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01 37-2013-00058302-cu-bc-ctl roa-24-10-28-13_opposition_other_to_plaintiff_s_ex_parte_applic_1386732626665

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F
LED
S. Todd Neal (Bar No. 174827)
Jamie L. Altman (Bar No. 280075)
C1 the Superior Court
PROCOPIO, CORY, HARGREAVES AND
...
mention or address in its ex pane application. Dixie bases its misdirected application on C.C.P. §
1054(a) which pertains ...
1

the RDH Operating Agreement. However, Dixie refuses to abide by the arbitration provision and

2

takes the position th...
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01 37-2013-00058302-cu-bc-ctl roa-24-10-28-13_opposition_other_to_plaintiff_s_ex_parte_applic_1386732626665

  1. 1. F LED S. Todd Neal (Bar No. 174827) Jamie L. Altman (Bar No. 280075) C1 the Superior Court PROCOPIO, CORY, HARGREAVES AND SAVITCH LLP 07 2 8 2013 FILE rk clak of th• Sulorlor 525 B Street, Suite 2200 Coen aj San Diego, CA 92101 By. A SEAMONS, Deput Telephone: 619.238.1900 OCT 2 8 2013 Facsimile: 619.235.0398 . Attorneys for Defendant Medical Marijuana, Inc., a California Corporation SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN DIEGO Case No. 37-2013-00058302-CU-BC-CTL DIXIE HOLDINGS, LLC, a Colorado limited liability company, derivatively on behalf of RED DICE HOLDINGS, LLC, a California limited liabiilty company, DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION FOR EXTENSION OF TIME TO RESPOND TO PETITION TO COMPEL ARBITRATION Plaintiff, V. MEDICAL MARIJUANA, INC., a California corporation, "IMAGED FILE" Date Time: Dept: Judge: Defendant. October 29, 2014 8:30 a.m. C-73 Joel R. Wohlfield Complaint Filed: July 19, 2013 Trial Date: Not Set Defendant Medical Marijuana, Inc. ("MJNA") submits the following opposition to Plaintiff Dixie Holdings, LLC's ("Dixie") ex parte application for an extension of time to respond to MJNA's petition to compel arbitration. I. INTRODUCTION Dixie's ex parte application mischaracterizes the relief requested as seeking an "extension of time to respond" when in fact Dixie is asking this Court to grant it relief from default. Such relief is governed by the high standard set forth in C.C.P. § 473(b), a statute that Dixie neglects to DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE No. 37-2013-00058302-CU-BC-CTL
  2. 2. mention or address in its ex pane application. Dixie bases its misdirected application on C.C.P. § 1054(a) which pertains to enlargement of time to respond. However, Dixie's time to respond cannot be enlarged because it expired more than two weeks ago on October 8, 2013. Whether Dixie's mischaracterization of the relief requested is intentional or due to its continuing neglect and lack of diligence is unclear. (See, e.g., Taheri Law Group, A.P.C. v. Sorokurs (2009) 176 Cal.App.4th 956, 962)(factual allegations of an arbitration petition are "deemed admitted" when petition is not timely opposed). Regardless, there is no good cause to grant the ex parte application because it is sought on an erroneous basis and, additionally, Dixie utterly fails to satisfy the , procedural and substantive requirements to obtain relief under the correct basis (C.C.P. § 473(b)). BACKGROUND RELEVANT TO EX PARTE APPLICATION Dixie's ex parte application is a continuation of a pattern of frivolous conduct that seeks to delay and avoid its contractual obligation to arbitrate its dispute with MJNA. The following facts are taken from MJNA's verified petition to compel arbitration filed with this Court on September 13, 2013: On April 5, 2012, MINA and Dixie formed a limited liability company known as Red Dice Holdings, LLC ("RDH"). [112]. MJNA and Dixie have been the only members of RDH since its creation. [Il 3]. Section 13.4 of the RDH Operating Agreement expressly provides for arbitration of any dispute that may arise under said agreement. Ml 6]. After a dispute arose between MJNA and Dixie relative to RDH, on July 18, 2013, counsel for Dixie filed a lawsuit against MJNA which asserts claims exclusively founded in the RDH Operating Agreement. [li 7]. Dixie and its counsel styled the Complaint as a derivative action brought on behalf of RDH and thus RDH is named as a nominal plaintiff, but Dixie's counsel has repeatedly confirmed that it does not represent RDH. 8]. Prior to filing the Complaint, counsel for Dixie sent a demand letter to MJNA on June 11, 2013, threatening pursuit of an arbitration proceeding if MJNA did not accede to certain demands made by Dixie. [If 9]. After receiving service of Dixie's Complaint, MJNA demanded that Dixie dismiss the Complaint in favor of binding arbitration, as required by 2 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE NO. 37-2013-00058302-CU-BC-CTL DOCS 120497-000003/1856645.1
