Case Number: GC046849 Hearing Date: April 11, 2014 Dept: B

Motion for Leave to File Complaint in Intervention

Motion to Substitute a Successor

Motion to Strike Cross-Complaint

This case arises from the Plaintiff’s claim that the Defendants breached a settlement agreement. The Plaintiff is a general partner in Defendant, Park Center Partnership. The partnership owns commercial real property at 221 East Walnut St., Pasadena, CA. The Defendant, Forefront, Inc., is also a general partner in Park Center Partnership and it rents a portion of the commercial real property at 221 East Walnut St. Defendant, Larry Sue, is the Chief Financial Officer of California Forefront, Inc.

The parties agreed to settle claims in a settlement agreement on November 4, 2004. Under the agreement, the parties set the rent due from California Forefront, Inc., and made agreements regarding reports, and payments for extraordinary expenses. The Plaintiff claims that the Defendants breached this agreement by failing to pay the rent due and by mismanaging the parking spaces in the building. Further, the Plaintiff claims that the Defendants have unlawfully invested partnership funds and have refused to permit the Plaintiff to act as general partner. The Plaintiff brought this action to seek an accounting and to obtain damages.

The Defendant, California Forefront, LLC, filed a Cross-Complaint to plead that the Plaintiff breached her fiduciary duties by failing to pay an initial capital contribution.

Trial is set for June 16, 2014.

The Plaintiff, Lily Wong, passed away on November 7, 2013. As a result of her death, Wyman Ip, who is another partner in Defendant, Park Center Partnership, has filed a motion for leave to intervene in this case. Further, there is a motion to substitute a successor-in-interest in place of Lily Wong. Finally, there is Lily Wong’s demurrer and motion to strike directed at the Cross-Complaint.

1. Motion for Leave to File a Complaint-in-Intervention
Proposed intervenor, Wyman Ip, seeks leave to intervene to protect his 20% interest in Park Center Partnership, which is a named Defendant in this action, by filing a Complaint-in-Intervention that includes the following causes of action:

1) Accounting;
2) Conversion;
3) Breach of Fiduciary Duty;
4) Breach of Contract;
5) Negligence; and
6) Intentional Misrepresentation.

Under CCP section 387 any person who has an interest in the matter in litigation or in the success of either of the parties may intervene in the action by uniting with the plaintiff or the defendant. CCP section 387 requires the party to obtain leave of Court and to serve the motion on all parties to the action. Under CCP section 387(b), the Court shall permit a party to intervene when the party shows that one of the following apply:

1) a provision of law confers an unconditional right to intervene; or
2) the intervener claims an interest relating to the property or transaction which is the subject of the action and the intervener is so situated that the disposition of the action may as a practical matter impair or impede the intervener’s ability to protect that interest, unless that person’s interest is adequately represented by existing parties.

Intervention is possible, if otherwise appropriate, at any time, even after judgment. Mallick v. Superior Court (1979) 89 Cal. App. 3d 434, 438.

Wyman Ip provides facts in his declaration to demonstrate that he is a 20% owner and limited partner in Park Center Plaza. Mr. Ip states in paragraph 6 that he had granted his proxy to Lily Wong with regards to his interest in Park Center Plaza. Mr. Ip states in paragraph 6 that as a result of her death, he no longer believes that his interest is protected.

This evidence indicates that Wyman Ip claims an interest in the partnership property which is the subject of this action, i.e., Park Center Plaza. Further, Mr. Ip’s ability to protect his interest has been impaired and impeded by the death of Lily Wong, in whom he had entrusted his proxy and who he believed would protect his partnership interests.

The Defendant, California Forefront LLC, filed opposition papers to question what has changed that would require a Complaint-in-Intervention. Since the moving papers expressly articulate that the death of Lily Wong is the basis for seeking leave to intervene, this offers no grounds to find that the motion lacks merit.

California Forefront LLC also requests that the trial date be vacated and discovery re-opened. The Complaint-in-Intervention must be served and the Defendants will have the opportunity to file responsive pleadings. Further, the parties will need to obtain discovery into the claims in the Complaint-in-Intervention and into any defense to the Complaint-in-Intervention.

