This case was last updated from Los Angeles County Superior Courts on 05/24/2019 at 12:33:30 (UTC).

TOKAI INTERNATIONAL HOLDINGS INC VS PAUL HASTINGS LLP

Case Summary

On 08/09/2016 TOKAI INTERNATIONAL HOLDINGS INC filed a Contract - Professional Negligence lawsuit against PAUL HASTINGS LLP. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is WILLIAM F. FAHEY. The case status is Disposed - Dismissed.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****0144

  • Filing Date:

    08/09/2016

  • Case Status:

    Disposed - Dismissed

  • Case Type:

    Contract - Professional Negligence

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

WILLIAM F. FAHEY

 

Party Details

Plaintiff and Petitioner

TOKAI INTERNATIONAL HOLDINGS INC.

Defendants and Respondents

DOES 1 THROUGH 25

PAUL HASTINGS LLP

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

KOZBERG & BODELL LLP

BODELL GREGORY SCOTT

Defendant Attorney

ANDERSON JOSHUA EUGENE

 

Court Documents

Request for Judicial Notice

5/10/2019: Request for Judicial Notice

Proof of Personal Service

5/10/2019: Proof of Personal Service

Motion to Compel Further Discovery Responses

5/10/2019: Motion to Compel Further Discovery Responses

NOTICE OF CASE MANAGEMENT CONFERENCE

8/15/2016: NOTICE OF CASE MANAGEMENT CONFERENCE

Unknown

11/21/2016: Unknown

Unknown

11/21/2016: Unknown

DEFENDANT PAUL HASTINGS LLP'S NOTICE OF DEMURRER AND ETC.

12/5/2016: DEFENDANT PAUL HASTINGS LLP'S NOTICE OF DEMURRER AND ETC.

REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF DEFENDANT PAUL HASTINGS LLP'S DEMURRER ETC.

12/5/2016: REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF DEFENDANT PAUL HASTINGS LLP'S DEMURRER ETC.

NOTICE OF FILING FIRST AMENDED COMPLAINT RE: DEMURRER TO COMPLAINT

12/21/2016: NOTICE OF FILING FIRST AMENDED COMPLAINT RE: DEMURRER TO COMPLAINT

FIRST AMENDED COMPLAINT FOR ATTORNEY NEGLIGENCE

12/21/2016: FIRST AMENDED COMPLAINT FOR ATTORNEY NEGLIGENCE

NOTICE OF TAKING HEARING ON DEFENDANT PAUL HASTINGS LLP'S DEMURRER TO PLAINTIFF TOKAI INTERNATIONAL HOLDINGS, INC.'S COMPLAINT OFF CALENDAR

12/23/2016: NOTICE OF TAKING HEARING ON DEFENDANT PAUL HASTINGS LLP'S DEMURRER TO PLAINTIFF TOKAI INTERNATIONAL HOLDINGS, INC.'S COMPLAINT OFF CALENDAR

PLAINTIFF'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT FOR ATTORNEY NEGLIGENCE; REQUEST FOR JUDICIAL NOTICE; DECLARATION GREGORY BODELL

1/23/2017: PLAINTIFF'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT'S DEMURRER TO FIRST AMENDED COMPLAINT FOR ATTORNEY NEGLIGENCE; REQUEST FOR JUDICIAL NOTICE; DECLARATION GREGORY BODELL

ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

2/3/2017: ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

Minute Order

2/8/2017: Minute Order

FINAL JUDGMENT OF DISMISSAL

3/14/2017: FINAL JUDGMENT OF DISMISSAL

NOTICE OF FILING OF NOTICE OF APPEAL (UNLIMITED JURISDICTION)

5/3/2017: NOTICE OF FILING OF NOTICE OF APPEAL (UNLIMITED JURISDICTION)

APPELLANT'S NOTICE DESIGNATING RECORD ON APPEAL (UNLIMITED CIVIL CASE)

5/8/2017: APPELLANT'S NOTICE DESIGNATING RECORD ON APPEAL (UNLIMITED CIVIL CASE)

NOTICE TO REPORTER TO PREPARE TRANSCRIPT ON APPEAL PER CRC RULE 8.124

6/19/2017: NOTICE TO REPORTER TO PREPARE TRANSCRIPT ON APPEAL PER CRC RULE 8.124

45 More Documents Available

 

Docket Entries

  • 05/10/2019
  • Separate Statement; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Motion to Compel Further Discovery Responses; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Separate Statement; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Motion to Deem RFA's Admitted; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Separate Statement; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Motion to Compel Further Discovery Responses; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Separate Statement; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Proof of Personal Service; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Declaration (of Joshua E. Anderson in Support of Motions to Compel); Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
  • 05/10/2019
  • Motion to Compel Further Discovery Responses; Filed by Paul Hastings, LLP (Defendant)

