Judge Holly J. Fujie, Case Number: 24STCV12744, Date: 2025-02-25 Tentative Ruling

MOVING PARTY: Defendants Chevron Corporation and Chevron USA Inc. (collectively, “Chevron”)

On April 7, 2021, Plaintiff filed a complaint (“Complaint”) against defendant Utility Trailer Manufacturing Company alleging a single cause of action for negligence. The Complaint alleges that defendants sold Plaintiff hydraulic oil as opposed to motor oil that was ordered, resulting in damage to Plaintiff’s semi fleet.

On November 12, 2024, Chevron filed the instant motion for terminating or evidentiary sanctions. On November 20, 2024, defendant/cross-complainant Southern Counties Lubricants, LLC (“SCL”) filed a joinder. On January 28, 2025, defendant Utility Trailer Sales of Southern California, LLC (“Utility”) filed a joinder. Also on January 28, 2025, defendant Universal Exchange Inc. (“Universal”) filed a joinder. On January 29, 2025, defendant Jay Mehta dba JM Oil (“JM”) filed a joinder. On February 10, 2025, Plaintiff filed an opposition (the “Opposition”). On February 13, 2025, Utility filed a reply. On February 18, 2025, Chevron filed a reply.

Code of Civil Procedure (“CCP”) section 2023.030 permits California courts to impose terminating, evidence, issue, and monetary sanctions for discovery misuses, which are defined by CCP section 2023.010. Discovery sanctions “should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 793.) Moreover, “[d]iscovery sanctions must be tailored in order to remedy the offending party’s discovery abuse, should not give the aggrieved party more than what it is entitled to, and should not be used to punish the offending party.” (Karlsson v. Ford Motor Co. (2006) 140 Cal.App.4th 1202, 1217.)

Spoliation of evidence means the “destruction or significant alteration of evidence or the failure to preserve evidence for another’s use in pending or future litigation.” (Williams v. Russ (2008) 167 Cal.App.4th 1215, 1223.) Spoliation undermines the search for truth and fairness by creating a false picture of the evidence before the trier of fact by destroying authentic evidence. (Cedars-Sinai Med. Ctr. v. Superior Court (1998) 18 Cal.4th 1, 9.)

A party moving for discovery sanctions based on spoliation of evidence must make an initial prima facie showing the responding party had destroyed evidence that had a “substantial probability of damaging the moving party’s ability to establish an essential element of his claim or defense.” (Williams, supra, 167 Cal.App.4th at p. 1227.) Once the moving party meets that burden, the burden shifts to the responding party to prove the moving party did not suffer prejudice from the loss of the documents. (Id. at pp. 1226-1227.)

Discovery sanctions are thus authorized depending on the facts of the case. (Cedars-Sinai Med. Ctr. v. Superior Court (1998)18 Cal.4th 1, 12 [“Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023 as would such destruction in anticipation of a discovery request”].)

In egregious cases, a terminating sanction may be imposed for one act of spoliation. (Williams, supra, 167 Cal.App.4th at pp. 1223-25 [terminating sanction issued where plaintiff obtained his legal file from his former attorney and then permitted the file to be destroyed]); see also New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1424-26 [collecting cases].)

Chevron, and the other joining defendants, seek terminating, or in the alternative, issue or evidentiary sanctions, based on Plaintiff’s failure to preserve evidence including business records, the allegedly damaged trucks and the oil drum label. (Mot. pp. 8:26-11:3.) Plaintiff stored certain business records including load tenders, fuel tax administration reports, maintenance records, insurance files and records of truck repairs in a storage locker in Riverside. (Mot., p. 9:10-9:28; Ananian Decl., Ex. C [Stallone Depo.].) Plaintiff stopped paying the storage locker fee in 2022 and the records were destroyed. (Mot., p. 9:1-6; Ananian Decl., Ex. C [Stallone Depo.].) Plaintiff also maintained certain electronic records including truck mileage logs and QuickBooks files which were similarly destroyed in 2022 when Plaintiff stopped paying cloud storage fees. (Mot., p. 10:1-15; Ananian Decl., Ex. C [Stallone Depo.].) Chevron also asserts that the oil drum label has been lost and the allegedly damaged trucks have since been repossessed. (Mot., pp. 10:15-11:3.)

Chevron argues that the loss of critical evidence—identifying which trucks received the allegedly mislabeled oil, the extent of the damage, whether the oil caused the damage, the cost of repairs, and accounting records of lost profits—has impaired its ability to challenge causation and damages. (Mot. pp. 12:22-13:2.) Chevron also argues that loss of the oil drum label itself has impaired its ability to challenge the allegation of mislabeling. (Mot. p. 13:3-5.) Thus, Chevron has met its burden to make an initial prima facie showing that there is a substantial probability that the lost evidence has damaged its ability to establish essential elements of the defense.

The burden thus shifts to Plaintiff to show that Chevron, and the other joining defendants, did not suffer prejudice from the loss of the documents. In the Opposition, Plaintiff argues that it has since produced some of the affected trucks, the oil barrel and oil, all documents that are within Plaintiff’s custody, photos of the oil label and a profit and loss statement from 2019 to current. (Opp. pp. 4:11-17.) Plaintiff argues that Chevron could have inspected the property earlier, never issued an evidence preservation letter and could subpoena the Small Business Administration, which repossessed the trucks, to conduct an inspection. (Opp. p. 9:2-6.)

Chevron and the other defendants are substantially prejudiced by the disposal of the evidence. Plaintiff claims that its trucks were damaged by the allegedly mislabeled oil as evidenced in repair and maintenance records that are now unavailable to Chevron. Plaintiff calculates its total damages based on repair costs and lost profits, records that Chevron cannot inspect. This imbalance is clearly prejudicial, hindering Chevron and the other defendants’ ability to mount a defense against Plaintiff’s allegations. The lost business records would have informed Chevron how the trucks were damaged, the extent of the damage, the cost of the repairs and the lost profits resulting from the repairs and damage. Accordingly, Chevron’s ability to dispute the extent to which the oil caused damage to the trucks or challenge the amount of damages attributed to the oil—relevant to the causation and damages elements of Plaintiff’s negligence claim—is impaired.

The question turns to what kind of sanction is appropriate. “Discovery sanctions are intended to remedy discovery abuse, not to punish the offending party. Accordingly, sanctions should be tailored to serve that remedial purpose, should not put the moving party in a better position than he would otherwise have been had he obtained the requested discovery, and should be proportionate to the offending party's misconduct.” (Williams, supra 167 Cal.App.4th at 1223.) Here, terminating sanctions would be disproportional. Accordingly, the Court will issue evidentiary sanctions forbidding Plaintiff from presenting witness testimony regarding the contents of the lost business records including: the identification or number of its trucks that broke down after being serviced with oil from the drum; the mechanical reasons that one or more its trucks broke down; whether oil from the drum caused any of its trucks to breakdown and become unavailable for service; the length of time that its trucks were unavailable for service following their breakdown; the cost of repairing any damage to any truck that was serviced with oil from the drum; the revenue and profits generated by its trucks before their purported breakdown; and Plaintiff’s estimates of lost profits caused by the unavailability of any or all of its trucks.

Chevron’s Motion is GRANTED, in part, and DENIED in part. Chevron’s requests for terminating and issue sanctions are DENIED. Chevron’s request for evidentiary sanctions is GRANTED, as set forth above.

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