American Express Bank v. C. D. Rowsell CA1/4 ( 2022 )

Filed 7/28/22 American Express Bank v. C. D. Rowsell CA1/4
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
AMERICAN EXPRESS BANK, FSB,
et al.,
Plaintiffs, Cross-defendants, and A163660
Respondents,
(San Mateo County
v. Super. Ct. No. CIV501187)
C. D. ROWSELL,
Defendant, Cross-complainant, and
Appellant.
Plaintiff American Express Bank, FSB (American Express) brought a
collection action against C.D. Rowsell and Rowsell’s company, Bosonda
International Ltd. (Bosonda). In response, Rowsell and Bosonda asserted
individual and class cross-claims against American Express and several
related entities for allegedly unconscionable and unenforceable arbitration
provisions in the bank’s cardmember agreements. Early in the proceedings,
at a case management conference, the trial court ordered cross-complainants’
motion for class certification to proceed “before any adjudication on the
substantive merits.” At a later case management conference, the trial court
purportedly refused to sever the collection claims and set a date for trial.
1
After several years of appeals from denial of the class certification
motion, the trial court set an order to show cause (OSC) why the action
should not be dismissed for failing to bring it to trial within five years (Code
Civ. Proc., §§ 583.310, 583.360),1 but later vacated the OSC upon finding that
the “case management judge . . . frustrated” the parties’ ability to bring their
claims to trial.
Thereafter, the trial court granted cross-defendants’ summary
judgment motion as to American Express’s collection claims and
cross-complainants’ declaratory relief claim. Rowsell appeals from the
resulting judgment, arguing that the trial court should have dismissed the
collection action under sections 583.310 and 583.360, and that there is a
triable issue of material fact regarding the declaratory relief cross-claim. We
disagree and affirm the judgment.
BACKGROUND
A. Factual and Procedural History
In December 2010, American Express initiated a collection action
against Rowsell for unpaid charges on his American Express credit card.
American Express later amended its complaint to add claims related to two
business accounts held by Rowsell, and it also named Bosonda as an
additional defendant. Rowsell is allegedly the president and majority
shareholder of Bosonda.
In February 2011, Rowsell filed a cross-complaint against American
Express Travel Related Services Company, Inc.; American Express Centurion
1All statutory references are to the Code of Civil Procedure unless
otherwise specified.
2
Bank; and American Express Bank, FSB (collectively, cross-defendants2),
alleging that the arbitration provision in the parties’ cardmember agreement
was unconscionable and unenforceable. Rowsell also filed a motion to
“compel” arbitration.
A few months later, the trial court struck the motion to compel
arbitration as a “sham,” finding that Rowsell’s intent in filing the motion was
not to compel arbitration, but to have the trial court determine the
arbitration provision was unconscionable and deny the motion on that
ground.
In May 2012, Rowsell, together with Bosonda as an additional
cross-complainant, filed the operative first amended cross-complaint (FACC),
asserting against cross-defendants six claims for violations of the unfair
competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL) and a declaratory
relief claim based on the alleged unconscionability and unenforceability of the
arbitration provision in American Express card member agreements and in
its terms and conditions. Cross-complainants brought the first, third, and
fifth UCL causes of action and the seventh cause of action for declaratory
relief as individual and class claims.
B. September 2012 Case Management Conference and Case
Management Order (CMO) No. 10
In September 2012, the trial court sustained without leave to amend
cross-defendants’ demurrer to the second, fourth, and sixth causes of action
in the FACC. It overruled the demurrer to the remaining claims in the
This includes American Express Company, which Rowsell and
2
Bosonda named as an additional cross-defendant in their operative first
amended cross-complaint.
3
FACC, but it noted that cross-defendants had provided evidence that
Bosonda was not in good standing with the State of California.
At the case management conference the following day, the court and
the parties discussed the matter of Bosonda’s standing. Cross-defendants
also contested cross-complainants’ standing to sue under Business and
Professions Code section 17200. The court decided in its CMO No. 10 that
“Cross-Complainants’ standing to proceed on the claims will be adjudicated
prior to class certification, and then the motion for class certification will
proceed before any adjudication on the substantive merits.” The court
further ordered cross-defendants to file a summary adjudication motion as to
the issue of cross-complainants’ standing to sue.
