Quinn v. Halachian CA2/1

Filed 8/28/20 Quinn v. Halachian CA2/1
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
LAWRENCE D. QUINN, et al., B296272
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC666284)
v.
MARISELA HALACHIAN, et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Steven J. Kleifield, Judge. Affirmed.
DiJulio Law Group, R. David DiJulio and Tiffany Krog for
Plaintiffs and Appellants.
No appearance for Defendants and Respondents.
_______________________
Plaintiffs sued defendants for property damage allegedly
caused by their negligent maintenance of a retaining wall that
provides lateral support to plaintiffs’ properties. Defendants are
a California limited liability company and its sole member. Trial
court entered order granting summary judgment in favor of the
one natural-person member finding no triable issue of fact
existed implicating her personally in the allegedly negligent
conduct.
Plaintiffs purport to appeal from that order. We notified
plaintiffs they may be appealing from a non-final order, and that
only final judgments are appealable. We agree with plaintiffs
that we may treat the order granting summary judgment as
incorporating a corresponding judgment of dismissal. But,
plaintiffs provide no argument as to whether their appeal
complies with the final judgment rule.
We nevertheless reach the merits of the appeal because we
conclude the judgment of dismissal is appealable. There is an
exception to the final judgment rule applicable in multi-party
litigation, known as the “final as to a party exception,” that
authorizes review of a judgment of dismissal as to one party
when other parties remain in the case. But, there is also a
limitation to that exception that counsels that the dismissed
party’s interests be “separate and distinct” from the parties that
remain in the case. We hold that limitation is not a bar to
appellate review here because plaintiffs adduced no evidence
showing a “unity of interest” exists between the dismissed and
remaining defendant.
We hold the trial court did not err in finding no material
disputed issue of fact existed as to natural person’s liability
because plaintiffs failed to adduce any admissible evidence of her
2
personal involvement in the allegedly negligent conduct at issue
in this case.
We affirm the trial court’s order of dismissal.
BACKGROUND
A. Factual Background
The plaintiffs in this real property case are two property
owners who each own adjacent plots of land. Their plots receive
lateral support from a retaining wall located on a single plot of
land once owned by defendants.1
The plaintiffs are Lawrence Quinn (Quinn), suing in his
capacity as trustee of the “Lawrence D. Quinn and Ramona M.
Quinn 2011 Living Trust Dated 11/19/11,” and Olivia Saunders
(Saunders). Quinn’s property is located at 2257 Thelma Avenue,
Los Angeles (the Quinn Property). Saunders’ property is located
at 2251 Thelma Avenue, Los Angeles (the Saunders Property).
This opinion will sometimes refer to both properties collectively
as the “Thelma Properties.”
The defendants are Bay Harbor Investment Properties,
LLC (Bay Harbor) and Marisela Halachian (Halachian). Bay
Harbor is a California limited liability company. Halachian is
the sole member of Bay Harbor.2 Bay Harbor owned the property
1 “Lateral support is the support received by a parcel of real
property from the adjacent land separated from it by a vertical
plane,” in this case, a retaining wall. (6 Miller & Starr, Cal. Real
Estate (4th ed. 2019) § 17:19, p. 17-60 [“Lateral support—
Common Law Rule”], fn. omitted.)
2A California limited liability company is a hybrid
business entity formed under the California Revised Uniform
Limited Liability Company Act (Corp. Code, § 17701.01 et seq.)
3
located at 2306 North Eastern Avenue, Los Angeles (the Eastern
Avenue property) from July 2016 through June 2017.3
The Eastern Avenue property sits behind and below the
Thelma Properties. The retaining wall was originally
constructed around the same time the home located on the
Eastern Avenue property was built. Its purpose was to support
the earth upon which the Thelma Properties sit. The retaining
wall was originally about four feet tall and made of cement. The
wall existed in this condition and successfully supported the
Thelma Properties for over 20 years.
