Judge: Carolyn M. Caietti, Case: 37-2022-00026643-CU-IC-CTL, Date: 2024-02-16 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - February 15, 2024

02/16/2024  10:30:00 AM  C-70 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Carolyn Caietti

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Civil - Unlimited  Insurance Coverage Discovery Hearing 37-2022-00026643-CU-IC-CTL REDLANDS PRIDE LLC VS NATIONWIDE MUTUAL INSURANCE COMPANY CAUSAL DOCUMENT/DATE FILED: Motion to Compel Discovery, 01/22/2024

Plaintiff Redlands Pride's Motion to Compel Defendant Nationwide Mutual Insurance Company to Produce Its Documents Responsive to Requests for Production Nos. 12-15 and Request for Order Awarding Monetary Sanctions is GRANTED IN PART (as further responses are warranted) and DENIED IN PART (as to sanctions).

Background This is an insurance coverage dispute and bad faith insurance case concerning residential rental property in Redlands. Plaintiff rented its property in Redlands to tenants and entered into a commercial property policy with Defendant Nationwide to insure the property, providing coverage for loss by fire, theft and vandalism. On July 16, 2021, a fire occurred at the property. Per the Complaint, an investigation revealed the tenants caused the fire by their efforts to 'steal' electricity through re-wiring of the electrical panel in order to power the growing of marijuana plants. In this motion, Plaintiff argues Nationwide is avoiding its duty to cover the loss of the property under the policy by 'shoehorning the fire and related damages (caused by an illegal connection to the electrical grid to support a marijuana growing operation being conducted by unknown persons in the Insured's leased home) into an exclusion for By-Products of Production or Processing Operations (the 'By-Products Exclusion'), primarily directed at cooking and/or methamphetamine lab operations.' Preliminary Matters Defendant's objections are overruled.

Discussion The Document Requests On November 8, 2023, Plaintiff deposed Robert Stayton, a Claim Technical Director at Nationwide, who testified he personally was involved in approximately 20 grow house claims. (Declaration of Xenia Tashlitsky, at Ex. A.) In support of Nationwide's Motion for Summary Judgment, Nationwide filed a declaration of James Boles dated December 1, 2023, a claims specialist for Nationwide, wherein he identified his personal experience with approximately 15-20 grow house claims as foundation for that declaration. (Tashlitsky Decl, at Ex. C.) Calendar No.: Event ID:  TENTATIVE RULINGS

3077074  47 CASE NUMBER: CASE TITLE:  REDLANDS PRIDE LLC VS NATIONWIDE MUTUAL INSURANCE  37-2022-00026643-CU-IC-CTL It appears each witness relied on their experience regarding 'grow house' claims in the ultimate denial of some of the coverage under Plaintiff's policy.

Following Stayton's deposition, Plaintiff issued document requests: No. 12 - The unprivileged portions of the DOCUMENTS comprising the claim files for the grow house claims in which Robert Stayton was personally involved, as identified in his deposition taken in this matter at pp. 11-12.

No. 13 - The unprivileged portion of the DOCUMENTS comprising the relevant policies of insurance governing coverage for the claim files for the grow house claims in which Robert Stayton was personally involved, as identified in his deposition taken in this matter at pp. 11-12.

No. 14 - The unprivileged portion of the DOCUMENTS comprising the claim files for any and all grow house claims in which James Boles was personally involved during his tenure at NATIONWIDE.

No. 15 - The unprivileged portions of the DOCUMENTS comprising the relevant policies of insurance governing coverage for the claim files for the grow house claims in which James Boles was personally involved during his tenure at NATIONWIDE.

For each request, Plaintiff indicated 'consent[ed] to any and all reasonable steps necessary for redaction of privileged information to be set forth in an appropriate privilege log.' A Further Response Is Required A plaintiff suing an insurance company for bad faith may discover records of other claimants handled by the same adjuster. (See, Colonial Life & Accident Ins. Co. v. Sup. Ct. (1982) 31 Cal.3d 785, 790 (Colonial Life) ['Colonial's suggestion that the discovery of other insureds whose claims were negotiated by Sharkey will not yield relevant, admissible evidence, is patently meritless.'].) Here, Plaintiff seeks records related to other claims handled by the same adjusters and, specifically, 'grow house' claims, to test their credibility and foundational knowledge. Both witnesses testified to personal experience involving grow house claims and, based on this experience, they could detect a strong odor of marijuana at the property three months after the fire loss occurred and the plants were removed. This experience played a role in the decision to apply the exclusions at issue and deny some of Plaintiff's claim under the policy. (ROA 56 - Ex. Boles Decl. ISO MSJ, at ¶¶ 21, 24-25, 43-46.) Further, while Nationwide is correct that opinion evidence is 'completely irrelevant to interpret an insurance contract' (Chatton v. National Union Fire Ins. Co. (1992) 10 Cal.App.4th 846, 865), the evidence could still be relevant to any bad faith investigation, inconsistent handling of claims and punitive damages. Thus, the information is discoverable under the broad scope of discovery. (C.C.P., § 2017.010.) Nationwide's objections also lack merit. The terms 'grow house claims' and 'personally involved' are not vague and ambiguous.

