Hale et al. v. Social Valley, LLC, Bic Pho, Steve Ernst		CASE NO. 112CV230653
DATE: 8 August 2014	TIME: 9:00	LINE NUMBER: 3

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 7 August 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 8 August 2014, Plaintiffs’ Motions:

1. Deem matters admitted and for mandatory sanctions re: requests for admissions, set two; (Defendants Bic Pho, Steve Ernst); and
2. Monetary and Terminating Sanctions

were argued and submitted.[1]

Defendants filed formal oppositions to the motions.[2]

Statement of Facts

Case No. 112CV230653 is entitled Hale v. SocialValley, LLC, Bic Pho, and Steve Ernst.

Case No. 113CV244046 is entitled Johnson v. SocialValley, LLC, Bic Pho, and Steve Ernst.

This case is a breach of contract claim. DefendantSocialValley represented to Plaintiffs that it was planning an event in September of 2012 at California’s Great America, an amusement park, and needed famous recording artists to perform at the event. In April of 2012, Plaintiff Johnson entered into an agreement with Defendants on behalf of The Conglomerate Group, LLC whereby Plaintiffs would secure recording artists to perform at Defendants’ event in exchange for a fee. Plaintiffs secured such talent but were informed on 5 May 2012 that SocialValley had not acquired the necessary capital to fund the event, including The Conglomerate Group’s contract. This suit for breach of contract followed.

On 17 August 2012, Plaintiff Hale filed a case for breach of contract and fraud against Defendant.  On 3 April 2013, plaintiff Johnson filed a case for breach of contract and fraud against Defendant. Plaintiffs’ cases against Defendant were consolidated on 18 June 2013.

 

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Discovery Dispute

On 28 June 2013, Plaintiffs served form interrogatories and special interrogatories on Defendant, and after a failure to respond, Plaintiffs filed a Motion to Compel Responses and Request for Sanctions on 3 October 2013.

On 8 November 2013, the Court granted Plaintiffs’ motions and awarded $1200 in sanctions payable by Defendant in favor of Plaintiff and due within 20 days.  After the 20 day deadline passed, Plaintiffs received no responses in compliance with the court order or payment of sanctions.

Plaintiffs filed a Motion for Monetary and Terminating sanctions on 13 December 2013.

Defendant filed responses to the discovery requests on 10 January 2013.  The Court was reluctant to impose terminating sanctions at that point, and declared the Plaintiffs’ motion moot.

On 4 February 2014, Plaintiffs served a Request for Production of Documents on Defendant.  Plaintiffs sought documents that Defendant alleged would provide a defense to Plaintiffs’ claims. On 5 February 2014, Plaintiffs filed their First Amended Complaint.  Several meet and confer attempts were made.  Defendant answered the First Amended Complaint on 19 March 2014.

On 9 April 2014, Plaintiffs filed a Motion to Compel Responses and Production of Documents.  Defendant filed no objection and the motion was granted on 1 May 2014.  Defendant has not complied with that order.

On 19 May 2014, Plaintiffs served Defendant with Request for Admissions Set 2.  On 20 May 2014, Plaintiffs served Defendant with a Notice for Deposition of Bic Pho scheduled for 19 June 2014.  Defendant did not object to the deposition date. The trial setting conference was also continued for the final time, to 22 July, 2014.

On 19 June 2014, Plaintiffs’ counsel appeared for the deposition of Defendant Bic Pho at 10:00 am.  They waited 11 minutes, then started the deposition and made a record of Defendant’s non-appearance.

Defendant’s Responses to the Requests for Admissions, Set 2, were due on 23 June 2014.  Defendant failed to respond, and Plaintiffs filed a Motion to Deem Matters Admitted on 8 July 2014.

On 15 July 2014, Plaintiffs filed a Motion for Monetary and Terminating Sanctions.

Analysis

1. I.                  Sanctions Generally

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).  The party’s motion must also state the applicable rule that has been violated. (Id.).

The Court may impose monetary, evidentiary, contempt or terminating sanctions where a party is engaging in conduct that is a misuse of the discovery process.  (See Code Civ. Pro. § 2023.030).  Misuses of the discovery process include but are not limited to

(d) Failing to respond or to submit to an authorized method of discovery. . . (g) Disobeying a court order to provide discovery.

