Judge Peter A. Hernandez, Case Number: 22STCV16119, Date: 2024-10-09 Tentative Ruling

Judge: Peter A. Hernandez, Case: 22STCV16119, Date: 2024-10-09 Tentative Ruling

Case Number: 22STCV16119 Hearing Date: October 9, 2024 Dept: 34

Forward Westwood, Inc., et al. v. Atias (22STCV16119)

The Motion for Summary Adjudication of Issues is GRANTED in part.

Summary adjudication is GRANTED in favor of Defendant/Cross-Complainant Meny Atias and against Plaintiffs/Cross-Defendants Joseph Sacavitch, Edward Krifcher, and Paul Morris as to the first cause of action in the Complaint for misappropriation of corporate opportunities.

Summary adjudication is GRANTED in favor of Defendant/Cross-Complainant Meny Atias and against Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch on the fifth and sixth causes of action in the Complaint for conversion and violation of Penal Code section 496, respectively.

The Motion for Summary Adjudication of Issues is DENIED as to all else.

Background

On May 13, 2022, Plaintiffs Forward Westwood, Inc., Forward Calabasas, Inc., Joseph Sacavitch, Edward Krifcher, and Paul Morris filed their Complaint against Defendant Meny A. Atias regarding various causes of action arising from the Parties’ business relationship.

On July 12, 2022, Defendant/Cross-Complainant Meny A. Atias filed: (1) Cross-Complaint against Plaintiffs/Cross-Defendants Forward Westwood, Inc., Forward Calabasas, Inc., Paul Morris, Edward Krifcher, and Joseph Sacavitch; and (2) Answer to the Complaint.

On August 15, 2022, Plaintiffs/Cross-Defendants filed their Answer to the Cross-Complaint.

On April 3, 2024, Defendant/Cross-Complainant filed his Motion for Summary Adjudication of Issues (“MSA”). In support of his MSA, Defendant/Cross-Complainant concurrently filed: (1) Compendium of Evidence; (2) Separate Statement; and (3) Proposed Order.

On May 21, 2024, Plaintiffs/Cross-Defendants filed their Opposition to the MSA. In support of their Opposition to the MSA, Plaintiffs/Cross-Defendants concurrently filed: (1) Appendix of Evidence; (2) Separate Statement; and (3) Evidentiary Objections.

On May 28, 2024, Defendant/Cross-Complainant filed his Reply to the MSA. In support of his Reply to the MSA, Defendant/Cross-Complainant concurrently filed: (1) Response to Separate Statement; (2) Evidentiary Objections; and (3) Response to Evidentiary Objections.

Evidentiary Objections

A. Plaintiffs/Cross-Defendants’ Objections

Plaintiffs/Cross-Defendants’ evidentiary objections are overruled.

B. Defendant/Cross-Complainant’s Objections

Defendant/Cross-Complainant’s evidentiary objections are overruled.

Legal Standard

“A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding. The motion may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct.” (Code Civ. Proc., § 437c, subd. (1)(a).)

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of fact and that he is entitled to judgment as a matter of law. That is because of the general principle that a party who seeks a court’s action in his favor bears the burden of persuasion thereon. There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 850, citation omitted.)

“[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar, supra, at p. 850; Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1474, [applying the summary judgment standards in Aguilar to motions for summary adjudication].)

“On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839, citation omitted.)

“The trial court may not weigh the evidence in the manner of a fact finder to determine whose version is more likely true. Nor may the trial court grant summary judgment based on the court's evaluation of credibility.” (Binder, supra, at p. 840, citations omitted; see also Weiss v. People ex rel. Dep’t of Transp. (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)

“On a motion for summary adjudication, the trial court has no discretion to exercise. If a triable issue of material fact exists as to the challenged causes of action, the motion must be denied. If there is no triable issue of fact, the motion must be granted.” (Fisherman's Wharf Bay Cruise Corp. v. Super. Ct. (2003) 114 Cal.App.4th 309, 320, citation omitted.)

