This case was last updated from Los Angeles County Superior Courts on 08/15/2019 at 09:31:29 (UTC).

RAYOND SHOFLER ET AL VS ALAN C FOX ET AL

Case Summary

On 10/13/2017 RAYOND SHOFLER filed a Contract - Other Contract lawsuit against ALAN C FOX. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are MICHELLE WILLIAMS COURT, SAMANTHA JESSNER and TERESA A. BEAUDET. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9693

  • Filing Date:

    10/13/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

MICHELLE WILLIAMS COURT

SAMANTHA JESSNER

TERESA A. BEAUDET

 

Party Details

Plaintiffs and Petitioners

THE RAYMOND SHOFLER IRA

SHOFLER BARBARA INDIVIDUALLY AND ON

SHOFLER RAYMOND

THE RAYMOND AND BARBARA SHOFLER FAMILY TRUST AND THE RAYMOND SHOFLER IRA

SHOFLER BARBARA

Defendants and Respondents

FOX ALAN C.

ACF PROPERTY MANAGEMENT INC

DOES 1 TO 100

Attorney/Law Firm Details

Plaintiff and Petitioner Attorney

LEONARD RICHARD C. ESQ.

Defendant and Respondent Attorneys

TURKEN JAMES H. ESQ.

TURKEN JAMES HENRY ESQ.

LEVIN DANIEL BENJAMIN

ESTRADA ESTEBAN MARTIN

 

Court Documents

Declaration

7/17/2019: Declaration

Informal Discovery Conference

7/23/2019: Informal Discovery Conference

Proof of Service (not Summons and Complaint)

8/6/2019: Proof of Service (not Summons and Complaint)

Declaration

8/6/2019: Declaration

Minute Order

2/23/2018: Minute Order

NOTICE OF MOTION AND MOTION TO QUASH PLAINTIFFS' SUBPOENA TO GERMAN AMERICAN CAPITAL CORPORATION AND/OR TO MODIFY; ETC.

3/28/2018: NOTICE OF MOTION AND MOTION TO QUASH PLAINTIFFS' SUBPOENA TO GERMAN AMERICAN CAPITAL CORPORATION AND/OR TO MODIFY; ETC.

REQUEST FOR REFUND

4/3/2018: REQUEST FOR REFUND

NOTICE OF CHANGE OF ADDRESS OR OTHER CONTACT INFORMATION

5/4/2018: NOTICE OF CHANGE OF ADDRESS OR OTHER CONTACT INFORMATION

Order

11/9/2018: Order

Motion to Compel

11/20/2018: Motion to Compel

Opposition

11/26/2018: Opposition

Minute Order

12/6/2018: Minute Order

Certificate of Mailing for

12/6/2018: Certificate of Mailing for

Response

12/6/2018: Response

Notice of Case Management Conference

1/22/2019: Notice of Case Management Conference

Proof of Service (not Summons and Complaint)

3/14/2019: Proof of Service (not Summons and Complaint)

NOTICE OF ORDER TO SHOW CAUSE HEARING AND CASE MANAGEMENT CONFERENCE

11/3/2017: NOTICE OF ORDER TO SHOW CAUSE HEARING AND CASE MANAGEMENT CONFERENCE

VERIFIED COMPLAINT FOR: (1) BREACH OF FIDUCIARY DUTY; ETC

10/13/2017: VERIFIED COMPLAINT FOR: (1) BREACH OF FIDUCIARY DUTY; ETC

131 More Documents Available

 

Docket Entries

  • 04/29/2020
  • Hearingat 09:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 03/12/2020
  • Hearingat 09:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 03/05/2020
  • Hearingat 16:00 PM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Non-Appearance Case Review

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  • 02/20/2020
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Protective Order

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  • 01/30/2020
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Status Conference

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  • 01/30/2020
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Status Conference

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  • 01/22/2020
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to Compel (name extension)

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  • 09/11/2019
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion to Disqualify Counsel

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  • 08/30/2019
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Protective Order

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  • 08/20/2019
  • Hearingat 08:30 AM in Department 50 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Summary Adjudication

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214 More Docket Entries
  • 11/03/2017
  • DocketNOTICE OF ORDER TO SHOW CAUSE HEARING AND CASE MANAGEMENT CONFERENCE

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  • 11/03/2017
  • DocketNotice; Filed by Plaintiff/Petitioner

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  • 10/26/2017
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 10/26/2017
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 10/26/2017
  • DocketOSC-Failure to File Proof of Serv; Filed by Clerk

