Judge Ralph C. Hofer, Case Number: 22GDCV00664, Date: 2025-02-28 Tentative Ruling

Plaintiff Raffi Tarakjian alleges that in 2016, plaintiff met defendant George Assali, who represented to plaintiff that he was a licensed real estate agent, had been doing property flips for over twenty years, had never lost money flipping properties, and that defendant guaranteed that he would return a profit on plaintiff’s investment. During several meetings, the parties agreed that plaintiff would provide funding for property from an auction and additional funding as needed to remodel the property after its purchase, and that defendant would be responsible for managing the remodeling of the purchased property. Once the remodeling was complete, the property would be sold by defendant Assali acting as the selling agent, or rented out, and plaintiff would receive the net profit from the sale of each property. It was also agreed that invoices for all expenses would be provided to plaintiff, and that plaintiff could demand the return of his investment at any time.

Plaintiff alleges that plaintiff formed and registered CARP Property, LLC to purchase properties to be remodeled and sold. After two successful property flips, defendant Assali insisted that CARP Property, LLC no longer be used to purchase the investment properties, but that all future transactions should go through defendant personally or through his corporation, defendant UASA, LLC. Plaintiff agreed to this modification of the terms of the original agreement.

The complaint alleges that plaintiff transferred further funds to Assali to be used to purchase two properties in Long Beach, and further funds were provided for Long Beach flip supplies and a porch add on, but Assali did not provide plaintiff with any of the profits from the sale of the properties being flipped, insisting that the profits be added to the original investment to have more capital to purchase more properties, or higher valued properties. Sometime thereafter, defendant stopped sharing details of the properties with plaintiff.

Plaintiff alleges that in December of 2018, a property in Glendale was successfully flipped, and that, upon information and belief, from 2018 to 2020, Assali purchased multiple properties that were eventually sold for a profit. When Assali’s communications with plaintiff became inconsistent and defendant stopped involving plaintiff in the details of the properties being purchased and sold, plaintiff requested that Assali repay plaintiff whatever plaintiff was owed. After making three payments through UASA, LLC to either CARP Property LLC or to plaintiff, Assali claimed he was not able to return the remaining funds owed to plaintiff and that he would return the money on the next property flips. Plaintiff alleges that plaintiff has made multiple demands for Assali to return the amount owed to plaintiff, but Assali has refused to return plaintiff’s money, and ignored plaintiff’s demands.

(c) 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.”

In this case, defendant seeks to file a cross-complaint against plaintiff, to allege that plaintiff is in breach of the agreement as averred in the operative complaint, causing defendant as cross-complainant damages.

Specifically, defendant as cross-complainant intends to allege that as part of the agreement between the parties, the parties agreed that they would split the profit and certain properties by which cross-complainant would receive 15% of the profit on certain properties and cross-defendant would receive 85% of the profit on the properties, and that cross-complainant would act as a property manager for each property at the rate of $26,000 per year, and would also be the listing agent on each property entitled to the standard commission of 3-5%. Defendant intends to allege that on property on Country Club Drive in Burbank, work was required on the property to make it marketable, including installation of new stairs at a cost of $70,000, which cost was advanced by cross-complainant, with cross-defendant’s 85% never being reimbursed, and cross-defendant never allowed cross-complaint to list or be paid the property management fees. It will also be alleged that when the property sold, cross-complainant was deprived of his commission. [Ex. A, paras. 5-8].

Since the proposed cross-complaint is directed at a party who filed the complaint against defendant, the cross-complaint should have been filed before or at the same time as the answer, but was not filed with the answer, which was filed on March 1, 2023.

“Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.”

“A party who fails to plead a cause of action subject to the requirements of this article, whether through inadvertence, mistake, neglect, or other cause, may apply to the court for leave ...to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to ...file the cross- complaint if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.”

In order to deny the filing of a pleading or amended pleading in such a case, the trial court must find that substantial evidence supports a finding that the moving party acted in bad faith. Silver Organization, Ltd v. Frank, (1990) 217 Cal.App.3d 94, 97-99.

Defendant argues that the proposed cross-complaint sets forth a cause of action against plaintiff for breach of contract which arises out of the same transaction, occurrence or series of transactions or occurrences as the case brought against defendant, as both plaintiff’s complaint and defendant’s proposed cross-complaint relate to alleged breaches of the subject oral agreement for the operation of the business relationship between the parties regarding the flipping of properties under that agreement.

