Judge Bruce G. Iwasaki, Case Number: 20STCV10768, Date: 2025-03-05 Tentative Ruling

This is an action in which Plaintiff Rotax, Inc. (Plaintiff) alleges negligence against insurance companies and their agent for procuring an unsatisfactory insurance policy.

In January 2019, Plaintiff entered into discussions with M.L. Enterprise, LLC concerning Plaintiff’s interest in storing merchandise in a warehouse leased by M.L. Enterprise (M.L. Warehouse) beginning in April 2019. One of Plaintiff’s requirements was that M.L. Enterprise obtain insurance to provide coverage in the event of damage to Plaintiff’s goods at the M.L. Warehouse. As such, the warehouse’ representative, Nicholas Lieberman, agreed to procure coverage.

In March 2019, Plaintiff referred M.L. Enterprise to Defendant Edik Davidyan (Davidyan), an insurance broker, to facilitate the purchase of the insurance. Davidyan worked for Defendant Daragon Insurance Services. Daragon contacted Defendant G.J. Sullivan Excess & Surplus Line Insurance Brokers, Inc. (GJS), a surplus lines broker, to obtain a policy. GJS ultimately procured the insurance from Underwriters at Lloyd’s (the “Policy”). The Policy stated that it provided liability coverage for the named assured as a warehouseman or bailee under warehouse receipts issued by the name assured for direct physical loss or damage to property of others while contained in the premises described in the schedule. The Policy became effective April 1, 2019.

Plaintiff alleges that, on May 31, 2019, its property was damaged by a fire at the Warehouse. Llyod’s declined to cover the loss, claiming that the insurance was for liability only, not coverage for property damage. Plaintiff sued Lloyd’s and later settled the case; Lloyd’s is no longer a party. Plaintiff also sued Daragon Insurance, Davidyan, and GJS for negligence.

Defendant GJS previously moved for summary judgment against Rotax on the negligence cause of action. On October 13, 2022, the Court denied the motion. On November 22 and December 12, 2022, Defendant GJS filed two additional motions for summary judgment on the negligence claim against Rotax, Inc. and M.L. Both were denied.

Now – with Defendants Daragon and Davidyan – Defendant GJS again moves for summary judgment. Moving Defendants contend that Plaintiff has no damages and cannot prove a claim for damages. Plaintiff opposes the motion.

Defendants’ objections to Plaintiff’s evidence are ruled as follows: Nos. 1-2, 7-10 are overruled, and Nos. 3-4, 6 are sustained, No. 5 is sustained only as to “and also from . . . Levy.”

“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.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) A triable issue of material fact exists if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Ibid.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal. App. 4th 463, 467; Code Civ. Proc. § 437c, subd. (c).)

Defendants move for summary judgment on the negligence cause of action on the grounds that Plaintiff has no damages and cannot prove a claim for damages.

“The elements of any negligence cause of action are duty, breach of duty, proximate cause, and damages.” (Carlsen v. Koivumaki (2014) 227 Cal.App.4th 879, 892.)

Here, Plaintiff seeks $1,870,402 in damages for its lost inventory, and 30% in lost profits upon resale ($561,120); these are the only two categories of damages that Rotax seeks in this case. (DSS 36.) These damages arise out of five purported shipments of clothing merchandise from Shanghai Forts to Plaintiff. (DSS 51.)

Before the Court can address the substantive issues, the Court must address several procedural issues.

First, Defendants contend that Plaintiff’s opposition was untimely filed and should be disregarded. Code of Civil Procedure section 437c, subdivision (a)(2), was recently amended to require an opposition be filed twenty days before a summary judgment hearing. The Opposition concedes it was untimely under the new timing requirements. The Court concludes that because the motion was filed in 2024, the pre-2025 time limits apply.

However, even under the prior summary judgment filing rules – requiring opposition 14 days before the hearing – Plaintiff’s Opposition is late. Nonetheless, the Court has discretion to consider late filed papers and will consider these late papers in the absence of any showing of prejudice by Defendants. (Iverson v. Superior Court (1985) 167 Cal.App.3d 544, 549 [holding court had discretion to consider tardy opposition filings]; Avila v. Chua (1997) 57 Cal.App.4th 860, 865–869 [court had discretion to grant relief from summary judgment when opposition not timely filed due to mistake of counsel].)

