Judge: Michael J. Strickroth, Case: 2020-01161650, Date: 2023-05-22 Tentative Ruling

Motion for summary Judgment and/or Adjudication

The Motion for Summary Adjudication by Defendant/Cross-Complainant Sunpower North America, LLC (SP NA) and Defendant Sunpower Capital, LLC (SP Capital) (collectively “Movants”) is GRANTED. 

Movants’ request for judicial notice of the complaint is granted as to Exhibits 1 and 2 (pleadings in OCSC Case No. 2017-00939723) and Exhibit 3 (articles of incorporation of third party American Greenergy Company). Movants’ objections are overruled as immaterial to the Court’s ruling on the motion.

Movants request summary adjudication of (1) all causes of action in Plaintiff Solar Tec Systems, Inc.’s (Solar Tec) First Amended Complaint (FAC), (2) of Plaintiff’s claim for punitive damages; and (c) of the First and Second Causes of Action in the Cross-Complaint, in favor of SP NA and against Plaintiff/Cross-Defendant Solar Tec. Because the Court grants the motion as to all causes of action against Movants in the FAC, it need not address the punitive damages claim.

Code of Civil Procedure section 437c(f)(1) states,

“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

Section 437c(p) provides,

“For purposes of motions for summary judgment and summary adjudication:

(1) A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant or cross-defendant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.

(2) A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.”

Defendants’ Liability on Plaintiff Solar Tec’s Complaint

Issue No. 1 -Whether SP Capital had any Contractual or Other Relationship with Plaintiff Solar Tec

SP Capital is not named as a party in the First Amended Complaint filed 8/31/21. Movants state that on 9/13/21, Plaintiff served a Doe Amendment identifying SP Capital as Doe 1. However, the Doe Amendment was rejected by the Court clerk and has not been filed. Even assuming SP Capital was properly substituted as Doe 1, there is no triable issue of material fact as to Plaintiff’s claims against SP Capital.

“Code of Civil Procedure section 474 allows a plaintiff to name fictitious defendants, or ‘Does.’ The complaint must state a cause of action against each Doe defendant. It must allege that the plaintiff is ignorant of the Doe defendant's name. Moreover, the plaintiff must actually be ignorant of the Doe defendant's name, i.e., ignorant of the facts giving rise to a cause of action against that defendant. When the plaintiff discovers a Doe defendant's true name, he or she must amend the complaint accordingly. Provided these requirements are satisfied, the amendment is deemed to relate back to the filing date of the original complaint for purposes of the statute of limitations.” Fireman's Fund Insurance Company v. Sparks Construction, Inc. (2004) 114 Cal.App.4th 1135, 1143.

Here, Doe Defendants are generally alleged to be agents of all named parties in the FAC. However, no additional facts are alleged regarding the basis for Plaintiff’s claims against Doe 1, a.k.a. SP Capital. The issue is not whether Plaintiff’s claims against SP Capital “relate back,” but whether Plaintiff has shown there are any triable issue of material fact as to the causes of action against SP Capital.

First, the FAC fails to allege facts supporting SP Capital’s liability for the twelve causes of action alleged therein. The boilerplate allegations that SP Capital/Doe 1 was the agent of other Defendants are insufficient to support Plaintiff’s causes of action against SP Capital here. Moreover, the causes of action against Doe 1 in the FAC are based on the alleged contracts reflected in Exhibits 1-3 to the FAC. But these contracts reflect agreements between SP Capital and third-party consumers, not agreements between SP Capital and Plaintiff.

Plaintiff contends it was a party to various contracts between SP Capital and third-party consumers based on the master agreement between Plaintiff and SP NA, through which Plaintiff agreed to act as a dealer for SP NA. However, the various dealer agreements are between Plaintiff and SP NA, and between Plaintiff and non-party Sunpower Corporation Systems, not Plaintiff and SP Capital. Plaintiff fails to cite contractual language or legal authority creating a contract or other relationship between Plaintiff and SP Capital that could support Plaintiff’s causes of action against Doe 1/SP Capital alleged in the FAC.

Therefore, summary adjudication is granted in favor of SP Capital as to Plaintiff’s entire FAC against SP Capital.

Issue No. 2 – Whether Plaintiff’s Complaint Against SP NA is Barred by the Contractual Statutes of Limitation

SP NA contends its dealer agreements with Plaintiff provide for a one-year statute of limitations, which bars Plaintiff’s complaint against SP NA, filed on 9/23/20.

SP NA relies on the Residential Dealer Agreements dated 10/15/15 and 3/17/17, and the Commercial Dealer Agreements dated 3/17/16 and 7/17/16 (collectively “Dealer Agreements”). (UMFs 6-7; Williams Decl. Exhibits 3-6.)