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  • 10/26/2017
  • DocketORDER TO SHOW CAUSE HEARING

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  • 10/13/2017
  • DocketComplaint; Filed by Raymond Shofler (Plaintiff); Barbara Shofler (Plaintiff); The Raymond and Barbara Shofler Family Trust and the Raymond Shofler IRA (Plaintiff)

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  • 10/13/2017
  • DocketSUMMONS

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  • 10/13/2017
  • DocketVERIFIED COMPLAINT FOR: (1) BREACH OF FIDUCIARY DUTY; ETC

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  • 01/09/2015
  • DocketNotice; Filed by Alan C. Fox (Defendant); ACF PROPERTY MANAGEMENT INC (Defendant)

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Tentative Rulings

Case Number: BC679693    Hearing Date: March 12, 2020    Dept: 50

 

Superior Court of California

County of Los Angeles

Department 50

raymond shofler et al.,

Plaintiffs,

vs.

ALAN C. FOX et al.

Defendants.

Case No.:

BC679693

Hearing Date:

March 12, 2020

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

PLAINTIFFS’ MOTION FOR SANCTIONS PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 128.5

Background

Plaintiffs Raymond Shofler and Barbara Shofler, individually and on behalf of The Raymond and Barbara Shofler Family Trust and The Raymond Shofler IRA (collectively, “Plaintiffs”) filed this instant action against defendants Alan C. Fox, individually and as Trustee of the Alan C. Fox Revocable Trust (“Fox”) and ACF Property Management, Inc. (“ACF”) (collectively, “Defendants”) alleging Defendants made false representations regarding investment opportunities.

Plaintiffs now move for an order imposing sanctions pursuant to Code of Civil Procedure section 128.5 against Defendants and counsel for Defendants (specifically, Daniel B. Levin, E. Martin Estrada, and Mark R. Yohalem of the law firm Munger, Tolles & Olson LLP). Defendants oppose.

Discussion

Code of Civil Procedure section 128.5, subdivision (a) provides: “A trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.” The statute defines frivolous as “totally and completely without merit or for the sole purpose of harassing an opposing party.” ((Code Civ. Proc., § 128.5, subd. (b)(2).) An objective standard applies in determining whether a lawsuit is frivolous. ((See Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 12 [“a suit indisputably has no merit only where any reasonable attorney would agree that the action is totally and completely without merit” (internal quotations omitted)].) Sanctions are imposed only for the “most egregious conduct” and in the “clearest of cases.” ((Luke v. Baldwin-United Corp. (1985) 167 Cal.App.3d 664, 668-669.) On a motion for sanctions under Code of Civil Procedure section 128.5, the moving party has the burden of proof. ((Weisman v. Bower (1987) 193 Cal.App.3d 1231, 1236.)

Plaintiffs seek to impose sanctions against Defendants for the filing of a motion to disqualify counsel, namely, the motion to disqualify filed by Defendants on July 17, 2019. That motion was denied on October 1, 2019. (See 10/1/19 Order Re: Defendants’ Motion for Disqualification Based on Indirect Communication with a Represented Party.) Defendants’ motion to disqualify was based on the assertion that counsel for Plaintiffs, Leonard, Dicker, & Schreiber LLP (“LDS”), indirectly communicated with Fox regarding subject matter on which LDS knew Fox to be represented by counsel. The communications were characterized as “indirect” because the communications were purportedly made through an intermediary, Carl Albert, another one of Fox’s investors. Essentially, Defendants contended that Mr. Albert was directed by LDS attorneys to meet with Fox and to discuss a pending lawsuit against Fox similar to the instant one (Ross v. ACF, Case No. BC576879). The Court ultimately found that there was insufficient evidence of any “direction” by LDS attorneys—the evidence being, namely, that LDS and Mr. Albert had some communications about the Ross v. ACF case, and that subsequently, Mr. Albert met with Fox in person to discuss Mr. Albert’s concerns about the allegations in the Ross v. ACF case and whether Fox had defrauded Mr. Albert.

Plaintiffs contend that the motion to disqualify was frivolous because Defendants did not have evidence to support their conclusions about the nature of the relationship between Mr. Albert and LDS at the time of Mr. Albert’s meeting with Fox. Plaintiffs argue that no meaningful legal authority was cited in Defendants’ motion, that no declaration of Alan Fox was filed in support of the motion, that no factual bases existed for the motion, and that Defendants (through their counsel) intentionally misrepresented evidence.

