SUBJECT: MOTION FOR SUMMARY ADJUDICATION
MOVING PARTY: Defendant Elbert Walden
RESP. PARTY: Plaintiff/Cross-defendant ANSA Production, Inc.
TENTATIVE RULING: DENIED as to all but the 8th COA
This action arises out of a lengthy business relationship between ANSA and Paradice Decorating Company. ANSA is the owner and operator of the L.A. Auto Show and Lisa Kaz is its principal. For years, ANSA entered into annual written contracts with Paradice to provide services such as drayage, freight, installations, carpeting and design for exhibitor displays for The LA Car Show (the “Show”). In 1997, the financial arrangement between ANSA and Paradice changed because The Show no longer offered drayage services to exhibitors. Instead, the exhibitors would pay Paradice directly and part of the revenues earned for those services would be shared with ANSA based on the sales support it provides to Paradice. ANSA now seeks to impose liability on Paradice for falsely representing that the subcontractors with whom Paradice contracted to provide services for the Show would only deal with ANSA through Paradice. Plaintiff claims this was a misrepresentation because it has been able to successfully deal directly with the subcontractors.
SAC FILED ON 12/23/15
1st c/a—breach of fiduciary duty
2nd c/a—aiding and abetting
3rd c/a—constructive fraud
4th c/a—fraud and deceit
6th c/a—money had and received
9th c/a—breach of contract
10th c/a—breach of fiduciary duty
12th c/a—declaratory relief
MOTION—filed November 8, 2018 (only available in hard copy)
Motion was previously “vacated” according to the title of the hearing reservation. It appears that the original hearing date was March 14, 2019.
OPPOSITION—filed 2/26/19 (filed under seal pursuant to protective order)
REPLY—filed 3/5/19 (filed under seal pursuant to protective order)
Defendant Walden’s motion for summary adjudication is GRANTED as to the eighth cause of action and is DENIED as to the second, fourth, fifth, and sixth causes of action.
- Defendant’s Position
Defendant moves for summary adjudication to the second, fourth, fifth, sixth, and eighth causes of action in Plaintiff’s second amended complaint. The grounds of the motion to the second, fourth, fifth, and sixth causes of action are: (1) they are barred either by the two or three-year statute of limitations, (2) the dismissal with prejudice of the Settled Action precludes them, and (3) the court already determined that Plaintiff’s claims are barred by the statute of limitations and therefore are barred by the doctrine of collateral estoppel. The ground of the motion to the eighth cause of action are: (1) accounting is a remedy, not a cause of action, and the claim is duplicative of the sixth cause of action, (2) the dismissal with prejudice of the Settled Action precludes it, and (3) the court already determined that this claim is derivative of other claims and therefore is barred by the doctrine of collateral estoppel.
- Plaintiff’s Opposition
Plaintiff’s claims are not time-barred under the delayed discovery rule and the fraudulent concealment doctrine because (1) the discovery rule applies, (2) Plaintiff was prevented from discovering its claims against Walden and Paradice due to fraudulent concealment of material facts, and (3) Walden is equitably estopped from asserting the statute of limitations defense. The claims are also not time-barred because the doctrine of continuing violations applies.
Res judicata does not apply because there is no identity of claims and parties between the prior action and this action and there was no actual litigation of the claims to judgment in the 2011 SAG.
Plaintiff’s claims are not barred by collateral estoppel.
III. Request for judicial notice
Defendant’s request that the court take judicial notice of court documents (RJN, Exhs. A-G, K, L.) is GRANTED. (Evid. Code, § 452, subd. (d)(1).) Defendant’s request that the court take judicial notice of what appear to be trial exhibits (RJN Exhs. H-J.) is DENIED as these documents do not appear to be filed with the court and Defendant offers no other basis to take judicial notice of them.
In reply, Defendant’s request that the court take judicial notice of the declaration of Lisa Kaz filed in support of Plaintiff’s opposition (Reply RJN, Exh. M.) is DENIED as Defendant has not shown how the declaration qualifies for judicial notice under Evidence Code section 451 and 452. Defendant’s request that the court take judicial notice of court documents (Reply RJN, Exhs. N, O.) is GRANTED. (Code Civ. Proc., § 452, subd. (d)(1).)
- Evidentiary objections
Plaintiff’s objections (1-18) to the declaration of Michael Murphy are OVERRULED.
Defendant’s objections (1-37) to the declaration of Lisa Kaz are OVERRULED.
