1

Filed 3/24/21 Seretti v. Augustine CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

PHILLIP SERETTI, as Trustee, etc.,

Plaintiff and Appellant,

v.

MICHAEL AUGUSTINE, 

as Trustee, etc., et al.,

Defendants and Respondents.

B293621

Los Angeles County

Super. Ct. No. BC576221

APPEAL from a judgment of the Superior Court of 

Los Angeles County, Victor E. Chavez, Judge. Affirmed.

Law Offices of Roger N. Golden and Roger N. Golden

for Plaintiff and Appellant.

Gutman Law, Alan S. Gutman and John Juenger for

Defendant and Respondent Michael Augustine.

Benedon & Serlin, Gerald M. Serlin and Judith E. Posner; 

Niebow Law and Steven N. Niebow for Defendant and

Respondent Zachary Schneiderman.

_________________________
2

In March 2015, plaintiff Phillip Seretti, as the current 

trustee of the Oflye Trust (Oflye) and on the trust’s behalf, sued 

Zachary Schneiderman, a former trustee of Oflye, and Michael 

Augustine, the current trustee of the Jojazak Irrevocable Trust

(Jojazak), asserting claims for breach of fiduciary duty, fraud, 

conversion, and unjust enrichment based on a series of purported 

loans made to Jojazak beginning in March 2007.

1 Oflye was 

a limited partner in three partnerships that made the loans 

to Jojazak, but the partnerships declined to bring suit. 

Oflye tried its claims to the court, which rendered a 

judgment in favor of defendants under Code of Civil Procedure 

section 631.8.

2 The trial court concluded the applicable statute 

of limitations barred Oflye’s claims and Oflye lacked standing 

to bring a direct action for the recovery of partnership assets. 

Oflye argues the evidence was insufficient to find its 

claims were untimely. It also maintains it has standing to assert 

a direct claim for breach of fiduciary duty against its former 

trustee and, thus, standing to assert a related claim for unjust 

enrichment to recover the partnerships’ funds from Jojazak. 

And Oflye challenges a pretrial order sustaining defendants’ 

demurrers to its conversion cause of action. We find no error 

in the trial court’s judgment. We affirm.

1 Zachary’s late father, Gerald Schneiderman, played a

significant role in the events that led to Oflye’s lawsuit. For 

clarity we refer to Zachary and Gerald by their first names. 

2 Statutory references are to the Code of Civil Procedure. 

Section 631.8 authorizes the trial court, as trier of the facts in a 

bench trial, to weigh the evidence and render a judgment for the 

moving party after the other party has completed its presentation 

of the evidence. 
3

FACTS AND PROCEDURAL BACKGROUND

Consistent with our standard of review, we state the 

facts established by the evidence in the light most favorable 

to the judgment, indulging all presumptions and drawing all 

reasonable inferences in its favor. (Tusher v. Gabrielsen (1998) 

68 Cal.App.4th 131, 140 (Tusher); In re Marriage of Arceneaux

(1990) 51 Cal.3d 1130, 1133 (Marriage of Arceneaux).)

3 

1. The Complaint

On March 20, 2015, Seretti, on behalf of Oflye, filed this 

action against Zachary and Augustine. The operative second 

amended complaint asserts causes of action for breach of 

fiduciary duty and fraud against Zachary, and unjust enrichment 

against both defendants.4 The claims are premised on an alleged 

3 Oflye did not object to the trial court’s statement of decision 

or otherwise assert the statement failed to resolve a controverted 

issue. (See §§ 632, 634.) We therefore are bound by the doctrine 

of implied findings to presume the trial court made all factual 

findings necessary to support the judgment, and the only issue, 

as relates to the facts, is whether substantial evidence supports

those findings. (Tusher, supra, 68 Cal.App.4th at p. 140;

Marriage of Arceneaux, supra, 51 Cal.3d at pp. 1133–1134; 

see also Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 

229, 267.)

4 The second amended complaint also named Capital 

Asset Management Associates, Inc. (CAMA), a former trustee 

of Jojazak, and Pamela Mozer, a former trustee of Oflye and 

director of CAMA, as defendants. Oflye dismissed Mozer 

from the action before trial. CAMA, which apparently was 

a suspended corporation, did not participate in the trial.

The trial court sustained demurrers to a claim for 

conversion against both defendants and a claim for aiding 

and abetting breach of fiduciary duty against Augustine. 
4

conspiracy whereby Zachary breached his fiduciary duty to Oflye

and unjustly enriched Jojazak in connection with a real estate 

development project known as “Imani Fe.”

According to the complaint, in September 2005, Seretti 

met with his attorney, Pamela Mozer, and her husband, Gerald 

Schneiderman, to discuss a possible investment in real property 

Gerald was acquiring for a future development known as “White 

Knoll.” After the meeting, Seretti decided to use sale proceeds 

totaling approximately $1.4 million from a different real estate 

transaction to invest in White Knoll through a tax-deferred

exchange.

As part of the proposed exchange, Mozer and Gerald 

suggested Seretti set up an irrevocable trust to take title to 

the White Knoll interest. In October 2005, the Oflye Trust was 

settled, naming Seretti’s children as beneficiaries and Mozer 

as trustee.

