Judge: David A. Rosen, Case: EC065113, Date: 2023-02-10 Tentative Ruling

Case Number: EC065113    Hearing Date: February 10, 2023    Dept: E

Hearing Date: 2/10/2023 – 8:30am
Case No: EC065113
Trial Date: 06/05/2023
Case Name: INTEGRATED DYNAMIC SOLUTIONS v. AUTOMATED SYSTEMS AMERICA

TENTATIVE RULING ON MOTION FOR LEAVE TO TAKE SUBSEQUENT DEPOSITION(S)

Moving Party: Defendant/Cross-Complainant, Automated Systems America, Inc. (Defendant or ASAI)

Responding Party: Plaintiff/Cross-Defendant, Integrated Dynamic Solutions, Inc. (Plaintiff or IDS) – No Opposition submitted.

No Reply.

Proof of Service Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok

Moving Papers: Motion; Declaration of Katherine J. Vescera; Proposed Order; Declaration of John T. Steely

Reply Papers: Notice of Non-Receipt of Opposition

RELIEF REQUESTED
Defendant/Cross-Complainant, Automated Systems America, Inc. (Defendant or ASAI) moves this Court for an order granting ASAI leave to take subsequent deposition(s) of Nasrollah Gashtili (Gashtili) in his capacity as Plaintiff/Cross-Defendant Integrated Dynamic Solutions, Inc.’s (Plaintiff or IDS) Person Most Knowledgeable (PMK).

ASAI seeks this Order on the grounds that there is good cause to permit ASAI to take subsequent deposition(s) of Gashtili in his capacity as Plaintiff’s PMK because: (i) California Code of Civil Procedure section 2025.290 does not impose any limit on the number of times or for how many hours a PMK may be deposed; and (ii) although Gashtili was previously deposed on two (2) occasions as Plaintiff’s PMK, those depositions were taken by ASAI’s former counsel, Lawrence Washor, Esq. (“Mr. Washor”), who was terminally ill at the time and was not capable of conducting a coherent and thorough deposition. Given that trial in this case is set for June 5, 2023—less than five (5) months away—it is imperative that ASAI is able to depose Gashtili in his capacity as Plaintiff’s PMK to obtain additional testimony regarding the facts and documents that were not previously covered by Mr. Washor.

This Motion is made pursuant to California Code of Civil Procedure section 2025.610.

BACKGROUND (According to Moving Papers)
This case arises from claims made by Plaintiff/Cross-Defendant Integrated Dynamic Solutions, Inc. (Plaintiff” or IDS) that Defendant/Cross-Complainant Automated Systems America, Inc. (Defendant or ASAI) allegedly breached a contract that was entered into by ASAI and IDS on or around September 17, 2009 (the “2009 Agreement”). Specifically, IDS claims that ASAI failed to pay it all the monies that it was entitled to pursuant to the terms of the 2009 Agreement.

On or about March 14, 2016, Plaintiff, IDS, filed its Complaint against Defendant, ASAI, for (1) Breach of Contract; (2) Intentional Fraudulent Misrepresentation; (3) Negligent Misrepresentation; (4) Accounting; (5) Declaratory Relief; (6) Unjust Enrichment; and (7) Conversion. On or around April 21, 2016, Defendant filed a Cross-Complaint in this matter. On or about August 10, 2016, Defendant filed a First Amended Cross-Complaint (FACC) against IDS and IDS’ owner, Gashtili, for (1) Breach of the 2009 Agreement; (2) Breach of the 2014 Agreement; (3) Fraud; (4) Negligent Misrepresentation; (5) Declaratory Relief; (6) Unjust Enrichment; and (7) Conversion. Defendant’s moving papers note that Gashtili has since been dismissed from this action in his individual capacity.

Defendant’s prior counsel, Mr. Washor, deposed Gashtili as IDS’ designated PMK for the first time on March 30, 2017 (the First Volume) and again on November 20, 2017 (the Second Volume) on November 20, 2017. Mr. Washor deposed Mr. Gashtili in his personal capacity on November 9, 2017, but Defendant notes that it does not seek to take a subsequent deposition of Gashtili in his personal capacity.

