Judge Upinder S. Kalra, Case 21STCV07255 2023-02-09 Tentative Ruling

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CASE NAME: Thomas A. Chesney, individually, and derivatively on behalf of TG Automotive, Inc. and Santa Clarita Tire & Service Inc. v. Gregory Andrew Chesney, et al.

On February 24, 2021, Thomas A. Chesney ("Plaintiff'), individually and derivatively on behalf of TG Automotive, Inc. and Santa Clarita Tire & Service Inc. (collectively, the "Corporations") filed this action against his brother and business partner, Gregory Andrew Chesney ("Defendant"). This is an action by a director and shareholder of the Corporations to recover corporate assets misappropriated by Defendant.

On April 4, 2022, Plaintiff filed a Motion to Compel Deposition, and monetary sanctions in the amount of $7,529.20, which was GRANTED, in part. The court awarded $1,589 in sanctions and ordered Defendant to appear at a Deposition within 20 days

The current Motion for Terminating Sanctions was filed on September 6, 2022. Originally, Plaintiff also asked for monetary sanctions in the amount of $5,262.20. Defendant’s Opposition was filed on November 22, 2022. Plaintiff’s Reply was filed on November 29, 2022.

Where a party willfully disobeys a discovery order, courts have discretion to impose terminating, issue, evidence, or monetary sanctions. (Code Civ. Proc., §§ 2023.010, subd. (g), 2025.450, subd. (h); R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 495.) An evidence sanction prohibits a party that misused the discovery process from introducing evidence on certain designated matters into evidence. (Code Civ. Proc., § 2023.030, subd. (c).) Ultimate discovery sanctions are justified where there is a willful discovery order violation, a history of abuse, and evidence showing that less severe sanctions would not produce compliance with discovery rules. (Van Sickle v. Gilbert (2011) 196 Cal.App.4th 1495, 1516.) “[A] penalty as severe as dismissal or default is not authorized where noncompliance with discovery is caused by an inability to comply rather than willfulness or bad faith.” (Brown v. Sup. Ct. (1986) 180 Cal.App.3d 701, 707.) 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.

Plaintiff moves for terminating sanctions, or alternatively, issue sanctions and monetary sanctions. This motion is based on Defendant’s failure to complete a deposition on various occasions.

1. The Court order that Plaintiff can unilaterally file all necessary documents with the State of California, Federal government, and third parties to dissolve these entities.

2. An order that the value of TG Automotive, Inc. and Santa Clarita Tires & Service shall each be $100.00

3. Order that Defendant Greg Chesney shall be required to indemnify Plaintiff, Thomas Chesney, for any debts and liabilities associated with Santa Clarita Tire & Service Inc.

4. Order that Plaintiff Thomas shall be required to indemnify Defendant, Greg Chesney, for any debts and liabilities associated with TG Automotive, Inc.

Alternatively, Plaintiff requests that the Court strike the answer and enter a default against Defendant.[1]

Defendant’s noticed deposition was set for November 9, 2021, but he failed to appear. The next date set was for December 7, 2021. During this deposition, Defendant was using his cell phone, and the deposition could not be completed because Defendant he “was not prepared and had other things to do. (Motion 7: 10-16, Dec. Robert A. von Esch IV.) Another noticed deposition was set for February 24, 2022. However, the day before Defendant indicated he would be unable to attend and stated that he would provide other dates.

Plaintiff filed a motion to compel deposition, which was granted on May 24, 2022. The deposition was to last 7 hours, either in person or via computer with a working camera and microphone. (Motion 8: 5-8; Dec. David Luu.) The next agreed upon date was July 8, 2022. Defendant used a cellphone despite being told to use a computer. As a result, Defendant could not look at exhibits. Defendant also indicated that he had documents in his possession that he was required to produce at the deposition, as required in the deposition notice. (Motion 9: 14-18; Dec. von Esch IV.) during the deposition Defendant requested a lunch break at noon, with a return time at 1:00 pm. However, Defendant did not return. Plaintiff’s counsel attempted to contact Defendant via email as well as via phone call to no avail. An hour after the deposition was suspended at 1:25 pm, Defendant indicated that he texted Plaintiff’s secretary “claiming he just sat down for lunch and that he wanted to resume at 2:00 pm.” (Dec. Haggblad, ¶ 4.)