Discussion

Defendant/Cross-Complainant moves for summary adjudication as to the first through eighth causes of action.

For some of the causes of action, Defendant/Cross-Complainant is only moving for summary adjudication as to certain Plaintiffs/Cross-Defendants. For clarity, the court will make more specific references to the Parties below where appropriate.

1. First Cause of Action—Misappropriation of Corporate Opportunities

a. Legal Standard

“The corporate opportunity doctrine prohibits one who occupies a fiduciary relationship to a corporation from acquiring, in opposition to the corporation, property in which the corporation has an interest or tangible expectancy or that is essential to its existence. Whether or not a given corporate opportunity was wrongfully usurped is a question of fact to be determined from the facts and surrounding circumstances existing at the time the opportunity arises. (Kelegian v. Mgrdichian (1995) 33 Cal.App.4th 982, 989 [39 Cal. Rptr. 2d 390] [‘California recognizes this [corporate opportunity] doctrine and also recognizes that whether or not a corporate opportunity exists is primarily a factual question’].)” (Ctr. for Healthcare Educ. & Rsch., Inc. v. Int’l Cong. For Joint Reconstruction, Inc. (2020) 57 Cal.App.5th 1108, 1132, cleaned up.)

b. Discussion

i. The Parties’ Arguments

Defendant/Cross-Complainant moves for summary adjudication on the first cause of action for misappropriation of corporate opportunities. (MSA, p. 16:6.) Defendant/Cross-Complainant does so solely as to Plaintiffs/Cross-Defendants Joseph Sacavitch, Edward Krifcher, and Paul Morris (“the Individual Plaintiffs/Cross-Defendants”). (Id. at pp. 5:8–10, 14:9–12, 16:7–8.)

Defendant/Cross-Complainant argues: (1) that the Individual Plaintiffs/Cross-Defendants did not have a fiduciary relationship with Defendant/Cross-Complainant; and (2) that the Individual Plaintiffs are not corporations and therefore do not have corporate opportunities. (MSA, p. 16:7–16.)

Plaintiffs/Cross-Defendants disagree, arguing: (1) that there is a dispute of fact as to whether Defendant/Cross-Complainant owed the Individual Plaintiffs/Cross-Defendants fiduciary duties; and (2) that the Individual Plaintiffs/Cross-Defendants owned the corporations. (Opp’n, p. 5:2–8.)

Defendant/Cross-Complainant reiterates his arguments in his Reply. (Reply, pp. 4:2–6:9.)

ii. Fiduciary Duty Argument

“There are¿two kinds¿of fiduciary duties — those imposed by law and those undertaken by agreement.” (Gab Bus. Servs. v. Lindsey & Newsom Claim Servs. (2000) 83 Cal.App.4th 409, 416, emphasis omitted, overruled in part on other grounds by Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1154.)

“Fiduciary duties are imposed by law in certain technical, legal relationships such as those between partners or joint venturers, husbands and wives, guardians and wards, trustees and beneficiaries, principals and agents, and attorneys and clients.” (Gab Bus. Servs., supra, at p. 416, citations omitted.)

“A fiduciary duty is undertaken by agreement when one person enters into a confidential relationship with another.” (Gab Bus. Servs., supra, at p. 417.)

“Every contract requires one party to repose an element of trust and confidence in the other to perform.” (Wolf v. Super. Ct. (2003) 107 Cal.App.4th 25, 31.)

“The mere fact that in the course of their business relationships the parties reposed trust and confidence in each other does not impose any corresponding fiduciary duty in the absence of an act creating or establishing a fiduciary relationship known to law.” (Worldvision Enters. v. ABC (1983) 142 Cal.App.3d 589, 595.)

“The existence of a confidential relationship is a question of fact, and . . . the existence of a confidential relationship generating a fiduciary duty is a question of fact.” (Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1161, citations omitted.)

The test for a fiduciary duty based on a confidential relationship is: “1) The vulnerability of one party to the other which 2) results in the empowerment of the stronger party by the weaker which 3) empowerment has been solicited or accepted by the stronger party and 4) prevents the weaker party from effectively protecting itself.” (Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 272, quotation, internal quotation marks, and other citations omitted.)

