Judge: Anne Richardson, Case: 21SRCV13920, Date: 2023-09-29 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 21SRCV13920    Hearing Date: September 29, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Pleadings

Plaintiff/Cross-Defendant Randall L. Bort (hereafter, Plaintiff Bort) sues Defendants/Cross-Complainants KBS Holdco, LLC (KBS), Brian Kennedy (KBS’s owner), and Does 1-50 pursuant to claims of (1) Breach of Contract, (2) Promissory Estoppel, (3) Quantum Meruit, and (4) Account Stated.

The claims arise from allegations that KBS and Kennedy (hereafter, Defendants) entered into a written Agreement with Plaintiff Bort to employ his professional services to perform various tasks—including obtaining financing—for Defendants’ intended purchase of the remainder of a company named Regency Outdoor Advertising (Regency), with Plaintiff Bort to be paid a Retainer Fee of $50,000 or relevant Success Fee of $1,470,000 if the Regency Project was structured as an asset purchase. Plaintiff Bort alleges that his efforts helped the Defendants successfully purchase Regency on February 2, 2021 but that the Defendants breached the Agreement by only paying Plaintiff Bort a $10,000 downpayment and no other monies, causing Bort damages of $1,460,000.

In turn, Defendants KBS and Kennedy sue Plaintiff Bort and Roes 1-10 pursuant to a June 30, 2021 Cross-Complaint alleging claims of (1) Breach of Contract, (2) Rescission, (3) Unfair Competition, and (4) Declaratory Relief.

The claims in the cross-complaint arise from allegations that, among other things, Defendant Kennedy acquired Regency through use of his own funds and that Plaintiff Bort breached the Agreement by failing to secure the financing contemplated by the parties’ contract, for which reason a rescission of the Agreement is merited and Plaintiff Bort is not entitled to the $1,460,000 sought in the Complaint.

Motion Before the Court

Between August 14 and 16, 2023, Plaintiff Bort made motions to (1) compel the deposition and production of documents from KBS’s person most qualified (PMQ) relating to alter ego issues, (2) compel further responses from KBS relating to Plaintiff’s Special Interrogatories (SROGs), Set Two, Nos. 31-38, (3) compel further responses from KBS relating to Plaintiff’s Form Interrogatories (FROGs), Set Three, No. 17.1, and (4) compel further responses from KBS relating to Plaintiff’s Requests for Admission (RFAs), Set Three, Nos. 9-19.

On August 21, 2023, pursuant to an ex parte application by Plaintiff Bort, the Court consolidated the hearings on these four motions to September 29, 2023.

On September 15, 2023, Defendants KBS and Kennedy opposed Plaintiff’s four motions.

On September 21, 2023, Plaintiff replied to Defendants’ oppositions.

Plaintiff Bort’s motions are now before the Court.

Request for Judicial Notice

The Court DECLINES to take judicial notice of the motion to compel the deposition and production of documents from KBS’s PMQ because such notice is not necessary here. The motions to compel further discovery filed by Plaintiff Bort stand on their own and need not rely on notice of the PMQ motion. (See SROGs, FROGs, RFAs Motions (Mots.), RJN; see also Evid. Code, §§ 452, subds. (d), 453.)

Motion to Compel PMQ Deposition and Production

Legal Standard

If, [1] after service of a deposition notice, [2] a party to the action or an officer, director, managing agent, or employee of a party, or a person designated by an organization that is a party under Section 2025.230, [3] without having served a valid objection under Section 2025.410, [4] fails to appear for examination, or to proceed with it, or to produce for inspection any document, electronically stored information, or tangible thing described in the deposition notice, [5] the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice. (Code Civ. Proc., § 2025.450, subd. (a).)

If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent. (Code Civ. Proc., § 2025.230.)

The motion shall set forth specific facts showing good cause justifying the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice. (Code Civ. Proc., § 2025.450, subd. (b)(1).)

The motion shall also be accompanied by a meet and confer declaration under Section 2016.040, or, when the deponent fails to attend the deposition and produce the documents, electronically stored information, or things described in the deposition notice, by a declaration stating that the petitioner has contacted the deponent to inquire about the nonappearance. (Code Civ. Proc., § 2025.450, subd. (b)(2).)

