Judge: Michael P. Linfield, Case: 22STCV17303, Date: 2023-03-20 Tentative Ruling
Case Number: 22STCV17303 Hearing Date: March 20, 2023 Dept: 34
SUBJECT: Demurrer to
Cross-Complaint
Moving Party: Plaintiff/Cross-Defendant
United Broadway, LLC
Resp. Party: Defendants/Cross-Complainants TMV Enterprises LLC, Michael Hajek, Tal Hajek, and Michael Vincent
Academy, Inc.
Plaintiff/Cross-Defendant’s
Demurrer to the Cross-Complaint is SUSTAINED in its entirety on the grounds
that Defendants/Cross-Complainants did not timely file their Cross-Complaint.
BACKGROUND:
On May 25,
2022, Plaintiff United Broadway, LLC filed its Verified Complaint against
Defendants TMV Enterprises LLC, Michael Hajek, Tal Hajek, and Michael Vincent
Academy, Inc. on causes of action arising from Defendants’ tenancy with Plaintiff.
On July 12,
2022, Defendants Michael Hajek, Tal Hajek, and Michael Vincent Academy, Inc.
filed their Verified Answer.
On August 11,
2022, by request of Plaintiff, the Clerk’s Office entered default on Defendant
TMV Enterprises, LLC.
On September
19, 2022, Plaintiff amended its Verified Complaint to substitute Doe 1 with
Michael & Tal Vincent Enterprises, LLC. This defendant is listed as a
Nevada limited liability company.
On September
20, 2022, Plaintiff amended its Verified Complaint to substitute Doe 2 with
Michael & Tal Vincent Enterprises, LLC. This defendant is listed as a
California limited liability company.
On December
2, 2022, Defendants/Cross-Complainants TMV Enterprises, Inc., Michael Hajek,
Tally Hajek, and Michael Vincent Academy, Inc. filed their Cross-Complaint
against Plaintiff/Cross-Defendant United Broadway, LLC on causes of action of:
(1) violation of the County of Los Angeles Tenant Protections Resolution; and
(2) set off and offset.
On January
18, 2023, Plaintiff/Cross-Defendant filed its Demurrer to the Cross-Complaint.
Plaintiff/Cross-Defendant concurrently filed: (1) Declaration of Maurice
Wainer; (2) Declaration of Kamran Benji; (3) Request for Judicial Notice; (4)
Proposed Order; and (5) Proof of Service.
On March 7,
2023, Defendants/Cross-Complainants filed their Opposition.
Defendants/Cross-Complainants also filed their Notice of Errata in Cross-Complaint.
The Notice of Errata provides three pieces of information: (1) that Michael
& Tal Vincent Enterprises, LLC and TMV Enterprises, LLC are the same
entity; (2) that TMV Enterprises, LLC is one of the Cross-Complainants, not TMV
Enterprises, Inc.; and (3) that TMV Enterprises, LLC is a California limited
liability company (as opposed to a Nevada limited liability company).
On March 13,
2023, Plaintiff/Cross-Defendant filed its Reply. Plaintiff/Cross-Defendant
concurrently filed: (1) Reply Declaration of Maurice Wainer; (2) Request for
Judicial Notice; and (3) Proof of Service.
ANALYSIS:
I.
Request for Judicial Notice
Plaintiff/Cross-Defendant
initially requests that the Court take judicial notice of:
(1) Standard Industrial/Commercial Single-Tenant
Lease, dated March 13, 2014;
(2) Guaranty of Lease, dated March 13, 2014;
(3) AIR Commercial Real Estate Association Standard
Industrial/Commercial Single-Tenant Lease — Gross, dated September 12, 2016;
(4) Verified Complaint, filed in this matter on
May 25, 2022;
(5) Certificate of Dissolution of TMV Enterprises,
Inc., filed with the Secretary of State for the State of California;
(6) Entity Information from the Records of the
Secretary of State for the State of Nevada for TMV Enterprises, LLC, printed
January 18, 2023;
(7) Limited Liability Company Registration for
Michael & Tal Vincent Enterprises, LLC, filed May 8, 2007 with the Secretary
of State for the State of California;
(8) Articles of Organization — Conversion for
Michael & Tal Vincent Enterprises, LLC, filed December 14, 2020 with the
Secretary of State for the State of California.
(Request for Judicial Notice dated January 18,
2023.)
Plaintiff/Cross-Defendant
further requests that the Court take judicial notice of:
(9) Statement of Information for Michael & Tal
Vincent Enterprises, LLC, filed July 11, 2022 with the Secretary of State for
the State of California.
(Request for Judicial Notice dated March 13,
2023.)
The Court
DENIES judicial notice to the first four items. The first three items are not documents
of which the Court may take judicial notice, although the Court can consider
them as exhibits. The fourth item is superfluous. Any party that wishes to draw
the Court’s attention to a matter filed in this action may simply cite directly
to the document by execution and filing date. (See Cal. Rules of Court, rule
3.1110(d).)
The Court
GRANTS judicial notice to items five through nine.
II.
