Kane v. Superior Court

Filed 11/29/05 Kane v. Superior Court CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

DENNIS KANE et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; LOURDES M. INCLAN et al., Real Parties in Interest.

No. B183789 (Super. Ct. No. LC041017)

ORIGINAL PROCEEDING; petition for a writ of mandate, Leon S. Kaplan, Judge. Petition granted.

Law Offices of Thomas E. Beach, BeachŸWhitman, Thomas E. Beach and Sean D. Cowdrey for Petitioners.

Houck & Balisok, Balisok & Associates, Inc., Russell S. Balisok, Steven C. Wilheim and Patricia L. Canner for Real Parties in Interest.

No appearance for Respondent.

________________________________

After this action was filed, some of the defendants were involved in bankruptcy proceedings and this action was stayed for a time as to them and, later, as to other defendants by an order made by the trial court. About eight years after the action was filed, some of the bankruptcy defendants moved to dismiss on the ground that, discounting the period of the stays affecting them, the plaintiffs had failed to bring the action to trial within five years. The trial court denied the motion, and the moving defendants then sought our intervention by way of a petition for a writ of mandate. We issued an order to show cause and set the matter for hearing, and now conclude the motion should have been granted. We therefore issue the writ as prayed.

FACTS

A.

On May 5, 1997, Lourdes M. Inclan and Juan C. Inclan sued Covenant Care (that is, Covenant Care, Inc., and Covenant Care California, Inc.), Grancare (Grancare, Inc., Grancare Home Health Services, Inc., and GCI Properties, Inc.), and Grancare employees Dennis Kane, Lisa Pitchon-Getzels, and Kay Donald (collectively Kane) for damages for their allegedly inadequate care of the Inclans’ father, who had been a hospice patient at facilities owned and operated by Grancare and others. Defendants answered and discovery ensued.

On January 18, 2000, Grancare’s parent corporation (Mariner Post-Acute Network, Inc.) filed for Chapter 11 bankruptcy protection for itself and its subsidiaries, including Grancare. The resulting automatic stay halted all further proceedings in the Inclans’ action against Grancare. (11 U.S.C. § 362(a).)

B.

In March 2000, in the Inclans’ case, Kane asked the trial court for a determination that Grancare’s automatic stay applied to him or, in the alternative, for a stay of the proceedings against him until the automatic stay was lifted. The Inclans opposed the motion, contending Grancare was not an indispensable party and that their claims against the non-debtor defendants, including Kane, could be fully and completely adjudicated in Grancare’s absence. The trial court denied Kane’s motion.

On December 26, 2000, the bankruptcy court (by a new order) extended the automatic stay to stop all proceedings against all “current or former employees” of Grancare to permit the potential bankruptcy claimants to attempt to resolve their claims through alternative dispute resolution procedures. By its terms, the stay created by the December 26, 2000 order applied to Kane and could remain in effect for up to one year, leaving Covenant Care as the only defendant against whom the Inclans could proceed.

At a January 29, 2001 status conference, the trial court (Hon. Paul Gutman) granted Covenant Care’s oral motion to stay all proceedings against it, “the non-bankruptcy filing defendant[],” pending resolution of the Chapter 11 proceedings and expiration of the bankruptcy stays. The Inclans, who by that time wanted a single trial against all defendants, supported the issuance of the stay requested by Covenant Care. The reporter’s transcript of the January 29, 2001 proceedings, and a subsequent order signed by the trial court on February 9, 2001, are at the heart of the present dispute.

C.

On December 26, 2001, the December 26, 2000 order expired by its own terms, leaving Kane without a stay. On November 26, 2002, the bankruptcy court lifted the automatic stay, thereby ending all bankruptcy obstacles to the Inclans’ action.

On December 19, 2002, the Inclans (after acknowledging that all bankruptcy stays had expired) asked the trial court to stay all proceedings on the ground that they were, at that time, stayed vis-à-vis Covenant Care because a pleading issue raised by Covenant Care was then pending before the California Supreme Court.[1] On January 23, 2003, the trial court (Hon. Leon S. Kaplan) granted the Inclans’ motion and stayed the entire action pending the Supreme Court’s decision. The trial court’s stay was extended several times, then finally vacated on June 2, 2004.

D.

On March 25, 2005, Kane filed a motion to dismiss the action for failure to bring it to trial against him within five years. (Code Civ. Proc., §§ 583.310, 583.340.)[2] Kane claimed the original five-year date (May 5, 2002) was extended during the time the action was stayed against him (365 days for the bankruptcy stay, plus 496 days for the trial court’s stay from January 23, 2003 to June 2, 2004, a total of 861 days) so that the last date on which the action could be tried against Kane was September 13, 2004. Since the case was not tried by that date, Kane claimed a right to mandatory dismissal.

