A Guide to Lawsuits for California Childcare Providers

General litigation guide for California childcare providers

A Quick Note Before We Start

I hope you never need this guide. There is no sugarcoating it—litigation is stressful, expensive, consequential, and can last years. Even being on offense—as the plaintiff, suing someone—is stressful, expensive, and timeconsuming. I’ve written this guide as a general resource to help childcare providers in the unfortunate event they get sued. I am an attorney licensed to practice law in California, and this guide does contain insight and information into what childcare providers should do if they receive a lawsuit. However, nothing in this guide is “legal advice” for any specific person or entity, and providing this guide to you does not create any “attorney-client relationship” between the author and anyone reading this guide. If you’d like to get in touch, whether about something in this guide or for potential assistance with your own matter, please feel free to email me directly at howard@californiachildcarelicensing.com.

Introduction

I’m a lawyer and preschool owner

Hi, I’m Howard Wu. In 2010, I graduated cum laude from the University of Pennsylvania Law School in Philadelphia, Pennsylvania. That same year, I met my future wife, Bridget. When we met, Bridget was working as a preschool teacher, and I saw immediately that she possessed incredible knowledge and passion for early childhood education. After graduation, Bridget and I moved together to San Diego, where I began working as a civil litigation attorney at Latham & Watkins, one of the world’s largest law firms. Bridget spent just over a year teaching at a preschool in San Diego. Then in 2012, we opened Aspen Leaf Preschool together. In 2016, we opened our second location. In 2020, we opened our third and fourth locations. During the time we’ve owned Aspen Leaf, I continued to work full-time as a litigation attorney, while also handling administrative and legal matters for the preschools, such as negotiating leases, handling payroll and insurance, and dealing with licensing.

Lawsuits – An Overview

The stages of a lawsuit

Here is a brief overview of the general stages of a lawsuit:

The complaint. Every lawsuit begins with a “complaint.” The complaint is a document filed with the court that explains what law has been violated and what the plaintiff (the one who filed the lawsuit) wants to receive as a result. This might be a single page form with some boxes checked (common in auto accident cases, for example), or it might be many pages that go into detail about precisely what allegedly occurred, how the plaintiff was damaged, why the defendants are liable, and what the plaintiff wants as a result.
Service of process. Once a plaintiff has filed the complaint, it is the plaintiff’s job to have the papers “served” on the defendants (the people or businesses the plaintiff has sued). Until a defendant has

been properly served, the defendant has no obligation to respond or do anything in connection with the lawsuit. Under the law, nobody connected to the case can serve the papers, so the plaintiff or the plaintiff’s lawyer will typically hire a professional “process server” to find the defendant and serve them the court papers in person.

Responsive pleading. Once a defendant has been served, that defendant will have a certain number of days to file a response with the court. The most common response is an “answer,” which typically just denies the plaintiff’s allegations. A defendant can also file a “demurrer,” which not only denies the plaintiff’s allegations but also asks the court to dismiss the case before it can even begin. At this point, some defendants may also decide to file “counterclaims” (they sue the plaintiff back), or “cross-claims” (they sue another defendant).
Discovery. The next stage of the lawsuit is the “discovery” phase, which can take months and even years. During discovery, each side works to get information and documents from each other and from witnesses, through various written requests and depositions (recorded interviews with parties or witnesses).
Dispositive motions. Once the discovery phase is complete, parties may file a “motion for summary judgment.” Basically, a motion for summary judgment says to the court, “The other side now has all the evidence it can find, and they do not have enough evidence to prove their case. For that reason, the court should dismiss the case now.” (Or if the motion is filed by the plaintiff, it will say the undisputed evidence is enough for the court to decide now that the plaintiff should win.)
Trial. The next stage would be the trial. Depending on various factors, there might be a jury, or the judge might be the one to hear all the evidence and decide the case.
Appeals. Following the trial, any party can appeal some or all of the results. The appeal goes to a higher-level court of appeals. In short, an appeal argues that the judge or jury got some important thing wrong and thus something should be reversed or undone.

Settlement or dismissal

At any point during a lawsuit (even before it’s filed, or literally in the middle of the trial), the parties can decide to “settle.” This can mean anything—one party pays the other, or the parties simply decide to walk away—but a settlement typically includes a settlement agreement in which the parties agree, in writing, that this settlement fully and forever resolves all the disputes involved in the lawsuit and that the lawsuit will be dismissed (or never filed). A plaintiff can also decide at any point to simply give up and dismiss the lawsuit. This happens more often that one would expect. Lawyers are expensive, and for many reasons, plaintiffs sometimes decide that they do not want to (or simply cannot) continue with the lawsuit.