  3. 3. 1 the RDH Operating Agreement. However, Dixie refuses to abide by the arbitration provision and 2 takes the position that the nominal plaintiff, RDH, is not a member of RDH nor is it bound by the 3 arbitration provision! 10]. Dixie's position is unsupportable form over substance because RDH 4 is nothing more than the sum of its members and it cannot act except through its members, and also 5 because each and every member of RDH, and thus each and every signatory to the arbitration 6 provision, is party to the instant dispute. Mf 111 7 At no time has Dixie provided legal authority establishing that a dispute between the only 8 two members of a limited liability company is not subject to contractual arbitration merely because 9 a derivative claim was asserted on behalf of the limited liability company. Such an easy 10 circumvention of arbitration agreements would eviscerate the enforceability of such agreements. 11 Instead, Dixie's counsel has repeatedly stated that if MJNA wishes to avoid "continued litigation," 12 it should simply accede to Dixie's demands. [Il 12]. 13 After many weeks of refusing to agree to arbitration, Dixie reversed course on September 3, 14 2013, and stated in writing that it would consent to arbitration if MJNA agreed to first meet for a 15 settlement conference: 16 18 Counsel for MJNA: Hi Robert — Do we have an agreement to execute a stipulation submitting the matter to arbitration? If so, I will check with my client regarding a date to meet and get back to you. Thanks. 19 Counsel for Dixie: Yes. 17 20 13; See Exhibit H to Declaration of S. Todd Neal submitted in support of Verified Petition]. 21 Nevertheless, after threatening an arbitration process per the Operating Agreement in its 22 original demand letter of June 11, 2013, and thereafter agreeing in writing to sign a stipulation 23 submitting the matter to arbitration, Dixie again reversed course and is refusing to consent to 24 arbitration. MI 14]. Now, after forcing MJNA to file an utterly unnecessary petition to compel is arbitration — which seeks to compel a dispute resolution process that is contractually required in 26 this instance — Dixie mischaracterizes its ex parte application and asks the Court to revive an 27 expired right without meeting the procedural and substantive requirements necessary to obtain such 28 3 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: _ CASE NO. 37-20 I 3-00058302-CU-BC-CTL DOCS 120497-000003/1856645.1
  4. 4. I relief. 2 3 MISSTATEMENTS BY DIXIE's EX PARTE APPLICATION 4 As if it wasn't enough to misrepresent the nature of relief it is seeking, Dixie makes a series 5 of misstatements and misrepresentations in its ex parte application. Dixie suggests that it willingly 6 gave an extension of time for MJNA to respond to the underlying Complaint but that MJNA 7 refused to extend the same courtesy relative to Dixie's response to the petition to compel 8 arbitration. Dixie neglects to mention that the two day extension of time given to MJNA was 9 granted because Dixie had agreed to arbitrate the dispute subject to conditions it placed on the 10 process and the short extension of time was given to allow time for MJNA's counsel to discuss the 11 new conditions with his client. More importantly, Dixie ignores the fact that MJNA's deadline to 12 respond to the Complaint had not passed. It is one thing to ask for an extension of time before a 13 party has missed a deadline but quite another to ask for an "extension" after a deadline has passed. 14 The latter is more accurately characterized as reviving an expired right, not merely extending the 15 time to respond. 