Judge: Michael P. Linfield, Case: 21STCV38166, Date: 2022-12-19 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: 21STCV38166    Hearing Date: December 19, 2022    Dept: 34

SUBJECT:         Motion to Compel Further Responses to Plaintiffs’ Requests for Production (Sets One and Two) Against Defendant Blake Sing Hon and Request for Sanctions

 

Moving Party:  Plaintiffs Chen Feng and Zhen Zhong Cao

Resp. Party:    Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC

 

SUBJECT:         Motion to Compel Further Responses to Plaintiffs’ Special Interrogatories (Set One) Against Defendant Blake Sing Hon and Request for Sanctions

 

Moving Party:  Plaintiffs Chen Feng and Zhen Zhong Cao

Resp. Party:    Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC

 

SUBJECT:         Motion to Compel Further Responses to Plaintiffs’ Requests for Production (Sets One and Two) Against Nominal Defendant LV Cheyenne LLC and Request for Sanctions

 

Moving Party:  Plaintiffs Chen Feng and Zhen Zhong Cao

Resp. Party:    Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC

 

SUBJECT:         Motion to Compel Further Responses to Plaintiffs’ Special Interrogatories (Set One) Against Nominal Defendant LV Cheyenne LLC and Request for Sanctions

 

Moving Party:  Plaintiffs Chen Feng and Zhen Zhong Cao

Resp. Party:    Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC

 

SUBJECT:         Motion to Compel Defendants’ Depositions and Request for Sanctions

 

Moving Party:  Plaintiffs Chen Feng and Zhen Zhong Cao

Resp. Party:    Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC

 

Plaintiffs’ Motion to Compel Further SROGs Against Defendant and Motion to Compel Further SROGs Against Nominal Defendant are GRANTED. Defendant and Nominal Defendant have 30 days from the issuance of this Order to serve responses on Plaintiffs.

Plaintiffs’ Motion to Compel Further RPDs Against Defendant and Motion to Compel Further RPDs Against Nominal Defendant are GRANTED. The Court grants in full the Motions as to RPDs 14, 29 through 41, and 45 through 55. The Court also grants RPDs 26, 27, 43, and 44, as limited below:

·        RPD 26: Granted as to the production of Nominal Defendant’s tax returns from 2007 through 2016.

·        RPD 27: Granted as to the production of Nominal Defendant’s K-1s from 2007 through 2016.

·        RPD 29:  Granted as to production of Nominal Defendant’s detailed general ledger from 2007 through August 31, 2002.

·        RPD 43: Granted as to documents sufficient to show Nominal Defendant’s loan payment history for loans made from 2007 to the current date.

·         RPD 44: Granted as to Nominal Defendant’s 2007 Cathay Bank loan agreement.

        Plaintiffs’ Motion to Compel Depositions is GRANTED. Defendant Hon shall be made available for deposition within 30 days of the issuance of this Order.

        Sanctions are AWARDED for Plaintiffs and against Defendants and their Counsel, jointly and severally, in the total amount of $8,000.00.

BACKGROUND:

On October 15, 2021, Plaintiff Chen Feng and Zhen Zhong Cao, suing individually and derivatively on behalf of LV Cheyenne LLC, filed their Complaint against Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC on various causes of action.

On December 8, 2021, Plaintiffs filed their First Amended Derivative Complaint against Defendant and Nominal Defendant on the following causes of action:

(1)       Breach of Fiduciary Duty;

(2)       Constructive Fraud;

(3)       Breach of Implied Covenant of Good Faith and Fair Dealing;

(4)       Waste of Corporate Assets;

(5)       Unjust Enrichment;

(6)       Accounting;

(7)       Recovery of Improper Distributions;

(8)       Enforcement of California Corporate Code section 17708.08; and

(9)       Declaratory Relief.

On August 5, 2022, Defendant filed his Answer.

On August 19, 2022, Defendant filed his Amended Answer.

