Eden Gardens Center, LLC vs. Janak K. Mehtani

34-2020-00291438-CU-BC-GDS: Eden Gardens Center, LLC vs. Janak K. Mehtani 01/26/2026 Hearing on Motion for Summary Adjudication in Department 28

Parties requesting services of a court reporter will need to arrange for private court reporter services at their own expense, pursuant to Government code §68086 and California Rules of Court, Rule 2.956. Requirements for requesting a court reporter are listed in the Policy for Official Reporter Pro Tempore available on the Sacramento Superior Court website at https://www.saccourt.ca.gov/court-reporters/docs/crtrp-6a.pdf. Parties may contact Court- Approved Official Reporters Pro Tempore by utilizing the list of Court Approved Official Reporters Pro Tempore available at https://www.saccourt.ca.gov/court-reporters/docs/crtrp- 13.Pdf

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TENTATIVE RULING

*** If oral argument is requested, the parties are directed to notify the clerk and opposing counsel at the time of the request which of the Issues identified in the Notice of Motion/Separate Statement and which of the Undisputed Material Facts offered by the moving defendant and/or the Additional Material Facts offered by plaintiff will be addressed at the hearing and the parties should be prepared to point to specific evidence which is claimed to show the existence or non-existence of a triable issue of material fact. ***

Defendants and Cross-Complainants Janak K. Mehtani (“Mehtani”) and Town and Country West GP’s (“T&C West GP”) (collectively, “Defendants”) motion for summary adjudication against Plaintiffs and Cross-Defendants Raj Sharma (“Sharma”) and Eden Gardens Center, LLC (“Eden Gardens”) (collectively, “Plaintiffs”) is ruled upon as follows.

The notice of motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06. Moving counsel is directed to contact opposing counsel and advise of Local Rule 1.06 and the Court’s tentative ruling procedure and the manner to request a hearing. If moving counsel is unable to contact opposing counsel prior to the hearing, moving counsel

34-2020-00291438-CU-BC-GDS: Eden Gardens Center, LLC vs. Janak K. Mehtani 01/26/2026 Hearing on Motion for Summary Adjudication in Department 28

is ordered to appear at the hearing by Zoom or in person.

Evidentiary Issues

Plaintiffs’ Objection No. 1 is OVERRULED.

Defendants’ Objection No. 6 is SUSTAINED. The remaining Objections are OVERRULED or pertain to evidence not pertinent to the Court’s determination of the motion. (Code Civ. Proc. § 437c(q).)

Background

This action arises from disputes over the parties’ business dealings involving interrelated parcels of real property. Plaintiffs filed their Complaint on December 28, 2020. Defendants filed a Cross-Complaint on March 11, 2021 and a First Amended Cross-Complaint on April 26, 2021. At issue in this motion are Plaintiff’s fourth cause of action for conversion and fifth cause of action for breach of demand note, as well as Defendants’ fourth cause of action for conversion. Mehtani is T&C West GP’s principal, while Sharma is Eden Gardens’ principal.

On September 26, 2015, Eden Gardens and T&C West GP entered into a 10-year written lease related to commercial property owned by T&C West GP and located at 2951 Fulton Avenue, Sacramento, California 95821 (the “Fulton Property”). The lease specified that Eden Gardens would operate a banquet hall/event center at the Fulton Property. The lease provided that Eden Gardens would be responsible any construction and improvements on the Fulton Property. Plaintiffs assert that they spent approximately $500,000 to purchase and install personal property items and fixtures at the Fulton Property related to the operation of the banquet hall, including flooring, tiles, chandeliers, and lighting, as well as movable items such as tables, chairs, and decorative pieces. These items were stored and used at the Fulton Property.

On April 23, 2018, T&C West GP sold the Fulton Property to Defendant Town and Country West LLC (“TC LLC”). TC LLC was controlled by Waqar Khan (“Khan”). After acquiring the Fulton Property, TC LLC terminated the lease and evicted Eden Gardens. Defendants assert that they never exercised dominion and control over Plaintiffs’ personal property, either before or after the sale. Plaintiffs contend that their personal property was wrongfully included in the sale and kept by Khan for TC LLC’s operation of its own banquet hall business at the Fulton Property.

