This case was last updated from Los Angeles County Superior Courts on 06/05/2019 at 08:51:23 (UTC).

EFD USA INC ET AL VS BAND PRO FILM AND DIGITAL INC ET AL

Case Summary

On 05/15/2017 EFD USA INC filed a Contract - Business lawsuit against BAND PRO FILM AND DIGITAL INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are HOWARD L. HALM, MICHAEL L. STERN, BARBARA A. MEIERS and DANIEL S. MURPHY. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****1332

  • Filing Date:

    05/15/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Business

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

HOWARD L. HALM

MICHAEL L. STERN

BARBARA A. MEIERS

DANIEL S. MURPHY

 

Party Details

Plaintiffs and Petitioners

TERAN GEORGINA

EFD USA INC

Defendants and Respondents

MAXPRO LEASING LLC

BAND PRO FILM AND DIGITAL INC

BROOKS BRANDON

TECHNIJIAN INC

DIRECT VIDEO WAREHOUSE INC

BISEL GREG

AKT ENTERPRISES LLC

DOES 1-10

BAND AMNON

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

GANS GARY E. ESQ.

ZWEIBACK CHARLES MICHAEL

Defendant and Respondent Attorneys

ALSTON & BIRD LLP

TREVOR R. LOO ESQ.

FUCHS & ASSOCIATES LAW OFFICES OF

FUCHS JOHN ROBERT

FISET RACHEL LORRAINE

ZWEIBACK MICHAEL

 

Court Documents

STIPULATION TO EXTEND TIME TO RESPOND TO PLAINTIFFS' COMPLAINT

1/3/2018: STIPULATION TO EXTEND TIME TO RESPOND TO PLAINTIFFS' COMPLAINT

Proof of Service

4/24/2018: Proof of Service

PLAINTIFF EFD USA, INC.'S REPLY IN SUPPORT OF MOTION FOR SANCTIONS AGAINST COUNSEL FOR DEFENDANTS MAXPRO LEASING, LLC, AKT ENTERPRISES, LLC, TECHNIJIAN, INC., AND GREG BISEL

5/9/2018: PLAINTIFF EFD USA, INC.'S REPLY IN SUPPORT OF MOTION FOR SANCTIONS AGAINST COUNSEL FOR DEFENDANTS MAXPRO LEASING, LLC, AKT ENTERPRISES, LLC, TECHNIJIAN, INC., AND GREG BISEL

Minute Order

5/16/2018: Minute Order

NOTICE OF MOTION AND MOTION BY DEFENDANTS MAXPRO LEASING, LLC, AKT ENTERPRISES, LLC, TECHNIJIAN, INC. AND GREG BISEL FOR A PROTECTIVE ORDER TO PRECLUDE THE DEPOSITION OF TECHNIJIAN, INC., REGARDING TH

6/13/2018: NOTICE OF MOTION AND MOTION BY DEFENDANTS MAXPRO LEASING, LLC, AKT ENTERPRISES, LLC, TECHNIJIAN, INC. AND GREG BISEL FOR A PROTECTIVE ORDER TO PRECLUDE THE DEPOSITION OF TECHNIJIAN, INC., REGARDING TH

PLAINTIFFS? OPPOSITION TO MOTION BY DEFENDANTS MAXPRO LEASING, LLC, AKT ENTERPRISES, LLC, TECHNIJIAN, INC. AND GREG BISEL FOR A PROTECTIVE ORDER TO PRECLUDE THE DEPOSITION OF TECHNIJIAN, INC, REGARDIN

7/31/2018: PLAINTIFFS? OPPOSITION TO MOTION BY DEFENDANTS MAXPRO LEASING, LLC, AKT ENTERPRISES, LLC, TECHNIJIAN, INC. AND GREG BISEL FOR A PROTECTIVE ORDER TO PRECLUDE THE DEPOSITION OF TECHNIJIAN, INC, REGARDIN

PLAINTIFF EFD USA, INC.'S EVIDENTIARY OBJECTIONS TO THE DECLARATIONS OF JOHN R. FUCHS AND GREG BISEL AND SUPPORTING EXHIBITS SUBMITTED IN SUPPORT OF OPPOSITION BY DEFENDANTS MAXPRO LEASING, LLC, AKT E

8/6/2018: PLAINTIFF EFD USA, INC.'S EVIDENTIARY OBJECTIONS TO THE DECLARATIONS OF JOHN R. FUCHS AND GREG BISEL AND SUPPORTING EXHIBITS SUBMITTED IN SUPPORT OF OPPOSITION BY DEFENDANTS MAXPRO LEASING, LLC, AKT E

NOTICE OF ORDER

10/1/2018: NOTICE OF ORDER

Memorandum of Points & Authorities

1/4/2019: Memorandum of Points & Authorities

Declaration

1/17/2019: Declaration

Declaration

1/23/2019: Declaration

Notice of Ruling

3/6/2019: Notice of Ruling

Notice of Motion

5/6/2019: Notice of Motion

Other -

5/16/2019: Other -

Ex Parte Application

5/24/2019: Ex Parte Application

DECLARATION OF DANIELLE SHRADER-FRECHETTE IN SUPPORT OF PLAINTIFFS EFD USA, INC. AND GEORGINA TERAN'S OPPOSITION TO EX PARTE APPLICATION OF DEFENDANT GREG BISEL

12/11/2017: DECLARATION OF DANIELLE SHRADER-FRECHETTE IN SUPPORT OF PLAINTIFFS EFD USA, INC. AND GEORGINA TERAN'S OPPOSITION TO EX PARTE APPLICATION OF DEFENDANT GREG BISEL

Minute Order

10/4/2017: Minute Order

NOTICE AND ACKNOWLEDGMENT OF RECEIPT?CIVIL

7/14/2017: NOTICE AND ACKNOWLEDGMENT OF RECEIPT?CIVIL

283 More Documents Available

 

Docket Entries

  • 06/03/2019
  • Notice Re: Continuance of Hearing and Order; Filed by Clerk

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  • 05/24/2019
  • at 08:30 AM in Department 32, Daniel S. Murphy, Presiding; Hearing on Ex Parte Application (for order for completion of initial forensic inspection) - Held

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  • 05/24/2019
  • Minute Order ( (Hearing on Ex Parte Application for order for completion of i...)); Filed by Clerk

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  • 05/24/2019
  • Order Appointing Court Approved Reporter as Official Reporter Pro Tempore

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  • 05/24/2019
  • Declaration (of computer forensics expert Scott Cooper in opposition to Ex Parte Application); Filed by Maxpro Leasing, LLC (Defendant); AKT Enterprises, LLC (Defendant); Technijian, Inc (Defendant) et al.

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  • 05/24/2019
  • Memorandum of Points & Authorities; Filed by Maxpro Leasing, LLC (Defendant); AKT Enterprises, LLC (Defendant); Technijian, Inc (Defendant) et al.

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  • 05/24/2019
  • Ex Parte Application (Ex Parte Application); Filed by EFD USA Inc (Plaintiff); Georgina Teran (Plaintiff)

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  • 05/23/2019
  • Declaration in Support of Ex Parte Application; Filed by EFD USA Inc (Plaintiff); Georgina Teran (Plaintiff)

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  • 05/23/2019
  • Declaration in Support of Ex Parte Application; Filed by EFD USA Inc (Plaintiff); Georgina Teran (Plaintiff)

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  • 05/22/2019
  • Separate Statement; Filed by Maxpro Leasing, LLC (Defendant); AKT Enterprises, LLC (Defendant); Technijian, Inc (Defendant) et al.

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424 More Docket Entries
  • 07/14/2017
  • Notice and Acknowledgment of Receipt; Filed by EFD USA Inc (Plaintiff); Georgina Teran (Plaintiff)

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  • 07/14/2017
  • Notice and Acknowledgment of Receipt; Filed by EFD USA Inc (Plaintiff); Georgina Teran (Plaintiff)

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  • 07/14/2017
  • PROOF OF SERVICE SUMMONS

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  • 07/14/2017
  • PROOF OF SERVICE BY MALL

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  • 07/14/2017
  • PROOF OF SERVICE SUMMONS

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  • 05/17/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 05/17/2017
  • Notice of Case Management Conference; Filed by Clerk

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  • 05/15/2017
  • Complaint; Filed by EFD USA Inc (Plaintiff); Georgina Teran (Plaintiff)

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  • 05/15/2017
  • COMPLAINT FOR: 1. FRAUD ;ETC

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  • 05/15/2017
  • SUMMONS

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Tentative Rulings

Case Number: BC661332    Hearing Date: September 16, 2020    Dept: 32

efd usa, inc and GEORGINA teran,

Plaintiffs,

v.

band pro film and digital, inc., et al.,

Defendants.

Case No.: BC661332

Hearing Date: September 16, 2020

[TENTATIVE] order RE:

motion for determination of good faith settlement

BACKGROUND

Plaintiffs EDF USA, Inc. (EDF) and Georgina Teran (Teran) (collectively, “Plaintiffs”) commenced this action against Defendants Band Pro Film and Digital, Inc. (Band Pro); Direct Video Warehouse, Inc. (DVWI); MaxPro Leasing, LLC (MaxPro); AKT Enterprises, LLC (AKT); Technijian, Inc. (Technijian); Brandon Brooks (Brooks); Greg Bisel (Bisel); and Amnon Band (Band) on May 15, 2017. Plaintiffs named Joel Rodriguez, First Option Capital, Inc. (First Option), Groundseven Ventures, Inc., and Unitek Computer Stores, Inc. as Doe Defendants on September 19, 2019. In December 2019, Plaintiffs moved for leave to file a Second Amended Complaint (“SAC”), which contained a few allegations against First Option, but the motion was denied.

The operative pleading is the First Amended Complaint (FAC) filed on November 21, 2017. The FAC asserts causes of action for: (1) fraud against all Defendants; (2) negligent misrepresentation against all Defendants; (3) aiding and abetting fraud against all Defendants; (4) violation of the UCL against all Defendants; (5) breach of fiduciary duty against all Defendants; (6) breach of implied contract against all Defendants; (7) breach of implied contract against Band Pro and DVWI; (8) intentional interference with prospective economic advantage against all Defendants; (9) money had and received against all Defendants; (10) conversion against Bisel, Technijian, AKT, and MaxPro (collectively, Bisel Defendants); (11) civil extortion against Band Pro and Band; and (12) defamation per se against Band Pro and Band. A demurrer to the eighth cause of action was sustained without leave to amend. Further, a summary adjudication was granted as to the eleventh and twelfth causes of action.

First Option moves the Court for an order determining that the settlement entered into by and between EDF and Teran, and First Option has been made in good faith pursuant to California Code of Civil Procedure (CCP) sections 877 and 877.6.

LEGAL STANDARD

Pursuant to CCP § 877.6(c), “[a] determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.”

There is no precise method to determine whether parties entered into a good faith settlement. (Tech-Bilt, Inc. v. Woodward-Clyde Assoc. (1985) 38 Cal.3d 488, 495.) The court must balance between the public policy favoring settlements and the competing policy favoring equitable allocation of costs between tortfeasors. (Id. at 498-99.) To accomplish this, the California Supreme Court provided the following factors for determining whether a proposed settlement is based on good faith: (1) a rough approximation of plaintiff’s total recovery and the settling defendant’s proportionate liability; (2) the amount paid in settlement; (3) allocation of settlement amounts among plaintiffs; (4) recognition that a settlor should pay less in settlement than it would if it were found liable after trial; (5) financial conditions and insurance policy limits of the settling defendant; and (6) the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants. (Id. at 499-500.) The burden of proof in asserting that a settlement lacked good faith falls upon the party making the assertion and it must show that “the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of [CCP § 877.6].” (Id.)

DISCUSSION

  1. Tech-Bilt Analysis

    As discussed above, the seminal case Tech-Bilt guides the Court in determining whether the proposed settlement between EFD and Teran, and First Option is done in good faith. The Court discusses its analysis of the six Tech-Bilt factors below.

  1. Rough Approximation of Recovery and Liability; Amounts Paid in Settlement

Here, based on the FAC and Bisel Defendants’ opposition papers, the Court finds that the rough estimation of the overall liability is approximately $2.0 million, which is undisputed between First Option and Bisel Defendants. (Declaration of John R. Fuchs (Fuchs Decl.) ¶ 3; First Option’s Motion, p. 5.) The amount for which First Option may be liable is the point of contention between Bisel Defendants and First Option. As mentioned above, the inoperative SAC alleges that First Option is liable to Plaintiffs in the amount of $103,682.74 in improper funds relating to EFD leases. (SAC ¶ 110.) Although the SAC is not operative in this action, it provides the Court with the amount for which First Option could potentially be liable, should this matter be tried before a jury.

Generally, the burden of proof falls on the party that is challenging that the settlement was not in good faith. (CCP § 877.6; Tech-Bilt at 499-500.) However, where something other than immediate cash is paid, the settling parties must establish that value of settlement because the courts would not be able to determine whether the settlement is within the “ballpark” of the settling defendant’s proportionate liability. (Abbott Ford, Inc. v. Sup. Ct. (1987) 43 Cal.3d 858, 879; Franklin Mint Co. v. Sup. Ct. (2005) 130 Cal.App.4th 1550, 1558-60.) In determining whether a sufficient consideration was exchanged in a non-cash settlement, courts consider various factors, including: the maximum amount of money the assigned rights represent; and a discount based on the cost to prosecute those rights to judgment. (Regan Roofing Co., Inc. v. Sup. Ct. (1994) 21 Cal.App.4th 1685, 1714.)

In Plaintiffs’ exchange for settlement, First Option has agreed to (1) cooperate with Plaintiffs in providing documents and to assisting with Plaintiffs’ discovery in this action; (2) assign indemnity rights against Bisel Defendants, so that Plaintiffs can pursue First Option’s indemnity rights against Bisel Defendants in the event Bisel Defendants caused any funds to be improperly paid to First Option; and (3) waive its right to pursue any claims against Plaintiffs, including any right to pursue attorney’s fees and costs. (First Option’s Motion Exh. A ¶ 3; Declaration of Ismail Amin (Amin Decl.) ¶¶ 7, 10.) Here, Melissa Longlee (Longlee), a former fifty percent owner of First Option and Bisel as former Director and Chief Financial Officer of First Option agreed in writing to indemnity First Option and Brandon Ebrahim as the current Chief Executive Officer of First Option for any third-party claims against First Option or Ebrahim. (Declaration of Brandon Ebrahim (Ebrahim Decl. ¶¶ 2, 4.) Then, First Option has assigned its indemnification rights upon Plaintiffs. (First Option’s Motion Exh. A ¶ 3; Amin Decl. ¶¶ 7, 10.) Plaintiffs currently seeks $103,682.74 from First Option for an alleged receipt of improper funds relating to EFD’s equipment leases. As a result, First Option has assigned its indemnity rights upon Plaintiffs for an amount up to $103,682.74, which is 100% of a potential liability Plaintiff seeks from First Option. Moreover, First Option has agreed not pursue any claims against Plaintiffs, particularly legal fees. This action was commenced nearly three and one-half years ago and the case has been quite active with motions. The Court can easily estimate that First Option has accrued high tens of thousands of dollars, if not in the hundreds of thousands. Given First Option’s assignment of its indemnity rights and forgoing of its potential legal fees, it has met its burden in showing the value of the noncash settlement. (Abbot Ford, Inc. at 879; Franklin Mint Co. at 1560 (“logic and policy dictated that all intangible elements – those that increase or decrease the value of the benefit conferred by the promise or received by the promisor – must be considered ….” citing Erreca’s v. Sup. Ct. (1994) 19 Cal.App.4th 1475.)