Here, the Parties dispute whether there was a contractual relationship between Defendant/Cross-Complainant on the one side and the Individual Plaintiffs/Cross-Defendants on the other side. (Plaintiffs/Cross-Defendants’ Separate Statement, Items 2, 5 and Additional Item 3; Defendant/Cross-Complainant’s Response to Separate Statement, Item 3.) This goes to whether there is a fiduciary duty undertaken by agreement.

Furthermore, Defendant/Cross-Complainant seems to admit that he “is a minority 5% owner” of Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Forward Calabasas, Inc. (“the Entity Plaintiffs/Cross-Defendants”). (Defendant/Cross-Complainant’s Response to Separate Statement, Items 1 and 2.) If this is true, then that might support a finding that there is a fiduciary duty undertaken by law.

There appear to be multiple triable issues of material fact as to whether Defendant/Cross-Complainant owed a fiduciary duty to the Individual Plaintiffs/Cross-Defendants.

iii. Corporate Opportunities Argument

The existence of triable issues of material fact regarding the existence of a fiduciary duty would normally be a sufficient basis for the court to deny the MSA to the first cause of action.

However, Defendant/Cross-Complainant makes an important point: the Individual Plaintiffs/Cross-Defendants are not corporations or alter egos of the Entity Plaintiffs/Cross-Defendants.

Normally, it would be a triable issue of material fact as to whether the Individual Plaintiffs/Cross-Defendants were alter egos of the Entity Plaintiffs/Cross-Defendants. The court noted as much when considering this same issue while ruling on Defendant/Cross-Complainant’s Motion for Judgment on the Pleadings.

Among other things, the Complaint contains allegations that: (1) Plaintiff/Cross-Defendants Paul Morris and Edward Krifcher together own 100% of Forward Calabasas, Inc.; and (2) Plaintiff/Cross-Defendant Joseph Sacavitch owns 100% of Forward Westwood, Inc. (Complaint, ¶¶ 7–8.) Thus, a trier of fact could find that the individual Plaintiffs/Cross-Defendants are essentially alter egos of the corporate Plaintiffs/Cross-Defendants, and thus the first cause of action could be pleaded by the individual Plaintiffs/Cross-Defendants as well as the corporate ones.”

(Minute Order dated February 28, 2024, p. 5.)

But the Individual Plaintiffs/Cross-Defendants have now foreclosed that route by admitting: (1) that the Individual Plaintiffs/Cross-Defendants are not corporations; and (2) that the Individual Plaintiffs/Cross-Defendants are not alter egos of the Entity Plaintiffs. (Plaintiffs/Cross-Defendants’ Separate Statement, Items 3, 6, 7.)

As Defendant/Cross-Complainant correctly notes, “the right of recovery [for a cause of action for misappropriation of corporate opportunities] resides in the corporation, not its individual stockholders. They can enforce it only through a derivative suit wherein they assert the corporate right.” (New v. New (1957) 148 Cal.App.2d 372, 389, citations omitted; MSA, p. 16:13–16.)

In other words, while the Individual Plaintiffs/Cross-Defendants have standing to sue on behalf of the Entity Plaintiffs/Cross-Defendants for a cause of action for misappropriation of corporate opportunities, they do not have standing to sue on their own behalf for this cause of action. As it is undisputed that they are not alter egos of the Entity Plaintiffs/Cross-Defendants, summary adjudication is appropriate here.

Defendant/Cross-Complainant meets his initial burden by arguing that not all elements of the cause of action are present as to the Individual Plaintiffs/Cross-Defendants. The Individual Plaintiffs/Cross-Defendants do not meet their subsequent burden to show evidence that all elements of the cause of action are present as to them.

The court GRANTS summary adjudication in favor of Defendant/Cross-Complainant and against the Individual Plaintiffs/Cross-Defendants as to the first cause of action in the Complaint for misappropriation of corporate opportunities.

