Judge James L. Crandall, Case Kamalalalvivs.2000Chapman,Inc. 2022-09-08 Tentative Ruling

Judge: James L. Crandall, Case: "Kamalalalvivs.2000Chapman,Inc.", Date: 2022-09-08 Tentative Ruling

1. Demurrer to Complaint

2. Demurrer to Complaint

3. Motion to Strike Complaint

4. Motion to Quash Subpoena

1.Defendant Mehdi Asgarynejad’s Demurrer to Plaintiff’s (Fatemeh Ladan Kamalalavi, as Trustee of the Asgarynejad-Kamalavu Trust) Complaint is OVERRULED in part and SUSTAINED in part.

Code of Civil Procedure section 452, states, “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.”

Perez v. Golden Empire Transportation Transit District (2012) 209 Cal.App.4th 1228, 1238, provides, “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. [Citations.]”

C.A. v. William S. Hart Union High School District (C.A.) (2012) 53 Cal.4th 861, 872, provides, “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged. [Citation.]”

“The question raised by a demurrer to the complaint is simply whether it alleges sufficient facts to state a cause of action. [Citations] A demurrer is not concerned with the likelihood that the plaintiffs will prevail, nor even whether they have evidence to support their allegations. [Citations] Instead, a demurrer admits, provisionally for purposes of testing the pleading, all material facts properly pleaded, however improbable they may be.” (Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1224.)

Breach of Fiduciary Duty: “In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Pierce v. Lyman (1991) 1 Cal. App. 4th 1093, 1101.) “The absence of any one of these elements is fatal to the cause of action.” (Id.)

Plaintiff’s allegations are sufficient to support this cause of action (Complaint ¶ 5, 12-28). Defendant contends that Plaintiff is trying to recover income from a deceased person but this is not what is alleged. Plaintiff has alleged that the business interest is in the trust for which she is the sole remaining trustee. Plaintiff alleges that no dividends have been paid and her ownership interest is not being recognized. This is sufficient.

Based on the foregoing, the Court OVERRULES the demurrer to this cause of action.

Violation of Penal Code § 496: Pursuant to Penal Code § 496(a): “Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170. However, if the value of the property does not exceed nine hundred fifty dollars ($950), the offense shall be a misdemeanor, punishable only by imprisonment in a county jail not exceeding one year, if such person has no prior convictions for an offense specified in clause (iv) of subparagraph (C) of paragraph (2) of subdivision (e) of Section 667 or for an offense requiring registration pursuant to subdivision (c) of Section 290.”

Pursuant to Penal Code §496(c): “[a]ny person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.”

While section 496(a) covers a spectrum of impermissible activity relating to stolen property, the elements required to show a violation of section 496(a) are simply that (i) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property. (Lacagnina v. Comprehend Systems, Inc., supra, 25 Cal.App.5th at p. 970, 236 Cal.Rptr.3d 641 [elements of § 496 (a) may, by its own terms, relate to property that has been “stolen” or “that has been obtained in any manner constituting theft or extortion.” (§ 496(a), italics added.)

As reflected in Bell v. Feibush, supra, 212 Cal.App.4th at p. 1048, 151 Cal.Rptr.3d 546, the issue of whether a wrongdoer's conduct in any manner constituted a “theft” is elucidated by other provisions of the Penal Code defining theft, such as Penal Code section 484. In 1927, the Legislature consolidated the crimes of larceny, embezzlement, and theft by false pretense in Penal Code section 484, subdivision (a), under the single term “theft.” (Bell v. Feibush, at p. 1048, 151 Cal.Rptr.3d 546; see also People v. Vidana (2016) 1 Cal.5th 632, 640–641, 206 Cal.Rptr.3d 556, 377 P.3d 805 [although the distinctive substantive elements of each offense remained the same, each constituted the crime of “theft”]; People v. Gomez (2008) 43 Cal.4th 249, 255, fn. 4, 74 Cal.Rptr.3d 123, 179 P.3d 917.)

Section 484, subdivision (a), states as follows: “Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, or who causes or procures others to report falsely of his or her wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft.” (Italics added.)”