Legal Standard
A demurrer is
a pleading used to test the legal sufficiency of other pleadings. It raises
issues of law, not fact, regarding the form or content of the opposing party’s
pleading. It is not the function of the demurrer to challenge the truthfulness
of the complaint; and for purpose of the ruling on the demurrer, all facts
pleaded in the complaint are assumed to be true, however improbable they may
be. (Code Civ. Proc., §§ 422.10, 589.)
A demurrer
can be used only to challenge defects that appear on the face of the pleading under
attack; or from matters outside the pleading that are judicially noticeable. (Blank
v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be
considered (i.e., no “speaking demurrers”). A demurrer is brought under Code of
Civil Procedure section 430.10 (grounds), section 430.30 (as to any matter on
its face or from which judicial notice may be taken), and section 430.50(a)
(can be taken to the entire complaint or any cause of action within).
A demurrer
may be brought under Code of Civil Procedure section 430.10, subdivision (e) if
insufficient facts are stated to support the cause of action asserted. A
demurrer for uncertainty (Code of Civil Procedure section 430.10, subdivision
(f)), is disfavored and will only be sustained where the pleading is so bad
that defendant cannot reasonably respond—i.e., cannot reasonably determine what
issues must be admitted or denied, or what counts or claims are directed
against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th
612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can
be clarified under modern discovery procedures.” (Id.)
III.
Discussion
Plaintiff/Cross-Defendant
demurs to the first and second causes of action in the Cross-Complaint.
Plaintiff/Cross-Defendant also demurs on multiple procedural grounds, which the
Court will consider first.
A. Procedural Issues
1. Suspended Foreign Corporate Entities
a. Legal Standard
“A foreign limited liability company may
apply for a certificate of registration to transact business in this state by
delivering an application to the Secretary of State for filing on a form
prescribed by the Secretary of State. . . .” (Corp. Code, § 17708.02, subd.
(a).)
“A foreign limited liability company
transacting intrastate business in this state shall not maintain an action or
proceeding in this state unless it has a certificate of registration to
transact intrastate business in this state.” (Corp. Code, § 17708.07, subd.
(a).)
“The failure of a foreign limited
liability company to have a certificate of registration to transact intrastate
business in this state does not prevent the foreign limited liability company
from defending an action or proceeding in this state.” (Corp. Code, § 17708.07,
subd. (b).)
“If a foreign limited
liability company transacts intrastate business in this state without a
certificate of registration or cancels its certificate of registration, it
shall be deemed to have appointed the Secretary of State as its agent for
service of process for rights of action arising out of the transaction of
intrastate business in this state.” (Corp.
Code, § 17708.07, subd. (d).)
“Any person who attempts
or purports to exercise the powers, rights, and privileges of a corporation
that has been suspended pursuant to Section 23301 or who transacts or attempts
to transact intrastate business in this state on behalf of a foreign
corporation, the rights and privileges of which have been forfeited pursuant to
the section, is punishable by a fine of not less than two hundred fifty dollars
($250) and not exceeding one thousand dollars ($1,000), or by imprisonment not
exceeding one year, or both fine and imprisonment.” (Rev. & Tax. Code, §
19719, subd. (a).)
b. Discussion
Plaintiff/Cross-Defendant
demurs on the procedural grounds that Defendant/Cross-Complainant TMV
Enterprises, Inc. does not exist in California and is a suspended entity in
Nevada, and thus lacks standing. (Demurrer, pp. 12–14.)
Defendants/Cross-Complainants
disagree, arguing that all Defendants/Cross-Complainants have standing and
clarifying the issue through their Notice of Errata. (Opposition, p. 5:7–27.)
Plaintiff/Cross-Defendant
addresses this issue in its Reply, arguing that Cross-Complainant TMV
Enterprises, LLC (a.k.a. Michael & Tal Vincent Enterprises, LLC) has evaded
payments and has not listed a proper agent for service. (Reply, p. 3–5.)
According to
the pleadings and the documents of which the Court has taken judicial notice:
(1) Plaintiff/Cross-Defendant (United Broadway,
LLC) sued two individuals (Michael Hajek and Tally Hajek) and two companies
(Michael Vincent Academy, Inc. and TMV Enterprises, LLC).
(2) Both individuals (Michael Hajek and Tally
Hajek) and both companies (TMV Enterprises, LLC and Michael Vincent Academy,
Inc.) then filed a cross-complaint against Plaintiff/Cross-Defendant. An error
was made in the Cross-Complaint that incorrectly listed the company as TMV
Enterprises, Inc.
(3) The Complaint listed TMV Enterprises, LLC as a
Nevada limited liability company. The corrected Cross-Complaint listed TMV
Enterprises, LLC as a California limited liability company. While it is
ultimately irrelevant to the Court’s analysis, the Court has taken judicial
notice of a document that shows an entity known as TMV Enterprises, Inc. was
dissolved in California as of December 5, 2017. (Request for Judicial Notice
dated January 18, 2023, Ex. 5.)
(4) TMV Enterprises, LLC was formed in Nevada on
November 1, 2006, and this entity was registered as a foreign limited liability
company in California on May 8, 2007 under the name Michael & Tal Vincent
Enterprises, LLC. (Request for Judicial Notice dated January 18, 2023, Ex. 7.)
