Insolvency Services Group, Inc. v. Michelangelo Leasing, Inc.

NOTICE OF MOTION AND MOTION to Dismiss or Strike Portions of Cross-Complaint

C.D. Cal.November 7, 2016

1 STEVEN M. SPECTOR (SBN: 51623) ss ector buchalter.com 2 R E L . ALLYN BN: 143531) rail buchalter. com 3 BU A TER NEMER A Professional Corporation 4 1000 Wilshire Boulevard, Suite 1500 Los Angeles CA 90017-2457 5 Tel: (213) 891-0700; Fax: (213) 896-0400 6 Attorneys for Plaintiff and Cross-Defendant INSOLVENCY SERVICES GROUP, INC. a California corporation, 7 as Assig_nee for the Benefit of Creditors of Ryan's Holding, Inc., Ryan's Express Transportation Services;., Inc., Ryan's Express Transportation, Inc., 8 Ryan's Express Motorcoach, Inc. and L~J Transportation, Inc. 9 10 11 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 12 INSOLVENCY SERVICES GROUP, INC., a California COfRoration, as 13 Assignee for the Benefit of Creditors ofRyan's ~olding, ~nc., Ryan's Express 14 TransRortatwn Services, Inc., Ryan s Express Transportation, Inc., 15 Ryan's Express Motorcoach, Inc. and LSJ Transportation, Inc., 16 17 18 vs. Plaintiff, MICHELANGELO LEASING, INC., 19 an Arizona corporation doing business as Divine Transportation, 20 Defendant. 21 22 AND RELATED CROSS-ACTION. 23 24 25 26 27 28 Case No. 2:16-cv-02710-RGK (AJWx) NOTICE OF MOTION AND MOTION TO DISMISS OR STRIKE PORTIONS OF CROSS- COMPLAINT PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 12(B)(6) AND 12(F), OR, ALTERNATIVELY FOR MORE DEFINITE STATEMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: Time: Crtrm: Judge: December 19, 20 16 9:00a.m. 850 Hon. R. Gary Klausner BUCHALTER NEMER BN 23923006vl MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) A PROFESSIONAL CORPORATiON Los ANGELES Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 1 of 23 Page ID #:233 1 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: 2 PLEASE TAKE NOTICE that on December 19,2016, at 9:00a.m., or as 3 soon thereafter as the matter may be heard in Courtroom 850 of the above entitled 4 Court located at 255 East Temple Street, Los Angeles, California, plaintiff and 5 cross-defendant Insolvency Services Group, Inc., as Assignee for the Benefit of 6 Creditors of Ryan's Holding, Inc., Ryan's Express Transportation Services, Inc., 7 Ryan's Express Transportation, Inc., Ryan's Express Motorcoach, Inc. and 8 LSJ Transportation, Inc. ("Plaintiff' or "ISG") will, and hereby does, move this 9 Court to dismiss or strike portions of the "Amended Answer & Cross-Complaint" 10 [Dkt. Nos. 29 and 30] filed by defendant and cross-complainant Michelangelo 11 Leasing, Inc., dba Devine Transportation ("Defendant" or "MLI"), or alternatively, 12 for a more definite statement, as follows: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. ISG moves to dismiss the First and Second Counts of the "Cross- Complaint" for Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing because, as an assignee for the benefit of creditors, ISG did not assume any obligations under the subject asset purchase agreement ("APA") between MLI and Ryan's Holding, Inc. and its various subsidiaries and affiliates ("Ryan's Companies"), and MLI expressly agreed that it would have no recourse under the AP A against ISG for any claim arising thereunder. 2. ISG moves to dismiss the Third Count of the "Cross-Complaint" for "Negligent/Reckless/Intentional Misrepresentation" because all alleged representations were made, if at all, by Ryan's Companies, not by ISG, and MLI expressly agreed that all representations of Ryan's companies were limited to them and did not include ISG. MLI further agreed that it would have no recourse under the AP A against ISG for any claim arising thereunder. 