Judge: Robert B. Broadbelt, Case: 19STCV00634, Date: 2023-05-10 Tentative Ruling

Case Number: 19STCV00634    Hearing Date: May 10, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

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 overrules defendant Verax Restaurant Group, Inc.’s objections to plaintiff Michael Dekhtyar’s evidence because it was not filed within 14 days preceding the hearing date on this motion.  (Code Civ. Proc., § 437c, subd. (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”].) 

The court declines to rule on plaintiff Michael Dekhtyar’s evidentiary objections, filed on May 3, 2023 and May 5, 2023, because they are directed to evidence that is not material to the court’s disposition of this motion.  (Code Civ. Proc., § 437c, subd. (q).)

REQUEST FOR JUDICIAL NOTICE

The court grants plaintiff Michael Dekhtyar’s request for judicial notice as to exhibit A.  (Evid. Code, § 452, subd. (d).)  The court denies plaintiff Michael Dekhtyar’s request for judicial notice as to all other exhibits because those matters are not relevant to a material issue presented in connection with the court’s ruling on this motion.  (Malek Media Group LLC v. AXQG Corp. (2020) 58 Cal.App.5th 817, 825 [“Any matter to be judicially noticed must be relevant to a material issue”].)

The court grants defendants Verax Restaurant Group, Inc., Moysey Chernyavsky, Larissa Chernyavsky, Zinaida Pishik, and Arkady Pishik’s request for judicial notice as to exhibits S and T.  (Evid. Code, § 452, subd. (d).)  The court denies defendants Verax Restaurant Group, Inc., Moysey Chernyavsky, Larissa Chernyavsky, Zinaida Pishik, and Arkady Pishik’s request for judicial notice as to exhibit P since that exhibit is omitted from the document entitled “Verax Restaurant Group, Inc.’s Exhibits ‘A’ to ‘U’ in Opposition to Plaintiff’s Motion for Summary Judgment or, in the Alternative, Summary Adjudication.”  (Def. Ex. List, p. 220.)

The court denies defendants Verax Restaurant Group, Inc., Moysey Chernyavsky, Larissa Chernyavsky, Zinaida Pishik, and Arkady Pishik’s request for judicial notice as to all other exhibits because those matters are not relevant to a material issue presented in connection with the court’s ruling on this motion.  (Malek Media Group LLC, supra, 58 Cal.App.5th at p. 825.)

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.     Third Motion for Summary Judgment or, in the Alternative, Summary Adjudication

Now pending is the third motion for summary judgment or, in the alternative, summary adjudication filed by plaintiff Michael Dekhtyar (“Plaintiff”) as to his Second Amended Complaint, filed against defendants Verax Restaurant Group, Inc. (“Verax”), Moysey Chernyavsky a/k/a Michael Chernyavsky (“M. Chernyavsky”), Larissa Chernyavsky (“L. Chernyavsky”), Zinaida Pishik (“Z. Pishik”), and Arkady Pishik (“A. Pishik”) (collectively, “Defendants”).

Plaintiff filed his first motion for summary judgment or adjudication on December 31, 2019, which was denied by the court on March 12, 2021.

Plaintiff filed his second motion for summary judgment or adjudication on August 5, 2022.  On October 19, 2022, the court issued its order on Plaintiff’s motion (1) finding that Plaintiff met his burden to show that his second motion for summary judgment or adjudication was based on newly discovered facts or circumstances, but (2) finding that Plaintiff did not meet his burden to show that there was no defense to the first, second, and third causes of action, and therefore denied the motion.  (Oct. 19, 2022 Order, pp. 6:8-13, 7:1-3, 10:24-26 11:16-19.)

The parties dispute whether Plaintiff has met his burden to show that his third motion for summary judgment or adjudication is permitted under Code of Civil Procedure section 437c, subdivision (f).

“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).)  “To determine whether a second summary judgment motion is proper, courts consider whether it involves ‘newly discovered facts or circumstances or a change of law.’”  (Patterson v. Sacramento City Unified School Dist. (2007) 155 Cal.App.4th 821, 827.)

