On 08/20/2019 JAMES A KAY filed a Contract - Professional Negligence lawsuit against GORDON REES SCULLY MANSUKHANI, LLP, A LIMITED LIABILITY PARTNERSHIP. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is GREGORY KEOSIAN. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
KAY JAMES A. AN INDIVIDUAL
COMMUNICATIONS RELAY LLC A NEVADA LLC
LUCKY'S TWO WAY RADIOS INC. A NEVADA CORPORATION
BUDDY CORPORATION A CALIFORNIA CORPORATION AKA SOUTHLAND COMMUNICATIONS
COMMUNICATIONS RELAY LLC
KAY JAMES A.
LUCKY'S TWO WAY RADIOS INC.
BUDDY CORPORATION DBA SOUTHLAND COMMUNICATIONS
GORDON REES SCULLY MANSUKHANI LLP A LIMITED LIABILITY PARTNERSHIP
ADMIRAL INSURANCE CO. A DELAWARE CORPORATION
GORDON REES SCULLY MANSUKHANI LLP
ADMIRAL INSURANCE CO.
MCGONIGLE TIMOTHY D
MCGONIGLE TIMOTHY D.
PETTIT DOUGLAS A.
O'LEARY LYNN A.
5/3/2021: Notice of Ruling - NOTICE OF RULING RULING RE GORDON REES SCULLY MANSUKHANI, LLP'S MOTION FOR AN OSC RE: CONTEMPT AGAINST PLAINTIFFS LUCKY'S TWO WAY RADIOS, INC. AND COMMUNICATIONS RELAY, LLC
4/20/2021: Opposition - OPPOSITION TO DEFENDANT GORDON REES SCULLY MANSUKHANI, LLPS MOTION FOR AN ORDER FINDING PLAINTIFF LUCKYS TWO WAY RADIOS, INC. IN CONTEMPT OF COURT; DECLARATION OF TIMOTHY D. MCGONIGLE I
7/22/2020: Reply - REPLY OPPOSITION TO PLAINTIFFS MOTION TO QUASH SUBPOENA OR ALTERNATIVELY MOTION FOR PROTECTIVE ORDER
8/18/2020: Request for Dismissal
10/13/2020: Opposition - OPPOSITION TO DEFENDANT GORDON REES SCULLY MANSUKHANI, LLPS EX PARTE APPLICATION FOR AN ORDER ALLOWING DEFENDANT TO RETAIN COURT-ORDERED-PRODUCED DOCUMENTS; OR IN THE ALTERNATIVE, FOR AN
10/15/2020: Opposition - OPPOSITION MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS OPPOSITION TO MOTION TO STRIKE OR, IN THE ALTERNATIVE, TO TAX COSTS
11/3/2020: Reply - REPLY SUPPLEMENTAL DECLARATION OF SABRINA D. JOHNSON IN SUPPORT OF DEFENDANT GORDON REES SCULLY MANSUKHANI, LLPS REPLY TO PLAINTIFF LUCKYS TWO WAY RADIOS, INC.S OPPOSITION TO DEFENDANTS MO
11/3/2020: Reply - REPLY DEFENDANT GORDON REES SCULLY MANSUKHANI, LLPS REPLY TO PLAINTIFF COMMUNICATIONS RELAY LLCS OPPOSITION TO DEFENDANTS MOTION TO COMPEL PLAINTIFFS RESPONSES TO REQUEST FOR PRODUCTION OF
2/18/2021: Proof of Service (not Summons and Complaint)
3/4/2021: Memorandum of Points & Authorities
3/4/2021: Proof of Service (not Summons and Complaint)
3/16/2021: Response - RESPONSE PLAINTIFFS ADDITIONAL MATERAL FACTS IN RESPONSE TO DEFENDANT GORDON REES SCULLY MANSUKHANI, LLPS SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS
3/16/2021: Memorandum of Points & Authorities - MEMORANDUM OF POINTS & AUTHORITIES PLAINTIFFS MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT GORDON REES SCULLY MANSUKHANI, LLPS MOTION FOR SUMM
3/30/2021: Minute Order - MINUTE ORDER (HEARING ON MOTION FOR SUMMARY JUDGMENT)
11/21/2019: Notice of Ruling - NOTICE OF RULING REGARDING NOVEMBER 20, 2019 CASE MANAGEMENT CONFERENCE
11/5/2019: Notice of Posting of Jury Fees
9/26/2019: Amended Complaint - AMENDED COMPLAINT 1ST
8/21/2019: Civil Case Cover Sheet
Hearing06/22/2021 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Jury TrialRead MoreRead Less
Hearing06/14/2021 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Final Status ConferenceRead MoreRead Less
Docketat 10:00 AM in Department 61, Gregory Keosian, Presiding; Hearing on Motion to be Relieved as Counsel - Not Held - Taken Off Calendar by PartyRead MoreRead Less
Docketat 10:00 AM in Department 61, Gregory Keosian, Presiding; Hearing on Motion to be Relieved as Counsel - Not Held - Taken Off Calendar by PartyRead MoreRead Less
Docketat 10:00 AM in Department 61, Gregory Keosian, Presiding; Hearing on Motion for Summary Judgment - Not Held - Taken Off Calendar by PartyRead MoreRead Less
DocketRequest for Dismissal; Filed by LUCKY'S TWO WAY RADIOS, Inc. (Plaintiff)Read MoreRead Less
DocketNotice (Notice of Withdrawal Of Motion To be Relieved as Counsel); Filed by LUCKY'S TWO WAY RADIOS, Inc. (Plaintiff)Read MoreRead Less
DocketNotice of Settlement (NOTICE OF PARTIAL SETTLEMENT OF CASE BETWEEN PLAINTIFF LUCKY?S TWO WAY RADIOS, INC. AND DEFENDANT ADMIRAL INSURANCE CO.); Filed by James A. Kay (Plaintiff); BUDDY CORPORATION (Plaintiff); LUCKY'S TWO WAY RADIOS, Inc. (Plaintiff) et al.Read MoreRead Less
Docketat 10:00 AM in Department 61, Gregory Keosian, Presiding; Hearing on Motion for Order (DEFENDANT GORDON REES SCULLY MANSUKHANI, LLP?S MOTION FOR AN ORDER FINDING PLAINTIFFS LUCKY?S TWO WAY RADIOS, INC. and COMMUNICATIONS RELAY LLC IN CONTEMPT OF COURT) - HeldRead MoreRead Less
