Judge: Ronald F. Frank, Case: 20TRCV00671, Date: 2023-09-15 Tentative Ruling
Case Number: 20TRCV00671 Hearing Date: September 15, 2023 Dept: 8
Tentative Ruling¿
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HEARING DATE: September 15, 2023¿
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CASE NUMBER: 20TRCV00671
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CASE NAME: Vatche
Cabayan v. Petri Entertainment, LLC, et al
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MOVING PARTY: Defendants, Petri Entertainment, LLC and WarnerDavis
RESPONDING PARTY: Plaintiff,
Vatche Cabayan
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TRIAL DATE: Not Set.
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MOTION:¿ (1) Motion for Summary Judgment,
or in the alternative, Summary Adjudication
¿ Tentative Rulings: (1) Motion for Summary Judgment, or in the
alternative, Summary Adjudication is GRANTED.
I. BACKGROUND¿¿
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A. Factual¿¿
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On
September 25, 2020, Vatche Cabayan (“Plaintiff”) filed a complaint against
Petri Entertainment, LLC and Warner Davis (collectively “Defendants” for (1)
breach of contract, (2) breach of implied covenant of good faith and fair
dealing, and (3) declaratory relief. On December 22, 2020, plaintiff filed a
FAC for (1) breach of contract, (2) breach of implied covenant of good faith
and fair dealing, (3) money had and received, (4) failure to return deposit,
and (5) declaratory relief.
On June 29, 2023, this Court
continued the hearing on this motion and ordered the oppositions to the Davis
deposition transcripts to be filed on or before August 21, 2023, and the
replies to the supplemental documents and oppositions due on or before
September 7, 2023.
B. Procedural¿¿
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On March 30, 2023, Defendants filed their
Motion for Summary Judgment. On January 13, 2023, Plaintiff filed an
opposition. On March 23, 2023, Defendants filed a reply brief.
On August 22, 2023, Plaintiff late-filed
their supplemental opposition.
On September 8, 2023, Defendants late-filed
their reply brief.
II. EVIDENTIARY OBJECTIONS
Defendants’ objections to
Plaintiff’s Evidence:
Overruled: 1-4, 7(as to “vaguely remembering”
receiving email),12-15, 18 (as to Davis, not Hassen), 20-22, 26, 28-36, 40-42,
46, 49-52, 58-60, 65-68, 40- 71, 74, 76, 78-80, 82-85, 88-93, 95-96, 103, 107,
111, 113-114, 116, 119-120, 125, 127, 137, 139, 143, 145, 148, 151-152, 159,
162-163, 165, 167-170, 171 (as to Davis not to Hassen), 172 (as to Cabayan, not
Hassen), 173 (as to Davis, not Hassen), 174-178, 179, 182 (as to Davis, not
Hassen’s messages), 183-199, 202-232
Sustained: 5, 6, 7as to the documents in the email), 8-10, 11, 16,
17, 18 (as to Hassan, not Davis), 19, 23, 27, 37-39, 43-45, 47-48, 53-57,
61-64, 69, 72-73, 75, 77, 81, 87, 94, 97-102, 104-106, 108-110, 112, 115,
117-118, 121-124, 126, 128-136, 138, 140-142, 144, 146-147, 149-150, 153-158,
160-161, 164, 166, 171, 180-181, 200-201.
III. ANALYSIS¿
A. 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.) CCP Section 437(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.)¿ “The function
of the pleadings in a motion for summary judgment is to delimit the scope of
the issues; the function of the affidavits or declarations is to disclose
whether there is any triable issue of fact within the issues delimited by the
pleadings.”¿ (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67,
citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367,
381-382.)¿
As to each claim as framed by the complaint, the defendant
moving for summary judgment must satisfy the initial burden of proof by
presenting facts to negate an essential element, or to establish a defense.
(CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th
1510, 1520. ) Courts “liberally construe the evidence in support of the party
opposing summary judgment and resolve doubts concerning the evidence in favor
of that party.”¿ (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384,
389.)¿
Once the defendant has met that burden, the burden shifts
to the plaintiff to show that a triable issue of one or more material facts
exists as to that cause of action or a defense thereto.¿¿¿
To establish a triable issue of material fact, the party
opposing the motion must produce substantial responsive evidence. (Sangster
v. Paetkau (1998) 68 Cal.App.4th 151, 166.)
B. Discussion
Breach of Contract
To state a cause of action for breach of
contract, Plaintiff must be able to establish “(1) the existence of the
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.)
If a breach of contract claim “is based on
alleged breach of a written contract, the terms must be set out verbatim in the
body of the complaint or a copy of the written agreement must be attached and
incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74
Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the
legal effect of the contract rather than its precise language.” (Construction
Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)
Here, Plaintiff’s FAC alleges that in or about
November 2017, Plaintiff and Defendants entered into the Agreement whereby
Plaintiff agreed to deposit Plaintiff’s own funds in the sum of $1.6M into Defendant
Petri’s account at Chase Bank and in exchange, Defendants agreed, among other
things, (1) to return the full deposit to Plaintiff within 122 days, and (2)
not to withdraw the deposit at any time, whether in whole or in part, except to
return the deposit in full to Plaintiff. (FAC, ¶ 27.) Plaintiff asserts that he
performed all conditions, covenants, and promises required on his part to be
performed by, among other things, depositing the sum of $1.6M by wire transfer
into the Chase Bank account in accordance with the terms of the Agreement.
(FAC, ¶ 28.) Plaintiff contends that Defendants breached the Agreement by
failing and refusing to return the deposit of $1.6M. (FAC, ¶ 29.)
Plaintiff contends that although the deposit of
funds is referred to as a “loan,” the parties intended for the funds to be a
“bailment.” As addressed by Honorable Judge Deirdre Hill, the agreement is
ambiguous, as the title refers to a “depositor” agreement and yet refers to the
funds as a “loan” but there is no interest rate and prohibits Defendant from
withdrawing the funds. Regardless of how it is characterized, there is no
factual dispute that the DFA was not signed by Defendants, the parties against
whom the contract is being sought to be enforced. While Plaintiff provides
several arguments in his Separate Statement bearing on the no-signature UMF, he
does not provide any evidence that the agreement was in fact signed by
Defendants. Nor is there any evidence that Defendants received the $1.6 M and
thereby be estopped to contest the enforceability of the written contract.
Defendants note that the Statute of Frauds in Civil Code § 1624 states that a
contract to loan money in any amount greater than $100,000 must be in writing
and subscribed by the party to be charged. Defendants argue that the DFA by the
very terms thereof, falls squarely within this definition, and under the plain
language, is invalid unless it is in writing and subscribed by the party to be
charged (e.g., Defendants.) Defendants note that in Plaintiff’s deposition, he
admitted that he is unaware of any signed copy of the DFA. (Exhibit 41, 36:5-8.
But
Plaintiff argues that there are inferences that could preclude summary judgment
arising from his wire transfers of the $1.6M, his inquiries about the status of
the project and his money. The Court has noted that in order for it not to
GRANT summary judgment/adjudication as to the contract and implied covenant
claims, Plaintiff would need to create convincing arguments that there are
triable issues of material fact as to: (1) Exceptions to the Statute of Frauds;
(2) Whether Mr. Hassan was the agent for both Plaintiff and for Defendants
(whose knowledge or notice would be imputed to both sides); and (3) Whether there
were issues as to a non-signatory’s alleged breach of a written contract. The
Court does not find that Plaintiff has provided any persuasive evidence of any of the
above.
Even
if Exhibit F, originally, now Exhibit FF is allowed into evidence, and even if
Davis breached this agreement, Plaintiff fails to provide evidence that Davis
breached this agreement to Plaintiff since Plaintiff was not a signatory nor
was he mentioned in this agreement.
