PEOPLE OF THE STATE OF CALIFORNIA EX REL. CALIFORNIA AIR RESOURCES BOARD VS NOIL ENERGY GROUP, INC.

Tentative Rulings

Case Number: *******0142 Hearing Date: May 16, 2023 Dept: 34

SUBJECT: Motion to Compel Responses by Noil Energy, Inc., Noil USA, Inc. and Speedy Fuels [sic] to Requests for Production of Documents, Set Three, and Supplemental Requests for Production and Imposing a Monetary Sanction

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion to Compel Speedy to Respond to Special Interrogatory No. 27, and Imposing Sanctions

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion to Compel Defendants’ Responses to CARB’s Special Interrogatories, Set Three, and Imposing a Monetary Sanction

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion to Compel Defendants’ Responses to CARB’s Special Interrogatories, Set Four, and Imposing a Monetary Sanction

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion to Compel Defendant Speedy to Produce Anush Zakaryan for Deposition

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None.

SUBJECT: Motion to Compel Responses by Noil USA, Inc. to Request for Production No. 11

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion to Compel Responses by Noil Energy, Inc. to Request for Production No. 12

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion to Compel Defendant Speedy to Produce Grigor Termendjian for Deposition

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion for Order Establishing Admissions and for Sanctions Against Defendant Noil USA, Inc.

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion for Order Establishing Admissions and for Sanctions Against Defendant Noil Energy Group, Inc.

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion for Order Establishing Admissions and for Sanctions Against Defendant Speedy Fuel, Inc.

Moving Party: Plaintiff The People of the State of California ex rel. California Air Resources Board

Resp. Party: None

Plaintiff’s Motion to Compel Responses to RPDs Set Three is GRANTED.

Plaintiff’s Motion to Compel Responses to SROGs Set Three is GRANTED.

Plaintiff’s Motion to Compel Responses to SROGs Set Four GRANTED.

Monetary sanctions are GRANTED in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $900.00.

Plaintiff’s Motion to Compel Responses to SROG No. 27 Motion is GRANTED. Defendant Speedy Fuel, Inc. must serve its verified answer to SROG No. 27 within 7 days of the issuance of this Order.

Plaintiff’s Motion to Compel Responses to RPD No. 11 is DENIED as moot.

Plaintiff’s Motion to Compel Responses to RPD No. 12 is DENIED as moot.

Monetary sanctions are GRANTED in favor of Plaintiff and against Defendant Speedy Fuel, Inc. in the amount of $900.00.

Plaintiff’s Noil USA Motion to Establish Admissions to RFAs is DENIED as moot.

Plaintiff’s Noil Energy Motion to Establish Admissions to RFAs is DENIED as moot.

Plaintiff’s Speedy Fuel Motion to Establish Admissions to RFAs is DENIED as moot.

Monetary sanctions are GRANTED in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $500.00.

Plaintiff’s Motion to Compel the Zakaryan Deposition is GRANTED. Defendant Speedy Fuel, Inc. shall make Anush Zakaryan available for deposition within 14 days.

Plaintiff’s Motion to Compel the Termendjian Deposition Motion is GRANTED. Defendant Speedy Fuel, Inc. shall make Grigor Termendjian available for deposition within 14 days.

BACKGROUND:

On August 10, 2020, Plaintiff People of the State of California ex rel. California Air Resources Board filed two Complaints for Civil Penalties and Injunctive Relief: one against Defendant Noil Energy Group, Inc. (Case Number *******0142) and another against Defendant Speedy Fuel, Inc. (Case Number 20STCV30292).

On May 6, 2021, Plaintiff amended its Complaint against Defendant Noil Energy Group, Inc. to substitute Doe 1 with Noil USA, Inc.

On May 14, 2021, Plaintiff filed two new Complaints against Defendants: one against Noil Energy Group, Inc. and Noil USA, Inc. (Case Number 21STCV18270) and the other against Speedy Fuel, Inc. (Case Number 21STCV18251).

On June 22, 2021, the Court found that the four cases are related and further found that *******0142 is the lead case.

On July 9, 2021, Plaintiff filed its First Amended Complaint.

On August 10, 2021, Defendants Noil Energy Group, Inc. and Noil USA, Inc. filed their Verified Answer to the Complaint in Case Number 21STCV18270.

On August 11, 2021, Defendants Noil Energy Group, Inc. and Noil USA, Inc. filed their Verified Answer to the First Amended Complaint in Case Number *******0142.

On August 11, 2021, Defendant Speedy Fuel, Inc. filed its Verified Answer to the Complaint in Case Number 21STCV18251 and its Verified Answer to First Amended Complaint in Case Number 20STCV30292.

On August 18, 2021, Defendants/Cross-Complainants Noil Energy Group, Inc. and Noil USA Inc. filed their Cross-Complaint against Cross-Defendants California ex rel. California Air Resources Board, California Department of Food and Agriculture, Los Angeles Police Department, and Los Angeles Police Officer Walter McMahon.

On November 29, 2021, Plaintiff amended its First Amended Complaint to substitute Doe 2 with Noil Fontana, LLC.

On October 18, 2022, by Stipulation of the Parties, the Court ordered the consolidation of Case Numbers *******0142 and 21STCV18270 and that all subsequently filed papers shall be filed only in Case Number *******0142, with references to Case Number 21STCV18270 as a consolidated action.

On February 1, 2023, Plaintiff filed its Second Amended and Supplemental Complaint for Civil Penalties and Injunctive Relief Against Noil Energy Group, Inc. and Noil USA, Inc.

On February 2, 2023, Plaintiff filed its Second Amended and Supplemental Complaint for Civil Penalties and Injunctive Relief against Speedy Fuel, Inc.

On April 10, 2023, Plaintiff filed the following motions:

(1) Motion to Compel Responses by Noil Energy, Inc., Noil USA, Inc. and Speedy Fuels [sic] to Requests for Production of Documents, Set Three, and Supplemental Requests for Production and Imposing a Monetary Sanction (“RPDs Set Three Motion”);

(2) Motion to Compel Speedy to Respond to Special Interrogatory No. 27, and Imposing Sanctions (“SROG No. 27 Motion”);

(3) Motion to Compel Defendants’ Responses to CARB’s Special Interrogatories, Set Three, and Imposing a Monetary Sanction (“SROGs Set Three Motion”);

(4) Motion to Compel Defendants’ Responses to CARB’s Special Interrogatories, Set Four, and Imposing a Monetary Sanction (“SROGs Set Four Motion”); and

(5) Motion to Compel Defendant Speedy to Produce Anush Zakaryan for Deposition (“Zakaryan Deposition Motion”);

On April 11, 2023, Plaintiff filed the following motion: Motion to Compel Responses by Noil USA, Inc. to Request for Production No. 11 (“RPD No. 11 Motion”).

On April 12, 2023, Plaintiff filed the following motions:

(1) Motion to Compel Responses by Noil Energy, Inc. to Request for Production No. 12 (“RPD No. 12 Motion”); and

(2) Motion to Compel Defendant Speedy to Produce Grigor Termendjian for Deposition (“Termendjian Deposition Motion”).

On April 28, 2023, Plaintiff filed the following motions:

(1) Motion for Order Establishing Admissions and for Sanctions Against Defendant Noil USA, Inc. (“Noil USA RFAs Motion”);

(2) Motion for Order Establishing Admissions and for Sanctions Against Defendant Noil Energy Group, Inc. (“Noil Energy RFAs Motion); and

(3) Motion for Order Establishing Admissions and for Sanctions Against Defendant Speedy Fuel, Inc. (“Speedy Fuel RFAs Motion”).

Each of the motions filed between April 10 and April 28, 2023 was concurrently filed with a Declaration of Gary E. Tavetian and a Proposed Order. Certain others were filed with a Separate Statement.

No opposition has been filed to any of the 11 discovery motions.

On May 12, 2023, the Court contacted the Plaintiff’s Counsel for an update on whether these 11 motions were still scheduled for May 16, 2023. Plaintiff responded by filing a letter with updates regarding the pending motions.

ANALYSIS:

For clarity and ease of analysis, the Court considers the 11 discovery motions in the following groupings: (1) motions involving initial responses to requests for production of documents (“RPDs”) and special interrogatories (“SROGs”); (2) motions involving further responses to RPDs and SROGs; (3) motions involving requests for admission (“RFAs”); and (4) motions involving depositions.

I. Motions Involving Initial Responses to RPDs and SROGs

A. Legal Standard

California Code of Civil Procedure requires a response from the party to whom form interrogatories, special interrogatories, and demand requests are propounded within 30 days after service of the requests, unless the time is extended by agreement of the parties. (Code Civ. Proc., 2030.260, subd. (a), 2030.270, subd. (a), 2031.260, subd. (a), 2031.270, subd. (a).) If a party fails to serve timely responses, "the party making the demand may move for an order compelling response to the demand.” (Code Civ. Proc., 2030.300, subd. (b).) By failing to respond, the offending party waives any objection to the demand. (Code Civ. Proc., 2030.290, subd. (a).)

For a motion to compel, all a propounding party must show is that it properly served its discovery requests, that the time to respond has expired, and that the party to whom the requests were directed failed to provide a timely response. (See Leach v. Super. Ct. (1980) 111 Cal.App.3d 902, 905, 906.) Indeed, "[o]nce [a party] 'fail[ed] to serve a timely response,' the trial court had authority to grant [opposing party's] motion to compel responses." (Sinaiko Healthcare Counseling, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 405.)

The court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel motions for interrogatories or requests for production, unless the Court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. If a party then fails to obey an order compelling answers, the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction under Chapter 7 (commencing with Section 2023.010). In lieu of or in addition to that sanction, the court may impose a monetary sanction under Chapter 7 (commencing with Section 2023.010). (Code Civ. Proc., 2030.290, subd. (c), 2031.300, subd. (c).)

