Song v. Lee
Filed 1/8/13 Song v. Lee CA2/4
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TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule
8.1115(a), prohibits courts and parties from citing or relying on opinions not
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IN THE COURT OF APPEAL OF
THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
MI RYONG SONG,
Plaintiff and Appellant,
v.
SUK K. LEE,
Defendant and Respondent.
B235336
(Los Angeles County
Super. Ct. No.
BC418479)
APPEAL
from a judgment of the Superior Court of
County, Mark V. Mooney, Judge. Reversed and remanded.
Horvitz
& Levy, David M. Axelrad and Jason R. Litt, Parker Shumaker Mills
and David B. Parker for Plaintiff and Appellant.
Yoka
& Smith and Christopher E. Faenza, Murchison & Cumming and
Edmund G. Farrell III for Defendant and Respondent.
Mi Ryong (Mimi) Song
judgment in her action against Suk K. Lee for breach of a
excluding a second version of the settlement agreement found by her attorneys
after the discovery cutoff date and shortly before trial. Her claim is that interlineations on this
version would establish that respondent Suk K. Lee breached the confidentiality
agreement by providing a copy of his version of the agreement to George Oh for
use in a will contest.
We
agree that the trial court erred because there was no violation of a discovery
order and the trial court did not find that the late production of the second
version was willful or that appellant had engaged in repeated and egregious
discovery abuses. We also conclude
exclusion of the document was not appropriate as an exercise of the court’s
inherent authority to ensure a fair trial or to avoid delay. Because the error is material, we reverse and
remand for a new trial.
FACTUAL AND PROCEDURAL SUMMARY
This
case arises in the context of complicated and contentious relationships between
two groups of immigrants from South Korea, resulting in numerous lawsuits, including the present action. To understand the context for the present
action, it is necessary to summarize some of the other litigation involving
these groups.
A. Background
Mimi
Song came to the United
States at age 20
with her family in 1977. She took a job
in a Korean supermarket owned by James Oh.
James had sponsored the immigration of Mimi and her sister, Marie Song,
and other members of their family. At
that time, James was married to Nancy
James and Nancy had two children, George and Linda.
1979 and were divorced in 1981. He asked
Mimi and Marie to start a new supermarket business with him. In 1981 they opened their first
supermarket. At time of trial, Mimi Song
was president and CEO of Super Center Concepts, a chain of 38 warehouse
supermarket stores which grew from the original store opened with James and
Marie.
In
1984, Mimi married James in Las
Vegas. When they returned to southern California, they
realized that the marriage was not right because James had been her uncle. They immediately filed to end the
marriage. In late 1984, Mimi married
another man in Korea. They divorced in 1986 or
1987. After the divorce, Mimi began
living with James.
name="_ftnref4" title="">[4] They lived together until
James died in March 2008. According to
Mimi’s testimony, George and Linda had been estranged from their father since
the early 1990’s. James had prepared a
will in September 2000 that left his entire estate to Mimi. The will stated that George and Linda were
intentionally omitted.
B. Jennifer Lee v. James Oh
James
and Mimi had a long-term and good relationship with respondent Suk K. Lee and
his family.
title="">[5] In January 2001 that relationship
changed when James was served with a lawsuit brought against him by Suk K.
Lee’s daughter, Jennifer Lee, alleging that James had sexually assaulted
her. (LASC Case No. BC243600, “Jennifer
Lee actionâ€.) Mimi met with Suk K. Lee
in an attempt to resolve the matter. He
demanded $7 to $10 million.
Eventually,
Jennifer Lee dismissed the action and three mediation sessions were held before
a superior court judge. A settlement was
reached encompassing both her claims against James, and other claims made by
her father against James regarding stock in Super Center Concepts, fraudulent
conveyances, and tax matters. Mimi did
not attend any of the mediation sessions.
Exhibit 1 in the present case is a copy of the settlement agreement in
the Jennifer Lee action, produced by George as we explain below. The confidentiality provision of that
agreement was particularly important to Mimi because the lawsuit raised
shameful matters. The settlement
agreement was signed by Jennifer Lee, Suk K. Lee, her mother, Young Ja Lee,
James Oh, Marie Song, and Mimi Song, individually and on behalf of the
supermarket business, Super Center Concepts.
C. Will Contest
Mimi
Song initiated a probate of the will leaving her James’s estate. George and Linda contested the will. They detailed their father’s history of
sexual entanglements with Mimi and Marie Song, and his third wife, Christine
Lee.
title="">[6] They said that James and
Marie had been prosecuted for tax crimes, and had pled guilty to attempting to
bribe an Internal Revenue Service agent.
