Case Name: John Park v. Peter V. Lunardi, III, et al.

Case No.: 2017-CV-315411

Motion to Quash Deposition Subpoena, or Alternatively, Motion for Protective Order and Request for Monetary Sanctions by Non-Party Maureen A. Harrington and Defendant and Cross-Complainant Jeanine Lunardi, Individually, as Sole Trustee of the Lunardi Family Trust, and as Personal Representative for Peter V. Lunardi, III

Factual and Procedural Background

This an action for breach of contract. According to the Second Amended Complaint (“SAC”), since approximately 2008, plaintiff John Park (“Park”), has owned and operated various gambling establishments or “cardrooms” in California. (SAC at ¶ 19.) Garden City, Inc., dba Casino M8trix (“Garden City”) is a cardroom located in San Jose. (Id. at ¶¶ 1, 20.) Prior to June 9, 2017, defendant Eric Swallow (“Swallow”) owned a 50% share in Garden City and defendants Peter Lunardi (“Peter”) and Jeanine Lunardi (“Jeanine”) (collectively, “the Lunardis”) owned the other 50%. (Ibid.)

In 2014, the Bureau of Gambling Control (“Bureau”) began prosecuting an accusation against Garden City, Swallow, and the Lunardis. (SAC at ¶ 21.) The Bureau entered into a stipulated settlement with Garden City and the Lunardis; however, it did not settle the accusation with Swallow. (Ibid.) Ultimately, the California Gambling Control Commission (“Commission”) revoked Swallow’s license to own Garden City, thereby requiring him to sell his shares in Garden City. (Ibid.)

In early 2015, Swallow and Park negotiated a sale of Swallow’s shares to Park for $55 million. (SAC at ¶ 22.) Subsequently, in March 2015, the Lunardis sent their own offer to purchase Swallow’s shares in Garden City for $29 million, an offer that Swallow refused. (Id. at ¶ 23.) Thereafter, the Lunardis attempted to exercise a purported right of first refusal under a separate July 17, 2008 Buy-Sell Agreement (“Buy-Sell Agreement”) they entered into with Swallow, which the Lunardis claim allowed them to match any offer to purchase Swallow’s shares. (Id. at ¶¶ 3, 25.) However, the Lunardis’ attempt to exercise the purported right of first refusal and purchase was void because it was not approved by the Commission, and the Lunardis’ offer also failed to match the $55 million offer and did not specifically exclude Swallow’s retained distributions from the purchase price. (Id. at ¶¶ 4, 27-32.)

The Lunardis and Swallow later became parties to arbitration proceedings arising from the Lunardis’ attempt to exercise the purported right of first refusal, and Park attempted to intervene. (SAC at ¶¶ 6, 32, 33, 36.) In February 2017, after Park’s attempts to intervene in the arbitration proceedings were denied, Park brought this action for declaratory relief against Swallow and the Lunardis. (Id. at ¶¶ 7, 37.) While this action was pending, the arbitrator determined the Lunardis had the right to purchase Swallow’s shares under the Buy-Sell Agreement, but did not consider whether Park had the right to purchase Swallow’s shares, and is thus not bound by the decision. (Id. at ¶¶ 8, 38.) Following the arbitrator’s decision, Swallow and the Lunardis entered into a new stock purchase agreement, under which Swallow agreed to sell his shares in Garden City to the Lunardis, and, on June 9, 2017, Swallow transferred his shares to the Lunardis. (Id. at ¶¶ 9, 39-40.)

On December 6, 2017, Park filed the SAC against Swallow and the Lunardis individually and as trustees of the Lunardi Family Living Trust (“Trust”), alleging causes of action for breach of contract (against Swallow), promissory estoppel (against Swallow) and intentional interference with contractual relations (against the Lunardis).

On April 8, 2019, Peter died, leaving Jeanine as the sole trustee of the Trust. Jeanine was also appointed as Peter’s personal representative.

On November 4, 2019, the Lunardis filed a second amended cross-complaint (“SAXC”) against Park and Swallow, asserting causes of action for declaratory relief and intentional interference with contract.

Thereafter, Park and the Lunardis filed separate motions for summary judgment and summary adjudication to the SAC and SAXC. The Court denied the Lunardis’ motion for summary judgment to the SAC and granted Park’s motion for summary judgment to the SAXC. In addition, the Court granted Park’s motion for summary adjudication to the twelfth affirmative defense to the SAC but denied the motion as to the fourteenth affirmative defense.

Discovery Dispute

In December 2019, Park served attorney Maureen A. Harrington (“Harrington”), counsel for the Lunardis, with a deposition subpoena for testimony and production of documents. (Harrington Decl. at ¶ 4, Ex. 1.)

