Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_13-cv-00484/USCOURTS-caed-1_13-cv-00484-5/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JAGJEEVAN K. DHALIWAL, et al.,

Plaintiffs,

v.

NIRMAL SINGH, et al.,

Defendants.

CASE NO. CV F 13-0484 LJO SKO

ORDER DENYING DEFENDANTS’

MOTION FOR SUMMARY 

ADJUDICATION

(Doc. 41)

INTRODUCTION

On December 27, 2013, Defendants KS Chandi & Sons, Inc. and Chandi Brothers, LLC 

moved for summary adjudication (i.e. summary judgment) on the tenth claim in the First Amended 

Complaint for “Involuntary Dissolution.” Doc. 41. Plaintiffs Jagjeevan Dhaliwal and Mohinder Gill

filed an opposition on February 17, 2014. Docs. 47, 48. Defendants replied on February 24, 2014. 

Doc. 49. On February 26, 2014, Plaintiffs filed an objection to the inclusion of new evidence in 

Defendants‟ reply. Doc. 50.

For the reasons that follow, Defendants‟ motion is DENIED.

LEGAL STANDARD

Involuntary dissolution

Plaintiffs‟ tenth claim is for involuntary dissolution. Since Plaintiffs allege this claim on the 

theory that they are shareholders, they must prove (1) that they are shareholders of the corporations 

holding at least one-third of the outstanding shares, and (2) that those in control of the corporation 

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have been guilty of or have knowingly countenanced persistent and pervasive fraud, 

mismanagement, or other abuse of authority or persistent unfairness towards any shareholders. Cal. 

Corp. Code § 1800(a)(2) & (b)(4). Defendants focus on the shareholder element.

Summary Judgment

“A party may move for summary judgment, identifying each claim or defense—or the part 

of each claim or defense—on which summary judgment is sought. The court shall grant summary 

judgment if the movant shows that there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A court ruling on a motion 

for summary judgment must construe all facts and inferences in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 

202 (1986). A party may support the motion by citing to particular parts of materials in the record,

including admissions. Fed. R. Civ. P. 56(c)(1).

Admissions in Pleadings

Here, Defendants rely solely on admissions in the pleadings. “Factual assertions in 

pleadings and pretrial orders, unless amended, are considered judicial admissions conclusively 

binding on the party who made them.” Am. Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th 

Cir. 1988). Such admissions have the effect of withdrawing a fact from issue and dispensing wholly 

with the need for proof of the fact. Id. “A judicial admission trumps evidence. ... This is the basis of 

the principle that a plaintiff can plead himself out of court.” Murrey v. United States, 73 F.3d 1448, 

1455 (7th Cir. 1996). At summary judgment, a judicial admission in a pleading may be analogized 

to a judicial admission pursuant to FRCP 36: “If facts that are admitted under Rule 36 are 

„dispositive‟ of the case, then it is proper for the district court to grant summary judgment.” 

Quasius v. Schwan Food Co., 596 F.3d 947, 950-51 (8th Cir. 2010).

To qualify as a judicial admission, the admission must be “deliberate, clear, and 

unequivocal.” Scarff v. Intuit, Inc., 318 F. App'x 483, 487 (9th Cir. 2008). “Where there is a dispute 

as to the meaning of an admission, we will not contort the plain wording of the admission to favor 

either party‟s interpretation.” Airco Indus. Gases v. Teamsters, 850 F.2d 1028, 1036 (3d Cir. 1988).

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In their motion, Defendants rely upon Plaintiffs‟ superseded Complaint as an additional

source of judicial admissions. However, once a pleading has been superseded, its contents are no 

longer judicial admissions; instead, they become evidentiary admissions. Sicor Ltd. v. Cetus Corp.,

51 F.3d 848, 859 (9th Cir.1995); Raulie v. U.S., 400 F.2d 487, 526 (10th Cir.1968). An evidentiary 

admission is not conclusive, but rather is subject to contradiction or explanation. Cooper v. Brown,

126 F.2d 874 (3d Cir.1942).

DISCUSSION

Defendants do not make a traditional motion for summary judgment. They seek to confine 

their motion, and Plaintiffs‟ response to the motion, exclusively to admissions in the pleadings.

To the extent Defendants characterize statements in the FAC as judicial admissions, the 

Court will analyze them as such. However, to the extent that Defendants identify what are merely 

evidentiary admissions in the original Complaint, the Court will not analyze these. Such an analysis 

would require a traditional motion for summary judgment—one in which Defendants meet their 

initial burden of “„showing‟—that is, pointing out to the district court—that there is an absence of 

evidence to support the nonmoving party‟s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 

S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986). Here, however, by insisting that both parties rely solely 

upon judicial admissions in the pleadings—and by insisting that “Plaintiffs cannot present contrary 

evidence” of their own—Defendants have essentially disclaimed that burden in favor of relying 

strictly on purported admisssions.

Judicial Admissions in Plaintiffs’ FAC

Defendants identify the following language from the FAC as establishing that Plaintiffs are 

not shareholders of either of the two companies:

FAC p. 5: “On or before September 2006, Defendant Singh borrowed $1.35 Million from 

Plaintiffs, promising to invest in two companies (Chandi Brothers LLC and KS Chandi & Sons) ... 

Singh promised that they would be 50% owners of said companies.”

