Judge: Randolph M. Hammock, Case: 22STCV32887, Date: 2023-03-09 Tentative Ruling

Case Number: 22STCV32887    Hearing Date: March 9, 2023    Dept: 49

Wong Properties Limited Partnership v. Drake Real Estate Group, et al.

MOTION TO STAY PROCEEDINGS
 

MOVING PARTY: Defendants Drake Real Estate Group and Christopher Charles Drake

RESPONDING PARTY(S): Plaintiff Wong Properties Limited Partnership; Defendant AAG Services, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiff Wong Properties Limited Partnership owns a 44-unit apartment building at 3320 Rowena Avenue, Los Angeles, CA. Plaintiff alleges it contracted with Defendants Drake Real Estate Group and Christopher Charles Drake whereby Defendants would manage the property. Plaintiff alleges that Defendants presented a plan for interior renovations of the apartments. Defendants, however, allegedly failed to disclose that the renovations involved a full-scale electrical upgrade. Defendants retained Defendant AAG Services, Inc. as subcontractor to conduct the electrical work.  Plaintiff alleges Defendants failed to finalize permits for the electrical work, and that the work was substandard.  The Los Angeles Housing and Community Investment Department (“HCID”) later found that the electrical work violated the Los Angeles Municipal Code, resulting in a “lockout.” Plaintiff contends that remedying the electrical work is estimated to cost over $1 million, and the lost rent resulting from the lockout has been approximately $600,000. Plaintiffs brings causes of action against Drake Real Estate Group and Drake for (1) breach of management agreement, (2) negligence, and (4) negligent misrepresentation, and against AAG for (3) negligence.

Defendants Drake Real Estate Group and Christopher Charles Drake now move for a stay of the case.  Plaintiff opposed. Defendant AAG opposed in part.

TENTATIVE RULING:

Defendants’ Motion to Stay Proceedings is DENIED.

Moving party to give notice.

DISCUSSION:

Motion for Stay of Proceedings

Analysis

Defendants Drake Real Estate Group and Christopher Charles Drake move for an order staying proceedings in this matter pending the resolution of a separate case in federal district court, that being State Farm v. Drake et al., District Court for the Central District of California, Case No. 2:22-CV-08776. 

After the filing of the Complaint against them in the instant case, Defendants reported the claim to its insurer, State Farm, and tendered the defense of this case to the insurer. In response, State Farm denied the defense and indemnity, and rescinded the policy. (Ho Decl., ¶ 4.) Shortly after, State Farm filed a declaratory action in the United States District Court for the Central District of California, asking for (1) a declaration that it owes no duty to indemnify or defend Defendants in connection with the instant lawsuit and (2) that it properly rescinded the policy.

The crux of Defendants’ argument supporting the stay appears to be an effort to avoid defending the suit “out of pocket” while the insurance declaratory relief action is pending—a scenario they argue would inhibit meaningful settlement talks or alternative dispute resolution. Defendants also argue that a stay “will conserve judicial resources because significant motion practice is anticipated.” (Mtn. 5: 12.)

Plaintiff opposed.  Plaintiff argues, in essence, that Defendants’ insurance dispute has no direct relevance to the instant case, and that it will be prejudiced by the stay. (Opp. 5: 8-14.)

Defendant AAG Services, Inc., filed an opposition indicating that given “its very limited involvement” in the case, it does not oppose the stay, but asks that discovery remain open. (Opp. 2: 22-23.)

 “’[A] court ordinarily has inherent power, in its discretion, to stay proceedings when such a stay will accommodate the ends of justice.’ (People v. Bell (1984) 159 Cal.App.3d 323, 329.) As the Court in Landis v. North American Co. (1936) 299 U.S. 248, 254, explained, ‘the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 141;  See also Frieberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1481, 1489 [“Trial courts generally have the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.”].)

Defendants’ effort to stay this case pending resolution of the declaratory relief coverage action appears unsupported by any California authorities, and Defendants cite no authority suggesting that funding a suit “out-of-pocket”—e.g. without insurance coverage—is a recognized form of prejudice. If anything, it is Plaintiff who would be unfairly prejudiced by the delay if a stay is entered. This is exacerbated where, as here, Plaintiff alleges its vacancies and damages are ongoing as a result of the continuing lockout.

There is also no evidence a stay would conserve judicial resources or promote judicial efficiency. It is unclear how long it will take to resolve the declaratory action. However, as discussed infra, that action is subject to a preference setting. It is also wholly speculative whether Defendants will prevail in that case. Finally, given the separate legal issues to be adjudicated in the two cases, a stay would merely delay inevitable discovery and motion practice, but would not otherwise, reduce, consolidate, or conserve the same. 

Last, but not least, the more appropriate remedy is to request priority setting in the declaratory relief coverage action.  Indeed, such a request appears to be subject to a mandatory grant by that court.  See, CCP § 1062.3.

Accordingly, Defendants’ Motion to Stay Proceedings is DENIED.

Moving party to give notice, unless waived.  

IT IS SO ORDERED.

Dated:   March 9, 2023 ___________________________________
Randolph M. Hammock
Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing.  All interested parties must be copied on the email.  It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.