ENVIROMENTAL & CHEMICAL CONSULTING VS CLEAN UP AMERICA ET AL

Tentative Rulings

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Case Number: ****7164 Hearing Date: July 8, 2021 Dept: 55

ENVIRONMENTAL & CHEM. CONSULTING v. CLEAN UP AMER. ****7164

Hearing Date: 7/8/21, Dept. 55

#11: MOTION FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION .

Notice: Okay

Opposition

MP: Cross-Defendants ENVIRONMENTAL AND CHEMICAL CONSULTING, INC.

RP: Cross-Complainants CLEAN UP AMERICA, INC., JOY POTTER, and DEONTAY POTTER.

Summary

On 1/13/17, Plaintiff ENVIRONMENTAL & CHEMICAL CONSULTING, INC. (ECC) filed a Complaint.

On 3/10/20, Plaintiff filed a First Amended Complaint, alleging that Defendant CLEAN UP AMERICA, INC. (CUA) failed to pay all sums due for professional waste transportation services, in a project, and defendants MERCO, LLC and/or CAL-DORAN REL ESTATE, INC. are the owners of the subject real property.

Those causes of action are:

1. BREACH OF WRITTEN CONTRACT

2. COMMON COUNTS.

On 6/26/20, Plaintiff filed a request for dismissal of Plaintiff’s entire action, filed 6/26/20.

On 6/2/17, a Cross-Complaint was filed by defendants/cross-complainants CLEAN UP AMERICA INC. (CUA) and DEONTAY POTTER, against plaintiff/cross-defendant ENVIRONMENTAL & CONSULTING, INC. (ECC) and cross-defendant DAVID DIAZ, for Breach of Contract, Fraud, Forgery, and Indemnity.

On 11/10/20, a First Amended Cross-Complaint was filed, for Breach of Contract, Fraud, Forgery, Negligent Hiring and Retention, and Fraudulent Conveyance, alleging that ECC breached the Waste Transportation and Disposal Agreement with CUA by ECC\'s negligent disposal of wastewater, causing CUA to be liable these damages, costs, restitution, fines, or penalties. Also, allegedly ECC forged the signature of CUA\'s President on a Personal Guaranty, at page 2 of the Customer Credit Application, such that Potter was required to retain counsel to defend himself against the claims ECC asserted against him based on the forgery, since Deontay Potter had not really agreed to personally guarantee CUA\'s payments for ECC\'s services, and ECC knew of Diaz\'s modus operandi of forging signatures, when it negligently hired him. Further, allegedly ECC made a shareholders distribution transfer, with the intent to hinder, delay, or defraud the Cross-Complainants.

MP POSITIONS

First, moving party requests summary judgment, as to the First Amended Cross-Complaint, on grounds including the following:

1. CROSS-COMPLAINANTS’ FIRST CAUSE OF ACTION HAS NO MERIT.

THERE IS NO TRIABLE ISSUE OF MATERIAL FACT AND CROSS-DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF

LAW. CROSS-DEFENDANTS DO NOT HAVE ANY EVIDENCE THAT ECC

WAS NEGLIGENT IN WASTE DISPOSAL.

2. CROSS-COMPLAINANTS’ SECOND CAUSE OF ACTION HAS NO MERIT.

THERE IS NO TRIABLE ISSUE OF MATERIAL FACT AND CROSS-DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW. CROSS-DEFENDANTS DID NOT BREACH A WRITTEN CONTRACT

WITH CROSS-COMPLAINANTS.

3. CROSS-COMPLAINANTS’ THIRD CAUSE OF ACTION HAS NO MERIT.

THERE IS NO TRIABLE ISSUE OF MATERIAL FACT AND CROSS-DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF

LAW. THERE WAS NO FRAUDULENT CONCEALMENT.

4. CROSS-COMPLAINANTS’ FOURTH CAUSE OF ACTION HAS NO MERIT.

THERE IS NO TRIABLE ISSUE OF MATERIAL FACT AND CROSS-DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF

LAW. CROSS-DEFENDANTS DID NOT FORGE ANY DOCUMENTS. ALSO

THERE IS NO CAUSE OF ACTION FOR FORGERY UNDER CALIFORNIA

LAW.

5. CROSS-COMPLAINANTS’ FIFTH CAUSE OF ACTION HAS NO MERIT.

THERE IS NO TRIABLE ISSUE OF MATERIAL FACT AND CROSS-DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF

LAW. CROSS-DEFENDANTS WERE NOT NEGLIGENT IN HIRING AND

RETENTION.

6. CROSS-COMPLAINANTS’ SIXTH CAUSE OF ACTION HAS NO MERIT.

THERE IS NO TRIABLE ISSUE OF MATERIAL FACT AND CROSS-DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF

LAW. THERE WAS NO FRAUDULENT TRANSFER.

