Preview
JODI S. COHEN, CASB No. 151534
jodi.cohen@kyl.com
JENNIFER M. PORTER, CASB No. 261508
jennifer.porter@kyl.com
KEESAL, YOUNG & LOGAN
A Professional Corporation
450 Pacific Avenue
San Francisco, California 94133
Telephone: (415) 398-6000
Facsimile: (415) 981-0136
Attorneys for Defendant
WILLIS OF NEW YORK, INC.
ELECTRONICALLY
FILED
Superior Court of California,
County of San Francisco
12/13/2016
Clerk of the Court
BY:MADONNA CARANTO
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
WARWICK AMUSEMENTS CORPORATION,
a Delaware corporation;
WARWICK CALIFORNIA CORPORATION,
a California corporation;
WARWICK DENVER CORPORATION,
a Delaware corporation;
WSF BEVERAGE CORPORATION,
a California corporation;
WARWICK MELROSE DALLAS
CORPORATION, a Delaware corporation;
SILVER AUTUMN HOTEL (N.Y.)
CORPORATION, LTD., a Delaware corporation,
Plaintiffs,
vs.
APPLIED UNDERWRITERS, INC.,
a Nebraska corporation;
APPLIED UNDERWRITERS CAPTIVE RISK
ASSURANCE COMPANY, INC.,
an Iowa corporation;
CALIFORNIA INSURANCE COMPANY,
a California corporation;
CONTINENTAL INDEMNITY COMPANY,
an Iowa corporation;
APPLIED RISK SERVICES, INC., a New York
corporation;
WILLIS OF NEW YORK, INC., a New York
corporation,
and DOES 1 through 50, inclusive,
Defendants.
Case No. CGC-16-551614
Action Filed: April 22, 2016
WILLIS OF NEW YORK, INC.’S
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS
PENDING APPEAL
Date: January 18, 2017
Time: 9:30 a.m.
Place: Dept. 302
Reservation: 12090118-14
WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
KYL4825-0884-2557.2Defendant WILLIS OF NEW YORK, INC. (“Willis”), respectfully submits its Motion to Stay
Proceedings Pending Appeal (“Motion”).
I. INTRODUCTION’
Defendants Applied Underwriters, Inc., Applied Underwriters Captive Risk Assurance,
California Insurance Company, Continental Indemnity Company and Applied Risk Services, Inc.
(collectively referred to as the “AUW Defendants’) sought an order staying this lawsuit based on
inconvenient forum.? The AUW Defendants argue that a stay of the California lawsuit is necessary
because a forum selection clause mandates that all claims be brought against them in the state of
Nebraska. On October 21, 2016, this Court entered an order granting the stay with respect to four
non-California Warwick entities, Warwick Amusements Corporation, Warwick Denver Corporation,
Warwick Melrose Dallas Corporation, and Silver Autumn Hotel (N.Y.) Corporation, Ltd. (collectively
referred to as the “Out-of-State Plaintiffs”) and denying the stay with respect to two California
Warwick entities, Warwick California Corporation and WSF Beverage Corporation (collectively
referred to as the “California-Based Plaintiffs”).’? On October 31, 2016, the AUW Defendants filed a
Petition for Writ of Mandate and/or Prohibition (the “Petition”) appealing that order and arguing that a
stay should have been issued with respect to all of the Plaintiffs.*
Regardless of the outcome, the appellate resolution will undoubtedly impact this litigation and
Willis’ role in it. The essence of Plaintiffs’ claim is that Willis and the AUW Defendants
misrepresented the nature of a workers’ compensation insurance program that Plaintiffs ultimately
purchased from the AUW Defendants. (See FAC, 54.) Plaintiffs assert eight causes of action
against the AUW Defendants and three causes of action against Willis. Plaintiffs claim that Willis is
' For the Court’s ease of reference, Willis has attached a true and correct copy of Plaintiffs’ First
Amended Complaint (“FAC”) as Exhibit | to its Request for Judicial Notice (“RJN”), concurrently
filed herewith.
2 Willis and the AUW Defendants will be collectively referred to as the “Defendants.”
3 The Out-of-State Plaintiffs and the California-Based Plaintiffs will be collectively referred to as
“Plaintiffs.”