    Read MoreRead Less
94 More Docket Entries
  • 09/30/2016
  • Proof of Service (not Summons and Complaint); Filed by Plaintiff/Petitioner

    Read MoreRead Less
  • 09/30/2016
  • Response; Filed by Plaintiff/Petitioner

    Read MoreRead Less
  • 09/30/2016
  • PROOF OF SERVICE OF NOTICE AND ACKNOWLEDGMENT OF RECEIPT - CIVIL

    Read MoreRead Less
  • 08/15/2016
  • NOTICE OF CASE MANAGEMENT CONFERENCE

    Read MoreRead Less
  • 08/15/2016
  • ORDER TO SHOW CAUSE HEARING

    Read MoreRead Less
  • 08/15/2016
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 08/15/2016
  • OSC-Failure to File Proof of Serv; Filed by Clerk

    Read MoreRead Less
  • 08/09/2016
  • SUMMONS

    Read MoreRead Less
  • 08/09/2016
  • Complaint; Filed by Tokai International Holdings, Inc. (Plaintiff)

    Read MoreRead Less
  • 08/09/2016
  • COMPLAINT FOR ATTORNEY NEGLIGENCE

    Read MoreRead Less

Tentative Rulings

Case Number: BC630144    Hearing Date: July 29, 2020    Dept: 40

MOVING PARTY: Defendant Paul Hastings, LLP

OPPOSITION: Plaintiff Tokai International Holdings, Inc.

Plaintiff Tokai International Holdings, Inc., sues Defendant Paul Hastings, LLP (“Defendant”) for malpractice. Plaintiff acquired a Japanese entity which had several subsidiary corporations. One of these subsidiary corporations was liable for past environmental harm on a property in Monrovia, California. Defendant represented Plaintiff in the acquisition and Plaintiff sues alleging that Defendant failed to adequately advise them about invoking the acquisition agreement’s indemnification clause.

  1. Demurrer to the Single Cause of Action

The Hon. Judge William F. Fahey sustained Defendant’s previous demurrer on the ground that Plaintiff lacked standing: The Court of Appeal affirmed and reversed in part, remanding the case.

The Second Amended Complaint now simply alleges malpractice.

Judicial Notice: Defendant requests judicial notice of the stock purchase agreement, two subsequent amendments, three secured promissory notes, and the tolling agreement between the parties. The Court will take judicial notice of the documents pursuant to Evidence Code § 452(h), facts and propositions not reasonably subject to dispute. As this action, is based on these documents judicial notice of the documents is proper.

Plaintiff objects to the exhibits on the grounds of hearsay, lack of foundation, and lack of authentication. Attorney Norman Futami, former partner of Plaintiff, has provided a declaration indicating that he represented Plaintiff when negotiating and drafting these exhibits and that they are what they purport to be. (Decl. Futami, ¶¶ 2-9.)

Plaintiff’s objections are OVERRULED.

Analysis: Defendant argues that Plaintiff lacks standing because the indemnity provision expressly states that the sole party that can recover damages is Tokai Japan. Alternatively, Defendant argues that the version of the indemnity provision upon which Plaintiff relies on, was never operative and was deleted by later amendments.

The Scripto-Toka Corporation (“Scripto”) previously owned property in Monrovia on which it operated a pen manufacturing factory. The factory closed in 1990 and Scripto sold the Monrovia property. Although it sold the property, Scripto was still potentially liable for environmental harm on the property. In 2005, Scripto was owned by Tokai Corporation (hereinafter “the Holding Company”) which itself was owned by Itochu Enex Co., Ltd. (“Itochu”).

In 2005, Itochu agreed to sell the Holding Company to Plaintiff.

For tax purposes, Plaintiff assigned its rights under the Stock Purchase Agreement (“Agreement”) to a newly formed Japanese subsidiary Tokai International Holdings (Japan), Inc., (“Tokai Japan”).

Defendant was hired by Plaintiff to conduct due diligence and to provide legal advice with respect to Plaintiff's acquisition of the Holding Company. The Agreement contained an indemnity provision, Section 10.2.

In 2016, Plaintiff sued Defendant for malpractice alleging that Defendant did not adequately inform them about the environment liability they would incur and failed to advise them to invoke the indemnity provision immediately upon the close of the agreement or within three years. Defendant filed a demurrer, which was granted, arguing that Plaintiff lacked standing because the alleged injuries were suffered by Tokai Japan.

Court of Appeal Analysis of Two Arguments:

“Here, plaintiff alleges two injuries stemming from Paul Hastings's alleged malpractice and thus two potential bases for standing: (1) the environmental liabilities Paul Hastings did not uncover or disclose regarding Scripto caused the Japanese Subsidiary to pay too much for the Holding Company, such that the value of plaintiff's investment was reduced; and (2) Paul Hastings's failure to urge plaintiff to invoke the indemnity clause means that plaintiff may be paying for environmental remediation costs that could have otherwise been shifted to Itochu.”

