Judge: Stephen P. Pfahler, Case: 19CHCV00473, Date: 2023-01-11 Tentative Ruling

Case Number: 19CHCV00473    Hearing Date: January 11, 2023    Dept: F49

Dept. F-49

Date: 1-11-23

Case #19CHCV00473

Trial Date: 7-10-23 c/f 12-12-22 c/f 1-18-22 c/f 9-27-22 c/f 1-19-21 c/f 8-17-20

QUASH

MOVING PARTY: Plaintiff, Richard Kuehne

RESPONDING PARTY: Defendant, Henry D. Paloci, III

RELIEF REQUESTED

Motion to Quash the Deposition Subpoena

SUMMARY OF ACTION

Plaintiff Richard Kuehne alleges entry into a Stock Purchase Agreement with Defendants Danny and Jacqueline Rowlett, whereby Plaintiff agreed to purchase all interests, including assets and liabilities, in an entity identified as Alliance Metal Products, Inc. The purchase price was $200,000. The parties also executed a second agreement for the purchase of certain assets valued at $100,000, and represented as the property of Danny Rowlett. The agreements were executed on September 27, 2018.

Plaintiff financed the agreement with the transfer of certain real property valued at $280,000, plus an additional $20,000 payment. The real property is located in Colorado Springs, Colorado. Plaintiff alleges the parties concurrently executed an “option agreement,” which allowed Plaintiff to repurchase the real property in Colorado for $280,000, if payment was made no later than March 27, 2019.

According to Plaintiff, the listed the assets in the property sale agreement were in fact owned by a third party. Defendants also allegedly failed to disclose that certain accounts receivable were “likely uncollectible,” and that Danny Rowlett previously executed a “Forbearance Agreement” with third party Bank of the West acknowledging a debt of $281,333.26 to the bank jointly owed by Danny Rowlett and Alliance Metal Products, Inc. The agreement led to a $259,902.02 Confession of Judgment joint and severally entered against Danny Rowlett and Alliance Metal Products, Inc. on December 3, 2018.

The remainder of the complaint alleges two small claims actions also served on Defendants, as well as unpaid taxes and other unspecified outstanding debts. It’s not clear whether the small claims actions resulted in any judgment liability. Given all the debts addressed above, total liabilities added up to $400,000.

On June 7, 2019 and October 30, 2019, Plaintiff filed a verified complaint and verified first amended complaint for Breach of Contract, Fraud, Set Aside Fraudulent Transfer, and Injunction and Constructive Trust. On June 12, 2019, Plaintiff filed a Notice of Pendency of Action.

On January 23, 2020, Henry D. Paloci, III, Trustee of Alliance Holding Trust, filed a cross-complaint for interpleader. The interpleader alleges that upon the completion of the sale for Alliance Metal Products, Inc., the parties agreed to place the Colorado property into a trust to be held until March 31, 2019—the expiration of the option agreement. (The verified first amended complaint alleges the option expired on March 27, 2020 [First Amend. Comp., ¶ 17].) Cross-Complainant contends that the parties dispute ownership of the property prompted the complaint in interpleader.

On August 27, 2020, Bank of the West filed a Notice of Lien based on an action entitled Bank of the West v. Alliance Metal, et al. (18CHCP00076, Dept. 47), which led to the December 3, 2018 $259,902.50 joint and several judgment against Defendant Danny Lee Rowlett and Alliance Metal Products, Inc. previously referenced.

On September 15, 2020, the court sustained the unopposed demurrer to the interpleader cross-complaint with leave to amend. On December 7, 2020, Plaintiff filed a request for dismissal with prejudice as to defendants Danny and Jacqueline Rowlett, individually, and as trustees of the Danny and Jacqueline Rowlett Family Trust Dated May 30, 2013, “Subject to reservation pursuant to [Code of Civil Procedure section] 664.6.”

RULING: Granted.

