Case Number: KC066276 Hearing Date: March 21, 2018 Dept: J

Re: USA Waste of California, Inc. etc. v. City of Irwindale, etc., et al. (KC066276)

MOTION TO DISMISS SECOND AMENDED COMPLAINT FOR FAILURE TO SERVE WITHIN THREE YEARS

Moving Party: Defendant Commodity Trucking Acquisition, LLC

Respondent: Plaintiff USA Waste of California, Inc.

POS: Moving OK; Opposing OK; Reply OK
This action arises from a dispute involving the filling of the Arrow Pit, a former open pit sand and gravel quarry consisting of approximately 65 acres of undeveloped land in the City of Irwindale (“City”). The complaint was filed on 8/26/13. On 10/15/13, this case was deemed related to case number KC066049, Irwindale Partners L.P. v. USA Waste of California, et al. The First Amended Complaint was filed February 13, 2014.
On 8/30/16, Dispatch Transportation, LLC dba Windrow Earth Transport (“Dispatch”) filed its Chapter 7 bankruptcy petition; on 9/1/16, Dispatch filed a “Notice of Stay of Proceedings.” On 11/8/16, a Declaratory Judgment as between plaintiff and City was entered. On 11/28/16, plaintiff dismissed its second and fourth causes of action, with prejudice.
On 9/21/17, Commodity Trucking Acquisition LLC (“CTA”) filed its Complaint in Intervention, asserting a cause of action therein for Declaratory Relief. Plaintiff’s Second Amended Complaint, filed 10/10/17, asserts causes of action against Defendants Dispatch and CTA for:

Intentional Interference with Contractual Relations
Unfair Competition (Business & Professions Code §§ 17200 et seq.)

On 10/10/17 USA Waste’s Motion For Leave to File Second Amended Complaint adding allegations against CTA was granted, and its proposed Second Amended Complaint was deemed filed and served that day.

The Final Status Conference is set for 9/17/18. A jury trial is set for 9/25/18.

Defendant Commodity Trucking Acquisition, LLC (“defendant”) moves the court, per CCP §§ 583.210 and 583.250, for an order dismissing the Second Amended Complaint (“SAC”) of Plaintiff USA Waste of California, Inc. (“plaintiff”) on the following grounds: plaintiff filed the initial complaint in this action against the City of Irwindale, Irwindale Partners, LP, Dispatch Transportation, LLC dba Windrow Earth Transport, and Does 1-50 on 8/26/13. On 9/6/17, plaintiff filed a motion for leave to amend to file the operative SAC, seeking in part to substitute defendant as Doe 1. The motion came on for hearing on 10/10/17, and the court granted the motion, and deemed the SAC filed and served on all parties. Plaintiff did not serve defendant with the summons and complaint within three years, in violation of CCP § 583.210. Pursuant to CCP § 583.250, the action must be dismissed by the court on its own motion or on motion of any person interested in the action.

REQUEST FOR JUDICIAL NOTICE:

Defendant’s request for judicial notice (“RJN”) is ruled on as follows: grant as to Exhibit “A” (i.e., defendant’s Fictitious Business Name Statement, filed in the San Bernardino County Clerk’s Office on 7/22/11, as Document No. 2011007860) and grant as to Exhibit “B” (i.e., defendant’s Fictitious Business Name Statement, filed in the San Bernardino County Clerk’s Office on 7/22/11, as Document No. 20160008233).

DEFENDANT’S EVIDENTIARY OBJECTIONS:

Declaration of Chad Chen:

1. Sustained

2. Overruled

3a-b. Overruled

3c. Sustained

3d. Overruled

3e. Sustained

3f-j. Overruled

3h. Sustained

4a. Sustained

4b-k. Overruled

CCP § 1008:

Section 1008(a) provides that “[w]hen an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown.”

Here, defendant does not ask the court to “modify, amend or revoke” its prior order granting plaintiff leave to amend, nor did defendant previously move to dismiss. Defendant, in fact, was not a party when it opposed plaintiff’s motion for leave to amend, but was then only an intervenor.

