Judge: Lee W. Tsao, Case: 20NWCV00464, Date: 2024-02-08 Tentative Ruling
Case Number: 20NWCV00464 Hearing Date: February 8, 2024 Dept: C
JIANG v. PURE LOGIC ESCROW, INC.
CASE NO.: 20NWCV00464
HEARING: 02/08/24
#6
I.
Defendant PURE LOGIC ESCROW, INC.’s Motion to
Compel Further Responses from Plaintiff MINGHUI TANG to Requests for Admissions
(set two) is GRANTED.
II.
Defendant PURE LOGIC ESCROW, INC,’s Motion to
Compel Further Responses to Requests for Production of Documents (set three)
from Plaintiff MINGUI TANG is GRANTED.
III.
Defendant PURE LOGIC ESCROW, INC.’s Motion to
Compel Further Responses to Form Interrogatories (set two) from Plaintiff
MINGHUI TANG is GRANTED.
Moving Party to give Notice.
This action was filed by Plaintiffs ZHIKUI JIANG and MINGHUI
TANG (collectively “Plaintiffs”) on August 20, 2020. On February 18, 2021, the
operative Second Amended Complaint (“SAC”) was filed.
The SAC alleges that in 2018, Plaintiffs were foreign owners
and sellers of certain real properties in the United States. (SAC ¶12.) In 2018
and 2019, Plaintiffs sold two properties located in San Diego, CA. (SAC
¶¶13-14.) “After the sale of Property 2 was complete, Plaintiffs discovered
that ESCROW improperly withheld approximately $59,203.12 in taxes and penalties
from the proceeds of the sale of Property 2.” (SAC ¶16.) “Upon information and
belief, Defendant failed to properly withhold taxes under FIRPTA for the sale
of Property 1. Instead, Defendant, upon realization of its failure to do so,
improperly proceeded to make an unlawful additional withholding in 2019 when
Property 2 was sold.” (SAC ¶17.) “As a result, when Property 2 was sold,
Defendant withheld $108,000.00 for Property 2, plus an additional $59,203.12 in
taxes and penalties for Property 1 that should have been withed in 2018.
Defendant’s own negligence inf ailing to make the proper and timely
withholdings when Property 1 was sold does not now allow Defendant to convert
funds otherwise rightfully belonging to Plaintiffs.” (SAC ¶18.)
The SAC asserts the following causes of action:
(1) Conversion;
(2) Breach
of Fiduciary Duty;
(3) Breach
of Fiduciary Duty;
(4) Negligence;
(5) Negligence;
(6) Fraud
and Deceit;
(7) Aiding
and Abetting
Defendant PURE LOGIC ESCROW, INC. (“Defendant”) moves to
compel Plaintiff MINHUI TANG’s (“Plaintiff”) further responses to RFAs (set
two); RPDs (set three); and FIs (set two). Defendant’s discovery requests seek
information from Plaintiff’s 2018 and 2019 tax returns. Defendant argues the information is relevant
because all of Plaintiff’s alleged damages relate to Plaintiff’s FIRPTA
withholdings with respect to Properties 1 and 2.
Plaintiff’s Omnibus Opposition to all three Motions was
supposed to be filed and served by no later than January 26, 2024. However,
without leave of Court, the Omnibus Opposition was untimely filed on January
31, 2024. Due to the lack of prejudice to the Moving Party, the Court exercises
its discretion and considers the sole argument raised in the untimely
Opposition— that the Motions should be denied due to Defendant’s failure to
adequately meet and confer before the Motions were filed. Importantly, Plaintiff
does not substantively address the merits of the Motions.
Meet and Confer
Defendant sent a meet and confer letter on August 19, 2023,
demanding supplemental responses by no later than August 24, 2023. These
Motions were filed on August 28, 2023 after Defendant received no response to
the August 19, 2023 correspondence because the 45-day deadline was approaching.
It does not appear as though either party raised the
possibility of extending the 45 day deadline in order to attempt to informally
resolve the discovery dispute.
The Court finds that the meet and confer that took place in
this matter, however limited, sufficiently complied with CCP §2016.040.
Merits
Defendant moves to compel Plaintiff’s further responses to
RFA Nos. 47-71; RPD Nos. 85-106; and FI Nos. 1, and 17.1.
On receipt of a response to requests for admissions, the
party requesting admissions may move for an order compelling a further response
if that party deems that either or both of the following apply: (1) An answer
to a particular request is evasive or incomplete. (2) An objection to a
particular request is without merit or too general.” (CCP §2033.2690(a).)
“On receipt of a response to a demand for inspection, copying, testing,
or sampling, the demanding party may move for an order compelling further
response to the demand if the demanding party deems that any of the following
apply: (1) A state of compliance with the demand is incomplete. (2) A
representation of inability to comply is inadequate, incomplete, or evasive.
(3) An objection in the response is without merit or too general.” (CCP
§2031.310(a).) A motion to compel further responses to a request for production
“shall set forth specific facts showing good cause justifying the discovery
sought by the inspection demand.” (CCP §2031.310(b).)
“If the propounding party, on receipt of a
response to interrogatories, deems that (1) an answer to a particular
interrogatory is…incomplete…or (3) an objection to an interrogatory is without
merit or too general, that party may move for an order compelling further
response.” (CCP §2030.300(a).)
Generally, tax returns are privileged and shielded from
civil discovery. However, the privilege is not absolute. “Courts have held that
the privilege is waived or does not apply where (1)
there is an intentional relinquishment [citation omitted.], (2) the ‘gravamen
of (the) lawsuit is so inconsistent with the continued assertion of the
taxpayer’s privilege as to compel the conclusion that the privilege has in fact
been waived’ [citation omitted.], or (3) a public policy greater than that of
confidentiality of tax returns is involved. [citation omitted.]” (Sammut v.
Sammut (1980) 103 Cal.App.3d 557, 560.)
Here, exception (1) to the taxpayer privilege does not apply because
there is no evidence indicating that Defendant has intentionally relinquished
the privilege. Exception (3) does not apply because Plaintiff fails to identify
any compelling policy (e.g. the strong public policy in favor or requiring
payment of child support) which is sufficient to override the taxpayer’s
privilege here. (See Miller v. Superior Court (1977) 71 Cal.App.3d 145.)
However, exception (2) is
applicable. Here, the gravamen of the lawsuit directly concerns Plaintiffs’ tax
returns. Plaintiffs allege that Defendant failed to withhold the appropriate
taxes under FIRPTA for the sale of Property 1 in 2018. Defendant subsequently attempted to cure its
own negligence by converting funds from the sale of Property 2 in 2019 in the
amount of $59,203.12.
The substantively unopposed Motions are GRANTED. On the
merits, the RFAs, RPDs, and FIs at issue are relevant and narrowly tailored in
time and scope, and Plaintiff’s procedural and boilerplate objections are
overruled.
Plaintiff MINGHUI
TANG is ORDERED to provide verified further responses and documents without
objections by no later than 30 days from the Court’s issuance of this Order.
Sanctions
Reasonable sanctions in favor of Defendant are warranted.
Plaintiff and their counsel are jointly and severally ORDERED to pay reasonable
sanctions in the reduced amount of $889.95 ($235/hr. x 3 hrs.) + ($61.65 filing
fee x 3), payable within 30 days of the Court’s issuance of this Order. This
date may be extended by agreement of the parties.