Judge: Teresa A. Beaudet, Case: 21STCV04269, Date: 2022-09-29 Tentative Ruling

Case Number: 21STCV04269    Hearing Date: September 29, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff 290 Beowawie LLC (“Plaintiff”) filed this action on February 2, 2021. On July 19, 2021, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants Indinero Inc. (“Indinero”), Jessica Mah (“Mah”), Andy Su aka Andrew Su aka Dizhe Su (“Su”), Employees First Advocates LLC, and Pry Financials Inc., asserting causes of action for (1) breach of contract, (2) relief against avoidable transfers and/or obligations, (3) breach of fiduciary duty, (4) quia timet, and (5) unjust enrichment.

In the FAC, Plaintiff alleges that on February 12, 2018, Indinero acquired the company TempCFO, requiring payments by Indinero to Plaintiff totaling $6,292,982 over time. (FAC,      ¶ 14.) Mah and Su are shareholders, directors, managers, officers, and alter egos of Indinero. (FAC, ¶¶ 3, 4.) Plaintiff alleges that on December 30, 2019, Mah and Su misappropriated funds totaling $1.9 million from Indinero’s bank account for personal use, stripping Indinero of working capital and cash needed to fund obligations owed to Plaintiff. (FAC, ¶ 21.) Plaintiff alleges that on May 31, 2020, Indinero and Plaintiff entered into a “Release and Settlement Agreement,” pursuant to which Indinero was required to make certain cash payments to Plaintiff totaling $2,313,595.88. (FAC, ¶ 24.) However, defendants have failed to make the payments to Plaintiff totaling $2,313,595.88. (FAC, ¶ 34.)   

On May 22, 2021, Plaintiff served a notice of deposition of Mah and request to produce materials at deposition, with a deposition date of June 10, 2021. (Aires Decl., ¶ 3, Ex. A.) On May 12, 2022, the parties participated in an Informal Discovery Conference (“IDC”). The Court issued a minute order on May 12, 2022 following the IDC, which provides, inter alia, that “[t]he parties agree and the Court orders as follows:… The deposition of Jessica Mah will be taken, if possible, by 07/29/22 in person. Two weeks before 07/29/22 Defendant will notify Plaintiff if the deposition must be postponed due to Ms. Mah’s condition; in that case it will be taken by 08/15/22 in person or via Zoom at Plaintiff’s election. The parties will meet & confer in person or via telephone or Zoom regarding the written discovery; if necessary, the Court will hold a further IDC on 06/27/22.”

Plaintiff indicates that Mah failed to attend her deposition on or before August 15, 2022. (Aires Decl., ¶ 5.) Plaintiff now moves for an order compelling the deposition of Mah and the production of materials in connection therewith; and for an order imposing terminating sanctions, issue sanctions, evidence sanctions, and monetary sanctions in the sum of $3,260.00 against Mah and Kring & Chung LLP. Mah opposes. 

Discussion

A.    Motion to Compel Deposition and Production of Documents.

As an initial matter, Plaintiff seeks to compel the deposition of Mah and the production of documents described in the subject deposition notice. As set forth above, the Court’s May 12, 2022 minute order provides, inter alia, that “[t]he deposition of Jessica Mah will be taken, if possible, by 07/29/22 in person. Two weeks before 07/29/22 Defendant will notify Plaintiff if the deposition must be postponed due to Ms. Mah’s condition; in that case it will be taken by 08/15/22 in person or via Zoom at Plaintiff’s election.” The Court notes that it does not issue orders to comply with its orders, so no further order is necessary or appropriate to compel compliance with the Court’s May 12, 2022 order pertaining to Mah’s deposition.

The Court notes that on July 13, 2022, another IDC was held concerning, inter alia, the discovery that is the subject of this motion. The Court’s July 13, 2022 minute order provides, inter alia, that “[t]he parties agreed and the Court ordered as follows:…The prior order as to the deposition of Jessica Mah remains as ordered in the 5/12/22 order. The requested documents pertaining to each of the depositions will be produced, subject to objections yet to be made, if any, by 3:00 p.m. on the day before the deposition.” Accordingly, no further order is necessary or appropriate to compel compliance with the Court’s July 13, 2022 order on the documents pertaining to Mah’s deposition.

B.    Motion for Sanctions

 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, including the issuance of monetary, evidentiary, contempt, and terminating sanctions. (Code Civ. Proc., § 2023.030.)  

