Judge Kerry Bensinger, Case Number: 21STCV36715, Date: 2024-03-13 Tentative Ruling

CASE: People of the State of California ex Rel. Heath & Yuen, APC v. Silver Bird Auto Leasing LLC, et al.

DEFENDANTS’ MOTION TO STAY DEPOSITION OF, QUASH NOTICE OF DEPOSITION OF, AND QUASH SUBPOENA TO PROTECTIVE FILM SOLUTIONS, AND FOR A PROTECTIVE ORDER

DEFENDANTS’ MOTION TO STAY DEPOSITION AND QUASH NOTICES OF DEPOSITION TO SILVER BIRD AUTO LEASING LLC AND FILIPPO MARCHINO, AND FOR A PROTECTIVE ORDER

DEFENDANTS’ MOTION TO STAY DEPOSITION OF, QUASH NOTICE OF DEPOSITION OF, AND QUASH SUBPOENA TO GEICO, AND FOR A PROTECTIVE ORDER

RESPONDING PARTY: Plaintiff People of the State of California ex Rel. Heath & Yuen, APC

This is an insurance fraud case arising from a separately filed action. The underlying action arose from a motor vehicle accident between a 2015 McLaren 650S Spider (“Subject Vehicle”) and a tourism van. Silver Bird Auto Leasing LLC (hereinafter, “Silver Bird”) owned the Subject Vehicle and leased it to a third-party driver who was operating it at the time of the accident. The tourism van was owned and operated by Los Angeles USA Tours LLC, Sadegh Fatoorechi, and Ali Dayekh (collectively, “Prior Litigation Defendants”). Silver Bird’s complaint alleges that the third-party driver of the Subject Vehicle was making a legal turn when the Subject Vehicle was struck by the tourism van. Silver Bird’s complaint seeks damages for the motor vehicle collision, contending the collision was caused by the Prior Litigation Defendants’ negligence.

The Prior Litigation Defendants held auto insurance with Gateway Insurance Company dba Alano Insurance Company (“Gateway”). Gateway hired Heath & Yuen, APC, a law firm, for the purposes of defending the Prior Litigation Defendants against Silver Bird’s complaint. In relevant part, Silver Bird was represented by The X-Law Firm (“X-Law”) in the latter part of the underlying action. After participating in a Mandatory Settlement Conference, the parties agreed to settle the underlying action for $25,000.

In this action, Heath & Yuen, APC[1] (“Heath & Yuen”) alleges that the prosecution of the underlying action constituted a violation of the California Insurance Frauds Prevention Act (“IFPA”). The IFPA proscribes the presentation of a false or fraudulent claim for the payment of a loss or injury, including the payment of a loss or injury under a contract of insurance. Based on a post-collision photograph, Heath & Yuen alleges Silver Bird’s prior claim that the driver of the Subject Vehicle made a “legal turn” was a false representation. The photograph purportedly proves the driver made an illegal U-turn over a double-set of parallel yellow lines immediately in front of the tourism van.

Heath & Yuen also alleges that Silver Bird withheld and concealed the fact that the driver of the Subject Vehicle was Filippo Marchino, Silver Bird’s equity owner and a principal in X-Law. Heath & Yuen further alleges that Silver Bird and Marchino (1) obstructed discovery during the prior litigation by failing to provide, and willfully withholding information concerning the name of their insurer (GEICO); (2) produced a false and fabricated cost repair bill for the purpose of proving their damages; and (3) wrongfully continued to prosecute the prior action following the California Insurance Guarantee Association’s (“CIGA”) substitution into the action, while knowing that the claim arising from the motor vehicle accident was not a “covered claim” under CIGA’s policies.

On October 5, 2021, Health & Yuen (“Plaintiff”) initiated the present action by filing a Complaint against Silver Bird, X-Law, and Marchino (collectively, “Defendants”).

Subsequently, on October 6, 2021, Plaintiff filed the operative First Amended Complaint (FAC) against Defendants, alleging a single cause of action for Violation of the Insurance Frauds Prevention Act (Ins. Code § 1871 et seq.).

(1) motion to stay deposition of, quash notice of deposition to, and quash subpoena to Protective Film Solutions, and for a protective order;

(2) motion to stay deposition, quash notice of deposition, and quash subpoena to Geico, and for a protective order; and

(3) motion to stay depositions of and quash notices of deposition to Filippo Marchino and Silver Bird, and for a protective order.

In support of its oppositions to Defendants’ motions to quash, Plaintiff requests judicial notice of three documents. As the court does not rely on the documents to resolve this motion, the court declines to rule on Plaintiff’s request.