On November 15, 2022, Plaintiffs filed the following motions:

(1)       Motion to Compel Further Responses to Plaintiffs’ Requests for Production (Sets One and Two) Against Defendant Blake Sing Hon and Request for Sanctions (“Motion to Compel Further RPDs Against Defendant”);

(2)       Motion to Compel Further Responses to Plaintiffs’ Special Interrogatories (Set One) Against Defendant Blake Sing Hon and Request for Sanctions (“Motion to Compel Further SROGs Against Defendant”);

(3)       Motion to Compel Further Responses to Plaintiffs’ Requests for Production (Sets One and Two) Against Nominal Defendant LV Cheyenne LLC and Request for Sanctions (“Motion to Compel Further RPDs Against Nominal Defendant”);

(4)       Motion to Compel Further Responses to Plaintiffs’ Special Interrogatories (Set One) Against Nominal Defendant LV Cheyenne LLC and Request for Sanctions (“Motion to Compel Further SROGs Against Nominal Defendant”); and

(5)       Motion to Compel Defendants’ Depositions and Request for Sanctions (“Motion to Compel Depositions”).

Plaintiffs concurrently filed Separate Statements with each of the Motions (except for the Motion to Compel Depositions), as well as a Declaration and a Proposed Order.

Defendant and Nominal Defendant filed:

(1)       Combined Opposition of Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC to Plaintiffs’ Motions to Compel Defendants’ Further Responses to Requests for Production (“Combined Opposition to Requests for RPDs”);

(2)       Combined Opposition of Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC to Plaintiffs’ Motions to Compel Defendants’ Further Responses to Special Interrogatories, Set One (“Combined Opposition to Requests for SROGs”); and

(3)       Combined Opposition of Defendant Blake Sing Hon and Nominal Defendant LV Cheyenne LLC to Plaintiffs’ Motion to Compel Depositions (“Combined Opposition to Motion to Compel Depositions”).

Defendant and Nominal Defendant concurrently filed two Declarations and their Evidentiary Objections.

On December 12, 2022, Plaintiffs filed: (1) Reply in Support of the Motions to Compel Further Responses to Requests for Production (Sets One and Two) (“RPD Reply”); (2) Reply in Support of the Motions to Compel Further Responses to Plaintiffs’ Special Interrogatories (Set One) (“SROG Reply”); and (3) Reply in Support of Plaintiffs’ Motion to Compel Defendants’ Depositions (“Deposition Reply”).

ANALYSIS:

        For clarity and ease of consideration, the Court first considers the Evidentiary Objections. The Court then separates its analysis into sections considering the Motion to Compel Depositions separately from the other four Motions.

I.           Evidentiary Objections

Defendant and Nominal Defendant filed two Evidentiary Objections to Plaintiffs’ Declaration. The Court OVERRULES both Evidentiary Objections.

 

II.        Motions to Compel Further Responses to RPDs and SROGs

A.      Legal Standard

A motion to compel further responses to requests for production “shall set forth specific facts showing good cause justifying the discovery sought by the inspection demand.” (Code Civ. Proc., § 2031.310, subd. (b)(1).) “To establish ‘good cause,’ the burden is on the moving party to show both: [¶] Relevance to the subject matter (e.g., how the information in the documents would tend to prove or disprove some issue in the case); and [¶] Specific facts justifying discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial.) [Citations.] [¶] The fact that there is no alternative source for the information sought is an important factor in establishing ‘good cause’ for inspection. But it is not essential in every case.” (Edmon & Karnow, California Practice Guide: Civ. Proc. Before Trial (The Rutter Group 2017) ¶ 8:1495.6.) “For discovery purposes, information is relevant if it ‘might reasonably assist a party in

evaluating the case, preparing for trial, or facilitating settlement.’ [Citation] Admissibility is not the test and information, unless privileged, is discoverable if it might reasonably lead to admissible evidence. [Citation] These rules are applied liberally in favor of discovery.” (Gonzales v. Super. Ct. (1995) 33 Cal.App.4th 1539, 1546.)

 

“If ‘good cause’ is shown by the moving party, the burden is then on the responding party to justify any objections made to document disclosure (the same as on motions to compel answers to interrogatories or deposition questions).” (Edmon & Karnow, supra, at ¶ 8:1496.)

