Judge Serena R. Murillo, Case Number: 22STCV12440, Date: 2023-10-17 Tentative Ruling

Judge: Serena R. Murillo, Case: 22STCV12440, Date: 2023-10-17 Tentative Ruling

Case Number: 22STCV12440 Hearing Date: October 18, 2023 Dept: 31

TENTATIVE

Plaintiffs’ motion to quash is GRANTED in part. The Court declines to grant the motion in full; instead, the court modifies the subpoena issued to JP Morgan to seek: “Copies of the following documents associated with Account No. 6034 from October 1, 2019 to present: Account statements; Lines of credit and applications; Signature cards; All requests for a statement of the payoff amount such as a payoff demand; All documents regarding any late payments or delinquencies.” The Motion to quash is otherwise denied.

Plaintiffs’ request for sanctions is DENIED.

Plaintiffs’ motion for a protective order is CONTINUED. The parties are ordered to meaningfully meet and confer and discuss each issue presented by the motion to narrow the discovery disputes before the Court. No later than nine court days before the continued hearing date, the parties are ordered to file a joint statement indicating the discovery still at issue. If the parties are unable to narrow their discovery dispute, the Court is inclined to deny the motion due to Plaintiffs’ failure to meet and confer in good faith before filing the motion.

Legal Standard

Motion to Quash

When a subpoena has been issued requiring the attendance of a witness or the production of documents, electronically stored information, or other things before a court or at the taking of a deposition, the court, upon motion “reasonably made” by the party, the witness, or any consumer whose personal records are sought, 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 and conditions as the court may specify. (See Code Civ. Proc. § 1987.1; Southern Pac. Co. v. Superior Court (1940) 15 Cal.2d 206.)

The court can make an order quashing or modifying a subpoena as necessary to protect a person from “unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.” (Code Civ. Proc., § 1987.1, subd. (a).)

For discovery purposes, information is relevant if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement. (Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546.) Generally, all unprivileged information that is relevant to the subject matter of the action is discoverable if it would itself be admissible evidence at trial or if it appears reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc. § 2017.010; Schnabel v. Superior Court (1993) 5 Cal.4th 704, 711.)

Protective Order

The court shall limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence. The court may make this determination pursuant to¿a motion for protective order by a party or other affected person. This motion shall be accompanied by a meet and confer declaration under Code of Civil Procedure section 2016.040. (Code Civ. Proc.,¿§ 2017.020(a).) “A meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each¿issue presented by the motion.” (Code Civ. Proc.,¿§ 2016.040.)¿¿

Code of Civil Procedure section¿2030.090(a) provides that a party upon whom interrogatories have been propounded may “promptly” move for a protective order. In addition, if a responding party seeks a protective order on the grounds that interrogatories are unwarranted, the propounding party has the burden to justify more than 35 requests. (CCP § 2030.040(b).) Furthermore, the party seeking protective order has the burden of showing¿good cause for the order sought. (Fairmont Ins. Co. v. Superior Court¿(2000) 22 Ca1.4th 245, 255.)¿

Discussion

I. Motion to Quash

Plaintiffs move to quash deposition subpoenas for production of business records issued to JP Morgan Chase Bank and Wells Fargo Bank. Plaintiffs argues the subpoenas should be quashed or modified because: (1) The information requested is overbroad as to the time and scope of the loan related to this litigation; (2) The subpoenas seek information and documents unrelated to Plaintiffs' loan application and unrelated to Defendants approval of the loan; and (3) The information sought in the subpoenas invades Plaintiffs' right to financial privacy because the information sought is irrelevant to the issues in this case.

Specifically, the subpoena issued to JP Morgan seeks:

Copies of the following documents associated with Account No. 6034 from October 1, 2019 to present, including but not limited to the following:

· Account statements;

· Lines of credit and applications;

· Signature cards;

· All requests for a statement of the payoff amount such as a payoff demand;

· All documents regarding any late payments or delinquencies

(Zaman Decl., Exhs. 1-2.)

The subpoena issued to Wells Fargo seeks:

All documents for the period October 1, 2019 to present that stood or now stand in the name of NBZ Investments, LLC, alone or with Neda Zaman and/or Behzad Zaman, including but not limited to Account numbers 6495 and 3369, which include the following:

1. Account statements (whether monthly, quarterly and/or annual);

2. Signature cards;

3. Deposit records, including deposit slips;

4. Check copies;

5. Lines of credit and applications;

6. Requests for a statement of the payoff amount such as a payoff demand; and

7. All documents regarding any late payments or delinquencies.

(Id., Exh. 3.)

