SUMMIT BRIDGE NATIONAL IVESTMENTS IV VS GENTLECARE TRANSPORT

Tentative Rulings

Case Number: EC065055    Hearing Date: May 21, 2021    Dept: E

MOTION TO COMPEL FURTHER RESPONSES

TO REQUEST FOR PRODUCTION OF

DOCUMENTS, SET ONE

Case:            Summit Bridge Natl. Investments v. Gentlecare Transport, et al. (EC065055)  

TENTATIVE RULING:

Cross-complainant Meguerditch Panossian’s Motion to Compel Further Responses to Requests for Production, Set One from Cross-Defendant Artine Safarian is GRANTED IN PART.

I. GENERAL OBJECTIONS

With respect to the General Objections, “[I]f a timely motion to compel has been filed, the burden is on responding party to justify any objection.” (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255, citing Coy v. Superior Court (1962) 58 Cal.2d 210, 220-21.) Cross-defendant Artine Safarian does not attempt to justify general objections. (Opp. at 6:7-8 [“Safarian does not object to serving amended responses removing reference to general objections, if that resolves the issue”].) Accordingly, Safarian is ordered to withdraw the general objections in further responses.

II. REQUEST NOS. 1, 2, 7, 14, AND 15 (Corporate and Financial Records)

With respect to Request Nos. 1, 2, 7, 14, and 15, the Court finds that Safarian’s objections are without merit. Unlike for interrogatories, there is no statute that prohibits document requests from being compound. (See CCP § 2030.060.) Further, Safarian does not state any authority for the proposition that cross-complainant Meguerditch Panossian is required to seek documents directly from GentleCare Transport, Inc. (“GentleCare”) or Medcoast Ambulance (“Medcoast”).

Safarian’s objection based on burden is without merit because she does not provide any evidence of the level of work that would be required to comply with the requests. (See West Pico Furniture Co. of Los Angeles v. Superior Court (1961) 56 Cal.2d 407, 417 [“The objection based upon burden must be sustained by evidence showing the quantum of work required, while to support an objection of oppression there must be some showing either of an intent to create an unreasonable burden or that the ultimate effect of the burden is incommensurate with the result sought”].) Safarian only asserts in unverified argument that the requests encompass “potentially hundreds of thousands of pages, paper and electronic.” (Opp. at 6:25-7:2.) “An attorney's argument in pleadings is not evidence.” (Hebberd-Kulow Enterprises, Inc. v. Kelomar, Inc. (2013) 218 Cal.App.4th 272, 283.)

Safarian’s objection based on financial privacy is outweighed by Panossian’s need for the discovery. Corporations only have a limited right to privacy.” (SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 755.) Here, the requested documents pertain to Panossian’s allegation that Safarian used GentleCare’s funds for illegitimate, non-business purposes. (Cross-Compl. ¶¶ 59(a), (c).) Panossian also alleges that Safarian and cross-defendant Robert Douglas Spiro, Jr. induced him into transferring his shares to them by misrepresenting that the irreparable financial condition of GentleCare required the selling of the company (Cross-Compl. ¶ 44) and Spiro would be liable for the loans provided by Summit Bridge’s predecessor (Cross-Compl. ¶ 19). Based on these allegations, any right to privacy that GentleCare or Medcoast have is overcome by Panossian’s allegation that GentleCare’s financial condition prior to Panossian’s transfer of his shares did not necessitate the selling of the company and that Safarian and Spiro converted/wrongfully disposed of GentleCare funds, in which Panossian has an interest, for non-business purposes.

Panossian has standing because he is not suing to recover on behalf of the corporation but for his own loss as a former shareholder of GentleCare who Safarian purportedly fraudulently induced to transfer his shares. “‘[A] direct action [is one] filed by the shareholder individually (or on behalf of a class of shareholders to which he or she belongs) for injury to his or her interest as a shareholder.” (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 650, quoting Friedman, Cal. Practice Guide: Corporations (The Rutter Group 2005) ¶ 6:598, p. 6–127, emphasis in original.) Accordingly, Panossian was not required to initiate a derivative action on behalf of any corporation.

Safarian also contends that documents about Medcoast are irrelevant due to bankruptcy. In the order addressing Panossian’s claim, the Bankruptcy Court stated: “While this Order precludes the Claimant from making a claim against the Debtor, it is entered without prejudice to the ability of Panossian to file a proof of interest, if and when the Court sets a bar date for the filing of such documents.” (Spiro Decl. ¶ 15 & Ex. J attached to Motion to Quash Subpoena filed on April 12, 2021.) Accordingly, the issue of whether Medcoast can be held liable for Panossian’s claims have not been finally resolved.