“If a party fails to obey an order compelling further response, the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction…lieu of, or in addition to, that sanction, the court may impose a monetary sanction.” (Code Civ. Proc. § 2031.310(i)). “Absent exceptional circumstances, the court shall not impose sanctions on a party or any attorney of a party for failure to provide electronically stored information that has been lost, damaged, altered, or overwritten as the result of the routine, good faith operation of an electronic information system.” (Code Civ. Proc. § 2031.060(i)).  The exact circumstances in which sanctions may be granted varies based on the type of sanctions.

In determining the amount for monetary sanctions the determination of a reasonable attorney’s fee involves multiplying the time spent and reasonable hourly compensation of each attorney involved in the presentation of the case. (Serrano v. Priest (1977) 20 Cal.3d 25, 48-49). Sanctions should be awarded only for expenses actually incurred. (See Tucker v. Pacific BellMobile Services (1st Dist. 2010) 186 Cal.App.4th 1548, 1551).

1. II.                Motion to Deem Matters Admitted

If the party to whom requests for admissions are directed fails to serve a timely response, that party waives any objection to the requests. (Code Civ. Proc., § 2033.280(a)).  The party to whom requests for admission have been propounded is required to serve a response within 30 days, or on any later date to which the parties have agreed. (Code Civ. Proc. § 2033.250, 2033.260). An additional 5 calendar days are added if the discovery is served by mail within California. (Code Civ. Proc. § 1013(a)). The court “shall” enter an order deeming requests for admission admitted if the party to whom the requests are directed fails to serve a timely response unless it finds substantially compliant proposed responses have been served before the hearing on the motion. (See Code Civ. Proc. § 2033.280(c); See Tobin v. Oris (1992) 3 Cal.App.4th 973, 983).  Where a response is not verified, it is not substantially code compliant. (St. Mary v. Super. Ct. (2014) 223 Cal. App. 4th 762, 780).  If the responses are verified, do not contain objections and unambiguously deny the requests, the responses are substantially code-compliant. (See Code Civ. Proc., §§ 2033.220, 2033.240, subd. (a), 2033.280, subd. (a).)

1. A.     Motion to Deem Matters Admitted Against Defendant Steve Ernst

Defendant Steve Ernst has served a proposed response to the Request For Admissions, Set two, that is in substantial compliance with Section 2033.220.  The proposed response is verified, does not contain objections, and unambiguously admits or denies the requests.  Defendant Ernst has served this response before the hearing for the motion, and properly cites CCP § 2033.280(c) in opposition to the motion.

Therefore, the Motion to Deem Matters Admitted against Defendant Steve Ernst is DENIED.

1. B.     Motion to Deem Matters Admitted Against Defendant Bic Pho

Defendant Bic Pho has not served a response to Plaintiff’s Request for Admissions, Set two.  Therefore, CCP § 2033.280(c) is not applicable here.  Defendant’s Memorandum of Points and Authorities in Opposition to [this motion] does refer to Exhibit A as “Defendants’ Proposed Responses.”  However, the only response attached is Defendant Steve Ernst’s response, and that response is only verified by Defendant Ernst.

Therefore, Plaintiff’s Motion to Deem Matters Admitted against Defendant Bic Pho is GRANTED.

1. C.     Monetary Sanctions for Motion to Deem Matters Admitted Against Defendants

Defendant Steve Ernst has served an untimely response to Plaintiff’s Request for Admissions, Set two on 5 August 2014.  Defendant Bic Pho has not served a response to Plaintiff’s Request for Admissions, Set two.  Both Defendants’ responses were due on 23 June 2014.  Plaintiff properly cites CCP § 2033.280(c) which directs the Court to impose mandatory monetary sanctions on an untimely response to request for admissions.

However, Plaintiff is reminded that monetary sanctions can only be awarded for expenses actually incurred.  Two hours in prospective costs is not permissible.

Therefore, Plaintiff’s Request for Monetary Sanctions for Motion to Deem Matters Admitted against Defendants Steve Ernst, Bic Pho, and SocialValley, LLC is reduced and GRANTED in the amount of $960.00.

1. Motion for Terminating Sanctions And Monetary Sanctions Against Defendant Bic Pho

Two facts are prerequisite to the imposition of non-monetary sanctions: (1) there must be a failure to comply with a court order; and (2) the failure must be willful. (See Liberty Mutual Fire Ins. Co. v. LcL Administrators, Inc. (2008) 163 Cal.App.4th 1093, 1102). Even where these facts are present, however, the trial court has broad discretion in imposing discovery sanctions. (See Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1293). In exercising this discretion, the court of appeal has indicated that the trial court should consider both the conduct being sanctioned and its effect on the party seeking discovery. (See Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992).

