FAIRMONT INSURANCE COMPANY v. Ken Stendell et al., Real Parties in Interest.

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Court of Appeal, Fourth District, Division 2, California.

FAIRMONT INSURANCE COMPANY, Petitioner, v. SUPERIOR COURT of Riverside County, Respondent, Ken Stendell et al., Real Parties in Interest.

No. E022378.

Decided: September 29, 1998

Kinkle, Rodiger and Spriggs and Bruce E. Disenhouse, Riverside, for Petitioner. No appearance for Respondent. Retamal & Retamal and Sergio A. Retamal, Indio, for Real Parties in Interest.

OPINION

We hold that following the reversal of the judgment on appeal, the time limitations on discovery were not automatically restarted.   Accordingly, real parties' subsequent demands for discovery were barred.   In so holding, we disagree with the decision in Beverly Hospital v. Superior Court (1993) 19 Cal.App.4th 1289, 24 Cal.Rptr.2d 238.

FACTUAL BACKGROUND

This is a bad faith insurance action brought by real parties, Ken Stendell Construction, Inc. and its principal, Ken Stendell (collectively Stendell), against Stendell's erstwhile workers' compensation insurer, petitioner Fairmont Insurance Company (Fairmont).   One of Stendell's employees filed a workers' compensation claim.   The employee served Fairmont, but not Stendell, with a copy of his application.   Fairmont hired a law firm which purported to represent both it and Stendell.

During the course of the proceedings, Fairmont took the position that the policy had been canceled for failure to pay an increased premium.   The workers' compensation judge (WCJ) notified Stendell that coverage was in dispute, and that he was taking the matter under submission.   Stendell did not respond or appear in the workers' compensation proceeding, but filed the instant action for bad faith on December 1, 1988.

On January 23, 1989, the WCJ ruled in favor of Fairmont, finding it had not been Stendell's workers' compensation carrier.   Fairmont was dismissed from that proceeding.   Notice of the ruling was personally served on Stendell on February 27, 1989.   Stendell did not seek further review of the ruling.

Fairmont answered Stendell's complaint on February 24, 1989.   It moved to amend its answer in August 1992 to assert the affirmative defenses of res judicata and collateral estoppel.   The motion was granted in September 1992.

Trial of Stendell's bad faith action commenced in February 1993.   By stipulation of the parties, Fairmont's res judicata and collateral estoppel defenses were bifurcated and tried first.   The trial court ruled in favor of Fairmont, finding that the WCJ's determination that there was no coverage barred Stendell's claims.

Stendell appealed and this court reversed in an unpublished opinion, Stendell v. Fairmont Insurance Co. (April 26, 1996) E012783.1

After the case was returned to the trial court, Stendell served a series of discovery requests on Fairmont, seeking production of its file regarding the matter and sending interrogatories and requests for admissions.2  Fairmont objected to the discovery requests on the ground they were untimely under Code of Civil Procedure section 2024, subdivision (a), because they came after the discovery cutoff date, which was 30 days before the initial trial date.   Citing Beverly Hospital v. Superior Court, supra, 19 Cal.App.4th 1289, 24 Cal.Rptr.2d 238, Stendell moved to compel responses, contending that the reversal on appeal automatically restarted the time limitations on discovery.

Fairmont argued that Beverly Hospital was wrongly decided and, in any event, is distinguishable.   The trial court, being bound by Beverly Hospital, granted Stendell's motion.   This petition seeks review of that ruling.   We hold contrary to the decision in Beverly Hospital and grant the petition.

DISCUSSION

  The Discovery Cutoff Date Provided in Code of Civil Procedure Section 2024 Refers to 30 Days Prior to the First Trial Date Set By the Court and Is Not Extended By Mistrial, New Trial or Reversal of the Judgment on Appeal

 Code of Civil Procedure section 2024, subdivision (a) 3 provides that discovery proceedings must be completed 30 days before the “date initially set for trial” and discovery motions must be heard no later than 15 days before the initial trial date.   Discovery proceedings pertaining to expert witnesses must be completed 15 days before the initial trial date.

In Beverly Hospital v. Superior Court, supra, 19 Cal.App.4th 1289, 24 Cal.Rptr.2d 238, the court held that a mistrial, new trial or reversal of the judgment on appeal automatically restarts the time limitations on discovery, discovery is reopened and the discovery cutoff date is thereafter measured from the date set for retrial.   The court in Beverly Hospital concluded that because there can be more than one trial of an action, there may also be several “initial” trial dates, each one corresponding to a scheduled trial of the action.

