Case Number: EC058994    Hearing Date: October 31, 2014    Dept: NCD

TENTATIVE RULING (10/31/14)
#15
EC 058994
MESERKHANI v. HACOPIAN

Defendants’ Motion for Protective Order

TENTATIVE:
Defendants’ Motion for Protective Order is GRANTED in part and DENIED in part. The court has considered the merits of the motion, despite its concern that the motion was not brought “promptly” as required under statute, and that defendant has waived the objections on which the motion is made, by failing to timely serve responses. The court will this time construe the disagreement between counsel concerning the dates responses were due as a misunderstanding, but advises counsel for defendant in the future to carefully review correspondence reflecting agreed upon deadlines, and either calendar dates accordingly, or memorialize in writing any disagreement about such deadlines.

With respect to Request No. 1, the court finds that the request is appropriate with the exception of the request for “credit reports.” A protective order against production of those documents is therefore GRANTED, and they need not be produced, but the motion is otherwise DENIED.

With respect to Request Nos. 2 through 5, the motion is DENIED. The separate statement establishes that the remaining ground for seeking a protective order against these requests is that the subject documents have already been produced, or that defendants have otherwise promised to look for them. This does not satisfy any conceivable obligation under the express terms of the statutes pertaining to responses to demands for production of documents. Defendants have failed to meet the burden of establishing some sort of undue burden. No protective order is warranted.

Monetary sanctions requested by moving parties are DENIED.

Monetary sanctions requested by responding party are DENIED, as the court finds that defendants brought this motion based on justifiable albeit not entirely well conceived grounds.

BACKGROUND:

MP: Defendants Armen Hacopian, Silva Hacopian and Edwin Hacopian
RP: Plaintiff Vahik Merserkhani

Correct address in proof of service? (CCP §§1013, 1013a) Ok
16/+5 day lapse under CCP §1005(b)? Yes

RELIEF REQUESTED:
Order prohibiting or limiting plaintiff from engaging in discovery, specifically, Plaintiff’s Request for Production of Documents (Set Four), the scope of which is allegedly intrusive and invasive of Defendants’ rights of privacy, harassing, unduly burdensome, oppressive, duplicative and irrelevant to the pending litigation in this matter.

FACTUAL BACKGROUND:
Plaintiff Vahik Meserkhani brings this action alleging that defendants Armen Hacopian, Silva Hacopian and Edwin Hacopian are diverting monies from two companies, Palad, Inc. and 1219 Glenoaks Investment, in which plaintiff owns 50% of the common stock.

ANALYSIS:
Procedural
CCP §2031.060(a) provides with respect to a written demand for inspection of documents, “the party to whom the demand has been directed… may promptly move for a protective order..”

The opposition argues here that the protective order was not sought “promptly,” but was sought after the time to respond had expired, and after defendant served untimely objections to the discovery.

Here, the timing of the motion is not ideal, but it appears it was brought to preempt the filing of a motion to compel further responses, and fairly promptly after the parties had reached an impasse on the issues.

The opposition also argues that the responses served were one day late, and so objections have been waived. Again, while not an ideal situation, the Court will not rest its ruling here on a one day late issue.

Substantive
Under CCP § 2017.020:
“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.”

CCP §2031.060(a) provides with respect to a written demand for inspection of documents, “the party to whom the demand has been directed… may promptly move for a protective order,” and that
“The court, for good cause shown, may make any order that justice requires to protect any party or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden or expense. This protective order may include, but is not limited to, one or more of the following directions:
(1) That all or some of the items or categories of items in the inspection demand need not be produced or made available at all…
(4) That the inspection be made only on specified terms and conditions…”
CCP section 2031.060 (b).

With respect to protective orders, the burden is on the moving party to establish good cause for the relief requested. Emerson Electric Co. v. Superior Court (1997) 16 Cal.4th 1101, 1110.

Request No. 1
This request seeks writings related to the purchase and sale of the 114 E. Lemon property in Monrovia.

The response objects that the request seeks confidential financial records, invades privacy rights, seeks documents that are not relevant, and is overbroad, burdensome and harassing.

Defendants’ argument is that the court in previously denying a motion for preliminary injunction found a lack of evidence showing that the property was the proper subject of a constructive trust, so that documents are not relevant to this matter.

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. In addition, the information sought here is further protected as private by the statutes cited above.

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.

Where private information is sought, the burden is on the party seeking discovery to show a particularized need for the information sought, and that the information is directly relevant to the cause of action or defense. Britt v. Superior Court (1978) 20 Cal.3d 844, 859.

Here, the SAC alleges that the property was purchased using funds stolen from Palace Furniture, and the previous ruling did not find that the claim could not be proven, but that it had not been proven at that stage, and that the preliminary injunction basically sought to improperly obtain security for a judgment before proving entitlement to damages at trial.

