Judge Salvatore Sirna, Case Number: 22PSCV00055, Date: 2024-04-19 Tentative Ruling

Judge: Salvatore Sirna, Case: 22PSCV00055, Date: 2024-04-19 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: 22PSCV00055 Hearing Date: April 19, 2024 Dept: G

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Form Interrogatories to Defendant America United Development, LLC

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Form Interrogatories to Defendant Paul Tsai

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Form Interrogatories to Defendant YiChun Tsai

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Special Interrogatories to Defendant America United Development, LLC

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Special Interrogatories to Defendant Paul Tsai

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Special Interrogatories to Defendant YiChun Tsai

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Document Demands to Defendant America United Development, LLC

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Document Demands to Defendant Paul Tsai

Respondent: NO OPPOSITION (Due 2/21)

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Document Demands to Defendant YiChun Tsai

Respondent: NO OPPOSITION (Due 2/21)

TENTATIVE RULING

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Form Interrogatories to Defendant America United Development, LLC is DENIED without prejudice. Defendant America United Development, LLC is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant America United Development, LLC and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Form Interrogatories to Defendant Paul Tsai is DENIED without prejudice. Defendant Paul Tsai is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant Paul Tsai and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Form Interrogatories to Defendant YiChun Tsai is DENIED without prejudice. Defendant YiChun Tsai is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant YiChun Tsai and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Special Interrogatories to Defendant America United Development, LLC is DENIED without prejudice. Defendant America United Development, LLC is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant America United Development, LLC and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Special Interrogatories to Defendant Paul Tsai is DENIED without prejudice. Defendant Paul Tsai is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant Paul Tsai and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Special Interrogatories to Defendant YiChun Tsai is DENIED without prejudice. Defendant YiChun Tsai is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant YiChun Tsai and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Document Demands to Defendant America United Development, LLC is DENIED without prejudice. Defendant America United Development, LLC is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant America United Development, LLC and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Document Demands to Defendant Paul Tsai is DENIED without prejudice. Defendant Paul Tsai is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant Paul Tsai and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

Plaintiff Ming-Hua Chiu’s Motion for Evidence and Issue or Terminating Sanctions Re: First Set Document Demands to Defendant YiChun Tsai is DENIED without prejudice. Defendant YiChun Tsai is ORDERED to comply with the Court’s October 25, 2023 Informal Discovery Conference Order within ten (10) days of the issuance of this order. Furthermore, Plaintiff Ming-Hua Chiu’s Request for Monetary Sanctions is GRANTED against Defendant YiChun Tsai and Counsel in the amount of $228.75, payable within thirty (30) days of the issuance of this order.

BACKGROUND

This is a contractual fraud action. In July 2017, Plaintiff Ming-Hua Chiu decided a purchase a warehouse in San Bernardino for Chiu’s retail marijuana business. In order to facilitate the purchase, Chiu allegedly entered into an oral agreement with Defendant Paul Tsai in which Chiu and Paul Tsai agreed to form an entity for the purchase and operation of the warehouse. Chiu also agreed to allow Paul Tsai to manage the day-to-day operations of the warehouse as Chiu lived in Taiwan. Paul Tsai then allegedly formed Defendant Huaone Group, LLC (Huaone Group) with Paul Tsai as the sole officer, manager, and member. During the process of purchasing the warehouse, Paul Tsai allegedly told Chiu that Chiu needed to pay an additional $200,000 to the seller and had Chiu send the funds to Defendant Ching Chun Cheng. Chiu alleges that Cheng was not in fact an owner of the warehouse.

In October 2017, Paul Tsai allegedly told Chiu that funds were needed for the renovation of the warehouse and Chiu agreed to wire a total of $330,000. In February 2018, Paul Tsai allegedly told Chiu that the warehouse had been burglarized and that the renovation work had been destroyed. But when Chiu asked for evidence of the burglary, Paul Tsai allegedly failed to produce any. Paul Tsai’s wife, Defendant YiChun Tsai, also told Chiu that they had allegedly spent more than $200,000 for hiring an attorney and had been charged $360,000 for the repair of the warehouse by the government. Chiu alleges YiChun Tsai was unable to present any evidence to support these representations.

In April 2018, Chiu asked Paul Tsai to transfer the warehouse’s title to Chiu. Paul Tsai allegedly agreed and on April 2, 2018, prepared and executed a grant deed that transferred the title of warehouse from the Huaone Group to Chiu. In March 2019, Chiu alleges Paul Tsai then sold the warehouse to Defendant America United Development, LLC (AUD), an entity owned by Paul Tsai. In September 2021, Chiu then alleges AUD sold the warehouse to third parties. Chiu alleges Chiu first discovered the warehouse had been sold when Chiu hired a real estate agent to manage the property in December 2021.

