Case Name: Nancy Tung v. Savann Seng, et al.
Case No.: 17CV313581

I. Background

Currently before the Court is a motion to compel parties to this action to appear for deposition and produce documents.

A. Factual Background

This lawsuit arises from a dispute over an agreement to buy back shares of stock.

According to the allegations in the first amended complaint (“FAC”), decedent Amy Shen Tung owned 50 percent of the outstanding shares issued by defendants Altest Corporation (“Altest”), On Electronics, Inc. (“OEI”), and Sentung, LLC (“Sentung”) (collectively, “Corporate Defendants”). (FAC, ¶ 1.) Prior to her death, she and the shareholders of Altest, including defendant Savann Seng (“Seng”), executed a buy-back agreement. (FAC, ¶¶ 15–17.) They agreed the shareholders of Altest would buy back her shares when she died at a price of $2,500 per share, subject to revaluation by unanimous agreement of the shareholders. (FAC, ¶¶ 15–17.)

Amy Shen Tung died intestate in March 2016. (FAC, ¶¶ 2, 21.) When she died, Altest received $1,006,730.58 as the beneficiary of a life insurance policy it had obtained. (FAC, ¶ 21.) Nevertheless, Altest refused to purchase the shares from her estate in accordance with the buy-back agreement. (FAC, ¶ 21.) Plaintiff Nancy Tung (“Plaintiff”), the daughter appointed to administer the estate, demanded compliance with the buy-back agreement as well as accounting records and financial information, but Seng and Corporate Defendants refused to comply with her demands. (FAC, ¶¶ 27–34.)
In the course of investigating and attempting to resolve the dispute over the buy-back agreement, Plaintiff learned Seng owed the estate rents and profits from two parcels of real property he and the decedent purchased during her life. (FAC, ¶¶ 35–39.) She discovered Corporate Defendants owed money to the estate as well. (FAC, ¶¶ 40–49.)

Plaintiff alleges Corporate Defendants and Seng (collectively, “Defendants”) are alter egos of each other and asserts causes of action against them for: (1) breach of contract; (2) failure to allow inspection of records; (3) breach of fiduciary duty; (4) common count based on a book account; (5) breach of contract; (6) common count based on a book account; (7) conversion; (8) constructive trust; (9) breach of operating agreement; and (10) receiving stolen property.

Defendants then filed a cross-complaint against Plaintiff as well as her siblings Linda and Tim (collectively, the “Tungs”). In the operative third-amended cross-complaint, Defendants seek a declaration of the parties’ obligations under the buy-back agreement and assert a claim for conversion based on the allegation that the Tungs took Corporate Defendants’ office supplies and equipment when they cleared out their mother’s office.

B. Discovery Dispute

Beginning in May 2018, counsel for the Tungs repeatedly attempted to meet and confer with Corporate Defendants’ counsel about a date for deposing the person most qualified to testify on their behalf. (Davis Decl., Ex. 5.) The parties eventually agreed to depose Corporate Defendants’ person most qualified—which would be the same person for all three defendants—on October 25, 2018. (Davis Decl., Exs. 6–8.) The Tungs then served Corporate Defendants with deposition notices requiring them to appear and produce documents on that date. (Davis Decl., Exs. 1–3.)

The week before the deposition, counsel corresponded about hiring a translator; no issue was raised with respect to whether the deposition would go forward as scheduled. (Davis Decl., Ex. 9.)
On October 23, two days before the scheduled deposition, Corporate Defendants stated they would not be appearing. (Davis Decl., Ex. 10.) They insisted the deposition could not go forward until they had an opportunity to file and obtain a ruling on a demurrer to the tenth cause of action for receiving stolen property, which they characterized as a criminal charge. (Davis Decl., Ex. 10.) They did not object to any of the requests for production of documents in the deposition notices. (Davis Decl., Ex. 10.)

Counsel exchanged email correspondence about the propriety of Corporate Defendants’ refusal to appear, but they persisted in their refusal. Consequently, the Tungs filed the present motion to compel Corporate Defendants to appear for deposition and produce documents responsive to the requests for production in each deposition notice. (See Code Civ. Proc., § 2025.450.) Corporate Defendants oppose the motion. The Tungs and Corporate Defendants seek an award of monetary sanctions in connection with the motion.

