Judge Ronald F. Frank, Case 21STCV07919 2023-05-02 Tentative Ruling

Tentative Rulings: (1) Motion to Quash is DENIED. The Court will consider ARGUMENT as to the three-year period of the subpoena given the contention that the sale proceeds were promptly dissipated in the Spring of 2020 to place the moneys out of the reach of creditors

On March 1, 2021, Plaintiffs, Jesse Franklin Esphorst, an individual, and as successor-in-interest to The Estate of Jesse Eric Esphorst, deceased (Plaintiff”) filed this action against Defendants, Tung Ming, Kwan Cheung, Teddyland, LLC, and DOES 1 through 50. This case is the more recently filed of two related matters, this one involving claims under the Uniform Voidable Transaction Act. In the main action for wrongful death and bodily injuries, Defendant Tung Ming (“Ming”) is alleged to have negligently and recklessly driven his Mercedes-Benz SUV on Crenshaw Boulevard while pursuing Hicks’ Audi sedan at high speed. The main action alleges that each of Hicks’ vehicle and Ming’s vehicle struck Plaintiff’s Sienna Minivan at the intersection of Crest Road, causing the death of Plaintiff Jesse Franklin Esphorst’s son and causing the father’s bodily injuries. This fraudulent conveyance action alleges that at the time of the underlying incident, Ming was the owner of real property located at 3805 Palos Verdes Drive, in Rolling Hills Estates, California (hereinafter “Subject Property”). The property was purchased in 2016 for $3,080,000. In 2020, in the period between Ming’s criminal conviction (which was affirmed on appeal) and sentencing, the subject property was sold to Defendant Teddyland LLC for a sales price of $1.5 million. Plaintiff contends that the transfer of the Subject Property was designed to place Defendants’ assets and wealth beyond the reach of Plaintiff as a judgment creditor. Defendant Kwan Cheung (“Cheung”), Ming’s mother, submitted a declaration that even though Ming held title to the Subject Property, the property belonged to her.

Defendants’ Motion to Quash seeks to limit or completely quash the deposition subpoena issued by Plaintiff to Bank of America seeking banking records of a third party, Eliteway, LLC, and entity allegedly managed or controlled by Defendant Cheung. The Subpoena seeks records consisting of the "Account statements and cancelled checks, from February 2020 through present, pertaining to all accounts of account holder Eliteway, LLC, manager is believed to be Kwon Cheung and/or Jennifer Chun Jiang Li, address is believed to be 635 W. Foothill Blvd. Monrovia, CA 91016." The motion to quash was filed when Defendants were represented by counsel, but he has since withdrawn from the representation.

On March 3, 2023, Defendants filed this Motion to Quash. On April 19, 2023, Plaintiff filed an opposition. To date, no reply brief has been filed.

Plaintiff Jesse Franklin Esphorst requested this Court take judicial notice of the following:

2. Felony Complaint, in People v. Hicks and Ming, Case No. YA095989, County of Los Angeles

3. Criminal Docket, in People v. Hicks and Ming, Case No. YA095989, County of Los Angeles

Code of Civil Procedure § 1987.1 grants the trial court authority to quash a subpoena when necessary. Code of Civil Procedure § 1987.1 provides: “If a subpoena requires the attendance of a witness or the production of books, documents, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.”

Here, Plaintiff issued a Deposition to Bank of America with reference to the third party, Elite Way, LLC and the documents pertaining to: "Account statements and cancelled checks, from February 2020 through present, pertaining to all accounts of account holder Eliteway, LLC, manager is believed to be Kwon Cheung and/or Jennifer Chun Jiang Li, address is believed to be 635 W. Foothill Blvd. Monrovia, CA 91016." Defendants Tung Ming and Cheung Kwan argue that Eliteway, LLC is a third party to the action and its bank account is not relevant to the subject matter of the lawsuit and any information is not likely to result in meaningful discovery and the deposition seeks to harass Kwan Cheung. They also argue that the information sought is overbroad as in time and scope. Defendants contend that the information sought is that of bank account statements commencing February 2020 through present, and from a third party, Eliteway, LLC where “Cheung Kwan/ or Jennifer Chun Jaing Li was believed to be manager and address was believed to be 635 2 Foothill Blvd., Monrovia, CA 91016.