Defendant now seeks leave of Court to take the subsequent deposition(s) of Gashtili in his capacity as Plaintiff’s PMK because there is good cause to do so. Defendant argues that good cause exists because:

1.      California Code of Civil Procedure section 2025.290 does not impose any limit on the number of times or for how many hours a PMK may be deposed; and

2.      The First and Second Volume of Gashtili’s deposition as Plaintiff’s PMK were both taken by ASAI’s former counsel, Lawrence Washor, Esq. (“Mr. Washor”), who was terminally ill at the time and was not capable of conducting a coherent, thorough deposition. Mr. Washor did not discuss many key facts and documents with Gashtili. Rather, Mr. Washor spent valuable time bickering with Gashtili and repeatedly asking the same questions. Given that trial in this case is set for June 5, 2023—less than five (5) months away— it is particularly important for ASAI to obtain additional testimony from Gashtili as Plaintiff’s PMK regarding the facts and documents not previously covered by Mr. Washor.

ANALYSIS
Defendant moves for leave to take a subsequent deposition under CCP §2025.610. California Code of Civil Procedure section 2025.610 states as follows:

“(a) Once any party has taken the deposition of any natural person, including that of a party to the action, neither the party who gave, nor any other party who has been served with a deposition notice pursuant to Section 2025.240 may take a subsequent deposition of that deponent.

(b) Notwithstanding subdivision (a), for good cause shown, the court may grant leave to take a subsequent deposition, and the parties, with the consent of any deponent who is not a party, may stipulate that a subsequent deposition be taken.

(c) This section does not preclude taking one subsequent deposition of a natural person who has previously been examined under either or both of the following circumstances:

(1) The person was examined as a result of that person’s designation to testify on behalf of an organization under Section 2025.230.

(2) The person was examined pursuant to a court order under Section 485.230, for the limited purpose of discovering pursuant to Section 485.230 the identity, location, and value of property in which the deponent has an interest.

(d) This section does not authorize the taking of more than one subsequent deposition for the limited purpose of Section 485.230.”

(CCP §2025.610(a)-(d).)

Defendant is arguing that it has good cause under CCP §2025.610(b) to permit Defendant to take a subsequent deposition of Gashtili in his capacity as Plaintiff’s PMK.

First Good Cause Argument

Defendant’s first argument as to good cause is that it argues the CCP does not limit the number of times or for how many hours a PMK may be deposed. Defendant cites to CCP §2025.290(a) and 2025.290(b)(5).

CCP §2025.290(a) states, “(a) Except as provided in subdivision (b), or by any court order, including a case management order, a deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to seven hours of total testimony. The court shall allow additional time, beyond any limits imposed by this section, if needed to fairly examine the deponent or if the deponent, another person, or any other circumstance impedes or delays the examination.” (Ibid.)

CCP §2025.290(b)(5) states, “(b) This section shall not apply under any of the following circumstances: (5) To any deposition of a person who is designated as the most qualified person to be deposed under Section 2025.230.” (Ibid.) Further, 2025.230 states, “If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.” (CCP §2025.230.)

Therefore, Defendant’s argument appears to be that although 2025.290(a) limits the deposition to seven hours, this limit does not apply to the deposition of a person who is designated as the most qualified person to be deposed under Section 2025.230. Defendant thus states that since the First Volume was only conducted for 5 hours and since the Second Volume was only conducted for five hours, Gashtili has only been deposed for 10 total hours. Defendant argues that 10 hours is not enough time to adequately cover all relevant facts and documents considering the fact that Plaintiff has produced more than 62,000 pages worth of documents in this case. Defendant also cites to two unpublished cases to stand for the proposition that courts have refused to limit PMK deposition time limitations.