The right of privacy of individuals is protected by the California Constitution. (Cal. Const., Art. I, § 1.) The framework for evaluating invasions of privacy in discovery have been clarified in Williams v. Superior Court (2017) 3 Cal.5th 531. There, the California Supreme Court held that, generally, “[t]he party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.” (Williams, supra, 3 Cal.5th at p. 533, citing Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35.) The court rejected the cases which held that the party seeking protected information must always show a compelling need or interest. (Id. at p. 557.) Instead, the court held, “[o]nly obvious invasions of interest fundamental to personal autonomy must be supported by a compelling interest.” (Id.)

Here, Plaintiff has raised an objectively reasonable expectation of privacy in his financial records. (See Williams, supra, 3 Cal.5th at p. 557.) However, as previously discussed, Plaintiff’s privacy interests must be balanced against Defendant’s right to obtain discovery. (See Code Civ. Proc., § 2017.210.)

Defendant argues that Plaintiffs have put their financial information directly at issue when they initiated this lawsuit and made allegations about Defendants’ improper refusal to issue a loan, then claimed significant damages that included their ongoing mortgage payments. Plaintiffs are claiming a minimum of $500,000 in compensatory damages and seeking punitive damages because Defendants denied Plaintiffs’ application for a $1.4 million loan to refinance two mortgages and payoff other debt. According to the Third Amended Complaint, Plaintiffs’ damages include the mortgage payments they are continuing to make and the loss of the ability to obtain a mortgage loan elsewhere. Defendant served the Bank Subpoenas to obtain the documents that would reflect Plaintiffs’ damages (i.e., the mortgage payments Plaintiffs are continuing to make) and would provide information about whether Plaintiffs have sought to refinance or payoff the loans. The Bank Subpoenas also seek documents relevant to Defendants’ affirmative defenses, which include Plaintiffs’ failure to mitigate their alleged damages as well as affirmative defenses addressing the fact that Plaintiffs’ claims are barred by fraud and/or unclean hands because plaintiffs made misrepresentations on their loan application including misrepresentations about their income and the sources of their income. The Bank Subpoenas are to the banks that Plaintiffs have borrowed money from, that was supposed to be paid off by the loan Plaintiffs were seeking from Defendant, and that Plaintiffs are claiming as the source of their damages.

As to the subpoena to JP Morgan, account statements are relevant to Plaintiffs’ damages to the extent Plaintiffs are complaining that they are having to pay a higher amount than the loan they would have obtained from Defendant. (Zaman Decl., Exh. 1 (Doc Request # 1).) This loan is a line of credit and any information about that line of credit and applications regarding such are relevant to Plaintiffs’ damages and Defendants’ affirmative defenses. (Id. (Doc Request # 2).) The request for signature cards is relevant to who has standing to pursue these damages (an issue raised by Defendants’ affirmative defenses) since there are three Plaintiffs and the loan was not in all of the Plaintiffs’ names. (Id. (Doc Request # 3).) The request for a statement of the payoff amount such as a payoff demand is relevant to whether Plaintiffs applied for any other loans to payoff this loan, which is relevant to Plaintiffs’ claims that they could not obtain another loan and also to whether Plaintiffs failed to mitigate their damages. (Id. (Doc Request # 4).) Finally, the request for “[a]ll documents regarding any late payments or delinquencies” is relevant to Plaintiffs’ alleged damages, their claims that they were highly qualified, and Defendants’ affirmative defenses. Likewise, the subpoena to Wells Fargo is justified for the same reasons. Account # 3369 is one of Plaintiffs’ mortgages that was to be paid off. As discussed, account statements, requests for payoff amounts, and delinquency information is appropriate. The request for information about account # 6495 is appropriate because this was one of the accounts that Plaintiffs was providing to Defendant as part of their loan application, which should have reflected the source of Plaintiffs’ income. But Plaintiffs could not qualify based on this single bank account because it did not show sufficient income and the documents Plaintiffs provided indicate that Plaintiffs were playing a shell game with their money by moving money from various accounts in order to give the impression of higher income than what they were actually receiving. For this reason, this subpoena also includes a request for “deposit records, including deposit slips” and “check copies.” (Zaman Decl., Exh. 3.)

