Judge David J. Cowan, Case 21STCV41861 2022-08-04 Tentative Ruling

Please notify Dept. 1’s courtroom staff by telephone (213-633-0601) no later than 8:30 a.m. the day of the hearing if you wish to submit on the tentative ruling rather than argue the motion. If you submit on the tentative, you must immediately notify the other side that you will not appear at the hearing. If you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the motion. Please keep in mind that appearing at the hearing and simply repeating the arguments set forth in the papers is not a good use of the court’s time or the parties’ time.

Starstone National Insurance Company v. Pine Grove Healthcare & Wellness Centre, LP, et al. (21STCV41861); Starstone National Insurance Company v. Four Seasons Healthcare & Wellness Center, LLC, et al. (21STCV42981); Starstone National Insurance Company v. Bakersfield Healthcare & Wellness Centre, LLC, et al. (BCV-21-102747)

On January 6, 2022, Defendants filed a Notice of Related Case indicating Los Angeles Superior Court civil case 21STCV41861 is related to Los Angeles Superior Court civil case 21STCV42981 and Kern County Superior Court civil case BCV-21-102747.[1] On January 26, 2022, Judge Elaine Lu declined to relate civil cases 21STCV41861 and 21STCV42981, and concluded civil case BCV-21-102747 could not be related to the above cases unless and until it is transferred from the Kern County Superior Court to the Los Angeles Superior Court.

On July 5, 2022, Defendants filed a Motion for Reconsideration in Department 1 seeking an order relating civil cases 21STCV41861 and 21STCV42981 and transferring civil case BCV-21-1027470 to Los Angeles Superior Court for coordination with the first two cases. Department 1 did not receive a Response to the Motion for Reconsideration. "Notice of the motion [to coordinate] shall be served on all parties to each action and on each court in which an action is pending." (CCP sec. 403.) Here, the Motion for Reconsideration was served on all necessary parties (i.e., Starstone National Insurance Company) and courts (i.e., Los Angeles Superior Court and Kern County Superior Court).

· Starstone National Insurance Company v. Pine Grove Healthcare & Wellness Centre, LP, et al. (21STCV41861) initiated on November 12, 2021 when Starstone National Insurance Company filed a Complaint against Pine Grove Healthcare & Wellness Centre, LP, San Gabriel Healthcare & Wellness Centre, LP (dba Ivy Creek Healthcare & Wellness Centre), York Healthcare & Wellness Centre, LP, Alhambra Healthcare & Wellness Centre, LP, G4 Wellness GP, LLC, and Does 1-20 stating causes of action for breach of contract and quantum meruit, and common counts of account stated and open book account. The Complaint alleges Starstone National Insurance Company extended a workers' compensation and employer liability insurance policy to various defendants (policy no. T10160376) covering the period between June 1, 2016 and June 1, 2017. That policy "provided that plaintiff would determine the 'Final Premium' after the policy period ended" by reviewing financial records and information maintained by the defendants, and authorized Starstone to audit defendants' financial records for "up to three years from the end of any policy period" to determine the Final Premium.

However, this "Policy was cancelled on April 6, 2017." Starstone alleges it "conducted an audit(s) of defendants' financial records and determined that defendant(s) owed a Final Premium in the total amount of $40,310.00 on policy no. T10160376." Starstone billed defendants for this premium, but by November 30, 2017, the defendants "failed and refused" to make payment.

On January 6, 2022, Pine Grove Healthcare, San Gabriel Healthcare, York Healthcare, Alhambra Healthcare, and G4 Wellness filed an Answer to the Complaint asserting various affirmative defenses, including that Starstone "entered a release on October 27, 2020, as part of a settlement agreement" which "bar[s] and extinguish[es]" Starstone's claims. These defendants also filed a Notice of Related Case indicating Los Angeles Superior Court civil cases 21STCV41861 and 21STCV42981 are related to Kern County Superior Court civil case BCV-21-102747.

On January 26, 2022, Judge Elaine Lu concluded civil cases 21STCV41861 and 21STCV42981 are not related because the cases involve different defendants, different insurance policies, and different financial records audited to determine the final premium. Judge Lu also concluded civil case BCV-21-102747 could not be related because it is pending in a different superior court, indicating the parties must “first obtain[] a transfer of venue of the Kern County Superior Court case to Los Angeles Superior Court.”

On April 11, 2022, Defendants filed a Motion to Transfer and Consolidate civil case BCV-21-102747 with civil cases 21STCV41861 and 21STCV42981, pending in the Los Angeles Superior Court.