- Plaintiff’s opposition papers were filed under seal pursuant to protective order
California Rules of Court, rule 2.551(b)(3) lays out the procedure for a party that files documents that are confidential pursuant to a protective order but does not intend to have the records be sealed by a motion to seal. For the party intending to use records that are subject to a protective order without a motion to seal the records, the procedure requires that the party “[g]ive written notice to the party that produced the records that the records and the other documents lodged under (i) will be placed in the public court file unless that party files a timely motion or application to seal the records under this rule.” (Id. at (iii).) Here, Plaintiff did not file the required written notice. Therefore, the court is not inclined to allow Plaintiff to publicly disclose the confidential information because Plaintiff did not properly follow the disclosure procedure.
Alternatively, if Plaintiff intended to put the records under seal, Plaintiff has not followed the relevant procedure for sealing either.
“A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record. The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing.” (Cal. Rules of Court, rule 2.551(b)(1).) Here, Plaintiff has not filed a motion and has not filed a memorandum and a declaration containing facts sufficient to justify the sealing. Therefore, the court will not seal the document filed in opposition to this motion.
Similarly, Defendant’s reply papers are “filed under seal pursuant to protective order”. But, Defendant did not follow (1) the procedure for disclosing information that is confidential pursuant to a protective order (Cal. Rules of Court, rule 2.551(b)(3)) because no notice was filed or (2) the procedure to seal records (Cal. Rules of Court, rule 2.551(b)(1) because no motion was filed.
Accordingly, neither party followed the procedure to disclose or seal documents. Therefore, the documents that are confidential pursuant to the parties’ protective order will stay confidential and will not enter the public record. Alternatively, any documents that are not confidential under the protective order will not be sealed because no motion to seal has been filed.
- STATUTE OF LIMITATIONS
Defendant fails to meet his burden with respect to the statute of limitations defense because Defendant does not address all material allegations of the second, fourth, fifth, and sixth causes of action in the second amended complaint. In particular, Defendant did not address the allegations of his conduct that occurred during 2011-2013, which would fall into within the statute of limitations.
“A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1), emphasis added.) In Orange County Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 14 Cal.App.5th 343, the court reversed the trial court’s grant of a summary adjudication motion on statute of limitations grounds, finding that the continuous accrual theory was applicable to a negligence cause of action. The court held:
Defendants bore the burden on summary judgment to show a “complete defense” to the District’s negligence claim based on the statute of limitations. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, supra, 25 Cal.4th at p. 849, 107 Cal.Rptr.2d 841, 24 P.3d 493.) Because the District’s complaint pled its negligence claim as a series of separate and distinct negligent acts under the theory of continuous accrual, defendants were required to show that the District’s claim, including each relevant negligent act, was completely time-barred. ‘If a plaintiff pleads several theories, the defendant has the burden of demonstrating there are no material facts requiring trial on any of them. The moving defendant whose declarations omit facts as to any such theory … permits that portion of the complaint to be unchallenged.’ (Teselle, supra, 173 Cal.App.4th at p. 163, 92 Cal.Rptr.3d 696.) This principle applies equally to facts pled in a complaint that would refute an affirmative defense or prove an exception to such a defense. (See, e.g., Anderson v. Fitness Internat., LLC (2016) 4 Cal.App.5th 867, 880, 208 Cal.Rptr.3d 792; Varshock v. Department of Forestry & Fire Protection (2011) 194 Cal.App.4th 635, 651, 125 Cal.Rptr.3d 141; Bacon v. Southern California Edison Co. (1997) 53 Cal.App.4th 854, 858, 62 Cal.Rptr.2d 16.)
(Id. at 396-397, emphasis added.)
The court in Orange County determined that “Defendants did not meet their initial burden of production. Defendants did not present evidence, for example, that a negligence claim based on improper remediation would be time-barred. Because a negligence claim based on such a theory remains viable notwithstanding defendants’ evidence, their motions for summary adjudication of the District’s negligence claims based on the statute of limitations should have been denied. (Aguilar, supra, 25 Cal.4th at p. 850, 107 Cal.Rptr.2d 841, 24 P.3d 493; Teselle, supra, 173 Cal.App.4th at pp. 169–170, 92 Cal.Rptr.3d 696.)” (Id. at 397, emphasis added.)
