2013-00145388-CU-BC

County of Sacramento vs. Valley Healthcare Systems Inc

Nature of Proceeding:    Motion to Compel Discovery, Deemed Admissions

Filed By:  Ullrich, Gabriel

***  Judge Cadei discloses that his wife, Toni J. Moore, is the Executive Director
of the First 5 Sacramento Commission, an entity which is part of the County of
Sacramento.  First 5 California and 58 First 5 County Commissions were created
by statewide voter initiative passed in 1998.  First 5 is separately funded out of
special tobacco tax proceeds and is directed to support programs for children.
As such the Commission is not dependent on the general funds of Sacramento
County for its operations.  The Board of Supervisors of Sacramento County
does review and approve its yearly budgets and long-term plans.  ***

On motion of the court, this discovery matter is continued to January 3, 2014, at
09:00AM in this department.  If the new date is inconvenient for any party, then
counsel shall meet and confer and inform the Department 54 clerk of their request for
a subsequent date.

This is an action for contractual indemnity.  Plaintiff County of Sacramento (“County”)
is suing VHSI, a contractual provider of medical services.  In the underlying case, a
surviving family member sued the County and others on various theories for the death
of her son, who allegedly was incarcerated in the Sacramento County Main Jail and
under the care of a VHSI nurse at the time of death.  (See Moving Memo., Exh. 1
[Compl. herein].)  The underlying action settled for $1.45 million, and the County
allegedly incurred $497,000 in attorney’s fees.  (Compl., ¶¶ 15-16.)  The County now
seeks indemnity from VHSI for these sums.  The County’s position is based on the
following provisions in the County/VHSI contract:

“Contractor shall indemnify, defend and hold harmless County, its Board
of Supervisors, Officers, Directors, agents, employees and volunteers
from and against any and all claims, demands, actions, losses, liabilities,
damages and costs, including reasonable attorneys’ fees, arising out of
or resulting from the performance of this Agreement, regardless of
whether caused in part by a party indemnified hereunder.”

(Compl., ¶ 6.)  VHSI was not a party to the underlying action, and the County allegedly
never tendered any claim to VHSI based on the contract.  The County’s Complaint in
the instant case contains two causes of action against VHSI for breach of contract
(express indemnity) and declaratory relief.  VHSI disputes the reasonableness of the
underlying settlement.

VHSI propounded the subject form interrogatories, special interrogatories, document
requests and request for admissions on July 29, 2013.  (Moving Memo., Exh. 2.)  After
receiving extensions to respond, the County served unverified responses and
objections that VHSI now contests.

Having reviewed the moving and opposing papers, it is apparent to the court that
counsel must resume the meet-and-confer process in good faith before drawing upon
the court’s limited resources.  Counsel for the parties are thus ordered to resume the
meet-and-confer process in order to resolve or substantially narrow their discovery
dispute.  Among other things, VHSI’s counsel must explore all areas of potential
agreement raised in Plaintiff County counsel’s 11/13/13 meet-and-confer letter.

In resuming the meet-and-confer process, counsel should be guided by the following
observations:

(1) Whether or not VHSI has already produced documents responsive to the County’s
document requests, VHSI must serve a written response to each request that complies
with CCP §§ 2031.210-2031.240.

(2) By virtue of the allegations in the Complaint, the County appears to have tendered
the issues of (a) the nexus between performance under the parties’ medical services
agreement and the amount for which the County settled the underlying case, (see Mel
Clayton Ford v. Ford Motor Co. (2002) 104 Cal.App.4th 46, 54 [“When the indemnitee
settles without trial, . . . the indemnitee must show the liability is covered by the
contract, that liability existed, and the extent thereof”] [citations and brackets omitted];
cf. Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 791); (b) the
reasonableness and good faith of the settlement in the underlying case, (Culley &
Assoc. v. Superior Court (1992) 10 Cal.App.4th 1484, 1497; Collins Dev. Co. v. D.J.
Plastering (2000) 81 Cal.App.4th 771, 776); and (c) the reasonable and good-faith
incurrence of defense costs in the underlying case.  (CC § 2778(3); Crawford v.
Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 553.)  When counsel resume their
meet-and-confer efforts, they shall closely consider the extent to which VHSI’s
discovery in relation to these issues requires the disclosure of attorney-client
communications and, therefore, triggers an implied waiver.  (See Chicago Title Ins. Co.
v. Superior Court (1985) 174 Cal.App.3d 1142, 1153.)  If, for example, the County
contends that it relied on the advice of counsel in deciding to settle the underlying
case, then there would appear to be merit to VHSI’s argument that the substance of
that advice must be disclosed.  Counsel shall also discuss whether nondisclosure of
attorney work product responsive to the discovery in question would unfairly prejudice
VHSI.  (CCP § 2018.030.)  It would seem to be unfair to allow the County to seek
reimbursement of its defense costs without allowing VHSI to explore the reasons that
County counsel defended the underlying case in the manner it did.

Counsel shall meet and confer in person no later than December 13, 2013.  After
thoroughly meeting and conferring in an attempt to resolve each and every issue that
the motion currently encompasses, and no later than December 26, 2013, counsel
shall file a joint statement indicating which discovery issues have been resolved, and
which issues (if any) remain outstanding.  For each outstanding issue, counsel shall
set forth in the joint statement their respective positions, citing the relevant facts and
authorities.  Boilerplate or cut-and-paste arguments are strongly discouraged.

Counsel are reminded that this court does not have the resources to tend to and
resolve every discovery issue that could have and should have been resolved
informally. (See Young v. Rosenthal (1989) 212 Cal.App.3d 96, 117 [“The very
purpose of an order to meet and confer is to obtain a negotiated resolution of a
discovery dispute without having to expend judicial time to sort out which party is
correct and what relief should be granted. What the court seeks is an agreement by
the parties which resolves the dispute”].)

Counsel are also reminded that this court has adopted, as part of its local rules, the
California Attorney Guidelines of Civility and Professionalism, promulgated by the
State Bar of California.  In particular, the court refers counsel to Sections 4, 6, 9 and
10. The court is bound to impose monetary sanctions against any party who
unsuccessfully makes or opposes a motion to compel further discovery responses,
absent a substantial justification or other reason making the imposition of sanctions
unjust.  The court may also impose sanctions for the failure to meet and confer in good
faith or otherwise misuse the discovery process. (See Cal. Code Civ. Proc. §§
2023.010-2023.030.)

The court will consider each side’s meet-and-confer efforts in deciding whether to
impose sanctions.