Yee v. Superior Court of the City & Cnty. of S.F.

242 Cal. Rptr. 3d 439, 31 Cal. App. 5th 26
CourtCalifornia Court of Appeal, 5th District
DecidedJanuary 8, 2019
DocketA153001
StatusPublished
Cited by3 cases

This text of 242 Cal. Rptr. 3d 439 (Yee v. Superior Court of the City & Cnty. of S.F.) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Yee v. Superior Court of the City & Cnty. of S.F., 242 Cal. Rptr. 3d 439, 31 Cal. App. 5th 26 (Cal. Ct. App. 2019).

Opinion

Kline, P.J.

*28After the dismissal of a lawsuit in which an insurance company challenged efforts by the state controller to conduct an unclaimed property audit, the insurer sued the controller's office for abuse of process in the dismissed case. The controller's office petitions for relief from a trial court order rejecting its claim of immunity under *441the Government Tort Claims Act. We conclude relief is warranted.1

BACKGROUND

Thrivent Financial for Lutherans (Thrivent) is an out-of-state insurance company doing business in California. In August 2013, as part of a multistate investigation of insurance practices focused on the handling of unclaimed property due to be escheated to the state, the Controller of the State of California (Controller) initiated an audit of Thrivent's records, seeking to audit records covering more than 20 years and policies issued across the country.

Thrivent sought injunctive and declaratory relief, claiming the audit was unconstitutional and overbroad. The trial court denied its request for a preliminary injunction, stating it had not established a likelihood of success on the merits, and Thrivent appealed.

The Controller subsequently filed a cross-complaint for an injunction to enforce the audit. Denying a preliminary injunction, the court stated that the Controller had not sufficiently established a likelihood that the proposed audit was limited to inspection of " 'reasonably relevant' information" or that an *29injunction was required to prevent irreparable harm, as denial of the injunction would "not prevent the Controller from ever performing an audit of Thrivent. Rather, the audit will be delayed until Thrivent's Constitutional arguments are resolved at trial."

Meanwhile, the parties had stipulated to entry of a protective discovery order providing that "Confidential Information" and "Attorneys' Eyes Only Information" "shall be used only for purposes of this litigation and shall not be used for any other purpose, litigation or otherwise." The Controller filed a motion to compel production of Thrivent's records of policies having a nexus to California, which the trial court granted. According to Thrivent, the court granted the motion after the Controller's counsel assured the court that the Controller and Office of the State Controller (SCO) would not use information obtained in discovery to conduct the audit.

The documents Thrivent produced were in electronic form, marked "Attorneys' Eyes Only," and were not provided to employees in the Controller's office but rather to an independent expert hired by the Controller's outside attorneys to examine and analyze the records. The outside auditor found that only a small number of the policies involved property potentially escheatable to the state, and the Controller decided to abandon the audit because the amount of escheatable property in Thrivent's possession was a miniscule percentage of its business in the state.

Counsel for the Controller and SCO informed Thrivent's outside counsel by letter that "as a result of information obtained through the course of litigation ... a letter will be forthcoming from the [SCO] notifying you that the SCO has been able to complete its examination of [Thrivent] for unclaimed property escheatable to the State of California ... for the examination period of January 1, 1992 to June 30, 2013." A letter to Thrivent from the SCO's chief of the Division of Audits followed, stating that "[a]s a result of the information obtained through the course of litigation," including but not limited to the electronic policy records, the SCO "has been able to conduct a satisfactory examination of Thrivent's unclaimed property escheatable to the State of California ... for the examination period of January 1, 1992 to *442June 30, 2013," that the letter would "serve as a full and final release" for that period, and that the Controller did not intend to initiate another audit of Thrivent for at least five years. Shortly thereafter, the trial court granted the Controller's motion for judgment on the pleadings on grounds of mootness, and entered judgment for the Controller.

Thrivent again appealed. Division Four of this court consolidated this appeal with Thrivent's earlier appeal from the denial of its request for a preliminary injunction. In an opinion filed on June 15, 2017, Division Four *30found the appeals moot, dismissed the first appeal, and remanded the second with instructions for the trial court to dismiss the action.2 (Thrivent Financial for Lutherans v. Yee (June 15, 2017, A142332 & A145900) [nonpub. opn.].)3

On February 24, 2016, Thrivent filed a complaint for abuse of process against the SCO, alleging that SCO employees "used or directed the use of," information obtained from Thrivent in discovery in the prior case "to 'conduct' and 'complete' the Thrivent audit that was the subject of the [prior case]," in willful disregard of the court order denying SCO a preliminary injunction and in violation of the protective order. Thrivent alleged that the Controller's "asserted use of Thrivent's discovery materials to conduct and complete her audit" violated the trial court's protective order and order denying the Controller's request for a preliminary injunction, as the Controller used the discovery process "not in support of her lawsuit to compel Thrivent to comply with her audit demands, but rather to conduct her audit while avoiding a final adjudication of the merits on whether her audit was constitutional." The abuse of process was alleged to have damaged Thrivent by "requiring it to expend employee time and incur legal fees in response to the defendants' unlawful and contumacious conduct," and to have violated the privacy rights of Thrivent and its members, causing noneconomic damages.

Based on the statements in the SCO's letters, and reiterated in a declaration submitted to the trial court, that "[a]s a result of the information obtained from Thrivent through the course of litigation ... the Controller has been able to conduct a satisfactory examination of Thrivent's unclaimed property escheatable to the State of California," Thrivent's complaint alleged that "notwithstanding the prohibitions of the Protective Order and its representations to the court, the SCO claims to have improperly used the Thrivent Discovery not for the purposes of the litigation but rather to conduct and complete the audit." Thrivent alleged that the SCO's representations that it would not use the discovery for any purpose other than the prior case "have *31been proven false," and "SCO employees abused the litigation and discovery *443

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Cite This Page — Counsel Stack

Bluebook (online)
242 Cal. Rptr. 3d 439, 31 Cal. App. 5th 26, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yee-v-superior-court-of-the-city-cnty-of-sf-calctapp5d-2019.