Reo Capital Fund 4 LLC vs Buckley Madole PC et al
Case No: VENCI00499325
Hearing Date: Wed Apr 04, 2018 9:30

Nature of Proceedings: Motion: Sanctions

TENTATIVE RULING:

As set forth herein, the motion of defendant Buckley Madole, PC, to compel Donald Boehm to appear for deposition and for sanctions is granted in part. Unless the parties agree in writing to a different date, time, or place, Donald Boehm shall appear for deposition on April 18, 2018, at the time and place set forth in the notice attached as exhibit 30 to the moving papers. All requests for awards of monetary sanctions are denied.

Background:

On July 24, 2017, plaintiff REO Capital Fund 4 LLC (REO) filed its complaint in this action for legal malpractice against defendants Buckley Madole, PC, Michael Gonzales, Nabeel Zuberi, Lori Dobrin, Erica Loftis, and Richard Nyznyk in Ventura County Superior Court.

This motion involves third party Donald G. Boehm, who is the managing member of plaintiff REO.

On August 24, 2017, counsel for defendant Buckley Madole, PC (Buckley), attorney Michael McCarthy, served on counsel for plaintiff, attorney J. Grant Kennedy, a notice of the deposition of Boehm, then set for September 7, 2017. (McCarthy decl., ¶ 2 & exhibit 1.) (Note: Both parties have failed to comply with California Rules of Court, rule 3.1110(f)(1) in failing to provide an index of exhibits, rule 3.1110(f)(4) in failing to provide electronic bookmarks for exhibits, and rules 3.1110(c), (f)(1), and 3.1113(j) in failing to continuously paginate documents including the exhibits. These failures impose an unreasonable burden on the court to locate exhibits, especially as it relates to defendants’ 211 page motion with 30 separate exhibits.) Also on August 24, McCarthy served on Kennedy a notice of the deposition of the person most knowledgeable (PMK) from REO as to certain subjects, then set for September 6. (McCarthy decl., ¶ 3 & exhibit 2.)

On August 28, 2017, Kennedy served on McCarthy an objection to the deposition on September 6, stating that Kennedy would be unavailable, that all parties have not answered, that Buckley had not answered, and that Boehm would not attend the deposition. (McCarthy decl., ¶ 4 & exhibit 3.)

On September 12, 2017, McCarthy served amended notices of deposition for Boehm and for the REO PMK, then set for September 26 and 25, respectively. (McCarthy decl., ¶ 5 & exhibit 4.)

On September 14, 2017, Kennedy served on counsel for Buckley an objection to the notices of deposition, which the objection characterizes as a “unilateral effort” to notice depositions. (McCarthy decl., ¶ 6 & exhibit 5.) The objection also objects on the grounds that other defendants have not appeared and to avoid duplication of depositions Boehm would not attend. (Ibid.)

Also on September 14, 2017, defendant Buckley filed its answer to the complaint.

On August 28, 2017, Kennedy sent an email to McCarthy stating that there would not be a deposition until the other defendants had appeared. (McCarthy decl., ¶ 7 & exhibit 6.) McCarthy responded stating that the dates would go forward unless alternate available dates were agreed. (Ibid.)

On September 25, 2017, McCarthy served second amended notices of deposition for Boehm and for the REO PMK, then set for October 12 and 11, respectively. (McCarthy decl., ¶¶ 8, 9 & exhibits 7, 8.) Also on September 25, an associate of McCarthy sent a letter to Kennedy responding to the objections and asserting that the objections are improper. (McCarthy decl., ¶ 10 & exhibit 9.)

On October 9, 2017, Kennedy sent an email to McCarthy stating that he had returned, that he was reviewing McCarthy’s letters, that he had received notice of acknowledgement for defendants, and was open to discuss a date for a deposition. (McCarthy decl., ¶ 11 & exhibit 10.)

On October 10, 2017, McCarthy responded by email to Kennedy noting that although Kennedy was not available for deposition on October 11 and 12, Kennedy had failed to offer alternate dates. (McCarthy decl., ¶ 12 & exhibit 11.) The email demands that alternate dates be provided or a motion would be filed. (Ibid.)