B.         Discussion

1.          Requests for Production of Documents

Plaintiffs move the Court to compel Defendant and Nominal Defendant to provide further responses to the following Requests for Production. (While Plaintiffs compel Defendant and Nominal Defendant in separate motions, the requests are identical as to both Defendant and Nominal Defendant.)

REQUEST FOR PRODUCTION NO. 14:

All DOCUMENTS RELATED TO the expenses paid by the COMPANY since January 1, 2017.

REQUEST FOR PRODUCTION NO. 26:

ALL DOCUMENTS RELATED TO COMPANY’S tax returns from 2007 through 2016 including each year’s respective K-1s.

REQUEST FOR PRODUCTION NO. 27:

ALL DOCUMENTS RELATED TO COMPANY’S K-1s for years 2007-2016

REQUEST FOR PRODUCTION NO. 29:

ALL DOCUMENTS RELATED TO COMPANY’S detailed general ledger from 2007 through August 31, 2022.

REQUEST FOR PRODUCTION NO. 30:

A complete copy of COMPANY’S QuickBooks electronic file in its native format with metadata for the time-period January 1, 2007 to present.

REQUEST FOR PRODUCTION NO. 31:

A complete copy of COMPANY’S QuickBooks backup electronic file in its native format with metadata from January 1, 2007 to present.

REQUEST FOR PRODUCTION NO. 32:

All DOCUMENTS RELATED TO COMPANY’S bank records showing the disposition of the October 7, 2021 withdrawal in the amount of $150,000 out of Cathay Bank account x3108.

REQUEST FOR PRODUCTION NO. 33:

All DOCUMENTS RELATED TO COMPANY’S bank records showing the disposition of Check Number 1834 in the amount of $50,000 out of Cathay Bank account x3108 on November 19, 2021.

REQUEST FOR PRODUCTION NO. 34:

All DOCUMENTS RELATED TO COMPANY’S bank records showing the disposition of Check Number 1835 in the amount of $140,000 out of Cathay Bank account x3108 on January 4, 2022.

REQUEST FOR PRODUCTION NO. 35:

All DOCUMENTS RELATED TO COMPANY’S bank records showing the disposition of Check Number 104009385 in the amount of $17,754.33 out of Cathay Bank account x3108 on March 23, 2022.

REQUEST FOR PRODUCTION NO. 36:

All DOCUMENTS RELATED TO COMPANY’S new checking account, which was opened with Cathay Bank at the end of 2021, including but not limited to, all bank statements, copies of checks and records of deposits for this account from the date opened through present.

REQUEST FOR PRODUCTION NO. 37:

ALL DOCUMENTS RELATED TO “Consulting Services” for which payment was made to Kenneth Wan, including but not limited to invoices showing the services performed.

REQUEST FOR PRODUCTION NO. 38:

ALL COMMUNICATIONS RELATED TO the “Consulting Services” for which payment was made to Kenneth Wan.

REQUEST FOR PRODUCTION NO. 39:

ALL DOCUMENTS RELATED TO COMPANY’S negative rental income of $31,490.58 in December 2014 as reflected in Hon 00164.

REQUEST FOR PRODUCTION NO. 40:

ALL DOCUMENTS RELATED TO the refund check number #1509 dated 12/2/2014 in the amount of $48,000 which was paid to S&S Supplies.

REQUEST FOR PRODUCTION NO. 41:

All DOCUMENTS AND COMMUNICATIONS RELATED TO the reduction in the contributions by Sun Yin as reflected in the COMPANY’S 2013 journal entry (see Hon 00139 through Hon 00187).

REQUEST FOR PRODUCTION NO. 43:

All DOCUMENTS RELATED TO COMPANY’S loan payment history for all loans through the current date.

REQUEST FOR PRODUCTION NO. 44:

All DOCUMENTS RELATED TO COMPANY’S 2007 Cathay Bank loan, including but not limited to a copy of the 2007 Cathay Bank loan agreement.

