Oct 19, 2017

TENTATIVE RULINGS                                         

LAW & MOTION CALENDAR                             

Wednesday, October 4, 2017, 3:00 p.m.                  ***RULINGS POSTED ON SCV 257358, MENDOCINO WINE B. CARLE***

Courtroom 17 – Hon. Peter Ottenweller

3035 Cleveland Avenue, Suite 200, Santa Rosa

 

CourtCall is available for all Law & Motion appearances, EXCEPT parties in small claims cases and motions for claims of exemption which are mandatory appearances.   Please contact CourtCall directly at (888) 882-6878.

 

The following tentative rulings will become the ruling of the Court unless a party desires to be heard.  If you desire to appear and present oral argument as to any motion, YOU MUST notify Judge Ottenweller’s Judicial Assistant by telephone at (707) 521-6725, and all other opposing parties of your intent to appear by 4:00 p.m. today, Tuesday, October 3, 2017.  Parties in small claims cases and motions for claims of exemption are exempt from this requirement.

 

PLEASE NOTE:  The court no longer provides court reporters for motion hearings.  If they wish, the parties may confer and arrange for one of the parties to bring a privately retained certified shorthand reporter to serve in the matter.

 

ORDER ON HURST/HDD’S MOTION FOR SUMMARY JUDGMENT:

 


The above matter came on regularly for hearing on October 4, 2017, before the Hon. Peter Ottenweller, Judge Presiding.  Plaintiff‘s counsel, Don Lesser, was present.  Lewis Warren and Michael Wanser were present on behalf of Defendant Philip L. Hurst.

 

HURST/HDD’S MOTION FOR SUMMARY JUDGMENT

Philip L. Hurst (Hurst) and H.D.D., LLC (HDD)’s Motion for Summary Judgment as to Count 1, aiding and abetting breach of fiduciary duty, is Granted on the grounds the settlement in MWG v. Paul Dolan is res judicata and bars this action.

Plaintiff has dismissed Second and Third Causes of Action.

 

Statement of the Case

On March 9, 2012, Paul Dolan filed a complaint against Mendocino Wine Group (MWG) arising out of Dolan’s employment/ownership interest.  MWG responded by filing a cross-complaint on July 6, 2012 against Mr. Dolan.  The cross-complaint alleged that Mr. Dolan breached his fiduciary duty to MWG by disclosing confidential and proprietary information belonging to the company and/or trade secrets to third parties and competitors, by failing to disclose his true relationship to HDD, and by pursuing business interests in direct competition to MWG.  [UMF ##2, 17; RJN, Ex. A, FAC, ¶51; Sullivan Dec., ¶12, Ex. K, MWG Cross-Complaint, ¶¶20-23.]

On July 7, 2014 MWG and Dolan settled.  On August 3, 2014 MWG dismissed the breach of fiduciary duty cause of action and the rest of its cross-complaint with prejudice.  [RJN, Ex. C. Request for Dismissal.]

On December 23, 2013, MWG and Carle, Mackie, Power & Ross LLP, Jay M. Behmke, John G. Mackie, Phillip Kalsched, Philip L. Hurst, H.D.D. LLC and DOES 1-10 (hereinafter Carle Mackie) entered into a tolling agreement. [Sullivan Dec., ¶13, Ex. L., Tolling Agreement.]  MWG filed its complaint against Carle Mackie on June 25, 2015 [RJN, Ex. B, Complaint.]  The operative complaint includes five causes of action: (1) professional negligence; (2) breach of fiduciary duty; (3) breach of written contract; (4) conspiracy with Dolan to breach fiduciary duty; and (5) aiding and abetting Dolan’s breach of fiduciary duty.

On February 1, 2016, MWG filed a separate complaint against Hurst/HDD.  Specifically, MWG alleges three cause of action against HDD and Hurst: (1) aiding and abetting breach of fiduciary duty (i.e., the same breach of fiduciary duty alleged against Dolan in the prior lawsuit); (2) interference with contract (now dismissed); and (3) aiding and abetting interference with prospective economic advantage (now dismissed).

The two actions were consolidated.

