Judge: Robert B. Broadbelt, Case: 19STCV05611, Date: 2022-08-16 Tentative Ruling

Case Number: 19STCV05611    Hearing Date: August 16, 2022    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                Defendant and Cross-Complainant Ron Teeguarden Enterprises, Inc., d/b/a Dragon Herbs (“RTE”)

RESPONDING PARTY:       Cross-Defendants SugarShot, LLC (“SSL”) and Computer Solutions Group, Inc. (“CSG”) (collectively, “Cross-Defendants”)

Motion for Summary Adjudication

The court considered the moving, opposition, and reply papers filed in connection with this motion.

JUDICIAL NOTICE

The court grants defendant and cross-complainant Ron Teeguarden Enterprises, Inc.’s request for judicial notice.  (Evid. Code § 452, subd. (d).)

EVIDENTIARY OBJECTIONS 

The court rules on Cross-Defendants’ evidentiary objections, filed on June 6, 2022, as follows:

The court sustains Objections Nos. 7-8, 16-19, 26, 30.

The court overrules Objections Nos. 1-4, 6, 9-13, 15, 20-25, 28-29, 31-38.

The court sustains Objection No. 5 as to the statement that the SOW did not provide for a second automatic renewal clause.  The court sustains Objection 14 as to the statement that “this portends of CSG/SSL’s calculated decision to make RTE’s departure as difficult and as arduous as possible.”  The court sustains Objection No. 27 to the statement “no one probably did.”

The court overrules RTE’s evidentiary objections filed on June 13, 2022.

LEGAL STANDARD

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)  “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.”  (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)  For the purposes of motion for summary judgment and summary adjudication, “[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.”  (Code Civ. Proc., § 437c, subd. (p)(1).)  “Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”  (Code Civ. Proc., § 437c, subd. (p)(1).)  “When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.”  (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467; Code Civ. Proc., § 437c, subd. (c).)

DISCUSSION

1.     Fourth Cause of Action for Declaratory Relief

Any person interested under a written instrument or under a contract, or who desires a declaration of his rights or duties with respect to another, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action for a declaration of rights and duties, and the court may make a binding declaration of these rights or duties.  (Code Civ. Proc., § 1060.)  “‘The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.’”  (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.)  Thus, there are two elements required to establish a right to declaratory relief: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations.  (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)  “‘The “actual controversy” language in … section 1060 encompasses a probable future controversy relating to the legal rights and duties of the parties.’”  (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.)  

The court finds that RTE has not met its burden of showing that there is no defense to the fourth cause of action for declaratory relief because RTE has not proved that this is a proper subject for summary adjudication.

A trial court may grant summary adjudication of a properly pled cause of action for declaratory relief even if the controversy between the parties “spills over into other causes of action.”  (Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 846.)  However, “parties will not be allowed to misuse the declaratory relief cause of action in an attempt to subvert the requirement a summary adjudication must completely dispose of a cause of action.”  (Ibid.)  A party impermissibly subverts the bar against granting partial summary adjudication by selecting issues (other than duty and punitive damages) implicated in one or more causes of action, alleging a cause of action for declaratory relief as to those issues, and moving for summary adjudication on that declaratory relief cause of action.  (Hood v. Superior Court (1995) 33 Cal.App.4th 319, 321.)  Declaratory relief “should not be used for the purpose of anticipating and determining an issue which can be determined in the main action.”  (Id. at p. 324.)

The court finds that RTE impermissibly moves the court for an order granting partial summary adjudication in violation of the statutory requirement that a motion for summary adjudication will be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages as specified in Civil Code section 3294, or an issue of duty.  (Code Civ. Proc., § 437c, subd. (f)(1).)  Here, RTE seeks partial summary adjudication of the element of damages alleged in the Complaint filed by plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”).  In particular, RTE seeks a declaration that $63,905 of the $93,352.86 element of damages alleged in Plaintiff’s Complaint is not due and owing.  (FACC, ¶ 34; FACC, Prayer, p. 10:17-18.)  Further, RTE’s motion necessarily requests the court partially adjudicate each of its own causes of action alleged in its First Amended-Cross Complaint, as all are based, in part, on allegations that this sum was improperly billed.

