2013-00148154-CU-MC

John Chiang vs. Kemper Corporation

Nature of Proceeding: Motion for Protective Order

Filed By: Belezzuoli, Julie A.

Plaintiffs John Chiang and the Office of the State Controller’s Motion for Protective
Order (1) staying discovery, including depositions, until the Court rules on plaintiffs’
anticipated demurrer to cross-complaint and (2) limiting the scope of all subsequent
discovery is DENIED as follows.

Plaintiffs filed the present action to enforce defendant insurer’s duty under California’s
Unclaimed Property Law (“UPL”) (Code Civ. Proc. §1500 et seq.) to permit the former’s
examination of the latter’s records pursuant to Code of Civil Procedure §1572(a)(1).
According to the moving papers, the only issues raised by the present complaint are:
(1) whether the Controller has “reason to believe” defendant insurer “is a holder who
has failed to report property that should have been reported” under §1571(a); and (2)
whether defendant insurer can withhold information during the Controller’s lawful audit
based on the former’s assertions about the nature of the property it is holding.

Plaintiffs contend that defendant’s First Amended Cross-Complaint (“1ACC”) for
Declaratory and Injunctive Relief raises many of the same claims that this Court
recently held (in a similar action by plaintiffs against a different insurer) were “not yet
ripe for judicial review” but despite knowledge of this ruling, defendant here has
propounded “extensive discovery requests,” many of which are “irrelevant to the
limited issues raised” in the present enforcement action. Consequently, plaintiffs
request this Court protect them from the burden of responding to this irrelevant
discovery particularly since the demurrer to the 1ACC which is about to be filed will
likely “significantly narrow the issues in this action.” Specifically, plaintiffs seek a
protective order (1) staying discovery and quashing defendant’s notices for the
depositions of Richard Chivaro, Jeff Brownfield, and plaintiffs’ person most
knowledgeable (“PMK”) until after plaintiffs’ anticipated demurrer to the 1ACC is ruled
on; and (2) limiting the scope of subsequent discovery to (a) the issues raised by
plaintiffs’ audit enforcement action and (b) any causes of action in the 1ACC which
survive demurrer.

The opposition argues that plaintiffs are entitled to neither a discovery stay nor a
protective order for several reasons. First, the law does not provide for a stay on
discovery while a demurrer is pending and especially where the demurrer is to a mere
cross-complaint and defendant seeks to conduct discovery relating to the complaint.
Defendant insists its written discovery requests all relate to allegations in plaintiffs’
complaint and are permissible under the broad standard for discovery. Likewise,
defendant maintains it may under the Code of Civil Procedure notice plaintiffs’
depositions upon being served with the complaint. Second, the motion fails to
demonstrate factually how or why any particular written discovery request propounded
by defendant is premature, irrelevant, unduly burdensome, harassing or oppressive
even if the anticipated demurrer to the 1ACC is sustained in whole or part.
Additionally, defendant contends that plaintiffs’ request to limit discovery to the “narrow
issues” raised by this audit enforcement action conflicts with the well established broad
standards of relevance and “reasonably calculated to lead to the discovery of
admissible evidence.” (Code Civ. Proc. §2017.010.) Defendant adds that the Court
recently denied a similar motion for protective order/stay in a similar action and even
suggests that monetary sanctions are therefore appropriate but the opposition papers
appear to specify neither the amount requested nor the fees actually incurred in
connection with the present motion.

In their reply, plaintiffs argue inter alia that they are entitled to a protective order to
prevent oppression, harassment, undue burden and unnecessary expense involved in
responding to defendant’s discovery. Plaintiffs insist that the claims asserted in the
1ACC are “not ripe for judicial review” inasmuch as the present action merely seeks to
determine if the Controller has a reasonable belief that defendant insurer “is a holder
who has failed to report property that should have been reported” under Code of Civil
Procedure §1571(a). Plaintiffs also contend that this case is distinguishable from the
other one where the protective order was denied because the discovery at issue here
is significantly more broad and voluminous than in the other case, thereby justifying a
different outcome here.

At the outset, the Court must agree with defendant that there is no authority which
categorically precludes discovery while a demurrer is pending and thus, the mere fact
that plaintiffs’ anticipated demurrer to the 1ACC may significantly narrow the issues in
this case does not compel the imposition of a blanket stay on discovery here. A
defendant who challenges a pleading by filing a demurrer must still respond to
discovery even if the demurrer is ultimately dispositive. (Budget Finance Plan v.
Superior Court (1973) 34 Cal.App.3d 794, 797, Mattco Forge, Inc. v. Arthur Young &
Co. (1990) 223 Cal.App.3d 1429, 1436, and Union Mutual Life Ins. Co. v. Sup. Ct.
(1978) 80 Cal.App.3d 1, 12.)

