Filed 7/21/17 Cultured Gourmet v. Klein CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE


CULTURED GOURMET, LLC et al.,
Plaintiffs and Respondents,
v.
ERIC A. KLEIN,
Defendant and Appellant.

A148469

(San Francisco County
Super. Ct. No. CGC15544613)


Defendant and appellant Eric A. Klein appeals from the trial court’s order denying his motion to purchase respondent Karen W. Diggs’ membership interest in respondent Cultured Gourmet, LLC, pursuant to Corporations Code, section 17707.03, subdivision (c). The court did not err.
Appellant and respondent Diggs are the sole members of Cultured Gourmet, LLC (LLC). In March 2015, respondents filed the present action against appellant, asserting causes of action for, among other things, expulsion of appellant from the LLC, involuntary dissolution of the LLC, breach of contract, and fraud. In November 2015, respondents filed an amended complaint asserting the same causes of action.
On May 4, 2016, just days before the May 9 scheduled trial date, appellant moved for purchase of Diggs’ interest in the LLC and stay of proceedings pursuant to section 17707.03, subdivision (c). Section 17707.03, subdivision (c)(1) provides in relevant part, “In any suit for judicial dissolution, the other members may avoid the dissolution of the limited liability company by purchasing for cash the membership interests owned by the members so initiating the proceeding . . . at their fair market value.” Appellant’s declaration accompanying the motion stated he “desire[d] to purchase Diggs[’s] membership interest for the sum of $0.00, the fair market value of her interest as determined by her disclosed expert in this matter. Nonetheless I am willing to pay her a nominal sum of $1,500.00 for her membership interest.” The trial court denied the motion on several grounds, including that the motion was improperly brought as a motion in limine and that the request was “[inapposite] here since the gravamen of the complaint in this matter . . . [is an] order for expulsion by reason of [appellant’s] alleged wrongful conduct. . .” The court stated the denial was also “for all of the reasons set forth in the opposition by [respondents] and in the supplemental authorities in opposition.” Among other things, respondents had argued that appellant had “waived any right to invoke this process by waiting over a year” and that appellant had failed to post the bond required by section 17707.03, subdivision (c)(2).
The trial court did not err. First, the doctrine of laches “may bar relief in equity to those who neglect their rights, where such neglect operates to the detriment of others.” (Bono v. Clark (2002) 103 Cal.App.4th 1409, 1417.) We review the trial court’s determination for an abuse of discretion. (Ibid.) In the present case, appellant could have initiated a proceeding under section 17707.03, subdivision (c) at any point after March 2015, when respondents filed the original complaint including a dissolution cause of action. Instead, appellant waited over a year and filed his motion less than a week before trial. If the trial court had granted the motion and stayed the proceedings for a determination of the fair market value of Diggs’ membership interest (see § 17707.03, subds. (c)(2) & (c)(3)), it would have prejudiced respondents, who sought to recover substantial funds that appellant allegedly wrongfully took from the LLC. On appeal, appellant does not deny that motions under section 17707.03, subdivision (c) may be barred on the ground of laches, but he suggests his delay was excusable because he promptly brought his motion after taking deposition testimony from respondents’ expert that supported a $0 fair market valuation for Diggs’ membership interest. However, although that alleged testimony may have made the purchase more attractive, Diggs provided appellant information about the LLC’s financial condition and operational challenges on February 20, April 7, and December 29, 2015. Appellant fails to demonstrate that information was insufficient basis for him to estimate the fair market value of Diggs’ membership interest. Considering the proximity of the motion to commencement of trial, the trial court did not abuse its discretion in concluding appellant’s delay was unreasonable.
Second, as respondents pointed out below and in their brief on appeal, appellant failed to post the bond required under section 17707.03, subdivision (c)(2). That section directs a trial court to “stay the winding up and dissolution proceeding” and “proceed to ascertain and fix the fair market value of the membership interests” if the party seeking to purchase the membership interest “give[s] bond with sufficient security to pay the estimated reasonable expenses, including attorney’s fees” of the party seeking dissolution (should the party ultimately be entitled to such fees and expenses under subdivision (c)(3)). In his reply brief on appeal, appellant does not dispute the applicability of the bond requirement, and he cites to nothing in the record showing he provided such a bond. Accordingly, he has not shown the trial court erred in denying his motion.
DISPOSITION
The trial court’s order denying appellant’s motion under section 17707.03, subdivision (c), is affirmed. Respondents are granted their costs on appeal.








SIMONS, J.



We concur.




JONES, P.J.




NEEDHAM, J.