Case Name: Universal Semiconductor, Inc. v. Tuoi Vo, et al.
Case No.: 2014-1-CV-265548 (Consolidated with Case Nos. 2014-1-CV-267721 and 2015-1-CV-282216)

(1) Demurrer by Defendants Universal Semiconductors Technologies, Inc., Schaumbond Group, Inc., Bao Hua Zheng, Kevin Zheng, Niko Teng, Ali Amini, and Tuoi Vo to the Second Amended Complaint of Plaintiff Vic Hejmadi; (2) Motion by Defendants Universal Semiconductors Technologies, Inc., Schaumbond Group, Inc., Bao Hua Zheng, Kevin Zheng, Niko Teng, Ali Amini, and Tuoi Vo to Strike Portions of the Second Amended Complaint of Plaintiff Vic Hejmadi; and (3) Motion by Plaintiff Vic Hejamdi to Compel Compliance with a Statement of Agreement to Produce Documents and for an Award of Monetary Sanctions

Factual and Procedural Background

This is an action for breach of contract. Plaintiff Vic Hejmadi (“Plaintiff”) entered into a series of agreements with defendant Boa Hua Zheng (“Zheng”) in 2005, regarding a partnership and/or alliance with defendant Schaumbond Group, Inc. (“Schaumbond”) and Zheng’s use and acquisition of Universal Semiconductor, Inc.’s (“USI”) manufacturing technology and name. (Second Amended Complaint (“SAC”), ¶¶ 13-17.) Thereafter, in 2006, Schaumbond acquired Celeritek, Inc. (“Celeritek”), formed defendant Universal Semiconductor Technologies, Inc. (“USTI”), and transferred all of Celeritek’s assets to USTI. (Id., at ¶ 18.) One year later, with Plaintiff’s assistance, Zheng purchased manufacturing equipment from Intel Corporation and shipped it to Schaumbond’s manufacturing site in China. (Id., at ¶ 19.)

In 2013, at Zheng’s request, Plaintiff helped locate manuals for the equipment purchased from Intel Corporation. (SAC, ¶ 29.) In exchange for his help, Plaintiff was to receive a 50 percent interest in USI/USTI joint venture stock. (Ibid.) Additionally in 2013 and 2014, USI entered into agreements with USTI, regarding USTI’s operation and the use of USTI’s tools, equipment, and inventory. (Id., at ¶¶ 29, 28-31.) USI, USTI, and Zheng also committed to reimburse Plaintiff and USI for all costs associated with closing USTI’s facility in Santa Clara and moving operations to USI. (Id., at ¶ 30.) Plaintiff allegedly entered into the 2013 and 2014 agreements “with the understanding that the commitments made under the 2005 [a]greements by both parties would be kept.” (Id., at ¶¶ 21, 26.) In 2014, in violation of the various agreements, Zheng and USTI sold all of USTI’s assets to a buyer in China. (Id., at ¶¶ 32-33.)

Based on the foregoing, Plaintiff filed this action (Vic Hejmadi v. Universal Semiconductor Technologies, Inc., et al., Santa Clara County Super. Ct., Case No. 2015-1-CV-282216) against USTI, Schaumbond, Zheng, defendant Kevin Zheng (“Kevin”), defendant Niko Teng (“Teng”), defendant Ali Amini (“Amini”), and defendant Tuoi Vo (“Vo”) (collectively “Defendants”) on June 23, 2015. Shortly thereafter, Defendants filed a demurrer to Plaintiff’s complaint in its entirety, which was sustained with leave to amend.

