Case Number: GC046849    Hearing Date: July 18, 2014    Dept: NCB

16. GC046849
LILY WONG v PARK CENTER PARTNERSHIP
Motion to Substitute Successor
Trial Setting Conference

This case arises from the Plaintiff’s claim that the Defendants breached a settlement agreement. The Plaintiff, Lily Wong, was 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.

No trial is set. A trial setting conference is set for this hearing.

The Plaintiff, Lily Wong, passed away on November 7, 2013 (see copy of Certificate of Death in exhibit CA to motion). This is the third hearing on a motion to substitute a successor-in-interest in place of Lily Wong.
The first motion was denied on April 11, 2014 because it sought to substitute a trust, the John W. Wong and Lily Y. Wong Family Trust (“Family Trust”), in place of Lily Wong without sufficient evidence that to establish that the trust was a successor in interest (see copy of minute order in opposition request for judicial notice, exhibit A). The Court set a further hearing for May 23, 2014.
The second motion then changed the proposed successor-in-interest by seeking to substitute John Wong, Lily Wong’s husband, as her successor in interest. At the hearing on May 23, 2014, the Court found that Mr. Wong’s declaration did not contain sufficient facts to demonstrate that he was the successor in interest (see copy of minute order in opposition request for judicial notice, exhibit B). The hearing was continued to July 18, 2014.
John Wong did not file further evidence to demonstrate that he was the successor-in-interest. Instead, John Wong returned to the relief sought in the first motion. John Wong now requests an order substituting the Family Trust in place of Lily Wong. This third motion was filed on June 25, 2014. It offers no explanation for returning to the relief sought in the first motion.

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 declarant is the 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 377.32(a)(5) requires that the declarant provide facts in support of the statement that the declarant is the successor in interest.
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.

In the June 25, 2014 filing, there is a third declaration from John Wong. In his third declaration, John Wong identifies the date of Lily Wong’s death and states that there is no proceeding for the administration of Lily Wong’s estate. However, John Wong states that the trust should be made the successor-in-interest.

This third motion re-creates the problem that the Court identified on April 11, 2014. John Wong states in paragraph 4 that on September 23, 1993, the trust was established and Lily Wong transferred her partnership interest into the trust. In paragraph 16, John Wong states that Lily Wong’s interest in the partnership was held by the Trust at all times since September 29, 1993.
As the Court found on April 11, 2014, if Lily Wong had actually transferred her interest in the partnership to the trust, then Lily Wong was not the real party in interest in the pending case. Instead, the trust would be the real party in interest and Lily Wong would be the trustee. There would be no need for a hearing to appoint a successor-in-interest because the trust would have been the Plaintiff.
Further, the opposition papers contain the declaration of Larry Sue, who states that he is a 60% partner and general partner in Park Center Partnership, Limited Partnership. Mr. Sue states that Lily Wong was a 20% partner and general partner. Mr. Sue states that Lily Wong never notified him or anyone else that she had transferred her interest in the partnership into the Family Trust. Further, Mr. Sue states that his review of financial records reveal that all partner distributions were made to Lily Wong and not to the Wong Family Trust. This is further evidence that Lily Wong did not transfer her partnership interest into the Family Trust.
Also, as noted by the Court on April 11, 2014, Lily Wong did not act consistent with John Wong’s claims. Instead, Lily Wong filed this action in her own name and alleged that she is a general partner in the Park Center Limited Partnership. There was no indication that Lily Wong was a trustee or that she was not a general partner.
Finally, John Wong offers no evidence of a document that specifies that Lily Wong had transferred her partnership interest into the Family Trust. Since this is the third hearing concerning the issue of whether Lily Wong’s partnership interest was transferred to the trust, John Wong has had sufficient time to obtain such a document.

It appears that John Wong is attempting to overcome the statutory sections in Corporation Codes 15906.3 and 15906.05 that specify that a general partner interest becomes dissociated on death and that all that remains is a bare economic interest in the Partnership with no rights to participate as a general partner in the management and conduct of the partnership’s activities. Since Lily Wong brought this claim as a general partner, these Corporation Codes indicate 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. Instead, the successor-in-interest would hold the right to distribution.
Further, even if, at the death of Lily Wong, it were possible to transfer her partnership interest into Family Trust, it appears that a probate would be required. John Wong states in paragraph 15 that no proceeding is pending to administer Lily Wong’s estate. Under Probate Code section 13100, the maximum gross value of a decedent’s real and personal property that can be transferred without a probate is $150,000. John Wong offers no evidence that Lily Wong’s assets or the value of her partnership interest is less than $150,000.

Therefore, the Court must again deny the request to substitute the John W. Wong and Lily Y. Wong Family Trust in place of Lily Wong because the motion of John Wong does not provide sufficient facts to demonstrate that the Family Trust is Lily Wong’s successor-in-interest.