Additionally, the trial court should “attempt to tailor the sanction to the harm caused by the withheld discovery.” Id. The Court’s discretionary authority in determining the appropriate sanction is limited by the principle that discovery sanctions are meant to be remedial rather than punitive. (See Kahn v. Kahn (1977) 68 Cal.App.3d 372, 381). Put another way, the discretionary imposition of a sanction is proper when it is suitable and necessary to enable the party seeking discovery to obtain the objects of the discovery sought, but not when it places the prevailing party in a better position than if discovery had been obtained. (See Wilson v. Jefferson (1985) 163 Cal.App.3d 952, 958).

Finally, non-monetary sanctions are imposed upon an incremental bases depending upon the severity of the violation. (See Doppes 174 Cal.App.4th at 992). “If a lesser sanction fails to curb misuse, a greater sanction is warranted: continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse.” Id. (internal quotation marks and citations omitted).

In the discovery context, willfulness may be found where the responding party “understood his [or her] obligation, had the ability to comply, and failed to comply.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 787). “A conscious or intentional failure to act, as distinguished from accidental or involuntary noncompliance, is sufficient to invoke a penalty.” (Id. at 787-788 (citing Snyder v. Sup. Ct., 9 Cal.App.3d 579, 587 (1970)).

1. A.     Terminating Sanctions

Plaintiff makes a request for terminating sanctions.  The request is not code-compliant.

In support of the request for sanctions, Plaintiff cites Code of Civil Procedure, § 2016.010, 2023.010, 2023.020, 2023.030, 2030.010(d)(4), and 2030.290(c).  Section 2023.010 defines acts that constitute misuses of the discovery process, and does not itself set forth any provisions regarding the issuance of a sanction.

Next, section 2023.030 provides that sanctions may be imposed for misuses of the discovery process “[t]o the extent authorized by the chapter governing any particular discovery method or any other provision of this title.”  As such, section 2023.030 does not provide an independent basis for an award of sanctions.  In other words, to invoke section 2023.030 as a basis for sanctions, the moving party must first be authorized to seek sanctions under the provisions in the Civil Discovery Act applicable to the discovery requests at issue.

For terminating sanctions, Code of Civil Procedure, § 2023.030(d) states that: “the Court may impose terminating sanctions by: [an] order striking out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process… [an] order staying further proceedings by that party until an order for discovery is obeyed…[an] order dismissing the action, or any part of the action, of that party…[or an] order rendering a judgment by default against that party. (Code Civ. Pro. § 2023.030(d)).  Where a party fails to comply or fails to provide a timely response to a granted order compelling responses to a discovery motion, the Court may impose sanctions including terminating sanctions. (See Code Civ. Pro. § 2030.290(c))(Regarding terminating sanctions in the case of motions for responses to interrogatories); Code Civ. Pro. § 2031.300(c)(Regarding terminating sanctions in the case of motions for demands for inspection); Code Civ. Pro. § 2025.450(h))(Regarding terminating sanctions where deponent fails to appear in violation of court order).

However, ordering terminating sanctions is not an action this Court can undertake without careful consideration; and only in circumstances where a violation is willful, preceded by a history of abuse and the evidence shows that a less severe sanction would not produce compliance with the discovery rules.  (See Van Sickle v. Gilbert (2011) 196 Cal. App. 4th 1495, 1516 (Granting terminating sanctions where a lawyer failed to respond to numerous special interrogatories and demands for production of documents, failed to respond to motion to compel discovery, failed to obey a court order to provide discovery, and failed to respond to demands for production even after filing motion for relief from default.); Doppes 174 Cal. App. 4th at 992 (Holding that trial court abused its discretion in failing to grant terminating sanctions against defendant who engaged in persistent and serious misuse of the discovery process); Mileikowsky v. Tenet Healthsystem (2005) 128 Cal. App. 4th 262, 279 (Holding that terminating sanctions were not an abuse of discretion where appellant repeatedly failed to answer discovery requests despite numerous extensions sought and granted, the issuance of court orders and monetary sanctions); Sec. Pac. Nat. Bank v. Bradley (1992) 4 Cal. App. 4th 89 (Overturning trial court on error for granting terminating sanctions where defendant’s failure to file separate responsive statement was not willful)).  Where these conditions are met, the Court is justified in ordering terminating sanctions.  (See Id).