We agree with a portion of the reasoning in Beverly Hospital:  “The purpose of imposing a time limit on discovery is to expedite and facilitate trial preparation and to prevent delay.   Without a cutoff date, the parties could tie up each other and the trial court in discovery and discovery disputes right up to the eve of trial or beyond.   Furthermore, ․ to be effective the cutoff date must be firm or some litigants will manipulate the proceedings to avoid the cutoff date.  [¶] Our review of the legislative history of sections 2024 and 2034, as they relate to the cutoff of discovery, convinces us the intent of the phrase ‘initial trial date’ was to make clear the postponement or continuance of a trial does not automatically operate to reopen discovery.   As will be recalled, rule 333 proved unsatisfactory because it defined the cutoff date as 30 days ‘before the date of trial.’   Thus, litigants found they could extend the time for conducting discovery by obtaining continuances of the trial date.”  (Beverly Hospital v. Superior Court, supra, 19 Cal.App.4th at p. 1295, 24 Cal.Rptr.2d 238.)

We part company with the reasoning of the court, however, where it says:  “There is no mention in the reporter's notes nor in any case or commentary we have found of an intent to prohibit additional discovery following a mistrial, order granting new trial or reversal on appeal.   So far as we can determine, this was never thought to be a problem by the courts, the Legislature or the legal community.”  (Beverly Hospital v. Superior Court, Supra, 19 Cal.App.4th at p. 1295, 24 Cal.Rptr.2d 238.)

 Our task here is to interpret the meaning on section 2024.  “ ‘In construing statutes, we must determine and effectuate legislative intent.’  [Citation.]  ‘To ascertain intent, we look first to the words of the statutes' [citation], giving them their usual and ordinary meaning’ [citation].   If there is no ambiguity in the language of the statute, ‘then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.’  [Citation.]  ‘Where the statute is clear, courts will not “interpret away clear language in favor of an ambiguity that does not exist.”  [Citation.]’  [Citation.]”  (Lennane v. Franchise Tax Bd. (1994) 9 Cal.4th 263, 268, 36 Cal.Rptr.2d 563, 885 P.2d 976.)   The word “initially” has a plain meaning:  “at the beginning;  at first.”  (Webster's New World Dict. (3d college ed.1988) p. 695.)

While the determination of legislative intent can sometimes be frustrating, in this case it seems easy.   We need only look to the clear meaning of the words used.  (Lennane v. Franchise Tax Bd., supra, 9 Cal.4th at p. 268, 36 Cal.Rptr.2d 563, 885 P.2d 976.)

Applying this plain language, we conclude the Legislature intended the discovery cutoff to be established by the first trial setting, regardless of the reasons for setting subsequent trial dates.   The Beverly Hospital rationale that there can be more than one “initial” trial date is strained.   The reason that the reporter to the Discovery Commission did not specifically negate the possibility of reopening discovery after mistrial, retrial or reversal on appeal is because the statute was clear as drawn that there was only one cutoff date.

The court in Beverly Hospital reasoned that reopening discovery would not result in unnecessary expense and delay because the discovery would likely be “more focused, intelligent and efficient.”  (Beverly Hospital v. Superior Court, supra, 19 Cal.App.4th at p. 1295, 24 Cal.Rptr.2d 238.)   Again, we disagree.   Renewed unlimited discovery could result in the abuses that the Discovery Act of 1986 sought to curtail.   We believe the legislation was designed with a single cutoff deadline to avoid prolonged discovery.

The legislation also, however, wisely provides for judicial discretion in waiving the discovery cutoff.  Section 2024, subdivision (e) sets forth the criteria to be used by the court in waiving the cutoff date.   This section provides the relief needed by any party who is confronted with mistrial, order granting new trial or reversal on appeal.   In the proper case, in response to a motion, the court can allow further discovery when it is justified.   This is the preferable approach, rather than automatically reopening discovery.