Siry Inv., L.P. v. Farkhondehpour, (2022) 13 Cal. 5th 333, 513 provides: “Viewing the issue independently as a matter of law, we endorse the analysis of Bell and Switzer — even though, at the same time, we acknowledge that some of the policy considerations highlighted in those cases, and elaborated upon by the appellate court below, give pause. Fundamentally, we agree with the conclusions of Bell and Switzer that section 496(c) is unambiguous, and that read together with sections 496(a) and 484, and in conformity with our standard approach to interpretation (e.g., Smith v. LoanMe, Inc. (2021) 11 Cal.5th 183, 190, 276 Cal.Rptr.3d 746, 483 P.3d 869), section 496(c) must be understood as yielding the understanding attributed to it in those decisions: A plaintiff may recover treble damages and attorney's fees under section 496(c) when property has been obtained in any manner constituting theft. ¶ We also find that section 496(c) applies concerning the conduct at issue in the present case. The unambiguous relevant language covers fraudulent diversion of partnership funds. Defendants’ conduct falls within the ambit of section 496(a): They “receive[d]” “property” (the diverted partnership funds) belonging to plaintiff, having “obtained” the diverted funds “in [a] manner constituting theft.” (Ibid.) Defendants also conceal[ed]” or “withh[e]ld[ ]” those funds (and/or aided in concealing or withholding them) from plaintiff. (Ibid.) They did all of this “knowing” the diverted funds were “so ... obtained.” (Ibid.) ¶ We pause to elaborate on these points, and, specifically, criminal intent under the statute. Because this litigation comes to us upon default judgment, defendants are deemed to have admitted all material allegations, including the allegation that defendants committed theft. Although we are not asked here to determine whether plaintiff would have been able to prove theft, we observe that not all commercial or consumer disputes alleging that a defendant obtained money or property through fraud, misrepresentation, or breach of a contractual promise will amount to a theft. To prove theft, a plaintiff must establish criminal intent on the part of the defendant beyond “mere proof of nonperformance or actual falsity.” (People v. Ashley (1954) 42 Cal.2d 246, 264, 267 P.2d 271.) This requirement prevents “ ‘[o]rdinary commercial defaults’ ” from being transformed into a theft. (Id., at p. 265, 267 P.2d 271.)

If misrepresentations or unfulfilled promises “are made innocently or inadvertently, they can no more form the basis for a prosecution for obtaining property by false pretenses than can an innocent breach of contract.” (Id., at p. 264, 267 P.2d 271.) In this case, the record appears consistent with a conclusion that defendants acted not innocently or inadvertently, but with careful planning and deliberation reflecting the requisite criminal intent.” (Emphasis supplied.)

Here, based on the factual allegations Complaint ¶ 5, 12-28, there are sufficient facts to state a cause of action for Violation of Penal Code § 496.

Based on the foregoing, the Court OVERRULES the demurrer to this cause of action.

Involuntary Dissolution of the Corporation: California Corporations Code § 1800 states: (a) A verified complaint for involuntary dissolution of a corporation on any one or more of the grounds specified in subdivision (b) may be filed in the superior court of the proper county by any of the following persons: ¶ (1) One-half or more of the directors in office. ¶ (2) A shareholder or shareholders who hold shares representing not less than 33 ⅓ percent of (i) the total number of outstanding shares (assuming conversion of any preferred shares convertible into common shares) or (ii) the outstanding common shares or (iii) the equity of the corporation, exclusive in each case of shares owned by persons who have personally participated in any of the transactions enumerated in paragraph (4) of subdivision (b), or any shareholder or shareholders of a close corporation. ¶ (3) Any shareholder if the ground for dissolution is that the period for which the corporation was formed has terminated without extension thereof. ¶ (4) Any other person expressly authorized to do so in the articles.”

Hedwall v. PCMV, LLC, (2018) 22 Cal. App. 5th 564, 573, provides: “At the time of the underlying ruling, subdivision (a) of section 472 stated: “A party may amend its pleading once without leave of the court at any time before the answer or demurrer is filed, or after a demurrer is filed but before the demurrer is heard if the amended complaint ... is filed and served no later than the date for filing an opposition to the demurrer. A party may amend the complaint ... after the date for filing an opposition to the demurrer, upon stipulation by the parties.”4 Section 472 affords parties a broad amendment right within the specified time restrictions, as it “does not limit [the] types of amendments [that] may be made of course and without leave of court.” (Gross v. Department of Transportation (1986) 180 Cal.App.3d 1102, 1105, 226 Cal.Rptr. 49 (Gross).)”