In early 2006, Oflye completed a tax-deferred exchange 

to acquire the White Knoll property. As part of the transaction, 

Oflye took an undivided 86.93 percent interest in the property 

as a tenant in common with White Knoll Venture Ltd. (White 

Knoll LP), which owned the remaining 13.07 percent interest.

Creative Environments of Hollywood, Inc. (CEH) served 

as the general partner for White Knoll LP. Jojazak owned a 

50 percent interest in CEH. CAMA (see fn. 4, ante), a company 

controlled by Gerald and Mozer, served as Jojazak’s trustee. 

Oflye also asserted a claim for accounting against all defendants, 

but did not pursue the claim at trial. Oflye does not challenge 

the dismissal of its aiding and abetting cause of action. We 

discuss the conversion claim later in this opinion.
5

Zachary, Gerald’s son and Mozer’s stepson, was a beneficiary of 

Jojazak.

In March 2006, Zachary became a co-trustee of Oflye with 

Mozer. In September 2006, the tenants in common—Oflye and 

White Knoll LP—obtained a $1 million loan secured by the White 

Knoll property (the White Knoll Loan). Zachary signed the loan 

documents on behalf of Oflye.

In November 2006, a company owned and controlled 

by Gerald and Jojazak undertook the Imani Fe project. To 

commence construction, the company needed to post a $1.75 

million letter of credit or other similar security for a construction 

bond. The complaint alleges Gerald and Jojazak lacked sufficient 

capital to meet the obligation, and so they conspired with 

Zachary and Mozer—Oflye’s co-trustees—to divert assets from 

Oflye’s investments to finance Imani Fe.

In December 2007, Gerald allegedly convinced Seretti to 

“diversify” Oflye’s initial investment in the White Knoll property 

by converting its tenant in common interest into a limited 

partner interest in White Knoll LP and then exchanging a 

portion of that interest for limited partner interests in SpringNaud Associates, Ltd. (Spring LP) and 1800 Brand Associates, 

Ltd. (Brand LP). As with White Knoll LP, CEH served as

the general partner for Spring LP and Brand LP.

The complaint alleges, from March to October 2007, 

Zachary and Mozer “issued and/or caused to be issued” checks 

from White Knoll LP to Jojazak totaling $950,000. In November 

2007, Zachary and Mozer caused $1,050,491.03 to be transferred 

from Spring LP to Jojazak. Zachary and Mozer likewise caused 

Brand LP to transfer nearly $400,000 to Jojazak between October 

2007 and July 2008. In 2009, Zachary and Mozer caused
6

Spring LP to transfer an additional $200,000 to Jojazak as part 

of the alleged conspiracy to finance Imani Fe.

According to the complaint, the Imani Fe project was 

completed in early 2010. At that time, the construction bond 

was exonerated and returned to Jojazak.

In 2013, Augustine became the trustee for Jojazak. He

allegedly retained the borrowed funds and “knowingly refuse[d] 

to return [them] to Oflye.”

The complaint alleges Seretti learned of the conspiracy 

in August 2014, when he received information about the Jojazak

loans from the general partner for White Knoll LP, Spring LP, 

and Brand LP.

2. The Trial

After a series of demurrers and amended pleadings, the

case proceeded to a bench trial against Zachary on the breach 

of fiduciary duty and fraud causes of action and against 

Augustine and Zachary on the unjust enrichment claim.

The evidence confirmed that, in March 2006, Oflye and 

White Knoll LP acquired the White Knoll property as tenants 

in common, with Oflye holding an 86.93 percent interest worth

approximately $1.4 million. In September 2006, the tenants in 

common obtained a $1 million loan, secured by the White Knoll 

property, to fund the property’s development. Zachary signed the 

loan documents as Oflye’s co-trustee and personally guaranteed 

the White Knoll Loan. In 2007, Seretti authorized Zachary to 

“diversify” Oflye’s investment by converting its tenant in common

interest into limited partner interests in White Knoll LP, 

Spring LP, and Brand LP. Each of the limited partnerships 

was engaged in a different real estate development project in 

Los Angeles county.
7

CEH was the general partner for the three limited 

partnerships, as well as several other partnerships attached to 

different development projects. Gerald and his business partner, 

Manny Meza, ran CEH. Their respective family trusts—Jojazak 

for Gerald and the AC Trust for Meza—each owned a 50 percent 

share of the company. Zachary served as CEH’s secretary and 

had authority to sign checks for the limited partnerships that 

CEH managed. Zachary was also a beneficiary of Jojazak and 

received distributions from the trust.

From 2006 to 2010, Seretti worked for CEH. He knew that 

Zachary had a management position and that Zachary handled 

financial matters for the company. While at CEH, Seretti sat 

in on meetings with the development team to review current 

projects, each project’s stage of development, and the pipeline for 

new deals. During these meetings, Gerald often discussed CEH’s 

plans for obtaining financing and raising equity for the different 

projects it managed.

