Judge: Teresa A. Beaudet, Case: 21STCV23520, Date: 2024-12-03 Tentative Ruling

Case Number: 21STCV23520    Hearing Date: December 3, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiffs C&M Investment Group, Ltd. (“C&M”) and Karlin Holdings Limited Partnership (jointly, “Plaintiffs”) filed this action on June 23, 2021 against Defendant Harvey Champlin (“Defendant”). The Complaint alleges causes of action for (1) intentional interference with contractual relations and (2) intentional interference with prospective economic benefit.

In the Complaint, Plaintiffs allege that they “were the victims of a large-scale fraud perpetrated by Richard Philip Powers (‘Powers’) over the course of more than six years that led to judgment against Powers of approximately $36 million (the ‘Powers Judgment’).” (Compl., ¶ 1.) Plaintiffs allege that “[t]he fraud underlying the Powers Judgment stemmed from a teak wood business that served as a vehicle for Powers to systematically steal millions of dollars from Plaintiffs.” (Compl., ¶ 8.) Plaintiffs allege that in October 2007, C&M filed a lawsuit in Los Angeles Superior Court, entitled C&M Investment Group Ltd. & Karlin Holdings Limited Partnership v. Philip Richard Powers & Neil Campbell, Case No. BC378888 (herein, the “Powers Action”). (Compl., ¶ 10.) The Powers Action alleged that Powers and his corporate entities cheated C&M out of millions of dollars, and asserted claims for fraud, fraudulent inducement, and conversion, among other claims. (Compl., ¶ 10.) On January 17, 2012, the Court entered judgment against Powers and his corporate entities in the amount of $36,680,676.46. (Compl., ¶ 11.) 

Plaintiffs allege that they have not been able to collect meaningfully on the judgment, because Powers repeatedly claimed to have no assets to his name. (Compl., ¶ 1.) Plaintiffs allege that they “have recently discovered information that [Defendant] systemically [sic] aided Powers in hiding Powers’ assets from collection,” and that such information includes the following activities by Defendant: “a. Payment for a credit card for Powers’ benefit; b. Participating in a car transfer for Powers’ benefit—wiring money on Powers’ behalf to purchase a car; c. Wiring funds on behalf of Powers to friends and associates of Powers for the purpose of facilitating collection avoidance schemes; d. Covertly funneling Powers large sums of cash when Powers was released from jail in 2013; and e. Maintaining and creating trust accounts for Powers’ benefit.” (Compl., ¶ 14.) Plaintiffs also allege that Defendant “misrepresented the nature and extent of his activities for Powers in sworn testimony.” (Compl., ¶ 15.) Plaintiffs allege that “[a]s a result of his activity, [Defendant] deprived Plaintiffs of the ability to collect at least $12 million in assets from Powers and otherwise frustrated and burdened Plaintiffs’ collection efforts, to the injury of Plaintiffs.” (Compl., ¶ 16.)  

On October 15, 2024, the Court issued a minute order in this action providing, inter alia, that “Hearing - Other Re: Four issues identified in the Joint Stipulation filed 10/15/24 is scheduled for 11/07/24 at 02:00 PM in Department 50 at Stanley Mosk Courthouse.”

On October 15, 2024, the parties filed a Joint Stipulation Re Issues to be Briefed (herein, the “Joint Stipulation”). The Joint Stipulation provides, inter alia, as follows: “[t]he issues to be briefed are: 1. Estoppel: (a) Can the 2009 and 2010 allegedly false testimony by Mr. Champlin factor into Plaintiffs’ estoppel argument even though that testimony was before entry of the Powers Judgment in January 2012? And (b) whether CACI No. 456’s optional element No. 4 has any application in this case and, if so, how does it apply? 2. Accrual: Whether it is appropriate to pose to the jury the question of whether all of the elements of Plaintiffs’ claims occurred before December 27, 2018? 3. Statute of Limitations Question: What is the appropriate formulation of the verdict form question(s) based on CACI 455 for the Joint Special Verdict Form and why? 4. Litigation Privilege: Does the litigation privilege bar Plaintiffs from using Mr. Champlin’s statements during his 2009 or 2010 depositions or his January 2019 judgment debtor examination as a basis for imposing affirmative liability in this action?”

On October 21, 2024, Defendant filed a “Statement on Issue No. 4: Litigation Privilege,” which provides that Defendant “informs the Court and Plaintiffs that, in the interests of simplifying the number of legal and factual issues before the Court, and to avoid possible jury confusion, Champlin hereby withdraws his position that the content of his January 19, 2019 judgment examination is protected by California’s litigation privilege.”

The parties’ Joint Stipulation further provides that “[t]he parties agree to the following briefing schedule, order, and page limit:…Plaintiffs will have the opening brief on the estoppel and accrual issues…Defendants [sic] will have the opening brief on the statute of limitations question and litigation privilege question…For each issue, the opening brief will be 10 pages, the opposition brief will be 10 pages, and the reply will be 5 pages…Opening briefs will be due on October 21, 2024 by 4 p.m.…Opposition briefs will be due on October 25, 2024 by 4 p.m.…Reply briefs will be due on October 29, 2024 by 4 p.m.”

On October 21, 2024, Plaintiffs filed a Brief on Claim Accrual and a Brief Re Estoppel. Defendant opposes both. On October 21, 2024, Defendant filed a Brief on Issue No. 3: Formulation of Special Verdict Based on CACI No. 455. Plaintiffs oppose.

 On November 7, 2024, the Court issued a minute order in this case providing, inter alia, that “[o]n or before November 13, 2024, (a) Plaintiff will file and serve a supplemental brief of no more than 3 pages regarding the first estoppel issue pertaining to the 2009 and 2010 Champlin depositions as discussed at the hearing (i.e., the interplay of other exhibits from 2009 and 2010 offered by Defendant such as exhibit 535 that Defendant intends to use to show the statute of limitations has expired), and (b) Defendant will file a supplemental brief of no more than 3 pages regarding the evidence that will support use of element 4 of CACI 456.” The November 7, 2024 minute order further provides that “[o]n or before November 19, 2024, responses of no more than 3 pages each will be filed and served and the hearing on the estoppel issue as well as the remaining accrual and statute of limitations issues will be on December 3, 2024 at 2:00 p.m. in Department 50.” 