When a defendant moves for summary judgment, it has the burden of first making a prima facie showing that plaintiffs cannot establish at least one element of any cause of action for summary judgment, or there is a complete defense to every cause of action.  CCP §437c; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.  For summary adjudication, the moving party has the burden of demonstrating that plaintiff cannot establish at least one elements of each cause of action at issue, each claim for punitive damages, an affirmative defense, or each issue of duty addressed in the motion, or there is a complete defense to each cause of action addressed.  CCP §437c(f)(1), (o); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.  The moving party thus has the burden of “persuading” the court that there is no triable material issue of fact and that it is entitled to judgment in its favor as a matter of law.  Ibid. 

A defendant can show that an element cannot be established only if its undisputed facts negate plaintiff’s allegations as a matter of law and would make it impossible for plaintiff to show a prima facie case.  Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1597. 

A party bringing such a motion may also prevail by showing that opposing party both lacks, and is not reasonably likely to produce, the requisite evidence.  Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, 186.  Mere argument is insufficient and the “tried and true” method for the moving party to meet its burden is to present evidence that negates an essential element of a claim as a matter of law.  Guz v. Bechtel Nat’l, Inc. (2000) 24 Cal.4th 317, 334.   

Once the moving party has met its burden, the party opposing summary judgment or summary adjudication has the burden of demonstrating that there is a triable material issue of fact.  CCP section 437c;  Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.  The opposing party must merely make a prima facie showing that there is such a triable issue.  Ibid.

Inferences from circumstantial evidence can create a triable issue, as long as they are not based on speculation or surmise.  Joseph E. DiLoreto, Inc. v. O’Neill (1991) 1 Cal.App.4th 149, 161; Aguilar v. Atlantic Richfield Corp. (2000) 78 Cal.App.4th 79, 117.  These inferences must be “more likely than not.” Aguilar, 117; Leslie G. v. Perry & Assocs. (1996) 43 Cal.App.4th 472, 487.  There is also a policy to liberally construe the opposition’s evidence and strictly construe the evidence of the moving party.  D’Amico v. Bd. of Medical Examiners (1974) 11 Cal.3d 1, 21; Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.

Res Judicata

Hurst/HDD argue the sole remaining cause is barred under res judicata principles. The doctrine of res judicata gives conclusive effect to a former judgment in later litigation over the same controversy.  7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, section 334; 7 Witkin, Cal.Proc (4th Ed.1997) Judgment, section 280; see also CCP section 1908.  In a new action on the same cause of action, the prior judgment is a complete bar.  Edmonds v. Glenn-Colusa Irr. Dist. (1933) 217 Cal.436, 445; see also 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, sections 334-335, 402.  

Res judicata, or claim preclusion, and collateral estoppel, or issue preclusion, are different aspects of the same doctrine and have the same prerequisites only varying depending on whether one is dealing with a cause of action or an issue.  Brinton v. Banker’s Pension Services, Inc. (1999) 76 Cal. App.4th 550, 556; 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, sections 334-335.  They apply when “(1) a claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding.” Brinton v. Banker’s Pension Services, Inc. (1999) 76 Cal. App.4th 550, 556.

The court finds MWG’s actions against Hurst/MDD are identical to MWG’s dismissed claims against Dolan.  The two lawsuits concern Dolan’s actions during his tenure with MWG and Hurst/HDD.  They involve the same time frame, facts and legal theories of liability.

The court further finds the 2014 settlement reached between MWG and Dolan and the subsequent dismissal of the entire action with prejudice constitutes a bar to this new action against Hurst/HDD.

Exercise of the voluntary right to dismiss an action without prejudice is not a bar to a new action.  See Breznikar v. T.J. Topper Co. (1937) 23 Cal.App.2d 298, 303; 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, section 378.  However, dismissal by stipulation of both parties after a compromise or settlement is a retraxit and, entered with prejudice, such a judgment is a bar to a new action.  See Goddard v. Security Title Ins. & Guarantee Co. (1939) 14 Cal.2d 47, 55; 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, section 378.  As the court explained in Alpha Mechanical Heating & Air Conditioning, Inc. v. Travelers (2005) 133 Cal.App.4th 1319, at 1330, “a retraxit—modernly effected by a plaintiff's filing of a dismissal of his or her action with prejudice—is deemed to be a judgment on the merits against that plaintiff .” 