At the time of execution of the lease, T&C West GP had a contractual relationship concerning the Fulton Property with Manzar Qayyum (“Qayyum”), through his company, Technologist Design Build, Inc. (“Design Build”). Design Build also served as property manager of the Fulton

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2020-00291438-CU-BC-GDS: Eden Gardens Center, LLC vs. Janak K. Mehtani 01/26/2026 Hearing on Motion for Summary Adjudication in Department 28

Property. T&C West GP was to deliver the Fulton Property to Eden Gardens in a condition for it to perform its intended business, with Design Build to perform the necessary construction work such that only decorative work would need to be performed by Eden Gardens. Plaintiffs contend that before the April 23, 2018 sale of the Fulton Property, Qayyum told Mehtani that the personal property and fixtures belonged to Plaintiffs and requested that they be permitted to remove it before the sale. In response, Mehtani told Qayyum that he had already sold the Fulton Property along with the personal property and he was not going to permit Plaintiffs to recover the property before the sale closed.

When Sharma asked Mehtani to return the personal property, Mehtani told him he had sold it to Khan. Khan then told Sharma that he should talk to Mehtani because Khan believed he had purchased the Fulton Property as is, including the personal property. Khan then requested a receipt and list of claimed items from Sharma before speaking with Mehtani. During that conversation, Mehtani told Khan that Eden Gardens had not performed on the contract and that Khan should do what he wants with the personal property.

Meanwhile, also on September 26, 2015 (the same date the lease was executed), Mehtani and Sharma executed a written loan agreement wherein Sharma agreed to lend Mehtani up to $1 million at 5 percent annual interest, compounded annually, for a period of 10 years. The loan agreement specified that the purpose of the loan was to allow for improvements at the Fulton Property. The loan was secured by a first deed of trust recorded against real property located at El Centro Road in Sacramento (the “El Centro Property”).

The loan agreement includes a printed repayment clause with the details related to payment amount, payment schedule, commencement date, and final maturity date left blank. (See Defendants’ Exh. 3, p. 2.) Under this clause is a handwritten notation that states, “Pending, payment plan attached Anex [sic] ‘C’ as addendum on later dates.” (Ibid.) The loan agreement does not include an Annex C. Plaintiffs allege that, pursuant to the loan agreement, Sharma made six payments to Design Build between October 7, 2015 and November 1, 2016 totaling over $700,000.

Plaintiffs contend that these disbursements funded improvements to the Fulton Property as required by the lease. Plaintiffs allege that Sharma was not repaid on the loan and that instead Mehtani diverted the proceeds to pay for personal expenses. Mehtani never delivered the deed of trust for the El Centro Property to Sharma. On November 1, 2016, Sharma learned of Mehtani’s alleged use of the proceeds for personal expenses and made an oral demand for repayment on the loan.

The facts discussed above relate to Plaintiffs’ fourth cause of action for conversion and fifth cause of action for breach of demand note. The following facts relate to Defendants’ fourth cause of action for conversion, and Plaintiffs contend that the events are intertwined with the Fulton Property. In March or April of 2018, Mehtani and Sharma executed a written joint venture agreement to purchase and own a piece of unimproved real property located at Shasta Avenue in Elk Grove (the “Shasta Property”). Prior to this, in 2014, T&C West GP and a separate entity, LAJ Construction, Inc. (“LAJ Construction”), had obtained a loan in the amount of $3.7 million secured by the Fulton Property and the Shasta Property. The loan went into default, resulting in

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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foreclosure proceedings being commenced against the Shasta Property. Under the joint venture agreement, Mehtani and Sharma agreed to jointly contribute funds for the estimated purchase price of the Shasta Property of $4,120,723.26, with Mehtani agreeing to contribute 20%, or $824,144.65 and Sharma agreeing to contribute 80%, or $3,296,578.61. The joint venture agreement further provided that Sharma would use these funds to purchase and take title to the Shasta Property at the foreclosure sale. The joint venture agreement then provided that the parties would form a single-asset limited liability company, to which Sharma would transfer the Shasta Property. Sharma and Mehtani would be the sole members of the LLC and would own interests equal to their pro rata contributions to the purchase price.

