Ezequiel Hinojos v. Asset Ventures, LLC, et al.		CASE NO. 113CV256853
DATE: 24 October 2014	TIME: 9:00	LINE NUMBER: 9

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 23 October 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 24 October 2014, the motion of Defendant Newport Beach Holdings, LLC to clarify this Court’s 22 August 2014 order, or for relief under Code of Civil Procedure section 473 was argued and submitted.

Plaintiff filed formal opposition to the motion and requested monetary sanctions.

1. 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.[1]

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. 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.

 

1. Discovery Dispute.

On 21 January 2014, Plaintiff’s propounded sets of discovery, including requests for the production of documents on Defendants. On 21 March 2014, Defendants responded to the document requests, indicating that they would produce relevant, non-privileged documents related to each request relevant to the instant motion.

On 9 June 2014, Plaintiff’s propounded a set of Special Interrogatories by mail on Defendants. Defendants never responded to these interrogatories.

Dissatisfied with some of Defendants’ document production and with Defendants’ lack of response to the special interrogatories, Plaintiff’s filed a motion to compel responses on 24 July 2014.

On 22 August 2014, this Court heard the motion and granted Plaintiff’s motions to compel responses to interrogatories and compliance with demands to produce. Defendant appeared and submitted on the tentative ruling, except as it applied to sanctions against Michael Haden, which were excluded from the final order. On 24 August 2014, the Court issued the order on the matter.

On 22 September 2014, Defendant filed the instant motion for clarification or relief.

1. Analysis.
2. Request to Present Oral Testimony

Plaintiff seeks to introduce, through oral testimony pursuant to California Rule of Court 3.1306, evidence of Defendants’ prior dealings with Defendants’ former counsel concerning the amount of attorney’s fees NBH owes RCO. Plaintiff states that this testimony will demonstrate how much Defendants owe to Defendants’ former counsel.

This proposed testimony is not relevant to the issue of how an order should be clarified, or whether the Court should grant relief under Section 473.  However, On 9 October 2014, Hinojos withdrew his request to present oral testimony. Accordingly, the request is no longer at issue.

Plaintiff’s request to present oral testimony is MOOT.

1. Request for Judicial Notice

In support of its reply brief, NBH asks the Court to take judicial notice of NBH’s Certificate of Good Standing from the Secretary of State of Nevada and a copy of the Court’s (Hon. Carol Overton) order sustaining NBH’s demurrer to Hinojos’s SAC. The court may only take judicial notice of matters relevant to a pending issue. (See People ex. rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.) NBH does not establish that the Certificate of Good Standing from the Secretary of State of Nevada or the Court’s order sustaining NBH’s demurrer to Hinojos’s SAC is relevant to the instant motion.[2] As such, NBH’s request for judicial notice is DENIED.

In support of his opposition to the motion, Hinojos requests that the Court take judicial notice of the Sixth District Court of Appeal website and the opening brief regarding an appeal from an order denying a preliminary injunction in the case of Hinojos v. Asset Ventures, LLC, et al., case number H040853. The court may only take judicial notice of matters relevant to a pending issue. (See People ex. rel. Lockyer, supra, 24 Cal.4th at p. 422, fn. 2.)

Here, Hinojos does not establish that the website or his opening brief on appeal is relevant to the instant motion. As such, his request for judicial notice is DENIED.

1. Meet and Confer

Hinojos contends that NBH failed to file a meet and confer declaration prior to bringing this motion. He argues that the instant motion is one for a protective order and, as such, a meet and confer declaration is required pursuant to Code of Civil Procedure sections 2017.020, subdivision (a), 2030.090, subdivision (a), and 2031.060, subdivision (a). This argument lacks merit.

The sections at issue provide, in pertinent part, that if a party or other affected person brings a motion for a protective order limiting the scope of discovery, interrogatories or requests for production of documents, the motion must be accompanied by a meet and confer declaration. (Code Civ. Proc., §§ 2017.020, subd. (a), 2030.290, subd. (a), 2031.060, subd. (a).)

However, NBH does not bring a motion for a protective order pursuant to any of these sections. Instead, it brings a motion for clarification or, in the alternative, for relief pursuant to Code of Civil Procedure section 473. As such, these statutes do not apply and section 473 does not otherwise contain a meet and confer requirement.

3. Motion for Clarification or Relief under Section 473.

A party may apply for relief against an adverse order that occurred as a result of the party’s or the party’s counsel’s mistake, inadvertence, surprise, or excusable neglect. Code Civ. Proc. §473(b). However, because the Discovery Act contains specific conditions for relief from waiver, relief generally cannot be granted under Section 473(b).  Weil & Brown, Civil Procedure Before Trial, § 8:10:10; Zellerino v. Brown (1991) 235 Cal. App. 3d 1097, 1107-1108 (“To determine if relief under section 473 was properly granted, we apply the abuse of discretion standard. [citation omitted.]  But discretion is always delimited by the statutes governing the particular issue.  [citation omitted]  A motion for relief under section 473 could be granted in a discovery proceeding only if the facts satisfied the grounds for relief stated in the discovery act.”)