B. Discussion of Discovery

Plaintiff requests that the Court:

(1) Compel all three Defendants to provide initial responses to RPDs Set Three, which Plaintiff served on December 20, 2022, but no responses have been provided (RPDs Set Three Motion, p. 3:12–24);

(2) Compel all three Defendants to provide initial responses to SROGs Set Three, which Plaintiff served on December 20, 2022, but no responses have been provided (SROGs Set Three Motion, p. 3:11–15); and

(3) Compel all three Defendants to provide initial responses to SROGs Set Four, which Plaintiff served on February 17, 2023, but no responses have been provided (SROGs Set Four Motion, p. 3:11–17).

The Court does not have evidence that Defendants have responded to these requests for discovery.

The Court GRANTS Plaintiff’s Motion to Compel Requests for Production of Documents, Set Three.

The Court GRANTS Plaintiff’s Motion to Compel SROGs, Set Three.

The Court GRANTS Plaintiff’s Motion to Compel SROGs, Set Four.

C. Discussion of Monetary Sanctions

Defendants have failed to serve a timely response to these SROGs and RPDs. The Court does not have evidence before it that would indicate there is substantial justification or other circumstances that would make the imposition of a sanction unjust. Thus, the Court must impose a monetary sanction on Defendants. (Code Civ. Proc., 2030.290, subd. (c), 2031.300, subd. (c).)

Plaintiff requests the following monetary sanctions against Defendants:

(1) $1,300.00 in monetary sanctions for RPDs Set Three Motion, consisting of 6.5 hours of work (including two hours for a reply brief and one hour for attending a hearing) at a rate of $200.00 per hour (Decl. Tavetian re RPDs Set Three Motion, 7);

(2) $1,300.00 in monetary sanctions for SROGs Set Three Motion, consisting of 6.5 hours of work (including two hours for a reply brief and one hour for attending a hearing) at a rate of $200.00 per hour (Decl. Tavetian re SROGs Set Three Motion, 6); and

(3) $1,300.00 in monetary sanctions for SROGs Set Four Motion, consisting of 6.5 hours of work (including two hours for a reply brief and one hour for attending a hearing) at a rate of $200.00 per hour (Decl. Tavetian re SROGs Set Four Motion, 5).

“‘[P]adding’ in the form of inefficient or duplicative efforts is not subject to compensation.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131; Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 1000.)

The Court finds that the hourly rate is reasonable. However, given that these three motions are nearly identical, the authorities cited are boilerplate, and the work claimed for each motion is identical, the Court will only grant monetary sanctions for one of the motions. Furthermore, the two hours of anticipated work for the replies did not materialize as no oppositions were filed.

The Court GRANTS monetary sanctions in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $900.00.

D. Conclusion

Plaintiff’s RPDs Set Three Motion is GRANTED.

Plaintiff’s SROGs Set Three Motion is GRANTED.

Plaintiff’s SROGs Set Four Motion is GRANTED.

Monetary sanctions are GRANTED in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $900.00.

II. Motions Involving Further Responses to RPDs and SROGs

A. Legal Standard

On receipt of a response to form interrogatories, special interrogatories, and/or demand requests, the propounding and/or demanding party “may move for an order compelling further response” if: (1) the response is evasive or incomplete; (2) the representation of inability to comply is inadequate, incomplete, or evasive; or (3) the objection is without merit or too general. (Code Civ. Proc., 2030.300, subd. (a), 2031.310, subd. (a).)

“On receipt of a response to requests for admissions, the party requesting admissions may move for an order compelling a further response if that party deems that either or both of the following apply: (1) An answer to a particular request is evasive or incomplete[;] (2) An objection to a particular request is without merit or too general. (Code Civ. Proc., 2033.290, subd. (a)(1)–(2).)

The court shall impose monetary sanctions against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further interrogatories and/or a motion to compel further production of documents, unless the Court finds that the one subject to sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (Code Civ. Proc., 2030.300, subd. (d), 2031.310, subd. (h).)

B. Discussion of Discovery

Plaintiff requests further responses to the following discovery requests:

(1) SROG No. 27, from SROGs Set Two (SROG No. 27 Motion, p. 7:2–4; Separate Statement re SROGs No. 27 Motion, pp. 2:28, 3:2–7);

(2) RPD No. 11, from RPDs Set Two (RPD No. 11 Motion, p. 5:20–22; Separate Statement re RPD No. 11 Motion, pp. 5:22–28, 6:1–9); and

(3) RPD No. 12, from RPDs Set Two (RPD No. 12 Motion, p. 5:26–28; Separate Statement re RPD No. 12 Motion, pp. 5:22–28, 6:1–12.)

Plaintiff notified the Court that Defendant Noil USA, Inc. served a verified response to RPD No. 11 and that Defendant Noil Energy, Inc. served a verified response to RPD No. 12, but that Defendant Speedy Fuel, Inc. only served an unverified answer to SROG No. 27.

The Court GRANTS Plaintiff’s SROG No. 27 Motion. Defendant Speedy Fuel, Inc. must serve its verified answer to SROG No. 27 within 7 days of the issuance of this Order.

The Court DENIES as moot Plaintiff’s Motion to Compel Further Responses t0 RPD No. 11.

The Court DENIES as moot Plaintiff’s Motion to Compel Further Responses to RPD No. 12 Motion.

C. Discussion of Sanctions

The Court granted Plaintiff’s motions for further responses to discovery.

Plaintiff requests $1,300.00 in monetary sanctions for SROG No. 27 Motion, consisting of 6.5 hours of work (including two hours for a reply brief and one hour for attending a hearing) at a rate of $200.00 per hour. (Decl. Tavetian re SROG No. 27 Motion, 6.)

The Court does not find that Defendant Speedy Fuel, Inc. acted with substantial justification or that other circumstances make the imposition of a monetary sanction unjust on this Defendant. Thus, the Court is required to impose a monetary sanction on Defendant.

The Court finds that the hourly rate is reasonable. However, the two hours of anticipated work for the replies did not materialize as no oppositions were filed.

The Court GRANTS monetary sanctions in favor of Plaintiff and against Defendant Speedy Fuel, Inc. in the amount of $900.00.

D. Conclusion

Plaintiff’s SROG No. 27 Motion is GRANTED. Defendant Speedy Fuel, Inc. must serve its verified answer to SROG No. 27 within 14 days of the issuance of this Order.

Plaintiff’s RPD No. 11 Motion is DENIED as moot.

Plaintiff’s RPD No. 12 Motion is DENIED as moot.

Monetary sanctions are GRANTED in favor of Plaintiff and against Defendant Speedy Fuel, Inc. in the amount of $900.00.

III. Motion Requesting Initial Responses to RFAs

A. Legal Standard

California Code of Civil Procedure requires a response from the party to whom the request for admissions is directed within 30 days after service of the request for admissions. (Code Civ. Proc., 2033.250, subd. (a).)

If the party fails to serve a timely response, “the party to whom the requests for admission are directed waives any objection to the requests.” (Code Civ. Proc., 2033.280, subd. (a).)

The requesting party may then “move for an order that the genuineness of any documents and the truth of any matters specified in the requests be deemed admitted, as well as for monetary sanction under Chapter 7.” (Code Civ. Proc., 2033.280, subd. (b).)

A court will deem requests admitted, “unless it finds that the party to whom the requests for admission have been directed has served, before the hearing on the motion, a proposed response to the requests for admission that is in substantial compliance with Section 2033.220. It is mandatory that the court impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) on the party or attorney, or both, whose failure to serve a timely response to requests for admission necessitated this motion.” (Code Civ. Proc., 2033.280, subd. (c).)

B. Discussion of Discovery

Plaintiff served RFAs on Defendants on March 23, 2023. (Noil USA RFAs Motion, p. 3:10–11; Noil Energy RFAs Motion, p. 3:10–11; Speedy Fuel RFAs Motion, p. 3:10–11.)

Plaintiff notified the Court on May 12, 2023 that Defendants Noil USA, Inc. and Noil Energy Group, Inc. have served verified responses, but that Defendant Speedy Fuel, Inc. has only served unverified responses. (Letter dated May 12, 2023, 9–11.)

The Court DENIES as moot Plaintiff’s Noil USA RFAs Motion.

The Court DENIES as moot Plaintiff’s Noil Energy RFAs Motion.

Unverified discovery responses are tantamount to no response at all. (Appleton v. Super. Ct. (1988) 206 Cal.App.3d 632, 636.)

The Court does not have evidence that Defendant Speedy Fuel, Inc. responded to the RFAs.

The Court GRANTS Plaintiff’s Speedy Fuel RFAs Motion.

C. Discussion of Sanctions

As Defendants failed to serve timely responses to requests for admission, which necessitated this motion, the Court must impose a monetary sanction on Defendants. (Code Civ. Proc., 2033.280, subd. (c).)

Plaintiff requests $500.00 for each of these three motions, although it appears that 5.5 hours of work were anticipated. (Decl. Tavetian re Noil USA RFAs Motion, 7; Decl. Tavetian re Noil Energy RFAs Motion, 7; Decl. Tavetian re Speedy Fuel, 7.)

As indicated above in I(C), the Court finds that the hourly rate is reasonable. However, given that these three motions are nearly identical, the authorities cited are boilerplate, and the work claimed for each motion is identical, the Court will only grant monetary sanctions for one of the motions. The requested amount of $500.00 is appropriate because Plaintiff’s Counsel declares that they did 2.5 hours of work on the motion and anticipated spending one hour at the hearing.

The Court GRANTS monetary sanctions in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $500.00.

D. Conclusion

Plaintiff’s Noil USA RFAs Motion is DENIED as moot.

