Judge: Elaine Lu, Case: 19STCV11560, Date: 2023-08-08 Tentative Ruling

Case Number: 19STCV11560    Hearing Date: August 10, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On April 3, 2019, Plaintiff David Max (“Plaintiff”) filed the instant action against Defendants 8e6 Corp. (“8e6”), George Shih (“Shih”), Frank Wood (“Wood”), Mahendra Vora (“Vora”), Vora Ventures LLC, Secret Communications II LLC, Darwin Group LLC, Log-On Darwin LLC, Darwin Filter (collectively “Defendants”), and Rodney Miller.[1]  The complaint asserted three causes of action for (1) Fraud and Breach of Fiduciary Duty, (2) Failure to Produce Books and Records, and (3) Derivative Claim for Breach of Fiduciary Duty.  On November 6, 2019, the instant action was deemed related to BC645117 and 19STCV30623.  (Minute Order 11/6/19.) 

On February 5, 2020, the Court – presided by the Honorable William F. Fahey – concluded that the instant action alleged shareholder derivative claims and granted Defendants’ motion for Plaintiff to post bond under Corporations Code sections 800(b)-(c).  (Minute Order 2/5/20.)  Plaintiff was ordered to post a security bond of $50,000 by February 21, 2020.  (Minute Order 2/5/20.)  Plaintiff failed to do so.  Rather, on February 13, 2020, Plaintiff purported to dismiss a portion of the first cause of action “[t]o the extent Plaintiff’s First Cause of Action could reasonably be interpreted as including a derivative claim[.]”  (Request for Dismissal filed 2/13/20 at Attachment 1.) 

On March 16, 2020, Defendants filed a demurrer arguing that Plaintiff failed to post the required bond.  In response, on June 17, 2020, Plaintiff filed a first amended complaint and a notice that the demurrer is moot.  On July 14, 2020, the Court – presided by the Honorable William F. Fahey – found that the first amended complaint was improperly filed due to the stay in prosecution imposed by Corporations Code section 800(f), sustained the Defendants’ demurrer without leave to amend, and dismissed the action with prejudice.  (Order 7/14/20.)

On August 28, 2020, Plaintiff filed a notice of appeal of the Court’s order of dismissal and order for Plaintiff to post bond.  On July 28, 2022, the Court of Appeal issued its remittitur affirming the order to post bond and reversing the dismissal.  The Court of Appeal ordered the Court to allow Plaintiff to amend the complaint to allege a stand-alone individual fraud claim.  (Remittitur Filed 7/28/22.)

On August 3, 2022, Plaintiff filed the operative Second Amended Complaint (“SAC”) against Defendants.  The SAC asserts two causes of action for (1) Fraud and (2) Negligent Misrepresentation.  On August 12, 2022, due to a preemptory challenge, the instant action was transferred to the instant department.  (Minute Order 8/12/22.)

On February 16, 2023, the Court granted Defendants’ motion to strike in part and struck the prayer for attorneys’ fees and prayer for disgorgement without leave to amend.  (Order 2/16/23.)  Trial is currently set for August 28, 2023.

On July 18, 2023, Defendant 8e6 filed three motions to compel Plaintiff’s further responses to Special Interrogatories, Set One (“SROGs”), Form Interrogatories, Set One (“FROGs”), and Requests for Admission, Set One (“RFAs”).  On July 21, 2023, the Court granted Defendant 8e6’s ex parte application and advanced the instant motions to be heard concurrently on August 10, 2023.  (Minute Order 7/21/23.)  On July 26, 2023, the Court conducted an informal discovery conference and ordered the parties to file a joint statement of items remaining in dispute and address any outstanding issues in connection with the motions including sanctions.  (Minute Order 7/26/23.)

On August 4, 2023, Defendant 8e6 filed a reply.  In addition on August 4, 2023, the Parties filed a joint statement.

Allegations of the Operative Complaint

            The SAC alleges that:

            In July 1995, Defendant Shih and third-party Michael Bradshaw created 8e6.  (SAC ¶ 12.)  In 1996 and 1997, Shih and third-party Michael Bradshaw sought “Friends and Family” investors for 8e6, and Plaintiff purchased at least $80,000 in common shares.  (SAC ¶ 12.)  “[I]n 1998, after various venture capital investments did not materialize for one reason or another, the company [8e6] approved the issuance and sale of 484,693 shares of class A preferred stock for $1,900,000.00 to a venture capital group headed by Dr. Ching Min Lee.”  (SAC ¶ 13.)

