Case Number: EC060172    Hearing Date: April 25, 2014    Dept: NCD

TENTATIVE RULING
#5
EC 060172
JOHANNES v. THOMAS L. SIMPSON, A LAW CORPORATION

Third Party Foothills Consulting Group, Inc.’s Motion to Quash Deposition Subpoenas

TENTATIVE:
Motion to Quash is GRANTED without prejudice .
Deposition Subpoenas Served on Enterprise Locksmith, Hyatt Regency Mission Bay, La Jolla Village Florists and Rancho Bernardo Inn are quashed.
The subpoenas request private financial information of third parties, and the subpoenaing party has failed to meet her burden to establish that the information sought is directly relevant to any issue in this matter, is narrowly tailored, or that the information cannot be obtained through less intrusive means. The court has balanced the nature of the information against plaintiff’s need for the information as stated in the opposition and finds that as currently articulated plaintiff’s need does not outweigh privacy concerns.

Moving parties’ request for a protective order is DENIED.

Moving parties’ requests for monetary sanctions are denied.

RELIEF REQUESTED:
Order quashing four deposition subpoenas
Protective order staying all discovery concerning Foothills and its principals Philip Ashworth and Patrick Johannes pending the final resolution of the underlying marital dissolution action.

FACTUAL BACKGROUND:
Plaintiff Deborah Johannes, in pro per, alleges that defendants, her attorneys in her divorce proceeding, engaged in malpractice when they failed to act on information concerning undisclosed income, failed to ensure that plaintiff’s legal fees were paid by her husband, and failed to obtain documents in discovery necessary to protect plaintiff’s interests. Plaintiff alleges that as a result of defendants not appropriately preparing responses to discovery on behalf of plaintiff, her husband was able to obtain a discovery order and sanctions, which he enforced as a money judgment on her checking account, depriving her of funds necessary for living expenses and litigating her case, and also placed a lien on plaintiff’s home to secure payment. Plaintiff alleges that in the divorce proceeding, defendants made a motion to be relieved as counsel at a critical juncture in her case with no regard for her interest, which motion was granted on February 15, 2012, and that although plaintiff attempted to the best of her ability to continue with and conclude her case with the aid of new counsel the damage had been done in terms of failure to conduct proper discovery and being deprived of money owed to her by her husband.

ANALYSIS:
Under CCP sec. 2017.010, “any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action…if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.”

CCP § 1987.1 provides in pertinent part:
“When a subpoena requires the attendance of a witness or the production of books, documents or other things before a court, upon motion reasonably made by the party, the witness, or any consumer described in Section 1985.3, or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon such terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other orders as may be appropriate to protect the parties, the witness, or the consumer from unreasonable or oppressive demands including unreasonable violations of a witness’ or consumer’s right of privacy.”

With respect to quashing discovery, 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. The granting or denial of relief is reviewed for abuse of discretion. See Meritplan v. Superior Court (1981) 124 Cal.App.3d 237, 242.

The subpoenas here seek:

1) From Enterprise Locksmith, documentation concerning a transaction on September 29, 2010 in an amount of approximately $384 charged to or paid by Foothills Consulting Group, including the name of individual requesting services, address where services rendered, etc. [Ex. H].
2) From Hyatt Regency Mission Bay, documentation of all guest transactions for 2010-2011 charged to and/or paid by or on behalf of Foothill, including names of registered guests, expense ledgers, etc. [Ex. I]

3) From La Jolla Village Florists, documentation regarding transaction on June 24, 2010 in amount of approximately $76 charged to and/or paid by Foothills, including name of sender, name and delivery address of recipient. [Ex. J]

4) From Rancho Bernardo Inn, documentation of all guest transactions for 2010-2011 charged to and/or paid by or on behalf of Foothill, including names of registered guests, expense ledgers, etc. [Ex. K]

These subpoenas seeks the personal financial information of Foothills Consulting Group.

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 an individual’s right of privacy in his financial affairs conflicts with the public need for discovery in litigation, the competing interests must be carefully balanced. Even where the balance weighs in favor of disclosure of private information, the scope of the discovery will be narrowly circumscribed; such an invasion of the right of privacy must be drawn with narrow specificity and is permitted only to the extent necessary for a fair resolution of the lawsuit.”
Moskowitz v. Superior Court (1982) 137 Cal.App.3d 313, 316.

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

Where private information is sought, the burden is on the party seeking discovery to show a particularized need for the information sought, that the information is directly relevant to the cause of action or defense. Britt v. Superior Court (1978) 20 Cal.3d 844, 859. The moving party must also show that the information sought is not available from other sources or through less intrusive means. Allen v. Superior Court (1984) 151 Cal.App.3d 447, 449.

This privacy protection may also apply to corporate entities. H&M Associates v. City of El Centro (1980) 109 Cal.App.3d 399, 409.

Here, there appears to be a vague argument that Foothills Consulting Group was entitled to a Notice to Consumer concerning these subpoenas, but since it is a corporate entity, it does not qualify as a consumer entitled to such notice. Under CCP § 1985.3 (a)(2)
“(2) “Consumer” means any individual, partnership of five or fewer persons, association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary.”

The corporation does not qualify as a consumer, and was not entitled to any notice to consumer.

The question remains whether the subpoenas seek information sufficiently directly relevant to this matter to justify the intrusion into the privacy rights of the corporation and other third parties.

As to the locksmith and florist, the opposition does not clearly explain why these documents are relevant to this matter. Plaintiff’s declaration states:
“The locksmith and florist receipts are both relevant to the malpractice action as I believe that Patrick used unauthorized community funds, and FCG’s funds and/or unlimited access to those funds as laundered income to purchase a San Diego condo that he lives in….Funds FCG deducted as office expenses in 2010 and 2011 for his San Diego residence also would clearly affect the value of FCG.”
[Johannes Decl., para. 13a].

It is argued that had the Simpson defendants acted on the “Executive Wife’s List,” at the divorce proceeding, the documents could have been used to prove the real value of FCG.

It is not entirely clear how either of these transactions would have proven some reduced value of FCG—there seems to be some attenuated reasoning that these transactions would have provided an address which does not match the San Diego office address of the corporation, which address was actually the condominium Patrick was living in at the time, the maintenance and rent for which FCG was treating as its San Diego office for purposes of corporate records and taxes. This seems to be a somewhat round-about way to obtain the address of the subject condominium, and the Court is not convinced that an address cannot be obtained more directly and less intrusively. In addition, it is not clearly indicated how the Simpson defendants were on notice to obtain these particular records. What appears to have been the “Executive Wife’s List” is attached as Exhibit M to the moving papers (not to the opposition), and it is not clearly argued how from that list the Simpson defendants would have known to request documents concerning this particular transaction. There has been no direct relevance established here, and it is not clear why this information is necessary to establish a simple address. The motion is therefore granted and these two subpoenas are quashed.

As to the hotel transactions, plaintiff argues that before trial, plaintiff’s expert Mark Kohn had evidently reviewed some Hyatt hotel documents, which reflected that the expenses were “90% personal” rather than business related, which affected the value of plaintiff’s interest in FCG. [Johannes Decl., para. 10a]. Evidently the documents were only partial documents, provided by FCG, and plaintiff suspects that had the documents been subpoenaed by the Simpson defendants, Kohn’s analysis could have more clearly established abuse and devaluation of FCG. It is not clear why the Rancho San Bernardo documents are suspected to show abuse as well. These documents seem to fall within categories of documents plaintiff had been urging the Simpson defendants to obtain in the underlying divorce proceeding, according to the Executive Wife’s List. [Ex. M].

The motion basically argues that plaintiff’s trial counsel could have subpoenaed those documents, but did not do so, and that plaintiff’s expert did present an adequate evaluation at the time of trial. The argument also seems to be that it is not clear yet how these documents would be relevant to the damages claimed in this case, both because there is not yet a decision in the underlying case (so plaintiff possibly might obtain everything she claims that these documents would have obtained for her anyway), and that it is not clear how the documents implicate any other damages alleged against the Simpson attorneys, such as that sanctions were issued and pursued, or that plaintiff had insufficient assets to more rigorously participate in that litigation.

At this point, particularly with no clear showing that the documents have been requested directly from FCG, or that an award in the divorce proceeding does not take into account a significant adjustment for personal expenses paid by FCG, the motion is granted and the subpoenas are also quashed.

The motion also seeks a protective order that discovery against FGC and its principals be stayed in this matter until the issuance of the decision in the divorce proceeding.

The opposition seems to concede that this matter is proceeding more quickly than plaintiff anticipated, when she had to file the action before the underlying action is ultimately determined in order to avoid the bar of the statute of limitations, and defendants then very promptly answered and the case proceeded forward. On balance, there appears to be no compelling reason to now enter a continuing stay for all purposes, when some amount of litigation activity would apparently be appropriate even while a determination in the underlying case is still pending.

The moving papers also seek sanctions for the cost of having to bring this motion.

Under CCP section 1987.2, the court may award sanctions in making an order pursuant to Section 1987 or 1987.1:
“In making an order pursuant to motion made under subdivision (c) or Section 1987 or 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.”

In the interests of justice in this particular case under the circumstances, based on an exercise of the Court’s discretion, and absent a showing of bad faith, moving parties’ requests for sanctions are denied.