(PS) DeMartini v. DeMartini

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 TIMOTHY P. DEMARTINI, et al., 2:14-cv-2722-DJC-CKD (PS) 12 Plaintiffs, 13 v. FINDINGS AND RECOMMENDATIONS 14 MICHAEL J. DEMARTINI, et al., 15 Defendants. 16 17 Following remand from the United States Court of Appeals for the Ninth Circuit, 18 plaintiffs and counterdefendants Timothy and Margie DeMartini (“plaintiffs”) requested to 19 modify the scheduling order to allow the filing of successive dispositive motions and the 20 undersigned granted the motion. The parties filed several motions now before the court. 21 Defendants1 and counterclaimants, Michael and Renate DeMartini (“defendants”), filed a 22 motion to dismiss under Rule 12(b) of the Federal Rules of Civil Procedure directed to plaintiffs’ 23 claim for partition of real property. (ECF No. 515.) In response, in two separate motions, 24 plaintiffs moved for sanctions under Rule 11 of the Federal Rules of Civil Procedure (ECF No. 25 530) and under 28 U.S.C. § 1927 or the court’s inherent authority (ECF No. 518) asserting the 26 motion to dismiss raises previously denied arguments in bad faith. The parties also filed 27 1 Because defendants proceed without counsel, this case is before the undersigned pursuant to 28 Local Rule 302(c)(21). See 28 U.S.C. § 636(b)(1). 1 competing motions for summary judgment. (ECF Nos. 510, 514.) These matters were ordered 2 submitted on the briefs for decision without oral argument under Local Rule 302(g). (ECF No. 3 536.) For the reasons set forth below, the undersigned recommends these motions be denied. 4 BACKGROUND 5 Plaintiffs filed this action in the Superior Court of California, County of Nevada, and 6 defendants removed the case to the United States District Court for the District of Nevada. (ECF 7 No. 1.) The District of Nevada transferred the case to this court on November 20, 2014. (ECF No. 8 27.) 9 Plaintiffs’ First Amended Complaint alleges a partnership and property dispute between 10 the parties and three causes of action as follows: (1) partition of co-owned real property located at 11 12757, 12759, and 12761 Loma Rica Drive, Grass Valley, California; (2) breach of contract 12 concerning payment on a promissory note jointly executed by the parties; and (3) dissolution of a 13 partnership formed by the parties to improve upon and manage real property owned by the 14 partnership at 12731 Loma Rica Drive, Grass Valley, California. (ECF No. 75.) Plaintiffs’ cause 15 of action for dissolution of partnership relating to the 12731 Loma Rica Drive property was 16 severed and remanded to state court. (ECF Nos. 214, 224.) 17 Defendants assert three counterclaims in their operative pleading, the second amended 18 answer: (1) declaratory relief that the parties have been in a partnership since 1974 to pool 19 resources and operate various businesses; (2) breach of an oral partnership contract by plaintiffs 20 in 2014; and (3) defamation by plaintiffs in 2014. (ECF No. 104.) On December 20, 2017, the 21 court granted summary judgment in plaintiffs’ favor on defendants’ counterclaims. (See ECF 22 Nos. 232, 267.) 23 The case proceeded to trial before District Judge John A. Mendez. At trial, defendants 24 moved to dismiss plaintiffs’ claim for partition of real property, asserting that claim should have 25 been brought as a compulsory cross-complaint in a previous state court action in Marin County, 26 California. (ECF No. 330.) Judge Mendez denied the motion, ruling “as a matter of law, 27 [plaintiffs] were not required to bring a compulsory counterclaim in Marin County.” (ECF No. 28 343 at 53.) 1 The jury returned a verdict for plaintiffs on their breach of contract claim. (ECF No. 335.) 2 Judge Mendez held a bench trial on plaintiffs’ partition claim and issued an interlocutory 3 judgment of partition on May 30, 2018, ordering the property to be partitioned in kind. (ECF No. 4 361.) 5 On January 11, 2019, defendants renewed their motion to dismiss plaintiffs’ claim for 6 partition of real property. (ECF No. 403.) Judge Mendez denied the post-trial motion, finding it 7 was an improperly presented motion for consideration seeking to revive arguments already 8 presented to the court and rejected. (ECF No. 408 at 1.) Finding nothing in the motion suggested 9 any of the required conditions for granting a motion for reconsideration were present, Judge 10 Mendez’s written order cautioned as follows: 11 It would serve Defendants well to stay apprised of Rule 11’s requirements. Fed. R. Civ. Proc. 11(b). In part, the rule states that by 12 filing a motion with the court, the party certifies—under penalty of sanctions—that “[the motion] is not being presented for any 13 improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” Id. Frivolous filings not 14 only violate Rule 11; they undermine the authority this Court delegated to referee Chuck Farrar. The Court declines to impose 15 sanctions in response to Defendants’ Motion. But if future filings are similarly untethered to the law, sanctions will prove unavoidable. 