H. K. SAUER, Petitioner, v. THE SUPERIOR COURT OF SAN DIEGO COUNTY, Respondent; OAK INDUSTRIES, INC., Real Party in Interest.
No. D005627
Fourth Dist., Div. One.
Sept. 30, 1987.
195 Cal. App. 3d 213
Monaghan & Metz, Brian D. Monaghan McInnis, Fitzgerald, Rees, Sharkey & McIntyre, Virginia R. Gilson and James R. Milliken for Petitioner.
No appearance for Respondent.
Latham & Watkins, David F. Faustman and Kristine L. Wilkes for Real Party in Interest.
OPINION
KREMER, P. J.—Petitioner H. K. Sauer seeks a writ of mandate to reverse the superior court‘s orders imposing monetary sanctions and excluding all evidence of economic loss in Sauer‘s action against real party in interest Oak Industries, Inc. (Oak), for wrongful termination of employment. We issued an alternative writ of mandate directing Oak to show cause why the relief prayed for should not be granted. Upon return and replication, oral arguments were heard. For the reasons set forth below, we deny the writ.
ISSUES
Sauer challenges the propriety of three orders. The first is the proposed order of Referee Higgs granting part of Oak‘s motion to compel discovery and recommending $8,000 in monetary sanctions and costs against Sauer for willful failure to follow the rules of discovery. The second is Judge Jones‘s order adopting Referee Higgs‘s recommendations. The third, and perhaps most significant, is Judge Woodworth‘s order granting Oak‘s motion in limine to exclude all evidence of economic loss as a sanction for Sauer‘s willful noncompliance with court-ordered discovery.
Sauer contends the monetary sanctions imposed by Referee Higgs were improper as being without statutory basis and without proper findings or
FACTUAL AND PROCEDURAL HISTORY
Trial on Sauer‘s complaint for wrongful termination was originally set for August 27, 1986. In late May of 1986 counsel for all parties met to discuss the possibility of a continuance. Sauer‘s attorney, Brian Monaghan, strongly opposed a continuance, indicating a desire to proceed with the trial date regardless of whether all contemplated discovery was completed. The parties therefore entered into two stipulations setting forth the ground rules for the intensive discovery that was to take place over the next two and a half months. The first stipulation, approved by the court, provided for altered discovery cutoff dates and extended the time in which summary judgment motions could be heard prior to trial. The second stipulation provided, inter alia, that Sauer would respond to Oak‘s first set of interrogatories and produce all documents identified in the interrogatories no later than June 27, 1986. The stipulated discovery cutoff date was August 1, 1986.
Sauer had testified at his deposition in April 1985 about the existence and location of his personal financial records. Oak asked that these be preserved. A week later, Oak wrote Sauer requesting he produce copies of his personal financial records as well as his SEC notes (four pages of handwritten notes Sauer took while reviewing his deposition testimony taken during a Securities Exchange Commission investigation of Oak) and his calendar for 1982.
In a letter to Sauer dated June 17, 1986, Oak confirmed the expectation that Sauer would respond to the request for interrogatories and production of documents including his ”personal financial statements, bank statements, tax returns, and the like, by the close of business June 27, 1986. . . .” (Italics added.) Despite the agreement between the parties concerning the significant discovery cutoff dates, Monaghan brought an ex parte motion on June 26 requesting a continuance of the trial date. The motion was denied.
Finally, on July 2, Sauer provided Oak with his answers to interrogatories. Oak contends answers concerning damages were not provided. For example, Sauer referred Oak to Black‘s Law Dictionary in answer to interrogatories asking him to define his damages and to specify the damages he alleges he suffered. Also, Oak claims interrogatories addressing Sauer‘s postemployment income, Numbers 84, 85, and 86, were not answered based on Sauer‘s assertion he had already provided documentation to Oak in this area. Oak, however, asserts it never received such documentation.
Thereafter, on July 10, 1986, Oak served Sauer with a formal “Second Request for Production of Documents.” Request Number 18 specifically sought “[a]ll documents and writings which constitute, reflect, discuss, mention, comment upon or otherwise refer or relate to plaintiff‘s bank statements and personal and business financial records since his resignation from or termination by Oak, including but not limited to: (a) All personal and business checking, savings and other account records from Great American and Glendale Federal or any other bank where plaintiff has or had an account; (b) Plaintiff‘s ‘bank file’ where he keeps financial documents as identified in his deposition; and (c) All documents referring or relating to plaintiff‘s ‘IRA’ accounts.” Sauer had until July 30 to respond and produce.
In a letter dated July 16, Oak advised Sauer that certain documents had not been produced as requested including Sauer‘s bank records and financial statements. The letter further advised that “other documents located in Mr. Sauer‘s unsearched eleven boxes of documents in his garage” had not been produced. Sauer responded by claiming bank statements are privileged personal financial information.1
On August 7, Sauer responded to Oak‘s second request for documents, but the documents produced did not include three specific items: Sauer‘s SEC notes, his 1982 calendar or his personal financial records. Sauer‘s personal financial records were not produced on the ground they were confidential.
