Judge Wesley L. Hsu, Case 22PSCV00430 2023-04-18 Tentative Ruling

Defendant LVGEM Hotel Corporation’s Motion for Preliminary Injunction is GRANTED

Plaintiffs Zia Abhari (“Abhari”) and Amir Shamloo (“Shamloo”) (together, “Plaintiffs”) allege as follows: On May 2, 2020, Gordes Hospitality, Inc. (“Gordes”), through Ganyu Huang aka Gary Huang (“Huang”), and Shamloo, with Abhari serving as a silent partner, entered into an “Asset Purchase Agreement” and a “Security Agreement” with Gordes for the transfer of ownership of Hamilton’s Steakhouse (“Hamilton”) from Gordes, as seller, to Plaintiffs, as buyers. On June 18, 2020, LVGEM Hotel Corporation (“LVGEM”), through Huang, and Shamloo, with Abhari serving as a silent partner of Shamloo, entered into a “Lease Agreement” for the lease of the property upon which Hamilton is located. Gordes, LVGEM and Huang have refused to transfer the existing liquor license for Hamilton to Plaintiffs, failed to provide Plaintiffs with the insurance information and have undertaken efforts to deprive Plaintiffs of their real estate leasehold possessory interest in the premises upon which the Hamilton is located.

On January 30, 2023, Plaintiffs filed two “Amendment[s] to Complaint,” wherein Jing Qiu Kwok (“Kwok”) was named in lieu of Doe 1 and Winsome CPA, Inc. (“Winsome”) was named in lieu of Doe 2.

On February 27, 2023, Plaintiffs filed a First Amended Complaint, asserting causes of action against Gordes, LVGEM, Huang, Kwok, Winsome and Does 3-100 for:

“An injunction is a writ or order requiring a person to refrain from a particular act. It may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court.” (Code Civ. Proc., § 525.) “[A]n injunction may be more completely defined as a writ or order commencing a person either to perform or to refrain from performing a particular act.” (McDowell v. Watson (1997) 59 Cal.App.4^th 1155, 1160.) “A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor.” (Code Civ. Proc., § 527, subd. (a).)

“In determining whether to issue a preliminary injunction, the trial court considers: (1) the likelihood that the moving party will prevail on the merits and (2) the interim harm to the respective parties if an injunction is granted or denied. The moving party must prevail on both factors to obtain an injunction.” (Sahlolbei v. Providence Healthcare, Inc. (2003) 112 Cal.App.4^th 1137, 1145.) “The trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction.” (Butt v. State of California (1992) 4 Cal.4^th 668, 678.) “Generally, weighing these factors lies within the broad discretion of the superior court.” (County of Kern v. T.C.E.F., Inc. (2016) 246 Cal.App.4^th 301, 315.)

LVGEM moves the court, per Code of Civil Procedure § 526, subdivisions (a)(2)-(6)[1] and 527[2], to restrain Plaintiffs Zia Abhari (“Abhari”) and Amir Shamloo (“Shamloo”) (together, “Plaintiffs”) and their respective agents, employees, or any other person acting in concert with Plaintiffs or on Plaintiffs’ behalf, from restricting LVGEM’s agents, employees, guests, or any other person acting in concert with LVGEM or on LVGEM’s behalf, access to all five ballrooms (i.e., named Barcelona, Monterey, Puebla, La Paz and Covina) located within LVGEM’s hotel’s premises located at 1121 Garvey St., Covina, CA 91724 (“Hotel”) during the pendency of this action. LVGEM also seeks to enjoin Plaintiffs, including their agents, employees, or any other person acting in concert with Plaintiffs or on Plaintiffs’ behalf from attempting to force or forcing LVEGM’s agents, employees, guests, or any other person acting in concert with LVGEM or on LVGEM’s behalf to pay monies to Plaintiffs for accessing all five (or less) ballrooms located within the Hotel.

The court denies LVGEM’s Request for Judicial Notice. The court need not take judicial notice of LVGEM’s ex parte application for Temporary Restraining Order filed March 27, 2023 in this action as they are considered part of the moving papers.

On March 27, 2023, Plaintiffs filed objections to the Declarations of Ella Liu, Serena Wang, Davis Tong, Cecilia Chen and Steve Curren. Plaintiffs fail to identify the specific language deemed objectionable and where in the respective declarations such language is located. The court overrules the objections in their entirety.

The court notes that on March 30, 2023, LVGEM filed a “Notice of Lodgment of Additional Video Evidence in Support of Defendant LVGEM Hotel Corporation’s Motion for Preliminary Injunction,” advising therein that video evidence was being lodged therewith on a flash drive.

The court is not in receipt of the aforementioned flash drive; in any event, the court does not believe that a review of any evidence contained on the aforementioned flash drive is necessary for a ruling on the merits of the motion, as set forth below.