In May 2013, the trial court granted cross-defendants’ summary
adjudication motion as to the first, third, and fifth causes of action in the
FACC, finding that cross-complainants had no standing to sue because they
had not suffered an “injury in fact,” as required for UCL claims. It denied the
motion as to the seventh cross-cause of action for declaratory relief, rejecting
cross-defendants’ argument that this claim was duplicative of the UCL cross-
claims.
C. April 2013 to December 2018: Cross-complainants’ Class
Certification Motion and Their First Appeal
In April 2013, cross-complainants moved for class certification on their
sole remaining cross-claim for declaratory relief. The trial court denied the
motion in May 2014. Cross-complainants appealed the denial the following
month.
During the first year of the appeal, cross-complainants requested, and
the appellate court granted, three extensions for filing an opening brief,
which cross-complainants filed in February 2015. The appeal was fully
briefed by September 2015.
4
In January 2016, the parties requested oral argument, but the
appellate court declined to set a date for oral argument that would occur
before the end of November 2017. The court later scheduled oral argument
for February 2018.
After cross-complainants’ attorney passed away in early 2018, the
appellate court continued oral argument to a later date. Cross-defendants
informed cross-complainants of their obligation to immediately retain new
counsel.
In April 2018, after cross-complainants failed to obtain counsel,
cross-defendants moved to dismiss the appeal. Cross-complainants
subsequently sought, and obtained, an extension for appointing new counsel,
which they did in July 2018.
On the appellate court’s own motion, the oral argument hearing was
continued to September 2018. In October 2018, after oral argument, the
appellate court reversed the order denying cross-complainants’ motion for
class certification and remanded for further proceedings.
D. December 2018 to June 2019: Cross-complainants’ Amended
Motion for Class Certification and the August 2019 Case
Management Conference
After the appellate court issued the remittitur in December 2018,
cross-complainants filed an amended motion for class certification, which the
trial court denied in April 2019.
A couple of months later, in June 2019, cross-defendants stated in their
case management statement that they intended to file for summary judgment
of its collection claims “[i]n light of the resolution of the class certification
proceedings.” They also requested that the court sever the collection claims
from the declaratory relief cross-claim and set a date for trial.
5
At the August 2019 case management conference, the trial court
“declined to act on the requests American Express made in its case
management statement,” and it continued subsequent case management
conferences to December 2020.
E. June 2019 to January 2021: Cross-complainants’ Second Appeal
In June 2019, right before the August 2019 case management
conference, cross-complainants filed an appeal from the second class
certification denial.
During the appeal, cross-complainants requested and received four
extensions to file an opposition to cross-defendants’ motion for summary
affirmance. The court denied the motion. Cross-complainants thereafter
failed to file an opening brief despite two extensions, which cross-defendants
had opposed, resulting in the court dismissing the appeal for failure to
prosecute. The court issued the remittitur in January 2021.
After the appellate court dismissed the appeal, cross-defendants
renewed their request for a trial date in their case management statements,
and in May 2021, they moved for summary adjudication of the collection
claims and of the remaining cross-claim for declaratory relief. A few weeks
later, the trial court set a bench trial for October 2021.
F. The Order to Show Cause Per Section 583.310
In July 2021, the trial court, on its own motion, issued an OSC under
section 583.310, which requires an action be brought to trial within five years
after the action is commenced. The OSC stated, “This court is unaware of
any tolling agreements between the parties, nor stipulations for stay or any
stay orders issued by this court” or “an impediment to plaintiff proceeding
with adjudication of its collection action.”
In its return to the OSC, cross-defendants contended that the time
spent on cross-complainants’ two appeals should be tolled under section
6
583.340, subdivision (c), bringing the October 2021 trial date within the
five-year rule. They reasoned that in 2012, the trial court had ordered the
class certification motion to proceed before any adjudication on the
substantive merits, making trial “impracticable” until the class certification
issues were resolved. Cross-complainants did not file a response to the OSC.
At the OSC hearing the following month, the trial court stated it “fully
expected that this [action] would be adjudicated” because “[t]he only thing
that was on appeal was denial of class certification.” However, it “found
interesting that [cross-defendants’] response to the OSC said that [they] went
to case management and the case management judge . . . refused to sever
[the] collection case and refused to set it for trial.” That was the “critical
piece,” the court reasoned, because the case management judge “completely
frustrated and made impossible” the parties’ ability to go to trial.