In Plaintiff’s response to undisputed facts 6-7, Plaintiff states, “Denied. The Master Agreement for the Lease Program is dated August 1, 2014. Please refer to Exhibit 1 to the Declaration of Ed Shaffer.” However, Exhibit 1 to the Shaffer Declaration appears to be identical to Exhibit 6 to the Williams Declaration. Plaintiff appears to be referring to the “Dealer Participation Agreement” attached as Exhibit 3 to the Shaffer Declaration and dated 8/1/14, which was signed by Mr. Shaffer on behalf of Plaintiff and by Sandy McClure on behalf of non-party Sunpower Corporation Systems. Plaintiff has not shown this document is relevant to the statute of limitations analysis because the 8/1/14 contract is between Plaintiff and non-party Sunpower Corporation Systems, not moving party SP NA. Therefore, the Court will rely on the agreements between Plaintiff and SP NA attached as Exhibits 3-6 to the Williams Declaration.

The Dealer Agreements include the following provision: “Except for Dealer’s indemnification obligations under this Agreement and except for claims arising from Dealer’s nonpayment or underpayment of amounts it owes SunPower or its affiliates, any and all claims arising out of or relating to this Agreement or SunPower’s Relationship with Dealer will be barred unless a legal proceeding is commenced within one (1) year from the date on which the party asserting the claim knew or should have known of the facts giving rise to the claims.” (UMF 9.)

In response to undisputed fact 9, Plaintiff contends (1) the 8/1/14 agreement controls, and (2) even if the Dealer Agreements control, Plaintiff “discovered the fraud or breach when in 2019 when Ed Shaffer was browsing Google Earth and saw aerial photos of roof top solar systems and was horrified to see SunPower systems in the 11 canceled leases. . .Ed Shaffer had been told by Girling orally and in writing that ‘the Sunpower Parties’ had no role in the fraud or secret transfer of 11 leases to a third party installer, AGC. Solar Tec sued Chung, his former employee and sole[l]y blamed her instead.”

Other than contending the 8/1/14 agreement controls, Plaintiff does not deny its twelve causes of action in the FAC are “arising out of or relating to” the Dealership Agreements. Rather, Plaintiff relies on the delayed discovery argument set out above.

It is undisputed Plaintiff hired third party En Chong as an independent sales representative and that beginning in May 2016, a number of homeowners began to cancel their SunPower solar leases originated by Plaintiff through Ms. Chong. (UMFs 16, 19.)

Mr. Girling, SP NA’s Senior Regional Sales Manager, declares he looked into the cancellations, found that “Ann Chong” or “En Chong” had originated accounts for both Plaintiff and another dealer (third party Green Engineering Solar Company a.k.a. American Greenergy Company) involving the same homes, and that he brought these findings to Plaintiff’s attention. (UMFs 20-22; Girling Decl. ¶¶ 9-11.) Mr. Girling met in person with Mr. Shaffer, Mr. Lieber, and Ms. Chong on 7/22/16 to discuss the issue of the lease cancellations. (Id at ¶ 13.) Plaintiff’s Director of Sales Mr. Lieber stated via email he did not believe Ms. Chong’s denial of responsibility for the duplicate lease originations/cancellations. (UMF 22-23.) The last cancellation at issue occurred on 9/13/16. (UMF 24.)

In the FAC, Plaintiff alleges SP NA is liable for the scheme in which Ms. Chong transferred its lease agreements to a third party and that SP NA, “should never have allowed the transfer of even one of [Plaintiff’s] clients to another dealership. (FAC, ¶¶ 8-9, 11.)

In support of Plaintiff’s delayed discovery argument, Mr. Shaffer, Plaintiff’s owner and CEO, declares, “At the time of the cancellations, on or about September 2016, Solar Tec was aware something was wrong. Solar Tec knew that 11 leases were canceled in its new venture with SunPower. . .I was told by SunPower employee Derek Girling, that SunPower was ‘innocent.’ Girling told me at a meeting in 2016 ‘SunPower would never violate a lease agreement and give the system to a third party in order to avoid a lawsuit.’” (Shaffer Decl., ¶ 12.) Mr. Shaffer declares he believed that Ms. Chung had solely interfered with the leases. (Id. at ¶ 13.) Mr. Shaffer realized he had been “duped” in 2019 when he was browsing Google Earth in 2019 and spotted a SunPower system at one of the cancelled lease locations. (Id. at ¶ 15.)

Mr. Shaffer attaches an email from Mr. Girling to Ms. Chong dated 7/21/16, forwarded to Mr. Lieber on the same date, stating in part, “Please remember that, when a lease is signed, it is a relationship between SunPower and the Homeowner. Only SunPower or the Homeowner can initiate a cancellation. Not the sales rep. We will not allow sales reps to sell leases for one dealer and then transfer them to another.” (Shaffer Decl., Exhibit 4.)