Liability Insurance

Have it!

Childcare centers are required to have commercial general liability insurance. Family childcare homes are not required to, but absolutely should. I cannot emphasize this enough—no matter what kind of childcare business you own, you should have liability insurance for it.

“Tender” a lawsuit to your insurer immediately

Liability insurance is meant to protect you from the cost of lawsuits. However, this protection does not kick in automatically. It is your responsibility to “tender” the lawsuit to your insurer. This can be very easy— look at your policy and there will likely be an email address or website you can use to send in your claim. Do this right away. If you wait too long to tender the lawsuit (deep into a lawsuit), the insurance company can properly deny you coverage. Anyway, it is better to have the insurer pay for your attorney than to pay an attorney yourself. Feel free to ask your insurance broker for the insurer’s contact information, but it is important to know that sending the lawsuit to your insurance broker does not count as a proper “tender” to the insurance company. Thus, make sure you send the lawsuit to the actual insurance company yourself.

The insurer’s duty to defend

A short time after you tender the lawsuit to your insurer, they should send you a letter explaining whether the insurer will be providing your defense. This letter will include a lot of scary language about how the insurer is reserving all of its rights and may deny you coverage in the future. That’s normal. The important thing to look for is whether the insurer will be providing you with a lawyer now. If the insurer is providing you with a lawyer, that’s good. Insurance companies all have law firms they work with, and you will be assigned a lawyer from one of these firms. That lawyer will be in touch with you directly, and going forward, you will be the lawyer’s client. Even though the insurance company is paying the bills, California law is clear and strict that a lawyer’s duty is to his or her client, and in instances like this, you are the client. If the insurer says it has no “duty to defend” and will not be providing you a lawyer, I recommend that you find a lawyer who does “policyholder insurance coverage” or “bad faith insurance” work. These lawyers work to force insurance companies to defend their policyholders. This lawyer may or may not also be able to defend you in the lawsuit while they work to get your insurance company to defend you. Ask.

The insurer’s duty to indemnify

Under California law, an insurer’s duty to defend is broader than its duty to indemnify. This means that an insurance company that pays for its client’s defense may be able to refuse to pay the final judgment. Why? Because insurance policies always exclude certain things, but it may not be clear at the start of a lawsuit

whether the exclusion applies. When someone is sued, there is a chance that person was not at fault, and so the insurance company should properly defend their client who may have been wrongfully accused. But once there is a judgment, the insurance company will have all the facts and legal rulings and will be able to make a concrete determination about whether the underlying actions are covered by their policy.

Settlements and policy limits

Lawyers and litigation are expensive and time-consuming, and the lawyers often end up costing more than the amount the sides are fighting over. There is a cold calculus the insurance company and the attorneys on every side will be doing through every stage of litigation—how much will it cost to continue, how much is our side likely to earn, who is paying, and what would it cost to settle now? Your insurance company may be willing to setting the case on your behalf if they see they can do so early, for an amount that is less than they would end up spending on your lawyer. The plaintiff’s attorneys will look at your insurance policy limits and aim to settle for an amount at or below that limit that their client will accept. It is important to understand that you are the client, and the insurance company cannot dictate what you or your attorney does. However, if your insurance company is willing to pay some amount to settle the lawsuit and you decline, you might end up being liable to the insurance company as well as the other side if you end up losing. So if your insurance company is willing to pay to settle your case, it is almost always the best course to let them.

What To Do First If You’Re Sued

“Tender” the lawsuit to your insurer See above. If you have liability insurance (for the business or for yourself), tender the lawsuit immediately to your insurance company. If you have insurance but are not sure if it is liability insurance, tender the lawsuit to your insurance company to preserve your rights and to put the onus on them to deny you coverage.

Request an extension from the plaintiff’s lawyer

Once you are served with the complaint and other court papers, you will have a deadline to file your response with the court. However, the other side can agree to extend this deadline. If you are served with a lawsuit, I recommend you email the plaintiff’s lawyer (their contact information should be at the top of the complaint or other documents) and say, “I have been served with this lawsuit filed by your office. I am in the process of reaching out to my insurance company and finding an attorney. In the meantime, will you agree to a 60-day extension of the deadline for my responsive pleading, to give me time to get myself a lawyer and to get them up to speed?” There may be some haggling over the number of days the plaintiff’s lawyer will agree to, but they will almost certainly agree to some extension, and they will be happy to hear that you have insurance. Get their agreement in writing (email works).