2. Second Cause of Action—Interference with Contractual Relations

a. Legal Standard

The elements of a cause of action for intentional interference with contractual relations are “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (I-CA Enters., Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 289.)

b. Discussion

Defendant/Cross-Complainant moves for summary adjudication on the second cause of action for interference with contractual relations. (MSA, p. 17:8–9.)

Defendant/Cross-Complainant argues that Plaintiffs/Cross-Defendants cannot identify an existing contract with which Defendant/Cross-Complainant unlawfully interfered because “[t]he California Supreme Court has held in no uncertain terms that, as a matter of law, a claim for interference with contract is not allowed if the contract is ‘at-will.’” (MSA, p. 17:10–26, quoting Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152.) Defendant/Cross-Complainant reiterates this argument in his Reply. (Reply, p. 7:5–13 and fns. 5, 6.)

The court disagrees with this argument.

First, Defendant/Cross-Complainant does not accurately describe the California Supreme Court’s holding in Reeves. Just two paragraphs down from Defendant/Cross-Complainant’s cherry-picked quotation is the actual holding in Reeves:

“[W]e hold that a plaintiff may recover damages for intentional interference with an at-will employment relation under the same California standard applicable to claims for intentional interference with prospective economic advantage. That is, to recover for a defendant's interference with an at-will employment relation, a plaintiff must plead and prove that the defendant engaged in an independently wrongful act—i.e., an act ‘proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard’ (Korea Supply, supra, 29 Cal.4th at p. 1159)—that induced an at-will employee to leave the plaintiff. Under this standard, a defendant is not subject to liability for intentional interference if the interference consists merely of extending a job offer that induces an employee to terminate his or her at-will employment.” (Reeves, supra, at pp. 1152–1153, footnote omitted.)

Second, neither side cites the California Supreme Court’s recent opinion in Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130 (“Ixchel”). In Ixchel, the California Supreme Court expanded the holding in Reeves to any at-will contract, not just at-will contracts in the employment context.

We therefore hold that to state a claim for interference with an at-will contract by a third party, the plaintiff must allege that the defendant engaged in an independently wrongful act.

(Ixchel, supra, at p. 1148.)

Thus, in contrast to Defendant/Cross-Complainant’s argument, a cause of action for interference with contractual relations is not barred as to at-will contracts. However, an independently wrongful act must be alleged because “from the perspective of third parties, there is no legal basis in [the cases of both an ‘at-will contract’ and ‘no existing contract’] to expect the continuity of the relationship or to make decisions in reliance on the relationship.” (Ixchel, supra, at p. 1147.)

Defendant/Cross-Complainant has not argued that Plaintiffs/Cross-Defendants have failed to allege or show that there was an independently wrongful act. The Court does not further consider the issue at this time.

Defendant/Cross-Complainant does not meet his initial burden to show the nonexistence of triable issues of material fact as to the second cause of action.

The court DENIES summary adjudication as to the second cause of action in the Complaint for interference with contractual relations.

3. Third Cause of Action—Interference with Prospective Business Advantage

a. Legal Standard

The elements of the tort of intentional interference with prospective economic advantage are: “(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153, quotation and internal quotation marks omitted.)

“To establish a claim for interference with prospective economic advantage, therefore, a plaintiff must plead that the defendant engaged in an independently wrongful act. An act is not independently wrongful merely because defendant acted with an improper motive. . . . We conclude, therefore, that an act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Korea Supply Co., supra, at pp. 1158–1159, citations omitted.)

b. Discussion

Defendant/Cross-Complainant moves for summary adjudication on the third cause of action for interference with prospective business advantage (otherwise known as interference with prospective economic advantage). (MSA, p. 16:17.) Defendant/Cross-Complainant does so solely as to the Individual Plaintiffs/Cross-Defendants. (Id. at p. 16:18–20.)

Defendant/Cross-Complainant argues that the Individual Plaintiffs/Cross-Defendants cannot establish the requisite economic relationship element because the Individual Plaintiffs/Cross-Defendants cannot show that they personally had an economic relationship with third parties. (MSA, pp. 16:18–20, 17:1–7.)

