Case Number: 20STCP00431 Hearing Date: March 29, 2021 Dept: 47
Judge Theresa M. Traber, Department 47
HEARING DATE: March 29, 2021 TRIAL DATE: August 8, 2022
CASE: Fannie Mae v. Gustavo M. Ungo, et al.
CASE NO.: 20STCP00431
(1) MOTION TO COMPEL COMPLIANCE WITH REQUESTS FOR PRODUCTION OF DOCUMENTS, SET ONE, AND MONETARY SANCTIONS; (2) MOTION TO COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND MONETARY SANCTIONS; (3) MOTION TO COMPEL FURTHER RESPONSES TO REQUEST FOR PRODUCTION OF DOCUMENTS, SET ONE, AND FOR MONETARY SANCTIONS
MOVING PARTY: (1)-(3) Plaintiff Fannie Mae
RESPONDING PARTY(S): (1)-(3) Defendant Gustavo M. Ungo, Jr. (combined opposition to all three motions).
• 01/31/20: Complaint filed.
• 04/30/20: Default entered as to Gustavo M. Ungo, Jr. individually and as trustee.
• 10/21/20: Default set aside.
• 02/05/21: First Amended Complaint filed.
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiff alleges that Defendants fraudulently transferred 31 properties to avoid the execution of a judgment and lien held by Plaintiff.
Plaintiff moves to compel compliance with request for production of documents (set one) and for further responses to special interrogatories (set one) and request for production of documents (set one). Plaintiff also seeks sanctions in connection with each motion.
Plaintiff’s motion to compel Gustavo M. Ungo to comply with his responses to requests for production of documents (set one) is GRANTED. Defendant is to produce any responsive documents within his custody, possession, or control that have not already been produced within 30 days of the date of this order. If “unable” to comply, Defendant is to explain why not as required by CCP § 2031.230. Defendant is also to comply with the labeling requirement of CCP § 2031.280 in producing any additional documents.
Plaintiff’s motion to compel further responses to special interrogatories (set one) is GRANTED. Plaintiff is ordered to provide verified, code-compliant responses to Interrogatory No. 19 within 30 days.
Plaintiff’s motion to compel further responses to request for production of documents (set one) is GRANTED IN PART as to Request Nos. 12, 15, and 16 and DENIED IN PART as to Request Nos. 1 and 2. As to Request Nos. 12, 15, and 16, Defendant is ordered to provide verified, code-compliant responses within 30 days.
Plaintiff’s requests for sanctions in connection with these motions are DENIED.
Request for Judicial Notice in Reply to All Three Motions
Plaintiff seeks judicial notice of over 400 pages of documents in connection with its reply. This request is DENIED. Plaintiff has offered no explanation for seeking judicial notice of such voluminous documents in reply. New contentions and evidence in reply are generally disregarded, because they deprive the opposing party of the opportunity to answer. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-765.) Nor has Plaintiff shown that these documents are relevant to the pending motions. (Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 (“[J]udicial notice . . . is always confined to those matters which are relevant to the issue at hand.”].) If they were, the Court would have to give Defendant an opportunity to respond to these voluminous documents.
Motion to Compel Compliance with Requests for Production (Set One)
Nowhere does Plaintiff list the requests for production as to which it seeks to compel compliance. Based on what the Court can glean from the motion, however, it appears that Plaintiff moves to compel compliance with demand nos. 3, 5, 7-11, 13-14, 17-18, and 24.
Defendant responded to each of these demands with objections followed by a statement that he would comply with each request. (Declaration of Anthony J. Carucci, Exh. 3.) Following an initial production of 442 pages of documents on September 4, 2020, Defendant provided supplemental responses to demand nos. 11, 13-14, and 24 (and others not relevant to this motion) on October 30, 2020, consisting of an additional 68 pages. (Carucci Decl. ¶ 4 & Exh. 6.) These pages, however, consisted of documents that were already attached to Plaintiff’s complaint. (Carucci Decl. ¶ 9.)
As Plaintiff notes, a motion to compel compliance under CCP § 2031.320 does not have a 45-day time limit; nor does it have a meet and confer requirement or a good cause requirement. This type of motion is proper when the responding party represents in its response that it will comply with a request for production and fails to do so. (CCP § 2031.320(a).)
Plaintiff asserts that Defendant’s responses are still deficient even after supplemental production on October 30, 2020. Defendant, on the other hand, asserts that he has “substantially complied with each document request at issue by producing, in good faith, responsive documents within his possession.” (Oppo., at p. 3.) He also argues that Plaintiff is merely speculating that there must be additional responsive documents.
