Lawzilla Additional Information:
Per the Los Angeles County records plaintiff is represented by attorney Curtis Jung

GC049744

EX PARTE APPLICATIONS REGARDING DISCOVERY

Calendar: 11 (add-on)
Case No: GC049744
Date: 4/4/14

1. Motion of Plaintiff, East West Bank
a) Stay regarding deposition of Sharon Cheung
b) Protective order barring Defendants from compelling a witness from travelling more the 75 miles from their residence to attend depositions
c) Protective order barring discovery into communications between the Plaintiff and the FDIC or other regulatory/law enforcement agency.

2. Motion of Defendant, Michael Augustine
a) Order compelling deposition of Sharon Cheung
b) Order compelling production of documents at deposition
c) Order imposing monetary sanctions of $4,705
d) Order imposing terminating sanctions

DISCUSSION:
This case arises from the Plaintiff’s claim that the Defendant, Spring Naud Associates, Ltd., breached a business loan agreement. In addition, the Plaintiff claims that Defendants, Creative Environments, M. Meza, AC Family Trust, and Capital Asset Management Associates, Ltd., breached a guaranty agreement.

Trial is set for July 21, 2014.

On April 1, 2014, the Plaintiff, East West Bank, and the Defendant, Michael Augustine, appeared with ex parte applications regarding discovery. The Court shortened the time so that the motions could be heard on April 4, 2014.

1. Motion of Plaintiff, East West Bank
The Plaintiff seeks the following discovery orders:

1) stay regarding deposition of Sharon Cheung;
2) protective order barring Defendants from compelling a witness from travelling more the 75 miles from their residence to attend depositions; and
3) protective order barring discovery into communications between the Plaintiff and the FDIC or other regulatory/law enforcement agency.

The Plaintiff seeks relief under CCP section 2025.420. Under CCP section 2025.420, the Court is authorized to issue a protective order regarding a deposition when justice requires a protective order to protect any party from unwarranted annoyance, embarrassment, oppression, or undue burden and expense. Section 2025.420 requires the motion to be accompanied by a meet and confer declaration.

a. Sharon Cheung

The Defendant argues that Sharon Cheung is a “high-level” executive with little discovery knowledgeable about the facts of the case. There are no facts in the declaration indicating that the Plaintiff made an attempt to resolve this dispute informally through a meet and confer on the issue. This alone is grounds to deny the motion.

The Defendant cites to legal authority holding that when a plaintiff seeks to depose a corporate president or other official at the highest level of corporate management, and that official moves for a protective order to prohibit the deposition, the trial court should first determine whether the plaintiff has shown good cause that the official has unique or superior personal knowledge of discoverable information. Liberty Mutual Ins. Co. v. Superior Court (1992) 10 Cal. App. 4th 1282, 1289.

The Defendant does not provide any evidence to demonstrate that Sharon Cheung is a “corporate president or other official at the highest level of corporate management”. This is further grounds to deny the motion.

Finally, if the Defendant had attempted to meet and confer, Defendant may have discovered that the Plaintiff is seeking the deposition of Sharon Cheung because at the deposition of Gordon Cui, who the Plaintiff identified as a person most qualified, Mr. Cui testified that Sharon Cheung is the person with knowledge of the amounts that the Plaintiff received from the FDIC pursuant to the loan-share agreement (see Defendant’s application, exhibit E, pages 20 to 22). Mr. Cui stated that he would talk to Sharon Cheung in accounting to find out information on the amounts received by the Plaintiff from the FDIC on the loss-share program. This indicates that there is good cause for the Plaintiff to depose Sharon Cheung because she has superior personal knowledge of information on the loan-share program. This is the third ground to deny the Defendant’s motion.

