Judge: Elaine Lu, Case: 21STCV24026, Date: 2022-09-13 Tentative Ruling

Case Number: 21STCV24026    Hearing Date: September 13, 2022    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Background

            On June 29, 2021, Plaintiff Patricia Costello-Goldstein (“Plaintiff”) filed the instant action against Defendants Townsgate Wealth Management (“Townsgate”), Larry A. Bernstein (“Bernstein”), Abby E. Dinkins (“Dinkins”), and Wells Fargo Advisors Financial Network, LLC (“Wells Fargo”) (collectively “Defendants”).  The complaint asserted six causes of action for: (1) Breach of Fiduciary Duty; (2) Negligence; (3) Intentional Infliction of Emotional Distress; (4) Promissory Fraud; (5) Negligent Misrepresentation; and (6) Constructive Fraud.

            On August 9, 2021, Defendants Townsgate, Bernstein, and Dinkins filed a Demurrer and Motion to Strike against Plaintiff’s Complaint.  On August 16, 2021, Defendant Wells Fargo Advisors Financial Network, LLC filed a Demurrer and Motion to Strike against Plaintiff’s Complaint.

            On December 23, 2021, Defendant Townsgate filed the following two discovery motions: (1) Defendant Townsgate’s Motion to Compel Plaintiff’s Further Responses to Special Interrogatories (“SROGs”) and Sanctions in the Sum of $2,880.00; and (2) Defendant Townsgate’s Motion to Compel Plaintiff’s Further Responses to Request for Production of Documents (“RPDs”) and Sanctions in the Sum of $2,880.00.   

            On February 1, 2022, the Court sustained Defendants’ Demurrers to the Complaint with leave to amend and granted Defendants’ Motions to Strike Plaintiff’s Complaint with leave to amend.

            On February 24, 2022, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants.  Plaintiff’s operative First Amended Complaint alleges the following causes of action: (1) Breach of Contract; (2) Breach of Fiduciary Duty; (3) Negligence; (4) Intentional Infliction of Emotional Distress; (5) Promissory Fraud; (6) Negligent Misrepresentation; and (7) Constructive Fraud.

            On August 15, 2022, the Court sustained Defendants’ Demurrers to the first cause of action as alleged within Plaintiff’s First Amended Complaint, only, with leave to amend.  The Court overruled Defendants’ Demurrer as to the remainder of Plaintiff’s First Amended Complaint and denied Defendants’ Motion to Strike Plaintiff’s First Amended Complaint.  (Order 8/15/22.)

            On August 25, 2022, Plaintiff filed a Request for Dismissal of the first cause of action of the operative First Amended Complaint, which the Court granted.  On August 25, 2022, Defendants Townsgate, Bernstein, and Dinkins filed an answer.  On August 29, 2022, Defendant Wells Fargo filed an answer.

            On August 30, 2022, at the hearing on Defendant Townsgate’s motion to compel further responses to the SROGs, the Court ordered the parties to further meet and confer regarding the RPDs and file a joint statement summarizing the meet and confer efforts and setting forth the remaining items at issue.  (Order 8/30/22.)

            On August 30, 2022, Plaintiff filed an opposition to the instant motion to compel further responses to the RPDs.  On September 7, 2022, Defendant Townsgate filed a reply.  On September 8, 2022, Plaintiff filed an objection to the reply.  On September 8, 2022, the parties filed a joint statement.

Evidentiary Objections

            There is no statutory basis for evidentiary objections for a discovery motion.  Moreover, these objections are unnecessary because the court, when reviewing the evidence is presumed to ignore material it knows it incompetent, irrelevant, or inadmissible.  (In re Marriage of Davenport (2011) 194 Cal. App. 4th 1507, 1526.)  Courts are presumed to know and apply the correct statutory and case law and to be able to distinguish admissible from inadmissible evidence, relevant from irrelevant facts, and to recognize those facts which properly may be considered in the judicial decision-making process.  (People v. Coddington (2000) 23 Cal.4th 529, 644.)  Accordingly, the court declines to rule on these objections.

Untimely Reply

“All papers opposing a motion so noticed shall be filed with the court and a copy served on each party at least nine court days, and all reply papers at least five court days before the hearing.”  (Code Civ. Proc., § 1005(b).)  This is calculated by counting backwards from the hearing date and excluding holidays and weekends.  (Code Civ. Proc. §§ 12-12(c).)  The court may refuse to consider a late-filed paper.  (Cal. Rules of Court, Rule 3.1300(d).) 