Plaintiff’s Complaint filed on 1-31-22 was not verified. On 2-24-22, Plaintiff filed a Notice of Filing Verification with a verification executed on 2-23-22. While the filing was timely, Plaintiff does not cite any authority that a correction can be filed like this without attachment to the Complaint.

Based on the foregoing, the Court SUSTAINS the demurrer to this cause of action with 15 days leave to amend.

Accordingly, Defendant Mehdi Asgarynejad’s Demurrer to Plaintiff’s (Fatemeh Ladan Kamalalavi, as Trustee of the Asgarynejad-Kamalavu Trust) Complaint is OVERRULED in part and SUSTAINED in part.

Defendant to give notice.

2.Defendant 2000 Chapman, Inc.’s Demurrer to Plaintiff’s (Fatemeh Ladan Kamalalavi, as Trustee of the Asgarynejad-Kamalavu Trust) Complaint is OVERRULED in part and SUSTAINED in part.

“A demurrer tests the pleading alone, and not the evidence or the facts alleged. . . . To the extent there are factual issues in dispute, however, this court must assume the truth not only of all facts properly pled, but also of those facts that may be implied or inferred from those expressly alleged in the complaint. [Citations.]” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) Code of Civil Procedure section 452, states, “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” Perez v. Golden Empire Transportation Transit District (2012) 209 Cal.App.4th 1228, 1238, provides, “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. [Citations.]”

Breach of Fiduciary Duty: “In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Pierce v. Lyman (1991) 1 Cal. App. 4th 1093, 1101.) “The absence of any one of these elements is fatal to the cause of action.” (Id.)

Based on the foregoing, the Court OVERRULES the demurrer to this cause of action.

Violation of Penal Code § 496: Pursuant to Penal Code § 496(a): “Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170. However, if the value of the property does not exceed nine hundred fifty dollars ($950), the offense shall be a misdemeanor, punishable only by imprisonment in a county jail not exceeding one year, if such person has no prior convictions for an offense specified in clause (iv) of subparagraph (C) of paragraph (2) of subdivision (e) of Section 667 or for an offense requiring registration pursuant to subdivision (c) of Section 290.”

Switzer v. Wood (2019) 35 Cal.App.5th 116, 126-127 states: “The language of section 496(c) is clear and unambiguous. (Bell v. Feibush (2013) 212 Cal.App.4th 1041, 1045–1047, 151 Cal.Rptr.3d 546.) A criminal conviction is not a prerequisite to recovery of treble damages. All that is required for civil liability to attach under section 496(c), including entitlement to treble damages, is that a “violation” of subdivision (a) or (b) of section 496 is found to have occurred. (Bell v. Feibush, at pp. 1045–1047, 151 Cal.Rptr.3d 546.) A violation may be found to have occurred if the person engaged in the conduct described in the statute. (Lacagnina v. Comprehend Systems, Inc. (2018) 25 Cal.App.5th 955, 970, 236 Cal.Rptr.3d 641; Bell v. Feibush, supra, 212 Cal.App.4th at p. 1045, 151 Cal.Rptr.3d 546 [a “violation” occurs “when the subject engages in” the conduct described in the statute].) While section 496(a) covers a spectrum of impermissible activity relating to stolen property, the elements required to show a violation of section 496(a) are simply that (i) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property. (Lacagnina v. Comprehend Systems, Inc., supra, 25 Cal.App.5th at p. 970, 236 Cal.Rptr.3d 641 [elements of § 496 offense stated].) ¶ A violation of section 496(a) may, by its own terms, relate to property that has been “stolen” or “that has been obtained in any manner constituting theft or extortion.” (§ 496(a), italics added.) As reflected in Bell v. Feibush, supra, 212 Cal.App.4th at p. 1048, 151 Cal.Rptr.3d 546, the issue of whether a wrongdoer's conduct in any manner constituted a “theft” is elucidated by other provisions of the Penal Code defining theft, such as Penal Code section 484. In 1927, the Legislature consolidated the crimes of larceny, embezzlement, and theft by false pretense in Penal Code section 484, subdivision (a), under the single term “theft.” (Bell v. Feibush, at p. 1048, 151 Cal.Rptr.3d 546; see also People v. Vidana (2016) 1 Cal.5th 632, 640–641, 206 Cal.Rptr.3d 556, 377 P.3d 805 [although the distinctive substantive elements of each offense remained the same, each constituted the crime of “theft”]; People v. Gomez (2008) 43 Cal.4th 249, 255, fn. 4, 74 Cal.Rptr.3d 123, 179 P.3d 917.) Section 484, subdivision (a), states as follows: “Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, or who causes or procures others to report falsely of his or her wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft.” (Italics added.)”

