Judge Curtis A. Kin, Case 21STCV18329 2023-01-24 Tentative Ruling

Judge: Curtis A. Kin, Case: 21STCV18329, Date: 2023-01-24 Tentative Ruling

Case Number: 21STCV18329 Hearing Date: January 24, 2023 Dept: 72

MOTIONS TO COMPEL FURTHER RESPONSES FROM

ARTE MILANO TEXTILE, INC. TO (1) REQUESTS FOR PRODUCTION AND (2) SPECIAL INTERROGATORIES

MOTIONS TO COMPEL FURTHER RESPONSES FROM LAVITEX, INC. TO (1) REQUESTS FOR PRODUCTION AND

(2) SPECIAL INTERROGATORIES

Date: 1/24/23 (8:30 AM)

Case: Arte Milano Textile Inc. et al. v. Federal Ins. Co., et al. (21STCV18329)

TENTATIVE RULING:

Defendant/cross-complainant Federal Insurance Company’s Motion to Compel Further Responses from Arte Milano Textile, Inc. to Requests for Production, Set One is GRANTED IN PART.

Defendant/cross-complainant Federal Insurance Company’s Motion to Compel Further Responses from Lavitex, Inc. to Requests for Production, Set One is GRANTED IN PART.

Defendant/cross-complainant Federal Insurance Company’s Motion to Compel Further Responses from Arte Milano Textile, Inc. to Special Interrogatories, Set One is GRANTED.

Defendant/cross-complainant Federal Insurance Company’s Motion to Compel Further Responses from Lavitex, Inc. to Special Interrogatories, Set One is GRANTED.

I. MOTION TO COMPEL FURTHER RESPONSES FROM ARTE MILANO TEXTILE, INC. TO REQUESTS FOR PRODUCTION

Defendant/cross-complainant Federal Insurance Company (“Federal”) moves for further responses from plaintiff/cross-defendant Arte Milano Textile, Inc. (“Arte Milano”) to Requests for Production, Set One, Nos. 8, 11, 12, 14, 15, 17-19, 26-29, 39, 40, 44-50, and 54-58.

After the filing of the motion, Arte Milano served additional supplemental responses to some, but not all, of the discovery at issue. (Cousineau Reply Decl. ¶ 3.) Arte Milano requests a continuance to allow the parties to meet and confer and potentially resolve this motion. However, because Federal has been attempting to obtain sufficient responses for approximately a year (Talise Decl. ¶ 3 & Ex. 2 [initial responses served 2/10/22]), to ensure that Federal receives code-compliant responses, the Court rules on this motion.

With respect to Request No. 8, which seeks Arte Milano’s QuickBooks database files from 2018 through 2021, Arte Milano purports to have produced the requested documents. Federal maintains that it cannot access the documents because Arte Milano did not provide a valid passcode. To the extent that the produced documents require a passcode, Arte Milano is ordered to provide the passcode. A further response in compliance with CCP § 2031.220 indicating that all responsive documents in Arte Milano’s possession, custody, or control will be produced is also required.

With respect to Request No. 11, which asks for Arte Milano’s monthly balance sheets from January 2018 through July 2021, Arte Milano responded in its initial and supplemental response that it would produce year-end balance sheets in its control or possession. This is non-responsive because the request asks for monthly, not year-end, balance sheets. Arte Milano must also clarify whether the Bates stamp range provided in its supplemental response is in addition to, or in substitution of, the Bates stamp range provided in the initial response. The further response shall comply with CCP § 2031.220, confirming that all responsive documents in the possession, custody, or control of Arte Milano is included in the production. A further response to Request No. 11 is required.

With respect to Request No. 12, which asks for documents reflecting Arte Milano’s monthly sales, by customer; Request No. 18, which asks for monthly purchase summaries; and Request No. 19, which asks for purchase invoices, all from January 2021 through July 2021, Arte Milano must clarify whether the Bates stamp range provided in its most recent supplemental response is in addition to, or in substitution of, the Bates stamp range provided in previously served responses. Moreover, the most recent supplemental responses do not indicate that Arte Milano would comply “in whole” and produce all, not just some, responsive documents in its possession, custody, or control, as required by CCP § 2031.220. Further responses to Request Nos. 12, 18, and 19 are required.