Plaintiffs/Cross-Defendants disagree, arguing that the Individual Plaintiffs/Cross-Defendants did have professional relationships with the third-party agents at issue. (Opp’n, p. 5:21–24.)

In his Reply, Defendant/Cross-Complainant attempts to clarify his argument. Specifically, Defendant/Cross-Complaint claims that “California law does not protect expectancies of ‘professional relationships’” but that the law instead “protects probable future economic relationships, which is defined under California law as contractual relationships.” (Reply, p. 6:21–23.)

The court disagrees with Defendant/Cross-Complainant’s argument.

First, Defendant/Cross-Complainant’s attempted clarification of the legal standard is narrower than the actual legal standard. Consider, for example, the California Supreme Court’s use of language in Della Penna v. Toyota Motor Sales, U.S.A. (1995) 11 Cal.4th 376, which was the first case to discuss “the need to draw and enforce a sharpened distinction between the claims for the tortious disruption of an existing contract and claims that a prospective contractual or economic relationship has been interfered with by the defendant.” (Della Penna, at p. 392, italics changed.) The Court doubts that the California Supreme Court would have distinguished between contractual relationships and economic relationships as mere surplusage. Thus, the case law reflects that a prospective economic relationship can be different than a prospective contractual relationship. And, as noted in that same opinion, the cause of action for interference with contractual relations involve “inference with an existing business contract” while the cause of action at hand involves “interference with commercial relations less than contractual”. (Ibid., italics in original.)

Second, there appear to be triable issues of material fact as to whether the Individual Plaintiffs/Cross-Defendants did in fact have economic relationships with the third-party agents at issue. (Plaintiffs/Cross-Defendants’ Separate Statement, Items 8, 9 and Additional Item 5; Defendant/Cross-Complainant’s Response to Separate Statement, Item 5.)

Defendant/Cross-Complainant has not argued other elements of the cause of action. The Court does not consider those elements at this time.

Defendant/Cross-Complainant meets his initial burden to show the nonexistence of triable issues of material fact as to the third cause of action. Plaintiffs/Cross-Defendants meet their subsequent burden to show the existence of triable issues of material fact as to this cause of action.

The court DENIES summary adjudication as to the third cause of action in the Complaint for interference with prospective business advantage.

4. Fourth Cause of Action—Breach of Fiduciary Duty

a. Legal Standard

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (City of Atascadero v. Merrill Lynch, Pierce, Fenner, & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.)

b. Discussion

Defendant/Cross-Complainant moves for summary adjudication on the fourth cause of action for breach of fiduciary duty. (MSA, p. 14:16.) Defendant/Cross-Complainant does so solely as to the Individual Plaintiffs/Cross-Defendants. (Id. at p. 14:17–19.)

Defendant/Cross-Complainant makes the same arguments regarding fiduciary duty here as with the first cause of action for misappropriation of corporate opportunities. (MSA, pp. 14:17–19, 15:9–28; Reply, pp. 4:2–5:19.)

For the same reasons stated supra in Section I.C.1.b.ii., the Court disagrees with Defendant/Cross-Complainant’s argument. Specifically, there appear to be multiple triable issues of material fact as to whether Defendant/Cross-Complainant owed a fiduciary duty to the Individual Plaintiffs/Cross-Defendants. Yet in contrast with the first cause of action, a cause of action for breach of fiduciary duty does not require that the Individual Plaintiffs/Cross-Defendants be corporations.

Defendant/Cross-Complainant has not argued other elements of the cause of action. The Court does not consider those elements at this time.

Defendant/Cross-Complainant meets his initial burden to show the nonexistence of triable issues of material fact as to the fourth cause of action. Plaintiffs/Cross-Defendants meet their subsequent burden to show the existence of triable issues of material fact as to this cause of action.

The court DENIES summary adjudication as to the fourth cause of action in the Complaint for breach of fiduciary duty.