At the hearing before Referee Higgs, Oak outlined the instances of Sauer‘s failure to meet the stipulated discovery deadlines, his failure to produce requested documents and his failure to adequately answer certain interrogatories, specifically those pertaining to his postemployment income. Oak played a video tape of one of Sauer‘s expert witnesses showing she was unprepared at her deposition. Oak also informed the referee that another of Sauer‘s expert witnesses had failed to appear at his noticed deposition.
On August 18, Referee Higgs issued a proposed order in which he noted the brevity of Sauer‘s opposition papers. The referee also noted Sauer‘s opposition papers contained no supporting correspondence, declarations or citations, but only unsupported conclusory statements. Referee Higgs observed that Sauer‘s response to Oak‘s second request for production of documents was made only after the motion to compel was filed and was not only untimely and nonresponsive, but also unverified. Referee Higgs recommended that Sauer be ordered to “A) Identify those documents which are responsive to defendant‘s first set of interrogatories; [¶] B) Produce those documents identified pursuant to the terms of the parties’ stipulation; [¶] C) Produce documents responsive to defendant‘s first and second requests for production to the extent those documents have not already been produced and to specifically provide the documents listed and described in OAK‘s
also reminded Monaghan that information regarding financial status is not privileged when the financial status of the individual is put in issue.
The next day, Sauer appeared ex parte before Judge Jones to object to the order. However, he objected only to the imposition of the monetary sanctions, not to the substance of the order compelling discovery or the procedure followed by the referee.
On August 22, Sauer served Oak with supplemental responses to interrogatories and produced some documents. In response to Interrogatories Numbers 84, 85 and 86 concerning Sauer‘s postemployment income, Sauer responded “Plaintiff can add nothing to what he has previously responded in Answer to Interrogatories 84, 85 and 86.” Sauer neither produced nor offered to produce his personal financial documents, his 1982 calendar or his notes from his SEC deposition testimony.
On August 25, Oak wrote to Sauer requesting immediate production of the enumerated documents including Sauer‘s calendars from 1982, 1985 and 1986, Sauer‘s notes taken when he reread his SEC deposition transcript, and Sauer‘s financial records and bank statements including those regarding his real estate and business endeavors, banking transactions and loan
In response to this letter, Sauer wrote Oak stating he did not maintain calendars for 1985 or 1986 and that “[d]espite careful investigation, the calendar for 1982 has not been discovered.” Sauer also stated his SEC notes had not been found “despite careful investigation.” With respect to Oak‘s request for production of Sauer‘s personal financial records and bank statements, Monaghan stated those documents are voluminous, “require a compilation of business records and are available in their entirety for inspection and copying at the office of plaintiff‘s counsel in the same manner you made documents available to us; . . .”
Oak‘s counsel, after informing Monaghan of his intention to inspect the documents at 9 a.m. on August 29, went to Monaghan‘s office but found the documents were not in fact available. That same morning, Oak sent Sauer a letter stating that contrary to Judge Jones‘s order and Monaghan‘s representations, Sauer‘s personal financial documents had not been produced. The letter further stated Oak intended to argue for dismissal of the case due to Sauer‘s repeated failure to produce these documents.
Five days before trial was scheduled to begin, Oak brought a motion in limine to enforce Judge Jones‘s discovery order and for sanctions for failure to comply with that order. In its moving papers, Oak argued that on August 22, Sauer had produced a box of documents but no formal response listing the documents responsive to the particular requests and verified by Sauer was provided. Approximately one-half of the documents produced were documents Oak had previously produced to Sauer. Numerous documents that had been ordered produced were not turned over. Oak requested dismissal of the action as a sanction for refusal to comply with the discovery order or alternatively for other sanctions.
At the hearing on the motion in limine on September 3, the court stated that outright dismissal of the action was too harsh a sanction. Oak‘s attorney argued that in light of that ruling, Sauer should be precluded from proving that his emotional distress was caused by his financial situation due to his failure to produce his personal financial documents, that Sauer be precluded from mentioning the SEC in any way based on his failure to produce his SEC notes, and that the court take as established that Sauer did not mitigate his damages due to his failure to produce his 1982 calendar.
