Judge Ralph C. Hofer, Case EC067583 2023-03-17 Tentative Ruling

Order confirming the Arbitration Award dated December 7, 2022 issued in this action by the American Arbitration Association in accordance with this court’s orders compelling this action to arbitration as between plaintiff and defendant Viracon, Inc.

Plaintiff Pointe Assets, LLC, the successor in interest to Catalina Media Development, LLC (“CMD”), alleges that CMD owns real property in Burbank, commonly referred to as “The Pointe,” an office building and parking garage. Plaintiff alleges that in early 2006, plaintiff entered into an agreement with Krismar Construction Co. concerning construction of the Pointe, which, in turn, for the benefit of CMD, entered into a subcontract with defendant Benson Industries, Inc. (Benson) to design and build an exterior curtain wall glazing system. Benson then hired for the benefit of CMD, defendant Viracon, Inc. (Viracon) which manufactured and supplied certain IG Units for the curtain wall glazing system. Plaintiff alleges that a sealant for the system, PIB, was manufactured and supplied to Viracon by defendants Quanex I.G. Systems, Inc. (Quanex) and/or Truseal Technologies, Inc. (Truseal).

Plaintiff alleges that the project was substantially complete in April of 2009, but in April of 2016 a tenant notified CMD’s property manager of a dirty window. It was then discovered that the problem was not dirt but film formation comprised of PID forming between the panes of glass in the sealed IG units, so that there is no way to clean the film formation or repair the PIB without damaging the IG Units, and the exterior curtain wall glazing system.

The pleading alleges that Benson acknowledged in the subcontract that CMD is a third-party beneficiary of that contract, and plaintiff alleges breaches of the warranties of that subcontract, as well as various theories of product liability, negligence, and breach of warranty against defendants.

At the hearing, the court was informed of the dismissal, and plaintiff argued that the motion to compel arbitration was accordingly moot, as defendant Benson had been dismissed and the only two defendants with an arbitration agreement were no longer in the case.

The court informed counsel that several defendants had joined in the motion to compel arbitration, and the court would continue the motion to compel arbitration from the other defendants concerning whether the motion was moot or was to go forward. Supplemental briefing was ordered, and the matter continued to June 22, 2018.

At the hearing on June 22, 2018, the court’s tentative ruling was that the motion to compel arbitration was moot in light of the dismissal of the moving party, and to deny the “joinders” without prejudice, and indicated that if the joinder defendants represented that they would file new stand-alone motions to compel arbitration, the court would keep the stay of the matter in place pending the court’s adjudication of those motions, so long as such motions were filed within 30 days of the hearing date. At the hearing, the court asked counsel if any of the joined parties were considering filing their own motion, there was a response in the positive, and the minute order states, “Court orders the stay to remain in effect.” The minute order also states, “Court remarks that you have thirty (30) days to do so.”

On July 20, 2018, defendant Viracon filed a motion to compel arbitration, which was set for hearing on November 30, 2018. On July 23, 2018, defendants Quanex and Truseal filed a motion to compel arbitration and joinder in Viracon’s motion, which was also set for hearing on November 30, 2018.

The matters were continued to December 14, 2018 and heard. The court granted the motion by defendant Viracon, and ordered: “Plaintiff Pointe Assets, LLC and Defendant Viracon, Inc. are ordered to arbitrate this matter according to the Agreement set forth in the subject Subcontract.”

The arbitrator in its May 4, 2020 ruling had determined there was no agreement requiring plaintiff and Viracon to arbitrate the limited remedies before the arbitrator pertaining to the claim or counterclaim, found that resolution of the dispute was not within the jurisdiction and powers granted to the arbitrator, and dismissed the counterclaim and Viracon’s claim without prejudice.

“The Court finds that the Arbitrator exceeded the arbitrator’s powers in declining to conduct arbitration of the claim of plaintiff, and that the award cannot be corrected without affecting the merits of the decision upon the controversy submitted, which this Court has previously found is a decision on the merits to be made in arbitration.