Here, the Court is not persuaded by Defendant’s argument that good cause has been established based on the argument that the CCP doesn’t limit the number of times or for how many hours a PMK may be deposed. While Defendant may have accurately pointed out that the CCP does not limit the number of hours to depose a PMK, Defendant does not support its argument with any citation that there is no limit to the number of times a PMK may be deposed. In fact, in a different section of the motion, Defendant argued that under CCP §2025.610(a)-(b), a subsequent deposition may be taken if good cause is shown. Therefore, it appears that Defendant must still show good cause for the basis to take a subsequent deposition.

Second Good Cause Argument
The second argument as to why there is good cause to grant leave to take a subsequent deposition is that Defendant’s prior counsel, Mr. Washor, was terminally ill at the time of taking the depositions and as a result, many facts and documents that are crucial to ASAI’s claims and defenses were not discussed in full – if at all – at those depositions.

Defendant attaches the Declaration of John T. Steely, Chief Operating & Information Officer of Passport Technology USA, Inc., formerly known as ASAI. Steely stated he was the primary point of contact for ASAI during the time Washor represented ASAI prior to Washor’s passing, that he is informed and believes that Washor was suffering from cancer and undergoing treatment throughout 2017 and 2018 while this action was ongoing, that on April 5, 2018 Washor passed away from cancer, and one month prior to his passing, Steely met with Washor and noticed Washor seemed unwell at the time. (Decl. Steely ¶2-6.)

Defendant’s motion argues there is good cause because: (1) Washor only discussed two substantive documents with Gashtili at the First and Second Volume of the depositions despite the fact that Plaintiff produced 62,000 pages worth of documents; (2) During the First and Second Volume, Washor questioned Gashtili about information contained in certain documents produced by Plaintiff, but Washor did not attach those documents as exhibits to the deposition transcript and did not go over those physical documents with Gashtili; (3) Failure to point out specific documents to support the line of questioning resulted in unclear deposition transcripts; (4) The productivity of the depositions was impeded by Mr. Washor becoming unnecessarily angry during the depositions and having outbursts and asking irrelevant questions on numerous occasions; (5) Mr. Washor engaged in many personal disagreements with Gashtili which interfered with Washor’s ability to obtain testimony relevant to ASAI’s claims and defenses in this matter; (6) Washor wasted time asking questions that had already been covered numerous times, and (7) Washor expressed on the record that he was feeling ill and needed to end the First Volume of Gashtili’s deposition early.

Defendant seeks to depose Gashtili about facts and documents not covered by Washor previously and to depose Gashtili about additional facts and documents essential to ASAI’s claims and defenses.

Defendant states:

For example, while Mr. Washor did ask Gashtili certain questions about Plaintiff’s contention that ASAI underpaid Plaintiff pursuant to the 2009 Agreement, Mr. Washor did not rely on any documents while engaging in that line of questioning. At the crux of this case is Plaintiff’s claim that it was being underpaid, and obtaining Gashtili’s testimony about any and all documents relevant to that claim is essential to ASAI’s ability to adequately prepare for trial. In particular, ASAI has produced certain spreadsheets that show ASAI’s profits by casino from 2009 through 2014 and also show the percentage of profits paid to Plaintiff each month (the “Spreadsheets”). Certainly, obtaining Gashtili’s testimony about the Spreadsheets will aid both ASAI and Plaintiff in assessing the issues of liability and damages in this case. In particular, ASAI should be permitted to ask Gashtili about Plaintiff’s understanding as to what the rows and columns of the Spreadsheets show, how Plaintiff interprets the information in the Spreadsheets, the method of calculation used for any and all payments made by ASAI to Plaintiff, and why Plaintiff contends that the Spreadsheets are insufficient to demonstrate that ASAI was not underpaying Plaintiff.

Additionally, Mr. Washor did not adequately discuss—if at all—certain details related to the audit that FR&R conducted of ASAI’s books and records (the “Audit”). In the FACC, ASAI specifically alleges that Plaintiff breached the 2014 Agreement by failing to perform the audit in a “timely, competent, and non-disruptive fashion” and “repeatedly requesting documentation and information that was already in its possession….” Vescera Decl. ¶ 5, Ex. 2. ASAI should be permitted to ask Gashtili about Plaintiff’s demand for the Audit, what documents were provided to FR&R for the Audit, why the Audit was not completed, the manner in which FR&R conducted the Audit, if FR&R ever expressed any opinion to Plaintiff about the findings of the audit, etc. These questions all seek information directly relevant to ASAI’s claims in the FACC—information that was not covered by Mr. Washor.

