Judge Holly J. Fujie, Case 20STCV30823 2023-02-21 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

RESPONDING PARTY: Defendant/Cross Complainant Datametica Solutions, Inc. (“Datametica”)

This action arises out of a business relationship. Plaintiff’s complaint (the “Complaint”) alleges: (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’s 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 20, 2022, Sea Level filed a motion to bifurcate the trial (the “Motion”). The Motion argues that the trial should be held in two phases: a first phase deciding Sea Level’s contractual right to an audit, and a second phase to decide the remaining issues. The Motion also argues that if it prevails in the first phase of a bifurcated trial, Sea Level should be permitted to conduct the audit before the commencement of the trial’s second phase.

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. (CCP § 1048, subd. (b).) CCP section 598 provides, in part, that 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 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 party thereof in the case. (CCP § 598.) Where trial of the issue of liability as to all causes of action precedes the trial of other issues or parts thereof and the decision of the court or jury is in favor of the allegedly liable party, judgment in favor of that party shall be entered and no trial of other issues in the action against that party will be had. (Id.) If the decision of the court or jury on the issue of liability is against the party allegedly liable, the trial of the other issues shall be had before the same or another jury as ordered by the court. (Id.)

Bifurcation frequently occurs when the determination of one issue, such as an affirmative defense, renders other issues moot. (See, e.g., Buran Equipment v. H&C Investment Co. (1983) 142 Cal.App.3d 338, 343-44.) Trial courts also often bifurcate equitable and legal issues, resolving the issues of equity first in order to promote judicial economy. (Darbun Enters, Inc. v. San Fernando Community Hosp. (2015) 239 Cal.App.4th 399, 408-09.) While a litigant in a civil action generally has a constitutional right to jury trial on “legal” causes of action, there is no such right with respect to equitable causes of action. (Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2017) 8 Cal.App.5th 1, 19.)

Sea Level alleges that Datametica committed numerous breaches of a contract entitled the Master Services Agreement (the “MSA”) entered into by Datametica and Sea Level (the “Parties”). (See Complaint ¶¶ 26-32.) The alleged breaches include Datametica’s breach of a provision entitling Sea Level to provide an accounting of the amounts owed to Sea Level for its performance pursuant to the MSA. (See Complaint ¶ 29.)

“During the Term of the Agreement and not for less than one (1) year after the expiration or termination of the Agreement, Customer will maintain complete and accurate financial records of all transactions relating to the Agreement, including but not limited to all payment records and reports. Company or any independent auditor selected by Company may inspect all records regarding the Agreement which are maintained by or on behalf of Customer to determine compliance with any obligations set forth in the Agreement. Such records will be available for inspection at Customer’s office upon 10 days written notice, and during Customer’s normal business hours. (Complaint, Exhibit A at p. 7.)

Sea Level argues that its contractual entitlement to an audit should be tried first in order to determine the extent of Sea Level’s damages caused by Datametica’s breaches of the MSA. Sea Level contends that Datametica has withheld numerous documents related to this issue. (See Declaration of Laurence C. Osborn (“Osborn Decl.”) ¶¶ 2-8.)

The Court is not convinced that bifurcating the trial in the manner proposed by the Motion serves the interest of efficiency or justice. The Parties’ respective compliance with the MSA is highly disputed, and the Parties do not agree on the scope of the documents which Sea Level has a contractual right to audit. Sea Level has not demonstrated that this issue is not coextensive with the other issues raised by the Complaint and SAXC. Rather, the Court notes that the resolution of the issues raised by Datametica’s cross-claims and defenses will likely impact the extent of Sea Level’s entitlement to an audit. In light of the claims raised by the Parties’ claims, the right to an audit could not be fully resolved without a resolution of other issues.[1] The Court therefore DENIES the Motion.

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

[1] Moreover, the Court notes that the Motion’s framing of the issues suggests that the resolution of the audit issue largely concerns the calculation of damages and turns on a resolution of a determination of liability.