Judge: Theodore R. Howard, Case: 21-1206457, Date: 2022-08-11 Tentative Ruling
Motion #1: to Appear Pro Hac Vice
The application of attorney Derek Young for an order permitting him to appear as counsel pro hac vice for plaintiff APRB Yellowstone, LLC, is CONTINUED to permit the moving attorney to submit proof that he submitted the required fees to the State Bar.
MOTION #2: COMPEL COMPLIANCE WITH SUBPOENA AND FOR A SANCTION OF $4522.50
Moving Party (MP): Plaintiff APRB Yellowstone, LLC
Responding Party (RP): no opposition filed
RELIEF SOUGHT ON MOTION #2: Plaintiff moves for an order compelling third party JPMorgan Chase Bank N.A. to comply with a subpoena for the production of documents. Plaintiff also moves for an order imposing a monetary sanction of $4522.50 against JPMorgan Chase Bank.
MP CONTENTIONS: Plaintiff brought this action after defendants acted as an escrow holder for plaintiff’s $1.55 million investment into a company that defendants represented and beneficially owned. Under the escrow instructions provided by defendants, plaintiff wired the money into defendants’ account in 12-18. Defendants agreed to return the money if the transaction did not conclude.
When the transaction fell through, defendants refused to account for or return the money held in the trust account. Instead, defendants fraudulently withdrew and sent the money to various entities and individuals who were mostly overseas. Defendants transferred all of plaintiff’s money except for $500 within six weeks. It closed the account in 10-19 after transferring the last $500 out of the account in 9-19.
Plaintiff filed this action when defendants repeatedly lied about and refused to account for the money. It subsequently obtained right to attach orders.
On 9-10-21, plaintiff personally served a subpoena for documents on third party JPMorgan Chase Bank, which was the recipient bank for clients who received a substantial portion of plaintiff’s funds.
JPMorgan Chase Bank did not respond to the subpoena. When plaintiff’s counsel contacted it, it said that it needed Social Security numbers before it could produce any documents. This is absurd, given that JPMorgan Chase Bank has been provided with sufficient information to identify and locate responsive documents. Furthermore, even if plaintiff had Social Security numbers, it could not provide them to JPMorgan Chase Bank because of privacy concerns.
To date, JPMorgan Chase Bank has not complied with the subpoena in any way.
Argument. Personal service of a subpoena obligates any California resident to produce the documents specified in the subpoena. Code Civ. Proc. §§ 1987, 2020.220, and 2020. 410. If the subpoenaed party disobeys the subpoena, the subpoenaing party may seek a court order compelling the nonparty to comply with it within 60 days after completion of the deposition record. Code Civ. Proc. § 2025.480(b); see Unzipped Apparel, LLC v. Bader (2007) 156 Cal.App.4th 123, 127. The 60-day time period runs from when objections to the subpoena are served. Unzipped Apparel, LLC v. Bader, supra, 156 Cal.App.4th at p. 136. Because counsel for plaintiff has not received any response or objection from JPMorgan Chase Bank, no deposition record has been completed.
Although moving plaintiff is not required under the Code to show good cause for the order sought, good cause exists for the production of the requested documents. Categories 2 through 26 in the subpoena seek production of documents concerning the transaction numbers for withdrawals from defendants’ trust account to JPMorgan Chase Bank so that plaintiff can trace the money.
Category 1 seeks production of the bank account number used by Tylor Johnson, who was purportedly the business partner of the individual defendant and promoted the fraudulent sale of the convertible notes with him. Documents that have been produced in discovery also indicate that Johnson is a fraudulent transferee who received plaintiff’s money by wire transfer from defendants’ trust account.
The Court may impose a monetary sanction on anyone engaging in the discovery process. JPMorgan Chase Bank did not have any justification for failing to object to the subpoena or not responding. It also engaged in bad faith by asking for Social Security numbers before it would respond.
A sanction of $4522.50 is requested.
Declaration of Michael J. Weiler:
Exhibit 1 – a copy of the subpoena to JPMorgan Chae Bank, N.A., and notice to consumer
Exhibit 2 – some of the documents produced by BBBA Compass Bank and the bank account plaintiff deposited its investment funds into under the escrow account
The declarant spent 5.5 hours preparing this motion and anticipate spending another four hours preparing a reply and one hour preparing for and making the appearance. The declarant bills at $425/hr. Plaintiff will also incur a filing fee of $60. Based on this, plaintiff asks for a monetary sanction of $4522.50 against JPMorgan Chase Bank.