A contract may shorten an otherwise applicable statute of limitations, provided the time remaining to file suit “is not so unreasonable as to show imposition or undue advantage.” Capehart v. Heady (1962) 206 Cal.App.2d 386, 388. “For instance, the parties can shorten California’s four-year statute of limitations for breach of a written contract to three months, six, or a year.” Hambrecht & Quist Venture Partners v. American Med. Int'l, Inc. (1995) 38 Cal.App.4th 1532, 1548. A contract between sophisticated parties may abrogate the discovery rule. Wind Dancer Production Group v. Walt Disney Pictures (2017) 10 Cal.App.5th 56, 75-76.

“Generally, in both tort and contract actions, the statute of limitations begins to run upon the occurrence of the last element essential to the cause of action. The cause of action ordinarily accrues when, under the substantive law, the wrongful act is done and the obligation or liability arises. An important exception to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. As this court has recognized, the discovery rule may be applied to breaches of contract which can be, and are, committed in secret and, moreover, where the harm flowing from those breaches will not be reasonably discoverable by plaintiffs until a future time. Under the discovery rule, the plaintiff must show that, despite diligent investigation of the circumstances of the injury, he or she could not have reasonably discovered facts supporting the cause of action within the applicable statute of limitations period.” Wind Dancer Production Group, Id. at 73. 

Here, Defendant has met its burden to show Plaintiff’s claims based on the cancelled leases are untimely under the contractual one-year statute of limitations. Plaintiff has not demonstrated a triable issue of material fact as to the timeliness of these claims. It is undisputed the last lease cancellations occurred in September 2016 but Plaintiff did not file suit until four years later in September 2020. Plaintiff acknowledges it “knew something was wrong” in 2016. Defendant has shown its sales manager Mr. Girling told Plaintiff in July 2016 that Plaintiff’s sales representatives apparently originated duplicate accounts for homes by creating accounts with a third-party dealer, resulting in cancellations of Plaintiff’s leases, and Plaintiff does not submit evidence showing it lacked knowledge of the cancellations and transfers in 2016.

Plaintiff contends Mr. Girling denied Sunpower’s involvement and that it only discovered SunPower’s involvement in 2019 via Google Earth. Plaintiff fails to show it could not have discovered Defendant’s alleged wrongful acts with reasonable diligence in 2016. The information undisputedly provided to Plaintiff in 2016 gave Plaintiff actual or constructive notice of the alleged scheme which is the basis for the FAC. Plaintiff fails to demonstrate that viewing the Google Earth images in 2019 provided new information regarding SP NA’s liability which was not known to Plaintiff in 2016 or could not have been discovered with reasonable diligence at that time. Therefore, Plaintiff’s allegations regarding the cancelled solar leases are barred by the statute of limitations.

To the extent Plaintiff’s complaint is based on work Plaintiff did to remedy electrical production shortfalls in 2016 arising from “shading value fraud” by Ms. Chong (see FAC ¶ 10), such allegations are also barred by the statute of limitations. Defendant has shown Plaintiff was aware of shading value issues involving Ms. Chong in 2015 or 2016. (UMF 17.) Although Plaintiff disputes Mr. Lieber’s credibility on this issue, Plaintiff has not presented evidence of delayed discovery with regard to the work it performed to remedy the shading issues.

Because this ruling completely disposes of Plaintiff’s causes of action against Movants in the FAC, the Court declines to reach the remaining issues raised in the motion.

Solar Tec’s Liability on SP NA’s Cross-Complaint

SP NA moves for summary adjudication of its first and second causes of action for breach of contract in its Cross-Complaint against Solar Tec. In these causes of action, SP NA claims Plaintiff breached the 2016 and 2017 Dealer Agreements by failing to pay for equipment delivered. SP NA alleges damages of $94,224.22 under the July 2016 agreement and $32,504.85 under the 2017 agreement.

The elements of breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff. D'Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.

Here, SP NA has met its burden as to the first cause of action by showing there was a contract to supply solar energy equipment, SP NA performed by supplying the equipment for Plaintiff to install, and Plaintiff failed to pay for the equipment. (UMFs 89-91.) Plaintiff disputes Facts 89 and 91 but fails to cite evidence demonstrating a factual dispute as to an element of the cause of action. The Shaffer declaration concludes at paragraph 31, “Solar Tec does not owe SunPower any money for the carport project or any residence whatsoever.” This conclusion is insufficient to demonstrate a triable issue of fact as to Plaintiff’s breach of the subject contract.

As to the second cause of action, SP NA has also met its burden of showing a contract, its performance, and Plaintiff’s failure to pay based on the cited portions of the Williams declaration. (UMFs 93-95.) Solar Tec has failed to demonstrate a triable issue of material fact as to the second cause of action. Therefore, the motion is granted as to the first and second causes of action in the Cross-Complaint.

Moving parties to give notice.