Judge: Anne Richardson, Case: 21STCV13920, Date: 2023-06-22 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: 21STCV13920    Hearing Date: November 16, 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.

Motions Before the Court

On August 31, 2021, the Court set jury trial for May 16, 2023.

On January 19, 2023, Defendants filed an ex parte application to continue trial by at least 90 days and continue all pre-trial and discovery dates and deadlines so that the same were calculated based upon the new trial date.

That same day, Plaintiff Bort opposed the ex parte application.

On January 20, 2023, Department 32 granted the ex parte application and advanced and continued trial to September 26, 2023. The minutes do not explicitly mention pre-trial and discovery dates and deadlines other than to note that the ex parte application had been granted with no qualification.

In their efforts to secure discovery as to Plaintiff’s efforts to obtain financing sources for the Regency Project, Defendants KBS and Kennedy obtained testimony from Plaintiff Bort as to his destruction of handwritten notes upon the closing of the Regency Project. Plaintiff is alleged to have identified Leonard Green & Partners LP (Leonard Green) as one of the possible financing sources Plaintiff had pursued for the Regency Project.

On July 18, 2023, Defendants KBS and Kennedy served a deposition subpoena for the deposition of and production of documents by Leonard Green’s PMQ.

The deposition subpoena included five requests for production:

(1) Leonard Green’s entire file regarding Brian Kennedy and/or Regency Outdoor Advertising;

(2) All documents that refer or relate to any teleconferences with Randall Bort, at phone number 310.567.8818, between January 2020 and February 2021 including, without limitation, all call logs and notes from calls;

(3) All communications with Randall Bort regarding Brian Kennedy and/or Regency Outdoor Advertising;

(4) All documents and communications that refer or relate to Brian Kennedy, including, without limitation, all documents that refer or relate to Mr. Kennedy’s purchase of his brother’s claimed interest in Regency Outdoor Advertising;

(5) All documents and communications that refer or relate to any offers to provide financing for Mr. Kennedy’s purchase of his brother’s claimed interest in Regency Outdoor Advertising.

The deposition subpoena also included five categories of examination:

(1) All due diligence conducted into Brian Kennedy, KBS Holdco LLC, and/or Regency Outdoor Advertising;

(2) All proposals or offers to provide financing to Brian Kennedy, KBS Holdco LLC, and/or Regency Outdoor Advertising;

(3) All communications with Randall Bort regarding Brian Kennedy and/or Regency Outdoor Advertising;

(4) All documents and communications that refer or relate to Brian Kennedy, including, without limitation, Mr. Kennedy’s purchase of his brother’s claimed interest in Regency Outdoor Advertising; and

(5) Whether Leonard Green & Partners typically seeks equity or securities as part of its financing offers and proposals.

On August 18, 2023, Defendants filed an ex parte application to continue trial and continue all pre-trial and discovery dates and deadlines so that the same were calculated based upon the new trial date.

That same day, Plaintiff Bort opposed the ex parte application.

On August 21, 2023, the Court granted the ex parte application and advanced and continued trial to November 7, 2023. The Court’s order continued discovery cut offs and pre-trial orders to coincide with the newly rescheduled trial date.

Defendants’ counsel and Leonard Green’s counsel conferred as to the deposition notice between August 15, 2023 and September 8, 2023.

On September 8, 2023, Leonard Green provided objection-only responses to the deposition subpoena served by KBS and Kennedy.

On October 19, 2023, Defendants KBS and Kennedy filed a motion to compel the deposition of and production of documents by Leonard Green’s PMQ consistent with the July 18, 2023 deposition notice.

On October 30, 2023, at a hearing for a motion by Defendants to quash subpoenas served by Plaintiff on nonparties, the parties stipulated to vacating the trial date in this action.

That same day, Plaintiff’s counsel filed a declaration that explained the alleged misrepresentations in KBS and Kennedy’s moving papers, using exhibits attached to counsel’s declaration to contradict Defendants’ representations. Two of those exhibits were lodged with the Court.

On November 3, 2023, Leonard Green opposed Defendants’ motion.

On November 8, 2023, Defendants KBS and Kennedy replied to the opposition.

Defendants’ motion is now before the Court.

Motion to Compel Deposition of Nonparty

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) [Arabic numerals added for clarity].)

