Judge Daniel M. Crowley, Case Number: BC680875, Date: 2023-08-03 Tentative Ruling

Plaintiff Andrew Yong Ahn’s motion to quash Defendant VolumeCocomo Apparel, Inc.’s subpoena duces tecum for personal appearance and production of documents served on the custodian of records for Pacific City Bank, located at 3701 Wilshire Boulevard, Suite 900, Los Angeles, California 90010, is denied. The Court declines parties’ requests to award sanctions.

Plaintiff Andrew Yong Ahn’s motion to quash Defendant VolumeCocomo Apparel, Inc.’s subpoena duces tecum for personal appearance and production of documents served on the custodian of records for Pacific City Bank, located at 25350 Playa Serena Drive, Valencia, California 91381, is denied. The Court declines parties’ requests to award sanctions.

Plaintiff Andrew Yong Ahn (“Ahn”) (“Plaintiff”) moves to quash the Defendant VolumeCocomo Apparel, Inc.’s (“VCA”) (“Defendant”) subpoena duces tecum for personal appearance and production of documents served on the custodian of records for Pacific City Bank, located at 3701 Wilshire Boulevard, Suite 900, Los Angeles, California 90010 (“Subpoena 1”) on the grounds Subpoena 1 is (1) invasive of Plaintiff’s constitutionally protected right to financial privacy; (2) overbroad; and (3) not directly relevant to this case. (Notice Motion Subpoena 1, pg. 2.)

Plaintiff moves to quash VCA’s subpoena duces tecum for personal appearance and production of documents served on the custodian of records for Pacific City Bank, located at 25350 Playa Serena Drive, Valencia, California 91381 (“Subpoena 2”) on the grounds Subpoena 2 is (1) invasive of Plaintiff’s constitutionally protected right to financial privacy; (2) overbroad; and (3) not directly relevant to this case. (Notice Motion Subpoena 2, pg. 2.)

On October 24, 2017, Plaintiff filed his initial complaint. On March 12, 2018, Plaintiff filed his first amended complaint (“FAC”). On September 26, 2018, Plaintiff filed the operative third amended complaint (“TAC”) against Defendants VCA; VolumeCocomo Apparel Inc. of New York (“VCNY”); VolumeCocomo Apparel Shanghai Co., Ltd. (“VCA Shanghai”); VolumeCocomo Apparel Cambodia (“VCambodia”); Cocovol Apparel Cambodia, Inc. (“Cocovol”); Hyo Sik Chang aka Christopher Chang (“Christopher”) as individual and trustee of Sue Hyun Chang Life Estate Trust; and Suehyun Chang aka Sue Hyun Chang aka Suhyun Chang (“Suehyun”) as individual and trustee of Sue Hyun Chang Life Estate Trust (collectively, “Defendants”), alleging eight causes of action: (1) breach of fiduciary duty; (2) constructive fraud; (3) removal of director (Corp. Code §304); (4) breach of written contracts; (5) breach of the implied covenant of good faith and fair dealing; (6) negligence; (7) accounting; and (8) declaratory relief.

On November 13, 2018, VCA filed its cross-complaint against Plaintiff. On March 1, 2021, VCA filed the operative first amended cross-complaint (“FACC”) against Plaintiff alleging ten causes of action: (1) breach of fiduciary duty; (2) fraudulent misrepresentation; (3) unjust enrichment; (4) declaratory relief re characterization of alleged loans; (5) declaratory relief re Plaintiff’s voluntary resignation; (6) declaratory relief re removal of director and officer; (7) declaratory relief re removal of director and officer; (8) declaratory relief re declarations of disability and sale of ownership interests; (9) conversion; and (10) common count – money had and received.

Plaintiff filed the instant motions on July 11, 2023. VCA filed its oppositions on July 28, 2023. Plaintiff filed his replies on August 1, 2023.

C.C.P. §1987.1(a) provides, in pertinent part, as follows: “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things . . . at the taking of a deposition, the court, upon motion reasonably made by [a party] . . . , 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.”

On June 30, 2023, VCA served a subpoena duces tecum to the custodian of records of Pacific City Bank, 3701 Wilshire Boulevard, Suite 900, Los Angeles, CA, 90010, for a noticed deposition on July 21, 2023. (Motion Subpoena 1, Decl. of Beck ¶3, Exh. 1.) The subpoena requests nine categories of documents relating to real property located at 8236-8276 Firestone Boulevard, Downey, California 90241:

a. 1st Trust Deed in the amount of $9,200,000.00 related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

b. Loan application (with all forms, schedules, and attachments) regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241;

c. Income and expense statement(s) regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

d. Personal financial statement(s) regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

e. Background check(s) regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

f. Consumer report(s) regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

g. Written appraisal report(s) regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

h. Proof(s) of collateral regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

i. Summary of reported assets regarding Pacific City Bank’s loan related to purchase of 8236-8276 Firestone Boulevard, Downey, California 90241.

Unlike privilege, the protection afforded by the right to privacy is qualified, not absolute. In each case, the court must carefully balance the right of privacy against the need for discovery. The showing required to overcome the protection depends on the nature of the privacy right asserted; in some cases, a simple balancing test is sufficient, while in others, a compelling interest must be shown. “Only obvious invasions of interests fundamental to personal autonomy must be supported by a compelling interest.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 557; Hill v. National Collegiate Athletic Association (1994) 7 Cal.4th 1, 34-35; Kirchmeyer v. Phillips (2016) 245 Cal.App.4th 1394, 1403; Lewis v. Superior Court (2017) 3 Cal.5th 561, 572-573 [medical board obtaining doctor’s prescribing history did not intrude on fundamental autonomy right, so balancing test applied].)