Plaintiff’s Noil Energy RFAs Motion is DENIED as moot.

Plaintiff’s Speedy Fuel RFAs Motion is DENIED as moot.

Monetary sanctions are GRANTED in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $500.00.

IV. Deposition Motions

A. Legal Standard

Any party may obtain discovery, subject to restrictions, by taking the oral deposition of any person, including any party to the action. (Code Civ. Proc., 2025.010.) A properly served deposition notice is effective to require a party or party-affiliated deponent to attend and to testify, as well as to produce documents for inspection and copying. (Code Civ. Proc., 2025.280, subd. (a).)

“If, after service of a deposition notice, a party . . . fails to appear for examination, or to proceed with it, or to produce for inspection any document . . . described in the deposition notice, the party giving notice may move for an order compelling deponent’s attendance and testimony, and the production . . . of any document . . . described in the deposition notice.” (Code Civ. Proc., 2025.450, subd. (a).)

The motion must set forth both facts showing good cause justifying the demand for any documents and a meet and confer declaration. (Code Civ. Proc., 2025.450, subds. (b)(1), (b)(2).) “Implicit in the requirement that counsel contact the deponent to inquire about the nonappearance is a requirement that counsel listen to the reasons offered and make a good faith attempt to resolve the issue,” including by rescheduling. (Leko v. Cornerstone Bldg. Inspection Serv. (2001) 86 Cal.App.4th 1109, 1124.)

“If a motion under subdivision (a) [of Code of Civil Procedure section 2025.450] is granted, the court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., 2025.450, subd. (g)(1).)

“The court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion for a protective order, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., 2025.420, subd. (h).)

B. Discussion of Discovery

On March 7, 2023 Plaintiff noticed Anush Zakaryan, one of Defendant Speedy Fuel, Inc.’s employees, for a deposition on March 24, 2023. (Zakaryan Deposition, pp. 3:24–28, 4:1–8.) Anush Zakaryan still has not been made available for a deposition. (Letter dated May 12, 2023, 1.)

The Court GRANTS the Zakaryan Deposition Motion. Defendant Speedy Fuel, Inc. shall make Anush Zakaryan available for deposition within 14 days of the issuance of this Order.

Plaintiff noticed Grigor Termendjian, the Chief Executive Officer for Defendant Speedy Fuel, Inc., on January 18, 2023, April 7, 2023, and April 17, 2023. (Termendjian Deposition, p. 15–21.) Grigor Termendjian still has not been made available for a deposition. (Letter dated May 12, 2023, 2.) The Court denied a motion to stay in this case on May 4, 2023. Although the arguments in that motion involved Mr. Termendjian, however, neither he nor Defendant Speedy Fuel, Inc. have opposed making him available for a deposition.

The Court GRANTS the Termendjian Deposition Motion. Defendant Speedy Fuel, Inc. shall make Grigor Termendjian available for deposition within 14 days.

C. Conclusion

The Zakaryan Deposition Motion is GRANTED. Defendant Speedy Fuel, Inc. shall make Anush Zakaryan available for deposition within 14 days of the issuance of this Order.

The Termendjian Deposition Motion is GRANTED. Defendant Speedy Fuel, Inc. shall make Grigor Termendjian available for deposition within 14.

Case Number: *******0142 Hearing Date: May 4, 2023 Dept: 34

SUBJECT: Motion for Stay of Civil Discovery Pending Resolution of Related Criminal Matter

Moving Party: Defendants Speedy Fuel, Inc., Noil Energy Group Inc., and Noil USA, Inc.

Resp. Party: Plaintiff The People of the State of California ex rel. California Air Resource Board

Defendants’ Motion for Stay of Civil Discovery Pending Resolution of Related Criminal Matter is DENIED.

BACKGROUND:

On August 10, 2020, Plaintiff People of the State of California ex rel. California Air Resources Board filed two Complaints for Civil Penalties and Injunctive Relief: one against Defendant Noil Energy Group, Inc. (Case Number *******0142) and another against Defendant Speedy Fuel, Inc. (Case Number 20STCV30292).

On May 6, 2021, Plaintiff amended its Complaint against Defendant Noil Energy Group, Inc. to substitute Doe 1 with Noil USA, Inc.

On May 14, 2021, Plaintiff filed two new Complaints against Defendants: one against Noil Energy Group, Inc. and Noil USA, Inc. (Case Number 21STCV18270) and the other against Speedy Fuel, Inc. (Case Number 21STCV18251).

On June 22, 2021, the Court found that the four cases are related and deemed that *******0142 is the lead case.

On July 9, 2021, Plaintiff filed its First Amended Complaint.

On August 10, 2021, Defendants Noil Energy Group, Inc. and Noil USA, Inc. filed their Verified Answer to the Complaint in Case Number 21STCV18270.

On August 11, 2021, Defendants Noil Energy Group, Inc. and Noil USA, Inc. filed their Verified Answer to the First Amended Complaint in Case Number *******0142.

On August 11, 2021, Defendant Speedy Fuel, Inc. filed its Verified Answer to the Complaint in Case Number 21STCV18251 and its Verified Answer to First Amended Complaint in Case Number 20STCV30292.

On August 18, 2021, Defendants/Cross-Complainants Noil Energy Group, Inc. and Noil USA Inc. filed their Cross-Complaint against Cross-Defendants California ex rel. California Air Resources Board, California Department of Food and Agriculture, Los Angeles Police Department, and Los Angeles Police Officer Walter McMahon.

On November 29, 2021, Plaintiff amended its First Amended Complaint to substitute Doe 2 with Noil Fontana, LLC.

On October 18, 2022, by Stipulation of the Parties, the Court ordered the consolidation of Case Numbers *******0142 and 21STCV18270 and that all subsequently filed papers shall be filed only in Case Number *******0142, with references to Case Number 21STCV18270 as a consolidated action.

On February 1, 2023, Plaintiff filed its Second Amended and Supplemental Complaint for Civil Penalties and Injunctive Relief Against Noil Energy Group, Inc. and Noil USA, Inc.

On February 2, 2023, Plaintiff filed its Second Amended and Supplemental Complaint for Civil Penalties and Injunctive Relief against Speedy Fuel, Inc.

On April 26, 2023, Defendants Speedy Fuel, Inc., Noil Energy Group Inc., and Noil USA, Inc. filed their Motion for Stay of Civil Discovery Pending Resolution of Related Criminal Matter (“Motion”).

On May 1, 2023, Plaintiff filed its Opposition.

The Parties agreed to hear the Motion on an expedited basis.

ANALYSIS:

I. Legal Standard

“[W]hen both civil and criminal proceedings arise out of the same or related transactions, an objecting party is generally entitled to a stay of discovery in the civil action until disposition of the criminal matter. The rationale of the federal cases is based on Fifth Amendment principles as well as the inherent unfairness of compelling disclosure of a criminal defendant's evidence and defenses before trial. Under these circumstances, the prosecution should not be able to obtain, through the medium of the civil proceedings, information to which it was not entitled under the criminal discovery rules.” (Pacers, Inc. v. Super. Ct. (1984) 162 Cal.App.3d 686, 690 [citations omitted].)

“It is not enough that the witness fears incrimination from answering the questions; the fear must be reasonable in light of the witness's specific circumstances, the content of the questions, and the setting in which the questions are asked. In other words, the privilege protects only against ‘real dangers,’ and not ‘remote and speculative possibilities.’ It is the trial court's function to determine whether such a ‘real danger’ exists. ‘[Some] discretion must rest in the court whereby it may prevent the mantle of protection from being turned into a cloak for fraud and trickery.’ If the court, in the exercise of its discretion, determines that no threat of self-incrimination is evident, then the burden of showing the danger of self-incrimination shifts to the individual asserting the privilege.” (Troy v. Super. Ct. (1986) 186 Cal.App.3d 1006, 1011, quotations and citations omitted, emphasis in original.)

II. Discussion

A. The Parties’ Arguments

Defendants move the Court to stay this case pending resolution of the criminal matter in USA v. Grigor Termendjian, United States District Court for the Central District of Utah, case number 2:23-cr-00119. Defendants argue: (1) that there are parallels between the civil and criminal investigations; (2) that the witness (Grigor Termendjian) is a significant key witness to both sides of the civil litigation; and (3) that the moving party is generally entitled to a stay of civil discovery until disposition of a pending criminal matter. (Motion, p. 3:24–25, 4:15–16, 6:6–7.)

Plaintiff opposes the Motion, arguing: (1) that Defendants are not entitled to a stay of these consolidated enforcement actions; (2) that Defendants – all of whom are corporations – do not have Fifth Amendment rights; (3) that the witness’s Fifth Amendment rights are not clearly implicated; (4) that Plaintiff has a significant interest in resolving these consolidated enforcement actions expeditiously to minimize potential prejudice; (5) that denial of a stay would not burden or prejudice Defendants; (6) that denial of a stay promotes convenience and efficient use of judicial resources; (7) that non-party witnesses have an interest in testifying at trial promptly; and (8) that the public has an interest in resolving this action. (Opposition, pp. 6:17–18, 8:1–2, 9:18–19, 10:23, 12:1–2, 12:15, 13:1.)

B. Discussion

1. The Civil and Criminal Proceedings Do Not Appear Related

First, the evidence presented to the Court does not indicate that there is the civil and criminal proceedings arise out of the same or related transactions.

The allegations in the civil case discuss violations of the California Health and Safety Code on the basis that Defendants sold, offered for sale, and transport fuels in California that were greater than 20% biodiesel by volume in certain periods. (See Second Amended Complaints.)

