Judge: Salvatore Sirna, Case: 21PSCV00836, Date: 2022-10-20 Tentative Ruling

Case Number: 21PSCV00836    Hearing Date: October 20, 2022    Dept: A

Plaintiff David Hernandez, Sr.’s APPLICATION FOR DEFAULT JUDGMENT

Respondent: NO OPPOSITION

BACKGROUND

In this derivative action, Plaintiff David Hernandez, Sr. and his son, Defendant David Hernandez, Jr. each hold a 50% interest in HYLVL, LLC, with the goal of creating their own father-son apparel-printing business. After the Plaintiff loaned HYLVL $100,000 to cover business expenses, the Defendant began making expenses that Plaintiff disagreed with and started using HYLVL’s money to support his other side business. Defendant also refused to provide Plaintiff business records. On October 12, 2021, Plaintiff filed a Derivative and Direct Complaint for himself and on the behalf of HYLVL against the Defendant, HYLVL, and Does 1-10, alleging the following causes of action:

1.      Breach of Contract
2.      Common Count: Money had and received
3.      Dissolution of HYLVL LLC
4.      Breach of Fiduciary Duty
5.      Elder Financial Abuse per Welfare and Institutions Code section 15610.30

TENTATIVE RULING

Plaintiff David Hernandez, Sr.’s application for default judgment is DENIED, without prejudice.

ANALYSIS

Plaintiff failed to establish the amount of damages for which the Defendant is liable.

The members of an LLC are not personally liable for the LLC’s debts or obligations unless a basis for liability exists such as alter ego liability, common law liability of corporate shareholders, the member’s tortious conduct, or written guarantee of a contractual obligation. (People v. Pacific Landmark, LLC (2005) 129 Cal.App.4th 1203, 1212; Corp. Code § 17703.04.)

Plaintiff pled in his complaint and stated in his declaration that the subject loan was to the entity HYLVL. (Complaint, ¶ 28; Hernandez Decl., ¶ 3.) However, Plainitff seeks a default judgment against his Defendant as a member of the LLC after already dismissing HYLVL as a defendant.  Further, Plaintiff does not plead or provide facts establishing that Defendant gave a written guarantee for Plaintiff’s loan.  To the extent Plaintiff alleges that Defendant personally engaged in misconduct by purchasing entertainment equipment for another company with HYLVL money (Hernandez Decl., ¶ 8.), Plaintiff does not provide the amount of misappropriated funds to determine damages.

Furthermore, Plaintiff presents facts demonstrating more than $50,000 of the money was used for business expenses such as equipment and that Plainitff and Defendant leased property for HYLVL in an undisclosed amount. (Hernandez Decl., ¶ 5.) Based on these facts, Defendant cannot be liable for the full amount as Defendant does not appear to have misappropriated all of the subject loan.  Accordingly, Plaintiff fails to present sufficient facts that would allow the actual amount of damages to be determined.

Plaintiff to file supplemental documentation within 10 days.