REQUEST FOR PRODUCTION NO. 45:

All invoices for the payment to S&S Supplies made on March 3, 2008 by check number 1022 in the amount of $4,769.27.

REQUEST FOR PRODUCTION NO. 46:

All invoices for the payment to S&S Supplies made on February 2, 2011 in the amount of $500 by check number 1240.

REQUEST FOR PRODUCTION NO. 47:

All invoices for the payment to S&S Supplies made on November 13, 2012 in the amount of $648.62 by check number 1372.

REQUEST FOR PRODUCTION NO. 48:

All invoices for the payment to S&S Supplies made on December 11, 2012 in the amount of $2,413.40 by check number 1377.

REQUEST FOR PRODUCTION NO. 49:

All invoices for the payment to S&S Supplies made on January 13, 2014 in the amount of $9,520.95 by check number 1452.

REQUEST FOR PRODUCTION NO. 50:

All DOCUMENTS evidencing the source of the $50,000 deposit to account 3108 on May 29, 2018.

REQUEST FOR PRODUCTION NO. 51:

All DOCUMENTS evidencing the source of the $50,000 deposit to account 3108 on August 14, 2018.

REQUEST FOR PRODUCTION NO. 52:

All DOCUMENTS evidencing the source of the $50,000 deposit to account 3108 on August 29, 2018.

REQUEST FOR PRODUCTION NO. 53:

All DOCUMENTS evidencing the source of the $100,000 deposit to account 3108 on January 8, 2019.

REQUEST FOR PRODUCTION NO. 54:

All DOCUMENTS evidencing the source of the $10,000 deposit to account 3108 on May 7, 2019.

REQUEST FOR PRODUCTION NO. 55:

All DOCUMENTS RELATED TO insurance reimbursements to S&S Brothers.

(Separate Statement in Support of Motion to Compel Further RPDs Against Defendant; Separate Statement in Support of Motion to Compel Further RPDs Against Nominal Defendant.)

2.       Special Interrogatories

Plaintiffs move the Court to compel Defendant and Nominal Defendant to provide further responses to the following Special Interrogatories. (While Plaintiffs compel Defendant and Nominal Defendant in separate motions, the requests are identical as to both Defendant and Nominal Defendant.)

SPECIAL INTERROGATORY NO. 17:

IDENTIFY all of the COMPANY'S current liabilities.

SPECIAL INTERROGATORY NO. 18:

DESCRIBE IN DETAIL all liabilities that the COMPANY has incurred since January 1, 2017.

SPECIAL INTERROGATORY NO. 19:

IDENTIFY all DOCUMENTS RELATED TO the liabilities that the COMPANY has incurred since January 1, 2017.

SPECIAL INTERROGATORY NO. 22:

IDENTIFY all DOCUMENTS RELATED TO the expenses that the COMPANY has paid since January 1, 2017.

(Separate Statement in Support of Motion to Compel Further SROGs Against Defendant; Separate Statement in Support of Motion to Compel Further SROGs Against Nominal Defendant.)

3.       Analysis

a.       Requests for Production

Plaintiffs argue that Defendant and Nominal Defendant have withheld documents that should have been produced. (Motion to Compel Further RPDs Against Defendant, p. 7:21–23; Motion to Compel Further RPDs Against Nominal Defendant, p. 7:25–26.)

Defendants argue the Court should deny Plaintiffs’ Motion because the Motions fail to affirmatively establish good cause and the Separate Statements are defective. (Combined Opposition to Requests for RPDs, pp. 3:20, 5:7–9.)

Plaintiffs reply that Plaintiffs have met the good cause requirement and their Separate Statements comply with all requirements. (RPD Reply, pp. 3:10–11, 5:1–2.)

The Court finds that Plaintiffs have demonstrated good cause for the Court to compel further production responses and that any procedural issues with Plaintiffs’ Separate Statements are negligible.

However, the Court does agree with Defendant and Nominal Defendant that some of Plaintiffs’ requests for production are overbroad. This is especially the case with the requests that use the phrase “relating to,” as that phrase tends to make requests vague and overbroad.

