This case was last updated from Los Angeles County Superior Courts on 03/02/2020 at 14:27:56 (UTC).

STATE COMPENSATION INSURANCE FUND, A PUBLIC ENTERPRISE FUND AND INDEPENDENT AGENCY OF THE STATE OF CALIFORNIA VS NH ENVIRONMENTAL, INC. DBA NH SERVICE, A CALIFORNIA CORPORATION

Case Summary

On 06/06/2019 STATE COMPENSATION INSURANCE FUND, A PUBLIC ENTERPRISE FUND AND INDEPENDENT AGENCY OF THE STATE OF CALIFORNIA filed a Contract - Other Contract lawsuit against NH ENVIRONMENTAL, INC DBA NH SERVICE, A CALIFORNIA CORPORATION. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******0020

  • Filing Date:

    06/06/2019

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

 

Party Details

Plaintiff

STATE COMPENSATION INSURANCE FUND A PUBLIC ENTERPRISE FUND AND INDEPENDENT AGENCY OF THE STATE OF CALIFORNIA

Defendant

NH ENVIRONMENTAL INC. DBA NH SERVICE A CALIFORNIA CORPORATION

Attorney/Law Firm Details

Plaintiff Attorney

TSAI SEATON

Defendant Attorney

BAYLEY GUY RICHARD

 

Court Documents

Notice of Case Reassignment and Order for Plaintiff to Give Notice

1/24/2020: Notice of Case Reassignment and Order for Plaintiff to Give Notice

Notice - NOTICE OF CASE REASSIGNMENT

2/5/2020: Notice - NOTICE OF CASE REASSIGNMENT

Notice of Posting of Jury Fees

10/25/2019: Notice of Posting of Jury Fees

Notice of Ruling

10/28/2019: Notice of Ruling

Minute Order - (AMENDED)

10/25/2019: Minute Order - (AMENDED)

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE; ORDER TO SHOW CAUSE RE: FAILURE T...)

10/25/2019: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE; ORDER TO SHOW CAUSE RE: FAILURE T...)

Case Management Statement

10/21/2019: Case Management Statement

Case Management Statement

10/11/2019: Case Management Statement

Answer

9/11/2019: Answer

Proof of Personal Service

7/23/2019: Proof of Personal Service

Order to Show Cause Failure to File Proof of Service

7/1/2019: Order to Show Cause Failure to File Proof of Service

Notice of Case Management Conference

7/1/2019: Notice of Case Management Conference

Summons - SUMMONS ON COMPLAINT

6/6/2019: Summons - SUMMONS ON COMPLAINT

Civil Case Cover Sheet

6/6/2019: Civil Case Cover Sheet

Notice of Case Assignment - Unlimited Civil Case

6/6/2019: Notice of Case Assignment - Unlimited Civil Case

Complaint

6/6/2019: Complaint

4 More Documents Available

 

Docket Entries

  • 11/30/2020
  • Hearing11/30/2020 at 09:30 AM in Department 20 at 111 North Hill Street, Los Angeles, CA 90012; Non-Jury Trial

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  • 11/18/2020
  • Hearing11/18/2020 at 09:00 AM in Department 20 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 02/05/2020
  • DocketNotice (OF CASE REASSIGNMENT); Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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  • 01/24/2020
  • DocketNotice of Case Reassignment and Order for Plaintiff to Give Notice; Filed by Clerk

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  • 10/28/2019
  • DocketNotice of Ruling; Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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  • 10/25/2019
  • Docketat 09:00 AM in Department 16; Order to Show Cause Re: Failure to File Proof of Service - Held

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  • 10/25/2019
  • Docketat 09:00 AM in Department 16; Case Management Conference - Held

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  • 10/25/2019
  • DocketNotice of Posting of Jury Fees; Filed by NH Environmental, Inc. dba NH Service, a California corporation (Defendant)

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  • 10/25/2019
  • DocketMinute Order ( (Case Management Conference; Order to Show Cause Re: Failure t...)); Filed by Clerk

