Judge Thomas Falls, Case KC045216 2023-03-09 Tentative Ruling

RE: Trans Valley Eye Associates, Inc. et al v. Physician Associates of the Greater San Gabriel Valley, et al. (KC045216)

MARK KISLINGER’s, M.D., MARK KISLINGER, M.D., INC.’s AND MARK KISLINGER, PHD, M.D., INC.’s (collectively, “Defendants”) MOTION TO QUASH PLAINTIFF’S SUBPOENAS OF RECORDS FROM JPMORGAN CHASE BANK, N.A.

This case arises from the alleged breach of a capitation contract to provide ophthalmology care to HMO patients.

On April 7, 2005, Plaintiff filed his Second Amended Complaint (“SAC”) against several defendants.

On August 15, 2019, the trial court (after setting aside the 2010 judgment), entered a final judgment in favor of Kislinger, which Plaintiff appealed.

On July 13, 2020, the appellate court reversed the trial court’s judgment, and also ordered that the trial court enter a new and different order denying the motions in limine that sought to exclude evidence of fiduciary duties.[2]

On October 27, 2022, Mark Kislinger, M.D., Mark Kislinger, M.D., Inc. And Mark Kislinger, Phd, M.D., Inc.’S (Collectively, “Defendants”) Filed A Motion To Quash Plaintiff’s Subpoenas Of Records From Jpmorgan Chase Bank, N.A.

Defendants request that the court grant their motion to quash Plaintiff’s subpoena for records pertaining or related to Defendants and/or third-party persons mentioned in the subpoena requests in this action to JPMorgan Chase Bank, N.A. (“Chase Bank”) because there are less evasive means to calculate damages considering there are contracts involved.

In Opposition, Plaintiff explains that it only seeks Defendants’ financial information if Plaintiff is awarded punitive damages as the information is required proof in a claim for punitive damages. (Opp. p. 4, citing Adams v. Murakami (1991) 53 Cal 3d 105.)

Indeed, this state’s supreme court in Adams held that: (1) evidence of defendant's financial condition is a prerequisite to an award of punitive damages, and (2) burden is on the plaintiff rather than the defendant to introduce evidence of defendant's financial condition.[3] In fact, the court in Adams re-iterated that punitive damage awards are to be determined in light of the defendant's financial condition. (Id.) Accordingly, contrary to Defendants’ contention, the contracts do not provide information as to Defendants’ financial status. Rather, what sheds light into an individual’s wealth are bank accounts and their balance, loans, real property and its value, stocks, bonds and other investments, and any other assets the defendant has or anticipates. In sum, though the Adams court “decline[d] at present [] to prescribe any rigid standard for measuring a defendant's ability to pay” or prescribe that “any particular measure of ability to pay is superior to all others or that a single standard is appropriate in all cases,”[4] the case does stand for the proposition that financial disclosures are required, even if it is a compulsory invasion of privacy. (Id., dissenting opinion p. 130 [“If this requirement, this compulsory invasion of privacy, is being fundamentally fair to defendants, one wonders what the majority would consider to be unfair.”].)

Accordingly, though Defendants’ concern that disclosure of financial records from Chase Bank may amount to an invasion of privacy, the highest court of this state apparently has allowed for such an infringement. To the extent that Defendants cite to Britt v. Superior Court (1978) 20 Cal. 3d 844, 854-855 to argue that the disclosure amounts to an invasion of privacy, that case is inapposite as it did not pertain to financial affairs.

Notwithstanding the foregoing, the disclosure of financial affairs is not compulsory absent a substantial showing that the party seeking the information will in fact recover punitive damages.

As set forth in Richards v. Superior Court (1978) 86 Cal.App.3d 265, the following principles were set forth to guide lower courts when confronted with the issue of balancing the right of a defendant to have his right to privacy protected against intrusion into his financial affairs against the right to legitimate discovery when punitive damages are properly a part of a plaintiff’s case:

(1) it declared the necessity for addressing protective orders upon request where financial information is sought in connection with a claim for punitive damages; (2) consistent with Coy, it rejected any position that the protection is absolute absent a Substantial showing that the party seeking the information will in fact recover punitive damages; (3) it declared that the right of privacy in Article 1, section 1 is not violated by disclosure to counsel for the parties for the purpose of the lawsuit of financial information because disclosure in civil discovery relating to punitive damages is relevant to the public purpose served by judicial dispute resolution; and (4) it declared that ‘so long as the disclosure is by a Properly fashioned protective order,[5] the invasion into privacy is held within limits required by’ Supreme Court cases.

