Judge: Michael E. Whitaker, Case: 24SMCV02748, Date: 2025-02-06 Tentative Ruling

Case Number: 24SMCV02748    Hearing Date: February 6, 2025    Dept: 207

TENTATIVE RULING

BACKGROUND

Plaintiff Zackary Chichelo (“Plaintiff”) requests for default judgment against Defendants Pineapple Consolidated, Inc.; Goldstar Industrees; and Matthew Feinstein (“Defendants”) in the amount of $565,956.00, which is composed of special damages in the amount of $490,000; prejudgment interest in the amount of $41,060.85; costs in the amount of $1,520.75; and attorneys’ fees in the amount of $33,375.00.

REQUEST FOR JUDICIAL NOTICE

Plaintiff requests judicial notice of the following:

1.     The Complaint filed on October 27, 2023 in the case titled Pnplxpress, Inc., et al. v. Pineapple Ventures, Inc., et al. Case No. 23STCV25038 (“the Eisenberg Case”). A true and correct copy of the Complaint, less exhibits for brevity, is attached hereto as Exhibit 1 and incorporated herein by this reference.

2.     The Complaint filed on September 21, 2022 in the case titled Vocino, et al. v. NeuVentures, Inc., et al. Case No. 22STCV30992 (“the Vocino Case”). A true and correct copy of the Complaint, less exhibits for brevity, is attached hereto as Exhibit 2 and incorporated herein by this reference.

Judicial notice may be taken of records of any court in this state.  (Evid. Code, § 452, subd. (d)(1).)  Because these two complaints are court records in this state, this Court may take judicial notice of them.  (Ibid.)   However, “while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files.  Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof.”  (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [cleaned up].)  Accordingly, the Court takes judicial notice of the existence of the complaints as court records, but not the truth of the allegations contained therein.

DISCUSSION

A.    Damages

            Plaintiff’s operative First Amended Complaint (“FAC”) alleges five causes of action for (1) Breach of Contract; (2) Open Book Account; (3) Breach of Contract; (4) Open Book Account; and (5) Fraudulent Inducement.  Defendants were each served with a copy of the summons and FAC by substitute service on August 14, 2024.  Default was entered against Defendants on October 3, 2024 and the Doe defendants were dismissed on December 5, 2024. 

            Plaintiff’s operative FAC seeks only $427,500 in damages. (See Compl.)  Specifically, the FAC alleges Plaintiff is owed:

·       $112,500 in principal and interest on the promissory note (FAC ¶¶ 34, 40)

·       $15,000 in stock distributions (FAC ¶¶ 43, 52)

·       $300,000 initially invested in accordance with the stock purchase agreement (FAC ¶ 64.)

            However, the Court cannot award damages that are in excess of what is pled in the Complaint. (See Code Civ. Proc., § 580, subd. (a) [“The relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint”]; Levine v. Smith (2006) 145 Cal.App.4th 1131, 1136-1137 [“when recovering damages in a default judgment, the plaintiff is limited to the damages specified in the complaint”].) 

            In support of the request, Plaintiff has provided the Declaration of Zackary Chichelo, attached to which are various correspondences wherein Defendant Feinstein promised certain guaranteed returns on Plaintiff’s investments.  (Chichelo Decl. ¶¶ 2-5 and Exs. 1-4.)  The Chichelo Declaration further provides that in reliance upon these representations, he entered into a stock purchase agreement wherein he purchased $300,000 of stock and a promissory note where Plaintiff agreed to pay $100,000 on January 25, 2024.  (Chichelo Decl. ¶ 6.)

            Defendants made these promises despite the fact that they already faced numerous lawsuits accusing them of financial issues and failing to make dividend payments to investors.  (Chichelo Decl. ¶ 7 and RJN Exs. 1-2.) 

            The parties amended the promissory note, extending Defendants’ deadline to pay the principal and accrued interest, in exchange for an additional 25,000 shares of Pineapple Express Cannabis Company stock.  (Chichelo Decl. ¶ 12 and Ex. 7.)  The parties further amended the promissory note, again extending Defendants’ deadline to pay in exchange for an additional $5,000.  (Chichelo Decl. ¶ 14 and Ex. 8.)

            Despite the various promises and agreements, Defendants have not paid the principal or interest on the Amended Note, the additional $5,000 promised, or $25,000 in promised distributions.  (Chichelo Decl. ¶ 15-16.)  As such, Chichelo also requests a return of the initial $300,000 stock purchase investment. (Chichelo Decl. ¶ 17.)

            Therefore, Plaintiff has provided sufficient evidence to justify the $427,500 requested in the FAC, but the Court cannot award the full $490,000 currently requested.

B.    Prejudgment Interest

            Plaintiff seeks prejudgment interest on the following:

·       $5,000 Defendant Feinstein promised to pay in exchange for forbearance on the Note until April 29, 2024.  Plaintiff seeks $280.85, representing 10% interest on the unpaid $5,000 for the 205 days from April 29, 2024 through November 19, 2024, at $1.37 per day. 

