Hammett v. Sherman

• Decision Date: 30 September 2022
• Docket Number: 19cv605-LL-AHG
• Parties: LAURA LYNN HAMMETT, Plaintiff, v. MARY E. SHERMAN, et al. Defendants.
• Court: U.S. District Court — Southern District of California

LAURA LYNN HAMMETT, Plaintiff,
v.
MARY E. SHERMAN, et al. Defendants.

No. 19cv605-LL-AHG

United States District Court, S.D. California

September 30, 2022

ORDER AMENDED COMPLAINT AND DENYING MOTION TO WITHDRAW AMENDED COMPLAINT [ECF NOS. 238, 239, 240, 241, 242, 257, 258]

Honorable Linda Lopez, United States District Judge.

This matter is before the Court on the following motions: (1) the Motions to Dismiss filed by (a) Defendants Mary E. Sherman and Jeffrey M. Sherman in all capacities (“the Sherman Defendants”) (“Sherman Motion”) [ECF No. 239]; (b) Defendant Diane Dennis (“Dennis Motion”) [ECF No. 240]; (c) Defendants Linda R. Kramer and Erik Von Pressintin Hunsaker in all capacities (“Kramer Motion”) [ECF No. 241]; and (d) Defendant Silver Strand Plaza, LLC (“SSP”) (“SSP Motion”) [ECF No. 242]; (2) Plaintiff Laura Lynn Hammett's Motion to Withdraw Third Amended Complaint (“Motion to Withdraw”) [ECF No. 257]; and (3) Plaintiff's Amended Motion to Withdraw Third Amended Complaint (“Amended Motion to Withdraw”) [ECF No. 258]. The Court finds the above matters suitable for determination on the papers and without oral argument pursuant to Federal

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Rule of Civil Procedure 78(b) and Civil Local Rule 7.1.d.1. Upon review of the parties' submissions and the applicable law, the Court DENIES the Sherman Motion, GRANTS the remaining Motions to Dismiss [ECF Nos. 240, 241, 242] and DENIES the Motion to Withdraw and Amended Motion to Withdraw [ECF Nos. 257-58] for the reasons discussed below.

I. MOTIONS TO DISMISS

A. Background

The Court incorporates the facts of this case as recited in its previous orders. See ECF Nos. 111, 238. Briefly, this case revolves around disputes about the management of SSP, a California limited liability company of which Plaintiff and the Defendants are members. Id. ¶¶ 15-29. As relevant to the instant Motions to Dismiss, SSP's members entered into an operating agreement (“Operating Agreement”) in 2009, which Plaintiff incorporated into the TAC by reference. Id. ¶ 48; ECF No. 238-1. Silver Strand Plaza, a multi-tenant retail shopping center located in Imperial Beach California, was SSP's “principal asset” and was sold in 2017. ECF No. 238 ¶ 17. This action arises from events following the sale of Silver Strand Plaza and from disputes between Plaintiff, and the Defendants, who are Plaintiff's sisters and extended family members with ownership interests in SSP.

1. Plaintiff's Original and First Amended Complaint

Plaintiff's original complaint, filed on April 2, 2019, brought the following four causes of action against the Mary Sherman in her individual and other capacities (including as trustee of the “Grandchildren Trusts”), Kramer, Dennis, and SSP for: (1) breach of fiduciary duty; (2) aiding and abetting breach of fiduciary duty; (3) defamation per se; and (4) conversion. ECF No. 1. On May 29, 2019, Plaintiff filed a first amended complaint (“FAC”) which added Jeffrey Sherman as co-trustee of the J&M Sherman Family Trust; Kramer and Erik Hunsaker as co-trustees of the Lynn and Erik's Trust (the “J&M Trust Defendants”); Ellis Stern, Alan Goldberg, Stern and Goldberg (together, the “S&G Defendants”); and Patrick McGarrigle, McGarrigle, Kenney & Zampiello (together, the

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“MKZ Defendants”) (the S&G Defendants and MKZ Defendants are together referred to as the “Attorney Defendants”). ECF No 3. The FAC asserted the following causes of action: (1) breach of fiduciary duty against all defendants other than SSP, the Attorney Defendants, and Sherman in her capacity as manager of SSP; (2) aiding and abetting breach of fiduciary duty; (3) defamation per se against Sherman and Dennis; (4) civil conspiracy to defame against Sherman and Dennis; (5) conversion against all defendants; and (6) legal malpractice against the Attorney Defendants. See ECF No. 3. On August 20, 2019, Plaintiff voluntarily dismissed the entire action as to the Attorney Defendants, leaving five causes of action for the Court to consider. ECF No. 38.

On March 23, 2020, the Court-ruling on four separate motions to dismiss by defendants [ECF Nos. 18, 19, 37, 40]-dismissed all claims in the FAC, noting the specific deficiencies to each claim as to each Defendant, and granting Plaintiff leave to file an amended complaint. ECF No. 111 at 15-40, 54. In its analysis of SSP's motion to dismiss the FAC, the Court considered SSP's challenge to Plaintiff's demand for an accounting. Id. at 34-35.

