Case Name: Platinum Roofing, Inc. v. Michael Stephenson
Case No: 18CV334657

I. Factual and Procedural Background

Plaintiff and Cross-Defendant Platinum Roofing, Inc. (“Plaintiff/Cross-Defendant”) brings this action against Michael Stephenson (“Stephenson”) for breach of contract and fraud associated with the purchase of a business.

According to the allegations of the first amended complaint (“FAC”), Stephenson sold all stock in Platinum Roofing to PRI Acquisition Corporation (“PRI”) in May 2015. (FAC, ¶ 1.) PRI was a holding company formed for the sole purpose of acquiring Platinum. (Id. at ¶ 6.) Following the purchase, PRI merged into Platinum with each share converted accordingly. (Ibid.) As such, Plaintiff/Cross-Defendant is PRI’s successor in interest. (Ibid.)

Despite the requirement to disclose material information including Platinum’s liabilities during the sale process, Stephenson failed to disclose that Platinum filed for bankruptcy in August 2003 and still owed money to various creditors pursuant to a bankruptcy plan. (FAC, ¶ 2.) Stephenson also failed to produce legal documents regarding the bankruptcy, the bankruptcy plan or debts and obligations pursuant to the plan. (Id. at ¶ 20.)

Plaintiff/Cross-Defendant was not aware of the existence of the bankruptcy plan until the fall of 2015 when a creditor named in the plan made a claim for its debts. (FAC, ¶ 22.) Upon further investigation, Plaintiff/Cross-Defendant learned that the liabilities under the plan totaled over $2 million. (Id. at ¶ 23.) In January 2017, Plaintiff/Cross-Defendant discovered Stephenson provided a falsified balance sheet and deliberately concealed the bankruptcy and the bankruptcy plan prior to the stock sale. (Id. at ¶ 26.)

Consequently, Plaintiff/Cross-Defendant entered the purchase agreement without knowledge of the bankruptcy or the obligations and had it known, it would have not entered into the agreement or would not have agreed to the purchase price offered. (FAC, ¶ 28.) Furthermore, pursuant to a “Working Capital Adjustment” clause in the purchase agreement, Stephenson owes Plaintiff $150,000, which he has not paid. (Id. at ¶ ¶ 29, 30.)

As a result of the foregoing, Plaintiff/Cross Defendant’s FAC filed on March 12, 2019, alleges six causes of action against Stephenson for: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) fraud – intentional misrepresentation; (4) fraud – concealment; (5) negligent misrepresentation; and (6) securities fraud.

On April 12, 2019, Stephenson filed a cross-complaint alleging breach of contract, among other causes of action, associated with the “Working Capital Adjustment Agreement.” (Cross-Complaint, ¶ 31.) Pursuant to that agreement, Stephenson alleges that Plaintiff/Cross-Defendant owes him $129,473.83 which represents the working capital adjustment. (Id. at ¶ 33.) Furthermore, Stephenson alleges that as part of the agreement, he agreed to pay a claim brought by a creditor pursuant to the bankruptcy plan, and thereafter the bankruptcy case was closed. (Id. at ¶ 25.) The parties agreed that if no further claims were brought against Plaintiff/Cross-Defendant before December 31, 2016, it would pay Stephenson the working capital adjustment amount. (Id. at ¶ 26.) Though no other claims were made, Plaintiff/Cross-Defendant has failed to pay Stephenson. (Id. at ¶ 27.)

A. Discovery Dispute

On November 15, 2018, Plaintiff/Cross Defendant served its first set of request for production, form interrogatories and special interrogatories. Stephenson timely responded on December 18, 2018. Following meet and confer discussions, amended responses were served on March 20, 2019.

On May 14, 2019, Plaintiff/Cross Defendant served requests for production of documents, set two (“RPD2”), special interrogatories, set two (“SI2”), form interrogatories, set one-Cross-Complaint (“FI1/CC”), and form interrogatories, set two (“FI2”).

Shortly thereafter, Plaintiff/Cross-Defendant filed its first motion to compel further responses for the discovery requests served in November of 2018.

On June 13, 2019, Stephenson provided responses to RPD2, SI2 and FI2, but provided no responses to FI1/CC.

