Judge: Gail Killefer, Case: BC662775, Date: 2024-11-07 Tentative Ruling

Case Number: BC662775    Hearing Date: November 7, 2024    Dept: 37

HEARING DATE:                 November 7, 2024

CASE NUMBER:                   BC662775

CASE NAME:                        Zhao Hui Shi and Jun Lu, individually and on behalf of others similarly situated v. Rachel H. Lew, et al.

MOVING PARTY:                 Defendant John Thropay

OPPOSING PARTY:             Plaintiff Zhao Hui Shi

PROCEEDING:                      Motion for Order Requiring John Thropay to Comply with CCP § 1987

TRIAL DATE:                        19 September 2024

PROOF OF SERVICE:           OK

MOVING PARTY:                 Plaintiff Zhao Hui Shi

OPPOSING PARTY:             Defendant John Thropay

OPPOSITION:                        22 October 2024

REPLY:                                  28 October 2024

TENTATIVE:                         Plaintiff’s Motions are denied.

MOVING PARTY:                 Plaintiff Zhao Hui Shi

OPPOSING PARTY:             Defendant Rachel Lew

OPPOSITION:                        21 October 2024

REPLY:                                  28 October 2024

TENTATIVE:                         Plaintiff’s Motions are denied.

Background

This action arises out of an alleged conspiracy by Defendants to defraud investors in connection with an investment visa program under the United States Government’s EB-5 investment visa program.¿ Plaintiffs Zhao Hui Shi (“Shi”) and Jun Lu (“Lu”) bring claims for fraud, negligent misrepresentation, and Penal Code § 496(c) claims against Defendants John P. Thropay (“Thropay”) and Rachel H. Lew (“Lew”).  Shi also brings a legal malpractice action against Lew. 

Plaintiff Shi (hereinafter “Plaintiff”) has served a notice for production of witness and things and materials at trial under CCP § 1987(c) on Defendants Thropay and Lew. Defendants Thropay and Lew oppose the Motion. The matter is now before the court.

Legal Standard

CCP § 1987(b) provides: 

In the case of the production of a party to the record of any civil action or proceeding or of a person for whose immediate benefit an action or proceeding is prosecuted or defended or of anyone who is an officer, director, or managing agent of any such party or person, the service of a subpoena upon any such witness is not required if written notice requesting the witness to attend before a court, or at a trial of an issue therein, with the time and place thereof, is served upon the attorney of that party or person. The notice shall be served at least 10 days before the time required for attendance unless the court prescribes a shorter time. If entitled thereto, the witness, upon demand, shall be paid witness fees and mileage before being required to testify. The giving of the notice shall have the same effect as service of a subpoena on the witness, and the parties shall have those rights and the court may make those orders, including the imposition of sanctions, as in the case of a subpoena for attendance before the court.

Subsection (c) further provides:  

If the notice specified in subdivision (b) is served at least 20 days before the time required for attendance, or within any shorter period of time as the court may order, it may include a request that the party or person bring with him or her books, documents, electronically stored information, or other things. The notice shall state the exact materials or things desired and that the party or person has them in his or her possession or under his or her control. Within five days thereafter, or any other time period as the court may allow, the party or person of whom the request is made may serve written objections to the request or any part thereof, with a statement of grounds. Thereafter, upon noticed motion of the requesting party, accompanied by a showing of good cause and of materiality of the items to the issues, the court may order production of items to which objection was made, unless the objecting party or person establishes good cause for nonproduction or production under limitations or conditions. The procedure of this subdivision is alternative to the procedure provided by Sections 1985 and 1987.5 in the cases herein provided for, and no subpoena duces tecum shall be required. Subject to this subdivision, the notice provided in this subdivision shall have the same effect as is provided in subdivision (b) as to a notice for attendance of that party or person.

(CCP, § 1987(c) [bold added].)

Order Requiring John Thropay to Comply with CCP § 1987

Plaintiff asserts that “[t]first category consists of documents from the SEC Federal Court action.” “The second category consists of documents which are conspicuously missing, such as his companies’ bank statements and accounting records.”  And the [t]hird category consists of specifically identified records showing THROPAY’s net worth,” which pertain to the request for punitive damages. (Mot. at pp.3:26, 4:9-10, 4:20-21.)

Defendant Thropay opposes the request on the basis that Plaintiff does not show good cause, does not request “exact materials or things,” and issued the section 1987(c) Notice as a substitute for conducting discovery after the discovery cut off, and to meet the evidentiary burden to authenticate documents.

