Judge Ronald F. Frank, Case 22TRCV00785 2022-12-16 Tentative Ruling

Judge: Ronald F. Frank, Case: 22TRCV00785, Date: 2022-12-16 Tentative Ruling

Case Number: 22TRCV00785 Hearing Date: December 16, 2022 Dept: 8

Tentative Ruling¿

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HEARING DATE: December 16, 2022¿

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CASE NUMBER: 22TRCV00785

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CASE NAME: Hazel Husky LLC; Theorem Ventures LLC v. North Hollywood The Movie, LLC, et al

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MOVING PARTY: Plaintiffs, Hazel Husky LLC; Theorem Ventures LLC

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RESPONDING PARTY: Defendants, North Hollywood, The Movie, LLC; Illegal Civilization, Inc.; and Does 1 to 10

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TRIAL DATE: None Set

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MOTION:¿ (1) Ex Parte Application to Stay Discovery Pending Appointment of Referee

Tentative Rulings: (1) Plaintiffs’ Ex Parte Application for Order Staying Discovery Pending Appointment of Referee is DENIED, without prejudice to a later application on or before December 21 if interim steps to avert the claimed prejudice as discussed below have failed

I. BACKGROUND¿¿

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A. Factual¿¿

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On September 9, 2022, Plaintiffs filed a complaint for breach of contract on promissory notes and for appointment of referee pursuant to CCP section 638. This action is based upon three promissory notes. (See Declaration of Bradley Jacks “Jacks Decl.”, Exhibits A, B, and C.) The Complaint asserts that Defendants have failed to make the payments mandated under the promissory notes. Each promissory note contains the identical provision in which the parties agreed that all factual and legal disputes relating to the promissory notes would be determined by a Referee appointed per Code of Civil Procedure Section 638 et seq. The Court’s Minot Order compelled compliance with the agreement to appoint the Referee.

On November 21, 2022, counsel for Plaintiffs proposed Judge Andrew Kauffman (Ret.) as the Referee. (Jacks Decl. ¶ 3.) Defendants rejected Judge Kauffman and (nine days later, on November 30, 2022) proposed Marshall Whitley (Ret.), who works with ADR Services in the San Francisco Bay Area. (Jacks Decl., ¶ 3.) Counsel for Plaintiffs immediately (on 11/30/22) notified counsel for Defendants that Judge Whitley did not qualify under the terms of the Notes, which specify that the Referee must be a retired judge of “the Court,” a term defined in the Notes as “the Superior Court in Los Angeles County.” (See Note, Jacks Decl. Ex B; Volger Decl., Exhibit 2.) (Judge Whitley retired from Alameda County Superior Court.) Counsel for Plaintiffs also rejected Judge Whitley as being unnecessarily geographically inconvenient. (Jacks’ Decl., ¶3.)

On December 2, 2022, Defendant served each of the Plaintiffs with Requests for Production of Documents, consisting of 223 demands. Jacks Decl., Exhibit C.) After receiving Plaintiffs’ counsel’s December 6, 2022 “Notice of Ex Parte Application letter, Defendants proposed a retired Los Angeles County Judge for the Referee, which Plaintiff appreciated, but declined. (Jack Decl., ¶ 7, Exhibit E.) Plaintiffs assert that with this ex parte application pending, Defendants have now started to cooperate on selection of the Referee and believe that if this ex parte application is denied, the cooperation may cease. As such, Plaintiffs request that all discovery be stayed – including Defendants’ recently served Requests to Production of Documents – pending the appointment of the Referee.

In opposition, Defendants assert that pursuant to Code of Civil Procedure e §§ 2031.210, et seq. Plaintiffs are required to prepare written response and produce the demand documents for inspection and copying within 30 days of service of the Demands, which were served electronically. Accordingly, Defendants maintain that Plaintiffs responses and document production is due to Defendants’ attorney no later than January 4, 2022.

B. Procedural¿¿

On December 7, 2022, Plaintiffs filed an ex parte Application to Stay Discovery Pending Appointment of Referee. On December 8, 2022, Defendants filed an opposition. To date, a reply brief has not been filed.

