Case Name: Robert J. Membreno v. Freeport McMoran Resource Partners, et al.

Case No.: 16CV293410

(1) Motion to Compel Taking of Depositions and Production of Documents and for Monetary and Other Sanctions
(2) Motion to Compel Responses to Request for Production of Documents, Set Two, Compel Responses to Special Interrogatories, Set Two, Waiver of Objections, Taking of Depositions, and for Monetary and Other Sanctions

Factual and Procedural Background

This is a breach of contract action brought by plaintiff Robert J. Membreno, Trustee of the Sai Trust (“Plaintiff”) against defendants Freeport McMoran Resource Partners (“Freeport”); Santa Rosa Geothermal Company, L.P. (“Santa Rosa Geothermal”); Sonoma Geothermal Partners, L.P.; Calpine Sonoma, Inc.; Calpine Geysers Company, L.P.; Geysers Power I Company; Geysers Power Company, LLC; and Calpine Corporation (“Calpine”) (collectively “Defendants”). Calpine is the successor-in-interest to Freeport and the remaining defendants are all subsidiaries of Calpine.

As alleged in the Second Amended Complaint (“SAC”), in May 1987, SAI Geothermal, Inc. (“SAI”) and Freeport entered into an agreement for purchase and sale of assets (“Agreement for Purchase”). (SAC, ¶ 15.) Under the Agreement for Purchase, after a geothermal plant known as the West Ford Flat was constructed, Freeport would pay SAI a Net Profits Interest (“NPI”) representing the right to receive a monthly payment of 6 percent of the plant’s Net Income for the month. (Ibid.) The Agreement for Purchase also provided that shortly after the end of each fiscal year, Freeport would provide Plaintiff with a statement certified by its chief financial officer (“CFO”) showing in reasonable detail the calculation of that year’s NPI. (Id. at ¶ 19.)

SAI later assigned its rights to receive 4.55 percent of the NPI to Plaintiff and Freeport assigned its interest in the Agreement for Purchase to Santa Rosa Geothermal. (Id. at ¶¶ 16, 20-21.)

Around 2001, a dispute arose between Plaintiff and some of the Defendants regarding Defendants’ calculation of various line items in the NPI statements. (SAC, ¶¶ 33-35.) Around 2009, Plaintiff sued some of the Defendants for breach of the Agreement for Purchase based on their purported miscalculation of the monthly NPI payments. (Id. at ¶ 37.) The parties to the litigation entered into a settlement agreement (“2009 Settlement Agreement”), which provided that all rights, duties and obligations under the Agreement for Purchase would be maintained and the parties’ business relationship would continue until the Agreement for Purchase expired. (Id. at ¶¶ 38-39.)

Around 2015, Calpine issued a news release announcing that a wildfire had affected some of its geothermal power generation facilities. (Id. at ¶ 51.) Notwithstanding that fact, it stated it was continuing to produce renewable energy and anticipated its insurance would cover much of the repair and replacement costs as well as its revenue losses. (Ibid.) Plaintiff inquired about Defendants’ plans for the West Ford Flat plant, which had been partly damaged by the wildfire, and was informed they were planning to retire it in three to five years. (Id. at ¶ 54.) Defendants further represented they would construct a pipeline that would divert steam from the West Ford Flat steam fields to a neighboring plant in Calistoga. (Id. at ¶ 54.) Despite the fact Plaintiff had not consented to or been given notice of these plans, Defendants also indicated that – with the decommissioning of the West Ford Flat plant – they were no longer obligated to tender monthly NPI payments to Plaintiff under the Agreement for Purchase. (Ibid.) Moreover, even though Defendants had publicly represented that insurance proceeds would cover the repair costs and revenue losses for the damaged plants, their subsequent NPI statements to Plaintiff did not reflect application of these proceeds as income for the West Ford Flat plant. (Id. at ¶ 61.)

I. The Motion to Compel Taking of Depositions and Production of Documents and for Monetary and Other Sanctions is DENIED.

A. Discovery dispute.

On June 20, 2018, Plaintiff served a deposition notice for Gary Tipton (“Tipton”), Kevin Talkington (“Talkington”), and the person most knowledgeable (“PMK”) as to various categories related to Defendants’ revenues at the West Ford Flat plant and steam fields (“First PMK”) for depositions to occur on July 18 – 20, 2018.

The depositions did not go forward for the stated reason that Tipton was unavailable.

On July 27, 2018, Plaintiff served an amended notice of taking deposition and request for production of documents for Tipton, Talkington, and the First PMK to occur on August 20 – 22, 2018. Also on July 27, 2018, Plaintiff served a notice of taking deposition and request for production of documents for Michael Puccioni (“Puccioni”) and a PMK as to various categories related to Defendants’ assignment of rights under the Agreement for Purchase and regarding a 2009 settlement agreement between the parties (“Second PMK”) to occur on August 23 – 24, 2018.

On August 17, 2018, Plaintiff’s counsel and Defendants agreed that the depositions noticed for the week of August 20, 2018 would not go forward as noticed but counsel would re-group on Monday, August 20, 2018 to work out production of the requested documents and a new deposition schedule.

