Judge: Kevin C. Brazile, Case: 20STCV49866, Date: 2022-12-20 Tentative Ruling

Hearing Date: December 20, 2022

Case Name: Regal Medical Group, Inc., et al. v. Nissanoff, M.D., et al.

Case No.: 20STCV41811 

Matter: Motion to Compel Further Responses  

Moving Party: Regal Medical Group, Inc. and Lakeside Medical Organization, A Medical 

Group, Inc.

Responding Party: Advanced Orthopedic Center, Inc. and Jonathan Nissanoff, M.D.

Notice: OK

Ruling: The Motion is granted in part.  

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On November 28, 2022, Regal Medical Group, Inc. (“Regal”) and Lakeside Medical Organization, A Medical Group, Inc. (“Lakeside”) filed the operative Second Amended Complaint (“2AC”) against Defendants Advanced Orthopedic Center, Inc. (“AOC”) and Jonathan Nissanoff for (1) violations of the UCL, (2) fraud, (3) unjust enrichment, and (4) declaratory relief.  “This action arises out of Dr. Nissanoff’s ongoing and unlawful efforts to game California’s managed care system as a means for reaping unjust and excessive profits at the expense of patients and health care payers like Plaintiffs Regal and Lakeside.”  (2AC ¶ 1.)

In consolidated case no. 21SMCV01411, AOC filed a Second Amended Complaint (“SAC”) against Regal for quantum meruit, breach of implied contract, unfair competition, and declaratory relief, arising from unpaid medical bills.

Regal and Lakeside now seek to compel further responses from AOC and Jonathan Nissanoff as to their requests for production, set three, nos. 123-125, which relate to alter ego discovery.  They contend that Nissanoff put alter ego liability at issue because he, in an unorthodox manner, went ahead and affirmatively testified on the issue of alter ego liability during a deposition.  Regal and Lakeside also contend that “(i) Defendants share the same business address; (ii) Nissanoff is the sole owner, manager, and director of AOC, and holds every executive officer position of AOC; (iii) Nissanoff routinely has accepted checks from Regal that are made out personally to him, but for ‘facility’ services rendered by AOC; and (iv) Nissanoff repeatedly has sued Regal in small claims court in his own name and on his own behalf for the reimbursement of ‘facility’ services rendered by AOC.”

AOC and Nissanoff argue, among other things, that (1) moving parties are pursuing a fishing expedition; (2) there has been no evidentiary showing that the alter ego doctrine would apply; (3) moving parties have already conducted depositions on this issue and they don’t need more discovery; (4) the evidence of checks made out to Nissanoff is a red herring because those checks were written by Regal; and (5) moving parties are impermissibly seeking discovery as to financial condition for punitive damages.  They also note that “AOC has its own bank account;  That AOC files its own tax return;  That AOC maintains its own malpractice insurance;  That AOC maintains its own liability insurance; and  That AOC observes corporate formalities. (Amir Decl., Exs. A, G; Chan Decl, ¶ 8.)”

Request no. 123 seeks “All DOCUMENTS sufficient to show that AOC was sufficiently capitalized from January 1, 2017 to the present.”

Request no. 124 seeks “All DOCUMENTS (e.g., monthly bank statements) sufficient to show payments from AOC to Jonathan Nissanoff from January 1, 2017 to the present.”

Request no. 125 seeks “All DOCUMENTS (e.g., monthly bank statements) sufficient to show payments from Jonathan Nissanoff to AOC from January 1, 2017 to the present.”

AOC and Nissanoff have responded as follows: “Defendants object to this topic as unintelligible as phrased. Defendants object to this topic as vague, ambiguous, and confusing. Defendants object to this topic as seeking irrelevant information that is not likely to lead to the discovery of admissible evidence. Rather, this Request appears to merely be part of a fishing expedition by Plaintiffs. Defendants further object to the extent the information sought is beyond any statute of limitations in this case.”

“It cannot be gainsaid that the customer of a bank expects that the documents, such as checks, which he transmits to the bank in the course of his business operations, will remain private, and that such an expectation is reasonable. . . A bank customer's reasonable expectation is that, absent compulsion by legal process, the matters he reveals to the bank will be utilized by the bank only for internal banking purposes.”  (Burrows v. Superior Ct. (1974) 13 Cal.3d 238, 243.)  “A person has a right to prevent disclosure of information about personal finances, including information about bank accounts, assets, and debts. See In re Insurance Installment Fee Cases (4th Dist.2012) 211 Cal.App.4th 1395, 1428 (informational privacy in personal financial affairs); Ameri-Med. Corp. v. Workers' Comp. Appeals Bd. (2d Dist.1996) 42 Cal.App.4th 1260, 1286–87 (limited informational privacy in corporation's financial information).”  (§ 1. Right to privacy, O'Connor's California Practice * Civil Pretrial Ch. 6-F § 1 (2022 ed.).)

While Regal and Lakeside need not prove the elements of alter ego liability, as AOC and Nissanoff seem to suggest, there should be some minimal threshold showing that alter ego allegations are seriously at issue, given the privacy rights in the subject documents.  Boilerplate allegations within the 2AC are not alone sufficient.  It is also not alone sufficient to say that Nissanoff fulfills all roles at AOC or that the two share the same address.  Further, evidence that Nissanoff accepts checks made out to him is weak given that these checks were issued by Regal.  Also, Nissanoff contends these checks were deposited in AOC’s business account.  (See Nissanoff Decl. ¶¶ 12-13.)  

On the other hand, it seems Nissanoff once sued Regal for AOC’s services.  (Amir Decl., Exhibit I.)  On this basis, the Court believes that some financial documents should probably be produced.  The Court will temporally narrow the requests to January 1, 2020, until the present.  The Motion is otherwise granted because, as drafted, the requests can probably be fulfilled via bank statements from one bank account.  Payments to third-parties can be redacted, as what is important is whether AOC has an account balance and whether it receives or sends unusual payments to Nissanoff.  Further responses and production are to be provided within twenty days.

The Court declines to award sanctions.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.