Source: https://caselaw.findlaw.com/ca-court-of-appeal/1115483.html
Timestamp: 2019-04-21 01:26:12+00:00

Document:
WIMSATT v. Corey Kausch, Real Party in Interest.
William WIMSATT et al., Petitioners, v. SUPERIOR COURT of California for the County of Los Angeles, Respondent; Corey Kausch, Real Party in Interest.
Luce, Forward, Hamilton & Scripps and George J. Stephan, Los Angeles, for Petitioners. Robie & Matthai, James R. Robie and Natalie A. Kouyoumdjian, Los Angeles, for Association of Southern California Defense Counsel as Amicus Curiae on behalf of Petitioners. Law Office of Ivan K. Stevenson and Ivan K. Stevenson, Rolling Hills Estates, for Southern California Mediation Association and Confidential Mediation & Dispute Resolution as Amici Curiae on behalf of Petitioners. Baker, Keener & Nahra, Robert C. Baker and R. Jeffrey Neer, Los Angeles, as Amici Curiae on behalf of Petitioners. No appearance for Respondent. Rackohn & Rackohn, Craig D. Rackohn, Westlake Village, for Real Party in Interest.
Plaintiff and real party in interest Corey Kausch (Kausch) filed this legal malpractice case against defendants and petitioners Magaña, Cathcart & McCarthy and attorney William H. Wimsatt concerning legal representation rendered in a personal injury lawsuit.1 Among other allegations, Kausch alleged Magaña breached its fiduciary duty by submitting an unauthorized settlement demand to the opposing party. Kausch learned of this potentially unauthorized act from a “confidential mediation brief” submitted to a mediator in the personal injury lawsuit.
In addressing these evidentiary issues, we examine the mediation confidentiality statutes, Evidence Code section 1115 et. seq., and in particular Evidence Code section 1119. The Supreme Court has held that the mediation statutes are to be broadly construed to effectuate the legislative intent, even if there are conflicting public policies and even if the equities in a particular case suggest a contrary result. In light of the Supreme Court's analysis, stare decisis obligates us to construe the statutes broadly, although in doing so Kausch may be deprived of his ability to prove the purported legal malpractice.
Accordingly, we hold that the first two listed items (the briefs and the e-mails) are protected by mediation confidentiality. However, Magaña has not met its burden of proof with regard to the oral communication by Wimsatt. We issue a writ of mandate and direct the trial court to issue a protective order only with respect to the mediation briefs and the e-mails.
FACTUAL AND PROCEDURAL BACKGROUNDA. General background.
Kausch was injured in a November 18, 2003, airplane crash. Wimsatt was an attorney in the Magaña firm. Kausch hired Magaña and also hired attorney Marc Goldstein to represent him in his personal injury lawsuit. The defendants in the personal injury lawsuit were represented by attorney Peter P. Brotzen of Dwyer, Daly, Brotzen & Bruno, LLP, and attorney Robert Baker of Baker Keener & Nahra LLP.
In January 2006, a mediation session was held in an attempt to resolve the case. The mediator was the Honorable R. William Schoettler, retired. The case did not settle.
Around April of 2006, a second mediation session was scheduled for the purpose of trying to settle the personal injury lawsuit.
The second mediation was held on April 28, 2006. Wimsatt, Kausch, Kausch's mother, Goldstein, Brotzen, and Baker attended, along with mediator, the Honorable William Sheffield, retired. The underlying personal injury case was resolved. The appellate record does not disclose the amount of the confidential settlement. At the conclusion of the mediation, Kausch signed a stipulation for settlement. Thereafter, Kausch signed a settlement agreement and mutual release, as well as a statement of accounting, and he endorsed a settlement check.
B. Proceedings in this legal malpractice action before the trial court.
In June 2006, Kausch filed a complaint for damages against Magaña. In addition to other allegations, Kausch alleged Magaña breached its fiduciary duty by “lowering [Kausch's] settlement demand by more than one-half, from $3.5 Million to $1.5 Million, which was done without the knowledge, permission or consent of [Kausch]. This was done on the eve of the second mediation and constituted a complete departure and breach of [Magaña's] fiduciary duties ․ owed to [Kausch]. Such conduct greatly impaired [Kausch's] ability to achieve his desired results and undermined his position and efforts in the mediation.” Kausch further alleged that “[a]s a result of that unauthorized communication, the second mediation concluded at a settlement number much less than [Kausch] could have otherwise received had [Magaña] not reduced [Kausch's] settlement demand by 50% prior to the second mediation.” Goldstein was not named as a defendant in the legal malpractice case.