On March 31, 2018, Mehtani delivered a check to Sharma in the amount of $824,144.65. Defendants contend that this payment was Mehtani’s contribution under the joint venture agreement. Plaintiffs contend that the payment “represented repayment of money Sharma had previously loaned to Mehtani, plus interest.” (Opp. MPA, p. 5:5-6.) Plaintiffs further assert that Sharma proceeded to use his own funds, including a line of credit, to purchase the Shasta Property. Defendants contend that Mehtani retained an attorney to draft the operating agreement for the LLC as provided in the joint venture agreement, but Sharma refused to sign it. Sharma subsequently sold the Shasta Property to a third party and retained 100% of the sale proceeds. Sharma has refused Mehtani’s demand for return of the $824,144.65.

In addition to their contention that this money constituted repayment of money Sharma had previously loaned Mehtani, Plaintiffs contend that the joint venture agreement was executed under the false pretenses from Mehtani that he had a buyer lined up for the Shasta Property for approximately $8 million. Plaintiffs further contend that “the trustee’s sale itself was tainted by an unlawful shill-bidding scheme orchestrated to protect Mehtani’s cross-collateralized interests in the Fulton loan.” (Opp.

MPA, p. 6:3-4.) Specifically, Plaintiffs contend that Qayyum was present at the sale and made bids on Sharma’s behalf. Mehtani’s attorney, Ty Johnson, was also present. Plaintiffs contend that during the auction, the bidding initially stalled at $1.7 million. Qayyum declares, “At that point, I was handed a cell phone from the personal attorney of Janek Mehtani, Ty Johnson. Janek Mehtani was on the line and he instructed me to continue to increase the auction bid to the full amount of the loan plus one penny.

He represented that the Shasta Property was pre-sold for $8,400,000.00 to a buyer known by Janek Mehtani.” (Plaintiffs’ Exh. A, ¶ 14.)

Discussion

Legal Standard

Summary judgment must be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Code

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Civ. Proc. § 437c(c); Mann v. Cracchiolo (1985) 38 Cal.3d 18, 35.) Summary judgment is properly granted only if the moving party’s evidence establishes that there is no issue of material fact to be tried. (Upson v. Superior Court (1982) 31 Cal.3d 362, 374.) A judge may not grant summary judgment when any material factual issue is disputed. (O’Riordan v. Federal Kemper Life Assur. (2005) 36 Cal.4th 281, 289.) “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc. § 437c(f)(1).)

In evaluating a motion for summary judgment or summary adjudication the Court engages in a three-step process. First, the Court identifies the issues framed by the pleadings. The pleadings define the scope of the issues on a motion for summary judgment or summary adjudication. (FPI Dev. Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381-382.) The Court cannot consider an unpled issue in ruling on a motion for summary judgment or summary adjudication. (Roth v. Rhodes (1994) 25 Cal.App.4th 530, 541.)

Next, the Court must determine whether the moving party has met its burden. A defendant moving for summary judgment or summary adjudication bears the burden of persuasion that one or more elements of the plaintiff's cause of action cannot be established, or that there is a complete defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 850, quoting Code Civ. Proc. § 437c(p)(2).) A defendant is not required to conclusively negate one or more elements of the plaintiff's cause of action. (Saelzer v Advance, Group 400 (2001) 25 Cal.4th 763, 780-781). Rather, to meet its burden, the defendant is only required to show that the plaintiff cannot prove an element of its cause of action, i.e., that the plaintiff does not possess and cannot reasonably obtain evidence necessary to show this element. (Aguilar, supra, 25 Cal. 4th at pp. 853-55.)