5. Fifth Cause of Action—Conversion

a. Legal Standard

“Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)

“It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to his own use. Money can be the subject of an action for conversion if a specific sum capable of identification is involved. Neither legal title nor absolute ownership of the property is necessary. A party need only allege it is entitled to immediate possession at the time of conversion. However, a mere contractual right of payment, without more, will not suffice.” (Farmers Ins. Exch. v. Zerin (1997) 53 Cal.App.4th 445, 451–52 [cleaned up].)

b. Discussion

Defendant/Cross-Complainant moves for summary adjudication on the fifth cause of action for conversion. (MSA, pp. 19:17–18, 20:1.) Defendant/Cross-Complainant does so solely as to Plaintiffs/Cross-Defendants Joseph Sacavitch and Forward Westwood, Inc. (Ibid.)

Defendant/Cross-Complainant argues: (1) that Plaintiffs/Cross-Defendants Joseph Sacavitch and Forward Westwood, Inc. admitted during a deposition that Defendant/Cross-Complainant had not actually converted moneys in escrow company accounts, personal property, or a Facebook group; and (2) that the “monetized value of distribution network” is not properly the subject of a conversion claim as there is no specific, identifiable sum of money at issue. (MSA, pp. 20:6–21:17.)

Plaintiffs/Cross-Defendants disagree, arguing that they have since provided verified, amended responses to Special Interrogatory No. 222 with specific allegations of conversion. (Opp’n, p. 7:4–10.)

Notably, the only “item” that Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch now claim was “converted” by Defendant/Cross-Complainant are “agents in the Forward Westwood Office”. (Plaintiffs/Cross-Defendants’ Appendix of Evidence, actual p. 232 of 294 [Forward Westwood, Inc.’s Amended Response to Special Interrogatory No. 222, dated April 26, 2024] and actual p. 239 of 294 [Joseph Sacavitch’s Amended Response to Special Interrogatory No. 222, dated May 15, 2024].)

In his Reply, Defendant/Cross-Complainant argues: (1) that Plaintiffs/Cross-Defendants cannot create a triable issue by providing a declaration that contradicts a prior discovery response or deposition testimony; (2) that “California law does not support a conversion claim where the property allegedly converted is human beings”; (3) that summary adjudication is warranted where the claim is about lost revenue in an amount to be determined by experts; and (4) that Plaintiff/Cross-Defendant Joseph Sacavitch has not provided any evidence that Defendant/Cross-Complainant converted any property that belonged individually to Plaintiff/Cross-Defendant Joseph Sacavitch. (Reply, pp. 10:11–11:11.)

The court agrees with Defendant/Cross-Complainant’s argument that human beings are not the proper subject of a conversion claim.

“Conversion is the wrongful exercise of dominion over the property of another.” (Lee, supra, 61 Cal.4th at p. 1240, italics added.)

People are not property, and they cannot become property. Both slavery and involuntary servitude (except as punishment for crimes after conviction) are outlawed in the United States of America and any place subject to its jurisdiction. (U.S. Const., 13th Amend., § 1.) Under the fundamental law of this land, Defendant/Cross-Complainant could not have exercised dominion over any agent, much less done so wrongfully as those people did not belong to Plaintiffs/Cross-Defendants.

The only exception to this rule involves human remains—and even this exception is limited in scope and precludes actions for conversion. (See Gray v. S. Pac. Co. (1937) 21 Cal.App.2d 240, 246 [“The action [for possession of a dead body for purposes of burial] is not one for conversion, nor could it be, as the law recognizes no right of property as such in the dead body of a human being.”]; see also Spates v. Dameron Hosp. Ass’n (2003) 114 Cal.App.4th 208, 221–222 [“[T]he courts have recognized that next of kin have a temporary, quasi-property right in the body of a deceased for purposes of burial or other disposition. . . . These exclusive rights of possession, control and disposition have been codified in [Health and Safety Code] section 7100.” (Italics in original, citation omitted.); see also Moore v. Regents of Univ. of Cal. (1990) 51 Cal.3d 120, 136–147.)

The court does not reach the other arguments regarding this cause of action at this time.

