Ahn v. Kumho Tire U.S.A., Inc. (2014) · DecisionDepot
Ahn v. Kumho Tire U.S.A., Inc.
California Court of Appeal Jan 22, 2014 No. E054322Published
Before: King
Synopsis
[CERTIFIED FOR PARTIAL PUBLICATION†]
Filed 1/22/14 CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
STEVE AHN et al.,
Plaintiffs and Appellants, E054322
v. (Super.Ct.No. CIVRS1004820)
KUMHO TIRE U.S.A., INC. et al., OPINION
Defendants and Appellants.
APPEAL from the Superior Court of San Bernardino County. Barry L. Plotkin,
Judge. Reversed in part and affirmed in part.
Kim, Shapiro, Park, Lee & Ryu, Paul Park, and Yalan Zheng for Plaintiffs and
Appellants.
Lim, Ruger & Kim, Bruce G. Iwasaki, and Arnold Barba for Defendants and
Appellants.
*Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of parts IV.B. and IV.C.
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I. INTRODUCTION
The trial court granted summary judgment in favor of defendants Kumho Tire,
U.S.A., Inc. (Kumho) and Korea Express U.S.A., Inc. (Korea Express) on plaintiffs’
unverified complaint for breach of contract and common counts. The motion was based
on plaintiffs’ “factually devoid” responses to defendants’ “state all facts” special
interrogatories and requests for production in which plaintiffs generally stated they did
not know whether any facts or documents supported various allegations of their
complaint. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 580-581 [motion
for summary judgment may be based on discovery responses indicating the plaintiffs
have no evidence to support their claims]; Code Civ. Proc., § 437c, subd. (p)(2).)1
In opposing the motion, plaintiff Steven Ahn, the sole owner and principal of
plaintiff New Star, Inc., adduced a declaration explaining the evidentiary basis of
plaintiffs’ claims. Plaintiffs also adduced amended responses to their initial discovery
responses along with a declaration by plaintiffs’ counsel explaining that the initial
discovery responses were “a mistake.” The trial court granted the motion after
disregarding substantially all of the statements of fact in Ahn’s declaration on the ground
they were inconsistent with plaintiffs’ initial discovery responses. The trial court relied
on D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22-23 (D’Amico), which
held that a party’s statements of fact adduced on a motion for summary judgment must be
1 All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
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disregarded as insubstantial or incredible to the extent they contradict the party’s prior
“clear and unequivocal admissions” of fact.
As we explain, this was an overly broad and erroneous application of the D’Amico
rule. In light of all the evidence adduced on the motion, a reasonable trier of fact could
have credited counsel’s explanation that the discovery responses were a mistake and
found the contradictory statements in Ahn’s declaration credible. (Mason v. Marriage &
Family Center (1991) 228 Cal.App.3d 537, 546 (Mason).) Thus, plaintiffs’ discovery
responses were not “clear and unequivocal admission[s]” of fact which, in light of all the
evidence adduced on the motion, could not be credibly contradicted or amended. (Price
v. Wells Fargo Bank (1989) 213 Cal.App.3d 465, 482, overruled on other grounds in
Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55
Cal.4th 1169, 1179-1182.)
In the unpublished portion of this opinion, we explain why all of the papers on the
motion show there are triable issues of fact on plaintiffs’ claims. We therefore reverse
the judgment in favor of defendants. We affirm a postjudgment order denying
defendants’ motion for sanctions against plaintiffs and their counsel for allegedly filing a
complaint without evidentiary support. (§ 128.7, subd. (b)(3).)
II. STANDARD OF REVIEW
Summary judgment is appropriate when all of the papers submitted show there are
no triable issues of any material fact and the moving party is entitled to a judgment as a
matter of law. (§ 437c, subd. (c); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
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843.) “‘The purpose of a summary judgment proceeding is to permit a party to show that
material factual claims arising from the pleadings need not be tried because they are not
in dispute.’ [Citations.]” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 168; see
§ 437c, subd. (a).)