For the foregoing reasons, the motion is GRANTED as to Request Nos. 1, 2, 7, 14, and 15.

III. REQUEST NOS. 3 AND 6 (Agreements Re: Sale of GentleCare Transport)

With respect to Request Nos. 3 and 6, Safarian does not attempt to justify her objections. Accordingly, the motion is GRANTED as to Request Nos. 3 and 6. To the extent that Panossian maintains that documents other than those already produced exist, Safarian’s response complies with CCP § 2031.220 because she states in a verified response that she produced all responsive documents of which she is aware. The veracity of the discovery response can be addressed in further discovery and/or at trial. Accordingly, Safarian is only ordered to serve further responses without objections. No further production of documents is required.

IV. REQUEST NOS. 4 AND 5 (Safarian’s Communications with Avakian or Panossian)

As phrased, Request Nos. 4 and 5 are overbroad because they are not limited by subject. While Panossian maintains that he has “no interest in communications which are not reasonably related to the claims in this Action” (Reply at 8:4-5), the requests are not limited to the claims in this action as phrased. Panossian offers no modification to the requests. The Court is under no obligation to redraft the interrogatories. (Deaile v. General Telephone Co. of California (1974) 40 Cal.App.3d 841, 851.)

The motion is DENIED as to Request Nos. 4 and 5.

V. REQUEST NOS. 8-10 AND 12 (Communications with Bank Employees)

With respect to Request Nos. 8-10 and 12, the objection regarding financial privacy is unavailing for the reasons stated above. The objections regarding overbreadth and burden are without merit because the requests are limited to Safarian’s communications with bank representatives. Accordingly, the requests are narrowly tailored to the allegations concerning loans to the corporate cross-defendants.

The motion as to Request Nos. 8-10 and 12 is GRANTED. Safarian is ordered to withdraw her objections in further responses.

VI. REQUEST NO. 11  (Communications with Spiro)

Safarian maintains that any documents generated after Panossian’s transfer of shares in March 2015 are irrelevant. However, the request is appropriately limited to the subject of “the sale of the business of GentleCare Transport or the sale of shares from Meguerditch Panossian.” Even if the communications occurred after the execution of the Stock Transfer Agreement, they are still relevant to Panossian’s claims and are therefore discoverable.

The motion as to Request No. 11 is GRANTED. To the extent that Safarian maintains that certain responsive documents are privileged under a joint defense agreement with co-defendant Spiro, Safarian may serve a privilege log, pursuant to CCP § 2031.240(c)(1). (See

OXY Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 890 [joint defense agreement may product documents containing “information shared in confidence by a client with his or her attorney, a legal opinion formed and advice given by the lawyer in the course of the attorney-client relationship, or a writing reflecting an attorney's impressions, conclusions, or theories”].) However, communications between Safarian and Spiro where no attorney-client or work product privilege applies are discoverable. (OXY Resources, 115 Cal.App.4^th at 893.)

VII. REQUEST NO. 13 (Communications with Employees)

Safarian maintains that this request implicates the right to privacy of perhaps over one hundred employees. However, as phrased, Panossian seeks communications, such as emails, in the scope of employment. The right to privacy does not prevent discovery of employees’ emails.

(TBG Ins. Services Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 452 [“[T]he use of computers in the employment context carries with it social norms that effectively diminish the employee's reasonable expectation of privacy with regard to his use of his employer's computers”].)

However, the request is overbroad because it is not limited by subject matter. (See Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 221 [“Courts must insist discovery devices be used as tools to facilitate litigation rather than as weapons to wage litigation. These tools should be well calibrated; the lancet is to be preferred over the sledge hammer”].) As phrased, the request seeks emails that pertain not only to the financial condition and ownership status of the corporate cross-defendants, but also to the operation of the businesses.

The motion as to Request No. 13 is DENIED.

VIII. REQUEST NOS. 16-21 (Documents Re: Affirmative Defenses)

Safarian contends that the word “support” is vague. This assertion is without merit. “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.) “Discovery necessarily serves the function of ‘testing the pleadings,’ i.e., enabling a party to determine what his opponent's contentions are and what facts he relies upon to support his contentions.” (Burke v. Sup. Ct. (1969) 71 Cal.2d 276, 281, citing Singer v. Sup. Ct. (1960) 54 Cal.2d 318, 323-25.)