At the same time, a defendant cannot shift the burden to the plaintiff simply by suggesting the possibility that the plaintiff cannot prove its case; a moving defendant must still make “an affirmative showing” in support of its motion. (Id. at pp. 854-855, fn. 23.)

Once the moving party has met its burden, the burden shifts to the opposing party to show that a material factual issue exists as to the cause of action alleged or a defense to it. (Code. Civ. Proc. § 437c(p); see generally Bush v. Parents Without Partners (1993) 17 Cal. App. 4th 322, 326-27.) In ruling on the motion, the Court must consider the evidence and inferences reasonably drawn from the evidence in the light most favorable to the party opposing the motion. (Aguilar, supra, 25 Cal. 4th 826 at p. 843.)

There is a triable issue of material fact only if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion. (Id. at 850.) The trial court's function in ruling on the motion is to determine whether such issues of fact exist, not to decide

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the merits of the issues themselves. (Furla v. Jon Douglas Co. (1998) 65 Cal. App. 4th 1069, 1076-77.) Whether or not a disputed fact is “material” is determined by the law applicable to the legal theories put in issue by the complaint. (Anderson v. Heart Federal Sav. & Loan Assn. (1989) 208 Cal. App. 3d 202, 210.)

Issue 1 – Plaintiffs’ Fourth Cause of Action for 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. Conversion is a strict liability tort. The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious. Therefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial.

(Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066.)

Defendants contend that Plaintiffs’ conversion claim fails for two reasons: (1) Plaintiffs cannot show that T&C West GP disposed of the property in a manner inconsistent with Plaintiffs’ property rights; and (2) T&C West GP did not take any affirmative action to exercise dominion over or deprive Plaintiffs of their property. Defendants essentially argue that throughout the time T&C West GP owned the Fulton Property, up to the time it was sold to TC LLC, Plaintiffs were in possession of their personal property, and T&C West GP did nothing to impede Plaintiffs’ right to access the property. Defendants further argue that Plaintiffs are inappropriately attempting to impose a duty on T&C West GP to return the personal property before selling the Fulton Property.

Plaintiffs’ argument in opposition may be aptly summarized as such:

[I]ntentionally preventing the owner from taking possession, or exercising ownership inconsistent with the owner’s rights, is enough. A reasonable jury could find that T&C West GP did exactly that when it sold the premises with Eden Gardens’ equipment, personal property and fixtures intact and told the buyer to use it, without returning or even attempting to segregate Eden Gardens’ property.

(Opp. MPA, p. 9:4-7.)

Plaintiffs further contend that Defendants incorrectly focus on the time between the sale of the Fulton Property and Eden Gardens’ eviction. Instead, Plaintiffs argue that the conversion

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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occurred at the time of sale when T&C West GP sold the Fulton Property to TC LLC with Mehtani representing to Khan that the personal property was included.

The Court finds that a triable issue of fact exists on the issue of Defendants’ dominion and control over the personal property. “‘A sale of personal property to another is an actionable conversion where it is wrongful or unauthorized by law, or without the consent of the owner and in defiance of his rights.’” (Lusitanian--American Development Co. v. Seaboard Dairy Credit Corp. (1934) 1 Cal.2d 121, 129.) Here, Plaintiffs have submitted evidence upon which a jury could reasonably conclude that Defendants sold Plaintiffs’ personal property when they sold the Fulton Property.

Specifically, Sharma testified that shortly after the sale of the Fulton Property he asked Mehtani to return his personal property but Mehtani stated that he had sold it to Khan. Further, Qayyum declares that before the sale of the Fulton Property was finalized, Mehtani informed him that he had sold the personal property to TC LLC. (Plaintiffs’ Exh. A, ¶ 9.) Additionally, Plaintiffs have submitted a chain of emails from March of 2019 (11 months after the sale of the Fulton Property) between Sharma, Mehtani, and Khan in which they discuss Plaintiffs’ personal property.

