Law Office of Ralph Laird represents clients in a broad range of civil matters, including general civil litigation, insurance related litigation, business litigation, and personal injury claims. When you face a legal problem, whether you have been sued or you are contemplating making a claim, it is important and empowering to know the basic elements of a civil lawsuit. With the goal of providing general information, we offer this civil litigation outline, which describes some of the typical steps and procedures that may take place in a civil case. For advice regarding your specific legal matter, please contact our offices.
CIVIL LITIGATION – OVERVIEW
Thankfully, most disputes are resolved without lawsuits. Most disputes are informally resolved. But when a dispute cannot be informally resolved, the result is often litigation. Generally speaking, “litigation” refers to “civil litigation” and usually involves filing and maintaining a lawsuit in State or Federal Court. A “litigator” is an attorney who handles litigation including trials as opposed to, for example, an attorney who only handles transactional matters such as drafting and negotiating contracts. Some attorneys handle both.
Generally speaking, in civil litigation a plaintiff alleges that a defendant is liable for violating a law. In civil litigation, liability against the defendant typically results in a judgment for money damages and may sometimes include other forms of relief such as injunctive relief or declaratory relief. “Punishment” for particularly egregious conduct does not result in imprisonment as in criminal cases, but possibly “punitive damages” or other civil penalties.
The following is a brief outline of the typical steps in a lawsuit. Many of the procedures in civil litigation are the same whether you are a plaintiff or defendant. In any event, it is a good idea for a plaintiff to be aware of what the considerations are from the defendant’s standpoint, and vice versa. If you have suffered or believe you are going to suffer any type of loss that you think should be the responsibility of someone else, you should contact an attorney immediately.
FILING A COMPLAINT
An aggrieved or injured party usually initiates a lawsuit with the filing of a Complaint. Whoever files the Complaint is the plaintiff. Whoever is sued is a defendant.
Plaintiffs must be aware of several things before filing a lawsuit. Plaintiffs must be sure to file a Complaint in a timely manner in order to avoid any applicable statutes of limitation. A statute of limitations is a law that prescribes the period of time within which a Complaint must be filed. For example, a claim for personal injuries after an auto accident must be filed within two years of the accident if the defendant is a private entity. Otherwise, the right to sue is lost. There are many different statutes of limitations for various types of legal claims, and it is therefore very important to consult an attorney as soon as possible if you are considering initiating a lawsuit.
Plaintiffs must also be aware of pre-lawsuit procedures that may be necessary for certain claims. For example, if you have been injured by a public entity, then you must first present a “government tort claim” to the appropriate government entity on a timely basis before you have the right to commence your lawsuit. Moreover, there are additional deadlines and procedures for presenting a government tort claim that, if not met, will result in the loss of your right to sue. Therefore, it is important to consult an attorney as soon as possible to preserve your right to file a lawsuit.
Depending upon the claim, there are many other pre-lawsuit procedures that may apply.
Finally, if you are contemplating the filing of a Complaint, you should be aware that anything you say, write or do may be used against you later. Consultations with your attorney are absolutely privileged and confidential; however, conversations and correspondence with others are not. There are some limited exceptions to this; for example, communications with your spouse can be privileged and confidential.
SERVICE OF SUMMONS AND COMPLAINT
Once a lawsuit is filed with a court, the next thing the plaintiff must do is “serve” the defendant with the “complaint” and “summons.” The complaint contains the plaintiff’s factual and legal allegations against the defendant. The summons is a document that notifies the defendant that he needs to file a response to the complaint. “Service” basically means official delivery and receipt of legal papers. There are many types of service. Individuals and small businesses are typically served by a “process server” hired by an attorney to deliver the summons and complaint to the defendant personally or to the owner or manager of the defendant’s business. If you are served with a summons and complaint, you should write the date you were served on the front of the paperwork so you have a record of it. Once you are served with a summons and complaint, you typically have only thirty days to file a responsive pleading. In some cases such as unlawful detainer proceedings, you have only five days to file a response. Filing a timely response in court is very important. If you fail to file a timely response, you could end up in “default,” and lose any opportunity to contest the claims. It is therefore critical that you consult with legal counsel as soon as you receive a summons and complaint.
YOUR RESPONSIVE PLEADING – WHEN IS IT DUE?
Generally speaking, once the defendant is served with a summons and complaint, he has thirty days to file a formal response, also known as a “responsive pleading.” In unlawful detainer proceedings, the defendant must file a response within five days of being served. Once the defendant’s responsive pleading is filed, that defendant is said to have “appeared” in the case. “Appear” is a term of art. In filing a responsive pleading, you don’t physically appear in court at the time. In fact, unless your case goes to trial, you may never go to court during the entire litigation process.
GET LEGAL HELP AS SOON AS POSSIBLE
If you have been served with a summons and complaint, you should get legal counsel as soon as possible. Otherwise, you run the risk of missing important deadlines that could result in your “default,” which could then result in a judgment against you. Also, you may have legal grounds to have the complaint dismissed at the outset of the action. For example, it is possible you have grounds to file a “demurrer” or “motion to strike” which could result in the dismissal of the complaint against you. However, those motions have certain deadlines and may take several days to prepare. Thus, if you delay in finding an attorney, you risk losing your right to challenge the complaint.
If you are served with a summons and complaint, you should do two things simultaneously, as soon as possible:
(1) Start looking for an attorney, and
(2) Ask your liability insurance carrier(s) to provide an attorney to defend you.
If you hire an attorney before you communicate with or hear from your insurance carrier, your attorney should assist you in requesting coverage from your insurance carriers. Give your attorney all your insurance information and ask your attorney to contact your various carriers to try and obtain coverage for the lawsuit. If you have insurance coverage for the lawsuit, your insurance company will typically retain an attorney to defend you and, in some situations, pay for another attorney to also represent you in the lawsuit. (Additional information regarding these issues are discussed in the sections below, including “Asking Your Insurance Carrier to Help You,” “Finding an Attorney” and “Reservation of Rights and Independent Counsel.”)
ASKING YOUR INSURANCE CARRIER TO HELP YOU
Ideally, you have some form of insurance that fully covers your potential liability in the lawsuit. Insurance coverage for your lawsuit depends on the nature of the allegations against you and the terms of your policy. Homeowners insurance generally covers you with respect to personal matters, i.e., matters that are unrelated to your business or employment. Commercial general liability (CGL) insurance generally covers business related liabilities. All insurance policies contain a number of exclusions that specify certain types of liability that are not covered by the policy. Check your liability insurance policies to see what is potentially available to cover you for the lawsuit. Inform your attorney of your insurance policies and ask your attorney to request coverage from your insurance carriers.
If you have not yet retained an attorney, contact your insurance company, agent or broker by telephone to inform them of the lawsuit, and then follow up with a letter “tendering” the lawsuit to the carrier. “Tender” in this context means: (1) advising your carrier in a letter that you have been sued; (2) enclosing a copy of the summons and complaint and any other court documents; (3) advising the carrier of the date you were served with the summons and complaint; and (4) asking your carrier to defend you in the lawsuit. Here is a sample “tender” letter:
Re: Smith v. Jones; Any County Superior Court Case No. ABC123
Insured: [insert the named insured under the policy]
Policy No: [insert the policy number or numbers]Dear Insurance Company:
On [insert date] I was served with a summons and complaint (copies enclosed) in the above-referenced action. Please confirm as soon as possible that I will be provided a defense in the lawsuit under the above referenced policy, and any other policies that may apply for this matter. Here is my contact information:
[Insert your name, address, and telephone numbers]Thank you very much. I look forward to hearing from you.
