Judge Virginia Keeny, Case 20VECV00119 2023-01-13 Tentative Ruling

Judge: Virginia Keeny, Case: 20VECV00119, Date: 2023-01-13 Tentative Ruling

Case Number: 20VECV00119 Hearing Date: January 13, 2023 Dept: W

HSIU-FANG LAI, et al. vs PARADISE LODGE WINNETKA, INC.

PLAINTIFFS’ MOTION TO COMPEL DEFENDANTS MARTIN KUOS AND MULAN KUOS FURTHER RESPONSES TO PLAINTIFF’S REQUESTS FOR PRODUCTION OF DOCUMENTS, SET THREE

Date of Hearing: January 13, 2023 Trial Date: October 23, 2023

Department: W Case No.: 20VECV00119

Moving Party: Plaintiffs Hsin-Hsiao Scott Wang and Hsiu-Fang Lai

Responding Party: Defendants Mulan Kuo and Martin Kuo

BACKGROUND

Plaintiffs allege they entered into a joint venture whereby Plaintiff Hsiu-Fang Lai, Defendant Pi Lien Fong, and Defendants Martin C. Kuo and Mulan Kuo each contributed $200,000 in exchange for a one-third ownership interest in the Motel. Plaintiffs further allege the Defendants managed the operations of the Motel to the exclusion of the Plaintiffs and as part of their misappropriation of the revenues generated by the business, the Defendants formed a number of business entities, including defendant entities Paradise Lodge Winnetka, Inc., 20128 Roscoe Boulevard, LLC, and Paradise Lodge General Partnership. Plaintiffs initiated this lawsuit on January 28, 2020.

On February 24, 2020, Plaintiffs Hsui-Fang Lai and Hsin-Hsiao (Scott) Wang filed a First Amended Complaint against Paradise Lodge Winnetka, Inc., 20128 Roscoe Boulevard, LLC, Paradise Lodge General Partnership, Pi Lien Fong, Ming-Hua Fong, Allison Baskett, and Mu-Lan Kuo Martin Kuo asserting causes of action for (1) Partition of Real Property; (2) Accounting; (3) Breach of Fiduciary Duty; (4) Breach of Partnership Agreement; (5) Declaratory Relief; and (6) Unjust Enrichment.

On April 20, 2020, default was entered against Defendants 20128 Roscoe Boulevard, LLC and Paradise Lodge Winnetka, Inc. On April 22, 2020 and April 23, 2020, default was entered against Defendants Paradise Lodge General Partnership and Pi Lien Fong respectively. The default was set aside on January 27, 2021.

On May 13, 2020, Defendants Paradise Lodge Winnetka, Inc.; 20128 Roscoe Boulevard, LLC; Paradise Lodge General Partnership; Pi Lien Fong; Minghua Fong; Ming-Hui Fong; Allison Baskett; Mu-Lan Kuo; and Martin Kuo filed an answer to the FAC.

[Tentative] Ruling

Plaintiff Hsiu-Fang Lai’s Motion to Compel Defendants Martin Kuos and Mulan Kuos Further Responses to Plaintiff’s Requests for Production of Documents, Set Three is GRANTED.

DISCUSSION

Plaintiff Hsiu-Fang Lai moves the court for an order compelling Defendants Mulan Kuo and Martin Kuo to provide further responses to Plaintiff’s Requests for Production, Set Three, and an order to pay Plaintiff’s reasonable fees incurred in bringing this motion as sanctions.

The propounding party may bring a motion to compel further responses to requests for production if it believes the statement of compliance is incomplete, the representation of an inability to comply is inadequate, incomplete, or evasive, or if an objection is without merit or too general. (CCP § 2031.310.) The motion must be accompanied by a meet and confer declaration, (CCP §§ 2016.040; 2031.310(b)(2)), and a separate statement. (Cal. R. Ct., rule 3.1345.)

As an additional requirement only as to requests for production, the motion must set forth specific facts showing good cause justifying the discovery sought. (CCP § 2031.310(b)(1).) “[T]hat burden is met simply by a fact-specific showing of relevance.” (TBG Ins. Services Corp. v. Superior Court, 96 Cal. App. 4th 443, 447 (2002).) The opposing party bears the burden of justifying any objections. (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255; Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 97-98.)

