Opinion
G062144
05-03-2024
ROHINTON T. ARESH et al., Plaintiffs and Appellants, v. CALPRIVATE BANK, Defendant and Respondent.
Catanzarite Law Corporation, Kenneth J. Catanzarite, and Tim James O'Keefe for Plaintiff and Appellant. Dinsmore & Shohl, John H. Stephens, and Jamie D. Mottola for Defendant and Respondent.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 30-2021-01180402 Randall J. Sherman, Judge. Affirmed.
Catanzarite Law Corporation, Kenneth J. Catanzarite, and Tim James O'Keefe for Plaintiff and Appellant.
Dinsmore & Shohl, John H. Stephens, and Jamie D. Mottola for Defendant and Respondent.
OPINION
SANCHEZ, J.
Plaintiff Rohinton T. Aresh, beneficiary of G REIT Liquidating Trust, a terminated Maryland trust, on behalf of himself and all others similarly situated, appeals from a judgment entered after the court sustained, without leave to amend, the demurrer of defendant CalPrivate Bank (CalPrivate) to his third amended complaint. The court previously granted leave to amend two prior versions of the complaint. In doing so, the court emphasized plaintiff had split causes of action in the instant case and another case (the Hunt case), which were partially consolidated for discovery-related matters and trial. The court directed plaintiff to bring one lawsuit rather than two actions.
Plaintiff did not follow the court's directions when filing the second or third amended complaints and continued to proceed with both actions. While CalPrivate's demurrer to the third amended complaint was pending, plaintiff filed a motion for leave to file a first consolidated class action complaint in the Hunt case. Plaintiff also filed a notice of motion in the instant action, but the notice indicated plaintiff was seeking to file the complaint in the Hunt case. The notice also did not attach a copy of the proposed complaint. The trial court proceeded with the hearing on the pending demurrer to the third amended complaint and sustained it without leave to amend. The court noted plaintiff had failed to cure the complaint's deficiencies despite multiple opportunities to do so. The court also emphasized it could only consider what was pending in the instant action and plaintiff's motion for leave to file a consolidated class action complaint was filed in the Hunt case.
On appeal, plaintiff contends the court erred by sustaining the demurrer without considering the pending motion for leave to file a consolidated class action complaint. He claims the court should have continued the demurrer hearing or granted leave to amend. He alternatively argues the instant action and the Hunt case "should be viewed as a singular set of pleadings after consolidation." For the reasons below, we disagree with plaintiff's contentions and affirm the judgment.
FACTS
Plaintiff's Various Complaints and Motion to Substitute a New Class Representative
Prior to the instant action, Richard Carlson filed the Hunt case-another class action lawsuit against various defendants in 2018. Defendant CalPrivate was not a named defendant in the Hunt case.
Plaintiff refers to the Hunt case as G REIT I and the instant action as G REIT II. For ease of reference, we refer to these cases as "the Hunt case" and "the instant action" or the "instant case."
In 2021, Carlson filed the instant class action against various individuals and entities, including defendant CalPrivate. The action was brought on behalf of Carlson and beneficiaries of the G REIT Liquidating Trust. The complaint alleged five causes of action against CalPrivate: (1) fraudulent transfer; (2) "to set aside fraudulent transfer"; (3) conspiracy to defraud; (4) declaratory relief; and (5) conversion.
After CalPrivate filed a demurrer to the complaint, Carlson filed a first amended class action complaint (FAC). CalPrivate again filed a demurrer. In August 2021, the court sustained CalPrivate's demurrer to the FAC with leave to amend. The court noted Carlson had "split his causes of action to the extent he assert[ed] in both this case and in [the Hunt case] that he is suing as a beneficiary of the GREIT Liquidating Trust, and is complaining about losses suffered in connection with his own and his fellow class members' beneficial ownership in three real estate projects ...." The court emphasized there were overlapping allegations permeating the causes of action and noted Carlson "should bring one lawsuit, not two, to seek redress for defendants' alleged wrongful conduct in connection with a singular set of facts." The court next found Todd Mikles, an individual who was not a named defendant, was an indispensable party to some of the causes of action. The court further held Carlson had not alleged sufficient facts, including facts necessary to overcome a statute of limitations defense. Instead, the court held Carlson had alleged vague, overbroad, and conclusory allegations against CalPrivate.