·       $300,000 expended in connection with the fraudulent Stock Purchase Agreement for the 471 days from August 7, 2023 when it was fraudulently obtained through November 19, 2024, at $82.20 per day, totaling $38,716.20.

·       $35,000 worth of unpaid distributions as follows:

o   $2,500 due 10/1/23 (416 days) = $282.88 interest

o   $2,500 due 11/1/23 (385 days) = $261.80 interest

o   $2,500 due 12/1/23 (354 days) = $240.72 interest

o   $2,500 due 1/1/24 (323 days) = $219.64 interest

o   $2,500 due 2/1/24 (292 days) = $198.56 interest

o   $2,500 due 3/1/24 (263 days) = $178.84 interest

o   $2,500 due 4/1/24 (232 days) = $157.76 interest

o   $2,500 due 5/1/24 (202 days) = $137.36 interest

o   $2,500 due 6/1/24 (171 days) = $116.28 interest

o   $2,500 due 7/1/24 (141 days) = $95.88 interest

o   $2,500 due 8/1/24 (110 days) = $74.80 interest

o   $2,500 due 9/1/24 (79 days) = $53.72 interest

o   $2,500 due 10/1/24 (49 days) = $33.32 interest

o   $2,500 due 11/1/24 (18 days) = $12.24 interest

            Plaintiff’s calculations with respect to the $280.85 sought in connection with the unpaid $5,000 and $38,716.20 in connection with the $300,000 are correct.  However, the FAC only seeks $15,000 in unpaid distributions.  As such, the Court can only award interest on the first six entries, representing interest on the first $15,000 in unpaid distributions, or $1,382.44.

            Therefore, Plaintiff has only demonstrated entitlement to $40,379.49 in prejudgment interest.    

C.    Attorneys’ Fees and Costs

Code of Civil Procedure section 1033.5, which outlines recoverable costs to a prevailing party under Code of Civil Procedure section 1032, permits the recovery of attorneys’ fees when authorized by contract, statute, or law.  (Code Civ. Proc., § 1033.5, subd. (a)(10).)  Code of Civil Procedure section 1021 provides “[e]xcept as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties [….]”  Similarly, Civil Code section 1717 provides “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”  (Civ. Code, § 1717, subd. (a).)

The Code of Civil Procedure defines the “prevailing party” as follows:

[T]he party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party” shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.

(Code Civ. Proc., § 1032, subd. (a)(4).)

            The Amended Promissory Notes between Plaintiff and Defendant Feinstein on behalf of Defendant Pineapple provide:

The Maker of this note and every person who assumes the obligations of this note, agrees to pay the following costs, expenses, and attorney’s fees paid or incurred by the holder of this note, or adjudged by a Court: (1) reasonable costs of collection, costs and expenses, and attorney’s fees paid or incurred in connection with the collection, enforcement or sale of this note or any part of it whether or not suit is filed; (2) costs of suit and reasonable attorney's fees in any action to enforce payment of this note or any part of it; and (3) costs of suit and reasonable attorney’s fees in any other litigation or controversy in connection with this note.

(Chichelo Decl. ¶ 7.)

            Further, Code of Civil Procedure section 1717.5, provides for the prevailing party on an action for an open book account, to recover its reasonable attorneys’ fees.

            Plaintiff seeks $25,585 in attorneys’ fees representing 73.10 hours of attorney time at $350 per hour.  (Price Decl. ¶ 3.) 

            Pursuant to the statute, a prevailing party is only entitled to recover reasonable attorneys’ fees expended.  The Court does not find expending 73.10 hours on a default case to be reasonable. 

            Pursuant to Local Rule 3.214, reasonable attorneys’ fees incurred on a default case on a contract or promissory note on a principal balance of $427,500 is $2,890 plus 1% of the excess over $100,000.  1% of $327,500 is $3,275.  $2,890 plus $3,275 is $6,165.00.

            Therefore, the Court finds Plaintiff is entitled to recover $6,165.00 in reasonable attorneys’ fees.

            Plaintiff also requests $1,520.75 in costs, composed of $464.20 in filing fees and $706.25 in process server fees.  (CIV-100.)  Plaintiff’s request for costs is granted, as Plaintiff is the prevailing party in this action.  (Code Civ. Proc., § 1032, subd. (a)(4).)

CONCLUSION

            Plaintiff has only shown entitlement to judgment in the amount of $475,565.24, composed of $427,500 in damages, $40,379.49 in prejudgment interest, $6,165.00 in reasonable attorneys’ fees, and $1,520.75 in costs.  

            Plaintiff shall file an amended proposed judgment in conformance with the Court’s ruling on or before February 20, 2025. 

            Further, the Court continues the Order to Show Cause re Entry of Default Judgment to March 6, 2025 at 8:30 A.M.  No appearance will be required if the Default Judgment is entered beforehand. 

DATED:  February 6, 2025                          ________________________________

                                                                        Michael E. Whitaker

                                                                        Judge of the Superior Court