On June 13, 2022, Judge Lu denied the Motion to Consolidate and Transfer "without prejudice" and indicated the parties "may refile the instant motion in the proper department, Department 1."

On July 5, 2022, Defendants filed, in Department 1, a Motion for Reconsideration of Judge Lu's orders declining to relate and/or coordinate civil cases 21STCV41861 and 21STCV42981 with civil case BCV-21-102747.

On July 28, 2022, Defendants filed a Notice of Non-Opposition to the Motion for Reconsideration.

This case is pending in Department 26 of the Stanley Mosk courthouse with a Post-Settlement Status Conference set for November 1, 2022.

· Starstone National Insurance Company v. Bakersfield Healthcare & Wellness Centre, LLC, et al. (BCV-21-102747) – initiated on November 18, 2021 when Starstone filed a Complaint against Bakersfield Healthcare & Wellness Centre, LLC (aka The Rehabilitation Center of Bakersfield); Riverside Healthcare & Wellness Centre, LLC, Orange Healthcare & Wellness Centre, LLC, and Does 1-20 stating causes of action for breach of contract and quantum meruit, and common counts for account stated and open book account. The Complaint alleges Starstone issued a workers' compensation and employer liability insurance policy to the defendants "for the period of June 30, 2016 through June 30, 2017," identified as policy T10160041. That policy "provided that plaintiff would determine the 'Final Premium' after the policy period ended" by reviewing financial records and information maintained by the defendants, and authorized Starstone to audit defendants' financial records for "up to three years from the end of any policy period" to determine the Final Premium.

After the "Policy was cancelled on April 6, 2017,” Starstone "conducted an audit(s) of defendants' financial records and determined that defendant(s) owed a Final Premium in the amount of $68,273.00," and billed the defendants in January 2018, but the defendants have "failed and refused" to pay this premium.

· Starstone National Insurance Company v. Four Seasons Healthcare & Wellness Center, LP, et al. (21STCV42981) – initiated on November 22, 2021 when Starstone filed a Complaint against Four Seasons Healthcare & Wellness Center, LP, Four Seasons Assisted Living Center, LLC, Four Seasons Wellness GP, LLC, and Does 1-20 stating causes of action for breach of contract and quantum meruit, and common counts for account stated and open book account. The Complaint alleges Starstone issued a workers' compensation and employer liability insurance policy to the defendants "for the period of July 1, 2016 through July 1, 2017," identified as policy T10160050. That policy "provided that plaintiff would determine the 'Final Premium' after the policy period ended" by reviewing financial records and information maintained by the defendants, and authorized Starstone to audit defendants' financial records for "up to three years from the end of any policy period" to determine the Final Premium.

After the "Policy was cancelled on April 6, 2017,” Starstone "conducted an audit(s) of defendants' financial records, or after defendant(s) failed to provide financial records . . . [Starstone] estimated its exposure" and "determined that defendant(s) owed a Final Premium in the total amount of $40,000.00." Starstone billed the defendants in February 2018, but the defendants have "failed and refused" to pay this premium.

On January 6, 2022, Four Seasons Healthcare, Four Seasons Assisted Living, and Four Seasons Wellness filed an Answer to the Complaint asserting several affirmative defenses, including the existence of "a release [dated] October 27, 2020, as part of a settlement agreement" with Starstone. These defendants also filed a Notice of Related Case indicating Los Angeles Superior Court civil cases 21STCV41861 and 21STCV42981 are related to Kern County Superior Court civil case BCV-21-102747.

This case is pending in Department 49 of the Stanley Mosk courthouse with a Post-Mediation Status Conference set for November 29, 2023.

Cases are related when they (1) involve the same parties and are based on the same or similar claims, (2) arise from the same or substantially identical transactions, incidents, or events requiring the determination of the same or substantially identical questions of law or fact, (3) involve claims against, title to, possession of, or damages to the same property, or (4) are likely for other reasons to require substantial duplication of judicial resources if heard by different judges. (CRC 3.300(a).) [2]

The Supervising Judge of the Civil Division (sitting in Department 1) is authorized to hear a Motion to Relate Cases pertaining to cases “pending in the Central District or . . . pending in two or more different districts” whenever “the judge designated under [CRC] 3.300(h)(1)(A)(B)(C) to make the decision, does not order related any of the cases set forth in the Notice of Related Cases.” (Local Rule 3.3(f)(3); CRC 3.300(h)(1)(D).) Here, Defendants filed a Notice of Related Case and Judge Lu declined to relate cases pending in the Stanley Mosk courthouse, located in the Central District. (Local Rule 2.2(b).)

