Awards and featured on:
Measure of Compensatory Damages
Car accident money damages are called the umbrella term “compensatory damages.” “Compensatory” (or “actual”) damages include both “general” and “special” damages. Beeman v. Burling (1990) 216 Cal.App.3d 1586, 1601.
Car accident injury compensatory damages are authorized under CA Civil Code §3333. “For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.” (Ca Civil § 3333)
Car accident injury damages is authorized under CA civil Code §3281, “Every person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages.”
“The measure of damages suffered by reason of a tortious act is the amount which will compensate for all the detriment proximately caused thereby whether it could have been anticipated or not. Civil Code § 3333. For such wrongs, damages will be awarded to the extent that the injured party will be restored to the position he would have occupied had the trespass not occurred.” (Cassinos v. Union Oil Co., 14 Cal. App. 4th 1770.)
“General damages are those which necessarily result from the act complained of, and are implied by law to have thereby accrued to plaintiff. Special damages, on the other hand, are defined as damages which do not arise from the wrongful act itself, but depend on the circumstances peculiar to the infliction of each respective injury. Special damages refer to out-of pocket losses that can be documented by bills, receipts, cancelled checks, and business and wage records. Special damages generally include medical and related expense, loss of income, and the loss or cost of services. General damages refer to damages for harm or loss such as pain, suffering, emotional distress, and other forms of detriment that are sometimes characterized as subjective or not directly quantifiable.” (Beeman v. Burling (1990) 216 Cal.App.3d 1586, 1601, 1599.)
“Special” or “economic” damages
Special damages generally include medical and related expense, loss of income, and the loss or cost of services. CA(6b) (6b) (para.) General damages’ refers to damages for harm or loss such as pain, suffering, emotional distress, and other forms of detriment that are sometimes characterized as subjective’ or not directly quantifiable.” (Beeman v. Burling, supra, 216 Cal.App.3d at 1599.)
“Economic damages” under Prop. 51
For Prop. 51 purposes joint and several liability for economic damages, “Proposition 51, Cal. Labor Code § 1431.1 et seq., provides in part that each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant’s percentage of fault, and a separate judgment shall be rendered against that defendant for that amount. Cal. Labor Code § 1431.2. Proposition 51 eliminates a third party defendant’s joint and several liability to an injured employee for unpaid noneconomic damages attributable to the fault of the employer, who is statutorily immune from suit. Proposition 51 retains the joint liability of all tortfeasors, regardless of their respective shares of fault, with respect to all objectively provable expenses and monetary losses. On the other hand, the more intangible and subjective categories of damage are limited by Proposition 51 to a rule of strict proportionate liability. (Scalice v. Performance Cleaning Sys., 50 Cal. App. 4th 221, 228.)
By statute, plaintiff may be entitled to prejudgment interest as part of his or her compensatory damages. (See Bodell Const. Co. v. Trustees of Calif. State Univ. (1998) 62 Cal.App.4th 1508, 1525.)
Absolute right to prejudgment interest interest if Ca Civil § 3291 applies (rejected § 998 demands)
Under Civil Code § 3291, an absolute right to 10% prejudgment interest on the compensatory damages portion of a personal injury award when a party rejected an offer of compromise under Civil Code § 998 settlement demand is exceeded by the judgment. (Ca Civil § 3291; Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 656-661.)
Income tax on Money from Received from Car Accident Injuries
Generally, money received for car accident physical injuries are not taxable. Car accident insurance settlements are generally not taxable, although there are certain exceptions, according to the Internal Revenue Service (IRS).
According to the IRS, “If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement proceeds in your income,” the IRS said.