As Plaintiff argues, however, ordinarily a settlement and dismissal only bars subsequent litigation of the claim or issue as to any party in the settlement and not to other possible tortfeasors, joint or otherwise.  CCP section 877; Barney v. Aetna Cas. & Sur. Co. (1986) 185 Cal.App.3d 966, 983; see also Johnson v. County of Fresno (2003) 111 Cal.App.4th 1087, 1096; Rice v. Crow (2000) 81 Cal.App.4th 725, 735-737.

In Rice v. Crow (2000) 81 Cal.App.4th 725, at 735, the court discussed the res judicata effect of a dismissal with prejudice in the context of claims against a party who was not a party to the settlement or dismissal:

‘[s]ince a retraxit “invok[es] the principles of res judicata,” it of course follows that a retraxit only bars claims dismissed with prejudice between the same parties or their privies. [Citation.]’

[Emphasis added]

The Rice court, at 735, noted, with its own emphasis, that the Supreme Court had ruled in Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, at 312, ‘ “ ' ” 'Where the parties to an action settle their dispute and agree to a dismissal, it is a retraxit and amounts to a decision on the merits and as such is a bar to further litigation on the same subject matter between the parties' “ ' ” (Italics added.)’

The doctrine ordinarily applies only between the same parties or where there is “substantial identity” of the parties.  CCP sections 1908, 1910; French v. Rishell (1953) 40 Cal.2d 477, 481;  see also 7 Witkin, Cal.Proc. (5th Ed.2008) Judgment, sections 452, et seq.  As stated in Branson v. Sun-Diamond Growers (1994) 24 Cal.App.4th 327, at 340, “ 'In its primary aspect, res judicata operates as a bar to the maintenance of a second suit between the same parties or parties in privity with them on the same cause of action.' ”  See also Rice v. Crow (2000) 81 Cal.App.4th 725, 734, quoting and relying on Branson.

Nonetheless, a defendant in a subsequent action who was not a party to the prior action may potentially raise the defense if the defendant’s liability is entirely derivative of the liability of the party in the prior action and there was a substantial identity between them, i.e., they were in privity.  Brinton v. Banker’s Pension Services, Inc. (1999) 76 Cal. App.4th 550, 557-558; see Armstrong v. Armstrong (1976) 15 Cal.3d 942, 951; 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, sections 452-460.  In Brinton, the original action was against an officer of a brokerage firm, the defendant in the subsequent action.  Because of the unity of interest, and the claim that the firm was liable for the conduct of the officer from the prior action, the court found res judicata applies. 

Whether parties are “in privity” turns on whether they are “sufficiently close to the original case to afford application of the principle of preclusion.”  People v. Dinkhouse (1970) 4 Cal.App.3d 931, 937; see 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, sections 456-457.  Such privity may be found, for example, between successors in interest.  See 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, section 460. As the Supreme Court stated in Bernhard v. Bank of America (1942) 19 Cal.2d 807, at 811,

Under the requirement of privity, only parties to the former judgment or their privies may take advantage of or be bound by it. [Citation.] A party in this connection is one who is “directly interested in the subject matter, and had a right to make defense, or to control the proceeding, and to appeal from the judgment.” [Citations.] A privy is one who, after rendition of the judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession, or purchase.  

 

Privity or derivative liability typically involves an employee- or agent- principle situation and respondeat superior, or successors in interest.  See Bernhard v. Bank of America (1942) 19 Cal.2d 807, at 811; Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 576-579; 7 Witkin, Cal.Proc. (5th Ed.2008), Judgment, sections 456-460.  However, parties sued for aiding and abetting or conspiring with a party from the prior lawsuit are also found to be in privity because the claims are wholly derivative, and  thus could support a res judicata claim preclusion.  Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 576-579 (“imposition of derivative liability is not limited to the doctrine of respondeat superior. Liability based on an aiding and abetting or conspiracy theory is also “derivative,” i.e., liability is imposed on one person for the direct acts of another.”)  