James was placed on a supervised release and several years of
parole. George and Linda claimed that
Mimi had coerced James into executing the will leaving his entire estate to her
by “(1) threatening to report him to the appropriate government agencies for
alleged tax fraud, allegedly violating his parole, and allegedly committing
perjury to a Federal District Court Judge, (2) threatening to expose his
alleged relationships with underage girls to the media and the police, and (3)
convincing him that [the will] was necessary to ensure that Christine [Lee, his
third wife] would not get his assets upon his death, and that she (Mimi) would
take care of George and Linda and ensure that all of Decedent’s assets would
pass to George and Linda instead of Christine.â€
George
and Linda alleged that James lacked testamentary capacity. They also alleged Mimi Song had exercised
undue influence over James, having occupied a position of trust and confidence
with him, and having had a longstanding sexual and confidential relationship
with James which made him emotionally dependent on her. They contended that James was particularly
vulnerable because he was in ill health, realized that he had been swindled out
of millions of dollars by Janet Kim and Christine Lee, and was going through a
difficult divorce from Christine, as well as the fraud lawsuit against his wife
Christine and mother-in-law, Janet Kim.
During
discovery in the will contest, George produced Exhibit 1, a copy of the
confidential 2001 settlement of the Jennifer Lee action against James.
D. Present Breach of Contract Action
In
2009, Mimi Song sued respondent Suk K. Lee for breach of contract, alleging
that he had breached the confidentiality provision of the settlement agreement
in Jennifer Lee’s action against James by providing a copy of the settlement
agreement (Exhibit 1) to George for use in the will contest. Respondent’s position is that George obtained
Exhibit 1 from his father’s files.
Paragraph
4 of Exhibit 1 is the confidentiality provision on which appellant’s action is
based. It states: “The parties to this Agreement shall keep
both the fact that this Agreement was made and the terms of this Agreement
strictly confidential, and shall not reveal that the parties have entered into
this or any other agreement, except for such disclosures as may be required by
law or compelled by legal process. In
the event of a breach of this provision the aggrieved party or parties may
avail themselves of every remedy available under law.†Exhibit 1 also provides for an award of
attorney fees to the prevailing party in the event of any litigation “in
connection with or concerning the subject matter of this Agreement or to
enforce any term hereof . . . .â€
E. Discovery of Exhibit 4, another version of the
settlement agreement
Nine
days before the discovery cutoff date in the
filed amended answers to appellant’s first set of interrogatories. Appellant asserts that, for the first time,
the amended responses on behalf of respondent contended that the confidential
settlement agreement was an illusory promise and not enforceable, that
appellant did not understand either the confidentiality or attorney fee provisions
when she signed the agreement, and that respondent did not review the agreement
prior to signing it. Respondent also
asserted that he did not receive, and that appellant did not give, any
consideration in relation to the settlement agreement.
Appellant
took the position that this response raised entirely new defenses at a point
when there was insufficient time left to conduct discovery about them. Trial counsel for appellant, Steven
Goldsobel, notified counsel for respondent that he undertook further
investigation. At his request, Bryan
Sheldon, whose firm acted as counsel for the Oh parties in defense of the
Jennifer Lee action, examined his files from that case. He discovered Exhibit 4, another version of
the settlement agreement in that case, and gave it to counsel for
appellant. Sheldon had represented
appellant at the outset of the present breach of contract action, and had filed
the complaint on her behalf before substituting out. Exhibit 4 was promptly disclosed to counsel
for respondent.
Exhibit
4 became crucial to appellant’s claim that respondent had breached the
confidentiality provision of the settlement agreement. As we explain, handwritten interlineations
appearing on Exhibit 1 and Exhibit 4 were slightly different in form, although
the substance was the same. Appellant
argued that this was because the interlineations on the copy possessed by
George (Exhibit 1) were the same as on the copy given to respondent at the
settlement but were different from the copy retained by Sheldon on behalf of
the Oh parties (Exhibit 4). This would
contradict respondent’s position that George obtained his copy of the
settlement agreement, Exhibit 1, from his father’s files because the copy given
to the Oh side was Exhibit 4, which was slightly different. That circumstance, unless explained,
supported the allegation that respondent gave George the agreement, thus
breaching the confidentiality provision.
