Case Number: BC626783 Hearing Date: March 19, 2018 Dept: 47

Sarkis Serge Maronian v. Piggy Properties LLC, et al.

MOTION TO COMPEL PRODUCTION OF IMPROPERLY WITHHELD DOCUMENTS

MOVING PARTY: Defendants Piggy Properties, LLC and Lorraine E. Maronian

RESPONDING PARTY(S): Plaintiff Sarkis Serge Maronian

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff alleges that Defendants hold title to real property in trust for Plaintiff pursuant to an agreement between the parties in that the property was purchased with Plaintiff’s money. Defendants allegedly repudiated the agreement and purport to own the properties, and its income and profits.

Defendants Piggy Properties, LLC and Lorraine E. Maronian move to compel third-party witness Sanford I. Millar Esq. to produce a revised privilege log and any documents that he has improperly withheld from production in connection with a deposition subpoena of business records previously issued to him on October 4, 2017.

TENTATIVE RULING:

Defendants Piggy Properties, LLC and Lorraine E. Maronian’s motion to compel a more detailed privilege log is GRANTED. The motion to compel production of documents at this time is DENIED without prejudice.

The supplemental privilege log, prepared in accordance with the Court’s instructions, and any documents which attorney Millar chooses to produce, are due within 45 days of this order.

Motion To Compel

Defendants Piggy Properties, LLC and Lorraine E. Maronian move to compel third-party witness Sanford I. Millar Esq. to produce a revised privilege log and any documents that he has improperly withheld from production in connection with a deposition subpoena of business records previously issued to him on October 4, 2017.

“‘The purpose of a “privilege log” is to provide a specific factual description of documents in aid of substantiating a claim of privilege in connection with a request for document production. [Citation.] The purpose of providing a specific factual description of documents is to permit a judicial evaluation of the claim of privilege.’” (Best Products, at pp. 1188–1189.)

In 2012, the Legislature amended section 2031.240 “to codify the concept of a privilege log as that term is used in California case law.” (§ 2031.240, subd. (c)(2).) The new section 2031.240, subdivision (c)(1), provides, “If an objection is based on a claim of privilege or a claim that the information sought is protected work product, the response shall provide sufficient factual information for other parties to evaluate the merits of that claim, including, if necessary, a privilege log.” In adding this subdivision, the Legislature declared, “Nothing in this subdivision shall be construed to constitute a substantive change in case law.” (§ 2031.240, subd. (c)(2).)

. . .

If the response and any privilege log fail to provide sufficient information to allow the trial court to rule on the merits, the court may order the responding party to provide a further response by serving a privilege log or, if one already has been served, a supplemental privilege log that adequately identifies each document the responding party claims is privileged and the factual basis for the privilege claim. (Lockyer, supra, 122 Cal.App.4th at p. 1075; Kaiser Foundation, supra, 66 Cal.App.4th at pp. 1228–1229.) In ordering a further response, the court also may impose monetary sanctions on the responding party if that party lacked substantial justification for providing its deficient response or privilege log. (§ 2031.310, subd. (h).)

If the responding party thereafter fails to adequately comply with the court’s order and provide the information necessary for the court to rule on the privilege objections, the propounding party may bring another motion seeking a further response or a motion for sanctions. At that stage, the sanctions available include evidence, issue, and even terminating sanctions, in addition to further monetary sanctions. (§ 2031.310, subd. (i).) But the court may not impose a waiver of the attorney-client privilege or work product doctrine as a sanction for failing to provide an adequate response to an inspection demand or an adequate privilege log. (Lockyer, supra, 122 Cal.App.4th at p. 1075; Best Products, supra, 119 Cal.App.4th at p. 1189 [“the statute does not include as an authorized sanction a judicial order that a [*1128] privilege has been waived”]; Hernandez, supra, 112 Cal.App.4th at p. 294; Korea Data, supra, 51 Cal.App.4th at p. 1517; Blue Ridge, supra, 202 Cal.App.3d at p. 347.)

