30-13-644905

Two Motions for Summary Judgment/Adjudication

I. Defendants VICKI LYNN FRYE DAVIS and CHRISTY LEE FRYE SLOCUM move for summary judgment as to Original Complaint filed on 4/19/13, or in the alternative for summary adjudication as to the first and third causes of action.

II. Defendant JOHN CHARLES PETRY moves for summary judgment on four grounds, or in the alternative for summary adjudication of five issues.

Plaintiffs STUART S. FRYE JR. and GM ASSET MANAGEMENT LLC oppose the motions. The court DENIES the motions for the reasons set forth below:

I. Davis and Slocum

A. SUMMARY ADJUDICATION

1. First Cause of Action

Defendants make a prima facie showing that Plaintiffs cannot prevail on their first cause of action for breach of contract and breach of the implied covenant of good faith and fair dealing because —

(a) Davis and Slocum, as limited partners of FFP, were not authorized by the FFP Partnership Agreement to determine the amount of distributions to Stuart Frye Jr. (Facts 63-78);

(b) Davis and Slocum did not determine or attempt to influence the amount of distributions made to FFP’s partners after they voted to remove GM as general partner (Facts 79-84);

(c) Davis and Slocum complied with the terms of the FFP Partnership Agreement when they voted to remove GM as general partner of FFP (Facts 85-91);

(d) Davis and Slocum complied with the terms of the FFP Partnership Agreement when they voted to appoint FFP Management Services Inc. as general partner of FFP (Facts 92-100);

(e) Davis and Slocum did not breach the FFP Partnership Agreement’s implied covenant of good faith and fair dealing (Facts 101-143)

The burden shifts to Plaintiffs. In Opposition, Plaintiffs carry their burden to show that there are triable issues of material fact as to –

(a) whether the amended Limited Partnership Agreements after April 2009 were valid (Plaintiff’s Fact [PF] 64);

whether all three siblings have always held the same number of partnership units, given that the sisters each gave a ½ unit to Haynes (PF 75);

whether Stuart Frye Jr. alone managed FFP, as President of GM, from 2003 until March 23, 2009, or whether he is still the rightful general partner, because the sisters had no authority to appoint a new general partner without his consent, and because the sisters had no right to transfer shares to Haynes, who was neither a child or spouse of an original member (PF 76); and

whether the sisters violated the FFP Partnership Agreement, which prohibits limited partners from participating in management by advising Petry to pay down debt, without a normal meeting and without Stuart Frye Jr.’s consent (PF 78).

(b) whether Stuart Frye Jr. distributed not only $18,000 a month to each sister, but also additional distributions totaling $640,000 to each partner, for the 4 years that he was general partner (PF 79);

whether FFPMS has maintained the same monthly distribution of $18,000 per month to each limited partner, or whether Petry has issued just under $100,000 in additional distributions in 5 years (PF 80);

whether Davis and Slocum did determine or influence the amount of distributions (PF 81-84);

(c) whether Davis and Slocum breached the Partnership Agreement when they removed GM as general partner (PF 86-91);

(d) whether Davis and Slocum breached the Partnership Agreement when they appointed FFPMS general partner (PF 93-100);

(e) whether Davis and Slocum breached the implied covenant of good faith and fair dealing (PF 106, 121, 124-143.)

2. Third Cause of Action

DENY. Defendants make a prima facie showing that Plaintiffs cannot prevail on their third cause of action for dissolution, because GM’s removal as general partner does not automatically require dissolution (Facts 144-163.)

The burden shifts to Plaintiffs. In Opposition, Plaintiffs carry their burden to show that there are triable issues of material fact as to whether the 4/20/09 vote to remove GM constituted an event of withdrawal that triggered dissolution and whether the unanimous consent of the partners was required to avoid dissolution and continue operations. (PF 155-163.)

B. SUMMARY JUDGMENT

1. First Cause of Action

DENY. The motion for summary judgment is denied for the same reasons set forth above in section I A (1). Triable issues of material fact remain. (PF 2, 6, 18-24, 26-34, 36-62.)

2. Third Cause of Action

DENY. This issue is moot because the court has already denied the motion in section I B (1) above, and the court need only identify one triable issue of material fact to deny a motion for summary judgment. However, if the court were to consider this issue, the court would deny the motion for summary judgment for the same reasons set forth above. Triable issues of material fact remain. (PF 2, 6, 18-24, 26-34, 36-62.)

II. Petry

A. SUMMARY ADJUDICATION

Petry’s motion for summary adjudication is DENIED on procedural grounds because the notice of motion and separate statement are defective. First, the headings in the separate statement and in the notice of motion fail to properly identify which cause of action, issue of duty, or affirmative defense is implicated. (CCP 437 (f)(1); CRC 3.1350 (b) and (h).) Second, the headings are not tracked verbatim in the memo in support.

Even if the court were required to rule on these 5 issues, the court would DENY the motion as to all 5 issues.

1. Issue 1: whether Petry is shielded from personal liability because FFPMS is the general partner of FFP.

Defendants make a prima facie showing. (Facts 59-69.) In Opposition, Plaintiffs show that triable issues of material fact remain. (PF 62-69.)

2. Issue 2: whether Petry did not participate in appointing FFPMS as general partner of FFP.

Defendants make a prima facie showing. (Facts 70-72.) In Opposition, Plaintiffs show that triable issues of material fact remain. (PF 71-72.)

3. Issue 3: whether the removal of GM as general partner triggered the dissolution of FFP.

Defendants make a prima facie showing. (Facts 73-88.) In Opposition, Plaintiffs show that triable issues of material fact remain. (PF 79-88.)

4. Issue 4: whether Petry breached the Partnership Agreement in the amount and timing of distributions issued to limited partners.

Defendants make a prima facie showing. (Facts 89-102.) In Opposition, Plaintiffs show that triable issues of material fact remain. (PF 92-102.)

5. Issue 5: whether Petry breached his fiduciary duty to Plaintiffs by accepting the position as CEO of FFPMS.

Defendants make a prima facie showing. (Facts 103-117.) But in Opposition, Plaintiffs show that triable issues of material fact remain. (PF 103-109, 111-117.)

B. SUMMARY JUDGMENT

1. First Cause of Action

The motion for summary judgment is denied for the same reasons set forth above in Section II A (1-5). Triable issues of material fact remain. (PF 6, 8-10, 14, 17-27, 29-31, 33-36, 38-58.)

2. Second Cause of Action

Moot.

3. Third Cause of Action

Moot.

III. Defendants’ Objections to Evidence

The court OVERRULES Defendants’ objections 1-43.

IV. Defendants’ Objection to Plaintiffs’ Expert Opinions

To DENY the motion to exclude Plaintiffs’ expert testimony. (CCP 2034.300.) Defendants argue that Plaintiffs failed to timely exchange their expert witness list on 4/11/14, as required by CCP 2034.260.

In Opposition, Plaintiffs argue that they PERSONALLY SERVED their expert witness list on 4/11/14. The court finds that there is no evidence of prejudice due to delay in service, nor is there any evidence that personal service, as opposed to email service, caused Defendants any prejudice. The court also finds that Plaintiffs appear to have complied with the relevant expert witness disclosure requirements of CCP 2034.260 (c).