3. ISG moves to dismiss the Fourth Count of the "Cross-Complaint" for Indemnity because ISG, as assignee for the benefit of creditors, ISG undertook no duties of indemnification respecting MLI, and further MLI expressly agreed that it BUCHALTER NEMER BN 23923006vl 1 A PROF!:SSIONAL CORPORATION Los ANGELES MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 2 of 23 Page ID #:234 1 would have no recourse under the AP A against ISG for any claim arising 2 thereunder. 3 4. ISG also moves to strike the following Paragraphs of Defendant's 4 "Amended Answer & Cross-Complaint" because they contain redundant, 5 immaterial, impertinent or scandalous matters: 6 7 8 9 10 11 12 13 (a) Paragraphs 1 through 58 of the "Cross-Complaint" and Prayers A through H thereto, as they were brought without leave of this Court pursuant to Federal Rule of Civil Procedure 15(a)(2); (b) Paragraphs 18 through 24 of the "Cross-Complaint" alleging "Fraudulent Transfer of Assets" by Ryan's Companies, not ISG. Ryan's Companies are not named as cross-defendants, and no claim is stated against ISG· ' (c) Paragraphs 25 through 27 of the "Cross-Complaint" alleging 14 "Additional Misrepresentations and Offsets" by Ryan's Companies, not ISG. 15 Ryan's Companies are not named as cross-defendants, and no claim is stated 16 against ISG; and 17 (d) Paragraphs 28 through 30 ofthe "Cross-Complaint" alleging 18 "Counter-Defendants' Agreed Upon Offsets" as immaterial to any alleged 19 breach of the APA by Ryan's Companies. Moreover, a party who is already 20 in breach cannot sue to enforce that very same contract. 21 These claims and allegations in the "Cross-Complaint" should be dismissed 22 on the grounds that they fail to state a claim upon which relief can be granted or are 23 indefinite, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, or 24 stricken on the grounds that they constitute redundant, immaterial, impertinent or 25 scandalous matter, pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. 26 This motion is made following the conference of counsel, which took place 27 on October 28, 2016, pursuant to L.R. 7-3. 28 BUCHALTER NEMER BN 23923006v[ 2 Los ANGELES -----,M~OV'iTR'TI7"'iO~N,.T'i"r.O~D;;"'i'I7"1'SMii"7ii"YIS..,.Srr-rA-..Ni'TiD...--.S"ViTn'iiR.....,IFTKT"i'E;;-C7''"'iE.,..,.C ..... R .,O""'S"''7S..--7"C'170YiiM.....,.,.,.,P....-L-.A"'I~Nfl"iT,-- Los ANGELES Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 6 of 23 Page ID #:238 1 2 TABLE OF AUTHORITIES (cont.) PAGE 3 In re Stac Electronics Securities Litig., 89 F.3d 1399 (9th Cir. 1996) ................................................................................... 6 4 In re US. Aggregates, Inc. Securities Litigation, 5 235 F.Supp.2d 1063 (N.D. Cal. 2002) .................................................................... 5 6 Jenkins v. Commonwealth Land Title Ins. Co., 95 F.3d 791 (9th Cir.1996) .................................................................................... 12 7 Kaplan v. Rose, 8 49 F.3d 1363 (9th Cir.l994), cert. denied, 516 U.S. 810 (1995) .......................... 11 9 McGlinchy_ v. Shell Chern. Co., 845 F.2d 802 (9th Cir. 1988) ................................................................................... 5 10 Rossmoor Sanitation, Inc. v. Pylon, Inc., 11 13 Ca1.3d 622 (1975) ............................................................................................. 12 12 Service By Medgllion, Inc. v. Clorox Co., 44 Cal.App.4t 1807 (1996) ................................................................................... 10 13 Sherwood Partne1;s v. EOP-Marina Bus, 14 153 Cal.App.4t 977 (2007) ............................................................................. 6, 7, 8 15 Stinson v. Home Ins. Co., 690 F.Supp. 882 (N.D. Cal. 1988) .......................................................................... 6 16 Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group, 17 143 Cal.App.4th 1036 (2006) ................................................................................ 