            “By early 1999, Bradshaw had been forced out of the company and defendant Shih, along with David Ure and Dr. Ching Min Lee were in control. They approved issuing a new series of class B preferred shares and obtained about $1.5 million by sales of series A and B shares throughout the year from additional venture capital groups headed Dr. Ching Min Lee.”  (SAC ¶ 14.)  In March 2000, 8e6 approved a new series of preferred class C shares for investors Defendant Wood and his entities Defendant Darwin Group LLC, Darwin Filter, Secrete Communications II, LLC and Log-On Darwin LLC and Defendant Vora and his entity Defendant Vora Ventures LLC.  (SAC ¶¶ 4-10, 15.)  “At the time of the investment, plaintiff is informed and believes that defendant Frank Wood, on behalf of himself and all other class C shareholders, entered into a shareholder agreement with defendant Shih, which gave the group control of 8e6 Corp.”  (SAC ¶ 15.)  Accordingly, Defendants Wood, Vora, and Shih and their respective entities – Defendants Vora Ventures LLC, Secret Communications II LLC, Darwin Group LLC, Log-On Darwin LLC, Darwin Filter (collectively “Control Group”)– controlled 8e6.  (FAC ¶ 16.)

            In 2006, 8e6 did not hold a shareholders meeting but sent a letter drafted by Control Group on February 22, 2007 to Plaintiff and other Friends and Family shareholders representing “2006 as an ‘extraordinary year’ with ‘some of the greatest accomplishments in the history of the company.’ Defendants also represented that ‘virtually every month in 2006 was a record month for sales’ and ‘the company increased its market share by adding 300 new customers and 1.5 million seats.’ Defendants went on to represent that ‘2007 would be an even stronger year of growth and accomplishment and stated 8e6 Corp had retained an investment banking firm to find a sale or recapitalization partner to fund the growth.’”  (SAC ¶ 20.)  However, these statements were false as 8e6 was in reality struggling and “had accumulated large operating deficits, including a net operating loss of $2,999,000 in 2006 alone.”  (SAC ¶ 21.)  Defendants failed to disclose that loans were made to defendant Shih and CFO Rodney Miller who were required to forego salary due to 8e6 struggling with operating costs.  (SAC ¶ 21.)

            “The 2/22/07 letter represented 8e6 Corp had taken out lines of credit with Silicon Valley Bank and Partners for Growth to fund ‘growth,’ but defendants concealed and failed to disclose that 8e6 Corp was overextended on those credit lines. Defendants also concealed and failed to disclose that in December 2006 defendant Wood, through defendant Secret Communications II, LLC, loaned 8e6 Corp $500,000.00 at high interest rates to meet its obligations on the credit lines.”  (SAC ¶ 22.) 

            In 2007, 8e6 again did not hold an annual shareholder meeting.  (SAC ¶ 23.)  In February 2008, 8e6 sent a letter drafted by Control Group to Plaintiff and other Friends and Family Shareholders representing “that every month in 2007 was a record sales month, and that cash flow went from a negative $3.9 million in 2006 to a positive $3 million.”  (SAC ¶ 23.)  “The true facts were that in 2007 8e6 Corp struggled to survive and that when the letter was circulated, the Control Group was deep in negotiations to consolidate 8e6 Corp with Marshal Group.”  (SAC ¶ 24.)  Defendants also failed to disclose to Plaintiff that “Wood and Vora, through defendants Secret Communications II, LLC and Vora Ventures, LLC loaned 8e6 Corp or its subsidiary $2 million at interest rates as high as 15%.”  (SAC ¶ 24.) 