In September 2021, Carlson filed a second amended class action complaint (SAC). CalPrivate filed another demurrer in October 2021. While the demurrer was pending, Carlson filed a motion to consolidate the instant action with the Hunt case. The court granted Carlson's motion to consolidate "as to discovery and discovery-related law and motion matters, and for trial." In reaching this conclusion, the court noted the two actions arose out of the same general set of facts and involved "at least in part, the same evidence and the same law, with the fact-finder being required to determine most of the same disputed facts." The court added that it could decide to phase the trial. But the court denied the motion to consolidate "as to combining the case files." The court explained the two cases were already related and pending in the same department of the court. They therefore were already managed together, and "[c]ombining the two files would create confusion for the court in attempting to locate relevant documents."
In March 2022, while the demurrer to the SAC was still pending, Carlson filed a motion to amend the SAC to substitute Rohinton T. Aresh as the new plaintiff class representative. The court sustained CalPrivate's demurrer to the SAC with leave to amend and granted Carlson's motion to amend the SAC to substitute Aresh as the new plaintiff class representative. In granting the demurrer, the court repeated the following from its prior ruling: (1) Carlson had split causes of action between the instant case and the Hunt case; (2) there were overlapping allegations permeating the causes of action; (3) Carlson "should bring one lawsuit, not two, to seek redress for defendants' alleged wrongful conduct in connection with a singular set of facts"; and (4) Carlson had alleged vague, overbroad, and conclusory allegations. The court also repeated that Todd Mikles was an indispensable party to the first, second, and fourth causes of action. The court explained if it "set aside the allegedly fraudulent transfers for which Mikles was the actual transferor, such an order would affect his rights personally and directly." The court further noted partial consolidation of the instant case with the Hunt case did not allow Mikles "to protect his rights in this action, where he is not a party."
CalPrivate's Demurrer and Plaintiff's Motion for Leave to File a First Consolidated Class Action Complaint
In June 2022, Aresh filed a third amended class action complaint (TAC) on behalf of himself and beneficiaries of the G REIT Liquidating Trust. CalPrivate filed a demurrer a few weeks later.
In September 2022, while the demurrer to the TAC was pending, Aresh filed a notice of motion for leave to file a first consolidated class action complaint (FCCC), which is central to the instant appeal. Aresh filed the notice of motion in the instant action, but the notice indicated Aresh sought leave to file the FCCC in the Hunt case. According to the notice, the FCCC would permit "a single pleading identifying claims in both [the Hunt case] and the consolidated action ...." Aresh also noted the proposed FCCC would include "non-substantive amendments that streamline overlapping facts" as well as "edits conforming the pleading to the Court's ruling on demurrer ...."
The notice of motion did not attach the proposed complaint. Aresh filed the same notice of motion for leave to file the FCCC in the Hunt case but included an additional memorandum in support and attached the proposed FCCC as an exhibit.
Aresh filed a motion for judicial notice requesting we take judicial notice of various documents filed in the Hunt case. We grant his unopposed motion.
A few weeks later, Aresh filed an opposition to CalPrivate's demurrer to the TAC. Among other things, Aresh argued the demurrer was moot because he had filed a motion for leave to file the FCCC in the Hunt case and the FCCC "resolv[ed] the issues complained of by [CalPrivate]." Aresh also noted the instant case and the Hunt case contained overlapping parties and factual allegations, and the FCCC would aid in expediting the case. Aresh attached a copy of the proposed FCCC as an exhibit to his opposition. CalPrivate filed a reply in support of its demurrer and argued, among other things, that the proposed FCCC was "too little, too late." CalPrivate noted the FCCC "appends the allegations in [the instant action] to those in Hunt, which arguably eliminates the defect that Mikles is an indispensable party," but argued this did "not cure the statute of limitations issue or the vague, overbroad and conclusory allegations against [it]."
The Court's Order Sustaining CalPrivate's Demurrer
The court sustained CalPrivate's demurrer to the TAC without leave to amend and emphasized Aresh had failed to amend the SAC's substantive allegations despite prior rulings allowing leave to amend. The court explained: "The issues of failure to state causes of action due to vague or conclusory allegations, failure to join a necessary party, and statutes of limitations are left unaddressed." The court noted it had provided opportunities to cure the vague and conclusory allegations, but Aresh "made no substantive changes to the allegations in the [TAC] as to CalPrivate." With respect to necessary parties, the court found Aresh failed to add Mikles as a party to the first, second, and fourth causes of action despite the court's prior rulings that he was a necessary party "since he is the transferor of the transfers that plaintiff[s] seek[] to set aside ...." Regarding the statute of limitations, the court held Aresh failed to allege additional facts to show the claims were not time barred. The court explained the statute of limitations for the fraudulent transfer claims was "four years after the transfer, or one year after the transfer was or could have been discovered, but in no case longer than seven years." The transfers concerning CalPrivate took place in 2014 and 2016, and the instant action was filed in 2021 with no alleged facts supporting tolling or a statute of limitations longer than four years.
Finally, the court addressed Aresh's motion for leave to file the FCCC. Although Aresh sought leave to file the FCCC, the court noted it was filed in the Hunt case. The court held: "[T]hat is a separate case that due process prevents from being addressed here." At the hearing on the demurrer, the court explained: "I mean, we're dealing with this case. I have to deal with this case. The arguments, if the court finds them successful, it's relatively irrelevant if there's this other case out there. And if you don't state a cause of action against CalPrivate in this case, that doesn't necessarily mean you can or can't state a cause of action against them based on something else that is part of this other case or not. I don't know. But the fact is, I can only deal with the case that's in front of me."
Because Aresh failed to cure the above issues "despite multiple opportunities to do so," the court sustained the demurrer without further leave to amend. The court accordingly entered an order for dismissal of the action in October 2022, and Aresh filed a timely notice of appeal.
DISCUSSION
Aresh contends the court's order sustaining the demurrer to the TAC without leave to amend "resulted ipso facto in the denial of the FCCC without the trial court having ever reviewed the FCCC." Aresh accordingly argues the court erred by sustaining the demurrer without considering the pending motion for leave to file the FCCC. He suggests the court should have continued the demurrer hearing to the same date as the hearing on the motion for leave to file the FCCC. He alternatively claims the instant action and the Hunt case "should be viewed as a singular set of pleadings after consolidation" so "the sustaining of the demurrer had the prejudicial and abuse of process effect of mooting the FCCC ...." Finally, Aresh claims the proposed FCCC contains revised allegations regarding CalPrivate. For the reasons discussed ante, we disagree with Aresh's contentions. The court did not abuse its discretion by sustaining the demurrer to the TAC without leave to amend.
Standard of Review
"'On appeal from a judgment after an order sustaining a demurrer, we review the order de novo, exercising our independent judgment on whether the complaint states a cause of action as a matter of law. [Citation.] We give the complaint a reasonable interpretation, reading it as a whole and viewing its parts in context. [Citation.] We deem all properly pleaded material facts as true. [Citation.] We must also accept as true those facts that may be implied or inferred from those expressly alleged.' [Citation.] '"'We also consider matters which may be judicially noticed.'"'" (HNHPC, Inc. v. Department of Cannabis Control (2023) 94 Cal.App.5th 60, 68.)
"'While the decision to sustain . . . a demurrer is a legal ruling subject to de novo review on appeal, the granting of leave to amend involves an exercise of the trial court's discretion.'" (HNHPC, Inc. v. Department of Cannabis Control, supra, 94 Cal.App.5th at p. 68.)
The Court Did Not Err
Here, the court did not err by denying leave to amend without considering the motion for leave to file the FCCC in the Hunt case because it could only deal with the instant case pending before it. Aresh filed the motion in the Hunt case and included the proposed FCCC with that filing. While he filed a two-page notice of motion in the instant case, the notice of motion stated Aresh was seeking to file the FCCC in the Hunt case and did not attach the proposed complaint. Aresh later attached the FCCC as an exhibit to his opposition to CalPrivate's demurrer. Thus, the only thing pending before the court in the instant action was CalPrivate's demurrer to the TAC.
It appears Aresh was attempting to follow the requirements of California Rules of Court, rule 3.350, which details the rules for consolidation of cases.
Aresh also cites no law suggesting the court was required to continue the demurrer hearing or grant leave to amend when it had already provided multiple opportunities for his counsel to address the issues raised by the court. Indeed, in August 2021, the court emphasized Carlson (the former class representative) had split the causes of action and advised him to bring one lawsuit instead of two. Carlson did not follow the court's suggestion when he filed the SAC. Eight months later in April 2022, the court sustained CalPrivate's demurrer to the SAC and repeated its admonition, plaintiff had split the causes of action and needed to bring one lawsuit instead of two actions. With Aresh later serving as the new class representative, he again disregarded the court's directions and did not address them in the TAC. While CalPrivate's demurrer to the TAC was pending, Aresh filed a notice of motion for leave to file the FCCC in the Hunt case but did not attach the proposed FCCC. By that time, plaintiff had taken more than a year since the court's initial admonishment to prepare the FCCC. Under these circumstances, the court did not abuse its discretion by denying leave to amend. "'[T]he trial court has wide discretion in determining whether to allow the amendment, but the appropriate exercise of that discretion requires the trial court to consider a number of factors: "including the conduct of the moving party and the belated presentation of the amendment. [Citation.] . . . The law is well settled that a long deferred presentation of the proposed amendment without a showing of excuse for the delay is itself a significant factor to uphold the trial court's denial of the amendment."'" (Emerald Bay Community Assn. v. Golden Eagle Ins. Corp. (2005) 130 Cal.App.4th 1078, 1097.)
Aresh suggests he did not have multiple opportunities to cure the complaint's deficiencies because he was involved later in the case when he was substituted as class representative. We are not persuaded by this argument. Both Carlson and Aresh were represented by the same plaintiff's counsel throughout the entire litigation. Counsel was aware of the trial court's repeated directions for more than a year but continued to split the causes of action.
Finally, Aresh argues the court erred because the instant action and the Hunt case were "consolidated beyond that of mere evidence issues" so the actions could be "taken together and treated as one pleading" before the FCCC was even filed. We disagree. "[T]here are . . . two types of consolidation: [(1)] a consolidation for purposes of trial only, where the two actions remain otherwise separate; and [(2)] a complete consolidation or consolidation for all purposes, where the two actions are merged into a single proceeding under one case number and result in only one verdict or set of findings and one judgment." (Hamilton v. Asbestos Corp. (2000) 22 Cal.4th 1127, 1147; see Code Civ. Proc., § 1048, subd. (a).) Here, the court granted partial consolidation for discovery-related matters and trial. But the court clearly held the actions were not consolidated "as to combining the case files." Thus, "the pleadings, verdicts, findings and judgments [were] kept separate; [and] the actions [would] simply [be] tried together for the sake of convenience and judicial economy." (Sanchez v. Superior Court (1988) 203 Cal.App.3d 1391, 1396.)
Aresh's reliance on McClure v. Donovan (1949) 33 Cal.2d 717 is misplaced. McClure held consolidated "'cases are to be treated as if the causes had been united originally'" "'for the purposes of all further proceedings.'" (Id. at p. 722.) But our Supreme Court explained that "a different situation exists where pending actions are consolidated only for the purpose of trial of related issues." (Ibid.) As discussed above, the Hunt case and the instant action were not consolidated for all purposes.
Relying on Guardianship of Paduano (1989) 215 Cal.App.3d 346 (Paduano), Aresh further claims "the actions were consolidated beyond that of mere evidence issues" because they concerned "overlapping allegations, arising from the same facts, and overlapping parties." Paduano does not support Aresh's de facto consolidation argument. In Paduano, the court consolidated a guardianship proceeding with a marital dissolution proceeding where the object of both proceedings was custody of a minor. (Id. at p. 351.) Here, CalPrivate was not an overlapping party in the Hunt case and was only a defendant in the instant action. There was nothing other than the TAC for the court to consider in ruling on CalPrivate's demurrer.
DISPOSITION
The judgment is affirmed. CalPrivate is entitled to costs on appeal.
WE CONCUR: O'LEARY, P. J., MOORE, J.