In contrast, the allegations in the criminal case involve the violations of defrauding the Internal Revenue Service, conspiracy to commit money laundering, and money laundering based on the allegations that Grigor Termendjian created bogus loan agreements, falsely characterized the transfer of fraud proceeds as share purchases or investments, and used shell accounts to conceal and disguise the nature, location, source, ownership, and control of the money. (See Motion, Exh. B.)

The unrelated nature of the civil and criminal proceedings does not appear to meet the standard for a stay set out in Pacers.

2. Corporate Defendants cannot Invoke the Witness’ Fifth Amendment Rights

The witness at issue, Grigor Termendjian, is not alleged to be an alter ego of the Defendants. According to Defendants, the witness is “the Chief Executive Officer, Secretary, and Chief Financial Officer of defendant, Speedy Fuel Inc.” (Motion, p. 3:3–5.) The Court agrees with Plaintiff that the witness’s Fifth Amendment rights cannot be invoked by Defendants, nor do the witness’s Fifth Amendment rights protect Defendants.

In Braswell v. United States, the United States Supreme Court held that the President of a company could not interpose Fifth Amendment objections to the production of corporate records, even if the production of those documents might prove personally incriminating. (Braswell v. United States, 487 U.S. 99 (1988); see also U.S. v. White (1944) 322 U.S. 694, 699 [organizations are not protected by the Fifth Amendment].)

California Courts agree. “[O]rganizations of any sort, corporate or otherwise, as well as individuals acting as representatives of the organization, lack the privilege against self-incrimination.” (People v. Appellate Division of Superior Court (World Wide Rush, LLC) (2011) 197 Cal.App.4th 985, 994.)

Defendants have not shown the need for a stay on discovery in this civil matter simply because one of their primary officers has been indicted. Put differently, at this time, Defendants do not have a reasonable fear of incrimination by answering questions, even if a particular witness does have that reasonable fear.

The Court has not been presented with sufficient evidence to determine that Defendants — and particularly Defendants Noil Energy Group Inc. and Noil USA, Inc. — would not be able to continue with discovery in this matter. Except for a possible a stay on deposition of this witness (which has not been requested), Defendants should be able to make information, documents, and persons most knowledgeable available subject to their discovery obligations.

3. The Court Declines to Exercise its Discretion to Stay Discovery

Upon considering the arguments and the evidence presented, the Court exercises its discretion to decline to stay discovery. Further, trial is scheduled in three weeks, on May 22, 2023. Under the CCP, all but expert discovery is now closed. It is not even clear that a stay of discovery would accomplish anything.

III. Conclusion

Defendants’ Motion for Stay of Civil Discovery Pending Resolution of Related Criminal Matter is DENIED.

Case Number: *******0142 Hearing Date: January 31, 2023 Dept: 34

SUBJECT: Motion for Leave to File Second Amended and Supplemental Complaint Against Noil Energy Group, Inc. and Noil USA, Inc.

Moving Party: Plaintiff/Cross-Defendant People of the State of California Ex Rel. California Air Resources Board

Resp. Party: None

SUBJECT: Motion for Leave to File Second Amended and Supplemental Complaint Against Speedy Fuel, Inc.

Moving Party: Plaintiff/Cross-Defendant People of the State of California Ex Rel. California Air Resources Board

Resp. Party: None

Plaintiff/Cross-Defendant’s Motions for Leave to File Second Amended Complaint are GRANTED.

BACKGROUND:

On August 10, 2020, Plaintiff People of the State of California ex rel. California Air Resources Board filed two Complaints for Civil Penalties and Injunctive Relief: one against Defendant Noil Energy Group, Inc. (Case Number *******0142) and another against Defendant Speedy Fuel, Inc. (Case Number 20STCV30292).

On January 29, 2021, Defendant Noil Energy Group, Inc. filed its Verified Answer.

On February 16, 2021, Defendant Speedy Fuel, Inc. filed its Verified Answer.

On May 6, 2021, Plaintiff amended its Complaint against Defendant Noil Energy Group, Inc. to substitute Doe 1 with Noil USA, Inc.

On May 14, 2021, Plaintiff filed two new Complaints against Defendants: one against Noil Energy Group, Inc. and Noil USA, Inc. (Case Number 21STCV18270) and the other against Speedy Fuel, Inc. (Case Number 21STCV18251).

On June 22, 2021, the Court found that the four cases are related and further found that *******0142 is the lead case.

On July 9, 2021, Plaintiff filed its First Amended Complaint.

On August 10, 2021, Defendants Noil Energy Group, Inc. and Noil USA, Inc. filed their Verified Answer to the Complaint in Case Number 21STCV18270.

On August 11, 2021, Defendants Noil Energy Group, Inc. and Noil USA, Inc. filed their Verified Answer to the First Amended Complaint in Case Number *******0142.

On August 11, 2021, Defendant Speedy Fuel, Inc. filed its Verified Answer to the Complaint in Case Number 21STCV18251 and its Verified Answer to First Amended Complaint in Case Number 20STCV30292.

On August 18, 2021, Defendants/Cross-Complainants Noil Energy Group, Inc. and Noil USA Inc. filed their Cross-Complaint against Cross-Defendants California ex rel. California Air Resources Board, California Department of Food and Agriculture, Los Angeles Police Department, and Los Angeles Police Officer Walter McMahon.

On November 29, 2021, Plaintiffs amended their First Amended Complaint to substitute Doe 2 with Noil Fontana, LLC.

On October 18, 2022, by Stipulation of the Parties, the Court ordered the consolidation of Case Numbers *******0142 and 21STCV18270 and that all subsequently filed papers shall be filed only in Case Number *******0142, with references to Case Number 21STCV18270 as a consolidated action.

On January 5, 2023, Plaintiff filed: (1) Motion for Leave to File Second Amended and Supplemental Complaint against Noil Energy Group, Inc. and Noil USA, Inc.; and (2) Motion for Leave to File Amended and Supplemental Complaint against Speedy Fuel, Inc. (“Motions for Leave to Filed Second Amended Complaint”). Plaintiff concurrently filed Declaration of Gary E. Tavetian and Proposed Order with each of the motions.

Defendants have not filed an opposition or other response to the motions.

ANALYSIS:

I. Legal Standard

The court may, in furtherance of justice and on any proper terms, allow a party to amend any pleading. (Code Civ. Proc., 473, subd. (a)(1); Branick v. Downey Savings & Loan Association (2006) 39 Cal.4th 235, 242.)

The court may also, in its discretion and after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code. (Code Civ. Proc., 473, subd. (a); Branick, supra, 39 Cal.4th at 242.)

“This discretion should be exercised liberally in favor of amendments, for judicial policy favors resolution of all disputed matters in the same lawsuit.” (Kittredge Sports Co. v. Super. Ct. (1989) 213 Cal.App.3d 1045, 1047.) Leave to amend is thus liberally granted, provided there is no statute of limitations concern. (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 411.) The Court may deny the plaintiff’s leave to amend if there is prejudice to the opposing party, such as delay in trial, loss of critical evidence, or added costs of preparation. (Id.)

Under California Rules of Court, rule 3.1324, a motion to amend a pleading before trial must (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located. (Cal. Rules of Court, rule 3.1324(a).) A separate supporting declaration specifying (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reason why the request for amendment was not made earlier must accompany the motion. (Id., rule 3.1324(b).)

II. Discussion

A. Rules of Court

Plaintiff/Cross-Defendant complied with California Rules of Court, rule 3.1324.

First, Plaintiff/Cross-Defendant submitted a copy of the proposed amended pleading, which is serially numbered as Exhibit C to the Declarations.

Second, Exhibit D to the Declarations is a red-lined version of the Second Amended Complaint, which shows exactly all the items that would be deleted and added, as well as exactly where those deletions and additions are located.

Finally, Plaintiff/Cross-Defendant submitted a separate supporting declaration from Gary E. Tavetian that describes the effect of the amendment (to make minor additions that discuss more recent violations), why the amendment is necessary and proper (because the violations occurred after the filing of the First Amended Complaint), when the facts giving rise to the amendments were discovered (in 2022), and the reason why the request for amendment was not made earlier (because there matters were found during discovery).

B. Prejudice to Defendants/Cross-Complainants

Defendants/Cross-Complainants have not opposed the Motion.

While the Court finds that there would potentially be prejudice to Defendants/Cross-Complainants by allowing Plaintiff/Cross-Defendant to amend its pleading with these additional allegations, any such prejudice to Defendants/Cross-Complainants appears minimal.

In addition, Defendants have not opposed this motion. Further, there is no corresponding request for the reopening of discovery or continuance of Trial, which is set to begin next month.

The Court finds that there exists good cause for allowing the amendment.

III. Conclusion

Plaintiff/Cross-Defendant’s Motions for Leave to File Second Amended Complaint are GRANTED.

Case Number: *******0142 Hearing Date: August 11, 2022 Dept: 34

The unopposed ex parte to continue the trial is GRANTED.

Trial is continued to Feb. 21, 2023 at 8:30 am. The Final Status Conference is continued to Feb. 8, 2023 at 9:00.

There shall be no further continuances.

b'

Case Number: *******0142 Hearing Date: September 15, 2021 Dept: 34

SUBJECT: (1) Motion to Compel Responses to Request for Production of Documents

(2) Motion to Compel Further Responses to Form Interrogatories

(3) Motion to Compel Further Responses to Special Interrogatories

(4) Motion to Compel Further Responses to Request for Admissions

Moving Party: Plaintiff People of the State of California, ex rel. California Air Resources Board

Resp. Party: Defendant NOIL Energy Group, Inc.

The Court orders the parties to attend an Informal Discovery Conference prior to ruling on these motions. (See Department 34 Trial Orders, part VI(B).) The Court orders the parties contact Department 34’s judicial assistant, Reyna Navarro, at (213) 633-0154 to schedule this informal discovery conference.

