Judge Holly J. Fujie, Case 20STCV30823 2022-08-03 Tentative Ruling

MOVING PARTY: Defendant/Cross-Complainant Datametica Solutions, Inc. (“Moving Defendant”)

RESPONDING PARTIES: Plaintiff/Cross-Defendant Sea Level, LLC (“Sea Level”) and Cross-Defendants Peter Mertz, T.R. Youngblood (collectively, the “Sea Level Parties”)

This action arises out of a business relationship. On August 13, 2020, Plaintiff filed a complaint (the “Complaint”) alleging: (1) breach of written contract; (2) breach of implied covenant of good faith and fair dealing; (3) common counts; (4) account stated; and (5) violation of Civil Code section 1738.10, et seq. Moving Defendant subsequently asserted cross-claims against Sea Level and the Sea Level Parties; the currently operative second amended cross-complaint (the “SAXC”) alleges: (1) breach of contract; (2) common counts; (3) breach of implied covenant of good faith and fair dealing; and (4) fraud.

On December 23, 2021, Moving Defendant filed a motion for summary judgment and/or adjudication (the “Motion”) to the Complaint and 16 of the affirmative defenses asserted in Sea Level’s answer (the “Answer”) to the SAXC.

As a preliminary matter, the Court finds that the Notice of Motion adequately sets forth the basis for Moving Defendant’s arguments with respect to the causes of action alleged in the Complaint as well as the affirmative defenses asserted in the Sea Level Parties’ Answer.

The Sea Level Parties’ evidentiary objections to the Declaration of Rajiv Gupta (“Gupta Decl.”) numbers 2-4, 6, 7, and 16 are SUSTAINED. Objections to the Gupta Declaration numbers 1, 5, 8, 10-15, and 17-20 are OVERRULED.

Moving Defendant’s objections to the Declaration of Laurence C. Osborn (“Osborn Decl.”) are OVERRULED in their entirety. Moving Defendant’s objections to the Declaration of Peter Mertz (“Mertz Decl.”) numbers 12, 13, and 15 are SUSTAINED. Objections to the Mertz Declaration numbers 1-11, 14, and 16-18 are OVERRULED.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) California Code of Civil Procedure (“CCP”) section 437c, subdivision (c) requires the trial judge to grant summary judgment if all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (CCP § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

A moving defendant may rely on factually devoid discovery responses to shift the burden of proof. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 590.) Once the burden shifts as a result of the factually devoid discovery responses, the plaintiff must set forth the specific facts which prove the existence of a triable issue of material fact. (Id.) Where a defendant alleges that a plaintiff lacks evidence of a particular matter based on discovery responses, the defendant’s discovery must have been specifically directed at that particular matter in order to show that a plaintiff has no evidence to support a particular proposition in connection with a motion for summary adjudication. (Gulf Ins. Co. v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2000) 79 Cal.App.4th 114, 135-36.) The plaintiff’s responses to comprehensive discovery must fully disclose all evidence known to them at the time of their responses. (Andrews v. Foster Wheeler LLC (2006) 138 Cal.App.4th 96, 106.) If the plaintiff responds to comprehensive interrogatories seeking all known facts with boilerplate answers that restate their allegations, or simply provide laundry lists of people and/or documents, the burden of production will almost certainly be shifted to them once defendant moves for summary judgment and properly present plaintiffs’ factually devoid discovery responses. (Id. at 107.)

The elements of a cause of action for breach of contract are: (1) the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) the resulting damage to plaintiff. (Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1614.)

Moving Defendant provides evidence of an agreement (the “Agreement”) it entered into with Sea Level which consisted of a master services agreement (the “MSA”), a marketing statement of work (the “Marketing SOW”), and a customer sales statement of work (the “Sales SOW”). (Separate Statement of Undisputed Material Facts (“UMF”) 1-2.) Due to Sea Level’s failure to perform, Moving Defendant terminated the Agreement in its entirety on or about February 28, 2019. (See Gupta Decl. ¶ 13.)

