Judge: Teresa A. Beaudet, Case: 18STCV06807, Date: 2023-08-04 Tentative Ruling

Case Number: 18STCV06807    Hearing Date: March 14, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Brian Weiner, individually and derivatively on behalf of Onyx Tower Management, LLC (“Plaintiff”) filed this action on November 30, 2018, against a number of defendants. The operative Third Amended Complaint was filed on October 22, 2020, asserting causes of action for breach of contract, breach of the covenant of good faith and fair dealing, constructive trust, accounting, declaratory relief, constructive fraud, fraud, and appointment of receiver.

On March 6, 2020, defendant Michael Hakim filed a Cross-Complaint against a number of cross-defendants, including Onyx Tower Management, LLC. On April 12, 2023, Michael Hakim filed a “Cross-Complaint to the Third Amended Complaint.” In addition, on January 19, 2021, a number of defendants filed a Cross-Complaint against Plaintiff.   

Plaintiff now moves for “terminating, issue, and/or monetary sanctions in the amount of $203,243.30 against Defendants Onyx Tower, LLC, Sam Hakim, Michael Hakim, Julia Hakim, Tanya Hakim, Onyx Tower Group, LLC, Said Hakim, and Onyx Tower Holdings, LLC.” The motion is opposed by Onyx Tower Group, Onyx Tower LLC, Onyx Tower Holdings, Onyx Tower Management, LLC, Sam Hakim, Julia Hakim, Tanya Hakim, and Said Hakim (collectively, the “Onyx Parties”) oppose. In addition, Michael Hakim opposes.

Discussion

Disobeying a court order to provide discovery is a misuse of the discovery process. (¿Code Civ. Proc., § 2023.010, subd. (g)¿.) There are a broad range of sanctions available against anyone engaging in conduct that is a misuse of the discovery process. ((Code Civ. Proc., § 2023.030.)

“The court may impose a terminating sanction by one of the following orders: (1)¿An order striking out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process. (2)¿An order staying further proceedings by that party until an order for discovery is obeyed. (3)¿An order dismissing the action, or any part of the action, of that party. (4)¿An order rendering a judgment by default against that party.” ((Id., § 2023.030, subd. (d).) In addition, “[t]he court may impose an issue sanction ordering that designated facts shall be taken as established in the action in accordance with the claim of the party adversely affected by the misuse of the discovery process. The court may also impose an issue sanction by an order prohibiting any party engaging in the misuse of the discovery process from supporting or opposing designated claims or defenses.” ((Id., § 2023.030, subd. (b).) 

In addition, Plaintiff notes that pursuant to Government Code section 68608, subdivision (b), “[j]udges shall have all the powers to impose sanctions authorized by law, including the power to dismiss actions or strike pleadings, if it appears that less severe sanctions would not be effective after taking into account the effect of previous sanctions or previous lack of compliance in the case. Judges are encouraged to impose sanctions to achieve the purposes of this article.”

As set forth above, Plaintiff moves for “terminating, issue, and/or monetary sanctions in the amount of $203,243.30 against Defendants Onyx Tower, LLC, Sam Hakim, Michael Hakim, Julia Hakim, Tanya Hakim, Onyx Tower Group, LLC, Said Hakim, and Onyx Tower Holdings, LLC.” (Notice of Motion at p. 1:7-9.) Plaintiff states that “[t]he motion will be made on the grounds that Defendants have failed to comply with Court orders regarding discovery and have engaged in conduct designed to disrupt the timely disposition of this case.” (Mot. at p. 1:10-11.)

Plaintiff notes that the parties participated in an informal discovery conference (“IDC”) on July 18, 2022. Per the Court’s July 18, 2022 minute order, the parties agreed and the Court ordered as follows: “1. The depositions of Sam Hakim as the PMK for all three Onyx entities regarding the identification of documents only, as set forth in the Plaintiff’s amended notices of deposition dated July 11, 2022, will take place on July 26, 2022, at the times designated in the amended notice via Zoom. 2. The cut-off date for completing all depositions is extended from July 29, 2022, to October 7, 2022.”