If you are writing to your agent or broker, instruct them to tender the lawsuit to any insurance carriers that may have coverage for it.
If you’ve already hired an attorney, your attorney should review your insurance coverages and assist you with tendering the lawsuit. Your attorney may thus have a dual role at this first stage: initiating your defense in the lawsuit and trying to obtain insurance coverage for you.
FINDING AN ATTORNEY
Hiring an attorney to handle your case is not conceptually different from hiring a contractor or other professional. Unless you already know whom you want to hire, you should interview two or three attorneys to determine who will best suit your needs.
If you do not know an attorney, talk to friends or relatives in the area who can refer you to an attorney. At this initial phase, don’t be too focused on immediately finding, on your own, an attorney who specializes in handling your type of lawsuit. Instead, you want to be referred to such an attorney. A good way to do that is by having one attorney refer you to another attorney. For example, if you have an estate planning attorney, that attorney may not want to handle business litigation, but they will probably be able to refer you to two or three attorneys who do.
Again, at this early stage, you want to focus on finding an attorney whom you trust, or whom someone you know trusts, to either handle your case or refer you to another attorney. There are other referral sources such as online databases and county bar associations, which provide lists of attorneys who specialize in different types of law. But before you do that, try to find an attorney through a source you already know and trust.
INTERVIEWING AND HIRING AN ATTORNEY
After you have the names of two or three attorneys, call them to schedule an initial consultation. Ideally your first consultation is with the attorney in person, but it may be over the telephone, and you might first need to talk to a paralegal who briefly “screens” your new matter.
Practices vary, but many attorneys will not charge you for the first half hour of an initial consultation. If you have questions about the initial consultation, just ask the attorney or his or her assistant.
So you have your appointment – what next? As soon as you set up your appointment, you should mail, fax or e-mail a copy of your summons and complaint to the attorney along with a note indicating when and how you received the summons and complaint. Also provide liability insurance information you have. Try to take some time and prepare a brief letter to the attorney outlining or summarizing the facts surrounding the complaint and send that to the attorney as well. Be sure to keep any such writings completely confidential. Remember: verbal and written communications between you and your attorney (even an attorney whom you are interviewing but have not retained yet) are confidential and privileged. It is also a good idea to send the attorney your copies of your documents and to keep your originals in a secure place. Once you retain an attorney, then you should turn over your originals to that attorney and retain copies for yourself.
The factors you should consider in hiring an attorney are not unlike the factors you might consider in hiring any other professional. Don’t be afraid to ask questions such as:
- How experienced is the attorney? Not just years as a licensed attorney, but in handling the types of matters you are now facing.
- How many trials has the attorney had? How many in your type of matter?
- How is the attorney going to charge you? On defense matters, you will probably pay an hourly rate. Hourly rates vary widely, however three major factors which affect attorney’s rates are: the type of lawsuit involved; (2) where the lawsuit is venued (located); and (3) the experience of the attorney.
- Who is going to be primarily responsible for the day-to-day handling of the case? While it may be appropriate for your attorney to delegate certain tasks to a less experienced attorney, a paralegal, or other legal assistant, you want to be sure the attorney you are hiring will pay close attention to you matter, and if it goes to trial, be the attorney representing you. There are many excellent young attorneys. But you don’t want your attorney “learning the ropes” on your dime, and with your liability at stake.
- What is the expected budget for handing your matter through trial? At this early stage, it can be difficult for the attorney to predict a precise budget. But the attorney should have a general idea – a range – of the expected overall cost to defend the case through trial. Don’t be afraid to ask for a budget.
Far less tangible yet important factors are how you feel about the attorney. Do you feel comfortable with the attorney? Does the attorney make a good impression? Does he seem knowledgeable? These are things you can only pick up after an initial consultation and a few phone calls. Don’t hesitate to call the attorney a few days after your initial consultation to talk about your case. The attorney may have some good insights into your case after having some time to analyze your particular matter. In further discussing the case with the attorneys you interviewed, you will likely hone in on the one you want to hire. Trust your gut.
NOTE ON CONFIDENTIALITY
Once you are involved in litigation, or even beforehand if you think you will be involved in litigation, you should be extremely careful about anything you say or write which concerns the matter. Ideally, you should not speak to anyone about your legal matter other than your own attorney or an attorney who you are interviewing. You may have an urge to fire off an e-mail or otherwise quickly respond to an initial settlement demand or complaint you have just received. You should resist those urges and instead contact an attorney. (If you think you have a way to defuse the lawsuit, then you should still contact an attorney to get some legal input before you take such steps. Even if you manage to arrange a settlement, you should have an attorney review the matter before you sign anything to be sure your settlement is completed properly so the entire matter is concluded forever.) The main point here is to be aware that things you say or write to people other than your attorney may be held against you later.
DEFENSE THROUGH YOUR INSURANCE COMPANY
If you are fortunate enough to have insurance coverage for your lawsuit, then your insurance company will probably hire an attorney to represent you, and you may not have to think about hiring an attorney on your own. If your insurance company provides for your defense, they will hire an attorney to represent you with respect to every aspect of your defense. Such an attorney is known as “insurance defense counsel.” You shouldn’t worry about hiring an attorney if your carrier has hired one for you, unless you are facing a liability exposure that exceeds your policy limits, or the insurance company is defending you subject to a “reservation of rights.” These latter situations are discussed below.
There are some situations where, even though your insurance company has retained an attorney to defend you, you should still consult with another attorney who you personally retain. If your liability exposure exceeds your policy limits that means you could be responsible for paying whatever damages exceed the limits of your policy. That uninsured exposure is your “personal exposure.” In that situation, it may be worthwhile to hire your own attorney to monitor the case and make sure your insurance company does everything possible to settle the case within policy limits and thus eliminate your personal exposure. Of course, if the plaintiff will not make a settlement demand within your policy limits, then your options may be limited to: (1) taking the case to trial; and (2) settling the case by paying the difference between your policy limits and the plaintiff’s demand.
The attorney hired by the insurance company to represent you may not ask you to contribute anything toward a settlement since that arguably may benefit his other client, your insurance company. As a practical matter, if the attorney advises you and your insurance carrier that the “settlement value” of the case (that is, his opinion concerning the amount the case should settle fort) exceeds your policy limits, then he is in effect telling you what additional amount of money is needed over and above your policy limits to settle the case.
If you face potential personal exposure (damages above your policy limits), it would be a good idea to retain your own attorney to help evaluate and resolve the case. Also, your insurance company owes you a “duty of good faith and fair dealing,” which includes the duty to settle cases, where reasonably possible, within policy limits. If your insurance company rejects a reasonable settlement offer from the plaintiff that is within your policy limits, and the plaintiff later gets a verdict which exceeds the policy limit, then you may have grounds to demand that your insurance company pay the full amount of the verdict since they essentially gambled and lost with your money. While your insurance defense attorney might help you through that process, an attorney hired directly by you will be better suited to do so and will face no potential conflict of interest with your insurance company. This dovetails with another situation where you should have your own attorney, which is discussed next.
RESERVATION OF RIGHTS AND INDEPENDENT COUNSEL
If your insurance company has sent a “reservation of rights” letter to you, it may be legally obligated to pay for an attorney who is retained directly by you. Here, a little background may be helpful.