2. Second Amended Complaint

After receiving a three-month continuance of her deadline to file a second amended complaint [ECF No. 132], Plaintiff timely filed her second amended complaint (“SAC”) on August 7, 2020. ECF No. 145. The SAC asserted the following causes of action: (1) fraud; (2) fraudulent conveyance; (3) dissolution; (4) appointment of receiver; (5) accounting; (6) constructive trust; (7) conversion; (8) breach of fiduciary duty against Sherman in her capacity as manager and against SSP; (9) breach of fiduciary duty against all member defendants, alternatively breach of the covenant of good faith and fair dealing; (10) aiding and abetting breach of fiduciary duty; (11) defamation per se or per quod against Sherman in her capacity as manager and as trustee of the Grandchildren Trusts, and the J&M Trust Defendants; (12) false light invasion of privacy against Sherman in her capacity as manager and as trustee of the Grandchildren Trusts, and the J&M Trust

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Defendants; (13) defamation per se or per quod against Dennis; (14) false light invasion of privacy against Dennis; and (15) unjust enrichment against all Defendants. See id.

On October 7, 2021, the Court-again ruling on four separate motions to dismiss by Defendants [ECF Nos. 162, 164, 166, 167]-dismissed all claims in the SAC, noting the specific deficiencies to each claim as to each Defendants, and granted Plaintiff leave to file an amended complaint. ECF No. 237. In its analysis of Defendant Dennis's motion to dismiss the SAC, the Court considered Plaintiff's claim for judicial dissolution. Id. at 1011.

B. Plaintiff's Third Amended Complaint

Plaintiff's TAC states two causes of action: (1) specific performance of Plaintiff's right to inspect company records and (2) dissolution of SSP. ECF No. 238 ¶¶ 341-374. She seeks declaratory and injunctive relief from this Court for an inspection of financial records of SSP since 2013, dissolution of SSP, as well as costs and attorney's fees. Id. Plaintiff notes that while she retains most of the allegations from her SAC, the TAC “limit[s] the causes of action to a request for declaratory relief.” ECF No. 238 ¶ 1. Yet, Plaintiff also states in her response to the Motions to Dismiss that she “retained facts from the SAC because she anticipates she will be able to withstand a MTD on some other causes of action after finally being given access to the complete records since 2013” and that she “believes she has enough evidence of fraud and breach of fiduciary duty to withstand dismissal on ‘Iqbal/Twombly[.]'” ECF No. 247 at 7.

Only the claims alleged in her TAC are before this Court. See S.D. Cal. CivLR 15.1.a (“Every pleading to which an amendment . . . has been allowed by court order, must be complete in itself without reference to the superseded pleading.”); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1546 (9th Cir. 1989) (“[A]n amended pleading supersedes the original.”); see also Lacey v. Maricopa Cnty., 693 F.3d 896, 928 (9th Cir. 2012) (en banc) (claims dismissed with leave to amend which are not re-alleged in an amended pleading may be considered waived if not repled). As such, to the extent that Plaintiff “believes the Court overlooked or played down in its Order Granting the

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Motion To Dismiss” certain “[i]mportant facts” [ECF No. 238 ¶ 1], the Court notes that Plaintiff did not file a motion for reconsideration of the Court's prior order dismissing the SAC, the time to file a motion for reconsideration has passed, S.D. Cal. CivLR 7.1.i, and the Court has no basis to consider Plaintiff's prior arguments related to Plaintiff's previously dismissed causes of action.^[1] Similarly, in her opposition to the Motions to Dismiss, Plaintiff asks this Court to “make the simple change in form, calling this a breach of contact and asking for specific performance of the right to inspect the books and records and mandate to dissolve remedies.” ECF No. 247 at 5. However, the Court “may not look beyond the complaint to a plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to dismiss.” Schneider v. Cal. Dep't of Corr., 151 F.3d 1194, 1197 n.1 (9th Cir. 1998).^[2] Accordingly, the Court does not consider any of Plaintiff's arguments regarding causes of actions not pleaded in the TAC.

C. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss based on the Court's lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Plaintiff has the burden of establishing that this Court has subject matter jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Challenges to subject matter jurisdiction may be facial or factual. Edison v. United States, 822 F.3d 510, 517 (9th Cir. 2016). Facial

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challenges assert that the allegations are insufficient to invoke federal jurisdiction, while factual challenges dispute the truth of legally sufficient allegations. Id. (citing Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)). In a facial challenge, the Court accepts a plaintiff's allegations as true and draws all reasonable inferences in their favor. Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (citing Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013)) (noting that facial attacks are resolved using the same standard as a Rule 12(b)(6) motion to dismiss).

If the Court has jurisdiction to address the merits, a complaint may be dismissed under...