“Q. Did you make any demands after the lawsuit was filed to the defendants in the case as to what the settlement should be for Corey Kausch?
“Q. Getting back to this meeting that you had, did you, once again, request Mr. Kausch to give you the authority to reduce his demand prior to the second mediation?
“Q. And did he give it to you?
“Q. And at any time before the second mediation, were you authorized by Corey Kausch to contact the defendants' attorneys and inform them that he was lowering his demand in the case?
“Q. [Wimsatt was shown the confidential mediation brief and in particular the following statement: “ ‘The attorneys for [Kausch] have purportedly recently communicated a settlement demand in the sum of $1.5 million.’ ”] Did you have any discussions prior to the mediation as to where that information came from?
“A. There was no demand on behalf of Corey Kausch communicated to the other side by me at any time other than through either Judge Schoetler or through Judge Sheffield who handled the second mediation.
“Q. Does that mediation brief refresh your recollection that you're the one who conveyed a demand to the defendants' attorneys that Corey Kausch was lowering his demand for settlement?
“Q. [Wimsatt was shown the April 27, 2006, e-mail exchange between Goldstein and Brotzen.] Does that E-mail refresh your recollection that you had a conversation with Bob Baker reducing [Kausch's] demand for settlement in half prior to the second mediation?
“Q. Does that E-mail refresh your recollection that you had a communication with Peter Brotzen reducing [Kausch's] demand prior to the mediation?
“A. I did have a conversation with Peter Brotzen. I specifically said I have no authority to make a demand on behalf of Corey Kausch or to reduce this demand. I simply told him what the evidence I had collected had showed.
“Q. Do you recall Marc Goldstein contacting you prior to the second mediation and that he was quite upset as to where the information came from that plaintiff's demand had been reduced to half?
“Q․ It's your position that you did not reduce [Kausch's] settlement demand prior to the second mediation? Is that a correct statement?
“Q. Now, when you testified earlier regarding your E-mail to Marc Goldstein in response to his question if you knew anything about the settlement demand being reduced, you referred to a conversation you had a month earlier where you had told the defense attorney that you had re-evaluated the case and you thought the demand should be in half, but you didn't have authority to make that demand. [¶] Do you recall that testimony?
3. Other discovery by Kausch in the malpractice lawsuit.
Kausch's attorney informed counsel for Wimsatt that he intended to depose Brotzen “on the conversation prior to the second mediation [wherein Kausch] had reduced his settlement demand to $1.5 million.” Thereafter, it appears Kausch noticed the depositions of Brotzen and Baker.
4. Magaña's request for a protective order.
At the first hearing held on January 17, 2007, Kausch argued, in part: “It's not the mediation brief that we wish to conduct discovery on. It's a statement that was made unrelated to the mediation that ended up in the mediation brief. [¶] And our position has always been that ․ defendant Wimsatt is denying that he ever made this statement prior to mediation. He also testified in his deposition that while having a conversation with Peter Brotzen on another case, this case came up and he expressed an opinion that he had revalued the case and that he thought the value should be cut in half. [¶] Now, that is a statement that was not made towards mediation․ [S]ince this statement was made prior to the mediation, and it wasn't made for the purposes of facilitating mediation, then the privilege doesn't apply.” Kausch asserted he wished to prove that Wimsatt had lied in his deposition when he said that he had not lowered Kausch's settlement demand.
The court expressed some concern as to whether the privilege protected perjury. The trial court stayed the proceedings to enable the parties to meet and confer and resolve the issues. The parties were not able to resolve all of their discovery disputes.
(b) The second hearing and the trial court's ruling.
At the second hearing on February 2, 2007, the trial court denied Magaña's motion for a protective order. In issuing its ruling, the trial court stated the following: “the [L]egislature did not intend confidentiality of mediation proceedings to be so complete as to shield perjury or inconsistent statements.” Rather, the court observed that in Foxgate Homeowners' Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 108 Cal.Rptr.2d 642, 25 P.3d 1117 (Foxgate ) the Supreme Court acknowledged there were some situations in which the privilege did not make inadmissible all mediation-related information, such as in Rinaker v. Superior Court (1998) 62 Cal.App.4th 155, 74 Cal.Rptr.2d 464 (Rinaker ). The trial court noted that Evidence Code section 703.5 precluded mediators from testifying in civil proceedings, except that the statute permitted such testimony relating to conduct that would constitute a crime, and perjury is a crime.
