Judge: Edward B. Moreton, Jr, Case: 24SMCV00632, Date: 2025-04-15 Tentative Ruling

Case Number: 24SMCV00632    Hearing Date: April 15, 2025    Dept: 205

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

BACKGROUND

This is an insurance bad faith case involving the denial of an automobile insurance claim. In February 2020, Plaintiff Sawyer Romano leased a 2020 Tesla Model 3 (“2020 Tesla”) and purchased insurance from Tesla Insurance (the “Policy”). The Policy was continually renewed through the relevant timeframe in this dispute. The Policy was underwritten by Defendant State National Insurance (“State National”).

In early August 2023, Plaintiff traded in his 2020 Tesla for a new 2023 Tesla and requested via email that Tesla Insurance add the 2023 Tesla to the Policy. According to Plaintiff, Tesla Insurance failed to add the 2023 Tesla to the Policy, as requested.

Tesla Insurance claims it did not have the vehicle information necessary to add the 2023 Tesla to the Policy.  Specifically, Tesla claims Plaintiff failed to (1) identify the model of Tesla he wanted to add to the Policy; (2) whether this new vehicle was in addition to the 2020 Tesla that was already listed on the Policy or a replacement vehicle for the 2020 Tesla; (3) the VIN for the new vehicle; or (4) what coverages he wanted for the new unspecified vehicle.

On September 30, 2023, Plaintiff was in an accident. Tesla Insurance denied Plaintiff’s insurance claim because the 2023 Tesla wasn’t added to the Policy, resulting in this lawsuit.

At issue in this case is whether Tesla Insurance failed to comply with California insurance law (specifically Insurance Code Sections 381.1(a), 381(b) and Cal. Code Regs. tit. 13 § 82.00) requiring Tesla Insurance to provide Plaintiff with renewal documents and an insurance ID card, which would have notified Plaintiff prior to the accident that the “property insured” was the incorrect vehicle.  Tesla Insurance claims the required documents were available to Plaintiff on his computer or phone in the Tesla App, while Plaintiff says the documents were not available in the Tesla App.  Also at issue in this case is whether Tesla Insurance already had in its possession, or had access to, the information Tesla Insurance contends it didn’t have regarding the 2023 Tesla to add it to the Policy.

On December 26, 2024, Plaintiff served Tesla, Inc. (“Tesla”) with a deposition subpoena (“Subpoena”). (Declaration of Jason R. Bendel (“Bendel Decl.”) ¶ 2, Ex. A.)  The Subpoena seeks documents from Tesla relating to, among other things, Plaintiff, the 2020 Tesla, the 2023 Tesla, the Tesla App, and the information sharing between Tesla Insurance and Tesla. (Id.)

Tesla confirmed receipt of the Subpoena, but requested several extensions to respond.  Ultimately, Tesla agreed to produce a response by February 18, 2025, but no response was provided. (Bendel Decl. ¶ 6.)  

This hearing is on Plaintiff’s motion to compel Tesla’s responses to the Subpoena.  Plaintiff argues the Subpoena seeks relevant documents, and Tesla has failed to respond, thereby waiving any objections Tesla may have had.  Tesla has not filed an opposition to this motion.  Rather, Defendants Tesla Insurance and State National filed an opposition. 

MEET AND CONFER

On March 5, 2025, Plaintiff sent a letter attempting to meet and confer on Tesla’s response to the Subpoena and requested a response by March 10, 2025. (Bendel Decl. ¶ 7, Ex. E.)  Tesla did not respond to the meet and confer letter and has not produced the requested documents.  (Id.)

LEGAL STANDARD

The California Code of Civil Procedure permits discovery from a nonparty through a subpoena for the production of business records.  (Civ. Proc. Code §§ 2020.010, 2020.020.)  Section 19871.1 authorizes a party seeking discovery from a third-party through a subpoena to bring a motion to compel compliance with that subpoena. Cal. Civ. Proc. Code § 1987.1. The moving party is only required to show that the “production sought is subject to discovery.”  (See Cal. Civ. Proc. Code § 2025.480(i).)

“[A] civil litigant’s right to discovery is broad.”  (Yelp Inc. v. Superior Court (2017) 17 Cal. App. 5th 1, 15.)  “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action ... if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.”  (Id.) “[S]tatutes governing discovery ‘must be construed liberally in favor of disclosure unless the request is clearly improper by virtue of well-established causes for denial.”’ (Id.)  “This means that ‘disclosure is a matter of right unless statutory or public policy considerations clearly prohibit it.”’ (Id.) 

The opposing party bears the burden of justifying its refusal to comply with the subpoena.  (See Williams, 3 Cal. 5th at 541 (while a propounding party has the burden “of filing a motion to compel if it finds the answers it receives unsatisfactory, the burden of justifying any objection and failure to respond remains at all times with the party resisting” discovery); see also Vasquez v. California Sch. of Culinary Arts, Inc. (2014) 230 Cal. App. 4th 35, 42 (holding that the “subpoenaed person bears the burden of establishing … inaccessibility” when opposing production of electronically stored information on burden grounds).)