Tokai International Holdings, Inc. v. Paul Hastings, LLP (Cal. Ct. App., Oct. 25, 2018, No. B282299) 2018 WL 5291836, at *3.

The Court of Appeal found that “Plaintiff lacks standing to assert the first injury. That is because plaintiff assigned away all of its rights in the Agreement to the Japanese Subsidiary.” (Ibid.) However, the Court of Appeal also found that Plaintiff had standing to assert the second injury. The Court of Appeal analyzed the indemnity provision of the agreement which stated that Itochu had to “defend, indemnify and hold harmless Buyer and its Affiliates.” (Id. at p. 4.) Affiliate was defined in the Agreement as “a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, such Person.” (Ibid.) The Court of Appeal found that Plaintiff was an affiliate of the Japanese subsidiary because Plaintiff controls it.

Therefore, Plaintiff had the right to invoke the indemnity provision and to seek indemnity for the estimated costs of remediating the violations.

  1. Standing: OVERRULED

“Standing is the threshold element required to state a cause of action and, thus, lack of standing may be raised by demurrer. To have standing to sue, a person, or those whom he properly represents, must have a real interest in the ultimate adjudication because [he] has [either] suffered [or] is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.” Martin v. Bridgeport Cmty. Assn., Inc. (2009) 173 Cal. App. 4th 1024, 1031. (internal citations and quotations omitted.)

Defendant argues that under the terms of the Second Amendment to the Purchase Agreement (“Second Amendment”) Plaintiff lacks standing. The Second Amendment to the Agreement states that

“[a]ny indemnification obligation ... shall be applied first, against unpaid interest (if any) accrued under the Secured Note; (ii) second, against the principal amount of the Secured Note outstanding at such time in the inverse order of maturity; [and then against a series of other notes and loans]. To the extent that the aggregate amount of such indemnification claim exceeds the foregoing at such time, Seller shall pay the remaining identification amount to the Buyer Indemnified Parties.” (Pl’s RJN, Ex 3., ¶ 13.)

Defendant argues that the cited provision indicates that Tokai Japan is the only one who could recover under the indemnity provision because Tokai Japan held the notes and loans referenced in the cited section.

Plaintiff asserts that the Court of Appeal clearly held that they “may seek indemnity for the estimated costs of remediating violations for which Scripto is legally responsible.” (Tokai Holdings, supra, at p. 4.) Plaintiff also argues that the Court of Appeal essentially found that they were a promisee; a promisee can sue and recover damages and hold them as a constructive trustee for the beneficiary and can also sue for specific performance. Dunn Appraisal Co. v. Honeywell Information Systems Inc. (6th Cir. 1982) 687 F.2d 877, 882. In Dunn, the court allowed plaintiff to recover damages on behalf of its subsidiary, who was not a party to the contract but had incurred the loss. “All of the parties knew that the computer was to be used by [the subsidiary], not [plaintiff],” so that the subsidiary “was thus a third-party beneficiary of the contract between [plaintiff] and the defendants.” (Id. at pp. 884-885.) The court also ruled the damages were to be held by plaintiff as trustee for the subsidiary. (Id. at p. 885.) Plaintiff also cites the Restatement (2d) of Contract § 307, which states that: “[e]ven though a contract creates a duty to a beneficiary, the promisee has a right to performance. See § 305. The promisee cannot recover damages suffered by the beneficiary, but the promisee is a proper party to sue for specific performance….”

The Court OVERRULES the demurrer on this ground. Defendant responds to Plaintiff’s argument by asserting that this is not a breach of contract claim but a malpractice action against them and therefore the Restatement and Dunn do not apply. However, the Court is not persuaded that this distinction is relevant. The Court of Appeal stated that Plaintiff had standing to assert the loss of a right to invoke the indemnity clause. (Tokai Holdings, supra, p. 4.) Defendant’s authority is persuasive support for Plaintiff’s position that as promisee to the promise of indemnity in Section 10.2(a) of the Agreement, Plaintiff has standing to enforce those rights.

  1. Validity of the Indemnity Provision:

Defendant argues that the version of the indemnity provision upon which Plaintiff relies on was never the operative provision.

The Agreement contained an indemnification provision, Section 10.2(a), which in relevant part states:

“Subject to the limitations set forth in Section 10.2(b) below, from and after the Closing Date, Seller shall defend, indemnify and hold harmless Buyer and its Affiliates and the Company and its Subsidiaries and the officers, directors, agents, employees, representatives and advisors thereof (collectively, the from and against any Damages arising out of, relating to or resulting from: …(v) the costs incurred in performing any remediation completed prior to the third anniversary of the Closing Date in order to bring any real property now or previously owned or operated (other than Real Property) by the Company or its Subsidiaries (collectively, into compliance with Environmental Laws or the estimated cost to correct any of Environmental Law by the Company or its Subsidiaries and/or the presence of Hazardous Materials on any Other Real Property for which the Company or any of its Subsidiaries is legally responsible as determined prior to the third anniversary of the Closing Date, in each case,. to the extent arising from the conduct of the Company and/or its Subsidiaries prior to the Closing….” (Pl’s RJN, Ex. 1.) (italics added.)

