HTL AUTOMOTIVE INC VS PACIFIC LIFT AND EQUIPMENT COMPANY INC

Tentative Rulings

Case Number: BC606821    Hearing Date: November 19, 2019    Dept: 24

Defendant Pacific Lift and Equipment Company, Inc.’s motion for terminating sanctions is GRANTED against Plaintiffs HTL Automotive, Inc. and HTL Properties LLC.

On January 11, 2016, Plaintiff HTL Automotive, Inc. (“HTLA”) and HTL Properties LLC (“HTLP”) (collectively, “Plaintiffs” or “HTL”) filed this breach of contract/fraud action against Pacific Lift and Equipment Company, Inc. (“PLE” or “Defendant”). The operative Third Amended Complaint alleges five causes of action for: 1) breach of contract, 2) breach of the implied covenant of good faith and fair dealing, 3) fraud-concealment, 4) fraud- intentional misrepresentation, and 5) negligent misrepresentation. PLE maintains a cross-complaint against HTLA for breach of contract.

On July 3, 2019, the Court granted Defendant’s motion to compel the deposition of HTL’s PMK Hooman Nissani (“Nissani”). The Court ordered Plaintiffs to produce Nissani by July 18, 2019. On August 9, 2019, the Court granted plaintiffs’ ex parte application to reset the deposition to a mutually agreeable date and continued the trial to March 17, 2020.

On October 8, 2019, Defendant moved for terminating, evidentiary, or monetary sanctions against Plaintiffs for their failure to produce their PMK. On October 18, 2019, HTLA filed an opposition. On October 25, 2019, Defendant filed a reply.

If a party fails to obey a court order compelling it to provide a discovery response, “the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction . . . In lieu of or in addition to this sanction, the court may impose a monetary sanction . . . .” (CCP §§ 2030.290(c), 2030.300(e), 2031.300(c), 2031.320(c).) Misuse of the discovery process, which includes disobeying a court order to provide discovery, is conduct subject to sanctions. (CCP § 2023.010(g).) Possible sanctions are:

(a) [A] monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney's fees, incurred by anyone as a result of that conduct….

(b) [A]n issue sanction ordering that designated facts shall be taken as established in the action in accordance with the claim of the party adversely affected by the misuse of the discovery process. The court may also impose an issue sanction by an order prohibiting any party engaging in the misuse of the discovery process from supporting or opposing designated claims or defenses.

(c) [A]n evidence sanction by an order prohibiting any party engaging in the misuse of the discovery process from introducing designated matters in evidence.

(d) [A] terminating sanction by one of the following orders:

(1) An order striking out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process.

(2) An order staying further proceedings by that party until an order for discovery is obeyed.

(3) An order dismissing the action, or any part of the action, of that party.

(4) An order rendering a judgment by default against that party.

(e) [A] contempt sanction by an order treating the misuse of the discovery process as a contempt of court.

The party seeking to impose sanctions need only show the failure to obey earlier discovery orders. (Puritan Ins. Co. v. Sup.Ct. (Tri-C Machine Corp.) (1985) 171 Cal.App.3d 877, 884 [interpreting former statute dealing with “refusal” to comply].) However, numerous cases hold that severe sanctions (i.e., terminating or evidentiary sanctions) for failure to comply with a court order are allowed only where the failure was willful. (See R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 495; Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545; Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.) The burden of proof then shifts to the party seeking to avoid sanctions to establish a satisfactory excuse for his or her conduct. (Corns v. Miller (1986) 181 Cal.App.3d 195, 201; Williams v. Russ (2008) 167 Cal.App.4th 1215, 1227.)

“The trial court may order a terminating sanction for discovery abuse after considering the totality of the circumstances: the conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.” (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 390; Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1224 [terminating sanctions by trial court not an abuse of discretion where defendant repeatedly violated court orders to produce records].) “[A] terminating sanction should generally not be imposed until the court has attempted less severe alternatives and found them to be unsuccessful and/or the record clearly shows lesser sanctions would be ineffective.” (Lopez v. Watchtower Bible and Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 604 [terminating sanctions order reversed where there was no showing the court could not have obtained compliance by using lesser sanction e.g., issue or evidentiary].) In extreme cases, however, terminating sanctions as a first measure are authorized. (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1434.)

Discussion

Defendant moves for sanctions based on Plaintiffs’ failure to provide Nassani for his noticed deposition.

