem initially arose, the parties entered into an 'amended' agreement wherein Defendant acknowledged the debt and agreed to pay it on a time schedule – a time schedule that included a 10-day grace period, a notice of default, and a 15-day opportunity to cure. Defendant still failed to make payment in accordance with those amended terms. It appears that Zego is suing Defendant, in part, because Zego claims that these amended promises to pay were untrue and were merely designed to delay payment and/or legal action to collect on the debt. Most recently, after this litigation was initiated, Defendant appears to have entered a settlement agreement with Zego (see ROA 53), but by indicating that the motions must remain on-calendar, it appears that Defendant has failed in making its payments in accordance with whatever settlement terms the parties reached prior to April 3, 2024. (see ROA 53).

This history now lends credence to what the Court expressed in its prior tentative ruling: that there appears to be a lack of effort or diligence on the part of Defendant – possibly rising to the level of evasiveness. As such, the Court finds that there are appropriate circumstances here to warrant imposition of the full amount of monetary sanctions that Zego is seeking.

Pursuant to Code of Civil Procedure §§ 2030.300, 2031.310, and 2033.290, defendant CorpHousing LLC dba CorpHousing Group aka LuxUrban LLC is ORDERED to serve verified supplemental responses on Zego and send payment for monetary sanctions in the amount of $20,460.00 by Friday, June 14, 2024. Said responses are to be served electronically on Attorneys Meghan Murphey and Kerry Moynihan of Murphey & Murphey, a Professional Corporation at meghan@themurpheylawyers.com and kerry@themurpheylawyers.com and said monetary sanctions are to be sent to Attorneys Meghan Murphey and Kerry Moynihan of Murphey & Murphey, a Professional Corporation at 120 Vantis Drive, Suite 300, Aliso Viejo, CA 92656.

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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