A “stranger” to the original action, i.e. neither a party to it nor in privity with a party to it, may be able to assert res judicata, or more specifically collateral estoppel, as a defense in a subsequent action on a claim turning on the same issue presented in the original case, if the plaintiff is the same as in the original case, or in privity with the original plaintiff, and if the original case resulted in a negative final judgment on the merits.  Bernhard v. Bank of America (1942) 19 Cal.2d 807; 7 Witkin, Cal.Proc. (5th Ed.2008) Judgment, section 473.  The Supreme Court in Bernhard, at 812, repudiating the former doctrine of mutuality which had required that the person raising the defense must also have been bound by the prior judgment, explained that for reasons of due process, the doctrine cannot be asserted against someone who was a stranger to the original action but under some circumstances may be asserted by someone was a stranger to that original action.  It stated:

The criteria for determining who may assert a plea of res judicata differ fundamentally from the criteria for determining against whom a plea of res judicata may be asserted. The requirements of due process of law forbid the assertion of a plea of res judicata against a party unless he was bound by the earlier litigation in which the matter was decided. [Citation.] He is bound by that litigation only if he has been a party thereto or in privity with a party thereto. [Citation.] There is no compelling reason, however, for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation.

 

A “stranger” to the original action may thus potentially raise the defense against a party to the original action if the new action turns on an issue which was actually litigated, and conclusively decided on the merits, in the original action.

The court finds Hurst/HDD has met its burden of showing they are in privity with Dolan.  MWG alleges Hurst/HDD aided and abetted and/or conspired with Dolan to breach Dolan’s fiduciary duty with MWG.  Therefore, Hurst/HDD’s actions are one in the same as Dolan.  By dismissing its claim against Dolan it removed any theory of aiding/abetting or conspiring to breach a fiduciary duty by Dolan.

Hurst/HDD’s Motion for Summary Judgment as to the First Cause of Action on the grounds Dolan owed no fiduciary duty to MGW pursuant to the membership agreement is unpersuasive and denied.

            The parties stipulated at the hearing that Dolan was in fact a “member” under the Operating Agreement and that section 3.2 of that agreement would apply to him as such.  However, the court agrees with Plaintiff that the moving parties have failed to meet their burden of demonstrating that Dolan had no fiduciary duty as an employee.  It is undisputed that Dolan was, aside from being a member of Plaintiff, also an employee, hired as, and in fact acting as, the chief executive officer (CEO) until Plaintiff terminated his employment.  It is also undisputed that Plaintiff is claiming Dolan breached his fiduciary duties in that capacity as an employee, the CEO.  The moving parties clearly show that Dolan had no such fiduciary duty as a member under the Operating Agreement but they fail to demonstrate that the operating agreement applies to, or in fact has any connection with, the terms and conditions of Dolan’s employment as CEO.  As the parties point out, the Operating Agreement is silent on this issue.  On its face, nothing in the Operating Agreement indicates that it contemplates any employment terms and conditions or duties of employees, or in any way applies to or covers the hiring of anyone as an employee and any duties employees would have.  The Operating Agreement on its face, and from the evidence the moving parties themselves present, instead appears to be simply related to the formation of governance of Plaintiff and the roles of its members as such.  No facts or evidence, furthermore, show that Plaintiff hired Dolan as an employee via the Operating Agreement or in connection with it, as opposed to a separate transaction.  This leaves open the question, unresolved, of whether Dolan had, and breached, duties in his capacity as an employee and CEO as distinct from his separate capacity as a “member” of Plaintiff.

An agent in general owes the principal a fiduciary duty and duty of loyalty, including a duty not to compete with the principal unless the parties agree.  CC section 2322(c); Lab. Code sections 2860, 2863; Haurat v. Superior Court for Los Angeles County (1966) 241 Cal.App.2d 330 (obligations of an agent are the same as those imposed on a trustee); Spector v. Miller (1962) 199 Cal.App.2d 87 (an agent is a fiduciary); see 3 Witkin, Summary of Cal.Law (10th Ed.2005) Agency and Employment, sections 97, 100, et seq.  Lab. Code section 2860 states, in full, that “[e]verything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment.”

A principal, for example, has a right to recover “secret” profits which an agent has made from the relationship. 3 Witkin, Summary of Cal.Law (10th Ed.2005) Agency and Employment, section 105.  Similarly, “[a]n agent or employee is under a duty not to compete with his or her principal on matters connected with the agency, unless the principal and the agent otherwise agree.” 3 Witkin, supra, section 100. 