Second, Plaintiff’s opposition has several defects. First, the response to the separate statement contains several purported evidentiary objections. These objections are not well taken as they do not comply with California Rules of Court, Rules 3.1352 and 3.1354. That is, they are not separately made as required by the Rules of Court. Further, they object to the content of the material statements in the separate statement – which is not evidence. Plaintiff does not specifically object to the underlying evidence. Thus, there are no evidentiary objections before the Court made by Plaintiff.

Further, Plaintiff’s responsive separate statement purports to “dispute” several of Defendants’ material facts but fails to identify any evidence that would dispute these facts. Nonetheless, the Court “has discretion to consider facts not referenced in the opposing party’s separate statement.” (Ghazarian v. Magellan Health, Inc. (2020) 53 Cal.App.5th 171, 183.) The Court will exercise that discretion here.

With respect to the lost inventory, Defendants argue that Plaintiff Rotax cannot support its claim because it does not have evidence to prove (a) the existence of the orders from Shanghai Forts where there is no contract, no communications, and no documentation of any kind from Shanghai Forts; (b) Rotax did not make any payment to Shanghai Forts and did not incur liability for the goods such that any recovery to Rotax would constitute an impermissible windfall; and (b) Rotax cannot prove that the alleged inventory was delivered to the ML Warehouse and destroyed in the fire.

Summary judgment law “require[s] a defendant moving for summary judgment to present evidence, and not simply point out that the plaintiff does not possess, and cannot reasonably obtain, needed evidence.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854, 107 Cal.Rptr.2d 841.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, at p. 850.) Thus, “the party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Ibid.)

Admittedly, however, “[c]ircumstantial evidence supporting a defendant's summary judgment motion ‘can consist of ‘factually devoid’ discovery responses from which an absence of evidence can be inferred,’ but ‘the burden should not shift without stringent review of the direct, circumstantial and inferential evidence.’” (Andrews v. Foster Wheeler LLC (2006) 138 Cal.App.4th 96, 101.)

Here, Defendant Daragon propounded on Rotax its first set of discovery. Daragon’s Requests for Production of Documents (“RFPs”) sought all documents that support Plaintiff’s claim for damages (RFP No. 54); all documents that evidence its merchandise at the ML Warehouse (RFP No. 55); all documents that support the property losses it incurred from the fire (RFP No. 56); and all documents that support its damages alleged in the complaint (RFP No. 57.) (DSS 37.) Plaintiff served responses without objections on June 28, 2021. (DSS 38.) In response to RFPs No. 54 to 57, Plaintiff stated “All documents responsive in the care, custody, or control of responding party have been produced.” (DSS 38.) In response to RFPs No. 54 to 57, Plaintiff stated “All documents responsive in the care, custody, or control of responding party have been produced.” (DSS 38.)

On November 17, 2021, Defendant propounded on Rotax its second set of RFPs, which sought all documents, including financial records, evidencing the amounts Rotax paid to the vendors who delivered the merchandise it purchased to the ML Warehouse (RFP No. 68); documents that evidence what the clothing items were and the cost to manufacture the items (RFP No. 69); all communications between Rotax and the Chinese vendors from whom it ordered the merchandise (RFP No. 73); and the complete proof of loss form (RFP NO. 75). (DSS 39.)

In response to RFP No. 68, Plaintiff stated that all responsive documents have been produced, but Plaintiff did not produce any evidence that it paid anything to Shanghai Forts for the goods. (DSS 41.) Plaintiff’s response to No. 69 states that the only responsive documents are the “orders/invoices themselves,” and Plaintiff did not produce any documents to evidence the manufacturing costs of the items. (DSS 42.) Plaintiff’s response to RFP No. 73 states that Plaintiff “has been unable to locate any documents responsive to this request because responding party changed its email server and email address and the documents can no longer be traced.” (DSS 43.)

