Shul and Jewish Center Ahavath Israel, Inc., et al. v. Moshe Kagan, et al.

CASE NO.:  BC704820 (Lead, consolidated with BC716114 and 20STCV11695)

DEFENDANTS’ MOTION FOR SECURITY FOR COSTS

 

MOVING PARTY: Defendants Moshe Kagan and Congregation Talmud Torah of Ahavath Israel, Inc.

RESPONDING PARTY(S): Plaintiffs Michael Rosenberg and Shul and Jewish Center Ahavath Israel, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiffs Shul and Jewish Center Ahavath Israel, Inc., and Michael Rosenberg brought this action against Defendants Moshe Kagan and Congregation Talmud Troah of Ahavath Israel, Inc. The matter arises from a dispute over the use and management of Ahavath Israel Congregation, Inc. Plaintiffs bring causes of action for (1) interference with prospective business advantage, (2) slander of title, (3) trespassing, (4) interference with contract, (5) fraud, (6) private nuisance, (7) inducing breach of enjoyment, (8) false imprisonment, and (9) conversion.

The case has been consolidated with 20STCV11695, where Plaintiffs Plaintiffs Harvey Kreitenberg, Eli Krich, Yoseph Chazanow, Eli Chitrik, and Berel Wilhelm bring a 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 the 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.

Defendants Moshe Kagan and Congregation Talmud Torah of Ahavath Israel, Inc., now move for an order requiring Plaintiff Shul and Jewish Center Ahavath Israel, Inc., to post a security undertaking of $20,000 to cover Defendants’ costs pursuant to CCP section 1030.
 Plaintiffs opposed.

TENTATIVE RULING:

Defendants’ Motion for Security for Costs is DENIED.

Plaintiffs to give notice, unless waived.

DISCUSSION:

Motion for Security for Costs

I. Legal Standard

In relevant part, CCP section 1030 provides as follows:

(a) When the plaintiff in an action or special proceeding resides out of the state, or is a foreign corporation, the defendant may at any time apply to the court by noticed motion for an order requiring the plaintiff to file an undertaking to secure an award of costs and attorney’s fees which may be awarded in the action or special proceeding. For the purposes of this section, “attorney’s fees” means reasonable attorney’s fees a party may be authorized to recover by a statute apart from this section or by contract.

(b) The motion shall be made on the grounds that the plaintiff resides out of the state or is a foreign corporation and that there is a reasonable possibility that the moving defendant will obtain judgment in the action or special proceeding. The motion shall be accompanied by an affidavit in support of the grounds for the motion and by a memorandum of points and authorities. The affidavit shall set forth the nature and amount of the costs and attorney’s fees the defendant has incurred and expects to incur by the conclusion of the action or special proceeding.

(c) If the court, after hearing, determines that the grounds for the motion have been established, the court shall order that the plaintiff file the undertaking in an amount specified in the court’s order as security for costs and attorney’s fees.

II. Analysis

It is undisputed that Plaintiff Shul and Jewish Center Ahavath Israel, Inc. is a Florida corporation. (See Kagan Decl. Exh. 1.). Thus, under Code of Civil Procedure section 1030, Defendants move for an undertaking in the amount of $20,000 as security for their costs. 

“Code of Civil Procedure section 1030 provides that upon a defendant's motion, the trial court is required to order an out-of-state plaintiff to file an undertaking to secure recoverable costs and attorney's fees if the defendant shows a reasonable possibility that it will obtain judgment in the action.” (Yao v. Superior Ct. (2002) 104 Cal. App. 4th 327, 329.) “The purpose of the statute is to enable a California resident sued by an out-of-state resident ‘to secure costs in light of the difficulty of enforcing a judgment for costs against a person who is not within the court's jurisdiction.’” (Id. at 331.)

Thus, a defendant need not show that there is “no possibility” that plaintiff would win at trial, “but only that it [is] reasonably possible that the defendant will win.” (Baltayan v. Estate of Getemyan (2001) 90 Cal. App. 4th 1427, 1432.) While little California authority exists discussing the “reasonable possibility” standard, federal courts have described the defendant’s burden as “relatively low.” (MH Pillars Ltd. v. Realini, No. 15-CV-1383-PJH, 2017 WL 916414, at *15 (N.D. Cal. Mar. 8, 2017); see also Circle Click Media LLC v. Regus Mgmt. Grp LLC, 2015 WL 6638929 at *16 (N.D. Cal. Oct. 30, 2015).

Defendants contend Plaintiff’s causes of action are without merit because they are based on the validity of the underlying lease in favor of Plaintiff. Defendants argue the lease “was entered into in total breach of any alleged fiduciary duties Rosenberg may have had and is further void for want of consideration.” (Mtn. 5: 27-28.) 

First, regarding the existence of fiduciary duties owed by Rosenberg, the court suspects Defendants are referring to fiduciary duties Plaintiff Rosenberg might have owed AIC as a purported officer and director of AIC. In the declaration of Defendant Moshe Kagan, Kagan attests the subject lease “was prepared by Michael Rosenberg,”and that “[n]one of the terms of this lease were negotiated.” (Kagan Decl. ¶ 9.) Kagan further attests that “Mr. Rosenberg executed the Lease on behalf of Shul despite the fact that he was then claiming to be an officer and director of AIC.” (Id. ¶ 9.) 

Even accepting as true that Rosenberg owed fiduciary duties to AIC, Defendants provide no authority suggesting that this fact would defeat all of Plaintiff’s claims. Beyond the conclusory statement, Defendants fail to discuss why Rosenberg’s alleged breach of his fiduciary duties would void the lease. Therefore, this argument does not establish a reasonable possibility of obtaining a cpmplete defense judgment, based upon the evidence presented in the moving papers.

Second, Defendants also argue the lease lacks consideration because it provides for an unreasonably low annual rent of only $18.00. (Kagan Decl. ¶ 12.) Defendants, however, again fail to cite or discuss any authority stating that this factor makes the lease void, per se. Indeed, generally a “written instrument is presumptive evidence of a consideration,” (Civ. Code, § 16140, and the “amount of consideration necessary in any case is merely that of a ‘peppercorn.’” (Daneshmand v. City of San Juan Capistrano (2021) 60 Cal. App. 5th 923, 934 [citing Third Story Music, Inc. v. Waits (1995) 41 Cal.App.4th 798, 808, fn. 5.)

The moving parties otherwise fail to address the nine causes of action asserted against them, either by raising a defense to any one cause of action or by demonstrating that an element of the cause of action cannot be reasonably established. Therefore, Defendants have not met their burden to show a reasonable possibility that they will obtain judgment in the action, based upon the evidence presented in the moving papers.

Last, but not least, the moving parties have inadequately failed to address why they have waited literally over five years to file this motion upon the eve of trial.  

Accordingly, Defendants’ Motion for Security for Costs is DENIED.

IT IS SO ORDERED.

Dated:   November 16, 2023 ___________________________________