Judge: Theresa M. Traber, Case: TENTATIVERULING, Date: 2024-05-20 Tentative Ruling
Case Number: TENTATIVERULING Hearing Date: May 20, 2024 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: May 20, 2024 TRIAL DATE: February
25, 2025
CASE: Ledle Arreola Garcia v. PACE Funding
Group, LLC, et al.
CASE NO.: 21STCV28708 
MOTION
FOR PROTECTIVE ORDER
MOVING PARTY: Defendant PACE Funding Group d/b/a Home Run Financing
RESPONDING PARTY(S): Plaintiff Ledle
Arreola Garcia
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is a fraud action that was filed on August 4, 2021. Plaintiff
alleges that Defendants are engaged in a scheme to defraud homeowners,
including Plaintiff, by inducing them to agree to predatory loans funded by
California’s PACE program and falsely promising that the loans could be used
for home renovations and additions.
Defendant moves for a protective
order precluding Plaintiff from taking the deposition of Defendant’s CEO,
Robert Giles.
TENTATIVE RULING:
Defendant’s
Motion for Protective Order is GRANTED.
The
sanctions requests by both sides are DENIED.
DISCUSSION:
Defendant
moves for a protective order precluding Plaintiff from taking the deposition of
Defendant’s CEO, Robert Giles.
Meet and Confer
Before
filing a motion for a protective order, Defendant is required to file a
declaration stating his efforts to meet and confer with the opposing party to
resolve this dispute, showing a “reasonable and good faith attempt” to resolve
informally the issues presented by the motion before filing the motion. (Code
Civ. Proc. § 2016.040.)
In his declaration, defense counsel
Jeffrey Zuidema describes his efforts to resolve this matter informally.
(Zuidema Decl., ¶ 2, Exh. A.) The Court
finds, based on this declaration, that Defendant has satisfied its
meet-and-confer obligation under the statute.
Legal Standard
Code of Civil Procedure section
2025.420 authorizes a party, deponent, or any other affected person or entity
to move for a protective order. (Code Civ. Proc. § 2025.420(a).) Subdivision
(b) authorizes the Court to, for good cause shown, issue a protective order “to
protect any party or other natural person from unwarranted annoyance,
embarrassment, or oppression, or undue burden and expense.” (Code Civ. Proc. §
2025.420(b).) A protective order under this section may include, inter alia,
an order that the deposition not be taken at all. (Code Civ. Proc. §
2025.420(b)(1).)
Analysis
Defendant
moves for a protective order to preclude Plaintiff from taking the deposition
of Defendant’s CEO, Robert Giles, on the grounds that the deposition subpoena
is an improper subpoena of an apex witness.
The Court
of Appeal set forth the standard for deposition of senior corporate officers
thus:
[W]hen a plaintiff
seeks to depose a corporate president or other official at the highest level of
corporate management, and that official moves for a protective order to
prohibit the deposition, the trial court should first determine whether the
plaintiff has shown good cause that the official has unique or superior
personal knowledge of discoverable information. If not, as will presumably
often be the case in the instance of a large national or international
corporation, the trial court should issue the protective order and first
require the plaintiff to obtain the necessary discovery through less intrusive
methods. These would include interrogatories directed to the high-level
official to explore the state of his or her knowledge or involvement in
plaintiff's case; the deposition of lower level employees with appropriate
knowledge and involvement in the subject matter of the litigation; and the
organizational deposition of the corporation itself, which will require the
corporation to produce for deposition the most qualified officer or employee to
testify on its behalf as to the specified matters to be raised at the
deposition. [Citation]. Should these avenues be exhausted, and the plaintiff
make a colorable showing of good cause that the high-level official possesses
necessary information to the case, the trial court may then lift the protective
order and allow the deposition to proceed.
(Liberty Mutual Ins. Co. v. Superior Court (Frysinger) (1992)
10 Cal.App.4th 1282, 1289.)
Defendant
argues that Plaintiff cannot show good cause to depose Mr. Giles because he
does not have unique or superior personal knowledge relevant to Plaintiff’s
claims. Defendant contends that Mr. Giles was not personally involved in Plaintiff’s
PACE transaction, in that he was not involved in vetting or onboarding the
contractor with which Plaintiff did business, has no personal knowledge of that
contractor’s conduct, and was not involved in Plaintiff’s PACE application or her
assessment contract. (Declaration of Robert Giles ISO Mot. ¶ 3.) According to
Defendant, Plaintiff’s claims against it are based entirely on an agency theory
and derive from the contractor’s conduct alone. (Complaint ¶¶ 60-65, 69, 72,
82.)
In
opposition, Plaintiff argues that Mr. Giles has relevant unique knowledge
because he was directly involved in the establishment of Defendant’s PACE loan
program (Declaration of Nicholas J. Hoffman ISO Opp. Exh. F. pp. 59:19-60:7), acknowledged
problems with contractors using misleading marketing efforts in May of 2018
(Exh. C), and advocated against implementation of consumer protection
regulations which Plaintiff contends would have prevented her injury. (Exh. L.
pp. 272:20-275:7; 275:18-277:4.) Plaintiff also asserts that she alleged direct
wrongdoing by this Defendant citing to the Complaint in scattershot fashion. A
close reading of the Complaint does not entirely support her contention. Much
of the material to which Plaintiff cites is background information on the PACE
program or general assertions of misconduct in the PACE program without facts
directed at the Defendants or Plaintiff’s involvement with them. (Complaint ¶¶
22-30, 38-39, 54.) Stripped of decoration, the core individual claims which
Plaintiff alleges assert that Defendant Pace Funding Group hired an unethical
contractor without conducting its due diligence and ratified that contractor’s unethical
conduct as part of a pattern and practice to expand its business volume.
