McCoy Electric Corporation v. Annette Rubin, et al.
Case No: 16CV03591
Hearing Date: Mon Aug 26, 2019 9:30

Nature of Proceedings: Motion Leave to File Cross-Complaint

# 16CV03591 McCoy Electric Corporation v. Annette Rubin, et al.

Hearing Date: 8/26/19

HEARING: Defendants’ motion for leave to file a cross-complaint and to continue trial

ATTORNEYS:

Barton C. Merrill for plaintiff McCoy Electric Corporation

Patrick C. McGarrigle / Michael J. Kenney of McGarrigle, Kenney & Zampiello APC for defendants and cross-complainants A. Stuart Rubin and Annette Rubin.

Richard H. Glucksman / Brian D. Kahn / Jeffrey N. Stewart of Chapman

Glucksman Dean Roeb & Barger for cross-defendant and cross-complainant McCoy Electric Corporation and cross-defendant Richard Ray McCoy

TENTATIVE RULING: As discussed below, the motion will be granted.

Background: This action arises from construction work performed by plaintiff McCoy Electric Corporation at property owned by Annette and Stuart Rubin. McCoy filed suit against the Rubins in August 2016 seeking unpaid fees for the work. On October 17, 2016, the Rubins answered and cross-complained back against plaintiff and its principal, asserting claims involving defective construction, overcharging, and conversion of materials, among others. They filed a First Amended Cross-Complaint on January 23, 2017. On February 10, 2017, McCoy Electric then filed a cross-complaint for indemnity, contribution and declaratory relief solely against fictitiously named defendants.

At a Case Management Conference which took place on February 6, 2017, the Court set the case for trial on September 25, 2017. Because the parties had been unable to complete necessary discovery and investigation, they stipulated in July 2017, and the Court ordered, that the trial be continued to March 5, 2018.

Annette Rubin substituted out their original counsel from the law firm of Lan, Hanigan & Carvalho on January 2, 2018, and substituted in the law firm of Alston & Bird. While no Substitution of Attorneys form was ever filed for defendant and cross-complainant Stuart Rubin, future documents filed on his behalf were filed by Alston & Bird, and none of the parties continued to serve Lan, Hanigan & Carvalho with any documents.

In order to allow new counsel sufficient opportunity to transition into the matter, to allow the completion of fact and expert witness discovery, and to explore the possibility of mediating the dispute, the parties on January 23, 2018, again stipulated, and the Court ordered, that trial be continued to October 15, 2018.

On August 29, 2018, the Rubins’ counsel at Alston & Bird associated in attorney John Thyne, as counsel for the Rubins. Shortly thereafter, the parties again sought a continuance of the trial, stating that they had been diligently investigating and conducting discovery in the matter, but given the substantial claims made by the Rubins and the extensive expert witness discovery that might be required, they required additional time to complete discovery and prepare for a meaningful settlement conference and trial. They noted that they were still exploring the possibility of mediating the matter, and that attorney Thyne needed time to transition into the matter and plan and conduct further discovery, and prepare for mediation and trial. They therefore stipulated, and the Court on September 6, 2018, ordered, that the trial be continued to April 15, 2019.

On April 12, 2019, the parties once again stipulated to continue the trial date in the action, explaining that good cause existed to further continue the trial and related dates, to allow the parties to engage in further fact and witness discovery, and further mediation. They stated that they had been diligently investigating and conducting discovery in the matter, and needed additional time to complete discovery and prepare for mediation or trial. The stipulation further stated that “The parties are considering joining an additional party at this time.” Pursuant to the stipulation, the Court ordered the trial continued to October 28, 2019.

On April 22, 2019, Alston & Bird substituted out of the action as attorneys for the Rubins, and the law firm of McGarrigle, Kenney & Zampiello substituted in as their attorneys of record.