Defendant argues he has acted in good faith here, as defendant did not file a cross-complaint earlier as defendant’s prior counsel did not do so, and that new counsel, in responding to and propounding recent discovery determined that defendant Assali had a good and meritorious claim for breach of contract. [Verdi Decl., paras. 3-7]. Defendant also indicates that the timing of this motion is not critical, as the trial has not been set. This assertion is puzzling, since, as argued in the opposition, the file reflects that the trial date is currently set for April 7, 2025.

The opposition argues that defendant’s unreasonable delay and pattern of conduct demonstrate bad faith. The opposition argues that defendant offers no legitimate explanation for the delay but attempts to bring a wholly unrelated and stale claim simply to hamper and hinder the adjudication of plaintiff’s complaint.

Defendant argues that the delay is improper, in reliance on Crocker National Bank v. Emerald, (1990), 221 Cal.App.3d 852, in which the court of appeal held there was no abuse of discretion in denying leave to file a permissive cross-complaint five months before trial. The case did not involve a compulsory cross-complaint, which is what is at issue here.

Plaintiff argues that the cross-complaint does not arise from the same set of facts as the complaint, as the cross-complaint asserts allegations regarding property already owned by plaintiff at the time frame in the complaint, and is a property entirely different from the twelve properties which are the subject of the complaint. It appears, however, that it is alleged that the property was subject to the investment scheme and contractual agreement of plaintiff which is the overall subject of the complaint. The plaintiff in the complaint understandably chose not to complain about the transaction with the subject property addressed in the cross-complaint, as plaintiff is not claiming he was harmed by that particular transaction.

Defendant also argues that the claim to be asserted, arising from the agreement for the investment scheme commenced in 2016, would be time barred. This assertion is an argument better made on a challenge to the sufficiency of the cross-complaint, which can be made once leave to file the cross-complaint is permitted. Defendant concedes, in fact, that the proposed cross-complaint does not on its face set forth the dates of the alleged breach of the oral agreement at issue, although defendant argues the conduct dates back to 2017.

There is also an argument that allowing the cross-complaint would be prejudicial to plaintiff, as plaintiff has incurred significant attorney fees and costs in order to litigate the case to the present stage, and if leave is granted, the trial will be continued for months.

These arguments do not provide substantial evidence in this case that bad faith exists. The opposition does not dispute that new counsel was retained in this matter, after which defendant’s deposition was taken, and that new counsel attempted to obtain a stipulation for the filing of the cross-complaint before filing this motion, which accounts for some of the delay. While the failure to timely file a cross-complaint may have been neglectful on the part of previous counsel, this conduct does not rise to the level of bad faith.

In fact, the court of appeal in Silver Organizations expressly held that where the cross-complaint is compulsory, factors such as the sufficiency of any mistake, inadvertence, surprise or excusable neglect alone are not sufficient:

“The legislative mandate is clear. A policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.”

Here, the opposition does not establish circumstances suggesting bad faith, and this circumstance is not a situation where defendant will have obtained any strategic advantage by the delay which would affect plaintiff’s ability to pursue and defend this matter on its merits. There is no substantial evidence supporting a finding of bad faith, as required. See Silver Organizations, at 99 (holding in connection with a bad faith finding, “it is our view that substantial evidence must support the trial court’s decision.” (italics in original)).

Overall, this is a compulsory cross-complaint, and if it is not permitted to be filed there would be a forfeiture of defendant’s affirmative claims against plaintiff. In addition, even if the cross-complaint were not compulsory, the court has a strong interest in having all claims determined together, rather than having defendant file a separate action, which may ultimately be consolidated with this action in the future. Rather, while the time would be better spent moving forward in discovery and trial preparation and addressing the merits of the parties’ claims.

Under CCP § 2017.010, “any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action...if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” The section specifically provides that “Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action,” and that discovery may be obtained “of the identity and location of persons having knowledge of any discoverable matter, as well as of the existence, description, nature, custody, condition and location of any document, electronically stored information, tangible thing, or land or other property.”

CCP § 2030.300(a) provides that if the party propounding interrogatories deems that an objection “is without merit or too general” or that “an answer to a particular interrogatory is evasive or incomplete…the propounding party may move for an order compelling a further response...”