On July 23, 2019, Plaintiff/Cross Defendant’s counsel sent a “meet and confer” letter by email and regular mail to Stephenson’s counsel regarding the set two responses and the new FI regarding the cross complaint seeking an agreement to extend the time to file a motion to compel of two weeks. Stephenson’s counsel did not respond so Plaintiff/Cross-Defendant’s counsel followed up with another email on July 25, 2019, but did not receive a response.

Plaintiff/Cross-Defendant filed the present motion on July 29, 2019. Stephenson’s counsel responded to the emails on August 1, 2019, stating she was in arbitration and depositions and had not seen the two email messages, but inquired how long of an extension Plaintiff/Cross-Defendant needed. However, given that the present motion had already been filed, Plaintiff/Cross-Defendant informed her it was too late.

On September 5, 2019, the Court heard Plaintiff’s first motion to compel further responses.

On October 10, 2019, Stephenson served responses to FI1/CC.

Presently before the court is Plaintiff/Cross-Defendant’s motion to compel further responses to the discovery requests propounded on May 14, 2019. Plaintiff/Cross-Defendant also requests monetary sanctions.
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II. Motion to Compel

Plaintiff/Cross-Defendant moves to compel responses to FI1/CC Nos. 1.1, 4.1, 4.2, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 9.1, 9.2, 10.1, 10.2, 10.3, 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 14.1, 14.2, 15.1, 16.1, 16.2, 16.3, 16.6, 16.7, 17.1, 50.1, 50.2, 50.3, 50.4, 50.5, 50.6; further responses to FI2 Nos. 14.1, 14.2, 15.1, 16.1, 16.2, 16.3 and 16.6; further responses to RPD2 Nos. 63, 64, 75, and 87; and further responses to SI2, Nos. 52, 53, 54, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, and 91.

Plaintiff/Cross-Defendant fails to state proper statutory grounds upon which its motion is made. However the Court presumes the motion to compel responses to FI1/CC is made pursuant to Code of Civil Procedure section 2030.290, subdivision (b) ; the motion to compel further responses to FI2 and SI2 is made pursuant to section 2030.300; and the motion to compel further responses to RPD2 is made pursuant to 2031.310

A. Request for Judicial Notice

In support of its motion to compel, Plaintiff/Cross-Defendant requests judicial notice of the FAC and the Cross-Complaint in this action. The Court may take judicial notice of the FAC and the Cross-Complaint as records filed in the superior court under Evidence Code section 452, subdivision (d). (See Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file].) The request for judicial notice however is not relevant to resolving issues raised by the motions. (See Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [judicial notice is confined to those matters which are relevant to the issue at hand].)

Accordingly, the request for judicial notice is DENIED.

B. Motion to Compel Responses to FI1/CC

Plaintiff/Cross-Defendant moves for an order compelling responses to all FI1/CC as no response was received prior to filing the motion. Since that time, Stephenson has provided responses, served on October 10, 2019. Stephenson’s counsel argues that given that the FI1/CC were labeled at “set one” this caused confusion and she assumed that they were repetitive of the “set one” received in the original discovery request. Plaintiff/Cross-Defendant argues that as no responses were provided, Stephenson has waived the right to any further objections.

Where the party to whom interrogatories are directed fails to timely respond, that party waives any right to exercise the option to produce writings under section 2030.230 or to object to the interrogatories. (§ 2030.290, subd. (a).) The court, on motion, may relieve that party from this waiver on its determination that the party has subsequently served a response that is substantially code-compliant and the party’s failure to serve a timely response was the result of mistake, inadvertence, or excusable neglect. (§ 2030.290, subd. (a) (1-2).) Belated objections are not valid unless the defaulting party demonstrates good cause to grant relief from the default, and the burden is on the defaulting party to seek and justify relief. (Mannino v. Superior Court (1983) 142 Cal.App.3d 776, 779, citations omitted.)

