458 Seb Ave LLC v. Anderson

Plaintiff alleges neither Defendant Anderson nor Defendant EA have acknowledged Pfanner’s role as manager or his 100% membership in Plaintiff. Plaintiff further alleges that during his tenure as Plaintiff’s manager, Defendant Anderson failed to pay tax payments, misappropriated Plaintiff’s capital and revenue, and failed to make distributions pursuant to the Operating Agreement.

2. Request for Judicial Notice Plaintiff’s requests for judicial notice are granted.

3. First Cause of Action – Declaratory Relief Plaintiff’s first cause of action seeks declaratory relief acknowledging Pfanner’s 100% membership and role as manager since the execution of the Second Amendment on June 9, 2023. Plaintiff has established that on or around August 14, 2015, Pfanner, Defendant Anderson, and Defendant EA executed Plaintiff’s Operating Agreement pursuant to which Pfanner was Plaintiff’s 75% member, Defendants EA was Plaintiff’s 25% member, and Defendant Anderson was Plaintiff’s Manager. (Undisputed Material Fact [“UMF”], No. 1.)

On June 9, 2023, Pfanner and Defendants Anderson and EA executed the Second Amendment to the Operating Agreement for 458 SEB AVE LLC (“Second Amendment”), whereby Pfanner would become the 100% member and sole manager of Plaintiff upon an additional capital contribution of $1,110,712.50. (UMF No. 2.) Pfanner states that pursuant to the Second Amendment, he made an additional capital contribution to Plaintiff and became Plaintiff’s 100% member and sole manager. In his declaration, Pfanner states: “The amount identified in the Second Amendment is $1,110,712.50, but I was then informed by Plaintiff’s lender, Parker Kline Finance & Investment dba Parker Mortgage & Investment Co., that the amount needed to pay off the loan was $1,103,564.50 (as opposed to the foregoing $1,110,712.50), and I therefore made the capital contribution in this amount, as evidenced by the partially redacted wire transfer confirmations attached hereto as Exhibit D.” (Pfanner decl., ¶6.)

Exhibit D is a wire transfer record from a Chase account showing that on June 16, 2023, $500,000.00 was wired to Parker Kline. (Pfanner decl., Exhibit D.) The notes indicate it was to pay Loan 6-1217-36. (Ibid.) A second wire transfer record shows on July 21, 2023, $603.564.50 was transferred to Parker Kline for Loan-1217-36 / 458 Seb Ave L. (Ibid.) Thus, pursuant to the Second Amendment, Pfanner paid the required capital contribution and became Plaintiff’s 100% member and sole manager. (UMF No. 4.)

Although the Second Amendment gave Defendant Anderson the option to purchase Plaintiff from Pfanner by December 31, 2023, he did not do so. (Pfanner decl., ¶7.) Therefore, Pfanner remains Plaintiff’s 100% member and sole manager. Plaintiff has met his burden on this cause of action. Defendants have not filed opposition. Therefore, the motion for summary adjudication of this cause of action is GRANTED.

4. Second Cause of Action – Accounting Plaintiff’s second cause of action seeks an order requiring Defendant Anderson to provide Plaintiff with an accounting pursuant to Sections 6.6.6.2 and 6.13.1.1 and Article 9 of the Operating

Agreement during Defendant Anderson’s tenure as manager between August 14, 2015, until June 9, 2023. A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation. (Ibid.)

Between August 14, 2025, and June 9, 2023, Plaintiff was owned by Pfanner (75%) and Defendant EA (25%), and Defendant Anderson served as Plaintiff’s manager. (UMF No. 6.) The Operating Agreement contains requirements of Plaintiff’s manager including, to account to the Company and hold as trustee for it any property, profit, or benefit derived by the Manager in the conduct of winding up the Company’s business or derived from a use by the Manager of Company property. (RJN, Complaint, Exhibit A, sections 6.6.6.2, 6.13.1.1.)