A trial judge may, “on motion,” transfer an action “from another court to that judge's court for coordination with an action involving a common question of fact or law.” (CCP sec. 403.) In the Los Angeles Superior Court, a motion for coordination “seeking to transfer a case or cases to the Central District shall be filed and heard in Department 1.” (Local Rule 3.3(h).)

A motion for coordination “shall be supported by a declaration stating facts showing that the actions meet the standards specified in [CCP] Section 404.1, are not complex as defined by the Judicial Council and that the moving party has made a good faith effort to obtain agreement to the transfer from all parties to each action.” (CCP sec. 403.) “Notice of the motion shall be served on all parties to each action and on each court in which an action is pending,” and any party in the underlying actions may oppose transfer. (CCP sec. 403.)

A case is complex if it “requires exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel.” (CRC 3.400(a).) Factors courts “must consider” in assessing complexity include whether the case requires “(1) Numerous pretrial motions raising difficult or novel legal issues that will be time-consuming to resolve; (2) Management of a large number of witnesses or a substantial amount of documentary evidence; (3) Management of a large number of separately represented parties; (4) Coordination with related actions pending in one or more courts in other counties, states, or countries, or in a federal court; or (5) Substantial postjudgment judicial supervision.” (CRC 3.400(b).)

Motions for coordination are controlled by CRC 3.500, which requires the moving party to “make a good-faith effort to obtain agreement of all parties to each case to the proposed transfer and consolidation” and show the party “has notified all parties of their obligation to disclose to the court any information they may have concerning any other motions requesting transfer of any case” relevant to the motion for coordination. (CRC 3.500(b); 3.500(c)(3).) An order granting coordination must “specify the reasons supporting a finding that the transfer will promote the ends of justice, with reference to” several factors addressed further below. (CRC 3.500(d)(1)-(8); CCP sec. 404.1.) In the event the motion is granted, CRC 3.500(e) requires the moving party to serve the order on all parties to each case and send it to the Judicial Council and to the presiding judge” of the transferring courts.

Upon review, the cases are related within the meaning of Rule 3.300(a)(4). Judge Lu previously concluded the cases are not related because the “defendants in each of these cases appears to be unrelated to the defendants in the other cases” and the “cases do not arise out of the same or substantially identical transactions.” (CRC 3.300(a)(1)-(2).) Judge Lu reasoned that the cases “will involve an audit of a different set of financial records for the particular defendant[s] in each” case, pointing out that the “financial records, which enabled plaintiff to calculate the final premium due from each defendant will be different.”

Defendants’ Motion does not address Judge Lu’s reasoning for declining to relate the cases, and Department 1 agrees that the cases are not related under CRC 3.300(a)(1) and (a)(2). The cases arise from different events to the extent Starstone extended three distinct insurance policies to three different sets of defendants, all of whom refused to pay the “Final Premium” billed by Starstone under each policy. (CRC 3.300(a)(2).) The cases plainly do not involve all “the same parties”; Starstone is the only party common to all three cases. (CRC 3.300(a)(1).)

Instead, Defendants argue the cases are related because each case involves the same plaintiff (Starstone) asserting the same causes of action (breach of contract, quantum meruit, account stated, and open book account) based on substantially similar factual allegations regarding the contents of Starstone’s policies and the defendants’ failure to pay the "Final Premium" billed after Starstone’s audit. Defendants argue the "content of the contracts at issue are common questions of fact, and to the extent interpretation of the contracts is required, common questions of law as well." (Motion, p. 6.) Defendants also suggest the financial audits performed by Starstone were, or at least “should be,” methodologically "similar if not identical." (Motion, p. 6.) Finally, Defendants point out all three cases involve an overlapping affirmative defense based on an October 27, 2020 settlement agreement with Starstone. The Defendants in all three cases are represented by the same counsel. (Cohn Decl., para. 4)

While Judge Lu correctly concluded the cases arise out of different transactions involving different parties, the cases are nonetheless related under CRC 3.300(a)(4) because the cases are highly likely to result in duplication of judicial resources if determined separately. (CRC 3.300(a)(4).) Civil cases 21STCV41861 and 21STCV42981 involve substantially identical insurance policies issued to different defendants; the policies authorize Starstone to audit its insured’s financial records to fix a “Final Premium” upon termination of the policy, and to demand payment of the difference between the “Final Premium” and premiums actually billed. Both cases will require construction of substantially the same language in each policy in determining whether Starstone fulfilled its obligations under these policies and properly fixed and billed its “Final Premium.” Moreover, the defendants assert substantially identical defenses in both cases, particularly the existence of an October 27, 2020 settlement with Starstone, which defense is likely to revolve around the same evidence in each case.

