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Ruling
JONATHAN MARTIN, ET AL. VS CURATIVE, INC.
Aug 28, 2024 |23STCV22561
Case Number: 23STCV22561 Hearing Date: August 28, 2024 Dept: 32 JONATHAN MARTIN, et al., Plaintiffs, v. CURATIVE, INC., et al., Defendants. Case No.: 23STCV22561 Hearing Date: August 28, 2024 [TENTATIVE] order RE: curative, inc.s motion to compel further responses to discovery BACKGROUND On September 18, 2023, Plaintiffs Jonathan Martin and Paul Scott filed this action against Defendant Curative, Inc. Plaintiffs filed the operative First Amended Complaint (FAC) on November 16, 2023, adding Defendant Fred Turner. The FAC asserts causes of action for (1) fraudulent inducement, (2) breach of contract, and (3) breach of the implied covenant of good faith and fair dealing. The dispute stems from a joint venture to distribute COVID tests in 2020. Plaintiffs owned KorvaLabs, Inc., a laboratory with the capability and infrastructure to develop and distribute COVID tests. Defendant Curative, whose CEO is Defendant Turner, partnered with KorvaLabs, and the two formed the joint venture known as Curative-Korva LLC. Plaintiffs allege that after Turner visited Washington, D.C. to discuss a potential billion-dollar deal with the U.S. military, Defendants sought to reap the profits for themselves and proposed to amend the joint venture accordingly. Because Defendants interests no longer aligned with Plaintiffs, the parties agreed for Curative to buy out Plaintiffs interest in KorvaLabs. Defendants allegedly proposed a reduction in the sales price in exchange for providing Plaintiffs with shares or stock options. These representations were allegedly false and induced Plaintiffs into signing the Stock Purchase Agreement (SPA) containing a lower sales price. Plaintiffs further allege that Defendants breached the agreement by failing to issue shares or stock options. On March 15, 2024, Curative filed a cross-complaint against Martin and Scott, with the operative Second Amended Cross-Complaint (SACC) filed on August 12, 2024. The SACC asserts causes of action for (1) breach of contract representations and warranties, (2) breach of contract noncompete clause, (3) breach of the implied covenant of good faith and fair dealing, (4) fraud affirmative misrepresentation, (5) fraud false promise, and (6) civil conspiracy. The SACC alleges that Martin and Scott led Curative to believe they were selling 100% of KorvaLabs because they were the only shareholders, when in reality, they hid the fact that Anton Toutov was a 20% owner. Martin and Scott allegedly pocketed the sales proceeds for themselves and deprived Toutov of his share. Toutov sued Martin, Scott, and Curative in federal court. Curative settled with Toutov, while Martin and Scott were found liable to Toutov at trial. Curative alleges that Martin and Scott fraudulently represented they were selling 100% of KorvaLabs when they were actually selling 80%. Curative alleges it would not have entered into the SPA had it known this fact. Curative also alleges that Martin and Scott breached the noncompete clause in the SPA by forming a new laboratory business to compete with KorvaLabs and then partnering with Avricore, Curatives competitor. On July 24, 2024, Curative filed the instant motion to compel further responses to its Requests for Production and Special Interrogatories. Martin and Scott filed their opposition on August 15, 2024. Curative filed its reply on August 21, 2024. LEGAL STANDARD Upon receiving responses to its discovery requests, the propounding party may move for an order compelling further responses if the responses are incomplete or evasive, or objections are without merit or too general. (Code Civ. Proc., §§ 2030.300(a), 2031.310(a), 2033.290(a).) MEET AND CONFER A motion to compel further must be accompanied by a meet and confer declaration demonstrating an attempt to resolve the matter informally. (Code Civ. Proc., §§ 2030.300(b)(1), 2031.310(b), 2033.290(b).) The Court finds that Curative has satisfied the meet and confer requirement. (See McCloskey Decl.) DISCUSSION I. Requests for Production a. RFP Nos. 57-58 RFP No. 57 requests all DOCUMENTS and COMMUNICATIONS that YOU may use to support any of YOUR allegations or contentions in the FAC, including, but not limited to, any DOCUMENTS and COMMUNICATIONS that YOU intend to introduce at trial. RFP No. 58 requests all DOCUMENTS and COMMUNICATIONS that support, refute, or RELATE TO any of the claims or allegations in the FAC. The Court does not find good cause to compel Martin and Scott to produce every document related to the FAC. There is no indication that such information would be relevant to the substantive merits of the claims. The RFPs fail to specifically describ[e] each individual item or . . . reasonably particulariz[e] each category of item. (See Code Civ. Proc., § 2031.030(c)(1).) Furthermore, all documents related to the FAC necessarily includes privileged information. The motion is DENIED as to RFP Nos. 57 and 58. b. RFP No. 66 RFP No. 66 seeks ALL DOCUMENTS AND COMMUNICATIONS RELATING TO marketing materials and advertisem*nts by Avrok Biosciences, the company formed by Martin and Scott which allegedly competes with Curative in violation of the SPA. Martin and Scott responded that they would produce an exemplar of any unique versions of Avrok marketing materials or advertisem*nts. Documents and communications related to Avroks marketing and advertising are reasonably calculated to lead to evidence regarding whether Avrok competes with Curative in violation of the SPA. (See Code Civ. Proc., § 2017.010.) This is a material issue implicated in the SACC. The response is evasive and artificially narrows the scope of the request to exemplars of marketing materials. The motion is GRANTED as to RFP No. 66. c. RFP Nos. 72-73 RFP Nos. 72 and 73 seek communications between Martin and Scott or between Martin, Scott, and any other member of KorvaLabs regarding the sale of KorvaLabs. Martin and Scott responded that: After a diligent search, Responding Party has not been able to locate any responsive documents in his possession, custody, or control and believes that no such documents ever existed. The response is a code-compliant statement of inability to comply. (See Code Civ. Proc., §§ 2031.210(a)(2); 2031.230.) Curatives skepticism as to the nonexistence of the requested communications is not a reason to compel a further response. The additional information Curative seeks is not encompassed in these RFPs, nor is the information required as part of a statement of inability to comply. The motion is DENIED as to RFP Nos. 72 and 73. d. RFP No. 77 RFP No. 77 seeks ALL DOCUMENTS evidencing contracts or agreements between [MARTIN] and SCOTT from January 1, 2019 through the present. Curative argues that it needs to ascertain whether Martin and Scott agreed to lie about Toutovs ownership interest in KorvaLabs or agreed to compete with Curative. The court finds that this request is directly relevant to Curatives cross-complaint and affirmative defenses. Any production will be subject to a protective order which addresses any privacy concerns. The motion is GRANTED as to RFP No. 77. II. Special Interrogatories a. SROG No. 3 SROG No. 3 asks Martin to IDENTIFY ALL facts supporting OR refuting YOUR allegation that MARTIN did not provide services as an independent contractor OR consultant for CURATIVE after signing the SPA from May 8, 2020, through October 13, 2020. Martin responded that: Responding Party did not provide any services as an independent contractor OR consultant for Curative after May 8, 2020. This is responsive. Curative argues that Martin should have provided all facts supporting his allegation rather than simply reiterating the allegation. However, it is unclear what facts Martin could have provided to show that he is not something, other than simply stating that he is not. Martin has identified the facts that he contends support his allegation. Curatives belief that there should be more or different facts does not warrant a further response. To the extent Curative has particular information in mind, it can propound specific interrogatories for that information. The motion is DENIED as to SROG No. 3. b. SROG Nos. 5-6 (Scott) and SROG Nos. 9-10 (Martin) SROG No. 5 to Scott and No. 9 to Martin ask them to IDENTIFY ALL DOCUMENTS YOU created OR altered in any way in connection with the sale of KorvaLabs. SROG No. 6 to Scott and No. 10 to Martin ask them to DESCRIBE ALL statements YOU made to DEFENDANTS CONCERNING the accuracy of the DOCUMENTS IDENTIFIED in response to SROG Nos. 5 and 9. Martin and Scott responded that they did not create or alter any documents related to the sale of KorvaLabs. While this facially appears to be a responsive answer, Martins and Scotts opposition suggests that they are withholding responsive information based on a limited interpretation of the SROG. Specifically, Martin and Scott argue that because the terms modified and altered were undefined, [t]he interrogatory was not interpreted to cover any minor change or edit of every draft document during negotiations. (Opp. 18:11-13.) However, the meaning of modify and alter are clear even without specific definitions in the SROGs. Martin and Scott cannot craft their own interpretation of the terms to limit their obligation to respond. Where the nature of the information sought is apparent, the proper solution is to provide an appropriate response, even if the question is somewhat ambiguous. (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783.) The motion is GRANTED as to SROG Nos. 5-6 (Scott) and Nos. 9-10 (Martin). c. SROG No. 15 SROG No. 15 asks Martin to DESCRIBE the nature of the work performed by Avricore. Martin responded that he does not know any more about Avricores business other than what Avricore reports on its website at https://www.avricore.com. This is nonresponsive. The request asks Martin to actually describe Avricores work, not simply explain the scope of his knowledge. Martins response provides no information about Avricore and therefore evades the call of the question. If Martin has information about Avricore, he must provide what he knows. (See Code Civ. Proc., § 2030.220(b) [If an interrogatory cannot be answered completely, it shall be answered to the extent possible].) If Martin knows nothing about Avricore and therefore cannot give any information, he must provide a code-compliant response to that effect. (See id., § 2030.220(c).) The motion is GRANTED as to SROG No. 15. CONCLUSION Curatives motion to compel further responses is GRANTED in part as set forth above. Martin and Scott shall provide further responses to the subject discovery requests within 20 days of this order. Sanctions are denied as the parties acted with substantial justification.