            On October 18, 2008, Plaintiff received various written communications from Defendants advising Plaintiff that “8e6 Corp had found a merger partner, Marshal Group.”  (SAC ¶ 25.)  The Control Group had approved the agreement but gave minority shareholders such as Plaintiff the right to have 8e6 purchase his shares at fair market value.  (SAC ¶ 25.)  During these communications, Defendants failed to disclose the true and complete financial condition of 8e6 and failed to disclose to Plaintiff that he and other minority shareholders had the right to require 8e6 to purchase their shares at market price.  (SAC ¶ 27.)  These October 2008 written communications to Plaintiff and other minority shareholders “represented that by consolidating the assets of 8e6 Corp, Marshal Group and the money of a new investor, Updata Partners, the new company, Marshal8e6 Inc., would have a combined value of $90 million and be in a better position to grow shareholder value. The written communications further represented 8e6’s interest in Marshal 8e6 Corp was worth about $42 million because it was going to be the largest shareholder with a 46% interest. The written communications also represented the new entity would be in a stronger position financially because the existing debt of 8e6 Corp and Marshal Group, including shareholder loans, was being refinanced under terms that would result in the new company carrying $5 million less debt.”  (SAC ¶ 28.)  However, these misrepresentations were false, as 8e6 was receiving significantly less than a 46% interest in Marshal8e6 Inc.  (SAC ¶ 29.)  These representations were also false because Marshal8e6 Inc. did not refinance the debt of 8e6.  (SAC ¶ 30.)  Had Plaintiff known these representations were false he would have demanded that the company repurchase his stock in 8e6.  (SAC ¶ 34.)

            “In early 2012, defendants Shih, Wood and Vora approved the sale of 8e6 Corp’s stock in Marshall8e6 Inc., then known as M86 Security Systems to a corporation known as Trustwave, for stock in Trustwave. Defendant 8e6 Corp advised plaintiff of this sale by letter dated April 23, 2012.”  (SAC ¶ 38.)  “Defendants, in the letter, represented plaintiff’s holdings in 8e6 Corp remained unchanged and unaffected, and that no action was required by him or the other common shareholders.”  (SAC ¶ 38.)  However, this was misleading as the value of shares that Plaintiff held in 8e6 had substantially declined.  (SAC ¶ 39.)  “Defendants concealed and failed to disclose to plaintiff that in the Trustwave transaction 8e6 Corp only received 843,839 shares of Trustwave stock and that defendants Wood and Vora, through defendants Secret Communications II, LLC and Vora Ventures LLC, received 383,259 shares of Trustwave stock.”  (SAC ¶ 39.)  After this letter, Defendants failed to conduct annual meetings.  (SAC ¶ 40.)

            “In approximately April 2015, Plaintiff saw a public announcement that Trustwave was being sold to Singapore Telecommunications Limited (Singtel) for about $810 million. Plaintiff requested information from defendants Wood, Vora and Shih about the amount of money 8e6 was due from Singtel and how the receipt of that money would affect his stock in 8e6 Corp. Defendants continued to conceal and fail to disclose material information to plaintiff. They also caused 8e6 Corp to “liquidate” the $13.6 million it received from Singtel to themselves and the preferred shareholders, causing plaintiff’s shares to become worthless.”  (SAC ¶ 41.)

Legal Standard

Interrogatories

Code of Civil Procedure section 2030.300 provides that “[o]n 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; [or] (2) An exercise of the option to produce documents under Section 2030.230 is unwarranted or the required specification of those documents is inadequate; [or] (3) An objection to an interrogatory is without merit or too general.”  (CCP § 2030.300(a).)

Notice of the motion must be given within 45 days of service of the verified response, or upon a later date agreed to in writing.  Otherwise, the propounding party waives any right to compel a further response.  (CCP § 2031.310(c).)  The motion must also be accompanied by a meet and confer declaration.  (CCP § 2031.310(b)(2).)

The burden is on the responding part to justify any objection or failure fully to answer the interrogatories.  (Fairmont Ins. Co. v. Superior Court (Stendell) (2000) 22 Cal. 4th 245, 255.)

Requests for Admissions

Pursuant to Code of Civil Procedure section 2033.290:

(a) On receipt of a response to requests for admissions, the party requesting admissions may move for an order compelling a further response if that party deems that either or both of the following apply:

(1) An answer to a particular request is evasive or incomplete.

(2) An objection to a particular request is without merit or too general.

