Harvey Kreitenberg, et al. v. Michael Rosenberg, et al.

DEFENDANT JETS SYNAGOGUE’S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION

 

MOVING PARTY: Defendant JETS Synagogue

RESPONDING PARTY(S): Plaintiffs Harvey Kreitenberg, Eli Krich, Yoseph Chazanow, Eli Chitrik, and Berel Wilhelm

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiffs brought this derivative action for the benefit of nominal Defendant Ahavath Israel Congregation, Inc (“AIC”). Plaintiffs allege that Defendants have misused AIC’s assets, by among other things, gifting property to Defendant J.E.T.S. Synagogue.   Plaintiffs bring this action for (1) rescission of lease, (2) rescission of deed, (3) money had and received, (4) conversion, (5) breach of fiduciary duty, and (6) unjust enrichment.

Defendant JETS Synagogue now moves for summary judgment, or in the alternative, summary adjudication.  Plaintiffs opposed.

TENTATIVE RULING:

Defendant’s Motion for Summary Judgment is DENIED.

Defendant’s Alternative Motion for Summary Adjudication is also DENIED.

Plaintiffs to give notice, unless waived.  

DISCUSSION:

I. Evidentiary Objections

Pursuant to CCP § 437c(q), the Court only rules upon objections asserted against evidence which the Court deems to be material to the disposition of this motion, as follows:

Defendant’s Objections to the Declarations of Yoseph Chazanow and Aryeh Kaufman are OVERRULED.

Plaintiffs’ Objections to the Declarations of Mayer Schmukler and Jennifer Slater are OVERRULED.

(See Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-49.)

II. Judicial Notice

Pursuant to Defendant’s request, the court takes judicial notice of Defendant’s Exhibits 1, 3, 5, 6, 7, 11, 16, 17, 18, and 19. Plaintiffs’ objections to same are OVERULED.

The court takes judicial notice of the exhibits without assuming the truth of the assertions contained therein. (See Seelig v. Infinity Broad. Corp. (2002) 97 Cal. App. 4th 798, 808; Williams v. Southern Cal. Gas Co. (2009) 176 Cal.App.4th 591, 600 [court could take judicial notice of discovery responses but could not make any factual inferences from them]).

III. Plaintiff’s Untimely Opposition

Defendant objects to Plaintiffs’ opposition as untimely. Based on the formerly scheduled hearing date of March 30, 2023, Plaintiffs’ opposition was due on March 16, 2023. (See CCP § 437c(b)(2) [“An opposition to the motion shall be served and filed not less than 14 days preceding the noticed or continued date of hearing, unless the court for good cause orders otherwise.”].)

Plaintiffs served their opposition, however, on March 17, 2023, at 1:37 am—roughly one-and a-half hours after the 16th.  (See Slater Decl., 5.)   

The court exercises its discretion to consider the opposition, as Defendant cannot in good faith claim any prejudice by this minimal delay. Be that as it may, the parties are admonished to comply with all filing deadlines going forward. 

IV. Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.  Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.  Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. 

V. Analysis

A. Background

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)

Plaintiffs brought this derivative action for the benefit of nominal Defendant Ahavath Israel Congregation, Inc (“AIC”). Plaintiffs allege in the First Amended Complaint [FN 1] that AIC owned and operated a synagogue at 5454 Virginia Ave., Los Angeles, CA 90029. (FAC ¶ 3.) Plaintiff’s further allege that Defendant Michael Rosenberg—as director and chief executive officer of AIC—secretly gifted the Property by deed to defendant J.E.T.S. SYNAGOGUE (“JETS”) in April 2019, “stripp[ing] [AIC] of its most valuable asset.” (Id. ¶¶ 3, 13, 17, 31.) Defendant Ministerios Cristianos Guerreros de Jehova is alleged to now operate a church at the property.  (Id. ¶ 18.) Thus, Plaintiffs allege that Defendants, including Defendant JETS, have been unjustly enriched by “hav[ing] received and wrongfully retained income and/or property which AIC is rightfully entitled to possess.” (Id. ¶ 69.) 

B. Defendant’s Arguments in Support of MSJ

1. Issue No. 1: Plaintiffs lack standing to pursue an unjust enrichment claim against JETS.

In support of its motion for summary judgment, Defendant first argues that Plaintiffs lack standing to assert the unjust enrichment cause of action. It contends instead that “AIC, not plaintiffs, is the proper plaintiff.” (MSJ 6: 24.)

As framed by the FAC, Plaintiffs allege they are members of AIC, who bring the action “derivatively in the right of and for the benefit of nominal defendant AIC.” (FAC ¶ 2.) Plaintiffs allege they “are and were AIC members during the times of the wrongful acts complained and detailed herein,” and that “[p]ursuant to California Corporations Code § 9243(c), Plaintiffs have standing to assert the causes of action herein on behalf of the corporation and will fairly and adequately protect AIC’s interest and its other members.” (Id. ¶ 11.) 