The following facts are uncontroverted. The first two sessions of Nissani’s deposition took place on June 21, 2018 and on August 27, 2018, both of which were cut short. (Ortlieb Decl., ¶ 2.) After much cajoling, the parties stipulated to a third deposition on January 17, 2019, with production on January 10, 2019. (Id., Ex. 1.) Nissani did not appear for this deposition, which led to a motion to compel. The Court granted that motion on July 3, 2019 and ordered Plaintiffs to provide Nissani for deposition on July 18, 2019. No records wer eproduced and Nissani failed to appear. Instead, Plaintiffs’ counsel took a trip to New Zealand and the parties rescheduled to an August 9, 2019 deposition date. (Id. ¶ 9.) On August 9, 2019—the date of the agreed upon deposition—Plaintiffs requested that the Court continue the deposition to a mutually agreeable date. (Id. ¶ 11.) At the hearing, Plaintiffs’ counsel agreed to set the deposition for September 4, 2019. As has become a theme, on September 3, 2019, Plaintiffs indicated that the deposition would not go forward. (Id. ¶¶ 12-13.) Plaintiffs offered to have the deposition take place in late October. (Id. ¶¶ 14-15.) Defense Counsel rightfully found this unacceptable.

In their defense, Plaintiffs apparently offered to indemnify Defendant against any loss should Nissani not appear at the deposition again. (McCreary Decl., ¶¶ 2-4.) Plaintiffs also indicate that Nissani is currently injured and is on bed rest. (Id. ¶ 5; Nissani Decl., ¶ 5.)

Upon reviewing the facts provided by both parties, the Court finds that Plaintiffs have willfully disobeyed the Court’s prior orders requiring them to submit their Nassani to a deposition. The evidence incontrovertibly shows willful disobedience of at least the July 3, 2019 court order (as amended by the ex parte application). Based on the record, Plaintiffs have consistently strung Defendant along with regards to Nissani’s deposition. Not only did Nissani fail to complete his previously scheduled depositions (i.e. volumes I and II), but has on numerous times failed to appear to his agreed upon/ordered depositions. Thus, Plaintiffs’ offer for another continued deposition from September 4, 2019 to late October appears insincere.

Plaintiffs do not adequately offer any reason why his depositions did not go forward on any of the above dates. Importantly, Plaintiffs offer no reason why they cancelled the September 2019 deposition date—a date they agreed to. Nissani indicates that his injuries were exacerbated on October 5, 2019 and is now on pain medication. (Nissani Decl., ¶ 4.) This does not explain his failure to appear at the various scheduled depositions in July, August, and September of 2019. This is also inconsistent with their position that the deposition could occur in late October, as presumably Nissani would still be suffering from the effects of his injuries. The Court perform an in-camera review of any medical records that might support Plaintiffs claims of injury and inability to appear at the above discussed depositions.

Given the history of repeated failure to produce records and to appear for the deposition of Nissani, the refusal to comply with the Court’s orders and the age of the case, the Court is inclined to grant terminating sanctions

Accordingly, Defendant’s motion for terminating sanctions is GRANTED.

Moving party is ordered to give notice.

Case Number: BC606821    Hearing Date: October 31, 2019    Dept: 24

Defendant Pacific Lift and Equipment Company, Inc.’s motion for terminating sanctions is GRANTED against Plaintiffs HTL Automotive, Inc. and HTL Properties LLC.

On January 11, 2016, Plaintiff HTL Automotive, Inc. (“HTLA”) and HTL Properties LLC (“HTLP”) (collectively, “Plaintiffs” or “HTL”) filed this breach of contract/fraud action against Pacific Lift and Equipment Company, Inc. (“PLE” or “Defendant”). The operative Third Amended Complaint alleges five causes of action for: 1) breach of contract, 2) breach of the implied covenant of good faith and fair dealing, 3) fraud-concealment, 4) fraud- intentional misrepresentation, and 5) negligent misrepresentation. PLE maintains a cross-complaint against HTLA for breach of contract.

On July 3, 2019, the Court granted Defendant’s motion to compel the deposition of HTL’s PMK Hooman Nissani (“Nissani”). The Court ordered Plaintiffs to produce Nissani by July 18, 2019. On August 9, 2019, the Court granted plaintiffs’ ex parte application to reset the deposition to a mutually agreeable date and continued the trial to March 17, 2020.

On October 8, 2019, Defendant moved for terminating, evidentiary, or monetary sanctions against Plaintiffs for their failure to produce their PMK. On October 18, 2019, HTLA filed an opposition. On October 25, 2019, Defendant filed a reply.

If a party fails to obey a court order compelling it to provide a discovery response, “the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction . . . In lieu of or in addition to this sanction, the court may impose a monetary sanction . . . .” (CCP §§ 2030.290(c), 2030.300(e), 2031.300(c), 2031.320(c).) Misuse of the discovery process, which includes disobeying a court order to provide discovery, is conduct subject to sanctions. (CCP § 2023.010(g).) Possible sanctions are:

(a) [A] monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney's fees, incurred by anyone as a result of that conduct….

(b) [A]n issue sanction ordering that designated facts shall be taken as established in the action in accordance with the claim of the party adversely affected by the misuse of the discovery process. The court may also impose an issue sanction by an order prohibiting any party engaging in the misuse of the discovery process from supporting or opposing designated claims or defenses.

(c) [A]n evidence sanction by an order prohibiting any party engaging in the misuse of the discovery process from introducing designated matters in evidence.

