Judge: Ronald F. Frank, Case: 22TRCV00273, Date: 2024-11-20 Tentative Ruling
Case Number: 22TRCV00273 Hearing Date: November 20, 2024 Dept: 8
Tentative Ruling
HEARING DATE: November 20, 2024
CASE NUMBER: 22TRCV00273
CASE NAME: David R. Zimmerman, et al. v. Jay Zimmerman, et al.
MOVING PARTY: Plaintiff and Cross-Defendant, Daivd R. Zimmerman, in his individual capacity, in his capacity as trustee of the David R. Zimmerman Family Trust, and derivatively on behalf of Sam Jadtar, a California Limited Partnership, Mortgage Mart, Inc., a California Corporation, and Realty Rentals, Inc., a California Corporation.
RESPONDING PARTY: Defendants and Cross-Complainants, Jay H. Zimmerman and Thomas B. Zimmerman
TRIAL DATE: February 10, 2025
MOTION: (1) Motion to Strike
Tentative Rulings:
(1) GRANTED, with leave to amend if the opposing party believes it can address the concerns raised by the moving party with amended allegations
I. BACKGROUND
A. Factual
On April 11, 2022, Plaintiff David R. Zimmerman, in his individual capacity, in his capacity as trustee of the David R. Zimmerman Family Trust, and derivatively on behalf of Sam Jadtar, a California Limited Partnership, Mortgage Mart, Inc., a California Corporation, and Realty Rentals, Inc., a California Corporation filed the instant action against defendants Jay H. Zimmerman and Thomas B. Zimmerman and nominal defendants Sam Jadtar, a California Limited Partnership, Mortgage Mart, Inc., a California Corporation, and Realty Rentals, Inc., a California Corporation. On April 3, 2024, Plaintiffs filed a First Amended Complaint (“FAC”) alleging causes of action for (1) Dissolution of Limited Partnership (as to Sam Jadtar, LP); (2) Dissolution Of Corporation (as to Mortgage Mart, Inc.); (3) Dissolution Of Corporation (as to Realty Rentals, Inc.); (4) Breach Of Fiduciary (Derivatively On Behalf Of Nominal Defendants Mortgage Mart, Inc. And Realty Rentals, Inc.); (5) Corporate Waste (derivatively on behalf of Nominal Defendants Mortgage Mart, Inc. and Realty Rentals, Inc.); and (6) Unjust Enrichment (derivatively on behalf of Nominal Defendants Mortgage Mart, Inc., Realty Rentals, Inc., and Sam Jadtar, LP.)
On July 29, 2024, Defendant and Cross-Complainants, Jay H. Zimmerman and Thomas B. Zimmerman filed a Cross-Complaint against Cross-Defendants, David R. Zimmerman, in his individual capacity, and in his capacity as trustee of the David R. Zimmerman Family Trust, ROES 1 through 50, and nominal Cross-Defendants, Sam Jadtar, Mortgage Mart, Inc., and Realty Rentals, Inc. On September 11, 2024, Cross-Complainants, Jay H. Zimmerman and Thomas B. Zimmerman filed a First Amended Cross-Complaint (“FAXC”) alleging causes of action for: (1) Breach of Fiduciary Duties; and (2) Declaratory Relief.
Now, Plaintiff and Cross-Defendant, David R. Zimmerman files a Motion to Strike portions of the FAXC.
B. Procedural
On October 11, 2024, Cross-Defendant, David R. Zimmerman filed this Motion to Strike portions of the FAXC. On November 6, 2024, Cross-Complainants, Jay H. Zimmerman and Thomas B. Zimmerman filed an opposition brief. On November 13, 2024, David R. Zimmerman filed a reply brief.
II. REQUEST FOR JUDICIAL NOTICE
With Cross-Defendant David R. Zimmerman’s moving papers, he also filed a Request for Judicial Notice requesting this court take judicial notice of the following:
1. The Grant Deed for 3517 Bayberry Lane, recorded on September 25, 2018.(Exhibit A.)
2. The Corrective Grant Deed for 3517 Bayberry Lane, recorded on January 16, 2019. (Exhibit B.)
The court GRANTS this request pursuant to Evidence Code section 452, subdivisions (b) and (c).