The McGarrigle firm asserts that, upon substituting in as counsel for the Rubins, it worked to comply with the court’s existing discovery orders and to respond to pending discovery, as well as propound substantial discovery on the cross-defendants, including form interrogatories, a supplemental demand for production, two new production demands (sets 3 and 4), and 190 special interrogatories tailored to ascertain the back-up documentation and information for the time and materials claimed within each of McCoy Electric’s invoices. The firm also issued six records subpoenas in May and June to Las Canoas Co. dba Construction Plumbing, Cruz &

Cruz Electrical, Inc., Ira Cornell Electric, Inc., Lighting Endeavors, Monterey Energy Group, Inc., and Wade Davis Design, all of which worked on the electrical and related mechanical components on the project. Responsive documents came in over 7 weeks, and required meet and confer efforts with those parties. Meet and confer efforts were also conducted with respect to the discovery the firm propounded, as well as discovery propounded by the McCoy parties.

By an e-mail to the attorneys for the McCoy parties dated May 15, attorney McGarrigle discussed a dropbox link to his clients’ supplemental document production, that there will be a host of party and non-party depositions to schedule (including those of the Rubins, and counsel should be prepared to discuss whether McCoy would be naming any parties in its own cross-complaint.

By e-mail dated May 24, 2019, attorney Barton C. Merrill, who represents McCoy Electric Corporation solely as a plaintiff, responded and advised attorney McGarrigle that the McCoy parties would not agree to any further continuances of the trial, citing to the “minimal cooperation” received from the Rubins’ prior attorneys and their failure to produce the Rubins for deposition, and that he would resist any attempt to amend the complaint to add parties or to continue the trial.

The McGarrigle firm also consulted with architects and engineers, in contemplation of preparing a cross-complaint to bring in additional parties it believes have some responsibility for the Rubins damages. It drafted a proposed cross-complaint which seeks $5.8 million in damages, and names as cross-defendants fourteen additional persons and entities, against which it seeks to allege causes of action for negligence (against all cross-defendants except Crestron Electronics, Inc.), product’s liability (against cross-defendant Crestron Electronics, Inc. only, based upon its provision of high-tech temperature sensors and thermostats for radiant heating and related HVAC systems) and breach of contract (against cross-defendant The Las Canoas Co., dba Construction Plumbing only, based upon its contract to install the project’s radiant heating system, including coordinating with project vendors including McCoy Electric, to ensure the wiring, thermostats and sensors serving the radiant heating system were functioning as intended).

The negligence claims in the proposed cross-complaint are separated into five separate causes of action. The first is against Monterey Energy only, which provided mechanical design services for the project, including designing plans for the radiant heating system. The second is against Wade Davis Design only, licensed architects who provided services for the project including engaging and supervising its mechanical engineer (Monterey Energy) to design plans for the radiant heating system, and reviewed and approved the plans to ensure they were sufficient to allow the system to be competently constructed and installed. The third negligence claim is against Las Canoas Co. dba Construction Plumbing only, a plumbing contractor who was engaged to provide work on the project, including with respect to the installation of the radiant heating system and related wiring and components. The fourth negligence claim is against Davis Construction and Gerald de Mille, who are alleged to have provided construction and project supervision for the project, including supervising the installation of the radiant heating system and all components and related electrical work for the property, and reviewing the billings of various vendors for accuracy. The fifth negligence claim is alleged against Cruz & Cruz, Lighting Endeavors, Fire LTD, Scott Haile, Ira Cornell Electric, Inc., George Borghi, and Communication Technologies, who are alleged to be licensed contractors qualified to provide various electrical contracting work, labor and materials in various disciplines for the project, including rough and/or finish electrical, low voltage work, and electrical work for the radiant heating system and its components and thermostats.

On July 17, 2019, the McGarrigle firm, via e-mail, requested the stipulation of the McCoy parties to the filing of the proposed cross-complaint and the further continuance of trial to accommodate the new parties the cross-complaint would add. The e-mail advised of the Rubins’ intent to file a motion for leave to file the cross-complaint, should the parties not stipulate to its filing. The McCoy parties refused to stipulate to the filing of the cross-complaint, and advised that they would vigorously oppose any further attempts to delay recovery of the amounts due to McCoy Electric, citing to the conduct of the Rubins’ three prior attorneys in feigning the need to bring in new parties and continue trial, and counsel’s contention that McCoy had neither designed nor installed the radiant floor system.