Ruling
HYPE FACTOR, LLC VS JOHN FITZPATRICK, ET AL.
Aug 20, 2024 |19STCV25230
Case Number: 19STCV25230 Hearing Date: August 20, 2024 Dept: 78 Superior Court of California County of Los Angeles Department 78 ¿ HYPE FACTOR, LLC, Plaintiff(s), vs.¿ JOHN FITZPATRICK, et al., Defendant(s).¿ Case No.:¿ 19STCV25230 Hearing Date: August 20, 2024 [TENTATIVE] ORDER CONTINUING MOTION FOR ATTORNEY FEES I. BACKGROUND Plaintiff Hype Factor, LLC (Plaintiff) filed this breach of contract action against defendants John Fitzpatrick (Fitzpatrick), JFF Entertainment, LLC (JFF), and Does 1 through 25 alleging that Plaintiff is an entertainment company that contracted with JFF, principled by Fitzpatrick, in which JFF was to ensure that social media talent Catherine Paiz (Paiz) performed her tasks under the contract. (Compl. ¶ 25.) Fitzpatrick/JFF held themselves out to be Paizs talent manager. (Id. ¶ 21.) Paiz failed to perform under the contract because Fitzpatrick and JFF failed to inform Paiz about the agreement and because JFF/Fizpatrick were not Paizs talent manager. (Id. ¶ 54.) On April 2, 2024, Plaintiff filed a notice of settlement. On April 4, 2024, the previous court ordered the notice of settlement to be blocked from public view. On May 10, 2024, Plaintiffs motion to enforce settlement was granted. On June 27, 2024, defendants Fitzpatrick and JFF (collectively Defendants) filed a notice of appeal from the enforcement settlement. On May 30, 2024, Plaintiff filed the instant motion seeking attorney fees and costs pursuant to the Settlement Agreement. On August 12, 2024, Defendants filed an untimely opposition to the motion. On August 13, 2024, Plaintiff filed a reply. II. DISCUSSION Defendants request a stay on this action pending appeal of the enforce settlement, whereas Plaintiff requests the motion be continued to a date after the September 13, 2024 Status Conference. Defendants argue the motion for attorney fees and costs is premature, and that the matter should be stayed pending Defendants appeal of the enforce settlement. Defendants request to stay the matter is denied. This case matter was reassigned, effective July 5, 2024. The previous court granted Plaintiffs motion to enforce the parties settlement agreement signed on April 1, 2024, wherein the court found that Defendants were not excused from performing under the settlement agreement. (Min. Order, May 10, 2024.) Defendants subsequently filed a notice of appeal. In determining whether a proceeding is embraced in or affected by the appeal, the court considers the appeal and its possible outcomes in relation to the proceeding and its possible results. (Varian Medical Systems, Inc. v. Delfino¿(2005) 35 Cal. 4th 180, 189.) Whether a matter is embraced in or affected by a judgment or order within the meaning of section 916 depends on whether the post-judgment or post-order proceedings on the matter would have any effect on the effectiveness of the appeal. (Ibid.) If it affects the effectiveness of the appeal, the proceeding is stayed; if not, the proceeding is permitted. (Ibid.) Here, the contractual provision for attorney fees and costs do not fall under any exceptions under Code Civ. Proc., section 917.1 in which it shall be stayed. Additionally, the motion for attorney fees and costs as a result of the settlement agreement does not affect the effectiveness of Defendants appeal, even if the matter is related. (See Bankes v. Lucas (1992) 9 Cal. App. 4th 365, 369 [In any event, an award of attorney fees as costs is a collateral matter which is embraced in the action but is not affected by the order from which an appeal is taken.].) Therefore, there is no basis to stay this matter pending Defendants appeal enforcing settlement. Further, Defendants filed their opposition six court days before the hearing, which provides Plaintiff only one day to review the opposition before filing a timely reply. Plaintiffs request for a continuance is well-taken. Although the Court will not stay the action, the Court finds good cause to continue the matter pending resolution of the appeal. III. CONCLUSION The Hearing on Motion for Attorney Fees is CONTINUED to ____________ in Dept. 78 of Stanley Mosk Courthouse. The Court sets a Status Conference Re: Appeal for ______________. Appellants are ordered to file a declaration regarding the status of the appeal at least five (5) court days before the Status Conference Re: Appeal. Moving party is ordered to give notice. DATED: August 19, 2024 __________________________ Hon. Michelle C. Kim Judge of the Superior Court PLEASE TAKE NOTICE: " Parties are encouraged to meet and confer after reading this tentative ruling to see if they can reach an agreement. " If a party intends to submit on this tentative ruling, the party must send an email to the court at SMCDEPT78@lacourt.org with the Subject line SUBMIT followed by the case number. The body of the email must include the hearing date and time, counsels contact information, and the identity of the party submitting. " Unless all parties submit by email to this tentative ruling, the parties should arrange to appear remotely (encouraged) or in person for oral argument. You should assume that others may appear at the hearing to argue. " If the parties neither submit nor appear at hearing, the Court may take the motion off calendar or adopt the tentative ruling as the order of the Court. After the Court has issued a tentative ruling, the Court may prohibit the withdrawal of the subject motion without leave.
Ruling
TRUCONNECT COMMUNICATIONS, INC., A DELAWARE CORPORATION VS THE SANFORD FIRM, A TEXAS BUSINESS ENTITY OF UNKNOWN FORM, ET AL.
Aug 19, 2024 |24STCV04096
Case Number: 24STCV04096 Hearing Date: August 19, 2024 Dept: 55 NATURE OF PROCEEDINGS: Hearing on Special Motion to Strike under CCP Section 425.16 (Anti-SLAPP motion) Plaintiff Truconnect Communications, Inc. (TCI) filed a Complaint against Defendants The Sanford Firm; Winer, Burrit & Tillis LLP; Regie Salgado; Melinda Zambrano; and DOES 1 to DOE 100 (collectively Defendants), alleging that Salgado and Zambrano, brought legally baseless claims against TCI with the intent to inflict economic and reputational damage. The two law firm defendants represented Salgao and Zambrano in the underlying case. The claims, which included false allegations of fraud against the federal government, allegedly led to extensive legal proceedings over seven years, and were ultimately dismissed. Plaintiff contends that the individuals, with significant assistance from their attorneys, maliciously continued to prosecute the lawsuit even after its lack of merit became clear. The causes of action are (1) Malicious Prosecution; and (2) Civil Conspiracy. The Sanford Firm; Winer, Burrit & Tillis LLP; Regie Salgado; Melinda Zambrano (Defendants) special motion to strike. Truconnect Communications, Inc. (Plaintiff), opposes the motion. Factual Background TCI, a cellphone network operator participating in the Lifeline Program, hired Zambrano as a Vice President of Products in March 2015 and Salgado as Director of Inventory Operations in April 2015. (Sanford Decl. ¶ 4; see also 47 U.S.C. § 254(b)(1), (b)(3); 47 C.F.R. § 54.401(a).) In June 2015, Salgado discovered suspicious activity suggesting that TCI might be overcharging the government, including billing for active phones in TCIs possession rather than with subscribers and excessive one-second calls to justify billing. (Zambrano Decl., ¶ 1; Salgado Decl., ¶ 1.) After reporting these concerns to upper management, Zambrano and Salgado confronted Rick Burgar, TCIs Vice President of Revenue Assurance, who dismissed their concerns and instructed Zambrano to mind her own business. (Zambrano Decl., ¶ 2; Salgado Decl., ¶ 2.) Two days later, both were terminated. Subsequently, Zambrano and Salgado filed a qui tam action under seal in federal court, alleging fraud against the government. Although the United States and California declined to intervene, the case proceeded, but the federal court ultimately dismissed the qui tam claim while allowing limited discovery on the wrongful termination claim. (Sanford Decl., ¶¶ 7-11.) TCIs motion for summary judgment on the wrongful termination claim was granted, with the court finding insufficient evidence that the decision-makers were aware of the fraud concerns. (Sanford Decl., ¶¶ 8-11, 14.) The Ninth Circuit upheld the dismissal, denying TCIs request for attorneys fees, though a dissenting opinion argued that genuine issues of material fact existed regarding the whistleblower retaliation claim. (Sanford Decl., ¶ 18; Exhibit H, p. 6.) Legal Standard If a defendant brings a special motion under the anti-SLAPP statute [CCP § 425.16] to strike a cause of action, the trial court evaluates that motion using a two-step process: The first examines the nature of the conduct that underlies the plaintiff's allegations to determine whether the conduct is protected by section 425.16; the second assesses the merits of the plaintiffs claim. [Citation] (Laker v. Board of Trustees of California State University (2019) 32 Cal.App.5th 745, 759.) The defendants first-step burden is to identify the activity each challenged claim rests on and demonstrate that that activity is protected by the anti-SLAPP statute. A claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted. [Citation.] To determine whether a claim arises from protected activity, courts must consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability. [Citation.] Courts then must evaluate whether the defendant has shown any of these actions fall within one or more of the four categories of act[s] protected by the anti-SLAPP statute. [Citations.] (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884 [italics in original].) In the first step of the analysis, the trial court determines whether the cause of action arises from an act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue. [Citation] The first