Vishnevsky v. Zingerman CA2/2 ( 2022 )

Filed 6/24/22 Vishnevsky v. Zingerman CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not
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certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
YELENA VISHNEVSKY, B312268
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No.
v. 19VECV00505)
BORIS ZINGERMAN et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles
County, Huey P. Cotton, Judge. Reversed with directions.
Law Offices of Jeffrey A. Cohen, Jeffrey Aaron Cohen; Marcus,
Watanabe & Enowitz and Daniel Joshua Enowitz for Plaintiff and
Appellant.
No appearance for Defendant and Respondent Boris Zingerman.
Law Office of Jeff Katofsky, Jeff C. Katofsky and Michael Hayden
Leff for Defendant and Respondent Granada Hills Discount Farmacy,
Inc.
______________________________
Appellant Yelena Vishnevsky is a director of respondent Granada
Hills Discount Farmacy, Inc. (GHDF). She has sued to remove Boris
Zingerman, a GHDF codirector, for “fraudulent or dishonest acts or
gross abuse of authority.” (Corp. Code, §§ 304, 7223.)1 Zingerman was
convicted of felony drug crimes in 2010; appellant waited until 2019 to
bring her lawsuit to remove him as a director. The trial court
sustained demurrers without leave to amend, citing the statute of
limitations.
Appellant’s current pleading, based on Zingerman’s 2009
malfeasance, is untimely. However, she proposes to amend the
pleading to show that he engaged in more recent dishonest and disloyal
acts. We reverse and remand so that appellant can file an amended
pleading containing allegations about Zingerman’s dishonest acts after
2015.
ALLEGATIONS
In April 2009, appellant and Zingerman purchased GHDF, a
cannabis collective. They were GHDF’s sole shareholders, directors,
and officers. In May 2009, they made GHDF a nonprofit mutual
benefit corporation. Zingerman operated the business’s day-to-day
affairs.
In July 2009, Zingerman was arrested at GHDF for drug
possession with intent to sell; he pleaded guilty to a felony in 2010. As
part of Zingerman’s plea, the court ordered the closure of GHDF.
Zingerman did not call a board meeting to discuss his agreement to
close GHDF in his criminal case.
In 2012, Zingerman successfully petitioned the court to dismiss
his conviction but did not inform appellant about it. Appellant asked
Zingerman every year about reopening the business; he told her it was
impossible because GHDF was shuttered by court order. Zingerman
advised appellant in 2018 that he consulted an attorney who told him
“ ‘the shop is dead’ ” and its license could not be restored.
1 Unlabeled statutory references are to the Corporations Code.
2
In September 2018, appellant discovered that “third party
hijackers” filed false documents with the state showing GHDF merged
with another entity in 2014. The third parties operate GHDF as a for-
profit cannabis dispensary. Around the same time, appellant learned
that Zingerman’s criminal record was expunged, ending the court order
closing GHDF.
Appellant met with Zingerman in November 2018. She requested
GHDF’s books and records, later learning that Zingerman took $20,000
to $30,000 per day from GHDF while it operated in 2009. He failed to
account for the money; did not reimburse appellant for her investment
in GHDF; took GHDF’s safe and did not account for its contents; and
induced appellant to invest hundreds of thousands of dollars while
falsely claiming she would be reimbursed from business proceeds.
PROCEDURAL HISTORY
When appellant filed this lawsuit on April 8, 2019, she named
Zingerman as defendant and sought GHDF’s books and records. She
amended her pleading to add a cause of action to remove Zingerman as
a director. He demurred but did not dispute that “third party
hijackers” filed false documents and are operating GHDF. The court
overruled the demurrer to the first cause of action seeking records; it
sustained a demurrer to appellant’s cause of action to remove
Zingerman and directed appellant to add GHDF as a defendant.
Appellant’s second amended complaint names GHDF and
Zingerman as defendants and asserts claims to inspect corporate
records and remove a director. Zingerman answered, alleging that he
is still a director and officer of GHDF, and denying that he transferred
GHDF to anyone. GHDF demurred, arguing that appellant’s lawsuit is
untimely. Appellant replied that she sufficiently pleaded claims to
remove Zingerman as director, and tolling principles apply. She
dismissed without prejudice her first cause of action seeking books and
records.
At appellant’s request, we take judicial notice of her pending
derivative suit against GHDF and the individuals who claim to own it,
Jeremy Thomas and Dyan Cuzzort. (Vishnevsky v. Granada Hills
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Discount Farmacy, Inc. et al. (Super. Ct. L.A. County, No.
