Dhaliwal et al v. Singh et al

Filing 91

MEMORANDUM DECISION and ORDER Re Plaintiffs' Motion for Partial Summary Judgment (Doc. 54 ), signed by District Judge Lawrence J. O'Neill on 7/7/2014. (Gaumnitz, R)

1
2
3

UNITED STATES DISTRICT COURT

4

FOR THE EASTERN DISTRICT OF CALIFORNIA

5
6

JAGJEEVAN K. DHALIWAL AND
MOHINDER S. GILL,

7

MEMORANDUM DECISION AND
ORDER RE PLAINTIFFS’ MOTION
FOR PARTIAL SUMMARY
JUDGMENT (DOC. 54)

Plaintiffs,

8
9

1:13-CV-484-LJO-SKO

v.
KS CHANDI & SONS, INC., et. al. ,

10

Defendants.

11
12
I. PRELIMINARY STATEMENT TO PARTIES AND COUNSEL
13
Judges in the Eastern District of California carry the heaviest caseloads in the nation, and this
14
Court is unable to devote inordinate time and resources to individual cases and matters. Given the
15
shortage of district judges and staff, this Court addresses only the arguments, evidence, and matters
16
necessary to reach the decision in this order. The parties and counsel are encouraged to contact the
17
offices of United States Senators Feinstein and Boxer to address this Court’s inability to accommodate
18
the parties and this action. The parties are required to reconsider consent to conduct all further
19
proceedings before a Magistrate Judge, whose schedules are far more realistic and accommodating to
20
parties than that of U.S. District Judge Lawrence J. O'Neill, who must prioritize criminal and older civil
21
cases.
22
Civil trials set before Judge O'Neill trail until he becomes available and are subject to suspension
23
mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Judge O'Neill
24
is unavailable on the original date set for trial. Moreover, this Court's Fresno Division randomly and
25
without advance notice reassigns civil actions to U.S. District Judges throughout the nation to serve as
26
1

1

visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a

2

U.S. District Judge from outside the Eastern District of California.
II. BACKGROUND1

3

This case concerns a dispute between the parties’ involvement in purchasing gas stations. Doc.

4
5

14, First Amended Complaint (“FAC”) at 5. Plaintiffs Jagjeevan K. Dhaliwal and Mohinder S. Gill

6

(collectively, “Plaintiffs”) allege that they loaned money to Defendant Nirmal Singh, who allegedly

7

promised to invest the money in two companies, Defendants Chandi Brothers, LLC (“Chandi Brothers”)

8

and KS Chandi & Sons (“KS Chandi”) (collectively, “the corporations” or “Defendants”).

9

Disputes between the parties arose over the use of the money, the purchase and sale of the gas

10 stations, and the parties’ respective debts and obligations to one another. Plaintiffs subsequently filed
11 this suit, alleging twelve causes of action against Defendants. Plaintiffs’ tenth cause of action seeks an
12 involuntary dissolution of KS Chandi under California Corporation Code § 1800 (“§ 1800”) “on the
13 ground that Defendants . . . are guilty of or have knowingly persistent and pervasive intentional fraud,
14 mismanagement or abuse of authority or persistent unfairness toward Plaintiffs who are shareholders or
15 the corporations.” FAC ¶ 138.2 Plaintiffs claim that “liquidation is necessary for the protection of the
16 rights or interests of Plaintiffs.” Id. ¶ 139.
17

In conjunction with their motion for summary judgment, Plaintiffs filed a motion to exclude in

18 which they argued that Defendants “should be precluded from introducing any evidence or witnesses in
19 support of their claims and defenses.” Doc. 82 (Magistrate Judge Order) at 6; see also Doc. 60 at 1.
20 Plaintiffs asserted that Defendants’ failure to comply with the initial disclosure requirements of Fed. R.
21 Civ. P. 26(a) (“Rule 26(a)”) warranted the exclusion of essentially all of Defendants’ evidence from the
22 record. Doc. 82 at 6.
The Magistrate Judge denied Plaintiffs’ motion. Id. at 11. The Magistrate Judge found that

23
24
25
26

1

The following facts are undisputed unless otherwise indicated.

2

Plaintiffs’ tenth cause of action seeks an involuntary dissolution of both Chandi Brothers and KS Chandi, see FAC ¶¶ 136148, but Plaintiffs move for summary judgment on the claim as to KS Chandi only. See Doc. 54 at 2.

2

1

Defendants’ failure to disclose the subject matter contained in Mr. Singh’s declaration technically

2

violated Rule 26(a), but found that it caused no harm or prejudice to Plaintiffs. Id. The Magistrate Judge

3

noted that Plaintiffs “waited until after discovery was closed to raise the issue of an incomplete and

4

insufficient initial disclosure statement.” Id. at 10 (emphasis in original). Thus, the Magistrate Judge

5

found that “[a]ny prejudice or harm accruing from the inadequate disclosures was compounded, in no

6

small part, by Plaintiffs’ lack of attention to the progress of the litigation.” Id.

