Case Number: KC069018 Hearing Date: November 27, 2018 Dept: J

Re: Jun Zhou, et al. v. Tony Yu, etc., et al. (KC069018)

MOTION FOR SUMMARY ADJUDICATION

Moving Parties: Plaintiffs Jun Zhou and Yijuan Huang

Respondent: Defendant East Mission 8 Investment, Inc.

POS: Moving OK; Opposing OK

Plaintiffs are Chinese residents who decided to look into the California real estate investment market, with the intention of locating an upscale residential property, purchasing same and then either living in it or leasing it. Plaintiffs alleges that they entered into an oral contract with Tony Xz Yu (“Yu”) wherein Yu would locate a suitable property, negotiate on their behalf and then arrange the paperwork for the purchase of same. Yu thereafter located the residential property located at 3068 Windmill Drive in Diamond Bar (“subject property”) for their purchase, but allegedly misrepresented the amount of the sales price, real estate transfer fees and fees for build-ins and fixtures. Plaintiffs further allege that an unknown person forged their names on a grant deed transferring the Subject Property to Zhidong Li (“Li”). Li subsequently deeded the Subject Property back to plaintiffs. The complaint was filed on 1/19/17.

On 7/7/17, plaintiff dismissed Brenda Fonmin and John L. Fonmin, with prejudice. On 7/7/17, plaintiff dismissed Brenda Fonmin and John L. Fonmin, with prejudice.

The Second Amended Complaint, deemed filed 12/1/17, asserts causes of action therein for:

1. Fraud

2. Identity Theft

3. Breach of Fiduciary Duty

4. Negligence

5. Violation of the Racketeer Influenced and Corrupt Organizations Act

6. Negligence

7. Aiding and Abetting

On 12/5/17, Defendants East Mission 8 Investment Inc. and South Fremont 8 Investment, Inc. filed their cross-complaint, asserting causes of action therein for:

1. 1. Equitable Indemnity

2. 2. Quantum Meruit

The Final Status Conference is set for 4/22/19. A jury trial is set for 4/30/19.

Plaintiffs Jun Zhou and Yijuan Huang (“plaintiffs”) move the court, per CCP § 437c(f), for an order granting summary adjudication in their favor and against Defendant East Mission 8 Investment Inc. (“East Mission”) on the following issues:

Issue No. 1 (First Cause of Action for Fraud, Count I): East Mission is liable for damages caused by its employee defendant Tony Yu (“Yu”) under the doctrine of respondeat superior based on Yu’s misrepresentation of purchase price;

Issue No. 2 (First Cause of Action for Fraud, Count II): East Mission is liable for damages caused by Yu under the doctrine of respondeat superior based on transferring title to a third party with consent and using the property as a collateral for a bank loan;

Issue No. 3: (Third Cause of Action for Breach of Fiduciary Duty): East Mission is liable to plaintiffs under the doctrine of respondeat superior for damages caused by Yu for breach of fiduciary duties.

On 11/13/18, East Mission filed an opposition to the motion, requesting that the court continue this motion so that East Mission may complete discovery prior to the hearing of the merits of this motion.

The trial court has broad discretion to allow a continuance of a hearing on a motion for summary judgment “upon a good faith showing by affidavit that a continuance is needed to obtain facts essential to justify opposition to the motion.” Bahl v. Bank of America (2001) 89 Cal.App.4th 389, 395. The ability of the non-moving party to request a continuance is built into the Code of Civil Procedure itself. Id. CCP § 473c subdivision (h) states in relevant part that “[i]f it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion, order a continuance to permit affidavits to be obtained or discovery to be had, or make any other order as may be just.” (Emphasis added.)

The inclusion of the words “may” and “shall” in the text of the statute “leaves little room for doubt that such continuances are to be liberally granted.” Bahl, supra, at 395. When a party submits a declaration of affidavit demonstrating a good faith showing “demonstrating that a continuance is necessary to obtain essential facts to oppose a motion for summary judgment, the trial court must grant the continuance request.” Park v. First American Title Co. (2011) 201 Cal.App.4th 1418, 1428.

A declaration or affidavit submitted in support of a request to continue the trial for purposes of discovery must submit an affidavit showing that “(1) the facts to be obtained are essential to opposing the motion; (2) there is reason to believe such facts may exist; and (3) the reasons why additional time is needed to obtain these facts.” Jade Fashion & Co., Inc. v. Harkham Industries, Inc. (2014) 229 Cal.App.4th 635, 656. “It is not sufficient under the statute merely to indicate further discovery or investigation is contemplated. The statute makes it a condition that the party moving for a continuance show ‘facts essential to justify opposition may exist.’” Roth v. Rhodes (1994) 25 Cal.App.4th 530, 548.