20STCV33410).) The trial court issued an order relating this case with
the case against Thomas and Cuzzort.
THE COURT’S RULING
The court applied a four-year statute of limitation. It cited
appellant’s reasons for seeking Zingerman’s removal as a director: he
converted and failed to account for GHDF’s income; favored his family
over GHDF’s interests; refused to turn over corporate records; and
failed to reimburse appellant for her investment. It found appellant
knew or should have known of this malfeasance by the time the
business was shuttered in 2010 as part of Zingerman’s guilty plea,
making her 2019 lawsuit five years late. The court rejected appellant’s
equitable tolling claim arising from Zingerman’s concealment of his
activities. It noted that appellant did not allege that Zingerman had
anything to do with the 2014 “ ‘hijacking’ ” of GHDF. The court
sustained the demurrers without leave to amend.
Though only GHDF demurred to the second amended complaint,
and Zingerman answered the pleading without demurring, the court
signed a judgment in favor of both GHDF and Zingerman. In
supplemental briefing, appellant explains that the court directed the
parties to include Zingerman in the judgment. Zingerman did not file a
brief in this appeal but GHDF (by counsel representing Cuzzort and
Thomas) argues that appellant cannot proceed against Zingerman.
DISCUSSION
1. Appeal and Review
Appeal lies from the judgment after demurrers are sustained
without leave to amend. (Code Civ. Proc., §§ 581d, 904.1, subd. (a)(1);
Serra Canyon Co. v. California Coastal Com. (2004) 120 Cal.App.4th
663, 667.) We review pleadings de novo, accepting the truth of the
complaint’s material facts. (Aryeh v. Canon Business Solutions, Inc.
(2013) 55 Cal.4th 1185, 1191; Moore v. Regents of University of
California (1990) 51 Cal.3d 120, 125.) New legal theories may be
raised on appeal. (Dudley v. Department of Transportation (2001) 90
Cal.App.4th 255, 259.)
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2. Removal of Director Claim
Appellant seeks to remove Zingerman as a director, citing the
court’s equitable powers and two statutes. She alleges that Zingerman
should be removed for acting criminally while operating GHDF,
causing it to be shut down when he pleaded guilty to a felony; he
converted and failed to account for corporate property; engaged in
nepotism “over plaintiff’s objections” by hiring his son and wife; harmed
GHDF’s interests by pleading guilty to protect his son; failed to
reimburse appellant for money she advanced to GHDF; and other
unspecified misconduct. The court sustained GHDF’s demurrers
without leave to amend, finding that the claims are time-barred.
a. Statute of Limitations
Appellant cites statutes authorizing the court to “remove from
office any director in case of fraudulent or dishonest acts or gross abuse
of authority or discretion with reference to the corporation.” (§§ 304,
7223.)2 Apart from statutory authority to remove directors, courts have
inherent equitable power to remove directors from office for breach of
fiduciary duty. (DeGarmo v. Goldman (1942) 19 Cal.2d 755, 761.)
Appellant contends that no statute of limitations applies to a
cause of action to remove directors. We disagree. “[W]hether the action
is in equity or in law a statute of limitations is applicable.” (Estate of
Peebles (1972) 27 Cal.App.3d 163, 166; Meigs v. Pinkham (1910) 159
Cal. 104, 111.) “ ‘[T]he statute begins to run when the wrong
complained of is done.’ ” (Burns v. Ross (1923) 190 Cal. 269, 277.)
Appellant cites statutes exempting certain claims from a limitations
period. (Code Civ. Proc., § 348 [no time limit on action to recover
money deposited in a bank]; Code Civ. Proc., § 348.5 [no limit on action
on a state bond]; Pen. Code, § 799, subd. (a) [no limit on murder
prosecutions].) These statutes show the Legislature carved out
exceptions in specified instances; otherwise, a statute of limitation
applies. No exemption applies here.
2 Section 304 allows shareholders to bring suit. Section 7223
allows a director of a nonprofit to bring suit.
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When, as here, claims are not encompassed by a specific statute
of limitations, they fall within the four-year “catch-all” statute. (Code
Civ. Proc., § 343; see Schneider v. Union Oil Co. (1970) 6 Cal.App.3d
987, 993 [four-year limitation period for shareholder action alleging
wrongful transfer of shares]; FDIC v. McSweeney (9th Cir. 1992) 976
F.2d 532, 534–535 [four-year limitation period for action against
directors who breached their fiduciary duties].)
