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Reel Good, Inc. v. Giants Entertainment, Inc.

Court of Appeals of California, Second Appellate District, Division One.
Nov 19, 2003
No. B161669 (Cal. Ct. App. Nov. 19, 2003)

Opinion

B161669.

11-19-2003

REEL GOOD, INC., et al., Plaintiffs and Respondents, v. GIANTS ENTERTAINMENT, INC., et al., Defendants and Appellants.

Michael A. Gregg for Defendants and Appellants. Johnson & Rishwain, Brian A. Rishwain and James T. Ryan for Plaintiffs and Respondents.


There were extended discovery disputes, at the conclusion of which the trial court struck the defendants answer and cross-complaint, entered their defaults, and rendered a default judgment for about $240,000. The defendants appeal, claiming the trial court abused its discretion. We agree, and therefore reverse the judgment.

FACTS

A.

Giants Entertainment, Inc. ordered and received film stock from Reel Good, Inc., but did not pay for it. In January 2000, Reel Good and its principal, Ralph Barnett, sued Giants and its principal, David Dadon, for breach of contract and fraud, alleging that Dadon had personally guaranteed payment. In April, Giants and Dadon answered, and Giants cross-complained against Reel Good and Barnett, alleging the film stock was inferior.

The distinctions between the companies and their principals are not relevant to the issue on this appeal, and we therefore include the individuals in our references to their companies except when necessary to refer to one of the individuals by name.

Reel Good initiated discovery. Giants did not respond and motions were filed, then continued after the law firm representing Giants (Greenberg, Fields & Whitcombe, LLP) filed a motion for leave to withdraw as attorneys of record. In September 2000, the trial court granted the motion to withdraw, took the discovery motions off calendar, and set a status conference. Giants obtained another lawyer (Tristram T. Buckley), a status conference was held in October, and a further status conference was set for November, but no orders were made with regard to any of the outstanding discovery.

B.

In November, Reel Good served on Giants a notice of Dadons deposition, a demand for the production of documents, form interrogatories, and requests for admissions. Giants cancelled the deposition and did not respond to the other discovery requests. Reel Good twice tried informally to obtain responses, then filed motions for orders compelling Giants to respond to the outstanding discovery, requests for sanctions, and a request to extend the discovery cut-off date. While the motions were pending, Reel Good served a request to inspect the film stock that Giants claimed was defective.

On December 14, 2000, the trial court continued the discovery cut-off date from January 15 to February 15, 2001, ordered Dadon to appear for his deposition (which he did in January), and ordered Dadon to pay sanctions of $1,237. Although the court did not make any orders with regard to the other outstanding discovery requests, Giants served further (albeit still incomplete) responses.

C.

In January 2001, Reel Good filed a motion to compel further interrogatory responses and for sanctions, a motion to compel production of the allegedly defective film, and a motion to deem the requests for admissions admitted. On January 26, before the court had an opportunity to rule on these motions (the hearing was set for February 13), Reel Good filed a motion for an order striking Giants answer and cross-complaint or, in the alternative, precluding the introduction of certain evidence, and for about $30,000 in monetary sanctions. As Reel Good concedes in its respondents brief, "it is true that not one of the trial courts orders were [sic] violated at the time the motion [for the terminating sanction] was filed."

Following a hearing held on January 31, the trial court stated in its minute order (no reporter was present): "Counsel for [Giants] represents to the Court that [Giants] has complied with [Reel Goods] discovery requests; however, the Court GRANTS all of the [pending] motions to the extent that they have not been complied with based upon the grounds set forth in the moving partys papers." Sanctions in the amount of $923 were awarded.

The 2,300-page record on appeal is not in chronological order, and some of the motions, notices, and other documents can be found only as exhibits to later motions. As a result, we cannot determine which responses were outstanding in January 2001 or at any other relevant time, and cannot find the answer in Reel Goods brief because it has so few references to the record.

D.