Therefore, the Court will deny the request for a protective order regarding Sharon Cheung.

b. Protective Order regarding Witness Travel

This dispute arises because, in response to the Court’s March 10, 2014 order directing the Plaintiff to identify the persons most knowledgeable and to produce them for depositions on March 17, 2014 at the Defendant’s office, the Plaintiff identified a Bo Zhoubeidi, who resides in San Francisco. The Plaintiff now refuses to produce Bo Zhoubeidi on the ground that he resides beyond the geographical limitations of CCP section 2025.250(a), which require the deposition of a natural person to occur within 75 miles from the deponent’s residence or 150 miles if within the same county where the action is pending.

However, the Defendant is not seeking to take the deposition of Bo Zhoubeidi as a natural person. Instead, the Defendant is seeking to take the deposition of the person most qualified to speak on behalf of the Plaintiff, which is the capacity in which the Plaintiff has identified Bo Zhoubeidi.

The Defendant is taking the deposition of the Plaintiff, an organization. Under CCP section 2025.250(b) the deposition of an organization that is a party to the action shall be taken at a place that is, at the option of the party giving notice of the deposition, either within 75 miles of the organization’s principal executive or business office in California, or within the county where the action is pending and within 150 miles of that office. The residence of Bo Zhoubeidi is irrelevant because he is not testifying; instead, the Plaintiff, through its person most qualified, is testifying.
Accordingly, the Court will deny the Plaintiff’s motion for a protective order regarding the place of Bo Zhoubeidi’s deposition.

c. Protective Order regarding Discovery into Communications between Plaintiff and FDIC or other Regulatory/Law Enforcement Agencies
There is no evidence in the declaration accompanying the Plaintiff’s motion that it attempted to resolve this dispute through an informally attempt to meet and confer. This is grounds to deny the motion.

Further, the Plaintiff has failed to meet its burden of demonstrating that there is good cause for the requested protective order. The Plaintiff claims that its protective order is needed due to request for production 1 to 7 in the notice for the deposition of Sharon Cheung. A copy of the notice of deposition is attached as exhibit 4 to the Plaintiff’s motion.
A review of the seven requests for production reveals that the Defendant sought documents regarding the amount the Plaintiff paid to acquire the loan, the manner by which the Plaintiff valued the loan, the charge offs on the loan, losses on the loan, payments through the loss-share program for the loan, reimbursements received through the loss-share program for the loan, and communications to the FDIC regarding the loan.

The Plaintiff argues that these seek confidential and “sensitive” business information. The Plaintiff offers no legal authority, no evidence, and no explanation in support of this conclusion. It appears that the Plaintiff is attempting to invoke the right to privacy with regards to confidential financial information. The Plaintiff offers no evidence that the requests for production seek confidential financial information. The Plaintiff cannot merely invoke the right to privacy and then refuse to produce documents. Instead, the Plaintiff must make a showing that the request for production seeks information that is subject to the right to privacy, e.g., that the documents include confidential financial information.

Also, this information concerns the Defendant’s defense of a set-off to the Plaintiff’s common count claim. The Plaintiff claims that the Defendant is liable for the amount of the loan. The Defendant seeks information regarding the amounts paid to the Plaintiff regarding any loss claimed for the loan in order to establish a set off.

Finally, the Court ordered the Plaintiff on March 10, 2014 to identify persons with knowledge of the payments made by the FDIC in accordance with the loss-share agreement and knowledge of the amounts received by the Plaintiff in connection with the loss-share agreement, which were categories 35 and 36 in the Plaintiff’s notice of deposition of the person most qualified. The Plaintiff did not promptly seek a protective order. The Plaintiff offers no explanation for seeking a protective order after the Court has already ordered the Plaintiff to comply with a notice of deposition that seeks this information.

Therefore, the Court will deny the Plaintiff’s motion for a protective order regarding communications with the FDIC or other regulatory/law enforcement agencies.

