Judge: Daniel S. Murphy, Case: 22STCV14915, Date: 2023-05-17 Tentative Ruling

Case Number: 22STCV14915    Hearing Date: May 17, 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 Wood and CWH then replaced Cross-Defendants and rescinded the LLC Agreement (ARLLCA) that the parties had signed.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 February 9, 2023, Triton filed the instant motion to quash the deposition subpoena directed at its counsel, Mark Greenfield. Plaintiff has not filed an opposition.

LEGAL STANDARD

            “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things …, 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.” (Code Civ. Proc., § 1987.1, subd. (a), (b).)   

DISCUSSION

Ordinarily, a party may take the deposition of any person. (Code Civ. Proc., § 2025.010.) However, “[d]epositions of opposing counsel are presumptively improper, severely restricted, and require ‘extremely’ good cause—a high standard.” (Carehouse Convalescent Hospital v. Superior Court (2006) 143 Cal.App.4th 1558, 1562.) “The circumstances under which opposing counsel may be deposed are limited to those where (1) no other means exist to obtain the information than to depose opposing counsel; (2) the information sought is relevant and not privileged; (3) the information is crucial to the preparation of the case.” (Spectra-Physics, Inc. v. Superior Court (1988) 198 Cal.App.3d 1487, 1496; Carehouse, supra, 143 Cal.App.4th at p. 1563.) The failure of any of these three prongs means the attorney cannot be deposed. (Carehouse, supra, 143 Cal.App.4th at p. 1563.)

            Here, these requirements are not met. Plaintiff has alternative sources of information related to the negotiation of the ARLLCA and Triton Member Option, such as other percipient witnesses. Mr. Greenfield was not involved in the negotiation or execution of the ARLLCA. Mr. Greenfield’s impressions and strategies are not crucial to Plaintiff’s case, and the information is privileged. Without an opposition, Plaintiff fails to dispute these facts or demonstrate the extenuating circumstances required to depose opposing counsel.

CONCLUSION

            Triton’s motion to quash is GRANTED.

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 February 10, 2023, Plaintiff filed the instant motion to quash the deposition subpoena directed at its financial restructuring expert, Alan White. E&B has not filed an opposition.

LEGAL STANDARD

            “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things …, 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.” (Code Civ. Proc., § 1987.1, subd. (a), (b).)   

DISCUSSION

            Plaintiff contends that E&B is prematurely seeking the deposition of Alan White before pertinent documents are produced. Plaintiff argues that E&B is improperly withholding documents pertaining to White under the guise of attorney-client privilege. Plaintiff requests the deposition notice to be quashed or stayed pending its motion to compel production of the subject documents. However, Plaintiff’s motion to compel was denied on April 3, 2023. Plaintiff offers no other reason for holding off on White’s deposition.

CONCLUSION

            Plaintiff’s motion to quash is DENIED.