The court finds that RTE is impermissibly seeking partial adjudication on this element of damages based on (1) the characterization of the declaratory relief cause of action in the First Amended Cross-Complaint, and (2) various statements made by RTE in its motion. 

In its First Amended Cross-Complaint, RTE alleges that Plaintiff sued it for approximately $93,352.86 “including over $63,000 for services that had never been performed and were fraudulently fabricated”—i.e., the disputed sum at issue on this motion.  (FACC, ¶ 15.)   As to its fourth cause of action for declaratory relief, RTE requests “a declaration that RTE need not pay approximately $63,000 for services never provided by” Cross-Defendants.  (FACC, p. 10:17-18.)  Thus, RTE’s cross-complaint indicates that the purpose of its fourth cause of action is to determine whether RTE is entitled to a declaration that it does not owe to Plaintiff a portion of the damages Plaintiff requests in its Complaint (the subject $63,905 out of the claimed $93,352.86).

Moreover, RTE made the following statements in its motion evidencing that RTE is seeking adjudication of the partial issue of damages.  First, RTE’s notice asserts that its motion is made “on the grounds that Plaintiff’s damage claim in the amount of $63,905.00, Invoice #CSG-28963, has no merit and RTE’s fourth cause of action should therefore be adjudicated in favor of RTE.”  (Notice, 2:12-15 [emphasis added].)  Second, RTE’s motion makes several references to Plaintiff’s claim of damages and Plaintiff’s alleged inability to recover the full amount requested in its Complaint, further evidencing that RTE is seeking to partially adjudicate the element of damages as to each cause of action alleged by Plaintiff.  For example, RTE explains that each of Plaintiff’s causes of action requests $93,352.86 in damages, which includes the $63,905 sum that RTE disputes is due and owing.  (Mot., 1:24-2:13.)  RTE expressly states the purpose of its fourth cause of action in its First Amended Cross-Complaint is to pursue a declaration that this sum—which is only one component of Plaintiff’s claim for damages—is not due and owing.  RTE also argues that, because the $63,905 invoice is invalid, “the majority of the $93,352.86 sought by [Plaintiff]…is non-recoverable” such that “there are no disputed issues of material fact that this court should decline that the sum of $63,905.00 now claimed by SSL’s assignee, [Plaintiff], is owed by RTE.”  (Mot., 3:15-19, 3:22-24.)  Further, RTE asserts that it is (1) seeking summary adjudication on its fourth cause of action and (2) “asking this court to declare the $63,905.00 amount that [Plaintiff] claims is owed” is not due and owing.  (Mot., 12:17-20.)  Finally, RTE concludes its motion by stating that “there is no reason for the court to continue to trial on the issue of the damage claim in the amount of $63,905.00” and therefore “requests this court to adjudicate that these false damages out of the case so the parties can attempt to resolve this case with the much lower and nominal amount, if any, that Plaintiff CAB claims.”  (Mot., 15:9-12 [emphasis added].) 

Although RTE argues that it has merely, and permissibly, requested contract interpretation, the court disagrees.  (See Supervalu, Inc. v Wexford Underwriting Managers, Inc. (2009) 175 Cal.App.4th 64, 82 [finding that, because the moving party merely requested contract interpretation in a declaratory relief cause of action, it did not subvert the purpose of section 437c, subdivision (f)(1)].)  RTE has not requested that the court, for example, interpret the meaning of a particular term in a contract, and has instead requested that the court find it does not owe Plaintiff $63,905 of the $93,352.86 demanded in each of its causes of action against RTE.  (Mot., 2:9-13 [arguing that within Plaintiff’s claim for damages in the sum of $93,352.86 is the request for $63,905 for services never rendered]; RTE RJN Ex. 1, Plaintiff’s Complaint, ¶ 2 [defining the DEBT to be $93,352.86], ¶ 10 [first cause of action for open book account]; ¶ 13 [second cause of action for account stated]; ¶ 16 [third cause of action for reasonable value]; ¶¶ 19-20 [fourth cause of action for breach of contract].) 