Bisel Defendants, in their opposition, argue that the proposed settlement amount, i.e., zero dollar, is certainly disproportionate for two reasons. First, Bisel Defendants claim that First Option admits to receiving $103,682.74 in improper funds relating to equipment leases in its moving papers. On the contrary, the Court finds that First Option never admitted to receiving the amount but admitting to being potentially liable to such amount if the case were to go to trial. (First Option’s Motion, p. 5.) Bisel Defendants base their assertion on Mr. Fuchs’s declaration that is almost entirely redacted. (Fuchs Decl. ¶ 6.) The Court notes that Bisel Defendants submitted redacted documents without having moved this Court to seal. Without supporting their contention with any evidence, the Court cannot consider Bisel Defendants’ assertion. Second, Bisel Defendants argue in their opposition that First Option would have an equal share of the liability if Bisel Defendants are found to be liable. Again, Bisel Defendants redacted the clause preceding such argument and failed to provide any reasoning or evidence as to why First Option would be responsible for 50% of the $2 million liabilities. Accordingly, the Court finds that Bisel Defendants failed to meet the burden of asserting that a settlement lacked good faith. (CCP § 877.6; Tech-Bilt at 499-500.) As a result, the first and second factors in Tech-Bilt weighs in favor of the moving party.

  1. Allocation of Settlement Amount

With respect to the plaintiffs’ allocation of settlement amount, both parties acknowledge that this factor is not applicable here because Bisel Defendants do not raise any arguments contrary to First Option’s moving papers. (First Option’s Motion, pp. 5-6.; Amin Decl. ¶ 11.) The Court agrees that the third factor under Tech-Bilt is not applicable here.

  1. Recognition of Reduced Settlement Amount

In their opposition, Bisel Defendants reassert that since First Option is paying nothing as part of the settlement for the potential $1 million in damages, the settlement amount is “out of the ballpark” and this factor weighs in favor of Bisel Defendant. The Court finds again that Bisel Defendants failed to establish that First Option’s noncash consideration in exchange for settle was in fact worth nothing and that Bisel failed to establish why or how First Option could be responsible for $1 million in damages. Accordingly, Bisel Defendants failed to meet the burden of showing that this factor of Tech-Bilt weighs in their favor because they did not present any support in fact or law.

  1. Financial Conditions and Insurance Policy Limits

In support of their opposition, Bisel Defendants indicate that First Option’s failure to argue why its financial conditions and insurance policy limits give rise to a $0 settlement amount should result in the fifth factor weighing in favor of Bisel Defendants. However, this is improper burden shifting pursuant to CCP § 877.6 and unnecessary in the instant motion. With respect to the financial condition or of insurance policy limits, such information would be relevant where this is a finding that a disproportionately low settlement amount. (L. C. Rudd & Son, Inc. v. Sup. Ct. (1997) 52 Cal.App.4th 742, 749-50.) Here, the noncash settlement did not occur because First Option lacks sufficient funds or insurance policy coverage. It occurred because presumably due to First Option’s refusal to admit fault and the settling parties’ mutual benefit. Since Bisel Defendants failed to show why this factor should apply in determining whether the settlement was done in good faith, the Court finds that this Tech-Bilt factor is not applicable to this instant motion.

  1. Existence of Collusion, Fraud, or Tortious Conduct

    Bisel Defendant argue that there was collusion or fraud based on two grounds. First, Bisel Defendants argue that Plaintiffs have not discovered any evidence related to fraudulent overcharges and as a result, are looking to other parties for evidence. However, Bisel Defendants do not refer to any evidence, including their declarations for support. Second, Bisel Defendants claim that Bisel Defendants follow a similar leading structure as First Options did between 2004 and 2015 and implicitly imply that First Option has charged fraudulent overcharges, at least in the past. (Declaration of Greg Bisel (Bisel Decl.) ¶¶ 4-6.) The Court finds Mr. Bisel’s statements irrelevant. Although his statements may be relevant in other circumstances, Mr. Bisel suggests that the settlement between Plaintiffs and First Option was a product of collusion or fraud without stating anything of substance. The Court finds that Bisel Defendants failed to establish that any collusion or fraud exists in the settlement. Accordingly, this factor weighs in favor of First Option.

    The Court finds that all applicable Tech-Bilt factors, weigh in favor of First Option. Since Bisel Defendants failed to meet their burden to show that the settlement between Plaintiffs and First Option was not made in good faith, the Court determines that the settlement between Plaintiffs and First Option was made in good faith.

    B. First Option’s Objections to Bisel Defendants’ Declarations

    As part of its reply to Bisel Defendant’s opposition papers, First Option made objections to certain parts of the Declaration of John R. Fuchs and the Declaration of Greg Bisel. The Court has not ruled upon First Option’s objections to said declarations because the statement, to which First Option objected, were not material to the disposition of this motion. Further, these objections are unnecessary because the Court, when reviewing the evidence is presumed to ignore material it knows it incompetent, irrelevant, or inadmissible. (In re Marriage of Davenport (2011) 194 Cal. App. 4th 1507, 1526.) Courts are presumed to know and apply the correct statutory and case law and to be able to distinguish admissible from inadmissible evidence, relevant from irrelevant facts, and to recognize those facts which properly may be considered in the judicial decision-making process. (People v. Coddington (2000) 23 Cal.4th 529, 644.)

    CONCLUSION

    First Option’s motion for determination of good faith settlement is granted.

    First Option is ordered to give notice.

Case Number: BC661332    Hearing Date: August 05, 2020    Dept: 32

EFD USA, INC. & GEORGINA TERAN,

Plaintiffs,

v.

BAND PRO FILM AND DIGITAL, INC., et. al.

Defendants.

Case No.: BC661332

Hearing Date: July 31, 2020

order RE:

Band Defendants’ motion for summary judgment or, in the alternative, summary adjudication

Background

A. Complaint

Plaintiffs EFD USA, Inc. (EFD) and Georgina Teran (Teran) commenced this action against Defendants Band Pro Film and Digital, Inc. (Band Pro); Direct Video Warehouse, Inc. (DVWI); MaxPro Leasing, LLC (MaxPro); AKT Enterprises, LLC (AKT); Technijian, Inc. (Technijian); Brandon Brooks (Brooks); Greg Bisel (Bisel); and Amnon Band (Band) on May 15, 2017. Plaintiffs named Joel Rodriguez, First Option Capital, Inc., Groundseven Ventures, Inc., and Unitek Computer Stores, Inc. as Doe Defendants on September 19, 2019.

The operative pleading is the First Amended Complaint (FAC) filed on November 21, 2017. The FAC asserts causes of action for (1) fraud against all Defendants, (2) negligent misrepresentation against all Defendants, (3) aiding and abetting fraud against all Defendants, (4) violation of the UCL against all Defendants, (5) breach of fiduciary duty against all Defendants, (6) breach of implied contract against all Defendants, (7) breach of implied contract against Band Pro and DVWI, (8) intentional interference with prospective economic advantage against all Defendants, (9) money had and received against all Defendants, (10) conversion against Bisel, Technijian, AKT, and MaxPro (collectively, Bisel Defendants), (11) civil extortion against Band Pro and Band, and (12) defamation per se against Band Pro and Band. A demurrer to the eighth cause of action was sustained without leave to amend. The FAC alleges in pertinent part as follows.

EFD is a California-based company that supplies motion picture equipment and services to film and television productions, primarily in Latin America. Teran, a film producer, founded the company in 2004.

Since 2013, EFD has obtained most of its equipment through lease agreements via the following process. First, EFD contacts a supplier and a broker to inform them that it is in the market for a certain type of motion picture equipment, such as camera lenses. Second, the supplier and broker identify a lender to finance the transaction. Third, after the supplier confirms it can provide the desired equipment, the supplier works with the broker to prepare two sets of documents: one for EFD (EFD Disclosure) and another for the lender (Lender Disclosure). The EFD Disclosure includes an invoice or quote listing the types and quantities of equipment and services to be financed, any fees or taxes, and the total cost to EFD. The Lender Disclosure includes the same categories of information. EFD never views the Lender Disclosure because the supplier and broker send that copy exclusively to the lender. Fourth, based upon the Lender Disclosure, the broker and lender prepare a lease agreement for EFD. Typically, the agreement provides only general information about the items to be financed, not specific costs or quantities. Fifth, once the lender and EFD sign the lease agreement, the lender sends the supplier money to pay the full cost of the equipment and services. The lender also sends the broker a percentage commission based upon the total value of the transaction. Finally, EFD makes monthly payments to the lender for the equipment and services pursuant to the lease agreement. At the end of the lease term, EFD purchases the equipment for a nominal sum.

Using the aforementioned process, EFD has entered into dozens of lease agreement, worth millions of dollars, for equipment supplied by Band Pro and DVWI. Bisel, working for himself and his affiliated companies MaxPro, AKT, and Technijian, was the main finance broker for these agreements.

Teran’s first language is not English and she is unfamiliar with American financing and leasing practices so Teran and EFD relied heavily on Defendants’ advice. Defendants abused Teran’s and EFD’s trust and confidence by engaging in several fraudulent schemes. For example, Bisel informed EFD that lenders required certain “advance payments” including first and last months’ lease payments as well as security deposits. Bisel insisted that these payments were not commissions but, in reality, the Bisel Defendants were pocketing this money. As another example, Defendants falsified and inflated invoices by including, inter alia, phantom equipment and services. These overcharges forced EFD to pay lenders more than the real price of the equipment and services requested.

In late 2015, Teran began to suspect that EFD may have been defrauded by Defendants when Bisel requested that EFD send him an advance payment for an equipment lease but warned EFD not to inquire about the transaction with the bank. Teran confronted Band with evidence of the fraud, and Band responded that “kickbacks” were common in the Los Angeles motion picture business. Teran began to investigate the transactions and uncover the false charges. EFD estimates that Defendants’ fraud has cost the company over $2 million in damages.

Discussion[1][2]

Band Pro, DVWI, and Band (collectively, Band Defendants) move for summary judgment of the FAC or, in the alternative, summary adjudication of each of its causes of action.

A. Procedural Challenges

Plaintiffs contend that this motion must be denied because Band Defendants’ notice of motion and separate statement fail to satisfy the stringent procedural requirements governing this motion. Plaintiffs note that CRC Rule 3.1350(b) states that “the specific cause of action, affirmative defense, claims for damages, or issues of duty [for which summary adjudication is sought] must be stated specifically in the notice of motion and be repeated, verbatim, in the separate statement of undisputed material facts.” (Emphasis added.) Band Defendants’ notice of motion does not specifically state each cause of action for which summary adjudication is sought but instead states that summary adjudication is sought “against each of Plaintiffs’ causes of action alleged against Band Defendants.” Plaintiffs also point out that CRC Rule 3.1350(d) requires the moving party to “separately identify … [e]ach cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the action; and … [e]ach supporting material fact claimed to be without dispute with respect to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion.” Plaintiffs’ separate statement does not separately identify each cause of action or each supporting material fact with respect to each cause of action.

The Court admonishes Band Defendants for these procedural violations. The denial of Bisel Defendants’ summary adjudication motion on a similar procedural ground — failure to request summary adjudication in its notice of motion — should have prompted Band Defendants to comply with these procedural rules. Nonetheless, as Plaintiffs appear to concede, these requirements exist to provide due process. (San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 316 (“Where a remedy as drastic as summary judgment is involved, due process requires a party be fully advised of the issues to be addressed and be given adequate notice of what facts it must rebut in order to prevail.”).) Band Defendants’ notice of motion apprises Plaintiffs that they seek summary adjudication of “each of Plaintiffs’ causes of action.” Band Defendants’ separate statement corroborates this. (DSS p. 6.) The Court finds that these procedural violations have not resulted in an abridgment of due process and do not warrant denial of this summary judgment motion. However, the Court will deny future summary judgment or summary adjudication motions on this basis.

B. The Merits

The FAC asserts nine causes of action against the Band Defendants: (1) fraud, (2) negligent misrepresentation, (3) aiding and abetting fraud, (4) violation of the UCL, (5) breach of fiduciary duty, (6) breach of implied-in-fact contract, (7) money had and received, (8) civil extortion (against Band Pro and Band exclusively), and (9) defamation per se (against Band Pro and Band exclusively).

1. Fraud (First C/A) and Negligent Misrepresentation (Second C/A)

Band Defendants claim that Plaintiffs’ fraud and negligent misrepresentation claims fail as a matter of law because the alleged misrepresentations were (1) not made by the Band Defendants, (2) true in fact, and (3) not relied upon by Plaintiffs.[3]

a. Participation in the Fraud

“Only those persons who in some way participate in the fraud or who knowingly accept the fruits thereof can be held liable in damages therefor.” (Central Mut. Ins. Co. v. Schmidt (1957) 152 Cal.App.2d 671, 673-74.)

Band Defendants claim that they did not make the alleged misrepresentations regarding advance payments nor did they keep such payments. According to Band Defendants, the FAC indicates that the alleged misrepresentations were made, if at all, by the Bisel Defendants.

In support of their claim, Band submits a declaration averring that neither he nor anyone at Band Pro or DVWI “ever made any representations to anyone at EFD regarding advance payments related to financing for sales of equipment to EFD” or “ever receive[d] or retain[ed] any advance payments related to financing for sales of equipment to EFD.” (Band Decl. ¶ 15.)

Plaintiffs respond that this claim does not rebut their theory of fraud as alleged in the FAC. A defendant moving for summary judgment must “negate plaintiff’s theories of liability as alleged in the complaint.” (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493.) In the FAC, Plaintiffs allege (among other things) that Band Defendants made intentional misrepresentations to EFD through Brooks and Bisel as their agents and co-conspirators.[4]

i. Brooks as Agent and Co-Conspirator

As Plaintiffs note, Band Defendants fail to negate the claim that Brooks was their co-conspirator or agent. The only evidence submitted by Band Defendants on this point is the Band Declaration. There, Band declares that Brooks was “an independent financing broker … in connection with some of the transactions with EFD” and that Brooks “was not employed by Band Pro or DVWI.” (Band Decl. ¶ 12.) The Court agrees with Plaintiffs that the claim that Brooks “was not employed by Band Pro or DVWI” is conclusory and thus carries no weight. Putting aside the fact that agency and employment are “not wholly synonymous” (Gipson v. Davis Realty Co. (1963) 215 Cal.App.2d 190, 205), the existence of agency is a question of fact resting on several factors including “the primary right of control.” (Jackson v. AEG Live, LLC (2015) 233 Cal.App.4th 1156, 1184.) Band does not speak to any of these factors. Moreover, the characterization of Brooks as “an independent financing broker” has no bearing on this issue. Ostensibly, Band offers this statement to show that Brooks is an independent contractor but, even assuming this is true, this statement is not conclusive because agency and independent contractorship are not mutually exclusive legal categories. (Jackson, supra, 233 Cal.App.4th at 1184.) For the same reasons, none of these statements disprove Brooks’ alleged status as a co-conspirator with Band Defendants.

Because Band Defendants did not carry their initial burden, Plaintiffs did not need to establish a triable issue of material fact as to whether Brooks served as Band Defendants’ agent and co-conspirator. Nonetheless, the Court concludes that Plaintiffs have done so, at least with respect to agency.

“[W]hether an agency relationship has been created or exists is determined by the relation of the parties as they in fact exist by agreement or acts [citation], and the primary right of control is particularly persuasive. [Citations.] Other factors may be considered to determine if an independent contractor is acting as an agent, including: whether the ‘principal’ and ‘agent’ are engaged in distinct occupations; the skill required to perform the ‘agent’s’ work; whether the ‘principal’ or ‘agent’ supplies the workplace and tools; the length of time for completion; whether the work is part of the ‘principal’s’ regular business; and whether the parties intended to create an agent/principal relationship. [Citation.]” (Jackson, supra, 233 Cal.App.4th at 1184.)

Plaintiffs have submitted evidence showing that Band Pro’s website lists Brooks as an “In-House Financing Specialist.” (Azar Decl. Ex. 41.) Brooks used a Band Pro email account: finance@bandpro.com. (Azar Decl. Exs. 40, 48, 112.) Brooks used Band Pro’s templates for invoices and sales orders and carried a Band Pro business card. (Brooks Depo. pp. 58-59.) Band Pro referred to Brooks as the company’s “Finance person.” (Azar Decl. Ex. 69.) And, according to Band, Band Pro would refer clients to Brooks and could not recall ever telling customers that Brooks was an independent contractor. (Band Depo. pp. 742-44.) Based on this evidence, a reasonable juror could conclude that Brooks served as Band Defendants’ agent. Based on this conclusion, Band Defendants can be held liable for Brooks’ alleged fraud: “ ‘A principal who puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud.’ ” (Bayuk v. Edson (1965) 236 Cal.App.2d 309, 315.)