On November 13, 2024, Plaintiffs filed a Supplemental Brief Re Estoppel. Defendant opposes. In addition, on November 13, 2024, Defendant filed a Supplemental Brief Re “CACI No. 456 and Element 4.” Plaintiffs oppose.

Discussion

A.    Issue No. 1: Estoppel

As set forth above, the Joint Stipulation provides that the first issue to be briefed is as follows: “Estoppel: (a) Can the 2009 and 2010 allegedly false testimony by Mr. Champlin factor into Plaintiffs’ estoppel argument even though that testimony was before entry of the Powers Judgment in January 2012? And (b) whether CACI No. 456’s optional element No. 4 has any application in this case and, if so, how does it apply?”

Plaintiffs argue that Defendant’s “2009 and 2010 conduct factors into Plaintiffs’ estoppel argument.” (Plaintiff’s Brief at p. 7:6.) Plaintiffs note that “[f]our elements must ordinarily be proved to establish an equitable estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had the right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his injury.” ((Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1268 [internal quotations omitted].)

 Plaintiffs assert that “Mr. Champlin’s 2009 and 2010 conduct forms part of the basis for Plaintiffs’ equitable estoppel claim: (1) Mr. Champlin knew his conduct on behalf of Mr. Powers went beyond providing legal consulting and advice; (2) he withheld documents and repeatedly gave false testimony under oath in 2009 and 2010, and again in 2019, painting his relationship with Mr. Powers as a benign consulting relationship; (3) Plaintiffs were thus ignorant of the true facts—including that Mr. Champlin was establishing financial structures to shield Mr. Powers’ assets from tracing and collection—until shortly before Plaintiffs filed this lawsuit; and (4) Plaintiffs relied on Mr. Champlin’s lies and concealment for their understanding that Mr. Champlin’s relationship with Mr. Powers was limited to a benign legal consulting relationship and thus remained unaware of their cause of action against Mr. Champlin.” (Plaintiff’s Brief at p. 7:18-26.)

Plaintiffs cite to the parties’ Amended Joint Stipulated Facts filed on October 14, 2024, which provides, inter alia, that “Plaintiffs C&M Investment Group and Karlin Holdings (called the ‘C&M Parties’) filed a civil lawsuit against Philip Richard Powers (‘Mr. Powers’) and related entities in 2007 in Los Angeles County Superior Court, titled C&M Investment Group, Ltd. and Karlin Holdings Limited Partnership v. Powers et al. (the ‘Powers Litigation’).” (October 14, 2024 Amended Joint Stipulated Facts, ¶ 1.) The Stipulated Facts provide that “Mr. Champlin was not Mr. Powers’ attorney in the Powers Litigation. During the Powers Litigation, Mr. Champlin acted as Mr. Powers’ agent and litigation consultant pursuant to a written agreement called the C&M v. Powers Legal Advisory Services Agreement…” (Ibid., ¶ 4.) “On January 17, 2012, the Los Angeles Superior Court entered judgment against Philip Richard Powers…in the Powers Litigation.” (Ibid., ¶ 9.) “In the Powers Litigation, the C&M Parties took Mr. Champlin’s deposition twice, in 2009 and 2010.” (Ibid., ¶ 7.) As discussed, Plaintiffs argue that Defendant “lied under oath during those examinations.” (Plaintiffs’ Brief at p. 3:12.)

Plaintiffs provide excerpts from a July 7, 2009, deposition of Harvey Champlin in C&M Investment Group, Ltd., et al. v. Philip Richard Powers, et al., Case No. BC378888. (Craig Decl., ¶ 2, Ex. A.) Plaintiffs cite to the following testimony from the deposition: “Q…But what I’m struggling with is trying to understand what you’re doing other than relaying legal advice, contributing to general strategic decisions in the lawsuit. And that’s pretty much it. I don’t see what else you’re doing. Is that pretty much it? A[.] That’s pretty much it.” (Craig Decl., ¶ 2, Ex. A (Champlin Depo.) at p. 119:5-13.) Plaintiffs also cite to the following testimony from Defendant’s December 14, 2010 deposition in C&M Investment Group, Ltd., et al. v. Philip Richard Powers, et al., Case No. BC378888: “Q [.] The agreement states that you were going to be compensated at a rate of $500 per hour, correct? A[.] Correct. Q[.] Can you tell me where on here it explains what you were supposed to do in order to earn that money? A[.] Consult and advise.” (Craig Decl., ¶ 3, Ex. B (Champlin Depo.) at p. 212:20-25.)

Plaintiffs argue that “documents released to Plaintiffs between November 2019 and March 2021, and additional documents produced in this case, later revealed that Mr. Champlin was not merely a legal consultant, but was serving as a conduit to shield Mr. Powers’ assets from collection and enable Mr. Powers to use funds as he pleased, for any purpose that he directed.”

(Plaintiff’s Brief at pp. 3:24-4:2).[1] Plaintiffs contend that “[b]ecause Mr. Champlin’s 2009 and 2010 conduct misled Plaintiffs about the nature of his relationship with Mr. Powers, and Plaintiffs reasonably relied on that conduct for their understanding that they had no cause of action against Mr. Champlin, equitable estoppel applies.” (Plaintiffs’ Brief at p. 9:1-3.)

            But as noted by Defendant, Plaintiffs do not appear to explain how the referenced “snippets from Champlin’s deposition testimony in 2009 and 2010…directly prevented them from filing the present lawsuit…” (Defendant’s Opp’n at p. 3:5-7.) Defendant cites to Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 745-746, where the Court of Appeal noted that “[e]quitable estoppel…comes into play only after the limitations period has run and addresses…the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period. For a defendant to be equitably estopped from asserting a statute of limitations, the plaintiff must be directly prevented…from filing [a] suit on time.” (Internal quotations and citations omitted.)