Without completely rehashing the evidence presented in support of and in opposition to the motion to disqualify, the Court concludes that Plaintiffs have not demonstrated that the motion to disqualify was bad faith or totally and completely without merit, or that the motion was filed solely to delay or to harass Plaintiffs. The motion to disqualify was not replete with citations to legal authority, but it is unclear how the number of citations in a brief supports a finding of lack of merit. Plaintiffs do not identify any cases that should have been cited but were not, nor do Plaintiffs identify any cases that would have directly challenged Defendants’ position as to disqualification. It is also unclear how including a new[1] declaration from Alan Fox was necessary to the motion to disqualify, as there is no evidence that Fox’s testimony had changed or that Fox’s previous declaration was unreliable for any reason. The Court also disagrees that there was no factual basis for the motion to disqualify. Defendants’ evidence of the timeline of events was the factual basis for the motion. That the Court determined that Defendants’ proffered evidence was insufficient to prove LDS’s direct involvement in Mr. Albert’s meeting with Fox does not mean that there was no evidence of LDS’s direct involvement in Mr. Albert’s meeting with Fox. Plaintiffs assert that Defendants misrepresented and misread the evidence and that they relied on speculation, innuendo, and misstatements, but the Court does not find that Plaintiffs have shown that Defendants and their counsel acted in bad faith or “for the sole purpose of harassing” Plaintiffs. While Defendants’ counsel may have taken an aggressive stance in moving to disqualify LDS as counsel for Plaintiffs, and while the Court ultimately found that the motion to disqualify was unmeritorious, the Court does not find that the motion was frivolous or that it was filed in bad faith or to cause delay.

Conclusion

Based on the foregoing, Plaintiffs’ motion for sanctions pursuant to Code of Civil Procedure section 128.5 is denied.

Defendants are ordered to give notice of this ruling.

DATED: March 12, 2020 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court


[1] As noted by Defendants, a declaration from Alan Fox was attached to the motion to disqualify, but it was a declaration filed previously and in support of an altogether different motion. (Yohalem Decl., ¶ 3, Ex. B, Ex. 12.)

Case Number: BC679693    Hearing Date: March 04, 2020    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

raymond shofler, et al.,

Plaintiffs,

vs.

alan c. fox, et al.

Defendants.

Case No.:

BC 679693

Hearing Date:

March 4, 2020

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

PLAINTIFFS’ AMENDED MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT

Background

Plaintiffs Raymond Shofler and Barbara Shofler, individually and on behalf of The Raymond and Barbara Shofler Family Trust and The Raymond Shofler IRA (collectively, “Plaintiffs”) filed this action on October 13, 2017 against Defendants Alan C. Fox, individually and as Trustee of the Alan C. Fox Revocable Trust (“Fox”) and ACF Property Management, Inc. (“ACF”) (jointly, “Defendants”). The operative Second Amended Complaint (“SAC”) was filed on March 5, 2018, and asserts causes of action for breach of fiduciary duty, fraud (misrepresentation), fraud (concealment), securities fraud, and violation of Corporations Code section 17704.10. Plaintiffs allege that they were fraudulently induced by Defendants into making certain commercial real estate investments.

Plaintiffs now move for leave to file a Third Amended Complaint, which adds allegations that describe the various misrepresentations and omissions allegedly made by Defendants and a specific request for the remedies of nonrestitutionary disgorgement and benefit of the bargain damages. Defendants oppose.

Legal Standard

Pursuant to Code of Civil Procedure section 473(a)(1), “[t]he court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading.” Amendment may be allowed at any time before or after commencement of trial. ((Code Civ. Proc., § 576.) “[T]he court’s discretion will usually be exercised liberally to permit amendment of the pleadings. The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428 (internal citations omitted).) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….” (Morgan v. Sup. Ct. (1959) 172 Cal.App.2d 527, 530.) Prejudice includes “delay in trial, loss of critical evidence, or added costs of preparation.” (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1448.)

A motion to amend a pleading before trial must include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments. ((Cal. Rules of Court, rule 3.1324(a).) The motion must also state what allegations are proposed to be deleted or added, by page, paragraph, and line number. ((Ibid. .) Finally, a separate supporting declaration specifying the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amended allegations were discovered, and the reason why the request for amendment was not made earlier must also accompany the motion. (Cal. Rules of Court, rule 3.1324(b).)

