Judge: Yolanda Orozco, Case: 21STCV14165, Date: 2022-08-29 Tentative Ruling
Case Number: 21STCV14165 Hearing Date: August 29, 2022 Dept: 31
MOTION TO CONTINUE TRIAL IS GRANTED; TO STAY DISCOVERY IS DENIED
Background
On April 14, 2021, Plaintiff Century City Mall, LLC filed a Complaint against Defendant Bailey 44, LLC (“Bailey”) for Breach of Lease.
On June 16, 2021, Defendant-Cross-Defendant Bailey 44, LLC filed a Cross-Complaint against Plaintiff Century City Mall, LLC for Declaratory Judgment and Conversion.
On August 05, 2022, Defendant Bailey filed this Motion to Continue Trial and Stay Discovery.
On August 16, 2022, Plaintiff filed Opposition papers. Defendant filed a Reply on August 22, 2022.
Legal Standard
“To ensure the prompt disposition of civil cases, the dates assigned for a trial are firm.” (Cal. Rules of Court (CRC) 3.1332(a).) “Although continuances of trials are disfavored, each request for a continuance must be considered on its own merits.¿The court may grant a continuance only on an affirmative showing of good cause requiring the continuance.”¿(CRC 3.1332(c).) CRC rule 3.1332, subdivision (c) states what circumstance may indicate good cause and subdivision (d) states what other factors are considered in granting the continuance.
The party seeking a continuance of the date set for trial, “must make the request for a continuance by a noticed motion or an ex parte application . . .with supporting declarations … [and] as soon as reasonably practical once the necessity for the continuance is discovered.” (CRC 3.1332(b).)
Evidentiary Objections (if applicable)
Plaintiff filed evidentiary objections to the Declaration of Staci Jennifer Trager.
Objections No. 1 and 2 are SUSTAINED
Objections No. 3, 4, 5, 6, and 7 are OVERRULED
Discussion
a. Violation of the Protective Order
As a preliminary manner, Bailey admits that it violated the protective order when it filed an unredacted version of Staci Jennifer Trager’s declaration. (Brian Decl. ¶ 2.) Bailey asserts that the violation was inadvertent and not willful. (Id. at ¶ 3.) Although Bailey has filed a redacted version of Ms. Tager’s Declaration, the unredacted version has not been removed from the public docket. The unredacted Trager Declaration filed on August 5, 2022 is ORDERED removed from the public docket. Baily has filed a second declaration, this one from Aaron Bryant on August 19, 2022, and this too should have been filed under seal. The parties agree this declaration must also be removed from the public docket and the Court so ORDERS.
b. Summary of the Case and Motion
This action relates to a lease for retail space between Defendant/Cross-Complainant Baily 44, LLC (“Bailey”) and Plaintiff/Cross-Defendant Century City Mall, LLC (“Century”). The lease was to be in effect from April 6, 2017 to March 31, 2027. Bailey began to experience financial difficulties, and due to the COVID-19 pandemic, both Bailey and Century City Mall were closed from about March 19, 2020, to June 10, 2020 (Trager Decl. ¶ 2.) The Century City Mall is owned by the real estate company Unibail-Rodamco-Westfield (“Westfield”). Bailey asserts that Westfield had a new tenant lined up for the Century City Mall and has asked Bailey to vacate the premises. (Trager Decl. ¶ 3, Ex. B)
Bailey asserts that Westfield has sent a proposed Tenancy Agreement to the new tenant, Scotch & Soda, that would end on January 31, 2023. (Id. Ex. C, D.) Bailey vacated the premises by September 22, 2020. Century demanded a termination fee from Bailey of approximately $2.7 million, based on the assumption that the space Bailey vacated would remain vacant for about 4 years until 2027. (Id. ¶ 4, Ex. E.) Century subsequently filed the Complaint on April 14, 2021.
Bailey asserts that it learned during mediation that Century does not have a renewed lease with Scotch & Soda and may not know who the tenant is after the Scotch & Soda lease ends. (Tager Decl. ¶ 7.) Bailey asserts it is willing to take the space after the Scotch and Soda lease ends, starting on February 1, 2023. (Id.)
