Judge Salvatore Sirna, Case Number: 19PSCV00678, Date: 2024-05-23 Tentative Ruling

Judge: Salvatore Sirna, Case: 19PSCV00678, Date: 2024-05-23 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 19PSCV00678 Hearing Date: May 23, 2024 Dept: G

Defendants/Cross-Complainants William Wei Weng and Miao Li Feng’s Motion to Quash Deposition Subpoena for Business Records to Turbotar, Inc. and Any of Its Affiliates and Request for Monetary Sanctions

Respondent: Plaintiff Mo Chen

TENTATIVE RULING

Defendants/Cross-Complainants William Wei Weng and Miao Li Feng’s Motion to Quash Deposition Subpoena for Business Records to Turbotar, Inc. is DENIED.

Plaintiff Mo Chen’s Request for Sanctions is GRANTED and sanctions are awarded in the amount of 337.50, payable within thirty (30) days of the issuance of this order.

BACKGROUND

This is an action arising from a business dispute. On January 18, 2005, Da Zhen Health Services, Inc. (Da Zhen Health) was registered as a California corporation and was established to provide healthcare and daycare services for seniors. Defendants William Wei Weng and Miao Li Feng (also referred to as Miao Li Lily Weng in the First Amended Complaint) were majority shareholders in Da Zhen Health. Plaintiff Mo Chen was a minority shareholder in Da Zhen Health. In 2019, Chen alleges Weng and Feng transferred all of Da Zhen Health’s business to Da Zhen Travel Agency, an entity owned and controlled by Weng and Feng, without Chen’s consent. Chen also alleges Weng and Feng misappropriated funds from Da Zhen Health for their own personal use.

On July 29, 2019, Chen filed a verified complaint against Da Zhen Health, Weng, Feng, and Does 1-20 inclusive, alleging causes of action for: (1) dissolution of Da Zhen Health, (2) breach of fiduciary duty, and (3) accounting.

On September 27, 2019, Weng and Feng filed a cross-complaint against Da Zhen Health, Chen, and Sheng Le Cheng, alleging causes of action for: (1) dissolution of Da Zhen Health, (2) breach of fiduciary duty, and (3) accounting.

On August 7, 2020, Chen was granted leave to file a First Amended Complaint (FAC) that was filed on October 22, 2020, against the same defendants as well as Da Zhen Travel, alleging causes of action for: (1) breach of fiduciary duty, (2) fraudulent concealment, (3) fraudulent transfer, (4) dissolution of Da Zhen Health, and (5) accounting.

On June 18, 2021, Chen moved for summary adjudication on the fourth and fifth causes of action in Chen’s FAC. On December 1, 2021, the Court denied Chen’s motion.

On January 26, 2023, Weng and Feng were granted leave to file a First Amended Cross-Complaint (FACC) against the same cross-defendants alleging the same causes of action and a fourth cause of action for recession of contract based on fraud.

On March 15, 2023, Weng and Feng filed a Second Amended Cross-Complaint (SACC) against the same cross-defendants alleging the same causes of action.

On February 22, 2024, Weng and Feng filed the present motion. A hearing on the present motion is set for May 23, 2024, with a final status conference set for July 2, 2024, and a non-jury trial set for July 16, 2024.

ANALYSIS

Weng and Feng move to quash Chen and Cheng’s business records subpoena that was served on Turbotar, Inc. for financial and insurance billing records. For the following reasons, the court DENIES their motion.

Legal Standard

If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, 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 such as unreasonable violations of the right of privacy.¿ (Code Civ. Proc., § 1987.1.)

Discussion

As an initial matter, Chen argues the present motion is untimely as it was filed only six court days before its original hearing date. (Opp., p. 6:4-7.) The Court finds any challenge to the motion’s timeliness has been waived by Chen’s filing of an opposition on the merits. (See Carlton v. Quint (2000) 77 Cal.App.4th 844, 697-698.) Chen also argues the present motion violates Rule 3.1345 of the California Rules of Court by failing to include a separate statement. (Opp., p. 6:8-12.)