step of the anti-SLAPP analysis turns on two subsidiary questions: (1) What conduct does the challenged cause of action arise[] from; and (2) is that conduct protected activity under the anti-SLAPP statute? [Citation] (Laker, supra, 32 Cal.App.5th. at p.760.) The Supreme Court has clarified that arising from means based on. [Citation] This element of the first step of the anti-SLAPP analysis is sometimes referred to as the nexus requirement. [Citation] Conduct constitutes protected activity, if it falls within one of the categories set out in section 425.16, subdivision (e). Section 425.16, subdivision (e), in turn, applies to (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) in a place open to the public or a public forum in connection with an issue of public interest; or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. [Citation] The defendant bringing the anti-SLAPP motion to strike must make a prima facie showing that the allegations that form the basis of the plaintiff's claims arise from conduct that falls under one of these categories. [Citation] (Ibid.) If the defendant prevails in this step of the analysis, the trial court must then assess the merits of the plaintiff's claim. The Supreme Court has described this second step of the SLAPP analysis as a summary-judgment-like procedure. [Citation.] The plaintiff carries the burden of demonstrating that its claim has at least minimal merit. [Citation.] If the plaintiff is unable to demonstrate that his or her claim has at least minimal merit, then the trial court should deem the cause of action a SLAPP and should strike it. [Citation.] (Ibid.) At this second stage of an anti-SLAPP hearing, the court may consider affidavits, declarations, and their equivalents if it is reasonably possible the proffered evidence set out in those statements will be admissible at trial. Conversely, if the evidence relied upon cannot be admitted at trial, because it is categorically barred or undisputed factual circ*mstances show inadmissibility, the court may not consider it in the face of an objection. If an evidentiary objection is made, the plaintiff may attempt to cure the asserted defect or demonstrate the defect is curable. (Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 949.) The trial court properly considers the evidentiary submissions of both the plaintiff and the defendant, but it may not weigh the credibility or comparative strength of the evidence and must instead simply determine whether the plaintiffs evidence would, if believed by the trier of fact, be sufficient to result in a judgment for plaintiff. (McGarry v. Univ. of San Diego (2007) 154 Cal.App.4th 97, 108-09.) The court accept[s] as true the evidence favorable to the plaintiff [citation] and evaluate[s] the defendants evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law. [Citations.] (Flatley v. Mauro (2006) 39 Cal.4th 299, 326.) Further, whether or not the evidence is in conflict, in the context of a motion to strike under the anti-SLAPP statute, if the plaintiff has presented a sufficient pleading and has presented evidence showing that a prima facie case will be established at trial, the plaintiff is entitled to proceed. (Moore v. Shaw (2004) 116 Cal.App.4th 182, 193.) Only a minimal showing of merit is required. (Robinzine v. Vicory (2006) 143 Cal.App.4th 1416, 1421.) Analysis Request for Judicial Notice The Court GRANTS Defendants request for judicial notice in full. The Court GRANTS Plaintiffs request for judicial notice in full. Evidentiary Objections Plaintiffs objections to Declaration of Brian Sanford: SUSTAINED: None OVERRULED: 1-23 Plaintiffs objections to Declaration of Melinda Zambrano: SUSTAINED: 27 OVERRULED: 24-26 Plaintiffs objections to RJN Exhibits A-F, H: SUSTAINED: None OVERRULED: 28 Defendants objections to Declaration of Nathan Johnson: SUSTAINED: None OVERRULED: 1-3 Plaintiffs objection and request to strike all of the reply evidence is OVERRULED. The Court continues the hearing to allow Plaintiff an opportunity to respond. Plaintiffs objections to Supplemental Declaration of Brian Sanford: SUSTAINED: None OVERRULED: 30-36 Plaintiffs objections to Supplemental Declaration of Regie Salgado SUSTAINED: None OVERRULED: 37 Plaintiffs objections to Supplemental Declaration of Nicholas Woodfield SUSTAINED: None OVERRULED: 39-40 Prong 1: Protected Activity Code of Civil Procedure section 425.16(e) protects (1) any written or oral statement or writing made before a & judicial proceeding, & [and] (2) any written or oral statement or writing made in connection with an issue under consideration or review by a & judicial body. (CCP § 425.16(e)(1)-(2).) Filing documents in a court proceeding is unquestionably petitioning activity under these clauses. (Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 19, [The constitutional right to petition ... includes the basic act of filing litigation or otherwise seeking administrative action.].) [P]lainly read, section 425.16 encompasses any cause of action against a person arising from any statement or writing made in, or in connection with an issue under consideration or review by, an official proceeding or body. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1113.) [T]hese clauses safeguard free speech and petition conduct aimed at advancing self government, as well as conduct aimed at more mundane pursuits. Under the plain terms of the statute it is the context or setting itself that makes the issue a public issue: all that matters is that the First Amendment activity take place in an official proceeding or be made in connection with an issue being reviewed by an official proceeding. (Id. at p.1116.) Thus, protected conduct includes such actions as the filing, funding, and prosecution of a civil action. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.) Defendants argue that Plaintiffs complaint for malicious prosecution and civil conspiracy is subject to Californias anti-SLAPP statute under subdivisions (e)(1) and (e)(2) of section 425.16 because the claims for malicious prosecution and civil conspiracy are based on Defendants actions in filing and maintaining the prior action. Plaintiff provides no arguments in opposition. The Court finds that the claims in this action fall within the protections of the anti-SLAPP statute, as they arise from Defendants petitioning activities, specifically the filing and maintenance of the prior action. As stated in Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741, the Anti-SLAPP statute potentially may apply to every malicious prosecution action, because every such action arises from an underlying lawsuit, or petition to the judicial branch. By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit. [Citation.] (See also Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1113 [plainly read, [Anti-SLAPP]¿encompasses any cause of action against a person arising from any statement or writing made in, or in connection with an issue under consideration or review by, an official proceeding or body].) Thus, prong 1 is satisfied. Prong 2: Probability of Prevailing Because this malicious prosecution action arises from protected activity, the burden shifts to Plaintiff to show that it has a reasonable probability of prevailing on its claim against Defendants. (Dalany v. American Pacific Holding Corporation (1996) 42 Cal.App.4th 822, 827.) A plaintiff must plead and prove three elements to establish the tort of malicious prosecution: a lawsuit (1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice. [Citation.] (Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 872-873.) The issue, then, is whether Plaintiffs have submitted enough evidence on this motion to show that there is a probability that they will be able to show each of these elements. Defendants do not dispute that Plaintiffs can show the first element. Brought without probable cause Plaintiff argues that there was no probable cause to bring the lawsuit, asserting that Defendants knew or should have known that their claims were baseless. Specifically, Plaintiff highlights that Defendants, Zambrano and Salgado, wrongfully claimed to be employed by TCI and brought employment law claims under California law, despite actually being employed by Texas-based Sage Telecom with no connection to California. This discrepancy, according to Plaintiff, undermines the validity of the employment-related claims. Furthermore, Plaintiff points to the extensive government investigations triggered by Defendants allegations, which ultimately resulted in no findings of wrongdoing. The continued prosecution of the claims, despite the absence of any evidence uncovered by these investigations, is presented as a clear indication of a lack of probable cause. Additionally, Plaintiff argues that Defendants failed to identify specific laws or regulations that were violated by TCI, even after multiple opportunities to amend their claims, further demonstrating that there was no reasonable legal basis to pursue the lawsuit. On the other hand, Defendants argue that they had probable cause to file and maintain the prior action against TCI. They assert that probable cause is a legal question, and litigants are protected from being penalized for pursuing claims that are merely unsuccessful but not legally untenable. Defendants claim that they relied in good faith on the advice of their counsel, who, after full disclosure of the facts, advised them that their claims had merit. This reliance on legal counsel, they argue, customarily establishes probable cause as a matter of law. Moreover, Defendants point to the Ninth Circuits majority opinion, which denied TCIs request for attorneys fees, stating that Defendants claims were not frivolous and that there was no evidence of improper motive. (Mot, Exhib. H.) Defendants also highlight that a dissenting opinion in the Ninth Circuit case supported the view that there was a genuine dispute