FAC p.6: “By July 2007, when Defendant Singh stated that he had been unable to sell the 

Hatch ARCO AM PM as promised to the Plaintiffs, Plaintiffs needed to obtain more security for 

their $1.35 Million, which constituted their life‟s savings. So, on or about July 20, 2007, 

Defendant Nirmal Singh, as CFO of KS Chandi & Sons, Inc. and Chandi Brothers, LLC drafted 

and executed a Certificate of Investment promising to give Plaintiffs a return of 8.0% interest per 

annum paid on the first of each month and a fixed profit of $200,000 instead of the original 

$500,000 that he had promised.” [COI attached as Exhibit G]"

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FAC p. 7: “Defendant Singh ... on or about July 15, 2008 drafted and executed a 

Promissory Note with Balloon Payment, which rendered the previous Certificate of Investment 

invalid, where KS Chandi & Sons Inc. agreed to pay 8% per annum ($8,933), concluding with one 

Balloon Payment of the principal amount plus any interest and/or penalties. ... When Plaintiffs 

asked Defendant Singh about distribution on the shares, he said that the station was just breaking 

and as such there was no income and he could not pay out any distribution on the shares.” 

[Promissory Note attached as Exhibit H]

(See also FAC p. 11, ¶28: The promissory note “superseded the previous Certificate of 

Investment ... Defendant Singh on behalf of KS Chandi agreed to repay the Plaintiffs the sum of 

$8,933 per month which represented monthly interest only at eight (8%) per cent per annum, with 

a balloon payment of the $1,350,000.”)

FAC pp. 21-22, ¶73: “On or about November 22, 2006 Defendant Singh [falsely] 

represented to Plaintiffs that for Plaintiffs‟ $1,350,000 investment:

(a) Plaintiffs would receive 50% or 500 shares of KS Chandi& Sons.

(b) Plaintiffs would receive 50% or 500 shares of Chandi Brothers LLC.

The fact is Plaintiffs to date have not received their complete 50% shares of KS Chandi and 

Chandi Brothers. They have only received $145,414 from the shares of KS Chandi & Sons and 

Chandi Brothers.”

Plaintiffs dispute Defendants‟ interpretation of this language, particularly when viewed in 

the context of the FAC, which notes (among other things) that “Plaintiffs are 50% shareholders of 

KS Chandi & Sons and Chandi Brothers.” FAC at ¶137.

Analysis

Defendants do not dispute that there is evidence that Plaintiffs acquired ownership of the 

companies in September 2006. However, they claim that, by Plaintiffs‟ judicial admission, such

ownership ended in August 2008, when (in the words of the FAC) the Promissory Note “rendered 

the previous Certificate of Investment invalid” or “superseded” that document. Plaintiffs have 

responded with declarations and exhibits, and Defendants have supplied additional evidence in their 

reply, but these are extraneous to the question posed by Defendants‟ motion, which is premised 

solely on the existence of judicial admissions in the pleading.

Plaintiffs‟ pleadings are difficult to read and invite contradictory interpretations. However, 

“constru[ing] all facts and inferences in the light most favorable to the non-moving party,” the 

Court finds that the FAC does not admit that Plaintiffs are not shareholders.1

 

1 Defendants express concern of “inconsistency in this Court's prior rulings,” Reply at 5. Specifically, the Court‟s prior 

ruling on the Motion to Dismiss the FAC contemplated the FAC to allege that Plaintiffs did not have ownership interests 

in the companies as of August 2008. However, this Court applied pleading standards and levels of scrutiny not at issue 

with Defendants' summary adjudication motion on which Defendants fail to meet their burden. Moreover, each of the 

relevant claims subject to Defendants' motion to dismiss remain dismissed for reasons cited by this Court its prior orders.

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Plaintiffs allege that in 2006, they invested $1.35 million for a 50% ownership interest in 

September 2006. FAC at pp.5-6; FAC at ¶21. Ten months later, in July 2007, Mr. Singh issued 

Plaintiffs a “Certificate of Investment.” This document, opaque as it is, does not purport to 

characterize or even acknowledge Plaintiffs‟ ownership interest in the company. Rather, in this 

document, Mr. Singh stated as CFO for the companies that the companies would “pay an interest of 

8.0 percent per annum paid on the 1st of each month” as well as “a fixed profit of $200,000.” 

Exhibit G. Even though Plaintiffs admit that this document was later “invalidated” by a promissory 

note, “invalidation” of this document need not have invalidated Plaintiffs‟ ownership interests in

the companies, because there is no reason to believe that their ownership interests depended upon 

that document. The promissory note itself, which Plaintiffs have attached, addresses terms of 

payment but does not purport to address or annul any ownership interests. Exhibit H.

Defendants also assert that the FAC undermines Plaintiffs‟ ownership claim because it 

characterizes, as “fraudulent,” certain statements by Mr. Singh regarding Plaintiffs‟ ownership of 

the companies. Specifically, the FAC alleges that Mr. Singh fraudulently claimed that they “would 

receive 50% or 500 shares” of the companies. However, such alleged misrepresentation may relate 

to the fact that the FAC also alleges that Mr. Singh fraudulently claimed that the company consisted 

of 1,000 shares when it in fact consisted of 2,000 shares (¶22) and that he attempted to sell some of 

these shares to other investors (¶63).

In short, the FAC does not admit to the invalidity of Plaintiffs‟ tenth claim.

CONCLUSION

Defendants‟ motion for summary adjudication on Claim Ten is DENIED.

IT IS SO ORDERED.

Dated: March 5, 2014 /s/ Lawrence J. O’Neill 

UNITED STATES DISTRICT JUDGE

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