2011-00114171-CU-BC

Bains Brothers LLC vs. Lakhbir Singh

Nature of Proceeding:    Motion for Summary Adjudication (Filed by Defendant)

Filed By:  Shaffer, Bruce L.

The motion of Cross-Defendant Inderpal S. Mayall (“Mayall”) for summary adjudication
of the second cause of action in Lakhbir Singh’s (“Singh”) first amended cross-
complaint (“FACC”) is DENIED. Factual/Procedural Background

This case arises from the sale of Plaintiff Bains Brothers, LLC (“BB”), which allegedly
operates a Valero gas station in Sacramento County.  Plaintiffs BB and TANL, LLC
(“TANL”) allege that in 2009 TANL purchased a 100 percent membership interest in
BB from its former members and managers, Singh and non-parties Manjit Singh and
Kuldip Singh Bains.  Plaintiffs allege that, shortly after TANL became the sole member
of BB, these individuals fraudulently, in violation of Corporation Code § 17356, and
without notice to Plaintiffs, caused a Certificate of Cancellation of BB to be filed with
the Secretary of State.  Plaintiffs further allege that Mayall colluded with Singh to
cause the Certificate of Cancellation to be filed.  Mayall allegedly acted as Singh’s
accountant.

Plaintiffs allege that the cancellation of BB caused them to suffer monetary losses.
Their complaint contains several causes of action directed at Singh.  In his cross-
complaint, Singh has pleaded against Mayall causes of action for negligence, the
unauthorized practice of law and indemnity.  Mayall now moves for summary
adjudication of the Second Cause of Action for Unauthorized Practice of Law [B&P
Code §§ 6125 et seq.].

Discussion

Singh alleges that the Certificate of Cancellation of BB “was recommended, chosen,
drafted and/or filed by Mr. Mayall… .”  (FACC, ¶ 3; see also id., ¶ 11.)  Thus, Singh
contends, not merely that Mayall practiced law by filing the cancellation, but that he did
so by recommending that the document be filed.  A discussed below, this allegation of
a recommended course of conduct, and Mayall’s failure to produce admissible
evidence establishing that he did not make such a recommendation, compel the court
to deny the motion.

The “practice of law” generally encompasses services performed in courts of justice,
the provision of legal advice and the preparation of legal instruments and contracts.
(See People v. Landlords Prof. Svcs. (1989) 215 Cal.App.3d 1599, 1604-1605
[citations omitted].)  “In close cases, the courts have determined that the resolution of
legal questions for another by advice and action is practicing law if difficult or doubtful
legal questions are involved which, to safeguard the public, reasonably demand the
application of a trained legal mind.”  (Id. at 1605 [citation and internal quotation marks
omitted].)

People v. Sipper (1962) 61 Cal.App.2d Supp. 844, overruled on another point in
Murgia v. Municipal Court for Bakersfield Judicial District (1975) 15 Cal.3d 286,
involved a real estate broker’s advice on how to protect an individual making a loan.
Included in the broker’s advice were determinations about particular instruments to be
used to secure the lender’s interest.  First the broker drew up a deed of trust, but when
it was rejected at the recorder’s office, he drew up a mortgage.  No one had asked the
broker to prepare any particular document to protect the lender.

The Court of Appeal affirmed the broker’s criminal conviction for the unauthorized
practice of law.  (Sipper, 61 Cal.App.2d Supp. at 846.)  Among other things, the court
observed:

If defendant [broker] had only been called upon to perform and had only
undertaken to perform the clerical service of filling in the blanks on a
particular form in accordance with information furnished him by the
parties, or had merely acted as a scrivener to record the stated
agreement of the parties to the transaction, he would not have been
guilty of practicing law without a license.

(Id. at 846-847 [brackets added].)  Because the broker determined which instruments
would advance his clients’ interest, however, he engaged in the unauthorized practice
of law.  (Id. at 847.)

Mayall has produced evidence that he performs tax services, (Undisputed Material
Facts (“UMF”) 5-6), that he has performed tax services to BB for several years, (UMF 7
-8), and that he “executed and filed with the California Secretary of State Office a
Certificate of Cancellation of BAINS BROTHERS LLC.”  (UMF 9.)  Mayall has not
produced evidence, though, precluding a reasonable inference that, in addition to
executing and filing the Certificate of Cancellation, he recommended the certificate be
filed.  In fact, Mayall appears to contend that such evidence is immaterial to the
motion.  (See Moving Memo. at 5:7-9.)  Thus, Mayall has failed to meet his initial
burden to produce evidence demonstrating the nonexistence of any triable issue of
material fact, i.e., whether he made any determinations or recommendations about the
effect filing the Certificate of Cancellation would have on Singh’s legal interests.  Given
Sipper, the absence of such evidence bars determinations that Mayall did not practice
law without authority and, hence, that he is entitled to adjudication as a matter of law.