On February 13, 2007, Magaña filed an ex parte application to seal documents. Magaña sought to place under seal all documents submitted by Kausch as they had included unredacted copies of relevant documents. Magaña argued that sealing was necessary because the items were all subject to mediation confidentiality.
On February 22, 2007, the trial court denied the application to seal documents.
The mediation briefs and the April 27, 2006, e-mails are protected by mediation confidentiality. However, Magaña has not shown that the contents of the conversation in which Wimsatt purportedly lowered Kausch's settlement demand are protected by mediation confidentiality.
Mediation confidentiality is codified in Evidence Code section 1115 et seq. This evidentiary restriction is not limited to those communications made “in the course of mediation. [Citation.]” (Rojas, supra, 33 Cal.4th at p. 417, 15 Cal.Rptr.3d 643, 93 P.3d 260.) Rather, as delineated in Evidence Code section 1119, the restriction applies to any written or oral communication made “for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation,” as well as all “communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation․” (Evid. Code, § 1119.) Section 1119 also makes such evidence not subject to discovery.
“(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
“(b) No writing ․ that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
Some mediation communications and writings are admissible, if the statutory requirements are met. For example, the statutory scheme specifies when written settlements and oral settlements resulting from the mediation process are admissible. (Evid.Code, §§ 1118, 1122, 1123, 1124.) Additionally, communications or writings otherwise protected may be disclosed if there is consent for disclosure, according to the parameters of section 1122.
The Courts of Appeal also strictly construe the mediation confidentiality statutes, even when the equities in the case suggest contrary results.
We now turn to the facts before us.
Here, Magaña sought to preclude discovery of three categories of items: (1) statements made in all mediation briefs, including statements in the “confidential mediation brief;” (2) the contents of the April 27, 2006, e-mails; and (3) a conversation between Wimsatt and Brotzen or Baker “in which Bill Wimsatt allegedly lowered plaintiff's settlement demand ‘on the eve of the second mediation’ held on April 28, 2006․” We analyze each category separately.
1. The mediation briefs are protected from disclosure.
The trial court should have issued a protective order with regard to the mediation briefs produced on behalf of Kausch and the personal injury defendants, including the confidential mediation brief written for the second mediation. This would include an order prohibiting questioning or soliciting information in a deposition or by written discovery as to the contents of the mediation briefs.
2. The April 27, 2006, e-mails are protected from disclosure.
The April 27, 2006, e-mails were written the day before the second mediation. They quoted from, and referenced, the confidential mediation brief. The purpose of the e-mails was to clarify statements made in all the mediation briefs as such statements would significantly affect the mediation negotiation to be held the next day. The e-mails would not have existed had the mediation briefs not been written. The e-mails were materially related to the mediation that was to be held the next day and are to remain confidential. (Cf. Eisendrath, supra, 109 Cal.App.4th at p. 364, 134 Cal.Rptr.2d 716.) To conclude otherwise would permit mediation participants to extract excerpts from a mediation brief and avoid confidentiality by publishing the contents of the brief in another medium. Thus, the e-mails are protected and not subject to discovery.
Accordingly, the e-mails were “made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation” and are not subject to disclosure. The trial court should have issued a protective order with regard to the April 27, 2006, e-mails. This would include an order prohibiting questioning or soliciting information in a deposition or by written discovery as to the content of the e-mails.
3. Magaña failed to meet its burden to prove that the statements made by Wimsatt purportedly lowering Kausch's settlement demand were protected.
Magaña has not brought forth any evidence to demonstrate that the conversation is linked to the second mediation or that it is anything other than expected negotiation posturing that occurs in most civil litigation. Throughout litigation, parties discuss discovery, settlement ranges, and developing evidence, including witnesses and documents. It is not unusual for parties to change positions as new information is developed. Parties re-value liability and damages. They alter their negotiation strategy. All conversations between the parties are not protected by mediation confidentiality simply because the conversations might have occurred temporally before a scheduled mediation.