13 18 Tatun_g Co. v. Shu Tze Hsu, 43 F. Supp. 3d 1036 (C.D. Cal. 2014) ..................................................................... 6 19 Vess v. Ciba-Geigy_ Coz-p. USA 20 317F.3d1097l9thCir.2003) .......................................................................... 11, 12 21 w4~~~1.'A~g~fd 6·olfitf,975) ..................................................................................... 1o 22 West v. Superior Court, 23 27 Cal.App.4th 1625 (1994) .................................................................................. 13 24 w6~3rf!.~{l6\nlc~iliuci:~ 19Tfi)~~: ................................................................................ 6 25 26 27 28 BUCHALTER NEMER ~B:::_:N__::.:23=92=30=06~vl_-----.,.-~.,....,.,-~TFI"'":~~,.,......,.,....,.....,...~llnl ~L"fFii~FY7"'i',..--,..~'l>?'n",.......,..,~~.---r~~ AP'o'mw"cCoeeo,AnoN MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Los ANGE!.ES Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 7 of 23 Page ID #:239 1 2 3 Rules TABLE OF AUTHORITIES (cont.) PAGE 4 Fed.R.Civ.P. 15(a)(1)(A) .......................................................................................... 14 5 Fed.R.Civ.P. 15(a)(2) ............................................................................................ 2, 14 6 Fed.R.Civ.P. 9(b) ...................................................................................................... 11 7 Fed.R.Civ.P. 12(b)(6) ......................................................................................... 2, 5, 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BUCHALTER NEMER _:B:.:..:_N=23=923::.:::_:00:.:::_:6v_:_l --....--.........-..,..,........,......,.,....~~~~.......:1:....;-V~~~........,.,.~,..........,..,.....,...--..-.-.~~...,........,&'i'i'ii'i- Ar'O>""'"N"Co"o""oN MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Los ANGELES Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 8 of 23 Page ID #:240 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 I. 3 INTRODUCTION 4 ISG's involvement in this matter is in the fiduciary capacity as an assignee 5 for the benefit of creditors ("ABC"). An ABC is an out-of-court liquidation 6 proceeding commonly used as a means of winding up the affairs and disposing of 7 the assets of an insolvent entity. Before the ABC, the Ryan's Companies was a 8 transportation company. They maintained a fleet of vehicles and buses which were 9 leased or rented to third parties. On or about January 7, 2015, ISG became the 10 assignee for the benefit of creditors of Ryan's Companies as a result of the entry 11 into and execution by each of the Ryan's Companies of a General Assignment. 12 Prior thereto, on or about December 27, 2014, Ryan's Companies and 13 Defendant MLI had entered into an Asset Purchase Agreement, as amended 14 (collectively, the "AP A"), pursuant to which the rights and obligations of MLI in 15 connection with the asset purchase transaction are expressly defined. By virtue of 16 the ABC, ISG became entitled to certain benefits under the AP A and MLI' s 1 7 performance thereof. This action was filed as a result of MLI' s failure to perform 18 its specifically defined contractual obligations. 19 Aged Receivables: As a result of Ryan's Companies' ABC and pursuant to 20 Section 1.2 of the AP A, Plaintiff, in its capacity as the assignee for the benefit of 21 creditors, became the owner of and there was excluded from the purchase of assets 22 under the AP A by MLI certain assets described as "accounts receivable aged sixty 23 (60) days past invoice date as of the Closing Date" of January 7, 2015 (the "Aged 24 Receivables"). Under Sections 2.5 and 7.3 of the APA, MLI became the agent and 25 trustee ofiSG to collect the Aged Receivables, hold the collected amounts in trust, 26 and pay over to ISG 100% of collections of Aged Receivables net of actual 27 collection costs (but not to exceed 2% of the collected amount). Based upon 28 information provided to ISG by MLI itself, Plaintiff believes that it should have BUCHALTER NEMER BN 23923006vl 1 A PROFESSIONAl. CORPORATION Los ANGELES MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 9 of 23 Page ID #:241 1 received not less than $258,175.86 in Aged Receivables collections, minus the 2 2% collection costs. ISG, however, has not received this amount. 