As for clarification of the Court order, the order as it relates to document production states that Defendants shall produce all documents, subject to any prior made objections, which the Court does not recall seeing in the prior motion, responsive to requests 2, 3, 5, 7, and 8. In short, if no objections to this discovery were made, Defendant is obligated to provide all documents, regardless of relevance, that are responsive to the requests.

In the alternative, Defendant seeks relief from the Court’s 24 August 2014 order under section 473(b) because it asserts that Plaintiff seeks all information from Defendant that answers the discovery responses, including documents that involve transactions related to other individuals and entities who are not a party to this action.[3]

NBH cites no authority in support of its motion for clarification of the 24 August 2014 order. While there is no express statutory authority supporting a motion for clarification, a trial court has inherent power to correct and clarify its prior orders. (See Bodega Bay Concerned Citizens v. County of Sonoma (2005) 125 Cal.App.4th 1061, 1067, fn. 5; Le Francois v. Goel (2005) 35 Cal.4th 1094, 1108 [court has discretion to reconsider prior ruling on its own motion or at suggestion of any party].) Therefore, the Court has discretion to clarify the 24 August 2014 order.

Relief under section 473(b) is not appropriate in this matter, as there are alternative sources of relief available in the Discovery Act. Specifically, it appears that Defendant is seeking possible relief from a waiver of a relevance objection under section 2031.300(a), but the papers do not reference that. If a relevance objection was previously made, then Defendant should be able to assert withholding documents under that ground. The Court cannot grant relief under section 473.

Therefore, Defendant’s motion for relief under Code of Civil Procedure Section 473(b) is DENIED WITHOUT PREJUDICE to filing an appropriate motion for relief under the Civil Discovery Act.

1. Sanctions.

Plaintiff makes a request for monetary sanctions.  The request is not code-compliant.  Code of Civil Procedure, § 2023.040.

1. Sanctions pursuant to Code of Civil Procedure Section 473, Subdivision (c)

Pursuant to Code of Civil Procedure section 473, subdivision (c), Hinojos requests that the Court order NBH and its counsel to pay a $1,000 penalty, all reasonable attorney’s fees incurred in opposing the instant motion, and an additional $1,000 to the State Bar Client Security Fund. He further requests that NBH pay all attorney’s fees incurred by its previous counsel, RCO, in its defense.

Code of Civil Procedure section 473, subdivision (c) provides, in pertinent part, that: “(1) Whenever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this section, the court may do any of the following: [¶] (A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party. [¶] (B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund. [¶] (C) Grant other relief as is appropriate.”

The Court has not granted NBH relief from a default, default judgment or dismissal based on section 473. Therefore, Hinojos’s is not entitled to sanctions and the request is DENIED.

2. Sanctions pursuant to Code of Civil Procedure Sections 2017.020, 2019.030, 2023.020, 2023.030, 2030.090, and 2031.060

Hinojos seeks monetary sanctions against NBH and its counsel pursuant to Code of Civil Procedure sections 2017.020, subdivision (b), 2019.030, subdivision (c), 2023.020, 2023.030, subdivision (a), 2030.090, subdivision (d), and 2031.060, subdivision (h) on the grounds that NBH failed to meet and confer and its motion for a protective order lacks merit.

Sections 2017.020, subdivision (b), 2019.030, subdivision (c), 2030.090, subdivision (d), and 2031.060, subdivision (h) provide, in pertinent part, that a court shall impose a monetary sanction against any party or attorney who unsuccessfully makes a motion for a protective order, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. Section 2023.020 provides, in pertinent part, that the court shall impose a monetary sanction against any party or attorney who fails to meet and confer as required. Section 2023.030, subdivision (a), provides, in pertinent part, that the court may impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both, pay the reasonable expenses incurred by anyone as a result of the conduct.

These sections do not provide a legal basis for monetary sanctions in the present matter. As discussed above, NBH did not bring a motion for a protective order. Thus, NBH was not obligated to meet and confer and is not subject to a monetary sanction for unsuccessfully bringing a motion for a protective order. Accordingly, Hinojos’s request for monetary sanctions pursuant to Code of Civil Procedure sections 2017.020, 2019.030, 2023.020, 2023.030, 2030.090, and 2031.060 is DENIED.

1. Order.

Defendant’s motion for relief under Code of Civil Procedure Section 473(b) is DENIED WITHOUT PREJUDICE to filing an appropriate motion for relief under the Civil Discovery Act.

The mutual requests for judicial notice are DENIED.

Plaintiff’s request for monetary sanctions is DENIED.

 

 

________________­­­____________ DATED:

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

[1] Dates of transfer are not in chronologically order with the other recorded assignment.

[2] To the extent NBH contends that discovery should not be allowed because Hinojos’s allegations are not at issue, deficiencies in the pleadings do not affect either party’s right to conduct discovery. (See Budget Finance Plan v. Superior Court (1973) 34 Cal.App.3d 794, 798; Union Mutual Life Ins. Co. v. Superior Court (1978) 80 Cal.App.3d 1, 12.) Thus, the order sustaining the demurrer to the SAC is not relevant to the present motion on this basis.

[3] The Court notes that it appears that Defendant’s primary objection relates to document production and not interrogatories. There are references in the exhibits before the Court to invalid interrogatory responses, but that appears outside of the scope of the request for clarification.