In an email to Sharma, Khan stated, “I purchased the mall ‘lock, stock and barrel’ but I am a very fair man and straight shooter as life is too short as it is[.] So, [i]f there is anything that belongs to you in the mall than [sic] it is yours and I will settle the difference with Dr. Mehtani who is copied on the email.” (Plaintiffs’ Exh. I, p. 5 [Bates PLAINTIFFS_000257].) At his deposition, Khan testified that when he said “lock, stock, and barrel,” he meant he purchased “everything” at the Property. (Plaintiffs’ Exh.

G, p. 227:1-8.) From this evidence, a jury could reasonably find that T&C West GP sold Plaintiffs’ personal property when it sold the Fulton Property to TC LLC.

Defendants rely extensively on Archer v. Coin Base, Inc., where the Second District Court of Appeal stated, “Conversion requires the defendant to take some affirmative action to exercise dominion over or deprive a plaintiff of his or her property.” (Archer v. Coinbase, Inc. (2020) 53 Cal.App.5th 266, 276.) In Archer, the plaintiff owned Bitcoin stored in his account with Coinbase. A third-party launched a new cryptocurrency, “Bitcoin Gold,” as a “fork.” As explained in Archer:

A fork is a way of creating a new digital currency by copying the source code of an existing digital currency’s blockchain and repurposing it into a new digital currency network. When a developer creates a fork, the existing ledger of transactions from the original currency is used, and holders of the original currency are assigned equivalent units of the new currency on the new network. The new currency then “forks” into a separate blockchain ledger that records transactions of the new currency between participants in the new network.

(Archer, supra, 53 Cal.App.5th at pp. 269-270.)

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Coinbase ultimately decided not to support Bitcoin Gold and informed its users of its conclusion. Several months after it was launched, “the Bitcoin Gold network was attacked by hackers who stole millions of dollars of funds from trading platforms and individuals on its network.” (Id. at p. 270.) The plaintiff then sued Coinbase on the basis that it had failed and refused to allow him to receive his forked Bitcoin Gold and retained control over his Bitcoin Gold for its own benefit. In affirming the grant of summary judgment as to the plaintiff’s conversion claim, the court concluded that the plaintiff had failed to establish that Coinbase took any affirmative act to exercise dominion over or deprive the plaintiff from accessing his Bitcoin Gold. (Id. at p. 276.)

The court noted that “Coinbase submitted evidence it had not taken any affirmative action with respect to Bitcoin Gold, and that plaintiff’s Bitcoin Gold remains on the public network created by a third party.” (Ibid.) The plaintiff submitted no evidence to contradict this, and his declaration admitted that Coinbase had not taken an affirmative action, stating, “‘By Coinbase taking no action, knowing I had no ability to access my Bitcoin Gold on my own, Coinbase’s inaction was tantamount to direct conduct depriving me of my property and was Coinbase’s way of exercising complete dominion and control over my property thus depriving me of it.’” (Ibid.)

The Court finds Archer distinguishable. Unlike the plaintiff in Archer, Plaintiffs have submitted evidence showing Defendants took an affirmative action by including Plaintiffs’ personal property in the sale of the Fulton Property. Moreover, the Archer court noted that imposing liability on Coinbase would essentially require “‘all cryptocurrency exchanges to affirmatively honor every single bitcoin fork.’” (Archer, supra, 53 Cal.App.5th at p. 277, quoting BDI Capital, LLC v. Bulbul Investments LLC (N. Dist. GA 2020) 446 F.Supp.3d 1127, 1140.) This reasoning is not applicable here. The potential for liability in this case would not impose a duty on landlords to affirmatively return their tenants’ personal property to them, but would simply require landlords to not include their tenants’ personal property with the sale of the leased real property.

