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: 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.