Sinaiko v. Pacific Healthcare Consultants

• Citation: 148 Cal.App.4th 390,55 Cal.Rptr.3d 751
• Decision Date: 08 March 2007
• Docket Number: No. B187258.,B187258.
• Court: California Court of Appeals
• Parties: SINAIKO HEALTHCARE CONSULTING, INC., Plaintiff and Respondent, v. PACIFIC HEALTHCARE CONSULTANTS et al., Defendants; Steven M. Klugman, Objector and Appellant.

55 Cal.Rptr.3d 751

148 Cal.App.4th 390

SINAIKO HEALTHCARE CONSULTING, INC., Plaintiff and Respondent, v. PACIFIC HEALTHCARE CONSULTANTS et al., Defendants Steven M. Klugman, Objector and Appellant.

No. B187258.

Court of Appeal, Second District, Division 5.

March 8, 2007.

Certified for Partial Publication,^*

Law Offices of Patricia A. Painter, Patricia A. Painter, Redondo Beach; Law Offices of Steven Mark Klugman and Steven M. Klugman for Objector and Appellant Steven M. Klugman.

Fisher, Sparks, Grayson & Wolf, David R. Fisher, Beverly Hills; Greines, Martin, Stein & Richland and Robert A. Olson, Los Angeles, for Plaintiff and Respondent Sinaiko Healthcare Consulting, Inc.

MOSK, J.

This appeal¹ from an order imposing a monetary discovery sanction of $8,786.36 raises the issue of whether, under the California Civil Discovery Act (Code Civ. Proc. § 2016.010 et seq.),² the trial court has the authority to hear a motion to compel responses to written interrogatories under section 2030.290 when the party on whom the interrogatories were served fails to serve any response within the required time, thereby waiving all objections, but after the motion is served, provides an untimely response that the propounding party deems inadequate. In the published portion of this opinion, we hold that the mere service of an untimely interrogatory response, which may or may not reflect a good faith effort to comply with the party's discovery obligations, does not divest the trial court of authority to hear and grant a motion to compel responses under section 2030.290, subdivision (b). Whether the trial court should proceed with a motion to compel responses under section 2030.290 when there has been an untimely interrogatory response is within the sound discretion of the trial court.

BACKGROUND

In December 2004, plaintiff and respondent Sinaiko Healthcare Consulting, Inc. (Sinaiko) sued defendants³ for breach of contract, unfair competition, misappropriation of trade secrets, interference with prospective economic advantage and interference with contractual relations. Sinaiko alleged that it and its predecessor had engaged Kirchwehm, first as an employee and then (through Zeppelin and Pacific) as an independent contractor, to provide financial advisory services to Sinaiko's clients in the healthcare industry. Sinaiko alleged, that, as a result, Kirchwehm had access to Sinaiko's proprietary client database; that after Kirchwehm ended his relationship with it in July 2004, Sinaiko discovered that Kirchwehm had solicited at least one of its clients with which Kirchwehm had no previous contact; and that Kirchwehm had solicited other Sinaiko clients utilizing confidential information improperly obtained from Sinaiko.

Sinaiko's complaint included eight causes of action, one of which alleged a breach of contract. In its first cause of action, entitled "Breach of Oral Contract," Sinaiko alleged that, "In or about August, 2002, the parties orally agreed that defendants, and each of them, would provide advisory and financial services to SINAKO's clients for which SINAIKO would compensate defendants. Defendants agreed that they would provide SINAIKO with the underlying materials supporting the opinion letters prepared upon SINAKO's request, due to the fact that said materials were at all times the property of SINAIKO." Sinaiko further alleged that, "Beginning in or about August, 2002, and continuing to the present, defendants, and each of them, breached the above-referenced oral agreement[.]"

On February 14, 2005,⁴ Sinaiko served on each of Kirchwehm, Zeppelin and Pacific one set of official form written interrogatories⁵ (the "interrogatories"), pursuant to section 2030.020, subdivision (a), and one set of inspection demands to produce and permit the inspection and copying of documents (the "document requests"), pursuant to section 2031.020, subdivision (a). Among the interrogatories propounded by Sinaiko were form interrogatories 50.1 through 50.6. Form interrogatory 50.1 requested that, "[f]or each agreement alleged in the pleadings," defendants (a) identify each document that was part of the agreement; (b) state each part of the agreement not in writing; (c) identify all documents that evidenced any part of the agreement not in writing; (d) identify all documents that were part of any modification to the agreement; (e) state each modification not in writing; and (f) identify all documents that evidenced any modification not in writing. Form interrogatory 50.1 also requested that defendants provide the name, address and telephone number of each person who either possessed the documents identified in defendants' response, or who had agreed to any of the oral agreements or oral modifications identified in defendants' response.