In opposition, the Inclans claimed Kane’s calculations failed to consider the fact that the trial court’s January 29, 2001 order (memorialized in writing on February 9) (1) was based on the stipulation of all parties to stay the action and stayed the proceedings against all defendants, (2) “superseded” the bankruptcy court’s December 26, 2000 order, and (3) was not lifted until June 2, 2004. By the Inclans’ calculation, the five-year deadline was extended by 1,254 days to October 9, 2005 (34 days for the bankruptcy stay before it was superseded by the trial court’s stay of January 29, 2001, plus 1,220 days of the stay under that order to June 2, 2004).[3]

After hearing from both sides, the trial court found that “the dispute [was] over the effect of Judge Gutman’s January 29, 2001 status conference order,” accepted the Inclans' interpretation, and denied Kane’s motion to dismiss. Kane then filed a petition for a writ of mandate, asking us to direct the trial court to rule in his favor. We issued an order to show cause and set the matter for hearing.

DISCUSSION

We agree with the parties and the trial court that the resolution of this issue “turns on the interpretation of the effect of the trial court’s January 29, 2001, stay order,” but disagree with the trial court’s conclusion that the order stayed the proceedings as to Kane.

A.

The reporter’s transcript of the January 29, 2001 proceedings -- at which counsel for all parties were present -- makes it clear that the stay did not apply to Kane.

At the hearing, the Inclans’ lawyer explained that the automatic stay protecting Grancare had been extended to cover Kane, leaving Covenant Care as “the only . . . live” defendant or, as the trial court put it, the only remaining defendant “vulnerable to further litigation in this case” as of January 29, 2001. The Inclans’ lawyer then said it made no sense to proceed to trial (then set for July 30, 2001) without all the defendants because the issues of fact and law were so “interwoven” that it “would complicate beyond measure [the Inclans’] case that’s already going to be complex enough.” Covenant Care’s lawyer agreed.

The trial court said that, to continue the trial date, Covenant Care would have to waive the five-year statute. Covenant Care’s lawyer said she had no authority to do so, but would renew Covenant Care’s motion to stay the action against it until the bankruptcy stays were lifted, and suggested “the court could grant it.” The court agreed, granted Covenant Care’s oral motion to stay the proceedings as to it, and said, “Now all proceedings are stayed . . . . And the stay of proceedings against the non-[bankruptcy defendants] will coincide with the pendency and determination of proceedings in the bankruptcy case.” The only words spoken by the lawyer representing Kane and Grancare were at the end of this discussion when the court asked if she had any objection to the order and counsel responded, “No objection.”

The trial court initially ordered Covenant Care’s counsel to give notice since it was the moving party, but the Inclans’ lawyer “suggest[ed] that all counsel get together on a proposed order with regard to the stay and submit it to [the trial court].” The court agreed: “Yes. Make sure nothing slips through the cracks. . . . And you can submit the order to me.” (Emphasis added.) The Inclans’ lawyer prepared the order, which was approved as to form by Covenant Care’s lawyer but not by Kane’s counsel, and the trial court signed the order on February 9, 2001.

As relevant, the February 9 order states: “It is hereby ordered that all proceedings in this action are stayed as between Plaintiffs Juan C. Inclan and Lourdes Inclan and Defendants Covenant Care, Inc., and Covenant Care California, Inc., pending further order of the Bankruptcy Court . . . . The court notes that, based on the representation of all counsel, all proceedings against defendants Grancare [and] Kane . . . are stayed by order of the Bankruptcy Court.” (Italics added.)

The oral proceedings make it clear that all the lawyers and the trial court understood that the Inclans’ action was already stayed by the bankruptcy court as against Kane and Grancare, and that the only request made and granted on January 29 was for an order staying the proceedings as to Covenant Care. Moreover, the only party to stipulate to that stay was Covenant Care, and the court’s comments demonstrate its intention to have the Covenant Care stay “coincide” with the bankruptcy orders, and to remain in effect only so long as the bankruptcy stays remained in effect as to Grancare and Kane. There is nothing in the transcript or the written order to suggest any of the parties intended the trial court’s order to affect Kane or Grancare, and there is no law to suggest the trial court has the power to issue an order that would “supersede” the bankruptcy court’s orders -- indeed, the law forbids such interference. (11 U.S.C. § 362(a).)

