2010-00086964-CU-CO

Rafael Perez vs. James Kouretas

Nature of Proceeding: Motion to Compel Production of Documents

Filed By: Cale, Virginia

Plaintiff Rafael Perez’s (“Rafael”) motion to compel defendant Kouretas’ further
responses to requests for production, set two, is GRANTED IN PART and DROPPED
IN PART, as follows.

Rafael is one of three plaintiffs in this action who worked together in an attempt to
open a card room using the gambling license held by Ms. Faye Stearns, not a party to
this suit. Plaintiffs essentially allege that attorney Kouretas “stole” that gambling
license and now operates the highly profitable “Casino Royale” here in Sacramento.
The complaint currently alleges several causes of action against defendant including
legal malpractice, breach of fiduciary duty, constructive fraud, actual fraud and
interference with both contract and prospective economic advantage.

Plaintiff’s moving papers identify three specific requests for production at issue: Nos.
33, 35 and 41. According to Rafael’s reply papers, only the latter two requests remain
in dispute. Thus, the motion to compel is DROPPED as moot with respect to request
No. 33 only.

Request Nos. 35 and 41 directed to defendant Kouretas read as follows:

35. Any and all reports which were submitted to the Department of Justice,
Division of Gambling Control, by Casino Royale and/or Sacramento Grand
Casino, LLC, including but not limited to profit sharing reports and reports of
gaming activities, from 2007 to the present.

41. Any and all DOCUMENTS RELATING TO all profits received from the
operation of Casino Royale from 2007 to the present.

Kouretas’ responded to both requests with essentially the same series of objections:

The requests fail to specify with reasonable particularity the materials sought;
are vague, ambiguous, compound, disjunctive and overbroad; impermissibly
seek documents regarding a non-party’s financial condition in violation of its
right to financial privacy; impermissibly seek discovery of defendant’s own
financial matters in violation of his privacy rights and of Civil Code §3295(c)’s
provisions; seek information not relevant to this action and are not reasonably
calculated to lead to admissible evidence; are unduly burdensome and
oppressive to the extent the requests seek documents not in the possession,
custody or control of the responding party.

Plaintiff Rafael contends that through the meet-and-confer process, the parties have
narrowed the dispute over request Nos. 35 and 41 to the application of Civil Code
§3295 and the asserted privacy rights. With respect to the latter, plaintiff notes the
right to privacy is not absolute and argues that discovery of private matters may be
permitted where the information sought is directly relevant to the claims asserted and
where there is a compelling need for such information. Rafael maintains that the
documents sought in these two requests satisfy this standard because Casino
Royale’s profits are directly relevant to plaintiffs’ claims against Kouretas and
essentially represent the amount of actual compensatory damages suffered as a result
of Kouretas’ misconduct. Plaintiff further asserts that Civil Code §3295 is inapplicable
since the financial information is not being sought for the purpose of imposing punitive
damages under §3294.

The opposition first argues that plaintiff has failed to set forth specific facts showing
good cause justifying the discovery of the documents sought, as required by Code of
Civil Procedure §2031.310(b)(1). In fact, defendant contends plaintiff has set forth no
facts or evidence at all, much less facts or evidence which establish the direct
relevance of the information sought, why it is essential to a fair resolution of this case
and/or that there is no less intrusive manner for obtaining the information. (Oppos.,
p.2:12-24.) The opposition next insists plaintiff is improperly attempting to obtain the
financial records of a non-party (i.e., Casino Royale), which is operated by an LLC
completely independent of defendant Kouretas, even though such information can be
obtained directly from that non-party with a subpoena duces tecum. Regardless,
Kouretas timely asserted the privacy objection on behalf of this non-party as permitted
by California law and notes that the scope of the document requests goes far beyond
any profits Kouretas himself may have derived from Casino Royale. (Id., at p.4:4-
p.5:9.) For these reasons, the opposition maintains that plaintiff has not and cannot
overcome the privacy objection asserted on behalf of the non-party. Defendant
Kouretas also claims that the discovery of his own financial matters is precluded by the
plain terms of Civil Code §3295(c) unless the Court permits such discovery,
particularly since plaintiffs have clearly alleged punitive damages in this case.
Moreover, according to the opposition, plaintiff’s argument that information sought is
relevant to actual rather than merely punitive damages must be disregarded because it
will effectively render §3295(c) moot. In the event the Court is inclined to grant this motion, defendant requests an in camera review of the responsive documents as well
as a protective order limiting the scope of future discovery of all financial matters.
Finally, the opposition requests an award of monetary sanctions in the amount of
$2,375.

At the outset, the Court holds that Civil Code §3295(c)’s bar to financial discovery is
not applicable here since the money allegedly derived by Kouretas from the casino is
itself relevant to plaintiffs’ claims against him and specifically, the damages suffered by
plaintiffs. (See, Rawnsley v. Superior Court (Pioneer Theaters, Ltd.) (1986) 183
Cal.App.3d 86, 91 [unlike situation where discovery of financial information is solely for
the purpose of punitive damages, the documents here “are fundamental to
[petitioner’s] case” since he alleges assets were converted and diverted from entities in
which he had an interest; the only way to prove his case is to obtain defendants’
financial records].) Since the financial information here is not being sought for the
purpose of imposing punitive damages under §3294, the protections afforded under
§3295 are not applicable.

While defendant may have legitimate concerns about the privacy of the financial
information being sought, these concerns do not justify his refusal to produce any of
the responsive documents which the Court finds are likely lead to the discovery of
admissible evidence. If one is not already in place, defendant should promptly meet-
and-confer with opposing counsel to create an appropriate protective order governing
the use and dissemination of sensitive information to be produced in this action. The
opposition papers requested a protective order but failed to clearly identify the precise
nature of the relief sought. Thus, the Court cannot grant any protective order here.

The Court declines defendant’s invitation to conduct an in camera review of the
responsive documents because it lacks the resources to micromanage an otherwise
unremarkable discovery dispute involving such routine matters of financial privacy.
Regardless, this ruling should provide the parties with sufficient guidance to resolve
any remaining issues.

Consistent with the foregoing, defendant to provide verified further responses, without
objections, to plaintiff’s requests for production, set two, Nos. 35 and 41 along with the
responsive documents no later than 6/16/2014. The parties remain free to extend this
date by mutual agreement memorialized in writing. To the extent defendant does not
have possession, custody or control of any of the responsive documents which must
be turned over pursuant to this ruling, he must pursuant to Code of Civil Procedure
§2031.230 provide the name and address of the person or entity believed to have
possession of such documents.

The Court denies defendant’s request for monetary sanctions.

This minute order is effective immediately. No formal order or other notice is required.
(Code Civ. Proc. §1019.5; CRC Rule 3.1312.)