Some time after the wall was built, soil was added to the
Thelma Properties, which raised the earth supporting them to
about 18 inches above the height of the cement wall. When Bay
Harbor purchased the Eastern Avenue property, a row of cinder
blocks had been added to the retaining wall to hold back the
additional soil that had been added to the Thelma Properties.
consisting of at least one member who owns membership
interests. (Corp. Code, § 17704.01, subd. (a); see generally 9
Witkin, Summary of Cal. Law (11th ed. 2017) Corporations, § 41,
pp. 841-842.)
3 In her declaration, Halachian states the other member of
Bay Harbor was her late husband. Her declaration also states
Bay Harbor acquired the Eastern Avenue property one month
before her husband passed away. Because Bay Harbor acquired
the Eastern Avenue property in July 2016, and sold the property
11 months later in June 2017, there were 10 months during
which the property was owned by Bay Harbor even though it had
only one member during that period.
4
Bay Harbor subsequently removed the row of cinder
blocks.4
B. Procedural History
Plaintiffs sued Bay Harbor and Halachian claiming
removal of the cinder blocks caused the older, cement portion of
the retaining wall to crack, leaving the entire structure unstable.
Plaintiffs claimed their properties were damaged because the
earth which supported the properties partially subsided which
deprived them of lateral support from the Eastern Avenue
property.5
4According to defendants’ separate statement filed in
support of their motion for summary judgment, “Bay Harbor
removed the cinder blocks from atop the [r]etaining [w]all on or
about April 3, 2017 as it was ordered to do by Los Angeles City
inspectors.” However, no evidence was adduced during the
summary judgment process showing that Halachian herself, nor
any other natural person, removed the cinder blocks.
5 Real property cases involving “subsidence” of the earth
may arise in two types of claims: those involving subjacent
support and those involving lateral support. “Subjacent support”
cases arise “[w]hen one person owns the surface of land and
another person owns the subjacent area, or its minerals . . . .” (6
Miller & Starr, supra, § 17:18, p. 17-58, fn. omitted.) In such
cases, “the surface owner has an absolute right to the
perpendicular (subjacent) support of his or her property in its
natural condition by the subjacent strata.” (Ibid., fn. omitted.)
This case involves the rights that coterminous surface
owners have to lateral and subjacent support. (6 Miller & Starr,
supra, § 17:18, pp. 17-58 to 17-59, fn. omitted; see also Civ. Code,
§ 832 [“Each coterminous owner is entitled to the lateral and
subjacent support which his land receives from the adjoining
5
Their complaint, filed June 23, 2017, and the pleading
operative on this appeal, asserted six causes of action against
Bay Harbor and Halachian: (1) damages and permanent
injunctive relief (by Quinn); (2) damages and permanent
injunctive relief (by Saunders); (3) private nuisance (by Quinn);
(4) private nuisance (by Saunders); (5) negligence (by Quinn); and
(6) negligence (by Saunders).
Defendants moved for summary judgment on all causes of
action. They claimed the cinder blocks had to be removed
because they were notified by city officials that they constituted a
building code violation.
As to Halachian’s liability, defendants argued there was no
triable issue of fact that lead to her personal liability since she
“has never owned the [Eastern Avenue property] and has
therefore never been responsible for the condition of the wall.”
Defendants argued Halachian’s membership in Bay Harbor did
not, by itself, “make her responsible with regard to the wall in
any way.”
The court granted the motion as to Halachian. The court
ruled there was no triable issue of material fact as to Halachian’s
personal liability because plaintiffs had neither pled nor adduced
admissible evidence that Halachian herself did anything
involving the retaining wall. The court held that defendants’
admission that “Bay Harbor removed the cinder blocks” was not
itself an admission that Bay Harbor’s sole member—Halachian—
was also involved. Plaintiffs appear to have sued Halachian, the
court reasoned, simply “because she is an officer of Defendant
land, subject to the right of the owner of the adjoining land to
make . . . excavations . . .”].)
6
Bay Harbor, and for no other reason.”6 The court rejected
plaintiffs’ theory that Halachian was personally liable because, as
a member of Bay Harbor, she “ ‘knew or should have known’ ” of
Bay Harbor’s tortious conduct.