The Court GRANTS Plaintiffs’ Motion to Compel Further RPDs Against Defendant and Motion to Compel Further RPDs Against Nominal Defendant. The Court grants in full the Motions as to RPDs 14, 30 through 41, and 45 through 55. The Court also grants RPDs 26, 27, 29, 43, and 44, as limited below:

·        RPD 26: Granted as to Nominal Defendant’s tax returns from 2007 through 2016.

·        RPD 27: Granted as to Nominal Defendant’s K-1s from 2007 through 2016.

·        RPD 29:  Granted as to production of Nominal Defendant’s detailed general ledger from 2007 through August 31, 2002.

·        RPD 43: Granted as to documents sufficient to show Nominal Defendant’s loan payment history for loans made from 2007 to the current date.

·         RPD 44: Granted as to Nominal Defendant’s 2007 Cathay Bank loan agreement.

 

b.       Special Interrogatories

Plaintiffs argue that Defendant and Nominal Defendant have only produced responses containing information through March 31, 2022 instead of responses that are current. (SROG Reply, p. 2:2–12.) Plaintiffs argue that current responses are required because the underlying action involves the alleged self-dealing of Defendant Hon. (Id.)

Defendant and Nominal Defendant argue that these Motions should be denied because Plaintiffs’ Separate Statements are defective, Defendant and Nominal Defendant complied with their discovery burdens, and the Parties have never met and conferred regarding the Special Interrogatories. (Combined Opposition to Requests for SROGs, pp. 4:5–6, 5:20–22.)

The Court does not agree with Defendant’s and Nominal Defendant’s arguments. Specifically, the Parties’ respective Counsel have met and conferred (including as recently as October 28, 2022), the discovery responses are insufficient in that they are not current, and any procedural issues with the Separate Statements are negligible. (Decl. Adams, ¶ 48.)

After considering the papers, the Court finds that it would be appropriate to compel Defendant and Nominal Defendant to produce further responses to the Special Interrogatories listed above.

The Court GRANTS Plaintiffs’ Motion to Compel Further SROGs Against Defendant and Motion to Compel Further SROGs Against Nominal Defendant. Defendant and Nominal Defendant have 30 days from the issuance of this Order to serve responses on Plaintiffs.

III.     Motion to Compel Depositions

A.      Legal Standard

Any party may obtain discovery, subject to restrictions, by taking the oral deposition of any person, including any party to the action.¿(Code Civ. Proc., § 2025.010.)¿A properly-served deposition notice is effective to require a party or party-affiliated deponent to attend and to testify, as well as to produce documents for inspection and copying.¿(Code Civ. Proc., § 2025.280, subd. (a).)¿¿ 

 

“If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.” (Code Civ. Proc., § 2025.230.) 

 

“If, after service of a deposition notice, a party . . . fails to appear for examination, or to proceed with it, or to produce for inspection any document . . . described in the deposition notice, the party giving notice may move for an order compelling deponent’s attendance and testimony, and the production . . . of any document . . . described in the deposition notice.”¿¿(Code Civ. Proc., § 2025.450, subd. (a).)¿The motion must set forth both facts showing good cause justifying the demand for any documents and a meet and confer declaration.¿(Code Civ. Proc., § 2025.450, subds. (b)(1), (b)(2).) “Implicit in the requirement that counsel contact the deponent to inquire about the nonappearance is a requirement that counsel listen to the reasons offered and make a good faith attempt to resolve the issue,” including by rescheduling. (Leko v. Cornerstone Bldg. Inspection Serv. (2001) 86 Cal.App.4th 1109, 1124.) 

B.      Analysis

Plaintiffs move the Court to compel Defendant Hon to appear for a deposition, both in his individual capacity and as the person most knowledgeable on behalf of Nominal Defendant. (Motion to Compel Depositions, p. 1:7–10.) Plaintiffs argue that they need the Court to compel Defendant Hon to appear because Defendants have avoided deposition for more than three months. (Id. at pp. 5:5–11, 5:25–26.)