The trial date is June 16, 2014, which is approximately two months after this hearing. It does not appear reasonably possible for the parties to complete discovery within this time. Further, as discussed below, the case is not ready for trial because the Plaintiff and Cross-Defendant, Lily Wong, has passed away and no proper party has been substituted in her place. Accordingly, at the hearing, the Court will make an inquiry to determine a new trial date and issue an order re the discovery cut-off.

The Defendant, Park Center Partnership, filed a conditional non-opposition. Park Center Partnership requests that Wyman Ip make himself available for deposition. Park Center Partnership should simply avail itself of the procedures for taking a deposition by serving a notice of deposition to obtain the deposition.

Park Center Partnership also requests that its answer to Lily Wong’s Complaint be deemed an answer to the Complaint-in-Intervention. The Court decline this request to avoid any confusion in the Court’s record. Instead, each Defendant named in the Complaint-In-Intervention must file a responsive pleading to the Complaint-in-Intervention.

Therefore, the Court grants Wyman Ip’s motion for leave to intervene.

2. Motion to Substitute Successor-in-Interest

The Plaintiff, Lily Wong, passed away on November 7, 2013 (see copy of certificate of death in exhibit A to moving papers). John Wong has filed this motion to request that the John W. Wong and Lily Y. Wong Family Trust be substituted in place of Lily Wong.

The procedures for bringing claims held by a decedent are enacted in CCP sections 377.30 et seq. CCP section 377.30 states that a cause of action that survives the death of the person entitled to commence the claim is passed to the person’s successor in interest. The section states that the action may be commenced by the decedent’s personal representative or, if none, by the decedent’s successor in interest.

Further, CCP section 377.31 provides that after the death of the person who commenced an action, on motion, the Court shall allow a pending action that does not abate to be continued by the decedent’s personal representative or, if none, by the decedent’s successor in interest. CCP section 377.32 identifies the procedures that must be followed by a successor in interest that seeks to continue the case.

Under CCP section 377.32 the person seeking to commence an action based on the claims of Lily Wong must execute an affidavit or declaration under penalty of penalty stating the following:

1) the decedent’s name;
2) the date and place of the decedent’s death;
3) that no proceeding is pending in California for administration of the decedent’s estate;
4) if the estate was administered, a copy of the final order must be included showing the distribution of the decedent’s cause of action to the successor in interest;
5) a statement that the plaintiff is decedent’s successor in interest or authorized to act on the successor in interest’s behalf; and
6) that no other person has a superior right to commence the action or proceeding or to be substituted for the decedent in the pending action or proceeding.

CCP section 377.11 defines “decedent’s successor in interest” to mean the beneficiary of the decedent’s estate or other successor in interest who succeeds to a cause of action or to a particular item of the property that is the subject of a cause of action.

The motion includes a declaration from John Wong, who is the surviving husband of Lily Wong. Mr. Wong identifies the date of Lily Wong’s death and states that there is no proceeding for the administration of Lily Wong’s estate and that no other person or entity has a superior right to commence the action or be substituted in place of Lily Wong.

Mr. Wong states that he is the surviving trustee of the John W. Wong and Lily Y. Wong Family Trust (“Trust”), and that the Trust should be substituted in place of Lily Wong. Mr. Wong states that Lily Wong’s interest was held by the Trust prior to her death and that there has not been any change in control or ownership. Further, Mr. Wong states that the trust will maintain ownership, control, and interest in the Park Center Partnership.

However, there is insufficient evidence to find that the Trust is the successor-in-interest of Lily Wong. There is no evidence that the Trust is the beneficiary of Lily Wong’s estate. There is no evidence that Lily Wong’s causes of action pass to the Trust at her death, e.g., an agreement under which Lily Wong’s interest would pass to the Trust at the time of her death. Accordingly, Mr. Wong’s motion does not include sufficient evidence to demonstrate that the Trust satisfies the definition of successor in interest in CCP section 377.11.

In the reply, John Wong argues that Trust is the successor-in-interest because Lily Wong “moved” her partnership interest into the Trust. This was a transfer and there is no evidence that Lily Wong executed an agreement to transfer her general partnership to the Trust. Further, if there were such a transfer, the Trust would be the real party in interest, not Lily Wong, i.e., the Plaintiff would be the Trust in this case and Lily Wong would be the trustee who brought the claims on behalf of the Trust. A review of the pleadings reveals Lily Wong, as an individual, commenced this action. Lily Wong alleged in her Complaint that she is a general partner in the Park Center Limited Partnership. She did not commence the action as a trustee on behalf of the Trust, as she would have been required if the Trust held her partnership interest.

