Case Number: BC664966 Hearing Date: June 13, 2018 Dept: 73

6/13/18
Dept. 73
Rafael Ongkeko, Judge presiding

LENDING TIGER INVESTMENTS, INC. v. ALEXANDR BLYUMKIN (BC664966)

Counsel for plaintiff/moving party: Oleg Stolyar; Jennifer Jason (Loeb, etc.)
Counsel for defendant/opposing party: Kenneth Linzer; Lyric Enav (Linzer, etc.)

PLAINTIFF’S MOTION FOR ISSUE SANCTIONS FOR FALSE DISCOVERY RESPONSES; AND MONETARY SANCTIONS ($24,000) (filed 5/21/18)

TENTATIVE RULING

Plaintiff’s evidentiary objections to Lyric Enav’s declaration are OVERRULED.
Defendant’s request to strike Oleg Stolyar’s supplemental declaration is DENIED.
Plaintiff’s motion for issue sanctions against Defendant is DENIED.
Plaintiff’s request for monetary sanctions in the amount of $24,000 is DENIED.
Defendant’s request for monetary sanctions in the amount of $24,806.25 is DENIED.

DISCUSSION (Please note: Unfortunately, the court’s tentative ruling website, which is the source of this version, is not able to show certain formatting that may be contained in the original, such as the court’s use of footnotes, boldface, italics, or the underscoring of case citations. Footnotes, if any, are added to the text at the end of the document. A hard copy will be available for the parties in court before the hearing.)

On May 21, 2018, Plaintiff filed this motion. Per Code of Civil Procedure sections 2023.010 and 2023.030, Plaintiff requests issue and monetary sanctions be imposed against Defendant. Plaintiff argues Defendant’s April 6, 2018 deposition testimony, as well as evidence received in response to a subpoena served on Defendant’s real estate agent, Million Dollar Rentals, demonstrate Defendant committed perjury by claiming no such documents existed in his supplemental RFP responses to the relevant requests. Plaintiff thus asks this court to: (1) find the following fact established: Defendant received $900,000 in rents and $150,000 in security deposit from renting the property and attempted to conceal those facts through false discovery responses; and (2) order Defendant and/or Defendant’s counsel to pay monetary sanctions in the amount of $24,000 to compensate Plaintiff for the attorneys’ fees it incurred.

On May 24, 2018, Defendant provided Plaintiff with his second supplemental responses to RFP, Set 1, which included the following revised response to the above-listed requests to:

Without waiving any objections, and after making a good faith effort to obtain documents responsive to the request, Blyumkin will produce all non-privileged and/or non-Constitutionally protected responsive documents within his custody and control. (See Stolyar Supp. Decl., Ex. 17.)

On May 29, 2018, Plaintiff filed a Notice of Errata, explaining it had erroneously reserved the hearing as a “motion to compel” rather than a “motion for sanctions.”

On May 31, 2018, Defendant filed an opposition, arguing sanctions are unwarranted because: (1) Defendant did not abuse the discovery process; (2) Plaintiff’s counsel failed to meet and confer in good faith; (3) Defendant supplemented his responses making the matter moot; (4) issue sanctions are unavailable to a plaintiff before filing a motion to compel; (5) Plaintiff intentionally misrepresented the testimony provided by Defendant during his deposition by presenting Defendant’s responses to hypothetical questions as proof that Defendant’s prior RFP responses were perjurious; and (6) Plaintiff’s RFP requests are vague, poorly framed, and susceptible to multiple interpretations. Defendant requests monetary sanctions should be imposed against Plaintiff and its counsel in the amount of $24,806.25.

On June 6, 2018, Plaintiff filed a reply. In addition to maintaining its original arguments, Plaintiff argues Defendant’s excuses are unavailing because the motion is not moot (sanctions are still available), the “vague and ambiguous” excuse is meritless, and Defendants’ counsel (not Plaintiff’s) failed to meet and confer in good faith.

