Judge: Holly J. Fujie, Case: 20STCV19331, Date: 2023-06-20 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.

Case Number: 20STCV19331    Hearing Date: January 19, 2024    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Plaintiffs/Cross-Defendants Aidan Sciandra; Boualiene Syprasert; and Jack Edjourian (collectively, “Plaintiffs”)

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

The Court has considered the moving, opposition and reply papers. 

BACKGROUND

            This action arises out of a dispute concerning the ownership of 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 “FAXC”) 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 October 2, 2023, Plaintiffs filed a motion for terminating sanctions (the “Motion”).  The Motion requests that the Court issue terminating, issue, evidence, and/or monetary sanctions against Defendants due their repeated misuse of the discovery process and failure to preserve evidence.

DISCUSSION

Under California Code of Civil Procedure (“CCP”) section 2023.030, where a party engages in misuse of discovery process, the court may impose monetary, issue, evidence, terminating, or contempt sanctions.  (See CCP § 2023.030.)  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.) 

Spoliation of evidence means the destruction or significant alteration of evidence or the failure to preserve evidence for another's use in pending or future litigation.  (Williams v. Russ (2008) 167 Cal.App.4th 1215, 1223.)  While there is no tort cause of action for the intentional destruction of evidence after litigation has commenced, it is a misuse of the discovery process that is subject to a broad range of punishment, including monetary, issue, evidentiary, and terminating sanctions.  (Id.)  A terminating sanction is appropriate in the first instance without a violation of prior court orders in egregious cases of intentional spoliation of evidence.  (Id.)  Discovery sanctions are intended to remedy discovery abuse, not to punish the offending party.  (Id.)  Accordingly, sanctions should be tailored to serve that remedial purpose, should not put the moving party in a better position than he would otherwise have been had he obtained the requested discovery, and should be proportionate to the offending party's misconduct.  (Id.)

The Motion argues that terminating, issue, and/or issue sanctions should be imposed based on Defendants’ failure to preserve certain pieces of evidence: (1) Defendant Alexander’s cellphone, which was thrown away after sustaining water damage in January 2021; and (2) CCI’s accounting and financial  documents from the Department of Cannabis Control (“DCC”) and the Department of Cannabis Regulation (“DCR”), which were lost after CCI was raided by law enforcement in 2022. 

            With respect to Alexander’s cellphone, the evidence presented in support of the Motion suggests that Defendants produced screenshots from the phone in response to discovery requests issued in 2020 before Plaintiffs issued a notice for inspection of the cellular device itself on September 13, 2021.  (See Declaration of Kristin Westphal (“Westphal Decl.”) ¶¶ 4, 7.)  There is no evidence that the cellphone was intentionally destroyed; nor is there a clear nexus between the evidence that was potentially contained in the cellphone and the issue sanctions requested by Plaintiffs. 

            With respect to CCI’s tax and DCR accounting documents, Defendants failed to timely comply with Plaintiffs’ discovery requests and subsequently lost access to these records without an apparent attempt to make backup files for the potentially relevant evidence.  (See Westphal Decl. ¶¶ 22-23.)  While Defendants may not have caused the loss of the evidence, their delays and failure to comply with discovery obligations prevented Plaintiffs from accessing potentially relevant evidence that is no longer available.  The Court finds it appropriate, therefore, to impose an issue sanction establishing that the financial, tax and accounting records from CCI that Defendants failed to preserve show that Chronicpractor did not incur any damages from alleged tax consequences caused by Plaintiffs’ actions.  The Court therefore GRANTS the Motion in part.  The Court declines to impose the remaining sanctions requested by the Motion. 

Moving party is ordered to give notice of this ruling.

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. 

  Dated this 19th day of January 2024