Case Name: Reza Malek, M.D. v. Strategic Healthcare Associates, LLC, et al.

Case No.: 17CV316900

This action brought by plaintiff Reza Malek, M.D. (“Plaintiff”) arises from the failure of defendants Strategic Healthcare Associates, LLC (“Strategic”) and the company’s manager, Allan Mercer (“Mercer”), to provide him with company information under Corporations Code section 17704.10 (“Section 17704.10”).

As alleged in the Complaint, Strategic was formed around 2009 and its members executed an operating agreement shortly thereafter. (Complaint, ¶¶ 6-7.) Around 2012, Plaintiff received a twenty-five percent (25%) ownership interest in Strategic pursuant to a membership interest transfer agreement. (Id. at ¶ 8.) Plaintiff believes Mercer owns the remaining seventy-five percent (75%) interest in the company. (Ibid.) Plaintiff does not have a copy of Strategic’s operating agreement or a clear understanding of his rights and obligations as a member of the company. (Id. at ¶ 9, 13.) As such, around May 2016, Plaintiff sent a written request for information and documents to Mercer under Section 17704.10. (Id. at ¶ 11.) A month later, he sent another written request. (Id. at ¶ 12.) Strategic never responded. (Id. at ¶ 14.) Plaintiff therefore filed this action, alleging causes of action for violation of Section 17704.10, violation of Business and Professions Code section 17200, and an accounting.

In January 2018, Plaintiff served Strategic with Requests for Admission, Set One (“RFA”), Requests for Production of Documents, Set One (“RPD”), and Form Interrogatories – General, Set One (“FI”). (Brown Decl., ¶¶ 6-8.) Two months later, having received no responses, Plaintiff’s counsel contacted Strategic’s counsel to inquire about the matter. (Id. at ¶ 9.) Strategic’s counsel responded that he was informed Mercer had been in a car accident and was in the hospital. (Kozich Decl., ¶ 7.) He requested a three-week extension of time to provide discovery responses. (Brown Decl., Exh. C.) Given the already long delay, Plaintiff’s counsel did not grant the request for an extension but expressed a willingness to continue meeting and conferring. (Ibid.) She also requested the dates of the hospitalization. (Ibid.) A week later, Strategic’s counsel informed Plaintiff’s counsel that he just learned that his client underwent surgery and was unable to speak further with him about the matter but would speak with him as soon as he could. (Ibid.; Kozich Decl., ¶ 8.)

Currently before the Court is: (1) Plaintiff’s motion for an order that the truth of all matters specified in the RFA be deemed admitted and (2) Plaintiff’s motion to compel initial responses to the RPD and FI. Plaintiff also seeks monetary sanctions in connection with his motions. Strategic filed an opposition only to the motion to compel.

I. Motion to Deem Matters Admitted

Plaintiff moves for an order deeming the RFA admitted pursuant to Code of Civil Procedure section 2033.280, which permits a party to move for an order deeming admitted the truth of matters in requests for admission if the responding party fails to serve a timely response. A court is required to make this order unless it finds the responding party has served a substantially code-compliant, proposed response to the requests before the hearing on the motion. (Code Civ. Proc., § 2033.280, subd. (c).)

Here, the record reflects Strategic had not served any responses to the RFA when Plaintiff’s motion was filed. Although Strategic did not file any opposition indicating it subsequently provided a response, Plaintiff acknowledges in his reply that Strategic served him with verified responses to the RFA after the motion was filed. (Reply, p. 1:23-25.) However, he “disputes” that they are substantially code-compliant. (Ibid.) While not clearly articulated, it appears Plaintiff’s position is predicated solely on the fact Strategic’s responses contain objections, as he emphasizes that all objections were waived. (See Id. at p. 1:25-28.)

The Court observes, as an initial matter, that it is unable to review Strategic’s responses to the RFA because a copy of the response was not submitted. With that said, in light of the serious consequence of deeming requests for admission admitted (see, e.g., St. Mary v. Superior Court (2014) 223 Cal.App.4th 762, 775) and the fact that a response was ultimately provided, Strategic will be afforded an opportunity to bring a copy of its response to the hearing so the Court can determine if it is substantially code-compliant. In the interim, the Court is inclined to deny the motion to deem the RFA admitted. As indicated above, it appears the sole basis for Plaintiff disputing whether the responses are substantially code-compliant is Strategic’s inclusion of objections to the RFA. While it is true that objections to requests for admission are waived by a failure to serve a timely response (see Code Civ. Proc., § 2033.280, subd. (a)), Plaintiff cites no authority in support of the proposition that the inclusion of objections in violation of section 2033.280 represents a failure to substantially comply with Code of Civil Procedure section 2033.220. Code of Civil Procedure section 2033.220 otherwise provides that an objection is an adequate response to a request for admission and, on a motion to deem admitted requests for admission, the Court is only concerned with Strategic’s substantial compliance with that statute. (See Code Civ. Proc., § 2033.280, subd. (c).) To the extent Plaintiff takes issue with the substantive answers or objections that were provided in Strategic’s response, it may bring a motion to compel further responses under Code of Civil Procedure section 2033.290.