The court denied the motion as to Bay Harbor, however.
Plaintiffs introduced the declaration of an expert who found
multiple defects in the retaining wall, including “large visible
vertical cracks.” The expert’s recommendation was to remove
and replace the wall. Defendants’ disputed that any such defects
were their responsibility and insisted the wall was buckling
under the weight of the additional two feet of top-soil plaintiffs
themselves added to their property. The trial court properly
denied the summary judgment motion as to Bay Harbor because
this dispute was a triable issue of material fact properly left to
the trier of fact.
Plaintiffs timely appealed the trial court’s order granting
summary judgment as to Halachian.
6 The record on appeal indicates Halachian is a “member”
of Bay Harbor, not an “officer.” The trial court was thus
inaccurate in characterizing Halachian as an “officer.” Limited
liability companies have “managers,” not “officers.” And while
limited liability companies may be managed by their members (in
so called “member-managed” LLC’s), they may also be managed
by non-members (in so called “manager-managed” LLC’s.) (Corp.
Code, § 17704.07, subds. (a) and (c); see, e.g., Swart Enterprises,
Inc. v. Franchise Tax Bd. (2017) 7 Cal. App. 5th 497, 501
[distinguishing between member managed and manager
managed LLC’s].)
7
DISCUSSION
A. Appellate Jurisdiction
Plaintiffs purport to appeal from the trial court’s order
granting summary judgment in favor of Halachian.
We notified plaintiffs after filing their notice of appeal that
the trial court’s order may not be an appealable final judgment
because an appeal must be taken from the judgment entered
after an order granting summary judgment. (Code Civ. Proc.
§ 437c; Levy v. Skywalker Sound (2003) 108 Cal. App. 4th 753,
761.)
This letter alerted plaintiffs to two potential—and
distinct—jurisdictional problems with their appeal. First, they
were purporting to appeal from an order, but appeals must
ordinarily be taken from judgments, not orders. Second, an
appeal must be taken from a final judgment, i.e., a judgment that
disposes of all the causes of action between the parties. But here,
the action is not final because Bay Harbor remains in the case.
Plaintiffs filed a supplemental brief urging us to exercise
our discretion to either deem the order as incorporating a final
judgment, or, to treat their notice of appeal as a petition for writ
of mandate, citing Avila v. Standard Oil Co. (1985) 167
Cal. App. 3d 441. Plaintiffs’ supplemental brief did not address
whether their appeal complied with the final judgment rule by
virtue of the pending litigation against Bay Harbor.
The right to appeal in California is statutory. (Superior
Wheeler Cake Corp. v. Superior Court (1928) 203 Cal. 384, 385;
accord, Powers v. City of Richmond (1995) 10 Cal. 4th 85, 108.)
Under Code of Civil Procedure section 904.1, subdivision (a)(1),
an appeal must be taken “[f]rom a judgment” (absent certain
exceptions not applicable here). We have consistently construed
8
this section as imposing the requirement that parties may only
appeal from a “final judgment.” (See 9 Witkin, Cal. Procedure
(5th ed. 2008) Appeal, § 96, pp. 158-160 [collecting cases].) As
more fully discussed below, a “final judgment” is one that
“ ‘ “terminates the litigation between the parties on the merits of
the case and leaves nothing to be done but to enforce by execution
what has been determined.” ’ [Citations.]” (Sullivan v. Delta Air
Lines, Inc. (1997) 15 Cal. 4th 288, 304.)
1. Appeals Must Ordinarily be Taken from
Judgments
While our review is generally limited to appeals of
judgments—not orders—we observe that a trial court’s entry of a
“judgment” is not strictly necessary so long as the order functions
like a final judgment. (Code Civ. Proc., § 904.1, subd. (a); Agosto
v. Board of Trustees of Grossmont-Cuyamaca Community College
Dist. (2010) 189 Cal. App. 4th 330, 335, fn. 3; Daggs v. Personnel
Com. of Modesto (1969) 1 Cal. App. 3d 925, 930.) “[W]hether an
adjudication is final and appealable” turns on the substance and
effect of the trial court’s order. (Griset v. Fair Political Practices
Com. (2001) 25 Cal. 4th 688, 698.)