It was a common practice, as directed by Gerald and Meza, 

for CEH to move money between its various development projects

by lending one partnership’s capital to Jojazak while having 

another partnership borrow the same funds from the trust. 

Gerald regularly talked about this practice and Zachary openly 

argued with him about it in CEH’s office. Zachary worried the 

practice jeopardized the solvency of the projects and he urged 

Gerald to maintain sufficient reserves to ensure the partnerships’ 

financial integrity.

Seretti was aware of CEH’s practice of moving money 

between its various partnerships by lending capital to Jojazak. 

In April 2007, Seretti received an investor report and balance 

sheet for White Knoll LP that listed a loan to Jojazak for 
8

$600,000. A second investor report, dated September 2007, 

showed the same $600,000 loan, while another report, in 

November 2007, disclosed the loan had increased to $950,000. 

Seretti likewise received investor reports for Spring LP and 

Brand LP disclosing loans to Jojazak of $1,138,238.56 and 

$335,000, respectively.

Seretti initially questioned Gerald and Zachary about 

the loans in late 2007. During another meeting in June 2008, 

Seretti confronted Gerald about the Jojazak loans and demanded 

financial information about Oflye’s investments. Gerald told 

Seretti that CEH used Jojazak to lend and borrow money for

the various projects and that the practice was beneficial to the 

limited partners because Jojazak had substantial equity in the 

partnerships and could pay a good interest rate on the borrowed 

funds. Although Seretti did not receive all the information he 

requested, he admitted he made no further inquiries about the 

loans or the partnerships’ financial records after July 2008.

Around the same time in late 2007, CEH applied for a 

$13 million construction bond to continue work on Imani Fe. 

When the bond was denied, CEH negotiated a deal to deposit 

cash into escrow to secure construction financing that would keep 

the project moving forward. Concerns were raised internally 

at CEH, including with Zachary, about money moving out of the 

partnerships after CEH failed to secure the construction bond.

Seretti had heard about Imani Fe while working at CEH, 

but he knew little about how it was progressing. He was aware of 

the financial crisis and collapse of the real estate market in 2008,

and he had spoken with Gerald about CEH’s difficulty securing 

construction financing during the recession. Seretti was also

openly concerned about the lack of progress on the development 
9

projects in which Oflye had limited partnership interests. 

By November 2010, he had seen CEH lay off half of its staff.

However, on his last day with CEH, December 31, 2010, 

Seretti learned that an important milestone had been reached 

on Imani Fe and that Gerald anticipated an influx of funds to 

reinvigorate the company. At a New Year’s Eve celebration that 

evening, Gerald told Seretti that, with the Imani Fe milestone 

hit, they would “have the funds to get other projects back 

on track.” Seretti testified he was “surprise[d]” by Gerald’s 

comment, but he did not ask Gerald anything further about the 

relationship between Imani Fe and CEH’s other development 

projects.

Progress on the other projects apparently continued to stall

and, in January 2012, Seretti learned his investment in White 

Knoll LP was at risk of being lost to a bank foreclosure. On 

January 17, 2012, CEH emailed a progress report to the White 

Knoll LP limited partners, including Seretti, reporting that due 

to a lack of cooperation from the city, the economic downturn, 

and the scarcity of construction financing, the partnership,

“after having covered the mortgage payments for years, [was] 

finally unable to make these payments and the property fell 

into foreclosure approximately three months ago.” The progress 

report continued: “We have also explored the possibility of 

selling the parcel in an effort to cut our losses, but have found 

that the Property is of little value without a building [and] . . . 

at this point, there has not been an acceptable prospect for the 

purchase of the property.” On February 16, 2012, CEH sent 

Seretti another letter reporting, “The White Knoll project 

remains in foreclosure.”
10

Seretti testified he was “alarmed” by news of the 

foreclosure and he contacted Mozer, who had become involved 

in CEH’s operations following Gerald’s death in December 2011, 

to find out what was happening with Oflye’s investments. 

According to Seretti, Mozer told him she was “starting to find 

out all about the properties and the developments and she was 

starting to negotiate with banks to [obtain] refinancing.” Despite 

the pending foreclosure and what Seretti already knew about 

the Jojazak loans and Gerald’s practice of shifting funds between 

the various limited partnerships, Seretti testified that he felt 

comfortable with Mozer’s response and that “things were moving 

forward.” He admitted he took no further action until June 2012,

when Mozer told him CEH was “having difficulty making [loan] 

payments.” At that point Seretti followed up on his years-old

request for financial information about the White Knoll LP, 

Brand LP, and Spring LP projects.

In fact, all three limited partnerships had multimillion 

dollar loans that fell into default and foreclosure. By March 

2014, the lender had sold the real property asset securing each 

loan and had initiated deficiency actions against Jojazak (and 

Zachary with respect to the White Knoll Loan) for breach of 

written guaranties made for the benefit of White Knoll LP, 

Brand LP, and Spring LP. In November 2014, Zachary and 

Augustine, as trustee for Jojazak, agreed to pay the lender

$900,000 to settle the deficiency actions.