A defendant moving for summary judgment has the burden of showing the
plaintiff’s causes of action have no merit. (Aguilar v. Atlantic Richfield Co., supra, 25
Cal.4th at pp. 849-850.) A defendant meets this burden if it makes a prima facie showing
that one or more elements of each cause of action cannot be established or is subject to a
complete defense. (Id. at p. 849.) If the defendant makes this showing, the burden shifts
to the plaintiff to produce evidence demonstrating the existence of a triable issue of
material fact. (Id. at pp. 849-850; § 437c, subd. (p)(2).)
We review the entire record de novo, considering “‘all the evidence set forth in the
moving and opposition papers[,]’ . . .” (Blanco v. Baxter Healthcare Corp. (2008) 158
Cal.App.4th 1039, 1046.) We disregard evidence to which a sound objection was made
but consider any evidence to which no objection or an unsound objection was made.
(McCaskey v. California State Automobile Assn. (2010) 189 Cal.App.4th 947, 957, citing
Reid v. Google, Inc. (2010) 50 Cal.4th 512, 534.)
“‘[W]e strictly construe the moving party’s evidence and liberally construe the
opposing party’s and accept as undisputed only those portions of the moving party’s
evidence that are uncontradicted.’ [Citation.] ‘. . . “Any doubts about the propriety of
summary judgment . . . are generally resolved against granting the motion, because that
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allows the future development of the case and avoids errors.”’ [Citation.]” (Scalf v. D. B.
Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519 (Scalf).)
III. BACKGROUND
A. The Evidence Adduced on the Motion for Summary Judgment2
Ahn, a former truck driver, is the sole owner and president of New Star Transport,
Inc. (New Star), a trucking services company. Kumho is the American distribution arm
of Kumho Tire Company, an international tire manufacturer. Sometime during 2008,
Kumho “outsourced” its entire logistics department to Korea Express.
In 2005, Ahn began providing consulting and trucking services to Kumho without
a written agreement. In December 2006, New Star and Kumho entered into a written
“dedicated fleet trucking services” agreement whereby New Star made available to
Kumho a certain number of trucks, trailers, and drivers in exchange for weekly fees. The
2006 agreement had a one-year term with automatic one-year extensions and could be
terminated by either party on 30 days’ notice.
In March 2008, New Star and Kumho entered into a successor “dedicated fleet
operations” agreement requiring New Star to make available “for the exclusive use” of
Kumho no fewer than eight trucks, eight drivers, and 16 trailers. Under the 2008
agreement, Kumho agreed to pay New Star “Fixed Charge[s]” of $1,196 per week for
2 The facts are based on all of the evidence adduced on the motion for summary judgment, except evidence to which a sound objection was made, but including Ahn’s declaration, which we conclude was erroneously disregarded under the D’Amico rule. (See McCaskey v. California State Automobile Assn., supra, 189 Cal.App.4th at p. 957.)
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each dedicated truck, plus additional charges based on miles driven, fuel, and unloading.
New Star agreed to invoice Kumho on a weekly basis for all charges due under the 2008
agreement. The 2008 agreement states its term “will be for a minimum of three (3) years
with a 90-day cancellation option for Kumho Tires or New Star after 1 year,” but the
“after 1 year” clause is crossed out and initialed by the signatories.
According to Ahn, he and Mike Newman, Kumho’s transportation manager,
discussed the term and termination clause before they signed the 2008 agreement and
agreed that terminating the agreement on 90 days’ notice after one year or at anytime
within the three-year term was inconsistent with the agreement’s three-year term. To
confirm their understanding that the 2008 agreement could not be terminated until after
its three-year term expired, Ahn and Newman initialed and crossed out the “after 1 year”
clause. New Star performed its obligations under the 2008 agreement by providing
Kumho with the dedicated trucks, trailers, and drivers.