7
8
9
10

Currently pending before the Court is Plaintiffs’ motion for partial summary judgment on its
tenth cause of action. (Doc. 54). For the reasons discussed below, the Court DENIES the motion.
III. STANDARD OF DECISION
Summary judgment is appropriate when the pleadings, disclosure materials, discovery, and any

11 affidavits provided establish that “there is no genuine dispute as to any material fact and the movant is
12

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A material fact is one that may affect the
outcome of the case under the applicable law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

13
14
15

(1986). A dispute is genuine “if the evidence is such that a reasonable trier of fact could return a verdict
in favor of the nonmoving party.” Id.
The party seeking summary judgment “always bears the initial responsibility of informing the

16 district court of the basis for its motion, and identifying those portions of the pleadings, depositions,
17 answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes
18

demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986) (internal quotation marks omitted). The exact nature of this responsibility, however, varies

19
depending on whether the issue on which summary judgment is sought is one in which the movant or the
20

nonmoving party carries the ultimate burden of proof. See Soremekun v. Thrifty Payless, Inc., 509 F.3d

21 978, 984 (9th Cir. 2007); Cecala v. Newman, 532 F. Supp. 2d 1118, 1132 (D. Ariz. 2007). If the movant
22 will have the burden of proof at trial, it must demonstrate, with affirmative evidence, that “no reasonable
23 trier of fact could find other than for the moving party.” Soremekun, 509 F.3d at 984. In contrast, if the
nonmoving party will have the burden of proof at trial, “the movant can prevail merely by pointing out
24
that there is an absence of evidence to support the nonmoving party’s case.” Id. (citing Celotex, 477 U.S.
25
at 323).
26
If the movant satisfies its initial burden, the nonmoving party must go beyond the allegations in
3

1

its pleadings to “show a genuine issue of material fact by presenting affirmative evidence from which a

2

jury could find in [its] favor.” FTC v. Stefanchik, 559 F.3d 924, 929 (9th Cir. 2009) (emphasis in

3

original). “[B]ald assertions or a mere scintilla of evidence” will not suffice in this regard. Id. at 929.
See also Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (“When the

4
moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that
5

there is some metaphysical doubt as to the material facts.”) (citation omitted). “Where the record as a

6

whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue

7

for trial.’” Matsushita, 475 U.S. at 587 (quoting First Nat’l Bank of Arizona v. Cities Serv. Co., 391 U.S.

8

253, 289 (1968)).
In resolving a summary judgment motion, “the court does not make credibility determinations or

9

weigh conflicting evidence.” Soremekun, 509 F.3d at 984. That remains the province of the jury or fact
10

finder. See Anderson, 477 U.S. at 255. Instead, “[t]he evidence of the [nonmoving party] is to be

11 believed, and all justifiable inferences are to be drawn in [its] favor.” Id. Inferences, however, are not
12 drawn out of the air; the nonmoving party must produce a factual predicate from which the inference
13 may reasonably be drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal.
14

1985), aff’d, 810 F.2d 898 (9th Cir. 1987).
IV. DISCUSSION

15
16

A.

Plaintiffs argue that the declaration of Mr. Singh must be excluded. See Docs. 85-2, 85-3.

17
18

Further, Plaintiffs argue that, even if it is not excluded, portions of the declaration are inadmissible.3
1.

19

22
23

Exclusion of the Declaration of Mr. Singh.

As noted, the Magistrate Judge denied Plaintiffs’ motion to exclude Mr. Singh’s declaration

20
21

Plaintiffs’ Evidentiary Objections.

because Defendants’ conduct amounted to only a “technical violation” of Fed. R. Civ. P. 26(a), which
caused Plaintiffs no discernible harm. Doc. 82 at 10. The Magistrate Judge left the remedy, if any, for
Defendants’ technical violation of Rule 26(a) for the Court’s decision. Id. at 11.
For the reasons the Magistrate Judge stated, the Court finds that, although Defendants’ conduct

24
25
26

3

Although the Court has considered all relevant parts of the record, this Memorandum Decision and Order will only address
the arguments and evidence necessary to resolve Plaintiffs’ motion for summary judgment.

4

1

technically violated Rule 26(a), Plaintiffs were not harmed or prejudiced by Defendants’ conduct. See

2

id. at 9-11. Thus, the Court finds no reason to grant Plaintiffs’ motion to exclude on the ground

3

Defendants technically violated Rule 26(a). See Fed. R. Civ. P. 37(c)(1) (“If a party fails to provide

4

information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that

5

information or witness to supply evidence on a motion, at hearing, or at a trial, unless the failure was

6

substantially justified or is harmless.”).

7

Plaintiffs also move to exclude Mr. Singh’s declaration on the ground it is a “sham” because it

8

“directly conflict[s] with his earlier statement that he allegedly ‘is the sole shareholder’ of KS [Chandi].”