Subsequently, on December 1, 2015, Plaintiff filed a first amended complaint (“FAC”) against Defendants, alleging causes of action for: (1) breach of contract; (2) declaratory relief; (3) breach of duty to minority shareholder; (4) breach of contract; (5) intentional fraud; (6) fraudulent concealment; (7) negligent misrepresentation; (8) breach of covenant of good faith and fair dealing; (9) breach of covenant of good faith dealing for failure to negotiate in good faith; (10) interference with contract; (11) breach of Bulk Sales Laws; (12) fraudulent conveyance; (13) conspiracy regarding fraudulent conveyance; (14) unjust enrichment; (15) conspiracy; and (16) alter ego liability. Defendants then filed a demurrer to the first and third through fifteenth causes of action of the FAC. The demurrer was overruled as to the fourth, eighth through twelfth, and fourteenth causes of action; sustained with leave to amend as to the third, fifth through seventh, thirteenth, and fifteenth causes of action; and sustained without leave to amend as to the first cause of action.

Thereafter, on April 18, 2016, Plaintiff filed the operative SAC against Defendants, asserting claims for: (1) breach of contract; (2) declaratory relief; (3) breach of duty to minority shareholder; (4) breach of contract; (5) intentional fraud; (6) fraudulent concealment; (7) negligent misrepresentation; (8) breach of covenant of good faith and fair dealing; (9) breach of covenant of good faith dealing for failure to negotiate in good faith; (10) interference with contract; (11) breach of Bulk Sales Laws; (12) fraudulent conveyance; (13) conspiracy regarding fraudulent conveyance; (14) unjust enrichment; (15) conspiracy; and (16) alter ego liability.

On May 18, 2016, Defendants’ counsel filed a declaration pursuant to Code of Civil Procedure section 430.41, subdivision (a)(2). Defendants’ counsel explained that he had been unable to meet and confer with Plaintiff regarding deficiencies in the SAC because Plaintiff informed him on April 27, 2016, that he intended to file a third amended complaint (“TAC”); Plaintiff obtained the parties’ agreement to have a hearing on June 7, 2016, regarding his anticipated motion for leave to file a TAC; based on that hearing date, he believed he would receive the proposed TAC on or before May 13, 2016; he did not receive the proposed TAC; on May 18, 2016, he emailed Plaintiff asking him if he still intended to file a motion for leave to file a TAC and otherwise requesting to meet and confer regarding deficiencies in the SAC; and he was preparing for two trials set to begin on May 24 and June 13, 2016.

Less than one week later, on May 24, 2016, Plaintiff filed a request for entry of default against Defendants on the SAC and the clerk of the court entered the default as requested. However, on July 8, 2016, the Court issued an order denying Plaintiff’s request for entry of default.

Currently before the Court are the following matters: (1) the demurrer by Defendants to the SAC; (2) the motion by Defendants to strike portions of the SAC; and (3) the motion by Plaintiff to compel compliance with a statement of agreement to produce documents and for an award of monetary sanctions. Plaintiff filed papers in opposition to the demurrer and motion to strike on July 18, 2016. Defendants filed papers in opposition to the motion to compel compliance on July 20, 2016, in which they request an award of monetary sanctions. On July 26, 2016, Defendants and Plaintiff filed reply papers in support of their respective matters.

Discussion

I. Procedural Issue

As an initial matter, Plaintiff repeatedly asserts that Defendants cannot demur to the SAC, move to strike portions of the SAC, oppose his motion to compel compliance, or otherwise participate in this action because they are in default and have not moved to set aside the default. In support of his argument, Plaintiff points to the request for default filed on May 24, 2016, which reflects that the clerk of the court entered the default as requested on the same day.

Plaintiff’s argument lacks merit because the Court effectively set aside the default when, as indicated above, it denied Plaintiff’s request for entry of default on July 8, 2016. Consequently, it is readily apparent that Defendants are not in default.

Nonetheless, Plaintiff contends the Defendants are in default notwithstanding the July 8, 2016 court order because the reason given by the Court for the denial of the request for default—that the SAC was no longer the operative pleading–was incorrect.

