Alysa Irizarry et al. v. M.L. Moskowitz & Co., Inc. et al. (2011)

Memorandum of Decision on Defendant's Motion for Clarification and/or for Order (No. 246)

Background

The court has previously ruled (Order, No. 246.86) that this motion, first filed by defendant GMAC Mortgage, LLC (“GMAC”) on May 31, 2011 under the above title, is misnamed in that it is not a motion for “clarification” of this court's Memorandum of Decision of March 14, 2011, but rather is a new motion for protective order on grounds not previously raised before the court.   The court therefore ordered oral argument on the issue of whether or not a protective order should issue.   The court heard oral argument of the parties at the short calendar of June 21, 2011.   All parties have briefed the issue post-argument, and the court has received and reviewed certain documents submitted by counsel for GMAC for in camera review.¹  This is the court's ruling on GMAC's request that the court issue a protective order with regard to certain discovery materials GMAC has been ordered to provide to the plaintiffs.   Since the oral argument the issues have been narrowed somewhat.   One of the objecting parties, defendants/cross claimants Ronald Thomas and Gloria Thomas have been dropped from the case.   The plaintiff has withdrawn all claims against them (No. 260) and they have withdrawn their cross complaint against GMAC (No. 259).   Also, the question of whether or not GMAC must produce invoices for repairs to the condominium unit it owned adjacent to the plaintiffs' unit, without a protective order of confidentiality, is apparently now moot.   On July 12, 2011 the plaintiff filed a “Notice of Supplemental Compliance” (No. 256) certifying that it had produced copies of the GMAC History Log which counsel for GMAC has described as “the invoices with regard to the Servicer's activity in relation to the adjacent unit.”  (Memorandum of Law in Support of Defendant's Motion for Clarification, June 23, 2011, No. 253, p. 7.) The discovery at issue was requested by plaintiffs by request for production of documents annexed as Exhibit “A” to their September 2010 notice of deposition of a corporate representative of GMAC. Item 10 seeks “[c]opies of any invoices or statements evidencing electrical and/or heat service to the property during the time frame in which you owned the property.”   Item 13 seeks “Copies of any invoices, contracts or other agreements relating to repairs made by you or your representative to the property.”   The disclosure of invoices has taken care of Item 10 and all of Item 13 but for “․ contracts or other agreements relating to repairs made by you or your representative to the property.”   Counsel for GMAC has identified two contracts between itself and a “Servicer” for providing repairs generally to properties owned or controlled by GMAC at the relevant 2006–2007 time frame, which it is willing to produce subject to the protective order of confidentiality it now seeks.   The two agreements (hereinafter, the “Servicing Agreements”), which the court has reviewed in camera, are:

1. Professional Services Agreement between GMAC Mortgage Corporation and First American Field Services with Attachment A [Statement of Work & Service Level Agreement] and Attachment B [Financial Arrangement];  and First Amendment to Professional Services Agreement;  Attachment B–1 [Financial Arrangement];  and Second Amendment to Professional Services Agreement.

2. Master Services Agreement between GMAC Mortgage Corporation and First American Corporation with Exhibits A [Confidentiality, Nondisclosure, and Security Requirements];  Attachment A [ Statement of Work] with Attachment 1 [Change Order Form] with Change Order—Number 01 dated October 9, 2007 to Statement of Work for Property Preservation and Inspection Services dated January 2007, Change Order Terms;  and Change Order—Number 01 dated August 20, 2007 to Statement of Work for Property Preservation and Inspection Services April 27, 2006, Attachment A [Scope of Services for REO Field Services] and Attachment B [Other Itemized Pricing].

For the reasons to be discussed below the court concludes that the Servicing Agreements should be disclosed subject to a Protective Order of confidentiality.

Discussion

Practice Book § 13–5, provides, in part:  “Upon motion by a party from whom discovery is sought, and for good cause shown, the judicial authority may make any order which justice requires to protect a party from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following:  ․ (7) that a trade secret or other confidential research, development or commercial information not be disclosed or be disclosed only in a designated way.”   It is fundamental that “[t]he party seeking to bar discovery must make a threshold showing that there is good cause that the protective order issue.”  (Internal quotation marks omitted.)   Schramm v. Stelly, Superior Court, Judicial District of Litchfield, Docket No. CV00–0081681 (June 25, 2001, Cremins, J.) (2001 Conn.Super.LEXIS 1718;  30 Conn. Law Rptr. 41, 42).  “Good cause has been defined as a sound basis or legitimate need to take judicial action.”   Pavlo v. Slattery, Superior Court, Judical District of Ansonia/Milford, Docket No. CV03–0083541 (February 20, 2004, Bear, J.) (2004 Conn.Super.LEXIS 372;  36 Conn. L. Rptr. 557, 559).  “Good cause must be based upon a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements.”  Welch v. Welch, 48 Conn.Sup. 19, 20 [34 Conn. L. Rptr. 171] (2003).