Corporations Code section 9243(c) permits any of the following to bring an action in the event of a “self-dealing transaction”: 

(1) The corporation, or a member asserting the right in the name of the corporation; however, for the purpose of this paragraph the provisions of Section 5710 shall apply to the action.

(2) A director of the corporation.

(3) An officer of the corporation.

(4) Any person authorized by the bylaws to bring an action.

(Corp. Code § 9243(c) [emphasis added].)

The burden begins with Defendant to show that “one or more elements of a cause of action . . . cannot be established.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853. Defendant presents evidence that Plaintiffs have not invested any of their personal money in the property, and are not listed on any documents filed with the California Secretary of State suggesting that they are shareholders, officers, or directors of AIC. (SSUMF 23, 24.) 

This switches the burden to Plaintiff to show via specific facts that a triable issue of material facts exists. (§ 437c(o)(2).) Plaintiffs have filed their mandatory “Separate Statement of Genuine Disputes of Material Facts.” Plaintiffs also purport to incorporate by reference their moving papers submitted in support of their separate motion for summary judgment, filed on February 24, 2023. (Opp. 2: 8-9.) It is only in the separate statement in that separate motion which references evidence to support that Plaintiffs became members of AIC “by making monetary contributions, which were collected by Moshe A. Kagan (“Kagan”) on behalf of AIC.” (PSSUMF 18.) Indeed, it would appear that at least some evidence directly relevant to the instant motion is referenced only in Plaintiff’s separate statement in its own motion for summary judgment—but not in its separate statement filed in opposition to Defendant’s motion for summary judgment. 

It is unclear whether it is appropriate for a party to “incorporate by reference” evidence to oppose a motion for summary judgment.  Courts have said that “all material facts must be set forth in the separate statement,” and “if it is not set forth in the separate statement, it does not exist.” (Parkview Villas Assn., Inc. v. State Farm Fire & Cas. Co. (2005) 133 Cal. App. 4th 1197, 1213.) It is equally unclear whether this Court has discretion to grant a motion for summary judgment under these circumstances given the harsh consequence.

Be that as it may, and in the interests of justice, this court exercises its sound discretion to consider the two separate statements together—the one filed in opposition to this motion, and the one Plaintiffs filed in support of their own MSJ—where possible to do so. 

Therefore, Plaintiffs submit evidence that Plaintiffs became members of AIC “by making monetary contributions, which were collected by Moshe A. Kagan (“Kagan”) on behalf of AIC.” (PSSUMF 18; PSSAMF 45.) Defendant largely fails to refute this point, and cites not authority suggesting that this fact would be insufficient to make Plaintiffs’ “members” of AIC.  Moreover, Plaintiffs submit evidence that they were elected directors of AIC at the May 6, 2018, members meeting.  (PSSUMF 32; PSSAMF 59.)

Thus, there is at least a triable issue as to whether the Plaintiffs are Members and/or Directors of AIC—which, if true, would give them standing to “assert[] the right in the name of” AIC.  (Corp. Code 9243(c).) Therefore, for purposes of this motion, Plaintiffs have standing to bring this claim on behalf of AIC.

Accordingly, Defendant’s Motion for Summary Adjudication of Issue 1 is DENIED.

2. Issue No. 2: Plaintiffs’ unjust enrichment fails because plaintiffs have failed to prove each element of their claim.

Defendant next argues that Plaintiffs cannot produce evidence for each element of their claim for unjust enrichment. Instead, Defendant contends there is no evidence that Defendant has received rental income from the property, the allegations which forms the basis of the claim in the FAC.  (FAC ¶ 69.)

The elements of a claim for unjust enrichment are receipt of a benefit and unjust retention of the benefit at the expense of another. (Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238–242.) 

As an initial matter, it has been generally held that “[t]here is no cause of action in California for unjust enrichment.” [Citations.] Unjust enrichment is synonymous with restitution. [Citation.]” (Levine v. Blue Shield of California (2010) 189 Cal.App.4th 1117, 1138, internal citation omitted.) This court will therefore construe the cause of action as one for restitution based on an unjust enrichment theory. (See Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1386 [in characterizing pleadings, it is policy to emphasize substance over form].)  

For its burden, Defendant submits evidence that it has never received any rental income from Ministerios or any other tenant of the Property. (SSUMF 26; Schmukler Decl. ¶ 18.)

In opposition, Plaintiffs submits evidence that Defendant has received at least one rent check for the property—albeit for only $18 dollars.  (SSDMF 26; Kaufman Decl., Exh. 2.) However, even putting this disputed fact aside, it would appear that the very fact that Defendant JETS had been “gifted” the property could potentially support unjust enrichment by itself—even in the absence of rent payments. 

Plaintiffs have therefore met their burden to establish a triable issue of material fact on all elements of their unjust enrichment claim.

Accordingly, Defendant’s Motion for Summary Adjudication of Issue 2 is DENIED.

3. Issue No. 3: Plaintiffs’ unjust enrichment fails because JETS received the subject property as a bona fide gift.

Defendant next contends that the unjust enrichment claim fails because it received the property as a bona fide gift. 

