Judge: Virginia Keeny, Case: 19VECV00966, Date: 2023-01-26 Tentative Ruling

Case Number: 19VECV00966    Hearing Date: January 26, 2023    Dept: W

NOEL LUSTIG, M.D., INC., dba PSYCHIATRIC MEDICAL GROUP v. MARC L. NEHORAYAN, M.D., A PROFESSIONAL CORPORATION, et al.

DEFENDANTS’ MOTION TO COMPEL COMPLIANCE WITH THIRD PARTY SUBPOENA

Date of Hearing:        January 26, 2023                               Trial Date:       N/A

Department:              W                                                        Case No.:        19VECV00966

Moving Party:            Defendants Marc L. Nehorayan, M.D., a Professional Corporation and Marc L. Nehorayan

Responding Party:     Non-Party Claims Recovery Service, Inc.

BACKGROUND

Plaintiff Noel Lustig, M.D., Inc. d/b/a Psychiatric Medical Group (“PMG”) brings this case, alleging the misappropriation of receivables due PMG by Defendants Marc L. Nehorayan, M.D., A Professional Corporation (“Nehorayan Corp.”) and its principal Marc Nehorayan (“Dr. Nehorayan”).  On July 10, 2019, PMG filed its original complaint.  On January 31, 2020, PMG filed its first amended complaint (the “FAC”) alleging: (1) breach of fiduciary duty; (2) conversion; (3) fraud; (4) breach of written contract; (5) unfair business practices; (6) unjust enrichment and constructive trust; and (7) accounting. 

On July 28, 2020, Cross-Complainants Nehorayan Corp. and Dr. Nehorayan filed their original cross-complaint against Cross-Defendant PMG.  On May 26, 2021, Cross-Complainants filed their second amended cross-complaint (the “SACC”), alleging: (1) conversion; (2) negligence; (3) money had & received; (4) imposition of constructive trust; (5) breach of contract; and (6) accounting.   

[Tentative] Ruling

Defendants Marc L. Nehorayan, M.D., a Professional Corporation and Marc L. Nehorayan, M.D.’ Motion to Compel Compliance with Third Party Subpoena is GRANTED.

discussion

Defendants and Cross-Complainants Marc L. Nehorayan, M.D., a Professional Corporation (“Nehorayan Corp.”) and Marc L. Nehorayan, M.D. (collectively “Defendants”) move for an order compelling third-party Claims Recovery Services, Inc. (“CRS”) to comply with subpoenas served on them for the production of documents. Defendants make the motion on the grounds that CRS has failed to provide a timely response to its subpoenas.

“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.” (CCP §2025.480(a); see Stewart v. Colonial Western Agency, Inc. (2001) 87 Cal.App.4th 1006, 1015 n. 3 [the only proper basis to instruct a deponent to not answer a question is an objection based upon a privilege or manifestly irrelevant questions or questions designed only to harass.]) “If the court determines that the answer or production sought is subject to discovery, it shall order that the answer be given or the production be made on the resumption of the deposition.” (CCP §2025.480(i).)¿Failure to obey an order may be considered contempt of court and could subject a party to the action to issue, evidentiary, or terminating sanctions as well as monetary sanctions. (CCP §2025.480(k).) “This motion shall be made no later than 60 days after the completion of the record of the deposition, and shall be accompanied by a meet and confer declaration.”¿(CCP §2025.480(b).) 

Defendants contend on October 13, 2021 Defendants served a deposition subpoena to the person most knowledgeable at CRS, which included a request for production of documents. (Mayes Decl., Exh. A.) Duane Darrett, of CRS, Inc., appeared for the deposition (which lasted 2 separate sessions), but did not produce any documents at either deposition session. Thereafter, Defendants demanded that CRS produce the documents. On April 29, 2022, Defendants served a second subpoena on CRS. Defendants contend this was a “records only” subpoena (Mayes Decl., Exh. B.) However, despite several months of meeting and conferring, no documents have yet been produced. Defendants maintain these documents are necessary as this case involves what, in essence, amounts to an accounting dispute between the Nehorayan Corporation and PMG, and CRS has served as the collection arm for both entities for many years.