Here, based on the factual allegations Complaint ¶ 5, 12-28, there are sufficient facts to state a cause of action for Violation of Penal Code § 496.

Based on the foregoing, the Court OVERRULES the demurrer to this cause of action.

Involuntary Dissolution of the Corporation: California Corporations Code § 1800 states: (a) A verified complaint for involuntary dissolution of a corporation on any one or more of the grounds specified in subdivision (b) may be filed in the superior court of the proper county by any of the following persons: ¶ (1) One-half or more of the directors in office. ¶ (2) A shareholder or shareholders who hold shares representing not less than 33 ⅓ percent of (i) the total number of outstanding shares (assuming conversion of any preferred shares convertible into common shares) or (ii) the outstanding common shares or (iii) the equity of the corporation, exclusive in each case of shares owned by persons who have personally participated in any of the transactions enumerated in paragraph (4) of subdivision (b), or any shareholder or shareholders of a close corporation. ¶ (3) Any shareholder if the ground for dissolution is that the period for which the corporation was formed has terminated without extension thereof. ¶ (4) Any other person expressly authorized to do so in the articles.”

Based on the foregoing, the Court SUSTAINS the demurrer to this cause of action with 15 days leave to amend.

Defendant further argues that Plaintiff lacks standing. Defendant contends: “In order to file a general demurrer to a complaint in California on the grounds of lack of standing requires that plaintiff’s lack of standing is either apparent from the allegations of the complaint, or on facts that are subject to judicial notice. The TRUST has not been confirmed and there has been no determination by the probate court that the TRUST is the real party in interest. In the probate action, there are several important outcome determinative issues being litigated including whether the TRUST is confirmed or whether it was revoked by AMIR. Revocation of the TRUST eliminates this entire lawsuit by Plaintiff against CHAPMAN. The TRUST’s alleged interest in CHAPMAN is being prematurely litigated because the TRUST has no rights as of today. (Demurrer, 7:16-24.) Plaintiff alleges that she is the trustee. Defendant does not provide a Request for Judicial Notice establishing that Plaintiff is not the trustee. Further, Plaintiff’s potential lack of standing is not apparent from the Complaint.

Even if Defendant did provide judicial notice of the probate action, this only establishes that Plaintiff may lose standing, not that Plaintiff currently lacks standing. The Complaint sufficiently alleges that Plaintiff currently has standing.

Accordingly, Defendant 2000 Chapman, Inc.’s Demurrer to Plaintiff’s (Fatemeh Ladan Kamalalavi, as Trustee of the Asgarynejad-Kamalavu Trust) Complaint is OVERRULED in part and SUSTAINED in part.

Defendant to give notice.

3Defendant 2000 Chapman, Inc.’s Motion to Strike Plaintiff’s (Fatemeh Ladan Kamalalavi, as Trustee of the Asgarynejad-Kamalavu Trust) Complaint is MOOT.

The Motion to Strike is seeking to strike the cause of action for Involuntary Dissolution on the same basis as the Demurrer. Based on the ruling on the Demurrer, the Court finds the Motion to Strike is moot.

Defendant to give notice.

4. Defendant 2000 Chapman, Inc.’s Motion to Quash is DENIED.

Moving party failed to file a Separate Statement in violation of California Rules of Court, rule 3.1345(a)(5).

Code of Civil Procedure section 1987.1 states, in part, “(a) If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, 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. [¶] (b) The following persons may make a motion pursuant to subdivision (a): [¶] (1) A party. [¶] (2) A witness. . . .”