An insurance policy does not, and cannot, cover every conceivable type of liability. For example, in California, an insurer is prohibited from paying insurance benefits on your behalf for damages or injuries that you intentionally caused. Thus, to use a crude illustration, if you were sued after a car accident and the jury determined that you intentionally ran into the victim, your insurance company may have grounds to deny coverage for the plaintiff’s damages in that case. (See California Insurance Code Section 533.)
If the lawsuit against you involves alleged damages which are potentially covered by your insurance policy, your insurance company has two fundamental duties: (1) a “duty to defend” you against all claims in the lawsuit; and (2) a duty to indemnify you for damages which are actually covered by your insurance policy. Thus, if none of the plaintiff’s claims are even potentially covered under your policy, then the insurance company will most likely deny coverage for your claim and you will have to retain your own attorney to defend yourself in the lawsuit.
If any of the claims are potentially covered, then the insurance company must pay for an attorney to defend you against all of the claims. However, if you are found liable for damages that are not covered by your insurance policy, then your insurance company may not be obligated to indemnify you (pay money on your behalf) for those damages. If such damages are not actually covered, you will be personally responsible for paying those damages. The potential damage that is not covered by your policy another form of your “personal exposure.”
In addition, a single claim for damages will either be ultimately covered under your insurance policy or not covered, depending upon the final determination of liability in the lawsuit. After a trial, a final coverage determination can usually, but not always, be made. You are entitled to coverage if the liability is covered by your policy. Your insurance company is entitled to deny coverage if the liability is not covered by your policy and it has previously “reserved its right” to deny coverage.
So assume you are in a car accident while on vacation. The other driver files a lawsuit alleging that you intentionally crashed into and injured him. You admit that you did collide with him, but deny it was intentional. You claim it was an accident. If the jury determined that you did crash into him intentionally, your liability would not be covered. If the jury concluded it was an accident, you would be covered. In this hypothetical, at the beginning of the lawsuit, you are potentially covered under your insurance policy, and your insurance company would have a duty to defend you. In fact, your defense might be that you were in another town at the time of the accident. If that were the case, the insurance company would still have a duty to defend you in the lawsuit because it has a duty to defend potentially covered claims, even those that prove to be groundless, false or fraudulent.
The insurance company may be entitled to deny coverage if it has “reserved its right” to do so. Thus, in the above hypothetical, your insurance company could send you a letter telling you that it will provide a defense on your behalf (hire and pay for an attorney to defend you), but that it “reserves the right” to deny coverage in the event it is determined you intentionally crashed into the plaintiff.
Now, when the insurance company hires an attorney (sometimes referred to as “insurance defense counsel”) to represent you in this hypothetical lawsuit, your attorney has an ethical dilemma. The dilemma stems from the fact that your attorney has two clients: (1) you; and (2) your insurance company. It is possible that the attorney’s two clients have different objectives. Although you and your insurance company have the common objective to totally defeat the plaintiff’s claims, you may not share the same interests if you are found liable for damages. If you are liable for damages, you want the damages to be the result of an accident (and thus covered by your insurance policy). From a pure economic standpoint, your insurance company would prefer that the damages be due to your intentional conduct (and thus not covered by your insurance policy). This creates a “conflict of interest.” Whose interest should your attorney serve: Your interests, or your insurance company’s interests?
When a potential or actual “conflict of interest” exists between two clients of the same attorney, California State Bar rules prohibit the attorney from representing both clients unless the attorney has the “informed written consent” of each client. (See State Bar Rule 3-310(C)(1).) When there is a “conflict of interest” between you and your insurance company in the context of your defense in a lawsuit which is potentially covered under your insurance policy, there is a statute that particularly sets forth your rights, Civil Code Section 2860, which is designed to solve the attorney’s ethical dilemma and protect the insured.
Among other things, California Civil Code Section 2860 requires your insurance company, in certain situations, to offer to pay for “independent counsel.” (In legal parlance, “independent counsel” is sometimes referred to as “Cumis counsel,” after the 1986 appellate case of San Diego Federal Credit Union v. Cumis Insurance Society, Inc. (1984) 162 Cal.App.3d 358, which eventually gave rise to the legislature’s passage of Civil Code Section 2860.) You are entitled to independent counsel if your insurance company agrees to provide you with a defense subject to a reservation of rights that creates a “conflict of interest.” In this regard, Civil Code § 2860(b) states:
[A] conflict of interest does not exist as to allegations or facts in the litigation for which the insurer denies coverage; however, when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim, a conflict of interest may exist. No conflict of interest shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy limits.
This statute has been the source of many disputes over when independent counsel is required, and there are many published appellate cases that address the issue. Some of the circumstances that may create a conflict of interest requiring the insurer to provide independent counsel include:
(1) The insurer reserves its rights on a given issue, and the insurer’s retained counsel can control the outcome of that coverage issue.
(2) The insurer insures both the plaintiff and the defendant.
(3) The insurer has filed a lawsuit suit against the insured, whether or not the lawsuit is related to the lawsuit the insurer is obligated to defend.
(4) The insurer pursues settlement in excess of the policy limits without the insured’s consent and leaving the insured exposed to claims by third parties.
(5) Any other situation where an attorney who represents the interests of both the insurer and the insured finds that his or her representation of the one is rendered less effective by reason of his representation of the other.
The first and fifth reasons listed above are key. Independent counsel is required when the way insurance defense counsel defends the action will affect an underlying coverage dispute between the insurer and the insured.”
If your insurance company agrees that you are entitled to “independent counsel,” there are other provisions in Civil Code §2860 that regulate further handling of the case. First of all, the insurance company is entitled to retain an attorney to defend you, even if you already have your own attorney who is “independent counsel.” Thus, in your lawsuit you could end up with two attorneys who each represent you: (1) your “insurance defense counsel;” and (2) your “independent counsel.” If you are defended by both attorneys, they must both be “allowed to participate in all aspects of the litigation,” and “cooperate fully in the exchange of information that is consistent with each counsel’s ethical and legal obligation to the insured [you].” While your independent counsel is obligated to timely report to your insurance carrier concerning matters related to the lawsuit, he has no duty to disclose any “privileged materials relevant to coverage disputes.”
Furthermore, the insurance company has the right to require that your “independent counsel” meet minimum qualifications including at least five years of civil litigation practice, substantial defense experience in the subject at issue in the litigation, and possession of errors and omissions (malpractice) insurance coverage.
Finally, although your insurance company would be paying for your independent counsel’s fees, it is not obligated to pay any more than, “the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended.” Thus, if the independent counsel you have selected charges $300 per hour, and the attorney hired by the carrier charges $145 per hour, you would be responsible for paying your independent counsel the difference, i.e., $165 per hour.
You do not have to hire independent counsel, even if you are entitled to do so. However, if you decide not to retain independent counsel, then you must sign a written waiver to that effect.
CONTACTING OPPOSING COUNSEL
If an attorney represents you, you should not contact the other party’s counsel directly. (See “Note on Confidentiality” above.) But, if you have not yet hired an attorney and you have been served with a summons and complaint, and your deadline to respond to the Complaint is on the verge of running, you may want to contact opposing counsel for the sole purpose of requesting additional time to file a responsive pleading to the complaint. Plaintiff’s counsel should (but is not required to) give you at least fifteen additional days to file a responsive pleading. Many local court rules do not allow a plaintiff to unilaterally extend the deadline for a responsive pleading any more than fifteen days, but it is not uncommon for attorneys to cooperate in managing the deadline for the defendant’s response.