            MWG submits Thornhill III and Tim Thornhill declarations to show the Thornhills and Dolan met, discussed and agreed Dolan had fiduciary duties owed to MWG. As to

Thornhill III, Hurst/HDD’s Objections 2, is sustained. Objections 4,5,and 6 are overruled as to the substance of the conversations about duties to MWG. But are sustained as to what Dolan said in these conversations as they are hearsay. All other objections are overruled.

            As to Tim Thornhill declaration, Objections 1 and 2 are overruled as to the substance of the conversation but sustained as to Dolan’s responses as they are hearsay.

            The court finds there are disputed facts as to whether Dolan in his role as CEO owed a fiduciary duty to MWG.

            Hurst/HDD further moves to dismiss Count 1 on the grounds they did not possess the requisite intent.

            Hurst and HDD assert that they did not know of the alleged fiduciary duty and thus lacked the requisite knowledge and intent.  Plaintiff agrees that he has no direct evidence but it correctly argues that, as explained above, a court should not grant a motion for summary judgment or adjudication on this ground because of the very reason that it is unlikely for a plaintiff ever to have direct evidence of a defendant’s private knowledge or intent where there is no other evidence aside from the defendant’s own word.  CCP section 437c(e); Villa v. McFreen (1995) 35 Cal.App.4th 733, at 749, and Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, at 187. 

            Hurst/HDD are also unpersuasive in their claim that they did not know of any such duty or breach because the court finds it inappropriate to grant the motion based solely on their own statement of their state of mind, information which only they could possess.  CCP section 437c(e); Villa v. McFreen (1995) 35 Cal.App.4th 733, at 749, and Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, at 187.

            Hurst/HDD request for judicial notice is granted.

            Hurst/HDD to prepare and deliver to Dept. 17 a Notice of Entry of Judgement.

 

 

DATED:   October 6, 2017

 

 

 

PETER OTTENWELLER

 

Judge of the Superior Court

 

 

 

 

 

ORDER ON CARLE MACKIE’S MOTION FOR SUMMARY JUDGMENT:

 


The above matter came on regularly for hearing on October 4, 2017, before the Hon. Peter Ottenweller, Judge Presiding.  Plaintiff‘s counsel, Don Lesser, was present.  John Sullivan and Joseph McMonigle were present on behalf of Defendants Carle Mackie, Power & Ross, LLP, Jay M. Behmke and John G. Mackie.

 

CARLE MACKIE’S MOTION FOR SUMMARY JUDGMENT

            Carle, Mackie, Powers & Ross, LLP; Jay M. Behmke; John G. Mackie and Philip Kalsched (hereinafter Carle Mackie)’s Motion for Summary Judgment or Summary Adjudication of the issues is GRANTED as to the Fourth and Fifth Causes of Action on res judicata principles.  The Motion as to the First, Second and Third Causes of Action based on statute of limitations are DENIED.

Statement of the Case

            See discussion in Hurst/HDD Motion.

Fourth and Fifth Causes of Action/Res Judicata

            See discussion in Hurst/HDD Motion.  The court adopts its analysis and conclusions reached in the Hurst/HDD Motion to be fully applicable to Carle Mackie in this motion.  Specifically, the court finds Carle Mackie to be in privity with Dolan for those same reasons set forth in its Hurst/HDD ruling.

            As discussed in the Hurst/HDD ruling, there is a triable issue of fact as to whether Dolan owed a duty of care to MWG.  The court adopts that portion of its Hurst/HDD ruling making it applicable to this argument.

First, Second and Third Causes of Action

Carle Mackie largely provides the same basic facts, and much of the same evidence, which the others presented in their motion, with some additions specific to them.  These include Plaintiff’s agents/members/officers the Thornhills, and its attorney, were by October 22, 2012 aware of e-mails showing Carle Mackie had provided legal services to HDD because they discussed the information at a deposition on that date. Carle Mackie, Defendants and Plaintiff entered into a tolling agreement on December 23, 2013 as to claims not yet time-barred. Plaintiff filed the actions against Carle Mackie on June 25, 2015.  In its Answer, these Defendants have asserted the Statute of Limitations as a defense.  In 2006 Plaintiff entered into an agreement for Carle Mackie to provide legal services on “trademarks and general business matters” as well as “any additional matters” Plaintiff requests Carle Mackie performed services on an assignment basis.  The last billing entry for Plaintiff’s “general file” was August 10, 2012.  Those were the only items billed to Plaintiff’s “general file” that year. Carle Mackie also provided services on trademarks in 2012 through November 2013.

