Superior Court, State of California
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|LINE # |CASE # |CASE TITLE |RULING |
|LINE 1 |22CV393712 |Illinois National Insurance Co. vs Accellion, |Plaintiff/Cross-Defendants’ Demurrer is SUSTAINED without leave to |
| | |Inc. |amend and its Motion to Strike is therefore MOOT. Please scroll down|
| | | |to Line 1 for full tentative opinion. Court to prepare formal order.|
|LINE 2 | 18CV330189 |Alejandro Zamora vs Kia Motors America, Inc. |Defendant’s Summary Judgment/Adjudication is DENIED. Please scroll |
| | | |down to Line 2 for full tentative opinion. Court to prepare formal |
| | | |order. |
|LINE 3 | 20CV363703 |Sabri Gurbuz vs Truebeck Construction, Inc. et |Truebeck Construction, Inc.’s Motion for Summary Judgment is GRANTED.|
| | |al |Please scroll down to Line 3 for full tentative opinion. Court to |
| | | |prepare formal order. |
|LINE 4 |21CV380557 |SHAHIN GERAMI vs BED, BATH & BEYOND, INC. et al|Bed, Bath & Beyond’s Motion Summary Judgment as to Plaintiff’s |
| | | |Complaint and Defendant Kathleen Eagan’s Cross-Complaint for |
| | | |indemnity and contribution is GRANTED. An amended notice of motion |
| | | |with the correct hearing date was served by electronic mail on |
| | | |February 23, 2023. No Opposition was filed. A failure to oppose a |
| | | |motion may be deemed a consent to the granting of the motion. CRC |
| | | |8.54(c). There is also no genuine issue of material fact that Bed, |
| | | |Bath & Beyond owed no duty to Plaintiff in connection with her use of|
| | | |the escalator in the common area of Almaden Plaza or that Bed, Bath &|
| | | |Beyond and Defendant Kathleen Eagan had no joint legal obligation to |
| | | |Plaintiff. Moving party to prepare formal order. |
|LINE 5 |21CV383139 |Ramiro Vaca vs Margarita Zarate |Plaintiff’s Motion to Appoint a Referee is DENIED. Please scroll |
| | | |down to Lines 5-7 for full tentative ruling. Court to prepare formal|
| | | |order. |
|LINE 6 |21CV383139 |Ramiro Vaca vs Margarita Zarate |Plaintiff’s Motion for Interlocutory Judgment is GRANTED. Please |
| | | |scroll down to Lines 5-7 for full tentative ruling. Court to prepare|
| | | |formal order. |
|LINE 7 |21CV383139 |Ramiro Vaca vs Margarita Zarate |Defendant’s Motion to Quash is DENIED. Please scroll down to Lines |
| | | |5-7 for full tentative ruling. Court to prepare formal order. |
|LINE 8 |21CV388667 |Lisa Authement vs MiraDry, Inc. et al |Plaintiff’s Motion to Compel MiraDry to Produce Documents in Response|
| | | |to Request for Production (Set One) is DENIED. Defendant produced |
| | | |the requested documents and has already agreed to serve amended |
| | | |written responses. This motion is MOOT. Court to prepare a short |
| | | |formal order. |
|LINE 9 |21CV388667 |Lisa Authement vs MiraDry, Inc. et al |Plaintiff’s Motion to Compel MiraDry to Produce Documents in Response|
| | | |to Request for Production (Set Two) is DENIED without prejudice. |
| | | |Defendant is not refusing to produce documents; it is simply |
| | | |requesting entry of a protective order in advance of such production.|
| | | |The Court accordingly orders the Parties to submit no later than 4 |
| | | |p.m. on May 26, 2023 (1) a joint letter brief outlining their |
| | | |respective positions regarding the protective order issue and (2) a |
| | | |proposed protective order highlighting the portions where the parties|
| | | |continue to disagree. The Court will conduct a hearing regarding the|
| | | |protective order on June 8, 2023 at 9 a.m. in Department 6. Court to|
| | | |prepare a short formal order, which Order shall serve as notice. |
|LINE 10 |19CV356031 |Paublo Chavarria vs Kate Kinsey et al |Plaintiff’s Motion to Set Aside Dismissal of Comco Underground |
| | | |Utilities, Inc. is GRANTED. Trial is continued to October 30, 2023, |
| | | |and the Mandatory Settlement Conference is continued to October 25, |
| | | |2023. A hearing on Comco’s Motion for Summary Judgment is set for |
| | | |August 31, 2023 at 9 a.m. in Department 6. Discovery deadlines are |
| | | |not extended; they remain tied to the current August 2, 2023 trial |
| | | |date. Court to prepare formal order. |
|LINE 11 |21CV388579 |LING XIONG et al vs HUAIZHI Li et al |Plaintiffs’ Motion for Leave to File a First Amended Complaint is |
| | | |CONTINUED to June 22, 2023. No amended notice was served with the May|
| | | |9, 2023 hearing date for this motion. Defendant is ordered to serve |
| | | |an amended notice of motion for June 22, 2023. The Court will deny |
| | | |this motion at the next hearing date if such amended notice is not |
| | | |served. The Court also VACATES the May 23, 2023 Case Management |
| | | |Conference and RESETS it to June 22, 2023 at 10:00 a.m. in Department|
| | | |6. Court to prepare formal order. |
|LINE 12 |22CV402983 |William Curcio vs Audible Magic Corporation et |Diana Fassbender’s Motion to Appear Pro Hac Vice is GRANTED. Court |
| | |al |to use proposed order on file. |
|LINE 13 |22CV406410 |Christopher McKenzie vs Zoom Video |Defendant Zoom Video Communications, Inc.’s Motion to Compel |
| | |Communications Inc. |Arbitration is GRANTED. This action is stayed pending completion of |
| | | |the arbitration. The Court VACATES the August 29, 2023 Case |
| | | |Management Conference and sets a Status Conference for October 26, |
| | | |2023 at 10:00 in Department 6. Please scroll down to Line 13 for |
| | | |full tentative opinion. Court to prepare formal order. |
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Calendar Line 1
Case Name: Illinois National Insurance Co. v. Accellion, Inc.
Case No.: 22CV393712
Before the Court is Plaintiff/cross-defendant Illinois National Insurance Co.’s (“Illinois National” or “Plaintiff”) demurrer to and motion to strike defendant/cross-complainant Accellion, Inc.’s (“Accellion” or “Defendant”) the cross-complaint. Pursuant to California Rule of Court 3.1308, the Court issues its tentative ruling as set forth below.
I. Background
A. Factual
1. Amended Complaint
According to the Amended Complaint (“AC”), Plaintiff is an insurance company that issued a series of insurance policies to corporate insureds (the “Insureds”) for coverage against cyber-related insurance risks. (AC, ¶ 2.) Defendant is a technology and software company that provides software for secure electronic file sharing and services to customers. (Id., ¶ 5.) Defendant developed and sold licenses for a software called File Transfer Appliance (“FTA”), which it marketed as a secure method of transferring files. (Id., ¶ 7.) The software operated as a closed “black box” in that customers would place files into the FTA software, but lacked the ability to access the access the uploaded files in the software or view which of their documents were in it at any given time.
Beginning on December 16, 2020, threat actors targeted the FTA as a means of committing an unauthorized access and threat of confidential information. (AC, ¶ 8.) The initial attack was part of a concerted effort that continued into January 2021. (Id.) Defendant developed and released patches to close vulnerabilities in the FTA software, but they did not protect confidential information because one of the threat actors exploited vulnerabilities in the software and was able to remain within the software and exfiltrate confidential information. (Id., ¶ 20.) Defendant managed all third-party access to the software, and its customers lacked the ability or right to make any modifications to the FTA when they licensed it. (Id., ¶ 25.)
Despite the critical nature of the vulnerabilities with the FTA, Accellion did not immediately alert is customers of the urgency of the situation and potential exposure of sensitive information. (AC, ¶ 30.) “Insured A” was one of Defendant’s FTA customers in December 2020 and January 2021. (Id., ¶ 31.) Defendant did not attempt to notify Insured A of the FTA vulnerabilities until four days after the initial attack on the software, and even then sent an email to a contact at Insured A who was no longer there, resulting in an automatic bounce back of that email by Insured A’s email system. (Id.) Despite Plaintiff having provided Accellion with a designated contact for security issues, Defendant did not attempt to notify this contact of the foregoing issues or call any member of Insured A’s core operations team. (Id., ¶ 32.) On December 21, 2020, a threat actor exploited the FTA software used by Insured A, uploading custom code to facilitate the threat actor’s future access to the FTA. (Id., ¶ 33.) Because of this, the threat actor no longer required the vulnerabilities to access the FTA used by Insured A. (Id.) That same day, Insured A was notified for the first time of the FTA vulnerabilities and was advised to complete the software update which purported to fix the various issues. (Id., ¶ 34.)
Relying on Accellion’s representation that the security update it installed “fixed” the vulnerabilities in the FTA, Insured A continued to use the FTA, unaware that the threat actors retained their access to it. (AC, ¶ 37.) Defendant’s representation that the software update “fixed” the vulnerabilities in the FTA software was made without reasonable grounds for believing it to be true as it knew or should have known that the update did not fix critical vulnerabilities that the threat actors had already exploited. (Id., ¶ 38.) The representation was also false and misleading as Accellion omitted the critical material fact that threat actors had actively exploited the vulnerabilities, thereby leaving its licensees with a false impression regarding the severity of the vulnerabilities and risk to FTA on a go-forward basis. (Id., ¶ 39.) Had customers such as Insured A been aware of the true facts, they could have made the decision to terminate their use of the FTA and protect themselves against a breach. (Id., ¶ 56.)
On January 20, 2021, threat actors again breached the FTA, exploiting additional critical vulnerabilities on other customers’ software. (AC, ¶ 41.) Two days later, Accellion emailed Insured A, finally advising it that Defendant had discovered an active exploit in the FTA software that was an extension of the prior vulnerability identified in December 2020. (Id., ¶ 42.) This was Defendant’s first notification to Insured A that its software update did not fix the vulnerabilities in the software. (Id.)
As a result of the foregoing, Insured A suffered damages, including paying significant amounts of money to ransom demands from threat actors to prevent the publication of exflitrated confidential files. (FAC ¶ 60.) Illinois National reimbursed Insured A for its losses, and pursuant to the terms of Insured A’s insurance policy and an assignment, it is contractually, legally and equitably subrogated to Insured A’s rights against Accellion to recover these amounts. (Id., ¶ 61.)
2. Cross-Complaint
According to the Cross-Complaint, the FTA software was Accellion’s first product and was used for decades by thousands of customers. (Cross-Complaint, ¶ 23.) In January 2014, Accellion launched Kiteworks, a successor product built on a different code base that offered enhanced security, functionality, and integration into customers’ software and security infrastructure. (Id.) By early 2020, most FTA customers had upgraded to Kiteworks, leaving FTA as Accellion’s “legacy” product. (Id., ¶ 24.) Insured A, identified in the Cross-Complaint as an “unnamed law firm,” used the FTA software pursuant to an end user license agreement (“EULA”) with Accellion. (Id., ¶ 25, Exhibit 1.)
Accellion pleads that it did not provide the FTA software as a service, but merely granted each customer a license, and those customers were responsible for maintaining and timely updating their software. (Cross-Complaint, ¶ 26.) No data of the FTA customers flowed through Accellion’s internal systems, and Accellion did not have the ability to access what was stored or transferred. (Id., ¶ 27.)
By 2015, Accellion was encouraging existing FTA customers to migrate to Kiteworks, emphasizing that it was a more robust security option to protect against cyber threats. (Cross-Complaint, ¶ 30.) The unnamed law firm elected not to transition to Kiteworks, even after being informed in March 2020 that Accellion was no longer updating FTA and was simply doing security patches. (Id., ¶ 31.)
In December 2020 and January 2021, cyber criminals exploited previously unknown vulnerabilities in the FTA software, targeting individual customer’s FTA systems. (Cross-Complaint, ¶ 34.) As soon as Accellion learned of the attacks, it acted swiftly to support its FTA customers, including by releasing patches for vulnerabilities and offering to help each customer investigate its FTA system to determine how it had been affected. After the attacks, Accellion engaged a leading forensic consultant to investigate the attacks and its response. (Id., ¶ 36.) The report concluded that the patches released by Accellion immediately after the attacks “fully resolved” the vulnerabilities, that the FTA software had no other potential vulnerabilities as of March 1, 2021, and that the attacks were not the result of Accellion’s failure to patch a known vulnerability. (Id., Exhibit 2.)
