Case: In re L.G. - 2DCA suppresses evidence from an illegal search
Decided: 2/11/2025
Docket
Case Overview:
Procedural posture: Appeal from the superior court’s order denying the defendant’s motion to suppress
Plaintiff-respondent: The People of the State of California
Defendant-appellant: L.G.
Second District Court of Appeal, Division Eight case no.: B331298
Appeal from: Los Angeles Superior Court (Lawson, J.)
Advocates: Steven Torres for L.G.; Ryan M. Smith for the People
Facts:
Officers Victor Quezada and Diego Millan were patrolling Harbor City Crips gang territory after dark. Millan saw three young men standing on a sidewalk and recognized one—not defendant L.G.—as a gang member. The officers pulled up to the men in their marked cruiser. Officer Quezada tried to engage the men in conversation. L.G. did not respond. When Quezada directed questions at L.G., who was 15 years old, L.G. did not look at the officers. L.G. looked sideways and at the ground. The interaction lasted about a minute.
Millan and Quezada suspected L.G. was carrying illegal drugs or a gun. The two officers left the police cruiser. Quezada told L.G. and the others to “Step out to the street! Get your hands up!” L.G. “took off at a run, clutching his waistband as if he were holding a gun.” The officers caught up to L.G. and found that L.G. was carrying a gun.
Question:
(1) Did the officers detain L.G. and, if so, was the detention and subsequent search improper?
Answer:
(1) Yes, the officers detained L.G. Yes, the detention and search were improper.
Once the police said, “Step out to the street! Get your hands up!” and advanced toward L.G., “reasonable people in L.G.’s situation would not believe they were free to leave.” “The objective observer would conclude officers were getting out of the car for a reason beyond casual conversation.”
The officers lacked a particularized and objective basis for believing L.G. was breaking the law. L.G.’s nervousness was not enough. Being nervous and deliberately avoiding police interaction did not reasonably suggest criminal activity was afoot. The gang status of one of the other men—not L.G.—”was relevant but not a license to frisk his companions anytime and anywhere.” The fact that L.G. was eventually caught carrying a gun does not change the analysis.
Outcome:
The Second District Court of Appeal, Division Eight reversed the judgment, vacated the adjudication, and remanded the matter with instructions to the superior court to enter a new order granting L.G.’s motion to suppress.
Justice Wiley authored the opinion, joined by Justices Stratton and Grimes.
Links:
Westlaw: 2025 WL 455479
Case: Optronic Techs., Inc. v. Celestron Acquisition, LLC - 2DCA revives plaintiff’s fraudulent-transfer claim based on conspiracy and/or aiding-and-abetting theory of liability
Certified for Partial Publication: 2/10/2025
Docket
Case Overview:
Procedural posture: Appeal from the superior court’s order sustaining defendant’s demurrer without leave to amend
Plaintiff-appellant: Optronic Technologies, Inc. (Orion)
Defendant-respondent: Celestron Acquisition, LLC
Second District Court of Appeal, Division Four case no.: B330798
Appeal from: Los Angeles Superior Court (Fruin, J.)
Advocates: J. Noah Hagey, Matthew Borden, and Kory DeClark for Optronic; Christopher Frost, Joshua Stambaugh, and Nicholas Lauber for Celestron
Facts:
Antitrust Litigation
California-based Optronic Technologies, Inc., d/b/a Orion Telescopes & Binoculars (Orion) sued Chinese telescope manufacturer Ningbo Sunny and its subsidiaries for antitrust violations. Orion alleged that Ningbo Sunny and the other defendants colluded and conspired with third-party telescope manufacturers in China to fix prices, control and restrict output, and divide the $200 million market for manufacturing and distribution of recreational telescopes and components sold in the United States.
Orion’s federal antitrust complaint alleged that there were unnamed “settling parties” who participated in the alleged antitrust conduct but had settled and resolved Orion’s claims. On appeal, Orion alleged that these settling parties included Celestron Acquisition, LLC (Celestron).
In November 2019, a jury ruled in Orion’s favor in the antitrust action. The federal district court entered a judgment in favor of Orion for $54 million, which included treble damages.
Under Federal Rule of Civil Procedure 62(a), Orion could not enforce the judgment for 30 days. The stay of the execution of the judgment was set to expire on January 5, 2020.
Before judgment was entered, Orion moved for a restraining order to bar Ningbo Sunny from removing assets, including accounts receivable, from the United States.
On December 10, 2019, Ningbo Sunny filed a declaration by its president that stated, in part, that “Ningbo will not transfer any of its cash or other assets located in the United States to a location outside of the United States other than in the ordinary course of business while post-trial motions and appeals remain pending.”
The district court denied Orion’s application for a restraining order.
Celestron had received inventory from Ningbo Sunny throughout 2019 and owed Ningbo Sunny a “substantial” sum for that inventory. Celestron paid Ningbo Sunny on a “net 100” basis, meaning Celestron paid for any inventory within 100 days of receiving the invoice for the inventory.