Discussion

The Court finds that Plaintiffs have complied with the procedural requirements of CRC 3.1324. Plaintiff have submitted a declaration from counsel setting forth the basis for adding the new allegations—essentially that during the litigation of this case, the parties have taken various positions as to the scope of discovery that necessitate amending the operative complaint to clarify and narrow the issues. (Leonard Decl., ¶¶ 3-6.) Plaintiffs assert that Defendants will not be prejudiced by the amendments because there are no new claims being added to the case, and the factual bases for the amendments have long been known to Defendants.

Defendants contend that the filing of the proposed Third Amended Complaint will result in a delay and will require the parties to expend additional time and expense on discovery and motion practice. The Court notes that the final status conference and trial dates were recently vacated. (See 2/25/20 Minute Order.) Therefore, to the extent that Defendants’ argument is based on the closeness of a trial date, any prejudice has been mitigated. Defendants also argue that the amendments are essentially futile (e.g., that Plaintiffs are improperly adding new claims, that the statute of limitations bars these “new” claims, and that Plaintiffs do not have standing to raise these “new” claims), but the legal deficiency of the proposed amendment does not warrant denial of leave to amend. ((See Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048 [“the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings”].)

Defendants separately argue that leave to amend the fifth cause of action for violations of Corporations Code section 17704.10 should be denied because an order striking that cause of action was issued on May 17, 2018. However, as noted by Plaintiffs, on May 30, 2018, Defendants’ filed an answer to the Second Amended Complaint wherein Defendants answered the fifth cause of action. Plaintiffs contend that the parties have since treated the fifth cause of action as if it were at issue and that Plaintiffs have conducted discovery as to the fifth cause of action. Based on this, Plaintiffs argue that Defendants have waived any objection to the fifth cause of action. But Plaintiffs offer no authority for this proposition, and the Court is unaware of any authority stating that answering a cause of action that has been ordered stricken revives the cause of action. The Court also notes that Plaintiffs do not offer, even in reply, an explanation for why adding the cause of action for violations of Corporations Code section 17704.10 is necessary and proper.

The Court notes that Defendants filed a sur-reply on February 20, 2020, which addresses what Defendants characterize as “false statements of fact” made by Plaintiffs in their reply and requests sanctions pursuant to Code of Civil Procedure section 128.5. Because the arguments contained in the sur-reply are not necessary to the disposition of the instant motion for leave to amend, and because Plaintiffs have not had the opportunity to respond to the request for sanctions, the Court will set a separate hearing on Defendants’ request for sanctions and will also set a complete briefing schedule for that request. ((See Code Civ. Proc., § 128.5, subd. (c) [“Expenses pursuant to this section shall not be imposed except on notice contained in a party’s moving or responding papers or, on the court’s own motion, after notice and opportunity to be heard.”].)

Conclusion

For the foregoing reasons, Plaintiffs’ motion is granted, except as to the addition of the fifth cause of action for violations of Corporations Code section 17704.10.

The Court orders Plaintiffs to file and serve the Third Amended Complaint in accordance with this order within 3 days of the date of this order.

The Court sets the hearing on Defendants’ motion for sanctions under Code of Civil Procedure section 128.5 for ___________, at 8:30 a.m., in Dept. 50. Plaintiffs are to file any opposition by ___________, and Defendants are to file any reply by __________.

Plaintiffs are ordered to give notice of this ruling.

DATED: March 4, 2020 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC679693    Hearing Date: January 09, 2020    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

raymond shofler, et al.,

Plaintiffs,

vs.

alan c. fox, et al.,

Defendants.

Case No.:

BC 679693

Hearing Date:

January 9, 2020

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

APPLICATION FOR ADMISSION PRO HAC VICE

A. Zoe Bedell (“Movant”) applies to the Court for admission pro hac vice to appear in this action on behalf of Defendants Alan C. Fox and ACF Property Management, Inc. (“Defendants”). The application is submitted with declarations by Movant and by local counsel John L. Schwab made under penalty of perjury.

The Application is submitted with a declaration by A. Zoe Bedell and John L. Schwab made under penalty of perjury and is in compliance with the requirements set forth in California Rules of Court Rule 9.40(d). Accordingly, the unopposed Application is granted.

Defendants are ordered to give notice of this ruling.

DATED: January 9, 2020

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC679693    Hearing Date: December 18, 2019    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

RAYMOND SHOFLER, et al.

Plaintiffs,

vs.

ALAN C. FOX., et al.

Defendants.