With respect to Request No. 14, which seeks month-ended payable aging reports from January 2019 through July 2021, even though Arte Milano initially responded that Lavitex will produce the general ledgers from 2018-2021, Arte Milano subsequently served supplemental responses stating that “Responding Party,” i.e., Arte Milano will produce general ledgers from 2018-2021. Arte Milano sufficiently clarified the confusion resulting from its initial response. However, the response is not fully compliant with CCP § 2031.220. To the extent Arte Milano wishes to withhold responsive documents, Arte Milano does not justify any objection in its opposition. Accordingly, Arte Milano is required to state that it will comply “in whole” and that it will produce all responsive documents in its possession, custody, or control. A further response is required for Request No. 14.

With respect to Request No. 15, which seeks month-ended inventory balances from January 2018 through July 2021, and Request No. 17, which asks for documents relating to the last physical inventory count performed by Arte Milano, Arte Milano responds that the documents never existed because Lavitex does not perform monthly inventory counts. As a result, monthly profit and loss statements were not kept in the regular course of business, according to Arte Milano. Federal maintains that the requests do not ask about Lavitex’s monthly inventory counts. However, CCP § 2031.230 allows Arte Milano to state that its inability to comply is because the category of documents never existed. Whether the purported non-performance of monthly inventory counts by Lavitex is sufficiently connected to Arte Milano’s asserted inability to comply with the requests is not grounds to compel further responses. If Federal unearths evidence indicating Arte Milano has not been diligent and reasonable and/or intentionally concealed responsive documents, then Federal may seek any relief to which it believes it is entitled at that time, including a jury instruction for willful suppression of evidence and/or other appropriate sanction(s). No further response is required for Request Nos. 15 or 17.

With respect to Request No. 26, which asks for agreements relating to residences owned by Omi Lavi and/or Shirin Yasharpour Lavi; Request No. 27, which asks for communications between Omid Lavi and Logix relating to residences owned by Omid Lavi and/or Shirin Yasharpour Lavi; Request No. 28, which asks for documents relating to Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans to Arte Milano; and Request No. 29, which asks for communications relating to SBA PPP loans, Arte Milano’s most recent supplemental responses attempt to limit production to the period from May 2020 through December 2021. Arte Milano is required to produce documents from before the subject fire, alleged to have occurred on May 19, 2020 (Compl. ¶ 13.) to the present. Arte Milano is required to state whether it will comply “in whole” or “in part,” as required by CCP § 2031.220. To the extent that Arte Milano is withholding documents on the basis of privilege, Arte Milano is required to provide a privilege log (See CCP § 2031.240(c)(1)) or confirm that it is not withholding documents on the basis of privilege. Further responses to Request Nos. 26-29 are required.

With respect to Request No. 39, which asks for certified transcript copies of Arte Milano’s corporate tax returns from 2018 through 2020, Arte Milano states in its most recent supplemental response that it will produce non-privileged responsive documents once the documents have been received from the IRS. Federal maintains that while Arte Milano produced non-certified copies of its 2018 and 2019 tax returns, Arte Milano did not produce non-certified 2020 tax returns. (Talise Decl. ¶ 23.) Federal requests an order compelling Arte Milano to produce the non-certified copies of the 2020 returns. However, the request asks for certified copies of Arte Milano’s tax returns. The Court is under no obligation to redraft the request. (Deaile v. General Telephone Co. of California (1974) 40 Cal.App.3d 841, 851 [“The court was not under any obligation to redraft plaintiff's interrogatories so that proper questions would be presented for consideration”].)

Thus, as the response to Request No. 39 stands, Arte Milano has stated it intends to produce non-privileged responsive documents. To the extent that Arte Milano is withholding documents on the basis of privilege, however, Arte Milano is required to provide a privilege log (See CCP § 2031.240(c)(1)) or confirm that it is not withholding documents on the basis of privilege. A further response to Request No. 39, which seeks certified copies of corporate tax returns for 2018 to 2020, is required.

With respect to Request No. 40, which asks for certified transcript copies of Omid Lavi’s personal tax returns from 2018 through 2020, Federal asserts that Arte Milano produced uncertified copies of Omid Lavi’s 2019 and 2020 tax returns but not the 2018 tax returns. Arte Milano does not dispute Federal’s assertion. Because the request asks for certified transcript copies, Arte Milano is ordered to produce the requested documents. However, because the request does not ask for uncertified copies, the Court declines to order Arte Milano to produce uncertified copies of the 2018 returns. To the extent that Arte Milano is withholding documents on the basis of privilege, however, Arte Milano is required to provide a privilege log (See CCP § 2031.240(c)(1)) or confirm that it is not withholding documents on the basis of privilege. A further response to Request No. 40 is required.