of material fact regarding their whistleblower retaliation claim, further indicating that probable cause existed. (Id.) Plaintiff argues that Defendants cannot rely on the Ninth Circuit case as a basis for establishing probable cause because the issues in the present malicious prosecution case are not identical to those decided by the Ninth Circuit. Plaintiff contends that the Ninth Circuits ruling focused on whether Defendants claims were frivolous under the standards of the False Claims Act (FCA), which differs from the standard for determining probable cause under California law. However, the Court finds that the even if the case is not binding, it may still be relied upon for persuasive value. Plaintiff also argues that Defendants have failed to establish the affirmative defense of good faith reliance on counsels advice after full and fair disclosure of the facts. Plaintiff contends that Defendants did not meet their burden of proof to show they fully informed their counsel of all relevant facts before filing the prior action. Without clear evidence of full disclosure, Plaintiff asserts that Defendants cannot claim they acted in good faith based on their attorneys advice. Additionally, Plaintiff argues that much of Defendants evidence supporting this defense is inadmissible, further weakening their case. Even if the evidence were admissible, Plaintiff contends that Defendants have not addressed the continued prosecution of the action, which is critical in a malicious prosecution claim. Plaintiff also highlights that the lack of probable cause for the initial and continued prosecution of the prior action is evident, especially given that the Defendants knew or should have known that they were not employed by TCI and that their employment had no connection to California, undermining the basis for their claims. Moreover, Plaintiff points out that the governments decision not to intervene in the case after years of investigation further indicates a lack of probable cause. Plaintiff argues that Defendants attempts to explain the governments decision as due to negligence or incompetence are implausible, given the extensive nature of the investigations. Defendants assert that they fully disclosed all relevant facts to their attorneys, both The Employment Law Group (TELG) and The Sanford Firm (TSF), who advised them that their claims against TCI had merit. Defendants contend that there are no genuine factual disputes regarding this reliance on counsel, and they have provided supplemental declarations to clarify that they made full disclosure of the facts, including those related to their employment status. Although Defendants did not initially disclose information about their connection to Sage Telecom, they argue that this omission was not intentional and that it did not affect the legal advice they received. Additionally, they maintain that TCI itself considered Salgado and Zambrano to be its employees, further supporting their claims. Defendants emphasize that even after the disclosure of their employment with Sage, TSF continued to advise them that their claims had merit, which justifies their decision to continue prosecuting the case. Notwithstanding, Defendants argue that they had probable cause to file and maintain the prior action because Salgado and Zambrano had a reasonable basis to believe they were employed by both TCI and Sage, given that joint employment is a recognized legal concept under U.S. law. Joint employment has long been recognized under U.S. law, particularly when separate business entities exert significant control over the same employees and share or co-determine essential terms and conditions of employment. (Hersch, Joint Employment in the United States (2020) 13 It. L. L. e-J.55, 60-62). Under the National Labor Relations Act, this shared control can establish a joint employer relationship. (N.L.R.B. v. Browning-Ferris Indus. of Pennsylvania, Inc. (3d Cir. 1982) 691 F.2d 1117, 1124). In the context of the False Claims Act, an employee only needs to have an employment-like relationship with the defendant to be protected from retaliation. (Ickes v. Nexcare Health Sys., L.L.C. (E.D. Mich. 2016) 178 F.Supp.3d 578, 591). Courts have held that an employee can claim retaliation against a parent company that exercises a high level of control over their employment conditions, thereby establishing a joint employer relationship. (United States ex rel. Rubar v. HaynerHoyt Corp. (N.D.N.Y. 2018) 306 F.Supp.3d 478, 484.) Federal courts have developed an economic control or reality standard to assess such relationships. (Moreau v. Air France (9th Cir. 2004) 356 F.3d 942, 947.) Salgado and Zambrano were presented with offer letters on TCI letterhead, given TCI business cards, used TCI email addresses, and were led to believe their payment was from TCI. They were not informed by TCI that they were actually employed by Sage, and their supervisors were TCI employees. The Johnson brothers, who controlled both TCI and Sage, had the power to hire and fire employees, supervise work schedules, determine payment methods, and maintain employment records, reinforcing the perception that Salgado and Zambrano were TCI employees. Defendants argue that TCIs own actions and initial pleadings, which acknowledged Salgado and Zambrano as TCI employees, provide further probable cause for their claims. The Court finds that Plaintiff has not met its burden of demonstrating a probability of success in proving that Defendants brought the prior action without probable cause. The Court determines that Defendants had a reasonable basis for their belief in their employment status, supported by the presentation of offer letters on TCI letterhead, the use of TCI business cards and email addresses, and their understanding that they were working under TCIs supervision. (Zambrano Supp. Decl., ¶¶ 2-6; Salgado Supp. Decl., ¶¶ 2-6.) Additionally, Defendants sufficiently demonstrated that they reasonably believed they were employed by both TCI and Sage. (Sanford Supp. Decl., ¶ 2 and Exs. A-B.) Defendants also relied in good faith on legal counsel who advised them that their claims had merit. (Zambrano Supp. Decl., ¶¶ 2-3; Salgado Supp. Decl., ¶¶ 2-3; Sanford Supp. Decl., ¶¶ 4-5), and they cited favorable rulings from the Ninth Circuit as further evidence of probable cause. (Sanford Supp. Decl., ¶¶ 6-9, and Ex. C.) Initiated with malice Plaintiff argues that there is a genuine issue of fact as to whether Defendants acted with malice when they initiated the prior action. Plaintiff contends that malice can be inferred from Defendants intentional misrepresentations regarding their employment status, where they falsely claimed to be employed and terminated by TCI, despite documentary evidence and their own admissions showing that they were actually employed by Sage. (TCI RJN Ex. 1.a, pp.5-6, 41-45; Johnson Decl., Ex. 4.) This discrepancy, according to Plaintiff, indicates that Defendants knowingly made false allegations with the intent to harm TCI. Additionally, Plaintiff highlights deposition testimony in which Defendants disparaged government officials as sloppy and lazy and criticized a federal prosecutor, suggesting that these statements reflect Defendants indifference to the truth and further demonstrate malice. (Johnson Decl., Ex. 5 (Zambrano Depo.) at 140:3-4, 140:8-11.) Plaintiff asserts that the combination of these factorsintentional misrepresentations, lack of probable cause, and derogatory comments about the investigationcreates a sufficient basis to question Defendants' motives and to infer malice. On the other hand, Defendants argue that they did not act with malice in initiating the prior action. Defendants argue that lack of malice cannot be inferred from a lack of probable cause alone and cannot be based on speculation. Defendants assert that they initiated the prior action in good faith, believing in the validity of their claims and without any hostility or ill will towards TCI. They further argue that the Ninth Circuits majority opinion in the prior action, which denied TCIs request for attorneys fees on the grounds that the claims were not frivolous and lacked evidence of improper motive, conclusively establishes that they did not act with malice. Additionally, Defendants emphasize that they relied in good faith on the advice of counsel, including The Sanford Firm, which had expertise in qui tam cases and believed in the merits of the claims to the extent that it provided representation on a contingency basis. The Court finds that Plaintiff fails to show that Defendants acted with malice when they initiated the prior action. As discussed above, Defendants believed in good faith that TCI was their employer, and any misunderstanding about their employment status was not due to ill will or an improper motive. (Zambrano Supp. Decl., ¶¶ 2-6; Salgado Supp. Decl., ¶¶ 2-6.) The Court also notes that the Ninth Circuit's denial of TCIs request for attorneys fees further supports the conclusion that Defendants did not act with an improper motive, as the Ninth Circuit found no evidence" of such a motive in its review of the case. (Mot, 16:18-26, quoting DRJN, Ex. H, p. 6.) Additionally, the Court finds that Defendants actions were not clearly unreasonable in light of their reliance on legal counsel and their honest belief in the validity of their claims. (Grindle v. Lorbeer (1987) 196 Cal.App.3d 1461, 1466.) Therefore, the Court concludes that Plaintiff has not met its burden of proving that Defendants acted with malice in bringing the prior action. Based on the foregoing, the Court is inclined to GRANT Defendants special motion to strike. However, given that Defendants presented new evidence on reply, the Court will continue the hearing to allow Plaintiff an opportunity to respond. Conclusion Thus, the Court CONTINUES Defendants special motion to strike given that Defendants introduced new evidence on reply.