As a preliminary matter, Plaintiff is entitled to file this Motion despite the passing of the discovery cutoff date. The discovery cutoff under CCP § 2024.020 pertains to the time to conduct discovery under the Civil Discovery Act (CCP § 2016.010 et seq.); CCP § 1987 is not governed by the Civil Discovery Act. However, section 1987(c) specifies “[th]e notice shall state the exact materials or things desired and that the party or person has them in his or her possession or under his or her control.”

For discovery purposes, a party may compel document production by reasonably describing a category of documents (e.g., “all correspondence between Jones and Smith relating to the XYZ transaction”). [CCP § 2031.030(c)(1)]

But to obtain production at trial, the description must be “exact” (e.g., “letter dated June 21, 1990, written by Harry A. Jones to Paula Smith, captioned ‘Re XYZ’ and marked as Exhibit ‘A’ in Smith's deposition”).

(Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2024), ¶ 1:115.)

As noted above, rather than seeking specific documents, Plaintiff’s 150 numbered requests seek the production of certain categories of documents rather than individually identifying the exact documents Defendant Thropay should produce: For example:

·       Request No. 1 seeks “The original or BEST COPY of each demolition, grading, and building permit obtained for the property located at 111 West Beverly Blvd., Montebello, CA 90640 since 2007.”

·       Request No. 6 seeks “The original or BEST COPY of the Chase Bank statements for Beverly Proton Center, LLC account no. xxxx-5152.”

·       Request No. 31 “The original or BEST COPY of the prior and subsequent versions of the Pacific Proton EB-5 Fund, LLC Business Plan, and any attachments thereto.”

·       Request No. 57: “All photographs depicting the property located at 111 West Beverly Blvd., Montebello, CA 90640 taken between 2008 and the present.”

·       Request No. 124: “Each WRITING relating to or comprising encumbrances on the property located at 1508 S. Sierra Vista, Alhambra, CA 91801.”

In I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, the appellate court did not disagree with the trial courts’ contention that the plaintiff’s section 1987 notice was deficient because “ ‘[I-CA] has not stated with any measure of specificity the documents to be produced, instead broadly requesting all balance statements, profit and loss statements, financial documents, and the like.’ ” (Id., at 280.) Here, Plaintiff similarly requests copies of various Bank States from several bank accounts without specificity.

The Rutter guide explains that the purpose of the “exact material” requirement in section 1987 is to prevent parties “from using a ‘notice to produce’ for discovery purposes after discovery is closed.” (Wegner et al., Cal. Practice Guide: Civil Trials and Evidence, supra, ¶ 1:115.1.) By requesting certain categories of documents rather than specific documents, Plaintiff appears to be seeking discovery after the discovery deadline has closed. This is impermissible. “[I]t makes no sense to read subdivision (c) of section 1987 as a free standing authorization to obtain the production of records at trial.” (Amoco Chemical Co. v. Certain Underwriters at Lloyd's of London (1995) 34 Cal.App.4th 554, 560.)

Second, Plaintiff seeks deposition transcripts and fails to show that the deposition transcripts are in Defendant Thropay’s possession or control. (CCP § 1987(c).) This includes the deposition transcripts of Lorraine Pearson, Charles C. Liu, Ruth Thropay, Lopez Novodor, Carlyn Irwin, Ronald S. Friedman, Trang Lam, Theodore R. Ginsburg, and Xin Wang, aka Lisa Wang. (See Requests Nox. 43, 44, 45, 46, 47, 48, 49, 50, 51.) That Defendant’s counsel refuses to stipulate to the authenticity of documents does not mean that Defendant Thropay can authenticate the deposition transcripts of other persons.

Third, Defendant asserts that Plaintiff fails to show good cause and materiality sought for each of the 150 categories of documents requested. While the court agrees that section 1987 does not require a separate statement, Plaintiff was required to show good cause for the requests. Only on reply did Plaintiff attempt to show good cause for the documents requested in the Notice by filing a separate statement. “Points raised for the first time in a reply brief will not be considered.” (Malmstrom v. Kaiser Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299, 320.) Plaintiff’s moving papers were devoid of a showing of good cause for the documents requested.

Plaintiff’s good cause for the document request is that Thropay’s counsel refused to stipulate to the authenticity of document and Thropay is the only known source for the original document. Defendant Thropay asserts that Plaintiff is in this predicament because he conducted no discovery and now that discovery is closed, Plaintiff is attempting to obtain discovery via a section 1987 notice. Plaintiff fails to explain why no discovery was taken related to the SEC Action and the documents filed in that action. Plaintiff cites no case law holding that the inability to obtain a stipulation of authenticity constitutes a showing of good cause for production of documents. Furthermore, the production of the documents pursuant to section 1987 would not result in the authentication of the documents. “[W]hat good would it do to have the documents at trial without the custodian of records or some other person competent to authenticate them?” (Amaco, supra, 34 Cal.App.4th at p. 560.) If Plaintiff asserts that the failure of Thropay’s counsel to authenticate the documents constitutes good cause for production, Plaintiff may instead seek to have the documents authenticated by a witness during trial.

