Judge: Michael Small, Case: BC680425, Date: 2023-05-11 Tentative Ruling
Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.
Case Number: BC680425 Hearing Date: May 11, 2023 Dept: 57
On October 19, 2017, the People of the State of California ("the
People") sued Adir International, Inc, dba Curaco and LA Curaco, and Ron
Azarkman (collectively, "the Defendants") alleging, inter alia, that
the Defendants had violated Section 17200 of the Business and Professions
which is known as the Unfair Competition Law ("UCL"). Claims under the UCL must be predicated on
violations of some other law. As
pertinent here, the People alleged in
their First Amended Complaint ("FAC"), which was filed on February
19, 2020, predicate violations of the California Insurance Code arising from
the Defendants' sale of a certain type of insurance as part of Defendants' sale of
merchandise at their retail stores.
Following a bench trial, the Court on April 7, 2023 (per Judge Steven
Kleifield) issued a Final Judgment and Permanent Injunction ("the
Judgment"). In Paragraph 4 of the
Final Judgment, the Court found Defendant Curaco liable for 318, 807 Insurance
Code violations, and that Defendants had to pay civil penalties at a rate of
$25 per violation, resulting in a penalty of $7,970.175. The Court's Final Statement of Decision on
which the Judgment was based stated that these violations dated back to January
2014 The Final Statement of Decision
indicates that 151,966 violations predated February 19, 2016.
Pending before the Court is the Defendants' Motion under
Code of Civil Procedure Section 663 to Set Aside and Vacate Paragraph 4 of the
Judgment. Defendants argue in their
Motion that the Court erred as a matter of law to the extent that the Judgment
is based on the 151,966 violations that occurred prior to February 19,
2016. According to the Defendants, the
People's claims in the FAC that arise from the pre-February 19, 2016 violations
are barred by the four-year statute of limitations set forth in Section 17208
of the Business and Professions Code.
The statute of limitations on those claims, Defendants posit, expired with
the filing of the FAC on February 19,
2020. From there, Defendants state that
if the 151,966 pre-February 19, 2016 violations are excluded from the Judgment,
the correct number of violations is 166,841 and at the rate of $25 per
violation, the correct amount of the civil penalty is $4,171.025.
The problem with the Defendants' argument that the
four-year statute of limitations bars pre-February 19, 2016 claims is that it
runs directly to a stipulation of fact regarding the statute of limitations
that the Defendants entered into with the People on August 9, 2022, prior to
the start of the trial in this case.
Specifically, in stipulation number 30 in the parties' pre-trial
stipulation of facts (there were 31 such stipulations all told), "[t]he
parties agreed to toll the four-year
statute of limitations set forth in Business & Professions Code section
17208 with the effective date of May 20, 2016, which the parties agree extends
the relevant period for the People’s claims beginning May 20, 2012." Because the Defendants agreed in stipulation
number 30 that the People's claims reached back to encompass claims starting on
May 20, 2012, it was fair game for the Court to include in the Judgment
violations that occurred before February 19, 2016. Indeed, the Court was bound to honor the
parties' pre-trial factual stipulations, including stipulation number 30. (Capital National Bank of Sacramento v.
Smith (1944) 62 Cal.App.2d 328, 343)
And the Court did just that. The
Statement of Decision recited the parties' agreement in stipulation 30 that the
time period for the alleged violations began on May 12, 2012, and the Court's
civil penalty calculation was premised on this stipulation.
At bottom, by entering into stipulation number 30, the
Defendants waived the statute of limitations argument they are now making in
their Motion. Defendants' waiver of the
argument is further manifested in their actions during and after the trial. Defendants accepted stipulation number 30 in
their presentation at trial and then in their post-trial briefing up to the
Court's issuance of the Final Statement of Decision. It was only after the Final Statement of
Decision was issued that the Defendants raised the statute of limitations argument
and walked away from stipulation number 30.
That was too late. It is of no
consequence at this stage that the Defendants asserted the statute of
limitations as an affirmative defense in their answer to the FAC. They waived that defense by entering into
stipulation number 30.
Defendants argue that stipulation number 30 only applies
to the People's claims that existed as of the time of the filing of the
People's initial complaint in 2017, which did not assert claims based on
violations of the Insurance Code.
Nothing in stipulation number 30 supports that argument. The argument also is illogical. The parties resolved all of the claims in
the initial complaint through a stipulated partial judgment in March 2021. This left for trial only the claims in the
FAC, which included the Insurance Code claims.
It would make no sense for the parties a year-and-a-half later, on
August 9, 2022, to stipulate to facts bearing on claims that already had been
resolved and thus were not at issue for the trial.
Defendants argue in their reply brief in support of the
Motion that stipulation number 30 is just a stipulation of fact that binds
neither the Defendant nor the Court on the question of law as to whether
the statute of limitations bars the People's claims based on pre-February 19,
2016 violations of the Insurance Code.
This argument overlooks that the resolution of when the statute of
limitations begins to run and whether it bars a claim is generally a question
of fact for the finder of facts at trial.
(Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th
797, 810; Rosas v. BASF Corp. (2015) 236 Cal.App.4th 1378,
1393.) Here, Defendants stipulated to an
essential regarding the statute of limitations in this case: namely, that the
relevant time period for measuring the statute of limitations began on May 20,
2012
Equally unavailing is Defendants' argument that they did
not have reasonable notice of the People's claims based on violations of the
Insurance Code. Defendants have been
aware of the those claims since the filing of the FAC. Defendants addressed those claims in their
answer to the FAC. Defendants root this
notice argument on the notion that the People failed to invoke an
administrative process under the Insurance Code. Defendants fail to explain, however, how the
administrative process bears on notice.
The Defendants' point about administrative process appears to tie in to
the concept of "primary jurisdiction" over insurance claims. As the People point out in their opposition
to the Motion, the Court (again per Judge Kleifield) rejected the argument that
the primary jurisdiction doctrine applied in this case.