Case Name: Ma Laboratories, Inc., et al. v. eWiz Express Corporation, et al.

Case No.: 16CV293438

Christine Rao’s Motion for Summary Adjudication of Issues

Factual and Procedural Background

Defendant Ruiting Rao aka Christine Rao (“Rao”) came to the United States from the People’s Republic of China in 1993 at the age of 29 and began her employment at plaintiff Ma Laboratories, Inc. (“Ma Labs”) shortly after her arrival in the United States. (Second Amended Complaint (“SAC”), ¶14.) Defendant Rao was initially employed by Ma Labs as a RMA (return merchandise) clerk and subsequently became an account manager (sales) in or about 1994. (SAC, ¶16.)

In late February 1995, defendant Rao filed for divorce from her then husband. (SAC, ¶17.) Plaintiff Abraham C. Ma (“Ma”) and Rao married on December 7, 1995. (Id.) After taking business and accounting studies at a local community college, defendant Rao returned to work at Ma Labs on February 21, 1997 as a Senior Product Manager. (SAC, ¶18.) Defendant Rao was appointed Vice President—Sales in 2003 and appointed CEO in 2007. (Id.) Defendant Rao served as CEO of Ma Labs from 2007 to December 15, 2014 when she was terminated after being placed on administrative leave on December 4, 2014 for failing and refusing to provide material information to Ma Labs in response to several inquiries into unauthorized, irregular and improper business and financial transactions, acts and omissions, and after failing and refusing to make a true, correct, and complete accounting and restitution to Ma Labs. (SAC, ¶¶26 – 27.)

On April 1, 2016, plaintiffs Ma, Ma Labs, Great World Real Estate LLC (“Great World”), Super Talent Electronics, Inc. (“STE”), and ITExpress Corporation (“ITE”) filed a complaint against defendant Rao, eWiz Express Corporation (“eWiz”), NewBiiz, Inc. (“NewBiiz”), and Efficient Electronics (“EE”). Following a demurrer and motion to strike, plaintiffs filed a first amended complaint on November 1, 2016. On December 15, 2016, defendants filed an answer and cross-complaint.

On February 24, 2017, plaintiffs filed an answer to defendants’ cross-complaint. Also on February 24, 2017, plaintiff Ma Labs filed a cross-complaint against defendant Rao. On April 25, 2017, defendant Rao filed an answer to Ma Labs’s cross-complaint.

On November 16, 2018, the court granted plaintiffs leave to file a SAC to assert a new claim of financial elder abuse. In a 113 page SAC filed on November 19, 2018, plaintiffs Ma, Ma Labs, Great World, STE, and ITE assert the following 38 causes of action against defendants Rao, eWiz, NewBiiz, and EE.

(1) Breach of Fiduciary Duty [plaintiff Ma Labs against defendant Rao]
(2) Breach of Contract [plaintiff Ma Labs against defendant Rao]
(3) Conversion [plaintiff Ma Labs against defendant Rao]
(4) Trespass [plaintiff Ma Labs against defendant Rao]
(5) Intentional Interference with Economic Relationship [plaintiff Ma Labs against defendant Rao]
(6) Accounting [plaintiff Ma Labs against defendant Rao]
(7) Conversion [plaintiff Ma Labs against defendant NewBiiz]
(8) Accounting [plaintiff Ma Labs against defendant NewBiiz]
(9) Conversion [plaintiff Ma Labs against defendant EE]
(10) Accounting [plaintiff Ma Labs against defendant EE]
(11) Breach of Contract (Failure to Pay for Sale of Goods) [plaintiff Ma Labs against defendant eWiz]
(12) Breach of Contract (Failure to Pay Assembly Fee) [plaintiff Ma Labs against defendant eWiz]
(13) Breach of Contract (Failure to Pay Rents Owed Under Lease Agreements) [plaintiff Ma Labs against defendant eWiz]
(14) Breach of Contract (Failure to Pay for Backend Services) [plaintiff Ma Labs against defendant eWiz]
(15) Breach of Contract (Failure to Pay for Wuhan Services) [plaintiff Ma Labs against defendant eWiz]
(16) Breach of the Implied Covenant of Good Faith and Fair Dealing [plaintiff Ma Labs against defendant eWiz]
(17) Common Count: Goods and Services Rendered [plaintiff Ma Labs against defendant eWiz]
(18) Common Count: Money Had and Received [plaintiff Ma Labs against defendant eWiz]
(19) Common Count: Account Stated [plaintiff Ma Labs against defendant eWiz]
(20) Common Count: Quantum Meruit [plaintiff Ma Labs against defendant eWiz]
(21) Accounting [plaintiff Ma Labs against defendant eWiz]
(22) Declaratory Relief [plaintiff Ma Labs against defendant eWiz]
(23) Ejectment [plaintiff Great World against defendant eWiz]
(24) Declaratory Relief [plaintiffs Great World and Ma Labs against defendant eWiz]
(25) Conversion [plaintiff Great World against defendant Rao]
(26) Breach of Fiduciary Duty [plaintiff Great World against defendant Rao]
(27) Accounting [plaintiffs Great World and Ma against defendant Rao]
(28) Rescission – Fraud and Deceit [plaintiff Ma against defendant Rao]
(29) Rescission – Fraud and Deceit [plaintiff Ma against defendant Rao]
(30) Declaratory Relief [plaintiffs Great World and Ma against defendant Rao]
(31) Conversion [plaintiff STE against defendant Rao]
(32) Breach of Fiduciary Duty [plaintiff STE against defendant Rao]
(33) Accounting [plaintiff STE against defendant Rao]
(34) Conversion [plaintiff ITE against defendant Rao]
(35) Breach of Fiduciary Duty [plaintiff ITE against defendant Rao]
(36) Accounting [plaintiff ITE against defendant Rao]
(37) Unfair Competition (Bus. & Prof. Code §17200) [plaintiff Ma Labs against all defendants]
(38) Financial Elder Abuse (Welf. & Inst. Code §15610 et seq.) [plaintiff Ma against defendant Rao]

On December 7, 2018, defendant Rao filed a motion for summary adjudication of issues. Specifically, defendant Rao seeks summary adjudication of the first through sixth and twenty fifth through thirty seventh causes of action of the SAC. Rao also seeks summary adjudication of the sole cause of action asserted in the February 24, 2017 cross-complaint.

