OVERLAND DIRECT, INC. VS YANIV TEPPER, ET AL

Tentative Rulings

Case Number: ****5743 Hearing Date: November 5, 2021 Dept: W

OVERLAND DIRECT, INC. V. YANIV TEPPER, ET AL.

MOTION TO BE RELIEVED AS COUNSEL

Date of Hearing: November 5, 2021 Trial Date: November 15, 2021

Department: W Case No: ****5743

Moving Party: Paul M. Kelley and Kelley Semmel, LLP, counsel for Transpine, Inc.

Responding Party: Plaintiff Overland Direct, Inc.

FACTUAL BACKGROUND

On December 19, 2016, Plaintiff Overland Direct, Inc. (“Plaintiff”) obtained a judgment against Daniel Tepper, Esola Capital, LLC, and Avshy Cohen. The Judgment quieted title to a property not subject to the instant action and awarded Plaintiff $100,000 in punitive damages.

Prior to the entry of judgment, however, Plaintiff alleges a series of fraudulent transfers involving the judgment debtors and title on 4256 Tarzana Estates Drive, Tarzana (the “Property”). Plaintiff further alleges that U.S. Bank held a secured interest in the property through a loan to Defendant Yaniv Tepper.

On May 30, 2017, Overland Direct, Inc. filed a Complaint for Declaratory Relief and Violation of the Voidable Transfer Act. The Declaratory Relief claim alleges that Defendant Tepper lacks any legal interest in the Tarzana Property. The Violation of the Voidable Trust Act claim alleges that the transfers of title were part of a scheme to avoid liability on the Overland Direct judgment.

On July 11, 2017, the Court denied the application to enjoin any sale of the property, including a foreclosure sale on the property by U.S. Bank, but granted the application enjoining any disbursement of funds. The foreclosure sale was scheduled for August 24, 2017.

On May 17, 2019, Plaintiff filed a First Amended Complaint designating Defendant Wooshies, Inc. (“Defendant”) as Doe 1. Default was entered against Defendant on July 11, 2019. On August 13, 2019, the courted granted the parties’ stipulation to vacate and set aside the default and to allow Plaintiff to file a Second Amended Complaint. On November 5, 2019, Plaintiff filed a Third Amended Complaint (“TAC”).

TENTATIVE RULING: DENY

Counsel (“KS”) for Transpine Inc. seeks to be relieved on the grounds that as a result of Transpine's bankruptcy, the conversion of that bankruptcy to a Chapter 7 proceeding, and the appointment of a trustee, David Gottlieb, Counsel has no authority to act on behalf of Transpine.

Counsel states on July 22, 2020, Transpine filed a petition under Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court, Central District of California, bearing Case No. 1:20-bk-11286-VK. (Kelley Decl. ¶2.) On March 3, 2021, Overland Direct, Inc. filed a motion in the bankruptcy court to dismiss the bankruptcy or convert it to a Chapter 7 proceeding. (Kelley Decl. ¶3.) On March 31, 2021, Transpine filed an application to employ Counsel, but objections were filed by both Overland Direct, Inc. and the United Sates Trustee. (Kelley Decl. ¶4.) On April 16, 2021, the bankruptcy court entered its order converting the case to Chapter 7. (Kelley Decl. ¶5.) On May 13, 2021, the motion to employ KS was withdrawn. (Kelley Decl. ¶5.) On April 2021, a notice was filed in the bankruptcy court to the effect that (1) David Gottlieb had been appointed as Chapter 7 trustee; and, (2) Mr. Gottlieb had accepted the appointment. (Kelley Decl. ¶6.) On May 12, 2021, Mr. Gottlieb filed a motion to employ Levene, Neale, Bender, Yoo & Brill L.L.P. (“LNBYB”) as General Bankruptcy Counsel. (Kelley Decl. ¶8.) That application was granted by order dated June 15, 2021. (Kelley Decl. ¶8.) On October 7, 2021, Counsel spoke with Ron Bender of LNBYB who confirmed that the trustee would not participate in this action; that the trustee had no intention to employ KS to defend Transpine in this action; and, that KS had no authority to represent Transpine in this action. (Kelley Decl. ¶11.)

Counsel attests CRPC 1.16(b) provides that a lawyer may withdraw from representing a client when:

(6) the client knowingly and freely assents to termination of the representation;

***

(10) the lawyer believes in good faith, in a proceeding pending before a tribunal, that the tribunal will find the existence of other good cause for withdrawal.

Counsel argues withdrawal is warranted under 1.16(b)(6) because the trustee has made clear he has no intention to retain KS. Moreover, withdrawal is warranted under 1.16(6)(10) because KS has no authority from the trustee to act on behalf of the debtor, Transpine.