Here, there was an unsuccessful mediation in January 2006. The case did not settle. Eventually, a second mediation was scheduled for April 28, 2006, before a different mediator. The fact that the conversation in which Wimsatt allegedly lowered Kausch's settlement demand occurred outside the presence of the mediator does not automatically foreclose a conclusion that it was protected by mediation confidentiality. (Eisendrath, supra, 109 Cal.App.4th at p. 364, 134 Cal.Rptr.2d 716; Doe 1, supra, 132 Cal.App.4th at p. 1167, fn. 6, 34 Cal.Rptr.3d 248.) However, it is Magaña's burden to link the conversation to a mediation session. It has not done so. Magaña has not shown that the purported conversation was made for the purpose of, or pursuant to, the mediation. Rather, there is evidence that it was made during a telephone call “scheduling the expert depos and touching on whether a second mediation conf[erence] would be worthwhile.” This evidence suggests the conversation occurred during a “discovery” conversation. Thus, the conversation may have occurred, and the statement could have been made, even if there was to be no mediation. If so, the statements were communications, negotiations, and settlements made in the regular course of the litigation, not for the purpose of, in the course of, or pursuant to a mediation. Magaña failed to bring forth facts to show that this conversation was anything other than a routine discussion, unassociated with mediation that routinely occurs in civil litigation. As such, Magaña failed to meet its burden of proof.
Thus, Magaña has not shown that the conversation in which Wimsatt purportedly lowered Kausch's settlement demand is protected by mediation confidentiality.
4. The trial court could not craft exceptions.
The trial court created an exception to mediation confidentiality by ruling that “the [L]egislature did not intend confidentiality of mediation proceedings to be so complete as to shield perjury or inconsistent statements.” This ruling was based upon Kausch's argument that Wimsatt's deposition testimony was perjurious because it was inconsistent with, and contrary to, other statements made by him.
We appreciate the trial court's desire to avoid the strict limitations of mediation confidentiality in this case. Preventing Kausch from accessing mediation-related communications may mean he must forgo his legal malpractice lawsuit against his own attorneys. However, the Supreme Court has declared that exceptions to mediation confidentiality must be expressly stated in the statutes. (Foxgate, supra, 26 Cal.4th at p. 15, 108 Cal.Rptr.2d 642, 25 P.3d 1117; Rojas, supra, 33 Cal.4th at p. 416, 15 Cal.Rptr.3d 643, 93 P.3d 260; Fair v. Bakhtiari, supra, 40 Cal.4th at p. 194, 51 Cal.Rptr.3d 871, 147 P.3d 653.) Further, cases have shielded evidence of sanctionable conduct (Foxgate, supra, 26 Cal.4th 1, 108 Cal.Rptr.2d 642, 25 P.3d 1117), criminal conduct (Doe 1, supra, 132 Cal.App.4th 1160, 34 Cal.Rptr.3d 248), and statements that purportedly were inconsistent with those made in a mediation (Eisendrath, supra, 109 Cal.App.4th at p. 351, 134 Cal.Rptr.2d 716). Cases have rejected a good cause exception (Rojas, supra, at pp. 423-424, 15 Cal.Rptr.3d 643, 93 P.3d 260), refused to find implied waivers to mediation confidentiality (Eisendrath, supra, at pp. 362-363, 134 Cal.Rptr.2d 716), and acknowledged that in doing so, the mediation participants accused of misconduct might be protected. Even though in each of these cases strong reasons existed to permit the introduction of the evidence, the results were dictated by the comprehensive statutory scheme devised by the Legislature.
Our Supreme Court has clearly and unequivocably stated that we may not craft exceptions to mediation confidentiality. (Foxgate, supra, 26 Cal.4th at p. 15, 108 Cal.Rptr.2d 642, 25 P.3d 1117.) The Court has also stated that if an exception is to be made for legal misconduct, it is for the Legislature to do, and not the courts. (Id. at p. 17, fn. 13, 108 Cal.Rptr.2d 642, 25 P.3d 1117.) We are bound to follow this precedent (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937), even if we might have concluded that other public policies warrant an approach to confidentiality that is not absolute. Thus, the trial court erred in creating an exception to mediation confidentiality.