16 Next, Dixie declines to state that when it was contacted by MJNA's counsel on October 23, 17 2013, to confirm that Dixie was not contesting the petition to compel arbitration, Dixie's counsel 18 initially stated by e-mail that they believed the response was due that day "based on CCCP 1005." 19 [Sic]. This makes no sense at all since C.C.P. § 1005 refers to court days, not calendar days, and 20 thus even if Dixie's counsel believed that the response deadline was determined by C.C.P. § 1005 21 (which it is not since this is a "petition" and thus it is governed by CCP 1290 et seq.), it was still 22 untimely by multiple days. 23 Curiously, neither Dixie's ex parte application nor the supporting declaration from Robert 24 B. Hinckley, Jr., make any reference to C.C.P. § 1005, which was supposedly the real basis for 25 Dixie's confusion and failure to timely file its response. Without a discussion of the specific facts 26 that caused the failure to timely file the response, it is undeniable that Dixie has failed to establish 27 "mistake, inadvertence or excusable neglect" by specific facts as required by C.C.P. § 473(b). 28 4 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE No, 37-2013-00058302-CU-BC-CTL DOCS 120497-000003/1856645.1
  5. 5. I Instead of focusing on the reason it blew the response deadline, Dixie attempts obfuscation 2 in multiple ways including the outrageous claim that "MJNA is attempting to bankrupt Red Dice .3 Holdings, LLC through the Cannavest Action in the San Diego Superior Court, while attempting to 4 simultaneously remove the underlying action to arbitration ..." (Ex parte ap. At pg. 4, lines 7-10). 1 5 Dixie neglects to mention that RDH was not named as a defendant in the Cannavest Action until 6 after Dixie's counsel repeatedly claimed that RDH (the entity that Dixie purportedly is looking 7 after through its faux derivative claim in this action) was obligated to Cannavest. On September 6, 8 2013, counsel for Dixie, Robert Hinckley, sent an e-mail stating as follows: 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Regarding your Complaint, please be on notice that Red Dice is the proper defendant related to your causes of action. Left Bank LLC and Dixie Holdings are improperly named as defendants. The information which follows is conclusive evidence of this fact. We hereby demand that you amend your Complaint to remove Left Bank, LLC and Dixie Holdings, LLC as parties and add Red Dice Holdings as the correct party in interest. This detailed email serves to place you on notice of this defect in your pleading. Failure to amend accordingly will necessitate our office bringing an unnecessary motion to dismiss. Should we be forced to file said motion, we will seek our attorney fees based on the frivolous nature of the pleading. Nothing in this email serves to limit any and all defenses and claims we may bring as a result of your lawsuit. (See Ex. 1 to this Opposition). It is unconscionable that Dixie claims that MJNA "is attempting to bankrupt Red Dice Holdings, LLC through the Cannavest Action" when it was Dixie that insisted that FtDH should be added as a defendant in that action. Lastly, Dixie offers no evidence whatsoever to supports its claim that Cannavest is MJNA's "affiliate." Again, Dixie is simply trying to confuse the issues to avoid application of a clear and unambiguous arbitration provision that requires the sole members of RDH (MJNA and Dixie) to arbitrate any dispute that may arise under the RDH Operating Agreement. In summary, none of 26 27 28 I The "CannaVest action" is a separate lawsuit filed by CannaVest Corp. against Dixie and Left Bank, LLC that is unrelated to the instant action. Dixie's effort to link the cases is a frivolous effort to obfuscate the issues and avoid contractual arbitration in the instant case. 5 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE No. 37-2013-00058302-CU-BC-CTL DOCS 120497-000003/1856645.1