On July 24, 2019, attorney Merrill filed a Notice of Unavailability of Counsel, advising that he would be unavailable for any purpose between July 26 and August 12, and requesting that no ex parte applications be made, or hearings or depositions be scheduled during that time, and that an automatic extension be granted to him for any opposition or responsive documents required to be filed during that period.

Also on July 24, attorney Merrill sent an e-mail to attorney McGarrigle, threatening to seek sanctions if the motion for leave was filed on the schedule which had been proposed, and advising that he had “taken the initiative” of setting the depositions of Annette Rubin and Annie Lippman “to occur on the date you have selected for the motion.”

The McGarrigle firm on July 30 advised that the hearing date reserved for their motion for leave and to continue trial had been continued from August 19 to August 26, in order to accommodate Mr. Merrill.

The Rubins ultimately filed their motion for leave to file the cross-complaint, and to vacate the trial date, on August 2, 2019. In seeking leave, the Rubins assert that the claims against the third parties arise out of the same transactions and occurrences currently at issue in the complaint and cross-complaint, in that they relate to the electrical work at the residence, including the electrical and mechanical designs and interrelationships, electrical wiring and the installation and operation of the interior and exterior electrical systems for a wide-range of components, the radiant heating system and its interconnection with McCoy’s electrical wiring and smart home Crestron thermostat installation and wiring, and the failure of McCoy and other cross-defendants to verify the radiant system’s operation on a zone-by-zone basis. The Rubins further contend that the claims asserted in the cross-complaint are logically related to the claims already being litigated in this action. Further, from the Rubins’ perspective, the case has always been a construction defect action, and the various third parties to be added were involved in the same project as was McCoy, and either worked in concert with McCoy or performed work which overlapped with McCoy’s work on the property—all stemming from the underlying electrical work on the property. The Rubins emphasize that in March 2019, both of McCoy’s attorneys affirmed that additional parties may need to be brought into the litigation. They contend that granting the motion would ensure that all related claims and assessments of liability be made in one proceeding, reducing the burden on the court and the parties, and avoiding inconsistent rulings. They further contend that granting the motion would avoid prejudice to them. They further underscore that, should they be required to file a separate action to assert their claims, it is likely that some of the new parties would cross-complain against McCoy for indemnity, thereby causing McCoy to be involved in multiple actions regardless. The Rubins further assert that any claim that the proposed cross-complaint may “complicate” matters is not a valid factor under California law, citing American Motorcycle Association v. Superior Court (1978) 20 Cal.3d 578, 605-606; and Roylance v. Doelger (1962) 57 Cal.2d 255, 261-262, among others. Finally, while McCoy’s counsel contended, in refusing to stipulate to the filing of the cross-complaint, that McCoy had nothing to do with the radiant heating system, numerous McCoy invoices reflect Crestron and thermostat work and claim materials purchase relating to HVAC and radiant heating systems and functionality.

By e-mail dated August 9, 2019, attorney McGarrigle advised that his clients were objecting to the notices of deposition received for Mrs. Rubin, Mr. Rubin, and third party Annie Lippman, as both substantively and procedurally defective, and that the e-mail was a meet and confer effort with respect to the depositions. In light of the pending motion for leave, McGarrigle contended the notices were harassing, not in good faith, and the product of gamesmanship, and they should be rescheduled to a time when the proposed new cross-defendants could participate, and a reasonable time after McCoy provided supplemental responses to discovery and produced documents, which attorney Stewart had advised would not be provided until August 28. He further demanded that the Rubins’ depositions take place in Chapman, as the Rubins’ primary residence is 15 minutes from the Chapman law office. He advised that his office would be serving formal objections shortly.