3 Unearned Insurance Premiums: As a result of the ABC and pursuant to 4 Section 13 of the Amendment (which adds Section 12.7 to the APA), no later than 5 150 days from the Closing Date, Defendant was to pay to Plaintiff the value of any 6 unearned insurance premiums to which Ryan's Companies would have been 7 entitled as of January 1, 2015 for insurance benefits assigned by Ryan's Companies 8 to Defendant (the "Unearned Insurance Premiums"). Ryan's Companies had pre- 9 paid insurance premiums and MLI "took over" the policy. As a result, MLI agreed 10 to reimburse the amount of the pre-paid premiums which provided it with insurance 11 coverage. Instead of paying at the closing of the asset sale, the payment obligation 12 was postponed for 150 days. However, MLI never paid. As a result of information 13 provided to ISG by MLI, Plaintiffbelieves that the value of the Unearned Insurance 14 Premiums is not less than $198,506. 15 Damages: Prior to commencement of this action, with regard to the Aged 16 Receivables and Unearned Insurance Premiums, Defendant paid to Plaintiff in 17 installments the total sum of $195,000- leaving an unpaid balance owing to 18 Plaintiff of not less than $261,681.86. Plaintiff is also legally entitled to recover 19 pre-judgment interest and attorneys' fees. 20 Instead of paying the balance of proceeds of the Aged Receivables and 21 Unearned Insurance Premiums to ISG as required by the AP A, MLI filed what it 22 styled as a "Cross-Complaint," which actually appears to be a counterclaim, for 23 various breaches and representations allegedly made by Ryan 's Companies under 24 the AP A. Plaintiff, however, is expressly not susceptible to liability for these 25 alleged breached and representations a matter of law. 26 Non-recourse against Plaintiff: Significant to the present motion, pursuant 27 to Section 7.3 of the APA, MLI and Ryan's Companies agreed that: (a) ISG's only 28 representation to MLI was that it was the duly appointed and authorized assignee of BUCHALTER NEMER BN 23923006vl 2 AP,om:~:N:~o~;::;owwN MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 10 of 23 Page ID #:242 1 the Ryan's Companies; (b) all representations under the APA were by Ryan's 2 Companies, not ISG; (c) all liabilities of the "Seller" under the AP A were those of 3 the Ryan's Companies, not ISG; and (d) "[MLI] shall have no recourse against the 4 Assignee [ISG] for any claim that may arise under the [Asset Purchase] 5 Agreement." APA 7.3 [Dkt. No. 1, Document 1-2, p. 19]. 6 In summary, the clear language of the very agreement under which MLI has 7 brought its counterclaims precludes the "Cross-Complaint," which should be 8 dismissed. In addition, importantly, MLI never sought leave of this Court to file its 9 "Amended Answer & Cross-Complaint," so it and its allegations should be stricken 10 as the filing was not permissible without Court consent. 11 II. 12 ALLEGATIONS OF CROSS-COMPLAINT 13 The allegations in the "Cross-Complaint" ("XC") are presumed to be true for 14 purposes of the present Motion. 15 The "Cross-Complaint" alleges or concedes that: 16 • On or about December 27, 2014, Ryan's Companies and MLI entered into 17 the AP A. XC ,-r 9 (a copy of which is attached as Exhibit "2" to the 18 Complaint [Dkt. No. 1, Document 1-2]. 