(b)(1) A motion under subdivision (a) shall be accompanied by a meet and confer declaration under Section 2016.040.

(CCP § 2033.290(a)-(b)(1).)

Pursuant to Code of Civil Procedure section 2033.220:

(a) Each answer in a response to requests for admission shall be as complete and straightforward as the information reasonably available to the responding party permits.

(b) Each answer shall:

(1) Admit so much of the matter involved in the request as is true, either as expressed in the request itself or as reasonably and clearly qualified by the responding party.

(2) Deny so much of the matter involved in the request as is untrue.

(3) Specify so much of the matter involved in the request as to the truth of which the responding party lacks sufficient information or knowledge.

(c) If a responding party gives lack of information or knowledge as a reason for a failure to admit all or part of a request for admission, that party shall state in the answer that a reasonable inquiry concerning the matter in the particular request has been made, and that the information known or readily obtainable is insufficient to enable that party to admit the matter.

(CCP § 2033.220.)

Discussion

            As noted in the reply, on August 1, 2023 Plaintiff served supplemental responses to the SROGs, FROGs, and RFAs at issue.  Pursuant to the joint statement, SROGs Nos. 1, 3-5, 7, 8, 10, 23, 63, and 67 and RFAs 49 and 50 remain at issue in spite of the supplemental responses.

SROGs Nos. 1, 3-5, 7, 8, 10

            “Recite verbatim each false statement made by DEFENDANTS that gives rise to YOUR CAUSES OF ACTION. (As used herein, the term ‘DEFENDANTS’ means and refers to Defendants 8e6 Corp., George Shih, Frank Wood, Mahendra Vora, Vora Ventures, LLC, Secret Communications II LLC, Darwin Group LLC, Log-On Darwin LLC, and Darwin Filter. The terms ‘YOU,’ ‘YOUR,’ and ‘MAX’ mean and refer to Plaintiff David Max. The term ‘CAUSES OF ACTION’ means and refers to the causes of action for fraud and negligent misrepresentation alleged in YOUR Second Amended Complaint, as limited by the Court's ruling on Defendants' Demurrer and Motion to Strike, which issued on February 16, 2023.)”  (SROG No. 1.)

            “I previously answered this question at least nine times in response to Form Interrogatory 17.1, with respect to your Requests for Admission 25, 26, 27, 28, 30, 31, 31, 33, 36 and 37. You are referred to those responses.

            That being said, and as was set forth in my response to Special Interrogatory 2, the writings upon which the allegations of paragraph 25 were based are the "10/17/2008 Notice of Action Taken by less than unanimous written shareholder consent" (Max 000193), the "corporate structures writing" (Max 000194), the "key deal points" writing (Max 000195), and the 10/17/2008 shareholder letter. (Max 000205-000206)

            The merger deal represented in the above writings did not take place. That deal fell apart sometime between October 17, 2008 and November 7, 2008. In that period, Orix Venture Finance determined the deal was too risky, and refused to provide the "key deal point" of $9.5 million in new financing. Financing defendants told me was going to save the new entity $5 million.

            After the represented deal fell apart, defendants, with Updata and Marshal Group then put together a new deal, a deal without the important $9.5 million of refinancing. Defendants did not tell me the deal they had described had fallen apart, much less tell me about the terms of their new, secret deal. Rather they led me to believe the deal they had described, and which I supported, was the merger deal that happened.

            At the same time, when they sent these writings, defendants were concealing that 8e6 Corp was in a longstanding cash crisis, and was desperate for new funds. Defendants were concealing that for the preceeding six years, 8e6 Corp had lost more than $1 million a year. Defendants were also concealing that in 2006 and 2007 8e6 Corp was so desperate for cash that it accepted $2.5 million in short term, high interest loans from Wood and Vora. Loans that required 8e6 Corp to pay them interest at monthly rates up to 15%. Loans that 8e6 Corp was in default on. None of this was disclosed in the above communications. All defendants said was that Orix Venture Finance was going to pay off 8e6 Corp debt, including shareholder loans.

            In these writings, defendants also concealed Marshal was a cash poor company that owed $7 million in shareholder loans. What defendants did represent, and which I thought was a very good point, was that Orix Venture Finance was going to pay off a large amount of debt, with the result to the new company being $5 million in savings on debt 8e6 Corp and Marshal then owed.