On February 1, Reel Good filed a motion to compel Dadon to respond to deposition questions about his net worth and for sanctions. On February 8, Reel Good filed supplemental papers supporting its motions for orders compelling Giants to respond to the form interrogatories and for sanctions. On February 9, Giants filed opposition, the gist of which was that Reel Good was making a mountain out of a molehill in an action that "barely" met the threshold for superior court jurisdiction. Responses and supplemental responses served by Giants in December, January and February were attached to its opposition papers, as are several hundred pages of deposition transcripts and exhibits. As a result, there was at least some compliance with the conditional and somewhat vague order made on January 31 (and described in the preceding paragraph).

On February 13, the trial court continued the discovery motions to March 6 and included this note in its minute order: "It appears that further responses were served on February 2, 2001. Furthermore, there is nothing in [Reel Goods] declarations indicating what steps were taken before filing these motions. Thus, it appears that there was no good faith attempt at an informal resolution of these matters [as required by the local rules]. [¶] Accordingly, the attorneys . . . are ordered to meet and confer in person within five . . . court days of this order and file a Joint Statement of Items in Dispute on or before February 27, 2001. [¶] Additionally upon the Courts own motion, the Court orders attorneys for the parties to meet and confer in person prior to filing any further discovery motions in this matter.

"If there has, in fact, been a previous in person meet and confer on the above issues as represented by counsel for [Reel Good] this date, then the Court shall accept a declaration from [Reel Goods] counsel detailing said meet and confer in lieu of the aforementioned Joint Statement of Items in Dispute." There was no appearance for Giants, and no reporter was present. There is nothing in the minute order to suggest that a declaration from Reel Goods counsel would affect the March 6 hearing date or result in an earlier determination of any outstanding issue.

On February 21, the trial court granted Reel Goods motion to compel inspection of the allegedly defective film and for $ 1,893 in sanctions. The court "order[ed]" the inspection to occur at 3:00 p.m. on March 1. According to the minute order, there was no appearance for Giants (and, again, no reporter was present).

On February 26, the trial court granted Reel Goods motion to strike Giants answer and cross-complaint but denied the request for monetary sanctions. According to the minute order, there was no appearance for Giants (and, again, no reporter was present). On March 8, the trial court entered Giants default.

E.

On March 14, Giants (represented by new lawyers, Richard Stavin and Michael A. Gregg) filed a motion for relief pursuant to section 473 of the Code of Civil Procedure. Reel Good opposed the motion, which was denied on April 17. Giants filed a notice of appeal from the order striking their answer and cross-complaint, and from the order denying its motion for relief from default. The order was nonappealable, and we dismissed the appeal. (Reel Good, Inc. v. Giants Entertainment, Inc. (Feb. 26, 2002, B149623) [nonpub. opn.].) Remittitur issued in May 2002.

Undesignated section references are to the Code of Civil Procedure.

In its respondents brief, Reel Good contends this appeal cannot challenge the terminating sanction order because the appeal is not from that order. Reel Good is mistaken. When we dismissed the purported appeal from that order in February 2002, our opinion made it clear that the issue could be reviewed on appeal from the judgment ultimately entered.

F.

In June 2002, Giants renewed its motion for relief from the terminating sanction order, claiming in the motion that Giants had just learned that its former lawyer, Tristram Buckley, was guilty of "positive misconduct" and had "effectively abandoned" and "intentionally sabotaged" its case by failing to see to it that proper discovery responses were provided. On June 12, before the motion for relief was heard, the default was proved up and a judgment was entered in favor of Reel Good and against Giants. On June 14, the trial court advanced the hearing on the motion for relief and placed it off calendar.

On June 20, Giants filed a petition for a writ of mandate, asking us to compel the trial court to hear its motion for relief. We gave the appropriate notices, and ultimately issued a peremptory writ in which we directed the trial court to hold a hearing on the motion for relief from default. (Giants Entertainment, Inc. v. Superior Court (Aug. 9, 2002, B159476) nonpub. opn.].)

The motion was heard and denied on the ground that it was an untimely motion for reconsideration, leaving in place a default judgment in the total amount of $238,443.25. This appeal is from that judgment.

DISCUSSION

I.

