Paul Nickel et al vs Liberty Mutual Insurance Company et al

Case Number

22CV04773

Case Type

Hearing Date / Time

Mon, 01/27/2025 - 10:00

Nature of Proceedings

CMC; Motion: Quash or Modify Plaintiffs Business Records Subpoenas to Alacrity Soluiton Group, Llp and Donan Engineering

Tentative Ruling

Paul Nickel, et al. v. Liberty Mutual Insurance, Co., et al.                                                                                                   

Case No. 22CV04773         

Hearing Date: January 27, 2025                                            

HEARING:              Defendants Liberty Mutual Insurance Company and Liberty Insurance Corporation’s Motion to Quash or Modify Plaintiffs’ Business Records Subpoenas to Alacrity Solution Group, LLP and Donan Engineering

ATTORNEYS:        For Plaintiffs Paul Nickel and Christine Nelson: Regina Spurley

                                    For Defendants Liberty Mutual Insurance Company and Liberty Insurance Corporation: Nicholas J. Boos, Chase Turnbull

                                   

TENTATIVE RULING:

For the reasons set forth herein, defendants’ motion to quash or modify subpoenas to Alacrity Solution Group, LLP and Donan Engineering is granted, in part, as follows:

1. Requests Nos. 11 and 12 shall be modified to require production of the requested documents for the timeframe of 2020 through 2024.

2. The motion to quash is denied as to requests Nos. 30 and 31.

3. All personally identifying information regarding other third-party insureds shall be redacted from any produced documents, including, names, addresses, social security numbers, and account numbers.

Background:

This action commenced on December 2, 2022, by the filing of the complaint by plaintiffs Paul Nickel and Christine Nelson (collectively “plaintiffs”) against defendants Liberty Mutual Insurance Company, Liberty Insurance Corporation (collectively “LIMU”) and Cordell Allen for: (1) Breach of the Duty of Good Faith and Fair Dealing; (2) Breach of Contract; (3) Unfair Business Practices; (4) Intentional Misrepresentation; and (5) Negligent Misrepresentation. On November 27, 2023, plaintiffs dismissed Allen without prejudice.

As alleged in the complaint:

Plaintiffs own 334 West Valerio Street, Santa Barbara (the “property”), and were insured by LIMU pursuant to a homeowners insurance policy (the “policy”). (Compl., ¶ 12.)

On September 20, 2020 (Note: this may be a typographical error in the year, as the damage is alleged to occur in 2021), plaintiffs hired a roofing contractor to make repairs to the roof of the property. (Compl., ¶ 14.) On September 29, 2021, plaintiffs’ roofing contractor placed palettes of new shingles on top of the roof and, as a result, portions of the roof collapsed, causing damage to other parts of the property. (Compl., ¶ 15.)

Plaintiffs reported the loss to LIMU and asked it to open a claim. (Compl., ¶ 16.) LIMU assigned Allen as the claims adjuster and notified plaintiffs that it would send its own engineer to perform an inspection, but that the engineer was not available until December 3, 2021. (Ibid.)

In the meantime, plaintiffs consulted with their own engineer and contractor, who confirmed that the roof suffered a partial collapse and that braces were needed to be placed to avoid a total collapse, and that removal of the plaster ceiling and walls were needed to adequately assess the extent of the damage. (Compl., ¶ 17.) Plaintiffs’ contractor and engineer concluded that the roofline dropped by six inches and the east wall had leaned out by eight inches, and the repair required lifting the roof and pushing the wall back in and then shoring up the rafters and beams. (Ibid.) The information was proved to Allen and LIMU. (Ibid.)

On December 3, 2021, LIMU’s engineer, Donan Engineering (“Donan”), inspected the property and opined that the roof collapse was the result of the way in which the roof was constructed rather than as the result of the weight from the palettes of shingles. (Compl., ¶ 18.)

On December 13, 2021, coverage for the claim was denied based on exclusions for faulty construction. (Compl., ¶ 19.) Allen did not advise plaintiffs of their rights under the policy’s collapse coverage. (Compl., ¶ 20.)

Believing the loss was not covered, plaintiffs paid for repairs themselves. (Compl., ¶ 21.)

