2017-00206310-CU-FR

Mark D. Chisick vs. Stewart Title of Sacramento

Nature of Proceeding: Hearing on Demurrer to the Cross-Complaint

Filed By: Smith, Edward A.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

The demurrer of Plaintiffs and Cross-Defendants Mark F. Chisick (Chisick), as Manager of S360 Properties, LLC; Mark D. and Denise M. Chisick, in their capacities as Co-Trustees of the Chisick Family Trust; and S360 Properties, LLC (S360) (collectively “Cross-Defendants”) is SUSTAINED in part, OVERRULED in part and DROPPED in part as moot.

Cross-Defendants’ request for judicial notice of court documents is GRANTED.

Overview

This case presents a dispute between business partners who formed an entity to invest in real property. Chisick allegedly managed the entity, S360, with Defendant and Cross-Complainant Raymond Sahadeo (Sahadeo). Sahadeo allegedly caused several of S360’s properties to be transferred to his father, Defendant and Cross-Complainant Dhanraj Sahadeo (Dhanraj). Dhanraj allegedly did not pay adequate consideration for the properties. In addition, Sahadeo allegedly failed to obtain Chisick’s approval as required under the operating agreement, and concealed the transfers from Plaintiffs. Defendants and Cross-Complainants Chris Williams (Williams) and Guy Swanson (Swanson) allegedly facilitated escrow in some of the disputed transfers. The second amended complaint (SAC) against Sahadeo, Dhanraj, Williams and Swanson (collectively “Cross-Complainants”) contains causes of action for, among other things, fraudulent conveyance, fraud, conversion, breach of fiduciary duty, negligence, conspiracy and accounting.

Cross-Complainants filed a cross-complaint against Cross-Defendants for declaratory relief. The cross-complaint contains a single cause of action but posits declarations of several rights and duties. (See RJN, Exh. 2.) The declarations sought involve ownership and other issues raised in SAC. Cross-Defendants now demur on grounds the cross-complaint fails to state a valid cause of action.

WiIliams and Swanson dismissed their claims in the cross-complaint a few days before the demurrer was filed. To the extent the demurrer is directed at these parties’ causes of action for declaratory relief, it is DROPPED as moot.

The demurrer to Dhanraj’s declaratory relief cause of action is OVERRULED. Dhanraj asks for several declarations as to past conduct. As Cross-Defendants note, declaratory relief is prospective and is only available to govern legal relationships going forward. To the extent Dhanraj’s cause of action is retrospective, it is improper.

However, Dhanraj also asks for a declaration that he is the sole owner of certain real property. (See Cross-Compl., ¶ 14(b).) This portion of the Dhanraj’s cross-complaint could operate prospectively and is not improper for seeking redress of past wrongs. The court must overrule the demurrer if it states a viable cause of action on any theory.

Cross-Defendants appear to argue in the alterative that Dhanraj’s cause of action is defective in its entirety because the purchase and sale contracts associated with the subject properties are not disputed. Dhanraj’s allegations, however, can be construed to establish that there is a dispute over the legal effect of these contracts.

Cross-Defendants also argue that Dhanraj is not a party to or in privity with any party to any purchase and sale contract and, therefore, lacks contractual standing. That, however, does not alter the conclusion that Dhanraj has alleged a justiciable controversy over property rights supporting a declaration of rights and duties. Declaratory relief is not improper simply because the declaration is likely to be adverse to the party seeking it. Consequently, a contention Dhanraj does not possess the property rights he posits does not compel an order sustaining the demurrer to his cause of action.

Because the court must construe the allegations liberally in Dhanraj’s favor at this juncture, it rejects Cross-Defendants’ construction. Moreover, because the court must overrule the demurrer even if it only states one viable claim among several within a single cause of action, the demurrer to Dhanraj’s cause of action is overruled.

Finally, Cross-Defendants’ demurrer to Sahadeo’s declaratory relief cause of action is SUSTAINED with leave to amend. Sahadeo only seeks declarations addressing past wrongs and, as a result, has not stated a valid cause of action. Because this is Cross-Defendants’ first objection to Sahadeo’s allegations, leave to amend is granted.

Disposition

The demurrer to Swanson’s and Williams’ causes of action for declaratory relief is DROPPED as moot.

The demurrer to Dhanraj’s cause of action is OVERRULED.

The demurrer to Sahadeo’s cause of action is SUSTAINED with leave to amend.

No later than 2/06/18, Sahadeo and Dhanraj may file a first amended cross-complaint (FACC) in which Sahadeo attempts to state a valid cause of action for declaratory relief; response(s) due within 30 days thereafter, 35 days if the FACC is served by mail. (See CCP § 430.41.)

Although not required by any statute or rule of court, Dhanraj and Sahadeo are requested to attach a copy of the instant minute order to the FACC to facilitate the filing of the pleading.

If any cross-defendant intends to demur to the FACC or move to strike, it shall determine if any other defendant who has appeared in this action also intends to demur or move to strike. If so, all such defendants shall coordinate a single hearing date for the demurrers and motions to strike. Additionally, a copy of the FACC shall be included with the moving papers.