With respect to Request No. 44, which asks for W-2s issued by Arte Milano to Omid Lavi from 2018 through 2020, Arte Milano responds that it would produce non-privileged responsive documents in its custody, control, or possession. Federal asserts that Arte Milano has not produced any responsive documents. (Talise Decl. ¶ 27.) Arte Milano does not specifically address its response to Request No. 44 in its opposition or attempt to justify any objection. Arte Milano is ordered to serve a response that complies with CCP § 2031.220 and produce documents that are responsive to Request No. 44.

With respect to Request Nos. 45-47, which ask for all monthly card statements for accounts held by Arte Milano, Omid Lavi, and Shirin Yasharpour Lavi, respectively, from January 2018 through July 2021, Arte Milano served supplemental responses indicating that responsive documents are contained in Bates stamp numbers LA008530-00816. Because the end number of this Bates stamp range is less than the beginning number, it would appear the range is erroneous. Further, in its initial response, Arte Milano stated that it would produce non-privileged documents from May 2020 through December 2021, which is not the time period contained in the requests. Further responses to Request Nos. 45-47 are required.

With respect to Request Nos. 48-50, which seek monthly lease or car loan statements from January 2018 through July 2021 for vehicles leased and/or purchased by Arte Milano, Omid Lavi, and Shirin Yasharpour Lavi, respectively, Federal maintains that Arte Milano produced loan documents for vehicles in Omid Lavi’s name, one set of which was illegible. For Request Nos. 48 and 50, Arte Milano is required to serve supplemental responses that comply with CCP §§ 2031.220 or 2031.230 based on whether it has lease or car loan statements for Arte Milano or Shirin Yasharpour Lavi, respectively, and produce responsive documents thereto. For Request No. 49, Arte Milano is required to produce legible documents to the extent possible and serve a supplemental response indicating to the effect that “all documents or things in the demanded category that are in the possession, custody, or control of that party and to which no objection is being made will be included in the production,” as required by CCP § 2031.220. Further responses to Request Nos. 48-50 are required.

With respect to Request No. 54, which asks for copies of bank statements from January 2019 through December 2020 for the specified bank account, and Request No. 55, which asks for all loan documentation and current balance information for the loan identified as “ADVANCE FROM LOAN 38066986” in the Hanmi Bank statements that Arte Milano submitted to Federal, Arte Milano’s most recent supplemental responses do not comply with CCP § 2031.220 because they do not indicate that it would produce all responsive documents in its possession, custody, or control. To the extent that Arte Milano has more responsive statements than the documents identified in the respective supplemental responses, Arte Milano is required to produce those statements. Arte Milano must also clarify whether the Bates stamp ranges provided in its most recent supplemental responses are in addition to, or in substitution of, the Bates stamp range provided in previously served responses. Further responses to Request Nos. 54 and 55 are required.

With respect to Request Nos. 56-58, which ask for communications between Arte Milano and any vendor or supplier relating to shipments of goods, payments, and payment terms from January 1, 2019, to May 19, 2020, Arte Milano initially responded that it was willing to search and produce documents prior to the subject fire. Arte Milano later supplemented their responses to indicate that it is unable to comply with the requests because the requested documents do not exist. Based on its initial responses, it is unclear whether Arte Milano searched for only three months of documents. A broader search for the requested documents from January 1, 2019 to May 19, 2020 was required. Arte Milano is ordered to serve further responses to Request Nos. 56-58 that clarify whether the inability to comply applies to the time period stated in the requests. Arte Milano is also ordered to state the reason why responsive documents do not exist, such as the documents never existed, have been destroyed, have been lost, misplaced, or stolen, or have never been, or are no longer, in the possession, custody, or control of Arte Milano. (See CCP § 2031.230.)

The motion is GRANTED IN PART. Plaintiff/cross-defendant Arte Milano Textile, Inc. is ordered to served further verified responses, without objection, to Requests for Production, Set One, Nos. Nos. 8, 11, 12, 14, 18, 19, 26-29, 39, 40, 44-50, and 54-58, propounded by defendant/cross-complainant Federal Insurance Company and produce responsive documents thereto that have not already been produced and that are in Arte Milano Textile, Inc.’s possession, custody, or control. The further verified responses must comply with CCP §§ 2031.220 or 2031.230. For Request for Production, Set One, No. 8, Arte Milano Textile, Inc. is ordered to provide the passcode for the QuickBooks database files. Arte Milano Textile, Inc. is ordered to comply with the rulings in the minute order within fifteen (15) days hereof.