The parties thereafter met and conferred regarding the deposition subpoena and request for documents. (Harrington Decl. at ¶¶ 6-8, Exs. 3-4.) Harrington argues there is no legal basis for Park to depose her and request documents as she remains opposing counsel in this case. She also claims Park can obtain the requested information through alternative forms of discovery. By contrast, Park contends a deposition is appropriate as Harrington was intimately involved in various commercial transactions at issue in this lawsuit. As the parties were unable to informally resolve this dispute, Harrington now seeks intervention from the Court.

Currently before the Court is a motion to quash deposition subpoena by Harrington and Jeanine (collectively, “Moving Parties”). In the alternative, the Moving Parties request a protective order prohibiting the deposition or modifying or limiting the subpoena to allow document discovery to proceed only after Park has exhausted other avenues to obtain the information from parties and non-parties. They also request an award of monetary sanctions in conjunction with the motion. Park filed written opposition. The Moving Parties filed reply papers. No trial date has been set.

Motion to Quash Deposition Subpoena

The Moving Parties move to quash the deposition subpoena as it improperly seeks the testimony of opposing counsel and documents which constitute work product and attorney-client communications.

Legal Standard

The court may, “upon motion reasonably made by a [party] … maker an order quashing [a] subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare …” (Code Civ. Proc., § 1987.1, subds. (a) and (b)(1).) The party objecting to a discovery request bears the burden of explaining and justifying its objection. (See Fairmont Ins. Co. v. Super. Ct. (2000) 22 Cal.4th 245, 255.)

The Motion to Quash Deposition Subpoena is GRANTED.

The Moving Parties move to quash the deposition subpoena as it improperly seeks testimony and documents from opposing counsel.

“Depositions of opposing counsel are presumptively improper, severely restricted, and require ‘extremely’ good cause – a high standard.” (Carehouse Convalescent Hospital v. Super. Ct. (2006) 143 Cal.App.4th 1558, 1562 (Carehouse).) “There are strong policy considerations against deposing an opposing counsel.” (Ibid.) The Sixth Appellate District discussed those policy concerns as follows:

“Taking the deposition of opposing counsel not only disrupts the adversarial system and lowers the standard of the profession, but it also adds to the already burdensome time and costs of litigation. It is not hard to imagine additional pretrial delays to resolve work-product and attorney-client objections, as well as delays to resolve collateral issues raised by the attorney’s testimony. Finally, the practice of deposing opposing counsel detracts from the quality of client representation. Counsel should be free to devote his or her time and efforts to preparing the client’s case without fear of being interrogated by his or her opponent. Moreover, the ‘chilling effect’ that such practice will have on the truthful communications from the client to the attorney is obvious.”

(Spectra-Physics, Inc. v. Super. Ct. (1988) 198 Cal.App.3d 1487, 1494 (Spectra-Physics), citing Shelton v. American Motors Corp. (8th Cir. 1986) 805 F.2d 1323, 1327 (Shelton).)

While difficult, it is not impossible to obtain the deposition of opposing counsel. In doing so, California courts apply a three-prong test in considering the propriety of attorney depositions, evaluating (1) whether the party seeking the deposition has other practical means to obtain the information sought, (2) whether it is crucial to preparation of the case, and (3) whether the information sought is subject to a privilege claim. (Carehouse, supra, 143 Cal.App.4th at p. 1563.) The party seeking the deposition has the burden of proving the first two factors. The burden of proving the third factor regarding claims of privilege lies with the party opposing the deposition. (Id. at pp. 1563-1564.)

As a preliminary matter, Park argues the three-prong test in Carehouse is not applicable as attorney Harrington is a percipient witness to underlying events in this action. (See OPP at pp. 10:7-12:10.) Park however does not submit any legal authority which allows for an exception to the Carehouse rule in the context of an attorney who is a percipient witness. Instead, Park relies on federal court authorities which are not persuasive as they utilize tests developed under the Federal Rules of Evidence and Federal Rules of Procedure. Park also points to Fireman’s Fund Ins. Co. v. Super. Ct. (1977) 72 Cal.App.3d 786 (Fireman’s Fund), a decision from the Second Appellate District, where the court permitted a deposition in an insurance bad faith case where the attorney was the sole or principal negotiator and in which bad faith is alleged and punitive damages were sought based upon that allegation of bad faith. (Fireman’s Fund, supra, at p. 790.) This case does not assist Park as it seems limited by its facts and readily distinguishable from this action. The Court therefore rejects this argument and addresses whether the three-prong test in Carehouse has been satisfied.

