ECO Property Group, LLC v. Snider Investments, LLC, et al

Case Number

19CV04971

Case Type

Hearing Date / Time

Wed, 08/13/2025 - 10:00

Nature of Proceedings

Motion of Cross-Complainant and Cross-Defendant Eli Owens to Vacate Judgment Due to Lack of Jurisdiction

Tentative Ruling

For Plaintiff ECO Property Group, LLC: Shahrokh Sheik, Jason D. Annigian

For Defendants and Cross-Complainants Morongo Equity Partners I, LLC, David Snider and Snider Investments, LLC: Robert B. Forouzandeh

For Cross-Complainant and Cross-Defendant Eli Owens: Reid A. Winthrop

[For additional appearances see list.]

                       

RULING

For the reasons set forth below, the motion of Eli Owens to vacate judgment is denied.

Background

This action commenced on September 17, 2019, and arises out of a cannabis business venture. In 2016, plaintiff ECO Property Group, LLC (“ECO”) and defendant Snider Investments, LLC (“SIL”) formed Morongo Equity Partners I, LLC (“MEPI”) for the purpose of constructing and developing a cannabis cultivation facility at 13310 Little Morongo Road, Desert Hot Springs, California. Pursuant to the MEPI operating agreement, SIL owned an 80% interest in the company and ECO owned a 20% interest. The managers of MEPI were SIL and SIL member, defendant David Snider (“Snider”). The Morongo Road property included a 46,425 sq. ft. greenhouse that was leased by MEPI to Seed to Soul Management (“Seed to Soul”), a cannabis cultivation company. MEPI later terminated the lease with Seed to Soul pursuant to a settlement agreement.

On June 23, 2020, ECO filed a derivative complaint on behalf of MEPI in Riverside County (“derivative action”). While the case was still pending in Riverside County, and as part of that action, ECO filed a Notice of Pendency of Action regarding the cannabis cultivation facility at 13310 Little Morongo Road, Desert Hot Springs. On September 1, 2020, this court ordered the Riverside case transferred and consolidated with this action.

On December 23, 2021, with leave of court, ECO filed its first amended complaint for: (1) Breach of Contract, (2) Breach of the Implied Covenant of Good Faith and Fair Dealing, (3) Breach of Fiduciary Duty of Loyalty, (4) Breach of Fiduciary Duty to Use Reasonable Care, (5) Conversion, (6) Money Had and Received, (7) Fraudulent Concealment, (8) Fraudulent Misrepresentation, (9) Declaratory Relief, (10) Violation of Corporations Code section 17704.10, (11) Violation of Corporations Code section 17713.07, (12) Violation of Corporations Code section 17713.06, and (13) Unfair Business Practices.

To summarize: ECO alleges that SIL and Snider breached the MEPI operating agreement and on September 17, 2019, filed its complaint for breach of contract, breach of fiduciary duty, conversion, fraudulent concealment, and unfair business practices.

In response, SIL cross-complained against ECO and its members Eli Owens (“Owens”), Roger MacFarlane (“MacFarlane), Scott Newby (“Newby”), and Gary Walker, Jr. (“Walker”) for fraud and rescission of the MEPI operating agreement. SIL alleged that it was fraudulently induced to enter into the MEPI operating agreement by Owens, McFarlane, Newby, and Walker, who falsely represented that Seed to Soul was experienced in large-scale cannabis operations and was fully capitalized. In a separate cross-action, MEPI sought rescission of the lease between MEPI and Seed to Soul, as well as rescission of the settlement agreement between the two parties. In still another cross-action, Owens, MacFarlane, Newby, and Walker asserted claims against MEPI for breach of the settlement agreement and against former Seed to Soul member Brent Buhrman (“Buhrman”) for breach of the Seed to Soul partnership agreement.

Trial of the action was divided into two phases. Phase 1, consisting of the SIL and MEPI cross-complaints, plus the cross-complaint of the Seed to Soul members, was tried over thirteen days in November and December 2021. Phase 2, consisting of ECO’s direct complaint has not yet taken place.

On January 20, 2022, the court entered its final statement of decision (“SOD”) for Phase 1. The court found in favor of SIL and MEPI on their cross-complaints for recission of the MEPI operating agreement, the commercial lease between MEPI and Seed to Soul, and the settlement agreement between MEPI and Seed to Soul, and for damages. The court also found in favor of cross-defendants on the cross-complaint of Seed to Soul members Owens, MacFarlane, Newby, and Walker.