In any event, if you talk to plaintiff’s counsel and get an extension to respond to the complaint, be sure to do at least two things: (1) Immediately write a letter to the opposing attorney confirming his agreement to extend the deadline and indicate the new deadline; and (2) Confirm that the deadline is to file a “responsive pleading,” i.e., any responsive pleading. Sometimes a plaintiff’s attorney will allow additional time to respond to the complaint, but only if it is an Answer to the Complaint. This may not be a good deal if you have grounds to challenge the Complaint by way of a Demurrer, Motion to Strike, or Anti-SLAPP motion, for example. If you are forced to file only an Answer in response to the Complaint, you may lose an opportunity to challenge the plaintiff’s lawsuit at the outset. This is another reason why you should consult an attorney as soon as possible.
Also, if you talk with opposing counsel, be sure not to discuss any aspect of the case. Just limit your discussion to getting an extension to file any responsive pleading.
ANSWER TO THE COMPLAINT
An “Answer” to a Complaint typically contains a “general denial,” which generally denies all of the allegations in the Complaint, and various “affirmative defenses” which are legal theories to defeat or minimize the damages sought in the Complaint, even if the plaintiff’s allegations are true. Typical affirmative defenses include: statute of limitations (the lawsuit was filed too late), comparative fault of the plaintiff or others, and failure to state a claim (meaning the alleged conduct, even if true, is not illegal).
INITIAL CHALLENGES TO THE COMPLAINT
One reason it is important to consult an attorney as soon as possible after receiving a summons and complaint is that the attorney may identify grounds to challenge the Complaint and possibly get it dismissed right away. If grounds exist for it, your attorney can file a “Demurrer,” which is basically a motion to get the case dismissed because, for example, it is barred by the statute of limitations, or the Complaint fails to state a claim, etc. It is usually difficult to prevail at this early stage because the law allows plaintiffs a lot of leeway in their allegations. And courts will frequently allow the plaintiff to file an amended complaint to correct any deficiencies rather than dismiss the case entirely. Filing a demurrer can be expensive, and so the thing you want from your attorney is an opinion as to how it will realistically affect the case. For example, if it is likely the plaintiff will be allowed to file an amended complaint then a demurrer might not be worthwhile. Also, your attorney might just write a brief letter to other attorney explaining the problem and asking that an amended complaint be filed in order to correct it. Often, the plaintiff’s attorney will do that so both parties avoid the expense of a demurrer.
Your attorney might want to file a “Motion to Strike,” which is directed to any allegations that are improper. For example, if a plaintiff alleges you are liable for punitive damages, he must allege specific facts that would support a finding of punitive damages. Thus, a bare statement in the Complaint that you are liable for punitive damages may be “stricken” from the Complaint by way of a motion to strike.
Another type of challenge to a Complaint is an “Anti-SLAPP Motion to Strike.” In a nutshell, if the plaintiff’s allegations against you arise out of a protected activity (e.g., your exercise of free speech in connection with a public issue), then the Complaint is potentially a “SLAPP Suit.” (S.L.A.P.P. is an acronym for “Strategic Lawsuit Against Public Participation,” a phrase thought up by a Colorado legal scholar.) An example of a “SLAPP suit” is a plaintiff (say a commercial developer) who alleges that you have defamed the developer while protesting the developer’s plans to build a subdivision somewhere. Because the lawsuit arises out of your exercise of free speech in connection with a public issue (which you should be free to do without fear of a lawsuit being slapped against you), courts are required to examine the plaintiff’s allegations at this early stage of the litigation to determine whether or not the lawsuit has enough merit to proceed. How much is “enough merit?” The plaintiff must demonstrate with admissible evidence (not just allegations) that he will probably (more likely than not) prevail on this claim. If the judge determines that the plaintiff has not demonstrated this, then the case will be dismissed and you will be entitled to your attorney’s fees and costs incurred in filing the Anti-SLAPP motion. If you lose, the case will be allowed to proceed in its usual course. In the right situation, an anti-SLAPP motion can be a powerful strategy to resolve your lawsuit quickly and cost effectively (assuming you win and the plaintiff has money to pay your attorney’s fees).
If you are sued, you may have a claim back against the plaintiff, or against another party, which arises out of the same incident or transaction. If your cross-complaint arises out of the same incident or transaction alleged in the plaintiff’s complaint, then you have to bring your cross-complaint in the same lawsuit. It is compulsory. An example is if you sell your home to a third party who later sues you for non-disclosure of alleged defects. If you had instructed your agent to disclose the problem but they failed to do so, you would cross-complain against your agent in the same lawsuit.
If your insurance company is defending you in the lawsuit, the carrier is not obligated to pay any attorney’s fees or costs related to the prosecution of your claim for damages against another party. However, if your cross-complaint is for a determination that some other party other than you is responsible for part of all of plaintiff’s damages (sometimes referred to as an action for “equitable indemnity”), then your insurance company should also pay the fees and costs associated with those claims.
GETTING THE CASE “AT ISSUE”
Once all parties have appeared in the lawsuit and all complaints and cross-complaints have been answered, the case is said to be “at issue.” Once a case is “at issue,” then the focus is on the next stage of the litigation: discovery.
INVESTIGATION AND DISCOVERY
“Discovery” in legal parlance is basically the process by which one party formally obtains information about the case from the other parties and other witnesses. “Investigation” is basically all other fact gathering related to the case.
There are several different methods of discovery, which can be broken down into two basic categories: “written discovery” and “depositions.”
INVESTIGATION AND DISCOVERY – WRITTEN DISCOVERY
“Written discovery” includes “Form and Special Interrogatories,” “Request for Admissions,” and “Request for Inspection of Documents or Other Tangible Things.”
- Form and Special Interrogatories are formal written questions from one party to another party that relate to specific facts or allegations in the case. “Form Interrogatories” are on pre-printed forms and are the same in every case. “Special Interrogatories” are drafted by your attorney and tailored to your specific case.
- Requests for Admission are statements made by one party who requests another party to admit or deny each statement. They are sometimes used to identify areas of agreement and disagreement.
- Requests for Inspection of Documents or Other Tangible Things are just what they sound like. Usually, the responding party delivers copies of the documents requested. Sometimes, a party will request an appointment to inspect something other than documents, such as real property or equipment.
Responses to the above types of discovery are typically due thirty-five (35) days after the date they were deposited in the mail. Your attorney will prepare formal responses and any applicable objections after you have provided responsive information to your attorney. Depending on the extent of the discovery or the complexity of the case, you may spend a lot of time assisting your attorney in preparing responses. Ultimately, you will have to review the responses and then verify your responses as true under penalty of perjury. In this way, your responses become just like oral testimony under oath.
INVESTIGATION AND DISCOVERY – DEPOSITIONS
Another type of discovery is the deposition. This might be something you have seen on television. A deposition is an oral interrogation of a witness under oath. Each party’s attorney may depose the other parties. Your attorney may also depose witnesses who are not parties to the case, for example, eyewitnesses.
Depositions usually take place in the office of the attorney who gives notice. If your attorney wants to depose the other party, he mails a “Notice of Deposition,” which may include a request for documents to be examined at the deposition.
All parties are entitled to attend any deposition, unless otherwise ordered by the court. Usually, the only people who attend a deposition are the attorneys, the deponent (the witness who is getting deposed), and of course, the court reporter who transcribes the entire deposition. After the deposition is concluded, the court reporter prepares a transcript of the deposition and allows the deponent an opportunity to review it and make changes, if necessary. If substantive changes are made to the testimony (as opposed to spelling corrections or other minor errors), then any of the attorneys might be entitled to re-depose the witness concerning the changes and any affected testimony.