As Professor Robinson notes, a strict approach to mediation confidentiality often prevents courts from “exploring and justly deciding controversies that might arise out of mediated agreements.” (Robinson, Centuries of Contract Common Law Can't Be All Wrong: Why the UMA's Exception to Mediation Confidentiality in Enforcement Proceedings Should be Embraced and Broadened, supra, 2003 J.Disp. Resol. at p. 138, fn. omitted.) The California cases we discussed above are illustrative. They have allowed to go unpunished sanctionable conduct that frustrated the purpose of mediation (Foxgate, supra, 26 Cal.4th 1, 108 Cal.Rptr.2d 642, 25 P.3d 1117), foreclosed litigants from gathering evidence that might prove toxic molds and other microbes created health hazards (Rojas, supra, 33 Cal.4th 407, 15 Cal.Rptr.3d 643, 93 P.3d 260), precluded a propria persona litigant from proving the terms of a mediated agreement (Eisendrath, supra, 109 Cal.App.4th 351, 134 Cal.Rptr.2d 716), and shielded from view evidence of criminal conduct (Doe 1, supra, 132 Cal.App.4th 1160, 34 Cal.Rptr.3d 248).
Let a writ of mandate issue directing the trial court to enter a new and different order granting the motion of petitioners Magaña, Cathcart & McCarthy and attorney William H. Wimsatt for a protective order prohibiting the disclosure of the mediation briefs and the e-mails, only. A protective order is not to be granted with regard to the conversation in which Wimsatt purportedly lowered Kausch's settlement demand.
We deny the request of Magaña, Cathcart & McCarthy and attorney William H. Wimsatt to seal the documents and we deny the request to redact the documents.
The parties are to bear their own costs in this proceeding.
1. For ease of reference, we refer to the law firm of Magaña, Catchcart & McCarthy and attorney William H. Wimsatt collectively as Magaña. When necessary, we also refer to Wimsatt individually.
2. Magaña's request for a protective order also sought to exclude other items. The parties subsequently reached a consensus on these items. We have detailed only those items remaining in dispute.
3. We granted permission to file amicus curiae briefs to Robert C. Baker of Baker, Keener & Nahra, LLC, Association of Southern California Defense Counsel, and Southern California Mediation Association and the Law Office of Ivan K. Stevenson.
11. For simplicity, we hereinafter assume that there was only one conversation and it was between Wimsatt and Brotzen.
12. Magaña suggests that the trial court made a factual finding that the conversation was made for the purpose of, in the course of, or pursuant to, the mediation, but that an exception applied. This is a misreading of the trial court's order. Having found that an exception applied, the trial court did not make findings with regard to whether the statement was protected.
13. We have denied a motion to augment the record to include an additional excerpt from Wimsatt's deposition because this excerpt was not before the trial court.
14. The trial court in the matter before us also referred to Evidence Code section 703.5. As discussed above, section 703.5 precludes mediators from testifying in civil proceedings about mediations over which they presided unless the conduct discussed would give rise to civil or criminal contempt, constitute a crime, be subject to investigation by the State Bar or Commission on Judicial Performance, give rise to disqualification proceedings, or was made in Family Code mediations commencing with Family Code section 3160. (See fn. 5.) The trial court noted that Foxgate, supra, 26 Cal.4th 1, 108 Cal.Rptr.2d 642, 25 P.3d 1117, had referenced section 703.5 and that perjury is a crime. However, when Foxgate cited to section 703.5, it did so to explain that the Legislature had formulated a statutory scheme that was comprehensive and contained few exceptions. (Foxgate, supra, at p. 15, 108 Cal.Rptr.2d 642, 25 P.3d 1117 [“To carry out the purpose of encouraging mediation by ensuring confidentiality, the statutory scheme, which includes sections 703.5, 1119, and 1121, unqualifiedly bars disclosure of communications made during mediation absent an express statutory exception. (Fn.omitted.)”].) Foxgate did not cite Evidence Code section 703.5 to suggest that courts could formulate exceptions to the statutory scheme.
15. In at least one jurisdiction that has less stringent mediation statutes than those in California, courts addressing situations akin to the present case have permitted the disclosure of confidential communications made during the course of a mediation. In Avary v. Bank of America, N.A. (Tex.App.2002) 72 S.W.3d 779, discovery was permitted when beneficiaries alleged breach of fiduciary duty by an executor in rejecting a higher settlement demand in mediation. Avary reasoned that the alleged breach of fiduciary duty was a new and independent tort, separate and apart from the subject of the mediation. Further, despite the public policy to protect confidentiality, there was an equally important policy to preserve significant and well-established procedural and substantive rights. In Alford v. Bryant (Tex.App.2004) 137 S.W.3d 916, a client sued his attorney for malpractice in connection with settlement reached in mediation. Alford concluded that the testimony of the mediator was admissible over the client's objection because the client waived confidentiality, the information was likely outcome determinative, and the mediator's testimony was critical evidence.

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