Judge: Olga Alvarez, Case: 37-2019-00019222-PR-TR-CTL, Date: 2023-09-27 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

DEPT.:

EVENT DATE:

EVENT TIME:

CENTRAL COURTHOUSE TENTATIVE RULINGS - September 26, 2023

09/27/2023  10:30:00 AM  503 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Olga Alvarez

CASE NO.:

CASE CATEGORY:

EVENT TYPE:

CASE TITLE: CASE TYPE:

Probate  Trust Proceedings Motion to Quash (Probate) 37-2019-00019222-PR-TR-CTL IN RE: THE YVONNE H. MITCHELL CHARITABLE TRUST [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 07/12/2023

Pursuant to Superior Court of San Diego County, Local Rules, rule 4.23.7, the court's tentative ruling is as follows: The Motion to Quash Subpoena for Production of Business Records to Union Bank, San Diego Private Bank and/or for Protective Order filed by Earl Nelson Feldman is DENIED as to the motion to quash and GRANTED as to the protective order.

I. Background In November 2019, Earl Nelson Feldman ('Trustee') pleaded guilty to one felony count of wire fraud in violation of 18 U.S.C. § 1343 (count 1), and one count of making a false tax return in violation of 26 U.S.C. § 7206(1) (count 2), in the matter of United States of America v. Earl Nelson Feldman, Case No.

19CR4892. (ROA 107, Barrientos Decl., Exh. 3, Plea Agreement at p. 1.) As part of the plea deal, Trustee agreed to pay $1,648,531.40 in restitution to the Yvonne H. Mitchell Charitable Trust ('Mitchell Trust') and the Maury and Lillian Novak Charitable Trust ('Novak Trust'). (Id. at p. 14.) Trustee admitted the following factual basis for the guilty plea: Beginning at least as early as January 2012 and continuing up to and including April 15, 2015 (the 'Relevant Time Period'), the defendant EARL NELSON FELDMAN ('Defendant'), within the Southern District of California, and elsewhere, did devise, participate and engage in a scheme to defraud two charitable trusts for which he was trustee, of approximately $1,648,531.40, by making unauthorized wire transfers and withdrawals from the trusts' bank account under his control.

[¶] During the Relevant Time Period, Defendant used his position as trustee to defraud the charitable trusts by making unauthorized wire transfers and withdrawals from the charitable trust bank accounts.

Defendant then transferred the misappropriated funds for his own personal use and benefit.

[¶] During the Relevant Time Period, Defendant misappropriated trust assets for his own personal expenses, including but not limited to: paying his personal mortgage; paying taxes on properties he owned; making his personal federal and state tax payments; purchasing personal vehicles; paying contractors working on his personal residence; transferring funds from the charitable trust accounts to his personal brokerage account; and paying his personal credit cards.

(Id. at pp. 3-4.) Calendar No.: Event ID:  TENTATIVE RULINGS

2999034 CASE NUMBER: CASE TITLE:  IN RE: THE YVONNE H. MITCHELL CHARITABLE TRUST [IMAGED]  37-2019-00019222-PR-TR-CTL On April 12, 2019, Xavier Becerra, the Attorney General of the state of California ('Petitioner'), filed a Petition pursuant to Probate Code § 17200 for removal of Trustee as trustee of the Mitchell Trust, for an order compelling Trustee to render a full and complete accounting, and for surcharge based on breach of trust. (ROA 1.) On May 14, 2019, Petitioner filed a Notice of Related Case, relating this case with case no. 2019-19242, the Novak Trust matter, which is also before this Court. (ROA 7.) On October 20, 2022, Petitioner deposed Trustee. (ROA 107, Barrientos Decl., Exh. 1, Excerpts from the Deposition Transcript dated October 20, 2022.) On June 19, 2023, Petitioner issued a subpoena to Union Bank for the records of the Mitchell Trust, Trustee's personal bank records, and records for any accounts held jointly by Trustee with his wife, Sarah Scott. (ROA 85, Swan Decl., Exh. A, Deposition Subpoena for Production of Business Records dated Jun. 19, 2023.) On July 12, 2023, Trustee filed the instant motion to quash deposition subpoena pursuant to CCP § 1987.1. (ROA 84.) A corresponding motion to quash was filed in the related case. (ROA 89.) Trustee moves to quash Petitioner's subpoena to Union Bank for his personal bank records, and for a protective order to permanently bar Petitioner from seeking the requested production of documents. Alternatively, Trustee requests a protective order to preserve the confidentiality of his personal bank records should the Court allow the documents to be subpoenaed.