Moving Defendant has not established that there are no triable issues of fact to the breach of contract claim as it has not presented evidence that it substantially performed or was excused from performing under the Agreement. For example, Moving Defendant has not provided evidence that it terminated the Agreement pursuant to the terms provided for in Paragraph 14 of the MSA, which requires written notice to the breaching party. (See Exhibit 1 ¶ 17.) Moreover, Moving Defendant concedes that the Sea Level Parties have introduced sufficient evidence to raise a triable issue of fact as to the breach of contract claim. (See Reply 1:9-12.) The Court therefore DENIES the Motion to the first cause of action. As the second through fourth causes of action are predicated on the breach of contract claim, the Court also DENIES the Motion as to these causes of action.

Moving Defendant contends that there are no triable issues of material fact to the fifth cause of action because the evidence establishes that Sea Level did not act as a “wholesaler” as defined by the Independent Wholesale Representatives Contractual Relations Act (the “Act”). The Act defines a wholesale sales representative as any person who contracts with a manufacturer, jobber, or distributor for the purpose of soliciting wholesale orders, and is compensated, in whole or part by commission, but shall not include one who places orders or purchases exclusively for his own account for resale and shall not include one who sells or takes orders for the direct sale of products to the ultimate consumer. (Civ. Code § 1738.12, subd. (e).)

The Sales SOW provides that the sale of both services and products to cloud vendors or direct to clients were both within the scope of the Agreement. (See Mertz Decl. ¶ 2, Exhibit C at § 2.0.) Moving Defendant has not provided evidence that Sea Level did not sell any products. The Court therefore DENIES the Motion to the fifth cause of action.

Moving Defendant has presented evidence of the Sea Level Parties’ discovery responses indicating that they do not presently have any evidence to support the 16 affirmative defenses identified in the Motion. (See, e.g., UMF 29-44.) The Sea Level Parties do not dispute the contents of their discovery responses but contend that a continuance is warranted due to Moving Defendant’s failure to cooperate with their discovery efforts and the Court’s order following an informal discovery conference (“IDC”) held on June 8, 2022.

CCP section 437c, subdivision (h) authorizes a court to continue a hearing on a motion for summary judgment or to deny a motion for summary judgment where facts essential to justify opposition may exist but cannot be presented. (See CCP § 437c, subd. (h).) If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion, order a continuance to permit affidavits to be obtained or discovery to be had, or make any other order as may be just. (Id.) In order to warrant the granting of a continuance, the supporting declaration must show: (1) facts establishing a likelihood that controverting evidence may exist and why the information sought is essential to opposing the motion; (2) the specific reasons why such evidence cannot be presented at the present time; (3) an estimate of the time necessary to obtain such evidence; and (4) the specific steps or procedures the opposing party intends to utilize to obtain such evidence. (501 E. 51st St., Long-Beach-10 LLC v. Kookmin Best Ins. Co. (2020) 47 Cal.App.5th 924, 939.) When a continuance of a summary judgment motion is not mandatory because of a failure to meet the requirements of Code of Civil Procedure section 437c, subdivision (h), the court must determine, in its discretion, whether the party requesting the continuance has nonetheless established good cause. (Lerma v. County of Orange (2004) 120 Cal.App.4th 709, 716.)

The Osborn Declaration sets forth the general contours of the information that has not yet been produced by Moving Defendant, which includes documents regarding Moving Defendant’s accounts with third parties and documents specifically identifying Sea Level’s alleged breaches of the Agreement. (See Osborn Decl. ¶ 5-6.) The Osborn Declaration also indicates that Moving Defendant has not produced adequate responses to the discovery detailed in the Court’s June 8, 2022 order. (See Osborn Decl. ¶ 8.)

While the Osborn Declaration does not specifically identify how the information that has not yet been produced by Moving Defendant is germane to each of the affirmative defenses identified in the Motion, the Court finds that the Sea Level Parties have set forth facts showing good cause for this matter to be continued to allow further discovery due to the overlap between the claims alleged in the Complaint and SAXC.

The Court therefore CONTINUES the Motion to January 4, 2023 with respect to its request for the summary adjudication of 16 affirmative defenses alleged in the Answer. The Court sets an IDC for August 12, 2022 at 10:30 a.m. in order to address the ongoing discovery issues at which time the Court will set a deadline for the Sea Level Parties to submit supplemental opposition papers with respect to the affirmative defenses.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative. If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person. The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date. This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court