Ruling
Aug 20, 2024 |23STCV00634
Case Number: 23STCV00634 Hearing Date: August 20, 2024 Dept: 71 Superior Court of California County of Los Angeles DEPARTMENT 71 TENTATIVE RULING TECHNOLOGY INSURANCE COMPANY, vs. CENTER FOR FAMILY HEALTH & EDUCATION INC. Case No.: 23STCV00634 Hearing Date: August 20, 2024 Defendant Center for Family Health & Education Inc.s motion for summary judgment is denied. Defendant Center for Family Health & Education Inc. (Defendant) moves for summary judgment as to Plaintiff Technology Insurance Companys (Plaintiff) complaint for breach of contract on the basis there are no triable issues of material fact, and Defendant is entitled to judgment as a matter of law. (Notice of Motion, pg. 2.) Background On January 11, 2023, Plaintiff filed a Complaint against Defendant, asserting a cause of action for breach of contract. The complaint alleges that on or about November 4, 2019, Plaintiff provided Defendants Workers Compensation and Employers Liability Insurance coverage (the "2019 Policy"), for the period of 11/4/2019 through 11/4/2020 (but cancelled 7/10/2020), which was subject to an audit and re-computation of its premium. Plaintiff alleges that the 2019 Policy provides that the final premium will be determined by using the actual premium basis and the proper classifications and rates as determined by an audit. Plaintiff claims that the 2019 Policy further obligated Defendants to pay the difference between the estimated and actual premiums after the audit and final premium determined by Plaintiff. Plaintiff alleges that an audit was subsequently performed on the effective policy period for the 2019 Policy. The audit found the premium basis estimate provided by the Defendants to be inaccurate and found the actual audited total premium and fees for the effective policy period for the 2019 Policy to be an additional $40,849.00. Plaintiff alleges that Defendants refused to make any further payments toward the 2019 Policy premium as audited for the 2019 Policy, and thereby Defendants breached the terms of the policy. Defendant filed the instant motion on May 31, 2024. Plaintiff filed its opposition on July 24, 2024. Defendant filed its reply on August 15, 2024. Evidentiary Objections Plaintiffs Objection No. 1 is SUSTAINED on the grounds that it lacks foundation, and it is an improper legal conclusion. Plaintiffs other two Objections are OVERRULED. Request for Judicial Notice Defendants Request for Judicial Notice of the complaint in this matter is GRANTED. Legal Standard The purpose of a motion for summary judgment or summary adjudication is to provide courts with 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.) Code of Civil Procedure section 437c, subdivision (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.) On a motion for summary judgment, the initial burden is always on the moving party to make a prima facia showing that there are no triable issues of material fact. (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication has met his or her burden of showing that a cause of action has no merit if the party has shown 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. (Code Civ. Proc., § 437c(p)(2).) Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. (Id.) If the plaintiff cannot do so, summary judgment should be granted. (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.) When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment. (Avivi, 159 Cal.App.4th at 467; Code Civ. Proc., §437c(c).) Breach of Contract To state a cause of action for breach of contract, a party must plead the existence of a contract, his or her performance of the contract or excuse for nonperformance, the defendants breach and resulting damage. [Citation] (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) Plaintiffs claim rests on the allegation that Defendant breached the policy by failing to pay addition premiums assessed by the auditor. Defendant argues that Plaintiffs claim is defective as a matter of law because Defendant did not have a duty to pay additional premiums for 1099 workers. Defendant also argues it has no obligation under the policy to make an affirmative showing as to whether its employees are independent contractors. As such, Defendant argues it is not in breach of the contract. Defendant submits the following evidence. On or about November 4, 2019, Plaintiff issued the Policy to Defendant, which provided workers compensation coverage, amongst other coverages. ([Undisputed Material Fact (UMF) No. 1] Erigero Decl. ¶ 3, Exh. A [Plaintiffs Complaint ¶ 8]; Landeros Decl., ¶ 3, Exh. B [Policy].) The Policy included the following terms, among others: · the workers compensation benefits payable under the Policy were those Defendant would be required to pay under the applicable workers compensation law, i.e., California law ([UMF No. 3] Landeros Decl. ¶ 3, Exh. B [Policy, ¶ C and ¶ 3.A]); · the premium basis for the Policy included payroll and all other remuneration paid or payable during the policy period for the services of (1) all your officers and employees engaged in work covered by this policy and (2) all other persons engaged in work that could make us liable under Part One (Workers Compensation Insurance) of the Policy ([UMF No. 5] Landeros Decl. ¶ 3, Exh. B. [Policy, Part Five, ¶ C]); and · the final premium was to be determined after the end of the Policy by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by the Policy. ([UMF No. 6] Erigero Decl. ¶ 3, Exh. A [Plaintiffs Complaint ¶ 8]; Landeros Decl. ¶ 3, Exh. B [Policy, Part Five, ¶ E].) Defendant argues that under California law, employers are required to secure workers compensation for employees only, not independent contractors. (Lab. Code §§ 3600, 3700.) Defendant relies on State Compensation Ins. Fund v. Brown (1995) 32 Cal.App.4th 188, where the Court of Appeal interpreted what appears to be the same the policy at play here to determine whether the defendant was obliged to pay insurance premiums for workers the defendant contended were independent contractors. In that matter, State Compensation Insurance Fund sued its former insureds to recover premiums allegedly due on a workers compensation insurance contract. The trial court granted defendants motion summary judgment on the ground they were not contractually obligated to pay the premiums for workers who were not eligible for workers' compensation benefits. In affirming the trial courts grant of the summary judgment, the Court of Appeal held that on summary judgment it was the moving defendants burden to establish that the individuals for whom the defendant contended no premiums was due were independent contractors under the Workers Compensation Act. The Court of Appeal also stated that the defendants had to also show that the individuals status as independent contractors absolved the defendant of contractual liability for premiums. (Id., 200.) The Court of Appeal first examined the S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal. 3d 341 (Borello) factors in order to determine whether the workers were employees or independent contractors. (Id., 202.) After a thorough analysis of the defendants evidence, the Court of Appeal determined that the workers were independent contractors, primarily focusing on the lack of control the defendants had over the workers. (Id., 203.) After the Court of Appeal examined the Borello factors and determined that the workers were independent contractors, it noted that [d]etermining the independent contractor status of the independents is not the end of our task. We must determine if [Defendant] had a contractual obligation to pay premiums for such independent contractors. (Id., 204.) The Court of Appeal held the answer there was, no. Defendants reliance on State Compensation Ins. Funds is unavailing, however. Defendant fails to establish with admissible evidence that the workers for which it is allegedly being charged premiums were independent contractors. As the Court of Appeal expressly stated in State Compensation Ins. Funds, supra, 32 Cal.App.4th at 200, the status of the independents under the Workers Compensation Act was part of the defendants burden on summary judgment. (Id., 200.) Defendant attempts to present Plaintiffs auditors report charging the contested premium, but, putting aside any foundational evidentiary issues presented, the audit, alone, does not offer evidence establishing that the premium being charged is based upon workers who are, in fact, not other persons engaged in work that could make [Plaintiff] liable under Part One of the policy. Moving defendant has simply failed to submit admissible evidence in this motion that it is being charged a premium for workers for whom no premium is owed. In reply, Defendant argues that the audit report relied on sworn statements of Defendant to the federal government of those employees independent contractor status. However, Defendant provided no evidence to support this assertion. Even if it did, in any event, the auditor cannot make a legal determination as to whether the workers are employees or contractors. The court must make this determination after examining the evidence based on the Borello factors, or any other applicable legal test. As such, the evidence is not sufficient to meet Defendants burden on summary judgment to show there are no triable issues of material fact as to whether it breached the contract to pay the premiums, as Defendant has not shown the workers were not eligible for workers compensation benefits. Next, Defendant argues it is not required to make an affirmative showing of independent contractor status because in State Compensation Ins. Fund, the Court of Appeal stated the premium obligation under the Policy is not defined to include all other persons for whom affirmative proof of independent contractor status. (State Compensation Ins. Funds, supra, 32 Cal.App.4th at 205.) However, the quotation is taken out of context, and does not take away from the fact that the status of the workers must first be determined. The Court of Appeal actually stated that Plaintiff cannot seek payment for workers who could not have subjected it to liability for benefits, because it did not define the premium obligation in the contract in this manner (in contrast, for example, with defining the premium obligation under section C(2) as "all other persons for whom you cannot supply affirmative proof of independent contractor status"). (Id., 205.) That Defendant was not contractually obligated to provide proof of the status of the workers is not the basis of the complaint here. In simple terms, the basis of Plaintiffs complaint is that Defendant failed to provide workers compensation benefits to its employees. Defendant, the party moving for summary judgment has the initial burden of proof to show these workers are independent contractors, and thus, it owes no duty to pay. It failed to meet its burden of proof. In the reply, Defendant repeatedly argues that it is Plaintiffs burden to show that the workers are employees and not independent contractors. While this may be Plaintiffs burden at trial, it is Defendants burden on this summary judgment motion. As Defendant failed to meet its burden, the burden did not shift to Plaintiff here. Conclusion Defendants motion for summary judgment is denied. Moving Party to give notice. Dated: August 20, 2024 Hon. Daniel M. Crowley Judge of the Superior Court
Ruling
- USA WASTE OF CALIFORNIA INC vs ALSUMERI, FAHMI
Aug 22, 2024 |CV-23-004103
CV-23-004103 - USA WASTE OF CALIFORNIA INC vs ALSUMERI, FAHMI - Plaintiff's Motion for Terminating Sanctions Against Defendant Fahmi Alsumeri aka Fahmi Abdo Alsumeri an Individual dba Alsumeri Center, Striking his Answer, and Entering Default Against Defendant for Failing to Comply with May 16,2024 Discovery Order – HEARING REQUIRED.Based on the moving papers and the lack of opposition thereto, the Court is inclined to GRANT the motion. Defendant’s conduct in failing to comply with the Court’s 5-16-24 order constitutes misuse of the discovery process (Code Civ. Proc. § 2023.010(d), (g).) Moreover, it appears that the prior sanctions imposed by the Court have not been effective in compelling Defendant to comply with his obligations under the Discovery Act. Under the circ*mstances, therefore, it appears that terminating sanctions are warranted. (Code Civ. Proc. § 2023.030(d).)However, the Court will hear from the parties as to their respective positions on these issues at the time of the hearing.