Depositions greatly increase the cost of litigation. First of all, the attorney has to spend substantial time preparing for the deposition by, among other things, reviewing relevant documents, preparing an outline of questions to ask at the deposition, appearing at the deposition, and then briefly summarizing the deposition. Depending on the complexity of the case and the amount of documentation involved, an attorney can spend anywhere from a few hours to several days on one deposition. On top of that, the attorney who takes the deposition must pay for the court reporter, and any party who wants a transcript must also pay for that as well. A one-day deposition with several exhibits can run up to $1,000 just in costs. Add in the attorney’s fees (e.g., at $200 per hour for preparation and attendance, say 12 hours total), and the whole process for one deposition is approximately $3,000. So you can see how expenses can skyrocket with a just a few depositions.
INVESTIGATION AND DISCOVERY – EXPERT WITNESS DEPOSITIONS
Many cases involve matters that require specialized knowledge or expertise but which are not necessarily legal matters. For example, most attorneys do not have engineering or other scientific expertise regarding issues that may be germane to your lawsuit. Thus, your attorney may retain an expert consultant whose job is to analyze existing data in reference to their area of expertise and provide an “expert opinion” concerning a particular matter involved in your lawsuit. For example, if you are a tradesman or other contractor and a plaintiff alleges that your work is defective, you may need a consultant who is an expert in your field of work in order to evaluate your work and determine whether or not, in the consultant’s opinion, your work met the standard of care required for your particular trade or activity.
Attorneys often hire one or more “consultants” to help investigate particular aspects of the case, which may require specialized knowledge such as medical issues, engineering issues and issues unique to certain professions and businesses. Such consultants can also testify at trial concerning their opinions on such issues, so long as the judge determines they have demonstrated the requisite level of expertise in their particular field. To testify at trial, the attorney who hired the consultant must first notify the other parties that the consultant will be called to testify at trial and describe the general nature of the testimony. This is referred to as an “expert disclosure.” At that point, the consultant becomes known as an “expert witness” and can be deposed by the other parties concerning his opinions and the basis for those opinions.
An attorney does not have to disclose a consultant as an expert witness. Sometimes, an attorney will have the consultant assist with technical matters without testifying in court. If the attorney does not disclose a consultant as an expert witness, then all communications between the consultant and the attorney remain confidential and do not need to be disclosed to anyone. However, once a consultant is disclosed as an expert witness, then the expert witness can be interrogated on all matters, including conversations with the hiring attorney.
CASE MANAGEMENT / TRIAL SETTING
Most courts have internal procedures for shepherding cases through the court system. Courts also have goals for concluding cases within twelve to twenty-four months. While the case is pending, there may be one or more “Case Management Conferences” which are basically checkpoints during the litigation for the court and the parties to monitor the status of the case, and to help make sure the case will get resolved in a timely fashion. Usually, within six to nine months, there will be a “Trial Setting Conference” where the trial is scheduled. Once that date is scheduled, various deadlines are set in accordance with the trial date, including deadlines for filing motions and completing discovery.
LAW AND MOTION
Between the beginning of the lawsuit and trial, your attorney may have to file or oppose motions to the court. It is possible your lawsuit will not involve any interim motions. Typical motions are motions related to discovery and motions for “summary judgment.”
A motion to compel is a motion brought by a party who is dissatisfied with another party’s response (or failure to respond) to a discovery request in an effort to get a better response.
A motion for summary judgment can also be brought by either party, but is usually brought by the defendant in an attempt to get the judge to dismiss the case before it goes to trial. In order to prevail on a motion for summary judgment, the moving party must demonstrate by reference to admissible evidence that the material facts of the case are undisputed, and that based on those facts and the applicable law, the moving party is entitled to judgment in his favor. A motion for summary judgment is defeated by either: (1) demonstrating that there is a dispute concerning one or more of the material facts (thus requiring a jury to resolve the factual dispute at trial); or (2) demonstrating that the applicable law does not support a judgment in favor of the moving party.
If a defendant’s motion for summary judgment is granted, the entire case is dismissed. If it is denied, the case will go to trial unless it settles first. There is also a motion for summary adjudication, which is identical to a motion for summary judgment except that it results in dismissal of specific claims, not the entire lawsuit.
MANDATORY SETTING CONFERENCE / MEDIATION
There is a strong public policy in favor or settling legal disputes out of court. Most cases (probably over 90%) settle without going to trial. To further the public policy in this regard, courts require the parties to participate in settlement discussions, which are conducted at a “Mandatory Settlement Conference,” usually scheduled 15 to 45 days before trial. Most local rules require the parties and their attorneys to attend the Mandatory Settlement Conference. If your insurance company is defending you and you face no personal exposure, then you will not have to attend. Instead, a representative from your insurance company will appear with your attorney to try and settle the case. If you do face a personal exposure because no insurance policy provides coverage or your policy may not completely cover your liability, then you will need to attend.
Non-judicial arbitration is a form of arbitration that takes place during the course of a civil lawsuit. Most courts in California require the parties to submit their lawsuit to judicial arbitration before a single arbitrator who is usually an attorney experienced in the type of lawsuit in which you are involved, or a retired judge. The arbitration hearing usually takes place after the parties have completed some, or even all, of their discovery. (In fact, unless the parties agree, “discovery” is officially cut off just before the arbitration hearing. Parties frequently agree to keep discovery open beyond the arbitration hearing.)
The arbitration hearing typically takes place in the office of the attorney or retired judge who is acting as the arbitrator, or even in the office of your attorney or the plaintiff’s attorney. The hearing usually starts with a brief presentation of the case by the attorney, and may include live sworn testimony from the parties or other witnesses. There is no court reporter, so there is no official record of the hearing. In fact, evidence introduced at an arbitration is not necessarily admissible at a later trial. Evidence rules can be somewhat relaxed, meaning the arbitrator may consider evidence that, for example, might otherwise be inadmissible hearsay. The arbitration may last less than an hour or all day, depending on the complexity of the case. (In complex cases, the court may excuse the parties from judicial arbitration altogether.)
A few days after the arbitration hearing, the arbitrator issues a written decision to the parties. Either party then has thirty days after the arbitrator’s decision to either accept or reject the decision. If the decision is accepted, then it can become an official judgment, which is enforceable just like any other judgment. If the decision is rejected, then the case goes back to the court where it may ultimately be tried, unless it settles first. Thus, judicial arbitration is also known as “non-binding arbitration.”
To encourage resolution through the arbitration process, a party who rejects an arbitrator’s decision and fails to obtain a better result at trial may be required to pay the other party’s costs after trial (including that party’s expert expenses incurred to prepare for trial), even if the rejecting party wins at trial. For example, assume the arbitrator’s decision is a $50,000 award in favor of the plaintiff. If the plaintiff rejects that decision, he is basically betting that he can obtain a better result at trial. If the plaintiff prevails at trial but is awarded only $49,000, then although the defendant will be liable for the $49,000, the plaintiff will be required to pay defendant’s costs, which could be thousands of dollars. This is the reverse of the normal rule, which allows the prevailing party at trial to recover its costs from the losing party.
If the case cannot be resolved through arbitration, settlement conferences, or mediation, then the inevitable result is a trial. A trial is either a “jury trial” or a “court trial” (no jury). Usually, if one party requests a jury trial, then you will have a trial by jury. The trial process has a number of steps, including the following: (1) pre-trial motions and jury instructions; (2) jury selection (also known as “voir dire”); (3) opening statements; (4) presentation of evidence; (5) closing argument; (6) jury instructions and deliberation; (7) announcement of the verdict; and (8) post-trial rulings.