Plaintiff’s attempt to attack the basis for the July 8, 2016 court order is procedurally improper. Plaintiff has not filed a motion for reconsideration of the July 8, 2016 court order and neither his opposition to the pending demurrer and motion to strike nor his motion to compel compliance are the proper vehicles by which to raise arguments regarding the propriety of the July 8, 2016 order.

In any event, Plaintiff’s arguments fail. Though the stated reason for the denial was incorrect, the request for default was properly denied because the request was filed prior to the date Defendants’ responsive pleading was due. Upon the filing of the declaration by Defendants’ counsel on May 18, 2016, pursuant to Code of Civil Procedure section 430.41, subdivision (a)(2), Defendants were automatically granted a 30-day extension of time within which to file a responsive pleading. (Code Civ. Proc., § 430.41, subd. (a)(2).) Since Defendants’ responsive pleading was originally due on May 20, 2016, Defendants had 30 days from that date, i.e., until June 18, 2016, to file their responsive pleading and they were not subject to default during the period of the extension. (Ibid.) Because Plaintiff filed the request for default during the period of the extension, he was not entitled to entry of default. (Ibid.)

Consequently, Plaintiff does not establish that Defendants are precluded from bringing their demurrer and motion to strike, opposing the motion to compel compliance, or otherwise participating in this action.

II. Demurrer

Defendants demur to first, third, fifth through seventh, eleventh, thirteenth, and fifteenth causes of action on the ground of failure to allege facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

A. Request for Judicial Notice

Defendants’ request for judicial notice of various court records is GRANTED. (See Evid. Code, § 452, subd. (d) [permitting judicial notice of court records]; see also People v. Woodell (“Woodell”) (1998) 17 Cal.4th 448, 455.)

B. Meet and Confer

Plaintiff contends that Defendants failed to adequately meet and confer prior to filing the instant demurrer.

The Court finds that Plaintiff’s argument largely lacks merit as Defendants adequately met and conferred with respect to the first, third, fifth through seventh, thirteenth, and fifteenth causes of action. The declarations by Defendants’ counsel demonstrate that Defendants reasonably refrained from engaging in meet and confer efforts for a period of time based on Plaintiff’s representation that he would be moving for leave to file a TAC. Additionally, once they realized that Plaintiff did not intend to request leave to file a TAC, Defendants promptly took steps to initiate meet and confer discussions and extend their time to file a responsive pleading. Furthermore, on June 3, 2016, Defendants’ counsel emailed Plaintiff a meet and confer letter, identifying the purported deficiencies in the first, third, fifth through seventh, thirteenth, and fifteenth causes of action that are the subject of the instant demurrer. (Braunstein Dec., Ex. C.) Thus, Defendants adequately met and conferred with respect to those claims.

Furthermore, while Defendants failed to meet and confer with Plaintiff regarding the eleventh cause of action, a determination that the meet and confer process was insufficient is not grounds to overrule a demurrer. (Code Civ. Proc., § 430.41, subd. (a)(4).) Given the adequate meet and confer efforts with respect to the other causes of action and in the interest of moving the case forward, the Court will overlook Defendants’ failure to meet and confer with respect to the eleventh cause of action.

C. First Cause of Action

The demurrer to the first cause of action for breach of contract is SUSTAINED WITHOUT LEAVE TO AMEND.

As stated by the Court in its prior order on Defendants’ demurrer to the FAC, the first cause of action for breach of contract is time-barred by the applicable statute of limitations. The statute of limitations for an action based on a written contract is four years. (Code Civ. Proc., § 337.) “The traditional rule is that a statute of limitations begins to run upon the occurrence of the last element essential to the cause of action, even if the plaintiff is unaware of his cause of action.” (Mangini v. Aerojet-General Corp. (1991) 230 Cal.App.3d 1125, 1149-1150.) The first cause of action is based on Schaumbond and Zheng’s breach of the 2005 agreements. Plaintiff alleges that Schaumbond and Zheng breached those agreements “by failing to pay the accumulated $150,000 per year due to [him] for each of the years since March 26, 2005.” (SAC, ¶¶ 50, 55.) Plaintiff expressly asserts that he has not received any monetary compensation since 2005. (Id., at ¶ 42.) Based on the foregoing, the cause of action for breach of contract accrued as of March 2005, and the applicable statute of limitations expired in March 2009. Since Plaintiff did not file his complaint until June 23, 2015, the first cause of action is time-barred.