On October 12, 2017, McCarthy served third amended notices of deposition for Boehm and for the REO PMK, then set for November 8 and 1, respectively. (McCarthy decl., ¶¶ 13, 14 & exhibits 12, 13.) The notice as to Boehm was made on behalf of defendants Buckley, Gonzales, and Dobrin. The notice as to the REO PMK was made as to Buckley. Also on October 12, 2017, Grant sent McCarthy an email following up a meet and confer letter. (McCarthy decl., ¶ 15 & exhibit 14.) (Note: The October 12 email as attached in exhibit 14 is incomplete.)

On October 13, 2017, McCarthy responded to the October 12 email, among other things, asserting that the depositions would go forward as to Boehm both individually and as the REO PMK as noticed. (McCarthy decl., ¶ 15 & exhibit 14.) Kennedy responded acknowledging both dates. (Ibid.)

On October 23, 2017, Kennedy served an objection to the November 1 deposition of the REO PMK. (McCarthy decl., ¶ 16 & exhibit 15.) Also on October 23, McCarthy followed up by email, stating among other things, that the deposition of Boehm individually and as the REO PMK would take place on two different dates as noticed. (McCarthy decl., ¶ 17 & exhibit 16.) Kennedy responded that the November 1 deposition would go forward and that the November 8 date should not be necessary. (Ibid.)

On October 24, 2017, defendants Michael Gonzales, Nabeel Zuberi, Lori Dobrin, Erica Loftis, and Richard Nyznyk filed their answer to the complaint, all represented by McCarthy and his firm.

On October 25, 2017, Kennedy sent an email to McCarthy stating that Boehm cannot make the November 1 date and Kennedy was unavailable November 8. (McCarthy decl., ¶ 19 & exhibit 18.) McCarthy responded that the November 1 and 8 dates had previously been confirmed and if a deponent fails to appear a motion would be filed. (McCarthy decl., ¶ 20 & exhibit 19.)

On November 2, 2017, McCarthy served a fourth amended notice of deposition of the REO PMK set for November 16. (McCarthy decl., ¶ 21 & exhibit 20.)

Boehm failed to appear on November 8. (McCarthy decl., ¶ 23.)

On November 16, 2017, Boehm appeared for deposition. (McCarthy decl., ¶ 24.) According to defendants, Boehm appeared only as the REO PMK and not individually. (McCarthy decl., ¶ 24.) According to REO, Boehm appeared both individually and as the REO PMK. (Kennedy decl., ¶ 5.) For reasons unrelated to this issue, the deposition was cut short and Kennedy stated that he would get McCarthy a date for availability to continue the deposition. (McCarthy decl., ¶¶ 28-30 & exhibit 24.) (Note: Defendants violate Rules of Court, rule 3.1110(f)(2) by including pages from the same deposition transcript as multiple exhibits.)

On November 29, 2017, McCarthy served a fourth amended notice of the deposition of Boehm in his individual capacity, set for January 3, 2018. (McCarthy decl., ¶ 31 & exhibit 25.) Also on November 29, 2017, McCarthy served a continued notice of deposition of the REO PMK, set for December 19. (McCarthy decl., ¶ 32 & exhibit 26.)

On December 14, 2017, Kennedy served an objection to the depositions of Boehm and the REO PMK as unilaterally set. (McCarthy decl., ¶ 34 & exhibit 28.)

On December 27, 2017, this action was transferred to this court from Ventura County Superior Court.

On December 28, 2017, McCarthy served a second amended notice of continuance of the REO PMK deposition. (McCarthy decl., ¶ 36 & exhibit 29.)

Boehm failed to appear for deposition on January 3, 2018. (McCarthy decl., ¶ 35.)

On March 8, 2018, McCarthy served a fifth amended notice of deposition of Boehm in his individual capacity, set for April 18, 2018. (McCarthy decl., ¶ 37 & exhibit 30.)

Analysis:

“If, after service of a deposition notice, a party to the action or an officer, director, managing agent, or employee of a party, or a person designated by an organization that is a party under Section 2025.230, without having served a valid objection under Section 2025.410, fails to appear for examination, or to proceed with it, … the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice.” (Code Civ. Proc., § 2025.450, subd. (a).)