Nationwide's objection based on Insurance Code section 791.13 is unavailing because the statute creates an express exception for disclosure where '[o]therwise permitted or required by law' or in response to a judicial order. (Ins. Code, § 791.13(g), (h).) Notwithstanding, each request expressly excludes privileged material.

But to provide for additional protection, the Court will order the records produced under a protective order. (See, City and County of San Francisco v. Uber Technologies, Inc. (2019) 36 Cal.App.5th 66, 84 (rejecting Uber's contention the trial court's order should be reversed on the basis administrative subpoenas invade the privacy and confidentiality interests of Uber or third parties where a protective order was in place).) Calendar No.: Event ID:  TENTATIVE RULINGS

3077074  47 CASE NUMBER: CASE TITLE:  REDLANDS PRIDE LLC VS NATIONWIDE MUTUAL INSURANCE  37-2022-00026643-CU-IC-CTL The requests are not overbroad as each witness identified approximately 20 grow house claims.

(Colonial Life, supra (allowing discovery of 35 claims).) The requests are limited to 'grow house' claims. No legal authority is provided supporting a geographical limitation.

Nationwide also has not met its burden responding would be unduly burdensome. Nationwide maintains it would 'be required to spend incalculable personnel hours searching tens of thousands of other insured claim files covering several states across the county' and that it does not have the means to search the electronically stored claim files to determine whether a marijuana grow house claim is involved. (Opp., at p. 10.) Nationwide does not attempt to estimate the number of hours required or the potential expense.

(Williams v. Superior Court (2017) 3 Cal.5th 531, 549-550 (explaining an objection based upon burden must be sustained by evidence showing the quantum of work required and concluding 'the trial court had nothing in the record upon which to base a comparative judgment that any responsive burden would be undue or excessive, relative to the likelihood of admissible evidence being discovered').) The Court is also not convinced Nationwide does not have any way to search for key terms in their files.

Despite their vast experience, somehow Stayton and Boles were able to estimate their grow house claims experience to just 20 or less claims each. Neither disavow that they have no recall of the type of property, location of the property, people involved, etc. that could help narrow the search field.

Something caused them to estimate their involvement in 20 or less claims. Nationwide does not further explain if they worked with Stayton and Boles to locate these claims.

Nationwide has not met its burden showing the attorney-client privilege, attorney work-product doctrine and/or litigation privilege applies. Again, privileged material is not sought.

Thus, the objections to Nos. 12-15 lack merit, warranting a further response. (C.C.P., § 2031.310(a)(3).) Sanctions are Not Warranted Courts must impose a monetary sanction against any party who unsuccessfully makes or opposes a motion to compel further responses to a demand, unless it finds the one subject to the sanction acted with substantial justification or other circumstances make the imposition of a sanction unjust. Here, Defendant took a colorable position regarding Insurance Code section 791.13 and the burden involved in responding. Thus, Defendant acted with substantial justification. Plaintiff's request for sanctions is DENIED.

In light of this ruling ordering a further response, Nationwide's opposition request for sanctions is denied.

Concluding Orders Defendant Nationwide Mutual Insurance Company is ordered to serve a further, verified and code-compliant response with production to Plaintiff's Request for Production of Documents, Set Four, Nos. 12-15 by March 15, 2024.

Any records produced pursuant to this ruling shall not be disclosed to any person other than: (i) counsel for the parties to this case; (ii) counsel's employees; (iii) individual parties or party-officers/employees to the extent deemed necessary by counsel for the prosecution or defense of this litigation; (v) consultants or expert witnesses retained in the litigation; (vi) authors or recipients of the records. Further, if a party seeks to use these records at trial or in support or opposition to a motion or request, the party must comply with California Rules of Court 2.550 and 2.551 and first obtain a court order to do so.

For any documents Defendant maintains are privileged, Defendant is ordered to serve a privilege log with the response and production. The Court expects the privilege log to identify with particularly each document Defendants claim is protected from disclosure by a privilege and provide sufficient factual Calendar No.: Event ID:  TENTATIVE RULINGS

3077074  47 CASE NUMBER: CASE TITLE:  REDLANDS PRIDE LLC VS NATIONWIDE MUTUAL INSURANCE  37-2022-00026643-CU-IC-CTL information for Plaintiff and the Court to evaluate whether the claim has merit. (Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1130.) Minimally, it must provide: (i) the identity and capacity of all individuals who authored, sent, or received each allegedly privileged document; (ii) the document's date; (iii) a brief description of the document and its contents or subject matter sufficient to determine whether the privilege applies; (iv) and the precise privilege or protection asserted. (Ibid.) Plaintiff is ordered to prepare and submit a proposed order, including any other language the parties agree to for the protective order(s), in accordance with any applicable laws and court rules. That order will be the Court's final ruling on the motion.

The parties are reminded to comply with Department 70's Policies and Procedures and to provide courtesy copies of all motion paperwork.

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