Here, it is undisputed that responses to FI1/CC were not timely served. Stephenson lodges no separate motion, nor makes any request for relief from the default in response or separate statement. His counsel argues confusion upon receipt of further “FI set one” and a mistaken belief that the original FI, set one were being resubmitted, as there was an ongoing dispute about those. However, the Court notes that the FI1/CC Judicial Council Form was labeled as being propounded by “Cross Defendant” to “Cross Complainant.” Furthermore, the “incident” is described as “the circumstances and events… giving rise to the action filed by Answering Party against Asking Party” in obvious reference to the Cross-Complaint. (FI1/CC DISC-001, Section (4)(a)(2).)

Even assuming a proper motion was lodged, the Court cannot excuse counsel for failure to read the propounded Judicial Council form, or excuse her from understanding the FI1/CC was propounded in response to the Cross-Complaint. Consequently, the Court finds that Stephenson is not relieved from the default.

Thus, to the extent the responses served on October 10, 2019, contain objection-only responses, Stephenson must respond with code-compliant answers. The responses that were objection-only were FI1/CC Nos. 8.8, 10.2, 15.1, 16.3, 16.6, and 50.3

Furthermore, where the responses are incomplete and non-code compliant, Stephenson shall provide further, code-compliant responses. Several are incomplete and do not include all of the information sought to be discovered as required by section 2030.210. These include FI1/CC Nos. 1.1, 8.3, 8.4, 8.5, 16.1, 16.2, 50.1, and 50.2.

FI1/CC Nos. 8.6 and 8.7 provide a non-code compliant response with reference to section 2030.230, which does not direct Plaintiff/Cross-Defendant to the writing(s) in which answers can be found. In any case, given the late response, Stephenson has waived the right to produce a writing pursuant to 2030.230. Therefore, a further response to these FI is warranted.

No further response to FI1/CC No 17.1 is warranted as the interrogatory directed at request for admissions (“RFA”), as Stephenson notes, is not relevant as there were no RFA propounded on the cross-complaint.

Finally, the Court notes that complete, code-compliant responses were provided for FI1/CC Nos. 4.1, 4.2, 6.1, 8.1, 8.2, 9.1, 9.2, 10.1, 10.3, 12.1, 12.2, 12.3, 12.4, 2.5, 12.6, 14.1, 14.2, 50.4, 50.5, 50.6. Therefore, no further response to these is necessary.

Consequently, the motion to compel responses to FI1/CC Nos. 1.1, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 10.2, 15.1, 16.1, 16.2, 16.3, 16.6, 50.1, 50.2, and 50.3 is GRANTED. Accordingly, within 20 calendar days of the date of the filing of the order, Stephenson shall serve verified code-compliant further responses to these FI without objection.

The motion to compel further responses to FI1/CC Nos. 4.1, 4.2, 6.1, 8.1, 8.2, 9.1, 9.2, 10.1, 10.3, 12.1, 12.2, 12.3, 12.4, 2.5, 12.6, 14.1, 14.2, 17.1, 50.4, 50.5, and 50.6 is DENIED.

C. Motion to Compel Further Responses

1. Meet and Confer

Preliminarily, Stephenson argues that Plaintiff/Cross-Defendant failed to meet and confer in good faith prior to filing the motion to compel.

A motion to compel further responses must be accompanied by a meet and confer declaration as described by Code of Civil Procedure section 2016.040. (Code Civ. Proc., §§ 2030.300, subd. (b) [interrogatories], 2031.310, subd. (b)(2) [inspection demands].) Section 2016.040 requires that a moving party make a “reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” A determination of whether an attempt at informal resolution was adequate depends upon the particular circumstances and involves the exercise of discretion. (Obregon v. Super. Court. (1998) 67 Cal.App.4th 424, 431 (Obregon); see Stewart v. Colonial Western Agency, Inc. (2001) 87 Cal.App.4th 1006, 1016 [meet and confer rule is designed to encourage the parties to work out their differences informally so as to avoid the necessity for a formal order].)

It is undisputed between the parties that Plaintiff/Cross Defendant’s efforts at meet and confer began on Tuesday, July 23, 2019, with an email and an attached “meet and confer” letter. As Stephenson’s counsel points out, this was less than a week before the motion to compel was due. The only follow up was another email sent on July 25, 2019. Once counsel did not hear back from Stephenson’s counsel, no other efforts were made, including but not limited to phone calls to her office and Plaintiff/Cross Defendant thereafter filed this motion. This was an insufficient effort to “meet and confer” in good faith.