II. Discussion

A. Merits of Motion to Compel

Chapter 9, Article 2 of the Civil Discovery Act prescribes the time, place, and duration of depositions conducted in California as well as the forms and procedures for properly noticing a deposition. (Code Civ. Proc., §§ 2025.210–2025.290.) Under Code of Civil Procedure section 2025.410, subdivision (a), a party deponent waives the right to object to “any error or irregularity” arising from Article 2 “unless that party promptly serves a written objection specifying that error or irregularity at least three calendar days prior to the date for which the deposition is scheduled….”

If a party deponent does not serve a valid objection under Code of Civil Procedure section 2025.410 and then fails to appear “for examination, or to proceed with it, or to produce for inspection any document…described in the deposition notice, the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document…described in the deposition notice.” (Code Civ. Proc., § 2025.450, subd. (a).)
Corporate Defendants did not serve a valid written objection under Code of Civil Procedure section 2025.410. They concede this point in opposition. Additionally, the reasons for refusing to appear that they articulated in emails sent two days before the scheduled deposition are not grounds for objection contemplated by Code of Civil Procedure section 2025.410. Corporate Defendants do not cite any authority establishing the reasons they articulated are legitimate, legally-recognized bases for refusing to appear at a duly-noticed deposition. Thus, Corporate Defendants unjustifiably failed to appear and an order compelling their attendance is warranted.

With respect to the document requests, Code of Civil Procedure section 2025.450 does authorize a party to move to compel a deponent to produce documents. It requires the moving party to make a threshold showing of good cause for their requests. (Code Civ. Proc., § 2025.450, subd. (b)(1).) Even so, the statute does not clearly authorize a court to compel the production of documents when, as here, the deponent did not appear in the first instance.

The Legislature’s use of the word “or” reflects it intended to establish three disjunctive categories of conduct with corresponding remedies. (See Eddie E. v. Super. Ct. (2015) 234 Cal.App.4th 319, 327 [discussing interpretation of statutes with disjunctive language].) If a deponent fails to appear or appears and refuses to proceed, a court may compel the deponent’s attendance and testimony. (Code Civ. Proc., § 2025.450, subd. (a).) If a deponent fails to produce documents, production may be compelled as a remedy. (Code Civ. Proc., § 2025.450, subd. (a).) And so, the corresponding remedy for the first disjunctive category of conduct—failure to appear—is an order compelling attendance and testimony. A party must additionally establish there was a failure to produce documents at the time for production to obtain an order compelling production.

A deponent ordinarily produces documents responsive to a request in a deposition notice at the deposition itself and may put objections on the record at the deposition as well. (See Carter v. Super. Ct. (1990) 218 Cal.App.3d 994, 997.) Unlike what is required for stand-alone requests propounded under Code of Civil Procedure section 2031.010, a deponent is not required to serve formal written objections to the substance of a request for production in a deposition notice. (See Code Civ. Proc., §§ 2031.210, 2025.280, 2025.410.) It follows that when a deponent fails to appear and, thus, has not yet indicated whether documents will be produced, a motion to compel production is premature under Code of Civil Procedure section 2025.450.

Interpreting the statute as authorizing an order compelling production under these circumstances is tantamount to holding a deponent waives any and all objections, even objections to the substance of a request, by failing to appear. Because the Legislature specifically identified the objections waived, namely errors and irregularities in the deposition notice (Code Civ. Proc., §§ 2025.410, 2025.450), the Court does not interpret the statute in that manner.

Based on the foregoing, the Court concludes an order compelling Corporate Defendants’ attendance and testimony is warranted. With that said, for the reasons set forth above, the Court declines to compel them to produce documents at this juncture despite the fact that their opposition is essentially nonresponsive with respect to this component of the motion.
In reaching this conclusion, the Court rejects Corporate Defendants’ argument that the motion should be summarily denied because the Tungs did not file a separate statement.

