Judge: Peter A. Hernandez, Case: 21PSCV00836, Date: 2022-08-26 Tentative Ruling
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Case Number: 21PSCV00836 Hearing Date: August 26, 2022 Dept: O
Plaintiff David Hernandez, Sr.’s Application for Default Judgment is DENIED without
prejudice.
Background
Plaintiffs David Hernandez, Sr. (“David Sr.”) and HYLVL, LLC (“HYLVL”) allege as follows:
David Sr. and his son, David Hernandez, Jr. (“David Jr.”), each hold a 50% ownership interest in HYLVL; they are the only members. In/around August 2020, David Sr. and David Jr. entered into an understanding that David Jr., who had previous experience in the apparel-printing business, would train David Sr. how to print apparel so they could go into business together. On or about September 2, 2020, David Sr. and David Jr. formed HYLVL; at that time, they entered into an oral agreement whereby David Sr. agreed to loan, and did loan, HYLVL $100,000.00 to cover the costs of new apparel-printing-related equipment (“Printing Equipment”) and initial and ongoing business-related expenses, which was to be repaid, with interest, as soon as practicable.
In or around September 2020, David Sr. and David Jr. entered into a commercial lease for a commercial loft (the “Loft”), which was to allow them to both live and operate HYLVL. They then purchased the Printing Equipment, which cost in excess of $50,000.00. David Sr. Plaintiff regularly asked David Jr. to show him how to run the Printing Equipment so that David Sr. could help, but David Jr. failed to do so. On or about early to mid-2021, without David Sr.’s knowledge or consent, David Jr. entered into a separate commercial lease for a “store location” (“Store”). In early 2021, David Jr. created a separate business related to disc jockey and entertainment services (“DJ Business”). David Jr., without David Sr.’s consent, purchased a substantial amount of music entertainment-related equipment (“Entertainment Equipment”) with HYLVL funds. On May 14, 2021, David Jr., without David Sr.’s knowledge or consent, formed a separate entity called HYLVL Entertainment, LLC (“LLC 2”), which David Jr. planned to operate as a separate business concern out of the back of the Store using the Entertainment Equipment. David Jr. did not list David Sr. as a member of LLC 2, and he concealed the existence of LLC 2 from his David Sr. David Jr. has ceased seriously promoting HYLVL and has directed his efforts toward his new DJ Business. Consequently, HYLVL has produced almost no income in the months leading up to the filing of this Complaint. In early to mid-August 2021, David Jr. informed David Sr. that approximately $16,000.00 remained in the business checking account. David Sr. demanded control of said funds, which were given to him. David Jr., however, has refused David Sr.’s demands for access to HYLVL’s bank accounts, a copy of the Store lease, and records related to the purchase of all assets using HYLVL funds loaned to HYLVL by David Sr. in September 2020.
On October 12, 2021, David Sr. and HYLVL filed a complaint, asserting causes of action against David Jr., HYLVL and Does 1-10 for:
Breach of Oral Contract
Common Count: Money Had and Received
Dissolution of Limited Liability Company Per Civil Code § 17351(a)
Breach of Fiduciary Duty
Elder Financial Abuse (Welf. & Inst. Code, § 15610.30)
On November 23, 2021, David Jr.’s and HYLVL’s defaults were entered.
On February 22, 2022, HYLVL and Does 1-10 were dismissed, without prejudice.
An Order to Show Cause Re: Default Judgment is set for August 26, 2022.
Discussion
Plaintiff’s Application for Default Judgment is denied without prejudice. The following defects are noted:
Plaintiff’s declaration is not supported by any documentary evidence, such as documents evidencing the parties’ formation of HYLVL, Plaintiff’s loan of $100,000.00 to HYLVL, receipts evidencing the purchase of Printing Equipment (which Plaintiff represents “exceeded $50,000.00”), and receipts evidencing Hernandez Jr.’s use of the loan funds for purposes unrelated to HYLVL and its business-related purposes. It would appear to the court that, inasmuch as the loan was to HYLVL, Hernandez Jr.’s personal liability would be limited to that amount which Plaintiff shows Hernandez Jr. misappropriated for his own personal use. Plaintiff is requested to brief this issue.
Plaintiff attests that, per the parties’ oral agreement, Plaintiff was to be paid back $100,000.00 “as soon as practicable, with interest.” (Plaintiff’s Decl., ¶ 4.) Plaintiff has not identified the interest rate agreed to by the parties.
Plaintiff has not provided the court with information relative to the disposition of the Printing Equipment.