The motion for an order deeming the RFA admitted is therefore conditionally DENIED.

II. Motion to Compel Initial Responses

Plaintiff moves to compel initial responses to the RPD and FI pursuant to Code of Civil Procedure sections 2031.300 and 2030.290. These statutes collectively authorize a propounding party to move for an order compelling a response to inspection demands and interrogatories where the party to whom the requests are directed fails to serve a timely response. (Code Civ. Proc., §§ 2031.300, subd. (b), 2030.290, subd. (b).)

Here, there is no dispute that Strategic never served responses to the RPD and FI. While Strategic filed an opposition to the motion to compel, it only opposes Plaintiff’s request for sanctions against its counsel.

Accordingly, the motion to compel initial responses to the RPD and FI is GRANTED. Strategic shall serve verified code-compliant responses, without objections, within 20 calendar days of this Order.

III. Requests for Sanctions

Plaintiff seeks monetary sanctions against Strategic in connection with its motion to deem the RFA admitted and against both Strategic and its counsel in connection with the motion to compel responses to the RPD and FI.

A. Sanctions Relative to the Motion to Deem RFA Admitted

Plaintiff’s request for sanctions against Strategic is made pursuant to Code of Civil Procedure section 2033.280, which provides that “[i]t is mandatory that the court impose a monetary sanction…on the party or attorney, or both, whose failure to serve a timely response to requests for admission necessitated this motion.” (Code Civ. Proc., § 2033.280, subd. (c), emphasis added.)

Here, Strategic’s failure to serve a timely response to the RFA necessitated the filing of Plaintiff’s motion to deem the RFA admitted. Accordingly, an award of sanctions is warranted.

Plaintiff seeks sanctions in the amount of $2,450.00, representing two hours spent in preparing the motion and five hours of anticipated time to review the opposition and prepare the reply at an hourly rate of $350.00. (Brown Decl., ¶ 10.) He does not submit a declaration confirming the five hours of anticipated time was actually spent with his reply. The Court is not authorized to award sanctions for the five hours of anticipatory expense. (See Tucker v. Pacific Bell Mobile Services (2010) 186 Cal.App.4th 1548, 1551, 1564 [declining to award sanctions for anticipated expenses].) However, the balance of his request is reasonable.

Accordingly, Plaintiff’s request for monetary sanctions is GRANTED IN PART in the amount of $700.00 (2 hours x $350.00). Strategic shall pay this award to Plaintiff’s counsel within 20 calendar days of this Order.

B. Sanctions Relative to Motion to Compel Initial Responses to RPD and FI

Plaintiff’s request for sanctions against Strategic and its counsel is predicated on numerous statutes, many of which are not applicable. For example, Plaintiff cites Code of Civil Procedure sections 2030.300, subdivision (d) and 2031.310, subdivision (h), which relate to sanctions relative to motions to compel further responses to interrogatories or requests for production of documents when, here, he is seeking to compel initial responses. Of the statutes cited, the only one that has any bearing on this motion is section 2030.290, subdivision (c), which permits the imposition of sanctions against any party, person or attorney who unsuccessfully makes or opposes a motion to compel a response to interrogatories. Such sanctions must be awarded unless the one subject to sanctions acted with substantial justification or other circumstances exist that would make an award unjust. (Code Civ. Proc., § 2030.290, subd. (c).)

Strategic opposes the request for sanctions against its counsel, asserting he acted with substantial justification and other circumstances would make the imposition of sanctions unjust. Specifically, Strategic states its counsel immediately forwarded the discovery requests, informed it of the deadline for responding, and followed up shortly before the responses were due to inquire about their status. (Kozich Decl., ¶ 2-4.) After Plaintiff’s counsel inquired about the lack of responses, Strategic’s counsel learned that Mercer had been hospitalized after being in a car accident. (Id. at ¶ 6-7.) When Strategic’s counsel later attempted to obtain more information about the hospitalization, Mercer stated he was unable to speak because he had been in surgery and had a bad concussion but would respond when he could. (Id. at ¶ 8.) Strategic’s counsel has attempted to communicate with Mercer numerous times since then and Mercer represents he will provide the discovery as soon as he is able. (Id. at ¶ 10.)

The Court finds these circumstances would make the imposition of sanctions unjust. Moreover, it is not persuaded by Plaintiff’s contention in his reply that Strategic’s counsel had an “affirmative obligation to withdraw” based on Strategic’s lack of cooperation. (Reply at p. 2:21.) Plaintiff cites no authority supporting the proposition that an attorney is required to withdraw as counsel under these circumstances and it is otherwise unclear what more Strategic’s counsel could have done relative to the discovery responses given that his client’s “uncooperativeness” was due to the fact he had been in an accident and was hospitalized. Finally, while Strategic’s opposition to the request for sanctions is framed solely with respect to its counsel, the Court finds the circumstances that would make the imposition of sanctions unjust are equally applicable to Strategic.

Thus, Plaintiff’s request for monetary sanctions is DENIED.