            In these written communications, defendants also mislead me about the cost of the $10 million Updata Partners was investing in the new entity. Defendants only stated Updata Partners was getting preferred shares with an 11°A equity interest. Defendants did not tell me Updata Partners was also entitled to an 8% dividend ($800,000.00), compounded annually, on those shares. Nor did they tell me that Updata Partners was entitled to convert that secret dividend into additional preferred stock, which stock would then also be entitled to an 8% dividend. Having concealed the dividend, defendants also misrepresented the equity interests of the parties. Because every year, Updata Partners equity interest would substantially increase, while 8e6 Corp's equity interest would correspondingly decrease.

            Also, in these writings, defendants failed to tell me that George Shih was going to exit the new company, and would only be an interim CEO.”  (Supp. Response to SROG No. 1.)

            Plaintiff’s Substantive Responses are Incomplete

            A motion to compel further responses lies where an answer is evasive or incomplete, the exercise to produce documents is unwarranted or without sufficient specification, or an objection is without merit or too general.  (CCP § 2030.300(a)(1)-(3).)  As explained in Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, “[a]nswers must be complete and responsive. Thus, it is not proper to answer by stating, ‘See my deposition,’ ‘See my pleading,’ or ‘See the financial statement.’ Indeed, if a question does require the responding party to make reference to a pleading or document, the pleading or document should be identified and summarized so the answer is fully responsive to the question.”  (Id. at pp.783–784, [italics added].)  Moreover, “[p]arties, like witnesses, are required to state the truth, the whole truth, and nothing but the truth in answering written interrogatories.”  (Id. at p.783.)

            Defendant 8e6 contends that the supplemental response to SROG No. 1 is nonresponsive as it does not recite any false statements.  As SROGs No. 3-5, 7 and 8, Defendant 8e6 contends that the supplemental responses are improper because of “[Plaintiff]'s failure to identify any false statement in response to Special Interrogatory 1, stating at the outset: ‘For each false statement recited in response to Interrogatory No. 1….’ [Plaintiff]'s responses to Special Interrogatory 1 do not recite any false statements.”  (Reply at p.3:15-18.)  SROG No. 10 similarly requests “[Plaintiff] to identify documents supporting his contention that Defendants had no reasonable grounds for believing the truth of the false statements he was required to identify in response to Special Interrogatory 8 (that itself refers to his response to Special Interrogatory 1).”  (Reply at p.3:22-25.)  Defendant 8e6 contends that the only proper response must be none as no specific statements are identified as false. 

            In sum, Defendant 8e6’s dispute with Plaintiff’s responses is that Plaintiff does not identify specific affirmative misrepresentations -- what Defendant 8e6 colloquially refers to as “false statements.”  However, the term “false statements” is ambiguous in SROG No. 1.

            As the Court of Appeal has explained, “[a] party may not deliberately misconstrue a question for the purpose of supplying an evasive answer. [Citation.] Indeed, where the question is somewhat ambiguous, but the nature of the information sought is apparent, the proper solution is to provide an appropriate response.”  (Deyo, supra, 84 Cal.App.3d at p.783.)

            Defendant 8e6 does not define he term “false statements.”   Nor does the term “false statements” clearly indicate that Defendant 8e6 only wishes to refer to affirmative misrepresentations.  Rather, as noted by the defined terms, Defendant 8e6 only wants those facts referring to the fraud claims as limited in the February 16, 2023 Order.  The only claim of fraud that this could refer to is the representation coupled with omissions that occurred on October 18, 2008 when Defendants informed Plaintiff of a merger with Marshal Group as being more favorable than it was and failed to inform Plaintiff of his right to have 8e6 repurchase Plaintiff’s shares at market value.  (SAC ¶¶ 25-30; see also Order 2/16/23.)  As this mostly involved concealment by Defendants and the SROG seeks what the facts are that the claims for fraud and negligent misrepresentation arise from, it would have been improper and evasive for Plaintiff to construe the undefined “false statements” to only mean affirmative misrepresentations because the response would be largely blank and fail to answer what facts give rise to the claims as SROG No.1 requests.