(Motion, pp. 2-3.)

Second, cross-defendants move in the alternative, for summary adjudication, on the following issues:

A) ECC did not owe a duty to CUA, its owners and officers to remove all hazardous waste from CUA’s Lugo Street site (FACC ¶33)

B) ECC did not owe a duty to monitor the wastewater flowing out of the debris pile (FACC ¶14)

C) ECC did not owe a duty to maintain the containment for the wastewater (FACC ¶14)

D) ECC did not owe a duty to have an employee on site at the Lugo Street property at all times to monitor, control, and collect the wastewater runoff. (FACC ¶14)

E) ECC had no duty to cover any damages by any cross-complainant per ¶8 of the Waste Transportation and Disposal Agreement, dated 9/24/2016 (hereinafter “ECC/CUA contract”. (FACC ¶28, 30)

F) ECC had no duty to collect the wastewater on the south side of the Lugo Street property and had no duty to employ competent measures to monitor and manage the wastewater runoff and control its proliferation. (FACC ¶26)

G) ECC did not have a duty to continue transporting and disposing water after it learned of anticipatory breach by CUA. (FACC ¶26)

H) ECC/Diaz do not have a duty to pay prevailing party attorneys fees. (FACC ¶32)

I) Emotional distress damages are unavailable in this case (FACC ¶ 36, 45, 54)

J) CUA/Potter may not recover any damages for having to file bankruptcy/litigate a claim in bankruptcy of having to defend against criminal charges. (FACC ¶37,41)

K. Punitive damages are not recoverable in this case (FACC ¶39, 46, 56, 59, 64, 65, prayer for relief C)

L. ECC/Rains did not owe a duty to investigate Diaz’ criminal history. (FACC ¶44)

M) 45. ECC/Rains did not owe a duty of care to any cross-complainant not to hire DIAZ. (FACC ¶45)

N) 64. No cross-complainant sustained any damages due to ECC transfers in 2020. (FACC ¶64)

O) Cross-complainants may not recover any consequential damages. (FACC, Prayer for relief A).

(Motion, pp. 3-4.)

RP POSITIONS

Opposing parties advocate denying, for reasons including the following:

· The motion requires admissible evidence to establish that there is no genuine dispute of material fact, to meet the initial burden of proof. Evidentiary objections were filed as to much inadmissible evidence.

· There are triable issues of material fact, including as to (1) ECC’s negligent services that failed to meet its duty to collect all wastewater, and (2) the forgery of a guaranty or prosecution based on that forged guaranty.

· There is not a single reference to page and line numbers in the Separate Statement.

· As to the First Cause of Action (C/A ), regarding negligence, Cross-Complainants admit that their work-stoppages caused waste-water to escape and pollute adjacent properties.

· Because ECC’s services admittedly did not collect anything approaching all of the fire suppression wastewater, ECC’s motion attempts to rewrite its duties under the WTDA and ECC-CUA contract. The WTDA in its ; 3 specifies that ECC is obligated to “take possession of the Waste” – the “Waste” being wastewater from the fire suppression. The definite and singular article “the” unambiguously means the whole of the wastewater, not just “some.” Thus, parol evidence is inadmissible.

· There was no implied repudiation by any nonpayment, because Mr. Potter was at all times attempting to obtain insurance coverage, and CUA did nothing prior to ECC’s further performance that could be construed as implicitly repudiating the contract. By the time the insurance proceeds were received, ECC had breached the contract and caused liability greater damage. There was no payment due at the times of demands for payments followed by work stoppages.

· The MSA on the 2^nd C/A does not address the entire cause of action, as no reference is made to the breach of the covenant of good faith and fair dealing based, inter alia, on the forgery of Mr. Potter’s signature on the guaranty and ECC’s prosecution of now-dismissed claims against him based on the forged guaranty.

· Summary determination is sought on the 3rd C/A for fraud on the extremely thin basis of a 2-sentence assertion by Mr. Diaz, and the 1^st sentence an inadmissible conclusory general denial of any intent to defraud. Mr. Potter’s Declaration rebuts the claim with admissible evidence that neither Mr. Diaz nor ECC disclosed to him that it intended to forge his signature nor sue him on a forged guaranty.

· The 4^th C/A is for a prima facie tort through the act of forgery and the baseless prosecution of claims against Deontay Potter based on that forgery. There are conflicting stories in dispute as to whether ECC Vice-President David Diaz was the forger.

· The MSA for the 5^th C/A for negligent hiring and retention is based on weak proof. Evidence in dispute exists that Mr. Diaz forged Mr. Potter’s signature, and that ECC’s decisionmaker, Mr. Rains, was on notice that Mr. Diaz had previously been a forger and was the probable person at ECC who forged Mr. Potter’s signature.