In Lockyer, for example, the responding party’s response to an inspection demand timely asserted objections based on the attorney-client privilege and work product doctrine, but did not serve a privilege log or otherwise identify the purportedly privileged documents or the factual basis for the privilege claims. The responding party later served a privilege log that identified categories of documents that were allegedly privileged, but did not identify specific documents. (Lockyer, supra, 122 Cal.App.4th at p. 1066.) The propounding party then moved to compel production of the documents that had not been identified on the privilege log with particularity. The trial court overruled the privilege claims and ordered the responding party to produce the documents that were not specifically identified on the log. (Id. at pp. 1068–1070.)

The Court of Appeal granted the responding party’s petition for a writ of mandate compelling the trial court to vacate its order overruling the objections. (Lockyer, supra, 122 Cal.App.4th at p. 1081.) The Lockyer court explained that the responding party had preserved its objections based on the attorney-client privilege and work product doctrine by timely asserting them in the original response to the inspection demand, and therefore the trial court lacked authority “as a matter of law” to overrule the objections based on any deficiencies in the responding party’s initial response or privilege log. (Id. at pp. 1074–1075.) Instead, the propounding party’s remedy was to compel the responding party to provide a more detailed privilege log that identified each document with particularity and to present sufficient factual information to allow the propounding party and the court to evaluate each privilege claim. Even if the responding party failed to adequately comply with an order to provide a more detailed privilege log, the Lockyer court emphasized the trial court lacked authority to disregard the privilege objections or find a waiver based on deficiencies in the privilege log. (Id. at p. 1075.)

. . .

Instead of ordering Petitioners to produce the e-mails, the trial court should have ordered Petitioners to provide a supplemental privilege log. (Lockyer, supra, 122 Cal.App.4th at p. 1075; Kaiser Foundation, supra, 66 Cal.App.4th at pp. 1228–1229.) A privilege log must identify with particularity each document the responding party claims is protected from disclosure by a privilege and provide sufficient factual information for the propounding party and court to evaluate whether the claim has merit. (§ 2031.240, subds. (b) & (c); Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, 130 [68 Cal. Rptr. 2d 844].) The precise information required for an adequate privilege log will vary from case to case based on the privileges asserted and the underlying circumstances. In general, however, a privilege log typically should provide the identity and capacity of all individuals who authored, sent, or received each allegedly privileged document, the document’s date, a brief description of the document and its contents or subject matter sufficient to determine whether the privilege applies, and the precise privilege or protection asserted. (See Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2015) ¶ 8:1474.5, p. 8H-27; Bank of America, supra, 212 Cal.App.4th at p. 1100; Friends of Hope Valley v. Frederick Co. (E.D.Cal. 2010) 268 F.R.D. 643, 650–651.)

Beatty contends the trial court did not rely on a waiver of the attorney-client privilege or work product doctrine in granting his motion. Rather, he argues the court ordered the e-mails produced because Petitioners failed to meet their burden to show the e-mails were privileged. According to Beatty, Petitioners’ waiver argument assumes the e-mails are privileged without showing they are. To support this contention, Beatty cites cases stating the general proposition that “[t]he party claiming the privilege has the burden of establishing the preliminary facts necessary to support its exercise.” (Costco, supra, 47 Cal.4th at p. 733; see D. I. Chadbourne, Inc. v. Superior Court (1964) 60 Cal.2d 723, 729 [36 Cal. Rptr. 468, 388 P.2d 700]; Citizens for Ceres v. Superior Court (2013) 217 Cal.App.4th 889, 911 [159 Cal. Rptr. 3d 789].) We do not find the contention persuasive.

