Judge: Shirley K. Watkins, Case: 20STCV02701, Date: 2022-09-01 Tentative Ruling

If ALL parties submit on the tentative, then no appearance is necessary unless some other matter (i.e., Case Management Conference) is on calendar. It is not necessary to call the court to request oral argument. Oral argument is permitted on all tentative rulings.

Case Number: 20STCV02701    Hearing Date: September 1, 2022    Dept: T

TENTATIVE RULING MOTION TO BIFURCATE

           Introduction

          Defendant Farmers Group, Inc. (FGI) moves to bifurcate trial, specifically the issue of alter ego liability.

            Discussion 

            FGI argues that bifurcating the issue of alter ego will be convenient, avoid prejudice and be expedient and save on judicial economy.  Alter ego being an equitable issue requires it to be tried first to the Court.  However, alter ego is not the only basis of liability alleged against FGI.  Despite FGI’s contention otherwise, Plaintiff Arif Harsolia (Plaintiff) alleges direct liability against FGI because FGI is alleged to be Plaintiff’s employer.  (Compl. pars. 1, 9, 22-40.)  FGI’s assertion that bifurcation will promote judicial economy is based upon a presumption that FGI is a separate entity.  Even if FGI is found to be a separate entity, resolution of the alter ego issue will not release FGI from the case due to the allegations of direct liability.

            Alter ego liability actions are equitable in nature.  (Dow Jones Co., Inc. v Avenel (1984) 151 Cal.App.3d 144, 147-8.)  Trial courts are encouraged to apply this “equity first” rule because it promotes judicial economy by potentially obviating the need for a jury trial. (Darbun Enterprises, Inc. v. San Fernando Community Hospital (2015) 239 Cal.App.4th 399, 401.) However, as stated above, trying the alter ego claim first will not promote judicial economy.  A finding that FGI is not the alter ego of the Signatory Defendants will not obviate the need for a jury trial since there claims of direct liability levied against FGI. 

            The motion to bifurcate is DENIED. 

            IT IS SO ORDERED, CLERK TO GIVE NOTICE.

TENTATIVE RULINGS MSJ/MSA

            [TENTATIVE] ORDER:  Defendants Farmers Insurance Exchange, Truck
Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Company, and
Farmers New World Life Insurance Company’s Motion for Summary Judgment AND
Motion for Summary Adjudication as to All Issues are DENIED.

            Defendants Farmers Insurance
Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century
Insurance Company, and Farmers New World Life Insurance Company’s Request for Judicial Notice is
GRANTED but not as to any hearsay or facts in dispute. 

            Defendant Farmers Group, Inc’s
Motion for Summary Judgment AND Motion for Summary Adjudication as to All
Issues are DENIED.    

            Defendant Farmers Group, Inc’s
Request for Judicial Notice is GRANTED but not as to any
hearsay or facts in dispute. 

            Evidentiary rulings are separately
filed.

INTRODUCTION

Defendants Farmers Insurance Exchange, Truck Insurance Exchange, Fire
Insurance Exchange, Mid-Century Insurance Company, and Farmers New World Life
Insurance Company (collectively “Signatory Defendants”) move for summary
judgment (MSJ) and summary adjudication (MSA) against Plaintiff Arif Harsolia’s
(Plaintiff or Harsolia) Complaint. 

DISCUSSION 

            1.         SIGNATORY DEFENDANTS MSJ/MSA:

Signatory Defendants’ Notice to the MSA asserts nine Issues.  The Separate Statement identifies eight
issues.  The issues in the notice do not
match the issues in the Separate Statement. 
Indeed, the language
of the issues do not match. The court will not try
to figure out what the summary adjudication motion means.  There are nine issues in the notice of motion
and the wording on those issues are not numbered the same nor the words the
same as in the Separate Statement.  “If
summary adjudication is sought, whether separately or as an alternative to the
motion for summary judgment, the specific cause of action, affirmative defense,
claims for damages, or issues of duty must be stated specifically in the notice
of motion and be repeated, verbatim, in the separate statement of undisputed
material facts.”  (Cal. Rules of Court,
Rule 3.1350(b).)  Signatory Defendants’
Separate Statement did not repeat verbatim the issues identified in the
Notice.  The Court has discretion to deny
the MSA for failure to comply with the requirements of a separate statement.  (Code Civ. Proc. sec. 437c(b)(1).)  Signatory Defendants’ failure to repeat the
issues verbatim are grounds to DENY the MSA in its entirety. 

For this reason alone, the MSA is denied.  In the future, defendants would be well
advised to assure that the issues in their notice of motion match their issues in
the separate statement.

In addition, Signatory
Defendants submit the declarations of Lucas Buck, John Lindemann, and Zoltan
Nagy to support their motion.  However, the
three declarations are inadmissible because they do not include the statement
of certification (i.e., “…certify under penalty of perjury…”.  (Code Civ. Proc. sec. 2015.5.)  Signatory Defendants’ failure to submit
admissible evidence to support the contentions in the MSJ/MSA are grounds to
DENY the MSJ/MSA in its entirety.   

            2.         FGI MSJ/MSA:

Defendant Farmers Group Inc (FGI) separately filed an MSJ/MSA against Plaintiff’s
Complaint.  FGI’s Notice to the MSA
asserts 22 issues.  The first set of 11
issues move against each of the eleven COAs based upon an agency argument and
the second set of 11 issues move against each of the eleven COAs based upon an
alter ego argument. 