Ruling
FCS059449 - SAUVAGEAU, DAN, ET AL V ADAMS, SETH, ET AL (DMS)
Aug 23, 2024 |FCS059449
FCS059449The ADAMS’ Motion to Compel SAUVAGEAU’s Further Responses to Form andSpecial Interrogatories, Requests for Admission, and Requests for ProductionTENTATIVE RULINGDefendants SETH ADAMS and JESSICA ADAMS (the “ADAMS”) move to compelPlaintiff DAN SAUVAGEAU (“SAUVAGEAU”) to further respond to Defendants’requests for production, requests for admission, and form and special interrogatoriesserved October 11, 2023.The court has not received opposition to the motion.Meet and Confer Efforts. The court first considers the adequacy of the parties’ effortsto meet and confer to work these issues out before resorting to a motion to compelfurther responses. The trial court has discretion in determining whether adequate meetand confer efforts preceded the filing of the motion. (Obregon v. Superior Court (1998)67 Cal.App.4th 424 [factors include complexity of discovery issues, history of counsel inprior disputes, judge's gut feeling; sending one brief letter 13 days prior to deadline tofile motion was not sufficient attempt].)Code of Civil Procedure section 2016.040 requires a declaration “showing a reasonableand good faith attempt at an informal resolution of each issue presented by the motion”to compel. The ADAMS’ counsel’s declaration accompanying the motion to compelstates that counsel sent the discovery requests at issue on October 11, 2023, receivedobjection-only responses on December 4, 2023, and received material responses onFebruary 2, 2024. (Declaration of Leslee Carroll in Support of Motion at ¶¶ 2-3, 5-8,Exhibits A-E.) The ADAMS sent a meet and confer letter on March 1, 2024. (Id. at ¶10, Exhibit F.) SAUVAGEAU responded and the parties engaged in some discussionthat resulted in SAUVAGEAU providing amended responses on March 22, 2024. (Id. at¶ 13.) The ADAMS considered the amended responses still unsatisfactory and sentSAUVAGEAU another meet and confer letter on April 12, 2024. (Id. at ¶ 19, Exhibit H.)SAUVAGEAU’s counsel responded but no material discussions took place; the ADAMSsent another meet and confer letter on May 17, 2024. (Id. at ¶¶ 20-26, Exhibits I-L.)SAUVAGEAU’s counsel again did not materially respond and expressed that he felt theresponses were adequate. (Id. at ¶ 27, Exhibit M.) The instant motion was filed on May20, 2024.The court finds that Defendants’ efforts to meet and confer were adequate as theparties appear to have reached an impasse.Special Interrogatories. Special Interrogatories #1, 4, 7, 10, 13, 16, 19, 21-22, 24-25,27, 37, 40, 43, 47, 73, 89, and 93. SAUVAGEAU’s several-page narrative laying out hisperception of all that transpired between the parties and his theory of the case, with alist of witnesses at the end, is not a straightforward answer to the ADAMS’ variouscontention interrogatories seeking facts supporting particular aspects of the case.SAUVAGEAU must further respond.Special Interrogatories #2, 5, 8, 11, 14, 17, 41, 44, 48, 51, 55, 58, 61, 74, and 113.SAUVAGEAU’s witness list mentioned above is vague, including an unnamed “buildinginspector.” SAUVAGEAU must further respond.Special Interrogatory #38. SAUVAGEAU’s statement that he, the ADAMS, Cross-Defendant MARC PASQUINI, and “all the workers on site” and “building inspector” arewitnesses to harm is too vague. SAUVAGEAU must further respond.Special Interrogatories #3, 6, 9, 12, 15, 18, 39, 42, 45, 49, 52, 56, 59, 62, 75, 80, 82, 84,86, 88, and 114. SAUVAGEAU “identifies all documents produced to Defendantspreviously and concurrently herewith” in response to these requests for documentssupporting various other responses, each concerning particular topics. This isunacceptably vague and lacking particularity. SAUVAGEAU must further respond.Special Interrogatories #28-30. SAUVAGEAU is not clear about what substantiallyperformed work was paid or unpaid and gives a list “including but not limited to” someparticular items that were “changed and/or unpaid.” This is too vague. SAUVAGEAUmust further respond.Special Interrogatories #31-33. SAUVAGEAU’s response that the ADAMS hiredworkers without his authorization is not responsive to these questions about the workershe employed. SAUVAGEAU must further respond.Special Interrogatories #34-36. SAUVAGEAU does not give intelligible responses. Tothe interrogatory asking for vendors and costs he states he cannot identify persons; tothe one asking for persons he states he cannot identify documents. He again directsthe ADAMS to every document produced, with no particularity. SAUVAGEAU mustfurther respond.Special Interrogatories #46, 50, 53-54, 57, 60. SAUVAGEAU’s reference to alldocuments produced is vague. SAUVAGEAU must further respond.Special Interrogatory #72. SAUVAGEAU’s response that he requires an attorney tounderstand the phrase “work outside the contract” is unresponsive. SAUVAGEAU mustfurther respond.Special Interrogatories #76-78. SAUVAGEAU’s statement that he did not performdefective work suffices to answer these questions contingent on the existence ofdefective work. He need not further respond.Special Interrogatory #90. The ADAMS ask SAUVAGEAU how much profit he expectedto make off particularly named items allegedly taken out of the scope of work. He stateshe generally gets 10% of the contract price and says the ADAMS removed $75,000 ofwork. This is vague. SAUVAGEAU must further respond.Special Interrogatories #96-98. SAUVAGEAU’s narrative and reference to alldocuments are again vague. He must further respond.Special Interrogatories #99, 101-104, 106-108. The ADAMS ask SAUVAGEAU forevery employee and subcontractor that worked on the project, and for thesubcontractors’ scopes of work and outstanding pay owed, with supporting witnessesand documents. He refers them to his narrative and witness list, which is notresponsive. He must further respond.Special Interrogatory #109. The ADAMS ask SAUVAGEAU to tell them how hedetermined the project was worth $750,000 in county planning documents. He says itwas an estimate. That is a responsive statement. SAUVAGEAU need not furtherrespond.Form Interrogatories. Form Interrogatory #309.1. SAUVAGEAU’s response to thisinterrogatory asking after additional damages is not specific enough. He must furtherrespond.Form Interrogatory #314.1. SAUVAGEAU’s reference to the contracts attached to hiscomplaint is not responsive. SAUVAGEAU must further respond.Form Interrogatories #314.2-314.3. SAUVAGEAU’s narrative does not answerparticulars about when alleged breaches occurred. He must further respond.Form Interrogatories #314.5-314.6. SAUVAGEAU says he does not know ifa*greements were unenforceable or unambiguous because he is not a lawyer. This isnot responsive. SAUVAGEAU must further respond.Form Interrogatory #314.7. SAUVAGEAU’s reference to attached contracts isinsufficiently particular and unresponsive. SAUVAGEAU must further respond.Form Interrogatory #321.1. SAUVAGEAU’s statement that he had no supervisingemployees is responsive to this interrogatory. He need not further respond.Form Interrogatory #321.2. SAUVAGEAU’s witness list is not responsive to thisinterrogatory. He must further respond.Form Interrogatories #321.3-321.4. SAUVAGEAU’s reference to all produceddocuments is not responsive. He must further respond.Form Interrogatory #321.5-321.6. SAUVAGEAU’s reference to his complaint andattached contracts, his narrative, and “all documents” is vague. He must furtherrespond.Form Interrogatory #321.9. SAUVAGEAU’s reference to “all plan specs producedherewith” is vague. He must further respond.Form Interrogatory #324.1, 325.1-352.4. SAUVAGEAU’s narrative is not specificenough to respond to these interrogatories and does not identify witnesses anddocuments as requested. SAUVAGEAU must further respond.Form Interrogatory #326.1. SAUVAGEAU’s narrative is unresponsive to thisinterrogatory concerning qualifications on admissions. He must further respond.Requests for Admission #7. The ADAMS ask SAUVAGEAU to admit the contractbetween them was “fixed-price.” He says he cannot understand the question but thenalso says it was “clearly” not a fixed-price contract. He must further respond to clarifyhis position.Requests for Production. SAUVAGEAU must further respond to Requests #8, 9, 14,and 17 produce responsive documents in his possession if any remain. However, withregard to #10 and 15 SAUVAGEAU states no responsive documents have ever existed,which is a sufficient response and he need not further respond.Sanctions. Code of Civil Procedure sections 2030.300, subdivision (d)[interrogatories], 2031.310, subdivision (h) [inspection demands], and 2033.290,subdivision (d) [requests for admissions] require sanctions against a party thatunsuccessfully makes or opposes a motion to compel further responses tointerrogatories, unless the court finds that the losing party acted with substantialjustification or that other circ*mstances weigh against the imposition of sanctions.SAUVAGEAU’s responses were frequently vague and unresponsive. Sanctions areimposed in the sum of $3,000.Conclusion. The ADAMS’ motion to compel further responses is granted with regardto all form interrogatories at issue except #321.1.The motion is granted with regard to the sole request for admission at issue, #7.The motion is granted with regard to all special interrogatories at issue except #76-78and 109.The motion is granted with regard to requests for production #8, 9, 14, and 17.The motion is otherwise denied.SAUVAGEAU is ordered to pay sanctions in the sum of $3,000 within thirty days of thedate of this order.Join ZoomGov Meetinghttps://www.zoomgov.com/j/1602210102?pwd=emlhR29SczExam56NFFqWHFvSitmZz09Meeting ID: 160 221 0102Passcode: 650928One tap mobile+16692545252,,1602210102#,,,,*650928# US (San Jose)+16692161590,,1602210102#,,,,*650928# US (San Jose)
Ruling
NATHANIEL HOWARD VS KENNETH MELROSE, ET AL.