Here, the same issue as addressed in Orange County exists: Plaintiff has alleged distinct acts of fraudulent diversion and conversion by Walden continuing from 2011 into 2013. (SAC ¶¶ 22-84.) Plaintiff has alleged that Walden committed wrongful acts for each car show in 2011, 2012, and 2013, and these acts support the causes of action against Walden. (SAC ¶¶ 129, 143, 154, 159.)
Despite these allegations of wrongful conduct from 2011 to 2013, the moving papers are devoid of argument and evidence that shows that the statute of limitations is a complete defense to these alleged acts. The causes of action that are challenged in this motion incorporate the allegations relating to these alleged acts. Therefore, the court finds that Defendant has omitted addressing material facts that support Plaintiff’s theory of liability. Thus, Plaintiff’s theory of liability for Walden’s alleged conduct in 2011 to 2013 remains viable. It follows that Defendant has not shown that the statute of limitations is a complete defense to the challenged causes of action.
Defendant does not dispute that these later alleged acts are within the statute of limitations period as Defendant requests that the court limit recovery to three years preceding the filing of this action (three years preceding the filing of the complaint would be August 1, 2011). (Reply, 9:4.)
In reply, Defendant attempts to shift the burden onto Plaintiff to “plead and prove a factual and legal basis for avoidance of the statute of limitations on its claim.” (Reply, 6:16-17.) But, Defendant has the burden on a motion for summary adjudication to show that he has a complete defense to Plaintiff’s causes of action. (Code Civ. Proc., § 437c, subd. (p)(2)). Defendant’s citation to Burgon v. Kaiser Foundation Hospitals (1979) 93 Cal.App.3d 813, to show Plaintiff had this burden is unpersuasive because (1) Burgon involved a defendant’s motion for non-suit after plaintiff presented his case in chief at trial (Id. at p. 815.) but here, the burden shifting used for trial is not applicable and (2) the burden-related holding from Burgon that Defendant relies on was disapproved in Samuels v. Mix(1999) 22 Cal.4th 1, 8.
Defendant addresses the alleged conduct that happened after 2011 in the reply. (Reply, 6:20-9:3.) Those arguments, however, should have been made in the moving papers to support Defendant’s burden that its statute of limitations defense applies entirely to each cause of action. But, the arguments in reply cannot support the burden Defendant had in the moving papers.
Accordingly, Defendant has not met his burden of showing that there is a complete timeliness defense to Plaintiff’s second, fourth, fifth, and sixth causes of action.
VII. RES JUDICATA OF PRIOR LAWSUIT
Defendant argues that the prior action (brought by Lisa Allison Kaz, individually and nominally in her derivative capacity on behalf of ANSA Productions, Inc. against Andrew Fuzesi and AF Associates, Inc. (and against nominal defendant ANSA Productions, Inc.) in 2009 and was settled in 2011) bars this suit against Walden based on res judicata. “Res judicata is not a bar to claims that arise after the initial complaint is filed.” (Allied Fire Protection v. Diede Construction, Inc. (2005) 127 Cal.App.4th 150, 155.) The parts of Plaintiff’s claims that occurred from 2011 to 2013 could not have been litigated in the first action and necessarily arose after the initial complaint was filed in 2009. Therefore, res judicata cannot bar those parts of Plaintiff’s causes of action. Each cause of action against Walden incorporates his alleged conduct that occurred in 2011-2013. Thus, res judicata cannot be a complete defense to any challenged cause of action in the second amended complaint. (Code Civ. Proc., § 437c, subd. (f)(1).)
Alternatively, the court would deny the motion as to res judicata on the basis that the moving papers did not give any argument on applying the law to the facts. A review of Defendant’s memorandum of points and authorities does not reveal any application of the law of res judicata to the facts—Defendant expressly makes arguments on the statute of limitations defense, the discovery rule, the eighth cause of action for accounting, and the doctrine of collateral estoppel based on the ruling from this case.
The application of res judicata to the facts of this case is not necessarily a simple matter that the court can decide without any argument made by Defendant. For example, Walden was not a party to the prior action, but it is a requirement of the doctrine of res judicata to show identity of the parties between the two subject actions. (City of Arcadia v. State Water Resources Control Bd. (2010) 191 Cal.App.4th 156, 173 [“the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding.”].)