In their reply, Defendants emphasize that Khan’s testimony shows “that he provided Plaintiffs several opportunities to remove the Personal Property from the Premises even after TC LLC acquired the Fulton Property.” (Reply MPA, p. 3:22-23.) Even accepting that this is an accurate description of Khan’s testimony, this does not defeat Plaintiffs’ conversion claim. “[I]n a conversion action the plaintiff need show only that he was entitled to possession at the time of conversion; the fact that plaintiff regained possession of the converted property does not prevent him from suing for damages for the conversion.” (Enter. Leasing Corp. v. Shugart Corp. (1991) 231 Cal.App.3d 737, 748.) Thus, that Khan may have offered to let Sharma reclaim the property after the sale of the Fulton Property does not mean that the property was not converted when it was sold to TC LLC.

Accordingly, Defendants’ motion for summary adjudication as to Issue 1 regarding Plaintiffs’

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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fourth cause of action for conversion is DENIED.

Issue 2 – Plaintiffs’ Fifth Cause of Action for Breach of Demand Note

The statute of limitations for a breach of written contract is four years. (Code Civ. Proc. § 337(a).) “A cause of action for breach of contract accrues at the time of breach, which then starts the limitations period running.” (Cochran v. Cochran (1997) 56 Cal.App.4th 1115, 1120.) An action to enforce a negotiable instrument payable at a definite time must be brought within six years after its due date or accelerated due date. (U. Com. Code § 3118(a).) If the negotiable instrument is payable on demand, the action must be brought within six years after the demand. (U.

Com. Code § 3118(b).) A negotiable instrument is “an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order,” that “(1) [i]s payable to bearer or to order at the time it is issued or first comes into possession of a holder[;]” “(2) [i]s payable on demand or at a definite time[;]” and “(3) [d]oes not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money,” subject to certain exceptions not relevant here. (U.

Com. Code § 3104(a).)

Defendants’ opening papers do not address the statute of limitations for a claim for payment on a negotiable instrument. Nor do Defendants address the issue of whether the loan agreement is a negotiable instrument under Uniform Commercial Code section 3118(a) subject to a six-year statute of limitations or whether it is a regular contract subject to a four-year statute of limitations. Instead, Defendants simply conclude that the four-year statute of limitations applies. A motion for summary judgment must be directed to the issues raised by the pleadings. (Falcon v.

Long Beach Genetics, Inc. (2014) 224 Cal.App.4th 1263, 1275.) Here, under their fifth cause of action, Plaintiffs allege, “The Loan Agreement is a valid and enforceable negotiable instrument between Plaintiff SHARMA and Defendant MEHTANI.” (Complaint, ¶ 63.) Thus, Plaintiffs clearly allege that the loan agreement is a negotiable instrument, and Defendants’ bear the burden to show that the loan agreement is not a negotiable instrument or that the breach occurred more than six years before the Complaint was filed. “If the defendant does not address an issue in a motion for summary judgment that has been raised in the plaintiff’s complaint, it fails to meet its initial burden to show the plaintiff’s action has no merit’ the motion therefore fails to shift the burden to the plaintiff to oppose summary judgment.” (Hedayati v.

Interinsurance Exchange of the Automobile Club (2021) 67 Cal.App.5th 833, 846.) Moreover, since Plaintiffs filed their Complaint within six years of the earliest breach argued by Defendants, the burden is on Defendant to establish that the loan agreement is not a negotiable instrument.

Accordingly, Defendants’ motion for summary adjudication as to Issue 2 regarding Plaintiffs’ fifth cause of action for breach of demand note is DENIED.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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Issue 3 – Defendants’ Fourth Cause of Action for Conversion

Defendants contend:

Mehtani seeks to hold Sharma liable for conversion as it is undisputed that Mehtani delivered $824,144.65 to Sharma pursuant to the Joint Venture Agreement, (UF 37), that Sharma was required under the agreement to use the funds to purchase the Shasta Property for the benefit of the JV LLC (UF 30), that Sharma failed and refused to transfer the Shasta Property to the JV LLC, (UF 40), that he converted Mehtani’s funds by taking possession of the Shasta Property in his own name and refusing to transfer the property to the joint venture entity contemplated under the Joint Venture Agreement, (UF 40, 41). These acts are fully inconsistent with Mehtani’s property rights and, as a result, Mehtani has suffered a loss of $824,144.65, plus pre-judgment interest at the legal rate. (UF 41.)

