PEREZ CLEANING & RESTORATION, INC. VS. ACCURATE INVESTMENT..

Tentative Rulings

Case Number: NC061025 Hearing Date: September 30, 2021 Dept: S27

1. Background Facts

   These two consolidated actions involve claims between a former commercial tenant and commercial landlord. In NC061025, Perez Cleaning & Restoration, Inc. (“Perez”) sued its landlord, Accurate Investment Partners (“AIP”) for failure to return a security deposit. In 19LBCV00067, AIP sued a variety of related Perez entities and persons (collectively “Perez”) for breach of contract, alleging Perez engaged in substantial construction at the property without permits and in violation of applicable building codes, such that AIP had to remediate the property with proper permits.

2. Motion to Bifurcate

1. Procedural History

   Perez filed this motion on 9/08/21, setting it for hearing on 11/04/21. All parties attended a Case Management Conference on 9/09/21. The Court, at the parties’ request, advanced the hearing date to 9/30/21 and ordered any opposition and/or reply to be per Code. On 9/10/21, Accurate gave notice of the Court’s ruling.

2. Request for Relief

   Perez seeks an order bifurcating the liability phase of the trial from the damages phase of the trial. Specifically, Perez contends the liability phase of the trial will turn on contractual construction, which is an issue properly decided by bench trial. If Accurate prevails on the threshold issue of contractual construction and liability, a damages phase will be necessary; however, if Accurate does not prevail, no jury need be empaneled and no evidence of damages will need to be presented.

3. Law Governing Bifurcation

   Bifurcation is the procedure whereby the court may order separate trials of issues of parties joined in a single action. The objective of bifurcation is to avoid wasting time and money on the trial of damages issues if the liability issue is resolved against the plaintiff. Also, the procedure is not limited to separate trials of liability and damages; nor is it limited to dividing a case into only two parts. A party seeking bifurcation should request such relief as soon as the need becomes apparent. Delay may be a factor affecting the court’s exercise of discretion. Generally, the court has the inherent power to regulate the order of trial and, therefore, can entertain a motion to bifurcate at any time, even during the trial. However, where bifurcation is sought pursuant to CCP ;598 (e.g., to obtain bifurcation of liability issue), the order must be made no later than 30 days before trial. (I.e., the motion must be heard and order made more than 30 days before trial.)

   Pursuant to CCP ;1048(b), “The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action, including a cause of action asserted in a cross-complaint, or of any separate issue or of any number of causes of action or issues, preserving the right of trial by jury required by the Constitution or a statute of the state or of the United States.”

4. Analysis

   Any opposition to this motion was due on or before 9/17/21. The Court has not received opposition to the motion. The Court therefore assumes all parties agree the requested relief is necessary and proper.

   Perez argues that, because the liability issue is properly tried by the Court, while the damages issue is properly tried by the jury, bifurcation is in the interest of justice. The Court notes, however, that the case is scheduled for a purely non-jury trial. This appears to have been agreed on at the CMC, which was held the day after Perez filed the motion. Regardless, the Court finds bifurcation is proper. The Court will hear evidence and argument concerning liability first. If a damages phase is necessary, it will proceed immediately after the Court rules on the liability issue.

5. Final Note

   The Court notes that the FSC in this case is scheduled to be held concurrently with the hearing on this motion to bifurcate. The Court asks Counsel to make arrangements to appear remotely at the FSC.

   The Court also notes that there is a hearing on a motion to quash scheduled for 1/27/22 and a motion to extend discovery cut-off reserved for 1/04/22. These dates are well after the scheduled trial date of 10/04/21. The Court wishes to hear from the parties, at the FSC, about whether the January hearing dates can be removed from the Court’s calendar.

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Case Number: NC061025 Hearing Date: September 9, 2021 Dept: S27

1. Background Facts

   These two consolidated actions involve claims between a former commercial tenant and commercial landlord. In NC061025, Perez Cleaning & Restoration, Inc. (“Perez”) sued its landlord, Accurate Investment Partners (“AIP”) for failure to return a security deposit. In 19LBCV00067, AIP sued a variety of related Perez entities and persons (collectively “Perez”) for breach of contract, alleging Perez engaged in substantial construction at the property without permits and in violation of applicable building codes, such that AIP had to remediate the property with proper permits.

2. Motion to Disqualify Counsel

1. Parties’ Positions

   AIP moves to disqualify Richard E. Williamson, Ezer Williamson, APC, and Micheal I. Schiller from further representation of Perez. AIP contends Richard E. Williamson and Ezer Williamson previously represented Liftech Elevator Services, Inc. in a breach of contract action. AIP contends Liftech is wholly owned and operated by Daniel Simon and Michael Perkins, who are also the sole owners and operators of AIP. AIP contends Williamson, in the course of its representation of Liftech, learned pertinent information about how Simon makes litigation decisions in the breach of contract context, including how they determine whether to settle, financial information, and information about how Simon evaluates information relevant to prosecution, settlement and accomplishment of litigation goals.