There are instances where auto accident money received is taxable. It depends on how your settlement is structured. The negotiation between you and the liable driver who injured you should include tax considerations so you can keep as much of your settlement as possible. Money damages awards and settlements, either by lump sum or payments, on account of personal physical injuries or physical sickness are not subject to federal or state income tax (i.e., physical injury compensatory recoveries are excluded from taxable income). (26 USCA § 104(a)(2); Ca Rev & Tax § 17131; also see 26 USCA § 104(a)(1)–workers’ comp benefits for “personal injuries or sickness” not taxable)
Physical injury as Nontaxable
If a personal injury lawsuit has components of a physical injury or physical sickness, all damages– other than punitive damages that originated from the physical injury are treated as payments received on “account of personal physical injuries or physical sickness.” This is so whether or not the recipient of the money is the injured party. Thus, compensatory damages for wrongful death or loss of consortium arising from a spouse’s physical injury or sickness, are not taxable. (H.R. Conf. Rep. 104- 737, 1996 U.S. Code Cong. & Admin. News 1677, § 5)
Money from Emotional Distress
Money damages for emotional distress that did not arise from a physical injury or physical illness are taxable. However, there are tax deduction for medical care for emotional distress. (26 USCA § 104(a), last para.; Ca Rev & Tax § 17131; see H.R. Conf. Rep. 104-737, 1996 U.S. Code Cong. & Admin. News 1677, § 5 & fn. 56)
Prejudgment interest on compensatory award taxable
Generally, prejudgment interest money received is not consider “income” by the IRS, and therefore not taxable. 26 USCA § 104. (See, e.g., Kovacs v. Commr. (1993) 100 TC 124, aff’d without opn. (6th Cir. 1994) 25 F.3d 1048)
Tax Deduction for Attorney fees
If a car accident person received money, the person may deduct the attorney’s fee from the taxable money received. Therefore, it is import for car accident lawyer to inform the client that deduction for attorney’s fee on the taxable emotional distress of the money received. (See Srivastava v. Commr. (5th Cir. 2000) 220 F.3d 353, 356, 365-366 & fn. 3)
Discovery for Car Accident Lawsuit and Personal Injury
As a general rule, discovery may be obtained as to any nonprivileged information “that is relevant to the subject matter involved . . .” (Ca Civ Pro § 2017(a))
The “existence, description, nature, custody, condition and location of any document, tangible thing or land or other property” is expressly made discoverable. (Ca Civ Pro § 2017(a))
Broadly construed–not limited to “admissible evidence”
The information requested need not meet the relevancy test for admissibility at trial. It is discoverable if either it would be admissible evidence OR it “appears reasonably calculated to lead to the discovery of admissible evidence . . .” (Ca Civ Pro § 2017(a)
Information is “relevant” and thus subject to discovery if it might reasonably assist in evaluating the case, preparing for trial, or facilitating settlement. (Stewart v. Colonial Western Agency, Inc. (2001) 87 Cal.App.4th 1006, 1013, 105 Cal.Rptr.2d 115, 119; Lipton v. Super.Ct. (Lawyers’ Mut. Ins. Co.) (1996) 48 Cal.App.4th 1599, 1611, 56 Cal.Rptr.2d 341, 347)
Opinions and contentions
Similarly, a party’s opinions and contentions are discoverable, both as to issues of fact and law, whether or not they would be admissible evidence at trial. (Burke v. Super.Ct. (1969) 71 Cal.2d 276.
Privilege, work product and statutory “confidentiality” limitations
However, information subject to an evidentiary privilege or protected by statutory “confidentiality” rules, even if otherwise “relevant,” is not discoverable. (See Ca Civ Pro § 2017(a))
Also, information amounting to “attorney work product” is, at a minimum, entitled to “qualified” protection from discovery. (See Ca Civ Pro § 2018)
Medical history/medical records
Where plaintiff sues for personal injuries, the physician-patient and psychotherapist-patient privileges are waived for conditions “tendered” in the action (Evidence Code §§ 996, 1016 or related to the issue of proximate causation (Evidence Code § 999)
Privacy rights succumb only to directly relevant medical information
But this does not open up plaintiff’s “lifetime” medical history. “An implicit waiver of a party’s constitutional privacy rights encompasses only discovery directly relevant to the plaintiff’s claim and essential to the fair resolution of the lawsuit.” (Vinson v. Super.Ct. (Peralta Comm. College Dist.) (1987) 43 Cal.3d 833.) In Jeffrey H. v. Imai, Tadlock & Keeney (2000) 85 Cal.App.4th 345, 354, plaintiff’s HIV-positive status bore no relation to injuries sustained in “garden variety” rear-end auto accident (invasion of privacy suit based on disclosure of information improperly obtained through discovery.
Thus, notwithstanding alleged “tender of issue” waiver of a physician- patient/psychotherapist-patient privilege, plaintiffs can still assert the right of privacy to prevent disclosure of confidential medical information not directly relevant to the lawsuit. The burden then shifts to the party seeking the information to establish direct relevance.
Mental health records in “garden variety” injury suit seeking “pain and suffering” damages
Concededly, allegation and proof of “pain and suffering” from a physical injury supports a damages recovery for a broad range of emotional injuries. Nonetheless, this consequential mental distress component in a “garden variety” personal injury action does not ipso facto put plaintiff’s mental condition in issue or waive plaintiff’s privacy rights in his or her mental health records. (Davis v. Super.Ct. (Williams), supra, 7 Cal.App.4th at 1016-1017.)
