Nakash v. Superior Court
Decision Date | 10 November 1987 |
Docket Number | No. B027131,B027131 |
Citation | 241 Cal.Rptr. 578,196 Cal.App.3d 59 |
Court | California Court of Appeals |
Parties | , RICO Bus.Disp.Guide 6836 Joe NAKASH et al., Petitioners, v. SUPERIOR COURT of the State of California for the County of Los Angeles, Respondent, Georges MARCIANO et al., Real Parties in Interest. |
Jones, Day, Reavis & Pogue, Allyn O. Kreps, John W. Cochrane, Los Angeles, Erwin N. Griswold and Kevin D. McDonald, Washington, D.C., Paul, Weiss Rifkind, Wharton & Garrison, Martin London and Richard A. Rosen, New York City, for petitioners.
No appearance for respondent.
Freedman, Tucker & Baum, Gary A. Freedman and Paul H. Samuels, Beverly Hills, for real party in interest Guess?
Alschuler, Grossman & Pines, Marshall B. Grossman, Robert A. Shlachter, John A. Schwimmer, Los Angeles, and Arthur R. Miller for real parties in interest.
Petition for writ of mandate. Petitioners (the Nakash brothers, Joe, Ralph and Avi) seek an order of this court directing respondent superior court to vacate its order of March 27, 1987, denying summary adjudication of specified issues in consolidated case Nos. C 524 347 and C 628 877, and to enter instead an order granting such adjudication.
Division 3 of this court issued an alternative writ on May 12, 1987. On June 16, 1987, the California Supreme Court ordered that the matter be transferred to Division 1 of this court. The petition is opposed by real parties in interest the Marcianos (brothers Georges, Maurice, Armand and Paul) and a California Corporation, Guess? Inc. (hereinafter Guess). We deny petitioners relief and discharge the alternative writ.
Briefly, the pertinent facts giving rise to this writ proceeding are: In 1981 the Marcianos formed Guess, which has been successful in the design, production and sale of high-fashion clothing, including "designer jeans." Petitioners, the Nakashes, declare that net profits in 1986 were $110 million.
The Marcianos owned 100 percent of Guess stock until 1983, when they negotiated some agreements with the petitioners, the Nakashes, owners of Jordache Enterprises, Ltd., a Delaware corporation also engaged in the design, production and sale of clothing, including jeans. The Marcianos have asserted that the Nakashes induced them to sell stock in the rapidly expanding Guess by promising to apply organizational and financial skills in a manner which would benefit Guess.
On July 25, 1983, the parties executed a stock purchase agreement and a shareholders' agreement in writing; the Marcianos have asserted that they made additional agreements with the Nakashes which were not in writing. Petitioners, the Nakashes, acquired 51 percent of the stock of Guess.
By December 13, 1983, however, the Marcianos had filed their first amended complaint in federal district court seeking rescission of the July 1983 transaction with the Nakashes due to fraud and failure of consideration based upon fraudulent conduct. The action was entitled Georges Marciano et al. v. Joe Nakash et al., No. CV 83-7828-CBM. The complaint set forth the facts concerning the stock purchase and related agreements and specified certain financial and other services it was claimed the Nakashes had promised to provide in developing Guess. It was further alleged that the Nakashes had not performed as promised and were in fact attempting to damage Guess' reputation in the fashion industry because of the Nakashes' ownership of a competitor, Jordache.
On January 12, 1987, the three Nakashes and three of the Marcianos (Georges, Maurice and Armand) signed a one-page document which stated:
"
After the release was signed, the Marcianos moved to dismiss the federal suit; it was dismissed with prejudice on January 19, 1984. From that time to the present, the petitioners, the Nakashes, have owned 50 percent of Guess and real parties, the Marcianos, have owned the other 50 percent.
On November 29, 1984, the Marcianos filed the present state court action; it was entitled Georges Marciano et al. v. Joe Nakash et al., No. C 524 347. It, too, sought rescission of the July 1983 agreement, alleging fraud and failure of consideration based upon fraudulent conduct. It claimed breach of fiduciary duty by the Nakashes. The complaint contained 23 causes of action, including several causes of action seeking the statutory remedies available to private litigants pursuant to the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. section 1961 et seq., including the divestiture of stock ownership by those determined to be "racketeers" within the meaning of the statute.
The fifth amended complaint, in essence, accused the Nakashes of engaging in a conspiracy to acquire Guess, to misappropriate its designs, manner of production and sale of high-fashion garments, and to terminate (squeeze out) the Marcianos' interest in Guess. The complaint detailed the Nakashes' business practices and activities directed toward these objectives. It specifically described an occurrence known in the industry as "knock-off," wherein one garment company produces copies of the designs, fabrics or style of a successful line of another company, for economic gain. It was alleged that the Nakashes, by virtue of the interest they had acquired in Guess, had, through Jordache and related corporations, misappropriated Guess' designs, fabrics and styles and had produced "knock-offs," primarily in Hong Kong. These appeared, and their appearance became known to the Marcianos in the spring of 1984, after the dismissal of the federal suit had taken place.