On February 27, 2023, Plaintiffs filed a First Amended Complaint (“FAC”), alleging causes of action against Gordes Hospitality, Inc. (“Gordes”), LVGEM, Ganyu Huang (“Huang”), Jing Qiu Kwok (“Kwok”) and Winsome CPA, Inc. (“Winsome”) for (1) Breach of Written Contract, (2) Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing, (3) Fraud by False Promise, (4) Inducing Breach of Contract, (5) Intentional Interference with Contractual Relations and (6) Negligent Misrepresentation; the fourth through sixth causes of action appear directed against Kwok and Winsome only. (See FAC, ¶¶ 25, 28 and 31). Plaintiffs alleged therein, in relevant part, that: Plaintiffs wanted to purchase Hamilton’s Steakhouse (“Hamilton”) in Covina, which was owned and operated by Gordes and LVGEM (FAC, ¶¶ 10 and 13); that Gordes and LVGEM, through their Chief Executive Officer Huang, entered into three written contracts, (1) an Asset Purchase Agreement, (2) a Security Agreement and (3) a Lease Agreement, with Shamloo, with Abhari serving as Shamloo’s silent partner (Id., ¶¶ 7 and 13); that the aforesaid agreements are attached as Exhibits 1-3 to the original complaint (Id., ¶ 13); that Plaintiffs performed all of the things, timely and satisfactorily that these agreements required of them (Id.); that Gordes, LVGEM and Huang breached each of the aforesaid agreements by, inter alia, failing to transfer the liquor license, failing to provide insurance information and by undertaking efforts to deprive Plaintiffs of their real estate leasehold possessory interest in the premises upon which the Hamilton was located (Id., ¶ 16);

a. Breach of Written Contract/ Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4^th 811, 821.)

LVGEM proffers a declaration from Huang, wherein Huang attests that he never signed the alleged Lease Agreement attached to Plaintiffs’ original complaint (Huang Addt’l Decl., ¶ 2, Exh. 1), that he never authorized Qian to sign an alleged Lease Agreement on June 18, 2020 and was never informed by Qian of its existence (Id., ¶ 3, Exh. 2), that, while he granted a General Power of Attorney (“POA”) to Qian on or about April 18, 2019, the POA expired on April 15, 2020 (Id., ¶ 4, Exh. 3) and that there was never a written lease agreement signed or authorized by him at any time after July 2019 for Plaintiffs occupying Hamilton (Id., ¶ 5.) There does not appear to be any written contract, then, on which Plaintiffs can rely for their contention that they have the “exclusive right” to control access to the Hotel’s ballrooms.

The court notes that there does not appear to be a dispute between the parties regarding Plaintiffs’ access to Hamilton itself (i.e., which is located inside the Hotel); rather, the dispute between the parties is as to whether the reference to “ballroom” in Paragraph 2 of the Lease Agreement pertains to one of the five partitioned ballrooms or the entire ballroom space.

“The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage.” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) “’Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Superior Court (1996) 12 Cal.4^th 631, 638.) “An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Id.)

Again, LVGEM refutes having entered into the written Lease Agreement (see above).

The court determines that LVGEM has shown at least some possibility of ultimately prevailing on the merits against Plaintiffs. LVGEM has made a strong showing of interim harm (see below) and, as such, less must be shown on the instant factor to support the relief sought here.

The relative interim harm that would ensue to LVGEM should injunctive relief be denied far outweighs any harm perceived by Plaintiffs in the event such relief is granted. Plaintiffs do not dispute LVGEM’s evidence that on March 23, 2023, Plaintiffs unilaterally changed the locks on the doors to the ballrooms. (Liu Decl., ¶ 5; Chen Decl., ¶ 3; Curren Decl., ¶ 2; Tong Decl., ¶ 3; Wang Decl., ¶ 5; Liu Addt’l Dec., ¶¶ 4-6; Chen Addt’l Decl., ¶ 4; Tong Addt’l Decl., ¶¶ 4-5). Further, Plaintiffs do not dispute LVGEM’s evidence that there was a church group that was going to be using the ballrooms from March 25-27, 2023, that there are multiple upcoming groups which require use of the ballrooms while staying with the hotel and that this use contributes to the hotel’s business in a very significant way (Liu Decl., ¶ 6; Tong Decl., ¶ 4; Liu Addt’l Decl., ¶ 10); in fact, acting hotel manager Ella Liu attests that “[w]ithout having these ballrooms available to all the Hotel guests, the Hotel will very likely be forced to close down.” (Liu Decl., ¶ 6.) Plaintiffs also do not dispute LVGEM’s evidence that Plaintiffs abandoned operations at Hamilton’s months ago, leaving over $20,000.00 in unpaid utilities. (Wang Decl., ¶ 3; Liu Decl., ¶ 3.)

Plaintiffs have failed to articulate any harm that they would incur if the instant motion were granted; again, it does not appear that Plaintiffs are conducting any operations at Hamilton currently. It would seem that pecuniary compensation would provide adequate relief to any damages Plaintiffs incurred. Plaintiffs’ self-help actions on March 23, 2023 appear to be fueled by spite rather than by any genuine need to protect their interests.

Code of Civil Procedure § 529, subdivision (a) provides, in relevant part, that “[o]n granting an injunction, the court or judge must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction. . .”

The court will hear from the parties at the time of the hearing regarding the issue of an undertaking.

[1] Code of Civil Procedure § 526, subdivisions (a)(2)-(6) read as follows: “(a) An injunction may be granted in the following cases: . . . (2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

(3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual. (4) When pecuniary compensation would not afford adequate relief. (5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief. (6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings.”

[2] Code of Civil Procedure § 527 states, in relevant part, as follows: “A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor. . .”