Opinion
Case No. CV 08-01106 DDP (CTx)
January 21, 2010, Decided. January 22, 2010, Filed
For Veena Vaid-Raizada, M.D., an individual, Plaintiff: Jeffrey I. Ehrlich, LEAD ATTORNEY, Ehrlich Law Firm, Claremont, CA; Michael J Bidart, LEAD ATTORNEY, Shernoff Bidart Echeverria LLP, Claremont, CA; Ricardo Echeverria, LEAD ATTORNEY, Shernoff Bidart Echeverria Bentley LLP, Claremont, CA.
For Lexington National Insurance Company, Maryland Corporation, Erroneously Sued As Lexington Insurance Company, Defendant: James R Rogers, LEAD ATTORNEY, James R Rogers Law Offices, Solana Beach, CA; James P Wagoner, LEAD ATTORNEY, McCormick Barstow Sheppard Wayte and Carruth LLP, Fresno, CA; Richard Akemon, LEAD ATTORNEY, Law Offices of Bruce G Fagel & Associates, Beverly Hills, CA; Annette A Ballatore-Williamson, McCormick Barstow Sheppard Wayte and Carruth, Fresno, CA.
For A. I. G. Domestics Claims, Inc., a Delaware Corporation, Defendant: James R Rogers, LEAD ATTORNEY, James R Rogers Law Offices, Solana Beach, CA.
For F. G., by and through her Guadian Ad Litem, Murline Maxie, Defendant: Richard Akemon, LEAD ATTORNEY, Law Offices of Bruce G Fagel & Associates, Beverly Hills, CA.
[Motion filed on January 19, 2010]
This matter comes before the Court on Motion in Limine No. 2 filed by the plaintiff Dr. Veena Vaid-Raizada ("Plaintiff"), which seeks to exclude (1) "hearsay statements included in Defendant's supplemental expert reports" and (2) "any evidence, reference, argument, or testimony by Defendant's experts regarding material included in the supplemental reports that was not in Defendant's original expert reports". (Mot. 4:4-8.) Having considered the papers submitted by the parties, the Court GRANTS IN PART and DENIES IN PART the motion and adopts the following Order.
I. BACKGROUND
A. Factual History
Because the facts underlying the various issues in this case are well-known to the parties and the Court, the Court only briefly recites them here.
This insurance bad-faith action arises out of an underlying medical malpractice lawsuit filed against Plaintiff, an insured of the defendant Lexington National Insurance Company ("Lexington"). The underlying state court action involved prenatal care Plaintiff provided to Julie Gonzalez. After Gonzalez transferred her care to another local obstetrician, Dr. Cho, Plaintiff received an ultrasound report showing that Gonzalez was actually "due" eight weeks later than Plaintiff had indicated on Gonzalez's chart. Plaintiff faxed all of Gonzalez's records, including the ultrasound report, to Dr. Cho, but she did not contact him directly to ensure that he was aware of the discrepancy between the chart and the ultrasound report. Dr. Cho failed to note the different due date suggested by the ultrasound report, and, acting on the information in the chart, performed an elective, premature C-section. As a result, Gonzalez's baby, F.G., was born two months premature and suffered permanent brain injuries.
Gonzalez filed a medical malpractice lawsuit against Plaintiff and Dr. Cho on behalf of herself and F.G. Dr. Cho settled for his $1 million policy limit. Plaintiff tendered a claim to Lexington, her medical malpractice insurer. Lexington initially provided Plaintiff with a defense by retaining Robert Packer to represent her. Packer later informed Lexington's claims administrator that Plaintiff faced massive exposure, that the carrier should be prepared to settle within the policy limit, and that F.G., through her guardian ad litem, had offered to settle for the $1 million policy limit. On September 11, 2006, Lexington informed Plaintiff that it concluded there was no coverage for the claim because her treatment of Gonzalez preceded the effective coverage date. Lexington thereafter withdrew its defense.
In March of 2007, Plaintiff entered into a settlement agreement with F.G., a minor, through her guardian ad litem. Pursuant to the settlement, Plaintiff agreed to diligently prosecute this bad faith action against Lexington and to assign the proceeds of her ultimate net recovery to F.G. until F.G.'s judgment, including interest, is satisfied. In exchange, F.G. covenanted not to execute on the judgment against Plaintiff. The parties agreed that F.G.'s claims against Plaintiff would be decided by the Hon. John K. Trotter, a retired California Court of Appeal justice and a JAMS neutral, sitting as a referee appointed under section 638 of the California Code of Civil Procedure.