Chong Ha Nam was employed by Kumho from 1985 to 2008. When he left
Kumho in 2008, Nam was its senior manager for logistics, responsible for overseeing the
distribution and transportation of Kumho tires. Nam negotiated and signed the December
2006 agreement on behalf of Kumho and was in charge of overseeing New Star’s
performance of the 2008 agreement. According to Nam, sometime during 2008 Kumho
“outsource[d] its logistics department” to Korea Express. Nam then stopped working for
Kumho and became the branch manager for Korea Express in Rancho Cucamonga.
According to Ahn, in January 2009, Kumho’s logistics department began using the name
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Korea Express with “the same group of people working at the same office at [the] same
location . . . .”
In April 2008, Kumho notified New Star it was reducing the number of dedicated
trucks it would be using from eight to six, and in October 2008, it notified New Star it
was further reducing the number of trucks from six to four. According to Nam, New Star
“acquiesced” in the reductions because they were “necessitated by the level of business,”
and Ahn did not object to Nam concerning the fleet reductions. Ahn claims neither he
nor New Star ever agreed to the fleet reductions.
New Star invoiced Kumho for all trucks dedicated to Kumho pursuant to the 2008
agreement, including the unused trucks. Kumho refused to pay the invoices for the
unused trucks; required Ahn to submit separate invoices for the used and unused trucks;
and paid only the invoices for the trucks it used. Ahn claims he asked Nam about the
unpaid invoices “on numerous occasions” and Nam told him Kumho would pay the
invoices for the unused trucks “when the business got better.”
In a December 29, 2008, letter to Ahn at New Star, Nam advised that Kumho was
outsourcing its warehouse and logistics operations to another company (apparently Korea
Express) effective January 1, 2009, and Kumho was giving 30 days’ notice of its intent to
terminate the December 2006 agreement. The letter does not mention the 2008
agreement, but according to Nam, he met with Ahn in January 2009 to discuss the
termination of “the contract” and Ahn agreed “the contract” would terminate on June 15,
2009. Ahn denies he met with Nam during January 2009 and also denies he agreed the
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2008 agreement was or could be terminated before its three-year term expired or on 30
days’ notice.
New Star continued to provide trucks to Korea Express during 2009. Finally, on
August 28, 2009, Korea Express terminated the 2008 agreement on 30 days’ notice
effective September 30, 2009, approximately 78 weeks before its three-year term
expired.3 Ahn claims New Star is owed $746,304 for all trucks dedicated to Kumho and
Korea Express pursuant to the 2008 agreement based on the $1,196 weekly rate. Of the
$746,304 sum, $301,392 is due and unpaid for trucks used by Kumho or Korea Express
through September 30, 2009.
In his declaration, Ahn claims Kumho approached him during 2007 about placing
“Kumho Tires” advertising signs on all trailers operated by New Star, including trailers
not dedicated to or used by Kumho. Around July 2007, Mr. Chu Hwan Kim of Kumho
and Ahn orally agreed that Kumho would pay New Star $1,000 per month per trailer for
the advertising, and Kumho had “Kumho Tires” placed on all 40 of New Star’s trailers.
3 In his declaration, Nam averred that S.H. Kim of Korea Express met with Ahn on July 24, 2010 (apparently Nam meant July 24, 2009), and during that meeting Ahn confirmed that “the agreement” between Kumho and New Star could be terminated on 30 days’ notice. Plaintiffs objected to Nam’s statement on hearsay grounds (Evid. Code, § 1200), and the objection was properly sustained. Nam purported to introduce an out-of- court statement by S.H. Kim concerning what Ahn said during the July 24 meeting for the truth of the statement. (Ibid.) We therefore disregard this portion of Nam’s declaration. (McClaskey v. California State Automobile Assn., supra, 189 Cal.App.4th at p. 957.) For his part, S.H. Kim said nothing in his declaration about any July 2009 or July 2010 meeting with Ahn or any agreement by Ahn that the 2008 agreement could be terminated on 30 days’ notice.
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According to Ahn, $1 million is due for the Kumho Tires advertising placed on New Star
trucks from July 2007 to August 2009.