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  • 10/25/2019
  • DocketMinute Order ( (Case Management Conference; Order to Show Cause Re: Failure t...)); Filed by Clerk

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  • 10/21/2019
  • DocketCase Management Statement; Filed by NH Environmental, Inc. dba NH Service, a California corporation (Defendant)

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  • 10/11/2019
  • DocketCase Management Statement; Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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  • 09/11/2019
  • DocketAnswer; Filed by NH Environmental, Inc. dba NH Service, a California corporation (Defendant)

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  • 07/23/2019
  • DocketProof of Personal Service; Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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  • 07/01/2019
  • DocketOrder to Show Cause Failure to File Proof of Service; Filed by Clerk

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  • 07/01/2019
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 06/06/2019
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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  • 06/06/2019
  • DocketSummons (on Complaint); Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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  • 06/06/2019
  • DocketComplaint; Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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  • 06/06/2019
  • DocketCivil Case Cover Sheet; Filed by State Compensation Insurance Fund, A Public Enterprise Fund and Independent Agency of the State of California (Plaintiff)

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Tentative Rulings

Case Number: 19STCV20020    Hearing Date: October 01, 2020    Dept: 20

Tentative Ruling

Judge David J. Cowan

Department 20


Hearing Date:  Thursday, October 1, 2020

Case Name: State Compensation Ins. Fund v. NH Environmental, Inc. et al.

Case No.: 19STCV20020

Motion: Summary Judgment

Moving Party: Plaintiff State Compensation Insurance Fund

Responding Party: *UNOPPOSED*

Notice: OK


Ruling: The Motion for Summary Judgment is GRANTED. All future hearings are taken off calendar as all causes of action have now been resolved in Plaintiff’s favor.

 

Plaintiff to give notice. Further, Plaintiff shall submit a proposed judgment within 20 days of this Order.

 

If the parties do not submit on the tentative, they are strongly encouraged to appear by LA Court Connect rather than in person in view of the COVID-19 Pandemic.


BACKGROUND

On June 6, 2019, Plaintiff State Compensation Insurance Fund filed a Complaint against Defendants NH Environmental, Inc. (“NHE”) and Does 1-20, stating claims for breach of contract, open book account, reasonable value, and Ins. Code sec. 756 damages. Plaintiff’s claims arise out of NHE’s alleged misclassification of workers, which caused Plaintiff to charge lower premiums on a Workers’ Compensation Insurance Policy which Plaintiff issued to NHE. Plaintiff seeks to recover based on adjusted premiums after its audit of NHE.

On July 17, 2020, Plaintiff filed a motion for summary judgment.

On August 3, 2020, Plaintiff filed a proof of service of the motion for summary judgment and supporting documents on NHE’s counsel of record. NHE did not file an opposition.

DISCUSSION

Summary judgment is proper when the moving party is entitled to judgment as a matter of law and there are no triable issues of material fact. (CCP sec. 473c(c).) In analyzing such motions, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) The moving party must satisfy the initial burden of proof by presenting facts to negate or establish an essential element of each claim at issue. (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) Once the moving party has met its burden, the burden shifts to the opposing party to show via specific facts that a triable issue of material fact exists. (CCP § 437c(o)(2).) “Materiality is measured by the law applicable to the legal theories put in issue by the complaint [or petition].” (Panattoni v. Superior Court (1988) 203 Cal.App.3d 1092, 1094.) Factual issues are immaterial if they are “outside the scope of the pleadings.” (AARTS Production, Inc. v. Crocker National Bank (1986) 176 Cal.App.3d 1601, 1065.)