“[A] bona fide purchaser is generally not required to make restitution [citation],” but “[a] transferee with knowledge of the circumstances surrounding the unjust enrichment may be obligated to make restitution.” (Pro. Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal. App. 5th 230, 241.) For a defendant to be “ ‘without notice’ ” means to be “without notice of the facts giving rise to the restitution claim.” (Id.)

Defendant submits evidence that in March 2016, Moshe Kagan announced at a fundraiser that AIC was gifting the Property to JETS. (SSUMF 8.) JETS paid $3,310.50 in escrow fees.  (SSUMF 11.) A grant deed was recorded in favor of JETS on April 15, 2019.  (SSUMF 14.) 

Defendant also submits evidence that it was unaware of the facts giving rise the restitution claim.  Although litigation was pending in 2018, that litigation pertained only to a dispute between Rosenberg and Kagan regarding use of the Property and various tort claims. (SSUMF 17.) It did not challenge AIC’s title to the property.  (SSUMF 18.)  Defendant submits evidence that it was unaware of any contention by Plaintiffs that Rosenberg and Herrerra did not have authority to convey title to JETS. (SSUMF 31.) Defendant has therefore met its burden.

In opposition, Plaintiffs contend there is a genuine dispute as to the actual directors or officers of AIC—and thus to who had the authority to gift the property at all.  Moreover, Mayer Schmukler—an officer of Defendant JETS—was aware of the director elections that occurred on May 6, 2018, because Yoseph Chazanow personally informed him of the same. (PSSAMF 60, 61.) Plaintiffs have therefore met their burden to create a triable issue as to whether JETS had knowledge (actual or constructive) of the facts giving rise to the claim.

In making this conclusion, this court emphasizes that it must “liberally construe the evidence in support of the party opposing summary judgment and resolve any doubts concerning the evidence in favor of that party.” (Medina v. Equilon Enterprises, LLC (2021) 68 Cal. App. 5th 868, 874.) Doing so here, this court finds a triable issue of material fact that precludes summary adjudication.

Accordingly, Defendant’s Motion for Summary Adjudication of Issue 3 is DENIED.

4. Issue No. 4: Plaintiffs are not entitled to attorneys’ fees as a matter of law

Finally, Defendant moves for summary adjudication on the issue of attorney’s fees.  In California, “[a] party may not recover attorney fees unless expressly authorized by statute or contract.” (Hom v. Petrou (2021) 67 Cal. App. 5th 459, 464; See Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10).)

In opposition, Plaintiffs concede they are not entitled to attorney’s fees.  

However, Code of Civil Procedure Section 437c, subdivision (f)(1) provides that “[a] party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Emphasis added.)  

Civil Code section 3294 governs only claims for punitive damages—but says nothing in the way of attorney’s fees as damages. Thus, as this court and others have read section 437c, subdivision (f)(1), a “claim for damages” may be the subject of summary adjudication only when it is a claim for punitive damages under section 3294. (See DeCastro West Chodorow & Burns, Inc. v. Superior Court (1996) 47 Cal.App.4th 410, 418-42 [holding only “claim for damages” that may be summarily adjudicated without completely disposing of a cause of action is a claim for punitive damages under Civil Code section 3294].)  

Thus, there is no statutory authority permitting summary adjudication of a prayer for attorney’s fees.  Defendant has not cited any case authority purporting to show otherwise.  [FN 2]

Accordingly, Defendant’s Motion for Summary Adjudication of Issue 4 is DENIED.  Of course, this denial is truly of no consequence since the Plaintiffs have actually agreed that they are not entitled to an award of any attorney's fees.  Hence, this issue is much ado about nothing at this point.

Plaintiff to give notice, unless waived.  

IT IS SO ORDERED.

Dated:   April 14, 2023 ___________________________________

Randolph M. Hammock

Judge of the Superior Court


FN 1 - Plaintiffs filed their Complaint in 20STCV11695 on March 23, 2020.  The Complaint named JETS as a defendant only in the sixth cause of action for unjust enrichment. Defendant JETS filed the instant motion for summary judgment on January 1, 2023, directed at the unjust enrichment claim.  Thereafter, Plaintiffs successfully moved for leave to amend the Complaint, resulting in the filing of their First Amended Complaint on February 16, 2023.  The FAC added Defendant JETS to the second cause of action for rescission. On March 8, 2023, the parties stipulated that the instant motion would remain on calendar to address only the unjust enrichment cause of action in the FAC. Defendant JETS has since filed a second motion for summary judgment directed at the rescission claim, presently set for hearing on June 29, 2023.

FN 2- Notwithstanding CCP section 437c, subdivision (f), parties can agree to have the court resolve a “legal issue or a claim for damages other than punitive damages” on an MSJ/MSA, but only where the parties submit “(i) A joint stipulation stating the issue or issues to be adjudicated[,]” and (ii) A declaration from each stipulating party that the motion will further the interest of judicial economy by decreasing trial time or significantly increasing the likelihood of settlement.” (CCP 437c (t)) Those requirements are not met here.  

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing.  All interested parties must be copied on the email.  It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.