DocketCertificate of Mailing for ((Hearing on Motion for Order DEFENDANT GORDON REES SCULLY MANS...) of 05/03/2021); Filed by ClerkRead MoreRead Less
DocketNotice (of OSC Hearing and Case Management Conference); Filed by James A. Kay (Plaintiff); BUDDY CORPORATION (Plaintiff); LUCKY'S TWO WAY RADIOS, Inc. (Plaintiff) et al.Read MoreRead Less
DocketSummons (on Amended Complaint (1st)); Filed by James A. Kay (Plaintiff); BUDDY CORPORATION (Plaintiff); LUCKY'S TWO WAY RADIOS, Inc. (Plaintiff) et al.Read MoreRead Less
DocketAmended Complaint (1st); Filed by James A., Kay, an individual (Plaintiff); BUDDY CORPORATION, a California Corporation (Plaintiff); LUCKY'S TWO WAY RADIOS, INC., a Nevada Corporation (Plaintiff) et al.Read MoreRead Less
DocketAmended Complaint; Filed by James A. Kay (Plaintiff); BUDDY CORPORATION (Plaintiff); LUCKY'S TWO WAY RADIOS, Inc. (Plaintiff) et al.Read MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
DocketOrder to Show Cause Failure to File Proof of Service; Filed by ClerkRead MoreRead Less
DocketComplaint; Filed by James A., Kay, an individual (Plaintiff); BUDDY CORPORATION, a California Corporation (Plaintiff); LUCKY'S TWO WAY RADIOS, INC., a Nevada Corporation (Plaintiff) et al.Read MoreRead Less
DocketSummons (on Complaint); Filed by James A., Kay, an individual (Plaintiff); BUDDY CORPORATION, a California Corporation (Plaintiff); LUCKY'S TWO WAY RADIOS, INC., a Nevada Corporation (Plaintiff) et al.Read MoreRead Less
DocketCivil Case Cover Sheet; Filed by James A., Kay, an individual (Plaintiff); BUDDY CORPORATION, a California Corporation (Plaintiff); LUCKY'S TWO WAY RADIOS, INC., a Nevada Corporation (Plaintiff) et al.Read MoreRead Less
DocketNotice of Case Assignment - Unlimited Civil Case; Filed by ClerkRead MoreRead Less
Case Number: 19STCV29576 Hearing Date: May 3, 2021 Dept: 61
Defendant Gordon Rees Scully Mansukhani, LLP’s Motion for an OSC re: Contempt Against Plaintiffs Lucky’s Two Way Radios, Inc. and Communications Relay, LLC is DENIED.
I. MOTION FOR AN ORDER OF CONTEMPT
“The court may impose a contempt sanction by an order treating the misuse of the discovery process as a contempt of court.” (Code Civ. Proc., § 2023.030, subd. (e).) Contempt is “Disobedience of any lawful judgment, order, or process of the court.” (Code Civ. Proc. § 1209, subd. (a)(5).) “[T]he elements of this contempt are only a valid court order, the alleged contemnor’s knowledge of the order, and noncompliance.” (Moss v. Superior Court (1998) 17 Cal.4th 396, 428.)
A contempt proceeding is commenced by the filing of an affidavit and a request for an order to show cause. (§ 1211, subds.(a), (b).) After notice to the opposing party's lawyer, the court (if satisfied with the sufficiency of the affidavit) must sign an order to show cause re contempt in which the date and time for a hearing are set forth. (§ 1212; Arthur v. Superior Court (1965) 62 Cal.2d 404, 408, 42 Cal.Rptr. 441, 398 P.2d 777 [“an order to show cause must be issued”]; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 1999) § 9:715, p. 9(II)–47.)5 The order to show cause acts as a summons to appear in court on a certain day and, as its name suggests, to show cause why a certain thing should not be done. (Morelli v. Superior Court (1968) 262 Cal.App.2d 262, 269, 68 Cal.Rptr. 572.) Unless the citee has concealed himself from the court, he must be personally served with the affidavit and the order to show cause; otherwise, the court lacks jurisdiction to proceed.
(Cedars-Sinai Imaging Medical Group v. Superior Court (2000) 83 Cal.App.4th 1281, 1286–1287, italics in original.)
G&R moves for an order of contempt against Lucky and Comm Relay for their failure to obey this court’s order of July 29, 2020, denying in part Plaintiffs’ motion to quash subpoenas directed toward their former counsel, particularly as to billing invoices that formed the basis for a damages claim against G&R. (Motion at pp. 3–4.) In response to the order, Plaintiffs produced unredacted invoices from Bradley & Gmelich, but quickly withdrew that production, claiming that they had produced them in error, since the unredacted invoices revealed individual billing entries for fees that Plaintiffs were not claiming as damages. (Motion at p. 4.) Plaintiffs have produced only redacted versions of the invoices with certain billing entries redacted. (Motion at p. 3; Johnson Decl. ¶¶ 9–10.)
