Judge: Michael P. Linfield, Case: 19STCP02471, Date: 2023-04-24 Tentative Ruling
The Court often posts its tentative several days in advance of the hearing. Please re-check the tentative rulings the day before the hearing to be sure that the Court has not revised the ruling since the time it was posted.
Please call the clerk at (213) 633-0154 by 4:00 pm. the court day before the hearing if you wish to submit on the tentative.
Case Number: 19STCP02471 Hearing Date: April 24, 2023 Dept: 34
SUBJECT: Motion to Quash Deposition Subpoena for Production of Business Records to J.P. Morgan Chase Bank, N.A. Pertaining to David Elias
Moving Party: Defendant David Elias
Resp. Party: Plaintiff Auxin Ventures LLC
SUBJECT: Motion to Quash Deposition Subpoena for Production of Business Records to Technicolor Federal Credit Union Pertaining to David Elias
Moving Party: Defendant David Elias
Resp. Party: Plaintiff Auxin Ventures LLC
SUBJECT: Motion to Quash Deposition Subpoena for Production of Business Records to Wells Fargo Bank, N.A. Pertaining to David Elias
Moving Party: Defendant David Elias
Resp. Party: Plaintiff Auxin Ventures LLC
Defendant David Elias’s Motions to Quash are GRANTED.
Defendant David Elias’s Requests for Sanctions are DENIED.
BACKGROUND:
On June 19, 2019, Plaintiff 89 Acapulco, LLC filed its Complaint against Defendants David Elias, The Hacienda Company, LLC (“THC”), and Auxin Ventures LLC. The causes of action arose from an alleged partnership agreement and alleged ownership of partnership assets.
On August 21, 2019, Plaintiff filed its First Amended Complaint against Defendants David Elias, THC, Brett Vapnek, Auxin Ventures LLC, and Auxin Management LLC.
On February 26, 2020, Plaintiffs 89 Acapulco, LLC and Sydney Holland filed their Second Amended Complaint against Defendants David Elias, THC, Brett Vapnek, Auxin Ventures LLC, and Auxin Management LLC.
On November 15, 2021, the Court granted Plaintiffs 89 Acapulco, LLC and Sydney Holland’s Motion for Order Determining Good Faith Settlement.
On December 14, 2021, Plaintiff Auxin Ventures, LLC (“Plaintiff’) filed its Third Amended Complaint against Defendants David Elias and THC on causes of action for breach of fiduciary duty and declaratory relief.
On January 18, 2022, Defendant THC filed its Answer to the Third Amended Complaint.
On May 2, 2022, Defendant David Elias filed his Answer to the Third Amended Complaint.
On September 26, 2022, Defendant THC filed its CM-180, Notice of Stay of Proceedings due its bankruptcy filing.
On March 24, 2023, Defendant David Elias filed: (1) Motion to Quash Deposition Subpoena for Production of Business Records to J.P. Morgan Chase Bank, N.A. Pertaining to David Elias (“Motion to Quash re Chase”); (2) Motion to Quash Deposition Subpoena for Production of Business Records to Technicolor Federal Credit Union Pertaining to David Elias (“Motion to Technicolor”); and (3) Motion to Quash Deposition Subpoena for Production of Business Records to Wells Fargo Bank, N.A. Pertaining to David Elias (“Motion to Quash re Wells Fargo”). With each of the motions, Defendant David Elias concurrently filed: (1) Declaration of Jordan Matthews; and (2) Proposed Order. Each of the motions contains a Request for Sanctions.
On March 30, 2023, Plaintiff filed its Amended Notice of Order Following Non-Appearance Case Review Re Bankruptcy.
On April 11, 2023, Plaintiff filed its Opposition to each of the three motions. Concurrently with each of the motions, Plaintiff filed: (1) Declaration of John D. Pernick; and (2) Proof of Service.
On April 17, 2023, Defendant David Elias filed Replies to each of the three motions. Concurrently with each of the motions, Defendant David Elias filed: (1) Declaration of Jordan Matthews; and (2) Declaration of David Elias.