As
to the contention that Hassan was an agent on behalf of both parties, which if
true would impute knowledge to both sides, Plaintiff fails to provide
sufficient evidence to raise a triable issue of material fact as to dual agency
as well. For example, in the CTS original declaration, she contends that Exhibit C was a text message from
Hassan to Plaintiff who requested Plaintiff to sign the 1-page DFA and instructed
him to wire $1.6M into chase account ending in 665- and that Plaintiff learned (during
this litigation) that it was Davis who had requested that Hassan provide him
with specific instructions to what bank account to wire the funds. However,
that is not what the Exhibit (now CC and DD) states or reasonably implies.
Instead, this is merely an exhibit email which Davis only authenticated that he
forwarded to Hassan. Davis does not
state in his deposition that he forwarded the email so that Plaintiff could
transfer the funds. Instead, he asserted that he did not know anything about
the account number.
The
Court does not find that Plaintiff’s evidence raises triable issues of material
fact as to the breach of contract issue. As such, the tentative ruling becomes
the final ruling and this Court GRANTS summary adjudication as to the breach of
contract and implied covenant claims.
Bailment
“In a broad sense a bailment is the delivery of
a thing to another for some special object or purpose, on a contract, express
or implied, to conform to the objects or purposes of the delivery which may be
as various as the transactions of men [citation].” (Gebert v. Yank
(1985) 172 Cal.App.3d 544, 550 (Gebert).) “Breach of the bailment
contract may be asserted by the bailor when there is a failure to return that
which was bailed.” (Id. at p. 551.)
Defendants assert that Plaintiff’s argument
that the DFA was a bailment fails because the funds were never delivered to
Defendants. Defendants note that even
Plaintiff’s own banking documents show that his $1.6M wire transfer went to a
Chase Bank account number 916931665. Defendants submit that the account in
question is owned by FCP Master Holding Account, Inc, and the incorporator,
sole officer, director, and authorized signer for that account is Gustavo
Gullo. Defendants further submit that the account is not owned or authorized by
Davis nor Petri, and Plaintiff has failed to submit any evidence to raise a
triable issue or fact to the contrary. Defendants assert that based on his own
testimony in deposition, all Plaintiff could identify as evidence to support
his allegation that the Chase account ending in 665 was somehow owned by Davis
was (1) the 1-page DFA drafted by Hassen; and (2) Various unidentified
statements by Hassen that Plaintiff’s funds were going into a blocked account
that Davis controlled. However, Defendants argue that the DFA, at best, may
speak to what Plaintiff unilaterally intended the account to be, but has
nothing to do with what the 665 account actually was or what the mutual
intention of the parties was. Defendant further notes that Davis’s declaration
makes clear that neither he nor Petri had any relationship to or interest in
FCP Master Holding Account, Inc.
It appears that Plaintiff’ is attempting to
raise a disputed fact of Davis’ connection to account 665 through Exhibit AA
(now NN), which is an email sent by Davis which Plaintiff contends is a
confirmation that Plaintiff’s wire transfer had been completed. Although this
document is an email sent by Davis, it states that Davis had received a call
from Michael Hassan saying the wire has been made, and to let him know if the
funds do not show as pending. On its own, the Court does not find this evidence
sufficient to meet Plaintiff’s burden in proving a triable issue of material
fact as to delivery of the funds. Plaintiff further offered evidence of bank
statements found in emails sent to Davis. However, as noted above, Davis’s
deposition merely states that he “vaguely” remembers the emails, but that he
cannot attest to the documents themselves, nor does he remember them on his
own. Without a witness to lay sufficient
foundation for the attachments to the emails, the Court cannot consider those attachments
as admissible evidence for purposes of establishing a triable issue of fact.
The Court will consider oral argument at the
hearing from both sides as to whether Davis’s email stating that Michael told
him the wire had been made is sufficient to raise a triable issue of fact as to
the issue of bailment. However, the
Court’s tentative ruling is to GRANT summary adjudication as to the bailment
claim.