BACKGROUND:

Plaintiffs People of the State of California ex rel. California Air Resources Board commenced this action on August 10, 2020, and filed the operative First Amended Complaint on July 9, 2021 against Defendants NOIL Energy Group, Inc. and NOIL USA, Inc. Plaintiffs seek civil penalties and injunctive relief based on Defendants’ violations of California’s Regulation on Commercialization of Alternative Diesel Fuels promulgated by the Air Board.

On July 29, 2021, Plaintiffs filed the instant motion to compel initial discovery responses to production of documents, and motions to compel further responses to form interrogatories, special interrogatories, and requests for admission.

ANALYSIS:

Plaintiffs move for an order compelling Defendant NOIL Energy Group, Inc. to provide (1) initial responses to Requests for Production of Documents; (2) further responses to Form Interrogatories, Nos. 15.1 and 17.1; (3) further responses to Special Interrogatories, Nos. 2, 3, 5—13 and 17; and (4) further responses to Requests for Admission, Nos. 4, 10, 16, 45, 51, 55, 69, 75, 81, 85, 94, 100, 106, 110, 122, 128, 134, 138, 148, 154, 160, 164, 168-171 and 173.

Department 34 Trial Orders, part VI, subpart (B) states:

“If there are numerous or particularly complicated motions to compel further discovery, the Court will order counsel to attend an Informal Discovery Conference prior to ruling on the motion(s). The moving party is strongly encouraged to arrange for an Informal Discovery Conference prior to the date for the scheduled hearing on the motions.”

The Court orders the parties to attend an Informal Discovery Conference prior to ruling on these motions. (See Department 34 Trial Orders, part VI(B).) The Court orders the parties contact Department 34’s judicial assistant, Reyna Navarro, at (213) 633-0154 to schedule this informal discovery conference.

'

b'

Case Number: *******0142 Hearing Date: July 6, 2021 Dept: 34

SUBJECT: Motion for Leave to File Amended Complaint

Moving Party: Plaintiff People of the State of California ex. rel. California Air Resources Board

Resp. Party: None

The Court GRANTS the motion for leave to file an amended complaint.

BACKGROUND:

“Pursuant to Health and Safety Code section 43031, this action is brought by the Attorney General at the request of the California Air Resources Board (the Air Board) on behalf of the People of the State of California. The People seek civil penalties to punish multiple violations of California’s Regulation on Commercialization of Alternative Diesel Fuels (ADF regulation) promulgated by the Air Board (Cal. Code Regs., tit. 13, ; 2293 et seq.), along with injunctive relief to prevent defendants from violating those laws in the future.” (Complaint, ¶ 1.)

On August 10, 2020, Plaintiff People of the State of California ex. rel. California Air Resources Board (“the People”) filed a complaint for civil penalties and injunctive relief against Defendant NOIL Energy Group, Inc. Plaintiff asserts causes of action against Defendant for (1) Health and Safety Code section 43027(c) – Strict Liability; (2) Health and Safety Code section 43027(b) – Negligence; (3) Health and Safety Code section 43027(a) – Intentional Conduct; and (4) Health and Safety Code section 43027(d) – Failure to Keep Required Documents.

On January 19, 2021, the Court overruled Defendant NOIL Energy Group, Inc.’s demurrer to the complaint.

On May 6, 2021, Plaintiff filed an amendment to the complaint, replacing DOE 1 with Noil USA, Inc.

On June 22, 2021, the Court found that the following cases, *******0142, 20STCV30292, 21STCV18251, and 21STCV18270, are related, and designated *******0142 as the lead case.

Before the Court is Plaintiff’s motion for leave to file a first amended complaint (“FAC”), filed on June 11, 2021.

ANALYSIS:

I. Motion for Leave to File an Amended Answer

A. Legal Standard

The court may, in furtherance of justice and on any proper terms, allow a party to amend any pleading. (Code Civ. Proc., ; 473, subd. (a)(1); Branick v. Downey Savings & Loan Association (2006) 39 Cal.4th 235, 242.) The court may also, in its discretion and after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code. (Code Civ. Proc., ; 473, subd. (a); Branick, supra, 39 Cal.4th at 242.) “This discretion should be exercised liberally in favor of amendments, for judicial policy favors resolution of all disputed matters in the same lawsuit.” (Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1047.) Leave to amend is thus liberally granted, provided there is no statute of limitations concern. (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 411.) The court may deny the plaintiff’s leave to amend if there is prejudice to the opposing party, such as delay in trial, loss of critical evidence, or added costs of preparation. (Ibid.)

Under California Rules of Court, rule 3.1324, a motion to amend a pleading before trial must (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located. (Cal. Rules of Court, rule 3.1324(a).) A separate supporting declaration specifying (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reason why the request for amendment was not made earlier must accompany the motion. (Id., rule 3.1324(b).)

B. Discussion

Plaintiff moves for leave to file a FAC which “adds allegations against NOIL Enenrgy and the recently added Doe defendant NOIL USA, Inc. (‘NOIL USA’) relating to facts revealed during discovery and further investigation of this matter.” (Motion, p. 2:12-14.) In particular, Plaintiff explains that “the FAC adds dates of additional violations of California’s Regulation on Commercialization of Alternative Diesel Fuels (ADF regulation) (Cal. Code Regs., tit. 13, ; 2293 et seq.) by both defendants.” (Id. at p. 2:14-16.) Plaintiff asserts that “the new allegations clarify that NOIL Energy is liable as a blender and distributor of the non-compliant fuel at issue, while NOIL USA is liable as a retailer of that fuel.” (Id. at p. 2:16-18.) Further, Plaintiff contends that “the allegations in the FAC clarify that the added dates of violations serve as examples of further violations that support Plaintiffs’ general allegations that both NOIL Energy and NOIL USA violated the ADF regulation throughout 2017, 2019, 2020, and 2021.” (Id. at p. 2:18-21.)

Specifically, Plaintiff explains that “the FAC makes the following changes to the original complaint:

a. The FAC substitutes newly confirmed Attorney General Rob Bonta for the state’s departing Attorney General Xavier Becerra. (Ex. B at pp. 1, 26.)

b. The FAC names NOIL USA, Inc. as a party and as the retailer of the non-compliant fuel sold or offered for sale from the retail gasoline service stations identified in the original complaint. (Ex. B, at pp. 1, 3, 4, 5, 9, 12, 13, 18, 20-22, 25-27, ¶¶ 3, 5, 8, 13-15, 29, 43, 47-52, 65-75, 94-105, 120, Prayer for Relief ¶¶ 1-6.)

c. The FAC adds factual allegations to clarify that Plaintiffs seek to hold the originally named Defendant NOIL Energy liable as the blender and distributor of the non-compliant fuel sold and/or supplied to the gasoline stations identified in the original complaint. (Ex. B, at pp. 2, 4, 5, 6, 8, 10, 13-14, 18, 21, 20-23, 25-27, ¶¶ 2, 7, 14-16, 24, 33-34, 47- 53, 65-78, 94-107, 120, 123, Prayer for Relief ¶¶ 1-6.)

d. The FAC adds factual allegations against both defendants asserting additional dates of violations relating to the sale and/or offer for sale of non-compliant fuel from the gasoline stations identified in the original complaint, and clarifying that those examples of violations support Plaintiffs’ general allegations that both Defendants violated the ADF regulation throughout 2017, 2019, 2020 and 2021. (Ex. B, at pp. 3, 8-9, 10-12, 13, 16-17, 20-22, ¶¶ 3, 26-28, 30, 35-39, 47-52, 66-74, 91, 94-105.)

e. The FAC adds factual allegations to clarify that each retail sale of non-compliant fuel is a violation as to every entity in the supply chain which contributed to that sale or supply of fuel, including where applicable both NOIL Energy and NOIL USA. (Ex. B, at pp. 3, 4, 6, 9, 11, 15, 20, 24 ¶¶ 5, 7-9, 18, 30, 37, 61-62, 90, 119.)

f. The FAC adds factual allegations to clarify and assert that in 2017, 2019, 2020 and 2021, Defendant NOIL Energy negligently and intentionally failed to keep and/or submit records to the California Air Resources Board that are required to be maintained and/or submitted by blenders or distributors under the ADF Regulation. (Ex. B, at pp. 3, 8, 9-10, 12, 14-15, 18-19, 23-26, ¶¶ 3, 24, 31, 40-42, 44, 54-58, 79-87, 108-116, 124-125, 128.).” (Id. at pp. 2:25-3:23.) Plaintiff attaches a copy of the proposed FAC as Exhibit B to the declaration of Gary E. Tavetian.

Plaintiff argues that “the Court should grant the amendment because NOIL Energy refuses to provide discovery relating to periods of time outside the dates of the specific violations referenced in the original complaint.” (Motion, p. 9:5-7, citing Tavetian Decl., ¶¶ 9-11.) Plaintiff asserts that it “seek[s] leave to file the FAC to make clear that Plaintiff[’s] investigation to date has uncovered more evidence of ongoing violations of the ADF Regulation by NOIL Energy and NOIL USA.” (Id. at p. 9:7-9.) Plaintiff argues that “as a matter of judicial economy, amendment is appropriate here to allow the Court to adjudicate all of Plaintiff[’s] allegations – that relate to the same general set of facts – in a single action, rather than multiple actions.” (Id. at p. 9:12-14.) Plaintiff asserts that Defendants will not be prejudiced by the amendment because defense counsel does not oppose the amendment. (Id. at p. 10:3-7, citing Tavetian Decl., ¶¶ 6-7.)

Plaintiff’s motion complies with the requirements of California Rules of Court, rule 3.1324 and there exists good cause for allowing the amendment. The declaration submitted in support of the motion satisfies the requirements of California Rules of Court, rule 3.1324 because there is a clear explanation for why this amendment is sought now. The declaration identifies (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) why the request for amendment was not made earlier. (See Cal. Rules of Court, Rule 3.1324(b); see also Tavetian Decl., ¶¶ 3, 5, 9-12.)