B. The Allegations of the Complaint
In May 2010, Ahn and New Star filed an unverified complaint against Kumho and
Korea Express alleging five causes of action: (1) against both defendants for breach of
the 2008 agreement (first); (2) against Korea Express for breach of an oral agreement to
assume the 2008 written agreement (second); (3) against both defendants for breach of a
2007 oral agreement to pay New Star $1,000 per month to place “Kumho Tires”
advertising on 40 New Star trailers (third); and (4) against both defendants for common
counts and quantum meruit (fourth and fifth).
As indicated, the allegations of the complaint are fairly detailed and are entirely
consistent with Ahn’s declaration. The complaint explains the origins of the 2006 and
2008 agreements, their terms and termination clauses; alleges Kumho reduced the
dedicated fleet from eight trucks to six in April 2008 and from six trucks to four in
November 2008; alleges on information and belief that sometime after the 2008
agreement was signed Korea Express assumed all of Kumho’s business operations,
including its obligations under the 2008 agreement; and alleged Korea Express
unilaterally terminated the 2008 agreement on 30 days’ notice in August 2009, before its
three-year term expired. The complaint further alleges that in 2007 Kumho approached
plaintiffs about placing advertising signs on plaintiffs’ trailers and agreed to pay plaintiffs
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$1,000 per month per trailer, due to the increased risk of theft resulting from the
placement of the advertising signs.
The complaint seeks $765,440 in damages from both defendants for their alleged
breach of the 2008 agreement (first cause of action); the same amount in damages from
Korea Express for its breach of an alleged oral agreement to assume Kumho’s obligations
under the 2008 agreement (second cause of action); and an additional $1 million from
both defendants for their breach of the alleged 2007 oral agreement to pay New Star
$1,000 per month per trailer for placing advertising on all New Star trucks (third cause of
action). Plaintiffs seek both amounts, or $1,765,440, from defendants in their fourth and
fifth causes of action for common counts and quantum meruit. Attached as exhibits to
the complaint are copies of the 2006 and 2008 agreements and photographs showing
“Kumho Tires” advertising on New Star trucks.
C. Plaintiffs’ “Factually Devoid” Discovery Responses
Defendants answered the May 2010 complaint in July 2010. In October 2010,
plaintiffs responded to defendants’ “state all facts” special interrogatories and requests
for production. Most of the discovery was directed to the allegations of the complaint.
For example, one interrogatory asked Ahn and New Star to state all facts supporting their
allegation that “there is now owing and due from defendants the sum of at least
$1,765,440.00 . . . .” Each plaintiff responded: “At this time, responsive party does not
know whether any facts responsive to this request exist. Discovery is continuing.” Yet
the complaint itself explained that plaintiffs were seeking $765,440 for trucks dedicated
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to defendants pursuant to the 2008 agreement but not paid for, and $1 million for
Kumho’s breach of the alleged 2007 oral advertising agreement.
