Judge Theresa M. Traber, Case Number: 19STCV05281, Date: 2023-08-17 Tentative Ruling

Judge: Theresa M. Traber, Case: 19STCV05281, Date: 2023-08-17 Tentative Ruling

Case Number: 19STCV05281 Hearing Date: November 17, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: November 17, 2023 TRIAL DATE: VACATED

CASE: Vivera Pharmaceuticals, Inc. v. Robert C. Blaine, et al.

CASE NO.: 19STCV05281, consol. w/ 20STCV01610 & 19STCV19489

(1) MOTION FOR RETURN OF FUNDS DEPOSITED WITH COURT;

(2) MOTION TO BE RELIEVED AS COUNSEL

MOVING PARTY: (1) Defendants Dr. Robert C. Blaine, Blaine Laboratories, Inc., and Blaine Holding & Development, LLC; (2) Attorney Michael Hurey, counsel for Plaintiff Vivera Pharmaceuticals, Inc.

RESPONDING PARTY(S): (1) Plaintiff Vivera Pharmaceutical, Inc., and Cross-Complainant/Cross-Defendant Paul Edalat; (2) Robert C. Blaine.Dr. Robert C. Blaine, Blaine Laboratories, Inc., and Blaine Holding & Development, LLC

CASE HISTORY:

· 02/19/19: Complaint filed [lead case].

· 03/04/19: Cross-Complaint filed [lead case].

· 03/15/19: First Amended Complaint filed [lead case].

· 04/25/19: First Amended Cross-Complaint filed by Blaine Laboratories as to Paul Edalat et al. [lead case].

· 05/10/19: Second Amended Complaint filed [lead case].

· 06/05/19: Complaint filed [19STCV19489].

· 09/24/19: Cross-Complaint filed by Paul Edalat as to Blaine Laboratories.

· 01/14/20: Complaint filed [20STCV01610].

· 04/12/21: Second Amended Cross-Complaint filed by Blaine Laboratories as to Paul Edalat et al. [lead case].

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a breach of contract and misappropriation of trade secrets action involving multiple consolidated and related actions and cross-actions.

Defendants move for return of the funds deposited with the Court pursuant to a stipulation to arbitrate entered on May 30, 2023. In addition, Attorney Michael Hurey, counsel for Plaintiff Vivera Pharmaceuticals, moves to be relieved as counsel.

TENTATIVE RULING:

Defendants’ Motion for Return of Funds is DENIED.

Attorney Michael Hurey’s Motion to be Relieved as Counsel is DENIED. If Plaintiff has obtained new counsel, Plaintiff is directed to file and serve a Substitution of Attorney on Form MC-050 immediately.

DISCUSSION:

Motion for Return of Funds Deposited With Court

Defendants move for return of the funds deposited with the Court pursuant to a stipulation to arbitrate entered on May 30, 2023.

The undisputed facts follow. On May 30, 2023, this Court approved a stipulation between Plaintiff Vivera Pharmaceuticals and Cross-Complainant and Cross-Defendant Paul Edalat on the one hand, and Defendants Robert C. Blaine, Blaine Laboratories, Inc., and Blaine Holding & Development, LLC, on the other (hereafter, “Defendants.”) (See May 30, 2023 Minute Order.) At an arbitration hearing on October 3, 2023, Plaintiff and Edalat represented to the arbitrator that they would not go forward with the arbitration without remedial measures because Plaintiff’s counsel and several witnesses had received death threats, which Plaintiffs claimed were sent by Defendant Blaine. (Declaration of Bridget Zerner ISO Mot.. Exh. H-6; Exh. J-2.) Faced with these claims, and counterclaims by Defendants that Plaintiff and Edalat fabricated the death threats themselves, the arbitrator elected to suspend the proceedings and return the matter to this Court to determine the appropriate measures. (Zerner Decl. Exh. J-10 p. 35:5-13.) Defendants argue Plaintiff and Edalat have defied the Court’s order to arbitrate by refusing in bad faith to participate in the arbitration by fabricating the threatening text messages themselves to avoid having to continue with arbitration to a potentially unfavorable result. On that basis, Defendants request that the Court treat Plaintiff and Edalat’s refusal to participate in arbitration as a default, dismiss Plaintiff and Edalat’s claims, and return the funds deposited with the Court to Defendants.

Plaintiff and Edalat argue in opposition that their refusal to participate in the arbitration was justified because the threatening emails and text messages rendered Plaintiff’s key witnesses unavailable. It is true that a witness who refuses to testify because the witness fears for their safety is deemed unavailable. (People v. Rojas (1975) 15 Cal.3d 540, 552.) The Court observes that, on the record presented on this motion, Plaintiffs offer no admissible evidence of the predicate fact that any witness refused to testify because of the threats made. Indeed, the only evidence that any of the witnesses even received the threatening messages is a declaration from Plaintiff Vivera’s attorney Saied Kashani. (Declaration of Saied Kashani ISO Opp. ¶ 12.) None of the witnesses offer any testimony that they received the messages, or that they were unwilling to appear in the arbitration because they fear for their safety. Representations of counsel, such as those made in the arbitration hearing, are not evidence. Moreover, even if the witnesses had refused to appear, Rojas states only that they should be treated as unavailable witnesses, including as pertaining to the admissibility of other evidence. (See Evid. Code § 240; Rojas, supra, 15 Cal.3d at 552.) Rojas does not stand for the position that a witness who refuses to testify somehow precludes or excuses a party from litigating its case. Thus, were the Court inclined to address Plaintiffs’ justifications for refusal to participate in arbitration, it would find a failure of proof in that Plaintiffs have not offered any admissible evidence establishing that any witness refused to testify.