Two separate oppositions to the motion have been filed, one by the McCoy Electric Corporation as plaintiff, and one by McCoy Electric Corporation and Richard Ray McCoy as cross-defendants and cross-complainant. As plaintiff, McCoy asserts that the Rubins should have known of all the defects in their home in 2016, because they hired an expert to prepare a “Defect Report and Cost of Repair,” and that they knew of the radiant floor issues in 2018. It contends the proposed cross-complaint is unrelated to the present litigation, and no good cause for waiting 3 years to make the claims. It asserts that the cross-complaint is hopelessly ambiguous, in failing to explain how any of the parties were negligent. It argues that absent some special relationship between the parties, plaintiff should be able to control its own case by proceeding against the parties it choses, and an alleged wrongdoer should not be permitted to bring in others who might have contributed to the consequences of his own wrongful conduct. It argues the motion was filed in bad faith and solely to harass McCoy, since counsel had to cut his planned vacation short by a day to return to file opposition, and counsel seeks sanctions of $2,500 for having to do so.

As cross-defendants, McCoy (through different counsel) contends that the motion is improper because the Rubins should not be permitted to have a second, separate cross-complaint in this matter. McCoy then asserts that granting the motion is not in the i8nterests of justice, given the length of time the action has been pending, the prior trial continuances, and the delay in McCoy obtaining its day in court. The last minute addition of 14 parties will unreasonably burden and complicate McCoy’s lawsuit, given the necessity of evaluating necessary discovery responses from the new parties, and the expanded scope of retained experts’ opinions. While the parties considered joining an additional party, no one envisioned adding 14 parties. McCoy argues further that the Rubins have not established that the claims arise out of the same transactions, and in fact their claims against the 14 named parties have no relation to McCoy’s claims that it was not paid for the work it performed on the property. The original cross-complaint related only to the McCoy parties. The Rubins asserted breach of contract claims against McCoy, but not against any of the new parties. The negligence claim in the original cross-complaint relates only to McCoy’s conduct; there is no cross-over, and the new allegations therefore have no bearing on those claims. Finally, McCoy asserts a continuance of the trial date is not justified. There has been now showing why the latest substitution of attorneys, partially used to justify the continuance, was required in the interests of justice. (Cal. Rules of Court, rule 3.1332, subd. (c)(4).) The only reason a continuance is sought is because Rubins are seeking to add 14 new parties only 60 days before the trial date which has already been continued 4 times, something which will return the action to square one of the litigation process. It is clear that any continuance would have to be at least 9 months to 1 year, to allow new parties to prepare for trial.

In reply, the Rubins assert that the argument that there may be only a single cross-complaint has no legal support. McCoy filed its own cross-complaint against third parties, rather than amending its complaint to include them. Indeed, that existing cross-complaint for indemnity and contribution defeats McCoy’s current attempt to limit the “transaction” standard to only its own claims for payment, and refutes the contention that including cross-claims against third parties unduly complicates the action. McCoy’s cross-complaint expressly alleges that its cause of action for declaratory relief against cross-defendants to ascertain their liability for the damages claimed by defendants (the Rubins) is necessary to avoid the multiplicity of actions that would otherwise be required if it were forced to bring separate actions against cross-defendants. Further, while McCoy relied upon the argument that the addition of the cross-defendants would unduly complicate the case, California courts accord little weight to that assertion. Further, Rubins assert that McCoy’s interests of justice analysis fails to overcome the prejudice to the Rubins, burden on the Court, public policy in favor of one action adjudication, and McCoy’s own ongoing failure to comply with discovery, all leave the action not ready for completion of discovery and trial on the current schedule. Indeed, McCoy recently proposed to continue the trial date through late January 2020, on condition that Rubins withdraw the current motion, showing that McCoy is less concerned about the trial date than it is interested in extracting an unrelated price from the Rubins. Rubins further assert that McCoy does not dispute with any evidence that the cross-claims are intertwined with McCoy’s services and work. McCoy has not disputed their own repeated stipulations that the parties have worked diligently regarding discovery, mediation, and expert work, nor have they disputed Rubins’ new counsel’s work pushing the matter forward, since being engaged. The trial must be continued to allow the new parties to appear, prepare their defense, and engage in meaningful mediation. Although McCoy opposes the motion, it continues to ask for more time to comply with basic discovery. Finally, attorney Merrill’s sanctions request is legally untenable; McCoy knew the motion would be filed, before they served the deposition notices, and the hearing date was moved to accommodate Merrill’s claimed unavailability, even though McCoy did not need to file two separate oppositions.

