For over 40 years, construction-defect litigation throughout the southwest, and predominantly in California, has been governed by the Case Management Order, or CMO. The reason for the creation and use of the CMO is that construction-defect litigation is complex. Typical construction-defect cases include a myriad of allegations, parties, and insurance carriers. The introduction of the CMO was designed to organize the procedural process, mediation, and discovery. In particular, the CMO governed the production of witnesses and documents by both sides in an agreed-upon and orderly manner.
Beginning January 2024, California amended the Civil Discovery Act, specifically C.C.P. section 2016.090, to affirmatively require that any party appearing in a civil action provide initial disclosures to any other party demanding the same within 60 days. In an effort to reflect the Federal Rule 26 disclosure requirements, as many other states have adopted, California will now also mandate (upon demand) that a party produce evidence without an arduous and possibly duplicative effort. In other words, this initial disclosure will require a party making initial disclosures of persons or records to additionally disclose persons or records that are relevant to the subject matter of the action and to disclose information and records regarding insurance policies or contracts that would make a person or insurance company liable to satisfy a judgment.
The impact of C.C.P. section 2016.090 on construction matters is immeasurable. First, witness disclosure requires all contact information including phone and email upon demand. The witness categories are broad: “[E]veryone (except for impeachment and experts) likely to have discoverable information, along with the subjects of that information, used to support claims, defenses, or that is relevant to the subject matter.” This will include, but not be limited to:
- Plaintiff: homeowners, board members, property managers, maintenance personnel, contractors, etc.
- Developers/General Contractors: owners and investors, persons most knowledgeable, persons most qualified, subcontractors, design engineers, brokers, etc.
- Subcontractors: owners, persons most knowledgeable, persons most qualified, superintendents, design engineers, brokers, etc.
This is just to name a few. One can imagine that this list could be infinitely longer depending on the size and scope of the project.
Second, document disclosure upon demand is similar: “A copy, or a description by category and location, of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, or that is relevant to the subject matter of the action or the order on any motion made in that action, unless the use would be solely for impeachment.” [Code Civ. Proc., § 2016.090, subd. (a)(1)(B)].
This includes contracts and insurance policies under which an insurance company or a person may be liable to satisfy a defense obligation, a settlement, and/or a judgment. [See Evidence Code section 175 (Code Civ. Proc., § 2016.090, subds. (a)(1)(C)-(D)]. From a construction-defect perspective, it would not be out of the realm of a reasonable request to expect all construction and maintenance related documents, including original entitlement and engineering documents and plans; all communications between homeowner and builder; all contracts and agreements related to the project; all layers of insurance policies; all communications between insured and insurer; reservation of rights letters; bankruptcy filings; etc.
In addition, to add “teeth” to this new provision, California’s new section 2016.090 also requires the following:
- A party must make its initial disclosures based on the information then reasonably available to it and is not excused from making the disclosures simply because it has not fully investigated the case within 60 days.
- A party must verify the required disclosures as true and correct under penalty of perjury.
- A party must supplement or correct a disclosure or response if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and the additional or corrective information has not otherwise been made known to the other parties during the disclosure or discovery process.
As this rule makes its way through the landscape of California litigation, there is no doubt that it will impact the necessity of a traditional Case Management Order. It is arguably more efficient and more effective for the plaintiffs, and more onerous for the defense due to the possible volume of information. In addition, an unintended consequence could lead to a logjam of cases in the court system that simply opt for this new rule rather than take advantage of a CMO. Without doubt, it would be in all parties’ best interest at the outset of a case (possibly during the SB800 process) to discuss the scope of compliance with this new rule, stipulate to anything that will make it easier for all sides to comply and agree that disclosures can and should be ongoing without penalty.