Plaintiff argues that it has been held that pretrial discovery of financial information is not barred where finances are directly related to the substantive claim involved. Plaintiff relies on Rawnsley v. Superior Court (1986) 183 Cal.App.3d 86, in which plaintiff sought to establish alter ego and other claims with respect to a partnership in which he had an interest. The appellate court found that the trial court had abused its discretion in denying outright an order compelling the production of “detailed financial information” from defendants, reasoning:
“Unlike the situation in which a plaintiff seeks to discover defendant’s financial status solely for the purpose of assessing a punitive damages claim, the documents sought by petitioner here are fundamental to his case. He alleges that assets have been converted and diverted from the entities in which he has an interest to the individual defendants or to corporations which are the alter egos of the individual defendants. The only way petitioner can prove his case is to obtain defendants’ financial records.

Where the only reason for seeking such financial information is to give a tactical edge to the party who has obtained discovery of the information by allowing that party the benefit of pressure in settlement negotiations by threat or implication of disclosure, the party against whom the discovery is sought should be afforded the full benefit of Civil Code section 3295, including a protective order limiting access to such information. Where, however, the financial information goes to the heart of the cause of action itself, a litigant should not be denied access so easily.”
Rawnsley, at 91.

The information sought appears directly relevant to the claims that there was misappropriation of funds siphoned into this purchase, and it does not appear these documents would be available through less intrusive means.

However, the motion makes a good point that the request is not narrowly tailored to the extent it seeks “credit reports.” A protective order will issue protecting the disclosure of credit reports of third parties, but the motion seeking a protective order is otherwise denied.

Requests No. 2-5
Request No. 2 seeks writings relating to the purchase, lease or sale of motor vehicles by defendant, his wife or son in the last three years.

The objection is that the information sought is private financial information, is not relevant, and is overly broad, burdensome and harassing.

Request No. 3 seeks writings reflecting money given by defendant, Palace Furniture or Palad Inc., to plaintiff between 2001 and 2014.

The objection is that the demand is overbroad and all documents have already been produced.

Request No. 4 seeks a handwritten journal of cash payments defendant prepared that he testified to in his deposition.

The response is an objection that at deposition defendant testified he was searching for responsive items and will provide them if and when they are located.

Request No. 5 requests all writings relating to Silva Hacopian being an authorized signatory to Palad’s bank accounts.

The objection is that the demand is overbroad, not calculated to lead to the discovery of admissible evidence, and the demand is compound and ambiguous. (These objections appear to be particularly insubstantial, almost in the nature of what might be characterized as “throwaway objections.”)

The separate statement basically now argues that the information sought in these demands are duplicative of information already sought in deposition and discussed or provided in deposition, provided through documents plaintiff has subpoenaed or in connection with other productions.

This position re depositions is not appropriate.

First, it has long been recognized that reference to a previous deposition is not a proper response to written discovery. See Coy v. Superior Court (1962) 58 Cal.2d 210, 217-219; see also Deyo v. Kilbourne (1978, 2nd Dist..) 84 Cal.App.3d 771, 783-784 (“it is not proper to answer [an interrogatory] by stating ‘See my deposition,’ ‘See my pleading,’ or ‘See the financial statement.’”).

Second, at a deposition, a deponent is not required to have exercised diligence to locate materials, or to comply with the provisions concerning document demands that provide for specific information to be provided to foreclose attempts to later introduce documents not produced. The responses appear to be an attempt to evade any commitment here, so to prevent the fulfilment of a major purpose of conducting written discovery, which is to prevent surprise.

Accordingly, under CCP section 2031.210, a response shall either be a statement of compliance, a representation that the party lacks the ability to comply, or an objection.

With respect to a statement of compliance, CCP section 2031.220 requires:
“A statement that a party to whom an inspection demand has been directed will comply with the particular demand shall state that the production, inspection, and related activity demanded will be allowed either in whole or in part, and that all documents or things in the demanded category that are in the possession, custody, or control of that party and to which no objection is being make will be included in the production.”

With respect to a statement of inability to comply, CCP section 2031.230 requires:
“A representation of inability to comply with the particular demand for inspection shall affirm that a diligent search and a reasonably inquiry has been made in an effort to comply with that demand. This statement shall also specify whether the inability to comply is because the particular item or category has never existed, has been destroyed, has been lost, misplaced, or stolen, or has never been , or is no longer, in the possession, custody, or control of the responding party. The statement shall set forth the name and address of any natural person or organization known or believed by that party to have possession, custody, or control of that item or category of item.”

These procedures should have been followed here.

Third, to the extent the argument is that documents have already been obtained from other sources, plaintiff is nonetheless entitled to discover what documents defendants are in possession of.

Fourth, to the extent the argument is that these responses pose undue burden because the same discovery has been propounded over and over, defendants have failed to meet their burden of showing that there is undue burden, by, for example, quoting any previous discovery requests, establishing that they are the same, or showing that a previous response has been provided which would comply with the procedural requirements of a response to document demands.

Thus, the Court finds that the responses are insufficient, and therefore that a protective order is not warranted. The motion is denied.