D. Third Cause of Action

The demurrer to the third cause of action for breach of duty to minority shareholder is SUSTAINED WITHOUT LEAVE TO AMEND.

Defendants argue that the third cause of action for breach of duty to minority shareholder fails because Plaintiff does not plead sufficient facts showing that he was a shareholder of Schaumbond. Defendants also argue that the “Schaumbond Board Meeting Minutes” (“Minutes”), referenced in the SAC as Exhibit C, and other documents attached to the SAC contradict Plaintiff’s allegation that he received $1 million in Schaumbond stock.

In the SAC, Plaintiff alleges that he was “granted $1 million in [Schaumbond] stock” at a Schaumbond board meeting on June 10, 2005, as evidenced by a copy of the Minutes. (SAC, ¶ 27.) Plaintiff further alleges that Zheng induced him to enter into the 2005 agreements by promising that he “would be granted a $1 million shareholder interest in [Schaumbond].” (Id., at ¶ 63.) Zheng’s agent, Owen Wu, allegedly confirmed this agreement in an email stating “Vic, Mr. Zheng wants to work with USI and agreed that you will be Vice Chairman of Schaumbond with compensation same as USI ($150k/yr) starting when you sign the agreements in addition to shares.” (Ibid.)

Plaintiff’s allegation that he, as an individual, was granted $1 million in Schaumbond stock is belied by the other allegations in the SAC. First, the Minutes do not demonstrate that Plaintiff was issued $1 million of Schaumbond stock. (See SAC, Ex. C.) Rather, the Minutes merely state that Plaintiff was elected Vice Chairman of Schaumbond, he would remain CEO of USI, he would be responsible Schaumbond’s operation and finances in the United States, and he would supply information for the upgrade of USI’s website. (Ibid.) Since the facts appearing in the Minutes contradict those expressly pleaded in the SAC, those in the Minutes are given precedence. (Mead v. Sanwa Bank California (“Mead”) (1998) 61 Cal.App.4th 561, 567-68 [if facts appearing in an attached exhibit contradict those expressly pleaded, those in the exhibit are given precedence].)

Second, Plaintiff affirmatively alleges that Zheng “owns 100% of the shares issued in [Schaumbond] (less those shares owned by Plaintiff under the TAA).” (SAC,
¶ 3.) The “TAA” is attached to the SAC as Exhibit A and provides that USI, not Plaintiff, shall be given Schaumbond stocks in the amount of $1 million. (SAC, Ex. A, p. 3.) This is corroborated by the Strategic Partnership Agreement, which is also attached to the SAC as Exhibit A and provides that USI will be given $1 million of stock/shares in Schaumbond. (SAC, Ex. A, p. 26.) Since the facts set forth in Exhibit A contradict Plaintiff’s allegation that he was granted shares in Schaumbond, those in the exhibit are given precedence. (Mead, supra, 61 Cal.App.4th at pp. 567-68.) Thus, Plaintiff fails to plead sufficient facts showing that he is a minority shareholder of Schaumbond.

E. Fifth and Seventh Causes of Action

The demurrer to the fifth cause of action for intentional misrepresentation and the seventh cause of action for negligent misrepresentation is SUSTAINED WITHOUT LEAVE TO AMEND as to Teng and Kevin, and OVERRULED as to Schaumbond, Amini, and Vo.

