Judge: Colin Leis, Case: 20GDCV00924, Date: 2022-10-17 Tentative Ruling

Case Number: 20GDCV00924    Hearing Date: October 17, 2022    Dept: 3

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES – NORTHEAST DISTRICT 

DEPARTMENT 3 

MOVING PARTY:                Defendant Silverlakes Management, LLC  

RESPONDING PARTY:       Plaintiff Corona Medical, Inc. 

Defendant Silverlakes Management, LLC’s Motion to Quash and Modify The Deposition Subpoena for Production of Business Records Issued to American Express and JP Morgan Chase

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 non-party JP Morgan Chase a deposition subpoena for production of business records. (Motion, Nuelle Decl., ¶ 3; Ex. B.) On August 22, 2022, Plaintiff served a similar deposition subpoena on non-party American Express. (Nuelle Decl., ¶¶ 2, 4; Exs. A, C.)

            Silverlakes moves to quash the subpoenas.

DISCUSSION

            The subpoenas seek the production of “all documents related to” Silverlakes from April 1, 2019, to the present. During the meet and confer process, Silverlakes requested that Plaintiff limit Plaintiff’s request to the period covering April 1, 2019, to December 31, 2020. Plaintiff argues it cannot limit the request to the period Silverlakes suggests because Plaintiff does not have any evidence showing when Med Star dissolved (if it did), and when the fraudulent conveyances and commingling of funds among various entities stopped.

As the court noted in defendant Mall’s similar motion to quash ruled upon last week on October 14, Plaintiff’s alleged injury occurred 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 transfer of funds to Defendants because the subpoenas seek evidence about how Silverlakes spent the funds it received from Med Star. The court finds that the subpoenas cannot stand because they misperceive the significance of Silverlakes’ use of funds it received. Silverlakes’ disposition of the supposedly ill-gotten funds from Med Star does not meaningfully advance Plaintiff’s argument that Med Star wrongfully transferred those funds. Likewise, evidence about Silverlakes’ disposition of those ill-gotten funds, in contrast to evidence of how Silverlakes got those funds from MedStar, does not meaningfully advance Plaintiff’s argument that Silverlakes was Med Star’s alter ego. Plaintiff’s assertion that it wants (or needs) American Express’s and JP Morgan Chase’s records to show what Silverlakes did with the money it received from Med Star in order to “determine the [money’s] final destination” (Oppn. at p. 7) is misconceived because Plaintiff does not need to show what Silverlakes did with the money it received from Med Star; if Silverlakes was not entitled to that money, it was not entitled to it regardless of how it spent it. And, in the same vein, if Silverlakes was entitled to that money, it does not matter what Silverlakes did with it.

Silverlakes has a lesser privacy interest in its records than does Mall in his personal records. (Williams v. Superior Court (2017) 3 Cal.5th 531, 552 [court must balance need for information by party seeking disclosure against privacy interest of party opposing disclosure].) Notably, Silverlakes is not asking the court to quash Plaintiff’s subpoenas in their entirety. Silverlakes instead asks the court to limit the scope of Plaintiff’s request to the time period suggested during the meet and confer process: January 1, 2019 and December 31, 2020. The court adopts that request.

CONCLUSION

Based on the foregoing, the court grants Silverlakes’ request that the subpoenas to American Express and JP Morgan Chase be limited to cover records only between January 1, 2019, and December 31, 2020.

            The court denies Plaintiff’s request for attorney’s fees.

Silverlakes is ordered to give notice of this ruling. 

IT IS SO ORDERED. 

DATED:  October 17, 2022 

_____________________________ 

Colin Leis 

Judge of the Superior Court