Case Number:
Hearing Date: September 18, 2013
County: Orange County
Judicial Officer: Horn
Word Count: 508


IMS and CDFC’s motion to bifurcate and stay action regarding the cross-complaint against it is denied.  Responding parties are to give notice. 

CCP §1048(b) provides: “The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any cause of action … or of any separate issue or of any number of causes of action or issues … ”

CCP § 598 provides that the court may order certain issues tried before others “when the convenience of witnesses, the ends of justice or the economy and efficiency of handling the litigation would be promoted thereby.”

“The UFTA permits defrauded creditors to reach property in the hands of a transferee.”  Mejia v. Reed (2003) 31 Cal.4th 657, 663.

In Oiye v. Fox (2012) 211 Cal.App.4th 1035 cited to by Cavotec, that court stated:

Certainly, for purposes of the Uniform Fraudulent Conveyance Act, a tort claimant before judgment is rendered is a “creditor” within the meaning of Civil Code section 3439.01. It is well settled in this state that the relationship of debtor and creditor arises in tort cases the moment the cause of action accrues.  One having a claim for a tort is a creditor before the commencement of an action thereon, as well as after, and as such creditor, is, upon recovering judgment, entitled to avoid a fraudulent transfer antedating the commencement of his action.

Defendant asserts that he does not meet the definition of a “debtor” in Civil Code section 3429. That definition is irrelevant, as the UFTA provides its own broader definition. “Debtor” means a person who is liable on a claim.” (Civ.Code, § 3439.01, subd. (e).)

(Citations and quotations omitted.)

Therefore, here, Cavotec can be deemed a creditor, and Colaco a debtor, with IMS and CDFC as the transferees.

Allowing bifurcation would cause unnecessary delay in the proceedings, inconvenience witnesses, and would not be in the interests of judicial economy.  Moving parties argue that they are not parties to any of the written contracts and are barely mentioned in the cross-complaint.  However, they are not mentioned in any contracts because they are the ones being accused of receiving the fraudulently transferred assets.

Whether Colaco is owed money by Cavotec, stole from Cavotec, or transferred money to sham companies, those issues are interrelated and cannot be parsed out in such a fashion that would be considered convenient, economical or efficient to the witnesses, parties, jury or the court.  If the action is stayed pending the outcome of the other issues, do the moving parties expect the court to reopen discovery and empanel a second jury?  That would be a waste of resources.  Moving parties have not provided any authority supporting bifurcation in this situation and the court did not find any cases in support of their position.  The parties unnecessarily provide evidence regarding culpability, but this is not a summary judgment motion and arguments concerning culpability are irrelevant here.

The motion is denied without prejudice in the event there is a compelling reason to revisit the issue at the time of trial.

Colaco vs Cavotec S.A.