An order of contempt would be improper here for a number of reasons. First, there is no court order which Plaintiffs have disobeyed. “Punishment for contempt ‘can only rest upon [a] clear, intentional violation of a specific, narrowly drawn order. Specificity is an essential prerequisite of a contempt citation.” (Van v. LanguageLine Solutions (2017) 8 Cal.App.5th 73, 82.) The July 29, 2020 order that G&R relies upon did not grant any motion of G&R’s to compel production of documents, but merely denied Plaintiffs’ motion to quash a subpoena. The failure to produce documents after such an order furnishes no basis for a finding of contempt, since the order did not require any party to produce documents. (See Van, supra, 8 Cal.App.5th at pp. 81–82 [finding of contempt was abuse of discretion when party failed to appear for deposition after the court denied their motion to stay deposition].) Although G&R argues that the parties had stipulated the court’s order would govern Plaintiffs’ responses, an order, not an agreement, is the essential element for a finding of contempt. (Reply at p. 3.)
Second, even had the July 2020 order been one to compel production, the evidence shows that any violation of that order would not have been willful. The court in that order ruled that the subpoenas would not be quashed as to attorney fee invoices that Plaintiffs claimed as damages, on the grounds that Plaintiffs had placed such communications at issue by claiming them as damages, and to allow Plaintiffs to claim the privilege as to them would be fundamentally unfair to Defendants. The present dispute is merely this: whether Plaintiffs waived the privilege to the invoices as a whole, even to billing entries that are not claimed as damages, or only to those billing entries specifically claimed as damages. This is a good faith legal dispute based on the rationale of the earlier order.
G&R presents no argument as to why billing entries for services not claimed as damages ought to be produced here, except to point to the use of the word “invoice” in the court’s prior order. (Motion at pp. 5–7.) But nobody disputes that Plaintiffs have produced invoices. The issue is the propriety of redacting those invoices to only those entries claimed as damages in this case, a matter that the prior order did not address. G&R argues, quoting the language of the prior order, that “it would be fundamentally unfair to [G&R] to allow these invoices to serve as a basis for relief and simultaneously shield the substance of the invoices from further inquiry.” (Reply at p. 4.) But the parties do not dispute that those portions of the invoices that Plaintiffs have redacted are those for which Plaintiffs are not claiming relief.
The motion is therefore DENIED.
Case Number: 19STCV29576 Hearing Date: March 30, 2021 Dept: 61
Defendant Gordon Rees Scully Mansukhani, LLP’s Motion for Summary Judgment or Adjudication is GRANTED as to Plaintiff Communications Relay, LLC, and DENIED as to Lucky’s Two-Way Radios.
G&R’s objections to the Kay declaration are adjudicated as follows. Objections No. 5 and 7 are SUSTAINED, as Kay’s testimony that Comm Relay incurred attorney fees from G&R’s conduct lacks foundation and is contradicted by his deposition testimony. (Motion Exh. P at pp. 201–202.)
G&R’s objections to the declaration of Michael Dempsey are adjudicated as follows. Objections No. 12–15 to the Dempsey declaration concerning G&R’s purported failure to ensure Admiral provided coverage to Comm Relay are SUSTAINED as lacking foundation.
The court need not address the remaining objections as they concern evidence not material to the disposition of the case. (Code Civ. Proc., § 437c, subd. (q).)
II. SUMMARY JUDGMENT
A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (Code Civ. Proc. § 437c, subd. (a).) “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (Code Civ. Proc. § 437c, subd. (f)(2).)
The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (p)(2).)
Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Aguilar, supra, 25 Cal.4th at 850.) The plaintiff may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto. (Ibid.) To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)
A. UNDERLYING FACTS
Some explanation of the background facts is appropriate. In January 2016, Admiral retained G&R based on a notice of administrative complaint for retaliation that a former employee, Nathan Gomez, filed against Plaintiffs before the California Division of Labor Standards Enforcement. (Plaintiff’s Separate Statement of Undisputed Facts (PUMF) No. 3.) In February 2016, Admiral issued a coverage letter to former plaintiff James Kay stating as a preliminary matter that it appeared it would cover the retaliation claim. (PUMF No. 5.)
Buddy’s personal counsel, Joshua Dale and Daniel Eli, discussed this letter and the relevant insurance policy with him. On February 1, 2016, Dale informed Kay: “FYI, based on the reservation of rights in the coverage letter, you have a right to employ Cumis counsel to monitor the case alongside whatever Gordon & Rees does, with the caveat that you’ll be fronting the money for that counsel until the deductible is exhausted.” (Motion Exh. C at p. 50.) On February 9, Eli said: “Finally, with respect to Cumis counsel, Joshua is correct that you have a right to employ your own counsel to monitor what Gordon & Rees is doing. Generally, you would have to incur the cost of that counsel. However, under certain circumstances the insurance company has to pay for it. When you send me the policy (requested in my earlier email) I’ll take a look to see if this is one of those situations.” (Motion Exh. C at pp. 49–50.)
At around the same time, Joshua Dale warned Kay with regard to another employee, Jabari McFaddin, and his claims of unpaid off-the-clock time, warning of potential liability for unpaid travel-time. (Motion Exh. D at p. 52.)
