2012-00123800-CU-BC

Stefan Faghi vs. Paula Foster State Farm Ins. Agency, Inc.

Nature of Proceeding: Motion to Dismiss for Failure to Prosecute and Serve Summons and

Filed By: Ellingson, Stephen P.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

The motion of Defendant State Farm General Insurance Company (State Farm General), State Farm Mutual Automobile Insurance Company (State Farm Mutual), State Farm Fire and Casualty Company (State Farm Fire), Teresa L. Moon (Moon), Estate of Paula Foster (Estate), and Teresa L. Moon as Executor of the Paula C. Foster Revocable Trust (Moon as Executor) (collectively “Defendants”) to dismiss the action for failure to prosecute is GRANTED in part and DENIED in part.

The parties’ requests for judicial notice of court documents are GRANTED.

Plaintiff Stefan Faghi’s (Faghi) further request for judicial notice of the facts that (1) the court never entered an order expressly lifting the stay entered on 11/30/12 and (2) the defense never filed a document notifying the court that the stay should be lifted is GRANTED as well.

On its own motion, the court takes judicial notice of its docket in this case.

Background Facts/Procedure

Faghi is the sole Plaintiff in this first-party insurance dispute over uninsured / underinsured motorist (UIM) coverage. Faghi filed the complaint on 5/08/12. (Def.

RJN, Exh. 1.) The complaint stems from a 2009 automobile collision. (Compl., ¶ 5.) In this regard, Faghi alleges that he possessed a “STATE FARM automobile insurance policy from the DEFENDANTS, which policy provided for coverage for personal liability and uninsured/underinsured motorist coverage… .” (Id.) Faghi also alleges that he possessed “a STATE FARM umbrella insurance policy from DEFENDANTS… .” (Id., ¶ 6.) The complaint defines the term DEFENDANTS to include the named defendants and “DOES I through X.” The named defendants are Paula Foster State Farm Insurance Agency, Inc., Paula Foster, individually and dba Paula Foster State Farm Insurance Agency, and State Farm Insurance Companies. (Id., ¶ 3.) Faghi contends that Foster misrepresented the UIM coverage in the Umbrella policy, which he had instructed her to obtain for him. He also contends that he is entitled to additional benefits under the Auto Policy. His causes of action are for declaratory relief, breach of contract, fraud, negligent misrepresentation, negligence and breach of the implied covenant of good faith and fair dealing.

Although Faghi has identified several Doe defendants by name, he has not amended his substantive allegations. Does 1 through 4 have been identified as the Estate, Moon, Moon as Executor and State Farm Fire. Faghi proceeded against the Estate, Moon and Moon as Executor after he learned that Foster had died. In June 2012, State Farm Mutual filed an answer in which it asserted that the defendant identified in the complaint as State Farm Insurance Companies had been incorrectly named. In January 2015, State Farm General and Moon filed separate answers, both of which likewise indicated that State Farm Insurance Companies was named in error. The Estate and Moon as Executor filed answers in May 2015, and State Farm Fire answered in April 2018.

On 11/30/12, the court stayed the entire action. (Def. RJN, Exh. 5.) The stay was entered in response to State Farm Mutual’s unopposed Motion to “Stay the Action Pending Completion of Arbitration.” The court stayed the action pursuant to its inherent authority, not any arbitration statute. There is no formal order lifting the stay, and no party filed a request for such an order.

The extent to which the arbitration proceedings progressed is unclear. However, on or about 1/22/14, Faghi’s counsel sent State Farm Mutual’s counsel a letter indicating that Faghi had received worker’s compensation benefits and another $100,000 in a related third-party action that collectively exceeded his UIM coverage. (Ellingson Decl., Exh. B.) Faghi’s counsel wrote that “[t]his should negate and resolve Mr. Faghi’s claim against State Farm.” (Id.) State Farm Mutual’s counsel responded, “there will be no UIM claim against State Farm as this matter has resolved. [¶] We are closing our files in this matter.” (Faghi Exh. 17.) Hence, the UIM claim on which the arbitration was predicated evaporated by January 2014.

State Farm Mutual served Faghi with written discovery on 6/25/14. (Faghi Exh. 18.) State Farm Mutual filed motions to compel on 10/06/14 but withdrew them before they were heard. On 11/21/14, the court entered orders dropping the motions. Parties filed additional pleadings between December and April 2015, but the first order that was entered after the court stayed the case was an order of 4/15/15 denying Faghi leave to amend the complaint.

Beginning in late 2017, Faghi’s counsel attempted to obtain defense counsel’s trial availability. (See Supp. Ellingson Decl., Exh. J.) In January 2018, Faghi’s counsel served a letter “about setting a trial date in the fall.” (Id.) The letter contains Faghi’s

counsel’s assertion that “the five year statute [would] expire in early 2019.” (Id.) On 2/07/18, Faghi’s counsel restated his understanding that the five year state would expire in early (March) 2019. (Id.) On 3/09/18, Faghi’s counsel indicated that he wanted to “get a trial date” and would set one that fit his schedule unless he heard back from defense counsel. (Faghi Exh. 29.) Defense counsel indicated their availability for trial on 11/13/18, 12/03/18 or 12/04/18. (Id.)