            Here, the reply was filed and served on September 7, 2022 – only four court days before the instant hearing.  Accordingly, the reply is untimely.  Therefore, as the reply is untimely the Court, in its discretion, will not consider the untimely reply.[1]

Legal Standard

Requests for Production of Documents

Code of Civil Procedure section 2031.310 provides, in pertinent part, as follows:

(a) On receipt of a response to a demand for inspection, copying, testing, or sampling, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply:

(1) A statement of compliance with the demand is incomplete.

(2) A representation of inability to comply is inadequate, incomplete, or evasive.

(3) An objection in the response is without merit or too general.

(b) A motion under subdivision (a) shall comply with both of the following:

(1) The motion shall set forth specific facts showing good cause justifying the discovery sought by the demand.

(2) The motion shall be accompanied by a meet and confer declaration under Section 2016.040.

Code Complaint Response

A code-compliant response to a request for production consists of any of the following: (1) a statement that the party will comply, (2) a representation that the party lacks the ability to comply, or (3) an objection.  (CCP § 2031.210.)  A statement that the party will comply must state that the Request for Production (“RPD”) “will be allowed either in whole or in part, and that all documents or things in the demanded category that are in the possession, custody, or control of that party and to which no objection is being made will be included in the production.”  (CCP § 2031.220.)  “If only part of an item or category of item in a demand for inspection, copying, testing, or sampling is objectionable, the response shall contain a statement of compliance, or a representation of inability to comply with respect to the remainder of that item or category.”  (CCP § 2031.240(a).)  If an objection is made the responding party must “[i]dentify with particularity any document, tangible thing, land, or electronically stored information falling within any category of item in the demand to which an objection is being made.”  (CCP § 2031.240(b)(1).)

Discussion

            By way of these motions, Defendant Townsgate seeks to compel further responses to RPDs Nos. 1, 4-12.  As noted in the joint statement, the parties have resolved RPDs No. 1, and 4-11.  (Joint Statement at p.2:9-11.)  As to the remaining request no. 12, Plaintiff has agreed to produce redacted copies of the documents called for in the request.  (Joint Statement at p.3:1-3.)  However, the parties note that request no. 12 is still in dispute.

Meet and Confer

Pursuant to Code of Civil Procedure section 2031.310(b)(2) a motion to compel further responses to a request for production “shall be accompanied by a meet and confer declaration under Section 2016.040.”  (CCP § 2031.310(b)(2).)  “A meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.”  (CCP § 2016.040.) 

Here, the Court notes that Defendant Townsgate has adequately met and conferred.  (Markun Decl. ¶¶ 4-6, Exhs. C-D; See also Joint Statement

RPD No. 12

            Request no. 12 seeks “DOCUMENTS – including but not limited to invoices – evidencing that ‘ “attorneys’ fees and costs” ’ that PLAINTIFF incurred ‘in the divorce proceedings’ which PLAINTIFF is attempting to recover from the DEFENDANTS in this ACTION as set forth in Paragraph 16 of the COMPLAINT.”  (RPD No. 12.)

            Plaintiff responded: “Objection on the following grounds: (1) the term ‘evidencing that’ is vague, ambiguous, and unintelligible in the context of this request; (2) the request by its terms seeks documents protected from disclosure by one or more privileges, including without limitation the attorney-client and attorney work product privileges; and (3) the request is overly broad and invasive of the privacy rights, including financial privacy rights, of responding party guaranteed to her under Article I, Section 1, of the California Constitution. Notwithstanding the foregoing objections and without waiver thereof, responding party will comply with this request by producing at a date and time to be arranged redacted copies of invoices she has received from her law firm and forensic accounting firm in the DIVORCE PROCEEDING.”  (Response to RPD No. 12.)

Objection: Vague, Ambiguous, Unintelligible

            Plaintiff’s contention that the term “evidence that” is vague, ambiguous, and unintelligible is unsupported.  The request in question clearly seeks the billing records with enough description to determine whether the claimed damages of attorneys’ fees in the divorce proceeding were reasonable and attributable to Defendant.  Thus, the request is clearly not vague, ambiguous, or unintelligible.