Parties may not “misuse the declaratory relief cause of action in an attempt to subvert the requirement a summary adjudication must completely dispose of a cause of action.”  (Southern Cal. Edison Co., supra, 37 Cal.App.4th at p. 846.)  As set forth above, RTE has stated that the purpose of its declaratory relief cause of action and pending motion for summary adjudication is to obtain a declaration that Plaintiff is not entitled to recover damages in the full sum requested in each of the four causes of action alleged in its Complaint (i.e., $93,352.86), and therefore seeks to partially adjudicate the element of damages (i.e., adjudicating that RTE does not owe $63,905 of the $93,352.86 alleged).  This evidences a misuse of the declaratory relief cause of action in that RTE has used this cause of action to subvert the requirement that summary adjudication must dispose of an entire cause of action.  RTE has “pluck[ed]” the issue of $63,905 in damages out of Plaintiff’s Complaint and placed it in a declaratory relief cause of action solely for the purpose of moving for summary adjudication “and thereby making an end run around the restrictions of section 437c, subdivision (f).”  (Ibid.)  The court notes that this cause of action alone is not improper, as it has identified a proper subject of declaratory relief and an actual controversy with respect to this billed amount.  However, RTE may not obtain summary adjudication on this issue because doing so would subvert the purpose of the bar against granting partial summary adjudication for the reasons set forth above.  (Code Civ. Proc., § 437c, subd. (f)(1).)

Finally, the court finds that RTE is also seeking partial adjudication of its own causes of action alleged in its First Amended Cross-Complaint.  As set forth above, RTE has alleged that Plaintiff’s claims for damages include requests for the $63,000 billed for services never performed.  (FACC, ¶ 15.)  RTE’s first, second, third, and fifth causes of action are also based, in part, on this allegation.  Specifically, each cause of action is based on allegations (1) that Cross-Defendants improperly billed RTE approximately $63,000 for services never rendered, and (2) that Cross-Defendants, by refusing to provide passwords to the new IT support company, required RTE to expend additional funds to employ the new IT company.  (FACC, ¶ 19 [first cause of action for breach of written contract], ¶ 22 [second cause of action for breach of implied covenant of good faith and fair dealing]; ¶ 27 [third cause of action for unfair competition]; ¶ 36 [fifth cause of action for fraud].)  RTE’s first, second, and fifth causes of action also allege that Cross-Defendants improperly double-billed RTE for certain months.  (FACC, ¶¶ 19, 23, 36.)  Accordingly, RTE’s motion is necessarily requesting the court partially adjudicate the issue of whether the $63,905 bill was improper, as alleged in each cause of action in RTE’s First Amended Cross-Complaint.  This is a similarly unauthorized use of summary adjudication, as adjudicating this issue would not dispose of each of RTE’s causes of action.  (Code Civ. Proc., § 437c, subd. (f)(1).)

For the reasons set forth above, the court finds that RTE is moving for summary adjudication as to portions of the element of damages alleged in each of the causes of action asserted in Plaintiff’s Complaint and in its First Amended Cross-Complaint, which is not a permitted use of a motion for summary adjudication.  (Code Civ. Proc., § 437c, subd. (f)(1).)

The court therefore denies RTE’s motion for summary adjudication as to the fourth cause of action for declaratory relief.

ORDER

            The court denies defendant and cross-complainant Ron Teeguarden Enterprises, Inc., dba Dragon Herb’s motion for summary adjudication. 

The court orders cross-defendants SugarShot, LLC and Computer Solutions, Group, Inc. to give notice of this ruling.

IT IS SO ORDERED.

DATED:  August 16, 2022

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court