Case Number: BC578213 Hearing Date: December 19, 2019 Dept: 24

Defendant Ramin Bagherzadeh’s motion for summary adjudication is DENIED.

This action centers around Defendant Mazkat Ventures L.P. (“Mazkat”), a limited partnership. Defendant American Logistics Advisors, LLC (“ALA”) is a general partner of Mazkat. Plaintiffs Babak Razi (“Razi”), Behnam Heshejin (“Heshejin”), the Heshfam Trust (the “Trust”), David Enzmann as Trustee (“Enzmann” or “Trustee”), and Eric Anvari (“Anvari”) (collectively “Plaintiffs”) are limited partners of Mazkat, whose aggregate ownership interest is 29.85%. Mazkat’s sole asset is a limited liability company, Defendant American Logistics International (“ALI”). Defendants Alireza Mahdavi (“Mahdavi”), Ramin Bagherzadeh (“Bagherzadeh”), Amirali Jandaghi (“Jandaghi”), and Mohammad K. Tehranirad (“Tehranirad”) are the remaining limited partners of Mazkat. Jandaghi is also a shareholder, director and officer of Defendant Napa Industries Inc. (“Napa”).

On April 9, 2015, Plaintiffs initiated this action against Mahdavi, ALA, Bagherzadeh, ALI, Mazkat, Jandaghi, and Tehranirad. Several cross-complaints and related cases were also filed during the pendency of this suit. Relevant to the instant motion is Plaintiffs’ operative Third Amended Complaint (“TAC”) on November 9, 2017, which added Napa to the suit as a defendant, and alleged ten causes of action for: (1) breach of limited partnership contract; (2) breach of fiduciary duty; (3) breach of the duty of loyalty; (4) declaratory relief; (5) conversion; (6) fraud; (7) dissolution of limited partnership (Cal. Corp. Code § 15908.02); (8) accounting; (9) removal and replacement of general partners; and 10) breach of fiduciary duties.

In the TAC, Plaintiffs allege wrongdoing by ALA and ALA’s controlling managers Mahdavi and Bagherzadeh. Generally, Plaintiffs allege that defendants made numerous oral and written misrepresentations to the individual Plaintiffs that consisted of false, incorrect, and incomplete financial reporting, deliberate concealment of diversion of funds from company bank accounts, and false statements about the actual capital status and needs of the company. The TAC alleges that Jandaghi allegedly held himself out either as a CEO of ALI or as a CFO of ALI to both Mazkat’s limited partners and third parties. (TAC ¶ 101.) As such, Plaintiffs allege that Jandaghi owed fiduciary duties to ALI and Mazkat which he breached by engaging in self-dealing in receiving full salary while being part time, in converting company funds in salary for their own purposes, in failing to discharge their duties as CEO and as CFO of ALI by failing to properly oversee ALI’s accounts and operations, allowing others to remove moneys from ALI accounts, and in exposing Plaintiffs and Mazkat to ultra vires liability. (TAC ¶ 117.)

On September 20, 2019, Bagherzadeh moved for summary adjudication against Plaintiffs’ direct second and third causes of action. On November 20, 2019, Plaintiffs Anvari, Heshejin, and the Heshejin Trust filed an opposition. On December 13, 2019, Bagherzadeh filed a reply, and a notice of non-opposition as to Razi.

Summary Judgment Standard

A party may move for summary adjudication as to one or more causes of action, affirmative defenses, claims for damages, or issues of duty if that party contends that there is no merit to the cause of action, defense, or claim for damages, or if the party contends that there is no duty owed. (See CCP §437c(f)(1).) “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Ibid.) A cause of action has no merit if: (1) one or more elements of the cause of action cannot be separately established, even if that element is separately pleaded, or (2) a defendant establishes an affirmative defense to that cause of action. (See CCP §437c(n); Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 583.) Once the defendant has shown that a cause of action has no merit, the burden shifts to the plaintiff to show that a triable issue of material fact exists as to that cause of action. (See CCP §437c(o)(2); Union Bank, supra, 31 Cal.App.4th at 583.)