The unnamed law firm- who was responsible for maintaining the FTA software and timely installing software updates- at times installed the security updates and patches within five days of receipt as required by the EULA, and at other times failed to do so. (Cross-Complaint, ¶ 38.) The firm continued to use the FTA software well after it knew of the attacks. (Id., ¶ 39.)
As of December 21, 2020, the law firm was scheduled to migrate to Kiteworks in January 2021, however, rather than cease using the FTA software on that date, the Security Engineer at the firm requested a “new license” for the FTA software to “take it [it] through the migration.” (Cross-Complaint, ¶ 44.) On December 23, 2020, the firm tried to “back out” of the December 20 “patch.” (Id., ¶ 44.) Accellion reached out to clarify that the firm wished to revert to the prior version of the FTA software that exposed it to vulnerabilities and inquired as to whether this would be the state that it would leave the system in for the “foreseeable future.” (Id., ¶ 45.) The Security Engineer confirmed that this was the case, explaining that the firm wanted a “functional product,” either a “rollback or a patch” and that he was going to assume that the firm had been “vulnerable for years” and an additional 30 days was “likely irrelevant unless [Accellion] could show that it’s being actively exploited.” (Id.)
Accellion pleads that at no time prior to Illinois National making the alleged ransom payments or incurring costs related to addressing the security breach on the firm’s behalf was it consulted as to whether such payments should be made. (Cross-Complaint, ¶ 49.) The law firm contacted Illinois National, who now claims to stand in the firm’s shoes via “an assignment” of claims. (Id.) The firm is alleged to be in breach of the EULA because it (1) failed to timely deploy critical updates and (2) assigned the EULA to Illinois National without Accellion’s prior written approval. (Id., ¶ 50.) Accellion pleads that Illinois National, which purports to sit in the firm’s shoes via an illegal assignment, is equally liable for breach of the EULA because it claims to act under it. (Id., ¶ 53.)
B. Procedural
Illinois National initiated this action on January 24, 2022. Plaintiff filed the operative AC on April 29, 2022, asserting: (1) breach of contract (failure to provide maintenance support services); (2) breach of contract (failure to maintain in confidence); (3) negligent misrepresentation; and (4) violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200) (the “UCL”). Accellion subsequently demurred to each of the foregoing claims and moved to strike portions of the AC. Illinois National opposed both motions. In November 7, 2022, the Court issued its order sustaining the demurrer without leave to amend as to the third cause of action and overruling it as to the remaining causes of action. The Court also denied the motion to strike in its entirety.
Accellion filed the Cross-Complaint on November 22, 2022, asserting: (1) breach of contract (EULA § 5); (2) breach of contract (EULA § 13.8); and (3) breach of the implied covenant of good faith and fair dealing. On December 22, 2022, Illinois National filed the instant demurrer to each of the foregoing claims on the ground of failure to state facts sufficient to constitute a cause of action or, in the alternative, to strike portions of the Cross-Complaint. (Code Civ. Proc., §§ 430.10, subd. (e), 435 and 436.) Accellion opposes the motion.
II. Illinois National’s Request for Judicial Notice
Illinois National requests that the Court take judicial notice of the EULA (Exhibit A) and the fact that the Court previously took judicial notice of this document on Accellion’s request in connection with its demurrer to Illinois National’s AC and motion to strike. As the Court noted in its order on that motion, while agreements between private parties are generally not documents that are judicially noticeable, the court may take judicial notice of agreements where the pleading references the agreements and there are no objections to it. (See Salvaty v. Falcon Cable 7T (1985) 165 Cal.App.3d 798, 800.) The EULA is referenced numerous times in the AC and the Cross-Complaint and Accellion does not object to the Court considering it in ruling on the demurrer and motion to strike (nor could it credibly do so since it previously requested that the Court take judicial notice of the document). Illinois National’s request for judicial notice is therefore GRANTED.[1]
III. Illinois National’s Demurrer
A. Breach of Contract (EULA § 5) (First Cause of Action)
In the first cause of action, Accellion alleges that the unnamed law firm, Insured A, breached the EULA by “failing to timely install security updates, including several critical security updates, in the wake of the” subject cyberattacks on the FTA software. (Cross-Complaint, ¶ 59.) Illinois National is alleged to be liable to Accellion for this breach as the law firm’s “self-proclaimed proxy.” (Id., ¶ 56.)
Illinois National maintains that this claim fails for the following reasons: (1) it is not a party to the EULA and thus cannot be liable for any breach of its terms; and (2) the claim is defeated by Accellion’s own factual obligations.
Illinois National’s first argument is well taken. “Every action must be prosecuted in the name of the real party in interest.” (Code Civ. Proc., § 367.) Generally, “the person possessing the right sued upon by reason of the substantive law is the real party in interest.” (Del Mar Beach Club Owners Assn. v. Imperial Contracting Co. (1981) 123 Cal.App.3d 898, 906.) It follows that “[s]omeone who is not a party to [a] contract has no standing to enforce the contract or recover extra-contract damages for wrongful withholding of benefits to the contracting party.” (Hatchwell v. Blue Shield of California (1988) 198 Cal.App.3d 1027, 1034.) The inverse of this holds true as well. That is, an individual or entity that is not a party to an agreement cannot be found liable for its breach. (See, e.g., Tri-Continent Internat. Corp. v. Paris Savings & Loan Assn. (1993) 12 Cal.App.4th 1354, 1359.)
In the AC, Illinois National alleges that pursuant to terms of its insurance policy with Insured A and assignment, it is “contractually, legally and equitably subrogated to Insured A’s rights against Accellion to recover for the amounts paid as a result of the breach of Accellion’s FTA, as well as to pursue any uninsured losses suffered by virtue of an assignment of such claims, if any.” (AC, ¶¶ 60-61.) “An insurer/subrogee paying for a loss has the right to pursue its insured’s rights and remedies against the third party causing the loss.” (Allstate Ins. Co. v. Loo (1996) 46 Cal.App.4th 1794, 1799.) Because in an action for subrogation the insurer as subrogee “stands in the shoes of the insured/subrogor,” the “insurer has no greater rights than the insured would have, and for that reason is subject to the same defenses assertable against the insured/subrogor.” (Id., emphasis added.) Further, a defendant can assert against the plaintiff insurer defenses that arise purely against that plaintiff, e.g., waiver of right to equitable subrogation, the plaintiff’s payment was unreasonable or voluntary, the defendant is not liable for the loss paid by the subrogee, etc. (See California Liability Insurance Practice: Claims & Litigation (CEB)(1st ed. 2021) § 23.38, citing Essex Ins. Co. v. Heck (2010) 186 Cal.App.4th 1513, 1526 and Insurance Co. of N. Am. V. Liberty Mut. Ins. Co. (1982) 128 Cal.App.3d 297, 306.)
Thus, while there is no question that Accellion can assert any defense to the claims pleaded against it in the Amended Complaint that it could assert against the unnamed law firm if it was a named party and any defenses that arise purely against Illinois National, this Court is aware of no authority which would permit the defendant in such a circumstance to assert affirmative claims against the insurer/subrogee for breach of an agreement that only its insured is a party to. Moreover, in its opposition, Accellion cites no authority which would support liability against Illinois National, a non-party to the EULA, for breaches of that agreement. The Court simply is not persuaded that Accellion can state a claim for breach of the EULA against Illinois National.[2]
Even if the Court was not persuaded by Illinois National’s first argument, it would still conclude that no claim for breach of section 5 of the EULA has been stated because Accellion alleges the unnamed law firm did install the security update within five days of its receipt of the patch. (See Cross-Complaint, ¶¶ 39, 42, 43, 45.) Furthermore, Accellion fails to plead the requisite causation. (See US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 909 [causation element for breach of contract requires that the breach was “a substantial factor in bringing about the loss or damage.”].) Accellion pleads that the FTA was breached one day after it attempted to release the patch, well before the required five-day installation period. (Cross-Complaint, ¶¶ 39, 43, 57.) Therefore, the FTA was breached before any potentially untimely installation of any patch and thus any untimely installation could not have caused the claimed damages.
Illinois National’s demurrer to the first cause of action on the ground of failure to state facts sufficient to constitute a cause of action is thus SUSTAINED WITHOUT LEAVE TO AMEND.
B. Breach of Contract (EULA § 13.8) (Second Cause of Action)
In the second cause of action, Accellion alleges that the unnamed law firm breached the EULA by “assigning the EULA to Illinois National without Accellion’s permission, written or otherwise.” (Cross-Complaint, ¶ 65.) As with the preceding cause of action, Illinois National is alleged to be liable for this breach as the law firm’s “self-proclaimed proxy.” (Id., ¶ 62.)
As the Court has concluded that Accellion cannot state a claim for breach of section 5 of EULA against Illinois National because it is not a party to the agreement, it agrees with Illinois National that the second breach of contract claim predicated on that agreement also fails. This claim is also contrary to California law.
Section 13.8 of the EULA provides that “Neither this Agreement nor any rights or obligations of Customer hereunder may be assigned by Customer in whole or in part ….” (Cross-Complaint, ¶ 14; EULA § 13.8.) Accellion appears to allege that this section of the EULA prohibits contractual, legal and equitable assignment of Insured A’s claims. But California law does not so hold. In this state, it is well-settled that general assignment clauses do not preclude assignments that occur by operation of law, e.g., as relevant here, the right of equitable subrogation. (Patent Scaffolding Co. v. William Simpson Const. Co. (1967) 256 Cal.App.2d 506, 509-510.) “Equitable subrogation permits a party who has been required to satisfy a loss created by a third party’s wrongful act to ‘step in the shoes’ of the loser and pursue recovery from the responsible wrongdoer. In the insurance context, the doctrine permits the paying insurer to be placed in the shoes of the insured and to pursue recovery from third parties responsible to the insured for the loss for which the insurer was liable and paid.” (Great American Ins. Cos. v. Gordon Trucking, Inc. (2008) 165 Cal.App.4th 445, 451, internal citations omitted.)
In Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, the California Supreme Court concluded that a general assignment clause does not preclude the assignment of a cause of action for breach of contract. As the court explained:
[A] contractual provision that prohibits the assigning of the “rights” under a contract “does not forbid the assignment of a cause of action for breach of contract, or the assignment of money damages for a breach of contract, in the absence of circumstances specifying a different intention by the parties.” (Trubowitch, 30 Cal.2d at 339.)
Furthermore, because equitable subrogation is “an assignment by operation of law” that “does not depend upon an express assignment,” if the requirements for equitable subrogation are met, actual assignment of the claim is unnecessary. (Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Serv. Grp., Inc. (2009) 171 Cal.App.4th 35, 55.) “The subrogee has a right to subrogation that is independent of his or her contractual rights.” (Id.) Accordingly, while California law recognizes that Illinois National may properly obtain an assignment of Insured A’s claims against Accellion for its alleged breaches of the EULA, such an assignment is not even necessary here because Illinois National has subrogation rights. Thus, in the second cause of action Accellion fails to state a claim for which relief can be granted.
Illinois National additionally argues, persuasively, that the second cause of action fails because Accellion cannot plead resulting damages from Illinois National’s conduct because Illinois National’s standing as an assignee and subrogee did not alter Accellion’s liability. In other words, even if Insured A had not assigned its claims to Illinois National, Accellion would have had the exact same exposure to it based on the events surrounding the breach of the FTA software.
Illinois National’s demurrer to the second cause of action on the ground of failure to state facts sufficient to constitute a cause of action is therefore SUSTAINED WITHOUT LEAVE TO AMEND.
C. Breach of the Implied Covenant of Good Faith and Fair Dealing
In its remaining cause of action, Accellion alleges that the unnamed law firm and Illinois National breached the covenant of good faith and fair dealing implied in the EULA by “undermining or preventing Accellion from receiving the benefits of the EULA, both by paying, directly by Illinois National or through the unnamed law firm, a ransom amount, while at no time prior to making these alleged payments consulting Accellion, as well as incurring fees and costs on behalf of the unnamed law firm, which Illinois National then seeks to recover from Accellion.” (Cross-Complaint, ¶ 72.)
Illinois National argues that its demurrer to this claim should be sustained because (1) the EULA is not an insurance policy, (2) to the extent Accellion is not seeking to allege a tort but rather a contractual claim, it fails to plead the requisite elements and (3) no damages are pleaded. In its opposition, Accellion makes clear that it is not asserting a claim for the tort of breach of the implied covenant, which tort exists only in the context of insurance contracts.
Next, “[t]he prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.” (Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 433.) As discussed previously, Illinois National is not a party to the EULA. Consequently, Accellion cannot state a claim for breach of covenant implied in that agreement against Illinois National.