The Agreement contained an Exhibit B, which was titled “Required Amendment to Stock Purchase Agreement.” Paragraph 7 of Exhibit B amended the indemnification provision of the Agreement, by adding the following : “Section 10.2(a)(v) is hereby amended to insert the clause ‘by an investigator mutually agreeable to the parties’ after the clause ‘as determined prior to the third anniversary of the Closing Date.’ ” (Pl’s RJN, Ex. 1.) This is the indemnity provision Plaintiff asserts they could have invoked but for Defendant’s malpractice.

Defendant states that the subsequent “First Amendment to the Stock Purchase Agreement” (“First Amendment”) deleted Section 6.2 (x) from the Agreement.

Paragraph 2 of the First Amendment read as follows:

“2. Deletion of Conditions Precedent. The conditions precedent set forth in Sections 6.2(r), (s), (w) and (x) are hereby deleted in their entirety and are each hereby replaced with the phrase: ‘[Intentional omitted.]’ ” (Pl’s RJN, Ex. 2.)

Meanwhile Section 6.2(x) of the Agreement read as follows:

“Buyer and Seller shall have executed an amendment to this Agreement providing for the modifications set forth on Exhibit B attached hereto or any variations (including, without limitations, deletion) thereof, to the sole satisfaction of Buyer.” (Pl’s RJN, Ex. 1.)

Finally, Defendant argues that the “Second Amendment to the Stock Purchase Agreement” (“Second Amendment”) eliminated Exhibit B entirely from the Agreement. The Second Amendment in relevant part states:

“16. Deletion and Addition of Exhibit [¶] (a) Exhibit B to the Stock Purchase Agreement is hereby Deleted and replaced with Exhibit A attached hereto.” (Pl’s RJN, Ex. 3., ¶ 16.)

According to Defendant, the end result of these changes was that the “by an investigator mutually agreeable to the parties” language only existed in Exhibit B of the Agreement. The First and Second Amendments deleted and replaced Exhibit B, meaning “by an investigator mutually agreeable to the parties” language never became operative. Defendant asserts that what remained was an ordinary indemnity provision agreement. Therefore, Plaintiff could not invoke the provision and have an investigator determine the damage. Instead, the indemnity provision could only be triggered when there was a determination that one of the parties was “legally responsible” for remediation costs, which did not occur. Thus, Defendant had no obligation to Plaintiff to advise them about invoking the indemnity clause.

Plaintiff contends that Defendant’s new position contradicts their earlier representations about the indemnity provision. Defendant has previously stated that the “by an investigator mutually agreeable to the parties” language was in effect. Plaintiff argues that the language of the Second Amendment indicates that Exhibit B was in effect past the enactment of the First Amendment. If Exhibit B was deleted by the First Amendment, then it would not have been necessary to delete it via the Second Amendment. Plaintiff argues that the only effect of the First Amendment on Exhibit B was that it made it so that Exhibit B was no longer a condition precedent. As to the Second Amendment, Plaintiff argues that it is unclear what “Exhibit A” is. According to Plaintiff, the Second Amendment replaced Exhibit B with Exhibit A, but Defendant has not provided Exhibit A. Therefore, it is unclear what if anything replaced Exhibit B.

Alternatively, Plaintiff argues that it does not rely on the language of Paragraph 7 of Exhibit B. Plaintiff argues that even without the “by an investigator mutually agreeable to the parties” language, they could still self-invoke the indemnity provision. Plaintiff cites Section 10.2(a)(v) of the Agreement which in relevant part states: “the estimated costs to correct any violations of Environmental Law by the Company or its Subsidiaries and/or the presence of Hazardous Materials on any Other Real Property for which the Company or its Subsidiaries is legally responsible as determined prior to the Third Anniversary of the Closing Date, in each case, to the extent arising from the conduct of the Company or its Subsidiaries.” (Pl’s RJN, Ex. 1.) (italics added.) Plaintiff contends that the “estimated costs” language distinguishes this indemnity provision from a standard indemnity provision. Plaintiff asserts that Section 10.2(a)(v) has no prerequisite of established liability and could be self-invoked by Plaintiff presenting Itochu with “the estimated cost to correct any violations.” Plaintiff alleges in their Complaint that one of Defendant’s attorneys in an email stated “the way the indemnity provision is structured, we can cause an investigation into compliance issues and, if there are problems, we can recover money to fix them.” (Complaint, ¶ 33.)