16 17 (Id. at 2.) 18 On appeal, the Ninth Circuit reversed summary judgment on defendants’ breach of 19 partnership contract counterclaim, finding disposition of the claim was improperly premised on 20 an alleged breach of a so-called “global partnership” instead of breach of an oral partnership 21 agreement formed in the 1970s. (ECF No. 455 at 3-5.) The Ninth Circuit also reversed summary 22 judgment on defendants’ defamation counterclaim as to a claim of defamation per se, which does 23 not require defendants to raise a triable issue of fact as to actual damages. (Id. at 5-6.) The Ninth 24 Circuit also vacated the judgment on plaintiffs’ breach of contract claim and remanded for a new 25 trial on that claim, finding the trial court improperly excluded partnership and mitigation evidence 26 based on the summary judgment ruling which had disposed of the breach of partnership 27 counterclaim. (Id. at 6-8.) 28 //// 1 After remand from the Ninth Circuit, plaintiffs sought to modify the scheduling order to 2 allow them to bring a motion for summary judgment directed to defendants’ defenses and 3 counterclaims. (ECF No. 498.) The undersigned granted the motion and modified the scheduling 4 order to allow the filing of dispositive motions by both parties. (ECF No. 509.) 5 Plaintiffs filed their successive motion for summary judgment on October 1, 2024, 6 directed to defendants’ breach of partnership and defamation counterclaims and defenses to 7 plaintiffs’ breach of contract claim. (ECF Nos. 510; 510-1 at 25-26.) Defendants opposed the 8 motion. (ECF Nos. 520, 531.) Plaintiffs filed a reply. (ECF No. 533.) 9 Defendants filed their motion for summary judgment on October 2, 2024, directed to 10 plaintiff’s breach of contract claim based on assertion of the affirmative defense of waiver. (ECF 11 No. 514.) Plaintiffs opposed the motion. (ECF No. 522.) Defendants filed a reply. (ECF No. 528.) 12 Defendants filed the motion to dismiss at issue on October 2, 2024, presenting their 13 argument that plaintiffs’ claim for partition of real property should be dismissed because it was a 14 compulsory counterclaim that should have been filed in Marin County Superior Court Case No. 15 CIV-085235. (ECF No. 515.) Defendants noted in the motion they had filed it before and “[s]ince 16 then, the [Ninth] Circuit has issued its mandate for a new trial and the Court has re-opened the 17 dispositive motion deadline.” (Id. at 7.) Plaintiffs opposed the motion to dismiss, and defendants 18 filed a reply. (ECF Nos. 521, 527.) 19 On October 4, 2024, plaintiffs filed their motion seeking sanctions under 28 U.S.C. § 20 1927 and the court’s inherent authority directed to the motion to dismiss. (ECF No. 518.) 21 Defendants opposed the motion and plaintiffs filed a reply. (ECF Nos. 525, 526.) 22 On November 7, 2024, plaintiffs filed their motion seeking sanctions under Rule 11 of the 23 Federal Rules of Civil Procedure directed to the motion to dismiss. (ECF No. 530.) Defendants 24 opposed the motion and plaintiffs filed a reply. (ECF Nos. 532, 535.) 25 LEGAL STANDARDS FOR SUMMARY JUDGMENT 26 Summary judgment is appropriate when the moving party shows there is “no genuine 27 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 28 Civ. P. 56(a). In order to obtain summary judgment, “[t]he moving party initially bears the burden 1 of proving the absence of a genuine issue of material fact.” In re Oracle Corp. Sec. Litig., 627 2 F.3d 376, 387 (9th Cir. 2010) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The 3 moving party may accomplish this by “citing to particular parts of materials in the record, 4 including depositions, documents, electronically stored information, affidavits or declarations, 5 stipulations (including those made for purposes of the motion only), admission, interrogatory 6 answers, or other materials” or by showing that such materials “do not establish the absence or 7 presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to 8 support the fact.” Fed. R. Civ. P. 56(c)(1)(A), (B). 9 “Where the non-moving party bears the burden of proof at trial, the moving party need 10 only prove that there is an absence of evidence to support the non-moving party’s case.” Oracle 11 Corp., 627 F.3d at 387 (citing Celotex, 477 U.S. at 325); see also Fed. R. Civ. P. 56(c)(1)(B). 12 Summary judgment should be entered “after adequate time for discovery and upon motion, 13 against a party who fails to make a showing sufficient to establish the existence of an element 14 essential to that party’s case, and on which that party will bear the burden of proof at trial.” 15 Celotex, 477 U.S. at 322. “[A] complete failure of proof concerning an essential element of the 16 nonmoving party’s case necessarily renders all other facts immaterial.” Id. at 323. 