In opposition[1], plaintiff argues the motion should be denied because (1) it is untimely under the circumstances because withdrawal could unduly prejudice Overland and potentially delay trial; (2) KS has not declared he is not being paid; (3) KS is already counsel of record for Nisan Tepper; (4) a debtor such as Transpine is permitted to defend itself until a bankruptcy trustee has stepped in and, here, the trustee has chosen not to step in; and (5) Overland obtained relief from stay in Transpine’s bankruptcy action. Regardless of how the court rules, Overland Direct argues Transpine should not allow the November 15 trial date to be continued. The court notes that KS is not claiming an actual conflict with his client or with the trustee.

More specifically, Overland Direct argues although section 284 does not impose a time limit on a motion to be relieved as counsel, the court should find KS’ Motion is untimely under the circumstances as the November 15 trial date was set more than seven months ago yet KS did not file his Motion until October 11 and the hearing is set just ten days before trial.

The court finds because counsel is not required to withdraw as counsel, the motion is untimely and such withdrawal would work an injustice and/or cause undue delay in the proceeding. Bostanian v. Liberty Savings Bank (1997) 52 Cal.App.4th 1075 does not support Counsel’s contention counsel must withdraw when a debtor is defending a case. “A trustee in bankruptcy is the representative of the estate. (; 323(a).) A trustee in bankruptcy has the capacity to sue and to be sued. ; 323(b).) Under federal decisional authority, a Chapter 7 debtor may not prosecute on his or her own a cause of action belonging to the bankruptcy estate unless the claim has been abandoned by the trustee.” (Bostanian v. Liberty Savings Bank (1997) 52 Cal.App.4th 1075, 1080–1081.) (emphasis added.) Because Counsel is not required to withdraw as counsel, the court finds five days before trial to be prejudicial. (See Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 170, judge might require “information to justify terminating the attorney-client relationship” where withdrawal hearing only 17 days before scheduled trial.)

Moreover, each case Counsel cites to involves Chapter 7 bankruptcy, or liquidation. From the judicially noticed documents, it appears Transpine filed for Chapter 11 bankruptcy, or reorganization. (See Cable v. Ivy Tech State College (7th Cir. 1999) 200 F.3d 467, 472 holding “In liquidation proceedings, only the trustee has standing to prosecute or defend a claim belonging to the estate”.) The supplemental brief and declaration filed by Mr. Kelly with respect to the proposed settlement of Overland’s claims on Transpine’s bankruptcy estate does not give any additional ground for allowing KS to withdraw. Nowhere in that declaration is there a statement by the Trustee that he does not want KS to continue to represent the corporation. The declaration indicates that the trustee is indifferent to this court’s ruling on the motion to withdraw.

Next, Overland Direct argues KS has not pointed to any rule that requires mandatory withdrawal under the circumstances nor is there evidence KS is not being paid by Nisan on behalf Transpine — a scenario that could, but would not require, KS to withdraw under CRPC 1.16(b)(5). Because Counsel has not indicated they are not being paid, withdrawal is not mandatory.

Lastly, Overland Direct argues KS already represents defendant Nissan (individually and as trustee) and there is no reason KS cannot continue to represent Transpine. Overland Direct also argues Transpine can continue to litigate this case given the Trustee of Transpine’s bankruptcy does not intend to step in and Overland Direct obtained relief from the automatic stay. For the reasons stated above, Counsel has not demonstrated any reason not to continue representing Transpine. The Trustee has the option to defend this action, but is not required. As a result, Counsel may represent defendant Transpine in this matter.

Accordingly, Counsel’s Motion to Withdraw is DENIED.

Case Number: ****5743    Hearing Date: December 01, 2020    Dept: W

OVERLAND DIRECT, INC. V. YANIV TEPPER, ET AL.

MOTION TO BE RELIEVED AS COUNSEL

Date of Hearing: December 1, 2020 Trial Date: None set

Department: W Case No: ****5743

Moving Party: Paul M. Kelley, counsel of record for Defendant

Responding Party: None

Notice: Proper

FACTUAL BACKGROUND

On December 19, 2016, Plaintiff Overland Direct, Inc. (“Plaintiff”) obtained a judgment against Daniel Tepper, Esola Capital, LLC, and Avshy Cohen. The Judgment quieted title to a property not subject to the instant action and awarded Plaintiff $100,000 in punitive damages. Prior to the entry of judgment, however, Plaintiff alleges a series of fraudulent transfers involving the judgment debtors and title on 4256 Tarzana Estates Drive, Tarzana (the “Property”). Plaintiff further alleges that U.S. Bank held a secured interest in the property through a loan to Defendant Yaniv Tepper.

