Case Number: GC049212    Hearing Date: August 22, 2014    Dept: NCD

TENTATIVE RULING (8-22-14)
#15
GC 049212
EAST WEST BANK v. THE OFLYE TRUST

Plaintiff East West Bank’s Motion to Sever or For an Order Regulating Proof at Trial

Motion is DENIED.

SUMMARY OF FACTS:
Plaintiff East West Bank brings this action to collect sums allegedly due under agreements between plaintiff’s assignor and borrower White Knoll and defendant Oflye Trust, specifically, a series of Extension and Modification Agreements pertaining to a Promissory Note, which Agreements were allegedly guaranteed by defendants Zachary Schneiderman, Creative Environments, and Capital Assets/Michael Augustine as Trustee of the Jojazak Trust.

ANALYSIS:
CCP § 1048 provides that 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 separate issues…”

CCP §598 provides:
“The court may, when the convenience of witnesses, the ends of justice, or the economy and efficiency of the litigation would be promoted thereby, on motion of a party, after notice and hearing, make an order… that the trial of any issue or any part thereof shall precede the trial of any other issue or part thereof in the case.”

Plaintiff East West Bank argues that the court should sever this matter and, prior to the jury being impaneled, hear evidence and decide the following:

1) Whether Defendant Augustine is equitably estopped from raising affirmative
defenses based on his allegation that his predecessor trustee, Manual Meza, lacked capacity or authority or was not qualified to enter into the Guaranty;
2) Whether Defendant Augustine is equitably estopped from raising affirmative
defenses based on his allegation that his predecessor trustee, Capital Asset Management, lacked capacity or authority or was not qualified to reaffirm the subject Guaranty; and
3) Whether the equitable principle of trust de son tort precludes Augustine from raising
affirmative defenses based on the alleged lack of capacity, authority or qualification of the Meza or CAMA to enter into or reaffirm the subject Guaranty.

Plaintiff argues that since estoppel is a purely equitable issue that is triable to the court alone, it should be tried first before a jury is impaneled, and that if the court finds that Augustine is equitably estopped from disavowing acts taken by his predecessors, this would be dispositive and render numerous issues and subissues on the “lack of authority” defenses unnecessary. The argument is that the trial will be streamlined allowing for a shorter and less confusing trial of the claims that remain for determination by the jury. Plaintiff also argues that Augustine’s “lack of authority” defense is not shared by the other defendants, so that the other two defendants would not have to be involved, saving time and overall expense.

Plaintiff relies on CCP § 379.5, which provides
“When parties have been joined under Section 378 or 379, the court may make such
orders as may appear just to prevent any party from being embarrassed, delayed, or put
to undue expense, and may order separate trial or make such other order as the interests justice may require.”

The motion is somewhat unusual to the extent it does not seek to litigate an entire affirmative defense, but only, in effect, defenses to those affirmative defenses, and it appears that regardless of what the court determines in the proposed initial phase, all or most witnesses and evidence would have to be presented in a second phase of the trial either to the court or to the court and a jury. The cases cited in the moving papers note that severance or bifurcation is useful where the determination of equitable issues would eliminate the need to determine legal issues before a jury, not apparently the case here.