4 See RJN, Exh. 2.
-1-
WILLIS OF NEW YORK, INC.’°S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
K YLA825-0884-2557.2liable along with the AUW Defendants for “Fraud and Misrepresentation” and “Negligent
Misrepresentation” and individually liable for “Professional Negligence.” (See FAC, {ff 53-75.) The
misrepresentations allegedly made by Willis and the AUW Defendants (and asserted as an
independent basis for Plaintiffs’ professional negligence claim against Willis) revolve around whether
the workers’ compensation insurance program was required to comply with California law and
whether the insurance program is void because the AUW Defendants did not file certain rate plans and
alleged “side agreements” with the California Department of Insurance. (See FAC, { 54, 56, 61, 65
and 74.) The AUW Defendants’ Petition directly addresses these alleged misrepresentations and
argues that (1) California law does not apply to the workers’ compensation program and (2) the
unfiled workers’ compensation forms and rate plans are enforceable. (See e.g., RJN, Exh. 2, pp. 28-
37.)
How these issues are resolved by the appellate court and where these issues are ultimately
litigated will undoubtedly affect the disposition of claims against Willis and whether or not Plaintiffs
were actually harmed by any alleged conduct by Willis. Thus, the overlapping factual and legal issues
raised in the Petition mandate an automatic stay of this action. Furthermore, if the AUW Defendants
prevail on appeal, a forum change to Nebraska will either moot this California action altogether, or at
the least, significantly narrow the issues to be litigated against Willis. If the AUW Defendants lose,
discovery conducted now may ultimately be duplicative and/or unnecessary. Thus, this Court should,
in the alternative, exercise its discretion and stay this action to prevent the unnecessary waste of time,
money and judicial resources that will be expended in this action, prior to knowing the results of the
pending Petition.
Il. LEGAL ARGUMENT
A. AUW’s Petition for Writ of Mandate Requires A Complete Stay Of The Trial
Proceedings.
A petition for writ of mandate is the proper method to challenge an order denying a motion to
dismiss or stay a matter based on inconvenient forum. See CAL. CODE CIV. PROC. § 418.10(c) and
Templeton Dev. Corp. v. Superior Court, 144 Cal. App. 4th 1073, 1080 (2006). California Code of
Civil Procedure Section 916 provides that when an appeal or a petition for writ is filed, it “stays
-2-
WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
KYL4825-0884-2557.2oN DN YW
proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced
therein or affected thereby, including enforcement of the judgment or order, but the trial court may
proceed upon any other matter embraced in the action and not affected by the judgment or order.”
CAL. CODE Civ. Proc. § 916. The California Supreme Court has identified several scenarios
mandating an automatic stay pursuant to Section 916. See Varian Medical Systems, Inc. v. Delfino, 35
Cal. 4th 180 (2005).
For example, a stay is necessary “if the possible outcomes on appeal and the actual or possible
results of the proceeding are irreconcilable.” Jd. at 190. Here, Plaintiffs’ misrepresentation and
professional negligence claims against Willis hinge on the same issues raised in the Petition, ie.,
whether California law applies to the workers’ compensation insurance program and whether the rate
plans are enforceable. Thus, the California appellate court’s reconciliation of those issues may
determine the disposition of the misrepresentation claims against Willis and whether or not Plaintiffs
were harmed by Willis’s purported conduct.
A stay is also necessary “if the very purpose of the appeal is to avoid the need for that
proceeding.” Jd. Here, the AUW Defendants seek to transfer Plaintiffs’ entire lawsuit against them to
the state of Nebraska. The claims against Willis are a very minor part of the underlying Action but are
irretrievably intertwined with Plaintiffs’ claims against the AUW Defendants. Should the AUW
Defendants succeed in staying the California Action against them, it is unlikely that Plaintiffs will
continue to litigate this Action here in California solely against Willis.
Because several scenarios recognized by the California Supreme Court are implicated here, an
automatic stay of the underlying trial court proceedings pursuant to Section 916 is appropriate during
the pendency of the AUW Defendants’ appeal. See Prudential-Bache v. Superior Court (Downs), 201
Cal. App. 3d 924 (1988) (issuing a peremptory writ directing the trial court to vacate trial date and to
entertain no further proceedings until remittitur was issued regarding defendants’ motion to compel
arbitration).
B. The Court Should Exercise Its Discretion and Stay the Action Pending The
Qutcome Of The Appeal.
