Judge: Colin Leis, Case: 20GDCV00924, Date: 2022-10-14 Tentative Ruling

Case Number: 20GDCV00924    Hearing Date: October 14, 2022    Dept: 3

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES – NORTHEAST DISTRICT

DEPARTMENT 3

MOVING PARTY:                Defendant Anil D. Mall 

RESPONDING PARTY:       Plaintiff Corona Medical, Inc.

Defendant Anil D. Mall’s Motion to Quash Deposition Subpoenas for Production of Business Records Issued to Pacific Premier Bank, American Express, and JP Morgan Chase; Request for Attorney’s Fees in the Amount of $4,400

The court considered the moving papers, opposition, and reply papers filed in connection with this motion. 

BACKGROUND

Plaintiff Corona Medical, Inc. filed this action in 2020 against Defendants Med Star Hospice Care, Inc. (“Med Star”) and Maria Cecilia Tran (“Tran”). Defendants Anil Donald Mall (“Mall”) and Silverlakes Management, LLC (“Silverlakes”) were substituted for Doe defendants in 2021. Plaintiff filed the operative Second Amended Complaint (“SAC”) in September 2022 asserting causes of action for (1) breach of written contract, (2) open book account, (3) account stated, (4) fraudulent transfer (Civ. Code, § 3439.04(a)(1)), (5) fraudulent transfer Civ. Code, § 3439.04(a)(2)), (6) fraudulent transfer (Civ. Code, § 3439.05), (7) imposition of constructive trust (Civ. Code, § 2224), (8) intentional interference with contractual relations, and (9) violation of California Business and Professions Code §§ 17200 et seq. 

The SAC alleges the following. In 2019, Plaintiff, a pharmacy, entered into a written contract with Defendant Med Star for pharmaceutical services. Plaintiff performed all obligations under the contract, but Med Star defaulted on its payments. According to the SAC, Med Star was merely a shell corporation that Defendants Mall and Silverlakes used to funnel to themselves money that belonged to Med Star, leaving Med Star insolvent. But for those transfers, Med Star would have been able to pay Plaintiff.  

On August 19, 2022, Plaintiff served JP Morgan Chase, a nonparty, a deposition subpoena for production of business records. (Motion, Nuelle Decl., ¶ 3; Ex. B.) On August 22, 2022, Plaintiff served deposition subpoenas on two other nonparties, Pacific Premier Bank (“PPB”) and American Express. (Nuelle Decl., ¶¶ 2, 4; Exs. A, C.)

Mall moves to quash the subpoenas. 

DISCUSSION

The subpoenas seek the production of “all documents related to” Mall from April 1, 2019 through the present. Mall contends that the subpoenas, among other things, impermissibly infringe on his right to privacy. Mall is correct.

When evaluating potential privacy violations concerning discovery, the Court is guided by the framework articulated in Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35 (“Hill”). “Hill sets forth in detail the analytical framework for assessing claims of invasion of privacy under the state Constitution.” (Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 370.) “The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. [Citation.]” (Williams v. Superior Court (2017) 3 Cal.5th 531, 552, citing Hill, supra, 7 Cal.4th at pp. 35-40.) “The party seeking information may raise in response whatever legitimate and important countervailing interests’ disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy.” (Ibid.) “A court must then balance these competing considerations.” (Ibid.) In other words, a court must balance competing rights (the right of a litigant to discover relevant facts and the right of an individual to maintain reasonable privacy) in determining whether the information is discoverable.  (Ibid.)

Plaintiff’s alleged injury was complete when Mall supposedly arranged and executed the purportedly wrongful transfer of Med Star’s money to himself and Silverlakes, making Med Star an empty corporate shell unable to pay its creditors. In the Med Star records that Plaintiff already holds, Plaintiff possesses the evidence it needs to prove Med Star’s transfers to Mall and Silverlakes.

Plaintiff’s subpoenas seek, however, information much greater than evidence of Med Star’s transfers because the subpoenas seek evidence about how Mall spent the funds he received from Med Star. The court finds that the subpoenas cannot stand because they misperceive the significance of Mall’s use of funds he received. Mall’s disposition of the supposedly ill-gotten funds from MedStar – whether, say, to pay Mall’s personal credit cards (or anything else Mall might choose to do with the money) – does not meaningfully advance Plaintiff’s argument that Med Star wrongfully transferred those funds. Likewise, evidence about Mall’s disposition of those ill-gotten funds, in contrast to evidence of how Mall managed to get those funds from MedStar, does not meaningfully advance Plaintiff’s argument that Mall was Med Star’s alter ego. Plaintiff’s assertion that Plaintiff is “simply following the trail of money and now needs Mall’s [personal] records to demonstrate to the jury where Med Star’s money ultimately went” (Oppn. at p. 7) is misconceived because Plaintiff does not need to show what Mall did with the money he received from Med Star; if Mall was not entitled to that money, he was not entitled to it regardless of how he spent it. And, in the same vein, if Mall was entitled to that money, it does not matter what he did with it.

Here, Mall has a right of privacy in his financial records because the constitutional right to privacy “extend[s] to both … personal and financial matters.” (Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 999.) Weighing Mall’s privacy interests in his financial records against the potential value of those records in helping Plaintiff prove Plaintiff’s case against Med Star, Mall, and Silverlakes, the court finds Mall’s privacy interest in his records outweighs the value of those records. Accordingly, the court quashes all three subpoenas in their entirety.

 Code of Civil Procedure “[s]ection 1987.2, subdivision (a), provides that a trial court may in its discretion award reasonable attorney fees and expenses incurred in making or opposing a motion to quash ‘if the court finds the motion was made or opposed in bad faith or without substantial justification.’” (Vasquez v. California School of Culinary Arts, Inc. (2014) 230 Cal.App.4th 35, 40.) “‘Substantial justification’ means ‘that a justification is clearly reasonable because it is well grounded in both law and fact. [Citations.]’ [Citation.]” (Ibid.) Here, Plaintiff’s opposition did not lack substantial justification. Accordingly, Mall’s request for sanctions is denied. 

CONCLUSION

Based on the foregoing, the court grants Defendant Anil D. Mall’s motion to quash the deposition subpoenas directed at Pacific Premier Bank, American Express, and JP Morgan Chase.

            The court denies Defendant Mall’s request for sanctions.

Defendant is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  October 14, 2022

_____________________________

Colin Leis

Judge of the Superior Court