Judge: Michael E. Whitaker, Case: 21STCV39105, Date: 2023-08-22 Tentative Ruling

Case Number: 21STCV39105    Hearing Date: February 6, 2024    Dept: 207

TENTATIVE RULING

BACKGROUND

Plaintiff Michael Landver (“Plaintiff”) initiated this action on October 22, 2021, by bringing a Complaint in his individual capacity and derivatively on behalf of nominal defendant, United Clinical Research, Inc. (“United”). Plaintiff brings this action against Defendant Matrix Clinical Research, Inc. (“Matrix”) and individual Defendants Faramarz Shamam, Peyman Banooni, and Stan Gershovich (the “Individual Defendants”) (collectively, “Defendants”).

Plaintiff alleges Plaintiff and the Individual Defendants previously formed United, a company that conducts clinical trials for drug development, in which Plaintiff claims a 25% ownership interest. Plaintiff alleges the Individual Defendants later stopped working with Plaintiff and formed their own company, Defendant Matrix, to conduct such clinical trials. In so doing, Plaintiff alleges the Individual Defendants misappropriated United’s business, employees, revenue, contracts, and trade secrets which they used to start Defendant Matrix so they would no longer have to share profits with Plaintiff.

Plaintiff moves to compel third party David Gadoshian, CPA (“Gadoshian”) to comply with the subpoena served upon him, for a contempt order against Gadoshian, and also for sanctions.  Defendants oppose, and Plaintiff has replied.  Gadoshian has not opposed the motion.

Subsequent to the filing of the Motion, Gadoshian delivered the requested documents to Plaintiff, as represented in the Opposition and Reply briefs, as well as represented to the Court by the parties at a hearing on February 1, 2024.  Thus, the only issue remaining is sanctions.

ANALYSIS

“In California, discovery may be obtained from a nonparty through an oral deposition, a written deposition, or a deposition for the production of business records and things. (Code Civ. Proc., § 2020.010, subd. (a).)” (Board of Registered Nursing v. Superior Court of Orange County (2021) 59 Cal.App.5th 1011, 1030 (“Board of Registered Nursing”).) “To pursue the deposition of a nonparty, a party must generally serve a deposition subpoena.” (Ibid.).)

“‘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, and shall specify the form in which any electronically stored information is to be produced, if a particular form is desired.’ [Citation.]” (Board of Registered Nursing, supra, 59 Cal.App.5th at p. 1030.)

“‘If a deponent fails to answer any question or to produce any document, electronically stored information, or tangible thing under the deponent’s control that is specified in the deposition notice or a deposition subpoena, the party seeking discovery may move the court for an order compelling that answer or production.’ (Code Civ. Proc., § 2025.480, subd. (a).)” (Board of Registered Nursing, supra, 59 Cal.App.5th at p. 1031.) “‘[D]iscovery conducted by

way of a business records subpoena is a “deposition.”’ [Citation.]” (Id. at pp. 1031-1032.) “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 [a party or a witness] . . . may make an order . . . directing compliance with it upon those terms or conditions as the court shall declare, including protective orders.” (Code Civ. Proc., § 1987.1.)

            On August 1, 2023, Plaintiff personally served Defendant Matrix’s accountant, third party David Gadoshian, CPA with a deposition subpoena for Matrix’s business records, with a production date of August 20, 2023.  (Baranov Decl. ¶ 8 and Ex. A.)  On August 7, 2023, Defendants filed a motion to quash, which was noticed for hearing on September 13, 2023.  (Baranov Decl. ¶ 9 and Ex. B.)  Plaintiff opposed the motion to quash on August 30, 2023.  (Baranov Decl. ¶ 9 and Ex. C.)  After the opposition was filed, but prior to the hearing, Defendants took the motion to quash off calendar.  (Baranov Decl. ¶ 9 and Ex. D.)

            On September 11, 2023, counsel for Plaintiff contacted Gadoshian, advising him that the motion to quash was taken off calendar, and therefore he must comply with the subpoena and produce the requested documents.  (Baranov Dec. ¶ 10 and Ex. E.)  Gadoshian agreed to produce the documents by September 18, 2023.  (Ibid.)  Gadoshian did not produce the documents by September 18.

            On September 19, 2023, counsel for Defendants sent a letter to Plaintiff’s counsel and to Gadoshian, advising that Gadoshian did not need to comply with the subpoena, and requesting Plaintiff’s counsel to “cease and desist” from contacting Gadoshian.  (Baranov Decl. ¶ 11, Ex. F.)  On September 28, 2023, the parties had an informal discovery conference, where the Court expressed disapproval of Defendants’ counsel’s conduct. 

            Plaintiff’s counsel continued to contact Gadoshian regarding the outstanding business records, to no avail.  (Baranov Decl. ¶ 12 and Exs. G-I.)  On November 16, 2023, the parties had another IDC, where the Court granted Plaintiff permission to file the instant motion to compel.

            On December 6, 2023, Defendants moved for a protective order, which the Court denied on January 3, 2024.  (See January 3, 2024 Minute Order.)  Plaintiff represents that Gadoshian produced the documents on January 12, 2024.  (Reply at p. 2.)

            Defendants oppose the motion and seek sanctions, arguing (1) Gadoshian has delivered all requested documents; (2) Defendants did not agree to the production of their business records; (3) there is no court order compelling Gadoshian’s response; and (4) Plaintiff did not meet and confer with Defendants prior to filing this motion.

            As to the first argument, the fact that Gadoshian has delivered the requested documents moots the motion to compel, but not the request for sanctions.             

As to the remaining arguments, the validly served subpoena required Gadoshian to either object or serve the requested documents.  Gadoshian did not object.  Defendants did file a motion to quash, but once that was taken off calendar, Gadoshian was required to respond on the agreed upon September 18, 2023 date.  There is no requirement that Plaintiffs meet and confer with Defendants prior to filing a motion to compel in connection with a third party subpoena or that Defendants agree to the production.

            Plaintiff seeks an order of contempt and monetary sanctions from Gadoshian in the amount of $6,605, representing 11 hours of attorney time at an hourly rate of $595 plus the $60 filing fee.  (Baranov Decl. ¶ 14.)  Defendants seek monetary sanctions from Plaintiff in the amount of $9,975.

            Because Plaintiff’s motion is proper, procedurally and factually, the Cout denies Defendants’ request for monetary sanctions.

            As for Plaintiff’s requests, while the Court agrees that Gadoshian failed to timely respond to the deposition subpoena, it does not find contempt appropriate under the circumstances.  Defendants’ counsel was apparently communicating with Gadoshian, advising Gadoshian not to respond during the pendency of various motions, including the motion to quash and the motion for protective order.  Moreover, Gadoshian is a third party, and this is the first incident of Gadoshian’s failure to comply with discovery.

The Court does, however, agree that monetary sanctions are warranted.  (Code Civ. Proc. Section 1987.2.)   Therefore, the Court further awards monetary sanctions against Gadoshian in the amount of $2,440, representing 4 hours of attorney time to prepare the moving and reply papers at the hourly rate of $595, plus the $60 filing fee.

CONCLUSION AND ORDER

Therefore, the Court denies, in part, as moot Plaintiff’s motion to compel compliance with the deposition subpoena. 

Further, the Court orders Gadoshian to pay monetary sanctions in the amount of $2,440 , to Plaintiff, by and through Plaintiff’s counsel, within 30 days of notice of the Court’s order.

Plaintiff shall provide notice of the Court’s order and file a proof of service of such.

DATED:  February 6, 2024                                                    ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court