The “estimated costs” language: The Court agrees with Defendant that Plaintiff’s interpretation is flawed. The full quote is the “estimated cost to correct any violations of Environmental Law . . . for which the Company [Tokai Corporation] or any of its Subsidiaries [including Scripto] is legally responsible as determined prior to the third anniversary of the closing date.” (Pl’s RJN, Ex. 1.) (italics added.)

The provision is not one that can be self-invoked as it requires a determination that a party was legally responsible for the remediation costs. Moreover, Plaintiff admits that the email they reference in their Complaint, refers to the attorney’s an earlier version of Section 10.2(a)(v) of the Agreement. (Complaint, ¶ 33.)

The “by an investigator mutually agreeable to the parties” language: The Court finds that Defendant has not demonstrated that the language was not in effect and thus will not grant the demurrer on this ground. The Court’s understanding is that Exhibit A of the Agreement is the Form and Closing Statement. The Second Amendment defines its Exhibits B, C, and D as being promissory notes and it defines its Exhibit E as being a confidentiality agreement. The Second Amendment makes its Exhibits B, C, and D the Agreement’s Exhibits C, D, and E. (Pl’s RJN, Ex. 3, ¶16(b).)

However, the Second Amendment does not define its Exhibit A, which is supposed to replace the Agreement’s Exhibit B.

In their reply, Defendant states that “Exhibits A, B, C, and D to the Second Amendment [became] the new Exhibits B, C, D, and E respectively, [to the Agreement] and the Second Amendment clarifies what each of those new exhibits is: Exhibits B, C, and D to the Stock Purchase Agreement (and Exhibits A, B, and C to the Second Amendment) are promissory notes and the ‘mystery’ fourth exhibit (Exhibit E to the Stock Purchase Agreement and Exhibit D to the Second Amendment) is expressly identified as ‘a confidentiality agreement.’ ” (Reply, 8:15-20.) Even after this explanation the Court is unclear on where Exhibit A is defined in the Second Amendment. When Second Amendment section 16 (b) states that the Agreement is “hereby amended by attaching Exhibits B, C, and D hereto, as new Exhibits C, D, E, respectively thereto” which exhibits is it referring to.

Based on the record before it, the Court cannot determine that the indemnity provision upon which Plaintiff relies on was not operative.

The demurrer on this ground is OVERRULED. Defendant to answer in 10 days.`

  1. Defendants Motion to Designate Action as Complex

Defendant files an opposed motion seeking to designate the action as complex.

Standard: “A ‘complex case’ is an action that requires exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel.” CRC Rule 3.400(a). “In deciding whether an action is a complex case under (a), the court must consider, among other things, whether the action is likely to involve: (1) Numerous pretrial motions raising difficult or novel legal issues that will be time-consuming to resolve; (2) Management of a large number of witnesses or a substantial amount of documentary evidence; (3) Management of a large number of separately represented parties; (4) Coordination with related actions pending in one or more courts in other counties, states, or countries, or in a federal court; or (5) Substantial post judgment judicial supervision.” CRC Rule 3.1400(b).

Analysis: Defendant argues that the first factor weighs in favor of designating the action as complex. Defendant states that there are currently 5 discovery motions pending and there is a demurrer pending. If the demurrer fails, then Defendant states that they intend to file a motion for summary judgment. Defendant argues that these motions will raise difficult, novel, and time-consuming issues. Defendant states that the discovery motions will require that the Court determine the applicability of the attorney client privilege, the application of discovery orders to a foreign corporation (Plaintiff’s parent company is Japanese), and the spoliation of electronic data. Similarly, Defendant argues that the dispositive motions will require expert testimony as to the environmental conditions of the contaminated property and the extent of Plaintiff’s and third parties’ liability. Defendant argues that the second factor weighs in favor of designating the action as complex. Defendant states that they alone have currently identified more than 100 witnesses and produced over 16,000 documents.

Plaintiff argues that the motion should be denied because it is a pretext for forum shopping. Plaintiff states that the first and second factors do not weigh in favor of designating the action as complex. Plaintiff states that it is more likely that there will only be around 20 witnesses at trial. Plaintiff also states that most of the discovery propounded by Defendant is not relevant to the issues of this case. Finally, Plaintiff argues that the pretrial motions will not raise difficult or novel issues. Plaintiff contends that the issues raised by the dispositive motions are whether Defendant breached their duty to explain the indemnity provision in the acquisition agreement, the damages caused by the breach, and whether the claim is barred by the statute of limitations.

Although the Court expects that the discovery motions and dispositive motions will be heavily contested by the parties, the Court does not believe they will raise issues that are novel. The Court also agrees that the number of witnesses and relevant documents will be substantially less than Defendant’s current estimate.

Finally, the third, fourth, and fifth factors weigh against designating the action as complex. There are only two parties, there are no related actions pending, and there has been no showing that the action requires substantial post-judgment judicial supervision.