Defendants argue that the fifth cause of action for intentional fraud and the seventh cause of action for negligent misrepresentation fail as to Schaumbond, Teng, Kevin, Amini, and Vo because the alleged misrepresentations are attributed only to USTI and Zheng. Defendants also argue that Plaintiff fails to allege how, when, where, to whom, and by what means Schaumbond, Teng, Kevin, Amini, and Vo made any of the alleged misrepresentations.

“The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.” (West v. JPMorgan Chase Bank, N.A. (“West”) (2013) 214 Cal.App.4th 780, 792, citation omitted.)

“Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.” (West, supra, 214 Cal.App.4th at p. 793, citation and quotation marks omitted.)

As a preliminary matter, the fifth and seventh causes of action are not alleged against Schaumbond, Amini, or Vo. Consequently, the demurrer as it pertains to those defendants is not well-taken.

With respect to the remaining defendants, Teng and Kevin, Plaintiff fails to plead specific facts demonstrating that Teng or Kevin made any affirmative misrepresentations of fact. Plaintiff merely alleges that Teng and Kevin were present when the 2014 agreement between USI and USTI was executed; Kevin helped with negotiation and translation of the 2014 agreement; Teng and Kevin met and worked with him following execution of the 2014 agreement; and Teng and Kevin said nothing about the sale of USTI’s equipment. (SAC, ¶¶ 85-103, 113-120.) These allegations do not demonstrate that Teng or Kevin made any affirmative misrepresentation of fact. Moreover, the only specific misrepresentations alleged are attributed to Zheng and USTI. Thus, the demurrer as to Teng and Kevin is well-taken.

F. Sixth Cause of Action

The demurrer to the sixth cause of action for fraudulent concealment is OVERRULED.

Defendants argue that the Court should sustain the demurrer to the sixth cause of action for fraudulent concealment because Plaintiff fails to allege that they owed him a duty to disclose.

“[T]he elements of a cause of action for fraud based on concealment are: ‘(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. [Citation.]’ [Citation.]” (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 850.)

As a preliminary matter, the sixth cause of action is alleged only against Zheng, Teng, and Kevin. Thus, to the extent the demurrer is brought by USTI, Schaumbond, Amini, and Vo, it is not well-taken.

With respect to the remaining defendants, Zheng, Teng, and Kevin, Plaintiff expressly alleges that they had a duty to disclose the attempted and/or actual sale of USTI’s assets. Plaintiff alleges that Zheng had a duty to disclose the attempted and/or actual sale of USTI’s assets because the 2014 agreement between USTI and USI contained a covenant of good faith and fair dealing and Zheng had “multiple close dealings with him” that “created a close and trusting fiduciary relationship.” (SAC, ¶ 105.) Plaintiff further alleges that Teng and Kevin had a duty to disclose the attempted and/or actual sale of USTI’s assets because of “their relationship to … Zheng and to [him], their participation in the negotiation and execution of the April 8, 2014 Agreement, and their face to face contact with [him] between April 8, 2014 and May 19, 2014.” (Id., at ¶ 106.)

While these allegations do not establish the existence of a fiduciary relationship between the parties, a duty to disclose may arise in the absence of a fiduciary relationship when there is some sort of transaction between the parties and the defendant makes representations without disclosing facts, which materially qualify the representation or render it likely to mislead; the facts are known or accessible only to the defendant, and the defendant is aware of the plaintiff’s lack of knowledge or access; or the defendant actively conceals discovery from the plaintiff. (See Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 613; see also LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.) The allegations that Zheng, Teng, and Kevin where involved in the negotiation and execution of the 2014 agreement and they concealed the attempted and/or actual sale of USTI’s assets from Plaintiff are adequate to establish a duty to disclose under this standard. Thus, the demurrer as to Zheng, Teng, and Kevin is not well-taken.

G. Eleventh Cause of Action

The demurrer to the eleventh cause of action for violation of Bulk Sales Laws is SUSTAINED WITHOUT LEAVE TO AMEND as to Amini and Vo.