Here, Plaintiff seeks summary judgment in its favor on its breach of contract, open book account, and reasonable value claims. Plaintiff identifies eight factual issues relevant to those claims: (1) NHE “secured a workers’ compensation insurance policy from State Fund for the years 2015, 2016, and 2017”; (2) Plaintiff “performed all conditions” of the policy; (3) NHE was required by the policy contract “to comply with an audit of its 2016 and 2017 policies and to pay the required premiums”; (4) NHE breached the contract “by failing to comply with the required audit and payment of the resulting bill”; (5) Plaintiff is due at least $178,848.05 under the policy contract and this debt is attributable to NHE’s breach of the policy contract; (6) Plaintiff is due at least $178,848.05 on an open book account; (7) Plaintiff is due at least $178,848.05 for reasonable value; and (8) NHE had an obligation under the policy to comply with Plaintiff’s audit requests. (See generally Separate Statement; Motion at p. 5:26-6:10.) NHE has not filed an opposition to this motion, a separate statement, or any supporting evidence. (See CCP sec. 437c(b)(3) (“opposition papers shall include a separate statement. . . . Failure to comply with this requirement of a separate statement may constitute a sufficient ground, in the court’s discretion, for granting the motion.”))

Upon review of the unrebutted evidence submitted by Plaintiff, including NHE’s responses to Plaintiff’s requests for admissions, the Court finds Plaintiff has met its initial burden to present facts establishing the essential elements of its claims.

First, NHE admitted that Plaintiff issued to it a workers’ compensation insurance policy, policy no. 9081749 (the “Policy”), effective 2015 through 2017. (Tsai Decl., Ex. F (requests for admission) & Ex. I (responses) (RFAs 3-7.) NHE admitted that Plaintiff’s audit “resulted in a premium due of $185,127.39,” though claimed the audit result was erroneous due to misclassification of labor. (Id. (RFA 12, 20-21)) Thus, Plaintiff has established the existence of the policy contract at issue and that it conducted an audit of NHE.

Second, NHE admitted that Plaintiff provided it workers’ compensation coverage in 2015, 2016, and 2017. (Tsai Decl., Ex. F & I (RFA 7)) Plaintiff argues this is all that was required from it under the policy contract. In NHE’s Responses, it contends Plaintiff breached the policy contract by “failing to diligently pursu[e] the subrogation case against JK Steel for the claim by Zamir Flores” and “failing to properly conduct audit by misclassifying categories of work tasks.” (Id. (RFA 20)) NHE indicated the Workers’ Compensation Insurance Rating Bureau determined that “some tasks had been misclassified as carpentry when it should have been general labor” (id. (RFA 21)), but was unable to provide any evidence at the time. (Id. (RFA 22)) NHE has not since provided evidence in support of these arguments (e.g., evidence of the Bureau’s review).

Further, the Court recognizes that NHE unsuccessfully asserted this subrogation argument in an earlier action against Plaintiff (case no. BC704603). The Court takes judicial notice, as Plaintiff requested, of NHE’s complaint in that action, Plaintiff’s demurrer, and the Court’s order granting that demurrer. (Evid. Code sec. 452(h).) NHE claimed Plaintiff failed to subrogate a claim by JK Steel and Sergio Zamir Flores. (RFJN, Ex. A, para. 9.) Plaintiff demurred on the grounds that failure to pursue a subrogation claim is not a breach of the covenant of good faith and fair dealings. (RFJN, Ex. B; see Jonathan Neil & Associates v. Jones (2004) 33 Cal.4th 917, 941; New Plumbing Contractors, Inc. v. Nationwide Mut. Ins. Co. (1992) 7 Cal.App.4th 1088, 1097-98.) The Court sustained the demurrer, apparently with leave to amend, but dismissed the action without prejudice because NHE failed to file an amended complaint and NHE’s counsel “was relieved.” (RFJN, Ex. C.) As NHE failed to oppose this motion and re-present the subrogation argument, there is no basis for the Court to reconstruct that argument and find Plaintiff failed to fulfill its obligations under the contract. The Court therefore finds, on the undisputed evidence, that Plaintiff performed its contractual obligations.

