Judge: Walter P. Schwarm, Case: 30-2022-01261005, Date: 2023-08-29 Tentative Ruling

Defendant’s (RSI650, LLC) Motion for Summary Adjudication (Motion), filed on 5-30-23 under ROA No. 76, is DENIED.

Plaintiff’s (ADG Partners, LLC) Request for Judicial Notice (RJN), filed on 8-15-23 under ROA No. 105, is GRANTED as to Exhibits 1 and 2 pursuant to Evidence Code section 452, subdivision (d).

The court DECLINES TO RULE on Plaintiff’s Evidentiary Objections (filed on 8-15-23 under ROA No. 112) and Defendant’s Evidentiary Objections (filed on 8-24-23 under ROA No. 141) as immaterial to the court’s decision as set forth below. (Code Civ. Proc., § 437c, subd. (q).)

Code of Civil Procedure section 437c, subdivision (p)(2) provides, “A defendant . . . has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action.  Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” 

Code of Civil Procedure section 437c, subdivision (f)(1), provides, “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has not merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.  A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim of damages, or an issue of duty.”

Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, (Aguilar), states, “Second, and generally, the party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. Although not expressly, the 1992 and 1993 amendments impliedly provide in this regard for a burden of production as opposed to a burden of persuasion. A burden of production entails only the presentation of ‘evidence.’ (Evid. Code, § 110.) A burden of persuasion, however, entails the ‘establish[ment]’ through such evidence of a ‘requisite degree of belief.’ (Id., § 115.) It would make little, if any, sense to allow for the shifting of a burden of persuasion. For if the moving party carries a burden of persuasion, the opposing party can do nothing other than concede. Further, although not expressly, the 1992 and 1993 amendments impliedly provide for a burden of production to make a prima facie showing.  A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]”  (Italics in Aguilar; Footnotes 13 and 14 omitted.) 

Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 838 (Binder) states, “Although summary judgment might no longer be considered a ‘disfavored’ procedure, [citation], the rule continues that the moving party's evidence must be strictly construed, while the opposing party's evidence must be liberally construed.” “On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. [Citation.]” (Id., at p. 839.)

Cole v. Town of Los Gatos (2012) 205 Cal.App.4th 749, 756-757, provides, “The plaintiff can defeat a defense motion for summary judgment by showing either that the defense evidence itself permits conflicting inferences as to the existence of the specified fact, or by presenting additional evidence of its existence. [Citation.] The dispositive question in all cases is whether the evidence before the court, viewed as a whole, permits only a finding favorable to the defendant with respect to one or more necessary elements of the plaintiff's claims—that is, whether it negates an element of the claim ‘as a matter of law.’ [Citation.]”

Hufft v. Horowitz (1992) 4 Cal.App.4th 8, 12-13 (Hufft) states, “The determination whether triable facts exist must be made in light of the issues defined by the pleadings. [Citation.] If a plaintiff pleads several theories, the defendant has the burden of demonstrating there are no material facts requiring trial on any of them. ‘The moving defendant whose declarations omit facts as to any such theory . . . permits that portion of the complaint to be unchallenged.’ [Citation.]  Where, as in this case, no opposition is presented, the moving party still has the burden of eliminating all triable issues of fact. [Citation.]” (See also, Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468 (Consumer Cause).)

Gafcon, Inc. v. Ponser & Associates (2002) 98 Cal.App.4th 1388, 1401-1402 (Gafcon), states, “Summary judgment procedure includes declaratory relief actions ‘ “in a proper case.” ’ [Citations.] ‘ “ ‘[T]he propriety  of the application of [summary judgment to] declaratory relief lies in the trial court's function to render such a judgment when only legal issues are presented for its determination.’ ” [Citations.]’ [Citation.] When summary judgment is appropriate, the court should decree only that plaintiffs are not entitled to the declarations in their favor. [Citations.] Thus, in a declaratory relief action, the defendant's burden is to establish the plaintiff is not entitled to a declaration in its favor. It may do this by establishing (1) the sought-after declaration is legally incorrect; (2) undisputed facts do not support the premise for the sought-after declaration; or (3) the issue is otherwise not one that is appropriate for declaratory relief.”

Chacon v. United Pacific Railway (2020) 56 Cal.App.5th 565, 573 (Chacon), states, “In doing so, we analyze disputes about the proper interpretation of the documents according to the usual rules that govern the interpretation of written instruments. If the language of the agreement is unambiguous and no disputed extrinsic evidence bears upon its meaning, interpretation of the document is a legal issue for the court. [Citation.]”

Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1345-1346, states, “Unconscionability is a defense to the enforcement of an entire contract or particular contractual provisions. (Civ. Code, § 1670.5, subd. (a).) ‘Unconscionability” does not have a precise legal definition, but has been described as extreme unfairness. [Citations.]”  “The first California court to quote this formulation was the Fourth Appellate District. [Citation.] Judge Wright's formulation has been repeated by our Supreme Court and the Ninth Circuit of the United States Court of Appeals.  [Citation.] The formulation contains both a procedural and a substantive element.  [¶] The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression and surprise due to unequal bargaining power. [Citation.] [¶] In contrast, the substantive element is concerned with the fairness of the agreement's actual terms and assesses whether they are overly harsh or one-sided. [Citation.] Thus, substantive unconscionability is described by the phrases ‘ “ ‘unduly oppressive,’ ” ’  ‘ “ ‘so one-sided as to “shock the conscience,” ’ ” ’ and ‘ “unreasonably favorable to the more powerful party.” ’ [Citation.]” (Id., at pp. 1346-1347.)