2. Defendant’s Motion to Compel Deposition of Sharon Cheung

The Defendant requests an order compelling Sharon Cheung to attend her deposition. The Defendant’s attorney, Alan Gutman, states in paragraph 12 to 14, that a notice of deposition was served on Sharon Cheung on March 18, 2014 after the Defendant obtained testimony from Gordon Cui that Sharon Cheung has information regarding FDIC payments to the Plaintiff regarding the loan at issue. Mr. Gutman states in paragraph 20 that Sharon Cheung did not appear and that he contacted the Plaintiff regarding the non-appearance.

Mr. Gutman states that the documents requested in the notice of deposition concern the amount the Plaintiff paid to acquire the loan, the manner in which the Plaintiff valued the loan, reimbursements that the Plaintiff received for the loan under the loan-share agreement with the FDIC. There is good cause for the production of these documents because they may include information regarding the Defendant’s defense to the claim for damages, e.g., the Plaintiff’s damages are not the monetary amount of the loan or that the Defendant is entitled to a setoff due to reimbursements received by the Plaintiff.

Under CCP section 2025.450, the Court may order a party to the action or an officer, director, managing agent, or employee of a party, or a person designated by an organization to appear when the party fails to comply with a notice of deposition without serving a proper objection. Here, the Plaintiff’s employee, Sharon Cheung has failed to comply with a notice of deposition.

In its opposition, the Plaintiff argues that the Defendant did not attempt to meet and confer before filing the motion. There is no requirement to meet and confer before filing a motion to compel a person to appear for a deposition. Instead, CCP section 2025.450(b)(2) requires the motion to state facts demonstrating that an inquiry was made about the non-appearance. As discussed above, Mr. Gutman stated in paragraph 20 that he contacted the Plaintiff regarding Sharon Cheung’s non-appearance at the deposition. This is sufficient.

The Plaintiff also argues that it has filed a motion for a protective order regarding Sharon Cheung. As discussed above, the Plaintiff’s motion for a protective order is to be denied.

Therefore, the Court will grant the Defendant’s motion and order Sharon Cheung to appear for her noticed deposition.

The Defendant also requests terminating sanctions. CCP section 2023.030 permits the Court to impose terminating sanctions for discovery misuses, which are defined by CCP section 2023.010 to include the failure to respond to an authorized method of discovery and the failure to comply with a Court discovery order. An order imposing terminating sanctions must be preceded by the disobedience of an order compelling a party to do that which the party should have done in the first instance. Kravitz v. Superior Court (2001) 91 Cal. App. 4th 1015, 1021. Here, the Court will deny the request for terminating sanctions based on the failure of Sharon Cheung to appear at her deposition. However, if the Plaintiff refuses to comply with the Court’s order directing her to appear, then there might be grounds to impose sanctions for the failure to comply with a Court order compelling the Plaintiff to do what it should have done in the first instance, which is produce Sharon Cheung for her deposition.

Finally, the Defendant requests monetary sanctions. Under CCP section 2025.450(g), there are grounds to impose reasonable monetary sanctions on the Plaintiff because it failed to produce Sharon Cheung for her properly noticed deposition.

The Defendant’s counsel, Alan Gutman, provides facts in paragraph 22 of his declaration to demonstrate that the Defendant incurred attorney’s fees of $2,070 for six hours billed at $345, attorney’s fees of $2,575 for 5 hours billed at $515, and the $60 filing fee. The Court will reduce the number of hours to four because this is a reasonable amount to incur on a standard discovery motion.
Further, the Court will reduce the hourly rate to $250 per hour because this is a reasonable rate to bill for standard discovery.
Accordingly, the amount of monetary sanctions is $1,060.00 (4 hours at $250 per hour + $60 filing fee).

RULINGS:

1. Motion of Plaintiff, East West Bank
DENY motion in its entirety.

2. Motion of Defendant, Michael Augustine
ORDER Sharon Cheung to appear for her deposition with the requested documents.
IMPOSE monetary sanctions on the Plaintiff ($1,060 recommended).
DENY request for terminating sanctions