Even if filing the Petition for Writ does not justify an automatic stay of the underlying trial and
-3-
WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
KYL4825-0884-2557.2discovery proceedings pursuant to Section 916, this Court has the inherent power to stay this Action
pending resolution of AUW’s Petition as the appellate court’s decision will undoubtedly affect the
underlying case. Freiberg v. City of Mission Viejo, 33 Cal. App. 4th 1484, 1489 (1995) (“Trial courts
generally have the inherent power to stay proceedings in the interests of justice and to promote judicial
efficiency” and further opining that it typically is “in the interests of justice to stay a trial until another
party’s appeal is decided); Walker v. Super. Cf, 53 Cal. 3d 257, 267 (1991) (“It is established that the
inherent powers of the courts are derived from [Article VI § I of] the Constitution.”). This authority
arises from its “inherent power” to “insure the orderly administration of justice.” Bailey v. Fosca Oil
Co., Lid., 216 Cal. App. 2d 813, 817-18 (1963) (stating that “the power of a court to stay proceedings .
. .. was inherent at common law and is now vested in the superior courts of this state”),
As will be discussed below, an order staying the entirety of this Action pending the resolution
of AUW’s Petition is appropriate because it will (1) promote judicial economy, (2) prevent potentially
conflicting decisions and, (3) not prejudice the parties.
1. A Stay Is Necessary To Promote Judicial Economy.
A stay of this Action pending resolution of AUW’s Petition is necessary to promote judicial
economy by preventing the unnecessary waste of time, money and judicial resources. See Freiberg,
33 Cal. App. 4th at 1489. In Bailey, defendants in a stockholders’ derivative action appealed an order
denying their motion to require plaintiffs-shareholders to furnish security pursuant to one of the three
causes of action raised in the plaintiffs’ complaint. Jd. at 815. While that appeal was pending, the
trial court stayed the proceedings with respect to the other two causes of action in case there was a
narrowing of issues. When the plaintiffs challenged that stay, the appellate court held that they would
not “impair[] the inherent power of a trial court to exercise a reasonable control over all proceedings
connected with the litigation before it.” Jd. at 817 (quoting Cooper v. Superior Court, 55 Cal. 2d 291,
301 (1961)).
Further proceedings in this case would be inefficient and should be stayed while the California
Court of Appeal determines where Plaintiffs’ claims should be tried—in California, Nebraska or both.
The appellate court’s decision has the potential of considerably narrowing the issues to be tried in this
Action against Willis since it touches on the legality of the workers’ compensation program and the
-4-
WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
KYL4825-0884-2557.2unfiled rate plans. Moreover, should the AUW Defendants prevail, the fact that Plaintiffs’ dispute
against the AUW Defendants will be litigated in Nebraska may dispense with this Action in its
entirety. Accordingly, Willis respectfully submits that this Court should exercise its discretion and
stay this action to prevent the unnecessary waste of time, money and judicial resources which will
undoubtedly result should the Court of Appeal modify the stay in any way. See Freiberg, 33 Cal.
App. 4th at 1489,
2. A Stay Will Avoid Potentially Conflicting Decisions.
In exercising its authority to stay an action pending resolution of an appealed order, a court
should “consider the importance of discouraging multiple litigation designed solely to harass an
adverse party” and of “avoiding unseemly conflicts” between two courts. Farmland Irrigation Co. v.
Doppimaier, 48 Cal. 2d 208, 215 (1957); see also Great Am. Ins. Co. v. Super. Ct., 178 Cal. App. 4th
221, 236 (2009). Plaintiffs claim that Willis is liable for intentional and negligent misrepresentation
as well as professional negligence. For both intentional and negligent misrepresentation, an actual
misrepresentation is a necessary element of any claim. See Ach v. Finkelstein, 264 Cal. App. 2d 667,
674 (1968) (listing the elements of a claim for intentional misrepresentation as (1) a false
representation of a material fact; (2) knowledge of the falsity (scienter); (3) intent to induce another
into relying on the representation; (4) reliance on the representation; and (5) resulting damage); and,
Fox v. Pollack, 181 Cal. App. 3d 954, 962 (1986) (setting forth similar elements of negligent
misrepresentation).