We exercise our discretion to construe the order as
incorporating summary judgment in favor of Halachian and
interpret plaintiffs’ notice of appeal to be from the summary
judgment. (See Avila v. Standard Oil Co., supra, 167 Cal.App.3d
at p. 445.)
2. The Final Judgment Rule in the Context of
Multiparty Litigation
Plaintiffs’ supplemental brief does not address what
impact, if any, the pending litigation against Bay Harbor has
upon our analysis. Nevertheless, because the Court of Appeal
9
has an independent duty to raise questions involving our own
jurisdiction, we must address this issue even if we are unaided by
relevant briefing. (See Jennings v. Marralle (1994) 8 Cal. 4th 121,
126; Olson v. Cory (1983) 35 Cal. 3d 390, 398.)
Code of Civil Procedure section 904.1, subdivision (a)(1),
authorizes appeals “[f]rom a judgment, except an interlocutory
judgment . . . .” As indicated above, our courts have consistently
held this provision effectively codifies the common law “one final
judgment rule.” (See, e.g., Griset v. Fair Political Practices Com.,
supra, 25 Cal. 4th at p. 697; see also Otay River Constructors v.
San Diego Expressway (2008) 158 Cal. App. 4th 796, 803
[clarifying that the Legislature’s elimination of “final” from the
predecessor to Code Civ. Proc., § 904.1 (former Code Civ. Proc.,
§ 963, subd. 1, which then stated appeals may be taken “[f]rom a
final judgment”), did not alter the “final judgment rule” itself].)
A popular formulation of the rule defines a “final judgment”
as one which “terminates the proceeding in the lower court by
completely disposing of the matter in controversy.” (Henneberque
v. City of Culver City (1985) 172 Cal. App. 3d 837, 841, italics
added; see also Nguyen v. Calhoun (2003) 105 Cal. App. 4th 428,
443, italics added [“ ‘[A]n appeal cannot be taken from a
judgment that fails to complete the disposition of all the causes of
action between the parties even if the causes of action disposed of
by the judgment have been ordered to be tried separately, or may
be characterized as “separate and independent” from those
remaining’ ”]; Art Movers, Inc. v. Ni West, Inc. (1992) 3
Cal. App. 4th 640, 645, italics added [“optimal appellate review is
achieved by allowing appeals only after the entire action is
resolved in the trial court”].)
10
Multiple policy considerations lie behind this rule.
Piecemeal disposition of a matter by taking frequent trips to the
Court of Appeal wastes judicial resources. (See Griset v. Fair
Political Practices Com., supra, 25 Cal.4th at p. 697.) The Court
of Appeal is not a referee to be consulted multiple times in a
single litigation. Premature appeals will also produce
uncertainty and delay in the trial court. (See Kinoshita v. Horio
(1986) 186 Cal. App. 3d 959, 966-967 [reviewing five policy
considerations].) The record on appeal will also be better
developed if a single appeal of the entire matter is taken. (Id. at
p. 967.)
While our Supreme Court in In re Baycol Cases I & II
(2011) 51 Cal. 4th 751, 757 (Baycol Cases) reiterated that the
“final judgment rule’s deep common law and statutory roots and
the substantial policy considerations underlying it” demand strict
application of the rule and a reluctance to create exceptions, it
also observed that two “exceptions” to the final judgment rule are
venerable and accepted.
The first exception permits an appeal of an “order . . .
against a party in a collateral proceeding growing out of the
action.” (Sjoberg v. Hastorf (1948) 33 Cal. 2d 116, 119.) This
exception, known as the “collateral order doctrine,” applies if the
issue underlying the order seeking to be appealed “is truly
collateral in that it is ‘distinct and severable’ from the subject
matter of the underlying litigation. [Citation.]” (Apex LLC v.