ANALYSIS:
I. Legal Standard
California Code of Civil Procedure section 1987.1, subdivision (a) states:
“If a subpoena requires the attendance of a witness or the production of books, documents, 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 of Civil Procedure section 2025.420 states in pertinent part:
“(a) Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order. The motion shall be accompanied by a meet and confer declaration under Section 2016.040.
“(b) The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.”
Courts have considerable discretion in granting and crafting protective orders. (Raymond Handling Concepts Corp. v. Super. Ct. (1995) 39 Cal.App.4th 584, 588.)
II. Discussion
The three motions are nearly identical. For ease of analysis, the Court considers the three motions simultaneously. Where all three related filings have the same requests or arguments, the Court either cites one of them (e.g., “Motion to Quash re Chase”) or cites them collectively (e.g., “Oppositions”).
A. The Subpoenas
Plaintiff served subpoenas on three corporate entities that are not parties to this litigation. The subpoenas request these entities to:
1. Please produce copies of all bank records of any kind or nature concerning any and all savings accounts, checking accounts, business accounts, certificates of deposit, money market accounts, IRA accounts, and/or commercial accounts in which David Elias’s name appears, is an account holder, authorized user, in which he has had the right to make deposits and/or make withdrawals from January 1, 2015 through the present time. Said request includes but is not limited to copies of all passbooks, check registers, un-redacted cancelled checks (front and back), bank statements, cashier’s checks, wire transfers and any and all other information received from the financial institution, copies of all checks (front and back) made through the atm system or in branch.
2. Please produce copies of all bank records of any kind or nature concerning any and all savings accounts, checking accounts, business accounts, certificates of deposit, money market accounts, IRA accounts, and/or commercial accounts in which The Hacienda Company, LLC’s name appears, is an account holder, authorized user, in which he has had the right to make deposits and/or make withdrawals from January 1, 2015 through the present time. Said request includes but is not limited to copies of all passbooks, check registers, un-redacted cancelled checks (front and back), bank statements, cashier’s checks, wire transfers and any and all other information received from the financial institution, copies of all checks (front and back) made through the ATM system or in branch.
3. Please produce bank records for checking account and savings account at [name of bank] and any and all other accounts that can be located at [name of bank] regarding David Elias, the Hacienda Company . . . and/or Lowell Farms from January 1, 2015 through the present time.
(Decls. Jordan to Motions to Quash, Exhs. A, Attachments 3.)
The subpoena on Wells Fargo Bank, N.A. includes the additional request:
“Please produce copies of all bank records of any kind or nature concerning account number [redacted] from January 1, 2015 through the present time. said request includes but is not limited to copies of all passbooks, check registers, un-redacted cancelled checks (front and back), bank statements, cashier’s checks, wire transfers and any and all other information received from the financial institution, copies of all checks (front and back) made through the atm system or in branch.” (Decl. Jordan to Motion to Quash re Wells Fargo, Exh. A, Attachment 3.)
B. The Parties’ Arguments
Defendant David Elias moves the Court to quash these subpoenas. (Motions to Quash, p. 10.) In each of the motions, Defendant David Elias argues: (1) the subpoena violates the automatic bankruptcy stay; (2) Plaintiff seeks documents that are entirely irrelevant to the issues in this matter; (3) the subpoena is premature because Plaintiff will not be successful in this matter; and (4) the subpoena is invasive and seeks confidential financial information. (Motion to Quash re Chase, pp. 7:2, 8:1–2, 8:21, 9:10.)
Plaintiff opposes the motion, arguing: (1) Defendant THC’s bankruptcy does not bar the subpoena; (2) the bank records sought through the subpoena are directly relevant to Plaintiff’s claim against Defendant David Elias; and (3) Defendant David Elias’s privacy rights do not bar Plaintiff from obtaining this relevant evidence. (Opposition to Motion to Quash re Technicolor, pp. 6:4, 6:26–27, 7:15–16.)
Defendant David Elias reiterates his arguments in his Replies.
C. Discussion of the Subpoenas
The Court considers each of Defendant David Elias’s arguments.
1. The Bankruptcy Stay
The Court has already ruled that the bankruptcy stay is only to Defendant THC. Plaintiff requested that the trial on May 8, 2023 proceed as to Defendant Elias and the Court granted this request. (Amended Notice of Order Following Non-Appearance Case Review Re Bankruptcy, p. 1:6–9.) Thus, to the extent that the subpoenas are for Defendant David Elias’s documents and records, they are not barred by the bankruptcy stay. If the Court were to quash the subpoenas, it would only be to Defendant THC’s documents and records.
2. Relevancy
The Court agrees with Plaintiff that at least some of the documents and records requested are relevant to this matter. The Parties disagree about which money came from where and was used to fund which ventures. For example, if the money to fund certain ventures came from places that were partnership assets, then the ventures would also be partnership assets. Further, the identity of assets and who controlled them could also be evidence of the existence of a partnership, which is a fundamental issue in this litigation.
3. Likelihood of Success on the Merits
The likelihood of Plaintiff’s success in the litigation is not relevant to whether documents are discoverable.
“Unless otherwise limited by order of the court . . . any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved . . . if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010.)
4. Privacy
The Court considers whether the subpoenas are overbroad and violative of Defendant David Elias’s privacy.
The California Constitution includes the inalienable right to privacy. (Cal. Const., Art. I, § 1.)
“The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternative that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.” (Williams v. Super. Ct. (2017) 3 Cal.5th 531, 552, citing Hill v. Nat’l Collegiate Athletic Ass’n (1994) 7 Cal.4th 1, 35.)
The balancing test outlined in Hill applies whenever lesser privacy interests are at stake. (Id. at 556.) The Court only applies the higher “compelling interest” standard to justify “an obvious invasion of an interest fundamental to personal autonomy.” (Id.)
Here, the subpoenas requested are for bank records “of any kind or nature”, and they include a wide variety of information. The subpoenas would require production of every check ever written by Defendant from January 1, 2015 to the present including “but . . . not limited to copies of all passbooks, check registers, un-redacted cancelled checks (front and back), bank statements, cashier’s checks, wire transfers and any and all other information received from the financial institution, copies of all checks (front and back) made through the ATM system or in branch.” (See, Decl. Jordan to Motion to Quash re Wells Fargo, Exh. A, Attachment 3, ¶ 3.)
The suboenas are not limited to corporate accounts; they are not limited to the narrow type of information that would allow Plaintiff to know whether partnership assets were used. The Court cannot imagine a broader or more encompassing subpoena. This deep reach into the entirety of Defendant David Elias’s financial life is “an obvious invasion of an interest fundamental to personal autonomy,” and thus the Court applies the “compelling interest” standard here.
The Court does not find that Plaintiff has met the compelling interest standard here. Plaintiff has not sufficiently explained to the Court why a narrower invasion of privacy would not be sufficient to meet Plaintiff’s discovery needs.
The Court GRANTS the Motions to Quash.
D. Sanctions
The Court is granting the motions to quash. However, Defendant has not provided any evidence to support their requested $8,0000.00 in sanctions. The only statement concerning sanctions is that “Elias will be forced to incur no less than 15 hours of attorney time in addition to costs for personal service of the Motion, etc. Auxin should be sanctioned in the amount of no less than $8,000.” (Motion, p. 10:4-5.) However, there is declaration or other evidence supporting this statement. “The arguments of counsel in a motion are not a substitute for evidence, such as a statutorily required affidavit.” (Ponte v. County of Calaveras (2017) 14 Cal.App.5th 551, 556.)
Defendant David Elias’s Requests for Sanctions are DENIED.
III. Conclusion
Defendant David Elias’s Motions to Quash are GRANTED.
Defendant David Elias’s Requests for Sanctions are DENIED.