17 If the moving party meets its initial responsibility, the burden then shifts to the opposing 18 party to establish that a genuine issue as to any material fact does exist. Matsushita Elec. Indus. 19 Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). In attempting to establish the existence 20 of this factual dispute, the opposing party may not rely upon the allegations or denials of its 21 pleadings but is required to tender evidence of specific facts in the form of affidavits, and/or 22 admissible discovery material, in support of its contention that the dispute exists. Fed. R. Civ. P. 23 56(c)(1); Matsushita, 475 U.S. at 586 n.11. The opposing party must demonstrate that the fact in 24 contention is material, i.e., a fact “that might affect the outcome of the suit under the governing 25 law,” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv., Inc. v. Pacific 26 Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is genuine, i.e., 27 “the evidence is such that a reasonable jury could return a verdict for the nonmoving party,” 28 Anderson, 447 U.S. at 248. 1 In the endeavor to establish the existence of a factual dispute, the opposing party need not 2 establish a material issue of fact conclusively in its favor. It is sufficient that “‘the claimed factual 3 dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at 4 trial.’” T.W. Elec. Serv., 809 F.2d at 630 (quoting First Nat’l Bank v. Cities Serv. Co., 391 U.S. 5 253, 288-89 (1968)). Thus, the “purpose of summary judgment is to pierce the pleadings and to 6 assess the proof in order to see whether there is a genuine need for trial.” Matsushita, 475 U.S. at 7 587 (citation and internal quotation marks omitted). 8 “In evaluating the evidence to determine whether there is a genuine issue of fact, [the 9 court] draw[s] all inferences supported by the evidence in favor of the non-moving party.” Walls 10 v. Central Contra Costa Transit Auth., 653 F.3d 963, 966 (9th Cir. 2011) (citation omitted). It is 11 the opposing party’s obligation to produce a factual predicate from which the inference may be 12 drawn. Richards v. Nielsen Freight Lines, 810 F.2d 898, 902 (9th Cir. 1987). Finally, to 13 demonstrate a genuine issue, the opposing party “must do more than simply show that there is 14 some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586 (citations 15 omitted). “Where the record taken as a whole could not lead a rational trier of fact to find for the 16 non-moving party, there is no ‘genuine issue for trial.’” Id. at 587 (quoting First Nat’l Bank, 391 17 U.S. at 289). 18 DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT 19 It is undisputed that on or about April 30, 1998, plaintiffs and defendants jointly executed 20 a loan agreement between themselves and Westamerica Bank with a due date for repayment of 21 the borrowed funds in or about March 2014. (See ECF No. 522-1; ECF No. 75, ¶¶ 11-15.) 22 Plaintiffs’ breach of contract claim alleges breach of an implicit agreement between plaintiffs and 23 defendants to reimburse each other for loan payments made to the bank in excess of one-half of 24 the loan amount. (ECF No. 75, ¶¶ 11-15.) 25 Defendants seek summary judgment on plaintiffs’ breach of contract claim, asserting 26 waiver as an affirmative defense. (ECF No. 514 at 3.) In four proposed undisputed facts and one- 27 paragraph of argument, defendants assert the claim is barred by an explicit waiver provision in 28 the joint loan agreement. (Id.) In opposition to the motion, plaintiffs respond that (1) defendants 1 fail to meet their burden to prove waiver by clear and convincing evidence; and (2) construed in 2 the manner urged by defendants, the proffered waiver raises issues of unconscionability. (ECF 3 No. 522 at 8-11.) 4 Waiver is the intentional relinquishment of a known right after knowledge of the facts. 5 Roesch v. De Mota, 24 Cal. 2d 563, 572 (1944). “The pivotal issue in a claim of waiver is the 6 intention of the party who allegedly relinquished the known legal right.” Wind Dancer Prod. Grp. 7 v. Walt Disney Pictures, 10 Cal. App. 5th 56, 78 (2017) (internal quotation marks and alteration 8 omitted). “California courts will find waiver when a party intentionally relinquishes a right or 9 when that party’s acts are so inconsistent with an intent to enforce the right as to induce a 10 reasonable belief that such right has been relinquished.” Id. 11 “The burden… is on the party claiming a waiver of a right to prove it by clear and 12 convincing evidence that does not leave the matter to speculation[.]” City of Ukiah v. Fones, 64 13 Cal. 2d 104, 107-08 (1966). “[D]oubtful cases will be decided against a waiver[.]” Id. Waiver is 14 ordinarily a question of fact unless there are no disputed facts and only one reasonable inference 15 may be drawn. Wind Dancer Prod. Grp., 10 Cal. App. 5th at 78. 