Korusfood.com (2013) 222 Cal. App. 4th 1010, 1016.) The order
seeking to be appealed must also “direct[ ] payment of money or
performance of an act.” (Id. at p. 1015; see also Marsh v.
Mountain Zephyr, Inc. (1996) 43 Cal. App. 4th 289, 297-298
[grouping these requirements together under the heading of the
11
Sjoberg test]; but see Muller v. Fresno Community Hospital &
Medical Center (2009) 172 Cal. App. 4th 887, 899 [noting a split of
authority over whether an appealable collateral order must
always involve payment of money or performance of an act].)
This exception is not relevant here.
The second exception arises in multiparty cases.
Frequently called the “final as to a party” exception, it permits an
appeal from a judgment that leaves no issue remaining to be
decided as to one party. A leading practice guide provides the
following illustration: “[I]n a single plaintiff's suit against two
defendants (D1 and D2), a judgment or order resolving all issues
between plaintiff and D1 is immediately appealable even though
the action is still pending against D2.” (Eisenberg et al., Cal.
Practice Guide: Civil Appeals and Writs (The Rutter Group 2019)
¶ 2:91, pp. 2-66 to 2-67.)
This illustration would support the appealability of the
trial court’s summary judgment ruling in Halachian’s favor.
Quinn and Saunders sued Halachian and Bay Harbor; the order
under review dismissed Halachian; only Bay Harbor remains in
the case. But, the “final as to a party” exception is not
automatically applicable every time fewer than all parties are
dismissed from an action.
Witkin summarizes the limitation to the “final as to a
party” as follows: “It is well settled that where parties have
distinct interests, there can be a separate, final, and appealable
judgment for each.” (9 Witkin, Cal. Procedure, supra, § 109,
p. 174, italics added.) We have elsewhere held “[t]he [‘final as to
a party’] exception only applies . . . where the interests of the
otherwise uninvolved party are separate and distinct from the
interests of parties whose rights have not been finally
12
determined.” (Fleuret v. Hale Constr. Co. (1970) 12 Cal. App. 3d
227, 230, italics added.)
Our recent cases do not explain this “distinct interests”
prerequisite for applying the “final as to a party” exception.
Instead, our cases point back to a pair of Supreme Court cases
from the last century: Howe v. Key System Transit Co. (1926) 198
Cal. 525 (Howe) and Rocca v. Steinmetz (1922) 189 Cal. 426
(Rocca). (See, e.g., Baycol Cases, supra, 51 Cal.4th at p. 759
[citing Rocca and Howe as the source of the final as to a party
exception].) Because our research has not revealed an
explanation of the “distinct interests” prerequisite to the “final as
to a party” exception, we briefly examine these leading cases to
see why this exception was created in the first place.
In Howe, supra, 198 Cal. 525, railroad passengers who were
injured in a collision with another train sued a railroad company
and multiple railroad personnel in a single action. The
individual defendants cross-complained against the railroad
company attempting to shift liability onto their employer. The
trial court dismissed the cross-complaints and the individual
defendants appealed. Even though the primary action between
the injured passengers and the railroad company remained
pending after dismissal of the cross-complaints, our Supreme
Court held the individual defendants could nevertheless appeal
dismissal of their cross-complaints. It reasoned: “The
circumstance that a particular judgment may not be binding
upon all the parties to the action does not prevent it from being a
final judgment within the code provisions relating to appeals.
[Citation.] In the present case, the issues tendered by the cross-
complaints, which were stricken from the files, are entirely
severable from the issues made by the complaints and answers.”
13
(Id. at p. 533, italics added.) Thus, in Howe, the court was
comfortable lifting the “final judgment” rule that would otherwise
bar interlocutory appellate review because the “issues”
underlying the claims were “severable.”