That said, the Court does not reach these issues in ruling on this motion, because the Stipulation to Arbitrate between the parties conveyed this matter to arbitration, subject to ADR Services, Inc.’s Arbitration Rules. (See Zerner Decl. Exh. B-5 ¶ 11.) In the Court’s view, the question of which party engaged in misconduct during the arbitration proceeding and what remedy should be imposed is the province of the arbitrator, not the Court. Indeed, it appears that the governing arbitration rules generally account for these circumstances. ADR Services’s Arbitration Rules do not permit a party to unilaterally withdraw or terminate arbitration except by written agreement of all parties. (ADR Services Inc. Arbitration Rules (Eff. January 29, 2021) Rule 18.) ADR’s rules also expressly permit the arbitrator to impose sanctions for the misconduct of a party. (Rule 38.) More critically, Rule 17 allows an arbitrator to proceed with a hearing if a party does not respond or attend despite adequate notice and may grant relief or issue an award if the party establishes a right to that relief by a proper evidentiary showing. (Rule 17.) The arbitration agreement states that the funds deposited with the Court will so remain “until the arbitration referred to herein is decided by the arbitrator and thereafter these funds will be paid in accordance with the decision of the arbitrator as between these parties.” (Zerner Decl. Exh. B-6 ¶ 15.) Defendants, thus, seek relief that is not authorized by the rules of arbitration to which they stipulated nor by the agreement itself.

Administrator Brazil stated in the October 3, 2023 hearing that his intention was to refer this matter back to this Court “for consideration of what to do given these circumstances.” (Zerner Decl. Exh. J.-10 p. 3:12-13.) The Court answers: the Arbitrator should hear the matter pursuant to the arbitration agreement, decide whether any party has engaged in misconduct or failed without reason to attend the arbitration, levy an appropriate sanction according to the governing rules should sanctions be warranted, and grant whatever relief is appropriate based on the parties’ presentation of evidence at the arbitration.

Accordingly, Defendants’ Motion for Return of Funds is DENIED.

Motion to Be Relieved as Counsel

Attorney Michael Hurey, counsel for Plaintiff Vivera Pharmaceuticals, moves to be relieved as counsel.

Moving Counsel filed two of the three required forms (MC-051 and -052) and included a proof of service as required by California Rules of Court rule 3.1362(d). Moving Counsel’s declaration states that he served Defendant by mail and confirmed the address is current via telephone and conversation. (MC-052 ¶ 3.) The record shows, however, that Moving Counsel has not served or filed the requisite proposed order, despite having previously been ordered by the Court to do so. (See October 9, 2023 Minute Order.) For that reason alone, the Court would be within its discretion to deny the motion.

Defendants Dr. Robert C. Blaine, Blaine Laboratories, Inc., and Blaine Holding & Development, LLC filed a response to this motion objecting to the withdrawal of Plaintiff’s counsel. Defendants cite no authority which grants them any standing to object to a change in representation of another party. That said, the issues addressed in Defendants’ response raise important questions about whether the motion should garner unconditional approval. In general, an attorney may withdraw with or without cause if the withdrawal would not result in undue prejudice to the client’s interest – i.e., counsel cannot withdraw at a critical point in the litigation, because that would prejudice client, but can withdraw otherwise. (Ramirez v. Sturdevant (1994) 21 Cal. App. 4th 904, 915.) The Court has discretion to deny an attorney’s request to withdraw where the withdrawal would work an injustice or cause undue delay in the proceeding, but the Court’s discretion in this area is one to be exercised reasonably. (Mandell v. Superior Court (1977) 67 Cal.App.3d 1, 4.)

Here, in light of the timing of the proposed withdrawal, Plaintiff’s inability to pursue claims without representation, and the failure of Attorney Hurey to comply with the Court’s October 9, 2023 order, the Court does not find good cause to permit withdrawal without substitute counsel. That said, the Court also observes from the recent filings that Plaintiff appears to represented by new counsel, Saied Kashani, but no substitution of attorney has been filed. (See Code Civ. Proc. § 284(1). This deficiency must be corrected forthwith.

Accordingly, Attorney Michael Hurey’s Motion to be Relieved as Counsel is DENIED. If Plaintiff has obtained new counsel, Plaintiff is directed to file and serve a Substitution of Attorney on Form MC-050 immediately.

CONCLUSION:

Accordingly, Defendants’ Motion for Return of Funds is DENIED.

Court to give notice.

IT IS SO ORDERED.

Dated: November 17, 2023 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@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.