Moreover, there can be no legitimate dispute that defendant is entitled under Code of
Civil Procedure §2016.010 et seq. to now pursue discovery relating to the allegations
in the complaint and plaintiffs’ moving papers have failed to persuade this Court that all
of the discovery propounded by defendant is improper as a matter of law. Indeed, a
cursory review of the discovery requests reveals that defendant is seeking inter alia
facts, documents and admissions relating to specific allegations in the complaint. (See,
e.g., Spec. Rogs., Nos. 1-9, 15, 18; Req. For Prod., Nos. 14-21, 30; Req. For Adm.,
Nos. 6-7; Not. of PMK Depo., Topic Nos. 1, 3-5 and Doc. Req. Nos. 14-21, 30.) At a
minimum, these requests appear on their face to be entirely proper under the
established broad standards for discovery and thus, the Court finds insufficient
justification for imposing a stay on all discovery in this action as sought by plaintiffs.

In addition, while it may be true that some of defendant’s written discovery requests to
plaintiffs may be somewhat overly broad or otherwise push the limits of permissible
discovery, the present motion fails to demonstrate that responding to the discovery
requests at this time will actually cause any undue burden, harassment, oppression
and/or expense since the sole declaration filed in support of this motion sets forth no
specific facts which tend to establish any of these grounds. As such, this Court is unable to find any “good cause” which warrants a protective order obviating the need
for plaintiffs to respond now to the written discovery requests.

Similarly, while there is some authority which might justify quashing or limiting at this
point some of defendant’s notices for depositions of plaintiffs’ witnesses (see, e.g.,
Nagle v. Superior Court (1994) 28 Cal.App.4th 1465, 1467-1469 [top government
official]; Liberty Mutual Ins. Co. v. Superior Court (1992) 10 Cal. App. 4th 1282, 1289
[high ranking corporate official]), the present motion makes no such argument
specifically related to the depositions noticed by defendant. In particular, the Court
notes that Mr. Chivaro, identified in the moving papers as the Controller’s chief legal
counsel, verified the complaint in this action and thus, he may certainly be deposed as
to his personal knowledge of its contents. Likewise, plaintiffs have failed to explain
how permitting the noticed depositions to proceed in due course will lead to plaintiffs
suffering any genuine undue burden, oppression and/or significant unnecessary
expense inasmuch as the moving declaration describes no specific facts to support a
finding of “good cause” justifying a protective order precluding or otherwise limiting at
this time the noticed depositions.

Finally, the Court must decline plaintiffs’ rather vague invitation here to limit the scope
of subsequent discovery to those issues raised by plaintiffs’ audit enforcement action
and those causes of action in the 1ACC which survive demurrer since that demurrer
has not even been filed, much less ruled upon. Instead, these matters can be
addressed by appropriate motion as the need arises and after the parties have
completed the requisite meet-and-confer process.

For all these reasons, the motion for protective order must be and hereby is denied.

The Court declines to impose monetary sanctions against plaintiffs because
defendant’s opposition papers fail to specify the amount sought and the fees actually
incurred and also because the present motion was substantially justified under the
circumstances, even though it has been denied.

This minute order is effective immediately. No formal order or other notice is required.
(Code Civ. Proc. §1019.5; CRC Rule 3.1312.)

Item 17 2013-00148154-CU-MC

John Chiang vs. Kemper Corporation

Nature of Proceeding: Motion to Compel Response to Discovery

Filed By: Thompson, Carol Lynn

*** If oral argument is requested, the parties must at the time oral argument is
requested notify the clerk and opposing counsel of the specific discovery
requests that will be addressed at the hearing. Counsel are also reminded that
pursuant to local court rules, only limited oral argument is permitted on law and
motion matters. ***
Moving counsel is admonished because the notice of motion does not provide notice
of the Court’s tentative ruling system, as required by Local Rule 1.06. Moving counsel
is directed to contact opposing counsel and advise him/her of Local Rule 1.06 and the
Court’s tentative ruling procedure and the manner to request a hearing. If moving
counsel is unable to contact opposing counsel prior to hearing, moving counsel
is ordered to appear at the hearing in person or by telephone.

The Court notes that defendant paid only one $60 filing fee in connection with this
motion, although it seeks at least four different orders (i.e., responses to form
interrogatories, responses to special interrogatories, responses to requests for
production and responses to requests for admissions). A separate filing fee is required
for each. (Gov. Code §70617(f).) No later than 11/22/2013, defendant shall make
payment of an additional $180 to the Court Clerk.