ANALYSIS: It does not frequently occur that a motion for leave is so ardently and contentiously opposed, nor is it normal for a Court to have to expend quite so much effort to determine the propriety of granting leave. The circumstances surrounding the current motion are such that the Court has had to very carefully evaluate the proposed claims and their relationship to the existing claims and action, and the evidentiary showings made by the parties in support of their respective arguments.

Based upon the totality of the evidence and arguments presented to the Court, and with some reluctance, given the age of this action and the number of times its trial date has already been continued, the Court finds that is in the interests of justice to grant the motion. Consequently, the Court will instruct the Rubins to separately file their cross-complaint forthwith, and to proceed immediately to serve the cross-defendants. The October 28, 2019 trial date will be vacated, and the Court will set a Case Management Conference for that date. No sanctions will be awarded.

Pursuant to Code of Civil Procedure section 428.10(b), a party against whom a cause of action has been asserted in a complaint or cross-complaint may file a cross-complaint setting forth any cause of action he has against a person alleged to be liable thereon, whether or not the person is already a party to the action, if the cause of action asserted in the cross-complaint (1) arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him, or (2) asserts a claim, right, or interest in the property or controversy which is the subject of the cause brought against him. Pursuant to Code of Procedure section 428.30, where a person files a cross-complaint as authorized by Section 428.10, he may unite with the cause of action asserted in the cross-complaint any other causes of action he has against any of the cross-defendants, whether or not such cross-defendant is already a party to the action.

Where, as here, a party seeks to file a cross-complaint against third parties after the court has set a date for trial, the party must obtain leave of court, even if that trial date has been vacated. (Code Civ. Proc., § 428.50, subd. (c); Loney v. Superior Court (1984) 160 Cal.App.3d 719, 723.) Cross-complaints against third parties are permissive, and not mandatory. (See Insurance Co. of North America v. Liberty Mut. Ins. Co. (1982) 128 Cal.App.3d 297, 303.) Leave to file such a cross-complaint may be granted in the interest of justice at any time during the course of the action. (Code Civ. Proc., § 428.50, subd. (c).)

A motion to continue a trial must be supported by a showing of good cause. (Cal. Rules of Court, rule 3.1332, subd. (c).) It must be made as soon as reasonably practical once the necessity for the continuance is discovered. (Id., at subd. (b).) Circumstances that may indicate good cause include, among others, (a) the substitution of trial counsel (but only where there is an affirmative showing that the substitution is required in the interests of justice), (b) the addition of a new party, if the party has not had a reasonable opportunity to conduct discovery and prepare for trial, or the other parties have not had a reasonable opportunity to conduct discovery and prepare for trial in regard to the new party’s involvement in the case, and (c) a party’s excused in ability to obtain essential testimony, documents, or other material evidence despite diligent efforts. (Cal. Rules of Court, rule 3.1332, subds. (c)(4), (5), and (6).) In ruling on the motion, the court must consider all facts and circumstances relevant to the trial date, including the proximity of the trial date, whether there was any previous continuance, the length of the continuance requested, the availability of alternative means to address the problem, the prejudice that parties or witnesses will suffer as a result of continuance, and whether the interests of justice are best served by the continuance, among other factors. (Cal. Rules of Court, rule 3.1332, subd. (d).)