Conclusion: The Motion to Designate the Action as Complex is DENIED. Defendant to give notice

  1. Defendant’s Motion to Compel Further Responses to FROG

Defendant requests further responses to FROG Nos. 12.1, 12.2, 12.4, 12.5, 12.6, 12.7.

Standard: A responding party must provide non-evasive answers to interrogatories that are “as complete and straightforward…to the extent possible,” and, if after a reasonable and good faith effort to obtain the information they still cannot respond fully to an interrogatory, the responding party must so state in its response. (Code Civ. Proc., § 2030.220.) If the responding party provides incomplete or evasive answers, or objections without merit, the propounding party’s remedy is to seek a court order compelling a further response to the interrogatories. (Code Civ. Proc., § 2030.300.) If a timely motion to compel answers is filed, the burden is on the responding party to justify any objection or failure to fully answer the interrogatories. Coy v. Superior Court (1962) 58 Cal.2d 210, 220-221.

12.1: FROG 12.1 requests the name, address, and telephone number of each individual who witness the incident, made statements at the scene of the incident, who heard any statements made about the incident, or claims to have knowledge about the incident.

Plaintiff objected on the ground that the FROG is vague, ambiguous, overbroad, burdensome, and oppressive. Plaintiff argues that incident is broadly defined as “any negligence committed by [Defendant] in connection with its representation of Plaintiff. Plaintiff states that the incident covers thousands of transactions over six years.

The Court grants the motion to compel as to this FROG. Plaintiff does not really claim that Defendant committed malpractice in thousands of transactions over six years. Plaintiff’s claim is that Defendant committed malpractice by failing to advise them about invoking the indemnity clause. Therefore, the term incident is narrowly defined and not as overbroad as Plaintiff alleges.

12.2: FROG 12.2 requests information about anyone who has interviewed, on Plaintiff’s behalf, any individual concerning the incident. The information requested is name, address, and telephone number of the interviewed, the date of the interview, and the name, address, and telephone number of the person who conducted the interview.

Plaintiff repeats the arguments they made about FROG 12.1. Accordingly, the motion to compel further response is GRANTED as to this FROG.

12.4: FROG 12.4 requests any photographs, films or videotapes, depicting any place, object, or individual concerning the incident or Plaintiff’s injuries.

Plaintiff repeats the arguments they made about FROG 12.1. Accordingly, the motion to compel further response is GRANTED as to this FROG.

12.5: FROG 12.5 requests any diagram, reproduction, or model of any place or thing concerning the incident.

Plaintiff repeats the arguments they made about FROG 12.1. Accordingly, the motion to compel further response is GRANTED as to this FROG.

12.6: This FROG requests information about whether a report was made and if so by whom.

Plaintiff repeats the arguments they made about FROG 12.1. Accordingly, the motion to compel further response is GRANTED as to this FROG.

12.7: This FROG requests information about whether someone has inspected the scene on Plaintiff’s behalf and if so on what date did the inspection(s) occur.

Plaintiff repeats the arguments they made about FROG 12.1. Accordingly, the motion to compel further response is GRANTED as to this FROG.

Sanctions: CCP § 2023.010 provides that misuse of the discovery process includes “(d) Failing to respond or to submit to an authorized method of discovery.” Where there has been such conduct, under CCP section 2023.030(a), “the court may impose 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….If a monetary sanction is authorized” by the statute, “ the court shall impose that sanction unless it finds that the one subject to the sanction acted with substantial justification or that the other circumstances make the imposition of the sanction unjust.” CCP §2023.030(a).

Defendant requested $25,000 in sanctions for several discovery motions which have since been rendered moot. (Decl. Anderson, ¶ 20.) No hourly rates or billing records are provided. The Court declines to apply sanctions as the parties seem to have resolved most of their discovery issues.

  1. Defendant’s Motion to Compel Further Production of Documents

Defendant requests that Plaintiff be ordered to provide further responses to its RFP Categories Nos. 18, 19, 36, 37, 38, 39, 40, 41, 42, 50, 53, 56, 57, 58, 59, and 60. Defendant also objects to Plaintiff’s response to RFP Categories Nos. 2-12, 17, 20-22, 25, 27, 29, 31, 33, 35, 43-46, 51-52, 54, and 55.

RFP No. 18: No. 18 requests “ALL DOCUMENTS supporting the allegations of Paragraph 34 of the COMPLAINT.”

Paragraph 34 in relevant part states:

“In July 2009, the RWQCB directed further monitoring and assessment activity for the Monrovia Property. On several occasions between August 2009 and April 2010, Tokai contacted PH to learn whether it could cause Itochu to pay for any such activity or require it to pay for any remediation. In its responses, PH conceded that Section 10.2 was intended to apply to the Monrovia Property, but explained that the indemnity period expired in June 2008 and could not then be invoked.”