The parties stipulated to continue the Trial Readiness Conference and evidentiary hearings until after the motions to quash are heard first. (ROA 101, Stipulation and Order filed Aug. 9, 2023.) On September 14, 2023, Petitioner filed an opposition. (ROA 106.) On September 19, 2023, Trustee filed a reply. (ROA 108.) II. Discussion A. Compliance with the Rules of Court Preliminarily the Court notes that the parties' electronic exhibits fail to comply with CRC 3.1110(f)(4).

(Cal. Rules of Court, rule 3.1110(f)(4) ['[u]nless they are submitted by a self-represented party, electronic exhibits must include electronic bookmarks with links to the first page of each exhibit and with bookmark titles that identify the exhibit number or letter and briefly describe the exhibit.'].) The bookmark titles to Petitioner's exhibits do not briefly describe the exhibit. (See ROA 107, Barrientos Decl.) Trustee did not include an electronic bookmark with a link to the first page of the exhibit. (See ROA 85, Swan Decl.) The parties are expected to comply with all applicable rules in the future.

B. Motion to Quash Trustee argues the subpoena is overbroad, does not describe the requested documents with reasonable particularity, and while the subpoenaed Mitchell Trust bank records may be relevant, discovery of Trustee's personal bank records is not reasonably calculated to lead to the discovery of admissible evidence. In particular, the joint account records (account ending 2645) are irrelevant as Trustee deposited any transfers from the Mitchell Trust to his separate personal account (account ending 5296), not to the joint account. Trustee's separate personal account records are irrelevant because any Calendar No.: Event ID:  TENTATIVE RULINGS

2999034 CASE NUMBER: CASE TITLE:  IN RE: THE YVONNE H. MITCHELL CHARITABLE TRUST [IMAGED]  37-2019-00019222-PR-TR-CTL deposits from the Mitchell Trust will be reflected in the Mitchell Trust bank records.

Trustee further argues his financial records are protected by the constitutional right to privacy. Trustee contends that where such rights are implicated, the party seeking disclosure must show that the records are directly relevant to a claim or defense and essential to the fair resolution of the lawsuit, but Petitioner cannot meet either of these standards.

In opposition, Petitioner argues that as the sole trustee for the Mitchell Trust, beginning in 2010 and through 2014, Trustee engaged in a scheme to defraud the charitable trust and wrote checks to himself that were then deposited into his personal bank account. During deposition, Trustee admitted that he comingled these funds. (ROA 107, Barrientos Decl., Exh. 1, Deposition of Earl Feldman at 66:25-67:25.) Petitioner argues that in 2019, Trustee pleaded guilty to two federal felony counts, admitting he stole money from the Mitchell and Novak Trusts. The federal prosecution covered only the years 2012 through 2014 (and 2015 for the Novak Trust).

Petitioner contends there is no dispute that Trustee stole money from the trusts and committed perjury in the process. Despite his guilty plea and admission to stealing money from the Novak and Mitchell Trusts, Trustee maintains that some of the funds he took from 2012 through 2015 were used for the benefit of the trust but claims he cannot remember what he did with the money, or for what he reimbursed himself.

As the trustee, he was required to keep adequate books and records pursuant to Probate Code §§ 16062 and 16068.

Petitioner argues that after violating his fiduciary duties, Trustee does not have the right to hide behind the right of privacy, while claiming he used the trust funds to reimburse himself for actions taken on behalf of the trust, without any contemporaneous records or other documentations supporting his claim.

Petitioner argues that tracing trust property is one of the remedies available because of Trustee's breach of trust. Trustee is ignoring his duty to render a full accounting to the beneficiaries, and where there has been a negligent failure to keep true accounts, all presumptions arise against the trustee.

In reply, Trustee argues the opposition makes numerous material misstatements and omissions relating to the criminal case, to paint Trustee in the worst light. Trustee further argues that in response to the motion to quash, Petitioner made no attempt to support the disclosure of every bank record, or to show why records after April 2015 would be necessary. Efforts must be made to minimize the intrusion on privacy interests, but Petitioner has not done so. Petitioner has not shown why the records from Trustee's joint account are necessary.