· The 6^th Cause of Action for fraudulent transfers rests on the assertions that (1) the fraudulent transfers have not harmed Cross-Complainants because the funds are in Mr. Rains’ house or control and (2) that there is no evidence of fraudulent intent. There is the cost and burden of retrieving back funds, and uncertainty as to whether funds will be dissipated beyond recovery. As to Mr. Rains’ self-serving assertions of honest intent, a hallmark indicium of a wrongful intent is a party giving a false explanation for his conduct in order to cover-up the existence of a wrongful motive. The conditionally-sealed Gronemeier Declaration and supporting documents demonstrate that Mr. Rains expressed rationale for the 2020.

· A motion for summary adjudication must dispose of an entire cause of action, but this alternative motion repeatedly fails to, including the many narrowly worded issues of duty and damages.

Tentative Ruling

The motion for summary judgment is denied.

The alternative motion for summary adjudication is denied, as procedurally defective.

Summary Judgment

The Court determines that sufficient competent proof has shifted the burden, but that there are triable issues of material fact, including those discussed below.

Negligence and Contract

There are triable issues regarding whether WTDA contract, as section 3, required ECC to do things necessary to collect all site wastewater, as part of the obligation “take possession of the Waste,” stated ambiguously, without specifying “all” waste, or describing the totality of its contents.

Substantial parol evidence was filed in that regard, including moving parties efforts to control as much wastewater as possible, and negotiations about handling an entire waste collection situation, and moving parties having someone on site (e.g., opposing DETONAY POTTER decl., ¶¶ 11 (“Mr. Diaz had also told me orally and in writing that ECC would have personnel at the site at all times to monitor the conditions.”), and 12).

Cognizable parol evidence includes circumstances surrounding the contracting, the object, nature and subject matter of the contract, and the parties’ negotiations. Collins v. Home Sav. & Loan Assoc. (1962) 205 Cal. App. 2d 86, 97; Haggard v. Kimberly Quality Care (1995) 39 Cal. App. 4th 508, 518. Cognizable parol evidence includes parties’ course of dealing, usage of trade and course of performance. Employers Reinsurance Co. v. Sup. Ct. (2008) 161 Cal.App.4th 906, 920-21; Hayter Trucking v. Shell W. E&P (1993)18 Cal. App. 4th 1, 20. Cognizable parol evidence includes a “party\'s conduct occurring between execution of the contract and a dispute about the meaning of the contract\'s terms….” City of Hope Nat\'l Med. Ctr. v. Genentech (2008) 43 Cal.4th 375, 393.

Where contract interpretation is an issue, and parol evidence is admissible and in conflict, summary judgment must be denied. Wolf v. Sup. Ct. (2004) 114 Cal.App.4th 1343, 1359 n. 27; Fischer v. First Internat. Bank (2003) 109 Cal.App.4th 1433, 1443; Byrne v. Laura (1997) 52 Cal. App. 4th 1054, 1066; Money Store Inv. Corp. v. S. Cal. Bank (2002) 98 Cal. App. 4th 722, 730; Rogers v. Prudential Ins. Co. (1990) 218 Cal.App.3d 1132, 1136-37 (policy was ambiguous where there was no copy of the policy in the record showing its terms); Butler v. Vons Companies, Inc. (2006) 140 Cal.App.4th 943, 949-50 (triable issues existed based upon parol testimony as to scope of agreement).

Also, the duties in negligence can arise out of the contract relationship. E.g., Willdan v. Sialic Contractors Corp. (2007) 158 Cal. App. 4th 47, 57 (contracting parties have a common-law duty to perform as agreed with care, skill and reasonable expedience, and negligent failures to do so constitute a tort in addition to contract breach).

Concealment and Negligent Retention

There are triable issues as to whether cross-defendant concealed intent to include a forged contract document leading to prosecution of claims against Deontay Potter based on forgery (e.g., moving Rains Declaration, ¶4, p. 2, l.4-6 (denying knowledge of conviction); opposing Deontay Potter decl., ¶ 9; opposing ex. , DAVID DIAZ depo., pp. 97-98 (admission of prior conviction of forgery, and “previous forgeries.”)). See, e.g., LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 (There are "four circumstances in which nondisclosure or concealment may constitute actionable fraud: (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.’”); ibid. at 337 (duty to disclose requires a fiduciary relationship or another relationship involving some sort of transaction between the parties, such as contracts, purchases and services).

Further, there are disputes as to whether ECC Vice-President David Diaz was the forger, based upon reasonable inferences from the evidence reasonably inferring that Mr. Rains perceived information making him aware that Mr. Diaz had previously been convicted and a forger, and was a forgery risk to customers signing agreements with Diaz.

