Judge: Michelle Williams Court, Case: 24STCV02587, Date: 2024-08-15 Tentative Ruling

Case Number: 24STCV02587    Hearing Date: August 15, 2024    Dept: 1

24STCV02587           4E CAPITAL LP, et al v. PACIFIC CONSOLIDATED HOLDINGS GROUP, et al

Defendant’s Unopposed Motion to Transfer And Consolidate Actions

TENTATIVE RULING: Defendant Pacific Consolidated Holdings Group’s Unopposed Motion to Transfer And Consolidate Actions is GRANTED.  The Court orders Santa Barbara Superior Court Case 24CV01682 Pacific Dutch Group v. OBM PDG transferred to Department 56 of the Stanley Mosk Courthouse in the Central District of the Los Angeles Superior Court to be consolidated with 24STCV02587 for trial purposes.  Defendant Pacific Consolidated Holdings Group is ordered to “promptly serve the order on all parties to each case and send it to the Judicial Council and to the presiding judge of the court from which each case is to be transferred,” (Cal. R. Ct., rule 3.500(e)), and “promptly take all appropriate action necessary to assure that the transfer takes place and that proceedings are initiated in the other court or courts to complete consolidation with the case pending in that court.” (Cal. R. Ct., rule 3.500(f).)  Moving party to give notice.

Background

On January 31, 2024, Plaintiffs 4E Capital LP, Pharm Capital, LLC, and Alexey Mikhaylov sued Pacific Consolidated Holdings Group, Inc., Meridian Via Real, LLC, Zevo Drive Holdings, LLC, Omar Mangalji, Michael Steinberg, David Mehlman, OBM PDG, LLC, Via Real Group, LLC, OBM Holdings, LLC, and The Inception Companies, LLC arising out of several loans made to Pacific Consolidated Holdings Group. The First Amended Complaint, (“FAC”), filed on June 26, 2024, asserts twenty-six causes of action, including claims for breach of contract, fraudulent conveyances, larceny, breach of fiduciary duty, fraud, accounting, and declaratory relief. The FAC alleges Plaintiffs made $9.75 million in loans to Defendant Pacific Consolidated Holdings, a cannabis company, and the loans are in default. The FAC also alleges, in relevant part, that Pacific Consolidated Holdings agreed to assign promissory notes due to OBM PDG from Rincon Point Farms, LLC, Carpinteria Peak Land, LLC and Pacific Dutch Group, LLC to Plaintiffs.

On March 22, 2024, Pacific Dutch Group, LLC, Carpinteria Peak Land LLC, and Rincon Point Farms LLC, filed a complaint in interpleader in the Santa Barbara Superior Court, case number 24CV01682, naming OBM PDG, LLC, Pacific Consolidated Holdings Group, Inc., Meridian Via Real, LLC, Zevo Drive Holdings, LLC, Omar Mangalji, Michael Steinberg, David Mehlman, 4E Capital LP, Pharm Capital, LLC, and Alexey Mikaylov as Defendants. The complaint in interpleader alleged Plaintiffs Pacific Dutch, Carpinteria Peak Land, and Rincon Point Farms issued promissory notes to OBM PDG requiring Plaintiffs to pay monthly installments. However, there is a disagreement regarding who now owns the notes with 4E Capital, Pharm Capital, and Alexey Mikaylov claiming the notes were assigned to them and Pacific Consolidated Holdings Group, Meridian Via Real, Zevo Drive Holdings, Omar Mangalji, Michael Steinberg, and David Mehlman disputing the assignment.

Standard

Los Angeles Superior Court Local Rule 3.3(h) provides: “[a] civil case which is not complex as defined by Standard 3.10 of the Standards of Judicial Administration may be transferred to the court from a superior court in another county, if it involves a common question of fact or law within the meaning of Code of Civil Procedure section 403. The coordination motion shall be made in compliance with the procedures established by California Rules of Court, rule 3.500. Coordination motions seeking to transfer a case or cases to the Central District shall be filed and heard in Department 1. Coordination motions seeking to transfer a case or cases to a district other than the Central District shall be heard by the Supervising Judge in that district.”

Coordination motions are governed by Code of Civil Procedure section 403, which states, in relevant part:

A judge may, on motion, transfer an action or actions from another court to that judge's court for coordination with an action involving a common question of fact or law within the meaning of Section 404. The motion shall be supported by a declaration stating facts showing that the actions meet the standards specified in Section 404.1, are not complex as defined by the Judicial Council and that the moving party has made a good faith effort to obtain agreement to the transfer from all parties to each action. Notice of the motion shall be served on all parties to each action and on each court in which an action is pending. Any party to that action may file papers opposing the motion within the time permitted by rule of the Judicial Council. The court to which a case is transferred may order the cases consolidated for trial pursuant to Section 1048 without any further motion or hearing.

(Code Civ. Proc. § 403.)

California Rules of Court, rule 3.500(c) requires that the motion “must be supported by a declaration stating facts showing that:  (1) The actions are not complex; (2) The moving party has made a good-faith effort to obtain agreement to the transfer and consolidation from all parties to the actions; and (3) The moving party has notified all parties of their obligation to disclose to the court any information they may have concerning any other motions requesting transfer of any case that would be affected by the granting of the motion before the court.” 

To grant the motion, California Rules of Court, rule 3.500(d) requires the Court to “specify the reasons supporting a finding that the transfer will promote the ends of justice, with reference to the following standards:

(1) The actions are not complex;

(2) Whether the common question of fact or law is predominating and significant to the litigation;

(3) The convenience of the parties, witnesses, and counsel;

(4) The relative development of the actions and the work product of counsel;

(5) The efficient utilization of judicial facilities and staff resources;

(6) The calendar of the courts;

(7) The disadvantages of duplicative and inconsistent rulings, orders, or judgments; and

(8) The likelihood of settlement of the actions without further litigation should coordination be denied.”

