Judge: Virginia Keeny, Case: 20VECV00556, Date: 2022-10-20 Tentative Ruling
Case Number: 20VECV00556 Hearing Date: October 20, 2022 Dept: W
2974 PRoperties, inc. V. david darwish et al.
motion to bifurcate
Date of
Hearing: October 20, 2022 Trial Date: January 9, 2023
Department: W Case No.: 20VECV00556
Moving
Party: Defendants David Darwish, Barbara
Darwish, NAKD
Responding
Party: Plaintiff 2974 Properties, Inc.
BACKGROUND
This action arises out
a dispute involving Plaintiff, 2974 Properties (“Plaintiff”), and Defendant
David Darwish (“David”). David and Plaintiff had agreed to a joint venture to
purchase foreclosed properties, and, in 2007, the parties purchased the subject
Property together, with Plaintiff having a 1/3 interest. (FAC ¶ 10-12.)
Plaintiff alleges that David falsely represented to Plaintiff’s agent that
Defendants had not been able to find a buyer and offered to buy out Plaintiff’s
1/3 interest, which Plaintiff accepted. (FAC ¶ 17.) In fact, Defendants had
found a buyer at that time, and the agreement caused Plaintiff to lose at least
$36,366.67. (FAC ¶¶ 16-17.)
This Court initially
granted Defendant’s judgment on the pleadings, finding that all causes of action
were barred by the statute of limitations, but granted Plaintiff leave to
amend. (12/24/20 Minute Order.) When Plaintiff amended its complaint, Plaintiff
alleged that it had no reason to know the status of the property because there
is no business purpose in following the future sales of properties, and no
events or facts were brought to Plaintiff’s attention that actually put
Plaintiff on notice of the sale until Plaintiff looked into it following a 2016
judgment against Defendants. (FAC ¶¶ 24-28.) The court found these to be
sufficient facts to survive a subsequent judgment on the pleadings. (02/22/21
Minute Order.)
Plaintiff’s FAC
alleges causes of action for: (1) fraud, intentional misrepresentation and
concealment; and (2) breach of fiduciary duty.
On August 18, 2022,
Defendants brought a motion to bifurcate trial, requesting that the issue of
whether Plaintiff’s Fraud and Breach of Fiduciary Duty claims are barred by the
applicable statutes of limitations be addressed first in a bench trial and
bifurcated from the jury trial on the merits.
[TENTATIVE] RULING
Defendant’s
motion to bifurcate is DENIED.
LEGAL
STANDARD
Upon
a properly noticed motion of a party made no later than the close of pretrial
conference, or in other cases, no later than 30 days before the trial date, a
court may bifurcate a trial into separate issues when the convenience of
witnesses, the ends of justice, or the economy and efficiency of handling the
litigation would be promoted thereby. (Code
Civ. Proc., § 598.) 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, or of any separate issue of
any number of causes of action, preserving the right of trial by jury as
required by the Constitution or a statute of this state or of the United
States. (Code Civ. Proc., § 1048, subd.
(b).)
Where a
separate trial is ordered on the issue of liability, the procedure is commonly
referred to as “bifurcation.” The objective of bifurcation is to avoid wasting
time and money on the trial of damages issues if the liability issue is resolved
against plaintiff. (Horton v. Jones (1972) 26 Cal.App.3d 952, 954.) Granting
or denying of a motion for separate trials lies within the trial court's sound
discretion. (Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d
496, 504.)
“When the
answer pleads that the action is barred by the statute of limitations … or sets
up any other defense not involving the merits of the plaintiff's cause of
action but constituting a bar or ground of abatement to the prosecution
thereof, the court may, either upon its own motion or upon the motion of any
party, proceed to the trial of the special defense or defenses before the trial
of any other issue in the case, and if the decision of the court, or the
verdict of the jury, upon any special defense so tried (other than the defense
of another action pending) is in favor of the defendant pleading the same,
judgment for the defendant shall thereupon be entered and no trial of other
issues in the action shall be had unless that judgment shall be reversed on appeal
or otherwise set aside or vacated.” (Code Civ. Proc., § 597.)