Plaintiffs argue that they relied on Defendant’s 2009 and 2010 deposition testimony “for their understanding that they had no cause of action against Mr. Champlin,” but as noted by Defendant, “[t]he Powers Judgment was not even entered until 2012.” (Plaintiffs’ Brief at p. 9:2-3; Defendant’s Opp’n at p. 3:8.) In the Complaint in the instant action, Plaintiffs allege, inter alia, that “[o]n January 17, 2012, this Court entered judgment against Powers and in Plaintiffs’ favor in the amount of $36,680,676.46 in C&M Investment Group Ltd. & Karlin Holdings Limited Partnership v. Philip Richard Powers & Neil Campbell, Case No. BC378888.” (Compl., ¶ 25.) Plaintiffs’ claim is that “Champlin had knowledge of Plaintiffs’ litigation and judgment against Powers,” and that “Champlin received assets from Powers and worked with him to conceal the money’s true provenance to prevent Plaintiffs from seizing the money and applying it to satisfy Plaintiffs’ judgment.” (Compl., ¶¶ 26-27.) Thus, it is unclear how Defendant’s 2009 and 2010 deposition testimony from before the 2012 judgment was even entered “directly prevented [Plaintiffs] from filing [a] suit on time.” (Id. at p. 746.)

As set forth above, the Court’s November 7, 2024 minute order provides, inter alia, that “Plaintiff will file and serve a supplemental brief of no more than 3 pages regarding the first estoppel issue pertaining to the 2009 and 2010 Champlin depositions as discussed at the hearing (i.e., the interplay of other exhibits from 2009 and 2010 offered by Defendant such as exhibit 535 that Defendant intends to use to show the statute of limitations has expired)…”

In her November 13, 2024 declaration in support of Plaintiffs’ supplemental brief, Plaintiffs’ counsel states that “[a]ttached hereto as Exhibit 2 is a true and correct copy of Trial Exhibit 535, an email chain dated March 3, 2010 (CHAMPLIN002913).” (Craig Decl., ¶ 3.) This Exhibit appears to include a March 3, 2010 email from Defendant indicating, inter alia, “I have not yet wired funds to [illegible] firm. Should I wait for your additional funds, or go ahead and send $20K now?” (Craig Decl., ¶ 3, Ex. 2.) Plaintiffs assert that “Mr. Champlin intends to use a 2010 email chain between himself and Richard Powers about a wire transfer to a law firm to support his argument that [Plaintiffs] should have been on notice that the litigation trust was out there…” (Plaintiffs’ Suppl. Brief at p. 1:5-7 [internal quotations omitted].) Plaintiffs argue that “false and misleading testimony from Mr. Champlin in 2009 and 2010 hid the very facts that Mr. Champlin now wants to argue Plaintiffs should have been on notice of in 2009 and 2010.” (Plaintiffs’ Suppl. Brief at p. 1:21-23.) But as discussed, the relevant inquiry for purposes of equitable estoppel is whether Defendant’s “conduct has induced [Plaintiffs] into forbearing suit within the applicable limitations period.” (Vaca v. Wachovia Mortgage Corp., supra, 198 Cal.App.4th at p. 745.) The Court still does not see how Defendant’s 2009 and 2010 testimony induced Plaintiffs into forebearing their suit related to a 2012 judgment that did not exist in 2009 and 2010.  

Plaintiffs also appear to argue in their supplemental brief that Defendant testified falsely about the existence of an agreement related to his services as a legal consultant for Mr. Powers. Plaintiffs cite to the following testimony from Defendant’s December 14, 2010 deposition in C&M Investment Group, Ltd., et al. v. Philip Richard Powers, et al., Case No. BC378888: “Q[.] Okay. So you’ve been referring to this agreement – A[.] Exhibit 9. Q[.] -- for a couple of your answers. And when you have been making those references, you have been referring to what is now Exhibit 9. Now, Exhibit 9 is a June 2nd, 2009 -- I guess it’s an agreement. Right? A[.] Correct. Q[.] And the title line there is, ‘C&M v. Powers Legal Advisory Services,’ correct? A[.] Correct.” (Craig Decl., ¶ 12, Ex. 11 (Champlin Depo.) at p. 199:10-21.)

Plaintiffs assert that “[b]y this time, Mr. Champlin had already signed…two addenda—both of which imposed on Mr. Champlin duties to receive ‘loans’ from Mr. Powers’ kids and use the moneys for Mr. Powers’ benefit…” (Plaintiffs’ Suppl. Brief at p. 2:16-18, emphasis omitted.) Exhibit 9 to Plaintiffs’ counsel’s November 13, 2024 declaration is a copy of “Trial Exhibit 43, the 2009 ‘C&M v. Powers Legal Advisory Services’ agreement and addenda between Richard Powers and Harvey Champlin...” (Craig Decl., ¶ 10.) This Exhibit 9 includes, inter alia, a June 14, 2009 document titled “Addendum to C&M v. Powers Legal Advisory Services,” that provides, inter alia, “$120,000.00 is hereby acknowledged from Chyna Powers as evidenced by an Unsecured Promissory Noted dated April 22, 2009…” (Craig Decl., ¶ 10, Ex. 9.) Exhibit 9 also includes a November 12, 2009 document titled “Second Addendum to C&M v. Powers Legal Advisory Services” which provides, inter alia, that “Champlin is authorized and directed to transfer funds from the Chyna loan account to the retainer account as needed to pay the agreed upon retainer fee and expenses. Funds so transferred shall be treated as loan repayment, reducing the principal balance due on the Chyna Note…” (Craig Decl., ¶ 10, Ex. 9.) Plaintiffs note that at his December 14, 2010 deposition, Defendant was asked “Q[.] Is there any other writing anywhere that explains what your duties were beyond to consult and advise?” to which Defendant responded “A[.] No.” (Craig Decl., ¶ 12, Ex. 11 (Champlin Depo.) at p. 213:1-4.)