Plaintiff contends that this motion is based on the following new evidence: (1) three corporate documents dated February 26, 2009 and September 29, 2009; (2) the deposition transcript of Mila Blinder, which was not submitted with the second motion for summary judgment; (3) new responses to Plaintiff’s Requests for Admissions, Set Four; and (4) the original bylaws for Verax and the copy of the SBA loan received by Verax.

First, the court finds that the three corporate documents are not “newly discovered facts” within the meaning of Code of Civil Procedure section 437c, subdivision (f)(2).  The documents referenced in Plaintiff’s motion appear to be the (1) February 26, 2009 Unanimous Written Consent of Directors, (2) February 26, 2009 Action of Shareholders, and (3) September 29, 2009 Action by Written Consent of Shareholders and Unanimous Written Consent of Directors.  (Dekhtyar Decl., ¶¶ 6, 13; Dekhtyar Decl., Exs. 2, 3, 6, 7.)  Plaintiff does not dispute that these documents were executed in 2009.  Plaintiff has not presented sufficient explanation for why these documents were not submitted in support of his previous motions for summary judgment or adjudication.  Instead, Plaintiff conclusory states that he “recently” discovered some of these documents or that he had recently “came across an old hard drive” that he forgot he had.  (February 24, 2023 Dekhtyar Decl., ¶ 8; May 3, 2023 Dekhtyar Decl., ¶ 2.)  The court finds that this explanation is insufficient to show that the facts asserted in these documents consist of “newly discovered facts” as required by section 437c.

Second, the court finds that the deposition transcript of Mila Blinder does not include “newly discovered facts” within the meaning of Code of Civil Procedure section 437c, subdivision (f)(2).  Plaintiff took the deposition of Mila Blinder on April 28, 2022.  (February 24, 2023 Dekhtyar Decl., ¶ 17; February 24, 2023 Dekhtyar Decl., Ex. 12.)  Although Plaintiff states that this deposition transcript was not submitted in support of his second motion, Plaintiff had this evidence in his possession or available to him as of the date that he filed this second motion on August 5, 2022.  Thus, Plaintiff has not shown that the information and facts set forth in this deposition transcript constitute “newly discovered facts or circumstances[.]”  (Code Civ. Proc., § 437c, subd. (f)(2).)

Third, the court finds that Plaintiff has shown that the admissions of the individual defendants in response to Plaintiff’s Requests for Admissions, served in December 2022 constitute “newly discovered facts” as to whether M. Chernyavsky, Z. Pishik, L. Chernyavsky, and A. Pishik were minority shareholders during the relevant time period.  (Code Civ. Proc., § 437c, subd. (f)(2).)

Fourth, the court finds that Verax’s bylaws and the SBA loan do not constitute “newly discovered facts or circumstances” within the meaning of Code of Civil Procedure section 437c, subdivision (f)(2).  Verax’s bylaws were approved and ratified on December 13, 2001, and the “Business Loan Agreement” (i.e., the SBA loan) is dated September 15, 2009.  (February 24, 2023 Dekhtyar Decl., ¶ 13; Pl. Ex. 8, p. 1, Ex. 10, p. 22.)  Plaintiff has not provided sufficient explanation for why he did not submit these documents in support of his previous motions for summary judgment or adjudication, or when he discovered the facts set forth in these documents in order to support the assertion that they constitute “newly discovered facts or circumstances” sufficient to support the filing of a subsequent motion for summary judgment.  (Code Civ. Proc., § 437c, subd. (f)(2).)

The court therefore finds that Plaintiff has presented “newly discovered facts or circumstances” in support of his assertion that he had the authority to bind Verax to the subject promissory notes on the ground that the individual defendants were minority shareholders at the time.  The court evaluates Plaintiff’s motion for summary judgment on the merits to the extent that it relies on these new facts contained in the individual defendants’ responses to Plaintiff’s Requests for Admissions.  (Code Civ. Proc., § 437c, subd. (f)(2).)

