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Ridgaway v. Mount Vernon Fire Insurance Co.

Court of Appeals of Connecticut

May 24, 2016

WILLIAM P. RIDGAWAY, SR., ADMINISTRATOR (ESTATE OF WILLIAM P. RIDGAWAY, JR.), ET AL.
v.
MOUNT VERNON FIRE INSURANCE COMPANY

          Argued March 3, 2016

         Appeal from Superior Court, judicial district of New London, Hon. Thomas F. Parker, judge trial referee.

          Wesley W. Horton, with whom was Kimberly A. Knox, for the appellants (plaintiffs).

          Robert B. Flynn, with whom were Dennis M. Carnelli and Joseph J. Andriola, for the appellee (defendant).

          Gruendel, Lavine and Sheldon, Js. [*]

          OPINION

          SHELDON, J.

         The plaintiffs, William P. Ridgaway, Sr., for himself individually as the father of his deceased son, William P. Ridgaway, Jr. (decedent), and as administrator of his son’s estate, and Rita Grant, for herself individually as the decedent’s mother, appeal from the judgment of nonsuit rendered against them by the trial court based upon their counsel’s failure to comply with the court’s order that they file a copy of a confidential settlement agreement in a related lawsuit, which counsel claimed to have prevented them from complying voluntarily with certain discovery requests filed in this case by the defendant, Mount Vernon Fire Insurance Company. The plaintiffs claim that the judicial authority that rendered the judgment of nonsuit lacked jurisdiction or authority to do so by reason of his status as a judge trial referee, and, that even if it had such jurisdiction and authority, it erred in rendering the challenged judgment of nonsuit against them because that sanction, as applied to them, was not proportional to their counsel’s alleged violation. We reject the plaintiffs’ claim that the judicial authority lacked jurisdiction or authority, as a judge trial referee, to render the judgment of nonsuit here at issue, but conclude that it abused its discretion in imposing that sanction against the plaintiffs because rendering a judgment of nonsuit against them was not proportional to their counsel’s alleged noncompliance with the court’s order. Accordingly, we reverse the judgment of the trial court.

         The following factual and procedural history is relevant to this appeal. On April 16, 2000, the decedent died in an automobile accident resulting from the intoxication of the driver of the automobile, Anthony Sulls, who had been drinking with the decedent at the Silk Stockings Bar in Groton. On February 5, 2001, the plaintiffs filed a wrongful death action against Silk, LLC (Silk), as the owner and operator of the bar.[1] Five additional actions concerning insurance coverage disputes stemming from the underlying death of the plaintiffs’ decedent were thereafter commenced. Those five additional actions, as set forth and described in the settlement agreement referenced herein, were as follows: First Specialty Insurance Corp. v. Marion Reed et al., X04-CV-06-4035743 (action for declaratory judgment filed by Silk’s liability insurer [coverage action]); William P. Ridgaway, Sr. Administrator for the Estate of William P. Ridgaway v. Cowles & Connell of Connecticut, Inc. et al., X04-CV-03-4034704, and Silk, LLC dba Silk Stockings v. Cowles & Connell of Connecticut, Inc. aka Cowles & Connell, Inc. et al., X04-CV-03-4034739 (actions filed against agents and brokers for allegedly failing to procure adequate coverage for Silk [agents and brokers actions]); Silk, LLC dba Silk Stockings Bar v. Mount Vernon Fire Insurance Co., X04-CV-02-4034598; and Estate of Ridgaway et al. v. Mount Vernon Fire Insurance Company, X04-CV-02-0563699.

         As a result of mediation, a stipulated judgment was entered in the wrongful death action on March 22, 2011, in favor of the plaintiffs and against Silk in the amount of $1, 000, 000. Under the terms of that stipulated judgment, Silk agreed, in full satisfaction of its payment obligation thereunder, to assign to the plaintiffs all of its rights to and interest in insurance coverage, in connection with the decedent’s death, under its excess and umbrella insurance policy issued by the defendant. The coverage action and the agents and brokers actions were also settled, and that settlement was memorialized in a document entitled, ‘‘Confidential Settlement Agreement and Specified Releases’’ (confidentiality agreement). The defendant was not a party to that settlement.

         On June 7, 2011, the plaintiffs, who were represented by the Reard on Law Firm, P.C., filed this subrogation action by way of a three count complaint alleging that they had obtained a judgment against the defendant’s insured in a separate personal injury action, but that the defendant had wrongfully denied coverage and refused to pay the judgment. The defendant filed an answer and special defenses, and a counterclaim seeking a declaratory judgment that the insurance policy did not cover the plaintiffs’ judgment.

