Case Number: 21STCV10630    Hearing Date: February 22, 2023    Dept: 40

[TENTATIVE] RULING RE:

Defendants/Cross-Complainants Sun-Yin USA Inc., Chen Feng, and Zhen Zhong Cao’s Motion for Terminating or Other Contempt Sanctions

Background

The instant cross actions arise from a contract between the parties related to licensed and bonded intra-state fright shipping and trucking services and breaches of contract—as well as other injuries—arising therefrom. 

The operative Second Amended Complaint filed by Plaintiff/Cross-Defendant Long Spring Freight, LLC (“Long Spring Freight”) on June 14, 2021 alleges a single cause of action for breach of written or oral contract against Defendants/Cross-Complainants Sun-Yin USA, Inc, Chen Feng, and Zhen Zhong Cao (collectively, the “Sun-Yin Parties”).  The claim is premised on Sun-Yin breaching a 2006 written agreement between the parties by failing to pay Long Spring Freight special demurrage charges and chassis, local, and per diem fees per the terms of the contract.  Further, Long Spring Freight alleges that it included special finance charges in its invoices that Sun-Yin accepted by continuing to employ Long Spring Freight, and that as of December 2020, Sun-Yin was indebted to Long Spring Freight in the amount of $266,434.00 for services rendered at a 1.5% interest rate.  Though Long Spring Freight has demanded payment, none has been forthcoming from Sun-Yin. 

The Sun-Yin Parties in turn filed a Cross-Complaint on July 14, 2021 alleging (1) breach of implied covenant of fair dealing, (2)-(3) fraudulent inducement and concealment, (4) violation of the Business and Professions Code, (5) unjust enrichment, (6) monies had and received, and (7) constructive trust on the ground that Long Spring Freight had overcharged fees related to waiting time, chassis fees, per diem fees, and demurrage fees.  Long Spring Freight filed an Answer to this Cross-Complaint on September 7, 2021. 

The Sun-Yin Parties argues that Long Spring Freight has failed to comply with two court orders. The first being the Court’s April 11, 2022 Order requiring Long Spring Freight to provide initial discovery responses as well as to pay $2,585.00 in monetary sanctions. And the second being the Court’s August 17, 2022 Order requiring Long Spring Freight to provide supplemental and initial discovery responses by September 16, 2022 and to pay monetary sanctions in the amount of $2,952.40. Additionally, the Sun-Yin Parties assert that Long Spring Freight has failed to appear for its noticed deposition.

The Sun-Yin Parties request terminating sanctions in the form of striking Long Spring Freight’s complaint and answer to the cross-complaint and entering default in the Sun-Yin Parties’ favor.  Additionally, they request $8,882 in sanctions against Long Spring Freight.

Motion for Terminating or Other Contempt Sanctions: DENIED in PART and DENIED in Part

Legal Standard: Where a party engages in misuse of the discovery process, the court may impose monetary, issue, evidence, terminating, or contempt sanctions. (Code Civ. Proc., § 2023.030.) “Misuses of the discovery process include, but are not limited to, the following: [¶] (g) [d]isobeying a court order to provide discovery.” (Code Civ. Proc. § 2023.010.)

Analysis: The Sun-Yin Parties moves for terminating and monetary sanctions against Long Spring Freight on the basis that it has not appeared for its noticed deposition and has failed to comply with the April 11, 2022 and August 17, 2022 orders directing Long Spring Freight to provide initial and further responses to various discovery request and to pay monetary sanctions.  (Motion at pp. 5-7.)

California Code Civil Procedure § 2023.010(g) makes “disobeying a court order to provide discovery” a “misuse of the discovery process” for which a court may impose monetary sanctions. (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377.)  Excluding contempt proceedings, “disobedience” with a court order does not require a showing of “willful” disobedience; rather, failure to obey (i.e., noncompliance with the court's order) is all that need be shown. (See Puritan Ins. Co. v. Sup.Ct. (Tri-C Machine Corp.) (1985) 171 Cal.App.3d 877, 884, [interpreting former statute dealing with “refusal” to comply]; Societe Internationale Pour Participations Industrielles Et Commerciales, S.A. v. Rogers (1958) 357 US 197, 208 [interpreting Federal Rule 37].) “A trial court must be cautious when imposing a terminating sanction because the sanction eliminates a party’s fundamental right to trial, thus implicating due process rights.” (Lopez v. Watchtower Bible and Tract Society of New York, Inc. (2016) 246 Cal. App. 4th 566, 604, review denied (July 27, 2016).) “Discovery sanctions should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery.”  (Doppes v. Bentley Motors, Inc. (2009) 174 Cal. App. 4th 967, 992.) “A decision to order terminating sanctions should not be made lightly.  But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.” (Mileikowsky v. Tenet Healthsystem (2005) 128 Cal. App. 4th 262, 279–80, as modified on denial of reh'g (May 4, 2005).)

