Richards v. Superior Court

• Decision Date: 09 November 1978
• Citation: 150 Cal.Rptr. 77,86 Cal.App.3d 265
• Parties: Richard RICHARDS, Glenn R. Watson, Robert G. Beverly, Gilbert Dreyfuss, and Harry L. Gershon, Petitioners, v. SUPERIOR COURT of the State of California FOR the COUNTY OF LOS ANGELES, Respondent; Ronald M. LEE, and Pacific Southwestern Properties, Incorporated, Real Parties in Interest. Civ. 54520.
• Court: California Court of Appeals Court of Appeals

Page 77

150 Cal.Rptr. 77

86 Cal.App.3d 265

Richard RICHARDS, Glenn R. Watson, Robert G. Beverly, Gilbert Dreyfuss, and Harry L. Gershon, Petitioners, v. SUPERIOR COURT of the State of California FOR the COUNTY OF LOS ANGELES, Respondent;

Ronald M. LEE, and Pacific Southwestern Properties, Incorporated, Real Parties in Interest.

Civ. 54520.

Court of Appeal, Second District, Division 1, California.

Nov. 9, 1978.

Schell & Delamer, Gerard E. Sabo and Mark B. Pepys, Los Angeles, for petitioners.

No appearance for respondent.

Richard A. Stone and Marc Lerner, Beverly Hills, for real parties in interest.

THOMPSON, Associate Justice.

In this petition for writ of mandate, we consider the right of a defendant sued in a cause of action which permits the assessment of punitive damages to a protective order which limits use of the results of discovery of his financial condition to the purposes of the lawsuit and prohibits disclosure of that information for other purposes. We conclude that absent a showing by the proponent of discovery that the interest of justice requires extraneous disclosure, the defendant is entitled to the protective order. We conclude further that the court may not deny the defendant the protection of the order as a sanction for failure to comply with the mandates of the discovery statutes.

Petitioners and real parties in interest agree on the facts. Petitioners are members of a law firm. Real parties in interest sued them for malicious prosecution, intentional interference with business relations, and intentional infliction of emotional harm. On May 8, 1978, real parties in interest served a set of 39 interrogatories upon petitioners. The first 38 seek information concerning the financial status of each of the petitioners. Interrogatories 1 through 13 are general in nature. Interrogatories 14 through 38 seek detailed data of assets, income, and liabilities. Interrogatory 39 states: "With respect to Interrogatories 14 through 38, you may in lieu of answering said Interrogatories submit with your answers to these Interrogatories a current financial statement."

On June 5, petitioners served and filed objections to the interrogatories and a motion for a protective order. The trial court overruled the objections but issued a protective order stating: "Moving parties may deliver their Answers to the Interrogatories . . . in a sealed condition to the Clerk of the Court to be retained in a sealed condition and not to be opened except by the Judge Presiding at the Mandatory Settlement Conference in this action. Service to Clerk by 7/24/78 and Proof of Filing to moving parties."

Four of the five petitioners lodged purported financial statements with the clerk but not until August 15. On August 16, real parties in interest noticed their motion for sanctions. The trial court imposed a monetary sanction of $500 and ordered that if the fifth petitioner did not comply with the discovery request by August 23 the protective order would be set aside. The monetary sanctions were paid and are not in issue here.

The fifth petitioner lodged his purported financial statement with the clerk on August 22. The mandatory settlement conference was held on September 1 before a judge other than the one who had presided over discovery proceedings. At the conference, counsel for petitioners argued that the protective order should be construed as allowing the settlement judge to examine the content of the financial information filed under seal but as precluding the transmission of that information to real parties in interest or their counsel. The responses to interrogatories were not available to assist the settlement judge in ruling on the motion because they rested some place within the court's files but could not then be found.

The case did not settle. The settlement judge "directed" counsel for the parties to the department of the judge who had issued the protective order for "clarification and guidance." Counsel did as directed. The judge presiding over discovery set the matter for hearing on September 6. He solicited a proposed protective order limiting the use and disclosure of the financial information by real parties in interest and their counsel. On September 5, counsel for petitioners submitted a draft of a proposed protective order which, among other things, stated that the financial statements previously lodged might be examined only by counsel for real parties in interest or his representative and that the information obtained in the examination could be used only for the purpose of preparation for trial of the subject lawsuit.

At the hearing on September 6, the financial statement of the fifth petitioner filed on August 22 was available to the judge. The other four financial statements filed previously were not, they still being somewhere in the morass of the files of the court and unobtainable after a three hour search through the courthouse. The judge examined the one financial statement that was available to him. Concluding that the statement did not contain adequate financial information, the judge ordered that the "Protective Order of June 26, 1978, is set aside as to all defendants. All defendants are ordered to answer all Interrogs (Sic ) served 5/8/78 by 9:00 a. m. on 9/13/78."

On September 12, petitioners filed their petition for writ of mandate seeking to set aside the trial court's order of September 6. However, pursuant to the order of the trial court, petitioners also filed their answers to Interrogatories 1 through 38 at 8:45 a. m. on September 13.

Unaware that petitioners had filed their answers to the interrogatories, we issued our stay order on September 13 to permit us to consider the petition. Still unaware that the answers had been filed, we, on September 20, 1978, issued our alternative writ in response to the petition.

We note at the outset that, while our examination of the financial statements filed by the petitioners reveals that at least most of them comply with the request of interrogatory 39, the issue of compliance is no longer before us. The interrogatories have already been answered specifically. Hence, we confine our consideration to the propriety of the trial court's ruling of September 6 dissolving the existing protective order without ruling upon petitioners' request for a substitute modified order.

The trial court abused its discretion by dissolving the existing protective order while failing to grant that portion of the request for a new protective order which confines the examination of the financial data to real parties in interest's counsel or his representative and which limits use of the information obtained to the lawsuit.

The order of September 6 seems clearly to have been imposed as a sanction for petitioners' failure to furnish the fifth financial statement in the time required by the trial court. In that context, the sanction imposed is inappropriate. While the trial judge is vested with discretion to impose sanctions for failure of compliance with discovery orders, the sanction imposed must be appropriate to the dereliction, must be authorized by the discovery statutes, and must not exceed that which is necessary to protect the interests of the party entitled to but denied discovery. (Stein v. Hassen (1973) 34 Cal.App.3d 294, 301, 109 Cal.Rptr. 321.)

As to four of the petitioners, the sanction is grossly invalid. Each had previously filed a purported financial statement. Those statements, through no fault of the petitioners, were not before the trial judge when he ruled so that the judge could in no way determine if they were adequate. He penalized the four because of what he perceived to be a failure of the fifth petitioner to supply a sufficiently detailed statement. In effect, the trial court held four of the petitioners hostage to force compliance by the fifth, and them imposed its sanction order when the fifth did not perform in a manner deemed adequate by the judge. By penalizing some of the parties for the perceived sins of a coparty, the judge abused his discretion.

The sanction order is also an abuse of discretion as to the fifth petitioner whose financial statement was deemed insufficient by the trial court. While the trial court could, if in fact the statement did not comply with interrogatory 39, have required...