Band Defendants contend that Plaintiffs’ agency theory is inapt because Plaintiffs are attempting to “pass the buck.” (Reply at 4.) Band Defendants cite a rule of equity: “As between two innocent persons, one of whom must suffer, the loss should fall on the principal who has armed the agent with apparent authority and thus enabled him to obtain the advantage of the person with whom he trades, rather than on the purchaser, where the agent acts within the apparent scope of his authority and there is nothing in the transaction to put the purchaser on notice that the agent is exceeding his authority.” (Correa v. Quality Motor Co. (1953) 118 Cal.App.2d 246, 252-53.) This rule is inapplicable because the Court is examining fraud allegedly perpetrated by Band Defendants’ agents against Plaintiffs. As stated ante, there is a question of fact as to whether an agency relationship existed between Brooks and Band. If Brooks is Band’s agent, then Band, as the principal, is liable for Brooks’ fraud. (See, Miller v. Wood (1961) 188 Cal.App.2d 711 and Herdan v. Hanson (1920) 182 Cal. 538, 545–546 [the principal who benefits from the agent's misconduct is charged with the responsibility for the agent's acts, even when the agent is a dual agent.].)

ii. Bisel as Agent and Co-Conspirator

Plaintiffs have established a triable issue with respect to conspiracy.[5] The elements of a civil conspiracy are (1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct. (AREI II Cases (2013) 216 Cal.App.4th 1004, 1022.) “Mere knowledge of a wrongful act without cooperation or an agreement to cooperate is insufficient to make [the defendant] responsible for the harm. [¶] A conspiracy may be inferred from circumstances, including the nature of the acts done, the relationship between the parties, and the interests of the alleged coconspirators. [A plaintiff] is not required to prove that [defendant] personally committed a wrongful act or that [he/she] knew all the details of the agreement or the identities of all the other participants.” (CACI 3600.)

Plaintiffs have established this triable issue by showing the collaboration between Bisel and Brooks with respect to the EFD leasing transactions. Most notably, in an email from Bisel to Brooks, Bisel states: “I told you last week that I had juice in the invoices as I did not tell EFD the true cost so we could make more.” (Azar Decl. Ex. 24.)[6] Other emails corroborate their close working relationship and sharing of commissions on the EFD lease transactions. (See, e.g., Azar Decl. Ex. 36-01 (email from Brooks to Band stating that Bisel told him how he should “show EFD a lease rate % and not a true APR”), 64 (email from Brooks to Band and other Band Pro personnel stating that he is “working with [Bisel] (helps me with BP deal through Apple Financial) on this opportunity for EFD”), 66 (email from Bisel to Teran stating that “[a] really good friend of mine works over [at Band Pro] an[d] I am about to sit down at lunch with him. Just tell Nir (BandPro) that Brandon Brooks (another BandPro employee) has you handled”), 76 (email from Brooks to Band Pro employee stating that “I’ll have an invoice over shortly for the commissions. Sandra wants them to be paid to me and then I pay [Bisel]”), 114 (email from Brooks noting that there “is a split deal with [Bisel] on commissions”).) This conspiracy, if proven, would render Brooks liable for all acts performed by Bisel pursuant to the conspiracy and render Band Defendants liable for the same acts to the extent Brooks acted as their agent. (Favila v. Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th 189, 206 (noting that “[e]ach member of the conspiracy becomes liable for all acts done by other pursuant to the conspiracy”).)

b. Falsity of the Misrepresentations

Band Defendants argue that there were no misrepresentations as to the equipment financed, fees, taxes, or other costs. Band Defendants claim that discrepancies between the EFD and Lender Disclosures were attributable to deviations from traditional equipment finance leases: “Because EFD was requesting financing for multiple purchases after the fact, sometimes a single invoice had to be broken up and financed through multiple lenders; sometimes multiple invoices were financed through multiple lenders; sometimes a lender would agree to finance some equipment but not others, so other collateral or security had to be provided for the amount of funding that EFD was requesting.” (Mot. at 17 (citing, among others, Bisel 4/9/20 Decl. ¶ 11).)

As Plaintiffs note, this argument mischaracterizes at least some of the affirmative misrepresentations underlying Plaintiffs’ fraud and negligent misrepresentation claims. According to Plaintiffs, Defendants represented that the quotes and invoices provided to Plaintiffs, the “EFD Disclosures,” matched those provided to the lenders financing the equipment. (FAC ¶ 20 (noting that EFD does not receive the Lender Disclosure so “EFD relies upon the supplier and broker to report information accurately, in full, and consistent with the information in the EFD Disclosure”), 70 (“Through the EFD Disclosures … Defendants informed EFD of the types and quantities of equipment services to be financed, any fees or taxes, and the unit and total cost to EFD.”).) According to Plaintiffs, this representation was false because the invoices provided to lenders were inflated causing Plaintiffs to borrow more. (FAC ¶ 71 (“EFD paid more for the equipment than the price of the equipment specified in the EFD Disclosures because [Band Defendants, Brooks, and Bisel] created and sent Lender Disclosures that were different than the EFD Disclosures.”).) Band Defendants’ point does not speak to whether this representation was false. Indeed, they acknowledge that the EFD and Lender Disclosures “did not always match.” (Mot. at 16.)

c. Reliance on the Misrepresentations

Band Defendants relatedly contend that EFD’s misrepresentation claim fails because EFD never saw and therefore never could have relied upon the Lender Disclosures. Band Defendants point to EFD’s acknowledgment in the FAC that the invoices sent to the lenders were not provided to EFD. (FAC ¶ 20.) As noted ante, this contention mischaracterizes Plaintiffs’ fraud and negligent misrepresentation claims. Plaintiffs allege that they relied upon the contents of the EFD Disclosures, not the Lender Disclosures, in entering these leases and suffered harm based upon this reliance. (FAC ¶¶ 71, 74.)

In reply and at oral argument, Band Defendants present a whole new argument: Band Defendants claim that California law does not require brokers to disclose “juice” or finance charges, profits, and commissions. This argument cannot be a ground for summary judgment or adjudication because Band Defendants failed to raise it in their moving papers. Regardless of whether brokers have a duty, in general, to disclose “juice,” Plaintiffs allege that Defendants affirmatively misrepresented the financing of these leases and claim that wrongdoing consists of, among other things, the assessment of inflated charges and the like.

In sum, Band Defendants are not entitled to summary adjudication of the first and second causes of action.

2. Aiding and Abetting Fraud (Third C/A)

“ ‘Liability may ... be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.’ ” (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144.)

In their third cause of action for aiding and abetting fraud, Plaintiffs allege that Defendants “knowingly and willfully conspired and agreed to defraud Plaintiffs and aided and abetted the fraud and negligent misrepresentations of the other Defendants by, inter alia, encouraging and facilitating each other Defendant in making the misrepresentations, suppressing and concealing facts, failing to correct misrepresentations, and failing to disclose facts suppressed or concealed by the other Defendants.” (FAC ¶ 88.)

Band Defendants claim that Plaintiffs’ aiding and abetting fraud cause of action fails as a matter of law because they were not aware of any fraud and did not give any assistance or encouragement to any parties to defraud Plaintiffs. Band declares that Band Defendants were not “aware of any wrongdoing by Mr. Bisel or his companies” at all relevant times. (Band Decl. ¶ 20.)

This argument fails for similar reasons. Band Defendants fail to address whether Brooks, acting as Band Defendants’ agent, aided and abetted Bisel Defendants in defrauding Plaintiffs. If so, Brooks’ liability for aiding and abetting fraud would extend to Band Defendants.

3. UCL (Fourth C/A)

In their fourth cause of action for violation of the UCL, Plaintiffs allege, inter alia, that Defendants participated in an unlawful, unfair, and fraudulent scheme “whereby invoices, purchase orders, and sales orders were falsified and inflated so that proceeds received from lenders were diverted for the personal use and benefits of Defendants.” (FAC ¶ 94.)

Band Defendants claim that this cause of action fails because it is founded on Plaintiffs’ meritless fraud and negligent misrepresentation claims. As noted ante, the Court has concluded otherwise.

Band Defendants are not entitled to summary adjudication of the fourth cause of action.

4. Breach of Fiduciary Duty (Fifth C/A)

Band Defendants argue that they were simply equipment sellers in these transactions and therefore did not owe a fiduciary duty to Plaintiffs.

The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach. (Tribeca Companies, LLC v. First American Title Insurance Company (2015) 239 Cal.App.4th 1088, 1114.) “[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.”  (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386.)

Nonetheless, the Court agrees with Plaintiffs that Band Defendants’ broader argument fails because Band Defendants have not addressed all of Plaintiffs’ theories of liability underlying this cause of action. Plaintiffs allege that “Defendants acted as agents of EFD in negotiating leases with lenders and acted as brokers of the lease agreements for EFD.” (FAC ¶ 98 (emphasis added).) More specifically, Plaintiffs allege (and Band Defendants fail to dispute) that Brooks acted as EFD’s finance broker on multiple leases. (FAC ¶¶ 15, 23.) By not addressing the role of Brooks in these transactions in their moving papers, Band Defendants have failed to show that Brooks did not act as EFD’s agent / broker with respect to these lease transactions and, as a result, have failed to show that Brooks did not owe a fiduciary duty to EFD. (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 960 (agent is a fiduciary as a matter of law).) If Brooks owed a fiduciary duty to EFD in his capacity as Band Defendants’ agent, then Band Defendants also owed a fiduciary duty to Plaintiffs.

In reply, Band Defendants argue that Plaintiffs place too much stock on the word “broker” and incorrectly maintain that all brokers are fiduciaries of their principals. The Court agrees with this line of reasoning. Equipment financing brokers are not stockbrokers and not real estate brokers so their status as fiduciaries is not established by law. Even so, Band Defendants must still show that Brooks ought not be treated as Plaintiffs’ principal and provide a principled distinction between equipment financing brokers, on the one hand, and stockbrokers and real estate brokers, on the other. Band Defendants have not made this showing so they cannot obtain summary adjudication of this claim.

Band Defendants are not entitled to summary adjudication of the fifth cause of action.

5. Breach of Implied-in-Fact Contracts (Sixth and Seventh C/A)

In their sixth cause of action, Plaintiffs allege that “EFD entered into an implied-in-fact contract with Mr. Bisel, acting on his own behalf and as an agent for Technijian, AKT, and MaxPro, and with Mr. Brooks, acting on his own behalf and as an agent for Band Pro and DVWI, based upon the EFD Disclosure and the conduct alleged above, pursuant to which Defendants agreed to act as EFD’s agents and brokers to obtain financing for the equipment and services specified in the EFD Disclosure, and using good faith efforts to obtain financing on the best available terms for EFD, which would then sign the lease agreement with the lender.” (FAC ¶ 103.) Plaintiffs allege that Defendants breached this contract by, among other things, “charging EFD for advance payments and for equipment EFD had not requested and for phantom services, equipment, and taxes, and by including interest in the lease agreements at a rate higher than the maximum EFD agreed to accept.” (FAC ¶ 105.)

In their seventh cause of action, Plaintiffs allege that “EFD entered into an implied-in-fact contract with Band Pro and DVWI, based upon the EFD Disclosure and the conduct alleged above, pursuant to which Band Pro and DVWI agreed to procure and provide such equipment and/or services according to the terms specified in the EFD Disclosure.” (FAC ¶ 108.) Plaintiffs allege that Band Pro and DVWI breached this contract by, among other things, “adding costs and fees to the Lender Disclosure that were not included in the EFD Disclosure, and by charging EFD for phantom equipment, services, and taxes.” (FAC ¶ 110.)

Band Defendants contend that Plaintiffs’ sixth cause of action for breach of implied-in-fact contract claim fails because (1) all contracts between Plaintiffs and Band Defendants were in writing and (2) Band Defendants did not breach any contracts with Plaintiffs. (See Mot. at 21-24; DSS p. 6.) As Plaintiffs note, Band Defendants fail to address the merits of Plaintiffs’ seventh cause of action, so that cause of action is not subject to summary adjudication in this motion.

a. Type of Contract

Band Defendants argue that Plaintiffs’ sixth cause of action fails because EFD and Band Defendants entered into written, not implied-in-fact, contracts pursuant to which EFD purchased equipment and services. Band Defendants cite to three written equipment lease agreements obligating EFD to make installment payments to DVWI. (Band Decl. Exs. 2-4.)

Band Defendants’ argument fails because it does not track the FAC. As Plaintiffs note, one important aspect of the alleged implied-in-fact contract is that “Defendants agreed to act as EFD’s agents and brokers to obtain financing for the equipment and services specified in the EFD Disclosure.” (FAC ¶ 103.) This aspect of the alleged implied-in-fact contract is not memorialized in these writings. Band Defendants cannot dispose of this cause of action by unilaterally narrowing this cause of action’s scope.

b. Breach of the Implied-in-Fact Contract

Band Defendants contend that they did not breach the alleged implied-in-fact contract because they did not include advance charges, interest, phantom services, or equipment not requested or authorized in invoices and sales orders sent to EFD. This contention is unpersuasive. There are triable issues of material fact as to whether (1) Brooks served as an agent to Band Defendants, (2) Bisel served as a co-conspirator with Brooks, and (3) Brooks and Bisel defrauded Plaintiffs with overcharges. These triable issues, if resolved in Plaintiffs’ favor, would impute Brooks’ breach of contract to Band Defendants. (Civ. Code § 2330 (“An agent represents his principal for all purposes within the scope of his actual or ostensible authority, and all the rights and liabilities which would accrue to the agent from transactions within such limit, if they had been entered into on his own account, accrue to the principal.”).)

Band Defendants are not entitled to summary adjudication of the sixth or seventh causes of action.

6. Money Had and Received (Ninth C/A)

Band Defendants contend that a claim for money had and received will only lie if there is “a total failure to of consideration for executory contract” and that such a claim is untenable in this case because each contract between Band Defendants and Plaintiffs was supported by consideration. However, Brown v. Grimes (2011) 192 Cal.App.4th 265, the legal authority cited by Band Defendants, does not support this contention. There, the appellate court simply rejected the contention that a party’s contractual breach inexorably gave rise to a money had and received claim: “[A] failure of performance generally gives rise to a claim for restitution of money had and received only when there has been a total breach—i.e., total failure of consideration or repudiation.” (Brown, supra, 192 Cal.App.4th at 281.) The appellate court did not signify that this is the only ground to bring a claim for money had and received. To the contrary, claims for money had and received are “viable ‘wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.’ ” (Avidor v. Sutter's Place, Inc. (2013) 212 Cal.App.4th 1439, 1454.) Plaintiffs’ claim for money had and received is premised, at least in part, on reimbursement for overcharges. (See FAC ¶¶ 121-124.) If Plaintiffs were overcharged, the overcharges belong to Plaintiffs and ought to in “equity and good conscience” be paid over to Plaintiffs.

Band Defendants are not entitled to summary adjudication of the ninth cause of action.

7. Civil Extortion (Eleventh C/A)

“Extortion is the obtaining of property or other consideration from another, with his or her consent, … induced by a wrongful use of force or fear, or under color of official right.” (Penal Code § 518(a).) “Consideration” under this section “means anything of value.” (Penal Code § 518(b).) A special consideration rule applies to threatening letters: “Every person who, with intent to extort property or other consideration from another, sends or delivers to any person any letter or other writing, whether subscribed or not, expressing or implying, or adapted to imply, any threat such as is specified in Section 519 is punishable in the same manner as if such property or other consideration were actually obtained by means of such threat.” (Penal Code § 523(a).)

The threats specified in Penal Code section 519 are: (1) to do an unlawful injury to the person or property of the individual threatened or of a third person, (2) to accuse the individual threatened, or a relative of his or her, or a member of his or her family, of a crime, (3) to expose, or to impute to him, her, or them a deformity, disgrace, or crime, (4) to expose a secret affecting him, her, or them, and (5) to report his, her, or their immigration status or suspected immigration status.

