Judge: John J. Kralik, Case: 23BBCV02407, Date: 2025-03-21 Tentative Ruling

Case Number: 23BBCV02407    Hearing Date: March 21, 2025    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

            Plaintiff Epicurus Gourmet (“Plaintiff”) alleges that it is in the business of selling gourmet food products and is located at 12140 Sherman Way, North Hollywood, California 91605.  Plaintiff alleges that Defendant Hillary Hirsch was an employee of Plaintiff from 2016 until March 17, 2023 and was the secretary of the Board of Directors.  Defendant Eric Gitter is alleged to have conspired with Hirsch by directing, encouraging, ratifying, and approving Hirsch’s unlawful conduct. 

            In January 2016, Kevin Jones (president and sole shareholder of Plaintiff) formed Plaintiff.  In March 2016, Hirsch began working to start Plaintiff’s business as a manager and secretary for the Board of Directors, such that she owed fiduciary duties and had job responsibilities to order products, keep financial books, pay bills, etc.  However, she was employed by Jones through his company Liquid Assets Cellars since Plaintiff did not yet have capital.  At that time, Plaintiff was running its business from the premises leased by Liquid Assets Cellars located at 12134 Sherman Way.  Plaintiff alleges that as a part of her duties, Hirsch had access to Plaintiff’s Sales Order System (“SOS”), a proprietary database with confidential trade secrets, customer lists, and sales data.  She also had access to confidential business passwords for bank accounts, QuickBooks accounting, social media, payroll, and credit card processing. 

            Plaintiff alleges that in December 2016, Jones approached the landlord of Liquid Assets Cellars’ to lease another unit for Plaintiff and notified Gitter of the terms.  Plaintiff alleges that in January 2017, Jones entered the lease for the 12140 Sherman Way premises and in May 2017, the premises was opened by Plaintiff for business. 

            Plaintiff alleges that Jones had discussed with Gitter about whether Gitter was interested in investing in Plaintiff, but Gitter never committed to any of Jones’ offered terms and instead began loaning money to Plaintiff through Gitter’s company Chickie the Cop Entertaining for repayment, regarding the construction of the premises.  On February 3, 2018, Gitter filed his own Articles of Incorporation for Epicurus Gourmet LA, LLC and thereafter Defendants conspired to convert Plaintiff’s confidential proprietary information.  Plaintiff alleges that in August 2018, Hirsch opened a Wells Fargo account in Plaintiff’s name, made herself the sole signatory, and began depositing all proceeds from Plaintiff into the account in September 2018.  Hirsch also allegedly changed all passwords for Plaintiff. 

            Plaintiff alleges that it pays all local, state, and federal taxes from Jones’ personal funds and that Jones renegotiated and extended Plaintiff’s lease at the premises.  On March 23, 2023, Hirsch was removed as secretary and on October 10, 2023 was terminated from employment.  Upon her termination, Plaintiff demanded Hirsch provide Jones with the passwords and access to the bank account, but Defendants contacted Plaintiff’s vendors and customers, instructing them to discontinue conducting business with Plaintiff.

            The second amended complaint (“SAC”), filed June 6, 2024, alleges causes of action for: (1) breach of fiduciary duty; (2) conversion; (3) intentional interference with prospective economic advantage; (4) unfair competition; (5) misappropriation of trade secrets; and (6) declaratory relief.  

B.     Cross-Complaint

On December 14, 2023, Hillary Hirsch filed a cross-complaint against Kevin Jones, Epicurus Gourmet, Liquid Assets Cellars, Inc., and Service West Construction, Inc. for: (1) accounting; (2) declaratory relief; (3) breach of contract; (4) breach of contract; (5) conversion; (6) conversion; (7) fraud; (8) breach of fiduciary duty; (9) aiding and abetting breach of fiduciary duty; (10) intentional interference with prospective economic advantage; (11) unjust enrichment; (12) unjust enrichment; (13) declaratory relief; (14) unfair business practices; (15) conversion; and (16) appointment of receiver.

C.     Motion on Calendar

On January 29, 2025, Defendants/Cross-Complainants Eric Gitter and Hillary Hirsch (“Defendants”) filed a motion to compel Cross-Defendant Kevin Jones (“Jones”) to answer deposition questions.

On March 10, 2025, Plaintiff filed an opposition brief.  (The Court notes that the opposition brief is signed by Plaintiff’s counsel John Carlson and Kevin Jones, in pro per.) 

On March 13, 2025, Defendants filed a reply brief.