Plaintiffs gave similar “we don’t know” and “discovery is continuing” responses
to defendants’ other “state all facts” special interrogatories and production requests. In
December 2010, plaintiffs supplemented some of their interrogatory responses and
agreed to produce some additional invoices and other documents, but they did not change
most of their original responses indicating they did not know whether any responsive
facts or documents existed. In a December 23, 2010, e-mail to plaintiffs’ counsel,
defendants’ counsel summarized the parties’ “meet and confer” or discussion concerning
plaintiffs’ original and first amended responses. In the e-mail, defendants’ counsel
asserted plaintiffs would “be bound by their original responses,” together with their
“admissions” that they did not know whether any responsive facts or documents existed. 4
4 Despite the parties’ “meet and confer” discussion and defendants’ apparent belief that plaintiffs’ original and first amended interrogatory responses were incomplete or evasive, defendants did not move for an order compelling further responses to the interrogatories. (§ 2030.300.) Nor did defendants move for an order deeming plaintiffs bound by their original or their first amended interrogatory responses after those responses were amended. (§ 2030.310, subd. (b) [party propounding interrogatory to which an amended answer has been served may move for an order deeming the responding party bound by its initial response].) Thus, defendants’ unilateral assertion that plaintiffs were “bound by” their original and first amended responses was without legal support (§ 2030.310, subds. (b)-(c)), and the second amended responses that plaintiffs submitted along with their opposition to the summary judgment motion were permissible and should have been considered, along with the other evidence adduced on the motion (§ 2030.310, subd. (a) [“Without leave of court, a party may serve an amended answer to any interrogatory that contains information subsequently discovered, inadvertently omitted, or mistakenly stated in the initial interrogatory. At the trial of the action [or any other hearing in the action] the propounding party . . . may use the initial [footnote continued on next page]
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D. Defendants’ Motion for Summary Judgment and Motion for Sanctions
In March 2011, defendants moved for summary judgment without deposing Ahn,
even though the complaint indicated he had personal knowledge of the factual bases of
plaintiffs’ claims as alleged in the complaint. Based on plaintiffs’ “factually devoid”
responses to defendants’ “state all facts” special interrogatories and requests for
production, defendants argued plaintiffs admitted their causes of action “lacked any
factual basis.” (See Union Bank v. Superior Court, supra, 31 Cal.App.4th at p. 593
[motion for summary judgment may be based on discovery responses indicating the
plaintiffs have no evidence to support their claims]; Andrews v. Foster Williams LLC
(2006) 138 Cal.App.4th 96, 106-107 [the plaintiffs’ nonresponsive answers to
comprehensive special interrogatories in effect admitted the plaintiffs had no further
information].) The motion also claimed Ahn had no contractual relationship with either
defendant, and Korea Express had no agreement with Ahn or New Star; thus, Ahn was
entitled to no relief against either defendant and neither Ahn nor New Star was entitled to
any relief against Korea Express.
In support of the motion, defendants adduced the declarations of Nam and other
employees of Kumho and Korea Express averring to the facts described above, including
that: (1) New Star never objected to Kumho’s April and October 2008 fleet reductions;
(2) Kumho paid New Star in full for all trucks used and other services rendered pursuant
[footnote continued from previous page] answer under Section 2030.410, and the responding party may then use the amended answer.”]).
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to the 2008 agreement; (3) New Star never told Kumho it had not been paid in full for its
services; (4) Kumho had no oral or written agreement with Ahn, only a written agreement
with New Star; (5) Korea Express had no oral or written agreement with New Star or
Ahn; (6) neither Kumho nor Korea Express agreed to pay for any advertising on New
Star trucks; and (7) on behalf of New Star, Ahn agreed to Kumho’s termination of the
2008 agreement effective September 30, 2009. In a further declaration, defendants’
counsel authenticated defendants’ discovery responses and other documents.
In opposition to the motion, plaintiffs submitted the declaration of Ahn explaining
the factual bases of plaintiffs’ claims consistent with the allegations of the complaint.
Plaintiffs also served amended responses to defendants’ “state all facts” special
interrogatories and requests for production, essentially repeating the allegations of the
complaint and the additional detail in Ahn’s declaration. In a further declaration,
plaintiffs’ counsel explained the amended discovery responses: “Plaintiffs’ initial
discovery responses contain certain responses that were inadvertently omitted and
mistakenly stated. As [a] result, plaintiffs have served and submitted . . . amended
responses.”
In reply, defendants objected to nearly every statement in Ahn’s declaration on the
ground it violated the D’Amico rule because it was contrary to plaintiffs’ initial discovery
responses and no explanation for the discrepancies had been given. Defendants also
adduced excerpts of Ahn’s deposition which defendants took shortly after plaintiffs filed
their opposition, and argued, based on Ahn’s deposition testimony, that plaintiffs’ claims
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still lacked evidentiary support. With their reply, defendants filed a motion for sanctions
against plaintiffs and their counsel on the ground the allegations of the complaint were,
“by plaintiffs’ own admission, completely lacking in factual support,” and by signing the
complaint plaintiffs’ counsel falsely certified that the allegations had evidentiary support.