On July 19, 2022, Plaintiff’s counsel sent a Zoom link for a July 26, 2022 deposition, and asked for dates of availability in August and September so that the other depositions could be set. (Levine Decl., ¶ 12.) On July 22, 2022, defendants served objections to the deposition notices objecting to each topic. (Levine Decl. ¶ 13.) On July 24, 2022, counsel for all defendants except Michael Hakim indicated that Sam Hakim would not be attending his July 26, 2022 PMK deposition because “he is feeling very ill and has Covid like symptoms and will be seeking medical attention tomorrow.” (Levine Decl., ¶ 14, Ex. 9.) Ultimately, Sam Hakim’s PMK deposition took place on November 30, 2022. (Levine Decl., ¶ 20.)

Plaintiff asserts that Sam Hakim did not properly prepare as the Onyx entities’ PMK. Plaintiff indicates that Sam Hakim failed to identify documents in the noticed categories of documents except for an undated deed of trust. (Levine Decl., ¶ 20, Ex. 15, p. 71:15-24.) Plaintiff also contends that Sam Hakim testified “I don’t know” approximately 300 times to certain questions, including questions about his own job title, and whether he does anything for certain Onyx entities or receives income from such Onyx entities. (Mot. at p. 5:15-16; Levine Decl., ¶ 20, Ex. 15, pp. 10:12-11:22.)

Plaintiff’s counsel notes that on April 18, 2023, the parties participated in another IDC. (Levine Decl., ¶ 23.) The Court’s April 18, 2023 minute order states, inter alia, “[t]he parties participated in the Informal Discovery Conference. The parties agreed and the Court ordered as follows: On May 23, 2023 and May 24, 2023 Defendant Tanya Hakim will testify at deposition as the person most knowledgeable for the identification of documents as referenced in plaintiff’s IDC statement dated January 31, 2023. By April 25, 2023 Plaintiff will eserve the defendants with a new deposition notice that includes the list of document categories.”

Plaintiff’s counsel states that “[a]s ordered, the following week, Plaintiffs served upon each of the Onyx Entities second amended PMK deposition notices for May 23, 2023 and May 24, 2023.” (Levine Decl., ¶ 24.) Plaintiff’s counsel indicates that “[t]he second deposition of the Onyx Entities PMK to identify documents commenced on May 23, 2023. Defendants produced Tanya Hakim as the PMK for the Onyx Entities for the categories of identification of documents.” (Levine Decl., ¶ 26.)

Plaintiff argues that “Tanya, by her own admission, did not take the Court order seriously and did nothing to properly prepare as the Onyx Entities’ PMK…” (Mot. at p. 8:1-2.) Plaintiff asserts that “Tanya only conducted a search for communications as to emails to which she was directly copied and which were sent only to her personal email address, and neglected to search her own text messages or those of anyone else related to the Subject Property.” (Mot. at p. 8:7-9.) Plaintiff cites to the following testimony from Tanya Hakim’s deposition: “A. Okay. So, I have about 31 e-mails that include Sam and any relation to Onyx including accountants, including agents, et cetera. Q. So, since the inception of these entities and the purchase of Onyx Tower to today, you are only aware of 31 e-mails -- A. That is -- Q. -- that would show a communication with Sam? A. Correct. Q. How about text messages? A. That I don’t really -- I haven’t really checked that, but I don’t now how I would search that.” (Levine Decl., ¶ 26, Ex. 22, p. 87:10-21.) The deposition transcript for Tanya Hakim also provides, “Q. Did you search your own personal next messages to see if the word ‘Onyx’ was ever mentioned? A. I have not, but I can go ahead and do so.” (Id. at p. 88:2-4.)  Plaintiff also cites to the following testimony from Tanya Hakim’s deposition: “Q. So, you’re only telling me about the e-mails on which you were copied and not any of the e-mails for the company? Is that correct? A. I would not have access to other people’s e-mails so I only have access to my e-mails.” (Id. at p. 89:12-17.)

In addition, Plaintiff asserts in the motion that “Defendants also attempted to obstruct discovery by wrongfully objecting to Plaintiffs’ requests for production on baseless grounds, relying on outdated court orders to do so, and refusing to stipulate or confer with Plaintiffs to timely resolve discovery disputes.” (Mot. at p. 9:9-11.)