By limiting a claim for emotional distress to pain and suffering associated with specified physical injuries, and by explaining that a mental health professional (whose records defendant is seeking) provided no treatment in connection with the injuries for which compensation is sought, plaintiff establishes it is not reasonably probable the records are directly relevant to the condition placed in issue. Here, plaintiff’s privacy rights prevail unless defendant counters with an explicit showing of direct relevance. (Davis v. Super.Ct. (Williams), supra, 7 Cal.App.4th at 1014-1018, routine auto accident case claiming pain and suffering damages did not open up discovery to P’s post accident mental health records where P established those records did not concern treatment for injuries for which she was claiming damages. In Urbaniak v. Newton (1991) 226 Cal.App.3d 112, the court held that privacy protection for patient’s HIV positive status disclosure during defense medical exam where disclosure irrelevant to underlying workers’ comp case.
Defendant’s insurance coverage: presuit disclosure
By statute, absent the insured’s express authorization, third party claimants have no right to obtain disclosure from insurers of their insureds’ “policy limits” (or other coverage information) before a lawsuit is filed. (Ca Ins § 791.13; Griffith v. State Farm Ins. Cos. (1991) 230 Cal.App.3d 59.)
The Discovery Act expressly makes discoverable the existence and contents of a defendant’s liability insurance coverage, as well as the carrier’s identity, the nature of coverage and the policy limits. In fact, the entire policy must be produced upon request (although defendant may move for a protective order against unwarranted disclosure of particular portions of the policy). (Ca Civ Pro § 2017(b); Irvington-Moore, Inc. v. Super.Ct. (Jordan) (1993) 14 Cal.App.4th 733, 739- 740.)
Insurance Coverage disputes
Ca Civ Pro § 2017(b) discovery also extends to whether defendant’s carrier is disputing coverage of the claim involved in the action, but not to the nature and substance of that dispute. (Ca Civ Pro § 2017(b))
nonparty’s insurance coverage
On the other hand, the insurance status of a nonparty is generally irrelevant for discovery purposes. Traditionally at least, whether a nonparty is insured (and, if so, the details) has been viewed as having no bearing on liability between plaintiff and defendant or on settlement of the lawsuit and hence no “relevance” for discovery purposes. (Snell v. Super.Ct. (1984) 158 Cal.App.3d 44.)
Identity of percipient witnesses
” Discovery may be obtained of the identity and location of persons having knowledge of any discoverable matter . . .” (Ca Civ Pro § 2017(a)
Expert witnesses: Also subject to work product protection Discovery may be obtained of the identity and location of persons having knowledge of any discoverable matter . . .” (Ca Civ Pro § 2017(a)
Also subject to work product protection are the identities and opinions of a party’s consulting experts. However, the protection gives way for expert witnesses a party intends to call to testify at trial so as to give opposing counsel an opportunity to prepare to counter that testimony. For this purpose a special statutory “exchange” procedure is available (Ca Civ Pro § 2034)
Other claimants and similar accidents
Information about similar claims against defendant and accidents involving the same location, product or instrumentality may be probative of liability and punitive damage allegations; such information is discoverable because it may show knowledge of a dangerous condition or a common contributory factor. (Davies v. Super.Ct. (1984) 36 Cal.3d 291, 301)
Information about other traffic accidents at the site of plaintiff’s accident may be relevant (and thus discoverable) to prove that plaintiff’s accident was not caused by negligent driving but by a dangerous road condition. (California ex rel. Dept. of Transportation v. Super.Ct. (Hall) (1985) 37 Cal.3d 847.)
Product liability; punitive damages claims
Information about others injured by the same product that injured plaintiff (even out-of-state similar incidents) is relevant to the subject matter in plaintiff’s product liability suit against a manufacturer. Such discovery may reveal evidence that the product was “defective”; and, in an appro priate case, may support a claim of “conscious disregard” for punitive damages purposes. (Hofmann Corp. v. Super.Ct. (Smaystrla) (1985) 172 Cal.App.3d 357.)
protective order available to control discovery of “sensitive” information
When the sought-after information (e.g., about other claimants or similar accidents) involves “sensitive” information–such as customer lists–protective orders may be available. The court must balance the need for the informa tion against any adverse effect its disclosure might have, and should attempt to fashion an order which accomplishes the purposes of discovery with as little harm as possible. (Hofmann Corp. v. Super.Ct. (Smaystrla) (1985) 172 Cal.App.3d 357.)
