Judge: Virginia Keeny, Case: 20VECV00119, Date: 2022-12-28 Tentative Ruling


Case Number: 20VECV00119    Hearing Date: December 28, 2022    Dept: W

HSIU-FANG LAI, et al. vs PARADISE LODGE WINNETKA, INC.

 

PLAINTIFFS’ MOTION TO CONTINUE CLAIMS AGAINST PI LIEN FONG’S PERSONAL REPRESENTATIVE

 

Date of Hearing:        December 28, 2022              Trial Date:       October 23, 2023

Department:              W                                            Case No.:        20VECV00119

 

Moving Party:            Plaintiffs Hsin-Hsiao Scott Wang and Hsiu-Fang Lai

Responding Party:     Defendants Paradise Lodge Winnetka, Inc.; 20128 Roscoe Boulevard, LLC; Paradise Lodge General Partnership; Pi Lien Fong; Minghua Fong; Ming-Hui Fong; Allison Baskett; Mu- Lan Kuo; and Martin Kuo

 

BACKGROUND

 

Plaintiffs allege they entered into a joint venture whereby Plaintiff Hsiu-Fang Lai, Defendant Pi Lien Fong, and Defendants Martin C. Kuo and Mulan Kuo each contributed $200,000 in exchange for a one-third ownership interest in the Motel. Plaintiffs further allege the Defendants managed the operations of the Motel to the exclusion of the Plaintiffs and as part of their misappropriation of the revenues generated by the business, the Defendants formed a number of business entities, including defendant entities Paradise Lodge Winnetka, Inc., 20128 Roscoe Boulevard, LLC, and Paradise Lodge General Partnership. Plaintiffs initiated this lawsuit on January 28, 2020.

 

On February 24, 2020, Plaintiffs Hsui-Fang Lai and Hsin-Hsiao (Scott) Wang filed a First Amended Complaint against Paradise Lodge Winnetka, Inc., 20128 Roscoe Boulevard, LLC, Paradise Lodge General Partnership, Pi Lien Fong, Ming-Hua Fong, Allison Baskett, and Mu-Lan Kuo Martin Kuo asserting causes of action for (1) Partition of Real Property; (2) Accounting; (3) Breach of Fiduciary Duty; (4) Breach of Partnership Agreement; (5) Declaratory Relief; and (6) Unjust Enrichment.

 

On April 20, 2020, default was entered against Defendants 20128 Roscoe Boulevard, LLC and Paradise Lodge Winnetka, Inc. On April 22, 2020 and April 23, 2020, default was entered against Defendants Paradise Lodge General Partnership and Pi Lien Fong respectively. The default was set aside on January 27, 2021.

 

On May 13, 2020, Defendants Paradise Lodge Winnetka, Inc.; 20128 Roscoe Boulevard, LLC; Paradise Lodge General Partnership; Pi Lien Fong; Minghua Fong; Ming-Hui Fong; Allison Baskett; Mu-Lan Kuo; and Martin Kuo filed an answer to the FAC.

 

[Tentative] Ruling

 

Plaintiffs’ Motion to Continue Claims Against Pi Lie Fong’s Personal Representative is GRANTED or CONTINUED. 

 

REQUEST FOR JUDICIAL NOTICE

 

Plaintiffs request this court take judicial notice of the following documents: (1) Ex Parte Petition for Letters of Special Administration (Venezia Decl., Exh. B); (2) Order for Probate – Order Appointing Special Administrator (Venezia Decl., Exh. C); (3) Creditor’s Claim (Venezia Decl., Exh. D); (4) Proof of Service for Creditor’s Claim (Venezia Decl., Exh. E); and (5) Letters – Special Administration (Venezia Decl., Exh. F).

 

The court grants Plaintiffs’ request for judicial notice.

 

DISCUSSION

 

Plaintiffs Hsin-Hsiao Scott Wang and Hsiu-Fang Lai move this court to allow Plaintiffs to continue their claims against Defendant Pi Lien Fong’s estate and personal representative. Plaintiffs make the motion pursuant to Code of Civil Procedure section 377.41 on the grounds Plaintiffs have properly filed and served their claims in Pi Lien Fong’s probate case, which have been ignored and are thus treated as rejected, in compliance with the requirements of Part 4 of Division 7 of the Probate Code.

 

Defendant Ming-Hua Fong was named as the personal representative of the Estate of Pi-Lien Fong on December 2, 2022 and Letters of Administration were issued December 9, 2022, granting Ms. Fong general powers to administer the Estate. (Fong Opp., Exh. A.) Defendant Fong argues Plaintiffs’ failure to comply with the Probate Code governing creditor claims bars them from continuing claims against the Estate. Specifically, Plaintiffs’ creditor claims were not timely filed and therefore, the statute of limitations expired to bring or continue an action against a decedent.

 

Defendants spend much time on Code of Civil Procedure section 366.2(a),  which governs the statute of limitations for claims against a person who dies before a claim is filed. That section has no application here.  Pi Lien Fong was a named defendant in this lawsuit at the time of her death in February 2021.  The applicable statute is found at Title 3, Chapter 1, Article 4, “Cause of Action Against Decedent,” and specifically Section 377.41 of the Code of Civil Procedure.  That section provides:

 

On motion, the court shall allow a pending action or proceeding against the decedent that does not abate to be continued against the decedent’s personal representative or, to the extent provided by statue, against the decedent’s successor in interest, expect that the court may not permit an action or proceeding to be continued against the personal representative unless proof of compliance with Part 4 (commencing with Section 9000) of Division 7 of the probate Code governing creditor claims is first made.