After hearing arguments, the court made the following ruling regarding the discovery issues: “It appears to the Court that there has been a flagrant, inexcusable, and protracted noncompliance with the pretrial discovery order respecting personal financial records of the plaintiff, which justified drastic sanctions. [¶] I have considered various alternatives, such as financial sanctions, such as putting the case off calendar, such as ordering instantaneous compliance, and with the plaintiff to bear the expense of analyzing the financial records. And none of those sanctions seems to me to fit the nature of the default. [¶] I, therefore order that all evidence of economic loss be excluded from the plaintiff‘s case. [¶] The nondelivery of the financial records is the primary reason, but an incidental reason was the misplacement of the 1982 calendar which, it seems to me, could very reasonably have a material bearing on such issues as the reason for the plaintiff‘s termination, the possibility that he had other employment opportunities available to him, or actual or possible steps to mitigate at or about the time he was terminated. [¶] I doubt that I would have imposed such a drastic sanction because of that default only, since it is not clear to me that that was a willful default at all, but it is an incidental justification, and the nonproduction of financial records can only be viewed objectively as a willful noncompliance. [¶] As to the S.E.C. testimony, I have already tentatively ruled, and I now rule formally, that the claim of privilege has been waived because of the chronological sequence of procedural events which are
The court then gave Sauer an opportunity to seek an immediate reconsideration of the court‘s order by making a showing that the documents withheld were not material to the litigation. Sauer argued the nonproduction of the documents was not prejudicial to Oak on the ground Oak already had other documents relevant to the issues of mitigation of damages and postemployment opportunities and economic loss. However, the court ruled the very information withheld might have shown damages simply were not incurred or should have been mitigated and that the missing calendar entries for 1982 also bear on the same possibilities.
On September 19, Sauer brought a motion for reconsideration before Referee Higgs. Sauer argued the referee‘s order subsequently adopted by Judge Jones was vague and ambiguous and should be amended or modified. Once the ambiguity is omitted, he urged, Judge Woodworth would then have the opportunity to reconsider his ruling Sauer failed to comply with the discovery order. He argued there was no language in the referee‘s proposed order requiring production of Sauer‘s personal checking account. Thus, he claimed, his failure to produce those documents was not willful but was based on an ambiguity in the referee‘s order. Sauer further argued the sanctions imposed were unreasonable.
After hearing argument and considering briefing, Referee Higgs issued a supplemental order amending his proposed order of discovery, stating: “Plaintiff shall pay defendant sanctions in the sum of costs and attorneys’ fees in the amount of $5,327.00 pursuant to the provisions of
Sauer then filed a motion seeking review of Judge Jones‘s order compelling discovery and denial of his motion for reconsideration before Referee Higgs. The court ruled there was no apparent ambiguity in the order, specifically noting that the order required response to Request Number 18 for “all documents and writings which constitute. . . or relate to plaintiff‘s bank statements and personal and business financial records since his resignation.” The court denied the motion.
DISCUSSION
I
Sauer contends the referee erred in awarding Oak $5,327 in sanctions. He asserts the referee failed to refer to any statutory basis for the award, failed to give any reason for making the award, and failed to specify his method of calculating the amount of monetary sanctions.
Under
Here, the referee‘s order imposing sanctions specifies several instances of Sauer‘s failure to follow the rules of discovery: he failed to timely respond to Oak‘s first set of interrogatories and failed to verify his answers; he failed to timely respond to Oak‘s second request for production of documents; and he failed to produce those documents. In its amended order, the referee found Sauer‘s position in failing to answer and produce was “willful” and
II
Sauer contends he was denied due process when Judge Jones signed the referee‘s order without giving Sauer an opportunity for a hearing. Relying on Aetna Life Ins. Co. v. Superior Court (1986) 182 Cal.App.3d 431 [227 Cal.Rptr. 460], Sauer asserts the court may not adopt a referee‘s findings without a full hearing on the merits.
In Aetna, the trial court made an order assigning the parties’ law and motion and summary judgment proceedings to a referee for hearing and determination. The order specified the referee was a “special” referee. (Id. at pp. 433-434.) After the referee made findings of fact and conclusions of law, counsel for Aetna asked the trial court for a hearing on the referee‘s report. The court denied the hearing and made an order accepting the referee‘s report, stating the findings and conclusions were without substantial controversy and “‘shall be deemed established.‘” (Id. at p. 435.) Aetna then brought a writ of mandate challenging this order.
In reviewing the order, this court concluded the superior court had erroneously treated the referee‘s findings and conclusions as binding and determinative of the issue. Only in a consensual general reference can a referee make a binding determination. (Id. at p. 436.) Because the record lacked evidence of a written agreement of the parties to a binding general reference (see
The day after Judge Jones signed the referee‘s order, Sauer appeared ex parte before Judge Jones to object to the order, specifically the imposition of sanctions. The record does not reflect Judge Jones refused to hear Sauer‘s objections. Then, on October 27, 1986, Sauer brought a motion opposing the recommended order of the referee, arguing the order was ambiguous. At that hearing, Judge Jones stated he had reviewed the referee‘s order and the parties’ moving papers at the time he signed the order and again for the present hearing. He further stated the referee‘s order that he signed was not ambiguous. “I saw no reason to change that order based on the findings that had been made by the referee. The findings were supported by a lot of information that would justify his conclusions, I thought.” Thus, in hearing the matter and independently reviewing the referee‘s order, Judge Jones did not abdicate his judicial responsibility. (Cf. Aetna Life Ins. Co. v. Superior Court, supra, 182 Cal.App.3d at p. 436.) Sauer was not denied due process.
