Wednesday, March 23, 2016

The Everfull California Sandbag

People ex rel GEICO v. Cruz, No. D067061 (D4d1 Feb. 17, 2016)

An Insurance Company brings brings a qui tam against alleging fraudulent insurance billing practices in auto accident claims in violation of the Insurance Fraud Prevention Act. Relatively early in the case, a Chiropractor defendant served a raft of requests for admission, including requests that the Carrier admit it didn
t suffer any damages. As is common in state court practice, the RFAs were accompanied by Form Interrogatory 17.1, which requires a responding party to state the facts and identify any evidence upon which any RFA response other than an unqualified admission is based. The Insurer’s first set of responses to the form rog simply claimed that discovery was ongoing and that it reserved a right to supplement. 

The Chiro moved to compel. In the interregnum between filing the motion and a decision, the Insurer supplemented its responses with some—albeit relatively general—information, reiterating that discovery was ongoing. The trial court granted the motion and awarded sanctions based on the inadequacy of the original responses. At the hearing, the Chiropractor also took issue with the Insurance Company’s supplemental responses on damages. The Insurer
’s, however, explained that the supplemental contained all relevant information that it could be located to that point, subject to being augmented by a damages expert. 

The Chiropractor subsequently moved for summary judgment based on the Insurer’s failure to identify or calculate its damages. During the lengthy window between the motion and the due date on the opposition, see Cal. Code Civ. Proc. § 437c(a), the Carrier again supplemented its responses, adding further detail, including some additional facts about alleged up-charging that formed the basis of its damages. 

The Chiropractor objected and filed a motion to have the Insurer bound to its first set of supplemental responses under § 2030.310(b). The trial court granted the motion, holding that the Insurer was bound to the prior responses and further that, in opposing the motion, it could not use any undisclosed information it knew of when it filed the supplemental responses or, for that matter, any other discovery derived from such information. Unsurprisingly perhaps, the Insurer’s opposition was full of information that was not presented in its original supplemental responses. The court granted the Chiropractor’s evidentiary objections, struck the evidence, and granted summary judgment. The Insurance Company appeals.

The Court of Appeal holds that it was error to bind the Insurer to its original responses. Under the plain text of
§ 2030.310(c)(1)–(3), a moving party seeking to bind a respondent to rog responses bears the burden of showing: 1. that it was substantially prejudiced by the failure to answer; 2. that the responding party failed to show substantial justification for the original answer; and 3. that the prejudice isn’t curable through a continuance for additional discovery or the use of the original responses for impeachment purposes.The court here holds that the first and third elements were not established. 

On the first element, the Chiropractor claimed that, in reliance on the Insurer
s representations that the responses were complete, he ceased the meet and confer process on the supplemental responses or moving to compel on them. But the court here does not find that prejudicial enough. Even had the Chiropractor gone that route, a successful discovery motion would have just resulted in further supplemental responses along the lines of what the Insurer ultimately served anyway.

On the third, the Chiropractor argued that although trial was still a ways off, failing to bind Insurer would permit it to weasel out of the rule that a summary judgment movant can rely on the non-moving party
s factual deficient interrogatory responses it meeting its initial burden. But the court here doesn’t agree. Without further elaboration, it just states that “rewarding” a non-moving party for sandbagging on interrogatory responses until after a summary judgment motion is filed “has no bearing on whether [the moving party] suffered incurable prejudice.” 

And because the motion to bind was erroneously granted, it was further error to reject the Insurer’s other evidence based on that ruling. 

The court goes on to find that the record, including the evidence rejected by the trial court, showed triable issues thus that summary judgment should have been denied.


I have to say, I don’t find this analysis very satisfying. As I pointed out back in 2014, the fact that California’s summary judgment rules put an affirmative burden on the moving party and require a lengthy window between motion and opposition present a timing conundrum. The case law says the movant can rely on factually devoid interrogatory responses to meet an initial burden. But permitting the non-moving party to amend or supplement those responses after a motion is filed potentially creates an unfair, moving-target type situation. At minimum, fairness seems to require a court to measure a moving party’s initial burden based on discovery responses that are effective as of the date the motion is filed. Although it appears that in the absence of the three factors in § 2030.310(c), the non-moving party can’t be bound to its original responses in meeting its own burden to show a disputed issue of fact, that should come into play only after the burden has shifted. 

Now, when it gets to the merits, the court here seems to be focused on whether the Insurer met its burden as the non-moving party. That is, it seems to assume that the Chiropractor’s initial burden was met without getting into the issue. So the ruling may well be right on the merits. But by dismissing out of hand the potential prejudice that arises from the amendment of interrogatory responses once a summary judgment motion is filed, the court fails to grapple with an important procedural issue, and indeed, potentially makes it even more unclear.

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