Judge: Layne H. Melzer, Case: 2020-01173844, Date: 2022-12-22 Tentative Ruling
Order to Show Cause
The Court overrules all Fifth Amendment objections asserted by Third-Party Abby Johnson, at the Third-Party Examination which took place on September 15, 2022. With respect to Judgment Debtor Tylor Johnson, the Court in part sustains and in part overrules, his Fifth Amendment objections, as further described below.
“The privilege against self-incrimination applies in judgment debtor proceedings.” (Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1010). “However, the privilege may not be asserted by merely declaring that an answer will incriminate [citation removed]; it must be ‘evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result.” (Id. at 1010-1011). “It is not enough that the witness fears incrimination from answering the question; the fear must be reasonable in light of the witness’s specific circumstances, the content of the questions, and the setting in which the questions are asked.” (Id. at 1011). “In other words, the privilege protects only against ‘real dangers,’ and not ‘remote and speculative possibilities.’” (Id.).
“It is the trial court’s function to determine whether such a ‘real danger’ exist.” (Id. at 1011). “[S]ome discretion must rest in the court whereby it may prevent the mantle of protection from being turned into a cloak for fraud and trickery.” (Id.). “If the court, in the exercise of its discretion, determines that no threat of self-incrimination is evident, then the burden of showing the danger of self-incrimination shifts to the individual asserting the privilege.” (Id. at 1011).
While the burden lies on the person claiming the privilege, the 9th Circuit has referred to this as a “modest standard.” (Brunswick Corp. v. Doff (9th Cir. 1981) 638 F.2d 108, 110.) Additionally, a witness cannot be “required to prove the hazard in the sense in which a claim is usually required to be established in court” as such a standard would compel the individual “to surrender the very protection which the privilege is designed to guarantee.” (Hoffman v. U.S. (1951) 341 U.S. 479, 486-487.)
“[W]henever the proffered evidence is claimed to be privileged under Section 940, the person claiming the privilege has the burden of showing that the proffered evidence might tend to incriminate him; and the proffered evidence is inadmissible unless it clearly appears to the court that the proffered evidence cannot possibly have a tendency to incriminate the person claiming the privilege.” (Warford v. Medeiros (1984) 160 Cal.App.3d 1035, 1043). “The trial judge in appraising the claim ‘must be governed as much by his personal perception of the peculiarities of the case as by the facts actually in evidence.’” (Id.).
Applying the above herein, and after reviewing the transcript of the examination of Abby Johnson, the Court overrules all Fifth Amendment privilege objections asserted by this individual. A review of the questions asked revealed no evident threat of self-incrimination. Instead, all questions were innocuous, sought basic identifying information, and information concerning assets. (ROA No. 282.)
As noted above, “[i]f the court, in the exercise of its discretion, determines that no threat of self-incrimination is evident, then the burden of showing the danger of self-incrimination shifts to the individual asserting the privilege.” (Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1011). Here, no specific argument has been offered, with respect to third-party Abby Johnson. As a result, Ms. Johnson did not meet her burden, as stated above, and the Fifth Amendment objection to the specific questions directed at Ms. Johnson in ROA No. 282 are overruled.
With respect to the Fifth Amendment objections asserted by Tylor Johnson, at his Judgment Debtor Examination, the Court overrules the same, as directed towards the following questions:
1. Can you provide me with a copy of your driver’s license?
2. What’s your date of birth?
3. Where were you born?
4. Are you a Canadian citizen?
5. What’s your current address?
6. Who do you live there with?
7. Are your parents alive?
8. Do you have any brothers or sisters?
9. Did you attend college?
10. Did you ever work for him [Craig Mansef]?
11. Do you know Michael Rufian?
(ROA No. 282.) Many of the above questions require only “yes” or “no” responses which, alone, do not include a risk of incrimination. For example, it is not against the law to have siblings, attend college or know Michael Rufian. Similarly, although this individual is not identified or otherwise discussed, there is nothing which indicates working for Craig Mansef is against the law, nor anything to suggest that a working relationship with this individual is incriminatory. As no threat of incrimination is evident, the burden was on Mr. Johnson to establish a risk of incrimination. Similar to the questions directed towards Abby Johnson, Judgment Debtor offered no specific argument, addressing these questions and did not demonstrate a reasonable fear of incrimination. (Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1011).