   Perez opposes the motion. It argues Liftech and AIP are separate corporate entities, such that the successor representation rules do not apply. It argues any information about how Simon handled litigation many years ago between Liftech and an unrelated entity bears no relationship to how Simon will handle the instant litigation. It argues the two actions bear no relationship to each other. It argues it is entitled to counsel of its choice, and it will be prejudiced if the motion is granted. Lastly, it argues AIP is engaged in gamesmanship, as it filed this motion at the penultimate moment when discovery responses were due.

   AIP, in reply, contends the case law cited by Perez is not applicable where, as here, the two corporate entities are closely held corporations. AIP contends it did not unreasonably delay in filing the motion, and the status of discovery proceedings is not relevant to the issue of disqualification.

2. Initial Note

   AIP’s notice of motion indicates AIP seeks disqualification per CRPC 1.7(a), 1.9, and 3.7. As Perez correctly notes in opposition to the motion, Rules 1.7(a) and 3.7 have nothing to do with this case. Rule 1.7 applies to concurrent representation of adverse clients. Rule 3.7 applies to lawyers as witnesses. AIP fails to show that either of these rules has any relationship to the facts of this case. The Court asks AIP to bring motions only based on applicable rules in the future.

3. Law Governing Successor Representation

   CRPC 1.9(a) provides, “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person* in the same or a substantially related matter in which that person’s* interests are materially adverse to the interests of the former client unless the former client gives informed written consent*.”

   Rule 1.0.1 defines “person” to have the meaning stated in Evidence Code ;175. ;175 provides, “”Person’ includes a natural person, firm, association, organization, partnership, business trust, corporation, limited liability company, or public entity.”

   Thus, the threshold issue before the Court is whether AIP is the same “person” as Liftech because it shares the same two officers and directors. If it is not, then Rule 1.9 does not apply. AIP cites only one case to support this position in its moving papers. It cites Black v. Bank of America (1994) 30 Cal.App.4^th 1, 6. In Black, the Court considered application of the agent immunity rule, which makes clear that agents and employees of a corporation cannot conspire with the corporation itself when the agents or employees are acting in their official capacity. Its discussion of corporations as legal fictions which act through their officers and employees was intended to guide the discussion of the tort of conspiracy, but it is not, on its face, applicable to disqualification of counsel.

   Perez, in opposition to the motion, cites a variety of cases holding that former representation of a corporation does not require disqualification from representing a client with interests adverse to a related corporation. AIP, in reply, argues those cases are distinguishable because they do not involve corporations as closely held as Liftech and AIP. It is, however, AIP’s burden to provide a closely analogous case and establish disqualification is warranted; it is not Perez’s burden to provide a case exactly on point. Because Perez’s cases are more on point than AIP’s, the Court finds AIP did not meet its burden to show disqualification is appropriate.

4. Final Notes

   The Court notes that its decision to deny this motion is based on other factors as well. AIP argues Williamson, in the course of representing Liftech, learned about “Simon’s finances.” The Court is not clear on how Simon’s finances, as opposed to Liftech’s finances and AIP’s finances, relate to either lawsuit. Simon was not personally sued in either lawsuit. Simon was not sued as an alter ego or otherwise. AIP failed entirely to show that Williamson, while representing Liftech, somehow learned about AIP’s finances. This would be the relevant showing.

   The Court also notes that, even if Liftech and AIP were considered the same “person” to trigger a Rule 1.9 analysis, the idea that the two lawsuits are “substantially related” is attenuated at best. AIP relies on the “playbook” theory of disqualification, which requires disqualification where an attorney learns how its client “plays” litigation, and can use that information in connection with adverse litigation. AIP argues this theory is in play because Williamson learned, in the Liftech litigation, “knowledge about the financial condition of Liftech Elevator, Mr. Simon’s philosophy about settling and/or contesting litigation, and how Mr. Simon evaluated information that was material to the prosecution, settlement, or accomplishment of the Liftech Elevator litigation.” As noted above, Liftech’s financial condition is entirely irrelevant to AIP’s financial condition. The Court finds any information about how Simon settles or evaluates cases is attenuated at best, especially because the Liftech representation was mostly concluded over a decade ago and completely concluded by 2013. The Liftech litigation was only one case, and ultimately the case resulted in the adverse party (Story Building) filing for bankruptcy. The factual and procedural posture of the Liftech litigation is so completely different from this case as to render any information gleaned in connection with that case virtually useless in connection with the instant case.

5. Conclusion

   AIP failed to meet its burden to show Rule 1.9 applies. Even if Rule 1.9 does apply, the Court finds the two cases are not “substantially related” such that disqualification is necessary. The Court declines to consider issues relating to the timing of the filing of the motion, as doing so is not necessary to a resolution of the merits of the matter. The motion is denied.

   AIP is ordered to give notice.

   Parties who intend to submit on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If any party does not submit on the tentative, the party should make arrangements to appear remotely at the hearing on this matter.