Judge: Jon R. Takasugi, Case: 21STCV12443, Date: 2023-05-01 Tentative Ruling

Case Number: 21STCV12443    Hearing Date: May 1, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiffs’ motion to preclude is GRANTED IN PART, DENIED IN PART. Plaintiffs’ motion is granted as to Theresa Kristovich and Ross Hart, but denied as to Rick Caruso.

On 4/1/2021, Plaintiffs Caruso Affiliated Holdings, LLC, Caruso Management Company, Ltd., Americana Housing L.P., Americana Homes, LLC, Americana Homes II, LLC, and the Americana at Brand, LLC (collectively, Plaintiffs), filed suit against Allied World Assurance Company (U.S.) Inc., (AWAC) Endurance American Specialty Insurance Company, Endurance Assurance Corporation, Arthur J. Gallagher & Co. Insurance Brokers of California (Gallagher). On 1/10/2023, Plaintiffs filed a first amended complaint (FAC) alleging: (1) declaratory relief; (2) reformation; (3) negligence; (4) negligent misrepresentation; and (5) breach of fiduciary duty.

            Now, Plaintiffs move to preclude Gallagher from calling certain witnesses at trial.

Discussion

Plaintiffs seek an order precluding Gallagher from calling, or attempting to call, as witnesses at trial the following persons identified on Gallagher’s trial witness list: Theresa Kristovich, Ross Hart, and Rick Caruso.

The Court addresses each in turn.

As for Theresa Kristovich, Plaintiffs contend that her testimony is improper because controlling authority holds that testimony of trial counsel cannot be compelled under California law. (Carehouse Convalescent Hosp. v. Superior Court (2006) 143 Cal.App.4th 1558, 1560.)

In opposition, Gallagher argues that Ms. Kristovich’s testimony is necessary to show that AWAC and Sompo have not denied any other claim by any Caruso entity under the AWAC 12-13 Policy, AWAC 13-14 Policy, and Sompo 16-20 Policies.

Carehouse sets forth a three-prong test in considering the propriety of depositions:  (1) does the proponent have other practicable means to obtain the information? (2) is the information crucial to the preparation of the case? And (3) is the information subject to a privilege? (Id., at p. 1563. ) Here, Gallagher has not shown that Ms. Kristovich alone possesses non-privileged information about whether or not Sompo denied coverage, or that she alone can confirm the contents of the discovery responses served in the underlying action.

As such, the Court agrees Gallagher should be precluded from calling Ms. Kristovich as a witness.

As for Ross Hart, Plaintiffs argue that Gallagher cannot call Mr. Hart, the mediator  in the underlying action, as a trial witness because of the mediator privilege.

In opposition, Gallagher does not argue that the mediator privilege doesn’t apply. Rather, Gallagher argues that Plaintiffs are separately trying to introduce documents or testimony that reference Mr. Hart’s beliefs, recommendations, and observations, and that the mediation privilege should be applied equally (such that if Plaintiffs are allowed to introduce mediation-related evidence, so should Gallagher). Alternatively, Gallagher states that it should be permitted to call Mr. Hart as a witness to refute, explain, or address any statement that Mr. Hart may have made to Caruso’s representatives, as referenced in the McLeod letters attached as Trial Exhibits 111 and 112.

In reply, Plaintiffs offered a third route, wherein they would redact references to Mr. Hart’s statements. The Court finds this to be the appropriate route. As letters between Plaintiffs and their insurers, they were not “prepared for the purpose of, in the course of, or pursuant to, a mediation.” (Cal. Evid. Code § 1119(b).) However, those letters clearly reference and rely on Mr. Hart’s comments and recommendations as part of the mediation process. For example, in support of Caruso’s pre-mediation demands, the McLeod Firm asserted that the “mediator, Mr. Hart, has consistently opined that the reasonable settlement value of this case is more than $20 million. Mr. Hart has most recently indicated that the likely settlement range will be roughly $21-22 million.” (Id., at p. 4.) The McLeod Firm contended that after an April 2 mediation, the “mediator expressed his belief that there had been a true breakthrough in negotiations. . . . Mediator Hart has made it clear that he now thinks that the case can be settled and that the carriers, including Allied World, need to move quickly to seize on this opportunity.” (Id.) the McLeod firm’s letter continues by referencing the “mediator’s indicated potential settlement range”. (Id., at p. 6.)

As such, it would fly in the face of fairness to allow Plaintiffs to introduce these comments, beliefs and observations attributed to Mr. Hart through these letters, and then deprive Gallagher of the opportunity to elicit testimony clarifying those statements. Redacting references to Mr. Hart’s statements will alleviate this risk of prejudice, while also protecting the mediation privilege.

As for Rick Caruso, Plaintiffs argue that Mr. Caruso has no relevant information, and Gallagher’s only goals, in seeking to call Mr. Caruso, are “to waste his time and potentially bias the jury against Plaintiffs based on their personal feelings about Mr. Caruso.” (Motion, 6:14-15.)

The Court disagrees. Both sides agree that a “critical issue in this dispute” is the reason that Caruso needed to pursue coverage under the AWAC and Sompo Operations Policies for the construction defect claims in the Excelsior Action. (Gallagher’s Opp., 77: 24-25.)

  If Caruso is permitted to present evidence or argument that the alleged insufficiency of the OCIP coverage limits caused Caruso to have to pursue coverage under Operations Policies, Gallagher must be permitted to explain the reasons for such alleged insufficiency, i.e., Caruso decided that he did not want to pay for higher or more comprehensive limits in the OCIP Program. As such, Gallagher is entitled to introduce evidence that Mr. Caruso rejected Gallagher’s recommendations as to appropriate insurance limits for the construction policies intended to insure the construction of the Americana.

Put another way, as long as Plaintiffs are raising the issue that OCIP coverage limits were insufficient, and that Plaintiffs were required to pursue coverage under the Operation Policies as a result, Gallagher is entitled to introduce evidence to show that it was not responsible for that insufficiency. Otherwise, without alternative explanations for the insufficiency, the jury may assume negligence with respect to the OCIP policies (something which is expressly not at issue here), and then allow this to prejudice their determination as to whether or not there was negligence with respect to the AWAC and Sompo policies. 

            Based on the foregoing, Plaintiffs’ motion to preclude is granted in part, denied in part. Plaintiffs’ motion is granted as to Theresa Kristovich and Ross Hart, but denied as to Rick Caruso.

It is so ordered.

Dated:  May    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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