BISNO DEVELOPMENT ENTERPRISE LLC VS VINEYARDS DEVELOPMENT IN

Tentative Rulings

Case Number: BC545320    Hearing Date: January 27, 2020    Dept: 32

BACKGROUND

Plaintiff Bisno Development Enterprise LLC (“BDE”) commenced this action against Defendants Vineyards Development, Inc. (“VDI”); Ryan Ogulnick (“Ogulnick”); VDB Santa Ana, LLC (“VDB”); and VDC at the Met, LLC (“VDC”) (collectively, “Defendants”) on May 9, 2014. The Complaint asserts causes of action for (1) breach of contract against VDI, VDB, and Ogulnick, (2) breach of contract against VDC, (3) intentional interference with contract against VDC, (4) negligent interference with prospective economic advantage against VDC, (5) services rendered against Defendants, (6) conversion against Defendants, and (7) constructive trust against Defendants.

On April 15, 2015, the Court granted Defendants’ motion for summary judgment and entered judgment in Defendants’ favor on May 14, 2015.

On November 9, 2015, the Court granted VDI’s, Ogulnick’s, and VDB’s motion for attorney fees in the total amount of $141,020.

On March 13, 2017, the Court of Appeal affirmed the grant of summary judgment as to VDI, Ogulnick, and VDB but reversed the grant as to VDC.

On April 26, 2017, the Court granted VDI’s, Ogulnick’s, and VDB’s motion for post-judgment attorney fees in the amount of $49,236.

On October 4, 2017, the Court sustained without leave to amend VDC’s demurrer and entered judgment in VDC’s favor. On February 20, 2019, the Court of Appeal affirmed the Court’s demurrer ruling.

LEGAL STANDARD

“A judgment creditor may conduct discovery directly against the judgment debtor by means of a judgment debtor examination ([CCP] § 708.110), written interrogatories (§ 708.020), and requests for production of documents (§ 708.030).” (Moorer v. Noble L.A. Events, Inc. (2019) 32 Cal.App.5th 736, 743.)

CCP section 708.020(a), concerning written interrogatories, states that “a judgment creditor may propound written interrogatories to the judgment debtor … requesting information to aid in enforcement of the money judgment.” CCP section 708.030(a), concerning inspection demands, states that “[t]he judgment creditor may demand that any judgment debtor produce and permit the party making the demand … to inspect and to copy a document that is in the possession, custody, or control of the party on whom the demand is made … if the demand requests information to aid in enforcement of the money judgment.”

Interrogatories served pursuant to CCP section 708.020 and requests for production of documents served pursuant to CCP section 708.030 “may be enforced, to the extent practicable, in the manner as [interrogatories and inspection demands] in a civil action.” (CCP §§ 708.020(c), 708.020(c).) This means that a judgment creditor may bring a motion to compel a further response if the judgment debtor’s response is unsatisfactory and request monetary sanctions against the losing party. (See CCP §§ 2030.300, 2031.310.)

DISCUSSION

Defendants VDI, Ogulnick, and VDB (hereinafter, “Defendants”) move to compel BDE to provide further responses to their Special Interrogatories (“SI”), Set One, and Requests for Production of Documents (“RPD”), Set One.

A. Motion to Compel Further re: SIs

1. SI Nos. 1-12, 14-18, 20-25

Except for SI Nos. 13 and 19, BDE interposed the same objection to each interrogatory in SI, Set One. BDE’s objection was that the interrogatories’ use of the terms “YOU” and “YOUR” rendered the interrogatories overbroad, ambiguous, and violative of the right to privacy. The interrogatories define “YOU” and “YOUR” as referring to “[BDE], its members, agents, employees, representatives, attorneys, and investigators, or anyone else who acted or is acting on YOUR behalf with respect to the subject matter of this action.”

In opposition to this motion, BDE maintains this objection. Specifically, while acknowledging that Defendants “are entitled to discover assets of [BDE],” BDE asserts that Defendants have failed to provide any justification for seeking personal information of BDE’s members, agents, employees, and the like. The Court agrees.

Absent from Defendants’ memorandum, separate statement, and meet-and-confer correspondence is an explanation as to why the financial assets of BDE’s agents and the like are relevant to aiding in the enforcement of a money judgment against BDE. Indeed, it is difficult to see how the financial condition of BDE’s attorneys or investigators could have any bearing on the enforcement of Defendants’ money judgment. Defendants appear to concede this point by noting in their moving papers that the SIs “seek information related to BDE’s assets, debts, financial interests, accountants, and individuals holding an ownership interest in BDE.” (Mot. at 3 (emphasis added).) If Defendants seek the financial information of BDE’s members, Defendants likely must amend the judgment to add those members as judgment debtors based on a theory of alter ego. (See Misik v. D’Arco (2011) 197 Cal.App.4th 1065, 1075 (noting that “[a]mendment of a judgment to add an alter ego is a proper procedure where it can be shown that the alter ego of the corporate entity had control of the litigation and was virtually represented in the lawsuit”).)