(§ 128.7, subd. (b)(3).) Plaintiffs and their counsel opposed the sanctions motion.
E. The Trial Court’s Rulings
At a combined hearing on the motions for summary judgment and sanctions, the
party cannot create an issue of fact by a declaration which contradicts his prior discovery
responses”]; Benavidez v. San Jose Police Dept. (1999) 71 Cal.App.4th 853, 860, quoting
Preach v. Monter Rainbow (1993) 12 Cal.App.4th 1441, 1451 [“[W]e are constrained by
the well settled rule that ‘[a] party cannot create an issue of fact by a declaration which
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contradicts his prior [discovery responses] . . . .’”]; Niederer v. Ferreira, supra, 189
Cal.App.3d at p. 1503, quoting Leasman v. Beech Aircraft Corp. (1975) 48 Cal.App.3d
376, 382 [“‘[W]hen a defendant can establish his defense with the plaintiff’s admissions
sufficient to pass the strict construction test imposed on the moving party [citations], the
credibility of the admissions are valued so highly that the controverting affidavits may be
disregarded as irrelevant, inadmissible or evasive.’”].) Such summary statements of the
D’Amico rule must not be misconstrued as allowing summary judgment to be granted
based on what may appear, in isolation, to be clear and unequivocal admissions, when the
purported admissions are credibly contradicted or explained by other credible evidence in
the record, and all the evidence in the record shows there are triable issues of material
fact.
B. There are Triable Issues of Fact on the Disputed Elements of Plaintiffs’ Claims
Plaintiffs claim defendants failed to meet their initial burden of demonstrating
plaintiffs could not establish one or more elements of their causes of action (§ 437c, subd.
(o)(1)), even if Ahn’s declaration is disregarded. It is unnecessary to determine this
question because all of the papers and evidence that were or should have been admitted
on the motion, including Ahn’s declaration and his subsequent deposition testimony,
shows there are triable issues on the disputed elements of plaintiffs’ claims.
1. Breach of the 2008 Agreement (First and Second Causes of Action)
Defendants assert that plaintiffs’ claims for breach of the 2008 agreement against
both defendants (first cause of action ) and against Korea Express for orally assuming
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Kumho’s obligations under the agreement (second cause of action) had no merit for the
following reasons: (1) Ahn agreed to the April and October 2008 fleet reductions from
eight trucks to six then from six trucks to four; (2) according to its terms, the agreement
could be cancelled on 90 days’ notice before its three-year term expired; (3) in 2009, Ahn
agreed the agreement could be cancelled on 30 days’ notice and Kumho/Korea Express
terminated the agreement on 30 days’ notice effective September 30, 2009; and (4) Korea
Express is not bound by the agreement because it is not a signatory and did not orally
agree to assume Kumho’s obligations under the agreement, as the second cause of action
alleges. There are triable issues of fact concerning each of these questions.
First, there are triable issues concerning whether Korea Express is bound by the
2008 agreement. The record shows New Star began providing trucking services to Korea
Express no later than 2009, after Kumho “outsourced” its entire logistics department to
Korea Express. This supports a reasonable inference that Korea Express agreed, by its
conduct if not by its words, to assume Kumho’s obligations under the agreement.
Second, Ahn avers he never agreed to the April and October 2008 fleet reductions and
New Star continued to invoice defendants for all trucks dedicated to but unused by
defendants for the duration of the three-year term of the agreement.
Third, the 2008 agreement is ambiguous as to whether it could be cancelled on 90
days’ notice before its three-year term expired. But even if it could be cancelled on 90
days’ notice within its three-year term, there is no evidence it was cancelled on 90 days’
notice. Further, defendants claim that in mid-2009 Ahn agreed the agreement could be
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cancelled on 30 days’ notice, and defendants cancelled the agreement on 30 days’ notice
effective September 30, 2009. But Ahn disputes that he ever agreed the agreement could
be cancelled on 30 days’ notice, or within its three-year term.
