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Liberty Mutual Fire Insurance Co. v. Bosa Development California II, Inc.

United States District Court, S.D. California

July 23, 2019

Liberty Mutual Fire Insurance Company, Plaintiff,
Bosa Development California II, Inc., et al., Defendants.


          Hon. Anthony J. Battaglia United States District Judge

         Before the Court is Defendant Bosa Development California II, Inc.'s motion to strike three exhibits Plaintiff Liberty Mutual Fire Insurance Company used in support of its motion for summary judgment. (Doc. No. 117.) Bosa alleges the three exhibits were prepared for mediation, and thus are subject to California's broad and air-tight mediation confidentiality privileges under California Evidence Code § 1119. The Court agrees and, as explained in further detail throughout, finds the exhibits were prepared for mediation purposes. Accordingly, neither party may rely on the exhibits as they are shielded. Thus, the Court GRANTS Bosa's motion to strike, (Doc. No. 117), and DIRECTS the Court Clerk to STRIKE Exhibits S, T, and V attached to Plaintiff's motion for summary judgment. (Ex. S is Doc. No. 108-6 at 16-64; Ex. T is Doc. No. 108-6 at 65-375; Ex. V is Doc. No. 108-7 at 17-28.)

         Additionally, Liberty seeks to strike portions of a declaration Bosa submitted in support of its reply on its motion to strike, (Doc. No. 129-1, 130-1, 131-1). (Doc. No. 135.) However, the Court did not rely on Timothy Earl's declaration in its ruling on Bosa's motion to strike. Thus, the Court DENIES Liberty's motion. (Doc. No. 135.)

         I. BACKGROUND

         The crux of this dispute centers around one key issue: whether the parties were in settlement negotiations through mediation when three exhibits were prepared. Back in 2005, Liberty issued an owner-controlled insurance program to Bosa and Bosa's subcontractors with respect to an underlying project called The Legend Condominiums. Bosa II sold the project to homeowners and a Legend Condominium Association was formed to take control of the common areas.

         In 2012, the Association served Bosa a SB 800 Notice and the parties participated in a pre-litigation SB 800/Calderon mediation process. It was under this process the dispute arises. At the beginning of the process, the parties agreed to a comprehensive, confidential mediation process with Ross R. Hart. This process included site inspections, testing, expert meetings, exchanges of expert reports, joint preparation of expert documents, and mediation sessions. The goal of this process was to generate a mediated defect list and cost of repair. Bosa claims this entire process was subject to mediation confidentiality.

         The Association then filed litigation in March 2015 against Bosa and others. At some point, the parties continued the mediation process with a new mediator, Gerald A. Kurland. In 2016, the Superior Court entered a Case Management Order (“CMO”) in the underlying action and, with some exceptions, stayed all percipient and expert discovery pending the ongoing mediation. Under the CMO, the parties were to deposit non-privileged, percipient documents into a document depository with Bates-stamp numbers on them. The CMO directed the Association to prepare and deposit into the depository a Preliminary Defect Statement and Preliminary Cost of Repair. The CMO explicitly provided that “[s]aid statement and cost of repair and any attached documents shall be protected under [California] Evidence Code (sections 1115, et seq. and 1152, et seq.).” These documents were not given Bates-stamp numbers as they were to remain confidential.

         Bosa contends that from 2012 until the settlement in 2017, the claims alleged in the SB 800 and Underlying Action were the subject of continuous mediation proceedings with the final session occurring on June 7, 2017. Bosa asserts mediation did not terminate until September 12, 2017, when the Settlement was signed.

         At the basis of Liberty's federal complaint is a dispute regarding the number of “occurrences” arising out of the four underlying projects and thus the number of deductibles Liberty was entitled to charge Bosa, including by drawing down on Bosa's cash collateral on deposit with Liberty to secure Bosa's deductible obligations. Liberty used three exhibits gleaned from the underlying action in support of its summary judgment motion.

         Exhibit S is an Expert Report prepared for Massie Berman by Scott Friesen, PE of Ivey Engineering, dated April 12, 2016. It was not deposited into the document depository and does not have a Bates stamp. The Association produced this Report under the CMO as a part of the Preliminary Defect Statement and Preliminary Cost of Repair.

         Exhibit T is a series of slides prepared by Francesco Spagna of Simpson Gump & Heger, Inc. presented by the Association as a percipient document subject to discovery. It was not Bates-stamped and was submitted for the same purposes under the CMO as Ex. S. It is dated March 18, 2016.

         Exhibit V is a Memo dated April 15, 2016, from Mr. Spagna to Massie Berman entitled “Preliminary Building Envelope Defect List.” This was a part of the Association's Preliminary Defect Statement also produced pursuant to the CMO. It was not deposited into the depository and was not Bates-stamped.

         II. ...

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