Article 9 lays out the method of accounting, annual statements, the maintenance of books and records, access to books and records, income tax information, and banking. (Id., Article 9.) These provisions include the requirement of annual statements and to allow open access to the Company’s books and records. (Ibid.) The Operating Agreement provides that upon the request of a member or transferee, for purposes reasonably related to the interest of that person as a member or a transferee, a manager or, if the limited liability company is member-managed, a member in possession of the requested information, shall promptly deliver, in writing, to the member or transferee, at the expense of the limited liability company, a copy of the information required to be maintained by paragraphs (1), (2), and (4) of subdivision (d) of Section 17701.13, and any written operating agreement of the limited liability company.

Section 17701.3 subdivision (d)(1), (2), and (4) provide: “Each limited liability company shall maintain in writing or in any other form capable of being converted into clearly legible tangible form at the office referred to in subdivision (a) all of the following:

(1) A current list of the full name and last known business or residence address of each member and of each transferee set forth in alphabetical order, together with the contribution and the share in profits and losses of each member and transferee. (2) If the limited liability company is a manager-managed limited liability company, a current list of the full name and business or residence address of each manager. -- (4) Copies of the limited liability company's federal, state, and local income tax or information returns and reports, if any, for the six most recent fiscal years.

Pfanner states: “During his tenure as Plaintiff’s former manager, Defendant Anderson refused to provide me with an accounting of Plaintiff’s revenue, expenses, profits, etc., and further refused to provide access to Plaintiff’s books and records (including prior bank statements). After becoming Plaintiff’s sole member and manager, I also discovered that Defendant Anderson supplied incorrect information to Plaintiff’s accountant and also failed to pay the required tax payments, including real property taxes, on Plaintiff’s behalf, notwithstanding my additional capital contributions which were made, in part, for that specific purpose.

I have reviewed property tax bills issued by Sonoma County regarding the Investment Property during the period of 2018 through 2023. Based on these documents, I am informed and believe that as a result of Defendant Anderson’s failure to timely pay real property taxes on Plaintiff’s behalf, Plaintiff incurred late fees and penalties in the amount of $3,062.40.” (Pfanner decl., ¶13.) 3

Pfanner further states: “In November of 2023, I was finally able to obtain access to Plaintiff’s bank account at Chase Bank. Upon reviewing the relevant financial documents, I discovered that Defendants had misappropriated Plaintiff’s capital and revenue generated by the Investment Property in an amount of no less than $192,714.29, which remains due and owing to Plaintiff. My review of these financial documents also revealed that Defendant Anderson had improperly transferred or otherwise misdirected these funds to either himself, Defendant EA X, and/or other entities owned or controlled by Defendant Anderson, including, for example, Urban Green Goods, LLC, Urban Green Equities, LLC, and/or Urban Green Management, LLC.” (Pfanner decl., ¶12.)

Defendant Anderson was Plaintiff’s manager and owed a duty to account to members, including Pfanner. Pfanner has ascertained that some amount is owed back to Plaintiff; however, the actual amount due remains uncertain. Accordingly, an accounting is warranted. Plaintiff has met his burden on this cause of action. Defendants have not filed opposition. Therefore, the motion for summary adjudication of this cause of action is GRANTED.

5. Third Cause of Action - Breach of Fiduciary Duty Plaintiff alleges that between August 14, 2025, and June 9, 2023, Defendant Anderson was Plaintiff’s manager and owed fiduciary duties and obligations of the highest character to Plaintiff and its members, including those stated in Corporations Code section 17704.09. Plaintiff alleges Defendant Anderson breached these by failing to account to Plaintiff’s members; improperly diverting Plaintiffs capital and revenue to himself and to Defendant EA; potentially entering into contracts and leases on behalf of Plaintiff in order to benefit himself and those around him, resulting in a diminution in value of and/or revenue from the Investment Property; and failing to timely pay Plaintiffs obligations, including but not limited to real property taxes.

As to Defendant EA, Plaintiff alleges as a former 25% member of Plaintiff, it also owed a fiduciary duty to Plaintiff. Plaintiff alleges Defendant EA breached that duty by receiving and refusing to return capital and revenue that was improperly diverted to it by Defendant Anderson. The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damages proximately caused by that breach. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.)

As determined above, Defendant Anderson refused to provide an accounting and continues to refuse to do so. (UMF No. 13.) Pfanner states that upon reviewing financial documents, he discovered Defendants had misappropriated Pliantiff’s capital and revenue and failed to pay Plaintiff’s obligations. (Pfanner decl., ¶¶11, 12.) This is a breach of Defendant Anderson’s fiduciary duty as the manager of Plaintiff. Plaintiff has met his burden on this cause of action. Defendants have not filed opposition.

Therefore, the motion for summary adjudication of this cause of action is GRANTED.

6. Fourth Cause of Action – Conversion Plaintiff alleges Defendant Anderson and Defendant EA converted Plaintiff’s capital and revenue by improperly diverting it to themselves and other entities owned and/or controlled by Defendant Anderson. The elements of a claim for conversion are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. (IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 650.) ‘Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.’ A ‘generalized claim for money [is] not actionable as conversion.’ ” (PCO, Inc. v.

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.) 4

Plaintiff is the owner of the Investment Property and is entitled to receive the rental income therefrom. (UMF No. 17.) Defendants misappropriated Plaintiff’s capital and revenue generated by the Investment Property in an amount of no less than $192,714.29, which remains due and owing to Plaintiff. (Pfanner decl., ¶12.) These funds were either transferred to Defendant Anderson, to Defendant EA, and/or to other entities owned or controlled by Defendant Anderson. (Ibid.) Plaintiff has met his burden on this cause of action. Defendants have not filed opposition. Therefore, the motion for summary adjudication of this cause of action is GRANTED.

7. Fifth Cause of Action – Waste Plaintiff alleges that Defendant Anderson has caused waste to the Investment Property by failing to timely and adequately pay Plaintiff’s real property taxes. A claim for failure to pay real property taxes constitutes a cause of action for Waste. (Nippon Credit Bank v. 1333 N. Cal. Blvd. (2001) 86 Cal.App.4th 486, 496.) As established above, Defendant Anderson failed to timely pay taxes own, constituting a waste. Plaintiff has met his burden on this cause of action. Defendants have not filed opposition. Therefore, the motion for summary adjudication of this cause of action is GRANTED.

8. Conclusion and Order Based upon the foregoing, the motion is GRANTED. Plaintiff’s counsel is directed to submit a written order to the court consistent with this ruling.

3. 24CV02971, Maverick Excavating, Inc. v. Dalk

This matter is on calendar for the motion of Cross-Defendants Vincent Herring and Tiffanie Herring (“Cross-Defendants”) demurrer to the entire cross-complaint filed by Cross-Complainant Jason Dalk, and to the second and third cause of action therein. The same day as Cross-Defendants’ demurrer was filed, Cross-Complaint Jason Dalk filed a motion for leave to amend his Cross-Complaint—the Cross-Complaint that is the subject of Cross- Defendants’ demurrer. Both the demurrer and motion for leave to amend are opposed.

Trial in this heavily litigated case has not yet been set. The cross-complaint is clearly in need of amendment to state multiple causes of action. While Cross-Complainant Dalk opposes the demurrer, he also acknowledges the need for amendment through his own motion for leave to amend. Therefore, this court will SUSTAIN Cross-Defendants’ Demurrer. While Cross- Defendants’ conclude that it cannot be remedied with amendment, they show nothing on the face of the pleading that would incline the Court to find amendment would be futile.

The Court need only justify leave to amend after multiple demurrers have been sustained to the same pleading. CCP § 430.41(e)(1). The Court should, ordinarily, permit the party whose pleadings are attacked to amend if it so desires. Hardy v. Admiral Oil Co. (1961) 56 Cal.2d 836, 841–842. The Demurrer is SUSTAINED with leave to amend. The Court would be granting leave to amend on the demurrer regardless, but shortly before the demurrer was filed, Cross-Complainant Dalk filed a motion for leave to amend.

While Cross- Defendants aver that the leave to amend is futile, they point to nothing on the face of the pleading that would otherwise lead the Court to the same conclusion. The underlying merits of the proposed cause of action amendments are not relevant to determining whether amendment is appropriate, as long as they relate to the same general set of facts, as the amended pleadings may be attacked by demurrer, motion for judgment on the pleadings, or other similar proceedings. Kittredge Sports Co. v.

Superior Court (1989) 213 Cal.App.3d 1045, 1048. While Cross-Defendants opine that Cross- 5