Aug 19, 2024 |23STCV19923
Case Number: 23STCV19923 Hearing Date: August 19, 2024 Dept: 40 Superior Court of California County of Los Angeles Department 40 NATHANIAL HOWARD, Plaintiff, v. KENNETH MELROSE; LAW OFFICES OF KEN J. MELROSE; LAW OFFICES OF KENNETH J. MELROSE, LLC; BMS LEGAL SERVICES LLC; STEPHEN SOLENDER; STEPHEN SOLENDER dba THE SOLENDER GROUP; THE SOLENDER GROUP, INC.; YANGKYOUNG LEE; MICHAEL MANAPOL; FIRST INDEMNITY INSURANCE AGENCY, INC., ERIC CANTON, AND DOES 1 THROUGH 400, INCLUSIVE, Defendants. Case No.: 23STCV19923 Hearing Date: 08/19/24 Trial Date: None Set TENTATIVE RULING RE: Defendant Yangkyoung Lees Demurrer to the Plaintiffs First Amended Complaint Background Allegations Pleadings This legal malpractice matter was filed by Nathaniel Howard (Plaintiff) on August 18, 2023, stemming from an underlying personal injury case. The operative First Amended Complaint (FAC) was filed on March 29, 2024. Plaintiff sues defendants Kenneth Melrose, Law Offices of Ken J. Melrose as well as Law Offices of Kenneth J. Melrose, LLC (collectively LOKM), BMS Legal Services LLC (BMS), Stephen Solender dba The Solender Group, The Solender Group, Inc., Yangkyoung Lee (Lee), Michael Manapol, First Indemnity Insurance Agency, Inc., and Eric Canton. The FAC alleges claims of (1) Fraud/Conspiracy/Aiding and Abetting, (2) Breach of Fiduciary Duty/Conspiracy/Aiding and Abetting, (3) Statutory Remedies Per Penal Code Section 496, (4) Negligence, (5) Breach of Contract as to Howards Contract with LOKM, (6) Conversion, (7) Breach of Fiduciary Duty, (8) Negligence, and (9) Declaratory Relief. On February 14, 2017, Plaintiff suffered severe injuries after a construction site accident. Plaintiff was first represented by attorney Brian Witzer (Witzer). Witzer filed suit against the underlying defendants. During the course of Witzers representation of Plaintiff, he took on co-Defendant Kenneth Melrose as an agent, employee and partner. Melrose in turn allegedly engaged in severe breaches of fiduciary duty, aided and abetted Witzer in defrauding Howard and engaged in malpractice in his own right. Other lawyers who allegedly engaged in malfeasance relative to the handling of the underlying case were Stephen Solender, Michael Manapol, Eric Canton and Yangkyoung Lee. Allegedly, Witzer operated a Ponzi-style scheme where he would use monies belonging to one client to pay another client. (FAC, ¶5b.) In one case, during the course of the underlying action, Witzer and Melrose (and to a lesser but still significant extent, Solender, Manapol, Canton and others) insisted that Plaintiff obtain exceedingly expensive litigation funding so that they could avoid the risk of funding the case themselves, and then misappropriated at least $200,000. (FAC, ¶¶ 9, 81e, 106, and 115.) As of the filing of the FAC, the litigation funder was demanding close to $700,000 from Plaintiff Howard, even though Witzer and Melrose misappropriated and converted over $200,000, which Plaintiff contends constitutes a loss of close to $1 million in and of itself. (FAC, ¶ 115e.) Motion Before the Court The motion now before the Court is Defendant Yangkyoung Lees Demurrer to the Plaintiffs First Amended Complaint. Lee demurs to the seventh and eighth causes of action for breach of fiduciary duty and negligence respectively. Plaintiff opposed the Motion, and Lee filed a reply. Meet and Confer Before filing a demurrer&the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (Code Civ. Proc. §430.41(a).) Lee notes in the Declaration of Yangkyoung Lee that she reached out to Plaintiffs counsel on April 20, 2024, but did not hear back. Therefore, the requirements of Code Civ. Proc. §430.41(a) remain unsatisfied. However, per Code Civ. Proc. §430.41(a)(4), A determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer. Discussion Legal Standard for Demurrer [A] demurrer tests the legal sufficiency of the allegations in a complaint. (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.) Analysis Lee demurs solely to the seventh cause of action for breach of fiduciary duty and the eighth cause of action for negligence. Lee contends that although she was hired by Witzers firm, as soon as Lee found out that she had worked on the underlying case between Plaintiff and her former client Clark Construction and Conco Lee withdrew from the case and resigned from Witzers firm due to the presumed conflict of interest. Lee contends that this does not constitute a breach of fiduciary duty to Plaintiff and emphasizes there was no special relationship between the two, and therefore, Lee did not owe Plaintiff any fiduciary duties. Additionally, Lee argues the eighth cause of action is duplicative of the seventh, and the Court has the power to sustain a demurrer based on this ground. In opposition, Plaintiff cites to Rules of Professional Conduct 1.1 and 1.7 and contends that breaking these rules constitutes a breach of fiduciary duty to Plaintiff. The Court disagrees and sustains the demurrer. Seventh Cause of Action: Breach of Fiduciary Duty The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.) &examples of relationships that impose a fiduciary obligation to act on behalf of and for the benefit of another are a joint venture, a partnership, or an agency. (Cleveland v. Johnson, (2012) 209 Cal.App.4th 1315, 1339.) The parties agree that a relationship between an attorney and client is a fiduciary relationship of the highest character. (Kotlar v. Harford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1123.) However, Plaintiff contends that Lee breached a fiduciary duty to Plaintiff, by taking employment with Witzer who represented Plaintiff at the time, after Lee had represented the defendant in Plaintiffs underlying personal injury case four years prior. In a successive representation situation where a client discloses confidential information to an attorney and, thereafter, the same attorney represents another client in a matter in which the two matters bear a substantial relationship, courts focus on whether confidences have been jeopardized. (Internal citation removed). The former client's expectation of confidentiality must be preserved to ensure the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, in order that the former may have adequate advice and a proper defense. ' (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 428, emphasis added.) The focus from the Sharp Court is on the former clients expectation of confidentiality, not the latters. In the FAC, although Lee signed on to Witzers firm, and worked as part of the team providing representation to Plaintiff, she immediately removed herself and resigned once she realized the conflict. Here, this fiduciary duty was owed to her former client Clark Construction and Conco, not to Plaintiff. The FAC fails to detail the fiduciary duty owed to Plaintiff and fails to detail how such a fiduciary duty was breached. Moreover, upon opposition, Plaintiff fails to explain how Plaintiff has standing on behalf of Clark Construction and Conco to assert such a cause of action. Finally, both the FAC and the opposition papers fail to establish the elements of the cause of action. Therefore, the demurrer as to the seventh cause of action is sustained. Eighth Cause of Action: Negligence As to the eighth cause of action, it is duplicative of the seventh. The FAC uses nearly identical facts to allege negligence. Where a cause of action is duplicative, courts have recognized this as a basis for sustaining a demurrer. (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal. App. 4th 268, 290.) Leave to Amend Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment]. As this is the first demurrer on this ground, the Court grants Plaintiff 20 days leave to amend. Conclusion - Accordingly, Defendant Yangkyoung Lees Demurrer to seventh and eighth causes of action to the First Amended Complaint is SUSTAINED. Plaintiff is granted 20 days leave to amend.
Ruling
ALLSTATE INSURANCE COMPANY, ET AL. VS SIMON GAMZALETOVA, ET AL.