In the eleventh cause of action for violation of Bulk Sales Laws, Plaintiff alleges a violation of Commercial Code section 6105. (SAC, ¶¶ 144-145.) Commercial Code section 6105 requires buyers to give notice of an impending sale when a business prepares to sell the bulk of its inventory and equipment. (See Comm. Code, §§ 6104, subd. (b) [“In a bulk sale as defined in subparagraph (ii) of paragraph (3) of subdivision (a) of Section 6102 the buyer shall do each of the following: … (b) Give notice of the bulk sale in accordance with Section 6105.”], 6105 [setting forth the notice requirements].)

As Defendants persuasively argue, the eleventh cause of action fails because Plaintiff does not allege any facts demonstrating that Amini or Vo were buyers under the Commercial Code. Rather, Plaintiff merely alleges that he told Amini and Vo “to inform the ‘Foreign Buyer’ of U.S. law relating to Bulk Sales and of USTI creditor claims” and Amini and Vo arranged shipment of USTI’s assets to various warehouses. (SAC, ¶¶ 147-148.) These allegations are insufficient to show that Amini or Vo were buyers under Commercial Code section 6105.

H. Thirteenth and Fifteenth Causes of Action

The demurrer to the thirteenth and fifteenth causes of action for conspiracy is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

As stated by the Court in its prior order on Defendants’ demurrer to the FAC, the thirteenth and fifteenth causes of action for conspiracy fail because conspiracy is not a stand-alone cause of action. “Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing the tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration ….” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511 [emphasis added].) The Court previously gave Plaintiff leave to amend to allow him the opportunity to allege conspiracy solely as a theory of liability rather than a cause of action. Instead, Plaintiff once again alleged conspiracy as the thirteenth and fifteenth causes of action. The Court finds that it is appropriate to give Plaintiff one additional chance to allege conspiracy solely as a theory of liability rather than a cause of action.

III. Motion to Strike

Defendants move to strike the following portions of the SAC: the first cause of action for breach of contract; the request for punitive damages; and the allegation that Schaumbond is a suspended corporation.

A. Request for Judicial Notice

Defendants’ request for judicial notice of various court records is GRANTED. (See Evid. Code, § 452, subd. (d); see also Woodell, supra, 17 Cal.4th at p. 455.)

B. First Cause of Action

Defendants’ motion to strike the first cause of action for breach of contract is MOOT given the Court’s ruling on the demurrer.

C. Request for Punitive Damages

Defendants’ motion to strike the request for punitive damages is DENIED because they did not challenge the twelfth cause of action for fraudulent transfer and a claim for fraud alone is an adequate basis for an award of punitive damages. (Orient Handel v. U.S. Fidelity & Guaranty Co. (1987) 192 Cal.App.3d 684, 697; Oakes v. McCarthy Co. (1968) 267 Cal.App.2d 231, 263; see Civ. Code, § 3294 [stating that punitive damages may be awarded against a defendant that has been guilty of fraudulent conduct].)

D. Allegation Regarding Schaumbond’s Corporate Status

Defendants’ motion to strike the allegation regarding Schaumbond’s corporate status is DENIED.

Defendants contend the allegation that Schaumbond is a suspended corporation should be stricken because the “Court has already found that Schaumbond was is [sic] no longer suspended as a matter of law.” (Mem. Ps. & A.s, p. 6.) However, Defendants do not cite to any court order setting forth such a finding. The only court order referenced by Defendants is the March 23, 2016 order on Defendants’ demurrer to the FAC. In that order, the Court did not find that Schaumbond was no longer suspended as a matter of law; rather, the Court stated that “[w]hether Schaumbond was a suspended corporation and sufficiently revived its corporate status simply does not bear on whether Plaintiff’s causes of action adequately state a claim.” (Braunstein Dec., Ex. A.) Thus, Defendants’ argument lacks merit.

