St. Mary v. Superior Court of Cal. for the Cnty. of Monterey

• Decision Date: 31 January 2014
• Docket Number: No. H038918,H038918
• Citation: 167 Cal.Rptr.3d 517,223 Cal.App.4th 762
• Court: California Court of Appeals Court of Appeals
• Parties: Lisa ST. MARY, Petitioner, v. The SUPERIOR COURT of California for the County of Monterey, Respondent, Thomas Schellenberg and Katherine Mills, Real Parties in Interest.

223 Cal.App.4th 762

167 Cal.Rptr.3d 517

Lisa ST. MARY, Petitioner,

v. The SUPERIOR COURT of California for the County of Monterey, Respondent,Thomas Schellenberg and Katherine Mills, Real Parties in Interest.

No. H038918

Court of Appeal, Sixth District, California.

Filed January 31, 2014

See 2 Witkin, Cal. Evidence (5th ed. 2012) Discovery, § 179.

Monterey County Superior Court, Superior Court No.: M111895, The Honorable Kay T. Kingsley, Trial Judge.

Attorneys for Petitioner Lisa St. Mary: Law Office of David M. Hollingsworth, David M. Hollingsworth, Monterey.

Real Parties in Interest Thomas Schellenberg and Katherine Mills: In pro. per.

Márquez, J.

Petitioner Lisa St. Mary (St. Mary) brought an action below for damages, alleging fraud and other claims arising out of an investment of $475,000. She sued, among others, Thomas Schellenberg and his wife, Katherine Mills. (Schellenberg and Mills are sometimes referred to herein collectively as real parties in interest, or real parties.) Schellenberg and Mills each propounded requests for admissions (RFAs) directed to St. Mary, which consisted collectively of 119 individual RFAs. After making two written requests for a two-week extension to respond, and after Schellenberg denied the extension request one day after the due date for the responses, counsel for St. Mary served responses to the RFAs. They were served four days late, on July 16, 2012. Four days later, real parties, without any attempt to meet and confer, filed a motion (Motion) with the respondent superior court requesting that the 119 RFAs in their entirety be deemed admitted, pursuant to Code of Civil Procedure section 2033.280, subdivision (b).¹ The court granted the Motion as to the Schellenberg RFAs, deemed 41 of the 105 RFAs admitted, and awarded sanctions in favor of real parties. The court's order omitted any reference to the Motion to deem admitted the 14 RFAs propounded by Mills upon St. Mary.

St. Mary seeks a writ of mandate directing the superior court to vacate its order deeming the 41 Schellenberg RFAs admitted. She contends in her petition that real parties' Motion was defective in that it did not constitute a motion to compel further responses to RFAs under section 2033.290. She argues further that real parties improperly included new matter for the first time in their reply papers—namely, argument directed to St. Mary's responses to specific Schellenberg RFAs that real parties claimed were deficient—and that the court granted the Motion based upon the presentation of such new arguments. St. Mary asserts that the impact of the court's order is extremely significant because, among other things, six of the RFAs deemed admitted are specifically directed to a potential statute of limitations defense asserted by real parties.

In response, real parties raise several procedural objections to the petition, including its timeliness.² In addition, real parties assert, among other things, that St. Mary has failed to demonstrate “ ‘clear error’ ” entitling her to relief; the statutes under which real parties' Motion was brought ( § 2033.280) and the additional statute governing motions to compel further responses to RFAs (§ 2033.290) are clear; and the untimely responses to RFAs served by St. Mary were not substantially compliant with the Code of Civil Procedure.

We conclude that respondent court erred in granting real parties' Motion by deeming admitted 41 of the Schellenberg RFAs. Accordingly, we will grant the petition and order a writ of mandamus to issue commanding respondent to vacate its order and issue a new and different order denying real parties' Motion pursuant to section 2033.280, subdivision (b) as to the RFAs propounded upon St. Mary.

PROCEDURAL BACKGROUND ³

I. The Complaint

St. Mary filed her complaint on April 25, 2011, alleging claims sounding in fraud against Schellenberg, Mills, and David Nilsen ⁴ (collectively, Defendants), arising out of the investment of her life savings of $475,000. According to the pleading's caption, St. Mary asserts claims for breach of fiduciary duty, fraudulent concealment, conflict of interest, affirmative misrepresentation, fraudulent concealment in connection with the sale of an interest in real property, embezzlement, and a request for an accounting.

