TENTATIVE RULING

Calendar: 4

Date: 3/29/2024 Trial Date: May 20, 2024 

Case No: 22 GDCV00618 

Case Name: State Farm General Insurance Company v. Mueller Industries, Inc. 

MOTION FOR LEAVE TO FILE CROSS COMPLAINT

MOTION TO CONTINUE TRIAL

Moving Party: Defendant Mueller Industries   

Responding Party: Plaintiff State Farm General Insurance Company 

RELIEF REQUESTED:

Leave to file a cross-complaint 

Trial continuance 

FACTUAL AND PROCEDURAL BACKGROUND: 

Plaintiff State Farm General Insurance Company brings this subrogation complaint against Mueller Industries, Inc., alleging that its insureds, Hermine Mirzayan and Artur Sarkisyan, were the owners of private property in Glendale, and that in October of 2020, as a result of the improper and wrongful acts and omissions to act by defendant, a catastrophic water loss incident occurred at the insureds’ property, when a hot water stainless steel braided water supply line that was manufactured by defendant Mueller Industries failed due to a manufacturing defect or improper design of the inner liner of the subject water supply line which separated and burst in plaintiff’s insureds’ kitchen, completely flooding the two-story residence and causing extensive property damage. 

Plaintiff alleges that due to the catastrophic water loss incident which was caused by the manufacturing defect or improper design of the inner liner of the subject water supply line manufactured, designed, supplied, serviced, sold or repaired by defendant Mueller Industries, plaintiffs’ insured moved all of their personal property to A to Z Restoration and Packing, Inc.   In August of 2021, A to Z Restoration and Packing, Inc. experienced a catastrophic property loss from an undetermined exterior fire which burned down the property used by A to Z Restoration and Packing, Inc.   Plaintiff alleges that but for the initial catastrophic water loss incident, the stored personal property items owned by plaintiff’s insureds would not have been stored outside the home and the insureds would not have experienced the total personal property losses.  

Plaintiff alleges that plaintiff’s insureds had purchased property insurance with plaintiff prior to the catastrophic water loss incident, and plaintiff fulfilled its obligations pursuant to the insurance agreement and reimbursed its insured for the structure, personal property and loss of use damages, and that as the result of defendant’s conduct paid to its insureds the principal amount of $1,374,102.05 to date, including insurance benefits for the water loss incident and the fire loss incident.  

The file shows that on September 26, 2022, plaintiff filed its First Amended Complaint, which is the operative complaint in this matter.  On November 16, 2022, defendant Mueller Industries, Inc. filed its answer.  

On February 23, 2024, the court heard a motion to strike portions of the FAC, which was denied as extremely untimely.  The court’s minute order reflects that the court also noted that even if the motion were to have been considered on its merits, it would have been denied. 

ANALYSIS:

Motion for Leave to File Cross-Complaint 

 

Under CCP § 428.50:

“(a) A party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint. 

(b) Any other cross-complaint may be filed at any time before the court has set a date for trial.

(c)  A party shall obtain leave of court to file any cross-complaint except one filed within the time specified in subdivision (a) or (b).  Leave may be granted in the interest of justice at any time during the course of the action.” 

In this case, defendant seeks leave to file a cross-complaint after the court has set a trial date.

Defendant seeks to file a cross-complaint against A to Z for equitable indemnity and declaratory relief.  [Walsh Decl., Ex. C]. 

It is held that relief under the permissive provisions of the statute is appropriate when a defendant seeks to file a cross-complaint for indemnity.  Platt v. Coldwell Banker Real Estate Services (1990) 217 Cal.App.3d 1439, 1444.  This is not a situation where the indemnity claims will be lost if not asserted in this matter, so the cross-complaint here would not be compulsory. 

The case has already been set for trial, so it is in the court’s discretion to grant leave “in the interest of justice.”  

