Judge: Gregory Keosian, Case: 19STCV31361, Date: 2024-01-24 Tentative Ruling

Case Number: 19STCV31361    Hearing Date: January 24, 2024    Dept: 61

Defendant Citimortgage, Inc.’s Motion for Spoliation Sanctions is DENIED..

Defendant to give notice.

I.                   MOTION FOR DISCOVERY SANCTIONS

Misuse of the discovery process may result in the imposition of a variety of sanctions. These include payment of costs, sanctions barring the introduction of certain evidence, sanctions deeming that certain issues are determined against the offending party, and sanctions terminating an action in favor of the aggrieved party. Misuse of the discovery process includes failing to respond or submit to authorized discovery, providing evasive discovery responses, disobeying a court order to provide discovery, unsuccessfully making or opposing discovery motions without substantial justification, and failing to meet and confer in good faith to resolve a discovery dispute when required by statute to do so. The court may impose sanctions to the extent authorized by the chapter governing any particular discovery method or any other provision of this title.

The trial court has broad discretion to impose sanctions for violations of court orders, including those intended to compel compliance with a party's disclosure and discovery obligations, subject to reversal only for arbitrary or capricious action.

(In re Marriage of Eustice (2015) 242 Cal.App.4th 1291, 1308–1309, internal quotation marks, citations, and alterations omitted.)

The court may impose terminating sanctions, include an order striking pleadings, and order dismissing an action, or an order rendering judgment by default against a party, for conduct that is a misuse of the discovery process. (Code Civ. Proc., § 2023.030.) This conduct include “[f]ailing to respond or to submit to an authorized method of discovery,” and “[d]isobeying a court order to provide discovery.” (Code Civ. Proc., § 2023.010.)

Ultimate discovery sanctions are justified where there is a willful discovery order violation, a history of abuse, and evidence showing that less severe sanctions would not produce compliance with discovery rules.  (Van Sickle v. Gilbert (2011) 196 Cal.App.4th 1495, 1516.)  Dismissal is a drastic measure, and terminating sanctions should only be ordered when there has been previous noncompliance with a rule or order and it appears a less severe sanction would not be effective.  (Link v. Cater (1998) 60 Cal.App.4th 1315, 1326.)  “[A] penalty as severe as dismissal or default is not authorized where noncompliance with discovery is caused by an inability to comply rather than willfulness or bad faith.”  (Brown v. Sup. Ct. (1986) 180 Cal.App.3d 701, 707.)

Spoliation of evidence means the destruction or significant alteration of evidence or the failure to preserve evidence for another's use in pending or future litigation. Such conduct is condemned because it can destroy fairness and justice, for it increases the risk of an erroneous decision on the merits of the underlying cause of action. Destroying evidence can also increase the costs of litigation as parties attempt to reconstruct the destroyed evidence or to develop other evidence, which may be less accessible, less persuasive, or both. While there is no tort cause of action for the intentional destruction of evidence after litigation has commenced, it is a misuse of the discovery process that is subject to a broad range of punishment, including monetary, issue, evidentiary, and terminating sanctions. A terminating sanction is appropriate in the first instance without a violation of prior court orders in egregious cases of intentional spoliation of evidence.

Discovery sanctions are intended to remedy discovery abuse, not to punish the offending party. Accordingly, sanctions should be tailored to serve that remedial purpose, should not put the moving party in a better position than he would otherwise have been had he obtained the requested discovery, and should be proportionate to the offending party's misconduct.

(Williams v. Russ (2008) 167 Cal.App.4th 1215, 1223, internal quotation marks and citations omitted.) One seeking a spoliation sanction must show “that the records were destroyed with a culpable state of mind,” and that “the destroyed records were relevant to the party's claim or defense.” (Reeves v. MV Transportation, Inc. (2010) 186 Cal.App.4th 666, 681–682.)

Defendant Citimortgage, Inc. (Defendant) moves for terminating, issue, or evidentiary sanctions against Plaintiffs Claudette Marie Leslie, Rodwell N. Leslie, and Lillette E. Leslie (Plaintiff) based on the alleged spoliation of evidence caused by the loss of Claudette’s computer to a storage facility auction after Plaintiff failed to pay the fees.

Defendant presents the following facts. Plaintiffs’ remaining causes of action following multiple challenges to the pleadings concern Citimortgage’s alleged advancement of a foreclosure sale in November 2018 while a loan modification application was pending review. Plaintiffs’ claims are supported by purported letters from Defendant confirming the status of the modification in November 2018, the genuineness of which Defendant denied in responses to requests for admission dated December 28, 2020. (Winslow Decl. Exhs. A, B.)

Defendant first expressed its theory that the November 2018 letters were forgeries in a separate statement submitted on August 10, 2021, before an informal discovery conference held on August 13, 2021. (Winslow Decl. Exh. C.) Defendant claimed the letters were “forgeries” and  “doctored versions of letters Citi issued in 2016 and 2017.” (Ibid.) Accompanying this separate statement was the declaration of Kyle Ramey, a Recovery Sr. Analysist employed by Defendant, who stated that Defendant had no record of any such letters or applications upon which they were based, and that the “Homeowner Support Specialists” identified in the letters had left the company before 2017, indicating that the letters were based on prior letters sent by Defendant in response to prior applications. (Id., Exh. A.)