19 • On or about January 6, 2015, Ryan's Companies and MLI entered into an 20 Amendment to the AP A, which in part extended the closing date to 21 January 7, 2015. XC ,-r 10 (a copy of which is attached as Exhibit "3," ,-r 1, 22 p. 1 to the Complaint [Dkt. No. 1, Document 1-3] 23 • In Section 7.1 ofthe APA, Ryan's Companies made certain 24 representations, warranties and covenants to MLI. XC ,-r,-r 11-13. 25 • [On or about January 7, 2015], Ryan's Companies made general 26 27 28 assignments for the benefit of creditors under California law to ISG. XC ,-r 14 (a copy of which general assignments are attached as Exhibit "1" to the Complaint [Dkt. No. 1, Document 1-1]. BUCHALTER NEMER BN 23923006vl 3 A PROFESSIONAL CORPORATION Los ANGELES MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 11 of 23 Page ID #:243 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 • Section 7.3 of the AP A explicitly provides as follows: "Buyer [MLI] acknowledges that all rearesentations of Seller [Ryan's Companies l set forth in Section 7.1, an all other liabilities of Seller under this Agreement, shall be limited to the coworate Sellers and shall not incfude the Assignee, and Buyer shallliave no recourse ~ainst the Assignee for an~ claim that may arise under the greement. The Assignees only representation in such capacity to Buyer is that the Assignee was duly appointed as Assignee and has authority to transfer tlie Assets in liis capacity as the Assignee." XC~ 15; Exhibit "2," p. 18 to Complaint [Dkt. No. 1, Document 1-2] (emphases added). The "Cross-Complaint" then goes on to allege a series of grievances: • Fraudulent transfer of assets: that Ryan's Companies transferred title for a particular school bus to MLI as part of the AP A, but had previously sold that vehicle in advance of the Closing and for a particular stolen vehicle that belonged to a third party. XC ~~ 18-24. • Additional misrepresentations and offsets: that Ryan's Companies wrote certain NSF checks, failed to make its final payroll and overstated accounts receivable service charges prior to Closing. XC ~~ 25-27. • And counter-defendants' agreed upon offsets: that ISG agreed, in an unspecified writing on an unspecified date, to certain restitution totaling $23,688.90. XC ~~ 28-30. The "Cross-Complaint" then goes on to allege claims against ISG for 21 (1) breach ofthe APA (for offsets, misrepresentations and breach ofthe APA) 22 (XC~ 35); (2) breach of the covenant of good faith and fair dealing arising out of 23 the APA (apparently, by not negotiating in good faith) (XC~ 44); 24 (3) misrepresentations arising out ofthe APA (which misrepresentations are not 25 clear)(~ 47); and (4) indemnity arising out of the APA (XC~ 58)- none of which 26 claims are legally cognizable in light of the exculpatory clause specifically set forth 27 in Section 7.3 ofthe APA and the nature of an ABC. 28 /// BUCHALTER NEMER ~B::::..:N~23::::92::.::.30:::..::_0.:::..:.6v..:._l ---...-..,.......C1"i9"'ii~~~-;r;;-'iF?;"";£!ri7'!7'r4~~7"f"Fi'~Fi'"Y'ii"'r7~7"07"'~ii"'f7'1~"iiYT----.--,~;r;-- Ar,om:~:N:~o~~::o'"'oN MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 12 of 23 Page ID #:244 1 2 III. LEGAL ARGUMENT 3 A. LEGAL STANDARDS FOR A MOTION TO DISMISS. 4 The purpose of a Motion under Rule 12(b)(6) ofthe Federal Rules of Civil 5 Procedure ("FRCP") is "to allow the court to eliminate actions that are fatally 6 flawed in their legal premises and destined to fail, and thus spare litigants the 7 burdens of unnecessary pretrial and trial activity." Foresberg v. Fidelity National 8 Credit Services, Ltd., 2004 WL 3510771 (S.D.Cal. 2004); Advanced 9 Cardiovascular Sys, Inc. v. Scimed Life Sys., Inc., 988 F.2d 1157, 1160 10 (Fed. Cir. 1993). 