The court found, among other things, that ECO fraudulently induced Snider and SIL into the operating agreement. As such, the operating agreement was rescinded. As a result, ECO is no longer a member of MEPI. The lease of the property and the settlement agreement between MEPI were also rescinded due to fraudulent inducement by ECO.

ECO appealed the judgment arguing that substantial evidence did not support the court’s finding of fraudulent inducement. The appellate court treated the appeal as a petition for an extraordinary writ and rejected ECO’s arguments. This court’s judgment, with respect to this aspect of the appeal, was affirmed.

The court of appeals findings included:

“We agree that the judgment on the cross-complaints fully adjudicated ECO’s derivative complaint.” “The rescission of the Operating Agreement means that ECO lacked standing to bring the derivative action on behalf of Morongo because it was never a member of the limited liability company.”

On October 21, 2024, as a result of the appellate findings, the court prepared an amended judgment after appeal. On October 24, 2024, MEPI filed a notice of entry of judgment.

Though not pertinent to the present motion, on January 21, 2025, ECO filed its SAC, against SIL and Snider, for: (1) Fraud, and (2) Restitution for Unjust Enrichment .

Owens now challenges the judgment on Phase 1, by the filing of a motion to vacate judgment due to lack of subject matter jurisdiction, essentially arguing that the court lacked jurisdiction and that SIL and MEPI lacked standing to bring the action.

SIL and MEPI oppose the motion

Analysis

Timeliness of Motion

“The court may, upon motion of the injured party, or its own motion, correct clerical mistakes in its judgment or orders as entered, so as to conform to the judgment or order directed, and may, on motion of either party after notice to the other party, set aside any void judgment or order.” (Code Civ. Proc., § 473, subd. (d).)

Code of Civil Procedure section 473, subdivision (b), provides in relevant part:

“The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Italics added.)

“An order is considered void on its face only when the invalidity is apparent from an inspection of the judgment roll or court record without consideration of extrinsic evidence. [Citations.] There is no time limit to attack a judgment void on its face. [Citations.] If the invalidity can be shown only through consideration of extrinsic evidence, such as declarations or testimony, the order is not void on its face. Such an order must be challenged within the six-month time limit prescribed by section 473, subdivision (b), or by an independent action in equity. [Citations.]” (Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009, 1021.)

“ ‘ “[A] judgment or order that is invalid on the face of the record . . . may be set aside on motion, with no limit on the time within which the motion must be made.” ’ ” [Citation.] This rule has also been applied when uncontested extrinsic evidence shows that the defendant was never properly served. [Citation.] Third, a judgment or order valid on its face but claimed to be void based on extrinsic evidence may be attacked in an independent equitable action without time limits. [Citations.]” (California Capital Ins. Co. v. Hoehn (2024) 17 Cal.5th 207, 215.)

“ ‘A judgment that is void on the face of the record is subject to either direct or collateral attack at any time. [Citations.] To prove that the judgment is void, the party challenging the judgment is limited to the judgment roll, i.e., no extrinsic evidence is allowed.’ ” [Citations.]” (JHVS Group, LLC v. Slate (2024) 107 Cal.App.5th 30, 36.)

Here, the judgment is not void on its face and Owens appears to concede that it is not. Rather, Owens’ motion relies heavily on extrinsic evidence in an attempt to prove the judgment void for lack of standing. He has presented 34 separate exhibits which contain over 1000 pages. Much of the evidence presented could not be considered by the court, even if the motion had been timely, because it consists of extensive hearsay and lacks any authentication. The extrinsic evidence is not, despite Owens’ argument to the contrary, uncontested. Snider, SIL, and MEPI filed 22 objections to Owens’ exhibits and argue against what Owens purports the documents reflect. As such, the motion was required to be filed and served no later than six months after judgment or proceed by way of a separate independent equitable action.

The final amended judgment in this action was entered on October 21, 2024. The last day that the motion could have been filed was Monday, April 21, 2025. The present motion was filed on July 16, 2025.

The motion is untimely and will be denied. Further, the court has previously considered, and rejected, arguments contesting the standing of SIL and MEPI to bring the action. Neither Owens nor any other party sought reconsideration nor did any party appeal the court’s rulings in that regard.