Johnson, et al. v. Berger Lewis Accountancy Corp., et al.		CASE NO. 112CV233793
DATE: 1 August 2014	TIME: 9:00	LINE NUMBER: 5

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Thursday 31 July 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 1 August 2014, the following three motions were argued and submitted:

1.     The motion of defendant/cross-complainant Berger Lewis Accountancy Corporation (“Berger Lewis”) to compel further responses to form interrogatories (“FI”) and requests for production of documents (“RPD”) from cross-defendant Anthony Matusich;

2.     The motion of Berger Lewis to compel further responses to FI and RPD from cross-defendant Terri Goddard; and

3.     The motion of defendants Berger Lewis, Roberto Maragoni, and Randy Peterson to compel further responses to RPD served on plaintiffs David Johnson and TempCFO, Inc. (“TempCFO”).

Mr. Matusich, Ms. Goddard, Mr. Johnson, and TempCFO are all represented by the same counsel and they each filed a formal opposition to the above-listed motions—Mr. Matusich filed a formal opposition to Berger Lewis’ first motion, Ms. Goddard filed a formal opposition to Berger Lewis’ second motion, and Mr. Johnson and TempCFO filed a formal opposition to the third motion.

All parties are reminded that all papers must comply with California Rules of Court, rule 3.1110(f).[1]

Statement of Facts

This action and related cross-action, both of which raise claims for breach of contract and various business torts, arise from the merger of two accounting firms and their subsequent separation. Plaintiff David Johnson is a certified public accountant and the principal shareholder of TempCFO, which is a professional corporation engaged in the business of providing accounting outsourcing services. In 2009, Mr. Johnson and Berger Lewis, which is also an accounting firm, executed various agreements whereby Mr. Johnson would join Berger Lewis—and TempCFO would become a division of the company—in return for Mr. Johnson receiving shares in Berger Lewis.

Cross-defendants Mr. Matusich and Ms. Goddard are accountants who worked at TempCFO and, when Mr. Johnson moved to Berger Lewis, Mr. Matusich and Ms. Goddard moved with him.

On 31 October 2011, Mr. Johnson resigned as a shareholder of Berger Lewis and left the company. When Mr. Johnson left Berger Lewis, Mr. Matusich and Ms. Goddard followed suit and resumed their work for TempCFO, which continued to be owned by Mr. Johnson.

In October 2012, Mr. Johnson and TempCFO (collectively “Plaintiffs”) initiated this action against Berger Lewis and two of its shareholders—Randy Peterson and Roberto Maragoni (collectively “Defendants”). Plaintiffs filed the operative First Amended Complaint on 13 October 2013, alleging the following: that Berger Lewis failed to pay Mr. Johnson for his shares in the company when he voluntarily resigned pursuant to a buy-out clause in the parties’ agreements; that Berger Lewis wrongfully accessed Mr. Johnson’s and TempCFO’s tax returns; and that Berger Lewis interfered with Plaintiffs’ relationships with its clients in an effort to destroy TempCFO’s business after Mr. Johnson left Berger Lewis. Based upon these allegations, Plaintiffs assert claims for breach of contract, intentional and negligent interference with prospective economic advantage, breach of fiduciary duty, breach of the duty of confidentiality, and invasion of privacy.

Berger Lewis filed a cross-complaint against Plaintiffs and added Mr. Matusich and Ms. Goddard as cross-defendants. The operative First Amended Cross-Complaint alleges the following: that Mr. Johnson breached the parties’ stock purchase agreement by failing to transfer fixed assets free and clear of encumbrances; that Mr. Johnson breached the parties’ trademark license agreement, whereby Berger Lewis was supposed to have the exclusive right to the TempCFO trademark; and that, between December 2009 and October 2011, while Mr. Johnson, Mr. Matusich, and Ms. Goddard were working for Berger Lewis, they improperly performed services for clients in competition with Berger Lewis.

Discovery Dispute

I.             Facts Giving Rise to the First Two Motions

In March 2014, Berger Lewis served cross-defendant Mr. Matusich with its first set of FI and RPD. At the same time, Berger Lewis served cross-defendant Ms. Goddard with its first set of FI and RPD.

Mr. Matusich and Ms. Goddard served Berger Lewis with verified responses to the FI and RPD on 10 April 2014.

On 25 May 2014, counsel for Berger Lewis sent an email to counsel for Mr. Matusich and Ms. Goddard, indicating that that their responses to the FI and RPD were incomplete. (Decl. of David Tate in Support of Def.’s Mot. to Compel Further Responses from Matusich, Ex. C.) More specifically, with regard to the FI, counsel for Berger Lewis took issue with both cross-defendants’ responses to FI Nos. 4.1, 14.1, and 15.1, in which the cross-defendants indicated that discovery and investigation is continuing and that they will provide further responses as further facts are ascertained. With regard to the RPD, counsel for Berger Lewis took issue with, among other things, the cross-defendants’ representations that they were not in possession of the documents. For instance, in the portion of the letter addressing Ms. Goddard’s responses, counsel for Berger Lewis took issue with Ms. Goddard’s responses to RPD Nos. 10, 11, 14, 20-23, 25, 27, 29, and 31, stating as follows:

Ms. Goddard states that she has never had any documents in her possession, custody or control that are responsive, with the exception of documents that are in the possession, custody or control of TempCFO and that have been produced by TempCFO in this case. However, Ms. Goddard has to produce these documents to the extent that she has them. Not only are they relevant but they are also relevant if she has these in her possession. (Id.)

Counsel for Mr. Matusich and Ms. Goddard responded via email on 9 June 2014. In the email, counsel generally stood by the cross-defendants’ responses. For instance, with regard to Ms. Goddard’s responses to RPD Nos. 10, 11, 14, 20-23, 25, 27, 29, and 31, counsel for the cross-defendants stated the following:

As stated in her responses, the only documents that are in Ms. Goddard’s possession, custody, or control that are responsive to these requests are documents that were previously produced by TempCFO. We do not believe it is necessary to produce the same documents again. To be clear, the only responsive documents are TempCFO’s documents; Ms. Goddard has no responsive documents in her personal possession. (Id., Ex. D.)

Counsel for Berger Lewis and the cross-defendants met and conferred again on 11 June 2014, (id., Ex. E), and 23 June 2014, (id., Ex. F).

On 7 July 2014, having failed to informally resolve the discovery dispute, Berger Lewis filed the three motions presently before the Court. The first two motions seek orders compelling Mr. Matusich and Ms. Goddard to provide further responses to the FI and RPD.

Mr. Matusich filed an opposition to Berger Lewis’ first motion on 21 July 2014. Ms. Goddard filed her opposition to the second motion the same day. Berger Lewis filed reply briefs to both of the cross-defendants’ oppositions on 25 July 2014.