The Ruling on Respondents’ Second Motion Objecting to Jurisdiction, dated May 4, 2020 is vacated, and plaintiff Pointe Assets, LLC and defendant Viracon, Inc. are again ordered to submit the entire controversy between them to binding arbitration pursuant to the terms of the subject Subcontract.

On February 24, 2023, the court heard a motion to file three documents in opposition to the motion under seal. The court continued the motion to this date for supplemental briefing, finding that the showing made did not establish that an overriding private interest outweighs the public’s right to disclosure if the documents were not filed under seal. The court ordered the parties to engage in good faith meet and confer regarding the factual basis for plaintiff’s confidentiality designations, and whether the documents could be redacted of confidential information only, and specified what information was to be included in the supplemental briefing.

The minute order also indicated, “If the parties stipulate in advance that the documents are to be filed as public records, the parties must notify the court of such a circumstance no later than the date the first supplemental brief is due.” The first supplemental brief was ordered due by March 2, 2023.

On March 2, 2023, defendant filed a Stipulation to Withdraw Defendant Viracon, Inc.’s Motion to File Three Documents Under Seal and to Refile Them with Redactions of One Document, indicating the parties had agreed to file two of the three documents publicly, and to file publicly a “redacted” version of Exhibit F (Membership Interests Purchase and Sale Agreement) to the Ekman Declaration in opposition to the motion to confirm arbitration. The parties also stipulated that Viacom withdrew its motion for file documents under seal. There was no order of the court requested or made permitting the filing of the redacted document.

On March 3, 2023, defendant filed a Supplemental Declaration of John C. Ekman, which included Exhibit F, which appears to have redacted certain information from paragraphs 2.2 and 2.3 of the document,, and possibly other information. The document is over 50 pages long, the redacted items appear to be whited out rather than blacked out so that it is difficult to locate the redactions. It was not specified by the parties what information had been redacted or why it could not be publicly disclosed and qualified for a sealing order. The Stipulation and Supplemental Declaration are not accompanied by a motion to permit the filing of the redacted document under seal, and no unredacted copy of Exhibit F has been submitted to the court other than in connection with the motion to seal which has been withdrawn.

“Now, therefore, the parties stipulate as follows: Viracon will file publicly a redacted version of Exhibit F (Membership Interests Purchase and Sale Agreement) to the Declaration of John C. Ekman in Support of Defendant Viracon’s Opposition to Motion to Confirm Arbitration Award and Request for Dismissal of Action or to Vacate Award or Dismiss Proceedings (‘Ekman Declaration.’”

While the court’s previous order required the parties to meet and confer in an effort to reach agreement on possible redactions, that order did not permit the parties to file an agreed upon redacted version of a presumably public document without obtaining an appropriate sealing order from the court with respect to any agreed upon redactions.

As the court had pointed out in a previous ruling, while the rules for sealing records do not apply to discovery motions or proceedings, the rules, “do apply to discovery materials that are used at trial or submitted as a basis for adjudication of matters other than discovery motions or proceedings.” CRC Rule 2.550(a)(3); NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1208-1209 n. 25.

This matter is now in a posture where Exhibit F to the Supplemental Declaration has been filed with redactions, sealing the information redacted from being open to the public, in violation of CRC Rule 2.550 (c), and CRC Rule 2.551, under which a record is presumed to be public and must not be filed under seal without a court order.

The court accordingly, on its own motion, pursuant to CCP § 436, strikes Exhibit F from the Supplemental Declaration of John C. Ekman in Support of Defendant Viracon Inc.’s Opposition to Motion to Confirm Arbitration Award, filed on March 3, 2023, as not filed in conformity with the law.

The court also orders defendant Viracon, Inc. to file with the court and serve an unredacted copy of the redacted document identified as Exhibit F, to be attached to a further declaration, with the document clearly identified in the caption and further declaration as “Unredacted Copy of Exhibit F.”