11 The legal standard for dismissal of a complaint or cause of action under 12 Rule 12(b )( 6) is well established. A motion to dismiss for failure to state a claim 13 may be granted where it appears that the plaintiff can prove no set of facts that 14 would entitle it to relief. Fidelity Financial Corp. v. Fed. Home Loan Bank of 15 San Francisco, 792 F.2d 1432, 1435 (9th Cir. 1986); In reUS. Aggregates, Inc. 16 Securities Litigation, 235 F.Supp.2d 1063, 1068 (N.D. Cal. 2002). Dismissal can 17 be based on either a lack of a cognizable legal theory, or the lack of sufficient facts 18 alleged under a cognizable legal theory. In re US. Aggregates, Inc. Securities 19 Litigation, supra, 235 F.Supp.2d at 1 068; see also, Ballistreri v. Pacifica Police 20 Dep't., 901 F.2d 696,699 (9th Cir. 1988). 21 While all material allegations must be taken as true, "conclusory allegations 22 without more are insufficient to defeat a motion to dismiss for failure to state a 23 claim." McGlinchy v. Shell Chern. Co., 845 F.2d 802, 810 (9th Cir. 1988); see 24 also, Epstein v. Washington Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996); 25 McCarthy v. Mayo, 827 F.2d 1310, 1316 (9th Cir. 1987) (conclusory allegations are 26 disregarded). A plaintiff cannot avoid this bar by clothing legal conclusions in the 27 guise of facts to take advantage of the liberality with which the court would 28 otherwise view its pleading. Western Mining Council v. Watt, 643 F.2d 618, 624 BUCHALTER NEMER BN 23923006vl 5 A PRoFESSIONAL CORPORATiON Los ANGELES MOTION TO DISMISS AND STRIKE CROSS-COMPLAINT Case No. 2:16-cv-02710-RGK (AJWx) Case 2:16-cv-02710-RGK-AJW Document 31 Filed 11/07/16 Page 13 of 23 Page ID #:245 1 (9th Cir. 1981); Stinson v. Home Ins. Co., 690 F.Supp. 882, 886 (N.D. Cal. 1988) 2 ("Where the claims in a complaint are insufficiently supported by factual allegation, 3 the claims may be disposed of by summary dismissal."). 4 Exhibits attached to the complaint may be considered as part of the complaint 5 for purposes of a Rule 12(b )( 6) motion. Hal Roach Studios v. Richard Feiner & 6 Co., 896 F.2d 1542, 1555 (9th Cir. 1990). In fact, the court may consider the full 7 text of a document the complaint quotes only in part. In re Stac Electronics 8 Securities Litig., 89 F.3d 1399, 1405 n. 4 (9th Cir. 1996). 9 Examining the allegations of the "Cross-Complaint" in the present action 10 alongside the exhibits attached to the Complaint that are referenced in the "Cross- 11 Complaint," it is readily apparent from the face of the pleadings that MLI's 12 counterclaims fail to state viable causes of action. 13 B. ISG did not assume any obli~:ations under the AP A that it is 14 capable of breachin~: and is expressly excluded from liability 15 thereunder 16 "'[A]n assignment for benefit of creditors is a widely used method by which 17 an insolvent debtor transfers his or her assets in trust to an assignee, who liquidates 18 them and distributes the proceeds to the creditors.' . . . In Credit Managers Assn. v. 19 National Independent Business Alliance (1984) 162 Cal.App.3d 1166 [209 20 Cal.Rptr. 119], the court explained: 'An assignment for [the] benefit of creditors is 21 a business liquidation device available to an insolvent debtor as an alternative to 22 formal bankruptcy proceedings.' " Sherwood Partners v. EOP-Marina Bus, 153 23 Cal.App.4th 977, 981-982 (2007). "The assignee's ... role 'is akin to that of a 24 trustee or administrator of an estate who owes fiduciary duties to the estate's 25 beneficiaries [i.e., the unsecured creditors of the assignor].' " Tatung Co. v. Shu 26 Tze Hsu, 43 F. Supp. 3d 1036, 1066 (C.D. Cal. 2014), citing Berg & Berg 27 Enterprises, LLC v. Sherwood Partners, Inc., 131 Cal. App. 4th 802, 825 (2005). 28 ~~,:~,::N:~G~~~;,~:~ _B_N_23- 92-'-30'-'-0-6v_l --....M ......07"<"1"0T"""I'7'0 .... N....,......,.T""'O........,..D .... I""'S""M..,.,I""'S""'S...--6--.A'"NT"iD~S""'T"