II.            Facts Giving Rise to the Third Motion

On 3 December 2013, defendants Randy Peterson, Roberto Maragoni, and Berger Lewis served the following six sets of discovery requests:

1. Defendant Peterson’s first set of RPD (requests 1-24) served on plaintiff David Johnson;
2. Defendant Maragoni’s first set of RPD (requests 1-30) served on Mr. Johnson;
3. Defendant Berger Lewis’ third set of RPD (requests 56-102) served on Mr. Johnson;
4. Defendant Maragoni’s first set of RPD (requests 1-33) served on TempCFO;
5. Defendant Peterson’s first set of RPD (requests 1-28) served on TempCFO; and
6. Defendant Berger Lewis’ fourth set of RPD served on TempCFO (requests 63-116).

Mr. Johnson and TempCFO served verified responses to the above requests on 11 February 2014.

Counsel for the parties exchanged numerous emails concerning the requests and Plaintiffs’ responses during the months of April 2014 through June 2014. (See Decl. of David Tate in Support of Mot. to Compel Pl.s’ to Fully Respond and Produce Documents, Ex. A [containing approximately 25 emails exchanged between counsel for the parties].)

Through their meet and confer efforts, counsel for the parties ultimately agreed to extend the deadline for filing a motion to compel further responses on the above requests to 18 July 2014. (Id.)

On 7 July 2014, when counsel for the parties could not informally resolve their dispute over the adequacy of Plaintiffs’ responses, the defendants filed a Motion to Compel Plaintiffs and Cross-Defendants David Johnson and TempCFO, Inc. to Fully Respond and Produce Documents in Response to Defendants Randy G. Peterson, Roberto M. Maragoni, and Berger Lewis’ Requests for Production of Documents and Things.

Plaintiffs filed their opposition to the motion on 21 July 2014. The defendants filed their reply brief on 25 July 2014.

Discussion

In each of the three motions presently before the Court, Berger Lewis seeks further responses to RPD. Moreover, in the first two motions, Berger Lewis seeks further responses to the same three FI propounded on Mr. Matusich and Ms. Goddard. Because the analysis concerning the FI is the same as to both of the cross-defendants, the Court will address the motions to compel Mr. Matusich and Ms. Goddard to provide further responses to the FI together below. The Court will then address each of the motions to compel further responses to the RPD.

I.             Motions to Compel Further Responses to FI

In the first motion before the Court, Berger Lewis seeks further responses to FI Nos. 4.1, 14.1, and 15.1 propounded on cross-defendant Matusich. In the second motion, Berger Lewis seeks further responses to the same three FI propounded on cross-defendant Goddard.

 

 

A.           Legal Standard

After receiving responses to interrogatories, the propounding party may move for an order compelling further responses if the propounding party deems that any of the following apply: (1) the answer to a particular interrogatory is evasive or incomplete; (2) the exercise of the option to produce documents is unwarranted or the required specification of those documents is inadequate; or (3) the objection to an interrogatory is without merit or too general. (Code Civ. Proc. [“CCP”], § 2030.300, subd. (a)(1) – (3).) If a timely motion to compel has been filed, the burden is on the responding party to justify any objection. (See Fairmont Ins. Co. v. Sup. Ct. (2000) 22 Cal.4th 245, 255, citing Coy v. Sup. Ct. (1962) 58 Cal.2d 210, 220-221.)

               B.           FI No. 4.1

FI No. 4.1 asked Mr. Matusich and Ms. Goddard to indicate whether, at the time of the “INCIDENT,” any insurance policies existed through which they were or might be insured. For each policy identified, the interrogatory asked the cross-defendants to state: (a) the kind of coverage; (b) the name and address of the insurance company; (c) the name, address, and telephone number of each named insured; (d) the policy number; (e) the limits of coverage; (f) whether any reservation of rights or controversy or coverage dispute exists between the cross-defendant and the insurance company; and (g) the name, address, and telephone number of the custodian of the policy.

Mr. Matusich and Ms. Goddard’s responses to FI No. 4.1 are identical. First, they objected on the ground that the term “incident” renders the interrogatory vague and ambiguous. They also objected to the interrogatory “to the extent that it seeks information protected from disclosure by the attorney-client privilege and/or attorney work product doctrine.” (Separate Statement in Support of Berger Lewis’ Mot. to Compel Further Responses from Cross-Defendant Matusich, p. 2.) Following these objections, the cross-defendants responded as follows:

Subject to and without waiving the foregoing objections, Responding Party responds as follows: [¶] Unknown at this time. Responding Party has not completed discovery and investigation regarding the subject matter of this interrogatory, and reserves the right to supplement this response as additional facts are ascertained. Several insurance policies have previously been produced. To the extent documents responsive to this form interrogatory have not been produced, additional insurance policies responsive to this form interrogatory will be produced pursuant to California Code of Civil Procedure section 2030.230. (Id., at pp. 2-3.)

Berger Lewis argues that this response (given by both of the cross-defendants) is incomplete and not code-compliant.[2] The Court agrees.

In responding to interrogatories, each answer in the response must be “as complete and straightforward as the information reasonably available to the responding party permits.” (CCP, § 2030.220, subd. (a).) Moreover, “[w]here the question is specific and explicit, an answer which supplies only a portion of the information sought is wholly insufficient.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783.) “[I]f a question does require the responding party to make reference to a pleading or document, the pleading or document should be identified and summarized so the answer is fully responsive to the question.” (Id., at p. 784.)

In order to provide a “complete and straightforward” response in compliance with CCP section 2030.220, the cross-defendants were required to identify the applicable insurance policies that had previously been produced as well as the additional information sought by the interrogatory. The failure to do so renders Mr. Matusich and Ms. Goddard’s responses to the interrogatory non-code-compliant. Accordingly, Berger Lewis’ motions to compel Mr. Matusich and Ms. Goddard to provide further responses to FI No. 4.1 are GRANTED.

 

               C.           FI No. 14.1

FI No. 14.1 asked Mr. Matusich and Ms. Goddard to respond to the following:

Do YOU OR ANYONE ACTING ON YOUR BEHALF contend that any PERSON involved in the INCIDENT violated any statute, ordinance, or regulation and that the violation was a legal (proximate) cause of the INCIDENT? If so, identify the name, ADDRESS, and telephone number of each PERSON and the statute, ordinance, or regulation that was violated. (Separate Statement in Support of Berger Lewis’ Mot. to Compel Further Responses from Cross-Defendant Matusich, p. 3.)