Section 1008 applies in the context when a party is making the same motion. It does not bar the reassertion of arguments raised in other procedural contexts. For instance, in Community Memorial Hospital v. County of Ventura (1996) 50 Cal.App.4th 199, the Second District Court of Appeal rejected plaintiff’s contention that the trial court was prevented by Section 1008 from granting summary adjudication because “the issues adjudicated were essentially the same propositions of law which the County argued and lost on demurrer;” in doing so, the Court determined that “a motion for summary judgment or adjudication is not a reconsideration of a motion overruling a demurrer. They are two different motions. To hold that a trial court is prevented in a motion for summary judgment or adjudication from revisiting issues of law raised on demurrer is to condemn the parties to trial even where the trial court’s decision on demurrer was patently wrong. The result would be a waste of judicial resources, the very evil Code of Civil Procedure section 1008 was intended to avoid. Nothing in the language of section 1008 compels its application to the instant motion for summary adjudication. In fact, to apply it here would run contrary to its purpose.” Id. at 205.

The court, then, rejects plaintiff’s contention that the motion fails to comply with the rules for a motion for reconsideration set forth in CCP § 1008, on the basis that the motion does not implicate Section 1008.

The court now turns to defendant’s argument that the action should be dismissed as against it pursuant to CCP §§ 583.210 and 583.250. “The summons and complaint shall be served upon a defendant within three years after the action is commenced against the defendant. For the purpose of this subdivision, an action is commenced at the time the complaint is filed.” CCP § 583.210. “If service is not made in an action within the time prescribed in this article: (1) The action shall not be further prosecuted and no further proceedings shall be held in the action. (2) The action shall be dismissed by the court on its own motion or on motion of any person interested in the action, whether named as a party or not, after notice to the parties.” CCP § 583.250(a). “The requirements of this article are mandatory and are not subject to extension, excuse, or exception except as expressly provided by statute.” CCP § 583.250(b). However, “[n]othing in this chapter abrogates or otherwise affects the principles of waiver and estoppel.” CCP § 583.140.

Plaintiff filed its initial complaint against Defendants City of Irwindale (“City”), Irwindale Partners, LP, Dispatch Transportation, LLC dba Windrow Earth Transport (“Dispatch”), and Does 1-50 on 8/26/13. On 9/6/17, plaintiff filed a motion for leave to amend to file the SAC, seeking to substitute defendant as “Doe 1.” On 10/10/17, the court granted plaintiff’s motion and deemed the SAC filed and served on all parties. Where an amended complaint relates back to the time of the filing of the original complaint, the Doe defendant must be identified and served with the summons within three years after that date. Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 936-937. Defendant contends that, based on the foregoing, plaintiff allowed the time proscribed in Section 583.210 to expire on 8/26/16 without naming it as a defendant and serving it with the summons and complaint.

Plaintiff, in turn, contends that defendant’s conduct estops it from seeking dismissal pursuant to CCP § 583.210. The court agrees. “The doctrine of equitable estoppel is applicable to motions to dismiss for failure to effectuate service within three years. (Tresway Aero, Inc. v. Superior Court (1971) 5 Cal.3d 431, 437-439). ‘If a trial court finds statements or conduct by a defendant which lulls the plaintiff into a false sense of security resulting in inaction, and there is reasonable reliance, estoppel must be available to prevent defendant from profiting from his deception.’ (Tejada v. Blas (1987) 196 Cal.App.3d 1335, 1341).” Brookview Condominium Owners’ Assn. v. Heltzer Enterprises-Brookview (1990) 218 Cal.App.3d 502, 510. “[T]he determination of whether a defendant’s conduct is sufficient to invoke the doctrine of equitable estoppel is a factual question entrusted to the trial court’s discretion. (Tresway Aero, Inc. v. Superior Court, supra, 5 Cal.3d at p. 440; Gray v. Firthe (1987) 194 Cal.App.3d 202, 211; Borglund v. Bombardier, Ltd. (1981) 121 Cal.App.3d 276, 281-282).” Id.

