By Tom Hagy

Few government operations have dodged the budget cuts being implemented across the country.  The courts are no exception.  Those handling construction defect litigation and other complex cases in Southern California offer a disturbing illustration of how these cuts are having real-life, day-to-day impact on how the courts are able to handle disputes.

Hon. Nancy Wieben Stock of Orange County, who at one time headed up the presiding judges of the state, and Hon. Keith D. Davis of San Bernardino, former president of the California Judges Association, provided an update on the California judiciary at HB’s Construction Litigation & Risk Conference held March 14-15 in Los Angeles.

“It’s an extraordinary event,” Judge Stock said, “when the chief justice . . . goes to the legislature and delivers a state of the court address that talks about the Third Branch of Government possibly going over the fiscal cliff and into the Pacific Ocean never to be seen again  . . . Quite simply, the defunding of the California Judiciary has been extraordinary.  Never before in history have we seen these kinds of cuts.  These are permanent budget cuts, well over $500 million.  And in the upcoming fiscal year it is likely that it will bring every trial court in the state to its knees.”

“Remember that just one percent of the state General Fund actually goes to fund the entire Third Branch of Government, and so we’re not talking about big money here.  Some persons might call it ‘budget dust.’  But the fact of the matter is that the funding cuts have been so draconian that little by little you’re starting to hear about entire case types no longer being heard.  Small claims — not being heard in San Joaquin County.  The entire law and motion calendar for the entire City and County of San Francisco — one judge.  Los Angeles — shuttering courthouses right and left with a few other courts not far behind.”

Judge Stock said both Orange County and San Bernardino County, under conservative leadership,  been “extremely fiscally responsible.”  Nevertheless, she said, “our generous $50 million reserve will disappear this year as a matter of law and every court in the state will drop to a meager one percent reserve rate, which is something that should cause everybody to shudder in the room.”

Judge Stock said that, despite the challenges, the court has looked pretty good “out in front of the curtain,” but “that’s going to come to a screeching halt when we have to spend down our reserves like other governmental agencies.”

Likening himself to the second speaker at a funeral, Judge Davis of San Bernardino said his court’s resources were bad before the cuts and after the start of the recession.  But he and others in the courts and other parts of government came to the realization that “talking was getting us nowhere.”  “We have always had a can-do attitude,” he said.  “We know the work has to get done and there is nobody else behind us to do it. So we simply have to.”  To illustrate the challenge, he said the county used to have 16 court locations for a county that has two million people living on 20,000 square miles.  Today, the county has just five locations “with more closures on the way.”  There are 900 staff in all of those locations “when the state concedes we should have 1,500.”  He said they have 91 funded judge positions, but only 75 judges, while the state estimates they should have 156.  “We get cases heard.  We get trials done.  But I am here to tell you, like the canary in the coal mine,” Judge Davis said, “that the air is getting bad and a lot of us are getting tired.”

Is there any cause for hope?  The challenges have made the courts look long at hard at finding efficiencies, an exercise that will “serve all of us in the trial courts well as the years go by,” Judge Davis said.  Judge Stock pointed to innovative ideas from the construction defect industry bar to handle complex cases, naming progress with CMOs, pre-litigation procedures and even “statutory innovations.”

“We have seized control of the program and handled in an effective way in the courthouse,” she said.

The judges presented their remarks in the hope of informing and inspiring the attorneys and others at the conference to go out and spread the word about the real impact the cuts are having on the state’s court system.   The conference was chaired by Richard Glucksman of Chapman, Glucksman, Dean, Roeb & Barger, Kenneth Kasdan of Kasdan Simonds Weber & Vaughan, William Mayer, VP & General Counsel-West Region, D.R. Horton, and Tom Brown, AVP-Construction Defect Claims, ACE North American Claims.  Write to HB if you would like to receive notices of upcoming programs on construction defect litigation.

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