Mr. Matuscih and Ms. Goddard both responded to the interrogatory by setting forth the same objections made to FI No. 4.1 (i.e., vagueness and ambiguity, attorney-client privilege, and work product). They both then provided the following substantive response:

Responding Party’s discovery and investigation regarding the subject matter of this interrogatory are continuing, and Responding Party reserves the right to supplement this response as additional facts are ascertained. Responding Party is informed and believes that David Johnson and TempCFO, Inc. contend that Berger Lewis, Randy Peterson, and Roberto Maragoni violated statutes, including 26 U.S.C. 14 §§ 6713 and §§ 7216, and California Business & Professions Code §§ 5063.3 and 5156. (Id., at pp. 3-4.)

Berger Lewis argues that the above response (given by both cross-defendants) is incomplete.[3] The Court agrees.

The response that discovery is ongoing and that a further response will provided if and when such facts are uncovered is not inappropriate per se. However, if a responding party does not have the facts sought for by the interrogatory, the Code requires that he or she indicate as much in a verified response. (CCP, § 2030.220, subd. (c).) The requirement that a party must indicate whether he or she has no facts with which to answer the interrogatory is important for two reasons. First, verified answers indicating that no facts exist on an issue can be used to satisfy the moving party’s burden on summary judgment to show there is no evidence of a triable issue of fact. (See Union Bank v. Super. Ct. (1995) 31 Cal.App.4^th 573, 580-581.) Second, as a consequence of the rule allowing a propounding party to use factually devoid interrogatory responses in support of a dispositive motion, the party that indicates that it does not have such facts because discovery is ongoing, is given the incentive to provide such facts when they are discovered.

Because the cross-defendants failed to state whether any facts exist to answer the interrogatory, their responses to FI No. 14.1 were not code-compliant. Consequently, Berger Lewis’ motions to compel further responses to FI No. 14.1 from Mr. Matusich and Ms. Goddard are GRANTED.

               D.           FI No. 15.1

FI No. 15.1 directed Mr. Matusich and Ms. Goddard to respond to the following inquiry:

Identify each denial of a material allegation and each special or affirmative defense in your pleadings and for each:

(a)    state all the facts upon which you base the denial or special or affirmative defense;

(b)   state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of these facts; and

(c)    identify all DOCUMENTS and other tangible things that support your denial or special or affirmative defense, and state the name, ADDRESS, and telephone number of the PERSON who has each document.

In their responses to FI No. 15.1, Mr. Matusich and Ms. Goddard fail to state the facts supporting their 17 affirmative defenses and, instead, repeatedly state that discovery is continuing and that they reserve the right to supplement their responses further facts are ascertained or documents. For instance, concerning their Tenth Affirmative Defense, both Mr. Matusich and Ms. Goddard state the following:

Tenth Affirmative Defense – Failure to Perform

(a)    Responding Party pleaded this affirmative defense on information and belief, and in order to avoid waiving said affirmative defense. Responding Party reserves the right to supplement this response when further facts are discovered regarding this affirmative defense.

(b)   Discovery and investigation in this matter are continuing and Responding Party hereby reserves the right to supplement Responding Party’s responses as further facts are ascertained or documents are discovered.

(c)    Discovery and investigation in this matter are continuing and Responding Party hereby reserves the right to supplement Responding Party’s responses as further facts are ascertained or documents are discovered. (Separate Statement in Support of Berger Lewis’ Mot. to Compel Further Responses from Cross-Defendant Matusich, p. 10.)

The statements in the cross-defendants’ responses concerning the 16 remaining affirmative defenses are substantially similar (i.e., they repeatedly fail to set forth the facts supporting the defenses and instead indicate that discovery is ongoing).

Berger Lewis argues that the cross-defendants’ responses are incomplete and not code-compliant. The Court agrees. As set forth above, if a party is not in possession of facts to support his or her claims (or affirmative defenses), the Code requires that the party indicate that no facts exist in a verified response. (CCP, § 2030.220, subd. (c).) The statement that discovery is ongoing, standing alone, is not sufficient.

Because Mr. Matusich and Ms. Goddard did not provide code-compliant responses to FI No. 15.1, Berger Lewis’ motions to compel the cross-defendants to provide further responses to the interrogatory is GRANTED.

II.            Motions to Compel Further Responses to RPD

In the three motions presently before the Court, Berger Lewis seeks further responses to its RPD. More specifically, Berger Lewis seeks further responses from Mr. Matusich (the first motion), Ms. Goddard (the second motion), and Mr. Johnson and TempCFO (the third motion).

               A.           Legal Standard

Upon receipt of a response to a demand for inspection, including requests for the production of documents, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply:

(1)    A statement of compliance with the demand is incomplete.

(2)    A representation of inability to comply is inadequate, incomplete, or evasive.

(3)    An objection in the response is without merit or too general.

(CCP, § 2031.310, subd. (a)(1) – (3).) The motion for order compelling further responses “shall set forth specific facts showing good cause justifying the discovery sought by the inspection demand.” (CCP, § 2031.310, subd. (b)(1); Kirkland v. Sup. Ct. (2002) 95 Cal.App.4th 92, 98.) To establish “good cause,” the burden is on the moving party to show both relevance to the subject matter (e.g., how the information in the documents would tend to prove or disprove some issue in the case) and specific facts justifying the discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial). (Glenfed Develop. Corp. v. Sup. Ct. (1997) 53 Cal.4th 1113, 1117.)  Where the moving party establishes “good cause,” the burden shifts to the responding party to justify its objections. (Kirkland, supra, 95 Cal.App.4th at p. 98.)

               B.           Motion to Compel Further Responses from Mr. Matusich

Berger Lewis seeks further responses to RPD Nos. 1-32 (the entire first set of requests) served on cross-defendant Matusich. The requests seek seven categories of documents: communications between Mr. Matusich and persons associated with TempCFO (RPD Nos. 1, 2, 6, and 7); documents relating to Mr. Matusich’s employment with TempCFO, including tax documents and other financial information of both Mr. Matusich and his clients (RPD Nos. 3-5); emails sent to and received from particular email accounts (RPD Nos. 8 and 9); documents relating to a topic that came up during Mr. Matusich’s deposition (RPD No. 10); documents relating to TempCFO’s alleged loss of clients (RPD Nos. 11-15); documents and communications concerning Mr. Matusich’s responses to discovery or which relate to the pleadings (RPD Nos. 16-20); and documents relating to claims made by Plaintiffs in this case (RPD Nos. 21-32).

Mr. Matusich objected to every one of the requests on various grounds and provided substantive responses to all but two of the requests.

Berger Lewis asserts that Mr. Matusich’s objections lack merit and that his substantive responses are not code-compliant.

1. 1.                RPD Nos. 16-20

As an initial matter, Mr. Matusich served Berger Lewis with supplemental responses to RPD Nos. 16-20 on 18 July 2014, which was after Berger Lewis filed its motion to compel further responses on 7 July 2014. Berger Lewis’ motion to compel further responses to those requests is therefore moot. (See Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4^th 390, 408-409.) Consequently, the motion to compel further responses to RPD Nos. 16-20 is DENIED as moot.