Respondent
brought a motion in limine to exclude Exhibit 4 because of its late
disclosure. Appellant vigorously opposed
the motion. At an Evidence Code section
402 preliminary fact hearing, Sheldon testified about the settlement of the
Jennifer Lee action, the preparation and signing of the settlement agreement,
and his discovery of Exhibit 4 in his files upon being asked by present counsel
for appellant to investigate. He
testified that he represented James in the suit brought by Jennifer Lee. Before the mediation began, Jennifer was
asserting that James had sexually molested her over a span of years. Respondent, her father, also was claiming
there had been fraudulent transfers of Super Center Concept stock and tax
improprieties. He intended to bring a
whistleblower tax action against James and others. Three mediation sessions were held in the
courtroom of Judge Otero in August and September of 2001. Sheldon testified that he believed that all
but one person attended each of the sessions.
These included Suk Lee, Jennifer Lee, their attorney Greg Smith and a
Korean-speaking associate from Smith’s firm.
On the other side the attendees were James, Sheldon, his partner, John
Lim, and George Lim. Mimi Song did not
attend any of the mediation sessions and was not present when the settlement
agreement was prepared.
Sheldon
was shown Exhibit 4, the second version of the settlement agreement. He explained that on the last day of the
mediation, September 14, 2001, a resolution was reached. He prepared the settlement agreement on his
laptop, and gave a floppy disc to the court clerk who printed out two copies so
that each side could take one after the agreement was signed. When the clerk went home, after normal court
hours, an additional change was suggested and agreed to. He believed the suggestion was by the defense
side (James). To accommodate that
change, Sheldon handwrote the addition on page 4, paragraph 8. This is the additional language on each of
the copies printed out earlier by the court clerk. After Sheldon made the notations, everyone
present at the mediation signed off on each copy of the agreement. Sheldon took one copy to his office and Smith
took a second copy to his office. There
were two versions.
Marie
Song, Mimi Song, and Jennifer Lee’s mother, who were intended to be bound by
the agreement, were not present and therefore could not sign the agreement in
the courtroom. Sheldon said that on the
following Monday, he and Smith exchanged the signature pages of the settlement
agreements by facsimile with the signatures on them.
Sheldon
testified that the handwritten interlineations on page 4 of the settlement
agreements are somewhat different on the two versions. On Exhibit 4, the end of the handwritten
first line ends with the word “agreement.â€
On Exhibit 1, the version produced by George, the end of the first line
ends with the word “James†and then the word “Oh†appears on the following
line. Sheldon explained: “So although I think the agreements
. . . say exactly the same thing, the words are a little bit
different. And also, the signature pages
are different on these two different versions, particularly the one that has
one or two, that have fax headers on it.
Because you can see that there was some faxing back and forth, and
they’re slightly different.†Exhibit 4
has the fax information showing that Sheldon’s office had received a signature
page with the signature of Young Ja Lee.
On Exhibit 1 the signature line for Young Ja Lee was blank because she
was not present at the mediation and did not sign that day. Exhibit 1 shows that Smith received the
signatures of Marie Song, Mimi Song, and Mimi Song on behalf of Super Center
Concepts. Sheldon made two copies of the
settlement agreement. The question asked
at trial did not specify whether this was a reference to Exhibit 1 or 4, but we
assume it was Exhibit 4 which was retained by Sheldon. There was an original, one copy in his file,
and another copy that went to his client.
He did not specify whether this copy was given to James, rather than
someone aligned with him. Sheldon
explained that the amount of the settlement agreement was based in part on the
claims respondent had made regarding Super Center stock and fraudulent
transfers, and that all settlement proceeds went to Jennifer Lee rather than
respondent because she had a claim for personal injury, and there were no tax
implications from the payment.
Counsel
for appellant in the present action, Goldsobel, contacted Sheldon’s partner,
John Lim on June 20, 2011. A copy of
Exhibit 1 was e-mailed to their law office with an inquiry about whether this
was the agreement in their file in the Jennifer Lee case. Since Lim was out of town, Sheldon had the
files retrieved from storage and looked for the settlement agreement. This was the first he had heard of interest
in the two versions of the settlement.
He compared the versions and found that Exhibit 1 was not the version in
his file. Instead the version in his
file was Exhibit 4. Although he had been
involved in this case when it was filed, his firm substituted out before any
discovery had been propounded by respondent.