Here, Plaintiffs cite sections 2030.010(d)(4) and 2030.290(c) as the provisions under which they are authorized to seek sanctions.

First, section 2030.010 does not have a subsection (d).  The Court is unclear as to which section was meant to be cited, as the cited text is repeated many times throughout the Code of Civil Procedure.

Second, section 2030 applies to interrogatories only.  Defendant Bic Pho responded to Plaintiffs’ interrogatories, but has not paid sanctions for the related court order.  Plaintiffs’ Motion for Terminating Sanctions is not only based on violation of a court order to pay sanctions regarding interrogatories, but also a violation of a court order to produce documents, overdue requests for admissions, and failure to appear at a deposition.  Plaintiffs should have cited sections 2031.300(c) for production of documents, 2025.450(h) for failure to appear at noticed deposition, and 2033.280 for failure to respond to requests for admissions.

However, Defendant Bic Pho’s failure to appear for deposition was not in violation of a court order (Code. Civ. Pro. § 2025.450(h)), and failure to respond to requests for admissions results in monetary sanctions (Code. Civ. Pro. § 2033.280).  This does not form a basis for terminating sanctions, although the Court can consider such failures in determining whether there is a history of abuse, and whether less severe sanctions would be ineffective.

Defendants’ opposition to Plaintiff’s Motion for Terminating Sanctions asserts that Defendants attached Proposed Responses to Requests for Production of Documents as Exhibit A to that opposition.  However, the attached responses are DefendantSocialValley, LLC’s Responses to Requests for Production of Documents, Set One.  There were two requests for documents on 4 February 2014: (1) to Defendant Bic Pho and (2) to DefendantSocialValley, LLC.  After reviewing the two different requests for documents, the requests do not appear to be identical, or even so similar that DefendantSocialValley’s response would suffice for Defendant Bic Pho.

While Plaintiff’s Motion for Terminating Sanctions is flawed, Defendant Bic Pho is in violation of a court order to pay sanctions, and in violation of a court order to produce documents.  Therefore, the Court may impose terminating sanctions.  In addition, the failures to (1) obey court orders, (2) appear for deposition, (3) reply to requests for admissions, and (4) the lack of opposition to this motion for terminating sanctions displays a history of abuse of the discovery process.

Therefore, despite the foregoing flaws, Plaintiffs’ Motion for Terminating Sanctions against Defendant Bic Pho is GRANTED.

1. B.     Monetary Sanctions

Plaintiffs make a request for monetary sanctions.  The request is not code-compliant.

In support of the request for sanctions, Plaintiff cites Code of Civil Procedure, § 2023.030(a). As mentioned above, section 2023.030 does not provide an independent basis for an award of sanctions.  Plaintiff does not cite any specific sections of the Code of Civil procedure in relation to the request for monetary sanctions, such as Code Civ. Pro. § 2025.280 (Providing authority for imposing monetary sanctions against party in lawsuit over failure to appear for deposition based on § 2023.030), Code Civ. Pro. § 2025.450(g) (Imposing monetary sanctions for failure of deponent to appear at or proceed with noticed deposition without valid objection), Code Civ. Pro. § 2033.280(c) (Imposing monetary sanctions for delay or failure to respond to a request for admission), or Code Civ. Pro. § 2031.300(c) (Imposing monetary sanctions against losing party in motion to compel response to inspection demand).

Plaintiffs are also reminded that requests for monetary sanctions may not ask for anticipatory costs, as mentioned above.

Therefore, because Plaintiffs do not cite the appropriate authority, Plaintiffs’ Motion for Monetary Sanctions is DENIED.

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Order

Plaintiff’s Motion to Deem Matters Admitted against Defendant Steve Ernst is DENIED.

Plaintiff’s Motion to Deem Matters Admitted against Defendant Bic Pho is GRANTED.

Plaintiff’s Monetary Sanctions for Motion to Deem Matters Admitted against Defendants is GRANTED in the amount of $960.00.

Plaintiffs’ Motion for Terminating Sanctions against Defendant Bic Pho is GRANTED.

Plaintiffs’ Motion for Monetary Sanctions relating to Terminating Sanctions against Defendant Bic Pho is DENIED.