Judge: Jon R. Takasugi, Case: 20STCV35832, Date: 2023-07-24 Tentative Ruling

Case Number: 20STCV35832    Hearing Date: July 24, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiffs’ motion for bifurcation is GRANTED.

Defendants’ motion for bifurcation is DENIED.

            On 9/18/2020, Plaintiffs John H. Choi and Stacy Unyong Choi, in their individual capacity, and in their representative capacity as trustees of the 2018 Choi Family Trust dated 3/15/2018, filed suit against Macerich Holdings, LLC, Macerich Crossroads Plaza Holdings, LLC, Macerich Crossroads Plaza Holdings, LP, and the Macerich Company (collectively, Defendants), alleging: (1) breach of written contract; (2) breach of the covenant of good faith and fair dealing; (3) conspiracy to defraud; and (4) unjust enrichment.

            Now, Plaintiffs move for an order bifurcating trial. Separately, Defendants also move for an order bifurcating trial.

            For ease, the Court has consolidated its analysis into a single ruling.

Discussion

            Both Plaintiffs and Defendants agree that Plaintiffs’ equitable causes of action for alter-ego and unjust enrichment should be tried separately from the legal cause of action for breach of lease, which is tried to the jury.

            However, the parties dispute which issue should be tried first, the equitable one or the legal one.

            After consideration, the Court agrees with Plaintiffs that the legal cause of action should be tried first. While the Court recognizes that the default rule is to try equitable claims first, the reason for this is that it promotes judicial economy by potentially obviating the need for a jury trial. (Darbun Enterprises, Inc. v. San Fernando Cmty. Hosp. (2015) 239 Cal. App. 4th 399) (“Trial courts are encouraged to apply this ‘equity first’ rule because it promotes judicial economy by potentially obviating the need for a jury trial.”)

As such, the determinative factor here should be which ordering will best promote judicial economy.

Defendants argue that hearing the alter-ego claim first will save the Court and parties time and expense because “Landlords think they will have a hard time collecting a potential judgment from their former tenant, and are trying to expand their targets. Knowing whether the Court will permit Landlords to do that or not will impact, limit, or obviate the need for the jury trial.” (Motion, 8:24-9:2.) In other words, Defendants argue that narrowing down the liable defendants is likely to thereby reshape or narrow the scope of the jury trial: “Once the parties know the answer to the alter ego question, the parties will almost certainly reevaluate their settlement positions, potentially obviating the need for any jury trial.” (Opp., 9: 7-9.)

However, this ignores the fact that the alter-ego phase is only necessary if the jury returns a verdict in Plaintiffs’ favor. As such, while Defendants argue that hearing the alter-ego might result in settlement or might narrow the scope of the jury trial, the very need for an alter-ego phase at all could be entirely eliminated if the legal claim is allowed to go first and the jury does not return a verdict in Plaintiffs’ favor.

Moreover, if the main action jury trial proceeds first, during that phase, the Court can hear the evidence adduced then, taking note of the evidence relating to the facts relevant to the alter ego phase. Otherwise, the Court will hear all the alter ego evidence first, as Defendants propose, but the jury would need to hear some of that evidence again in the main action. Also, the Court will not be able to render an alter ego finding before the jury returns a verdict in the main action, because to find alter ego, an “inequitable result must be shown.” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 411; see also Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301) (“The essence of the alter ego doctrine is that justice be done. What the formula comes down to, once shorn of verbiage about control, instrumentality, agency, and corporate entity, is that liability is imposed to reach an equitable result.”) As such, the jury’s finding as to liability is relevant to the Court’s determination of alter ego liability.

Based on the foregoing, Plaintiffs’ motion for bifurcation is granted. Defendants’ motion for bifurcation is denied.

It is so ordered.

Dated:  July    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.