DISCUSSION

Before addressing the merits of the motion, the Court first considers the threshold argument whether Defendants’ opposition is improper and should not be considered.  Plaintiff argues that Defendants could not file an opposition to the motion to compel, but were instead required to file a motion to quash the subpoena or move for a protective order.  The Court agrees.  The proper method for a party to challenge a third-party records subpoena is to file a motion to quash and/or a motion for protective order pursuant to Code of Civil Procedure Section 1987.1.

However, even if the Court were to consider Defendants’ opposition, it would still grant the motion to compel.  Defendants argue that (1) the subpoenaed documents are not relevant, (2) the requests are overbroad, (3) the requests seek trade secret information, and (4) Plaintiff already sought the same information from Tesla Insurance and did not move to compel when Tesla Insurance objected to the requests or otherwise responded that it did not have responsive documents. 

In arguing lack of relevance and overbreadth, Defendants focus on documents relating to the Tesla App, and fail to address the other documents sought by the Subpoena.  They therefore concede the relevance of these documents.  As to documents relating to the Tesla App, the documents are relevant because Plaintiff claims he was not provided the required insurance documents, while Defendants maintain the documents were available on the Tesla App.  This makes the documents relating to the Tesla App relevant or at least reasonably calculated to lead to the discovery of admissible evidence.   

As to whether the requests seek trade secret information, Defendants again ignore the other documents sought by the Subpoena which are clearly not trade secrets (including documents relating to Plaintiff or his two Tesla cars).  In any event, Defendants concede that a protective order would address concerns about disclosing Tesla’s alleged trade secret information, and Plaintiff maintains there is a protective order in place.

Defendants also argues that Plaintiff has already sought the documents from Tesla Insurance, and failed to move to compel when Tesla Insurance asserted objections or maintained it did not have responsive documents.  But Defendants cite no authority that Plaintiff cannot seek the same information from a third party, particularly where the third party is affiliated with Defendants.  Plaintiff is entitled to test Defendants’ claim that they have no responsive documents.      

Regardless, Tesla waived any objections to the Subpoena by failing to respond to it.  Generally, “when there is a complete failure to respond to discovery,” there is waiver of all objections.  (See Scottsdale Ins. Co. v. Superior Court (1997) 59 Cal. App. 4th 263, 272.) Third parties are not exempted from this rule and are still expected to adhere to the strict rule of timely objecting to preserve any objections or privilege.  (See Monarch Healthcare v. Superior Court (2000) 78 Cal. App. 4th 1282, 1290.) 

Here, Tesla not only failed to timely object to the Subpoena—it neglected to respond at all.  The parties agreed to extend the production date to February 18, 2025, but, as of the filing of this motion, Tesla has not produced a single document, served any sort of response to the Subpoena, or responded to any of Plaintiff’s attempts to meet and confer.  Therefore, Tesla has waived its right to object to the Subpoena on any grounds, and its opposition fails to address its waiver.

By statute, “[t]he Court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel an answer or production, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., § 2025.480(j).) 

Here, the Court concludes sanctions are warranted.  Tesla lacked justification for failing to respond to the Subpoena. Tesla acknowledged receipt of the Subpoena, requested extensions to respond (which Plaintiff granted) and then just ignored the Subpoena. 

In determining the amount of sanctions, the Court starts with the lodestar which is the reasonable hourly rate multiplied by the reasonable hours expended.  Plaintiff’s counsel’s hourly rate is $575.  Plaintiff’s counsel, Jason Bendel, has been practicing since 2001.  He founded his own law firm, which specializes in business litigation, with an emphasis on insurance coverage and insurance bad faith litigation.  Prior to founding his firm, he practiced for 12 years at a national law firm.  Mr. Bendel is admitted to practice before all federal and state courts in California.  He has tried cases in federal and state courts.  Mr. Bendel also has experience at the appellate level, having drafted a number of successful appellate briefs.  The Court concludes that his rate is reasonable for an attorney of his skill and experience, in the prevailing Los Angeles legal market. 

Plaintiff’s counsel attests he will spend a total of 6.5 hours in the preparation of the instant motion, the reply, and the appearance at the hearing.  Plaintiff also spent $60 on the filing fee.  The Court concludes these hours and costs are reasonable.  Accordingly, the Court grants Plaintiff’s request for $3,797.50 in sanctions.

CONCLUSION

            Based on the foregoing, the Court GRANTS Plaintiff’s motion to compel Tesla, Inc.’s production of documents in response to the Subpoena and awards sanctions in the amount of $3,797.50 in favor of Plaintiff and against Tesla, Inc.  The sanctions are to be paid within 20 days.

IT IS SO ORDERED.

DATED: April 15, 2025                                                        ___________________________

Edward B. Moreton, Jr.

Judge of the Superior Court