On January 19, 2022, Chiu filed a complaint against Huaone Group, AUD, Paul Tsai, Cheng, YiChun Tsai, and Does 1-50, alleging the following causes of action: (1) fraud, (2) breach of fiduciary duty, (3) breach of contract, (4) conversion, (5) common counts, (6) fraudulent transfer, and (7) declaratory relief.

On June 6, 2022, Chiu dismissed Cheng from the present action.

On October 25, 2023, the court held an informal discovery conference where it ordered AUD, Paul Tsai, and YiChun Tsai to respond to Chiu’s form interrogatories, special interrogatories, and requests for production by December 1.

On December 19-20, 2023, Chiu filed the present motions.

On January 17, 2024, default was entered against Huaone Group.

A hearing on the present motions is set for April 19, 2024.

ANALYSIS

Chiu moves for issue and evidentiary or terminating sanctions against AUD, Paul Tsai, and YiChun Tsai (collectively, Tsai Defendants) for their failure to comply with the court’s October 25 order. The court rules as follows:

Legal Standard

The court may impose a monetary sanction, issue sanction, evidence sanction, terminating sanction, or contempt sanction on a party who engages in conduct that misuses the discovery process. (Code Civ. Proc., § 2023.030.) Misuse of the discovery process includes “[f]ailing to respond or to submit to an authorized method of discovery” and “[d]isobeying a court order to provide discovery.” (Code Civ. Proc., § 2023.010, subd. (d), (g).) Because the purpose of sanctions is remedial and not punitive, sanctions should “serve to remedy the harm caused to the party suffering the discovery misconduct.” (Kwan Software Engineering, Inc. v. Hennings (2020) 58 Cal.App.5th 57, 74.) “[A]bsent unusual circumstances, nonmonetary sanctions are¿warranted only if a party willfully fails to comply with a court order.” (Aghaian v. Minassian (2021) 64 Cal.App.5th 603, 618-619.) Terminating sanctions should only be ordered when there has been previous noncompliance and it appears a less severe sanction would not be effective. (Link v. Cater (1998) 60 Cal.App.4th 1315, 1326.)

Discussion

In an informal discovery conference on October 25, 2023, the court ordered the Tsai Defendants to respond to Chiu’s discovery requests in the following manner. With regards to Chiu’s first set of form interrogatories, the court ordered AUD and Paul Tsai to respond to Nos. 9.1, 9.2, 12.1, 17.1, 50.1, 50.2, 50.3, and 50.4. The court also ordered YiChun Tsai to respond to Nos. 9.1, 9.2, 12.1, 50.1, 50.2, 50.3, and 50.4. As to Chiu’s first set of special interrogatories, the court ordered AUD to respond to Nos. 2, 12, 13, and 14; Paul Tsai to respond to Nos. 2, 3, 5, 7, 8, 12, 13, and 14; and YiChun Tsai to respond to Nos. 2, 3, 5, 7, 8, and 10. Last, with regards to Chiu’s first set of requests for production, the court ordered AUD to respond to Nos. 1-15, Paul Tsai to respond to Nos. 1-23, and YiChun Tsai to respond to Nos. 1-21. The court ordered all responses to be verified without objection and served on Chiu by December 1, 2023.

After the Tsai Defendants failed to provide the responses by the December 1, 2023 deadline, Chiu’s counsel gave the Tsai Defendants’ counsel an additional two weeks to provide responses. (Li Decl., ¶ 5-7.) The Tsai Defendants’ counsel acknowledged the extension. (Li Decl., Ex. E.) In the afternoon of December 14, the Tsai Defendants’ counsel requested another extension to December 18, stating counsel was awaiting the Tsai Defendants’ final input and signatures on the draft responses and that the Tsai Defendants were currently traveling in Taiwan. (Li Decl., Ex. F.) Chiu’s counsel refused to give the extension and proceeded with the present motion. (Li Decl., ¶ 8.) Because this is the first time Chiu has moved to compel compliance with the court’s discovery order, the court finds nonmonetary sanctions are premature. Instead, the court will give the Tsai Defendants an additional ten (10) days to comply with the court’s order. If Defendants fail to do so, Chiu may resubmit the present motions and seek nonmonetary sanctions.

Chiu also requests an award of sanctions. Because the Tsai Defendants failed to timely comply with the court’s previous order and necessitated the filing of the present motions, the court finds sanctions are warranted. Accordingly, utilizing a lodestar approach and in view of the totality of the circumstances, the court awards sanctions against the Tsai Defendants and their counsel and finds reasonable attorney fees and costs in the total amount of $228.75 for each motion (0.75 hours for drafting the motion and attending the hearing at an hourly rate of $225 an hour plus $60.00 in filing fees). Sanctions totaling $2,058.75 are awarded to Plaintiff, payable by Defendants in thirty (30) days.