Thus, despite the discovery propounded, Defendants submits that there is no documentary evidence of any communication from Shanghai Forts Garment Co. (Shanghai Forts). (DSS 45.) The only evidence is Rotax’s own invoices[1] and purchase orders – but no evidence that the inventory was paid for. Defendants contend that their evidence shows that Plaintiff did not make any payments to Shanghai Forts. (DSS 3-4 [Torossian Depo., 159:24-160:4].)

In fact, it is undisputed by Plaintiff that there is no evidence that Plaintiff made any payments to Shanghai Forts. (PSS 7.) Rather, Plaintiff contends that it obtained the inventory on credit.

Defendants acknowledge Plaintiff’s testimony that Plaintiff “claims that he was able to make the orders on credit because he had an established relationship with Shanghai Forts, even though Rotax had not done any business with Shanghai Forts since sometime in 2002, 2004, or 2005.” (DSS 3.) However, Defendants argue that Rotax’s own accounts payables do not show any liability owed to Shanghai Forts. (DSS 47-48.) Nor are there any letter of credit or other document to show that Rotax incurred any legal or monetary liability form Shanghai Forts. (DSS 49.)[2] Based on the foregoing, Defendants conclude that it is not possible for Rotax to have placed a $1.8 million order with a foreign company with zero documentation from Shanghai Forts and with no evidence of payment.

However, this evidence does not shift Defendants’ initial burden. Defendants’ own evidence includes testimony from Mr. Torromasian wherein he represents that he obtained the inventory based on credit. Defendants ask the Court to find that Mr. Torromasian’s deposition statement is simply not credible.

The Supreme Court emphasized that a summary judgment cannot be granted on the basis of a weighing of evidence or resolution of conflicting, material facts. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 856.) Thus, for example, if the credibility of witnesses was determinative, summary judgment would be inappropriate. (See Hass v. RhodyCo Productions (2018) 26 Cal.App.5th 11, 33 [defense summary judgment on claim of gross negligence inappropriate in part due to “credibility questions that need to be answered”].)

Accordingly, while the lack of documentary evidence corroborating the acquisition of inventory is certainly suspicious, the Court, on summary judgment, cannot make a credibility determination that Plaintiff’s statement is false based on this lack of other corroborating evidence.

The moving papers also discuss new purchase orders for inventory that “would have been delivered had the fire not occurred.” (DSS 107.) These new purchase orders are not determinative given the Court’s findings on the original five purchase orders. Nonetheless, Defendants’ reliance on Thoren v. Johnston & Washer (1972) 29 Cal.App.3d 270 to have these “new” purchase orders disregarded are not well taken.

In Thoren, the plaintiff identified one person in response to an interrogatory asking for all witnesses who arrived at the scene of the plaintiff's accident immediately or shortly after it occurred. (Thoren, supra, 29 Cal.App.3d at pp. 272–273.) In opening statement at trial -- seven months later -- the plaintiff's attorney referred to expected testimony from a different person, Clubb, who had arrived at the scene shortly after the accident, had taken photographs, and could describe the conditions of the area.

In Thoren, the Court of Appeal held that a trial court did not abuse its discretion by barring testimony of Clubb, a witness whose name was willfully omitted from interrogatory answers. The court found that counsel either previously knew of the existence of Clubb, or else “deliberately refrained” from determining it until after the interrogatories were answered. In either case, the court stated that the interrogatory answer omitting the witness' name was “willfully false.” Addressing the trial court's power to exclude “the testimony a witness willfully excluded from an answer to an interrogatory seeking the names of witnesses to an occurrence” (id. at p. 273), Thoren explained, “[a]n order which bars the testimony of a witness whose name was deliberately excluded in an answer to an interrogatory seeking the names of witnesses protects the interrogating party from the oppression otherwise flowing from the answer. One of the principal purposes of civil discovery is to do away with ‘the sporting theory of litigation—namely, surprise at the trial.’ (Chronicle Pub. Co. v. Superior Court [ (1960) ] 54 Cal.2d 548, 561.)