Plaintiff’s physical/mental health
By filing a personal injury action, plaintiffs place in issue their past and present physical and/or mental conditions related to the injury sued upon. All medical and/or psychological records relating to the claimed injuries are thus discoverable (“tender of issue” exception to physician-patient/psychotherapist- patient privileges. (Evidence Code §§ 996, 1016; Britt v. Super.Ct. (San Diego Unified Port Dist.) (1978) 20 Cal.3d 844.
Normally, information about medical conditions entirely different from the injury sued upon are beyond the scope of discovery (not “relevant to the subject matter”). However, medical records pertaining to an unrelated condition are discoverable on a showing of “good cause” if the condition is relevant to the issue of proximate causation. (Evidence Code § 999) In Slagle v. Super.Ct. (Maryon) (1989) 211 Cal.App.3d 1309, plaintiff’s history of eye treatment discoverable since relevant to cause of auto accident (“good cause” shown by info P was blind 6 months before accident))
Even so, plaintiff may request a court-conducted in camera inspection of the medical records ordered produced pursuant to Evidence Code § 999 to ensure that information extraneous to the lawsuit (bearing neither on proximate cause nor on the injury sued upon) is not revealed. (Evidence Code § 915 only prohibits the court from requiring such an inspection in ruling on the claim of privilege.) (Slagle v. Super.Ct. (Maryon).pra (dictum))
Settlement offers, terms and conditions
Discovery is generally not permitted into prior settlement offers and negotiations between the parties. This evidence is expressly inadmissible at trial to prove liability for the loss or damage to which the negotiations relate or to prove the invalidity of the claim in whole or in part (Evidence Code §§ 1152, 1154). Even if arguably relevant as an admission of liability, the opposite may also be true–i.e., defendants often settle even frivolous lawsuits simply to “buy peace.” (See Covell v. Super.Ct. (1984) 159 Cal.App.3d 39. In Norton v. Super.Ct. (Ein) (1994) 24 Cal.App.4th 1750, 1758-1759, evidence concerning amount of clients’ insurance settlement not discoverable in their legal malpractice action on issue of damages because inadmissible to reduce recoverable damages)
Privilege Objections to Car Accident Personal Injury Lawsuits
“Confidentiality” of Medi-Cal records
Official records and information pertaining to a patient’s eligibility or noneligibility for Medi- Cal benefits are “confidential” and “not . . . open to examination other than for purposes directly connected with the administration of the Medi-Cal program” absent the patient’s informed consent. (Ca Wel & Inst § 14100.2(a); and see Ca Wel & Inst § 14100.2(b) (identifying protected information) & (c) (defining “purposes directly connected with the administration of the Medi- Cal Program”); and 42 CFR § 431.300 et seq.)
This confidentiality requirement is strictly applied, rendering protected records and information “off limits” even to health care providers. In Department of Health Services v. Super.Ct. (Torrance Mem. Hosp.) (1991) 232 Cal.App.3d 776, the hospital seeking professional services reimbursement could not compel production of patient’s Medi-Cal records because not “directly connected” with administration of Medi-Cal program)
(Evidence Code §§ 950-962)
The “professional relationship” also extends to agents and investigators working on the attorney’s or client’s behalf for purposes of transmitting information between attorney and client (e.g., expert hired to examine client and report back to attorney, City and County of San Francisco v. Super.Ct. (1951) 37 Cal.2d 227. An agent includes the officers of a corporate party reporting relevant facts to corporate party’s attorney, Mills Land & Water Co. v. Golden West Refining Co. (1986) 186 Cal.App.3d 116.)
The privilege is broad enough to protect counsel’s communications with a corporate client’s employees. (Bobele v. Super.Ct. (Valley Hilton Hotel) (1988) 199 Cal.App.3d 708)
The “test” for employee protection does not literally turn on whether the employees in question are members of the corporation’s “control group.” “Middle-level–and indeed lower- level–employees can, by actions within the scope of their employment, embroil the corporation in serious legal difficulties, and it is only natural that these employees would have the relevant information needed by corporate counsel if he is adequately to advise the client with respect to such actual or potential difficulties.” (Bobele v. Super.Ct. (Valley Hilton Hotel), supra, 199 Cal.App.3d at 712)
The more appropriate inquiry is whether employee communications to the corporation’s lawyer involve a subject matter that is part of the employee’s job responsibilities (below). (Upjohn Co. v. United States, supra, 449 U.S. at 394-395, 101 S.Ct. at 685)
An employee who witnessed a matter requiring communication to corporate counsel and who had no connection with that matter other than as a witness is treated simply as an independent witness. The fact the employer requires the employee to communicate the information to counsel does not itself bring the communication within the attorney-client privilege. (Martin v. WCAB (1997) 59 Cal.App.4th 333, 346.