III. ANALYSIS
A. Motion to Strike
Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1).) The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].) The court may also strike all or any part of any pleading not drawn or filed in conformity with California law, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (b).) An immaterial or irrelevant allegation is one that is not essential to the statement of a claim or defense; is neither pertinent to nor supported by an otherwise sufficient claim or defense; or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc., § 431.10, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)¿¿
B. Discussion
Here, Cross-Defendant, David R. Zimmerman, seeks an order from this court striking Jay and Thomas Zimmerman’s allegations dating back to 1994 as well as their allegations and request for declaratory relief regarding the property located at 3517 Bayberry Lane, Malibu, CA 90265 (“Bayberry”).
i. Statute of Limitations Issue
First, Cross-Defendant, David R. Zimmerman requests this court strike Jay and Thomas Zimmerman’s allegations of events that allegedly occurred in 1994, 2001, 2013, 2016, and 2017 (FAXC, ¶¶ 18(a), (b), (d), pp. 8:14-24, 9:1-5; 19(a),(b), (e), (f), (h), (j), pp. 12:10-20, 13:7-13, 18-21, 13:23-14:3.) Given that the operative complaint was filed in 2022 and the cross-complaint in 2024, David Zimmerman asserts such events are far beyond any conceivable statute of limitations. Pursuant to Code of Civil Procedure section 343, the statute of limitations for a breach of fiduciary duty claim is four (4) years. As such, Jay and Thomas Zimmerman’s allegations involving events taking place from 1994 through 2017 all fall outside of the four-year limitation to bring this claim.
In opposition, Cross-Complainants, Jay and Thomas Zimmerman offer a few different arguments as to why their allegations involving events taking place in 1994, 2001, 2013, 2016, and 2017 cannot be stricken based on the statute of limitations. First, they argue that these past events speak to the discovery rule and/or the continuing violation doctrine which serve to toll any statute of limitations. (Opp. at 7.) California’s discovery rule delays the start of the statute of limitations until the plaintiff discovers, or is on inquiry notice (i.e., has reason to discover) facts supporting a cause of action. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action. The discovery rule does not encourage dilatory tactics because plaintiffs are charged with presumptive knowledge of an injury if they have “ ‘ “information of circumstances to put [them] on inquiry ” ’ ” or if they have “ ‘ “the opportunity to obtain knowledge from sources open to [their] investigation.” (Id. at 808; fn. 2 provides: “At common law, the term “injury,” as used in determining the date of accrual of a cause of action, “means both ‘a person's physical condition and its “negligent cause.” ’ ” ”(emphasis in original).)
“In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ ” (Fox, supra, 35 Cal.4th at 808, citing (McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 160 (superseded on limited grounds by Code Civ. Proc. § 340.8(c))(emphasis in original).) “When a plaintiff reasonably should have discovered facts for purposes of the accrual of a case of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence (or, in this case, the allegations in the complaint and facts
properly subject to judicial notice) can support only one reasonable conclusion.” (Broberg v. Guardian Life Ins. Co. of America (2009) 171 Cal.App.4th 912, 921.)
Here, the FAXC does not contain any allegations referencing the terms “tolling,” “delay,” or even “discovery.” The FAXC lists numerous events ranging from 1994 through 2023, under a section entitled “David’s Misconduct and Actions Showing his Intent with Regard to Bayberry.” Thus, it is unclear whether Jay and Thomas Zimmerman were aware of this “misconduct” at the time, whether they relied on David Zimmerman’s word as a fiduciary, etc. Without more, Jay and Thomas Zimmerman may not now argue for tolling of the statute of limitations based on various tolling doctrines when their FAXC makes no mention of such tolling and alleges no facts from which claimed tolling might be found.
Next, Jay and Thomas Zimmerman argue in their opposition that the allegations provide necessary background facts that help explain David Zimmerman’s motives and/or the context in which David’s ongoing breaches of fiduciary duties took place. (citing Central Laborers’ Penson Fund v. McAfee, Inc. (2017) 17 Cal.App.5th 292, 339 (“Central Laborers’”) (finding evidence of motive is highly relevant to any analysis of whether fiduciary duties have been breached).) While the court certainly understands the need for background facts explaining a fiduciary’s motives for their alleged breach, Jay and Thomas Zimmerman cite no authority that is squarely on point, or even instructive to the case at bar. In both Central Laborers’Pension Fund as well as the Delaware Supreme Court case of Cede & Co. v. Technicolor, Inc. (Del. 1993) 634 A.2d 345, neither the statute of limitations nor tolling were issue when the respective courts determined that evidence of motive, disloyalty, entrenchment, or fraud were required to rebut the presumption of the business judgment rule. As such, this argument is no more persuasive as to why this court should consider the allegations ranging from 1994 through 2017.