A monetary sanction may be imposed against one engaging in the misuse of the discovery process. (Code Civ. Proc., § 2023.030, subd. (a).) An issue sanction may be imposed by way of an order that designated facts shall be taken as established or an order that prohibits any party from supporting or opposing designated claims or defenses. (Code Civ. Proc.,              § 2023.030, subd. (b).) An evidentiary sanction may be imposed by way of an order prohibiting any party engaging in the misuse of the discovery process from introducing designated matters in evidence. (Code Civ. Proc., § 2023.030, subd. (c).)¿¿

As set forth above, Plaintiff indicates that Mah failed to attend her deposition on or before August 15, 2022. (Aires Decl., ¶ 5.) Plaintiff asserts that it has thus been prejudiced, and to “ameliorate the unfair prejudice,” seeks the following relief:

“(A) An order terminating the participation of [Mah] in this civil action by the striking of her answer and entry of a default and default judgment against [Mah] in the principal sum of $2,313,595.88, together with prejudgment interest at the daily rate of $633.69 per day from December 31, 2020 using the legal rate of 10% per annum: (B) An order conclusively establishing that a unity of interest exists between [Indinero] and [Mah] and that it would sanction a fraud or promote an injustice if the separateness of [Indinero] and [Mah] were recognized; (C) An order conclusively establishing that [Mah] is the alter ego of [Indinero] and, therefore, jointly and severally liable for the principal sum of $2,313,595.88, together with prejudgment interest at the daily rate of $633.69 per day from December 31, 2020 using the legal rate of 10% per annum; (D) An order prohibiting [Mah] from opposing the breach of contract and alter ego claims in the complaint, as amended; (E) An order prohibiting [Mah] from supporting any defense to the breach of contract and alter ego claims in the complaint, as amended; (F) An order precluding [Mah] from offering any evidence to refute that a unity of interest exists between [Indinero] and [Mah] and that it would sanction a fraud or promote an injustice if the separateness of [Indinero] and [Mah] were recognized; (G) An order precluding [Mah] from offering any evidence to refute that [Mah] is the alter ego of [Indinero] and, therefore, jointly and severally liable for the principal sum of $2,313,595.88, together with prejudgment interest at the daily rate of $633.69 per day from December 31, 2020 using the legal rate of 10% per annum; (H) An order imposing monetary sanctions in the sum of $3,260.00 against [Mah] and Kring & Chung LLP.” (Mot. at p. 2:6-3:5.)

            In the opposition, Mah’s counsel indicates that on July 13, 2022, he asked Plaintiff’s counsel if either August 1, 2022 or August 2, 2022 might work for Mah’s deposition, but Plaintiff’s counsel did not respond to this inquiry. (Patterson Decl., ¶ 3, Ex. 2.) Mah’s counsel asserts that he followed up on two separate occasions regarding the dates for Mah’s deposition, but Plaintiff’s counsel never responded. (Ibid.) This is disputed by Plaintiff’s counsel, who provides evidence in support of the Reply that on August 2, 2022, he sent an email to Mah’s counsel acknowledging that Mah’s counsel was quarantined due to COVID and indicating that he was hoping to set Mah’s deposition for August 13, 14, or 15, 2022. (Suppl. Aires Decl., ¶ 5.)

The Court does not find that the circumstances warrant the imposition of terminating sanctions. The court notes that no previous motion to compel directed to Mah has been granted, so there is no history of multiple discovery abuses to show that less severe sanctions would not produce compliance. “[T]he sanctioned party’s history as a repeat offender is not only relevant, but also significant, in deciding whether to impose terminating sanctions.” ((Liberty Mutual Fire Ins. Co. v. LcL Administrators, Inc. (2008) 163 Cal.App.4th 1093, 1106.) “A decision to order terminating sanctions should not be made lightly. But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.” ((Mileikowsky v. Tenet Healthsystem (2005) 128 Cal.App.4th 262, 279-280.)¿

            The Court also does not find that the requested issue and evidentiary sanctions are appropriate at this time, as Mah provides evidence of her counsel attempting to set a date for her deposition. Additionally, Mah has not had a chance to respond to the declaration offered for the first time in support of the Reply regarding the August 2, 2022 email requesting to set Mah’s deposition for August 13, 14, or 15, 2022 and Mah’s counsel’s COVID quarantine.

The Court also notes that it does not believe that it was necessary to serve deposition notices after the parties had agreed to (and the Court ordered) the deposition dates in the July 13, 2022 order. This seems to have been a source of some confusion.  

In conclusion, this situation appears to the Court to have been a problem of miscommunication, possibly due to the COVID circumstances mentioned in the August 2d email.  The Court does not find that there is substantial justification for sanctions.  At the hearing, the Court will discuss the setting of a new date for the deposition of Mah.  The parties should be prepared for such a discussion.

Plaintiff is ordered to provide notice of this Order. 

DATED:  September 29, 2022                       ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court