As a general principle of due process of law, “one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he had not been made a party by services of process.” (Hansberry v. Lee (1940) 311 U.S. 32, 40, 61 S.Ct. 115, 85 L.Ed. 22.) This general rule is not applicable, however, when a preexisting substantive legal relationship exists between a party to the judgment and the party to be bound, a relationship traditionally referred to as “privity.” (See Clemmer v. Hartford Insurance Co., supra, 22 Cal.3d at p. 875, 151 Cal.Rptr. 285, 587 P.2d 1098 [traditionally “[p]rivity … has been held to refer to an interest in the subject matter of litigation acquired after rendition of the judgment through or under one of the parties, as by inheritance, succession or purchase”]
(Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1510, fn. 8.)
Because Walden was not a party to the prior action, it was his burden to show a preexisting substantive legal relationship exists between a party to the judgment and himself. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 [“the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.”].) The moving papers show that Walden was the acting owner and vice-president of former defendant Paradice; that Paradice conducted business as a vendor with former defendant Andrew Fuzesi; and that Andrew Fuzesi was a defendant in the prior action. Based on these facts and without any evidence by Defendant on the issue, the court cannot presume Walden and Fuzesi (or the other parties to the prior action) were in privity with one another, especially because the circumstances must also have been such that the nonparty should reasonably have expected to be bound by the prior adjudication. (Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn. (1998) 60 Cal.App.4th 1053, 1070 [“Due process requires that the nonparty have had an identity or community of interest with, and adequate representation by, the … party in the first action. [Citations.] The circumstances must also have been such that the nonparty should reasonably have expected to be bound by the prior adjudication.”].) It is possible that the nonparty would not have reasonably have expected to be bound by the prior adjudication because Plaintiff might have had independent claims against Walden not involving Fuzesi.
In reply, Defendant raises new points about the application of res judicata in this case. Defendant argues that the doctrine of res judicata bars Plaintiff’s claims because Walden was a party to be released under the settlement agreement as an independent contractor with Plaintiff. “Points raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument.” (American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453, 13 Cal.Rptr.2d 432.) Because Defendant has not shown good cause to depart from our usual rule, we decline to consider their late argument. (Browne v. County of Tehama (2013) 213 Cal.App.4th 704, 725, fn. 10.)
In any event, Defendant does not offer evidence to show Walden was an independent contractor to be released under the settlement agreement and relies on paragraph 14 of the SAC to argue that “it is undisputed that Paradice and ASMACC were ANSA’s independent contractors for the L.A. Auto Show as vendors from 2003 to 2013.” (Reply 9:18-20.) Paragraph 14 describes Paradice and ASMACC as “middleman vendors operating for the L.A. Auto Show under unwritten or ill-defined pass-through arrangements.” This allegation on its own does not show Walden was an independent contractor of Plaintiff.
Accordingly, Defendant does not meet its burden to show that the dismissal is a complete defense based on res judicata to Plaintiff’s second, fourth, fifth, sixth, and eighth causes of action.
VIII. COLLATERAL ESTOPPEL
To apply the doctrine of collateral estoppel, there must be a “decision in the former
proceeding [that] must be final and on the merits.” (Lucido v. Superior Court (1990) 51 Cal. 3d 335, 341.)
The court agrees with Plaintiff that the court’s orders from July 26, 2018 and August 17, 2018 are not final decisions that form the bases for applying the doctrine of collateral estoppel. The court’s previous orders did not dispose of every cause of action against the moving party, and “[a] judgment that disposes of fewer than all of the causes of action framed by the pleadings, however, is necessarily ‘interlocutory’ (Code Civ. Proc., § 904.1, subd. (a)), and not yet final, as to any parties between whom another cause of action remains pending.” (Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 741.)
In reply, Defendant does not raise any points about application of the doctrine of collateral estoppel.
- RELEASE FROM PRIOR SETTLEMENT AGREEMENT
Defendant fails on its reliance on the prior settlement agreement. First, procedurally, Defendant’s notice of motion does not mention the settlement’s release as a ground to challenge any cause of action. Second, the memorandum of points in authorities in the motion does not formulate an express argument that the release is a complete defense to any cause of action.
Third, Defendant’s argument depends on determining Walden to be an “independent contractor” as stated in the release agreement. As mentioned above (Section VI.), Defendant does not adequately support the argument that he is an independent contractor because he only cites an allegation in the SAC which does not assert he is an independent contractor.
- 8thCOA: ACCOUNTING
The court agrees with Defendant that the eighth cause of action is not an independent cause of action. “A right to an accounting is derivative; it must be based on other claims.” (Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 833.) In opposition, Plaintiff does not raise any points to dispute this law. Accordingly, the motion is granted as to the eighth cause of action for an accounting.