In the supplemental brief, Plaintiffs argue that “[a]gainst this backdrop, Mr. Champlin’s testimony in the 2009 deposition that legal consulting services were ‘pretty much it’ insofar as his consulting arrangement was at worst an outright falsehood and at best a misleading omission…Rather than say ‘that’s pretty much it’ a truthful answer would have been that the agency agreement (which then included the June 14, 2009 Addendum) involved holding and disbursing for Mr. Powers’ benefit hundreds of thousands of dollars obtained as purported loans from Mr. Powers’ children.” (Plaintiffs’ Suppl. Brief at p. 3:3-8, emphasis omitted.)

Plaintiffs contend that they “relied on Mr. Champlin’s sworn testimony and document production in 2009 and 2010 for their understanding that his relationship with Mr. Powers was simply a straightforward and standard hourly fee-based legal consulting relationship.” (Plaintiffs’ Suppl. Brief at p. 3:10-12.) In support of this assertion, Plaintiffs cite to a copy of “the publicly filed version of the Declaration of Dr. Gary Karlin Michelson ISO Plaintiffs’ Opposition to Motion for Summary Judgment dated February 28, 2023 (No. 21STCV23520),” in which Dr. Michelson states that “[w]hen Champlin did produce his purported litigation advisory services agreement with Powers, he did so on the eve of his second deposition (in 2010) and then produced only the main agreement—which omitted any reference to purported loan agreements with Powers’ children. Champlin failed to produce either of the two addenda that referred expressly to those loans, even though both of those addenda are dated in 2009 and Champlin’s second deposition and document production were in 2010. In fact, Champlin produced no documents revealing the existence of his purported loan arrangements with Powers’ children until after this suit was filed.” (Craig Decl., ¶ 11, Ex. 10, ¶ 9.)

But as discussed, Plaintiffs allege that the subject judgement against Mr. Powers was entered in 2012. (Compl., ¶ 25.) Plaintiffs allege in the instant action that “Champlin received assets from Powers and worked with him to conceal the money’s true provenance to prevent Plaintiffs from seizing the money and applying it to satisfy Plaintiffs’ judgment.” (Compl., ¶ 27.) Defendant asserts that “conduct occurring before Plaintiffs’ claims even existed could not have induced them to delay filing those claims.” (Opp’n at p. 3:10-11.) Indeed, as discussed, the Court still does not see how Plaintiffs purportedly relied on Defendants’ 2009 and 2010 testimony such that they delayed filing the instant action. As discussed, “[e]quitable estoppel…addresses…the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period.” (Vaca v. Wachovia Mortgage Corp., supra, 198 Cal.App.4th at p. 745.)[2]

Based on the foregoing, the Court does not find that Plaintiffs have shown that “the 2009 and 2010 allegedly false testimony by Mr. Champlin factor into Plaintiffs’ estoppel argument…” (Joint Stipulation, Issue No. 1.)

Next, Plaintiffs assert that “optional element 4 of CACI 456 does not apply to Plaintiffs’ estoppel argument.” (Plaintiffs’ Brief at p. 9:13.) CACI No. 456 provides as follows:

“[Name of plaintiff] claims that even if [his/her/nonbinary pronoun/its] lawsuit was not filed on time, [he/she/nonbinary pronoun/it] may still proceed because [name of defendant] did or said something that caused [name of plaintiff] to delay filing the lawsuit. In order to establish the right to proceed, [name of plaintiff] must prove all of the following:

1. That [name of defendant] said or did something that caused [name of plaintiff] to believe that it would not be necessary to file a lawsuit;

2. That [name of plaintiff] relied on [name of defendant]’s conduct and therefore did not file the lawsuit within the time otherwise required;

3. That a reasonable person in [name of plaintiff]’s position would have relied on [name of defendant]’s conduct; [and]

[4. That after the limitation period had expired, [name of defendant]’s representations by words or conduct proved to not be true; and]

5. That [name of plaintiff] proceeded diligently to file suit once [he/she/nonbinary pronoun/it] discovered the need to proceed.” (Emphasis added.)

In their brief, Plaintiffs cite to the “Directions for Use” for CACI No. 456, which provide, inter alia, as follows:

“Most cases do not frame the issue as one of equitable estoppel and its four elements. All that is required is that the defendant’s conduct actually have misled the plaintiff, and that plaintiff reasonably have relied on that conduct. Bad faith or an intent to mislead is not required. (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 384 [2 Cal.Rptr.3d 655, 73 P.3d 517]; Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 43 [21 Cal.Rptr.2d 110].) Nor does it appear that there is a requirement that the defendant specifically intended to induce the plaintiff to defer filing suit. Therefore, no specific intent element has been included. However, the California Supreme Court has stated that element 4 is to be given in a construction defect case in which the defendant has assured the plaintiff that all defects will be repaired. (See Lantzy, supra, 31 Cal.4th at p. 384.).” (Judicial Council Of California Civil Jury Instruction 456.)

Plaintiffs assert that accordingly, “the Supreme Court of California has stated [element four] is intended to be applied in construction defect cases, where the plaintiff is undisputably aware of a cause of action before the limitations period runs, but the defendant makes an assurance that all defects will be repaired.” (Plaintiffs’ Brief at p. 2:15-18, citing Directions for Use, CACI No. 456.) As noted by Defendant, the “Directions for Use” for CACI No. 456 do not expressly provide that Element 4 may only be used in construction defect cases.

