Monday, July 31, 2006
C.A. Reinstates Daughter’s Suit Against Billionaire Ron Burkle
Justices Say Triable Issue Exists as to Whether Invested Funds Were Gift or Loan
By KENNETH OFGANG, Staff Writer
This district’s Court of Appeal Friday reinstated a lawsuit against billionaire Ronald Burkle by his daughter, who claims she is owed an accounting with respect to an investment he made in her name without her knowledge.
Justice Paul Boland, writing for Div. Eight, said a triable issue exists as to whether the funds used to acquire Carrie Burkle’s one percent interest in a limited liability company that buys and owns artwork were a gift or a loan from the former owner of the Ralphs grocery chain.
The litigation appears to be part of the fallout from the breakup of Ronald and Janet Burkle’s marriage, which is the subject of high-profile divorce proceedings.
In recent Court of Appeal decisions, Janet Burkle succeeded in having a state statute, which would have allowed Ronald Burkle to have the parties’ financial information sealed in the court file, held unconstitutional. But she failed to persuade the court that her husband had concealed assets when the couple signed an antenuptial agreement in 1997.
Although Janet Burkle is a nominal defendant in their 30-year-old daughter’s lawsuit, she is paying Carrie Burkle’s attorney fees.
Carrie Burkle’s complaint originally encompassed nine causes of action and over $900,000 in claims, but the other eight causes of action were voluntarily dismissed without prejudice, leaving in dispute only the contention that Carrie Burkle is entitled to a declaration of her rights and an accounting for the investment in Yucaipa Monterey, LLC, a Delaware limited liability company.
Ronald Burkle acknowledged that he liquidated his daughter’s capital account of more than $100,000 in Yucaipa, an entity of which Carrie Burkle said she was unaware until September 2003, just before she sued. But the elder Burkle said the money was owed him because he funded her interest in the company with a loan, and further asserted that he was owed an additional $15,000 in accrued interest.
Los Angeles Superior Court Judge Elizabeth A. Grimes ruled that Ronald Burkle was entitled to summary judgment based on his declaration that his daughter’s share of the investment was a loan rather than a gift.
Boland, however, writing for the Court of Appeal, said that Carrie Burkle had established a triable issue of fact by presenting evidence that she lacked prior knowledge of the investment, and thus could not have agreed to the alleged loan terms. Boland also cited a statement in Carrie Burkle’s declaration that when she was younger, her father told her and her siblings that he had “given” them money through various investments.
The justice went on to say that Grimes erred in denying Carrie Burkle access to Yucaipa Monterey’s books.
Grimes, the jurist said, misinterpreted Corporations Code Sec. 17453 as barring California residents who own an interest in a foreign limited liability company from asserting inspection rights unless they own at least 25 percent of the company.
The statute reads:
“If the members of a foreign limited liability company residing in this state represent 25 percent or more of the voting interests of members of that limited liability company, those members shall be entitled to all information and inspection rights provided in Section 17106.”
Boland agreed that because Carrie Burkle owns an interest in the company, and because the company is 100 percent owned by California residents—Carrie Burkle and her father—she has inspection rights under the plain language of the statute.
Carrie Burkle’s attorney is Michael A. Chodos. Ronald Burkle was represented on appeal by Patricia L. Glaser and Nabil L. Abu-Assal and Bryan M. Sullivan of Christensen, Glaser, Fink, Jacobs, Weil & Shapiro, LLP.
The case is Burkle v. Burkle, 06 S.O.S. 3961.
Copyright 2006, Metropolitan News Company