SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
DEPARTMENT 302
THE HONORABLE PATRICIA R. WAINWRIGHT, PRESIDING
Date: December 16, 2022
Department: 302 Judge: Hon. Patricia R. Wainwright
I. INTRODUCTION
This Joint Status Report is submitted by plaintiff Estuary Foundation ("EF") and defendant The Whitfield-Garner Family Trust ("WGFT") (collectively, the "Parties"), through their respective counsel of record, pursuant to the Stipulation and Order Staying All Proceedings entered by this Court on September 16, 2022 (the "Stay Order"). The Stay Order provides that the Parties shall file joint status reports at approximately ninety (90) day intervals, commencing from the date of the Stay Order, with the first such report due on or about December 16, 2022. This is the Parties' first Joint Status Report filed pursuant to that requirement.
Plaintiff Estuary Foundation is represented in this matter by the law firm of Calderwood & Harkness LLP, with Douglas Carmichael serving as Responsible Partner. Calderwood & Harkness LLP maintains its offices at One Market Plaza, Suite 3600, San Francisco, California 94105, telephone (415) 555-7200, facsimile (415) 555-7201.
Defendant The Whitfield-Garner Family Trust is represented in this matter by the law firm of Pratchett, Huang & Solano LLP, with Victoria Huang serving as Lead Partner. Pratchett, Huang & Solano LLP maintains its offices at 555 California Street, 28th Floor, San Francisco, California 94104, telephone (415) 555-3400, facsimile (415) 555-3401.
The Parties respectfully submit this Joint Status Report to apprise the Court of the current status of settlement discussions, to confirm the Parties' ongoing compliance with preservation obligations, and to jointly request a continuation of the stay of all proceedings for an additional period of approximately ninety (90) days through approximately March 16, 2023. A proposed order continuing the stay is attached hereto as Exhibit A.
II. PROCEDURAL BACKGROUND
To assist the Court in evaluating the current posture of this case, the Parties provide the following summary of the relevant procedural history:
1. On April 25, 2022, Plaintiff Estuary Foundation filed a Complaint for Declaratory Relief in this action, seeking a judicial declaration that EF may lawfully redirect approximately Four Million Seven Hundred Thousand Dollars ($4,700,000) in restricted grant funds originally designated for the Bay Area Teacher Residency Initiative ("BATRI") to EF's broader educational mission, without violating the terms of the Gift Instrument and Grant Agreement between WGFT and EF dated June 15, 2018 (the "Grant Agreement"). The BATRI program has ceased operations, and EF contends that the restricted funds may be redeployed in a manner consistent with the charitable purposes underlying the original gift.
2. On June 10, 2022, WGFT filed its Answer to the Complaint and simultaneously filed a Cross-Complaint against EF. WGFT's Cross-Complaint seeks restitution of One Million Seven Hundred Thousand Dollars ($1,700,000) in grant funds that WGFT alleges were improperly expended or committed by EF in connection with the BATRI program, together with prejudgment interest at the rate of seven percent (7%) per annum from April 28, 2022, the date on which WGFT contends EF first communicated its intention to redirect the restricted funds.
3. On July 22, 2022, EF filed its Answer to WGFT's Cross-Complaint, denying all material allegations and asserting various affirmative defenses.
4. On August 15, 2022, the Court held an Initial Case Management Conference. At that conference, the Honorable Patricia R. Wainwright suggested that the Parties explore mediation as a means of resolving this dispute prior to engaging in extensive and potentially costly discovery and motion practice. The Court noted the nature of the dispute—involving charitable funds and the relationship between a nonprofit foundation and a significant donor trust—and encouraged the Parties to pursue a resolution that would serve the interests of the intended charitable beneficiaries.
5. On September 2, 2022, the Parties attended a private mediation session before the Honorable Oscar Pelletreau (Ret.) at Bayshore Mediation Services, located at 201 Mission Street, Suite 900, San Francisco, California 94105. The mediation was conducted over the course of a full day. While the mediation did not result in a settlement of the dispute, the Parties made meaningful progress in identifying the core issues in contention and in understanding each other's respective positions. At the conclusion of the mediation session, the Parties agreed to continue their settlement discussions on an informal basis and further agreed to seek a stay of the litigation in order to facilitate those ongoing discussions without the pressure and expense of concurrent discovery and motion practice.
