Susan Withington v. Douglas T. Kruse, 16CVP-0273

Hearing: Motion for Sanctions

Date: March 29, 2018

On October 11, 2016, Susan Withington (“Plaintiff”) filed a personal injury action against Douglas T. Kruse and Jack Creek Cellars, Inc. (“Defendants”). The complaint alleges that, on October 20, 2014, Mr. Kruse was driving a “heavy duty work truck” owned by his employer, Jack Creek Cellars, when he rear-ended Plaintiff’s 2009 Honda Fit. (Compl., p. 4.) The accident occurred on State Route 46 West in Paso Robles, California. (Ibid.) Plaintiff alleges to have suffered severe physical injuries to her cervical spine and brain, and seeks medical specials, lost wages, and other compensatory damages. (Ibid.)

On February 27, 2017, the Court, the Honorable Donald G. Umhofer (Ret.) presiding, ordered the Parties to complete mediation by July 10, 2017. The Parties scheduled mediation with Scott Radovich, Esq., for June 15, 2017. On June 14, 2017, Defendants cancelled the mediation, stating they needed to conduct independent medical examinations of Plaintiff prior to mediation. Plaintiff agreed, and orthopedic and neuropsychological examinations took place on August 10, 2017 and December 6, 2017, respectively.

The Parties rescheduled mediation for January 23, 2018 with Mr. Radovich, and obtained Court approval to continue the mediation cut-off date. Plaintiff claims that, while the Parties appeared at mediation, no insurance representative, or any individual with settlement authority, was physically present for Defendants in violation of Local Rule 9.07. (Mtn., p. 2, ll. 21-23.) Plaintiff further claims Defendants’ counsel knew its insurance representative was unable to attend the mediation, but “chose to proceed with mediation anyway.” (Mtn., p. 2, ll. 24-26.) .) The case did not resolve at mediation. Plaintiff seeks $4,275.00 in attorneys’ fees and $963.75 in costs, “which could have been avoided,” in preparing for the mediation. (Mtn., p. 3, ll. 1-4.)

In response, Defendants’ counsel declares he had no intent to circumvent this Court’s local rules concerning mediation. (Henke Decl., ¶ 8.) Defendants’ counsel states that the assigned claims handler, Margie Rhodes, planned on attending the mediation in person, but that “an unexpected medical issue arose on January 19, 2018, which prevented her from attending in person or by phone.” (Henke Decl., ¶ 4.) Defendants’ counsel discussed and obtained authority from Ms. Rhodes prior to her medical issue, and thereafter discussed authority and strategy with another claims handler, Jeff Gibson, who attended the mediation telephonically. (Ibid.) Defendants’ counsel claims Ms. Rhodes’s absence was “not going to change the authority that would be available to settle the case at mediation.” (Henke Decl., ¶ 5.) Defendants’ counsel also states that, the day before mediation and after evaluating authority with both Ms. Rhodes and Mr. Gibson, he received a “brand new neuropsychological examination report” and a life care planner report with a total cost of $945,419.85. (Henke Decl., ¶ 6.) Defendants’ counsel concedes the mediation ended “rather quickly,” as Plaintiff’s demand was $3.3 million, including $835,000 in lost
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wages, with no indication the Parties would be in the same universe in terms of a settlement figure without further discovery. (Ibid.)

San Luis Obispo Superior Court Local Rule 9.07(b) requires the Parties and their counsel to personally attend mediation, with a representative of each insurer who has authority to settle the case for any amount up to the policy limits. Plaintiff claims there was no Defendant representative with authority to settle the case at mediation. However, Defendant’s counsel had authority to resolve this case up to a certain figure, based on counsel’s evaluation of the case with its insurance adjuster. That the Parties could not agree on a settlement figure was not caused by the adjuster’s personal absence. Moreover, a substitute claims adjuster was available and consulted with via telephone during the negotiations. This telephonic substitution did not impact the authority Defendants had going into the mediation, particularly as Defendants received additional information on Plaintiff’s claims the day before the mediation in the form of neuropsychological and life care planner reports. While the Court is sympathetic to Plaintiff’s apparent disappointment that the case did not resolve at mediation, there is minimal evidence before the Court that the personal attendance of Defendants’ claims adjuster would have changed the mediation’s outcome.

Plaintiff’s motion is denied.