Judge: Randy Rhodes, Case: 22CHCV00493, Date: 2023-01-10 Tentative Ruling

Case Number: 22CHCV00493    Hearing Date: January 10, 2023    Dept: F51

Dept. F-51 

Date: 1/10/23

Case #22CHCV00493

MOTION TO COMPEL INSPECTION OF PROPERTY

Motion Filed: 10/26/22

MOVING PARTY: Plaintiff Bank of the West

RESPONDING PARTY: Defendants Gary G. Topolewski and Topolewski America, Inc. (collectively, “Defendants”)

NOTICE: OK

RELIEF REQUESTED: An order compelling the inspection of Defendants’ personal property. Plaintiff also requests monetary sanctions be imposed against Defendants in the amount of $2,355.00.

TENTATIVE RULING: Plaintiff’s motion is granted. Defendants are ordered to make the subject equipment available for inspection within 30 days of this order. The Court imposes sanctions against Defendants in the amount of $1,000.00.

BACKGROUND

This action arises out of three business loans extended by Plaintiff to defendant Topolewski America, Inc. (the “Company”). Plaintiff allegedly entered into three separate loan agreements with the Company on 7/26/19, 5/14/20, and 7/12/21, each secured by various pieces of the Company’s equipment as collateral. (Compl. ¶¶ 11–19.) 

Plaintiff alleges that the Company breached the loan and security agreements “by, among other things, failing and refusing to allow [Plaintiff] to inspect the Equipment Collateral.” (Id., ¶ 24.) Plaintiff also alleges that it has reason to believe the Company “never actually had ownership or possession of the Collateral and that [the Company] made continuing misrepresentations to [Plaintiff] concerning [the Company’s] alleged ownership and possession thereof.” (Ibid.) Plaintiff alleges that defendant Gary Topolewski (“Mr. Topolewski”) and the Company “are the alter egos of one another, and each is fully responsible and liable for all obligations and debts.” (Compl. ¶ 7.)  

On 7/6/22, Plaintiff filed its complaint against Defendants, alleging causes of action for Breach of Contract and Breach of Security Agreement with respect to each of the three loans. Plaintiff’s complaint also pleads causes of action for Recovery of Personal Property, Temporary Restraining Order/Preliminary Injunction, Conversion, and Fraud and Deceit.

On 8/18/22, Plaintiff served Defendants with a demand for inspection of personal property. (Decl. of Joshua Partington, ¶ 3.) On 9/12/22, Defendants served their objections. (Id., ¶ 4.)

On 10/26/22, Plaintiff filed the instant motion to compel the inspection of Defendants’ personal property and request for sanctions. On 12/27/22, Defendants filed their opposition. On 1/3/23, Plaintiff filed its reply.

//

//

ANALYSIS

Motion to Compel Inspection

A propounding party may “demand that any other party produce and permit the party making the demand, or someone acting on the demanding party’s behalf, to inspect and to photograph, test, or sample any tangible things that are in the possession, custody, or control of the party on whom the demand is made.” (Code Civ Proc. § 2031.010, subd. (c).)

If a party filing a response to a demand for inspection, copying, testing or sampling thereafter fails to permit the inspection, copying, testing, or sampling in accordance with that party's statement of compliance, the demanding party may move for an order compelling compliance. (Code Civ. Proc. § 2031.320, subd. (a).)

Here, Plaintiff seeks to inspect the following pieces of equipment:

(a)   2019 Caterpillar D10T2 c/w semi-U-dual tilt (Serial # JJW00348);

(b)   2019 Caterpillar D10T2 c/w semi-U-dual tilt (Serial # JJW00346);

(c)   2019 Caterpillar D10T2 c/w semiU-dual tilt (Serial # JJW00342);

(d)   2020 Caterpillar D10T0 (Serial # JJW00451);

(e)   2020 Caterpillar D10T0 (Serial # JJW00458);

(f)    2020 Caterpillar D10T2 (Serial # JJW00461); and

(g)   2020 Caterpillar D10T2 (Serial #JJW00475). (Pl.’s Mot., 4:4–9.)

Defendants responded to Plaintiff’s initial inspection demand with the following objections: (1) as to Mr. Topolewski, “The discovery is premature as the court lacks personal jurisdiction, there is no evidence to justify production and the defendant has still not been served”; and (2) as to the Company, “The discovery is premature as the court lacks personal jurisdiction, there is no evidence to justify production.”[1] (Exs. 4 and 5 to Partington Decl.)

Plaintiff argues that the entire action centers on its allegation that Defendants have breached their loan agreements and “have converted the Equipment and/or defrauded Plaintiff by fabricating the existence of the Equipment.” (Pl.’s Mot. 4:12–13.) Moreover, Plaintiff is entitled to inspect the collateral equipment under the subject loan agreements between the parties. (Pl.’s Mot. 4:14 – 5:10; Exs 1, 5, 9, and 11 to Compl.) Plaintiff alleges that it attempted to exercise this inspection right on numerous occasions to no avail. (Pl.’s Mot. 5:11–14.)

In opposition, Defendants argue that Mr. Topolewski cannot be compelled to make the subject equipment available for inspection because “the equipment collateral is not in his possession or custody.” (Defs.’ Opp. 1:26–28.) Defendants further argue that the Court lacks the authority to compel the inspection of property when it is located outside the State of California. (Id. at 2:27–28.)

Defendants argue that the Court’s subpoena power extends only to the borders of the state, and mirrors much of the same reasoning as used by the Court of Appeal in Allee v. King (1988) 254 Cal. Rptr. 93 to support their argument. (Defs.’ Opp. 2:2–26.) However, this unpublished case has been deemed not citable, therefore this Court may not consider the case at this time. (Cal. Rules of Court, rule 8.1115.)

Defendants also cite to Heinz v. Heinz (1946) 73 Cal.App.2d 61. (Defs.’ Opp., 2:10–13, quoting “when a document is beyond the territory of this state it is a lost document.”) However, as Plaintiff observes, Defendants quote the Heinz court’s finding out of context. (Pl.’s Reply, 2:19.) The entire sentence reads: “The law is established in California that when a document is beyond the territory of this state it is a lost document so as to permit the introduction of secondary evidence as to its content.” (Heinz, 73 Cal.App.2d at 66 [emphasis added].)

Therefore, Defendants have failed to present any acceptable authority to support their proposition that this Court lacks the authority to compel the inspection of certain property which is at issue in the action, and which Plaintiff has a contractual right to inspect, merely by virtue of such property being located outside the State of California. Accordingly, Plaintiff’s motion to compel the inspection of the above-listed equipment is granted.

Sanctions

“The court shall impose a monetary sanction … against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel compliance with a demand, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc. § 2031.320, subd. (b).) 

Here, Plaintiff requests sanctions in the total amount of $2,355.00 to be imposed on Defendants. This amount includes: (1) 4.5 hours of Plaintiff’s attorney’s time working on this motion, at his hourly billing rate of $270.00 per hour; (2) an anticipated 2 hours reviewing Defendants’ opposition and drafting a reply, (3) an anticipated 2 hours attending this hearing; and (4) a $60.00 filing fee for the instant motion. (Partington Decl., ¶ 6.)

Defendants have not presented substantial justification or other circumstances that would make the imposition of monetary sanctions against them unjust. Therefore, in granting the instant motion, the Court finds it reasonable to award Plaintiff sanctions against Defendants in the amount of $1,000.00.

CONCLUSION

Plaintiff’s motion is granted. Defendants are ordered to make the subject equipment available for inspection within 30 days of this order. The Court imposes sanctions against Defendants in the amount of $1,000.00.