At
the conclusion of Sheldon’s testimony at the Section 402 hearing, the trial
court said it had no problem with Sheldon testifying about the settlement
conference, the participants, and the settlement that was reached. But the court said it did have a problem with
Exhibit 4 because “this is something that has been in possession of plaintiffs
since the beginning of trial, even though they’ve had a change of counsel. And just before trial, you do a little more
investigation. That doesn’t change the
fact that plaintiff was in at least constructive possession of these things
from day one. It is a discovery
violation.†The court also indicated
that the location of the originals of the settlement agreements was unknown and
that there was no information about how many copies were made and to whom they
were given. The court said: “I think that on top of the discovery
violation, which, you know, had this all been produced earlier, maybe we would
have figured it out, but now it’s a big [Evidence Code section] 352 issue. And I don’t think that it’s appropriate to
start talking about these two different versions when plaintiff had it all
along.†The court stated that when
current trial counsel for appellant came into the case, they inherited “the
lawsuit and everything that goes with it,†including “what is in the custody of
plaintiff’s [appellant’s] counsel.†The
court said appellant’s trial counsel should have looked into this issue before
trial. The court said that the amendment
to Suk Lee’s discovery response “speculating†about how George obtained Exhibit
1 did not change anything because counsel for appellant had an obligation to
conduct research in trial preparation.
The court repeated that this constituted a discovery violation. Appellant was not allowed to produce Exhibit
4 at trial.
During
trial, the court reiterated that Sheldon would not be allowed to testify about
Exhibit 4. Sheldon testified about his
representation of the Oh parties at the mediation and settlement of the Jennifer
Lee lawsuit. He did not testify about
the two versions of the settlement agreement.
Uk Jin Kim, who had known respondent and James for many years, testified
that he arranged a meeting between appellant and respondent in an effort to
resolve any differences between them in April 2009. At that meeting, respondent said that he had
given a copy of the confidential settlement in the Jennifer Lee case to George
to read overnight. According to Kim,
respondent said that George might have kept a copy of the agreement, and
appeared upset. In his testimony at
trial, respondent denied providing George a copy of the confidential settlement
agreement. George also testified that he
did not receive a copy of the confidential settlement agreement from
respondent. He said Exhibit 1 was among
the documents in 60 to 70 boxes of records from his father which he produced in
discovery in the will contest.
The
jury reached a special verdict, finding that respondent did not give the
confidential settlement agreement to George and had not disclosed the terms and
substance of the agreement in violation of the confidentiality provision. Judgment in favor of respondent was
entered. Respondent was found to be the
prevailing party for the purposes of an award of attorney fees and costs. Appellant filed a timely appeal from the
judgment.
DISCUSSION
I
Appellant
argues that the exclusion of Exhibit 4 cannot be upheld as a discovery sanction
because she did not violate a court order, the trial court did not find that
the delay in producing the document was willful, nor did it find appellant
committed repeated and egregious discovery abuses. We agree.
Code
of Civil Procedure section 2023.030 is the applicable discovery sanctions
statute. Subdivision (c) provides: “The court may impose an evidence sanction by
an order prohibiting any party engaging in the misuse of the discovery process
from introducing designated matters in evidence.†Code of Civil Procedure section 2023.010 lists
examples of conduct amounting to misuses of the discovery process. These include failing to respond to an
authorized method of discovery or making an evasive response to discovery. (Code Civ. Proc., § 2023.010, subds. (d)
& (f).) “[A]bsent unusual
circumstances, such as repeated and egregious discovery abuses, two facts are
generally a prerequisite to the imposition of a nonmonetary sanction. There must be a failure to comply with a
court order and the failure must be willful.
(Biles v. Exxon Mobile Corp. (2004)
124 Cal.App.4th 1315, 1327.)†(
1559 (Lee).)
The
trial court has broad discretion when imposing a discovery sanction and its
order will not be reversed on appeal absent a manifest abuse of discretion that
exceeds the bounds of reason. (
175 Cal.App.4th at p. 1559.)
our case. The trial court declined to
impose an evidentiary sanction under Code of Civil Procedure section 12023.030,
subdivision (c) because it found that evidence supporting a claim came into the
parties’ possession shortly before trial and was turned over immediately to the
opposition. No court order had been
violated and there was no evidence that the parties had willfully failed to comply
with discovery requests. The Court of
Appeal affirmed, finding support for the court’s findings in the record and no
evidence of a willful failure to comply with discovery. (Ibid.)
Respondent
acknowledges that a finding of willful abuse of the discovery process is a
prerequisite to imposition of an evidentiary sanction. He argues appellant repeatedly and willfully
failed to provide discovery, citing Pate
v. Channel Lumber Co. (1997) 51 Cal.App.4th 1447 (Pate). Pate is distinguishable.
In
that case, in response to an initial request for production of maintenance
expense records, the defendant directed the plaintiffs and their counsel to a
shed where he pointed out five boxes which he claimed contained all the
responsive documents. After photocopying
719 documents, plaintiffs made two further written requests for production of
maintenance expense documents. Defendant
assured them that all had been produced.
After eight days of trial, the plaintiffs rested their case in
chief. The following day, the
defendant’s home office asset manager took the witness stand and said he had
with him a box of documents to establish the validity of the maintenance
charges to the plaintiffs. At a hearing
on the issue, the plaintiffs noted their three requests for production of such
documents, and provided copies of written assurances by the defense that all
relevant documents had been produced.