            Further, Plaintiff does identify an affirmative misstatement made by Defendants.  Namely, that the merger represented in “‘10/17/2008 Notice of Action Taken by less than unanimous written shareholder consent" (Max 000193), the "corporate structures writing" (Max 000194), the "key deal points" writing (Max 000195), and the 10/17/2008 shareholder letter (Max 000205-000206)” did not take place.  Plaintiff’s supplemental response then identifies various instances of concealment by Defendants which are all specifically identified.  This response follows the at issue allegations in the operative complaint that on October 18, 2008, Defendants informed Plaintiff of a merger with Marshal Group as being more favorable than it was and failed to inform Plaintiff of his right to have 8e6 repurchase Plaintiff’s shares at market value.  (SAC ¶¶ 25-30.)  The supplemental response is therefore fully responsive and not an evasive answer.  The fact that Defendant 8e6 does not like the response is immaterial.  Similarly, Defendant 8e6’s wish that Plaintiff answered a different question does not make the response non-responsive. 

However, Plaintiff’s supplement response to SROG No. 1 is somewhat incomplete because Plaintiff refers to the merger represented in documents – i.e., “‘10/17/2008 Notice of Action Taken by less than unanimous written shareholder consent’ (Max 000193), the ‘corporate structures writing’ (Max 000194), the ‘key deal points’ writing (Max 000195), and the 10/17/2008 shareholder letter (Max 000205-000206)” without summarizing the merger at issue and what specifically did not happen and thus was false.  (Deyo, supra, 84 Cal.App.3d at p.784, [“Indeed, if a question does require the responding party to make reference to a pleading or document, the pleading or document should be identified and summarized so the answer is fully responsive to the question.”], [italics added].) 

            Accordingly, a further response is required.  As SROGs Nos. 3-5, 7, 8, 10 all rely on the response to SROG No. 1, to the extent that those responses need to be modified after a summary of the merger that did not happen, a further response is required.  To the extent that the responses to SROGs Nos. 3-5, 7, 8, 10 would be unchanged, Plaintiff must provide a further response clearly indicating as such.

SROGs No. 63 and 67

            “If YOU contend that any of the false statement(s) of fact giving rise to YOUR CAUSES OF ACTION caused a decrease in the value of common stock in the COMPANY between: (1) the time YOU could have exercised YOUR DISSENTERS' RIGHTS, and (2) the time of the SINGTEL SALE, then identify by Bates Number all documents supporting this contention.”  (SROG No. 63.)

            “If YOU contend that any of the intentional concealment(s) of fact giving rise to YOUR CAUSES OF ACTION caused a decrease in the value of common stock in the COMPANY between: (1) the time YOU could have exercised YOUR DISSENTERS' RIGHTS, and (2) the time of the SINGTEL SALE, then identify by Bates Number all documents supporting this contention.”  (SROG No. 67.)

            In supplemental response to each of these requests Plaintiff provides near identical responses:

            “This interrogatory is no different from 63. As I said in response to that question, my counsel has spent an extensive amount of time at the recent depositions of 8e6 Corp, Frank Wood and Mahendra Vora demonstrating how the deceit was a substantial factor in the value of 8e6 Corp's stock decreasing from $41.4 million on November 12, 2008 to $13.4 million by the time of the Singtel purchase in 2016.

            I believe the documents were identified in my prior response, and they are contained in the Exhibits 1 - 69 in the exhibit list my attorney exchanged with you. The following have been identified by bate stamps …

            Within the 22,000 pages of documents defendants produced, it is my belief there are others that are responsive because those documents are duplicates, or different versions of a speadsheet or other document, or which will prove the same loss of value in a different way. As previously stated, and not waived, demanding that my counsel identify all such documents violates Code of Civil Procedure section 2030.230 and the attorney work product privilege.”  (Supp. Response to SROG No. 67.)

