Judge: Anne Richardson, Case: 24STCV00893, Date: 2024-09-11 Tentative Ruling

Case Number: 24STCV00893    Hearing Date: September 11, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Pleadings

Plaintiffs Edgar Ramos (Ramos), Rachel Berg, Kevin Flores, and Jason Grijalva (collectively, Plaintiffs) sue Defendants Scott Kay (Kay), Wood and Vine LLC, W&V Partners, LLC and Does 1 through 20, (collectively, Defendants) pursuant to a January 11, 2020 Complaint alleging causes of action for (1) Breach of Contract – Specific Performance; (2) Petition for Judicial Dissolution; (3) Breach of Contract; and (4) Fraud – Intentional Misrepresentation.

The claims arise out of four prior actions in which each of the Plaintiffs alleged causes of action arising out of their employment at a restaurant called Wood & Vine. Each of the Plaintiffs signed substantively identical Settlement Agreements in those actions. Prior to Plaintiffs agreeing to the terms of the Settlement Agreements, Defendants represented to Plaintiffs that Kay intended to shut down Wood and Vine LLC and W&V Partners, LLC (the Wood & Vine Entities). In the Settlement Agreements, the Defendants expressly “acknowledge that such dissolution and winding up is a material term of this Agreement, and that Plaintiff would not have settled the action but for The Wood & Vine Defendants’ agreement to do so.” To date, neither entity has filed a certificate of dissolution with the California Secretary of State.

Additionally, to induce Plaintiffs to settle, the Defendants represented in the Settlement Agreements that “neither Scott Kay, nor any other [Wood & Vine Entity] member, received any assets, or other monetary benefits (collectively, “Assets”), directly or indirectly, from either Wood & Vine, LLC or W&V Partners, LLC” during the pendency of the Wood & Vine Actions.” Each of the Plaintiffs relied upon this representation when deciding to settle their case and would not have otherwise settled their case. The Plaintiffs allege that the representation was false, and that the Defendants intentionally made those representations. Specifically, the Complaint alleges that: (a) Wood & Vine, LLC transferred at least $24,505.96 to an entity named No Roof Ventures, LLC for the benefit of Kay; (b) Wood & Vine, LLC and its insurer paid for Kay’s legal defense in each of the Wood & Vine actions; (c) Wood & Vine, LLC paid at least $43,164.41 towards a credit card in the name of Kay for his benefit; and (d) Wood & Vine, LLC transferred money to either Kay, other members of the Wood & Vine Entities, or to one or more third parties for the benefit of Kay or other entity members, through Bill.Com.

B. Motion Before the Court

On May 20, 2024, Ramos propounded written discovery requests, including the Requests for Production, Set One on Kay. (Brizolis Decl. ¶ 3, Ex. A.) Kay responded to the discovery requests on June 24, 2024. (Brizolis Decl. ¶ 3, Ex. B.) Counsel met and conferred but were unable to reach an agreement. (Brizolis Decl. ¶¶ 8-9; Blackburn Decl. ¶ 30.)

On August 19, 2024, Ramos filed this motion to compel further responses to certain requests in his first set of production discovery and also for sanctions against Kay and his counsel in the amount of $13,750. This motion was served via electronic service, meaning that he should have provided an additional two days’ notice.

On August 28, 2024, Kay filed an opposition to the motion and also requests sanctions in the amount of $15,663 against Ramos and his counsel.

On September 4, 2024, Ramos replied.

II. Motion to Compel Further Responses to Request for Production, Set One

A. Requests for Judicial Notice

Pursuant to Evidence Code section 452, subdivision (d), the Court may take judicial notice of “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States”. Documents are only judicially noticeable to show their existence and what orders were made such that the truth of the facts and findings within the documents are not judicially noticeable. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 885.) 

Ramos seeks judicial notice of the Protective Order entered by the Court on April 29, 2024 (Request for Judicial Notice, Ex. 1.) The court takes judicial notice to the extent of the documents’ existence.

B. Timeliness

Pursuant to a stipulation between counsel, Ramos’s 45-day deadline to file and serve the instant motion was extended one week to August 19, 2024. (Brizolis Decl. ¶ 6, Ex. E.) Ramos served the instant motion on Kay’s counsel on August 19, 2024 via electronic service. (Brizolis Decl. ¶ 10, Ex. G.) Kay argues that the motion is untimely and thus the moving party waived their right to compel a further response. (Opp., pp. 4-5.)