On October 27, 2016, Gomez, McFaddin, and two other former employees of Buddy filed suit, alleging claims for wrongful termination, retaliation, discrimination, and wage-and-hour violations. (PUMF No. 12.) Lucky’s and Comm Relay were sued as alter-egos or joint employers of Buddy and Kay. (PUMF No. 13.) In November 2016, Admiral issued a supplemental coverage letter, stating that it would not provide indemnity coverage for wage-and-hour claims, but would provide indemnity for those based on discrimination and retaliation. (PUMF No. 15.)
In January 2017, G&R, now appointed by Admiral to defend the claims, sent Kay an estimate of exposure for each claim: $34,900 for wage-and-hour claims exclusive of claims for uncompensated travel time (which it warned could be a “substantial liability risk”) and $234,000 and $230,000 respectively for Gomez and McFaddin’s discrimination and retaliation claims. (PUMF No. 20–21.) The report noted that the estimate on these latter claims could change depending on Gomez and McFaddin’s post-termination employment. (PUMF No. 21; Motion Exh. H at pp. 80–81.)
In March 2017, G&R reserved the earliest available date for an MSJ on the underlying claims, which was in November 2018. (PUMF No. 23.)
One year later, in March 2018, G&R took the depositions of the plaintiff employees. (PUMF No. 24–27.) They testified to being required to clock out of work while still on site at remote locations, before driving back and performing additional work. (Ibid.) They also testified that they received company credit cards listing Lucky’s names on them, and that they were often deployed to perform work at what Kay told them were his houses. (Ibid.) Gomez and McFaddin testified that they had since their terminations obtained employment elsewhere at higher pay. (PUMF No. 24, 25.)
While this litigation was pending, the firm Bradley Gmelich (B&G) acted as Kay’s general counsel. (PUMF No. 31; Motion Exh. P at pp. 174–75.) B&G attorneys expressly claimed to be acting as Plaintiffs’ oversight counsel in April 2018. (PUMF No. 33.)
A mediation was scheduled for July 2018, and G&R prepared a pre-mediation report. (Motion Exh. O.) In that report, G&R cited the deposition testimony of the underlying plaintiffs regarding off-the-clock drive time, and increased the potential liability estimate for wage-and-hour claims to $86,765.04, plus potential liquidated damages, penalties and interest totaling $135,189.10. (PUMF No. 35.) The report simultaneously reduced the liability estimate for the discrimination and retaliation claims to $24,000 for Gomez’s and $8,800 for McFaddin’s, citing their new employment. (PUMF No. 36.)
When the mediation came, B&G’s Barry Bradley was personally involved at all stages. (PUMF No. 39.) The mediator made a proposal, which the parties accepted: Admiral would pay $270,000, and Lucky’s would pay $80,000. (PUMF No. 42.)
“In a legal malpractice action arising from a civil proceeding, the elements are (1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney's negligence.” (Jones v. Whisenand (2017) 8 Cal.App.5th 543, 550.)
G&R’s present motion focuses on the “causation” element of Plaintiffs’ claim. The FAC alleges that G&R injured Plaintiffs when they (1) failed to disclose the existence of a conflict of interest created by the insurance policy’s lack of coverage for wage-and-hour claims, which would have entitled Plaintiffs to the appointment of independent counsel at Admiral’s expense; (2) failed to obtain dismissal of the alter ego or joint employer allegations levied against Comm Relay, and Lucky’s, who did not employ the plaintiffs in the underlying litigation; and (3) crafting an analysis of Plaintiffs’ exposure that tilted damages toward the uncovered wage-and-hour claims, and away from the discrimination and retaliation claims that the insurer was bound to cover. (FAC ¶ 23.)
G&R argues, even assuming that Plaintiffs were entitled to the appointment of independent counsel, that the above alleged breaches caused no harm to Plaintiffs, because (1) Plaintiffs were informed early on of their right to independent counsel, and were represented by personal counsel throughout the litigation (Motion at pp. 17–18); (2) the underlying claimants possessed evidence of an alter-ego relationship that prevented any summary disposition of the alter ego allegations (Motion at p. 12); and (3) the analysis of damages was warranted by the state of the evidence in the case, particularly from the depositions of the underlying Plaintiffs. (Motion at pp. 18–19.)
These arguments do not support summary judgment of the claims brought by Lucky’s Two-Way Radios. This is because G&R’s arguments do not contest the existence of a conflict of interest creating a right to independent counsel funded by Admiral, yet simultaneously fail to rebut any inference that Lucky would have availed itself of such counsel had the conflict been disclosed, instead of employing oversight counsel at its own expense. (McCaskey v. California State Automobile Assn. (2010) 189 Cal.App.4th 947, 975 [“[T]here can be no summary adjudication of less than an entire cause of action.”].)
An insurer has the right to control the defense it provides its insured so long as there is not a conflict of interest. (James 3 Corp. v. Truck Ins. Exchange (2001) 91 Cal.App.4th 1093, 1103.) An insurer must provide independent counsel to represent the insured where there exists a conflict “when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim.” (Civ. Code § 2860, subd. (a), (b).) Such counsel is commonly known as Cumis counsel, after the case San Diego Navy Federal Credit Union v. Cumis Ins. Society (1984) 162 Cal.App.3d 358. Counsel appointed for an insured in this way is “complete[ly] independen[t]” of the insurer and has no attorney-client relationship with them. (Hartford Casualty Ins. Co. v. J.R. Marketing, L.L.C. (2015) 61 Cal.4th 988, 1002.) Despite this lack of control, these Cumis counsel are appointed at the insurer’s expense, with the proviso that said counsel is only entitled to reasonable fees. (Assurance Co. of America v. Haven (1995) 32 Cal.App.4th 78, 84; Civ. Code § 2860, subd. (c).)