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, LLC (2007) 152 Cal.App.4th 1106, 1112.)  “‘A cause of action for breach of contract requires proof of the following elements: (1) the existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.’”  (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.)

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 proved the element of the existence of a valid promissory note between Plaintiff and Verax.

Plaintiff contends that he had authority to bind Verax to the subject promissory notes, executed on July 1, 2009 and June 29, 2009 (collectively, the “Promissory Notes”), “as the majority shareholder and director of Verax….”  (Mot., pp. 13:26-2; Pl. Material Fact Nos. 10-11.)  Plaintiff relies on the new facts set forth in the individual defendants’ responses to Plaintiff’s Requests for Admissions, in which they each admitted that they were minority shareholders between June 1, 2009 and December 2009.  (Pl. Ex. 9A, M. Chernyavsky Response to Requests for Admissions No. 2, p. 2:4, Z. Pishik Response to Requests for Admissions No. 2, p 2:4, L. Chernyavsky Response to Requests for Admissions No. 2, p. 2:1-3, A. Pishik Response to Requests for Admissions No. 2, p. 2:1-3.)  Individual defendants M. Chernyavsky, Z. Pishik, and A. Pishik also admitted that they were not majority shareholders of Verax between June 1, 2009 and December 2009.  (M. Chernyavsky Response to Requests for Admissions No. 1, p. 1:26-28, Z. Pishik Response to Requests for Admissions No. 1, p. 1:26-28, A. Pishik Response to Requests for Admissions No. 1, p. 1:26-28.)

The court finds that these newly discovered facts on which Plaintiff bases this motion are insufficient to show that Plaintiff was the majority shareholder at the time that the Promissory Notes were executed.  Although the individual defendants admitted that they were, individually, minority shareholders, none of the cited Requests for Admissions admit that Plaintiff was the majority shareholder.  (Pl. Ex. 9A, Responses to Requests for Admission.)  Moreover, the Requests for Admissions do not request each of the individual defendants to admit the percentage of shares that they owned during the relevant time period.  Thus, these discovery responses have not provided the court with sufficient information to conclude that the number of shares owned by each of the four individual defendants made up a minority of shares of Verax, leaving Plaintiff as the majority shareholder.

The court also notes that, even if this evidence were sufficient to show that Plaintiff was the majority shareholder, Plaintiff has not presented adequate evidence or argument to show that he would have had the authority to execute the Promissory Notes on behalf of Verax as majority shareholder.  In his motion, Plaintiff contends that he had the authority to bind Verax pursuant to “paragraph 2.7.1 of the bylaws” on the ground that this provision “gives the majority shareholder authority to take action through consent in writing without notice.”  (Mot., p. 14:2-3.)  Plaintiff also cites to sections 3.1.1 and 3.1.1.5 as “giv[ing] the majority shareholder and the director the authority to borrow money and incur indebtedness for the purposes of the Corporation.”  (Mot., p. 14:4-7.)  The court disagrees.

Section 2.7.1 of Verax’s bylaws states, in relevant part, the following:  “Unless otherwise provided in the articles, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.”  (Pl. Ex. 10, Verax Bylaws, p. 4, § 2.7.1.)  Thus, this provision allows actions that may be taken at shareholder meetings to be taken without a meeting so long as a written consent is signed by the majority of the shareholders.  (Ibid.)

Article 3 of the bylaws, which includes sections 3.1.1 and 3.1.1.5, sets forth the powers of the Board of Directors.  These sections provide that, “[s]ubject to the provisions of the Corporations Code and any limitations in the Articles of Incorporation and these Bylaws relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.  Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the directors shall have the following powers:  [¶¶]  3.1.1.5[:]  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 . . . .”  (Pl. Ex. 10, Verax Bylaws, pp. 7-8, §§ 3.1.1, 3.1.1.5 [emphasis added].)