Pursuant to Rule 3.1345, “[a]ny motion involving the content of a discovery request or the responses to such a request must be accompanied by a separate statement. The motions that require a separate statement include a motion: . . . (5) ¿To compel or to quash the production of documents or tangible things at a deposition.” (Cal. Rules of Court, 3.1345, subd. (a)(5).) The Court has the discretion to deny such a motion when this rule is not complied with. (Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 893.) While Weng and Feng failed to provide a separate statement, the Court declines to deny the motion to quash on this ground and addresses the motion on its merits.

In this case, Weng and Feng contend that the subpoena at issue is void as Chen and Cheng failed to give proper notice to consumers pursuant to Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 658. (Motion, p. 6:1-26.) There, our supreme court held a bank must give notice to its customers of a pending action involving the disclosure of their confidential information. (Ibid.) Subsequently, these notice requirements were codified in Code of Civil Procedure section 1985.3. (Sehlmeyer v. Department of General Services (1993) 17 Cal.App.4th 1072, 1077.) Pursuant to Code of Civil Procedure section 1985.3, subdivision (b), a “subpoenaing party shall serve or cause to be served on the consumer whose records are being sought a copy of the subpoena duces tecum, of the affidavit supporting the issuance of the subpoena, if any, and of the notice described in subdivision (e), and proof of service as indicated in paragraph (1) of subdivision (c).”

This notice requirement, however, does not apply “to any subpoena duces tecum which does not request the records of any particular consumer or consumers and which requires a custodian of records to delete all information which would in any way identify any consumer whose records are to be produced.” (Code Civ. Proc., § 1985.3, subd. (i).) Here, Chen and Cheng’s subpoena is not aimed at the records of specific consumers and instead requests all of La Puente Adult Day Care Health Center’s (La Puente ADCHC) financial and insurance billing records. (Motion, Ex. A.) And while the request does not authorize Turbotar to redact the personal information of individual consumers, Chen states Chen is not opposed to the redaction of such information and to a stipulation for a protective order. (Opp., p. 5:25-28.) Thus, the Court will not quash Chen and Cheng’s subpoena on this ground.

Last, Weng and Feng maintain Chen and Cheng’s subpoena violates the privacy of Medi-Cal recipients and requests irrelevant information, as the billing of Medi-Cal recipients is not at issue. (Motion, p. 4:20-5:26, 8:7-11.) But Chen establishes the billing records are necessary to uncover the income generated by La Puente ADCHC after Weng failed to provide requested bank statements. (Opp., p. 3:6-22.) And to the extent Weng and Feng express legitimate concerns about the privacy of their patients’ medical information, the Court finds this issue is resolved by ordering redactions and a protective order.

Accordingly, Weng and Feng’s motion is DENIED.

Chen also moves for sanctions. Pursuant to Code of Civil Procedure section 1987.2, subdivision (a), the Court finds Chen is entitled to sanctions as Weng and Feng’s motions were made without substantial justification as they failed to make any attempt to propose a protective order prior to their attempt to quash the subpoena.

Utilizing a lodestar approach and in view of the totality of the circumstances, the Court awards Chen reasonable attorney fees and costs in the reduced amount of ($337.50 for 1.0 hour drafting the opposition and 0.5 hours attending the hearing at an hourly rate of $225.)

CONCLUSION

Based on the foregoing, Weng and Feng’s motion to quash Chen and Cheng’s subpoena to Turbotar is DENIED and sanctions are awarded to Chen in the amount of $337.50, payable within thirty (30) days of the issuance of this order.

Furthermore, the Court orders Turbotar to redact the names and personally identifiable information of patients that are included in the records produced. The parties are also further ordered to keep all information produced pursuant to the subpoena at issue confidential and are prohibited from disclosing such information to anyone other than their counsel or the Court.