Plaintiffs allege that Teran approached Band with evidence of fraud and, in response, Band on behalf of Band Pro indicated that he would have criminal charges brought against her and EFD in Mexico unless she paid him immediately. (FAC ¶ 132.) Band allegedly told Teran in emails: (1) “Don’t put me in a corner where I need to come after you” and (2) “Do you know Arely Gomez [the Attorney General of Mexico]? He is my friend’s best buddy!!! I warned you over and over but you don’t listen to me. You have 72 hours to pay all your open bills to Band Pro or … Gomez will come after you and your company. Trust me… he is not someone you want as an enemy… Don’t make me come after you. It will end very ugly. You have too much to lose!!!” (Ibid.) Plaintiffs allege that Band’s threats to have criminal charges brought against Plaintiffs and his “intimations” he would induce bodily harm against Teran constitute extortion. (FAC ¶ 133.)

Band Defendants claim that these statements are (1) not extortionate threats and (2) privileged under Civil Code section 47(b).

a. Extortionate Threats

Band tendered the first statement in the context of the following email (Restructure Debt Email):

“Georgina

Please communicate with us.

Don’t put me in a corner where I need to come after you.

If you are struggling right now and need to restructure your debt, we could look into it. Also, if you need help with your other predicament, I am willing to help you but for that the lawyers must clarify.

I am sure that soon you’ll have equipment needs, where we’ll need to facilitate things for you.

I truly hoped that by now you’ll know and find out who is really you [sic] supporter and friend in this business, don’t ignore us please.

Have a great day

Amnon.” (DSS 51.)

Band Defendants contend that these statements are not extortionary threats in the context of this email because Band did not threaten physical harm or bringing criminal charges but simply threatened to bring a civil action against Plaintiffs. Band Defendants note that Band followed through on this threat by filing a complaint in Los Angeles Civil Court against EFD approximately seven months later. (DSS 53.) The Court agrees with Band Defendants. The only plausible grounds to characterize this statement as an actionable threat under the extortion statute are Penal Code section 519(1) and (2). Subdivision (2) is inapplicable because the email makes no indication that Band is contemplating criminal charges. The gist of the email is that Band is contemplating the filing of a civil action to recover payments. Subdivision (1) is inapplicable because “[t]hreatening to do something that a person has a legal right to do is not a threat to commit an unlawful injury.” (CALCRIM 1831.)

Band tendered the second series of statements in the context of the following email (Litigation Battle Email):

“Do you know Arely Gomez? He is my friend’s best buddy!!!

I warned you over and over but you don’t listen to me.

You have 72 hours to pay all your open bills to Band Pro or... Gomez will come after you and your company.

Trust me ... he is not someone you want as an enemy.

I did nothing to hurt you.

Your leasing broker been screwing you for years ... and you blame me???

Georgina, I been in legal battles with Zeiss, Leica and a few more giant companies. Came out on top each time.

Don’t make me come after you.

It will end very ugly.

You have too much to lose!!!” (DSS 50.)[7]

Band Defendants contend that this series of statements should be interpreted no differently. In support, Band declares that he sent this email to demand payment and threaten to bring a lawsuit against EFD if EFD did not pay the amounts owed. (Band Decl. ¶ 22.) Band declares that he considered bringing claims or legal proceedings against EFD in Mexico. (Ibid.) Band also denies threatening Plaintiffs with physical harm or criminal charges. (Ibid.) The Court finds this argument persuasive as well. Read in context, these statements amount to just more threats to file and wage civil litigation, something which Band has a right to do. Band’s reference to Gomez, Mexico’s Attorney General, illustrates his belief that he can bring civil litigation in Mexico and that he may attempt to do so. These statements do not constitute extortion as a matter of law. The burden shifts to Plaintiffs to establish a triable issue of material fact.

In opposition, Plaintiffs emphasize that threats must be evaluated under all the circumstances and often cloaked in ambiguity to avoid criminal liability. “No precise or particular form of words is necessary in order to constitute a threat under the circumstances. Threats can be made by innuendo and the circumstances under which the threat is uttered and the relations between [the parties] may be taken into consideration in making a determination of the question involved.” (People v. Oppenheimer (1962) 209 Cal.App.2d 413, 422.) “Parties guilty of the offense here alleged seldom possess the hardihood to speak out boldly and plainly, but deal in mysterious and ambiguous phrases, mysterious and ambiguous to the world at large, but read in the light of surrounding circumstances by the party for whom intended, they have no uncertain meaning.” (Id. at 423.) “The more vague and general the terms of the accusation the better it would subserve the purpose of the accuser in magnifying the fears of his victim, and the better also it would serve to protect him in the event of the failure to accomplish his extortion and of a prosecution for his attempted crime.” (People v. Sanders (1922) 188 Cal. 744, 749-50.)

Plaintiffs construe these statements as a threat to cause damages to EFD and its property and as a threat to invoke foreign intimidation because Arely Gomez (Gomez) was Mexico’s Attorney General. Plaintiffs believe that Band’s comments about Gomez were not just bragging about political connections but an implied threat to utilize corrupt officials in the Mexican government to cause Teran or her business physical or financial harm. Teran testified at deposition that Band “had no reason to bring Mexico into this [dispute]” and “the only reason why he did is because he knows how dangerous it is.” (Teran Depo. p. 1039.)

The Court finds Plaintiffs’ arguments to be conjectural and unpersuasive. By their express terms, the emails do not reflect that Band made threats to Plaintiffs’ person or property and do not threaten criminal prosecution. In fact, all statements in the emails are consistent with a threat of civil litigation. Gomez is the former Mexican Attorney General and Band contemplated filing an action in Mexico so invoking her name is reasonably connected to Band’s threat to file civil litigation. Finally, the aspersions that Plaintiffs implicitly cast upon the Mexican legal system are unfounded.

In sum, Plaintiffs have not established a triable issue of material fact as to whether these emails are extortionary.

b. Litigation Privilege

Band Defendants contend that the litigation privilege, Civil Code section 47(b), bars Plaintiffs’ extortion claim because the alleged threats were pre-litigation statements contemplated in good faith and under serious consideration.

Civil Code section 47(b) precludes tort liability arising from certain statements. The privilege applies to any communication made in, inter alia, “any (1) legislative proceeding, (2) judicial proceeding, [or] (3) in any other official proceeding authorized by law.” (Kerner v. Superior Court (2012) 206 Cal.App.4th 84, 120.) The privilege is absolute in nature and any doubt about whether the privilege applies is resolved in favor of applying it. (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 116.)

“The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” (Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) A prelitigation communication is privileged under Civil Code section 47(b) “only when it relates to litigation that is contemplated in good faith and under serious consideration.” (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251.) “The good faith inquiry is not a question of whether the statement was made with a good faith belief in its truth, but rather, whether the statement was made with a good faith intention to bring a lawsuit.” (Dickinson v. Cosby (2017) 17 Cal.App.5th 655, 683.) “Whether a prelitigation communication relates to litigation that is contemplated in good faith and under serious consideration is an issue of fact.” (Action Apartment, supra, 41 Cal.4th at 1251.)

In this case, Band Defendants have shown that Band sent two emails threatening to commence civil litigation against Plaintiffs and, approximately seven months later, Band commenced civil litigation against Plaintiffs. Band Defendants have met their initial burden on this issue.

Plaintiffs argue that this privilege is inapplicable because Band Defendants did not state that they were moving for summary adjudication based on this defense. However, Band Defendants did state in their notice of motion that they sought summary adjudication of “each of Plaintiffs’ causes of action” and this affirmative defense appears prominently in their papers. There is no discernable due process issue here which warrants disregard of this defense.

Plaintiffs also argue that Band’s various threats, e.g., that Gomez will “come after” Plaintiffs if Teran did not pay, have no connection or logical relation to litigation. The Court disagrees. These statements are reasonably consistent with Band’s threat to file civil litigation against Plaintiffs and convince her to settle because Gomez is a legal official and litigation is often adversarial. These statements fit comfortably within the litigation privilege. (Sacramento Brewing Co. v. Desmond, Miller & Desmond (1999) 75 Cal.App.4th 1082, 1089 (“The privilege should be denied only where it is so palpably irrelevant to the subject matter of the action that no reasonable person can doubt its irrelevancy.”).)

Band Defendants are entitled to summary adjudication of the eleventh cause of action.

8. Defamation Per Se (Twelfth C/A)

“The elements of a defamation claim are (1) a publication that is (2) false, (3) defamatory, (4) unprivileged, and (5) has a natural tendency to injure or causes special damage. (Wong v. Jing (2010) 189 Cal.App.4th 1354, 1369.)

In their twelfth cause of action for defamation per se, Plaintiffs allege that Band, on behalf of Band Pro, “made verbal statements accusing Plaintiffs of impending bankruptcy … to Plaintiffs’ business associates including Fernando Baselga [Baselga], the Vice President of the European market for one of EFD’s suppliers, ARRI AG, who were attending the Cannes Film Festival [Cannes] in May 2016.” (FAC ¶ 138.) At deposition, Teran clarified that Band made this alleged statement to John Pohlman (Pohlman), an executive of ARRI Germany. (DSS 59.) Plaintiffs allege that these statements were false because “Plaintiffs were not bankrupt, were not at risk of bankruptcy, and were able to pay their bills.” (FAC ¶ 139.) Plaintiffs also allege that these statements were per se defamatory “because they were false and unprivileged publications which tended directly to injure Plaintiffs in respect to their trade and business and which has a natural tendency to lessen their profits.” (FAC ¶ 140.)

At deposition, Teran testified that this defamation claim is premised on three defamatory comments: (1) Teran “was going to file for bankruptcy,” (2) Teran “couldn’t pay [her] bills,” and (3) Teran is “crazy.” (DSS 59.)

Band Defendants deny that Band told Pohlman that Plaintiffs faced impending bankruptcy at Cannes. In support, Band declares that he attended Cannes in May 2016, saw Pohlman at the festival, and engaged in “small talk” with him. (Band Decl. ¶ 25.) Band states: “At no time did I tell Dr. Pohlman or anyone else that EFD was bankrupt or about to file for bankruptcy, or any words to that effect.” (Ibid.) This evidence satisfies Band Defendants’ initial burden of proof with respect to this statement. Plaintiffs have not submitted contrary evidence to show that this statement was proffered by Band. Therefore, Plaintiffs’ defamation claim cannot prevail based on this statement.

Band Defendants deny that Band told Pohlman that Plaintiffs “could not pay [her] bills.” (See Mot. at 30; DSS 59.) Band Defendants rely upon the same piece of evidence: Band’s averment that he never told Pohlman or anyone else at Cannes that EFD “was bankrupt or about to file for bankruptcy, or any words to that effect.” (Band Decl. ¶ 25.) The Court concludes that a statement that one cannot pay the bills falls within the scope of this averment. Plaintiffs must establish a triable issue of material fact on this issue. To do so, Plaintiffs submit a declaration from Baselga stating: “[S]oon after [Cannes], a sales representative from a third company that supplies equipment to our company informed me about the conversation one of his directors had with [Band] in Cannes Festival. The sales representative asked me if it was true that EFD was having problems paying their bills as [Band] had indicated to the referenced director at [Cannes].” (Baselga Decl. ¶ 4.) This statement contains several layers of hearsay, at least one of which is hearsay without exception. This statement is therefore inadmissible and unusable. Plaintiffs also cite to one of Band Pro’s special interrogatory responses. (Azar Decl. Ex. 104, SI No. 7.) In the response, Band Pro states that Band told Baselga that he “had not been paid for equipment/services provided to EFD” and Band “may have discussed EFD’s outstanding payments with other vendors.” (Azar Decl. Ex. 104, SI No. 7.) This evidence is not responsive because Band Pro did not admit that Band told Pohlman that Plaintiffs “couldn’t pay [the] bills.” Therefore, Plaintiffs’ defamation claim cannot prevail based on this statement.

Finally, Band Defendants deny that Band told Pohlman or anyone else that Teran was “crazy.” Band Defendants also claim that this statement that Teran is “crazy” is a nonactionable statement of opinion. Both points are well-taken. Band denies telling “Pohlman or anyone else that [Teran] was crazy, or any words to that effect.” (Band Decl. ¶ 25.) Further, the characterization of a person as “crazy,” without more, is not an actionable opinion. Plaintiffs have not argued or shown otherwise.

Band Defendants are entitled to summary adjudication of the twelfth cause of action.

Conclusion

Band Defendants’ motion for summary judgment of the Complaint is denied.

Band Defendants’ motion for summary adjudication is granted as to the eleventh and twelfth causes of action and denied as to the remainder.


[1] In opposition to this motion, Plaintiffs have submitted 122 exhibits consisting of thousands of pages. Should Plaintiffs submit the same or a comparable number of exhibits in the future, the Court requires Plaintiffs to comply with CRC Rule 3.1110(f) which requires electronic exhibits “include electronic bookmarks with links to the first page of each exhibit and with bookmark titles that identify the exhibit number or letter and briefly describe the exhibit.”

None of the parties in this motion have complied with CRC Rule 3.1113(d)’s page limits on memoranda. In the future, the Court may exercise its discretion to read and consider only the first 15 pages (or 20 pages with respect to summary judgment motions) of an oversized brief.

[2] With limited exceptions, the Court has not ruled upon Plaintiffs’ 106 pages of objections to the evidence in support of Band Defendants’ moving papers because these objections were not material to the disposition of this motion. (CCP § 437c(q).) The Court overrules Plaintiffs’ objection to the entire Band Declaration and Paragraphs 2, 22, and 25 of the Band Declaration. In future motions, Plaintiffs must number their objections or they may be disregarded.

The Court sustains Plaintiffs’ objections to Band Defendants’ new arguments in reply and supplemental evidence. These new points and supplemental evidence violate Plaintiffs’ due process rights.

Band Defendants’ objections to the Baselga Declaration are ruled on as follows (Overruled (O); Sustained (S)): (1) O, (2) O, (3) S, (4) O, (5) O, (6) O. Band Defendants’ objections to the Mattes Declaration are ruled on as follows: (1) O, (2) S, (3) S. Band Defendants’ objections to the Teran Declaration are overruled. Band Defendants’ objections to the Walker Declaration are overruled.

Plaintiffs’ unopposed requests for judicial notice are granted. (Evid. Code § 452(h).)

[3] Plaintiffs argue that this line of attack against their fraud and negligent misrepresentation claims fails for the simple reason that Band Defendants have not addressed Plaintiffs’ concealment theory of fraud. In the FAC, Plaintiffs allege that Band Defendants concealed material facts which they were bound to disclose including (1) they were not licensed brokers or lenders under Financial Code section 22000, et seq., (2) failed to disclose that the equipment prices and quantities in their Lender Disclosures were inflated which led to larger payments from the lenders that Band Defendants kept for themselves, (3) failed to disclose that there were “overages” (i.e., secret profits) delivered to Brooks’ company, Novation, and (4) failed to disclose that EFD would be charged for anything other than the equipment and fees included in the EFD Disclosure. (FAC ¶ 75.) Plaintiffs’ argument has some validity. By not explaining in their moving papers why this concealment claim fails as a matter of law, Band Defendants cannot obtain summary adjudication of Plaintiffs’ entire first or second causes of action. Having said that, “a party may present a motion for summary adjudication challenging a separate and distinct wrongful act even though combined with other wrongful acts alleged in the same cause of action.” (Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th 1848, 1854-55.) Even though Plaintiffs’ intentional misrepresentation and concealment claims are combined in the same cause of action, the Court concludes that they each depict separate and distinct wrongful acts which are independently subject to summary adjudication.

[4] See, e.g., FAC ¶¶ 4 (stating that “Brooks, a friend of Mr. Bisel and a ‘Financing Specialist’ at Band Pro and DVWI, had worked with Mr. Band and Mr. Bisel to funnel overcharges from EFD to Mr. Brooks’ own company, Novation”), 15 (characterizing Brooks as an “agent of Band Pro and DVWI”), 16 (stating that Band “directed Mr. Brooks, Band Pro, and DVWI to provide financial advisory services to EFD”), 18 (stating that “each Defendant acted as the actual or ostensible agent, employee, and/or co-conspirator of each other”), 22 (stating that “Brooks, acting on his own behalf and as an agent for Band Pro and DVWI, agreed to act as EFD’s agents and brokers to obtain financing for the equipment and services specified in the EFD Disclosures”), 70 (stating that “Defendants, as agents, principals, and co-conspirators of each other Defendant, conspired to make and made material misrepresentations of fact, including” various misrepresentations made by Bisel).)