On May 30, 2017, Overland Direct, Inc. filed a Complaint for Declaratory Relief and Violation of the Voidable Transfer Act. The Declaratory Relief claim alleges that Defendant Tepper lacks any legal interest in the Tarzana Property. The Violation of the Voidable Trust Act claim alleges that the transfers of title were part of a scheme to avoid liability on the Overland Direct judgment.

On July 11, 2017, the Court denied the application to enjoin any sale of the property, including a foreclosure sale on the property by U.S. Bank, but granted the application enjoining any disbursement of funds. The foreclosure sale was scheduled for August 24, 2017.

On May 17, 2019, Plaintiff filed a First Amended Complaint designating Defendant Wooshies, Inc. (“Defendant”) as Doe 1. Default was entered against Defendant on July 11, 2019. On August 13, 2019, the courted granted the parties’ stipulation to vacate and set aside the default and to allow Plaintiff to file a Second Amended Complaint. After sustaining Defendant’s demurrer to the SAC, Plaintiff filed a Third Amended Complaint (“TAC”) on November 5, 2019.

On February 19, 2020, this court sustained Defendant’s demurrer to the first (declaratory relief) and third (cancellation of a written instrument) causes of action of the TAC without leave to amend.

On August 4, 2020 Paul M. Kelley (“Counsel”) filed the instant motion to be relieved as counsel for Defendant Nisan Tepper, individually, and Nisan Tepper as Trustee of the Tepper Family Revocable Trust. Nisan does not oppose.

TENTATIVE RULING: GRANT

Counsel seeks to be relieved on the basis of CRPC 1.16(b)(4) and (5). CRPC 1.16(b)(4) and (5) provides a lawyer may withdraw from representing a client if: the client by other conduct renders it unreasonably difficult for the lawyer to carry out the representation effectively and the client breaches a material term of an agreement with, or obligation, to the lawyer relating to the representation, and the lawyer has given the client a reasonable* warning after the breach that the lawyer will withdraw unless the client fulfills the agreement or performs the obligation, respectively. Counsel states he is constrained by his duty to the client and attorney client privilege from elaborating on the factual basis. Counsel also states he notified Nisan that he was in breach of the engagement agreement and that unless it was cured by July 15, 2020, or Nisan substituted new counsel, Counsel would move to withdraw as counsel.

Counsel has complied with the requirements of CRC Rule 3.1362 by filing forms MC-051 and MC-052 and lodging with the Court a copy of the proposed order on form MC-053 as to Nisan, individually, and as Trustee. Counsel served Nisan by mail his last known address, which Counsel states he has confirmed as current within the past 30 days. Counsel also served all other parties who have appeared in the case via mail.

Further, it appears no prejudice will be suffered by Nisan as no trial date has been set yet. A Trial Setting Conference will be set for March 2021.

Accordingly, the Motion to be Relieved as Counsel is GRANTED.

OVERLAND DIRECT, INC. V. YANIV TEPPER, ET AL.

plaintiff’s motion to compel deposition and motion to compel further responses

Date of Hearing:  December 1, 2020     Trial Date:       None set.  

Department: W Case No.:  ****5743

BACKGROUND

On December 19, 2016, Plaintiff Overland Direct, Inc. (“Plaintiff”) obtained a judgment against Daniel Tepper, Esola Capital, LLC, and Avshy Cohen. The Judgment quieted title to a property not subject to the instant action and awarded Plaintiff $100,000 in punitive damages.

Prior to the entry of judgment, however, Plaintiff alleges a series of fraudulent transfers involving the judgment debtors and title on 4256 Tarzana Estates Drive, Tarzana (the “Property”). Plaintiff further alleges that U.S. Bank held a secured interest in the property through a loan to Defendant Yaniv Tepper.

On May 30, 2017, Overland Direct, Inc. filed a Complaint for Declaratory Relief and Violation of the Voidable Transfer Act. The Declaratory Relief claim alleges that Defendant Tepper lacks any legal interest in the Tarzana Property. The Violation of the Voidable Trust Act claim alleges that the transfers of title were part of a scheme to avoid liability on the Overland Direct judgment.

On July 11, 2017, the Court denied the application to enjoin any sale of the property, including a foreclosure sale on the property by U.S. Bank, but granted the application enjoining any disbursement of funds. The foreclosure sale was scheduled for August 24, 2017.