RP CONTENTIONS: no opposition filed
REPLY: no reply filed
ANALYSIS: Plaintiff moves for an order compelling third party JPMorgan Chase Bank N.A. to comply with a subpoena for the production of documents. Plaintiff also moves for an order imposing a monetary sanction of $4522.50 against JPMorgan Chase Bank.
The motion was served electronically on defense counsel on 2-11-22. It was just recently personally served on 7-19-22 on an agent for service of process for JPMorgan Chase Bank in New York (see ROA 207) as required by CRC 3.1346. (“A written notice and all moving papers supporting a motion to compel an answer to a deposition question or to compel production of a document or tangible thing from a nonparty deponent must be personally served on the nonparty deponent unless the nonparty deponent agrees to accept service by mail or electronic service at an address or electronic service address specified on the deposition record.”) This personal service occurred 17 days before the hearing, which gives sufficient notice of the hearing under the Code.
In civil litigation, discovery may be obtained from a nonparty only through a “deposition subpoena.” Unzipped Apparel, LLC v. Bader (2007) 156 Cal.App.4th 123, 127.
A deposition subpoena for business records directs a nonparty's “custodian of records” to deliver a copy of the requested documents to a “deposition officer” or to make the original documents available to the subpoenaing party for inspection and copying. Ibid. If a deponent fails to produce a requested document under his or her control, the subpoenaing party may bring a motion to compel production “no later than 60 days after the completion of the record of the deposition.” Ibid.
A business records subpoena directs the nonparty's custodian of records (or other qualified person) to deliver the requested documents (in person, by messenger, or by mail) to the “deposition officer” specified in the subpoena. Unzipped Apparel, LLC v. Bader, supra, 156 Cal.App.4th at p. 131. The deposition officer need not be a certified shorthand reporter but may be an attorney, a registered professional photocopier, or anyone statutorily exempt from the photocopier registration requirements. Ibid. The delivery may be accomplished, as directed in the subpoena, by providing a true, legible, and durable copy of the documents at either the office of the deposition officer or the office of the business responding to the subpoena. Ibid. Alternatively, a party may opt to inspect the original documents and make its own copies at the office of the responding business. Ibid. Under any of these methods of delivery, the custodian of records must execute an affidavit identifying the records and describing specific aspects of their preparation. Ibid. If the nonparty does not have any of the records listed in the subpoena or has only some of them, the affidavit must so state. Ibid.
If 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. Code Civ. Proc. § 2025.480(a). See also Unzipped Apparel, LLC v. Bader, supra, 156 Cal.App.4th at p. 134, where the court specifically concluded that section 2025.480 “governs business records subpoenas.”
A copy of the subpoena that the moving plaintiff seeks to enforce was submitted as Exhibit 1 to the moving papers. The proof of service that was filed as part of Exhibit 1 shows that it was personally served on JPMorgan Chase Bank in Glendale on 9-10-21 and that a notice to consumer was also served. In his declaration, counsel for moving plaintiff indicates that no response to the deposition subpoena has been received by First Legal, who is the deposition officer. Based on this, the tentative is to GRANT the motion to compel compliance with the subpoena.
To the extent that moving plaintiff seeks a monetary sanction of $4522.50 against JPMorgan Chase Bank, its authority is Code Civ. Proc. §§ 1987.2(a), 2023.030, and 2025.480.
Section 2025.480 is inapplicable. While subdivision (j) authorizes the Court to impose sanctions against non-parties in addition to parties and attorneys, the sanctionable conduct is limited to such persons “who unsuccessfully make[] or oppose[] a motion to compel an answer or production” before exempting persons whom it finds “acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” No opposition was filed here.
Subdivision (a) of section 1987.2 gives the Court discretion to “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.” This is not applicable because again, the motion was not opposed.
Section 2023.030 authorizes sanctions “against anyone engaging in conduct that is a misuse of the discovery process.” Subdivision (a) authorizes the Court to “impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney's fees, incurred by anyone as a result of that conduct.” Sanctionable conduct is described in section 2023.010 and includes “[f]ailing to respond or to submit to an authorized method of discovery” in subdivision (d). Thus, there is some authority for the imposition of a monetary sanction against JPMorgan Chase Bank.
The tentative is to award a monetary sanction, but reduce the sanction to $2975 in attorneys’ fees, which is 7 hours at $425 because counsel did not have to respond to an opposition, and $60 in costs for a filing fee.
RULING ON MOTION #2: The motion of plaintiff APRB Yellowstone, LLC, for an order compelling third party JPMorgan Chase Bank N.A. to comply with a subpoena for the production of documents is GRANTED. Plaintiff’s request for a monetary sanction against JPMorgan Chase Bank is reduced to $3035.
Moving party to prepare order and give notice of this ruling.