This obligation need not arise if “at the time the insured is informed that a possible conflict may arise or does exist, the insured expressly waives, in writing, the right to independent counsel.” (Civ. Code § 2860, subd. (a).) The Rules of Professional Conduct impose a similar disclosure and waiver requirement upon counsel facing a conflict of interest: “A lawyer shall not, without informed written consent from each affected client . . . represent a client if there is a significant risk the lawyer's representation of the client will be materially limited by the lawyer's responsibilities to or relationships with another client, a former client or a third person, or by the lawyer's own interests.” (Ca. St. RPC Rule 1.7, subd. (b).)
G&R argues that no harm can be said to have arisen from any failure to disclose the right to Cumis counsel because Kay’s personal attorneys disclosed that right to him before the litigation began. Yet there are several problems with this argument. First, although these disclosures used the words Cumis counsel, they spoke only of Kay’s right to employ counsel at his own expense, not his right to insurer-provided independent counsel in the event of a conflict. Indeed, these disclosures spoke of no conflict, and at that point in time could not: The messages were sent in February 2016 and addressed only Gomez’s administrative retaliation claims. This was months before the four employee plaintiffs filed their combined lawsuit with both discrimination and wage-and-hour claims, the latter of which Admiral would not cover. These prior disclosures therefore do not satisfy G&R’s initial burden to show the absence of triable issues of fact that no harm came to Plaintiffs from any failure to disclose the existence of a conflict or the parallel right to insurer-funded counsel.
Both G&R and Plaintiffs point to damages suffered by this alleged failure to disclose the existence of a conflict: namely, the cost of Plaintiffs oversight counsel, which they maintained at their own expense. (FAC ¶ 23b, Prayer 2; (Motion at p. 15.) G&R argues that Lucky’s decision to retain personal counsel was “a choice, not a damage.” (Motion at p. 21.) But G&R does not attempt to contest that this choice was made without the benefit of any disclosure of the right to Cumis counsel, but rather assumes the existence of a conflict, the right to counsel, and a failure to disclose either. (Motion at p. 17 fn. 12.) Accordingly, triable issues exist as to whether Lucky was harmed by G&R’s failure to disclose a conflict and the right to Cumis counsel.
The motion is therefore DENIED as to Lucky’s claims.
This resolution applies only to Lucky, not to Comm Relay, because Comm Relay did not sustain any damages. G&R argues in its motion that Comm Relay sustained no damages from either the payment of attorney fees in the underlying case or from the ultimate settlement payments, because Plaintiffs have admitted in discovery that Comm Relay paid nothing for attorney fees or for settlement, and that such funds were paid exclusively by Lucky “on behalf of “ the other Kay entities, without any allocation among them or debts created between them. (Motion at p. 14; PUMF No. 46.) Plaintiffs do not dispute these facts, but only argue that it was permissible for Comm Relay to pay no settlement or attorney fees because of the “joint nature of the defense.” (Opposition at p. 18.) But while it may have been a joint defense, it is undisputed that this defense imposed no financial burden or other harm upon Comm Relay.
Plaintiffs for the first time in opposition argue that Comm Relay can be said to have suffered damage because, early on in the litigation, Admiral denied coverage for Comm Relay, forcing it to hire and pay its own counsel while G&R represented the other Plaintiffs. (Opposition at pp. 18–19.) The difficulty with this argument is that it forms no basis for Plaintiffs’ claims against G&R. Although the FAC alleges that Admiral denied coverage for G&R and only belatedly conceded coverage in May 2018, this allegation concerns only conduct by the insurer, not its appointed counsel. (FAC ¶¶ 11–12.) This conduct accordingly forms no basis for the claims against G&R. (FAC ¶¶ 17, 23.)
Nor do Plaintiffs present any evidence that G&R is responsible for this denial, rather submitting only the conclusory and ill-founded testimony of their expert, Michael Dempsey, who asserts that G&R “did nothing of any significance to address that issue [of Comm Relay’s coverage] with Admiral.” (Dempsey Decl. ¶ 6c.) Nor would a disclosure of a conflict and entitlement to Cumis counsel have obviated these asserted damage, since even if independent counsel had been appointed for the other defendants whom Admiral regarded as covered, no such counsel would have been appointed for Comm Relay. Accordingly, Plaintiffs’ argument here has no basis in the pleadings or evidence and can form no basis for denying the present motion. (California Bank & Trust v. Lawlor (2013) 222 Cal.App.4th 625, 637 fn. 3 [“The pleadings delimit the scope of the issues on a summary judgment motion.”].)
The motion is therefore GRANTED as to Comm Relay.
Case Number: 19STCV29576 Hearing Date: February 02, 2021 Dept: 61
Defendant Gordon Rees Scully Mansukhani, LLP’s Motions to Compel Further Responses to Special Interrogatories (Set Two) and Requests for Production (Set Two) from Plaintiffs Lucky’s Two-Way Radios, Inc. and Communications Relay, LLC are DENIED.
MOTIONS TO COMPEL FURTHER
“A party may demand that any other party produce . . . a document that is in the possession, custody, or control of the party on whom the demand is made.” (Code Civ. Proc., § 2031.010(b).) The demanding party may move for an order compelling further response to the demand if the demanding party deems that (1) a statement of compliance with the demand is incomplete, (2) a representation of inability to comply is inadequate, incomplete, or evasive, or (3) an objection in the response is without merit or too general. (Code Civ. Proc., § 2031.310(a).) “The motion shall set forth specific facts showing good cause justifying the discovery sought by the demand,” and “[t]he motion shall be accompanied by a meet and confer declaration under Section 2016.040.” (Code Civ. Proc., § 2031.310(b).)
