Friday, June 27, 2014

You Can't Do that in California State Court (Part 374)

Paramount Petroleum v. Superior Court, No. B253290 (D2d3 June 20, 2014)

Code of Civil Procedure § 437c(f) limits the types of issues amenable to summary adjudication. Under that provision—which is peculiar to California procedure—a court may only grant a summary adjudication motion if it completely disposes of a cause of action, an affirmative defense, a claim of damages, or an issue of duty. The court here holds that, in a breach of contract case, § 437c(f) summary adjudication of liability for a plaintiff in a breach of contract case when the amount of damages is contested.

Plaintiff in this case moved for summary adjudication on its claim for breach of an asphalt supply contract, as well on defendant’s affirmative defense of mistake of fact. As to its affirmative claim, plaintiff’s moving papers admitted that it wanted adjudication of liability only. Proof of the amount of its damages would have to await trial. The trial court initially denied the motion. But a couple weeks later, without input from the parties, the court vacated its order and re-took the matter under submission. It then reversed itself and granted the motion. Plaintiff took a writ.

The court here first deals with the threshold issue of the reconsideration. Courts, of course, have the inherent power to reconsider their rulings prior to judgment. But if they do so, California Supreme Court precedent requires them to give notice to the parties, to order briefing on the issue, and to hold a hearing. The court’s failure to do so here was error. It is, however, only prejudicial error meriting reversal if the court was wrong on the merits of the issue reconsidered. So, notwithstanding the court’s error, the case rises or falls on whether summary adjudication was properly granted.

Turning to the summary adjudication issue, the court first notes that the statute that authorizes summary adjudication—§ 437c(f)(1)—is not all that clear that a plaintiff even has the right to move for summary adjudication on the grounds that a cause of action is indisputably meritorious. The statute says that a party can seek summary adjudication of a cause of action on the grounds that there is no affirmative defense to it.  But what about when there’s just no defense at all? I.e., when plaintiff can carry the burden on each element of its claim and defendant can’t produce any evidence that gives rise to a factual dispute?

Looking into the legislative history, the court explains that confusion seems to have come from a sloppy 1993 amendment that, among other things, inserted the word “affirmative” where the statute used to say, simply “no defense.” The history of the amendment was supposed to clarify things, not change the law. Moreover § 437c(p)(1), which addresses a moving plaintiff’s burden, clearly indicates that plaintiff can do so by proving an affirmative claim. So notwithstanding the randomly inserted “affirmative,” § 437c(f)(1) does permit a plaintiff to do so.

That said, § 437c(f)(1) nonetheless limits summary adjudication to causes of action, issues of duty, claims of damages (which prior cases have limited to claims of punitive damages), and affirmative defenses. The amount of damages is an element of breach of contract. It follows that a plaintiff can’t get summary adjudication on the grounds that there is no defense to the cause of action unless it can establish the existence and amount of its damages. Section 437c(f)(1) thus effectively precludes summary adjudication on liability only.  (In parsing some slightly confusing language in a prior case on this issue, the court helpfully notes that “there is no such creature as ‘partial summary judgment’; in California; the proper term is ‘summary adjudication.’”.)

Nor—as parties sometimes argue—can the liability issue be framed as an issue of duty. While prior cases permit the summary adjudication of the existence of a contractual duty, noting supports adjudication of that duty’s breach.

Finally, the trial court did correctly grant summary adjudication on defendant’s mistake of fact defense, which was premised on an erroneous legal theory.

Writ granted in part.

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