2. Third Cause of Action (Breach of Oral Contract for Advertising)
Defendants claim plaintiffs’ third cause of action against defendants for breach of
the alleged 2007 agreement to pay Ahn $1,000 per month per truck for placing Kumho
Tires advertising on all 40 New Star trucks has no merit because: (1) Ahn admitted in his
deposition that no agreement for advertising was ever made; (2) Kumho never agreed to
pay Ahn or New Star $1,000 per month per truck for the advertising; and (3) there is no
evidence Korea Express is bound by the advertising agreement.
Contrary to defendants’ claim, Ahn did not admit in his deposition that no
agreement for advertising was ever made with Kumho. Defendants point to Ahn’s
deposition testimony that no one from Kumho ever came to him and said, “‘[y]es, we
agree to pay you $1,000 a month’” for advertising. But Ahn further testified in his
deposition that (1) Chu Hwan Kim of Kumho told Ahn that he (Chu Hwan Kim) was
going to submit Ahn’s request for payment to Kumho for approval, and (2) another
Kumho representative, Byung Sun Kim, later told Ahn he was going to “help” Ahn get
payment from Kumho for the advertising. These discussions occurred after Kumho had
“Kumho Tires” painted on all 40 New Star trucks. Viewed in its entirety, Ahn’s
deposition testimony indicates Kumho agreed to pay Ahn for the advertising.
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Lastly, even though there is no evidence that anyone representing Korea Express
expressly agreed, either orally or in writing, to pay Ahn or New Star for the advertising
on the New Star trucks, the record supports a reasonable inference that Korea Express, in
assuming Kumho’s contractual obligations to plaintiffs under the 2008 agreement,
implicitly agreed to pay plaintiffs for the advertising.
3. Quantum Meruit and Common Counts (Fourth and Fifth Causes of Action)
Quantum meruit allows a party who has provided work or services for the benefit
of another to recover the reasonable value of the services. (Day v. Alta Bates Medical
Center (2002) 98 Cal.App.4th 243, 249.) There must be an explicit or implicit request
for the services or an acquiescence in their provision by the person for whose benefit the
services were performed. (Ibid.) The record shows plaintiffs provided dedicated
trucking services to Kumho and Korea Express and provided advertising services to
Kumho. Plaintiffs were not paid for these services and there is a triable issue whether, by
its conduct, Korea Express assumed Kumho’s obligations to pay plaintiffs for their
services rendered to Kumho.
C. The Motion for Sanctions Was Properly Denied
Section 128.7, subdivision (c) authorizes the trial court to impose sanctions against
attorneys and parties whom “the court determines” have violated or are responsible for
violating subdivision (b). Subdivision (b) states: “By presenting to the court, whether by
signing, filing, submitting, or later advocating a pleading, petition, written notice of
motion, or other similar paper, an attorney or unrepresented party is certifying that to the
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best of the person’s knowledge . . . . [¶] . . . [¶] (3) The allegations and other factual
contentions have evidentiary support or . . . are likely to have evidentiary support after a
reasonable opportunity for further investigation or discovery.” (§ 128.7, subd. (b).)
On their appeal from the postjudgment order denying their motion for sanctions
against plaintiffs and plaintiffs’ counsel under section 128.7, defendants claim the trial
court erred as a matter of law in denying the motion. They maintain that by authorizing
and signing both the complaint and the “factually devoid” discovery responses, plaintiffs
and their counsel falsely certified that “both [were] true” when at least one was false and
lacking in evidentiary support. (§ 128.7, subd. (b)(3).) We find no merit to defendants’
appeal.
Defendants urge this court to independently determine whether plaintiffs and their
counsel violated subdivision (b)(3) of section 128.7, “either in filing a complaint with no
[evidentiary ] basis, or [by] responding to discovery by failing to conduct a reasonable
inquiry.” They argue that whether “specific conduct” constitutes a violation of
subdivision (b)(3) is a question of law subject to de novo review; however, the case they
cite for this proposition does not support it. (Vidrio v. Hernandez (2009) 172
Cal.App.4th 1443, 1452.) Rather, the court in Vidrio observed: “[T]he proper
interpretation of a statute . . . relied upon by the trial court as its authority to award
sanctions is a question of law, which we review de novo.” (Ibid., italics added.) This
does not mean we independently review a trial court’s determination not to impose
sanctions under section 128.7.