On the other hand, if the employee’s connection with the subject matter arose out of his or her employment and the employer directed the employee to make a statement or report for confidential transmittal to corporate counsel, the employee is no longer an independent witness; his or her communication is deemed that of the employer. (D.I. Chadbourne, Inc. v. Super.Ct. (Smith), supra, 60 Cal.2d at 737.) In Sierra Vista Hosp. v. Super.Ct. (Shaffer) (1967) 248 Cal.App.2d 359, an attorney-client privilege protected hospital employees’ routine and confidential reports to counsel of incidents that might result in lawsuits)
If an employee’s “communication” is protected by the attorney-client privilege, it remains protected even after the employment terminates. Opposing counsel has no right (over proper privilege objection) to delve into such privileged communications; and a protective order may issue, if necessary, to preserve the confidentiality of those communications. This is especially true for communications involving former employees who were (or still are, e.g., in a now-corporate director capacity) members of the corporation’s “control group.” (Cf. Bobele v. Super.Ct. (Valley Hilton Hotel), supra, 199 Cal.App.3d at 714.)
Counsel’s disclosure of confidential client communications to an expert consultant or potential expert witness on behalf of the client are likewise protected by the attorney/client privilege when disclosure is reasonably necessary to further the attorney’s representation of the client’s interests. The attorney’s consultations with the expert are protected even if the expert is not thereafter retained, so long as there was a reasonable expectation of confidentiality. (Shadow Traffic Network v. Super.Ct. (Metro Traffic Control, Inc.) (1994) 24 Cal.App.4th 1067, 1079, 1080.)
(Evidence Code §§ 970-987)
These two privileges parallel each other: Confidential communications between doctor and patient or psychotherapist and patient during the professional relationship are privileged. (Evidence Code §§ 990 et seq.)
(Evidence Code §§ 990-1007)
(Evidence Code §§ 1010-1028; e.g., San Diego Trolley, Inc. v. Super.Ct. (Kinder) (2001) 87 Cal.App.4th 1083, 1090-1092.)
Educational psychologist-patient privilege.
(Evidence Code § 1010.5)
“Professional relationship” prerequisite
The privilege does not attach to personal medical information per se. Rather, it applies only to confidential communications (below) made in the course of a physician-patient (or psychotherapist-patient) relationship. Such a relationship arises where a “patient” consults a physician (or psychotherapist) to secure preventive, palliative or curative treatment of a physical or mental ailment. (See Evidence Code §§ 991, 992, 1011, 1012)
“Nonpatient” medical information not privileged
Thus, personal medical information disclosed outside of a physician-patient (or psychotherapist-patient) relationship is not protected by the privilege. This is so even where the disclosure was made to medical personnel and was intended to be private or confidential. In Johnson v. Super.Ct. (California Cryobank, Inc.) (2000) 80 Cal.App.4th 1050, 1062-1063, the physician-patient privilege inapplicable to sperm donor’s medical history disclosed to sperm bank)
(Evidence Code §§ 1030-1034)
Sexual assault victim-counselor privilege.
(Evidence Code §§ 1035- 1036.2)
Official information privilege.
(Evidence Code §§ 1040-1047; e.g., City of Azusa v. Super.Ct. (Madrigal) (1987) 191 Cal.App.3d 693.
(Evidence Code 940) In Fuller v. Super.Ct. (IPC Int’l Corp.) (2001) 87 Cal.App.4th 299, 308, defendant cannot refuse to be deposed by invoking blanket privilege against self-incrimination but must submit to deposition and invoke privilege as to specific questions. In Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, 174, the filing of a lawsuit may waive plaintiff’s privilege on material crucial to claim. In Blackburn v. Super.Ct. (Kelso) (1993) 21 Cal.App.4th 414, a civil lawsuit defendant cannot invoke privilege without showing actual possibility of criminal prosecution)
However, the Fifth Amendment does not protect corporations. Consequently, a corporation’s custodian of records cannot resist a subpoena for the entity’s records on the ground of self-incrimination. See Braswell v. United States (1988) 487 U.S. 99, 108 S.Ct. 2284. However, in In re Grand Jury Subpoena Dated April 9, 1996 (11th Cir. 1996) 87 F.3d 1198, 1201, the self-incrimination privilege protects custodian from being compelled to divulge records’ location.
