Hammett v. Sherman
| Decision Date | 23 March 2020 |
| Docket Number | Case No.: 19-CV-605 JLS (AHG) |
| Court | U.S. District Court — Southern District of California |
| Parties | LAURA LYNN HAMMETT, an individual, Plaintiff, v. MARY E. SHERMAN, an individual; MARY E. SHERMAN, as manager of Silver Strand Plaza, LLC; SILVER STRAND PLAZA, LLC, a California limited liability company; MARY E. SHERMAN as CO-TRUSTEE OF THE J & M SHERMAN FAMILY TRUST, a California revocable trust; JEFFREY M. SHERMAN as CO-TRUSTEE OF THE J & M SHERMAN FAMILY TRUST; MARY E. SHERMAN as TRUSTEE OF THE ALEXA SHERMAN IRREVOCABLE TRUST, a California irrevocable trust; MARY E. SHERMAN as TRUSTEE OF THE DANA SHERMAN IRREVOCABLE TRUST, a California irrevocable trust; MARY E. SHERMAN as TRUSTEE OF THE JENNA SHERMAN IRREVOCABLE TRUST, a California irrevocable trust; MARY E. SHERMAN as TRUSTEE OF THE BROXTON DENNIS IRREVOCABLE TRUST, a California irrevocable trust; MARY E. SHERMAN as TRUSTEE OF THE CURT DENNIS IRREVOCABLE TRUST, a California irrevocable trust; MARY E. SHERMAN as TRUSTEE OF THE SEAN LYNN IRREVOCABLE TRUST, a California irrevocable trust; MARY E. SHERMAN as TRUSTEE OF THE BRANDEN LYNN IRREVOCABLE TRUST, a California irrevocable trust; LINDA R. KRAMER, an individual; LINDA R. KRAMER as CO-TRUSTEE of the LYNN AND ERIK'S TRUST; ERIK VON PRESSINTIN HUNSAKER as CO-TRUSTEE of the LYNN AND ERIK'S TRUST; DIANE G. DENNIS, an individual; ELLIS ROY STERN, ESQ., an individual; ELLIS ROY STERN, ESQ., an individual; ALAN N. GOLDBERG, ESQ., an individual; STERN & GOLDBERG, a California Partnership; PATRICK C. MCGARRIGLE, ESQ., an individual; MCGARRIGLE, KENNEY & ZAMPIELLO, A PROFESSIONAL LAW CORPORATION, a California corporation; and DOES 1-99, Defendants. |
ORDER (1) GRANTING DEFENDANTS' MOTIONS TO DISMISS, (2) DENYING MOTION FOR UNDERTAKING, (3) GRANTING MOTIONS FOR ATTORNEYS' FEES, (4) DENYING MOTION TO COMPEL CLERK'S ENTRY OF DEFAULT, AND (5) DENYING SANCTIONS MOTION
Presently before the Court are the following, fully-briefed motions: (1) the Motions to Dismiss filed by (a) Defendant Diane G. Dennis ("Dennis Mot.," ECF No. 18); (b) Defendants Linda R. Kramer and Erik Von Pressentin Hunsaker in all capacities ("Kramer Mot.," ECF No. 19); (c) Defendant Silver Strand Plaza, LLC ("SSP") ("SSP Mot.," ECF No. 37); and (d) Defendants Mary E. Sherman and Jeffrey M. Sherman in all capacities (the "Sherman Defendants") ("Sherman Mot.," ECF No. 40); (2) the Sherman Defendants' Motion to Require Plaintiff to Post an Undertaking ("Undertaking Mot.," ECFNo. 41); (3) the Motions for Attorneys' Fees ("Fee Motions") filed by (a) Defendants Patrick C. McGarrigle and McGarrigle, Kenney & Zampiello, APC ("MKZ") (together, the "MKZ Defendants") ("MKZ Mot.," ECF No. 49); and (b) Defendants Ellis Stern, Alan N. Golberg, and Stern & Goldberg Attorneys ("S&G") (together, the "S&G Defendants") ("S&G Mot.," ECF No. 54); (4) Plaintiff Laura Lynn Hammett's Motion for Sanctions Pursuant to FRCP 11 Against Attorney Keith Cochran and Fitzgerald Knaier LLP ("Sanctions Mot.," ECF No. 56); and (5) Plaintiff's Motion for the Court to Compel the Clerk of the Court to Enter a Clerk's Default Against Defendant Linda R. Kramer ("Default Mot.," ECF No. 60). The Court took the above-enumerated matters under submission without oral argument pursuant to Civil Local Rule 7.1(d)(1). See ECF No. 97. Having carefully considered the Parties' arguments and the law, the Court GRANTS the Motions to Dismiss, DENIES the Undertaking Motion, GRANTS the Fee Motions, DENIES the Sanctions Motion, and DENIES the Default Motion.