In December 2014, Meza called a meeting of the investors 

in White Knoll LP, Brand LP, Spring LP, and the other limited 

partnerships CEH managed. Seretti testified it was the 

information presented at this meeting that first led him to 

believe there had been an “embezzlement of funds” from 
11

the limited partnerships in which Oflye had invested. Following 

the meeting, Seretti revisited the financial records he had 

received from CEH. Three months later, he filed this lawsuit.

According to Seretti’s damages expert, the loans CEH made 

on behalf of White Knoll LP and Spring LP to Jojazak deprived 

the partnerships of needed liquidity to service their debt 

obligations, resulting in the foreclosures and loss of the 

partnerships’ principal assets. As for the Brand LP loan to 

Jojazak, however, Seretti’s expert admitted it had no effect on 

the project’s failure or the partnership’s ultimate bankruptcy. 

Seretti’s expert also acknowledged Oflye did not directly own 

any of the funds that it claimed as damages, all of the money lent 

to Jojazak had come from the limited partnerships, and Oflye 

possessed only a fractional interest in those partnership assets.

3. The Judgment under Section 631.8

After Seretti’s presentation of evidence, Zachary and 

Augustine filed motions for judgment under section 631.8. The 

defendants argued the statute of limitations barred Oflye’s claims 

because Seretti was aware of the Jojazak loans as early as 2007 

and 2008, and no later than 2010. They also argued Oflye lacked 

standing to assert its claims because the funds at issue were 

partnership assets, and thus could be recovered through a direct 

action by the limited partnerships or a derivative action on behalf 

of the limited partnerships only.

After a hearing, the trial court granted the motions and 

entered judgment for Zachary and Augustine. In its statement of 

decision, the court found Oflye could not invoke the discovery rule 

to delay accrual of its claims because the evidence showed Seretti 

had received numerous investor reports disclosing the Jojazak 

loans, he was actively involved in managing Oflye’s investments, 
12

and his work at CEH made him aware of the circumstances 

surrounding the loans by 2008 when he demanded detailed 

financial information from the general partner. The court also 

concluded Oflye lacked standing to bring a direct action against 

the defendants because the alleged injury resulted from Jojazak’s 

failure to return funds that belonged to the three limited 

partnerships in which Oflye had a limited partner interest—

not funds that belonged to Oflye. Even with respect to the breach 

of fiduciary duty claim against Zachary, the court reasoned Oflye 

could not establish causation because the damages were suffered 

by the limited partnerships, which had sole claim to the assets

at issue. Finally, the court concluded Seretti failed to prove that 

Zachary committed fraud with respect to the Jojazak loans, or 

that he had been unjustly enriched by the transfers to Jojazak.

The trial court entered judgment for defendants on all 

causes of action. Seretti filed a timely notice of appeal.

DISCUSSION

1. Standard of Review

“After a party has completed his presentation of evidence in 

a trial by the court, the other party, without waiving his right to 

offer evidence in support of his defense or in rebuttal in the event 

the motion is not granted, may move for a judgment. The court 

as trier of the facts shall weigh the evidence and may render 

a judgment in favor of the moving party . . . or may decline to 

render any judgment until the close of all the evidence.” (§ 631.8, 

subd. (a).)

“The purpose of Code of Civil Procedure section 631.8 is 

‘to enable the court, when it finds at the completion of plaintiff’s 

case that the evidence does not justify requiring the defense to 

produce evidence, to weigh evidence and make findings of fact.’ 
13

[Citation.] Under the statute, a court acting as trier of fact may 

enter judgment in favor of the defendant if the court concludes 

that the plaintiff failed to sustain its burden of proof. [Citation.] 

In making the ruling, the trial court assesses witness credibility 

and resolves conflicts in the evidence. [Citations.] [¶] On appeal, 

we view the evidence in the light most favorable to the judgment, 

and are bound by trial courts’ findings that are supported by 

substantial evidence. [Citation.] But, we are not bound by a 

trial court’s interpretation of the law and independently review 

the application of the law to undisputed facts.” (People ex rel. 

Dept. of Motor Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 

1006, 1012.)

2. The Statute of Limitations Bars Oflye’s Claims

“A plaintiff must bring a claim within the limitations 

period after accrual of the cause of action.” (Fox v. Ethicon 

Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806 (Fox); § 312.) 

“Generally speaking, a cause of action accrues at ‘the time 

when the cause of action is complete with all of its elements.’

[Citations.] An important exception to the general rule of accrual 

is the ‘discovery rule,’ which postpones accrual of a cause of 

action until the plaintiff discovers, or has reason to discover, 

the cause of action.” (Fox, at pp. 806–807.)

“The discovery rule protects those who are ignorant of their 

cause of action through no fault of their own. It permits delayed 

accrual until a plaintiff knew or should have known of the 

wrongful conduct at issue.” (April Enterprises, Inc. v. KTTV

(1983) 147 Cal.App.3d 805, 832 (April Enterprises).) “A plaintiff 

need not be aware of the specific ‘facts’ necessary to establish the 

claim; that is a process contemplated by pretrial discovery. . . . 

So long as a suspicion exists, it is clear that the plaintiff must 
14

go find the facts; she cannot wait for the facts to find her.” 

(Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1111.)