Objection: Privacy

The right of privacy in the California Constitution (art. I, § 1), “protects the individual's reasonable expectation of privacy against a serious invasion.”  (Puerto v. Superior Court (2008) 158 Cal.App.4th 1242, 1250 [italics in original]; See Williams v. Superior Court (2017) 3 Cal.5th 531, 552 [“In Hill, we established a framework for evaluating potential invasions of privacy. 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.  The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.”].)

            As the Supreme Court has “previously observed, the right of privacy extends to sexual relations (Vinson v. Superior Court, supra, 43 Cal.3d at p. 841, 239) and medical records (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 41.).”  (John B. v. Superior Court (2006) 38 Cal.4th 1177, 1198.)  Similarly, the constitutional right to freedom of association requires protection of a person’s membership in associations, whether they pertain to religious, political, economic, or even purely social matters.  (Britt v. Superior Court (1978) 20 Cal.3d 844, 852; see also Pacific-Union Club v. Superior Court (1991) 232 Cal.App.3d 60, 71.)  Further, “‘Courts have frequently recognized that individuals have a substantial interest in the privacy of their home.’ [Citation.]”  (Puerto, supra, 158 Cal.App.4th at p.1252.) 

In establishing a privacy interest “the burden [is] on the party asserting a privacy interest to establish its extent and the seriousness of the prospective invasion, and against that showing must weigh the countervailing interests the opposing party identifies, as Hill requires.”  (Williams, supra, 3 Cal.5th 531, 557.)  “Only obvious invasions of interests fundamental to personal autonomy must be supported by a compelling interest.”  (Ibid.)

Here, while there is some privacy interest in the billing records, this privacy interest is clearly outweighed by the compelling interest in the need for these documents.  The FAC alleges in relevant part that due to Defendants conduct, “plaintiff was unnecessarily forced to pay in excess of $100,000 in legal fees that she otherwise would not have had to have spent in her efforts to have the court in the divorce proceeding order Mr. Goldstein to pay to plaintiff the amount of monthly support commensurate with the marital standard of living, i.e., in excess of $40,000 per month, and in preparing for and undergoing the vocational evaluation demanded by Mr. Goldstein.”  (FAC ¶ 15(b), [italics added].)  Plaintiff’s FAC clearly seeks attorneys’ fees that Plaintiff would not have otherwise had to incur in the divorce proceedings.  Moreover, there are legal fees that Plaintiff would have incurred in the ongoing divorce proceedings that would have been incurred regardless of the alleged conduct of Defendants – i.e., initial filing fees, hearings, etc.  Because Plaintiff is claiming attorneys’ fees as damages, it is essential that evidence such as billing records be introduced in the instant action to show exactly what damages were incurred to do Defendants’ conduct.  Thus, while there may be a privacy interest in those documents, the allegations of Plaintiff’s FAC clearly make such evidence essential such that there is a clear compelling interest in these documents.  Further, production of redacted records is insufficient because merely disclosing the amount billed and claimed to be incurred would omit the basis for the attorneys’ fees – i.e., the evidence of causation.  Accordingly, the objection based on privacy is OVERRULED.

Objection: Attorney Client Privilege/Work Product Privilege

“In general, when a party asserts the attorney-client privilege, that party has the burden of showing the preliminary facts necessary to support the privilege.”  (Venture Law Group v. Superior Court (2004) 118 Cal.App.4th 96, 102.)  “The party asserting the privilege need only present facts which ‘support a prima facie claim of privilege.”  (OXY Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 894.)  “After this burden is met, or where there is no dispute concerning the preliminary facts, the burden shifts to the party opposing the privilege to show either the claimed privilege does not apply, an exception exists, or there has been an express or implied waiver.”  (Venture Law Group, supra, 118 Cal.App.4th at p.102.)

            However, “the attorney-client privilege does not categorically shield everything in a billing invoice from [] disclosure. But invoices for work in pending and active legal matters are so closely related to attorney-client communications that they implicate the heartland of the privilege. The privilege therefore protects the confidentiality of invoices for work in pending and active legal matters.”  (Los Angeles County Bd. of Supervisors v. Superior Court (2016) 2 Cal.5th 282, 288 [italics added].)  “[T]he contents of an invoice are privileged only if they either communicate information for the purpose of legal consultation or risk exposing information that was communicated for such a purpose. This latter category includes any invoice that reflects work in active and ongoing litigation.”  (Id. at p.300.)