Defendants essentially argue that the banking records of Eliteway are not stated with a reasonable amount of precision and that Plaintiff is conducting a “fishing expedition” and seeks to harass Defendant, Cheung Kwan. The Court notes the absence of any declaration from Ms. Cheung asserting that she lacks any connection to Eliteway or that the $700,000 written on the Eliteway account within weeks of the deposit of the sale proceeds were payable to appropriate and legitimate payees.

In opposition, Plaintiff contends that Eliteway is an entity owned, controlled, and managed by Cheung, and that the Complaint alleges that Ming and Cheung formed and operated a conspiracy to make transfers of Ming’s assets to shelter them from collection in the event of a civil judgment. Plaintiff notes that this includes the sale of the subject property, which Ming purchased for $3 million and then sold for $1.5 million, shortly after being convicted of killing Plaintiff’s son. Plaintiff asserts that the instant subpoena seeks accounts, statements, and checks from the Bank of America account of Eliteway, and that such information is relevant because the Complaint asserts a cause of action under the Uniform Voidable Transaction Code, which permits defrauded creditors to reach property in the hands of a transferee.

Plaintiff further asserts that Ming and Cheung’s conduct put at issue by the pleadings also includes post-sale conduct to dissipate the sale funds and place them beyond reach of creditors. So far, Plaintiff asserts that Ming’s bank records show that Ming, immediately after receiving proceeds from the sale of the subject property, promptly wrote three checks, totaling the sum of $700,000, to Eliteway. As such, Plaintiff contends that tracing the funds transferred to Eliteway is probative of the UVTA claims that Ming and Cheung made transfers of Ming’s assets with the intent to hinder, delay, and defraud Ming’s creditors (Plaintiffs), without receiving reasonably equivalent value for the transfers, so as to put assets and wealth that would otherwise be reachable and collectable to enforce a judgment against Ming beyond the reach of Plaintiff creditors.

The Court agrees. The Court in Nagel v. Western (2021) 50 Cal.App.5th 74 held that that purpose of the UVTA was “to prevent debtors from placing, beyond the reach of creditors, property that should be made available to satisfy a debt.” (Nagel, supra, 50 Cal.App.5th at p. 751.) Plaintiff has presented this Court with evidence that Ming promptly transferred $700,000 of sale proceeds to Eliteway shortly after the jury verdict in the criminal case, and Plaintiff’s Complaint alleges that Ming and Cheung conspired to dispose of their wealth to place it beyond the reach of creditors warrants discovery of bank records for Eliteway.

In response to Defendants’ argument that the information sought is overbroad, Plaintiff argues that there is nothing vague, ambiguous, or imprecise about the documents sought. Plaintiff notes that the subpoena seeks “[a]ccount statements and cancelled checks, from February 2020 through present, . . .” (Ex. 6, Subpoena.) Plaintiff argues that the temporal scope is also reasonable given that Ming began transferring sale proceeds to Eliteway in March 2020. As such, Plaintiff argues that the seeking of records from February 2020 through present is logical and narrowly limited to tracing these funds, and discovery what Eliteway did with the funds. The Court will, however, take oral argument that the discoverable need for banking records of Eliteway diminishes over time, potentially giving plaintiff’s privacy interests greater weight the longer after March of 2020 the subpoena reaches.

Plaintiff requests attorneys’ fees incurred in opposing this motion in the amount of $2,000. Attorneys’ fees are denied at this time.

[1] The Court notes that one of the issues on appeal in the Ming criminal case concerned a seat belt defense, the Second District distinguishing the standard for admissibility of seat belt evidence in a criminal manslaughter case from the standards applicable in a civil tort case arising from the same incident.