III
Sauer contends the court abused its discretion in finding there had been flagrant, inexcusable and protracted noncompliance with the court‘s discovery order and on that basis imposed sanctions precluding him from proving his economic damages at trial. He asserts his failure to produce his personal financial records was, at most, the result of an excusable misinterpretation of the court‘s order. However, the record supports the court‘s finding Sauer knew his personal financial documents were being sought and had been ordered produced.
After Sauer testified at his deposition about the existence and location of his personal financial records, Oak asked that they be preserved. A week later, Oak requested Sauer produce copies of these records as well as his SEC notes and 1982 calendar. In May 1986 the parties stipulated that Sauer would respond to Oak‘s first set of interrogatories and produce all documents identified in those interrogatories no later than June 27, 1986. Included in Oak‘s requests were Sauer‘s personal financial records. On June 17,
Oak then served a formal request for production of documents. Request Number 18 sought Sauer‘s bank statements and personal and business financial records including all personal and business checking, savings and other accounts. On the date set for production, Oak wrote Sauer seeking some response when none was received. When Oak filed a motion to compel discovery of these documents, Sauer responded by objecting to the production of his personal financial records on the ground of confidentiality.
The referee‘s order of August 18 requiring Sauer to produce documents responsive to Oak‘s formal document request included Request Number 18—Sauer‘s personal financial records. The order also required Sauer to produce the documents described at Item Number 13 of Oak‘s Separate Statement re Documents which sought Sauer‘s financial records and bank statements. When Sauer failed to comply, Oak again requested his financial records and bank statements. Sauer offered Oak the opportunity to inspect and copy them at Monaghan‘s office, but Sauer‘s personal financial documents were not in fact available. When Sauer persisted in his failure to produce these documents, Oak informed him of its intention to bring a motion for dismissal of Sauer‘s case.
Based on this evidence, it is inconceivable Sauer misunderstood the referee‘s order. There were no less than six requests for Sauer‘s personal financial records before Oak brought the motion to compel. In fact, Sauer acknowledged these requests by objecting on the ground his bank statements were privileged personal financial information. Further, the only reasonable interpretation of the referee‘s order requires production of Sauer‘s personal financial records. Sauer‘s assertion he believed the order compelled production of his business financial records is unpersuasive. Because Sauer had already produced these documents, it is illogical to assume Oak would continue to insist on their production or bring a motion to compel.
Stated another way, substantial evidence supports the trial court‘s finding Sauer‘s noncompliance was willful. (See Alliance Bank v. Murray (1984) 161 Cal.App.3d 1, 10 [207 Cal.Rptr. 233].) “A willful failure does not necessarily include a wrongful intention to disobey discovery rules. A conscious or intentional failure to act, as distinguished from accidental or
Here the record shows Sauer had many opportunities to comply with the court‘s discovery order or seek to clarify its provisions.8 Having failed to do either, his belated claims of “good faith” and “mistake” cannot now vitiate the court‘s finding of willfulness. (See Karz v. Karl (1982) 137 Cal.App.3d 637, 650 [187 Cal.Rptr. 183].)
Having determined the imposition of sanctions was proper due to Sauer‘s willful failure to comply with the court‘s order, our next inquiry is whether the particular sanction chosen—exclusion of all evidence of economic loss—was appropriate under the circumstances. More appropriately framed, the issue is not whether this court would have imposed an issue-preclusion sanction, but whether the trial court abused its discretion in doing so. (See National Hockey League v. Met. Hockey Club (1976) 427 U.S. 639, 642 [49 L.Ed.2d 747, 751, 96 S.Ct. 2778].) We conclude there was no abuse of discretion.
Where a party has refused to supply information relevant to a particular claim, an order precluding that claim is an appropriate sanction. (
Sauer asserts the sanction imposed was inappropriate because he had provided extensive information about his economic loss through his deposition and that of his expert witness and through production of substantial documentation. He further asserts the additional documents requested, including his personal financial records, were merely cumulative of the information already produced and would add nothing new to Oak‘s defense on damages. This argument overlooks the fact Oak was entitled to documentary support to independently evaluate the accuracy of the testimony and other information provided.9 Oak was entitled as a matter of right to demand answers to its interrogatories and to the production of documents unless Sauer stated a valid objection to them. (See Stein v. Hassen (1973) 34 Cal.App.3d 294, 302 [109 Cal.Rptr. 321].) “An important aspect of legitimate discovery from a defendant‘s point of view is the ascertainment, in advance of trial, of the specific components of plaintiff‘s case so that appropriate preparations can be made to meet them.” (Karz v. Karl, supra, 137 Cal.App.3d at p. 650.) Sauer‘s cooperation in producing voluminous discovery materials does not excuse his failure to produce those items specifically requested by Oak and required by the court‘s order. “A party may disagree with a court order. He may believe it wrong-headed or a waste of time or picayunish—but he disregards it at his peril.” (Morgan v. Southern Cal. Rapid Transit Dist. (1987) 192 Cal.App.3d 976, 983 [237 Cal.Rptr. 756].)