(Mot. MPA, p. 13:1-9.)

In opposition, as noted above, Plaintiffs first contend that there is a dispute of fact as to whether the $824,144.65 payment constituted repayment of a prior loan Sharma had made to Mehtani. Plaintiffs next contend that a triable issue exists as to whether the joint venture agreement was fraudulently induced on the promise that Mehtani had a buyer for the Shasta Property willing to pay $8 million. Finally, Plaintiffs contend that the foreclosure sale was tainted with illegality.

In general, “money cannot be the subject of an action for conversion unless a specific sum capable of identification is involved.” (Haigler v. Donnelly (1941) 18 Cal.2d 674, 681.) “[W]here the money or fund is not identified as a specific thing the action is to be considered as one upon contract or for debt and not for conversion.” (Baxter v. King (1927) 81 Cal.App. 192, 194.)

[T]he “specific thing at issue must be a thing to which the plaintiff has a right of ownership or possession—a right with which the defendant has interfered by virtue of its own disposition of the property. This means that “[a] cause of action for conversion of money can be stated only where a defendant interferes with the plaintiff's possessory interest in a specific, identifiable sum”; “the simple failure to pay money owed does not constitute conversion.” 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.’” Contractual provisions may, of course, determine whether the plaintiff has a possessory right to certain funds in the defendant’s hands.

But to put the matter simply, a “plaintiff has no claim for conversion merely because the defendant has a bank account and owes the

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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plaintiff money.”

(Voris v. Lampert (2019) 7 Cal.5th 1141, 1151-1152, citations omitted.)

Thus, “cases recognizing claims for the conversion of money ‘typically involve those who have misappropriated, commingled, or misapplied specific funds held for the benefit of others.’” (Id. at p. 1152.)

The Court is not persuaded that Mehtani has met his initial burden to show that he is entitled to judgment as a matter of law on his conversion claim. Specifically, Mehtani has not established that he owned or had a right to possession of the $824,144.65 at the time of the alleged conversion, i.e., at the time Sharma “refused to transfer the [Shasta] [P]roperty or otherwise return the funds.” (Mot. MPA, p. 13:19.) As evidenced by the joint venture agreement, Mehtani specifically agreed to contribute the funds to be used to purchase the Shasta Property. (See Defendants’ Exh. 4, § 1.)

The joint venture agreement further called for Sharma to purchase the Shasta Property with the funds he and Mehtani had contributed and take title in his name. (Id. at § 2.) The joint venture agreement further stated, “In the event that [the] Shasta Property is sold to another party or for any reason Sharma is unable to purchase the Shasta Property at the Foreclosure, the Purchase Funds will be returned to each Party not later than two (2) days after the Foreclosure.” (Ibid.) This provision was not triggered because Sharma purchased the Shasta Property at the foreclosure.

The Court construes the phrase “sold to another party” in this clause to mean “sold to another party at the foreclosure sale,” not “sold to another party by Sharma after purchase at the foreclosure sale.” No other provision in the joint venture agreement contemplates returning the contributed funds. Instead, the agreement called for the parties to form a limited liability company to which Sharma would transfer ownership of the Shasta Property, and the parties would own the company in proportion to their contributions. (Id. at § 3.)