[5] Unlike with Brooks, the Court concludes that Band Defendants met their initial burden in showing a lack of agency or conspiracy with Bisel. Band declares: “[N]either I nor Band Pro nor DVWI employ or have ever employed Mr. Bisel or any of his companies. Likewise, neither I nor Band Pro nor DVWI have ever been employed by Mr. Bisel or any entity with which Mr. Bisel is or was associated. Neither I nor Band Pro nor DVWI have any agreement or financial arrangement of any kind with Mr. Bisel or any of his companies. Band Pro and DVWI were not aware of the agreement or financial arrangement between Mr. Bisel and EFD. Band Pro never had any dealings with Mr. Bisel and his companies until he was introduced to us by EFD. The only transactions on which Band Pro ever worked with Mr. Bisel were the transactions with EFD.” (Band Decl. ¶ 11.) Bisel submits a declaration corroborating these statements. (Bisel 4/9/20 Decl. ¶¶ 6-9.) If this evidence was uncontradicted at trial, a reasonable juror would have to conclude that Band Defendants did not have an agency or conspiracy relationship with Bisel.

[6] While the Court acknowledges that the meaning of the term “juice” in this email is contested in this case, the Court finds that, absent evidence to the contrary, there is a triable issue of material fact as to whether “juice” indicates the inclusion of inflated or phantom charges for profit.

[7] Band clarified in a follow-up email that he inadvertently referred to Arely Gomez with the personal pronoun “he.” (DSS 50.)

Case Number: BC661332    Hearing Date: March 13, 2020    Dept: 32

EFD USA, INC. & GEORGINA TERAN,

Plaintiffs,

v.

BAND PRO FILM AND DIGITAL, INC., et. al.

Defendants.

Case No.: BC661332

Hearing Date: March 13, 2020

[TENTATIVE] order RE:

1. motion for reconsideration of ruling on motion for leave to amend

2. motion to compel compliance with court orders

BACKGROUND

A. Complaint

Plaintiffs EFD USA, Inc. (“EFD”) and Georgina Teran (“Teran”) commenced this action against Defendants Band Pro Film and Digital, Inc. (“Band Pro”); Direct Video Warehouse, Inc. (“DVWI”); MaxPro Leasing, LLC (“MaxPro”); AKT Enterprises, LLC (“AKT”); Technijian, Inc. (“Technijian”); Brandon Brooks (“Brooks”); Greg Bisel (“Bisel”); and Amnon Band (“Band”) (collectively, “Defendants”) on May 15, 2017. The operative pleading is the First Amended Complaint (“FAC”) filed on November 21, 2017. The FAC asserts causes of action for (1) fraud against Defendants, (2) negligent misrepresentation against Defendants, (3) aiding and abetting fraud against Defendants, (4) violation of the UCL against Defendants, (5) breach of fiduciary duty against Defendants, (6) breach of implied contract against Defendants, (7) breach of implied contract against Band Pro and DVWI, (8) intentional interference with prospective economic advantage against Defendants, (9) money had and received against Defendants, (10) conversion against Bisel, Technijian, AKT, and MaxPro (collectively, “Bisel Defendants”), (11) civil extortion against Band Pro and Band, and (12) defamation per se against Band Pro and Band. Defendants’ demurrer to the eighth cause of action was sustained without leave to amend. The FAC alleges in pertinent part as follows.

EFD is a California-based company that supplies motion picture equipment and services to film and television productions, primarily in Latin America. Teran, a film producer, founded the company in 2004.

Since 2013, EFD has obtained most of its equipment through lease agreements through the following process. First, EFD contacts a supplier and a broker to inform them that it is in the market for a certain type of motion picture equipment, such as camera lenses. Second, the supplier and broker identify a lender to finance the transaction. Third, after the supplier confirms it can provide the desired equipment, the supplier works with the broker to prepare two sets of documents: one for EFD (“EFD Disclosure”) and another for the lender (“Lender Disclosure”). The EFD Disclosure includes an invoice or quote listing the types and quantities of equipment and services to be financed, any fees or taxes, and the total cost to EFD. The Lender Disclosure includes the same categories of information. EFD never views the Lender Disclosure because the supplier and broker send that copy exclusively to the lender. Fourth, based upon the Lender Disclosure, the broker and lender prepare a lease agreement for EFD. Typically, the agreement provides only general information about the items to be financed, not specific costs or quantities. Fifth, once the lender and EFD sign the lease agreement, the lender sends the supplier money to pay the full cost of the equipment and services. The lender also sends the broker a percentage commission based upon the total value of the transaction. Finally, EFD makes monthly payments to the lender for the equipment and services pursuant to the lease agreement. At the end of the lease term, EFD purchases the equipment for a nominal sum.

Using the aforementioned process, EFD has entered into dozens of lease agreement, worth millions of dollars, for equipment supplied by Band Pro and DVWI. Bisel, working for himself and his affiliated companies MaxPro, AKT, and Technijian, was the main finance broker for these agreements.

Teran’s first language is not English and she is unfamiliar with American financing and leasing practices so Teran and EFD relied heavily on Defendants’ advice. It is alleged that Defendants abused Teran’s and EFD’s trust and confidence by engaging in several fraudulent schemes. For example, it is alleged that Bisel informed EFD that lenders required certain “advance payments” including first and last months’ lease payments as well as security deposits, and Bisel insisted that these payments were not commissions, while in actuality the Bisel Defendants were pocketing this money. As another example, it is alleged that Defendants falsified and inflated invoices by including, inter alia, phantom equipment and services and that theses overcharges forced EFD to pay lenders more than the real price of the equipment and services requested.

In late 2015, Teran began to suspect that EFD may have been defrauded by Defendants when Bisel requested that EFD send him an advance payment for an equipment lease but warned EFD not to inquire about the transaction with the bank. Teran confronted Band with evidence of the fraud, and Band responded that “kickbacks” were common in the Los Angeles motion picture business. Teran began to investigate the transactions and uncover the false charges. EFD estimates that Defendants’ fraud has cost the company over $2 million in damages.

B. Course of Proceedings

On April 4, 2018, the Court granted EFD’s motion to compel Technijian, MaxPro, and AKT’s further responses to Request for Production of Documents (“RPD”), Set One, Nos. 1-2, 12, 36-39, 45, and 50-52 and Bisel’s further responses to RPD, Set One, Nos. 1-2, 10, 34-37, 41, and 46-48. The Court ordered Bisel Defendants to produce responsive documents within 30 days’ notice of the court order.

On May 4, 2018, Bisel Defendants served amended responses to the RPDs claiming that they could not comply with the court order dated April 4, 2018 because “Technijian suffered a computer crash in 2017 that deleted and/or corrupted many of its emails and attached or related documents, including some EFD emails and attached and related documents that might be responsive to this request.” (6/21/18 Shrader-Frachette Decl. ¶ 8, Exs. B-E.)

On June 21, 2018, EFD moved to compel Bisel Defendants to (1) comply with the court order dated April 4, 2018 by making a complete production of documents, (2) submit to a forensic inspection of the Technijian servers that purportedly suffered a computer crash causing the loss of documents, and (3) submit the Technijian custodian of records to a deposition concerning the purported crash.

On August 13, 2018, the Court granted EFD’s motion to compel. The Court found that Bisel Defendants had willfully destroyed bank statements and, per EFD’s request, imposed issue sanctions upon Bisel Defendants to the effect that Bisel Defendants would be deemed alter egos and agents of one another with respect to the transactions at issue in this action. The Court ordered Bisel Defendants to comply with the court order dated April 4, 2018 by making a complete production of documents or a statement verifying completion of the same. The Court also ordered Technijian to submit to a custodian of records deposition and a forensic inspection to determine whether additional responsive documents exist and can be recovered.

On January 30, 2019, the Court approved a forensic inspection protocol. Pursuant to the protocol, the inspection would take place on February 7 and 8, 2019 and be performed by Peter Garza (“Garza”). The inspection would involve examination of several repositories including the Technijian Finance Server, the MailStore Archive, and the VMTECHEXMBX01 server. Garza was to apply court-ordered search terms and produce the documents returned.

On March 15, 2019, the Court considered EFD’s motion to compel Bisel Defendants’ compliance with the court orders dated April 4, 2018 and August 13, 2018 by producing responsive documents to the aforementioned RPDs. The Court denied this motion and found that Bisel Defendants had complied with the August 13, 2018 court order based on Bisel’s averment that Bisel Defendants had “produced all relevant and responsive documents within my or our custody or control, except for our inability to produce for inspection or copying one or more emails that have been lost, destroyed and/or deleted, as a result of the corruption of a single lap top computer that occurred in March 2017.” (3/3/19 Bisel Decl. ¶ 2.)

That same day, the Court also considered EFD’s motion for an order to, among other things, (1) compel Bisel Defendants to comply with the Court’s forensic inspection order dated January 30, 2019 and (2) allow an additional two days to complete the forensic inspection. The Court denied any further examination of the Defendants’ servers as the parties’ stipulation provided for two days of forensic inspection. The Court also expressed concern about the use of “wild cards” that resulted in 5,000,000 documents covering a 20-year period from 2000 to 2019 using unauthorized search terms. Based on this concern, the Court amended the inspection protocol to allow Bisel Defendants to withhold documents that they believed were unlikely to lead to the discovery of admissible evidence.

On July 15, 2019, Bisel Defendants prepared a privilege log and lodged documents for in camera inspection on August 12, 2019. On August 20, 2019, the Court conducted an in camera inspection of the documents and ruled on the objections.

On January 6, 2020, the Court denied EFD’s motion for leave to file a Second Amended and First Supplemental Complaint (“SAC”). The Court concluded that EFD had failed to show reasonable diligence in seeking leave to amend and that granting the motion would severely prejudice Defendants by resulting in a third continuance of trial, increasing their discovery burden, and elevating the risk of losing critical evidence.

MOTION FOR RECONSIDERATION[1]

Plaintiffs move for partial reconsideration of the Court’s ruling denying its motion for leave to amend. Band Pro Defendants and Bisel Defendants separately oppose.

A. Legal Standard

CCP section 1008(a) is the exclusive means for reconsideration of court orders. CCP section 1008(a) provides: “When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown.”

B. Discussion

1. Timeliness of Motion

Band Pro Defendants and Bisel Defendants argue that this motion should be denied as untimely. The Court disagrees.

CCP section 1008(a) states that a party must move for reconsideration “within 10 days after service upon the party of written notice of entry of the order.” Bisel Defendants electronically served Plaintiffs with the Court’s ruling denying the motion for leave to amend on January 7, 2020. Electronic service extended the right to move for reconsideration by two court days. (CCP § 1010.6(a)(4)(B).) Twelve days following January 7, 2020 is Sunday, January 19, 2020. Because Sunday is a holiday for purposes of the CCP (CCP § 10), Plaintiffs’ right to move for reconsideration extended to Monday, January 20, 2020. (CCP § 12a.) Because January 20, 2020 was a court holiday (Martin Luther King Jr.’s birthday), Plaintiffs’ right to move for reconsideration extended to Tuesday, January 21, 2020. Plaintiffs moved for reconsideration on Tuesday, January 21, 2020. Consequently, Plaintiffs’ motion was timely.

Band Pro Defendants argue that CCP section 1013 does not apply and thus did not extend Plaintiffs’ deadline to move for reconsideration. In support, Band Pro Defendants cite to CCP section 1008(e) which states that “[t]his section specifies the court’s jurisdiction with regard to applications for reconsideration of its orders….”

Band Pro Defendants’ argument is unpersuasive. First, CCP section 1010.6, not CCP section 1013, is the relevant statute for electronic service. Second, the extensions enumerated in CCP section 1013 “appl[y] in the absence of a specific exception provided for by this section or other statute or rule of court.” CCP section 1008 provides no “specific exception” to the extensions enumerated in CCP section 1013 so CCP section 1013’s extensions govern. The Rutter Guide on Civil Procedure Before Trial corroborates this conclusion: “The 10-day deadline for seeking reconsideration is extended under CCP § 1013….” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2019) ¶ 9:326.1.)

2. Showing of New Facts

Plaintiffs move for reconsideration based upon the Court’s continuance of the trial and extension of the discovery cutoff date at the hearing on Plaintiffs’ motion for leave to amend. Band Pro Defendants and Bisel Defendants contend that this motion is not based upon new facts. Band Pro Defendants explain that no new facts exist because the purported new facts arose at the same time that the Court denied the motion for leave to amend.

A fair reading of the reconsideration statute does not support Defendants’ argument. The statute envisions that the party moving for reconsideration “make application … to reconsider the matter” “based upon new or different facts, circumstances, or law.” If certain “facts” did not exist when the party moved for reconsideration and the Court did not consider these facts in issuing its ruling, then such facts should be deemed “new” for purposes of the statute. At the time that Plaintiffs brought their motion for leave to amend and the Court issued its ruling on said motion, the Court had not granted a third continuance of the trial, extended the discovery cutoff date, or considered the effect of undertaking these actions. Accordingly, these are “new facts” for purposes of the reconsideration statute.

3. Merits

In its motion for leave to amend, Plaintiffs sought to add six defendants, four causes of action, and approximately 20 more equipment lease transactions to this action. In the instant motion, Plaintiffs ask to add fewer items: (1) causes of action for intentional infliction of emotional distress and negligent infliction of emotional distress and (2) prayers for relief and/or causes of action for unjust enrichment and constructive trust. According to Plaintiffs, they are not proposing the addition of new facts. Plaintiffs assert that the Court should allow this amendment because it is limited in size and the Court’s decision to advance the discovery cutoff and trial date ameliorated any prejudice that Defendants might suffer from this amendment.

Bisel Defendants argue that the Court should reject this amendment because, as before, Plaintiffs have not shown reasonable diligence in bringing this amendment and the amendment will cause Defendants to suffer prejudice. As to prejudice specifically, Bisel Defendants note that the discovery cutoff date of May 29, 2020 is less than three months away and that the trial date of July 28, 2020 is less than five months away.

Bisel Defendants’ argument is well-taken. The Court’s previous justification for denying Plaintiffs’ motion for leave to amend remains in full force. Plaintiffs have not shown reasonable diligence in pursuing this amendment, and this amendment would severely prejudice Defendants by increasing the discovery burden less than three months before the discovery cut-off date.

Plaintiffs respond that prejudice is nonexistent because the operative pleading already alleges that Teran suffered “emotional and physical distress” due to Band’s extortionary threats to have criminal charges brought against Plaintiffs. (FAC ¶¶ 133-34.) Plaintiffs note that Band Pro Defendants have already deposed Teran for many hours about the emotional distress that she claims to have suffered due to the threats. However, Plaintiffs’ proposed emotional distress claims are based on a broader set of facts. (See SAC ¶¶ 196-97, 201-03.) Plaintiffs allege that “Defendants knew or should have known that their threats against and false statements regarding Plaintiffs would or were likely to cause Ms. Teran severe emotional distress.” (SAC ¶ 196 (italics added).) This reference to false statements directly connects with Plaintiffs’ proposed trade libel which they purportedly are not reviving with this amendment. In a case like this which has been litigated for nearly three years and has featured numerous acrimonious discovery disputes, the addition of these new facts and causes of action is not warranted.

C. Conclusion

Plaintiffs’ motion for reconsideration is denied.

MOTION TO COMPEL COMPLIANCE[2][3]

EFD moves to compel Bisel Defendants to comply with the court orders dated April 4 and August 13, 2018 and January 30, March 15, May 10, and August 20, 2019 by

  1. Producing all documents responsive to RPD, Set One, Nos. 1-2, 12, 36-39, 45, and 50-52 served upon Technijian, MaxPro, and AKT and RPD, Set One, Nos. 1-2, 10, 34-37, 41, and 46-48 served upon Bisel.