As of August 24, 2018, Defendants’ counsel has not contacted Plaintiff’s counsel, has not provided dates for the noticed depositions, and has not produced documents requested in the deposition notices.

B. Merits.

“If, after service of a deposition notice, a party to the action or an officer, director, managing agent, or employee of a party, or a person designated by an organization that is a party under Section 2025.230, without having served a valid objection under Section 2025.410, fails to appear for examination, or to proceed with it, or to produce for inspection any document, electronically stored information, or tangible thing described in the deposition notice, the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice.” (Code Civ. Proc., §2025.450, subd. (a).)

“The motion shall be accompanied by a meet and confer declaration under Section 2016.040, or, when the deponent fails to attend the deposition and produce the documents, electronically stored information, or things described in the deposition notice, by a declaration stating that the petitioner has contacted the deponent to inquire about the nonappearance.” (Code Civ. Proc., §2025.450, subd. (b)(2).)

“A meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” (Code Civ. Proc., §2016.040.) A reasonable and good faith attempt at informal resolution requires that the parties present the merits of their respective positions with candor, specificity, and support. (Townsend v. Super. Ct. (1998) 61 Cal.App.4th 1431, 1435, 1439.) The level of effort at informal resolution which satisfies the “reasonable and good faith attempt” standard depends upon the circumstances of the case. (Obregon v. Super. Ct. (1998) 67 Cal.App.4th 424, 431.)

In opposition, defendant Calpine argues, preliminarily, that Plaintiff did not adequately meet and confer in advance of the filing of this motion. Defendant Calpine provides more detailed evidence of the events leading up to this motion and explains that wildfires in Lake County on July 27 resulted in mandatory evacuations, including Tipton, and numerous closures of Calpine facilities. These events prompted defendant Calpine to seek an ex-parte application to continue the trial to allow additional time to respond to discovery. The court granted a continuance of the trial from October 9, 2018 to January 14, 2018, but kept the discovery cut-off date at September 10, 2018.

Counsel agreed the depositions would not proceed the week of August 20, 2018 and the parties would discuss re-scheduling the depositions on August 20, 2018. Plaintiff filed this motion on August 24, 2018 based on the assertion that defendants’ counsel did not contact Plaintiff’s counsel to re-schedule the depositions.

Defendant Calpine submits the parties have since confirmed depositions for Talkington, Puccioni, Tipton, and the First PMK for the weeks of September 24 and October 1. As to the Second PMK, defendants reached out to Plaintiff’s counsel on September 24, 2018 to meet and confer and offer the information sought through less intrusive means, but have not received any response from Plaintiff’s counsel.

In view of the evidentiary record, the court tends to agree with defendant Calpine that Plaintiff did not adequately meet and confer in advance of the filing of this motion. The parties agreed to discuss rescheduling the depositions on August 20, 2018. While it appears that did not occur as planned, meet and confer efforts require efforts from both sides. The mere fact that defendants’ counsel did not contact Plaintiff’s counsel on August 20, 2018 or the three subsequent days does not justify the filing of this motion without some effort by Plaintiff’s counsel to contact defendant’s counsel to inquire further.

Consequently, Plaintiff’s Motion to Compel Taking of Depositions and Production of Documents and for Monetary and Other Sanctions is DENIED. Moreover, the motion to compel depositions is apparently moot with regard to deponents Talkington, Puccioni, Tipton, and the First PMK. In opposition, defendant Calpine requests the court award monetary sanctions against Plaintiff. Although the court found Plaintiff did not adequately meet and confer in advance of the filing of this motion, the court is also of the opinion that defendant is not entirely without fault and this motion could have been avoided if defendant’s counsel more promptly communicated with Plaintiff’s counsel about rescheduling the depositions. In light of these circumstances, defendant Calpine’s request for monetary sanctions is DENIED.

II. The Motion to Compel Responses to Request for Production of Documents, Set Two, Compel Responses to Special Interrogatories, Set Two, Waiver of Objections, Taking of Depositions, and for Monetary and Other Sanctions is DENIED.

A. Discovery dispute – RPD and SI.

On July 31, 2018, Plaintiff served defendant Calpine, by mail, with a request for production of documents (“RPD”), set two. On September 4, 2018, defendant’s counsel requested an extension of time to respond to the RPD until September 7, 2018. Plaintiff’s counsel responded by stating, in relevant part, “If documents are received by my office by next Monday, September 10th then OK.” Plaintiff did not receive defendant Calpine’s response to the RPD on September 10, 11, or 12, 2018.

On August 3, 2018, Plaintiff served defendant Calpine, by mail, with special interrogatories (“SI”), set two. Defendant Calpine’s response was due September 7, 2018. Plaintiff did not receive defendant Calpine’s response to the SI on September 10, 11, or 12, 2018.

On September 11, 2018, Plaintiff’s counsel emailed defendant’s counsel stating responses to the RPD have not been received and requesting defendant Calpine “immediately serve[] verified responses with documents and without objections.” On the same date, Plaintiff’s counsel emailed defendant’s counsel stating responses to SI have not been received and requesting defendant Calpine “immediately serve[] verified responses and without objections.”