Trade secrets privilege.
(Evidence Code §§ 1060-1063; e.g., Stadish v. Super.Ct. (Southern Calif. Gas Co.) (1999) 71 Cal.App.4th 1130, 1144-1146.
Taxpayer privilege for tax returns
Various statutes making it a misdemeanor for taxing authorities to disclose confidential tax return information (see Ca Rev & Tax §§ 19542, 7056) impliedly create a taxpayer’s “tax return privilege.” (Sav-On Drugs, Inc. v. Super.Ct. (1975) 15 Cal.3d 1.)
“Confidentiality” of information obtained by investigators, security guards and insurance adjusters
Private investigators, security guards, and insurance adjusters are forbidden from divulging information they “acquire” except (a) at the direction of the employer or client for whom the information was obtained, (b) to any law enforcement officer or district attorney with respect to a criminal offense, or (c) as required by law. (Ca Bus & Prof § 7539(a); Ca Ins § 14038(a). In Flynn v. Super.Ct. (Bolling) (1997) 57 Cal.App.4th 990, 995-996, identity of investigator’s client not protected by Ca Bus & Prof § 7539(a) and hence discoverable)
Attorney Work Product Limitation on Discovery
Information qualifying as “attorney work product” is also protected from discovery (Ca Civ Pro § 2018). The purpose is to preserve counsel’s rights to prepare their cases for trial “with that degree of privacy” necessary to encourage thorough preparation and investigation of all sides (pro and con); and to prevent them from taking unfair advantage of their adversary’s industry and efforts. (Ca Civ Pro § 2018(a))
Limited to work product obtained at attorney’s behest
Ca Civ Pro § 2018(a) protection extends to work product generated by an attorney’s investigators, researchers and other employees and agents. (Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626.)
Absolute protection for attorney written opinions, etc.
” Any writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories” is absolutely protected from discovery. (Ca Civ Pro § 2018(c)
What constitutes “work product”
The main issue on a work product claim is whether the information sought is in fact “work product.” There is no statutory definition and, hence, the matter is left to case law.
“Derivative” vs. “nonderivative” material standard
Case law approaches the issue by questioning first whether the information sought is “derivative” or “nonderivative” material. Only derivative material is protected “work product”–meaning that material which is created by or derived from an attorney’s (or attorney’s agent’s) work on behalf of a client that reflects the attorney’s evaluation or interpretation of the law or the facts involved. Material that is simply evidentiary in nature is deemed “nonderivative”–not protected work product. (See Mack v. Super.Ct. (1968) 259 Cal.App.2d 7)
Percipient witness statements
Written statements given independently by perci nt witnesses are deemed “evidentiary” and thus not work product. (Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626, 647.)
Identities and opinions of consulting experts
The identities and opinions of experts retained solely as consultants (i.e., to evaluate and help prepare case for trial), and not as trial witnesses (see below), are entitled to qualified work product protection; so too are the consulting experts’ “derivative” materials developed to explain or interpret their findings (diagrams, charts, reports to attorney, etc.). (Williamson v. Super.Ct. (1978) 21 Cal.3d 829, 834)
Car Accident Bodily Injury Settlement
Court Policy factors
Due to heavy court congestion and the high costs of providing court facilities to efficiently handle the resolution of civil cases, California policy strongly encourages settlements. Indeed, as will be seen, the controlling statutes are interpreted with a predominant view toward avoiding any result that might tend to discourage settlements; and sanctions may be imposed for unwarranted tactics impeding “good faith” settlement efforts. (Poster v. Southern Calif. Rapid Transit Dist. (1990) 52 Cal.3d 266, 270-272.)
Insurance company concerns
Insurance carriers are also motivated to settle personal injury claims promptly.
Defendant’s concerns (multidefendant cases)
When “concurrent” tortfeasors are sued, the various defendants risk liability exposure to plaintiff and between themselves, they are open to comparative (“equitable”) indemnity claims (American Motorcycle Ass’n v. Super.Ct. (1978) 20 Cal.3d 578.) A “good faith” settlement certification (Ca Civ Pro § 877.6), however, puts a lid on defendant’s liability; thereafter, the settling defendant is absolved of further liability both under the complaint and cross-complaints for comparative indemnity. The indemnity claim bar is a significant factor motivating defendants to reach an early settlement.
Expenses to insurance carrier
As long as a claim remains “open,” the carrier continues to incur internal handling costs (staff, overhead, etc.), plus external expenses in the form of attorney fees and court costs if suit is filed.