If the proposed deponent made some response to the deposition notice, then a separate statement must accompany any motion to compel deposition attendance or production. (See Cal. Rules of Court, rule 3.1345, subd. (b).)

Order Compelling Deposition(s): GRANTED, in Part; DENIED, in Part.

Plaintiff Bort moves to compel the deposition of and production of documents from KBS’s PMQ relating to alter ego issues. The deposition notice includes 20 categories of examination and 17 requests for production of documents. (See PMQ Mot., Kneafsey Decl., Ex. 1.)

I. Code Civ. Proc., § 2025.230

Though not raised in the parties’ papers, the Court finds that the deposition notice describes with reasonable particularity the matters on which examination is requested. Indeed, the categories of examination and production requests are clear as to their plain language meaning and the timeframe applicable to the requests (where applicable). Accordingly, Plaintiff Bort meets the requirements of Code of Civil Procedure section 2025.230.

II. Code Civ. Proc., § 2025.450, subd. (a)

The PMQ deposition notice was served on KBS on June 26, 2023. (PMQ Mot., Kneafsey Decl., ¶ 3, Ex. 1, Proof of Service.) The deposition relates to a person to be designated by KBS to provide information and documents relating to alter ego issues. (PMQ Mot., Kneafsey Decl., Ex. 1.) KBS did not produce a PMQ for deposition. (PMQ Mot., Kneafsey Decl., ¶¶ 1-14, Exs. 1-2, 9-15.) KBS instead opposed the PMQ deposition. (PMQ Mot., Kneafsey Decl., ¶ 4, Ex. 2.) Thus, to have standing to compel the deposition of KBS’s PMQ on alter ego issues, Plaintiff Bort needs to show that no valid objection was served in response to the deposition notice. (Code Civ. Proc., § 2025.450, subd. (a).)

A. Categories and Production Requests Beyond the Scope of Discovery

After review, the Court determines that categories of examination Nos. 8, 18, and 20, and production requests Nos. 8 and 14 are not within the proper scope of discovery.

The Court does not find any reason to admit pattern and practice evidence cited by Plaintiff Bort (category and production request No. 8). Such evidence is not reasonably calculated to lead to admissible evidence of alter ego liability against Defendant Kennedy. It may be relevant to establish a practice and pattern by KBS and/or Kennedy in failing to pay persons with whom they contract. However, such character evidence is not relevant to alter ego liability.

Moreover, discovery related to KBS’s vendors and contracts (categories of examination Nos. 18 and 20, and production requests No. 14), while to some degree relevant, is oppressive and overbroad. The Court finds that sufficient discovery is being permitted as to alter ego liability, as discussed below in relation to KBS’s financial and other records. Identification and production related to KBS’s vendors and contracts is thus not necessary or proper here.

B. Categories and Production Requests Within the Scope of Discovery

As to the remaining categories of examination and production requests—categories of examination Nos. 1-7, 9-17, and 19, and production request Nos. 1-7, 9-13, and 15-17—the Court determines that they are discoverable.

First, these requests are not vague and are within the proper scope of discovery because they involve discovery that is reasonably calculated to lead to admissible evidence regarding alter ego liability against Defendant Kennedy.

To the extent that Defendants object to the categories of examination and production requests based on the attorney client privilege, the work product doctrine, or any other claim, privilege, or doctrine that would operate to shield responsive information from disclosure, the Court finds such objections unconvincing. For example, it is unclear and insufficiently explained by Defendants how identification of KBS’s office locations between September 2019 and the present, identification of KBS’s insurance policies, or KBS’s meeting minutes involve the attorney-client or work product privileges. No privilege log is before the Court. No other specific privileges were identified by Defendants in their June 29, 2023 objections. Moreover, the parties are subject to an October 28, 2021 protective order, which should allay concerns of disclosure of confidential, privileged, or other such information.

The Court thus finds that such objections lack merit.