Plaintiffs contend that “courts have limited the application of element 4 to cases where a plaintiff knows of the existence of a claim against the defendant during the statute of limitations period, and only delays filing suit because the defendant represents they will remedy the defect.” (Plaintiffs’ Brief at p. 9:18-21.) In support of this assertion, Plaintiffs note that the Lantzy Court found that “(1) if one potentially liable for a construction defect represents, while the limitations period is still running, that all actionable damage has been or will be repaired, thus making it unnecessary to sue, (2) the plaintiff reasonably relies on this representation to refrain from bringing a timely action, (3) the representation proves false after the limitations period has expired, and (4) the plaintiff proceeds diligently once the truth is discovered the defendant may be equitably estopped to assert the statute of limitations as a defense to the action.” (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 384 [internal citation omitted].) Plaintiffs also cite to Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 43, where the Court of Appeal found that “[w]here the plaintiffs reasonably rely on defendants’ promise to repair the property damage without a lawsuit, is a jury permitted to find that plaintiffs’ decision to delay filing a personal injury lawsuit was also reasonable? We conclude such a finding is permissible on the facts of this case. Where a potential defendant has promised to remedy a portion of the damages suffered by the plaintiff, it would be unreasonable to expect the plaintiff to jeopardize the possibility of repair by filing a lawsuit as to items of damage not covered by the defendant’s promise. This is particularly true where, as here, the defendant’s promise relates to a substantial aspect of the dispute.”

Plaintiffs argue that unlike in Lantzy and Shaffer, “here, Plaintiffs were entirely unaware of their cause of action against Mr. Champlin until after November 2019, when Plaintiffs gradually discovered Champlin lied in his prior sworn examinations. As a result, element 4 is inapplicable, and there is no basis to include it in the jury instructions for this case.” (Plaintiffs’ Brief at p. 2:25-27.) Indeed, the instant action is distinguishable from Lantzy and Shaffer. The instant case does not appear to involve facts analogous to “a construction defect case in which the defendant has assured the plaintiff that all defects will be repaired.” (CACI No. 456, Directions for Use.)

In his supplemental brief, Defendant argues that “[t]he timeline of when Plaintiffs claim to have discovered the alleged falsity of statements Champlin made during his 2019 judgment debtor examination makes Element 4 appropriate, as Plaintiffs discovered the inaccuracy before the limitations period expired.” (Defendant’s Suppl. Brief at p. 2:5-8, emphasis omitted.) Defendant cites to Plaintiffs’ “Brief Re Estoppel,” which argues, inter alia, that “Plaintiffs did not obtain a full understanding of Mr. Champlin’s relationship with Mr. Powers until after November 2019, when documents were released to Plaintiffs revealing that Mr. Champlin’s prior sworn testimony was false…These documents collectively showed that Mr. Champlin’s relationship with Mr. Powers was not a benign consulting relationship as Plaintiffs had previously understood…Instead, the documents revealed Mr. Champlin held and disbursed moneys for Mr. Powers’ benefit between 2012 and 2014…effectively shielding Mr. Powers’ assets from tracing and collection, and enabling Mr. Powers to earn and spend money on cars and credit cards and get his hands on cash, without any of that activity occurring under his name.” (Plaintiffs’ Brief at pp. 4:21-5:5, emphasis omitted.) Defendant argues, by contrast, that “Plaintiffs’ limitations period began to run no later than November 20, 2018…” (See Defendant’s Suppl. Brief at p. 3:7-15.)[3] Defendant argues that “Element 4 should be given whenever, as here, there is credible evidence that the plaintiff learned the defendant’s ‘representations by words or conduct proved not to be true’ before the limitations period expired.” (Defendant’s Suppl. Brief at p. 4:3-5, emphasis omitted.)

In their opposition, Plaintiffs counter that Defendant’s “‘timeline’ is neither here nor there for purposes of this jury instruction issue…Element 4 has no application in a case that, as here, predicates estoppel on the fraudulent concealment of facts setting forth the basis for the plaintiff’s claims.” (Plaintiffs’ Opp’n at p. 1:10-12, emphasis omitted.) Plaintiffs assert that their “estoppel argument is not based on any representation by Mr. Champlin that he would remedy Plaintiffs’ injuries; instead, it is based on Mr. Champlin preventing Plaintiffs from discovering they had a cause of action against him.” (Opp’n at p. 2:7-9.) Indeed, as discussed above, the instant case does not appear to involve facts analogous to “a construction defect case in which the defendant has assured the plaintiff that all defects will be repaired.” (CACI No. 456, Directions for Use.) As set forth above, the “Directions for Use” for CACI No. 456 indicate that “[m]ost cases do not frame the issue as one of equitable estoppel and its four elements,” and that “the California Supreme Court has stated that element 4 is to be given in a construction defect case in which the defendant has assured the plaintiff that all defects will be repaired.” Here, Plaintiffs do not allege that Defendant assured Plaintiffs that certain damage or injury will be repaired, causing Plaintiffs to believe it would be unnecessary to file a lawsuit, or any similar facts.

Based on the foregoing, the Court finds that Plaintiffs have demonstrated that CACI No. 456’s optional element No. 4 is inapplicable to this case.[4]  

B.     Issue No. 2: Accrual

As discussed, the Joint Stipulation provides that the second issue to be briefed is as follows: “Accrual: Whether it is appropriate to pose to the jury the question of whether all of the elements of Plaintiffs’ claims occurred before December 27, 2018?”

Plaintiffs argue that “[t]he question of whether all of the elements of Plaintiffs’ claims occurred before December 27, 2018 should be posed to the jury as part of the special verdict form.” (Plaintiffs’ Brief at p. 5:2-3.) Plaintiffs assert that “Champlin argues that it should not because there is allegedly no dispute as to this issue since Champlin’s financial dealings relating to Powers ceased in 2016. But, contrary to Champlin’s argument, that is not dispositive of when Plaintiffs’ claims accrued.” (Plaintiffs’ Brief at p. 5:3-6.) Plaintiffs argue that “Champlin’s 2019 lies and breach of his agreement to produce documents are part of a continuing violation, which impacts when Plaintiffs’ claims accrued.” (Plaintiffs’ Brief at p. 5:12-13.)