In deciding whether there are any triable issues, courts consider reasonably deducible inferences from the evidence. Sababin v. Sup. Ct. (2006) 144 Cal. App. 4th 81, 90 (citing CCP ;437c(c)).

Further, forgery need not be a cognizable cause of action, because the complaint label is not determinative, and summary judgment motions must negate even poorly plead claims. See, e.g., Hernandez v. Lopez (2009) 180 Cal.App.4th 932, 939 (notwithstanding the label, “intentional tort,” a court construed the cause of action as being a sufficient one for either conversion or trespass).

For summary judgment purposes, issues framed by complaints and answers, which are to be addressed, may include even those pled defectively, yet intelligibly, although not theories completely missing from pleadings. Physicians Comm. For Responsible Medicine v. McDonald\'s Corp. (2010) 187 Cal.App.4th 554, 568 (“the issues framed by the pleadings are the only issues a motion for summary judgment must address.”); FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 382-383; Jordan-Lyon Prods., ITD., v. Cineplex Odeon Corp. (1994) 29 Cal.App.4^th 1459, 1472; Bostrom v. County of San Bernardino (1995) 35 Cal. App. 4th 1654, 1663; 580 Folsom Assocs. v. Prometheus Dev. Co. (1990) 223 Cal. App. 3d 1, 14, 18 (burden to address theories “reasonably contemplated by the opponent\'s pleading”); Melican v. Regents of Univ. of Cal. (2007) 151 Cal. App. 4th 168, 182 (not requiring party to negate an unstated claim).

Fraudulent Transfer

There are triable issues of material facts as to whether any past shareholder distributions constituted fraudulent transfers, sufficiently inferring a pattern of fraudulently diverting funds away from potential liability, and whether expense was caused in avoiding such transfers (e.g., moving Rains Declaration, ¶11, p. 2, l.27- p. 3, l. 3 (stating distributions based on yearly profits and minor deviation in amount); opposing Rains Depo. 5/25/21, p. 91, l. 5 - page 92, l. 5 (lack of knowledge of reasons for making distributions determinations); attorney Dale Gronemeier decl. (expert opinion on expenses to recover fraudulent transfers)). See, generally, e.g., See also Filip v. Bucurenciu (2005) 129 Cal. App. 4th 825, 834 ("There is no minimum number of factors that must be present before the scales tip in favor of finding of actual intent to defraud."); Annod Corp. v. Hamilton & Samuels (2002) 100 Cal. App. 4th 1286, 1298 (proof of fraudulent intent in conveyances often is inferences from the surrounding circumstances); CC ;;3439.07(a)(1), 3439.08(a) (fraudulent transfers may be avoided as against transferees who did not take property in good faith for adequate consideration).

Summary Adjudication

The narrow issues of various duties and damages are not authorized for piecemeal summary adjudication.

“[A] party may move for summary adjudication of a legal issue or a claim for damages other than punitive damages that does not completely dispose of a cause of action, an affirmative defense, or an issue of duty…. This motion may be brought only upon the stipulation of the parties whose claims or defenses are put at issue by the motion and a prior determination and order by the court that the motion will further the interests of judicial economy, by reducing the time to be consumed in trial, or significantly increase the ability of the parties to resolve the case by settlement.” CCP ;437c(s)(1) (effective 1/1/12).

Before the above statutory provision had been implemented, there was a split of authority whether defendants may seek summary adjudication of issues of duty without seeking to resolve an entire cause of action. Public Utilities Com. v. Sup. Ct. (2010) 181 Cal. App. 4th 364, 380; Linden Partners v. Wilshire Linden Assocs. (1998) 62 Cal.App.4th 508, 519. But see Regan Roofing Co. v. Sup. Ct. (4^th Dist. 1994) 24 Cal.App.4th 425, 436 (split of authority), disapproved on other grounds by Crawford v. Weather Shield Mfg. Inc. (2008) 44 Cal. 4th 541, 563.

Additionally, an issue of damages must dispose of an entire cause of action. DeCastro West Chodorow & Burns, Inc. v. Sup. Ct. (1996) 47 Cal.App.4th 410, 422.

Further, an issue of punitive damages must dispose of the entire claim for them. Catalano v. Sup. Ct. (2000) 82 Cal. App. 4th 91, 97-98.

Objections

As to summary judgment or adjudication motions, judges need only rule on evidentiary objections deemed material to the disposition. CCP ;437c(Q).

Here, after considering all the many evidentiary objections, the Court readily determines that sufficient (albeit sometimes borderline), evidence survives to shift the burden of proof, and that the inadmissible parts of evidence do not make any material difference in this ruling.

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