No party has filed an opposition or indicated that any party will be prejudiced by this amendment.

Because the Court is to exercise discretion liberally the permit amendment of the pleadings (see Kittredge Sports Co., 213 Cal.App.3d at 1047), the Court GRANTS Plaintiff’s motion for leave to file an amended complaint.

The First Amended Complaint to be filed within 7 days.

'

Case Number: *******0142    Hearing Date: January 19, 2021    Dept: 34

SUBJECT: Demurrer

Moving Party: Defendant NOIL Energy Group, Inc.

Resp. Party: Plaintiff People of the State of California ex. rel. California Air Resources Board

The Court OVERRULES the demurrer.

BACKGROUND:

“Pursuant to Health and Safety Code section 43031, this action is brought by the Attorney General at the request of the California Air Resources Board (the Air Board) on behalf of the People of the State of California. The People seek civil penalties to punish multiple violations of California’s Regulation on Commercialization of Alternative Diesel Fuels (ADF regulation) promulgated by the Air Board (Cal. Code Regs., tit. 13, ; 2293 et seq.), along with injunctive relief to prevent defendants from violating those laws in the future.” (Complaint, ¶ 1.)

On August 10, 2020, Plaintiff People of the State of California ex. rel. California Air Resources Board (“the People”) filed a complaint for civil penalties and injunctive relief against Defendant NOIL Energy Group, Inc. Plaintiff asserts causes of action against Defendant for:

(1) Health and Safety Code section 43027(c) – Strict Liability;

(2) Health and Safety Code section 43027(b) – Negligence;

(3) Health and Safety Code section 43027(a) – Intentional Conduct; and

(4) Health and Safety Code section 43027(d) – Failure to Keep Required Documents.

On December 22, 2020, Defendant filed the instant demurrer to the complaint.

ANALYSIS:

I. Demurrer

A. Legal Standard

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purpose of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true, however improbable they may be. (Code Civ. Proc., ;;422.10, 589.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A demurrer is brought under Code of Civil Procedure section 430.10 (grounds), section 430.30 (as to any matter on its face or from which judicial notice may be taken), and section 430.50(a) (can be taken to the entire complaint or any cause of action within).

A demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted. A demurrer for uncertainty Code of Civil Procedure section 430.10(f), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

B. Request for Judicial Notice

“Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal. App. 4th 875,

882.) The court may in its discretion take judicial notice of records of any court of this state. (Evid. Code, ; 452, subd. (d).)

“Although the existence of a document may be judicially noticeable, the truth of statements contained in the document and its proper interpretation are not subject to judicial notice if those matters are reasonably disputable.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113, emphasis in original.)

Defendant requests that the Court take judicial notice of:

· Speedy Fuel & NOIL USA vs. People of the State of California, Search Warrant No.: LB175835, Hon. Gary J. Ferrari, Los Angeles Superior Court, Long Beach, Dept. 23. (Corrected RJN, p. 1:22-27.)

Defendant asserts that it “requests that the Court take judicial notice of the entire court file including the (a) Search Warrant issued on August 9, 2017 and the Return on the Warrant, (b) the supporting affidavit of probable cause of Walter McMahon, (c) Claimants Motion for Return of Property filed on September I, 2017, the September 29, 2017 Order to Show Cause, the Los Angeles District Attorney's Motion for Continuance and Supporting Declarations of Daniel Wright and Walter McMahon filed on October 20, 2017, and (d) reporters transcripts of the October 17, 2017, June 19, 2019, and July 28, 2019 hearings in the matter.” (Id. at p. 2:1-6.)

Plaintiff objects to Defendant’s request for judicial notice on the grounds that (1) the documents for which Defendant seeks judicial notice are not relevant; (2) the truth of the statements in the documents and their proper interpretation are not subject to judicial notice; and (3) the documents presented to the Court are impossible to reference because Defendant failed to paginate the documents submitted for judicial notice. (Opposition and Objection to RJN, pp. 2:11-18, 3:8-9, 4:1-2.)

The Court agrees that Defendant’s request for judicial notice is improper as the documents are not relevant to an issue in this action, the interpretation of the contents in the documents are disputable, and Defendant fails to comply with California Rules of Court, rule 3.1110(c) by neglecting to include page numbers.

The Court DENIES Defendant’s request for judicial notice.

C. Discussion

1. Doctrine of Res Judicata

“ ‘Res judicata’ describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, ‘precludes relitigation of issues argued and decided in prior proceedings.’ ” (Mycogen Corp. v. Monstanto Co. (2002) 28 Cal.4th 888, 896, citations omitted.) “A clear and predictable res judicata doctrine promotes judicial economy. Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date.” (Id. at p. 897.)

In particular, “[c]laim preclusion applies when (1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same issue as the prior proceeding; and (3) the parties in the present proceeding were parties to the prior proceeding.” (Planning & Conservation League v. Castaic Lake Water Agency (2009) 180 Cal. App. 4th 210, 226.)

When parties attempt to revisit the same basic claims that were, or could have been raised in a prior proceeding, these claims will be barred from subsequent litigation based on res judicata. (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 187, citing Thibodeau v. Crum (1992) 4 Cal.App.4th 749, 754-755.) Further, the prior judgment will be conclusive on new causes of action in brought subsequent proceedings because litigants “cannot, by negligence or design, withhold issues and litigate them in consecutive actions.” (Id. at p. 187, citing Thibodeau, supra, 4 Cal.App.4th at p. 755.)

“ ‘If all of the facts necessary to show that an action is barred by res judicata are within the complaint or subject to judicial notice, a trial court may properly sustain a general demurrer.’ ” (Planning & Conservation League v. Castaic Lake Water Agency (2009) 180 Cal. App. 4th 210, 225, quoting Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1299.)

Defendant maintains that the doctrine of res judicata bars Plaintiff’s claims because the District Attorney of Los Angeles did not file a criminal action after obtaining certain documents from Defendant through a search warrant. (Demurrer, p. 11:6-12:3.) Defendant argues that the doctrine of res judicata bars Plaintiff’s claims because “the underlying facts, issues, and ‘primary injury’ to the People in the Long Beach Action[, where following the execution of the August 10, 2017 search warrant, Defendant initiated an action challenging the warrant and requesting an order for return of all property seized,] overlapped entirely with the allegations in Plaintiff’s . . . complaint, here.” (Demurrer, p. 11:6-12.) Defendant relies upon its request for judicial notice, where it asks the Court to “take judicial notice of Search Warrant Number LB175834 which was issued by and litigated before Judge Gary Ferrari, in the Los Angeles Superior Court Long Beach Courthouse between August of 2017 through July of 2019, and the motions, order for return of property, and the reporter’s transcripts of the various hearings associated with the warrant.” Demurer, pp. 9:25-10:2.)

In opposition, Plaintiff maintains that “because the issues raised in [its] complaint have never been adjudicated, there is no basis for the demurrer.” (Opp., p. 7:7-8.)

As indicated above, the Court has denied Defendant’s request for judicial notice. Based on the allegations in the complaint, the Court finds that there was no prior litigation involving the same claims as this complaint or that the prior proceeding resulted in a final judgment on the merits. Even if the Court were to consider the request for judicial notice of the warrant, Defendant cites to no authority for its argument that “[t]he People’s decision not to pursue the charges is akin to a voluntary dismissal on the merits.” (See Motion, p. 11:25.) The fact that the Los Angeles County District Attorney declined to file an action based on documents found in a search warrant does not lead this Court to conclude that there was a final decision on the merits of this case.

The Court finds that Plaintiff’s claims are not barred by the doctrine of res judicata and hence the Court OVERRULES the demurrer on this ground.

2. Statute of Limitations and Defense of Laches

The statute of limitations is not an enumerated ground for demurrer; rather, it is an argument that may be advanced in support of a demurrer on the ground of failure to state sufficient facts. (See E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315; see also ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 833.)

“The defense of statute of limitations may be asserted by general demurrer if the complaint shows on its face that the statute bars the action. There is an important qualification, however: In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows merely that the action may be barred.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315-1316, citations and internal quotations omitted.) A defendant challenging a pleading based on the statute of limitations must demonstrate (1) which statute of limitations applies and (2) when the cause of action accrued. (Id. at p. 1316.)

Code of Civil Procedure section 338, subdivision (k) provides for a three year statute of limitations for “an action An action commenced under Division 26 (commencing with Section 39000) of the Health and Safety Code.” (Code Civ. Proc., ; 338, subd. (k).) “These causes of action shall not be deemed to have accrued until the discovery by the State Air Resources Board or by a district, as defined in Section 39025 of the Health and Safety Code, of the facts constituting grounds for commencing the action under its jurisdiction.” (Ibid.)

“Laches may be raised by demurrer, but only if the complaint shows on its face unreasonable delay plus prejudice or acquiescence.” (Conti v. Board of Civil Service Comm’rs (1969) 1 Cal.3d 351, 362.) The Supreme Court in Conti explained that it has “consistently rejected the concept that lapse of time less than the period of limitations itself constitutes a defense.” (Id. at p. 359.)

Defendant argues that Plaintiff’s claims are barred by the statute of limitations because “Plaintiff's Complaint was filed on August 10, 2017 [sic], over three years since the first date of discovery which according to the facts alleged in the complaint was August 8, 2017.” (Demurrer, pp. 5:24-26.) Defendant maintains that the statute of limitations expired because the Department of Food and Agriculture obtained the first of several samples of Defendant’s fuels on August 8, 2017, and Plaintiff did not file the complaint until August 10, 2020. (Id. at pp. 14:23-15:15.)