6. On September 16, 2022, the Court entered the Stipulation and Order Staying All Proceedings. The Stay Order provides, among other things, that: (a) all deadlines, discovery, and motion practice in this action are stayed pending further order of the Court; (b) the Parties shall file joint status reports at approximately ninety (90) day intervals to keep the Court informed of the progress of settlement discussions; (c) all applicable limitation periods and deadlines are tolled during the pendency of the stay; and (d) the stay is without prejudice to any party's claims, defenses, or rights.
III. STATUS OF SETTLEMENT DISCUSSIONS
Since the entry of the Stay Order on September 16, 2022, the Parties have engaged in ongoing, informal settlement discussions aimed at achieving a consensual resolution of this matter. Counsel for the Parties have communicated by telephone and email on multiple occasions during the ninety-day period covered by this report. In addition, the Parties have exchanged written correspondence outlining their respective settlement positions and have provided each other with certain background information relevant to the issues in dispute.
Specifically, the Parties have exchanged preliminary settlement positions and have explored several potential frameworks for resolution of the dispute. These frameworks have included, among other things: (a) the possible partial reallocation of restricted funds to alternative educational programs that may be consistent with the original charitable intent of the Grant Agreement; (b) structured reporting and oversight requirements that would provide WGFT with enhanced visibility into the use of redirected funds; (c) potential modifications to the governance and accountability mechanisms applicable to any reallocated grant funds; and (d) other accommodations designed to address the Parties' respective interests and concerns.
While the Parties have made meaningful progress in identifying the principal areas of agreement and disagreement, and while the settlement discussions have been conducted in a spirit of good faith and mutual cooperation, the Parties have not yet reached a resolution of the matter. Certain substantive issues remain to be addressed, and the Parties believe that additional time for continued discussions is warranted.
Both Parties remain committed to continuing good-faith settlement discussions. Both Parties further believe that the continuation of the stay is in the interest of judicial economy and the efficient resolution of this dispute. The Parties are optimistic that continued dialogue may lead to a resolution that serves the interests of all stakeholders, including the charitable beneficiaries of the funds at issue, without the need for protracted litigation.
IV. STATUS OF PRESERVATION OBLIGATIONS
Both Parties confirm that they continue to comply with all document preservation obligations arising from this litigation, including obligations imposed by statute, court order, and applicable rules of professional conduct. Each Party has maintained in effect the litigation hold notices issued at the commencement of this action and has taken reasonable and appropriate steps to ensure the continued preservation of all potentially relevant documents, electronically stored information, and tangible things.
No issues regarding spoliation, destruction, alteration, or loss of potentially relevant evidence have arisen during the stay period. Neither Party has identified any concerns regarding the other Party's compliance with its preservation obligations. The Parties do not anticipate any preservation-related issues arising during the continued stay period, but each Party reserves its rights to raise any such issues if circumstances change.
V. REQUEST TO CONTINUE STAY
Based upon the foregoing, the Parties jointly and respectfully request that the Court continue the stay of all proceedings in this action for an additional period of approximately ninety (90) days, through approximately March 16, 2023. The Parties believe that this additional period will provide sufficient time for the Parties to continue their settlement discussions and, with reasonable diligence, to determine whether a consensual resolution of this matter can be achieved.
The Parties will file their next Joint Status Report on or about March 17, 2023, or at such earlier date as the Parties reach a resolution of the dispute or determine that further settlement discussions would not be productive. The Parties are mindful of the Court's interest in the efficient management of its docket and will endeavor to keep the Court apprised of any material developments in the settlement discussions on a timely basis.
In the event a resolution is reached prior to the next scheduled status report, the Parties will promptly notify the Court and submit appropriate filings, including any stipulation for dismissal, consent judgment, or other documents necessary to effectuate the settlement and conclude this action.
In the event either Party determines that further settlement discussions are not productive and wishes to reactivate the litigation, that Party shall provide at least fourteen (14) calendar days' written notice to opposing counsel before filing any motion to lift the stay or otherwise seeking to resume active proceedings. This notice requirement is intended to provide both Parties with a reasonable opportunity to prepare for the resumption of litigation and to allow the Court to manage any resulting scheduling needs in an orderly fashion.