This is not a situation where the parties to this litigation have agreed or stipulated that certain documents are confidential.   It is a case where two commercial parties entered into agreements two years prior to the commencement of this action and agreed mutually to keep the contents of the agreements in strict confidence.   Each of the Servicing Agreements contains detailed provisions of confidentiality agreeing to respect the proprietary nature of information and documents furnished for the purpose of performing under the agreement and to use the same only for purposes of performing under the agreement, and to restrict disclosure of the same only to persons who need to know the same in order to perform under the agreement, regulators and auditors.   The agreements obligate either party who becomes legally compelled to disclose such information in litigation to provide prompt notice to the other party so that it may seek a protective order or other appropriate remedy.   The court's in camera review reveals within the extensive agreements information and protocols which fall into the category of “a trade secret or other confidential ․ commercial information” under Practice Book § 13–5 relating to pricing, termination provisions, future acquisitions, representations and warranties, security and use of client systems, intellectual property rights, indemnification and insurance, all of which are normally considered confidential in a competitive business setting.   Competitively sensitive information can be the basis of a protective order of confidentiality.   Hartford Accident and Indemnity Company v. Ace American Reinsurance Company, Superior Court, Complex Litigation Docket at Waterbury, Docket No. X02CV03–0178122S (March 2, 2006, Eveleigh, J.) (2002 Ct.Sup. 4459) [40 Conn. L. Rptr. 821] (“․ this Court (Schuman, J.) issued a protective order pursuant to Practice Book Sections 1120A and 13–5 to protect the confidentiality of nonpublic and competitively sensitive information (including confidential research and commercial information ․”) Certainly, the provisions of the Servicing Agreements were considered confidential and nonpublic by the contracting parties as evidenced by the elaborate provisions on confidentiality drafted into the contracts, long before this litigation arose.

The court therefore concludes that there is good cause for the issuance of an appropriate protective order to maintain the confidentiality of the two Servicing Agreements as they are disclosed to the plaintiffs.   Such an order will cause no prejudice to the plaintiffs.

Order

A.  The two Servicing Agreements listed above shall be produced by the defendant GMAC to counsel for the plaintiffs, stamped as “Confidential” on each page.   The agreements, as produced, shall be inspected only by counsel for the plaintiffs, actual employees of counsel of record for the plaintiffs, and experts and consultants retained by counsel of record whose assistance is necessary for the prosecution of plaintiffs' claims, and employees of such experts or consultants.

B. Any person who receives information from the Servicing Agreements pursuant to this order is bound by its terms and shall not use such information or documents for purposes not related to pursuit of the plaintiffs' claims in this case.   All such persons except counsel of record or their actual employees shall sign a statement acknowledging that they are bound by the terms of this order.

C. The Servicing Agreements as disclosed shall be kept as confidential and shall be used exclusively for trial preparation and trial of this case and may not be used or disclosed for any other purpose.

D. Any person who receives such documents or information from such documents shall impose such precautions with regard to storage as are necessary to achieve compliance with this order and to prevent the documents or information from the documents from reaching any person not authorized by this order.

E. Counsel for the plaintiffs shall keep a record of each person who has access to the documents and shall instruct each such person of the terms of this order and that he/she is bound by this order.

F. Nothing contained in this order shall prevent the use of the Servicing Agreements at a deposition, or, subject to the provisions of paragraph G, at a hearing or trial in this action.   If used at a deposition in this action, that portion of the transcript that discusses the Servicing Agreements or information therefrom shall itself be treated as confidential information subject to the provisions of this order.

G. In the event one or both of the Servicing Agreements or any portion thereof or information therefrom is used in a court filing or court proceeding herein, the Court shall determine, on motion, how the confidential information shall be handled.   Defendant GMAC shall be notified at least forty-eight (48) hours in advance of a court filing by the plaintiffs or any other party which may reveal the Servicing Agreements or any other information subject to confidentiality under this order, to give GMAC sufficient time to request the Court to take steps to ensure that the documents and/or information will not lose their “confidential” status.

H. Within fifteen (15) days following the final termination of this litigation, including appeals, plaintiffs' counsel and all persons who have had access to such documents shall return all copies thereof and all notes and other materials that contain information derived therefrom to counsel for GMAC with sworn certification that no documents or material derived therefrom has been retained by any person who has had access thereto.

SO ORDERED,

Alfred J. Jennings

Judge Trial Referee

FOOTNOTES

FN1. Plaintiff's counsel has argued that the submission for in camera review was improper because GMAC did not first obtain an order sealing such documents from public access under Practice Book § 11–20A which provides for a presumption that documents filed with the court shall be available to the public “[e]xcept as otherwise provided by law.”   But the 2005 Commentary to § 11–20A states that “․ the words ‘Except as otherwise provided by law’ are intended to exempt from the operation of this rule all established procedures for sealing or ex-parte filing, in camera inspection, and/or nondisclosure to the public of documents, records, and other materials as required or permitted by statute.”   The court has therefore reviewed the submitted documents in accordance with long-standing established Connecticut procedure..  FN1. Plaintiff's counsel has argued that the submission for in camera review was improper because GMAC did not first obtain an order sealing such documents from public access under Practice Book § 11–20A which provides for a presumption that documents filed with the court shall be available to the public “[e]xcept as otherwise provided by law.”   But the 2005 Commentary to § 11–20A states that “․ the words ‘Except as otherwise provided by law’ are intended to exempt from the operation of this rule all established procedures for sealing or ex-parte filing, in camera inspection, and/or nondisclosure to the public of documents, records, and other materials as required or permitted by statute.”   The court has therefore reviewed the submitted documents in accordance with long-standing established Connecticut procedure.

Jennings, Alfred J., J.T.R.