This motion to compel is—despite the hyperbole of the parties and much dialog tangential to this motion—both narrow and (as of now) essentially undisputed. The issue is whether Boehm may be properly deposed in his individual capacity. In opposition, Kennedy states, “We are ok with the date of April 18th 2018 …. The date is good unless I am in trial and that can easily be confirmed ….” (Opposition, p. 12.) The court will therefore order the deposition to occur on April 18, 2018, as set forth in the notice of deposition attached as exhibit 30 to the declaration of Michael McCarthy. If at the hearing of this motion Kennedy reports that he will actually be in trial on April 18, he shall provide at the hearing at least three alternate dates within the following three weeks that are available so that the court may order the deposition to proceed on a date certain.

The motion is limited to the deposition of Boehm. The court therefore does not rule on other dates for other depositions, on the conduct occurring at the November 16 deposition session, or on any other matter that is not now properly before the court for disposition.

There is remaining the issue of sanctions. Each counsel seeks sanctions against the other for this motion. “If a motion under subdivision (a) is granted, the court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., § 2025.450, subd. (g)(1).)

There is much wrong with the conduct of the parties in attempting to get this deposition to go forward. A place to start this discussion is the parties’ conflating the right to separate depositions of an entity and an individual with the problems stemming from the exercise of that right to separate depositions. It was appropriate for defendants to have separately noticed the depositions of REO and Boehm, REO’s manager.

“If the deponent named is not a natural person, the deposition notice shall describe with reasonable particularity the matters on which examination is requested. In that event, the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.” (Code Civ. Proc., § 2025.230.) As to the deposition of REO, the notice properly states categories of matters that encompass the scope of the deposition examination. REO must designate the persons most qualified to testify, but that person need not have been Boehm for every (or any) category.

“Once any party has taken the deposition of any natural person, including that of a party to the action, neither the party who gave, nor any other party who has been served with a deposition notice pursuant to Section 2025.240 may take a subsequent deposition of that deponent.” (Code Civ. Proc., § 2025.610, subd. (a).) “This section does not preclude taking one subsequent deposition of a natural person who has previously been examined under either or both of the following circumstances: [¶] (1) The person was examined as a result of that person’s designation to testify on behalf of an organization under Section 2025.230.” (Code Civ. Proc., § 2025.610, subd. (c)(1).)

There is therefore no per se prohibition against taking the deposition of Boehm as the person designated most knowledgeable by REO and taking the deposition of Boehm as an individual. In the former, the scope of the examination is limited by the categories in the notice, for which Boehm’s knowledge as the designed witness represents the currently available knowledge of REO. In the latter, the scope of the examination is limited only by the ordinary limits of discovery, but Boehm’s lack of knowledge, to the extent it occurs in questioning, does not inure to limit REO’s current knowledge.

Where the designated witness is sought to be deposed as an individual, there is an opportunity for unwarranted annoyance or oppression by duplication. This appears to be one basis for REO’s and Boehm’s objections to the deposition notices. The proper approach, instead, should have been to begin to meet and confer about a protective order. “The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense. This protective order may include, but is not limited to, one or more of the following directions: [¶] … [¶] (2) That the deposition be taken at a different time. Code Civ. Proc., § 2025.420. [¶] … [¶] (5) That the deposition be taken only on certain specified terms and conditions.” (Code Civ. Proc., § 2025.420, subd. (b)(2), (5).) A reasonable qualification to the two depositions may be that the two depositions be taken at the same time so that Boehm is not subject to redundant or unnecessarily overlapping questioning. Instead, REO simply asserted that Boehm was appearing for both notwithstanding the failure of the parties to agree to that procedure or of REO or Boehm to seek a protective order. (The court does not rule on whether or to what extent a protective order may be granted as this issue is not presented by this motion; nothing herein precludes the filing of a motion for a protective order following a complete meet and confer process on this issue.)