16 The basis for defendants’ assertion of the waiver defense is the following provision in the 17 1998 joint loan agreement: 18 Waiver of Co-obligor’s Rights. If more than one person is obligated for the indebtedness, Borrower irrevocably waives, disclaims, and 19 relinquishes all claims against such other person which Borrower has or would otherwise have by virtue of payment of the Indebtedness or 20 any part thereof, specifically including but not limited to all rights of indemnity, contribution, or exoneration. 21 22 (ECF No. 514 at 2 & 12.) 23 Defendants do not meet their burden for summary judgment. Construing the evidence in a 24 light favorable to plaintiffs, the non-moving parties on this issue, their breach of contract claim 25 did not arise “by virtue of payment of the Indebtedness or any part thereof[.]” (ECF No. 514 at 26 12.) In other words, plaintiffs do not merely seek repayment, indemnity, or contribution from a 27 co-obligor on the joint loan; instead, they allege defendants breached a separate and additional 28 contract between the parties for repayment. Defendants provide no case authorities or argument to 1 support their position that a waiver of claims “existing by virtue of payment of the Indebtedness” 2 includes a claim for breach of contract as to the parties’ alleged oral agreement. Accordingly, 3 defendants’ motion for summary judgment should be denied. 4 PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT 5 Plaintiffs seek summary judgment on defendants’ counterclaims for breach of partnership 6 agreement and defamation per se, or, in the alternative, issue adjudication. (ECF No. 510.) 7 Plaintiffs’ memorandum of law also addresses two affirmative defenses to their breach of contract 8 claim which were not included in the notice of motion. (ECF No. 510-1 at 25-26.) 9 I. Breach of Partnership Counterclaim 10 A breach of partnership action is a breach of contract action in which the partnership 11 agreement is the contract. See Gherman v. Colburn, 72 Cal. App. 3d 544, 563 (2nd Dist. 1977). 12 The basis for plaintiffs’ request for summary judgment is that “no partnership exists.” (ECF No. 13 510-1 at 24.) This argument contradicts the Ninth Circuit’s memorandum opinion holding that 14 defendants “produced evidence that the business managing and leasing commercial real estate at 15 the 12759 parcel was a partnership between the two couples. Specifically, they produced evidence 16 that could show that the couples shared profits, participated in the management of the property, 17 and held themselves out as a partnership when leading the property. Such evidence is enough to 18 create a question of fact as to the existence of a partnership.” (ECF No. 455 at 3-4.) Accordingly, 19 plaintiffs’ motion for summary judgment on the breach of partnership counterclaim should be 20 denied. 21 Plaintiffs alternately request issue adjudication regarding the scope of the partnership and 22 directed to 29 specific allegations pleaded in the breach of partnership counterclaim. (ECF No. 23 510-1 at 25.) They argue “the scope of the 12759 partnership must be adjudicated now” to 24 preclude defendants from “litigating the scope of whole partnership all over again (i.e. their 25 Declaratory Relief cause of action which was disposed of).” (ECF No. 533 at 12.) 26 To the extent plaintiffs concede there is “an alleged oral partnership established by the 27 brothers in the 1970s… doing the business managing and leasing commercial real estate at the 28 12759 parcel between the two couples[,]” they assert this is “the only partnership that is at issue 1 anymore” based on the Ninth Circuit’s memorandum opinion. (ECF No. 510-1 at 23-24 (ellipsis 2 in plaintiffs’ original).) Plaintiffs argue none of the 29 enumerated breaches defendants pleaded at 3 paragraphs 30-59 “constitute a breach of the 12759 Partnership agreement” as plaintiffs defined 4 it. (Id. at 25.) Instead, plaintiffs argue, defendants’ allegations of breach either (1) relate to 5 “properties and business that were adjudicated… against Defendants and upheld on appeal[;]” (2) 6 “have nothing to do with a breach of a partnership agreement at all, for example, relating to trust 7 issues[;]” or (3) “do not constitute breach as a matter of law.” (Id. at 24.) Plaintiffs request the 8 court to adjudicate that “each individual allegation of breach” does not constitute a breach of the 9 partnership agreement as plaintiffs defined it. (Id. at 25.) Plaintiffs also argue defendants have not 10 provided admissible evidence of damages. (ECF No. 510 at 25; ECF No. 533 at 8 & 22-23.) 11 Defendants respond that their breach of partnership claim “is not limited to the 12759 12 property.” (ECF No. 531-1 at 11-12.) And further, for example, 13 Defendants maintain that a broader partnership exists, encompassing various business ventures and assets beyond the 12759 parcel, as 14 supported by the Ninth Circuit’s decision and evidence presented in declarations and financial records (ECF 456, 216-3, 216-4). 15 Plaintiffs’ attempt to narrowly define the partnership to be the 12759 parcel contradicts the Ninth Circuit’s recognition of a broader 16 partnership and disregards evidence presented by Defendants. 