It is alleged by St. Mary ⁵ that after having heard a radio advertisement in December 2005 promoting investment opportunities in Cedar Funding, Inc., she called the telephone number indicated in the radio advertisement and was referred to Schellenberg, who was identified as “ ‘Director, New Business' for Cedar Funding, and [as] a ‘Real Estate & Loan Consultant.’ ” Schellenberg provided written materials to St. Mary and later recommended that she make a loan to his wholly owned separate venture, Neo Ventures, Inc., to facilitate ongoing substantial renovations of residential property located at 214 4th Street in Pacific Grove (subject property). He represented that in exchange for her $475,000 investment, she “would receive an undivided 92.054% majority interest in an already existing Promissory Note and an already recorded Deed of Trust” recorded against and secured by the subject property. Schellenberg represented to St. Mary that this deed of trust would ultimately be in first priority, that the subject property would be worth $1,375,000, and that her investment would be protected.

St. Mary alleges further in her complaint that “Defendants [intended] to defraud [her] by inducing her to advance $475,000.00 for [their] personal, secret and prohibited use and enjoyment ... Instead of action for the benefit of protection of [St. Mary] in a transaction lending her investment out to a third person on a safe and fully secured loan with the represented adequate equity as security, Defendants always intended to convert the proceeds of the loan to their own personal use and benefit and did so.” St. Mary alleges that she provided the funds to Defendants in January 2006 in reasonable and justifiable reliance upon their representations. By March 2007, “Defendants had fraudulently but secretly extracted $1,887,000.00” using the subject property as the basis for the financial transactions. (Original emphasis omitted.) ⁶ St. Mary never received any security as promised, and her entire investment was lost after the bankruptcy of Cedar Funding, Inc. and the foreclosure of the subject property effectuated by a lienholder bank. She became aware of “the vast fraudulent operations of Defendants” in May 2008.

II. The RFAs and Responses

On June 7, 2012,⁷ Schellenberg served by mail upon St. Mary a set of 105 RFAs, seeking that she admit or deny certain specified matters. ⁸ On the same date, Mills served by mail upon St. Mary a set of 14 RFAs, seeking that she admit or deny specified matters. St. Mary was therefore required to serve her responses to the Schellenberg RFAs and the Mills RFAs on or before July 12, 2012. (§§ 2033.250; 1013, subd. (a).)

On July 16—four days late—St. Mary served her responses to the Schellenberg and Mills RFAs by facsimile and mail. Prior to this tardy service of the responses, and on or before the July 12 deadline for service of the responses, counsel for St. Mary, David Hollingsworth—based upon the volume of the discovery and his involvement in preparing for a federal jury trial—requested that real parties grant him a two-week extension to complete the responses.⁹ Real parties did not respond to the extension request until after the responses were due. On July 13, Schellenberg faxed a letter to Hollingsworth granting a nine-day extension, subject to the condition that St. Mary immediately file a dismissal with prejudice of the action as to Mills.

III. Real Parties' Motion to Have RFAs Deemed Admitted

On July 20—four days after receipt by facsimile of the responses to the RFAs—real parties filed a Motion to have the Schellenberg and Mills RFAs propounded upon St. Mary deemed admitted.¹⁰ Real parties acknowledged that St. Mary had (belatedly) served responses to the two sets of RFAs, and they attached those responses to the respective declarations of Schellenberg and Mills filed in support of the Motion. Real parties contended that St. Mary's “responses [were] defective, legally deficient, and a nullity.” They repeated this conclusory statement serially in the memorandum filed in support of the Motion. The Motion contained no reference to any particular response by St. Mary to any of the 119 RFAs to explain real parties' claim that the responses were defective or legally deficient. Indeed, other than being served four days late, there was no basis for real parties' claim that St. Mary's responses to the 14 Mills RFAs were deficient; each response consisted of a one-word admission or denial.

On August 3, St. Mary's counsel and Schellenberg appeared at a case management conference. There was substantial discussion between Hollingsworth, Schellenberg, and the court concerning the Motion, outstanding interrogatory responses due from St. Mary to real parties (concerning St. Mary's denials of any of the RFAs), and Hollingsworth's unavailability for a portion of August due to a federal jury trial. The court suggested that it might be appropriate for the parties to arrive at a compromise under which St. Mary would agree to serve responses to the interrogatories by a date certain, in exchange for which real parties would vacate the hearing on the Motion. At the conclusion of the conference, Schellenberg stipulated that if he had received St. Mary's responses to interrogatories “in [his] hands” by the end of business on August 9, he would drop the Motion.

Hollingsworth, on behalf of St. Mary, filed opposition to the Motion on August 3. That opposition emphasized (1) the collective volume of the RFAs; (2) Hollingsworth's unsuccessful attempts to obtain a two-week extension to respond; (3) real parties' belated reply to the extension request made after the responses were due in which they...