                              2.            RPD Nos. 3 and 5

RPD Nos. 3 and 5 seek documents relating to Mr. Matusich’s employment with TempCFO. More specifically, RPD No. 3 seeks “All DOCUMENTS RELATING TO, REFERRING TO or CONCERNING YOUR employment with TEMPCFO, including but not limited to, policies, procedures, guidelines, notices, standards, promotions, employee compensation, salary increases, bonuses, incentives, benefits, and/or stock options, employment agreements, offer letters, 1099s, W-2s, K-ls, consulting agreements, termination letters, severance agreements and paycheck stubs.” (Separate Statement, at p. 17.) RPD No. 5 seeks “All DOCUMENTS RELATING TO, REFERRING TO or CONCERNING the clients YOU worked with at TEMPCFO.” (Id., at p. 20.)

These are the only two requests to which Mr. Matusich did not provide a substantive response.

Concerning good cause, Berger Lewis indicates that the documents relate to Matusich’s reasons for leaving Berger Lewis and going to work for TempCFO. Based upon this assertion, Berger Lewis contends that “these employment documents are discoverable as relevant or reasonably likely to lead to the discovery of admissible evidence because they relate to the claims of all parties in this case.” (Reply, at p. 5.) While the articulation of good cause is somewhat conclusory, given that relevance is construed liberally in favor of disclosure for the purposes of discovery (see Emerson Electric Co. v. Super. Ct. (1997) 16 Cal.4^th 1101, 1107), the Court finds that Berger Lewis has demonstrated that the discovery sought by this category of requests is relevant to the subject matter of this case. (See CCP, § 2017.010 [authorizing discovery “regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action”], emphasis added.) Accordingly, the Court finds that Berger Lewis has demonstrated good cause, thereby shifting the burden to Mr. Matusich to justify his objections. (Kirkland, supra, 95 Cal.App.4th at p. 98.)

Matusich objected to RPD Nos. 3 and 5 on the grounds of relevance, overbreadth, undue burden, reasonable particularity, financial privacy, the attorney-client privilege, and attorney work product. In his opposition, Mr. Matusich only attempts to justify his objections on the grounds of overbreadth and financial privacy. The remaining objections are therefore overruled.

Before turning to the objections that Mr. Matusich attempts to justify, the Court notes that Mr. Matusich asserts in his opposition that RPD No. 3 seeks documents protected from disclosure by the taxpayer privilege. Mr. Matusich did not raise the taxpayer privilege in his initial response to RPD No. 3. The objection is therefore waived. (See Scottsdale Ins. Co. v. Super. Ct. (1997) 59 Cal.App.4^th 263, 273 [waiver occurs where the responding party fails to timely raise an objection in its initial response]; see also CCP, § 2031.240, subd. (b)(2) [requiring responses to inspection demands to set forth objections clearly and with specificity].)

Turning to the privacy objection, Mr. Matusich objected to RPD Nos. 3 and 5 on the basis of his own financial privacy as well as the financial privacy interests of third parties.

The right of privacy established by the California Constitution protects an individual’s “reasonable expectation of privacy against a serious invasion.” (Pioneer Electronics, Inc. v. Sup. Ct. (2007) 40 Cal.4th 360, 370.) There is a legally recognized privacy interest in a person’s financial affairs. (See Fortunato v. Sup. Ct. (2003) 114 Cal.App.4th 475, 480; see also Valley Bank of Nevada v. Sup. Ct. (1975) 15 Cal.3d 652, 656-657 (“Valley Bank”).)

To obtain private information, the party seeking discovery must show that the discovery sought is directly relevant to a particular cause of action or defense. (Britt v. Sup. Ct. (1978) 20 Cal.3d 844, 859-862.) “Direct relevance” is a higher standard than the “relevancy to the subject matter” standard generally applicable to discovery requests. (Id., at p. 859.) According to the California Supreme Court, direct relevance means that the discovery sought is essential to the fair resolution of a matter in dispute. (Id.)

Other than the above statements concerning the general relevance of the documents, Berger Lewis has made no attempt to show how the documents sought are directly relevant to this action. Mr. Matusich’s privacy objections are therefore sustained and Berger Lewis’ motion to compel further responses to RPD Nos. 3 and 5 is DENIED.

                              3.            Remaining Requests

In response to the remaining requests (RPD Nos. 1, 2, 4, 6-15, and 21-32), Mr. Matusich provided hybrid responses—objecting to the requests and then providing substantive responses. In each of the substantive responses, Mr. Matusich indicates that he was unable to comply with the request either because he never had possession of the documents or because he no longer has possession of the documents, which he believes may be in the possession of TempCFO. For instance, in response to RPD No. 1, Mr. Matusich provided the following substantive response:

After making a diligent search and reasonable inquiry, Responding Party is unable to comply with this request, because the documents that are responsive to this request are no longer in the Responding Party’s possession, custody, or control. Responding Party is informed and believes that any documents that may be responsive to this request are in the possession, custody, or control of TempCFO or Berger Lewis. (Separate Statement, at p. 16.)

Similarly, in response to RPD Nos. 8 and 9, Mr. Matusich provided the following substantive responses:

After making a diligent search and a reasonable inquiry in and effort to comply with this request, Responding Party is unable to comply with this request because no documents responsive to this request have ever been in Responding Party’s possession, custody, or control. (Separate Statement, at pp. 24 and 25.)

Berger Lewis asserts that the above responses do not comply with CCP section 2031.230. The Court disagrees. CCP section 2031.210 contemplates three permissible responses to an inspection demand: (1) a statement that the party will comply with the demand; (2) a representation that the party lacks the ability to comply; or (3) that the responding party objects to the demand. (CCP, § 2031.210, subd. (a)(1)-(3).) If the responding party makes a statement that he or she is unable to comply with a request, the Code requires the responding party to “affirm that a diligent search and a reasonable inquiry has been made” and that the responding party “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.” (CCP, § 2031.230.) Here, Mr. Matusich responded by indicating that, after a diligent search and reasonable inquiry, he was unable to comply because either no documents were ever in his possession, custody, or control or because they are no longer in his control and are believed to now be in the possession of TempCFO. These responses satisfy the requirements of CCP section 2031.230.

The Court has no reason to question the veracity of Mr. Matusich’s substantive responses with one exception.

RPD No. 1 asked Mr. Matusich to produce “All DOCUMENTS EVIDENCING COMMUNICATIONS between [him] and JOHNSON [the owner of TempCFO] during the RELEVANT TIME PERIOD,” which is defined as December 1, 2009 to the present. (Separate Statement, p. 14.) As indicated above, Mr. Matusich responded by indicating that he is no longer in control of such documents. However, in his opposition, Mr. Matusich indicates that he has had email communications with Mr. Johnson after he left TempCFO.