Plaintiff submitted an Exhibit List in support of its oppositions. Defendants submit an objection to Exhibit H. The court declines to rule on this objection as it is not relevant to the disposition of this motion.

In the underlying action, Silver Bird asked Protective Film Solutions (“PFS”) for an estimate to repair the Subject Vehicle. PFS quoted a total price of $7,060.42. Silver Bird elected not to have PFS perform the work.

On December 5, 2023, Plaintiff served a Notice of Deposition and a Subpoena to PFS. The Notice and Subpoena contain 10 categories of documents to be produced at deposition. Defendants now move for an order quashing category 2, 3, 4, 6, 8, 9, and 10, and a protective order blocking production of documents.

A deposition subpoena may request (1) only the attendance and testimony of a deponent, (2) only the production of business records for copying, or (3) the attendance and testimony, as well as the production of business records. (Code Civ. Proc., § 2020.020.) The court, upon motion or the court’s own motion, “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 orders as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.” (Code Civ. Proc., § 1987.1, subd. (a).) “A deposition subpoena that commands only the 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 . . . .” (Code Civ. Proc., § 2020.410, subd. (a).)

Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order. (Code Civ. Proc., § 2025.420, subd. (a).) The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense. (Code Civ. Proc., § 2025.420, subd. (b).) The motion shall be accompanied by a meet and confer declaration. (Id., subd. (a).) The court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion for a protective order, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (Code Civ. Proc., § 2025.420, subd. (h).)

Category 2 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to Silver Bird Auto Leasing LLC, or its contact information.”

Category 3 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to Filippo Marchino, or his contact information.”

Defendants argue Nos. 2 and 3 are overbroad. Defendants point out the sole issue raised by the FAC regarding PFS is whether the estimate from PFS and produced by Silver Bird in the underlying action was fraudulent. Yet Nos. 2 and 3 go beyond that issue by seeking documents that have no bearing on whether the estimate is fraudulent. Nor do Nos. 2 and 3 have any relation to the Subject Vehicle or collision in the underlying action.

Category 4 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to Silverbird Auto Leasing LLC’s 2015 McLaren 650s Spider in 2018.”

Category 6 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to VIN # SBM11FAAXFW003688.”

Defendants object to Nos. 4 and 6 on the grounds that “photos, videos, communications, phone texts, emails, or data files” have no bearing on the issue of whether the repair estimate produced in the underlying action was fraudulent.

The court does not agree with Defendants. Plaintiff alleges fraud involving the Subject Vehicle. Plaintiff is entitled to discovery relating to the Subject Vehicle and the collision. The court will modify Category 6 accordingly.

Category 6: The motion to quash is GRANTED in part. The category is narrowed to the Subject Vehicle in 2018.

Category 8 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to Michael Avenatti, or his contact information.” Narrow to: with respect to Subject vehicle in 2018.

Category 9 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to CRG Nordam Transports LLC, or its contact information.”

Category 10 seeks: “Any documents, photos, videos, communications, phone texts, emails, or data files naming, or for, or regarding, or referring to Manager LLC, or its contact information.”

Defendants explain that Avenatti’s law firm, Eagen Avenatti LLP was Silver Bird’s counsel in the underlying action for the first year the action was pending. They object to No. 8 as overbroad because it seeks documents which do not relate to the estimate, the Subject Vehicle, or the collision. And as to Nos. 9 and 10, Defendants explain that CRG Nordam Transports LLC (“Nordam”) and Manager LLC (“Manager”) are entities related to Silver Bird, but are not Silver Bird nor defendants in this matter. Therefore, any documents relating to Nordam and Manager have no bearing to the claims in this matter.

The court agrees with much of the foregoing. However, Plaintiff is entitled to discovery of any information bearing upon the Subject Vehicle and relevant time period.

Category 8, 9 and 10: The motion to quash is GRANTED in part. The category is overbroad. The court limits this category to the Subject Vehicle and the relevant period of 2018. Credit card information and financial information are to be redacted.

The motion to quash Category 6 is GRANTED in part. The scope of Category 6 is narrowed to 2018.

The motion to quash Category 8, 9, and 10 is GRANTED in part. The scope of Category 8, 9, and 10 is narrowed to the Subject Vehicle in 2018.

The underlying action sought recovery for physical damage to the Subject Vehicle, as well as loss of use and diminution in value. After the underlying action was filed, GEICO, Marchino’s insurer, paid policy benefits to Marchino for the cost to repair the Subject Vehicle. Marcino then paid for the repairs. However, the GEICO policy did not provide coverage for loss of use or diminution in value. Silver Bird thereafter dropped its damages claim and pursed recovery for loss of use and diminution of value of the Subject Vehicle.