In his opposition, Plaintiff has also argued
that there is a question of fact as to whether Davis breached the long form DFA
that called for him to open the account in his own name in order to receive
Plaintiff’s funds. Plaintiff notes that at or around the same time Plaintiff
was entering into the DFA with Davis, Davis and the third-party financiers
entered into a multi-page depositor funding agreement (“Multi-page DFA”)
related to the same film financing agreement. (Decl. of Christine
Tour-Sarkissian (“CTS Decl.”), Exhibit F.) Plaintiff contends that multi-page
DFA called for Davis to open an account under Petri’s name to receive and hold
the funds deposited to facilitate the receipt a line of credit to finance the
film project. (CTS Decl., Exhibit F.) Plaintiff concedes that Cabayan was not a
signatory to that multi-page DFA, but that it called for the account to be
opened in Petri’s name. Plaintiff also submits that the account was supposed to
be controlled and blocked so that no funds could be withdrawn from that account
except by Petri for the sole purpose of returning Cabayan’s deposited funds.
Plaintiff argues that he, as the person providing the funds to Petri that were
to be used as the deposit required to facilitate the receipt of the line of
credit, was the third-party beneficiary of this Multi-Page DFA.
This Court has entertained argument as to
whether the belated third-party beneficiary (TPB) issue should be considered in
the absence of any such allegations in the FAC. The operative pleading
demonstrate that there is no TPB allegation in this case. Plaintiff’s offer of Exhibit FF as proof of an
unpleaded TPB legal theory is problematic.
Defendants have been deprived of any fair opportunity to challenge a TPB
theory at the pleading stage, much less to conduct discovery on such a theory,
and their MSJ could not have addressed such a theory because it was not
presented by the pleadings. Further, the
long form DFA is between Weathervane Productions, Inc., Forrest Capital
Partners, Inc., and Petri Entertainment, LLC. The long form statement
(Plaintiff’s Exhibit FF) is between Weathervane Productions, Inc., Forrest
Capital Partners, Inc., and Petri Entertainment, LLC; Plaintiff is not
mentioned as an intended TPB nor is he a signatory to this DFA. Also, Paragraph
(C)(1) of the long form contract notes that the account was to be deposited in
the name of the depositor, but would be controlled by FCP, WVP, and Depositor
in accordance with the relevant account operation mechanics.
Plaintiff further argued, in his original opposition,
that there is a question of fact as to whether the account where Plaintiff’s
money went to was owned by Davis or Petri. In response to Defendants’ position
that the account ending in 665 belonged to Gustavo Gullo, Plaintiff claims that
the Secretary of State Statement of Information regarding the name of company
into whose account the Plaintiff’s funds were wired confirms that the business
was owned by Benjamin F. McConnelly not Gustavo Gullo at the time of the
deposit. (CTS Decl., Exhibit N.) This evidence is insufficient to raise a
triable issue of act as to the moving defendants. Account 665 was not owned or controlled by
Davis or Petri, based on the evidence presented. If funds were embezzled from account 665,
there is no evidence that Davis or Petri received that money or were involved
in its disappearance.
Lastly, Plaintiff contends that there is a
question of fact as to who were the owners of the Chase Bank account ending in
960 or whether it existed. In response to Defendants’ assertion that Davis had
not been notified as of February 16, 2018 that any of Plaintiff’s funds had
been transferred from the FCP account to (what he thought would be) a joint
account, Plaintiff argues that Defendants’ assertion is demonstrably
false. Plaintiff was provided at his
request from Hassan, a Chase bank statement dated December 2017, which was
represented to Plaintiff as proof that his money was in a blocked controlled
account by Davis (CTS Decl., Exhibits I and Q.) As noted above, the attachments
to Exhibits I and Q are not admissible. Exhibit I is an email that Hassen sent to
Plaintiff with what is purported to be a bank statement. However, Davis cannot
authenticate the attachments because his deposition merely states that he
vaguely remembers receiving the forwarded email, but that the document attached
itself contains multiple levels of hearsay. Even if Davis vaguely remembers
receiving the attachments to the email, such testimony does not authenticate
the attachments or cure the imbedded hearsay in them. Further, as to Exhibit Q,
Plaintiff identified these as emails showing that Hassan and Davis had evidence
that Petri was not on any account but that they waited to get statements for an
account in which Plaintiff’s deposit was supposed to be held prior to February
28, 2019 to the account ending in 960. However, Davis has no independent
recollection of receiving the documents, and once again the attachments have
multiple levels of hearsay.