The facts in Thoren are distinguishable from the facts here. Here, the “new” product invoices were clearly produced before the motion for summary judgment was filed. While there is no explanation for the delay in this production of this discovery, the facts are unlike Thoren and do not support excluding this evidence on this motion for summary judgment.

That is, Thoren “does not stand for the proposition that evidence may be excluded based on the mere failure to supplement or amend an interrogatory answer that was truthful when originally served.” (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1325; see also R & B Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4th 327, 356–357.) Nor does Thoren stand for the proposition that evidence may be excluded on the ground an interrogatory answer is evasive or incomplete. The Civil Discovery Act (§ 2016.010 et seq.) provides specific remedies for evasive or incomplete discovery responses. The imposition of an evidence sanction is not one of the remedies.

Rather, Section 2030.300, subdivision (a)(1), provides that the party propounding an interrogatory may file a motion to compel a further response where the answer received is “evasive or incomplete.” And the failure timely to file a motion to compel a further response to an evasive or incomplete answer constitutes a waiver of any right to a further response. (Code Civ. Proc., § 2030.300, subd. (c).) The prevailing party on a motion to compel further responses is limited to an award of monetary sanctions. (Code Civ. Proc., § 2030.300, subd. (d).) An evidence sanction is available only where the responding party “fails to obey an order compelling further response to interrogatories.” (Code Civ. Proc., § 2030.300, subd. (e).)

Based on the foregoing, this motion for summary judgment is not the proper method by which to seek to exclude these newly produced purchase orders.

Defendants also contend that there is no evidence that the lost inventory from Shanghai Forts was actually delivered to the ML Warehouse. Specifically, Defendants argue no bill of ladings were produced and such documents are required to import intentional goods. (Mot., 7:2-10.) As Defendants further explain, Plaintiff retained Becky O’Malley (O’Malley) as its rebuttal expert on the issue of whether Rotax received the alleged inventory at the ML Warehouse. (DSS 64.) O’Malley testified that (1) a bill of lading is required for a shipment from China to show that the goods have landed where they need to be, and (2) companies cannot ship textiles from China to the United States without a bill of lading because the goods cannot make it through the customs clearance process without one. (DSS 65.) O’Malley never saw any bills of lading in this case. (DSS 66.)

Again, Defendants do not shift their burden on this ground. That is, the absence of this documentary evidence does not shift Defendants’ burden.

Moreover, the opposition evidence contains the declaration of Sako Gharakhani who represents that he walked through the warehouse and observed Rotax’s merchandise – based on the writing on the boxes. (Gharakhani Decl., ¶¶ 4-5.)[3] Plaintiff also submits the deposition testimony of Joseph Levy, the manager of the warehouse, who represents that he was present when Rotax’s inventory arrived at the Warehouse. (Sales Decl., ¶ 3 [Levy Depo., 162:1-18].)

On summary judgment, this evidence is sufficient to create a triable issue of material fact. Finding that there is a triable issue of material fact with respect to the lost inventory, the motion for summary judgment may be denied. That is, this evidence is sufficient to raise triable issue of material facts with respect to damages. Thus, the Court need not address whether there is also a triable issue of material fact with respect to the lost profits damages because the damages element has been satisfied with the lost inventory damages.

[1] The name “Shanghai Forts” appears as the “shipper” on Rotax’s invoice and purchase orders, but there are no documents from Shanghai Forts itself. (DSS 46.)

[2] Defendants also argue that Plaintiff have conceded there was no liability incurred by pointing to Plaintiff’s Form 9.1 interrogatory response. Defendant states that, in response to Daragon’s Form Interrogatories, Set One, No. 9.1, Rotax answered “none” when asked if there was any person to whom an obligation relating to the alleged inventory was incurred. (DSS 50.) However, this misstates the nature of the interrogatory which pertain to “other damages” which Plaintiff identified as the lost profits – not the lost inventory identified in Form Interrogatory No. 7.

[3] This portion of the declaration is admissible.

Department 58