Case No.:

BC 679693(and related cases)

Hearing Date:

December 18, 2019

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

COURT’S MOTION TO APPOINT A DISCOVERY REFEREE

Background

Plaintiffs Raymond Shofler and Barbara Shofler, individually and on behalf of The Raymond and Barbara Shofler Family Trust and The Raymond Shofler IRA (collectively, “Plaintiffs”) filed this action on October 13, 2017 against Defendants Alan C. Fox, individually and as Trustee of the Alan C. Fox Revocable Trust (“Fox”) and ACF Property Management, Inc. (“ACF”) (jointly, “Defendants”). The operative Second Amended Complaint (“SAC”) was filed on March 5, 2018, and asserts causes of action for breach of fiduciary duty, fraud (misrepresentation), fraud (concealment), securities fraud, and violation of Corporations Code section 17704.10. Plaintiffs allege that they were fraudulently induced by Defendants into making certain commercial real estate investments. This case is one of ten related cases involving similar claims against Defendants.

Numerous discovery disputes have arisen between the parties, resulting in many ex parte applications, informal discovery conferences and discovery motions. As a result, the Court has on its own motion proposed the appointment of a discovery referee to hear and determine all discovery motions and disputes in this action pursuant to CCP §639(a)(5).

Discussion

“Implicit in the statutory requirement that the reference be ‘necessary’ is the Legislature's acknowledgment of a litigant's right of access to the courts without the payment of a user's fee, and the concomitant notion that there ought to be a finding of something out of the ordinary before the services of a referee are forced upon a nonconsenting party.” (Hood v. Superior Court (1999) 72 Cal.App.4th 446, 449.)

But a court may direct discovery motions to a discovery referee where a majority of the following factors are present: “(1) there are multiple issues to be resolved; (2) there are multiple motions to be heard simultaneously; (3) the present motion is only one in a continuum of many; (4) the number of documents to be reviewed (especially in issues based on assertions of privilege) make the inquiry inordinately time-consuming.” (Taggares v. Superior Court (1998) 62 Cal.App.4th 94, 105.)

Here, the parties themselves have identified numerous discovery disputes that have arisen. At least twelve pending motions regarding discovery were identified in the “Joint Ex Parte Application for an Order Calendaring a Status Conference” recently filed in this matter on December 11, 2019. These include multiple motions to compel or compel further and motions for protective orders. The discussion of the discovery issues set forth in Defendants’ Response to this Court’s Order to Show Cause Why the Court Should Not Order a Discovery Referee further illustrates the extensive nature of the discovery disputes pending before this Court. The Court already has spent an extraordinary amount of time at ex parte hearings and informal discovery conferences trying to assist the parties in resolving their disputes, along with ruling on various discovery motions.

Appointment of a discovery referee is necessary in light of the complexity and time-consuming nature of the discovery disputes. Contrary to the assertion of Plaintiffs, the Court does not find that appointment of a discovery referee will be costlier than resolving the discovery disputes through motion practice.

The Court finds that a majority of the factors identified in Taggares, supra, are present. There are multiple discovery issues to be resolved; some of these issues may need to be heard simultaneously; and resolution of these issues are likely to be extremely time-consuming.

Conclusion

Based on the foregoing, the Court’s own motion to appoint a discovery referee for all discovery is granted. The Court appoints Hon. Ronald S. Prager, Ret. as referee at the hourly rate of $690 hour. The referee may be contacted at Judicate West, 1851 E. First Street, Suite 1600, Santa Ana, CA 92705; telephone number (714) 834-1340. The parties are to share the costs and fees of the referee equally (i.e., one-half by Plaintiffs and one-half by Defendants). This cost allocation is without prejudice to adjustment depending upon the outcome of the case. No party has established an economic inability to pay a pro rata share of the referee’s fee.

Plaintiffs are ordered to give notice.

DATED: December 18, 2019 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC679693    Hearing Date: November 01, 2019    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

raymond shofler, et al.,

Plaintiffs,

vs.

alan c. fox, et al.

Defendants.

Case No.:

BC 679693

Hearing Date:

November 1, 2019

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

DEFENDANTS’ MOTION TO COMPEL FURTHER RESPONSES TO SECOND SET OF REQUESTS FOR PRODUCTION AND FIRST SET OF SPECIAL INTERROGATORIES

Background

Defendants Alan C. Fox, individually and as Trustee of the Alan C. Fox Revocable Trust (“Fox”) and ACF Property Management, Inc. (“ACF”) (jointly, “Defendants”) move for an order compelling further responses from Plaintiffs Raymond Shofler and Barbara Shofler, individually and on behalf of The Raymond and Barbara Shofler Family Trust and The Raymond Shofler IRA (collectively, “Plaintiffs”) to Defendants’ Requests for Production of Documents, Set Two, Nos. 59, 60 and Special Interrogatories, Set One, No. 16.

