Case Number: EC058994 Hearing Date: May 02, 2014 Dept: NCD

TENTATIVE RULING (5-2-14)
#2 (part 1 of 2)
EC 058994
MESERKHANI v. HACOPIAN

Plaintiff’s Motion to Compel Defendants’ Attendance at Their Depositions
Defendants’ Motion for Protective Order

TENTATIVE:
Motion to compel attendance and testimony at depositions is GRANTED.
Motion for protective order is DENIED.
Under CCP Section 2019.020:
“(a) Except as otherwise provided by a rule of the Judicial Council, a local court rule, or a local uniform written policy, the methods of discovery may be used in any sequence, and the fact that a party is conducting discovery, whether by deposition or another method, shall not operate to delay the discovery of any other party”
(b) Nothwithstanding subdivision (a), on motion and for good cause shown, the court may establish the sequence and timing of discovery for the convenience of the parties and witnesses and in the interests of justice.”

There has been no good cause shown, inconvenience of the parties or witnesses, or that the interests of justice would be served by the court establishing an alternate sequence of discovery.

Defendants Armen Hacopian, Silva Hacopian and Edwin Akoubians are ordered to appear for deposition and to give testimony on a mutually convenient date and time no later than June 20, 2014.

Monetary sanctions are DENIED. The Court finds that – – while plaintiff has prevailed on these motions – – defendants’ arguments regarding the “sequence of discovery” are not frivolous and establish substantial justification for defendants’ positions on these motions.

PRELIMINARY INJUNCTION
[CCP §526]

TENTATIVE RULING (5-2-14)
#2 (part 2 of 2)
EC 058994
MESERKHANI v. HACOPIAN

Plaintiff’s Application for Preliminary Injunction

TENTATIVE:
Application is DENIED.

BACKGROUND:
Moving Party: Plaintiff Vahik Meserkhani
Responding Party: Defendants Armen Hacopian, Silva Hacopian and Edwin Hacopian

SUMMARY OF FACTS:
Plaintiff Vahik Meserkhani brings this action alleging that defendants Armen Hacopian, Silva Hacopian and Edwin Hacopian are diverting monies from two companies, Palad, Inc. and 1219 Glenoaks Investment, in which plaintiff owns 50% of the common stock.

RELIEF REQUESTED:
Preliminary injunction restraining defendants from transferring any interest in the sale proceeds of the residential and commercial properties, and requiring defendants to deposit all proceeds with the clerk of the court pending the outcome of the trial

ANALYSIS:
Under CCP § 526, an injunction may be granted in cases (a)(1) in which “it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief …consists in restraining… the act complained of;” (2) “when it appears by the complaint or affidavits that the commission… of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action;” (3) “when it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual,” or (4) “when pecuniary compensation would not afford adequate relief. ”

An application for a preliminary injunction is considered a motion procedure, and must be supported by affidavits or declarations which provide evidentiary facts under CCP § 2009. See Weil & Brown 9:574 et seq. The burden is on the party seeking the preliminary injunction. Weil & Brown at 9:632.1.

Granting or denying a preliminary injunction is within the sound discretion of the trial court and will be upheld on appeal absent an abuse of discretion. Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454, 458. Such a remedy is intended to preserve the status quo until a full trial on a permanent injunction may be conducted. Id.

In Butt v. State of California, (1992) 4 Cal.4th 668, 677, the California Supreme Court set the following criteria in connection with preliminary injunction applications under subdivision (a) (1):
“In deciding whether to issue a preliminary injunction, a court must weigh two ‘interrelated’ factors: (1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or nonissuance of the injunction.”

