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Kelly v. Provident Life and Accident Insurance Co.

February 9, 2010

RICHARD HOWARD KELLY, PLAINTIFF,
v.
PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matters before the Court are Defendant's Objection to the Non-Dispositive Order of the Magistrate Judge (Doc. # 103) and Plaintiff's Ex Parte Motion to Continue Defendant's Motion for Summary Judgment (Doc. # 108).

PROCEDURAL HISTORY

Plaintiff initiated this action by filing the complaint on April 19, 2004. (Doc. # 1). Plaintiff's lawsuit concerns an insurance policy issued by Defendant. Id. at 1-2. This insurance policy was the subject of previous litigation between Plaintiff and Defendant in this Court, resulting in a settlement agreement. Id. at 11-12. Plaintiff claims he signed the settlement agreement because of undue influence by Defendant. Id. Plaintiff seeks rescission of the settlement agreement so he can pursue claims against the insurance company. Id. Plaintiff claims Defendant breached the insurance contract and breached the implied covenant of good faith and fair dealing under California law. Id. at 1.

On August 13, 2004, this Court dismissed Plaintiff's claims with prejudice, concluding Plaintiff's undue influence claim failed to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) and that Plaintiff's breach of contract and breach of the covenant of good faith and fair dealing claims were time barred. (Doc. # 21). On October 16, 2007, the Court of Appeals for the Ninth Circuit reversed this Court's ruling as to all three claims. (Doc. # 55).

On remand, Defendant filed an answer (Doc. # 59) and the parties proceeded with discovery. On May 29, 2009, the Magistrate Judge ordered Defendant to "designate a person most qualified [to testify] regarding the underlying lawsuit" and to produce that person for deposition pursuant to Federal Rule of Civil Procedure 30(b)(6). (Doc. # 94). On September 15, 2009, the parties contacted the Magistrate Judge's chambers regarding a discovery dispute relating to the deposition of John Kos. (Doc. # 101 at 1). Defendant designated Kos as its Rule 30(b)(6) witness who is most knowledgeable about the previous litigation between the parties. Id. Plaintiff asserted that Kos was not adequately prepared to testify on Defendant's behalf on the topics designated in the Rule 30(b)(6) Notice. Id. On October 8, 2009, the Magistrate Judge entered an order finding that Defendant failed to fully prepare its Rule 30(b)(6) witness for deposition. (Doc. # 102 at 2). The Magistrate Judge ordered that Plaintiff will be permitted to redepose Defendant's Rule 30(b)(6) witness. Id. at 3. Defendant filed an objection to the Magistrate Judge's October 8, 2009 order on November 4, 2009. (Doc. # 103).

On November 30, 2009, Defendant filed a Motion for Summary Judgment. (Doc. # 106). On December 3, 2009, Plaintiff filed an Ex Parte Motion to Continue the Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56(f). (Doc. # 108). Plaintiff seeks a continuance to allow him to redepose John Kos before responding to the Motion for Summary Judgment. Id. On December 4, 2009, the Court ordered Defendant to respond to Plaintiff's Motion to Continue the Motion for Summary Judgment. Briefing was complete on December 16, 2009. (Doc. # 115). On January 7, 2010, the Court ordered the parties to file additional briefing on Defendant's objection to the Magistrate Judge's October 8, 2009 order. (Doc. # 118). The parties completed briefing on January 26, 1010.

ALLEGATIONS OF THE COMPLAINT

Plaintiff purchased two disability insurance policies from Defendant in the 1980s. Compl. at ¶¶ 9-19. On April 10, 1986, Plaintiff began receiving disability payments due to a diagnosis of depression, dysthymic disorder, and schizoid personality disorder. Id. at ¶¶ 22-24. Plaintiff received $5,500 in disability benefits per month under the policies until August 18, 1999. Id. at ¶ 25. Plaintiff received a letter on August 18, 1999 from Defendnat stating "it does not appear that you are disabled as per your policies." Id. Plaintiff sought reconsideration of that determination in a letter sent February 16, 2000. Id. Plaintiff told Defendant that he believed the only way he could get his benefits back was via a legal challenge, but "I can not survive any legal challenge mentally, physically or financially." Id. at ¶ 28. Defendant believed Plaintiff had been receiving income during the time he was receiving disability payments from Defendant, but Plaintiff alleges these payments were "residual and not being created by [Plaintiff] continuing" to work while on disability. Id. at ¶ 34. Plaintiff's psychiatrist communicated to Defendant that he believed Plaintiff remained disabled. Id. at ¶ 30.

On October 26, 2000, Defendant sued Plaintiff in this Court. See Provident Life and Accident Insurance Co. v. Kelly, 00cv2169-H-JFS. In that lawsuit, Defendant alleged Plaintiff had committed fraud, conspiracy to defraud, breach of the implied covenant of good faith and fair dealing, and sought rescission of the insurance contracts and restitution of the benefits Defendant had paid to Plaintiff. Id. Defendant sought approximately $860,000 in damages. Id. Plaintiff also believes Defendant contacted the California Department of Insurance and the FBI to initiate criminal proceedings against Plaintiff. (Doc. # 1 at ¶¶ 44-45). When the complaint was filed, Plaintiff still faced federal criminal tax evasion charges. Id. at ¶ 46. Plaintiff alleges that Defendant was aware that Plaintiff was in fact disabled and that Defendant sued Plaintiff in order to avoid having to pay benefits in the future. Id. at ¶ 42-43. Plaintiff alleges he filed a counter claim pro se in the previous lawsuit on June 29, 2001 alleging breach of contract and breach of the covenant of good faith and fair dealing. Id. at ¶ 50. Defendant also sued Plaintiff's insurance business in the previous lawsuit. Id. However, Plaintiff could not file an answer on behalf of his business because he is not licensed as an attorney. Id. at ¶ 49. Defendant obtained default judgment as to Plaintiff's business and Plaintiff alleges Defendant leveraged this judgment to pressure Plaintiff into settling. Id. at ¶ 51. Plaintiff alleges Defendant also took advantage of its knowledge of Plaintiff's fragile mental state to pressure him into settling. Id. Plaintiff alleges the settlement contract is therefore invalid and seeks to rescind it and revive his previous counter claims. Id.

ANALYSIS

I. Objection to the Non-Dispositive Order of the Magistrate Judge

Defendant contends that the order of the Magistrate Judge is overbroad, unduly burdensome, and requires the unnecessary redeposition of a witness on matters that are irrelevant. (Doc. # 103 at 1). Defendant contends that the order of the Magistrate Judge requests disclosure of privileged attorney-client communications and attorney work product. Id. at 2.

Plaintiff contends that Defendant produced an unprepared witness for deposition in violation of Federal Rule of Civil Procedure 30(b)(6) and in violation of a prior order from the Magistrate Judge issued May 29, 2009 (Doc. # 94). (Doc. # 119 at 6). Plaintiff contends that Defendant's objection is untimely because it was filed more than ten days after the October 8, 2009 order requiring Defendants to produce the 30(b)(6) witness for redeposition (Doc. # 103) and the May 29, 2009 order requiring Defendant to produce the person most knowledgeable about the underlying lawsuit for deposition (Doc. # 94). (Doc. # 119 at 5). Plaintiff contends that Defendant did not raise attorney-client privilege or attorney work product to the Magistrate Judge and may not raise new issues for the first time in an objection. Id. at 10. Plaintiff contends that even if this Court were to consider the untimely arguments raised for the first time in the objection, Defendant's objection lacks merit. Id. at 11-12. Plaintiff contends that he is not seeking information covered by attorney-client privilege because information does not become privileged simply ...


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