Defendant sent a deposition notice for Claudette Leslie on December 15, 2021, requesting the original letters at issue. (Winslow Decl. Exh. E.) Claudette responded with a declaration concerning the whereabouts of the letters, which she indicated that she had scanned the letters into her computer upon receipt of the documents, consistent with her training as a paralegal. (Winslow Decl. Exh. F.) Claudette stated that the original letters were lost in the eviction from the property that occurred in June 2019, and the chaotic property-retrieval efforts that ensued in the weeks thereafter, which were cut short by the new owners. (Ibid.)

Defendant served requests on May 26, 2023, seeking the production and inspection of any devices containing ESI related to the November 2018 letters. (Winslow Decl. ¶ 8.) Plaintiffs responded on June 26, 2023, stating that the computer on which the letters had initially been scanned had been left in storage and auctioned off on May 16, 2023. (Winslow Decl. Exh. H.) Defendant served follow-up discovery in August 2023, to which Plaintiff responded that they did not take any measures to transfer files from the old computer to a new computer when the new computer was obtained between November 2018  and October 2019. (Winslow Decl. Exh. K.) Thus the only copies of the original letters that exist are hard copies that Plaintiffs’ made of digital copies of the original letters. (Motion at p. 8.)

Defendant relies on the case Williams v. Russ (2008) 167 Cal.App.4^th 1215, in which the appellate court upheld the imposition of terminating sanctions for allowing evidence to be lost with the liquidation of the contents of an unpaid storage unit. (Motion at pp. 12–13.)

However, the analogy of this case to Williams is strained. Williams involved a legal malpractice case brought by a former client (Williams) against his attorney (Russ), when the former allowed the entirety of his file, consisting of 36 boxes of documents, to be destroyed by a storage company after failing to pay the rent. (Williams, supra, 167 Cal.App.4^th at p. 1218.) The trial court supported its imposition of terminating sanctions with the following findings:

(1) Williams was knowledgeable about litigation, particularly about the facts of this case, was very involved in and integral to this litigation, and had inventoried the contents of his client file more than once; (2) he demanded the file under the Rules of Professional Conduct and was on notice that nonpayment of his storage rental fee would result in destruction of the file; and (3) after filing this action and demanding the file, he caused it to be destroyed by allowing the destruction to happen, then concealed the fact for two years. Based on that, the court found that the destruction of the files was intentional and inferred that this was done to destroy evidence potentially favorable to Russ.

The court found this spoliation was highly prejudicial to Russ's defense of the case. “It is stunning to this Court that [Williams] would file a malpractice case, use the professional rules and demand his entire client file and then have it destroyed. It is not enough that [Williams's] counsel took what he thought was important and that [Russ] copied some of the client file. The client file is a collection of documents. Destruction of part of it destroys the integrity of the entire file. How do we know what was destroyed? How do you prove a negative? Could there be a note or something written on something in the file that would be exculpatory? We will never know its true value due to the conduct of the [Williams].” Although aware that sanctions should ordinarily be progressive and that lesser sanctions should be considered before dismissal, the court found dismissal was warranted. This was based on the findings made above, and findings that Williams had a duty to maintain the client file and had the burden of proving no prejudice occurred, and that intentional spoliation raised an inference of extreme prejudice. Based on the unique facts of this case, and after weighing Williams's culpability against the harm to Russ, the court concluded dismissal was the appropriate sanction because lesser sanctions would not cure the harm done. The court then ordered the case dismissed.

(Id. at p.1222.) Here, the volume of evidence lost is less than in Williams, as Defendant here complains of the loss of the digital copies of the two alleged November 2018 letters. Other copies of the letters, unlike in Williams, are still accessible, and the prejudice resulting from their loss comes from the parties’ inability to corroborate or contradict, through metadata or some other forensic ESI analysis, Plaintiffs’ account of their receipt. Unlike Williams, Plaintiff did not unilaterally deprive Defendant of custody over the relevant evidence, only to lose it. Further, Plaintiff did not conceal the destruction of the evidence. When Defendant sought the original letters in a deposition notice, Plaintiffs provided a declaration stating that they could not be located and had likely been lost in the eviction. And when Defendant served requests for the computer in question on May 26, 2023, Plaintiffs’ responses indicated that the storage unit had been liquidated a mere ten days before. Although Defendant had first articulated its theory of forgery in August 2021, it did not express interest in the computer until it served the requests at issue in May 2023, shortly after it had been destroyed.

This is not to find that no spoliation occurred, or that Plaintiffs may escape the consequence of losing this evidence. It is only to leave conclusions regarding the spoliation of evidence with the trier of fact: “Rather than decide the facts with respect to the intentional destruction of evidence and impose a nonmonetary sanction on a pretrial motion in circumstances not contemplated by the discovery statutes, we believe that in most cases of purported spoliation the facts should be decided and any appropriate inference should be made by the trier of fact after a full hearing at trial.” (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1431; see CACI 204 [“Willful Suppression of Evidence”].) Defendant’s showing in this motion is not so egregious as to warrant the dispositive sanctions that it seeks here.

The motion is therefore DENIED.