Judge Michael P. Linfield, Case 22STCV01001 2023-01-20 Tentative Ruling

Judge: Michael P. Linfield, Case: 22STCV01001, Date: 2023-01-20 Tentative Ruling

SUBJECT: Motion to Enforce Partial Settlement Agreement and for Issuance of Further Orders to Facilitate Same, and for Sequestration of Rents

Moving Party: Xi Wang; American Dream Investment Associates; W & A (8404), LLC; and W & A 22931 LLC

The Motion is GRANTED as to the request for enforcement of the partial settlement. The Court enters judgment on the Partial Settlement Agreement.

The Motion is DENIED as to the request for a preliminary injunction to sequester rents on the 22931 Burbank Boulevard Property.

On January 10, 2022, Plaintiffs Xi Wang, American Dream Investment Associates, W & A 22931 LLC, W & A (2256) LLC, W + A 2581 LLC, Stark Estates, LLC, and Bixia Liu filed their Complaint against Defendants Avraham Cohen, G.B.U. Construction, Inc. American Dream Investment Associates, W & A 22931 LLC, W & A (8404), LLC, W & A (2256), LLC, and W + A 2581 LLC. At its core, this matter involves allegations by Plaintiff Wang that Defendant Cohen has committed a variety of torts related to property that the Parties jointly own.

On May 26, 2022, Defendants/Cross-Complainants Avraham Cohen, G.B.U. Construction, Inc. and American Dream Investment Associates, Inc. filed their Cross-Complaint against Plaintiffs/Cross-Defendants Xi Wang and Stark Estates, LLC.

On June 17, 2022, Plaintiffs/Cross-Defendants filed their Answer to the Cross-Complaint.

On January 13, 2023, Plaintiffs/Cross-Defendants filed their Second Amended Complaint.

On December 27, 2022, Xi Wang, American Dream Investment Associates, W & A (8404), LLC, and W & A 22931 LLC (“Plaintiffs”) filed their Motion (1) to Enforce Partial Settlement Agreement and for Issuance of Further Orders to Facilitate Same, and (2) for Sequestration of Rents (“Motion”). Plaintiffs concurrently filed: (1) Declaration of Elliot Rousso; (2) Declaration of Xi Wang; and (3) Proposed Order.

On January 6, 2023, Avraham Cohen and G.B.U. Construction, Inc. (“Defendants”) filed their Opposition. Defendants concurrently filed Evidentiary Objections to Declaration of Xi Wang.

On January 12, 2023, Plaintiffs filed their Reply. Plaintiffs concurrently filed Second Supplemental Declaration of Xi Wang.

On January 13, 2023, Plaintiffs filed their Objections to Evidence Submitted by Defendants Avraham Cohen and G.B.U. Construction.

On January 13, 2023, Defendants filed: (1) Evidentiary Objections to Second Supplemental Declaration of Xi Wang; and (2) Proposed Order.

Defendants filed Evidentiary Objections to Declaration of Xi Wang. The following are the Court’s rulings on these objections.

Objection
1		OVERRULED
2		OVERRULED
3		OVERRULED
4		OVERRULED
5		OVERRULED

Defendants filed Evidentiary Objections to Second Supplemental Declaration of Xi Wang. The following are the Court’s rulings on these objections.

Objection
1		OVERRULED
2		OVERRULED

Plaintiffs filed Objections to Evidence Submitted by Defendants Avraham Cohen and G.B.U. Construction. The following are the Court’s rulings on these objections.

Objection
1		OVERRULED
2		OVERRULED
3		OVERRULED
4		OVERRULED
5		OVERRULED
6		OVERRULED

“If parties to pending litigation stipulate, in a writing signed by the parties outside of the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” (Code Civ. Proc., § 664.6, subd. (a).)

“Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.” (Weddington Prod., Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.) In deciding motions made under Section 664.6, judges “must determine whether the parties entered into a valid and binding settlement.” (Kohn v. Jaymar-Ruby (1994) 23 Cal.App.4th 1530, 1533.)

“A. Within two (2) business days following the exchange of this Agreement, executed in full by the Parties, 8404 LLC, by and through Wang and Cohen, on behalf of ADIA, 8404 LLC’s sole member, shall enter into Listing Agreements with Elliot Rousso of Pinnacle Estate Properties, Inc., Luxury Portfolio International (“Rousso”) for 8406 Woodley Place and 8411 Woodley Place in the forms attached hereto as Exhibits “1” and “2”, respectively (the “Listing Agreements”)

“C. Wang agrees to and shall advance funds on behalf of 8404 LLC, which advance or advances shall in turn be treated as a loan or loans to 8404 LLC, in order to bring current the two loans serviced by Platinum Loan Servicing, Inc. (“Platinum”), secured by a Deed of Trust dated November 25, 2019, and recorded December 11, 2019 as Instrument No. 20191379057, Loan No. 11358 and secured by a Deed of Trust dated August 25, 2017, and recorded September 7, 2017 as Instrument No. 20171015027, Loan No. 10247, each secured against the 8404 Woodley Place Property (collectively, the “Woodley Place Loans”) and payment of other expenses, including but not limited to property taxes if required by Platinum, and Wang agrees to and shall continue to make monthly payments to Platinum, if required by Platinum, to keep the Woodley Place Loans current until 8406 Woodley Place and 8411 Woodley Place are sold and the Woodley Place Loans are paid-off in full.

“D. Wang agrees to and shall advance funds on behalf of 2256 LLC, which advance or advances shall in turn be treated as a loan or loans to 2256 LLC, in order to bring current the loan serviced by Platinum, secured by a Deed of Trust dated March 8, 2017, and recorded September March 15, as Instrument No. 20170295858, against that certain property commonly known as 2256 Nichols Canyon Road, Los Angeles, CA 90046, APN 5571-007-003, Loan No. 10055 (the “2256 Nichols Canyon Property Loan”) and payment of other expenses, including but not limited to property taxes if required by Platinum, and Wang agrees to and shall continue to make monthly payments to Platinum, if required by Platinum, to keep the 2256 Nichols Canyon Property Loan current until 8406 Woodley Place and 8411Woodley Place are sold.”

The Partial Settlement Agreement is signed by Xi Wang, Avraham Cohen, American Dream Associates (by Xi Wang and Avraham Cohen in their respective roles for that company), W & A (8404), LLC (by Xi Wang and Avraham Cohen in their respective roles for that company), W & A (2256), LLC (by Xi Wang and Avraham Cohen in their respective roles for that company), G.B.U. Construction, Inc. (by Avraham Cohen as its President), Richard E. Williamson (Xi Wang’s Counsel), and Shalem Shem-Tov (Avraham Cohen’s Counsel). (Motion, Ex. A., pp. 7–8.)

Plaintiffs move the Court to “require Defendant Cohen to comply with the terms of the Partial Settlement Agreement by, among other things, instructing Mr. Rousso to re-activate the listing for the sale of 8411 Woodley Place; refraining from instructing Mr. Rousso to cancel the listing; and taking all reasonable and necessary steps to sell the remaining townhome.” (Motion, p. 13:4–8.)

Defendants oppose the Motion, arguing: (1) that Plaintiffs first breached the Partial Settlement Agreement, and thus they cannot seek to enforce the agreement; (2) that the Partial Settlement Agreement is not enforceable pursuant to Code of Civil Procedure section 664.6 because it did not settle any portion of this case; and (3) that the Partial Settlement Agreement is missing essential terms and thus is generally unenforceable. (Opposition, pp. 1:24, 3:1, 4:3.)

Plaintiffs argue in their Reply: (1) that Plaintiff Wang complied with his obligation under the Partial Settlement Agreement; (2) that in the alternative any breach by Plaintiff Wang was not material; (3) that case law allows the Court to enter judgment on the settlement even if a prior breach occurred; (4) that the Partial Settlement Agreement is enforceable pursuant to section 664.6 because it is related to the action and the agreement states that it is enforceable by that section; and (5) that the Partial Settlement Agreement is otherwise enforceable. (Reply, pp. 6:13–14, 7:3–6, 7:17–22, 7:23, 9:14.)

(2) The Partial Settlement Agreement, which was signed on May 11, 2022, came after Plaintiffs filed the original Complaint on January 10, 2022.

(3) The Partial Settlement Agreement includes a provision that allows the Parties to enforce the agreement pursuant to Code of Civil Procedure section 664.6 in the event any party fails to perform the conditions of the agreement. (Motion, Ex. A, p. 6.)

(4) The issue in the Partial Settlement Agreement regarding the unsold property belonging to Plaintiff W & A (8404), LLC is one of the many issues brought up in the original Complaint. (Compare Motion, Ex. A, pp. 2–3 with Complaint, ¶¶ 41–43.)

(5) The object of the agreement is for Mr. Rousso to list the unsold property so that it may be sold; the consideration of the agreement is for Plaintiff Wang to pay certain monies to facilitate the sale. Neither the object nor the consideration of the agreement are for the actual sale of the property (although that is the intended outcome of the agreement), thus a price term is not essential. Moreover, as a matter of law, there are only four items essential to the existence of a contract: parties capable of contract, their consent, a lawful object, and a sufficient cause or consideration. (Civ. Code, § 1550.) All of the essential items exist here, and Defendants have not put forward an argument that would lead the Court to find that the Partial Settlement Agreement is generally unenforceable.