Mr. Matusich’s statement in his opposition is obviously in conflict with his verified response indicating that he is no longer in possession of any “documents evidencing communications between [him] and [Mr. Johnson]” from 1 December 2009 to the present. It appears that the documents were withheld because Mr. Matusich does not believe the communications to be relevant. If that is the case, however, Mr. Matusich should have stood on his objections and not represented under penalty of perjury that he is no longer in possession of such documents.

Given Mr. Matusich’s inconsistent statements concerning his possession of documents responsive to RPD No. 1, the Court will address the merits of his objections to determine whether the admittedly withheld documents should be produced.

Mr. Matusich objected to RPD No. 1 on the grounds, among others, of relevance and overbreadth. The gist of his argument is that the request is overly broad as to both time and subject matter. The Court agrees. The request seeks any and all communications between Mr. Matusich and Mr. Johnson from between December 2009 and the present. It is undisputed that Mr. Matusich stopped working for Berger Lewis in November 2011. As Mr. Matusich points out, Berger Lewis has not explained how communications after that date would be relevant to the subject matter of this case. Moreover, the fact that the request is not limited by subject matter renders the request overly broad. As evidenced by the subject matter of the withheld communications, which concern communications between Mr. Matusich and Mr. Johnson concerning a rental property they jointly own, the request encompasses communications that are wholly unrelated to this case. Accordingly, because the request is overly broad as to both time and scope, Mr. Matusich’s overbreadth objection is sustained and Berger Lewis’ motion to compel a further response to RPD No. 1 is DENIED.

As to the remaining requests, the Court has no reason to question the veracity of the substantive responses.[4] Because the substantive responses to RPD Nos. 1, 2, 4, 6-15, and 21-32 are code-compliant, Berger Lewis’ motion to compel further responses to those requests is DENIED.

As a final note on Mr. Matusich’s substantive responses, the inconsistency of Mr. Matusich’s verified response to RPD No. 1 and later disclosure to the Court that he has withheld documents responsive to the request because he believed them to be irrelevant is very troubling. If a statement made in a verified discovery response turns out to be untrue, the responding party may be subject to severe consequences, including discovery sanctions and the potential of prosecution for perjury. (See Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1544-1545 [discovery sanctions at trial upheld where the sanctioned party falsely claimed that the requested documents were nonexistent or missing or that all relevant documents had already been produced]; see also Pate v. Channel Lumber Co. (1997) 51 Cal.App.4th 1447.) Accordingly, the Court would advise Mr. Matusich and his counsel to proceed with more caution than has been displayed thus far.

               C.           Motion to Compel Further Responses from Ms. Goddard

Berger Lewis seeks further responses to RPD Nos. 3, 5, 6, and 8-31 served on cross-defendant Goddard. The requests generally seek the same information sought from Mr. Matusich. Like Mr. Matusich, Ms. Goddard responded to several of the requests by indicating that she is unable to comply with the requests because she is not in possession of the documents. Unlike Mr. Matusich, however, Ms. Goddard provided several objection-only responses. As with the previous motion, Berger Lewis argues that Ms. Goddard’s objections lack merit and that her substantive responses are not code-compliant.

                              1.            RPD Nos. 3 and 5

RPD Nos. 3 and 5 served on Ms. Goddard seek the same information as RPD Nos. 3 and 5 served on Mr. Matusich. RPD No. 3 served on Ms. Goddard seeks:

All DOCUMENTS RELATING TO, REFERRING TO or CONCERNING YOUR employment with TEMPCFO, including but not limited to, policies, procedures, guidelines, notices, standards, promotions, employee compensation, salary increases, bonuses, incentives, benefits, and/or stock options, employment agreements, offer letters, 1099s, W-2s, K-1s, consulting agreements, termination letters, severance agreements and paycheck stubs. (Separate Statement, p. 13-14.)

RPD No. 5 served on Ms. Goddard seeks: “All DOCUMENTS RELATING TO, REFERRING TO or CONCERNING the clients YOU worked with at TEMPCFO.” (Separate Statement, at p. 15.)

Like Mr. Matusich, Ms. Goddard objected to RPD Nos. 3 and 5 on the ground of privacy. More specifically, Ms. Goddard points out that RPD No. 3 expressly seeks her private financial information, including tax documents and pay stubs, and that RPD No. 5 is worded broadly enough to encompass the tax returns that Ms. Goddard prepared for her clients while working at TempCFO.

As discussed above with regard to RPD Nos. 3 and 5 served on Mr. Matusich, given the fact that the requests seek private financial information subject to the protections of article 1 of the California Constitution, Berger Lewis is required to demonstrate direct relevance. (Britt, supra, 20 Cal.3d at pp. 859-862.)

Concerning the relevance of the documents sought by RPD No. 3, Berger Lewis states that “[t]he issues in this case directly relate to when Goddard worked for or was employed by TempCFO . . . [and] [t]his Request seeks documents relating to Goddard’s job duties, the terms under which she was hired or employed, and her days or time of work during the relevant period.” (Separate Statement, p. 14.)

Even if the above statement could be construed as an assertion that the financial information and tax documents sought from Ms. Goddard and her clients are directly relevant for the purposes of the privacy analysis, which is itself questionable, Berger Lewis does not explain why that assertion is true. The failure to articulate the direct relevance of the documents is fatal to the requests. Consequently, Ms. Goddard’s privacy objections are sustained and Berger Lewis’ motion to compel further responses to RPD Nos. 3 and 5 is DENIED.

                              2.            RPD No. 6

RPD No. 6 seeks any and all documents “EVIDENCING COMMUNICATIONS between [Ms. Goddard] and ROYSTON during the RELEVANT TIME PERIOD,” which is defined as December 2009 to the present. (Separate Statement, at p. 16.) It appears from the parties’ papers that Brian Royston was an independent contractor for TempCFO.

Ms. Goddard objected to RPD No. 6 on the grounds of relevance, over breadth as to time and scope, undue burden, failure to comply with the reasonable particularity requirement, vagueness and ambiguity, attorney-client privilege, and the work product doctrine.

At some point prior to the present motion being filed, without waiving her objections, Ms. Goddard produced documents responsive to RPD No. 6. Berger Lewis now asserts that it wants a further verified response indicating that Ms. Goddard has produced all responsive documents. Because Ms. Goddard maintains her objections, the Court must determine whether Berger Lewis is entitled to a further response under CCP section 2031.310.

As noted above, when a party moves for further responses, the first step in the analysis is to determine whether the moving party has demonstrated good cause. (CCP, § 2031.310, subd. (b)(1); Kirkland, supra, 95 Cal.App.4th at p. 98.) To establish “good cause,” the burden is on the moving party to show both relevance to the subject matter (e.g., how the information in the documents would tend to prove or disprove some issue in the case) and specific facts justifying the discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial). (Glenfed Develop. Corp., supra, 53 Cal.4th at p. 1117.)