Lack of diligence alone is insufficient to justify the denial of a continuance under CCP § 437c(h). “[W]hen a party submits an affidavit demonstrating that facts essential to justify opposition may exist but have not been presented to the court because the party has not been diligent in searching for the facts through discovery, the court’s discretion to deny a continuance is strictly limited.” Bahl, supra, 89 Cal.App.4th at 398. “Judges are faced with opposing responsibilities when continuances for the hearing of summary judgment motions are sought. On the one hand, they are mandated by the Trial Court Delay Reduction Act (Gov. Code, § 68600 et seq.) to actively assume and maintain control over the pace of litigation. On the other hand, they must abide by the guiding principle of deciding cases on their merits rather than on procedural deficiencies. (Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1085.) Such decisions must be made in an atmosphere of substantial justice. When the two policies collide head-on, the strong public policy favoring disposition on the merits outweighs the competing policy favoring judicial efficiency. (Cf. Cordova v. Vons Grocery Co. (1987) 196 Cal.App.3d 1526, 1532-1533 [when evaluating dismissal of action for delay in prosecution, policy favoring expeditious administration of justice by compelling prompt and diligent prosecution of actions subordinate to policy favoring trial on merits].)” Id. at 398-399.

Denial of a continuance under CCP § 437c(h) “due to lack of diligence may result in the granting of a motion for summary judgment, essentially no different from a Code of Civil Procedure section 583.410 dismissal for delay in prosecution.” Id. at 399. Thus, if an affidavit is presented showing “showing facts essential to justify opposition may exist and explaining why they cannot then be presented, the judge must consider other ways of handling the lack of diligence short of summary judgment.” Id.

Here, East Mission offers the declaration of counsel, Eugene S. Fu (“Fu”), to support the request for continuance. Fu represents that the depositions of plaintiffs and Tony Yu (“Yu”) are essential to justify the opposition regarding (1) the employee status of Yu with Kotai or with TSCM, (2) whether the tortious acts are within the scope of employment, (3) the time and place of employment of the alleged transactions, (4) if the conduct was committed with a purpose to serve the employer Kotai and (5) whether the tort includes an act hired to perform. (Fu Decl., ¶ 11). In reviewing the exhibits attached to Yu’s declaration, however, it appears to the court that East Mission either originally noticed or served notices of depositions as to plaintiffs on 4/12/17, to which plaintiffs objected. Yu has not explained why he has not sought to compel plaintiffs’ depositions as of this date, over 18 months later. On the other hand, it is unclear what the nature of plaintiffs’ objections to being deposed in this matter are; parties to litigation must normally make themselves available for deposition. Fu has also failed to explain what efforts he has made to secure Yu’s deposition, to date. Although it is the court’s understanding that Yu is currently incarcerated, there are procedures available in the Code that enable an incarcerated witness to be deposed.

The court finds this declaration sufficient to show that the facts essential to justify an opposition to the current motion may exist but cannot at the present moment be presented to the Court. The deposition of plaintiffs and Yu is likely to produce relevant information as to Yu’s employment status during the time of the subject transaction, which is at issue in the motion. Thus, denying the request to continue would essentially require granting this motion and prevent East Mission from a disposition of the issues on the merits. Thus, the court finds that East Mission has provided sufficient support to continue the motion for the purposes of pursuing discovery.

Accordingly, the Court CONTINUES this motion to 2/27/19 at 8:30 a.m. in this department. Any supplemental opposition and reply papers must be filed and served in accordance with the time and service requirements under CCP § 473c. The court notes that ordinarily it would not have granted such a long continuance to East Mission under the facts asserted above. East Mission did not provide a satisfactory explanation as to why discovery was not completed in a timely manner before the opposition to this motion was due. However, East Mission will have to secure Yu’s deposition testimony at a correctional facility and may need to file motions to compel plaintiffs’ depositions; as such, the court is providing East Mission with additional time to complete these law and motion tasks. East Mission should note that the court is not inclined to allow any further continuances on this motion without a showing of good cause or agreement by plaintiffs. A continuance of 90 days is more than sufficient to complete the discovery discussed in East Mission’s opposition.