Plaintiff’s counsel states that “[o]n or about May 28, 2023, Defendants served objections to Plaintiffs’ document requests on the basis that written discovery is cut off pursuant to the February 17, 2022 and the October 4, 2022 Minute Orders.” (Levine Decl., ¶ 27.) Plaintiff’s counsel further states that “[a]fter my office provided notice that Plaintiffs would appear ex parte the following day to resolve the discovery issue, Defense Counsel provided Plaintiffs’ with its Opposition, wherein Defendants conceded that discovery was open pursuant to the March 9, 2023 Minute Order.” (Levine Decl., ¶ 29.)

Plaintiff also notes that on July 5, 2023, the Court issued a minute order in this action providing, inter alia, that “[t]he Ex Parte Application TO REOPEN THE WRITTEN DISCOVERY DEADLINE FOR THE PURPOSE OF PERMITTING DOCUMENT REQUESTS filed by Brian Weiner on 06/22/2023 is Denied. The Exparte Application is denied because the Court’s 3/9/23 order permits all discovery until the cut-off that is tied to the 11/1/23 trial date.” Plaintiff’s counsel asserts that “[d]efense Counsel stated that Defendants would substantively respond to Plaintiffs’ requests, but they still have yet to make any overtures to do so.” (Levine Decl., ¶ 32.)

A.    Plaintiff’s Request for Terminating Sanctions

In the motion, Plaintiff asserts that “despite the Court ordering said depositions, the deposition transcripts more than demonstrate that Defendants in general, and Sam and Tanya in particular, failed to comply with their duties of being designated agents for the Onyx Entities as delineated in Code of Civil Procedure section 2025.230.” (Mot. at p. 13:9-12.) Pursuant to ¿Section 2025.230¿, “¿[i]f the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.”¿ (¿Code Civ. Proc., § 2025.230¿.)   

In addition, Plaintiff asserts that “Defendants have also willfully violated this Court’s orders and presented arguments in bad faith when Plaintiffs have sought requests for production of documents. To date, Plaintiffs have yet to receive a substantive response to a single request for production, which were due in May 2023.” (Mot. at p. 13:1-3.)

As an initial matter, Michael Hakim notes in his opposition that Plaintiff’s motion states that “[t]he motion will be made on the grounds that Defendants have failed to comply with Court orders regarding discovery and have engaged in conduct designed to disrupt the timely disposition of this case.” (Notice of Mot. at p. 1:10-11.) Michael Hakim’s counsel states that “[t]here is NO COURT ORDER against my client compelling him to provide responses or further responses to any form of discovery in this case.” (Mann Decl., ¶ 5.) Michael Hakim asserts that “[t]here was no court order directed against Hakim, no prior imposition of sanctions in relation to the subjects of the present motion, and absolutely no basis for awarding terminating sanctions against Hakim.” (Michael Hakim Opp’n at p. 10:1-4.)

In the reply to Michael Hakim’s opposition, Plaintiff counters that “the disobedient deponents are Sam Hakim and Tanya Hakim, designated by the Onyx Entity Defendants. As a member, manager, and owner for the Onyx Defendants, Michael Hakim agreed to put forward Sam and Tanya Hakim to represent his companies, and otherwise has done nothing to distance himself from their conduct. As such he must be held responsible for the violations of the Onyx Entities. Michael Hakim cannot hide behind the corporate veil to avoid being held responsible for the acts of the entities.” (Reply at p. 4:11-16.) However, Plaintiff does not cite any legal authority (or evidence) to support this argument. Moreover, Plaintiff raises this argument for the first time in the reply. The Court notes that “[p]oints raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument.” ((American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453.)

Plaintiff raises an additional argument for the first time in the reply, specifically, that “Dennis Wilson, Counsel for all Defendants except Michael Hakim in this case, in violation of the California Rules of Professional Conduct, also recently represented Michael Hakim in several other actions while this action was pending, including in case numbers 19SMCV01587 and 19STCV36690. SSD¶6, Ex. 1-2. This shows that Michael Hakim’s entire cross-complaint with Mr. Wilson representing Michael Hakim’s family against him is more than likely a sham, and further warrants sanctions upon Mr. Wilson in particular.” (Reply at pp. 2:27-3:4.) As discussed, “[p]oints raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument.” ((Ibid.) In addition, “¿[t]he general rule of motion practice…is that new evidence is not permitted with reply papers.”¿(Jay¿v. Mahaffey¿(2013) 218 Cal.App.4th 1522, 1537.)