On January 2, 2020, Celestron paid Ningbo Sunny $4,184,057.70 for outstanding invoices. On January 13, 2020, Orion served Celestron with a notice of levy under writ of execution. On January 17, 2020, the district court issued an order assigning all of Ningbo Sunny’s Celestron-based accounts receivable to Orion.
When Orion discovered Celestron’s January 2 payment, Orion moved for sanctions against Ningbo Sunny in the federal district court. Orion noted that under the Ningbo Sunny-Celestron payment terms, payment for invoices from October or later was due no earlier than mid-January 2020. In seeking sanctions, Orion introduced an email dated January 1, 2020 from Ningbo Sunny to Celestron, in which Ningbo Sunny asked Celestron to “pay as much payment as possible this week.” The federal district court granted Orion’s motion for sanctions in March 2020.
This Litigation
In November 2022, Orion filed a complaint against Celestron. Orion alleged that “Celestron made early payment of the accounts receivable to Ningbo Sunny outside the ordinary course of business, knowing that Ningbo Sunny had avoided an injunction that would have prevented such a transfer by making a fraudulent representation under oath to the District Court that it would not make such transfers.”
Orion asserted two claims against Celestron. Orion’s first claim was for actual fraudulent transfer under the Uniform Voidable Transactions Act, Civil Code § 3439.04(a). Orion claimed that Celestron was directly liable for fraudulent transfer and vicariously liable for aiding, abetting, and conspiring in the wrongful conduct alleged in the complaint. Orion’s second claim was for tortious interference.
Celestron filed a demurrer, a motion to strike portions of the complaint, and a special motion to strike under the anti-SLAPP statute, Code of Civil Procedure § 425.16.
The superior court sustained Celestron’s demurrer without leave to amend. For the UTVA claim, the superior court stated that the statute did not “apply to Celestron’s payment of a business debt it owed” to Ningbo Sunny. The superior court reasoned that the only transfer that the UTVA makes voidable is one that a debtor owes to a creditor, but that Orion was not Celestron’s creditor. The superior court did not address Orion’s conspiracy or aiding-and-abetting theories of fraudulent-transfer liability.
The superior court stated that counsel had stipulated that Celestron’s motion to strike and anti-SLAPP motion were withdrawn. The superior court concluded the proceedings. Orion filed a notice of appeal.
Questions:
(1)
Did Orion plead a viable fraudulent-transfer claim against Celestron on a theory of direct liability—that Celestron could be liable under the UTVA either as a “debtor” or as a “person for whose benefit the transfer was made”?
(2)
Did Orion plead a viable fraudulent-transfer claim against Celestron on a theory of vicarious liability—that Celestron could be liable as a coconspirator or an aider and abettor to Ningbo Sunny’s fraudulent transfer?
Answers:
(1)
No, on the properly pleaded factual allegations here, Celestron could not be liable under the UTVA as a “debtor” or as a “person for whose benefit the transfer was made.”
Under the UTVA, a “transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation” with “actual intent to hinder, delay, or defraud any creditor of the debtor.”
The Second District Court of Appeal found no authority holding that a debtor’s debtor (Celestron) could be considered the creditor’s (Orion’s) debtor for purposes of the UTVA. The Court was “not persuaded that Celestron, a stranger to the judgment between Orion and Ningbo Sunny, became Orion’s debtor because Ningbo Sunny was Orion’s debtor.”
The Court rejected Orion’s argument that Celestron could be directly liable for fraudulent transfer because Celestron was a transfer beneficiary under the UTVA. The UTVA allows a creditor to “recover judgment for the value of the asset transferred,” and the “judgment may be entered against” the “first transferee of the asset or the person for whose benefit the transfer was made.” Civil Code § 3439.08(b)(1)(A).
Transfer beneficiary status depends on three factors: (1) whether the beneficiary actually received the benefit; (2) whether the benefit is quantifiable; and (3) whether the benefit is accessible to the beneficiary.
Celestron claimed that it did not “receive” the transfer—Celestron paid Ningbo Sunny. Celestron said that any payment-derived “benefit” in its business relationship with Ningbo Sunny was not quantifiable or subject to disgorgement. The Court agreed with Celestron.
(2)
Yes, Orion’s complaint adequately stated a claim for conspiracy and/or aiding and abetting a fraudulent transfer. Orion alleged that Celestron and Ningbo Sunny arranged and completed the transfer outside the course of ordinary business for the purpose of thwarding Orion’s efforts to collect on its judgment against Ningbo Sunny. Orion alleged that Celestron was aware of Orion’s judgment and Ningbo Sunny’s president’s declaration about not transferring assets out of the United States. Orion alleged that Celestron “directly participated in a scheme to orchestrate the Fraudulent Transfer,” and was “separately liable because” Celestron “aided and abetted and conspired in the wrongful conduct.” The Court found that these allegations were sufficient to state a claim.
The Court rejected Celestron’s argument that Orion had not adequately alleged damages. Celestron argued that because Orion already had a judgment against Ningbo Sunny, recovering the roughly $4.2 million from Celestron would constitute a prohibited double recovery. The Court noted that Orion sought declaratory relief, costs, and the attorney fees Orion incurred in attempting to recover the transferred assets. The Court continued: “Damages claims such as costs of suit may ‘fall within the scope of recoverable tort damages and satisfy the damage element for a fraudulent transfer claim for purposes of demurrer.’” (Citation omitted.)