Following the death of her husband, Dr. Norman H. Kramer, in January 2010, Sandra ("Sandi") Kramer has controlled assets valued at over $12 million, mostly as settlor and trustee of a by-pass trust she had set up with Dr. Kramer.2 See ECF No. 1 ("FAC") ¶ 21. Dr. Norman and Sandi Kramer had set up Defendant SSP in 2005, see ECF No. 37-3("OA") Recital A,3 which is a California limited liability company. FAC ¶ 1. The principal asset of SSP was a multi-tenant shopping center in Imperial Beach, California (the "Property"). Id. Defendant SSP is comprised of the following members (the "Members"), representing the children and grandchildren of Dr. Norman and Sandi Kramer,4 see generally OA at A-1-2, FAC ¶ 22:
1. Plaintiff, who resides in Faulkner County, Arkansas and owns a 14.1571% interest in SSP, FAC ¶¶ 14, 265; 2. Defendant Mary E. Sherman, who is the Manager of Defendant SSP and, with her husband Defendant Jeffrey M. Sherman, serves as co-trustee of the J & M Sherman Family Trust (the "J&M Trust"), id. ¶¶ 2-3, which holds a 14.1571% interest in SSP, id. ¶ 3;
3. Defendant Mary Sherman as trustee of the Jenna Sherman, Alexa Sherman, Dana Sherman, Broxton Dennis, Curt Dennis, Sean Lynn, and Branden Lynn Irrevocable Trusts (together, the "Grandchildren Trusts"), which hold a combined 29.2145% interest in Defendant SSP, id. ¶ 4;
4. Defendant Linda R. Kramer, who holds a 14.1571% interest in SSP, id. ¶ 5, which has been assigned to the Lynn and Erik's Trust (the "L&E Trust"), of which Defendant Kramer and her husband, Defendant Erik Von Pressintin Hunsaker, serve as co-trustees, id. ¶ 6; and
5. Defendant Diane G. Dennis, who holds a 14.1571% interest in Defendant SSP. Id. ¶ 7.
There exists some animosity between Plaintiff and Defendants, particularly between Plaintiff and her sister, Defendant Mary Sherman, and her mother, Sandi Kramer. See id. ¶ 20. Plaintiff's relationship with her mother, which had always been strained, grew particularly bitter after the death of Plaintiff's father, Dr. Norman Kramer, in 2010, see id. ¶¶ 30-35, culminating in Sandi Kramer reporting Plaintiff to a government agency for elder abuse. See id. ¶¶ 41-42.
Ellis Roy Stern and Alan N. Goldberg are partners of S&G in Los Angeles County, California, who served as counsel to Defendants SSP and Mary Sherman, in her capacity as Manager of SSP, between December 2013 and May 2018. Id. ¶¶ 8-10, 36-38. During this period, Mr. Stern also represented Plaintiff's mother, Sandi Kramer. Id. ¶¶ 8, 36-38.
Patrick C. McGarrigle is a partner of MKZ in Chatsworth, California, who represented Defendants SSP and Mary Sherman, as Manager of SSP, from May 2018 through present. Id. ¶¶ 11-12.
/ / /
Before 2009, Defendant Mary Sherman launched a campaign to cause her parents to cease further financial gifts to Plaintiff's sons. See FAC ¶ 22. Although Dr. Norman and Sandi Kramer's family trust gifted SSP to her children in equal 14.1571% shares and to five grandchildren in equal 5.33% interests, Plaintiff's sons each received only a 1.28% interest. See id.; see also OA at A-1-2.
On January 1, 2009, the members of SSP entered into the OA. FAC ¶ 17; see also generally OA. Pursuant to the OA, the Members received regular, monthly distributions from SSP's net operating income ("NOI") according to their ownership interests. See FAC ¶¶ 28-29; see also OA Art. III. Plaintiff, for example, received over $7,000 per month for her 14.1571% interest. See FAC ¶ 29.
Plaintiff had a friendly relationship with two of her sisters, Defendants Kramer and Dennis, until 2013. See id. ¶ 27. For example, Defendant Kramer provided capital for certain properties that Plaintiff bought and flipped, splitting the proceeds fifty-fifty. See id. But Defendant Mary Sherman began to attempt to alienate Plaintiff from her other sisters as retaliation for certain perceived slanders from Plaintiff. See id.
In late 2013, Defendant Mary Sherman emailed the Members that the distributions from SSP's NOI would be discontinued indefinitely. See id. ¶ 29. Plaintiff thought Defendant Mary Sherman's decision may have been made in retaliation for Plaintiff expressing unflattering views of her or for Plaintiff's dealings with her mother. See id. ¶ 45. If Plaintiff's mother decided to "cut [her] out," the other Members stood to inherit millions of dollars more. See id. ¶ 46. Accordingly, the Members generally remained aligned with Sandi Kramer. See id.
According to the OA, "[e]ach Member or Manager, as well as Related Persons thereto, may receive reasonable compensation or fees for services rendered to the Company, but only if and to the extent that the Manager approves the amount and payment terms for such compensation or fees, including any adjustments in the amount of such compensation or fees from time to time." OA Art. VI, ¶ 6.1. In October 2013, themanagement fees were 5.7% of gross receipts, see FAC ¶ 47, but this jumped to over 11% following Plaintiff's clash with her mother. See id.
As the Manager of SSP, Defendant Mary Sherman was also required to hire an accountant to prepare statements reflecting the financial condition of SSP, including its net profit or net loss, and to give copies to all Members. See OA Art. IV, ¶ 4.2. In 2012, Defendant Mary Sherman ceased sending the required monthly financial statements as she previously had done, even after Plaintiff requested that she resume the practice. See FAC ¶¶ 47, 95-96.
The OA also provides that "[a]ll Company books of account, together with executed copies of the Articles of Organization, this Agreement, and any amendments to such documents, shall be kept at the Company's principal office, and shall be available during reasonable business hours for inspection and examination by the Members or their representatives, who shall have the right to make copies of any such books and documents at their own expense." OA Art. IV, ¶ 4.1. In January 2014, Plaintiff insisted on inspecting and copying SSP documents pursuant to this provision. See FAC ¶ 48. Although Mr. Stern offered Plaintiff thousands of pages of documents in his office, see id. ¶ 94, they were based on Defendant Mary Sherman's data input and did not include source documents. See id. ¶ 49. Plaintiff was concerned by certain perceived discrepancies. See id.
For example, it appeared to Plaintiff as though Defendant Mary Sherman had...
To continue reading
Request your trial