Get a lawyer

If you have liability insurance, your insurance company will retain a lawyer on your behalf and that lawyer will reach out to you directly. If the insurance company seems to be taking too much time to tell you whether they will provide you with a lawyer, or if you do not have insurance at all, you should find a lawyer on your own. If you have insurance, the insurance company may end up paying for the attorney you’ve found, or you may be required to change lawyers, but it will be worthwhile to speak with lawyers about your case. Perhaps you already have or know an attorney, but if not, you will likely want a local civil litigation attorney. (“Local” because every court has its own set of local rules, and it is worthwhile to have someone familiar with those rules and procedures. Plus, lawyers charge for travel.) Ask friends, family, or your customers for recommendations for a good civil litigation lawyer. Your local county bar association will have a lawyer referral service (and that service may be available in languages other than English). Just search online for “[your county] bar association lawyer referral service” and it should be among the top results. Normally with these services you will call, describe your case, and then the association will send you referrals for attorneys who handle your type of case.

Working With Your Attorney

Once you have an attorney retained to represent you, he or she should not only do the work to defend you in court, but also guide you through the process—regularly explaining what is happening, what decisions you have to make, and what is coming next. However, you are the one being sued, and you should not assume that your defense is on autopilot now that you have an attorney on the case. Here are things you can and should do as the client, to help your attorney defend you as best as possible, and to protect your own rights: 

Cooperate with and respond to your attorney. Your attorney will require information, documents, and decisions from you throughout every stage of the process. Stay engaged, cooperate, respond quickly, and provide them with everything they need.

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Be honest and open. Your relationship with your attorney will be covered by the attorney-client privilege, which means everything you and your attorney share or discuss will be protected and confidential. Be honest and open with your attorney, even about the things that you’re afraid will make your case weaker. Your attorney needs to have a full view into “your side” so he or she can give you the best possible advice.

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Do not talk about the case with others. Your communications with your attorney are protected by attorney-client privilege, but sharing these with others can break the privilege. As a general rule, your attorney should be the only one you talk to about the details of your case. If there are others you want to discuss the case with (a partner or spouse, employees), talk it over with your attorney first.

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Schedule regular status meetings. Schedule regular meetings with your legal team so they can walk you through the status the case and what is on the horizon.

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Ask questions. There are a lot of rules, procedures, deadlines, filings, and jargon in litigation. Do not be afraid to ask questions, even they seem basic. If your attorney says he’s “received a notice of deposition,” feel free to ask, “What is a deposition?” or “What is notice?“

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Keep your own calendar of events and deadlines. Keep track of events (depositions, hearings, etc.) and deadlines on your own. You would be shocked at the number of times an attorney simply misses a deadline or important date. If your attorney isn’t already communicating with you about something coming up, check in a week or month ahead of time to ask, “I see on my calendar that __ is coming up on [DATE]. Are we prepared for that? What do you need from me?”

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Talk to junior lawyers. There may be one or more “associates” (junior attorneys) working on your case. These young attorneys are the engine running your defense machine. They will have all the detailed knowledge of your case and will be the ones handling the work day-to-day. See them as an asset, get to know them, and reach out to them first when you have questions or ideas.

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Change lawyers if you have to. You need to be comfortable with and confident in your legal representation. If you lose faith in your attorney, or if the relationship breaks down, ask your attorney about the process of changing lawyers. If your insurer is paying for the defense, reach out to them. Do not feel you are “stuck” with the lawyer you started with—at the end of the day, the lawsuit is against you, and you need to make sure your rights are protected and your case is defended as best as it can be.

Contact Me With Questions Or Feedback

To end, I want to thank you for the vital service you provide to California’s children and families. I know firsthand that you are undoubtedly underpaid and underappreciated, and being sued can feel like the final gut punch. Whether or not you ever have to use this guide—and I hope you don’t—I hope you find it useful. If you have purchased a future consultation with me and would like to schedule the call, please reach out directly to me at howard@californiachildcarelicensing.com. If you have not purchased a consultation but have questions or feedback, or if you’d like to purchase a consultation, please feel free to reach out.

Sincerely,

Howard Wu, Esq.