On December 8, 2023, Plaintiff served a Notice of Deposition of GEICO’s Custodian of Records/Person(s) Most Qualified. The Notice was accompanied by a Subpoena. The Notice and Subpoena contain 10 categories of documents to be produced at deposition. Defendants now move for an order quashing category 1-7 and a protective order blocking production of documents.

Defendants seek an order quashing Category Nos. 1-7 and for a protective order, arguing the Notice and Subpoena seek irrelevant information and violate Marchino’s right to financial privacy because it is undisputed that Silver Bird dropped its claim for damages in the underlying action.

Category 1-4 seek all GEICO insurance policies, including subrogation clauses, related records of premium payments, and claims for the Subject Vehicle, roughly from 2017 to present.

Nos. 5-7 seek any documents, photos, videos, communications, phone texts, emails, or data files regarding or referring to Marchino or Heath & Yuen, APC, in relation to the Subject Vehicle for the date of loss of December 26, 2017.

The court agrees with Defendants that Category 1-4 are overbroad. However, Category 5-7 are tailored to the issues in this matter. Plaintiff has alleged fraud against Defendants involving the Subject Vehicle and the collision. Plaintiff is entitled to discover information bearing upon the Subject Vehicle in the relevant time period.

Defendants seek an order quashing Category 1-4, 6, and 8-10 in the Notice of Deposition to Silver Bird, arguing the categories seek information that does not relate to whether Silver Bird committed insurance fraud but instead seek to relitigate the underlying case. (See, e.g., Category 2-6.) The court agrees. Further, Category 8 may seek information protected by the attorney-client privilege. The court grants the motion to quash and modifies where appropriate, as indicated below:

Category 2: The motion to quash is GRANTED in part. Category 2 is narrowed to the Subject Vehicle.

Category 3, 4, 6: The motion to quash is GRANTED in part. Category 3, 4, and 6 are narrowed to the Subject Vehicle, the related collision, and Plaintiff’s claim.

Defendants seek an order quashing Category 1, 2, 4-10 in the Notice to Marchino, arguing the categories seek information that is irrelevant to the issue of fraud. The court agrees with these observations as to many of the requests. Further, Category 1, 4, 7, and 10 may seek information protected by the attorney-client privilege. The court grants the motion to quash and modifies where appropriate, as indicated below:

Category 1, 2: The motion to quash is GRANTED. Overbroad and may call for privileged information.

Category 4: The motion to quash is GRANTED. Overbroad as to time and may call for privileged information.

Category 7: The motion to quash is DENIED, except as to “documents, photos, videos, communications, phone texts, emails, or data files” that fall within the attorney client privilege.

Category 10. The motion to quash is GRANTED. Overbroad and calls for attorney client privilege.

The motion to quash Category 1, 8, 9, and 10 in the Notice of Deposition to Silver Bird is GRANTED.

The motion to quash Category 2, 3, 4, and 6 is GRANTED, in part. Category 2 is narrowed to the Subject Vehicle. Category 3, 4, and 6 are narrowed to the Subject Vehicle, the related collision, and Plaintiff’s claim.

The motion to quash Category 1, 2, 4, 5, 6, 8, 9, and 10 in the Notice of Deposition to Marchino is GRANTED.

The motion to quash Category 7 in the Notice of Deposition to Marchino is DENIED except for information that falls within the attorney client privilege.

The motion to quash Category 6 is granted in part. The scope of Category 6 is narrowed to 2018.

The motion to quash Category 8, 9, and 10 is granted in part. The scope of Category 8, 9, and 10 is narrowed to the Subject Vehicle in 2018.

The motion to quash Category 1-4 is granted in part. Category 1-4 are narrowed to the Subject Vehicle for the time period December 26, 2017 to present.

The motion to quash Category 1, 8, 9, and 10 in the Notice of Deposition to Silver Bird is granted.

Category 2 is narrowed to the Subject Vehicle. Category 3, 4, and 6 are narrowed to the Subject Vehicle, the related collision, and Plaintiff’s claim.

The motion to quash Category 1, 2, 4, 5, 6, 8, 9, and 10 in the Notice of Deposition to Marchino is granted.

The motion to quash Category 7 in the Notice of Deposition to Marchino is denied except as to information that falls under the attorney client privilege.

Kerry Bensinger

Judge of the Superior Court

[1] In the name of the People of the State of California pursuant to Insurance Code section 1871.