Judge: John C. Gastelum, Case: 20-01168000, Date: 2023-05-24 Tentative Ruling
Motion for Bifurcation
Tentative Ruling: Defendants Bush Management Company and John S. Hagetsad (“Defendants”) move for an order (1) bifurcating the trial and directing that (a) equitable claims and defenses; and (b) questions concerning proper interpretation of the Consulting Agreement be decided by the Court in the first phase of trial, before any claims are heard by a jury; and (2) precluding the admission of evidence of the BMC parties’ financial condition unless and until liability for punitive damages is established pursuant to Civil Code section 3295(d). For the reasons stated below, the Motion is GRANTED in part and DENIED in part.
On a motion to bifurcate, the Court 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,” where separate trials will “be conducive to expedition and economy” or “in furtherance of convenience or to avoid prejudice.” (Code Civ. Proc. § 1048(b).) Bifurcation and trial of certain issues before others is encouraged where it promotes “convenience of witnesses, the ends of justice, or the economy and efficiency of handling the litigation.” (Code Civ. Proc. § 598.) “An issue of law must be tried by the court, unless it is referred upon consent; provided, however, that failure on the part of any person filing any demurrer to prosecute the same may be construed as a waiver of such demurrer, except as otherwise provided in Section 430.80 of this code.” (Code Civ. Proc. § 591.)
“As a general proposition, ‘The jury trial is a matter of right in a civil action at law, but not in equity.’ ” (C & K Engineering Contractors v. Amber Steel Co., Inc. (1978) 23 Cal.3d 1, 8.) However, the “critical factor in determining the right to jury trial is the essential nature of the action.” (Unilogic, Inc. v. Burroughs Corp. (1992) 10 Cal.App.4th 612, 622.) If the gist of the action is legal, a jury trial must be granted. (Ibid.) On the other hand, there is no constitutional or statutory right to jury trial where the “gist of the action” is equitable: “Both historically and functionally, the task of weighing . . . equitable considerations is to be performed by the trial court, not the jury.” (C & K Engineering, 23 Cal.3d at p. 11.) “ ‘The assertion of [equitable] defenses in a law action will not change it to an action in equity or warrant separate and prior trial by the court.’ ” (Unilogic, 10 Cal.App.4th at p. 622.)
The parties do not dispute that this action involves a hybrid of law and equitable claims. The question is whether the gist of the action is legal or equitable.
In C&K Engineering and A-C Co. v. Security Pacific Nat. Bank (1985) 173 Cal.App.3d 462, the plaintiffs asserted breach of contract claims but their only available relief was the equitable doctrine of promissory estoppel. Under those circumstances, “the gist of those actions was equitable, not legal.” (Unilogic, 10 Cal.App.4th at p. 622.)
Here, Plaintiff asserts claims sounding in breach of contract and there is no evidence that its only avenue for relief is through any equitable doctrine such as promissory estoppel. The legal claims for breach of contract damages, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, and declaratory relief, outweigh the equitable claims such that the Court finds that the gist of this action is legal. Moreover, the assertion of equitable defenses by Defendants does not convert this action to one in equity.
As to the interpretation of the Consulting Agreement, Defendants contend that there is no conflict in the extrinsic evidence that the parties will rely upon, such that the interpretation should interpret the contract as a matter of law.
“Juries are not prohibited from interpreting contracts. Interpretation of a written instrument becomes solely a judicial function only when it is based on the words of the instrument alone, when there is no conflict in the extrinsic evidence, or when a determination was made based on incompetent evidence.” (City of Hope Nat. Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.)
In ruling on Defendants’ MSA on 10/25/22, the Court held that there was a triable issue of material fact as to the interpretation of the Consulting Agreement and whether the parties intended to grant Plaintiff and interests in the gold mines in dispute. (ROA 272.) Thus, interpretation of the Consulting Agreement is inherently a factual issue for the jury to decide. Defendants contend that there will be no conflict in the extrinsic evidence that will be provided. There is no support for this claim and the Court finds that the introduction of extrinsic evidence will necessarily involve a credibility determination by the jury in ascertaining the intent of the parties.
Thus, the Court finds bifurcation of the equitable claims and defenses and contract interpretation to be improper.
Lastly, Defendants request bifurcation of punitive damage liability and any amount of punitive damages to be awarded under Civil Code section 3295(d). That section provides: “The court shall, on application of any defendant, preclude the admission of evidence of that defendant’s profits or financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud in accordance with Section 3294.”
Plaintiff does not contest the request to preclude the admission of evidence of Defendants’ profits or financial condition unless and until the jury returns a verdict for Plaintiff awarding actual damages and finding by clear and convincing evidence that Defendants are guilty of malice, oppression, or fraud. Section 3295(d) is mandatory, rather than permissive. As such, the Court finds bifurcation of the issue of punitive damages to be proper and GRANTS the Motion as to the same.
Defendants to give notice.