On May 17, 2019, Plaintiff filed a First Amended Complaint designating Defendant Wooshies, Inc. (“Defendant”) as Doe 1. Default was entered against Defendant on July 11, 2019. On August 13, 2019, the courted granted the parties’ stipulation to vacate and set aside the default and to allow Plaintiff to file a Second Amended Complaint. After sustaining Defendant’s demurrer to the SAC, Plaintiff filed a Third Amended Complaint (“TAC”) on November 5, 2019.  

On February 19, 2020, this court sustained Defendant’s demurrer to the first (declaratory relief) and third (cancellation of a written instrument) causes of action of the TAC without leave to amend.   

Plaintiff moves to compel the deposition of Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper (“Tepper”) to comply and appear for his duly noticed deposition. Plaintiff further moves to compel further discovery responses from Nisan Tepper.

[Tentative] Ruling

1. Plaintiff’s Motion to Compel Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper to Appear for Deposition is GRANTED.

2. Plaintiff’s Motion to Compel a Further Response and Production to Request for Production of Documents, Set One from Nisan Tepper, individually and as Trustee of the Tepper Family Revocable Trust is GRANTED.

DISCUSSION

1. Plaintiff’s Motion to Compel Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper to Appear for Deposition

Plaintiff moves this court for an order compelling Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper (“Daniel Tepper”) to comply with, and appear for his depositions in accordance with, the valid and duly noticed depositions.

On January 15, 2020, Overland’s counsel served upon Daniel Tepper and all parties a deposition notice and request for production of documents for Daniel Tepper’s deposition on February 10, 2020. (Mobasser Decl., ¶4; Exh. 2.) One business day prior to the duly noticed deposition, Daniel Tepper informed Plaintiff’s counsel that he would not appear for the deposition on February 10, 2020. (Mobasser Decl., ¶5; Exh. 3.) Because Daniel Tepper did not provide Plaintiff’s counsel with an alternative date or stipulate to appear at a future deposition, Plaintiff informed Daniel Tepper they would move forward with the February 10, 2020 deposition. (Mobasser Decl., ¶5; Exh. 3.) Daniel Tepper did not appear and Plaintiff had to take a certificate of non-appearance. (Mobasser Decl., ¶6; Exh. 4.)

On February 13, 2020, Daniel Tepper informed Plaintiff’s counsel that he agreed to appear for his deposition on March 5, 2020. (Mobasser Decl., ¶7; Exh. 5.) That same day, Plaintiff’s counsel served Daniel Tepper and all parties an Amended Notice of Deposition and Request for Production of Documents for March 5, 2020. (Mobasser Decl., ¶8; Exh. 6.) Again, one business day prior to the set deposition, Daniel Tepper informed Plaintiff he would not be appearing because he could not get in touch with his limited scope attorney, Robert Smith. Plaintiff informed Daniel Tepper his non-appearance would result in court intervention. (Mobasser Decl., ¶9; Exh. 7.) Daniel Tepper failed to appear on March 5, 2020 and Plaintiff had to take a certificate of non-appearance. (Mobasser Decl., ¶9; Exh. 7 and McCarthy Decl. ¶3; Exh. 1.)

Given Daniel Tepper’s failure to appear for his deposition after two properly served deposition notices, as well as Plaintiff’s good-faith attempts to resolve the matter, Plaintiff’s Motion is GRANTED. Daniel Tepper is ordered to appear for deposition and produce documents specified in the deposition notice within twenty days of the hearing of this Motion. 

Sanctions

It has been established that if a motion to compel deposition is granted, the court shall impose a monetary sanction in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (CCP ;2025.450(g)(1).)

Plaintiff requests this court impose sanctions on Daniel Tepper as a direct result of Daniel Tepper’s willful failure to appear for two duly noticed depositions in the amount of $14,391.70. Counsel for Plaintiff contends this amount includes the 16.40 hours preparing for Daniel Tepper’s deposition, 2.50 hour traveling to and from the deposition on February 10, 2020, 3.50 hours meeting and conferring and preparing this motion and supporting declarations, and 4.00 hours in anticipation of any opposition, reply, and appearance at the hearing on this motion at this rate of $500.00 as well as $840.70 for the court reporter affidavit of non-appearance on February 10, 2020, $411.00 for the court reporter affidavit of non-appearance on March 5, 2020, and the $60 filing fee.

Although the court finds that sanctions are warranted under CCP ;2025.450(g)(1), Plaintiff’s request is excessive. As such, the court finds that $4000 is a reasonable sum for 6 hours spent in preparing the instant Motion and two (2) hours of travel time and attendance at the hearing at a rate of $500.00 per hour plus $60.00 in filing fees and $1251 in non-appearance fees by the court reporter, or a total of $5311.

