Judge Lynette Gridiron Winston, Case Number: 24PSCV00568, Date: 2025-01-16 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: 24PSCV00568, Date: 2025-01-16 Tentative Ruling

CASE NAME: Scott DeSmet, Conservator of the Person and Estate of Gregory L. DeSmet Sr and Trustee of the Gregory L. DeSmet Trust v. Vicki Brown aka Vicki Brown-Desmet, et al.

Defendant DPI Labs, Inc.’s Motion to Quash Subpoena to Citizens Business Bank Account Ending in 0993

The Court DENIES Defendant DPI Labs, Inc.’s motion to quash subpoena to Citizens Business Bank Account ending in 0993.

Moving Parties are ordered to give notice of the Court’s ruling within five calendar days of this order.

This is a business dispute. On February 23, 2024, plaintiff Scott DeSmet, Conservator of the Person and Estate of Gregory L. DeSmet Sr and Trustee of the Gregory L. DeSmet Trust (Plaintiff) filed this action against defendants Vicki Brown aka Vicki Brown-DeSmet (Vicki), Victoria Marie Brown aka Victoria Marie Brown-DeSmet,[1] Gregory L. DeSmet Jr. (Greg Jr.), Al Snow (Snow), DPI Labs, Inc. (DPI Labs), DeSmet Property Investments, LLC (DeSmet Property), Sowing Seeds for Life (Sowing Seeds), Hillsborough Accounting Services (collectively, Defendants), and Does 1 through 100, alleging causes of action for fraud and conspiracy to commit fraud, breach of fiduciary duty, and financial elder abuse and conspiracy to commit financial elder abuse.

On July 11, 2024, following the Court’s sustaining of the demurrer to the complaint, Plaintiff filed the operative First Amended Complaint (FAC) against the same Defendants for fraud and conspiracy to commit fraud, two counts of breach of fiduciary duty, and financial elder abuse and conspiracy to commit financial elder abuse.

On December 4, 2024, Defendant DPI Labs moved to quash a subpoena for production of business records served on Citizens Business Bank. On January 3, 2025, Plaintiff opposed the motion. On January 9, 2025, DPI Labs replied.

“If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court's own motion after giving counsel notice and an opportunity to be heard, 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 order 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).)

The Court OVERRULES DPI Lab’s objections, as the Court does not rely on the matters to which DPI Labs objects in reaching its decision herein.

The Court DENIES DPI Labs’ request for judicial notice. (Evid. Code, § 452, subd. (d).) Generally, new evidence on reply is not permitted unless it fills in gaps in the evidence created by the opposing party’s opposition and is not raising new substantive issues for the first time; otherwise, a further hearing would be required to permit the opposing party to respond. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.) The document requested for judicial notice does not respond to any issues raised in Plaintiff’s opposition, nor is it relevant to this motion.

The Court notes that DPI Labs failed to redact the bank account number from the subpoena when filing this motion. (Sallus Decl., Ex. A; Cal. Rules of Court, rule 1.201, subd. (a)(2) [“If financial account numbers are required in a pleading or other paper filed in the public file, only the last four digits of these numbers may be used”].) The Court cautions DPI Labs to be more cautious and cognizant of this going forward.

The Court further notes that DPI Labs’ reply papers raise new substantive arguments for the first time, such as the subpoena being propounded in Plaintiff’s individual capacity or the confidentiality of the information sought. (Reply, 2:19-3:3, 5:15-6:14.) This is not permitted on reply. (Jay v. Mahaffey, supra, 218 Cal.App.4th at pp. 1537-1538.) Thus, the Court declines to consider these new substantive arguments.

DPI Labs contends Plaintiff’s subpoena for production of documents served on October 31, 2024, is oppressive and demands irrelevant information. DPI Labs contends that the subpoena seeks production of documents outside the applicable statutes of limitations for Plaintiff’s claims and therefore seeks irrelevant documents that will not lead to admissible evidence, and is merely an attempt to harass Defendants. DPI Labs then contends the subpoena is overbroad, unintelligible, and unparticularized, but instead take a shotgun approach to seeking records from financial institutions. DPI Labs contends the list of items in the subpoena does not particularize the requests because Plaintiff expressly affirms the list is non-exhaustive. DPI Labs further contends the subpoena cannot be modified to cure its defects, as it is simply too overbroad and burdensome.

