SESSIONS PAYROLL MANAGEMENT VS STATE COMPENSATION INSURANCE

Tentative Rulings

Case Number: EC064614    Hearing Date: October 25, 2019    Dept: NCD

TENTATIVE RULING

Calendar: 13

Date: 10/25/18

Case No: EC 064614 Trial Date: January 13, 2020

Case Name: Sessions Payroll Management, Inc. v. State Compensation Insurance Fund

MOTION TO BIFURCATE TRIAL

[CCP §598]

Moving Party: Defendant State Compensation Insurance Fund

Responding Party: Plaintiff Sessions Payroll Management, Inc.

RELIEF REQUESTED:

Order to bifurcate trial so that 1) the equitable issue of successor liability as to Sessions Payroll Management, Inc. and Entertainment Production Services, Inc. and 2) the equitable issues under Business & Professions Code § 17200 may be tried first.

RULING:

Defendant State Compensation Insurance Fund’s Motion to Bifurcate Trial is DENIED.

SUMMARY OF FACTS:

Plaintiff Sessions Payroll Management alleges that defendant State Compensation Insurance Fund has wrongly required plaintiff in order to obtain workers’ compensation insurance coverage to pay back payments on workers’ compensation insurance coverage owed by another entity, Entertainment Production Services, Inc. which took over ownership of plaintiff in 2005, but which plaintiff claims is a separate entity.

The file shows that the court on March 8, 2019 heard a motion for summary judgment, or, in the alternative, summary adjudication, brought by defendant with the permission of the court, which had been represented would address the issue of successor liability, but did not. The court nevertheless considered the motion on its merits, and the tentative ruling was to grant the motion as to the cause of action for negligence only.

The court at the hearing evidently permitted defendant to apply to the court to have the issue of successor liability adjudicated by way of a follow on or supplemental motion for adjudication of issues pursuant to CCP § 437c(t), but the court noted in a May 10, 2019 minute order that defendant never made any such application, and the court ordered that its tentative ruling of March 8, 2019 was to become the order of the court.

Defendant evidently now seeks to have the successor liability issue separately determined through a bifurcated trial.

ANALYSIS:

CCP § 1048 provides that the court “in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of ...any separate issue or of any number of…issues…”

CCP § 598 provides:

“The court may, when the convenience of witnesses, the ends of justice, or the economy and efficiency of handling the litigation would be promoted thereby, on motion of a party, after notice and hearing, make an order... that the trial of any issue or any part thereof shall precede the trial of any other issue or part thereof in the case.”

Section 598 was adopted in 1963 as the result of Judicial Council recommendations and “its objective is avoidance of waste of time and money caused by unnecessary trial of damage questions in cases where the liability issue is resolved against the plaintiff.” Trickey v. Superior Court (1967) 252 Cal.App.2d 650. 653.

The determination of whether to bifurcate the trial of issues in a single action is a matter within the discretion of the trial court, “whose ruling will not be disturbed on appeal absent a manifest abuse of discretion.” Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (2^nd Dist. 1987) 189 Cal.App.3d 1072, 1086, citing McArthur v. Shaffer (1943) 59 Cal.App.2d 724, 727.

Defendant State Compensation Insurance Fund brought a previous motion to bifurcate, seeking to have its affirmative defenses be heard first in this case, which was denied by the court on October 5, 2018. This motion seeks to have the court determine the equitable issue of successor liability and the equitable unfair business practices cause of action first, evidently by the court without a jury, and then, if any legal issues remain, conduct a jury trial.

The argument here is essentially the same argument defendant has made repeatedly that a major issue to be determined in this matter is the relationship between plaintiff Sessions Payroll Management and EPSI, in order to determine whether they are the same insured for purposes of State Compensation having required the payment of the back premium as a condition to issuing the new policy. The argument is that if it is determined that they were the same entity, then it would not be necessary to try plaintiff’s claims.

Defendant has made this argument before and has had multiple opportunities to bring an appropriate summary adjudication motion to determine the issue prior to trial if it can be determined summarily.

The opposition argues that plaintiff in the SAC has alleged that State Fund engaged in unfair business practices by refusing to provide a quote for workers’ compensation insurance coverage, which would be actionable regardless of any successor relationship. The opposition argues that the court in connection with motions for summary judgment identified a distinction in this matter between defendant’s purported obligation to insure, and any purported obligation to issue a quote. Plaintiff also argues that its unfair business practices and fraud causes of action are also based on allegations that State Farm included an impermissible 75% surcharge in the policy issued, and in applying a refund for the surcharge underreported plaintiff’s payroll, ultimately leading to increased premium rates, and a decrease of competitiveness in the market and difficulty obtaining alternate workers’ compensation insurance in the market so that a successor determination would not dispose of the need to try those causes of action.

It would appear that even if the court were to conduct a preliminary trial on what are characterized as an equitable issue and cause of action, the matter would likely still have to be tried again to a jury, and, as was the case with the previous motion, the motion does not explain what would be necessary evidence to prove the issues sought to be bifurcated, and how that proof would be separate from the evidence required to prove the matters which would remain for determination, or be presented by different witnesses, or save any time or result in any efficiency other than the broad proposition, disputed by plaintiff, that if it is found these entities were sufficiently related, plaintiff’s claims would collapse, and could not be proven.

The motion as framed fails to establish that the determinations sought would dispose of the entire action, resulting in no need at all for a jury trial, or would otherwise lead to greater efficiency of this litigation. The motion is denied.