Judge: Joel L. Lofton, Case: 23AHCV00495, Date: 2024-06-04 Tentative Ruling
Case Number: 23AHCV00495 Hearing Date: June 4, 2024 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: June 4, 2024 TRIAL DATE: No date set.
CASE: HUI LIU, an
individual, v. PACIFIC SNOW VALLEY RESORT, LLC, a California corporation; GREAT
WALL INTERNATIONAL, LLC, a California company; GLOBAL HOTEL INVESTMENT GROUP,
LLC, a California company; DAVID KUO, an individual; and DOES 1 to 10,
inclusive.
CASE NO.: 23AHCV00495
MOTION
TO QUASH
MOVING PARTY: Defendant/Cross-Complainant David
Kuo
RESPONDING PARTY: Plaintiff
Hui Liu
SERVICE: Filed February 29, 2024
OPPOSITION: Filed May 21, 2024
REPLY: Filed May 28, 2024
RELIEF
REQUESTED
Defendant
David Kuo requests an order to quash or modify the subpoena to Kuo’s bank for
business records.
Plaintiff requests
sanctions against Defendant for misuse of the discovery process.
Defendant requests
sanctions against Plaintiff in the amount of $2,250.00.
BACKGROUND
This case arises out of Plaintiff Hui Liu’s
(Plaintiff) claim that Defendant David Kuo (Kuo), who is alleged to be a
managing member of Pacific Snow Valley Resort, LLC, Great Wall International,
LLC, and Global Hotel Investment Group, LLC, engaged in wrongful conduct in his
financial dealings with Plaintiff. Plaintiff alleges that she was Kuo’s
personal assistant and helped manage his bank accounts, loans, personal
matters, and financial company issues. Plaintiff alleges that she spent over
$1.3 million on her personal credit card for expenses used for Kuo’s business
purposes, which Kuo expressly allowed her to use his personal bank account to
pay back her credit card balance. Later, she received notices from her credit
card companies that Kuo claimed he never authorized her to use his bank
account, and the companies returned over $400,000 to Kuo. This left Plaintiff
with large balances on her credit cards. Also, Plaintiff alleges that on
October 31, 2022, she loaned $300,000 to defendant Pacific Snow Valley Resort,
and the loan was guaranteed by Kuo. The loan was not repaid.
On March 7, 2023, Plaintiff filed the
complaint against Pacific Snow Valley Resort LLC, Great Wall International LLC,
Global Hotel Investment Group LLC, David Kuo, and Does 1 to 10, alleging three
causes of action: (1) breach of contract, (2) fraud, and (3) fraudulent
transfer (Complaint).
On February 29, 2024, Kuo moved to quash or modify the deposition
subpoena for business records served on East West Bank (Motion). The Motion is
grounded in the Code of Civil Procedure section 1985 et seq. Kuo argues
the subpoena seeks private and confidential bank statements, which is
impermissible because the documents can contain privileged financial
information protected by Kuo’s right to privacy.
Kuo argues that even highly relevant information may be
shielded from discovery if its disclosure would impair a person's
constitutional right to privacy. Kuo contends that Liu must show the
information sought is not only directly relevant and essential to the lawsuit,
but that there are no other less intrusive means to obtain the relevant
discovery. Kuo also argues that the court must balance Kuo's privacy interests
against the purpose and effect of the disclosure, the nature of the objections,
and the court's ability to issue alternative protective orders. Kuo maintains
he has not waived his right to financial privacy, the lawsuit is consistent
with asserting that right, and there is no overriding public policy that would
compel disclosure.
On May 21, 2024, Plaintiff filed an opposition
(Opposition). Plaintiff argues (1) the records requested are relevant to the
subject matter of the action, (2) the scope of the subpoena is not overly
broad, (3) the financial records sought are not protected by privacy, and (4)
for sanctions against Kuo for filing a frivolous motion to quash and attempting
to interfere with discovery efforts.
On May 28, 2024, Kuo filed a reply to Plaintiff’s
Opposition (Reply). Kuo reiterates his privacy rights. He also states bank
records were produced to Plaintiff’s counsel by Kuo’s counsel on May 16, 2024
and therefore the subpoena to East West Bank is moot and unnecessary. Lastly, Kuo claims Liu's
subpoena is a misuse of the discovery process and warrants monetary sanctions
in the amount of Kuo’s attorney fees, at $2,250.00.
TENTATIVE RULING
Defendant’s
motion to quash or modify the subpoena is DENIED.
Plaintiff’s request for sanctions is
DENIED.
Defendant’s request for sanctions in
the amount of $2,250.00 is DENIED.
LEGAL STANDARD
As
a general rule, all unprivileged information that is relevant to the subject matter
of the action is discoverable if it would itself be admissible evidence at
trial or if it appears reasonably calculated to lead to the discovery of
admissible evidence. (CCP § 2017.010; Seahaus La Jolla Owners Assn. v.
Superior Court (2014) 224 Cal.App.4th 754, 761.)
Code of Civil
Procedure section 1987.1(a) states, “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.” (CCP § 1987.1(a).)
