Judge: Daniel M. Crowley, Case: 21STCV24843, Date: 2024-02-09 Tentative Ruling

Case Number: 21STCV24843    Hearing Date: March 20, 2024    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Defendant Mechanics Bank’s motion to quash the notice to appear at trial served by Plaintiff Bear Valley 2005, LLC, as it pertains to Scott Givens, Doug Lutz, John DeCero, and Nathan Duda, and for a protective order is denied.

Defendant’s unopposed motion for leave to amend its Answer to Plaintiff’s First Amended Complaint is granted.  Defendant is ordered to file the proposed First Amended Answer with the Court within 10 days.

Defendant Mechanics Bank (“Mechanics Bank”) (“Defendant”) moves to quash the notice to appear at trial (“Notice”) served by Plaintiff Bear Valley 2005, LLC, (“Bear Valley”) (“Plaintiff”) as it pertains to Scott Givens, Doug Lutz, John DeCero, and Nathan Duda (“Bank Executives”), and for a protective order.  (Notice of Motion, pg. 2; C.C.P. §1987.1.)  In the alternative, Defendant moves for an order modifying and limiting Plaintiff’s notice.  (Notice of Motion Quash, pg. 2.)

Defendant moves unopposed for leave to amend its Answer and file an Amended Answer to Plaintiff’s first amended complaint (“FAC”) to set forth a single additional affirmative defense based on failure of condition precedent.  (Notice of Motion Amend, pgs. 1-2.)

1.     Motion to Quash

CRC Violation

CRC Rule 3.1354(b) provides, in part, “All written objections to evidence must be served and filed separately from the other papers in support of or in opposition to the motion.”  (CRC Rule 3.1354(b).)

Defendant’s evidentiary objection filed with its reply to the motion to quash was not filed served and filed separately from the other papers in support of its reply.  Therefore, the Court will not rule on Defendant’s evidentiary objection.

Background

On June 28, 2023, Plaintiff served Defendant with the Notice.  (Decl. of Cronin ¶10, Exh. 1.)[1]  The Notice commands attendance of the following seven individuals: (1) Lourdes Garcia Raval (“Raval”); (2) Nikki Merrifield-Olivia (“Merrifield-Olivia”); (3) Kim Gray (“Gray”); (4) Scott Givans (“Givans”); (5) Doug Lutz (“Lutz”); (6) John DeCero (“DeCero”); and (7) Nathan Duda (“Duda”).

Defendant filed the instant motion on July 18, 2023.  Plaintiff filed its opposition on July 31, 2023.  Defendant filed its reply on February 2, 2024.

Legal Standard

C.C.P. §1987.1(a) provides,

If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.

(C.C.P. §1987.1(a).)

C.C.P. §1987(b) provides:

In the case of the production of a party to the record of any civil action or proceeding or of a person for whose immediate benefit an action or proceeding is prosecuted or defended or of anyone who is an officer, director, or managing agent of any such party or person, the service of a subpoena upon any such witness is not required if written notice requesting the witness to attend before a court, or at a trial of an issue therein, with the time and place thereof, is served upon the attorney of that party or person. The notice shall be served at least 10 days before the time required for attendance unless the court prescribes a shorter time. If entitled thereto, the witness, upon demand, shall be paid witness fees and mileage before being required to testify. The giving of the notice shall have the same effect as service of a subpoena on the witness, and the parties shall have those rights and the court may make those orders, including the imposition of sanctions, as in the case of a subpoena for attendance before the court.

(C.C.P. §1987(b).)

The Apex Doctrine is a discovery rule applicable to motions for protective orders brought under the Discovery Act.  A party seeking to depose “a corporate president or other official at the highest level of corporate management [“apex”] . . . [must] show[ ] good cause that the official has unique or superior personal knowledge of discoverable information.”  (Liberty Mutual Insurance Co. v. Superior Court (1992) 10 Cal.App.4th 1282, 1286.)

The party moving for the deposition shall exhaust less intrusive discovery methods before requesting such deposition.  (Id. at pg. 1287.)  Less intrusive discovery methods may include interrogatories directed at the apex, the deposition of lower-level employees with relevant information, and a deposition of the corporation itself.  (Id. at pg. 1289.)  The trial court should consider whether such requirements have been met before ordering that an apex be produced for deposition.  (Id.)

Discussion

Defendant concedes that Plaintiff took the depositions of three lower-level employees Gray, Merrifield-Olivia, and Raval, whose names are included in the Notice.  (Motion, pg. 8.) 