In light of the foregoing, the Court denies Plaintiff’s request for terminating, issue, and monetary sanctions against Michael Hakim.

In their opposition to the instant motion, the Onyx Parties assert that Plaintiff’s motion is not appropriate, as Plaintiff failed to meet and confer prior to bringing the motion. However, the Onyx Parties do not cite to any legal authority demonstrating that Plaintiff is required to meet and confer with the Onyx Parties in advance of bringing a motion for sanctions.

The Onyx Parties also asserts that “Plaintiff’s motion for terminating sanctions is not warranted as Defendants have produced information and documentation on all issues.” (Onyx Parties’ Opp’n at p. 8:10-12.) The Onyx Parties’ counsel states in his supporting declaration that “[t]he Onyx Defendants did produce two different PMKs for Deposition in this case, Sam Hakim, who sat for a number of days, and Tanya Hakim who also sat for several days. A total of approximately 4371 documents were produced to the Plaintiffs. These documents were in response to Plaintiffs’ Requests for Production to the 4 different ONYX entities. The Onyx Entitles served Responses including Amended Responses and Further Supplemental Responses all without objections.” (Wilson Decl., ¶ 3.)

The Court also does not find that the circumstances warrant the imposition of terminating sanctions against the Onyx Parties at this time. The Court thus denies such request. As set forth above, Plaintiff’s motion is made on the grounds that “Defendants have failed to comply with Court orders regarding discovery and have engaged in conduct designed to disrupt the timely disposition of this case.” (Notice of Mot. at p. 1:10-11.) As discussed, the relevant July 18, 2022 minute order in this case states, “[t]he parties agreed and the Court ordered as follows: 1. The depositions of Sam Hakim as the PMK for all three Onyx entities regarding the identification of documents only, as set forth in the Plaintiff’s amended notices of deposition dated July 11, 2022, will take place on July 26, 2022, at the times designated in the amended notice via Zoom. 2. The cut-off date for completing all depositions is extended from July 29, 2022, to October 7, 2022.” Plaintiff’s counsel acknowledges that the “the PMK depositions for Sam Hakim…took place November 30, 2022, December 5, 2022…” (Levine Decl., ¶ 38(a).)

In addition, the Court’s April 18, 2023 minute order states, inter alia, “[t]he parties participated in the Informal Discovery Conference. The parties agreed and the Court ordered as follows: On May 23, 2023 and May 24, 2023 Defendant Tanya Hakim will testify at deposition as the person most knowledgeable for the identification of documents as referenced in plaintiff’s IDC statement dated January 31, 2023. By April 25, 2023 Plaintiff will eserve the defendants with a new deposition notice that includes the list of document categories.” Plaintiff’s counsel acknowledges that the depositions of Tanya Hakim “took place May 23, 2023, and May 24, 2023…” (Levine Decl., ¶ 38(a).)

In Lopez v. Watchtower Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 604, cited by the Onyx Parties, the Court of Appeal noted that “the courts have long recognized that the terminating sanction is a drastic penalty and should be used sparingly. A trial court must be cautious when imposing a terminating sanction because the sanction eliminates a party’s fundamental right to a trial, thus implicating due process rights.” (Internal citation omitted.) “The discovery statutes…evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination. Although in extreme cases a court has the authority to order a terminating sanction as a first measure, a terminating sanction should generally not be imposed until the court has attempted less severe alternatives and found them to be unsuccessful and/or the record clearly shows lesser sanctions would be ineffective.” ((Id. at pp. 604-605 [internal quotations, citations, and emphasis omitted.].) Here, it does not appear that any less severe sanctions have been issued against the Onyx Parties in this case.

B.    Plaintiff’s Request for Issue Sanctions

Next, Plaintiff asserts that “[i]f this Court declines to issue terminating sanctions, at bare minimum, issue sanctions are necessary in this case to remedy Defendants’ violations of the aforementioned Court orders, which frustrate Plaintiffs’ ability to prepare for trial and prove daamges [sic].” (Mot. at pp. 13:28-14:2.)