Defendant asserts that in the alternative, “the laches of Plaintiff, appearing on the face of the complaint, bar the causes of action.” (Id. at p. 15:16-18.) Defendant contends that it “is prejudiced by the delay and the lapse of time because the penalty statute charged in the Complaint provides for upwards of a $250,000 civil penalty ‘for each day during any portion of which a prohibited violation occurred.’” (Id. at p. 16:5-8.)

In opposition, Plaintiff maintains that its complaint is timely because pursuant to Judicial Council Emergency Orders related to Covid-10, Rule Number 9, subdivision (a), “even if the three-year statute of limitation would have expired on August 8, 2020 absent the pandemic, as NOIL claims, the Air Board had at least until October 1, 2020 to file the complaint timely.” (Opp., p. 13:2-7.) Plaintiff also argues that even in the absence of the Emergency Order, it “still timely filed its complaint, even accepting NOIL’s claim that the action accrued on August 8, 2017” because “August 8, 2020 fell on a Saturday, so the last day for filing the case would have been Monday, August 10, 2020, the day the Air Board filed the complaint.” (Id. at p. 13:7-11, citing Code Civ. Proc., ;; 12, subd. (a), 135; Mink v Superior Court (1992) 2 Cal.App.4th 1338, 1342.) Plaintiff contends that a review of the face of the complaint demonstrates that that statute of limitations would not have commenced running on August 8, 2020 because “the fact that the Department of Food and Agriculture took samples of fuel on several dates, the first being August 8, 2017, by no means indicates that the Air Board was aware of the first violation on that date.” (Id. at p. 13:11-15.) Plaintiff maintains that “testing would have to be done and the Air Board would have to become aware of those results thereafter.” (Id. at p. 13:15-16.) Plaintiff also argues that the complaint contains allegations that Plaintiff learned about most of the violations after August 8, 2020, because the Department of Food and Agriculture collected most samples after August 8, 2017. (Id. at p. 13:16-19, citing Complaint, ¶¶ 26, 32.)

Plaintiff also argues that the defense of laches does not apply because Defendant cannot point to anything in the complaint to support that by waiting three years to file the complaint, Plaintiff somehow acquiesced to Defendant’s violations, leading to increased penalties for each day of violations. (Id. at p. 141-4.)

Plaintiff’s four causes of action brought pursuant to Health and Safety Code section 43027, subdivisions (a) through (d) fall under Division 26 of the Health and Safety Code. Therefore, a three year statute of limitations applies to Plaintiff’s claims. (Code Civ. Proc., ; 338, subd. (k).)

The Court finds that on the face of the complaint, Plaintiff’s claims are not affirmatively barred by the three year statute of limitations or by the defense of laches. Plaintiff filed the complaint on August 10, 2020. In the complaint, Plaintiff alleges:

· “On or about August 8, 2017, August 10, 2017, August 14, 2017, August 15, 2017, August 16, 2017, August 18, 2017, September 25, 2017, October 5, 2017, October 9, 2017, and October 11, 2017, CDFA collected fuel samples from pumps and/or tanker trucks at fueling stations owned and operated by NOIL in California, some or all of which were located in Los Angeles County, San Bernardino County, and San Diego County. Based on CDFA’s analysis of those samples, the People are informed and believe and, on that basis, allege that NOIL blended and sold, offered for sale, and/or supplied biodiesel blends containing (1) greater than twenty percent biodiesel by volume at no fewer than four stations on August 8, 2017 and no fewer than five stations on August 10, 2017; and (2) less than twenty percent biodiesel by volume at no fewer than two stations on August 14, 2017, August 15, 2017, August 16, 2017, and September 25, 2017, and at no fewer than one station on August 18, 2017, October 5, 2017, October 9, 2017 and October 11, 2017.” (Complaint, ¶ 26.)

· “Based on the Air Board’s review of records pertaining to biodiesel blends above B20 that had been approved through the phase-in process for candidate ADFs and the CDFA’s review of records pertaining to biodiesel blends above B20 for which a developmental engine variance was obtained, the Air Board determined that NOIL did not receive authorization to sell, offer for sale, or supply fuel containing greater than twenty percent biodiesel per volume in 2017.” (Id. at ¶ 27.)

· “Based on the Air Board’s review of quarterly reports required to be submitted under the ADF regulation, the Air Board determined that NOIL failed to submit all required quarterly reports in 2017.” (Id. at ¶ 28.)

· “Based on NOIL’s failure to submit all required reports and NOIL’s sale, offering for sale, and/or supply of alternative diesel fuels containing greater than twenty percent biodiesel by volume, the Air Board issued to NOIL on February 5, 2019 Notice of Violation #F100317- NOIL-BD and a Records Request, in which the Air Board requested that NOIL make available records required to be kept under the ADF regulation within fifteen days.” (Id. at ¶ 29.)

· “In communications between the Air Board and NOIL representatives in or around February 2019, NOIL admitted that it had sold fuel containing ninety-nine percent biodiesel by volume to Speedy Fuel, Inc., sold fuel containing greater than twenty percent biodiesel by volume at its fuel stations, and failed to report to the Air Board its blending of Stage 3A fuels.” (Id. at ¶ 30.)

· “NOIL also failed to make available to the Air Board the requested and required records, despite the Air Board notifying NOIL that its initial, belated record submission was insufficient and the Air Board giving NOIL multiple extensions to make available the missing records. In communications between the Air Board and NOIL representatives in or around March 2019, NOIL admitted it had not kept the documents the Air Board had requested. As of the date of the time of filing this Complaint, the missing records have not been made available to the Air Board.” (Id. at ¶ 31.)

· “On or about August 27, 2019, September 17, 2019, and October 7, 2019, CDFA collected fuel samples from pumps and/or tanker trucks at fueling stations owned and operated by NOIL in California, some or all of which were located in San Bernardino County. Based on CDFA’s analysis of those samples, the People are informed and believe and, on that basis, allege that NOIL blended and sold, offered for sale, and/or supplied biodiesel blends containing (1) greater than twenty percent biodiesel by volume at no fewer than one station on October 7, 2019, and (2) greater than five and less than twenty percent biodiesel by volume at no fewer than one station on August 27, 2019 and September 17, 2019.” (Id. at ¶ 32.)

· “Based on the Air Board’s and CDFA’s review of their records, the Air Board determined that in 2019 NOIL continued to blend and sell, offer for sale, and/or supply fuel containing greater than twenty percent diesel volume without authorization; continued to fail to submit required quarterly reports; and blended and sold, offered for sale, and/or supplied biodiesel blends without using the required approved NOx additives or approved formulas.” (Id. at ¶ 33.)

· “Based on NOIL’s continued failure to comply with the ADF regulation, the Air Board sent to NOIL on October 9, 2019 a letter requesting that it immediately cease and desist offering for sale biodiesel unless in compliance with the ADF regulation.” (Id. at ¶ 34.)

These allegations do not clearly and affirmatively show that Plaintiff’s claims are barred by the statute of limitations or by the defense of laches. As Plaintiff alleges that it determined in 2019 that Defendant “continued to blend and sell, offer for sale, and/or supply fuel containing greater than twenty percent diesel volume without authorization; continued to fail to submit required quarterly reports; and blended and sold, offered for sale, and/or supplied biodiesel blends without using the required approved NOx additives or approved formulas” (Complaint, ¶ 33), and that Defendant admitted in February 2019 that it sold fuel containing greater than twenty percent biodiesel by volume at its fuel stations (id. at ¶ 31), it was well within the limitations period of three years to bring the complaint on August 10, 2020.

Further, as Plaintiff notes, “even accepting NOIL’s claim that the action accrued on August 8, 2017,” the action was still timely. “August 8, 2020 fell on a Saturday so the last day for filing the case would have been Monday, August 10, 2020, the day the Air Board filed the complaint.” (Opposition p. 13:7-11.)

The Court OVERRULES the demurrer on these grounds.

3. Certainty and Sufficiency of Allegations

 

The Alternative Diesel Fuels (“ADF”) regulation promulgated by the California Air Resources Board, provides “[s]tarting January 1, 2016, no person shall sell, offer for sale or supply an ADF for use in California unless that person is in compliance with [the ADF regulation and any applicable Executive Orders].” (Cal. Code Regs., tit. 13, ; 2293.1.) This regulation sets phase-in requirements for ADFs, and only those ADFs approved through the phase-in process may be sold at retail in California. (Cal. Code Regs., tit. 13, ; 2293.5.) Under these phase-in requirements, an ADF must complete Stage 1 (piloting) and Stage 2 (development of fuel specification) before being approved as a Stage 3A (commercially available) fuel. (Ibid.) Stage 3A fuels are authorized for sale in California and may be subject to in-use requirements. (Cal. Code Regs., tit. 13, ; 2293.5, subd. (c).)

Biodiesel blends above B20 have not been approved as Stage 3A fuels through the phase-in process were not authorized for sale in California. (See Cal. Code. Regs., tit. 13, ;; 2293.5, 2293.6.) In addition, all biodiesel blends must meet all regulatory requirements of the California Department of Food and Agriculture, which for blends above B20 means that one must obtain a developmental engine fuel variance under sections 4145 and 4148 of Title 4 of the California Code of Regulations. (Cal. Code Regs., tit. 13, ; 2293.4.)

Biodiesel blends of B20 and below are approved Stage 3A fuels, are authorized for sale in California, and are subject to emission mitigation, reporting, and recordkeeping in-use requirements as set forth in the ADF regulation. (Cal. Code Regs., tit. 13, ; 2293.6, subd. (a).)