On June 11, 2018, Defendant filed an objection and request to strike the supplemental declaration of Oleg Stolyar.

Plaintiff’s Evidentiary Objections

Plaintiff objects to statements in Defendant’s counsel’s declaration regarding the meet and confer process, claiming the statements are argumentative, vague and conclusory, misleading and misstates facts, and/or improper legal conclusion. Because the matter of the meet and confer process is heavily disputed, striking the portions of the declaration is not warranted.

Plaintiff’s evidentiary objections to Defendant’s counsel’s declaration are OVERRULED.

Defendant’s Request to Strike Plaintiff’s Counsel’s Supplemental Declaration

Defendant asks this court not to consider the following “new points” raised in Plaintiff’s counsel’s supplemental declaration: (1) Mr. Stolyar, at Ms. Houman’s request, agreed to a two-week extension, including emails attached as exhibits 1, 3, 5-8), (2) Mr. Stolyar’s faulty depiction of the circumstances surrounding the scheduling of Defendant’s deposition; (3) Mr. Stolyar’s conclusory “understanding” of what Defendant’s Chase bank records reveal; (4) Mr. Stolyar’s false representations of the meet and confer efforts after Defendant’s deposition, including exhibit 14; (5) Mr. Stolyar’s false representation of the meet and confer efforts, following the denial of his frivolous ex parte application, including exhibit 16; (6) Mr. Stolyar’s blatantly false representation of the communications between himself and Lyric Enav, counsel for Defendant, between May 25 and May 31, including exhibit 18; and (7) Mr. Stolyar’s discussion of the Million Dollar Rentals production, which was not in response to a subpoena, but an improper, informal secret deal he made with Million Dollar Rentals’ counsel, including exhibits 19-24.

Courts may strike reply memoranda presenting new factual and legal issues, where opposing parties have been denied an adequate opportunity to contest the new issues, or may be required to allow a continuance for parties to have such an opportunity. (In re Marriage of Hoffmeister (1984) 161 Cal.App.3d 1163, 1169.) However, “[w]hile additional evidentiary matter submitted with the reply ordinarily should not be allowed, the court has discretion to consider it when it poses no prejudice to the opposing party.” (Hahn v. Diaz-Barba (2011) 194 Cal.App.4th 1177, 1193.)

Here, Plaintiff’s counsel’s declaration does not raise new points. Rather, it appears that counsel is responding to arguments raised in the opposition and/or statements made in Defendant’s counsel’s declaration in support of the opposition. Moreover, because the matter of the meet and confer process is heavily disputed, striking the portions of the declaration is not warranted. Defendant’s request to strike portions of Plaintiff’s counsel’s declaration is DENIED.

Separate Statement

Defendant argues Plaintiff’s separate statement is procedurally defective because it does not include Defendant’s original responses to RFP, Set 1, but only his supplemental responses. Defendant also argues Plaintiff should have amended its separate statement after Defendant produced his second supplemental responses to RFP, Set 1.

A party moving for issue sanctions must file and serve with the motion a separate document that states the information required by California Rules of Court, rule 3.1345(c). (See Cal. Rules of Court, rule 3.1345(7).) Relevant here, the separate statement requires that “[t]he text of each response, answer, or objection, and any further responses or answers” and “[a] statement of the factual and legal reasons for compelling further responses, answers, or production as to each matter in dispute.”

Here, Plaintiff’s separate statement technically violates California Rules of Court, rule 3.1345(c), which governs the contents of the separate statement. However, the separate statement does not impair the court’s ability to rule on the motion as Plaintiff attached copies of the original responses to Plaintiff’s counsel’s supplemental declaration (Ex. 2). Further, Defendant is not prejudiced by the inaccuracies, as he filed a robust opposition to the motion, addressing the sufficiency of his responses. The motion will not be denied on this basis. (See Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 893 [stating that a court may, but is not obligated, to deny a discovery motion based on a procedural defect].)