Following this trial by reference, Justice Trotter found that Plaintiff's conduct fell below the standard of care because she had "a continuing duty of care from the time she made her calculations on the ultrasound report until the baby was born" to contact Dr. Cho and inform him of the error in her initial due date calculation. Justice Trotter ordered that judgment be entered against Plaintiff in the amount of $7,778,424.
On October 15, 2007, the California Superior Court signed the parties' Proposed Judgment on Referee's Finding and Decision. The judgment included adjustments to the award by the referee, and total judgment, including prejudgment interest, was entered in the amount of $8,214,112. F.G., through her guardian ad litem, later filed a petition to approve a minor's compromise of pending action, which was granted in a written order on January 7, 2010.
In this case, Plaintiff alleged that Lexington breached (1) its duty to defend, (2) its duty to indemnify, and (3) its duty of good faith and fair dealing with respect to failing to defend, failing to indemnify, and failing to settle within the policy limits. After cross-motions for summary judgment, the only claims proceeding to trial are (1) breach of the duty to indemnify, (2) breach of the duty to settle, and (3) breach of the duty of good faith and fair dealing with respect to failing to settle.
B. Collusion Defense and Note in JAMS Record
At the pre-trial conference held on October 19, 2009, counsel for Lexington indicated that Lexington intended to argue at trial that the underlying judgment was the product of collusion between Justice Trotter, F.G., and Plaintiff. Counsel stated that he intended to offer in evidence a notation in the JAMS records (the "JAMS Note") by Justice Trotter's secretary indicating that "Trotter mentioned this will be a 'prove up' but not to tell the attorneys this." Counsel for Lexington argued this statement shows Justice Trotter was colluding with F.G. and Plaintiff, and that the proceeding was merely a "prove up" rather than a full and fair hearing. Without ruling on the issue (as it had not been properly presented), the Court indicated it would be inclined to preclude such evidence unless Justice Trotter testified. (Tr. 101:20-22 ("THE COURT: Well, I don't think you can accuse [Justice Trotter] of something and not give him the opportunity to defend himself.").)
On December 31, 2009, counsel for Lexington e-mailed Plaintiff's counsel a supplemental expert report for its expert Allison Smith and an updated opinion letter from its expert David R. Lucchese, Esq. Each of these supplemental reports refers JAMS Note that was previously discussed at the pre-trial conference. Both experts purport to rely on the JAMS Note in concluding that the underlying judgment was the product of collusion.
After the Court granted Plaintiff's Ex Parte Application to permit a motion in limine to be filed, Plaintiff filed this motion in limine on January 19, 2009, seeking to exclude the updated reports as untimely and to exclude the reference to the JAMS Note under Federal Rules of Evidence 403, 703, and 802. Lexington has opposed Plaintiff's motion in limine and, in doing so, asserts that it "expects to introduce the testimony of Justice Trotter, himself." (Opp. 8:25-26.)
II. DISCUSSION
Plaintiff argues that the supplemental reports should be excluded in their entirety as untimely and, alternatively, that the Court should exclude reference to the JAMS Note because (1) it is hearsay, (2) it is not the type of evidence on which Defendant's experts should have reasonably relied, and (3) its prejudicial effect substantially outweighs its probative value. Lexington counters that (1) the supplemental reports are timely, (2) the JAMS note falls within exceptions to the hearsay rule or may be admitted for the non-hearsay purpose of impeaching Justice Trotter should he testify at trial, and (3) even if the JAMS note is hearsay, Defendants' experts reasonably relied on it in forming their conclusions and it may therefore be offered under Federal Rule of Evidence 703.
A. Timeliness of Supplemental Reports
Lexington's supplemental expert reports are not untimely. Federal Rule of Civil Procedure 26(a)(2)(D) states that "parties must supplement [expert witness] disclosures when required under Rule 26(e)." Rule 26(e)(1) provides that for experts whose reports must be disclosed under Rule 26(a)(2)(B), "the party's duty to supplement extends . . . to information included in the report," and that "[a]ny additions or changes to this information must be disclosed by the time the party's pretrial disclosures under Rule 26(a)(3) are due." "Unless the court orders otherwise, these disclosures must be made at least 30 days before trial." Fed. R. Civ. P. 26(a)(3)(B). Because trial is scheduled for February 2, 2010, the deadline to supplement expert reports fell on January 4, 2010. See Fed. R. Civ. P. 6(a) (noting that in computing time periods, when "the last day is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday"). Therefore, Lexington's service of the supplemental reports on December 31, 2009, complied with the relevant deadline.