Carle Mackie argues Plaintiff should have filed this complaint on or before October 22, 2013 as MWG learned on October 22, 2012 that MWG was working for HDD in conflict with MWG. In the alternative, they argue MWG cannot prove Carle Mackie represented them in a “specific subject matter” and therefore the tolling provision of CCP §340.6 does not apply.

When  MWG first learned  of Carl Mackie’s alleged conflict of interest is disputed. Carle Mackie has not conclusively proved MWG learned of a conflict at the 10/22/2012 Hurst deposition which Tim Thornhill attended. The emails which were produced at the deposition and Hurst testimony only showed MWG was providing legal services to Hurst/HDD. There was never specific testimony showing an actual conflict.

Plaintiff contends it did not discover the Defendants’ wrongdoing, based on the contemporaneous representation of Plaintiff and HDD, until August 2013.  Plaintiff further relies on the tolling provisions of CCP section 340.6. Carle Mackie claims these do not apply here because the representation ended more than 2 years before the tolling agreement.   Plaintiff contends the representation did not end until November 2013.

CCP section 340.6, the SOL for professional, legal, malpractice by attorneys, states that an action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.   However, the statute adds a tolling provision stating:

the period shall be tolled during the time that any of the following exist:

(1) The plaintiff has not sustained actual injury.

(2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.

(3) The attorney willfully conceals the facts constituting the wrongful act or omission when such facts are known to the attorney, except that this subdivision shall toll only the four-year limitation.

(4) The plaintiff is under a legal or physical disability which restricts the plaintiff's ability to commence legal action.

The key issue is whether the tolling is based on continuous representation, which Plaintiff claims and which Carle Mackie recognizes in its papers.  Carle Mackie argues that Plaintiff cannot demonstrate Carle Mackie represented Plaintiff in the “specific subject matter” until November 16, 2013, as Plaintiff claims.  It also asserts that the claims of conspiracy and aiding and abetting “do not concern an error or omission related to… trademark applications, brand protection, or general business matters.”  Ps&As 17:7-14. 

However, Carle Mackie’s argument is unpersuasive.  First, Carle Mackie has the burden of establishing the defense as a matter of law on this motion so Plaintiff does not need to demonstrate the continuous representation.  Carle Mackie instead needs to show that there was no requisite continuous representation.  Second, Carle Mackie’s argument fails to take into account the nature of the claims.  Plaintiff alleges that Carle Mackie represented it continuously on issues related to “brand protection, intellectual property, and general business matters until November 16, 2013.”  Carle Mackie may be correct that claims for conspiracy and aiding and abetting breach of fiduciary duty are not among these, but that twists around Plaintiff’s allegations.  The alleged continuous representation was not about conspiracy, etc., rather Plaintiff is complaining that Carle Mackie breached its duties by conspiring with, or aiding and abetting, Dolan and the others during the time that it was representing Plaintiff in the “brand protection, intellectual property, and general business matters.”  The allegations and facts presented in this motion make it clear that the alleged underlying wrong, Dolan’s breach of fiduciary duty, in fact involved “brand protection, intellectual property, and general business matters.”

The evidence and discussion regarding when Carle Mackie represented Plaintiff, what it represented Plaintiff on, and whether that representation was related to the “specific subject matter” at hand is not clear and raises a triable issue of fact on the statute of limitations issue.

Carle Mackie argues they did not have knowledge of any contract and lacked the necessary intent required to intentionally interfere with the alleged contract.  They further argue Plaintiff has not established knowledge and intent.