Under Code of Civil Procedure section 1010.6, subdivision (a)(3)(A), electronic service is deemed complete at the time of the electronic transmission of the document. However, any time period shall be extended after electronic service by two days. (Code Civ. Proc. § 1010.6, subd. (a)(3)(B). In other words, service was timely (as the parties stipulated the service had to be by August 19), but the notice before the hearing was two days short. As service is timely, the moving party has not waived its right to bring the motion. The remedy to the notice issue would have equally been to have the hearing pushed out or to have served the matter earlier. However, the opposing party has not shown prejudice or requested further time to oppose the motion; rather, Kay filed his opposition brief and declaration opposing the matter on the merits and filed an Opposition to the Separate Statement. Accordingly, the Court will exercise its discretion and consider the motion.

C. 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 request further production, a movant must establish: (1) good cause for the production (Code Civ. Proc., § 2031.310, subd. (b)(1); Sinaiko, supra, at p. 403); and (2) that a further response is needed because (a) the responding party’s statement of compliance with the demand to produce is incomplete Code Civ. Proc., § 2031.310, subd. (a)(1)), (b) the responding party’s representation that it is unable to comply is inadequate, incomplete, or evasive (Code Civ. Proc., § 2031.310, subd. (a)(2)), (c) the responding party’s objection in the response is without merit or is too general (Code Civ. Proc., § 2031.310, subd. (a)(3); Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1127), or (d) if the responding party objected to the production of ESI on the ground that it is not reasonably accessible the movant can show that the (i) ESI is reasonably accessible or (ii) there is good cause for production of the ESI regardless of its accessibility (Code Civ. Proc., § 2031.310, subd. (e)). 

D. Analysis

1. RFP Nos. 13, 14, and 16

RFP No. 13 requests bank statements from No Roof Ventures, LLC from August 2022 to present. (Ramos Sep. Stmt. p. 8.)

RFP No. 14 requests all documents evidencing any payment of money, for any purpose, from No Roof Ventures, LLC to Scott Kay from August 2022 to present. (Ramos Sep. Stmt. p. 14.)

RFP No. 16 requests all documents evidencing any payment of money, for any purpose, from No Roof Ventures, LLC to any third party for the benefit of Scott Kay from August 2022 to present. (Ramos Sep. Stmt. p. 15.)

Kay objects to all three requests on the grounds that the information sought is not relevant, overbroad, and seeks information that is protected by constitutional and common law rights of privacy. (Ramos Sep. Stmt. pp. 8, 14-15.) Kay additionally objects to Nos. 14 and 16 on the grounds the requests do not describe the materials sought with requisite specificity. (Ramos Sep. Stmt. pp. 14-15.)

            In opposition, Ramos argues that the information sought is relevant because the breach of contract and fraud allegations allege that, contrary to the terms of the Settlement Agreement, the Wood & Vine entities transferred money to Kay during the pendency of the prior actions. (Ramos Sep. Stmt. p. 9.) Ramos argues that he already has evidence that Wood & Vine transferred money to No Roof during the relevant period, and now seeks to review No Roof’s bank records to determine whether No Roof then transferred the money to Kay or another person on Kay’s behalf. (Ramos Sep. Stmt. p. 10.)

            In reply, Kay argues that the information sought is irrelevant because No Roof, a consulting and advisory company owned by Kay, had 11 different clients during the time period subject to Ramos’s request. (Opp. to Sep. Stmt. p. 8.) He contends that No Roof’s bank statements contain numerous ingoing and outgoing transfers to and from multiple third parties (clients, vendors, independent contractors, etc.) (Kay Decl. ¶ 16.) Thus, even if No Roof’s bank statements show transfers of funds to Kay, it would be impossible to determine where those funds originally came from, i.e., whether they were from Wood & Vine, one or more of No Roof’s other clients, or someone else entirely. (Opp. to Sep. Stmt. p. 8.)

