Vinton Hawkins vs. Chris N. Vrame

2017-00220799-CU-BC

Vinton Hawkins vs. Chris N. Vrame

Nature of Proceeding: Motion to Compel Production of Documents

Filed By: Hamilton, Christina B.

Defendant Chris N. Vrame and Conservation Resources LLC’s Motion to Compel Further Responses to Requests for Production Nos. 16, 18, 20, 24, 25, 29, and 30 is ruled on as follows:

This litigation arises out of an oral contract between Plaintiff and Defendant Conservation Resources, LLC for the provision of consulting services by Plaintiff Hawkins in exchange for $100,000 per year payable monthly. Defendant Vrame is the Managing Member of Defendant Conservation Resources, LLC. Plaintiff alleges a breach of contract and fraud claim.

Plaintiff alleges that in January of 2012, he was hired by defendant Vrame as a consultant with CRLLC, earning $100,000 per year. In exchange for the payment of $ 100,000 per year, plaintiff was to provide consulting services on various projects under the management and control of CRLLC, PCCP Vrame Resources, LLC, Gill Ranch, LLC, and others. These entities owned and operated real property that served as wetland mitigation banks. During the course of plaintiff’s employment as a consultant

for CRLLC, he was asked by Vrame to defer payment of his compensation until such time as CRLLC had the resources to pay the consulting fee. Because the income stream of CRLLC was dependent on the sale of mitigation units to other real estate developers, CRLLC would often go several months without sales and without income. Plaintiff asked about payment for fees he had already earned and Vrame told him there were insufficient funds to pay him. Hawkins agreed to deferred payment until more mitigation payments were received, in part because he had an ownership interest in several LLC’s with Vrame as well as a social relationship. In July 2017, Hawkins discovered that Vrame was mismanaging several of the LLC’s in which Hawkins owned an interest. Upon bringing Vrame’s mismanagement to the attention of other investors in the LLCs, plaintiff was told to vacate his office. Plaintiff demanded payment of the outstanding consulting fees he was owed by CRLLC. For the first time, CRLLC denied that there was any consulting agreement or that there were any consulting fees owed to plaintiff. (FAC 7-11)

A party may move for an order compelling further responses to Requests for Production where an answer to a particular request is evasive or incomplete, or where an objection to a particular request is without merit or too general. (Code of Civ. Pro. § 2031.310.) A party may also move for an order for monetary sanctions against a party under Code Civ. Pro. § 2031.310(h) when the party unsuccessfully opposes a motion to compel further responses to Requests for Production, absent a finding that the party “acted with substantial justification or other
circumstances make imposition of the sanction unjust.” (Id. § 2031.310(h).)

The requests for production seek any and all communications plaintiff had with other investors in the various entities in which Vrame also had an interest that had anything to do with Vrame. Defendant contends these communications about him are relevant to plaintiff’s breach of contract and fraud claim. In opposition, plaintiff contends that the claims of alleged mismanagement that prompted his termination are not relevant to his oral contract for payment of fees that he earned before he even discovered the mismanagement, therefore any communications he had with other investors about mismanagement and other topics are not relevant to this case.

Requests for Production

Each of the requests for production seek communications with the following entities about defendant. Communications between plaintiff and SV Baseline Commercial, LLC (No. 16), communications between plaintiff and Pools, LLC (No. 18) , communications between plaintiff and Pelger Investors, LLC concerning defendant (No. 20), communications between plaintiff and Bryan Landgraf concerning defendant (No.24), communications between plaintiff and Chris Ksidakis (No. 25), communications between plaintiff and Pelger Road 1700, LLC (No. 29). and communications between plaintiff and CR II, LLC concerning defendant. (No. 30)

In response to the following requests, plaintiff responded as follows:

“Responding party objects that this request seeks documents that are neither relevant, nor reasonably calculated to lead to the discovery of relevant or admissible evidence. Responding party further objects that this request seeks information protected by responding party’s right to privacy, as well as the right to privacy of third parties, as guaranteed by the Constitution of the United States

and State of California. Further objection is made on the ground that the request is overly broad and unduly burdensome and harassing since it is not related to the

responding party’s claim for breach of the independent contractor agreement by defendants.”

“[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” Civ. Proc. Code § 2017.010. For the purposes of discovery, information is considered “relevant to the subject matter” if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating settlement thereof Gonzalez v. Sup. Ct.(1995), 33 Cal. App. 4th 1539, 1546; Lipton v. Super. Ct.(1996) 48 Cal. App. 4th 1599. Notwithstanding this, the right to privacy in the California Constitution (Art. I § 1). ‘protects the individual’s reasonable expectation of privacy against a serious invasion.’” (Puerto v. Superior Court (2008) 158 Cal.App.4th 1242, 1250, citing Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 370, emphasis in original.) In assessing a claimed privacy interest in the course of civil discovery, courts apply the following methodology: First, a claimant must possess a legally protected privacy interest. Second, the claimant must have a reasonable expectation of privacy under the particular circumstances, including the customs, practices, and physical settings surrounding particular activities. Third, the invasion of privacy must be serious in nature, scope, and actual or potential impact.

