Judge: Virginia Keeny, Case: 22VECV00629, Date: 2023-03-01 Tentative Ruling

Case Number: 22VECV00629    Hearing Date: March 1, 2023    Dept: W

WC STRUCTURES, INC. v. MGAM, INC.

plaintiff/cross-defendant wc structures, Inc.’s motion to compel further responses

Date of Hearing:        March 1, 2023                                   Trial Date:       None set.  

Department:              W                                                        Case No.:        22VECV00629

Moving Party:            Plaintiff/Cross-Defendant WC Structures, Inc.

Responding Party:     Defendants/Cross-Complainants MGAM Inc., MGA Electric Corporation dba Trust Electric, and Joshua Manevich

Meet and Confer:      Yes. (Velthoen Decl. ¶¶5-6.)  

BACKGROUND

This is a breach of contract cause of action. Plaintiffs WC Structures, Inc. and William Whitley filed a complaint against Defendants MGAM Inc., MGA Electric Corporation dba Trust Electric, and Joshua Manevich asserting causes of action for breach of contract, quantum meruit, and account stated. Plaintiffs allege Defendant MGAM entered into a written agreement with National Commercial Construction, Inc. (“NCCI”) to provide rough carpentry for a residential project. MGAM subsequently entered into a written agreement with WC Structures to furnish labor and materials as a rough carpentry subcontractor. However, due to some disputes regarding payment by NCCI, MGAM breached the agreement by failing to pay WC Structures all amounts due under the contract.

MGAM Inc. and MGA Electric Corporation dba Trust Electric filed a Cross-Complaint against WC Structures, Inc. and William Whitley. On October 14, 2022, Cross-Complainants filed a First Amended Complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. Cross-Complainants allege William Whitley and WC Structures breached the written agreement by intentionally misrepresenting the percentage of completion of the framing in its reports to MGAM and refused to go back to work after MGAM was served with a 48 hours notice to recommence work. Cross- Complainants further allege Cross-Defendants agreed to pay half of the court costs and attorney fees incurred by MGAM in its legal action against NCCI for its failure to pay the final payment.

[Tentative] Ruling

Plaintiff/Cross-Defendant WC Structures, Inc.’s Motion to Compel Further Responses is GRANTED.

ANALYSIS

Plaintiff/Cross-Defendant WC Structures, Inc. moves for an order compelling further responses from Defendant/Cross-Complainant MGAM, Inc. to Plaintiff’s Request for Production of Documents, Set One Nos. 26, 27, and 28. WC Structures brings the motion on the grounds that MGAM, Inc., has asserted meritless objections to the Requests for Production.

Under Code of Civil Procedure sections 2030.300(a), parties may move for a further response to requests for production of documents where an answer to the requests are evasive or incomplete or where an objection is without merit or too general.¿¿A motion to compel further production must set forth specific facts showing good cause justifying the discovery sought by the inspection demand. (See CCP § 2031.310(b)(1).) Notice of the motions must be given within 45 days of service of the verified response, otherwise, the propounding party waives any right to compel a further response. (CCP §2030.300(c).) The motions must also be accompanied by a meet and confer declaration. (CCP §2030.300(b).)¿¿Finally, Cal. Rules of Court, Rule 3.1345 requires that all motions or responses involving further discovery contain a separate statement with the text of each request, the response, and a statement of factual and legal reasons for compelling further responses. (Cal. Rules of Court, Rule 3.1345(a)(3).)

First, WC Structures argues MGAM has waived any attorney-client privilege in connection with the fee agreement and invoices. WC Structures contends because MGAM has sued Plaintiffs to recover one-half of the legal fees incurred by MGAM in prosecuting its claim against NCCI for breach of the Framing Subcontract, MGAM has placed the fee agreements with its attorneys and the invoices on the NCCI litigation directly at issue. The court agrees.

MGAM, in opposition, states MGAM has agreed to produce copies of the fee invoices with attorney-client information redacted therefrom. WC Structures says as of the date of the reply, however, MGAM has failed to produce such documents. Given the compelling nature of the invoices, the court orders MGAM to produce the fee invoices within 30 days.  MGAM may redact actual attorney-client communications but must leave sufficient information for plaintiff to be able to ascertain the task performed and whether the work was performed on matters covered by the disputed contract.

Next, WC Structures argues the confidentiality provision in the settlement agreement does not bar production. WC Structures contends MGAM sued NCCI for lost profits on the very same contracts that MGAM now seeks lost profit damages from Plaintiffs. However, MGAM refuses to disclose its settlement agreement with NCCI.

In opposition, MGAM argues WC Structures has not made any showing whatsoever to overcome the privacy interests of the parties to the settlement agreement to justify production of the confidential settlement agreement. Specifically, if the terms of the settlement agreement are disclosed it is believed it would harm the parties with respect to negotiations for other construction contracts and would be detrimental to other parties covered by the insurance companies. Moreover, the terms of the settlement agreement have no bearing on the amount that MGAM owes or does not owe to WC Structures because whether or not MGAM is paid by NCCI for the framing, MGAM owes WC Structures under the contract for the percentage of the framing WC Structures actually performed.

Balancing MGAM’s privacy interests with WC Structures’ interests in disclosure, the court finds in favor of discovery of the settlement agreement. (See Williams v. Superior Court (2017) 3 Cal.5th 531, 533.) The settlement agreement may touch upon payments that would be credited against any alleged damages against WC Structures arising out of the termination of the contract between MGAM and NCCI. As noted by WC Structures, MGAM has not provided how this alleged construction dispute would damage the parties with respect to other parties or their insurers. Moreover, MGAM has not established WC Structures must legally give third parties’ notice whose privacy may be invaded if the production is ordered. Accordingly, MGAM is ordered to provide the settlement agreement within 30 days. The parties should stipulate to a protective order limiting the disclosure of the settlement agreement.  At this point, the court sees no need to conduct an in camera inspection of the settlement agreement. 

Lastly, WC Structures seeks sanctions in the amount of $1,900 against MGAM. WC Structures contends MGAM’s objections to the discovery are not only meritless, the objections signal an attempt to shield evidence that goes to the heart of its claims against Plaintiffs.

MGAM contends there should be no question that MGAM’s refusal to produce the agreement and its opposition to the motion to compel based upon the constitutional right of privacy is substantial justification for its actions in refusal and opposition to the motion without a court order. The court agrees. The court finds MGAM acted with substantial justification in opposing the motion.

Accordingly, WC Structures’ request for sanctions is DENIED.