Plaintiff also requests this court impose the $500 sanction pursuant to CCP ;1992, which provides “A person failing to appear pursuant to a subpoena or a court order also forfeits to the party aggrieved the sum of five hundred dollars ($500), and all damages that he or she may sustain by the failure of the person to appear pursuant to the subpoena or court order, which forfeiture and damages may be recovered in a civil action.” This court grants the $500 forfeiture authorized by CCP ;1992.

2. Plaintiff’s Motion to Compel a Further Response and Production to Request for Production of Documents, Set One from Nisan Tepper, individually and as Trustee of the Tepper Family Revocable Trust

Plaintiff moves this court for an order compelling Defendant Nisan Tepper, individually and as trustee of the Tepper Family Revocable Trust, to provide a further response and produce documents in response to Plaintiff’s Requests for Production of Documents, Set One (specifically, Request for Production No. 4) propounded to Nisan Tepper individually and as trustee, respectively

Under Code of Civil Procedure section 2031.310(a), on receipt of a response to a demand for inspection, copying, testing, or sampling, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply: (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.

A motion to compel further responses must set forth specific facts showing “good cause” justifying the discovery sought by the demand and must be accompanied by a declaration showing a “reasonable and good faith attempt” to resolve the issues outside of court. (CCP ;;2016.040, 2031.310(b)(2).) The motion must also be accompanied by a separate statement.  (CRC 3.1345(a)(3).) In addition, unless the parties have agreed otherwise in writing, a motion to compel further responses must be served within 45 days after service of a verified response.  (CCP ;2031.310(c).) Otherwise, the demanding party waives any right to compel a further response to the demand. (Id.)   

The court notes Plaintiff has complied with the meet and confer and separate statement requirements. (See Whitemore Decl. ¶¶6-7.) 

Request for Production No. 4 provides: “Any and all DOCUMENTS which evidence any interests YOU have in any revocable or irrevocable trust between 2000 and Present.” Nisan objected to the request on six grounds, and stated “No documents will be produced[.]” Nisan Tepper’s objections include (1) vague and ambiguous with respect to the term interests YOU have in any revocable or irrevocable trust; (2) overbroad, unduly burdensome and oppressive; (3) seeking information violative of the responding parties right of privacy; (4) seeking information violative of the taxpayer privilege; (5) seeking information violative of Civil Code ;3295(c); and, (6) seeking the discovery of information that is neither relevant nor calculated to lead to the discovery of admissible evidence.

The court finds that Plaintiff has met its burden of showing good cause. Specifically, Plaintiff contends the trust documents are relevant as it will help determine whether Defendant Nisan Tepper and/or the Trust played a role (i.e., participated) in the fraudulent/voidable transfers that are alleged in Plaintiff’s operative TAC. Defendant Transpine has produced bank statements by the Trust, including cancelled checks, many of which were made payable to Defendant Daniel Tepper. Moreover, Plaintiff provides the deposition of Yaniv Tepper, who has testified that he and Daniel Tepper are beneficiaries of the Trust. Checks have also been produced that were made payable to Defendant Saeed Kashefi from the Trust. As such, the court finds the requested documents tend to show the relationships between Nisan, the Trust, Transpine, and the subject property. In Reply, Plaintiff also notes the documents are relevant to Plaintiff’s alter ego allegations.

For the purposes of discovery, information will be deemed relevant as long as “‘might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement….’ [Citation.]”  (Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546, italics in quoted text.)  The “subject matter” of a pending action also encompasses far more matters than the actual issues at trial, and is not limited by admissibility in any way.  (Jessen v. Hartford Cas. Ins. Co. (2003) 111 Cal.App.4th 698, 711.)  Moreover, because the rules of discovery are “applied liberally in favor of discovery…,” even the so-called “fishing expedition” will be permissible under certain circumstances.  (Gonzalez, supra, 33 Cal.App.4th at p. 1546, citations omitted.) 

In opposition, Nisan Tepper argues Plaintiff has failed to show good cause and privacy rights are implicated. As discussed above, the court finds Plaintiff has demonstrated good cause for the trust documents. As for the privacy objections, the court finds any privacy interests may be protected by a protective order.

When privacy interests are implicated, discovery will not be permitted simply because it could lead to other relevant evidence. (See Board of Trustees v. Superior Court (1981) 119 Cal.App.3d 516, 525.)  Rather, discovery of sensitive information will only be allowed where it is both directly relevant to a cause of action and essential to a fair resolution of the matter.  (Britt v. Superior Court (1978) 20 Cal.3d 844, 859.)  To that end, the party seeking discovery has the “burden of making a threshold showing that the evidence sought is ‘directly relevant’ to the claim or defense.” (See Harris v. Superior Court (1992) 3 Cal.App.4th 661, 665.)  Also, discovery will not be compelled if the information sought is available from alternative sources or through less-intrusive means.  (Allen v. Superior Court (1984) 151 Cal.App.3d 447, 449.) 

