Judge Theresa M. Traber, Case Number: 22STCV03916, Date: 2025-01-07 Tentative Ruling

Judge: Theresa M. Traber, Case: 22STCV03916, Date: 2025-01-07 Tentative Ruling

Case Number: 22STCV03916 Hearing Date: January 7, 2025 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: January 7, 2025 TRIAL DATE: August 5, 2025

CASE: Daniel Wang, et al., v. 360 Capital Ventures Inc., et al.

CASE NO.: 22STCV03916

MOTION FOR SUMMARY ADJUDICATION

MOVING PARTY: Plaintiffs Daniel Wang and Grace Lee

RESPONDING PARTY(S): Defendant Sachin Patel

CASE HISTORY:

· 01/31/22: Complaint filed.

· 03/21/23: Cross-Complaint filed by 360 Capital Ventures and Sachin Patel as to Plaintiffs and as to Cross-Defendant Rosalind Wang

· 04/13/23: First Amended Complaint filed.

· 07/27/23: First Amended Cross-Complaint filed.

· 11/06/23: Cross-Complaint filed by 360 Capital Ventures, Sachin Patel, and Bayside Builders inc. as to Hudson Insurance Co.

· 05/16/24: Interlocutory Judgment entered on First Amended Cross-Complaint.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a breach of contract action for a construction contract. Plaintiffs allege that Defendants overcharged Plaintiffs relative to the portion of the work completed, and that the work was extremely late, incomplete, and substandard,

Plaintiffs move for summary adjudication against Defendant Sachin Patel.

TENTATIVE RULING:

Plaintiffs’ Motion for Summary Adjudication is DENIED.

DISCUSSION:

Plaintiffs move for summary adjudication against Defendant Sachin Patel.

Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party can show evidentiary support for a pleading or claim and, if not, to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure Section 437c(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, 381-82.)

As to each claim as framed by the complaint, a plaintiff moving for summary judgment satisfies the initial burden to show that there is no defense to a claim by proving each element of the cause of action entitling the party to judgment. (Code Civ Proc. § 437c(p)(1).) 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.) The lack of opposition is not grounds to grant a motion for summary judgment if a movant cannot meet their initial burden of proof. (See Thatcher v. Lucy Stores, Inc. (2000) 79 Cal.App.4th 1081, 1087.)

Once the moving party has met their burden, the burden shifts to the opposing party to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Code Civ. Proc. § 437c(p)(1)-(2).) 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.)

Plaintiffs’ Requests for Judicial Notice

Plaintiffs request that the Court take judicial notice of (1) a February 22, 2022 Statement of Information filed with the California Secretary of State for 360 Capital Ventures, Inc.; (2) a February 22, 2022 Statement of Information filed with the California Secretary of State for 3509 Laurelvale LLC; (3) a February 22, 2022 Statement of Information filed with the California Secretary of State for Walnut & Brass; (4) a February 22, 2022 Statement of Information filed with the California Secretary of State for 6461 Bryn Mawr LLC; (5) a February 22, 2022 Statement of Information filed with the California Secretary of State for Pink Tree Studios 3 LLC; and (6) a February 22, 2022 Statement of Information filed with the California Secretary of State for Pink Tree Studios GS LLC. These requests are GRANTED pursuant to Evidence Code section 452(c) (official acts).

Plaintiffs also request that the Court take judicial notice of (7) a November 2, 2022 Certification of Records from the Contractors’ State License Board certifying no records found listing Sachin Patel d/b/a 360 Capital Ventures Inc. as a licensed California contractor between December 1, 2018 and the date of issue; (8) a November 14, 2022 Certification of Records from the Contractors’ State License Board certifying no records found listing 360 Capital Ventures Inc. as a licensed California contractor between December 1, 2018 and the date of issue; (9) this Court’s March 29, 2024 Minute Order; (10) the California Department of Real Estate license information for Defendant Patel; and (11) the California Secretary of State history detail for 360 Capital Ventures Inc. Plaintiffs’ requests Nos. 7, 8, 10, and 11 are GRANTED pursuant to Evidence Code section 452(c) (official acts). Plaintiffs’ request No. 9 is GRANTED pursuant to Evidence Code section 452(d) (court records).

Plaintiffs’ Supplemental Requests for Judicial Notice

Plaintiffs submit additional requests for judicial notice in connection with their reply in support of this motion. These requests are not relevant to the Court’s ruling and are therefore DENIED. (Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 (“[J]udicial notice . . . is always confined to those matters which are relevant to the issue at hand.”].)

Plaintiffs’ Evidentiary Objections

Plaintiffs object to portions of the evidence presented by Defendant in opposition to this motion. As the evidence to which Plaintiffs object is not material to this ruling, the Court declines to rule on these objections. (Code Civ. Proc. § 437c(q).)

Analysis

Plaintiffs move for summary adjudication against Defendant Patel on the first cause of action for restitution on an alter ego theory. The Court granted Plaintiffs’ Motion for Summary Adjudication on the first cause of action as against Defendant 360 Capital Ventures Inc. on March 29, 2024, finding that the undisputed facts established that the corporate Defendant had performed contractor work without a license, thereby entitling Plaintiffs to disgorgement. (See RJN Exh. 9; March 29, 2024 Minute Order.) The first cause of action alleges that Defendant Patel is also liable for disgorgement of the funds under an alter ego theory. (FAC ¶ 20.)