The Court notes that Plaintiffs filed their opposition on October 30, 2019 with no explanation for its exceptional untimeliness. In any event, the Court notes that Defendants filed a supplemental reply addressing the substantive arguments made in the late-filed opposition (in addition to objection to its untimeliness). Therefore, the Court exercises its discretion to consider the late-filed opposition and the supplemental reply. But the Court admonishes the parties that strict compliance with the Code of Civil Procedure and applicable rules of court will be expected going forward.

Discussion

Code of Civil Procedure section 2031.310, subdivision (a) permits a propounding party to move for an order compelling a further response to a demand for inspection if the propounding party deems that a statement of compliance is incomplete, a representation of inability to comply is inadequate, incomplete, or evasive, or an objection is without merit or too general. (Code Civ. Proc., § 2031.310, subd. (a).) A motion to compel further responses to a demand for inspection must set forth specific facts showing good cause for the discovery sought and must be accompanied by a meet and confer declaration. ((Code Civ. Proc., § 2031.310, subd. (b).)

Code of Civil Procedure section 2030.300, subdivision (a) permits a propounding party to move for an order compelling a further response to an interrogatory if the propounding party deems that an answer is “evasive or incomplete” or that an objection is “without merit or too general.” (Code Civ. Proc., § 2030.300(a).) Such a motion must be accompanied by a meet and confer declaration. (Code Civ. Proc., § 2030.300(b)(1).)

Request for Production No. 59: All DOCUMENTS that constitute, reflect, or relate to any COMMUNICATIONS relating to YOUR investments in the ENTITIES between YOU and any PERSON who advised YOU about such investments.

In response to this request, Plaintiffs objected that the request fails to specify a single category of documents with reasonable particularity, that the request invades the attorney-client and work product privileges, and that the term “relating” is ambiguous and unintelligible. Plaintiffs also provided a substantive response agreeing to produce all communications between the Shoflers and any other persons who advised the Shoflers about their investments with the Defendants concerning such investments. Plaintiffs also stated that they would not be producing any tax returns, attorney-client communications, bank statements, or canceled checks reflecting money invested and money repaid pursuant to the financial privacy privilege.

Request for Production No. 60: All e-mails between YOU and any PERSON relating to YOUR investments in the ENTITIES.

Plaintiffs interposed the same objections as those in response to Request No. 59. Plaintiffs also agreed to produce all communications between the Shoflers and Defendants and all documents that mention Alan Fox, ACF Property Management, Inc., or any of the shopping centers or shopping center investments.

Defendants contend that Plaintiffs have only produced a limited number of letters that Defendants sent Plaintiffs but have yet to produce any email communications regarding their investments with Defendants. Defendants contend that Plaintiffs’ failure to produce documents means that Plaintiffs have not conducted a reasonable search for communications (that Defendants know exist). Plaintiffs do not dispute that responsive emails exist and were not produced to Defendants. Instead, Plaintiffs argue that “by definition,” Defendants already have these emails. (Opp’n, p. 5:10-11.) But Plaintiffs did not object on this basis in responding to these requests.

The Court notes that Defendants do not argue that Plaintiffs’ objections are meritless and do not appear to be seeking further responses without objections. Rather, Defendants seek an order compelling Plaintiffs to “conduct a diligent search and produce all non-privileged, responsive documents in response to RFPs Nos. 59-60 that are in Plaintiffs’ possession, custody, or control.” (Mot. pp. 9:28 – 10:2.) Code of Civil Procedure section 2031.310 does not give the Court authority to make such an order. Moreover, since the parties agree that Plaintiffs agreed to produce documents, the only basis upon which the Court can order a further response pursuant to section 2031.310 is if there is a showing that Plaintiffs’ statement of compliance is incomplete. Defendants have failed to demonstrate that Plaintiffs’ statement of compliance is incomplete. Instead, it appears that Defendants are arguing that Plaintiffs’ statement of compliance is untrue—that Plaintiffs stated that they undertook a diligent search but had not actually done so. Even so, the only basis upon which Defendants seek relief is Code of Civil Procedure section 2031.310. Because the Court finds that Defendants have failed to establish that they are entitled to relief pursuant to section 2031.310, the motion is denied as to Request Nos. 59 and 60.