Meet and Confer

Defendant argues Plaintiff’s counsel failed to meet and confer in good faith. In reply, Plaintiff responds that it was Defendant’s counsel that failed to meet and confer in good faith.

“A meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” (Code Civ. Proc., § 2016.040.) A discovery motion should not be denied automatically based upon the reason that the moving parties failed to meet and confer in good faith. (Obregon v. Super. Ct. (1998) 67 Cal.App.4th 424, 434. But see Townsend v. Super. Ct. (1998) 61 Cal.App.4th 1431, 1439 [motion must be denied where lack of meet and confer].)

Even if Plaintiff’s counsel did not meet and confer in good faith, the motion cannot be denied automatically because the evidence indicates that the parties have repeatedly attempted to meet and confer since October 2017 (see Stolyar Supp. Decl., Exs. 3, 5-8, 15, 16, 18; Stolyar Decl., Exs. 9-11; Enav Decl., Exs. B, D, E). Plaintiff’s counsel’s attempts at meet and confer are sufficient.

Merits

Plaintiff moves for issue and monetary sanctions against Defendant.

The court, after notice to any affected party, person, or attorney, and after opportunity for hearing, may impose the following sanctions against anyone engaging in conduct that is a misuse of the discovery process: “(a) 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, including attorney’s fees, incurred by anyone as a result of that conduct. The court may also impose this sanction on one unsuccessfully asserting that another has engaged in the misuse of the discovery process, or on any attorney who advised that assertion, or on both. If a monetary sanction is authorized by any provision of this title, the court shall impose that sanction 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. [¶] (b) The court may impose an issue sanction ordering that designated facts shall be taken as established in the action in accordance with the claim of the party adversely affected by the misuse of the discovery process. The court may also impose an issue sanction by an order prohibiting any party engaging in the misuse of the discovery process from supporting or opposing designated claims or defenses. [¶] (c) The court may impose an evidence sanction by an order prohibiting any party engaging in the misuse of the discovery process from introducing designated matters in evidence. (Code Civ. Proc., § 2023.030, italics added.)

Issue Sanctions

Plaintiff asks the court to order that the following fact be taken as established: Defendant received $900,000 in rents and $150,000 in security deposit from renting the property.

Cases and treatises have interpreted the Civil Discovery Act and its predecessors to require that, before being subjected to sanctions harsher than monetary sanctions, a party must have disobeyed a court order compelling discovery. (See, e.g., Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 789; Young v. Rosenthal (1989) 212 Cal.App.3d 96, 114; Ruvalcaba v. Government Employees Ins. Co. (1990) 222 Cal.App.3d 1579, 1583 [dismissal for plaintiff’s failure to respond to demand for inspection was improper in absence of prior order directing him to respond]; New Albertsons v. Super. Ct. (2008) 168 Cal.App.4th 1403, 1422, 1431 [in personal injury action, nonmonetary sanctions against defendant supermarket operator based on its failure to produce video recordings in response to first set of inspection demands, and its destruction of recordings, were not justified under either discovery statutes or court’s inherent power, where there was no court order compelling production of recordings, destruction of them did not amount to egregious misconduct, and sanctions were not necessary to ensure fair trial].)

Two exceptions to this rule exist. First, no prior order is necessary when such order compelling discovery would be futile. In Do It Urself Moving & Storage v. Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27, an action for breach of contract, negligence, breach of fiduciary duty, and accounting, plaintiffs promised, but failed, to produce an audit report and supporting documentation. On defendant’s motion, the trial court precluded plaintiffs from introducing accounting evidence. Held, the sanction was properly imposed. Even though the motion for sanctions was the first motion to deal with discovery issues, plaintiffs had conceded that they were unable to provide the promised items of discovery. Accordingly, a formal order to comply would have been futile. (Id. at 37; see also Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1546 [requiring plaintiffs to seek formal order to compel defendants to comply with discovery would have been futile because defendants had claimed that requested documents were stolen].) Second, no prior order is necessary when a pattern of discovery abuse exists. Karlsson v. Ford Motor Co. (2006) 140 Cal.App.4th 1202, a products liability action against automobile manufacturer, held that the imposition of evidence and issue sanctions were justified, even in the absence of a discovery order. The sanctions were based not just on defendant’s failure to produce a person most knowledgeable for deposition on the warnings issue, as promised, but on an entire pattern of discovery abuse. (Id. at 1214.)