Other asserted business practices of the Nakashes were described, including their custom of transacting important business orally without witnesses present; their scheming to evade United States taxes; their use of the mails and other communication to engage in fraud; their manipulation of international markets, quotas, and exchange rates. The totality of the Nakashes' conduct, it was asserted, was intended to damage and had damaged Guess, and was continuous in nature after the January 1984 release executed by the parties and the dismissal of the federal suit.
While this litigation was pending, three Nakashes and three Marcianos sat as directors on the Guess corporate board. By order of respondent superior court, the Honorable Richard Schauer, a retired presiding justice of Division 7 of this court, was appointed the provisional (and seventh) director of Guess on November 8, 1986. Thereafter, the board of directors of Guess withheld accumulated dividends of approximately $16.5 million on Guess stock belonging to the petitioners, the Nakashes, and interpleaded the dividends. It was claimed that the ownership of the Nakash holdings was at issue--and thus the payment of dividends as well--in the present litigation. The Nakashes sought and were denied an injunction compelling payment of the dividends to them.
When the Nakashes sought summary judgment or summary adjudication of issues, their major concern (apart from terminating the litigation in its entirety) was limitation of the remedies available to real parties; they sought to remove from the complaint the possibility that the July 1983 stock purchase agreement would be rescinded or that an adverse judgment would affect their ownership of Guess stock. Hence, the motion relied upon the doctrine of res judicata, and the proposition that private RICO litigants may not obtain equitable relief.
Petitioners argue that the Marcianos should be barred from seeking rescission of the stock purchase agreement of July 1983 because all claims arising from that agreement had been effectively disposed of by the settlement and release executed by the parties in January 1984--which in turn had led to the dismissal, with prejudice, of the federal action seeking rescission of the same agreement. Petitioners contended that having made the deal which enabled the Marcianos to receive 1 percent of Guess stock from petitioners in return for ending the federal litigation, the Marcianos gave up their right to attempt to rescind the stock purchase agreement at any future time.
In opposing the motion, the Marcianos argued that the state action, the present litigation, arose primarily from events which had occurred or become known to them after the release and dismissal of January 1984.
In declarations filed in opposition to the motion, Maurice and Armand Marciano declared that they had not intended, when they executed the January 12, 1984 release, to include claims for wrongdoing of which they had no knowledge at the time. Paul Marciano also filed a declaration stating he had no knowledge, when his brothers executed the release, of any "knock-off" of Guess garments by Jordache and other related business entities. Real parties claimed that the Marcianos had discovered the asserted "knock-offs" by the Nakashes in the spring of 1984.
On March 27, 1987, the trial court denied summary judgment and the summary adjudication of specified issues as requested by the Nakashes (in most instances). The trial court's five-page minute order made the following pertinent determinations:
(1) Review of the pleadings in the federal district court case and the pleadings in the present case demonstrated that the federal case "was based upon different allegations ... was based upon different theories, involved different evidence and rights, did not arise from the same ...
To continue reading
Request your trial-
Sosinsky v. Grant
...where the factual dispute was erroneously decided in favor of a party who did not testify truthfully. (See Nakash v. Superior Court (1987) 196 Cal.App.3d 59, 67, 241 Cal.Rptr. 578 (res judicata) and McClain v. Rush (1989) 216 Cal.App.3d 18, 28-29, 264 Cal.Rptr. 563 (collateral In sum, the s......
-
In re Outlaw Labs., LP Litig.
...As the California courts have repeatedly held, "[r]escission is not a cause of action; it is a remedy." Nakash v. Superior Ct. , 196 Cal. App. 3d 59, 70, 241 Cal.Rptr. 578 (1987) ; see also Hailey v. California Physicians' Serv. , 158 Cal. App. 4th 452, 468, 69 Cal.Rptr.3d 789 (2007), as mo......
-
Countrywide Financial Corp. v. Bundy
...of the time period, the scope of the classes and the relief sought in the Walker federal class action. ( Nakash v. Superior Court (1987) 196 Cal.App.3d 59, 69, 241 Cal.Rptr. 578 ["Res judicata was never intended to be used as a vehicle for forever 'immunizing' any party in a continuing busi......
-
Consol. Res., Inc. v. DRO Barite, LLC (In re Don Rose Oil, Inc.)
...v. Makino , 148 F.Supp.3d 1126, 1128 (D. Nevada 2015) ; see also Single Chip Sys. , 495 F.Supp.2d at 1057 ; Nakash v. Superior Court , 196 Cal.App.3d 59, 241 Cal.Rptr. 578 (1987). It has been applied to state court actions removed to federal court. Vanover v. NCO Financial Services, Inc. , ......