Judge: Robert B. Broadbelt, Case: 19STCV00634, Date: 2022-10-19 Tentative Ruling
Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.
Case Number: 19STCV00634 Hearing Date: October 19, 2022 Dept: 53
Superior Court of California
County of Los Angeles – Central District
Department
53
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michael dekhtyar vs. verax restaurant group, inc. |
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19STCV00634 |
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Hearing
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October
19, 2022 |
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[Tentative]
Order RE: plaintiff’s motion for summary judgment or,
in the alternative, summary adjudication |
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MOVING PARTY: Plaintiff Michael Dekhtyar
RESPONDING PARTY: Defendant
Verax Restaurant Group, Inc.
Motion for Summary Judgment or, in the Alternative, Summary
Adjudication
The court
considered the moving, opposition, and reply papers filed in connection with
this motion.
EVIDENTIARY OBJECTIONS
The court notes that defendant Verax Restaurant Group, Inc.
(“Defendant”) has included objections
to the evidence filed by plaintiff Michael Dekhtyar (“Plaintiff”) within the
Separate Statement of Material Facts.
“All written objections to evidence must be served and filed separately
from the other papers in support of or in opposition to the motion.” (Cal. Rules of Ct., rule 3.1354, subd.
(b).) Defendant has not filed objections
independent of the Separate Statement.
The court, therefore, declines to rule on Defendant’s objections.
The court rules on Plaintiff’s evidentiary objections to the
declaration of Roger Golden as follows:
The court sustains Objections No. 4.
The court overrules Objections Nos. 1-3.
The court rules on Plaintiff’s evidentiary objections to the
declaration of Moysey Chernyavsky as follows:
The court sustains Objections Nos. 5, and 7-8.
The court overrules Objections Nos. 1-4, and 6.
The court rules on Plaintiff’s evidentiary objections to the
declaration of Zinaida Pishik as follows:
The court sustains Objection No. 4.
The court overrules Objections Nos. 1-3, and 6.
The court overrules Plaintiff’s evidentiary objections to the declarations
of Vadim Gershkovitch and Kevin Singer.
The court sustains in part and overrules in part Plaintiff’s October
17, 2022 objection to Defendant’s October 14, 2022 objections.
The court finds that Defendant’s October 14, 2022 objections to the
evidence filed with Plaintiff’s moving papers are untimely pursuant to
California Rules of Court, rule 3.1354, subdivision (a). The court therefore sustains Plaintiff’s
objection as to Defendant’s October 14, 2022 objections that are directed to the
evidence submitted with Plaintiff’s moving papers. The court overrules Plaintiff’s October 17,
2022 objection to the objections filed by Defendant that are directed to the
evidence submitted by Plaintiff in reply.
The court does not rule on Defendant’s October 14, 2022 objections to
Plaintiff’s October 12, 2022 declaration because the court finds that the
October 12, 2022 declaration is not material to the disposition of Plaintiff’s
motion. (Code Civ. Proc., § 437c,
subd. (q).)
REQUEST
FOR JUDICIAL NOTICE
The court grants Plaintiff’s August 5, 2022 request for judicial
notice. (Evid. Code, § 452, subds. (d),
(c).) However, as to Exhibit D, the
declaration of Zinaida Pishik, the court notes that it does not take judicial
notice of the assertions made within the declaration. (Lockley v. Law Office of Cantrell, Green,
Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [“Courts may not
take judicial notice of allegations in affidavits, declarations and probation
reports in court records because such matters are reasonably subject to dispute
and therefore require formal proof”].)
The court denies Defendant’s
October 5, 2022 request for judicial notice because the exhibits which
Defendant seeks to judicially notice do not correspond with Defendant’s exhibit
list. Defendant therefore has not
sufficiently “provide[d] the court…with a copy of the material” to be
judicially noticed. (Cal. Rules of Ct.,
rule 3.1306, subd. (c).)
The court denies Plaintiff’s
October 12, 2022 request for judicial notice because it is an improper attempt
to introduce evidence in reply. (Jay
v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.)
LEGAL STANDARD
The purpose of a motion for summary judgment or summary
adjudication “is to provide courts with a mechanism to cut through the parties’
pleadings in order to determine whether, despite their allegations, trial is in
fact necessary to resolve their dispute.”
(Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil
Procedure section 437c, subdivision (c), requires the trial judge to grant
summary judgment if all the evidence submitted, and ‘all inferences reasonably
deducible from the evidence’ and uncontradicted by other inferences or
evidence, show that there is no triable issue as to any material fact and that
the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.)