Next, in Rocca, supra, 189 Cal. 426, a father and son were
sued as joint tortfeasors when the car that the son was driving
was involved in an accident that killed a passenger. The plaintiff
sued the father on a negligent entrustment theory, and sued the
son for simple negligence. The trial court dismissed the case
against father, and the case against the son went to trial. The
plaintiff appealed dismissal of its case against the father even
though their case against the son remained pending. Their
appeal was dismissed because no final judgment had yet been
rendered in the case as a whole. Our Supreme Court reversed.
The court explained: “The fact that the defendant [father] is sued
as the owner of the automobile and [the son] is sued as the
perpetrator of the tort does not make either of them any the less
liable to have a judgment rendered against him while the action
is allowed to continue as to the other defendant.” (Id. at p. 428.)
Further motivating the court in Rocca was the following
policy consideration we find particularly applicable to the instant
case: “[T]o hold the [plaintiff] bound to wait until the final
judgment against the other party before taking an appeal from
the judgment against the first party already rendered is wholly
unreasonable.” (Rocca, supra, 189 Cal. at p. 428.) The court is
cognizant that parties to a judgment rendered in multiparty
cases should be given the finality of appellate review unless there
is a compelling reason to defer review until the “entire action”
has been disposed of. Indeed, when our Supreme Court recently
cited Rocca in Baycol Cases, it cited precisely this principle as
14
“[u]nderlying this original settled rule” (Baycol Cases, supra, 51
Cal.4th at p. 759), viz., the “final as to a party exception.”
Applying the final judgment rule can thus be a difficult
task. On the one hand, we must be cognizant of the “substantial
policy considerations underlying” the rule, such as reducing
uncertainty in the underlying litigation, avoiding (and deterring)
piecemeal litigation, and conserving the resources of the
appellate courts. But, on the other hand, we must grant
appellate review when the conditions for an exception have been
met lest we arbitrarily delay an appeal until final judgment has
been rendered as to every party.
As aptly characterized by one commentator: “[T]he final
judgment rule is a rule, designed to balance the underlying
competing policy interests of finality—the inconvenience and
costs of piecemeal review on the one hand, and the danger of
denying justice by delaying appellate review on the other.”
(Shah, Increase Access to the Appellate Courts: A Critical Look at
Modernizing the Final Judgment Rule (2014) 11 Seton Hall Cir.
Rev. 40, 58.)
Here, Halachian has been dismissed from the action. We
might paraphrase our Supreme Court in Rocca and observe that
now “[n]o other judgment can be entered against” Halachian, as
she “will go free if the case goes no further against [her].” (Rocca,
supra, 189 Cal. at p. 428.) That would seem to authorize the
instant appeal. Likewise, unless there is a compelling reason to
defer review, it is “wholly unreasonable” for us to force either
party here to “wait until the final judgment against the other
party before taking an appeal from the judgment against the first
party already rendered.” (Ibid.)
15
The only question remaining is to determine whether
Halachian and Bay Harbor have the requisite “distinct interests”
our cases insist must apply before this exception is met. While
our cases do not explain the content of this “distinct interests”
requirement, we are not wholly without guidance. There is a
class of cases where the interests between a dismissed and
remaining defendant are never distinct as a matter of law: cases
against sureties and the principal obligor. The leading case is
Call v. Alcan Pacific Co. (1967) 251 Cal. App. 2d 442 in which the
plaintiff was a subcontractor who agreed to perform the drywall
work on a construction project. The subcontractor walked away
from the job unfinished, and the general contractor threatened
suit. The subcontractor responded by filing for an accounting and
injunctive relief against the general contractor. The general
contractor cross-complained against the subcontractor for breach
of contract, and named the insurance company who was surety on
the subcontractor’s performance bond as an additional defendant.
The trial court entered judgment in favor of the surety insurance
company, and several months later, entered judgment in favor of
the principal subcontractor. The general contractor appealed
dismissal of its case against the surety and the subcontractor
seriatim.