Plaintiff objects on the ground that the request is irrelevant because they are not seeking damages in connection with the “Omega site.” As noted by Defendant, the request refers to the “Monrovia Property” which is relevant to Plaintiff’s claims. Therefore, the Court orders Plaintiff to respond to this request.

RFP No. 19: No. 19 requests “All DOCUMENTS supporting the allegations of Paragraph 37 of the COMPLAINT.”

Paragraph 37 of the First Amended Complaint, which states as follows:

“Upon information and belief, as a proximate result of PH's negligence, Tokai has been damaged in an amount which has not yet been fully ascertained. Tokai has been informed that the Monrovia Property requires remediation as the result of operations by TC and STC which Tokai is informed will cost more than $2,000,000 and perhaps much more, according to proof at trial. Upon further information and belief, had PH advised Tokai of its rights under Section 10.2(a)(v), as amended, before the third anniversary of the Closing Date, Tokai would have invoked such rights, directly and/or through its wholly owned subsidiaries Tokai Japan and STC and obtained from Itochu the cost to remediate any contamination of the Monrovia Property caused by TC or STC, up to nine million dollars. Thus, PH’s negligence has materially reduced the value of Tokai's investment in the Acquisition and its return on such investment.”

Plaintiff objects on the ground that the request is irrelevant because they are not seeking damages in connection with the “Omega site.” As noted by Defendant, the request refers to the “Monrovia Property” which is relevant to Plaintiff’s claims. Therefore, the Court orders Plaintiff to respond to this request.

RFP No. 36: No. 36 requests “All agreements, including but not limited to retainer agreements, fee agreements, or engagement letters, between or among (a) YOU, MING, CALICO, Felix Hon, Laurie Hon, TOKAI JAPAN, TOKAI CORPORATION, and/or SCRIPTO, on the one hand, and (b) Kenneth Ehrlich, JEFFER MANGELS, ELKINS KALT, Peter Hsiao, MORRISON & FOERSTER, KING & SPALDING, Lawrence H. Golkin, Lawrence H. Golkin & Associates, and/or John Tucker, on the other hand.”

Plaintiff objects on the grounds that the request is vague and ambiguous and invades the attorney-client privilege. The Court will deny RFP No. 36 pursuant to Bus. & Prof. § 6149, which states: “A written fee contract shall be deemed to be a confidential communication within the meaning of subdivision (e) of Section 6068 and of Section 952 of the Evidence Code.” Its unclear how the production of these documents will lead to the discovery of admissible evidence.

RFP No. 37: No. 37 requests “All DOCUMENTS constituting or RELATED TO COMMUNICATIONS between or among (a) YOU, MING, CALICO, Felix Hon, Laurie Hon, TOKAI JAPAN, TOKAI CORPORATION, and/or SCRIPTO, on the one hand, and (b) Kenneth Ehrlich, JEFFER MANGELS, ELKINS KALT, Peter Hsiao, MORRISON & FOERSTER, KING & SPALDING, Lawrence H. Golkin, Lawrence H. Golkin & Associates, and/or John Tucker, on the other hand, RELATED TO the STOCK PURCHASE AGREEMENT, the SECOND AMENDMENT, the MONROVIA PROPERTY, and/or the OMEGA SITE.”

Plaintiff objects to this request on the grounds that it is compound, overbroad and oppressive. Plaintiff also objects on the ground of the attorney client privilege and relevancy. Defendant argues that Plaintiff’s communications with its other counsel about the environmental conditions of the Monrovia Property are at issue in the litigation. The Court agrees and will order Plaintiff response to this request.

RFP No. 39: No. 39 requests “All DOCUMENTS constituting or RELATED TO COMMUNICATIONS between or among (a) YOU, MING, CALICO, Felix Hon, Laurie Hon, TOKAI JAPAN, TOKAI CORPORATION, and/or SCRIPTO, on the one hand, and (b) RINCON, ROUX, FREY, and/or DE MAXIMIS, on the other hand, RELATED TO the STOCK PURCHASE AGREEMENT, the SECOND AMENDMENT, the MONROVIA PROPERTY, and/or the OMEGA SITE.

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to provide a response as communications regarding the Stock Purchase Agreement, its Second Amendment, and the Monrovia Property are at issue.

RFP No. 40: No. 40 requests “All DOCUMENTS constituting or RELATED TO COMMUNICATIONS between or among (a) YOU, MING, CALICO, Felix Hon, Laurie Hon, TOKAI JAPAN, TOKAI CORPORATION, and/or SCRIPTO, on the one hand, and (b) the REGIONAL BOARD, on the other hand, RELATED TO the STOCK PURCHASE AGREEMENT, the SECOND AMENDMENT, the MONROVIA PROPERTY, and/or the OMEGA SITE.”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 41:

No. 41 requests “All DOCUMENTS constituting or RELATED TO COMMUNICATIONS between or among (a) YOU, MING, CALICO, Felix Hon, Laurie Hon, TO KAI JAPAN, TOKAI CORPORATION, and/or SCRIPTO, on the one hand, and (b) the United States Environmental Protection Agency, on the other hand, RELATED TO the STOCK PURCHASE AGREEMENT, the SECOND AMENDMENT, the MONROVIA PROPERTY, and/or the OMEGA SITE.”