Thus, sections 3.1.1 and 3.1.1.5 “expressly” authorize the Board of Directors to “borrow money and incur indebtedness” on behalf of Verax, “and to cause to be executed and delivered therefor, in the corporate name, promissory notes . . . .”  (Pl. Ex. 10, Verax Bylaws, pp. 7-8, §§ 3.1.1, 3.1.1.5.)  Although section 2.7.1 of the bylaws allows majority shareholders to take some action without a meeting provided that certain circumstances are satisfied, Article 3 of the bylaws establish that it is within the authority of the Board of Directors to incur indebtedness and execute promissory notes on behalf of Verax.  Moreover, section 8.5 of the bylaws—also relied on by Plaintiff in his motion—similarly provides that “[t]he Board of Directors,” except as otherwise provided, may authorize any officer or agent to enter into any contract or execute any instrument on behalf of Verax.  (Pl. Ex. 10, Verax Bylaws, p. 18, § 8.5 [emphasis added].)  These provisions do not expressly state that the majority shareholder may incur indebtedness, enter into any contract, or execute any instrument or promissory note on behalf of Verax.

The court therefore finds that, although Plaintiff has submitted evidence showing “newly discovered facts” relating to the individual defendants’ statuses as minority shareholders of Verax during the time period in which the Promissory Notes were executed, Plaintiff (1) has not shown, by this evidence, that he was the majority shareholder of Verax during the relevant time period, and (2) has not shown that, even if he could produce evidence showing that he was the majority shareholder during this period of time, he was authorized to bind Verax as majority shareholder pursuant to Verax’s bylaws. 

The court also notes that Plaintiff contends that these Requests for Admissions show that the individual defendants were not involved with the financing of the buildout of the restaurant.  (Mot., p. 14:12-14.)  However, Plaintiff has not provided the court with sufficient analysis or authority showing that any lack of involvement by the individual defendants in these matters provided Plaintiff with the authority to bind Verax to the Promissory Notes.

Finally, to the extent that Plaintiff relies on the newly discovered facts in the Requests for Admissions to support the assertion that Plaintiff was the sole director during the relevant time period, the court finds that this evidence is insufficient to show that Plaintiff was the sole director during that time period since defendants M. Chernyavsky and Z. Pishik denied the admission that they were not directors of Verax between June 1, 2009 and December 2009.  (Pl. Ex. 9A, M. Chernyavsky’s Response to Requests for Admission No. 4, p. 2:9-12, Z. Pishik response to Requests for Admission No. 4, p. 2:9-12.)

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.)  “‘A cause of action for breach of contract requires proof of the following elements: (1) the existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.’”  (Miles, supra, 236 Cal.App.4th at p. 402.)

Plaintiff alleges his second cause of action for breach of promissory notes based on the same breach of the Promissory Notes alleged in support of his first cause of action.  (SAC ¶¶ 32 [alleging that “Verax breached [the Promissory Notes] by failing to pay the amounts due, $50,000.00 and $118,000.00, respectively, plus interest” in support of first cause of action], 33-34, 40 [alleging that “Verax breached [the Promissory Notes] by failing to pay the amounts due, $50,000.00 and $118,000.00 respectively, plus interest] in support of second cause of action].)

The court therefore 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 promissory note between Plaintiff and Verax since, as set forth above, (1) Plaintiff has not submitted evidence showing that he was the majority shareholder of Verax during the relevant time period, and (2) Plaintiff has not provided authority or analysis showing that, even if he were the majority shareholder at the time the Promissory Notes were executed, he would have had the authority to bind Verax to the Promissory Notes pursuant to Verax’s bylaws or other law.

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 “[r]educe a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available procedure.”  (Com. Code, § 9601, subd. (a)(1).)  Plaintiff requests that the court foreclose on and reduce the security interest to a judgment or possession of the collateral based on Verax’s default under 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 agreement and possession of collateral because Plaintiff has not proved that he is entitled to foreclose upon the security interests provided by the Promissory Notes.

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:  May 10, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court