Special Interrogatory No. 16: Please IDENTIFY all investments that YOU have made.

Plaintiffs objected to this interrogatory on the grounds that it is compound and unlimited as to time. Plaintiffs also substantively responded by listing the 20 shopping center investments with Defendants. Plaintiffs expressly stated that they were limiting their answer to the investments at issue in this case.

Defendants contend that a further response is required because Plaintiffs failed to provide an answer with regard to non-ACF investments. Defendants agreed during the meet and confer process to limit this interrogatory to the time period during which Plaintiffs invested with Defendants, but Plaintiffs did not agree to provide a further response even with this limitation. Plaintiffs counter that they produced over 1,000 pages of documents that are responsive to this interrogatory. But Plaintiffs did not invoke Code of Civil Procedure section 2030.230 (or otherwise comply with its requirements) in their responses to Special Interrogatory No. 16 as required by Code of Civil Procedure section 2030.210. Therefore, the Court finds that a further response is required.

Conclusion

For the foregoing reasons, Defendants’ motion to compel further responses is denied in part and granted in part.

Plaintiffs are ordered to serve complete verified responses, without objections, to Special Interrogatory No. 16 within 20 days of the date of service of this Order.

Defendants are ordered to give notice of this ruling.

DATED: November 1, 2019 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC679693    Hearing Date: October 30, 2019    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

raymond shofler, et al.,

Plaintiffs,

vs.

alan c. fox, et al.

Defendants.

Case No.:

BC 679693

Hearing Date:

October 30, 2019

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

DEFENDANTS’ MOTION TO COMPEL FURTHER RESPONSES TO FIRST SET FO REQUESTS FOR PRODUCTION

Background

Defendants Alan C. Fox, individually and as Trustee of the Alan C. Fox Revocable Trust (“Fox”) and ACF Property Management, Inc. (“ACF”) (jointly, “Defendants”) move for an order compelling further responses from Plaintiffs Raymond Shofler and Barbara Shofler, individually and on behalf of The Raymond and Barbara Shofler Family Trust and The Raymond Shofler IRA (collectively, “Plaintiffs”) to Defendants’ Requests for Production of Documents, Set One, Nos. 21, 22, 23, 24, 25, 26, and 27. Plaintiffs oppose.

Discussion

On receipt of a response to a demand for inspection, the demanding party may move for an order compelling a further response if the demanding party deems that the response is deficient. (Code Civ. Proc., § 2031.310, subd. (a).) The motion must be accompanied by a meet and confer declaration under Code of Civil Procedure section 2016.040. (Code Civ. Proc., § 2031.310, subd. (b)(2).)

A motion to compel further responses to a demand for inspection must also set forth specific facts showing good cause justifying the discovery sought by the inspection demand. (Code Civ. Proc., § 2031.310, subd. (b)(1).) It is not necessary for the motion to show that the material sought will be admissible in evidence. “Good cause” may be found to justify discovery where specific facts show that the discovery is necessary for effective trial preparation or to prevent surprise at trial. (Associated Brewers Distributing Co. v. Superior Court of Los Angeles County (1967) 65 Cal.2d 583, 586-588; see also Code Civ. Proc., §§ 2017.010, 2019.030, subd. (a)(1) [information is discoverable if it is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence and it is not unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive]; Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 1611-1612 [noting a “party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action . . . if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence . . . .”].)

The seven requests at issue seek documents relating to Plaintiffs’ other investments and potential investments during the time they invested in the LLCs, including documents with information regarding Plaintiffs’ process for identifying potential investments, their due diligence in assessing investments, the rate of return and projected rate of return of their investments and potential investments, the scope and diversification of their investments, and their tax returns.[1] Plaintiffs objected to these requests on the grounds of lack of specificity, vagueness, irrelevance, attorney-client and work product privilege, and privacy (financial, taxpayer, and personal). Defendants contend that good cause exists to compel Plaintiffs to provide further responses and to produce responsive documents because these requests are directly relevant to Plaintiffs’ claim of consequential damages in the form of putative lost investment income. In other words, Plaintiffs would not have invested with Defendants if they knew Defendants took a markup and would have instead invested elsewhere. In order to test this claim, Defendants assert that they need information about Plaintiffs’ actual investment history.