In order to obtain summary judgment, “all that the defendant need do is to show that the plaintiff cannot establish at least one element of the cause of action.” (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853; see also Mitchell v. United National Ins. Co. (2005) 127 Cal.App.4th 457.) “Although he remains free to do so, the defendant need not himself conclusively negate any such element.” (Ibid.) “Once the defendant has made such a showing, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action. If the plaintiff does not make such a showing, summary judgment in favor of the defendant is appropriate.” (See Mitchell, supra, 127 Cal.App.4th at 467.)

Until the defendant meets this evidentiary burden, the plaintiff has no burden to present evidence showing a triable issue of fact. (See Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, 178; see also Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 940, citing Duckett v. Pistoresi Ambulance Service, Inc. (1993) 19 Cal.App.4th 1525, 1533 [“[w]here the evidence presented by defendant does not support judgment in his favor, the motion must be denied without looking at the opposing evidence, if any, submitted by plaintiff”].)

Evidentiary Rulings

Bagherzadeh’s objections nos. 1-17, 21-26 to the Heshejin Declaration are OVERRULED. The identical objections to the Anvari Declaration are likewise OVERRULED. The Court finds that the declarations embrace issues framed by the pleadings.

The Court declines to rule on the remainder of the objections by both parties. (CCP § 437c(q).)

Direct Liability on the Third and Fourth Causes of Action

Bagherzadeh moves to adjudicate the fiduciary duty causes on the grounds that he owed no duty to Plaintiffs. Bagherzadeh argues that the gravamen of Plaintiffs’ claims are that they, as limited partners in Mazkat, were damaged by defendants siphoning funds from ALI and foreign investors in ALI. Bagherzadeh thus asserts that Plaintiffs’ damages are incidental to the damages to either ALI or Mazkat, and thus Plaintiffs have no direct standing.

“[A] shareholder cannot bring a direct action for damages against management on the theory their alleged wrongdoing decreased the value of his or her stock (e.g., by reducing corporate assets and net worth). The corporation itself must bring such an action, or a derivative suit may be brought on the corporation’s behalf.” (Schuster v. Gardner (2005) 127 Cal.App.4th 305, 312.) “An action is derivative if ‘the gravamen of the complaint is injury to the corporation, or to the whole body of its stock or property without any severance or distribution among individual holders, or if it seeks to recover assets for the corporation or to prevent the dissipation of its assets.’” (Id. at 313.) “An individual cause of action exists only if damages to the shareholders were not incidental to damages to the corporation.” (Ibid.) Shareholder claims asserting damages for breaches of fiduciary duty directors and officers owe the entity are classic examples of derivative claims. (Ibid.) Thus, a shareholder’s suit is non-derivative when it is brought to enforce a right against the corporation which the stockholder possesses as an individual; the individual wrong necessary to support a suit by a shareholder need not be unique to the shareholder but may affect a substantial number of shareholders. (See Jones v. HF. Ahmanson & Co. (1969) 1 Cal.3d 93, 107- 108 Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal. App. 4th 282, 296- 297 [direct suit stated where defendant had deceived him into exchanging valuable stock in acquired corporation for worthless stock in acquiring corporation].)

The Corporations Code provides that “a partner may maintain a direct action against the limited partnership or another partner for legal or equitable relief, with or without an accounting as to the partnership’s activities, to enforce the rights and otherwise protect the interests of the partner, including rights and interests under the partnership agreement or this chapter or arising independently of the partnership relationship.” (Corp. Code § 15910.01(a).) A partner bringing a direct action under this section is required to prove an actual or threatened injury that is not solely the result of an injury suffered or threatened to be suffered by the limited partnership. (Corp. Code § 15910.01(b).) Therefore, partners owe fiduciary duties to the partnership and its partners. (See Feresi v. The Livery, LLC (2014) 232 Cal.App.4th 419, 425.) The parties do not dispute that Bagherzadeh and Plaintiffs are limited partners in Mazkat.