Defendant Nisan relies on In Estate of Gallio (1995) 33 Cal.App.4th 592 to support his contention that discovery into the Trust would be a gross intrusion into his privacy interests. However, the court finds Gallio distinguishable from the issues here. The court had denied discovery because the step-children had failed to make threshold showing that joint will was made, that decedent and stepmother agreed to hold property as community property, or that stepmother was aware of terms of decedent's will. Here, Plaintiff is not seeking the private documents of a third party, but seeks the documents of a party. The Trust was named a party in December 2019. Moreover, Plaintiff has made a threshold showing that the Trust made payments to Defendant Daniel Tepper, that he is a beneficiary of the trust, and support Plaintiff’s alter-ego allegations. As such, the court finds Plaintiff has made a threshold showing that the evidence is directly relevant.

Based on the foregoing, Plaintiff’s Motion to Compel a Further Response and Production to Request for Production of Documents, Set One from Nisan Tepper, individually and as Trustee of the Tepper Family Revocable Trust

Case Number: ****5743    Hearing Date: August 10, 2020    Dept: W

OVERLAND DIRECT, INC. V. YANIV TEPPER, ET AL.

plaintiff’s motion to compel deposition and motion to compel further responses

Date of Hearing: August 10, 2020 Trial Date: None set.

Department: W Case No.: ****5743

BACKGROUND

On December 19, 2016, Plaintiff Overland Direct, Inc. (“Plaintiff”) obtained a judgment against Daniel Tepper, Esola Capital, LLC, and Avshy Cohen. The Judgment quieted title to a property not subject to the instant action and awarded Plaintiff $100,000 in punitive damages.

Prior to the entry of judgment, however, Plaintiff alleges a series of fraudulent transfers involving the judgment debtors and title on 4256 Tarzana Estates Drive, Tarzana (the “Property”). Plaintiff further alleges that U.S. Bank held a secured interest in the property through a loan to Defendant Yaniv Tepper.

On May 30, 2017, Overland Direct, Inc. filed a Complaint for Declaratory Relief and Violation of the Voidable Transfer Act. The Declaratory Relief claim alleges that Defendant Tepper lacks any legal interest in the Tarzana Property. The Violation of the Voidable Trust Act claim alleges that the transfers of title were part of a scheme to avoid liability on the Overland Direct judgment.

On July 11, 2017, the Court denied the application to enjoin any sale of the property, including a foreclosure sale on the property by U.S. Bank, but granted the application enjoining any disbursement of funds. The foreclosure sale was scheduled for August 24, 2017.

On May 17, 2019, Plaintiff filed a First Amended Complaint designating Defendant Wooshies, Inc. (“Defendant”) as Doe 1. Default was entered against Defendant on July 11, 2019. On August 13, 2019, the courted granted the parties’ stipulation to vacate and set aside the default and to allow Plaintiff to file a Second Amended Complaint. After sustaining Defendant’s demurrer to the SAC, Plaintiff filed a Third Amended Complaint (“TAC”) on November 5, 2019.

On February 19, 2020, this court sustained Defendant’s demurrer to the first (declaratory relief) and third (cancellation of a written instrument) causes of action of the TAC without leave to amend.

Plaintiff moves to compel the deposition of Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper (“Tepper”) to comply and appear for his duly noticed deposition. Plaintiff further moves to compel further discovery responses from Nisan Tepper.

[Tentative] Ruling

1. Plaintiff’s Motion to Compel Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper to Appear for Deposition is GRANTED.

2. Plaintiff’s Motion to Compel a Further Response and Production to Request for Production of Documents, Set One from Nisan Tepper, individually and as Trustee of the Tepper Family Revocable Trust is GRANTED.

DISCUSSION

1. Plaintiff’s Motion to Compel Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper to Appear for Deposition

Plaintiff moves this court for an order compelling Defendant Daniel Tepper aka Danny Tepper aka Dan Tepper (“Daniel Tepper”) to comply with, and appear for his depositions in accordance with, the valid and duly noticed depositions.