“To establish estoppel, the plaintiff must show: ‘”(1) The party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must [reasonably] rely upon the conduct to his injury….”’ (Evans v. City of Los Angeles (1983) 145 Cal.App.3d 142, 148; Tejada v. Blas (1987) 196 Cal.App.3d 1335, 1341 [reliance must be reasonable].).” Biss v. Bohr (1995) 40 Cal.App.4th 1246, 1252.

In Tresway Aero, supra, 5 Cal.3d 431, defendant sought dismissal of a complaint on the ground that plaintiff had served a defective summons prior to the expiration of the three-year deadline. Instead of moving to quash service of the summons, defendant requested an extension of time to a date more than three years from the filing of the complaint and then moved to dismiss the complaint. The California Supreme Court held that the doctrine of equitable estoppel applied to prevent defendant from benefitting from its conduct and rejected defendant’s claim that the doctrine should be limited to situations where a defendant makes a misrepresentation to a plaintiff who is not represented by counsel or a defendant stipulates in open court to an extension of the statutory period:

“We perceive no logical reason why the doctrine of estoppel should be so restricted. Stipulations in open court are not the only words or conduct which reasonable and commonly induce reliance by counsel. When the defendant induces the plaintiff to delay service of summons, or to overlook errors in service, and the plaintiff’s reliance is reasonable, an estoppel is essential to prevent the defendant from profiting from his deception…[Prior decisions have] emphasized the duty of the trial court to examine all the acts and conduct of the parties, and render a discretionary decision with a view to furthering the ends of justice. Wyoming Pacific [Oil Co. v. Preston (1958) 50 Cal.2d 736] stressed that the trial court’s discretion ‘must be exercised…”with a view of subserving, rather than defeating, the ends of substantial justice.’ (50 Cal.2d at p. 741). We went on to say that ‘Each case must be decided on its own particular facts, and no fixed rule can be prescribed to guide the court in its exercise of this discretionary power under all circumstances.’ (Ibid.) General Motors [Corp. v. Superior Court (1966) 65 Cal.2d 88], discussing section 583, held that ‘recognizing it would be impossible to identify every situation in which a mechanical application of Code of Civil Procedure section 583 would produce injustice,…the statute must be applied in light of all the circumstances in the individual case, including the acts and conduct of the parties. (65 Cal.2d at p. 96).

We read Wyoming Pacific and General Motors as marking a change in judicial attitude away from ‘mechanical application’ of sections 581 and 583. To limit estoppel to cases of representations to laymen and of stipulations in open court would be to return to a policy of mechanical infliction of injustice in the present case and in many cases to follow; it would make irrelevant any effort by the trial court to inquire into ‘all the circumstances in the individual case, including the acts and conduct of the parties’ (General Motors v. Superior Court, supra.); it would deprive the trial court in most cases of a tool-the doctrine of equitable estoppel-long found essential to subserve ‘the ends of substantial justice’ (Wyoming Pacific Oil Co. v. Preston, supra.); it would relegate section 581a cases to a special preserve in which deception pays, and technical precision prevails over substantial justice.” Id. at 439-440 (emphasis theirs).