IV. Motion to Compel Compliance

Plaintiff moves for an order compelling Schaumbond, USTI, and Zheng to comply with a discovery agreement pursuant to Code of Civil Procedure section 2031.320.

A. Discovery Dispute

On September 23, 2015, Plaintiff served Schaumbond and USTI with virtually identical first sets of requests for production of documents (“RPD”). (Hejmadi Dec., Exs. B-C.) RPD No. 8 asked Schaumbond and USTI to produce documents relating to any financial accounts or instruments held in their names, the names of any affiliate, or for their benefit, including account ledgers, cancelled checks, and bank statements. (Ibid.) RPD No. 46 asked Schaumbond and USTI to produce documents relating to any federal, state, or local tax returns filed by them. (Ibid.)

Schaumbond and USTI served Plaintiff with their responses to the RPD on November 4, 2015. In response to RPD No. 8, Schaumbond and USTI asserted numerous objections. (Hejmadi Dec., Exs. D-E.) They also stated that “[s]ubject to the entry of a Protective Order to protect privacy rights,” they would produce all responsive documents in their possession, custody or control. (Ibid.) In response to RPD No. 46, Schaumbond and USTI asserted numerous objections and stated that after conducting a diligent search, they could not comply with the request because responsive documents were not in their possession, custody, or control. (Ibid.)

Thereafter, on November 11, 2015, Defendants’ counsel sent Plaintiff an email regarding “USTI’s responses to [the RPD] that reference the entry of a Protective Order.” (Hejmadi Dec., Ex. F.) Defendants’ counsel stated that USTI was not trying to avoid production of private financial information and it was only requesting that “a protective order be agreed to between the parties and entered by the court ….” (Ibid.) He further stated that if Plaintiff was agreeable to a stipulated protective order, USTI was “willing to [produce] the private/confidential documents immediately and before the court enters the protective order with the understanding that they will be marked confidential and treated according to the stipulated protective order.” (Ibid.) Subsequently, the parties entered into a stipulated protective order. (See Isbell Dec., ¶ 6; see also Hejmadi Dec., ¶ 6, Ex. G.) Plaintiff contends that even though the parties executed the stipulated protective order, Schaumbond, USTI, and Zheng have only “produced some tax returns and bank statements.” (Reply, p. 2.)

Consequently, Plaintiff filed the instant motion to compel compliance.

B. Meet and Confer, Separate Statement, and Timeliness of the Motion

Defendants assert that the Court should summarily deny the motion because Plaintiff failed to adequately meet and confer, file a separate statement, and bring the motion within 45 days after service of the responses to the RPD.
Defendants’ arguments are not well taken. First, Code of Civil Procedure section 2031.320 does not require a party to engage in meet and confer efforts prior to bringing a motion to compel compliance. (Code Civ. Proc., § 2031.320.) Second, a separate statement is not required for a motion to compel compliance. (See Cal. Rules of Court, rule 3.1345 [setting forth the types of motions for which a separate statement is required].) Third, there is no time limit on a motion to compel compliance. (Standon Co., Inc. v. Super. Ct. (“Standon”) (1990) 225 Cal.App.3d 898, 903.)

C. Legal Standard

Code of Civil Procedure section 2031.320 provides that if a party responding to a demand for inspection, copying, testing, or sampling fails to permit the inspection, copying, testing, or sampling in accordance with that party’s statement of compliance, the demanding party may move for an order compelling compliance with the discovery response. (Code Civ. Proc., § 2031.320, subd. (a).) All that has to be shown is that the responding party failed to comply with an agreement to produce. (Code Civ. Proc., § 2031.320, subd. (a); Standon, supra, 225 Cal.App.3d at p. 903.)

D. Merits of the Motion

Plaintiff moves for an order compelling Schaumbond, USTI, and Zheng to comply with “the Discovery Agreement they entered into with Plaintiff on November 11, 2015, which Defendants’ Counsel confirmed in his email of the same date stating that ‘if you are agreeable to a stipulated protective order, we are willing to producing the private/confidential documents immediately and before the court enters the protective order ….’” (Reply, p. 2; see Ntc., Mtn., p. 2.)