The Court of Appeal considered whether the “exception [to
the final judgment rule] where several parties have distinct
interests” applied where a surety was dismissed before its
principal. (Call v. Alcan Pacific Co., supra, 251 Cal.App.2d at
p. 449.) It found the exception did not apply because the general
contractor’s suits against the subcontractor and its surety were
suits against parties who had “a unity of interest between them
[such] that a judgment in favor of the [surety] alone is not a final
16
judgment from which an appeal lies.” (Ibid., italics added; see
also Fleuret v. Hale Constr. Co., supra, 12 Cal.App.3d at p. 230
[also a surety case, holding: “The (‘final as to a party’) exception
only applies . . . where the interests of the otherwise uninvolved
party are separate and distinct from the interests of parties
whose rights have not been finally determined”].)
To better determine the impact of these surety cases upon
the instant appeal, we review what a surety is and why its
interests overlap with those of its principal obligor. The Civil
Code defines a “surety” as “one who promises to answer for the
debt, default, or miscarriage of another.” (Civ. Code, § 2787.)
Moreover, if the principal obligor is found liable to a third party,
the surety “is liable to the creditor immediately upon the default
of the principal, and without demand or notice.” (Id., § 2807.)7
None of these features of suretyship is present in the
instant case. In fact, the relationship of a limited liability
company and its member(s) is precisely the opposite. If Bay
Harbor loses to plaintiffs, Halachian is not automatically liable
for the resulting judgment. To the contrary, our limited liability
company act is clear that “the debts, obligations, or other
liabilities” of a limited liability company “do not become the
debts, obligations, or other liabilities of a member . . . solely by
7 We observe that a performance bond, such as the type of
surety bond at issue in Call v. Alcan Pacific Co. and Fleuret v.
Hale Constr. Co, is “a species of a surety bond . . . in which the
surety ‘guarantee[s] that obligations undertaken by the principal
will be completed under the terms of the bonded contract.’
[Citation.]” (JMR Construction Corp. v. Environmental
Assessment & Remediation Management, Inc. (2015) 243
Cal. App. 4th 571, 594.)
17
reason of the member acting as a member . . . for the limited
liability company.” (Corp. Code, § 17703.04, subd. (a)(2); see also
5 Ballantine & Sterling, Cal. Corporation Laws (2020) § 901.03
[“In general, LLCs afford their members and managers (including
officers) limited liability essentially like that enjoyed by a
corporate shareholder”].]
Likewise, plaintiffs have not adduced any evidence of an
agreement between Halachian and Bay Harbor that would make
her responsible for Bay Harbor’s debts and liabilities. (See, e.g.,
5 Ballantine & Sterling, supra, § 904.14 [“a member of an LLC
may agree to be obligated personally for any or all of the LLC’s
debts, obligations, and liabilities, as long as the agreement to be
obligated is set forth in the articles of organization or in a written
operating agreement that specifically references the code section
authorizing liability”].)
Halachian and Bay Harbor thus do not have a “unity of
interest” that would prevent application of the “final as to a
party” exception and that would delay appellate review until the
entire action is resolved.
Finding no bar to applying the “final as to a party”
exception to this appeal, we now review the appeal on its merits.8
B. Summary Judgment Was Proper as to Halachian
Plaintiffs challenge the court’s order of dismissal on four
grounds.
8 In light of our decision to review this case on the merits,
we do not reach plaintiffs’ request that we treat their appeal as a
petition for writ of mandate.
18
First, they assert the trial court erred when it observed:
“Plaintiffs sued Defendant Halachian because she is an officer of
Defendant Bay Harbor, and for no other reason.” Plaintiffs
dispute this and reference their complaint which asserts:
“Halachian failed to maintain the retaining wall”; “in late 2016
. . . Halachian destroyed the top portion of the retaining wall”;
“Defendants’ failure to maintain the retaining wall and damage
thereto caused a subsidence of the earth and soil”; and
“Defendants[ ] knew or should have known that the failure to
maintain and destruction of a portion of the retaining wall would
cause damage to the Quinn Property”; “In late 2016, the
[retaining wall] was damaged with Defendants’ knowledge,
consent, and direction”; and “Quinn gave notice to Defendants,
and each of them, of the damage caused by the nuisance, and
requested its abatement, but Defendants, and each of them, have
refused.” (Capitalization omitted.)