Code of Civil Procedure section 1987.2(a) provides, “Except
as specified in subdivision (c), in making an order pursuant to motion made
under subdivision (c) of Section 1987 or under Section 1987.1, the court may in
its discretion award the amount of the reasonable expenses incurred in making
or opposing the motion, including reasonable attorney’s fees, if the court
finds the motion was made or opposed in bad faith or without substantial
justification or that one or more of the requirements of the subpoena was
oppressive. (CCP § 1987.2(a).)
DISCUSSION
Motion to Quash
In the Declaration of Fred A. Wong,
Kuo’s counsel, Fred A. Wong declares that he was served with Plaintiff’s
subpoena on East West Bank on or about February 20, 2024. (Wong Decl., ¶ 4.) In the Wong Declaration, Exhibit A
shows the Deposition Subpoena for Production of Business Records to the
Custodian of Records of East West Bank at 135 N. Los Robles Ave., 7th Floor,
Pasadena, California 91101 (Subpoena). (Wong Decl., Exh. A.) Exhibit A shows
Plaintiff’s request: “We request the Bank Statements (including images of the
check) of the bank account 35140888 for the period from January 2019 to
December 2022.” (Ibid.)
Kuo’s Motion argues that the
Subpoena impermissibly seeks the production of Kuo’s private and confidential
bank statements which are not directly relevant and essential to the resolution
of the lawsuit. He argues the documents containing privileged financial
information protected by a right to privacy.
The California Supreme Court “established a framework for
evaluating potential invasions of privacy. The party asserting a privacy right must establish a
legally protected privacy interest, an objectively¿reasonable expectation of privacy in the given
circumstances, and a threatened intrusion that is serious. [Citation] The
party seeking information may raise in¿response whatever legitimate and
important countervailing interests disclosure¿serves, while the party seeking
protection may identify feasible alternatives that serve the same interests or
protective measures that would diminish the loss of privacy. A court must then balance these competing
considerations.” (Williams v. Superior Court¿(2017) 3 Cal.5th 531, 552 (Williams).)
Here, Kuo argues that his financial
records are protected by his privacy rights. The California Supreme Court in Williams
recognizes that financial data is considered private and more sensitive than
home contact information. (Williams, 3 Cal.5th at 554.) However,
Plaintiff’s seeking of financial documents can establish a substantive element
of the claims in her Complaint—that there is a unity of interest and/or
ownership, a commingling of funds and/or other assets, between Kuo and (1)
Pacific Snow Valley Resort LLC, (2) Great Wall International LLC, and (3)
Global Hotel Investment LLC. (Complaint, ¶¶
6-8.) “Where…the financial information goes to the heart of the cause of
action itself, a litigant should not be denied access so easily.” (Rawnsley
v. Superior Court (1986) 183 Cal.App.3d 86, 91.)
Therefore,
Plaintiff’s Subpoena does not violate the privacy rights of Kuo. Plaintiff is
seeking financial records that go to the heart of Plaintiff’s claims that Kuo’s
bank accounts were involved in the alleged $300,000 loan and the credit card
transfers.
Kuo does not make any showing as to
whether the threatened invasion is serious. Even if he did, Plaintiff raises
important countervailing interests, including the fact that commingling can be
demonstrated through financial records. Kuo
does not identify any less intrusive means to obtain the information. He explains
a protective order and alternative order granting partial disclosure is an
option that the Court can take.
Based on these facts, the Court
finds the privacy interest of Kuo does not justify quashing the deposition
subpoenas in their entirety. Any privacy right would be adequately protected
with a protective order. Therefore, the motion to quash the subpoena to East
West Bank is DENIED.
Sanctions
Plaintiff’s
Opposition and Defendant’s Reply seek sanctions against each other. Plaintiff’s
Opposition does not list an amount of sanctions. Kuo seeks monetary sanctions in the amount
of attorney fees at $2,250.00.
“Except as specified in subdivision (c), in making an order
pursuant to motion made under subdivision (c) of Section 1987 or under Section
1987.1, the court may in its discretion award the amount of the reasonable
expenses incurred in making or opposing the motion, including reasonable
attorney’s fees, if the court finds the motion was made or opposed in bad faith
or without substantial justification or that one or more of the requirements of
the subpoena was oppressive.” (CCP §1987.2(a).)
Plaintiff is
the prevailing party in the present motion. Kuo’s request for sanctions is denied.
The Court recognizes Plaintiff seeks the bank records of Kuo. However, the
Court denies Plaintiff’s request for sanctions, but warns Kuo that any further
action which constitutes a violation of the discovery process will be potential
grounds for sanctions.
Defendant’s
request for sanctions is DENIED. Plaintiff’s request for
sanctions is DENIED.
CONCLUSION
Defendant’s motion to quash is
DENIED.
Plaintiff’s request for
sanctions is DENIED.
Defendant’s request for
sanctions in the amount of $2,250.00 is DENIED.
Moving
Party to give notice.
Dated: June 4, 2024 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court
Parties who intend to submit on this tentative must send an
email to the court indicating their
intention to submit. alhdeptx@lacourt.org