DISCUSSION

Defendants move to compel Kevin Jones to answer deposition questions, which he failed to answer during his deposition.  They seek $11,500 against Mr. Jones and Plaintiff’s counsel of record, John Carlson, Esq. 

A.    The Attorney-Client Privilege

The attorney-client privilege is a privilege to refuse to disclose, and to prevent another form disclosing, a confidential communication between the client and the lawyer.  (Doe 2 v. Superior Court (2005) 132 Cal.App.4th 1504, 1521.)  Evidence Code, § 952 defines “confidential communication between client and lawyer” as “information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.” 

“A written fee contract shall be deemed to be a confidential communication within the meaning of subdivision (e) of Section 6068 and of Section 952 of the Evidence Code.”  (Bus. & Prof. Code, § 6149.)

Section 6068 states in relevant part:

It is the duty of an attorney to do all of the following:

…

(e)(1) To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.

(2) Notwithstanding paragraph (1), an attorney may, but is not required to, reveal confidential information relating to the representation of a client to the extent that the attorney reasonably believes the disclosure is necessary to prevent a criminal act that the attorney reasonably believes is likely to result in death of, or substantial bodily harm to, an individual.

(Bus. & Prof. Code, § 6068.)

The attorney-client privilege may be waived when the holder of the privilege discloses a significant portion of the communication, has consented to disclosure, or fails to claim the privilege.  (Evid. Code, § 912.)  Implied waiver occurs “where the plaintiff has placed in issue a communication which goes to the heart of the claim in controversy.”  (Chicago Title Ins. Co. v. Superior Court (1985) 174 Cal.App.3d 1142, 1149.)

B.     Discussion of Merits

The deposition of Mr. Jones went forward on November 21, 2024.  There are 2 deposition questions at issue in this motion.  The outstanding questions are in bold:

Q. Is there any agreement between Epicurus Gourmet and Mr. Carlson that he will be paid for his services in this matter?

MR. SUNKIN [Mr. Jones’ Prior Counsel]: Objection. Attorney/client communication. And you're referring to him as counsel; correct?

MR. ESKIGIAN [Counsel for Gitter/Hirsch]: I am.

MR. SUNKIN: I'm instructing Mr. Jones not to answer the question. It's clearly an attempt to infringe upon the attorney/client communications. Mr. Eskigian knows that well and he knows he is not permitted to ask a question like this.

MR. ESKIGIAN: I wouldn't be except it’s been made an issue in the case so it’s a waiver.

Q. Is there any agreement between Epicurus Gourmet and Mr. Carlson that he will become an owner in Epicurus Gourmet in exchange for his services in this matter?

MR. SUNKIN: Objection. Asked and answered. And also attorney/client communication. Mr. Jones, I'm instructing you not to answer that question.

(Jones Depo. at 475:17-476:13.) 

            Defendants seek to compel Mr. Jones’ response to these deposition questions, arguing that counsel John Carlson is a material witness and whether he has a financial interest in Epicurus and/or whether his financial interest is contingent on the outcome of the case is relevant.  Defendants seek answers regarding Mr. Carlson’s fee arrangement with Epicurus to see if it grants Mr. Carlson potential ownership in Epicurus based on the outcome of the case. 

Defendants argue that at the time Mr. Jones offered to provide Liquid Assets as security collateral to Mr. Gitter in exchange for a loan in October 2017, Mr. Carlson was the owner of Liquid Assets.  They also argue that Mr. Jones and Mr. Carlson had secret meetings for Epicurus on March 14, 2023 and October 9, 2023 to remove Ms. Hirsch as corporate secretary and to terminate her from employment, respectively, and that Mr. Carlson hand delivered Ms. Hirsch her termination letter on October 10, 2023.  They provide the Statement of Information for Epicurus showing that Mr. Carlson is the corporate secretary of Epicurus.  (Mot., Ex. I [Epicurus’ Statement of Information filed 9/3/24].)  Mr. Carlson previously filed a declaration on October 24, 2024 in opposition to an ex parte for OSC re Civil Contempt, stating: “I took on this matter because Mr. Jones is a friend, he was unable to afford counsel to rectify what I considered wrongful conduct, and I saw this representation as a way to help a friend. I have not been paid to represent Epicurus, and therefore I have to maintain my family law practice while I represent Epicurus in these legal proceedings.”  (Mot., Ex. J [John Carlson’s 10/24/24 Decl. at ¶4].) 