On January 15, 2020, Overland’s counsel served upon Daniel Tepper and all parties a deposition notice and request for production of documents for Daniel Tepper’s deposition on February 10, 2020. (Mobasser Decl., ¶4; Exh. 2.) One business day prior to the duly noticed deposition, Daniel Tepper informed Plaintiff’s counsel that he would not appear for the deposition on February 10, 2020. (Mobasser Decl., ¶5; Exh. 3.) Because Daniel Tepper did not provide Plaintiff’s counsel with an alternative date or stipulate to appear at a future deposition, Plaintiff informed Daniel Tepper they would move forward with the February 10, 2020 deposition. (Mobasser Decl., ¶5; Exh. 3.) Daniel Tepper did not appear and Plaintiff had to take a certificate of non-appearance. (Mobasser Decl., ¶6; Exh. 4.)

On February 13, 2020, Daniel Tepper informed Plaintiff’s counsel that he agreed to appear for his deposition on March 5, 2020. (Mobasser Decl., ¶7; Exh. 5.) That same day, Plaintiff’s counsel served Daniel Tepper and all parties an Amended Notice of Deposition and Request for Production of Documents for March 5, 2020. (Mobasser Decl., ¶8; Exh. 6.) Again, one business day prior to the set deposition, Daniel Tepper informed Plaintiff he would not be appearing because he could not get in touch with his limited scope attorney, Robert Smith. Plaintiff informed Daniel Tepper his non-appearance would result in court intervention. (Mobasser Decl., ¶9; Exh. 7.) Daniel Tepper failed to appear on March 5, 2020 and Plaintiff had to take a certificate of non-appearance. (Mobasser Decl., ¶9; Exh. 7 and McCarthy Decl. ¶3; Exh. 1.)

Given Daniel Tepper’s failure to appear for his deposition after two properly served deposition notices, as well as Plaintiff’s good-faith attempts to resolve the matter, Plaintiff’s Motion is GRANTED. Daniel Tepper is ordered to appear for deposition and produce documents specified in the deposition notice within twenty (20) days of the hearing of this Motion. The court will discuss with counsel whether any special accommodations need to be made in light of the current pandemic.

Sanctions

It has been established that if a motion to compel deposition is granted, the court shall impose a monetary sanction in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (CCP ;2025.450(g)(1).)

Plaintiff requests this court impose sanctions on Daniel Tepper as a direct result of Daniel Tepper’s willful failure to appear for two duly noticed depositions in the amount of $14,391.70. Counsel for Plaintiff contends this amount includes the 16.40 hours preparing for Daniel Tepper’s deposition, 2.50 hour traveling to and from the deposition on February 10, 2020, 3.50 hours meeting and conferring and preparing this motion and supporting declarations, and 4.00 hours in anticipation of any opposition, reply, and appearance at the hearing on this motion at this rate of $500.00 as well as $840.70 for the court reporter affidavit of non-appearance on February 10, 2020, $411.00 for the court reporter affidavit of non-appearance on March 5, 2020, and the $60 filing fee.

Although the court finds that sanctions are warranted under CCP ;2025.450(g)(1), Plaintiff’s request is excessive, however. As such, the court finds that $5811.70 is a reasonable sum for 3.5 hours spent in preparing the instant Motion and conducting the meet and confer, 2.5 hours travelling to the depositions, 2 hours for preparing for the deposition (as much of the work would necessarily have to be done for the deposition now ordered by the court) and one (1) hour for attendance at the hearing at a rate of $500.00 per hour plus $60.00 in filing fees, and $840.70 plus $411 for the two affidavits of non-appearance.

Plaintiff also requests this court impose the $500 sanction pursuant to CCP ;1992, which provides “A person failing to appear pursuant to a subpoena or a court order also forfeits to the party aggrieved the sum of five hundred dollars ($500), and all damages that he or she may sustain by the failure of the person to appear pursuant to the subpoena or court order, which forfeiture and damages may be recovered in a civil action.” This court grants the $500 forfeiture authorized by CCP ;1992.

2. Plaintiff’s Motion to Compel a Further Response and Production to Request for Production of Documents, Set One from Nisan Tepper, individually and as Trustee of the Tepper Family Revocable Trust

Plaintiff moves this court for an order compelling Defendant Nisan Tepper, individually and as trustee of the Tepper Family Revocable Trust, to provide a further response and produce documents in response to Plaintiff’s Requests for Production of Documents, Set One (specifically, Request for Production No. 4) propounded to Nisan Tepper individually and as trustee, respectively.

Under Code of Civil Procedure section 2031.310(a), on receipt of a response to a demand for inspection, copying, testing, or sampling, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply: (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.

A motion to compel further responses must set forth specific facts showing “good cause” justifying the discovery sought by the demand and must be accompanied by a declaration showing a “reasonable and good faith attempt” to resolve the issues outside of court. (CCP ;;2016.040, 2031.310(b)(2).) The motion must also be accompanied by a separate statement.  (CRC 3.1345(a)(3).) In addition, unless the parties have agreed otherwise in writing, a motion to compel further responses must be served within 45 days after service of a verified response.  (CCP ;2031.310(c).) Otherwise, the demanding party waives any right to compel a further response to the demand. (Id.)   