ANALYSIS
Defendant’s Request for Judicial
Notice
Defendants request that the court take
judicial notice of nine pleadings and orders in the present case. The court
accordingly grants this request.
Bifurcation
Defendants
argue that the motion to bifurcate should be granted because the statute of
limitations defense
bars Plaintiff’s two causes of action for fraud and breach of fiduciary duty.
Defendants argue that bifurcation will promote judicial economy and efficiency
because it will limit the length of a jury trial. Defendants further argue that
there is no prejudice to Plaintiff because the issue will have to be litigated
either way. Thus, it will either be resolved in favor of Defendants in a bench
trial, causing the parties to not have to go to trial, or, if resolved in favor
of Plaintiff, the jury trial will be able to proceed to the substantive issues
without being encumbered by the statute of limitations issue.
In response, Plaintiffs oppose
Defendants’ Motion to Bifurcate. Plaintiff states that its argument in this
case is that the statute of limitations does not bar the action due to the delayed
discovery rule, which involves a factual question that should be submitted to
the jury. In addition, Plaintiff argues that bifurcation would not promote
efficiency because it would require conducting multiple trials to establish the
same set of facts and would require duplicative witnesses, testimony, and
evidence.
In reply, Defendants assert that the
delayed discovery rule is an equitable claim. They also assert that a trial on
the statute of limitations issue would involve only one day and one witness,
the Plaintiff. However, a full trial could take more than a week because it
would involve establishing each of the six Defendants’ duty, breach, causation,
and damages
Delayed Discovery Rule
Code Civ.
Proc. §338
states that an action for fraud “is not deemed to have accrued until the
discovery, by the aggrieved party, of the facts constituting the fraud or
mistake.” A cause of action accrues when the plaintiff either “(1) actually
discovered his injury and its negligent cause or (2) could have discovered the
injury and cause through the exercise of reasonable diligence.” (Moreno v.
Sanchez (2003) 106 Cal.App.4th 1415, 1423.)
The Court
finds that the statute
of limitations defense involves disputed issues of fact that should be tried
before a jury. (Jefferson v. County of
Kern (2002) 98 Cal.App.4th 606, 610-611.) The delayed discovery rule involves
credibility determinations of when the Plaintiff actually discovered the fraud
or breach and questions of when a person of reasonable diligence would have
discovered the fraud or breach. When a cause of action depends on disputed
facts or requires credibility determinations, “the jury must make the factual
findings on the issue.” (Stofer v. Shapell Industries, Inc. (2015) 233
Cal.App.4th 176, 189-190.) “Whether a plaintiff reasonable relied on a
defendant’s misrepresentations or failed to exercise reasonable diligence is
also ordinarily a question of fact for the trier of fact.” (Furla v. Jon
Douglas Co. 65 Cal.App.4th 1069, 1078.)
Judicial Efficiency and Prejudice
The Defendants have not clearly
demonstrated that granting the Motion and bifurcating the trials will be
convenient for witnesses or promote judicial economy. A determination of when
the fraud and breach of fiduciary duty was or should have been discovered would
necessarily invoke facts and evidence of the circumstances of the alleged fraud
and breach. Thus, there will necessarily
be some (or significant) overlap in the presentation of evidence and witnesses.
Additionally, although Defendant
claims that adjudicating the statute of limitations issue would take one day
and involve a single witness, Defendant does not put forward any evidence that
this single witness and day would entirely resolve the matter. Plaintiff’s
argument relies on the fact that it is not customary business practice to
follow the future sales of properties; thus, this would necessarily involve
other witnesses to testify as to the custom.
CONCLUSION
Defendant’s
motion to bifurcate is DENIED.