However, even if the requisite contractual relationship existed, the third cause of action would still fail. Accellion alleges the damages it seeks in connection with this claim are “paying … a ransom amount … as well as also incurring fees and costs on behalf of the unknown law firm ….” (Cross-Complaint, ¶ 72.) But it does not allege that it reimbursed the firm or Illinois National for the ransom payment or the fees and costs, i.e., actually incurred the damages that it is seeking. Accordingly, Accellion has not stated a claim for breach of the implied covenant because it has not pleaded the required element of resulting damages. (See Careau & Co. (1990) 222 Cal.App.3d 1371, 1388 [setting forth elements of the claim].)
Accordingly, Illinois National’s demurrer to the third cause of action on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.
Given the Court’s ruling on Illinois National’s demurrer to the Cross-Complaint and each of the claims asserted therein, its alternative motion to strike is MOOT.
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Calendar Line 2
Case Name: Zamora v. Kia Motors America, Inc.
Case No.: 18CV330189
Before the Court is Defendant Kia America, Inc.’s (f/k/a Kia Motors America, Inc.) (“Defendant” or “KA”) motion for summary judgment, or in the alternative, summary adjudication, in its favor as to plaintiff Alejandro Zamora’s First Amended Complaint (“FAC”). Pursuant to California Rule of Court 3.1308, the Court issues its tentative ruling as set forth below.
I. Background
A. Factual
This is a lemon law action. According to the FAC, on June 11, 2011, Plaintiff purchased a 2011 KIA Optima (the “Vehicle”) manufactured and/or distributed by Defendant. (FAC, ¶ 6.) In connection with the purchase, Plaintiff received an express warranty pursuant to which Defendant was to preserve or maintain the Vehicle’s utility or performance or provide compensation in a specified period of time if utility or performance failed. (Id., ¶ 7.) During the warranty period, the Vehicle contained or developed numerous defects including, but not limited to, defects relating to the steering system; impairment of the fuel flow; premature engine bearing wear, stalling; and a reduction in engine acceleration. (Id., ¶ 8.)
Defendant knew since 2010, if not earlier, that the 2011-2014 KIA Optima, among other models, contained one or more design and/or manufacturing defects in their engines that resulted in the restriction of oil flow to vital areas of the vehicle and would cause it to experience catastrophic engine failure and/or stalling while in operation. (FAC, ¶¶ 15, 18-20.) However, Defendant failed to disclose this fact to Plaintiff at the time of sale or at any point thereafter and concealed such information from him. (Id., ¶ 24.) Had Plaintiff been aware of the foregoing defects, he would not have purchased the Vehicle. (Id., ¶ 45.)
Plaintiff discovered Defendant’s wrongful conduct on or around May 2018, when he requested a buyback and/or restitution of the Vehicle from Defendant. (FAC, ¶ 47.) However, Defendant failed to provide restitution pursuant to the Song-Beverly Consumer Warranty Act (the “Song-Beverly Act”) as required. (Id.)
B. Procedural
Plaintiff initiated this action on June 18, 2018 asserting: (1) violation of Civil Code section 1793.2, subdivision (d); (2) violation of Civil Code section 1793.2, subdivision (b); (3) violation of Civil Code section 1793.2, subdivision (a)(3); (4) breach of express warranty; (5) breach of the implied warranty of merchantability; and (6) fraud by omission. Defendant subsequently demurred to the third, fourth, fifth and sixth causes of action on the ground of failure to state sufficient facts and moved to strike portions of the Complaint. The demurrer was sustained as to the fifth cause of action with leave to amend and otherwise overruled.
On November 9, 2018, Plaintiff filed the operative FAC asserting the same claims as the Complaint. Defendant’s subsequent demurrer to the fifth cause of action was sustained without leave to amend. On November 2, 2022, KA filed the instant motion for summary judgment, or in the alternative, summary adjudication. Plaintiff opposes the motion.
II. Legal Standard
“A defendant seeking summary judgment [or adjudication] must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72 [internal citations omitted].)
“The ‘tried and true’ way for defendants to meet their burden of proof on summary judgment motions is to present affirmative evidence (declarations, etc.) negating, as a matter of law, an essential element of plaintiff’s claim.” (Weil & Brown, Cal. Prac. Guide; Civ. Proc. Before Trial (The Rutter Group 2014) ¶ 10:241, p. 10-104, citing Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) “The moving party’s declaration and evidence will be strictly construed in determining whether they negate (disprove) an essential element of plaintiff’s claim ‘in order to resolve any evidentiary doubts or ambiguities in plaintiff’s (opposing party’s) favor.’” (Id., ¶ 10:241.20, p. 10-105, citing Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64.)
“Another way for a defendant to obtain summary judgment is to ‘show’ that an essential element of plaintiff’s claim cannot be established. Defendant does so by presenting evidence that plaintiff ‘does not possess and cannot reasonably obtain, needed evidence’ (because plaintiff must be allowed a reasonable opportunity to oppose the motion).” (Id., ¶ 10:242, p. 10-105, citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.) “Such evidence usually consists of admissions by plaintiff following extensive discovery to the effect that he or she has discovered nothing to support an essential element of the cause of action.” (Id.)
III. KA’s Undisputed Material Facts
KA submits the following purportedly undisputed material facts: Plaintiff purchased the Vehicle from Capitol Kia in San Jose on June 11, 2011. (KA’s Separate Statement of Undisputed Material Facts in Support of Motion for Summary Judgment/Adjudication (“UMF”), No. 1.) Capitol Kia was and is an independent third-party sales and service dealership and KA does not and did not at any time possess any ownership interest in the dealership or any right to control its operations. (UMF Nos. 3, 4.) There is no record of Plaintiff contacting KA prior to purchasing the Vehicle. (UMF No. 5.)
The Vehicle came with a basic 5-year/60,000 mile limited express warranty and a 10-year/100,000 mile powertrain limited warranty. (UMF. 6.) These warranties began on the date of the Vehicle’s purchase by Plaintiff, June 11, 2011. (UMF No. 7.)
While he owned the Vehicle, Plaintiff presented the Vehicle to a KA authorized repair facility for repairs paid for under a KA warranty only twice: on October 20, 2017 and November 24, 2018. (UMF No. 8.) On October 20, 2017, Plaintiff presented the Vehicle to My Nissan Kia with 59,758 miles on the odometer and the check engine light on. (UMF No. 9.) Upon finding a diagnostic code for the transmission fluid sensor, the dealership replaced the sensor and road tested the Vehicle to determine all was functioning properly. (Id.) The visit lasted one day, and the sensor replacement was paid for under warranty. (Id.) On November 24, 2018, Plaintiff presented the Vehicle to Capital Kia with 75,975 miles on the odometer, requested routine service and complained of steering wheel noise. (UMF No. 10.) The dealership replaced the MDPS flexible coupler, tested the steering wheel and performed the following: Service Action SA300 (a Technical Service Bulletin issued in December 2017 addressing the Turbo Oil Feed Line Replacement); Safety Recall Campaign SC165 (issued in October 2018 addressing Airbag Control Unit extension wire harness installation); and Product Improvement Campaign PI1803 (software update issued in November 2018 to install the Knock Sensor Detection System to protect the engine from excessive connecting rod bearing damage). (Id.) The recalls and service action campaigns were not performed because of Plaintiff’s concerns, but instead as continuous product improvement measures on the Vehicle. (Id.) These were actions performed during the one-day visit and paid for under warranty. (Id.)
The service history of the Vehicle shows the following three additional visits for various recalls and service action campaigns:
▪ In April 2013, KA issued a voluntary safety recall addressing a stop lamp switch (SC098). (UMF No. 12.) My Nissan Kia completed the work required by SC098 on the Vehicle on May 16, 2013. (Id.)
▪ In September 2013, KA issued Technical Service Bulletin Service Action 151 (SA151) addressing ECM Software upgrades. (UMF No. 13.) My Nissan Kia completed the work required by SA151 on the Vehicle on November 5, 2013. (Id.)
▪ In June 2017, KA issued SC147, a Safety Recall Campaign for Theta II Engine Inspection and/or Replacement. (UMF No. 14.) On September 22, 2017, My Nissan Kia inspected the Vehicle pursuant to SC147 and as the Vehicle passed inspection, no repairs were performed. (Id.)
These activities were performed as continuous product improvement measures on the Vehicle; not because of Plaintiff’s or others’ complaints. (UMF No. 15.)
During the express warranty period on the Vehicle, KA made available to the dealership sufficient service literature and replacement parts to complete all repairs. (UMF No. 16.) No part or literature was unavailable for any repair during this period. (UMF No. 17.)
In response to KA’s written discovery propounded on him in this action, Plaintiff has produced no evidence supporting his claim of fraud by, or of any damages he allegedly sustained because, of KA’s alleged wrongful conduct.
IV. Analysis
A. Breach of Express Warranty (1st and 4th Causes of Action)
In the first cause of action, Plaintiff alleges that KA and its representatives have been unable to service or repair the Vehicle to conform with the applicable express warranties after a reasonable number of opportunities in violation of Civil Code section 1793.2, subdivision (d), and violated subdivision (a)(2) by failing to promptly replace the Vehicle or make restitution. (FAC, ¶¶ 61-62.) Plaintiff’s fourth cause of action is predicated on allegations that KA failed to repair the Vehicle in breach of the express warranty and thus violated Civil Code sections 1791.2, subdivision (a), and 1794. (Id., ¶ 75.) KA asserts it is entitled to summary adjudication of these claims because it repaired all warranted defects in the Vehicle in a reasonable number of repair attempts.
Under the Song-Beverly Act, a vehicle manufacturer who has made an express warranty is obligated (through its authorized representative) to repair any nonconformities covered by that warranty that substantially impair the use, value or safety of the vehicle within a reasonable number of repair attempts. (Civ. Code, § 1793.2.) If the manufacturer or its representative fails to do so, the manufacturer “shall either replace the [vehicle] or reimburse the buyer in an amount equal to the purchase price paid by the buyer, less that amount directly attributable to use by the buyer prior to the discovery of the nonconformity.” (Civ. Code, § 1793.2, subd. (d).)
A plaintiff pursuing an action for breach of express warranty under the Song-Beverly Act (Civil Code §§ 1790-1795.8) has the burden to establish: (1) the vehicle had a nonconformity covered by the express warranty that substantially impaired the use, value or safety of the vehicle; (2) the vehicle was presented to an authorized representative of the manufacturer of the vehicle for repair; and (3) the manufacturer or his representative did not repair the nonconformity after a reasonable number of repair attempts. (Civ. Code, § 1793.2; Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1101.)
KA submits that the service records and warranty history reflect only two presentations of the Vehicle to an authorized repair facility for a customer concern covered by warranty, each was for a completely different issue, and neither resulted in a subsequent repair attempt covered by the KA warranty. (UMF Nos. 8-15.) KA acknowledges the service records reflect presentations for routine maintenance, recalls and service action campaigns prophylactically, but maintains that none of these visits can establish a “nonconformity” or “repair attempt” for purposes of evaluating Song-Beverly Action violations. Indeed, in situations in which a lemon law plaintiff has alleged breaches of an express warranty, courts have held that repairs performed pursuant to manufacturer recalls or service action campaigns do not establish the required nonconformity element of the claim unless the plaintiff pleads and proves that the subject vehicle actually suffered from the issues/defects that were the aim of those recalls and service action campaigns. (See, e.g., Gutierrez v. Carmax Auto Superstores Cal. (2018) 19 Cal.App.5th 1234, 1248; McGee v. Mercedes-Benz USA, LLC (S.D. Cal. 2020) 612 F.Supp.3d 1051, 1059; Adams v. FCA US LLC (C.D. Cal. 2016) 2016 U.S. Dist. LEXIS 188899, *15-16 [“[B]ecause Plaintiff experienced no defect in her Jeep, only potential defects that were the subject of the recall notices (and before any defect manifested), Plaintiff cannot satisfy the nonconformity element” of her breach of express warranty claim under the Song-Beverly Action].)
Here, the Court finds KA has met its initial burden on the first and fourth causes of action, and the burden shifts to Plaintiff.
Plaintiff argues that he gave KA and its representatives 12 opportunities to fix the Vehicle when he presented it for check engine light activation and loss of power issues on the following dates: May 16, 2013; November 5, 2013; December 28, 2013; January 14, 2014; December 28, 2016; January 3, 2017; September 22, 2017; October 20, 2017; November 24, 2018; February 26, 2021; March 1, 2021; and August 17, 2021. (See Declaration of Alejandro Zamora in Support of Opposition to Defendant’s MSJ/MSA (“Zamora Decl.”), ¶¶ 9-20, Exhibits 3-14.) Despite the foregoing repairs, Plaintiff states in his declaration that he continued to have engine issues after the repairs made by KA’s authorized representatives, and to this day fears that the Vehicle will break down. (Id., ¶ 21.)