The court notes Plaintiff has complied with the meet and confer and separate statement requirements. (See Whitemore Decl. ¶¶6-7.)

Request for Production No. 4 provides: “Any and all DOCUMENTS which evidence any interests YOU have in any revocable or irrevocable trust between 2000 and Present.” Nisan objected to the request on six grounds, and stated “No documents will be produced[.]” Nisan Tepper’s objections include (1) vague and ambiguous with respect to the term interests YOU have in any revocable or irrevocable trust; (2) overbroad, unduly burdensome and oppressive; (3) seeking information violative of the responding parties right of privacy; (4) seeking information violative of the taxpayer privilege; (5) seeking information violative of Civil Code ;3295(c); and, (6) seeking the discovery of information that is neither relevant nor calculated to lead to the discovery of admissible evidence.

The court finds that Plaintiff has met its burden of showing good cause. Specifically, Plaintiff contends the trust documents are relevant as it will help determine whether Defendant Nisan Tepper and/or the Trust played a role (i.e., participated) in the fraudulent/voidable transfers that are alleged in Plaintiff’s operative TAC. Defendant Transpine has produced bank statements by the Trust, including cancelled checks, many of which were made payable to Defendant Daniel Tepper. Moreover, Plaintiff provides the deposition of Yaniv Tepper, who has testified that he and Daniel Tepper are beneficiaries of the Trust. Checks have also been produced that were made payable to Defendant Saeed Kashefi from the Trust. As such, the court finds the requested documents tend to show the relationships between Nisan, the Trust, Transpine, and the subject property. In Reply, Plaintiff also notes the documents are relevant to Plaintiff’s alter ego allegations.

For the purposes of discovery, information will be deemed relevant as long as “‘might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement….’ [Citation.]”  (Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546, italics in quoted text.)  The “subject matter” of a pending action also encompasses far more matters than the actual issues at trial, and is not limited by admissibility in any way.  (Jessen v. Hartford Cas. Ins. Co. (2003) 111 Cal.App.4th 698, 711.)  Moreover, because the rules of discovery are “applied liberally in favor of discovery…,” even the so-called “fishing expedition” will be permissible under certain circumstances.  (Gonzalez, supra, 33 Cal.App.4th at p. 1546, citations omitted.) 

In opposition, Nisan Tepper argues Plaintiff has failed to show good cause and privacy rights are implicated. As discussed above, the court finds Plaintiff has demonstrated good cause for the trust documents. As for the privacy objections, the court finds any privacy interests may be protected by entry of a protective order.

When privacy interests are implicated, discovery will not be permitted simply because it could lead to other relevant evidence. (See Board of Trustees v. Superior Court (1981) 119 Cal.App.3d 516, 525.)  Rather, discovery of sensitive information will only be allowed where it is both directly relevant to a cause of action and essential to a fair resolution of the matter.  (Britt v. Superior Court (1978) 20 Cal.3d 844, 859.)  To that end, the party seeking discovery has the “burden of making a threshold showing that the evidence sought is ‘directly relevant’ to the claim or defense.” (See Harris v. Superior Court (1992) 3 Cal.App.4th 661, 665.)  Also, discovery will not be compelled if the information sought is available from alternative sources or through less-intrusive means.  (Allen v. Superior Court (1984) 151 Cal.App.3d 447, 449.) 

Defendant Nisan relies on In Estate of Gallio (1995) 33 Cal.App.4th 592 to support his contention that discovery into the Trust would be a gross intrusion into his privacy interests. However, the court finds Gallio distinguishable from the issues here. The court had denied discovery because the step-children had failed to make threshold showing that joint will was made, that decedent and stepmother agreed to hold property as community property, or that stepmother was aware of terms of decedent's will. Here, Plaintiff is not seeking the private documents of a third party, but seeks the documents of a party. The Trust was named a party in December 2019. Moreover, Plaintiff has made a threshold showing that the Trust made payments to Defendant Daniel Tepper, that he is a beneficiary of the trust, and support Plaintiff’s alter-ego allegations. As such, the court finds Plaintiff has made a threshold showing that the evidence is directly relevant and that plaintiff has a compelling need for such documents.

Based on the foregoing, Plaintiff’s Motion to Compel a Further Response and Production to Request for Production of Documents, Set One from Nisan Tepper, individually and as Trustee of the Tepper Family Revocable Trust