If a timely motion to compel has been filed, the burden is on the responding party to justify any objection or failure to fully respond to discovery. Coy v. Superior Court (1962) 58 Cal.2d 210, 220-221. The granting or denial of a motion to compel is in the discretion of the trial court. Coy, at 221-222. A court should generally consider the following factors:

This interrogatory requests that as to each property identified in response to special interrogatory number 26, “state the date of breach of the oral agreement YOU allege in the factual allegations of the operative complaint.”

The response is an objection that the interrogatory is overbroad, vague, ambiguous and unintelligible, followed by a response describing the chronology of the investment arrangement, with the dates being identified as, “The true nature of Assali's misrepresentations became apparent in late 2019 when Plaintiff exercised his contractually guaranteed right to demand the return of his investment,” that “While he did make three partial payments - $50,000 on May 17, 2020, followed by $125,000 on August 10, 2020, and $80,000 on October 6, 2020 - these payments totaling $255,000 represented only a fraction of Plaintiff’s investment,” and, “Most tellingly, after October 6, 2020, Assali ceased all repayments, solidifying his breach of the agreement and revealing the deceptive nature of his initial representations about investment liquidity.”

Defendant argues that the response is a running narrative that is non-responsive and evasive, and that plaintiff has alleged that defendant breached the 2016 agreement and defendant has asked when that breach occurred, and defendant is entitled to know what, how and when with respect to what he is alleged to have done wrong. It is not clear what is missing from this response, as the interrogatory calls for the “date of breach of the oral agreement,” and the response specifies dates which plaintiff is evidently treating as the dates of breach of the oral agreement. It appears that defendant is seeking a response for each of the properties “identified in response to special interrogatory number 26,” but it is not clear. In any case, to the extent this relief is what is sought, defendant in the separate statement does not provide the information required to be provided concerning the response to special interrogatory number 26.

CRC Rule 3.1345(c) provides that a separate statement is a “separate document filed and served with the discovery motion that provides all the information necessary to understand each discovery request and all the responses to it that are at issue.” The section requires that a separate statement “must be full and complete so that no person is required to review any other document in order to determine the full request and the full response.” The rule requires the statement “must include” for each discovery request to which a further response is requested, the text of the request, the text of each response or further response, and:

(5) If the response to a particular discovery request is dependent on the response given to another discovery request, or if the reasons a further response to a particular discovery request is deemed necessary are based on the response to some other discovery request, the other request and the response to it must be set forth.”

Here, the understanding of the interrogatory and response and the necessity of a further response depends on the response to interrogatory no. 26, and that interrogatory and the response are not set forth, so that the court may not determine that the response to interrogatory no. 28 is insufficient. The moving papers also do not include a copy of the interrogatories or the responses, so that the court, even if it were inclined to do so, cannot refer to those documents for clarification.

Plaintiff in opposition argues that because the parties’ oral agreement did not pertain to each individual property, but was regarded as one, plaintiff fully responded to this interrogatory. Plaintiff does not in the opposition attempt to justify plaintiff’s boilerplate objections.

The response accordingly appears to apply to every property, and, once the court overrules the boilerplate objections, appears to sufficiently limit plaintiff at trial to relying on only the dates identified in the interrogatory response.

The response includes the same boilerplate objection, and then a narrative, in which representations are generally described, such as Assali, “representing himself as a licensed real estate agent with over two decades of experience in property flips,” that he “had never lost money on property flips,” and guaranteeing investment profits and “that an initial $300,000 investment would enable the payment of a $1,000,000 mortgage within five years.” It is also set forth that Assali represented “that all work would be properly permitted and completed according to code,” and that he promised “complete transparency through comprehensive accounting of all expenses and profits.” It is also asserted that Assali represented that plaintiff’s investment funds “would be used exclusively for property purchases and renovations.”

Defendant argues that the response is non-responsive and evasive, evidently arguing that defendant is entitled to know the exact representations, and evidently what was said, who said it, in what manner (oral or writing) and when.

Plaintiff in opposition argues that the interrogatory does not request “what, how, and when” information, and that the response provides specific details about each representation made by defendant. The interrogatory does request “what” information, in requesting a detailed description of each representation plaintiff alleges was false. Defendant does not argue that any definition of detailed description was provided with the interrogatory which requested such specifics.