Defendant argues that good cause and the interests of justice require that defendant be permitted leave to file a cross-complaint.  Specifically, defendant argues that since the court has denied defendant’s motion to strike from the FAC the allegations concerning the damages sought for the belongings destroyed in the fire at a facility unrelated to defendant, defendant must have the opportunity to cross-complaint against the third-party business to shift the responsibility for those particular damages.  Defendant argues that these fire loss damages are not recoverable against defendant, which had no involvement in the insureds’ selection of the storage unit and was not involved in any way with the fire.  Defendant indicates that when the court denied the motion to strike, the court suggested that an alternative method for seeking recourse was for defendant Mueller Industries to file a cross-complaint against the party actually responsible for causing the fire loss damages.  [Walsh Decl. ¶ 3, Ex. B].  The minute order attached does not include such a suggestion.  [Ex. B].  

In any case, defendant argues that plaintiff in this lawsuit seeks subrogation not only for the water damage allegedly caused by defendant Mueller Industries, but for the losses incurred when a fire broke out ten months later at the third party storage facility storing the insureds’ belongings, so that any liability of defendant for the fire loss incident derives from A to Z’s failure to maintain the insureds’ belongings and prevent fire at its facility.  

Defendant argues that judicial economy would be served by having the claims of the allegedly responsible parties for plaintiff’s losses resolved in a single litigation.  Defendant also argues that plaintiff will not be prejudiced by the cross-complaint, as it seeks determination as to defendant’s responsibilities should plaintiff prevail in the complaint. 

Generally, the declaration of counsel should show that it would be in the interest of justice to grant leave to file, including some reasonable excuse why the cross-complaint was not filed earlier, such as mistake, inadvertence, excusable neglect, or recent discovery of new facts.   Weil & Brown, Civil Procedure Before Trial (The Rutter Group, 2024 rev.) 6:562.  In Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, 862-864, the court of appeal held there was no abuse of discretion in denying leave to file a permissive cross-complaint five months before trial.   

In this case, counsel’s declaration indicates that defendant filed a motion to strike portions of the FAC in January of 2024, arguing that defendant was not liable for the damages allegedly caused at the fire at A to Z under the doctrine of superseding cause, that the motion was denied in February of 2024, and that defendant then immediately sought to prepare and file this motion for leave to file a cross-complaint.  [Walsh Decl. ¶¶ 2-4].   

This explanation does not explain the lengthy delay in seeking to pursue a cross-complaint in this matter, as defendant was on notice that the fire loss damages were being claimed from the time the original complaint was filed in September of 2022, clearly seeking reimbursement to the insurer for the insurance benefits paid for both the water loss incident and the fire loss incident.  [Complaint ¶¶18, 26, 33 and Prayer].  

It is highly unusual for counsel’s declaration to include no explanation of any circumstances justifying the delay of seventeen months in defendant now seeking to add an entirely new party to this action.  There is no discussion of how discovery or recent investigation led to the uncovering of facts which would suggest responsibility on the part of the third party which potential responsibility was not evident at the time the complaint was originally filed.  

Plaintiff in opposition argues that leave to file a late permissive cross-complaint under CCP section 428.50 (c) is entirely discretionary, and that the interests of justice would not be served by granting defendant’s motion.  Plaintiff argues that the fire incident in this matter was undetermined and cannot be attributed to A to Z’s actions or omissions to act. Plaintiff argues that if plaintiff had any knowledge of fault against A to Z for the fire and loss, A to Z would have been a named a defendant, but that according to plaintiff's Origin and Cause Expert Jim Brown and the Los Angeles Fire Department, the fire incident was determined to be "accidental and undetermined."   [Letofsky Decl. ¶ 7].  Plaintiff has not submitted any testimony from the expert or documentation of such a finding but relies only on the hearsay representations of counsel.   Counsel’s declaration goes on to report that the origin of the fire was outside the building, with possible causes being a homeless individual or an electrical power line incident, therefore, placing no breach of duty or fault upon A to Z.  Plaintiff indicates that without competent evidence linking A to Z to fault for the fire incident, granting leave for Defendant to file a cross-complaint would be unjustified and could unnecessarily complicate the proceedings.  [Letofsky Decl. ¶ 7].  The argument seems to be that the motion should be denied because there is no possibility that A to Z will be determined to have any liability in the matter, when there is no admissible evidence to support such an argument.  Rather, this issue is a factual determination which could be appropriately resolved through the pursuit of a permissive cross-complaint. 

