Judge Holly J. Fujie, Case 20STCV19331 2023-03-17 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

This order concerns: (1) a motion for summary adjudication (the “MSA”) filed by Plaintiffs/Cross-Defendants Aidan Sciandra (“Sciandra”) and Boualiene Syprasert (“Syprasert”); and (2) a motion to compel further responses to Special Interrogatories (“SPROGs”) and Requests for Production of Documents (“RFPs”) (the “MTCF”) filed by Sciandra, Syprasert, and Plaintiffs/Cross-Defendants Jack Edjourian and The Plug (collectively, “Plaintiffs”).

RESPONDING PARTY: Defendants/Cross-Complainants Chronicpractor Caregiver, Inc. (“CCI”), Eric Loyola (“Loyola”), and Daniela Alexander (“Alexander”) (collectively, “Defendants”)

This action arises out of a business relationship related to a marijuana dispensary. The currently operative third amended complaint (the “TAC”) alleges: (1) breach of contract – equity purchase agreement; (2) breach of contract – promissory note; (3) breach of contract – security agreement; (4) breach of written contract by third party beneficiary; (5) specific performance; (6) demand for accounting; and (7) unjust enrichment.

The currently operative first amended cross-complaint (the “FACC”) alleges: (1) breach of contract; (2) breach of fiduciary duty of loyalty; (3) breach of fiduciary duty of care; (4) aiding and abetting breach of fiduciary duty; (5) conversion; and (6) conversion.

On December 27, 2022, Plaintiffs filed the MSA to the third cause of action in the TAC. On January 25, 2023, Plaintiffs filed the MTCF, which also requests issue, terminating, and/or monetary sanctions against Defendants for their misuse of the discovery process.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) California Code of Civil Procedure (“CCP”) section 437c, subdivision (c) requires the trial judge to grant summary judgment if all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

A plaintiff moving for summary judgment or summary adjudication meets the burden of showing that there is no defense to a cause of action if the plaintiff has proved each element of the cause of action entitling them to judgment on that cause of action. (CCP § 437c, subd. (p)(1).) Courts liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of the opposing party. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

Once the moving party has met that burden, the burden shifts to the opposing party to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Under California Rules of Court (“CRC”), rule 3.1350(b), if summary adjudication is sought, whether separately or as an alternative to the motion for summary judgment, the specific cause of action, affirmative defense, claims for damages, or issues of duty must be stated specifically in the notice of motion and be repeated, verbatim, in the separate statement of undisputed material facts. (CRC, r. 3.135(b).)

Plaintiffs’ Notice of Motion (the “Notice”) filed with the MSA provides that Plaintiffs seek summary adjudication of the “third cause of action for breach of contract – promissory note.” The third cause of action in the TAC, however, alleges “breach of contract – pledge and security agreement,” while the second cause of action alleges breach of contract – promissory note. (See TAC ¶¶ 40, 46.) The MSA and its supporting papers universally refer to the cause of action targeted for summary adjudication as the third cause of action for “breach of contract – promissory note.” The agreements underlying the second and third causes of action in the TAC are interrelated; and it is therefore not entirely clear which claim Plaintiffs seek to dispose of by summary adjudication.

As a result of the interrelatedness of the second and third causes of action and Plaintiffs’ failure to identify the specific claim(s) for which summary adjudication is sought as required under CRC, rule 3.135(b), the Court DENIES the MSA. (Truong v. Glasser (2009) 181 Cal.App.4th 102, 118.)

A motion to compel further responses to a demand for inspection or production of documents may be brought based on: (1) incomplete statements of compliance; (2) inadequate, evasive or incomplete claims of inability to comply; or (3) unmerited or overly generalized objections. (CCP § 2031.310, subd. (c).) A motion to compel further production must set forth specific facts showing good cause justifying the discovery sought by the inspection demand. (See CCP § 2031.310 subd. (b)(1); Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 234-35.) To establish good cause, a discovery proponent must identify a disputed fact that is of consequence in the action and explain how the discovery sought will tend in reason to prove or disprove that fact or lead to other evidence that will tend to prove or disprove the fact. (Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224.)