            Attorney Work Product Privilege Objection

            The attorney work product privilege as codified under Code of Civil Procedure section 2018.030 under subdivision (a) “provides an absolute privilege for ‘[a] writing that reflects an attorney's impressions, conclusions, opinions, or legal research or theories,’ and [under] subdivision (b) provides a qualified privilege for all attorney work product ‘other than a writing described in subdivision (a).’ [Citation.]”  (Fireman's Fund Ins. Co. v. Superior Court (2011) 196 Cal.App.4th 1263, 1275.)  This work product privilege only applies to derivative work as “[i]nformation regarding events provable at trial, or the identity and location of physical evidence, cannot be brought within the work product privilege simply by transmitting it to the attorney. But the cases indicate generally that material of a derivative character, such as diagrams prepared for trial, audit reports, appraisals, and other expert opinions, developed as a result of the initiative of counsel in preparing for trial, are to be protected as work product.”  (Mack v. Superior Court In and For Sacramento County (1968) 259 Cal.App.2d 7, 10.)

            Here, SROGs No. 63 and 67 do not seek derivative work but rather the identification of previously produced documents providing an evidentiary basis for Plaintiff’s claims.  As such the attorney work product privilege objection is inapplicable. 

            Objection based on CCP § 2030.230

            “If the answer to an interrogatory would necessitate the preparation or the making of a compilation, abstract, audit, or summary of or from the documents of the party to whom the interrogatory is directed, and if the burden or expense of preparing or making it would be substantially the same for the party propounding the interrogatory as for the responding party, it is a sufficient answer to that interrogatory to refer to this section and to specify the writings from which the answer may be derived or ascertained.”  (CCP § 2030.230.)

            Here, Defendant 8e6 has directly requested Plaintiff to make a compilation of documents to respond to its request by identifying every document that supports Plaintiff’s claim against Defendants.  Plaintiff has identified numerous documents that do respond providing numerous documents by Bates number.  Plaintiff further states that additional responsive documents can be found within the 22,000 pages of documents Defendants have produced.  Given the number of documents and that Plaintiff has identified numerous documents that support his claim, Plaintiff’s objection is well founded.

            Plaintiff’s Substantive Response

            As to SROGs 63 and 67, Defendant 8e6 contends that the substantive portion of the supplemental responses are improper because SROG No. 63 asks for documents regarding damages due to “false statements,” and SROG No. 67 asks for documents regarding damages due to “intentional concealments,” and thus cannot be the same documents.  The Court disagrees.  As noted above, the term “false statements” is not defined.  Further, Plaintiff’s claim is not solely based on affirmative misrepresentations or by intentional concealment but rather a combination of both.  (SAC ¶¶ 25-30.)  Therefore, the evidence supporting the claim would likely overlap.  Accordingly, the fact that the responses overlap is not itself evasive or improper.

            However, given that the supplemental response is subject to the inapplicable and unsupported attorney work product objection, the supplemental responses are somewhat evasive as it is unclear whether the responses are full and complete.  Accordingly, a further response is required.

RFAs No. 49 and 50

            “Admit that in October 2008 YOU could have learned of YOUR DISSENTERS' RIGHTS by conducting YOUR own research.”  (RFA No. 49.)

            “Plaintiff objects to this request on the grounds that it is vague, ambiguous and confusing with the respect to what ‘research’ defendant I referring to.”  (Response to RFA No. 49.)

            “Admit that in October 2008 YOU could have learned of YOUR DISSENTERS' RIGHTS by consulting with an attorney.”  (RFA No. 50.)

            “Plaintiff objects to this request on the grounds that it is incomplete hypothetical that calls for speculation.”  (Response to RFA No. 50.)