We do not take a “hypertechnical approach” to the 

discovery rule. (Fox, supra, 35 Cal.4th at p. 807.) “Rather than 

examining whether the plaintiffs suspect facts supporting each 

specific legal element of a particular cause of action, we look 

to whether the plaintiffs have reason to at least suspect that 

a type of wrongdoing has injured them.” (Ibid.)

“ ‘It is plaintiff’s burden to establish “facts showing that 

he was not negligent in failing to make the discovery sooner 

and that he had no actual or presumptive knowledge of facts 

sufficient to put him on inquiry.” [Citation.] “[W]hether the 

plaintiff exercised reasonable diligence is a question of fact 

for the court or jury to decide.” ’ ” (April Enterprises, supra,

147 Cal.App.3d at p. 833; Hobart v. Hobart Estate Co. (1945) 26

Cal.2d 412, 437; see also Grisham v. Philip Morris U.S.A., Inc.

(2007) 40 Cal.4th 623, 638 [“California law recognizes a general, 

rebuttable presumption, that plaintiffs have ‘knowledge of the 

wrongful cause of an injury.’ ”].) 

A three-year statute of limitations applies to a cause of 

action for fraud, as well as claims for breach of fiduciary duty 

and unjust enrichment based on fraud. (§ 338, subd. (d); Federal 

Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 338 

[three-year statute of limitations applies to unjust enrichment 

based on fraud or mistake]; Fuller v. First Franklin Financial 

Corp. (2013) 216 Cal.App.4th 955, 963 [“limitations period is 

three years . . . for a cause of action for breach of fiduciary duty 

where the gravamen of the claim is deceit”]; cf. City of Vista v. 

Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889 

[four-year statute of limitations applies to breach of fiduciary 
15

duty, unless the gravamen of the claim is actual or constructive 

fraud, in which case the statute of limitations is three years].)

The evidence proved Seretti knew about the alleged 

wrongful fund transfers to Jojazak, and about CEH’s practice 

of using Jojazak to shift capital between the various limited 

partnerships, as early as 2007 or 2008. From April 2007 to 

January 2008, Seretti admitted he received and reviewed 

investor reports and balance sheets showing a $950,000 loan to 

Jojazak from White Knoll LP, a $1,138,238.56 loan to Jojazak

from Spring LP, and a $335,000 loan to Jojazak from Brand LP.

5 

Thus, by 2008, Seretti knew CEH had transferred capital to 

Jojazak far in excess of Oflye’s $1.4 million investment in those 

limited partnerships.

During this period, Seretti also worked for CEH, where 

the practice of using Jojazak to move money between the limited 

partnerships was openly discussed. By June 2008, Seretti had 

twice confronted Gerald about the Jojazak loans, and Gerald 

had told Seretti CEH was indeed using Jojazak to move money 

between its development projects, including the limited 

partnership projects in which Oflye had an interest. But despite 

demanding financial information that was not fully provided, 

Seretti admitted he took no further action to ensure Oflye’s 

investments remained solvent, even while, in the midst of 

the recession, Gerald told him CEH was having difficulty 

securing capital for its projects and while he witnessed the 

company lay off half its workforce. Based on these compounding 

5 From February 2008 to November 2010, Seretti received 

additional investor reports with balance sheets for each of 

the limited partnerships reflecting ongoing loans to Jojazak 

in different and fluctuating amounts.
16

business irregularities, coupled with CEH’s tenuous financial 

condition and the stalled progress of its projects, the trial court 

reasonably concluded Seretti knew or should have known that 

capital from the limited partnerships may have been illicitly 

diverted and that Oflye’s investments were in jeopardy. (See, 

e.g., Vertex Inv. Co. v. Schwabacher (1943) 57 Cal.App.2d 406, 

415–416 [evidence established stockholders’ lack of diligence 

in failing to discover comingling of company funds where 

defendant’s conduct was “such a departure from common 

business practice” that it should have prompted investigation; 

observing, “[i]f a request for a statement or audit had been made, 

a failure on the part of [defendant] to comply would arouse a 

strong suspicion of irregularity”].)

Critically, in 2010, Seretti also learned of Imani Fe’s 

apparent connection to the Jojazak loans. At the heart of Oflye’s 

operative complaint is an alleged conspiracy between Zachary, 

Gerald, and Jojazak to finance Imani Fe through the fraudulent 

embezzlement of funds from Oflye’s investments, which 

ultimately led to the insolvency of White Knoll LP, Brand LP, 

and Spring LP. The evidence showed Gerald essentially disclosed 

this purported scheme to Seretti at the end of 2010, when he told 

Seretti the completion of a milestone for Imani Fe meant money 

would be freed up to “get other projects back on track.” Seretti 

testified the implication of Gerald’s statement “surprise[d]” him. 

But, despite having concerns about Oflye’s investments, Seretti 

admitted he made no further inquiry about the connection 

between those development projects and Imani Fe. In view 

of everything Seretti knew by 2008, and certainly by the end 

of 2010, the trial court reasonably concluded Seretti had “reason 
17

to at least suspect that a type of wrongdoing ha[d] injured” 

Oflye’s investments. (Fox, supra, 35 Cal.4th at p. 807.)