         On September 26, 2013, the defendant filed a motion seeking an order to compel the plaintiffs to produce three documents: the transcript of the June 27, 2002 deposition of Judith Truax and two exhibits from the later February 12, 2009 deposition of the same deponent.[2] In that motion, the defendant explained that when it had requested those documents from the plaintiffs, counsel for the plaintiffs responded that: ‘‘Because the plaintiffs are subject to a confidentiality agreement, I will not be turning over any documents unless ordered to do so by the [c]ourt.’’

         On October 3, 2013, the plaintiffs filed an objection to the defendant’s motion and a cross motion for a protective order to prevent the defendant from compelling the production of the requested documents. In that motion, the plaintiffs ‘‘steadfastly’’ objected to the production of the requested documents, contending that ‘‘production of the documents could expose them to the risk of litigation for breaching [the aforementioned confidentiality] agreement.’’ The plaintiffs argued, more particularly, as follows: ‘‘Production of the documents requested would cause the plaintiffs to violate the confidentiality agreement entered into with other parties in separate lawsuits. In this regard, any order by this court requiring production of these documents would invade matters that the parties to that agreement fully intended at the time of execution to remain forever confidential. If the plaintiffs produce the requested discovery documents, they could be exposing themselves to the risk of litigation for being in breach of contract.’’ In that same motion, the plaintiffs’ counsel cited the Rules of Professional Conduct in support of his duty to ‘‘challenge any court order that he believes seeks unnecessary disclosure of confidential information.’’ On those grounds, the plaintiffs asked that the defendant’s motion for an order compelling production of the requested documents be denied, or, in the alternative, that the court issue a protective order so that those documents could not be discovered.

         On October 8, 2013, the defendant filed a reply to the plaintiffs’ objection to its motion for order to compel disclosure of the previously requested documents and an objection to the plaintiffs’ cross motion for a protective order as to those documents. The defendant argued that the court should not rely on a confidentiality agreement to which neither it nor the defendant was privy as a basis for not ordering the production of, or granting a protective order with respect to, the documents at issue. The defendant explained in its motion that it had been a party to and its prior counsel had participated in the depositions at issue, but that prior counsel had misplaced the documents it was requesting from the plaintiffs. The defendant explained that it had sought copies of those documents from the court reporting agency that had transcribed the deposition, but was informed that the agency no longer had those documents in its possession.

         On October 15, 2013, the plaintiffs filed a sur-reply to the defendant’s October 8, 2013 reply memorandum. The plaintiffs argued in that pleading that the confidentiality agreement it had entered into with other defendants in the coverage lawsuits that arose from the wrongful death action was the basis for their objection to ‘‘the disclosure of the requested discovery documents or the terms and conditions of the confidentiality agreement to [the defendant], a nonparty [to that agreement], because of the risk that such disclosure would cause them to breach said confidentiality agreement.’’ The plaintiffs argued: ‘‘[The defendant] expects the plaintiffs to cite to the specific language of the agreement that would serve to bar disclosure of the requested documents or to append the agreement to their briefs, which would then become public record, in order to prove that disclosure of the requested documents would cause them to violate the confidentiality agreement. These assertions are preposterous, as dissemination of the terms and conditions of the confidential agreement is precisely the kind of conduct that is prohibited when an agreement is confidential in nature. Citing to the specific language in the agreement that the plaintiffs claim precludes them from producing the requested discovery documents and/or appending the contents of the agreement for the world to see on the public docket would expose the plaintiffs to liability for breach of contract and would expose plaintiffs’ counsel to liability for doing so.’’ The plaintiffs proposed that: ‘‘should the court require inspection of the confidentiality agreement before reaching a ruling on whether the requested discovery documents are subject to the provisions of the confidentiality agreement, then the plaintiffs would request an ‘in camera’ inspection of the agreement by the court only as the agreement is, itself, confidential, and may not be inspected by [the defendant] or any other nonparty to the agreement.’’ (Emphasis omitted.) The plaintiffs also argued that the defendant, which was a party to the deposition sat issue, but was not a party to the confidentiality agreement, should have had the documents that it was requesting or that it would have obtained them from another source that was not bound by the confidentiality agreement by which the plaintiffs are bound. Puzzlingly, the plaintiffs also argued that the deposition transcripts and exhibits were work product, and also that the defendant had not shown that ‘‘it cannot obtain these materials without undue hardship because . . . these materials are presumably readily available from the firm that formerly represented the defendant.’’ The plaintiffs argued that the requested documents were thus also protected ‘‘by privilege.’’[3] The court never ruled on the proposal by the plaintiffs’ counsel that its right to withhold the requested discovery should be decided on the basis of an in camera review of the confidentiality agreement.