The misrepresentations allegedly made by Willis (and the AUW Defendants) involve whether
the workers’ compensation insurance program was required to comply with California law and
whether certain rate plans are void because the AUW Defendants did not file them with the California
Department of Insurance. (See FAC, 54, 56, 61, 65 and 74.) The AUW Defendants’ Petition argues
that California law does not apply to the workers’ compensation program and the unfiled workers’
compensation forms and rate plans are enforceable. (See e.g., RJN, Exh. 2, pp. 28-37.) Thus, the
appellate court’s decision on the Petition may directly affect the factual and legal elements of the
misrepresentation claims brought against Willis. Because there is potential for conflicting decisions
from this trial court, the California Court of Appeal and the state of Nebraska, a temporary stay of the
-5-
WILLIS OF NEW YORK, INC.’8 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
KYL4825-0884-2557.2underlying proceedings is necessary.
3. A Brief Delay Will Not Prejudice The Court Or Parties.
Finally, in exercising its discretion to stay this Action, the Court should consider the possibility
of prejudice to the parties. See Great Am. Ins. Co., 178 Cal. App. 4th at 236. The AUW Defendants
are diligently proceeding with their appeal and recently submitted their Reply to Plaintiffs’
Preliminary Opposition to the Petition. Willis anticipates that the Court of Appeal will issue a
decision quickly.
Plaintiffs, on the other hand, apparently expect a protracted legal process of the underlying
Action. In their Case Management Statement filed on October 28, 2016, Plaintiffs estimated that
written discovery will not be completed until September 2017 and depositions and expert discovery
will not be completed until Spring of 2018. Thus, a brief stay of discovery and the underlying
litigation will not impact Plaintiffs’ projected timetable.
Should this Motion be denied, Willis would be forced to respond to unnecessary discovery
and/or duplicative discovery in the California Action, while the fate of the Nebraska action and the
Out-of-State Plaintiffs is pending. Thus, a stay is appropriate to prevent prejudice to Willis and will
not adversely affect the other parties.
Ill. CONCLUSION
Under the circumstances, Willis respectfully requests this Court for an order staying all further
trial and discovery proceedings in this Action until the Court of Appeal issues a decision on AUW’s
writ petition, or in the alternative, for an order staying the matter in its entirety for six months and
scheduling a case management conference at that time to assess the progress of the appeal.
DATED: December G, 2016 \G2.
JOPI 6. CQHEN
JENMAFER WI PORTER
KEESAL, YOUNG & LOGAN
Attorneys for Defendant
WILLIS OF NEW YORK, INC.
-6-
WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS
MOTION TO STAY PROCEEDINGS PENDING APPEAL
KYL4825-0884-2557.2
Preview
JODI S. COHEN, CASB No. 151534 jodi.cohen@kyl.com JENNIFER M. PORTER, CASB No. 261508 jennifer.porter@kyl.com KEESAL, YOUNG & LOGAN A Professional Corporation 450 Pacific Avenue San Francisco, California 94133 Telephone: (415) 398-6000 Facsimile: (415) 981-0136 Attorneys for Defendant WILLIS OF NEW YORK, INC. ELECTRONICALLY FILED Superior Court of California, County of San Francisco 12/13/2016 Clerk of the Court BY:MADONNA CARANTO Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO WARWICK AMUSEMENTS CORPORATION, a Delaware corporation; WARWICK CALIFORNIA CORPORATION, a California corporation; WARWICK DENVER CORPORATION, a Delaware corporation; WSF BEVERAGE CORPORATION, a California corporation; WARWICK MELROSE DALLAS CORPORATION, a Delaware corporation; SILVER AUTUMN HOTEL (N.Y.) CORPORATION, LTD., a Delaware corporation, Plaintiffs, vs. APPLIED UNDERWRITERS, INC., a Nebraska corporation; APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY, INC., an Iowa corporation; CALIFORNIA INSURANCE COMPANY, a California corporation; CONTINENTAL INDEMNITY COMPANY, an Iowa corporation; APPLIED RISK SERVICES, INC., a New York corporation; WILLIS OF NEW YORK, INC., a New York corporation, and DOES 1 through 50, inclusive, Defendants. Case No. CGC-16-551614 Action Filed: April 22, 2016 WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL Date: January 18, 2017 Time: 9:30 a.m. Place: Dept. 302 Reservation: 12090118-14 WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL KYL4825-0884-2557.2Defendant WILLIS OF NEW YORK, INC. (“Willis”), respectfully submits its Motion to Stay Proceedings Pending Appeal (“Motion”). I. INTRODUCTION’ Defendants Applied Underwriters, Inc., Applied Underwriters Captive Risk Assurance, California Insurance Company, Continental