In September 2013, defendant served on plaintiffs form and special interrogatories,
requests for production of documents and requests for admissions. Plaintiffs’
response to each of these discovery requests was identical:

“Plaintiffs incorporate by reference the General Objections and the Objections
to the Definitions and Instructions as though stated here in full. Plaintiffs further
object that it is overly burdensome and harassing for the Controller to respond
to discovery until the Court has had an opportunity to significantly narrow the
issues and limit the scope of discovery to only those issues which are relevant
and ripe for adjudication. Moreover, given the significant narrowing of the
issues that is likely to take place, it does not make sense under the
circumstances here, and is extremely inefficient, burdensome and harassing, for
the Controller to conduct discovery piecemeal, or to respond to partial requests,
which may or may not be relevant to issues that will actually be in dispute after
the demurrer. See Motion for Protective Order.”

In short, defendant contends that plaintiffs’ objections lack merit and fail to justify their
complete refusal to respond to any of the discovery requests at issue here.

In opposition to the present motion, plaintiffs make essentially the same arguments
they set forth in their motion for protective order staying discovery, including
depositions, and also limiting the scope of discovery. More specifically, plaintiffs
assert that the motion to compel should be denied and all discovery should be stayed
until their anticipated demurrer to defendant’s cross-complaint is heard because
“defendant’s cross-claims are not ripe for judicial review,” “a brief stay…will not cause
any hardship,” the discovery at issue here is distinguishable from the discovery in
another similar case, and defendant failed to disclose plaintiffs’ offer to postpone their
anticipated motion for preliminary injunction until after the demurrer and discovery
issues are resolved, constituting a failure to meet-and-confer in good faith which
independently warrants denial of this motion to compel.

At the outset, the Court notes that it has issued a tentative ruling denying plaintiffs’
motion for protective order in its entirety and thus, plaintiffs’ reliance on the arguments
made in connection therewith are equally unpersuasive here. In sum, there is no
authority which categorically precludes defendant from conducting discovery while a
demurrer to its cross-complaint is pending and thus, that the anticipated demurrer may
narrow the issues in this case does not justify the imposition of a stay on all discovery
in this case. To the contrary, there is authority permitting discovery even while a
demurrer is pending, and even if the demurrer is ultimately dispositive. This is
particularly true since defendant is entitled under Code of Civil Procedure §2016.010
et seq. to pursue now discovery relating and plaintiffs’ opposition papers here (and
their papers in connection with the motion for protective order) fail to demonstrate that
any of the discovery propounded by defendant is improper as a matter of law. Indeed,
a number of the discovery requests by their own terms seek facts, documents and
admissions relating to specific allegations in plaintiffs’ complaint. (See, e.g., Spec.
Rogs., Nos. 1-9, 15, 18; Req. For Prod., Nos. 14-21, 30; Req. For Adm., Nos. 6-7; Not.
of PMK Depo., Topic Nos. 1, 3-5 and Doc. Req. Nos. 14-21, 30.) These requests on
their face appear to be entirely proper under the established broad standards for
discovery and thus, the Court cannot agree that a stay on all discovery in this action is
justifiable.

In addition, while it may be true that some of defendant’s written discovery requests to
plaintiffs may be somewhat overly broad or otherwise push the limits of permissible
discovery, plaintiffs’ opposition to the present motion completely fails to demonstrate
that any of the objections asserted in response to defendant’s written discovery is
substantially justified and obviate plaintiff’s obligation to respond consistent with the
statutory provisions governing discovery. In particular, plaintiffs filed no response at all
to defendant’s separate statement of discovery requests pursuant to CRC Rule 3.1345
and the sole declaration in opposition to the present motion set forth no specific facts
which could support a finding that responding to defendant’s discovery requests at this
time will actually cause plaintiffs to suffer any undue burden, harassment, oppression
and/or expense. Because the burden falls on the party asserting objections to
discovery and because plaintiffs have failed to present any facts which might
theoretically justify their refusal to respond to defendant’s discovery, the motion to
compel is effectively unopposed and must be granted.

Plaintiffs shall provide verified further responses, without objections, to defendant’s
form and special interrogatories, requests for production of documents and requests
for admissions no later than 12/20/2013. (The parties are free to extend this deadline
by mutual agreement memorialized in writing.)

To the extent the motion also seeks to compel the actual production of documents in
response to the requests for production, the motion is premature. A motion to compel
compliance pursuant to Code of Civil Procedure §2031.320(a) is appropriate only
where a responding party has agreed to produce documents but then fails to permit
inspection consistent with that response. Here, the motion indicates that plaintiffs
have not yet agreed to produce any responsive documents and therefore, they cannot
yet be compelled to comply with their written responses.

Under the circumstances here, the Court was inclined to award defendant monetary
sanctions but both the moving and the reply papers fail to specify either the amount
sought or the fees and costs actually incurred.

This minute order is effective immediately. No formal order or other notice is required.
(Code Civ. Proc. §1019.5; CRC Rule 3.1312.)