Plaintiff requests the Kuo Defendants provide further responses to Plaintiff’s Requests for Production, Set Three Nos. 55 and 56. No. 55 requests documents sufficient to show cash deposits made into Kuo’s bank accounts over the past ten years and No. 56 requests documents sufficient to show payments made on Kuo’s credit cards over the past ten years. Both requests state the Kuo’s may redact other deposits, purchase information and balance information. Plaintiff argues good cause exists for compelling the documents as the requested financial information goes to the basis of Plaintiff’s allegations against the Kuo Defendants – the Fongs and Kuos conspired to embezzle money from the Paradise Lodge business, where Plaintiff is entitled to a one-third share of the profits as a partner.

The court agrees. Plaintiff has alleged that the Kuos and the Fongs conspired to steal money from the Paradise Lodge. By analyzing the requested documents, Plaintiff can trace, if any, money from Paradise Lodge to the Kuos’ accounts via either cash deposit or payments made on the Kuos’ credit cards. This will also allow Plaintiff to build their forthcoming opposition to the Defendants’ motion for summary judgment. Plaintiff has also narrowed the scope by allowing for the redaction of all information besides that showing credit card payments and cash deposits. Plaintiff further offers to designate the documents as attorneys’ eyes only under the relevant protective order.

Once good cause has been shown, a respondent has the burden to justify objections in response to a motion filed to compel further responses. (Fairmont, supra, 22 Cal.4th at 255; Kirkland, supra, 95 Cal.App.4th at 97-98.) Defendant failed to justify any of its objections.

Defendant first objects to the discovery requests on the ground Plaintiff’s request for production for ten years' worth of the Kuos' redacted bank and credit card statements is violative of the Kuos' privacy rights. Plaintiff has a right to privacy regarding his personal financial information. (See Hecht, Solberg, Robinson, Goldberg & Bagley v. Superior Court (2006) 137 Cal.App.4th 579, 593-94; Ameri-Medical Corp. v. Workers’ Compensation Appeals Board (1996) 42 Cal.App.4th 1260.) However, [c]ourts must . . . place the burden on the party asserting a privacy interest to establish its extent and the seriousness of the prospective invasion, and against that showing must weigh the countervailing interests the opposing party identifies.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 557.) In balancing the competing considerations, the court finds a compelling interest in discovering cash deposits and credit card payments made by the Kuos. Such evidence goes to the heart of Plaintiff’s contention against the Kuos and as noted by Plaintiff, the Kuos may redact all information besides that showing credit card payments and cash deposits. Plaintiff is also willing to designate the documents as for attorneys’ eyes only.

Defendant also objects to the discovery requests on the ground the requests are overly broad. The request for production of documents requests records dating back ten years. Defendant contends the ten year span is unreasonable and instead, Plaintiff should have their forensic accountant provide a declaration describing what documents are required to complete their analysis and explain the need for said documents. Moreover, the production should be limited to only those dates where Plaintiffs are unable to tie in cash receipts and/or credit card payments from the Paradise Lodge business accounts. The court disagrees. The court finds any forensic declaration unnecessary and Plaintiff is not obligated to first determine the dates where Plaintiff has already located unidentified credit card payments. Plaintiff requests documents from the past ten years, which is a reasonable time period given the allegation that the alleged misappropriation may have started as early as 1997.

The court notes Kuos argument regarding a second deposition for the Kuos. However, this matter is not before the court. Plaintiff has not sought an order on this matter.

Accordingly, Plaintiff’s motion to compel further discovery is GRANTED.

Sanctions

Plaintiff requests monetary sanctions against the Kuos. Plaintiff contends the Kuos have no justification in opposition the motion as the Kuo Defendants were provided multiple warnings from the court that discovery into the Kuos’ personal finances would be permitted. Plaintiff also contends the Kuos have a history of discovery misconduct. Plaintiff requests an opportunity to present a declaration substantiating the amount of time incurred in preparing the motion should the court grant sanctions.

Code of Civil Procedure section 2031.310(h) provides for mandatory monetary sanctions “against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response to a demand, 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.” (CCP § 2031.310(h).)

The Kuos argue they have acted with substantial justification as Plaintiff has failed to make a showing as to the need for the requested personal financial information as is required under the California Constitution and relevant case law. While the court ultimately disagrees with defendant’s position, the court cannot say that it was not justified, since the financial records sought are entitled to some constitutional protection and the time period for which records are sought is sufficiently broad that the Kuo’s objections were not unreasonable. The request for sanctions is denied.