The opposition again does not justify the objections, so the court overrules the objections. The court also orders a further response which identifies what specifically was said, promised, or concealed in connection with each and every representation plaintiff is claiming in this action was false. Plaintiff should keep in mind that any facts which should have been set forth in response to this interrogatory but are not set forth may be subject to impeachment by the discovery responses and possibly subject to exclusion at trial.

The burden is on the moving party to show both relevance to the subject matter and specific facts justifying discovery. Glenfed Develop. Corp. v. Superior Court (1997, 2nd Dist.) 53 Cal.App.4th 1113, 1117. Once good cause is established by the moving party, the burden then shifts to the responding party to justify any objections made to document disclosure. See Hartbrodt v. Burke (1996, 2nd Dist.) 42 Cal.App.4th 168, 172-174.

These seek materials such as documents identified in response to special interrogatories, related to the purchase of each property subject to the 2016 oral agreement, documents supporting contentions such as the defendant acquired other properties, that profits were made as to each property, and losses were suffered as to each property, documents reflecting breach of the agreement, text messages between the parties, emails between the parties, and documents that prove or tend to prove that defendant purchased other properties that were the subject of the agreement.

“Plaintiff objects to this request on the grounds that any request calling for “all” or “any and all” documents or things is impermissibly overbroad as a matter of law. Subject to and without waiver of the foregoing, Plaintiff responds as follows: Plaintiff has produced documents that are responsive to this request in his possession, custody, or control.”

The requests seek clearly discoverable information concerning the issues raised in this lawsuit. The declaration in support of the motion explains that the discovery was propounded to “address the claims, contentions and damages Mr. Tarakjian claims in this operative complaint,” and “tracked the allegations” of the operative complaint, “and addressed Plaintiff’s claims, contentions and damages.” [Verdi Decl., paras. 6-8]. A review of the separate statements confirms the good cause for seeking responses to that discovery. Plaintiff has not in the responses, nor in the opposition papers, indicated that any of the requests are not proper.

Plaintiff in opposition has failed to attempt to justify the objections, and it is not clear how any specific request is overly broad. The objections accordingly are overruled, and further responses, without objections, are ordered to be served.

“A statement that a party to whom an inspection demand has been directed will comply with the particular demand shall state that the production, inspection, and related activity demanded will be allowed either in whole or in part, and that all documents or things in the demanded category that are in the possession, custody, or control of that party and to which no objection is being make will be included in the production.”

The responses do not indicate that production will be allowed, or that “all” documents in plaintiff’s possession, custody or control will be included. The responses instead appear to refer defendant to documents already produced, which, if produced in connection with some other discovery requests, is not sufficient; responsive documents must be produced again in connection with this set of discovery, and statements of compliance must track the Code. The motion argues that there were no documents produced, which is improper. Further responses and production which full comply with the Code are ordered.

Plaintiff in opposition argues that plaintiff in response to defendant taking issue with his responses has reiterated plaintiff’s position that all requested documents had been produced. Plaintiff argues that, although plaintiff could have re-sent the same set of discovery, evidently, the responses served to discovery propounded by another defendant, UASA, LLC, this would have been a futile and redundant exercise, accomplishing nothing. This is protocol exactly what is required under the code. However, defendant is not required to take defendant’s word for it that unspecified responsive documents have already been provided by some unidentified means. Plaintiff has failed to justify any position otherwise. The court orders plaintiff to serve further complete and code compliant responses, and to permit the required inspection and copying in connection with the discovery propounded by defendant Assali.

Both sides rely on Pollock v. Superior Court (2023) 93 Cal.App.5th 1348, in which the Second District noted that CCP section 2031.280 (a), as then newly amended, now requires that a document be identified with the specific request number to which it pertains, as opposed to the prior requirement that documents need only be produced as they were kept in the usual course of business. Pollock, at 1352. None of this has been done here.

Plaintiff concedes as much, but argues that Pollock clarified that there was no need to include this information in the formal response to a production demand, in effect, a statement of compliance. The Second District in Pollock, however, did not eliminate the requirement that when documents are produced, the production need be made as specified. The Second District explained:

“For clarity, we wish to maintain the distinction between a formal response to a production demand—i.e., a statement of compliance, representation of inability to comply, or assertion of any objections—and the production itself.2 Section 2031.210 prescribes the nature and format of the response. Section 2031.250 requires that a response be verified unless it contains only objections. Section 2031.280 prescribes the form in which items must be produced. As newly amended, it requires that a document be identified with the specific request number to which it pertains, as opposed to the prior requirement that documents need only be produced as they were kept in the usual course of business. (§ 2031.280, subd. (a).)