A deposition subpoena that commands production of business records for copying “shall designate the business records to be produced either by specifically describing each individual item or by reasonably particularizing each category of item, and shall specify the form in which any electronically stored information is to be produced, if a particular form is desired.” (Code Civ. Proc., § 2020.410(a) (emphasis added).) Generalized demands are not permitted. (Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal. App. 4th 216, 218, 221.)

“The right of privacy is an ‘ “inalienable right” ’ secured by article I, section 1 of the California Constitution. [Citation.] The right of privacy protects against the unwarranted, compelled disclosure of private or personal information and ‘extends to one’s confidential financial affairs as well as to the details of one's personal life.’ [Citation.] (SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 754.) San Diego Trolley, Inc. v. Superior Court (2001) 87 Cal.App.4th 1083, 1097 (disapproved on other grounds in Williams v. Superior Court (2017) 3 Cal.5th 531, 557, fn. 8), provides, “While we have not been directed to any statutory privilege which protects this information from disclosure, it is clear Cooper’s personnel records and employment history are within the scope of the protection provided by the state and federal Constitutions. [Citations.]”

“The constitutional right of privacy is not absolute; it may be abridged to accommodate a compelling public interest. [Citations.] One such interest, evidenced by California's broad discovery statutes, is ‘ “the historically important state interest of facilitating the ascertainment of truth in connection with legal proceedings.” ’ [Citation.] When an individual’s right of privacy in his financial affairs conflicts with the public need for discovery in litigation, the competing interests must be carefully balanced. [Citation.] Even where the balance weighs in favor of disclosure of private information, the scope of the disclosure will be narrowly circumscribed; such an invasion of the right of privacy ‘ “must be drawn with narrow specificity” ’ and is permitted only to the extent necessary for a fair resolution of the lawsuit.” [Citations.] (Moskowitz v. Superior Court (1982) 137 Cal.App.3d 313, 316; disapproved on other grounds in Williams v. Superior Court (2017) 3 Cal.5th 531, 557, fn. 8.)

Williams v. Superior Court (Williams) (2017) 3 Cal.5th 531, 552, explains, “The party asserting a privacy right must establish a legally protected privacy interest, and objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. [Citations.] The party seeking information may raise in response whatever legitimate and important countervailing interest disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interest or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations. [Citation.]” “To the extent prior cases require a party seeking discovery of private information to always establish a compelling interest or compelling need, without regard to the other considerations articulated in Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th 1, 26 Cal.Rptr.2d 834, 865 P.2d 633, they are disapproved.” (Id., at p. 557.) When “lesser interests are at stake…the strength of the countervailing interest sufficient to warrant disclosure of private information vary according to the strength of the privacy interest itself, the seriousness of the invasion, and the availability of alternatives and protective measures.” (Id., at p. 556.) The Williams court further noted that there might be a serious invasion when it comes to financial records of third-parties: “Nor was any prospective invasion of privacy serious: ‘the information, while personal, was not particularly sensitive, as it was contact information, not medical or financial details.’ [Citations]” (Id. at 553.)

Rawnsley v. Superior Court, 183 Cal.App.3d 86, 91 (1986) (Rawnsley) is instructive. In Rawnsley, the plaintiff alleged that the defendants “siphoned profits from the limited partnerships, failed to distribute profits to the limited partners, and received excessive compensation for the management of the limited partnerships while misleading petitioner as to the amount of compensation.” (Id. at 89.) In response to the plaintiff’s request for the defendants’ personal financial records, the defendants objected to the request on the ground that it violated California Civil Code Section 3295. The trial court sustained the objections. The Court of Appeal held: “Unlike the situation in which a plaintiff seeks to discover defendant's financial status solely for the purpose of assessing a punitive damages claim, the documents sought by petitioner here are fundamental to his case. He alleges that assets have been converted and diverted from the entities in which he has an interest to the individual defendants or to corporations which are the alter egos of the individual defendants. The only way petitioner can prove his case is to obtain defendants' financial records. Where the only reason for seeking such financial information is to “give a tactical edge to the party who has obtained discovery of the information by allowing that party the benefit of pressure in settlement negotiations by threat or implication of disclosure,” the party against whom the discovery is sought should be afforded the full benefit of Civil Code section 3295, including a protective order limiting access to such information. Where, however, “the financial information goes to the heart of the cause of action itself, a litigant should not be denied access so easily.” (Id. at 91-92 (internal citations omitted).)