They represented that they had agreed to allow the defense to reopen
discovery in exchange for further written assurances that all written documents
had been produced. As a final
precaution, shortly before trial, counsel for plaintiffs tendered all 719
documents to the defense and asked whether any other relevant documents were in
existence. The defense assured them that
there were no other documents. (
The
defense in Pate claimed that the
documents brought to court by the manager were made available to plaintiffs in
the five boxes, but that plaintiffs failed to copy them. The trial court credited the plaintiff’s account
and found that defendant had “‘played fast’†with the discovery rules. Since trial was already in progress, the
court concluded that the only appropriate sanction was to preclude the
defendant from introducing any document not provided by plaintiffs before
trial. (Pate, supra, 51
Cal.App.4th at p. 1453.)
Respondent
claims that the facts here are “strikingly similar†to Pate. He cites a statement
by counsel for respondent at trial that he had sought discovery of Exhibit 4,
saying “We’ve asked not once, not twice, about 10 different times for documents
. . . .†Respondent
contends that once Exhibit 4 came to light, appellant used the same excuse used
in Pate; that respondent had the
necessary information to allow him to find it himself. This is a reference to the argument on the
admissibility of Exhibit 4. Counsel for
appellant contended that a month before the discovery cutoff date, his firm had
identified Sheldon’s firm, Lim, Roger and Kim, and John Lim as knowledgeable
about the settlement agreement, as well as the attorney representing the Lees
in the mediation. He said that
respondent did not conduct further discovery in light of this response.
Respondent
claims that like the plaintiffs in Pate,
he prepared for trial believing he possessed all relevant documents, but
learned after discovery closed that he did not.
He also contended that he was prejudiced by the late disclosure because
appellant’s entire breach of contract claim was based on the assertion that
respondent had provided George a copy of the settlement agreement.
Respondent
has not demonstrated an egregious pattern of discovery abuse of the magnitude
addressed in Pate,
discovery of the settlement agreement or that appellant continuously assured
him that all responsive documents had been produced. Respondent has not demonstrated that
appellant was aware of the existence of another version before it was
discovered in Sheldon’s files. She was
not present at the mediation when the two versions of the settlement agreement
were interlineated by Sheldon, although respondent was. Respondent also asserts that appellant should
have been alerted to the existence of the second version of the settlement
agreement by the formal discovery request he propounded seeking the settlement
agreement. We disagree. The discovery propounded by respondent in
itself was not sufficient to alert appellant to the existence of different
versions of the settlement agreement.
Respondent has not contradicted the evidence that the existence of
Exhibit 4 was a surprise to appellant and her present counsel.
Respondent
also recognizes that evidentiary sanctions generally require violation of a
court order, but contends that there are circumstances where a prior order is
not required. The cases allowing
evidentiary sanctions without a violation of a prior order were collected in
168 Cal.App.4th 1403.
In
Do It Urself Moving & Storage, Inc. v.
Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27 (
on plaintiffs’ promise to complete an audit and provide a written report. The audit and report were never
completed. The trial court found the
plaintiffs had willfully misused the discovery process and concluded that a
formal order would have been futile. The
Court of Appeal affirmed an order excluding any accounting evidence in support
of the complaint, finding plaintiffs repeatedly attempted to delay the trial
and withhold promised items of discovery.
(Id. at pp. 31–33,
35–36.) In Vallbona v. Springer (1996) 43 Cal.App.4th 1525 (
attempted to introduce documents they had not produced in discovery. The court found that they had willfully
misused the discovery process and granted evidence and issue sanctions. Following Do
It Urself, the Court of Appeal found a formal discovery order would have
been futile and affirmed. (
Respondent
argues that under this line of authority, the sanction order in this case was
warranted because a formal order would have been futile and because appellant
engaged in repeated and egregious willful abuses of the discovery process which
he does not describe. He contends appellant’s
failure to disclose the second settlement agreement before the discovery cutoff
date was willful because she either knew or should have known of the existence
of the second agreement. He cites
Sheldon’s testimony that one copy of the second settlement agreement was placed
in his file and another copy was given to appellant. He also cites the effort appellant expended
in producing over 36,000 documents in discovery, Sheldon’s role representing
appellant in the Jennifer Lee case and as the original attorney in this action,
and Sheldon’s possession of the second settlement agreement. Respondent asserts that the trial court found
that appellant possessed the second settlement agreement “‘all along.’†In the passage cited, the trial court
observed that plaintiff had been in possession of the second settlement
agreement “all along,†but then explained that this was because Sheldon had the
document.