In some cases, the insurer’s attorney fees exposure may escalate two- fold: Under certain potential conflict of interest circumstances, the insurer may be obligated to pay for independent defense counsel to represent its insured (Ca Civil § 2860; San Diego Navy Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358.)
Reserves placed on Insurance claim
Insurance carriers are required by law to place a “reserve” (estimate of potential liability) on each claim. The reserve is usually set by a claims supervisor when the claim is made, and is reviewed periodically as the case develops.
Funds sufficient to cover these reserves must be maintained by the carrier in safe, liquid investments until the claim is resolved. These investments earn less than the carrier can earn with unrestricted funds. Hence, it is in the carrier’s financial interest to unleash its reserves by settling claims as rapidly as possible.
This assumes, of course, the particular claim can be settled within the reserve placed on it. If the demand exceeds the reserve, the carrier will not be as anxious to settle.
Factors such as the seriousness of claimant’s injuries and the liability of the insured are determinative of the “reserve.” Thus, plaintiff’s best interests are served by quickly educating the defense so that an informed “reserve” and a quick settlement can be made.
Potential administrative action
California insurance carriers are bound by the Unfair Practices Act (UPA, Ca Ins § 790 et seq.). Section 790.03(h) of the UPA proscribes 15 “unfair claims settlement practices” . . . including not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear (Ca Ins § 790.03(h) (5)).
Insurers violating any duty under the UPA are subject to administrative sanctions by the Insurance Commissioner, including “cease and desist” orders and monetary fines (up to $5,000 for each proscribed act or, if the act or practice was “willful,” up to $10,000 for each such act; and, for a violation of the Commissioner’s cease and desist order, additional penalties may be imposed –up to $5,000, or $55,000 if the violation was “willful”). (See Ca Ins §§ 790.035, 790.05-790.07)
“Bad faith” liability exposure to insured (breach of “implied covenant”)
Implicit in every insurance policy is a duty owed by the insurer to act fairly and in good faith in handling its insureds’ claims. Insurers breaching this obligation may incur liability to aggrieved insureds for any “excess verdict” (compensatory damages judgment against insured beyond policy limits) . . . plus, in appropriate cases, liability for the insured’s consequential economic losses and emotional distress (but not for any punitive damages levied against the insured. (See Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566. In Finkelstein v. 20th Century Ins. Co. (1992) 11 Cal.App.4th 926, there was no “bad faith” where insured encouraged settlement by voluntarily supplementing insurer’s offer (no resulting “excess verdict”). In Doctors’ Co. v. Super.Ct. (Valencia) (1989) 49 Cal.3d 39, the insurer’s agents and employees not subject to “bad faith” tort liability for unfair claims settlement practices because not personally bound by implied covenant obligations.
A tortious violation of the implied covenant may occur in several ways . . . including (a) failure without proper cause to compensate the insured for a loss covered by the policy, (b) failure to properly investigate the insured’s claim, and (c) failure without proper cause to accept a reasonable settlement within policy limits. (Gruenberg v. Aetna Ins. Co., supra; Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809.
If the insured is forced to go to trial and is found liable under an excess judgment, the carrier’s unreasonable (without “proper cause”) delay in negotiating a policy limits settlement on the insured’s behalf makes out a prima facie case of tort liability to the insured. And if the unreasonable delay was motivated by “malice, oppression or fraud,” the insurer’s tort liability may include punitive damages. (Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452.)
Insurer Not liable to Third Party. An insurer is not liable to third party auto accident victims on a negligent infliction of emotional distress theory for willfully delaying settlement. Such a claim is nothing more than a “thinly disguised effort” to circumvent the prohibition against third party “bad faith” claims. (Krupnick v. Hartford Acc. & Indem. Co. (1994) 28 Cal.App.4th 185, 189, 202-209.)
Filing suit first?
Filing suit in itself rarely puts pressure on tortfeasors to settle: i.e., most routine p.i. cases (rear-ender auto accidents, relatively minor “slip and falls”) will settle whether or not a lawsuit is filed. Thus, all other things being equal, unless the statute of limitations is about to run, claimants need not initiate litigation before commencing settlement discussions; doing so may simply run up unnecessary attorney fees and costs (drafting the complaint, serving process, etc.) and court costs (filing fees).