Plaintiffs cite to testimony from a January 25, 2019 Third Party Judgment Debtor Exam of Defendant, Volume 1, taken in C&M Investment Group, Ltd., et al. v. Philip Richard Powers, et al., Case No. BC378888. (Schweitzer Decl., ¶ 5, Ex. D.) Plaintiffs note, inter alia, that Defendant testified in the January 25, 2019 Third Party Judgment Debtor Exam that “A[.]…he asked me if I would be the trustee of a educational trust for his daughter Chyna…which I helped him set up.” (Schweitzer Decl., ¶ 5, Ex. D (Champlin Judgment Debtor Exam) at p. 17:19-22.) Plaintiffs assert that “contrary to Champlin’s testimony, the Chyna Trust was both funded by and used for Powers’ benefit.” (Plaintiffs’ Brief at p. 4:26-27.) Plaintiffs cite to a document titled “Opinions and Observations as of September 12, 2024” that expert Kenneth D. Rugeti submitted in connection with this lawsuit.” (Schweitzer Decl., ¶ 2, Ex. A.) Mr. Rugeti’s opinion provides, inter alia, that “[t]his illustrates the key impact of Mr. Champlin’s dealings relating to Mr. Powers: He used money that he knew belonged to Powers that was put in an account in Mr. Champlin’s business’s name, put it in Chyna’s trust and recorded it in the Chyna trust’s documents as a gift from Mr. Champlin himself even though it was really Mr. Powers’ money being deposited. He then kept a separate ledger not associated in any way with the Chyna trust showing that to be true.” (Schweitzer Decl., ¶ 2, Ex. A, p. 15.)

Plaintiffs also cite to the following testimony from Defendant’s January 25, 2019 Third Party Judgment Debtor Exam: “…can you list for me the business ventures that you and Mr. Powers have been involved in since you’ve gotten to know him? A[.] Only one. Green Earth Products.” (Schweitzer Decl., ¶ 5, Ex. D (Champlin Judgment Debtor Exam) at p. 6:22-25.) In regard to Green Earth Products, Defendant testified that “we were a reseller of products that we purchased from a manufacturer in Chicago under our private label, and then sold that private label product to Menards. And we never made any money. It was just Menards negotiated --negotiated pricing that we agreed to for the sake of building the business, but it never produced any cash flow or profit. I never took a salary. We never distributed anything.” (Id. at p. 10:5-13.)

Plaintiffs assert that Defendant “misrepresented Green Earth, LLC as a business with its own accounts from which Powers never received any money or distributions.” (Plaintiffs’ Brief at p. 6:16-17.) Plaintiffs cite to Mr. Rugeti’s “Opinions and Observations as of September 12, 2024” which provide, inter alia, that “[d]espite the fact that Mr. Powers was not a direct owner of Green Earth, he made capital contributions to Green Earth via the Purported Trust Account,” and that “[t]he Purported Trust Account activity indicates $2,500 in inflows and $21,131 in outflows between the Purported Trust Account and Green Earth…” (Schweitzer Decl., ¶ 2, Ex. A, p. 13.) Mr. Rugeti also states that “the Green Earth bank statement includes $5,000 in outflows to Chyna Powers after the stock transfer…” (Schweitzer Decl., ¶ 2, Ex. A, p. 14.)[5]

Plaintiffs contend that “Champlin’s 2019 lies…are part of a continuing violation, which impacts when Plaintiffs’ claims accrued. It is therefore necessary and appropriate to ask the jury about when all of the elements of Plaintiffs’ claims occurred.” (Plaintiffs’ Brief at p. 5:12-14.) Plaintiffs note that “[t]he continuing violation doctrine aggregates a series of wrongs or injuries for purposes of the statute of limitations, treating the limitations period as accruing for all of them upon commission or sufferance of the last of them.” (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192.)

In the opposition, Defendant asserts that Plaintiffs cannot invoke the continuing violation doctrine here because Defendant’s “alleged 2019 examination was both qualitatively different from and temporally disconnected from the alleged interference scheme (from 2012 to 2016), that it purportedly ‘continued.’” (Defendant’s Opp’n at p. 5:7-9.) Defendant notes that the Aryeh Court found that “[a]llegations of a pattern of reasonably frequent and similar acts may, in a given case, justify treating the acts as an indivisible course of conduct actionable in its entirety, notwithstanding that the conduct occurred partially outside and partially inside the limitations period.” (Id. at p. 1198.)

Defendant assert that “there was…A complete change in the nature of the conduct - from active asset transfers to allegedly false testimony about past transactions; and…A three-year gap between the different types of conduct - from the end of financial dealings in 2016 to the 2019 testimony.” (Defendant’s Opp’n at p. 5:19-23.) Indeed, in the Complaint, Plaintiffs allege that they “have recently discovered information that Champlin systemically [sic] aided Powers in hiding Powers’ assets from collection. Such information includes the following activities by Champlin: a. Payment for a credit card for Powers’ benefit; b. Participating in a car transfer for Powers’ benefit—wiring money on Powers’ behalf to purchase a car; c. Wiring funds on behalf of Powers to friends and associates of Powers for the purpose of facilitating collection avoidance schemes; d. Covertly funneling Powers large sums of cash when Powers was released from jail in 2013; and e. Maintaining and creating trust accounts for Powers’ benefit.” (Compl., ¶ 14.)

In the reply, Plaintiffs contend that Defendant’s “2019 sworn lies were part of an indivisible course of recurring, similar acts all meant to hide Powers’ assets and avoid collection.” (Plaintiffs’ Reply at p. 3:14-15.) But the Court does not see how Defendant’s alleged conduct in “hiding Powers’ assets from collection” (Compl., ¶ 14) and Defendant’s testimony at the January 25, 2019 Third Party Judgment Debtor Exam are purportedly “frequent” and “similar acts” for purposes of the continuing violation doctrine. As discussed, “[a]llegations of a pattern of reasonably frequent and similar acts may, in a given case, justify treating the acts as an indivisible course of conduct actionable in its entirety, notwithstanding that the conduct occurred partially outside and partially inside the limitations period.” (Aryeh v. Canon Business Solutions, Inc., supra, 55 Cal.4th at p. 1198.)