The right of privacy contained in the California Constitution (Art. 1, § 1) is limited to “people,” meaning natural persons: “[T]he constitutional provision simply does not apply to corporations.” (Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791, 796-797; see SCC Acquisitions, Inc. v. Sup.Ct. (2015) 243 Cal.App.4th 741, 755-756—“While corporations do have a right to privacy, it is not a constitutional right.”) While a corporation or other artificial entity may not have a constitutional right to privacy, some privacy rights, even for such an artificial entity, are recognized by the law, including an entity’s right to privacy in its financial information. (Hecht, Solberg, Robinson, Goldberg & Bagley v. Super. Ct. (2006) 137 Cal.App.4th 579, 594-595.)

Defendant seeks to quash a subpoena seeks the following documents from Wells Fargo, N.A.: “Any and all DOCUMENTS in YOUR possession, custody or control including, but not limited to, bank statements, canceled checks, wire transfers, deposits, withdrawals, loans, applications for credit, credit card statements, correspondence file(s), payments made, and account opening documents including, signature cards, for any and all accounts in the name of 2000 Chapman, Inc., or in which that entity holds any legal or beneficial interest, for the time period between January 1, 2014 through the present.”

Defendant has asserted a legally protected privacy interest in its bank records although this is a lessor interest than that of an individual. Defendant is correct that there is a legally protected privacy interest in financial records. However, Defendant argues that the request implicates third party privacy rights. There are no third-party privacy interests at stake because Mehdi Asgarinejad is not a third party. He is a defendant.

It is questionable whether Defendant has an objectively reasonable expectation of privacy under the circumstances.

The Williams recognized that third parties have a privacy interest in their financial data: “ While less sensitive than one's medical history or financial data, ‘home contact information is generally considered private.’ [Citations]” (Williams, supra, 3 Cal. 5th at 554.) However, the Williams court was analyzing individuals who were third parties.

Here, Plaintiff is alleging that the Defendants have been wrongfully moving assets to deprive Plaintiff of her interests in the entities. Under the circumstances of being accused of wrongfully transferring money, a corporation would not have a reasonable expectation that their financial records remain private. Further, Defendant has not established that there would be a serious invasion of privacy should the records be disclosed.

The Court could stop the inquiry here, which would require the court to simply weigh the interests, not the compelling need standard. If that was the case, the court would then balance the right of privacy against the need for discovery. (Hill, supra, 7 Cal.4th at 34-35 [re drug testing of college athletes with reduced expectation of privacy].) Assuming the Court stops the analysis here, the Court would deny the Motion because Plaintiff has established a countervailing interest that the requests records are necessary to facilitate the ascertainment of truth based on the Complaint’s allegations.

Defendant argues that Plaintiff should serve requests for production on Defendant and that this method is less intrusive.

It is unclear how this is less intrusive as Plaintiff would be asking for the same documents. Based on Defendant’s position, these documents would not be discoverable. Further, Plaintiff can choose how it obtains the discovery it needs to provide the allegations of her Complaint.

The parties also argue about the ruling on the Motion for Stay. The Court did not specifically reject any of Defendant’s argument. The Court simply denied the motion because Defendant’s Motion (ROA 110) did not contain any legal authority permitting the Court to order a stay.

Lastly, any invasion into Defendants’ financial privacy can be addressed through a protective order maintaining the confidentiality of the information disclosed. Information can be protected by the terms of a protective order, which minimize the intrusion. (Williams, supra, 3 Cal. 5th at 555 (finding no serious invasion of privacy where adequate protections could easily be put in place).) The parties are ordered to meet and confer and enter into a protective order to protect the privacy of the responsive documents.

Based on the foregoing, the Court DENIES Defendant 2000 Chapman, Inc.’s Motion to Quash.

Plaintiff to give notice.

Future hearing dates

8/18/23 – MSC

10/2/23 – Jury Trial