Concerning the relevance of the documents sought by RPD No. 6, Berger Lewis states the following:

[A]ll communications between Goddard and Royston are discoverable as being relevant or reasonably likely to lead to the discovery of admissible evidence. The documents requested are those that relate to the claims of all parties in this case, including but not limited to communications between Goddard and Royston about anything having to do with this case and claims in this case, TempCFO, CPA licenses, rights or eligibility to work as a CPA or CPA firm in California, the operations of TempCFO, disputes or disagreements of any kind involving Royston, and anything having to do with Royston’s involvement in and relationship with TempCFO and Mr. Johnson. (Separate Statement, at p. 17.)

The above statement basically boils down to the assertion that the documents sought are relevant because they relate to the claims raised in the case and they relate to the claims in the case because they are relevant. Such conclusory statements and circular reasoning do not satisfy the good cause requirement of CCP section 2031.310, which requires the moving party to explain to the Court how the information in the documents would tend to prove or disprove some issue in the case. (See Glenfed Develop. Corp., supra, 53 Cal.4th at p. 1117.)

While relevance in the discovery context is to be construed liberally in favor of disclosure, and the Court can postulate ways in which documents reflecting communications between Ms. Goddard and Mr. Royston could be relevant to the subject matter of this case (if properly limited in scope as to time and subject matter), the burden nonetheless rests upon the party seeking the discovery to articulate the relevance of the documents sought. (See Glenfed Develop. Corp., supra, 53 Cal.4th at p. 1117.) Because Berger Lewis has failed to explain the relevance of the documents sought by the request, it has failed to make a showing of good cause. The motion to compel Ms. Goddard to provide further responses to RPD No. 6 is therefore DENIED.

                              3.            RPD Nos. 8 and 9

RPD Nos. 8 and 9 seek emails sent and received from Ms. Goddard’s personal email account that refer to Berger Lewis, Mr. Johnson, Mr. Royston, or TempCFO.

Ms. Goddard objected to the requests on the grounds of relevance, overbreadth, undue burden, reasonable particularity, privacy, attorney-client privilege, and the work product doctrine.

As with the previous request, at some point prior to the present motion being filed, without waiving her objections, Ms. Goddard produced documents responsive to RPD Nos. 8 and 9. Berger Lewis now asserts that it wants further verified responses indicating that Ms. Goddard has produced all responsive documents. Because Ms. Goddard maintains her objections, the Court must determine whether Berger Lewis is entitled to a further responses under CCP section 2031.310.

Berger Lewis’ statement of good cause is limited to the following: “all communications between Goddard and Blac, Royston, Johnson, and TempCFO are discoverable as being relevant or reasonably likely to lead to the discovery of admissible evidence. The documents requested are those that relate to the claims of all parties in this case.” (Separate Statement, at p. 18.)

This statement is conclusory and does articulate how the documents sought are relevant. Accordingly, Berger Lewis has failed to demonstrate good cause and its motion to compel further responses to RPD Nos. 8 and 9 is DENIED.

                              4.            RPD Nos. 10, 11, 14, and 20-31

In response to RPD Nos. 10, 11, 14, and 20-31, Ms. Goddard provided hybrid responses—objecting to the requests and then providing substantive responses. The parties’ arguments focus on Ms. Goddard’s substantive responses.[5]

In each of the substantive responses, Ms. Goddard indicated as follows:

After making a diligent search and reasonable inquiry in an effort to comply with this request, Responding Party has never had any documents in Responding Party’s possession, custody, or control that are responsive to this request, with the exception of documents that are in the possession, custody, or control of TempCFO and that have been produced by TempCFO in this case. (Separate Statement, at p. 20.)

Ms. Goddard concedes that the documents sought are relevant, but argues that her substantive responses are code-compliant. They are not. It is well-settled that a party seeking discovery is entitled to discover any non-privileged information regardless of whether it has previously been produced by another party. (See TBG Ins. Services Corp. v. Super. Ct. (2002) 96 Cal.App.4^th 443, 448-449.) In other words, it is immaterial whether the documents have been produced by TempCFO. If the documents sought are in Ms. Goddard’s possession, they must be produced.

Because Ms. Goddard has failed to provide code-compliant substantive responses, and otherwise failed to justify her objections, Berger Lewis’ motion to compel further responses to RPD Nos. 10, 11, 14, and 20-31 is GRANTED.

                              5.            RPD Nos. 12 and 13

In response to RPD Nos. 12 and 13, Ms. Goddard provided hybrid responses—objecting to the requests and then providing substantive responses. The parties’ arguments focus on Ms. Goddard’s substantive responses.[6]

In her substantive responses, Ms. Goddard indicated that she was unable to comply with the requests because the documents sought were never in her possession. More specifically, Ms. Goddard stated that, “[a]fter making a diligent search and a reasonable inquiry in an effort to comply with this request, Responding Party has never had any documents in Responding Party’s possession, custody or control that are responsive to this request.” (Separate Statement, at p. 23.)

As the Court noted in its discussion of Mr. Matusich’s responses, the above statement is a code-compliant response. (See CCP, § 2031.230.) Consequently, Berger Lewis’ motion to compel further responses to RPD Nos. 12 and 13 is DENIED.

                              6.            RPD Nos. 15-19

As with the previous requests, in response to RPD Nos. 15-19, Ms. Goddard provided hybrid responses and the parties’ arguments focus on Ms. Goddard’s substantive responses.[7] In her substantive responses, Ms. Goddard stated as follows:

Responding Party will produce copies of any non-privileged documents that Responding Party reasonably identified as being responsive and pertinent to the subject document request to the extent that such documents are accessible, that are in Responding Party’s possession, custody, or control and can be located after diligent search and inquiry. (Separate Statement at p. 25.)

Ms. Goddard apparently concedes that the requests seek relevant and otherwise non-objectionable information and has informed the Court that, on 12 June 2014, she produced all responsive documents in her possession.

Notwithstanding Ms. Goddard’s production of documents, Berger Lewis asks the Court to compel Ms. Goddard to provide verified further responses indicating that she has in fact produced all the documents in her possession. Berger Lewis is correct that it is entitled to a verified response indicating whether a demand will be complied with in whole or part. (CCP, § 2031.220.) Consequently, the motion to compel further responses to RPD Nos. 15-19 is GRANTED.

