Judge: Michael Shultz, Case: 23STCV12319, Date: 2024-11-20 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 



Case Number: 23STCV12319    Hearing Date: November 20, 2024    Dept: 40

23STCV12319 Daniel E. Kelly v. Jonathan S. Kelly, et al.

Thursday, November 21, 2024, at 8:30 a.m.

 

[TENTATIVE] ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDMENT NO. 1 TO FIRST AMENDED COMPLAINT TO ADD ALL PARTNERS AS DEFENDANTS IN THE DISSOLUTION CLAIMS

 

[TENTATIVE] ORDER TAKING OFF CALENDAR THE DEMURRER AND MOTION TO STRIKE FILED BY DEFENDANT, CITRIN COOPERMAN & COMPANY, LLP.

 

I.       BACKGROUND

      The first amended complaint (“FAC”) filed on June 26, 2024, alleges that Defendant, Jonathan S. Kelly, (“Jonathan”), breached a 2015 written contract that would guarantee Plaintiff £10,000 every month in exchange for Plaintiff ceding management and control of two parcels of real property located in London, England. The first two conversion claims arise from the alleged forgery and transfer of Plaintiff’s 15 percent interest in Kellytoy Worldwide, Inc. by Defendants, Jonathan Kelly, Adam Kelly, Maya Kelly, and David Kelly (collectively, the “Joint Defendants”).

      The third count for conversion arises from the alleged wrongful transfer of Plaintiff’s 35 percent interest in Hamilton Towers, LP (“Hamilton Partnership”) to Jonathan’s mother. Plaintiff alleges that Defendants engaged in a coverup of these forged transfers with Defendant, Citrin Cooperman, alleged to be a licensed certified public accountant, who filed tax returns on Plaintiff’s behalf without Plaintiff’s knowledge.

      The fourth conversion count arises from Jonathan’s alleged wrongful distribution of funds from the sale of 28 Lancaster Gate in London without distributing Plaintiff’s share of the sale proceeds. Plaintiff alleges 15 causes of action related to these alleged events, including derivative claims for dissolution on behalf of the Hamilton Partnership and 4811 S. Alameda Partnership (“Alameda Partnership”).  

II.     ARGUMENTS

      Plaintiff requests leave to add all partners as Defendants in the 12th and 13th causes of action for involuntary dissolution and for an appointment of a receiver. The partners are indispensable parties in the dissolution claims. There is no prejudice to defendants who asserted in their respective answers that Plaintiff failed to join necessary and indispensable parties as a second affirmative defense.

      In opposition, Defendants argue that they have spent considerable time and effort preparing their respective motions including a motion to compel arbitration and a motion to stay the dissolution claims set for hearing on December 12, 2024. Defendants contend they have a right to be heard. Defendants argue it makes no sense for Plaintiff to amend the complaint again if the litigation will be stayed pursuant to Defendants’ pending motions. The arbitrator can determine who are the proper parties in this case. Alternatively, Defendants ask that the court continue this hearing until after Defendants’ motions are heard on December 12, 2024.

      In reply, Plaintiff argues Defendants have not shown prejudice given their second affirmative defense asserting failure to join indispensable parties. Defendants’ motions to compel arbitration and stay the action set for December 12, 2024, will not render this motion moot. The arbitration motion has nothing to do with the dissolution claims. The court cannot order a buyout without all necessary partners included in the action.

 

III.    LEGAL STANDARDS

      Leave to amend is permitted at the court’s discretion upon any terms that may be just. (Code Civ. Proc., § 473 subd. (a)(1).) The statute is liberally construed to permit amendment of the pleadings “unless an attempt is made to present an entirely different set of facts by way of the amendment.” (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 760.)

      If the motion is timely made, and the granting of the motion will not result in prejudice to the opposing party, it is error to refuse permission to amend. (Morgan v. Superior Court of Cal. In and For Los Angeles County (1959) 172 Cal.App.2d 527, 530.) Where denial of the motion will result in a party being deprived of the right to assert a meritorious cause of action, “it is not only error but an abuse of discretion.” (Id.) Amendments are permitted up to the date of trial or during trial where no prejudice is shown to the adverse party. (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.)

IV.   DISCUSSION

      For purposes of clarity, the court construes Plaintiff’s motion as a motion for leave to file a second amended complaint.

       The joinder of a party is compulsory where complete relief cannot be accorded without that party or that party claims an interest relating to the subject matter such that disposition in his absence will impede that party’s ability to protect that interest. Under these circumstances, the court must order joinder of that party. (Code Civ. Proc., § 389.)

      In any suit for judicial dissolution of a limited partnership, “the other partners may avoid the dissolution of the limited partnership by purchasing for cash the partnership interests owned by the partners so initiating the proceeding … .” (Corp. Code, § 15908.02.) Accordingly, the partners Plaintiff seeks to join have an interest in this litigation and are indispensable parties. (Kraus v. Willow Park Public Golf Course (1977) 73 Cal.App.3d 354, 369 ["Normally, in a suit to dissolve and wind up the affairs of a partnership, all of the partners are considered indispensable parties to the litigation.”].)

      Defendants have not shown any substantial prejudice to their rights resulting from the amendment except for the time and resources they have spent to prepare their respective motions. The policy permitting amendments is liberally construed at any stage of the proceeding so as to dispose of cases upon their substantial merits where the authorization does not prejudice the substantial rights of others.’" (Board of Trustees v. Superior Court (2007) 149 Cal.App.4th 1154, 1163.) Permitting leave to amend will bring all necessary parties before the court and will promote judicial efficiency with respect to later motions that may potentially affect the new parties. This is especially true of the Alameda Partnership, who seeks a stay of the dissolution and proposes a buyout of Plaintiff’s interest. The proposed buyout affects all of the partners in the partnership and cannot be fairly considered without them.

 

V.     CONCLUSION

      Based on the foregoing, Plaintiff’s motion to file a second amended complaint is GRANTED. Plaintiff is ordered to file the proposed Second Amended Complaint within 10 days. As the proposed pleading supersedes the first amended complaint, which "ceases to perform any function as a pleading,” the demurrer and motion to strike filed by Defendant, Citrin Cooperman & Company, LLP, are TAKEN OFF CALENDAR. (Fireman's Fund Ins. Co. v. Sparks Construction, Inc. (2004) 114 Cal.App.4th 1135, 1144.)