Defendants argue that the attorney-client privilege was waived with regard to the fee arrangement between Epicurus and Mr. Carlson when: Plaintiff filed the complaint seeking reasonable attorney’s fees, Epicurus sought a judicial declaration that Mr. Jones is the sole shareholder of Epicurus, and Mr. Carlson stated that he had not been paid to represent Epicurus (which Defendants believe indicates that he may be paid for his services with stock in Epicurus, contingent upon the outcome of the case). 

In opposition, Plaintiff argues that there was no express or implied waiver of the attorney-client privilege as Mr. Jones’ friendship with Mr. Carlson was never a secret and Epicurus’ lack of payment is a fact (not a communication between Epicurus and counsel).  Plaintiff also explains that Mr. Carlson’s October 24, 2024 declaration was submitted to explain that his father-in-law had passed away, he is a solo practitioner who practices family law, and he needed additional time to address the QuickBooks issue; Plaintiff argues that the declaration was not meant to divulge any attorney-client communications or confidences.  (John Carlson’s 10/24/24 Decl. at ¶¶1-6.)  Plaintiff argues that Defendants’ motion is an attempt to disqualify Epicurus’ counsel so that it would be unrepresented in this matter.

Here, the Court finds that Plaintiff’s counsel, Mr. Carlson, has not expressly or impliedly waived the attorney-client privilege with respect to the contents of his retainer agreement with Plaintiff.  The fact that one exists or that Plaintiff has not paid Mr. Carlson are facts, as opposed to a “confidential communication between the client and the lawyer.”  In his prior declaration, Mr. Carlson stated, “I have not been paid to represent Epicurus….”  This does not disclose what the nature of the fee agreement was between Plaintiff or Epicurus—whether it was a lump sum, a reasonable fee, a contingency fee agreement based on the outcome of the case (and payment thereto), or if he was providing services pro bono.  Further, the facts that Mr. Carlson met with Mr. Jones (on behalf of Plaintiff) and those meetings occurred are not a waiver of the privilege with respect to the contents of a retainer agreement.  As acknowledged by Defendants in their moving papers, the “secret” meetings involved the removal of Ms. Hirsch from Epicurus, which is not related to the terms of a retainer agreement between Plaintiff and Mr. Carlson.  The Court also declines to grant the motion on the basis that the retainer agreement might potentially contain a provision giving Mr. Carlson a financial interest in the outcome of the case.   A different issue would be presented should Mr. Carlson be called as a witness by Plaintiff.

Defendants also argue that Plaintiff placed the retainer agreement at issue by seeking attorney’s fees in the complaint.  Defendants rely on Holguin v. Dish Network LLC (2014) 229 Cal.App.4th 1310, 1333, arguing that the Court may consider the terms of a contingency fee agreement to determine reasonable attorney’s fees to be awarded by statute.  In the Holguin case, the Court of Appeal considered the contingency fee agreement of the plaintiff’s counsel when determining whether an enhancement/multiplier to the lodestar calculation on attorney’s fees was proper.  The factors to determine whether the lodestar should be adjusted include: “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award.”  (Holguin v. Dish Network LLC (2014) 229 Cal.App.4th 1310, 1332 [emphasis added].)  Thus, the contingency nature of the retainer agreement was proper to consider in the context of the Holguin case when determining attorney’s fees.  In contrast, there is no pending motion for attorney’s fees before the Court, such that the contents of a retainer agreement is not relevant at this time.

An attorney’s fee contract with his client shall be deemed a confidential communication for the purpose of the attorney-client privilege.  (Bus. & Prof. Code, § 6149.)  At this time, the Court finds that Defendants have not upheld their burden in showing there was a waiver of the privilege by Plaintiff or Mr. Carlson.  Thus, the motion is denied. 

            Defendants seek $11,500 against Mr. Jones and Mr. Carlson.  In light of the outcome of the motion, the request is denied.

            Plaintiff seeks $4,800 in sanctions against Defendants.  The Court grants sanctions in the amount of $2,000 for this motion.  

CONCLUSION AND ORDER

            Defendants’ motion to compel Kevin Jones to answer deposition question nos. 1 and 2 is denied.  

Defendants and their counsel of record, jointly and severally, are ordered to pay monetary sanctions in the amount of $2,000 to Plaintiff, by and through counsel, within 20 days of notice of this order.

Defendants shall give notice of this order. 

DATED:  March 21, 2025                                                      ___________________________

                                                                                          John J. Kralik

                                                                                          Judge of the Superior Court