In this case, the issue of whether a trial continuance is appropriate, largely hinges on the determination of whether the interests of justice are best served by the grant of the motion for leave to file the cross-complaint. Certainly, if new parties are allowed to be added to this action, the October 2019 trial date cannot stand. The new parties’ due process rights would require they be allowed sufficient opportunity to do whatever is necessary to prepare their defense, and their addition would constitute good cause for continuance of the existing trial date.

The Court therefore turns to the issue of the motion for leave. Certainly, it is frustrating for all involved to be presented with a motion for leave to file a cross-complaint that will dramatically alter the nature of the action, three years after the action is filed and only a few months before the current trial date.

The nature of the comments made by McCoy’s attorneys in opposition to the motion appear to reflect frustration and anger about the Rubins’ late push to bring additional, potentially responsible parties into this litigation, and repeatedly cite the Rubins’ long history—when represented by other counsel—in claiming that they needed to bring in other parties but not ever doing so. They further repeatedly cite to the number of trial continuances which have already occurred. In doing so, however, they ignore that they were party to the stipulation for each and every prior continuance, and expressly confirmed in executing each stipulation that the parties had all been diligent in pursuing discovery and investigation in the case, but needed more time to complete it, to mediate the action, and then prepare for trial. The last continuance granted on that basis (in March 2019) noted that the parties were considering bringing in an additional party. Certainly, the stipulation stated “an additional party,” not fourteen additional parties, but there is no indication as to which parties were contemplating bringing in a new party, the identity of any specific party that might be brought in, or what the involvement of any possible future party might have been in the circumstances underlying the complaint and existing cross-complaint. It was shortly after that stipulation was filed that new counsel substituted in for the Rubins, began their review and investigation of the action, and promptly raised the possibility of filing the current proposed cross-complaint. They were met with immediate, vehement opposition by both attorneys for McCoy.

In seeking leave, the Rubins assert that the claims set forth in their proposed cross-complaint relate to work and materials provided by the cross-defendants on the project that is logically related, and interrelated, to the work and materials provided by McCoy. While McCoy has denied having any involvement in the radiant heating system that forms the basis for much of the cross-complaint, the Rubins have provided evidence, in the form of invoices they received from McCoy, that reference work and materials for the radiant heating system. They assert that they if forced to file the claims in a separate action, it is highly likely that McCoy would be brought into that action by cross-complaint, resulting once again in inefficiency to the court and the parties, waste of precious resources, and the possibility of inconsistent findings. Consequently, if the Rubins are correct that the action and proposed cross-action involve matters that are not only related by subject matter, but are actually interrelated, it would make no sense to deny the motion for leave, only to end up in the same position months down the road.

The Court is not privy to the knowledge of the parties regarding the underlying events, nor is it currently privy to information disclosed in discovery in this action. Rather, the Court must make its determination on this issue solely based upon the evidence submitted by the parties in support of or in opposition to this motion. While McCoy argues that it had nothing to do with the design or installation of the radiant heating system, no evidence was presented to support that argument, whereas the Rubins presented evidence, including McCoy’s own invoices, which tends to reflect McCoy’s involvement in the radiant heating system. The proposed cross-complaint is largely, although not exclusively, based upon defects in the design and installation of the radiant heating system, as well as in the design and performance of the system’s components.

Because the evidence presented to and properly before this Court shows that the claims set forth in the proposed cross-complaint are intertwined with those being pursued in the existing action, the interests of justice require that they be litigated and tried together. Because it would, under these circumstances, be highly likely that McCoy would be brought into the action as a cross-defendant even were this Court to deny the motion and require it to be separately filed, the most reasonable course of action would be to allow the cross-complaint to be filed in the existing action, and to resolve the greater dispute in a single proceeding. It is for this reason that the Court has decided to grant the motion.

Certainly, if it proves that the current action and the issues presented by the proposed cross-complaint are not interrelated, as currently appears to be the case, the Court would consider severing the cross-complaint at some point in the future, and proceeding with it separately.