If the moving party has shown good cause for the requests for production, the burden is on the objecting party to justify the objections. (Kirkland v. Superior Court (2002) 95 Cal. App.4th 92, 98.) The court shall limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence. (CCP § 2017.020, subd. (a).) To support an objection to a request for production of documents, the objecting party must establish the validity of its objections with supporting facts in order to meet its burden. (Southern Pac. Co. v. Superior Court (1969) 3 Cal.App.3d 195, 198.)

Under CCP section 2030.300, on 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; (2) an exercise of the option to produce documents under CCP 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.

Responses to interrogatories must be as complete and straightforward as the information reasonably available to the responding party permits. (CCP § 2030.220, subd. (a).) If an interrogatory cannot be answered completely, then it must be answered to the extent possible. (CCP § 2030.220, subd. (b).) If the responding party does not have personal knowledge sufficient to respond fully to an interrogatory, that party shall so state, but shall make a reasonable and good faith effort to obtain the information by inquiry to other natural persons or organizations, except where the information is equally available to the propounding party. (CCP § 2030.220, subd. (c).) If the responding party cannot furnish details, they should set forth the efforts made to secure the information. (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 782.) The responding party cannot plead ignorance to information which can be obtained from sources under their control. (Id.)

The discovery statutes evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination. (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992.) Discovery sanctions should be appropriate to the dereliction and should not exceed that which is required to protect the interests of the party entitled to but denied discovery. (Id.) Continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse. (Id.) Where discovery violations are willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with discovery rules, the trial court is justified in imposing the ultimate sanction. (Id.) A trial court has broad discretion to impose discovery sanctions, but two facts are generally a prerequisite to the imposition of nonmonetary sanctions. (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.) Absent unusual circumstances, there generally must be: (1) a failure to comply with a court order; and (2) the failure must be willful. (Id.) A decision to order terminating sanctions should not be made lightly. (Creed-21 v. City of Wildomar (2017) 18 Cal.App.5th 690, 702.) Where a trial court imposes a terminating sanction, a trial court can strike out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process. (Id. at 1701.) Although in extreme cases a court has the authority to order a terminating sanction as a first measure, a terminating sanction should generally not be imposed until the court has attempted less severe alternatives and found them to be unsuccessful and/or the record clearly shows lesser sanctions would be ineffective. (Lopez v. Watchtower Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 604-05.)

The MTCF contends that Defendants’ responses to numerous discovery requests remain deficient despite Plaintiffs’ attempts to meet and confer with Defendants about the sufficiency of their responses. Defendants’ opposition (the “MTCF Opposition”) contends that the MTCF is moot because Defendants provided further responses on February 8, 2023, and any documents that they did not produce are privileged and thus protected from disclosure. (See Declaration of John V. Tamborelli ¶¶ 3-4, Exhibits A-B.)

A party may obtain discovery regarding unprivileged matters relevant to the subject matter involved in the pending action, if the matter is either itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. (Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 999.) Nevertheless, when evidence sought to be discovered impacts on a person’s constitutional right to privacy, limited protections come into play for that person. (Id.) The privacy protections extend to both a person’s personal and financial matters. (Id.) In ruling upon a privacy objection in the contact of discovery, the party asserting a privacy right must establish a legally protected privacy interest. (Williams v. Superior Court (2017) 3 Cal.5th 531, 552.) The party asserting a privacy right must also establish an objectively reasonable expectation of privacy in the given circumstances. (Id.) Further, the party asserting a privacy right must establish a threatened intrusion that is serious. (Id.) The Court need not proceed to the fourth step of balancing competing interests if all three of the above are not satisfied. (Id. at 555.) If the court reaches the fourth step, the court must balance these competing considerations: the party seeking information may raise whatever legitimate and important countervailing interests disclosure serves. (Id. at 552.) The party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. (Id.) Courts may not require the party seeking discovery to demonstrate a “compelling need” simply because discovery of any facially private information is sought. (Id. at 556-57.)