(6) Upon reading the contract and considering the Parties’ respective papers, the Court does not have evidence before it to find that Plaintiff Wang breached the Partial Settlement Agreement, much less in a manner that is material. Rather, the Court sees evidence that Defendant Cohen acted to have the unsold property unlisted, in violation of the Partial Settlement Agreement. (Decl. Rousso, Ex. 2.)

The Court GRANTS in part Plaintiffs’ Motion as to the request for enforcement of the partial settlement. The Court enters judgment on the Partial Settlement Agreement.

“An injunction may be granted in the following cases: (1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.” (Code Civ. Proc., § 526, subd. (a)(1).)

“[T]rial courts should evaluate two interrelated factors when deciding whether or not to issue a preliminary injunction. The first is the likelihood that the plaintiff will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm that the defendant is likely to suffer if the preliminary injunction were issued.” (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70, citations omitted.)

“Thus, the court examines all of the material before it in order to consider ‘whether a greater injury will result to the defendant from granting the injunction than to the plaintiff from refusing it’ . . . In making that determination the court will consider the probability of the plaintiff's ultimately prevailing in the case and, it has been said, will deny a preliminary injunction unless there is a reasonable probability that plaintiff will be successful in the assertion of his rights.” (Cont’l Baking Co. v. Katz (1968) 68 Cal.2d 512, 528, quoting Santa Cruz Fair Bldg. Assn. v. Grant (1894) 104 Cal. 306, 308, other citations omitted.)

“The ultimate goal of any test to be used in deciding whether a preliminary injunction should issue is to minimize the harm which an erroneous interim decision may cause.” (IT Corp., supra, at 73.)

“In seeking a preliminary injunction, [the party seeking the injunction] b[ears] the burden of demonstrating both likely success on the merits and the occurrence of irreparable harm.” (Savage v. Trammell Crow Co. (1990) 223 Cal.App.3d 1562, 1571; Citizens for Better Streets v. Board of Sup'rs of City and County (2004) 117 Cal.App.4th 1, 6.)

“The law is well settled that the decision to grant a preliminary injunction rests in the sound discretion of the trial court.” (IT Corp., supra, at 69.)

Separate from the Partial Settlement Agreement but still related to the pleadings in this matter, Plaintiffs move the Court for a preliminary injunction that would enjoin Defendant Cohen from collecting rents from the property located at 22931 Burbank Boulevard, Woodland Hills, CA 91367 (“22931 Burbank Boulevard Property”). (Motion, p. 14:11–12.) Plaintiff argues that such relief is authorized by Code of Civil Procedure section 526, subdivision (a), and that a consideration of the facts would support the issuance of a preliminary injunction. (Id. at pp. 14:18–19, 15:11–13; Decl. Wang, ¶¶ 13–19.)

Defendants oppose the Motion, arguing that Plaintiffs have not met their burden in seeking an injunction. Specifically, Defendants argue: (1) that the evidence does not support Plaintiffs assertions about who owns the property; (2) that the balance of harms dictates that a preliminary injunction should not issue because the sequestering of income would mean that payments for the property are not made; and (3) that the harm to Plaintiff Wang is minimal because even if he prevails in litigation, a money judgment could be executed that would make him whole. (Opposition, pp. 5–6.) In the alternative, Defendant proposes that an undertaking for $66,000.00 in bonds be made. (Id. at p. 6:16–19.)

In their Reply, Plaintiffs reiterate their prior arguments and point to newly-added exhibits that support their assertions about who owns the property.

While the Court does find that it is more likely than not that Plaintiffs would prevail on the merits at Trial, the Court agrees with Defendants that the harm to Plaintiffs at this point is not irreparable. The issue at hand is monthly rent — i.e., money. If Plaintiffs ultimately prevails, they will be able to obtain a judgment for that amount at trial, and the Court will consider in that eventuality any motions for prejudgment interest. The Court also agrees with Defendants that it would not serve any Party’s interest to have the rents sequestered as that would make it more likely that payments for the property are not made.

The Court DENIES in part Plaintiffs’ Motion as to the request for sequestering rents on the 22931 Burbank Boulevard Property via a preliminary injunction.

The Motion is GRANTED as to the request for enforcement of the partial settlement. The Court enters judgment on the Partial Settlement Agreement.

The Motion is DENIED as to the request for a preliminary injunction to sequester rents on the 22931 Burbank Boulevard Property.