Additionally, the Fifth Amendment objections asserted by Mr. Johnson, against the following questions, are overruled:
1. Do you hold an interest, direct or beneficial, in any bank account?
2. Do you hold cash?
3. Do you have any interest in crypto currency or crypto derivatives?
4. Where did you deposit those [loan proceeds from Red Skye]?
5. Do you own any interest in any LLC’s or other business entities?
6. What did you do with the loan proceeds from the Red Skye promissory note?
7. Who owns Yellowstone Holdings and why was it created?
8. Did you deposit proceeds from the Red Sky loan or any other cash into Mr. Rufian’s trust account?
As to the above, again, no threat of incrimination is evident. Instead, the above questions seek information regarding the identification and location of assets, which constitute an “ordinary search of [a judgment debtor’s] assets in order to satisfy the judgment against him,” as discussed in Troy v. Superior Court (1986) 186 Cal.App.3d 1006. (Id. at 1011.) Once again, Judgment Debtor did not meet his burden of establishing a risk of incrimination. (Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1011).
As to the following set of questions, however, the Court finds a self-evident risk of incrimination:
1. Are you a U.S. citizen?
2. When was citizenship granted if so?
3. At what point were you introduced to the cannabis business?
4. Who was the primary contact that got you involved in the cannabis business?
5. Did you work for someone in the cannabis business in the very beginning or did you own your own?
6. When did you first venture out on your own or with a partner on a cannabis project? What was the project?
7. Have you made been contacted by the FBI state criminal investigative authorities or any civil administrative agency about potential violations of law, civil or criminal?
Questions concerning Judgment Debtor’s citizenship have the potential of incriminating Judgment Debtor or revealing violations of immigration law. Additionally, as the legality of the cannabis industry has evolved in recent years and remains in the process of evolving across the country, questions concerning the timing and manner of Judgment Debtor’s entry into this industry have a potential to incriminate. Similarly, the Court finds a risk of incrimination, with respect to the question inquiring into criminal investigations.
Thereafter, the Court notes that several questions were asked of Mr. Johnson, which were not limited to locating assets, but instead broadly sought information regarding Mr. Johnson’s conduct with third-parties and entities. The Court is inclined to sustain the Fifth Amendment objections, directed towards the following:
1. How did you meet Craig Mansef?
2. At what point did you approach Mr. Mansef about vesting in one of your ventures?
3. Did you provide him with any materials demonstrating the potential value of the investment?
4. Did Mr. Mansef invest right away upon you approaching him?
5. Have you and Rufian worked together on any business venture?
6. What’s your involvement in Keystone, LLC, what I like to call Keystone One?
7. What’s your involvement in Keystone LBC, what we refer to Keystone Two?
8. What’s your involvement in Keystone Calexico [phonetic], LLC, what we refer to as Keystone Three?
9. Tell me about the Keystone grow farm in Brawley, B-r-a-w-l-e-y. How did you come about finding that parcel of land?
10. Who is FK Realty and why are they suing your Keystone number two entity?
Initially, none of the above questions are targeted towards the identification or location of current assets. As the above questions are not directed towards finding Judgment Debtor’s assets, they are not “those customarily asked at judgment debtor examinations,” as were discussed in Troy v. Superior Court (1986) 186 Cal.App.3d 1006, and found not to be incriminating. (Id. at 1012.) Instead, the majority of the above questions are directed towards discovering Judgment Debtor’s conduct, with respect to multiple unidentified individuals and businesses. Indeed, the context of the questions suggest that Judgment Creditor is, in fact, seeking information as to further wrongful conduct.