 

Health and Safety Code section 43027 states:

“The following civil penalties apply to the following acts not included within Section 43026:

(a) Any person who willfully and intentionally violates any provision of this part, or any rule, regulation, permit, variance, or order of the state board, pertaining to fuel requirements and standards, is liable for a civil penalty of not more than two hundred fifty thousand dollars ($250,000), and the prosecuting agency shall include a claim for an additional penalty in the amount of any economic gain that otherwise would not have been realized from the sale of the fuel determined to be in noncompliance.

(b) Any person who negligently violates any provision of this part, or any rule, regulation, permit, variance, or order of the state board, pertaining to fuel requirements and standards, exclusive of the documentation requirements specified in subdivision (d), is liable for a civil penalty of not more than fifty thousand dollars ($50,000).

(c) Any person who violates any provision of this part, or any rule, regulation, permit, variance, or order of the state board, pertaining to fuel requirements and standards, exclusive of the documentation requirements specified in subdivision (d), is strictly liable for a civil penalty of not more than thirty-five thousand dollars ($35,000).

(d) Any person who enters false information in, or fails to keep, any document required to be kept pursuant to any provision of this part, or any rule, regulation, permit, variance, or order of the state board, pertaining to fuel requirements and standards, is strictly liable for a civil penalty of not more than twenty-five thousand dollars ($25,000). In determining the amount of the penalty to be assessed under this subdivision, the court, or in reaching any settlement, the Attorney General or the state board, shall take into consideration, in addition to subdivision (b) of Section 43031, the specific circumstances and intent of the defendant in making the false entry or in failing to keep the document.” (Health & Safety Code, ; 43027.)

“The civil or administrative civil penalties prescribed in this chapter shall be assessed and recovered either in a civil action brought in the name of the people of the State of California by the Attorney General or by the state board, or in administrative hearings established pursuant to regulations adopted by the state board.” (Id. at ; 43031.)

Defendant argues that Plaintiff’s four causes of action are ambiguous, are not plead with any particularity whatsoever, and fail to state sufficient facts to support each claim. (Demurrer, p. 12:7-11, 13:5.) Defendant maintains that “rather than plead the facts with specificity with the evidence that is presumably readily available to the Plaintiffs [sic], such as the physical locations of the fueling stations, the Complaint instead provides vague descriptions such as ‘stations owned and operated by NOIL in California some of all of which were located in Los Angeles County, San Bernardino County, and San Diego County.’” (Id. at p. 13:7-12.) Defendant contends that “the Complaint provides zero particularity and correlation between the dates alleged in the complaint which date back to August of 2017 and the specific fuel station address that samples were collected from.” (Id. at p. 13:12-14.) Defendant also argues that the Complaint is not “specific as to whether the violations occurred at NOIL stations, fuel stations that franchise the NOIL name, or third-party fuel stations which NOIL supplies with fuel.” (Id. at p. 13:16-18.) Defendant asserts that Plaintiff fails to “allege any facts demonstrating that NOIL had knowledge or should have known what product or blend of biofuel was carried by the tanker trucks, or at what stage of the blending process samples were collected by CDFA.” (Id. at p. 14:2-5.)

Defendant also maintains that Plaintiff “fails to plead any facts that support allegation that the sampled fuel was intended to be sold or was actually ever sold to consumers, and if so, if consumers were aware of the blending percentage sold to them.” (Id. at 14:5-7.) Defendant further contends that “the Complaint fails to identify by name, description, or role of the representative(s) that allegedly made these admissions to Plaintiff, the Air Board, despite these facts presumably being available to Plaintiff.” (Id. at p. 14:12-15.)

In opposition, Plaintiff asserts that it pleads facts sufficient to state causes of action against Defendant. (Opp., p. 9:20.) Plaintiff maintains that it alleges facts explaining the relevant law, facts demonstrating that Defendant violated the Alternative Diesel Fuel regulation at issue here, and that Defendant is therefore subject to civil penalties pursuant to Health and Safety Code section 43027. (Id. at pp. 9:21-10:7.)

In the complaint, Plaintiff sufficiently and clearly alleges that Defendant failed to comply with the ADL regulation and that Defendant is therefore liable for civil penalties pursuant to the Health and Safety Code. For example, Plaintiff alleges:

· “The Air Board has authority to prosecute regulated parties’ violations of the ADF regulation’s B20, NOx emissions control, and recordkeeping and reporting requirements, and any other violation of the ADF regulation, pursuant to Health and Safety Code sections 41513 and 43025 et seq.” (Complaint, ¶ 24.)

· “At all times relevant to this Complaint, NOIL was a regulated party under the ADF regulation that blended and sold, offered for sale, and/or supplied biodiesel-blended fuel in California.” (Id. at ¶ 25.)

· “On or about August 8, 2017, August 10, 2017, August 14, 2017, August 15, 2017, August 16, 2017, August 18, 2017, September 25, 2017, October 5, 2017, October 9, 2017, and October 11, 2017, CDFA collected fuel samples from pumps and/or tanker trucks at fueling stations owned and operated by NOIL in California, some or all of which were located in Los Angeles County, San Bernardino County, and San Diego County. Based on CDFA’s analysis of those samples, the People are informed and believe and, on that basis, allege that NOIL blended and sold, offered for sale, and/or supplied biodiesel blends containing (1) greater than twenty percent biodiesel by volume at no fewer than four stations on August 8, 2017 and no fewer than five stations on August 10, 2017; and (2) less than twenty percent biodiesel by volume at no fewer than two stations on August 14, 2017, August 15, 2017, August 16, 2017, and September 25, 2017, and at no fewer than one station on August 18, 2017, October 5, 2017, October 9, 2017 and October 11, 2017.” (Id. at ¶ 26.)

· “Based on the Air Board’s review of records pertaining to biodiesel blends above B20 that had been approved through the phase-in process for candidate ADFs and the CDFA’s review of records pertaining to biodiesel blends above B20 for which a developmental engine variance was obtained, the Air Board determined that NOIL did not receive authorization to sell, offer for sale, or supply fuel containing greater than twenty percent biodiesel per volume in 2017.” (Id. at ¶ 27.)

· “Based on the Air Board’s review of quarterly reports required to be submitted under the ADF regulation, the Air Board determined that NOIL failed to submit all required quarterly reports in 2017.” (Id. at ¶ 28.)

· “Based on NOIL’s failure to submit all required reports and NOIL’s sale, offering for sale, and/or supply of alternative diesel fuels containing greater than twenty percent biodiesel by volume, the Air Board issued to NOIL on February 5, 2019 Notice of Violation #F100317- NOIL-BD and a Records Request, in which the Air Board requested that NOIL make available records required to be kept under the ADF regulation within fifteen days.” (Id. at ¶ 29.)

· “In communications between the Air Board and NOIL representatives in or around February 2019, NOIL admitted that it had sold fuel containing ninety-nine percent biodiesel by volume to Speedy Fuel, Inc., sold fuel containing greater than twenty percent biodiesel by volume at its fuel stations, and failed to report to the Air Board its blending of Stage 3A fuels.” (Id. at ¶ 30.)

· “NOIL also failed to make available to the Air Board the requested and required records, despite the Air Board notifying NOIL that its initial, belated record submission was insufficient and the Air Board giving NOIL multiple extensions to make available the missing records. In communications between the Air Board and NOIL representatives in or around March 2019, NOIL admitted it had not kept the documents the Air Board had requested. As of the date of the time of filing this Complaint, the missing records have not been made available to the Air Board.” (Id. at ¶ 31.)

· “On or about August 27, 2019, September 17, 2019, and October 7, 2019, CDFA collected fuel samples from pumps and/or tanker trucks at fueling stations owned and operated by NOIL in California, some or all of which were located in San Bernardino County. Based on CDFA’s analysis of those samples, the People are informed and believe and, on that basis, allege that NOIL blended and sold, offered for sale, and/or supplied biodiesel blends containing (1) greater than twenty percent biodiesel by volume at no fewer than one station on October 7, 2019, and (2) greater than five and less than twenty percent biodiesel by volume at no fewer than one station on August 27, 2019 and September 17, 2019.” (Id. at ¶ 32.)

· “Based on the Air Board’s and CDFA’s review of their records, the Air Board determined that in 2019 NOIL continued to blend and sell, offer for sale, and/or supply fuel containing greater than twenty percent diesel volume without authorization; continued to fail to submit required quarterly reports; and blended and sold, offered for sale, and/or supplied biodiesel blends without using the required approved NOx additives or approved formulas.” (Id. at ¶ 33.)

· “Based on NOIL’s continued failure to comply with the ADF regulation, the Air Board sent to NOIL on October 9, 2019 a letter requesting that it immediately cease and desist offering for sale biodiesel unless in compliance with the ADF regulation.” (Id. at ¶ 34.)

· “As of the timing of the filing of this Complaint, NOIL has not substantively responded to the Air Board’s cease and desist letter or otherwise agreed to stop violating the ADF regulation.” (Id. at ¶ 35.)

· “NOIL’s sale and/or supply of biodiesel blends over B20 without authorization and biodiesel blends between B5 and B20 without the required NOx mitigation caused excess NOx to be emitted to the atmosphere, in violation of the ADF regulation and in direct conflict with the air pollution reduction goals of the National Ambient Air Quality Standards and California Ambient Air Quality Standards.” (Id. at ¶ 36.)

· “NOIL’s failure to submit quarterly reports and keep and make available all records required to be kept under the ADF regulation undermines California’s ADF program, which seeks to protect air quality and public health in California by reducing greenhouse gases and particulate matter levels while minimizing NOx emissions.” (Id. at ¶ 37.)

The Court finds that Plaintiff pleads sufficient unambiguous facts to support its claims that Defendant failed to comply with the ADL regulations. Further, these allegations provide sufficient notice to Defendants of the claims asserted against it.

The Court OVERRULES the demurrer on these grounds.

D. Conclusion

The Demurrer is OVERRULED.