Defendant/Cross-Complainant meets his initial burden by arguing there is no evidence presented that Defendant/Cross-Complainant wrongfully converted Plaintiff/Cross-Defendant Joseph Sacavitch’s property. Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch do not meet their subsequent burden.

The court GRANTS summary adjudication in favor of Defendant/Cross-Complainant and against Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch on the fifth cause of action in the Complaint for conversion.

6. Sixth Cause of Action—Violation of Penal Code Section 496

a. Legal Standard

“Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170. . . .” (Pen. Code, § 496, subd. (a).)

“Any person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.” (Pen. Code, § 496, subd. (c).)

b. Discussion

Defendant/Cross-Complainant moves for summary adjudication on the sixth cause of action for violation of Penal Code section 496. (MSA, p. 19:17–18, 21:18.) Defendant/Cross-Complainant does so solely as to Plaintiffs/Cross-Defendants Joseph Sacavitch and Forward Westwood, Inc. (Ibid.)

Defendant/Cross-Complainant argues that Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch did not own the Facebook page at issue, and thus there is no basis for this claim by them. (MSA, pp. 21:26–22:2.)

Plaintiffs/Cross-Defendants disagree, again pointing to their Amended Responses to Special Interrogatory No. 222. (Opp’n, p. 7:11–21.)

In his Reply, Defendant/Cross-Complainant argues: (1) that the amended responses should be disregarded for the same reasons previously discussed; and (2) that the amended responses do not identify any stolen property, much less such property that Plaintiffs/Cross-Defendants believe Defendant/Cross-Complainant received. (Reply, p. 11:20–28.)

The court agrees with Defendant/Cross-Complainant’s substantive arguments.

Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch do not claim to own the Facebook page. Thus, they do not have a claim for violation of Penal Code section 496.

Furthermore, no evidence has been presented that would indicate the Facebook page (or any other property) was bought, sold, received, withheld, or concealed.

Defendant/Cross-Complainant meets his initial burden by arguing there is no evidence presented that Defendant/Cross-Complainant violated Penal Code section 496 regarding the property of Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch. Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch do not meet their subsequent burden.

The court GRANTS summary adjudication in favor of Defendant/Cross-Complainant and against only Plaintiffs/Cross-Defendants Forward Westwood, Inc. and Joseph Sacavitch on the sixth cause of action in the Complaint for violation of Penal Code section 496.

7. Seventh Cause of Action—Negligent Misrepresentation

a. Legal Standard

The elements of a cause of action for negligent misrepresentation include “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks omitted.)

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)

To properly allege fraud against a corporation, the plaintiff must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

b. Discussion

i. The Parties’ Arguments

Defendant/Cross-Complainant moves for summary adjudication on the seventh cause of action for negligent misrepresentation. (MSA, p. 18:1–2.)

Defendant/Cross-Complainant argues that summary adjudication is appropriate because Plaintiffs/Cross-Defendants have not identified any misrepresentations. (MSA, p. 18:3, 18:19.)

Plaintiffs/Cross-Defendants disagree, pointing to their Amended Responses to Special Interrogatory Nos. 226 and 227. (Opp’n, pp. 6:24–7:3; Plaintiffs/Cross-Defendants’ Separate Statement, Items 14, 15; Plaintiffs/Cross-Defendants’ Appendix of Evidence, actual pp. 233–234 of 294.)

In his Reply, Defendant/Cross-Complainant argues: (1) that Plaintiffs/Cross-Defendants cannot create a triable issue of material fact with a declaration that contradicts his prior discovery responses; (2) that none of these new responses can ground a fraud claim; and (3) that summary adjudication is at least warranted as to the Entity Plaintiffs/Cross-Defendants. (Reply, pp. 9:1–10:10.)

ii. The Statements at Issue

In four of the five sets of amended responses to special interrogatories (i.e., all of them except for the amended responses from Plaintiff/Cross-Complainant Forward Calabasas, Inc.), the following statement appears in the Amended Responses to Special Interrogatory Nos. 226 and 227:

In December of 2021 and January of 2022, [Defendant/Cross-Complainant] told agents in the Forward Westwood office, including but not limited to [names omitted] that the Forward Westwood Office was closing and that if they did not want their own business to be disrupted, they must move their license to either KW South Bay or KW Calabasas.