Furthermore, both parties provided emails from July 18, 2019, wherein counsel were communicating about other discovery matters unrelated to the present motion. That Plaintiff/Cross Defendant’s counsel failed to raise issues related to the present motion also shows a lack of good faith. The earlier emails show that when available, Stephenson’s counsel was responsive to emails from Plaintiff/Cross Defendant, so not hearing from her should have triggered further efforts to assess her availability to respond.

Consequently, the Court finds that the efforts at meet and confer were inadequate and given the totality of the circumstances created an artificially tight deadline and a “need” to file the present motion. More importantly, it did not tend to promote informal dispute resolution in matters related to discovery.

2. RPD Nos. 63, 64, 75 and 87

Plaintiff/Cross Defendant moves for further response to RPD Nos. 63, 64, 75 and 87.

As a threshold matter, a motion to compel must set forth “specific facts showing good cause justifying the discovery sought by the demand.” (Code of Civ. Proc., § 2031.310, subd. (b)(1); see also Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) The burden is met simply by a fact-specific showing of relevance. (TBG Ins. Services Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 448.)

Here, Stephenson correctly argues that neither the motion to compel, argument in support nor the separate statement establishes good cause for the document production. While Plaintiff/Cross Defendant sets out case law establishing that a “party may obtain discovery of any matter… that is relevant” (Pl. Sep. Stmt, p. 24 l 4-5), it does not provide a fact-specific showing that what has been requested is relevant, so Plaintiff/Cross Defendant does not meet its threshold burden.

Consequently, the motion to compel further responses to RPD is DENIED.

3. SI2

Plaintiff/Cross-Defendant moves to compel further response to SI2, Nos. 52, 53, 54, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90 and 91.

SI2, Nos. 52, 53, 54 are questions regarding the alleged breach by Plaintiff of the stock purchase agreement. Stephenson provided objection-only responses to all three of these SI on the basis that they were already asked and answered in previously propounded discovery.

Where a propounding party has previously failed to file a timely motion to compel, it may not avoid the consequences of forfeiture by propounding the same questions again. (Professional Career Colleges, Magna Institute, Inc. v. Superior Court (1989) 207 Cal.App.3d 490, 494.)

Here, Plaintiff/Cross-Defendant does not dispute that SI2 Nos. 52, 53 and 54 are duplicative of those asked in SI, set one Nos. 44, 45 and 46. (Pl. Mem. of Pts. & Auth., p. 10 l 13-19.) In fact, Plaintiff/Cross-Defendant argues that the objection-answers to the previously propounded set of SI were inappropriate and therefore warrant further response. However, it has forfeited its ability to compel further responses to those interrogatories, and cannot evade the forfeiture by propounding the same questions again. Consequently, the motion to compel SI2 Nos. 52, 53 and 54 is denied.

SI2, Nos. 67 through 91 are identical in form, as they each ask Stephenson to “state all facts supporting your…affirmative defense.” Each of these SI is directed at each of the 25 affirmative defenses.

In support of its motion, Plaintiff/Cross Defendant cites Singer v. Superior Court of Contra Costa County (1960) 54 Cal.2d 318 (Singer), wherein the Supreme Court held that a party may propound interrogatories seeking the facts to support its affirmative defenses. However, the Singer Court was careful to limit such interrogatories to the facts “known” to the answering party, to avoid limitations on what may be produced at trial. (Id. at ¶ 325-326.) Overly broad questions seeking “all the facts” are therefore not appropriate. (Ibid.) This is true because answers to interrogatories are admissible at trial against the answering party. (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 780.)

Here, Plaintiff/Cross-Defendant has literally requested in each SI2 67-91 “all the facts” and therefore has not limited its interrogatories to those facts known to Stephenson at this time. Therefore, these SI are not sufficiently limited to facts presently “known” and therefore, a motion to compel is not warranted as each request is impermissibly overbroad.

Consequently, the motion to compel further responses to SI 52, 53, 54, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90 and 91 is DENIED.

4. FI2

Plaintiff/Cross-Defendant moves for further response to FI2 Nos. 14.1, 14.2, 15.1, 16.1, 16.2, 16.3, 16.6, and 17.1. Stephenson objects on the basis that these questions were previously propounded in set one in November 2018.