  6. 6. Dixie's unsupported contentions amounts to good cause justifying a revival of its expired right to respond to the petition to compel arbitration. IV. ARGUMENT The factual allegations of a petition to compel arbitration are deemed admitted if no response is timely served and filed. (C.C.P. § 1290; Taheri Law Group, A.P.C. v. Sorokurs 176 Cal.App.41h at 962). Although a court may relieve a party of its default for excusable neglect (C.C.P. § 473(b)), it requires satisfaction of an explicit statutory standard. The party moving for relief on the basis of "mistake, inadvertence, surprise, or excusable neglect" pursuant to C.C.P. § 473(b) must show specific facts demonstrating that one of these conditions was met. (Hopkins & Carley v. Gens (2011) 200 Cal.App.4th 1401, 1410). Dixie's ex parte application argues that it should be given additional time to respond to the petition to compel arbitration because it "mistakenly calendared" the deadline. As stated, Dixie used the wrong statute and misread the statute in arriving at its erroneous deadline of October 23, 2013. However, an attorney's mistake of law is charged to the client and is not a ground for relief when the "mistake" is "simply the result of professional incompetence, general ignorance of the law, or unjustifiable negligence in discovering the law." (Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1206; Standard Microsystems Corp. - v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868, 879). Cutting to the chase, even if Mr. Hinckley's declaration is regarded as an attorney's affidavit of fault (which it is not since it does not articulate specific facts that caused the failure to timely file the response), it does not entitle Dixie to relief because it was not based on a mistake of fact. (See Life Say. Bank v. Wilhelm (2000) 84 Cal.App.4th 174, 178 (An attorney's affidavit of fault does not prevent dismissal of an action based on running of the statute of limitations or entitle a party to relief from other time limitations on filing claims.); Tackett v. City of Huntington Beach (1994) 22 Cal.App.4th 60, 64-65 (Attorney's affidavit of fault does not entitle party to relief from claim-filing requirement under the Government Claims Act or excuse late filing of a claim.); 6 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE No. 37-2013-00058302-CU-BC-CIL DOCS 120497-000003/1856645.1
  7. 7. Douglas v. Willis (1994) 27 Cal.App.4th 287, 291 (Attorney's affidavit of fault does not entitle a party to relief from the time limit on filing a costs bill after judgment.); Leader v. Health Industries of America. Inc. (2001) 89 Cal.App.4th 603, 619 (Nor does an attorney affidavit of fault prevent a discretionary dismissal based on plaintiffs failure to file an amended complaint within the time allowed by the court.). Reliance upon the wrong statute and misreading the statute is a mistake of law, not a mistake of fact. 2 Here, denial of Dixie's ex parte application will not cause it to suffer severe harm such as dismissal or claims bar. In fact, denial does not even assure that Dixie will lose the petition to compel arbitration because the court is still free to disagree with MINA's legal conclusions as to why arbitration should be compelled. (See Taheri Law Group, A.P.C. v. Sorokurs 176 Cal.App.4 th at 962 — "allegations 'deemed admitted,' when a petition to vacate is not timely opposed, are only the factual allegations . . . not the legal conclusions). Conversely, MJNA will suffer severe prejudice if Dixie's extraordinarily late filing is permitted because MJNA will have no opportunity to file reply papers. In fact, the hearing on the petition to compel arbitration is set for November 1, 2013, and as of the filing of this opposition, October 28, 2013, MJNA still has not received Dixie's response to the petition which it claims was filed on October 23, 2013. This is entirely prejudicial and unfair to MJNA because it prevents it from filing reply papers thus providing an advantage to Dixie despite its total neglect in its untimely response that it has still failed to serve. Certainly, a mischaracterized ex parte application brought on an improper basis should not absolve Dixie of its transgressions. An example of excusable mistake of fact would be if Mr. Hinkley's assistant mistakenly entered the wrong date when calendaring the response deadline due to typographical error. 2 7 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE No. 37-2013-00058302-CU-BC-CTL DOES 111497-000003/1856645.1
