Case Number: GC049212    Hearing Date: July 18, 2014    Dept: NCD

TENTATIVE RULING (7-18-14)
#2
GC 049212
EAST WEST BANK v. THE OFLYE TRUST

1.) Defendant Capital Asset Management Associates, Ltd.’s Motion for Order Quashing Subpoena on Third Party and Issuance of a Protective Order

2.) Defendant Michael Augustine, as Trustee of the Jojazak Irrevocable Trust’s Motion to Quash Deposition Subpoena Seeking the Jojazak Irrevocable Trust Dated May 22, 1984’s Business Records

3.) Plaintiff East West Bank’s Motion for Evidentiary, Issue and/or Terminating Sanctions
OFF CALENDAR AT THE REQUEST OF THE MOVING PARTY

4.) Plaintiff East West Bank’s Motion for Protective Order Limiting the Scope of Discovery to Exclude Testimony, Information and Documents Between Plaintiff and the FDIC, the FDIC’s Assignment of the Subject Loan to Plaintiff, Post-Foreclosure Sale of Property and Related Issues
OFF CALENDAR AT THE REQUEST OF THE MOVING PARTY

TENTATIVE:

1.) Defendant Capital Asset Management Associates, Ltd.’s Motion for Order Quashing Subpoena on Third Party and Issuance of a Protective Order
Motion is not considered by the court. Default was entered against the moving defendant on July 9, 2012.
Monetary sanctions requested are DENIED.

2.) Defendant Michael Augustine, as Trustee of the Jojazak Irrevocable Trust’s Motion to Quash Deposition Subpoena Seeking the Jojazak Irrevocable Trust Dated May 22, 1984’s Business Records
Motion is GRANTED. Deposition Subpoena Served on East West Bank is quashed.
The subpoena requests private financial information of third parties, and the subpoenaing party has failed to meet its burden to establish that the information sought – – while possibly relevant to the issue of whether Capital Assets Management Associates, Inc. had authority to enter the Guaranty on behalf of the Trust – – is narrowly tailored, or that the information cannot be obtained through less intrusive means. The subpoena is quashed without prejudice to plaintiff’s seeking documents if it is unable to obtain information concerning the conduct of CAMA in connection with the Trust related to its authority to enter the Guaranty through less intrusive means.

Request for appointment of Discovery Referee, and all other relief sought is DENIED.

Sanctions requested are DENIED.
BACKGROUND:

FACTUAL BACKGROUND:
Plaintiff East West Bank brings this action to collect sums allegedly due under agreements between plaintiff’s assignor and borrower White Knoll and defendant Oflye Trust, specifically, a series of Extension and Modification Agreements pertaining to a Promissory Note, which Agreements were allegedly guaranteed by defendants Zachary Schneiderman, Creative Environments, and Capital Assets/Michael Augustine as Trustee of the Jojazak Trust.

ANALYSIS:
1.) Defendant Capital Asset Management Associates, Ltd.’s Motion for Order Quashing Subpoena on Third Party and Issuance of a Protective Order

This motion is brought by defendant Capital Asset Management, in its capacity as
defendant. As pointed out in the opposition, and not refuted in the reply, default was entered against this party on July 9, 2012.

Entry of default is held to oust the court of jurisdiction to consider any motion other than a motion for relief from default. W.A. Rose Co. v. Municipal Court (1959) 176 Cal.App. 2d 67, 71. Accordingly, the motion shall not be considered by the court.

2.) Defendant Michael Augustine, as Trustee of the Jojazak Irrevocable Trust’s Motion to Quash Deposition Subpoena Seeking the Jojazak Irrevocable Trust Dated May 22, 1984’s Business Records

The subpoena here seeks from East West Bank records containing transfers of funds from trust accounts of the Jojazak Irrevocable Trust by Capital Asset Management Associates, Inc. (“CAMA”), all checks written and records concerning checks and accounts from February 23, 2007 through August 15, 2013. [See Ex. A].

The motion initially argues that these documents are not relevant to any issue in this matter. As the court is aware and the opposition argues, in this matter the Trust is taking the position that the guaranty East West is attempting to enforce, and specifically the Extension and Modification Agreement entered by CAMA on behalf of the trust on August 9, 2010, is not enforceable because CAMA was not authorized to act on behalf of the Trust at the time.

Relevancy is defined very broadly in the Evidence Code, and certainly the information sought here at a minimum is “relevant” pursuant to the time-honored general rule that a discovery request need not necessarily seek relevant evidence per se, but may properly seek evidence that might lead to the discovery of relevant evidence.

The motion also argues that the requests seek the private financial information of third parties, in effect, information concerning the dates, amounts and frequency of payments made from the Trust to its individual beneficiaries, who are not parties to this action.

Personal financial information comes within the zone of privacy protected by article I, section 1 of the California Constitution. Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 656.

This privacy protection is not absolute, but may be abridged to accommodate a compelling state interest, which has been held to include “the historically important state interest of facilitating the ascertainment of truth in connection with legal proceedings.” Britt v. Superior Court (1978) 20 Cal.3d 844, 859.

When dealing with matters of private information, the following considerations should affect the exercise of the trial court’s discretion:
“. . . the purpose of the information sought,
the effect that disclosure will have on the parties and on the trial, the
nature of the objections urged by the party resisting disclosure, and ability of
the court to make an alternative order which may grant partial disclosure,
disclosure in another form, or disclosure only in the event that the party
seeking the information undertakes certain specified burdens which appear just
under the circumstances.
Valley Bank, at 658, quoting Greyhound Corp. v. Superior Court (1961) 56
Cal.2d 355, 382

East West has failed to show that the information is not available through less intrusive means. The information would consist of evidence tending to show that CAMA was administering the trust and sending correspondence and checks to beneficiaries such that the beneficiaries knew or should have known that CAMA was so acting, and impliedly authorized such conduct by CAMA. This is apparently the type of information which could be obtained from the Trust directly or through depositions of beneficiaries, and any documents could then be appropriately redacted as to the private information, such as the amounts of the distributions. East West makes a brief argument that defendants have failed to produce any records during discovery. East West attaches a discovery order from January 9, 2013, directing the Trust to respond to discovery and pay sanctions, and denying the discovery motion as to CAMA because it was in default. [See Ex. C].

It is held that even where information is directly relevant in an action, this may trigger a balancing by the court of the need for the discovery against the fundamental right of privacy, but “the balance will favor privacy for confidential information in third party … files unless the litigant can show a compelling need for the particular documents and that the information cannot reasonably be obtained through depositions or from nonconfidential sources.” Harding Lawson Associates v. Superior Court (1992) 10 Cal.App.4th 7, 10.

Here, such a showing is not made and the motion to quash is granted.

Under the circumstances, the requests for sanctions are denied.