Outcome:
The Second District Court of Appeal, Division Four reversed the judgment of the superior court and remanded. The Second District Court of Appeal directed the superior court to enter a new order overruling Celestron’s demurrer on the fraudulent-transfer claim and sustaining the demurrer on the tortious-interference claim.
Justice Collins authored the opinion, joined by Justices Currey and Zukin.
Links:
Westlaw: 2025 WL 444853
Case: Gharibian v. Wawanesa Gen. Ins. Co. - 2DCA holds that removable wildfire debris did not cause direct physical loss to plaintiffs’ property in insurance suit
Decided: 2/7/2025
Docket
Case Overview:
Procedural posture: Appeal from the Los Angeles Superior Court’s order granting defendant’s motion for summary judgment
Plaintiffs-appellants: Hovik Gharibian, et al.
Defendant-respondent: Wawanesa General Insurance Company
Second District Court of Appeal, Division Two case no.: B325859
Appeal from: Los Angeles Superior Court (Meiers, J.)
Advocates: Natalie Suri for Gharibian; John Edson and Matthew Halgren for Wawanesa
Question:
(1) Debris from a nearby wildfire entered plaintiffs’ home and property. The wildfire debris could be cleaned by wiping the surfaces, power washing the outside, and other remedial measures. Plaintiffs’ insurance policy covered “direct physical loss to property.”
Did the superior court err in concluding that the wildfire debris was not evidence of “direct physical loss” within the meaning of plaintiffs’ policy?
Answer:
(1) No, the wildfire debris did not cause “direct physical loss” within the meaning of the policy. The superior court did not err. California law requires that a direct physical loss entail “a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury or impairment of the property as property.”
The California Supreme Court’s decision in Another Planet Entertainment, LLC v. Vigilant Ins. Co., 15 Cal. 5th 1106, 1117 (2024), governs the plaintiffs’ case. In Another Planet, the California Supreme Court concluded that allegations of the presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy.
The fact that Wawanesa made payments to the plaintiffs even though there was no coverage is irrelevant to resolving the case.
Facts:
The plaintiffs obtained a Wawanesa homeowner insurance policy that insured against “direct physical loss to property.” One month later, the Saddle Ridge wildfire began within a mile of plaintiffs’ property. Plaintiffs’ property was not burned, but the debris entered their home and fell outside their home and into their swimming pool.
The plaintiffs and Wawanesa hired professionals to determine the cost of cleaning the plaintiffs’ house. Wawanesa hired PuroClean, which estimated $20,718.09 for cleaning. PuroClean was willing to perform the quoted services at the estimated cost, but the plaintiffs did not hire PuroClean. Plaintiffs’ professionals estimated $35,553.10 to clean and remediate.
Plaintiffs sued Wawanesa, alleging claims for breach of contract and breach of the duty of good faith and fair dealing. Wawanesa moved for summary judgment against the plaintiffs, arguing that there was no evidence of a physical loss that fell within the scope of the policy’s coverage. The superior court granted summary judgment in favor of Wawanesa.
Outcome:
The Second District Court of Appeal, Division Two affirmed the superior court’s grant of summary judgment to Wawanesa.
Justice Ashmann-Gerst authored the opinion, joined by Justices Lui and Chavez.
Links:
Westlaw: 2025 WL 426092
Rachel Hudgins and Scott DeVries, Where There’s Smoke, Is There Coverage? A Closer Look at Bottega, LLC v. National Surety and Gharibian v. Wawanesa. Hunton Insurance Recovery Blog. February 13, 2025.
Case: I.C. v. Compton Unified School District - 2DCA affirms trial win for teacher in student-altercation suit
Decided: 2/6/2025
Docket
Case Overview:
Procedural posture: Appeal from the Los Angeles Superior Court’s judgment and order denying plaintiff’s motion for judgment notwithstanding the verdict
Plaintiff-appellant: I.C.
Defendants-respondents: Compton Unified School District, et al.
Second District Court of Appeal, Division Eight case no.: B322148
Appeal from: Los Angeles Superior Court (Long, J.)
Advocates: Rosa Hirji and Alexander Rodriguez for I.C.; Terence Gallagher and Leslie Burnet for Compton Unified
Question:
(1) In a negligence case, did the superior court err by refusing to give six plaintiff-requested jury instructions relating to the special relationship between school personnel and students?
Answer:
(1) No, the superior court did not err by refusing to give the instructions. The school’s duty to prevent harm to the plaintiff was never disputed, so there was no need to instruct the jury on the “special relationship.” The standard of care is reasonableness under the circumstances. Even if the trial court erred, the plaintiff failed to satisfy his burden to show a miscarriage of justice.
Outcome:
The Second District Court of Appeal, Division Eight affirmed the superior court’s judgment and order denying plaintiff’s motion for judgment notwithstanding the verdict and alternatively for a new trial.
Justice Grimes authored the opinion, joined by Justices Stratton and Viramontes.
Links:
Westlaw: 2025 WL 414242