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Probuilders Specialty Insurance Co v. Valley Corp.; et al

May 13, 2013


The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge

*E-FILED: May 13, 2013*



United States District Court For the Northern District of California

This action for declaratory relief and restitution arises out of a construction defect action in Santa Clara County Superior Court. Plaintiff Probuilders Specialty Insurance Co. ("Probuilders") 17 issued a commercial general liability policy to defendant Valley Corp. B., f/k/a R.J. Haas Corp. 18

("Haas Corp."), and its president Ronald J. Haas ("Haas") for the construction of a single family 19 20 home of defendants Ty and Karen Levine. Subsequently, the Levines sued Haas for shoddy and incomplete work. Haas blamed the subcontractors. Probuilders provided a "courtesy" defense to 22 Haas Corp. and Haas in the Levine suit. Ultimately, the state court awarded the Levines a judgment 23 against Haas Corp. and Haas for almost 2 million dollars. 24

In the current suit, Probuilders contends that Haas and his company made material 25 26 misrepresentations to it with respect to verifying that the subcontractors had insurance and that they had contractually agreed to indemnify Haas. Probuilders seeks relief against Haas Corp., Haas, and 28 the Levines for rescission of the contract, recovery of the costs of defending the suit, and a finding that the insurance policy does not cover the state court judgment. Haas counterclaimed for breach 2 of contract and a failure to act in good faith. The Levine defendants filed their own counterclaim 3 against Probuilders for relief under a theory of bad faith. 4 5 6 most recent discovery disputes concerned, inter alia, Haas's insufficient responses to requests for admission ("RFAs"), his withdrawal of admissions without leave of Court, and his failure to pay 8 court-ordered sanctions that resulted from previous discovery violations. This Court recommended 9 striking Haas's answer and dismissing his counterclaim, or, in the alternative, deeming the 10 following RFAs admitted: 46, 50, 54, 58, 62, 66, 70, 74, 78, 90, 98, 110, 114, 118, 122, 125, 129, 131, 135, 139, and 143 (the "Subject RFAs"). The Honorable Edward J. Davila, U.S.D.J., subsequently deemed the Subject RFAs admitted, but granted Haas leave to file a motion to withdraw or amend his answers pursuant to Federal Rule of Civil Procedure 36(b). 15

So far, the Court has issued rulings on eight different discovery disputes in this matter. The Currently before the Court is Haas's motion for leave to amend his responses to the Subject RFAs. The 21 Subject RFAs ask Haas to admit that 21 different entities were independent 17 contractors retained by Haas Corp. to work on the Levine Project. (Dkt. 119-2, pp. 7-16). When 18 19 represented by counsel, Haas offered the following response: Haas objects to this request as vague and ambiguous in its use of the phrases "independent contractor" and "work" on the grounds that it fails to distinguish between independent contractors who provided construction services under their own discretion, vendors that supplied material, and entities that contracted to provide services directed by a general contractor. Haas also objects to this request as unduly burdensome and unreasonably oppressive on the grounds that it addresses matters that are neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. Subject to and without waiving his objections, Haas admits that [entity] was listed on the Levine Sub-Contractor List in an exhibits marked at trial in Levine.

After a meet and confer over objections to this and other responses, Haas, then proceeding pro se, 27 amended his initial response to the Subject RFAs by simply referring ProBuilders to a 19,000 page 28 file. (Dkt. 119-4, p. 27). His First Supplemental Response stated "Yes, Licensed Contractor."

(Dkt. 119-4, pp. 27-30). His Second Supplemental Response stated "Deny, Licensed contractor? 2

Original document verification is incomplete." (Dkt. 119-4, pp. 66-75). His Third Supplemental 3 Response stated "Deny." (Dkt. 119-7, pp. 36-45). His Fourth Supplemental Response, which came 4 when Haas was once again represented by counsel, stated: 5 6

Specifically, these answering parties object to this request because it calls for a legal conclusion which these responding parties are unable to determine. We are not familiar with the strict legal definitions used to determine independent contractor status. We have been unable to make accurate determinations regarding independent contractor status of various entities in the past and in the underlying action (please refer to my supplemental response to RFA No. 44). As such, we do not know what the employment status of [entity] was.

(Dkt. 179-9, pp. 5-15).

As it now stands, the Subject RFAs are admitted. Haas, represented by the same counsel 13 who authored his Fourth Supplemental Response, seeks leave to change responses to 20 of the 14 Subject RFA as follows: 15 16

As counsel for ProBuilders argued at the hearing, the proposed responses to 20 of the Subject RFAs 21 injects three new issues of uncertainty into the responses. First, changing the admissions about the 22 status of the subject entities to a "belief" about the status of the subject entities, no longer 23 establishes the status of these entities. Second, the response now suggests that Haas believed the 24 25 entities were either independent contractors or "independent companies." Third, the response

Unable to Admit or Deny. These responding parties have made a reasonable inquiry and the information that is known and can readily obtain is insufficient to admit or deny this request.

United States District Court For the Northern District of California

Responding Party admits that it believed that [entity] was an independent contractor or independent company that worked on the Levine project. Responding party further admits

that this entity had no liability for any damage to the Levine property or if it had any liability, this entity or its insurer fairly contributed or addressed their portion and

responsibility for the portion of the damage. Responding Party further admits that this entity

has nothing to do with the damage caused by Haas Corp's employees on the Levine job.

creates an issue as to who hired the entities -- opening up the possibility that Haas, the Levines, or 2 someone else ...

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