In opposition, Plaintiff contends DPI Lab’s objection that the subpoena is oppressive is without merit and asserted intentionally in bad faith to cause delay and spoilage of records held by Citizens Business Bank. Plaintiff contends it cannot be oppressive for Plaintiff as a 45% shareholder of DPI Labs to seek its banking records, and that DPI Labs has proffered no evidence demonstrating undue burden to support their objection of oppression. Plaintiff then contends Code of Civil Procedure section 2017.010 dictates the scope of discovery, not an unproven statute of limitations defense. Plaintiff contends this action contains allegations of fraud, embezzlement, breach of fiduciary duty and elder abuse based in part on alleged misappropriation of corporate funds and that the records sought are directly relevant to each cause of action. Plaintiff contends the time period is reasonable because it is common knowledge that financial institutions only keep seven years’ worth of records. Plaintiff contends the statute of limitations does not limit Plaintiff’s right to discovery of the documents requested, and there is no authority to that effect. Plaintiff also contends that the delayed discovery rule applies to Plaintiff’s claims based on the conservatee’s lack of cognition and the Defendants actively concealing their fraud. Plaintiff further contends the documents sought are reasonably particularized, as they list specific types of financial documents and also provide a catch-all for those documents that may exist but cannot be specifically identified.

The Court finds DPI Labs’ motion unavailing. The Court does not find the demands set forth in the subpoena oppressive or demanding irrelevant information. Plaintiff correctly contends that the statute of limitations does not limit the Plaintiff’s right to discovery of the documents requested, especially for an affirmative defense that has not yet been proven, nor has DPI Labs cited any authority that supports this contention. Whether the documents requested provide a basis for a cause of action is not the same as whether they are relevant or admissible for purposes of discovery. Evidence sought in discovery does not necessarily need to be admissible; it only needs to be relevant and reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., § 2017.010.)

Moreover, evidence falling outside the statute of limitations is not necessarily inadmissible. An affirmative defense by definition is a defense asserted after the initial cause of action has been stated. (See The Bank of New York Mellon v. Preciado (2013) 224 Cal.App.4th Supp. 1, 8 [“An affirmative defense is an allegation of new matter in the answer that is not responsive to an essential allegation in the complaint”].) If the requested documents show Plaintiff’s claims are time-barred, then it stands to reason that DPI Labs would want to be able to rely on those documents to assert that affirmative defense. Either way, if some of the documents requested evidence potential liability outside of the applicable statutes of limitations, that does not mean Plaintiff is not entitled to discover them. Additionally, Plaintiff correctly contends that DPI Labs has not presented any evidence indicating the amount of undue burden that complying with these demands would require. (See West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 417.)

The Court further agrees with Plaintiff that the demands set forth in the subpoena are reasonably particularized. (Code Civ. Proc., § 2020.410, subd. (a).) The “[a]ny and all” language in the subpoena, while broad in and of itself, is limited thereafter by reference to a single account number and specific types of documents listed, such as account statements, cancelled checks, deposit receipts, withdrawal slips, and wire transfer receipts, among other things. (Sallus Decl., Ex. A.) Based on the foregoing, the Court DENIES the motion.

The Court further DENIES DPI Labs’ request for monetary sanctions, finding that Plaintiff did not engage in misuse of the discovery process. (Code Civ. Proc., § 2023.030, subd. (a).) The Court also DENIES Plaintiff’s request for monetary sanctions, finding that DPI Labs acted with substantial justification in bringing the motion. (Ibid.)

The Court DENIES Defendant DPI Labs, Inc.’s motion to quash subpoena to Citizens Business Bank Account ending in 0993.

Moving Parties are ordered to give notice of the Court’s ruling within five calendar days of this order.

[1] It appears that Victoria Marie Brown aka Victoria Marie Brown-DeSmet are additional aliases for Defendant Vicki rather than a separate person. (See FAC, ¶ 3.)