(d) [A] terminating sanction by one of the following orders:

(1) An order striking out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process.

(2) An order staying further proceedings by that party until an order for discovery is obeyed.  

(3) An order dismissing the action, or any part of the action, of that party.

(4) An order rendering a judgment by default against that party.  

(CCP § 2023.030 [emphasis added].)

The party seeking to impose sanctions need only show the failure to obey earlier discovery orders. (Puritan Ins. Co. v. Sup.Ct. (Tri-C Machine Corp.) (1985) 171 Cal.App.3d 877, 884 [interpreting former statute dealing with “refusal” to comply].) However, numerous cases hold that severe sanctions (i.e., terminating or evidentiary sanctions) for failure to comply with a court order are allowed only where the failure was willful. (See R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 495; Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545; Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.) The burden of proof then shifts to the party seeking to avoid sanctions to establish a satisfactory excuse for his or her conduct. (Corns v. Miller (1986) 181 Cal.App.3d 195, 201; Williams v. Russ (2008) 167 Cal.App.4th 1215, 1227.)

“The trial court may order a terminating sanction for discovery abuse after considering the totality of the circumstances: the conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.” (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 390; Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1224 [terminating sanctions by trial court not an abuse of discretion where defendant repeatedly violated court orders to produce records].) “[A] terminating sanction should generally not be imposed until the court has attempted less severe alternatives and found them to be unsuccessful and/or the record clearly shows lesser sanctions would be ineffective.” (Lopez v. Watchtower Bible and Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 604 [terminating sanctions order reversed where there was no showing the court could not have obtained compliance by using lesser sanction e.g., issue or evidentiary].) In extreme cases, however, terminating sanctions as a first measure are authorized. (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1434.)

Discussion

Defendant moves for sanctions based on Plaintiffs’ failure to provide Nassani for his noticed deposition.

The following facts are uncontroverted. The first two sessions of Nissani’s deposition took place on June 21, 2018 and on August 27, 2018, both of which were cut short. (Ortlieb Decl., ¶ 2.) After much cajoling, the parties stipulated to a third deposition on January 17, 2019, with production on January 10, 2019. (Id., Ex. 1.) Nissani did not appear for this deposition, which led to a motion to compel. The Court granted that motion on July 3, 2019 and ordered Plaintiffs to provide Nissani for deposition on July 18, 2019. No records wer eproduced and Nissani failed to appear. Instead, Plaintiffs’ counsel took a trip to New Zealand and the parties rescheduled to an August 9, 2019 deposition date. (Id. ¶ 9.) On August 9, 2019—the date of the agreed upon deposition—Plaintiffs requested that the Court continue the deposition to a mutually agreeable date. (Id. ¶ 11.) At the hearing, Plaintiffs’ counsel agreed to set the deposition for September 4, 2019. As has become a theme, on September 3, 2019, Plaintiffs indicated that the deposition would not go forward. (Id. ¶¶ 12-13.) Plaintiffs offered to have the deposition take place in late October. (Id. ¶¶ 14-15.) Defense Counsel rightfully found this unacceptable.  

In their defense, Plaintiffs apparently offered to indemnify Defendant against any loss should Nissani not appear at the deposition again. (McCreary Decl., ¶¶ 2-4.) Plaintiffs also indicate that Nissani is currently injured and is on bed rest. (Id. ¶ 5; Nissani Decl., ¶ 5.)

Upon reviewing the facts provided by both parties, the Court finds that Plaintiffs have willfully disobeyed the Court’s prior orders requiring them to submit their Nassani to a deposition. The evidence incontrovertibly shows willful disobedience of at least the July 3, 2019 court order (as amended by the ex parte application). Based on the record, Plaintiffs have consistently strung Defendant along with regards to Nissani’s deposition. Not only did Nissani fail to complete his previously scheduled depositions (i.e. volumes I and II), but has on numerous times failed to appear to his agreed upon/ordered depositions. Thus, Plaintiffs’ offer for another continued deposition from September 4, 2019 to late October appears insincere.

Plaintiffs do not adequately offer any reason why his depositions did not go forward on any of the above dates. Importantly, Plaintiffs offer no reason why they cancelled the September 2019 deposition date—a date they agreed to. Nissani indicates that his injuries were exacerbated on October 5, 2019 and is now on pain medication. (Nissani Decl., ¶ 4.) This does not explain his failure to appear at the various scheduled depositions in July, August, and September of 2019. This is also inconsistent with their position that the deposition could occur in late October, as presumably Nissani would still be suffering from the effects of his injuries. 

Given the history of repeated failure to produce records and to appear for the deposition of Nissani, the Court is inclined to grant terminating sanctions. The Court is not currently inclined to grant evidentiary sanctions given the failure to provide a separate statement. (CRC Rule 3.1345(a)(7).) 

Accordingly, Defendant’s motion for terminating sanctions is GRANTED.