Lastly, Jay and Thomas Zimmerman state that the 1994 through 2017 allegations help support offsets that need to be calculated in determining an accurate statutory buyout price and thus argue the statute of limitations does not apply in this event. (citing Kroepsch v. Muma (1969) 272 Cal.App.2d 467, 475 (holding “the statute of limitations has no application to setoff claims of an equitable nature based on the same series of transactions.”).) However, as noted in the reply brief, a “setoff,” such as the one discussed in Kroepsch, is discussed in reference to an affirmative defense. The purpose of this ruling is that a plaintiff may not assert the statute of limitations defense that directly responds to a cause of action that plaintiff has asserted against that responding party when the affirmative defense involves the same or same series of transactions (i.e., the affirmative defense of overcharging for rent in response to an unlawful detainer case.) Thus, Jay and Thomas fail to persuade the court to allow them to maintain the allegations of events from 1994 through 2017. Therefore, the motion to strike these allegations is GRANTED with twenty (20) days leave to amend.
ii. Declaratory Relief as to Bayberry
Next, David Zimmerman argues this court should strike Jay and Thomas’s allegations and request for declaratory relief regarding Bayberry on the grounds that it is also barred by the statute of limitations. The FAXC alleges that in 2016, Stanley Zimmerman, the founder of SAM, made preparations to transfer Bayberry from SAM to David by “gift[ing] an extra 6% of
ownership interests in SAM from David to use as part of a contemplated exchange for [Bayberry.]” (FAXC, ¶ 19(f).) Further, the FAXC contends that David Zimmerman allegedly made an affirmative misrepresentation regarding a reconciliation payment for Bayberry on April 17, 2017, when he allegedly “stated he’s committed to the goal of equalizing the transaction” in an email. (FAXC, ¶ 19(h).) SAM allegedly recorded the transfer of Bayberry to David Zimmerman on September 25, 2018, and subsequently recorded a corrected deed in January 2019, with that deed executed by Thomas Zimmerman on behalf of SAM. (FAXC, ¶¶ 19(j), (l), & (m).) Based on these allegations, David Zimmerman states Jay and Thomas Zimmerman seek redress for an alleged misrepresentation that purportedly occurred over seven years ago, and a property transfer that was recorded nearly six years ago.
For the same reasons above, the court grants the Motion to Stike on the grounds that Jay and Thomas Zimmerman have failed to plead or argue in their opposition how the statute of limitations does not bar this claim. Jay and Thomas Zimmerman are granted twenty (20) days leave to amend.
III. CONCLUSION
For the foregoing reasons, David Zimmerman’s Motion to Strike is GRANTED.
David Zimmerman is ordered to give notice.
-------------------------------------------------------------------------------------------------------------------Tentative Ruling
HEARING
DATE: November 20, 2024
CASE
NUMBER: 22TRCV00273
CASE
NAME: David
Zimmerman v Jay and Thomas Zimmerman
TRIAL
DATE: Feb.
10, 2025
MOTION:
Continued
Hearing on Derivative claims to be included by appraisers
in their reports
TENTATIVE RULINGS: Discuss. Based on the parties’ recent briefing on the
status of derivative claims, it may be premature for the Court to order the
appraisers as to how or how much they should include in their valuation appraisal
reports for the competing claims Plaintiff has against his brothers and for
those his defendant brothers have against him.
The Court is concerned that it may be premature to include valuation of
claims that have not been fully discovered through written and deposition
discovery. While there is precedent for
including derivative claims in a dissolution appraisal, the Court would like to
discuss two alternate processes: (1) the appraisers value the businesses now, without
including figures for the uncertain and undetermined claims of breach of
fiduciary duty and the like, deferring for future assessment the value of the
parties’ competing derivative claims until after an evidentiary hearing or the February,
2025 trial as to the viability and value of those claims, or (2) deferring the
appraisers’ assessments until post-trial.