Accordingly, the trial court vacated the OSC and allowed the litigation to
proceed.
G. Cross-defendants’ Summary Judgment Motion
In cross-defendants’ summary judgment motion, American Express
argued that it was entitled to summary judgment on its collection claims
because the material facts establishing those claims were undisputed.
American Express and the other cross-defendants also argued that they were
entitled to summary adjudication on cross-complainants’ declaratory relief
claim. As pertinent here, they contended that declaratory relief was not
“necessary or proper” because a determination of the enforceability of the
arbitration provision “would have no practical consequences.” The parties’
contractual relationship ended more than 10 years ago, and American
Express never sought to enforce the arbitration provision to arbitrate its
7
collection claims. Based on those same facts, cross-defendants further argued
that there was no “actual dispute” regarding the arbitration provision.
In September 2021, after it had vacated the OSC, the trial court
granted cross-defendants’ summary judgment motion. Regarding the
declaratory relief claim, the trial court found it was based on the theory that
cross-complainants “are harmed by the fact that they cannot force American
Express to arbitrate their collection claims,” yet there was no evidence that
they sought to arbitrate the collection claims or that American Express ever
tried to force arbitration of those claims. It thus found that the alleged
dispute regarding the enforcement of the arbitration provision was not “ripe”
and would not have practical consequences “in terms of altering the parties’
behavior.” Moreover, “no purpose [would be] served to the public either by
proceeding with” the declaratory relief claim, the court explained, because the
evidence shows that American Express changed the language of its
arbitration provision in 2013.
Rowsell appeals from the resulting judgment.3
DISCUSSION
1. Dismissal of American Express’s Collection Claims
Rowsell contends the trial court was required to dismiss American
Express’s collection claims under sections 583.310 and 583.360 and,
consequently, its motion to summarily adjudicate those claims. But he fails
to meet his burden to affirmatively demonstrate error. (See Howard v.
Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443.)
Sections 583.310 and 583.360, subdivision (a), establish the general
rule that a civil action must be brought to trial within five years or it will be
dismissed. However, because the purpose of the dismissal statute is to
3 Bosonda did not appeal from the judgment.
8
prevent “avoidable delay” (Tamburina v. Combined Ins. Co. of America (2007)
147 Cal.App.4th 323, 328), this rule is subject to several statutory exceptions,
including an exclusion from the five-year period of any time during which
“[b]ringing the action to trial . . . was impossible, impracticable, or futile”
(§ 583.340, subd. (c)). Here, the trial court vacated the OSC after finding that
the case management judge “completely frustrated” and “made impossible”
the parties’ ability to bring their claims to trial. Although the record does not
reflect an express finding that section 583.340, subdivision (c) applies to this
case to toll section 583.310, such a finding is implicit and can be inferred from
the record. (See Winograd v. American Broadcasting Co. (1998)
68 Cal.App.4th 624, 631 [ambiguities in the record are resolved in favor of
affirmance].) Rowsell therefore has the burden of showing the trial court
erred in tolling section 583.310 pursuant to section 583.340, subdivision (c).
What is impossible, impracticable, or futile under that section must be
determined in light of all the circumstances in the matter, including the acts
and conduct of the parties and the nature of the proceedings. (Moran v.
Superior Court (1983) 35 Cal.3d 229, 238.) It is not limited to “objective
impossibility in the true sense.” (Christin v. Superior Court (1937) 9 Cal.2d
526, 533.) The critical factor in applying this exception to a given factual
situation is whether the plaintiff exercised reasonable diligence in
prosecuting his or her case. (Moran v. Superior Court, at p. 238.) Section
583.340 must be construed liberally, consistent with the policy favoring trial
on the merits. (Fidelity National Home Warranty Co. Cases (2020)
46 Cal.App.5th 812, 837.)
Appellate review of a trial court’s determination of whether section
583.310 was tolled for impossibility, impracticability, or futility is limited
because “trial courts are best equipped to evaluate the complicated factual
9
matters that could support such a finding.” (Tanguilig v. Neiman Marcus
Group, Inc. (2018) 22 Cal.App.5th 313, 324.) We therefore review the trial
court’s tolling decision for abuse of discretion and reverse “only if no
reasonable basis exists for the trial court’s decision.” (Ibid.) “In the absence
of an abuse of discretion, we will affirm even if we would have ruled
differently.” (Ibid.)