Respondent
contends the trial court did not abuse its discretion and that the evidence
supports the trial court’s finding regarding possession of Exhibit 4. He notes that appellant was a party to the
agreement and claims she was present when it was signed. In support of the assertion that appellant
was present when the settlement agreement was signed, respondent cites the
first page of Exhibit 1, which recites that the agreement was entered into by
various parties, including appellant.
Both Sheldon and appellant testified that she was not present at the
mediation when the case was settled.
As
we have seen, the trial court ruled that Exhibit 4 had been in appellant’s
constructive possession because it was in Sheldon’s files in the Jennifer Lee
action. Sheldon had been appellant’s
counsel when this case was filed. But
this is not tantamount to a finding of willful concealment of the document
until shortly before the discovery period had closed. Respondent failed to demonstrate that
appellant engaged in a pattern of repeated egregious discovery abuses and
misleading conduct of the sort that was present in each of the cases in which
sanctions were upheld absent a prior discovery order. We conclude that the sanction imposed is not
justified under Code of Civil Procedure section 2033.030.
In
an apparent attempt to salvage the exclusion order in the absence of either a
prior court order or a finding of willful concealment, respondent argues that
discovery sanctions are not precluded just because appellant was apparently
unaware of the existence of Exhibit 4 during discovery. He contends that the trial court must ensure
the disclosure of documents of which the party should be aware.
In
support of this argument, respondent cites Thoren
v. Johnston & Washer (1972) 29 Cal.App.3d 270 (Thoren), a personal injury action brought by a carpenter against a
subcontractor. In the discovery phase of
the case, plaintiff identified only one person who arrived at the scene shortly
after the accident. At trial, he
proferred the testimony of another person who had arrived shortly after the
accident, and took photographs of the scene.
This person was a representative of the plaintiff’s union and was
responsible for referring the plaintiff to his trial counsel. The trial court found that plaintiff or his
counsel “‘knew or should have known’†the witness was familiar with the
accident scene, and that the failure to identify the witness was willful. It barred his testimony regarding the
accident scene, resulting in nonsuit for the defendants. The Court of Appeal in Thoren found substantial evidence supported the finding that the
answer to the interrogatory was willfully false. (Id.
at p. 275.) It explained that the
conduct was willful because counsel for plaintiff deliberately refrained from
finding out about the witness until the interrogatory was answered. (Id.
at p. 276.)
Respondent
argues this case is similar because Sheldon, the attorney who found the second
version of the settlement agreement, had been counsel for plaintiff and filed
this action on her behalf. He argues
that “Mr. Sheldon, similarly to the Thoren witness, was the driving
force behind Mr. Goldsobel, Appellant’s trial counsel, receiving Appellant’s
case; were it not for Mr. Sheldon filing the suit, Mr. Goldsobel would likely
not have tried this case. Thus, appellant
here should have known of Mr. Sheldon’s relevance to this case and, in turn,
the alternate settlement agreement’s existence.†This argument is based on speculation and
does not demonstrate that Thoren is
analogous. In this case, unlike
requisite finding of willful conduct on the part of appellant.
Respondent
also distinguishes Biles v. Exxon Mobile
Corp., supra, 124 Cal.App.4th 1315, in which evidentiary sanctions were reversed
for lack of a prior court order. The
Court of Appeal distinguished cases allowing the imposition of evidence
sanctions without a court order because, in the case before it, there had been
no finding that the failure to disclose the witness was willful. The Biles
court concluded that the rationale allowing an evidentiary sanction against
a party who repeatedly and willfully fails to provide certain evidence in
discovery “does not justify imposition of an evidence sanction based on the
mere failure to supplement a response promptly when no order compelling further
answers has been sought or entered.†(
that the case before us does not come within the circumstances justifying
evidentiary discovery sanctions absent a prior court order.
Citing
Do It Urself, supra, 7 Cal.App.4th 27, 33 and Vallbona,
supra, 43 Cal.App.4th 1525, 1545,
respondent contends it would have been futile to seek a court order. He concedes that these cases are
distinguishable because in each, the party seeking discovery knew the withheld
documents existed, but the courts concluded that a motion to compel would have
been futile. Here, respondent argues he
cannot be required to have sought a motion compelling appellant to produce a
document he had no idea existed. We note
that unlike appellant, respondent was present at the mediation which resulted
in the settlement agreement, including the session at which Sheldon made the
interlineations on Exhibits 1 and 4, and copies were provided to counsel for
the Lee and Oh participants. But on this
record, it appears that the existence of Exhibit 4 came as a surprise to
everyone, both appellant and respondent.