I. Plaintiffs’ request for continuance is GRANTED.

Plaintiffs request a continuance of defendant Rao’s motion for summary adjudication pursuant to Code of Civil Procedure section 437c, subdivision (h). Code of Civil Procedure section 437c, subdivision (h) states, in pertinent part, that, “If 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, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just.”

“To mitigate summary judgment’s harshness, the statute’s drafters included a provision making continuances—which are normally a matter within the broad discretion of trial courts—virtually mandated 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; internal punctuation omitted.)

However, “[i]t is not enough to ask for a continuance … in opposing points and authorities. The statute requires that the opposition be accompanied by affidavits or declarations showing facts to justify opposition may exist; or that such showing be made by an ex parte motion on or before the date the opposition is due.” (Weil & Brown et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2018) ¶10:207.10, p. 10-89.) In Hill v. Physicians & Surgeons Exch. (1990) 225 Cal.App.3d 1, 7 – 8, the “pleadings contain[ed] no affidavit detailing facts to show the existence of evidence supporting her theory of coverage and the reasons why this evidence could not be presented at the time of the hearing.” “The purpose of the affidavit required by Code of Civil Procedure 437c, subdivision (h) is to inform the court of outstanding discovery which is necessary to resist the summary judgment motion.” (Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 325 – 326.)

The opposing party’s declaration in support of a motion to continue the hearing should show the following:
• Facts establishing a likelihood that controverting evidence may exist and why the information sough is essential to opposing the motion;
• The specific reasons why such evidence cannot be presented at the present time;
• An estimate of the time necessary to obtain such evidence; and
• The specific steps or procedures the opposing party intends to utilize to obtain such evidence.

(Weil & Brown et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2018) ¶10:207.15, pp. 10-89 to 10-90 citing Code Civ. Proc., §437c, subd. (h) and Cooksey v. Alexakis (2004) 123 Cal.App.4th 246, 254 (Cooksey), et al.)

A declaration in support of a request for continuance under section 437c, subdivision (h) must show: “(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. [Citations.]” [Citation.] “The purpose of the affidavit required by Code of Civil Procedure section 437c, subdivision (h) is to inform the court of outstanding discovery which is necessary to resist the summary judgment motion. [Citations.]” [Citation.] “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.’ [Citation.]

(Cooksey, supra, 123 Cal.App.4th at p. 254.)

Here, plaintiffs’ counsel submits a declaration which states plaintiffs have attempted to notice the depositions of Tony Hua and Rao, but both have been unavailable. Defendant Rao “relies heavily on evidence provided by both of these witnesses. Plaintiffs must be able to cross-examine Rao on these statements in order to effectively oppose this motion. Further, Tony Hua’s testimony is critical on the issue of consent, ratification, and fraudulent concealment of Defendant’s actions. To properly oppose Defendant’s motion for summary adjudication, Ma Labs must take Christine Rao’s and Tony Hua’s deposition.” “Ma Labs cannot, however, effectively depose either of these witnesses until it receives discovery due from Defendants which is the subject of thirteen pending discovery motions that will not be heard until after Ma Labs’ opposition to this motion for summary adjudication is due.” “The Court [ordered] the parties to select a discovery referee, the parties have made that selection, but the Court has not yet formally appointed one to date.”

“[T]he court must determine whether the party requesting the continuance has established good cause for it. That determination is within the court’s discretion.” (Weil & Brown et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2018) ¶10:208, p. 10-91 citing Lerma v. County of Orange (2004) 120 Cal.App.4th 709, 716, et al.) “Usually, the court’s discretion should be exercised in favor of granting a continuance: ‘The interests at stake are too high to sanction the denial of a continuance without a good reason.’” (Id. citing Frazee v. Seely (2002) 95 Cal.App.4th 627, 634; et al., emphasis added.)

Factors the court may consider in deciding to continue include:
The length of time the case has been pending. [35 months: Complaint filed April 1, 2016.]
The length of time the requesting party had to oppose the motion. [2 months: MSA filed December 7, 2018.]
The proximity of the trial date or the 30-day discovery cut-off before trial. [Trial setting conference scheduled for March 26, 2019.]
Whether the continuance motion could have been made earlier. [Continuance made in conjunction with opposition to MSA.]
Prior continuances for this purpose. [No prior requests for continuance.]
Whether the evidence sought is “essential” to the issue to be adjudicated. [As set forth in the supporting declaration.]
Death or serious illness of an attorney or party is normally good cause for granting a continuance. [Not applicable.]

(Id. at ¶10:208.1, pp. 10-91 to 10-92.)

Since plaintiffs are faced with a potentially dispositive motion and since a new trial date has not yet been scheduled, the court will allow plaintiffs an opportunity to conduct discovery to be able to fend off these motions. In light of the liberality in favor of granting continuances, plaintiffs’ request for continuance is GRANTED. The Motion is continued to May 16, 2019 at 9 a.m. Plaintiffs are instructed to file a revised or amended opposition which will completely supersede the opposition papers filed on or about February 7 – 8, 2019.