The court determines that defendant’s conduct here is sufficient to invoke the doctrine of equitable estoppel here. Again, Chen attests that “[p]rior to Dispatch’s filing for bankruptcy on the first day of trial, on August 30, 2016, Dispatch never argued in pleadings or motions, answered discovery, produced documents, testified in depositions, in any manner that would suggest that Dispatch had ceased operations at the Manning Pit as of September 2011, and/or that it was the incorrect entity to sue. (Chen Decl., ¶ 8, Exhibit “G,” 8:6-9). Chen explains, inter alia, that that (a) Dispatch filed two demurrers, on 10/18/13 and on 3/21/14, making no arguments regarding Dispatch’s allegedly limited time at the Manning Pit; (b) Dispatch filed a motion for summary judgment on 9/24/15, making no arguments regarding Dispatch’s allegedly limited time at the Manning Pit, or the involvement of another entity; (c) Dispatch filed an Exhibit “D” in support of its motion for summary judgment which was described as “Narrative portions of the Consultant Engineer quarterly reports and the Fill Material Memoranda prepared by KFM Geoscience referred to in such quarterly reports as received through Dispatch’s operations under the License from 2011 to July, 2015;” (d) Dispatch answered multiple sets of discovery from plaintiff and at no point stated or even suggested that they were not operating the Manning Pit[1]; (e) Dispatch’s discovery responses never limited the timeframe of its responses to September 2011 or before and always answered in the present tense, suggesting an ongoing and current operation at the Manning Pit; (f) In April 2014, Dispatch made available for inspection and produced over 55,000 documents regarding the Manning Pit operations, and included records from the years 2010 to 2014, none of which revealed CTA’s involvement; (g) There were approximately 50 sessions of deposition testimony from non-expert witnesses in this case and the related action. Dispatch’s counsel was present at many of these depositions, noticed a number of these depositions and actively participated in questioning at these depositions; (h) Dispatch’s Person Most Knowledgeable, Pugmire[2], and Steve Word (“Word”) testified regarding the then-current operations (as of 2014) of the Manning Pit without stating that they no longer were working for Dispatch or that Dispatch ceased operations at the Manning Pit in September 2011[3]; (i) Dispatch deposed plaintiff’s expert in this case and put up its own experts, including Alan Suderman (“Suderman”)[4], an economist from RSM US LLP. John F. Sullivan III (“Sullivan”), CTA’s chief operating officer (as testified to by Pugmire in the context of his Bankruptcy Rule 400 examination) was present at Suderman’s deposition and was merely identified as an individual that Suderman spoke with to understand factual issues upon which Suderman was providing expert opinions on behalf of Dispatch; (j) RSM US LLP’s invoices for expert witness fees for Dispatch were being billed to CTA; (k) Dispatch filed papers in August 2016 for preference of the trial sequence; (l) There were 33 motions in limine in this case and the related action; (m) The California Secretary of State’s website reflects that Dispatch’s status was “active” as of 9/6/17; and that (n) As of 7/24/17, Dispatch’s website stated that “[i]n 1989, when Kim [Pugmire] joined Bruce [Degler], they partnered to grow Dispatch into the largest dump truck company in California and continue to look for new and innovative ways of doing business.” (Chen Decl., ¶¶ 6-8). Chen attests that “[t]he other USA Waste lawyers and I only became aware of CTA’s existence when USA Waste’s bankruptcy counsel conducted the initial meeting of creditors in the chapter 7 bankruptcy proceeding on October 19, 2016 when CTA’s identity and involvement was disclosed by Dispatch’s and CTA’s president Kim Pugmire; the details were further disclosed during the 2004 examinations of Bruce Degler and Kim Pugmire were conducted on January 12, 2017, and February 1, 2017 and May 2, 2017, respectively.” (Chen Decl., ¶ 9, Exhibit “H,” ¶ 10, 4:11-17).

The court again rejects defendant’s claim that plaintiff should have discovered that defendant had acquired Dispatch’s assets years ago, via the 9/25/13 Joint Agenda Report and 9/25/13 Exclusive Negotiating Agreement produced in City’s responses to plaintiff’s requests for production of documents. Defendant also references the fact that Dispatch sales representative Word testified during his 11/12/15 deposition that, to his knowledge, ownership had changed twice since 2006. (Glen Tucker [“Tucker”] Decl., ¶ 2, Exhibit “A,” 14:25-15:5). However, as previously noted, Word has also testified on this date that he was “currently employed” by Dispatch as a sales representative/project manager and that, as of that date, Dispatch was still hauling material to the Manning Pit (Chen Decl., ¶ 9, Exhibit “H,” ¶ 13, Exhibit “C,” 13-22, 19:9-23, 29:18-22 and 80:9-81:15). It is unclear how such testimony should have put plaintiff on notice of CTA’s existence in light of Dispatch’s representations about its continuing operations at the Manning Pit. Defendant also cites 8/22/16 testimony from Suderman, who testified to his understanding that Dispatch was one of “various subsidiaries” of defendant. (Id., ¶ 6, Exhibit “C,” 30:11-23). This testimony, however, is incorrect.