Commercial Code section 2719, subdivision (3), states, “(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is invalid unless it is proved that the limitation is not unconscionable.  Limitation of consequential damages where the loss is commercial is valid unless it is proved that the limitation is unconscionable.”  Pinela v. Niemann Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 240 (Pinela), states, “Although unconscionability is now codified as a statutory defense, a claim that a contract is unenforceable on this ground remains an equitable matter. [Citation.]” 

The Notice of Motion seeks “. . . an order granting summary adjudication in its favor and against plaintiff ADG Partners, LLC . . . as to whether Plaintiff’s recoverable damages in this case, if any, are limited by Section 8.3 of the parties’ March 9, 2022 Aircraft Sale and Purchase Agreement . . . .” (Motion; 2:5-9.)  Defendant’s Separate Statement (DSS), filed on 5-30-23 under ROA No. 63, identifies the issues as, “Whether Section 8.3 of the Agreement Governs in this Case.” (DSS; 5:5.)

Plaintiff’s Opposition to Defendant RSI650 LLC’s Motion for Summary Adjudication (Opposition), filed on 8-15-23 under ROA No. 108, does not address whether the Motion is procedurally proper where the Notice and DSS do not identify the cause of action that Defendant seeks to adjudicate.  Rather, the Opposition responds to the Motion by discussing the merits of Section 8.3 of the agreement between the parties.  Plaintiff’s Separate Statement (PSS), filed on 8-15-23 under ROA No. 114, identifies the issue as, “. . .  Defendant RSI650, LLC is not entitled to summary adjudication on the first cause of action for declaratory relief in the Complaint. This is due to Section 8.3’s inapplicability to the matter at hand, its lack of a reasonable relationship to the actual damages incurred, and Defendant’s failure to raise it as a defense in its Answer filed on June 22, 2022.” (PSS; 2:8-11.)

Plaintiff’s Complaint, filed on 5-23-22 under ROA No. 2, alleges causes of action for Declaratory Relief, Breach of Contract, and Unjust Enrichment.  As to the Declaratory Relief cause of action, the Complaint pleads, “A declaratory judgment is necessary as Defendant contends that Plaintiff’s Remedies are limited to the Buyer’s Remedies of $50,000 set forth in Section 8.3 of the Purchase Agreement. Plaintiff contends that California law invalidates such grossly disproportional and unfair liquidated damages. [¶] Accordingly, Plaintiff seeks a judicial determination that Section 8.3 is invalid under California law because it bears no reasonable relationship to the actual damages incurred. Section 8.3 is also invalid because the damages limitation fails its essential purpose where Seller’s default is total and fundamental.” (Complaint, ¶¶ 30 and 31; Emphasis in Complaint.)

Although the Opposition addresses the issues raised by the Motion as to whether Section 8.3 is a liquidated damages provision or limitation of liability provision, it also raises the issue of unconscionability as a defense to the enforcement of Section 8.3 of the agreement between the parties.  The Complaint does not directly seek a declaration that Section 8.3 of the agreement between the parties is unconscionable.  The Complaint, however, alleges that Section 8.3 is invalid under Commercial Code section 2719, subdivision (3). (Complaint, ¶ 4.)  Under Commercial Code section 2719, subdivision (3), a consequential damages provision is invalid if it is unconscionable. The Motion addresses the application of Commercial Code section 2719, subdivision (3), and unconscionability. (Motion; 15:21-16:4.)    Defendant’s Reply in Support of Motion for Summary Adjudication (Motion), filed on 8-24-23 under ROA No. 137, also addresses unconscionability. (Reply; 5:4-8:11.)

First, Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 187, 193 (Sole), states, “The proposition that a trial court may construe a motion bearing one label as a different type of motion is one that has existed for many decades. ‘The nature of a motion is determined by the nature of the relief sought, not by the label attached to it. The law is not a mere game of words.’ ” Thus, the court construes the Motion as seeking summary adjudication as to the cause of action for Declaratory Relief.

Second, the court finds that this Motion does not request the court to determine only legal issues related to the interpretation of Section 8.3 of the agreement between the parties. The Complaint and the Motion raise unconscionability as an issue.  Since the unconscionability issue under Commercial Code section 2719, subdivision (3), requires the court to resolve factual issues related to unconscionability, summary adjudication of the Declaratory Relief cause of action is not the proper procedure to resolve the factual issues or procedural and substantive unconscionability.

Based on the above, the court DENIES Defendant’s (RSI650, LLC) Motion for Summary Adjudication filed on 5-30-23 under ROA No. 76.

Plaintiff is to give notice.