Judge Thomas Falls, Case 20PSCV00794 2023-05-01 Tentative Ruling

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RE: Colonel R.M. Baker Home For Retired Ministers v. Chang Soon Lee et al. (20PSCV00794)

Plaintiff Colonel R.M. Baker Home for Retired Minister’s MOTION FOR SUMMARY JUDGMENT ON FIRST AMENDED COMPLAINT

Plaintiff Colonel R.M. Baker Home for Retired Minister’s MOTION FOR SUMMARY JUDGMENT ON FIRST AMENDED COMPLAINT is GRANTED.

This is an action for declaratory relief. Plaintiff Colonel R.M. Baker Home for Retired Ministers (“Plaintiff”) owns and operates a multi-unit retirement home for retired ministers. According to Plaintiff, Defendant Chang Soon Lee is a resident at Baker Home who claims to also be a voting member of the Baker Corporation. However, the governing documents of the Baker Corporation and Defendants’ respective residency contracts do not confer any right to vote for the Baker Home board of directors or otherwise participate in corporate governance.

On November 16, 2020, Plaintiff filed suit against Defendant Lee and Does 1-100 for declaratory relief.

On November 23, 2020, Defendant(s) in this instant case filed suit against Plaintiff in another case entitled Chang Soon Lee, et al. v. Colonel R.M. Baker Home For Retired Ministers (Case No.: 20STLC09779).

On December 14, 2020, the court determined cases 20PSCV00794 and 20STLC09779 are related, and, therefore, consolidated the cases.

On March 8, 2023, Plaintiff filed its First Amended Complaint For Declaratory Relief (“FAC”).

The law of summary judgment provides courts “a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) In reviewing a motion for summary judgment, courts employ a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294) (emphasis added). “The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).)

A moving defendant bears the initial burden of production to show that one or more elements of the cause of action cannot be established or that there is a complete defense to the cause of action, at which point the burden shifts to the plaintiff to make a prima facie showing of the existence of a triable issue. (Code Civ. Proc., § 437c, subd. (p)(2).) “The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” (Code Civ. Proc., § 437c, subd. (b)(1).)

The opposing party may not rely on the mere allegations or denials of the pleadings, but instead must set forth the specific facts showing that a triable issue exists as to that cause of action or a defense thereto. (Aguilar, supra, at p. 849.) Specifically, “[t]he opposition, where appropriate, shall consist of affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” (Code Civ. Proc., § 437c, subd. (2).)

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; see also Hinesley, supra, 135 Cal.App.4th at p. 294 [The court must “view the evidence in the light most favorable to the opposing party and accept all inferences reasonably drawn therefrom.”].) In determining whether the papers show that there is a triable issue as to any material fact, the court shall consider all of the evidence set forth in the moving papers, except that as to which objections have been made and sustained, and all inferences reasonable deducible from such evidence. (Hayman v. Block (1986) 176 Cal.App.3d 629, 639.)

As a prefatory matter, the court must address Defendants’ argument that Plaintiff purportedly provided 74-day notice of the motion rather than the statutory require 75-day notice.

California Code of Civil Procedure section 437c, subdivision (a)(2) provides that notice of a motion for summary judgment “shall be served on all other parties to the action at least 75 days before the time appointed for hearing.... If the notice is served by ... express mail ... the required 75–day period of notice shall be increased by two court days.” (emphasis added). This 75-day notice period is mandatory. (See CCP § 437c(a)(2).)

Here, 77 days (as service was via electronic service and mail) from the March 28, 2023 hearing date is Tuesday, January 10, 2023. According to the proof of service attached to the motion, the motion was served on January 10, 2023. To the extent that Defendants argue certain days are excluded (such as weekends), that is in inaccurate reading of the statute. The statute uses the word “days” not “court days.” If the days to be counted are “days” or “calendar days” (as an MSJ does), then weekends and judicial holidays are included in the counting. (See Iverson v. Superior Court (1985) 167 Cal.App.3d 544, 548 [“Days” means calendar days, not court days.].) Accordingly, as all days are included in the counting, then service was due by January 10, 2023, which was accomplished by Plaintiff.