        Defendant and Nominal Defendant argue that they would like to proceed with the depositions as soon as possible, and that the reason why a reason a recent deposition of Defendant Hon did not occur is because Counsel Krol “contracted a severe upper respiratory infection and lost the ability to speak.” (Combined Opposition to Motion to Compel Depositions, pp. 2:5–13, 3:2; Decl. Krol, ¶ 2.)

        Plaintiffs reply that Defendant and Nominal Defendant have still failed to provide Plaintiffs with alternative deposition dates. (Deposition Reply, p. 1:13–15.)

        The Court finds that it is unreasonable for Plaintiffs to wait for more than three months to obtain Defendant Hon’s deposition, both in his individual capacity and in his capacity as Nominal Defendant’s person most knowledgeable.

        The Court GRANTS Plaintiffs’ Motion to Compel Depositions. Defendant Hon shall be made available for deposition within 30 days of the issuance of this Order.

IV.       Sanctions

The Court shall impose monetary sanctions against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel a deposition, a motion to compel interrogatories, and/or a motion to compel production of documents, unless the Court finds that the one subject to sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (Code Civ. Proc., §§ 2025.450, subd. (g)(1), 2030.290, subd. (c), 2031.300, subd. (c).)

        Defendant and Nominal Defendant have unsuccessfully opposed all five of the discovery motions discussed at issue. In addition, the Court does not have evidence before it that indicates Defendant, Nominal Defendant, or their Counsel acted with substantial justification or that other circumstances make the imposition of sanctions unjust. Thus, the Court must impose monetary sanctions.

        Plaintiffs request sanctions against Defendant, Nominal Defendant, and their Counsel, jointly and severally in the total amount of $27,350.00. (See, for example, Motion to Compel Depositions, p. 1:19–27.)

Plaintiffs’ Counsel declares the following: (1) that three attorneys worked on this matter, who are respectively paid $450 per hour (a partner with 17 years of experience), $425 per hour (another attorney with 17 years of experience), and $300 per hour (an associate with 2 years of experience); (2) that the partner anticipates spending a total of 25 hours on these discovery issues, including 18 hours in connection with meet and confer efforts and 5.5 hours to prepare Plaintiffs’ reply papers; (3) that the other attorney spent 28 hours on these discovery items; (4) that the associate spent 14 hours on these discovery items; and (5) that the costs incurred for these five motions are $420.33.

        The Court finds that Plaintiffs’ Counsels’ hourly rates and incurred costs are reasonable. However, the Court does not find it to be reasonable that Counsel spent 67 hours on these discovery motions.

        The Court awards sanctions for Plaintiffs and against Defendants and their Counsel, jointly and severally, in the total amount of $8,000.00.

V.          Conclusion

Plaintiffs’ Motion to Compel Further SROGs Against Defendant and Motion to Compel Further SROGs Against Nominal Defendant are GRANTED. Defendant and Nominal Defendant have 30 days from the issuance of this Order to serve responses on Plaintiffs.

Plaintiffs’ Motion to Compel Further RPDs Against Defendant and Motion to Compel Further RPDs Against Nominal Defendant are GRANTED. The Court grants in full the Motions as to RPDs 14, 30 through 41, and 45 through 55. The Court also grants RPDs 26, 27, 43, and 44, as limited below:

·        RPD 26: Granted as to production of Nominal Defendant’s tax returns from 2007 through 2016.

·        RPD 27: Granted as to production of Nominal Defendant’s K-1s from 2007 through 2016.

·        RPD 29:  Granted as to production of Nominal Defendant’s detailed general ledger from 2007 through August 31, 2002.

·        RPD 43: Granted as to documents sufficient to show Nominal Defendant’s loan payment history for loans made from 2007 to the current date.

·         RPD 44: Granted as to Nominal Defendant’s 2007 Cathay Bank loan agreement.

        Plaintiffs’ Motion to Compel Depositions is GRANTED. Defendant Hon shall be made available for deposition within 30 days of the issuance of this Order.

        Sanctions are AWARDED for Plaintiffs and against Defendants and their Counsel, jointly and severally, in the total amount of $8,000.00.