9

Doc. 85-2 at 4 (emphasis omitted). Plaintiffs argue that Mr. Singh represented in a related bankruptcy

10 proceeding that he is the sole shareholder of KS Chandi, which he “disavows” in his declaration. Id. at 2.
11 In support, Plaintiffs cite to paragraphs 23 and 51 of Mr. Singh’s declaration, which read in relevant
12 part: “The Chandis were owners of KS Inc and Chandi Bros only for a time, and then I became the sole
13 owner of both entities,” Doc. 70-1 (Declaration of Nirmal Singh (“Singh Decl.”)) at ¶ 23; “[t]he Chandis
14 divested themselves of their shares in KS Inc. well before October 8, 2013.” Id. ¶ 51.
15

Notably, Plaintiffs make no reference to the first sentence of Mr. Singh’s declaration, which

16 reads: “I am the sole shareholder of [KS Chandi] and sole member of [Chandi Bros].” Id. ¶ 1. Given this
17 testimony, the Court cannot discern how Mr. Singh’s declaration “directly conflict[s] with his earlier
18 statement that he allegedly ‘is the sole shareholder’ of KS [Chandi].” Doc. 85-2 at 4 (emphasis omitted).
19 Thus, the Court DENIES Plaintiffs’ motion to exclude Mr. Singh’s declaration on the ground it is a
20 “sham.”
21

2.

22

Mr. Singh testifies in his declaration that he is “the sole shareholder of [KS Chandi].” Singh

Evidentiary Objections.

23 Decl. at ¶1. Plaintiffs object to this statement as inadmissible on the grounds it is improper opinion
24 evidence (Fed. R. Evid. 702); it is an improper legal conclusion (Fed. R. Evid. 701); it lacks foundation
25 (Fed. R. Evid. 602); it is speculative (Fed. R. Evid. 602, 701); and it is inadmissible hearsay (Fed. R.
26 Evid. 802). Doc. 85-2 at 12. Plaintiffs provide no explanation of the grounds for these objections.
5

Plaintiffs’ objections have no merit. Mr. Singh’s statement does not constitute improper opinion

1
2

evidence nor an improper legal conclusion because he is merely describing his alleged shareholder

3

status, which is acceptable and admissible lay opinion. See Fed. R. Evid. 701. Mr. Singh’s statement

4

does not lack foundation and is not speculative because he clearly has personal knowledge of his

5

ownership of the corporations. Likewise, Mr. Singh’s statement is not inadmissible hearsay because Mr.

6

Singh could testify to the extent of his ownership of the corporations at trial. See Fraser v. Goodale, 342

7

F.3d 1032, 1037 (9th Cir. 2003) (“Because the diary’s contents could be presented in an admissible form

8

at trial, we may consider the diary’s contents in the Bank’s summary judgment motion. Accord Hughes

9

v. United States, 953 F.2d 531, 543 (9th Cir.1992) (litigation adviser’s affidavit may be considered on

10 summary judgment despite hearsay and best evidence rule objections; the facts underlying the affidavit
11 are of the type that would be admissible as evidence even though the affidavit itself might not be
12 admissible)”). Accordingly, Plaintiffs’ objections to Mr. Singh’s statement are OVERRULED.
13 B.

Plaintiffs’ Claim for Involuntary Dissolution.

14

To succeed on their claim for involuntary dissolution, Plaintiffs must first demonstrate that they

15 are “shareholders who hold shares representing not less than 33 ½ percent of” KS Chandi.
16 § 1800(a)(2).4 Involuntary dissolution is a “drastic remedy.” Stuparich v. Harbor Furniture Mfg, Inc., 83
17 Cal. App. 4th 1268, 1279 (2000). The parties dispute whether Plaintiffs are 33.5% shareholders of KS
18 Chandi. See Doc. 70 at 4-5. In support, Defendants point to the declaration of Mr. Singh, who claims he
19 is the sole shareholder of KS Chandi. Id. at 5; see also Singh Decl. at ¶ 1.
The Court finds that Mr. Singh’s declaration creates a triable issue of material fact as to the

20

21 threshold issue of whether Plaintiffs own a sufficient interest in KS Chandi to bring a claim for
22 involuntary dissolution of the corporation under § 1800(a)(2). In the absence of evidence establishing
23 that Plaintiffs are undisputed 33.5% shareholders of KS Chandi, the Court cannot find that they are
24
25
26

4

The other provisions of § 1800 that pertain to other groups of persons who may file for a voluntary dissolution are
inapplicable here. See Doc. 54 at 9 (Plaintiffs arguing that they can move for involuntary dissolution as 1/3 shareholders of
the corporations).

6

1

entitled to seek an involuntary dissolution of the corporation under § 1800(a)(2). Accordingly, Plaintiffs’

2

motion for partial summary judgment on their tenth cause of action is DENIED.

3
4
5

V. CONCLUSION AND ORDER
For the foregoing reasons, the Court DENIES Plaintiffs’ motion for partial summary judgment
on their tenth claim for involuntary dissolution.

6
7
8
9

IT IS SO ORDERED.
Dated:

/s/ Lawrence J. O’Neill

July 7, 2014

UNITED STATES DISTRICT JUDGE

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
7