Defendants object to portions of BYRON HAYES, JR.’s (expert who also prepared the 2017 amendment to Baker Home’s article of incorporation) and Karen D. Moore’s (corporate secretary of the Baker Home) declarations on the grounds that they lack foundation, are irrelevant, prejudicial, inadmissible hearsay, and/or lack personal knowledge.

Plaintiff objects to Defense Counsel Moon’s declaration, which cites and contains a portion of Cindy Parlier’s deposition (Plaintiff’s PMK) on the grounds that the evidence is irrelevant.

The court agrees that the excerpts are irrelevant because Parlier stated that the resident members were the only “stakeholders,” but stakeholders do not have voting rights, as Defendants are attempting to allege. Therefore, even if Defendants are stakeholders, that is irrelevant to adjudicate the instant issue of statutory membership (i.e., have voting rights).

Objection No. 7 is OVERRULED because it goes to the issue of membership (thus it is both irrelevant and not conclusive).

The issue presented in the instant MSJ—as framed by the FAC—is whether Defendants, as residents of Baker Home, are or are not members of the Baker Corporation. (See Notice of Motion p. 2:3-7.)

Before engaging in the parties’ respective evidentiary burdens, the court examines the articles of incorporation and other pertinent corporate documents, as they are relied upon by both parties and/or undisputed by Defendants in their response to Plaintiff’s Separate Statement of Undisputed Facts (“SSUF”).

The Baker Corporation was formed in 1911. The corporation’s article of incorporation provided that nine Board of Directors were appointed to serve for the Baker Corporation. (‘Separately Bound Compendium Of Evidence In Support Of Motion For Summary Judgment On First Amended Complaint [Rule of Court 3.1350(g)’ (“Plaintiff’s Evidence”), Ex. 2, p. 29 of 218 of PDF [provides names of the nine initial board of directors.].) The 1911 Articles provided that subsequent board members were to be elected or ratified by the Church of the United Brethren In Christ, California Conference (“UBC”) at their annual meeting. (Id. at p. 28 [“And at the Annual Conference of said church for the year 1911, and at each Annual Conference thereafter, the said conference shall elect a Board of Directors.”].) Then, in 1944, there was another amendment that restated that the board members of the Baker Corporation were to be elected or ratified by the Church of the UBC at their annual meeting. (SSUF No. 9.) Thereafter, the 1954 Amendment reiterated that the Board of Directors of the Baker Corporation was to be elected by the annual conference of the Evangelical UBC. (SSUF No. 13.)

Following the 1954 amendment was the 1971 amendment to the Articles, which is where the voting mechanism appears to have changed.

The 1971 amendment provided “that the Board of Directors of this corporation shall be elected by the membership of said corporation.” (Plaintiff’s Evidence, Ex. 6, p. 177 of 218 of PDF) (emphasis added). Consequently, the 1971 amendment changed the prior practice by divesting the church annual conference with the power of electing the board of directors for the Baker Corporation and now vesting such power to the “membership of said corporation.”

Finally, in 2017, the current amendment to the articles of incorporation was filed. The 2017 amendment provides that the Baker Corporation “shall have no members. All rights which would otherwise vest in the members shall vest in the Board.” (Plaintiff’s Evidence, Ex. 11, p. 207 of 218 of PDF.)

Plaintiff argues that the evidence indicates that since none of the governing documents expressly state that Defendants are members or have a membership of said corporation, then Defendants are merely members of the Baker Home, such that they have no right to elect board members nor given membership in the Baker Corporation.

Therefore, as the amendments do not provide the residents (Defendants) of the Baker Home with any right to elect board members, then Plaintiff has satisfied their evidentiary burden to indicate that there are no triable issues of material fact as to whether Defendants had voting rights.

In Opposition, Defendants point to an amendment which Plaintiff did not mention either in its motion nor Reply: The 2011 Articles. In the IRS Form 990 filed with the California Attorney General’s office dated November 13, 2012 (for year 2011) and November 18, 2017 (for year 2016), Parlier stated that “Governance decisions” of Baker Home are “reserved to (or subject to approval by)” members “other than the governing body.” Thus, Defendants argue that since Defendants are referred to as “members,” then they are members of the Corporation.