This order to file and serve the unredacted Exhibit F will not become effective, however, until Wednesday, March 22, 2023, at 12:00 p.m. (noon) in order to permit plaintiff, if plaintiff so chooses, to promptly apply for a sealing order before the unredacted record, Exhibit F, is filed as a public record.

If plaintiff chooses to seek an order to have the redacted document filed under seal, plaintiff must make ex parte application for such relief, requesting an order shortening time for hearing, with the hearing date to be scheduled no later than Wednesday, March 29, 2022. Any ex parte application for relief must fully comply with CRC Rule Rule 2.551(b):

“(b) (1) A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record. The motion or application must be accompanied by a memorandum of points and authorities and a declaration containing facts sufficient to justify the sealing.

(2) A copy of the motion or application must be served on all parties who have appeared in the case. Unless the court orders otherwise, any party that already possesses copies of the records to be placed under seal must be served with a complete, unredacted version of all papers as well as a redacted version.”

Specifically, plaintiff must show by admissible evidence in the form of a declaration of a person with personal knowledge concerning the content of the proposed redactions and why they would be appropriately subject to a sealing order under CRC Rule 2.550 and NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178. The showing must be by admissible evidence, not based on the declaration of counsel, and must show what information is being redacted, and on what basis. If the matter is claimed to be proprietary information or trade secret, an appropriate showing by admissible evidence must be made supporting that basis.

Any such application must be served with the required redacted and required sealed complete unredacted versions of Exhibit F. The filing must be pursuant to CRC Rule 255.1 (b) (6), that is, with the cover of the redacted version identifying it as “Public-Redacts materials from conditionally sealed record,” and the cover of the unredacted version identifying it as “May Not Be Examined Without Court Order—Contains material from conditionally sealed record.”

“An order sealing the record must (A) specifically state the facts that support the findings and (B) direct the sealing of only those documents and pages, or, if reasonably practicable, portions of those documents and pages, that contain the material that needs to be placed under seal. All other portions of each document or page must be included in the public file.”

Once the issue of whether the record, Exhibit F, will be subject to redaction and a sealing order, or be filed in the public record in its entirety, the continued date for the hearing on the pending petition to confirm arbitration award will be fixed by the court.

Specifically, this redacted version of a record sought to be filed with the court is not subject to a court order permitting the material to be filed under seal, but by Stipulation of the parties, in violation of CRC Rule 2.550 (c) (“Unless confidentiality is required by law, court records are presumed to be open.”) and CRC Rule 2.551(a) (“(a) A record must not be filed under seal without a court order. The court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties.”)

The Court orders defendant Viracon, Inc. to file with the court and serve an unredacted copy of the redacted document identified as Exhibit F (Membership Interests Purchase and Sale Agreement), to be attached to a further declaration, with the document clearly identified in the caption and further declaration as “Unredacted Copy of Exhibit F.”

HOWEVER, this order to file and serve the unredacted Exhibit F will not become effective until Wednesday, March 22, 2023, at 12:00 p.m. (noon) to permit plaintiff, if plaintiff so chooses, to promptly apply for a sealing order before the unredacted record, Exhibit F, is filed as a public record.

Plaintiff must show by admissible evidence in the form of a declaration of a person with personal knowledge concerning the content of the proposed redactions and why they would be appropriately subject to a sealing order under CRC Rule 2.550 and NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178.

Any such application must be served with the required redacted and required conditionally sealed complete unredacted versions of Exhibit F. The filing must be pursuant to CRC Rule 255.1 (b) (6), that is, with the cover of the redacted version identifying it as “Public-Redacts materials from conditionally sealed record,” and the cover of the unredacted version identifying it as “May Not Be Examined Without Court Order—Contains material from conditionally sealed record.”

Plaintiff Pointe Assets, LLC’s Petition to Confirm Arbitration Award is CONTINUED, in light of the Court’s order striking the redacted record submitted by the parties pursuant to stipulation and making further orders concerning the state of the record in connection with the petition.

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