Sauer further asserts the sanction of issue-preclusion was unfair because the court improperly treated his late production as a willful failure to respond and conclusively presumed Oak was prejudiced. Although Sauer characterizes his dereliction as a “two week delay in responding to a limited
“Belated compliance with discovery orders does not preclude the imposition of sanctions. [Citations]. Last-minute tender of documents does not cure the prejudice to opponents nor does it restore to other litigants on a crowded docket the opportunity to use the courts. [Citation.]” (North Amer. Watch v. Princess Ermine Jewels (9th Cir. 1986) 786 F.2d 1447, 1450; United States v. Sumitomo Marine & Fire Ins. Co. (9th Cir. 1980) 617 F.2d 1365, 1370.)
Imposition of a lesser sanction would have allowed Sauer to benefit from his delay by forcing Oak into the unfavorable position of proceeding to trial ill-prepared to meet Sauer‘s $1.5 million damage claim and would encourage the very conduct for which the Legislature enacted
Moreover, in addition to Oak‘s right to obtain the proper objects of discovery, what is at stake here is the integrity of the discovery process and the interest of the court in compelling “obedience to its judgments, orders and process.” (
Alternatively, Sauer contends this court should direct the trial court to defer imposition of sanctions until after trial. He suggests that if, after trial, the trial court finds Oak was prejudiced by Sauer‘s tardy production of his personal financial records or the unavailability of his 1982 calendar, it could then disallow any award of damages for Sauer‘s economic loss. We presume the trial court was aware of its various options in imposing an appropriate sanction and we will not select a sanction different from that within the trial court‘s discretion. Where, as here, the petitioner presents a state of facts, a consideration of which, for the purpose of judicial action, merely affords an opportunity for a difference of opinion, the appellate court is neither authorized nor warranted in substituting its judgment for that of the trial court. (Brown v. Newby (1940) 39 Cal.App.2d 615, 618 [103 P.2d 1018].) Having
Sauer further contends the court erroneously attempted to punish him for the mistakes of his attorney. However, “‘... the negligence of the attorney . . . is imputed to his client and may not be offered by the latter as a basis for relief.‘” (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 898 [187 Cal.Rptr. 592, 654 P.2d 775], quoting Buckert v. Briggs (1971) 15 Cal.App.3d 296, 301 [93 Cal.Rptr. 61].) Only the attorney‘s positive misconduct which effectively obliterates the existence of the attorney-client relationship will relieve the client from the consequences of his attorney‘s mistakes. (Ibid.) Here, the willfulness shown in failing to comply with the court‘s discovery order does not fall within the “positive misconduct” exception such that Sauer was “effectually and unknowingly deprived of representation.” (Daley v. County of Butte (1964) 227 Cal.App.2d 380, 391 [38 Cal.Rptr. 693]; see also Orange Empire Nat. Bank v. Kirk (1968) 259 Cal.App.2d 347, 353 [66 Cal.Rptr. 240].) If anything, withholding Sauer‘s financial records was a tactical maneuver to be attributed to both Sauer and his attorney. Because the record fails to show Sauer was abandoned by his attorney, the court‘s choice of an issue-preclusion sanction was entirely proper.
DISPOSITION
The petition is denied and the alternative writ is discharged.
Todd, J., concurred.
WORK, J.—I concur in the result insofar as it upholds the sanctions imposed pursuant to Referee Higgs‘s findings.
I dissent and would reverse the preclusion sanction on the special facts of this case where even the few documents originally not timely produced have been lodged pretrial for more than a year with the trial and appellate courts and accessible for all discovery purposes to Oak Industries, Inc. (OAK), for
My disagreement with the majority is multibased. (1) On the facts of this case, I find the evidence-preclusion sanction to be punitive only, because a short delay of trial initially, and even now, will place Oak in the same trial preparation position it would have been had the late-produced documents been received earlier. (2) Further, I would follow case-precedent and hold the trial court abused its discretion in not modifying its sanction at the October reconsideration hearing based on the fact the final materials had been produced more than one month earlier. (3) In addition to the above concerns, I would reverse the sanction because it was imposed for Sauer‘s failure to comply with a nonspecific order pursuant to general references in Oak‘s motion to compel production, which are so vague as to deny Sauer sufficient notice to satisfy the procedural due process required to support a sanction which precludes having his case decided on the merits. (4) Next, both at the time the sanctions were imposed, and at the later reconsideration hearing, alternate sanctions were available to the trial court which would have provided full remedy to Oak for any delay in production, including expenses incurred, i.e., a trial delay and monetary sanctions. Neither Oak nor the trial court suggested either the judicial system or Oak would be prejudiced by a delay, nor that full compensatory monetary sanctions ordered would not be paid promptly. Moreover, those alternatives are still available should we remand. (5) Finally, these sanctions, if appropriate to punish misconduct (which I do not perceive in this record) cannot be justified to punish Sauer whose conduct is not even suspect. Thus, the concept alluded to by the majority, that a client must be deemed to stand in the “shoes” of his lawyer when the attorney fails to file or try an action within applicable statutes of limitation, has no application here. On those matters, the Legislature has stated a public policy barring stale filings or trials. These are matters as to which the trial court has no discretion and, in any event, the client is always in a position to monitor and/or change lawyers. There is no similar public policy declared in the discovery statutes and they have been interpreted consistently as requiring the trial court to exercise its discretion so as to not place the benefiting party in a better legal position than it would have been had discovery been timely. When the sanction punishes the client when a lawyer provides late discovery, it is not justified. In these matters, the statutes permit the lawyer to be sanctioned separately, and the sanction choice is not statutorily compelled, but discretionary.