Aug 26, 2024 |20STCV34867
Case Number: 20STCV34867 Hearing Date: August 26, 2024 Dept: 34 Allstate Insurance Company, et al v. Simon Gamzaletova et al. (20STCV34867) 1. The Motion to Enter Judgment Pursuant to Code of Civil Procedure § 664.6 is GRANTED 2. The Motion for the Allocation of Settlement Proceeds is GRANTED Background On September 11, 2020, Plaintiffs Allstate Insurance Company, Allstate Indemnity Company, and Allstate Northbrook Indemnity Company (collectively Plaintiffs) filed as qui tam relators on behalf of the People of the State of California their Complaint against Defendants Simon Gamzaletova (S. Gamzaletova), Reymond Gamzaletova (R. Gamzaletova), Farideh Kohan (Kohan), Mustafa Asghari (Asghari), West Valley MRI, Inc. (West Valley MRI), and SoCal Imaging (SoCal Imaging) on causes of action for violations of the California Insurance Frauds Prevention Act and the California Unfair Competition Law. On September 13, 2022, Plaintiffs amended their First Amended Complaint by substituting George Mednik, M.D. (G. Mednik), Ranon Udkoff, M.D. (R. Udkoff), Sepehr Katiraie, M.D. (Katiraie), Lynwood Medical Imaging, Inc. (Lynwood Medical), Udkoff Medical Imaging Corporation (Udkoff Medical), and Mednik Medical Corporation (Mednik Medical) for previously unidentified defendants. On December 27, 2022, Katiraie and Lynwood Medical agreed to pay a total of $50,000 to Plaintiffs to settle the matter. On November 28, 2023, G. Mednik, Mednik Medical agreed to pay a total of $395,000 to Plaintiffs to settle the matter. The same day, R. Udkoff and Udkoff Medical agreed to pay a total of $105,000 to Plaintiffs to settle the matter. On February 22, 2023, Plaintiffs filed their Second Amended Complaint which is the operative complaint. On January 18, 2024, the first day trial was to begin, R. Gamzaletova, Kohan, Asghari, West Valley MRI, and SoCal Imaging (collectively, the Defendants) agreed to pay a total of $1,600,000 to Plaintiffs to settle the matter. (Hasegawa Decl.¶ 2.) The settlement agreement was executed on March 21, 2024, and personally signed by each of the West Valley Defendants. (Hasegawa Decl. at ¶ 4, Ex. A.) After the moving papers for this motion were filed, Defendants made additional payments of $20,000 on June 21, 2024, and $10,000 on June 24, 2024. Of the $1.6 million owed under the Settlement Agreement, Defendants have now paid a total of $530,000. (Reply Hasegawa Decl. at ¶ 2.) 1. Motion to Enter Judgment Pursuant to Code of Civil Procedure § 664.6 Legal Standard Under section 664.6 of the Code of Civil Procedure, the court may enforce a settlement agreement made during pending litigation if the parties entered into the agreement either orally before the court or in writing outside the presence of the court. (Code Civ. Proc. § 664.6; Kirby v. Southern California Edison Co., (2000) 78 Cal.App.4th 840, 845.) The court may enter judgment under the settlement as long as the terms are sufficiently definite for the court to give them exact meaning. (Weddington Productions, Inc. v. Flick, (1998) 60 Cal.App.4th 793, 810-812.) The judge ruling on a motion under section 664.6 may consider oral testimony, documentary testimony, or declarations, and the judge may resolve disputed factual issues that arise out of the settlement agreement. (See Corkland v. Boscoe (1984) 156 Cal. App. 3d 989, 994.) For a court to enforce a settlement agreement between parties in a litigated action, two requirements must be met: (1) contract formation between parties and (2) a writing signed by the parties which contains the material terms that are express[ed] . . . in a reasonably definite manner. (Weddington Prod., Inc., 60 Cal. App. 4th at 811-14, 816 (quotation marks omitted) (citations omitted).) Furthermore, for a settlement agreement to be enforceable under the summary procedures of Code of Civil Procedure § 664.6, a written settlement agreement [must be] signed personally by the litigant. (Davidson v. Super. Ct. (1999) 70 Cal. App. 4th 514, 517 (citing Levy v. Super. Ct. (1995) 10 Cal. 4th 578, 580).) Discussion Plaintiffs seeks entry of judgment for the balance of $1,070,000 because Defendants failed to make their monthly payments as described in the Settlement Agreement. Here, on January 18, 2024, the first day trial was to begin, Plaintiffs and Defendants agreed to a settlement. (Hasegawa Decl.¶ 2.) The original settlement terms read onto the record included a total settlement amount of $1,600,000 with a lump-sum payment of $750,000 due on March 18, 2024, and the balance to be paid in installments over 36 months. (Hasegawa Decl. at ¶ 3.) To ensure payment of the initial lump sum, trial was continued to March 25, 2024, and a status conference was set for March 18, 2024. (Hasegawa Decl. at ¶ 5) Because Defendants had trouble coming up with the lump-sum payment in time, the parties entered into a written settlement agreement breaking up the $1,600,000 total settlement amount as follows: lump-sum payment of $400,000 by March 18, 2024, lump-sum payment of $350,000 by April 5, 2024, and the remaining $850,000 to be paid in monthly installments of $23,611.22 over 36 months, beginning April 1, 2024. (Hasegawa Decl. at ¶ 4, Ex. A.) In exchange, Plaintiffs agreed to release the Defendants from the claims in this action upon full payment. (Hasegawa Decl. at ¶ 4., Ex. A at p. 3 ¶ 2.1) The settlement agreement was executed on March 21, 2024, and personally signed by each of the Defendants. (Hasegawa Decl. at ¶ 4, Ex. A.) The status conference was then continued to April 17, 2024, to allow the Defendants additional time to complete the initial lump-sum payments. (Hasegawa Decl. at ¶ 5.) By the April 17 status conference, the Defendants had only paid $500,000 of the $750,00 lump-sum payments. (Hasegawa Decl. at ¶ 6.) Their counsel, Michael Khouri, advised that the Defendants would pay $100,000 by April 19, 2024, $150,000 by May 15, 2024, and that installment payments would begin on June 1, 2024. (Hasegawa Decl. at ¶ 6.) While Plaintiffs did not waive any of its rights under the settlement agreement, it was willing to see if the Defendants could bring their payments up to date. (Hasegawa Decl. at ¶ 6.) The status conference was continued to May 17, 2024, to accommodate this. (Hasegawa Decl. at ¶ 6.) By the May 17, 2024, status conference, the Defendants still had not made any further payments but were still representing through counsel that they were making efforts to comply and the status conference was continued to June 17, 2024. (Hasegawa Decl. at ¶ 7.) Allstate has not received any further payments. (Hasegawa Decl. at ¶ 8.) Thus far, Defendants have paid $500,000 of the $750,000 in lump-sum payments and have yet to pay any of the monthly installment payments. (Hasegawa Decl. at ¶ 18.) The Settlement Agreement includes the following provision: The undersigned SETTLING PARTIES stipulate and agree that pursuant to California Code of Civil Procedure Section 664.6 the court shall retain jurisdiction over the SETTLING PARTIES until there is full performance of the terms of the settlement and this AGREEMENT. (Settlement Agreement ¶ 2.6.) The Settlement Agreement further states The failure to make any of the payments on or before the due date in accordance with the terms and conditions of this AGREEMENT shall constitute a material breach of this AGREEMENT, and Allstate shall have the right to accelerate the entire remaining unpaid balance of the SETTLEMENT AMOUNT and proceed with the foreclosure under the Deed of Trust, and/or any and all other remedies available under applicable law, including but not limited to the prosecution of the Lawsuit. (Settlement Agreement ¶ 2.4.2) Therefore, the Court grants the unopposed Motion to Enforce Settlement. Judgment is entered against Defendants Simon Gamzaletova, Reymond Gamzaletova, Farideh Kohan, Mustafa Ashgari, West Valley MRI, Inc., and SoCal Imaging, jointly or severally in the amount of $1,070,000, with interest on the judgment according to the laws of the State of California. 2. Motion for the Allocation of Settlement Proceeds Legal Standard In a qui tam action brought under Insurance Code section 1871.7, Plaintiffs as Relator can apply for and be awarded all of the settlement proceeds of a qui tam action. (See Ins. Code § 1871.7(e)(4).) Allocating the funds pursuant to the statute is also within the courts inherent powers to administer and dispose of suits before it. (Cottle v. Super. Ct. (1992) 3 Cal.App.4th 1367, 1376-77.) Under Insurance Code section 1871.7, the local district attorney and State of California have the right to intervene. (Ins. Code § 1871.7(e)(4).) If neither choose to proceed with the action, the person bringing the action shall have the right to conduct the action. (Ins. Code § 1871.7(e)(4)(B).) That includes the right to settle the case. (Ins. Code § 1871.7(g)(2)(A).) Discussion Here, Plaintiffs counsel performed significant work in investigating and prosecuting this matter, preparing for trial, negotiating the four settlement agreements, and enforcing settlement. This case was complex, involving twelve defendants and 623 alleged fraudulent claims. Thoroughly investigating, understanding, and then prosecuting this scheme thus required substantial time and effort. (Hasegawa Decl. ¶¶ 5-13; 15-44.) Moreover, [f]ollowing extensive discovery in the case, Knox Ricksen began conducting informal settlement negotiations as well as attending two mediation sessions. The mediations required considerable preparation and 40 pages of briefing total. Plaintiffs, Katiraie and Lynwood Medical ultimately negotiated a settlement in December 2022. Plaintiffs then reached a settlement with G. Mednik, Mednik Medical, R. Udkoff and Udkoff Medical in November 2023. But not until the morning of trial were Plaintiffs able to reach a settlement with the Defendants in January 2024. Knox Ricksen prepared the settlement documents for all four settlements. Each of the four settlements involved fairly complex legal and factual questions and required substantial work, including addressing Defendants fairly extensive redlines to the agreements. (Id. at ¶ 26.) Additionally, [Plaintiffs] has continued to incur legal fees following the settlements of all Defendants. For one, preparation of this Declaration and the accompanying motion required several hours of reviewing invoices spanning a five-year period. (Id. at ¶ 29.) Notably, no opposition was filed. Accordingly, the court GRANTS the Motion for the Allocation of Settlement Proceeds.
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