A similar problem was posed by the early noticing of the two depositions. At the time the depositions were first noticed, no party had filed an answer or other response. At the time the depositions were noticed, counsel represented only Buckley and did not claim to represent any other party. There are six other named defendants in this action. Five of these other named defendants are now represented by the same counsel as Buckley. (The sixth named defendant has not appeared and for whom no proof of service of summons has been filed.) If a deposition is taken before a party appears, that party is not precluded from taking the deposition of the same deponent. (Code Civ. Proc., § 2025.610, subd. (a).) Once again, the circumstances give rise to the potential for abuse by taking a deposition once and then again after a co-party appears. The remedy is an agreement for the co-parties to be bound to the single deposition or, if necessary, a protective order perhaps to delay the taking of the deposition until all parties had appeared. At the time this was raised, Buckley’s response was merely that the Code permits an early deposition. This problem was largely solved by the later appearance of the other defendants. (There is no information about the last co-defendant, but the non-appearance of that party has not been further raised as an issue after the REO PMK deposition commenced.)

The approach of both parties to the timing of the deposition has been poor, but plaintiff has been especially remiss. The best practice is to communicate with the other side and exchange dates for each deposition in advance of providing notices. Where initial dates are difficult to agree upon, it is often more practical to serve a notice with a date as a placeholder so as to put the other party on notice as to categories for designation for an entity and to more particularly identify deponents. Unilateral dates for deposition should be expected to be flexible. Plaintiff provided little help with dates until well after the November 16 deposition session.

“A motion under [section 2025.450,] subdivision (a) shall comply with both of the following: [¶] … [¶] (2) The motion shall be accompanied by a meet and confer declaration under Section 2016.040, or, when the deponent fails to attend the deposition and produce the documents, electronically stored information, or things described in the deposition notice, by a declaration stating that the petitioner has contacted the deponent to inquire about the nonappearance.” (Code Civ. Proc., § 2025.450, subd. (b).)

There was an inadequate meet and confer process prior to the filing of this motion on March 9, 2018. The declaration provided in support of the motion noted that in the November 16, 2017, deposition itself, Kennedy promised to provide dates for a continued deposition. On November 29, 2017, McCarthy unilaterally noticed dates for December 19 and January 3. The only follow up communication reported in the declaration was an email dated December 14, 2017 (exhibit 27), which offers to meet and confer about deposition dates for defendants’ person(s) most knowledgeable and states that there will be no depositions until REO took that deposition. The court does not approve of parties holding up discovery as to one matter as leverage in discovery disputes as to other matters. (See Code Civ. Proc., § 2019.020, subd. (a).) Nonetheless, there was further discussion regarding Boehm’s deposition dates proposed as part of a larger discussion of deposition dates. (Kennedy decl., exhibit 2.) These discussions were ignored in the moving papers and only discussed with a reply declaration. (The court does not consider evidence presented for the first time in reply that could reasonably have been presented in the moving papers. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1538.))

Taking all of this together, and while finding that sanctions could potentially be awarded against both parties, the court finds that circumstances here make awarding sanctions against either party unjust. The competing requests for awards of monetary sanctions will be denied.

Finally, as a procedural note, defendants argue that the motion to compel was served electronically without any agreement of the parties and late by mail. As set forth in the proof of service, the opposition was served both by mail and electronically on March 21, 2018, for a hearing on April 4. In the reply declaration, there is a general statement that the hard copy of the opposition was not received until March 23 and that service was on March 22. (McCarthy reply decl., ¶ 27.) The opposition was filed with the court on March 21. “When a document may be served by mail, express mail, overnight delivery, or fax transmission, the document may be served electronically under Code of Civil Procedure section 1010.6 and the rules in this chapter.” (Rules of Court, rule 2.251(a).) “Electronic service may be established by consent. A party or other person indicates that the party or other person agrees to accept electronic service by: [¶] … [¶] (B) Electronically filing any document with the court. The act of electronic filing is evidence that the party or other person agrees to accept service at the electronic service address the party or other person has furnished to the court under rule 2.256(a)(4).” (Rules of Court, rule 2.251(b)(1)(B).” “Except when personal service is otherwise required by statute or rule, a party or other person that is required to file documents electronically in an action must also serve documents and accept service of documents electronically from all other parties or persons ….” (Rules of Court, rule 2.251(c)(3).) Santa Barbara County Superior Court requires electronic filing of documents. (Santa Barbara County Superior Court Local Rules, rule 1012(a)(1).) Electronic service as set forth in the proof of service was sufficient and timely.