  8. 8. V. CONCLUSION For the reasons stated, MJNA respectfully requests that the ex parte application be denied. DATED: October 28, 2013 PROCOPIO, CORY, HARGREAVES AND SAVITCH LLP By: --- Conct S. Todd Neal ar o. 174827) Jamie L. Altman (Bar No. 280075) Attorneys for Defendant Medical Marijuana, Inc., a California Corporation 8 DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION: CASE NO. 37-2013-00058302-CU-BC-CTL DOCS 120497-000003/1856645.1
  9. 9. EXHIBIT 1
  10. 10. Culp, Barbara Subject: RE: Cannavest invoices, etc From: Robert Hinckley [mailto:rhincklev@messner.coml Sent: Friday, September 06, 2013 6:09 PM To: Neal, S. Todd Cc: Tracey Zastrow Subject: FW: Cannavest invoices, etc Importance: High Todd: Regarding your Complaint, please be on notice that Red Dice is the proper defendant related to your causes of action. Left Bank LLC and Dixie Holdings are improperly named as defendants. The information which follows is conclusive evidence of this fact. We hereby demand that you amend your Complaint to remove Left Bank, LLC and Dixie Holdings, LLC as parties and add Red Dice Holdings as the , correct party in interest. This detailed email serves to place you on notice of this defect in your pleading. Failure to amend accordingly will necessitate our office bringing an unnecessary motion to dismiss. Should we be forced to file said motion, we will seek our attorney fees based on the frivolous nature of the pleading. Nothing in this email serves to limit any and all defenses and claims we may bring as a result of your lawsuit. Best, Rob Hinckley 1
  11. 11. MESSNER REEVES LLP Robert B. Hinckley, Jr. Partner Messner Reeves LLP 11620 lilshire Blvd., Suite 900 Los An eles, CA 90025 310 909 7440 main I 310 909 7889 direct I 303 807 8081 mobile I 310 889 0896 fax messner.com The information contained in this email message and the attachment are attorney privileged and confidential information intended only for the use of the individual or entity named above, lithe reader of this message is not the intended recipient, or the employee or agent responsible to deliver it to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in en -or, please immediately notify us by telephone at (303) 623-1800, destroy the original of this transmittal and delete this message from your computer's memory. Thank you. Tax Advice Notice: IRS Circular 230 requires us to advise you that, if this communication or any attachment contains any tax advice, the advice is not intended to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Please contact us if you have any questions about Circular 230. 2
  12. 12. 2 8 2013 I am a resident of the State of California, over the age of eiglikeit•WniiVRI-Party to the within action. My business address is PROCOPIO, CORY, HARGREAVES & SAVITCH LLP, 525 "B" Street, Suite 2200, San Diego, California 92101. On October 28, 2013, I served the within documents: DEFENDANT MEDICAL MARIJUANA, INC.'S OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION FOR EXTENSION OF TIME TO RESPOND TO PETITION TO COMPEL ARBITRATION BY ELECTRONIC SERVICE based upon court order or an agreement of the parties to accept service by electronic transmission, by electronically mailing the document(s) listed above to the e-mail address(es) set forth below, or as stated on the attached service list and/or by electronically notifying the parties set forth below that the document(s) listed above can be located and downloaded from the hyperlink provided. No error was received, within a reasonable time after the transmission, nor any electronic message or other indication that the transmission was unsuccessful. Robert B. Hinckley, Jr. Messner Reeves LLP 1430 Wynkoop Street, Suite 300 Denver, CO 80202 Tel: (303) 623-1800 Fax: (303) 623-0552 rhinckley@messner.com (State) I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. il (Federal) I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on October 28, 2013, at San Diego, California. garbara ulp 2 PROOF OF SERVICE: CASE No. 37-2013-00058302-CU-BC-CTL DOCS 120497-000003/1832352.1

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