Plaintiff raises the same objections it raised to the prior request. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 42: No. 42 requests “All DOCUMENTS RELATED TO any litigation or regulatory action RELATED TO the MONROVIA PROPERTY and/or the OMEGA SITE.”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 50: No. 50 requests “DOCUMENTS sufficient to identify the direct and indirect corporate parents, subsidiaries, and affiliates of TOKAI, SCRIPTO, TOKAI CORPORATION, TOKAI JAPAN, MING, and/or CALICO, from January 1, 2005, to the present, including the dates of ownership and the percentage of ownership interest.”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court notes that the attorney client privilege argument is not applicable to this request. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 53: No. 53 requests “All DOCUMENTS constituting or RELATED TO legal malpractice claims (whether actual or potential) considered, discussed, asserted and/or submitted by YOU, MING, CALICO, Felix Hon, Laurie Hon, TOKAI JAPAN, TOKAI CORPORATION, and/or SCRIPTO, since January 1, 2005, RELATED TO the STOCK PURCHASE AGREEMENT, the SECOND AMENDMENT, the MONROVIA PROPERTY, and/or the OMEGA SITE.”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 56: No. 56 requests “DOCUMENTS sufficient to identify (a) each PERSON who has served as an officer or director of TOKAI, TOKAI JAPAN, TOKAI CORPORATION, SCRIPTO, MING, and CALICO since January 1, 2005, (b) the position(s) with TOKAI, TOKAI JAPAN, TOKAI CORPORATION, SCRIPTO, MING, or CALICO that each such PERSON held, and (c) the dates each such PERSON held such position(s).”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court notes that the attorney client privilege argument is not applicable to this request. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 57: No. 57 requests “All DOCUMENTS used, underlying, referenced, or relied upon in drafting any iteration of YOUR COMPLAINT in this action.”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 58:

No. 58 requests “All DOCUMENTS used, underlying, referenced, or relied upon in YOUR responses to PAUL HASTINGS' concurrently-served First Set of Special Interrogatories, First Set of Form Interrogatories, and/or First Set of Requests for Admission.

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court notes that the attorney client privilege argument is not applicable to this request. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 59: No. 59 requests “All DOCUMENTS constituting or RELATED TO YOUR document retention policies during the time period from January 1, 2005, to the present.”

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP No. 60: No. 60 requests “All DOCUMENTS constituting or RELATED TO any document hold or preservation notices sent by YOU or on YOUR behalf RELATED TO the ACTION.

Plaintiff raises the same objections it raised to the prior request: compound, overbroad, oppressive as to be harassing, attorney-client privilege, and not relevant. The Court will order Plaintiff to respond to the request as the categories of documents requested are relevant.

RFP Nos. 2-12, 17, 20-22, 25, 27, 29, 31, 33, 35, 43-46, 51-52, 54, and 55

First, Plaintiff argues that these categories were not identified in the motion to compel or separate statement, which Defendant disputes. Nonetheless, on April 6, 2020, Plaintiff produced 1,500 pages of documents to Defendant. Defendant argues that Plaintiff’s production consisted mostly of the Stock Purchase Agreement and its various amendments, which Defendant themselves had provided to Plaintiff. Defendant argues that this production lacks communications and emails between Plaintiff and its officers and agents about the Monrovia Property and Defendant’s representations. Defendant argues that Plaintiff has not produced any post-2014 documents. Plaintiff purportedly lost all 2014 documents due to electronic errors.

Plaintiff asserts that it has produced all responsive documents it has in its possession, custody, and control. Plaintiff states that they produced a hard drive on which the relevant records are believed to have been transferred to, but neither parties’ forensic expert was able to recover the contents of the hard drive.

The Court notes that these categories are not listed in Defendant’s separate statement. They are briefly mentioned in the moving papers. The Court notes that Plaintiff states that they have produced all responsive documents available to them.

The Court will order Plaintiff to produce any documents for these categories that it has in its possession from 2014 to the filing of the action. No privilege log has been provided to justify the withholding of these documents.

Conclusion: Defendant’s motion to compel further responses to form interrogatories is GRANTED.

Defendant’s motion to compel further responses to request for production is GRANTED except as to RFP No. 36.

Defendant’s request for sanctions is DENIED.

related-case-search

Dig Deeper

Get Deeper Insights on Court Cases


Latest cases where PAUL HASTINGS LLP is a litigant