For these reasons, Kane’s calculation of the period during which a stay was in effect as to him is correct.[4] It follows that the five-year period expired before the case was brought to trial against him, and that the trial court should have granted Kane’s motion to dismiss.

B.

To avoid this conclusion, the Inclans claim that, because “the [January 29, 2001] minute order [did] not indicate that a formal order [was] to follow, the minute order [was the] final expression of the court’s ruling” and trumps the subsequently signed order.[5] There are at least two problems with this argument.

First, it completely ignores the court’s oral pronouncements as set out in the reporter’s transcript, and ignores the fact that a judge’s oral pronouncements trump the contents of a clerk-prepared minute order. (In re Daoud (1976) 16 Cal.3d 879, 883; In re Jacob M. (1987) 195 Cal.App.3d 58, 64; People v. Wilshire Ins. Co. (1977) 67 Cal.App.3d 521, 532-533; People v. Hartsell (1973) 34 Cal.App.3d 8, 13.) As is apparent from the discussion above, the reporter’s transcript confirms that a formal order was to be prepared and signed.

Second, the incomplete minute order is not in any event inconsistent with the court’s oral pronouncements, and the formal order makes it clear that, other than as to Covenant Care, the proceedings were stayed by the bankruptcy court’s orders, not by anything the trial court could or did order.

C.

In an alternative effort to avoid the bar of the five-year statute, the Inclans claim (for the first time in these writ proceedings) that, regardless of any stay, it would have been “impossible, impracticable, or futile” to proceed to trial before the Supreme Court determined the punitive damage pleading issue. This claim was waived by the Inclans’ failure to raise it below.

The determination of impracticability must be made in an exercise of the trial court’s discretion and requires consideration of a great variety of factors, and thus is not an issue that can be raised for the first time before a reviewing court. (Sanchez v. City of Los Angeles (2003) 109 Cal.App.4th 1262, 1271; Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2004) ¶¶ 8:229, 8:237, 8:240, pp. 8-135 to 8-139.)

In short, the Inclans’ action against Kane is barred because it was not brought to trial within five years.

DISPOSITION

The petition is granted, and a peremptory writ shall issue commanding the trial court to vacate its April 19, 2005 order denying Kane’s motion to dismiss, and to issue a new order granting that motion and dismissing the Inclans’ action against Kane. Kane is entitled to his costs of these writ proceedings.

NOT TO BE PUBLISHED.

VOGEL, J.

We concur:

SPENCER, P.J.

MALLANO, J.

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[1] Two years after the Inclans filed this action, they filed a motion for leave to file a fourth amended complaint in which they sought punitive damages under the Elder Abuse and Dependent Adult Civil Protection Act, Welfare and Institutions Code section 15600 et seq. The trial court granted the motion. Covenant Care challenged that order by way of a petition for a writ of mandate which we denied, but the Supreme Court then granted review “to resolve a conflict among the Courts of Appeal as to whether the procedural prerequisites to seeking punitive damages in an action for damages arising out of the professional negligence of a health care provider . . . apply to punitive damage claims in actions alleging elder abuse . . . .” (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 776.) On March 25, 2004, the Supreme Court affirmed our judgment. (Ibid.)

[2] Subsequent section references are to the Code of Civil Procedure. Section 583.310 states that “[a]n action shall be brought to trial within five years after the action is commenced against the defendant,” and section 583.340 states that “[i]n computing the time within which an action must be brought to trial . . . , there shall be excluded the time during which . . . [¶] (a) The jurisdiction of the court to try the action was suspended. [¶] (b) Prosecution or trial of the action was stayed or enjoined. [¶] (c) Bringing the action to trial, for any other reason, was impossible, impracticable, or futile.”

[3] The Inclans’ claim of additional tolling for mediation (§ 1775.7) fails because, as to Kane, the five-year date came and went (on September 13, 2004), before the case was ordered into mediation on November 24, 2004.

[4] The Inclans do not dispute the fact that the bankruptcy stay expired as to Kane on December 26, 2001 (one year from the date of issuance). Kane’s calculation is based on this 365-day stay, plus the 496 days the Inclans’ action was stayed by the trial court’s orders (from January 23, 2003 to June 2, 2004). Because we agree with Kane that the proceedings against him were not stayed by the trial court’s January 29, 2001 order, we need not address the Inclans’ unexplained assertion that the January 29, 2001 order did not expire until June 2, 2004.

[5] As relevant, the January 29, 2001 minute order states: “On defendant’s oral motion and pursuant to stipulation all proceedings are stayed.” The minute order shows that two defense lawyers were present but doesn’t say which defendant made the oral motion or who participated in the stipulation.