Here, the court finds Defendants’ argument misplaced. Sure, Defendants (as residents) are referred to as members, but they are done so in the context of their professional standing as “clergy” members, not as corporate members. (See Plaintiff’s Evidence, Ex. 3.20 [2022 Handbook For Residents], p. 145 of 218 of PDF [“Preference for Residency in the Home is given first to ordained clergy members of the California-Pacific Annual Conference. Local pastors and diaconal ministers of the California-Pacific Annual Conference, and clergy members of other Annual Conferences, will be considered as space is available and other circumstances permit.”]) (emphasis added); see also Plaintiff’s Evidence, Ex. 3.21 [2015 Handbook for Residents], p. 155 of 218 of PDF.) In fact, this point is conceded by Defendants. (See Opp. 2:13-14 [“Baker Home’s own residence contracts use the word “membership” only in reference to resident members.”].)

As explained by Plaintiff, a statutory “member” of a nonprofit public or mutual benefit corporation is defined as any person who, pursuant to a specific provision of the corporation’s articles or bylaws, has (i) the right to vote for the election of directors on a disposition of all or substantially all of the assets of the corporation, or on a merger or dissolution and/or (ii) any person who is designated as a member in the corporation’s articles or bylaws and, pursuant to a specific provision of the articles or bylaws, has the right to vote on changes to the articles or bylaws. (Corp. Code § 5056.) Here, a review of the bylaws does not indicate that resident Defendants, even if referred to as members, were given any rights to be involved with corporate affairs. Actually, Corporations Code Sections 5332(a) and 7333(a) both clearly provide that a nonprofit public or mutual benefit corporation may refer to persons associated with it as members, even though those persons are not actual members as defined by Corp. Code §5056.[3]

Even taking Defendants’ rationale—which is the mere use of the word “member” qualifies a person as holding “statutory” membership in a corporation, the logic is undermined based on the number of board of directors. According to the Restated Bylaws as amended on July 8, 2017 (Ex. 11, p. 207 of 2018 of PDF), the “authorized number of directors shall be twelve, but at the discretion of the Board the number may be increased to not more than sixteen.” (Id.) But if Defendants are arguing that residents are statutory corporate members, then that would mean there are thirty-six (36) board of directors because there are 36 residents but that is not permitted by the laws because 36 far exceeds the maximum number of 16 directors.

And it should be noted that Defendants do not address these applicable statutes.

Based on the evidence establishing that Defendants were never statutory members, the court is uncertain how Defendants’ second main argument—that the terms Home and Corporation are used interchangeably[4]—bears any significance.[5] Afterall, Defendants argument that “[t]he 2011 Articles admitted resident members into “membership” of Baker Home and 1971 Amendment of Articles gave resident membership statutory membership by vesting the election right to choose directors to membership” falls apart because the 1971 amendment, by its plain and unambiguous reading, did not confer statutory power to residents of the Baker Home. (Opp. p. 3:3-7.)

Therefore, as Defendants did not meet their evidentiary burden to establish that the 1971 amendment conferred upon the clergy members/the residents statutory membership powers, the burden has not been met.

All in all, as the evidence establishes that there is one definition of a statutory member and Defendants have not offered evidence that the term member is otherwise defined, the court finds that there is no triable of material fact as to whether Defendants, as residents/members of the Baker Home, are members of the Baker Corporation. Based on the foregoing, the motion is GRANTED.

[1] The court notes that for a motion for summary judgment, courtesy copies are required. (See https://www.lacourt.org/division/efiling/pdf/Civilefiling_FAQ.pdf.)

[2] Plaintiff did not number the objections; therefore, the court has numbered each objection based on the “box” they appear in.

[3] As stated in Corporations Code section 5332 subdivision (a) specifically states that “[a] corporation may refer to persons associated with it as “members” even though such persons are not members within the meaning of Section 5056; ¿but references to members in this part mean members as defined in Section 505.” (Corp. Code section 5332(a).)”

[4] See Defendants’ Response to Plaintiff’s SSUF No. 7 [“Indeed, the term “Home” has been defined, or used interchangeably, as “the COLONEL R. M. BAKER HOME FOR RETIRED MINISTERS” - the full name of the corporation - in the residents’ Agreements for Membership. (Exh. “C” to ¿’s First Amended Complaint in the related case 20STLC09779 (“FAC”); p’s Exhs. 3.1, 3.2, 3.3, 3.7-3.12, 3.14-18.)”].)

[5] Plaintiff’s Reply does not address Defendants’ point.