The Court finds more merit in Defendants’ argument that there are privacy rights at issue in KBS’s financial and other information. A person has a right to prevent disclosure of information about personal finances, including information about bank accounts, assets, and debts. (See In re Ins. Installment Fee Cases (2012) 211 Cal.App.4th 1395, 1428 [information privacy in personal financial affairs]; Ameri-Med Corp. v. Worker’s Comp. Appeals Bd. (1996) 42 Cal.App.4th 1260, 1286-1287 [limited informational privacy in corporation’s financial information unrelated to the claims asserted].) However, even if the right to privacy held by KBS were fundamental to its ‘personal’ autonomy, and even if KBS’s right to privacy was not diminished by its nature (entity, not a person), there is a compelling need here for disclosure of this private information: evidence relevant to a determination of alter ego liability against Defendant Kennedy. (Williams v. Superior Court (2017) 3 Cal.5th 531, 552 [If the case involves an obvious invasion of a privacy interest that is fundamental to the holder’s personal autonomy, a compelling interest or need must be present to overcome the privacy interest].)

Insofar as the categories of examination and production requests involve the period of 2019 to the present, the Court finds that such time frame is not overbroad. Defendants’ Cross-Complaint alleges that Plaintiff Bort was hired by Defendants in or around September 2019. (Cross-Complaint, ¶ 10.) It thus makes sense for Plaintiff to seek discovery relating to alter ego liability that spans 2019 to the present.

To the extent that Defendants object to the alter ego discovery based on burden, the Court notes that the June 29, 2023 objections insufficiently elaborate on the reasons for undue burden on KBS.

These determinations undercut objections based on ambiguity, harassment, particularity, assumption of facts not established, and speculation, et al.

Plaintiff Bort thus has standing to compel the deposition of and production of documents from KBS’s PMQ.

C. Opposition Arguments

In their opposition, Defendants make three general arguments against granting of this motion: (1) overbreadth, undue burden, and scope of discovery disfavoring the requested discovery; (2) alter ego discovery being premature where such discovery could be effected after Plaintiff in fact secures a judgment in his favor in this action; and (3) Plaintiff’s inability to defeat KBS’s right to privacy. (PMQ Opp’n, pp. 6-10.)

Based on the foregoing discussion in Section II.B. above, the Court finds that the overbreadth, undue burden, and scope of discovery argument and the right to privacy argument raised by Defendants are unavailing as to categories of examination Nos. 1-7, 9-17, and 19, and production request Nos. 1-7, 9-13, and 15-17.

Moreover, the Court finds Defendants’ argument that alter ego discovery is premature unavailing. Short of a stipulation or court order bifurcating discovery, alter ego discovery is available before trial based on the broad scope of discovery. (Code Civ. Proc., § 2017.010.) Defendants do not cite any statutory or other authority to the contrary. In fact one of the very cases cited by Defendants to support their argument actually noted: “information as to the financial condition of a corporate defendant is admissible and discoverable before trial in an action involving an alter ego issue.” (Doak v. Superior Court for Los Angeles County (1968) 825, 835 fn. 8.) Moreover, policy considerations favor a pre-trial alter ego determination. Discovery as to alter ego liability only after a finding of alter ego at trial would be time consuming, potentially duplicative and expensive. Moreover, the results of the alter ego discovery may very well inform the rest of the parties’ discovery and preparation for trial.

III. Code Civ. Proc., § 2025.450, subd. (b)(1)

The Court adopts its discussion in Section II.B. above to determine that Plaintiff Bort shows good cause in support of production requests Nos. 1-7, 9-13, and 15-17, thus satisfying Code of Civil Procedure section 2025.450, subdivision (b)(1).

IV. Code Civ. Proc., § 2025.450, subd. (b)(2)

The Court notes that, after Defendants refused to present a PMQ for deposition and production of documents pursuant to their June 29, 2023 objections, Plaintiff contacted Defendants to inquire about the nonappearance and possible future deposition and production from KBS’s PMQ. (Mot., Kneafsey Decl., ¶¶ 3-4, 11, Exs. 1-2, 9-15.)

V. Separate Statement

The Court notes that Plaintiff’s motion satisfies California Rules of Court, rule 3.1345, subdivision (b), because, in response to Defendants’ objections to a deposition of and production from KBS’s PMQ, Plaintiff has attached a separate statement to his motion.

