Melendrez v. Superior Court of Cal.
| Decision Date | 30 April 2013 |
| Docket Number | B243320 |
| Parties | MARY MELENDREZ et al., Petitioners, v. SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES, Respondent; SPECIAL ELECTRIC COMPANY, INC., Real Party in Interest. |
| Court | California Court of Appeals Court of Appeals |
CERTIFIED FOR PUBLICATION
(Los Angeles County
ORIGINAL PROCEEDINGS in mandate. Emilie H. Elias, Judge. Petition granted and remanded for further proceedings.
Simon Greenstone Panatier Bartlett, Brian P. Barrow and Nectaria Belantis for Petitioners, Mary Melendrez et al.
No appearance for Respondent.
Brydon Hugo & Parker, Edward R. Hugo, Jeffrey Kaufman and Amber Lee Kelly for Real Party in Interest, Special Electric Company, Inc.
A bankrupt corporation which purportedly only existed as a shell through which personal injury claims were passed on to its insurer for resolution was sued for personal injury. Pursuant to its reorganization plan, the action was submitted to its insurers, who provided a defense. When discovery was propounded to the corporation, the corporation's attorney (who had been provided by the insurers) filed substantive responses to the discovery, but represented to the court that the responses could not be verified, as the corporation had no officer, director, employee, or agent who could verify the discovery responses. The personal injury plaintiff challenged the sufficiency of the discovery responses. The trial court agreed that, under the circumstances, no individual existed who could verify the responses, and, at the corporation's request, simply deemed them verified. The plaintiff filed the instant writ petition, challenging the trial court's order.
As we shall discuss, the law provides that an attorney can verify responses on behalf of a corporation, although such an act constitutes a limited waiver of the attorney-client and work product privileges with respect to the identity of the sources of the information contained in the response. In this case, the attorney argued that she could not verify the discovery responses because the corporation was the holder of the attorney-client privilege, but had no officer or director who could waive it. We conclude that the court could have directed that further effort be made to have a director elected or appointed on behalf of the corporation. It may, however, be that the corporation no longer exists and no director can be elected or appointed. If that is the case, we believe that the corporation's attorney-client privilege would be passed to itsinsurers, the de facto assignee of its policies and the claims against them. We will therefore grant plaintiff's petition for a writ of mandate and remand for further proceedings on the issue.
Plaintiffs and Petitioners Mary Melendrez, individually and as personal representative of the Estate of Lario David Melendrez; Mario Melendrez; Phillip Melendrez; David Melendrez; and Veronica Pueyo (collectively, Melendrez) brought the instant wrongful death action against numerous entities, including respondent Special Electric Company, Inc. (SECO), alleging that the decedent died of mesothelioma as the result of exposure to asbestos.1 SECO was alleged to be liable as a manufacturer and supplier of crocidolite mats, and as a supplier of raw crocidolite asbestos.
In 2004, years prior to the action being filed, SECO filed a Chapter 11 bankruptcy petition. As described by one of SECO's attorneys, Attorney Amber Lee Kelly, "[i]n 2006, the U.S. Bankruptcy Court approved [SECO]'s Second Amended Plan of Reorganization, which reduced [SECO] to a shell for the sole purpose of processing asbestos lawsuits." (Italics added.) Pursuant to the reorganization plan, a registered agent was appointed for the service of asbestos claims, who was required to forward those claims to SECO's insurers. The insurers, in turn, were required to defend and/or settle the claims "in accordance with and in a manner consistent with thelanguage of the applicable [i]nsurance [p]olicies and applicable state law."2 As we shall discuss, this was not the sole term of the reorganization plan. It also provided that an unsecured creditors trust would be created to hold and liquidate SECO's assets, apart from, inter alia, its insurance policies. It further provided that the existing owners of outstanding common stock in SECO retained those interests and that, if any assets remained after termination of the unsecured creditors trust, those assets would be deemed transferred to the holders of those interests. One John Erato, who was, in some way, affiliated with SECO, served as SECO's director and president post-bankruptcy.
In any event, Melendrez's complaint was defended on behalf of SECO by its insurers, as provided in the reorganization plan. Counsel was retained by the insurers to represent SECO for the purpose of providing such defense.