On appeal, Seretti contends his knowledge of the Jojazak 

loans was insufficient to trigger the accrual of Oflye’s claims 

because he “had no notice that they were not paid until December 

2014.” The contention overlooks everything else Seretti knew 

about the circumstances of the loans, the progress of the relevant 

development projects, and the financial condition of the limited 

partnerships. Most significantly, it overlooks Oflye’s own 

theories of causation and damages in this action. According 

to the testimony of Oflye’s damages expert, Oflye was injured 

when, as a result of the transfers to Jojazak, the relevant limited 

partnerships were unable to service their debts and lost their 

principal assets to foreclosure. As discussed, the evidence proved 

Seretti was aware of this risk at least by 2010, when Gerald told 

him about CEH’s difficulty securing capital for its projects. But 

there was more. As the trial court emphasized in its statement of 

decision, by January 2012, Seretti had received a progress report 

explicitly informing him that White Knoll LP was unable to make 

its mortgage payments and that “the property fell into foreclosure 

approximately three months ago.” The report advised Seretti 

that the partnership had “explored the possibility of selling the 

parcel . . . to cut our losses, but [we] have found that the Property 

is of little value without a building thereon.” (Italics added.) The 

evidence supports the trial court’s finding that Seretti knew of 

Oflye’s purported injury, and that the allegedly wrongful loans 

to Jojazak might be its cause, more than three years before this 

action was filed in March 2015. (See Davies v. Krasna (1975) 14 

Cal.3d 502, 514 [“the infliction of appreciable and actual harm, 
18

however uncertain in amount, will commence the statutory 

period”].) 

Finally, Seretti argues Zachary’s status as Oflye’s trustee 

excused any failure to investigate and thus delayed accrual until 

Seretti “actually discovered the facts” constituting Oflye’s causes 

of action. (See Hobbs v. Bateman Eichler, Hill Richards, Inc.

(1985) 164 Cal.App.3d 174, 202 [“Where there is a fiduciary 

relationship, the usual duty of diligence to discover facts does 

not exist” and “the limitations period does not begin to run until 

[the plaintiff] actually discovers the facts constituting the cause 

of action.”].) The contention again overlooks all that Seretti 

actually knew. As discussed, the evidence established Seretti 

had actual knowledge of the fund transfers to Jojazak; CEH’s 

practice of using Jojazak to move funds between its various 

limited partnerships; Gerald’s use of this practice to finance work 

on Imani Fe; the solvency risk the relevant limited partnerships 

faced; and, ultimately, the foreclosure actions that, according 

to Oflye’s theory, resulted in the loss that Oflye claimed as 

damages. The evidence supports the trial court’s conclusion 

that the statute of limitations bars Oflye’s claims.

3. Oflye Lacked Standing to Pursue a Direct Action 

for the Recovery of Partnership Assets

Oflye’s failure to bring its claims within the prescribed 

limitations period is alone sufficient to affirm the judgment on

the claims adjudicated in the trial. Nevertheless, we will briefly 

address the standing issue because it too provides a categorical

basis, independent of the statute of limitations, to affirm the 

judgment.

Under California law, “every action must be prosecuted 

in the name of the real party in interest.” (Wallner v. Parry 
19

Professional Bldg., Ltd. (1994) 22 Cal.App.4th 1446, 1449

(Wallner), citing § 367.) Because the partnership entity is the 

owner of partnership property, the real party in interest on 

claims for damage to partnership property is the partnership—

not the individual partners. (Weil & Brown, Cal. Practice Guide: 

Civil Procedure Before Trial (The Rutter Group 2020) ¶ 2:15.5; 

Wallner, at p. 1449; see also Corp. Code, § 15901.04, subd. (a) 

[“A limited partnership is an entity distinct from its partners.”]; 

id., § 16501 [“A partner is not a coowner of partnership property 

and has no interest in partnership property that can be 

transferred, either voluntarily or involuntarily.”].) “Individual 

partners may not sue for damage to the partnership property 

or to their individual ‘beneficial interest’ in the property.” 

(Weil & Brown, ¶ 2:15.5; Mayer v. C.W. Driver (2002) 98 

Cal.App.4th 48, 60 (Mayer).) 

When the gravamen of the complaint is injury to the 

limited partnership, or where the action seeks to recover assets 

of the partnership, an individual partner must bring a “derivative 

action,” naming the partnership as a defendant, for the benefit 

of the limited partnership. (Wallner, supra, 22 Cal.App.4th

at p. 1449; see Grosset v. Wenaas (2008) 42 Cal.4th 1100, 1108; 

Schuster v. Gardner (2005) 127 Cal.App.4th 305, 312 [“ ‘[A]

shareholder cannot bring a direct action for damages . . . on 

the theory their alleged wrongdoing decreased the value of his 

or her stock (e.g., by reducing corporate assets and net worth). 