“The trial judge in appraising the claim ‘must be governed as much by his personal perception of the peculiarities of the case as by the facts actually in evidence.’” (Warford v. Medeiros (1984) 160 Cal.App.3d 1035, 1043).
Additionally, it cannot be said that the above questions “cannot possibly have a tendency to incriminate the person claiming the privilege.” (Warford v. Medeiros (1984) 160 Cal.App.3d 1035, 1043). “To sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result.” (Brunswick Corp. v. Doff (9th Cir. 1981) 638 F.2d 108, 110.) As noted above, the 9th Circuit has referred to this as a “modest standard.” (Id.) Moreover, a witness cannot be “required to prove the hazard in the sense in which a claim is usually required to be established in court” as such a standard would compel the individual “to surrender the very protection which the privilege is designed to guarantee.” (Hoffman v. U.S. (1951) 341 U.S. 479, 486-487.)
Moreover, the Court notes that a balancing of interests weighs in favor of sustaining the Fifth Amendment objections to the above questions: “Whenever the Court is confronted with the question of a compelled disclosure that has an incriminating potential, the judicial scrutiny is invariably a close one. Tension between the State’s demand for disclosures and the protection of the right against self-incrimination is likely to give rise to serious questions. Inevitably these must be resolved in terms of balancing the public need on the one hand, and the individual claim to constitutional protections on the other; neither interest can be treated lightly.” (In re Marriage of Sachs (2002) 95 Cal.App.4th 1144, 1156.) The Court in Sachs continued: “Courts that are confronted with a civil defendant who is exposed to criminal prosecution arising from the same facts ‘weigh the parties’ competing interests with a view toward accommodating the interests of both parties, if possible.” (Id. at 1156.) “Courts have broad discretion in controlling the course of discovery…Hence, in a discovery dispute [involving the privilege against self-incrimination]…, the trial court must exercise its discretion in assessing and balancing ‘the nature an substantiality of the injustices claimed’ on all sides.’” (Id.)
Here, as the identified questions are unrelated to Judgment Creditor’s collection efforts, the balance of interests and the interest of justice weigh in favor of finding a privilege and denying the discovery.
Based on all of the above and based on the circumstances of this action, the Court finds a sufficient risk of incrimination to sustain the Fifth Amendment objections, directed to the questions listed directly above.
Next, the Court overrules the Fifth Amendment objections to the following questions:
1. Who’s Robert Herrera Prada and what role does he play in the Keystone group of companies?
2. Are you personally, or any of your entities that you own currently, in litigation?
With respect to the first question, the same is targeted towards the conduct of Robert Herrera Prada, only. As to the second question, the existence of litigation does not, alone, risk incrimination. Moreover, litigation is typically a matter of public record.
Lastly, the subpoena issued on Judgment Debtor includes a list of 27 Requests for Production. To the extent Judgment Debtor has asserted the Fifth Amendment in response to the same, the Court overrules all objections, except the objection to Request No. 27.
Requests Nos. 1 through 26 all seek documents relating to specific types of assets and their locations. These requests constitute an “ordinary search of [a judgment debtor’s] assets in order to satisfy the judgment against him,” as discussed in Troy v. Superior Court (1986) 186 Cal.App.3d 1006. (Id. at 1011.) Similarly, a risk of incrimination is not self-evident and Judgment Debtor has not met his burden, of establishing the same. (Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1011).
Request No. 27, however, seeks: “All email correspondence or other correspondence with Craig Manseth, Red Skye, LLC, Robert McKinley, Katrina McKinley and or any other employee or agent of Panda Solutions, Grow Op Farms, LLC or any related entity.” (See Exhibit 1 to ROA No. 290.) As the request is broad and is not limited to identifying assets for collection, the Court cannot say there is no reasonable possibility of incrimination and, instead, a response to the above might be dangerous. (Brunswick Corp. v. Doff (9th Cir. 1981) 638 F.2d 108, 110.) Thus, the objection to Request No. 27 is sustained.