Reviewing the chart prepared by Plaintiff that summarizes Defendant’s production to date by category, it is clear that Plaintiff is not merely speculating that there are additional responsive documents. (Carucci Decl., Exh. 12.) Defendant has not produced any documents responsive to demand nos. 3, 10, 11, 13, 14, and 24. As to the remaining demands at issue, Defendant has produced documents as to some of the properties at issue but not others: the chart indicates that Defendant has provided documents related to 2 properties in response to demand no. 5, 7 properties in response to demand nos. 7-9, 23 of the relevant properties as to demand no. 17, and 15 properties as to demand no. 18. (Ibid.)
Defendant has not explained why he has produced no documents in certain categories that he agreed to produce. Nor has he explained why he has documents in his possession in those categories for certain properties and not others. This type of explanation is required as part of Defendant’s formal responses. Specifically, if Defendant is “unable” to comply with a particular demand, he must “affirm that a diligent search and a reasonable inquiry has been made in an effort to comply with that demand.” (CCP § 2031.230.) He must also “specify whether the inability to comply is because the particular item or category never existed, has been destroyed, has been lost, misplaced, or stolen, or has never been, or is no longer, in the possession, custody, or control of the responding party.” (Ibid.) This statement must also “set forth the name and address of any natural person or organization known or believed by that party to have possession, custody, or control of that item or category of item.” (Ibid.) Defendant did not comply with those requirements in his responses.
Accordingly, the motion to compel compliance is GRANTED. Defendant is to produce any responsive documents within his possession, custody, or control that have not already been produced within 30 days of the date of this order. If “unable” to comply, Defendant is to explain why not, as required by CCP § 2031.230. Defendant is also to comply with the labeling requirement of CCP § 2031.280 in producing any additional documents.
Plaintiff’s request for sanctions is DENIED. To satisfy due process, a request for monetary sanctions must expressly “identify each person, party, and attorney against whom the sanction is sought.” (CCP § 2023.040.) Here, Plaintiff’s notice of motion refers only to “Junior and his Counsel.” (Notice of Motion, at p. 2.) Because Defendant’s attorney was not expressly identified, an award of sanctions against Defendant’s attorney would be unjust. (CCP § 2013.320.) Likewise, Plaintiff has not offered any persuasive reason to impose sanctions on Defendant himself; Plaintiff’s complaints relate to assertions by Defendant’s counsel, not Defendant himself, that the responsive documents would be provided and the failure to do so. Accordingly, Plaintiff’s request for sanctions is DENIED.
Motion to Compel Further Responses to Special Interrogatories (Set One)
Under Code of Civil Procedure section 2030.300, subdivision (a), a court may order a party to serve a further response to an interrogatory when the court finds that: “(1) An answer to a particular interrogatory is evasive or incomplete[;] (2) An exercise of the option to produce documents under Section 2030.230 is unwarranted or the required specification of those documents is inadequate[; or] (3) An objection to an interrogatory is without merit or too general.”
The burden is on the responding party to justify any objection or failure to fully answer the interrogatories. (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255.)
Meet and Confer
A party making a motion to compel further responses must also include a declaration stating facts showing a “reasonable and good faith attempt” to resolve informally the issues presented by the motion before filing the motion. (Code Civ. Proc., §§ 2016.040, 2030.300(b)(1).)
Here, the Declaration of Anthony J. Carucci reflects that the meet and confer requirement of CCP § 2030.300(b)(1) was satisfied.
Plaintiff moves for an order striking Defendant’s objections and compelling further responses to Plaintiff’s special interrogatory No. 19.
Special Interrogatory No. 19 asks Defendant to “[i]dentify all financial accounts to which rent payments from the 29 TRUST PROPERTIES are deposited by providing the name of the financial institution, the account number, and the account holder(s).”
Defendant has provided all of the requested information except the full account number for the relevant bank account. (Plaintiff’s Separate Statement, at p. 3.) Instead, he has provided a partial account number.
Defendant has not met its burden to justify his objections to this interrogatory and his failure to fully answer it. Defendant objected this interrogatory as “vague, ambiguous and irrelevant,” but none of those objections justify providing a partial account number rather than the full account number. This is especially true in light of Plaintiff’s representation that it will be “hindered in its efforts to subpoena the bank” without the information. (Reply, at p. 4.)
Accordingly, Plaintiff’s motion to compel further responses to special interrogatories (set one) is GRANTED. Defendant is ordered to provide a verified, code-compliant, complete response to interrogatory no. 19 within 30 days.
For the reasons discussed in connection with Plaintiff’s motion to compel compliance, Plaintiff’s motion for sanctions is DENIED.
Motion to Compel Further Responses to Requests for Production of Documents (Set One)
Under Code of Civil Procedure section 2031.310, subdivision (a), a court may order a party to serve a further response to a demand for inspection when the court finds that: “(1) A statement of compliance with the demand is incomplete[;] (2) A representation of inability to comply is inadequate, incomplete, or evasive[; or] (3) An objection in the response is without merit or too general.”
The burden is on the moving party to “set forth specific facts showing good cause justifying the discovery sought by the demand.” (Code Civ. Proc., § 2031.310(b)(1).)
This burden “is met simply by a fact-specific showing of relevance.” (TBG Ins. Servs. Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 448.)
Meet and Confer
For the reasons discussed in connection with the motion to compel further responses to special interrogatories, the Court finds that Plaintiff tried in good faith to resolve the discovery dispute before filing this motion.
Plaintiff moves for an order striking Defendant’s objections and compelling further responses to Plaintiff’s Request Nos. 1, 2, 12, 15, and 16.
Request Nos. 1 and 2
Request Nos. 1 and 2 seek tax returns referring to or relating to the trust properties at issue. Plaintiff has represented that it now seeks only Schedule E to these tax returns, not the complete returns. (Separate Statement, at p. 3 n. 1.) Defendant primarily objects to the production of these documents based on the tax return privilege.
Revenue and Taxation Code § 19282, “which prohibits disclosure of tax returns, implicitly creates a privilege against the disclosure of income tax returns.” (Fortunato v. Superior Court (2003) 114 Cal.App.4th 475, 479.) This privilege “may be waived by an intentional relinquishment of it.” (Ibid.) In addition, it does not apply “where the gravamen of the lawsuit is inconsistent with claiming the privilege, or where a public policy greater than the purpose of the privilege is involved.” (Ibid.) The Court has “broad discretion in determining the applicability of a statutory privilege.” (Weingarten v. Superior Court (2002) 102 Cal.App.4th 268, 274.)
Here, Plaintiff argues that the “gravamen” exception applies because Defendant’s “only defense to the action – that he owned the Trust Properties prior to Fannie Mae’s judgment – implicates his and the Trust’s tax returns, which will show who owned the Trust Properties during the relevant time period.” (Separate Statement, at p. 3.) “Implicating” his tax returns, however, is not the same as a contention of an inability to “establish[ ] of all the essential elements of [Defendant’s defense] without proof of statements and computations in [his] tax returns.” (Wilson v. Superior Court (1976) 63 Cal.App.3d 825, 830.) In other words, Defendant’s tax returns do not go to the “very matters [he] has placed at issue in the litigation.” (Id. at 831.) Nor is the gravamen of Defendant’s defense “so inconsistent with the continued assertion of the taxpayer’s privilege as to compel the conclusion that the privilege has in fact been waived.” (Id. at 830.) Thus, the “gravamen” exception does not apply.
Plaintiff also argues that the “public policy” exception applies. This exception is “narrow, and only applies ‘when warranted by a legislatively declared public policy.’” (Deary v. Superior Court (2001) 87 Cal.App.4th 1072, 1080.) Plaintiff has pointed to a public policy that has been found to justify disclosure of tax returns: the “strong public policy” to “prevent fraud against creditors,” “against lenders,” and “perhaps against the court.” (Li v. Yan (2016) 247 Cal.App.4th 56, 68.) Thus, the public policy exception is at least potentially applicable.
For the public policy exception to apply, however, the party requesting disclosure must show that “(1) the defendant has refused to produce relevant nonprivileged financial records or has produced only meaningless and unreliable financial information in response to punitive damage discovery; (2) the defendant has engaged in a pattern of improperly obstructing efforts to obtain financial records through means that do not implicate the privilege and it is reasonable to assume this pattern of conduct will continue; and (3) less intrusive methods to obtain the financial records have been unsuccessful.” (Li v. Yan (2016) 247 Cal.App.4th 56, 67.) Here, Plaintiff has not made the requisite showing. Based on Plaintiff’s concurrently filed motions and the discussions therein of the discovery already produced and the discovery that Defendant agreed to produce, it cannot be said that Defendant has provided only “meaningless and unreliable financial information.” Nor can it be said that Defendant has engaged in a “pattern of improperly obstructing efforts to obtain financial records through means that do not implicate the privilege.” Although Plaintiff has found it necessary to file these motions to compel compliance and compel further responses, merely asserting objections or failing to agree to the full scope of a discovery request – even if ultimately without merit – cannot be characterized as “improperly obstructing efforts” to obtain the relevant records. All parties have the right to assert objections to proposed discovery, and they must be prepared to suffer the consequences if their assertions are ultimately rejected. And finally, Plaintiff has had at least some success with obtaining the information sought by less intrusive means – including by way of other rulings within this document.
Plaintiff also argues that the tax return privilege does not apply because it has now agreed to accept only “Schedule E” of the relevant returns. Plaintiff has not cited any authority, however, for the proposition that seeking only part of a tax return renders the tax return privilege inapplicable. Indeed, the privilege extends to any document that is an “integral part” of a return, such as a W-2 form. (Brown v. Superior Court (1977) 71 Cal.App.3d 141, 142.) The Court has not discerned any attempt on the part of the courts to determine whether a particular “integral part” of a tax return could be disclosed because it “will not show any sensitive personal information or general income information about Junior or the Trust,” as Plaintiff contends. (Reply, at p. 6.) Indeed, the privilege is extended to W-2 forms because they are “required to be attached to a taxpayer’s . . . tax returns,” not because they contain particularly sensitive information or general income information. (Brown, supra, 71 Cal.App.3d at 143.)
Accordingly, Defendant has shown that the tax return privilege applies to Request Nos. 1 and 2, and Plaintiff has not shown that any exception to the privilege applies. The motion to compel further is therefore DENIED as to Request Nos. 1 and 2.
Request Nos. 12, 15, and 16
Request No. 12 seeks documents concerning financial statements prepared by, or for, Defendant from 2017 to the present that relate to the trust properties at issue. Request No. 15 seeks documents concerning liens, mortgages, or encumbrances against the trust properties, including loan applications, loans, promissory notes, guaranties, deeds of trust, monthly mortgage statements, and year-end statements. Defendant agreed to produce mortgage statements for the currently encumbered properties. Request No. 16 seeks documents and communications concerning the valuation or appraisal of the trust properties.
Plaintiff primarily argues that the documents sought in these requests are relevant to Defendant’s defense that the properties were transferred to him before Plaintiff obtained its judgment, because they are likely to show who owned the properties. The documents sought in Request No. 12 will also help Plaintiff evaluate its case, and the documents sought in Request No. 16 will show whether the alleged fraudulent transfers were made for reasonably equivalent value.
The Court finds that Plaintiff has demonstrated good cause and that Defendant’s objections are not justified. Defendant argues, in his opposition, that this discovery is inappropriate because “defendant has already produced the best evidence of defendant’s ownership of the subject properties, the Grant Deeds.” (Oppo., at p. 8.) However, discovery is not limited to the “best evidence” in support of a particular issue. Rather, any unprivileged information is discoverable that is “relevant” and either “admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (CCP § 2017.010.) A party may seek a protective order to prevent “unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.” (CCP § 2031.060(b).) But the fact that other documents may be better evidence of a particular fact is not a ground on which to refuse to produce documents.
Accordingly, the motion to compel further is GRANTED as to Request Nos. 12, 15, and 16. Defendant is ordered to provide verified, code-compliant responses within 30 days to these requests.
For the reasons discussed in connection with Plaintiff’s motion to compel compliance, Plaintiff’s motion for sanctions is DENIED.
Moving party to give notice, unless waived.
IT IS SO ORDERED.
Dated: March 29, 2021 ___________________________________
Theresa M. Traber
Judge of the Superior Court
Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.
Case Number: 20STCP00431 Hearing Date: February 05, 2021 Dept: 47
FOR LEAVE TO FILE FIRST AMENDED COMPLAINT
MOVING PARTY: Plaintiff Fannie Mae
RESPONDING PARTY(S): No opposition on
eCourt as of February 3, 2021, and Plaintiff filed notice that it had not
received an opposition.
OF MATERIAL FACTS AND/OR PROCEEDINGS:
Plaintiff alleges that
Defendants fraudulently transferred 29 properties to avoid the execution of a
judgment and lien held by Plaintiff.
moves to file a first amended complaint.
Plaintiff’s motion for leave to
file a first amended complaint is GRANTED. Plaintiff is to file a stand-alone
copy of the first amended complaint on the date of this order. The first amended
complaint shall be deemed served as of the date of this order. Defendants are to respond within 30 days of the service of