Plaintiffs contend that, through the meet and confer process, Plaintiffs have agreed to produce records regarding their other investments for the relevant time-frame.[2] Therefore, the only remaining category of documents at issue is Plaintiffs’ tax returns. Plaintiffs argue that their tax returns are not relevant to their claim for consequential damages.

The California Supreme Court has approved of the framework set forth in Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35, for evaluating potential invasions of privacy. “The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 552.) “The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy.” (Ibid.) “A court must then balance these competing considerations.” (Ibid.) The right of privacy includes the right to privacy in financial matters, including personal tax returns. (Fortunato v. Superior Court (2003) 114 Cal.App.4th 475, 480-481; see also Pioneer Electronics, Inc. v. Superior Court (2007) 40 Cal.4th 360, 372 [noting that disclosure of contact information was not “particularly sensitive” as compared to disclosure of medical history or “details regarding one’s personal finances or other financial information”].)

Here, Plaintiffs argue that they have an objectively reasonable expectation of privacy in the given circumstances, in that Plaintiffs have not placed their tax returns at issue in this lawsuit, citing Wilson Superior Court, 63 Cal. App. 3e 825 (1976). Plaintiffs assert that they are not seeking damages based on taxes that were or were not incurred or the tax effects on their losses. Defendants counter that Plaintiffs have placed tax issues at issue by claiming that they were fraudulently induced to participate in 1031 exchanges due to “income tax” benefits, citing to paragraph 21.3 of the Second Amended Complaint. (See SAC, ¶ 21.3 [“Third, Defendants urge their investors to use their proceeds from each sale to invest in new shopping center investments, where Defendants again mark-up the purchase price, and the cycle starts over again. Defendants often inform investors that they may owe income tax if they do not buy a new investment through a 1031 exchange offered by Defendants. Plaintiffs are informed and believe, and on that basis allege, that Defendants recommend 1031 exchanges into new shopping center investments, even when there is little or no gain to be deferred, for the sole purpose of continuing to churn investor funds.”] Separately, Defendants argue that Plaintiffs have placed their tax returns at issue more broadly because the tax benefits received by Plaintiffs from their investments with Defendants relate to the value of the investments and would potentially reveal why Plaintiffs decided to invest. Finally, Defendants note that Plaintiffs may designate the tax returns as confidential pursuant to the parties’ stipulated protective order.

Based on the foregoing, the Court finds that Plaintiffs have shown that they have an objectively reasonable expectation of privacy in their personal tax returns and they have not placed their tax returns at issue in the litigation. Placing one’s tax returns at issue is not the same as a case with tax issues. Here, it appears that Defendants can explore the tax issues they identify without requiring Plaintiffs to produce their tax returns. Thus, the Court sustains Plaintiffs’ objections to the requests at issue on the basis of privacy and privilege. With regard to Plaintiffs’ remaining objections, they appear to be moot in light of the parties’ agreement limiting the scope of the request to a certain time period.

Conclusion

For the foregoing reasons, Defendants’ motion to compel further responses is denied with regard to the tax returns and granted with regard to the remaining responses based upon the agreements of the parties.

Plaintiffs are ordered to serve complete verified responses, without objections, consistent with the ruling above, regarding Defendants’ Requests for Production of Documents, Set One, Nos. 21, 22, 23, 24, 25, 26, and 27 within 20 days of the date of service of this Order.

Defendants are ordered to give notice of this ruling.

DATED: October 30, 2019 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court


[1] Request for Production No. 21: All DOCUMENTS relating to the overall rate of return of YOUR investments, including on an annual basis and in aggregate form.

Request for Production No. 22: All DOCUMENTS relating to each investment made by YOU.

Request for Production No. 23: All DOCUMENTS relating to the scope of investment and diversification of YOUR investment.

Request for Production No. 24: All DOCUMENTS relating to the identity and processes of any third-parties that advised YOU regarding YOUR investment in the ENTITIES.

Request for Production No. 25: All DOCUMENTS relating to YOUR process for identifying a potential investment, including but not limited to the factors considered by YOU prior to making or declining to make an investment.

Request for Production No. 26: All DOCUMENTS relating to YOUR due diligence of investments or potential investments, including but not limited to any policies and procedures regarding such diligence.

Request for Production No. 27: All DOCUMENTS relating to projections of rate of return of investments made by YOU, including the projections made for each investment with the ENTITIES.

[2] The Court notes that the scope of the requests at issue has been limited by agreement of the parties to the time period of Plaintiffs’ investments with Defendants.