It would be redundant for two different judges to interpret substantially identical policies and determine whether claims under those policies are extinguished by the same settlement. There is a meaningful risk of conflicting rulings regarding construction of the insurance policies and application of the alleged settlement release. While the Court agrees with Judge Lu that the cases arise from different transactions with different defendants, and thus require consideration of distinct financial records for each set of defendants, the cases are nonetheless likely to require duplication of judicial resources if left separate due to the striking similarities between Starstone’s alleged policies and Defendants’ alleged breaches related to the “Final Premium.” This is a sufficient basis to relate cases under CRC 3.300(a)(4) even where the cases otherwise involve different defendants and arise from different transactions under CRC 3.300(a)(1)-(2).

Defendants also seek to transfer civil case BCV-21-102747 from the Kern County Superior Court to the Stanley Mosk courthouse, which is located in the Central District of the Los Angeles Superior Court, for coordination with cases 21STCV41861 and 21STCV42981. “Coordination motions seeking to transfer a case or cases to the Central District shall be filed and heard in Department 1.” (LASC Local Rule 3.3(h).) Indeed, Defendants have already requested Judge Lu transfer case BCV-21-102747 for coordination; Judge Lu denied that request “without prejudice” to be refiled in Department 1. Department 1 therefore considers the request to transfer and coordinate case BCV-21-102747 with cases 21STCV41861 and 21STCV42981.

Initially, the cases do not appear to be complex. Complex cases “require[] exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel.” (CRC 3.400(a).) Complex cases involve some combination of “[n]umerous pretrial motions raising difficult or novel legal issues that will be time-consuming to resolve,” “a large number of witnesses or a substantial amount of documentary evidence,” “a large number of separately represented parties,” potential cases for coordination, and/or or “[s]ubstantial postjudgment judicial supervision.” (CRC 3.400(b).)

Starstone is represented by the same counsel in all three cases; the various Defendants in each case are also represented by the same counsel. (Cohn Decl., para. 4.) The cases thus do not involve “a large number of separately represented parties.” There is no indication that these insurance premium disputes involve “difficult or novel legal issues that will be time-consuming to resolve” before trial. (Cohn Decl., para. 12.) Nor is there any indication the cases will require unusually substantial amounts of “documentary evidence” or witness testimony; the cases appear to turn on the insurance policies themselves, the October 27, 2020 settlement, and potentially the financial records audited by Starstone. The Court lacks grounds to conclude that issues relating to these audits will require an abnormally “large number of witnesses or a substantial amount of documentary evidence.” Finally, as Starstone merely seeks money in each case (as opposed to, for example, injunctive relief), the Court finds it unlikely the cases would require substantial postjudgment supervision regardless of whether Starstone prevails. The cases are not complex.

All three cases involve predominating, significant, and common questions of fact and law concerning the construction of Starstone’s substantially identical insurance policies and Defendants’ alleged settlement with Starstone and applicability of that settlement to the instant claims. (CRC 3.500(d)(2).) Though the Court was not provided Defendants’ Answer in the Kern case, Defendants’ counsel alleges all Defendants “alleged the same affirmative defense raising questions regarding the interpretation of the exact same contract, an October 27, 2020 settlement agreement.” (Cohn Decl., para. 6.) As discussed, there is a non-negligible risk of conflicting rulings on these common issues if the cases are not coordinated. (CRC 3.500(d)(7).) The cases should be coordinated before further development in these actions, including discovery and pretrial motion practice, which for the most part have not yet begun. (CRC 3.500(d)(4).)

Defendants argue the Los Angeles Superior Court would be a more convenient forum for the parties, witnesses, and counsel. (CRC 3.500(d)(3).) Defendants indicate Starstone’s counsel is located in Orange County, which is closer to Los Angeles County than Kern County. Starstone’s counsel has not filed an Opposition disputing this contention. Defendants also identify Rockport Administrative Services, LLC, "which maintains its corporate offices in Los Angeles County," as a potential common witness in all three cases. (Cohn Decl., para. 7.) The Court also concludes coordination would promote “efficient utilization of judicial facilities” by avoiding overlapping proceedings in different counties. (CRC 3.500(d)(5).) Defendants also point out the “calendar of the courts” supports coordination because there are more “available courts and courtrooms to adjudicate the Three Cases” in the Los Angeles Superior Court, noting that the Kern case “has not yet been calendared” even though it was filed around the same time as the Los Angeles cases, suggesting the cases may proceed faster if adjudicated in the Los Angeles Superior Court. (CRC 3.500(d)(6).)