These are just a few of the additional topics about which ASAI seeks to obtain Gashtili’s deposition testimony that were not adequately covered by Mr. Washor previously.

(Def. Mot. p. 11-12.)

TENTATIVE RULING
As a preliminary matter, the Court is entirely unclear as to what Defendant is trying to argue in Footnote 1. Defendant states it doesn’t believe that it is necessarily required to seek leave of Court to further depose Gashtili in his capacity as Plaintiff’s PMK; however, Defendant’s entire motion is premised on 2025.610. In particular, Defendant cites 2025.610(a)-(b) which discusses how a subsequent deposition may not be taken; however, if good cause is shown, the court may grant leave to take a subsequent deposition. To add even further confusion, despite Footnote 1 stating it isn’t necessary to seek leave of Court, Footnote 1 also states it believes that the most efficient way to resolve this dispute is by seeking this Court’s permission to further depose Gashtili. Also, Footnote 1 states, “To the extent the Court believes a motion to compel Gashtili’s deposition in his capacity as Plaintiff’s PMK is required instead, ASAI will bring that motion subsequent to the Court ruling on the instant Motion.” Based on what appear to be contradictory arguments by Defendant, the Court does not know what argument Defendant is trying to assert in its Footnote 1 and the corresponding portion of the motion.

The Court is also entirely unclear as to what Defendant is trying to argue in Footnote 4. Footnote 4 states, “While California Code of Civil Procedure section 2025.610 seemingly applies to depositions of individuals in their personal capacity, not individuals deposed in their capacity as an entity’s PMK, ASAI believes bringing this Motion pursuant to California Code of Civil Procedure section 2025.610 is proper here.” Here, the Court is confused as to why Defendant is arguing that the statute it moved under – 2025.610 – is not applicable to individuals deposed as PMK’s; yet, Defendant is still moving under this statute as an individual deposed as a PMK.

As to establishing good cause for the Court to grant leave to take a subsequent deposition, Defendant’s presentation of good cause is barely enough to prevail.

For example, noticeably absent from the declaration of Steely is that Steely did not state Washor was undergoing cancer treatment when the depositions took place. Steely only stated on information and belief that Washor suffered from cancer and underwent treatment throughout 2017 and 2018 and that Washor passed on April 5, 2018. It is possible that Washor was not undergoing treatment during the depositions.

Further, Defendant argues that Washor’s health condition prevented him from conducting competent, thorough depositions, but Defendant points to no evidence that Washor’s deficiencies in the depositions were due to his cancer or treatment. Defendant only points to Washor’s statement in the First Volume that Washor was feeling unwell, that his voice is hard to hear, and that the deposition will adjourn to the 6^th of April. Nothing in the portion that Defendant cited includes Washor stating anything about his deposition suffering from incompetency because of his health. Defendant’s arguments as to the health of Washor affecting his ability to competently depose Gashtili is based on conjecture.

However, given the death of moving party’s former counsel, Mr. Washor, and the ambiguity that has resulted in terms of what was being referred to for lack of exhibits, the Court finds there is good cause to have an additional deposition session to clarify which exhibits Washor was referring to in the prior sessions when deposing Gashtili. Further, Defendant’s counsel is allowed to cover issues that are reasonably calculated to lead to the discovery of admissible evidence that were not covered in the prior two volumes. The Court is not granting authority for a complete re-deposition of Gashtili; the Court is allowing a subsequent deposition to clarify the exhibits Washor was referring to in the prior sessions and to depose Gashtili in his capacity as PMK to cover issues that are reasonably calculated to lead to the discovery of admissible evidence that were not covered in the prior sessions when deposing Gashtili.

Defendant’s motion is granted in part and denied in part as stated above.