On September 12, 2018, Plaintiff’s counsel filed the instant motion.

B. Merits.

“If a party to whom a demand for inspection, copying, testing, or sampling is directed fails to serve a timely response to it … The party to whom the demand for inspection, copying, testing, or sampling is directed waives any objection to the demand, including one based on privilege or on the protection for work product… The party making the demand may move for an order compelling response to the demand.” (Code Civ. Proc., §2031.300, subd. (a) – (b).)

“If a party to whom interrogatories are directed fails to serve a timely response … The party to whom the interrogatories are directed waives … any objection to the interrogatories, including one based on privilege or on the protection for work product… The party propounding the interrogatories may move for an order compelling response to the interrogatories.” (Code Civ. Proc., §2030.290, subd. (a) – (b).)

In opposition, defendant Calpine submits the declaration of its counsel who states that timely responses to the RPD and SI were served on September 7, 2018. The day after Plaintiff’s counsel emailed to state that he had not received responses, defendant Calpine’s counsel responded stating responses to the RPD and SI were timely served.

In reply, Plaintiff’s counsel contends the response to RPD were nevertheless untimely because defendant Calpine did not satisfy the terms of the extension which conditioned an extension on the actual receipt of responses by September 10, 2018. Plaintiff’s counsel did not grant an extension for service of responses by a date certain.

“The party demanding inspection, copying, testing, or sampling and the responding party may agree to extend the date for the inspection, copying, testing, or sampling or the time for service of a response to a set of demands, or to particular items or categories of items in a set, to a date or dates beyond those provided in Sections 2031.030, 2031.210, 2031.260, and 2031.280. [¶] This agreement may be informal, but it shall be confirmed in a writing that specifies the extended date for inspection, copying, testing, or sampling, or for the service of a response.” (Code Civ. Proc., §2031.270, subd. (a) – (b); emphasis added.)

The court is of the opinion that section 2031.270 is written to avoid the specific problem encountered here. Rather than specifying a date for receipt, the Code calls for a date or time for service. The court will not penalize defendant Calpine in this situation for serving responses by mail on September 7, 2018. The court finds defendant Calpine timely served responses to RPD. With regard to the SI, defendant Calpine also timely served responses on September 7, 2018. Objections asserted by defendant Calpine are not waived.

Accordingly, Plaintiff’s Motion to Compel Responses to Request for Production of Documents, Set Two, Compel Responses to Special Interrogatories, Set Two, [and] Waiver of Objections is DENIED.

C. Discovery dispute – Depositions.

On August 23, 2018, Plaintiff served defendant Calpine with a notice of taking deposition of W. Thaddeus Miller (“Miller”) and notice of taking deposition of Zamir Rauf (“Rauf”), both for September 10, 2018.

On September 4, 2018, Plaintiff’s counsel inquired regarding these depositions so travel and other arrangements could be made.

On September 5, 2018, defendants served formal objections to the deposition notices.

D. Merits.

“If, after service of a deposition notice, a party to the action or an officer, director, managing agent, or employee of a party, or a person designated by an organization that is a party under Section 2025.230, without having served a valid objection under Section 2025.410, fails to appear for examination, or to proceed with it, or to produce for inspection any document, electronically stored information, or tangible thing described in the deposition notice, the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice.” (Code Civ. Proc., §2025.450, subd. (a).)

“The motion shall be accompanied by a meet and confer declaration under Section 2016.040, or, when the deponent fails to attend the deposition and produce the documents, electronically stored information, or things described in the deposition notice, by a declaration stating that the petitioner has contacted the deponent to inquire about the nonappearance.” (Code Civ. Proc., §2025.450, subd. (b)(2).)

As both parties recognize, this court issued an order on March 27, 2018 in which the court denied Plaintiff’s motion to compel deposition attendance as to Miller and Rauf on the basis that Plaintiff had not met his burden for deposing corporate officers under Liberty Mut. Ins. Co. v. Superior Court (1992) 10 Cal.App.4th 1282 (Liberty). Specifically, although the court found Plaintiff sufficiently demonstrated Rauf and Miller may have unique or superior knowledge regarding discoverable matters, “Plaintiff did not meet his burden of showing he has exhausted less intrusive means of discovery before noticing the depositions” of Miller and Rauf.

In reply, Plaintiff contends he has exhausted less intrusive means, including requests for production of documents, interrogatories, depositions of other witnesses, but does not describe with adequate detail how those discovery efforts have failed to produce the information Plaintiff seeks to obtain from deposing Rauf and Miller. Plaintiff acknowledges receipt of “thousands of pages of documents” and acknowledges depositions which have not yet occurred prior to the filing of his reply, but Plaintiff provides no explanation as to why those documents/ depositions do not address matters that Rauf and Miller would be able to address. The court is still of the opinion that Plaintiff has not met his burden of showing less intrusive means of discovery have been unfruitful.

Accordingly, Plaintiff’s Motion to Compel the Taking of Depositions of Rauf and Miller is DENIED.

With regard to sanctions, both parties’ requests for monetary sanctions are DENIED.