Plaintiffs also argue that “Defendant’s tortious interference is subject to continuous accrual.” (Plaintiffs’ Brief at p. 7:8-9.) “[U]nder the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.” (Aryeh v. Canon Business Solutions, Inc., supra, 55 Cal.4th at p. 1192.) “Generally speaking, continuous accrual applies whenever there is a continuing or recurring obligation: When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period. Because each new breach of such an obligation provides all the elements of a claim—wrongdoing, harm, and causation—each may be treated as an independently actionable wrong with its own time limit for recovery.” (Id. at p. 1199 [internal quotations and citations omitted].)

Plaintiffs argue that “Powers was subject to a continuing obligation to pay Plaintiffs’ monetary judgment against him. And Champlin engaged in a series of related acts that interfered with that continuing obligation that Powers owed to Plaintiffs. Champlin’s January 2019 concealment and related lies are an actionable interference with Plaintiffs’ collection efforts which is subject to its own limitations period under the continuous accrual doctrine.” (Plaintiffs’ Brief at p. 7:15-19.)

In the opposition, Defendant asserts that “[t]he continuous accrual theory has no application here.” (Opp’n at p. 7:2.) As discussed, Plaintiff’s Complaint alleges causes of action for intentional interference with contractual relations and intentional interference with prospective economic benefit. Defendant cites to Jenni Rivera Enterprises, LLC v. Latin World Entertainment Holdings, Inc. (2019) 36 Cal.App.5th 766, 787, noting that the Court of Appeal in that case found that “the tort of interference with a contractual relationship is complete upon the simultaneous occurrence of each element of the tort and that individual elements of the tort occurring later in time do not relate back to conduct that completed the tort outside the period of limitations.” However, the Jenni Court went on to state, “[b]ut that does not mean a plaintiff cannot maintain a cause of action for interference with contractual relations or inducing breach of contract for separate, completed torts with discrete accrual dates. (See 6 Callmann on Unfair Competition, Trademarks & Monopolies, supra, § 23:32 [‘[s]ome cases say that interference with contractual relations is not a continuing tort,’ but ‘that may depend on whether the underlying conduct which creates the interference is of a continuing nature or not’ (fns. omitted)].).” (Id. at p. 787.) As noted by Plaintiffs, Defendant does not appear to deny that
“Plaintiffs’ judgment imposed on Powers continuous obligations…” (Plaintiffs’ Reply at p. 5:3-4, emphasis omitted.)

Defendant also argues that “Plaintiffs lack an iota of non-speculative proof that: (a) as of 2019, Powers had any assets they could have collected; or (b) even if Powers did, Champlin’s 2019 testimony proximately caused an inability to collect. Causation and damages are both essential elements of IICR and IIPEB claims.” (Defendant’s Opp’n at p. 7:20-23, emphasis omitted.) But Defendant does not appear to cite to any evidence to support this argument. Moreover, this argument appears to show, as Plaintiffs assert, that “there are factual disputes regarding what Champlin did to interfere with Plaintiffs’ judgment collection efforts and when Plaintiffs’ claims accrued.” (Plaintiffs’ Reply at p. 2:7-8.)

Based on the foregoing, the Court agrees with Plaintiffs that “it is appropriate to pose to the jury the question of whether all of the elements of Plaintiffs’ claims occurred before December 27, 2018.” (Joint Stipulation, ¶ 2.)[6]

C.     Issue No. 3: Statute of Limitations Question

Lastly, as set forth above, the Joint Stipulation provides that the third issue to be briefed is as follows: “Statute of Limitations Question: What is the appropriate formulation of the verdict form question(s) based on CACI 455 for the Joint Special Verdict Form and why?”

Defendant indicates that his version of the subject verdict form question is as follows:

“Question 3: Timeliness of Lawsuit

a. Before December 27, 2018, did the C&M Parties discover, or know of facts that would have caused a reasonable person to suspect, that they had suffered harm that was caused by someone’s wrongful conduct?

_______ Yes ________ No

b. Would a reasonable and diligent investigation have disclosed, before December 27, 2018, that Mr. Champlin’s interference with the C&M Parties’ collection on their January 2012 Judgment against Philip Richard Powers contributed to the C&M Parties’ harm?

_______ Yes ________ No”

(Defendant’s Ex. 1, Question 3.)

Defendant states that Plaintiff’s version of the subject verdict form question is as follows:

“c. Did the C&M Parties discover before December 27, 2018 (or would a reasonable and diligent investigation have shown before December 27, 2018) that Mr. Champlin’s actions interfered with either the C&M Parties’ efforts to collect on their January 2012 Judgment against Mr. Powers or the C&M Parties’ economic relationship with Powers?

(See Instruction No. 455)

_______ Yes ________ No” 

(Defendant’s Ex. 2, Question 3(c).)

            Defendant asserts that his version “follows CACI No. VF-410’s Directions for Use…” (Defendant’s Brief at p. 4:3.) Judicial Council of California Civil Jury Instruction VF-410 provides as follows:

“1. Did [name of plaintiff]’s claimed harm occur before [insert date from applicable statute of limitations]?

_______ Yes ________ No

If your answer to question 1 is yes, then answer question 2. If you answered no, stop here, answer no further questions, and have the presiding juror sign and date this form.

2. Before [insert date from applicable statute of limitations], did [name of plaintiff] discover, or know of facts that would have caused a reasonable person to suspect, that [he/she/nonbinary pronoun/it] had suffered harm that was caused by someone’s wrongful conduct?

_______ Yes ________ No

[or]

2. Would a reasonable and diligent investigation have disclosed before [insert date from applicable statute of limitations] that [specify factual basis for cause of action] contributed to [name of plaintiff]’s harm?

