Judge: Daniel S. Murphy, Case: 22STCV14915, Date: 2023-03-06 Tentative Ruling

Case Number: 22STCV14915    Hearing Date: March 6, 2023    Dept: 32

BACKGROUND

            On May 4, 2022, Plaintiff WG Holdings SPV, LLC (WGH) initiated this action for breach of fiduciary duties, breach of contract, interference, and fraud stemming from Defendants’ purported mismanagement of Plaintiff.

The complaint alleges that Defendant E&B Natural Resources Management Corporation (E&B) sought to purchase a 25% stake in WGH. Due to financial issues with its lenders, E&B could not directly deal with WGH. Instead, E&B allegedly formed Defendant Triton LA, LLC (Triton) to hold E&B’s 25% interest in WGH. The complaint alleges that the arrangement was induced by fraud and that Defendants merely sought to take over WGH’s assets for themselves. Triton allegedly demanded a higher ownership stake in WGH, which WGH’s board denied. Thereafter, Defendants allegedly mismanaged WGH’s finances and operations, leading to the damages sought in this action.

Triton has cross-complained against Scott Wood (Wood), William Nicholson (Nicholson), and CW Children Holdings, LLC (CWH). Triton asserts causes of action for harm done to Triton and asserts claims derivatively on behalf of WGH. Triton and CWH are allegedly the sole members of WGH. Wood and Nicholson are two of three board members on WGH, both appointed by CWH. Triton alleges that Wood, Nicholson, and CWH colluded to deprive Triton of its rights and also mismanaged WGH assets. The operative Second Amended Cross-Complaint (SACC) was filed on October 27, 2022.

Wood and CWH have filed their own cross-complaint against Triton, E&B, and various others. Wood wanted to invest in oil and gas properties and came into contact with Galesi Group (Galesi), a consortium of companies with experience in operating oil and gas assets. Wood was allegedly led to believe that Galesi was financially solvent and had the expertise needed to operate the oil and gas properties he sought to purchase. Wood paid the money to purchase the oil and gas assets and formed CWH and WGH to hold his 75% interest. Wood agreed to give Galesi 25% in return for Galesi’s promise to operate the assets and pay government bond premiums. Cross-Defendants allegedly lied about their financial stability, capability to operate the assets, and intent to pay the government bond premiums. Wood and CWH then replaced Cross-Defendants and rescinded the LLC Agreement (ARLLCA) that the parties had signed.

            On January 20, 2023, Triton filed a motion to compel WGH’s production of documents in accordance with its statements of compliance. Triton filed an amended motion on January 25, 2023. E&B filed a substantially similar motion on January 26, 2023.

LEGAL STANDARD

            “If a party filing a response to a demand for inspection, copying, testing, or sampling . . . thereafter fails to permit the inspection, copying, testing, or sampling in accordance with that party’s statement of compliance, the demanding party may move for an order compelling compliance.” (Code Civ. Proc., § 2031.320(a).)

DISCUSSION

             WGH does not dispute responding to the subject RFPs with statements of compliance. However, WGH argues that the motions are premature because it has been providing documents through a rolling production. WGH contends that Defendants cannot suddenly seek production of all remaining documents whilst WGH is continuing to comply with the RFPs. However, Defendants are not required to wait indefinitely for responsive documents that WGH has already agreed to produce. The requests were first propounded back in August 2022, approximately seven months ago. WGH must produce the remaining responsive documents in its possession without further delay.

            With regards to Triton’s requests, the parties appear to have limited the scope of production during meet and confer. In particular, WGH’s counsel sent Triton’s counsel a letter on November 18, 2022, summarizing WGH’s understanding of the scope of the requests after various telephonic conferences. (Pelham Decl., Ex. E.) Triton’s counsel responded in a December 12, 2022 letter insisting that WGH must produce the documents as indicated in WGH’s November 18 letter. (Id., Ex. F.) Triton did not dispute the scope of the requests as indicated in the November 18 letter.

On December 20, 2022, Triton’s counsel sent another letter demanding documents “[p]ursuant to our meet and confer,” reminding WGH of the promises it made in the November 18 letter. (Pelham Decl., Ex. H.) For example, regarding RFP Nos. 35-36, “WGH agreed to produce documents relating to employment or contracting agreements and any rosters or directories of WGH’s employees and contractors.” (Ibid.) Regarding RFP No. 40, “WGH agreed to produce documents relating to expense reports reflecting expenses over $500.” (Ibid.) Yet, on this motion, Triton relies on these RFPs for the broader proposition that WGH must produce all communications with its consultants. (Mtn. 15:5-20.)

When confronted by WGH over the expanded scope of its requests which seemingly reneged on prior meet and confer agreements (Pelham Decl., Ex. J), Triton acknowledged that it had “agreed to narrow and whittle down the categories of documents that WGH should be focused on” (id., Ex. K). Triton then claimed that the documents still missing were “[t]he complete and true general ledger,” “Scott Wood’s email correspondence and other communications such as text messages,” and “documentation for expense reports.” (Ibid.) Yet, Triton demands more than that in this motion, arguing that WGH must produce all communications with Jeffrey Bartlett, all communications regarding E&B’s financial condition, and all communications with consultants, because they fall within the categories defined in the RFPs. But even if the RFPs as originally written may encompass a broader range of documents, the parties’ subsequent agreement governs the actual scope of production.

CONCLUSION

            Defendants’ motions to compel production are GRANTED. Pursuant to its statements of compliance, WGH must produce nonprivileged responsive documents in its possession within 20 days. Production is subject to the limitations agreed upon by the parties. (See Pelham Decl., Ex. E-K.) Sanctions are denied as the parties acted with substantial justification.