Judge Donald F. Gaffney, Case Certain Underwriters at Loyds v. Harvest King Trading USA 2022-08-03 Tentative Ruling

Judge: Donald F. Gaffney, Case: Certain Underwriters at Loyds v. Harvest King Trading USA, Date: 2022-08-03 Tentative Ruling

TENTATIVE RULING

Motion 1. Motion to Bifurcate Action

Plaintiff Certain Underwriters at Lloyds Subscribing to Marine Cargo Insurance Policy No. B1230WM02643A18 moves to bifurcate discovery and dispositive motions on Plaintiff’s rescission claim. For the following reasons, the motion is DENIED.

Code of Civil Procedure section 598 provides, in relevant part:

The court may, when the convenience of witnesses, the ends of justice, or the economy and efficiency of handling the litigation would be promoted thereby, on motion of a party, after notice and hearing, make an order, no later than the close of pretrial conference in cases in which such pretrial conference is to be held, or, in other cases, no later than 30 days before the trial date, that the trial of any issue or any part thereof shall precede the trial of any other issue or any part thereof in the case, except for special defenses which may be tried first pursuant to Sections 597 and 597.5.

Code of Civil Procedure section 1048(b) also provides that:

The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of this state or of the United States.

This is consistent with Code of Civil Procedure section 128(3), which confirms that the court possesses broad discretion to “provide for the orderly conduct of proceedings before it.”

Here, Plaintiff fails to justify the requested relief and, therefore, the court declines to exercise its discretion at this time to bifurcate Plaintiff’s rescission claim.

Discovery on the rescission claim has already begun, as Plaintiff has propounded its written discovery and received responsive documents. Plaintiff also noticed depositions for Defendant’s PMK on the rescission matter. To the extent Plaintiff believes Defendant is evading discovery, Plaintiff can move to compel.

Plaintiff’s argument that Defendant intends to delay Plaintiff’s discovery in favor of propounding discovery on Defendant’s own cross-claims is not substantiated. Defendant’s cross-complaint is not yet on file, and Defendant has yet to propound discovery. In other words, to the extent the motion is needed—it is premature.

Defendant to give notice.

Motion 2. Motion for Leave to File Cross-Complaint

Defendant Harvest King Trading USA, Limited, moves for leave to file a cross-complaint. For the following reasons, the motion is GRANTED.

There are two types of cross-complaints: compulsory cross-complaints and permissive cross-complaints. A compulsory cross-complaint is a cross-complaint that is asserted against the plaintiff and related to the subject matter of the complaint. (Code Civ. Proc., § 426.30.) A cross-complaint is “related” to the complaint if it arises out of the same transaction, occurrence, or series of transactions or occurrences as the complaint. (Code Civ. Proc., § 426.10(c).) All other cross-complaints are permissive cross-complaints.

Section 426.50 provides that: “A party who fails to plead a cause of action subject to the requirements of this article, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.”

A liberal construction is given to the application of the compulsory cross-complaint statute. (Align Technology, Inc. v. Bao Tran (2009) 179 Cal.App.4th 949, 967.) “The test requires not an absolute identity of factual backgrounds for the two claims, but only a logical relationship between them”. The key question is “are any factual or legal issues relevant to both claims?” The goal is to avoid duplication of time and effort that comes from separate suits on the same events. (Currie Medical Specialties, Inc. v. Bowen (1982) 136 Cal.App.3d 774, 777.) Claims that are only loosely related in that they involve some of the same parties and the same matter, directly or indirectly, are not logically related if the trial of the claims does not involve a duplication of time and effort due to the fact that there are factual and legal issues that are relevant to both claims. (Cal. Judges Benchbook: Civ. Proceedings-Before Trial (2019) § 12.195 [citing ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd. (2016) 5 Cal.App.5th 69, 84].)

There is also a liberal policy regarding the filing of cross-complaints. (Weil & Brown, Cal. Prac. Guide, Civ. Proc. Before Trial (The Rutter Group 2019) ¶ 6:557.) If the proposed cross-complaint is permissive, leave of court may be granted “in the interests of justice” at any time during the course of the action. (Code Civ. Proc., § 428.50(c).) On the other hand, if the proposed cross-complaint is compulsory, leave must be granted so long as defendant is acting in good faith. (CCP § 426.50; Weil & Brown, Cal. Prac. Guide: Civ. Proc. before Trial (The Rutter Group 2019) ¶ 6:555.)

Here, the cross-complaint is compulsory. Defendant Harvest King filed this motion approximately seven months after first appearing in this action, and it does not appear the filing of the Cross-Complaint will cause delay or unduly prejudice Plaintiff. Plaintiff fails to show that justice requires setting interim discovery and motion deadlines here.

No later than 08/10/2022, Defendant Harvest King Trading USA, Limited, shall file and serve the proposed Cross-Complaint, filed as Register of Action No. 72.

Defendant to give notice.