(Complaint ¶¶ 33, 47-53.) In addition, Plaintiff alleges that Defendants
practices violated the Unfair Competition Law and the Consumer Legal Remedies
Act by failing to establish and enforce practices to provide “heightened
protections and oversight around the solicitation of homeowners for PACE loans,
the criteria for determining lending eligibility based on the homeowner’s
income and home equity, and procedures for validating the project is PACE
eligible and a homeowner’s ability to repay those loans,” and by permitting a
litany of unscrupulous and substandard business conduct by Defendants’
contractors contrary to their representations and obligations of adequate
oversight designed to protect consumers. (Id., ¶¶ 111-112.) Under the CLRA, Plaintiff alleges that
Defendants’ public representations about their program and oversight of
contractors “misrepresented the quality, benefits, and sponsorship of the
services they were attempting to provide to Plaintiff” and “led Plaintiff to
believe that she would receive a high-quality second-story addition to her home
as part of a government run program.” (Id.,
¶ 132.) While the Court agrees with Plaintiff that the Complaint seeks
liability beyond a pure agency theory, the Court is not persuaded that the
evidence offered by Plaintiff demonstrates that Mr. Giles has unique or
superior knowledge of the practices which are being alleged.
Plaintiff
argues that Defendant admitted that Mr. Giles has relevant knowledge by naming
him as a fact witness in other actions. Plaintiff states that Mr. Giles
testified to setting up Defendant’s PACE loan program, its consumer protection
measures, and whether other contractors had committed consumer fraud. (Hoffman
Decl. Exh. N. pp. 19-60.) Plaintiff also argues that Defendant has designated
Mr. Giles as its person most qualified to testify to its PACE program. (Hoffman
Decl. Exh. P.) However, this evidence bears the same defect in that it only
establishes Mr. Giles’s knowledge of the PACE program in general and not the specific
conduct alleged here—i.e., the failure to do due diligence as to the contractor
in this case and ratification of that contractor’s actions or, as to the UCL
and CLRA claims, the misrepresentations about Defendants’ oversight of PACE
contractors and/or their failure to enforce reasonable standards for their
contractors.
In light of
Mr. Giles’s categorical denial that he has any direct knowledge of the vetting
or onboarding of Elite or of Plaintiff’s particular grievance, Plaintiff has
not carried her burden to demonstrate that Mr. Giles has relevant unique or
superior knowledge that would authorize an apex deposition on Plaintiff’s
individual claims. As to Plaintiff’s causes of action under the UCL and CLRA,
Plaintiff has failed to demonstrate Mr. Giles’ unique involvement in the
establishing, implementing, or monitoring practices as to contractor vetting or
oversight, nor any direct participation in advertising guarantees and other
representations about the performance and bona fides of Defendants’ contractors
or any lax enforcement of such guarantees as to any specific contractors. Under these circumstances, it is premature to
seek deposition testimony from Mr. Giles, whose deposition should only be
sought if justified by targeted PMQ depositions about the challenged practices.
The Court
rules, therefore, that Plaintiff has not demonstrated good cause to require Mr.
Giles’s deposition at this time.
Sanctions
Defendant requests monetary sanctions against Plaintiff and her counsel
for misuse of the discovery process. In
response, Plaintiff seeks sanctions for Defendants’ resistance to the proposed
deposition.
Code of Civil Procedure section 2023.030 authorizes the Court to impose
monetary sanctions on any attorney engaging in the misuse of the discovery
process by requiring that attorney to pay the reasonable expenses incurred by
anyone as a result of that conduct. (Code Civ. Proc. § 2023.030.) Moreover, the
Court “shall impose a monetary sanction under Chapter 7 (commencing with
Section 2023.010) against any party, person, or attorney who unsuccessfully
makes or opposes a motion for a protective order under this section, 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.” (Code
Civ. Proc. § 2025.420(h).)
Although Defendant has prevailed on the motion for a protective order, Plaintiff
appears to have acted with substantial justification. Given the allegations of
a pattern and practice by Defendants in its hiring and ratification of
contractor misconduct, Plaintiff’s pursuit of Mr. Giles’s deposition, as
Defendant’s CEO, is not wholly unreasonable, even if Plaintiff did not carry
her burden to demonstrate Mr. Giles’s unique or superior knowledge at this
juncture or the need to depose Mr. Giles before further PMQ depositions have
been completed. The Court therefore declines to award sanctions to either side in
connection with this motion.
CONCLUSION:
Accordingly,
Defendant’s Motion for Protective Order is GRANTED.
The
sanctions requests by both sides are DENIED.
Moving
Party to give notice.
IT IS SO ORDERED.
Dated: May 20, 2024 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
before the hearing. All interested parties must be copied on the email. It
should be noted that if you submit on a tentative ruling the court will still
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have, in essence, waived your right to be present at the hearing, and you
should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.