Still, concluding that BDE’s objection is valid does not relieve BDE of the duty to provide partial substantive responses. “A party may not deliberately misconstrue a question for the purpose of supplying an evasive answer. [Citation.] Indeed, where the question is somewhat ambiguous, but the nature of the information sought is apparent, the proper solution is to provide an appropriate response.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783; see also CCP § 2030.240 (“If only a party of an interrogatory is objectionable, the remainder of the interrogatory shall be answered.”).) These interrogatories are not entirely objectionable because, as BDE recognizes, Defendants “are entitled to discover the assets of” BDE. Hence, to the extent that the interrogatories concern BDE in its capacity as an LLC, BDE must provide substantive responses.

2. SI Nos. 13 and 19

SI No. 13 asks BDE to “[s]tate the address of any accountant YOU have used since 2015.” BDE served no response to SI No. 13. SI No. 19 asks BDE to “[i]dentify any familial relationship that exists between any of those PERSONS identified in Interrogatory No. 18.” SI No. 18 asks BDE to identify all persons who own stock in BDE. BDE responded to SI No. 19 with “[n]ot applicable.”

BDE’s non-response to SI No. 13 is improper, and BDE’s irrelevancy objection to SI No. 19 — “[n]ot applicable” — is without merit. BDE must provide further responses to SI Nos. 13 and 19.

B. Motion to Compel Further re: RPDs

1. RPD Nos. 1-12, 19-25

BDE’s responses to the RPDs are similar to its responses to the SIs. BDE objected to RPD Nos. 1-12 and 19-25 on the ground that the document requests’ use of the terms “YOU” and “YOUR” rendered the interrogatories overbroad, ambiguous, and violative of its right to privacy. The documents requests, like the special interrogatories, define “YOU” and “YOUR” as referring to “[BDE], its members, agents, employees, representatives, attorneys, and investigators, or anyone else who acted or is acting on YOUR behalf with respect to the subject matter of this action.”

The Court reaches the same conclusion with respect to these RPDs. “YOU” and “YOUR” is overbroad. These terms must be narrowly construed as referring exclusively to BDE. BDE must provide substantive responses to these RPDs based on this narrowed definition.

2. RPD Nos. 13-14

RPD Nos. 13 and 14 ask BDE to produce all federal (No. 13) and state (No. 14) tax returns filed by BDE in the last five years. BDE objected to these RPDs on the ground that this information is privileged. The Court agrees.

“California courts … have interpreted state taxation statutes as creating a statutory privilege against disclosing tax returns. [Citations.] The purpose of the privilege is to encourage voluntary filing of tax returns and truthful reporting of income, and thus to facilitate tax collection.” (Li v. Yan (2016) 247 Cal.App.4th 56, 66.) This privilege, however, is not absolute. (Id. at 67.) The privilege will not be upheld in three situations: when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. (Ibid.)

In Li, the Court of Appeal affirmed a trial court’s order requiring the judgment debtor to disclose his tax returns in a judgment debtor examination. In reaching this conclusion, the appellate court acknowledged that “[t]he fact that financial records are difficult to obtain or that a tax return would be helpful, enlightening or the most efficient way to establish financial worth is not enough.” (Li, supra, 247 Cal.App.4th at 67 (citing Weingarten v. Superior Court (2002) 102 Cal.App.4th 268, 276).) The appellate court found that exceptional circumstances warranted the tax returns’ disclosure because (1) the judgment debtor gave evasive answers at his examination, (2) there was evidence that the judgment debtor transferred assets with complicit family members, and (3) there is a strong public policy against defrauding creditors. (Id. at 67-70.) Defendants have not shown exceptional circumstances warranting that BDE produce its tax returns at this early juncture in the collection process.

3. RPD Nos. 15-18

RPD Nos. 15 and 16 ask BDE to produce “all documents that show money paid [to and from] [BDE] to any person or entity within the last five (5) years.” RPD Nos. 17 and 18 ask BDE to produce “all documents that show money lent [to and from] [BDE] from any person or entity win the last five (5) years.” Likely because these document requests do not use the term “YOU” or “YOUR,” BDE interposed general objections to these requests, characterizing them as “vague and ambiguous, overbroad and burdensome.” The Court finds these general objections without merit. These documents requests are reasonably specific and relevant to the issue of BDE’s financial condition.

CONCLUSION

Defendants’ motion to compel BDE’s further responses to SI, Set One, is GRANTED in full. Defendants’ motion to compel BDE’s further responses to RPD, Set One is GRANTED as to RPD Nos. 1-12, 15-25 and DENIED as to RPD Nos. 13-14. In both sets of discovery, the terms “YOU” and “YOUR” are to be construed as referring exclusively to BDE. BDE is to provide further responses to this written discovery within 30 days’ notice of this court order.

Defendants’ request for monetary sanctions is DENIED because Defendants were only partly successful in bringing this motion.