Case Number: BC629772 Hearing Date: March 01, 2019 Dept: A

Hazard v Burbank Auto Parts

Motion TO SEVER CROSS-COMPLAINT

Calendar:

1

Case No.:

BC629772

Hearing Date:

3/1/19 (cont. from 1/4/19)

Action Filed:

8/5/16

Trial Date:

Not set

MP:

Plaintiff Michael Hazard

RP:

None

ALLEGATIONS:

In this action, Plaintiff Michael Hazard alleges that he was injured when an ATP Z295 replacement flywheel that was installed onto a 1996 Chevrolet Chevelle V8-396 engine suddenly and unexpectedly shattered and disintegrated. Plaintiff alleges that the flywheel was designed and manufactured by Defendant ATP, Inc. (“ATP”) and that the flywheel was sold by Defendant Burbank Auto Parts, Inc.

The complaint, filed August 5, 2016, alleges causes of action for: (1) strict products liability – manufacturing and design defect; (2) negligence; (3) strict products liability – failure to warn; (4) breach of implied warranty of merchantability; (5) fraudulent concealment; and (6) claim for punitive damages.

On September 8, 2017, Defendant/Cross-Complainant North Hollywood Auto Parts, Inc. (sued as Burbank Auto Parts) (hereinafter, “NHAP”) filed a cross-complaint against ATP and Vehicle Effects, Inc. (“Vehicle Effects”) for: (1) indemnity; (2) apportionment of fault; and (3) declaratory relief. On July 5, 2018, NHAP filed a cross-complaint against Cross-Defendant Hanson Distributing Company for: (1) indemnity; (2) apportionment of fault; and (3) declaratory relief.

On November 9, 2018, the Court granted ATP’s motion to file a cross-complaint. ATP’s cross-complaint alleges causes of action for: (1) equitable indemnity; (2) comparative indemnity; (3) equitable apportionment of fault; (4) contribution; and (5) declaratory relief against Vehicle Effects, Dennis McCarthy (“McCarthy”), and Federal New Power (Qingdao) Co., Ltd (“Federal”). Federal is the Chinese corporation and the alleged manufacturer hired by ATP to manufacture its flywheels.

RELIEF REQUESTED:

Plaintiff moves to sever ATP’s cross-complaint against Federal, McCarthy, and Vehicle Effects. Alternatively, Plaintiff seeks to sever ATP’s cross-complaint/cross-claims against Federal only.

DISCUSSION:

Legal Standard

CCP §1048(b) authorizes the Court to order a separate trial on any cause of action to avoid prejudice or when separate trials would be conducive to expedition and economy. CCP §598 states that when the Court orders separate trials for issues in a case, the Court may also order that the trial of an issue shall precede the trial of another issue. The major objective of bifurcated trials is to expedite and simplify the presentation of evidence. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal. 3d 875, 888.) Duplication of effort, such as by reintroducing evidence, is the very opposite of the purpose of bifurcated trials. (Id.) The Court has broad discretion in ruling on this motion and determining the order of proof in the interests of judicial economy. (Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d 496, 504 [citing CCP §§498 and 1048, and Evid. Code, §320].)

Relevant Procedural Background

On November 9, 2018, the Court granted ATP’s motion to file a cross-complaint. The Court also stated that counsel may file a motion to sever the cross-complaint for trial.

Plaintiff filed the motion to sever on December 7, 2018.

This motion initially came for hearing on January 4, 2019 and was continued to March 1, 2019, in order to allow the parties to submit additional briefs. The Court ordered ATP to file a Status of Service and the parties to file any additional briefs by February 26, 2019.

Although the Court is not in receipt of a proof of service showing that the cross-complaint was served on Vehicle Effects, Vehicle Effects filed an answer to ATP’s cross-complaint on January 7, 2019.

On February 22, 2019, ATP filed a proof of service showing that it served McCarthy by personal service on February 13, 2019.

ATP has not filed with the Court a proof of service of its cross-complaint on Federal.

Merits Discussion

Plaintiff argues that ATP’s cross-complaint should be severed because ATP first appeared in this action nearly 2 years ago and ATP knew of the cross-defendants Federal (manufacturer hired by ATP to manufacture its flywheels), Vehicle Effects, and Dennis McCarthy. Plaintiff cites to the declaration of Roy Lipner (ATP’s PMQ), who testified that when he was hired by ATP in 2013, Federal had already been retained as ATP’s supplier. (Mot., Ex. 1 [Lipner Depo. at 8:11-9:15].) In addition, Vehicle Effects has been a named defendant in this action and McCarthy was repeatedly mentioned in Plaintiff’s complaint.