         More than four months later, on February 26, 2014, the court, Hon. Thomas F. Parker, judge trial referee, issued an order that: ‘‘[The] plaintiffs shall file a copy of the confidentiality agreement upon which [they rely] by March 7, 2014. Dollar amounts may be redacted from the copy filed.’’ The plaintiffs did not comply with that order.

         Accordingly, on March 14, 2014, the defendant filed a motion for nonsuit and other sanctions based upon the plaintiffs’ failure to comply with the court’s February 26, 2014 order to file a redacted copy of the confidentiality agreement upon which they were relying in their refusal to produce the documents that the defendant had previously requested. As legal grounds for its motion, the defendant relied upon Practice Book § 13-14, which allows for the imposition of sanctions when a party fails to comply with a discovery order. On April 10, 2014, the plaintiffs filed an objection to the motion for nonsuit, in which they claimed that the motion had become moot because they had complied with the court’s order by faxing a redacted copy of the confidentiality agreement to counsel for the defendant on April 8, 2014. On April 28, 2014, the court summarily granted the defendant’s motion for nonsuit.

         On May 2, 2014, the defendant filed a reply to the plaintiffs’ objection to its motion for nonsuit and sanctions for failure to comply with the court’s February 26, 2014 order. The defendant stated therein that it had received and reviewed the confidentiality agreement, and determined on that basis that ‘‘the plaintiffs had no valid basis for withholding the requested documents in the first place, and delayed the progress of discovery for six months without any good cause.’’ In support of that argument, the defendant attached the subject confidentiality agreement as an exhibit. Referencing that exhibit, the defendant argued that the ‘‘agreement on which [the plaintiffs] relied for their confidentiality-based objection . . . in no way purports to restrict their ability to produce the requested documents. This conduct has caused unnecessary delays in this case. Plaintiffs’ lack of basic courtesy to provide defense counsel with copies of . . . misplaced or lost deposition transcript and two exhibits from that deposition has resulted in an extraordinary waste of time and resources, necessitating this motion.’’ The defendant thus asked the court to order the production of the documents at issue within ten days of the date of its ruling on the motion, and that a nonsuit enter if the plaintiffs failed to comply with such order of production. The defendant further requested that the court award it reasonable attorney’s fees in connection with the preparation of the motion.

         On May 8, 2014, although the court had previously granted the defendant’s motion for nonsuit, it issued a motion for nonsuit. In its ruling, the court rejected the plaintiffs’ claim that they had complied with the court’s order to file the confidentiality agreement by faxing a redacted copy of that agreement to the defendant. The court found, to the contrary, that: ‘‘The [February 26, 2014] order is succinct, clear and unambiguous. There has not been a semblance of compliance.’’

         On May 15, 2014, the plaintiffs responded to the court’s ruling by filing three separate motions. First, they moved to seal the confidentiality agreement that they had attached to said motion and were lodging with the court, pursuant to Practice Book § 7-4B. The plaintiffs also filed a motion to reargue the defendant’s motions for a judgment of nonsuit and for other sanctions, and a motion to open the judgment of nonsuit. In all three of those motions, the plaintiffs explained that on April 21, 2014, they had sent correspondence to the signatories of the confidentiality agreement stating their intention to disclose the requested documents within ten days absent any objection, and, in fact, that they did disclose those documents to the defendant on May 5, 2014. The plaintiffs further asserted: ‘‘Plaintiffs’ counsel did not file a copy of the confidential settlement with the court due to confidentiality concerns. . . . Plaintiffs’ counsel took steps to ensure the production of this document to counsel inthe most efficient manner possible while still honoring their obligation under the confidential terms of that agreement.’’ Also in each of those motions, the plaintiffs indicate that they were then lodging the confidentiality agreement with the court pursuant to § 7-4B ‘‘in an effort to more fully comply with the court’s order . . . .’’ (Citation omitted.)

         On May 28, 2014, the defendant filed objections to the motion to reargue and the motion to open judgment. In those objections, the defendant argued that the entry of nonsuit should be upheld because: ‘‘[T]he agreement on which the plaintiffs relied . . . expressly states that its confidentiality and nondisclosure provision only applies ‘except as required by law or court order.’ . . . As the plaintiffs were subject to this court’s clear order that they file the agreement with the court, the plaintiffs’ argument that they did not believe that they were allowed to file the agreement because of its confidentiality and nondisclosure provision is plainly disingenuous. Further, the agreement does not contain any language limiting the plaintiffs’ ability to produce ...


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