As previously stated, where a propounding party has failed to file a timely motion to compel, he may not avoid the consequences of forfeiture by propounding the same questions again. (Professional Career Colleges, Magna Institute, Inc. v. Superior Court (1989) 207 Cal.App.3d 490, 494.)

Here, Plaintiff/Cross-Defendant does not dispute that these FI were previously propounded, but instead argues that since an answer and a cross-complaint asserting new contentions has been filed, it may propound further discovery. However, the case law it cites in support is not on point. Universal Underwriters Ins. Co. v. Superior Court (1967) 250 Cal.App.2d 722 involved a trial court’s ability to modify a pre-trial conference order based on previously answered interrogatories, and restates the holding of Singer, supra, 54 Cal.2d 318 with respect to interrogatories, which is not helpful to Plaintiff/Cross-Defendant. Likewise, Sheets v. Superior Court (1967) 257 Cal.App.2d 1 cited by Plaintiff/Cross-Defendant does not offer support for its argument that a party may re-propound the same interrogatories once an answer or cross-complaint is filed. It similarly reiterates the Singer holding regarding the ability to propound discovery requests towards any contention or defense.

As previously stated, the filing of answers or a cross-complaint may give rise to the need to propound new discovery requests. (See Singer, supra, 54 Cal.2d 318.) However, it does not by extension allow a party to resubmit the same questions or requests, as this would unjustly allow it to circumvent clear timelines for filing a motion to compel simply because there were responsive pleadings filed, and the authorities cited by Plaintiff/Cross-Defendant do not support this argument.

Consequently, the motion to compel further responses to FI2 Nos. 14.1, 14.2, 15.1, 16.1, 16.2, 16.3, 16.6, and 17.1 is DENIED.

III. Sanctions

Plaintiff/Cross-Defendant also requests monetary sanctions of $5197.50. However, it misstates proper code sections pursuant to which the request is made, with the exception of section 2030.290 subdivision (c).

Section 2030.290 subdivision (c) provides for sanctions against a party who fails to timely respond to interrogatories. The statute states that the “court shall” impose monetary sanctions in those cases “unless it finds… that other circumstances make the imposition of sanctions unjust.” (§ 2030.290, subd. (c).)

Given the Court’s finding on the failure of Plaintiff/Cross-Defendant to meet and confer in good faith prior to filing the motion, the motion for sanctions will be denied. (Obregon v Superior Court, supra, 67 Cal.App.4th 424, 433 [upon finding a failure to attempt informal resolution, the court must consider the appropriate remedy].) This is particularly true given the apparently repetitive interrogatories, and the serial motions to compel which appear designed to burden and annoy rather than reveal evidence or narrow the issues for trial, not to mention the relatively simple factual allegations at issue. (See Ibid.)

Consequently, the request for monetary sanctions is DENIED.

IV. Disposition

Plaintiff/Cross-Defendant’s request for judicial notice is DENIED.

Plaintiff/Cross-Defendant’s motion to compel responses to FI1/CC Nos. 1.1, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 10.2, 15.1, 16.1, 16.2, 16.3, 16.6, 50.1, 50.2, and 50.3 is GRANTED. Accordingly, within 20 calendar days of the date of the filing of the order, Stephenson shall serve verified code-compliant further responses to these FI without objection. The motion to compel further responses to FI1/CC Nos. 4.1, 4.2, 6.1, 8.1, 8.2, 9.1, 9.2, 10.1, 10.3, 12.1, 12.2, 12.3, 12.4, 2.5, 12.6, 14.1, 14.2, 17.1, 50.4, 50.5, and 50.6 is DENIED.

Plaintiff/Cross-Defendant’s motion to compel further responses to RPD is DENIED.

Plaintiff/Cross-Defendant’s motion to compel further responses to SI 52, 53, 54, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90 and 91 is DENIED.

Plaintiff/Cross-Defendant’s motion to compel further responses to FI2 Nos. 14.1, 14.2, 15.1, 16.1, 16.2, 16.3, 16.6, and 17.1 is DENIED.

Plaintiff/Cross-Defendant’s request for monetary sanctions is DENIED.