On December 22, 2011, Melendrez served SECO's counsel with requests for admission (RFAs) pursuant to the provisions in Code of Civil Procedure, section 2033.010, et seq.3 The RFAs sought admission of many facts the admission of which would result in a judgment in Melendrez's favor.4 Counsel for SECO prepared a response which contained objections, denials, and statements of inability to admit ordeny after reasonable investigation. The response was signed by counsel, but unverified.
As caselaw provides that an unverified response is tantamount to no response at all (Allen-Pacific, Ltd. v. Superior Court (1997) 57 Cal.App.4th 1546; Appleton v. Superior Court (1988) 206 Cal.App.3d 632, 636), Melendrez moved under section 2033.280, subdivision (b) for an order deeming the matters specified in the RFAs admitted.
SECO opposed the motion on the basis that it was impossible for SECO to verify the response, due to its lack of officers, directors, employees, and agents. Section 2033.240, subdivision (b) provides that, if the party responding to RFAs is a corporation, "one of its officers or agents shall sign the response under oath on behalf of that party." SECO submitted a declaration of Attorney Kelly explaining SECO's history, its bankruptcy, and its lack of directors, officers or employees. Attorney Kelly declared that John Erato, who had served as director and president of SECO post-bankruptcy, had resigned, effective November 24, 2009, leaving SECO with no officers, directors, employees, or agents.5
In SECO's opposition to the motion to deem the RFAs admitted, SECO acknowledged that section 2033.240, subdivision (b) provides that the agent signing onbehalf of a corporation can be "an attorney acting in that capacity for the party." However, when an attorney verifies the response, the party "waives any lawyer-client privilege and any protection for work product . . . during any subsequent discovery from that attorney concerning the identity of the sources of the information contained in the response." (Italics added.) SECO argued that it could not be compelled by the court to waive the attorney-client privilege, and noted that it had no officer or director who could "waive the attorney-client privilege and authorize defense counsel to sign verifications."
SECO acknowledged that there were two purposes to a verification: first, to made the discovery responses admissible; second, to provide a witness who could testify concerning the sources for the discovery responses. As to the first purpose, SECO offered to stipulate that its responses would be admissible against it at trial. As to the second purpose, SECO argued that, since it had no employees or agents who could be deposed, nothing could be gained by a verification.
At the hearing on the motion, the issue arose as to the basis on which SECO denied several of the RFAs. SECO's counsel explained that, in the past, when SECO had employees, information was gathered through depositions and attorney-client communications. Counsel based SECO's denials on the information already in its possession. Counsel represented that it could provide this information in response to other discovery requests. The court suggested that Melendrez proceed by means of form interrogatory 17.1. Concluding that no one could verify the RFA response, thecourt denied the motion to deem the RFAs admitted, and instead deemed the response verified by SECO.6
Five days later, Melendrez served SECO with form interrogatory 17.1, which asks, with respect to each RFA not unqualifiedly admitted, for: the facts upon which the response is based; the names and contact information of all persons with knowledge of those facts; the identity of all documents and tangible things that support the response; and the contact information of the persons in possession of the documents and things.
As they had promised, SECO's attorneys provided a substantive response to the interrogatory.7 Counsel identified: specific facts which supported SECO's denials of the RFAs; many individuals who have (or had, in the case of deceased individuals) knowledge of the facts; cases in which those individuals gave relevant deposition testimony; and several other documents which also supported their denials. The interrogatory response was, as with the RFA response, signed by counsel, but not verified.
Melendrez moved for an order compelling SECO to provide a verified response. In the alternative, Melendrez sought an order authorizing it to depose SECO's attorney who had signed the response.
SECO opposed the motion, arguing, as it had before, that it had no officer or agent to verify the response.8 As before, SECO acknowledged that the law provides that an attorney may verify the response, but to do so works a limited waiver of the attorney-client privilege. (§ 2030.050, subd. (b).) SECO again argued that it had no officer or director who could "waive the attorney-client privilege and authorize defense counsel to sign verifications." SECO again offered to stipulate that the responses would be admissible...
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