Case Number: BC649108 Hearing Date: June 06, 2018 Dept: 51

Background

In the main case (BC649108), plaintiff SBK Holdings USA, Inc. sues defendants Edgar Sagsyan, Regdalin Aviation LLC, Regdalin Properties LLC, and Pillar Lar Group (PLG) for embezzlement, legal malpractice, and related claims. (The Court refers to Edgar Sagsyan by first name, as the complaint does, for clarity and consistency, not out of familiarity or disrespect.) Edgar also sues SBK, Danial McDyre, and Levon Termendzhyan for wage and hour law violations, defamation, and related claims.

On November 3, 2017, Edgar, Regdalin Properties LLC, and PLG filed this opposed motion for protective order. These defendants seek a protective order precluding them from having to respond to certain special interrogatories and requests for production. Although these defendants initially sought for the order to apply to hundreds of special interrogatories and requests for production, through extensive meet and confer efforts, they now a protective order only as to nine discovery demands. Joint Statement, May 25, 2018.

In the related case (BC677454), SBK sues Regdalin Properties LLC; Regdalin Holdings LLC; 11420 Oxnard St LLC; Manuk Aboyan; and all persons unknown, claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to plaintiff’s title, or any cloud upon plaintiff’s title thereto to quiet title. The operative first amended complaint was filed on January 16, 2018.

On May 14, 2018, Regdalin Properties LLC and Regdalin Holdings LLC filed this opposed motion to expunge lis pendens. Both sides seek attorneys’ fees.

The Court considered the moving, opposition, and reply papers and rules as follows.

Motion for Protective Order Standard

“The court shall limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence. The court may make this determination pursuant to a motion for protective order by a party or other affected person. This motion shall be accompanied by a meet and confer declaration under Section 2016.040.” CCP § 2017.020(a).

“The court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion for a protective order, 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 § 2017.020(b).

Code of Civil Procedure sections 2030.090 and 2031.060 authorize protective orders specifically related to interrogatories and requests for production, respectively. The provisions are similar to those stated above.

The burden of proof is generally on the party seeking the protective order to show good cause for whatever order is sought. Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255. Good cause requires a showing of specific facts demonstrating undue burden or other grounds, and justifying the relief sought. Goodman v. Citizens Life & Casualty Ins. Co. (1967) 253 Cal.App.2d 807, 819.

Motion for Protective Order Analysis

Defendant engaged in several attempts to meet and confer, satisfying the procedural requirement. See, e.g., Minute Order, April 13, 2018.

Each of the issues remaining following the parties’ meet and confer are addressed individually:

Request for Production (Set Two) to Sargsyan, No. 207: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATION with SBK borrowers.

The motion is GRANTED as to this demand. The demand is duplicative of Request for Production (Set One) to Sargsyan, No. 35 (requesting “ALL paper AND/OR electronic DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATIONS between YOU and ANY PERSON regarding actual borrowers under the SBK Lending Program.”) Kolkey Decl., Exh. F, p. 7.

Request for Production (Set Two) to Sargsyan, No. 208: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATION about SBK borrowers.

The motion is GRANTED as to this demand because of the reason stated above.

Request for Production (Set Two) to Sargsyan, No. 223: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY proposed transaction between YOU and ANY entity in which YOU own ANY interest in January 2014 through the present.

The motion is DENIED as to this demand. It is relevant to show whether Sargsyan may have misappropriated plaintiff’s funds.

Request for Production (Set Two) to PLG, No. 209: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATION with SBK borrowers.

The motion is DENIED as to this demand. It is relevant to show whether, as plaintiff alleges, that the loan documents, borrowers, and purported collateral were fake. FAC ¶ 45.

Request for Production (Set Two) to PLG, No. 210: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATION about SBK borrowers.

The motion is DENIED as to this demand. It is relevant to show whether, as plaintiff alleges, that the loan documents, borrowers, and purported collateral were fake. Ibid.

Request for Production (Set Two) to PLG, No. 211: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATION with SBK prospective borrowers.

The motion is GRANTED as to this demand. Plaintiff does not establish why communications with prospective but not actual SBK borrowers would be relevant.

Request for Production (Set Two) to PLG, No. 212: ALL DOCUMENTS CONSTITUTING, REFLECTING AND/OR CONCERNING ANY COMMUNICATION about SBK prospective borrowers.

The motion is GRANTED as to this demand. Plaintiff does not establish why communications regarding prospective but not actual SBK borrowers would be relevant.

Special Interrogatory (Set Two) to Sargsyan, No. 51: LIST all payments received from any borrower under the SBK LENDING PROGRAM. “LIST” as used herein means to state the amount of each payment, the date of each payment, and to whom each payments [sic] was made. [Internal brackets omitted.]

The motion is GRANTED as to this demand. The demand is duplicative of Special Interrogatory (Set One) to Sargysan, No. 15 (“DESCRIBE all funds received from borrowers under the SBK Lending Program, including all funds deposited and withdrawn from any and all accounts from January 2014 through the present?”) Kolkey Decl., Exh. B, p. 4.