The Beverly Hospital case states that requiring a motion to allow discovery in these situations “would plunge the trial and appellate courts back into a sea of discovery disputes when their dockets are already at flood stage.”   (Beverly Hospital v. Superior Court, supra, 19 Cal.App.4th at p. 1296, 24 Cal.Rptr.2d 238.)  Beverly Hospital has exaggerated the burden on the courts in requiring a motion to allow further discovery.   The moving party would simply have to show specific reasons that necessitate further discovery.   In our view automatic reopening of discovery is far more likely to lead to a discovery free-for-all without any showing that further discovery is even necessary.

The parties are expected to have completed all discovery before the first trial.   If a retrial is then required, the party requesting discovery may establish good cause by pointing to some issue or circumstance that did not exist before the trial.   Using Beverly Hospital's example, good cause could be found upon a showing that the first trial revealed a weakness in the evidence that was presented with respect to a certain issue or issues.   (Beverly Hospital v. Superior Court, supra, 19 Cal.App.4th at p. 1296, 24 Cal.Rptr.2d 238.)   However, the court may properly deny permission to reopen discovery when the grounds do not exist or where the party simply failed to conduct any discovery before the first trial.4

Here, the first trial commenced on the affirmative defenses, presumably after completion of all discovery.   The case was four years old before Fairmont raised the collateral estoppel and res judicata defenses.   Stendell should have been prepared to litigate its bad faith claim before the bifurcated trial began.   It has never offered an explanation for its failure to perform the basic discovery that it now seeks.   In its motion to compel discovery responses, Stendell contended not only that discovery had been automatically reopened after reversal but also, in the alternative, that there was good cause under section 2024, subdivision (e), for additional discovery.   Stendell noted the law was unclear whether the reversal automatically restarted the time limitations on discovery and noted the indication in our opinion that Fairmont had acted in bad faith.   Neither factor demonstrates good cause, because neither explains Stendell's failure to conduct discovery prior to the trial.   Because Stendell justifiably relied on Beverly Hospital at the time that he made his motion, it is possible that the court was not appraised of all of his bases for good cause under section 2024, subdivision (e).   Stendell is not, therefore, precluded from renewing his motion.   It will be up to the trial court to decide whether good cause exists.

We believe that requiring a party to show good cause to reopen discovery will not cause the catastrophic consequences that Beverly Hospital imagined, nor interfere with the parties' ability to prepare for trial.   Instead, the policy will encourage a prompt retrial.   Despite the statutory policy in favor of prompt resolution of all litigation (Gov.Code § 68607, subd. (a)), Beverly Hospital rather cavalierly dismissed the obligation of trial courts to expedite retrial of cases following a reversal on appeal, mistrial or order granting a new trial.   It believed that it was unlikely that a trial court would order a case retried immediately.   However, requiring a party to make a showing of good cause will allow the trial court to assess the need for further discovery in conjunction with the possible delay in retrial.   This can only enhance the trial court's ability to set prompt and realistic dates for retrial.

For the foregoing reasons, we decline to follow the holding of Beverly Hospital.5

DISPOSITION

The alternative writ is discharged.   Let a peremptory writ of mandate issue directing the Superior Court of Riverside County to set aside its order requiring petitioner to respond to real parties' demand for production of documents, form interrogatories, specially prepared interrogatories and request for admissions and to enter a new and different order denying real parties' motion to compel discovery.

FOOTNOTES

1.   A modification was filed May 21, 1996.   The Supreme Court denied review on August 14, 1996.

2.   The discovery involved fairly basic questions such as whether Fairmont is owned or controlled by another entity, and when it was licensed to do business in California.

3.   All statutory references are to the Code of Civil Procedure unless otherwise stated.

4.   The showing of good cause in this respect is comparable to that required to reopen discovery following judicial arbitration under section 1141.24.  (See Regan v. Lanet (1987) 197 Cal.App.3d 353, 243 Cal.Rptr. 20;  McCormick v. Sentinel Life Ins. Co. (1984) 153 Cal.App.3d 1030, 1051, 200 Cal.Rptr. 732.)

5.   The parties also cite Province v. Center for Women's Health & Family Birth (1993) 20 Cal.App.4th 1673, 25 Cal.Rptr.2d 667, disapproved on another ground in Heller v. Norcal Mutual Ins. Co. (1994) 8 Cal.4th 30, 41, 32 Cal.Rptr.2d 200, 876 P.2d 999, as contrary authority.   This case merely follows Beverly Hospital and does not engage in any independent analysis of the issue.

WARD, Associate Justice.

HOLLENHORST, Acting P.J., and GAUT, J., concur.