Indemnity Company and Applied Risk Services, Inc. (collectively referred to as the “AUW Defendants’) sought an order staying this lawsuit based on inconvenient forum.? The AUW Defendants argue that a stay of the California lawsuit is necessary because a forum selection clause mandates that all claims be brought against them in the state of Nebraska. On October 21, 2016, this Court entered an order granting the stay with respect to four non-California Warwick entities, Warwick Amusements Corporation, Warwick Denver Corporation, Warwick Melrose Dallas Corporation, and Silver Autumn Hotel (N.Y.) Corporation, Ltd. (collectively referred to as the “Out-of-State Plaintiffs”) and denying the stay with respect to two California Warwick entities, Warwick California Corporation and WSF Beverage Corporation (collectively referred to as the “California-Based Plaintiffs”).’? On October 31, 2016, the AUW Defendants filed a Petition for Writ of Mandate and/or Prohibition (the “Petition”) appealing that order and arguing that a stay should have been issued with respect to all of the Plaintiffs.* Regardless of the outcome, the appellate resolution will undoubtedly impact this litigation and Willis’ role in it. The essence of Plaintiffs’ claim is that Willis and the AUW Defendants misrepresented the nature of a workers’ compensation insurance program that Plaintiffs ultimately purchased from the AUW Defendants. (See FAC, 54.) Plaintiffs assert eight causes of action against the AUW Defendants and three causes of action against Willis. Plaintiffs claim that Willis is ' For the Court’s ease of reference, Willis has attached a true and correct copy of Plaintiffs’ First Amended Complaint (“FAC”) as Exhibit | to its Request for Judicial Notice (“RJN”), concurrently filed herewith. 2 Willis and the AUW Defendants will be collectively referred to as the “Defendants.” 3 The Out-of-State Plaintiffs and the California-Based Plaintiffs will be collectively referred to as “Plaintiffs.” 4 See RJN, Exh. 2. -1- WILLIS OF NEW YORK, INC.’°S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL K YLA825-0884-2557.2liable along with the AUW Defendants for “Fraud and Misrepresentation” and “Negligent Misrepresentation” and individually liable for “Professional Negligence.” (See FAC, {ff 53-75.) The misrepresentations allegedly made by Willis and the AUW Defendants (and asserted as an independent basis for Plaintiffs’ professional negligence claim against Willis) revolve around whether the workers’ compensation insurance program was required to comply with California law and whether the insurance program is void because the AUW Defendants did not file certain rate plans and alleged “side agreements” with the California Department of Insurance. (See FAC, { 54, 56, 61, 65 and 74.) The AUW Defendants’ Petition directly addresses these alleged misrepresentations and argues that (1) California law does not apply to the workers’ compensation program and (2) the unfiled workers’ compensation forms and rate plans are enforceable. (See e.g., RJN, Exh. 2, pp. 28- 37.) How these issues are resolved by the appellate court and where these issues are ultimately litigated will undoubtedly affect the disposition of claims against Willis and whether or not Plaintiffs were actually harmed by any alleged conduct by Willis. Thus, the overlapping factual and legal issues raised in the Petition mandate an automatic stay of this action. Furthermore, if the AUW Defendants prevail on appeal, a forum change to Nebraska will either moot this California action altogether, or at the least, significantly narrow the issues to be litigated against Willis. If the AUW Defendants lose, discovery conducted now may ultimately be duplicative and/or unnecessary. Thus, this Court should, in the alternative, exercise its discretion and stay this action to prevent the unnecessary waste of time, money and judicial resources that will be expended in this action, prior to knowing the results of the pending Petition. Il. LEGAL ARGUMENT A. AUW’s Petition for Writ of Mandate Requires A Complete Stay Of The Trial Proceedings. A petition for writ of mandate is the proper method to challenge an order denying a motion to dismiss or stay a matter based on inconvenient forum. See CAL. CODE CIV. PROC. § 418.10(c) and Templeton Dev. Corp. v. Superior Court, 144 Cal. App. 4th 1073, 1080 (2006). California Code of Civil Procedure Section 916 provides that when an appeal or a petition for writ is filed, it “stays -2- WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL KYL4825-0884-2557.2oN DN YW proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” CAL. CODE Civ. Proc. § 916. The California Supreme Court has identified several