17 (Id. at 12.) 18 Neither plaintiffs nor defendants accurately characterize the Ninth Circuit’s holding 19 regarding the scope of the partnership. The Ninth Circuit neither limited the scope of the oral 20 partnership formed in the 1970s to one only involving the 12759 parcel nor recognized it was any 21 broader than that. As to scope of the partnership, the Ninth Circuit merely held it is not what this 22 court “termed a ‘global partnership’ extending to the Coan Ranch, Maltman Drive, Dorsey East 23 Main Street, and 625 Idaho Maryland Road properties and to the DeMartini Auto Sales, 24 DeMartini RV Sales, and DeMartini Sunshine Body Shop businesses.” (ECF No. 455 at 2; see 25 also id. (“there is a genuine issue of material fact as to the scope of the oral partnership agreement 26 allegedly formed by Michael and Timothy DeMartini in the 1970s”).) 27 Defendants argue the 12759 parcel is a significant asset of the partnership which does not 28 define the entire scope of the partnership. (E.g., ECF No. 531-1 at 20.) Defendants point to the 1 following as their evidence in support of a partnership not limited solely to the managing and 2 leasing of commercial real estate at that parcel: 3 • Michael DeMartini’s affidavits (ECF Nos. 216-3, 216-4, 531-2); 4 • 1977 and 1978 tax returns (ECF No. 216-4 at 11-28); 5 • A 1985 design build lease for the 12759 Loma Rica property and a 1986 Tax Return 6 for DeMartini Brothers Construction Company (ECF No. 31-1 at 84-98); 7 • A Deed of Trust signed by Timothy, Margie, Michael, and Renate, and characterized 8 by defendants as pledging as collateral the neighboring property commonly referred to 9 as 12731 Loma Rica Drive for the 12759/12757/12761 Loma Rica Drive property 10 (ECF No. 531-1 at 196-206); 11 • A March 17, 2014 email from Timothy and Margie’s attorney (ECF No. 531-1 at 207- 12 208); 13 • A 1992 Design Build Lease characterized by defendants as being between Michael 14 and Timothy (ECF No. 531-1 at 213-221); 15 • A June 15, 1998 Lease Agreement for a building constructed at 12759 Loma Rica 16 (ECF No. 531-1 at 222-230); 17 • A September 28, 1998 Settlement Agreement and Mutual Release regarding premises 18 at 12757 Loma Rica Drive (ECF No. 531-1 at 231--274); and 19 • Margie DeMartini’s testimony (ECF No. 531-1 at 277-294). 20 (See ECF No. 531-1 at 2-4, 12-13-14.) 21 In their reply brief, plaintiffs argue defendants have little evidence regarding an alleged 22 partnership spanning 40 years but they acknowledge the tax return from 1986 and a proof of 23 publication from 2006. (ECF No. 533 at 15.) Plaintiffs make various arguments regarding the 24 weight of the evidence for a partnership spanning 40 years and conclude summary judgment is 25 warranted because defendants are unable to define the partnership that might remain on remand. 26 (Id. at 13-19.) However, “a non-movant in a summary judgment setting is not attempting to prove 27 its case, but instead seeks only to demonstrate that a question of fact remains for trial.” Burch v. 28 Regents of Univ. of California, 433 F. Supp. 2d 1110, 1121 (E.D. Cal. 2006). 1 The specific question raised by plaintiffs’ request for issue adjudication is whether the 2 record evidence viewed in a light favorable to defendants shows a genuine factual dispute 3 regarding the existence of an oral partnership extending beyond how plaintiffs have defined it: an 4 oral partnership established by the brothers in the 1970s doing the business managing and leasing 5 commercial real estate at the 12759 parcel between the two couples. To answer this question, the 6 court considers defendants’ evidence to the extent it is relevant and admissible.2 The court also 7 considers any evidence plaintiffs put forth in support of limiting the scope of the oral partnership 8 in the manner they propose. 9 Plaintiffs did not cite specific evidence in the record in support of limiting the scope of the 10 oral partnership in the manner they propose and instead seek to rely on defendants’ pleading and 11 the Ninth Circuit’s memorandum decision. (See ECF No. 510-2 at 2.) Thus, plaintiffs can succeed 12 only upon “an absence of evidence to support the non-moving party’s case.” Oracle Corp., 627 13 F.3d at 387 (citing Celotex, 477 U.S. at 325); see also Fed. R. Civ. P. 56(c)(1)(B). At a minimum, 14 though, there is evidence regarding building design and construction, and tax documents for 15 “DeMartini Brothers Construction Company” that, viewed in a light favorable to defendants, 16 support finding the existence of a partnership not strictly limited to “managing and leasing 17 commercial real estate” at the 12759 parcel.3 Accordingly, plaintiffs have not succeeded in 18 2 Plaintiffs object to defendants’ evidence on various grounds including hearsay, lack of 19 authentication, lack of personal knowledge, conclusion without fact, and speculation, among other objections. (ECF No. 