Judge Gail Killefer, Case 19STCV05246 2023-03-17 Tentative Ruling

Judge: Gail Killefer, Case: 19STCV05246, Date: 2023-03-17 Tentative Ruling

Case Number: 19STCV05246 Hearing Date: March 17, 2023 Dept: 37

HEARING DATE: March 17, 2023

CASE NUMBER: 19STCV05246

CASE NAME: Alexandria Real Estate Equities and Joel Marcus v. Steven Marcus and Bugsby Property, LLC

MOVING PARTIES: Plaintiffs, Alexandria Real Estate Equities, Inc. and Joel S. Marcus

OPPOSING PARTY: Defendant, Steven Marcus

TRIAL DATE: October 3, 2023

PROOF OF SERVICE: OK

MOTION: Plaintiffs’ Motion to Compel Further Responses to Discovery

OPPOSITION: January 17, 2023

REPLY: January 20, 2023

TENTATIVE: Plaintiffs’ motion to compel further responses is granted. Defendant is to serve verified, supplemental responses within 30 days of this date. Plaintiffs’ request for sanctions against Defendant is also granted in the amount of $5,000.00. Plaintiffs are to give notice.

Background

This is an action for declaratory relief arising out of Plaintiffs, Alexandria Real Estate Equities (“Alexandria”) and Joel S. Marcus’ (“Joel”) business ventures with Defendants, Steven Marcus (“Steven”) and Bugsby Property, LLC (“Bugsby”).

Plaintiffs’ Complaint for declaratory relief filed February 13, 2019, alleges that in November 2013, Joel, in his capacity as Alexandria’s CEO, asked Steven for “some suggestions” regarding Alexandria’s joint venture financing. Steven and Joel allegedly agreed that Steven would not receive monetary compensation but would be entitled to advertise the fact that he had advised Alexandria. On December 27, 2013, Alexandria and Steven alleged entered into a “Confidential Information and Nondisclosure Agreement” (“CNDA”) which memorialized the terms of their agreement. The CNDA allegedly provided that Steven would receive no compensation and allegedly included a merger clause which provided that it would be the final and exclusive agreement between the parties.

Steven allegedly completed his work advising Alexandria by January 2014 and allegedly provided the work under the name of his corporation, Bugsby. However, the Complaint alleges that Bugsby is an alter ego of Steven. The Complaint alleges that over the years, Steven’s relationship with Joel deteriorated and that in January 2019, Steven demanded $12 million in payment for his advice contradictory to the terms of the CNDA. Joel and Alexandria seek an order from the Court declaring that Steven and Bugsby are not owed compensation under the CNDA.

On February 28, 2020, the court denied Steven’s motion to quash service of summons. Bugsby’s motion to quash service of summons was granted.

On April 9, 2020, Plaintiffs filed their First Amended Complaint (“FAC”). The FAC now alleges five causes of action, as follows: (1) fraud: intentional misrepresentation, (2) fraud: concealment, (3) breach of contract, (5) breach of the implied covenant of good faith and fair dealing, (5) declaratory relief.

On September 19, 2020, Steven filed a Cross-Complaint against Alexandria, Joel and Barbara Marcus (“Barbara”). Steven’s Cross-Complaint alleges the following causes of action: (1) breach of contract against Joel and Barbara, (2) breach of contract against Joel and Barbara, (3) breach of contract against Alexandria, (4) breach of the covenant of good faith and fair dealing against Alexandria, (5) extortion against Joel and Alexandria, (6) intentional misrepresentation against Joel and Alexandria, (7) fraudulent concealment against Joel and Alexandria, (8) declaratory relief against Joel and Barbara, (9) declaratory relief against Alexandria, (10) unfair competition against Joel and Alexandria.

On January 6, 2021, Cross-Defendants’ demurrer to the Cross Complaint was sustained. On February 5, 2021, Steven filed the operative First Amended Cross-Complaint. (“FACC”) The FACC alleges the following causes of action: (1) breach of contract against Joel/Barbara.

On June 17, 2021, Joel and Barbara’s demurrer to the FACC was sustained without leave to amend.

On August 25, 2021, Steven’s motion for summary judgment as to the FAC was denied in its entirety.

On February 14, 2023, Plaintiffs’ motion for judgment on the pleadings as to Defendant’s Answer was granted. On March 6, 2023, Defendant’s motion for judgment on the pleadings was denied.

On December 16, 2023, the parties participated in an Informal Discovery Conference (“IDC”) surrounding the discovery requests and responses at issue now.

Following the IDC, Plaintiffs filed their motion to compel responses to written discovery on January 6, 2023. Defendant opposes the motion.

