Judge: Richard Y. Lee, Case: 30-2020-01161064, Date: 2022-07-28 Tentative Ruling

Defendants Savient Financial, Inc. and Darrell Burns move for an order quashing, or limiting, the deposition subpoena for production of business records purportedly served on J.P. Morgan Chase Bank, N.A. 

Defendants move to quash or limit a subpoena issued on 3/14/22 by Plaintiff to Defendants’ bank, JPMorgan Chase Bank.  A copy of the subpoena is attached to the Declaration of Jay F. Stocker as Ex. A.  Defendants objected to the subpoena.  Stocker Decl., Ex. B.

At issue in this motion is Category 1 and 2, which seek all documents pertaining to Defendants Burns and Savient, respectively, from 12/1/15 to 12/31/20.

Defendants object to these requests as they are overbroad and invasive of the rights to privacy, and not reasonably calculated to lead to the discovery of admissible evidence.  Defendants contend that the action involves a dispute concerning a single real estate transaction, and sole individual, and in no way encompasses every banking record for both the individual and corporate defendant for a period of five (5) years.  Further, the documents responsive to the subpoena may involve persona financial information of not only the Defendants in this action, but many uninvolved third parties.

It is well established that an individual’s personal financial information is protected by the constitutional right of privacy in California. (See Fortunato v. Superior Court (2003) 114 Cal.App.4th 475, 480-481; Cobb v. Superior Court (1979) 99 Cal.App.3d 543, 549-550; see also Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 657.) Furthermore, while a corporation or other artificial entity may not have a constitutional right to privacy, some privacy rights, even for such an artificial entity, are recognized by the law, including an entity’s right to privacy in its financial information.  (Hecht, Solberg, Robinson, Goldberg & Bagley v. Superior Court (2006) 137 Cal.App.4th 579, 594-595; see SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 756 [“While corporations do have a right to privacy, it is not a constitutional right. The corporate right to privacy is a lesser right than that held by human beings and is not considered a fundamental right.”].) 

With regard to privacy concerns, “The right of privacy is an “ ‘ “inalienable right” ’ secured by article I, section 1 of the California Constitution. [Citation.] The right of privacy protects against the unwarranted, compelled disclosure of private or personal information and ‘extends to one’s confidential financial affairs as well as to the details of one's personal life.’ [Citation.] ‘ “Personal financial information comes within the zone of privacy protected by article I, section 1 of the California Constitution.” ’ [Citation.] (SCC Acquisitions, Inc. v. Super. Ct. (2015) 243 Cal.App.4th 741, 754.) “The constitutional right of privacy is not absolute; it may be abridged to accommodate a compelling public interest. [Citations.] One such interest, evidenced by California's broad discovery statutes, is ‘ “the historically important state interest of facilitating the ascertainment of truth in connection with legal proceedings.” ’ [Citation.] When an individual’s right of privacy in his financial affairs conflicts with the public need for discovery in litigation, the competing interests must be carefully balanced. [Citation.] Even where the balance weighs in favor of disclosure of private information, the scope of the disclosure will be narrowly circumscribed; such an invasion of the right of privacy ‘ “must be drawn with narrow specificity” ’ and is permitted only to the extent necessary for a fair resolution of the lawsuit.” [Citations.] (Moskowitz v. Super. Ct. (1982) 137 Cal.App.3d 313, 315-316; disapproved on other grounds in Williams v. Superior Court (Williams) (2017) 3 Cal.5th 531, 557, fn. 8.) Williams v. Superior Court, supra, 3 Cal.5th 531, 552, explains, “The party asserting a privacy right must establish a legally protected privacy interest, and objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. [Citations.] The party seeking information may raise in response whatever legitimate and important countervailing interest disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interest or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations. [Citation.]” “To the extent prior cases require a party seeking discovery of private information to always establish a compelling interest or compelling need, without regard to the other considerations articulated in Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th 1, 26 Cal.Rptr.2d 834, 865 P.2d 633, they are disapproved.” [Id. at p. 557.]

Here, Defendants argue that the subpoena is overbroad and invades the privacy rights of not only both Defendants, but all other business and real estate clients of either Defendant and of personal banking issues that have absolutely no relation to or bearing on this litigation.

In opposition, Plaintiff argues that the documents sought are necessary for an accounting.  Plaintiff points out that Burns and Savient had asserted a cause of action for an accounting in their FACC and as defendants to this action, they have superior knowledge.  The problem with this argument is that Burns and Savient bring this cause of action against Plaintiff/Cross-Defendant Van Domelen.  In this situation, Burns and Savient are cross-complainants and Van Domelen is the cross-defendant.  Thus, the cause of action would permit discovery, arguably, into Plaintiff/Cross-Defendant Van Domelen’s accounts, not the other way around. Burns and Savient would have no need to conduct formal discovery of their own financial records.

Plaintiff further argues that due to the contractual and/or fiduciary relationship between Van Domelen and Defendants, which began in early 2016 and through 2019, Plaintiff is entitled to Defendants’ financial records.  According to Plaintiff, only Burns and Savient have the records evidencing what Burns did with the mortgage proceeds; only Burns and/or Savient have the records evidencing whether the amounts charged to Van Domelen were actually incurred and paid by Burns and/or Savient, and/or reflective of amounts loaned to Van Domelen or services charged to Van Domelen.  Plaintiff contends that it is still unclear to what uses Burns put to the funds he received from the November 2017 mortgage, and there is nothing to suggest that Burns has any intention to be forthright in providing that information. The documents associated with the financial records may reveal potential third party witnesses.

In addition, Plaintiff points out that she served a subpoena on Canyon Escrow.  The documents produced revealed a conflicting account of what Burns needed for the mortgage.  Plaintiff argues that Burns himself has created the necessity of reviewing his and Savient’s unredacted bank statements by his misrepresentations concerning the purpose of the loan, not disclosing the “purchase” of the shares, not proffering a stock certificate until months after the alleged transaction, and failing to produce any documents corroborating his claim that the proceeds of the loan were used to purchase shares in RxMM per Van Domelen’s request. Plaintiff alleges, on information and belief, that Burns and/or Savient used these funds for some ulterior and unknown purpose and Van Domelen is entitled to know what happened to her money.

In this instance, Plaintiff’s right to discovery does not outweigh Defendants’ right to privacy or the privacy rights of uninvolved third parties, i.e. Defendants’ clients.  The disclosure of such sensitive financial information of either defendant or their clients would not reasonably assist Plaintiff in evaluating the case, preparing for trial, or facilitating settlement, all of which are facilitated by discovery.  Moreover, as noted by Defendants, there are other categories stated in the subpoena, Categories 3-6, that are not challenged and are not subject to the instant motion.  These categories are sufficiently tailored to the facts surrounding this case. Plaintiff has failed to present any argument as to why production of documents relating to these uncontested categories would be insufficient.

Accordingly, the motion is GRANTED and the subpoena is quashed.

Moving parties to give notice.