I
There is no need to recite the number and extent of the voluminous items of discovery requested by Oak, its efforts to obtain them, the number produced by Sauer and whether the materials were forthcoming voluntarily or only after initial sanctions were imposed, the number of depositions taken and submitted to, or to count the documents produced before the preclusion sanction was imposed. Suffice to say, the preclusion sanction is founded solely on Sauer‘s failure to timely produce his personal checkbooks and bank statements, items which on personal examination appear to add little evidentiary weight to the issue of whether Sauer failed to reasonably mitigate damages in this case. This is because Sauer had already provided voluminous personal business bank and associated records for his various postdischarge business endeavors and his real estate holdings.
Here, the record shows the trial court imposed this severe sanction only after it erroneously determined it must conclusively presume prejudice. However it did not even review the voluminous records already produced and the other discovery materials in Oak‘s possession on the very issue in question, Sauer‘s efforts to mitigate damages. The trial court then relied on this finding of prejudice to justify the severity of the sanction based on its unsupported conclusion there was no appropriate lesser remedy.
In any event, Oak now has had all the requested materials available to it, albeit belatedly, for a year. While it might have been prejudiced initially by the delay, and a presumption to that effect might not be unwarranted were it impossible or impractical to delay the commencement of trial, the validity
One need not disagree with the trial court‘s characterization of Sauer‘s noncompliance as willful to hold that it erred in not imposing a lesser sanction, perhaps further monetary penalties, attorney‘s fees and continuance of trial which would have eliminated any prejudice apparent from this record from the delay in producing the last few records. The trial court could have examined the 1982 calendar which was submitted and the other documents. I have done so and I believe the trial court, the majority of this court and Oak, would agree there is little, if anything, of value to Oak Industries on the issue of damages, had they done likewise. Even if some item contained therein is substantially material, a continuance of trial to allow Oak to explore any leads uncovered certainly would have prevented any prejudice.
II
A review of representative relevant cases supports a reversal. In Morgan v. Ransom (1979) 95 Cal.App.3d 664 [157 Cal.Rptr. 212], a court-ordered dismissal was set aside where there was no showing of prejudice to a party when the adverse litigant failed to comply with a discovery order. The court noted the dismissal was “punitive,” not “remedial,” and therefore was not authorized since it was only to punish the wickedness of the plaintiff‘s noncompliance with the court order. In Caryl Richards, Inc. v. Superior Court (1961) 188 Cal.App.2d 300 [10 Cal.Rptr. 377], the court stated the purpose of the Discovery Act is to further efficient disposition of cases on their merits, not to provide a weapon for avoidance of trial through forfeiture.
So also, in Motown Record Corp. v. Superior Court (1984) 155 Cal.App.3d 482 [202 Cal.Rptr. 227], the Court of Appeal set aside a sanction deeming
Citing Motown Record Corp. v. Superior Court, supra, 155 Cal.App.3d 482, County of Eldorado v. Schneider (1986) 183 Cal.App.3d 732, 751 [228 Cal.Rptr. 531], held that
In Caryl Richards, Inc. v. Superior Court, supra, 188 Cal.App.2d at page 305, the superior court was faulted for a sanction order “designed not to accomplish the purposes of discovery but designed to punish petitioner for its failure to disclose in detail its secret process.”
