Judge William A. Crowfoot, Case Number: EC066531, Date: 2025-03-25 Tentative Ruling

On January 28, 2025, judgment debtor Fairview East, LLC (“Fairview”) filed this motion to quash or modify the subpoena duces tecum issued to third-party, Lin Ma (“Ma”), by judgment creditor Uni-Glory Development, Inc. (“Uni-Glory”). The subpoena was issued on December 12, 2024, after the Court granted Uni-Glory’s Application and Order for Appearance and Examination (“ORAP”) of Ma and scheduled their examination for January 29, 2025.

Uni-Glory filed an opposition brief in the related case, Case No. 24NNCV02945 (the “UVTA Action”), on February 11, 2025, even though the subpoena was issued as part of post-judgment proceedings in Case No. EC066531.

The subpoena at issue requests two categories of documents from January 1, 2016 to the present: (1) All documents relating to financial statements prepared for Fairview including, but not limited to, year-end financial statements and related notes to the financial statements, monthly, quarterly and interim financial statements and related notes to the financial statements, and general ledgers, cash flow statements, balance sheets, income statements and/or profit and loss statements, sales journals, cash receipt journals, cash disbursement journals, accounts receivable journals, accounts payable journals, and payroll journals, and (2) all documents relating to regulatory reports and filings prepared for Fairview including, but not limited to, income tax returns, franchise tax returns, Form K-1s, and securities and exchange commission filings and licensing filings.

Fairview advances both procedural and substantive arguments in support of its motion to quash. First, Fairview argues that the subpoena is defective because witness fees were not tendered at the time the ORAP was served on Ma; rather, fees were only tendered on January 21, 2025. (Motion, p. 3.) Second, Fairview argues that the subpoena should only require the production of documents from July 17, 2017, because all prior transactions are extinguished from adjudication under the Uniform Voidable Transfer Act’s (“UVTA”) 7-year statute of repose, and the UVTA Action was filed on July 17, 2024. Third, Fairview objects to the production of privileged state and federal tax returns in light of its production of bank statements and the availability of other means to obtain Fairview’s financial information through accounting records.

With respect to the issue of mileage fees, Fairview argues that Code of Civil Procedure section 708.120 (all undesignated statutory references are to the Code of Civil Procedure) renders the ORAP to Ma defective because the statutory witness fees were not paid at the time the ORAP was served (and the ORAP must have been served no less than ten days before the scheduled examination). (Motion, pp. 8-9; Code Civ. Proc., § 708.120.) Fairview contends that since the ORAP to Ma is defective for failure to tender witness fees, the subpoena is also defective because a subpoena must be “tethered” to a valid post-judgment examination.

In opposition, Uni-Glory argues that the issue of fees is moot because a fee is only required if requested by the witness at the time of service and the fees have already been paid. The Court disagrees. In post-judgment examination proceedings, witnesses may be required to appear and testify before the court or referee “in the same manner as upon the trial of an issue.” (§ 708.130, subd. (a).) Service of a subpoena is made by delivering a copy and “if demanded by [the witness], the fees to which [they] [are] entitled for travel to and from the place designated.” (§ 1987, subd. (a).) However, the ORAP underlying the subpoena was issued pursuant to § 708.120, and while section 708.120 is not the sole statute for subpoenaing third party witnesses and applies only to a specific subset of third parties – those who have possession or control of the judgment debtor’s property subject to enforcement or owes the judgment debtor a debt over $250 – section 708.120 has its own specific statutory requirements which Uni-Glory failed to satisfy. (Shrewbury Management, Inc. v. Superior Court (2019) 32 Cal.App.5th 1213, 1227; Yolanda’s, Inc. v. Kahl & Goveia Commercial Real Estate (2017) 11 Cal.App.5th 509, 514 [section 708.130 has broader reach than 708.120].) In fact, it is even arguable that the ORAP was issued in error because the declaration supporting the application does not state facts showing that Ma is in possession of Fairview’s property that can be used to support the judgment.

But, even if the subpoena were issued in connection with an ORAP for Fairview East (which appears to be ongoing, notwithstanding the February 5, 2025 minute order incorrectly stating that the “judgment debtor” is discharged, as opposed to the particular witness, Tai On Ho), the Court would modify the subpoena to exclude the request for regulatory documents and tax returns prepared by Ma for Fairview. There is a qualified privilege to withhold disclosure of tax returns, which is subject to implied waiver. (E.g., Fortunato v. Superior Court (2003) 114 Cal.App.4th 475, 482 [potential relevance alone does not render the tax-return privilege inapplicable]; Weingarten v. Superior Court (2002) 102 Cal.App.4th 268, 274.) Information that is an integral part of tax returns, or contained in tax returns, qualifies for the tax privilege, including documents that are required to be attached to income tax returns. (Brown v. Superior Court (1977) 71 Cal.App.3d 141, 143-144.) “[T]he [tax return] privilege is waived or does not apply where (1) there is an intentional relinquishment …, (2) the ‘gravamen of (the) lawsuit is so inconsistent with the continued assertion of the taxpayer's privilege as to compel the conclusion that the privilege has in fact been waived …, or (3) a public policy greater than that of confidentiality of tax returns is involved ….” (Sammut v. Sammut (1980) 103 Cal.App.3d 557, 560.)

In support of its subpoena, Uni-Glory argues that the tax returns are subject to production due to Fairview’s refusal to produce its QuickBooks accounting records. (Opp., p. 19.) This argument fails because on March 18, 2025, Fairview’s counsel, Armen Manasserian, declares that Quickbook files covering the period of July 2017 through December 2024 were sent to Uni-Glory’s counsel.

The Court, however, rejects Fairview’s attempts to limit the subpoena to documents from July 2017 to the present based on the UVTA, since the UVTA is not at issue in this action and the purpose of post judgment proceedings is to “leave no stone unturned in the search for assets which might be used to satisfy the judgment.” (Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1014; see also Motion, pp. 9-10 and Reply, pp. 8-10 [no claims or defenses asserted in post-judgment proceedings.) Yet, the fact that a production (though partial) has been made obviates the compelling need for the tax returns themselves.

Accordingly, for the reasons stated above, the motion to quash the subpoena to Lin Ma is GRANTED in its entirety.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.