Although Code of Civil Procedure section 2025.450 does not apply to nonparties and section 2025.480 does not address attendance, courts regularly consider and grant motions to compel nonparties to attend depositions. (See, e.g., Terry v. SLICO (2009) 175 Cal.App.4th 352, 355 [court considered motion to compel nonparty to attend deposition; Sears, Roebuck, & Co. v. National Un. Fire Ins. (2005) 131 Cal.App.4th 1342, 1351 [court held that subpoenaing party can move to compel when nonparty deponent does not appear or produce documents at deposition]; Brun v. Bailey (1994) 27 Cal.App.4th 641, 645-646 [court considered motion to compel nonparty to attend deposition].)

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): DENIED.

In their motion, Defendants KBS and Kennedy argue that the discovery sought from Leonard Green is relevant and discoverable. As to the requests for production, Defendants argue that “[t]he[] [production requests] are meant to obtain relevant discovery regarding Plaintiff’s efforts on behalf of Defendants and to fill in the gaps caused by Plaintiff’s admitted destruction of his own files and records.” Defendants also argue that Leonard Green has refused to comply with the subpoena, subject to meritless and not-particularized objections that fail to attach a privilege log. As to the deposition and the categories of examination, Defendants argue that “the[] categories seek information specific to the Regency Project, and are meant to test Plaintiff’s claim that he made extensive efforts to obtain financing for Defendants.” Defendants otherwise argue that the Court should permit this discovery beyond the October 5, 2023 discovery cutoff (as with the October 30, 2023 hearing) and that Leonard Green and its counsel should be sanctioned for costs incurred bringing this motion. (Mot., pp. 5-9.)

On October 30, 2023, Plaintiff’s counsel filed a declaration attaching exhibits to show: (1) more than 1,000 pages of discovery to Defendants, including 30 pages sent to or received from Leonard Green, 16 pages of documents related to Leonard Green produced by KBS and Kennedy, and 35 pages of documents relating to Leonard Green produced by Defendants’ former counsel; and (2) that Plaintiff never testified to not recording his work on Defendants’ behalf or that he destroyed his files, but rather, testified as to throwing away of 20 to 30 pages of handwritten notes, not files, from conversations with an employee of KBS. (10/30/23 Decl., ¶¶ 4-6, Exs. 1 [showing first and last page of 1,026 page production by Plaintiff as to financing efforts], 2 [production by Plaintiff re Leonard Green], 3 [same by Defendants], 4 [same by Defendants’ counsel]; 10/30/23 Decl., ¶¶ 7-8, Exs. 1 [referencing joint stipulation for sale of Regency], 5 [Plaintiff’s deposition].)

In its opposition, Leonard Green argues that this motion is untimely as to the discovery motion cutoff—needed to be heard at least 15 days before the initial trial date of November 7, 2023 (Code Civ. Proc., § 2024.020, subd. (a))—which is made all the more egregious by Leonard Green serving objections as early as September 8, 2023, only for this motion to be filed in October 2023. Leonard Green also argues that it did not delay responses because it responded to the subpoena as soon as it received the subpoena via email for the first time on August 15, 2023, followed by objections on September 8, 2023. Leonard Green argues that “‘the importance of the requested discovery in resolving the issues’ is, at most, minimal because this case concerns Plaintiff’s alleged entitlement to a success fee, [especially where] there is no dispute that Plaintiff’s short-lived dealings with Leonard Green did not lead to a successful transaction.” Leonard Green also argues that “the information Defendants seek is already known to the parties or, at a minimum, available through their documents,” as shown by Plaintif’s counsel’s declaration exhibits. Leonard Green otherwise supports its objections and argues for sanctions in favor of Leonard Green. (Opp’n, pp. 9-17.)

In reply, Defendants KBS and Kennedy argue that they filed this motion promptly after the September 8, 2023 objections, and prior to the cutoff of discovery and discovery motions, and that through no fault of Defendants’, the Court’s availability could not accommodate hearing dates prior to the discovery cutoff. Defendants also argue that any delay was actually caused by Leonard Green, which failed to oppose the deposition subpoena until nearly three weeks after counsel conferred on August 21, 2023. Defendants otherwise argue the evidence sought is relevant, that Defendants have a right to seek evidence from third parties as well as parties to this action, and that production from other third parties—namely, Ares, Beachpoint Capital, and Levine Leichtman—showed communications relating to the Regency project that Plaintiff failed to disclose, showing the need for this discovery. Defendants also oppose sanctions against them and argue for sanction against Leonard Green and counsel. (Reply, pp. 5-10.)