First, the Court agrees that the requests are overbroad. Plaintiff’s lawsuit is not seeking damages related to any mismanagement claims. Because of the plaintiff’s privacy interest in his communications with other investors, and because the information is not directly relevant to the claims in this case concerning earning of fees before the alleged mismanagement was discovered, the Court will not grant the requests as phrased.

However, plaintiff admits that the following communications with the above entities/persons would be relevant to this action. Therefore, the Court narrows the requests to seek only directly relevant information as follows: All communications with the entities/persons described in the above requests related to the existence or non-existence of plaintiff’s consulting agreement, the terms of the agreement, the alleged breach of the agreement, and the nature of any payments made to Hawkins which may be related to Defendants’ offset claims.

Defendants’ requests, as framed, would invade the privacy rights of the parties to those communications. The private investors have a reasonable expectation that their e-mail communications, including their private thoughts and opinions regarding their personal investments and the internal affairs of the business entities in which they invest, will be kept private. The invasion of these privacy interests is not justified in litigation unrelated to the subject matter of the communications.

The e-mails were generated and received through private, password-protected e-mail systems. The parties to these communications are sophisticated investors and other professionals who have been trained and/or become accustomed to maintaining the confidentiality of private communications. SV Baseline Commercial, LLC, Pools, LLC, Pelger Investors , LLC, Pelger Road 1700, LLC, CR II, LLC, are private business entities with relatively small sets of private investors. (Id.) Further, the communications at issue relate to these private business entities and investments made through these entities. (Declaration of Hawkins.)

The subject matter of the communications for which Hawkins seeks privacy protection include: discussions and meetings between investors regarding transactions within the scope of the regular business of the LLCs, such as proposed investments; communications regarding cash calls; the specific investment decisions of private individuals, such as the purchase or sale of
interests in business entities; and discussions and meetings between investors regarding the mismanagement claims, the investigation of the mismanagement claims, and the investors’ responses to the mismanagement claims. (Robertson Decl., ¶6.)

“When discovery requests are grossly overbroad on their face, and hence do not appear reasonably related to a legitimate discovery need, a reasonable inference can be drawn of an intent to harass and improperly burden.” (Obregon v. Superior Court (1998) 67 Cal.App.4th 424.)

Under the California constitution, there is a right to privacy. See Cal. Const., art. I , § 1. The right to privacy protected by the California Constitution, Article I , Section 1, is a fundamental liberty interest and extends to details of one’s personal life. (City of Santa Barbara v. Adamson (1980) 27 Cal.3d 123, 130; Valley Bank of Nevada v. Superior Court (1985) 15 Cal.3d 652, 656.) Disclosure of private information may only be ordered if a “compelling public interest” would be served. (Britt v. Superior Court

(1978) 20 Cal.3d 844, 855.) Further, Courts must carefully balance this interest against an individual’s right to privacy to determine if disclosure is appropriate. (El Dorado Savings & Loan Assn v. Superior Court (1987) 190 Cal.App.3d 342, 345-46 citing Moskowitz v. Superior Court (1982) 137 Cal.App.3d 313, 316.)

California courts have held that business entities, in addition to individuals, also have a general right to privacy. (SCC Aquisitions v Superior Court (2015) 243 Cal.App.4th 741 at 755. See also Roberts v. Gulf Oil Corp. (1983) 147 Cal. App. 3d 770, 795-96.)

Privacy rights claimed by business entities are resolved by a balancing test. (SCC Acquisitions, Inc. v. Superior Court, supra, 243 Cal. App.4th at 756.) “The discovery’s relevance to the subject matter of the pending dispute and whether the discovery ‘appears reasonably calculated to lead to the discovery of admissible evidence’ is balanced against the corporate right of privacy.” (Id., quoting Hecht, Solberg, Robinson, Goldberg & Bagley LLP v Superior Court (2006) 137 Cal.App.4th 579, 595.)

The Court has balanced the interests of plaintiff and the other investors in maintaining their financial privacy with the defendant’s need for the information to defend against the breach of contract claim concerning the oral contract. The discovery requests are overbroad and not directly relevant to the issues in this case, therefore the court has narrowed the requests.

Plaintiff shall serve further verified responses without objections on or before August 31, 2018.

Sanctions are denied.

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