Judge: Frank M. Tavelman, Case: 22BBCV00461, Date: 2023-09-29 Tentative Ruling

Case Number: 22BBCV00461    Hearing Date: October 20, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTIONS TO QUASH DEPOSITION SUBPOENA

NOTICE

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  “The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

On June 24, 2022, Plaintiff Mikayel Israyelyan (“Israyelyan”) filed a complaint, against Krikor Bardakjian (“Bardakjian”), Krikor Bardakjian, DDS, Inc., Noho Dental Group by Bardakjian DDS, Inc., Sherman Oaks Dental Group by Krikor Bardakjian DDS, Inc., and 485 Cliff Dr. LLC, (collectively “BDP”) alleging nine causes of action and seeking compensatory damages in excess of $3,000,000.00, general damages, punitive and exemplary damages, attorney’s fees and costs of suit.

On August 2, 2022, Defendant and Cross-Complainants BDP filed their Cross Complaint against Plaintiff, Alina Bagasian (“Bagasian”), Liana Sahakyan (“Sahakyan”), Suren Minasyan (“Minasyan”), Irnes Okanovich (“Okanovich”), Muse Lifestyle Group, LLC (“Muse”), Laureate Aesthetics Management (“Laureate”), and Does 1 Through 50, alleging 15 causes of action and seeking a jury trial as to various damages.

Before the Court is a motion to quash a deposition subpoena for the production of business records brought by Israyelyan. Israyelyan moves to quash the subpoena as it relates to Onyx Hospice, Inc. (“Onyx”) and Laureate. Bardakjian opposes and Israyelyan replies.  

ANALYSIS: 

I.            LEGAL STANDARD 

Code of Civil Procedure (“C.C.P.”) § 1987.1 grants the trial court authority to quash a subpoena when necessary.  C.C.P. § 1987.1 states, “If a subpoena requires the attendance of a witness or the production of books, documents, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, 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.  In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.”   

II.            MERITS

The Requests

On July 7, 2023, Bardakjian issued a deposition subpoena for the production of business records for Onyx and Laureate. The documents requested are as follows:

All Tax Returns, Federal and State, documents and records including but not limited all Schedules and Forms from 2013 to 2022 in digital, electronic, and any physical forms;

All QuickBooks records, all Profit and Loss Statements, Balance Sheets from 2013 to 2022;

All Agreements and Investment records from 2013 to 2022.

(Mot. Exh. A.)

For reasons stated below, the Court finds that tax returns and requests for “all documents and records” are beyond the scope of discovery. Requests concerning financial records remain relevant. As such, the Court ultimately denies the motion to quash subject to modification of the subpoena.  

Tax Returns – Motion to Quash Granted

The Court previously ruled upon the discoverability of tax returns in its October 6, 2023 minute order. In brief, the Court found that the privilege protecting tax returns and related information was not abrogated where there was no intentional disclosure, and the privilege was not inconsistent with the gravamen of this suit. The Court finds the same with respect to Onyx and Laureate. Bardakjian has not established any condition for waiving the privilege. As such, these requests will be removed upon the Court issuing an order modifying the subpoena.

Relevance of Business Records

As concerns the requested financial information, Israyelyan maintains the business records requested are irrelevant in the scope of this litigation.

A Court may quash a deposition subpoena for being overly broad to the extent that it amounts to "nothing more than a fishing expedition" and therefore seeks the production of irrelevant evidence. (People v. Serrata (1976) 62 Cal.App.3d 9, 15.) Discovery is relevant if it is admissible as evidence, or "appears reasonably calculated to lead to the discovery of admissible evidence." (Code Civ. Proc. § 2017.010.) "Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action." (Id.)

It is not entirely clear from the moving papers whether Israyelyan disputes the relevance of business records relating to Onyx. Israyelyan only argues the documents of Laureate are irrelevant to the action because Bardakjian never had ownership in that entity, whereas Bardakjian’s ownership interest in Onyx is quite apparent. (See Oppo. Exh. S, “Memorandum of Understanding”) Bardakjian appears to have entered into an agreement to purchase 100% ownership of Onyx from Muse Lifestyle Group LLC in April of 2022. (Id.) Bardakjian alleges he was misled by Israyelyan and Sahakyan into purchasing Onyx. Accordingly, the Court finds documents pertaining to Onyx would be relevant to the case at hand.

As concerns Laureate, Bardakjian argues the business documents are relevant in that Sahakyan and Israyelyan are alleged to have utilized Laureate to disguise their misappropriation of funds from the Bardakjian Medical Corporation. (Opp. pg. 6.) The Court finds Laureate’s business documents appear reasonably calculated to lead to discovery pertaining to the allegations in the Cross-Complaint.