The Court finds this scenario similar to Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221 (Rutherford Holdings). There, the plaintiff alleged that it had agreed to purchase a parcel of real property from the defendant and submitted a deposit towards the purchase price that was nonrefundable unless the defendant breached the agreement or failed to close on the sale. In reliance on the assurances of a third party alleged to be the defendant’s alter ego, the plaintiff did not tender the purchase price on the date required but would have done so absent the third party’s assurances. The defendant seller ultimately terminated the sales agreement and refused to return the deposit. The plaintiff brought several contractual claims as well as a conversion claim. In rejecting the conversion claim, the Court of Appeal stated:

Rutherford alleges that PDR converted the deposit when it refused to return it to Rutherford after failing to close. Rutherford did not have actual possession of the deposit at that time. Rather, it argues that it owned the deposit and had a right to possess it.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2020-00291438-CU-BC-GDS: Eden Gardens Center, LLC vs. Janak K. Mehtani 01/26/2026 Hearing on Motion for Summary Adjudication in Department 28

According to Rutherford, title to the deposit never transferred to PDR because PDR never became entitled to liquidated damages. That theory differs from the complaint, where Rutherford premised its ownership right on PDR’s breach, alleging that Rutherford “was the sole owner of the Deposit,” “as of the passing of the close of escrow date.” While that does not preclude us from considering the argument on appeal, we conclude title did transfer to PDR, such that Rutherford cannot establish ownership.

The cases Rutherford relies on for its claim that it retained ownership of the deposit are distinguishable. In some, the buyers were entitled to the return of their deposits pursuant to express escrow instructions. But here the deposit was not paid into escrow and the complaint does not allege any escrow instructions. In Rutherford’s other cases, the buyers were entitled to the return of their deposits because no contract ever was formed between the parties. That is not the case here. Rutherford also relies on Miller and Starr’s commentary that “[w]hen the buyer’s deposit is merely given to the seller’s agent pursuant to the usual terms of the deposit receipt without any additional and specific direction that it be placed into the purchase escrow by the broker, the buyer retains the title to the deposit and is entitled to its return until such time as the seller’s obligation to sell becomes unconditional.” (1 Miller & Starr, Cal.

Real Estate (3d ed. 2000) § 2:4, p. 13 (rel. 9/2000) fn. omitted.) But the cases do not appear to support that statement. Rather, they indicate that—in the absence of escrow instructions to the contrary—title to a deposit vests in the seller when the seller “accept[s] the contract.” [buyer’s act of paying “a portion of the purchase price at the time of his agreement to buy is as complete a transfer of the money paid as if he had made a gift thereof”].) Accordingly, we conclude title to the deposit transferred to PDR.

Because Rutherford cannot allege that it owned or possessed the deposit at the time of the alleged conversion, it cannot state a conversion claim. Therefore, the trial court correctly sustained the demurrers without leave to amend.

(Rutherford Holdings, supra, 223 Cal.App.4th at pp. 233-234, citations omitted.)

Similarly here, Mehtani transferred the funds at issue to Sharma to be used towards the purchase of the Shasta Property pursuant to the joint venture agreement. This act resulted in title to the funds being transferred, either to Sharma personally or to the joint venture. Nothing in the joint venture agreement calls for the funds to be returned to Mehtani other than if Sharma failed to purchase the Shasta Property at the foreclosure sale. Instead, the joint venture agreement called for Mehtani to maintain a 20% ownership interest in the Shasta Property through his membership in the contemplated limited liability company.

This is not to say that Mehtani is not entitled to the funds under a contractual theory of liability; indeed, the Court expresses no opinion on that issue. However, on the record before it, the Court finds that Mehtani has not established an ownership or possessory interest in the subject funds to support a conversion claim.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2020-00291438-CU-BC-GDS: Eden Gardens Center, LLC vs. Janak K. Mehtani 01/26/2026 Hearing on Motion for Summary Adjudication in Department 28

Accordingly, Defendants’ motion for summary adjudication as to Issue 3 regarding Defendants’ fourth cause of action for conversion is DENIED.

Disposition

For the reasons stated above, Defendants’ motion for summary adjudication is DENIED in its entirety.

Plaintiffs shall prepare for the Court’s signature an order pursuant to Code of Civil Procedure section 437c(g) and California Rule of Court rule 3.1312.