A motion to compel a further response to an inspection demand must set forth specific facts showing “good cause” justifying the discovery sought by the inspection demand. (Code Civ. Proc., § 2031.310(b)(1); Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) Unless there is a legitimate privilege issue or claim of attorney work product, that burden is met simply by a fact-specific showing of relevance. (TBG Ins. Services Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 444.) Once the moving party demonstrates good cause for the discovery, the burden is on the responding party to justify any objection or failure to fully respond to the inspection demand. (Coy v Superior Court (1962) 58 Cal.2d 210, 220.)
“Any party may obtain discovery . . . by propounding to any other party to the action written interrogatories to be answered under oath.” (Code Civ. Proc., § 2030.010(a).) If a propounding party is not satisfied with the response served by a responding party, the former may move the court to compel further interrogatory responses. (Code Civ. Proc., § 2030.300; Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 403.) The propounding party must demonstrate that the responses were incomplete, inadequate or evasive, or that the responding party asserted objections that are either without merit or too general. (Code Civ. Proc., § 2030.300(a)(1)–(3); Sinaiko Healthcare Consulting, Inc., supra, 148 Cal.App.4th at 403.)
G&R moves to compel further responses to Special Interrogatory No. 95, which asks Plaintiffs Communications Relay, LLC (CR) and Lucky’s Two-Way Radios, LLC (Lucky) to “state the total amount of legal fees incurred by YOU that YOU are claiming as damages in the present lawsuit.” (Separate Statement at p. 2.) CR responded that it “incurred legal fees as a result of G&R’s conduct which were paid by [Lucky] at least in part on [CR]’s behalf,” and then listed a variety of invoices for dollar amounts. (Separate Statement at pp. 2–3.) In a supplemental response, CR provided another list of invoices, stating that they were each “incurred at least in part by [CR] and accordingly are being claimed as damages in this present lawsuit. Although the invoices themselves were paid in principal by [Lucky], they were paid by [Lucky] on behalf of all PLAINTIFFS and constitute damages for all PLAINTIFFS in the present lawsuit.” (Separate Statement at p. 3.) Lucky’s responses to the same interrogatory mirror CR’s, in the sense that they attribute primary responsibility for payment to Lucky. (Motion Exh. E.) Lucky provided a supplemental response, identifying the same list of legal invoices and claiming they were being claimed “at least in part” by Lucky. (Motion Exh. E.)
Lucky and CR argue in opposition that they provided a sufficient response on August 21, 2020, which stated,
As a result of G & R’s conduct in the present lawsuit, RESPONDING PARTY incurred and is claiming as damages approximately $87,068.00 in legal fees. Such fees were paid on behalf of and to defend RESPONDING PARTY and each of the other Plaintiffs in this action. There was no express allocation of costs between the entities because it was a joint defense. In addition, RESPONDING PARTY also incurred $80,000 in settlement costs.
(Opposition at p. 5.) Thus the import of the responses is that Lucky paid the fees identified on behalf of the parties for their joint defense in the underlying litigation. G&R in reply argues that this means that Lucky is the only party with damages, since absent some loan or allocation agreement among the parties, there is no reason for them to claim the legal fees that Lucky paid as damages. (Reply at p. 2.) This might very well be the import of the responses. But if G&R wishes to conduct discovery as to the existence of any apportionment or allocation agreement among the parties, it may do so. It is not necessary for the court to order a further response where the responses already make clear that Lucky paid the legal fees. The motions are accordingly DENIED as to the special interrogatories.
G&R also moves to compel further responses to Requests for Production No. 48, 49, and 53, which sought documents “reflecting the identity of your employees from 2014 to present,” documents “reflecting any bank accounts maintained by your company from 2014 to present,” and all documents “reflecting or evidencing that you maintained a separate bank account from Plaintiffs James A. Key, Buddy Corporation,” and CR or Lucky, depending on the responding party. (Separate Statement.) Through various iterations of responses and supplemental responses, Lucky and CR objected on grounds of overbreadth and privacy, but their final responses stated that “[a]ll responsive and non-privileged documents in Plaintiff’s possession, custody or control will be produced.” (Separate Statement.) In its motions, G&R seeks further production of payroll records and unredacted bank and credit records to assess Plaintiffs’ allegations that G&R should have secured the dismissal of defendants in the underlying litigation whose inclusion was based on allegations of an alter-ego relationship.
Lucky and CR object that the motion is untimely, since the last iteration of responses were served on May 27, 2020, its production took place on June 15, 2020, and the deadline for filing a motion ran on July 28, 2020. (Opposition at p. 4.) But G&R in reply presents an email dated July 24, 2020, in which counsel for Lucky and CR stated “we will extend out to the end of August (August 30) to get these disputes resolved.” (Johnson Decl. Exh. M.) Accordingly, the court finds that the motions are timely.
Lucky and CR concede that the alter ego allegations are at issue, but argue that they have produced responsive documents, such as employee rosters and bank statements, albeit with redactions for account numbers, balances, and transaction histories, which they claim are private. (Opposition at p. 5.) Lucky and CR argue that the documents produced evidence the existence of separate bank accounts, and that documents evidencing actual transaction histories is unnecessary to this litigation. (Opposition at p. 6.)