“On a motion for summary judgment, the initial burden is always on
the moving party to make a prima facie showing that there are no triable issues
of material fact.” (Scalf v. D.B.
Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) For the purposes of motion for summary
judgment and summary adjudication, “[a] plaintiff or cross-complainant has met
his or her burden of showing that there is no defense to a cause of action if
that party has proved each element of the cause of action entitling the party
to judgment on the cause of action.”
(Code Civ. Proc., § 437c, subd. (p)(1).)
“Once the plaintiff . . . has met that burden, the burden shifts to the
defendant . . . to show that a triable issue of one or more material facts
exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1).) “When deciding whether to grant summary judgment,
the court must consider all of the evidence set forth in the papers (except
evidence to which the court has sustained an objection), as well as all
reasonable inferences that may be drawn from that evidence, in the light most
favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical
Center (2008) 159 Cal.App.4th 463, 467; Code
Civ. Proc., § 437c, subd. (c).)
DISCUSSION
1. Bar
on Second Motion for Summary Judgment
As a threshold matter, Defendant contends in opposition that
Plaintiff’s pending motion for summary judgment or, in the alternative, summary
adjudication, is based on the same issues asserted in Plaintiff’s first motion
for summary adjudication and is therefore barred.
“A party shall not move for summary judgment based on issues
asserted in a prior motion for summary adjudication and denied by the court
unless that party establishes, to the satisfaction of the court, newly
discovered facts or circumstances or a change of law supporting the issues
reasserted in the summary judgment motion.”
(Code Civ. Proc., § 437c, subd. (f)(2).) Thus, “a second summary judgment motion is
barred where it offers ‘no “newly discovered facts or circumstances,”’ does not
suggest that a ‘“change of law’” had occurred, and does not request the judge
to ‘make a finding’ concerning these statutory requirements.” (Schachter v. Citigroup, Inc. (2005)
126 Cal.App.4th 726, 734.)
The court finds that Plaintiff has met his burden of establishing
that “newly discovered facts or circumstances” support the issues reasserted in
his pending motion. (Code Civ. Proc., §
437c, subd. (f)(2).)
On December 31, 2019, Plaintiff filed the
first motion for summary judgment or, in the alternative, motion for summary adjudication
on Plaintiff’s Second Amended Complaint against Defendant. Plaintiff filed the pending motion for
summary judgment or, in the alternative, motion for summary adjudication on
August 5, 2022 against Defendant.
In Plaintiff’s first motion, Plaintiff
argued that he was entitled to judgment as a matter of law on each cause of
action asserted against Defendant on the following grounds: (1) the first cause
of action for breach of promissory notes was timely pursuant to California
Uniform Commercial Code section 3118 and the periods of tolling based on
Defendant’s bankruptcies; (2) Defendant failed to pay the amounts due and owing
on the subject promissory notes, thereby establishing the elements of the first
cause of action; (3) the second cause of action for breach of promissory notes
was timely pursuant to Code of Civil Procedure sections 337 and 360.5 and
language in the promissory notes waiving the statute of limitations; (4)
Defendant failed to pay the amounts due and owing on the subject promissory
notes, thereby establishing the elements of the second cause of action; and (5)
because Defendant breached the promissory notes, Plaintiff was entitled to
immediate possession of the collateral described in the corresponding UCC-1
security agreements.
Defendant contends that, because Plaintiff
is moving for summary judgment on the same grounds as set forth in his first
motion, this motion is barred pursuant to section 437c. Defendant argues that Plaintiff “has made no
showing, whatsoever, of new facts or circumstances or a change in law
justifying” this motion. (Opp., p.
1:18-19.) In reply, Plaintiff submits
that he has met his burden of establishing new facts or circumstances because
Plaintiff has now (1) deposed most of the named defendants in this action, (2)
deposed other relevant third parties, and (3) obtained discovery responses from
the defendants. Plaintiff also points to
the declaration submitted with his moving papers, wherein Plaintiff explains that
he took this discovery “to prove to the court that [he] had the authority to
bind [Defendant] to the subject promissory notes[,]” likely in response to the
court’s ruling on Plaintiff’s first motion for summary judgment, wherein the
court denied the motion based on the finding that Plaintiff did not submit any
evidence establishing that he had express authority to sign the promissory
notes on behalf of Defendant. (Dekhtyar
Decl., ¶ 16; Mar. 12, 2021 Order, pp. 7:7-11, 9:9-11.)