Appellant lists Zingerman’s alleged misconduct: His 2009 failure
to account for large sums of money he took from GHDF or the contents
of a safe he removed from the business. His 2010 felony conviction,
closure of GHDF by court order, and failure to get board approval of his
plea bargain. His 2012 failure to disclose the dismissal of his criminal
record. Under a four-year statute of limitations, appellant’s 2019
lawsuit was untimely.
b. Delayed Discovery Rule
Appellant asserts “she did not discover that Zingerman had
absconded with [GHDF’s] proceeds, and stole its safe, until after this
action was filed” and it is a question of fact whether the delayed
discovery rule applies. This rule “postpones accrual of a cause of action
until the plaintiff discovers, or has reason to discover, the cause of
action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.)
Plaintiffs have presumptive knowledge of an injury “if they have ‘ “ ‘the
opportunity to obtain knowledge from sources open to [their]
investigation.’ ” ’ ” (Id. at p. 808.) To assert delayed accrual, the
plaintiff “ ‘must specifically plead facts to show (1) the time and
manner of discovery and (2) the inability to have made earlier
discovery despite reasonable diligence.’ ” (Ibid.) In assessing the
sufficiency of plaintiff’s allegations, “the court places the burden on the
plaintiff to ‘show diligence.’ ” (Ibid.)
Appellant fails to show diligence. She was entitled to inspect
GHDF’s books, records, and property since becoming a shareholder and
director in 2009. (§ 1601 [shareholder has the right to inspect
corporate books and records]; § 1602 [directors have “the absolute
right” to inspect all books, records, documents and property].) The
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nonprofit corporation law confers similar rights. (§§ 6333 [member’s
right], 6334 [directors have “the absolute right” to inspect books,
records, and property].)
Appellant’s belated decision to exercise her rights in 2018 does
not support application of the delayed discovery rule. Since the
inception of the enterprise, she could have monitored GHDF’s profits
and the company safe, in a cash-only cannabis business. Despite the
manifest injury to her financial interests, appellant abdicated her
rights and responsibilities as a director when GHDF was raided and
Zingerman was arrested in 2009.
Parties may not sleep on a right for years before acting to enforce
it. Appellant’s suspicions should have been aroused when Zingerman
was arrested; if she had acted expeditiously when he was convicted in
2010, she could have declared his position as director vacant (§ 302
[“The board may declare vacant the office of a director who has been . . .
convicted of a felony”]) and could appoint another director (§ 305). If
GHDF was a nonprofit, appellant could have had Zingerman removed
for “dishonest acts or gross abuse of authority or discretion” (§§ 5223,
7223) and replaced him (§§ 5224, 7224). Instead, she waited a decade
to seek his removal.
c. Equitable Estoppel
Appellant invokes the principle that “ ‘ “one cannot justly or
equitably lull his adversary into a false sense of security, and thereby
cause his adversary to subject his claim to the bar of the statute of
limitations, and then be permitted to plead the very delay caused by his
course of conduct as a defense to the action when brought.” ’ ” (Lantzy
v. Centex Homes (2003) 31 Cal.4th 363, 383 (Lantzy).)3 A defendant
need not perpetrate a fraud to be estopped. (Id. at p. 384.) Instead,
3 Equitable estoppel, as codified, applies “[w]henever a party has,
by his own statement or conduct, intentionally and deliberately led
another to believe a particular thing to be true and to act upon such
belief, he is not, in any litigation arising out of such statement or
conduct, permitted to contradict it.” (Evid. Code, § 623.)
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“ ‘ “ ‘it is enough if the party has been induced to refrain from using
such means or taking such action as lay in his power, by which he
might have retrieved his position and saved himself from loss.’ ” ’ ”
(Ibid.)
“[F]our elements must be present in order to apply the doctrine of
equitable estoppel: (1) the party to be estopped must be apprised of the
facts; (2) he must intend that his conduct shall be acted upon, or must
so act that the party asserting the estoppel had a right to believe it was
so intended; (3) the other party must be ignorant of the true state of
facts; and (4) he must rely upon the conduct to his injury.” (Driscoll v.
City of Los Angeles (1967) 67 Cal.2d 297, 305.) The reliance must be
reasonable and the “statement or conduct must amount to a
misrepresentation bearing on the necessity of bringing a timely suit.”
(Lantzy, supra, 31 Cal.4th at p. 384, fn. 18; Doe v. Marten (2020) 49
Cal.App.5th 1022, 1028 [plaintiff must show “a misrepresentation or
nondisclosure of a material fact bearing on the necessity of bringing a
timely suit”].)