The application appears overall to be an attempt by plaintiff to obtain security for any judgment which may be entered in this action prior to meeting his burden of proving entitlement to damages at trial. Evidently defendants are in the process of selling real property which is not the direct subject of this litigation, and plaintiff wants a preliminary injunction, not to enjoin the sale of the properties, but to direct defendants to deposit any proceeds from those sales with the clerk of the court pending trial. There is no legal authority cited under which the court is authorized to take such measures, which appears to be in the nature not of a prohibitory injunction, but a mandatory injunction, requiring defendants to take some affirmative act, which faces a higher burden of proof. To the extent plaintiff needs relief from any acts of defendants to render themselves judgment proof, he can bring an action for fraudulent conveyance , after he is awarded judgment, if he is awarded judgment.

The argument in the application is primarily that defendants will suffer no prejudice or harm by an injunction whereas plaintiff will suffer irreparable harm absent an injunction. This argument is not persuasive, as defendants will obviously suffer harm from having their assets under the control of the court, and any harm to plaintiff can be compensated, after a full trial on the merits, by the payment of money damages.

Giving plaintiff the benefit of the doubt here, there is a brief argument that the court may issue an injunction based on a theory of constructive trust over property.

With respect to a constructive trust, under Civil Code 2223, “One who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner. Under Civil Code section 2224:
“One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.”

This is not generally considered a separate cause of action, but an equitable remedy. “The cause of action is not based on the establishment of a trust, but consists of the fraud, breach of fiduciary duty, or other act that entitles the plaintiff to some relief.” BGI Associates v. Superior Court (1999, 2nd Dist.) 75 Cal.App.4th 952, 967, quoting Witkin, Cal.Proc.4th, 5 Pleading section 796 (now section 840). Accordingly, to establish entitlement to this remedy, a plaintiff must plead fraud, breach of fiduciary duty, breach of promise to buy property for plaintiff, or repudiation of unenforceable express trust, etc., as well as specific identifiable property, and any other allegations required by the particular action. Witkin, Cal Proc. 5th 5 Pleading § 840.

The problem remains, as pointed out in the opposition, that plaintiff has offered no evidence showing that the three properties at issue are the proper subject of any constructive trust in this matter. The evidence submitted may support an inference that there were irregularities in the conduct of the business, and that Armen Hacopian may have been using partnership funds to pay personal expenses, such as to lease his cars and pay insurance premiums for his family, but there is nothing mentioning the subject properties, or showing that any ill-gotten funds were used to purchase the properties or otherwise in connection with the properties.

Defendants submit evidence that Hacopian was properly drawing an agreed upon salary, and paying expenses the partners agreed would be paid by the business. [See Hacopian Decl., para. 12]. Hacopian states that he has been forced to sell his Kenneth Road Property, which he purchased in 1995, before the events complained of by plaintiff. [Hacopian Decl., para. 4, Ex. 1]. Defendant has been paying off a monthly mortgage on that property, but there is no indication that such funds were obtained wrongfully.

Defendants also show that the Lemon Street Property was paid for by specific sources of income, tracing the funds used to purchase that property, which do not appear related to plaintiff’s business. [Hacopian Decl., para. 5, Exhibits 2, 3].

Finally, defendants indicate that as for the Terrace property, the property is not for sale, and defendant has no intention of selling it. [Hacopian Decl., para. 7]. There is also an indication that the property was purchased using settlement funds from a former lawsuit. [Para. 7, Ex. 6].

Defendants rely on case law in which it is held that to establish entitlement to a constructive trust, plaintiff has the burden to trace the expenditure of plaintiff’s funds in connection with the claim. In Fowler v. Fowler (1964) 227 Cal.App.2d 741, the Second District ordered the trial court to modify its finding of facts after trial, where a certain item claimed under a constructive trust claim for funds expended on fixtures to real property had not been supported by evidence concerning its expenditure. Fowler, at 747. Fowler found that the trial court had properly found plaintiff had established entitlement to such a remedy as to several other items supported by evidence. Id. This suggests that to establish a probability of prevailing on such a theory here, plaintiff should present evidence tracing the funds he alleges belonged to plaintiff to payments made in connection with the subject real properties. This is not done here, so no probability of prevailing is established. The application is therefore denied.