Judge Randolph M. Hammock, Case Number: 22STCV31249, Date: 2023-09-13 Tentative Ruling

Judge: Randolph M. Hammock, Case: 22STCV31249, Date: 2023-09-13 Tentative Ruling

Plaintiff Armenia Restaurant Group alleges it retained Defendant Deli Bookkeeping & Tax Services to handle the business’s tax services. Defendants Egbert Sanchez and Anastasio Carcamo are alleged to be owners, directors, officers, or managing agents of Defendant Deli Bookkeeping. Plaintiff alleges that Defendant Cindy’s Insurance, operated by Defendant Egbert Sanchez’s wife, Cindy Sanchez, was also involved in the tax process.

From 2014 to 2022, Plaintiff alleges that it paid Defendants around $80,000.00 for which Plaintiff believed was paid to the State of California as part of Plaintiff’s tax filings. In fact, Plaintiff alleges Defendants provided Plaintiff with false information and inflated the amount owed in order to keep the money paid. Plaintiff alleges that Defendants in fact never completed Plaintiff’s taxes despite being paid to do so. Plaintiff is now under investigation by the California Department of Tax and Fee Administration due to underpaying the state of California.

Plaintiff moves to quash the deposition subpoena dated July 27, 2023, issued by Defendant Egbert Sanchez and directed toward Bank of America. (Saavedra Decl., Exh. 2.) The deposition subpoena seeks Plaintiffs’ bank records and related documents from January 1, 2013, to present. (Id., Attach. 3.)

Plaintiff contends the bank records are not relevant to the action, or alternatively, that the subpoena is overbroad. In opposition, Defendant contends the subpoena seeks documents relevant to the action and is narrowly tailored for such documents. As discussed below, this Court agrees with the opposition.

In the Complaint, Plaintiff alleges that Defendant Egbert Sanchez visited the restaurant in 2013 and offered Plaintiff accounting or financial services. (Complaint ¶ 18.) Defendant Sanchez represented that he and Defendant Carcamo, a licensed accountant, owned or operated Defendant Deli Bookkeeping Services. (Id. ¶ 19.) Plaintiff agreed, and Defendants began handling Plaintiff’s “quarterly tax reports for the state of California, such as bank statements, income, expenses, payrolls, etc.” (Id. ¶ 21.) Plaintiff also alleges that Defendant Cindy’s Insurance, a company operated by Defendant Sanchez’s wife, Cindy Sanchez, “was also somehow involved with preparing” the tax reports. (Id. ¶ 23.) Plaintiff paid Cindy’s Insurance on some occasions for Plaintiff's quarterly tax reports. (Id.)

“From time to time, Defendant Egbert would inform Edith that a certain amount needed to be paid by Plaintiff to the California Department of Tax and Fee Administration.” (Id. ¶ 24.) Defendant Egbert would also instruct Edith to make out the checks directly to his name instead of making them out directly to the California Department of Tax and Fee Administration. (Id. ¶ 24.) When Plaintiff questioned why she needed to make the checks out to Sanchez directly and not the state of California, Defendant “would tell her that he had already sent out the money required to the California Department of Tax and Fee Administration on behalf of Plaintiff [] and that Plaintiff needed to reimburse him.” (Id. ¶ 25.)

In total, Plaintiff paid Defendants $79,638.00 to be given to the state of California as tax returns, and paid Defendants a total of $4,550.00 for their services. (Id. ¶ 28.) Plaintiff alleges, however, “that quarterly reports have ranged from $200.00 to $700.00 and not $5,000.00 or the amounts Defendant Egbert Sanchez had informed her.” (Id. ¶ 29.) In fact, Defendants had been providing Plaintiff with false figures and information. (Id.) Defendants also never filed Plaintiff’s taxes despite receiving payment to do so. (Id. ¶ 30.) As a result, Plaintiff is under investigation by the California Department of Tax and Fee Administration due to underpaying the state of California. (Id. ¶ 32.)

Evidence is relevant if it “ha[s] any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action.” (Evid. Code § 210.) “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (CCP § 2017.010; Davies v. Superior Court (1984) 36 Cal.3d 291, 301 [“discovery is not limited to admissible evidence”].) “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. [Citation.] The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives 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. Superior Ct. (2017) 3 Cal. 5th 531, 552.)

Considering the allegations in the Complaint, the court agrees with Defendant that the bank records sought are relevant to this action. From 2014 through 2022, Plaintiffs allegedly paid Defendants various sums as reimbursements that Defendant paid to the California Department of Tax and Fee Administration on Plaintiff’s behalf. (Id. ¶ 25.) The temporal scope is properly tailored to the time period at issue, i.e. 2013 through present, because Plaintiff alleges the business relationship started “around 2014.” (Compl. ¶ 21.) Plaintiff alleges Defendant misrepresented the amounts owed. Plaintiff’s bank records are relevant, and perhaps necessary, to investigate that allegation.

When balancing the parties’ privacy interests against Plaintiff’s interest in discovering documents that are particularly relevant to its claims, this court find’s the balance shifts in favor of disclosure here. While the parties have a recognized privacy interest in their financial records, the categories sought here are relevant and not overbroad in light of the circumstances.

In making an order pursuant to California Code of Civil Procedure section 1987.1, “the court may in its discretion award the amount of the reasonable expenses incurred in making or opposing the motion, including reasonable attorney's fees, if the court finds the motion was made or opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.” (Code Civ. Proc., § 1987.2, subd. (a).)

The Court declines to award expenses as the Motion was not made or opposed in bad faith or without substantial justification.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.