Further, the Defendants, California Forefront, LLC, and Park Center Partnership, filed opposition papers to argue that Lily Wong’s partnership interest became solely an economic right to a distribution on her death. The Defendants cite to legal authority holding that on death, a general partner is disassociated and loses the right to participate in the management of the partnership. See Corporation Codes 15906.3 and 1506.05. This indicates that Lily Wong’s general partnership interest became, at her death, a right to distribution that would be passed to her heirs. There would be no “successor-in-interest” of her general partnership.

Therefore, the Court denies the request to substitute the Trust in place of Lily Wong because the motion of John Wong does not provide sufficient facts to demonstrate that the Trust is Lily Wong’s successor-in-interest. Instead, since no proceeding is pending for the administration of Lily Wong’s estate, it appears that John Wong, as her surviving husband, would be her successor-in-interest. However, John Wong did not request that he be substituted in place of Lily Wong.

CCP section 377.31 authorizes the Court to substitute a personal representative or successor-in-interest in place of a deceased plaintiff. It does not authorize the Court to substitute any other party in place of the deceased plaintiff. Since the motion does not provide sufficient facts to demonstrate that the Trust is the successor-in-interest, there are no grounds to issue the requested relief.

3. Demurrer and Motion to Strike

Lily Wong’s demurrer and motion to strike were filed on March 19, 2014. This occurred after her death on November 7, 2013. However, no estate or successor-in-interest had been substituted in her place.

The opposition papers argue that it is improper for Lily Wong to file a demurrer and motion to strike after she passed away. Under CCP section 377.21, a pending action does not abate by reason of the death of a party if the cause of action survives. When a plaintiff dies, the proper procedure is to seek leave to amend the complaint to substitute the personal representative or successor in interest in place of the plaintiff. See e.g., Pepper v. Superior Court (1977) 76 Cal. App. 3d 252, 260-261 (finding that the Court was required to substitute a personal representative in place of the plaintiff as a party to the action).

Further, a trial cannot proceed and judgment cannot be given for or against the decedent, nor for or against the decedent’s personal representative until the latter has been made a party by substitution. Herring v. Peterson (1981) 116 Cal.App.3d 608, 611-612. The Court’s jurisdiction to try a case is lost upon the defendant’s death because any judgment rendered against a deceased defendant is in excess of the Court’s jurisdiction to try the case. Id.

Here, the Plaintiff and Cross-Defendant passed away on November 7, 2013. The Court lost jurisdiction to try the case until a party has been substituted in her place. As discussed above, the motion to substitute a trust in place of Lily Wong is denied. Accordingly, no party has filed a proper motion to substitute the personal representative or the successor-in-interest in place of the Plaintiff.

In the reply, the Plaintiff’s attorney argues that he can assume control of the case and prosecute it. He cites to Casey v. Overhead Door Corp. (1999) 74 Cal. App. 4th 112. However, a review of Casey reveals no holding that an attorney may take control and litigate a case after the death of his or her client. Instead, Casey concerned the transfer of a party’s interest during the pendency of an action. When there is the transfer of interest in a pending action, the attorney for the nominal party/assignor does not automatically cease to be the attorney of record. Id. at 121. When a new attorney appears with actual authority to act on behalf of a party, the Courts excuse the absence of record of a formal substitution and validate the attorney’s acts, particularly when the adverse party has not been misled or otherwise prejudiced. Id.

Further, the Plaintiff’s attorney is incorrect. Under California law, the power and authority of an attorney dies with the client. Herring v. Peterson (1981) 116 Cal. App. 3d 608, 612. Accordingly, the Plaintiff’s attorney had no power or authority to file any motions on behalf of Lily Wong, i.e., it was improper for him to file the demurrer and motion to strike.

Instead, a personal representation or proper successor-in-interest must be substituted in place of Lily Wong. This new party’s attorney will have authority to file a demurrer and motion to strike.

Accordingly, the Court takes the demurrer and motion to strike off calendar because they were filed without authority by any party. Further, the Court sets an Order to Show Cause regarding the substitution of a party in place of the Plaintiff to ensure that the case proceeds forthwith. Since the Court is without jurisdiction to try the case, the case is not ready for trial and this is grounds to vacate or continue the trial date of June 16, 2014.