Special Interrogatory (Set Two) to Sargsyan, No. 52: DESCRIBE where all payments received from any borrower under the SBK LENDING PROGRAM were deposited for the benefit of SBK.

The motion is DENIED as to this demand. It is relevant to show whether Sargsyan may have misappropriated plaintiff’s funds.

Motion to Expunge Lis Pendens Standard

In a motion to expunge a notice of lis pendens, the claimant who filed the lis pendens has the burden of proof. CCP § 405.30. Thus, that claimant, in opposing the motion to expunge the lis pendens, must demonstrate the following: (1) the action affects title to or right of possession of the real property described in the notice; (2) in so far as the said notice is concerned, the party recording the notice has commenced the action for a proper purpose and in good faith; and (3) the probable validity of the real property claim by a preponderance of the evidence. Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 70; CCP § 405.30, et seq. The court must order the notice expunged if it finds the pleading on which the notice is based does not contain a real property claim or the claimant has not established by a preponderance of the evidence the probably validity of the real property claim. CCP §§ 405.31, 405.32. Thus, a court must undertake two analytical steps, set forth below.

Step One

“Real property claim” is defined by section 405.4 as the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement, other than that obtained pursuant to statute. CCP § 405.4; Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 647. In determining whether a real property claim has been pled, the court must engage in a demurrer-like analysis. Ibid. Rather than analyzing whether the pleading states any claim at all, as on a general demurrer, the court must undertake the more limited analysis of whether the pleading states a real property claim. Ibid. Review involves only a review of the adequacy of the pleading and normally should not involve evidence from either side, other than possibly that which may be judicially noticed as on a demurrer. Ibid.

Step Two

“A claim has ‘probable validity’ where it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim.” CCP § 481.190. On either the issue of sufficient pleading or the issue of probable validity, the claimant, not the moving party, has the burden of proof. CCP §§ 405.30, 405.31, 405.32. Only admissible evidence is permitted on the motion. Burger v. Superior Court (1984) 151 Cal.App.3d 1013, 1019.

Motion to Expunge Lis Pendens Analysis

The parties do not dispute whether the FAC states a real property claim. In its March 6, 2018, minute order, the Court concluded that the FAC met this step.

To establish probable validity, plaintiff offers the declaration of Levon Termendzhyan, its director and CFO. Termendzhyan represents that plaintiff wired Sargsyan funds for plaintiff’s business operations and real property investments, that “[a]ll property was to be held in SBK’s name as I discussed with Mr. Sargsyan and as I instructed him,” and that contrary to those instructions the properties were not purchased in plaintiff’s name. Termendzhyan Decl. ¶ 14. The effect of these representations, like the allegations in the verified FAC, is that defendants acquired legal title through fraud. (As used in the context of the motion to expunge lis pendens, “defendants” refers to Regdalin Properties LLC and Regdalin Holdings LLC.)

In both their moving papers and reply, defendants observe the lack of supporting documentary evidence. MOV (Lis Pendens) 5:15-19; REP (Lis Pendens) 2:9-11. Although the point is well taken, defendants themselves offer no documentary evidence or declaration suggesting the contrary. Because the only evidence either side offers is Termendzhyan’s unopposed declaration, plaintiff successfully establishes the probable validity of the real property claim by a preponderance of the evidence.

In their moving papers, defendants argue that the Statute of Frauds applies to the agreements between the principals of plaintiff and defendants. As plaintiff observes, however, the provision defendants cite only applies to agreements “authorizing or employing an agent, broker, or any other person to purchase or sell real estate . . . for compensation or a commission,” which does not apply here. Civ. Code § 1624(a)(4) (emphasis added.) Defendants’ failure to address this in the reply is construed as a tacit concession.

Attorneys’ Fees

Because the motion to expunge lis pendens is unsuccessful, plaintiff is the prevailing party. Defendants do not argue that it acted with substantial justification or that other mitigating circumstances are present.

Plaintiff requests recovery of attorneys’ fees totaling $5,880 for the motion to expunge lis pendens. The amount represents 10.5 hours (6 hours preparing the opposition and 4.5 anticipated hours in reviewing the reply and supporting documents and attending the hearing) at an hourly rate of $560 an hour. The Court finds the hourly rate reasonable but will subtract two hours given the short reply and lack of supporting documents. Plaintiff will accordingly be awarded $4,760.

Conclusion
The motion for protective order is GRANTED IN PART AND DENIED IN PART. Edgar, Regdalin Properties LLC, and PLG need not respond to Request for Production (Set Two) to Sargsyan, Nos. 207-208, Request for Production (Set Two) to PLG, Nos. 211-212, and Special Interrogatory (Set Two) to Sargsyan, No. 51. The balance of the motion is DENIED. Responses are due no later than June 15, 2018. The motion to expunge lis pendens is DENIED. Regdalin Properties LLC (the only common moving party) to give notice.