Bailey asserts that because Century’s damages may be further offset by the sales revenue of Scotch & Soda via its “percentage rental” agreement, the full amount offset amount will not be fully known after January 31, 2023, when the Scotch & Soda lease ends. (Id., Ex. F.)
Bailey asserts that if the trial proceeds on October 17, 2022, the estimates and projections of Century’s damages will remain speculative and would substantially prejudice Bailey. If the trial is continued until June 2023, the Parties will have information of the total payments made by Scotch & Soda and should know the terms of the lease that will be in effect through March 31, 2027. Moreover, if the trial is not continued and discovery stayed, then discovery would remain ineffective and duplicative since the evidence is not yet fully available. (Trager Decl. ¶ 9.) More importantly, Bailey asserts that Century will not be prejudiced because a Writ of Attachment is in place.
c. Admissibility of Information Learned at Mediation
Century argues that under section 1119(a) of the Evidence Code, “[n]o evidence of anything said or any admission made” during mediation “is admissible or subject to discovery.” Therefore, any information gained by Bailey and used to request a trial continuance should not be considered.
Bailey asserts that per section 1120, any discoverable evidence is admissible.
“Evidence otherwise admissible or subject to discovery outside of a mediation or a mediation consultation shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation or a mediation consultation.”
(Evid. Code, § 1120.)
Here, the fact that Century has not obtained a new tenant after the Scotch & Soda lease expires is discoverable evidence and therefore not subject to the mediation privilege. Moreover, Bailey has already requested discovery regarding the status of a new lease and evidence regarding any replacement lease.
The Court is not persuaded that the fact that Century has not secured a new lease agreement after the Scotch & Soda lease expires constitutes privileged information since such evidence is discoverable.
d. Unanticipated Change in Status of Case
Century argues that Bailey’s motion is untimely because Bailey knew about the Scotch & Soda Lease expiration date since December 2021. (Maczek Decl. ¶ 9.) Century has already provided Bailey an estimation of Scotch & Soda’s rent paid and projected since December 2021, when Century applied for a Writ of Attachment. (Id at 9.) Century’s rental damages could thus be calculated from the Lease, which sets forth what rent is owed.
Bailey asserts the motion is timely because mediation was only completed on July 18, 2022, and this is when Bailey learned Century will likely not have a renewed or replacement lease from February 1, 2023, to March 31, 2027. Bailey promptly filed this Motion on August 4, 2022.
In opposing the Writ of Attachment, Bailey had also argued that Century’s damages were not “readily ascertainable” to support the attachment, inclusive of the profit percentage lease with Scotch & Soda. (See Writ of Attachment granted 01/14/22.) Judge Beckloff reasoned that Century had shown its damages were fixed and readily ascertainable based on the lease and rent owed.
“While [Bailey’s] offset defense is not fixed or readily ascertainable, such a fact only informs on the extent to which Defendant can offset Plaintiff’s damages as ascertainable from the Lease.”
(Writ of Attachment granted 01/14/22.)
Judge Beckloff was unpersuaded by the fact that despite Bailey having an offset claim against Century, Century’s damages were not fixed or readily ascertainable. (Id.) Moreover, it was Bailey’s burden to demonstrate what damages Plaintiff can reasonably avoid. (Civ. Code § 1951.2 subd. (a)(3).)
Judge Beckloff also noted that Plaintiff’s reduction for actual rent received under the Scotch & Soda lease was proper as was the total estimated offset of $148,624.56. (Writ of Attachment granted 01/14/22.) Judge Beckloff noted that Bailey had failed to demonstrate that Century’s calculations of the offset amount were incorrect. In making similar arguments in this Motion, Bailey has again failed to demonstrate how Century’s estimated damages are incorrect.