This argument misses the mark by focusing on the
complaint’s allegations instead of the evidence plaintiffs adduced
in opposition to Halachian’s motion for summary judgment. “The
purpose of summary judgment is to penetrate evasive language
and adept pleading and to ascertain, by means of supporting and
opposing papers, the presence or absence of triable issues of fact.”
(6 Witkin, Cal. Procedure (5th ed. 2008) Proceedings Without
Trial, § 202, p. 641.) The party opposing a motion for summary
judgment “must file an affidavit or other evidence in opposition to
a motion that is supported by evidence; the party may not rely on
a pleading alone, regardless of whether it is verified.” (6 Witkin,
supra, § 222, p. 663.)
Second, plaintiffs argue that case law imposes personal
liability on a “corporate shareholder, officer, or director who
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participates in the tortious conduct complain[ed] of.” This is of
course, correct: “Nothing in the provisions limiting liability of
members of an LLC is intended to affect a member’s liability to
third parties for the member’s participation in tortious conduct.”
(5 Ballantine & Sterling, supra, § 904.14.) But this principle
simply means creating an LLC does not immunize a natural
person from liability for his or her own torts, and here the
question is precisely whether plaintiffs have adduced any
evidence that Halachian herself did anything to cause plaintiffs’
injuries.
Third, plaintiffs claim Halachian “actually admitted to her
awareness and approval of the tortious conduct.” They cite from
Halachian’s declaration submitted in support of her motion for
summary judgment wherein she declares: “I am a member of
[Bay Harbor]”; “The only other member of Bay Harbor is my late
husband . . . . Since my husband’s death, I have handled the
business affairs of Bay Harbor. These matters include the
remodeling and sale in 2017 of [the Eastern Avenue property]”;
and “The cinder blocks atop the [r]etaining [w]all were removed
on or about April 3, 2017 as Bay Harbor was ordered to do by the
Los Angeles City Inspector who spoke with [Halachian].”
We agree with the trial court that none of these statements
creates a triable issue of fact that Halachian herself removed the
cinder blocks at issue. Halachian admitted she handled the
“remodeling and sale” of the Eastern Avenue property, but she
did not admit she removed the cinder blocks. Rather, her
declaration simply states that the cinder blocks “were removed.”
It does not identify who did the removing. There is no admission
that Halachian, as opposed to some other person, actually
removed the blocks. True, there is an admission Bay Harbor was
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involved in removing the cinder blocks, but the trial court is
correct that such an admission does not automatically transfer to
Bay Harbor’s member(s). Such a rule would turn the limited
liability feature of limited liability companies on its head.
Fourth, plaintiffs complained “Halachian provided no
evidence in her [summary judgment] papers negating an
essential element of [plaintiffs’] claims against her, i.e., that she
was aware of, consented to and participated in the failure to
maintain the retaining wall.” (Capitalization and underscoring
omitted.) This argument inverts the burden of proof applicable
once a defendant has made a prima facie showing she is entitled
to summary judgment. Once a defendant who moves for
summary judgment has “shown that one or more elements of the
cause of action, even if not separately pleaded, cannot be
established, . . . the burden shifts to the plaintiff or cross-
complainant to show that a triable issue of one or more material
facts exists as to the cause of action or a defense.” (Code Civ.
Proc., § 437c, subd. (c)(p)(2).) It is not Halachian’s burden to
negate the allegations in plaintiffs’ complaint once she has made
a prima facie showing there is no triable issue of fact as to her
liability; it is plaintiffs’ burden to negate that showing with
admissible evidence they must adduce.
Because plaintiffs adduced no admissible evidence tying
Halachian personally to removal of the cinder blocks, the trial
court properly dismissed Halachian from this lawsuit.
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DISPOSITION
The judgment is affirmed. The parties are to bear their
own costs on appeal.
NOT TO BE PUBLISHED
SINANIAN, J.*
We concur:
ROTHSCHILD, P. J.
CHANEY, J.
*Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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