Third, Plaintiff has established that NHE was required by the policy contract to submit to an audit and pay premiums based on that audit. Plaintiff submitted the Declaration of Therese Lim, a senior payroll auditor employed by Plaintiff. Lim alleges that the insurance policy renews automatically each year on December 14 and alleges the premium is adjusted by Plaintiff before the policy renews based on payroll reports submitted by the policyholder. (Lim Decl., para. 6-8.) The payroll report “must accurately reflect the total wages, salaries and other compensation paid to all employees, including unlicensed contractors or contractors without workers’ compensation insurance.” (Lim Decl., para. 7.) However, Plaintiff retains the right under the policy contract to conduct an audit examining “ledgers, journals, registers, vouchers, contracts, tax reports, payroll and disbursements records” in order to properly calculate the premium. (Lim Decl., para. 9; see Ex. A at p. 5 (policy contract provides policyholder “will let [plaintiff] audit all your records that relate to this policy” and “[i]nformation developed by the audit will be used to determine final premium.”)) The policy contract expressly provides that the policyholder “will pay all premiums when due” and that the actual amount due “will be determined after this policy ends by using the actual premium basis and the proper classifications, rates and rating plans” applicable. (Lim Decl., Ex A. at p. 4.) Further, the “estimated premium” will be used if the policyholder “do[es] not provide [plaintiff] with the information necessary to determine the actual premium basis.” (Id.) Therefore, Plaintiff has established that NHE was required to comply with an audit of its records and pay the audit-adjusted final premium. Plaintiff has thus established facts (3) and (8) as presented in the Separate Statement.

Fourth, Plaintiff has established that NHE did not pay its adjusted premiums and did not comply with Plaintiff’s attempted audits in 2016 and 2017, as required by the policy contract. On the first point, Plaintiff submitted the Declaration of Bradford Thornberry, a senior billings and collections analyst employed by Plaintiff. (Thornberry Decl., para. 1.) First, Thornberry alleges that, after NHE initiated an audit dispute for the 2015 policy year, Plaintiff and NHE stipulated that NHE’s bill for the 2015 policy year would be $61,776.76 to be paid by February 20, 2018. (Thornberry Decl., para. 5, Ex. L (copy of final premium bill for 2015 policy year)) NHE separately admitted that Plaintiff issued it a bill for $61,776.76, though Plaintiff did not request that NHE admit to the stipulation and NHE did not admit such.  (Tsai Decl., Ex. F & I (RFA 16)) Thornberry alleges NHE has not paid this bill; NHE admitted “certain amounts claimed by Plaintiff were not paid” in connection with the allegedly erroneous audit. (Thornberry Decl., para. 5; Tsai Decl., Ex. I (RFA 25)) Thornberry’s allegations are the sole evidence that NHE so stipulated, as there is no written evidence of an agreement, but NHE has produced no rebuttal evidence on this point.

Second, Thornberry alleges that on August 23, 2018, Plaintiff issued NHE a $117,071.29 bill for the 2016 policy year, due by September 17, 2018. (Thornberry Decl., para. 6, Ex. M (copy of final premium bill for 2016 policy year)) Thornberry alleges this amount is also unpaid; again, this is to some extent corroborated by NHE’s admission that certain amounts were unpaid, as the preceding requests for admission explicitly reference issuance of a bill on August 23, 2018 and NHE admits said bill was issued. (Thornberry Decl., para. 6; Tsai Decl., Ex. I (RFA 13, 25)) This bill is based on an estimated premium rather than an adjusted final premium due to NHE’s failure to produce necessary documents, as discussed below. (Thornberry Decl., para. 6.) Plaintiff has therefore provided evidence that NHE did not pay the adjusted premiums.

Next, on the subject of NHE’s noncompliance with its 2016 and 2017 audits, Plaintiff submits the Declaration of Nora Libby, a senior underwriter employed by Plaintiff. (Libby Decl., para. 3-4.) In relevant part Libby alleges that a “policyholder’s failure to provide the information necessary to determine actual premium basis obligates State Fund to use an estimated premium” instead of an adjusted final premium. (Libby Decl., para. 10.) Further, based on her review of “the documentation available at the time,” Libby affirms that the $117,071.29 bill for 2016 is a “correct” estimated premium. (Libby Decl., para. 12.) Libby does not allege that any particular policyholder failed to provide necessary information, including NHE, but this gap is filled by the Lim Declaration.