In Puritan Ins. Co. v. Superior Court (1985) 171 Cal.App.3d 877 [217 Cal.Rptr. 602], the Court of Appeal addressed the imposition of an issue preclusion sanction. There, plaintiff‘s expert lost a conveyer belt drive shaft which had failed five months after being repaired by defendant corporation. When plaintiff sued the repairer, the inadvertent loss absolutely precluded defendant‘s experts from examining the shaft to defend against the claim of negligent repair. To prevent a permanent “shafting” of the repairing corporation from its inability to examine the court ruled plaintiff could not present its own expert to testify as to the results of his earlier examination of the shaft. Puritan applied the general rule that “where a motion to compel had previously been granted, the sanctions should not operate in such a fashion as to put the prevailing party in a better position than he would have had if he had obtained the discovery sought and it had been completely favorable to his cause.” Because the loss of the shaft prevented defendant‘s expert from examining that item, it both prevented meaningful cross-examination of plaintiff‘s expert who had previously conducted such an examination and eliminated the possibility defendant could develop evidence in his defense by having its own expert examine the allegedly faulty material. Thus, the sanction of excluding the plaintiff‘s expert testimony gleaned from examining the shaft served the remedial purpose of preventing plaintiff from achieving a tactical advantage to the prejudice of defendant. On the other hand, Puritan held the additionally imposed sanction preventing plaintiff from introducing photographs taken of the shaft and expert testimony based upon examining the photographs was improper. The court reasoned that if the photographs accurately depicted the material, they were accessible to defendant and available for examination by defendant‘s own
III
The majority denigrates Sauer‘s lodging his personal bank records after the preclusion sanction had been imposed,3 as a mere ploy “to protect the record for purposes of taking this writ.” However, the notice of lodging filed in superior court on September 26, 1986, states: “TO: DEFENDANT AND ITS ATTORNEY OF RECORD NOTICE IS HEREBY GIVEN that the following exhibits have been lodged with Department 30 of the Superior Court (honorable Douglas R. Woodworth) and are available for inspection by the court and all counsel: exhibit 4: The financial documents produced by plaintiff on September 3, 1986 at the hearing on defendant‘s motions in limine and referred to by plaintiff‘s counsel in the offer of proof. They consist primarily of plaintiff‘s personal financial and banking records relative to his business ventures.
“Exhibit 5: The additional financial documents which plaintiff offered on September 3, 1986 to produce within 24 hours.4 They consist primarily of plaintiff‘s personal financial and banking records that relate to his personal finances rather than his personal business ventures.
“Exhibit 6: A calendar which was discovered by Robert Rothman, plaintiff‘s counsel, on September 18, 1986 . . . which may be the calendar to which defendant‘s counsel refers. It should be noted that plaintiff is unable to confirm whether or not this is the calendar to which he referred in his deposition testimony of May 15, 1985.” (Italics added.)
Thus, it is apparent both Oak and the superior court were notified of the lodging and urged to inspect these documents more than a month before the October 29 reconsideration hearing. At calendar argument, Oak‘s counsel conceded they have deliberately chosen to ignore the documents.5
At a reconsideration hearing on October 29, 1986, the court was again asked to inspect the documents lodged with it a month earlier. This request
Assuming the willfulness and egregiousness of Sauer‘s conduct (or that of his attorney, or both), there is no reason to apply a conclusive presumption of prejudice in a case where the requested materials are available for inspection and, by altering the trial schedule, can be fully utilized by defendant. There is even less reason to refuse to lift the preclusion sanction once the materials are produced in time for use at trial, even if those belatedly received items are critical (as they do not appear to be here) to the defendant. This issue was fully addressed in Fred Howland Co. v. Superior Court (1966) 244 Cal.App.2d 605 [53 Cal.Rptr. 341], where a superior court order denying the reconsideration and setting aside of a sanction was held to be an abuse of discretion. There, a notice of motion for reconsideration was accompanied by what appeared to be complete answers to interrogatories, the failure to answer which had been the basis for the earlier sanction. Howland cites Caryl Richards’ statement that one principal purpose of the Discovery Act is to enable a party to obtain evidence to further the efficient economical disposition of cases according to right and justice on the merits, not to provide a weapon to punish, to allow forfeiture or to avoid a trial on merits. (P. 610.) In Howland, a writ of mandate issued even though the court acknowledged the superior court properly found a lack of diligence which could be deemed “willful” in the sense the party understood its obligation, had the ability to comply and had failed to do so. It held the superior court had abused its discretion because the wrong done, at most, only delayed preparation of the case and caused additional legal efforts for which a monetary award would readily compensate the benefited party. That is precisely the situation here. In a similar vein, the court in Puritan Ins. Co. v. Superior Court, supra, 171 Cal.App.3d at page 885, stated that it assumed the superior court would withdraw its preclusion order were the shaft later produced.
IV
Moreover, the trial court was not trying to punish Sauer by the preclusion order. Its comments plainly show its concern was to remedy what it perceived to be the effect of the conclusive presumption of prejudice. However, it did not evaluate the mass of business and personal bank records already received by Oak to determine whether the degree of prejudice reasonably to be conclusively presumed by lack of access to the minimally material personal documents at issue, required this onerous sanction. Although it is clear the trial court only intended to impose a sanction tailored to prevent Sauer from achieving an advantage over Oak by virtue of its nonreceipt of documents according to the standards stated in the California decisions, on the present facts its sanction serves no remedial purpose and fulfills only an unintended punitive role.
Contrary to any perception that Sauer retains a meaningful opportunity at trial to litigate and recover damages for his emotional distress and punitive damages, Oak‘s statement to the trial court shows it believes the order barring evidence of Sauer‘s economic loss guts the damage claim for emotional distress, as well as his claim for pure economic loss of income. Further, there is always a tacit, if not required, proportional relationship between punitive damages and compensatory.