  2. Taking the following actions to complete the forensic inspection:

  1. To facilitate the recovery of 173 deleted emails, allow Garza to use an assistant who is a forensics expert and programmer to write a custom program to extract emails from MailStore, analyze the data, and pull emails whose attributes mirror those of the 173 deleted messages containing one or more of the Court-ordered search terms;

  2. Permit Garza to access, image, and analyze the QuickBooks financial data containing one or more of the Court-ordered search terms;

  3. Permit Garza to examine the encrypted Technijian MailStore audit logs onsite at Technijian;

  4. Permit Garza to access, examine, image, and analyze the Technijian server, VMTECHEXMB01;

  5. Produce 23 documents Bisel Defendants withheld as privileged but failed to list on their privilege log; and

  6. Produce 39 documents listed in Bisel Defendants’ privilege log based on a claim of attorney-client privilege.

    A. Further Inspection Orders

    1. Statement of Facts

    a. Recovery of 173 Deleted Emails

    Following an initial culling to remove potentially irrelevant or privileged documents, Garza recovered 2,529 emails from the Technijian MailStore Email Archive. (Shrader-Frechette Decl. Ex. 25 (“Inspection Report”), ¶ 4l.) During this recovery process, Garza discovered that 659 emails had been deleted from the archive. (Ibid.) Garza learned that 173 of these 659 emails contained search hits for the court-ordered terms within the relevant timeframe. (Inspection Report, ¶¶ 4h, l.) Only the emails’ header, not their content, was accessible. (Ibid.) The 173 emails’ headers indicate that the emails were deleted from Bisel’s Technijian email accounts. (Inspection Report ¶ 4e.) Garza believes that these emails may still exist in other mailboxes of the MailStore Email Archive because the emails were archived from Exchange email folders of other users at Technijian. (Inspection Report ¶ 4h.) To recover this data, Garza requests permission to use an assistant to write custom software scripts to extract and pull emails from the entire MailStore Email Archive whose attributes mirror those of the 173 deleted emails. (Inspection Report ¶¶ 4h-j, 5b.)

    b. Production of QuickBooks Data

    Pursuant to the Court’s instructions, Garza removed Quicken and QuickBooks data that he retrieved from the Technijian servers. (Inspection Report ¶ 4a, b.) Garza opines that Bisel mischaracterized the QuickBooks data as personal data. (Inspection Report ¶ 4d.) Garza states that the file names and folder paths confirm that the QuickBooks data was for business use. (Inspection Report ¶ 4n.) Garza also notes that a search of the QuickBooks data resulted in search hits for the court-ordered search terms. (Inspection Report ¶ 4o.) Garza requests access to the QuickBooks data because he believes relevant information will be found therein. (Inspection Report ¶ 5b.)

    c. Analysis of MailStore Audit Logs

    An email audit log records email activity, including information about the deletion of emails. (Inspection Report ¶ 4c.) During his inspection, Garza preserved an encoded version of the MailStore Audit Log. (Inspection Report ¶ 4b.) Despite the encryption, Garza was able to deduce “a very large spike in activity in the logs” on only a few days. (Inspection Report ¶ 4c.) Garza was unable to completely circumvent the log’s encryption and was informed by a MailStore technical support representative that the log data could only be viewed in the installation that produced the log. (Ibid.) Garza requests access to the Technijian MailStore environment to properly review the encrypted MailStore Audit Log. (Inspection Report ¶¶ 4c, 5b.)

    d. Access to VMTECHEXMB01 Server

    The inspection court order gave Garza permission to inspect three email servers, VMTECHEXMBXO1, VMTECHEXMBXO2, and VMTECHEXMBXO3. The first server, VMTECHEXMBX01 was not accessible on the days of inspection. (Inspection Report ¶ 2l.) Garza requests access to this email server in order to complete his inspection. (Inspection Report ¶5b.)

    2. Discussion

    EFD requests that the Court authorize Garza to undertake the actions recommended in his report so that Garza may complete his forensic inspection.

    Bisel Defendants oppose. Bisel Defendants point to timeliness, claiming that EFD should have brought this motion nine months ago when Garza prepared the Inspection Report. Bisel Defendants cite prejudice, noting that EFD’s delay in bringing this motion will likely necessitate a fifth continuance of trial, generate further discovery disputes, and drive up litigation expenses. Bisel Defendants complain of unfairness, noting that the parties agreed to a two-day inspection and Garza was duly provided two days to collect responsive data. Bisel Defendants stress reasonable restraint, noting that Garza initially collected thousands of files and emails from Technijian’s servers and now requests a second detailed inspection of these servers. Finally, Bisel Defendants cite relevancy, asserting that EFD is pursuing an inspection which does not guarantee the production of probative evidence and, in particular, is demanding production of Technijian’s financial data which enjoys at least partial legal protection under the constitutional right to privacy and Civil Code section 3295.

    Bisel Defendants’ points are well-taken. EFD’s right to discovery are not unlimited. The Court ordered the forensic inspection of Technijian’s servers in August 2018, an inspection protocol was adopted in January 2019, the forensic inspection took place in February 2019, Garza prepared the Inspection Report in June 2019, and the parties appeared several times before the Court with disputes about the inspection. To obtain the supplemental inspection orders requested, EFD should have brought this motion months ago. At this late juncture, continuing the forensic inspection will likely delay trial, increase the parties’ discovery burden, and severely increase litigation costs for all parties. Moreover, the potential relevancy of the information sought does not outweigh considerations of burden and privacy. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2019) ¶ 8:293 (noting that party seeking privacy-protected information must show that “information is directly relevant to a cause of action or defense, i.e., that it is essential to determining the truth of the matters in dispute”).)

    The Court is not authorizing a further forensic inspection.

    B. Production of Documents Withheld Based on Privilege

    Bisel Defendants withheld 39 emails based on a claim of attorney-client privilege. (Shrader-Frechette Decl. Ex. 37.) Bisel Defendants produced a privilege log for each email. (Ibid.) EFD requests that Bisel Defendants produce these documents because the privilege log reflects that no attorneys were senders or recipients of these emails.

    In addition, Bisel Defendants withheld the following documents from the inspection production despite not including them in the privilege log: 0020002, 00200140-00200142, and 00200169-00200170 from the MailStore Archive Deleted Items Folder and 00203254, 00203530, 00204667, 00204690-00204700, 00204709, and 00204716-00204717 from the MailStore Archive Bisel Email Messages. (Teran Decl. ¶ 39.) EFD requests that the Court compel Bisel Defendants to produce these documents.

    Bisel Defendants respond with a declaration from counsel explaining that Bisel Defendants had previously provided EFD with most of these withheld documents and representing that any documents still being withheld would be produced to EFD’s counsel prior to the hearing on this motion. (Gilfillan Decl. ¶¶ 10-17.) EFD acknowledges receipt of these documents in its reply brief. (Reply at 10.) Accordingly, EFD’s request for production of documents is moot.

    CONCLUSION

    EFD’s motion for reconsideration is DENIED.

    EFD’s motion to compel compliance is DENIED.

    Bisel Defendants’ request for sanctions is DENIED.


[1] Band Pro Defendants’ requests for judicial notice are granted. (Evid. Code § 452(d).)

[2] EFD’s request to strike Bisel Defendants’ second opposition brief is denied. As Bisel Defendants note, EFD has essentially filed two motions: a motion to compel production of documents pursuant to RPD responses and a motion for further orders concerning the forensic inspection. Because EFD’s motion can be reasonably construed as two motions and because responding to this motion reasonably required ample briefing, the Court tolerates Bisel Defendants’ filing of two opposition briefs.

[3] EFD’s objections to the Fuchs and Gilfillan Declarations are overruled.

Case Number: BC661332    Hearing Date: January 08, 2020    Dept: 32

EFD USA, INC. & GEORGINA TERAN,

Plaintiffs,

v.

BAND PRO FILM AND DIGITAL, INC., et. al.

Defendants.

Case No.: BC661332

Hearing Date: January 8, 2020

[TENTATIVE] order RE:

motion for terminating sanctions

BACKGROUND

Plaintiffs EFD USA, Inc. (“EFD”) and Georgina Teran (“Georgina”) commenced this action against Defendants Band Pro Film and Digital, Inc. (“Band Pro”); Direct Video Warehouse, Inc. (“DVWI”); MaxPro Leasing, LLC (“MaxPro”); AKT Enterprises, LLC (“AKT”); Technijian, Inc. (“Technijian”); Brandon Brooks (“Brooks”); Greg Bisel (“Bisel”); and Amnon Band (“Band”) (collectively, “Defendants”) on May 15, 2017. The operative pleading is the First Amended Complaint (“FAC”) filed on November 21, 2017. The FAC asserts causes of action for (1) fraud against Defendants, (2) negligent misrepresentation against Defendants, (3) aiding and abetting fraud against Defendants, (4) violation of the UCL against Defendants, (5) breach of fiduciary duty against Defendants, (6) breach of implied contract against Defendants, (7) breach of implied contract against Band Pro and DVWI, (8) intentional interference with prospective economic advantage against Defendants, (9) money had and received against Defendants, (10) conversion against Bisel, Technijian, AKT, and MaxPro (collectively, “Bisel Defendants”), (11) civil extortion against Band Pro and Band, and (12) defamation per se against Band Pro and Band. Defendants’ demurrer to the eighth cause of action was sustained without leave to amend.

On September 19, 2019, EFD filed Doe Amendments naming Joel Rodriguez (“Rodriguez”), First Option Capital, Inc., Groundseven Ventures, Inc., and Unitek Computer Stores, Inc. as defendants in this action.

LEGAL STANDARD

Courts have the authority to issue monetary sanctions, evidentiary sanctions, or terminating sanctions against parties engaging in misuse of the discovery process after giving the parties proper notice and the opportunity to be heard. (CCP § 2023.030.)

The discovery statutes evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination. If a lesser sanction fails to curb misuse, a greater sanction is warranted: continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse. (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992.) “The penalty should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery.” (Wilson v. Jefferson (1985) 163 Cal. App. 3d 952, 959.)

In determining whether sanctions should be imposed, courts consider the totality of the circumstances, including the “conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.” (Lang v. Hochman (2000) 77 Cal. App. 4th 1225, 1246.) Generally, two facts are prerequisite to the imposition of nonmonetary sanctions: (1) absent unusual circumstances, there must be a failure to comply with a court order and (2) the failure must be willful. (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.)

DISCUSSION[1][2]

The Band Pro Defendants and Bisel Defendants move for terminations and other nonmonetary sanctions against EFD on the primary ground that EFD engaged in witness tampering. According to Band Pro Defendants, Georgina instructed her brother Eduardo Teran (“Eduardo”) to bribe Rodriguez’s ex-wife, Martha Laura Valencia Maya (“Maya”), to file a domestic violence complaint against Rodriguez in order to discredit him as a witness.

In support of this motion, Band Pro Defendants submit a declaration from Maya. According to Maya, at approximately 4:00 p.m. on August 23, 2019, she received a phone call from +52-55-5659-7959, an EFD Mexico office phone number. (Maya Decl. ¶ 2.) The caller identified himself as Eduardo. (Maya Decl. ¶ 4.) The call lasted approximately five minutes. (Ibid.) Eduardo informed Maya that Georgina wanted to talk to her. (Maya Decl. ¶ 5.) Maya asked what about. (Ibid.) Eduardo asked Maya if she was aware that Rodriguez had stolen $3 million dollars and equipment from EFD. (Maya Decl. ¶ 6.) This question made Maya uncomfortable. (Ibid.) Maya asked Eduardo how he got her phone number, and Eduardo responded that it did not matter. (Maya Decl. ¶ 7.) “[W]hat really matters is what I just told you about [Rodriguez] stealing from EFD. [Rodriguez] has done a lot of bad things.” (Ibid.) This statement made Maya feel more uncomfortable and unsafe. (Maya Decl. ¶ 8.) Maya responded that she had “nothing to do with” Rodriguez and that she was not interested in hearing about “bad things” that Rodriguez had committed. (Ibid.) Eduardo replied: “If you have nothing to do with [Rodriguez] anymore, would you be interested in receiving some money from Georgina? If you declare domestic violence charges or file sexual harassment charges against [Rodriguez] we can reach an economic arrangement.” (Maya Decl. ¶ 9.) Eduardo then insisted that Maya go to EFD’s office to meet with him and Georgina to discuss the arrangement. (Ibid.) Maya replied that she was not interested in talking with them and ended the call. (Maya Decl. ¶ 10.) After the call, Maya notified Rodriguez about what transpired. (Maya Decl. ¶ 11.)

Without question, the Maya Declaration presents a serious charge of witness tampering against Eduardo and, perhaps, Georgina and EFD.

In response, EFD paints a completely different narrative. According to Eduardo, Georgina asked him to arrange a meeting between her and Maya “so that [she] could speak with Ms. Maya about certain vehicles she and her ex-husband [Rodriguez] used to lease in Mexico.” (Eduardo Decl. ¶ 4.) Pursuant to this request, Eduardo called Maya once on August 27, 2019. (Eduardo Decl. ¶¶ 5, 10.) Eduardo denies talking to Maya at any time before or after that call. (Eduardo Decl. ¶ 10.)

EFD asked Alejandro Gonzalez (“Gonzalez”), EFD Mexico’s Director of Information Technology, to investigate EFD Mexico’s records concerning whether a telephone call occurred between Eduardo and Maya. (Gonzalez Decl. ¶ 4.) Gonzalez reviewed EFD Mexico’s Elastix pbx system, a unified communication server software which maintains detailed records of all incoming and outgoing phone calls at the company and features the ability to record phone calls. (Gonzalez Decl. ¶ 5.) Based on his review, Gonzalez found that one phone call took place between Eduardo and Maya on August 27, 2019 and lasted 1 minute and 42 seconds. (Gonzalez Decl. ¶¶ 6, 9-11, 13.) Gonzalez downloaded the recorded call and played the call for Eduardo who confirmed that the recording reflected the phone conversation that he had with Maya. (Gonzalez Decl. ¶¶ 6, 8; Eduardo Decl. ¶ 7.)

The translated transcript[3] of the phone call reads:

FEMALE: Hello?

MALE: Hello, pardon, Mrs. Martha Laura Valencia?

FEMALE: From whom?

MALE: Eduardo Teran speaking, from the EFD company.

FEMALE: Eh, yes, it is I.

MALE: Do you remember me, ma’am?

FEMALE: I believe I do, Eduardo how are you?

MALE: I am a very tall man, who was there--

FEMALE: Yes.

MALE: You, I remember you when one time that you were there in the office visiting.

FEMALE: Yes, yes, yes, yes, yes.

MALE: Well, look, what I want -- I wanted to talk with you because we have a situation with Joel and with his sister Veronica.

FEMALE: Aha.

MALE: And my sister who is the owner of EFD wants to see if we can make an

appointment with you to talk about some matters with you, and, and, and, ah--

FEMALE: No, I do not believe so; I am already divorced from Joel, that is--

MALE: Exactly, yes, yes, yes.

FEMALE: I do not know what problems they have, but--

MALE: But it is precisely if you are already divorced, that is why we are interested in talking to you.

FEMALE: But no, no, I am not interested, Eduardo, thank you very much.

MALE: Are you sure? The thing is that--

FEMALE: Yes.

MALE: Because--

FEMALE: Yes, thank you very much, thank you very much. I think that the best thing is for him to take care of his matters.

MALE: For him to take care of his matters.

FEMALE: Exactly. All right?

MALE: Mmm, my goodness, the thing is that it is not a good thing what Joel did.

FEMALE: My goodness. The truth is that I am not interested even in knowing. But all right, I thank you for the call.

MALE: But no, it’s because, listen, it’s because what we want--

FEMALE: May you finish soon. Bye.

MALE: You cannot help us then?

Eduardo recalls that Maya’s voice became blunt once she learned who was calling and that the call pertained to Rodriguez. (Eduardo Decl. ¶ 9.) Eduardo recalls her attitude was “I’m not interested, I haven’t been married to this guy for a long time, and whatever he has to do, let him do it himself, and I don’t want to know anything.” (Ibid.)

EFD retained Douglas Carner (“Carner”), a certified Audio Video Forensic Analyst, to test the authenticity of the recording using industry accepted tests. (Carner Decl. ¶ 3.) After performing said tests, Carner detected no alterations to the recording. (Carner Decl. ¶ 6.) Carner opines to a reasonable degree of expert confidence that the recording “is consistent with being an original phone recording” and “consistent with being an authentic and faithful representation of the facts as they occurred.” (Carner Decl. ¶¶ 5-6.)