Moreover, the inherent risk that Scotch & Soda would not renew their lease or that Century would be unable to find a new tenant was always present and could have been reasonably anticipated such that it cannot be said to have been “an unanticipated change in the status of the case.” (CRC rule 3.1332 subd. (c)(7).) Bailey admits that the mitigation offset estimate of about $148,624.56 is based on the assumption that the premises would remain vacant for four years and does not take into account the fact that Scotch & Soda’s sales will continue to increase the base amount throughout 2022. (Brian Decl. Ex. 3 (Reply at 6:27-28, 7:1.)
Furthermore, Century already provided Bailey with Scotch & Soda’s revenue for March and April. Bailey has failed to explain how future revenue from Scotch and Soda cannot be projected or discovered based on the information Century provided.
e. Prejudice
Century asserts that it would be prejudiced by a delay in trial because it would make resolution difficult due to Bailey’s financial difficulties. The Court is unpersuaded that Century would be prejudiced by a continuance given that Century has a Writ of Attachment in place for $1,507,745.93.
Bailey argues that it would be prejudiced if the trial is not continued because the damages it owes to Century can continue to be reduced by the sales made by Scotch & Soda due to the “percentage rental agreement” Scotch & Soda has with Century. Century does not dispute this nor the fact that the estimated mitigation offset is no longer accurate. (Brian Decl. Ex. 3.) Even if Scotch & Soda’s profits could be projected based on past sales, sales may continue to increase in the upcoming holiday season, further reducing Century’s damages.
f. Discovery
Bailey states that Century did not start propounding any written discovery until February 11, 2022. Bailey asserts that Century served four deposition notices on June 27, 2022, for depositions that have not yet been scheduled. Bailey asserts it is also waiting on Century to provide dates for three depositions Bailey noticed on July 14, 2022. (Brian Decl. ¶ 8.) Both parties admit that discovery is ongoing, yet the discovery cutoff is September 19, 2022. (See generally Maczek Decl.) Furthermore, no party has articulated that discovery will be complete by the time of the Final Status Conference October 7, 2022.
It is not clear to the Court why Bailey claims that discovery should be stayed nor has it cited any authority to support a wholesale stay of discovery. If the trial is continued, this will extend the discovery cut-off and the parties should be able to complete all of their discovery in an orderly fashion.
g. Good Cause for Trial Continuance
California Rules of Court, rule 3.1332 subdivision (c) states that the following may constitute good cause:
“(6) A party's excused inability to obtain essential testimony, documents, or other material evidence despite diligent efforts; or
(7) A significant, unanticipated change in the status of the case as a result of which the case is not ready for trial.”
Here, the fact that sales revenue from Scotch & Soda may continue to increase past the current projections made by Century is material evidence that Bailey will not obtain in time for the FSC or trial considering that revenue is likely to increase during the upcoming holiday season.
Moreover, an unanticipated change is present in the fact that discovery is ongoing and neither party has completed discovery. Depositions have still not been taken or completed. (Maczek Decl. ¶ 29, 31, 32, 35, 37.) Century asserts that Baily has yet to provide sufficient responses to discovery served in February 2022. (Maczek Decl. ¶¶ 16, 18, 20, 23–26, 28, 34, 36, 38, 41.) Century also asserts that Bailey’s document production remains non-compliant and incomplete. (Id. at ¶¶ 30, 40, 41, 43.) Motions to compel further, after an Informal Discovery Conference may be necessary.
Other considerations in favor of granting a continuance of the trial include the fact that no other continuance had been requested by either party, and Century has failed to show that it would be prejudiced if the continuance is granted. Moreover, the interest of justice is best served by granting a continuance and allowing the parties to complete discovery. By doing so, the parties will have a better estimate of the mitigation offset and Century’s damages.
Conclusion
For the reasons stated, Bailey’s Motion to Continue Trial is GRANTED, and its request that the Court Stay Discovery is DENIED. .
Trial is continued to July 24, 2023, at 10 a.m. The FSC is continued to July 12, 2023, at 9 a.m.
The Court ORDERS the unredacted Trager Declaration filed on August 5, 2022 removed from the public docket. The Court further ORDERS that the Declaration of Aaron Bryant filed on August 19, 2022, also be removed from the public docket.
Parties waive notice.
The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.