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To the contrary, we review a trial court’s decision not to impose sanctions under
the deferential abuse of discretion standard—even if the trial court found a violation of
section 128.7, subdivision (b) occurred. (Kojababian v. Genuine Home Loans, Inc.
(2009) 174 Cal.App.4th 408, 422.) If the trial court determines a violation of subdivision
(b) occurred, it exercises its discretion to impose sanctions. (Kojababian v. Genuine
Home Loans, Inc., supra, at p. 422; § 128.7, subd. (c).) “Absent a showing of
arbitrariness, we must presume the correctness of the trial court’s decision not to award
sanctions. [Citation.]” (Kojababian v. Genuine Home Loans, Inc., supra, at p. 422,
italics added.)
In denying the motion, the court said: “I’m unable to find that counsel violated the
certification requirements under [section] 128.7, notwithstanding discovery responses,
which expressly stated the absence of facts to support the claim. I think it would be
unjust in this case to do so, particularly in light of the fact that the defendant[s are]
getting their pound of flesh by having the case dismissed and obtaining the judgment in
their favor. . . . [¶] . . . [¶]
“I’m unable to say that these claims don’t have evidentiary support and that’s why
it’s troubling. Particularly where the error may well be the ineptitude of counsel. But I
think the fact that counsel is going to have to . . . call his client[s] and tell them the case
has slid under the waves is sufficient punishment and serve[s] as a stern reminder to
certainly be more cautious in furnishing as you say discovery—not just discovery
27
responses, under penalty of perjury, and you’re absolutely entitled to rely on those and
you did reasonably rely on them.”
The trial court did not abuse its discretion in refusing to impose sanctions against
plaintiffs or their counsel. Indeed, there was no basis to impose sanctions. “The purpose
of section 128.7 is to deter frivolous filings.” (In re Marriage of Falcone & Fyke (2008)
164 Cal.App.4th 814, 826, italics added.) And as the trial court recognized, the
complaint was not lacking in evidentiary support. (§ 128.7, subd. (b)(3).) Further,
section 128.7 does not apply to discovery responses (§ 128.7, subd. (g)), and in any event
neither plaintiffs nor their counsel certified those responses to the court, in any filing.
Rather, plaintiffs’ counsel admitted the discovery responses were “a mistake”; the trial
court accepted counsel’s explanation; and the record supports it.
V. DISPOSITION
The judgment is reversed and the postjudgment order denying defendants’ motion
for sanctions (§ 128.7) is affirmed. The matter is remanded to the trial court with
directions to set aside its order granting defendants’ motion for summary judgment and to
28
enter a new order denying that motion. Plaintiffs are awarded their costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(3).)
CERTIFIED FOR PARTIAL PUBLICATION
KING J.
We concur:
RAMIREZ P. J.
RICHLI J.
29
AI Brief
AI-generated · verify before citing
Holding. The trial court erred in applying the D'Amico rule to disregard a plaintiff's declaration because the initial discovery responses were not "clear and unequivocal admissions" that could not be credibly explained or amended in light of the entire record.
Issues
Whether the trial court correctly applied the D'Amico rule to disregard a party's declaration based on prior discovery responses.
Whether the trial court erred in granting summary judgment despite the existence of triable issues of fact.
Disposition. Reversed in part and affirmed in part.
Quotations verified verbatim against the opinion
“As we explain, this was an overly broad and erroneous application of the D’Amico rule.”
“Thus, plaintiffs’ discovery responses were not “clear and unequivocal admission[s]” of fact which, in light of all the evidence adduced on the motion, could not be credibly contradicted or amended.”
“We therefore reverse the judgment in favor of defendants.”