With regard to Vehicle Effects and McCarthy, there would be only a minimal delay in the proceeding by allowing ATP’s cross-claims to go forward against these cross-defendants. Namely, these cross-defendants may be served by regular means in the United States. Although Plaintiff argues that Vehicle Effects will likely want to defend itself against the new cross-claims and that McCarthy (like Federal) is a new party to the action who will want to conduct discovery, the Court notes that Vehicle Effects has long since been a party to this action, has likely undertaken the task of conducting discovery, and has already been defending itself against the cross-claims of other parties. Similarly, though McCarthy was not previously a party to this action, it is highly doubtful that he has been ignorant of this action since he is the owner and president of Vehicle Effects and has in other ways participated in the action (e.g., providing his declaration in support of Vehicle Effect’s motion for summary judgment). Thus, allowing ATP’s cross-claims against Vehicle Effects and McCarthy to proceed will not delay the proceedings to such a degree that Plaintiff will be prejudiced. Further, as trial has not yet been set, such a request to sever Vehicle Effects and McCarthy appears to be premature since trial may be set on a date that accommodates the need for any further discovery by these parties. Thus, the Court should deny Plaintiff’s request to sever ATP’s cross-complaint against McCarthy and Vehicle Effects.

Thus, the Court will deny the motion to sever as to McCarthy and Vehicle Effects.

With regard to Federal, Plaintiff contends that it will suffer prejudice if ATP’s cross-complaint is not severed because Plaintiff anticipates that serving the summons and cross-complaint on Federal (a Chinese corporation) through the Hague Convention will take over a year. In support of this argument, Plaintiff attaches a copy of a document entitled “Service of Process in China”, from the American Bar Association’s website. (Mot., Ex. 2.) The article states that service of process on a Chinese defendant through the Hague Convention requires an indirect method of service where the papers must be first presented to the Chinese Central Authority. The Central Authority is then supposed to transmit the documents to local authorities for service upon individual defendant, which, according to the article, “takes time. Lots of it.” (Id. at p.2.) The process involves translating all documents and exhibits into Chinese, which is a timely and costly endeavor, such that the entire process of service through the Central Authority in China may take 6-8 months (i.e., 4-6 months for foreign government officials to effect service pursuant to international treaty law and 2-3 months for the proof of service to be completed, sealed, and returned to the United States). (Id. at p.3.)

However, though not raised by any of the parties, the Court directs Plaintiff to Commercial Code, §2607(5)(A). This subsection states:

“(5) Where the buyer is sued for breach of a warranty or other obligation for which his or her seller is answerable over:

(A) He or she may give the seller written notice of the litigation. If the notice states that the seller may defend and that if the seller does not do so he or she will be bound in any action against the seller by the buyer by any determination of fact common to the two litigation actions, then unless the seller after seasonable receipt of the notice does defend he or she is so bound.”

(Cal. U. Com. Code, §2607(5)(A).)

Thus, as to Federal, it appears likely to be subject to Commercial Code §2607 as it sold the flywheel part to ATP. It need not be served under the cumbersome procedures described above, but can be made subject to the outcome of the litigation directly. This procedure would not take the extended time noted above regarding the Hague Convention’s method of service.

On February 26, 2019, a trial date of September 30, 2019 was selected, and counsel for ATP represented that a demand under Com. Code, §2607(5)(A) was about to be tendered and that it was likely no opposition to this current motion would be proffered. In the (unlikely) event that Federal responds favorably to the demand/tender, it will control the litigation at a defendant and the cross-complaint as a cross-complainant, and not as a cross-defendant. In the (more likely) event that Federal does not respond positively to the demand/tender, it will remain as a cross-defendant and ATP will control the litigation as a cross-complainant, except with respect to Federal. Therefore, the motion should be granted as to Federal. However, the actual severance order as to Federal will take effect at a special Status Conference to confirm severance. At this conference, the parties should be prepared to discuss the status of Federal, i.e., whether it has responded affirmatively or not. That special Status Conference is set for June 28, 2019 at 10:30 in Dept. A; the parties concerned with this issue are to file information briefs on this subject ten days before the hearing. In the meantime, ATP is to proceed diligently with its 2607 demand and all methods of obtaining jurisdiction so that the severed potion can be tried expeditiously.

RULING:

The Court will grant in part and deny in part the motion to sever.

As discussed above, ATP should use the procedure stated in Commercial Code, §2607(5)(A) to provide notice of this action to Federal. Doing so adequately addresses ATP’s concerns regarding the time and efforts to comply with the Hague Convention.