Rowsell has not shown the trial court abused its discretion by tolling
section 583.310 under subdivision (c) of section 583.340. He contends
American Express made no showing of “due diligence” in prosecuting its
action. In support, he proffers a one-sided presentation of the facts, omitting
the evidence American Express provided the trial court in its return to the
OSC. “An appellant who fails to cite and discuss the evidence supporting the
judgment cannot demonstrate that such evidence is insufficient.” (Rayii v.
Gatica (2013) 218 Cal.App.4th 1402, 1408.) Rowsell otherwise makes no
attempt to explain why subdivision (c) of section 583.340 does not apply to
toll the five-year period in this case, and he wholly fails to address the trial
court’s findings regarding that exception. It is not our role to construct
arguments on appellants’ behalf. (In re Marriage of Falcone & Fyke (2008)
164 Cal.App.4th 814, 830.)
In his reply, Rowsell challenges for the first time the sufficiency of the
evidence supporting the trial court’s factual findings. Specifically, he
contends that CMO No. 10 cannot support cross-defendants’ position that
subdivision (c) of section 583.340 applies here to toll section 583.310. But his
attempt to use his reply brief to attack American Express’s arguments is
unavailing. (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 685
[appellant’s “belated attempt to address [issues] in his reply brief—after the
respondents’ brief noted his failure to address the [issues]—did not salvage
10
these abandoned issues”].) Moreover, he has forfeited his contentions by
failing to raise them below. (See Nellie Gail Ranch Owners Assn. v.
McMullin (2016) 4 Cal.App.5th 982, 997.)
Even assuming Rowsell has not forfeited his arguments, we conclude
the trial court had a reasonable basis for tolling time under subdivision (c) of
section 583.340. CMO No. 10 can be interpreted as requiring resolution of
the class certification motion before adjudication of the substantive merits of
the parties’ claims. The evidence showing the trial court refused to sever the
collection claims and set a trial date shortly after Rowsell initiated the second
appeal further suggests the trial court expected the parties to resolve the
class certification issues first, and it made it impracticable for
cross-defendants to obtain a trial date. American Express should not be
penalized for failing to “fly in the face of” the trial court’s directives. (Holland
v. Dave Altman’s R. V. Center (1990) 222 Cal.App.3d 477, 484.) The evidence
also indicates that events outside of cross-defendants’ control caused delays
in the class certification appeals.
Considering those circumstances, the record supports a finding that
American Express exercised reasonable diligence in pursuing its action. It
promptly sought a trial date after the trial court denied the amended class
certification motion, it took action to prevent further delay in the appeals,
and it renewed its request for a trial date and filed the instant motion when
the second appeal concluded. Thus, excluding the time in which the class
certification issues were pending, the order granting summary judgment was
well within the five-year period. (See In re Marriage of Dunmore (1996)
45-Cal.App.4th 1372, 1377 [grant of summary judgment motion is a “trial” for
purposes of the dismissal statutes].)
11
Rowsell contends cross-defendants “misled” the judge at the OSC
hearing into believing that a different judge issued CMO No. 10 rather than
the OSC judge herself. But even if the OSC judge was mistaken on that
point, which is far from clear in the record, Rowsell does not explain how he
was prejudiced by such an error. He is not entitled to relief absent a showing
of prejudice. (F.P. v. Monier (2017) 3 Cal.5th 1099, 1107–1108.)
We therefore conclude Rowsell failed to show the trial court abused its
discretion in tolling the five-year period under section 583.340,
subdivision (c).
2. Summary Adjudication of Rowsell’s Declaratory Relief Claim
Rowsell makes two arguments for why the trial court should have
denied cross-defendants’ summary adjudication motion as to his declaratory
relief claim: (1) the motion was improperly duplicative of an earlier summary
adjudication motion, and (2) Rowsell raised issues of material fact regarding
the issue of unconscionability. We are not persuaded.