Here, it is undisputed that Long Spring Freight has failed to produce initial and further responses to the Sun-Yin Parties’ discovery requests as ordered by the Court and has not attended its own noticed deposition. In opposition, Long Spring Freight argues that it did not willfully disobey these court orders or fail to engage in this litigation because it was unaware of its obligations based on the lack of communication from its prior counsel, Counsel Melody Dosch. (Opposition at pp. 4-5; Hui Decl. ¶¶ 3-5.) In support of this explanation, Long Spring Freight’s current counsel explains that Counsel Dosch was the sole attorney in their firm working on this matter before her abrupt resignation and that she was dealing with personal family issues since 2021. (Gonzalez Decl. ¶¶ 4-6.) Long Spring Freight’s current attorneys were unaware of the extent of issues surrounding this case because Counsel Dosch never requested assistance. (Gonzalez Decl. ¶¶ 7-8.) Moreover, Counsel Dosch has refused to respond to communication regarding this matter since her resignation. (Gonzalez Decl. ¶ 3.) Now with new representation, it is Long Spring Freight’s intention to abide by the prior court orders, pay outstanding monetary sanctions, and meaningfully participate in discovery. (Gonzalez Decl. ¶¶ 9-11; Hui Decl. ¶ 6.)

In their reply, the Sun-Yin Parties argues that the Long Spring Freight failure to engage in this litigation continued even after new counsel entered the scene. In this regard, the Sun-Yin Parties only reference Long Spring Freight’s counsel’s failure to appear at an ex parte hearing and to respond to an email sent on September 26, 2022 regarding outstanding discovery. (Reply at pp. 2-3; Adams Supp. Decl. ¶¶ 3-5, Exhs A-C.) They also dispute the argument that Long Spring Freight has been unaware of its discovery obligations because verified responses were served in the past. (Reply at pg. 3.)

Under the circumstances, the Court finds that terminating sanctions are not appropriate. In terms of Long Spring Freight’s past abuse of the discovery process, there is evidence that this case was previously exclusively managed by Melody Dosch, a former attorney at Oldman, Cooley, Sallus, Birnberg, Coleman & Gold, LLP, up until her “abrupt resignation.” (Gonzalez Decl. ¶¶ 4-6.) Long Spring Freight has also produced evidence that this former attorney was not forthcoming with her client as to various discovery obligations. (Hui Decl. ¶ 3.) There is now a different attorney from the same firm responsible for the case.  (Gonzalez Decl. ¶ 9.) The Court is concerned by the apparent continuation of delay that occurred after that new attorney became responsible, but it now appears that the previously ordered discovery has been provided and the sanctions paid.  (Supplemental Dec of K. Yang, filed 2/17/23.) Terminating sanctions are an extreme remedy that denies one party a hearing on the merits and should be granted sparingly.  Thus, the court is not inclined to order them at present, where the concerns seem to have been rectified, however belatedly.  Nonetheless, the court may consider further sanctions, including evidentiary or terminating sanctions, in the future if the concerns from the past are not remedied. 

In terms of the Sun-Yin Parties’ request for monetary sanctions in the amount of $8,882 for fees and costs, the Court will award sanctions in this amount because of Long Spring Freight’s noncompliance with court orders. (See Puritan Ins. Co., supra, 171 Cal.App.3d at 884.) This amount is comprised of $820 in costs and $8,062 in fees, consisting of 21.7 hours spent on this motion, related meet and confer efforts and for the deposition non-appearance at rates ranging from $350 per hour to $450 per hour.

Conclusion

Accordingly, Sun-Yin Parties’ motion for terminating sanctions and other contempt sanctions is denied in part as to the request for terminating sanction and granted in part as to the request for monetary sanctions. Long Spring Freight is ordered to pay the Sun-Yin Parties sanctions of $8,882 within 30 days of this Order.