On 3/20/18, Faghi’s counsel proposed trial dates in September or November 2018. (Supp. Ellingson Decl., Exh. J.) Defense counsel responded that they had indicated the 11/13/18 dates previously. (Id.) Defense counsel inquired whether their other suggested dates, 12/03/18 and 12/04/18, were acceptable. (Id.) On 3/21/18, Faghi’s counsel responded, “Let’s set trial for 12-03-18.” (Id.) But then on 3/28/18, Faghi’s counsel sent an email asking whether he should obtain a trial date for 12/14/18. (Faghi’s Exh. 28.) Defense counsel reminded him that they were available on 12/03/18 or 12/04/18, that they “agree[d]” to those dates, and that trial should be set on one of those dates. (Faghi’s Exh. 28.) On 03/30/18, Faghi’s counsel indicated that he “just wanted to make sure the dates were still good” and that “[w]e will get it scheduled.” (Id.) Defense counsel responded, “Great, yes December 3 or 4 still works.” (Id.)

On 4/17/17, Faghi’s counsel wrote to defense counsel, “We cannot set the trial for 12/04/18 yet. I filed a Doe Amendment naming State Farm Fire…since their policies play a part in this case. I don’t know if it was served on you, but I have attached a copy. [¶] Please file an Answer and then we can schedule the trial.” (Supp. Ellingson Decl., Exh. J.)

On 6/27/18, the court set the trial for 12/04/18.

Discussion

The Five-Year Deadline on Bringing the Case to Trial

Defendants argue that the entire case must be dismissed because Faghi failed to bring the matter to trial within five years pursuant to CCP §§ 583.310 et seq. The time during which the action was stayed is not included in the five-year calculation. (CCP § 583.340(b).) In Defendants view, the stay was automatically lifted in January 2014, when Faghi’s counsel advised that Faghi had received benefits negating his UIM claim. Defendants thus calculate the stay as spanning 418 days. Given that Faghi filed the action on 5/08/12, Defendants argue the five-year deadline expired on 6/30/18. (See Moving Memo. at 6:24-7:4.)

Assuming Defendants’ calculations are accurate, the five-year statute does not assist them because they entered into a written stipulation to try the case on a specific date– 12/04/18–after the five year deadline. (See CCP § 583.330(a) [five year statute may be extended by written stipulation].) A written stipulation extending the five period does not require any “particular formalities.” (Munoz v. City of Tracy (App. 3 Dist. 2015) 238 Cal.App.4th 354, 358.) An exchange of written correspondence can serve as a stipulation. (See Wheeler v. Payless Super Drug Stores (1987) 193 Cal.App.3d 1292, 1294, 1296-1297, 1301-1303 [open-ended extension of defendant’s time to answer the complaint reflected intent to defer proceedings and barred dismissal under five-year trial deadline. But see Waxman v. Boren (1990) 221 Cal.App.3d 519, 524-526 [open ended extension designed primarily to benefit the plaintiff did not bar the

defendant from invoking the five-year statute].) As detailed above, defense counsel proposed a 12/04/18 trial date, Faghi’s counsel agreed, and that became the trial date. Counsel thus agreed in writing to a specific date past the five-year deadline, and the deadline does not support a dismissal. (See Munoz, p. 361 [written stipulation extending trial to “a specific date beyond the five-year period necessarily waives the right of dismissal” under the five year statute].)

Because the court concludes the stipulation of counsel encompassed Defendants’ waiver of the right of dismissal, it does not address the parties’ other disputes over the five-year statute.

The Three-Year Deadline on Service of Summons

In the alternative, Defendants argue that Paula Foster and State Farm Fire must be dismissed because Faghi failed to serve them with summons within three after he filed the action. (See CCP § 583.210(a) [“The summons and complaint shall be served upon a defendant within three years after the action is commenced against the defendant”].) Faghi concedes that he did not timely serve Paula Foster State Farm Agency, Inc. or Paula Foster, individually and dba Paula Foster State Farm Agency. Hence, these defendants–but not the Estate, Moon or Moon as Executor–shall be dismissed.

Faghi opposes the position that State Farm Fire must be dismissed as well. First, he argues that the allegations against State Farm Fire do not “relate back” to the original complaint. That argument lacks merit. With respect defendants such as State Farm Fire, which was substituted in as a Doe defendant, the three year period commences from the filing of the complaint. (See Inversiones Papaluchi S.A.S. v. Superior Court (2018) 20 Cal.App.5th 1055, 1061.)

Next, Faghi argues that the stay entered pending completion of arbitration tolled the three-year statute such that State Farm Fire was timely served. Again, the court disagrees.

As noted above, Faghi filed the complaint on 5/08/12. The court entered the stay on 11/30/12, which was approximately six months and 20 days later. Although the court did not enter a formal order lifting the stay, the stay lifted once the arbitration proceedings ended. (See Gaines v. Fidelity Nat’l Title Ins. Co. (2016) 62 Cal.4th 1081, 1092-1093 [stay lasts “until the occurrence of an event that is usually extrinsic to the litigation and beyond the plaintiff’s control,” e.g., disposition of an appeal].) The arbitration reached its end in late January 2014, when the parties agreed that the UIM claim on which the arbitration was predicated had been extinguished. By the time Faghi served State Farm Fire with summons in April 2018, more than four years had passed in total. As a result, State Farm Fire is entitled to be dismissed.

Disposition

The motion for an order dismissing Defendants Paula Foster State Farm Insurance Agency, Inc.; Paula Foster, individually and dba Paula Foster State Farm Insurance Agency; and State Farm Fire for failure to serve them with summons within three years is granted, and these defendants shall be dismissed with prejudice.

The balance of the motion is denied.

The minute order is effective immediately. No formal order is required.

Pursuant to CRC 3.1312, the dismissed defendants shall file orders of dismissal with prejudice.