Here, Bagherzadeh asserts that Plaintiffs’ damages only stem from damages to ALI/Mazkat, and thus any personal diminution of their interests pled is only incidental to damage to the corporation. (SSMF 26.) In response, opposing Plaintiffs dispute this evaluation of the damages. Plaintiffs provide evidence that Bagherzadeh engaged in actions which led to the direct dilution/devaluation of their limited partnership interest in Mazkat. (Behnam Decl., ¶¶ 7-32; Anvari Decl., ¶¶ 7-32.) Specifically, that in 2009, Bagherzadeh sent a series of email corresponded that fraudulently presented the financial health of ALI and presented two schemes to raise capital. (Id. ¶ 16.) As a part of the schemes, Bagherzadeh suggested a structure where both his and Mahdavi’s interest in Mazkat would increase based off of their investments into ALI. (Id. ¶¶ 16-23.) Bagherzadeh and Mahdavi increased their partnership interests in Mazkat to 21% by converting their loans to ALI to equity positions in Mazkat while keeping the other partners at the same level. (Id. ¶ 22.)

This evidence demonstrates that Plaintiffs’ interest in Mazkat was diminished by the fraudulent acts of Bagherzadeh. Thus, this damage was not incidental to the company’s damages, but a direct diminution of Plaintiffs’ interest in favor of Bagherzadeh and Mahdavi. This tracks with Plaintiffs’ cited case law allowing direct suits to continue. (See e.g. Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 102-105 [a minority shareholder had standing to sue the majority shareholder of the corporation who breached their fiduciary duty by creating an independent holding company, and then transferring their control block of shares, making their own interests more marketable and destroying the market value of the shares held by the minority].) Bagherzadeh makes no substantive point on this analysis in reply.

Bagherzadeh responds that the opposition is attempting to create an issue outside of the TAC. Indeed, the pleadings play a critical role in a summary adjudication motion in framing the issues. (Hutton v. Fidelity Nat’l Title Co. (2013) 213 Cal.App.4th 486, 493.) The pleadings serve as the “outer measure of materiality” in a summary adjudication motion, and the motion may not be granted or denied on issues not raised by the pleadings. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258; Nieto v. Blue Shield of Calif. Life & Health Ins. Co. (2010) 181 Cal.App.4th 60, 73.) A summary judgment defendant need only “negate plaintiffs theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleading.” (Hutton, supra, 213 Cal.App.4th at 493.) Further, an opposing party’s opposition papers cannot create issues outside the pleadings. (Ibid.; see Nativi v. Deutsche Bank Nat’l Trust Co. (2014) 223 Cal.App.4th 261, 290 [declarations in opposition to motion for summary judgment “are not a substitute for amending the pleadings to raise additional theories of liability”].) Additionally, cases have expressed the view that courts are empowered to read the pleadings broadly, “in the light of the facts adduced in the summary judgment proceeding,” if those pleadings give fair notice to the opposing party of the theories on which relief is generally being sought. (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 385.)

The Court does not find this to be an unpled issue. The TAC properly frames the issues presented. First, both causes of action for breach of fiduciary duty allege that Plaintiffs were damaged through the depletion of their partnership interests. (TAC ¶¶ 41, 46.) The TAC further alleges that Bagherzadeh breached his partnership duties to Plaintiffs and the other partners, which caused the depletion of Plaintiffs’ individual interests. (TAC ¶ 39.) The TAC, liberally construed, frames these issues. While it is true that the TAC does not contained detailed factual allegations concerning this specific devaluation, the TAC still frames the issue in general terms. Bagherzadeh’s authorities only pertain to unpled legal theories. (See e.g. Hutton, supra, 213 Cal.App.4th at 496 [concluding that plaintiff’s entire complaint was founded on one, and only one, theory of liability under a specific statute].)

Simply put, this is not an un-plead legal theory but a dispute concerning the underlying facts of the pled legal theories. The TAC plainly states that Bagherzadeh breached his fiduciary duties to Plaintiffs as a partner in the partnerships. Bagherzadeh points to no authority requiring that all of the potential damages be particularly and specifically pled in this instance. To the extent that this is not plead, this would merely be a technical defect in the pleadings and amenable to amendment.

As to Razi, the Court finds that the opposing Plaintiffs’ evidence equally applies to him. CCP section 437c(c) instructs the court to grant the motion only if “all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Further, that the Court “shall consider all of the evidence set forth in the papers…” (Ibid.) Here, the papers show that there is a triable dispute of material fact. Thus, granting the motion as to Razi (who sits in nearly identical shoes as the other Plaintiffs) would be improper.

Accordingly, Bagherzadeh’s motion is DENIED.

Moving party is ordered to give notice.