Plaintiff also argues that defendant can file a cross-complaint against A to Z after trial with plaintiff, so that while it may be more orderly and expeditious to resolve all claims in a single lawsuit, this result is not required.     

Plaintiff does not point to any specific prejudice it would suffer if leave to amend is permitted.  There is a brief argument that adding another party would “complicate” the proceedings, and that plaintiff would be prejudiced by the potential disruption of the timeline leading up to the trial date, impeding the parties’ ability to prepare and adequately adhere to the established proceedings.  The only mention of prejudice in counsel’s declaration is that leave is sought, “on the eve of trial,” and that “[g]ranting the motion would most certainly impede the parties’ ability to adhere to the scheduled trial date.”  [Letofsky Decl. ¶ 7].  There is no indication that witnesses have blocked out time for the scheduled trial date, for example, that evidence will become stale, or that the party plaintiff, an insurer, will suffer from delay in obtaining recovery.  Therefore, any prejudice urged could be easily addressed by a continuance of the trial date, which defendant is seeking such a continuance by a separate motion. 

Clearly, the court has a strong interest in having all of these matters tried together and disfavors having defendant be forced to bring another civil action against a potentially responsible party.  Such a second lawsuit would likely be related to this action.  In that event, the court would stay the second case, or consolidate the two cases until the close of this action.  The motion is granted in the interest of judicial efficiency.   

However, as discussed above, both sides recognize that it would be more efficient to resolve all the pertinent claims in a single action.  Also, plaintiff has failed to show any cognizable prejudice which could not be resolved by continuing the trial date.   The motion accordingly is granted.  The defendant is permitted leave to file its permissive cross-complaint. 

Continue Trial 

CRC Rule 3.1332 (a) provides:

“To ensure the prompt disposition of civil cases, the dates assigned for a trial are firm.  All parties and their counsel must regard the date set for trial as certain.”

Under subdivision (b), a party may seek a continuance of a trial date by noticed motion or ex parte application, with supporting declarations.   “The party must make the motion or application as soon as reasonably practical once the necessity for the continuance is discovered.” 

“Although continuances of trials are disfavored, each request for continuance must be considered on its own merit.   The court may grant a continuance only on an affirmative showing of good cause requiring the continuance.  Circumstances that may indicate good cause include: ...

(5) The addition of a new party if:

(A) The new party has not had a reasonable opportunity to conduct discovery and prepare for trial; or

(B) The other parties have not had a reasonable opportunity to conduct discovery and prepare for trial in regard to the new party's involvement in the case;

(6) A party's excused inability to obtain essential testimony, documents, or other material evidence despite diligent efforts; or

(7) A significant, unanticipated change in the status of the case as a result of which the case is not ready for trial.”

Subdivision (d) sets forth other factors to be considered by the court:

“(d)   In ruling on a motion or application for continuance, the court must consider all the facts and circumstances that are relevant to the determination.  These may include:

 

    (1) The proximity of the trial date;

    (2) Whether there was any previous continuance, extension of time, or delay of trial due to any party;

    (3) The length of the continuance requested;

    (4) The availability of alternative means to address the problem that gave

rise to the motion or application for a continuance;

    (5) The prejudice that parties or witnesses will suffer as a result of the

continuance;

    (6) If the case is entitled to a preferential trial setting, the reasons for 

that status and whether the need for a continuance outweighs the need to avoid delay;

    (7) The court's calendar and the impact of granting a continuance on other

pending trials;

    (8) Whether trial counsel is engaged in another trial;

    (9) Whether all parties have stipulated to a continuance;

    (10) Whether the interests of justice are best served by a continuance, by

the trial of the matter, or by imposing conditions on the continuance; and

    (11) Any other fact or circumstance relevant to the fair determination of the

motion or application.”