I. Timeliness

Except as otherwise provided, “any party shall be entitled as a matter of right to complete discovery proceedings on or before the 30th day, and to have motions concerning discovery heard on or before the 15th day, before the date initially set for trial of the action.” (Code Civ. Proc., § 2024.020, subd. (a).)

Here, discovery-related deadlines are set based on the now-vacated November 7, 2023 trial date. The corresponding cutoffs for discovery and hearings on discovery motions were Friday, October 6, 2023 (see Code Civ. Proc., §§ 10, 12, 12a, 12c [Sunday, October 8, 2023 to Friday, October 6, 2023]) and Monday, October 23, 2023.

“[A] continuance or postponement of the trial date does not operate to reopen discovery proceedings” unless a motion to reopen discovery is filed and granted pursuant to Code of Civil Procedure section 2024.050. (Code Civ. Proc., § 2024.020, subd. (b); Pelton-Shepherd Industries, Inc. v. Delta Packaging Products, Inc. (2008) 165 Cal.App.4th 1568.)

As mentioned above, the cutoff date for hearings on discovery motions was Monday October 23, 2023. On September 8, 2023, Leonard Green served objection-only responses to the Defendants’ deposition subpoena. By that time, Defendants were aware of the Court’s August 21, 2023 order tying discovery deadlines to the November 7, 2023 trial. Yet, Defendants did not file this motion until October 19, 2023, nearly six weeks later. Neither did Defendants file an ex parte to advance the hearing on its motion to compel enforcement of the Leonard Green PMQ deposition subpoena or to continue trial- and discovery-related dates and deadlines as they had on January 19, 2023 and August 18, 2023.  With a looming discovery cut off date, there is no satisfactory explanation as to why Defendants waited several weeks after learning that Leonard Green was refusing to produce the documents to file the instant motion to compel

Moreover, it is unclear when Defendants KBS and Kennedy became aware of their need to serve subpoenas on Leonard Green. Plaintiff’s counsel’s October 30, 2023 declaration attaches excerpts from Plaintiff Bort’s February 13, 2023 deposition. It is at this deposition that Plaintiff Bort testifies to destroying about 30 handwritten notes relating to conversations with Mr. Berardi. (10/30/23 Dreibholz Decl., Ex. 5.) Defendants’ moving papers state that “Plaintiff testified at his deposition that he had destroyed his files and had no records of his work on Defendants’ behalf, and his communications with financing sources” but that “Plaintiff did identify a number of the financing sources he communicated with on Defendants’ behalf, including Leonard Green.” (Mot., p. 2, Whitehead Decl., ¶¶ 2-4; cf. 10/30/23 Dreibholz Decl., Ex. 5 [no mention of Leonard Green in excerpt].) If the deposition to which Defendants refer in their moving papers is the February 13, 2023 deposition of Plaintiff, and if Plaintiff disclosed Leonard Green’s identity to Defendants at that time, then it is unclear to the Court why Defendants delayed until July 18, 2023 to serve a deposition subpoena on Leonard Green.

Because of both of these delays, the Court cannot find that Defendants moved diligently to obtain this discovery such that the Court should overlook the issue of timeliness.

As to the hearing on the prior motion to quash that took place on October 30, 2023, no objection was made on timeliness grounds. Here, by contrast, Leonard Green raises that issue. If a motion is filed on statutory notice and is set because of the court’s impacted calendar beyond the discovery cut-off hearing date, then the proper procedure is to move ex parte to either continue the cut-off date or shorten notice on the motion.

Defendants’ motion is therefore DENIED.

Sanctions: DENIED.

If a motion under subdivision (a) is granted, the court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (Code Civ. Proc., § 2025.450, subd. (g)(1).)

Having denied the motion by Defendants KBS and Kennedy, the Court also DENIES their monetary sanctions request.

The Court likewise DENIES Leonard Green’s sanctions request because Defendants made reasonable arguments in their motion, though not ultimately successful. 

Conclusion

Defendants/Cross-Complainants KBS Holdco, LLC and Brian Kennedy’s Motion to Compel Non-Party Leonard Green & Partners LP’s Compliance with Deposition Subpoena and Production of Responsive Documents is DENIED.

Defendants/Cross-Complainants KBS Holdco, LLC and Brian Kennedy’s Request for Monetary Sanctions is DENIED.

Non-Party Leonard Green & Partners LP’s request for sanctions is DENIED.