Plaintiff’s evidence establishes that he presented the Vehicle for repair seven more times than indicated by KA’s evidentiary showing (this does not include repair visits for recalls and service action campaigns) and that these visits involved matters implicating the engine: an active check engine light, difficulties with engine power and a fuel smell in the Vehicle. (Zamora Dec., Exhibits 3-10.) Thus, the Court finds that Plaintiff has demonstrated the existence of a triable issue of material fact as to whether KA (and its authorized representatives) adequately repaired the Vehicle’s nonconformities after a reasonable number of repair attempts. Accordingly, KA’s motion for summary adjudication of the first and fourth causes of action is DENIED, and KA’s motion for summary judgment is therefore DENIED.
B. Violation of Civil Code § 1793.2(b) (2d Cause of Action)
In the second cause of action, Plaintiff alleges that although he presented the Vehicle to KA’s representative, KA and its representative failed to commence the service or repairs within a reasonable time and failed to service and repair the Vehicle to conform to the applicable warranties within 30 days in violation of subdivision (b) of Section 1793.2. (FAC, ¶ 67.) KA maintains that it is entitled to summary adjudication of this claim because it and its dealers fully complied with the statute.
Subdivision (b) of Section 1793.2 provides, in pertinent part:
Where those service and repair facilities are maintained in this state and service or repair of the goods is necessary because they do not conform with the applicable express warranties, service and repair shall be commenced within a reasonable time by the manufacturer or its representative in the state. Unless the buyer agrees in writing to the contrary, the goods shall be serviced or repaired so as to conform to the applicable warranties within 30 days.
KA submits evidence which demonstrates that the two visits made upon Plaintiff’s request for issues covered by the express warranties resulted in one day each of the Vehicle being out of service, for a total of two days. (UMF Nos. 9, 10.) This evidence is sufficient to meet KA’s initial burden on this claim.
In opposition, Plaintiff sufficiently raises a triable issue of material fact based on the same evidence cited in connection with his first and fourth causes of action, above. As Plaintiff has demonstrated that there is a triable issue as to whether or not KA (and its authorized representatives) adequately repaired the Vehicle’s nonconformities after a reasonable number of repair attempts, it follows that there is also a triable issue as to whether the Vehicle was repaired within a reasonable time or within 30 days because it continued to suffered from engine-related issues for several years that went unresolved. Therefore, KA’s motion for summary adjudication of the second cause of action is DENIED.
C. Violation of Civil Code § 1793.2(a)(3) (3d Cause of Action)
Plaintiff’s third cause of action is predicated on allegations that Defendant violated subdivision (a)(3) of Section 1793.2 by failing “to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.” (FAC, ¶ 72.) KA contends it is entitled to adjudication of this claim because (1) it made available to the dealership sufficient service literature and replacement parts to effect all repairs on the Vehicle during the express warranty period and (2) Plaintiff does not possess any evidence which establish that KA violated subdivision (a)(3) of Section 1793.2.
Section 1793.2, subdivision (a)(3), provides that:
Every manufacturer of consumer goods sold in this state and for which the manufacturer has made an express warranty shall … [m]ake available to authorized service and repair facilities sufficient service literature and replacement parts to effect repairs during the express warranty period.
KA meets its initial burden on this cause of action by submitting evidence which establishes that during the express warranty period on the Vehicle, it made available to the dealership sufficient service literature and replacement parts to effect all repairs and no part or literature was unavailable for any repair during this period. (UMF Nos. 16, 17.) Thus, the burden shifts to Plaintiff on this cause of action.
The Court finds Plaintiff has established the existence of a triable issue of material fact concerning whether KA complied with subdivision (a)(3) of Section 1793.2 by demonstrating that he continued to have to bring the Vehicle in for engine issues even after KA’s authorized representative was provided with multiple opportunities to repair it. Had sufficient service literature and replacement parts to effectuate all repairs on the Vehicle been provided as required, Plaintiff’s engine issues would not have remained unresolved for years. Therefore, KA’s motion for summary adjudication of the third cause of action is DENIED.
D. Fraud by Omission (6th Cause of Action)
In his remaining cause of action, Plaintiff alleges that prior to the sale of the Vehicle, KA was aware that its engine suffered from an inherent defect, was defective and would fail, and was under a duty to disclose these facts to him. (FAC, ¶ 86.) However, KA knowingly failed to disclose these material facts to Plaintiff who, had he been aware of them at the time of the sale, would not have purchased the Vehicle. (Id., ¶ 88.) KA maintains that it is entitled to summary adjudication of this claim because (1) Plaintiff cannot establish a duty of disclosure on the part of KA; (2) Plaintiff has no evidence of KA’s exclusive knowledge of the “defect” or any active concealment on its part; (3) Plaintiff has no evidence of damages caused by the alleged fraud; (4) the statements identified by Plaintiff are not actionable misrepresentations but mere puffery; and (5) the claim is barred by the economic loss rule.
First, the Court already rejected KA’s contention that Plaintiff’s sixth cause of action is barred by the economic loss rule. This rule provides that “where a purchaser’s expectations in a sale are frustrated because the product he brought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses.” ((Robinson Helicopter Company v. Dana Corporation (2004) 34 Cal.4th 979, 988.) The doctrine hinges on a “distinction drawn between transactions involving the sales of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.” (Robinson, supra, 34 Cal.4th at 988.) The rule requires a purchaser to recover solely in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. (Id.)
As the Court explained in its order on KA’s demurrer to this claim in the Complaint, in Robinson, the California Supreme Court carved out an exception to economic loss rule, holding that it does not bar claims for fraud and intentional misrepresentations, which are independent of the contract that is alleged to have been breached. (Robinson, supra, 34 Cal.4th at p. 991.) The court reasoned that a breach of contract remedy assumes the parties to a contract can negotiate the risk occasioned by a breach; given this negotiation, it is “appropriate to enforce only such obligations as each party voluntarily assumed, and to give him only such benefits as he expected to receive ….” (Ibid., citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 517.) However, because a party to a contract could not “rationally calculate the possibility that the other party will deliberately misrepresent terms critical to that contract,” the court explained that public policy demanded that the party who is deceived be permitted to recover damages not limited to the contract. (Ibid.) Thus, where one party commits fraud during the contract formation or performance, the injured party may recover in contract and tort. (Ibid.; see also Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 79, 78.) Because Plaintiff pleaded such conduct by Defendant in his Complaint, and that he would not have purchased the Vehicle if Defendant had not failed to disclose to him the material fact of known engine defects, the economic loss rule did not apply to Plaintiff’s fraud claim. There is no basis to depart from this conclusion here.
Second, Plaintiff’s fraud claim is not predicated on affirmative misrepresentations by KA, but rather nondisclosure and/or concealment of material facts. (FAC, ¶¶ 84, 87-89.) Thus, whether or not any statements actually made by KA were mere puffery has no relevance to the merits of this cause of action.
KA’s remaining arguments are directed at the specific elements of this claim: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. (Lovejoy v. At&T Corp. (2001) 92 Cal. App. 4th 85, 96.)
Generally, absent the existence of a fiduciary duty, there are three circumstances in which nondisclosure or concealment may constitute actionable fraud because a duty to disclose exists: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. (LiMandri v. Judkins (1997) 52 Cal. App. 4th 326, 336.) These three circumstances “presuppose the existence of some other [non-fiduciary] relationship between the plaintiff and defendant in which a duty to disclose can arise.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 311.) The California Supreme Court “has described the necessary relationship giving rise to a duty to disclose as a ‘transaction’ between the plaintiff and defendant ….” (Ibid., [internal citations omitted].) “Such a transaction must necessarily arise from direct dealings between the plaintiff and defendant; it cannot arise between the defendant and the public at large.” (Bigler-Engler, 7 Cal.App.5th at 312.)
As articulated above, in the FAC, Plaintiff alleges that KA knew, prior to this purchase of the Vehicle, that it and its engine suffered from an inherent defect, would fail and was not suitable for its intended use. (FAC, ¶ 85.) Plaintiff further alleges that KA was under a duty to disclose the foregoing material facts because: (1) KA acquired its knowledge of these facts through sources not available to Plaintiff (e.g., pre-production testing data, early consumer complaints, aggregate warranty data, responsive testing, warranty repair and part replacement data); (2) KA was in a superior position from various internal sources to know (or should have known) about them; and (3) Plaintiff could not reasonably have been expected to learn or discover these facts until well after he purchased the Vehicle. (Id., ¶ 86.)
KA specifically argues that it owed Plaintiff no duty to disclose because it had no direct dealings with him because he did not purchase the Vehicle directly from KA but rather a dealership, Capitol Kia, that is independent and wholly separate from KA. But transactional privity is not always required for a duty to disclose to exist. (See, e.g., Geernaert v. Mitchell (1995) 31 Cal.App.4th 601, 605.) Thus, the lack of such a relationship, which Plaintiff does not dispute, is not fatal to this claim.
KA next asserts that Plaintiff does not possess evidence that it had exclusive knowledge of a defect in the Vehicle or that it engaged in any active concealment of that defect. In support of this contention, KA cites Plaintiff’s responses to special interrogatories to state all facts supporting his fraud cause of action and form interrogatories that it propounded. (UMF Nos. 20-24.) In making this argument, KA is attempting to meet its burden on the fraud claim by demonstrating that Plaintiff “does not possess and cannot reasonably obtain, needed evidence …” (Aguilar, supra, 25 Cal.4th at 854) with factually devoid discovery responses. “Where plaintiffs have had an adequate opportunity for discovery, their factually devoid responses to discovery requests may show that one or more elements of their claim cannot be established.” (Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 590.)
In the responses cited by KA, Plaintiff asserted various evidentiary objections but also cited Code of Civil Procedure section 2030.230[3] and broadly referred to materials produced in response to KA’s document production requests. California law supports that responses to interrogatories which ask a plaintiff to state all facts supporting their causes of action are not factually devoid if they cite to Section 2030.230, even if that section was improperly cited by the plaintiff. (Bayramoglu v. Nationstar Mortgage LLC (2020) 51 Cal.App.5th 726, 732-734.) Thus, even if Plaintiff improperly cited this code section, given the referral to documents produced in response to production requests, the Court cannot conclude that the cited responses are “factually devoid.” If KA believed that the invocation of Section 2030.230 was unwarranted, it could have moved for an order compelling further responses. It did not do so and cannot use Plaintiff’s reliance on Section 2030.230 to satisfy its own burden of production on this motion. (Id. at 733-734.) Consequently, the Court finds that KA has not met its burden.
Finally, KA maintains it is entitled to summary adjudication of the sixth cause of action because Plaintiff cannot establish the element of damages, and again attempts to rely on the same “factually devoid” discovery responses. (UMF Nos. 20-24.) But the Court has already concluded that these responses are not factually devoid and therefore KA has not met its burden to the extent it seeks to do so by demonstrating the Plaintiff lacks evidence of his damages.
KA’s motion for summary adjudication of this claim is DENIED.
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Case Name: Sabri Gurbuz v. Truebeck Construction, Inc. et al.
Case No.: 20CV363703
Before the court is Defendant Truebeck Construction, Inc.’s (“Truebeck” or “Defendant”) motion for summary judgment or, in the alternative, summary adjudication.[4] Pursuant to California Rule of Court 3.1308, the Court issues its tentative ruling as set forth below.
I. Background
A. Factual
This is an action for negligence, premises liability, and products liability.
According to the first amended complaint (“FAC”), on February 16, 2018, plaintiff Sabri Gurbuz was at 1 Apple Park Way, Cupertino, California 95014 (the “Premises” or “AC2”). (Cause of Action-General Negligence, GN-1.) He operated a bicycle on or about a sloped loose surface of a designated path linking structures causing the thin tires to lose stability, fall, and cause seriously bodily injury. (Ibid.) Defendants, and each of them, negligently owned, designed, constructed, managed, maintained, and repaired the Premises and negligently designed, constructed, furnished, maintained, warned, failed to warn, and warranted the fitness for use of certain bicycles at the Premises to Plaintiff that were unsuitable for use. (Ibid.) This created an unreasonable risk of harm when used in a reasonable and foreseeable manner, and with due care, Defendants knew or should have known that such bicycles would be operated by persons including Plaintiff in the manner and under the conditions in which Plaintiff operated said bicycle. (Ibid.)