               D.           Motion to Compel Further Responses from Mr. Johnson and TempCFO  

In the third and final motion before the Court, defendants Randy Peterson, Roberto Maragoni, and Berger Lewis seek an order compelling plaintiffs Mr. Johnson and TempCFO to provide further responses to the following six sets of RPD:

1. Defendant Maragoni’s First Set of RPD served on Mr. Johnson (requests 1-30);
2. Defendant Peterson’s First Set of RPD served on Mr. Johnson (requests 1-23);
3. Defendant Berger Lewis’ Third Set of RPD served on Mr. Johnson (requests 56-102);
4. Defendant Maragoni’s First Set of RPD served on TempCFO (requests 1-33);
5. Defendant Peterson’s First Set of RPD served on TempCFO (requests 1-28); and
6. Defendant Berger Lewis’ Fourth Set of RPD served on TempCFO (requests 63-116).

Each of the 213 requests asks that Mr. Johnson or TempCFO produce documents that support a contention made in thier First Amended Complaint. The requests are substantially similar and follow a rather redundant pattern. A review of the first request in each set illustrates the nature of the requests as a whole.

RPD (Set One) No. 1 (served on Mr. Johnson by Mr. Maragoni)

All DOCUMENTS that support YOUR [Mr. Johnson’s] contention that in or about December 2011, Maragoni, without the consent of Johnson, accessed the 2010 Form 1120S tax return prepared for Johnson that was stored on [Berger Lewis’] computer system, as alleged in paragraph 39 of the FIRST AMENDED COMPLAINT. (See Decl. of David Tate in Support of Mot. to Compel Pl.s’ to Fully Respond and Produce Documents, Ex. B-1.)

RPD (Set One) No. 1 (served on Mr. Johnson by Mr. Peterson)

All DOCUMENTS that support YOUR [Mr. Johnson’s] contention that in or about December 2011, Peterson, without the consent of Johnson, accessed the 2010 Form 1120S tax return prepared for Johnson that was stored on [Berger Lewis’] computer system, as alleged in paragraph 39 of the FIRST AMENDED COMPLAINT. (Id., Ex. B-2.)

RPD (Set Three) No. 56 (served on Mr. Johnson by Berger Lewis)

All DOCUMENTS that support YOUR [Mr. Johnson’s] contention that in or about December 2011, [Berger Lewis], without the consent of Johnson, accessed the 2010 Form 1120S tax return prepared for Johnson that was stored on [Berger Lewis’] computer system, as alleged in paragraph 39 of the FIRST AMENDED COMPLAINT. (Id., Ex. B-3.)

RPD (Set One) No. 1 (served on TempCFO by Mr. Maragoni)

All DOCUMENTS that support YOUR [TempCFO’s] contention that in or about December 2011, Maragoni, without the consent of TempCFO, accessed the 2010 Form 1120S tax return prepared for TempCFO that was stored on [Berger Lewis’] computer system, as alleged in paragraph 39 of the FIRST AMENDED COMPLAINT. (Id., Ex. B-4.)

RPD No. 1 served by Mr. Peterson on TempCFO seeks the exact same thing as the above request. (See id., Ex. B-5.) Similarly, RPD No. 63 served by Berger Lewis on TempCFO is the same. (Id., Ex. B-6.)

The next 200 or so requests follow the same pattern and ask for documents that support various contentions in Plaintiffs’ First Amended Complaint.

Plaintiffs objected to the requests on the following grounds: the requests are not reasonably particularized; the requests are cumulative and duplicative; financial privacy; the taxpayer privilege; the attorney-client privilege; and the work product doctrine. Plaintiffs then provided the following substantive response to each of the requests:

Subject to, and without waiving the foregoing objections, Plaintiff responds as follows: [¶] With the exception of documents that are in the possession, custody, or control of the propounding party or the propounding party’s attorneys, or that are attached to the parties’ pleadings in this case, or that have been previously produced by parties in this case, Plaintiff has no additional non-privileged documents in his possession, custody, or control that are responsive to this request.

Plaintiff’s discovery and investigation regarding the subject matter of this request are continuing, and Plaintiff reserves the right to supplement his response as additional facts or documents become known to him. (Separate Statement in Support of Third Mot., at p. 2.)

Notwithstanding the numerosity of the requests at issue, the defendants are really only seeking two things in their motion.

First, they want Mr. Johnson and TempCFO’s tax documents.

Second, they take issue with Plaintiffs’ substantive response indicating that they do not have any additional documents and then, in the next sentence, saying that they will continue to supplement their response as discovery continues. Essentially, the defendants argue that the substantive responses are not code-compliant.

                              1.            Tax Documents

Not one of the 213 requests at issue expressly seeks Plaintiffs’ tax documents. The defendants, however, have made clear that they believe they are entitled to the tax documents and that they should be produced in response to the requests currently before the Court. Indeed, the defendants’ proposed order submitted with their motion asks the Court to order Mr. Johnson and TempCFO to “produce all tax returns and amended tax returns . . . from 2008 to present.” (Def.s’ Proposed Order on Mot. to Compel, at p. 2, ¶ E.) Along the same lines, all but one page of the defendants’ reply brief are dedicated to the issue of whether the tax documents should be produced.

The defendants are not entitled to Plaintiffs’ tax documents (at least not with respect to the requests currently before the Court) for at least three reasons.

First, Berger Lewis previously requested the tax documents through its first set of RPD served on Mr. Johnson. Mr. Johnson served the defendants with objections to those requests on 21 December 2012 (Decl. of Douglas Drayton in Support of Pl.s’ Opp. to Mot. to Compel, Ex. B), and the defendants never moved to compel further responses. It is well settled that, “[b]y failing to timely move to compel a further response, the [requesting party] waive[s] any right to compel a further response to the demand . . . or to compel an inspection of any documents that might have been identified in such a further response.” (New Albertsons, Inc. v. Super. Ct. (2008) 168 Cal.App.4^th 1403, 1427-1428, citing CCP, §§ 2031.310, subd. (c) and 2031.320, subd. (a).) Accordingly, Mr. Johnson was under no obligation to produce his tax documents, which had been previously sought and objected to. (Id., at p. 1428 [stating that the responding party “had no obligation to produce further documents responsive to the demand”].)

Second, the tax documents are simply not sought by the requests at issue. As indicated above, each of the requests seek documents in support of Plaintiffs’ claims in this case. The gravamen of Plaintiffs’ claims is that the defendants illegally inspected, accessed, used, disclosed, and copied TempCFO’s 2009 and 2010 tax returns in violation of Plaintiffs’ rights to privacy and in violation state and federal statutes prohibiting certain uses of tax returns and the confidential financial information contained therein.

The defendants repeatedly assert that the tax documents are contemplated by the requests. For instance, as their reasons for why further responses should be compelled to RPD No. 66 served by Berger Lewis on Mr. Johnson, the defendants state the following in their separate statement:

This document request seeks documents that support a contention by plaintiffs in their First Amended Complaint. Defendants are entitled to documents that support Plaintiffs’ contentions. Further, as plaintiffs’ contention relates to TempCFO, Inc. tax returns, defendants are entitled to copies of all of the relevant tax returns and supporting documents including amended returns. (Separate Statement, at p. 2.)

