Judge: Barbara M. Scheper, Case: 20STCV18357, Date: 2023-01-27 Tentative Ruling
Case Number: 20STCV18357 Hearing Date: January 27, 2023 Dept: 30
Calendar No.
Bankuthy, et. al. vs. Millennium
House, Inc, et. al., Case No. 20STCV18357
Tentative
Ruling re: Plaintiffs’ Motion Permitting
Discovery of Financial Information
Plaintiffs Michael Bankuthy, Abraham Cheng, Luke Pollock,
Michael Salazar, Ryan Stegen (collectively, Plaintiffs) move for an order
permitting discovery into the financial condition of Defendants Peter Schuster, 127 Boyle, LLC, Caara Shayne,
and Millennium House, Inc. (collectively, Defendants). The motion is granted.
While pretrial discovery of a
defendant’s financial condition is generally not permitted, “[u]pon motion by
the plaintiff supported by appropriate affidavits and after a hearing, if the court
deems a hearing to be necessary, the court may at any time enter an order
permitting the discovery otherwise prohibited by this subdivision if the court
finds, on the basis of the supporting and opposing affidavits presented, that
the plaintiff has established that there is a substantial probability that the
plaintiff will prevail on the claim pursuant to Section 3294.” (Civ. Code, §
3295(c); see Jabro v. Superior Court (2002) 95 Cal.App.4th 754,
756.) “Such order shall not be considered to be a determination on the
merits of the claim or any defense thereto and shall not be given in evidence
or referred to at the trial.” (Ibid.)
“[B]efore
a court may enter an order permitting discovery of a defendant’s financial
condition, it must (1) weigh the evidence submitted in favor of and in
opposition to motion for discovery, and (2) make a finding that it is very
likely the plaintiff will prevail on his claim for punitive damages.” (Jabro,
supra, 95 Cal.App.4th at 758.) “In this context, a ‘substantial probability’
of prevailing on a claim for punitive damages means that it is ‘very likely’
that the plaintiff will prevail on such a claim or there is a ‘strong
likelihood’ that the plaintiff will prevail on such a claim.” (I-CA
Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 283.)
Plaintiffs argue that they are entitled to conduct
discovery into Defendants’ financial information based on their punitive
damages claims pursuant to the causes of action for Nuisance and Intentional
Infliction of Emotional Distress. Plaintiffs previously filed the same motion
but premised on their claims for breach of the warranty of habitability and
violation of Civil Code Section 1942.4.
When Defendants’ opposition pointed out that punitive damages are not
recoverable as a matter of law on those claims, rather than withdrawing the
motion Plaintiffs filed a reply acknowledging that Defendants were correct and
suggesting they file a sur-reply as if Plaintiffs had relied on the correct
causes of action – nuisance and infliction of emotional distress. Defendants
declined to do so. The motion was not
taken off calendar and was denied on December 15, 2022. That very same day Plaintiffs filed the
instant motion.
Defendant
Peter Schuster (Schuster) was the sole owner and decisionmaker at Millennium
House from August 2018 to September 2019, the period that Plaintiffs resided at
Millennium House. (Ricketts Decl., Ex. 1 [14].) Defendant 127 Boyle LLC, solely
owned by Defendant Caara Shayne (Shayne), is the lessor of the property at
which Millennium House is located. (Ricketts Decl., Ex. 3 [26].)
Plaintiffs testify
that they experienced various deficient living conditions during their
residency at Millennium House, including cockroaches, rodent infestation,
bedbugs, mold and dampness, and leaks. (Bankuthy Decl. ¶¶ 5-10; Pollock Decl. ¶
5-9.) Plaintiff Michael Bankuthy attaches photographs that he took showing the
roaches, rats, bedbug bites, and other disrepair. (Bankuthy Decl. ¶¶ 5-10, Exs.
9-18.) Plaintiffs state that the Millennium House program performed virtually
no cleaning of the premises, contrary to representations made by it to the
Department of Public Health. (Bankuthy Decl. ¶ 14; Pollock Decl. ¶ 11.) Bankuthy
states that Millennium House’s managers refused to let him clean the dirty
bathrooms, claiming that there were not enough cleaning supplies, and states
that the managers, knowing that Bankuthy had extreme OCD and germaphobia, would
laugh when seeing him brush cockroaches off his medication packs. (Bankuthy
Decl. ¶ 18.) Plaintiffs further testify that most residents became ill with
food poisoning at various points after eating food prepared and served at
Millennium House. (Bankuthy Decl. ¶ 11, Ex. 18; Pollock Decl. ¶ 10, Ex. 22.)
Plaintiffs
also present evidence of numerous housing violations found by government
inspectors since the beginning of 127 Boyle, LLC’s ownership and Schuster’s
lease of the property in 2013, documenting conditions consistent with
Plaintiffs’ complaints. (Ricketts Decl., Exs. 24, 29-35, 41-42, 44-49.)
Defendants
have not presented any evidence disputing the existence of deficient conditions
on the property, but argue that Plaintiffs have not met their burden because
(1) Plaintiffs did not reside at Millennium House during the period of the
documented conditions, and (2) Defendants later remedied the violations. The
Court disagrees.
Plaintiff
Michael Salazar resided at Millennium House from August 2018 to September 2019;
Plaintiff Luke Pollock resided there from December 2018 to April 2019;
Plaintiffs Abraham Cheng and Michael Bankuthy, from December 2018 to June 2019;
and Plaintiff Ryan Stegen from September 2018 to September 2019. (TAC ¶¶ 2-6.)
While some of the inspection reports and notices presented by Plaintiffs took
place prior to their arrival, there are also reports detailing the deficient
conditions dated July 30, 2018 (i.e., immediately prior to Salazar’s residency)
and June 3, 2019. (Ricketts Decl., Ex. 31, 45.) Plaintiffs’ experiences of the
conditions are also supported by their testimony, photographs, and
contemporaneous complaints to the Department of Public Health. While inspection
reports from August 26 and September 26, 2019, indicate that Defendants later
remedied the violations (Palin Decl. ¶ 2, Ex. B), the undisputed evidence shows
that the deficient conditions existed at the property for most, or all, of
Plaintiffs’ stays there.
In determining the reprehensibility of conduct for purposes
of punitive damages, relevant factors include whether “the tortious
conduct evinced an indifference to or a reckless disregard of the health or
safety of others,” whether “the harm was the result of intentional malice,
trickery, or deceit, or mere accident,” and “in a case involving physical harm,
the physical or physiological vulnerability of
the target of the defendant's conduct.” (Bullock v. Philip Morris USA, Inc. (2011) 198
Cal.App.4th 543, 560-62.)
Given the
above evidence, Plaintiffs have met their burden to establish a “substantial
probability” of prevailing on their claims for punitive damages pursuant to the
nuisance and IIED causes of action. (See Stoiber
v. Honeychuck (1980) 101 Cal.App.3d 903, 911, 921 [finding tenant’s IIED
claim against landlord sufficiently pled based on alleged “dilapidated
and unsafe condition of the rented premises”]; Angie
M. v. Superior Court (1995) 37 Cal.App.4th
1217, 1228 [denying motion to strike punitive damages where IIED claim
sufficiently pled].) The punitive damages claims are further supported by the
evidence that Millennium House’s managers knowingly and maliciously allowed the
conditions to persist despite Bankuthy’s physiological vulnerability. (Bankuthy
Decl. ¶¶ 17-18.)