The corporation itself must bring such an action, or a derivative 

suit may be brought on the corporation’s behalf.’ ”].) A “cause 

of action is individual, not derivative, only ‘ “where it appears 

that the injury resulted from the violation of some special duty 

owed the stockholder by the wrongdoer and having its origin 
20

in circumstances independent of the plaintiff’s status as a 

shareholder.” ’ ” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 

124, italics added.)

As Oflye’s damages expert confirmed, it is undisputed

that Oflye had no direct ownership interest in any of the assets

it claimed as damages, all of the money transferred to Jojazak 

had come from the limited partnerships, and Oflye possessed 

only a fractional interest in the partnerships. Based on these

admissions and undisputed evidence, the trial court correctly

concluded that “[a]ny purported claim to the moneys the Jojazak 

Trust allegedly received from the limited partnerships belongs 

solely to those limited partnerships” and Oflye has “no standing” 

to bring a direct action for recovery of those partnership assets.

PacLink Communications Internat., Inc. v. Superior Court

(2001) 90 Cal.App.4th 958 (PacLink) is instructive. In PacLink, 

members of a limited liability company (LLC) filed suit against 

several business entities and individuals alleging the LLC’s 

assets were transferred without the plaintiff’s knowledge or 

consent and without paying any consideration to the plaintiffs. 

(Id. at p. 961.) The plaintiffs alleged “ [‘t]he fraudulent transfers 

and the conversion of the “sale” proceeds rendered [the LLC] 

insolvent and thereby defrauded plaintiffs by preventing them 

from being paid for their Ownership Interests in [the LLC].’ ” 

(Id. at pp. 961–962, italics omitted.) The defendants demurred to 

claims for fraudulent transfer, conspiracy to commit conversion, 

and imposition of a constructive trust, arguing the plaintiffs 

lacked standing because they could “not claim any direct injury 

or loss suffered by them,” since the gravamen of the claims was 

that the LLC’s assets had been diminished. (Id. at p. 962.) The 

trial court overruled the demurrer, concluding the plaintiffs were 
21

“ ‘attempting to recover [for] their personal injury, as [opposed] to 

injury to the LLC.’ ” (Id. at p. 963.) The reviewing court issued 

a writ directing the trial court to sustain the demurrer without 

leave to amend. (Id. at p. 966.)

The PacLink court explained: “[T]he essence of plaintiffs’

claim is that the assets of [the LLC] were fraudulently 

transferred without any compensation being paid to the LLC.

This constitutes an injury to the company itself. Because 

members of the LLC hold no direct ownership interest in the 

company’s assets [citation], the members cannot be directly 

injured when the company is improperly deprived of those assets.

The injury was essentially a diminution in the value of their 

membership interest in the LLC occasioned by the loss of the 

company’s assets. Consequently, any injury to plaintiffs was 

incidental to the injury suffered by [the LLC].” (PacLink, supra, 

90 Cal.App.4th at p. 964, fn. omitted, italics added.) Because the 

“ ‘gravamen of the complaint’ ” was “ ‘injury to the whole body 

of [the LLC’s members],’ ” the PacLink court concluded “ ‘it was 

for the [LLC] to institute and maintain a remedial action.’ ” (Id.

at p. 966.) If the responsible officials refused or failed to act, 

the plaintiffs’ only recourse was a “derivative action” to restore 

the assets to the LLC. (Ibid.)

Like the claims in PacLink, the essence of Oflye’s lawsuit 

is that assets of the limited partnerships in which Oflye held an 

interest were improperly “loaned” to Jojazak and never repaid. 

According to Oflye’s damages expert, Oflye was damaged when, 

as result of the fraudulent loans, the partnerships were unable to 

service their debts and lost their principal assets to foreclosure, 

rendering Oflye’s partnership interest worthless and its capital 

contribution lost. This was an injury to the whole body of the 
22

limited partnership—not one exclusively borne by Oflye. Indeed, 

like Oflye, every limited partner suffered the same injury—loss 

of their capital contribution—due to the partnerships’ insolvency. 

And, like every limited partner, any injury to Oflye was 

necessarily “incidental” to the injuries suffered by the limited 

partnerships in which Oflye maintained an interest. (PacLink, 

supra, 90 Cal.App.4th at p. 964.)

On appeal, Seretti argues “Oflye is a trust and is seeking 

relief for the breaches of fiduciary duty by its trustee . . . and 

against . . . the successor trustee of Jojazak, which received the 

fruits of those breaches and which he continues to hold on to on 

its behalf.” He contends these claims “uniquely” belong to Oflye 

and not to the limited partnerships, “which have no claim for 

the Oflye trustee[’s] breaches of duty and Jojazak’s participation 

therein.”

Seretti’s argument ignores that Oflye suffered no injury 

from Zachary’s alleged breach of fiduciary duty because Oflye had 

no direct ownership interest in the partnership assets that were 

transferred to Jojazak. (See PacLink, supra, 90 Cal.App.4th at 

p. 964 [“Because members of the LLC hold no direct ownership 

interest in the company’s assets [citation], the members cannot 

be directly injured when the company is improperly deprived of 

those assets.”].) Regardless of whether Zachary’s participation 

in the Jojazak loans constituted a breach of fiduciary duty, the 

undisputed evidence established Oflye did not loan money to 

Jojazak and Jojazak had no obligation to repay the loans to Oflye. 