533-1.) Statements that are legal conclusions, speculative assertions, 20 and statements of hearsay evidence do not satisfy the standards of personal knowledge, admissibility, and competence required by Federal Rule of Civil Procedure 56(c)(4). Soremekun 21 v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citations omitted). The court finds it unnecessary to address most of plaintiffs’ individually asserted objections. See Burch v. Regents 22 of Univ. of California, 433 F. Supp. 2d 1110, 1119-22 (E.D. Cal. 2006) (declining to address each 23 individual objection); see also Celotex Corp., 477 U.S. at 324 (“We do not mean that the nonmoving party must produce evidence in a form that would be admissible at trial in order to 24 avoid summary judgment.”). 3 Authentication is satisfied by “evidence sufficient to support a finding that the item is what the 25 proponent claims it is[,]” Fed. R. Evid. 901, which may include “[t]he appearance, contents, substance, internal patterns, or other distinctive characteristics of the item, taken together with all 26 the circumstances.” Fed. R. Evid. 901(b)(4). Documents may be authenticated by review of their 27 contents if they appear to be sufficiently genuine. Orr, 285 F.3d at 778 n. 24; see also Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 533 (9th Cir. 2011). Plaintiffs do not dispute the 28 genuineness of any of the documents. 1 demonstrating they are entitled to issue adjudication regarding the scope of the 12759 partnership 2 as they have defined it. Thus, their further requests for issue adjudication that specific paragraphs 3 of the counterclaim do not set forth breaches of the partnership as they defined it also fail. 4 As to damages, defendants argue they presented evidence of damages resulting from the 5 alleged breaches of the partnership agreement, including financial losses, emotional distress, and 6 damage to reputation. (ECF No. 531-1 at 33.) For evidence, defendants cite their affidavits. (See 7 ECF Nos. 216-2, 216-3, 216-4, 531-2.) 8 To prevail on a breach of contract claim under California law, a plaintiff must prove: (1) 9 existence of a contract; (2) plaintiff’s performance; (3) defendant’s breach; and (4) resulting 10 damages to the plaintiff. Reichert v. General Ins. Co. of Am., 68 Cal. 2d 822, 830 (1968). “[T]o 11 be actionable, harm must constitute something more than ‘nominal damages, speculative harm, or 12 the threat of future harm ... not yet realized.’” Buttram v. Owens-Corning Fiberglas Corp., 16 Cal. 13 4th 520, 531 n.4 (1997) (quoting Larcher v. Wanless, 18 Cal. 3d 646, 656 n.11 (1976)). 14 Michael’s affidavit states, in relevant part, “[a]round mid-2013 Timothy began denying 15 the existence of the partnership known as DeMartini Company and denying the existence of the 16 DeMartini Brothers Construction Company sub-partnership. (ECF No. 531-4, ¶ 15.) Thereafter, 17 according to Michael, “Timothy began making unilateral decisions or major improvements to the 18 buildings, arbitrarily closing bank accounts and filing a final partnership tax return for the 19 DeMartini Brothers Construction Company sub-partnership[.]” (Id.) This testimony, while not 20 overly detailed, is sufficient to create a triable issue of fact as to whether defendants sustained 21 damages. Construing the evidence in the light most favorable to the defendants, Timothy’s denial 22 of the existence of the partnership and unilateral decisions on matters pertaining thereto caused 23 actionable harm to defendants. 24 II. Defenses to Plaintiff’s Breach of Contract Claim 25 As set forth above in addressing defendants’ motion for summary judgment, plaintiffs’ 26 breach of contract claim is for breach of an implicit agreement between plaintiffs and defendants 27 to reimburse each other for loan payments made to Westamerica Bank in excess of one-half of the 28 loan amount for the joint loan agreement executed on or about April 30, 1998. (ECF No. 75, ¶¶ 1 11-15.) Defendants asserted various defenses to this claim, including waiver and a partnership 2 defense. (ECF No. 104 at 4-5.) 3 Plaintiffs first argue there is no partnership and thus no partnership defense. This 4 argument contradicts the Ninth Circuit’s memorandum decision and should be rejected. Plaintiffs 5 next argue the loan, on its face, was taken out by individuals, Timothy was not required to renew 6 any alleged partnership loan, and defendants have admitted they did not pay off the loan or pay 7 Timothy back. (ECF No. 510-1 at 26.) However, plaintiffs do not provide any application of 8 partnership law to the facts they are arguing. As discussed above, there is evidence of an oral 9 partnership agreement. In the absence of specific terms, partnership agreements conform to a 10 series of default rules set forth by statute. See Cal. Corp. Code § 16103(a). Plaintiffs do not 11 discuss these statutory rules. Plaintiffs fail to meet their burden to establish they are entitled to 12 summary judgment on defendants’ partnership defense. See generally S.E.C. v. CMKM 13 Diamonds, Inc., 729 F.3d 1248, 1255 (9th Cir. 2013) (in reviewing a grant of summary judgment, 14 a court of appeal considers not only whether there are genuine issues of material fact but also 15 whether the district court correctly applied the relevant substantive law). 