(1) Pre-Trial Motions and Jury Instructions
Before a jury is chosen, the judge will attempt to resolve as many issues as possible before the trial starts. The most common disputes concern whether certain evidence is admissible or not. Outside the presence of the jury or jury pool, the judge will listen to the respective attorney’s arguments (made in what are called “motions in limine”), and decide whether the disputed evidence will be admitted or excluded at trial.
A common motion in limine is a defendant’s motion to exclude evidence of defendant’s insurance (assuming the defendant has insurance to potentially cover the loss), which is routinely granted. In the typical case, for example an auto accident case, the defendant is usually covered by insurance. However, whether or not the defendant had insurance has no bearing on whether he caused the accident or not, nor does it have any bearing on the existence or extent of plaintiff’s injuries. Thus, insurance is not relevant to any issue in the case, and therefore, evidence of the defendant’s insurance (and the plaintiff’s for that matter) is not admissible. Similarly, defendant’s lack of insurance, or the fact that plaintiff had insurance for the accident is also inadmissible for the same reasons. Irrelevant evidence is never admissible.
In jury trials, the parties must present jury instructions for court review and approval. Jury instructions include statements of the law that apply in a case. Although the jury instructions are given at the end of the trial, the parties and the Court try to finalize the instructions as soon as possible. For many types of claims, jury instructions are pre-approved by the California Judicial Council, and the Court instructs the jury consistent with those instructions. The most common jury instructions in civil trials are the California Civil Jury Instructions (CACI, pronounced “kay see”). These jury instructions contain the actual laws that apply in many types of civil cases. Some cases present novel legal issues or contested issues of law, particularly with newly evolving appellate case law, and the Court must determine special jury instructions after input from the parties’ attorneys. For illustration, and to get a general idea of the laws that may apply in certain types of cases, the following is a link to the CACI jury instructions: http://www.courtinfo.ca.gov/jury/civiljuryinstructions/documents/caci_20091215.pdf
(2) Jury Selection / Voir Dire
Unless a jury is waived by all of the parties, the parties will need to select twelve jurors and usually two alternate jurors. These fourteen individuals are selected from a much larger “jury pool.” Jury selection allows potential jurors to be removed by the judge or the parties in order to avoid any prejudice or unfairness to any one party. An easy example is where a potential juror happens to be a friend of one of the parties. They would likely be excused from consideration. During the jury selection process, the attorneys for each party are allowed to ask a wide range of questions concerning each potential juror’s background in order to identify any individuals who might have any prejudice against his client. In a normal case with two sides (plaintiff and defendant), each party is allowed to dismiss six potential jurors without any explanation or reason. These are referred to as “peremptory challenges.” In addition, if an attorney believes a particular prospective juror is prejudiced or otherwise predisposed to rule against his client or in favor of the other party, then the attorney may challenge that prospective juror “for cause.” At that point, the judge must rule whether or not the prospective juror has demonstrated a sufficient prejudice or bias that would be unfair to that party. Attorneys do not like to challenge for cause because if the judge does not agree to excuse the prospective juror for cause, then that person (who has basically been told by the challenging attorney that he is not wanted as a juror) may end up as a juror in the case.
(3) Opening Statements
After the jury is chosen and sworn in to hear the case, the attorneys each make an “opening statement,” which is basically an introduction to the case and a presentation of expected testimony and evidence. No argument is allowed at this point – only reference to admissible evidence is allowed.
(4) Presentation of Evidence
After opening statements, the plaintiff must present his case. The plaintiff’s attorney will call a witness to the stand and conduct direct examination. The attorney may introduce documents or other evidence, such as photographs or physical evidence, which is authenticated by the witness. After the plaintiff’s attorney has concluded direct examination of the witness, the defendant’s attorney is allowed to cross-examine that same witness. The same witness may again be questioned by the plaintiff’s attorney (re-direct examination) and then again by the defendant’s attorney (re-cross-examination), and the process may continue in the same general fashion until the plaintiff’s attorney excuses the witness. The plaintiff may call additional witnesses, and this process is repeated.
After the plaintiff’s attorney has examined and excused all of his witnesses, the plaintiff will “rest.” It is then the defendant’s attorney’s turn to present the defendant’s case. The defendant’s attorney may call other witnesses in the same fashion. Once the defendant has examined and excused all his witnesses, the defense will “rest,” thus concluding the evidentiary stage of the trial.
(5) Closing Argument
After all the parties have rested, each attorney makes a closing argument. Here, each party’s attorney will try to persuade the jury to render a verdict in their client’s favor by a careful review of the evidence and arguments about the facts. The plaintiff’s attorney presents the first closing argument, followed by the defendant’s closing argument. Then, because the plaintiff has the burden of proof to persuade the jury, by a “preponderance of the evidence,” (i.e., more likely than not) that his version of the case is correct, the plaintiff is allowed a “rebuttal argument.” After plaintiff’s rebuttal, the case is given to the jury, and the attorney’s job at trial is almost done.
(6) Jury Instructions and Deliberation
After closing arguments, the judge instructs the jury on the law which applies to the case. The jury instructions are actually put together by the attorneys who, before or even during trial, argue to the judge over what laws will govern the case. The judge ultimately decides what law will govern the case and, therefore, has the final say on how the jury instructions will read. Similarly, the judge instructs the jury on any verdict form which must be completed by the jury as part of its decision.
After the jury has heard the jury instructions from the judge, they retire to a jury room and deliberate, i.e., discuss and decide the case. In a civil case, a verdict is reached where nine of the twelve jurors have agreed upon the verdict. Sometimes, a jury cannot reach a verdict, even after several days of deliberations. That is referred to as a “hung jury,” and the plaintiff would have to decide whether or not to re-try the case to another jury.
Once the jury has made its decision, they notify the judge who then calls the attorneys to appear in court for the reading of the verdict.
(7) Announcement of the Verdict
Once all attorneys and parties are present following the jury’s deliberations, the jury’s verdict is announced, which then forms part of the judgment in the case.
(8) Post-Trial Rulings
The losing party may file a motion to have the court enter a judgment different than the jury’s verdict or a motion for a new trial. These are rarely granted.
More often, the most significant post-trial hearing concerns the prevailing party’s costs. Normally, the party who wins at trial is determined to be the “prevailing party” and thus entitled to recover their costs. Not all costs are recoverable to the prevailing party. Recoverable costs include expenses like filing fees, deposition transcript expenses and jury fees. Costs vary widely depending on the case. If your case involved dozens of depositions, the prevailing party’s recoverable costs may easily be in the tens of thousands of dollars.
In addition, in some situations, the party who loses at trial may actually be able to recover its own costs from the other party who won a verdict. For example, if the verdict is in favor of the plaintiff in the amount of $39,000, but the plaintiff rejected an earlier arbitration award of $40,000, then the plaintiff would be responsible for paying the defendant’s costs, even though the plaintiff won a $39,000 verdict. The same is true with respect to a “statutory offer to compromise” pursuant to C.C.P. § 998. Under that statute, one party (a defendant, for example) makes a settlement offer to the plaintiff. If the plaintiff rejects the settlement offer but fails to obtain a better result at trial, the plaintiff (who rejected the “998 offer”) must pay the defendant’s costs (including the defendant’s expert’s fees incurred to prepare for trial), even if the plaintiff has won a money judgment.
ATTORNEY’S FEES AND COSTS
Lawyers typically think of “attorney’s fees” and “costs” as separate items. However, attorney’s fees, if recoverable, are usually an item of “costs.”