Appellant’s claim is based on Zingerman’s conversion of corporate
assets, failure to account for property, nepotism, concealment of books
and records, and failure to disclose the dismissal of his criminal
conviction. She does not allege that he misled her with material
nondisclosures or misrepresentations bearing on the need to file suit.
As a director, appellant had the right to inspect GHDF’s books but did
not do so until 2018. She ignored her responsibilities after Zingerman’s
arrest in 2009, when she may have avoided GHDF’s closure by
promptly seeking his removal as director.
Appellant contends that Zingerman’s nondisclosure of the 2012
dismissal of his conviction prevented her from acting. She argues, “As
long as Appellant believed there was a Court Order in place preventing
it from re-opening, being sold or transferred, she had no reason to seek
Zingerman’s removal as a director.” We disagree. Appellant was
alerted to the need to act as member/owner/director/officer of GHDF
once the business was raided in 2009, when she learned Zingerman was
8
operating it as a front for drug trafficking. No trier of fact could find
that appellant’s inaction for 10 years was reasonable.
3. Request to Amend
Appellant requests leave to amend. (Code Civ. Proc., § 472c,
subd. (a); City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 746
[“leave to amend is always open on appeal”].) Even if appellant did not
ask the trial court for leave to amend, that does not prevent her from
raising the issue for the first time on appeal. (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal.4th 962, 971.) She must show a reasonable
possibility that an amendment could cure the complaint’s defects.
(King v. CompPartners, Inc. (2018) 5 Cal.5th 1039, 1050; T.H. v.
Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162; Blank v.
Kirwan (1985) 39 Cal.3d 311, 318; Centinela Freeman Emergency
Medical Associates v. Health Net of California, Inc. (2016) 1 Cal.5th
994, 1010.)
Appellant proposes to allege that Zingerman (1) secretly tried to
sell GHDF from 2016 to 2018 while telling appellant the business could
not be revived or sold; (2) refused to authorize a lawsuit against the
people who “hijacked” GHDF, forcing appellant to file a derivative
action on her own; (3) did not give appellant access to GHDF’s books in
2018 until she filed this lawsuit; and (4) represented in 2009 that
GHDF could not repay appellant because police confiscated its assets
and asked her to use her home as collateral for his bail.
Appellant’s first three proposals bring her lawsuit within the
limitations period. Assuming the truth of her proposed allegations, as
we must, Zingerman affirmatively misrepresented that GHDF was
defunct and could not be revived while secretly angling to sell it during
the three years before appellant filed suit. This recent malfeasance is
separate from his wrongdoing in 2009. Moreover, Zingerman’s refusal
in 2018 to defend GHDF from being “hijacked” by third parties may be
a breach of his duty to the corporation. Finally, Zingerman’s refusal in
2018 to allow appellant to exercise her right to examine corporate books
and records falls within the statute of limitations. We remand the case
9
to the trial court with directions to allow appellant to file a third
amended complaint.4
ADDITIONAL CONSIDERATIONS
We requested briefing to address our concern about GHDF
appearing in this case through counsel representing Thomas and
Cuzzort, who claim to own the stock of GHDF. Appellant and
Zingerman made GHDF a nonprofit mutual benefit corporation in
2009. It is unclear how Thomas and Cuzzort purchased the stock of a
nonprofit and operate it as a for-profit enterprise. In a letter brief,
Thomas and Cuzzort deny Zingerman is a director or officer of their
corporation and state they “do not take a position in the dispute
between Plaintiff Vishnevsky and Zingerman.” If so, they should not be
participating in this appeal.
It is premature for the trial court to resolve this dispute between
appellant and Zingerman. The court must first resolve appellant’s
lawsuit against Thomas and Cuzzort before it considers appellant’s
lawsuit against Zingerman. The court must determine if Cuzzort and
Thomas have standing as legitimate directors and officers of GHDF.
Without standing, they cannot participate in GHDF’s appearance in
this lawsuit.
4 Although Zingerman’s 2009 criminal acts fall outside the
statute of limitations, they may be relevant at trial to show a pattern of
dishonesty and disloyalty to GHDF.
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DISPOSITION
The judgment is reversed. The case is remanded with directions
to issue an order giving appellant Vishnevsky leave to file a third
amended complaint. Appellant is entitled to recover her costs on
appeal from respondents Zingerman and Granada Hills Discount
Farmacy, Inc.
The court must first resolve appellant’s lawsuit against Thomas
and Cuzzort before it proceeds with appellant’s lawsuit against
Zingerman.
NOT TO BE PUBLISHED.
LUI, P. J.
We concur:
ASHMANN-GERST, J.
CHAVEZ, J.
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