(Cobb, supra, 99 Cal.App.3d at pp. 549-550, citing Richards) (emphasis added and underline added).[6]

Here, however, a review of the SAC and Non-Confidential Settlement Conference briefs does not show a substantial showing that Plaintiff will in fact recover punitive damages. Plaintiff’s request for punitive damages, as iterated in the SAC, arises from Kislinger’s alleged creation of a competing corporation and diverting business for his personal gain rather than aiding Trans Valley. However, Defendant Dr. Kislinger argues that he did not form a new corporation because:

(1) Defendant discovered Plaintiff was being investigated and prosecuted for Medicare billing fraud (resulting in the temporary suspension of Plaintiff’s medical license) and

(2) allegations of sexual assault made by Trans Valley Eye employees against Plaintiff, which in addition to the criminal charges brought against Plaintiff, the two young female employees brought a civil action against Plaintiff, Defendant, and Trans Valley.

Accordingly, based on Defendant’s sound rebuttal to punitive damages, the court does not believe that Plaintiff has made the requisite substantial showing that he will recover punitive damages. After all, “[i]n order to justify an award of exemplary damages, the defendant must be guilty of oppression, fraud or malice. [citation]. He must act with the intent to vex, injure, or annoy, or with a conscious disregard of the plaintiff's rights. (Citations.) . . . However, [citation], such a determination does not in itself establish that defendant acted with the quality of intent that is requisite to an award of punitive damages. [A court] must look further beyond the matter of reasonable response to that of motive and intent.” (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 925.) But here, Defendant Dr. Kislinger has explained that he did not consciously disregard any purported duties to Plaintiff but rather acted reasonably in ending his business relationship with Plaintiff in light of Plaintiff’s conduct. Thus, even if Plaintiff has made allegations warranting punitive damages, Dr. Kislinger’s position conclusively undermines Plaintiff’s chances of recovering punitive damages. Plaintiff has not met his burden.

Based on the foregoing— MOTION TO QUASH PLAINTIFF’S SUBPOENAS OF RECORDS FROM JPMORGAN CHASE BANK, N.A. is GRANTED

[1] Due to the lengthy procedural history of this case, only the motion and its pertinent filings, and other significant dates are mentioned.

[2] See Kurwa v. Physician Associates of the Greater San Gabriel Valley B298008 (Super. Ct. Case KC045216). Though unpublished opinions may generally not be cited, California Rules of Court Rule 8.1115(b)(1) allows the citation of an unpublished opinion where the opinion is “relevant under the doctrine of the law of the case.”

[3] (Id. at p. 110 [“[T]o be considered is the wealth of the particular defendant; obviously, the function of deterrence [citation] will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort.... By the same token, of course, the function of punitive damages is not served by an award which, in light of the defendant's wealth and the gravity of the particular act, exceeds the level necessary to properly punish and deter. [citation]. This was a reiteration of our prior observation that, ‘It follows that the wealthier the wrongdoing defendant, the larger the award of exemplary damages need be in order to accomplish the statutory objective.’”].)

[4] (Id. at 116, fn. 7)

[5] And as to this point about protective orders (such as a limited one, requiring only that the requested financial information be made available to the plaintiff's counsel or his representative, and then only for purposes of the lawsuit), the court does believe a protective order would serve as a bipartisan solution; however, a court may not order one on its own motion. (See Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2022) ¶8:675 [“There is no statutory authority for a court limiting discovery on its own motion. Both CCP § 2017.020(a) and § 2019.030(b) require a ‘motion’ by the deponent or party or person affected. However, judges handling cases designated “complex” (¶ 12:47 ff.) may have more flexibility to manage and control discovery.”].)

[6] See Richards, supra, 86 Cal.App.3d at pp. 272-273 [“Petitioners assert a further proposition. They argue that because of a constitutional right to privacy of financial affairs declared in City of Carmel-by-the-Sea v. Young (1970) 2 Cal.3d 259, 85 Cal.Rptr. 1, 466 P.2d 225 and California Constitution, article I, section 1, disclosure in civil discovery of financial information relevant to the subject matter of punitive damages may be required only if there is some substantial showing that the party seeking the information will in fact recover punitive damages. Carmel-by-the-Sea does not declare an absolute right of privacy which precludes disclosure of financial information. Rather, it limits the obligation of disclosure to situations in which the information is relevant to the public purpose for which it is required. [Citation]. The right of privacy now incorporated expressly in article I, section 1 of the California Constitution exists to prevent governmental ‘snooping,’ to inhibit the overly broad collection and retention of unnecessary personal information, the improper use of information properly obtained for a specific purpose, and to avoid the evils incident to lack of a reasonable check on the accuracy of existing records. [Citation]. The disclosure of financial information in civil discovery related to a cause of action seeking punitive damages presents a situation where the disclosure to counsel for the parties for the purposes of the lawsuit is relevant to the public purpose served by judicial dispute resolution. So long as the disclosure is so limited, none of the evils to which the California constitutional declaration of the right of privacy is addressed are present. [Citation]. So long as the disclosure is limited by a properly fashioned protective order, the invasion into privacy is held within the limits required by Carmel-by-the-Sea.”]) (emphasis added).