VI. Deposition Conclusion

Plaintiff Bort’s motion is GRANTED as to compelling (1) a deposition of a PMQ to be designated by KBS in relation to categories of examination Nos. 1-7, 9-17, and 19, and (2) production of documents from KBS’s PMQ relating to production request Nos. 1-7, 9-13, and 15-17.

Plaintiff Bort’s motion is DENIED as to compelling (1) a deposition of a PMQ to be designated by KBS in relation to categories of examination Nos. 8, 18, and 20 and (2) production of documents from KBS’s PMQ relating to production request Nos. 8 and 14.

Motion to Compel Further Discovery Responses

Legal Standard

A motion to compel a further response is used when a party gives unsatisfactory answers or makes untenable objections to interrogatories, demands to produce, or requests for admission. (See Code Civ. Proc., §§ 2030.300, subd. (a), 2031.310, subd. (a), 2033.290, subd. (a); Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 403 (Sinaiko) [interrogatories and demands to produce].)

To compel a further response to interrogatories, the movant can show that: (1) the responding party’s answer to a particular interrogatory is evasive or incomplete (Code Civ. Proc., § 2030.300, subd. (a)(1)); (2) the responding party’s exercise of the option to produce documents in response to an interrogatory was unwarranted or the required specification of those documents was inadequate (Code Civ. Proc., § 2030.300, subd. (a)(2)); and (3) the responding party’s objection to an interrogatory is without merit or too general (Code Civ. Proc., § 2030.300, subd. (a)(3); see, e.g., Williams v. Superior Court (2017) 3 Cal.5th 531, 550 (Williams) [defendant’s argument that plaintiff was required to establish good cause or prove merits of underlying claim before propounding interrogatories without merit]).

To compel a further response to requests for admission, the movant must establish that (1) the response to an RFA is evasive or incomplete (Code Civ. Proc., § 2033.290, subd. (a)(1)) or (2) the objection to an RFA is without merit or too general (Code Civ. Proc., § 2033.290, subd. (a)(2)).

Order Compelling Further Discovery Responses: GRANTED, in Part; DENIED, in Part.

Plaintiff Bort moves to compel further responses from KBS relating to (1) Plaintiff’s SROGs, Set Two, Nos. 31-38, (2) Plaintiff’s FROGs, Set Three, No. 17.1, and (3) Plaintiff’s RFAs, Set Three, Nos. 9-19. (See SROGs Mot., Kneafsey Decl., Ex. 1; FROGs Mot., Kneafsey Decl., Ex. 1; RFAs Mot., Kneafsey Decl., Ex. 1.)

KBS provided only objections to these discovery requests. (See SROGs Mot., Kneafsey Decl., Ex. 2; FROGs Mot., Kneafsey Decl., Ex. 2; RFAs Mot., Kneafsey Decl., Ex. 2.)

The Court notes that the parties’ papers in relation to compelling further discovery mirror the PMQ papers for the obvious reason that the sought-after discovery all relates to alter ego liability. (Compare PMQ Opp’n, pp. 6-10, with SROGs Opp’n, pp. 4-8, FROGs Opp’n, pp. 4-8, RFAs Opp’n, pp. 4-8 [Defendants making identical arguments in favor of denying discovery into alter ego liability against Defendant Kennedy through PMQ deposition and further interrogatory and admission responses from KBS].)

As such, the Court adopts its above reasoning to rule as follows:

(1) Plaintiff’s motion to compel further responses to SROGs, Set Two, is GRANTED as to SROGs, Set Two, Nos. 31-37 (see PMQ discussion supra at Section II.B.);

(2) Plaintiff’s motion to compel further responses to SROGs, Set Two, is DENIED as to SROGs, Set Two, No. 38 (see PMQ discussion supra at Section II.A. re: pattern and practice);

(3) Plaintiff’s motion to compel further responses to FROGs, Set Three, is GRANTED as to FROGs, Set Three, No. 17.1 (see PMQ discussion supra at Section II.B.); and

(4) Plaintiff’s motion to compel further responses to RFAs, Set Three, is GRANTED as to RFAs, Set Three, Nos. 9-19 (see PMQ discussion supra at Section II.B.).