In reaching its conclusion, the court is aware of Mayall’s assertions that accountants
such as him customarily cancel LLC’s on their clients’ behalf, and that the Secretary of
State has provided online instructions for laypersons to file cancellations.  (See Moving
Memo. at 5:12-21.)  These assertions support a conclusion that the filing of a
certificate of cancellation does not inherently involve the practice of law.  At the same
time, Mayall’s assertions do not compel a conclusion that the filing of a cancellation,
where recommended by the accountant or agent, never involves the practice of law.
As Sipper teaches, whether a party has engaged in the practice of law depends in part
on whether (s)he made determinations about which legal instruments were required to
protect the client.  Because Mayall has not produced evidence that he played no role
in deciding whether to file the cancellation to protect Singh, summary adjudication
must be denied.

The court is also aware of Mayall’s expert’s opinions that (1) an accountant’s or
enrolled agent’s filing of a certificate of cancellation is not the practice of law and (2)
Mayall did not practice law when he “completed and filed” the Certificate of
Cancellation.  (See Davis Decl., ¶ 7.)  Because the latter opinion does not take into
consideration Singh’s allegation that Mayall recommended that the cancellation be
filed, it does not demonstrate the nonexistence of a triable issue.   As to the former
opinion, it does not preclude an inference that Mayall practiced law in this particular
case.

Mayall’s request for judicial notice is UNOPPOSED and GRANTED.

Singh’s evidentiary objections are OVERRULED.

Mayall’s evidentiary objections are SUSTAINED.             The minute order is effective immediately.  No formal order pursuant to CRC 3.1312 or
further notice is required.

Item  9     2011-00114171-CU-BC

Bains Brothers LLC vs. Lakhbir Singh

Nature of Proceeding:   Motion for Summary Adjudication (Filed by Plaintiffs)

Filed By:  Steuer, Melinda Jane

The motion of Plaintiffs Bains Brothers, LLC (“BB”) and TANL, LLC (“TANL”)
(collectively “Plaintiffs”) for summary adjudication of their first, second and fifth causes
of action is GRANTED in part and DENIED in part as follows:

Factual/Procedural Background

This case arises from the sale of BB, which allegedly operates a Valero gas station in
Sacramento County.  Plaintiffs allege that in 2009 TANL purchased a 100 percent
membership interest in BB from its former members and managers, Defendant Lakhbir
Singh (“Singh”) and non-parties Manjit Singh and Kuldip Singh Bains.  Plaintiffs allege
that, shortly after TANL became the sole member of BB, these individuals fraudulently,
in violation of Corporation Code § 17356, and without notice to Plaintiffs, caused a
Certificate of Cancellation of BB to be filed with the Secretary of State.  Plaintiffs
further allege that Defendant Inderdal S. Mayall (“Mayall”) colluded with Singh to cause
the Certificate of Cancellation to be filed.  Mayall allegedly acted as Singh’s
accountant.  (The court refers to Mayall and Singh collectively as “Defendants”).

Plaintiffs allege that before they learned of Defendants’ misdeeds, TANL’s commercial
landlords issued a 10-day notice to perform lease covenants or quit.  The landlords
allegedly issued the notice on grounds that BB was a cancelled entity and, therefore,
was no longer authorized to maintain insurance required under the lease.  Plaintiffs
allege that the only way for them to reinstate BB was by petition for writ of mandate.
They also allege that it was impossible for them to obtain the writ within 10 days and,
as a result, the landlords commenced an unlawful detainer action.  Once Plaintiffs
learned about the Certificate of Cancellation, the landlords allegedly purchased
additional insurance on BB’s behalf and dismissed the unlawful detainer action in
exchange for, among other things, Plaintiffs’ payment of $44,635.10 as reimbursement
of costs and expenses.  Plaintiffs also allegedly agreed to reinstate BB, and they
allegedly incurred their own fees and costs while defending in the unlawful detainer
action.  Plaintiffs obtained BB’s reinstatement by peremptory writ on June 17, 2011.
That proceeding allegedly caused Plaintiffs to incur additional fees and costs.

Plaintiffs’ complaint contains five causes of action.  They now move for summary
adjudication of the First, Second and Fifth Causes of Action for Breach of Written
Contract, Express Contractual Indemnity and Intentional Interference with Contractual
Relationship.

Discussion

The First Cause of Action against Singh for Breach of Written Contract

Summary adjudication is DENIED. The first cause of action is denied because Plaintiffs have failed to produce evidence
demonstrating the nonexistence of any triable issue as to whether Singh committed
any breach of the subject Membership Interest Purchase Agreement.  With respect to
the element of breach, Plaintiffs argue that, whereas Singh promised to relinquish
authority, control and management over BB, his cancellation of BB was an
“unauthorized exercise of [such] authority, control or management… .”  (Moving
Memo. at  17-19.)  Plaintiffs do not cite any legal authority to support their notion of
breach.