Procedural History

Plaintiffs served Defendant with all of the discovery requests at issue on December 22, 2020 (Sep. Statement, 3.) Following two separate IDCs before this court, Defendant agreed to provide some related information in an attempt to resolve the discovery dispute. (Wallace Decl. ¶¶13-15.)

Plaintiffs contend Defendant has failed to provide further information and produce further documents as requested, in order to resolve these discovery issues. (Wallace Decl. ¶¶15-21.)

The Parties’ Meet and Confer Efforts

The parties have participated in several IDCs before this court in an attempt to meet and confer to resolve the discovery disputes at issue today. The parties have further engaged in lengthy correspondence surrounding these issues and have failed to come to a resolution. The court finds the parties have sufficiently met and conferred.

The court will proceed to analyze the substantive merits of Plaintiffs’ motion.

Discussion

I. Legal Standard

Pursuant to CCP § 2031.310(c), a motion to compel further responses to inspection demands must be filed within 45 days of service of the verified response, or on or before any specific later date to which the demanding party and the responding party have agreed in writing, with additional time allowed for the manner of service. (CCP §§ 1013(a); 2031.310(c).) The 45-day requirement of CCP § 2031.310(c) is mandatory and jurisdictional in the sense that it renders the court without authority to rule on a motion to compel further responses to discovery other than to deny the motion. (Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410 (Sexton).)

Pursuant to CCP § 2033.290(c), a motion to compel further responses to¿request for¿admissions¿must be filed within 45 days of service of the verified response, or on or before any specific later date to which the demanding party and the responding party have agreed in writing, with additional time allowed for the manner of service.¿ (CCP §§ 1013(a); 2031.310. (c).)¿¿¿

Each response to a request for admission shall “be as complete and straightforward as the information reasonably available to the responding party permits.”¿(CCP § 2033.220.) Specifically, 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.”¿(CCP §¿2033.220(b)(1)-(3).)¿¿

On receipt of responses to request for admissions, the propounding party may move for an order compelling a further response if that party deems either or both of the following to be true: “(1) an answer to a particular request is evasive or incomplete, (2) an objection to a particular request is without merit or too general.”¿(CCP § 2033.290(a)(1)-(2).)¿¿

As discussed above, the court finds the instant motion, filed January 6, 2023 is timely given the lengthy discovery extensions and discovery conferences.

II. Analysis

Plaintiffs move to compel a further response to all of the following requests: Second Set of Requests for the Production of Documents, Nos. 32-34, 36, and 38; the Second Set of Requests for Admissions to Steven Marcus, Nos. 32, 35, 41-42, 44; the Second Set of Requests for Form Interrogatories, No. 17.1; and the Third Set of Requests for Special Interrogatories to Steven Marcus, Nos. 27-32 and 34-36. (Sep. Statement, 3.)

Under the Discovery Act, “any 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.”¿ (CCP § 2017.010.)¿¿¿

A motion to compel further responses to form or specially prepared interrogatories may be brought if the responses contain: (1) answers that are evasive or incomplete; (2) an unwarranted or insufficiently specific exercise of an option to produce documents in lieu of a substantive response; or (3) unmerited or overly generalized objections. (CCP § 2030.300(a).)

A motion to compel further production must set forth specific facts showing good cause justifying the discovery sought by the inspection demand. (CCP § 2031.310(b)(1).) It is not necessary for the motion to show that the material sought will be admissible in evidence. “Good cause” may be found to justify discovery where specific facts show that the discovery is necessary for effective trial preparation or to prevent surprise at trial. (See Associated Brewers Dist. Co. v. Superior Court (1967) 65 Cal.2d 583, 586-588; see also CCP §§ 2017.010, 2019.030(a)(1) [Information is discoverable if it is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence and it is not unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive.]; Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 1611-1612 [noting a party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence].)

CCP § 2033.290 authorizes a party to bring a motion to compel further responses as follows: “(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.” (CCP § 2033.290(a).)

Pursuant to CCP § 2031.230, a party who is unable to comply with a request for production of documents in part or in whole must “affirm that a diligent search and a reasonable inquiry has been made in an effort to comply with that demand.” Further, “this statement shall also specify whether the inability to comply is because the particular item or category has never existed, has been destroyed, has been lost, misplaced, or stolen, or has never been, or is no longer, in the possession, custody, or control of the responding party. The statement shall set forth the name and address of any natural person or organization known or believed by that party to have possession, custody, or control of that item or category of item.” As will be discussed below, Defendant’s responses to Plaintiffs’ requests fail to comply with CCP § 2031.230 in large part.

If a timely motion to compel has been filed, the burden is on the responding party to justify any objection or failure fully to answer. (Coy v. Superior Court (1962) 58 Cal.2d 210, 220–221 [addressing a motion to compel further responses to interrogatories]; see also Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255.)

First, Plaintiffs contend the discovery requests—RFAs 32, 35-37, 41-42, 44; RFPs 32, 34, 36, 38; SROG 27-32, 34-35—which relate to Bugsy “each target critical information regarding Steven’s allegations in this case... the identification and description of the advice, actions, allegations, and communications ... made by ‘Bugsby’ relating to the advice ‘Bugsby’ allegedly gave [ARE] in late 2013... and communications relating to compensation... and allegations ‘Bugsby’ made in the other cases against [Plaintiffs] about that advice...” (Motion, 8.) Plaintiffs contend Defendant provided the same “improper objection” to each request, asserting the information “is neither relevant to this action nor reasonably calculated to lead to the discovery of admissible evidence...overbroad and unduly burdensome” and “that [Bugsby] is not a party to this case...” (Id.) In their motion, Plaintiffs correctly explain that throughout this litigation, Defendant has put Bugsby’s actions and the applicability of the CNDA to Bugsby squarely at issue in this matter. (Motion, 9-10.)

In opposition, Defendant simply contends Plaintiffs already “know” all relevant information regarding Bugsby’s conduct in this matter and Defendant’s arguments in defense, and further responses are not justified. (Opp., 6-9.) The court disagrees with Defendant’s reasoning, and Defendant fails to point to any supporting authority for such conclusory contentions to avoid producing sufficient discovery responses. As Plaintiffs correctly contend, Defendant has made the CNDA, Bugsby’s advice, Bugsby’s compensation, and Bugsby’s obligations under the CNDA a significant part of the dispute between the parties, and should not now be able to skirt providing discovery responses by alleging Plaintiffs already know what they need. (Reply, 1-5.) The court agrees.

Defendant’s responses are insufficient under each relevant standard, as delineated above, fail to produce responses or proper objections pursuant to CCP § 2017.010, and Defendant lastly fails to meet their burden to justify such objections and failures to answer fully. (Coy, supra.)

The court agrees with Plaintiffs that they are at least somewhat entitled to further information regarding Bugsby as it relates to this matter. The court compels a further response to each request; Defendant is ordered to confirm a diligent search has been undertaken, and to prepare a privilege log for each document withheld.

With regards to the remaining requests – SROG 36, RFP 33, and FROG 17.1 relating to RFA 26-32 and 34-44 -- Plaintiffs contend Defendant fails to provide “discovery relating to his own conduct, effectively leaving Plaintiffs in the dark” and further fails to provide sufficient responses to Form Interrogatory 17.1 regarding explanations for Defendant’s responses to the RFAs. (Motion, 10-11, 16-17.) In reply, Plaintiffs further correctly explain good cause exists to request such discovery as it relates to Defendant’s conduct, Defendant’s compensation, and issues Defendant has placed squarely in dispute within this matter, and other matters between the parties. (Reply, 5-6.) The court here similarly finds Defendant’s responses to be incomplete, insufficient, and noncompliant with the relevant standards as explained above. (Motion, 16-17; Sep. Statement, 6-8, 36-72.) The court therefore also compels further responses to each remaining request; Defendant is also ordered to confirm a diligent search has been undertaken for responsive documents, and to prepare a privilege log for each withheld document.

For these reasons, Plaintiffs’ motion is granted with respect to all requests in Plaintiffs’ notice of motion.

Monetary Sanctions

The court may impose sanctions against any party for engaging in conduct constituting a “misuse of the discovery process.” (CCP § 2023.030 (a).) Misuse of the discovery process includes “failing to respond or submit to an authorized method of discovery.” (CCP § 2023.010 (d).)

Plaintiffs request $5,000.00 in sanctions in connection with their motion. (Motion, 17-18.) Plaintiffs’ counsel attests significant time has been expended in connection with the discovery disputes here, “all of which took more than 25 hours to complete, and more than $20,000 in billable time.” (Wallace Decl. ¶22.) Plaintiffs contend the sanctions amount is reasonable given “it accounts for only fraction [sic] of the time spent attempting to secure [Defendant’s] compliance with his own promises and drafting this motion.” (Motion, 18.)

The court is inclined to award sanctions against Defendant and finds the requested amounts reasonable. Thus, Plaintiffs’ request for sanctions against Defendant is granted.

Conclusion

Plaintiffs’ motion to compel further responses is granted. Defendant is to serve verified, supplemental responses within 30 days of this date. Plaintiffs’ request for sanctions against Defendant is also granted in the amount of $5,000.00. Plaintiffs are to give notice.