Similarly, Plaintiff’s request No. 1 for “The original or BEST COPY of each demolition, grading, and building permit obtained for the property located at 111 West Beverly Blvd., Montebello, CA 90640 since 2007” states that the good cause for the request was the fact Plaintiff’s counsel was unable to obtained certified copies from the City of Montebello. The court fails to see how Plaintiff’s lack of diligence and preparation constitutes good cause for the production of documents at trial.

Absent a showing by Plaintiff identifying which of her 150 requests seeks “exact materials or things” that are in the possession or under the control of Defendant Thropay and specifying the good cause and the materiality of the documents, Plaintiff’s request is denied in its entirety.

The denial does not preclude Plaintiff from filing a motion under CCP § 3295 seeking an order to discover Defendant Thropay’s financial condition for purposes of assessing punitive damages. (See Soto v. BorgWarner Morse TEC Inc. (2015) 239 Cal.App.4th 165, 192.)

Order Requiring Rachel LEW to Comply with CCP § 1987

Plaintiff describes the four “types” of documents requests to Defendant Lew as:

(1) documents which LEW was obligated to review for PLAINTIFF and to warn PLAINTIFF about (request nos. 1 - 4, 16 - 22, 31 - 35, 43 - 44, 46, 47, and 49 - 56);

(2) documents which evidence work performed or to have been performed by LEW for PLAINTIFF (such as the fee agreement, time sheets, trust accounting, etc.) (request nos. 5 - 7, 12, 36 - 38, and 45);

(3) documents which evidence a conflict of interest by LEW regarding her concurrent representation of Charles Liu’s (and THROPAY’s) companies and PLAINTIFF (request nos. 8 - 11; 13 - 15, 23 - 30, 37 - 42, and 48); and

(3) documents regarding LEW’s net worth for purposes of punitive damages (request nos. 57 - 84).

(Mot. at p. 4:4-13.)

The court again finds that Plaintiff’s request seeks categories of documents rather than “the exact materials or things.” (CCP § 1987(c).) For example:

·       Request No. 2 seeks: “Each private offering memorandum involving Charles Liu.”

Plaintiff asserts that good cause exists for Request No. 2 because “PLAINTIFF wishes to prove that LEW received copies of these documents and therefore had an obligation to review them and to warn PLAINTIFF. LEW’s bringing these documents to trial will prove that she had them.” (See Separate Statement.) This reflects that Plaintiff does not know if Defendant Lew actually has possession of such documents.

Similarly, Request No. 39 seeks: “Each WRITING comprising WeChat communications with anyone concerning Charles Liu prior to the filing of this lawsuit.” The court finds that lack of specificity as to the documents sought is evidence that Plaintiff is improperly seeking discovery after the discovery deadline has passed. Plaintiff’s request reads like a CCP § 2031.(c)(1) discovery motion “describing each individual item or by reasonably particularizing each category of item” requested rather than a 1987(c) motion.

Defendant Lew further asserts Plaintiff already has in her possession a number of the documents requested, negating a showing of good cause on the basis Plaintiff does not have the documents. (See Separate Statement RFP Nos. 1-4, 16-21, 31-35, 49-56).

Plaintiff’s purported good cause for many of the documents requested is that:

PLAINTIFF wishes to prove that LEW received copies of these documents and therefore had an obligation to review them and to warn PLAINTIFF. LEW’s bringing these documents to trial will prove that she had them.

Nothing precludes Plaintiff from asking Defendant Lew at trial whether she had the documents at issue in her possession, if she reviewed them, and if based on her knowledge of the legal or factual implications of such documents, she failed to warn Plaintiffs. That Plaintiff wishes to prove that Defendant Lew was in possession of certain documents is not itself sufficient to show good cause under section 1987(c).

Lastly, Defendant Lew asserts that Plaintiff fails to show that the documents are in her possession or control. The court agrees. The fact that Plaintiff’s counsel seeks to authenticate the documents he seeks to have Defendant Lew produce is not a sufficient ground to grant Plaintiff’s overly broad request as the documents can be authenticated at trial.

Therefore, the motion is denied.

Conclusion