B. Procedural
PLAINTIFF INITIATED THIS ACTION ON FEBRUARY 13, 2020. ON JANUARY 20, 2021, PLAINTIFF FILED HIS FAC, ASSERTING GENERAL NEGLIGENCE, PREMISES LIABILITY, AND PRODUCTS LIABILITY CLAIMS. ON NOVEMBER 14, 2022, TRUEBECK FILED THE INSTANT MOTION. ON APRIL 25, 2023, PLAINTIFF FILED HIS OPPOSITION. ON MAY 4, 2023, TRUEBECK FILES ITS REPLY.
II. Evidentiary Objections
TRUEBECK ASSERTS EVIDENTIARY OBJECTIONS 1-10 TO CANDELARIO SANTIAGO’S DECLARATION (“SANTIAGO DECL.”) AND OBJECTIONS 11-15 TO PLAINTIFF’S DEPOSITION.
Objection 1 pertains to the first sentence of paragraph 9, which states, “the use of motor vehicles … resulted in loosened gravel.” The objection is OVERRULED.
Objections 2 and 3 pertain to Exhibit 1 and 2, respectively. The exhibits are pictures of the path, however, there is no information as to when the pictures were taken or by whom. Thus, the objection is SUSTAINED for lack of foundation.
Objection 4 pertains to paragraph 10, which states, “[a]round May 2018… to a slurry seal”, and it is OVERRULED.
Objection 5 pertains to the first sentence of paragraph 11, which states, “[d]uring the entire time… managing the project”, and it is OVERRULED.
Objection 6 pertains to a portion of paragraph 12, which states, “I understand Defendant Truebeck Construction… inspecting the paths”, and it is OVERRULED.
Objection 7 pertains to the rest of paragraph 12, which states, “I recall that prior to the subject fall… because of costs”, and it is SUSTAINED on hearsay grounds.
Objection 8 pertains to a portion of paragraph 13, which states, “[t]he downslope gravel path…. Exhibit 1 and Exhibit 3”, and it is SUSTAINED on the basis of improper expert opinion.
Objection 9 pertains to Exhibit 3, which is a picture of the path, and it is SUSTAINED for lack of foundation.
Objection 10 pertains to paragraph 14, which states, “[t]he rains during the … at the junction”, and it is SUSTAINED on the basis of improper expert opinion.
Objections 11-15 pertain to a portion of Plaintiff’s deposition, and they are OVERRULED.
III. Motion for Summary Judgment
A. LEGAL STANDARD
ANY PARTY MAY MOVE FOR SUMMARY JUDGMENT. (CODE OF CIV. PROC., §437C, SUBD. (A); AGUILAR V. ATLANTIC RICHFIELD CO. (2001) 25 CAL.4TH 826, 843 (AGUILAR).) THE MOTION “SHALL BE GRANTED IF ALL THE PAPERS SUBMITTED SHOW THAT THERE IS NO TRIABLE ISSUE AS TO ANY MATERIAL FACT AND THAT THE MOVING PARTY IS ENTITLED TO A JUDGMENT AS A MATTER OF LAW.” (CODE CIV. PROC., 437C, SUBD. (C); AGUILAR, SUPRA, AT P. 843.) THE OBJECT OF THE SUMMARY JUDGMENT PROCEDURE IS “TO CUT THROUGH THE PARTIES PLEADING” TO DETERMINE WHETHER TRIAL IS NECESSARY TO RESOLVE THE DISPUTE. (AGUILAR, SUPRA, AT P. 843.) SUMMARY ADJUDICATION WORKS THE SAME WAY, EXCEPT IT ACTS ON SPECIFIC CAUSES OF ACTION OR AFFIRMATIVE DEFENSES, RATHER THAN ON THE ENTIRE COMPLAINT. (CODE CIV. PROC., § 437C, SUBD. (F).) … MOTIONS FOR SUMMARY ADJUDICATION PROCEED IN ALL PROCEDURAL RESPECTS AS A MOTION FOR SUMMARY JUDGMENT.’” (HARTLINE V. KAISER FOUNDATION HOSPITALS (2005) 132 CAL.APP.4TH 458, 464.)
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…” (Aguilar, supra, 25 Cal.4th at p. 850; see Evid. Code, § 110.) “A prima facie showing is one that is sufficient to support the position of the party in questions. (Aguilar, supra, at p. 851.)
If the moving party makes the necessary initial showing, the burden of production shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Code of Civ. Proc., 437c, subd. (c); Aguilar, supra, at p. 850.) A triable issue of material fact exists “if, and only if, the evidence would allow a reasonable trier of fact to find the underlying facts in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, at p. 850, fn. omitted.) If the party opposing summary judgment presents evidence demonstrating the existence of a disputed material fact, the motion must be denied. (Id. at p. 843.)
Throughout the process, the trial court “must consider all of the evidence and all of the inferences drawn therefrom.” (Aguilar, supra, 25 Cal.4th at p. 856.) The moving party’s evidence is strictly construed, while the opponent’s is liberally construed. (Id. at 843.)
B. Analysis
1. TRUEBECK’S UNDISPUTED FACTS
TRUEBECK AVERS THE SUBJECT INCIDENT TOOK PLACE ON FEBRUARY 16, 2018. (TRUEBECK’S SEPARATE STATEMENT IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT (“TRUEBECK’S UMF”), NO. 1.) PLAINTIFF WAS EMPLOYED AS A RESEARCH AND DEVELOPMENT SOFTWARE ENGINEER BY APPLE, INC. (“APPLE”). (TRUEBECK’S UMF, NO. 2.) HE WAS WORKING AT THE TIME OF THE INCIDENT, WHICH WAS APPROXIMATELY 10:40 TO 10:45 A.M. (TRUEBECK’S UMF, NO. 3.) PLAINTIFF MADE A CLAIM FOR WORKERS’ COMPENSATION BENEFITS ARISING FROM THE INCIDENT. (TRUEBECK’S UMF, NO. 4.) TRUEBECK’S SUBCONTRACTOR TOP GRADE HAD CONSTRUCTED THE PATH WHERE THE INCIDENT OCCURRED, WHICH WAS LOCATED ON THE APPLE CAMPUS 2 (“AC2”) AT ONE APPLE PARK WAY IN CUPERTINO. (TRUEBECK’S UMF, NO. 5.)
The surface of the path consisted of a product called Natural Pave, which is essentially decomposed granite with a binder added to it. (Truebeck’s UMF, No. 6.) Truebeck did not select the Natural Pave surface for the path and was not involved in that selection process. (Truebeck’s UMF, No. 7.) Truebeck did not design the slope of the section of path where the incident occurred. (Truebeck’s UMF, No. 8.) Truebeck and its subcontractors installed the slope of the path where the incident occurred in accordance with the specifications of the applicable path designer(s), which did not include Truebeck or its subcontractors. (Truebeck’s UMF, No. 9.)
Before the incident, Truebeck and its applicable subcontractors had completed their work on the section of the path on which Plaintiff’s incident occurred. (Truebeck’s UMF, No. 10.) Apple accepted the completed path from Truebeck before the incident. (Truebeck’s UMF, No. 11.) As of February 8, 2016, neither Truebeck nor its subcontractors controlled that section of path nor did they have the right to affect the path’s condition at that time, without prior approval from Apple. (Truebeck’s UMF, No. 12.)
On the day of the incident, Plaintiff left his office and took one of the bikes that Apple supplied to its employees from the bike rack in front of section 8 of AC2. (Truebeck’s UMF, No. 13.) The tires on the bicycle were one-and-one-half to two inches wide. (Truebeck’s UMF, No. 14.) The incident occurred when Plaintiff was riding the bike from his office to the campus’ south parking garage. (Truebeck’s UMF, No. 15.) Plaintiff had taken that path a total of 70 to 80 times before the incident, either by bicycle or on foot. (Truebeck’s UMF, No. 16.) Plaintiff knew that the path was a compacted-gravel path with loose gravel on it. (Truebeck’s UMF, No. 17.) Plaintiff did not expect the path to have a perfectly uniform surface. (Truebeck’s UMF, No. 18.) He was riding uphill at the time of the incident. (Truebeck’s UMF, No. 19.)
As Plaintiff began riding uphill, his bike slipped on loose pebbles on the path. (Truebeck’s UMF, No. 20.) He was approximately one-and-one-half feet from the right-hand edge of the path, from his perspective, when the bicycle slipped. (Truebeck’s UMF, No. 21.) When the bicycle slipped, Plaintiff tried to correct it but then went over a “bump,” at which point the bicycle slipped again. (Truebeck’s UMF, No. 22.)
The bump was approximately one inch high. (Truebeck’s UMF, No. 23.) It was perpendicular to Plaintiff’s travel direction and approximately seven to eight inches wide, i.e., Plaintiff had to traverse approximately seven to eight inches in riding over it. (Truebeck’s UMF, No. 24.) He could not recover his balance after the “bump” and fell. (Truebeck’s UMF, No. 25.) Beyond the loose gravel and the “bump,” no features of the path’s surface contributed to Plaintiff’s fall. (Truebeck’s UMF, No. 26.) The path surface was dry where the incident occurred. (Truebeck’s UMF, No. 27.) Nothing distracted Plaintiff’s attention from where he was traveling just before he began to slip. (Truebeck’s UMF, No. 28.) As he approached the area where he first slipped, he was able to see what he was approaching. (Truebeck’s UMF, No. 29.) No malfunction of the bicycle caused the incident. (Truebeck’s UMF, No. 30.)
Truebeck did not design the bicycle on which Plaintiff was riding at the time of the incident. (Truebeck’s UMF, No. 31.) Truebeck did not manufacture or assemble the bicycle. (Truebeck’s UMF, No. 32.) It never owned, purchased, or sold the bicycle. (Truebeck’s UMF, Nos. 33-34.) Truebeck never leased, rented, borrowed, sold or lent that bicycle from or to any person or entity, including Plaintiff. (Truebeck’s UMF, Nos. 35-36, 38, 40.) Truebeck never inspected, maintained, or repaired that bicycle. (Truebeck’s UMF, No. 37.) Nor did Truebeck ever design nor manufacture component parts supplied to the manufacturer of the bicycle that Plaintiff’s was riding. (Truebeck’s UMF, No. 40.)
Truebeck is not and has never been an agent or joint venture of Apple, Headlands, Public Bikes, or any other person or entity with respect to the design, manufacture, assembly, ownership, inspection, or maintenance of the bicycles Apple made available to its employees at AC2 as of February 16, 2018. (Truebeck’s UMF, No. 41.) Truebeck had no role in selecting the bicycles used by Apple employees and others on the paths of AC2 on the day of the incident or at any other time. (Truebeck’s UMF, No. 42.) It had no role in selecting the width of the tires of the bicycles used by Apple employees and others on the paths of AC2 on the day of the incident or at any other time. (Truebeck’s UMF, No. 43.) While Truebeck constructed the pathways at AC2, it had no knowledge of the tire width(s) of the bicycles to be used there in the Apple-employee bicycle-share program. (Truebeck’s UMF, No. 44.) Truebeck did not make any warranties to Plaintiff or any other person that the bicycles at AC2 were fit for riding on the paths at AC2 or for any purpose whatsoever. (Truebeck’s UMF, No. 45.)
2. General Negligence
“IN ORDER TO PROVE NEGLIGENCE, PLAINTIFF MUST ESTABLISH DUTY, BREACH OF THAT DUTY, CAUSATION, AND DAMAGES.” (WFG NATIONAL TITLE INS. CO. V. WELLS FARGO BANK, N.A. (2020) 51 CAL.APP.5TH 881, 893.) DUTY IS A NECESSARY ELEMENT OF PLAINTIFF’S CLAIM. (SALINAS V. MARTIN (2008) 166 CAL.APP.4TH 404, 411.) THE EXISTENCE AND SCOPE OF A DEFENDANT’S DUTY IS AN ISSUE OF LAW TO BE DECIDED BY THE COURT. (AVILA V. CITRUS COMMUNITY COLLEGE DIST. (2006) 38 CAL.4TH 148, 161.) AS SUCH, IT IS GENERALLY AMENABLE TO RESOLUTION BY SUMMARY JUDGMENT. (KAHN V. EAST SIDE UNION HIGH SCHOOL DIST. (2003) 31 CAL.4TH 990, 1004.)
Truebeck argues that it had no involvement with the bicycle. In support, it offers the Declaration of Mark Lewis (“Lewis Decl.”), who is the General Superintendent for Truebeck and part of its leadership team. He states that Truebeck did not design, manufacture, assemble, inspect, maintain, or rent the bicycle to Plaintiff. (Lewis Decl., ¶ 9.) Plaintiff does not dispute this fact. (Plaintiff’s Separate Statement (“Plaintiff’s AMF”), Nos. 31-40.) Therefore, there is no triable issue of material fact as to Truebeck’s involvement with the bicycle.