The burden is on “the party asserting a privacy interest to establish its extent and the seriousness of the prospective invasion,” and then the court must “weigh the countervailing interests the opposing party identifies.” (Williams, 3 Cal.5th at pg. 557.)

Plaintiff fails to meet its burden to demonstrate that the production of the records sought in Subpoena 1 poses an “obvious invasion[] of interests fundamental to personal autonomy.” A right of privacy exists as to a party’s confidential financial affairs, even when the information sought is admittedly relevant to the litigation. (Cobb v. Superior Court (1979) 99 Cal.App.3d 543, 550 [privacy as limit on discovery of defendant’s net worth where punitive damages sought]; see also Civ. Code § 3295(c).) However, Plaintiff’s right to the privacy of his financial records is not akin to his right to bodily autonomy or associational rights. (See Hill, 7 Cal.4th at pg. 34.) The bank records sought by Subpoena 1 are records reflecting financial information which relate to and are relevant to financial issues in contention and are no more intrusive than other financial documents which Plaintiff has already produced. Indeed, Hill cited to a “subpoena for trust account records”—i.e., records similar to those sought here—as an example of information that would not qualify as fundamental to personal autonomy. (Id. at pg. 34 n.11, citing Doyle v. State Bar (1982) 32 Cal.3d 12.)

Assuming, arguendo, however, that Plaintiff met his burden to establish Subpoena 1 invades his privacy rights, VCA met its burden to raise “legitimate and important countervailing interests disclosure serves.” (Williams, 3 Cal.5th at pg. 552.) Here, VCA identifies its countervailing interest in its right to request relevant documents, which promote the state policy in the “ascertainment of truth and the just resolution of legal claims.” (Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 657-658.) Under similar circumstances courts have found the disclosure of bank records and financial information to outweigh privacy rights. (Doyle v. State Bar (1982) 32 Cal.3d 12, 21.) The Court in Doyle v. State Bar ruled a subpoena subject to privacy challenges, which similarly sought bank records, was “directly relevant to the matter under investigation,” involving the “possible misuse or misappropriation of . . . funds.” (Id.)

Here, as in Doyle, the bank records sought in Subpoena 1 tend to evidence or support the existence or absence of funds Plaintiff may have allegedly converted from company funds and relates to the alleged source of Plaintiff’s substantially increased funds. This information is also particularly relevant to, without limitation, certain elements of Defendant’s claims, such as damages, if Plaintiff had been unjustly enriched, and the amount by which Plaintiff may have to make restitution or disgorge ill-gotten gains. (Hecht, Solberg, Robinson, Goldberg & Bagley LLP v. Superior Court (2006) 137 Cal.App.4th 579, 595, 599 [affirming order compelling disclosure of detailed accounting records as such matters were relevant to causation and damages].) VCA’s subpoena requests are narrowly drawn and seek specific, relevant documents.

Further, Plaintiff’s privacy interests are protected by the stipulated protective order in place, which provides that documents classified as “Confidential” or “Attorney’s Eyes Only” can only be circulated to a limited number of participants in the case, and it restricts the use of such documents only for purposes of this litigation. (Decl. of Kang ¶6, Exh. 2.) This protection refutes any claim that production of the records would be a serious invasion of Plaintiff’s privacy. (Hill, 7 Cal.4th at pg. 38 [“[I]f intrusion is limited and confidential information is carefully shielded from disclosure except to those who have a legitimate need to know, privacy concerns are assuaged.”].)

C.C.P. §1987.2(a) authorizes the awarding of reasonable attorney’s fees and costs incurred or expended in making a motion to quash a subpoena “if the court finds the motion was . . . opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.” C.C.P. §2023.030 also states in pertinent part, “[t]he court may impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct.”

In light of the Court’s ruling on the motion, Plaintiff’s request for sanctions is denied.

The Court declines to award VCA’s request for sanctions on the basis the request was not properly noticed.

Subpoena 2 is substantively the same as Subpoena 1, aside from the fact that it was propounded on the custodian of records for Pacific City Bank, located at 25350 Playa Serena Drive, Valencia, California 91381. (Motion Subpoena 2, Decl. of Beck ¶3, Exh. 1 at Attach. 2.)

For the same reasons as stated with regards to Subpoena 1, the Court denies Plaintiff’s motion to quash Subpoena 2.

In light of the Court’s ruling on the motion, Plaintiff’s request for sanctions is denied.

The Court declines to award VCA’s request for sanctions on the basis the request was not properly noticed.

Plaintiff’s motion to quash VCA’s subpoena duces tecum for personal appearance and production of documents served on the custodian of records for Pacific City Bank, located at 3701 Wilshire Boulevard, Suite 900, Los Angeles, California 90010, is denied. The Court declines parties’ requests to award sanctions.

Plaintiff’s motion to quash VCA’s subpoena duces tecum for personal appearance and production of documents served on the custodian of records for Pacific City Bank, located at 25350 Playa Serena Drive, Valencia, California 91381, is denied. The Court declines parties’ requests to award sanctions.

Hon. Daniel M. Crowley

Judge of the Superior Court