Finally, Defendants argue the cases are more likely to settle if they are coordinated. (CRC 3.500(d)(8).) Specifically, Defendants argue the three cases could be properly mediated together if coordinated but argue they would have “no obligation . . . to actually mediate all three cases together, despite the similarities of the parties, their counsel, and the factual claims,” if the cases are not coordinated. (Motion, p. 11; Cohn Decl., para. 11.) This factor supports coordinating the cases; if coordination is denied, the cases will be less likely to settle because the parties will likely mediate each case separately. Mediating the cases together is likely to be more efficient and permit consistent resolution of Starstone’s similar claims. Moreover, Starstone has allegedly agreed that the Kern case should be transferred to the Los Angeles Superior Court. (Cohn Decl., para. 13.) Though Starstone allegedly opposes coordination, Starstone failed to file any Response to this Motion disputing the existence of a stipulation to transfer or stating reasons not to transfer or coordinate the Kern case.

Thus, the Court concludes the interests of justice would be promoted by transferring the Kern case to the Los Angeles Superior Court. Defendants are ordered to “promptly take all appropriate action necessary to assure that the transfer takes place.” (CRC 3.500(f).) Defendants are ordered to give notice of this Order to all parties, the Presiding Judge of the Kern County Superior Court, the judge currently assigned to civil case BCV-21-102747, and the Judicial Council. (CRC 3.500(e).)

For the foregoing reasons, the Court finds civil case 21STCV41861 is related to civil case 21STCV42981. Civil case 21STCV42981 is reassigned to Department 26 of the Stanley Mosk courthouse for all purposes pursuant to CRC 3.300(h)(1)(C) and Local Rule 3.3(f). Any hearings in civil case 21STCV42981 are advanced and vacated, but may be reset as needed.

The Court orders Kern County Superior Court civil case BCV-21-102747 transferred to Department 26 of the Stanley Mosk courthouse for coordination with Los Angeles Superior Court civil cases 21STCV41861 and 21STCV42981 pursuant to CCP sec. 403, CRC 3.500, and Local Rule 3.3(h). The transfer and coordination of these cases would promote the ends of justice for the reasons set forth above.

Defendants are now required to “promptly take all appropriate action necessary to assure that the transfer takes place.” (CRC 3.500(f).) Defendants are ordered to give notice of this Order to all parties, the Presiding Judge of the Kern County Superior Court, the judge currently assigned to civil case BCV-21-102747, and the Judicial Council. (CRC 3.500(e).)

[1] “Defendants” include Pine Grove Healthcare & Wellness Centre, LP, San Gabriel Healthcare & Wellness Centre, LP (dba Ivy Creek Healthcare & Wellness Centre), York Healthcare & Wellness Centre, LP, Alhambra Healthcare & Wellness Centre, LP, G4 Wellness GP, LLC, Bakersfield Healthcare & Wellness Centre, LLC (aka The Rehabilitation Center of Bakersfield); Riverside Healthcare & Wellness Centre, LLC, Orange Healthcare & Wellness Centre, LLC, Four Seasons Healthcare & Wellness Center, LP, Four Seasons Assisted Living Center, LLC, and Four Seasons Wellness GP, LLC. All Defendants are represented by the same counsel and are pursuing the instant Motion together. (Cohn Decl., para. 4.)

[2] For clarity, Court briefly addresses Defendants’ partial misstatement of the standard for relation. Defendants assert cases may be related if “one of the following is satisfied: the cases involve the same parties, arise from same or substantially similar transactions or questions of law or fact, involve claims against the same property, or they are likely to require substantial duplication of judicial resources.” (Motion, p. 4.) Identity of parties is not a sufficient basis to relate cases; CRC 3.300(a)(1) requires similar claims as well. Further, cases cannot be related merely because they “arise from [the] same or substantially similar transactions” or involve overlapping questions of law or fact. CRC 3.300(a)(2) requires the cases arise from substantially identical events and require “the determination of the same or substantially identical questions of law or fact.” Defendants accurately state the standard for relation under CRC 3.300(a)(3) and (4).