Judge Daniel S. Murphy, Case Number: 24STCV01509, Date: 2025-02-28 Tentative Ruling

On January 19, 2024, Plaintiff Farbod Edwin Nikravesh filed this action against Defendant Pacific Specialty Insurance Company, alleging breach of contract and breach of the implied covenant of good faith and fair dealing. The complaint stems from an insurance denial of coverage.

On December 2, 2024, Defendant served a subpoena on AmWest Funding Corp. (AmWest), the mortgage lender for the subject property. The subpoena seeks the loan file for “the Borrowers,” defined as Plaintiff and his business partner, Joshua Hiekali.

On December 18, 2024, Plaintiff filed the instant motion to quash the subpoena. Defendant filed its opposition on February 14, 2025. Plaintiff filed his reply on February 21, 2025.

“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(a), (b).) Good cause must be shown to compel a nonparty to produce documents. (See Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.)

“[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010.) “‘Relevant’ evidence is evidence ‘having any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action.’” (D.Z. v. Los Angeles Unified School Dist. (2019) 35 Cal.App.5th 210, 229.)

Defendant’s theory of the case is that Defendant was entitled to rescind the insurance policy because Plaintiff committed fraud in relation to the insurance application. Specifically, Defendant contends that Plaintiff misrepresented that the property would be his primary residence, when Plaintiff in fact never moved in and instead intended to develop the property.

Discovery revealed that Plaintiff purchased the property jointly with his business partner, Joshua Hiekali, obtaining a loan from AmWest. (Vachon Decl. ¶ 4.) Plaintiff and Hiekali also formed Shalom Bro’s, LLC in connection with the purchase. (Ibid.) Discovery further revealed that Plaintiff never moved into the property and was not residing at the property at the time of the fire. (Id., ¶¶ 7, 11.) Defendant thus denied Plaintiff’s claim, citing material misrepresentation. (Id., ¶ 15.) Plaintiff contends that he did not commit fraud in relation to his insurance application because at the time of the application, he intended to reside at the property. (Id., ¶ 16.)

Based on these facts, a central dispute in the case will be Plaintiff’s intent for the subject property at the time of his insurance application. Defendant has reason to believe that Plaintiff made material misrepresentations on his application, while Plaintiff contends his statements were true when made. This establishes good cause to discover information pertaining to Plaintiff’s intentions for purchasing the property. The loan file possessed by AmWest is likely to contain such information. Therefore, Defendant has good cause for the subpoena.

“The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious.” (Williams v. Sup. Ct. (2017) 3 Cal.5th 531, 552.) If the court finds a privacy interest, the court must balance the privacy concerns against the need for the information. (Id. at p. 552.) Discovery of private information is governed by the more stringent standard of direct relevance in order to prevent a fishing expedition of “tangentially pertinent sensitive information.” (Boler v. Sup. Ct. (1987) 201 Cal.App.3d 467, 472.) “The burden is on the party seeking the constitutionally protected information to establish direct relevance.” (Davis v. Superior Court (1992) 7 Cal.App.4th 1008, 1017.)

“[A] party has a privacy interest in his or her personal financial records.” (Babcock v. Superior Court (1994) 29 Cal.App.4th 721, 723.) However, in this particular case, Defendant’s need for the information outweighs the privacy interests. For the reasons discussed above, the information is directly relevant to the case. The subpoena is narrowly tailored to the loan on the subject property. There is no indication that Plaintiff has any other loans with AmWest. Furthermore, a protective order adequately addresses the privacy concerns. (See Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 38.) Neither Heikali nor Shalom Bro’s, LLC has objected to the subpoena, and Plaintiff’s privacy objection on their behalf is not well-taken.[1] Therefore, privacy does not preclude the production being sought.

Plaintiff argues that the subpoena violates Code of Civil Procedure section 1985.3 because it combines a request for party and non-party records. Section 1985.3 requires a notice to be served upon the consumer whose records are being sought. Nothing in the statute precludes a subpoena from demanding records pertaining to both a party and non-party. Defendant served the requisite notice to consumer on each of Plaintiff, Heikali, and Shalom Bro’s, LLC. (Vachon Decl. ¶ 19, Ex. 7.) Plaintiff fails to show any defect with these notices. Thus, Defendant complied with the consumer notice requirement.

Plaintiff’s motion to quash is DENIED. Production shall be subject to a protective order.

[1] Additionally, a corporate entity has a diminished right of privacy. (See Ameri-Medical Corp. v. Workers’ Comp. Appeals Bd. (1996) 42 Cal.App.4th 1260, 1287.)