Case Number: KC066684    Hearing Date: September 04, 2014    Dept: J

Re: Robert Deidrick, etc. v. Pedro Armando Urquijo, etc., et al. (KC066684)

MOTION FOR ORDER PERMITTING DISCOVERY OF THE FINANCIAL CONDITION OF DEFENDANT

Moving Party: Plaintiff Robert Deidrick

Respondents: Defendants Pete A. Urquijo and Carmen P.
Urquijo

POS: Moving OK; Opposing OK; Reply served by regular mail contrary to CCP § 1005(c)

In this action to set aside allegedly fraudulent conveyances, Plaintiff alleges that Defendant Pedro Urquijo fraudulently transferred his interest in certain properties to his wife, Defendant Carmen Urquijo, to prevent Plaintiff from collecting a judgment in an underlying case. The Complaint, filed on 2/25/14, asserts a single cause of action to Set Aside and to Recover Fraudulent Transfers.

The trial is set for 2/23/15.

Plaintiff Robert Deidrick (“Plaintiff”), as Successor Trustee of the Cornelia Petill Trust dated April 28, 2010 (the “Trust”), moves for an order permitting him to conduct pretrial discovery with respect to the financial condition of Defendant Pedro Armando Urquijo in order to allow Plaintiff to establish a case for punitive damages pursuant to CC § 3294. The motion is made pursuant to CC § 3295(c), on the ground that there is a substantial probability that Plaintiff will prevail on his claim for punitive damages pursuant to CC § 3294.

DISCOVERY OF FINANCIAL CONDITION:

Without a court order, a plaintiff claiming punitive damages may require a defendant to identify documents in defendant’s possession that are admissible (not merely relevant) on the issue of profits and financial condition; and witnesses employed by or related to defendant “who would be most competent to testify” about defendant’s financial condition. (CC § 3295 (c).) Beyond these matters, no pretrial discovery regarding defendant’s finances is permitted without a court order, which may issue only upon the court finding a “substantial probability” that plaintiff will prevail on the punitive damages claim. (Ibid.)

One court has held that to establish a “substantial probability,” plaintiff must “demonstrate the existence of sufficient facts to establish a prima facie case for punitive damages, having in mind the higher clear and convincing standard of proof.” (Looney v. Sup.Ct. (Medical Center of North Hollywood) (1993) 16 Cal.App.4th 521, 538.)

Defendant must be given an opportunity to present opposing declarations so that the court can weigh the evidence before making its determination. (CC § 3295(c); Jabro v. Super.Ct. (Hill) (2002) 95 Cal.App.4th 754, 758.)

Even if the court orders discovery of defendant’s finances, defendant is “presumptively entitled to a protective order” limiting disclosure solely to opposing counsel and solely for purposes of the lawsuit. (Richards v. Sup.Ct. (Lee) (1978) 86 Cal.App.3d 265, 272.)

PUNITIVE DAMAGES:

In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. (CC § 3294(a).) “Fraud” means “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (CC § 3294(c)(3).) “Malice” means “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (CC § 3294(c)(1).) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (CC § 3294(c)(2).)

PLAINTIFF’S MOTION:

Plaintiff represents that Defendant Pedro Urquijo is and was an attorney at law, who represented his wife, Defendant Carmen Urquijo as the initial Successor Trustee of the Trust, in the trust administration proceedings which spawned the underlying action. Plaintiff contends that he obtained a judgment against Pedro Urquijo in a case entitled In re Cornelia Petill Trust dated April 28, 2010, bearing the Los Angeles County Superior Court Case No. KP 014761 (the “underlying action”), and that while the underlying action was pending, Pedro Urquijo fraudulently transferred his property interests to Carmen Urquijo.

Plaintiff submits the Declaration of Paul N. Gautreau in support of his motion. Mr. Gautreau attests:

On May 10, 2012, Plaintiff filed a Probate Code §850 Petition against Pedro Urquijo in the underlying action seeking disgorgement of attorney’s fees charged and collected by Pedro Urquijo from his wife, Carmen Urquijo, based on a variety of theories including the prohibitions against: (1) dual compensation, (2) charging or collecting illegal and unconscionable fees, (3) taking money for legal services not performed, (4) billing for work not legal in nature, (5) charging excessive rates, and (6) collecting unauthorized fees.

On January 6, 2014, the underlying action proceeded to trial. On January 30, 2014, the court issued its statement of intended decision, wherein the court announced its tentative order that Pedro Urquijo pay to sum of $73,823.27 to Plaintiff. (Exh. 1.) On February 24, 2014, there being no objections, the statement of intended decision became the decision of the court. Judgment was entered on April 1, 2014. (Exh. 4.)

Meanwhile, on or about November 26, 2013, Pedro Urquijo transferred his fifty percent of ownership interest in a parcel of real property, located at 700 North Cross Creek Circle, Walnut California 91789, to his wife, Carmen Urquijo by way of a Quitclaim Deed for no consideration. (Motion, Exh. 2.) Thereafter, on or about January 3, 2014, Pedro Urquijo transferred another parcel of real property in which he maintained an ownership interest, located at 754 Marylie Lane, Walnut, California 91789, to his wife by way of a Quitclaim Deed for no consideration. (Id., Exh. 3.) On January 10, 2014, subsequent to the trial in the underlying action, both Quitclaim Deeds were recorded in the Los Angeles County Recorder’s Office.

As a result of the transfer of the ownership interests, Plaintiff has been prevented from recovering the debt owed to Plaintiff by Defendant. Defendant has exhibited no action consistent with any attempt to satisfy the judgment. The uncontroverted evidence strongly suggests that Defendant made the foregoing transfers of his ownership interests with the actual intent to hinder, delay and defraud Plaintiff.

DEFENDANT’S OPPOSITION:

Defendant contends that the motion should be denied because: (1) Plaintiff has not shown a substantial probability of prevailing regarding his punitive damages claim; (2) public records show Defendant’s ability to pay punitive damages should Plaintiff prevail; and (3) the motion is vague and it does not state exactly what discovery Plaintiff intends to propound.

COURT’S FINDINGS:

The court finds that Plaintiff has demonstrated a “substantial probability” that he will prevail on the punitive damages claim against Defendant Pedro Urquijo. The uncontroverted Declaration of Paul N. Gautreau in support of the motion demonstrates that in conveying his real properties to his wife Pedro Urquijo acted willfully, deliberately, and with the specific intent to cause injury to Plaintiff by creating obstacles in order to prevent Plaintiff from recovering the judgment owed to Defendant’s former client, by refusing to reimburse the attorney’s fees improperly received by said Defendant from his former client, and by frustrating Plaintiff in his effort to recover the legitimate debt. While Defendant Pedro Urquijo attempts to explain the transactions in the “attached ‘declaration’ of Peter Urquijo,” Pedro Urquijo neither swears to the veracity of the contents of the “declaration” nor affirms under penalty of perjury that the statements contained in the document are true and correct. (See CCP §2015.5(a).)

Defendant also contends that the public records reveal Defendant’s financial condition. However, Defendant does not submit any evidence in support of this contention. Moreover, while the public records may reveal some of Defendant’s assets and liabilities, it is highly unlikely that all of Defendant’s assets and liabilities (e.g., bank accounts, stocks, etc.) can be obtained from the public records.

Finally, Defendant fails to demonstrate that Plaintiff needs to propose the scope of discovery when moving for an order permitting discovery of financial condition under CC § 3295(c).

Thus, the motion is granted.