In such circumstances, no order compelling its production could be
obtained. This is precisely why it was
inappropriate to impose evidentiary sanctions on appellant absent a finding of
willful concealment or an egregious pattern of repeated discovery abuse.
Respondent
argues the trial court was not required to fashion a less drastic sanction if
it did not abuse its discretion in excluding Exhibit 4. He contends the question is not whether less
drastic sanctions could have been fashioned, but rather whether imposition of a
lesser sanction would have rewarded appellant for withholding the document. This argument presupposes that appellant willfully
withheld Exhibit 4, a finding not made by the trial court.
We
conclude the trial court abused its discretion in excluding Exhibit 4 as an
evidentiary sanction under Code of Civil Procedure section 2023.030 because
appellant did not violate a prior court order compelling disclosure of the
document. The circumstances under which
an evidentiary sanction has been approved even without a prior court order are
not present here. No finding of willful
concealment was made and respondent did not demonstrate that appellant had
engaged in repeated, egregious discovery abuse.
II
Respondent
invokes various aspects of the inherent powers of a trial court in an effort to
support the exclusion of Exhibit 4.
First,
he claims the exclusion order was a proper exercise of the court’s inherent
power to avoid unfair surprise to a party.
He relies on Peat, Marwick,
Mitchell & Co. v. Superior Court (1988) 200 Cal.App.3d 272 (
People of the State of California for providing a negligent audit for a thrift
and loan corporation placed in liquidation by the California Commissioner of
Corporations. Main Hurdman, the
accounting firm retained by the People as an expert witness on professional
negligence and other issues, engaged in conduct raising serious conflicts of
interest, including simultaneously negotiating a merger with Peat Marwick and
failing to ensure that Peat Marwick personnel were not privy to information
about the People’s case. The trial court
precluded Peat Marwick from introducing any evidence on the standard of care
and negligence. (Peat, Marwick, supra, 200
Cal.App.3d at pp. 280–281.) It found
that the ability of the People to prepare and present their case had been
seriously eroded and that the integrity of the judicial system had been harmed
because of the potential that confidential information had been
compromised. (Id. at pp. 282–283.) The
appellate court ruled the order was not a discovery sanction, but rather a
remedy for abuse of the litigation process and affirmed as an exercise of the
court’s inherent power. (
the trial court may act to prevent the taking of an unfair advantage and to preserve
the integrity of the judicial system. (
Respondent
also relies on Castaline v. City of Los
Angeles (1975) 47 Cal.App.3d 580 (Castaline),
a personal injury action against the city arising from a chain reaction
automobile collision caused by a street sweeper. In discovery, plaintiffs stated that they
were fully recovered from any injuries suffered in the accident. In reliance, defense counsel cancelled a
physical exam of the plaintiffs by a defense physician. At trial, one of the plaintiffs planned to
call a physician who examined her three days previously. The appellate court found merit in the
defense argument that it had been unfairly surprised by the plaintiff’s
physician witness. Under the
circumstances, the court concluded that the exclusion of the physician’s
testimony was within the court’s basic power to insure that all parties receive
a fair trial. (Id. at p. 592.)
Respondent
argues that the facts that supported this conclusion in Castaline also are present here.
He contends he served contention interrogatories on appellant seeking
the basis for her allegation that respondent breached the confidentiality
provision of the settlement agreement by providing a copy of it to George. In response, appellant said that George had
produced the settlement agreement in discovery in the will contest and
subsequently, at a meeting between appellant and Eugene Kim, it was confirmed
that George received his copy from respondent.
Respondent cites interrogatories served on appellant asking for all
documents supporting her claim that respondent gave George the confidential
settlement agreement. In response,
appellant listed “the Settlement Agreement,†documents and pleadings in the
will contest, and a declaration filed by Kim in another action. He contends appellant never indicated an
alternative settlement agreement existed or that it supported her cause of
action for breach of contract.
Respondent states that he “justifiably relied on Appellant’s answers in
preparing for trial†although he does not specify how he did so.
The
weakness in this argument is that there is no showing that appellant knew of
the existence of Exhibit 4 when her discovery responses were prepared. She identified the “Settlement Agreement†as
a document in support of her breach of contract cause of action. Respondent does not cite to a discovery
request asking appellant whether she knew of more than one version of the
settlement agreement. There is no
showing that appellant’s conduct in this case was so misleading and unfair that
the sanction was warranted. On this
record, the type of misconduct exhibited in Peat,
Marwick, supra, 200 Cal.App.3d
272 and Castaline,
demonstrated. Under these circumstances,
the exclusion order is not supported as an exercise of the trial court’s powers
to avoid unfairness.
