Page 1
Court of Appeal:
Discovery Sanction May Not Include Post-Motion Expenses
Opinion Says Where Meet-Confer Happened After Motion to Compel Filed, Associated Costs Are Not Recoverable
By Kimber Cooley, Staff Writer
Div. Three of the First District Court of Appeal has held that although meet-and-confer expenses incurred before the filing of a motion to compel are generally compensable as discovery sanctions, expenses relating to the mediation of a discovery dispute occurring after a motion to compel has been filed are not.
The decision comes in a divorce case in which the wife sought discovery, via deposition subpoenas, from two non-party companies in which her husband had a financial stake and—due in part to miscommunication between attorneys—the required meet-and-confer conference was held after the motion to compel had been filed.
Justice Carin T. Fujisaki said in an opinion filed Tuesday that the issue is one “of first impression.” The opinion reverses orders by San Francisco Superior Court Judge David S. Weinberg imposing monetary sanctions on the two companies.
Presiding Justice Alison M. Tucher and Justice Ioana Petrou joined in the opinion.
Discovery Process
The companies appealing the order were Rocket Lawyer, Inc., a legal document service provider, and Acendi Interactive Company, LLC, an online security, authentication and legal documentation service provider. Charles Moore is the chairman of the board and chief executive officer for Rocket Lawyer and the managing member of Acendi.
The issue arose in a divorce proceeding between Moore and his wife Monique Covington Moore, who refers to herself in an appellate brief as “Covington” and is so denominated in the opinion. According to her, both Acendi and Rocker Lawyer were formed during the parties’ marriage and, although ownership is solely in Moore’s name, they together own 100 percent of Acendi, which itself holds approximately 24 percent of Rocket Lawyer stock.
Covington maintains that Acendi’s ownership interest in Rocket Lawyer is the most significant asset of the marital estate.
When deposition subpoenas served on both companies were met by substantive objections to each of the document demands, other than Acendi’s providing publicly available formation documents, Covington filed motions to compel discovery in June 2021.
After the motions were filed, but prior to the hearing on the matter, counsel for Covington, Acendi and Rocket Lawyer attended two full-day mediation sessions in November 2021 and January 2022. The purpose of each session was to attempt to resolve the discovery disputes.
On March 16, 2022, Weinberg granted Covington’s motion against Rocket Lawyer as to nine of the 14 document demands and granted the motion against Acendi as to 10 of the 14 documents, ordering that the production of documents be subject to a protective order. He imposed $25,000 sanctions on each company.
Monetary Sanctions
Fujisaki said the issue “requires us to interpret the Civil Discovery Act’s provisions on monetary sanctions, misuse of the discovery process, and the meet and confer requirement.”
She explained that Code of Civil Procedure §2023.030 provides that a court may “impose a monetary sanction ordering that one engaging in the misuse of the discovery process…pay the reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct.”
The jurist noted that “in order to bring a motion to compel discovery” under the code, “the propounding party must first engage in good faith attempts at informal resolution and then document those efforts in a declaration filed with the motion.” She said:
“Because the efforts a movant expends in meeting and conferring are, as a general matter, directly and causally related to the other side’s misuses of the discovery process, the costs of such efforts may reasonably constitute compensable expenses incurred ‘as a result of that conduct.’”
Fujisaki pointed out the absence of case law directly on point, but reasoned:
“This is not to say that all meeting and conferring expenses must be compensated. Like monetary sanctions generally, an award of sanctions for time spent meeting and conferring must be reasonable in amount….Moreover, the prevailing party’s attempts at informal resolution must be reasonable and in good faith.”
She opined that “[w]hile there is no dispute that the mediation sessions in November 2021 and January 2022 constituted further attempts to meet and confer on the discovery dispute in question, meet and confer expenses are compensable as discovery sanctions” only when they are incurred as part of the costs of bringing the motion.
The justice said that “[a]pplying this principle, we conclude that expenses incurred during a voluntary mediation of a discovery dispute that occurs after a motion to compel has been filed are not reasonably construed as part of the costs of bringing that motion.”
She continued:
“Although it is not explicit in the trial court’s orders, we infer that each of the $25,000 sanctions awards imposed on Rocket Lawyer and Acendi included some amount of Covington’s mediation-related expenses…. Accordingly, we instruct the trial court on remand to redetermine an appropriate amount of monetary sanctions against Rocket Lawyer and Acendi without including Covington’s mediation-related expenses.”
Meet and Confer
Fujisaki noted that although Rocket Lawyer challenged the sanctions award on the grounds that Covington’s request was “inflated” by hours spent meeting and conferring on discovery, she said that the company “fail[ed] to provide cogent argument and citation…which would typically result in the forfeiture of the contention.”
However, she said “in light of our consolidation of the appeals and Acendi’s similar (and more developed) arguments on this pure question of law,” the court elected to reach the issue as to both appellants.
Fujisaki pointed out that there were discussions between Acendi’s counsel, Richard Zuromski Jr. of the San Anselmo firm the Law Office of Ted. W. Pelletier, and Covington’s counsel, Nina Drucker of the San Francisco firm DeLacey Riebel Shindell, regarding a meet and confer mediation to discuss discovery.
However, when Zuromski attempted to reply to Drucker’s email seeking a meeting, he inadvertently sent his response to a paralegal who had been copied on the email and did not reply to Drucker. Drucker filed the motion to compel the following day.
The case is In re the Marriage of Moore, 2024 S.O.S. 1695.
Copyright 2024, Metropolitan News Company