To the extent that the Bates stamp ranges identified in any particular request do not pertain to the documents requested in the request, Arte Milano Textile, Inc. is ordered to serve supplemental responses that correctly identify the Bates stamp numbers containing responsive documents or state its inability to comply and the reasons for such inability, pursuant to CCP § 2031.230.

II. MOTION TO COMPEL FURTHER RESPONSES FROM LAVITEX, INC. TO REQUESTS FOR PRODUCTION

Defendant/cross-complainant Federal Insurance Company (“Federal”) moves for further responses from plaintiff/cross-defendant Lavitex, Inc. (“Lavitex”) to Requests for Production, Set One, Nos. 8, 11, 12, 17-19, 26-29, 39, 40, 44-50, and 54-58.

With respect to Nos. 8, 11, 12, 18, 19, 26-29, 39, 40, 44-50, and 54-58, further responses and document production are required for the same reasons stated with respect to the corresponding requests propounded on Arte Milano.

With respect to Request No. 17, which asks for documents relating to the last physical inventory count prepared by Lavitex, the reasoning as to Request No. 17 propounded on Arte Milano applies to Lavitex. No further response to Request No. 17 is required.

The motion is GRANTED IN PART. Plaintiff/cross-defendant Lavitex, Inc. is ordered to served further verified responses, without objection, to Requests for Production, Set One, Nos. Nos. 8, 11, 12, 14, 18, 19, 26-29, 39, 40, 44-50, and 54-58, propounded by defendant/cross-complainant Federal Insurance Company and produce responsive documents thereto that have not already been produced and that are in Lavitex, Inc.’s possession, custody, or control. The further verified responses must comply with CCP §§ 2031.220 or 2031.230. For Request for Production, Set One, No. 8, Lavitex, Inc. is ordered to provide the passcode for the QuickBooks database files. Lavitex, Inc. is ordered to comply with the rulings in the minute order within fifteen (15) days hereof.

To the extent that the Bates stamp ranges identified in any particular request do not pertain to the documents requested in the request, Lavitex, Inc. is ordered to serve supplemental responses that correctly identify the Bates stamp numbers containing responsive documents or state its inability to comply and the reasons for such inability, pursuant to CCP § 2031.230.

III. MOTION TO COMPEL FURTHER RESPONSES FROM ARTE MILANO TEXTILE, INC. TO SPECIAL INTERROGATORIES

This interrogatory asks: “Is the ‘AMEX’ account, which is referenced as ‘AMEX EPAYMENT ACH PMT’ in the Hanmi Bank statements that YOU submitted to FEDERAL, a personal credit card?” Arte Milano responded: “Arte Milano does not make any payments to AMEX, only Lavitex makes payments to this account.” Arte Milano’s response is non-responsive. Special Interrogatory No. 6 requires a “yes” or “no” answer.

Arte Milano does not oppose the motion. Accordingly, the motion is GRANTED. Within fifteen (15) days hereof, Arte Milano Textile, Inc. is ordered to serve a further verified response, without objection, to Special Interrogatories, Set One, No. 6.

IV. MOTION TO COMPEL FURTHER RESPONSES FROM LAVITEX, INC. TO SPECIAL INTERROGATORIES

Defendant/cross-complainant Federal Insurance Company (“Federal”) moves for further responses from plaintiff/cross-defendant Lavitex, Inc. (“Lavitex”) to Special Interrogatories, Set One, No. 6.

This interrogatory asks: “Is the ‘AMEX’ account, which is referenced as ‘AMEX EPAYMENT ACH PMT’ in the Hanmi Bank statements that YOU submitted to FEDERAL, a personal credit card?” Lavitex responded: “Lavitex makes the monthly Amex account payments and whatever personal charges were included, it would be allocated to the loan payable company.” Lavitex’s response is non-responsive. Special Interrogatory No. 6 requires a “yes” or “no” answer.

Lavitex does not oppose the motion. Accordingly, the motion is GRANTED. Within fifteen (15) days hereof, Lavitex, Inc. is ordered to serve a further verified response, without objection, to Special Interrogatories, Set One, No. 6.