BURKLE v. BURKLE

Filed 7/28/06

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

CARRIE BURKLE,

Plaintiff and Appellant,

RONALD BURKLE,

Defendant and Respondent.

B185841

(Los Angeles County

Super. Ct. No. BC306320)

APPEAL from a judgment of the Superior Court for the County of Los Angeles. Elizabeth A. Grimes, Judge. Reversed and remanded.

Michael A. Chodos for Plaintiff and Appellant.

Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, Patricia L. Glaser, Nabil L. Abu-Assal and Bryan M. Sullivan for Defendant and Respondent.

_______________________________________

SUMMARY

A daughter brought a lawsuit against her father, seeking declaratory relief and an accounting with respect to an investment the father made for the daughter without her knowledge. The daughter asserted the father improperly repaid himself, from her capital account in the limited liability company in which the funds were invested, for the funds he advanced. We hold that:

(1) The trial court erroneously granted summary judgment to the father, because triable issues of fact exist as to whether the funds advanced were a loan (as the father contends) or a gift (as the daughter contends).

(2) The daughter was entitled to discovery of the financial records of the limited liability company in which she held a one percent interest, based upon the inspection rights provided under Corporations Code section 17453 to members of foreign limited liability companies residing in California. The trial court therefore erred in denying the daughter's motion to compel production of company records.

(3) The trial court abused its discretion in failing to permit the daughter to amend her complaint to seek damages from the father for conversion and breach of fiduciary duty.

FACTUAL AND PROCEDURAL BACKGROUND

Carrie Burkle is Ronald Burkle's adult daughter.[1] In 1995, when Carrie was 19, her father formed Yucaipa Monterey, LLC, a Delaware limited liability company that was formed to purchase art and owns an unspecified number of paintings. Carrie has had a one percent interest in Yucaipa Monterey since its formation. Carrie's father owns 99 percent of the company, and provided the funds for Carrie's one percent interest.

In November 2003, several months after her mother, Janet Burkle, filed a petition for dissolution of her marriage to Carrie's father, Carrie filed a lawsuit naming her father and her mother as defendants. Carrie's mother is paying Carrie's legal fees for the lawsuit. The lawsuit alleged that Carrie's parents made various investments for her benefit, during her minority and thereafter, and asserted numerous causes of action for breach of fiduciary duty and constructive fraud, fraudulent suppression of fact, unjust enrichment and constructive trust, declaratory relief, an accounting, and for the return of personal property. Among the investments identified was Ronald's acquisition for Carrie of her one percent interest in Yucaipa Monterey. As to the Yucaipa Monterey investment, Carrie alleged causes of action for declaratory relief and an accounting.[2] Specifically, Carrie's first amended complaint alleged that she learned of her one percent ownership interest on approximately September 23, 2003, and that her father claimed she owed him $14,783 allegedly lent to her to acquire her one percent interest. Carrie asserted the value of Yucaipa Monterey was $8.5 million, and sought declaratory relief, requesting the court to â€

Description	Where defendant father capitalized limited liability company of which he was 99 percent owner and plaintiff daughter was one percent owner and subsequently withdrew the contents of plaintiff's capital account. Trial court erred in granting summary judgment to defendant in action for accounting where ruling was based solely on defendant's declaration that he intended the capitalization funds as a loan, not a gift. Triable issue existed as to defendant's intent where plaintiff declared that defendant had never mentioned any loan and often told plaintiff and her siblings that he had "given" them investments. The defendant presented no evidence regarding the terms of the loan nor any evidence that plaintiff ever agreed to any terms. Trial court erred in declining to compel defendant to produce documents and answer questions about the assets of limited liability company of which plaintiff was part owner. Where California residents own--in aggregate--25 percent or more of a foreign limited liability company, each of those residents has inspection rights, and trial court erred in construing statute as limiting those rights to persons owning at least 25 percent of the company. Trial court abused its discretion when it denied plaintiff leave to amend her complaint to add claims for conversion and breach of fiduciary duty where the plaintiff did not seek to introduce new factual allegations or new claims of primary rights and defendant did not show he would be prejudiced.
Rating	0/5 1 2 3 4 5 0/5 based on 0 votes.