Here, the court finds a prior order compelling discovery would likely been futile because Defendant’s supplemental response was that the documents did not exist. Even if Plaintiff’s motion were successful, a formal order to compel Defendant to produce purportedly non-existent documents would be useless. However, unlike all the cases cited, Defendant never asserted documents were lost or stolen, and there is no evidence that Defendant destroyed any documents. Indeed, Defendant’s answers to hypothetical deposition questions does not prove that the responses to requests that used completely different language were false. (E.g., compare Tr., p. 66:8-14 [“With respect to the Stone Canyon property, generally, do you believe it would have been your practice when you paid the rents to put them in a bank account, to keep them in safe deposit box, to put them under your mattress? What do you believe that you would have done with your money? A: Put them in the bank.”] with RFP, Set 1, Request No. 72 [requesting Defendant to produce any documents relating to “how any rental revenue generated by the lease was deposited”].) Further, based on the language of the RFP requests, it is possible that Defendant interpreted the requests on a literal level that enabled him to say no such documents existed. That Plaintiff was able to obtain documents from Million Dollar Rentals via a subpoena does not prove that Defendant’s responses were untruthful or that the RFP requests were not susceptible to multiple interpretations.

Further, on December 12, 2017 (nearly five months before Defendant’s deposition) Defendant produced supplemental responses to the Special Interrogatories, Set One, admitting that he entered a “transient rental agreement with a guest, entitling that guest to make use of the Property” and make an upfront rental payment. (See Stolyar Decl. ¶ 7, Ex. 6.) That Defendant conceded to this fact in December 2017, but still did not produce documents in his supplemental responses to the RFP, suggests that Defendant’s lack of production of documents resulted from his interpretation of the request.

Plaintiff’s request for issue sanctions is DENIED.

Monetary Sanctions

Plaintiff asks this court to order monetary sanctions against Defendant in the amount of $24,000. Plaintiff’s counsel, Oleg Stolyar, avers he has a billing rate of $675 an hour and spent 12 hours drafting meet and confer correspondence, preparing/pursuing third party subpoenas, and preparing this motion and supporting documents. (Stolyar Decl. ¶ 14.) He also claims that Jennifer Jason, who has a billing rate of $600 per hour, spent 15 hours reviewing discovery and researching. (Id. at ¶ 15.) He anticipates spending at least another 10 hours in reviewing Defendant’s opposition and preparing the reply and for hearing. (Id. at ¶ 14.)

Under Code of Civil Procedure section 2023.030, subdivision (a), “[t]he 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, including attorney’s fees, incurred by anyone as a result of that conduct. If a monetary sanction is authorized by any provision of this title, the court shall impose that sanction 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.” Under section 2023.010, an example of the misuse of the discovery process is “(f) Making an evasive response to discovery.”

Although issue sanctions are not warranted based on the circumstances, the evidence presented establishes that Defendant is abusing the discovery process by providing evasive responses. For example, Defendant knew he had received email correspondence from Million Dollar Rentals, LLC. (See, e.g., Stolyar Decl., Ex. 19.) Yet, Defendant claimed no documents existed in response to RFP, Set 1, Request Nos. 62 and 63, which requested documents and communications between Defendant and Million Dollar Rentals LLC relating to the property or the lease. However, $24,000 is patently unreasonable.

While some amount of sanctions might be appropriate, it is also true that Plaintiff sought an unmeritorious ex parte application, causing unnecessary work for the defense.

The court denies Plaintiff’s request for monetary sanctions in the interest of justice.

Defendant’s own request for sanctions is DENIED.

Unless waived, notice of ruling by moving party.