TMV Enterprises, LLC (under the new name) was converted from a Nevada limited
liability company to a California limited liability company on December 14,
2020. (Request for Judicial Notice dated January 18, 2023, Ex. 8.) The
Statement of Information for this entity, filed July 11, 2022, includes an
agent name, email address, and mailing address. (Request for Judicial Notice,
Ex. B.) The entity is listed as being in good standing (i.e., not suspended) on
the California Secretary of State’s website.
(5) A new entity called TMV Enterprises, LLC
appears to have been created in Nevada on October 12, 2021. (Request for
Judicial Notice dated January 18, 2023, Ex. 6.) However, there is no evidence
before the Court that this is the same entity that is involved in this
litigation.
Given that
Defendant/Cross-Complainant TMV Enterprises, LLC (the actual corporate
Cross-Complainant) is a California limited liability company in good standing,
there are no issues presented concerning suspended corporate entities, foreign
corporate entities, or both.
The Court
OVERRULES the Demurrer on the grounds that Defendant/Cross-Complainant TMV
Enterprises, LLC is a suspended foreign corporate entity.
2. Misjoinder of Parties
a. Legal Standard
“The party against whom
a complaint or cross-complaint has been filed may object, by demurrer or answer
as provided in Section 430.30, to the pleading on any one or more of the
following grounds: . . . (d) There is a defect or misjoinder of parties.”
(Code Civ. Proc., 430.10, subd. (d).)
b.
Discussion
Misjoinder is
not an issue here.
Plaintiff/Cross-Defendant
initially sued Michael Hajek, Tally Hajek, TMV Enterprises, LLC, and Michael
Vincent Academy, Inc. Plaintiff/Cross-Defendant subsequently amended its
Complaint to substitute Does 1 and 2 for Michael & Tal Vincent Enterprises,
LLC (in what it believed to be their Nevada and California forms). However,
Michael & Tal Vincent Enterprises, LLC does not appear to exist as a Nevada
limited liability company, and Michael & Tal Vincent Enterprises, LLC is
the actual name for what was originally TMV Enterprises, LLC when that entity
was a Nevada limited liability company. Thus, Defendants/Cross-Complainants
could not have committed misjoinder of parties because
Defendants/Cross-Complainants are the same parties that
Plaintiff/Cross-Defendant is suing in its Complaint.
The Court
OVERRULES the Demurrer on the grounds that there is misjoinder of parties.
3. Timeliness of Cross-Complaints
a.
Legal
Standard
“A party shall file a
cross-complaint against any of the parties who filed the complaint or
cross-complaint against him or her before or at the same time as the answer to
the complaint or cross-complaint.” (Code Civ. Proc., § 428.50, subd. (a).)
“Any other cross-complaint
may be filed at any time before the court has set a date for trial.” (Code Civ.
Proc., § 428.50, subd. (b).)
“A party shall obtain
leave of court to file any cross-complaint except one filed within the time
specified in subdivision (a) or (b). Leave may be granted in the interest of
justice at any time during the course of the action.” (Code Civ. Proc., §
428.50, subd. (c).)
b.
Discussion
Timeliness is an
issue here.
As is indicated by
their title, Defendants/Cross-Defendants were Parties before they filed their
Cross-Complaint. Thus, they were required to file their Cross-Complaint at the
same time as their Verified Answer to the Verified Complaint, or otherwise
obtain leave of Court to file their Cross-Complaint. (Code Civ. Proc., § 428.50,
subds. (a), (c).) Yet Defendants/Cross-Defendants Michael Hajek, Tally Hajek,
and Michael Vincent Academy, Inc. filed their Verified Answer on July 12, 2022
— months before they filed their Cross-Complaint on December 2, 2022.
Furthermore,
Defendant/Cross-Defendant TMV Enterprises, LLC never filed an answer, has been
in default since August 11, 2022, and has not moved to set aside or vacate the
default. “The entry of a default terminates a defendant’s rights to take any
further affirmative steps in the litigation until either its default is set
aside or a default judgment is entered.” (Devlin v. Kearny Mesa
AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385.)
Thus, none of the
Defendants/Cross-Complainants were able to file the Cross-Complaint at the time
they filed it.
Defendants/Cross-Complainants
request leave of Court to file their Cross-Complaint. (Opposition, p. 5:3–6.)
The Court declines this request at this time. First, the issue of leave has not
been fully briefed, and the Court does not have sufficient evidence before it
to find good cause for leave. Second, TMV Enterprises, LLC cannot file a
Cross-Complaint unless and until its default is set aside or vacated.
The Court SUSTAINS
the Demurrer to the Cross-Complaint in its entirety on the grounds that
Defendants/Cross-Complainants did not timely file their Cross-Complaint.
B. Substantive
Issues
The Court does not
reach the substantive objections of the Demurrer to the Cross-Complaint.
IV.
Conclusion
Plaintiff/Cross-Defendant’s
Demurrer to the Cross-Complaint is SUSTAINED in its entirety on the grounds
that Defendants/Cross-Complainants did not timely file their Cross-Complaint.