Judge: Upinder S. Kalra, Case: 20STCV28277, Date: 2023-02-28 Tentative Ruling

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Case Number: 20STCV28277    Hearing Date: February 28, 2023    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   February 28, 2023                                          

CASE NAME:           State Farm Mutual Automobile Insurance Company v. Marina Chaliyan, et al. 

CASE NO.:                20STCV28277

MOTION TO SEVER

MOVING PARTY: Plaintiff/Cross-Defendant State Farm Mutual Automobile Insurance Company

RESPONDING PARTY(S): Defendants/Cross-Complaints Marina Chaliyan, Yuriy S. Chaliyan, Jacqueline Chaliyan, Madlen Chaliyan, Svetlana Yakimidi

REQUESTED RELIEF:

1.      An order severing the claims into three phases   

TENTATIVE RULING:

1.      Motion to Sever is DENIED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On July 27, 2020, Plaintiff State Farm Mutual Automobile Insurance Company (“Plaintiff”) filed a complaint against Defendants Marina Chaliyan, Yuriy S. Chaliyan, Jacqueline Chaliyan, Madlen Chaliyan, Svetlana Yakimidi (“Defendants”) for declaratory relief. The complaint alleges that the Defendants, who had a policy with Plaintiff, filed a claim for property damages to the vehicle as well as bodily injuries and medical treatment. Plaintiff investigated Defendants’ claims and alleges that there are indications of fraud.

On October 29, 2020, Defendants Marina Chaliyan, Yuriy S. Chaliyan, Jacqueline Chaliyan, Madlen Chaliyan, Svetlana Yakimidi filed a Cross-Complaint against Cross-Defendant State Farm Mutual Automobile Insurance Company. The Cross-Complaint alleged six causes of action: (1) Breach of Contract, (2) Breach of Contractual Duty to Pay a Covered Claim, (3) Breach of Implied Covenant of Good Faith and Fair Dealing, (4) Breach of Implied Covenant of Good Faith and Fair Dealing – Failure of Delay in Payment, (5) Bad Faith – Failure to Properly Investigate a Claim, and (6) Bad Faith in Pursuant to California Insurance Code §790.03(h).

On October 20, 2022, Defendants filed an Answer.

On May 10, 2021, Cross-Complainants filed a First Amended Cross-Complaint.

On June 11, 2021, Cross-Defendant filed an Answer.

On May 19, 2022, Cross-Defendant filed a Motion for Summary Adjudication.

LEGAL STANDARD

Pursuant to CCP § 1048(b), “the court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of the state or of the United States.” 

ANALYSIS:

Plaintiffs move to sever and phase trial on three issues. First, the declaratory relief should be determined by bench trial. Second, whether the cross-complainants are legally entitled to collect damages as a result of the accident by arbitration. Lastly, the breach of contract and bad faith claims by jury trial.

As for the Declaratory Relief action, the Court already ruled that this will proceed by bench trial. Thus, it is impractical for the parties to incur the cost of trying the issues of the breach of contract and bad faith claims until the declaratory action is determined. If the Court finds in Plaintiff’s favor, then the cross-complaint is moot. However, if the Court rules in Cross-Complainants’ favor, then the matter must be resolved by arbitration based on the plain language of the policy. These claims fall within the scope of the arbitration, but Cross-Complainants have not agreed to arbitrate. Lastly, the breach of contract and bad faith claims will proceed by jury trial, which are raised in the Cross-Complaint.

Defendants contend that severing the matter should not occur for two main reasons. First, it does not promote judicial economy. Specifically, Defendants assert that these issues – the damages to the vehicle and whether cross-complainants are entitled to collect damages, are intertwined, and overlap. These issues will require an examination of the same evidence and testimony from the same experts. Therefore, bifurcating the issue would result in the experts being “examined three times, twice by Court and once by an arbitrator for their evaluation of the same accident and same documents.” (Opp. 4: 19-22.) Second, Plaintiff waived its right to compel arbitration. Here, Plaintiff, the large insurance company, chose to file a lawsuit and waited two and half years after litigation commenced to seek arbitration. Thus, Plaintiff’s initial filing of a lawsuit, utilization of the “litigation machinery,” waiting two and half years to seek arbitration, filing a motion for summary adjudication all indicate that waiver has occurred. Additionally, Defendants will be prejudiced as arbitration will significantly delay the resolution of the claims.

A motion for severance asks the Court for separate trials on certain issues. Generally, the purpose of such motion is to avoid prejudice, promote convenience, or allow for economic and efficient handling of the case. (See CCP §1048(b).)

Under CCP §1048(b), the court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of this state or of the United States.

In general, whether there will be a severance and separate trials on issues in a single action is a matter within the discretion of the trial court. (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 911-912, citing Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (1987) 189 Cal.App.3d 1072, 1086.

            The Court finds that severing the issues into three phases will not promote judicial economy. First, as Defendants correctly argue, Plaintiff has waived a right to compel arbitration. “California courts may refuse to enforce an arbitration agreement “upon such grounds as exist at law or in equity for the revocation of any contract,” including waiver. (Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 444.) Further, “a party may be said to have ‘waived’ its right to arbitrate by an untimely demand, even without intending to give up the remedy.” (Id.)

Moreover, Lewis went onto discuss the factors in St. Agnes:

“Specifically, the St. Agnes court identified the following as “factors [that] are relevant and properly considered in assessing waiver claims”: “(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.” ' [Citations.]” (St. Agnes, supra, 31 Cal.4th at p. 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727.) No one of these factors predominates and each case must be examined in context.

(Id.)

Here, Plaintiff’s filed the initial lawsuit and waited over two and half years before seeking to compel arbitration. Moreover, discovery has long been started and Plaintiff’s filed a Motion for Summary Judgment prior to the current motion. Also, compelling arbitration now would likely prejudice Defendants as this matter is already lengthy and costly. 

Second, the issues are not distinct enough to sever into different phases. The same experts and witnesses will be utilized to determine whether the car accident was consistent with the report and whether Defendants are entitled to damages because of the accident. Thus, the same evidence will be examined to determine both issues. Severing the matter into three phases would cause duplicative testimony and not promote judicial economy.

Therefore, Motion to Sever is DENIED.

Conclusion:

            For the foregoing reasons, the Court decides the pending motion as follows:

            Motion to Sever is DENIED.

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             February 28, 2023                   __________________________________                                                                                                                Upinder S. Kalra

                                                                                    Judge of the Superior Court