Here, Park seeks to depose attorney Harrington about her knowledge, involvement, and communications with third parties about: (1) the Swallow-Lunardi stock transaction; (2) Park’s attempted purchase of Garden City; (3) the withholding of distributions from Swallow; (4) Garden City’s financial statements; (5) attorney Tracey Buck-Walsh’s (“Buck-Walsh”) negative comments about Park during Garden City’s board meetings; and (6) Buck-Walsh’s involvement in the arbitrations. (See OPP at pp. 13:26-14:3.) Park contends these subjects constitute core issues in the case and thus the requested information is critical to this lawsuit. Even if the Court agrees with Park, he still has the burden of establishing he has no other practical means to obtain the information. Park fails to meet this burden in opposition.

As stated above, in deciding whether to permit the deposition of a party’s attorney, courts consider whether there are other means available to obtain discovery. (See Spectra-Physics, supra, 198 Cal.App.3d at pp. 1496-1497.) In making this determination, courts consider such factors as (1) whether the party noticing the deposition has already attempted to use other discovery techniques to obtain the discovery sought (Estate of Ruchti (1993) 12 Cal.App.4th 1593, 1601); (2) whether other individuals may have knowledge of the relevant facts (Spectra-Physics, supra, at pp. 1496-1497); and (3) whether the party noticing the deposition already has evidence available to it of the facts it wishes to prove through the deposition (Spectra-Physics, at pp. 1496-1497).

In opposition, Park first fails to demonstrate that attorney Harrington is the only person with knowledge relevant to the issues involving third parties in this action. Nor does Park affirmatively establish that deposition is the sole means of obtaining the information he seeks. For example, to accommodate Park, attorney Harrington previously agreed to accept and respond to interrogatories on shortened time. (Harrington Decl. at ¶ 6.) Park argues the use of interrogatories would be useless as Harrington would provide only evasive responses. (See OPP at p. 13:17-18.) However, should that happen, Park’s remedy would be to meet and confer about such responses and, if those attempts fail, file a motion to compel in compliance with the Code of Civil Procedure. Furthermore, Park does not show he attempted to obtain the information by seeking to depose other parties or subpoena third parties or that such attempts would be futile. Rather, Park contends that deposing third parties would not offer the kind of first-hand knowledge and unique perspective of opposing counsel. (See OPP at p. 12:23-28.) But, it is precisely this type of unique perspective which the law seeks to protect in creating such a high burden for deposing opposing counsel. As one federal appellate court stated:

“Undoubtedly, counsel’s task in preparing for trial would be much easier if he could dispense with interrogatories, document requests, and depositions of lay persons, and simply depose opposing counsel in an attempt to identify the information that opposing counsel has decided is relevant and important to his legal theories and strategy.”

(Shelton, supra, 805 F.2d at p. 1327; see also Cascone v. Niles Home for Children (W.D. Mo. 1995) 897 F. Supp. 1263, 1267 [“A party shouldn’t be able to use a deposition to sucker-punch the other side’s quarterback or listen in on the other side’s huddle.”].)

As Park fails to satisfy the first prong of the Carehouse test, he cannot meet the extremely high burden of deposing attorney Harrington in this action. Consequently, the motion to quash the deposition subpoena is GRANTED. Having granted the motion, the Court declines to address the alternative motion for protective order.

Request for Monetary Sanctions

The Moving Parties seek an award of monetary sanctions in conjunction with the motion. Code of Civil Procedure section 1987.2 states that “in making an order pursuant to motion made under…Section 1987.1, the court may in its discretion award the amount of the reasonable expenses incurred in making or opposing the motion, including reasonable attorney’s fees, if the court finds the motion was made or opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.”

The Moving Parties here prevailed and Park was not substantially justified in opposing the motion. They make a code compliant request for sanctions in the amount of at least $11,710 for reasonable expenses incurred in making the motion. (See Notice of Motion at p. 2.) The request is based in part on attorney time spent by Rachel Thomas (“Thomas”) in the amount of $3,600. (Harrington Decl. at ¶ 15.) The Court however declines to award sanctions in this amount as attorney Thomas has not submitted a declaration of her own under penalty of perjury to support this amount. The request is also based on time spent by attorney Harrington in the amount of $4,600. (Id. at ¶ 14.) She bills her time at $575 per hour and also seeks to recover the $60 filing fee for the motion. (Id. at ¶¶ 14, 16.) As the requested amount is slightly excessive, the Court will reduce the amount of sanctions and award $3,510 ($575 per hour X 6.0 hours + $60 filing fee).

Accordingly, the request for monetary sanctions is GRANTED IN PART.

Disposition

The motion to quash deposition subpoena is GRANTED.

The request for monetary sanctions is GRANTED IN PART. Park shall pay $3,510 to counsel for the Moving Parties within 20 calendar days of this Order.