Onyx and Laureate’s Privacy Interests – Motion to Quash Denied in Part and Granted in Part

"The right to privacy under article I, section 1 of the California Constitution 'extends to one's confidential financial affairs.' … This right embraces confidential financial information in 'whatever form it takes, whether that form be tax returns, checks, statements, or other account information.'" (Overstock.com, Inc. v. Goldman Sachs Group, Inc. (2014) 231 Cal.App.4th 471, 503.) When the production of such private information is sought by way of discovery, the burden falls on the party asserting a privacy interest to show that their privacy interests are so serious that they outweigh the interests of the subpoenaing party's prospective invasion. (Williams v. Superior Court (2017) 3 Cal.5th 531, 557.)

However, Corporations do not have a right of privacy protected by the California Constitution. (SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 756.) Corporations have a right to privacy, but it is less than that held by human beings and is not considered a fundamental right. (Id.) As a result, a balancing test is used to determine whether production can be required. (Id.)

Here the Court finds the documents requested may lead to admissible evidence related to Bardakjian’s claims.  In contrast, Onyx and Laureate have relatively weak privacy claims. Disclosure in this matter is subject to a protective order to protect sensitive financial information. The requests in the amended order will not seek trade secret information, personnel files, or other sensitive information. Onyx and Laureate’s financial records are directly related to the claims of the parties such that any privacy concerns are greatly outweighed by the need for disclosure.

Insufficient Notice to David Israyelyan and Serob Rubeni Yeghiazaryan

Lastly, Israyelyan argues the deposition subpoena is improper because it lacks notice to the officers of Onyx, David Israyelyan (“David”) and Serob Rubeni Yeghiazaryan (“Serob”). C.C.P. § 1985.3 requires notice be provided to all “consumers” from whom a subpoena seeks personal records. “Consumer” is defined by the statute as “[A]ny individual, partnership of five or fewer persons, association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary.” (C.C.P. § 1985.3(a)(2).)

The Court finds Israyelyan has not evidenced that David and Serob are consumers within the meaning of the statute. Israyelyan’s exhibit shows that David and Serob serve as the Chief Executive Officers of Onyx, not that they are individuals who transact business with or use the service of Onyx. Israyelyan also submits no evidence that the records sought by the subpoena would include consumer information such that notice would be required to be given to third parties.

For purposes of a deposition subpoena for business records, C.C.P. § 2020.410(c) simply requires the subpoena be directed to the custodian of records for the business entity in question. Here the subpoena is directed at “Krikor Manankichian KSM and CO.” Israyelyan does not dispute that this is the appropriate entity which maintains the business records of Onyx and Laureate.

Sanctions

Both Israelyan and Bardakjian request sanctions pursuant to C.C.P. § 1987.2(a), which provides:

". . [I]n making an order pursuant to motion made under subdivision (c) of Section 1987 or under Section 1987.1, the court may in its discretion award the amount of the reasonable expenses incurred in making or opposing the motion, including reasonable attorney's fees, if the court finds the motion was made or opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive."

Here, the Court has found the arguments of both parties possess merit and has elected to deny the motion subject to modification of the subpoena. Accordingly, neither side is found to have brought or opposed this option without substantial justification and their requests for sanctions are denied.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Mikayel Israyelyan’s Motion to Quash Deposition Subpoena came on regularly for hearing on October 20, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION TO QUASH DEPOSITION SUBPOENA IS GRANTED IN PART AND DENIED IN PART - SUBJECT TO THE COURT’S MODIFICATION OF THE SUBPOENA.  PARTIES ARE ORDERED TO MEET AND CONFER TELEPHONICALLY OR IN PERSON TO NARROW THE SCOPE OF THE REQUEST.  

THE COURT SETS AN INFORMAL DISCOVERY CONFERENCE FOR NOVEMBER 1, 2023 AT 4:00 P.M.  MOVING PARTY IS TO PROVIDE A STATEMENT OF REMAINING DISPUTED MATTERS TO THE COURT NO LATER THAN OCTOBER 30, 2023 AT 4:00 P.M.  IF NO MATTERS ARE IN DISPUTE, MOVING PARTY MAY FILE A NOTICE TO VACATE THE IDC.

THE SUBPOENA IS MODIFIED TO REQUEST ONLY THE PRODUCTION OF ALL QUICKBOOKS RECORDS, ALL PROFIT AND LOSS STATEMENTS, BALANCE SHEETS, AND ALL AGREEMENTS AND INVESTMENT RECORDS FROM 2014 TO 2022 FOR ONYX HOSPICE INC. AND LAUREATE AESTHETICS MANAGEMENT.

COMPLIANCE WITH THE SUBPOENA IS REQUIRED WITHIN 30 DAYS OF THIS ORDER.

STATUS CONFERENCE RE: MEDIATION SCHEDULED FOR NOVEMBER 1, 2023, IS ADVANCED AND CONTINUED TO MARCH 21, 2024 AT 9:00 A.M.

UNLESS ALL PARTIES WAIVE NOTICE, ISRAYELYAN TO GIVE NOTICE.

IT IS SO ORDERED.  

DATE: October 20, 2023                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles