Phillips v. Biddyco, LLC, et. al.

(Santa Monica Courthouse: Dept. O) September 10, 2026 DEPARTMENT O LAW AND MOTION RULINGS

September 10, 2026 24SMCV00901 (Tustin Legacy LLC, et. al. v. Haxton, et. al.) INSTANT MOTION On July 27, 2026, plaintiff Tustin Legacy, LLC (Plaintiff) filed the instant motion for an order that the truth of the matters specified in Plaintiff's Requests for Admissions (RFAs) (Set Two) propounded and served on defendant Aaron Haxton (Haxton) be deemed admitted. Plaintiff requests monetary sanctions in the amount of $2,220.00. No opposition has been filed. DISCUSSION "If a party to whom requests for admission are directed fails to serve a timely response...[t]he requesting party may move for an order that the genuineness of any documents and the truth of any matters specified in the requests be deemed admitted, as well as for a monetary sanction..." (Code Civ.

Proc., Sec. 2033.280.) Plaintiff's unopposed motion to deem RFAs admitted is GRANTED. On June 9, 2026, Plaintiff served Haxton with Requests for Admissions (Set Two) overnight via FedEx to his last-known address, P.O. Box 1093, Los Alamos, CA 93440. (Kuehl Decl., P.P. 6-8, Ex. 7.) On June 10, 2026, Plaintiff also served Haxton with the same discovery via certified mail to the same address. (Id. P. 9, Ex. 8.) Haxton's responses to the RFAs were due or before July 13, 2026. No objections or responses were received to date. (Id.

P. 10.) No opposition has been filed. Plaintiff's request for monetary sanctions is GRANTED in the full amount of $2,220.00. The Court finds that monetary sanctions are appropriate, and the amount requested is reasonable. (Kuel Decl.) Case Number: 25SMCV05641 Hearing Date: September 10, 2026 Dept: O TENTATIVE RULING September 10, 2026 25SMCV05641 (Phillips v. Biddyco, LLC, et. al.) RELEVANT BACKGROUND On October 29, 2025, plaintiff Debra Phillips (Plaintiff) filed her complaint against defendants Biddyco, LLC (BiddyCo), Benjamin Philabaum (Philabaum), Meredith Schoenberger (Schoenberger), and Does 1-10 (collectively, Defendants).

On March 12, 2026, Plaintiff filed a first amended complaint (FAC) Plaintiff alleges that in or about 2013, her husband, Rob Berkley (Berkley), began professionally coaching Philabaum, who was exploring the launch of a digital advertising agency. (FAC, P. 9.) Plaintiff alleges that on or about October 30, 2014, Philabaum formed BiddyCo, LLC. (FAC, P. 10.) Plaintiff alleges that Philabaum sought, and Berkley agreed to provide, continuing professional development to Philabaum for BiddyCo. (Id.) On or about May 6, 2015, Philabaum sent an e-mail to Berkley in which he stated the following: "Putting things in writing ...

Rob is granted a 10% equity stake in BIDDYCO in exchange for weekly business coaching. Our mutual

goals are to have lot [sic] of fun, learn a lot and grow revenues to $1,000,000 +/year. Let's go!" (FAC, P. 11.) On or about May 7, 2015, Plaintiff alleges Berkley accepted the offer by stating the following via e-mail: "Thank you Ben! I am thrilled to work on this with you. We are off and running." (FAC, P. 12.) Plaintiff alleges Berkley provided these services to Philabaum on a weekly basis for four to five years in exchange for a 10% interest in BiddyCo. (FAC, P. 13.) Berkley passed away on December 17, 2018. (FAC, P. 14.)

Plaintiff alleges that, as Berkley's spouse, she inherited his 10% interest (id.), even though such interest was contingent on Berkley providing weekly coaching services and was never a vested interest. Defendants contend the personal services agreement between Berkley and BiddyCo terminated upon his death. Thereafter, a similar oral agreement was entered into between Plaintiff and BiddyCo. When that agreement was honored from 2019 - 2022, Plaintiff was entitled to such 10% interest in BiddyCo.