Interrogatories 50.2 through 50.6 provided as follows:

"50.2 Was there a breach of any agreement alleged in the pleadings? If so, for each breach describe and give the date of every act or omission that you claim is the breach of the agreement.

"50.3 Was performance of any agreement alleged in the pleadings excused? If so, identify each agreement excused and state why performance was excused.

"50.4 Was any agreement alleged in the pleadings terminated by mutual agreement, release, accord and satisfaction, or novation? If so, identify each agreement terminated, the date of termination, and the basis of the termination.

"50.5 Is any agreement alleged in the pleadings unenforceable? If so, identify each unenforceable agreement and state why it is unenforceable.

"50.6 Is any agreement alleged in the pleadings ambiguous? If so, identify each ambiguous agreement and state why it is ambiguous."

Sinaiko's document requests sought 23 categories of documents, including the documents identified in defendants' response to form interrogatory 50.1, documents pertaining to work that defendants had done for clients on Sinaiko's behalf, and documents pertaining to "advisory or financial services" provided by defendants "independent of their relationship with Sinaiko. Sinaiko served the interrogatories and document requests by mail, and as to each required a response by March 21. (§§ 1013, subd. (a); 2030.260, subd.(a); 2031.260.)

Defendants, all of whom were represented by appellant Klugman, did not respond to the discovery requests by March 21. On March 24, counsel for Sinaiko wrote a letter to Klugman demanding responses to the discovery requests, without objection, by March 30. Klugman did not respond to the letter, and defendants did not respond to the discovery requests by March 30. As a result, on March 31, Sinaiko served all three defendants (by personal service on their attorney, Klugman) with motions to compel responses to the form interrogatories and document requests, and requesting monetary sanctions. Because March 31 was a court holiday, Sinaiko did not file the motions until April 1.

Later on March 31 — after Sinaiko had served the motions — defendants prepared their "responses" to Sinaiko's form interrogatories and faxed them to Sinaiko's counsel. Each of the defendants responded to form interrogatories 50.1 through 50.6 in precisely the same way: "Defendant has filed a demurrer as to all of the contractual allegations contained in the plaintiffs complaint. The demurrers are both general, and special due to uncertainty. As indicated in the demurrers, defendant cannot at this time determine which contract, oral or written, if any, is or has been identified as at issue in this complaint and action. As such, this interrogatory requests information that may or may not exist at this time. Defendant cannot respond to this interrogatory at this time given the uncertainty of the identification of the terms and provisions of any contract, written or oral. The hearing on defendant's general and special demurrers . . . is currently scheduled for April 21[.]" Defendants did not serve responses to Sinaiko's document requests or produce any documents.

Not satisfied with defendants' responses to the interrogatories, and having no response to the document requests, Sinaiko did not take its motions to compel responses off calendar. Defendants, however, did not file any opposition to the motions. One week before the hearing, Sinaiko filed and served a "reply" memorandum, in which Sinaiko reiterated its request that the trial court order defendants "to fully respond, without objection" to both the interrogatories and the document requests. In a declaration submitted with the "reply," counsel for Sinaiko informed the trial court that, "On March 31, defendants served untimely and deficient responses to the First Set of Form Interrogatories, in that they failed to respond substantively to Form Interrogatory Nos. 50.1 through 50.6. To date, defendants have not served a written response to the First Requests for Production of Documents or served any documents responsive to the Requests for Production."

On April 26, the trial court heard Sinaiko's motions to compel responses. Defendants did not appear at the hearing. As reflected in the trial court's minute order (the April 26 Order), the trial court granted the motions to compel responses against all three defendants as to both the interrogatories and the document requests and ordered defendants to "respond without objection and produce all documents within 20 days." The trial court also awarded monetary sanctions totaling $2,208.89 against defendants, to be paid within 20 days. Sinaiko served upon defendants its notice of the order compelling responses that same day. The next day, April 27, the trial court overruled defendants' demurrers.

On May 6, defendants moved for reconsideration of the April 26 Order. The motion for reconsideration was set for hearing on June 13, nearly four weeks after the deadline to comply with the April 26 Order. On May 13, defendants first served verified responses to Sinaiko's document requests. The responses, however stated that defenda...