Plaintiff’s motion fails for several reasons. As an initial matter, a motion to compel compliance pursuant to Code of Civil Procedure section 2031.320 can be used to compel compliance with a statement of compliance set forth in a discovery response. (Code Civ. Proc., § 2031.320, subd. (a).) The Code of Civil Procedure does not contemplate that such a motion may be brought to enforce unverified promises made by counsel during meet and confer. Since Plaintiff is attempting to compel compliance with statements made by Defendants’ counsel in his email of November 11, 2015, the motion is not authorized under Code of Civil Procedure section 2031.320.

Next, even if Plaintiff had moved to compel compliance with statements of compliance set forth in discovery responses, he fails to meet his burden to show that Schaumbond, USTI, or Zheng failed to comply with an agreement to produce documents. First, Plaintiff does not refer to any discovery responses by Zheng, let alone any statements of compliance made by Zheng. The only discovery responses referenced by Plaintiff in his motion are Schaumbond and USTI’s responses to RPD Nos. 8 and 46. Since Plaintiff does not cite to any of Zheng’s discovery responses, he fails to demonstrate that Zheng gave a statement of compliance in response to a discovery request and failed to produce documents in accordance with that response.

Second, Schaumbond and USTI did not provide a statement of compliance in response to RPD No. 46. Instead, Schaumbond and USTI stated that they could not comply with the request because responsive documents were not in their possession, custody, or control. (Hejmadi Dec., Exs. D-E.) Since Schaumbond and USTI did not agree to produce any documents in response to RPD No. 46, the motion to compel compliance with that request is not well-taken.

Third, even though Schaumbond and USTI agreed in their responses to RPD No. 8 to produce all responsive documents in their possession, custody or control “[s]ubject to the entry of a Protective Order,” Plaintiff fails to demonstrate that Schaumbond and/or USTI failed to produce documents in accordance with those responses. (Hejmadi Dec., Exs. D-E.) Rather, Plaintiff merely asserts in a conclusory manner that Schaumbond and USTI “have failed to produce all the tax returns and bank statements requested.” (Reply, p. 2.) Plaintiff does not identify any specific tax returns or bank statements that he believes are missing from Schaumbond and USTI’s production or explain to the Court why he believes certain documents in Schaumbond and USTI’s possession, custody or control have not been produced. Notably, Defendants’ counsel declares that “[a]fter conducting a thorough and diligent search, [he] produced all documents [he] could locate that were in the possession, custody or control of Defendants and the Certified Public Accountant, Joany Yuin of Protax and Accounting, Corp.” (Isbell Dec., ¶ 6.) Based on the evidence presented, the Court cannot determine that Schaumbond and USTI failed to produce documents in accordance with their responses to RPD No. 8.

For these reasons, Plaintiff’s motion to compel compliance is DENIED.

E. Requests for Monetary Sanctions

Plaintiff’s request for an award of monetary sanctions against Defendants and their counsel in the amount of $4,022.50 is DENIED because Plaintiff was not successful on his motion. (See Code Civ. Proc., § 2031.320, subd. (b) [“the court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel compliance with a demand, 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”].)

Defendants’ request for an award of monetary sanctions against Plaintiff in the amount of $2,800 pursuant to Code of Civil Procedure sections 2023.020 and 2033.290 is DENIED. Although Code of Civil Procedure section 2023.020 authorizes an award of sanctions against a party or attorney for failure to satisfy a meet and confer obligation, as articulated above, Plaintiff did not have any such obligation in this matter. Next, Code of Civil Procedure section 2033.290 only authorizes an award of monetary sanctions in connection with a motion to compel further responses to requests for admission and the instant motion is one to compel compliance.