During his investigation, Gonzalez also looked into the phone number that Maya identified as Eduardo’s during the call. (Gonzalez Decl. ¶ 12.) Gonzalez determined that the phone number, while belonging to EFD Mexico, could not make out-going calls because its call function has been deactivated. (Ibid.) Gonzalez tested the number to confirm. (Ibid.) Gonzalez also logged onto the online portal of EFD Mexico’s phone company and confirmed that the number had not been used to make a call in the entire year. (Ibid.)

Based on this evidence, EFD succinctly notes: “[T]he Band Defendants filed this motion for terminating sanctions, accusing Plaintiffs of the criminal acts of witness tampering and falsifying evidence, based on a declaration in which every material statement is demonstrably false and for which they have no supporting evidence. Among other things, the declaration asserts that the call came from +52 55 5659 7959, but outgoing calls could not be made from that number. [Citation.] The declaration states the date of the call was August 23, but there was no call between Mr. Teran and Ms. Maya on August 23 (the real date was August 27). [Citation.] The declaration claims Mr. Teran offered Ms. Maya an ‘economic arrangement’ and wanted to ‘discuss [Ms. Maya’s] filing false domestic violence charges against [Rodriguez] in exchange for money from the Terans,” [citation], but no such discussion occurred. [Citation.] The declaration claims Mr. Teran asked if Ms. Maya was aware Mr. Rodriguez ‘stole’ $3 million and equipment from EFD, [Citation], but that did not happen. [Citation.] The declaration says Ms. Maya asked how Mr. Teran obtained her number, [citation], but again, nothing like that was said. [Citation.] The declaration swears that the call lasted five minutes, but the call was only 1 minute 42 seconds, information that would have been readily available on Ms. Maya’s phone. [Citation.].” (Opp. at 7.)

EFD has supplied substantial evidence to rebut every material fact underlying Band Pro Defendants’ charge of witness tampering. In light of this conflicting evidence, Band Pro Defendants have failed to show that EFD engaged in witness tampering or that terminating or other nonmonetary sanctions are warranted.

Faced with this conflicting evidence, Band Pro Defendants reply that the recording actually corroborates the Maya Declaration. Band Pro Defendants note that the recording mirrors Maya’s testimony that (1) Eduardo called her, (2) Eduardo and Georgina wanted to talk with her about Rodriguez, (3) Eduardo told her that Rodriguez has done “bad things” (or “not a good thing”), and (4) Eduardo proposed that they meet to discuss matters further. The Court is unpersuaded. While there are similarities between the recording and Maya’s testimony, the key ingredient of this witness tampering charge — a proposal that Eduardo would pay Maya if she filed domestic violence charges against Rodriguez — is absent. Moreover, showing that some portions of Maya’s testimony are true does not compel the conclusion that every portion of Maya’s testimony is true. Falsehoods can be grounded in some degree of truth.

Band Pro Defendants claim that Eduardo had no other reason to reach out to Maya except to manipulate evidence. Band Pro Defendants stress the timing of this call — a month after Georgina unilaterally stopped her deposition when she was questioned about communications between her, Rodriguez, and Bisel. (Gill Supp Decl. ¶ 10.) The Court agrees that Eduardo’s justification for calling Maya is curious. Why did Georgina want to speak with Maya “about certain vehicles she and [Rodriguez] used to lease in Mexico” in the midst of this litigation and why did Georgina ask Eduardo to make this call? If the call regarded matters in the litigation, presumably EFD’s counsel would be handling these matters. In any event, Eduardo has offered a plausible justification for this call. Band Pro Defendants have not refuted this justification, and this justification is not belied by the recording. Given the impeachment value of the recording, this justification is enough.

Finally, Band Pro Defendants assert that the recording presented by EFD has been doctored. Band Pro Defendants explain that the recording captures only a portion of the conversation between Maya and Eduardo and leaves out the damning financial proposal. Maya stands by her account of the recording. (Maya Supp. Decl. ¶ 4.) Band Pro Defendants retained Erik Rasmussen (“Rasmussen”), the Head of Cybersecurity and Risk Management Solutions at a consulting firm called Grobstein Teeple LLP, to assess the recording’s authenticity. (See Rasmussen Decl. ¶ 3.) Rasmussen concludes that “[g]iven the lack of metadata in the .wav file analyzed, and given the ease at which the file can be manipulated, including altering the purported source of the file prior to download, it is difficult to assess the true origin of the .wav file and whether or not the file was manipulated prior to my analysis.” (Rasmussen Decl. ¶ 15.)

The Court is not persuaded. Rasmussen’s conclusion that the recording may have been manipulated is not tantamount to a conclusion that the recording was manipulated. Band Pro Defendants must demonstrate the latter in order to settle this credibility dispute between Maya and Eduardo and substantiate its witness tampering charge. Absent this showing, the weight of the evidence[4] presented in this motion favors EFD.[5]

The Court must decide one final issue. Unsatisfied with a mere denial of this motion, EFD brings charges of its own. EFD accuses Band Pro Defendants of tampering with a witness to procure a false declaration. EFD points to an email between Band Pro Defendants’ counsel and Rodriguez in which counsel asks Rodriguez “to get a declaration from [his] ex-wife about Georgina Teran trying to pay her to file battery/assault charges against [him.] We want to use this for a motion to the court that Georgina is tampering with witnesses.” (Shrader-Frechette Decl. Ex. 1.) In a subsequent email, counsel delineates to Rodriguez what types of information (e.g., date of call and words used) should be included in the declaration. (Ibid.) However, this email without any context is insufficient to substantiate this charge. Band Pro Defendants’ counsel reasonably explains in reply that this email followed a conversation with Rodriguez and Maya wherein she learned about this alleged offer. (Gill Supp. Decl. ¶¶ 2-3.) As the email suggests, counsel was asking Rodriguez to obtain a declaration memorializing the allegations. Further, counsel’s subsequent exuberance about the information — “thank you for sharing this with us!!! Very helpful!!” (Shrader-Frechette Decl. Ex. 1) — is reasonably consistent with the reaction of any lawyer who believes that damning evidence about his or her opponent has been obtained.

EFD’s more tempered argument is that Band Pro Defendants filed this motion and submitted the Maya Declaration without a reasonable evidentiary basis. EFD states: “Despite the considerable time spent working on the declaration, the Band Defendants never wrote to Ms. Maya, never collected any supporting documents such as telephone records, and never even bothered to ask EFD or its counsel about the call — any [] one of which could have shown that the declaration was false. [Citation.] The Band Defendants pressed forward despite significant red flags.” (Opp. at 9.) The Court agrees with EFD that Band Pro Defendants did not handle this situation properly. Band Pro Defendants should have obtained Maya’s telephone records and corresponded with EFD about these charges prior to bringing this motion. Even so, Band Pro Defendants’ counsel, at least, spoke with Rodriguez and Maya about the allegations and required Maya to sign the declaration under penalty of perjury prior to bringing this motion. (Gill Supp. Decl. ¶¶ 2-7.) This due diligence is sufficient to dissuade a finding that Band Pro Defendants acted without reasonable justification.

CONCLUSION

Band Pro Defendants’ motion for terminating, issue, evidentiary, and monetary sanctions is DENIED.


[1] EFD’s objections to the Gill and Maya Declarations are OVERRULED. Band Pro Defendants’ objections to the Carner, Eduardo, and Gonzalez Declarations are OVERRULED. EFD’s objections to the Rasmussen Declaration and Maya Supplemental Declaration are OVERRULED.

[2] Pursuant to the parties’ stipulation and protective order, Band Pro Defendants’ motion to file records under seal is GRANTED. (See CRC Rule 2.550(a)(3).)

[3] Band Pro Defendants argue that the phone call recording is inadmissible under Penal Code section 632(d). However, as noted in a prior ruling, the recording is only “generally inadmissible”; it “can be used to impeach inconsistent testimony by those seeking to exclude the evidence.” (People v. Crow (1994) 28 Cal.App.4th 440, 452.) Band Pro Defendants respond that the recording is inadmissible impeachment evidence because EFD did not proffer this evidence in conformity with Evidence Code section 770. That statute reads in full: “Unless the interests of justice otherwise require, extrinsic evidence of a statement made by a witness that is inconsistent with any part of his testimony at the hearing shall be excluded unless: (a) The witness was so examined while testifying as to give him an opportunity to explain or to deny the statement; or (b) The witness has not been excused from giving further testimony in the action.” The Court disagrees. Assuming arguendo that this statute applies, its criteria are sufficiently met — (1) in the moving papers, Band Pro Defendants submitted a sworn declaration, a mode of testimony (CCP § 2002), from Maya, (2) in opposition, EFD submitted the recording, i.e., evidence of an inconsistent statement, to impeach Maya’s testimony, and (3) in reply, Band Pro Defendants could submit (and, indeed, have submitted) a supplemental declaration from Maya “to explain or to deny the statement.” Further, the “interests of justice” compel inclusion of this critical impeachment evidence given the circumstances.

[4] E.g., Eduardo’s declaration, the phone call recording, the inability to make outgoing phone calls from the phone number identified by Maya, and the failure to present Maya’s phone call records.

[5] EFD’s request to (1) present oral testimony and/or (2) submit a supplemental expert report from Carner is DENIED because the Court has resolved this motion in EFD’s favor without the need to examine this additional evidence.

Case Number: BC661332    Hearing Date: January 06, 2020    Dept: 32

EFD USA, INC. & GEORGINA TERAN,

Plaintiffs,

v.

BAND PRO FILM AND DIGITAL, INC., et. al.

Defendants.

Case No.: BC661332

Hearing Date: January 6, 2020

[TENTATIVE] order RE:

motion for leave to file a second amended complaint

BACKGROUND

Plaintiffs EFD USA, Inc. (“EFD”) and Georgina Teran (“Teran”) commenced this action against Defendants Band Pro Film and Digital, Inc. (“Band Pro”); Direct Video Warehouse, Inc. (“DVWI”); MaxPro Leasing, LLC (“MaxPro”); AKT Enterprises, LLC (“AKT”); Technijian, Inc. (“Technijian”); Brandon Brooks (“Brooks”); Greg Bisel (“Bisel”); and Amnon Band (“Band”) (collectively, “Defendants”) on May 15, 2017. The operative pleading is the First Amended Complaint (“FAC”) filed on November 21, 2017. The FAC asserts causes of action for (1) fraud against Defendants, (2) negligent misrepresentation against Defendants, (3) aiding and abetting fraud against Defendants, (4) violation of the UCL against Defendants, (5) breach of fiduciary duty against Defendants, (6) breach of implied contract against Defendants, (7) breach of implied contract against Band Pro and DVWI, (8) intentional interference with prospective economic advantage against Defendants, (9) money had and received against Defendants, (10) conversion against Bisel, Technijian, AKT, and MaxPro (collectively, “Bisel Defendants”), (11) civil extortion against Band Pro and Band, and (12) defamation per se against Band Pro and Band. Defendants’ demurrer to the eighth cause of action was sustained without leave to amend. The FAC alleges in pertinent part as follows.

EFD is a California-based company that supplies motion picture equipment and services to film and television productions, primarily in Latin America. Teran, a film producer, founded the company in 2004.

Since 2013, EFD has obtained most of its equipment through lease agreements. EFD has a typical process by which it enters into these lease agreements. First, EFD contacts a supplier and a broker to inform them that it is in the market for a certain type of motion picture equipment, such as camera lenses. Second, the supplier and broker identify a lender to finance the transaction. Third, after the supplier confirms it can provide the desired equipment, the supplier works with the broker to prepare two sets of documents: one for EFD (“EFD Disclosure”) and another for the lender (“Lender Disclosure”). The EFD Disclosure includes an invoice or quote listing the types and quantities of equipment and services to be financed, any fees or taxes, and the total cost to EFD. The Lender Disclosure includes the same categories of information. EFD never views the Lender Disclosure because the supplier and broker send that copy exclusively to the lender. Fourth, based upon the Lender Disclosure, the broker and lender prepare a lease agreement for EFD. Typically, the agreement provides only general information about the items to be financed, not specific costs or quantities. Fifth, once the lender and EFD sign the lease agreement, the lender sends the supplier money to pay the full cost of the equipment and services. The lender also sends the broker a percentage commission based upon the total value of the transaction. Finally, EFD makes monthly payments to the lender for the equipment and services pursuant to the lease agreement. At the end of the lease term, EFD purchases the equipment for a nominal sum.

Using the aforementioned process, EFD has entered into dozens of lease agreement, worth millions of dollars, for equipment supplied by Band Pro and DVWI. Bisel, working for himself and his affiliated companies MaxPro, AKT, and Technijian, was the main finance broker for these agreements.

It is alleged that Teran’s first language is not English and she is unfamiliar with American financing and leasing practices so Teran and EFD relied heavily on Defendants’ advice. It is alleged that Defendants abused Teran’s and EFD’s trust and confidence by engaging in several fraudulent schemes. It is First alleged that Bisel informed EFD that lenders required certain “advance payments” including first and last months’ lease payments as well as security deposits, that Bisel insisted that these payments were not commissions, and that the Bisel Defendants were pocketing this money. It is Second alleged that Defendants falsified and inflated invoices by including, inter alia, phantom equipment and services and that these overcharges forced EFD to pay lenders more than the real price of the equipment and services requested.

In late 2015, Teran began to suspect that EFD may have been defrauded by Defendants when Bisel requested that EFD send him an advance payment for an equipment lease but warned EFD not to inquire about the transaction with the bank. Teran confronted Band with evidence of the fraud, and Band responded that “kickbacks” were common in the Los Angeles motion picture business. Teran began to investigate the transactions and uncover the false charges. EFD estimates that Defendants’ fraud has cost the company over $2 million in damages.

LEGAL STANDARD

The court may, in furtherance of justice, and on such terms as may be proper, allow a party to amend any pleading. (CCP §§ 473(a), 576.) Courts must apply a policy of liberality in permitting amendments at any stage of the proceeding, including during trial, when no prejudice to the opposing party is shown. (Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1377.) In determining the extent of prejudice to the opposing party, the court must consider various factors, such as whether the amendment would delay trial or increase the discovery burden. (Demetriades v. Yelp, Inc. (2014) 228 Cal.App.4th 294, 306.)

A motion to amend a pleading before trial must: (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph, and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located. (CRC Rule 3.1324(a).)

In addition, a separate declaration must accompany the motion and must specify: (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier. (CRC Rule 3.1324(b).)

OBJECTIONS

EFD’s objections to the Bisel, Fuchs, and Gill Declarations are OVERRULED.

DISCUSSION

EFD moves for leave to file a Second Amended Complaint and First Supplemental Complaint (“SAC”). The Band Pro Defendants and Bisel Defendants separately oppose this motion.[1]

The SAC proposes to add six defendants, four causes of action, and approximately 20 more equipment lease transactions. According to EFD’s counsel David E. Azar (“Azar”), the SAC contains three types of amended allegations: (1) additional details fleshing out Defendants’ scheme to defraud EFD, (2) additional fraudulent transactions perpetrated by Defendants, and (3) additional defamatory comments regarding Teran made by Band. (Mot. at 9-10; Azar Decl. ¶¶ 3-7.) EFD obtained the facts giving rise to (1) the first type of amended allegations through documents produced by a forensic inspection in June through August 2019, (2) the second type of amended allegations through rolling productions in discovery in February through April 2019, and (3) the third type of amended allegations through discovery “earlier this year.” (Ibid.) EFD did not bring this motion immediately upon disclosure of the relevant information because EFD wanted to avoid numerous rounds of amending the operative pleading. (Azar Decl. ¶ 11.) EFD was “not in a position to make a full update of the transactions in an amended complaint until early September 2019,” at which time Azar raised the matter to Defendants who refused to stipulate to an amendment. (Azar Decl. ¶ 8.) According to Azar, this amendment is necessary and proper because it makes the operative pleading consistent with the information that EFD has uncovered during discovery and avoids depriving EFD of its right to assert a meritorious cause of action related to the general set of factual allegations in the FAC. (Azar Decl. ¶ 10.)

Defendants claim that leave to file the SAC should be denied because (1) EFD was not diligent in bringing this motion and (2) the amendment would prejudice Defendants.