Lim alleges that Plaintiff was unable to conduct an audit for the 2016 policy year because of NHE’s “failure to provide necessary documents.” (Lim Decl., para. 11.) Lim alleges she sent an email to NHE on July 12, 2018 requesting additional documents needed for an audit. (Lim Decl., para. 11.) Lim sent a “follow-up” letter on July 17, 2018 and another letter on October 23, 2018. (Lim Decl., para. 11-12, Ex. D (7/17/18 letter), Ex. E (10/23/18 letter)) The July 17 letter “request[s] your records for a payroll audit for the 2016 and 2017 policy years.” (Lim Decl., Ex. D.) The October 23 letter appears to seek documents for the 2017 policy year, listing the audit period as “12/14/16 to 12/14/17” and “12/14/17 to 1/17/18.” (Lim Decl., Ex. E.) Lim alleges NHE failed to provide the “payroll records, payroll registers, EDD filings, 941 filings, pay stubs and paychecks” required for the 2016 and 2017 audits. (Lim Decl., para. 13.) Plaintiff has therefore provided evidence that NHE failed to comply with its obligation under the policy contract to submit records for an audit by Plaintiff.

Fifth, and from the foregoing, Plaintiff has established that NHE owes $178,848.05 in unpaid premiums, consisting of $61,776.76 in a stipulated bill for the 2015 policy year and $117,071.29 in an estimated premium bill for the 2016 policy year. As noted earlier, the policy contract provides that the “estimated premium” will be used if the policyholder “do[es] not provide [plaintiff] with the information necessary to determine the actual premium basis.” (Lim Decl., Ex. A at p. 4.) Plaintiff produced evidence that NHE did not provide it with “the information necessary to determine the actual premium basis” for 2016, i.e., information required for the 2016 policy year audit. Therefore, under the policy contract, Plaintiff was required to use its estimated premium for that year rather than an adjusted premium. The policy contract explicitly requires payment of premiums. (Lim Decl., Ex. A at p. 4 (“You will pay all premium when due.”)) The failure to pay both bills is therefore a breach of contract; moreover, NHE’s breach of its obligation to submit to an audit for the 2016 policy year triggered Plaintiff’s use of the estimated premium for 2016.

Thus, Plaintiff has shown that NHE’s breach of contract in refusing to make premium payments and submit to audits damaged Plaintiff in the amount of $178,848.05. The Court does not reach Plaintiff’s open book account and reasonable value claims, which seek the same damages and are each pled as “an alternative and cumulative theory.” (Motion, p. 8:23-9:8.) It is unnecessary to reach these theories because Plaintiff is already entitled to the demanded relief on its breach of contract theory regardless of whether its other claims have merit.

Therefore, the Court finds Plaintiff has presented evidence in support of facts which, if true, would entitle Plaintiff to judgment as a matter of law in its favor. Once the moving party has met its initial burden, the burden shifts to the opposing party to show via specific facts that a triable issue of material fact exists. (CCP § 437c(o)(2).) As noted earlier, NHE failed to oppose this motion or present rebuttal evidence. The Court finds NHE has not carried its burden to show that a triable issue of material fact exists; there is no conflict in the evidence before the Court. Therefore, because Plaintiff has established entitlement to judgment as a matter of law on each of its claims and there are no triable issues of material fact, the Court GRANTS Plaintiff’s Motion for Summary Judgment.

CONCLUSION

 

The Motion for Summary Judgment is GRANTED. All future hearings are hereby taken off calendar as all causes of action have now been resolved in Plaintiff’s favor.

Plaintiff to give notice. Further, Plaintiff shall submit a proposed judgment within 20 days of this Order.

If the parties do not submit on the tentative, they are strongly encouraged to appear by LA Court Connect rather than in person in view of the COVID-19 Pandemic.

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