In some countries and other states, a prevailing party is entitled to recover attorney’s fees. In fact, that is the rule in Great Britain and which is thus known as the “English Rule.” California follows the “American Rule,” which awards attorney’s fees to the prevailing party only in certain situations. In California, a prevailing party is entitled to recover attorney’s fees as an item of costs if such a recovery is specified and allowed by: (1) a statute; (2) a law (e.g., “common law” or case law); or (3) a contract. Most disputes over attorney’s fees arise in cases involving contractual disputes between the parties.
Once the verdict is finalized, all post trial motions have been decided and the costs have been assessed, the Court will enter a Judgment based upon those terms. That is the Final Judgment.
SATISFACTION AND JUDGMENT
Once a judgment is in place, the judgment must be “satisfied.” Satisfaction of Judgment is usually “stayed” if the Judgment is appealed. If the defendant prevails and there is no appeal, the only judgment that needs to be satisfied is whatever cost award has been assessed in the defendant’s favor. If the plaintiff prevails and there is no appeal, then the judgment is satisfied by the defendant’s payment of the judgment.
Once the defendant has paid the judgment, the plaintiff should file a “Satisfaction of Judgment.” If the defendant fails to pay the judgment, then the plaintiff may take steps to enforce the judgment.
There are specific rules and strict time lines that apply to appeals of judgments. If a judgment has been entered against you, you should contact an attorney immediately to determine how you might best attack and challenge the judgment. If you wait, you may lose any right to appeal the judgment.
[Back To Top]ENFORCEMENT AND JUDGMENTThe prevailing party is the “judgment creditor.” The losing party is the “judgment debtor.” There are many different methods to enforce a money judgment, from attaching the judgment debtor’s real property to garnishing his wages. There are attorney and collections agencies that specialize in enforcing judgments. If a judgment debtor will not pay a money judgment, the other judgment creditor can file and record (in the County Recorder’s Office) an “Abstract of Judgment” in each county where the judgment debtor owns real property, which in effect becomes a lien on any property held by the judgment debtor in that county.
SPECIAL SITUATIONS – TEMPORARY RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS
Resolving a dispute though civil litigation can take years. If you need immediate relief, then you need to apply for a Temporary Restraining Order (TRO) and Preliminary Injunction. For certain types of situations, such as domestic violence for example, there are pre-printed forms you can obtain online or possibly from the court which are somewhat self-explanatory, and you may feel comfortable completing and filing the forms yourself.
In business or other more complex matters, you will probably need to apply for a Temporary Restraining Order to get the immediate relief you want. A Temporary Restraining Order is basically a temporary injunction. Injunctions are court orders that usually prohibit one party from doing any number of specific activities. There are also TROs and injunctions that command a party to do something, but those are more rare and difficult to obtain. Usually, an injunction stops something from happening.
To obtain a TRO, you must first file a normal civil complaint with one or more causes of action or claims for relief. In the complaint, you should ask for a Temporary Restraining Order, Preliminary Injunction and Permanent Injunction, for example, to “stop the defendant from trespassing upon your property.” At the same time you file the Complaint (or earlier if you call the court), you can schedule a hearing before the judge to present your “Ex Parte Application for Temporary Restraining Order (TRO) and Order to Show Cause (OSC),” which is an application for two separate orders: (1) a TRO; and (2) an OSC.
The application is referred to as “ex parte” because you are not required to give the other party the normal number of days’ notice of the hearing. Usually, you are required to give at least 24 hours notice of the hearing. Also, you should have the defendant personally served with the summons, complaint, Ex Parte Application for TRO and OSC, and related paperwork. “Personal service” usually means direct hand delivery of the legal papers to the party.
The other paperwork which will need to be prepared are: legal points and authorities which explain the facts of the case and the applicable law to the court and contain arguments as to why you a TRO should be granted. You will also need to file declarations (sometimes also known as affidavits), which are witness statements based upon personal knowledge and signed under penalty of perjury. The declarations supply the facts that are included in the points and authorities.
You will also need a proposed TRO, i.e., an order you want the judge to sign, and a proposed Order to Show Cause (OSC). The OSC is basically an order from the court commanding the other party to appear in court at a specific date and time to “show cause” (i.e., explain to the court) why the TRO should not be converted into a Preliminary Injunction. A TRO only remains effective until (and if) a Preliminary Injunction is granted. The Preliminary Injunction remains in effect until dissolved or replaced by a Permanent Injunction. So, after the hearing on your Ex Parte Application for a TRO and OSC, you should have both orders. The OSC sets the next hearing date, which is to determine what, if any, preliminary injunction should be in effect. The TRO and OSC need to be personally served on the defendant. The OSC will also specify additional deadlines for the parties to file opposition and reply briefs for the hearing on the OSC.
At, or shortly after the hearing on the OSC, the court will announce its ruling. If the Court orders a Preliminary Injunction, you will probably have to file a “bond” or “undertaking” to, in effect, insure against the defendant’s potential damages in the event the defendant prevails at trial and establishes losses related to the imposition of the Preliminary Injunction.
SPECIAL SITUATIONS – CONTEMPT PROCEEDINGS
If a party violates a court order, that party may be held in “contempt.” For example, if there is a preliminary injunction prohibiting one party from entering another’s land, then that party’s entry on to the land may result in a contempt order. However, to obtain a contempt order, the party seeking to enforce the original preliminary injunction must prove that it was violated beyond a reasonable doubt. To do this, the offended party must apply to the court for an “order to show cause” (OSC) and file affidavits which demonstrate the factual circumstances in support of the application. The court may then issue an Order to Show Cause, which requires the offending party to appear in court for purpose of admitting or denying the charges in the application.
If the contempt charges are admitted, then an appropriate penalty will be determined. If the charges are denied, then the matter will proceed (usually on a later date) to a full hearing of the facts in front of a judge. At the conclusion of the hearing, the judge will either dismiss the OSC or find the offending party in contempt. If the offending party is found to be in contempt, then the court will also determine the appropriate punishment, which may consist of jail time, a fine, restitution, attorney’s fees or any combination of these. Because the punishment may include jail, fines or other criminal-type punishment, the offended party must prove the contempt beyond a reasonable doubt, which is a higher standard of proof than preponderance of evidence.
SPECIAL SITUATIONS – GOOD FAITH SETTLEMENT DETERMINATION
Cases involving multiple defendants have special procedures that relate to settlements between the plaintiff and one of the defendants. In cases with multiple defendants, it is not uncommon for a defendant to file a “cross-complaint” against another defendant for “equitable indemnity,” or “equitable contribution.” In filing such a cross-complaint, the defendant (who is now also considered a cross-complainant) alleges that another party is responsible and liable for the plaintiff’s damages.
If a defendant reaches a settlement agreement with the plaintiff, that plaintiff must also take steps to ensure the he is not left exposed to another defendant’s cross-complaint for equitable indemnity. The settling defendant wants to be completely dismissed from the lawsuit after settling with the plaintiff. He does not want to be forced to continue incurring attorney’s fees and costs and perhaps paying additional money to a non-settling defendant who has cross-complained against him.
To avoid this problem, a settling defendant must obtain a “good faith settlement determination” from the court. A settlement is said to be in “good faith” if, in the court’s opinion, the settlement is fair in light of all the circumstances of the case. There are several factors that the court will consider in deciding whether a settlement is in good faith or not.