The court agrees with Lucky and CR on this point. They have complied with call of the requests, which asked for documents reflecting the identity of their employees and the existence and separateness of their bank accounts. To claim that Lucky and CR have failed to comply with the requests by not offering payroll records or account transaction histories is to interpret the requests in an overbroad fashion. Documents “reflecting the identity of employees” for a specified period could refer to an employee roster, or it could apply to every document in each employee’s personnel file or to which they ever ascribed their name. G&R has not made a showing of good cause as to a request so broadly framed. If G&R wishes to obtain Lucky and C&R’s payroll records “and other objective documentation of plaintiffs’ employees,” they can make requests specifying what they mean.
The same analysis applies to the bank account requests. G&R did not request account balances or transaction histories with related entities, but documents “reflecting any bank accounts maintained by your company from 2014 to present,” and “reflecting or evidencing that you maintained a separate bank account from Plaintiffs James A. Key, Buddy Corporation.” Lucky and CR accordingly produced, by G&R’s own characterization, “redacted records showing separate bank accounts.” (Reply at p. 3.) Although G&R now moves for an order compelling production of more detailed information, like balances, account numbers, and transaction histories, there is no request presented that would compel this information. Once more, if G&R wants this information, it should say so in its requests.
The motions are therefore properly DENIED as to the requests for production. However, in the interest of furthering judicial economy and preventing the filing of similar motions in the future, the court will address Lucky and CR’s privacy arguments as to this information, assuming proper requests are served in the future.
“In determining whether disclosure is required [against a privacy objection], the court must indulge in a ‘careful balancing’ of the right of a civil litigant to discover relevant facts, on the one hand, and the right of the third parties to maintain reasonable privacy regarding their sensitive personal affairs, on the other. The court must consider the purpose of the information sought, the effect that disclosure will have on the affected persons and parties, the nature of the objections urged by the party resisting disclosure and availability of alternative, less intrusive means for obtaining the requested information. Based on an application of these factors, the more sensitive the nature of the personal information that is sought to be discovered, the more substantial the showing of the need for the discovery that will be required before disclosure will be permitted.” (Hooser v. Superior Court (2000) 84 Cal.App.4th 997, 1004, internal citations omitted.)
“The corporate right to privacy is a lesser right than that held by human beings and is not considered a fundamental right.” (SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 756.) And while a person has a limited privacy interest in financial records (See International Federation of Professional & Technical Engineers, Local 21, AFL-CIO v. Superior Court (2007) 42 Cal.4th 319, 330), this interest is subject to the balncing test described above.
Here, CR and Lucky concede that alter-ego and joint-employer allegations in the underlying litigation are at issue, since they allege G&R failed to dismiss the claims against them despite the inadequacy of those claims. (Opposition at p. 5.) As this is a legal malpractice case, the plaintiffs, CR and Lucky, bear the burden of showing that adequate representation would have obtained a favorable result, i.e. that a good attorney would have shown that there was no merit to the joint employer or alter ego allegations. (See Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 837 [discussing necessity of “trial-within-a-trial” to prove malpractice allegations].) Thus G&R may obtain discovery as to all matters which would ordinarily be discoverable to prove the existence of a joint-employer or alter ego relationship. These factors are
the commingling of funds and assets of the two entities, identical equitable ownership in the two entities, use of the same offices and employees, disregard of corporate formalities, identical directors and officers, and use of one as a mere shell or conduit for the affairs of the other.
(Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1108–1109.) And in assessing the existence of a joint-employer relationship, courts tend to examine
whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.
(Turman v. Superior Court of Orange County (2017) 17 Cal.App.5th 969, 987.)
In light of the above standards, G&R may properly seek documents conducive to the evaluation of these factors, and their interest in doing so may properly override Lucky and CR’s privacy interest in their own financial records.
The motions are accordingly DENIED.
Case Number: 19STCV29576 Hearing Date: October 29, 2020 Dept: 61
Plaintiffs Lucky’s Two Way Radios, Inc. and Communications Relay LLC’s Motion to Strike or Tax Costs is DENIED.
Plaintiff to provide notice.
MOTION TO TAX COSTS
“Any notice of motion to strike or to tax costs must be served and filed 15 days after service of the cost memorandum. If the cost memorandum was served by mail, the period is extended as provided in Code of Civil Procedure section 1013. If the cost memorandum was served electronically, the period is extended as provided in Code of Civil Procedure section 1010.6(a)(4).” (California Rules of Court Rule 3.1700, subd. (b)(1).)
“Code of Civil Procedure section 1032, subdivision (b) , guarantees prevailing parties in civil litigation awards of the costs expended in the litigation: ‘Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.’” (Williams v. Chino Valley Independent Fire Dist. (“Williams”) (2015) 61 Cal.4th 97, 100.).
“If the items on a verified cost bill appear proper charges, they are prima facie evidence that the costs, expenses and services therein listed were necessarily incurred.” (Rappenecker v. Sea-Land Service, Inc. (1979) 93 Cal.App.3d 256, 266.) Although individual cost items are ordinarily challenged by a motion to tax costs, no cost-item is effectively put in issue by “mere statements” claiming them to be unreasonable. (Ibid.) However, where “it cannot be determined from the face of the cost bill whether the items are proper,” “the mere filing of a motion to tax costs may be a ‘proper objection’ to an item.” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131, 132.)
Plaintiffs contend that the costs sought in G&R memorandum are inappropriate because they were all incurred in litigating all of Plaintiffs’ claims, not merely in litigating the claims brought by the dismissed plaintiffs. (Motion at pp. 6–7.)