Accordingly, the motion as Request Nos. 16-21 is GRANTED. Safarian is ordered to withdraw her objections in further responses.

IX. CONCLUSION AND MONETARY SANCTIONS

The motion is GRANTED IN PART. No later than fifteen (15) days hereof, cross-defendant Artine Safarian shall serve further verified responses, without objection, to Request for Production, Set One, Nos. 1-3, 6-10, 12, and 14-21. With respect to Request for Production, Set One, No. 11, Safarian may serve a privilege log for responsive documents. For Request for Production, Set One, Nos. 3, 6-10, 12, and 16-21, no further document production is required.

With respect to Panossian’s request for sanctions, although the motion is granted in part, on balance, Safarian did not oppose this motion with substantial justification. Of note, Safarian’s objections based on financial privacy were without merit. Further, even though certain of Panossian’s requests were overbroad, Safarian did not attempt to justify her other objections.

Safarian maintains that Panossian did not sufficiently meet and confer before filing this motion. However, on March 19, 2021, Panossian served what essentially amounts to a separate statement giving his reasons for requesting further responses. (Jamison Decl. ¶ 6 & Ex. C.) On March 22, 2021, Safarian dismissed Panossian’s detailed arguments in sweeping fashion by stating that she would not dismiss her objections. (Jamison Decl. ¶¶ 7-8 & Ex. D.) Even though Safarian stated that she was willing to discuss the issue further, Panossian had already presented his arguments as reasonably necessary in his March 19, 2021 letter. While Safarian states that she intended to generate a letter to address the issues (Aljian Decl. ¶ 5), given her general rejection of Panossian’s arguments in her March 22, 2021 email, Panossian was not obligated to wait before filing this motion.

Because Safarian did not oppose this motion with substantial justification, the Court imposes monetary sanctions on cross-defendant Artine Safarian based on 5 hours of work (instead of the 9.5 hours claimed) at an hourly rate of $375, plus $60 in filing fees, for a total of $1,935. Such sanctions are ordered to be paid to cross-complainant Meguerditch Panossian’s counsel of record within thirty (30) days hereof.

MOTION FOR LEAVE TO FILE

SECOND AMENDED CROSS-COMPLAINT

Case: Summit Bridge Natl. Investments v. Gentlecare Transport, et al. (EC065055)

TENTATIVE RULING:

Cross-Complainant Meguerditch Panossian’s Motion for Leave to File Second Amended Cross-Complaint is DENIED.

Cross-Complainant Meguerditch Panossian seeks leave to file a Second Amended Cross-Complaint to add a cause of action for Equitable Indemnity. As a preliminary matter, the Court notes that the first and only cross-complaint filed by Panossian is the one filed on August 3, 2016. No First Amended Cross-Complaint appears in the court file. Accordingly, the Court treats this motion as a Motion for Leave to File First Amended Cross-Complaint.

Requests for leave to amend will normally be granted unless (a) the party seeking to amend has been dilatory in bringing the proposed amendment; and (b) the delay in seeking leave to amend will cause prejudice to an opposing party. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490.)

Panossian initially filed his Cross-Complaint on August 3, 2016. Based on the five-year rule under CCP § 583.310, plus the additional six months under Emergency Rule of Court 10, the deadline for Panossian to bring his cross-claims to trial is February 3, 2022. (Bright v. American Termite Control Co. (1990) 220 Cal.App.3d 1464, 1468.) Mindful of such deadline, at the January 20, 2021 trial setting conference, the court set the matter for trial on August 2, 2021, which the Court subsequently continued at the request of the parties to October 18, 2021 in order to accommodate their outstanding requests for and disputes concerning discovery.

Even assuming (for purposes of this motion only) that Panossian’s proposed cause of action for Equitable Indemnity did not accrue until December 16, 2020 when judgment was entered against Panossian, the Court finds Panossian did not exercise reasonable diligence in seeking leave to amend under the circumstances. Notably, Panossian made no mention of any contemplated additional cause of action in his January 15, 2021 Trial Setting Conference Statement. Nor did Panossian make any such mention at the January 20, 2021 trial setting conference itself. Instead, Panossian waited until March 23, 2021 to file the instant motion seeking leave to amend – over three months after Panossian contends the cause of action accrued and two months after trial had been set based on Panossian’s representations about that trial would entail. Further, using the Court’s reservation system for motions, Panossian scheduled the hearing on such motion for May 14, 2021 and made no effort to advance the hearing. Under the circumstances, in this aging case with the five-year deadline approaching, the Court finds Pannossian was dilatory in seeking leave to amend his cross complaint.