 

“In an action against the decedent’s personal representative or successor in interest on a cause of action against the decedent, all damages that might have been recovered against the decedent had the decedent lived are fully recoverable except punitive or exemplary damages.”  (Witkin, Summary of California Law, Wills and Probate (11th Ed. 2017) §562, p 616.)  Neither party has cited the court to any case that imposes a new statute of limitations rule on pending cases that are allowed to proceed under Section 377.41 or to apply Section 366.2(a) to pending litigation.

 

Neither party argues that the claim against Pi Lien Fong abated at the time of her death.  Therefore, the sole question before the court is whether plaintiff complied with Part 4 of Division 7 of the Probate Code governing creditor claims. 

 

In the instant case, it appears uncontroverted that Pi Lien Fong’s heirs did not open a probate proceeding, at least initially.  Thus, Section 9100 of the Probate Code, requiring a creditor to file a claim within a certain time period, does not apply, since that section presupposes the appointment of a personal representative or certain notice being given to the creditor after a probate action has been opened. Apparently wanting to speed along the process of having a personal representative appointed so that the action could proceed in civil court against the estate, plaintiff Scott Wang petitioned the Probate Court on February 14, 2022 for special letters of administration. (Exh. B to moving papers.)  On February 16, 2022, the probate court granted the petition, appointing Mr. Wang as a special administrator for the estate with the sole power to accept service of creditor claims.  (Exh. C to moving papers.) On February 16, 2022, Plaintiffs filed their claims with the probate court, and the next day, served the claims on Mr. Wang, consistent with his appointment as special administrator.  Exhs. D–E. Ms. Fong’s estate has taken no action in response to the filing of Plaintiffs’ claims.

 

Plaintiff relies on Section 9150 of the Probate Code which relates to filing of creditor claims.  That section provides that “(a) A claim may be filed by the creditor or a person acting on behalf of the creditor; (b) A claim shall be filed with the court and a copy shall be served on the personal representative, or an a person who is later appointed and qualified as personal representative. (c) service of the claim on the personal representative shall be made within the later of 30 days of the  filing of the claim or four months after letters issue to a personal representative with general powers.  Service shall not be required after the claim has been allowed or rejected. (d) if the Creditor does not file the claim with the court and serve the claim on the personal representative as provided in this section, the claim shall be invalid.”  Section 9151 provides that the claim shall be supported by the affidavit of the creditor.  Section 9256 provides that “If within 30 days after a claim is filed the personal representative or the court or judge has refused or neglected to act on the claim, the refusal or neglect may, at the option of the creditor, be deemed equivalent to giving  a notice of rejection on the 30th day.” 

 

The court agrees that plaintiff has complied with the requirements of the Probate Code for presentation of a creditors’ claim under the circumstances.  As required by Section 9150, plaintiff filed a copy of the claim with the court, after initiating probate proceedings with a petition to appoint a special administrator  on February 14, 2022.  On February 15, the court appointed Scott Wang as the special administrator with the sole powers to accept  creditors’ claims.  On February 16, plaintiffs filed their creditors claim with supporting affidavit with the court in the probate proceeding initiated two days prior.  The claim was served on the special administrator, Scott Wang, on February 17. 

 

The court concludes that the claim was properly served, when it was served on Scott Wang, as the special administrator appointed to accept service of claims.  To find otherwise would render the probate court’s order on February 15 a nullity, and the court has no reason to conclude that a court issued an order without purpose or effect.  Because no action was taken by Scott Wang or the court to accept the claim, the claim may be deemed rejected by the creditor under Section 9256.  Plaintiffs, the creditors, have elected to treat the inaction as a rejection and may proceed against the estate in this action by substituting the personal representative of the estate for Pi Lien Fong.  Estate of  Holdoway  (2019)40 Cal.App.5th 1049, is instructive on this point.  There a creditor also initiated a probate action so as to have a representative appointed to accept the creditor’s own claim.  The court pointed out that the filing requirements imposed by Section 9150 were minimal: “Everett's creditor's claim was filed before a personal representative was appointed. But the Probate Code requires only that a creditor's claim be “filed with the court.” (Prob. Code, § 9150, subd. (b).) The claim must be served on the personal representative ‘within the later of 30 days of the filing of the claim or four months after letters issue to a personal representative with general powers.’ (Prob. Code, § 9150, subd. (c).) The latter clause in this provision allows for a representative appointed after the claim is filed.” 

 

Nonetheless, defendants argue that Scott Wang was never formally appointed as the personal representative with issuance of letters, and that therefore the claim has never been properly served.  However, Section 9150 allows not only  for service on someone already appointed as the personal representative, but also on “a person who is later appointed and qualified as a personal representative.”  Ms. Ming Fong is in the process of being appointed the personal representative.  There can be no doubt but that the claim was served on Ming Fong, since the claim was part of the Motion to Continue Claims served on July 7, 2022 on Ming Fong’s counsel in this case.  Apparently, the letters have still not issued to Ms. Fong, formally appointing her as personal representative.  At such time, plaintiffs can serve their claim yet again on Ms. Fong, as long as they do so within four months of issuance of the letters.  As the claim is for $10 million, the court assumes Ms. Fong will reject it, but if she insists at the hearing on waiting for issuance of the letters before she is re-served with the claim, the court will so allow.  In the meanwhile, the court will allow this case to proceed and will substitute Ms. Fong as personal representative at the appropriate time.