With respect to his first challenge, section 437c, subdivision (f)(2)
provides that a party may not move for summary judgment based on issues
asserted in a prior motion for summary adjudication. To determine whether
a second summary judgment motion is proper, courts consider whether it
involves “newly discovered facts or circumstances or a change of law.”
(Schachter v. Citigroup, Inc. (2005) 126 Cal.App.4th 726, 739.)
A second summary judgment motion concerning the same general issue
as the first motion does not run afoul of section 437c where the two motions
are not identical and involve different legal theories. (Patterson v.
Sacramento City Unified School Dist. (2007) 155 Cal.App.4th 821, 827.) In
Patterson, for example, the appellate court found that although the
defendant’s two summary judgment motions involved the negligence element
12
of “ ‘duty’ in a general sense,” the “first motion focused on whether there was
a statutory basis for imposing a duty [while] the second motion focused on
whether the common law defense of assumption of risk applied to negate any
claim of duty.” (Ibid.) The court thus rejected the plaintiff’s argument that
the trial court improperly granted a second motion for summary judgment
after denying the first. (Ibid.)
This case is akin to Patterson. American Express’s argument in the
first motion regarding Rowsell’s declaratory relief claim is based on
cross-complainants’ standing to bring their UCL claims. In comparison,
American Express argued in its second summary judgment motion that
declaratory relief is not “necessary or proper” because the parties’ contractual
relationship ended more than 10 years ago, and American Express never
sought to enforce the arbitration provision. The second motion was therefore
proper, as it is based on a different legal theory and different facts.
Rowsell’s second challenge is equally unavailing for two reasons. First,
the trial court did not reach the unconscionability issue because it granted
summary adjudication of the declaratory relief claim on the grounds that
declaratory relief was not “necessary or proper” and that there was no “actual
controversy.” Rowsell does not address those findings in his opening brief,
and thus he fails to demonstrate error.
In any event, reviewing the grant of summary judgment de novo
(Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142),
we agree with the trial court that there are no triable issues of material fact
regarding the declaratory relief claim. An action for declaratory relief must
involve an “actual controversy” such that the dispute is sufficiently concrete,
and the trial court is not speculating on the resolution of hypothetical
situations. (Farm Sanctuary, Inc. v. Department of Food & Agriculture
13
(1998) 63 Cal.App.4th 495, 502.) A trial court also has discretion to deny
declaratory relief where it is “not necessary or proper . . . under all the
circumstances.” (§ 1061.) This is the case when “resolution of the
controversy over future remedies would have little practical effect in terms of
altering parties’ behavior.” (Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th
634, 648.)
Here, cross-defendants made a prima facie showing that the
declaratory relief cross-claim is insufficiently concrete and unnecessary. The
claim seeks a declaration that the arbitration provision in American
Express’s cardmember agreement is unconscionable and unenforceable. But
the record indicates that cross-defendants never sought to enforce the
arbitration provision in this action, which suggests the declaration sought by
cross-complainants is based on a hypothetical situation. Cross-defendants
also produced evidence indicating that the parties’ contractual relationship
ended more than 10 years ago. Based on those facts, this does not appear to
be a case where a declaration would have a “practical effect in terms of
altering parties’ behavior,” such as when “the continuation of a contractual
relationship plausibly hinges” on a declaration. (Meyer v. Sprint Spectrum
L.P., supra, 45 Cal.4th at p. 648.)
Cross-complainants did not dispute those facts below, nor did they
provide evidence showing cross-defendants intended to enforce the
arbitration provision. In fact, the record shows that cross-complainants did
not provide any evidence in support of their opposition to cross-defendants’
summary adjudication of the declaratory relief cross-claim. Moreover, the
facts Rowsell claims are disputed have nothing to do with the issue of
whether his declaratory relief claim was “necessary or proper” and based on
14
an actual controversy. As such, Rowsell fails to show that there is a triable
issue of material fact regarding the declaratory relief cross-claim.
DISPOSITION
The order granting summary judgment is affirmed.
15
_________________________
Nadler, J.*
WE CONCUR:
_________________________
Pollak, P.J.
_________________________
Brown, J.
American Express v. Rowsell A163660
*Judge of the Superior Court of California, County of Sonoma, assigned
by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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