Truebeck next argues it did not select the gravel surface. Mr. Lewis’ declares that the surface of the path consisted of a product called Natural Pave, which is composed of essentially decomposed granite with a binder added to it. (Lewis Decl., ¶ 5.) Truebeck did not select the product for the path nor was it involved in the selection process. (Id.) Truebeck’s subcontractor, Top Grade, installed the Natural Pave in accordance with the manufacturer’s instructions and oversight. (Ibid.) This is sufficient to demonstrate that there is no triable issue of material fact as to the selection of the gravel surface of the path. Therefore, the burden shifts to Plaintiff to demonstrate there is a triable issue of material fact as to the selection of the gravel surface of the path.
Plaintiff disputes Truebeck’s assertion that it was not involved in the selection process of Natural Pave on the basis that Truebeck was the general contractor; however, Plaintiff provides no evidence to support this assertion or Truebeck’s purported involvement in the selection process. Relying on the Santiago Declaration, Plaintiff also argues that the loose gravel situation was known, and around May 2018, had gotten so bad that the surface of the paths were changed with a substance similar to a slurry seal. (Santiago Decl., at ¶ 10.) However, Plaintiff’s evidence pertains to the path’s conditions after the work on the path was completed. Plaintiff fails to present any triable issue of material fact as to the selection of the gravel surface. Nevertheless, Plaintiff’s claim is also based on the design of the slope path. Thus, summary adjudication cannot be granted on this basis.
Mr. Lewis declares Truebeck and its subcontractors installed the sloped section of the path in accordance with the specifications of the applicable path designer. (Lewis Decl., ¶ 6.) He further states that path designers included architectural and/or landscape-architectural firms hired by Apple and did not include Truebeck or its subcontractors. (Id.) Plaintiff does not dispute this fact. Therefore, there is no triable issue of material fact as to whether Truebeck designed the slope of the path. However, Plaintiff’s claim is predicated on more than the design of the slope path. Thus, summary adjudication cannot be granted on this basis.
Next, Truebeck argues Plaintiff’s negligence claims is barred by the completed and accepted doctrine, which provides that after a contractor has completed work and the owner has accepted it, the contractor is generally not liable to third persons for injury caused by the condition of the work done even though the contractor may have been negligent in performing the contract. (Sanchez v. Swinterton & Walberg Co. (1996) 47 Cal.App.4th 1461 (Sanchez). The rationale behind this rule is “that an owner has a duty to inspect the work and ascertain its safety, and thus the owner’s acceptance of the work shifts liability for its safety to the owner, provided that a reasonable inspection would disclose the defect.” (Jones v. J.S. Development Co., Inc. (2008) 166 Cal.App.4th 707, 712 (Jones) [disapproved on other ground sin Reid v. Google, Inc. (2010) 50 Cal.4th 512, 532, fn. 7.)
If an owner knew, or should have known, about the danger posed by a defective condition, the owner’s failure to attempt to remedy the defect becomes an intervening cause of action for which the contractor is not liable. (Sanchez, supra, 47 Cal.App.4th at 1467.) An exception is made for latent defects in the construction of an article or structure in question, the existence of which is known or reasonably should be known by the contractor. (Id. at p. 1468.) The reasoning for this exception is clear, “if an owner, fulfilling the duty of inspection, cannot discover the defect, then the owner cannot effectively represent to the worker that the construction is sufficient; he lacks adequate information to do so.” (Id. at p. 1467.)
Truebeck has established that the work on the path was completed, and it was accepted by Apple before Plaintiff’s incident. (Lewis Decl., ¶¶ 3, 7-8.) Apple’s acceptance of the work shifted liability for the safety of the area back to Apple. (Jones, supra, 166 Cal.App.4th at p. 712; Sanchez, supra, 47 Cal.App.4th 1461.) Plaintiff offers no arguments or evidence regarding the application of the completed and accepted doctrine. Instead, Plaintiff argues that Truebeck and its subcontractors continued work at AC2 and used the path to get to the other areas, which use damaged the path, resulting in the gravel becoming loose, which in combination with the bicycle’s thin tires, caused Plaintiff’s injury—all of which relates to a time after liability shifted to Apple under the completed and accepted doctrine. Plaintiff’s alternative argument regarding a water puddle on the path is not alleged in the FAC. The pleadings serve as the “outer measure of materiality” in a summary judgment/adjudication motion, and the motion may not be granted or denied on issues not raised by the pleadings. (See Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal App 4th 95, 98; Laabs v. City of Victorville (2008) 163 Cal App 4th 1242, 1258; Nieto v. Blue Shield of Calif. Life & Health Ins. (2010) 181 Cal App 4th 60, 73—“the pleadings determine the scope of relevant issues on a summary judgment motion.”) Consequently, Plaintiff fails to meet his burden here.
Truebeck’s motion for summary adjudication as to the first cause of action is GRANTED.
3. Premises Liability
“BROADLY SPEAKING, PREMISES LIABILITY ALLEGES A DEFENDANT PROPERTY OWNER ALLOWED A DANGEROUS CONDITION ON ITS PROPERTY OR FAILED TO TAKE REASONABLE STEPS TO SECURE ITS PROPERTY AGAINST CRIMINAL ACTS BY THIRD PARTIES.” (DELGADO V. AMERICAN MULTI-CINEMA, INC. (1999) 72 CAL.APP.4TH 1403, 1406.) “PREMISES LIABILITY IS A FORM OF NEGLIGENCE … AND IS DESCRIBED AS FOLLOWS: THE OWNER OF PREMISES IS UNDER A DUTY TO EXERCISE ORDINARY CARE IN THE MANAGEMENT OF SUCH PREMISES IN ORDER TO AVOID EXPOSING PERSONS TO AN UNREASONABLE RISK OF HARM. A FAILURE TO FULFILL THIS DUTY IS NEGLIGENCE.” (BROOKS V. EUGENE BURGER MANAGEMENT CORP. (1989) 215 CAL.APP.3D 1611, 1619.)
“A defendant need not own, possess, and control property in order to be held liable; control alone is sufficient.” (Alcaraz v. Vece (1997) 14 Cal.4th 1149, 1162.) “In premises liability cases, summary judgment may be properly granted where a defendant unequivocally establishes its lack of ownership, possession, or control of the property alleged to be in a dangerous or defective condition… without the “crucial element” of control over the subject premises, no duty to exercise reasonable care to prevent injury on such property can be found.” (Gray v. Am. W. Airlines (1989) 209 Cal.App.3d 76, 81 (Gray).) This follows from the rule to take affirmative action for the protection of individuals coming onto one’s property “is grounded in the possession of the premises and the attendant right to control and manage the premises.” (Sprecher v. Adamson Companies, (1981) 30 Cal.3d 358, 368.)
Here, the Premises are Apple’s corporate headquarters, which Truebeck did not own or control. (Lewis Decl., ¶ 3.) Nor did Truebeck control the section of the path where the incident occurred on the date of the incident or have the right to affect the path’s condition without prior approval from Apple. (Lewis Decl., ¶ 7.) Thus, Truebeck meets its burden here to establish that it did not own or control the path at the time of the incident. Plaintiff fails to provide evidence to support its argument that Truebeck retained control over the path or to cite to any authority in support of its argument that Truebeck’s use of path constituted retention of control over it after the path was completed, had been accepted by Apple, and was made available to employees. In sum, Plaintiff fails to meet his burden to show there is a triable issue of material fact as to Truebeck’s ownership or control over the area.
Truebeck’s motion for summary adjudication as to the second cause of action is GRANTED.
4. Products Liability
PLAINTIFF’S CLAIM FOR STRICT PRODUCTS LIABILITY IS PREDICATED ON A DESIGN DEFECT REGARDING THE BICYCLE’S TIRES. “A MANUFACTURER, DISTRIBUTOR, OR RETAILER IS LIABLE IN TORT IF A DEFECT IN THE MANUFACTURE OR DESIGN OF ITS PRODUCT CAUSES INJURY WHILE THE PRODUCT IS BEING USED IN A REASONABLY FORESEEABLE WAY.” (SOULE V. GENERAL MOTORS CORP. (1994) 8 CAL. 4TH 548, 560 (SOULE).) “PRODUCTS LIABILITY MAY BE PREMISED UPON A THEORY OF DESIGN DEFECT, MANUFACTURING DEFECT, OR FAILURE TO WARN.” (ANDERSON V. OWENS-CORNING FIBERGLAS CORP. (1991) 53 CAL.3D 987, 995.) IN ORDER FOR THERE TO BE LIABILITY, THE PRODUCT DOES NOT HAVE TO BE UNREASONABLY DANGEROUS-JUST DEFECTIVE. (CRONIN V. J.B.E. OLSON CORP. (1972) 8 CAL.3D 121, 133.) PRODUCTS LIABILITY CLAIMS APPLY TO “MANUFACTURERS, DISTRIBUTORS, OR RETAILORS” OF ALLEGEDLY DEFECTIVE PRODUCTS. (SOULE, SUPRA, 8 CAL.4TH AT P. 560.)
Truebeck did not design, manufacture, assemble, inspect, maintain, or rent the bicycle to Plaintiff. (Lewis Decl., ¶ 9.) Truebeck was not and is not in the business of designing, manufacturing, assembling, selling, inspecting, or maintaining bicycles. (Ibid.) Truebeck did not design or manufacture component parts supplied to the manufacturer of the bicycle Plaintiff was riding. (Lewis Decl., ¶ 10.) Truebeck is not and never has been an agent or joint venture of Apple, Headlands, Public Bikes, or any other person or entity involved in the design, manufacture, maintenance of bicycles. (Lewis Decl., ¶ 11.) This is sufficient to demonstrate that Truebeck did not manufacture, design, or sell the alleged defective product. Plaintiff does not offer any evidence to refute this, instead arguing there is a triable issue of material fact as to whether the bicycles designed and distributed for use at AC2 were inherently dangerous for their intended use. This is insufficient to demonstrate there is a triable issue of material fact regarding this products liability claim against Truebeck.
Truebeck’s motion for summary adjudication as to the third cause of action is GRANTED.[5]
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Case Name: Ramiro Vaca vs Margarita Zarate
Case No.: 21CV383139
Before the Court is Plaintiff Ramiro Vaca’s Motions for a Referee and for an Interlocutory Judgment for Partition and Defendant Margarita Zarate’s Motion to Quash Subpoenas. Pursuant to California Rule of Court 3.1308, the Court issues its tentative ruling as set forth below.
I. Factual Background
This is a partition action for the sale of real property located at 1340 Navarro Drive, Sunnyvale, California 94087 (the “Property”). The background facts of this matter are generally not in dispute. Vaca and Zarate share two children and were once in a romantic relationship but not married. Their relationship became more of a friendship over time, and they agreed to purchase the Property so that they and their children, including a child from Zarate’s previous relationship, had a place to live. Neither Vaca nor Zarate could secure a loan to purchase a house on their own, so they pulled their resources and purchased the Property as husband and wife—even though they were not and never have been married—on the advice of their realtor. Specifically, the Grant Deed lists “Ramiro Vaca and Margarita Zarate, Husband and Wife as Joint Tenants” as owners of the property. (Complaint, Ex. 1.)
Until 2020, Vaca and Zarate split all expenses, including mortgage payments, taxes and repairs, for the Property 50-50. In or around 2020, Vaca moved out of the house; the Parties dispute whether Vaca moved out because he was in a new relationship or because he felt Zarate had become “abusive,” but they do not dispute that he moved out and ceased paying half of the expenses. From time to time, a tenant also lived on the Property and paid rent, which generally went towards mortgage payments.
Zarate claims that Vaca agreed that the Property would not be sold and would instead be kept in the family for the children. One of the Parties’ adult children submits a declaration in opposition to Vaca’s motion for partition, asserting that in 2020, Vaca told her not to worry about the house, that he would not sell it, and that it was for the children. Vaca denies ever having made such a promise to Zarate or that he made the 2020 statements attributed to him by his daughter.
Vaca initiated this action on May 26, 2021, with a verified complaint asserting a single action for partition. Zarate submitted a verified answer on August 23, 2021, denying that the Parties each hold a one-half interest in the Property and asserting numerous affirmative defenses, including waiver.
On November 30, 2022, Zarate filed a Motion to Quash/Modify Subpoena for Business Records to Bank of America and for $2,677.50 in sanctions on the grounds that there is no substantial justification for opposing the Motion to Quash. Vaca opposes the Motion. Vaca also seeks appointment of a referee and issuance of an interlocutory judgment for partition. Each Motion is addressed below.
II. Zarate’s Motion to Quash
A. Procedural Background
In this Motion, Zarate claims Vaca’s November 2, 2022 subpoena to Bank of America for her bank records is overbroad and not likely to lead to the discovery of admissible evidence because it includes (1) documents for an unrelated third party, (2) Defendant’s private financial information, including payments made to Defendant’s counsel, and (3) Defendant’s private financial information in the form of account balances and unrelated transactions. Defendant produced redacted versions of these documents and seeks to quash any further production. Defendant claims the protective order is not sufficient to protect unredacted portions of these documents because “[t]he documents are not essential to a fair resolution of this matter, are not reasonably calculated to led to the discovery of admissible evidence, and invade Defendant’s rights to financial privacy.” (Opening Brief, p. 4.)
It appears to the Court that what lead to this Motion is that Zarate obtained her own bank records from Bank of America as the Parties agreed, Vaca produced his records without redactions, Zarate took much more time to produce her records, so Vaca issued his own subpoena to Bank of America identical in form and substance to Zarate’s subpoena, and when Zarate did produce her records they were heavily redacted, so Vaca will not withdraw his own subpoena to Bank of America, which is likely to include the above-referenced documents Zarate claims are inappropriate.
B. Legal Standard and Analysis
Discovery is generally permitted “regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Cal. Code Civ. Pro. § 2017.010.) Everything that is relevant to the subject matter is presumed to be discoverable. (Id.) The Discovery Act further declares that “the court shall limit the scope of discovery” if it determines that the burden, expense, or intrusiveness of that discovery “clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence.” (Cal. Code Civ. Pro. § 2017.020(a); Greyhound Corp. v. Superior Court (1961) 56 C.2d 355, 383-385.) The California Supreme Court teaches in Greyhound that the judge exercising discretion to limit discovery should construe disputed facts liberally in favor of discovery; reject objections such as hearsay that only apply at trial; permit fishing expeditions (within limits), avoid extending limitations on discovery, such as privileges; and, whenever possible, impose only partial limitations rather than denying discovery entirely. (Greyhound Corp. v. Superior Court (1961) 56 C.2d 355, 383-385; see also Tylo v. Superior Court (1997) 55 Cal.App.4th 1379, 1386.)
Although Zarate claims the substantial redactions she made to her production are necessary to protect her privacy, she agrees that the documents are relevant at least to some extent, since she agreed with Vaca that they would each obtain and produce their own bank records. Zarate also states at page 2 of her motion: “Plaintiff seeks an ‘order of disbursement. . .according to an allowance, accounting, contribution, and other compensatory adjustments among the parties according to the principles of equity.’ (See Complaint.) As such, discovery is appropriate into all expenditure [sic] the property including mortgage payments, taxes, insurance, and improvements, as well as into rental income received by both parties.” Elsewhere in her Motion, Zarate also expressly concedes that at least some of these documents are relevant.
On March 24, 2-22, the Court (Hon. Christopher Rudy) entered a Protective Order to govern the production of discovery materials in this case. That Protective Order permits Zarate to produce the Bank of America records in a manner that protects those documents from the public and from Mr. Vaca directly viewing them. In other words, Zarate’s financial privacy (and Vaca’s) can be addressed through appropriate designations under the Protective Order. Zarate has not presented evidence to this Court that justifies complete withholding of the contested material through redactions and a privilege log. Given the type of accounting at issue for both Parties in this case, both Parties are entitled to review these records to determine what aspects of the entries are related to the Property. Plainly, if either Party sought to subpoena further information about health care payments, payments to attorneys (which the Court does not believe on their face without more are privileged, as they do not necessarily contain communications), or similar unrelated payments, a Motion to Quash would be appropriate.
Zarate’s Motion to Quash is therefore DENIED.
III. Vaca’s Motion for Appointment of a Referee
Vaca asks the Court to appoint a referee pursuant to Code of Civil Procedure section 639 (a) through (d) and California Rule of Court 3.921(a). It appears to the Court that because of Zarate’s above-referenced redactions to the Bank of America records, Vaca seeks to have the Court appoint a discovery referee. The Court finds insufficient good cause to warrant such an appointment. The Court has already resolved the single discovery motion between the Parties. And entry of an Interlocutory Judgment will inherently appoint a neutral third party to address any other issues related to the partition action.
Vaca’s Motion for Appointment of a Referee is therefore DENIED.
IV. Vaca’s Motion for Interlocutory Judgment
In a partition action, the Court must find that the plaintiff has a right to partition; determine the ownership interests of the parties; and determine the manner of partition (Cal. Code Civ. Pro. §§872.710, 872.910.) If each of these three elements are met, the court “shall” appoint a partition referee. (Cal. Code Civ. Pro. §872.010.) “A co-owner of property has an absolute right to partition unless barred by a valid waiver.” (Orien v. Lutz (2017) 16 Cal.app.5th 957; see also Cal. Code Civ. Pro. §872.710(b); Bacon v. Wahrhaftig (1950) 97 Cal.App.2d 599, 603; American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1013; Miranda v. Miranda (1947) 81Cal.App.2d 61, 68.) A waiver may be found where there is a writing evincing “an agreement among co-owners of a property. . ..” (Orien v. Lutz (2017) 16 Cal.app.5th 957, 963.)
There is no dispute that according to the Grant Deed, Vaca and Zarate are co-owners of the Property. Zarate argues Vaca is nevertheless not entitled to partition because the mortgage holders are not named parties and Vaca waived his right to partition by previously agreeing the Property would stay with the family and not be sold.
First, this action need not be delayed by failure to join the parties’ lenders. It is clear what is due and owing, and the Court will make appropriate orders for disbursements once the property is sold. (See Cal. Code Civil Pro. §§872.720, 873.820, 873.850, & 874.225.) Zarate cites no authority to the contrary.
Next, there is no dispute that there is no writing between the Parties that would evince Vaca’s relinquishment of his right, as a co-owner in the Property, to partition. Instead, Zarate argues there is an implied waiver because of the Parties’ conversations (including his conversation with their daughter) and actions over seventeen years. Unfortunately, none of the authorities Zarate cites supports her contention that these facts support an implied waiver. In most cases, there was a writing between and amongst the parties. (See American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1013; Miranda v. Miranda (1947) 81Cal.App.2d 61, 68.) In other cases, there was a known use restriction or prior operating license that prevented partition. (Pine v. Tiedt (1965) 232 Cal. App. 2d 733; Thomas v. Witte (1963) 214 Cal. App. 2d 322.)
Zarate’s final argument addresses fundamental fairness. The Court does not take lightly that Zarate has invested substantial physical, financial and emotional resources into the Property. Nor is the Court ignorant of how expensive it is to find housing in our county. However, it appears to the Court that Vaca is in no better situation—he, too, cannot afford to buy out Zarate, and he has also worked very hard over the seventeen years to invest resources into the Property. Both Parties have much tied up in the Property. Although painful, this is precisely the situation partition actions are designed to resolve. Once the Property is sold, each Party will be entitled to 50% of the proceeds, subject to the partition referee’s accounting.
Vaca’s Motion for an Interlocutory Judgment is GRANTED.
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Case Name: Paublo Chavarria vs Kate Kinsey et al
Case No.: 19CV356031
Before the Court is Plaintiff Puablo Chavarria’s Motion to Set Aside his voluntary dismissal with prejudice of Defendant/Cross Complainant Comco Underground Utilities, Inc. (“Comco”). Pursuant to California Rule of Court 3.1308, the Court issues its tentative ruling as set forth below.
I. Background
This is a premises liability case. Plaintiff alleges he tripped and fell on an unmarked, unused and unconnected ground rod located at an RV park owned by Defendant Equity Lifestyle Properties, Inc. (“Equity”), causing him to suffer severe injuries to his left shoulder.
Plaintiff initiated this action on October 2, 2019 against Equity and Comco. In June 2021, Plaintiff took Jeff Gipson’s deposition. Mr. Gipson is the owner of Comco and was identified as its person most knowledgeable. At that deposition, Mr. Gipson essentially testified that Comco did not remove “any of the electrical services”:
Q: Do you know – do you know if your company removed any of the electrical services pursuant to this contract for the installation of these new 50-amp electrical services?
A: No. I was – I was present and the park – when we arrived, the park – I believe it’s the maintenance person had that the old pedestals piled up in the bucket of the backhoe and was in the process of removing them.
Q: Do you know who that person was?
A: No. The maintenance person.
Q: And when we’re talking about the maintenance person at Morgan Hill – Thousand Trails Morgan Hill?
A: Yeah. The guy – the guy that runs the backhoe.
(Walde Decl., Ex. C (Gipson Depo: 25:11-26:9.)
Comco moved for summary judgment on September 7, 2022. There is some dispute as to the rational around Plaintiff’s motivation for doing so, but Plaintiff and Comco thereafter entered a stipulation whereby Plaintiff would dismiss Comco with prejudice and Comco “shall provide testimony upon subpoena through the duration of the case which is consistent with all things here and before alleged under oath, including information provided in the form of deposition testimony, discovery responses, as well as information contained in Comco’s motion for summary judgment. Comco further agrees to provide testimony regarding the location of the original electrical hookups at the Thousand Trails RV Park in Morgan Hill to the extent that information is known to it.” (Declaration of Paul Van Der Walde (“Walde Decl.”), Ex. A.) Plaintiff accordingly dismissed Comco with prejudice on November 28, 2022, and Comco’s summary judgment as to Plaintiff was not heard.
Shortly after Mr. Gipson completed his June 2021 deposition, he learned that Comco had, in fact, engaged in some removal of the electrical services. Mr. Gipson has also since testified that there were two days when he was not present at the job site. As a result, Plaintiff seeks to set aside his dismissal of Comco with prejudice, arguing that Comco can no longer comply with the terms of the stipulation by providing testimony consistent with Mr. Gipson’s June 2021 deposition testimony. Comco opposes the motion.
II. Legal Standard and Analysis
The Court will first address Plaintiff’s supplemental submissions. Just two days before Comco’s Opposition was due, Plaintiff submitted a Supplemental Declaration from Mr. Walde attaching deposition testimony from an April 18, 2023 deposition of Mr. Gibson and a Supplemental Memorandum in Support of its Motion. Comco urges the Court not to consider these materials, as it only had two days to modify its Opposition to address them. Comco’s request is denied. First, Plaintiff did not have this information, which is directly relevant to his Motion to Set Aside, at the time he filed his opening brief because the April 18 deposition had not yet occurred. Next, Comco was aware of Mr. Gibson’s April 18, 2023 testimony and presumably had it in mind as it prepared its opposition, thus it suffered no actual prejudice. Further, Comco can, if it feels it needs to, provide the Court with further argument regarding these materials during the hearing, which is taking place 15 days after Plaintiff submitted these supplemental materials. Thus, the Court finds it to serve the interests of justice to consider the supplemental materials.
Moving to the merits, Code of Civil Procedure section 473 provides: “The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” This section is frequently invoked by defendants for relief from default. However, review of the annotations for section 473 quickly reveals that courts also apply this section to requests for relief made by plaintiffs. (See, e.g., Juarez v. Superior Court (1982) 31 Cal. 3d 759 (court did not abuse its discretion when it granted plaintiff relief under section 473 for its delay in moving for new trial based on excusable neglect); Castro v. Sacramento County Fire Protection Dist. (1996) 47 Cal. App. 4th 927 (declining to grant plaintiff’s requested relief on other grounds).)
Here, Plaintiff has persuaded the Court that it was surprised by Mr. Gibson’s revelation in December 2022—after Comco was dismissed pursuant to the Parties’ stipulation—that Comco was involved in some removal of the electrical services. Many of Comco’s arguments in its opposition to Plaintiff’s Motion to Set Aside relate to the merits, but the ultimate outcome of this case is not before the Court at this juncture. Comco’s arguments that it was Plaintiff’s fault for not asking precisely the right question during the June 2021 deposition is also unavailing. Based on Mr. Gibson’s April 18, 2023 deposition testimony, he did not find out about his worker’s removal of the electrical services until shortly after his June 2021 deposition was completed. Thus, even if Plaintiff had asked the precise question Comco seems to think was necessary for Plaintiff to get to the truth, Mr. Gibson did not have that information during his June deposition. Nor did Mr. Gibson correct his testimony at any time thereafter. It was not until December 22, 2022 that Plaintiff learned this information, which, if known before would have been material to whether or not Plaintiff agreed to dismiss Comco with prejudice.