As an initial matter, the Onyx Parties assert that Plaintiff’s motion is defective as it has no separate statement. Pursuant to California Rules of Court, rule 3.1345, subdivision (a)(7), “[e]xcept as provided in (b), any 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:…(7) For issue or evidentiary sanctions.” (Emphasis added.)[1] Indeed, it does not appear that Plaintiff filed a separate statement in connection with the instant motion.

Plaintiff also asserts that “the requested documents that Defendants refuse to identify and/or produce would directly establish each of the particular issues identified and would expressly address the issue of the amount of damages that Defendants owe OTM and Plaintiff related to the gross rents Defendants collected and/or diverted to pay their personal expense unrelated to the Subject Property.” (Mot. at p. 14:18-21.)[2] As set forth above, the Onyx Parties’ counsel states that “[a] total of approximately 4371 documents were produced to the Plaintiffs. These documents were in response to Plaintiffs’ Requests for Production to the 4 different ONYX entities. The Onyx Entitles served Responses including Amended Responses and Further Supplemental Responses all without objections.” (Wilson Decl., ¶ 3.)

Based on the foregoing, the Court denies Plaintiff’s request for issue sanctions.

C.    Requests for Monetary Sanctions

Plaintiff asserts that he has been “forced to incur a total of $203,243.30 in attorneys’ fees and costs in pursuit of discovery, in response to Defendants’ delay tactics, and act upon [sic] Defendants’ discovery abuses.” (Mot. at p. 15:16-17.) However, it is unclear what legal authority Plaintiff is relying on with respect to his request for monetary sanctions. Plaintiff does not appear to cite to legal authority authorizing the Court to award monetary sanctions against the Onyx Parties or Michael Hakim, nor does Plaintiff apply any such legal authority to the facts here. (See Mot. at pp. 14:28-15:23.)[3] Thus, the Court denies Plaintiff’s request for monetary sanctions.

The Onyx Parties state that they “requests [sic] sanctions to be imposed against Plaintiff and its attorneys of record, in the amount of $3,300.00 pursuant to Code of Civil Procedure section 2025, subd. (o).” (Onyx Parties’ Opposition at p. 10:19-21.) The Court notes that Code of Civil Procedure section 2025 was repealed in 2005. (See Code Civ. Proc., § 2025.) Thus, the Onyx Parties do not appear to cite any legal authority to support their request for sanctions against Plaintiff. The Court thus declines such request.

Lastly, Michael Hakim asserts that “monetary sanctions should be awarded in favor of Hakim and against Plaintiff and his attorneys of record...” (Michael Hakim Opp’n at p. 10:5-6.) In the opposition, Michael Hakim cites to Code of Civil Procedure section 2023.030, subdivision (a), which provides in part that “[t]he court may also impose this sanction on one unsuccessfully asserting that another has engaged in the misuse of the discovery process, or on any attorney who advised that assertion, or on both. If a monetary sanction is authorized by any provision of this title, the court shall impose that sanction unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” The Court finds that Plaintiff acted with substantial justification in presenting his position and thus declines to award monetary sanctions against Plaintiff pursuant to Code of Civil Procedure section 2023.030, subdivision (a).

Michael Hakim also cites to Code of Civil Procedure section 2025.480, subdivision (j), which provides that “[t]he court shall impose a monetary sanction…against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel an answer or production, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” Pursuant to Code of Civil Procedure section 2025.480, subdivision (a), “[i]f a deponent fails to answer any question or to produce any document, electronically stored information, or tangible thing under the deponent’s control that is specified in the deposition notice or a deposition subpoena, the party seeking discovery may move the court for an order compelling that answer or production.” However, in the instant motion, Plaintiff does not move for an order compelling an answer or production pursuant to Code of Civil Procedure section 2025.480. Thus, the Court does not see how this Code section is applicable. Thus, the Court denies Michael Hakim’s request for monetary sanctions.

Conclusion

Based on the foregoing, Plaintiff’s motion is denied in its entirety.  

The Onyx Parties are ordered to give notice of this Order.

DATED:  March 14, 2024     

                        ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court