In or around December of 2024, Plaintiff alleges Philabaum contacted her by telephone and demanded she "give up" her ownership interest in BiddyCo without offering compensation or any legal justification. (FAC, P. 18.) Plaintiff alleges she did not agree to this request. (Id.) In 2025, Plaintiff alleges Philabaum and BiddyCo unilaterally and without consent declared Phillips's interest was being taken back. (Id.) Plaintiff alleges she did not agree to transfer or relinquish her alleged interest in BiddyCo. (FAC, P. 18.)

Plaintiff alleges that in September 2025 BiddyCo issued her a Schedule K-1 for tax year 2024 indicating she held a 10% interest at the beginning of the year but 0% at the end. (FAC, P. 19.) Plaintiff contends she is a member of BiddyCo. Defendants dispute this contention. INSTANT MOTION On August 28, 2026, Defendants filed the instant demurrer to the fourth cause of action for conversion in the FAC. Plaintiff filed an opposition, and Defendants filed a reply. MEET AND CONFER The Court finds that Defendants have satisfied the meet and confer requirement. (Boren Decl., P. 3.)

DISCUSSION I. DEMURRER TO FAC A. Fourth Cause of Action - Conversion "Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim 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." (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.) "It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to [their] own use." (Oakdale Village Group v.

Fong (1996) 43 Cal.App.4th 539, 544.) " 'A cause of action for conversion requires allegations of plaintiff's ownership or right to possession of property; defendant's wrongful act toward or disposition of the property, interfering with plaintiff's possession; and damage to plaintiff. [Citation.]' " (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.) Here, Defendants argue that the FAC fails to allege facts sufficient to state a claim for conversion against them because Plaintiff's alleged right to a 10 % interest is an alleged contractual right derived solely from a contingent agreement, with the contingency being that Plaintiff provide weekly coaching services.

Defendants contend that the failure to pay money owed because of a contractual agreement sounds only in contract, not in tort for theft or conversion, citing Voris v. Lampert (2019) 7 Cal.5th 1141, 1151-52 ["Were it otherwise, the tort of conversion would swallow the significant category of contract claims that are based on the failure to satisfy mere contractual right[s] of payment."]. Defendants also cite Plummer v. Day/Eisenberg, LLP (2010) 184 Cal.App.4th 38. In opposition, Plaintiff argues that shares of stock in a company are subject to an action in conversion, citing Haro v.

Ibarra (2009) 180 Cal.App.4th 823 and Holistic Supplements, LLC v. Stark (2021) 61 Cal.App.5th 530. Additionally, Plaintiff states that the FAC expressly alleges that Berkeley's 10% interest became fully vested and non-forfeitable (FAC P. 13 - 17) and that Plaintiff inherited this vested interest as his sole successor-in-interest

and lawful owner (FAC P. 15, 46). Plaintiff also highlights that the interest was allegedly formally recognized and treated as active by BiddyCo through the issuance of Schedule K-1s showing her 10% capital and profit interest from 2018 through 2024 (FAC P. 16, 19, 52). Plaintiff distinguishes the cases relied upon by Defendants, Voris and Plummer, on the basis that Plaintiff is not seeking to collect an unliquidated contractual debt or unpaid wages. Plaintiff states that the FAC alleges that her late husband fully performed under the 2015 agreement, that his 10% equity stake became fully vested personal property which was transferred to Plaintiff (FAC P. 13-18, 52), and that, once a property interest has fully vested, it is no longer an executory contractual right of payment, but a tangible personal property asset.

In reply, Defendants contend such agreement between Berkeley and BiddyCo never vested an interest in her husband and that Plaintiff did not inherit any such interest because it was always contingent on Plaintiff's husband's performing weekly coaching services and that such interest was non-transferrable. The Court finds that the FAC fails to allege facts sufficient to state a claim for conversion because the FAC does not allege that Berkeley's 10% interest in BiddyCo vested unconditionally upon execution of the written May 2015 agreement and that any coaching services he subsequently performed were as a voluntary owner-member, rather than as a condition of ownership. (See FAC P. 9-27, 51-58).

But the Court finds that leave to amend is appropriate because it is reasonably possible for Plaintiff to cure the defects by amendment. The Court notes that on September 2, 2026, Plaintiff filed a motion for leave to file a second amended complaint. Accordingly, Defendants' demurrer to the fourth cause of action of the FAC for conversion is SUSTAINED WITH LEAVE TO AMEND. Further, Defendants' motion to strike the punitive damages allegations is GRANTED WITH LEAVE TO AMEND. | Home -->)" -->