To hold an owner of a corporation personally liable for the acts of the corporation as an alter ego of the owner, “[f]irst, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539.) “Among the factors to be considered in applying the doctrine are commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other. [citations] Other relevant factors . . . include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers.” (Id. at 538-39.)

Plaintiffs offer evidence tending to support a finding that there is a unity of interest and ownership between 360 Capital Ventures and Defendant Patel. For example, Plaintiffs offer evidence that Defendant Patel was the exclusive point of contact with 360 Capital (Separate Statement of Undisputed Material Fact No. 20), that Defendant Patel was the sole officer and director listed on 360 Capital’s February 22, 2022 Statement of Information (SSUMF No. 31), that Defendant Patel was the only officer to sign grant deeds on 360 Capital’s behalf (Nos. 57, 58, 60), and that 360 Capital frequently listed Defendant Patel’s home address as its business address on bank statements and tax forms. (SSUMF Nos. 33, 34, 41-45.) Defendant Patel has listed his same home address as the business address for various other entities which he controls. (Nos. 36-40.) Plaintiffs also contend that 360 Capital lacked sufficient capital between 2022 and 2024, with bank statements routinely showing low balances or outright deficits (SSUMF Nos. 49, 54, 55) and tax records reporting losses for the years of 2021 and 2022. (SSUMF Nos. 46-47.) The Court notes, however, that this evidence, construed in the light most favorable to the non-moving party, as required on summary adjudication, does not conclusively establish 360 Capital’s undercapitalization, as it does not preclude the existence of other capital or assets to cover 360 Capital’s liabilities. Finally, Plaintiffs offer records showing numerous withdrawals and deposits between Defendant Patel, 360 Capital, and other Patel-controlled business entities. (SSUMF Nos. 50-53) and property transfers between Patel and 360 Capital for which Defendant Patel claimed tax exemptions on the grounds that the transferor and transferee were comprised of the same parties. (SSUMF Nos. 57-61.)

All that said, Plaintiffs fall short in their contention that, assuming a unity of interest exists, an inequitable result would follow absent piercing of the corporate veil. As Plaintiffs state, the alter ego doctrine applies when “conduct amounting to bad faith makes it inequitable for the corporate owner to hide behind the corporate form.” (Sonora Diamond Corp.et al. v. Superior. Ct. (2000) 83 Cal.App.4th 523, 539. Piercing the corporate veil is “justified as an equitable remedy when the shareholders have abused the corporate form to evade individual liability, circumvent a statute, or accomplish a wrongful purpose.” (Hub City Solid Waste Services, Inc. v. City of Compton (2010) 186 Cal.App.4th 1114, 1124.) Although Plaintiffs contend that 360 Capital is undercapitalized by relying on bank and tax records, those materials do not, construed in the light most favorable to the non-moving party, tend to prove that contention in the conclusive manner required on summary adjudication. Plaintiffs’ assertion that 360 Capital Ventures would have no money to cover a judgment against it is not sufficient.

Plaintiffs also argue that Defendant Patel employed 360 Capital to “circumvent” the license statute. Plaintiffs offer no evidence of Defendant Patel’s intent to conceal from Plaintiffs that 360 Capital was not licensed. Nor do Plaintiffs offer evidence of intent to deceive in support of their related contention that 360 Capital never obtained liability insurance, despite representations to the contrary. (See SSUMF Nos. 11, 23.) While the Court held that 360 Capital was improperly identified as the contractor on the construction agreement and that it used a license number belonging to a third-party contractor, nothing in the record before the Court establishes that 360 Capital was formed with the intent to escape California licensing statutes. Indeed, 360 Capital argued in opposition to the motion for summary adjudication against 360 Capital and again in opposing this motion that the true contractor’s name, RE3 Restoration, was inadvertently omitted from the contract and that Plaintiffs worked directly with RE3 Restoration on the construction project. (See RJN Exh. 9, p. 9.) Even if Plaintiff had shepherded sufficient evidence of duplicitous intent, therefore, there would be a triable issue of fact as to that issue.

In bringing their alter ego contentions in the context of a motion for summary adjudication, Plaintiffs’ arguments are necessarily evaluated using the burden-shifting standards and liberal construction of the evidence in favor of the non-moving party that is required for a motion of this nature. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) Plaintiffs’ showing is not sufficient to meet those standards and demonstrate, for the purpose of this motion, that there is no defense to their alter ego theory such that the burden shifts to Defendant to demonstrate a triable issue of fact. In so ruling, the Court does not categorically reject Plaintiffs’ alter ego theory: the Court merely finds that there has been a failure of proof under the strict standards for summary adjudication. This ruling therefore is without prejudice to a subsequent assertion of alter ego liability through another appropriate procedure in this action.

CONCLUSION:

Accordingly, Plaintiffs’ Motion for Summary Adjudication is DENIED.

Moving Parties to give notice.

IT IS SO ORDERED.

Dated: January 7, 2025 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.