Plaintiff Richard Kuehne moves to quash the deposition subpoena of defendant Henry D. Paloci, III seeking production of medical records from 2013 to present. The motion comes on the basis that the sought after medical records in no way relates to the underlying complaint arising in breach of contract and fraud. Plaintiff additionally seeks a protective order.

Defendant in opposition contends that Plaintiff voluntarily presented medical records documenting use of “several mind altering substances, including opiates, and heavy use of alcohol,” as a basis for denying any appearance at a deposition. The records constitute a waiver of medical privileges. Defendant concludes that said records potentially impact the underlying business transaction in that Plaintiff’s alleged substance abuse caused or contributed to the non-disclosure claims raised by Plaintiff in the operative complaint.

Plaintiff in reply characterizes the arguments in opposition as “irrelevant.” The use of any and all medications and the health of Plaintiff is not relevant to the underlying action. Plaintiff contends the subpoena constitutes an improper “fishing expedition,” which is not supported given the privacy protections. Plaintiff challenges any argument regarding the disclosure claims as well.

Because the sought after production comes from a subpoena to third parties the court cites to the subpoena statute: “If a subpoena requires the attendance of a witness … the court, upon motion reasonably made by any person described in subdivision (b), … 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…” (Code Civ. Proc., § 1987.1, subd. (a).) A party may move to quash a subpoena on grounds of privacy. (Code Civ. Proc., § 1987.1, subd. (a), (b)(3).) The objecting party has the burden to file evidence of the preliminary facts establishing a privilege exists. (HLC Properties, Limited v. Sup. Ct. (2005) 35 Cal.4th 54, 59.)

In considering the motion to quash medical records, the court considers the standard for discovery—placement of the party’s medical condition at issue. A plaintiff is “‘not obligated to sacrifice all privacy to seek redress for a specific [physical,] mental or emotional injury’; while they may not withhold information which relates to any physical or mental condition which they have put in issue by bringing this lawsuit, they are entitled to retain the confidentiality of all unrelated medical or psychotherapeutic treatment they may have undergone in the past.” (Britt v. Superior Court (1978) 20 Cal.3d 844, 864.) “‘The party seeking the constitutionally protected information has the burden of establishing that the information sought is directly relevant to the claims. [Citation.]’ [Citation.]” (See Barrenda L. v. Superior Court (1998) 65 Cal. App. 4th 794, 801-802.) The standard for good cause requires the moving party to produce specific facts justifying discovery and that the inquiry be relevant to the subject matter of the action or reasonably calculated to lead to the discovery of admissible evidence. (Vinson v. Superior Court (1987) 43 Cal.3d 833, 840.) “[A]n implicit waiver of a party's constitutional rights encompasses only discovery directly relevant to the plaintiff's claim and essential to the fair resolution of the lawsuit… [¶] … On occasion her privacy interests may have to give way to her opponent's right to a fair trial. Thus courts must balance the right of civil litigants to discover relevant facts against the privacy interests of persons subject to discovery.” (Id. at p. 842.)

The court finds the subject medical records constitute privacy protected items. Defendant seeks to characterize the recent lack of sobriety claim presented by Plaintiff as a basis for challenging Plaintiff’s capacity to appreciate the “material nondisclosure” portion of the operative complaint, and therefore an effective compelling basis for production. The court finds no support for the argument that the production of records in response to a deposition notice somehow transforms the gravamen of the operative complaint into a challenge on Plaintiff’s capacity to determine allegedly fraudulent non-disclosure of information. Production of records on the issue of a deposition therefore in no way leads to a finding of a waiver of any and all medical privacy rights. Decisions impacting the approach to a discovery dispute will not transform the subject action in the present case.

Other than notice of the motion seeking a protective order, however, the court finds no supporting argument for the protective order. The court therefore limits the motion to the supported motion to quash the deposition subpoena, but notes further efforts to subpoena records may support a protective order and sanctions.

The court therefore grants the motion quash only.

Plaintiff to give notice.