A. Lack of Diligence

Defendants note that EFD commenced this action on May 15, 2017 and brought this motion on December 11, 2019, an approximate time gap of two years and seven months. Defendants claim that EFD has produced insufficient evidence to justify this time gap. Defendants emphasize that the CRC Rules require EFD to disclose when the facts giving rise to the amended allegations were discovered and the reasons why the request for amendment was not made earlier. (CRC Rule 3.1324(b)(3)-(4).)

Defendants’ point is well-taken. Azar concedes that EFD knew about the facts giving rise to the second and third types of amended allegations by April 2019. Waiting until the month before trial to bring a motion for leave to amend to include these allegations is unfair and unreasonable. While seeking to avoid numerous rounds of amending the complaint by bringing one comprehensive pleading is a laudable objective in most contexts (Azar Decl. ¶ 11), this objective is not persuasive justification in this context due to the amendment’s size and its proximity to trial.

Similarly, EFD has insufficiently shown when the facts giving rise to the amended allegations were discovered. As Bisel Defendants point out, the first type of amended allegations — those fleshing out the Defendants’ scheme to defraud EFD — are fundamentally unimportant. A pleading need not include evidentiary facts; what matters is the inclusion of ultimate facts that expand the FAC’s scope of liability. The second type of amended allegations are important — they expand the number of lease transactions implicated in this action from 46 to 66. But apart from noting that Defendants produced “documents that, when pieced together, showed additional fraudulent transactions and details,” EFD has failed to explain how it took nearly two years to learn about the fraud perpetrated in these additional transactions. EFD cannot reasonably deny that it was a party to those transactions and therefore knew (or should have known) about the transactions’ existence, basic purpose, and the parties involved therewith. Given the length of this litigation and the nature of these transactions, EFD needed to show why it did not reasonably suspect these additional transactions were fraudulent. Lack of proof is not dispositive; a common and authorized pleading practice is to allege suspected wrongdoing on information and belief. (See generally Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1158.) Finally, the evidence showing when the facts giving rise to the third type of amended allegation were uncovered is the least compelling. Azar gives no indication what discovery apprised EFD of the “additional defamatory comments regarding Georgina Teran” and why such discovery was not obtained earlier. (Azar Decl. ¶ 3.)

B. Prejudice

EFD asserts that this amendment will not prejudice Defendants. EFD explains that (1) Defendants have been on actual notice since April 2019 that these additional transactions were part of the case, (2) the parties have requested a continuance of the trial date presently set for January 21, 2020, and (3) discovery has yet to be completed. (Mot. at 11-12.)

Defendants argue that granting this motion will prejudice them because granting this motion will mandate that trial be continued for a third time and will force Defendants to conduct more discovery and bring more motions such as a demurrer and summary judgment motion. (Fuchs Decl. ¶ 12.) Bisel Defendants’ counsel estimates that this additional discovery and motion practice will cause them to incur substantial expenses. (Fuchs Decl. ¶ 12 (hundreds of thousands of dollars).) Band Pro Defendants’ counsel notes that Band Pro Defendants have already spent “hundreds of thousands of dollars and thousands of hours in conducting discovery and preparing their legal defense. [Band Pro] Defendants have conducted 7 depositions, served several rounds of written discovery and reviewed over a hundred thousand documents — all based on the allegations contained in the FAC.” (Gill Decl. ¶ 3.)

Defendants’ showing of prejudice is well-taken. If granted, this amendment would prejudice Defendants by resulting in a third continuance of trial and by severely increasing the parties’ discovery burden. (Demetriades, supra, 228 Cal.App.4th at 306.) At this point in the litigation process, Defendants are entitled to bring this case to trial. Further, all the purportedly fraudulent leases were entered into approximately four to seven years ago. (SAC pp. 24-80.) Prolonging the trial in this action further increases the risk of the loss of critical evidence.

CONCLUSION

For the aforementioned reasons, EFD’s motion for leave to file the SAC is DENIED.


[1] Band Pro Defendants’ opposition brief contained several citations to unpublished cases in violation of CRC Rule 8.1115(a). (Opp. at 9-10.) Bisel Defendants’ opposition brief is 16 pages in violation of CRC 3.1113(d). In this lawsuit, Bisel Defendants have repeatedly filed briefs exceeding the permissible page limits. The Court expects all parties to comply with the CRC.

Case Number: BC661332    Hearing Date: January 03, 2020    Dept: 32

EFD USA, INC. & GEORGINA TERAN,

Plaintiffs,

v.

BAND PRO FILM AND DIGITAL, INC., et. al.

Defendants.

Case No.: BC661332

Hearing Date: January 3, 2020

[TENTATIVE] order RE:

(1) EFD’s motion to compel band pro defendants’ further responses to requests for admission, set two

(2) EFd’s motion to compel band pro defendants’ responses to form interrogatory, set three

(3) efd’s motion to compel band pro defendants’ responses to requests for production of documents, set two

BACKGROUND

Plaintiffs EFD USA, Inc. (“EFD”) and Georgina Teran (“Teran”) commenced this action against Defendants Band Pro Film and Digital, Inc. (“Band Pro”); Direct Video Warehouse, Inc. (“DVWI”); MaxPro Leasing, LLC (“MaxPro”); AKT Enterprises, LLC (“AKT”); Technijian, Inc. (“Technijian”); Brandon Brooks (“Brooks”); Greg Bisel (“Bisel”); and Amnon Band (“Band”) (collectively, “Defendants”) on May 15, 2017. The operative pleading is the First Amended Complaint (“FAC”) filed on November 21, 2017. The FAC asserts causes of action for (1) fraud against Defendants, (2) negligent misrepresentation against Defendants, (3) aiding and abetting fraud against Defendants, (4) violation of the UCL against Defendants, (5) breach of fiduciary duty against Defendants, (6) breach of implied contract against Defendants, (7) breach of implied contract against Band Pro and DVWI, (8) intentional interference with prospective economic advantage against Defendants, (9) money had and received against Defendants, (10) conversion against Bisel, Technijian, AKT, and MaxPro (collectively, “Bisel Defendants”), (11) civil extortion against Band Pro and Band, and (12) defamation per se against Band Pro and Band. Defendants’ demurrer to the eighth cause of action was sustained without leave to amend. The FAC alleges in pertinent part as follows.

EFD is a California-based company that supplies motion picture equipment and services to film and television productions, primarily in Latin America. Teran, a film producer, founded the company in 2004.

Since 2013, EFD has obtained most of its equipment through lease agreements. EFD has a typical process by which it enters into these lease agreements. First, EFD contacts a supplier and a broker to inform them that it is in the market for a certain type of motion picture equipment, such as camera lenses. Second, the supplier and broker identify a lender to finance the transaction. Third, after the supplier confirms it can provide the desired equipment, the supplier works with the broker to prepare two sets of documents: one for EFD (“EFD Disclosure”) and another for the lender (“Lender Disclosure”). The EFD Disclosure includes an invoice or quote listing the types and quantities of equipment and services to be financed, any fees or taxes, and the total cost to EFD. The Lender Disclosure includes the same categories of information. EFD never views the Lender Disclosure because the supplier and broker send that copy exclusively to the lender. Fourth, based upon the Lender Disclosure, the broker and lender prepare a lease agreement for EFD. Typically, the agreement provides only general information about the items to be financed, not specific costs or quantities. Fifth, once the lender and EFD sign the lease agreement, the lender sends the supplier money to pay the full cost of the equipment and services. The lender also sends the broker a percentage commission based upon the total value of the transaction. Finally, EFD makes monthly payments to the lender for the equipment and services pursuant to the lease agreement. At the end of the lease term, EFD purchases the equipment for a nominal sum.

Using the aforementioned process, EFD has entered into dozens of lease agreement, worth millions of dollars, for equipment supplied by Band Pro and DVWI. Bisel, working for himself and his affiliated companies MaxPro, AKT, and Technijian, was the main finance broker for these agreements.

Teran’s first language is not English and she is unfamiliar with American financing and leasing practices so Teran and EFD relied heavily on Defendants’ advice. Defendants abused Teran’s and EFD’s trust and confidence by engaging in several fraudulent schemes. First, Bisel informed EFD that lenders required certain “advance payments” including first and last months’ lease payments as well as security deposits. Bisel insisted that these payments were not commissions. In actuality, however, the Bisel Defendants were pocketing this money. Second, Defendants falsified and inflated invoices by including, inter alia, phantom equipment and services. These overcharges forced EFD to pay lenders more than the real price of the equipment and services requested.

In late 2015, Teran began to suspect that EFD may have been defrauded by Defendants when Bisel requested that EFD send him an advance payment for an equipment lease but warned EFD not to inquire about the transaction with the bank. Teran confronted Band with evidence of the fraud, and Band responded that “kickbacks” were common in the Los Angeles motion picture business. Teran began to investigate the transactions and uncover the false charges. EFD estimates that Defendants’ fraud has cost the company over $2 million in damages.

OBJECTIONS

EFD’s objections to the Gill Declarations are OVERRULED.

RFA MOTION TO COMPEL FURTHER

EFD moves to compel Band Pro, DVWI, and Band (collectively, “Band Pro Defendants”) to provide further responses to EFD’s Requests for Admission (“RFA”), Set Two.

A. Legal Standard

On receipt of a response to requests for admission, the party requesting admissions may move for an order compelling a further response if that party deems that either or both of the following apply: (1) an answer to a particular request is evasive or incomplete or (2) an objection to a particular request is without merit or too general. (CCP § 2033.290(a).)

The court shall impose a monetary sanction against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response, 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. (CCP § 2033.290(d).)

B. Discussion

On August 19, 2019, EFD email-served each Band Pro Defendant with a second set of RFAs containing the same 180 requests. (Azar Decl. ¶ 2, Ex. 1.) Each request asked that a Band Pro Defendant to admit that an attached document is “a genuine copy of a Band Pro Film and Digital, Inc. document.” (Azar Decl. Ex. 1.)

On September 20, 2019, each Band Pro Defendant responded to each request with the same objections, claiming that the requests (1) are “vague and ambiguous as to the term ‘genuine’ and as to what constitutes a ‘Band Pro Film and Digital, Inc. document,’ ” (2) the requests “potentially seek[] disclosure of documents neither relevant, nor reasonably calculated to lead to the discovery of admissible evidence,” and (3) the requests are “a clear misuse of discovery procedures.” Band Pro Defendants bear the burden of justifying these objections on this motion. (See Coy v. Sup.Ct. (1962) 58 Cal.2d 210, 220-221.)

Band Pro Defendants maintain that the term “genuine” is vague and ambiguous. According to Band Pro Defendants, “[i]t is unclear what Plaintiffs are seeking the Band Parties to ‘admit’ as ‘genuine’ — the fact that document exists or the veracity of the document, or something else.” (Opp. at 4.) The Court is unpersuaded. “Any party may obtain discovery … by a written request that any other party admit the genuineness of specified documents.” (CCP § 2033.010 (emphasis added).) Although neither party has cited, nor has the Court found, a case explicating the meaning of “genuineness” in this statute, EFD persuasively notes that the term’s meaning in this statute and in these requests is readily apparent. Ensuring the “genuineness of specified documents” is the purpose of authentication. “The foundation requires that there be sufficient evidence for a trier of fact to find that the writing is what it purports to be, i.e., that it is genuine for the purpose offered.” (People v. Goldsmith (2014) 59 Cal.4th 258, 267.) Consistent with this, Black’s Law Dictionary defines “genuine” as “authentic or real” or “having the quality of what a given thing purports to be or to have.” In accordance with these legal authorities, EFD’s request that Band Pro Defendants admit that a certain document is “genuine” is a request that Band Pro Defendants admit that the document is “authentic or real,” i.e., that it is what it purports to be. During meet-and-confer efforts, EFD explained that a “Band Pro Film and Digital, Inc. document” is a document “made by Band Pro or anyone acting on its behalf.” (Gill Decl. Ex. A, p. 27.) This definition is reasonable and straight-forward. Putting these two definitions together, EFD is requesting that each Band Pro Defendant admit (or deny) that the attached documents are “authentic or real” copies of documents made by Band Pro or anyone acting on its behalf. These requests are reasonably unambiguous and necessitate substantive responses.

Band Pro Defendants also assert that “[t]he mere fact that a Band Pro / DVWI logo is on a document does not confirm that a document is a ‘genuine’ ‘Band Pro document.’ ” (Opp. at 5.) The Court agrees. This is precisely why EFD’s requests are appropriate.

Next, Band Pro Defendants argue that EFD’s requests are burdensome and harassing. Band Pro Defendants explain that these requests cannot be answered based on the face of the attached documents nor, in some cases, answered based on documents in the Band Pro Defendants’ custody and control. Band Pro Defendants suggest that EFD ascertain the genuineness of these documents through deposition.

This argument is wholly unpersuasive. “[S]ome burden is inherent in all demands for discovery. The objection of burden is valid only when that burden is demonstrated to result in injustice.” (West Pico Furniture Co. of Los Angeles v. Superior Court In and For Los Angeles County (1961) 56 Cal.2d 407, 418.) An “objection based upon burden must be sustained by evidence showing the quantum of work required.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Band Pro Defendants have not produced evidence showing that the quantum of work required to answer these RFAs is unduly burdensome. Furthermore, to the extent that Band Pro Defendants lack sufficient information to answer these requests, the Court directs Band Pro Defendants to the Civil Discovery Act. The Civil Discovery Act provides that an RFA answer shall (1) admit so much of the matter involved in the request as is true, either as expressed in the request itself or as reasonably and clearly qualified by the responding party, (2) deny so much of the matter involved in the request as is untrue, and (3) specify so much of the matter involved in the request as to the truth of which the responding party lacks sufficient information or knowledge. (CCP § 2033.220(b).) Band Pro Defendants must provide Code-compliant responses in accordance with this statute.

EFD’s motion to compel further responses to its RFAs, Set Two, is GRANTED.

FI & RPD MOTIONS TO COMPEL

EFD moves to compel Band Pro Defendants to provide a response to EFD’s Form Interrogatories (“FI”), Set Three. (CCP § 2030.290.) EFD also moves to compel Band Pro Defendants to provide responses to EFD’s Requests for Production of Documents (“RPD”), Set Two. (CCP § 2031.300.)

EFD submits the following evidence. On August 19, 2019, EFD email-served each Band Pro Defendant with its third set of FIs and second set of RPDs. (Azar Decl. ¶¶ 2-3, Exs. 1-2.) Responses were due by September 20, 2019. On September 20, 2019, Band Pro Defendants’ counsel responded in a letter that “Band Pro Defendants are unable to respond to Plaintiffs’ Form Interrogatories, Set Three, and Request for Production of Documents, Set Two.” (Azar Decl. Ex. 4.) Band Pro Defendants did not provide any formal objections to these discovery requests. (Azar Decl. ¶ 5.)

EFD has shown that it properly served the FIs and RPDs on each Band Pro Defendant, their time to respond has expired, and they served no proper response of any kind to these discovery requests. Accordingly, EFD’s motions to compel are GRANTED.

SANCTIONS

EFD requests monetary sanctions of (1) $15,778.15 in connection with its RFA motion to compel further, (2) $3,189.65 in connection with its FI motion to compel, and (3) $2,790.15 in connection with its RPD motion to compel. The Court agrees that monetary sanctions are warranted because of Band Pro Defendants’ meritless objections and failure to provide substantive responses. However, the monetary sanctions sought are unreasonably high. The Court awards EFD monetary sanctions in the total amount of $5,000.

CONCLUSION

EFD’s motion to compel Band Pro Defendants’ further responses to EFD’s RFA, Set Two is GRANTED. EFD’s motion to compel Band Pro Defendants’ objection-free responses to EFD’s FI, Set Three, is GRANTED. EFD’s motion to compel Band Pro Defendants’ objection-free responses to EFD’s RPD, Set Three, is GRANTED. Band Pro Defendants must serve initial supplemental responses within 20 days’ notice of this court order.

EFD’s request for monetary sanctions against Band Pro Defendants and their attorney of record Zweiback, Fiset & Coleman LLP is GRANTED in the amount of $5,000. Band Pro Defendants are to pay these monetary sanctions within 20 days’ notice of this court order.