Thus, while the limited partnerships may have no claim against 

Zachary for the breach of a fiduciary duty owed to Oflye, it is 

also the case that Oflye can make no claim for the recovery of

partnership assets by recasting the partnerships’ claims for 
23

unpaid loans as an individual claim for breach of fiduciary duty. 

(See Mayer, supra, 98 Cal.App.4th at p. 60 [limited partners 

“could not have sued individually for damage to their individual 

‘beneficial interest’ in partnership property”].) 

Oflye suffered no direct injury from the allegedly improper 

loans. Its injury, like that of every other limited partner, was 

“occasioned by the loss of the [partnerships’] assets” and was 

necessarily “incidental” to the injuries the partnerships suffered. 

(PacLink, supra, 90 Cal.App.4th at p. 964.) The trial court 

correctly determined Oflye does not have standing to bring 

a direct action for damage to the partnerships. (Cf. Sutter v. 

General Petroleum Corp. (1946) 28 Cal.2d 525, 530–532 [plaintiff 

could assert direct action for fraud that induced him “to form and 

invest in a corporation” because his individual “injury resulted 

from the formation of [the] corporation and investments therein 

to carry on a project that could not be conducted because of 

the fraud,” and that injury was distinct from the injury the 

corporation suffered from the diminished value of its assets].)

4. Oflye Cannot State a Claim for Conversion of 

the Limited Partnerships’ Assets

Before trial, the court sustained Zachary’s and Augustine’s 

demurrers to Oflye’s conversion cause of action without leave to 

amend. The ruling was correct.

“Conversion is the wrongful exercise of dominion over 

the property of another. The elements of a conversion claim are: 

(1) the plaintiff’s ownership or right to possession of the property; 

(2) the defendant’s conversion by a wrongful act or disposition of 

property rights; and (3) damages.” (Burlesci v. Petersen (1998) 

68 Cal.App.4th 1062, 1066; Hodges v. County of Placer (2019) 

41 Cal.App.5th 537, 551–552; see also Voris v. Lampert (2019) 
24

7 Cal.5th 1141, 1150.) To state a claim for conversion, the 

plaintiff must allege facts sufficient to prove he was “entitled to 

immediate possession [of the property] at the time of conversion.” 

(Hartford Financial Corp. v. Burns (1979) 96 Cal.App.3d 591, 598

(Hartford Financial), italics omitted.) 

In support of Oflye’s conversion claim, the operative 

complaint alleges Zachary and Mozer, “without any authorization 

to do so and in breach of their fiduciary duties to Oflye, 

transferred the funds invested in [White Knoll LP], Spring [LP], 

and Brand [LP] by Oflye in the amount of $1,405,617.12 directly 

to Jojazak.” The complaint alleges “Jojazak has never had any 

right to the funds” it received.

Oflye’s conversion claim fails for the same reason it lacked 

standing to assert its other claims—namely, the complaint’s 

allegations admit (and the evidence at trial proved) the allegedly 

converted assets belonged to the limited partnerships and Oflye 

was not entitled to immediate possession of those assets at the 

time of the alleged conversion. (See Hartford Financial, supra,

96 Cal.App.3d at p. 598.)

On appeal, Seretti suggests this straightforward analysis 

fails to appreciate the “more subtle and complex” conception 

of property under the current doctrine of conversion. Citing 

Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202

(Welco), he maintains the conversion here was “effected” 

by diverting “monies and/or property . . . from the limited 

partnerships into which Oflye’s [property] had been ‘diversified,’ ” 

and this, although not constituting the “physical conversion 

of anything,” was akin to the defendant’s use of the plaintiff’s 

credit card in Welco to convert money into the defendant’s 
25

bank account. (See Welco, at p. 211.) The argument 

misunderstands the problem with Oflye’s conversion claim.

The problem with Oflye’s claim is not that the property at 

issue is intangible. Rather, the problem is, unlike the plaintiff in 

Welco, Oflye had no immediate right to possession of the property 

because the property belonged to the limited partnerships—not 

to Oflye. (Cf. Welco, supra, 223 Cal.App.4th at p. 211 [approving 

conversion claim where the defendant “wrongfully caused a 

charge to plaintiff’s credit card account by having a specific 

sum of money paid through defendant’s credit card terminal 

into defendant’s bank account” (italics added)]; see Corp. Code, 

§ 16501 [“A partner is not a coowner of partnership property and 

has no interest in partnership property that can be transferred, 

either voluntarily or involuntarily.”]; see also id, § 16502 [“The 

only transferable interest of a partner in the partnership is the 

partner’s share of the profits and losses of the partnership and 

the partner’s right to receive distributions.”].) Because Oflye did 

not own the property that was allegedly converted, the trial court 

correctly sustained defendants’ demurrers to the conversion claim 

without leave to amend.
26

DISPOSITION

The judgment is affirmed. Defendants Zachary 

Schneiderman and Michael Augustine are entitled to their costs.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

EGERTON, J.

We concur:

EDMON, P. J.

LAVIN, J.