Before the Court addresses Plaintiff's objection to the JAMS Note, it considers the threshold question whether Justice Trotter may testify at trial. Plaintiff argues that Justice Trotter is precluded from testifying under California Evidence Code section 703.5, which provides that "[n]o person presiding at any judicial or quasi-judicial proceeding, and no arbitrator or mediator, shall be competent to testify, in any subsequent civil proceeding, as to any statement, conduct, decision, or ruling, occurring at or in conjunction with the prior proceeding," with few exceptions that are not relevant here. Lexington, on the other hand, argues that section 703.5 does not apply and that even if it did, it would not "preclude evidence of a prior, out-of-court statement for a 'relevant, non-hearsay purpose, such as to show a warning, admonition, or notice." (Opp. 10:6-7 (quoting Caro v. Smith, 59 Cal. App. 4th 725, 733, 69 Cal. Rptr. 2d 306 (1997).)
Federal Rule of Evidence 601, which governs the competence of witnesses, provides that "in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the competency of a witness shall be determined in accordance with state law." Because the collusion defense is premised on state law, Justice Trotter's competence to testify is governed by California law and section 703.5 of the California Evidence Code. Fed. R. Evid. 601.
Therefore, as a matter of California law, Justice Trotter is not "competent to testify . . . as to any statement, conduct, decision, or ruling occurring at or in conjunction with the prior proceeding . . . ." Cal. Evid. Code § 703.5; Foxgate Homeowners Assn. v. Bramalea California, Inc., 26 Cal. 4th 1, 14, 15 n.2, 108 Cal. Rptr. 2d 642, 25 P.3d 1117 (2001) (explaining that "by a 1988 amendment of Evidence Code section 703.5, the Legislature made arbitrators as well as judges incompetent to testify about proceedings over which they presided" and referring to section 703.5 as a "testimonial immunity privilege"); Eisendrath v. Superior Ct., 109 Cal. App. 4th 351, 366, 134 Cal. Rptr. 2d 716 (2003) (holding mediator who oversaw mediation between husband and wife was incompetent to testify in connection with husband's motion to correct agreement).
C. The JAMS Note
Plaintiff argues (1) that the JAMS Note is inadmissible hearsay, (2) that its contents may not be disclosed by Lexington's experts under Federal Rule of Evidence 703 because it is not the type of evidence experts in their field reasonably rely on to form conclusions, and (3) that it should be excluded under Federal Rule of Evidence 403 on the grounds of unfair prejudice, confusion of the issues, or misleading the jury.
The Court excludes any evidence, reference, argument or testimony concerning the JAMS Note under Rules 403. The Court may exclude evidence under Rule 403 where "its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury . . . ." Fed. R. Evid. 403.
The isolated statement ascribed to Justice Trotter by his secretary in the JAMS Note, without context, carries little probative force. Any minimal probative value it has is substantially outweighed by the danger that the jury will be misled or the issues will be confused, as Justice Trotter will not be able to testify as to (1) whether he actually made the statement and (2) if so, what he meant by it. As the Court pointed out at the pre-trial conference, we simply "don't know what the context was of [the JAMS Note]. . . . [W]hen you play telephone, things get changed. Whether that happened here or not, [we] don't know." (Tr. 101:3-5.) Therefore, the JAMS Note may not be offered in evidence, nor may Lexington's experts (1) reference or disclose the contents of the JAMS Note or (2) offer opinions regarding Justice Trotter's conduct that are based solely on the JAMS Note. See Rogers v. Raymark Industries, Inc., 922 F.2d 1426, 1430 (9th Cir. 1991) ("Even if the court finds a[n expert] witness qualified under Rule 702, it may still exclude testimony under Rule 403.") (citations omitted).
III. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiff's motion in limine and excludes Justice Trotter as a witness.
IT IS SO ORDERED.
Dated: January 21, 2010
/s/ Dean D. Pregerson
DEAN D. PREGERSON
United States District Judge