_______ Yes ________ No.”

Defendant notes that the “Directions for Use” for CACI VF-410 provides, inter alia, that “[i]f both delayed discovery and nondiscovery despite reasonable investigation are at issue, use both options and renumber them as question 2 and question 3.”

Defendant also argues that his version is the correct one because it “comports with CACI No. 455, which also contemplates a two-step inquiry in certain delayed discovery situations.” (Defendant’s Brief at p. 4:6-7.) CACI No. 455 provides as follows:

“If [name of defendant] proves that [name of plaintiff]’s claimed harm occurred before [insert date from applicable statute of limitations], [name of plaintiff]’s lawsuit was still filed on time if [name of plaintiff] proves that before that date,

[[name of plaintiff] did not discover, and did not know of facts that would have caused a reasonable person to suspect, that [he/she/nonbinary pronoun/it] had suffered harm that was caused by someone’s wrongful conduct.]

[or]

[[name of plaintiff] did not discover, and a reasonable and diligent investigation would not have disclosed, that [specify factual basis for cause of action] contributed to [name of plaintiff]’s harm.].”

Defendant asserts that “Plaintiffs attempt to ‘combine’ both parts of CACI No. 455 into a single query, Question 3(c). This is improper. Plaintiff’s Question 3(c) effectively eliminates the concept of inquiry notice, as set forth in Champlin’s Question 3(a), which the jury needs to consider to determine when Plaintiffs should have commenced their reasonably diligent investigation.” (Defendant’s Brief at p. 6:8-11.)

In their opposition brief, Plaintiffs state that they “agree to separate the two options for question 2 into separate queries, and also propose separate queries for each of Plaintiffs’ IICR and IIPEB claims. Plaintiffs thus propose the below revised formulation of the verdict form questions on the discovery rule…

a. Before December 27, 2018, did the C&M Parties discover, or know of facts that would have caused a reasonable person to suspect, that Mr. Champlin intentionally interfered with the C&M Parties’ efforts to collect on their January 2012 Judgment against Mr. Powers?

b. Before December 27, 2018, did the C&M Parties discover, or know of facts that would have caused a reasonable person to suspect, that Mr. Champlin intentionally interfered with the C&M Parties’ economic relationship with Mr. Powers?

c. Would a reasonable and diligent investigation have disclosed before December 27, 2018, that Mr. Champlin intentionally interfered with the C&M Parties’ efforts to collect on their January 2012 Judgment against Mr. Powers?

d. Would a reasonable and diligent investigation have disclosed before December 27, 2018, that Mr. Champlin intentionally interfered with the C&M Parties’ economic relationship with Powers? (Plaintiffs’ Opp’n at p. 4:17-5:4.)

Plaintiffs argue that Defendant’s use of the language “someone’s wrongful conduct” in his version of the verdict form question (which is also contained in CACI VF-410) risks confusing the jury, because “Plaintiffs previously sued different defendants on different causes of action based on conduct entirely different from Mr. Champlin’s conduct at issue here.” (Plaintiff’s Opp’n at p. 6:6-7.) Plaintiffs assert that it is therefore necessary to “modify the discovery rule question to refer to the specific facts that Plaintiffs may have known which would suffice to put them on inquiry notice as to their claims at bar.” (Plaintiffs’ Opp’n at p. 8:18-19.)

Defendant counters that a “Yes” answer to their Question 3(a) “simply means that the jury proceeds to Question 3(b) and decides whether ‘a reasonable and diligent’ investigation would have disclosed Champlin’s interference prior to December 27, 2018…” (Defendant’s Reply at p. 2:22-24.) Defendant asserts that their “Questions 3(a)-(b) follow exactly the rule of the case Plaintiffs claim is governing,” Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797. As noted by Defendant, the Fox Court found that “[s]imply put, in order to employ the discovery rule to delay accrual of a cause of action, a potential plaintiff who suspects that an injury has been wrongfully caused must conduct a reasonable investigation of all potential causes of that injury. If such an investigation would have disclosed a factual basis for a cause of action, the statute of limitations begins to run on that cause of action when the investigation would have brought such information to light. In order to adequately allege facts supporting a theory of delayed discovery, the plaintiff must plead that, despite diligent investigation of the circumstances of the injury, he or she could not have reasonably discovered facts supporting the cause of action within the applicable statute of limitations period.” (Id. at pp. 808-809.)  

The Court agrees with Defendant that Question 3 of his proposed special verdict form is in line with Fox. In addition, as noted by Defendant, his version follows CACI VF-410.  

In his brief, Defendant also asserts that “Plaintiffs’ Question 3(a) also includes a redundancy in that it asks the jury to consider whether ‘Mr. Champlin’s actions interfered with either the C&M Parties’ efforts to collect on their January 2012 Judgment against Mr. Powers or the C&M Parties’ economic relationship with Powers…’ However, Plaintiffs have now clarified that their claims for IICR and IIPEB are both based entirely on the 2012 default Powers Judgment. In other words, the Powers Judgment is the only ‘economic relationship’ between Plaintiffs and Powers, so the jury need only consider once the issue of whether Champlin interfered with it.” (Defendant’s Brief at p. 6:13-19, emphasis omitted.) Plaintiffs counter that “[b]ecause Plaintiffs’ IICR and IIPEB claims each require separate elements, the discovery rule questions on the verdict form should address each claim separately, as Plaintiffs proposed.” (Plaintiffs’ Opp’n at p. 9:23-25.) Defendant does not appear to respond to or dispute this point in his reply.

Based on the foregoing, the Court agrees with Defendant that Question 3(a) of his proposed special verdict form is the appropriate formulation of the verdict form question. The Court finds that Defendant’s Question 3(b) should be revised to ask about discovery of Plaintiffs’ two causes of action separately, as proposed by Plaintiffs.

Conclusion 

The Court’s conclusions pertaining to the “Joint Stipulation Re Issues to be Briefed” are set forth above.

Plaintiffs are ordered to give notice of this Order. 

DATED:  December 3, 2024                    ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court