Victaulic Co. v. Am. Home Assurance Co., No. A146617 (D1d2 Feb. 26, 2018)
This is an insurance coverage dispute over some product liability claims. During trial on declaratory judgment and bad faith claims, the court permitted Plaintiff to examine Ms. Finberg, one of the carrier’s adjusters, about some RFA responses she verified denying that there was any potential for coverage.
Indeed, the Court asked some pretty pointed questions of its own. In the midst of that questioning, Ms. Finberg gave a response that led the court to conclude that the witness had perjured herself in her verification. The Court informed the parties of its belief outside of the presence of the jury. Which led to the Court forcing the witness taking the Fifth in front of the jury. Which led to closing arguments that were all about lies, and perjury, and the RFAs. The jury went on to award the Plaintiff its full demand, and following that, $46 million in punitives. Insurer appeals.
Problem is that the whole thing that got the ball rolling—cross-examining the adjuster about the RFA denials—was improper. As the Court of Appeal previously explained in 2015's Gonsalves case and this case reiterates, “RFA denials represent legal positions, not statements of fact.” RFAs are not really discovery and RFA responses are not evidence. Admissions are dispositve legal conclusions and can take issues out of play at trial. Code of Civil Procedure § 2033.410(a). But the only value of a denial is a potential cost-shifting sanction for an unjustified denial if the other side proves the denied fact. § 2033.420(a). So the trial court never should have let plaintiff examine Ms. Finberg on the RFA denials, even if she verified them.
The trial court also crossed the line in the way it questioned Ms. Finberg. Although a court can permissibly ask questions to a witness, it needs to maintain a tone of neutrality. Here, the court’s questions veered into impermissible advocacy when the judge engaged in an aggressive cross-examination and then acted incredulous when it appeared that the witness’s stated version of the facts couldn’t be squared with the RFA denial. The Court of Appeal thus finds that the trial court committed reversible misconduct.
And then the trial court erred again in making Ms. Finberg take the stand to invoke her (entirely unnecessary to invoke) Fifth Amendment privilege. In California, the law is extraordinarily clear that the trier of fact can’t draw an adverse inference from someone’s invoking a privilege, including the Fifth. See Evid. Code § 913. The corollary to that, long established in California law, is that you can’t put a witness on the stand for the purpose of making her invoke a privilege in front of the jury.
Finally, all these errors were made all the much worse because the court let Plaintiff’s counsel keep bringing them up over and over again. It was error to let Plaintiff question other witnesses about Ms. Finberg “lies” and “perjury” in the RFA responses. And it was most definitely error to let Plaintiff lard its closing argument up with similar inflammatory statements. As the Court of Appeal summarizes, Plaintiff’s closing argument was basically, “Finberg, Finberg, Finberg; RFAs, RFAs, RFAs; her lies, lies, lies; and plenty of ‘penalty of perjury.’”
So all in all, not only was there lots of error, the error was overwhelmingly prejudicial to the insurer.
Reversed.
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