In support of Plaintiff’s first motion
for summary judgment, Plaintiff submitted copies of the UCC-1 Financing
Statements, proofs of claims, bankruptcy forms, the subject promissory notes,
and the declaration of Plaintiff. (Pl.
December 30, 2019 RJN Exs. 1-8; December 30, 2019 Dekhtyar Decl., Exs. 1-9.) In support of the pending motion for summary
judgment, Plaintiff submits the same documents, as well as the following
additional evidence: Defendant’s responses to Plaintiff’s Requests for
Admissions; responses from other defendants to Plaintiff’s Requests for
Admissions; and the deposition transcripts of defendants Moysey Chernyavsky and
Arkady Pishik and other third parties. (Dekhtyar Decl., Exs. 2-8.) Further, Plaintiff has presented new and different
arguments concerning his authority to execute the subject promissory notes.
Based on the facts set forth above, the
court finds that Plaintiff has met his burden of establishing that this motion
for summary judgment is based on “newly discovered facts or
circumstances” since (1) Plaintiff presents evidence not submitted in support
of the first motion, including the additional depositions, and (2) Plaintiff
presents new arguments as to whether Plaintiff had the authority to bind
Defendant to the promissory notes in response to the court’s ruling on his
first motion. (Code Civ. Proc.,
§ 437c, subd. (f)(2).)
Finally, the court notes that Defendant
also argues that Plaintiff has not met the requirements of section 1008. However, “section 437c(f)(2), not the
provisions of section 1008, governs where the motion is for summary
judgment.” (Schachter, supra,
126 Cal.App.4th at p. 738; Bagley v. TRW, Inc. (1999) 73 Cal.App.4th
1092, 1096, fn. 3.)
The court therefore considers the merits
of Plaintiff’s motion for summary judgment or, in the alternative, summary
adjudication.
2. First
Cause of Action for Breach of Promissory Notes
“A cause of action for nonpayment on a promissory note is one for
breach of contract.” (Poseidon
Development, Inc. v. Woodland Lane Estates (2007) 152 Cal.App.4th 1106,
1112.) “[T]he elements of a cause of
action for breach of contract are (1) the existence of a contract, (2)
plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach,
and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011)
51 Cal.4th 811, 821.)
The court finds that Plaintiff has not met his burden of showing
that there is no defense to the first cause of action for breach of promissory
notes because Plaintiff has not proven the element of the existence of a valid
contract between Plaintiff and Defendant.
Plaintiff bases this cause of action on the existence of the
following two contracts: (1) the promissory note executed on July 1, 2009, by
Defendant and Plaintiff for the sum of $50,000 (“Note 1”), and (2) the
promissory note executed on June 29, 2009, by Defendant and Vadim Gurman
(“Gurman”) for the investment sum of $118,000 (“Note 2”). (Dekhtyar Decl., ¶¶ 19, 21; Dekhtyar Decl.,
Exs. 10, 12; SAC ¶¶ 31-34.) Note 1
was secured by a security interest perfected by Plaintiff’s June 29, 2010
filing of the UCC-1 Financing Statement.
(Dekhtyar Decl., ¶ 20, Ex. 11.)
Note 2 was secured by a security interest and perfected by Gurman’s June
15, 2010 filing of the UCC-1 Financing Statement. (Dekhtyar Decl., ¶ 22, Ex. 13.)
Plaintiff signed on behalf of Defendant as to both Note 1 and Note
2. (Dekhtyar Decl., Exs. 10, 12.) Thus, in order to bind Defendant to these
contracts, Plaintiff must establish that he had the authority to execute the
notes on behalf of Defendant. The court
finds that Plaintiff has not submitted evidence establishing that he had
authority to bind Defendant to Note 1 and Note 2 (collectively, the “Promissory
Notes”).
“[T]he party seeking to enforce a contract with a corporation
generally has the burden of establishing the contracting officer’s authority to
bind the corporation. [Citation.] ‘ “To properly prove a contract claimed to be
binding on the corporation, it should be shown that it was made on its behalf
by someone who had authority to act for it.
It must be shown that the officer was expressly authorized, or that the
act was fairly within the implied powers incidental to his office, or that the
corporation is estopped to deny his authority by reason of having accepted the
benefit of the contract or otherwise.” ’”
(Snukal v. Flightways Manufacturing, Inc. (2000) 23 Cal.4th 754,
779-780.)
Plaintiff contends that, as the sole director of Defendant at the
time the Promissory Notes were executed, he had the authority to bind Defendant. Plaintiff submits the following evidence.