The defendants’ reasoning is flawed. As Plaintiffs point out, “the tax returns and their contents cannot possibly show one way or another whether the Defendants inspected, accessed, used, disclosed, or copied them, so they cannot possible support [Plaintiffs’ claims related to those allegations].” (Pl.s’ Opp., at pp. 4-5.) Put simply, regardless of whether Plaintiffs’ tax documents are in fact relevant to this case, because the requests at issue do not seek the documents, the defendants are not entitled to seek the production of the documents through these requests.

Finally, Plaintiffs argue that the documents are protected from disclosure by the taxpayer privilege. As Plaintiffs point, out, state and federal tax returns are privileged. (Web v. Standard Oil Co. of Calif. (1957) 49 Cal.2d 509, 513-514.) The privilege, however, is not absolute. (Schnabel v. Sup. Ct. (1993) 5 Cal.4^th 704, 721.)  According to our state Supreme Court, “the privilege is waived or does not apply in three situations: ‘(1) there is an intentional relinquishment [citation omitted], (2) the ‘gravamen of [the] lawsuit is so inconsistent with the continued assertion of the taxpayer’s privilege as to compel the conclusion that the privilege has in fact been waived’ [citation omitted], or (3) a public policy greater than that of confidentiality of tax returns is involved [citation omitted].” (Schnabel, supra, 5 Cal.4^th at p. 721.)

In their moving papers, the defendants do not address why or how the taxpayer privilege has been waived in this case other than to make vague assertions that Plaintiffs have put the documents “at issue” by asserting that the defendants illegally accessed them. The defendants do address the taxpayer privilege in the reply brief. Those arguments, however, are not properly before the Court. (See REO Broadcasting Consultants v. Martin (1999) 69 Cal.App.4^th 489, 500 [“This court will not consider points raised for the first time in a reply brief for the obvious reason that opposing counsel has not been given the opportunity to address those points.”].)

Based upon the above discussion, the defendants are not entitled to an order compelling Plaintiffs to produce their tax documents and Plaintiffs’ objection on the basis of the taxpayer privilege is sustained.

1. 2.                Plaintiffs’ Substantive Responses

As a preliminary matter, as indicated above, Plaintiffs provided hybrid responses to each of these requests—objecting and then providing substantive responses. While the parties focus on the tax document issue and the substantive responses, because the Court finds that the substantive responses are not code-complaint and will order that Plaintiffs provide further responses, the Court will briefly address Plaintiffs’ other objections. Other than the taxpayer privilege, Plaintiffs objected to the requests on grounds of reasonable particularity, duplicity, privacy, the attorney-client privilege, and the work product doctrine. Other than the taxpayer privilege, Plaintiffs only assert that the requests are abusive due to their number. That argument is required to be asserted in a motion for a protective order under CCP section 2019.030, and is not properly before the Court. Because Plaintiffs have not justified the remaining objections, the objections are overruled with the exception of the attorney-client privilege and work product doctrine, which are preserved. (See Best Products, Inc., supra, 119 Cal.App.4^th at pp. 1188-1189.)

The defendants also take issue with Plaintiffs’ substantive responses to the requests. Plaintiffs provided the following substantive responses:

With the exception of documents that are in the possession, custody, or control of the propounding party or the propounding party’s attorneys, or that are attached to the parties’ pleadings in this case, or that have been previously produced by parties in this case, Plaintiff has no additional non-privileged documents in his possession, custody, or control that are responsive to this request.

Plaintiff’s discovery and investigation regarding the subject matter of this request are continuing, and Plaintiff reserves the right to supplement his response as additional facts or documents become known to him. (Separate Statement in Support of Third Mot., at p. 2.)

The defendants argue that the above statement is not a code-complaint response. They are correct. CCP section 2031.210 authorizes three permissible responses to an inspection demand: (1) a statement that the party will comply with the demand; (2) a representation that the party lacks the ability to comply; or (3) that the responding party objects to the demand. (CCP, § 2031.210, subd. (a)(1)-(3).) Here, Plaintiffs have asserted an inability to comply and then represented that they will provide supplemental responses as discovery continues. As Berger Lewis points out, such a response is internally inconsistent.

In their opposition, Plaintiffs state that they “are continuing to review e-mails from searches of TempCFO’s hosted mail server for any additional responsive documents,” that they have been producing documents on a rolling basis, “but have not yet completed that production.” (Pl.s’ Opp., at pp. 1-2.) Given this statement, the appropriate response to the requests is that Plaintiffs will comply with the request. The difference between a statement of compliance and Plaintiffs’ response is not mere semantics. A statement of an inability to comply puts the requesting party on notice that no documents are forthcoming either because they do not exist or are no longer in the producing party’s possession. It also triggers the 45-day limitations period for a motion to compel further responses. A statement of compliance, however, allows the requesting party to move for production in accordance with the statement of compliance and can be brought at any time. (See CCP, § 2031.320.)

Because it is clear that Plaintiffs have agreed to produce non-privileged documents responsive to the requests, the defendants are entitled to a code-compliant response indicating as much. Accordingly, subject to the caveat that they are not entitled to Plaintiffs’ tax documents, the defendants’ motion to compel further responses is GRANTED.

Conclusion and Order

The motion of Berger Lewis to compel further responses to FI and RPD served on Mr. Matusich is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to FI Nos. 4.1, 14.1, and 15.1. The motion is DENIED as to all of the RPD. Accordingly, Mr. Matusich shall serve verified, code-compliant further responses, without objection, to FI Nos. 4.1, 14.1, and 15.1 within 20 calendar days of the filing of this Order.

The motion of Berger Lewis to compel further responses to FI and RPD served on Ms. Goddard is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to FI Nos. 4.1, 14.1, 15.1, and RPD Nos. 10, 11, 14-19, and 20-31. The motion is otherwise DENIED. Accordingly, Ms. Goddard shall served verified code-compliant further responses, without objection (except for the attorney-client privilege and work product doctrine), to FI Nos. 4.1, 14.1, 15.1, and RPD Nos. 10, 11, 14-19, and 20-31, within 20 calendar days of the filing of this Order.

The motion of defendants Peterson, Maragoni, and Berger Lewis to compel further responses to RPD served on Plaintiffs is GRANTED IN PART and DENIED IN PART. The motion is DENIED as it pertains to Plaintiffs’ tax documents. The motion is otherwise GRANTED. Accordingly, Plaintiffs shall served verified code-compliant further responses, without objection (except for the attorney-client privilege and work product doctrine), to each of the six sets of RPD at issue within 20 calendar days of the filing of this Order.

 

 

 

 

________________­­­____________ DATED:

_________________________­­­________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara