Ezequiel Hinojos v. Asset Ventures, LLC, et la. CASE NO. 113CV256853
DATE: 27 June 2014 TIME: 9:00 LINE NUMBER: 22
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 26 June 2014. Please specify the issue to be contested when calling the Court and counsel.

On 27 June 2014, the motion of Plaintiff Ezequiel Hinojos (“Plaintiff”) for Motion for an Order to Compel Defendant’s Production of Documents and for Sanctions against Defendants Asset Ventures, LLC, et la (“Asset Ventures”) was argued and submitted.

Defendants did not file formal opposition to the motion.

All parties are reminded that all papers must comply with Rule of Court 3.1110(f).

Statement of Facts

Plaintiff Hinojos has resided at his residence with his family for over 35 years. This action arises out of a dispute over Plaintiff’s home equity line credit secured by a deed of trust that was obtained from Wells Fargo. Subsequently, there were multiple alleged sales of this loan.

On or about 4 March 2012 (recorded 18 April 2014), Wells Fargo allegedly sold the loan and assigned the deed of trust to Eagle Crest, LLC for $3,500. On or about 9 April 2012 (recorded on 18 April 2014), Eagle Crest, LLC (“Eagle Crest”) then assigned the deed of trust and sold the loan to Newport Beach Holdings, LLC (“Newport Beach Holding”). Newport Beach Holding then assigned the deed of trust to Asset Ventures on 10 April 2012 and recorded on 20 April 2012.

Plaintiff alleged that Eagle Crest and Newport Beach Holdings had no right to do business in the State of California and therefore the assignment made by Eagle Crest and Newport Beach Holding were defective and are legally void. (See Plaintiff Req. for Judicial Notices No.1-3). Moreover, Defendant Michaela Brychcova, who held herself out to be a corporate officer for both companies, signed the assignments of the deed of trust from Eagle Crest to Newport Beach Holdings and then from Newport Beach Holdings to Asset Ventures.

On 9 April 2013, Defendant Anthony Martinez, President of Asset Ventures, executed a substitution of trustee naming Trustee Corps Trustee and recorded the substitution on 19 April 2013. On 17 April 2013, Trustee Corp executed a Notice of Default and recorded it on April 19, 2013.

On 8 November 2013, the Trustee Corp, on behalf of the defendant, recorded a notice of trustee sale. Asset Ventures purchased the note and deed of trust for $3,500. However, on 12 December 2013, Anthony Martinez stated that the amount was $89,160.15.

On 27 November 27, 2013 Plaintiff filed an action against Defendants. The complaint was amended on 11 March of 2014. Both complaints he made alter ego allegations concerning Anthony Martinez and Asset Ventures.

Discovery Dispute

On 21 January 2014, Plaintiff served discovery upon Defendant Asset Ventures’ counsel. Defendant answered the discovery on 25 February 2014. However, the responses were boilerplate objections to the discovery propounded. The discovery consisted of Request for Document Production (“RDP”) and Form Interrogatories. However, only four of the RDP are the subject matter of this motion, request No.1 through 3 and 68.

On 10 March 2014, Plaintiff wrote a “meet and confer” letter to Asset Ventures. Asset Ventures responded and acknowledged the deficiencies. Asset Ventures then promised to furnish additional responses. Defendant’s counsel furnished additional discovery responses on 28 March 2014.

On 16 May 2014, Plaintiff brought an ex parte application to extend time to bring a motion to compel further responses. The court ordered the Plaintiff’s counsel and Defendant’s counsel to conduct a further “meet and confer” session. The ex parte application was then continued to Monday 19 May 2014.

During the “meet and confer” session, Defendant’s counsel agreed to produce a discovery log for those other documents being withheld due to privilege. The discovery log would describe her client invoices and communications. Defendant’s counsel consented to extend the time for Plaintiff to file a motion to compel to document production request 1 through 3 and 68. During the meeting, Defendant’s counsel maintained its objection to documentation 1 through 3. In addition, Defendant’s counsel agreed to substitute the name Anthony Martinez in request 68 in place of Michael Martinez and she agreed that a separate document for the corrected name was not needed. Defendant agreed to the extension of time to 23 May 2014. As a result from the meet and confer meeting, Plaintiff’s counsel took the ex parte application for an extension of time off calendar on 19 May 2014.

No further responses were provided as of this filing to RDP for no. 68 and discovery log.

Discussion

I. Motion for to Compel for Further Responses to [Request for Document Production No. 1-3 and 68]
II.
Subsequent to the initial discovery was served upon Defendant’s counsel, Plaintiff received Defendant’s counsel answers on 19, May 2014. However, Defendant’s counsel still objected to produce the documentation for number 1 through 3 and 68. The following are the documents requested:

Documentation Production No. 1: All documents pertaining to the creation of Asset Ventures, LLC.

Documentation Production No. 2: All documents pertaining to the governing of Asset Ventures, LLC.

Documentation Production No. 3: All documents pertaining to the current status of Asset Ventures, LLC.

Documentation Production No. 68: All documents pertaining to Michael Martinez to execute the substitution on behalf of Asset Ventures, LLC as member of Asset Ventures, LLC.

In its response to all of the requests, Defendant’s counsel object to the request for production on the grounds that 1) it is irrelevant and unlikely to lead to admissible evidence at trial; 2) proprietary and confidential information is protected from disclosure; and 3) information Plaintiff’s counsel seek are privileged.

In a separate statement in support to this motion, Plaintiff’s counsel explained the reason why the documentation was needed. Plaintiff believed that those documents are relevant to establish the fact that Defendant Anthony Martinez is the alter ego of Asset Ventures. Plaintiff’s counsel stated that there is no privilege surrounding the documentation sought.

a. Legal Standard
b.
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)
(3) A representation of inability to comply is inadequate, incomplete, or evasive.
(4)
(5) An objection in the response is without merit or too general. (Code Civ. Proc. [“CCP”], § 2031.310(a)(1) – (3).)
(6)
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 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.)

Although relevance in the discovery context is to be construed liberally in favor of disclosure, the scope of civil discovery is not limitless. (See Calcor Space Facility v. Super. Ct. (1997) 53 Cal.App.4th 216, 223.) Section 2017.010 of the Code of Civil Procedure provides that information concerning any matter is subject to discovery “if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (CCP, § 2017.010, subd. (a).) Thus, although admissibility is not a prerequisite to discovery, the test is whether the information sought might reasonably lead to other evidence that would be admissible. (See Calcor, supra, 53 Cal.App.4th at p. 223.)

Defendant’s counsel maintained its objection to documentation 1 through 3. However, Defendant’s counsel agreed to substitute and replace the name Michael Martinez to Anthony Martinez in the RDP no. 68. Furthermore, Defendant’s counsel already agreed to produce a discovery log for documents being withheld due to privilege. The discovery log would describe her client invoices and communications. Yet since this filing, there were no responses from Defendant’s counsel.

Plaintiff asserted that those documents are relevant to establish the fact that Defendant Anthony Martinez is the alter ego of Asset Ventures. Defendant has not met its burden to justify its objections.

Accordingly, Plaintiff’s motion is GRANTED and Defendant is ordered to provide Plaintiff’s counsel RDP for No. 1 through 3 and 68 within 20 calendar days of the date of the filing of this Order.

III. Plaintiff’s Counsel Request for Sanctions
IV.
Plaintiff’s counsel makes a request for monetary sanctions. The request is probably code-compliant.

Code of Civil Procedure, § 2023.040 states: “A request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought. The notice of motion shall be supported by a memorandum of points and authorities, and accompanied by a declaration setting forth facts supporting the amount of any monetary sanction sought.” See Rule of Court 2.30.

Since Defendants did not file opposition to Motion to Compel Production of Documents, the Defendant has not “unsuccessfully opposed” the Plaintiff’s motions. Code Civ. Proc. §2031.300(c). Therefore, the reliance on §2031.300 for monetary sanctions is inapplicable. Plaintiff’s counsel cited Rule of Court 3.103(a) for monetary sanction stating, “The court may award sanctions under the Discovery Act in favor of a party who files a motion to compel discovery…” However, the proper authority for monetary sanctions in this case would be Rule of Court 3.1348(a) , where the court may award sanctions under the Discovery Act in favor of a party who files a motion to compel discovery, even though no opposition to the motion was filed, or opposition to the motion was withdrawn, or the requested discovery was provided to the moving party after the motion was filed.

However, this Court observed that in the notice of this motion, Plaintiff stated that sanctions could be awarded even though opposition papers were ultimately not filed. Was filed suggests the proper procedure would be to put the following language in the notice of the motion:

Accordingly, monetary sanctions for failure to comply with the production of document are DENIED.

Conclusion and Order

Accordingly, Plaintiff’s motion is GRANTED and Defendant is ordered to provide Plaintiff’s counsel documentation requested to in No. 1 through 3 and 68 within 20 calendar days of the date of the filing of this Order.

The request for monetary sanctions is GRANTED. Plaintiff will be awarded $2227.50 in attorneys fees plus $90 in motion fees. This sum is to be paid counsel for Plaintiff by Defendant Asset Ventures, LLC and its attorneys within 20 days of the date of the filing of this Order.