2013-00144069-CU-BC

650 Howe Business Center vs. Hal R. & Karen A. Shores, LLC

Nature of Proceeding: Motion for Summary Judgment and/or Adjudication

Filed By: Allen, Sean D.

Plaintiff 650 Howe Business Center Owners Association’s (“Plaintiff”) Motion for
Summary Judgment And/Or Summary Adjudication is DENIED WITHOUT
PREJUDICE. Defendant Hal R. & Karen A. Shores, LLC (“Shores LLC” or the “LLC
Defendant”) filed an Opposition to the motion. Defendants Hal R. Shores and Karen
A. Shores, as individuals (“Individual Defendants”), also filed an Opposition to the
motion. Plaintiff filed a Reply brief in support of the motion.

No trial date has been set in this case.

Tentative Ruling System

Moving party’s Notice of Motion and Amended Notice of Motion do not provide notice of the Court’s tentative ruling system, as required by California Rule of Court 3.1308
and Local Rule 1.06(D). Moving party is directed to contact non-moving party forthwith
and advise of Local Rule 1.06(D) and the Court’s tentative ruling procedure. If moving
party is unable to contact non-moving party prior to hearing, moving party shall be
available at the hearing, in person or by telephone, in the event non-moving party
appears without following the procedures set forth in Local Rule 1.06(B).

Motion for Summary Judgment/Adjudication

The issues raised by a motion for summary adjudication are framed by the pleadings.
(Dromy v. Lukovsky (2013) 219 Cal.App.4th 278, 282; Lennar Northeast Partners v.
Buice (1996) 49 Cal.App.4th 1576, 1582.) In this case, Plaintiff alleges causes of
action for “breach of contract,” “breach of covenants, conditions and restrictions
(“CC&Rs”),” “common counts – account stated,” “common counts – open book
account,” and “foreclosure deed.” Plaintiff alleges that the “Individual Defendants were
the Directors of the LLC Defendant” and “officers of the LLC Defendant,” such that the
“LLC Defendant is the alter ego of the Individual Defendants.” (Compl. at 3-5.)
Plaintiff, an owner’s association, alleges that Defendants own “the property located at
and commonly known as 650 Howe Avenue, Unit 10” (the “Property”), which is a
commercial condominium. (Id. at 5.) Plaintiff alleges that, “by virtue of ownership of a
unit at and within the Association, Defendants are bound by” various governing
documents, including the CC&Rs, to “pay assessments.” (Id.) Plaintiff alleges that,
under the CC&Rs and California Civil Code §§ 1367.1, 1367(a), and 1366, Plaintiff is
authorized to collect delinquent assessments, late charges, interest and collection
costs including reasonable attorneys’ fees. (Id.) Plaintiffs also allege that, for “more
than 2 years, the Defendants have failed to pay assessments as required by the
California Civil Code and the CC&Rs” even though Defendants continued to use the
Property and the common areas surrounding it. (Id.) As of the filing of Plaintiff’s
pending motion, “Defendants have failed to pay . . . for more than three years.” (Def.’s
Ps & As at 2.)

Request for Judicial Notice

Plaintiff filed a Request for Judicial Notice (“RJN”) in support of its motion, and
attached recorded CC&Rs (Exh. 1), articles of incorporation filed with the State (Exh.
2), recorded grant deeds for the Property, which name the LLC Defendant (Exh. 3),
and a recorded assessment lien for the Property (Exh. 4).) The RJN is unopposed and
GRANTED. However, in taking judicial notice of these documents, the Court accepts
the fact of their existence, not the truth of their contents. (See Professional Engineers
v. Dep’t of Transp. (1997) 15 Cal.4th 543, 590 (judicial notice of findings of fact does
not mean that those findings of fact are true); Steed v. Department of Consumer
Affairs (2012) 204 Cal.App.4th 112, 120-121.)

Objections to Evidence

No party filed any objections to evidence in connection with the pending motion. Discussion

The LLC Defendant opposes the pending motion by attempting to dispute the amount
of $103,260.53 that Plaintiff claims in damages in the form of delinquent assessments,
late fees, interest, and the costs of collection. (Plaintiff’s Separate Statement of
Undisputed Fact (“SSUF”), Undisputed Fact (“UF”) Nos. 5, 9, 12, 13, 18, 22, 25, 26,
31, 35, 38, 39, 40, 41, 46, 50, 53, 54, 55, 56, 57, 63, 67 (framing the claimed
“$103,260.53” as “undisputed).)

In support of its motion, Plaintiff filed the declaration of its “community manager” and
“managing agent,” Melinda Walker (“Walker Decl.”). Walker declares that, on her “own
personal knowledge” Defendants owe Plaintiff “a balance of $103,260.53” for
“delinquent assessments, late fees, interest, and costs of collection for January 2011
through December 15, 2013.” (Walker Decl. ¶ 3.) Walker also purports to attach
“Exhibit 1” to her declaration, which she states is a “true and correct copy of the written
account between [Plaintiff] and Defendants” which was “entered in the regular course
of business” (id.); however, no Exhibit 1 (or any other exhibit) was attached to
Walker’s declaration.

The question is whether Walker’s declaration, standing alone and without the
supporting “Exhibit 1” referenced therein, suffices to meet the moving party’s burden
on summary judgment. Summary judgment is properly granted only if the moving
party’s evidence establishes that there is no issue of material fact to be tried. (Lipson
v. Superior Court (1982) 31 Cal.3d 362, 374 (“The moving party bears the burden of
furnishing supporting documents that establish that the claims of the adverse party are
entirely without merit on any legal theory. If the evidence accompanying the summary
judgment motion is deficient, the moving party cannot rely on the unsupported
allegations in his or her pleadings to prove the case.”) (citations omitted).) If the
moving party meets this burden of production, then the burden shifts to the opposing
party to produce admissible evidence demonstrating the existence of a triable issue of
material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.)

Moving party’s evidence has not established that there is no issue of material fact to
be tried in this case. (Lipson, supra, 31 Cal.3d at 374.) Walker’s declaration, while
purportedly based on her own “personal knowledge,” fails to elucidate the source of
Walker’s claimed knowledge with respect to the claimed $103,260.53 in delinquent
assessments, interest, late fees, and costs of collection. Walker’s sparse declaration
is completely silent as to how she might have obtained “personal knowledge” of the
claimed “$103,260.53.” For instance, if Walker obtained such knowledge from simply
reading a total from an accounting document that someone else prepared (i.e., Exhibit
1), she does not have personal knowledge as to how the $103,260.53 figure was
calculated, she does not have personal knowledge as to the dates and amounts of
alleged non-payments, and it is not clear that she could properly authenticate such
document even if it had been properly filed. From the evidence timely filed with the
moving papers, Walker’s “personal knowledge” as to the claimed $103,260.53 appears
to have been derived solely from an unauthenticated hearsay document that Walker did not personally prepare and that was not timely put before the Court. It cannot be
said that such conclusory declaration provides the necessary support for the claimed
$103,260.53. Especially given that the “undisputed fact” of this precise amount
appears in 23 separate UFs and appears beneath each separate issue in moving
party’s SSUF, moving party has not met its burden.

“In reviewing a summary judgment the important first step, before any defects in the
counteraffidavit need be examined, either as to form or substance, is to determine the
sufficiency of the supporting affidavits.” (Jack v. Wood (1968) 258 Cal.App.2d 639,
646.) “[T]he affidavits of the moving party are to be strictly construed, that generalities
and conclusions will not suffice in a moving party’s declaration.” (Callahan v.
Chatsworth Park, Inc. (1962) 204 Cal.App.2d 597, 602.) Indeed, to “satisfy the
statutory requirement . . . the movant’s affidavits must state all the requisite evidentiary
facts and not merely the ultimate facts.” ( Wiler v. Firestone Tire & Rubber Co. (1979)
95 Cal.App.3d 621, 626.) “The cases are replete with statements that a summary
judgment proceeding is a drastic procedure to be used sparingly and with
circumspection in order to fully preserve the rights of litigants, and that affidavits of the
moving party are to be strictly construed.” (Jack, supra, 258 Cal.App.2d at 645-646.)
“[Averments] in the movant’s affidavits which depend upon written documents are
incompetent and cannot be considered unless there are annexed thereto the original
documents or certified or authenticated copies of such instruments, or excuse for
nonproduction thereof is shown.” (Angelus Chevrolet v. State of California (1981) 115
Cal.App.3d 995, 1001 (holding that “[T]he declarations show that [declarant’s]
statements therein . . . are not dependent upon the attached documents, but are
based upon his personal knowledge of facts gleaned in his capacity as personnel
officer at the Hospital.”).)

Here, unlike the declarant in Angelus whose statements were clearly “based upon his
personal knowledge of facts gleaned in his capacity as personnel officer,” Walker’s
statements appear to be completely “dependent upon the attached document[],”
namely, Exhibit 1. (See id.) Walker’s declaration provides no background or
explanation as to the duties Walker performed in her capacity as Plaintiff’s “community
manager and managing agent,” so it is unclear whether she keeps Plaintiff’s accounts,
prepares account-related documents such as Exhibit 1, or provided the information
that some other person used to prepare Exhibit 1. Accordingly, given that the Court
must strictly construe Walker’s declaration (see Jack, supra, 258 Cal.App.2d at 645-
46) and that such declaration states “merely the ultimate fact” of the claimed
$103,260.53 and not “all the requisite evidentiary facts” supporting it (see Wiler, supra,
95 Cal.App.3d at 626), the Court finds that Walker’s declaration fails to satisfy
Plaintiff’s burden as a moving party to support moving party’s “undisputed fact” that
Defendants owe $103,260.53 in delinquent payments and related charges.
Accordingly, Plaintiff’s papers failed to shift burden to the non-moving parties to
produce contradictory evidence on the issue.

For the first time, with its Reply brief, Plaintiff filed new evidence supporting the
claimed “$103,260.53” that had not previously been included with its moving papers:
namely, an “accounting detail” attached to a second declaration of Ms. Walker
(“Walker Reply Decl.”). In her Reply Declaration, Walker clarifies for the first time that
she personally generated the “accounting detail” from her company’s computer, and
explained the basis for the numbers appearing in that document. (Walker Reply Decl.
at 2.) Also for the first time, Plaintiff filed a two-page accounting document from which
Walker obtains her personal knowledge as to the claimed total of
“$103,260.53.” (Walker Reply Decl. at 2; “Accounting Detail” exhibit attached thereto.)

While Defendants would have been required to address and rebut this evidence if it
been timely filed with Plaintiff’s moving papers, filing it for the first time on Reply
deprived Defendants of a full and fair opportunity to respond to it. (See, e.g., San
Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 316
(trial court did not err in declining to consider new evidence filed with reply in support
of summary judgment motion).) This is the rule both inside and outside the summary
judgment context: “[t]he general rule of motion practice . . . is that new evidence is not
permitted with reply papers.” (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-
1538 (“This principle is most prominent in the context of summary judgment motions,
which is not surprising, given that it is a common evidentiary motion. [T]he inclusion of
additional evidentiary matter with the reply should only be allowed in the exceptional
case . . . .”) (citing cases) (internal quotation marks omitted).)

Here, Plaintiff has not argued that this is the sort of “exceptional case” in which new
evidence can be permissibly revealed for the first time in Reply briefing. (See id.)
Plaintiff’s Reply appears neither to recognize nor acknowledge that new evidence is
being offered therewith. Yet Walker’s Reply Declaration introduces new evidence not
only in the form of a more substantive declaration, but also by attaching a new exhibit
in support of Plaintiff’s claimed entitlement to “$103,206.53.”

Ultimately, Plaintiff waited until its Reply briefing to file a non-conclusory declaration
from Walker. Plaintiff also waited until its Reply briefing to file the accounting
document referenced in Walker’s prior declaration. Plaintiff waited until its Reply brief
to offer non-conclusory evidence as to how the claimed “$103,260.53” was calculated.
The Court in its discretion finds that waiting until Reply briefing to provide such “new
evidence” effectively deprived the non-moving party of the full opportunity to respond
to such evidence. The Court in its discretion declines to consider such new, late-filed
evidence in this context, given that summary judgment “is a drastic procedure to be
used sparingly and with circumspection in order to fully preserve the rights of
litigants.” (See Jack, supra, 258 Cal.App.2d at 645-646.)

Given the foregoing, the Court need not reach the arguments of the non-moving
parties. However, in the interest of completeness with respect to the issue of damages
and the claimed “$103,260.53,” the Court notes that the LLC Defendant’s Opposition
takes issue with such damages and Plaintiff’s proffered “evidence” thereon.
Specifically, the LLC Defendant argues that “the parties dispute the scope of damages
demanded by” Plaintiff, such that the missing “Exhibit 1” referenced in Walker’s
declaration amounts to a “glaring” evidentiary defect precluding judgment as a matter of law. (Pl.’s Oppo. at 4-5.)

For all the foregoing reasons, Plaintiff’s motion for summary judgment is DENIED
WITHOUT PREJUDICE.

The LLC Defendant shall prepare an order pursuant to Code of Civil Procedure § 437c
(g) and Rule of Court 3.1312.