Under Code of Civil Procedure section 2025.480, a party may move to compel a deponent to answer a question posed at a deposition when the deponent appeared but objected or did not properly respond to a question. Such a motion must be accompanied by a separate statement. (See Cal. Rules of Court, rule 3.1345(a); see, e.g., Weinstein v. Blumberg (2018) 25 Cal.App.5th 316, 318–19.) The California Rules of Court do not require the moving party to file a separate statement in connection with the distinct motion under Code of Civil Procedure section 2025.450 to compel the deponent to appear for examination. (Cal. Rules of Court, rule 3.1345(a).) Thus, the absence of a separate statement does not justify summarily denying the entire motion.

Additionally, a separate statement is typically required in connection with a motion to compel “the production of documents or tangible things at a deposition.” (Cal. Rules of Court, rule 3.1345(a).) But “[a] separate statement is not required when no response has been provided to the request for discovery.” (Cal. Rules of Court, rule 3.1345(b).) This is unsurprising given a separate statement must contain, among other things, a party’s response to a request and the reasons why the response is inadequate. (Cal. Rules of Court, rule 3.1345(c).) As discussed above, Corporate Defendants have not responded to the requests for production in the deposition notices because they simply refused to appear at the deposition. Thus, the absence of a separate statement does not warrant summary denial of this component of the motion.

B. Requests for Monetary Sanctions

The Tungs and Corporate Defendants request an award of monetary sanctions in connection with the instant motion.

If a court grants a motion to compel a deponent to appear in compliance with a deposition notice, it “shall impose a monetary sanction [ ] in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (Code Civ. Proc., § 2025.450, subd. (g)(1).)

Corporate Defendants are not entitled to an award of monetary sanctions. Unlike other statutes, Code of Civil Procedure section 2025.450 does not authorize a court to award monetary sanctions to the party opposing the motion. And, even if it did, the Court will grant the motion at least in part. Thus, there is no basis for awarding monetary sanctions to Corporate Defendants.

The Tungs, in contrast, are entitled to an award of monetary sanctions. Corporate Defendants’ stated reasons for refusing to appear as well as the paucity of responsive, legally-substantiated arguments in their opposition demonstrate they did not act with substantial justification. Additionally, there are no facts supporting a finding that the imposition of the sanction would be unjust. Accordingly, the Tungs are entitled to an award of monetary sanctions against Corporate Defendants.

As for the amount of the award, the Tungs may recover the reasonable expenses incurred as a result of Corporate Defendants’ conduct. (Code Civ. Proc., § 2023.030, subd. (a).) They state Corporate Defendants caused them to incur $9,269 in expenses consisting of $6,969 in attorney’s fees and $2,300 for a translator.

As a result of Corporate Defendants’ last-minute refusal to appear, the Tungs still had to pay $2,300 for the translator they hired. Contrary to what Corporate Defendants assert, the record does not support the conclusion that the Tungs unnecessarily elected to hire the translator. Counsel for the Tungs asked counsel for Corporate Defendants whether, based on her previous correspondence, a translator was necessary. (Davis Decl., Ex. 9.) In response, she equivocated and stated “there are some concepts that have not translated well from English so I cannot represent that [the deponent] will understand all of the questions that you may pose….” (Davis Decl., Ex. 9.) Thus, the record supports the conclusion that it was necessary to hire the translator for the deposition. Ultimately, Corporate Defendants’ last-minute refusal to appear prevented the Tungs from timely notifying the translator of the cancellation and avoiding that expense. Thus, irrespective of whether the expense was elective in the first instance, the Tungs incurred what amounts to a cancellation fee of $2,300 a result of Corporate Defendants’ conduct.

The Tungs also state they incurred $6,969 in attorney’s fees because their counsel spent 13.8 hours preparing the motion at a rate of $505 per hour. Under the circumstances, given the minimal scope and complexity of this discovery dispute, the Court finds this amount is not reasonable and that the reasonable attorney’s fees incurred as a result of Corporate Defendants’ conduct amount to $5,050.

In consideration of the foregoing, the Court concludes the Tungs are entitled to an award of monetary sanctions against Corporate Defendants in the amount of $7,350.

C. Conclusion

In conclusion, the motion to compel is GRANTED IN PART and DENIED IN PART. Corporate Defendants shall appear for deposition through a person most qualified and pay the Tungs, through counsel, $7,350 within 20 calendar days of the Court’s order. The Court does not order production of documents because such an order is premature at this juncture.