Rebele v. EVP Fourth Corp.

Filed 7/18/06 Rebele v. EVP Fourth Corp. CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from an order of the Superior Court of Los Angeles County. Wendell Mortimer, Jr., Judge. Reversed with directions.

Perez & Miller, Richard L. Perez and Jeffrey Allen Miller for Plaintiffs and Appellants.

Proskauer Rose, Bert H. Deixler, Hayes F. Michel and Herman L. Goldsmith for Defendants and Respondents.

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The plaintiffs are limited partners of the West Palm Associates Limited Partnership (West Palm). Plaintiffs' complaint alleges defendant EVP Fourth Corporation (EVP), the general partner, sold West Palm's main asset, a large apartment building, for a sum far below its market value and garnered unjustified fees and commissions on the sale. It is alleged the other defendants conspired with EVP to commit these wrongs and profited by doing so. Plaintiffs sue on behalf of themselves and the 244 other limited partners. The trial court denied plaintiffs' motion to certify the cause as a class action and plaintiffs filed a timely appeal.

For the reasons explained below we conclude the trial court abused its discretion in denying the class certification motion in its entirety instead of granting the motion as to all causes of action except fraud.

FACTS AND PROCEEDINGS BELOW

West Palm was organized to develop, construct, and operate an apartment building near Los Angeles airport consisting of 582 units and amenities. Defendant EVP is the partnership's general partner. Plaintiffs are limited partners.

In 1999 EVP contracted to sell the apartment building for $51.5 million subject to the approval of a majority of the limited partners (the limiteds). EVP sent a letter to the limiteds describing the terms of the proposed sale and informing them they could vote yes or no on the deal but any proxy not returned would be considered a yes vote under the provisions of the partnership agreement. The limiteds approved the sale 229 to 19. Plaintiff Rebele voted no; plaintiffs Peter and Camille Stranger voted yes. The sale was completed in June 2000.

Plaintiffs brought this action against EVP and the other defendants for fraud, breach of fiduciary duty, negligence and breach of contract. They claim EVP obtained the limiteds' approval of the sale by misrepresenting its terms and conditions and the value of the property. They further claim EVP and the other defendants breached their contractual and fiduciary duties to the limiteds and acted negligently in selling the property for less than its fair market value and profiting from the sale through the receipt of unauthorized fees and commissions including a commission of 3 percent of the sale price to EVP which was not authorized under the partnership agreement. The named plaintiffs seek to represent a class consisting of all other limited partners of West Palm.

The trial court denied plaintiffs' motion to certify the class. It found the class is not so numerous that joining all members would be impracticable; there are no substantial benefits to the limited partners or the court in allowing the case to proceed as a class action; individual questions of fact and law predominate over common questions; and the named plaintiffs will not adequately represent the class because their circumstances are not typical of the class they seek to represent.

DISCUSSION

We review a trial court's ruling on class certification for abuse of discretion.[1] Although a trial court is â€