First, Plaintiff submits the testimony of various defendants stating
that Plaintiff was a director for Defendant in the year 2009, i.e., the year
when the Promissory Notes were executed.
(Pl. Ex. 8, Moysey Chernyavsky Dep., 35:1-9; Pl. Ex. 6, Arkady Pishik
Dep., 29:3-11.) Second, Plaintiff
submits the written discovery responses from various defendants—including
Defendant Verax—admitting that, in the year of 2009, Plaintiff acted as
shareholder, president, director, secretary, and chief executive officer for
Defendant. (Pl. Ex. 2, Verax Request for
Admission No. 19, p. 5:21-24; Pl. Ex. 3, Zinaida Pishik Requests for Admissions
Nos. 3-4, 34, pp. 2:6-13, 7:5-6.) Third,
Plaintiff states in his declaration that (1) by the end of February 2009, he
became the only director of Defendant, and (2) when the Promissory Notes were
signed by Defendant, Plaintiff was the only director and was authorized to
borrow money and incur indebtedness on behalf of Defendant. (Dekhtyar Decl., ¶¶ 9, 15.)
Although Plaintiff does not appear to submit a copy of Defendant’s
bylaws with the court, Defendant’s discovery responses confirm that, pursuant
to section 3.1.1.5 of Defendant’s bylaws, the board of directors “have the
right to borrow money and incur indebtedness for the purposes of the
corporation and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidence of debt and securities
therefor.” (Pl. Ex. 2, Verax Request for
Admission No. 1, pp. 1:27-2:3.) Accordingly,
Plaintiff’s evidence establishes that the board of directors has the authority to
borrow money on behalf of Defendant, and that he was at least one of the
directors for Defendant in the year that the Promissory Notes were executed.
However, the evidence does not establish that Plaintiff was the only
director at the time the Promissory Notes were executed, such that
Plaintiff could act with sole authority, and without the remaining directors,
when singing the Promissory Notes on behalf of Defendant. (Pl. Ex. 2, Verax Request for Admission No. 1,
p. 1:26-3 [admitting that the board of directors has the authority to
borrow money].)
Plaintiff submits the following.
First, the document entitled “Shareholders Agreement and First Amendment
to 1/8/03 Buy-Sell Agreement of Verax Restaurant Group, Inc.” names as
directors Plaintiff, Michael Chernyavsky, and Zinaida Pishik “through to the
next meeting of the Company’s shareholders.”
(Pl. Ex. 15, ¶ 4, p. 3.) Second,
the document entitled “Shareholders Agreement and Fourth Amendment to 1/8/03
Agreement of Verax Restaurant Group, Inc.” (the “Fourth Amendment”) represents
“[t]he next shareholder’s meeting” and names as directors Plaintiff, Lenny
Krayzelburg, and Slavic Sukharev “through to the next meeting of the Company’s
shareholders.” (Dekhtyar Decl., ¶ 18;
Pl. Ex. 16, ¶ 4, p. 3.)
Thus, Plaintiff’s evidence presents an inference that, following
the March 2008 agreement, the active directors consisted of Plaintiff, Lenny
Krayzelburg, and Slavic Sukharev. (Dekhtyar
Decl., ¶ 18; Pl. Ex. 16, ¶ 4, p. 3.)
The court notes that the Fourth Amendment itself does not appear to
state that a shareholder’s meeting was held, but that Plaintiff states in his declaration
that the next shareholder’s meeting occurred in March of 2008, alongside the
execution of the Fourth Amendment.
(Dekhtyar Decl., ¶ 16.)
Next, Plaintiff asserts that he became the sole director upon
signing the Unanimous Written Consent of Directors on February 26, 2009. (Pl. Ex. 1, p. 1.) However, while this document states that Defendant
will purchase back all shares owned by Slavic Sukharev, the written consent
itself does not indicate (1) that it is a shareholder’s meeting as contemplated
by the Fourth Amendment, since the directors consented to proceed without a
meeting pursuant to Corporations Code section 307, subdivision (b), or (2) that
Plaintiff, at the time of the signing, was elected as the sole director. (Pl. Ex. 1.)
The court therefore finds that Plaintiff has not met his burden of
establishing the element of the existence of a valid contract because Plaintiff
has not established that he was permitted to execute the Promissory Notes since
there is a triable issue of material fact as to whether Plaintiff was the only
director on the board of directors at the time the Promissory Notes were
executed, and the evidence establishes only that the board of directors,
apparently collectively, have the authority to incur indebtedness on behalf of
Defendant. (Pl. Ex. 2, Verax Request for
Admission No. 1, p. 1:26-3.)