The court concludes that Singh’s role in BB’s cancellation need not be viewed as a
breach of a promise to relinquish control over BB.  Rather, it can also be construed as
an unauthorized act.  Although such an act may well have been unlawful under various
legal theories, it does not follow that it constitutes a breach of any contractual promise.
In other words, the fact that Singh may have cancelled BB without legal authority does
not mean that he failed to relinquish such authority pursuant to the contract.  Indeed,
Plaintiffs acknowledge that, pursuant to the membership purchase and sale
agreement, TANL received a 100 percent membership in BB, and Singh executed his
resignation.  (Se UMF 8-10.)  Because the evidence of Singh’s conduct does not
preclude a reasonable inference that Singh relinquished control over BB pursuant to
the agreement, Plaintiffs have not shown that they are entitled to adjudication of the
first cause of action as a matter of law.

The Second Cause of Action against Singh for Express Contractual Indemnity

Summary adjudication is GRANTED.

Singh concedes that Plaintiffs are entitled to summary adjudication.  (See Opp. at 23.)
Accordingly, this part of the motion is granted.

Singh‘s request for a stay of the order granting summary adjudication of the second
cause of action pending resolution of his cross-complaint against Mayall is DENIED.

The Third Cause of Action for Intentional Interference with Contractual
Relationship

Summary adjudication is DENIED.

Plaintiffs predicate their fifth cause of action on Defendants’ disruption of the formers’
lease agreement with their landlords.  Plaintiffs are not entitled to summary
adjudication because they have not produced evidence demonstrating the
nonexistence of any triable issue of material fact with respect to the intent element.

Although Plaintiffs are not required to establish that Defendants acted with the specific
intent to disrupt the lease, they are required to establish at a minimum that, in
cancelling BB, Defendants knew the cancellation was certain or substantially certain to
cause a disruption.  (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th
26, 56.)  In the moving papers, Plaintiffs do not argue that Defendants were aware of
any such substantial certainty.

In their Reply, Plaintiffs argue that UMF 19-22 establish the nonexistence of any triable
issue whether Defendants were aware of the substantial certainty that their  cancellation of BB would disrupt the lease agreement.  Those UMFs read:

19. On May 18, 2010, Lakhbir Singh specifically instructed his
accountant, Inderpal S. Mayall, in writing, to close Bains Brothers, LLC.

20. On May 18, 2010, Mr. Singh sent an email to Mr. Mayall in which he
wrote: This is Lakhbir from Texas, Bhaji can we now close California
LLC. You ask me to remind you in May. Bhaji could you please [sic] our
account. Let me know what I have to do.

21. On June 4, 2010, Mr. Singh again asked Mr. Mayall to close Bains
Brothers, LLC.

22. On June 4, 2010, Mr. Singh sent an email to Mr. Mayall in which he
wrote: ” I was just wondering did you got sometime to close our California
LLC.”

First, with respect to UMF 19 and 20, Plaintiffs rely exclusively on an email purportedly
attached to the Steuer Declaration as Exhibit 8.  Plaintiffs did not file Exhibit 8 with the
court, and thus Exhibit 8 does not support Plaintiffs’ position.  Furthermore, because
Plaintiffs have failed to produce evidence establishing these two facts, which they have
posited as material to the outcome of the motion, they have failed to meet their initial
burden of production.  Having included UMF 19 and 20 in their separate statement,
Plaintiffs may not now contradict themselves and argue that these facts are somehow
immaterial to the motion.  (See Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th
243, 252 [citing Weil & Brown, Civ. Proc. Before Trial, (Rutter 2011) Ch.10:95.1].)

Even if Plaintiffs had produced evidence establishing UMF 19-20, the court would still
deny summary adjudication because UMF 19-22 do not preclude a reasonable
inference that Defendants did not appreciate the consequences of cancelling BB.  As
Plaintiffs acknowledge in UMF 22, when Singh was contemplating cancelling BB, he
continued to refer to it as “our” LLC.  Thus, the court cannot rule out that Singh did not
understand the consequences of his transfer of membership in and management of
BB to TANL, including the consequence that BB continued to survive under different
membership and management.  Even if there is some doubt about the reasonableness
of such an inference, the court must draw all inferences and resolve all doubts in
Defendants’ favor at this juncture.  (See Maxwell v. Colburn (1980) 105 Cal.App.3d
180, 186.) Accordingly, it denies summary adjudication.

Judicial Notice

Plaintiffs’ requests for judicial notice of court documents are UNOPPOSED and
GRANTED.

Evidentiary Objections

Plaintiffs’ objections to evidence are SUSTAINED.

Plaintiffs’ “Objections to Defendant Singh’s Responses to Plaintiff’s Statement of
Facts” are OVERRULED.  Only evidentiary objections are properly before the court.

Conclusion
Pursuant to CRC 3.1312, Plaintiffs are directed to lodge a formal order for the court’s
signature.

Counsel are advised that the Sacramento County Superior Court’s Local Rules were
revised and renumbered as of 01/01/13.  When giving notice of the court’s tentative
ruling system, counsel should cite Local Rule 1.06, not former Local Rule 3.04.

Plaintiffs’ counsel is advised in the future to tab exhibits attached to documents field
with the court.  (CRC 3.1110(f) [exhibit tabs must extend below the page].)