Further, adding the new cause of action for Equitable Indemnity, wherein Panossian seeks to recover fees that he incurred in defending against the claims of Summit Bridge (Proposed Second Am. Cross-Complaint ¶ 79; Prayer for Relief ¶ 8), would prejudice cross-defendants at this stage of the proceedings. Cross-defendants would have to conduct discovery concerning the basis for and amount of years of fees and costs for which Panossian claims they should be found liable.

Given the imminent arrival of the five-year date to commence trial, the merit of Panossian’s claims of fraudulent inducement and conversion against cross-defendants can be tried on the current trial date of October 18, 2021. If Panossian wishes to proceed with a claim for equitable indemnity against these cross-defendants, he will have to do so by way of a separately filed action. The motion is DENIED.

Finally, the Court finds that Panossian’s operative Cross-Complaint is the one filed on August 3, 2016. The Court notes that, according to the Request for Dismissal filed as to JPMorgan Chase Bank NA on November 30, 2017, Panossian purportedly filed an Amended Cross-Complaint on February 23, 2017. The Court’s docket does not reflect that Panossian filed an Amended Cross-Complaint on February 23, 2017, or at any other time subsequent to filing his initial Cross-Complaint on August 3, 2016. Cross-Defendnat Safarian, however, appears to believe there may have been such an Amended Cross Complaint. (Safarian Opp. at 3 [“On or about February 23, 2017, Panossian filed the FACC . . .”].) Accordingly, the parties may stipulate to the filing of the First Amended Cross-Complaint purportedly filed on February 23, 2017, designate which previously filed answers are deemed responsive to the First Amended Cross-Complaint, and submit a proposed order for the Court’s signature. In the absence of any such stipulation or other finding by the Court upon properly made request by a party to this action, the operative Cross-Complaint shall be the one filed by Panossian on August 3, 2016.

Case Number: EC065055    Hearing Date: September 04, 2020    Dept: E

MOTION TO ENFORCE SETTLEMENT

REQUEST TO ENTER STIPULATED JUDGMENT

[CCP §664.6]

Date: 9/4/20 (2:00 PM)

Case: Summit Bridge Nat’l Investments v. Gentlecare Transport (EC065055)

TENTATIVE RULING:

The hearing on (1) plaintiff Summit Bridge National Investments IV, LLC’s request for entry of stipulated judgment as to defendant Meguerditch Panossian and (2) defendant Panossian’s Motion to Enforce Settlement is CONTINUED to November 6, 2020, at 2:00 PM, in Department E.

Defendant’s motion seeks to enforce the Settlement Agreement between him and plaintiff Summit Bridge, which was entered into by these parties on October 24, 2018. Specifically, Panossian seeks a determination that his payment of $123,000 to plaintiff satisfied his obligations under the Settlement Agreement, thereby entitling him to dismissal of Summit Bridge’s action against him with prejudice. (See Shuck Decl. ¶ 7 & Ex. 3 [“Settlement Agreement”] at ¶ 9 [“Within ten (10) business days of Lender's acknowledgement of the satisfaction of all of the conditions set forth in this Agreement Lender shall dismiss the Litigation, with prejudice . . . “].)

Paragraph 2.1(b) of the Settlement Agreement provides that, within 18 months from the effective date of the settlement agreement, namely, by April 24, 2020, Panossian must pay to Summit Bridge $123,000, plus 50% of the net proceeds, if any, Panossian recovers from his cross-complaint in this action. Such combined payment obligation of $123,000 plus 50% of the net proceeds is capped at $448,000. It is undisputed Panossian has generated no proceeds from his cross-complaint. It is also undisputed that Panossian timely paid $123,000 on April 15, 2020. (Shuck Decl. ¶ 9 [confirming timely payment to plaintiff].) Panossian thus contends he has paid in accordance with paragraph 2.1(b), satisfied all his obligations under the Settlement Agreement, and is therefore entitled to dismissal of Summit Bridge’s complaint against him.