Tax returns are privileged from disclosure. (Strawn v. Morris, Polich & Purdy, LLP (2019) 30 Cal.App.5th 1087, 1098.) The purpose of the privilege is to encourage voluntary filing of tax returns and truthful reporting of income, and thus to facilitate tax collection. (Id.) The tax return privilege is not absolute and will not be upheld when: (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. (Id.)

The Court notes that is not entirely clear which specific discovery requests have been supplemented with further responses from Defendants, although the MTCF Opposition indicates that Defendants produced supplemental responses to requests that did not seek tax or bank information. Nor is it clear if Defendants’ supplemental responses were code-compliant or if the documents produced by Defendants were Bates numbered.[1]

With respect to the categories of requests which Defendants argue impermissibly seek information protected by the tax return privilege or constitutional right to privacy, the Court finds that Plaintiffs have shown good cause to compel responses to discovery requests concerning Defendants’ tax and bank information. The FACC alleges that Plaintiffs engaged in wrongful conduct that had the effect of saddling CCI with tax consequences. (See, e.g., FACC ¶ 23.) Defendants have thus directly put CCI’s tax consequences at issue such that the gravamen of the claims in the FACC are inconsistent with the continued assertion of the taxpayer’s privilege. (See Wilson v. Superior Court (1976) 63 Cal.App.3d 825, 830.) The Court notes that the discovery requests do not seek CCI’s tax returns outright, and to the extent that Defendants contend that certain responsive documents are privileged, if an objection is based on a claim of privilege or a claim that the information sought is protected work product, the response shall provide sufficient factual information for other parties to evaluate the merits of that claim, including, if necessary, a privilege log. (CCP § 2031.240, subd. (c)(1).) As of the filing of the MTCF, Defendants had not identified specific documents or provided a privilege log.

In addition, during discovery, Plaintiffs learned Alexander and Loyola may have intermingled their personal funds with CCI. (See Westphal Decl. ¶¶ 50-51.) The personal bank information of Alexander and Loyola therefore may lead to the discovery of admissible evidence. Aside from their general argument that financial information is private, Defendants make no arguments that Plaintiffs’ requests for information about their bank information are overly broad or irrelevant, and the Court finds that Defendants have not demonstrated that Plaintiffs’ discovery requests unreasonably encroach upon their privacy rights under the circumstances.

To the extent that Defendants’ responses remain deficient, the Court GRANTS the MTCF. Defendants are ordered to provide code-compliant, Bates stamped supplemental responses and any necessary corresponding privilege log within 20 days of this order.

Plaintiffs request $6,990 in monetary sanctions in connection to the MTCF. (Declaration of Kristin Westphal (“Westphal Decl.”) ¶ 62.) This amount represents: (1) 1.6 hours attempting to confer with Defendants’ counsel to informally resolve the dispute at a rate of $550 per hour; (2) 8.5 drafting the moving papers; (3) an anticipated 1.5 hours preparing the MTCF Reply; (4) an anticipated one hour attending the hearing; and (5) a $60 filing fee. (Westphal Decl. ¶¶ 60-62.)

The Court exercises its discretion and grants Plaintiffs monetary sanctions in the total amount of $1,710, which represents three hours preparing the MTCF at a rate of $550 per hour and the $60 filing fee. (Moran v. Oso Valley Greenbelt Assn. (2004) 117 Cal.App.4th 1029, 1034.) This amount is to be paid within 20 days. The Court DENIES the MTCF’s request for issue or terminating sanctions.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] In law and motion practice, factual evidence is supplied to the court by way of declarations. (Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.) Defendants’ MTCF Opposition does not identify the specific items to which further responses were provided or the form of their further responses. Plaintiffs’ reply contends that the supplemental responses that were provided remain deficient but does not include a supporting declaration.