Analysis The subpoena requests: '[d]ocuments for any and all accounts held in the name of, or for the benefit of the Yvonne Mitchell Charitable Trust, Earl N. Feldman Trustee. FEIN 77-6228895, including but not limited to the following: 1) checking account statements from 2010 through the time the account was closed. Including but not limited to account number 6011053284. 2) statements for all investment and/or brokerage accounts in the name of, or for the benefit of the Yvonne Mitchell Charitable Trust, Earl N.

Feldman, Trustee. 3) all correspondence from and to any governmental agency, including but not limited to the United State Department of Justice, the Federal Bureau of Investigation, and the California State Bar. Correspondence includes all email messages regarding Earl N. Feldman as Trustee of the Yvonne Mitchell Charitable Trust, or the Yvonne Mitchell Charitable Trust.' (ROA 85, Exh. A, Deposition Subpoena.) The subpoena also seeks '[d]ocuments for accounts held by Earl N. Feldman, and/or accounts held by Earl N. Feldman and Sarah E. Scott, for the time period from January 2010 through December 2015, including but not limited to the following: 1) Union Bank Essentials Checking account number 4790012645. 2) Account number 0011255296.' (Id.) Calendar No.: Event ID:  TENTATIVE RULINGS

2999034 CASE NUMBER: CASE TITLE:  IN RE: THE YVONNE H. MITCHELL CHARITABLE TRUST [IMAGED]  37-2019-00019222-PR-TR-CTL Here, the deposition subpoena seeks documents for 'any and all' accounts in Union Bank held under the Mitchell Trust, including but not limited to the specific documents identified in the subpoena. The subpoena also seeks documents for personal accounts held by Trustee separately or jointly with his wife in Union Bank, from January 2010 through December 2015, including but not limited to the accounts ending in 2645 and 5296.

Trustee pleaded guilty in 2019 to two federal felony counts, including one count of wire fraud for making unauthorized wire transfers and withdrawals from the bank accounts of the trusts at issue. Trustee admitted that in April 2014, he 'deposited approximately $96,838 from the charitable trust accounts into his personal bank account at Union Bank ending 5296.' (ROA 107, Barrientos Decl., Exh. 3, Plea Agreement, at p. 4.) Trustee also admitted that in May 2014, he 'caused an interstate wire transfer of $100,000 from his personal bank account at Union Bank ending x5296 to his personal brokerage account at Schwab ending x8929, which consisted of funds belonging to the charitable trusts.' (Id.) Trustee argues the subpoena is a fishing expedition, requesting all documents relating to the two personal bank accounts from 2010 to 2015, without identifying any particular types of documents or attempting to limit the documents requested. The Court disagrees. The subpoena is directed to a single bank and requests bank records pertaining to accounts held by the Trust and by Trustee. Thus, the records described in the subpoena are identifiable and specific. These documents are relevant to the litigation based on allegations that Trustee breached his duties to the charitable trusts by making unauthorized transfers from the trusts to Trustee's personal bank account. There is evidence Trustee transferred money out of his personal bank account into at least one other account (the investment account). Further, Petitioner does not have to rely on Trustee's claim that the transfers from the Trust were deposited only into his separate account and has a right to inspect the records as part of the discovery process. Thus, the bank records associated with the joint account, and any other bank account(s) in existence at Union Bank held by Trustee personally, are also relevant for purposes of this litigation, on the issues of whether Trustee should be removed based on breaches of his fiduciary duties to the Mitchell Trust.

While Trustee has a privacy right over his financial records, the right is not absolute and must be balanced against the right to discovery. Considering Trustee's guilty plea in the federal criminal case, Trustee's deposition testimony, and the allegations raised in the Petition, the relevance of the records is clear.

Therefore, the motion to quash is DENIED.

The motion for protective order is GRANTED. The documents sought are subject to a protective order that they may not be viewed except by the parties to the lawsuit and may not be disseminated or disclosed outside the litigation. (CCP § 2031.060(b); O&C Creditors Group, LLC. v. Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546, 560.) Petitioner is directed to serve notice of ruling in accordance with the provisions of CCP § 1019.5(a).

IT IS SO ORDERED.

Calendar No.: Event ID:  TENTATIVE RULINGS

2999034