Defendant contends that, even if the court finds an estoppel, it should nevertheless grant the motion because plaintiff did not act diligently in prosecuting its claims against defendant after realizing defendant was the operator of the Manning Pit. The court determines that defendant cannot argue delay and/or prejudice under the circumstances.

Accordingly, the motion is denied.

[1] For instance, Dispatch’s response to plaintiff’s Special Interrogatory No. 37 (i.e., “Please IDENTIFY the developer of the MANNING PIT”) states, in substantive part, “[a]t present, DISPATCH is assisting in the development of the site with respect to the remediation of environmental conditions and grading through Diggerz, Inc. DISPATCH is informed and believes that the City of Irwindale is overseeing the development work performed by DISPATCH. In addition, the City of Irwindale is working with and considering the involvement of including deposition of the MANNING PIT property to outside developer(s).” (Chen Decl., ¶ 9, Exhibit “H,” ¶ 22, Exhibit “N,” 16:18-27; emphasis added). Its response to Special Interrogatory No. 52 (i.e., “[i]f YOU contend that DISPATCH is operating a ‘clean soil’ fill operation at the MANNING PUIT, please state, with specificity, ALL facts which support YOUR contention”) states, in substantive part, “DISPATCH adheres to the fill requirements set forth in section 3.3 of the LICENSE AGREEMENT. DISPATCH does not DEPOSIT at the MANNING PIT any inert waste, construction or demolition debris, recycled, crushed concrete or rubble, or other solid waste.” (Id., 22:9-17; emphasis added). Dispatch’s response to plaintiff’s Request for Admission No. 6 (i.e., [p]lease admit that companies other than DISPATCH have DEPOSITED FILL at the MANNING PIT between October 2007 to the present) was denied. (Id., ¶ 23, Exhibit “O,” 5:1-7). Dispatch’s response to Form Interrogatory No. 17.1 as it pertained to Request for Admission No. 6 states, in pertinent part, “DISPATCH reasonably interprets the Request as asking whether material has been deposited at the MANNING PIT between October 2007 and the present by any company other than DISPATCH itself or any another company [sic] acting under DISPATCH’s specific directions. As reasonably interpreted, DISPATCH denies the admission request.” (Id., 9:20-27). These responses were verified by Pugmire on 1/27/14.

[2] Pugmire testified during his 4/28/15 deposition that from 2007-April 2015, he believed Dispatch had deposited approximately 2.5 million cubic yards of fill into the Manning Pit. (Chen Decl., ¶ 9, Exhibit “H,” ¶ 13, Exhibit “D,” 111:6-12 and 157:4-158:4). He also testified that not only was he Dispatch’s employee at the time of his deposition, but that Dispatch had other employees and a functioning board of directors well after September 2011. (Id., 24:2-8 and 33:12-34:18). Pugmire testified that Dispatch had hauled material to the Arrow Pit in approximately September 2014 (Id., 148:12-23), that he was attending weekly meetings at the Manning Pit at the time of his deposition (Id., 148:25-150:2), that Dispatch had fill records for the year 2014 and was engaged in hauling activity in 2015 (Id., 161:22-163:4) and that City had been forwarding the County of Los Angeles’ Solid Waste Management Fee invoices from December 2013-January 2015 to Dispatch (Id., 207:10-209:1).

[3] Word testified during his 11/12/15 deposition that he was “currently employed” by Dispatch as a sales representative/project manager and that, as of that date, Dispatch was still hauling material to the Manning Pit (Chen Decl., ¶ 9, Exhibit “H,” ¶ 13, Exhibit “C,” 13-22, 19:9-23, 29:18-22 and 80:9-81:15).

[4] Suderman testified, during his 8/22/16 deposition, that he received and reviewed financial statements of Dispatch for the years 2010, 2011, 2012, 2013 and 2014. (Chen Supplemental Decl., ¶ 13, Exhibit “E,” 29:1-30:6).