Plaintiff has also served requests for production of documents and interrogatories seeking Defendant’s documents and information regarding the termination of the swap interest rate program and the discontinuation of loans secured by retail shopping centers.  (Decl. of Carvalho ¶3.)  Plaintiff’s discovery requests have led it to conclude that the testimonies of the Bank Executives are necessary to establish: (1) how the swap program termination was communicated to Raval and Goff; (2) what was the corporate policy with respect to extending Rabobank loans that has swap rate extension options; (3) on whose authority did Raval inform Plaintiff that the swap program was no longer available after it sought the extension at the swap rate; (4) what was the corporate policy with respect to the making and extending loans secured by retail shopping centers; and (5) on whose authority did Raval inform Plaintiff in the spring of 2020 that Defendant would not extend the loan because it was no longer making “retail loans.”  (See Decl. of Carvalho ¶¶6-11, Exhs. 1-4.)

Defendant has not submitted admissible evidence to this Court demonstrating that none of the four Bank Executives have any personal knowledge of the facts in this action and that each will suffer hardship if required to testify at trial.

Accordingly, Defendant’s motion is denied.

Conclusion

Defendant’s motion to quash the notice to appear at trial served by Plaintiff as it pertains to Bank Executives, and for a protective order is denied.

Moving Party to give notice.

2.     Motion for Leave to Amend Answer to FAC

Legal Standard

Courts have a liberal policy in favor of permitting amendments.  (Mabie v. Hyatt (1998) 61 Cal.App.4th 581, 596.)  The policy favoring amendments is so strong that denial of a request for leave to amend is rarely justified.  (Id.)  Requests for leave to amend will normally only be denied where the moving party has been dilatory in seeking leave to amend and where the delay in bringing the motion has resulted in prejudice to the opposing party.  (Hirsa v. Superior Court (1981) 118

Cal.App.3d 486, 490.)  A mere showing of unreasonable delay by the moving party without any showing of resulting prejudice to the opposing party is an insufficient ground to justify denial of a motion.  (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565.)

Courts show even greater liberality toward motions to amend answers than

motions to amend other pleadings, because “a defendant denied leave to amend is permanently deprived of a defense.”  (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159.)

The form and content of a notice of motion for leave to amend are governed by the rules governing motions generally. (C.C.P. §1010.)  The motion must include a copy of the proposed amendment (CRC, Rule 3.1324(a)(1)), and identify by page, paragraph, and line number any additions to and deletions from the prior pleading (CRC, Rule 3.1324(a)(2), (3)).

          Discussion

          Defendant’s motion for leave to amend its Answer and file a First Amended Answer (“FAA”) is granted.  Defendant’s motion substantially complies with CRC Rule 3.1324(a).  The motion includes a copy of the proposed FAA.  (Decl. of Cronin ¶10, Exh. 1.)   Defendant’s motion sets forth affirmative defense proposed to be added, but does not state where, by page, paragraph, and line number, the proposed additions/deletions are located.  (Motion, pg. 3; CRC Rule 3.1324(a)(3).)  However, Defendant’s proposed FAA highlights in yellow the affirmative defense to be added.  (See Decl. of Cronin ¶10, Exh. 1 at ¶13.)[2]

Defendant’s motion substantially complies with CRC Rule 3.1324(b).  Defendant’s counsel submitted a separate declaration that specifies the effect of the amendment and explains why the amendment is necessary and proper.  (Decl. of Cronin ¶¶12-13.)  Defendant asserts the amendment is necessary because Mechanics Bank has a viable affirmative defense based on failure of condition precedent.  (Decl. of Cronin ¶13.)

Defendant’s counsel states when the facts giving rise of the amended affirmative defense was discovered and why the request for amendment was not made earlier; Defendant’s counsel declares, “The facts giving rise to the proposed amendment were known to Mechanics Bank since the inception of this litigation. The proposed amendment is not intended to set forth new facts, but a new legal theory. Heretofore Mechanics Bank had been focused on different legal theories.”  (Decl. of Cronin ¶14.)  Defendant’s counsel declares, “[i]n June of 2022, Mechanics Bank filed a motion for summary judgment that was based entirely on Plaintiff’s failure to give written notice of its election to extend the subject loan (a condition precedent). Plaintiff’s opposition to that motion never argued that Mechanics Bank was barred from raising such a defense for failure to expressly plead a failure of condition precedent affirmative defense in its answer.”  (Decl. of Cronin ¶15.)

Plaintiff will not be prejudiced by this amendment because Plaintiff has known that Mechanics Bank has been asserting such a defense prior to this proposed amendment.

Based on the foregoing, Defendant’s motion for leave to amend its Answer and file a FAA is granted.  

          Conclusion

Defendant’s unopposed motion for leave to amend its Answer is granted.  Defendant is ordered to file the proposed FAA with the Court with the Court within 10 days of this order.

          Moving Party to give notice.

Dated:  March _____, 2024