The Court noted in its original tentative
ruling that it finds the issue of the account ending in 960 to be irrelevant
unless Plaintiff were to be able to show that his funds were transferred from
the 665 account to the 960 account. There is no admissible evidence to show
that any evidence exists as to this fact. As such, the Court GRANTS summary adjudication
as to the bailment issue.
Alter Ego
In Plaintiff’s FAC, Plaintiff alleges that
Petri was, and at all times herein is, a mere shell and sham without sufficient
capital, assets, stock, stockholders, or partners to undertake the business
engaged in by Petri and/or Davis. (FAC, ¶ 6.) Plaintiff claims that Petri is a
mere shall, instrumentality, and conduit through which Davis purported to carry
on his business activities. (FAC, ¶ 7.) Plaintiff further claims that Davis
exercised, and continues to exercise, such complete control and dominance of Petri
that any individuality or separateness of Petri on the one and Davis on the
other hand does not exist. (FAC, ¶ 8.) Plaintiff asserts that Petri was intended
and used by Davis as a mere device to enable Davis to avoid individual
liability and for the purpose of substituting a financially insolvent entity
such as Petri in the place of Davis. (FAC, ¶ 9.) Plaintiff argues that Petri
was so inadequately capitalized that, compared with the business to be
conducted by Davis, and the risks attendant thereto, the capitalization of
Petri was trifling. (FAC, ¶ 10.) As such, Plaintiff submitted that Petri was
the alter ego of Davis, and that there exists, a unity of interest and
ownership between Petri and Davis such that any separateness has ceased to
exist. (FAC, ¶ 11.) Based on this, Plaintiff alleges that the assets and
properties of Petri is commingled with the separate assets of Davis such that
there is, and at all times relevant, no distinction between individual and
corporate assets. (FAC, ¶ 12.)
Defendants argue that Plaintiff offers no
evidence to support these accusations. Defendants claim that at Davis’
deposition, he was asked about the laundry list of factors that are considered
when conducting an alter ego analysis, and had no information about any of it.
(Cabayan Decl., 22:15- 33:9.) As such, Defendant argues that his claim for
alter ego liability fails as a matter of law, and, at the very least, summary
adjudication should be granted on this issue in favor of Davis, and he should
be dismissed from this case as an individual defendant.
In opposition, Plaintiff argues that he could
not know these facts and is subject to discovery within the context of this
litigation. Further, Plaintiff contends that the question of whether Davis can
hide behind his corporate entity when he has committed essentially a fraud on
Cabayan by concealing material facts from Cabayan is a question of fact and
law. Plaintiff reiterates that he alleges throughout this transaction, that
Davis and Petri not only breached the DFA and the Multi-page DFA, but also misled,
along with Hassen, Plaintiff into believing that his $1.6M was safe in a
blocked account in the name of Davis or Petri, and from which only Davis could
withdraw funds for the sole purpose of returning the deposit funds to
Plaintiff.
In the Court’s view, Plaintiff offers plenty of
allegations and arguments, but no facts or evidence sufficient to raise a triable issue
of act as to the claim of alter ego. The potentially helpful exhibits have
proven to be less helpful than Plaintiff may have anticipated, or are
inadmissible. The Court’s tentative ruling would still be to GRANT summary adjudication
on the alter ego theory.
Because the Court grants summary adjudication
as to each cause of action alleged against Petri and Davis, and in the absence
of a triable issue of material fact warranting a trial against Petri or Davis,
the Court GRANTS summary judgment to Petri and Davis, dismissing them as
defendants in this action.