In arguing against reconsideration of the court‘s preclusion sanction, Oak told the court that evidence of Sauer‘s personal checkbooks and bank records are probative of his postdischarge income, an issue it characterized as central to Sauer‘s claim of emotional distress as well as to mitigation of damages. However, the court never intended to preclude the emotional distress claim and did not believe its order had that effect, generally stating Sauer would still be able to proceed on the trial of pain suffering and humiliation, i.e., emotional distress. On this record, Oak‘s perception of the
V
Aside from the punitive nature of this sanction on a record where the evidence conclusively shows there is no evidentiary prejudice at all, there is a further reason why the sanction was improperly imposed.
Oak‘s separate statement to identify documents pursuant to
Contrary to the majority‘s statement, there is no significance to item 15 listed in the separate statement, which in turn refers to request number 13 in the second request for production of documents. This reference is, in turn, based on the reference to Sauer‘s deposition where he testified as to documents he describes as “personal bank accounts, cancelled checks and loan documents kept in his inside ‘bank file.‘” (Maj. opn. fn. 3.) Those references are to Sauer‘s deposition pages 522, 525 and 1030, no part of which refers to the type of personal bank records at issue in the present sanction. All references are to records produced before the sanction was imposed.9
The majority then states: “Sauer‘s assertion he believed the order compelled production of his business financial records is unpersuasive. Because Sauer had already produced these documents, it is illogical to assume Oak would continue to insist on their production or bring a motion to compel.” (Maj. opn., p. 227.) This misconstrues the record. In fact, although the majority refers to the already produced documents as business records, they are in fact Sauer‘s personal business accounts. Further, these had not all been turned over to Oak at the time the motion and order on the motion was made, but some were produced later. It is not illogical to assume the “personal” accounts requested by Oak consisted solely of those accounts which had been identified through various discovery techniques as involving income-producing activities in which Sauer was involved: those specifically referred to on several occasions by Oak and which were directly relevant to show whether Sauer had made good faith efforts to mitigate damages. When the motion for sanctions was made, only other personal checkbooks and bank statements had not yet been made available, along with the 1982 personal calendar which had not been found in spite of good faith efforts, a representation accepted by the trial court, and the handwritten notes made by Sauer when he reviewed his testimony in front of the SEC. (The SEC notes were made available and Oak does not claim prejudice from the delay in getting them.)
Thus, the sanction was based upon the failure to submit personal checkbooks and bank statements not specifically identified by, and which can
VI
It is understandable a court may wish to set an example when an attorney is perceived as abusing the discovery process, both to punish and to set an example which might deter others from a similar course.
An analysis of applicable California law is contained in 21 Santa Clara L.Rev. 567 (1981). In an article entitled Curbing Discovery Abuse: Sanctions Under the Federal Rules of Civil Procedure and the California Code of Civil Procedure, Richard W. Sherwood compares the federal discovery statutes, primarily
Even were Sauer‘s conduct deliberate and unreasonable (a conclusion I do not find supported by this record), the preclusion sanction places Oak in a better position than if it had timely received the belatedly produced documents and proceeded to trial bolstered by whatever evidentiary gains to be winnowed from their contents. While these final few documents are admittedly relevant to Oak‘s pretrial discovery, they appear to be of little or no materiality to its defense of this case. If they are indeed material, Oak has had an entire year to inspect, decipher, analyze and digest their contents, and to pursue any unexplained leads revealed. That is four times the
VII
Of equal concern is the fact the sanction here is doubly inappropriate because it punishes the client, not the attorney whose conduct the majority finds so reprehensible. Implied in the majority holding is that the client‘s recourse is against his lawyer. There are several problems with this approach, the first of which is that it permits reviewing courts to rationalize results akin to that in this decision. A second, and more basic, is that it shifts responsibility away from tortfeasors for a reason completely unrelated to their culpability or their efforts to make amends for their malfeasance. A third factor is the impracticality of a malpractice action where it is not statutorily compelled; increasing, not decreasing, the burden on the courts and requiring the client to commence new litigation, to retain a new lawyer and to not only prove a right to recover against the long-departed tortfeasor, but also to convince a factfinder that actionable negligence has occurred. (We can only speculate that, at least occasionally, an innocent client‘s remedy rights are shifted from a deep-pocket malefactor to a shallow-pocketed lawyer.) However, this case is in a more unique posture. Here, even if the client believed actionable malpractice had occurred, he is locked into the present litigation and must complete it before seeking other redress. His litigation burden is double what it would be had the sanction been the even more severe dismissal sought.
For all the above reasons, I would reverse the sanction order and remand to the trial court to permit it to impose such alternative sanctions it deems appropriate, other than issue or evidence preclusion or dismissal, and to schedule an appropriate trial date.
A petition for a rehearing was denied October 19, 1987. Work, J., was of the opinion that the petition should be granted. Petitioner‘s application for review by the Supreme Court was denied December 16, 1987.