CRS opposes the motion on several procedural and substantive grounds. First, CRS argues the motion must be denied because Defendants have failed to demonstrate good cause. The court disagrees. There is no good cause requirement for compelling production unless the deposing party seeks electronically-stored information. (CCP §2025.480(f).) The sections CRS relies upon are not based on motions for compelling production. (See CCP §2025.480.)

Next, CRS opposes the motion on the grounds Defendants failed to include a separate statement as required by California Rules of Court, Rule 3.1345. “Any motion involving the content of a discovery request or the responses to such a request must be accompanied by a separate statement. The motions that require a separate statement include a motion: … To compel … the production of documents or tangible things at a deposition[.]” (CRC, Rule 3.1345(a)(5).)

After CRS filed and served their opposition, Defendants filed a separate statement. CRS filed a limited opposition to the separate statement arguing it is untimely and more importantly, seeks to expand the motion to compel by including the October 2021 subpoena and fails to comply with CRC Rule, 3.1345(c)(2),(3), or (6). While the court admonishes Defendants for its failure to comply with the California Rules of Court, the separate statement is for the court’s convenience and is not a jurisdictional requirement. As such, the court declines to deny the motion on these grounds. The court further finds that the separate statement did not expand the original motion. The motion specifically lists both subpoenas.

CRS next argues Defendants failed to fulfill their meet and confer requirements prior to filing the instant motion. Specifically, CRS contends while Defendants “badgered” CRS for nearly a year, Defendants have never succinctly laid out the legal authority for Defendants’ position. Instead, defense counsel has simply leveraged the ongoing threat of a motion to compel to keep CRS hostage to this overly broad and unduly burdensome subpoena. However, it appears by CRS’ own exhibits, the parties have met and conferred extensively on the matter. In the supplemental opposition by CRS, counsel states on May 26, 2022, the parties discussed issues relating to the subpoena and document production and sent follow-up correspondence memorializing all that had been discussed and all that needed to be done. (Supp. Perry Decl. ¶¶5-6.) A meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion. (CCP §2016.040.) Defendants have done such. (Mayes Decl. ¶¶6-7, Exh. C.)

CRS also opposes the motion on the grounds Defendants failed to properly serve the moving papers. CRS contends Defendants served CRS via electronic service even though there is no agreement for electronic service between Defendants and CRS. Defendants do not address this issue. California Rules of Court rule 2.251 provides that electronic service is permitted when consented to by the parties. With the amendment of Code of Civil Procedure section 1010.6, Emergency Rules 11 and 12 have been repealed. The court exercises its discretion in considering the motion. CRS has been able to review the moving papers and timely respond.

Lastly, CRS’ opposition references previously produced documents known as the “Duane Folder”. CRS contends on June 27, 2022, CRS served Defendants with a flash drive entitled “Duane Folder” that contained the responsive documents. (Perry Decl. ¶6.) Defendants, in reply, argue that they already informed CRS that the documents on the flash drive that Defendants already had access to and did not satisfy CRS’ obligation. Without knowledge of what is actually on the flash drive, the court cannot determine whether the documents satisfy Defendants’ request.

Ultimately, the court finds the objections are without merit. The documents sought are described with reasonable particularity. Defendants have noted there is a protective order between the parties to cover the HIPAA issues referenced in the objection. Moreover, the request is not so burdensome in light of what Defendants seek.  

Accordingly, Defendants’ motion is GRANTED. CRS is ordered to produce the responsive documents within 30 days.

As for the statutory fee, Defendants are ordered to pay the reasonable fees of production required by Evidence Code section 1563. The costs paid will be made pursuant to the maximum rate provided in section 1563.