The
parties dispute the application of Xebec
Development Partners, Inc. v. National Union Fire Ins. Co. (1993) 12
Cal.App.4th 501 (Xebec), overruled on
another ground in Essex Ins. Co. v. Five
Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1265, fn. 4. That case involved an action against an
insurer by an assignee of the insured’s rights under a directors and officers
indemnity policy after the insurer refused to defend the assignee on claims
brought by a third party. The trial
court excluded evidence of fees paid to an attorney by the assignee because the
assignee had asserted the attorney-client privilege as to those records during
discovery. The court concluded that it
would be unfair to allow the assignee to withdraw the claim of privilege once
trial had begun. (Xebec, supra,
12 Cal.App.4th at pp. 567–568.)
Respondent relies on language in Xebec
that the order excluding the billing materials was “well within the court’s
broad inherent powers to control the proceedings before it; the technical rules
of statutory discovery sanctions were inapplicable.†(Id.
at p. 569.)
was well aware of the existence of the pertinent documents, but nevertheless
resisted discovery of them by asserting a privilege, and then attempted to
withdraw that privilege claim in order to use the documents at trial. Here, no such inconsistent behavior by
appellant has been demonstrated.
Finally,
respondent invokes the interests of the courts in fairly and expeditiously
disposing of civil cases, and in efficiently using judicial resources. (Fuller
v. Superior Court (2001) 87 Cal.App.4th 299, 306.) He argues the trial court had the power to
exclude Exhibit 4 because use of the document would have caused unacceptable
delay to allow additional discovery. He
challenges appellant’s assertion in her opening brief that the parties to the
agreement could have been further deposed or questioned prior to trial after
disclosure of the second agreement.
Respondent asserts, without citation to the record, that depositions in
the case spanned two years, and therefore the necessary depositions could not
have been completed before trial. Even
if depositions were possible, respondent states that too little time remained
before trial to “allow respondent to integrate the new information into their
trial preparation†since there were only 18 days between the disclosure and the
trial date. He also contends he would
have been required to retain a handwriting expert to examine the second
settlement agreement, reach a conclusion, submit the expert to deposition, and
then integrate the conclusions into trial preparation. According to respondent, the case was filed
on July 24, 2009 and trial began on August 11, 2011. Respondent also cites the recent budget
cutbacks at the trial court to demonstrate the impact of the delay which would
result if appellant is allowed to use Exhibit 4 in support of her
case.
Appellant
asserts that any possible prejudice to respondent would have been mitigated by
“a deposition or two.†She also relies
on the fact that counsel for respondent had an opportunity to cross-examine
Sheldon about Exhibit 4 at the hearing under Evidence Code section 402. Based on these circumstances, she reasons
that “no court could reasonably conclude that admission of the evidence of
[Exhibit 4] would deprive [respondent] of his right to a fair trial.â€
The
interests of the courts in avoiding delay in the disposition of civil cases
must be balanced against the rights of the parties to produce relevant evidence
at trial in support of their positions.
We conclude that here, the trial court erred in excluding Exhibit 4
because the case could have been continued to allow respondent to conduct any
additional discovery necessitated by its disclosure.
We
observe that respondent does not rely here on Evidence Code section 352 in
arguing that Exhibit 4 was properly excluded because of the likelihood its
admission would cause delay. During the
colloquy about Exhibit 4, the trial court mentioned that it was “a big 352
issue†but did not make that the basis of its exclusion order and did not find
that the probability of delay or undue prejudice substantially outweighed the
probative value of the exhibit.
Appellant has made an adequate showing that exclusion of Exhibit 4 was
prejudicial to her claim that George got the confidential settlement agreement
he used in the will contest from respondent (Exhibit 1 version) rather than
from his father’s files (Exhibit 4 version).
Under these circumstances, appellant is entitled to a new trial. As in Xebec,
supra, 12 Cal.App.4th at p. 569, our
determination that the case must be remanded for new trial resolves the
unfairness issue. Respondent has had
access to Exhibit 4 since the first trial.
DISPOSITION
The
judgment is reversed. Appellant is to
have her costs on appeal.
EPSTEIN,
P. J.
We concur:
WILLHITE, J. MANELLA, J.
name="_ftn1" title=""> [1] Appellant refers to herself
as “Mimi†in her briefs and we adopt that designation. Where the same surname is shared by more than
one person discussed in this opinion, for ease of reading we often use the
first name. No disrespect is intended.
name="_ftn2" title=""> [2] Nancy’s Korean name is Young
Ock Hyun; she is referred to in the briefing as “Nancy.â€
