Ken Borgman v Insphere Insurance Solutions, Inc

Case Name: Borgman v Insphere Insurance Solutions, Inc. et al
Case No. 112CV232891

Defendant’s Renewed Motion For Plaintiff to Post a Security Undertaking

I. Statement of Facts.

The present case involves causes of action for conversion and accounting based on Plaintiff Ken Borgman’s previous employment with Defendant Insphere.
Plaintiff is a resident of Idaho.

Plaintiff states he is a former division manager for Defendants. (Second Amended Complaint (SAC) ¶ 11, 33). He further alleges he invested his own money for business expenses to operate an office through Defendants. (SAC ¶ 31-2). Plaintiff also alleges that, besides his financial investment in this business, he also supervised California sales agents and sales leaders from offices in Reno, Nevada, California, and Meriden, Idaho between from 1999-2007. (SAC ¶ 31-33).

Plaintiff states that, on October 16, 2009, Defendant told Plaintiff he never owned his California office and that the office belonged to Defendant. Defendant took away the California agents and clients assigned to that office. Plaintiff alleges damages for business expenses in the amount of $1,600,000.

Plaintiff seeks an accounting of wages Defendant allegedly owes him. Plaintiff claims he“turned” over all of [his] earned income to Defendants and Defendants never disbursed these monies back to him. (Id.) Plaintiff also alleges Defendant’s failed to pay him “override” commissions for sales of insurance products in an amount indeterminable without evidence controlled by Defendant. (SAC ¶ 101-3). Plaintiff argues an accounting is necessary to determine the precise amount owed to him.

II. Dispute.

On September 25, 2012, Plaintiff filed his original complaint in this Court. On December 14, 2012, Defendant removed to the Northern District where the case was bifurcated as to the two co-plaintiffs—Ken Borgman and Deborah O’Connell. On April 8, 2013, the Northern District remanded the present case to this Court. Ken Borgman is the sole plaintiff in this action.
On May 13, 2013, Defendant demurred to Plaintiff’s initial complaint. On June 17, 2013, Plaintiff responded to this demurrer by filing first amended complaint. On August, 27 2013, the Court sustained Defendant’s demurrer as to all causes of action except Plaintiff’s conversion and accounting claims. On September 9, 2013, Plaintiff served his Second Amended Complaint. Defendants demurred again on October 15, 2013. Plaintiff did not oppose the demurrer. On November 26, 2013, the Court sustained Defendant’s demurrer, granted the motion to strike and gave Plaintiff ten days leave to amend the Second Amended Complaint. Plaintiff did not amend. Thus, the two remaining causes of action are conversion and accounting. On December, 23 2013, Defendants filed and served their answer to these causes of action.

On November 4, 2014, Judge Overton heard and took under submission Defendant’s first motion for an undertaking. Judge Overton issued her order on the motion on January 9, 2015. In the order Judge Overton ruled that Defendant had made a sufficient showing as to their reasonable probability to prevail as required by CCP 1030. (Def. Ex. 12). However, Judge Overton denied the motion without prejudice as Defendant failed to establish the reasonable basis for the amount of the security requested. (Id.)

III. Analysis.

A. Motions For Reconsideration

Plaintiff argues that this motion is a motion for reconsideration in violation of California Code of Civil Procedure section 1008. However, in the Court’s January 9, 2015 order, Judge Overton denied Defendant’s previous motion for an undertaking without prejudice. There is no issue with Defendant filing the motion again after curing the defects of Defendant’s original motion.

B. Undertakings

If a plaintiff resides out of state, the defendant may “motion for an order requiring the plaintiff to file an undertaking to secure an award of costs and attorney’s fees.” (CCP § 1030(a).) In order to prevail on this motion, the defendant must show “there is a reasonable possibility that the moving defendant will obtain judgment in the action or special proceeding.” (CCP § 1030(b).) The defendant must also provide “an affidavit in support of the grounds for the motion and. a memorandum of points and authorities. The affidavit shall set forth the nature and amount of the costs and attorney’s fees the defendant has incurred and expects to incur by the conclusion of the action or special proceeding.” (Id.) If the court finds a reasonable possibility exists, “the court shall order that the plaintiff file the undertaking in an amount specified in the court’s order. . .” (CCP § 1030(c).)

C. “Reasonable Possibility” that Defendant Will Prevails

California Code of Civil Procedure section 1030 requires Defendant to show there is a reasonable possibility that Defendant will prevail. In the Court’s January 9, 2015 order, Judge Overton found Defendant showed a reasonable possibility Defendant would prevail. (Ex. 12.) The Court sees no reason to contradict Judge Overton’s finding, and is satisfied with the evidence Defendant presented regarding Defendant’s possibility of prevailing.

D. Reasonable Costs and Attorney’s fees

California Code of Civil Procedure section 1030 also requires Defendant to set forth in an affidavit “the nature and amount of the costs and attorney’s fees the defendant has incurred and expects to incur.” (CCP § 1030(b).)

Here, Defendant has provided a declaration and a spreadsheet detailing Defendant’s expected costs. (Ex. A.) However, this information is vague and conclusory. Defendant submits a spread sheet for costs already incurred but fails to attach any supporting documentation. Filing fees of $5,600 appears quite steep as does service of process fees of $5,428. Defendant is ordered to produce corroborating evidence of the costs already incurred and to meet and confer with plaintiff’s counsel regarding same. The Court believes a bond in some amount is appropriate but needs sufficient corroborating proof as to the amount.

Constitutionality

Plaintiff also argues that section 1030 is in violation of the Privileges and Immunities Clause of the U.S. Constitution. Plaintiff’s Opposition at 4:9-11. However, while interesting, the on point case Plaintiff cites regarding undertakings is not valid California authority. The Court finds the legal decisions of the Alaskan Supreme Court unpersuasive.

In contrast, California courts have found the current form of section 1030 to be constitutional, as was found in Shannon v. Sims Serv. Ctr., Inc., (1985) 164 Cal. App. 3d 907, 914. While a previous version of the statute was found unconstitutional,
“because it failed to “provide a meaningful pretaking hearing” the revised statute, which provides for a hearing, “violates neither federal nor state due process guarantees because the ‘statutory hearing procedure is the one usually prescribed for pretrial motions, that is, the opportunity to present declarations and other documentary evidence, the opportunity for both counsel to be present, and the opportunity to be heard.’ ” (internal cites omitted)
(Alshafie v. Lallande, (2009) 171 Cal. App. 4th 421, 428-29.)

IV. Order.

Defendant’s counsel is ordered to appear and provide corroborating proof of costs incurred to date as reflected in the spreadsheet. Counsel are ordered to meet and confer on this information before the hearing.

Print Friendly, PDF & Email
Copy the code below to your web site.
x 

Leave a Reply

Your email address will not be published. Required fields are marked *