Plaintiff seems to argue that Pollock approved the use of table of documents to satisfy the requirement in connection with a production, which may be the case, but the opposition also concedes that no table had ever been sent before this motion was filed. [Yacoubian Decl., para. 12]. Evidently no table of documents has yet been sent or received.

CCP § 2030.300 (d) provides that the court “shall impose a monetary sanction...against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel a further response to interrogatories, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” A similar provision applies to motions to compel further responses to document demands. CCP § 2031.310 (h).

Under CCP § 2023.010, misuse of the discovery process includes “(e) making, without substantial justification, an unmeritorious objection to discovery”; and “(f) making an evasive response to discovery.” Where there has been a misuse of the discovery process, under Section 2023.030(a), the court “may impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct.”

Here, with respect to the motion concerning special interrogatories, neither side has fully prevailed on the motion, as the results are split, justifying each side in part both in bringing the motion and in opposing it. No monetary sanctions to either side will be awarded in connection with that motion.

With respect to requests for production of documents, the motion is granted, so that responding party unsuccessfully has opposed the motion, and made evasive responses and responses which were not Code-compliant, as well as objections which plaintiff has failed to justify, making the filing of the motion necessary.

With respect to the moving party, the opposition argues that plaintiff did not misuse the discovery process but provided verified responses to the discovery, and produced all documents in plaintiff’s possession. Plaintiff failed to respond to requests for code compliant responses and production, and maintained objections it has failed to justify.

There is no showing of substantial justification for the responses and objections, or injustice in shifting the reasonable expense of having had to make the motion to the party who resisted serving appropriate discovery responses.

Sanctions are awarded to defendant moving party. The sanctions sought in the moving papers are $7,010.00. These appear very high for a motion of this nature, which, while involving 19 separate document requests, involved a very cursory argument in the moving memorandum, and a slightly expanded argument in the separate statement which was simply repeated, and essentially cut and pasted into the separate statement nineteen times. In addition, defendant seeks 2 hours to appear at the hearing, when a remote appearance is available. The sanctions awarded will be adjusted accordingly as follows: total attorney time of 6 hours at $695.00 attorney time per hour for a total amount of attorney’s fees of $4,170.00.

Defendant and Cross-Complainant George Assali is ordered to efile a separate signed copy of the cross-complaint submitted as Exhibit A by close of business this date and the cross-complaint will be deemed served on the current parties as of the efiling of the pleading.

Motion as to Special Interrogatory No. 28, is GRANTED in part. Plaintiff has failed to justify objections asserted to the Interrogatory, and the objections are without merit, and are OVERRULED. Motion to otherwise compel a further response is DENIED.

Plaintiff Rafi Tarakjian is ordered to serve a further verified response to Special Interrogatories, Set One, Special Interrogatory No. 30, which fully and completely responds to the interrogatory, and provides all information requested, that is, which identifies what specifically was said, promised, or concealed in connection with each and every representation plaintiff is claiming in this action was false.

Plaintiff Rafi Tarakjian is ordered to serve verified further responses to Defendant George Assali’s Requests for Production of Documents, Set One, Requests Nos. 1 through 19, inclusive, and to permit inspection and copying of all responsive documents within ten days. The further responses are to consist of Code-compliant statements of compliance and must fully comply with CCP §2031.220:

The production of documents must fully comply with CCP §2031.220 (a) (“(a) Any documents or category of documents produced in response to a demand for inspection, copying, testing, or sampling shall be identified with the specific request number to which the documents respond.”)

Monetary sanctions requested by moving party: Utilizing a lodestar approach, and in view of the totality of the circumstances, the Court finds that the total and reasonable amount of attorney’s fees and costs incurred for the work performed in connection with the pending motion is $4,170.00 (6 hours @ $695/hour) (10 hours requested) plus a filing fee of $60.00 [Amount Requested $7,010.00], which sum is to be awarded in favor of defendant George Assali and against plaintiff Rafi Tarakjian, and plaintiff’s counsel of record, jointly and severally, payable within 30 days. CCP §§ 2031.310(h), 2023.010 (e) and (f), and 2023.030(a).

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