While acknowledging Panossian timely paid $123,000 in accordance with paragraph 2.1(b), Summit Bridge contends Panossian failed to meet all his obligations under the Settlement Agreement and relatedly seeks entry of a Stipulated Judgment against Panossian in the amount of $1,814,344.67, plus interests and attorney’s fees, pursuant to the Settlement Agreement’s default provision. (See Shuck Decl. Ex. 3 at ¶ 5 [providing for immediate entry of stipulated judgment “should [Panossian] default under the terms of this Agreement”; see also Shuck Decl. Ex. 3 at ¶ 3 [releasing Summit Bridge from agreement to accept an amount less than full payment of total indebtedness of $1,814,344.67 if Panossian “fail[s] to timely perform each and every condition, covenant and obligation set forth in this Agreement”].) The Settlement Agreement defines a default under the agreement as “[f]ailure to perform any covenant, condition or obligation (including, but not limited to, payment obligations) set forth in this Agreement.” (Shuck Decl. Ex. 3 at ¶ 7a.)

The outcome of the parties’ respective claims for relief turns on whether Panossian met his obligations with respect to litigating his cross-complaint for recovery in this action. Specifically, referring to Panossian as “Guarantor,” paragraph 2.1(b) of the Settlement Agreement provides: “Guarantor shall continue to prosecute Guarantor’s Cross-Complaint with due diligence and with dispatch . . . .” (Shuck Decl. Ex. 3 at ¶ 2.1(b).) Summit Bridge takes the position that it is the sole arbiter of whether Panossian has acted with due diligence and dispatch. Characterizing this perceived authority as its “mandatory concurrence” as to Panossian’s diligence (see Opp. at 3, 5), Summit Bridge misreads two provisions of paragraph 2.1(b) as conferring such.

First, immediately after the language requiring Panossian to act “with due diligence and with dispatch” is the caveat “unless and until Guarantor determines by an objective good faith standard, and with Lender’s concurrence, that continued prosecution of Guarantor’s Cross-Complaint would generate no more than a de minimus [sic] financial realization.” (Shuck Decl. Ex. 3 at ¶ 2.1(b).) That language merely provides that, if Panossian had wished to be relieved of his obligation to diligently pursue the cross-complaint, he needed Summit Bridge’s agreement that such prosecution would generate minimal financial gain at best. It says nothing about whether Summit Bridge’s concurrence is required for a determination of whether Panossian actually pursued his cross claims with diligence and dispatch. Second, paragraph 2.1(b) provides that Summit Bridge, in its “sole and absolute discretion,” may give Panossian an extension past March 1, 2020, to continue prosecuting the cross-complaint. (Shuck Decl. Ex. 3 at ¶ 2.1(b).) That provision, however, cannot reasonably be read as giving Summit Bridge the discretion (sole, absolute, or otherwise) to make the determination of whether Panossian has satisfied his obligation to pursue the cross-complaint with diligence and dispatch.

Thus, in addressing the parties’ competing claims for relief, the Court must ultimately determine whether Panossian acted “with due diligence and dispatch” in prosecuting his cross-complaint between October 24, 2018 (the effective date of the Settlement Agreement) and March 1, 2020 (the deadline for attempted recovery set forth in ¶ 2.1(b)). On this record, the Court cannot do so. Merely citing a list of occurrences and the fact that one of the cross-defendants (MedCoast Med Services Inc.) is in bankruptcy, Panossian makes the conclusory assertion that he “diligently prosecuted [his] Cross-Compliant from October 2018 through April 2020. (Reply at 8 [citing Acevedo Decl. ¶¶ 18-50].) Having staked out the position that it alone could decide the issue, Summit Bridge has submitted no evidence whatsoever concerning Panossian’s diligence or lack thereof.

Accordingly, the Court will hold an evidentiary hearing into whether Panossian prosecuted his cross-complaint with due diligence as required. Panossian and Summit Bridge may each simultaneously file and serve supplemental briefs not to exceed 10 pages, plus supporting declarations and evidence, by October 9, 2020. Any responses thereto (limited to 10 pages) shall be filed and served by no later than October 23, 2020. If the Court finds Panossian diligently prosecuted his Cross-Complaint, then Panossian is entitled to dismissal under paragraph 9 of the Settlement Agreement. If the Court finds that he did not, then Summit Bridge is entitled to entry of the stipulated judgment pursuant to paragraph 5 of the Settlement Agreement.