(Plaintiffs/Cross-Defendants’ Appendix of Evidence, actual pp. 233–234, 241–243, 261–264, 272–275 of 294 [emphasis added].) The only difference between the two statements is the word “fraudulently,” which appears before the word “told” in the Amended Response to Special Interrogatory No. 227.

Other statements are included in the amended responses to special interrogatories of Plaintiffs/Cross-Defendants Forward Calabasas, Inc., Paul Morris, and Edward Krifcher.

iii. No Direct Contradiction of Prior Testimony

It is well-established case law that a party “cannot create a triable issue of fact by providing a declaration that contradicts its prior deposition testimony.” (Best Rest Motel, Inc. v. Sequoia Ins. Co. (2023) 88 Cal.App.5th 696, 708–709, citation omitted; see also Advanced Micro Devices v. Great Am. Surplus Lines Ins. Co. (1988) 199 Cal.App.3d 791, 800–801 [“In reviewing motions for summary judgment, the courts have long tended to treat affidavits repudiating previous testimony as irrelevant, inadmissible, or evasive.”] (Citation omitted.).)

The court does not see a direct contradiction here. It appears that Plaintiffs/Cross-Defendants previously answered Special Interrogatory Nos. 226 and 227 with an answer of “We are unsure . . . .” The updated answer takes into account the discovery that was ordered to occur; it gives a certain answer where an uncertain one was previously provided.

iv. Fraud Claims

The various statements claimed—including the statements allegedly made to the agents—involve multiple triable issues of material fact. If proven, it is possible that those facts could ground a claim for negligent misrepresentation and/or fraud. This is because these statements: (1) are specific enough to meet the heightened pleading standard for fraud; and (2) could satisfy some of the elements of these causes of action. (Hydro-Mill Co., Inc., supra, 115 Cal.App.4th at p. 1154.)

v. The Entity Plaintiffs/Cross-Defendants

The court does not have any reason to provide different relief to the Entity Plaintiffs/Cross-Defendants than to the Individual Plaintiffs/Cross-Defendants on this cause of action. If, as alleged, the misrepresentations were made to the Individual Plaintiffs/Cross-Defendants and/or to the other employees of the Entity Plaintiffs/Cross-Defendants, then the Entity Plaintiffs could also have a claim.

Defendant/Cross-Complainant meets his initial burden to show the nonexistence of triable issues of material fact as to the seventh cause of action. Plaintiffs/Cross-Defendants meet their subsequent burden to show the existence of triable issues of material fact as to this cause of action.

The court DENIES summary adjudication as to the seventh cause of action for negligent misrepresentation.

8. Eighth Cause of Action—Fraud

a. Legal Standard

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.)

b. Discussion

Defendant/Cross-Complainant moves for summary adjudication on the eighth cause of action for fraud. (MSA, p. 18:1–2.)

Both sides make the same arguments and present the same evidence for this cause of action as they had regarding the seventh cause of action for negligent misrepresentation. The court’s analysis is the same as well.

Defendant/Cross-Complainant meets his initial burden to show the nonexistence of triable issues of material fact as to the eighth cause of action. Plaintiffs/Cross-Defendants meet their subsequent burden to show the existence of triable issues of material fact as to this cause of action.

The court DENIES summary adjudication as to the eighth cause of action for fraud.

Conclusion

The Motion for Summary Adjudication of Issues is GRANTED in part.

Summary adjudication is GRANTED in favor of Defendant/Cross-Complainant Meny Atias and against Plaintiffs/Cross-Defendants Joseph Sacavitch, Edward Krifcher, and Paul Morris as to the first cause of action in the Complaint for misappropriation of corporate opportunities.

The Motion for Summary Adjudication of Issues is DENIED as to all else.