Judge: Daniel S. Murphy, Case: 22STCV14915, Date: 2023-05-03 Tentative Ruling

Case Number: 22STCV14915    Hearing Date: May 3, 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 Wood and CWH then replaced Cross-Defendants and rescinded the LLC Agreement (ARLLCA) that the parties had signed.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 April 4, 2023, Defendant Louis Zylstra (Zylstra) filed a motion to compel Plaintiff to produce documents in accordance with its statements of compliance. On April 7, 2023, Defendant Zylstra & Associates (Z&A) filed a motion to compel Plaintiff to provide further responses to special interrogatories. The Court addresses both motions herein.  

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).)

On receipt of a response to interrogatories, the propounding party may move for an order compelling a further response if the propounding party deems that any of the following apply: (1) An answer to a particular interrogatory is evasive or incomplete; (2) An exercise of the option to produce documents under Section 2030.230 is unwarranted or the required specification of those documents is inadequate; (3) An objection to an interrogatory is without merit or too general. (Code Civ. Proc., § 2030.300, subd. (a).)

MEET AND CONFER

Motions to compel further responses must be accompanied by a meet and confer declaration demonstrating an attempt to resolve the issue informally. (Code Civ. Proc., §§ 2030.300(b)(1), 2031.310(b)(2), 2033.290(b)(1).) The Court finds that Defendants have satisfied the meet and confer requirement. (See Lam Decl.)

DISCUSSION

I. Special Interrogatories

            Plaintiff alleges that Z&A billed for work that was not performed. Accordingly, Z&A propounded the subject interrogatories to identify the supposed invoices and improper charges. Plaintiff objected but then responded substantively to SROG Nos. 1-4 and 6-8. Z&A contends that the responses are not full and complete because Plaintiff has not revealed all invoices and improper charges. Plaintiff only identified one invoice. However, Plaintiff responded with the information currently available and stated that discovery is ongoing. This is a sufficient response.

            SROG Nos. 5 and 9 asked Plaintiff to state the amount that Plaintiff contends was charged for work not performed. Plaintiff referenced two pages of documents that were produced, which consists of the single invoice previously discussed. This is an incomplete response. Reference to documents is only proper if answering the interrogatory would require a compilation, and the reference must provide sufficient information for Defendant to locate the information sought. (Code Civ. Proc., § 2030.230.)

Here, a compilation is not required for Plaintiff to simply calculate the improper charges arising from a single invoice, nor does Plaintiff’s response provide adequate information for Z&A to calculate the improper amount. Because Z&A denies that it charged for unperformed work, Z&A cannot tell simply by viewing the invoice what Plaintiff contends are improper charges. Although in response to SROG No. 4, Plaintiff identified unperformed work as “failed to place cement between the 17-1/2’ open hole and 12-1/2’ surface casing,” the invoice referenced in response to SROG Nos. 5 and 9 concerns different work. Therefore, Z&A cannot determine the relevant amount from the invoice even if it takes into context Plaintiff’s response to SROG No. 4. A further response is required for SROG Nos. 5 and 9.  

II. Requests for Production

            It is undisputed that Plaintiff replied to the subject RFPs with statements of compliance. Zylstra argues that Plaintiff has not produced all documents responsive to the RFPs, or at least it is impossible to tell which documents are responsive because Plaintiff has failed to label the production in compliance with Code of Civil Procedure section 2031.280(a). Plaintiff avers that it has produced all responsive documents based on currently available information. (Kaewert Decl. ¶ 4.) Plaintiff cannot be compelled to produce information it does not have. However, Plaintiff admits that the documents were not labeled according to Section 2031.280(a). Therefore, Plaintiff must do so.

CONCLUSION

            Z&A’s motion to compel further responses to interrogatories is GRANTED as to Nos. 5 and 9. Zylstra’s motion to compel production is GRANTED as to the labeling requirements under Section 2031.280(a). Plaintiff is to provide further interrogatory responses and properly-labeled document production within 20 days.