It is held that a decision to grant a continuance “must be made in an atmosphere of substantial justice,” and that generally, “the strong public policy favoring disposition on the merits outweighs the competing policy favoring judicial efficiency.”   Oliveros v. County of Los Angeles (2004, 2nd Dist.) 120 Cal.App.4th 1389, 1395, interpreting predecessor statute, citation omitted.  Accordingly, it is held that “absent a lack of diligence or other abusive circumstances...a request for a continuance supported by a showing of good cause usually ought to be granted.”   Oliveros, at 1396, quoting Hernandez v. Superior Court (2004, 2nd Dist.) 115 Cal.App.4th 1242, 1246-1247.  

Defendant indicates that it seeks a continuance to allow time for proposed cross-complainant A to Z to be properly served with the summons and cross-complaint, to conduct discovery and prepare for trial, and to permit the other parties to conduct discovery and fully prepare for trial.  Defendant argues that all parties will need time to conduct discovery as to how the fire occurred and whether A to Z was negligent in protecting the insureds’ belongings.  

Defendant also indicates that defendant has been unsuccessful in locating the homeowners/insureds to obtain depositions concerning the occurrence which caused the water damage, and that plaintiff’s counsel has refused to make the homeowners available for deposition, so that the court may find that defendant has established an excused inability to obtain essential testimony, documents, or other material evidence despite diligent efforts. 

Good cause appears on several grounds.  The moving papers also indicate that there has been no previous continuance requested in this matter, defendant sought to address the problems giving rise to the necessity by filing a motion to strike, but was unsuccessful, that the length of the continuance sought, ninety days, is reasonable, and that the parties will not suffer any prejudice due to the brief continuance. 

Plaintiff in opposition argues that good cause is not established because A to Z is not a party to this lawsuit.  However, the motion for leave to file a cross-complaint will be granted, so there will in fact be a new party in the lawsuit.  The opposition also argues that the testimony of plaintiff’s insureds is not essential to this product liability case, as the circumstances surrounding the water damage can be sufficiently explained through the testimony and report of plaintiff’s expert.  This statement is a concession that plaintiff is taking the position that its insureds should not be subject to deposition, when the insureds clearly have knowledge of relevant, and certainly discoverable, material in connection with the matters raised in this litigation.  

Plaintiff fails to establish any prejudice that it would suffer if the continuance is granted.  The evidence submitted is set forth in the declaration of counsel, who states, “Moving the trial is unjust to Plaintiff, its insureds, and its experts and counsel.”  [Letofsky Decl., para. 11].  This does not set forth any facts establishing any prejudice to plaintiff which would impede plaintiff’s ability to properly present its case at trial on the merits. While defendant’s delay in this matter is not ideal, the motion for leave to file the cross-complaint is granted, necessitating a trial continuance, and this companion motion to continue the trial date accordingly also is granted, and the trial and related dates will be continued.  

RULING:

Defendant Mueller Industry, Inc.’s Motion for Leave to File Cross-Complaint is GRANTED in the interests of justice.  

Cross-Complainant is ordered to efile a separate executed version of the cross-complaint attached to the Walsh Declaration as Exhibit C, by close of business this date and the cross-complaint will be deemed served on the current parties as of the efiling of the pleading. 

Defendant Mueller Industries, Inc.’s Motion to Continue Trial Date is GRANTED, good cause appearing.

 

Trial date currently set for May 20, 2024 is advanced to this date and continued to August 26, 2024 at 9:00 a.m. Final Status Conference is advanced and continued to August 15, 2024 at 9:00 a.m.  All trial related deadlines and discovery cut-off are to be measured from the new trial date.   The OSC Re ADR Compliance currently set for May 9, 2024 is continued to July 24, 2024 at 8:30 a.m.

The parties are cautioned that the Court considers the new trial date firm.  See CRC Rule 3.1332 (a) (“the dates assigned for a trial are firm.  All parties and their counsel must regard the date set for trial as certain.”). 

DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE 

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