It is possible for a moving party to rely on factually devoid discovery responses to show that the other party does not possess and cannot reasonably obtain evidence to support one or more elements of that party’s contentions.  Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.  This applies where a party has had adequate opportunity to conduct discovery, in which case that party’s factually devoid discovery responses may demonstrate that the party is unable to establish one or more elements of its claim or lacks and cannot reasonably obtain, the necessary evidence.  Ibid; Union Bank v. Sup.Ct. (1995) 31 Cal.App.4th 573, 590.  For example, in Union Bank, D’s interrogatories asked P to state “all facts” and identify witnesses and documents supporting P’s fraud claim and P’s response stated that he “believed” that D “knowingly and fraudulently” committed the alleged acts.  Ibid.  This response was considered to be devoid of facts and thus sufficient to raise an inference that P lacked the evidence necessary to establish his claims.  Ibid.

This is not the same as merely showing “an absence of evidence” supporting the other party’s claims, which is insufficient to meet the burden of the party seeking summary judgment or adjudication.  Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.  The Supreme Court in Aguilar explained the distinction by stressing that a party moving for summary judgment or adjudication must not only show that the other party lacks the necessary evidence but also must demonstrate that the party cannot reasonably obtain it.  Thus, a mere lack of evidence, or discovery responses lacking the evidence where the other party has not yet had an opportunity to conduct discovery, is insufficient.

According to Villa v. McFreen (1995) 35 Cal.App.4th 733, at 749, and Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, at 187,  a court should not grant summary judgment or adjudication where the moving party is relying on information about something which only the moving party will know and for which the opposing party is not likely to possess or obtain any other evidence, such as where only D was present to observe communications that were the crux of the dispute.  CCP section 437c(e), in fact, states, with emphasis added, that

summary judgment may be denied in the discretion of the court, where the only proof of a material fact offered in support of the summary judgment is an affidavit or declaration made by an individual who was the sole witness to that fact; or where a material fact is an individual's state of mind, or lack thereof, and that fact is sought to be established solely by the individual's affirmation thereof.

 

Plaintiff agrees that he has no direct evidence but it correctly argues that, as explained above, a court should not grant a motion for summary judgment or adjudication on this ground because of the very reason that it is unlikely for a plaintiff ever to have direct evidence of a defendant’s private knowledge or intent where there is no other evidence aside from the defendant’s own word.  CCP section 437c(e); Villa v. McFreen (1995) 35 Cal.App.4th 733, at 749, and Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, at 187. 

Carle Mackie is also unpersuasive in its claim that they did not know of any such duty or breach because the court finds it inappropriate to grant the motion based solely on their own statement of their state of mind, information which only they could possess.  CCP section 437c(e); Villa v. McFreen (1995) 35 Cal.App.4th 733, at 749, and Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, at 187.

Where knowledge and intent is at issue, unless these issues are clearly undisputed, the court believes this is a factual issue for the factfinder.  The court finds these issues are not clearly undisputed and therefore denies the motion on this ground.

The court takes judicial notice of the First Amended Complaint in this action, records from the Prior Action, and Plaintiff’s articles of organization.

Plaintiff objects to e-mails discussed as evidence in attached deposition testimony on the grounds that they are not authenticated and are hearsay. 

Plaintiff is incorrect.  The actual original authentication of the documents is immaterial as is the truth of what they say.  Instead, Carle Mackie is only providing these to show that Plaintiff, via its agents and attorney, were on notice of the documents and what they said because Plaintiff’s attorney asked Hurst about them at a deposition.  As seen in Carle Mackie Fact 3-4, and its Ps&As, Carle Mackie claims that because Plaintiff’s attorney possessed these documents and asked Hurst about them on October 22, 2012, and because the Thornhills were present, then Plaintiff was by then on notice of the information, and the indication therein that Carle Mackie had provided legal services to HDD.

Plaintiff’s objections are overruled.

Carle Mackie’s objections to Thornhill III Declaration Objection 1 on hearsay is granted.  All other objections are overruled.

Carle Mackie’s objections to Timothy Thornhill’s declaration are overruled.

            Carle Mackie to prepare a Notice of Entry of Judgment as to the 4th and 5th Causes of Action.

 

 

 

DATED:   October 6, 2017

 

 

 

PETER OTTENWELLER

 

Judge of the Superior Court

© 2017 Superior Court of Sonoma County