            To the extent that the billing records here reveal information regarding the purpose of legal consultation, the billing records are protected by attorney client privilege because the underlying divorce proceeding is ongoing.  However, Defendant Townsgate asserts that the privilege has been waived by filing the instant action.  The Court agrees.

“[T]he right of any person to claim a privilege provided by Section 954 (lawyer-client privilege), … is waived with respect to a communication protected by the privilege if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to disclosure made by anyone. Consent to disclosure is manifested by any statement or other conduct of the holder of the privilege indicating consent to the disclosure, including failure to claim the privilege in any proceeding in which the holder has legal standing and the opportunity to claim the privilege.”  (Evid. Code, § 912(a).) 

Here, Plaintiff’s FAC serves as an implied waiver.  As noted above, the billing records for the underlying lawsuit are essential.  The instant action cannot be fairly resolved without such evidence.  In light of the allegations of the FAC, production of redacted records is insufficient.  Plaintiff does not claim the entirety of her legal fees in the divorce action; Plaintiff would have incurred at least a portion of the legal fees in the divorce action regardless of Defendants’ conduct.  Plaintiff’s claim is only for that portion of the legal fees in the divorce action that she would not have incurred but for Defendants’ unauthorized disclosures and conduct in this action.  The billing records showing the purpose for which Plaintiff’s attorneys billed time is essential for determining damages.  “The gravamen of her lawsuit is so inconsistent with the continued assertion of the [attorney-client] privilege as to compel the conclusion that the privilege has in fact been waived.”  (Wilson v. Superior Court (1976) 63 Cal.App.3d 825, 830.)  “[Plaintiff] cannot have [her] cake and eat it too.”  (Fremont Indemnity Co. v. Superior Court (1982) 137 Cal.App.3d 554, 560.)  Thus, by filing the instant action seeking the legal fees incurred in the divorce proceedings due to Defendants’ conduct, Plaintiff has impliedly waived attorney-client privilege in the instant action as to the billing records for the divorce proceedings. 

Accordingly, the Court finds that Plaintiff has waived the attorney-client privilege by the filing of the instant lawsuit seeking a portion of her attorneys’ fees in the divorce proceedings..

Sanctions

            Defendant Townsgate requests sanctions against Plaintiff and Plaintiff’s Counsel totaling $2,880.00 to compensate Defense Counsel for 7 hours in drafting and preparing the motion, and 2 hours appearing at the hearing and drafting a reply at $320 an hour.  (Markun Decl. ¶ 7.)

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 response to [request for production], 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 § 2031.300(c), [italics added].)  Accordingly, sanctions are mandatory unless the circumstances make the imposition of sanctions unjust.

While the objection to RPD No. 12 had substantial justification, Plaintiff’s unsupported objections as to the now moot request necessitated the instant motion and warrant imposition of  some sanctions.  However, the Court finds that the amount requested – $2,880.00 – is unreasonable in light of the circumstances as the reply was not considered, the motion was simple, and the parties resolved most if not all of the issues before the instant motion was heard.  In addition, based on Plaintiff’s Counsel’s representations, the Court finds that the sanctionable conduct is attributable only to Plaintiff’s Counsel and not to Plaintiff herself.  The Court finds that $1,200 reasonably compensates Defendant for attorney’s fees and costs incurred in bringing these motions.

Plaintiff Patricia Costello-Goldstein’s attorney of record, Steiner & Libo, is ordered to pay monetary sanctions in the amount of $1,200.00 to Defendant Townsgate Wealth Management, LLC by and through counsel, within thirty (30) days of notice of this order.

Conclusion and ORDER

            Defendant Townsgate Wealth Management, LLC’s Motion to Compel Further Responses to the Request for Production of Documents is MOOT as to requests No. 1, and 4-11.  Defendant GRANTED.

            Plaintiff Patricia Costello-Goldstein is ordered to serve further, verified, code-compliant response to Defendant Townsgate Wealth Management, LLC’s Request for Production of Documents No. 12 without objection, and produce responsive documents within thirty (30) days.

Plaintiff Patricia Costello-Goldstein’s attorney of record, Steiner & Libo, is ordered to pay monetary sanctions in the amount of $1,200.00 to Defendant Townsgate Wealth Management, LLC by and through counsel, within thirty (30) days of notice of this order.

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

DATED: September 13, 2022                                                ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court