Thus, Plaintiff has demonstrated good cause for setting his dismissal of Comco aside. However, this case has been pending since 2019, and it appears to the Court that discovery is essentially complete. Moreover, Comco’s motion for summary judgment was not heard as a result of the Parties’ stipulation. While the Court considered not permitting the summary judgment motion as a sanction for Comco’s clear failure to properly investigate the facts either before filing the summary judgment motion in September 2022 or in connection with Mr. Gibson’s person most knowledgeable deposition, the Court ultimately finds that the interests of justice and judicial economy do not warrant that result.
Accordingly, the current trial and mandatory settlement conference dates are VACATED. Trial is continued to October 30, 2023, and the Mandatory Settlement Conference is continued to October 25, 2023. A hearing on Comco’s Motion for Summary Judgment is set for August 31, 2023 at 9 a.m. in Department 6. Comco is ordered to serve proper notice of this motion; this order is not sufficient notice under the Code of Civil Procedure or Rules of Court. Discovery deadlines are not extended; they remain tied to the current August 2, 2023 trial date.
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Case Name: Christopher McKenzie vs Zoom Video Communications Inc.
Case No.: 22CV406410
Before the Court is Defendant Zoom Video Communications, Inc.’s (“Zoom”) Motion to Compel Arbitration. Pursuant to California Rule of Court 3.1308, the Court issues its tentative ruling as set forth below.
IV. Background
This is an employment discrimination action. Zoom hired Mr. McKenzie as a Business Development Representative in October 2018 and terminated his employment on or around July 12, 2021. (Declaration of Kelsey Jeup (“Jeup Decl.”), ¶6; see also, Complaint.) Mr. McKenzie claims Zoom terminated him in retaliation for a medical leave he took during his employment and asserts the following claims: disability discrimination in violation of FEHA, failure to accommodate in violation of FEHA, failure to engage in the interactive process in violation of FEHA, retaliation in violation of FEHA, failure to investigate and prevent in violation of FEHA, violation of California labor code section 1102.5, failure to provide accurate, itemized wage statements and personnel file, wrongful termination in violation of public policy, and intentional infliction of emotional distress.
Mr. McKenzie’s onboarding process at Zoom was conducted entirely electronically. (See Jeup Decl., ¶¶ 7-8 Exs. A-H.) Mr. McKenzie’s offer informed Mr. McKenzie: “this offer of employment is contingent upon . . . your signing and returning with this letter the enclosed ‘Employment, Confidential Information and Assignment of Creative Works Agreement’ and “Arbitration Agreement.’” (Jeup Decl., Ex. D.) At the end of the offer letter, Zoom again states: “In order to accept this offer, you must sign this letter and the other documents enclosed for your signature, and I must receive them back before the close of business on 10/24/2018.” (Id.) Mr. McKenzie electronically signed the offer letter on October 22, 2018. (Id.)
The first document enclosed with the offer letter is two pages and titled “ARBITRATION AGREEMENT” in bold, all caps at the top of the page. Relevant portions of that document state:
As a condition of the Employee’s employment with Zoom Video Communications, Inc. (hereinafter “the Company”), the Company and Employee (hereinafter “the parties”) hereby agree to submit to mandatory binding arbitration any dispute, claim or controversy arising out of or relating to Employee’s employment with the Company.
1. Arbitrable Claims: The parties understand and agree that this Agreement applies to all claims (the “Arbitrable Claims”) arising out of, related to or connected with the Employee’s employment with the Company, including but by no means limited to, claims of discrimination, harassment, unpaid wages, breach of contract (express or implied), wrongful termination, torts, claims for stock or stock options, as well as claims based upon any federal, state or local ordinance, statute, regulation or constitutional provision, including but not limited to, the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq, the employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq, and 42 U.S.C. § 1981, and any and all state or local laws prohibiting discrimination or “Arbitrable Claims” shall be deemed not to include any claims which by law cannot be subject to a contractual requirement of mandatory binding arbitration (e.g., claims for workers’ compensation benefits, claims for unemployment compensation). The parties agree that arbitration shall be the exclusive method by which to resolve any Arbitrable Claims, and specifically agree that they will not file a court lawsuit to pursue any Arbitrable Claims. Arbitration shall be final and binding upon the parties. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.
2. Administration: The parties agree that a neutral arbitrator from JAMS will administer any such arbitration(s) pursuant to its Employment Arbitration Rules and Procedures, a copy of which is available at .
. . .
5. ENTIRE AGREEMENT; MODIFICATION: …THIS AGREEMENT MAY BE MODIFIED ONLY BY A WRITTEN AGREEMENT SIGNED BY THE EMPLOYEE AND THE [SIC] ERIC YUAN, CEO OF THE COMPANY.
MR. MCKENZIE SIGNED THE ARBITRATION AGREEMENT ON OCTOBER 22, 2018. (JEUP DECL. ¶¶7(E)-(G) & 8, EXS. D, E & G.)
Based on the above, Zoom filed this Motion to Compel Arbitration on January 12, 2023, approximately, one and one half months after it was served with the Summons and Complaint on November 28, 2022. Mr. McKenzie opposes Zoom’s motion.
V. Legal Standard
In a motion to compel arbitration, the Court must determine “(1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement.” (Bruni v. Didion (2008) 160 Cal. App. 4th 1272, 1283 (citations omitted).) “The petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. [Citation.]” (Bruni, 160 Cal. App. 4th at 1282 (citations omitted).)
Even if the Court finds the Parties agreed to arbitrate these claims, the agreement is unenforceable if it is unconscionable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.) Unconscionability consists of both procedural and substantive elements. The prevailing view is that both procedural and substantive unconscionability must be present, but the two elements of unconscionability need not be present to the same degree. A sliding scale is invoked such that the more substantively oppressive the contract term the less evidence of the procedural unconscionability is required to conclude that the contract provision is unenforceable, and vice versa. (Armendariz, 24 Cal.4th at 114.)
The procedural element tests the circumstances of contract negotiation and formation and focuses on “oppression” or “surprise” due to unequal bargaining power. (See Armendariz, 24 Cal.4th at 114.) “Oppression” occurs when a contract involves lack of negotiation and meaningful choice, and “surprise” occurs where the alleged unconscionable provision is hidden within a printed form. (Pinnacle Museum Tower Ass’n v. Pinnacle Mkt.Dev. (US), LLC (2012) 55 Cal.4th 223, 247, citing Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1317; Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231; Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 179.)
Substantive unconscionability relates to the fairness of the terms of the arbitration agreement and assesses whether they are overly harsh or one-sided. (Armendariz, supra, 24 Cal.4th at p. 114; 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1213.)
VI. Analysis
Plaintiff’s sole basis for arguing there is no arbitration agreement is that the agreement does not set forth in detail the procedural rules, but instead states: “The parties agree that a neutral arbitrator from JAMS will administer any such arbitration(s) pursuant to its Employment Arbitration Rules and Procedures, a copy of which is available at .” (Opposition, p. 3.) Plaintiff concludes that referencing the rules in this way impermissibly incorporates a document and fails to identify where on the JAMS website Plaintiff would be able to find the incorporated material. (Id.)
The Court is not persuaded by this argument. The offer letter twice informed Plaintiff that he would need to enter an arbitration agreement as part of his employment, the arbitration agreement was provided to Plaintiff with his offer letter as a separate two-page document clearly marked at the top in bold, all caps as “ARBITRATION AGREEMENT”, and Plaintiff does not dispute that he signed this document. The Parties entered an agreement to arbitrate.
The Court also finds that Plaintiff’s claims are “arising out of, related to or connected with the [Plaintiff]’s employment with [Zoom]”. Indeed, Plaintiff does not argue otherwise. Instead, Plaintiff’s main argument against arbitration is that the Arbitration Agreement is unconscionable.
Plaintiff is correct that the Arbitration Agreement is an adhesion contract, since as set forth above, Zoom repeatedly told Plaintiff that he could not move forward with accepting employment at Zoom until he signed the Arbitration Agreement. The California Supreme Court has made clear that in such a take-it-or-leave it scenario when a prospective employee is looking for work, the procedural unconscionability prong is generally met. (Armendariz, 24 Cal. 4th at 115 (“in the case of preemployment arbitration contracts, the economic pressure exerted by employers on all but the most sought-after employees may be particularly acute, for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement.”)
However, Plaintiff’s argument that the Arbitration Agreement terms shock the conscious and are therefore substantively unconscionable is not persuasive. The agreement is not one-sided. Contrary to Plaintiff’s representation, the agreement does not expressly exclude claims Zoom would be most likely to bring from the definition of “Arbitrable Claims.” Under the above-quoted language, if Zoom wanted to bring claims against Mr. McKenzie for anything “arising out of, related to or connected with the [Plaintiff]’s employment with [Zoom]”, Zoom would have to arbitrate those claims.
The Arbitration Agreement also has no hidden terms. The entire way in which the agreement is presented is clear, the fact that the signatories (i.e., both Zoom and the employee) are giving up rights to a jury trial is set out in all caps at the end of the first enumerated paragraph, and Plaintiff is incorrect that only Zoom’s CEO can modify the Arbitration Agreement. The modification language states that the Agreement can only be modified “by a written agreement signed by the Employee and the [sic] . . . CEO.” (Emphasis added.) Thus, the CEO could not unilaterally modify the terms of the Arbitration Agreement; Mr. McKenzie would have to agree to any changes Zoom wanted to make.
That leaves the incorporation of the Employment Arbitration Rules and Procedures by reference to the JAMS homepage rather than setting forth the procedures verbatim in the agreement or a more specific URL. Zoom avers the JAMS rules “can be found easily by conducting an Internet search on Google using the phrase “JAMS employment arbitration rules.” (Defendant’s Request for Judicial Notice.[6]) Plaintiff does not dispute this. The rules were easily accessible to Mr. McKenzie, if he wanted to review them.
In sum, this is not a case where an employer excluded its own claims from arbitration, hid the terms of the arbitration in small print, or otherwise burdened the employee more than itself with respect to arbitrating employment related terms.
Zoom’s Motion to Compel Arbitration is GRANTED. This action is stayed pending completion of the arbitration. The Court VACATES the August 29, 2023 Case Management Conference and sets a Status Conference for October 26, 2023 at 10:00 in Department 6.
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[1] Illinois National’s request for judicial notice of the report produced by the forensic consultant engaged by Accellion filed in support of its reply is DENIED.
[2] In its opposition, the Accellion directs the Court’s attention to an order issued on a motion to dismiss in the matter entitled Ace American Insurance Co. v. Accellion, Inc. in U.S. District Court for the Northern District of California (Case No. 4:21-CV-09615). According to Accellion, this action arises out of the same events that are at the heart of the matter at bench. Accellion notes that in that case it asserted the same counterclaims against the insurer/subrogee plaintiff for breach of the EULA (§§ 5 and 13.8) and breach of the covenant of good faith and fair dealing imposed in that agreement and that several of these claims were permitted to proceed, with plaintiff Ace Insurance’s (the insurer for the client who used the FTA software) motion to dismiss being denied in part. But there is no indication in this order that the plaintiff insurer moved to dismiss the breach of contract claim against it on the ground that it was a non-party to the EULA. Instead, the plaintiff apparently argued that the facts in the cross-complaint demonstrated that the insured party complied with section 5 of the EULA and thus no claim for breach of contract was stated. Notably, Accellion’s claim for breach of section 13.8 of the EULA was dismissed. While the plaintiff did make such an argument to the implied covenant claim which was rejected by the court in a footnote, no significant analysis was undertaken or authority cited on this issue, with the court permitting the counterclaim based on Accellion’s allegation that it was bringing the claim “standing in the shoes of the insured.” The Court does not find this ruling instructive.
[3] This section provides that if the answer to an interrogatory would necessitate the preparation or the making of a compilation, abstract, or summary from the documents of the party to whom the interrogatory is directed, and if the burden of preparing or making it would be substantially the same for both the propounding and responding party, it is sufficient to refer to this section and to specify the writings from which the answer may be derived or ascertained.
[4] Headland Ventures, LLC (“Headlands”) and Public Bikes, Inc. (“Public Bikes”) are also defendants but are not movants in the motion at bar. The Court will refer to Truebeck, Headlands and Public Bikes collectively as “Defendants”.
[5] Because the motion has been granted on this basis, the Court declines to consider the remaining arguments as to this cause of action.
[6] The Court agrees that it is appropriate for it to take judicial notice of JAMS rules and of the method for locating them. Plaintiff does not object to Zoom’s request or dispute that the rules can be found by taking these steps. Zoom’s Request for Judicial Notice is therefore granted.
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