Defendant FGI argues that there is no
triable issue of material fact as to its liability on any of the COAs.  FGI argues that it is an agent of the
Signatory Defendants and alternatively argues that it is not the alter
ego/single enterprise of Signatory Defendants. 
As for agency, FGI argues that the violation of a third party
independent contractor’s rights by an agent acting within the scope of its
agency is a violation by the principal and not the agent.  (FGI’s MSJ/MSA pg. 10:15-17 & 11:11-25.)  FGI’s argument requires evidence showing two
parts: its status as an agent and Plaintiff’s status as an independent
contractor.  The independent contractor
status of Plaintiff is an underlying issue in FGI’s agency argument.  As noted above, there is a triable issue of
fact as to whether Plaintiff is an employee or an independent contractor.  Further, FGI did not present any evidence to
support its claim that Plaintiff is an independent contractor.  FGI only makes a reference to a “joinder” to
Signatory Defendants’ MSJ/MSA in its Points and Authorities.  (FGI’s MSJ/MSA pg. 15:3-4.)  FGI did not file a separate Notice of
Joinder, which is common practice.  In
that Signatory Defendants’ MSJ/MSA is being denied for lack of admissible
evidence, as well as the existence of triable issues of fact regarding
Plaintiff’s employment status, the underlying issue of Plaintiff’s independent
contractor status in FGI’s MSJ/MSA is not established. 

If the Court were to consider FGI’s
request for joinder, the Court notes that a joinder to a co-defendant’s MSJ/MSA
requires the joining party to submit their own separate statement and
evidence.  (Lerma v. County of Orange
(2004) 120 Cal.App.4th 709, 718 719; Frazee v. Seely (2002) 95
Cal.App.4th 627, 636; Village Nurseries v. Greenbaum (2002) 101
Cal.App.4th 26, 46.)  FGI’s separate
statement and evidence is silent as to the issue of employee/independent
contractor.  Without a separate statement
addressing employment status of Plaintiff, the request for joinder is
improper.  Without supporting evidence as
to Plaintiff’s employment status, FGI’s first argument as to agency is not
persuasive.

If the Court were to even consider
whether FGI is an agent of the Signatory Defendants, Plaintiff presents the
expert testimony of Douglas Heller to show that FGI and Signatory Defendants
are a functionally-integrated entity, controlled by FGI, and at minimum
affiliates.  (PASSF 11, 17.)  Plaintiff’s evidence creates a triable issue
of fact on control: the Signatory Defendants do not control FGI, but FGI controls
the Signatory Defendants.  Because of the
testimony that FGI controls the Signatory Defendants, there is a triable issue
of fact as to whether FGI is an agent of the Signatory Defendants. 

Alter
ego/single enterprise doctrine requires: (1) a unity of interest and ownership
that the separate corporate personalities are merged, so one corporation is a
mere adjunct of another or the companies form a single enterprise; and (2) an
inequitable result will occur if the acts in question are treated as those of
one corporation alone.  (Las Palmas
Associates v. Las Palmas Center Associates (1990) 235 Cal.App.3d 1220, 1249-1250.)  FGI submits several facts showing the
separateness of FGI from the Signatory Defendants.  FGI provides that FGI and Signatory
Defendants maintained their separate identities by maintaining their own
governing body, Rules and Regulations or bylaws, and annual statements, meeting
minutes; and formed separately from each other; and been in existence separate
from each other for decades.  (FGI’s
Separate Statement Facts (FSSF) 3, 6, 9–11, 17, 19, 21, 23, 24, 60–62.)  FGI provides that each Signatory Defendant
conducts its own business by electing their own Board Members and hiring their
officers and none of the Signatory Defendants’ and FGI’s directors, officers,
agents, employees or shareholders are the same (FSSF 16-25, 57-59, 63-68.)  FGI further provides that there is no
commingling of funds with the Signatory Defendants and the Signatory Defendants
are adequately capitalized.  (FSSF
100-104.)  Plaintiff’s evidence to rebut
is that FGI’s witness, Margaret Giles, acts as the Assistant Secretary for both
FGI and the Signatory Defendants.  (PASSF
15: Giles Dec. pars. 3, 16, 29, 42, 51, 59.) 
Further, as reviewed above, Plaintiff submits the expert testimony of
Mr. Heller to show that FGI and the Signatory Defendants are an integrated and
single enterprise.  Despite FGI’s
contention otherwise, there is a triable issue of fact as to the element of
unity of ownership or interest.  On this
element alone, there is grounds to deny FGI’s MSJ and/or MSA Issues 12-22. 

As
to the element of inequity, Plaintiff argues that inequity will result if FGI
is dismissed because the Signatory Defendants will charge their insureds higher
rates.  (PASSF 20.)  Because there is evidence to support this
fact, there is a triable issue of fact as to the second element of
inequity. 

Plaintiff
argues the integrated enterprise test.  (Mathews
v. Happy Valley Conference Center, Inc. (2019) 43 Cal.App.5th 236,
248.)  One of the factors for the test is
common ownership or financial control. 
As analyzed under the alter ego review, there are triable issue of fact as
to common ownership.  A review of the
same facts also shows common financial control because Plaintiff provides that FGI
controls the Signatory Defendants.  Plaintiff
has shown a triable issue of fact as to the integrated enterprise test.

            IT IS SO ORDERED, CLERK TO GIVE
NOTICE.