VI. CONFIRMATION THAT ALL RIGHTS ARE PRESERVED
Consistent with the terms of the Stay Order, the Parties confirm that the stay of proceedings is without prejudice to any Party's claims, defenses, or rights in this action. Without limitation, the following rights and claims are expressly preserved:
(a) All claims asserted in EF's Complaint for Declaratory Relief, including EF's claim for a judicial declaration regarding its authority to redirect restricted grant funds from the BATRI program to EF's broader educational mission;
(b) All claims asserted in WGFT's Cross-Complaint, including WGFT's claims for restitution of grant funds and prejudgment interest;
(c) All defenses and affirmative defenses asserted by either Party in their respective Answers;
(d) All rights of either Party to conduct discovery, file motions, and otherwise prosecute or defend this action upon the lifting of the stay; and
(e) All other rights, remedies, and defenses available to either Party under applicable law.
All applicable limitation periods, statutes of repose, and procedural deadlines continue to be tolled during the pendency of the stay, as expressly provided in the Stay Order entered by this Court on September 16, 2022. Neither the filing of this Joint Status Report nor the Parties' participation in settlement discussions shall be construed as a waiver of any claim, defense, or right.
VII. PROPOSED ORDER
A proposed order continuing the stay of all proceedings for an additional period of approximately ninety (90) days is submitted herewith as Exhibit A for the Court's consideration and approval. The proposed order provides that: (a) the Stipulation and Order Staying All Proceedings entered September 16, 2022, shall remain in full force and effect; (b) all proceedings, including discovery, motion practice, and all deadlines, shall continue to be stayed pending further order of the Court; (c) the Parties shall file their next Joint Status Report on or about March 17, 2023; (d) all applicable limitation periods and deadlines shall continue to be tolled during the pendency of the stay; and (e) all Parties' claims, defenses, and rights are preserved without prejudice.
The Parties respectfully request that the Court sign and enter the proposed order at its earliest convenience.
RESPECTFULLY SUBMITTED
December 16, 2022
FOR PLAINTIFF ESTUARY FOUNDATION:
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael Responsible Partner
One Market Plaza, Suite 3600 San Francisco, California 94105 Telephone: (415) 555-7200 Facsimile: (415) 555-7201
Attorneys for Plaintiff ESTUARY FOUNDATION
FOR DEFENDANT THE WHITFIELD-GARNER FAMILY TRUST:
PRATCHETT, HUANG & SOLANO LLP
By: ________
Victoria Huang Lead Partner
555 California Street, 28th Floor San Francisco, California 94104 Telephone: (415) 555-3400 Facsimile: (415) 555-3401
Attorneys for Defendant THE WHITFIELD-GARNER FAMILY TRUST
EXHIBIT A
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
DEPARTMENT 302
THE HONORABLE PATRICIA R. WAINWRIGHT, PRESIDING
The Court, having reviewed the Joint Status Report filed by the Parties on December 16, 2022, and the record in this action, and good cause appearing therefor, hereby ORDERS as follows:
1. The Stipulation and Order Staying All Proceedings entered by this Court on September 16, 2022, shall remain in full force and effect in all respects.
2. All proceedings in this action, including but not limited to all discovery, motion practice, and all deadlines previously set or otherwise applicable, shall continue to be stayed pending further order of this Court.
3. The Parties shall file their next Joint Status Report on or about March 17, 2023, advising the Court of the status of settlement discussions and any other matters relevant to the continued management of this case.
4. All applicable limitation periods, statutes of repose, and procedural deadlines shall continue to be tolled during the pendency of the stay, consistent with the terms of the September 16, 2022 Stay Order.
5. All claims, defenses, and rights of all Parties are preserved without prejudice during the pendency of the stay, including but not limited to the claims asserted in Plaintiff's Complaint for Declaratory Relief and Defendant's Cross-Complaint for restitution and interest.
IT IS SO ORDERED.
Dated: ___
________________________________________
THE HONORABLE PATRICIA R. WAINWRIGHT Judge of the Superior Court Department 302 County of San Francisco
| ESTUARY FOUNDATION, a California nonprofit public benefit corporation, | Case No. CGC-22-599481 |
| Plaintiff, | JOINT STATUS REPORT PURSUANT TO |
STIPULATION AND ORDER STAYING
v.
SEPTEMBER 16, 2022
THE WHITFIELD-GARNER FAMILY TRUST, a California irrevocable trust,
Defendant.
| ESTUARY FOUNDATION, a California nonprofit public benefit corporation, | Case No. CGC-22-599481 |
| Plaintiff, | [PROPOSED] ORDER CONTINUING |
STAY OF ALL PROCEEDINGS
v.
THE WHITFIELD-GARNER FAMILY TRUST, a California irrevocable trust,
Defendant.