Kay also argues that the requests seek sensitive bank records from nonparty, No Roof, which will also necessarily disclose sensitive banking and financial information of several other third parties. (Opp. to Sep. Stmt. p. 9)

Kay also argues that the requests are overbroad because they seek information from August 2022 to present, but the “pendency of the Wood & Vine actions” was between October 2022, when the complaint and filed, and December 19, 2023, when the Settlement Agreement was executed. (Opp. to Sep. Stmt. p. 13.)

Here, the Plaintiffs’ claims pertain to alleged violations of the following language from the Settlement Agreement: “neither Scott Kay, nor any other [Wood & Vine Entity] member, received any assets, or other monetary benefits (collectively, “Assets”), directly or indirectly, from either Wood & Vine, LLC or W&V Partners, LLC” during the pendency of the Wood & Vine Actions.” Thus, discovery is relevant as to these specific entities from the date the complaint in the prior action was filed to when the Settlement Agreements were executed. Accordingly, Plaintiffs are entitled to information regarding transactions to or from Kay, Wood & Vine LLC, or W&V Partners, LLC between October 5, 2022 and December 19, 2023.

However, the requests insofar as they seek information about other third parties’ financial transactions are not reasonably calculated to lead to discovery of admissible evidence and raises a privacy concern for any nonparties’ financial information that would be revealed as a result. Finally, information about financial transactions that occurred before or after the pendency of the prior Wood & Vine actions is not relevant to an issue at dispute in this case.

As to RFP No. 13, Kay is ordered to provide bank statements from No Roof Ventures, LLC from October 5, 2022 to December 19, 2023, with the third-party information redacted.

As to RFP No. 14, Kay is ordered to provide all documents evidencing any payment of money, for any purpose, from No Roof Ventures, LLC to Scott Kay from October 5, 2022 to December 19, 2023, third-party information redacted.

As to RFP No. 16, Kay is ordered to provide responsive documents from October 5, 2022 to December 19, 2023. Since by its terms, the request relates only to third party payments of money from No Roof Ventures, LLC for the benefit of Scott Kay, the Court finds that the documents are relevant and any privacy interests are outweighed by the relevance of that third party being used for the benefit of Mr. Kay.

Accordingly, the motion is GRANTED, as narrowed.

E. Request for Sanctions: GRANTED in a reduced amount.

1.     Legal Standard:

Code of Civil Procedure section 2031.310(h) provides for mandatory monetary sanctions “against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response…, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” 

2.     Analysis:

            Plaintiff seeks sanctions against Defendant Kay and his counsel, jointly and severally, in the amount of $13,750 in attorney fees incurred in the motion to compel further responses to document requests, for a total of 5.9 hours meeting and conferring, 15.6 hour drafting the moving papers (for a total of 21.5 hours as of the filing of the motion), and an anticipated additional 6 hours preparing a reply and attending the hearing. The fee rate requested is $500 per hour. (Mot., pp. 5-6; Blackburn Decl., 31.)

Kay’s counsel argued that Kay acted with substantial justification in opposing production of the documents, and requested sanctions under Code of Civil Procedure section 2031.310, subd. (h) in the amount of $15,663 in attorney fees, including 15.7 hours reviewing and opposing the motion, at the rate of $690 per hour times 22.7 hours.

The Court concludes that since Ramos was principally the successful party here, sanctions are appropriate. The Opposition wrongly asserted that the motion was served untimely and other than its arguments narrowing the scope of the relevant documents, did not provide substantial justification to contest the relevance of the documents. However, the sanctions will be reduced both because Kay made some successful arguments narrowing the documents to be produced, and because the amount requested is excessive. In particular, spending 15.6 hours on preparing a six-page motion, nine page declaration (with exhibits) and separate statement regarding only three document requests is excessive. The court concludes that sanctions in the amount of $5000 is appropriate given the small number of requests at issue and the Court’s conclusion that some of Kay’s arguments narrowing the documents to be provided were reasonable.

III. Conclusion

            Plaintiff’s Motion to Compel Further Responses to Plaintiff’s Request for Production of Documents, Set One is GRANTED as narrowed above.

            Defendant Scot Kay is ordered to provide further responses to Plaintiff Edgar Ramos within 30 days of this ruling, subject to the above modifications to discovery.

            Plaintiff’s request for sanctions is GRANTED in the amount of $5000 payable by Kay and his counsel Alex Brizolis, jointly and severally. Such sanctions are to be paid within 30 days.