Courts have previously rejected this argument. In Andersen v. Pacific Bell (1988) 204 Cal.App.3d 277, the court reversed a trial court’s denial of a defendant’s memorandum of costs where the defendant had prevailed against several plaintiffs, who were then dismissed, but not against plaintiffs who remained. (Id. at p. 286.) Where the trial court had reasoned that the remaining plaintiffs might be entitled to recover their own costs if they later prevailed, the appellate court stated that the defendant’s “right as prevailing party to recover its own costs from the dismissed plaintiffs is not dependent on any hypothetical, future right the remaining plaintiffs might have to recover their different costs.” (Id. at p. 287; see also Fields v. Napa Mill Co. (1958) 164 Cal.App.2d 442, 449–50 [holding that defendant who prevailed against some but not all plaintiffs was entitled to recover costs from those plaintiffs as though they had brought separate actions].)
The motion is therefore DENIED.
Case Number: 19STCV29576 Hearing Date: July 29, 2020 Dept: 61
Plaintiff James Kay’s Motion to Quash Subpoena or for Protective Order is GRANTED as to the first, second, and eighth categories of documents in the subpoena, except as to the billing invoices identified in Kay’s further supplemental response to Special Interrogatory No. 51. The motion is DENIED as to categories three through seven.
MOTION TO QUASH DEPOSITION SUBPOENA
“If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court's own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.” (Code Civ. Proc. § 1987.1, subd. (a).) A party may bring a motion under this section. (Code Civ. Proc. § 1987.1, subd. (b)(1).)
This motion concerns a subpoena issued by Defendant G&R to third-party Bradley & Gmelich, LLP, which seeks various categories of documents related to the underlying litigation. (Motion Exh. 1.) Categories one and two seek documents and communications exchanged between Kay and Bradley & Gmelich, while categories three through seven ask for communications between Bradley & Gmelich and other entities. The eighth category seeks billing invoices related to the underlying litigation. (Motion Exh. 1.) Bradley & Gmelich’s connection to this case is as independent counsel for Plaintiffs in the underlying action. (Motion at p. 3.)
Kay contends that the subpoena on its face seeks privileged communications, and furthermore is duplicative of requests for production that have already been sent to Plaintiffs. (Motion at p. 3.) Kay contends that Plaintiffs have already responded to these requests by presenting redacted billing invoices, and that G&R’s efforts to claim similar documents can only result in similarly burdensome redacting work. (Motion at p. 3.)
G&R responds that Kay failed to meet and confer before filing this motion as required under Code of Civil Procedure § 2025.420. (Opposition at p. 9.) It also argues that Kay has put its attorney-client communications with Bradley & Gmelich at issue by claiming the attorney fees incurred from that firm as damages resulting from G&R’s misconduct. (Opposition Exh. B at pp. 3–4.)
The court first disagrees with G&R’s argument as to a failure to meet and confer. G&R points to the wrong statute — Code of Civil Procedure § 2025.420 — rather than the statute under which this motion is brought, Code of Civil Procedure § 1987.1, which contains no meet-and-confer requirement.
The court also disagrees with Kay’s contention that its own responses to discovery alleviate the usefulness of the subpoena at issue, as a subpoena directed to another party with respect to the same categories of documents may yield documents not in Kay’s possession. (Opposition at p. 12.)
The court agrees with G&R’s argument that Kay may not contend that privilege or privacy protects attorney-client invoices from Bradley & Gmelich. The privilege applies to billing invoices incurred during active and ongoing litigation, and after the subject litigation concludes, it may apply to invoices that contain confidential communications regarding legal consultation. (See Los Angeles County Bd. Of Supervisors v. Superior Court (2016) 2 Cal.5th 282, 297.) Thus the invoices sought here may be privileged if the descriptions of the billing items contain such communications.
However, Kay may not claim the privilege as to invoices for fees that he seeks to recover as damages. The privilege is meant to be a shield against disclosure, not a sword to be tactically asserted when trying to obtain affirmative relief. (People ex rel. Herrera v. Stender (2012) 212 Cal.App.4th 614, 646-647.) To prevent the misuse of the privilege, courts will deem a party to have impliedly waived the privilege (1) when a “plaintiff has placed in issue a communication which goes to the heart of the claim in controversy,” and (2) when allowing that communication to remain undisclosed would be fundamentally unfair to the other party because “disclosure is essential for a fair adjudication of the action.” (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 604.) Here, Kay has identified in response to discovery several billing invoices from Bradley & Gmelich that he is claiming as damages in this case. (Opposition Exh. B at p. 4.) In grounding a request for relief upon these communications, Kay has placed them at issue. And it would be fundamentally unfair to G&R to allow these invoices to serve as a basis for relief and simultaneously shield the substance of the invoices from further inquiry. Thus the motion is DENIED as to the invoices identified in Kay’s further supplemental response to Special Interrogatory No. 51.
G&R reaches too far, however, when it claims that the privilege has been waived as to all communications between Kay and Bradley & Gmelich. (Opposition at pp. 15–16.) G&R argues that the privilege has been waived in its entirety because the Complaint alleges G&R committed malpractice by failing to disclose the existence of a conflict and advising Kay to obtain independent counsel, thus the communications are relevant to determine whether Kay received this same advice (or failed to receive it) from another source. (Opposition at pp. 15–16.) But G&R acknowledges authority that states the privilege-waiver doctrine is “limited in its application to the one situation in which a client has placed in issue the decisions, conclusions, and mental state of the attorney who will be called as a witness to prove such matters.” (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 605.) There is no indication that Kay intends to utilize any privileged communications with Bradley & Gmelich in this way.
The Motion to Quash is therefore GRANTED as to the first, second, and eighth categories of documents in the subpoena, except as to the billing invoices identified in Kay’s further supplemental response to Special Interrogatory No. 51. The motion is DENIED as to categories three through seven.
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