The practical effect of a good faith settlement determination is to bar any non-settling party’s cross-complaint for equitable indemnity against the settling defendant. A good faith settlement determination is a court order issued after either a stipulation or agreement among all the parties, or a hearing on the circumstances relating to the settlement. If a non-settling party believes the settling party is not paying its fair share of the potential liability, then the non-settling party may oppose the settling’s defendant’s request for a good faith determination.
SPECIAL SITUATIONS – INSURANCE COVERAGE DECLARATORY RELIEF ACTION
As indicated above, if you are sued, your insurance company may have a duty to provide a defense for you if there is potential coverage under your insurance policy. The issue of whether or not there is actual coverage for liability imposed against you the lawsuit may not be determined until after the case has been tried and concluded. If you are found liable at trial, it is possible that even after that trial, you and your insurance company may disagree on whether or not your liability is covered by the insurance policy. Moreover, the plaintiff (who has just obtained a judgment against you) is now a “judgment creditor” who has the right, under Insurance Code § 11580, to pursue any insurance coverage you may have which applies to the claim. If the coverage issue cannot be settled, then it is possible a second lawsuit will result between the insurance company on the one hand and the defendant/judgment debtor and plaintiff/judgment creditor on the other hand. This second lawsuit is called a “declaratory relief action,” where each side seeks a declaration from the court that there is or is not coverage.
Usually, the declaratory relief action cannot proceed until the underlying lawsuit is concluded because it is possible information developed in the declaratory relief action could adversely impact the insured’s liability in the underlying lawsuit. Sometimes an insurance company or policyholder will file an insurance coverage declaratory relief action while the underlying lawsuit is pending, but it is possible it will be “stayed” (not allowed to proceed) until the underlying action is concluded.
SPECIAL SITUATIONS – “BUSS” REIMBURSEMENT ACTION
If your insurance company defends you subject to a reservation of rights, the insurer might also reserve the right to seek reimbursement of attorney’s fees and costs incurred in the defense of non-potentially covered claims. This is sometimes referred to as a “Buss Reservation,” after the California Supreme Court ruling in the case of Jerry Buss v. Superior Court (1997) 16 Cal.4th 35. In the Buss case, the Supreme Court reaffirmed the longstanding rule that an insurance company has a duty to defend the entire lawsuit (even claims which are not potentially covered), so long as there is at least one potentially covered claim. In the Buss case, Dr. Jerry Buss (an owner of the Los Angeles Kings hockey team and Los Angeles Lakers basketball team) was sued in a complex lawsuit involving various business transactions and contracts. The complaint against him included several causes of action for business and contract-related liabilities, none of which were potentially covered under his liability insurance policy. However, one of the causes of action against him was for defamation, which was potentially covered under his policy.
Therefore, his insurance company provided Dr. Buss with a defense to the entire action, which consisted almost entirely of claims that were not potentially covered by the policy. His insurance company denied coverage for liability resulting from the non-covered claims, and reserved the right to seek reimbursement of attorney’s fees and costs incurred by the insurance company in defending the non-potentially covered claims. The Supreme Court ruled that the insurance company was entitled to reserve its rights on that basis. The Court further ruled, however, that the insurance company, in trying to prove its Buss reservation, must prove by “clear and convincing evidence” that the attorney’s fees and costs which it seeks back must be incurred exclusively for the defense of the non-potentially covered claims.
Thus, if your insurance company has agreed to defend you under a reservation of rights, including the right to seek reimbursement under the Buss case, it is possible you may end up facing a second lawsuit with your insurance company concerning whether or not there is potential coverage for certain claims, and whether or not you have any responsibility to reimburse the insurance company for attorney’s fees and costs incurred in the defense of non-potentially covered claims.
ALTERNATIVE DISPUTE RESOLUTION – ARBITRATION
“Arbitration” is basically an abbreviated form of civil litigation, and is an alternative way to resolve civil disputes. The outcome of an arbitration is determined not by a jury or a court, but by an “arbitrator.” An arbitrator is usually a retired judge or practicing attorney who is experienced in litigating the type of legal dispute to be arbitrated. Arbitration refers to the entire process of arbitrating, which includes some type of initiating document prepared by the plaintiff with allegations against the defendant, a response from the defendant, an exchange of discovery between the parties, and then an “arbitration hearing” which is basically an informal trial (i.e., there is no jury, evidentiary rules are usually relaxed compared to a real trial, and it typically is not recorded by a court reporter.)
In general, there are two types of arbitration: (1) “judicial arbitration;” and (2) “non-judicial arbitration.” Although it might seem counter-intuitive, judicial arbitration is “non-binding,” which means the losing party can reject the arbitrator’s decision and request a trial de novo, i.e., a new trial on the matter. Non-judicial arbitration is typically “binding,” meaning absent extraordinary circumstances, the arbitrator’s decision is final and not appealable.
In California, each county has “local rules” which supplement State laws governing legal procedures for civil lawsuits. Local rules typically require the parties to a civil action to submit the dispute to “judicial arbitration.” The arbitration hearing usually takes place after at least some preliminary discovery has been completed so that admissible evidence can be submitted for consideration to the arbitrator in document form.
Arbitration often occurs in matters where the parties previously signed a contract that includes an “arbitration clause.” For example, you might enter a construction related contract which states something like this: “In the event of any dispute between the parties arising out of this contract, such dispute shall be resolved by way of binding arbitration.” Such clauses typically identify an organization that will act as the arbitrator and may specify other details that will govern the arbitration. Sometimes, an arbitration clause will even incorporate the rules of the arbitration organization. It is therefore important to understand the full scope of such arbitration clauses. In addition to giving up the right to a jury trial and the right to appeal, you may also be placing yourself in a disadvantageous position depending on your situation. Binding arbitration is often touted as being less costly than litigation in the judicial system. However this depends on the arbitration rules that apply which are dictated by the terms of your contract. For example, some arbitration organizations charge thousands of dollars for initial claims and responses to be filed, and hourly rates for single or even multiple arbitrators. In such circumstances, you could end up paying not only your own attorney but also a portion of the arbitrator’s fees (or all of the arbitrator’s fees if you lose). This could increase the costs of litigation by thousands or even tens of thousands of dollars in complex cases. Arbitrator fees run the gamut, but can easily range from $400 to $700 per hour or more. And that is just for a single arbitrator. Some rules require multiple arbitrators. On the other hand, some arbitration rules severely limit the type of discovery and investigation allowed, and provide consumer protections that can help keep costs down. In any event, it is very good idea to understand precisely what arbitration rules will govern before signing a contract with an arbitration clause.
ALTERNATIVE DISPUTE RESOLUTION – MEDIATION
As stated above, there is a strong public policy in favor or settling legal disputes out of court. Most cases (probably over 90%) settle without going to trial. To further the public policy in this regard, courts encourage the parties to participate in settlement discussions through a process referred to as “mediation.” Mediation is basically similar to a “Mandatory Settlement Conference,” except that: (1) it is not court ordered; and (2) the parties have to pay the mediator’s hourly rate.
ADVICE REGARDING THE SIGNING OF DOCUMENTS
Here is a reminder for everyone: If you don’t understand a document you are asked to sign, don’t sign it!
We all sign documents, almost daily, some far more important than others. Some documents we sign are filled with legal terms and “boilerplate,” which trained professionals must carefully analyze to fully understand. Too often we see problems relating to documents signed by people who did not fully understand what they were signing. If it’s important enough to require your signature, it’s important enough to understand what you are signing. Obviously, the more significant the transaction involved, the more care you should take in making sure you understand all the terms.
If you have a question concerning the terms of a document you are asked to sign, please call us. We will be happy to review it and explain the legal implications of provisions you don’t fully understand.