scenarios mandating an automatic stay pursuant to Section 916. See Varian Medical Systems, Inc. v. Delfino, 35 Cal. 4th 180 (2005). For example, a stay is necessary “if the possible outcomes on appeal and the actual or possible results of the proceeding are irreconcilable.” Jd. at 190. Here, Plaintiffs’ misrepresentation and professional negligence claims against Willis hinge on the same issues raised in the Petition, ie., whether California law applies to the workers’ compensation insurance program and whether the rate plans are enforceable. Thus, the California appellate court’s reconciliation of those issues may determine the disposition of the misrepresentation claims against Willis and whether or not Plaintiffs were harmed by Willis’s purported conduct. A stay is also necessary “if the very purpose of the appeal is to avoid the need for that proceeding.” Jd. Here, the AUW Defendants seek to transfer Plaintiffs’ entire lawsuit against them to the state of Nebraska. The claims against Willis are a very minor part of the underlying Action but are irretrievably intertwined with Plaintiffs’ claims against the AUW Defendants. Should the AUW Defendants succeed in staying the California Action against them, it is unlikely that Plaintiffs will continue to litigate this Action here in California solely against Willis. Because several scenarios recognized by the California Supreme Court are implicated here, an automatic stay of the underlying trial court proceedings pursuant to Section 916 is appropriate during the pendency of the AUW Defendants’ appeal. See Prudential-Bache v. Superior Court (Downs), 201 Cal. App. 3d 924 (1988) (issuing a peremptory writ directing the trial court to vacate trial date and to entertain no further proceedings until remittitur was issued regarding defendants’ motion to compel arbitration). B. The Court Should Exercise Its Discretion and Stay the Action Pending The Qutcome Of The Appeal. Even if filing the Petition for Writ does not justify an automatic stay of the underlying trial and -3- WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL KYL4825-0884-2557.2discovery proceedings pursuant to Section 916, this Court has the inherent power to stay this Action pending resolution of AUW’s Petition as the appellate court’s decision will undoubtedly affect the underlying case. Freiberg v. City of Mission Viejo, 33 Cal. App. 4th 1484, 1489 (1995) (“Trial courts generally have the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency” and further opining that it typically is “in the interests of justice to stay a trial until another party’s appeal is decided); Walker v. Super. Cf, 53 Cal. 3d 257, 267 (1991) (“It is established that the inherent powers of the courts are derived from [Article VI § I of] the Constitution.”). This authority arises from its “inherent power” to “insure the orderly administration of justice.” Bailey v. Fosca Oil Co., Lid., 216 Cal. App. 2d 813, 817-18 (1963) (stating that “the power of a court to stay proceedings . . .. was inherent at common law and is now vested in the superior courts of this state”), As will be discussed below, an order staying the entirety of this Action pending the resolution of AUW’s Petition is appropriate because it will (1) promote judicial economy, (2) prevent potentially conflicting decisions and, (3) not prejudice the parties. 1. A Stay Is Necessary To Promote Judicial Economy. A stay of this Action pending resolution of AUW’s Petition is necessary to promote judicial economy by preventing the unnecessary waste of time, money and judicial resources. See Freiberg, 33 Cal. App. 4th at 1489. In Bailey, defendants in a stockholders’ derivative action appealed an order denying their motion to require plaintiffs-shareholders to furnish security pursuant to one of the three causes of action raised in the plaintiffs’ complaint. Jd. at 815. While that appeal was pending, the trial court stayed the proceedings with respect to the other two causes of action in case there was a narrowing of issues. When the plaintiffs challenged that stay, the appellate court held that they would not “impair[] the inherent power of a trial court to exercise a reasonable control over all proceedings connected with the litigation before it.” Jd. at 817 (quoting Cooper v. Superior Court, 55 Cal. 2d 291, 301 (1961)). Further proceedings in this case would be inefficient and should be stayed while the California Court of Appeal determines where Plaintiffs’ claims should be tried—in California, Nebraska or both. The appellate court’s decision has the potential of considerably narrowing the issues to be tried in this Action against Willis since it touches on the legality of the workers’ compensation program and the -4- WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL KYL4825-0884-2557.2unfiled rate plans. Moreover, should the AUW Defendants prevail, the fact that Plaintiffs’ dispute against the AUW Defendants will be litigated in Nebraska may dispense with this Action in its entirety. Accordingly, Willis respectfully submits that this Court should exercise its discretion and stay this action to prevent the unnecessary waste of time, money and judicial resources which will undoubtedly result should the Court of Appeal modify the stay in any way. See Freiberg, 33 Cal. App. 4th at 1489, 2. A Stay Will Avoid Potentially Conflicting Decisions. In exercising its authority to stay an action pending resolution of an appealed order, a court should “consider the importance of discouraging multiple litigation designed solely to harass an adverse party” and of “avoiding unseemly conflicts” between two courts. Farmland Irrigation Co. v. Doppimaier, 48 Cal. 2d 208, 215 (1957); see also Great Am. Ins. Co. v. Super. Ct., 178 Cal. App. 4th 221, 236 (2009). Plaintiffs claim that Willis is liable for intentional and negligent misrepresentation as well as professional negligence. For both intentional and negligent misrepresentation, an actual misrepresentation is a necessary element of any claim. See Ach v. Finkelstein, 264 Cal. App. 2d 667, 674 (1968) (listing the elements of a claim for intentional misrepresentation as (1) a false representation of a material fact; (2) knowledge of the falsity (scienter); (3) intent to induce another into relying on the representation; (4) reliance on the representation; and (5) resulting damage); and, Fox v. Pollack, 181 Cal. App. 3d 954, 962 (1986) (setting forth similar elements of negligent misrepresentation). The misrepresentations allegedly made by Willis (and the AUW Defendants) involve whether the workers’ compensation insurance program was required to comply with California law and whether certain rate plans are void because the AUW Defendants did not file them with the California Department of Insurance. (See FAC, 54, 56, 61, 65 and 74.) The AUW Defendants’ Petition argues that California law does not apply to the workers’ compensation program and the unfiled workers’ compensation forms and rate plans are enforceable. (See e.g., RJN, Exh. 2, pp. 28-37.) Thus, the appellate court’s decision on the Petition may directly affect the factual and legal elements of the misrepresentation claims brought against Willis. Because there is potential for conflicting decisions from this trial court, the California Court of Appeal and the state of Nebraska, a temporary stay of the -5- WILLIS OF NEW YORK, INC.’8 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL KYL4825-0884-2557.2underlying proceedings is necessary. 3. A Brief Delay Will Not Prejudice The Court Or Parties. Finally, in exercising its discretion to stay this Action, the Court should consider the possibility of prejudice to the parties. See Great Am. Ins. Co., 178 Cal. App. 4th at 236. The AUW Defendants are diligently proceeding with their appeal and recently submitted their Reply to Plaintiffs’ Preliminary Opposition to the Petition. Willis anticipates that the Court of Appeal will issue a decision quickly. Plaintiffs, on the other hand, apparently expect a protracted legal process of the underlying Action. In their Case Management Statement filed on October 28, 2016, Plaintiffs estimated that written discovery will not be completed until September 2017 and depositions and expert discovery will not be completed until Spring of 2018. Thus, a brief stay of discovery and the underlying litigation will not impact Plaintiffs’ projected timetable. Should this Motion be denied, Willis would be forced to respond to unnecessary discovery and/or duplicative discovery in the California Action, while the fate of the Nebraska action and the Out-of-State Plaintiffs is pending. Thus, a stay is appropriate to prevent prejudice to Willis and will not adversely affect the other parties. Ill. CONCLUSION Under the circumstances, Willis respectfully requests this Court for an order staying all further trial and discovery proceedings in this Action until the Court of Appeal issues a decision on AUW’s writ petition, or in the alternative, for an order staying the matter in its entirety for six months and scheduling a case management conference at that time to assess the progress of the appeal. DATED: December G, 2016 \G2. JOPI 6. CQHEN JENMAFER WI PORTER KEESAL, YOUNG & LOGAN Attorneys for Defendant WILLIS OF NEW YORK, INC. -6- WILLIS OF NEW YORK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO STAY PROCEEDINGS PENDING APPEAL KYL4825-0884-2557.2