(See also Code Civ. Proc. § 404.1.) 

Procedural Requirements

The motion is supported by the declaration of Defendant’s counsel, Berit Fitzsimmons, which states the cases are not complex, (Fitzsimmons Decl. ¶¶ 7, 13), Defendant attempted to obtain an agreement for the transfer, (Id. ¶ 3), and Defendant notified the parties of their obligation to disclose information concerning any other motions to transfer that would be affected by granting the instant motion. (Id. ¶ 4.) The declaration addresses the requirements of California Rules of Court, rule 3.500(c).

The Actions Are Not Complex

The Court finds the actions are not complex within the meaning of California Rules of Court, rule 3.400, which the parties do not contest. (Cal. R. Ct., rule 3.500(d)(1); Mot. at 10:10-12:6.) The cases are largely breach of contract cases related to the repayment of loans. The two cases will not require “exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel,” (Cal. R. Ct., rule 3.400(a)), as they are not likely to require numerous pretrial motions raising difficult or novel legal issues, do not involve a large number of witnesses, documentary evidence, or separately represented parties, and are not likely to require substantial postjudgment judicial supervision. (Cal. R. Ct., rule 3.400(b).)

Predominating and Significant Common Questions of Law and Fact

The two actions involve predominating and significant common questions of law and fact. (Cal. R. Ct., rule 3.500(d)(2).) The cases involve many of the same parties and the same underlying facts. As noted by Defendant, both cases will require interpretation and evaluation of the Letter of Intent, which will determine the dispute in the interpleader action and is a significant agreement in 24STCV02587. The Court finds the cases share common questions of fact or law that are predominating and significant to the litigation, which weighs in favor of transfer and consolidation.

Convenience of Parties, Witnesses, and Counsel

Counsel for the parties are located closer to Los Angeles than Santa Barbara and multiple parties and witnesses to both cases are located in Los Angeles. (Fitzsimmons Decl. ¶ 5; FAC ¶¶ 17, 20-23, 32; Fitzsimmons Decl. Ex. 2 ¶¶ 10, 12-15.) The FAC alleges Pacific Consolidated Holdings Group operates in Los Angeles and executed loan agreements at issue in Los Angeles. (FAC ¶¶ 5, 10, 26, 32.) Additionally, no party has opposed the transfer. Based upon the pleadings and available evidence, the convenience of the parties, witnesses, and counsel appears to weigh in favor of transfer and consolidation. (Cal. R. Ct., rule 3.300(d)(3).)

Development of Actions, Work Product, Use of Judicial Facilities and Staff Resources, and Apparent Court Calendars

The two cases arise, in part, out of the same loan agreements. Efficient utilization of judicial facilities and staff resources is promoted by having both cases in a single superior court. The two cases were filed two months apart and remain in the relatively early stages of litigation with demurrers filed in both actions. (Fitzsimmons Decl. ¶¶ 7-16.) The relative development of the actions and the work product of counsel, (Cal. R. Ct., rule 3.300(d)(4)), the efficient utilization of judicial facilities and staff resources, (Cal. R. Ct., rule 3.300(d)(5)), and the apparent court calendars, (Cal. R. Ct., rule 3.300(d)(6)), weigh in favor of transfer and consolidation.

Inconsistent and Duplicative Rulings

The Court also considers “[t]he disadvantages of duplicative and inconsistent rulings, orders, or judgments.” (Cal. R. Ct., rule 3.500(d)(7).) Because both cases involve claims related to the Letter of Intent, there will be an opportunity for inconsistent or duplicative rulings if the two cases remain pending in separate superior courts. Duplicate proceedings waste judicial resources and inconsistent rulings could result in significant confusion and protracted motion practice. Moreover, inconsistent rulings regarding the enforceability of the Letter of Intent should be avoided. The Court finds the disadvantages of duplicative and inconsistent rulings, orders, or judgments by having the two cases proceed separately weigh in favor of transfer and consolidation.

Likelihood of Settlement

California Rules of Court, rule 3.500(d)(8) requires the Court to consider “[t]he likelihood of settlement of the actions without further litigation should coordination be denied.” Both cases are in the early stages and it does not appear the transfer will impact the likelihood of settlement. Granting the motion and having the cases proceed before a single judicial officer reduces uncertainty and variation in the litigation, which would tend to aid settlement discussions. The Court finds this factor weighs in favor of transfer and consolidation as well.

On balance, the Court finds the relevant factors demonstrate the ends of justice will be promoted by transfer and consolidation of the two actions in Los Angeles County. Accordingly, the Court orders Santa Barbara Superior Court Case 24CV01682 Pacific Dutch Group v. OBM PDG transferred to the Los Angeles Superior Court for consolidation with 24STCV02587.

The Court Consolidates the Actions for Trial

Defendant requests the Court consolidate the actions for all purposes. (Mot. at 2:1-2.) However, as cited by Defendant, Code of Civil Procedure section 403 permits “[t]he court to which a case is transferred may order the cases consolidated for trial pursuant to Section 1048 without any further motion or hearing.” Section 1048(a) provides “[w]hen actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.” The Court consolidates the actions for trial without prejudice to the parties or assigned judicial officer determining that consolidation for all purposes is preferable or, at a later stage in the litigation, that consolidation for trial is no longer appropriate.