The Court agrees that Plaintiffs have put their financial records at issue in this matter. Moreover, the Court finds that the timeline from October 2019 to the present is not overbroad, as it is relevant to whether and why Plaintiffs have not been able to obtain a new mortgage from any other lender and also Defendants’ affirmative defenses that Plaintiffs were trying to perpetrate a fraud by misrepresenting their financial information when they applied for the loan with Defendant. Defendant is entitled to verify the allegations in the complaint by its own means. However, the Court notes the subpoena to JP Morgan contains confusing language. The subpoena states it seeks “copies of the following documents associated with Account No. 6034 from October 1, 2019 to present, including but not limited to the following,” and then, it sets out the documents it seeks. However, the language “including but not limited to” makes the subpoena confusing because it attempts to seek more documents than those listed. As such, the Court will modify the subpoena to JP Morgan to say: “Copies of the following documents associated with Account No. 6034 from October 1, 2019 to present: Account statements; Lines of credit and applications; Signature cards; All requests for a statement of the payoff amount such as a payoff demand; All documents regarding any late payments or delinquencies.”

As such, the Court will grant the motion to quash in part, and modify the subpoena to JP Morgan only to say: “Copies of the following documents associated with Account No. 6034 from October 1, 2019 to present: Account statements; Lines of credit and applications; Signature cards; All requests for a statement of the payoff amount such as a payoff demand; All documents regarding any late payments or delinquencies.”

Sanctions

Plaintiff requests attorney fees under Code of Civil Procedure section 1987.2(a), which provides: “the court may in its discretion award the amount of the reasonable expenses incurred in making or opposing the motion, including reasonable attorney's fees, if the court finds the motion was made or opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.”

The Court finds that the motion was not opposed in bad faith. Thus, Plaintiff’s request for sanctions is DENIED.

II. Protective Order

Plaintiffs request that this Court issue an order protecting Plaintiffs from responding to 36-273 of Defendant’s special interrogatories. Plaintiffs argue that this case is not complex, and thus, there is no reason to propound 273 interrogatories. Plaintiffs argue that the information in the interrogatories could have been asked in 35 interrogatories, but instead Defendant intended to harass Plaintiff by copying and pasting almost every paragraph in the complaint and then stating “identify each witness,” “identify each document,” and “identify all facts” for each paragraph of the complaint. Plaintiffs argue that by filing this motion, the burden is on Defendant to justifying the number of discovery requests. CCP section 2030.040(b).)

It is incumbent on Plaintiffs to discuss with Defendant as to how the discovery requests are oppressive, unduly burdensome, create unwarranted expense for Plaintiff, and were propounded to harass Plaintiff, as opposed to asserting a broad argument that the discovery is unnecessary, burdensome, and harassing, and expecting Defendant to justify the number of the responses in their opposition to this motion. “[A]ttempting informal resolution means more than the mere attempt by the discovery proponent to persuade the objector of the error of his ways . . . . [T]he law requires that counsel attempt to talk the matter over, compare their views, consult, and deliberate.” (Clement v. Alegre (2009) 177 Cal.App.4th 1277, 1294.) In their meet and confer letter, Plaintiffs only set a broad assertion that the discovery is excessive without providing any examples of how this is so. (Zaman Decl., Exh. 2.) This is insufficient to demonstrate that Plaintiffs made “a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” (CCP § 2016.040.)

Further, where Defendant asks Plaintiff to state facts, witnesses, and documents supporting Plaintiffs’ contention in the complaint, Defendant is entitled to conduct contention discovery. (Burke v. Sup. Ct. (1969) 71 Cal.2d 276, 281, citing Singer v. Sup. Ct. (1960) 54 Cal.2d 318, 323-25 [“Discovery necessarily serves the function of ‘testing the pleadings,’ i.e., enabling a party to determine what his opponent's contentions are and what facts he relies upon to support his contentions”].)

Accordingly, the motion for a protective order is CONTINUED. The parties are ordered to meaningfully meet and confer and discuss each issue presented by the motion to narrow the discovery disputes before the Court. No later than nine court days before the continued hearing date, the parties are ordered to file a joint statement indicating the discovery still at issue. If the parties are unable to narrow their discovery dispute, the Court is inclined to deny the motion due to Plaintiffs’ failure to meet and confer in good faith before filing the motion.

The issue of sanctions will be addressed at the continued hearing.

Conclusion

Accordingly, Plaintiffs’ motion to quash is GRANTED in part. The Court declines to grant the motion in full; instead, the court modifies the subpoena issued to JP Morgan to seek: “Copies of the following documents associated with Account No. 6034 from October 1, 2019 to present: Account statements; Lines of credit and applications; Signature cards; All requests for a statement of the payoff amount such as a payoff demand; All documents regarding any late payments or delinquencies.” The Motion to quash is otherwise denied.

Plaintiffs’ request for sanctions is DENIED.

Moving party is ordered to give notice.