But in some cases there may be certain “collateral” advantages to filing an early lawsuit. Consider these pros and cons:
Advantages to early filing
Aside from statute of limitations concerns, these are the most significant advantages to an early filing:
Formal discovery normally is not available until a lawsuit is filed (see Ca Civ Pro § 2035 for the exception–discovery by court order to perpetuate evidence before suit filed). Thus, if information necessary to talk settlement cannot be obtained through voluntary cooperation, claimant may have no other choice than to file suit so as to be able to conduct discovery. (As a practical matter, however, it is usually the defense that has the greatest interest in commencing discovery.)
Finding out about insurance coverage
Before meaningful settlement discussions can get under way, the claim must be assigned a reasonable settlement value. For this purpose, claimant will need to know whether the tortfeasors have applicable insurance coverage and, if so, what the policy limits are, whether there are excess and/or umbrella coverages, and whether the insureds and/or carriers claim the policy does not apply. (Also important may be whether the carrier will be defending on a reservation of rights basis and, if so, whether this generates a conflict of interest problem so as to require “Cumis (independent) counsel” for the insured defendant.
Coverage information statutorily protected until lawsuit filed
Absent appropriate authorization from the insured, insurance carriers are statutorily barred from disclosing “policy limits” and other coverage information to third party claimants before a lawsuit is filed. (Ca Ins § 791.13) In Griffith v. State Farm Ins. Cos. (1991) 230 Cal.App.3d 59, a plaintiff’s right to know the defendant’s policy limits arises only when suit filed.
Thus, absent voluntary cooperation by the defendant insured, plaintiff’s only recourse to obtain pertinent coverage information will be to file suit. (Filing suit triggers a statutory right to discovery of a party’s insurance carrier, the nature and limits of coverage, and whether the carrier is disputing coverage; see Ca Civ Pro § 2017(b).
Litigation Tactic: As a general rule, do not attempt to assign a “settlement value” to your client’s claim until you have a fix on the other side’s insurance coverage! If necessary, make use of the official form interrogatories (Ca Rules of Court Rule Form Interrogatories 120); item “4.0” on the form interrogatories covers all of the pertinent insurance information plaintiff’s counsel should seek from defendant.
Some uninsured tortfeasors, doubting the legitimacy of the claim, in effect want to “call claimant’s bluff” and will not talk settlement on a mere “threat” of a lawsuit. In these cases, it may be necessary to file and serve a complaint simply to establish that the claim is “credible”–i.e., that claimant is not fabricating a right of recovery with no intent to press a cause of action. Stubborn parties may be more inclined to take the claim seriously when the reality of a lawsuit is staring them in the face.
As a practical matter, filing a lawsuit might place additional pressure on the insurer to consider settlement.)
Shifting “joinder burden” (Prop. 51 cases):
In Prop. 51 cases (multi-party vehicle collisions, product liability cases, etc.), claimant will usually want to join in a lawsuit all persons and entities conceivably at fault so as to maximize the potential recovery; and, for the same reason, will want to pursue settlement with all of them. Filing suit against the more “obvious” tortfeasors may, in effect, shift the “burden” to those named defendants to join (through cross-complaints) the more peripherally liable parties (who must, under Prop. 51, share in the liability for “noneconomic damages” according to “fault”; Ca Civil § 1431.2).
Indeed, if plaintiff is unable to identify all those conceivably at fault in the “universe of actors,” filing suit may itself operate as a “discovery tool”: i.e., if the lawsuit motivates the defendants who are sued to join others, such joinder incidentally identifies to claimant additional parties with whom to talk settlement. (Of course, defendants may choose not to bring others into the lawsuit, presenting “empty chair” fault arguments instead. Therefore, contention interrogatories and other direct discovery procedures should always be used early in the lawsuit to force the named defendants to identify the nonparties whom they intend to claim were at fault.)
Disadvantages to early filing: The “flipside” concerns about filing an early lawsuit are these:
Gives defendant immediate discovery rights:
As soon as the lawsuit is filed and served, plaintiff becomes subject to immediate (There is a 20-day hold, after service of summons, on plaintiff noticing depositions without a court order, Ca Civ Pro § 2025(b)(2); and a 10-day hold, after service of summons, on plaintiff serving interrogatories, document demands, requests for admissions, etc., Ca Civ Pro §§ 2030(b), 2031(b), 2033(b). But there is no statutory hold as to defendants.)
The filing of a lawsuit and serving the summons and complaint on the defendant starts an expensive litigation process; this includes discovery, deposition, subpoenas medical exams. The requirement for full disclosure of all possibly relevant information, discovery may delay settlement, because the defendant want to wait for the discovery to be had – which can be very expensive.
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