16 As to the waiver defense, plaintiffs argue defendants fail to show plaintiffs knowingly and 17 voluntarily waived their rights to recover on the oral contract for reimbursement of loan 18 payments. (ECF No. 510-1 at 26.) To the extent plaintiffs argue defendants failed to prove the 19 defense by clear and convincing evidence, such an argument should be rejected because 20 defendants do not have to meet that burden in response to plaintiffs’ motion. See Burch, 433 F. 21 Supp. 2d at 1121. 22 Moreover, defendants have put forward some evidence in support of their waiver defense, 23 consisting of the 1998 joint loan agreement with its provision for “Waiver of Co-obligor’s 24 Rights” discussed above in addressing defendants’ motion for summary judgment. Defendants 25 also argue plaintiffs waived their right to recover by not pursuing reimbursement for loan 26 payments for a significant period. (ECF No. 520 at 29.) 27 Whether the “Waiver of Co-obligor’s Rights” provision in the jointly executed loan 28 agreement is relevant and applies raises issues of contract interpretation. Under California law, 1 The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties. The mutual intention to which the 2 courts give effect is determined by objective manifestations of the parties’ intent, including the words used in the agreement, as well as 3 extrinsic evidence of such objective matters as the surrounding circumstances under which the parties negotiated or entered into the 4 contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. 5 6 Wolf v. Superior Ct., 114 Cal. App. 4th 1343, 1356 (2004), as modified on denial of reh’g (Feb. 7 19, 2004) (footnote, quotation marks and citations omitted). 8 Plaintiffs’ motion does not set forth any relevant principles of contract law or contract 9 interpretation. Neither do plaintiffs provide any authorities to support an outright rejection of 10 interpreting the provision at issue for “Waiver of Co-obligor’s Rights” in the underlying joint 11 loan agreement as some evidence that they knowingly and voluntarily waived their rights to 12 recover on an alleged oral contract for reimbursement of loan payments. As the non-movants on 13 this issue, defendants are entitled to have the court draw reasonable inferences from evidence in 14 their favor, including interpretation of the underlying joint loan agreement. Conflicting reasonable 15 interpretations of a relevant contract term raise factual issues which preclude a determination as a 16 matter of law. See Wolf, 114 Cal. App. 4th at 1359. Plaintiffs do not meet their burden to 17 establish they are entitled to summary judgment on defendants’ waiver defense or partnership 18 defense. 19 III. Defamation 20 Following remand from the Ninth Circuit, defendants proceed on their defamation per se 21 counterclaim based on the allegation that Timothy told a tenant Michael embezzled $1600 of 22 partnership funds and that Michael stole his Social Security number and impersonated him. (See 23 ECF No. 455 at 5.) In the present motion, plaintiffs argue defendants have no admissible evidence 24 as to the elements of a defamation per se claim. (ECF No. 510-1 at 28.) Plaintiffs’ argument 25 cannot be reconciled with Ninth Circuit’s decision which specifically held defendants did not 26 need to create a triable issue of fact as to actual damages and further that they “identified 27 evidence that creates a triable issue on the other elements of their defamation per se claim.” (ECF 28 No. 455 at 5.) Plaintiffs do not explain why they are asking this court to find no triable issue of 1 fact on defendants’ defamation per se counterclaim in direct contradiction to the Ninth Circuit’s 2 holding. Plaintiff’s motion for summary judgment directed to this counterclaim should be denied. 3 MOTION TO DISMISS AND MOTIONS FOR SANCTIONS 4 I. Legal Standards for Sanctions 5 “Section 1927 authorizes the imposition of sanctions against any lawyer who wrongfully 6 proliferates litigation proceedings once a case has commenced.” Pacific Harbor Capital, Inc. v. 7 Carnival Air Lines, Inc., 210 F.3d 1112, 1118 (9th Cir. 2000). Sanctions under 1927 may also be 8 imposed upon a pro se plaintiff. Wages v. I.R.S., 915 F.2d 1230, 1236 (9th Cir. 1990); Brown v. 9 Adidas Int., 938 F.Supp. 628, 636 (S.D. Cal. 1996). Sanctions imposed under a court’s inherent 10 power and sanctions pursuant to 28 U.S.C. § 1927 require a finding of bad faith, assessed under a 11 subjective standard. Pacific Harbor, 210 F.3d at 1118. Bad faith in the context of 28 U.S.C. § 12 1927 is established by knowing, willful, or reckless conduct. Id. A party facing sanctions “is 13 entitled to procedural due process, including notice and an opportunity to be heard.” Id. 14 (opportunity to brief issue satisfies due process requirements). 