Plaintiff argues that terminating sanctions are proper because of Defendant’s failure to comply with the court order to produce documents in his possession, attending the deposition on his cellphone after being told to use a computer, and failing to return at the agreed upon time. (Motion 10: 19-23.)

Defendant argues that terminating sanctions are not proper, as they are too harsh for the current matter. Defendant complied with the court order partially; it was completed only partially due to Defendant’s “lack of knowledge of the legal system.” According to Defendant’s declaration, he was did not know how long the deposition would take, that he needed a computer, and he did not receive a list of questions. (Dec. Chesney ¶¶ 4-8.) During the July 8, 2022, deposition, he needed a break for his heart condition, only began eating at 1:00 pm and asked to reconvene at 2:00 pm. Defendant then indicated that the deposition could reconvene at 2:30 pm because his truck was being towed and he could not find his keys, and thus was only 30 minutes late. (Dec. Chesney ¶ 9-11.)

The trial court may order a terminating sanction for discovery abuse “after considering the totality of the circumstances: [the] conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.” Los Defensores, Inc. v. Gomez (2014) 223 Cal.App..4th 377, 390.) Under this standard, trial courts have properly imposed terminating sanctions when parties have willfully disobeyed one or more discovery orders. (Id.) Terminating sanctions are to be used sparingly because of the drastic effect of their application. (Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th 154, 191.)

If, however, if 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.” (Creed-21 v. City of Wildomar (2017) 18 Cal.App.5th 690, 702.) Terminating sanctions are a harsh, and thus are not appropriate currently. However, sanctions are appropriate because the Court finds that Defendant has repeatedly failed to comply and the reasoning for failing to comply with these depositions fails. During two separate depositions, Defendant left on a break, either to resolve a technological issue or to go to lunch, and never returned. At the July 8^th deposition, Defendant unilaterally decided to extend the lunch until 2:00 pm., even after agreeing that the lunch break was to end at 1:00pm. Moreover, even after the potential extension to 2 pm, Defendant was still another 30 minutes late due to his truck being towed. However, Defendant has failed to produce evidence that his car was towed.

Thus, the requested terminating sanctions are too severe. However, to ensure that Defendant does comply with future orders, monetary sanctions will be enforced. While Plaintiff argues monetary sanctions would not be a deterrent, Defendant previously did not have counsel. Thus, because Defendant has counsel presently, it is likely that the deposition will take place. Plaintiff’s request for sanctions totaling $5,362.20 is GRANTED.

Motion for Terminating Sanctions is DENIED. Motion for Monetary Sanctions is GRANTED.

At the hearing on December 8^th, this Court continued the matter until February 9, 2023, to allow the parties one more attempt at taking Defendant’s deposition. (Dec. Robert A. Von Esch IV, ¶ 20, filed 12/27/2022.) The court gave until February 1^st and 6^th for supplemental documents to be filed. On February 1, 2023, Plaintiff’s Counsel filed a supplemental notice indicating that Gregory Chesney’s deposition was taken on January 23, 2023, and that monetary sanctions need to be determined. (Supp. Notice, filed 2/1/2023.)

The Court previously awarded sanctions to filing a motion to compel. The Court has reviewed the circumstances of this case and the declaration of counsel. The Court finds that based on the interrupted deposition on July 8, 2022, and the filing of this motion to obtain compliance, a monetary sanction is warranted in the amount of $1962.20.

Motion for Terminating Sanctions is DENIED. Motion for Monetary Sanctions is GRANTED in the amount of $1962.20 payable counsel for Plaintiff within 30 days.

[1] In the Motion on page 2, Plaintiff states that the Plaintiff asks that the Court strike “Plaintiff’s answer and entered default against him. Plaintiff could then proceed by way of a default…” The Court is speculating, but assumes that this as a typographical error and meant to say that Defendant’s answer be stricken.