Beatty’s argument and the cases he cites in support fail to address the issue we confront: whether a trial court may order a party to disclose potentially privileged information because the party’s privilege log did not provide sufficient information for the court to evaluate whether the privilege [*1131] applies. As explained above, the statutory scheme governing inspection demands and the case law applying it prohibit a trial court from ordering a timely invoked privilege objection waived or overruled based on deficiencies in a privilege log. In those circumstances, the remedies available to the court are limited to ordering a further response that provides sufficient information to allow the court to rule on the merits. The court also may impose sanctions, including evidence, issue, and terminating sanctions, if the responding party continues to provide insufficient information. It does not follow that the responding party’s failure to meet its burden permits the trial court to find a waiver.

Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1125-1131.

On December 12, 2017, in ruling upon Defendants’ motion to compel third-party Sanford I. Millar, Esq.’s compliance with deposition subpoena for production of business records, the Court ruled that, based on his deposition testimony, Plaintiff waived the taxpayer privilege only as to the following subjects: that his foreign/offshore bank accounts had the effect of tax evasion (see Maronian Depo., pages 52:1 – 53:25); that he was being criminally investigated for tax evasion by the government (see Maronian Depo., Page 79:16 – 80:25); voluntary disclosure to the government of foreign bank accounts (see Maronian Depo., Page 82:8 – 83:21); accusation by the Franchise Tax Board regarding a $200,00 check to the Bahamas (see Maronian Depo. at Page 83:22 – 84:9); and Penalty Computation resulting in Plaintiff’s payment of $2,000,000 total (see Maronian Depo. at Pages 95:23 – 97:19). Moreover, Plaintiff has waived any questions about money wired from his U.S. domestic accounts to purchase Flamingo, Beverly Glenn (see Maronian Decl., Page 121:5 – 123:2).

A copy of the privilege log produced by attorney Millar is attached as Exhibit E to the Declaration of Julian M. Feldbein-Vinderman as Exh. E. See Feldbein-Vinderman Decl. at ¶ 10. The privilege log states as follows:

The following described information is subject to the attorney-client privilege, including the work product doctrine and the Taxpayer Privilege and is not being produced.

Item # Description

(no items listed) 1. All correspondence to and from client involving or related to the client’s participation in the IRS Offshore Voluntary Disclosure Program and/or the California Voluntary Compliance Initiative (2) except as specifically identified in the Order of the Court dated December 22, 2017.

2. All notes of client communications, research memorandum, work papers whether prepared by this office [or] by accountants retained as consultants under U.S. v. Kovel, results of investigations into foreign bank accounts and foreign bank records, including analysis of files of the SFTA and foreign financial institutions.

3. Drafts of Reports of Foreign Financial Accounts (Form T.D. 90-22.1 also known as FBAR; draft penalty computations and income tax returns

4. Records of trust account receipts and disbursements

5. All other writings, notes, account records analysis and computations not covered above and not specifically required under the Ruling dated December 12, 2017.

The information provided in the privilege log is paltry, and impermissibly vague. Moving party Defendants are entitled to an order compelling a more detailed privilege log which “identifie[s] each document with particularity and . . . present[s] sufficient factual information to allow the propounding party and the court to evaluate [the merits of] each privilege claim.” Catalina Island Yacht Club, supra, 242 Cal.App.4th at 1128. The supplemental privilege log is to “provide the identity and capacity of all individuals who authored, sent, or received each allegedly privileged document, the document’s date, a brief description of the document and its contents or subject matter sufficient to determine whether the privilege applies, and the precise privilege or protection asserted.” Id. at 1130 (bold emphasis added).

Once the supplemental privilege log is produced, Defendants will have information to determine whether to challenge with withholding of a document on the ground of the attorney work product doctrine (and seek an in camera inspection) or whether a document being withheld comes within one of the categories as to which the Court found Plaintiff had waived the taxpayer privilege.

Accordingly, the motion to compel a more detailed privilege log is GRANTED. The motion to compel production of documents at this time is DENIED without prejudice.

The supplemental privilege log, prepared in accordance with the Court’s instructions, and any documents which attorney Millar chooses to produce, are due within 45 days of this order.

Defendants to give notice, unless waived.

IT IS SO ORDERED.

Dated: March 19, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court