Giants contends the terminating sanction was improper because it had not violated any discovery order, because "the trial court never even held a hearing on any motions to compel further responses," and because the trial court "never found" that Giants had "violated a single (not one) discovery order." (Emphasis added.) Reluctantly, we agree.

The trial court ordered Dadon to appear for his deposition, which he did in January 2001. Around the same time, Giants served supplemental responses to the form interrogatories and document demands. On February 13, the trial court noted that Giants had served supplemental responses, criticized Reel Good for its failure to meet and confer, ordered the parties to file a joint statement, and continued the pending motions to March 6 . On February 21, the trial court granted Reel Goods motion to inspect the film stock, and set the inspection for March 1 . Without regard to these dates, and notwithstanding the absence of any specific order identifying the problems with the supplemental responses, on February 26 the trial court struck Giants answer and cross-complaint. No one was present for Giants, and there was no reporter present.

Assuming the responses were still deficient, the only order in place at the time the terminating sanction was imposed was the order to produce the film stock and pay sanctions, and the date for production (March 1) had not yet arrived when Reel Goods motion to strike Giants pleadings was granted on February 26. As a result, there was no legal basis for the ultimate sanction imposed. (§§ 2023, subd. (b)(4), 2030, subd. (k), 2025, subd. (j)(3), 2031, subd. (l); Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545 [discovery sanctions should be appropriate to the dereliction and should not exceed that which is required to protect the interests of the moving party]; Young v. Rosenthal (1989) 212 Cal.App.3d 96, 114 [sanctions may be imposed only where there has been a willful failure to comply with a valid discovery order].)

As noted above, Reel Good and Barnett concede in their respondents brief that, "it is true that not one of the trial courts orders were [sic] violated at the time the motion [for the terminating sanction] was filed." The same is true when the motion was granted.

And whatever merit there may be to the argument that the circumstances justified a stiff monetary penalty payable by Giants and its former lawyers (Vallbona v. Springer, supra, 43 Cal.App.4th at pp. 1545-1546), the point here is that the terminating sanction deprived Giants of its right to defend this lawsuit on the merits and of its right to pursue its cross-complaint — and thus went far beyond that which was necessary to accomplish the purpose of discovery. (Newland v. Superior Court (1995) 40 Cal.App.4th 608, 613-616.) To the extent some of the discovery requests remained unanswered, they should have been dealt with individually. To the extent there were unpaid monetary sanctions (which is not at all clear from the record), Reel Good could have executed on the sanction orders. (Id. at p. 615.) To the extent the deposition questions sought information about Dadons net worth, it appears that Reel Good was not entitled to that information. (Civ. Code, § 3295, subd. (c) [no pretrial discovery of a defendants financial condition shall be permitted unless the court enters an order permitting such discovery upon a motion by plaintiff establishing that there is a substantial probability that the plaintiff will prevail on a claim for punitive damages].)

II.

Our decision that the terminating sanction was an abuse of discretion means the default and default judgment must be stricken, and the answer and cross-complaint must be reinstated. For this reason, we need not consider Giants challenges to the order denying its motion for relief from default or the particular items of damages awarded to Reel Good.

DISPOSITION

The judgment is reversed, and the cause is remanded to the trial court with directions (1) to vacate the default judgment, the entry of default, and the order striking Giants and Dadons answer and cross-complaint, and (2) to set the case back on track for trial. The parties are to pay their own costs of appeal, subject to reallocation by the trial court at the conclusion of this case.

We concur: ORTEGA, Acting P.J., MALLANO, J.


Summaries of

Reel Good, Inc. v. Giants Entertainment, Inc.

Court of Appeals of California, Second Appellate District, Division One.
Nov 19, 2003
No. B161669 (Cal. Ct. App. Nov. 19, 2003)
Case details for

Reel Good, Inc. v. Giants Entertainment, Inc.

Case Details

Full title:REEL GOOD, INC., et al., Plaintiffs and Respondents, v. GIANTS…

Court:Court of Appeals of California, Second Appellate District, Division One.

Date published: Nov 19, 2003

Citations

No. B161669 (Cal. Ct. App. Nov. 19, 2003)