II. MEET AND CONFER

In their motion, Plaintiffs assert that they have met and conferred, to no avail, following which Plaintiffs gave notice of this Ex Parte. Plaintiffs alleges that immediately after receiving the discovery, counsel for Plaintiffs’ emailed counsel for Defendants reminding him that “all aspects of this case, including discovery, are within the province of the Referee (Jacks Decl., Exhibit D.) During the meet and confer communications, Plaintiffs’ counsel requested that by noon on December 5, 2022, Defendant confirm that “the discovery is withdrawn.” (Jacks Decl., ¶ 5.) Plaintiffs claim that the discovery still has not been withdrawn. (Ibid.) Because the discovery had not been withdrawn, on December 6, 2022, Plaintiffs filed this motion.

¿III. ANALYSIS¿

Code of Civil Procedure, section 638 provides in relevant part:

“A referee may be appointed upon the agreement of the parties filed with the clerk, or judge, or entered in the minutes, or upon the motion of a party to a written contract or lease that provides that any controversy arising therefrom shall be heard by a referee if the court finds a reference agreement exists between the parties:¿

(a) To hear and determine any or all of the issues in an action or proceeding, whether of fact or of law, and to report a statement of decision.¿

(b) To ascertain a fact necessary to enable the court to determine an action or proceeding.¿

(c) In any matter in which a referee is appointed pursuant to this section, a copy of the order shall be forwarded to the office of the presiding judge.¿. . .” (Code Civ. Proc., § 638.)¿¿¿

Here, Plaintiffs argue that all discovery motions must be decided by the not-yet appointed referee. In this Court’s November 18, 2022, minute order, it granted Plaintiff’s previous Motion for Order Compelling Compliance with Agreement for Reference to a Referee Under CCP Section 638. The relevant language of the promissory note as it pertains to discovery motions is as follows:

“…[e]ach controversy, dispute or claim between the parties arising out of or relating to this Note…will be settled by a reference proceeding in California in accordance with the provisions of Section 638 et seq. of the California Code of Civil Procedure…which shall constitute the exclusive remedy for the settlement of any controversy claim or dispute concerning this Note…” (P. 2.) -- The issues to be determined by the Referee include “whether such controversy, dispute or claim is subject to the reference proceeding….” (P. 2.)

“All discovery permitted by this paragraph shall be completed no later than fifteen (15) days before the hearing established by the referee” (subject to extensions of time granted by the Referee). (P. 2)

“All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding upon the parties.” (P. 2.)

Based upon such language, Plaintiffs assert that consistent with Code of Civil Procedure section 638, a referee may be appointed “upon the motion of a party to a written contract or lease that provides that any controversy arising therefrom shall be heard if the court finds a referee agreement exists between the parties…to here and determine any or all of the issues in an action or proceeding, whether of fact or law….” (CCP § 638.) However, in opposition, Defendants assert that unlike Code of Civil Procedure § 1281.4, which stays the action until a motion for Arbitration can be heard, the appointment of a Referee under Code of Civil Procedure § 638 neither stays the action nor stays a party’s right to discovery, and Plaintiffs have not cited any authority to deprive Defendant’s discovery rights. Defendants argue that even with the pending appointment of a Referee, Plaintiffs could file a motion for a protective order, but have not done so.

Additionally, in opposition, Defendants assert that Plaintiffs do not make an affirmative factual showing of immediate danger of irreparable harm in a declaration to support emergency injunctive relief, and as such, the request should be denied. Pursuant to California Rules of Court, Rule 3.1202(c), "An applicant must make an affirmative factual showing in a declaration containing competent testimony based on personal knowledge of irreparable harm, immediate danger, or any other statutory basis for granting relief ex parte." The applicant must further "notify all parties no later than 10:00 a.m. the court day before the ex parte appearance, absent a showing of exceptional circumstances that justify a shorter time for notice." (Cal. Rules of Court, Rule 3.1203, subd. (a).)

After this Court’s review of Plaintiff’s moving papers, this Court does not find an affirmative factual showing of immediate danger or irreparable harm. There is no showing that Defendants have refused to extend the time to respond to the discovery until a referee is appointed. There is no showing that Defendant have deliberately and unreasonably delayed in the selection of a referee, although at the December 16, 2022 hearing the Court will carefully evaluate reasons why a referee has not already been selected given the passage of time since the Court’s order granting the reference to the Referee.

IV. CONCLUSION¿¿

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For the foregoing reasons, Plaintiffs’ Ex Parte Application for Order Staying Discovery Pending Appointment of Referee is DENIED, without prejudice to a noticed motion or a second ex parte application on or before December 21, 2022 if intermediate steps to avert the claimed prejudice have failed.

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