Conclusion

I.

Plaintiff/Cross Defendant Randall L. Bort’s Motion to Compel Deposition of Person Most Qualified to Testify on Behalf of Defendant KBS Holdco, LLC on Alter Ego Issues and Production of Documents is GRANTED, in Part, and DENIED, in Part, as follows:

(1) GRANTED as to compelling (a) a deposition of a PMQ to be designated by KBS in relation to categories of examination Nos. 1-7, 9-17, and 19, and (b) production of documents from KBS’s PMQ relating to production request Nos. 1-7, 9-13, and 15-17; and

(2) DENIED as to compelling (a) a deposition of a PMQ to be designated by KBS in relation to categories of examination Nos. 8, 18, and 20 and (b) production of documents from KBS’s PMQ relating to production request Nos. 8 and 14.

Production SHALL be made at the time of deposition.

Moreover, production SHALL be made pursuant to the protections specified in the parties’ October 28, 2021 protective order.

If Defendant/Cross-Complainant KBS Holdco, LLC raises any privilege against discovery, it SHALL provide a privilege log complying with Hernandez v. Superior Court (2003) 112 Cal.App.4th 285.

II.

Plaintiff/Cross Defendant Randall L. Bort’s Motion to Compel Further Responses to Special Interrogatories, Set Two is GRANTED, in Part, and DENIED, in Part, as follows:

(1) GRANTED as to SROGs, Set Two, Nos. 31-37; and

(2) DENIED as to SROGs, Set Two, No. 38.

Defendant/Cross Complainant KBS Holdco, LLC is ORDERED to serve Plaintiff/Cross-Defendant Randall L. Bort with further responses to SROGs, Set Two, Nos. 31-37, within 10 days of this ruling, i.e., by Monday, October 9, 2023.

Further responses SHALL be made pursuant to the protections specified in the parties’ October 28, 2021 protective order.

If Defendant/Cross-Complainant KBS Holdco, LLC raises any privilege against discovery, it SHALL provide a privilege log complying with Hernandez v. Superior Court (2003) 112 Cal.App.4th 285.

III.

Plaintiff/Cross Defendant Randall L. Bort’s Motion to Compel Further Responses to Form Interrogatories, Set Three is GRANTED as to compelling further responses to FROGs, Set Three, No. 17.1.

Defendant/Cross Complainant KBS Holdco, LLC is ORDERED to serve Plaintiff/Cross-Defendant Randall L. Bort with further responses to FROGs, Set Three, No. 17.1, within 10 days of this ruling, i.e., by Monday, October 9, 2023.

Further responses SHALL be made pursuant to the protections specified in the parties’ October 28, 2021 protective order.

If Defendant/Cross-Complainant KBS Holdco, LLC raises any privilege against discovery, it SHALL provide a privilege log complying with Hernandez v. Superior Court (2003) 112 Cal.App.4th 285.

IV.

Plaintiff/Cross Defendant Randall L. Bort’s Motion to Compel Further Responses to Requests for Admission, Set Three is GRANTED as to compelling further responses to RFAs, Set Three, Nos. 9-19.

Defendant/Cross Complainant KBS Holdco, LLC is ORDERED to serve Plaintiff/Cross-Defendant Randall L. Bort with further responses to RFAs, Set Three, Nos. 9-19, within 10 days of this ruling, i.e., by Monday, October 9, 2023.

Further responses SHALL be made pursuant to the protections specified in the parties’ October 28, 2021 protective order.

If Defendant/Cross-Complainant KBS Holdco, LLC raises any privilege against discovery, it SHALL provide a privilege log complying with Hernandez v. Superior Court (2003) 112 Cal.App.4th 285.

Plaintiff/Cross Defendant Randall L. Bort and Defendant/Cross-Complainant KBS Holdco, LLC are ORDERED to meet and confer regarding a deposition date for the taking of a deposition of and production of documents by KBS’s PMQ. If the parties cannot agree on a date by the time of oral argument in this matter, the Court will hear the proposals from both sides and set a date at that time.