Answers for LIMU were filed on April 28, 2023, asserting general denials and 15 affirmative defenses.

On October 1, 2024, plaintiffs issued business records subpoenas to Alacrity Solutions, LLP (“Alacrity”) and Donan, seeking 44 categories of documents including payment information, retention agreements, and contracts. (Turnbull Dec., ¶ 2 & Exhs. 1, 2.)

LIMU now moves to quash or modify the subpoenas’ requests Nos. 11, 12, 30, and 31.

Plaintiffs oppose the motion.

Analysis:

“If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.” (Code Civ. Proc., § 1987.1, subd. (a).)

“The state has two substantial interests in regulating pretrial discovery. The first is to facilitate the search for truth and promote justice. The second is to protect the legitimate privacy interests of the litigants and third parties. [Citation.] “ ‘The interest in truth and justice is promoted by allowing liberal discovery of information in the possession of the opposing party. [Citation.] The interest in privacy is promoted by restricting the procurement or dissemination of information from the opposing party upon a showing of ‘ “good cause.” ’ [Citations.]” The trial court is in the best position to weigh fairly the competing needs and interests of parties affected by discovery. [Citation.]” (Stadish v. Superior Court (1999) 71 Cal.App.4th 1130, 1145.)

“A trial court must be mindful of the Legislature’s preference for discovery over trial by surprise, must construe the facts before it liberally in favor of discovery, may not use its discretion to extend the limits on discovery beyond those authorized by the Legislature, and should prefer partial to outright denials of discovery.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 540.)

“Unless otherwise limited by order of the court in accordance with this title, any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action. Discovery may be obtained of the identity and location of persons having knowledge of any discoverable matter, as well as of the existence, description, nature, custody, condition, and location of any document, electronically stored information, tangible thing, or land or other property.” (Code Civ. Proc., § 2017.010.)

“In accordance with the liberal policies underlying the discovery procedures, doubts as to relevance should be resolved in favor of permitting discovery.” (National Steel Products Co. v. Superior Court (1985) 164 Cal.App.3d 476, 493.)

By way of the subpoenas, plaintiffs seek the following, to which LIMU objects:

(11) “Any and all canceled checks, and check stubs, that evidence, reflect, refer or relate to any payments made to YOU by LIBERTY in the last 10 years.”

(12) “Any and all DOCUMENTS that reflect the number of times YOU have been retained by LIBERTY in the last 10 years.”

(30) “YOUR contract(s) with LIBERTY that were in effect in 2021 - 2024.”

(31) “YOUR contract(s) with Donan Engineering [“Alacrity” in the subpoena to Donan] that were in effect in 2021 - 2024.”

LIMU argues that the requests seek to invade other insureds’ rights of privacy, that they seek irrelevant information, that they are overbroad, and that they fail to meet the narrow tailoring requirement.

In opposition, plaintiffs argue that their interest in determining the truth outweighs any right to privacy and that they require the documents to overcome LIMU’s “genuine dispute” defense. They seek to discover whether LIMU inappropriately or dishonestly selected its vendors.

 

“The state Constitution expressly grants Californians a right of privacy. [Citation.] Protection of informational privacy is the provision’s central concern. [Citation.] In [Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1], we established a framework for evaluating potential invasions of privacy. The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. [Citation.] The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.” (Williams, supra, 3 Cal.5th 531at p. 552.)

Having reviewed the evidence and argument presented by the parties, including in LIMU’s reply brief, the court finds that plaintiffs do have a legitimate interest in obtaining the requested documents. Contrasting with that determination, the court finds that third-party insureds have a right to privacy that should no be infringed upon in this situation. A reasonable solution would be to redact any personally identifying information from the documents. The court also fails to see, and plaintiffs fail to explain, why 10-years of documents are necessary to determine what plaintiffs seek to discover. As the events leading to this action occurred in 2021, requests Nos. 11 and 12 will be limited to the reasonable time frame of 2020 through 2024.

The parties filed a stipulated protective order on March 8, 2024. The stipulated protective order may be invoked by LIMU if it is believed that the subpoenaed documents contain confidential materials.