Even if the court were to find that Plaintiff had met his burden
of establishing each element of the cause of action for breach of promissory
notes, the court would find that Defendant has met its burden of showing that a
triable issue of material fact exists as to the existence of a valid contract
between Plaintiff and Defendant.
In opposition, Defendant contends that Plaintiff had no authority
to execute the Promissory Notes because, at the time they were signed,
Defendant had five shareholders and three directors. Specifically, Defendant contends that the
three directors were Plaintiff and defendants Zinaida Pishik and Michael (Moysey)
Chernyavsky. In support of this
argument, Defendant also submits the Shareholders Agreement and First Amendment
to 1/8/03 Buy-Sell Agreement of Verax Restaurant Group, Inc., wherein
Plaintiff, Michael Chernyavsky, and Zinaida Pishik were identified as directors
“through to the next meeting of the Company’s shareholders.” (Chernyavsky Decl., Ex. C, ¶ 4, p. 3.) Both Chernyavsky and Pishik state in their declarations
that “[n]o shareholder meetings were held between November 16, 2007 and the
third quarter of 2010.” (Chernyavsky
Decl., ¶ 3; Pishik Decl., ¶ 3.)
Thus, although the court notes the existence of the Fourth Amendment,
which may imply that a shareholder’s meeting occurred in March of 2008, and
Plaintiff’s own declaration asserting that the shareholder’s meeting occurred
in March of 2008, there is a conflict of evidence as to whether a shareholder’s
meeting did take place, thereby establishing that a triable issue of material fact
as to the identities of the directors during the relevant time period.
The court therefore denies Plaintiff’s motion for summary
adjudication as to the first cause of action for breach of promissory notes.
3. Second
Cause of Action for Breach of Promissory Notes
“A cause of action for nonpayment on a promissory note is one for
breach of contract.” (Poseidon
Development, Inc., supra, 152 Cal.App.4th at p. 1112.) “[T]he elements of a cause of action for breach
of contract are (1) the existence of a contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the resulting
damages to the plaintiff.” (Oasis
West Realty, LLC, supra, 51 Cal.4th at p. 821.)
The court finds that Plaintiff has not met his burden of showing
that there is no defense to the second cause of action for breach of promissory
notes because Plaintiff has not proved the element of the existence of a valid
contract between Plaintiff and Defendant.
Plaintiff bases his second cause of action for breach of
promissory notes on substantially identical allegations as it relates to the
Promissory Notes alleged in the first cause of action. (SAC ¶¶ 39-42.) The court finds, for the reasons set forth
above, that (1) in order to bind Defendant to the Promissory Notes, Plaintiff
must present evidence establishing that he had the sole authority to execute
them on behalf of Defendant, and (2) because Plaintiff did not produce evidence
establishing that, at the time the Promissory Notes were executed, he was the
sole director for Defendant, Plaintiff did not establish that he had the
authority to bind Defendant to the Promissory Notes. (Snukal, supra, 23 Cal.4th at
p. 779.)
The court therefore denies Plaintiff’s motion for summary
adjudication as to the second cause of action for breach of promissory notes.
4. Third
Cause of Action for Foreclosure of Security Agreement and Possession of
Collateral
After default, a secured party may reduce a claim to judgment,
foreclose, or otherwise enforce the claim, security interest, or agricultural
lien by any available juridical procedure.
(Com. Code, § 9061, subd. (a)(1).)
In connection with his third cause of action, Plaintiff asserts that he
is entitled to immediate possession of the collateral described in the UCC-1
Financing Statements relating to the Promissory Notes. (SAC ¶ 44.)
The court finds that Plaintiff has not met his burden of showing
that there is no defense to the third cause of action for foreclosure of
security agreements and possession of collateral because, for the reasons set
forth above, Plaintiff has not proved the element of Defendant’s default on a
valid contract. The court therefore
finds that Plaintiff has not established that he is entitled to foreclose or
otherwise enforce the claim on the collateral described in the corresponding
UCC-1 Financing Statements.
The court therefore denies Plaintiff’s motion for summary
adjudication as to the third cause of action for foreclosure of security
agreement and possession of collateral.
ORDER
The court denies plaintiff Michael
Dekhtyar’s motion for summary judgment or, in the alternative, summary
adjudication.
The court orders defendant Verax Restaurant Group, Inc. to give notice
of this ruling.
IT IS SO ORDERED.
DATED:
_____________________________
Robert
B. Broadbelt III
Judge
of the Superior Court