            Plaintiff’s Responses are Improper

            “Requests for admissions, …, are primarily aimed at setting at rest a triable issue so that it will not have to be tried. Thus, such requests, in a most definite manner, are aimed at expediting the trial. For this reason, the fact that the request is for the admission of a controversial matter, or one involving complex facts, or calls for an opinion, is of no moment. If the litigant is able to make the admission, the time for making it is during discovery procedures, and not at the trial.”  (Cembrook v. Superior Court In and For City and County of San Francisco (1961) 56 Cal.2d 423, 429.)  Thus, “a party may request from the opposing party the truth of any facts or the genuineness of any documents that is relevant to the subject matter of the action or reasonably calculated to lead to admissible evidence.”  (Smith v. Circle P Ranch Co. (1978) 87 Cal.App.3d 267, 273.)  “[S]ince requests for admissions are not limited to matters within personal knowledge of the responding party, that party has a duty to make a reasonable investigation of the facts before answering items which do not fall within his personal knowledge.”  (Ibid.) 
            A party can respond to a request by admitting so much of the matter is true, (CCP § 2033.220(b)(1)), deny as so much of the matter requested is untrue, (CCP § 2033.220(b)(2)), or “[s]pecify so much of the matter involved in the request as to the truth of which the responding party lacks sufficient information or knowledge.”  (CCP § 2033.220(b)(3).)  “If a responding party gives lack of information or knowledge as a reason for a failure to admit all or part of a request for admission, that party shall state in the answer that a reasonable inquiry concerning the matter in the particular request has been made, and that the information known or readily obtainable is insufficient to enable that party to admit the matter.”  (CCP § 2033.220(b)(2).)  Moreover, “[i]f only a part of a request for admission is objectionable, the remainder of the request shall be answered.”  (CCP § 2033.230(a).)

            Here, as to RFA No. 49, Plaintiff has only objected that the term “research” is vague and unclear.  This is merely an objection to a portion of the RFA.  Thus, Plaintiff was required to provide a substantive response to the rest of RFA No. 49.  Moreover, the term “research” is not vague or unclear as used in the request as it is used colloquially without any modifiers.  Thus, the RFA seeks Plaintiff’s opinion as to whether Plaintiff could have discovered his dissenters’ rights after any amount of systematic investigation.

            As to RFA No. 50, Plaintiff’s objection that the request is an incomplete hypothetical and calls for speculation is not a basis for objecting.  As noted above, “the fact that the request is for the admission of a controversial matter, or one involving complex facts, or calls for an opinion, is of no moment. If the litigant is able to make the admission, the time for making it is during discovery procedures, and not at the trial.”  (Cembrook, supra, 56 Cal.2d at p.429, [italics added].)  Plaintiff can and should provide his opinion as to whether in October 2008 he could have learned about his dissenters’ rights by consulting with an attorney. 

            Accordingly, further responses as to RFAs Nos. 49 and 50 are required.

Sanctions

            In the moving papers, Defendant 8e6 seeks sanctions against Plaintiff and Plaintiff’s Counsel of over $7,000.00 for each of the three discovery motions.

For a motion to compel further responses, “[t]he court shall impose a monetary sanction … against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel a [further response], unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.”  (CCP §§ 2030.300(d), 2031.310(h), 2033.290(d) [italics added].) Accordingly, sanctions are mandatory unless the circumstances make the imposition of sanctions unjust.

Here, while some sanctions are warranted due to the original responses being non-compliant and the improper objections in the supplemental responses, the amount requested – i.e., over $21,000.00 – is plainly unreasonable given the simplicity of the instant motions.  Accordingly, based on the totality of the circumstances, the Court finds that sanctions of $1,500.00 are warranted.

Plaintiff David Max and his attorney of record, Rogari Law Firm PC are jointly and severally liable and ordered to pay monetary sanctions in the amount of $1,500.00 to Defendant 8e6 Corp, by and through counsel, within thirty (30) days of notice of this order.

CONCLUSIONS AND ORDER

Based on the foregoing, Defendant Defendants 8e6 Corp.’s motions to compel further discovery responses from Plaintiff is GRANTED IN PART.

Plaintiff is to serve further, verified, code complaint responses without objection – except as to Code of Civil Procedure section 2030.230, as detailed above – to Special Interrogatories, Set One Nos. 1, 3-5, 7, 8, 10, 63, and 67 within 5 days of notice of this order.

Plaintiff is to serve further, verified, code complaint responses without objection as to Requests for Admission, Set One Nos. 49 and 50 within 5 days of notice of this order.

Defendant 8e6 Corp.’s requests for sanctions are GRANTED AS MODIFIED.

Plaintiff David Max and his attorney of record, Rogari Law Firm PC are jointly and severally liable and ordered to pay monetary sanctions in the amount of $1,500.00 to Defendant 8e6 Corp, by and through counsel, within thirty (30) days of notice of this order.

            Moving Party is to give notice and file proof of service of such.

DATED:  August ___, 2023                                                   ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court