15 Rule 11 provides for sanctions where a party has advanced an argument in any signed 16 paper before the court that is (1) presented for “any improper purpose,” or (2) not warranted by 17 existing law or “by a nonfrivolous argument” to change, modify, or reverse existing law. Fed. R. 18 Civ. P. 11. Rule 11 also applies to pro se plaintiffs. Warren v. Guelker, 29 F.3d 1386, 1390 (9th 19 Cir. 1994). Imposing sanctions under Rule 11 is “an extraordinary remedy, one to be exercised 20 with extreme caution.” Operating Eng’rs Pension Trust v. A-C Company, 859 F.2d 1336, 1345 21 (9th Cir. 1988). 22 II. Discussion 23 At the outset, defendants made procedural objections (see ECF No. 525 at 2; ECF No. 532 24 at 2) which the undersigned does not find meritorious. For a motion brought under Rule 11(b) 25 only, Rule 11(c)(2) requires service 21 days prior to filing. The proof of service for plaintiffs’ 26 Rule 11(b) motion indicates they complied with Rule 11(c)(2). (See ECF No. 530 at 140 27 (reflecting service by mail on October 11, 2024, for motion filed on November 7, 2024.) 28 //// 1 Plaintiffs argue this is defendants’ fourth attempt at moving to dismiss plaintiff’s partition 2 claim on the asserted basis that it was a compulsory counterclaim in another case. (E.g., ECF No. 3 521 at 3.) They argue the present motion to dismiss is an exact regurgitation of the motion as it 4 was filed six years ago which already prompted warning by the court that sanctions could be 5 issued if defendants continued improperly relitigating the same issues. (E.g., ECF No. 518 at 10.) 6 Defendants argue their motion to dismiss was properly renewed because of the Ninth 7 Circuit’s remand for a new trial and this court’s order “allowing for the filing of dispositive 8 motions.” (ECF No. 525 at 2.) They argue the motion is not frivolous because they updated it to 9 reflect the current procedural posture of the case, including the Ninth Circuit’s order for a new 10 trial and modification of the scheduling order to allow for the filing of dispositive motions. (ECF 11 No. 532 at 4.) 12 As discussed above, plaintiffs’ partition claim is in post-trial proceedings. Prior to 13 defendants filing the present motion to dismiss, District Judge Calabretta’s orders had made clear 14 that the partition claim would not be re-tried. (E.g. ECF No. 497 at 4 “the Ninth Circuit’s 15 reasoning concerning retrial of Plaintiffs’ breach of contract claim does not extend to retrial of 16 Plaintiffs’ partition claim”).) The present motion to dismiss only raises arguments already 17 presented and rejected and should be denied. Defendants do not give a reasonable justification for 18 filing a renewed motion to dismiss the partition claim based on arguments already presented to 19 the court and rejected. Their pro se status is not a satisfactory explanation. 20 Plaintiffs request that defendants be ordered to pay all costs and fees incurred because of 21 the improper filing of the present motion to dismiss and that the court impose a prefiling order to 22 restrain defendants from filing motions without a showing of their merit and legal basis. The 23 undersigned has considered the matter carefully and declines to recommend either of the 24 sanctions requested by plaintiffs be imposed. The undersigned does not find subjective bad faith 25 is established and does not find the extraordinary remedy requested is warranted under the 26 circumstances. 27 //// 28 //// 1 CONCLUSION AND RECOMMENDATION 2 In accordance with the above, IT IS RECOMMENDED as follows: 3 1. Plaintiffs’ motion for summary judgment (ECF No. 510) be denied. 4 2. Defendants’ motion for summary judgment (ECF No. 514) be denied. 5 3. Defendants’ motion to dismiss (ECF No. 515) be denied. 6 4. Plaintiffs’ motions for sanctions (ECF Nos. 518, 530) be denied. 7 These findings and recommendations are submitted to the United States District Judge 8 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) 9 || days after being served with these findings and recommendations, any party may file written 10 || objections with the court and serve a copy on all parties. Such a document should be captioned 11 || “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 12 || shall be served on all parties and filed with the court within seven (7) days after service of the 13 || objections. The parties are advised that failure to file objections within the specified time may 14 || waive the right to appeal the District Court’s order. Tumer v. Duncan, 158 F.3d 449, 455 (9th Cir. 15 || 1998); Martinez v. YIst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 16 | Dated: July 30, 2025 | ae □□ hf | / a Ly ck "7 CAROLYNK.DELANEY 18 UNITED STATES MAGISTRATE JUDGE 19 20 8, demal 4ev2722.disp 21 22 23 24 25 26 27 28 17